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July 21, 2006

Nunavut needs an energy policy

Most people in Nunavut believe, understandably, that we pay too much for electrical power and fuel.

They’re wrong. The reality, likely, is that we may still be paying too little. But our energy prices have taken such a big leap over such a short period of time, that’s not how it feels.

In the period between about 1994 and 1998, energy prices were just about the lowest in history — adjusted for inflation of course. Since then the price pendulum has swung rapidly in the other direction. But though they may now seem astronomical, world oil prices are only slightly higher than their historic average. For example, information recorded by the U.S. Energy Information Administration shows that gasoline prices — adjusted for inflation — are now only slightly above their average price for most of 20th century.

In other words, we saw prices for fossil fuel products in the 1990s that were cheaper than we will ever see again.

Since that time, the price shock has hit Nunavut hard, driving up the cost of everything, from airline tickets to loaves of bread. The ill-prepared Nunavut government, through agencies such as the Qulliq Energy Corp. and the Petroleum Products Division, is forced every year to pay higher prices for the diesel fuel they burn to make electricity, the heating oil that keeps us warm in the winter, and the gasoline that runs our vehicles.

Energy costs now burn up at least one-quarter of the GN’s budget each year. Some people have joked that it may be cheaper for Nunavut to generate electrical power by using furnaces stoked with $20 bills.

Until at least some Nunavut communities are moved onto either hydro-electric power, or even some form of wind power that can be made to work in the Arctic, our utter dependence on expensive and dirty fossil fuels will continue, stunting our economy and making the cost of living unbearable for the poor.

It’s obvious that Nunavut needs an energy policy. The consultants who did last year’s external review of the Qulliq Energy Corp. recommended that Nunavut develop one by the end of the 2006-07 fiscal year, with the QEC doing the work, and the GN paying the bill for it.

This is just plain common sense. And it shouldn’t have to take a group of consultants to tell the GN to do something they should have done long ago.

Nunavut’s energy policy should, at the very least, answer the following questions:

• What is the GN’s position on climate change and the Kyoto Accord?

With their performance on this issue so far, the Nunavut’s floundering territorial government has solidified its well-earned reputation for cynicism and duplicity. At the same time, the legislative assembly’s avoidance of the issue has solidified that body’s well-earned reputation for irrelevance and ineptitude. MLAs, after all, have better things to talk about — such as teachers with pet snakes.

Though the GN’s leaders show remarkable ingenuity in their ability to dodge the issue, it is now undeniable that global warming affects the Arctic more dramatically than it affects any other region on Earth, with the possible exception of the Antarctic. A very large chunk of the Arctic lies within Nunavut’s borders. So it is not unreasonable to expect that even Nunavut’s clownish territorial government might manage to say something coherent about global warming some day.

A coherent energy policy must state what the GN stands for on global warming and on the reduction of carbon dioxide emissions. If the GN is against Kyoto, fine. They should say so in their energy policy, and state why. If they’re for it, that’s fine too — but they had better back up such a commitment with a credible plan for reducing carbon emissions.

The point is that the GN must end the current confusion over where it stands on global warming. An ideal place to do that would be within an energy policy.

• Should the Government of Nunavut use surpluses, or dividends, from the power corporation to pay for consumer subsidies?

This was how the old Government of the Northwest Territories found money to help pay the cost of subsidizing small power customers, especially homeowners and social housing tenants. The power corporation was allowed to charge rates high enough to produce a profit, which was returned to the territorial government, its sole shareholder, as a dividend. The GNWT then used this dividend to finance subsidy programs.

The GN’s current approach to the QEC has never been clear. But even an immature government like the GN should be able to make a decision on such a simple policy issue. And the GN’s behaviour generally suggests it’s their ultimate goal to use power corporation dividends in the way that the GNWT used to use them.

If so, then the GN should say so, in a clear, unequivocal policy statement that everyone can understand.

• Should the old Petroleum Products Division be restructured as the Qulliq Fuel Corp., and become a subsidiary of the QEC?

The GN was supposed to do this as of April 1, 2005, following a recommendation contained in the Ikuma II report. We’re still waiting for it to happen, though QEC’s web site still says this: “By April 2005, it is anticipated that Qulliq Fuel Corporation will be responsible for the procurement, transportation, storage, delivery and resale of all petroleum products in Nunavut.”

This, however, appears to be a good idea. One agency would purchase and handle all fuels for Nunavut, including the large amounts of diesel and lubricant that the QEC’s generating stations consume each year. That means simpler, more cost efficient contracts for supply and shipping. And it means the production of an annual report and financial statement that reveals the true cost of energy in Nunavut.

If the GN still believes that a stand-alone fuel corporation is a good idea, then they should get on with it — and back it up with a clear policy statement. JB

Baffin's best-kept secret

"Turbot: Savour the Arctic's Best Kept Secret."

That's the catch-line on a promotional handout that the Baffin Fisheries Coalition gives away at trade shows and meetings.

Based on a recent review of Nunavut's fishing industry done for the Nunavut government by a Halifax-based consultant called Tavel Ltd., that's an apt slogan.

Because if there ever was a public resource in Canada that's shrouded in secrecy, it's the fishery. That's especially true in Nunavut.

In their report, the consultants recommend that companies who get fish quotas be required to supply basic information about how they're governed, how they plan to use the money they make catching fish, and what benefits they will create for Nunavummiut

This ought to be a no-brainer. Nunavut's offshore turbot and shrimp fishery is among the last remaining sets of healthy fish stocks left on the planet, and the management of this public resource is everybody's business.

If you want a useful comparison, just consider the vast amounts of detailed information that the mining industry must give to regulators - and the public - before they're allowed to even begin the exploitation of public mineral resources.

In Nunavut, mining companies such as the Tahera Diamond Corp. and Cumberland Resources Ltd. must supply environmental impact statements, project descriptions, socio-economic studies, reclamation plans and much more. If they don't supply enough information, bodies such as the Nunavut Impact Review Board and Nunavut Water Board may delay licence and permit applications until the information is supplied.

All documents supplied to regulators by such companies are available on a public FTP site, at ftp.nunavut.ca. Anyone with a computer and access to the internet can download the information and read it.

And because the shares of virtually all mining companies are traded on stock markets, their financial information is also readily available to the public. That's because security regulators require them to publish quarterly and annual financial statements, annual reports, and any other information that could affect the financial standing of a company.

Want to know how much profit Tahera believes it will earn from the extraction of diamonds at the Jericho mine? For an easy answer to this and numerous other financial questions, you need only go to their web site at www.tahera.com, or you can look them up at www.sedar.com, a public database.

The companies that exploit Nunavut's fishery, on the other hand, are not burdened by such requirements.

For example, here's the consultants description of their attempt to get information from the Qikiqtaaluk Corp., which is "owned" by land claim beneficiaries the Baffin region:

"The consultants received very limited verbal information from QC and did not receive any of the requested written information."

Another example occurred at a meeting of the Senate fisheries committee one day in the spring of 2005, when officials, including lawyers, from Nunavut Tunngavik Inc. and the Nunavut Wildlife Management board, couldn't provide straight answers to simple questions about what benefits Inuit are getting from the activities of the Baffin Fisheries Coalition. Their performance was an embarrassment to Nunavut.

The consultants also noted that it's the BFC that provokes the greatest concerns about lack of accountability and transparency. Whether that's fair or not, it's not surprising, given that four little-known for-profit companies sit beneath BFC's shell, two of them partly owned by a Greenlandic-Icelandic firm.

"We did not investigate who has the effective ownership of this company," the consultants reported.

They find, however, that staff wages and honoria for BFC board members have gone up sharply recently, from 11 per cent of royalties to 25 per cent of royalties, raising questions about the effectiveness of the organization's board:

"The Nunavut practice of paying honoraria for every meeting - and for some organizations to pay bonuses as well - means that disproportionate benefits can be collected by a few members."

And:

"Are the board members up to the task? - Complaints of directors not reporting back to shareholders, and shareholders feeling that they do not have any say in the direction of the company."

To be fair, the BFC is a new organization with a complex, multi-layered structure. And none of the other players in the fishery provide much information either. The consultants point out that the BFC could be just the first of many firms exhibiting the same problems.

However, those who profit from public resources must be held to a high standard of accountability, and so must the government organizations that are supposed to protect the public interest, such as the Nunavut Wildlife Management Board, the Department of Fisheries and Oceans, and the Government of Nunavut.

The consultants recommend that companies receiving fish quota in waters adjacent to Nunavut must supply business, governance and benefit plans to the NWMB.

This is a good start, but it doesn't go far enough. They must also be required to provide this information to the public. JB

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