GNWT absorbing electrical rate hike exposes larger issue

The public response to the late-September announcement that the Government of the Northwest Territories would pay $20 million to cover a power rate hike was unsurprisingly positive. In the super-expensive North, who wants to pay more for power?

But the move is also the equivalent of a student council president offering free hot dogs to the student body every Friday. Sure, it’s within your power to make happen, and no doubt people will like it, but should you?

The GNWT argues the move is about being part of the solution to lowering the cost of living for people who live here. If that’s the case, this is far from a sustainable way to make that happen.

Instead, it’s an expensive, convenient decision that throws a borrowed $20 million at a problem caused by an unfortunate lack of rain this past summer. Along with the bad practice of borrowing to pay for the operating costs of an arms-length utility, it also brings into focus the Northwest Territories’ lack of meaningful long-term energy investment.

Assuming an average household usage of 1,000 kWh/month, the costs of the proposed rate increase would have been just under $40/month or less per household, or about $500/year. While significant, paying it on people’s behalf doesn’t do two things:

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  1. Solve our long-term energy problem
  2. Encourage people to use less energy

The latter issue rarely enters into energy discussions. Canadian households use nearly three times as much electricity as those in a number of other developed nations, such as Australia and the United Kingdom. Yes, it gets cold and dark up here, so we’re understandably going to be heavy electricity consumers. But there’s no reason we can’t cut our usage, even slightly, by investing in household and industrial technology designed to make it happen.

But large-scale change does not a timer on your car’s block heater bring, which is why we need alternative and renewable energy projects. I’ve often argued that no matter the price, nearly every alternative energy project becomes attractive when you stack it up against the millions blown out the window on diesel-generated power every year in so many NWT communities. Try it sometime, and it doesn’t take too many years before the payback becomes apparent.

Recent alternative and renewable energy projects in the NWT have been minimal, including a small solar installation in Fort Simpson and a number of other proposed projects, such as a geothermal project in Fort Liard and a mini-hydro project in Lutsel K’e. Then there’s the once highly touted, but now seemingly forgotten Taltson Expansion project that would have doubled the hydro output south of the lake for roughly $500 million. The last project would have been great, but the grand vision of signing purchase agreements with the mines never materialized.

Financing the significant start-up cost of even a small-scale venture is usually the problem getting from feasibility to execution. But this is really a question of political will, and if we can find a borrowed $20 million to place a band aid on a surprise cost, can’t we find the same money for projects that could bring meaningful change? Weledeh MLA Bob Bromley certainly supports the idea.

Utilities benefit enormously from economies of scale, or large user groups spreading out the cost of building, maintaining and delivering the service. With just under 44,000 people spread out over an area the size of Western Europe, providing power rates on par with southern Canada would require a miracle. And given our remote location, we’re especially vulnerable to spikes in fossil-fuel prices over the coming decades.

If our elected officials continue to eschew long-term thinking, once the money’s spent, we’re no closer to a solution. And if we’re going to borrow to offset the cost of energy, let’s use it for a meaningful investment, not an unexpected cost overrun in the year before an election.


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