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Power rates up 5.9 per cent Oct. 1

But at long last, QEC makes a profit

JIM BELL

The QEC’s first profit, recorded at the end of its 2005-06 fiscal year, is a “significant milestone for the corporation,” Energy Minister Ed Picco says. (PHOTO BY JIM BELL)

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Ed Picco, the Nunavut energy minister, announced the increase this past Friday, following a recommendation from the Utility Rates Review Council.

Because of various GN subsidies, however, only a small number of customers, mostly business owners, will pay the full increase.

If you live in a social housing unit, you will see no change in your power bill. The GN’s heavily subsidized rate of 6 cents per kwh for social housing tenants, in effect since 1996, will stay as is.

If you live in a privately-owned dwelling unit, you will pay only 1.1 cents per kwh more, when the subsidized residential rate rises from 18.4 cents per kwh to 19.5 cents. The GN estimates this amounts to about $10 a month more after Oct. 1.

Those subsidized rates for residential customers apply between Oct. 1 and March 31 to the first 1,000 kwh consumed each month. In the six spring and summer months, the subsidized portion drops to 700 kwh.

Also, the 3.98 cent per kwh fuel rate rider that customers have paid since Nov. 1, 2005 will be removed Oct. 1.

Picco said the QEC does not yet know if a new rider will be imposed, since they’re still waiting for this year’s final fuel price information from the Department of Community and Government Services.

Since Nunavut’s fuel supplies for 2006-07 are still being delivered, that information won’t be revealed for several weeks, Picco said.

But he did say that this year’s fuel-price shock may be less than expected. That’s because world oil prices are dropping slightly and the Canadian dollar is gaining in value, which improves Nunavut’s buying power.

Meanwhile, the QEC revealed that for the first time in its five-year history, they’ve made a small profit.

Their financial statement for 2005-06, signed off by the Auditor General of Canada, shows that in the fiscal year ending March 31, 2006, the QEC, with revenues of $69.04 million and expenditures of $67.26 million, produced a surplus of about $1.7 million.

“This is a significant milestone for the corporation,” Picco said.

He said the QEC achieved this by better management and better cost controls, pointing out that the corporation’s costs per kilowatt hour are lower than in 2001, in spite of higher fuel prices.

The 5.91 per cent rate increase that the URRC eventually accepted is a little lower than the 6.1 per cent that the power corporation requested in its application of May 9, 2006.

But Picco suggested that the URRC took the corporation’s improved efficiency into account, and said the lower rate “won’t tip the power corporation into any type of deficit.”

That application last May was actually a follow-up to a decision that the URRC made early in 2005, in response to the corporation’s general rate application of August, 2004.

In 2005, the URRC allowed a 15 per cent increase, but also said the QEC actually needed 6.3 per cent more than that to become financially healthy.

But they said the QEC should first demonstrate the ability to better control costs, and submit itself to the scrutiny of an external review conducted by experts in power generation.

That external review, released in March of 2006, showed the QEC made big improvements in efficiency. With that in hand, the corporation applied on May 9 for the last part of its allowed rate increase, reducing their demand to 6.1 per cent.

But when Nunavut business groups discovered that the corporation proposed to make that increase retroactive to April 1, 2005, they showered the URCC with written submissions denouncing the idea.

The corporation proposed that, in addition to paying the 6.1 per cent increase, customers also pay a temporary surcharge aimed at collecting the retroactive amount.

Groups such as the Northwest Co. and the Iqaluit Chamber of Commerce said that the surcharge, plus the rate increase, would produce too much of a shock all at once.

In response, the URRC recommended that the GN pay the retroactive amount for the period between April 1 2005 and Oct. 1, 2006, which adds up to about $5.16 million.

So for the next 24 months, the QEC will bill customers until that amount is recovered - but the GN will subsidize the entire amount. After Oct. 1, the related arithmetic will be shown on customer bills.

“We’re trying to be transparent in showing what we’re covering. The amount of the subsidy will be on your bill,” Picco said.

Over the next few months, Nunavut’s new Energy Secretariat, headed by Nino Wischnewski will work on an energy policy for Nunavut, with a big emphasis on energy conservation.

“We need to reduce our addiction to fossil fuels for energy and the secretariat has been asked to come up with options and recommendations on how just to do that,” Picco said.

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