Gra update: final decision on rates by the public utilities board (March 31, 2023)
On March 31, 2023, the NWT Public Utilities Board issued its final decision on NTPC's 2022-23 General Rate Application. New rates based on this decision will come into effect on May 1, 2023.
Follow this link to read the final decision.
GRA Update: Submission of Compliance Filing to Public Utilities Board (February 17, 2023)
Summary
As part of it’s General Rate Application (GRA), NTPC was required to submit a Compliance Filing to the NWT Public Utilities Board (PUB) incorporating eight directives which the PUB had previously issued. The Compliance Filing, which was submitted to the PUB on Friday, February 17, 2023, includes new proposed rates that have been developed after implementing the PUB directives.
The PUB will review and approve NTPCs compliance filing before any rate increases come into effect.
Background
On January 18, 2023, the PUB issued its decision on NTPC’s General Rate Application (GRA). The PUB Decision included eight directives to NTPC that needed to be incorporated into a Compliance Filing. A link to the Decision can be found here.
Based on implementation of those directives, NTPC was required to propose new rates for all rate zones. The filing was submitted to the PUB on February 17, 2023. A link to the Compliance Filing can be found here.
Among the directives provided to NTPC were the following:
- Removal of the Behchoko EV Charging Station from rates
- Removal of 50% of NTPC’s Pole Replacement Program
- Removal of costs & insurance proceeds from the Snare Forks Unit 1 overhaul
- Revised depreciation & revised interest expense on capital leases
- Revised capitalization on Human Resource salaries
- The cost savings from wind generation in Inuvik are to solely be applied to the Thermal Zone
As a result of these requirements, the rates included in the original GRA have been adjusted. After implementing the PUB directives, NTPC’s compliance filing proposes the following rate increases to ensure NTPC receives the revenue required to deliver electricity to its customers:
NTPC has also filed an application for a revenue shortfall rider to recover revenue owed for power used by customers in 2022-23 that did not have the PUB approved rates applied. The shortfall rider will provide NTPC with revenue it has already earned but which has not been collected from customers. However, there will be a lag between when the rates have received PUB approval and when customers utilized the power. The rider will allow NTPC to collect approximately $1M owing from customers for the 2022-23 fiscal year. The rider will be in place for 12 months.
The PUB will have to review and approve NTPCs compliance filing before any rate increases come into effect. Information about the process as well as all documentation related to the GRA can be found on the PUB website.
Background on General Rate Application submitted on March 30, 2022
NTPC has filed a General Rate Application (GRA) with the NWT Public Utilities Board (PUB). The GRA is required because revenue collected from customers is not currently sufficient to cover the cost of delivering electricity. The PUB ensures that electricity customers are protected from unreasonable rate increases. To reduce the impact on customers, NTPC has requested that any approved rate increase be phased in over two years.
Current rates are not producing sufficient revenue to cover the cost of delivering electricity to customers. To address this situation, a revenue increase of approximately seven percent is required. The GRA proposes that rates in the Snare and Thermal Zones increase by 2.5% in each of the next two years. In Norman Wells and the Taltson Zone, rates must increase by 10% in each of the next two years. These larger increases are necessary because of local or regional factors.
The rate increase in the Snare and Thermal Zones and Norman Wells will be offset by the Territorial Power Support Program (TPSP). Customers in NTPC communities in the Taltson Zone have the lowest rates in the NWT and therefore don’t qualify for the TPSP. However, rates have not been covering the cost of delivering power for many years. Even after the increase, Fort Smith and Fort Resolution rates will remain lower than other communities in the NWT and below the TPSP rate. Information about the TPSP can be found below.
The table below illustrates the impact on an average residential customer who uses 1000 kilowatt hours a month during the winter, before and after the TPSP is applied.
Throughout 2022, the PUB oversaw a process to review the costs identified by NTPC to determine whether the rate increases proposed in the GRA were appropriate. Members of the public, including local governments, business groups and individuals participated in this process. For information on how to register as an intervenor, follow this link to the PUB website. The website also provides further information about how the GRA process works and the role of the PUB in setting electricity rates.
On January 18, 2023, the PUB issued its decision on the GRA. The decision can be found here.
Electricity rates are based on the costs that are necessary to deliver power to customers, including the cost to replace or refurbish assets such as hydro units, diesel generators and power poles. Utilities are also permitted to earn a reasonable profit, which may be built into rates.
Over the past several years, the Government of the Northwest Territories (GNWT), the sole shareholder of NTPC, has foregone dividends as part of its efforts to keep the cost of electricity as low as possible. The GNWT also helps to keep rates low across the NWT through the TPSP. This program ensures that all NWT households can, with modest energy saving efforts, pay the same power rate as Yellowknife. The GNWT subsidizes the difference between local rates and Yellowknife rates up to 1000 kilowatt hours in the winter and up to 600 kilowatt hours the rest of the year. This program represents a cost to the GNWT of several million dollars annually.
NTPC is required to operate on a self-sustaining basis – rates collected must be sufficient to pay for the cost of delivering electricity to customers. NTPC has worked very hard to keep rates as low as possible while providing reliable service and investing in new and refurbished assets such as hydro units, local power plants, transmission lines and power poles.
The key factors impacting the cost of electricity include:
- Sales are declining – the assets used to provide electricity service are not easily downsized when sales decline so the cost of the infrastructure is unchanged but there are fewer sales over which to spread the cost. Operation and maintenance costs also do not decline significantly.
- Aging infrastructure – costs to maintain assets increase as they get older and there is a need to invest in refurbishment and/or replacement of critical assets (hydroelectric plants, thermal plants, transmission lines, etc.)
- Lack of new industrial sales to offset declining residential sales
- Climate change – extreme weather events (e.g., lightning, flooding, forest fires, high winds, temperature extremes) and receding permafrost
- Fluctuating fuel prices
- Inflation
- Interest and amortization (cost to repay loans used to pay for capital projects)
- Federal funding support for necessary refurbishments and plant replacements has helped minimize the costs that must be recovered from customers.
NTPC is committed to maintaining and improving the reliability of electricity service in the communities it serves. This requires the Corporation to not only invest in refurbishment and replacement of assets but also to financially commit to a comprehensive preventive maintenance program, including the repair and replacement of parts when required and the associated labour costs.
NTPC has also initiated work to develop electricity sales, whether to supply industry or to support electrification of transportation. If successful, these steps to increase electricity load will help stabilize electricity rates for all Northerners.
Links
Throughout the GRA process, this page will be updated to include links to key documents so that interested parties have access to the information you require.