Question.

Question is being called. All those in favour? All those opposed? The motion is carried.

---Carried

Bill 16 has had first reading. Item 17, first reading of bills. Item 18, second reading of bills. The honourable Member for Hay River, Mr. Pollard.

Thank you, Madam Speaker. Madam Speaker, I move, seconded by the honourable Member for Nunakput, that Bill 18, Supplementary Appropriation Act, No. 4, 1993-94, be read for the second time. Madam Speaker, this bill makes supplementary appropriations for the Government of the Northwest Territories for the fiscal year that ended March 31, 1994. Thank you, Madam Speaker.

Thank you. The motion is in order. To the principle of the bill.

Question.

Question has been called. All those in favour? All those opposed? Motion is carried.

---Carried

Bill 18 has had second reading and, accordingly, the bill stands referred to committee of the whole.

Item 18, second reading of bills. Item 19, consideration in committee of the whole of bills and other matters.

Speaker's Ruling

Prior to going into committee of the whole, I wish to provide my ruling on a point of privilege raised by the Member for Iqaluit, Mr. Patterson, on October 28th. Mr. Patterson's point of privilege was based on remarks made by the Minister of Justice, Mr. Kakfwi, during consideration in committee of the whole of Bill 3, Guardianship and Trusteeship Act.

Mr. Patterson indicated in raising his point of privilege, which is contained on page 1472 of unedited Hansard: "I raised some questions of principle on the general intent of the bill. I was told that I was too late, that I was frivolous, that I was lecturing and that I hadn't done my homework." Mr. Patterson went on to request that I determine whether his privilege as an ordinary Member to debate fully at this stage of the bill had been infringed by the remarks and the attitude of the Minister of Justice, who was co-sponsoring the bill.

To rule on this matter, I reviewed the remarks that Mr. Patterson alleges the Minister of Justice made that may have infringed on the Member for Iqaluit's privileges as a Member. I reviewed nine pages of debate between Mr. Patterson and the Minister, Mr. Kakfwi. The debate is contained on pages 1464 to 1472 of unedited Hansard.

This chair found that the Minister did indicate on a number of occasions the following, as it related to Mr. Patterson's understanding of the proposed legislation and his advanced review of the bill in question. I quote comments by Minister Kakfwi, as contained on page 1466: "Maybe Mr. Patterson didn't read all of the legislation." Also, on page 1470: "The Member admits that he hasn't read it, he hasn't looked at the entirety of this legislation, but he had concerns." In addition, on page 1471: "As I have said, if the Member reads the legislation and goes through it clause by clause, and he allows the proposed amendment also to be moved and dealt with, I think we will see that the concerns, as he has stated them, are already taken care of in this legislation. But, we can't convince him if he doesn't know and he hasn't read the legislation. That's why I make the suggestion if, at the end of the day, after doing his homework and reading this legislation..."

I could also relay comments made on the matter of lecturing and being frivolous, but it is my opinion that there is no need to expand further on Mr. Kakfwi's comments to rule on this point of privilege. On ruling on a point of privilege, the chair must determine firstly if there appears to be a prima facie breach of privilege and, secondly, that the matter has been raised at the earliest opportunity.

As Members are aware, a question of privilege is usually raised only when a very serious act or omission occurs which impedes or obstructs the House or its Members in the performance of their duties. Reflection on Members can be a point of privilege if the events are of such serious significance as to fall within the definition of privilege.

I find that Beauchesne's 6th edition, citation 69 may be of assistance with this point and I would like to quote from Beauchesne: "The Speaker has reminded the House that it is very important to indicate that something can be inflammatory, can be disagreeable and even be offensive, but it may not be

a question of privilege unless the comments actually impinge upon the ability of the Members to do their job properly."

As indicated in reviewing the debate between Mr. Patterson and Mr. Kakfwi, I find that the Member for Iqaluit's basic right to fully debate the issue before committee of the whole was not infringed upon, as the unedited Hansard clearly indicates the debate did take place. On these grounds, I find that the Member for Iqaluit does not have a point of privilege. However, I did find that certain comments made by the Minister of Justice were of a provocative nature that could have led to a point of order.

Once again, I must caution all Members to be conscientious of comments made in debate so as to ensure that another Member doesn't misunderstand their comments and intentions. All Members have the right to raise issues of concern, thus ensuring that all sides of an issue are debated in a manner that maintains the dignity of the House and respect for each Member's point of view.

Item 19, consideration in committee of the whole of bills and other matters: Tabled Document 14-12(6), "Open for Business" - Privatizing the Northwest Territories Power Corporation; Tabled Document 23-12(6), Report of the 1993-94 Electoral District Boundaries Commission Northwest Territories; Tabled Document 36-12(6), "Action Plan - Consolidation - Health and Social Services"; Minister's Statement 11-12(6), Return to Session; Committee Report 10-12(6), Report on the Review of the 1995-96 Capital Estimates; Committee Report 11-12(6), Report on the First Annual Report (1992-93) of the Languages Commissioner of the NWT; Committee Report 13-12(6), Report on the Elimination of the Alcohol and Drug Board of Management; Bill 1, Appropriation Act, No. 1, 1995-96; Bill 2, Aboriginal Custom Adoption Recognition Act; Bill 3, Guardianship and Trusteeship Act; Bill 7, An Act to Amend the Arctic College Act; Bill 8, An Act to Amend the Public Utilities Act; and, Bill 15, An Act to Amend the Legislative Assembly and Executive Council Act, with Mr. Ningark in the chair.

Thank you, Mr. Dent. Does the committee agree that we deal with the NWT Power Corporation, subsequent to that Bill 7 and then MACA?

Agreed.

---Agreed

Northwest Territories Power Corporation

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.