The head of the largest power provider in the territory is accusing the GNWT of planning to expropriate their assets while manipulating power pricing to win contracts.
These blistering accusations from Northland Utilities’ vice-president of Northern Development, Doug Tenney, were delivered yesterday in the Legislative Assembly to non-government MLAs on the Standing Committee of Priorities and Planning.
“Let’s call it for what it is. We’re not blind to what’s really going on and what their real energy agenda is about,” said an impassioned Tenney. “This government has made it abundantly clear that it hopes to expropriate Northland Utility, effectively removing a longstanding private investor with longstanding First Nations ownership.” (Denendeh Investments Incorporated owns 14 percent of NUL; they signed an MOU last year to acquire a 50 percent stake in the company, but the transaction has not been completed.)
“There is a process and it’s not expropriation. It’s negotiation, then arbitration; I wouldn’t consider that expropriation at all.” – Lou Sebert
The idea that the GNWT wants to expropriate NUL’s assets in Hay River — where NTPC recently won the power distribution contract after promising prices would be 20 percent lower than those NUL had been offering — was flatly denied by NTPC minister Lou Sebert.
“There is a process and it’s not expropriation. It’s negotiation, then arbitration; I wouldn’t consider that expropriation at all,” Sebert told EDGE on Friday morning.
From Tenney’s perspective, the competition has been rigged from the get-go: the GNWT has the power to lower prices in certain communities by raising rates in other communities, he says; furthermore, NTPC (which produces electricity at the Taltson Dam) has continually overcharged NUL for that power, by upwards of 30 percent, he alleges — a cost which NUL then had to pass on to their Hay River customers.
“The government has manipulated electricity rates and overcharged Northland… only to turn around now and promise lower rates on the backs of others,” he says.
Tenney made it clear that his company will not willingly sell their Hay River assets and the process will have to move to arbitration. He estimates NUL’s Hay River infrastructure — transmission lines above and below ground, poles, meters — is worth roughly $12 million, though he did not give an exact figure, saying it would be up to the arbiters to determine this.
Time for a third party?
At the core of his presentation was a plea for government to postpone the NTPC’s takeover of the Hay River contract — scheduled for the end of November — until a third-party study can be completed examining a potential partnership or merger between NUL and NTPC.
“Why would the government want to push out a company with decades of experience building transmission, distribution, hydro-electric and natural gas infrastructure?” he asked. “We have the access to capital and the technical expertise to work alongside the government of the Northwest Territories to unlock the vast potential of the territory’s energy resources.”
His plea, however, seems to have fallen on deaf ears. When questioned about it, Sebert called the idea “a rather radical proposition being put to us rather late in the day,” although he added that “we haven’t had a chance to consider it at all, so I can’t really comment on it.”
Northland without the North?
Although Tenney doubtless has reason to overplay the impact of losing the Hay River contract to attract MLA’s sympathy, the picture he paints is stark. If the government does not change its power strategy, he says, there’s a good chance NUL will leave the territory within the next five years. This, he says, could cost the GNWT $180 million, the amount he claims NUL’s total infrastructure across the territory is worth.
“Over the next three years Yellowknifers will continue to be overcharged by the government until the [NUL] franchise agreement runs out,” Tenney claims.
(NUL has the Yellowknife distribution contract, but Tenney asserts that about 75 percent of what Yellowknifers pay for power comes from power generation and transmission costs set by NTPC before they sell the electricity on to NUL).
“Then the government will, under the guise of another competitive process, promise lower rates to Yellowknife regardless of what it costs them to provide the electricity,” he says, warning that after several years of low prices, NTPC could sharply raise the cost to consumers. “Ultimately, Northland Utilities will be nothing but a memory.”
“But why wait?” he asked. “If this is really the path the government decides to pursue, just do it today. Pay us out the $180 million it’s going cost to expropriate Northlands, and we will take our investment elsewhere.”
Interviewed after the presentation, Tenney softened his language somewhat, admitting that his company has “no exit plan.” But he maintains: “it’s pretty tough if you’re not wanted in a community by a government and the government holds all the cards.
“I suspect we have a franchise in Yellowknife that lasts until the end of 2020,” he continued, “but that will be a pretty tough slugging three or four years, where we could end up with all kinds of things the government could impose on us.”
Would NTPC actually be ready and willing to take over the Yellowknife contract in 2020?
Here’s what Sebert had to say: “I’m not certain whether they are even contemplating that. That would largely be up to the City of Yellowknife… It’s three years down the road. Lots of things can happen. We may or may not be in a position to do that, if it does come up. But again that’s up to City of Yellowknife.”
Perhaps, Tenney’s most radical claim was that the government was planning to disband the Public Utilities Board, after already moving NTPC closer to the government by firing the independent board of directors and appointing deputy ministers instead. This, again, was denied by Sebert.
“That’s simply not true,” Sebert says. “The Public Utilities Board has been active for many years, and it’s simply part of the process, there’s no plans to dissolve it.”
For more on this story, read Not So Fast: Hay River Power Struggle To Continue