Northern energy corporations seek rate relief

July 25, 2012

The three territorial Crown-owned energy suppliers operate very different energy production and distribution systems over a vast area.  Each company is in the midst of a general rate application.

• Qilliq Energy Corporation (QEC) serves 12,800 customers in Nunavut. It produces all its energy from imported diesel fuel. It plant is for the most part quite old and decrepit.  The Minister Responsible for QEC authorized an increase in base rates of 18.88% effective April 1, 2011, to all rate classes. QEC’s rates are the highest in Canada. Phase II of the GRA, now underway, will determine how the new base rates will be applied across the different rate classes and communities. QEC is unique in that the power rates in each community reflect the true cost of production, ie. there are no levelized rates. QEC plans to move towards rate levelization.
• Northwest Territories Power Corporation (NTPC) serves a population of 43,000 in the NWT, but the company does not indicate its customer base. It has a mixture of diesel and hydro assets. NTPC seeks increase all energy charges for all customer classes, in all communities, except Norman Wells, by 7%; and for interim rates to increase all energy charges for all customer classes in Norman Wells by 15%. Specifically, the proposed increases are approximately 7% per year for most customers for the first three years and approximately 5% in the final year (2015/16). NTPC has 4 rate classes and proposes to reduce these to three.
• Yukon Energy Corporation (YEC) serves about 14,000 customers in the Yukon from an isolated hydro grid, with diesel back-up in each community.  The corporation has asked for a 6.4 percent increase for all customer classes (residential, commercial, industrial and government) in 2012 and an additional 6.5 percent raise in 2013. YEC has levelized rates—customers pay the same no matter which community they live in. (Yukon Electrical Company Limited distributes most of the the electrical energy for YEC).

NTPC and YEC are in the midst of a regulatory review process with their respective utility boards. Both are seeking interim rate relief.

 

Commentary

There are a variety of reasons for the rate increase requests: Inflation, the need for capital investment, unexpected growth, unforeseen cost increases, depreciation, etc.

Sources

• a)http://www.nunavutpower.com/home/index.php?option=com_content&task=view&id=75



• b)http://www.ntpc.com/documents/GRAInterimRateApplication2012.PDF



• c)http://yukonutilitiesboard.yk.ca/pdf/1338_YEC%202012_2013%20GRA%20FINAL_2012%2004%2027%20Tabs%201-11.pdf