Northern News Services
Wednesday, May 09, 2007
YELLOWKNIFE - A proposal to increase the price of electricity in the North has the mayor and the Yellowknife Chamber of Commerce crying foul.
"We oppose the increase," said Mayor Gord Van Tighem, who expects it to add five per cent to the city's annual operating expenses. "Our main issue is to ensure the (Northwest Territories) Power Corporation (NTPC) is providing services at the most economical rate and that it is able to justify any increases."
If NTPC gets its way, a 12 per cent interim electricity price increase approved last December would become permanent and could even increase by an additional two p er cent.
In the general rate application before the Public Utilities Board (PUB), NTPC says it needed to make $79.9 million for 2006/2007 and will need $84.3 million next year - up from the $65.5 million it has been operating with since 2002/2003. That was the last time the Power Corporation received approval for a revenue adjustment.
A 60 per cent increase in diesel prices since 2001, difficulties retaining employees in a tight labour market, federal changes affecting NTPC's pension fund and overall inflation make the general rate application necessary, according to the power corporation.
If approved, the second phase will determine how this additional revenue will be collected, which will likely entail an increase in electricity prices.
Already, an interim rate rider has increased the price of electricity for Yellowknife residents to 20.91 cents a kilowatt-hour from 18.22 cents.
Though NTPC bases its rates on the cost of providing services in each community, most rely on relatively expensive diesel-generated electricity. Enter the $10 million territorial support program, augmented by $3.5 million in NTPC dividends, and all customers' rates are subsidized to Yellowknife levels.
NWT residents are subsidized up to the first 700 kilowatts used per month. Commercial customers are subsidized for up to 1,000 kilowatts per month.
Because of this subsidy, both the mayor and Yellowknife Chamber of Commerce President Jim Eriksen said the rate increase only helps NTPC maintain its profit margin on the backs of hydro communities like Yellowknife which are far cheaper to supply with power.
"All these power outages that we have here is a huge cost to businesses, equipment gets burned out, so we'd like to see if this increase will enhance NTPC service rather than simply maintaining their bottom line," said Eriksen. "We are definitely against this unless we can see some justification on how it's going to be spent."
On the issue of placing the burden on hydro communities, Terence Courtoreille, manager of financial planning for NTPC, said that opinion is "incorrect."
"The subsidy program's origin is totally under GNWT control," said Courtoreille. "We are a Crown corporation but we're still mandated to turn a profit and run our business in a profitable manner."
Public hearings for the Phase one application will be held May 23-25 at the Baker Centre, starting at 9 a.m.