As one would suspect, importing fuels into and across this vast territory is an expensive proposition. In 2012-2013, for instance, the Government of Nunavut (through the Petroleum Products Division) imported approximately $195 million worth of fossil fuels. This initial purchase of fuel and all other PPD operating expenses are paid for through the Petroleum Products Revolving Fund which has an authorized limit of $200 million.
Once fuel is imported, PPD then sells to a variety of customers (either directly or through designated contractors). One such customer is the Qulliq Energy Corporation.In 2012-2013, QEC purchased approximately $42 million of fuel for electricity. Another territorial corporation, the Nunavut Housing Corporation, spent approximately $43 million on heat and electricity. In addition to territorial corporations, the Government of Nunavut spends money to provide electricity and heat to government-owned buildings.In 2012-2013 the GN spent approximately $21.6 million for electricity, and an additional $6.7 million on fuel from PPD.
In addition to this energy spending, the GN supports a number of different energy subsidies. Some of these are highly visible such as the Nunavut Electricity Subsidy Program, and the Public Housing Support Program.Others are hidden inside other programs such as electricity and heat payments from the Income Support Program. Energy subsidies are estimated to cost the GN approximately $30 million a year.
In total, energy expenditures by the GN and all of its related parties are estimated to be $338 million for the 2012/2013 fiscal year. Because the GN continues to rely on imported fossil fuels, these costs will likely rise as the territory will have to contend with volatile world energy markets and unforeseen supply disruptions.A perfect example of this is in 2008, when world energy prices spiked to an all-time high of $147 per barrel of crude oil. As result of this, QEC was forced to double their fuel stabilization rider from 6.40 cents/kWh to 12.52 cents/kWh.
This reality provides many challenges for Nunavut moving forward. Energy expenditures are non-discretionary budget items, and as such,any increase in energy pricesdirectly impacts the funding of priorities such as health, education, and housing.