Nunavut government approves latest power rate increase

The new 7.1 per cent rate hike is effective as of May 1, 2014 to all customer classes and communities, the Qulliq Energy Corporation said June 3. (FILE PHOTO)

Paul Okalik, the minister responsible for the Qulliq Energy Corp., has given Nunavut’s electrical power utility the go-ahead to impose a rate hike of 7.1 per cent across all customer categories.

The new rate is effective as of May 1, 2014, the corporation said in a June 3 release.

“This increase will bring QEC’s revenue in line with its expenses,” said QEC president Peter Ma. “Increases to QEC’s revenues are necessary because expenditures, such as fuel and other operating costs have increased.”

Citing a need to meet rising costs, the corporation filed a new rate hike application last November, which sought to raise power bills by an average of 5.1 per cent by April 2014.

The QEC began at the same time making a move towards uniform, territorial-wide power rates, which would attempt to rebalance who pays how much, and in which communities.

Under rate re-balancing, larger communities like Rankin Inlet and Iqaluit — where most of Nunavut’s small businesses are located — would have seen big increases in power rates, while some small communities would have seen their rates go down.

But Okalik shot down the rate-balancing plan this past March, saying homeowners and businesses in larger communities would suffer the most.

So for now, the QEC will continue to use a different power rate for each community, based on the local cost of providing service.

In early 2014, the QEC then amended its previoius general rate increase application to request an across-the-board hike of 8.6 per cent for all rate classes across Nunavut.

The corporation said the increase was a response to the Government of Nunavut’s decision to raise fuel prices Jan. 1, which QEC said would mean a $1.8 million increase in expenses..

The corporation also pointed to the Utility Rates Review Council’s recent decision to reduce a QEC fuel rate rider request from 5.31 cents a kilowatt hour to 3.93 cents a kilowatt hour, saying that’s created an additional $2.4 million shortfall in the corporation’s potential revenues.

The GN ended up approving a rate increase of 7.1 per cent.

But the QEC has removed its fuel stabilization rider of 3.92 cents per kWh as of May 1, 2014, as current fuel prices have been reflected in the newly-implemented rates.

Under the new rate, domestic customers who fall under the Public Housing Power Support Program will not be affected, the QEC said. Public housing tenants will continue to pay a low rate of only six cents per kilowatt hour.

Domestic customers throughout Nunavut — mostly homeowners — who fall under the Nunavut Electricity Subsidy Program and maintain their electricity consumption within the limits (700 kWh during summer months and 1,000 kWh during winter months) all pay the same rate, which is 50 per cent of Iqaluit’s base rate.

These customers will see their rate rise from 30.12 cents to 30.15 cents per kWh.

The QEC has also removed its fuel stabilization rider of 3.92 cents per kWh as of May 1, 2014, as current fuel prices have been reflected in the newly-implemented rates.

Under Nunavut’s system for setting power rates, the QEC sends rate applications to the cabinet minister responsible for the power corporation.

The minister then refers the application to the Utility Rates Review Council, which studies the application and sends its recommendation to the minister.

The minister then issues the final decision.