Have they got the guts?

There’s no getting around it: The Nunavut Power Corporation does not receive enough revenue to cover the rising cost of providing electrical power to Nunavut residents.

That simple fact is repeated several times in Auditor General Sheila Fraser’s recent Nunavut report, which devotes two chapters to financial bungling within the NPC and other Crown corporations between 2001 and 2003.

Understandably, the public have focused on what went wrong during those years: the inaccurate budgeting, the absence of timely financial information, the messed-up power bills, the cost overruns, and the extravagant bonuses that senior staff paid themselves.

The Nunavut government, however, is well on its way to fixing those problems. They’ve cleared out the senior staff who were in command at the time and replaced them, they’ve hired three new financial workers for the corporation’s head office, and they’ve set up a cabinet committee to keep an eye on Crown corporations.

Despite those improvements, there’s something else the power corporation badly needs – more money.

Nunavut’s power rates haven’t changed since 1997. Since then, fuel, labour, and other overhead costs have all risen sharply – so even a well-managed NPC is set up to lose money right now. In her report, Sheila Fraser says the power corporation must raise its rates, and also impose a “fuel rider” to cover the rising costs of the diesel fuel that’s burned to generate electricity.

In the last legislative assembly, neither the cabinet nor the regular members caucus had the guts to support either a fuel rider or a new rate system. Maybe it was because they were too scared to face the voters in last February’s election after having jacked-up their power bills, or maybe it’s because a lack of clear information kept them from seeing the true state of the corporation’s finances.

But will they have the guts now?

If the government were to combine rate increases with subsidies to protect consumers, including businesses and municipal governments, it could be relatively painless. Keep in mind that 84 per cent of the money the corporation gets from selling power is paid either by the territorial government, or by organizations funded by the government. Businesses and consumers pay the rest – so it should be possible to come up with a system that protects vulnerable customers from the shock of higher rates.

If they don’t come up with something soon, they may end up presiding over a spectacular bankruptcy. JB