IEEE Power & Energy Magazine - July/August 2014 - 57

The World Bank estimates that 1.2 billion people worldwide have no
access to electricity and that interconnecting them with the existing
electric grid is not feasible within the next five to ten years.

load variation highlights the importance of understanding
a community's use of electricity and of being cautious with
regard to assumptions when information is not readily available or simply does not exist.
diesel and heavy oil are the energy sources used to supply electricity to more than two-thirds of the n&rcs. the
estimated annual fuel consumption for n&rc electricity
generation in canada is 215 million liters (corresponding to
approximately 600 kt co2 equivalent), and its breakdown by
province and territory is shown in figure 10. Approximately
74% of the fuel is consumed by communities in British columbia, nunavut, and Quebec, and with the exception of the Îlesde-la-madeleine and iqaluit, all serviced communities have
relatively small and scattered grids (microgrids). evidently,
rising fuel and shipping costs have a direct impact on energy
prices in the canadian north. the next section will examine
the wide range of electricity rates based on fuel source, access,
intended use, and type of customer.

Electricity Rates
the cost of supplying services to the northern regions of
canada is high, and electricity is no exception. As with
regular electricity rates, the price depends on the energy
sources available, but in the case of n&rcs, access, utility
type, and customer classification play a significant role in
determining the corresponding electricity rate. regardless,
the costs are primarily covered by the government of canada
under various provincial and/or federal agency and payment
frameworks. the government agencies' role and detailed
structure are beyond the scope of this article, since it is an
extensive topic; a general perspective regarding rates can be
formulated, however, without entering into further details
regarding the role of each stakeholder. rate structures vary
by province and territory, and it is challenging to make a
direct comparison among them. nevertheless, a simplified
classification is provided below in order to give a general
economic perspective of electricity rates in n&rcs.
the electricity rates vary among customers and are set
so as to cover the operational costs and reflect the subsidy
framework available for each rate. figure 11 presents a simplified classification of the diverse electricity rates, by customer type (government or nongovernment) and by end use
of electricity (residential or general services). figure 11(a)
shows the nongovernment residential rates, which are generally lower than the total operation costs, especially for
july/august 2014

diesel-based locations. in the case of provinces, these lower
rates are set to match the equivalent on-grid electricity
rates; for the territories, the rates are set to match the tariffs
charged in their respective capitals (iqaluit, whitehorse,
and yellowknife). figure 11(b) shows the nongovernment
general service rate, which in most locations is similar to
the residential tariff; the differences depend on the subsidy level of commercial clients. for the previous rates, an
energy cutoff scheme applies, in which a tariff closer to the
operational cost is charged after certain period is reached.
for example, in the northwest territories, the base rate
for sachs harbour is c$0.26/kwh and in the winter, after
1,000 kwh/month, the rate increases to c$0.54/kwh. An
important objective of this scheme is to discourage the
use of electricity for heating purposes. figure 11(c) and
(d) present the government rates for residential and general services use, respectively. these rates are commonly
higher than the nongovernment rates and nearly reflect the
average operation costs in the region. how the rates are set
in each location depends on the utility; some calculate an
average operation cost based on a specific region while others set a distinct tariff by community.
A subsidy framework is required to bridge the gap between
the operational costs and the lower nongovernment rates. these
frameworks can involve federal and/or provincial agencies and
vary significantly by province and territory, type of utility, customer type, and diesel fuel price. for example, British columbia has a high subsidy for the cost of the delivered diesel fuel,
which leads to low electricity rates for all customers. in ontario,
the diesel fuel prices are the same as those in the rest of the
province, which after adding transportation costs drives operation and maintenance costs to approximately eight to ten times
the on-grid residential rate. the government of ontario has a
provincial fund in place to support utility-operated communities, while AAndc supports community-operated locations.
in manitoba, the government rate is calculated so as to pay for
the gap between the total generation costs and the nongovernment rates-hence the high discrepancy between the two prices.

Energy-Related Issues
from the earlier discussion, it is clear that the canadian
n&rcs face many significant energy challenges. the list
that follows summarizes the principal ones.
✔ Fossil fuel dependency: the estimated fuel
consumption figure for the n&rcs (215 million liters/
ieee power & energy magazine

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Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - July/August 2014

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