Nunavut
Qulliq Energy Corporation's proposal to increase electricity rates by 19.3 per cent across Nunavut to address a $22.7 million shortfall has some communities worried about being able to make ends meet financially.

The proposed increase is included in the corporation's 285-page general rate application for 2010-11 submitted this past Oct. 4 to Lorne Kusugak, the territorial's minister responsible for the corporation.

The corporation states in its application it anticipates revenues of about $101.2 million for the 2010-11 fiscal year but with the current electricity rates, the corporation would collect around $76.2 million in revenues. It adds this represents a shortfall of $22.7 million or 14.65 cents per kilowatt-hour.

The corporation is proposing to increase the general electricity rate by 19.3 per cent to address the shortfall, states Peter Mackey, the corporation's president and CEO in a letter to Kusugak. This is the second general rate application since the territory was formed. The previous application dates back to Sept. 2004.

"During that six-year period, we have seen (an) increase for salaries and wages for employees, we've seen an increase in the operations and maintenance costs ... and we've also seen an increase in the capital requirements to improve the aging infrastructure as well as to meet the new demand that we see constantly with the growth within Nunavut," said Mackey.

But the communities of Pond Inlet, Pangnirtung and Kimmirut said they would have difficulty absorbing such an increase.

"Any kind of a rate increase will cause some adjustments for the municipality. Electricity is a large part of our budget and that kind of a rate increase will cause difficulties for the municipality," said Ron Mongeau, Pangnirtung's senior administrative officer.

He said electricity accounts for 3.5 to four per cent of the hamlet's budget, adding if the rates are approved as proposed, they will have to see if they can move money from other programs to pay for the increase.

"One would hope that first the government would seriously examine the size of this rate increase and determine if it's completely applicable. Also, a phase in of any kind of rate increase would be appropriate, I think," he said.

In Pond Inlet, senior administrative officer Mike Richards said the proposed electricity rate increase would "dramatically" affect them because they pay commercial rates.

"This will affect everybody dramatically but these things are really beyond our control. We're worried but we would have to put it into our budget because we can't control it," he said. "I am going to worry a lot because with the demands for wages and things, we're having a hard time with that. Our resources are limited but they're stretched thin out right now so it's not very optimistic for this year for sure."

Kimmirut's SAO Akeego Ikkidluak said such a proposed rate increase is worrisome as they have to keep the school and health centre open.

"I don't know if we will have enough money to pay for those (increases)," she said.

And Iqaluit mayor Elisapee Sheutiapik was somewhat surprised by the increase.

"I didn't expect it to be such an increase. I knew they were looking for it. I thought it would be a modest one. I think 19.3 (per cent) is pretty steep," she said.

The Utility Rates Review Council will review the application and recommend the minister, who is not bound by those recommendations. If approved, the rates would change in 2011.

"I am confident that we have provided accurate, clear information of our costs so based on that, I am confident that the increase will be close to where we have asked for," said Mackey.

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