Inuvik (Sep 19/03) - Inuvik natural gas will not become a regulated utility anytime soon, according to a recent decision by the regulatory board.

On Feb. 28, 2003, Inuvik Gas filed an application with the Public Utilities Board (PUB) to raise the price of gas from $12.10 to $17.50 per gigajoule. That price went into effect on May 1, but the Town of Inuvik filed a complaint.

The price of gas is tied directly to the price of a heating equivalent diesel fuel, rather than the cost of service as is the case with most public utilities.

The town's complaint argued that the gas company is a monopoly and requires regulation.

Mayor Peter Clarkson informed council at Wednesday's meeting that their complaint was dismissed by the PUB.

"They basically said there hasn't been a long enough history of high gas prices to warrant further regulation," Clarkson said.

The PUB's decision will force IGL to post monthly fuel costs on their Internet Web site and file their annual financial statements to the PUB.

"We can go to Inuvik Gas and sit down and try to work out a reasonable pricing arrangement, so that we can prevent high costs and prevent rate shock, so we don't see 50 to 60 per cent increases from one month to the next," Clarkson said, adding that the fluctuating price makes it impossible for people to forecast budgets.

Non-profit organizations, business owners and landlords have a hard time absorbing the extra costs when rates jump to the magnitude such as the May increase.

On Aug. 1, the Public Utilities Board received notice from Inuvik Natural Gas Ltd. that effective Oct. 1, the price of gas will drop from $17.50 per gigajoule (gj) to $14.70 per gj.

"It's still $2 higher than it was last year," Clarkson said.

The costs of the complaint will be covered by the town and IGL will cover their costs, but Clarkson is left wondering if the regulatory process is worth the bother and expense, since their last two efforts have come up with little or no effect in both electrical and natural gas rate interventions.

"In the NTPC application, you recover your costs through the process, but that's just passed on to consumers," he said.

"On the Inuvik gas application, we have to bear all of those costs."

The Town of Inuvik has the option to purchase 25 per cent of Inuvik Gas Ltd.

And Clarkson said with a rate of return of 14 per cent, it's probably a good investment.

The gas project:

• The Inuvik Gas Project was completed in 1999.
• The Ikhill pipeline and Inuvik transmission network cost about $44 million.
• Two customers: Inuvik Gas Ltd. and the Northwest Territories Power Corporation.
• Two companies, upstream and downstream are both owned by a joint venture between Alta Gas, Inuvialuit Petroleum Corporation and Enbridge Inc.
• Upstream gas is regulated by the National Energy Board, downstream regulated by the Public Utilities Board.
• the net profit for 2002 for the upstream company was $1.7 million, but Inuvik Gas did not generate a profit.
• 621 customers in Inuvik have converted to gas.