Power corporation climbs out of the red

The Qulliq Energy Corp. last week produced more information that will help the GN figure out how much money to charge its power customers, with the release of its 2003-04 annual report, which shows a $9.4 million operating loss, but a $4.5 million overall profit.

“Now, everything is settling down and I think what the government wants, the direction it wants, is clear now, so I think things are starting to click,” said Simon Merkosak, the chair of the Qulliq Energy Corp.’s board.

The corporation’s revenues for 2003-04 were boosted by a $14 million GN contribution to its fuel price fund approved by the legislative assembly in 2003.

The money was to make up for the loss of a proposed rate rider that the GN withdrew that year after the idea of higher power bills ran into a barrage of political opposition.

But now Merkosak and Ed Picco, Nunavut’s energy minister, each say this latest batch of financial data helps to show how much revenue the corporation needs to operate.

In turn, that helped the Utilities Rates Review Council, or URRC, figure out how what kind of rate increases to recommend. The URRC got an early look at the new numbers about three weeks ago.

“The long and the short of it is I think it’s a good statement. It identifies more clearly the revenue requirements for the corporation,” Picco said.

Picco received the URRC’s recommendations on Jan. 31. The minister now has 30 days to either accept them or request that the URRC make changes to them.

The power corporation, the minister and various GN bureaucrats will now study the recommendations, and when the URRC’s report is made final, it will be released to the public.

The corporation’s latest financial statements cover the period between April 1, 2003 and March 31, 2004, the corporation’s third year. The statements have already been scrutinized by staff at the office of the Auditor General of Canada.

With the financial information, and after studying the URRC’s recommendation, Picco said he will announce new power rates after Feb. 22, when the legislative assembly resumes sitting.

And he said that after April 1 this year, when the new rates come into effect, the power corporation should become financially stable.

This year’s financial statements were about six months late.

Merkosak says his board is now committed to having the corporation produce its next financial statement – for 2004-5 – within 60 days after March 31, 2005, when the fiscal year ends.

And Picco says that, although there are still “logistical and administrative issues with the corporation,” he believes it’s now heading in the right direction.

Right now, they’re ready to soon hire a financial expert to provide the board with financial advice independent of the company’s management. They’ve also hired three new financial staff, and cut back on a variety of expenses.

After April 1 this year, they’ll be issuing bills in Inuktitut.

Highlights of the new financial statement and annual report:

* Nunavut lost a dispute with the Northwest Territories over division of the old NWT power corporation’s assets and liabilities, producing a $5.6 million bill that the GN’s Department of Finance must pay to the GNWT;
* The power corporation’s debt-equity has improved to .76 to .24, bringing it closer to the three to one ratio required by territorial law;
* In 2003-04, the corporation sold $54.5 million worth of electricity, but rang up expenses of $63.9 million;
* The corporation’s biggest expenses are for fuel and lubricants (41.4 per cent of total expenses), and salaries and wages (32.6 per cent of total expenses.)