What is a GRA?
GRA stands for General Rate Application. It is the process by which NTPC applies to the NWT Public Utilities Board (PUB) to change how much customers pay for power or make other changes to the way NTPC conducts business.
The current GRA is requesting an increase in what customers pay for power to make sure that NTPC’s revenue covers the cost of producing and delivering the power to customers.
Why would you submit a GRA now, just as pandemic restrictions are being lifted?
NTPC recognizes that the pandemic has been financially challenging for many of its customers. Submission of a GRA was delayed for a year in acknowledgement of the economic impact of the COVID-19 pandemic as well as the logistical challenges, such as public health orders, that would have made the review process difficult.
During the pandemic, many of NTPC’s costs continued to rise and revenue from current rates is insufficient for NTPC to meet its costs to deliver electricity to its customers. There has been no rate increase since 2019.
What is an interim rate?
Interim rates are PUB approved rates that allow a utility to charge a specific rate while it goes through the GRA process. Interim rates help ensure that the utility can begin recovering costs sooner, which helps spread rate increases over a longer period.
How can I become involved in this GRA?
The GRA process is open and transparent and public involvement is encouraged.
The first step is to register with the PUB as an intervenor. Intervenors are interested parties who receive copies of the application and all written questions and answers.
Intervenors may take an active role in the hearing process, or they may choose not to actively participate. As a registered intervenor, you will receive all formal documentation related to the GRA.
Once registered, intervenors can submit written questions, give evidence, call expert witnesses, and cross-examine NTPC. In return, NTPC, as well as other intervenors, are given the opportunity to cross-examine the intervenor and/or the intervenor's expert witnesses.
More information can be found on the PUB website (www.NWTpublicutilitiesboard.com).
Why are rates going up?
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:
- 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)
- Lack of new industrial sales
- Climate change – extreme weather events (e.g., lightning, flooding, forest fires, high winds, temperature extremes) and receding permafrost.
- Fluctuating fuel prices.
- Interest and amortization.
Federal funding support for necessary refurbishments and plant replacements has helped minimize the rate increase. Projects that would otherwise been fully funded through electricity rates that are receiving federal support include:
- Overhaul of Snare Forks Units 1 and 2
- Overhaul of Taltson Hydro
- New diesel plant in Sachs Harbour
- New diesel plant in Lutselk’e
- New LNG plant in Fort Simpson
- Inuvik Wind
How does NTPC expect customers to be able to afford ongoing rate increases?
NTPC is aware that residents of the Northwest Territories are concerned about the cost of living, including the cost of electricity rates. NTPC is committed to keeping costs and rates as low as possible and recognizes that electricity rates contribute to the high cost of living in the North. However, NTPC is required to recover its costs through rates – it is how we ensure that the people who use power are the ones who pay for it. Future generations should not be left responsible for paying what people use today.
The installation of Intelligent Meter Hubs in most communities provides customers with information that can help them monitor their electricity consumption and identify opportunities to reduce consumption and lower their bills. Information about conservation measures can be found on NTPC’s website or through the Arctic Energy Alliance.
Through its Territorial Power Support Program (TPSP), the GNWT also helps residential customers to keep their rates down by subsidizing electricity rates in communities with rates higher than those in Yellowknife. Further information on the TPSP can be found below.
Will we ever see rates go down or at least remain the same for several years?
NTPC has developed a long-term Strategic Plan that commits the organization to reducing the gap between residential electricity rates in the NWT and the Canadian national average.
Customers should not expect to see lower rates in the future but rate increases are expected to be smaller as key elements of our Strategic Plan are executed. Lower rates would be exceedingly difficult to achieve, based on current cost pressures and economic growth forecasts.
Although capital costs will be lower in the future, borrowed funds to complete refurbishment projects over the next several years will require repayment. Without significant population or economic growth, residential sales are unlikely to increase.
Increasing the number of industrial customers, or generally selling more electricity, would help offset other pressures that lead to rate increases. NTPC will continue with its efforts to increase its customer base, as well as identify operating efficiencies and cost saving opportunities within the Corporation to stabilize electricity costs. However, access to affordable electricity is one of many decision points for new mines and other factors such as proven reserves, regulatory permitting and financing have a greater impact on the potential for new mining operations.
What is the Territorial Power Support Program (TPSP)?
The Government of the Northwest Territories established the TPSP to ensure that all NWT households can, with modest energy saving efforts, pay the same low power rate as households in Yellowknife. From September 1 to March 31, residential customers only pay the Yellowknife rate on the first 1000 kilowatt hours (kWh) of power that they consume. After 1000 kWh, each additional kilowatt hour is charged at the rate established for the Zone in which their account is located. From April 1 to August 31, residential customers only pay the Yellowknife rate on the first 600 kilowatt hours (kWh) that they consume. After 600 kWh, each additional kilowatt hour is charged at the rate established for the Zone in which their account is located.
The TPSP does not apply to businesses or to residential customers in zones where rates are below the Yellowknife rate.
What impact will a rate increase have on customers who qualify for the TPSP?
The Government of the Northwest Territories established the Territorial Power Support Program (TPSP) to ensure that all NWT households can, with modest energy saving efforts, pay the same power rate as households in Yellowknife.
For most residential customers in NWT, the increase to their bill will be 3.5% over two years after TPSP, or 1% per year on average since 2019. This is well below inflation and the rate increases being proposed are consistent with electricity rate increases in other parts of the country.
Residential customers in small communities will continue to be subsidized to the Yellowknife residential rate for the first 1000 kilowatt hours in winter months and the first 600 kilowatt hours during other periods of the year.
Residential customers in the Snare and Thermal zones who use less than 1000 kWh/month in the winter or 600 kWh/month at other times of the year will see their bill increase by approximately 3.5% over the next two years.
Residential customers in Norman Wells who use less than 1000 kWh/month in the winter or 600 kWh/month at other times of the year will see their bill increase by approximately 3.5% over the next two years.
Residential customers in Fort Smith and Fort Resolution do not qualify for the TPSP. Customers in those communities have the lowest rates in the NWT but 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.
Residential customers who receive their electricity through Northland Utilities (Hay River and Yellowknife) will see increases of 3.7% and 3.5% respectively.
In dollars and cents, how much will monthly bills go up?
An average residential customer in the Snare and Thermal Zones will see an increase in their monthly bill of approximately $11.50 after the TPSP is applied.
An average residential customer in Norman Wells will see an increase in their monthly bill of approximately $11.50 after the TPSP is applied.
An average residential customer in Fort Smith or Fort Resolution will see an increase in their monthly bill of approximately $55.00.
Does the addition of more renewables help decrease rates or do they contribute to higher rates?
Large scale renewable projects owned by NTPC but paid for by the federal government and/or the GNWT help reduce the amount of expensive diesel that must be consumed to generate electricity – this helps reduce NTPC’s operating costs and keeps rates lower.
Programs such as Net Metering and other self-generation projects help to reduce greenhouse gas emissions (GHG) but also reduce NTPC’s electricity sales and increase costs for the remaining customer base.
In 2021, the GNWT released a study to estimate the effects of current Net-metering and self-generation policy on utility revenues and GHG emissions. The GNWT is considering changes to Net Metering and self-generation policies to reduce the impact of renewable energy projects on rate increases in the future.
Can you explain how renewables push rates up when they push diesel consumption down?
Replacing diesel generation with renewable generation can have both financial and environmental benefits.
Financial benefits are maximized when capital costs to build renewable facilities (solar arrays, wind turbines) are fully covered by third parties, such as the federal or territorial governments. In these situations, capital costs do not have to be recovered through rates as NTPC does not incur capital costs.
When third parties do not help offset the cost of investment, renewables are a higher cost option and difficult to justify when compared to the cost of diesel generation.
The addition of renewables to an electricity system can also lead to an increase in maintenance costs as the cost to maintain the existing infrastructure does not decline – diesel generators, distribution lines and poles still need to be kept in good working order.
General: NTPC Expenditures
What is NTPC doing to cut costs and keep rates from continually increasing?
Rate increases cannot be the only solution to challenges facing the NWT electricity sector. NTPC has a Strategic Plan that aspires to reduce the gap between electricity rates in the NWT and the Canadian national average as well as to achieve the greenhouse gas emission reduction targets for electricity generation in diesel-powered communities as outlined in the GNWT’s 2030 Energy Strategy.
Reducing costs and increasing sales has been and will continue to be key areas of focus for NTPC. Already, increased contributions from renewable and lower cost generation sources, such as LNG, has helped offset pressures in the thermal zone. With additional support, there is room to do more.
NTPC has received significant federal and territorial government support for renewal of core infrastructure and is actively pursuing load growth opportunities in hydro zones.
The Corporation is always looking for innovative ways to implement efficiencies in controllable costs, including:
- Striving to increase electricity sales through electric heating, industrial customers and electric vehicle charging stations
- Implementing measures to reduce diesel consumption such as use of summer fuels in road communities, prioritizing engine efficiency in new purchases and signing Power Purchase Agreements with Indigenous governments and Indigenous organizations
- Using GNWT and Federal funding to help keep capital expenditures as low as possible
- Building enhanced estimating and project management capacity in the organization
- We expect to achieve greater economies of scale once we become the electricity distributor in Hay River
As subsidized renewable projects such as Inuvik Wind are commissioned, NTPC expects its generating costs to decrease further due to a reduction in the amount of expensive diesel consumed.
It is important to note that renewable projects that are not funded by other parties, such as the Government of Canada and/or the GNWT, will reduce greenhouse gas emissions but do not significantly reduce costs, if at all.
What are NTPC’s plans for building stronger relations with Indigenous organizations?
NTPC is committed to fostering strong relationships with Indigenous governments and organizations.
Among the existing relationships/partnerships:
- NTPC is a partner in Aadrii Limited with the Gwich’in Development Corporation, which owns a heat recovery system in Fort McPherson
- NTPC has a signed Power Purchase Agreement (PPA) with Nihtat Energy Ltd. for a solar array in Aklavik and are actively discussing a PPA for another solar project planned in Inuvik
- NTPC has a signed PPA with Tulita Forest Products Ltd. for a solar array in Tulita
- NTPC has a signed letter of intent with the Denesoline Corporation to purchase low carbon electricity produced by a proposed project in Lutselk’e
- NTPC has a long-term agreement to operate the Snare Cascades hydro facility on behalf of the Dogrib Power Corporation
NTPC consults frequently with Indigenous governments and organizations as part of land use permitting and water licensing.