Maritime Electric rate hike proposal under fire from Liberal and Green MLAs

Maritime Electric's rate increase proposal was a hot topic in the P.E.I. legislature Tuesday as opposition parties asked the provincial government to intervene and make the utility fund its post-Fiona costs out of its own pocket. 

Liberal MLA Robert Henderson said Islanders shouldn't have to bear the costs of Maritime Electric's Fiona recovery — either in their electric bills or in their taxes — considering the utility has expenses for tree trimming baked into its budget.

He asked Energy Minister Steven Myers whether the province would step in to stop the $37 million in Fiona restoration costs that Maritime Electric wants to fund through a customer rate increase starting in March 2024.

"Islanders are wondering: Will government step in and overrule this decision like it did with the residential rate increases?" Henderson asked, referring to how the province intervened to reduce allowable rent increases for landlords last year.

"Are you prepared to do the same for electricity cost increases?"

Myers' response included a partial defence of Maritime Electric.

"It's ridiculous to think we were hit by the hurricane with the strongest winds to ever hit land in North American history and that there was a tree blew down on a line — and it's Maritime Electric's fault for every single tree that blew down?" he asked the legislature, causing Henderson to call out: "It is."

"Most ludicrous thing I've ever heard tell of in my life," Myers continued.

Utility slammed for not trimming enough trees

Maritime Electric had previously been criticized for not going far enough in its vegetation and tree trimming strategy.

Commissioners with the Island Regulatory and Appeals Commission (IRAC) took the company to task for spending just a fraction of what other utilities in the region spend to keep foliage away from their grids.

According to Maritime Electric's rate application filed with IRAC in June 2022, the company was spending just $238 per kilometre of distribution line on vegetation management. NB Power spent twice as much ($476 per kilometre) and Nova Scotia Power four times as much ($1,000 per kilometre).

In late 2019, nearly three-quarters of Prince Edward Island's power lines were in urgent need of maintenance to protect them from being broken by nearby trees, according to documents Maritime Electric filed with the province's energy regulator.

Fallen trees, about 40,000 of them, were the main reason for the widespread power outages that dragged on after post-tropical storm Fiona hit Prince Edward Island last fall, the power utility has said.

During question period Tuesday, Green MLA Peter Bevan-Baker spoke to Maritime Electric's rate increase proposal and asked if Island tax dollars were going to "bail out" the electric utility.

That's why we're in this jam. We thought we had a partner and all of a sudden we didn't.— Steven Myers

"Do you think hard-working and stretched Islanders should bear the costs of this super-profitable corporation?" Bevan-Baker asked.

"They haven't been asking us for money," Myers said. "But they did say they would take it to not have to go through the process of making rates go up."

Ottawa 'bailed' on Islanders, minister says

In an interview with CBC News after question period, Myers said the province is leaving it to IRAC to figure out whether Maritime Electric should get the rate increase it's looking for.

He also took aim at the federal government, as he did during question period, for the Trudeau Liberals not covering expenses related to Fiona on Prince Edward Island.

"We expected to have money from the federal government. They bailed on us. They bailed on Islanders," Myers said.

"It was Justin Trudeau that promised the money. Not only promised, he was the one who came up with the idea. He offered the money, and then didn't follow through on it. That's why we're in this jam. We thought we had a partner and all of a sudden we didn't."

Last year, after meeting with the prime minister, P.E.I. Premier Dennis King said Ottawa had agreed to cover Maritime Electric's costs to restore power after post-tropical storm Fiona. Then this summer, the federal government turned down P.E.I.'s request to cover that under the Disaster Financial Assistance Arrangements (DFAA) program.

Questions about profit margin

After that decision, there was speculation that the costs could eventually fall onto the shoulders of Maritime Electric's customers. That was confirmed by the utility's application to IRAC, which included a request to let the bid to recover Fiona expenses through higher rates be included in how its maximum allowable profit margin (or rate of return) is calculated. 

Myers said the King government will put forward a bill next year to change the way utilities are regulated on Prince Edward Island, especially as it relates to cost recovery after disasters like Fiona.

When asked whether a utility should earn a profit on cleaning up after a natural disaster, Myers said "no."

"That's part of why we're looking at the way we regulate energy on P.E.I.," he said. "We want to bring better legislation to the floor so we're looking at all avenues and saying: 'Here are the ways we allow Maritime Electric to earn — and are these the proper ways to allow them to earn?'"