Return to Written Question 4-12(4), asked by Mr. Patterson to the Minister of Municipal and Community Affairs, concerning the Iqaluit hot water system shutdown costs.

system. At this time, the central heating system was operated by the NWT Power Corporation (NWTPC). The GNWT purchased HTHW wholesale from NWTPC and resold it to individual users. There were no formal agreements between NWTPC, the GNWT or the individual users.

In December, 1991, FDL ceased purchasing HTHW from the system. That same month, a proposal was put forward to Cabinet to allow NWTPC to increase its rates for HTHW effective March 15, 1992. This rate increase was approved and came into force on March 15, 1992. In April, 1993, the central heating system was decommissioned.

During the one year period between the rate increase and the decommissioning of the system, the town of Iqaluit's costs relating to the purchase of HTHW increased by $250,714, an increase of 104 per cent. This occurred for the other remaining users of the system as well. On October 29, 1993, the town formally requested that the GNWT reimburse them for the amount of the increase, relying on section 3(w) of the turnover/acquisition agreement and on representations made by the NWT at the meetings of the Iqaluit Turnover Implementation Committee.

There were two issues:

1. whether the GNWT was liable for the increased utility costs paid by the town of Iqaluit under section 3(w) of the turnover/acquisition agreement, and,

2. whether the GNWT was liable for these costs outside of this agreement.

The conclusion of the GNWT legal division was that the GNWT was not liable under section 3(w), however, there were other factors which implied liability for this amount, outside of the terms of the agreement, including the failure of the GNWT to take several actions required by other sections of the turnover/acquisition agreement, the lack of a written agreement between the GNWT and the purchasers of the HTHW, the relationship between the GNWT and NWTPC, and representations made by the GNWT officials in discussions with the town.

As can be seen from the preceding explanation, this is a very complex issue which largely accounts for the events that have occurred to date. However, given the current situation, the GNWT is prepared to insulate the town from the $250,000 cost increase that occurred in 1992-93. My officials are working on this and action will be taken before the end of the calendar year. In the circumstances, I believe the GNWT is acting in good faith and is going beyond its legal obligations. As a result, I would not be prepared to consider paying interest on the amount paid by the town in October.