The P.E.I. government should take over energy generation from Maritime Electric and establish a new panel at IRAC for greater electricity oversight, says the P.E.I. Energy Commission.
Government released the commission’s long-awaited report Friday the end result of 15 months of extensive research and consultations with public and stakeholders.
CLICK HERE TO DOWNLOAD THE FULL REPORT
The 85-page report recommends several major changes to the structure and regulation of electricity management, including one recommendation that would see the P.E.I. Energy Corporation assume ownership of energy generation facilities currently owned and operated by Maritime Electric.
This would be a viable alternative to government to taking over the utility entirely, the commission’s report states.
“There is some potential to reduce the cost of electricity to Island ratepayers by restructuring and moving the ownership of generation assets to government while allowing transmission and distribution assets to remain with Maritime Electric,” the report says.
“This will serve to reduce the equity base upon which Maritime Electric’s annual earnings are calculated.”
Another key recommendation in the report calls for a new panel to be established at the Island Regulatory and Appeals Commission (IRAC) dedicated entirely to electricity oversight.
This new three-person IRAC panel would work independently of the current panel and adopt an approach more directly involved in all aspects of P.E.I.’s electricity system.
The commission says it heard repeatedly from Islanders who expressed concerns over IRAC’s current approach to regulating Maritime Electric, especially regarding its rate increases.
That’s why the commission believes a new panel should be struck, selected independently in a non-partisan process, to provide greater oversight and scrutiny of the energy sector.
“It would not be acceptable for such a panel to stand by silently and/or relinquish its oversight of Island utilities on matters affecting the best interest to electricity consumers,” the report states.
Finance Minister Wes Sheridan said Friday he was surprised by this recommendation, but said it makes sense.
“IRAC, being the body that’s responsible for allowing any increase in rates for consumers here in P.E.I., I think it would make a lot of sense to have a dedicated panel to the electricity complexities and ensuring they are on top of it at all times.”
As for the notion of taking over energy generation assets from Maritime Electric, Sheridan said the province will begin preliminary talks with the utility to determine the viability of this idea.
“Taking those (generation assets) over and financing them through government, because of our strong interest rates, we can save ratepayers a lot of money by changing over those assets,” Sheridan said.
“It’s one that we’re putting on the books to start to look at.”
Government has already begun work on implementing another recommendation in the report. This one calls on the P.E.I. Energy Corporation to separate its current governance structure to operate more arms-length from government.
This separation would see the corporation take over all debt associated with the Point Lepreau nuclear plant refurbishment, including the debts currently held by Maritime Electric.
This debt transfer has already begun.
Sheridan says this will result in savings for ratepayers through reduced debt financing costs.
“It’s exactly the same thing as the generation assets we can do it for a lesser interest rate and therefore make a lower bill for Island consumers.”
The commission further stressed that a third power cable must be installed at the earliest possible date.
The report calls P.E.I.’s underwater cables “the most important single component of the province’s electricity supply system.”
Maritime Electric president and CEO Fred O’Brien says he was happy to see such a strong tone taken toward the need for a third cable.
“It’s good to see such a strong recommendation towards that project,” he said.
But as for the calls for more IRAC oversight and shifting of energy generation to the province, O’Brien said he hopes to speak more with government before it moves forward on implementation.
“I think there’s some very interesting ideas and observations in the report, but there are a few recommendations that we do need to get more background and information on so that we can complete an assessment,” O’Brien said.
“What we want to look for is the benefit and the cost to our customers and to do an analysis… and we hope to have an opportunity present our thoughts and findings to government.”
twright@theguardian.pe.ca
So the PEI Govt assumes millions more debt on behalf of Islanders! Higher taxes, upset bond raters and poorer Islanders.