Power rate hike

Prov­ince and Mar­itime Elec­tric sign agree­ment that will see 6.9 per cent elec­tric­ity rate hike, plans for power gen­er­a­tor shelved

The Guardian (Charlottetown) - - FRONT PAGE - BY TERESA WRIGHT

Elec­tric­ity rates will go up for Is­lan­ders and plans for a new $68-mil­lion power gen­er­a­tor will be shelved if a new joint pro­posal by the P.E.I. govern­ment and Mar­itime Elec­tric is ap­proved by the Is­land Reg­u­la­tory and Ap­peals Com­mis­sion.

The P.E.I. govern­ment and Mar­itime Elec­tric have is­sued the joint ap­pli­ca­tion to IRAC for a new Gen­eral Rate Agree­ment.

This agree­ment pro­poses to in­crease elec­tric­ity rates in­cre­men­tally over the next three years. The in­crease would amount to 2.3 per cent for the av­er­age res­i­den­tial cus­tomer ev­ery year for the next three years – amount­ing to a to­tal 6.9 per cent in­crease by 2019.

The util­ity es­ti­mates this will be an in­crease of about $2.60 a month each year for the next three years.

En­ergy Min­is­ter Paula Big­gar says this pro­posed rate agree­ment has been struck with the util­ity to en­sure a sta­ble elec­tric­ity price for Is­land ratepay­ers.

She noted Mar­itime Elec­tric had pre­vi­ously ap­plied for a higher rate in­crease of 2.5 per cent for 2016, so this new agree­ment low­ers that amount for Is­lan­ders and locks it in at a pre­dictable rate for three years.

“If we hadn’t come to this three-year agree­ment, there would be an an­nual fil­ing for rate in­creases by Mar­itime Elec­tric,” Big­gar said.

“This would have meant an an­nual hear­ing process and no real guar­an­tee on what the rates would be… this will sta­bi­lize our rates.”

The rate in­crease is nec­es­sary due to the costs of the new un­der­wa­ter power ca­ble and in­fla­tion of pro­duc­tion costs for the util­ity.

The money will also go to­ward be­gin­ning the process of de­com­mis­sion­ing the Char­lot­te­town ther­mal plant on Cumberland Street.

As part of this agree­ment, Mar­itime Elec­tric has with­drawn its ap­pli­ca­tion to IRAC for a rate in­crease and has with­drawn its ap­pli­ca­tion for a new $68-mil­lion com­bus­tion tur­bine gen­er­a­tor. This new diesel-fired gen­er­a­tor was thought to be nec­es­sary due to grow­ing de­mand for elec­tric­ity in P.E.I.

But thanks to a new deal signed be­tween Mar­itime Elec­tric and New Brunswick, P.E.I.’s trans­mis­sion ca­pac­ity from N.B. will be in­creased from 80 megawatts to 130 megawatts.

This elim­i­nates the need for the CT4 gen­er­a­tor.

Fred O’Brien, CEO of Mar­itime Elec­tric, says this plan has been ap­proved by the New Brunswick Sys­tem Op­er­a­tor.

“We feel con­fi­dent this is the right way to go.”

An­other as­pect of this agree­ment will see Mar­itime Elec­tric ac­cept a slightly lower equity re­turn to its share­hold­ers of 9.35 per cent, down from 9.7 per cent.

O’Brien says this is the lower end of the range that would be ac­cept­able for in­vestors in a com­pany of Mar­itime Elec­tric’s size.

“We felt that (low­er­ing the equity re­turn) was nec­es­sary to show our com­mit­ment to this agree­ment and to make the agree­ment work, so we were will­ing to do that.”

Big­gar ac­knowl­edges this agree­ment does mean to an in­crease in elec­tric­ity rates for Is­lan­ders. But she ex­plains this will en­sure more sta­bil­ity for ratepay­ers in a mar­ket prone to price volatil­ity in light of the soon-to-be-ex­pired P.E.I. En­ergy Ac­cord.

“There is a need to en­sure that we have sta­ble and pre­dictable en­ergy com­ing to P.E.I., and this was the most eco­nom­i­cal way to fund that,” Big­gar said.

Mean­while the prov­ince is in the midst of de­vel­op­ing a pro­vin­cial en­ergy strat­egy. An RFP for the work on this strat­egy closed on Jan. 15.

HEATHER TAWEEL/THE GUARDIAN

Wade MacPhee, Mar­itime Elec­tric, reads a me­ter at a Char­lot­te­town apart­ment build­ing Fri­day. The util­ity is propos­ing a rate in­crease of 6.9 per cent over the next three years.

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