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March 4, 2005
What’s in the URRC report?
NUNATSIAQ NEWS
In its report on the Qulliq Energy Corp.’s general rate application, the Utilities Rates Review Council took a close look at the power corporation’s expenses to try to figure out how much extra money it needs to reach the break-even point.
Here are some highlights:
- The URRC said no to QEC proposals for small surcharges aimed at paying for alternative energy projects, environmental clean-ups and training beneficiaries.
- If the power corporation demonstrates “prudence,” and an effective financial management plan, it may qualify for another, smaller rate increase on April 1, 2006
- The URRC approved the use of a temporary, Nunavut-wide surcharge on customer bills called a “rate rider,” should the power corporation’s fuel stabilization fund rise or fall by $1 million. If the rider is needed, the QEC would apply for it, and the minister would approve it. If the fund rises by more than $1 million, the “rider” could become a rebate to customers.
- The URRC says the power corporation should use a different type of rider to pay for infrastructure improvements at community power plants — an “equalization rider.” The power corporation must apply for one within 90 days.
- The URRC concludes that the power corporation needs $69.6 million from its customers to break even on its operating budget.
- Under its current rates, the power corporation would face a revenue shortfall of $12.47 million.
- Under the new rates announced this week, the power corporation would face a revenue shortfall of only $4.1 million this year.
- To make up for that shortfall, the URRC has asked the power corporation to try to make internal savings in the following areas: employee salaries and benefits, including overtime; employee travel and accommodation; supplies and services.
- Though the QEC forecast wage and benefit costs of $17.3 million for the upcoming year, the URRC said $16 million is a more realistic amount, especially if the corporation cuts back on overtime.
- The URRC recommends that the Nunavut government hire an engineering or consulting firm to review the power corporation to find ways of streamlining it and regaining public confidence.
- The URRC says the QEC should consult with customers before filing its next rate application; the QEC has already said it will do that.
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