Mr. Chairman, just a comment, initially, on the example that was used regarding the increase to residential charges in Inuvik. The rate would increase from .22 of a cent per litre to .33 of a cent per litre, or a 50 per cent increase in rates. The residential example that was calculated, my assumption is that it would have used the commercial rate as opposed to the residential rate because the residential rate should only go $82.50 per month as opposed to the $125 per month that had been indicated.

Mr. Koe indicated the concern over the impact on consumption that will occur if the rates go up. The consumption will come down substantially and that will have an impact because the utilidor system still needs to be operated for the same amount of money. We would anticipate that is what would happen, although the amount of the change is uncertain. What is interesting, though, in the case of Inuvik is to compare the economic rates for service in Inuvik which right now is at .52 cents of a litre compared to some of the other economic rates, for example in Iqaluit the rate presently is about .95 cents of a litre and Norman Wells is about 1.3 cents per litre. So, in relative terms, the economic rate in Inuvik, even if it was to increase as a result of the reduction in consumption that would come with these policy changes, should still rank somewhere within the range of some of the other similar municipalities.

What we have proposed with Inuvik is, because of the big change in the rates for commercial users in Inuvik, and the fact that, at present, high rates are charged to government and industry users in order to indirectly subsidize and keep rates low to commercial users, in addition to the implementation of these policy changes we've proposed a phasing out of the cross-subsidy. In the process, rather than a sudden increase of the 118 per cent that was indicated within two or three months, this rate would actually be phased in over three increments over the next two fiscal years. The actual sudden impact that commercial users would experience would be minimized as a result of that. The charges that these people would receive would in the end be similar to the charges to commercial consumers in the other tax-based municipalities.