Electricity rate hike of 6.9 per cent proposed for P.E.I.

Teresa Wright
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Maritime Electric

Maritime Electric and the P.E.I. government issue joint application to the Island Regulatory and Appeals Commission for a new agreement covering the next three years

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 2018.

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

RELATED: P.E.I. energy accord cuts power rates by 14 per cent (March 2011)

Energy Minister Paula Biggar says this proposed rate agreement has been struck with the utility to ensure electricity price stability 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As part of this agreement, Maritime Electric has withdrawn its previous application to IRAC for a rate increase and has also withdrawn its application for a new $68-million combustion turbine generator.

“We believe this is an important step in securing stable and predictable costs for Islanders for their electricity usage for the next three years,” Energy Minister Paula Biggar

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.

Biggar said the successful bidder would be announced soon, followed by public consultations. The completed energy strategy is expected in the spring.









Organizations: Maritime Electric, Island Regulatory and Appeals Commission, Islanders

Geographic location: Prince Edward Island, Charlottetown, New Brunswick Nova Scotia

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Recent comments

  • Billy
    January 30, 2016 - 09:27

    You are so right Danny. If you want them in power then PAY the consequences. Today 93/4 % is pretty darn good investment but the pei government will get a better return on the tax increases!

  • Danny M.
    January 29, 2016 - 16:12

    I have no sympathy for Islanders. Vote for crooks 3x in a row, you get what you deserve.

    • Easterner
      January 29, 2016 - 21:11

      Agree totally! Islanders voted for them and really get what they deserve! Next on the agenda; will be Wade's finance minister Alan Roache raising the HST to 15% in this year's budget!

  • Islander
    January 29, 2016 - 14:49

    Simply outragous For years we have not had a decrease. This cable is mostly Federal infrasture money. The comminication officer had quiete the smile on her face showing off the new cable from Korea but forgpt to mention the increase. Nothing but greed and bloosuckers. You should be ashamed to show your face

  • kyle
    January 29, 2016 - 14:35

    when is this provincial energy strategy going to be made public it seems like they have been talking about it for years ?

    • don
      January 29, 2016 - 19:31

      it is called we can fool islanders and they will do as they are told. we are liberals we have the POWER and the MONEY to buy what ever we want .energy strategy that is called we will back maritime electric as we have shares and the more money they make the more we make again islander are dumb enough to vote us in then they can suffer

  • Crooks
    January 29, 2016 - 13:41

    What a bunch of Crooks! As if they don't make enough money in the run of a year....Most people struggle financially as it is on PEI to keep their head above water....now we need to pay even more so those making the big bucks at the top can have even more! Disgusting!

  • Crazy Horse
    January 29, 2016 - 13:03

    9 3/4 % Return on investment must be maintained.

    January 29, 2016 - 12:25

    Something smells here and it can be very easily found. First, is the fact that the article states the increase is required to pay for the cable. MARITIME ELECTRIC is not paying for the cable. Canadian Taxpayers are. Second,all bills have a SECVICE SHARGE which apparently takes care of any actions required. Is it to the point that ALL profits must now go to the shareholders and the taxpayers pick up ALL of the expenses? We need help here from not only this company but our own Provincial elected official who are backing them.

    • Sammy
      January 29, 2016 - 13:44

      Don't expect any help here. They are all in bed together including Scott MacKenzie the patronage appointed head of IRAC. Where is my rubber stamp?

  • MFH
    January 29, 2016 - 12:17

    Maritime Electric is being given a multi-million dollar, tax-payer funded cable, that is going to be used mostly by privately owned foreign windmill companies to move power to their clients. Why are we paying more to subsidize these corporations. Minister Biggar is taking an active part in scamming Islanders on behalf of Maritime Electric and it corporate friends. We should be getting a decrease in rates not the opposite.

    January 29, 2016 - 12:16

    $2.60 per month at 14%HST or maybe higher equals 37 cents per month times the number of electrical users in PEI means another LARGE tax grab for our glorious Government. Our official motto here on PEI should BE" TO HELL WITH THE PEOPLE JUST GET THEIR MONEY". We are already the highest charged place in North America for electricity. Where is the justification or are they above having to justify their actions?

  • How it is...
    January 29, 2016 - 11:12

    No no no. They're trying to pay for that cable to the mainland that they should have been investing prior profits into an infrastructure fund instead of handing out record dividends. Now they want all of us to pay even more for their lack of foresight and shareholder benefits. Everyone that they pushed into electric heat for their homes will be paying FAR more than $2 more a month. Probably closer to $10, which is an extra $120 annually ($360 by the end of the 3 years). In an economy that's contracting and people are struggling to find jobs to put food on the table, an increase in services to account for inflation (while we're really in a recession) is completely unjustified. Unfortunately if gas prices are any indication, IRAC will just hand over more of our hard earned dollars to the pockets of already rich corporations.

  • Fed up
    January 29, 2016 - 10:46

    Wade won't be happy until he raises everything! HST ....now electricity! Oil prices way down, but government putting everything up so they can keep spending! He has no idea the value of money...just spend and get the rest of us to pay for it!