Council wants IPC to pay for the exclusive right to sell natural gas in town.

"We've been very reluctant to agree to any franchise fee," responded IPC chairman Russell Newmark. "Obviously, any fee charged by the town gets passed on to the consumer."

And the more consumers have to pay, the less they will use, said Newmark. The IPC proposal hinges on a reversal of the trend toward energy conservation -- the more gas Inuvik customers use, the more viable the project will be.

But it appears city hall is in desperate need of the annual income such a fee would bring.

At the conclusion of Tuesday's meeting, Mayor George Roach, sitting as an observer, said most members of the committee seemed to have their minds made up that a franchise fee is not a good idea.

"You've got your minds made up," shot back committee member Al Davis, an opponent of the fee, referring to council.

"You haven't looked at our books!" interjected councillor Vince Sharpe, a member of the committee who supports the proposal.

The carrot presented in a draft agreement is a guarantee that, for the first five years of the 20-year agreement, gas will be fixed at 15 per cent less than the price of diesel at the time the deal is signed. After that it will fluctuate with the price of diesel, remaining 15 per cent lower.

Diesel fuel accounts for less than half the cost of producing and distributing electrical energy to the town, said one Power Corp. official.

IPC is weeks away from inking a deal with the Power Corp., said Newmark. For the operation to be viable, the GNWT buildings would have to convert to gas, plus at least 60 per cent of residential customers.

Newmark said the company is hoping to drill two or three wells this winter and build a 48-kilometre pipeline from the wells to town the following winter.

Construction of a distribution system to deliver the gas to homes, businesses and government offices is proposed for 1999 or 2000.