Homeowners and business should oppose one-rate system

Do the people of Iqaluit, and some other large communities in Nunavut, know what is about to hit them? I don’t think so.

Qulliq Energy Corporation (which is in effect the Nunavut Power Corp.) filed its General Rate Application a month ago, and there has been little said about it by the public. There will be community hearings in certain communities including Iqaluit, but unless people know what is in the General Rate Application, it’s unlikely that they will attend the hearings and object to what is being proposed.

Right now, every community has its own rate based on its own costs. This is the way it’s always been. What QEC is proposing is that there should be one territorial rate — everyone should pay the same. This means that in some communities the rate will go up and in others the rates will go down.

Under the present proposal, Iqaluit will face a 92 per cent increase in commercial power rates. (And Rankin Inlet 65 per cent, Igloolik 64 per cent, Pangnirtung 54 per cent, Baker Lake 41 per cent, Cambridge Bay 41 per cent.)

This will affect all businesses in these communities, and they will have to pass their increased costs on to their customers, who already face a very high cost of living. These increased rates will especially hit stores and restaurants and hotels which sell food, because of the high power consumption of freezers and coolers, but it will also affect every other business in these communities. This increase will make some existing businesses unviable. Some will fail.

These rate increases will also affect homeowners and renters who are not in government or public housing. Homeowners and renters will also face major increases in power costs, in the case of Iqaluit a rate increase of approximately 84 per cent.

This will be devastating to many homeowners who struggle with high mortgage costs, high land lease costs, increasing property taxes, high water and sewer rates, and already higher fuel costs. And there is no guarantee that the Government of Nunavut will continue to subsidize the first 700 kilowatt-hours of residential consumption — Qulliq Energy’s press release says so.

Iqaluit faces other costs that are higher than those in other communities, in particular the high cost of property taxes, which are expected to increase because of the need of Iqaluit’s city council to provide public infrastructure of benefit to all of Nunavut’s citizens by virtue of Iqaluit’s position as capital. Council has already stated that tax revenues are not adequate to keep up with the infrastructure needs, particularly in water and sewer and roads infrastructure.

Everyone will acknowledge that our power is diesel generated and fuel costs have increased. Everyone should therefore understand the need for a rate increase of some size.

However, larger communities that have economies of scale should not be expected to subsidize the costs of smaller communities, which lack economies of scale.

There is no justification for a one-rate system of power rates.

I do not agree with the concept of a one-rate system because it leads to increases of an unconscionable magnitude in some communities. Nunavut should continue to have community-specific power rates.

Nunavut Power Corporation should not be used as a means of carrying out GN policy (if there is such policy) in regards to the economic viability of small communities. If the GN wants to increase the viability of small communities which lack certain economies of scale, it should explore other means to support them, including community-specific GN subsidies.

Nunavut Power is in the deficit position it is in, in part because of mismanagement since the creation of Nunavut, at both the political and bureaucratic levels. Power rates should have increased long ago, and if they had, they would not need to jump now to such a high level.

Power Corporation officials had a proposal ready well before the last election to add a fuel cost rider to power bills, and this would have been justified, but it was killed because an election was coming. This only exacerbated the deficit and the rate at which it grew. The GN should seek ways to bail out the Power Corporation on a one-time basis, so that it can start again with a clean financial slate. We, the consumers, should not now be saddled with the responsibility of paying off a debt incurred in part through mismanagement.

The Nunavut Power Corporation should seek to recover, through legal means, the bonuses paid to senior management who got paid bonuses for fiddling while Rome burned.

There are other things wrong with this process. The minister responsible for Qulliq Energy is obliged by legislation to seek the advice of the Utilities Rates Review Council (URRC), but he is not bound by its recommendations. This body is therefore much weaker than what we used to have to deal with rate increases, a Public Utilities Board.

Nonetheless, URRC is going to have hearings, and they have sprung them on us quickly — on purpose I think so that communities, especially Iqaluit, do not have an opportunity to get their opposition to these rates organized.

I hope that every business owner and every homeowner and every renter not in public or government housing, and everyone who aspires to buy a house in the future, in every community whose rates will increase to subsidize those of other communities, attend these hearings and avail themselves of their right to be heard.

Businesses, homeowners and renters should not rely on a few vocal spokespersons to represent them on this matter. The numbers of interveners will matter. Hundreds of people should attend these sessions.

Call your MLA. We have three of them representing Iqaluit, and each one of them represents a riding with lots of homeowners and lots of votes. Two of them are in cabinet where the decision will ultimately be made. Demand that they oppose this one-rate proposal. Call your city councilors and the mayor and demand that council vigorously oppose it as well. Call the Chamber of Commerce.

Demand that the URRC’s public hearings in Iqaluit be delayed to allow the people of Iqaluit time to consider this proposal, and to gather the necessary facts and figures to properly oppose it. And if the hearings go ahead as scheduled — or whenever they go ahead — go and speak your mind and kill this proposal.

Kenn Harper
Iqaluit