Debates of February 15, 2005 (day 36)

Operation expenditure summary, $7.276 million.

Agreed.

Page 2-64, information item, labour relations and compensation services, active positions.

Agreed.

Page 2-65, information item, labour relation and compensation services, active positions.

Agreed.

Page 2-67, activity summary, government accounting, operations expenditure summary, $11.636 million.

Agreed.

Page 2-69, activity summary, government accounting, Mr. Braden.

Thank you, Mr. Chairman. There are a few areas that I would like to delve into here under the power subsidy issue. The program, as outlined here, suggests that the government is going to inject about $8.3 million into subsidizing electrical power that will largely go to individual households in the diesel powered communities, Mr. Chairman. A smaller amount goes to a commercial subsidy program. I would note, Mr. Chairman, that that is a projected increase of about $1.2 million from this current year. I’m sorry; it is the same as this current year, Mr. Chairman, but this current year is $1.2 million ahead of last year. So we are going from about $7.2 million last year to a projected $8.3 million this year and it’s going to stay the same next year. Mr. Chairman, this begs a little bit of a question. The cost of the Power Subsidy Program to this government has risen about $1 million a year for last four or five years.

Indoor gym.

Why is it that all of a sudden we’re about to put the brakes on this and anticipate no change? It just looks as if there’s some kind of an anomaly going on with the trends in the forecasting. That’s where I’d like to put this question. Why, in the face of sustained and fairly predictable increases in the cost of this subsidy, is there no increase forecast for next year? Thank you, Mr. Chairman.

Thank you, Mr. Braden. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, the Power Subsidy Program has grown over the last number of years and we’ve had to change it accordingly or come in for higher costs. There have been a number of factors that were involved in that growth, the change in the way the billing was done or the rate riders and so on. I’ll have Mr. Voytilla go into that. Before that, though, the Power Subsidy Program is paid to residential customers as well as some of the small business ones, depending on their amount of profit and the size of it. But the vast majority is for residential customers and it is anybody who pays more than the Yellowknife rate. It doesn’t matter what type of power you get; if you’re above the Yellowknife rate, you’ll be subsidized for the first 700 kilowatt hours. But for the detail in some of the changes that have happened and the way the subsidy was put together and why we have some room and not moving up in the five or six areas, I’ll have Mr. Voytilla give that detail.

Thank you, Mr. Roland. Mr. Voytilla.

Thank you, Mr. Chairman. We’re actually engaged this year in a major review of the Power Support Program. There have been a lot of concerns expressed recently about sustainability of the program. We, of course, share those concerns and want to make sure that we have a good handle on what’s happening with the program across the Territories.

As the Minister already pointed out, about $8 million is our estimate for the residential component of the program and the commercial is about $200,000 to $300,000. We have seen very rapid increases in the last few years and a lot of that is because of significant changes in the rate structure that has been approved by the Public Utilities Board. The Power Corporation introduced a program of rate rebalancing a number of years ago, where they attempted to make the burden, I guess, of meeting the revenue requirement more equitable between classes of customers. What we found is that there was a shift away from the government as the main player, if you will, of the bill to a more equitable distribution between government users, industry users and residential users. The more burden that was put on the residential users, the more the Power Subsidy Program went up, because that increased residential rates significantly in communities. In some cases, rates over the seven-year period we looked at rose as much as 100 percent.

So the rate rebalancing had a big impact in the past years on the Power Support Program and that’s pretty much done now. They pretty much stabilized and made the rates equitable. In addition for next year, we’re not anticipating the similar fuel price increases that we saw this year, so we don’t expect that the Power Corporation or NUL will need to make significant adjustments in rates for fuel prices, so that tends to smooth the increase out.

I wouldn’t note that we had budgeted $8.3 million this year in anticipation of a new rate rider coming in for the higher diesel cost. In fact, the rate riders that have been applied for are less than we anticipated. So $8.3 million might be a little bit high for this year and, as a result, we think it will be adequate to fund our requirements for next year.

Thank you, Mr. Voytilla. Mr. Braden. Mr. Menicoche. Sorry, Mr. Braden, did you have a follow-up?

Yes. I’ll get back.

Mr. Menicoche.

Thank you very much, Mr. Chairman. This has been one of the topics that I’m passionate about, is our Territorial Power Subsidy Program and where we’re going with the territorial power subsidy. I’m just wondering, has the Minister looked at the terms of reference of how they wish to look at this subject. I’m of the mind that everyone has to pay the same, just like every other jurisdiction in Canada. I might be going a bit outside the topic here, but I wonder if there’s leeway at all in the deliberation of the territorial power support and, indeed, of the Power Corporation of looking at their rate structure at all and make some suggestions. I’m still thinking that even if we levelize the diesel communities to having one rate, that might be a place that we want to look at. Just in terms of the terms of reference, Mr. Chairman, if the Minister can answer that for me.

Thank you, Mr. Menicoche. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, the work that’s undergoing within the review of the Power Subsidy Program is one around the existing rate structure, what’s driving the costs. So right now it is not identified to look at the rate structure itself as that is not within our purview as the Financial Management Board Secretariat. The power rate structure itself falls under the Public Utilities Board. So our work is around the existing program, what’s driving the cost, what levels of support there should be, should there be changes, things of that nature. So it will be around the existing program as it’s structured to date. Thank you.

Thank you, Mr. Roland. Mr. Menicoche.

Thank you very much, Mr. Chairman. One of the things I’m starting to hear back in my riding is that as I talk to the elders, they’re saying, okay, listen, you guys are helping me subsidize my fuel and I still need assistance with my cost of living. Can the government subsidize the power for elders, those over the age of 65 and on pension? Is that something this review could look at, Mr. Chairman?

Thank you, Mr. Menicoche. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, as the program is laid out now, anybody who has a household that is paying higher than the Yellowknife base rate, as we call it, would qualify for a subsidy. So elders, if they have their own home and their rate is higher than the Yellowknife rate would qualify for subsidy. If there are other problems around income and not being able to afford that, then we have some other programs within government that could be looked into. But specifically in this area as it would apply today, elders would be a part of the package when you look at the existing structures and the way this Power Subsidy Program works. Thank you.

Thank you, Mr. Roland. Mr. Menicoche.

Thank you very much, Mr. Chairman. I believe that the seniors were looking for something further. They’re owning their own houses and in the diesel communities, Mr. Chairman, they are paying quite a bit. I don’t know if it’s leaks in their system, but I’m telling the Minister they’re only taking home $750 a month and their power bill is $250. That’s far beyond what they can afford. They’re asking if there’s a way for us to subsidize the power elders are receiving, beyond the way it exists now. Is there some other supplementary way of doing it much like we’re contributing towards our costs of…I think if we buy them one tank of fuel per year, can we do something like that for the elders? I think that one tank of fuel has a value of $500. Can we do that? Let’s call it a $500 rebate for power to the elders. Can we look at that, Mr. Chairman?

Thank you, Mr. Menicoche. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, as the program exists today, elders who own their own homes and are paying the power bill do qualify for a subsidy; the same subsidy that’s available to all residents in the territory. For a rebate of that nature, if the committee felt strong enough for the government overall to look at establishing something like that, we would look at it. But under the review that is happening, it’s around the existing structure, the rates, what’s driving those rates, and the cost to go up and look at that side of the equation. We have other programs out there. As the Member touched on, we have the Fuel Subsidy Program for seniors, as well, to try to help lower the cost of living in our communities in the Northwest Territories and there are other programs that people could apply for. Through our income support programs of hardship, there are areas there as well. There are a number of other areas and that’s some of the difficulty, I guess, in the Northwest Territories, is that there are different departments that offer programs that are meant to mitigate the cost of living in the northern communities.

Specifically to the Power Support Program issue, again, the subsidy is just that. It’s providing a subsidy to help people in the Northwest Territories that have their homes and are paying their power themselves. Then we do have a number of other programs out there, but not related to this. Thank you.

Thank you, Mr. Roland. Mr. Menicoche.

Thank you very much, Mr. Chairman. I wasn’t quite clear if the Minister was willing to allow it as part of the terms of reference when they’re reviewing the Territorial Power Support Program. Thank you.

Thank you, Mr. Menicoche. Mr. Roland, can you clarify that, please?

Thank you, Mr. Chairman. The review that’s ongoing is one that we’re doing from within FMBS. It’s ongoing now. At this time I’m not anticipating that we would change the work that’s going to include other work. What I did state was if Members of this Assembly felt that it was an area that we need to address and make that recommendation, then we would definitely look at that. Thank you.

Thank you, Mr. Roland. Mr. Braden is next. Mr. Braden, my apologies for not recognizing you. There was a change in chairs here. My apologies. Go ahead, Mr. Braden.

Thank you, Mr. Chairman. We’re always ready to accommodate everybody in Committee of the Whole. I appreciate your mention. I wanted to thank Mr. Voytilla for that explanation. Obviously he and his work with the folks at the Power Corporation and perhaps the Public Utilities Board and Northland Utilities will have access to a greater level of detail than I. I can only hope that forecast of zero growth in the cost of this subsidy will hold for this coming year. I guess I must express some skepticism considering the trend that we’ve seen, but I will not challenge it any further.

The government-wide review of our overall social safety net, I guess I wanted to just confirm, Mr. Chairman, that this government has something like 17 different subsidy and assistance programs spread out over something like six departments or eight departments and four different delivery vehicles. It’s quite a complicated approach we take. Now the Power Subsidy Program is one of those. Is that the overall review that the Minister was talking about when it was either he or Mr. Voytilla who said, okay, we’re going to look at this whole thing from top to bottom? Is that in conjunction with the government-wide review? Thank you.

Thank you, Mr. Braden. Mr. Roland.

Thank you, Mr. Chairman. It’s not in conjunction, but that information will be very useful as we go forward. Mr. Braden has touched on an area that is something we are beginning to look at overall. The subsidy programs and what we have available, there are quite a number of them, as he stated, that better coordination would definitely be an asset to those who access the program and for ourselves as accounting and for identifying the kind of support we give residents of the Northwest Territories. But the work that’s ongoing right now within FMBS around the Territorial Power Support Program is directly to do with the Power Support Program. Thank you.

Thank you, Mr. Roland. Mr. Braden.

Okay. Thank you. I’m pleased to hear that in this forum. I’m going to be looking forward to that debate and the involvement to see what various communities and customers across the NWT have to say. Electricity is an essential service and it’s a very costly one, of course, in many of our communities. There is though also, I think, a very real requirement, along with some kind of a subsidy or cost redistribution mechanism, for a strong enough price on it, Mr. Chairman, to promote and stimulate conservation. This is going to be a really interesting discussion of this very essential service. Now is not the time for it, so I won’t get into any of the other levels, but I do look forward to it.

Mr. Chairman, there is another aspect of the Power Support Program administration for this year that I wanted to follow up on. I think Mr. Menicoche had already indicated or made reference to the FMBS decision of just a couple months ago to take up the rate rider in the diesel communities. This was a rate rider of about 3.3 cents a kilowatt hour that this government is going to absorb. So customers out there are saved, they are rescued from this interim rate rider. It’s going to cost us about $620,000 and could save, depending on where the house and community was, the customer up to about $150 a year, which is a substantial subsidy. So way to go; I’m in favour of it.

Where I wanted to seek some clarification, Mr. Chairman, was in whether or not this is going to be a universally-applied rescue package, if you will. The rate riders that this program comes into affects the diesel communities. We’ve been advised by the Power Corporation that the communities that are on hydro, which do need some diesel, will also be experiencing a rate rider probably in March of this year. I wanted to ask the Minister, is the move that has already been taken in the diesel communities also going to apply when rate riders come into effect for other communities in the NWT? Will there be universality? Thank you.

Thank you, Mr. Braden. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, the program, as it’s laid out, is based on Yellowknife rates, so those that receive the subsidy would be paying higher than the Yellowknife rate and that is the program and we’ll stay on that. The changes in dealing with the rate rider will work on the same principle. If we find, for example, the Yellowknife base rate goes up, then so will everybody else’s rate go up accordingly, because Yellowknife, again, is used as the base rate and if it goes up then the subsidy will kick in from that rate up. So the rest of the residents of the North will feel, if the base rate goes up, a bit of an increase, as well, on how that would work. The subsidy will not change in how it’s applied. Thank you.

Thank you, Mr. Roland. Mr. Braden.

Thank you. I follow the Minister’s argument there. I guess what I’m looking at is a rate rider, Mr. Chairman, from my understanding, is a temporary price adjustment. It is subject to certain terms and time frames. The Minister is referring to the base rate, which again, from my understanding, is something that goes through an extraordinarily complex process and has to be approved by the Public Utilities Board. The base rate will not change, because there’s a temporary rate rider imposed on Yellowknife. So this is my understanding. I wanted to confirm with the Minister if this is the case. Are we understanding, or maybe we need to seek some more clarification? Thank you.

Thank you, Mr. Braden. Mr. Roland.

Thank you, Mr. Chairman. I thank the Member for that question because it will help clarify the terminology being used. It would be the Yellowknife rate that would be worked with, not the base rate, as the Member has clarified, that exists now in the rates that are adjusted and established by the PUB. It would be the Yellowknife rate and adjustments from that. That’s the policy decision that we’re following. Thank you.

Thank you, Mr. Roland. Mr. Braden.

Okay. So does the policy read that the subsidy program is based on Yellowknife’s base rate or Yellowknife’s rate? What’s the rule of the day? Thank you.

Thank you, Mr. Braden. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, the policy wording itself isn’t as specific to say Yellowknife base rate, that we can compare it to the rates that are set up by the PUB. We’ve been interpreting it through FMBS as being the Yellowknife rate. Thank you.