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EDITORIAL: IRAC review brings change

Auditor general Jane MacAdam speaks at a media briefing Friday, Jan. 4, 2019. A report prepared by MacAdam found the process used by the Island Regulatory and Appeals Commission to set petroleum prices lacked transparency.
Auditor general Jane MacAdam speaks at a media briefing Friday, Jan. 4, 2019. A report prepared by MacAdam found the process used by the Island Regulatory and Appeals Commission to set petroleum prices lacked transparency. - Stu Neatby

The auditor general should see if similar transparency problems are found elsewhere in IRAC.

P.E.I. auditor general Jane MacAdam has dealt effectively with the key issue and the most obvious complaint; but there is more to be done. Much more.

Her review of the Island Regulatory and Appeals Commission (IRAC) dealt with the question asked countless times by Islanders: “Why is the price of gas going up?” She determined there is a lack of transparency about how IRAC makes gas and heating oil pricing decisions; no explanation how it sets petroleum prices; and no place where the average Islander can find such information.

IRAC found itself under review, for the first time since it was created in 1991, so it’s refreshing to see the commission is accountable to someone. For that, we have Opposition MLA Jamie Fox to thank, who, as chairman of the Legislative Audit Committee, asked for the review.

RELATED: Gas price-setting decisions lack transparency, says P.E.I. auditor general

Before other provinces brought in price controls, P.E.I. used to brag that it had the cheapest gas in the region because of regulation, which offered some consolation for high tolls on bridge and ferries. Many Islanders can recall when visitors would drive over for a day’s excursion and then fill up before heading back to Nova Scotia or New Brunswick.

Apart from the twice-a-month petroleum adjustments, Islanders are keenly interested in IRAC because its decisions impact so many other issues – rents, land use, water and sewer rates, waste watch, electricity and insurance.

Other regulated provinces use a clear, established formula in setting gas prices, taking out the guess work and the criticism. P.E.I. has a formula but also applies other subjective criteria. Do we really expect a provincial regulatory body to assess current unrest in the Middle East before setting oil prices?

Ms. MacAdam recommended that IRAC document the reasoning behind each pricing decision and make it public. It didn’t take long for IRAC to act, implementing five of her seven recommendations, and making a pledge to conduct a review with pricing decisions in other areas to satisfy Mr. Fox and Ms. MacAdam. IRAC also posted its methodology on its website Dec. 19, two weeks before the AG report was made public.

Mr. Fox suggests that IRAC requires a complete restructuring to curb its absolute powers. He suggests a full review by a special standing committee of the legislature, with hearings in 2019. He should remember that IRAC’s responsibilities were greatly expanded under the previous PC government when more and more duties were handed over – to avoid blame for unpopular rate increases and decisions.

The AG should see if similar transparency problems are found elsewhere in IRAC. Maybe Mr. Fox is right -- that a full review is warranted. The province is also reviewing her report to make the commission more accountable and transparent. The initial review was certainly worthwhile.

Mr. Fox is obviously fishing for Liberals when he seeks a legislature review, and by questioning if politically-appointed individuals are qualified to make regulatory decisions. The question and answer are obvious so don’t expect the government to go along with any such review – especially in an election year.

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