City of Iqaluit wants changes to QEC electricity rate proposal

The City of Iqaluit is pushing back against Qulliq Energy Corp.’s proposal to change the billing structure for electricity that would result in the city receiving a 71.5 per cent increase in the electricity bills to its commercial properties.

On May 6, QEC announced its plan to change the billing structure for electricity to a territory-wide model from its current community-based model.

That would make electricity rates more equitable, according to QEC, because customers in the same category would be charged the same rates regardless of where they are located.

“In [QEC’s] attempt to generate fairness across the territory, they’ve developed an incredibly unfair scenario for the city of Iqaluit and its residents,” Coun. Kyle Sheppard said at city council on Tuesday.

That increase would mean an additional $1,335,000 per year in power costs to the City of Iqaluit, according to a report prepared by chief administrative officer Amy Elgersma.

If the city has to pay that, it will result in an increase in property taxes because those taxes are how the city generates revenue to pay its electricity bill, Sheppard said.

Nunavut’s minister responsible for the Utility Rates Review Commission is accepting public input on QEC’s proposal until June 17. If QEC’s proposed changes are approved, the new rates would come into effect on Oct. 1.

The goal for the change in the rate structure is to make power rates more equitable across the territory, QEC has stated. Currently, non-government commercial buildings in smaller hamlets like Whale Cove pay 112.8 cents per kilowatt hour compared to 48.3 cents per kilowatt hour in Iqaluit.

According to the QEC’s proposal, the territorial non-government commercial and residential properties would be set at Iqaluit’s current rate plus a territory-wide increase of 5.1 per cent.

To make up for lost revenue, QEC is proposing a territory-wide rate for government properties that will result in higher costs to larger hamlets.

For government commercial properties, that rate would be 85.3 cents per kilowatt hour. That will be an increase in government commercial properties in Rankin Inlet by 44.8 per cent, but decrease in smaller hamlets like Kugaaruk by 17 per cent, QEC says.

As a response, the City of Iqaluit is recommending that it pay the non-government commercial rate for its properties, which would be approximately 50.8 cents per kilowatt hour instead of 85.3 cents per kilowatt hour for the government commercial rate.

The reason for this recommendation is that Iqaluit generates its own revenue to pay for power, while the other municipalities in the territory receive Government of Nunavut subsidies, Sheppard said in an interview with Nunatsiaq News.

“It’s only fair that we pay a different rate than the municipalities that are beholden to the Government of Nunavut and their transfers each year,” Sheppard added at council.

The revenue shortfall if the city’s recommendation is accepted will need to be made up somewhere, Sheppard acknowledged.

If QEC were to increase its power rates by the proposed amount, raising property taxes would be the only viable option for the city since the alternative would be to cut municipal services, Sheppard said.

“I don’t think our residents would tolerate a reduction in services, if anything we need to expand our services,” he added.

QEC president and chief operating officer Rick Hunt acknowledged in a statement to Nunatsiaq News the City of Iqaluit would be significantly affected by the proposed change since it is the only municipality not relying on GN subsidies.

The city’s position shows why the feedback process is important as it affects the recommendations the corporation ends up presenting to the minister responsible for the QEC, he added.

Both the city of Iqaluit and QEC confirmed they will be meeting in the afternoon of May 25 to discuss options on mitigating the costs to Iqaluit in the power rate proposal.