Market Snapshot: Explaining the high cost of power in northern Canada

Release date: 2017-02-16

Electricity prices in the Northwest Territories (NWT) and Nunavut are significantly higher than the rest of Canada.Footnote 1 Households in the NWT and Nunavut pay more than 30 cents per kilowatt hour (kW.h) for electricity – the Canadian average electricity price is 12.9 cents per kW.h.Footnote 2 Yukon households pay 13.6 cents per kW.h, this is closer to, but still above the Canadian average.

In much of northern Canada population density is low and communities are remote, this limits the viability of lower-cost energy infrastructure like natural gas pipelines and hydroelectric facilities. Geography poses a challenge for the broader use of renewables and as a result, northern Canada relies heavily on relatively expensive and carbon-intensive energy sources.

Source and Description

Source: Hydro-Québec (for all provinces); Yukon Energy (for Yukon); Arctic Energy Alliance – Fuel Cost Library (for NWT); Quilliq Energy Corporation (for Nunavut)

Description: This chart illustrates household electricity prices in major cities for each province and territory in 2016 (see footnote 1 for locations). Prices reflect residential bills for the first 1 000 kW.h per month. NWT and Nunavut residents pay the highest prices in Canada – more than 30 cents per kW.h and significantly above the weighted average Canadian electricity price of 12.9 cents per kW.h. Yukon households pay 13.6 cents per kW.h, only slightly more than the national weighted average. Prices in the provinces vary from a low of 7.2 cents per kW.h in Quebec to a high of 17.8 cents per kW.h in Ontario.

Power generation facilities in Nunavut are almost all diesel-fired and most homes are heated by fuel oil. Nunavut must import all its fuel for the year in bulk during the summer. The NWT generates more than half its power and heat from diesel and fuel oil.Footnote 3 However, they also generate roughly one third of their power from hydroelectric resources. Yukon’s electricity is mostly from regional hydro resources, which is why prices are relatively low; diesel and natural gas-fired generators are still used to back-up the main power system and are also the main power source in the most remote communities.

Less carbon-intensive energy sources are increasingly attractive and becoming more cost-competitive in northern Canada. NWT has over 20 megawatts of installed wood-pellet biomass capacity and growth is expected. The town of Inuvik, NWT fuels one of its gas-fired power plants with liquefied natural gas (LNG) trucked in from British Columbia. Yukon Energy’s Whitehorse LNG facility was completed in 2015 and provides a cleaner alternative to the diesel generators used to back up its hydro facilities. Two solar projects have also been introduced in both NWT and Nunavut.

 

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