UPDATE: Energy body urges power play on electricity

Teresa Wright
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Commission calls for province to take over electricty generation

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

 

 

Organizations: Maritime Electric, P.E.I. Energy, Island Regulatory and Appeals Commission P.E.I. Energy Commission

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  • Simone
    January 05, 2013 - 12:15

    If you take a look at the Energy Commission website, you will see that these five men were appointed by Robert Ghiz. Thus, all results are null and void as they are not unbiased.Take over Maritime Electric??? Right now, this gov't could not run a lemonade stand without putting all Islanders deeper in debt.

  • Chucker
    January 05, 2013 - 11:35

    This is just another scam to get us to pay for the costs of a big corporation. I am unsure if Sheridan and O'Brien are pretending they did know what recommendations are coming. Of course they did. But Sheridan in particular is signalling both sides of the story, acting like he did not know and then saying some changes are already in progress. Anyhow I have read this over. It is bascially a sweetening of the sweetheart deal that Fortis already gets from the citizens of PEI. We have been guaranteed nothing. Zilch. And new positions are in the offing for friends o fthe regime. That is about it.

  • Trevor Leclerc
    January 05, 2013 - 11:28

    The Liberals are just short of the NDP call for full scale public ownership of the whole utility, but - as with kindergarten - they adopt NDP policies piece by piece over time, and say "glad we thought of it." ;)

  • No business common sense
    January 05, 2013 - 10:39

    I agree with "give it to NB Power", why is ME not being offered 'for sale' to NB Power? This would increase their share of the electricity market and give them more purchasing power, therefore making it possible to offer more on-par rates to the energy consumers of both nb and pei. ME buys the majority of pei's power from NB anyway. As the average islander knows, we as citizens and business' owners cannot afford to pay any higher rates for our electricity. It quite simply cuts into our disposable income ( if that even exists anymore) which hurts even the governments bottom line through decreased tax revenue. Someone with a business degree needs to get elected to this failure of a government!

  • Here's the rub.
    January 05, 2013 - 09:32

    Here's the rub. Since Islanders have been planb'd, how are were ever to know a good deal from another scam?

  • Sylvia
    January 05, 2013 - 08:04

    Anything that makes sense to Sheridan makes me anxious because I feel it's going to come back on Island taxpayers. He never listens to anything Islanders say that makes sense to them and are good ideas. We have lots of good ideas about things we'd like to see happen in P.E.I. but the government will not listen. It's like talking to empty space or hitting our heads against a brick wall. Why should we listen to anything this government comes up with. The bottom line is that everything they come up with has an end result, to bring more money into government coffers and bleed more money out of Islanders. I have no trust in any of their ideas. I'm glad to be able to say that I didn't vote for this government in 2007 or 2011. I could see there was going to be trouble for Islanders with this government in charge. We're not living in a democracy any more because it's become a dictatorship.

  • James Macgoo Lakeside
    January 05, 2013 - 06:12

    The report is worthy of further review. However, extensive public understanding is required before endorsement by government the actions detailed are adopted. I am concerned about transmission and distribution assets. Transmission and distribution assets are the equivalent of suoer highways. Suoer highways are generally toll roads. Toll roads in the hands of private companies can be very expensive. Users pay the tolls demanded or find alternative methods of transport. The generation assets the government purchases tend to be more cost intensive and environmentally sensitive. We better understand if there are any agreements concerning toll structure, now and in the future, if this deal closes. I would like to know why the PEI Energy Commission did not suggest taking all assets of Maritime. Did Maritime insist on retaining transmission and distribtion assets? If yes, wonder why.

  • John Getson
    John Getson
    January 04, 2013 - 22:48

    Apparently Wes Sheridan has found one more voice, that isn't an ordinary Islander, which he CAN listen to. http://www.cbc.ca/news/canada/prince-edward-island/story/2013/01/04/pei-energy-commission-report-584.html hmmm... Let's see ...a report that seems to recommend that taxpayers, by way of the PEI government, buy all the generating capacity of Maritime Electric on PEI... because it will stabilize prices... Sounds like a GREAT idea and an amazing DEAL for taxpayers! Of course this is the very same generating capacity that is so expensive to operate that M/E only uses it as a last resort, and even then to generate only around 1% of the Island requirements... because it is cheaper for M/E to buy the bulk of THEIR customers energy needs from 3rd parties like Point Lepreau... Oh, and they also suggest that taxpayers, by way of the PEI government, pay M/E's power bill for the costs of the sourcing power that they had to buy from other more expensive sources... because their contracted supplier, Point Lepreau was being 'refurbished' for 4 years... And we taxpayers, by way of the PEI government, also should pay for a 3rd undersea cable to handle their extra power demands that have to be transmitted to PEI from the mainland so M/E can service THEIR customers... because at no time in the past several decades did anyone at M/E stop to consider that a mission-critical piece of their equipment, the other two undersea cables might not last indefinitely and someday may need to be replaced... And let's not forget that taxpayers, by way of the PEI government, should finance more of, if not all the rest of M/E's debt load going forward because... taxpayers, by way of the PEI government, can do it cheaper than anyone else... Then, taxpayers, by way of the PEI government, should allow M/E to keep control over the distribution network because... they want to mitigate any impact on THEIR customers... Lastly, taxpayers, by way of the PEI government, will continue to maintain M/E's 'right' to a guaranteed percentage of profit on all the operations in PEI, because... Islanders are good like that Seems like just one more example of those governmental "reach-around"s that party faithful seem to get so easily... while taxpayers try and fight off 'their chosen few"... to avoid being straight-out bent over the nearest "red-clay wave" or "Plan B guard rail" and getting rammed home... wanting so much to to believe the sermon in their ear that drones on with "it won't hurt... much", "it's for your own good" or "you will like it eventually" Might there be a M/E Board of Directors seat in someone's future? Apparently Wes Sheridan has found one more voice, that isn't an ordinary Islander, which he CAN listen to.

  • oh no another jamies dream production
    January 04, 2013 - 22:47

    Wes is so enthralled in the photo, it reminds me of the Jamies Dream Production which featured Jamie Ballem (cost thousands) as the inventor of wind energy, looking as starry eyed and dumbfounded as Wes looks in the photo. Wes would love to run Maritime Electric too. Borrow another couple BILLION in easy bonds. Wes will tell us why it is good additional debt. 100 Years to hit 1 billion and Ghiz may push it up over 3 billion or more at his current rate. Vote Liberal, enrich the elite, you sheep. thanks eh?

  • mike
    January 04, 2013 - 22:14

    If you look at the original story months ago there was a recommendation for the government to take over ownership of ME. If treated like summerside power any profit goes back in to the community. Also the plan was to also take ownership of all wind mills and build more to provide most power on PEI and then sell of excess. A win win for islanders. only downfall would be that they would have to keep rates at current levels for a few years to pay down debt.

  • Nor easter
    January 04, 2013 - 21:25

    I'm 100% in favor of getting rid of the illegal monopoly on electricity that Maritime electricity has [ monopolies are supposed to be against the law here]. It would be so nice for the island to have an electric company that employed as many workers as needed and not putting out a big pay-out to its investers that our PEI government has assured this company and is laughing at all us customers . There is alot said for Co-ops and an electric co-operative would and could work when people would realize how much they would save The state of Maine gets its power from a private company and is getting a 7% decrease in cost in March. Whats the deal here, we are sending power from our windmills to New England and should use it here before exporting it. What stats gives this company have that gives them the rigt to put up elec prices. Maybe the government of the day gets alot more taxes and willing to push everything under the rug.

  • Joe Blow
    January 04, 2013 - 19:54

    If Wes Sheridan says these suggestions make sense...then you can rest assured that it is because his bank account will only get bigger because of it!!! Him and Ghiz have shown many times now that they don't care about Islanders and only care about themselves and their friends and families.....so for him to say that these suggestions make sense, only tells me that it is a bad idea and that Islanders will pay more than ever. When you are a politician that has lied as many times as Sheridan has....people start to see that in order for Islanders to benefit from any decision, we have to do the opposite of what the politician says. Sheridan...its time you resigned and stop ruining PEI!!!

  • Dufferdon
    January 04, 2013 - 19:53

    Is Wesley looking at the pictures,not sure if He can read !!

  • Congratulations
    January 04, 2013 - 19:38

    Wow finally great news . M electric Is a private 4 profit company. They pay over 9 per cent on dividends to share holders!!! Public Is best 4 all!!

    • Garth Staples
      January 05, 2013 - 08:13

      So the PEI Govt assumes millions more debt on behalf of Islanders! Higher taxes, upset bond raters and poorer Islanders.

  • don
    January 04, 2013 - 19:27

    i see a tv in the back ground who pays for his cable?

  • intobed
    January 04, 2013 - 18:01

    If only ten percent of Island power is produced on PEI, and the rest is purchased off Island, then the government should be purchasing the distribution network, and have the suppliers (including Maritime Electric) bid to supply the Island with power. The cost of electricity would drop. Let ME take the money they would get from the purchase of the power distribution system and use that to pay down their debts.

  • give it to nb power
    January 04, 2013 - 16:24

    I would go a step further. Buy all of Maritime Electric at-cost (no profit for Fortis). Close the generation assets (as if they are any use anyway). Give all the transmission and distribution line assets to NB Power, who we buy our electricity from anyway. If a resident sitting in Cape Tormentine can pay 6 cents a kilowatt hour and a resident sitting in Borden has to pay 14 cents a kilowatt hour, when the same electrons come from the same power plant, then something is wrong. And the thing that is wrong is Maritime Electric / Fortis. Nationalize our electrical grid and turf Fortis and give it to NB Power. They maintain a good service for New Brunswickers and provide us with our power only to be sold at a mark up by Fortis. There is no need for the Fortis middle man whatsoever.

    • Garth Staples
      January 04, 2013 - 18:59

      Maritime Union looks better everyday.

    • keeping in context
      January 05, 2013 - 08:12

      Not to be confused with wanting to maintain our relationship with Fortis I do believe that your rate comparison Re: NB power and

  • SG
    January 04, 2013 - 13:30

    Dear God what is next? Blood Pressure Prescriptions must be at an all time high on PEI.

  • Chet
    January 04, 2013 - 12:06

    Maritime Electric just got a better deal than the absentee landlords 230 years ago. Just sit back and take the cash. Very bizarre.

  • Donnie
    January 04, 2013 - 11:49

    If the Province of PEI is taking over control of electricity I'm buying a generator.....

  • Good Call
    January 04, 2013 - 11:11

    Knew something was up! You've got 6-7 big Liberals in there "Consulting" for the past 4-5 years. Just before the electric rates go through the roof, switch it to government owned. Wow, what a great idea!

  • candrayo
    January 04, 2013 - 10:48

    I wish I was educated enough to know if this is good or not...so since I lack education...I will go with what I know...if "THEY" want it...then WE HAD BETTER RUN

  • benbarr
    January 04, 2013 - 10:37

    what are the downsides of all this????

  • lets borrow another billion or "so"
    January 04, 2013 - 10:30

    Great Idea, lets buy out or friends in the "energy accord" and pay a premium price to the very profitable Maritime Electric. Easy as pie just borrow another billion dollars and get a few extra million for needy party boys. thanks eh

    • Garth Staples
      January 04, 2013 - 19:02

      Don't forget to ask the Feds (PM Harper) for more cash!