Maritime Electric will be putting its rates up 2.2 per cent on March 1. Instead of just worrying about the five per cent GST, Islanders will be paying a 14 per cent tax on their light bills because of the HST starting April 1.
© Guardian photo
Rick MacLeod, Maritime Electric, tries to restore power to thousands of customers after a voltage regulator exploded at the company's Crossroads substation Tuesday morning.
Islanders will be paying a bit more to turn on their lights beginning March 1.
That’s before the new harmonized sales tax takes effect on April 1 so, in effect, Islanders are facing two increases in the first half of 2013.
Maritime Electric will be putting its rates up 2.2 per cent on March 1. For the average customer, that will mean an extra $2.35 on their bill.
Rates will also be going up 2.2 per cent in 2014 and 2015.
And there’s the HST to take into account. Instead of just worrying about the five per cent GST, Islanders will be paying a 14 per cent tax on their light bills because of the HST.
Kim Griffin, manager of corporate communications and public affairs for Maritime Electric, says the increase was passed in the just-completed session of the legislature.
“That’s going to lock us in for our costs and what the cost increases are going to be for customers,’’ Griffin said Thursday. “That’s going to be their cost increase for the next three years; 2.2 per cent.’’
When electricity rates were stabilized with the 2010 Energy Accord, major jumps or dips in energy costs for consumers were replaced with a 14 per cent rate reduction as part of a five-year power purchase agreement with NB Power.
After the deal’s first two years, power rates were set to increase with the rate of inflation, which the government expected to be about 2.5 per cent annually.
With the HST on the way they decided on 2.2 per cent.
Griffin points out that the HST is a tax and not a rate hike from the utility.
She added that the 2.2 per cent hike customers are faced with on March 1 would be higher if not for the fact the utility has been collecting $21 million in overpayments from Islanders.
According to P.E.I. Finance Minister Wes Sheridan that money came from the Energy Cost Adjustment Mechanism (ECAM), which the previous Progressive Conservative government established to make sure consumers weren’t hit by spikes in energy prices.
That account is to be emptied and returned to ratepayers by the end of the five-year energy accord, Sheridan said.
Griffin said also helping to keep rates down is the fact Maritime Electric will save $700,000 in HST rebates under what is called an Input Tax Credit. The company gets a portion the HST back, as do other businesses, as part of the cost of doing business.
“We’re saving approximately $700,000 annually. We have several business costs, such as utility poles, wires (and) professional fees.’’
All of it — the $21 million in the ECAM account and the $700,000 — has been rolled into the energy accord in terms of working out what Islanders are paying.
“It allows customers to know that, for the next three years, their cost increase is going to be 2.2 per cent.’’