Thank you. Let's have a very, very short break and come back.

---SHORT RECESS

The committee will come back to order. Is the Minister responsible for the NWT Power Corporation prepared to make opening comments?

Yes, Mr. Chairman.

Go ahead, Madam Premier.

Minister's Introductory Remarks

Mr. Chairman, I am pleased to present the preliminary 1995-96 capital budget for the Northwest Territories Power Corporation.

Mr. Chairman, the budget calls for expenditures of about $20 to $24 million and reflects the corporation's objective of working with communities throughout the territories to improve electrical generating facilities and to develop alternate energy sources. Examples include the Dogrib power project, the potential of using natural gas to generate electricity in Inuvik, wind generation in Cambridge Bay and Iqaluit, and consideration of alternative electric sources in Lutsel K'e and an agreement with that community's band council.

Mr. Chairman, as mentioned during the Standing Committee on Finance review, the corporation's budget timetable is different from that of the government. The power utility's capital budget is scheduled to be reviewed by the corporation's board of directors at their November meeting. Because of this, the plan is still subject to change. A copy of the final budget will be provided to all Members of the Legislative Assembly when it has been approved.

As Members know, the Power Corporation does not receive any funding from the government. Its capital projects and its O and M are independently financed by the corporation through the sale of electricity and heat and a combination of debt and equity financing. As a result, it is essential that the corporation continues to be financially sound and that it earns its full rate of return on a year-to-year basis in order to finance its required capital expenditures without creating an unmanageable debt load.

In 1993-94, Mr. Chairman, the corporation made a profit of $9.36 million, which represents its full rate of return as established by the Public Utilities Board of the Northwest Territories. From this profit, the corporation paid the government a dividend of $3.48 million which was redistributed in the form of a power subsidy to northern consumers.

Hear, hear.

The remaining $5.88 million, along with long-term financing, was reinvested in new capital projects for the coming year.

However, the forecast for 1994-95 indicates that the corporation's profit will drop to $4.8 million, nearly one-half of the full rate of return it is allowed to earn. After paying the annual dividend to the government, there will be little, if any, profit to reinvest in capital projects. This means that capital projects must be reduced or borrowing must be increased.

Mr. Chairman, reduced profits for 1994-95 are a direct result of the increased fuel costs in Yellowknife because of the low water in the Snare hydro system. Water levels in the Snare system are lower than at any time since the 1970s and, in order to meet the electrical power needs of its customers, the corporation has had to produce a greater proportion of the Yellowknife load by diesel generation.

This had added about $4.8 million to the corporation's fuel costs and made it necessary for the corporation to request the Public Utilities Board for a temporary rider to recover the cost of the additional fuel. As you know, the utilities board conducted a hearing on this matter and is in the process of making a decision.

The utilities board is also reviewing a long-standing proposal by the corporation to implement a system of cost-based rates. The proposed system will not increase the total amount of revenue earned by the corporation, but it will affect individual customers by creating a more equitable rate structure throughout the territories. Both decisions will have a direct bearing on the financial viability and operation of the corporation.

Mr. Chairman, the first five years of government ownership have provided a solid operating base for the Power Corporation. So far, the utility has proven that it can be profitable and pay for the subsidy program if it is left to operate as a business, but that doesn't mean the future is secure. The operation of an electrical utility is capital intensive and requires a high degree of organizational and operational stability. And it needs financial certainty in order to make sure that existing facilities are properly maintained and that inadequate facilities are replaced. I had hoped that the proposal to privatize the corporation would have addressed this matter.

Members will recall that the government tabled the two Abbott reports on privatization early on in its mandate, at a time when the economy was in better shape than it is now. The reports were prepared to satisfy a condition of the corporation's purchase agreement that required the government to examine privatization options. In addition, I tabled another document dealing with privatization of the Power Corporation at the conclusion of the last sitting of the Legislative Assembly.

All of these documents were widely circulated throughout the territories in order to provide the public with the information they requested and to provide the government with the feedback required to properly consider such an important policy issue.

Since releasing the various documents, the government has been working on draft legislation, which I will be making available later today. The government has also heard from many groups and individuals who went to a great deal of work to examine the privatization proposal, establish policy positions and provide the government with constructive feedback and suggestions.

For instance, I have been informed there is a common position developing among aboriginal organizations in the western territories with respect to privatization of the corporation. At a meeting last week, representatives agreed their support would be contingent on the following principles:

1. That the corporation be sold to a consortium of aboriginal groups and other northerners;

2. That the government guarantees the current power subsidy program stays in place;

3. That the corporation be sold at a fair market price; and,

4. That existing contractual arrangements will be honoured.

Mr. Chairman, Ministers and individual MLAs have also heard from interested residents concerning the proposal to privatize the corporation. In addition, I met with a wide variety of organizations that expressed an interest in discussing a user-owned utility controlled by northern investors and regulated by a Public Utilities Board.

Mr. Chairman, the comments we received over the past several months were mixed, and the inability of the Assembly's Standing Committee on Agencies, Boards and Commissions to schedule hearings on the matter suggests that it will not be possible to reach a territorial consensus on the concept of privatization during the last year of our mandate.

In addition, the economic climate has changed, the federal Finance Minister has warned of tougher times to come, and the expected financial return on making the corporation a user-owned utility has softened. As a result, the government has come to the conclusion that it is not timely to proceed with the privatization initiative. Mr. Chairman, that doesn't meant that difficult issues can be put on the back shelf. If the corporation is to remain profitable and financially sound, the issues will have to be addressed.

For instance, the cost of the power subsidy is expected to increase by $1 million to $4.5 million this year. In 1995-96, the subsidy will cost about $6.5 million and vigilance will be required to make sure that we do not fall into the trap of unmanageable debt being faced by other jurisdictions.

Mr. Chairman, it is not difficult to find examples where crown corporations experience substantial financial losses that impact the owner government. Canadian National is a good example of a crown corporation providing a public service at a high cost. In Alberta, Novatel experienced huge financial losses at the government's expense and the media has been full of stories about the significant losses experienced by Ontario Hydro.

Obviously, the NWT Power Corporation will need the continued support and understanding of the government and the Legislative Assembly in order to balance the money it is allowed to earn on a yearly basis with the demand for additional and improved services. It needs to remain financially sound and be in a position to provide safe and reliable electrical power service without becoming a burden on our existing financial resources.

This can be accomplished by letting the corporation continue to be managed as a business. At the same time, the government must come to a determination on a number of matters, including the threat of competing utilities wanting to service profitable communities, leaving the Power Corporation with smaller centres that have high costs, no return on investment, and an inability to provide an annual dividend for the payment of a power subsidy.

In addition, changes to both the Power Corporation Act and the Public Utilities Board Act will be required in order for the corporation to continue operating in a financially sound and business-like manner, at arm's length from government. For example, it may be worthwhile examining how utility board decisions could be issued in a more timely manner, or we might want to consider providing the corporation with the exclusive right to generate and distribute electrical power in excess of three megawatts.

In conclusion, Mr. Chairman, power plants are costly and the Power Corporation cannot be expected to borrow funds for all of it's capital requirements or else it's debt load will grow to a point where it is a burden on ratepayers and a liability to government. The government does not want this to happen, and I know that Members of this House feel the same way. Thank you. I am prepared to answer any questions that Members might have, Mr. Chairman.

Thank you. The chairman of the Standing Committee on Finance, the honourable Member for Nahendeh, Mr. Antoine.

Standing Committee On Finance Comments

Thank you, Mr. Chairman. The Standing Committee on Finance has a very short comment on the Northwest Territories Power Corporation. The committee wishes to repeat its comments of last year: that the Power Corporation should enhance their budget presentation by, "presenting consistent five-year plans that are comparable from year to year." As well, committee Members would like to see more detailed substantiation of larger projects, much as is included in the departmental project substantiations.

Those are all the comments from the Standing Committee on Finance. Thank you.

Thank you, Mr. Antoine. Before I open the floor for general comments, I would like to ask the honourable Minister if she would like to bring in her witnesses.

Yes, Mr. Chairman.

Thank you. Sergeant-at-Arms, escort the witnesses please.

Thank you. For the record, Madam Premier, would you mind introducing your witnesses to the committee, please.

Mr. Chairman, I have Mr. Jim Robertson, chairman of the Power Corporation and Mr. Courneya, vice-president of finance of the Northwest Territories Power Corporation.

Mr. Chairman, at this time I would like to take the opportunity to distribute the work that was done on the legislation for the privatization of the Power Corporation for Members' perusal. Thank you.

Thank you. The document is being distributed. Thank you for the introduction of your witnesses. General comments from the committee. Mr. Ballantyne.

General Comments

Thank you, Mr. Chairman. I have a number of comments. First of all, I would like to offer positive comments. I would like to publicly congratulate the Power Corporation for the realization of the Dogrib power project. It took a lot of hard work and a lot of skill in working with a number of organizations. It was very difficult, but I think it bodes well for development in the western Arctic. It was a job well done and I congratulate the Power Corporation on that particular project.

My second comment is about the rate zones and cost-based rates. I, for one, support the principle. It is important that in every area of the Northwest Territories, people know exactly how much it is to supply power. I think that knowledge should be public knowledge and, if there are to be subsidies, they should be outside the actual costs of delivering power. I agree with the principle. I will have some questions about the actual details of the zones and rates that are proposed, but I just want to indicate to the Power Corporation that I think they're definitely on the right track.

My third positive comment: I was, as I am sure other Members were, quite pleased to hear that the issue of privatization has at least been postponed. I have made a number of comments in this House, as have others, that I felt it was premature at this time, for a number of reasons, to consider the concept of privatization. I know for one thing that, at the appropriate time with the right financial conditions and the right political conditions -- perhaps not until after division -- there definitely should be a full debate on the pros and cons of privatization. I think it is an issue, as the Premier has said, that we should put aside for now because of timing, but it is one that, at the right time, merits a full debate. At that time, I think we can discuss it fully and make a decision for the right reasons.

Again, I want to congratulate the Minister for postponing it for now. There wasn't a consensus out there and, rather than having a debate which is counter-productive, I think this was a prudent decision. At the right time, I'm sure we'll reopen this particular debate.

I read also, Mr. Chairman, with some interest about possible changes to the Public Utilities Board. I, for one, am willing to look at those, but I really want to put it on the record that it is very important that the Public Utilities Board has public confidence and is acting as a regulator for power distribution for power companies in the Northwest Territories. There are ways to streamline and improve the process, but I wouldn't like to see anything done which takes away from the ability of the Public Utilities Board to protect the interests of the consumers in the Northwest Territories.

Mr. Chairman, I have been on record in the last three weeks indicating my concern about the process which lead the Power Corporation to ask for a 22 per cent increase as a surcharge because of low water in Yellowknife. I have put my concerns on the record. We will wait to see what the PUB has to say about that situation, but once that decision comes down, I will sum up my concerns about this process.

Suffice it to say now, I do have some concerns about the decision-making process for that sort of a decision such as: as the power of the Cabinet and the Minister; the interaction between the Power Corporation and the Minister; and, the involvement or lack of involvement of MLAs. It is an area that bears some scrutiny in the future.

I have always agreed with the premise that the Power Corporation should be run as a business and 95 per cent of the time, that works. But for something as unusual as the low-water situation in the Snare system and for something that has such a profound impact on a relatively small number of consumers, I think perhaps we should look at a better approach to deal with that situation. At the appropriate time, I will have some more to say on this situation.

Generally, I don't have a problem with the capital budget of the Power Corporation. I think that they are attempting to deal with needs in the communities throughout the Northwest Territories. I hope, in the future, for some of the more difficult and controversial decisions that the Power Corporation will have to make, that they will find a better process of consultation and communication than they might have found in the past. With that, Mr. Chairman, that concludes my opening comments. I will have two or three questions during the detail of the budget, but that is it for now. Thank you, Mr. Chairman.

Thank you. General comments. Mr. Dent.

Qujannamiik, Mr. Dent. General comments. Mr. Pudlat.

(Translation) Thank you, Mr. Chairman. I do not have too many comments to raise. I want to raise some issues along what the two Members have already raised. I, too, am very thankful to the Minister responsible for the Power Corporation. We have seen a big improvement. I understood that it has not always been operating that well. One of the comments I want to make is I don't want to see this privatized as yet. As the Minister responsible for the Power Corporation stated, the privatization of the Power Corporation is deferred. I am in support of this. If the privatization of the Power Corporation is going to be deferred and if we are going to wait until 1999, I would be in support of that. I have worked closely

with my constituents, especially in 1994, with regard to this issue. We all understand that the Members of the Legislative

Assembly understand and are in support of the way the Power Corporation is being operated now.

I also understand that in the near future, after the Power Corporation is privatized, we might see increases to our power rates. When this happens, we will have to look for solutions. If the Power Corporation continues to owe more money, we will have to look for solutions to this problem. Thank you, Mr. Chairman.

Qujannamiik, Mr. Pudlat. Any further general comments? We are reviewing the NWT Power Corporation. Mr. Antoine.

Thank you, Mr. Chairman. I have a few comments that I would like to make. It is regarding the statement the Minister made. Much of the budget for this year hasn't been approved by the board and it won't be until November. A lot of the decision is based on whether the Public Utilities Board will approve their application or not. Many things are still up in the air. From the figures in this document, it states that in 1993-94, the corporation made a profit of $9.363 million. From this profit, the corporation paid the government a dividend of $3.48 million, which was redistributed in the form of a power subsidy to the northern consumers. I will have a question about this later on. The remaining $5.88 million went to new capital projects. However, the forecast for this year, 1994-95, indicates that the profit is going to be forecast at $4.8 million, which is about 50 per cent less than what was earned last year. As a result of that, if you take the -- I don't know whether the government is going to get a dividend this year or not -- $3.48 million off the profit, which was given last year, that leaves only $1.32 million for new capital projects.

Up front, the Minister is saying that the budget calls for an expenditure of $20 million to $24 million. I take it that a lot of that will be in the O and M part of the budget. In the 1993-94 statement, with a profit of $9.36 million, it will be interesting to know what the total operating costs of the corporation were, to realize a profit of this amount.

The other thing is, if this current year's profit is going to be $4.8 million, would the corporation still pay the government a dividend from that and how much would it be? Would that dividend be applied to the power subsidy for northern consumers? Would that dividend be enough to cover all the power subsidy that is offered to northern consumers? Is the $3.4 million the total amount for power subsidy to northern consumers? Could the Minister answer those questions, Mr. Chairman?

Qujannamiik. Madam Premier.

Mr. Chairman, there are many questions that have been made in general comments and we will try to keep a running tab of them. For the specific question that Mr. Antoine made in terms of dividends and the breakdown of the expense, we indicated that the budget calls for expenditures of about $20 million to $24 million. That is all-inclusive on capital.

Some of the capital expenses are paid for by loans or debt financing, so it is not totally reflected in the profit margin that we are allowed to make. In terms of the dividend, the Government of the Northwest Territories can request any amount. The bigger the request is, the less there is to make on expenditures on other things, such as upgrades and plants. So the subsidy amount is generally the one that is requested from the Power Corporation.

If there is anything else, perhaps Mr. Robertson can elaborate.

Thank you. Mr. Robertson, would you like to take it from here?

Thank you, Mr. Chairman. There are just a few questions that are outstanding. The amount of the dividend that was requested, as far as we know, covers 100 per cent of the subsidy. The $3.4 million that was paid last year, again, as far as we know, covered off all the subsidy payments required.

Thank you. General comments. Mr. Antoine.

One question that wasn't covered was this presentation states that the budget calls for an expenditure of $20 to $24 million for this year, 1994-95. This will make the profits drop by $4.8 million. I wanted to know what the total operating costs were from 1993-94 to realize a profit of $9.360 million for that year.

Thank you. Madam Premier.

Mr. Chairman, we did table the financial statement for the Power Corporation. I will have Mr. Courneya answer the detail of the question.

Thank you. Mr. Courneya.

The information the Member is looking for would be contained in the income statement in the annual report, which would give the total operating costs for 1993-94. The estimated capital expenditures for 1994-95 do not directly impact on our expected net income for the 1994-95 year, as the capital expenditure program is not directly related to the O and M expenses or the net income of the corporation.

Thank you. General comments. Mr. Antoine.

The tabled document that they refer to was tabled and it would be good if I could get a copy of that. Members don't receive tabled documents unless they ask for them, so I am asking for it now.

I'm satisfied with the answers for now. I will look at the document when I get it, Mr. Chairman. I just want to carry on with my general comments on the Power Corporation. A lot of the capital expenditures are still outstanding, as I said, because of a lot of outstanding issues. The board hasn't approved the capital; they expect to do it in November. Plus, there are two proposals before the Public Utilities Board that will probably determine changes in the financial picture of the Power Corporation.

One of the items that the Standing Committee on Finance requested is information on projects that are $250,000 and over. The corporation knows that we requested this; I just wanted to remind them that we are still looking forward to that.

Finally, Mr. Chairman, I just wanted to say that the only time people at the community level deal with the Power Corporation is when they pay their bills. There are still outstanding problems in the communities I represent, especially in Fort Simpson. This past year, there were some problems with the management of that operation. The Minister said they were there to work with the communities and I'm glad to hear that because the manager of the station in Fort Simpson took an early retirement because he was having a lot of problems with headquarters.

This man spent 33 years of his life working with this corporation, and to finish working for them that way is not a good way to work with people in the community. Everybody in the community knows this person and the feeling is that he wasn't treated very well. I don't know what the president or the Minister said to him, but usually when somebody retires, there is usually some sort of celebration or award. Certainly, when someone dedicates 33 years of his life to a corporation, he deserves something other than taking an early retirement because of the stress headquarters is putting him under.

I just wanted to tell the corporation that they are going to have to start working a lot better with the people in the communities and start treating people in the communities who are working for the corporation a lot better than they have. That is the experience we have had in Fort Simpson. Thank you, Mr. Chairman.

Thank you. Madam Premier.

Mr. Chairman, with regard to the individual issue, the Member is correct in saying that the person is having his own problems. However, he is still working for us. He's still on the job. When his retirement takes place, he will be treated like every other employee. I would like to say very clearly that the Power Corporation does have retirement parties and long-service awards, even more than this government has.

Many past employees, when they worked for the federal Crown, were basically left in the interior and not taken any notice of, and were given very little compensation for their services. The Power Corporation has a very good reputation for recognizing its employees and trying to do the right thing by them, whether they are carry-over employees or whether it is looking after the families when there is a grey area. This individual will be recognized for his service, just like we do for others.

I know the chairman of the board and the new president, in view of their past work with employees, have a very good record. I just want to assure the Member that once a retirement takes place, there will be proper recognition of the service that the individual provided. He is still at work, so we will do that at the appropriate time. This corporation, to my knowledge, goes a long way in trying to say thank you when thank you is due.

Thank you. General comments. We have Mr. Pudlat, Mr. Patterson and Mr. Koe. Mr. Koe, I have you on the list first.

Mahsi, Mr. Chairman. I have a couple of comments on the statement the Minister made. I take exception to the comments made on page 6 about the Standing Committee on Agencies, Boards and Commissions and their inability to schedule hearings. The Standing Committee on Agencies, Boards and Commissions, which I chair, will take criticism where it is rightfully due. In this case, I think the comments are a bit unwarranted, in the sense that meetings were set up, but it is an issue that concerns all Members of the Assembly and there are other standing committees that made suggestions that hearings be rescheduled. For various reasons, they didn't proceed.

I would just like to state that it wasn't solely because of the inability of the Standing Committee on Agencies, Boards and Commissions that we did not have the hearing. I'm not sure what the qualification at the end means: "...the consensus territorial-wide..." You are the one who travelled the north and talked to different people. I believe you probably have a better sense than I would on what the consensus was, but through my contacts, I know there wasn't consensus in the north on the concept of privatization. But, it is not because we couldn't schedule our hearings that that consensus wasn't reached. And it wasn't because of our inability to schedule hearings that we didn't receive consensus in this House.

On other issues, I have some concerns about some of the policies used by the Power Corporation, and these aren't new. There are two basic concerns, the buy north and hire north policies. I still hear in my travels across the north about the Power Corporation not using as many northern goods and services as they should. I don't have any concrete evidence to say that they are or they aren't, but you hear it from suppliers and on the street. I want the Minister, if she can, to confirm that the buy north, hire north policies, and the BIP are used by the Power Corporation.

Thank you. Madam Premier, do you have any response?

First of all, on the comments the Member takes exception to, you would have to read two paragraphs together. As he indicated, I have probably met with a greater variety of organizations and people who have expressed varying degrees of interest. I believe the second paragraph, which reads: "The inability of the Assembly's Standing Committee on Agencies, Boards and Commissions to schedule hearings suggested it would not be possible to reach a territorial consensus on the concept of privatization..." is saying exactly what the Member has said.

The issue is, although the information was circulated, there wasn't really a total acceptance of any model. Certainly, in this House, dealing with privatization didn't have total consensus either. This is just to acknowledge that. It isn't to make a criticism of anyone. I think what the standing committee and I found is the same thing. It was a situation where people had different models and different ideas about how it should be done. It varied from individual communities who felt they could take it over on a regional level to one model where everything stayed together. It wasn't there to provide criticism, but to tie the two things together.

In terms of hiring and buying for the Power Corporation, a lot of equipment and what is needed is really not provided in the Northwest Territories. It is a specialty group that buys the types of equipment, power generating plants, et cetera, that aren't made in the Northwest Territories. And, I believe, it probably wouldn't be feasible or economically sound for someone to go into the business of selling the generators required and so on. A large part of what the corporation buys, which I've been tracking, are things that couldn't really go to a second agency housed in the Northwest Territories.

The Power Corporation does buy north and hire north. One of the first things, in terms of hire north, was to try to adjust the compensation paid to a lot of workers who were out in the interior carrying out duties and functions. We tried to stabilize that and look at that, making that real for the people who are doing the bulk of the work in the communities. I hope that we will be able to have people trained to take on some of the more complex jobs, particularly in the engineering area where it is difficult to get people who are qualified.

Given the new government's thrust for education, training and employment, we should try, as much as possible, to encourage people to take on those more complex jobs. Sometimes, it is just impossible to hire north because people are not available. But, I believe the corporation has done an excellent job of trying to meet those two mandates. They do have a policy governing their expenditures and also on hiring north. Thank you, Mr. Chairman.

Thank you. General comments. Mr. Koe.

Mahsi. In terms of hiring people, I assume the corporation is just like any other business where, if they don't have staff, they use contractors, especially for small maintenance jobs. I assume it is one of their policies to use, say a local sandblasting outfit, as compared to flying somebody in from the south, where people are available. I know companies are not available in every region, but somewhere in the north there is usually a company that can provide a service. That is what I was getting at.

In terms of staffing and hiring, the corporation used to have a lot of trainees in different trades. Do they still do a lot of the apprenticeship training?

Thank you. Mr. Robertson.

Mr. Chairman, the answer to the question with respect to apprenticeship programs is yes. We are in the process right now of hiring a number of people in each of the regions and we are hoping to see through the four or five-year apprenticeship program for mechanics, linemen and electrical operators. We are working closely with Arctic College and the Department of Education, Government of the Northwest Territories, with respect to bringing people through the system in the apprenticeship program.

As far as the other question on the use of outside firms to do work. As much as possible, we try to use companies within the Northwest Territories. There is, however, a price factor involved. The policy we have allows a differential for territorial companies, but, a differential is not an example of 50 per cent more. But, as much as possible, we are trying to use local corporations.

Thank you. General comments. I have Mr. Pudlat.

(Translation) Thank you, Mr. Chairman. As I said, I was going to raise a question. I don't know how this question relates to what we are talking about, but in the community I live in we have a brand new power plant and there is also a back-up system. The Northwest Territories Power Corporation Minister has seen our new power plant.

Mr. Chairman, perhaps a couple of weeks ago, there was a problem with power outages. One of the outages went overnight. It was a concern as the power plant is quite new. I don't know exactly what happened. There have been problems with outages already. My question is on that topic. I am very happy and proud that we have an employee who is a young Inuit, who is working and training on the job as an apprentice. He has worked with other employees from the region also, as the employee before had resigned. I don't know as to what extent the present employee is trained. He is a locally hired employee, however, I think they should have more supervision when they are learning on the job. This is not to say that I don't trust the employee, but we have to be aware that they have adequate supervision when they are learning on the job. I don't know if the problems we have had with outages are due to the fact that he has been alone. We have to be proud and praise our young Inuit, who are willing to take on these jobs. There are always problems when new things come about.

It is probably expensive to maintain these power plants, especially with freight and maintenance costs. Has it been considered to have adequate supervision for our young people who we are quite proud of and who are in an apprenticeship?

As I told you, we have a brand new power plant and there is a back-up system. I don't know why the back-up system didn't come into place when the main power went out. So have there been considerations as to how much supervision these new employees are given when they are new on the job? Has it been considered, is it in place or are there plans to have this in place in the future? Thank you, Mr. Chairman.

Thank you. Mr. Robertson.

Thank you, Mr. Chairman. The Member's remarks are quite accurate and, unfortunately, I am not in the position to say because I do not know why the power was out for such a long period in Lake Harbour two weeks ago. This is currently being looked into and we will advise the honourable Member as soon as we are aware of the reasons.

He is correct in saying the operator who looks after our plant in Lake Harbour is new to the corporation. There has been a series of training modules put together for the operator and we do not think the outage was caused in any way by the operator's lack of training. At the same time, we acknowledge the amount of training the operator has will have to be continued and upgraded over the next few years. Again, as soon as we find out and determine the reason for the outage, we will advise the Member.

Thank you. Mr. Pudlat.

(Translation) Thank you for the response. I will repeat part of my question. As I said, I was very proud of aboriginal people being put on the job. Can they be given adequate supervision, especially when they are new to the job? Or, is it impossible because of a shortage of funds? Are there any plans to have supervision for these new employees? Thank you, Mr. Chairman.

Thank you. Mr. Robertson.

Thank you, Mr. Chairman. The supervision the plant operators get during the first few years of their employment, takes place initially quite intensively and as the employee shows some ability to operate the plant on their own, the supervision is relaxed. It is quite evident from the experience in Lake Harbour that we are going to have to revisit the amount of supervision given to that particular plant and plant operator, as well as others.

Mr. Patterson.

Thank you. I would like to remind Members and the Minister that, if you want to discuss some matters, there is a Member's lounge back there. Be quiet please. Thank you. Madam Premier.

---Applause

On the question of another developer coming in, subject to the normal approval, as the Member has indicated, for environmental and other processes, there is nothing that would stop another developer from coming in and putting in, say, a large hydro development.

Thank you. General comments. Mr. Patterson.

Just a final comment. In that event, Mr. Chairman, I guess I would also like to recommend that, in looking at the possibility of legislating to give the Power Corporation the exclusive rate to generate and distribute electrical power in the larger communities, the Minister responsible for the corporation may also want to look at legislation to protect the exploitation of our hydro resources by competitors.

I think, as we go to more difficult financial circumstances -- as referred to in the opening comments -- we are going to want to protect the economies of scale and the natural resources we have in the Northwest Territories, and protect them in favour of our publicly-owned utility. So, I would suggest that, even though privatization was off -- and I understand it was partly motivated by the desire to create a corporation that would have sufficient strength and muscle to fend off competitors -- and it is off the agenda, that some of these legislative safeguards should still, nonetheless, be pursued. Because, otherwise, we may be subject to competition that could further erode the financial viability of our corporation. That's just a comment, Mr. Chairman. Thank you.

Thank you very much, Mr. Patterson. On my list I have Mr. Ng. General comments.

Thank you, Mr. Chairman. First, I would like to apologize for being a little bit late getting back. I was at the airport. I missed the Minister's opening comments, but I had a chance to read the notes that came forward. I just wanted to clarify one thing. It is in relation to the major concern I had about privatization. There have been comments made on this.

Secondly, on page 6, she has indicated that the government has come to the conclusion that it is not timely to proceed with the privatization initiative. I just want to clarify something. Does that mean the Minister has shelved this for the duration of this government's term? Thank you.

Thank you. Madam Premier.

Mr. Chairman, the Member is right. It was a requirement on the turnover from the federal Crown to the GNWT, that we would explore the options for privatization. In doing that, the two reports, the Abbott reports, were commissioned to take a look at the option of privatization and what the best way of doing it is.

The privatization option that came forward was to keep the Power Corporation in one part, not to split it up, which would make the best sense to balance and stabilize the customer base. That is what we looked at.

Now as we proceed and go forward -- and the Member is quite right, he was not here when I tried to answer that question before -- there isn't a consensus out there. There is a lot of interest, particularly from aboriginal groups, but there isn't a consensus on how we go about it. As well, in this Legislature, there is no consensus on that. As all the Members know, we have a very heavy legislative timetable for other areas we have to look at. I have circulated the work that was done on the legislation according to the Abbott report on the one unit.

So these are the areas that were explored and were put forward. Every now and then you have to measure how much work can be put on the legislative timetable. As all Members know, in order to do that, there has to be some type of consensus if we are going to talk about one unit. At this point, I believe it is just not there. There are many people who are interested. Some communities are talking about taking over their own power corporation. Other regional groups are saying take over the regional distribution area and are suggesting that the territorial government turns it over for one dollar and then they operate it.

Part of this whole issue is that at the time the studies were done, this corporation's estimated value was $80 million. I don't know, given the circumstances, whether the $80 million is still the figure. There is much work to be done in terms of understanding this whole thing. There is a lot of concern about the subsidy and that if it is privatized, the territorial government could not put their hands into the coffers of the Power Corporation and demand that a dividend be paid whether there is a profit or not. So these things are not really understood.

For example, we have a number of utilities, in the marginal communities where the territorial government has paid 75 per cent of the cost with Northland Utilities, that don't pay a subsidy. These are issues that aren't clear enough to the interested groups. I don't believe we have the time, given that the mandate of this Legislature is a year from today, to satisfy the concerns and issues out there. That is what I meant by this statement.

Thank you. General comments. Madam Premier.

Mr. Chairman, I just wanted to note something, to clear up any misconceptions. At the beginning, there were some comments made and I want to clear them up for the record. On the privatization of the Power Corporation, to have the government guarantee future loans, in terms of the proposals we had on the table, there was no request for a guarantee for the future loans on the privatization.

In terms of the comments on its stability, it is very difficult for the Power Corporation to say what is a good year, what is a bad year and how it will break out. These are the questions out there. When we took over the Power Corporation from the federal Crown, what I remember most is trying to get the records from the Edmonton office. Part of the reason those records weren't available, we were told, is because they would move on occasion and the Power Corporation was split and part of it went to the Yukon. So we really couldn't get a lot of those records, so when we took it over, we had to do the best we could with the information we had to make sure we had enough in place and got the Power Corporation for such a price, that we could make up for some of the environmental concerns and some of the records that weren't there.

I would like to say, on record, that I give a great deal of respect and confidence to the board of directors of the Power Corporation, to their very dedicated time they had to spend to make sure even though there were unknowns out there, they were able to tie it together and still be a good corporate citizen to the many communities, whether they are small or large, and respond to needs.

I really have to say, even in the privatization, I felt very sincerely that we had to put something on the table to start discussions, consider options and people can have input. We do have a lot of aboriginal businesses out there who need some good business deals in the Northwest Territories. There aren't very many and I have said that time and time again. It needs to move forward in such a way that it is northern owned. The NWT residents own the corporation. If the time is not right now, it can be explored further in the next Legislature. I believe that enough work has been done and the data has been prepared, so the next Assembly can weigh that information. I hope that we have done an adequate job, so in the next round people will have the information. They can ask what is a good deal and what are some of the perils and outstanding issues. Thank you, Mr. Chairman.

Thank you, Madam Premier. Mr. Dent.

Thank you, Mr. Dent. Madam Premier.

Thank you, Mr. Chairman. I don't want to get into a philosophical debate. I think the only purpose is to at least give all our owners the opportunity to have as much information as possible and to live up to the commitments we made. I believe we have done that, and it will probably be up to a future Legislature to deal with. I'm quite happy to put that in their hands, Mr. Chairman.

Thank you. Any further general comments? If not, do we agree to the detailed information on the preliminary 1995-96 capital budget of the Northwest Territories Power Corporation? The amount is $224.429 million. Do you agree that this is concluded? Mr. Patterson.

Just one very quick question, Mr. Chairman. I was intrigued with the reference to wind

generation potential in Cambridge Bay and Iqaluit. I would like to know how far along that work is at this point. Thank you.

Mr. Robertson.

As I understand, there is a company by the name of Dutch Industries that is presently installing a group of wind-generating turbines in Iqaluit. The Power Corporation is working with Dutch Industries and has agreed to purchase any power they are able to produce from these generators. At the same time, the Power Corporation is taking a keen interest in the technology that is being employed by this company in Iqaluit.

As the Member is probably well aware, we've tried wind turbines elsewhere in the Arctic and, so far, we've had very mixed results. So, we are watching this experiment in Iqaluit with great interest and, in fact, are helping finance part of it by buying the power from the generation.

Thank you very much, Mr. Robertson. If there are no further comments, do we agree that the preliminary 1995-96 capital budget is concluded for the Northwest Territories Power Corporation? Mr. Ballantyne.

Just one question in the area of alternate energy. Over the years, we've done a fair amount of work with wind generation. I wonder if the Minister can tell us what has been a success and what really is the long-term potential of this particular source of energy?

Thank you. Madam Premier.

Mr. Chairman, I think that pretty well everyone knows that there hasn't been a great deal of success with the projects that have been put in place. Much of that has been attributed to the extreme cold weather and the high winds. They haven't been able to modify the equipment to deal with those two environmental factors. Up to this point in time, I would say that the experiments that have been in place haven't met with a high degree of success. But, that doesn't mean that the corporation will not continue to look for more effective ways to make it feasible.

Thank you. Any further general comments? Do we agree, then, that this matter is concluded?

Agreed.

---Agreed

Thank you, very much. I would like to thank the Premier, Mr. Courneya and Mr. Robertson for appearing before the committee. Thank you very much.

Do we agree that we deal with Bill 7, An Act to Amend the Arctic College Act?

Agreed.

---Agreed