The Northwest Territories Power Corporation may record 80 per cent of prudently incurred temporary generator rental costs in a new Norman Wells deferral account, but cannot include the ordinary generation expenses and permanent capital costs it also sought to defer.
The Northwest Territories Public Utilities Board’s October 2, 2026 decision establishes a way to record eligible costs for a later application to recover them from customers. It does not approve a final account balance or a new customer rate. The proportion ultimately recoverable may change when the Board assesses further evidence.
A temporary response to Imperial Oil’s withdrawal
For about 37 years, NTPC bought surplus electricity from Imperial Oil Limited for distribution in Norman Wells. Its generating station, commissioned in 2020, was designed to become a standalone prime-power plant and included space for a third generator, whose installation had been deferred until needed.
Imperial Oil’s January 30, 2026 notice identified an expected end date of August 13. NTPC assumed prime-power responsibility on August 12, and Imperial Oil ceased its Norman Wells operations on August 14. NTPC installed a temporary generator because its two existing units could meet the load but did not provide the required backup capacity after Imperial Oil’s withdrawal.
The Board distinguished knowing that a transition would eventually occur from having enough certainty about its timing to commit customers to permanent replacement capacity. It found the period after the January notice insufficient to install permanent capacity while maintaining the required reliability standard, and considered temporary rental generation a reasonable transitional response.
Why only 80 per cent can be recorded
The Board considered the size and uncertainty of the costs, whether their causes were outside the utility’s control and whether they were risks the utility normally bore. It also considered whether the treatment fairly recognized related costs and benefits. These factors were useful guides, not an exhaustive or decisive checklist: higher costs alone did not justify exceptional deferral treatment.
NTPC forecast annual rental costs of approximately $1.56 million. The Board found the amount material and accepted limited deferral treatment, but said the entire rental bill was not an incremental transition cost. If permanent capacity had been installed just in time, customers would still have borne its annual capital-related costs, including depreciation and a return on the investment.
Because the record did not precisely calculate that avoided capital-related revenue requirement, the Board used a 20 per cent reduction as a provisional estimate. That leaves 80 per cent of prudently incurred rentals eligible to be recorded. The reduction is not a penalty or a final disallowance of that share of the rental bill.
When NTPC seeks disposition of the account, it must quantify the capital costs, depreciation, return and other material components customers would have borne for timely permanent capacity. The Board will then decide whether the 20 per cent estimate should remain or be adjusted for final recovery.
The clock starts when the rental unit is available
The account begins when the rental generator was commissioned and available to provide the required reliability service—not February 1, the planning-based start date NTPC requested. NTPC must confirm the commissioning and availability date with its first report of amounts recorded in the account.
The approved treatment ends at the earlier of the rental unit being replaced by NTPC-owned generation or no longer being required, and 12 months after commissioning and availability. An extension requires Board approval on an application filed before expiry. NTPC must explain the continuing need, alternatives considered, efforts to reduce or eliminate rental costs, expected replacement date and forecast continuing cost.
NTPC’s September application targeted March 31, 2029 for the permanent third generator. The Board said that date alone did not justify extraordinary rental costs continuing until then. Earlier evidence had contemplated replacing the rental with an NTPC-owned temporary unit in fall 2026, and the later application did not explain what had happened to that plan.
Ordinary operating costs and permanent capital are excluded
The Board refused deferral treatment for the forecast $511,000 in additional annual generation operating and maintenance expenses. Labour, overtime, lubricants, materials, contractors, travel, training and similar costs would also arise with permanent generation. Ordinary cost changes between rate cases remained a utility risk on this evidence, although the costs could be considered prospectively in NTPC’s next general rate application.
Depreciation, return and other costs associated with permanent fuel-storage improvements or other permanent capital additions were also excluded from this account. The Board said those facilities belonged in the normal capital and general rate review process.
There is a narrower possibility for costs directly and necessarily incurred solely to connect the temporary rental generator. NTPC estimated the connection capital cost at about $417,000, but the Board did not approve that amount in advance. Such expenditures can be brought forward at disposition only with evidence that they were prudent, incremental, temporary and would not otherwise have been incurred for permanent generation facilities.
Related revenues and savings must also be explained
The Board required NTPC to identify and quantify incremental revenues from any electricity supplied to Imperial Oil, along with related financial assistance from Imperial Oil, government or other sources. This includes subsidies, grants, contributions and reimbursements, as well as related cost savings and other recoveries. NTPC must also identify costs already recovered through existing rates or another regulatory mechanism, so customers are not charged twice.
That is not an automatic direction to deduct every receipt dollar for dollar. NTPC must explain, with supporting calculations, how each amount should affect the balance sought from customers. If it considers an identified amount should not be an offset, it must give its reasons and calculations for the Board to assess.
Fuel-cost changes remain outside this account. Net of the avoided Imperial Oil purchased-power costs, they are to be addressed through the existing Rate Stabilization Fund. The new account is a limited response to temporary rental generation, not approval of NTPC’s broader transition costs.
