Here's why the N.W.T Power Corp. wants to hike power rates, again

The Northwest Territories Power Corporation says it wants to hike power rates to pay for upgrading aging generators, adding a new customer service division, hiring 12 new full-time employees, and rising operation costs and inflation.

In its most recent General Rate Application, the Power Corp proposes a 4.8 per cent hike for the first year, and a fourper cent increase each for both the second and third years. That's a total of 12.8 per cent over the next three years.

Its last general rate application in 2012 resulted in a 28.4 per cent increase spread over four years.

An interim rate increase applicationfor this yearwas recently rejected by the Public Utilities Board, butthe Power Corp isagainrequesting aninterim rate hike for this year, to start as early as Aug.1.

The Public Utilities Boardis expected to approve or denythegeneral rateapplication in 2017.

• N.W.T. Power Corp. didn't make convincing case for higher bills, says regulator

In a letter that accompanies its application, the Power Corp. says it needs to cover increasing costs for infrastructure replacement and other maintenance work.

"Aging infrastructure is really big, and it's affecting costs across the country," says Pam Coulter, spokesperson for the Power Corporation.

It's mainly generators and some buildings they need to fix and some of the equipment is as old as 40 years, she says.

"When they reach a certain point, it needs to be done. If it doesn't we're putting the power at risk," she says.

Coulter says the Power Corp. will now focus more on preventing breakages and outages, which is "cheaper in the long-run than emergency repairs."

But Mike Bradshaw, executive director of N.W.T. Chamber of Commerce, says paying for infrastructure shouldn't immediately drive up power rates for customers since large infrastructure purchase payments would be distributed over time through a process of amortization taking anywhere between 20 to 50 years.

"So I'm not sure why it would be suggested why capital investments [or paying for infrastructure] would drive these rate increases," he said.

A new 1-800 number

The corporation says it's also adding 12 new full-time employees.

"They are necessary," says Coulter.

She says the Power Corp. felt the need to provide more "responsive, efficient, readily available" customer service to the territory's residents.

"We understand that we're using our ratepayers' funds," she says, but that this new service desk is necessary to "improve and be more efficient in our work."

The new customer service division will include three new full-time employees who will be in charge of a new 1-800 service line in a virtual call centre.

Other new positions include hires for developmental and finance work, a position to work the new computer management system, and regional superintendents in small communities will have increased hours. The corporation is also introducing a summer student program next year, hiring 22 new students to work in remote communities.

"It will strengthen our next generation of employees," says Coulter.

Bradshaw says additional employees is justifiable, considering the size of the Power Corporation's workforce.

"When you have a blizzard, you've got to do everything to get back on its feet. And they do it with less than 200 employees," says Bradshaw.

"And when you think of the geography they manage, that's a pretty phenomenal story."

Operation costs to increase by $5 million

The corporation says its operation costs will increase by $5 million in the next three years. Although the cost of diesel fuel is projected to go down, the corporation says the cost increase will be due to inflation, decrease in power sales, increase in salaries in wages, and the improvements it will do in health and safety systems, human resources, and preventative maintenance.

But Coulter says the public will benefit from getting more reliable power, better customer service and fewer power outages.Coulter saysthe Power Corp. doesn't make a profit from supplyingthe territory's power.

"Our employees are also residents of the community and we all pay the same rates."

Bradshaw says that considering the small population size of the territory, high power rates are unavoidable.

"Everyone has to pick up a bigger share of the overall cost. So that's what happens when you have a small market. Everyone's costs are high."