NTPC’s outlook looks grim due to low water levels and soaring diesel prices

What is the future of the Northwest Territories Power Corporation? With inflationary diesel prices, low water levels, obstacles to transitioning to renewable energy and aging infrastructure, some MLAs say the Northwest Territories could be facing a crisis.

Cory Strang, president and CEO of the Northwest Territories Power Corporation (NTPC), and Caroline Wawzonek, minister responsible for NTPC, met with MPs on Monday to discuss the long list of challenges facing the power corporation.

To begin with, it is worth noting that between 2023 and 2024, diesel consumption in this region has increased astronomically.

That’s partly due to low water levels affecting the Snare hydro system, a system that supplies power to Yellowknife, Dettah and Behchokǫ̀. Water levels at the Snare are more than three metres below average, Strang said.

The territory used about 45 million litres of diesel in 2023-24, almost two-thirds of which was to be used as a backup source of energy. That’s more than double the amount used in the past few years. That’s partly the result of low water levels affecting the Snare hydroelectric scheme.

In previous years, hydropower provided about 98 percent of the energy supplied to Yellowknife and the surrounding area, but recentlycloser to 50 percentThis means that the Jackfish power plant in Yellowknife, a backup source of diesel fuel, has beenworks regularly.

Despite the low water levels, the Snare hydroelectric scheme appears to be NTPC’s long-term plan, as evidenced by Wek’èezhìı Land and Water Board documents, which show that the company has renewed its water licence for another 39 years.

Another reason for the high consumption of diesel fuel is the construction of the Taltson hydroelectric system, which serves South Slave. This makes the communities of South Slave completely dependent on diesel fuel.

Doug Prendergast, an NTPC spokesman, said no timetable has been provided for completion of work on Taltston, but said in an email that the team is making progress.

What about renewable energy?

Strang said the Inuvik wind turbine, an NTPC project, is an example of a successful renewable energy project.

According to Prendergast, the wind turbines, which were initially estimated to cost $40 million in 2017, are now expected to cost $88 million.

Prendergast attributed the high costs in part to regulatory delays and the COVID-19 pandemic, which was exacerbated by inflationary costs and challenges in building access roads. The project had been expected to be up and running by December 2020.

“Despite the cost increases, the project continues to deliver huge benefits,” Prendergast said, adding that the project is expected to reduce diesel consumption “in NTPC’s largest off-grid community” by up to 30 percent.

Strang said there are also talks underway about installing a third liquefied natural gas tank in Inuvik.

While it’s still early days, he said the project has the potential to be transformational.

“Instead of having to truck natural gas all the way from British Columbia, it could be delivered right across the street,” he said.

But Strang added that moving too quickly to a renewable energy system poses significant challenges.

He added that introducing renewable energy sources to a community that has a reliable energy system and “is seeing little to no growth” could have an impact on rates.

The committee meeting was held in response to two requests by NTPC since February seeking rate hike due to high diesel cost.

“I feel we are facing a crisis”

Robert Hawkins, Member of the Legislative Assembly for Yellowknife Centre, raised the alarm about the situation facing NTPC and the Territory.

“We can’t throw another $15 million to $30 million in subsidies and we won’t be able to produce power if we can’t produce power and we don’t have any new customers, and there are no new customers on the horizon,” Hawkins said.

“At what point do we define this as a crisis? Because I feel like we’re facing a crisis.”

Wawzonek said resolving the energy situation in the Northwest Territories is one of the territory’s most important tasks.

“We cannot continue on this same path for 50 years without a sense of urgency,” she said.

Wawzonek said implementing the changes would involve significant costs and strong political will.

New management structure

At the commission meeting, Wawzonek also announced that NTPC would change its governance structure to a mixed model with representatives from the Northwest Territories government and independent members.

The current structure consisting solely of deputy ministers from the Northwest Territories has been criticized for lack of independence.

Wawzonek says he expects a formalized plan for the new structure to be in place within the next year.