N.W.T. Premier Bob McLeod says the territorial government will borrow money to cover the extra cost of producing electrical power with diesel generators.

At a news conference Friday McLeod said his government will cover the $20 million the power corporation was trying to recoup through a rate rider, shielding N.W.T. residents and businesses from a hike in their power bills.

'We have eliminated the need of the rate rider and have ensured the costs have not been passed on to N.W.T. residents," he said. 

The Northwest Territories Power Corporation had applied to add a ​3.69 cents/kWh​ rider for the next two years to recover the extra costs incurred by using diesel generation to supplement hydro generation from the Snare system this summer.

Snare hydro system low water

Low water levels in the N.W.T. this summer affected the Snare hydro system's electricity output. This photo, taken Aug. 14, 2014 shows the low water levels at one of the dams in the Snare system. (Northwest Territories Power Corporation)

Low water levels due to drought had reduced the amount of power the Snare hydro system was able to produce.

McLeod said the government is also working to hike the amount of debt it's allowed to carry.

"We are asking to raise debt ceiling from $800 million to $1.8 billion," he said. 

The prospect of a power rate hike was opposed by many N.W.T. municipalities and chambers of commerce, and more than 650 people signed an online petition against the move.