Business declares war over power rates

“A veil of secrecy and silence”

By JIM BELL

The Iqaluit Chamber of Commerce launched a full-blown campaign this week aimed at pressing Energy Minister Ed Picco to delay a second power rate application requested this past May by the Qulliq Energy Corp. on behalf of the Nunavut Power Corp.

The business group says the public needs more time to study the impact of the proposed rate scheme, especially when it’s combined with a separate fuel rate surcharge expected to be imposed in reaction to skyrocketing petroleum prices.

“Instead of providing information to reassure the public that costs are under control and the utility has its house in order, there seems to have been a veil of secrecy and silence around recent activities of the Power Corporation,” the chamber said in a report issued this week.

The chamber also says the public needs to see the result of an independent review of the power corporation’s operations, which isn’t due until December.

“What is the rush to decide on something that will not even take effect until April 2006?” said Ken Spencer, president of the Iqaluit chamber, in an Aug. 23 letter.

The chamber is asking mayors, MLAs, community leaders and other residents to put pressure on Nunavut’s energy minister to extend the deadline for public comment on the application, which is now before the Utilities Rates Review Council.

Picco has extended the deadline once, from Aug. 5 to Aug. 31. But the chamber says they want more time, including time for public meetings with the URRC.

That’s because they want the power corporation to answer questions about its compliance with URRC recommendations contained in a report that the URRC issued earlier this year in response to last year’s general rate application.

“None of those very important questions have been answered,” Spencer said.

“We don’t even know how well the power corporation kept to its budget this year. And we also don’t yet know how much QEC wants power rates to increase as a result of increased fuel prices this year.”

The power corporation filed the second application on May 27. In it, they’re seeking permission to impose a temporary surcharge of 5.48 cents per kilowatt-hour on all power bills. This would create a special fund to pay for new power plants and power plant upgrades in a way that spreads the cost evenly throughout Nunavut.

But the Iqaluit business group now accuses the power corporation of deception: hiding a full-blown rate increase inside its capital rate rider application.

“It is apparent that this second request is nothing but a full rate increase by a different name,” the chamber says in a lengthy report released to the public this week.

The chamber alleges that the second proposal, if accepted as is, would extract an extra $8 million a year in revenue from customers after it goes into effect on April 1, 2006.

That’s roughly equal to the $8.3 million a year in extra revenue that will be produced by rate increases approved early this year in response to the general rate application that the power corporation filed in the fall of 2004.

Attached to Spencer’s letter is a 32-page report that attempts to explain how a series of political failures and administrative blunders transformed the Northwest Territories Power Corp. – in Nunavut – from a healthy, profitable utility into the money-losing entity now known as the Nunavut Power Corp.

The report suggests that the bungled decentralization of the NPC’s head office from Iqaluit to Baker Lake in 2001 contributed to staggering financial losses in the power corporation’s first two years and that the company’s customers should not have to pay for them.

“Business customers, however, do not feel that they should be responsible for subsidizing costs resulting from the application of Nunavut-wide government priorities, such as decentralization, to the power corporation,” the chamber says.

In contrast, the chamber praises the Nunavut-Northwest Territories Workers Compensation Board for its ability to “resist” a proposal to decentralize its office from Iqaluit to Pangnirtung in 2003.

The WCB refused to make the move, after a consultant’s report showed that relocating to Pangnirtung would make the organization less efficient and lead to higher rates for the businesses that pay into its compensation fund.

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