QEC starts move towards uniform Nunavut rates

At a public hearing held Nov. 10, Mike Gardener of Iqaluit was the first resident to ask questions and comment on the Qulliq Energy Corp.’s latest rate proposals, which would charge more to customers in some larger communities, including Iqaluit, and less to customers in many other places. “This is something of a fait accompli,” Gardener said. “Whatever we say, the rates will go up for Iqalummiut.” (PHOTO BY JIM BELL)

Nunavut’s electrical power utility, the Qulliq Energy Corp., last week began a gradual move towards uniform, territorial-wide power rates with public hearings in Iqaluit and five other Nunavut communities.

The proposed new rates won’t give the QEC more revenue. But they will attempt to rebalance who pays how much, and in which communities.

“This exercise won’t give the power corporation any new money,” Ray Mercer, the chair of the Utilities Rates Review Council, said at the start of an afternoon hearing in Iqaluit Nov. 10.

In its 755-page application, the power corporation proposes small domestic rate-hikes for six communities: Rankin Inlet, Iqaluit, Baker Lake, Pangnirtung, Cape Dorset and Igloolik.

This means residential customers in those communities would see rate hikes of up to five per cent, or about $10 a month extra for those who qualify for the Nunavut electricity subsidy program, the QEC’s president, Peter Mackey, said in a presentation.

At the same time, rates would drop by up to four per cent in all other communities.

This scheme would also raise rates by up to five per cent for business customers in five communities: Rankin Inlet, Iqaluit, Pangnirtung, Cape Dorset and Igloolik.

This would amount to a monthly increase of up to $53 a month for commercial customers, based on monthly consumption of 2,000 kilowatt-hours, Mackey said.

But that’s just the start.

Mackey said that after a series of phased changes in the rate structure every three years or so, the power corporation aims for the eventual creation of standardized territorial-wide power rates.

“We would be looking at nine or 10 years from now,” Mackey said.

Mackey said the QEC is trying to spread the cost of doing expensive power plant upgrades and replacements across a wider base and that the idea of sharing costs across the entire territory is in line with “Nunavut societal values.”

This information prompted a sceptical response from Iqaluit resident Mike Gardener, who asked a series of questions about how and when the new rate system would be applied.

“This is something of a fait accompli. Whatever we say, the rates will go up for Iqalummiut,” Gardener said.

Colleen Dupuis of Nunavut Tourism said the rate rebalancing scheme could affect some of Nunavut’s more popular tourist destinations, where members of her organization, such as energy-hungry hotels and restaurants, do business.

“Some of these communities are where there is a lot of tourism,” Dupuis said.

And these businesses also worry they will bear the brunt of higher costs passed on to them by municipal governments and others.

“They fear that they are at the top of the food chain,” she said.

Sue Avery, representing the Iqaluit homeowners association, asked Mackey why Nunavut’s stock of community power plants have been allowed to deteriorate to a point where the territory is now faced with hundreds of millions of dollars worth of plant replacements.

Mackey responded by saying that in the years leading up to the creation of Nunavut in 1999, infrastructure planners gave little thought to electrical power generation, especially in Iqaluit and the 10 communities that received decentralized jobs.

As a result, the corporation spent its limited capital dollars on new generators, rather than new power plants, as it scrambled to meet a rapidly accelerating demand for electricity.

“Instead of building power plants, the corporation was buying engines,” Mackey said.

To fix this, Mackey said the QEC’s position now is that the federal government should recognize that it didn’t give Nunavut enough capital money for power plants in the 1990s, and that they should make amends by providing that funding now.

“I look at it as seeking some money that the federal government should have provided at the time of the creation of Nunavut,” Mackey said.

Mercer said his council, after studying the QEC’s 755-page rate application and considering the oral and written comments of Nunavummiut, will submit its recommendations to the Nunavut energy minister, Lorne Kusugak, by Feb. 6, 2012.

Right now, customers in each Nunavut community pay their own set of rates, based, more or less, on the cost of providing power within the community.

An attempt to move towards pan-territorial rates, made in 2004, fizzled in the face of widespread opposition from businesses and homeowners in larger communities.

But a phased approach, Mackey said, “would reduce the impact on ratepayers.”