The Northwest Territories Power Corporation (NTPC) will see $25-million in annual losses by 2040 unless it pumps more money into its infrastructure and pursues large hydro transmission, and either government or ratepayers will eat the cost.
That's the message Yellowknife city council heard during a presentation by power corp. Monday.
Nonetheless, the corporation is urgently working to lower costs by cutting diesel use and expanding its industrial customer base, said Jay Grewal, president and CEO of NTPC.
"Our prime job is to keep the lights on at all times but we have to do it in an economically efficient manner," she said.
Power corp. projects the $25-million in annual losses by 2040 despite $110-million in annual revenues.
“Either rates go up or the shareholder eats that,” she said, meaning the territorial government, which owns power corp.
"The choice for (ratepayers) cannot be, 'Do I feed my family or do I pay my power bill?'" said Grewal.
The power corporation is seeking partnerships with industry, including Fortune Minerals' NICO mine, a cobalt-gold-bismuth-copper project 50 kilometres north of Whati, in hopes of reducing costs. The Tlicho all-season road, which will extend 95 kilometres north from Highway 3 to Whati, was given approvals by the responsible ministers and Tlicho Grand Chief George Mackenzie in October 2018. The highway extension will allow power corp. to extend transmission lines northward.
Power corp. is also looking to partner with Osisko Metals Inc,. which took over the Pine Point zinc project near Hay River in 2017. The project will be able to access power from NTPC's Taltson River hydro station, which the corporation would like to connect with Snare Hydro north of Great Slave Lake.
"All roads lead back to Taltson," said Grewal. "If we do not get the Taltson expansion ... Our reality will be a difficult one for all of us."
A combination of Snare, Jackfish Lake power plant and Bluefish dam supplies power to Yellowknife and Dettah but expanding Taltson is ideal, said Grewal.
"We have to develop cost-effective power solutions," said Grewal. "Without the ability to go after economies of scale ... We will not be able to achieve what we need to for all residents of the North."
The Taltson system serves the South Slave Region but is not connected to the North Slave. Connecting the two systems will address future needs, she said.
Taltson can reach a capacity of 200 megawatts but adding even 60 megawatts could improve rates, said Grewal. Right now it is rated at 18 megawatts and Snare Hydro at 30 megawatts.
Making a case for hydro expansion
The NTPC supplies power to 95 per cent of the the territory but doesn't have the requisite economies of scale to support cheaper power. Some of the highest power costs in Canada are "discouraging" residents and industry, said Grewal.
However, the corporation can only control 54 per cent of its expenses. The power corp is also facing necessary upgrades to its infrastructure.
“We cannot reduce the cost of amortizing those investments,” she said.
Andrew Stewart from the energy division for the Department of Infrastructure spoke to the benefits of a Taltson expansion, which has been on the table since 2010.
A transmission line would give clean energy access to industrial development and 70 per cent of NWT residents, said Stewart.
Industry makes up 50 per cent of the territory's greenhouse gas emissions and providing greener sources of energy will promote clean growth, he said.
The GNWT is a signatory to the Pan-Canadian Framework on Clean Growth and Climate Change, which requires it to reduce its greenhouse emissions by 30 per cent below 2005 levels by 2030.
Hydro is a proven and cost-effective power source, said Stewart.
Power rates in the North are nearly five times the Canadian average and with declining sales and continual rises in operating and maintenance costs, rates are only expected to increase.
Power rates have climbed by 31 per cent in just the past five years.
“We have to invest more to maintain the aged infrastructure that we have,” she said.
“We do not have hydro in the North. We do not have opportunity to socially or economically build hydro (in remote communities),” she said.
Coun. Steve Payne said ratepayers can adopt energy saving initiatives but aren't seeing the savings by using less power because of rate riders and user fees.
"You have us by the golden boys no matter what we do," said Payne.
Battery storage limits pursuit of renewables: Grewal
The power corporation is monitoring advancements in battery energy storage but until then renewables are considered "intermittent" sources of power, she said.
Renewables have a policy case but do not have a business case because batteries cannot store power in all conditions, said Grewal.
"Until you can store hours worth, days worth, there is no economic business case because you still have to maintain their reliability," she said.
The corporation will take up the Inuvik Wind Project to reduce 6,400 tonnes of greenhouse gas reductions.
NTPC to invest into core assets
The power corporation plans to invest $144-million in infrastructure over three years to reduce the frequency of outages from 10 to six outages per year. If it cannot maintain its hydro assets, it will be forced to rely more heavily on diesel, said Grewal.
For other remote NWT communities, with the exception of Inuvik which uses natural gas, diesel is the main source of power supply and high costs are more heavily influenced by transportation costs rather than fuel prices.
The corporation plans to cut fuel consumption by 540,000 litres and greenhouse gases by 1,568 tonnes per year. To do that, it will manage planned hydro outages, find alternative sources of generation, including variable speed generators, options to make engines more efficient and optimized diesel fuel.
It will reduce its controllable costs to $135 per megawatt hours from $150 megawatt hours.
The NTPC burns diesel during maintenance periods and tends to burn more when it does not have water to run through the hydro plants, said Grewal.
Taltson and Snare are from different watersheds so diversifying water sources could mitigate diesel use in low water years, which are predicted to occur three times in the next 30 years, she said.
The NTPC is expected to complete facility repairs and upgrades to its Snare Forks hydroelectric facility. It received $24.6-million in federal funding that will offset the cost of planned overhauls and the unanticipated repairs.
The unit will be offline until April 2019 as part of a planned overhaul but until repair costs are assessed, the effect on electricity rates is uncertain, said Doug Prendergast, communications manager for NTPC in a Nov. 22 interview with News/North.