QEC makes capital surcharge pitch to URRC

Capital costs to spread Nunavut-wide?


The Qulliq Energy Corp. is pitching new ways of paying for new power plants and power plant upgrades, in a proposal submitted to Energy Minister Ed Picco on May 27, and then forwarded to the Utility Rates Review Council.

The URRC asked the QEC to submit the proposal within 90 days, in its report last February on the QEC’s general rate hike application.

Their scheme would create a special pot of money called a “Capital Stabilization Fund.”

To create that fund, the QEC is proposing two options for raising the money from its customers.

The two choices are:

raise the QEC’s regular rates by 5.648 cents a kilowatt hour for all customer classes in all communities;
or, create a small surcharge to be added to power bills paid by all or most Nunavut customers – their proposal suggests 7.04 cents per kilowatt hour for a period of up to five years.
These types of special surcharges are called “rate riders.”

In the past, the old NWT Power Corporation paid for plant replacements and upgrades by simply jacking up prices in the affected communities, which sometimes produced astronomical rates in communities with small numbers of customers, such as Clyde River.

Last February, the URRC decided to keep the old NWT system of making each community pay individualized rates to cover the cost of generating power – but only for operating costs.

The URRC said the extra cost of expensive plant replacements and upgrades should be borne by customers in all Nunavut communities, and then asked the QEC for a proposal to create a capital stabilization fund through the use of a rate rider.

Right now, homeowners and other residential customers pay only 18.4 cents a kilowatt-hour for the first 1,000 kilowatt hours consumed in the six cold months of the year, and 18.4 cents per kilowatt hour for the first 700 kilowatt hours consumed in the six warmer months of the year.

Public housing tenants pay only 6 cents a kilowatt hour. Small business with revenues under $2 million a year are eligible to apply for a power rate rebate.

The URRC will study the capital stabilization fund application, receive written submissions, and then present recommendations to the energy minister, who will then announce a decision, likely by the end of the summer.

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