Gas price-setting decisions lack transparency, AG

P.E.I.’s auditor general says the methods used by provincial regulators to set gas, diesel and home heating oil prices lack transparency.

In a report released on Friday, Jane MacAdam found there was no public explanation of the methodology used by the Island Regulatory and Appeals Commission in setting petroleum prices. The audit of IRAC’s methods in relation to petroleum pricing was conducted between April 2016 and March 2018. “Nowhere could the average Islander find information on IRAC’s methodology,” MacAdam said during a press briefing on Friday morning. MacAdam said the prices of gasoline, diesel and heating oil affect all Islanders. As such, IRAC is mandated by law to ensure petroleum prices are fair. “IRAC has broad powers under the Petroleum Products Act to set prices that are just and reasonable,” MacAdam said.

“It is important that Islanders know how it interprets those broad powers and applies them.” MacAdam’s report also found applications from petroleum retailers for reviews of margins were not processed in a timely manner. IRAC sets the margins that wholesalers and retailers can charge for gasoline, diesel, furnace oil and propane. Wholesalers and retailers can apply for an increase in the margin for petroleum products.

The report looked at two examples of margin reviews. In one case, a margin application submitted by a group of furnace oil retailers took 23 months before a decision was made. In the second case, no decision had been made by IRAC 21 months after an application from another association representing retail gasoline dealers was submitted. “IRAC has the authority and obligation to develop and document policies and procedures that are transparent to applicants and provide for the timely review of margin applications,” the report said.