Not So Fast: Hay River Power Struggle to Continue

They may have lost the battle, but the war over power distribution in Hay River is not over, says Northland Utilities (NUL).

Town councillors voted to replace the current privately-owned power distributor with the government-owned Northwest Territories Power Corporation (NTPC) Thursday night.

But NUL’s vice president of Northern development Doug Tenney says the campaign to win over the town — and the rest of the territory — is far from over.

“We don’t see this as just an issue in Hay River,” Tenney said. “Certainly, the franchise is in Hay River, and the Town of Hay River has the right to make choices, but we’ve long said picking a different service provider in Hay River isn’t going to lead to any real change in the cost structure of electricity in the Northwest Territories, so we’re going to continue to work with the government of the Northwest Territories to find a solution that would be territory-wide and lower costs and create more equitable rates across the territory, not just in Hay River.”

NUL still has a franchise agreement with the town until Nov. 30, 2016, and Tenney says the company is planning to use that time to continue its campaign, which includes the proposal for a possible public-private partnership with NTPC.

“I think we’re still in the early stages of this. I recognize there’s a letter of intent, but it’s simply that: a letter of intent. So there’s a lot of time between now and November 30,” he said. “So for me, what I think the next stages are, is I think the public will want to see what was really in the two proposals of Northlands versus NTPC so they can determine if they agree with council’s preliminary decision here.”

It’s a certainty that we won’t agree on a price because we do not want to sell our assets. So there will be an arbitration process after November 30, and the third party arbitrator will come up with the price.

If the town decides to switch over to NTPC this fall, it will have to purchase NUL’s assets — valued by the GNWT to cost $12 million. NTPC has agreed to pay for that acquisition.

Tenney says NUL will refuse to negotiate the sale of those assets, meaning the hostile transaction would have to go through third party arbitration.

“What I said last time hasn’t changed this time: we’re not for sale,” Tenney said. “It’s a certainty that we won’t agree on a price because we do not want to sell our assets. So there will be an arbitration process after November 30, and the third party arbitrator will come up with the price.”

NUL, an ATCO-owned company, had been providing electricity to the community for over 60 years when it was told by the municipality in late 2014 that the town was looking to shop elsewhere for its power in order to bring down high rates. The town issued a request for proposals last spring and received applications from both NUL and NTPC.

Despite being tied into the Taltson hydro system, Hay River residents pay almost 30 percent more per kilowatt hour for power than neighbouring communities in the South Slave. Ratepayers in Hay River pay NUL $0.31/kWh for their hydro while those in Fort Smith pay NTPC $0.21.

NUL has blamed government policy for the rate disparity, claiming Hay River is mandated to pay more for transmission costs than other communities based on location, while critics — including the former minister responsible for NTPC, Michael Miltenberger — argue that NUL is a middle man unfairly gouging residents to make a profit.

The town and NTPC released a joint statement this week claiming that customers in Hay River can expect a 20 percent drop in their overall electricity rate starting this fall, due to reductions made to distribution and backup rates.

Tenney says NUL has requested to meet with the new government, including newly appointed NTPC Minister Lou Sebert, to discuss the potential for partnership. Last assembly, when the prospect of partnering was raised, Miltenberger balked, calling it a move to privatize the territory’s Crown power corporation.

“We know there was a different cabinet and set of elected officials who were not interested in working with us [last assembly],” Tenney said. “We’re very hopeful that the new government is interested, so that remains to be seen. That’s still our goal.”

In the lead-up to last fall’s election, Sebert told EDGE he was in favour of a partnership between NTPC and NUL as a way to improve service delivery and eliminate the need for massive government subsidies.

But now wearing his minister’s hat, he says there’s no move within government to make that a reality.

“I don’t think that’s anything we’ve been looking at,” Sebert said. “Assuming this arrangement goes through in Hay River as expected, then that would leave Northlands or ATCO ultimately as the supplier of power to the residents of Yellowknife and some very small communities, so we’re not thinking of any partnership.”

Sebert said he’s confident NTPC will be able to bring down costs for ratepayers in Hay River.

“We have noticed the power rates are much lower in Fort Smith than they are in Hay River, and we’re hoping that once the franchise is taken over that the residents will be benefit,” he said. “To a large extent, it will be driven by the efficiencies of having the generator at the local provider of power being the same corporation. It will simplify things.”

As well, Sebert said the GNWT is looking internally to create efficiencies at the Power Corp., specifically by growing its customer base, which could even include shipping excess power from the Taltson dam to Saskatchewan.

“Expanding the customer base of the Power Corp. is one of the ways that costs can be brought down, because there’s a certain amount of fixed costs and more customers would make the corporation more efficient and profitable,” he said.

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