Nunavut utility to jack up power rates as of Dec. 1
QEC seeks 4.13 cent fuel price surcharge for six months
Merry Christmas, Nunavummiut: the Qulliq Energy Corp. just found a way to siphon more money out of your pay cheques.
They’ll do this by way of a special surcharge on electrical power rates to be paid by all classes of customers in all Nunavut communities.
The QEC applied for the rate hike Nov. 14, long after the last legislative assembly sitting wrapped up in Iqaluit and MLAs had all gone home.
The extra charge, known in bureaucratic lingo as a “fuel stabilization rider,” will inflate all power bills by 4.13 cents a kilowatt hour for the six-month period between Dec. 1, 2012 and May 31, 2013.
If you’re the owner of a home or a small business, you’ll likely feel the pain soon — in the first QEC power bills to be issued after Dec. 1.
Retail store operators, hotels, restaurants and most other unsubsidized commercial customers will see power bills rise by 4.1 per cent to 9.1 per cent, depending on the community.
This could trigger a corresponding hike in retail prices, including food.
At the same time, homeowners paying domestic rates and who qualify for the Nunavut Electricity Subsidy Program will see their power bills rise by 15.8 per cent.
Domestic non-subsidized customers will see rates rise by 3.9 per cent to 7.5 per cent, depending on the community.
Public housing tenants, who make up about half of Nunavut’s population, will see no increases.
That’s because public housing tenants pay a special low rate of only 6 cents a kilowatt-hour. The Nunavut Housing Corp. pays most of their actual power costs.
The QEC submitted its temporary rate hike pitch to Lorne Kusugak, the minister responsible for the power corporation, about a week ago.
Kusugak then turned it over to the Utilities Rate Review Council, the body that serves as Nunavut’s power rate watchdog.
The corporation also asks Kusugak to approve imposition of the rate hike now, on an “interim” basis as of Dec. 1, pending the URRC review, which won’t likely finish until early 2013.
The utility watchdog invites written submissions from Nunavummiut, with a deadline of Jan. 11, 2013.
In the mean-time, the QEC wants to collect the extra cash now so they can begin using it to top up a special pot of money called a “fuel stabilization rate fund.”
They use that fund to cover ups and downs in the price they pay when they buy diesel from the Government of Nunavut’s petroleum products division.
If that fund rises or falls by plus or minus $1 million, the QEC may apply for a rate rider to bring it back into balance.
Theoretically, a rate rider could produce a reduction in consumer power bills if the stabilization fund gets too big — but that rarely occurs.
In its Nov. 14 application, the QEC said they underestimated their fuel price projections back in 2011, when the current electrical rate system for Nunavut was approved, based on 2010 diesel price estimates.
“For the past period since June 2010, QEC faced a significant upward pressure on fuel prices, which led to accumulation of charges to the FSR fund,” their application reads.
To cover the stabilization fund’s recent losses, the GN, which owns the QEC, has written two bailout cheques to the cash-strapped QEC.
The first bailout cheque, for $2.349 million, covers losses the fund suffered in 2011-12.
The second, for $2.422 million, covers the period between April 2012 and November 2012.
But even with those cash infusions, the fuel stabilization fund is estimated at only $500,000 as of Dec. 1.
In its application, the QEC projects the cash they’ll extract from consumers by way of the fuel rider will bring the fund back up to about $3.5 million by May 31, 2013.
Spreadsheets attached to the QEC application show the corporation paid an actual “weighted average fuel price” of 93 cents a litre in April 2011.
By March 2013, they project that cost to rise to about $1.03 per litre.
But the current set of Nunavut power rates, which date to April 1, 2011, assume average fuel prices of only about 91 cents a litre.
The result? The fuel stabilization fund has been gradually drained of cash.
The QEC wanted power rates to get re-adjusted once again, as of April 1, 2012, in a rate rebalancing scheme that would have seen rates rise in lower cost communities like Iqaluit and fall in higher cost communities.
But the QEC minister, Lorne Kusugak, postponed that change by two years, until April 1, 2014.