EdinburghNLP/nunavut-hansard-plusplus huggingface dataset:
Now, we are into something that we are looking around and where is it going from here and what is it going to cost us?
The Board of Directors, I think today, in my humble opinion, that Board of Directors is a great group of people, they are intelligent and they are capable of making the decisions, but, is that Board of Directors involved in the decision making of how this utility is going to be run?
I do not know if it is or not. They are all capable, I respect them all, but are they involved in the decision making and the hiring process and the direction that this corporation is going in?
If we are going to have a Board of Directors, let us make them make the decisions and that is all the comments I have to say.
Mr. Iqaqrialu (interpretation): Thank you. Thank you, Mr. Chairman.
When the corporation was being set up for Nunavut, we wanted to have ownership and my community had 30 to 40% expected increase while we were discussing the setting up for this corporation for Nunavut.
And so, we had to make some changes and so, I was very happy to have this Nunavut Power Corporation created.
I think it was $18 million dollars that we set aside for the set up of the Nunavut Power Corporation in 1999, perhaps in 2000, I forget which year, but we did set monies aside for the creation of Nunavut Power Corporation.
When we are dealing with rate hikes, we as Nunavummiut, either through the staff or the consumer, they do not get pay raises when we get increases to our rates and so, we have to be considering the Nunavummiut.
When we consider increasing rate hikes, we have to be looking at the people of Nunavut individually because they do not automatically get a raise to make up for that hike.
The cost of living will keep going up and so, we have to keep in mind the whole picture.
Our staff through different jobs in Nunavut, we also have to consider that their salaries are in tune with these rate hikes.
When we were children, in Nunavut, when we were growing up, 50 cents was a lot of money. You could buy a lot of things with 50 cents back then.
Today, $100 dollars is like $1 dollar in comparison. So, that’s how different it is now.
When I was going out camping to go out hunting, $100 dollars was adequate for my supplies. Now, today, I need $1 thousand dollars just to get the supplies for my camping trip. That is how much the cost of living is going up.
With the cost of living going up, if we’re still going to continue to be part of the economy, our salaries will also have to be considered to be in line with the increase in cost of living.
If you want to be a contributing citizen, $5 thousand dollars is adequate for living. And so these are the considerations we have to keep in mind.
At this time, we’re talking about, in Committee of the Whole, Nunavut Power Corporation.
Please try not to get off the subject.
Because I’m an Inuk, I’m not really clear on what’s happening with the power increase. And now they’ve deferred it.
I thought, why are we talking about it today when they already deferred the item, the power rate.
Do you want to ask questions now?
I have no more names for general comments on this topic.
We will be going to the questions.
Mr. Chairman, going back and looking at the URRC Report to the Minister, in there it goes on to talk about the extra revenue that was generated from the 3.4 cents rider that was previously put on in place and it’s my understand and I’d just like to ask the Minister to clarify that that rider was set to go off on March 2001.
Was that when the initial thing for it was changed to 2002 when it was actually March 31, 2002 when it actually came off. I just wondered. I’d like to ask the Minister if he could clarify that.
Mr. Chairman, originally when the rider was put on, I think that’s why we need some clarification today. In 1995-1998, the Northwest Territories Power Corporation asked for a rate rider increase for fuel because public utilities can’t increase their rates all the time. So that was done in 1998.
At that time they allowed for a plus or minus $2 million dollars for a rider when the fund reached that amount.
So, they put 3.4 cents on. They asked for that. And one of the members asked me earlier, the Northwest Territories put on a water rider, a low water rider.
So, here in Nunavut, we all had to pay for low water in Great Slave Lake to create hydro power. When they put the 3.4 cents on, as Mr. Tootoo just indicated, Mr. Chairman, they came back within four months and said we need 9.9 cents I think it was or 9.5 cents.
As the Government of Nunavut we were just setting up our power corporation. So, we said no, we will not go with the 9.9 and we left the rider on in place until March 31, 2002. Now that’s what happened.
Mr. Chairman, if I may, I just want to make a couple of comments on the comments that we usually have an opportunity to respond to the comments made by the members. I wanted to just say a couple of things.
First of all, the power corporation was only set up on April 1, 2001, two years ago. Mr. McLean just suggested that he doesn’t trust the financial statements.
Mr. Chairman, I said in the house two days ago that the reason why I didn’t table the annual report was because I didn’t have the financial statements.
I had to wait for the Auditor General for Canada to sign off on the financial statements. If the Auditor General for Canada has signed off on the financial statements and in her report she stated that these financial statements meet all the criteria of any general accounting practises in Canada. So, Mr. McLean can trust these statements.
The Auditor General for Canada signed off on them.
Mr. Chairman, another comment made was on the rider. 70 percent of any rider or any increase, and as Mr. Anawak indicated, we’re not going with it anyway, that any increase would be covered by the government, schools, hospitals, nursing stations, those are the costs associated with the rider.
That’s why it’s unique in Nunavut.
Mr. Chairman, lastly, and I have answered Mr. Tootoo’s question. My last comment is, it’s only been two years and the reason why we said no on the rider application, and there is a process in place, the power corporation can’t increase it’s rates or put a rider in place unless they make an application.
They’ve made the application. And if you look at your report, Mr. Chairman, I think it’s important to note that, Mr. McLean had said earlier that the power corporation got away from the Minister.
On January the 2nd, one day after New Year’s day, this Minister was in the office and I received the application from the power corporation. Within two working days, on the 6th of January, I had requested advice from the URCC, which is the process.
It’s only been in operation for 2 years. On April 1st, two months ago, it was a two year operation of the power corporation. We only have one set of financial statements, Mr. Chairman.
And that’s why the cabinet, after taking URRC recommendations, I went back to cabinet, which I’m supposed to do and the cabinet said how can you put the rate in place when we’re trying to set up what Mr. Tootoo talked about earlier. The highest rates in the western world are being paid in Nunavut.
And that’s why in the Qulliq Energy Report and Ikuma 1 and Ikuma II, that every member is familiar with, we talked about the affordable energy fund, the AEF. So we’ve just set up the Qulliq Energy Corporation and we’ve appointed the president.
It wouldn’t be acceptable when the power corporation has to go for a GRA this fall, to put another rider on because we don’t know based only on one audited financial statement, if the problem with the power corporation is on the revenue side or as some members have indicated, on the expense side.
Tootoo, do you have anything else.
Mr. Chairman, my question was that initial rider of 3.4 cents, was it, when it was initially put on, was it put on, was it supposed to come off on March 31, 2001 and not March 31, 2002.
Mr. Chairman, the way the rider was set up and I think it’s important to note how the rider was put in place so you understand how it works.
The rider was put in place by the Public Utilities Board and as I said, it was 3.4 cents and when the fuel reached plus or minus $2.2 million dollars, then it could come off.
But, what happened was, Mr. Chairman, in December of that year, the Northwest Territories Power Corporation said that they needed the rider to go up to 9.9 cents, because the 3.4 cents was out stripping it.
So, Mr. Chairman, we said as a corporation or as a government, we didn’t want to go to 9.9 cents because we were just setting up our own power corporation and because we weren’t sure of the 9.9 cents because of 26 communities in Nunavut which made up the 52 community in the Northwest Territories, we had 80 percent of the diesel generated plants.
So, we would be paying for this rider and we were not sure because we are setting up the Power Corporation if the numbers coming forward were correct. So, we decided to leave the 3.4 cents on for the twelve month period.
We could do that because the Power Corporation had said that, according to their figures, the money under the rider was outstripping the fund.
Please try to keep your responses and question short.
Mr. Chairman, I just asked the Minister, if that rider was supposed to come off March 31st, 2001 instead of March 31st, 2002, simple.
I do not need a big, long, filibustering answer, just a simple yes or no.
Mr. Chairman, I am trying to explain that when the rider was put on, it was to bring the fund plus or minus $2 million. So, it could have been six months or three months.
The Power Corporation had to say to the Public Utilities Board: Our estimate, if it had increased to 9.9 cents, is that we can do it by March 31st, 2001, and therefore and thus it comes off.
So, the rider is not set up for a period of six months, it is to set up until the fund reaches plus or minus $2 million dollars based on the best estimate that was available to the Corporation.
So, there was a date of March 31st, 2001, as the Minister mentioned. Can the Minister indicate if and when the fund made it to that amount when it was supposed to come off? Did it do that before March 31st, 2002 or has it done it?
Mr. Chairman, as you know we were setting up the Nunavut Power Corporation as of April 1st, 2001, and we felt then after that 12 month period was up, we left the 3.4 cents on to recover with we thought was the amount and that was the best advise that the Power Corporation had to give us at that time and then after that 12 month period was off, we took the 3.4 cents off.
At the end of the division of assets and liabilities between the Government of the Northwest Territories and Nunavut, we realized that the fund was under collected by $2.7 million dollars and that was paid back at that time as part of the assets and liabilities division part.
At the same time, they still did not have a financial statement because of the ongoing exercise of assets and liabilities between the two governments.
Mr. Tootoo: Thank you, Mr. Chairman. I give up on that line of questioning, I cannot seem to get an answer from the Minister.
Mr. Chairman, the Minister met with the Chamber of Commerce in Iqaluit last month, I think it was the day the power went out, I am sure he remembers it quite well.
Word was going around that he was trying to keep people in the dark.
Mr. Chairman, I would like the Minister, at that time speaking to one of the Chamber Members that was at the meeting, he had indicated to me that the Minister had indicated to him that once the rider was taken off on March 31st, 2002, the subsidy was reduced by the 3.4 cents resulting in no change in people’s power bills and that the Minister, when they asked the Minister about that, he had indicated it was a computer glitch that caused the problem.
I would just like to ask the Minister if he can clarify if that was actually the case or not just so that we could have some clarity and hopefully that did not happen.
Mr. Chairman, it is very hard for me to comment on someone said this and I said that and it was a meeting when the power went off.
Mr. Chairman, what I can say is that when the rider came off the bills, as of the date, and the member just talked about the date and so on, to the best of my knowledge, based on the information provided to me and the bills, then that’s exactly what had occurred.
If there was an individual who had a concern, and in that case, there was one person who brought their bills forward, then I asked them to go see the customer service agent of the power corporation to ensure that there was, if there was money that had been owed or not owed, that indeed the bill was put together properly.
So that’s the only comment I can make on that because there was only incident, there was only one persons bill.
Mr. Tootoo: Thank you, Mr. Chairman. So I guess that wasn’t the case. It did stay the same.
Going on Mr. Chairman, in the executive summary on page 3, it says the results of the 2001, it says that the Nunavut Power Corporation experienced a net loss for the year of almost $16 million dollars.
It says that about $5 million, 150 thousand dollars of that was a direct operating loss, while the remaining almost $11 million dollars was attributed to one time only expenses related to the division of the former Northwest Territories.
Mr. Chairman, we all know the other day I asked the Minister what the fuel rider was to be used for. It can only be used for increased costs of fuel.
If you go to the financial statements and under the outlook for 2002/2003, it says the same thing.
Without the numbers, that the corporation has experienced significant loss in operations due to one time costs associated with the commencement of operations and it anticipates a loss on operations for the 2002/2003 fiscal year.
My first question, and it say that for the second year, it’s for the higher cost of fuel, does the Minister have any idea how much that’s going to be?
Mr. Chairman, first of all, on the fund, I tried to explain the other day, and I’m going to read into the record what the fund is.
The fund is called a fuel stabilization rider.
The most, or 80 percent of the component is the cost of fuel, but that’s not the only one.
So, if I can, I’ll read it into the record.
The amount placed to or taken out of the fund is determined based upon a calculation of the actual generation, and that’s the electricity generated, divided by the most plant efficiency, for a community, each community, times the difference in fuel prices, between prices in rates, and the actual prices in any given year.
That’s what the fuel subsidy rider is.
So, it’s not just the cost of fuel. It’s based on the efficiency of the generation of power and what the costs and expenses are for that. On the financial question that Mr. Tootoo raised, and he’s raising a good point, and that’s the point that goes back to the cabinet.
We only had one year’s financial statements and a forecast of revenue growth and expenses and liabilities based on the second year of operation. So, where we are, Mr. Chairman, we know the rates haven’t increased since 1998. There has been no rate increase since 1998.
So it would be very difficult to say that the forecast made by the power corporation is either correct based on the annual report or based on the total numbers available to us from the audit report.
And that’s why the cabinet was in the position of saying if we put the 7.5 cents, will it actually, based on the efficiency, will it actually bring the fund to zero.
Don’t forget the power corporation’s own forecast was 10 cents. They asked for 10 cents. First they asked for 5 cents and then they asked for 10 cents.
The URRC came back and said no, you can’t have 5 or 10, you can have 7.5, somewhere in the middle.
So based on all of those questions, the government instructed me as the Minister Responsible, to go for the affordable energy fund, the have the power corporation go for a general right application in the fall and make sure that we find out exactly the figures.
So, the quick answer to Mr. Tootoo’s question is no, I do not know if that is an accurate forecast and that is the question that we have.
So, then is the first time we are hearing that this rider can be used for something other than fuel. That is other than the increased cost of fuel?
If I can interpret what the Minister said, that what he just said that it could be used for other things. As he has indicated in the past, in interviews and meetings that that is all it was going to be used for.
I would like to know, it talks about operational losses and one-time cost for division and what happens when Government Departments go for a budget like that?
All that is, is either poor budgeting or poor management.
Do people have to pay for that? Do we have to pay for that, the one-time cost?
When a Department goes over that, they do not increase the user fees for anything else, they do that, they take it out of general revenue and those things cover off in the form of a Supplementary Appropriation.
You know, if it is operating costs due to poor budgeting or poor management, then I think that is where it should come from.
The consumers should not have to pay for that and if the Government is paying, as the Minister stated, 80% of it already, what is the big deal?
Sorry, 70%, Mr. Picco.
You know, because I know that, like, up until just a couple minutes ago, I was under the impression and that that is the only thing that that is the only increase, the increased cost of fuel is the only thing that the rider could be used for.
You know, and in the outlook it states that, you know, it talks about the losses over the first two years and that the Corporation intends to address the loss in 2001 and 2002 and the projected loss in 2002-2003, through the implementation of a fuel rate rider in 2003-2004.
Based on all of the information that the Minister provided before, you know, I was just questioning, is that something that they can do? Can they put a rider on to cover off costs other than increased costs related to fuel?
Mr. Chairman, the Member has probably made, I think probably the most important statement here today and that is a Power Corporation, a public utility is not like any other business.
It cannot raise its rates or prices to cover off the cost of doing business.
If Ed. Picco Company is losing money, I can increase my prices or rates. I can do that.
The Corporation, the public utility has to go before a Board; it has to go to the public and say: This is what our costs are and so on.
So, the Member is correct. It cannot raise its rates to cover off those costs.
However, in the negotiated settlement of ’95, ’98, this goes back to the Public Utilities Board, they realized the cost of diesel was increasing and like every other Utility Board in the country and every other Energy Corporation, whether it be Manitoba Hydro, whatever, for the diesel costs, they are allowed to have a rider in place to cover those costs, not the rate, but to cover the cost.
And the cost, and I want to explain it again because I do not think that I am explaining it well enough, the fund is not just on the cost of oil, it is on the efficiency of the plant. That is how they figure out what the amount of the rider is.
So, the rider covers off the increased fuel cost, but it is based on the efficiency of the plant and that is what I am trying to explain is that it is the determined on the calculation of the actual generation of the plant divided by the most recent plan efficiency.
Each plant has to have an efficiency rating and that is done on a regular basis by the Corporation and when they come forward based on their rates, they say: The plant is 87% efficient and if we are going to bill, use a hundred litres of oil, this is how much electricity we can generate.
If the cost of oil is going up, then of course the efficiency of the generation goes down and therefore the fund is put in place. So, that is how the fund is worked out.
And Mr. Tootoo is right.
The corporation cannot increase rates or use the fund to cover any other costs.
That’s why it’s only on the efficiency of the plant and the fuel costs. Because they can’t use it for increased labour costs for example.
So, then they I can finally figure out what the Minister is stated.
They can’t use any funds of the rider to offset any one time costs as a result of division.
If that’s the case, why does it say in their report that that’s what they’re going to do with it?
Chairperson (interpretation): Thank you, Mr. Tootoo. Minister Picco.
That’s not what the intent was of what was said there.
On the division of assets and liabilities, we are in negotiations, mediations right with the Northwest Territories to take another I think it’s between $4.6 and $8 million dollars that we believe they owe to us.
If you put that into the first year of operations of the corporation, their bottom line is that the power corporation has actually done very well, if you look at that.
But we don’t have that money right now, and that’s why the outstanding balance.
I can confirm for the member, as he had just indicated, that the fund is only for the increase costs in the generation of electricity as it pertains to the efficiency and the oil purchase.
That’s why it’s a fuel stabilization rider. And how you get that fund amount is based on the efficiency. How much oil does it cost to generate x number of hours of electricity and you factor in the cost of the fuel that you had to purchase that electricity.
So, that’s how the stabilization rider would work if we had to put it in place based on what the power corporation asked for.
Chairperson (interpretation): Okay. Thank you. Your last questions, because you’re running out, Mr. Tootoo.
And I’m sure that the other members would like to ask questions.
First I’d like to make a comment. Maybe the Minister should check page 28 of the annual report, where it says it’s going to be used to cover off those losses. Maybe that’s a mistake in the report that he may want to fix.
Two things I guess, maybe a two part question. One, as I had mentioned earlier, the corporation has indicated they’re planning on paying dividends to the government.
They had planned $2.3 million dollars last year, and two and a $2 million dollar dividend this year.
If they know they’re losing money, how can they pay a dividend?
And I guess the other thing that relates to the overall costs is, we all know in the last year, the government awarded the fuel supply contract to a new firm and was going on about how many millions of dollars they were going to save by doing that.
It’s the same people that are doing the power corporation fuel delivery I believe. Has it gone up that much?
Isn’t there, when are these savings going to be passed on to the users?
Mr. Chairman, that’s why in Qulliq 1 and Qulliq 2, the Ikuma I and Ikuma II, it talks about the affordable energy fund which will be the savings. And we’re in the process of doing that right now.
So, those are the savings that would be passed on. On page 28 of the annual report, which you’re talking about the losses, those are the losses that the corporation had forecasted, from not having the fuel subsidy rider in place.
Again, Mr. Chairman, on the dividend, the dividend would be available if the $4.6 or more comes from the Government of the Northwest Territories, that’s in accounts receivable, and if the power corporation, based on their forecast estimates, which means if the fuel prices and the savings, they’d actually have a dividend.
But again, in any business or government, we make estimates or we say there’s the supplementary estimates.
So it’s an estimate based on the best information from what their business will do.
I will allow Mr. Tootoo to ask more questions after the Members have asked their questions.
Mr. McLean: Mut’na, Mr. Chairperson.
I sure bet you before I ask my question that the shareholders of that Enron Corporation had the Auditor General sign off in their financial statements today.
They probably wish the Auditor General signed off in their audited financial statements, they probably really wish today in the billions of dollars they lost.