Double whammy

Get ready to pay more for just about everything.

That’s because the Government of Nunavut hiked fuel prices and power rates together this past Nov. 1 in the face of rising world petroleum costs.

The GN’s long-awaited fuel price increase is simple: for all classes of fuel products, including gasoline, home heating oil and naptha, Nunavummiut will pay 10 cents a litre more than they paid before, plus GST.

The GN calls it the “10-cent-solution.” That’s because consumers will bear only half the burden of paying this year’s real fuel price increase in Nunavut, which amounts to 20 cents a litre.

The GN will pay the other half, in the form of a higher fuel subsidy, splitting the difference with consumers.

Levinia Brown, the minister of Community and Government Services, said the GN estimates this will cost her government about an extra $9 million.

“We have no control over world prices, but the GN has done the best we can. I think we’ve done a pretty good job in subsidizing fuel prices,” Brown said.

It’s Brown’s department, through the Petroleum Products Division, that buys Nunavut’s entire fuel supply each year and re-sells it to Nunavummiut through various contracted distributors. The GN subsidizes consumer fuel prices by drawing on a special pot of money called the “petroleum products stabilization fund.”

The price hikes will likely hit private homeowners and businesses the hardest. Social housing tenants don’t pay for home heating oil, and will continue to pay a low rate for power.

So most Nunavummiut will notice the higher prices only when they buy gasoline for their vehicles or fuel for their Coleman stoves.

But Brown said that even with this week’s hike, gasoline prices in other Arctic communities are still higher, generally, than in Nunavut.

In Kuujjuaq, the price per litre jumped earlier this fall to a whopping $1.66. In Churchill, Manitoba, it’s now $1.46 per litre and in Inuvik, $1.21.

In Iqaluit, the price of gasoline will rise from about $1.08 per litre to about $1.18.

As for the GN’s one per cent internal cost cutting plan, announced this past September by Premier Paul Okalik, Brown said it’s too soon to tell how much the GN will save.

She said the effect of those cost saving measures won’t likely show on the GN’s books until some time next year at the earliest.

That effort, aimed at trimming $10 million in spending to reduce an expected deficit, focuses heavily on energy conservation. That’s because in each of the past two fiscal years, rising fuel costs sucked $30 million out of the GN’s operating budget and continues to threaten the government’s financial health.

Brown did say, though, that her CGS department is analyzing how the new fuel prices would affect municipal governments.

It’s also too soon to tell how the new prices will affect retail businesses that sell food to Nunavummiut, such as co-op and Northern stores, and whether higher food prices will follow.

But for the Qulliq Energy Corp. and its customers, the price shock is immediate.

The power corporation will charge its customers more for electricity, also starting Nov. 1. That’s because, like every other fuel customer, the QEC must pay the GN’s new fuel prices for the diesel they use to generate electricity.

They will cover it through an increase in their fuel stabilization rider: a special surcharge that’s slapped onto all customer power bills.

Their current rate rider of 3.98 cents a kilowatt hour will be replaced by a bigger one: 7.87 cents a kilowatt hour.

The power corporation has sent an application for a rate rider increase to the Utilities Rates Review Council, which has 90 days to make a recommendation on the proposal to Ed Picco, the energy minister.

If the URRC recommends a lower amount, consumers will get a rebate to make up the difference.

The QEC says the average homeowner will pay about $30 a month more, starting with their December power bills, which will cover power consumed after Nov. 1.