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Northwest Territories Premier Bob McLeod, left, is shown with Prime Minster Stephen Harper in March, 2013.

James MacKenzie/Reuters

The Northwest Territories is planning a sweeping expansion of its electrical grid, with hopes of unlocking new mining projects and lowering power bills in remote communities.

As part of an energy plan set for release Monday, the NWT aims to deliver cheaper power to several communities and mines currently running on diesel generators. Many Northerners currently pay power rates far higher than southern Canadians – the plan aims to lower those bills, while leveraging cheaper power to lure industry to consider new mines.

But the move is a gamble. The 20-year electrical expansion plan could see the NWT more than double its debt-load, currently about $587-million. Early, rough projections show the electrical plan could cost $700-million. It will test Prime Minister Stephen Harper's oft-stated commitment to Northern development, as Ottawa would need to approve raising the territory's $800-million borrowing limit.

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The expansion "vision" is being released Monday along with a short-term Energy Action Plan, which includes $31-million in spending on pilot projects to boost energy efficiency.

"When we first got into this, our first objective was to reduce our reliance on fossil fuels," NWT Premier Bob McLeod told The Globe and Mail, later adding: "So we're pretty excited. We have this energy plan. We're going to spend $31-million over three years. And then we have our vision for the next 20 years. … I think, very soon, the people of the Northwest Territories will start to benefit from all this work, in terms of lower costs."

The NWT's request for more borrowing power – or an agreement to not count the power project's debt against the current limit – is a subject sure to be discussed Monday when Finance Minister Jim Flaherty meets his provincial and territorial counterparts. The Prime Minister and the Premier discussed the plan this summer.

"He realizes that the future, our future, largely depends on hydro and highways. So, his main comment was, well, you've got to have a business case and you should talk to Flaherty," Mr. McLeod said. "I think we do [have a case], yes."

The $700-million plan, which the Premier believes would pay itself down through power rates and new resource projects, amounts to roughly $16,000 in new debt per NWT resident. But Mr. McLeod sees more affordable, cleaner energy as a need.

"We shouldn't be penalized for where we live. We're part of Canada. We're contributing to Arctic sovereignty. And it's a difficult place to live, but it's our home and we're doing our part to make it more affordable, and also to protect the environment and make the communities more sustainable," the Premier said. "That's our constant message to Ottawa. If you want Arctic sovereignty, the best way to do it is to have healthy, sustainable communities in the North. So this is part and parcel."

The short-term plan includes expanded use of liquefied natural gas – an LNG power facility is due to open in Inuvik, NWT, in the coming months. The plan also underscores existing solar-power development and calls for a small-scale power transmission expansion. NWT residents will be offered financial incentives to install wood-pellet stoves and replace aging water heaters. The NWT will improve energy efficiency in its public housing and government buildings. The plan also calls for a study of the effect of Northern weather on electric vehicles.

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The 20-year electricity plan would link the NWT's two current grids – one in the south, with an underused Taltson hydro dam, and another around Yellowknife. A line would also be built east into a region with current and proposed mines. Existing mines would be asked to pay part of the cost to build transmission lines, though some – nearing the end of production, and already equipped with diesel generators – may not. But what new mines are "always asking for is cheaper power, to make their projects more feasible," the Premier said.

The Premier hopes to connect the two grids within five years, then ultimately connect its revamped grid to the continental grid through Saskatchewan.

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