Taxpayers won't save by taking over Maritime Electric, CEO says

Teresa Wright
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Making Maritime Electric a public utility would not help Islanders save on their power bills, says the utility’s president and CEO Fred O’Brien.

Opposing views on whether the province should take over Maritime Electric were presented Wednesday as the P.E.I. Energy Commission began its public meetings on the cost and management of energy in P.E.I.

As part of his submission, O’Brien told the commission government-owned utilities in other jurisdictions have tended to become problematic, as ‘priorities can get skewed.’

“There are very strong motives within government to do economic development, regional development very viable and very appropriate for a government to deal with, but where we would have concern is if they would engage and pull the utility into those types of goals,” O’Brien said.

“It would deflect from where we should be, which is reliable service at the lowest possible cost.”

But Leo Broderick from the Council of Canadians called on the commission to recommend the provincial government take over full ownership and operation of Maritime Electric and all energy utilities and wind farms in the province.

With multinational companies in control of most of these assets, Islanders continue to pay high energy prices and in doing so, support mainly non-renewable energy initiatives, Broderick said.

“We pay 10 per cent of what we have in the province to Fortis, which is Maritime Electric, that would be a 10 per cent savings. And as energy costs continue to rise and we continue to rely on fossil fuels the costs are only going to increase,” he said, referencing the 9.75 per cent rate of return currently guaranteed to Fortis-owned Maritime Electric.

“We think there would be further energy savings in the province if all the energy in the province is controlled by the province and then we could even sell it on the market. At the moment all those profits go to Fortis and we need control over that,” Broderick said.

He pointed to the city of Summerside, which operates its own electric utility. He said this community-based model could easily be replicated in other areas of the province.

“It is not a corporate board. The monies go back into the community, if there are any monies to be made, or at least an attempt to reduce the electrical rates,” he said.

“There’s no reason why this could not happen here in Charlottetown, there’s no reason it could not happen in Souris.”

Leo Cheverie also spoke to the energy commission Wednesday in support of government ownership of Maritime Electric.

He said he believes P.E.I.’s electrical grid should be decentralized to allow for more community based utility management.

“It will actually create more jobs, create more money for the local economy and have a whole lot more positive impacts so I think public ownership, community ownership models are something we need to be looking at.”

O’Brien argued Maritime Electric as a public utility would not save Islanders money on their electricity rates because 70 per cent of the Island’s supply comes from outside sources subject to market prices and fluctuations.

“We don’t have the resources here to economically produce power with the exception of wind, so no matter what structure the utility is built upon, it will have to buy power from essentially the same source as we do,” O’Brien said.

“If there was a cheaper way to build generation here on the Island, we would be doing it now or the P.E.I. Energy Corporation would be doing it, someone would be doing it. That’s why I conclude that with two-thirds of your bill being driven by energy supply, that’s hard to overcome.”

Other presenters to the commission Wednesday included a Larry Flemming from Cavendish Farms and Michael Meacher who both spoke about the need for a natural gas pipeline for P.E.I.

The commission will submit a report to government in the fall with recommendations that come from whatever materializes through public input. The public meetings continue Thursday.

Organizations: Maritime Electric, P.E.I. Energy

Geographic location: P.E.I., Iceland, Summerside Charlottetown Souris

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Recent comments

  • lilley
    February 23, 2012 - 11:01

    Government taking over Maritime Electric?? Does that mean Premier XYZ et al will be climbing poles, stringing high tension and strand, not to mention placing the pole anchors etc?? Imagine that!! At the heights of a snow storm, who will be be our "Electric Super-Men"?? Why, it would be some washed up political hack appointed to Run down to Ruin a well managed and suscessfully operated Utility?? Give your heads a shake!! Look at N.B. Power for an example of a Power Utility run by a Government Ministry; $5Billion in debt, Point LePreau 3 years behind schedule, and $2B in cost over- runs Mr. O'Brien is doing a good job of running Maritime Electric, why fix (and ruin) something that's not broke??

  • Checker
    February 23, 2012 - 10:37

    Yes...the cost may remain the same but the 9.75% guaranteed return could go back into the consolidated revenue fund where all Islanders would benefit instead of a few shareholders who form the 10% of the polulation with 90% of the wealth. Wonder how many shares our political leaders and the members of the Energy Commission have in Maririme Electric?

  • mike
    February 23, 2012 - 09:14

    If the PEI government buys ME. This would be a great thing. Simply they can set up wind farms to produce power at a lower rate then buying from across. They can then purchase power at high demand points when needed. They could even then sell off excess power produced to other provinces or to the US. Right now most wind power is sold off from PEI so if the government owned ME they could set up there own wind farm to keep the power on PEI since its cheap to produce. I know there would be a loan us tax payers would have to pay off but I would rather pay off a loan then pay investors off PEI 10 percent return every year. In the short term power would cost more but I know it would drop down and could also be almost free if the government created enough wind farms to sell excess power off island.

    • Not Quite
      February 23, 2012 - 10:46

      This sounds like a great idea, however if you want wind turbines to produce the amount of energy needed for PEI everyone would have one in their backyard - it's simply not feasible. Most people don't realize the logistics of wind power. If Maritime Electric is buying our power elsewhere you can bet that it's cheaper than setting up and producing our own power via wind turbines. Think before you attack ME.

  • Ron
    February 23, 2012 - 08:14

    Community based energy sources, such as Summerside, appear to be an ideal that would eliminate the provincial or federal sticky fingers from finding other uses for any excess. The excesses could then be returned to the community in the form of reduced rates.

  • Gerry
    February 23, 2012 - 08:12

    What happened to all the hype about the effectiveness (economically and environmentally) regarding wind turbines? We've heard squat since Jamie's departure. No more wind?

  • don
    February 23, 2012 - 07:54

    O'Brien is protecting his BIG pay cheque. but he talks about "If there was a cheaper way to build generation" they would do it. anyone got a shovel.take the profits and help islanders lower the power bills but the owners of money hungry power company can't afford it. o"brain tell us your clear profits for last year.

  • No difference
    February 23, 2012 - 07:33

    Either way we will continue to be screwed over.

  • alfredd
    February 23, 2012 - 07:24

    here we go again, --and where would the Prov. get the money to pay for such a company as Maritime Electric, - just think of the interest we would have to pay on such a loan, - Leo C. proposes it would create jobs, ---more than Maritime Electric are doing now? How would that make the electricity cheaper, -- I am not hearing that the high wages and fine pensions Maritime Electric workers are earning, should be reduced to make the electricity cheaper? How about that?? How about proposing that all lines be put under ground to reduce the cost of maintenance when storms hit? Over the long term there would be savings, so be constructive with advise instead of spouting unacheivable dreams.

  • Taxpayer
    February 23, 2012 - 07:06

    How is a public power utility working out for the tax payers of New Brunswick? Net loss of 117 Million last year alone, and debt in excess of 3.4 billion... Considering their assets are only at 5.4 billion (as of 2010). That is not a great situation. We cannot afford to fund a public utility. We either pay higher rates through a private company - or have our tax dollars wasted with a public one. I'd rather work on reducing the deficit and take a lesson from NB.

  • Dipper
    February 23, 2012 - 06:49

    please tell us what part of the private economy Leo Broderick and the Council "for" Canadians would not have government run. We all hate Maritime Electric. I get it. But they are heavily regulated - rates, profitability, and even required investments and power sources.

  • gargamel
    February 23, 2012 - 06:42

    O'Brien's argument holds no water. He's protecting himself as a shareholder. A big fish in a small pond. We are an island of 140,000 people only 8 miles off New Brunswick. If our network was publicly owned and merged with NB Power, there is no reason in the world why we should pay the current rates that Maritime Electric charges. I used to live in an area of Quebec that had the same population and was over 400 km from the nearest generating station, yet we paid 5 cents a kilowatt hour. Fred lies and he's protecting Fortis and his own skin. Don't waste my tax money on the Churchill TCH diversion but you can certainly use my tax money to expropriate the electrical network and shut down the Charlottetown and Borden generating stations and merge the entire thing into NB Power.

  • gargamel
    February 23, 2012 - 06:38

    Maritime Electric and Nova Scotia Power should be made public and merged with NB Power to form a single Maritimes-wide publicly owned power utility that all 3 provinces participate in.

  • John H Bernard
    February 23, 2012 - 06:20

    O'Brien is protecting is own skin, he only is accountable to the share holders of the main company Fortis. He doesnt care that we pay the highest rates, he's making a big salary and lives in a fancy house. Why would he be concerned over people making a choice on food, heat or leaving the lights on. I think everybody should refuse to pay their electical bill until rates comes down.

  • gary naylor
    February 23, 2012 - 04:57

    Over the years,Fred O'Brien has proven to be smarter than all of the Binns and Ghiz hangers-ons put together. At every meeting he comes out further ahead. So here we go again! Maybe.

  • Just Imagine
    February 23, 2012 - 00:22

    Sure thing Leo and Leo, get a bunch of leftover deadwood from the Liberal party to run Maritime Electric? Is there something in the water you fella's are drinking. Say maybe Brooke MacMillan should be running Maritime Electric or the stooge that was running Island Waste and paying himself like he was the head of GE? Maybe Eleanor Clitherow who was running Ontario Hydro and paying herself over 1,000,000.00 per year along with 500,000.00 in perks. No Leo's your intent to get affordable power is misdirected. PEI should join the Madeleine Islands and Quebec so we could have just 1 MLA, sound governance and be part of Quebec where corruption is only 20% of the PNP not like Ghiz at 100%.

  • Joe Martell
    February 22, 2012 - 22:08

    Me thinks O'Brien is protecting his own skin...and that of those 'investors' and their guaranteed 9.75% return...

    • firebird
      February 23, 2012 - 13:17

      there are alot of comments being made about maritime electric here some for and some against as far as im concerned those that are for it are all share holders that dont want to lose their cushy dividend cheque every year and as far as irac is concerned they were set up to protect the consumer which is the people of the island but the only ones they protect arte the companies such as maritime electric and the oil companies

  • Greeneyed Monster
    February 22, 2012 - 21:50

    "we don't have the resources here to economically produce power with the exception of wind" translated, YOU have the resources to economically produce wind power. However, if you did this we would not be able to exploit you in order to realize our ridiculous profits at your exspence.