NTPC ordered to pay $48K monthly to Naka Power for use of Hay River transmission line

The N.W.T.'s public utilities board has ordered the Northwest Territories Power Corporation (NTPC) to start paying Naka Power $48,500 per month to use a transmission line in the Hay River area, starting March 1.

That's when NTPC is set to take over power distribution for Hay River from Naka, a change that includes the sale of assets. Naka Power will retain ownership of the transmission line that delivers power to the town.

The cost for NTPC to use that transmission line is part of an ongoing hearing between the two companies. In the meantime, Naka will begin collecting some of the costs through a revenue offset designed to help shelter its remaining customers from rate shock as a result of losing its Hay River customer base.

The approved offset is about half of the $98,000 per month Naka had asked the board to approve.

Jay Massie, northern development vice-president for Naka Power, said the offset is also meant to ensure there's not a huge cost recovery required by the time the utility board makes a decision.

"The point of the revenue offset is to continue to charge very similar rates that customers had been charged before for that transmission line," said Massie.

When the transfer happens, Naka will no longer have customers within the Hay River town boundaries. Massie said the company will continue to serve around 700 customers in the Taltson Zone. That includes communities such as Fort Providence, Kakisa, Enterprise and Kátł'odeeche First Nation.

The interim monthly rate that NTPC pays will continue until a decision is made by the public utilities board on Naka Power's general rate application. Massie said a hearing should be done in the first week of April and then a month or two later the board should give its final decision on all rates.

NTPC says offset will cost customers

The board approved the partial revenue offset Friday, despite objections from NTPC and Hay River to Naka's original proposal.

On that original proposal, NTPC called the offset a "contentious item" that should not be awarded in an interim rate application, and argued it would be subsidizing customers in another zone.

"The practical effect would be that NTPC's Taltson Zone customers will pay a significant amount to Naka's Hydro Zone customers for Naka's [administrative and general] costs," the submission states.

NTPC also argued the offset would violate the N.W.T.'s electricity guideline, which states electricity rates for each utility are set on a zoned basis and each interconnected system served primarily by hydro should form a zone.

"NTPC's Taltson Zone and Naka's Hydro Zone are recognized as two separate zones in the guideline. Naka cannot simply combine these two zones operated by different utilities for the purposes of rate setting and cross subsidization between the utilities," the power corporation stated.

In an email to CBC News, NTPC manager of communications Doug Prendergast said it would be inappropriate for the company to publicly comment on the matter at this time. He noted NTPC is also in the midst of its own general rate application before the board.

"We are also an intervenor in the Naka Power [general rate application] process. We will continue to express our disagreement with Naka Power's proposed transmission wheeling approach within the structure of the quasi-judicial [utility board] review process," Prendergast wrote.

In its decision Friday, the utility board wrote that the revenue offset still wouldn't be enough to stop Naka's remaining customers from seeing their rates go up.

It said setting the transmission fees to zero for the interim, as NTPC and Hay River had both suggested, could lead to "very significant" rate increases if other measures weren't taken.

One rate for all?

Massie said when looking at the revenue offset, they considered the two zones as one entire Taltson zone, and since customers are getting the same electricity the same way in Hay River, rates shouldn't differ too much from what they were before.

"We've proposed rate reform. So not only for that zone, but for all the N.W.T.," said Massie.

He said they've been asking the territory to look at adopting one rate for the entire N.W.T.

"One rate that supports customers in these small communities. And so that's our concern, once this is done, the 740 customers that we have left are in pretty small communities. We really believe they should be supported also, and this rate reform is one way to do that," said Massie.

In December, the N.W.T. government announced a $48-million subsidy for NTPC to offset its proposed power rate increases. Massie said rate reform would allow all customers, regardless of which utility serves them, to access that support.

Massie added that other jurisdictions such as Manitoba and Quebec use a single-rate type of system.

Currently, there are seven zones in the N.W.T. 

Massie said that makes for a complicated revenue structure for the territory. 

"It can really be simplified down and that'll lead to some cost efficiencies for everybody," said Massie.

Massie said they presented this idea to the standing committee on government operations in December, but further engagement is still needed with the government, NTPC and the public utilities board.