Scrap NPC rate proposal, Iqaluit businesses say

Nunavut’s largest business organization says the Qulliq Energy Corp. should scrap its one-price-fits-all power rate proposal and replace it with a temporary 17 per cent, across-the-board rate hike to give everyone time to create a better way of paying for electrical power in Nunavut.

The Iqaluit Chamber of Commerce made the recommendation in its final written submission to the Utility Rates Review Council near the end of December.

The QEC’s new system, if accepted as is, would impose a 106.8 per cent increase on Iqaluit commercial power customers.

“The General Rate Application in its present form is unsubstantiated in many respects, lacking in justification, manifestly unfair, and should be rejected,” the chamber says.

But the Iqaluit chamber’s submission not only contains severe criticisms of the price shock that customers in Nunavut’s larger communities would feel because of the QEC’s one-rate proposal; the chamber also says the entire review process is badly flawed.

The chamber says that’s because the URRC is forced to make decisions on two complex issues that should have been handled separately, but have been combined into one package.

Instead, the chamber says, the process should have been split into two phases.

The first phase should have been a set of hearings aimed at figuring out how much extra money the power corporation needs, and why.

The chamber says the second decision — the actual setting of rates — should not take place until the power corporation’s “revenue requirement” has been determined.

That job ought to take about six months, the chamber says.

In the second phase, the regulator would then decide who should pay how much, and why. To that end, the second phase would include a “cost-of-service-study” aimed at figuring out how much it costs to generate power in each Nunavut community.

That’s because the power corporation has not provided enough cost of service information, the chamber says.

“The inadequacies of the cost of service information relied on by the Qulliq Energy Corporation have already been pointed out to you by several presenters,” the chamber’s submission says.

The chamber also accuses the Nunavut government — the power corporation’s owner and only shareholder — of being absent from the process, and says the GN has been “silent” on a variety of important issues.

For example, they say the GN has not stated what it plans to do with its power rate subsidies for homeowners and public housing tenants, which were created under the Government of the Northwest Territories and are based on obsolete Yellowknife-based standards.

And they also criticize the GN for not stating how much money it plans it put into the power corporation and how that money is to be used.

“Statements made by the Minister of Finance in the Legislative Assembly in November revealed that while significant monies have apparently been set aside for contributions to the power corporation in the coming year’s budget, it is not yet clear where those monies might be allocated and to what purposes,” the chamber says.

The chamber’s four recommendations to the URRC are:

1. Reject the current one-rate proposal.
2. Recommend a 17 per cent “rate rider,” to be applied across the board on top of the current rate system, to give the power corporation more revenue in the interim.
3. Establish a “collaborative” method for designing a new rate system that involves Arctic Co-ops, the Northwest Company, Nunavut Tunngavik Inc., the Nunavut Economic Forum, URRC advisors, the Iqaluit Chamber of Commerce, the Nunavut Association of Municipalities and other groups.
4. Develop a “made-for-Nunavut” energy policy.

The Qulliq Energy Corp. filed its rate proposal on behalf of its subsidiary, the Nunavut Power Corp., this past October. It would erase the 25 different community rate schedules used now, replacing them with one commercial rate and one residential rate for all of Nunavut.

After the URRC has finished studying the proposal, they’ll hand their recommendations to Energy Minister Ed Picco.

After that, Picco will announce new rates, following a decision by cabinet.