Iqaluit chamber burns Qulliq
Consumers will pay for power increases, businesses warn
Iqaluit’s business lobby has come out swinging against the latest bid to bump up power rates in Nunavut.
In late May the Qulliq Energy Corporation applied to the Utility Rates Review Council to raise rates further with a special surcharge to help offset capital costs, known as a capital “rate rider.”
The QEC has permission from the URRC to use two rate riders, in addition to a 16.5 per cent rate increase that came into effect April 1.
One rate rider, to adjust for rising fuel costs, has yet to appear on customers’ power bills – but the power corporation already has permission from the URRC to impose one if necessary.
The other rate rider, to create a special pot of money called a capital stabilization fund, is aimed at helping spread the cost of power plant upgrades among all Nunavut communities.
The QEC submitted a capital fund application recently, at the URRC’s request.
But Ken Spencer, president of the Iqaluit Chamber of Commerce, said the strategy of tacking on extra fees makes him wonder if much has changed since October 2004.
At that time, the QEC applied for a Nunavut-wide, one-price-fits-all rate increase that was maligned by Iqaluit businesses and eventually rejected by the URRC. Spencer said the power corporation remains mired in debt from earlier years of mismanagement, and he’s concerned not enough has changed.
“They asked for a huge amount in the rate application to secure outstanding debt,” said Spencer, referring to last year’s rate increase bid. “We don’t think their intention has changed. They’re just going at it a little bit at a time.”
This slow creep of surcharges will lead to higher costs for heating offices, run refrigerators and other power-related expenses, he warns, and these higher costs will ultimately be passed back down to consumers when they shop for groceries and pay their bills.
“Eventually, it’s going to come down to the consumers who have to pay for this.”
As it stands, he said there are few ways for businesses to gauge the total impact of both riders.
The fuel rider application has been accepted by the URRC, but there’s not yet any indication just how much the extra surcharge will be, nor has the Nunavut government announced what subsidies will be available to offset the additional fuel costs.
Spencer said he would rather see all costs presented at once and debated in public. “Let us know what the total impact is,” he said.
He’s also concerned there are few details available about how money raised for the capital fund will be spent. And he has gripes with how numbers are presented in the application.
Spencer said the application for the capital rider contains some misleading information, because the five-year projection doesn’t include rates with the proposed capital rider included. This reminds him of the failed rate application last year, which contained numbers later revealed to be wrong.
“The chamber’s members are tired of crunching numbers they can’t trust,” he said. “We feel it’s a breach of trust.”
When added up, Spencer said the number of concerns create uncertainty that could shake Iqaluit’s fragile business environment.
“You don’t know when the next one will come, and by how much.”
The capital rider application was in fact requested by the URRC as a means of spreading the burden of large capital expenditures among communities.
Under the old system, inherited from the NWT Power Corp., each community had to pay for local power upgrades through jacked up fees, which sometimes led to astronomical increases.
What would convince the chamber that QEC’s financial house is in order? Spencer suggests an outside firm should be brought in to help streamline the organization, which was among the URRC report’s suggestions.
“You can’t do it internally. You need to have someone to look at it from an external perspective.”
Criticism has also been launched at QEC for the application’s timing, which coincides with the summer vacations of many local business owners. But the QEC had to make the application within 90 days of the URRC report in mid-February this year.
The chamber came up with its position after numerous meetings and conference calls with its members, which included executives of larger companies like the Northern Store, Northwestel and First Air.