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.