Nunavut cabinet rejects uniform power rates, grants QEC 6.6% hike over two years

After seven months of waiting, individuals, businesses and organizations that buy electricity from Qulliq Energy Corp. now know their bills will rise by 6.6 per cent over the next two years, thanks to a decision that Jeannie Ehaloak, the minister responsible for the QEC, announced June 1.

In it, the Nunavut cabinet rejected a QEC proposal to move towards a uniform rate system for every community in the territory.

That would have seen customers in larger communities like Iqaluit and Rankin Inlet pay substantially more, while customers in smaller communities like Whale Cove and Kugaaruk pay less.

“There are various considerations cabinet thought about. The way the structure was done we felt that some of the communities who pay less now, would be paying a higher rate if we went with a territory-wide structure,” Ehaloak told reporters June 1, following her announcement in the legislative assembly.

But they did agree to a 6.6 per cent hike in existing rates, after the QEC reduced its initial 7.6-per-cent across-the-board request.

The first 3.3 per cent of that increase is retroactive to May 1. The second half of the rate hike kicks in April 1, 2019.

The QEC had filed its application for new rates last Oct. 27, just before the Oct. 30, 2017 territorial election.

In it, they asked for two things: an across-the-board increase of 7.6 per cent over two years, and sweeping rate adjustments that would have led to uniform rates in all 25 communities in about six years.

That application went to an advisory body called the Utility Rates Review Council, which studied the application and consulted residents.

Late last month, Premier Paul Quassa, the minister responsible for the URRC, said in the House that cabinet received the URRC’s report this past March 26.

But cabinet did not discuss it until May 25, Quassa said. And their decision wasn’t announced until yesterday.

Following that decision, Ehaloak did not close the door on the eventual adoption of a uniform rate system.

But she said the GN must first review the Nunavut Electricity Subsidy Program.

That program’s subsidized rate is calculated right now on 50 per cent of the Iqaluit rate, which would have risen dramatically had a uniform rate system been adopted

The Department of Finance and the QEC will now study the Nunavut Electricity Subsidy Program and recommend “a subsidy rate program that would work for all Nunavummiut,” she said.

“Cabinet made the decision to go with the increase for two years. Which is 6.6 per cent over two years. Before the end of the two years we will be reviewing again a new structure for all of Nunavut,” Ehaloak said.

The Nunavut government uses the Nunavut Electricity Subsidy Program to subsidize power bills paid by residents of private dwelling units, including homeowners, and small businesses with gross revenues less than $2 million a year.

This means that from April to September, homeowners pay slightly more than 30 cents per kilowatt-hour each month for up to 700 kilowatt hours.

In the darker, colder months of October to March, that subsidized rate of 30 cents or so would apply to consumption of up to 1,000 kilowatt hours.

For small businesses, the amount eligible for subsidization is set at 1,000 kilowatt hours all year, also using 50 per cent of the Iqaluit base rate.

Right now, it’s not clear how the value of those subsidies would have been distorted by changes to the Iqaluit base rate brought about by a uniform rate system, but it is clear that the Nunavut government now wants to study the issue.

“Cabinet wanted to be fair to all of Nunavummiut and not go with a territory-wide structure and has directed QEC and Finance to come up with a subsidy rate program that would work for all of Nunavummiut,” Ehaloak said.

A study released by the World Wildlife Fund estimates that the Nunavut Electricity Subsidy Program costs the GN about $11 million a year.

As for social housing tenants, they pay a highly subsidized rate of only 6 cents a kilowatt hour, and they are not affected by the rate hike announced yesterday.

That particular subsidy costs the Nunavut Housing Corp. more than $25 million a year, the WWF report said.

As for the QEC, Ehaloak said the 6.6 per cent rate hike will give the QEC enough revenue to cover its rising operating costs.

“QEC has to make some revenue to keep up with their expenditures and costs,” she said.

With files from Beth Brown