GNWT pays (some of) your power bill, prepares to borrow big

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Yellowknife, NWT – “We’re just hoping there are going to be no more unforeseen, big expenses like this.”

That’s what GNWT finance minister Michael Miltenberger told Moose FM as he signed a cheque for $20m, which means northern residents will avoid a threatened 13% increase in power rates.

Low water levels mean power supplier NTPC must rely on diesel to replace hydro, but now the Government of the Northwest Territories is meeting $20m in costs which would otherwise have fallen on consumers.

“We have the highest power rates in the country and this particular rate increase, on top of all the other ones, would have been too big a burden to expect people to bear at this time,” said Miltenberger on Friday.

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‘We were all under pressure’

But where, after a fire season which hit the GNWT with a surplus $50m outlay, will this $20m come from?

“We’re going to take it out of our short-term borrowing,” explained Miltenberger. “We still have the flexibility to do that, even though it’s getting very stretched.”

That’s one way of putting it, says Range Lake MLA Daryl Dolynny, who feels very little consultation took place for such a big spending decision.

“It’s a $20m decision. We should probably have had some debate around it,” said Dolynny.

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“We have no idea how this $20m is going to fit in our fiscal strategy, and we don’t have a lot of wriggle room.

“We only had a $100m buffer to our borrowing limit and we know, very well, that buffer was almost eaten up in its entirety with the fire suppression season. Now, potentially, with this levy coverage, we’ve eaten up that so-called safety.”

Miltenberger says he offered as much consultation time as was possible. “We were all under pressure in this. This wasn’t something that was open for a long, leisurely discussion,” he said.

City saves $700,000

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Not everyone in government is a financial loser here.

Mark Heyck, the mayor of Yellowknife, had been preparing to write off hundreds of thousands of dollars in additional power costs.

Now, the GNWT’s $20m payout means the city won’t have to pay the increased rates. Back comes that money.

“It would have had a major impact both on the city’s budget and on the community as a whole,” Heyck told Moose FM.

“For us alone, in terms of municipal operations, we would have been looking at almost $700,000 in extra expenditures next year just to cover that.”

Some of that $700,000 would have found its way to you, the Yellowknife resident, in the form of taxes farther down the line.

“Just on the facilities side of power – traffic lights and things like that – that would have equated to about a 1.27% tax increase,” said Heyck. “On the water and sewer side, it would have hit user fees to the tune of almost 5%.”

Digging out $20m each winter to subsidize power generation is not, the GNWT admits, a sustainable long-term policy. So what could the solution look like?

For a long time, government ambitions lay south: connecting up to the Taltson hydro facility and then on to the southern provinces.

Now, Miltenberger says that option is prohibitively expensive.

Focus on generation

“We’ve spent 18 months doing the cost estimates, and those estimates came in considerably higher than the initial estimates,” he said. “Somewhere in the neighborhood of $1.2bn. That high price has taken it off our priority list.

“We have to focus on the other area of opportunity, which is the area of generation – especially in places like Yellowknife, where now we’re relying far too much on diesel, resulting in a $20m cost to northerners.

“We’re looking at putting several hundred million dollars into conservation, into generation issues tied to solar, wind, biomass, and we’ll take a look at liquid natural gas to see if that proves out.”

Heyck, however, wants the GNWT to keep exploring a connection to the southern grid.

“I think that’s perhaps one of the long-term solutions we need to be looking at,” said Heyck.

“I also think that gives the territorial government the ability to look south and look to Alberta or Saskatchewan to perhaps export power to southern provinces.

“It’s a massive project, something of that magnitude, but it’s something that affects the whole economy of the Northwest Territories. Even the diamond mines, right now, have to truck in diesel to supply power to their operations.

“I think there’s a longer-term opportunity. The city would have to do its own analysis but we’d likely be supportive of the GNWT trying to build the territory that way.”

‘Can we afford this?’

No matter what the solution, cash will be needed. The GNWT is looking to the federal government to increase its debt ceiling by a full billion dollars, from $800m to $1.8bn. That equates to roughly $45,000 per Northwest Territories resident.

“If we don’t get an increase then we’re not going to be able to make the critical investments we need to our infrastructure, to deal with the broader issues of energy and the cost of living,” said Miltenberger.

“This is a fundamental economic activity and we need the capacity to do that. We have the ability, we just have to conclude our discussions with the federal government.”

For Dolynny, that’s a large amount of money resting on the shoulders of comparatively few people.

“Can we afford another billion dollars of debt?” He asked.

“I think a lot of us have a hard time understanding how we’re going to do this.”

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