Iqaluit (Oct 11/04) - Until the territorial finance department announces what its subsidy will be, it's unclear what Nunavummiut will pay for power now that Qulliq Energy Corporation is moving to a flat rate system.

Simon Merkosak, chair of Qulliq Energy, announced the company's proposal for flat rate power for Nunavut last week. - Kathleen Lippa/NNSL photo

The corporation has filed an application with the Utilities Rate Review Council to change power rates. If accepted, Qulliq would phase out the present community rate structure over the next three years.

Under the current pricing, the per kilowatt hour (kWh) price ranging from Iqaluit's 31.58 cents to Kimmirut's 73.49 cents.

Currently, Quilliq only brings in $58 million in revenues, but its expenses hover around $77 million.

To help cover this $19 million annual shortfall, a new flat rate system would set residential rates at 53.33 cents and commercial rates at 49.83 cents.

"It's a complicated process to say exactly what effect (the new rates) will have," said Simon Merkosak, the corporation's chairman.

The reason it's such a cloudy issue is because the actual price paid by residential customers is subsidized by the Government of Nunavut to keep residential rates at about 15 cents per kWh across the territory.

As well, public housing customers are subsidized down to six cents per kWh.

Since the last general rate application occurred on the NWT's watch in 1997/98, its unclear whether the subsidy will remain the same or not.

"We don't have a say in that," said Merkosak. "It's a political issue."

So far the government isn't willing to talk about its share of Nunavut's power bills beyond saying things may change.

The government opted to pay $4 million in 2003-2004 and $10 million in 2004-2005 rather than charge customers extra on their power bills to cover the higher price of diesel.

"Right now the power corporation has an application in to the Utilities Rate Review Council. Whatever comes from that process might cause us to change the subsidy program," said Robert Vardy, deputy minister of finance.

"But at this stage I can't speculate on what those changes would be."

If the flat rate system does become a reality and the subsidy doesn't change, the result could be the government's cost would go down in the eight communities where the posted rate is more than 53 cents per kWh, said Hazen Hawker, Qulliq's chief financial officer.

In the case of the others the cost could go up.

The corporation said it hopes to become profitable again in fiscal year 2005-06, at which point any surplus will go back to the government -- which owns the energy provider.

It will take about five months for the rate application to go through the review process.

The bottom line Today:

In Kugaaruk, Vince Ningark currently pays $80 a month for power.

When he looks at his bill it shows a rate of 15.22 cents per kWh. It's quite a good deal considering the actual cost is 65.89 cents. On all bills across the territory, the government subsidizes the cost down to approximately this level on the first 700 kWh -- once more is consumed, the customer pays full pop.

Business rates are not held artificially low by the government program.