Nunavut power utility files 5.1 per cent rate hike scheme
Two-part proposal raises power rates, moves QEC closer to rate re-balancing
The Qulliq Energy Corp. filed a new across-the board rate hike application Nov. 1 that would raise power bills by an average of 5.1 per cent on April 1 next year.
The corporation, in a Nov. 1 news release, said they need the extra revenue to meet rising costs.
The proposal will first go to Monica Ell, who still serves as minister responsible for the QEC, pending the swearing-in of a new premier and cabinet later this month.
Ell will then refer the proposal to Nunavut’s power rate watchdog, the Utility Rates Review Council, who will study the QEC proposal, likely with public consultations, and then make recommendations to the minister some time next year.
By the end of the day Nov. 3, a full copy of the general rate application had yet to appear on the QEC’s website.
At 5.1 per cent, this set of requests is less than what the QEC asked for in its last general rate hike proposal of October 2010, which proposed base rate increases of 19.3 per cent.
After passing through the Utilities Rates Review Council, that scheme was whittled down, as of April 1, 2011, to an 18.9 per cent increase across all customer classes.
But — following a two-year delay in implementation — the power corporation will move forward next year with a concurrent scheme it calls “rate rebalancing.”
Under rate rebalancing, the QEC will move — in stages — to a uniform power rate system across Nunavut.
Rate rebalancing does not generate new revenue for the corporation — it’s intended to level out historic differences in power rates between high-cost and lower-cost communities.
After rate rebalancing is completed, likely sometime after 2020, customers in every Nunavut community, large or small, would pay the same base rates.
The last round of rate-rebalancing adjustments were to have kicked in April 1, 2012.
But in February 2012, Lorne Kusugak, then the minister responsible for the QEC, announced a two-year delay in the roll-out of that scheme.
That’s because the territorial government wanted to give customers more time to get used to the big 18.9 per cent general rate hike that kicked in a year earlier.
Now, the resumption of rate rebalancing, in tandem with the proposed 5.1 per cent rate increase, will produce different effects in different communities, the QEC said.
In Baker Lake, for example, unsubsidized domestic customer bills would rise 10 per cent, or by $51 a month based on consumption of 700 kilowatt-hours.
And in Pangnirtung, commercial power bills will rise by 10 per cent, or $122 a month based on consumption of 2,000 kilowatt-hours.
On the other hand, non-government domestic customers would see lower bills after April 1, 2014, the QEC said in its news release.
For example, a non-government domestic customer in Kugaaruk would see their bill decrease by 4.7 per cent, or $38 a month based on monthly consumption of 700 kilowatt-hours.
And non-government commercial customers in 12 communities would see lower rates, the QEC said.
In Whale Cove, for example, a non-government commercial customer would see a 4.5 per cent decrease in their bill, worth about $105 on monthly consumption of 2,000 kilowatt-hours.
Many Nunavut power customers are protected from the full effect of power rates by a variety of subsidies.
Social housing tenants, who comprise about half of Nunavut’s population, pay a low fixed rate of only six cents a kilowatt-hour, while the Nunavut Housing Corp. pays the lion’s share of their power bills.
Homeowners and other residential customers get a subsidy for monthly consumption of up to 700 kilowatt-hours in the spring and summer and up to 1,000 kilowatt-hours in the winter months.
And the smallest of Nunavut’s small businesses — those with gross revenues of $2 million a year or less — may apply for subsidies granted for the same seasonal periods.
But larger businesses, such as retail stores, hotels and airlines, receive no power subsidies and usually pass on any increases to their customers.
All those subsidized rates are based on 50 per cent of Iqaluit base rates which stood at 52.39 cents per kw/h for domestic non-government customers as of April 1, 2011 and 43.42 cents per kw/h for commercial non-government customers.
But those Iqaluit base rates are expected to rise after the new rate scheme kicks in April 1 next year.
And that means homeowners — called domestic non-government customers — will likely see their power bills increase by at least one per cent, or about $2.40 per month based on 700 kilowatt-hours.
There’s one piece of good news for cash-strapped power customers in Nunavut.
That’s a temporary surcharge of 5.31 cents a kilowatt-hour for all customers — called a “fuel stabilization rider” — that started this past June 1.
The QEC imposed it following a 15 per cent increase in fuel prices charged by Uqsuq Corp. in Iqaluit, which accounts for 32 per cent of all electrical power generated in Nunavut.
That rate rider, intended to protect the QEC from fuel price shocks, is scheduled for removal as of the end of this month.
Some QEC facts:
• Total operating revenues, 2011-12: $114.03 million
• Total operating expenses, 2011-12: $106.56 million
• Operating surplus, 2011-12: $7.47 million
• Total long-term debt, as of March 31, 2012: $79.95 million
• Total number of employees, September 2012 (if fully staffed): 194
• Total number of job vacancies: 22
• Total number of filled jobs: 172
• Effective 2011 wage hike in last collective agreement: 4.5 per cent
• Size of annual wage hikes in last two years of collective agreement: 2 per cent.
• Expiry date for current collective agreement: Dec. 13, 2013.
• Inuit employment ratio, September 2012: 55 per cent