The Northwest Territories will borrow almost $30 million to once again cover the costs of diesel through the winter, as water levels run at record lows.
The territory’s ability to generate power through hydro has been severely affected as a consequence.
At a news conference on Wednesday, Premier Bob McLeod said the government was opening its chequebook “to ensure residents are shielded from factors outside our control”.
Last year, the territory did the same thing to the tune of $20 million. This year’s deal, in the face of territorial expenditure outstripping revenue growth, is subject to approval in the legislature.
According to finance minister Michael Miltenberger, residents would face increases of up to 25 percent over two years in their power bills without this government intervention – which leaves around $400 million of the territory’s debt cushion remaining.
Miltenberger said the time may have come for the territory consider the creation of a dedicated fund for future “extreme weather events”.
According to the territory’s figures, diesel use in the North Slave has increased 12 percent in a year – now forming 36 percent of power generation in the region. Hydro generation across the territory has fallen from 75 percent to 61 percent in that time.
“Water levels continue to be at record lows,” said McLeod. “We only have two options: either the GNWT makes up the difference or power rates for all NWT residents increase.
“While our financial resources are already strained, we do not believe passing on those additional costs to our residents makes sense.
“Severe droughts usually take more than one year to recover, but we did not know the extent to which this drought has persisted.”
The $29.7 million payment is split into around $22 million to cover diesel costs for the remainder of this fiscal year, then roughly a further $7 million up to July 2016. The Premier says those figures are based on a ‘conservative’ estimate of fuel costs – if prices remain suppressed, as they are at present, the total cost may be closer to $23 million.
As McLeod admitted “this is not sustainable for the long term”, Miltenberger said the territory would, as a matter of urgency, now seek alternative solutions.
“We are prepared to invest significant amounts of money on alternative energy,” he added, listing solar and wind as two options.
“Yellowknife is a particularly compelling, urgent case. We don’t have the luxury any more of looking, thinking and studying things for three or four years.
“We know we’re going to do something and we want to be able to first gauge interest, potential and cost, and then start working on where we would go.”
‘The North is on the vanguard’
One potential project is a 10-megawatt battery that, according to Miltenberger, “would give us a 15-minute cushion to absorb the effect of any outage and allow the diesel backup to come on if there’s an interruption to the system”.
Miltenberger also noted that major parties in the coming federal election have promised to invest money in solutions to the problem the NWT is facing.
“Some of the federal parties – the Liberals and the NDP, I’m not so sure about the Conservatives – have promised considerable amounts of money for green and alternative energy,” he said.
“We would see ourselves trying to take advantage of that, recognizing that the North is on the vanguard in terms of dealing with these types of extreme weather events.
“We recognize we’re going to need to look at all our costs that are driving us. These big-ticket items – if they become the new norm – we’re going to talk about if we set up a special fund. That would have to be considered.”
This story was updated shortly after publication to reflect that the figure is closer to $30 million, not $29 million, when rounded.