NT’s Government-owned power generator is broke, and may increase power prices.

The Northern Territory Government has announced it replaced the board of Territory Generation with an interim board amid efforts to fix the ailing utilities corporation.

The Government released a heavily-redacted report revealing at least $43 million in budget blowouts caused by high fees, inflated staffing levels, and project over-spend.

“Since coming to Government we've had some concerns about the financial sustainability of Territory Generation, there is no doubt that there are some real challenges out there,” Treasurer and Acting Chief Minister Nicole Manison said.

The Government blamed the situation on a 2014 decision by a previous government to split the Government-owned Power and Water Corporation into three new bodies: Power and Water, Territory Generation, and retail branch Jacana Energy.

“When you turn one thing into three, you then replicate senior management three times, for example, systems three times,” Ms Manison said.

The finance report review appears to agree with Ms Manison's assessment.

“Territory Generation has experienced a significant deterioration in its financial performance since its establishment as a stand-alone business,” it said.

“To date, T-Gen has not made any meaningful savings in its cost base or staffing levels, despite past ... forecasts that this would have already occurred.”

The NT Government approved an unplanned $20 million loan last financial year to help fund capital projects, while also increasing Territory Generation’s overdraft facility from $10 million to $20 million.

Even so, the company will not have enough to pay costs this year “if corrective action is not taken”, the report said.

The report warned that Territory Generation can only complete current works if the Government props it up in a manner that would be inconsistent with the Government Owned Corporations Act.

The corporation will petition the Government to increase power prices once an existing freeze ends on July 1, 2018.

But the Labor Government has previously committed to not increasing power prices.

“T-Gen has flagged its intention to pursue an increase in tariffs to recover its costs ... increasing tariffs will accelerate the competitive threat,” the report said.

“Any tariff increase will either have to be borne by consumers or the Government ... the latter would be an effective back-door subsidy to T-Gen.”

Ms Manison says her Government’s promise was that utilities prices would not rise by more than CPI.

Meanwhile, Territory Generation has unveiled plans to build the world's second-most powerful renewable energy storage system.