Energy Projects, Programs and Pricing November 24 th, 2010

Energy Projects, Programs and

Pricing

November 24th, 2010

Introduction

• Energy Projects and Programs– Energy Plan– Energy Priorities Investments

• Energy Pricing– Electricity Review

Energy Plan:

Introduction

Energy Priorities Framework:

Introduction• The Priorities are based upon

priorities identified by the 16th Legislative Assembly:

• Pursue initiatives that reduce the cost of living, and in particular energy costs;

• Work proactively with residents, communities and industry on mitigation of climate change; and

• Advance alternative energy initiatives.

Energy Priority Investments

• A multi-year, $60 million commitment to provide funding for energy initiatives.

• Wide range of projects.• Premised on Government support to ensure no

impact on consumers.• Key action areas from the Energy Plan:

o Energy conservation and efficiency;o Alternative energy and emerging technologies;o Energy policy and planning;o Energy development and supply; andoReducing government energy use.

Energy Priorities Investment Plan:

Investment Summary

Reducing Energy Use in GNWT Assets: $11.5M

Energy Policy and Planning: $9.3M

Energy Conservation and Efficiency: $6.3M

Alternative Energy and Emerging Technologies: $8.7M

NWT Energy Development and Supply: $24.3M

$60 million Investment Beginning in 2009/10

Energy Priorities Investment Plan:

Energy Development and SupplyProject Department

Lutselk’e Mini-Hydro Facility Northwest Territories Energy Corporation

Whati Mini-Hydro Northwest Territories Energy Corporation

Sahtu Hydro / Bear River Feasibility Northwest Territories Energy Corporation

Fort Providence Transmission Line Extension

Industry, Tourism and Investment

Natural Gas Conversion Industry, Tourism and Investment

Taltson Hydro Expansion Northwest Territories Energy Corporation

Hydro Development (Hydro Strategy) Northwest Territories Energy Corporation

Energy Priorities Investment Plan:

Alternative EnergyProject Department

Community Swimming Pools - Solar Power

Environment and Natural Resources

Biomass Strategy Environment and Natural Resources

Wind Energy Development Environment and Natural Resources

In-Stream Hydro Power Development Northwest Territories Power Corporation

Geothermal Power Development Environment and Natural Resources

Energy Priorities Investment Plan:

Energy Conservation and EfficiencyProject Description Department

Community Energy Planning SupportMunicipal and Community Affairs,Arctic Energy Alliance

Residual Heat Expansion Northwest Territories Power Corporation

Energy Efficiency Incentive Program Environment and Natural Resources

Arctic Energy Alliance Increased Community Presence

Environment and Natural Resources,Arctic Energy Alliance

Business Support ProgramEnvironment and Natural Resources, Industry, Tourism and Investment,Arctic Energy Alliance

Energy Priorities Investment Plan:

Reducing Government Energy UseProject Description Department

Wood Pellet Boiler - Legislative Assembly

Public Works and Services

Wood Pellet Boiler - Fort Simpson Public Works and Services

Capital Asset Retrofit Fund Public Works and Services

Energy Efficiency for Public Housing Northwest Territories Housing Corporation

Energy Priorities Investment Plan:

Energy Planning and PolicyProject Description Department

Territorial Power Subsidy ProgramFinance,Industry, Tourism and Investment

Electricity Review Industry, Tourism and Investment

Northwest Territories Power Corporation Review

Executive

Energy Plan Renewal Industry, Tourism and Investment

Community Pricing Survey Executive

Fort Simpson In-Stream Hydrokinetic Turbine

Alaskan Experience

Geothermal in the Northwest Territories

Geothermal Project Design Concept

Subsurface:o Hydrothermal Fluids;o Production Well; ando Injection Well

Surface:o Binary-Cycle Power Plant;o Six 100 kW Generating Sets

Units (Operating in Parallel);o Option for Heat Distribution;

Wood Pellet/Biomass Projects

Wind Speeds Across the ArcticWind Speeds Across the Arctic

Tuktoyaktuk5.3 m/s

Kotzebue6 m/s

Ulukhaktok6.7 m/s

Sachs Harbour6.5 m/s

Paulatuk5.7 m/s

Rankin Inlet7.3 m/s

Cambridge Bay6.7 m/s

Arviat7.3 m/s

Kuujjuarapik7.5 m/s

Inukjuak8 m/s

Salluit7.5 m/s

Chesterfield Inlet7.5 m/s

Pincher Creek7.5 m/s

Whitehorse6.5 m/s

Yellowknife5.4 m/s

Energy Planning and Policy:

Hydro Strategy• Focus on the development of the tremendous potential of over

11,000 MW.

• The Hydro Strategy focuses on four strategic areas:o Preparing for Hydro Development;o Protecting our Environment;o Financing Future Hydroelectric Projects; ando Policy Initiatives.

• Draft Hydro Strategy released in December 2008.

• Additional discussions with Aboriginal governments and organizations are required.

• A finalized Hydro Strategy will be released in 2011/12.

21

Northwest Territories Hydro Development

Existing Developments

Legend

Potential Transmission

Existing Transmission

Highways

Proposed Mackenzie Pipeline

Potential Hydro

Existing Hydro

Communities

Established Industrial Loads

Potential Industrial Loads

Possible Export Connection

22

Northwest Territories Hydro Development

Developments Currently Proposed or Actively Studied

Legend

Potential Transmission

Existing Transmission

Highways

Proposed Mackenzie Pipeline

Potential Hydro

Existing Hydro

Communities

Established Industrial Loads

Potential Industrial Loads

Possible Export Connection

23

Northwest Territories Hydro Development

Further Developments Contemplated

Legend

Potential Transmission

Existing Transmission

Highways

Proposed Mackenzie Pipeline

Potential Hydro

Existing Hydro

Communities

Established Industrial Loads

Potential Industrial Loads

Possible Export Connection

24

Northwest Territories Hydro Development

Ultimate Potential

Legend

Potential Transmission

Existing Transmission

Highways

Proposed Mackenzie Pipeline

Potential Hydro

Existing Hydro

Communities

Established Industrial Loads

Potential Industrial Loads

Possible Export Connection

Taltson Update November, 2010

Taltson

Taltson Update November, 2010

Energy Pricing

United States Energy Information Administration:

West Texas Intermediate Oil Price

Natural Resources Canada:

Canada’s Energy Outlook

0

20

40

60

80

100

120

140

160

1980 1990 2000 2010 2020 2030

AEO2009 Reference NRCan PIRA Long Term Forecast NEB

`

Hydro Quebec:

North American Electricity PricesLocation

Price (¢/kWh)

Yellowknife 22.37

New York 25.32

Boston 19.12

San Francisco 18.06

Fort Smith 16.36

Houston 17.86

Edmonton 10.22

Toronto 11.46

Regina 10.91

Vancouver 7.13

Montreal 6.87

Winnipeg 6.94

Electricity rates based on consumption of 1,000 kWh of electricity and exclude basic monthly charge and taxes.

Electricity Rates for Selected Communities

CommunityTotal Rate

(¢/kWh)Service Provider

Whatì 84.57 NTPC

Délînê 83.20 NTPC

Łutselk'e 78.53 NTPC

Tuktoyaktuk 70.80 NTPC

Fort Simpson 73.45 NTPC

Inuvik 60.35 NTPC

Norman Wells 44.71 NTPC

Fort Smith 16.36 NTPC

Fort Resolution 20.75 NTPC

Hay River 25.68 NUL(NWT)

Fort Providence 50.07 NUL(NWT)

Wekweètì 101.33 NUL(NWT)

Trout Lake 85.38 NUL(NWT)

Yellowknife 22.37 NUL(YK)

• The Ministerial Energy Coordinating Committee released a public

discussion Paper in 2008.• The Committee appointed the Electricity Review Team to guide

the public discussion process.• A forum was held in Yellowknife to ensure the voices of our small

communities were heard.• The Electricity Review Team’s final report, Creating a Brighter

Future: A Review of Electricity Regulation, Rates and Subsidy Programs, was released in November 2009.

• During the Electricity Review process many asked for a review of the Northwest Territories Power Corporation.

• The GNWT released a comprehensive response to the Electricity and Northwest Territories Power Corporation Reviews in May 2010.

Electricity Review - Background

• GNWT response focuses on actions including simplifying the

regulatory process to make it more understandable, and therefore, accessible to northerners.

• The GNWT will take a leadership role to ensure the electricity system is efficient, affordable and that residents and businesses have equitable access to electricity.

• The Government’s actions were organized into five areas:o Vision and Principles;o Electricity Rates;o Affordability and the Territorial Power Subsidy Program;o Electricity Regulation; ando Industry Structure and NTPC Operations.

Energy Planning and Policy:

Electricity Review

• Electricity Rate Policy Guidelines were issued to the Public

Utilities Board, key changes include:o The establishment of rate zones;o Allocate administrative and general operating costs by energy

sales;o The establishment of territorial electricity rate riders; o Reduce the return earned by the Northwest Territories Power

Corporation; ando Electricity rates will not exceed electricity rates on October 1st,

2009.

• The Government, as a form of transitional support, will pay all existing rate rider fund balances, a $6 million contribution.

• The Government will forgo an annual $3.5 million dividend from the Northwest Territories Power Corporation for 2010/11 and 2011/12

Energy Planning and Policy:

Electricity Review Key Actions

• The Territorial Power Subsidy Program residential usage

thresholds will increased to 1,000 kWh per month between September and March and decreased to 600 kWh per month between April and August.

• A Legislative Proposal will be developed to update the Public Utilities Act, a key change includes to clarify the authority of the Government to issue policy direction to the Public Utilities Board.

Energy Planning and Policy:

Electricity Review Key Actions

CommunityCurrent Rate

(¢/kWh)

Revised Rate

(¢/kWh)

Difference (¢/kWh)

Difference (%)

Colville Lake 230.27 49.00 -181.27 -78.8%

Nahanni Butte 166.40 49.00 -117.40 -70.6%

Whatì 84.57 49.00 -35.57 -42.1%

Gamètì 129.80 49.00 -80.80 -62.2%

Łutselk'e 78.53 49.00 -29.53 -37.6%

Fort Resolution 20.75 16.36 -4.39 -21.2%

Yellowknife 22.37 22.37 0.00 0.0%

Electricity Review:

Impact on Residential Rates

CommunityCurrent Rate

(¢/kWh)

Revised Rate

(¢/kWh)

Difference (¢/kWh)

Difference (%)

Colville Lake 200.26 42.00 -158.26 -79.0%

Nahanni Butte 214.65 42.00 -172.65 -80.4%

Whatì 78.50 42.00 -36.50 -46.5%

Gamètì 149.18 42.00 -107.18 -71.8%

Łutselk'e 73.02 42.00 -31.02 -42.5%

Fort Resolution 18.02 12.88 -5.14 -28.5%

Yellowknife 18.87 17.87 0.00 0.0%

Electricity Review: Impact on Commercial Rates

CommunityCurrent Bill

(Oct 1, 2009) TPSP 700 kWh

Revised BillTPSP 1,000 kWh

Difference (¢/kWh)

Difference (%)

Colville Lake $918 $254 -$664 -72%

Nahanni Butte $717 $254 -$463 -65%

Whatì $459 $254 -$205 -45%

Gamètì $601 $254 $347 -58%

Łutselk'e $440 $254 -$186 -42%

Fort Resolution $237 $191 -$46 -19%

Yellowknife $265 $265 0% $0

Electricity Review: Impact on Residential Bill (1,000 kWh)

CommunityCurrent Bill

(Oct 1, 2009) Revised Bill

Difference (¢/kWh)

Difference (%)

Colville Lake $8,495 $1,829 -$6,666 -78%

Nahanni Butte $9,099 $1,829 -$7,270 -80%

Whatì $3,381 $1,829 -$1,552 -46%

Gamètì $6,350 $1,829 -$4,521 -71%

Łutselk'e $3,151 $1,829 -$1,322 -42%

Fort Resolution $841 $625 -$216 -26%

Yellowknife $867 $867 0% $0

Electricity Review: Impact on Commercial Bill (4,000 kWh)

Consolidation of Maintenance and Utilities

•This initiative presented the GNWT with an opportunity to improve the efficiency and cost effectiveness of tracking utilities through consolidation of responsibilities and resources.

• It will result in a standardized approach to the payment and tracking of utilities and management of energy consumption.

•If the public wants to set energy or greenhouse gas emissions reduction targets, the GNWT needs to track usage and costs

Consolidation of Maintenance and Utilities

DepartmentBase Funding

(effective 2010-11)

Actual2008-09

Expenditures

Shortfall from Base Funding

Justice $1,415,000 $1,527,000 ($112,000)

ENR $590,000 $590,000 -

ECE $10,660,000 $11,379,000 ($719,000)

ITI $43,000 $43,000 -

H&SS $7,001,000 $7,477,000 ($476,000)

DOT $3,152,000 $3,283,000 ($131,000)

Total $22,861,000 $24,299,000 ($1,438,000)

• Energy prices will rise again over the long term.

• Developing renewable energy while not increasing the high cost of living in the north is a challenge.

• The GNWT has made an unprecedented financial commitment to reduce energy costs, develop local energy sources, and reduce imported diesel.

• Working as a Territory and leveraging the power requirements of industry can result in greater development of northern energy, economic opportunities, and in the long term, a more sustainable NWT energy system.

Concluding Comments