The territorial government on Wednesday made a powerful announcement they say will stave off an energy rate hike, but it was an uncomfortable deja-vu for one regular MLA.
Premier Bob McLeod said the government will pony up almost $30 million for the Northwest Territories Power Corporation to help make up for a shortfall created by low water levels affecting the Snare and Bluefish hydro systems. The cash is meant to offset the cost of diesel fuel purchased between July 2015 and July 2016.
Both moves were reflective of party politics, which is almost a violation of our Financial Administration Act.
“Without this decision, NTPC would have had to apply for a two-year rate rider that would have increased costs for all NWT power customers,” McLeod said in a press release. “Our government doesn’t believe it makes sense to pass these costs on to residents and has decided to cover them instead.”
He said the government would continue to look for “long-term solutions,” including conservation efforts and new options for generation and distribution.
But Range Lake MLA Daryl Dolynny, the only other lawmaker to attend the premier’s press conference at the legislature Wednesday afternoon, said the government of the day has pulled out its credit card and bypassed the consensus government’s due diligence for a second year to float the NTPC.
On Monday, Aug. 31 regular MLAs got word there was going to be a $22 million item related to power discussed during the upcoming session. Dolynny said somehow between then and the press conference, the item grew to $27 million and then the $29.7 million announced Wednesday.
It reminded him of the $20 million the GNWT gave to the power corporation last year, also without debate. Then, as now, the move lands regular MLAs in a lose-lose situation: if they make noise about how the GNWT decided to spend that $29.7 million, they become easy targets to be accused of opposing any reduction in the cost of living.
“Both moves were reflective of party politics, which is almost a violation of our Financial Administration Act,” he said Thursday morning, Sept. 3. “This could have happened in the House and set up a debate (but) the messaging (from the premier) was that this is a done deal. We’re talking about due process and how this government has to work.”
Dolynny said energy costs are the “black hole question of the day” for the NWT, and that he plans to table a report critiquing the McLeod government’s financial track record using empirical performance measures and avoiding “gut feelings” and colourful language.
“History will judge us as the Assembly that stretched the boundaries of borrowing beyond any other Assembly,” he said. “When the Mastercard gets maxed, out comes the Amex application. We can’t continue to borrow.”
NTPC data provided with the announcement shows in 2014 the corporation relied on hydro for 75 per cent of its generation, compared to 22 per cent from diesel. A year later, the mix was 61-34 hydro-to-diesel, with small amounts coming from solar and natural gas.
In August 2015 water volume at the Snare intake was down almost half from where it was in 2013, from about 90,000 cubic metres per second to just over 50,000.
Politicians make hay over second hydro bailout
As a result of the low water levels this summer, NTPC is expecting lower hydro production, which will need to be supplemented with diesel generation, requiring approximately 29 million litres of fuel, according to GNWT. The additional fuel is expected to cost $29.7 million depending on fuel price changes over the next 13 months.
Finance Minister Michael Miltenberger said Friday the legislature would have the final say on whether to spend the money. If MLAs vote it down, he said the NTPC would have to raise rates by 20-25 per cent.
“I don’t think anybody has opposed the power corporation not having to raise rates,” he said. “There is some debate about the process. It’s misguided.”
Miltenberger said last year the GNWT stepped in to avoid a 15 per cent rate hike but there were strings attached to the money leading to the Public Utilities Board, which required the government to report publicly on how money was spent and how it intended to respond to low water levels in the future.
The first of three deadlines passed on Mar. 31 but the GNWT got three extensions, taking it to August. Miltenberger said the $29.7 million announcement wasn’t the breach Dolynny described but a requirement.
“We’ve been delaying so we could do our work,” he said. “We had to do this to comply with our own process. The assembly is the final arbiter.”
He said climate change is creating extreme weather that is blowing budgets far beyond the NWT’s borders.
“Around the world we’re moving to spending a trillion dollars a year responding to extreme weather,” he said. “Alberta is giving hundreds of thousands to farmers (for irrigation), and (spending) hundreds of thousands more on fires. Saskatchewan is too, and B.C. and we’re not immune. This drought is long and deep and we have to manage that.”