When the town of Hay River voted to end its decades-old franchise agreement with power distributor Northland Utilities (NUL) in 2016 in a bid to lower energy costs, the proposed switch set the stage for years of legal wrangling SA国际影视传媒� and itSA国际影视传媒檚 not over yet.

Three years ago, the town made notice of its intent to purchase the rights to distribute, supply and sell electric energy in Hay River, exercising a right set out in the Cities, Towns and Villages Act (CTV Act) and in the franchise agreement contract. The town sought to purchase property used in connection with the services provided by Northland under the agreement, including distribution circuits, poles, underground ducts, transformer bases,  backup diesel generators, conductors, street lights, meters and vehicles.

Town council voted to give a new contract to Northwest Territories Power Corporation (NTPC) a GNWT-Crown corporation.

But both sides were unable to settle on the terms of the purchase, and an arbitrator was called in to determine the value of NorthlandSA国际影视传媒檚 assets within the town SA国际影视传媒� how much the town of Hay River would have

to pay to purchase them.

In February of 2018, arbitrator John Marshall SA国际影视传媒� adopting a business cash flow methodology proposed by an expert hired by the town SA国际影视传媒� released his partial final award, valuing NorthlandSA国际影视传媒檚 assets in Hay River at around $14 million.

Marshall valued NorthlandSA国际影视传媒檚 assets at 1.3 times their net book value, the value of an asset when depreciation is taken into account, to factor in future, potential earnings of the assets.

Northland is now appealing MarshallSA国际影视传媒檚 ruling, asking the NWT Supreme Court of Appeal to set aside his partial final award on the grounds the arbitrator erred by choosing a cash flow valuation methodology in assessing NorthlandSA国际影视传媒檚 assets, causing a SA国际影视传媒渄omino effectSA国际影视传媒� that led to other errors in both law and fact.

When both parties met in court in Yellowknife late last month, Loyola Keough, a civil lawyer representing Northland, said Marshall misinterpreted the purchase as the sale of a business, not the sale of assets, and said he should have used a replacement costs new minus depreciation (RCN-D) methodology. That approach effectively asks: what is the approximate cost it would take the town to build the same system in place today SA国际影视传媒� same size and same quality SA国际影视传媒� with depreciation taken into account to reflect the fact the system has aged?

Had the arbitrator followed previous Supreme Court of Canada rulings in similar cases and used the RCN-D method, argues the power corporation, NorthlandSA国际影视传媒檚 assets would have been valued closer to $40 million.

But Thomas Marriott, a lawyer representing the town, reminded the court the arbitrator said adopting the RCN-D method would have resulted in NorthlandSA国际影视传媒檚 assets being valued at three times the current net book value.

Marriott said Northland wants the court to accept Marshall erred SA国际影视传媒渂y not blindly following a formula that gives three times the net book value.SA国际影视传媒�

SA国际影视传媒淲hy would legislation (CTV Act) put in a right that has no practical application and that no one would dare evoke?,SA国际影视传媒� asked Marriott, arguing the RCN-D method would render the purchase uneconomical for Hay River.

A factum from the town of Hay River, filed in October, states, SA国际影视传媒渁 right that can only be exercised by inflicting oppressive financial harm on the person exercising the right (the buyer), is barely a right at all.SA国际影视传媒�

Northland argues itSA国际影视传媒檚 up to the town to discern whether or not the purchase is economically viable, and that the arbitrator inappropriately considered the townSA国际影视传媒檚 financial impact when choosing to adopt the business model valuation.

The two sides are also squabbling over which assets the town can purchase under the franchise agreement. Northland says the arbitrator erred when he ruled generation assets form a part of the franchise assets purchasable by the town.

The Town of Hay River wants the appeal dismissed, and for the partial final award to be upheld.

Justice Andrew Mahar has reserved his decision for early May. But as Doug Tenney, vice president for Northern development at ATCO, NorthlandSA国际影视传媒檚 parent company, recently told Yellowknifer, thereSA国际影视传媒檚 still a long way to go before the matter is resolved.

Tenney said both sides have been working out of court towards reaching an agreement on a SA国际影视传媒渘umber of other issues,SA国际影视传媒� following the partial final agreement, including outstanding power bills.

SA国际影视传媒淐ustomers are going to have outstanding bills with (Northland) SA国际影视传媒� who owns that (once the sale is complete)?,SA国际影视传媒� asked Tenney.

Tenney added he believes Northland and the town are SA国际影视传媒済etting very closeSA国际影视传媒� to reaching common ground on the purchasing sale agreement, but that both sides remain at odds on some issues.

SA国际影视传媒淪o those issues will go back to arbitration for a final ruling,SA国际影视传媒� he said, adding both sides are set to sit down with Marshall at the end of April.

After that, thereSA国际影视传媒檚 more even more hurdles to clear.

Once the arbitratorSA国际影视传媒檚 final decision is released, Northlands will have to go before the Public Utilities Board to request the sale of the assets, which will prompt probes of the company's costs and rates, along with whether or not the sale is in the publicSA国际影视传媒檚 interest. Offering an optimistic estimate, Tenney said that process could take nine months.  

Then, if the town of Hay River immediately flips the purchased assets to NTPC, that opens up a whole other purchase and sales agreement that must go before the Power Utilities Board.

Tenney doesnSA国际影视传媒檛 think the takeover will happen this year.