P.E.I. government prepared to intervene in electricity rate hearings

P.E.I.'s Energy Minister Steven Myers says the province is prepared to intervene in upcoming hearings on increasing electricity rates on the Island.

In the legislature Friday, Myers expressed concern about the potential for "rate shock" from one proposed change he said would have an "unfair impact on farmers."

In December, Maritime Electric filed an application with the Island Regulatory and Appeals Commission for a rate increase the utility wanted to see kick in March 1, 2019.

However, on Feb. 28 IRAC announced it was deferring a decision on the application as it sought further information and pending public hearings to be held over the summer.

Overall the utility is seeking an increase of 4.1 per cent over three years for residential customers.

Minister concerned

Myers said his concerns stem not from the application from Maritime Electric, but from a recommendation from a consultant hired by IRAC.

Multeese Consulting has recommended IRAC phase out the reduced rate that kicks in for Island homeowners and farmers who use more than 2,000 kWh of electricity per month.

Referred to as "second-block billing," the rate that kicks in for usage above that threshold is about 20 per cent lower than the base rate.

According to the Multeese report, charging a lower rate to the highest consumers of electricity "is at odds with [Maritime Electric's] corporate objective of encouraging energy efficiency, and appears to provide larger users with service at a cost which is less than the cost to serve them."

Multeese has recommended increases in the second-block rate over three years to make it equal with the base rate, and then phasing out second-block billing in 2022.

In its application Maritime Electric has also asked to phase out second-block billing, but rather than gradually increasing rates, the utility has applied to increase the threshold after which the discounted rate kicks in, from 2,000 to 5,000 kWh.

"We don't want to have a negative financial impact on farmers without giving them some lead time to make some changes," said Myers. "Through our office of efficiency, we have agricultural grants that can help for farmers to get into solar and all different types of more efficient energy sources that will help reduce this burden. But we need time to do that."

Province will intervene

Myers said he's not against getting rid of the second block discount on electricity rates but wants to delay the process.

He said the P.E.I. Energy Corporation will become an intervenor in the rate hearings to argue that point.

Green Party energy critic Stephen Howard said getting rid of the discount rate and switching to a single, flat rate "does shift us in the right direction because at the moment … we actually encourage you to use more power. We want to encourage you to use less power so that there's less of a demand on the grid."

He said ultimately a better move for the province would be to discount rates for customers who use less electricity.

"We really want to discourage high energy use and encourage energy efficiency, so why not build that rate into our rate structure?"

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