The customer is always right
The customer is always right. That’s a longstanding principle in business, and though it’s often honoured more in the breach than in the observance, the principal is as valid today as in past times.
The government of the Northwest Territories and the western NWT’s political leaders should have kept that principle in mind when 18 months ago they decided to start playing hard-ball with Nunavut over the question of what to do with the Northwest Territories Power Corporation after April 1, 1999.
The result? The NTPC will effectively lose its largest single customer after April 1, 2001, and now faces an uncertain financial future under an NWT government that also sits on shaky financial ground, while facing an even shakier political future.
The group of western political leaders who pushed the GNWT into a negotiating position that would have left Nunavut owning only 40 per cent of the shares in NTPC and holding a minority of seats on NTPC’s board have left the Nunavut government with no choice but to go it alone. In deciding to create an independent Nunavut Power Corporation by April 1, 2001, the Nunavut government has made the only choice that makes sense for Nunavut residents.
Leaving aside the hard-line approach taken by western leaders towards the sharing of NTPC after division, the company in recent years has been moving in a direction that is not in the best interests of Nunavut.
They have moved away from the cross-subsidization of rates between large and small communities towards a community-based rate system in which small, high-cost communities have been pounded with steep rate increases and have been forced to bear the full cost of building new NTPC infrastructure.
For example, in Clyde River, where the municipal government is now staggering under the burden of a $600,000 deficit, the NTPC has proposed rate increases of up to 35 per cent to pay for badly needed improvements to the community’s generating plant.
Any deficit recovery plan that might be devised for Clyde River could be undermined by such an increase. As well, the local Northern store would be forced to hike prices, ultimately adding to the Nunavut government’s social assistance costs.
As well, if the Nunavut government had agreed to the western position on sharing NTPC, they would have been left with little influence over the power corporation’s actions and policies. The Nunavut government would have no ability to prevent the NTPC from carrying out measures that, while good for the west, could do serious damage to Nunavut’s economy and social well-being.
With a Crown corporation under its direct control, the Nunavut government won’t have to worry about the capricious actions of a western-based power corporation that’s dominated by western political and financial interests.
These fears are real. The NWT government that will emerge after the December territorial election in the west is facing a huge potential budget deficit in its next fiscal year. The temptation to raise some extra cash by privatizing the NTPC will surely be a great temptation within such an uncertain financial environment.
If western leaders had their way, the government of Nunavut would have no means of protecting the interests of Nunavut residents against the effects of such actions. The creation of a Nunavut Power Corporation will eliminate that dangerous imbalance. JB