Paying for power at the cash register

Back in 1986, the irrepressible Gordon Wray, an unjustly forgotten MLA who at that time represented the people of Baker Lake and Arviat in the Northwest Territories Legislative Assembly, had a long chat with a young reporter from Nunatsiaq News.

His subject: the impending divison of the Northwest Territories and the creation of Nunavut, and his deep concerns about the Nunavut territory’s ability to survive.

“They think it’s easy? Just wait until they try to split the power corporation,” Wray said.

He was right.

The question of what to do with the NWT power corporation led to a convoluted mess. At first, leaders tried to keep it in one piece, to be shared between the two territories after 1999.

But NWT leaders got greedy. They insisted that the NWT government would name a majority of its board members, own a majority of its shares, and get the biggest share of its profits, or “dividends.” This was unacceptable for Nunavut leaders, for obvious reasons.

So not long after 1999, they created the Nunavut Power Corp. On April 1, 2001, it went into business.

As we know now, the new made-in-Nunavut utility began losing money at an alarming rate, especially in its second year, for a long list of reasons: incompetence by now-managers inherited from the NWT, rising fuel and labour costs, and prices that are too low. And the NWT still owes Nunavut millions of dollars in an unresolved dispute over division of the power corporation’s assets and liabilities.

At the same time, its former managers couldn’t produce financial statements on time. That meant few people learned of its worst financial losses until earlier this year, when the Auditor General of Canada issued her scathing report on Nunavut’s Crown corporations.

And without the information contained in those long-delayed financial statements, the power corporation could not supply the back-up needed to explain why they must charge higher power rates.

Now, the power corporation’s board intends to finish the job. They’ve done what could not have been done in the recent past: propose a brand-new rate structure.

Their plan, released last week, will dramatically change the way that the Nunavut Power Corp. calculates your power bills. If their scheme goes forward as is, you will pay the same rate no matter where you live in Nunavut.

It’s an idea with a lot of merit. Nunavut’s current rate structure is incomprehensible to most residents; the new plan is simple and easy to understand. It will surely turn out to be an easier system for the power corporation’s billing clerks to administer.

And as the power corporation correctly points out, large numbers of residents already pay a “territorial rate” — because they’re protected by territorial-wide subsidies. Social housing tenants will see no change. Homeowners and tenants in privately-owned housing may see minor changes, but only if they use more than 700 kilowatt-hours a month.

There’s just one hitch.

If you live in Iqaluit, Rankin Inlet and a few other large communities, you may end up paying a lot more. But not through your power bills. You will end up paying more at the cash register, whenever you shop for food and clothing.

Here’s why: Right now, the lowest commercial rates are charged to businesses located in larger communities such as Iqaluit and Rankin Inlet, Igloolik, Cambridge Bay, Panniqtuuq, and Baker Lake.

When the new territorial-wide rates come into effect, retail stores, hotels and other small businesses in those communities will see a dramatic jump in their power bills. In Iqaluit, small businesses will pay nearly twice as much as they do now for the electrical power they need to run their freezers, kitchens and storage areas.

When that happens, those businesses will make you pay for it, every time you go to the store to buy Enfalac, pilot biscuits, or pork chops. That’s what businesses must always do to survive when their costs go up — raise their prices.

It’s likely that the power corporation’s proposal will go forward more or less in its current form. Right now, Nunavut’s small business community is weak and disorganized — their chambers of commerce may not have the capacity to challenge the new rate structure.

But when your food bills go up next year, it’s not food that you’ll actually be paying more for, but the store manager’s power bills. JB