Maritime Electric scales back its rate increase request after deal with province

Maritime Electric is asking for a smaller increase to electricity rates than it had originally wanted after reaching a deal with the Prince Edward Island government.

The company announced Wednesday that it's no longer asking the Island Regulatory and Appeals Commission for 3 per cent rate increases in each of the next three years.

Instead, Maritime Electric now proposes electricity rates would go up 2.6 per cent starting May 1, 2.6 per cent in 2024, and 2.7 per cent in 2025.

That's after the utility reached an agreement with the government-operated P.E.I. Energy Corporation that would allow Maritime Electric to increase its profit as long as it doesn't drive provincial electricity rates higher.

Under provincial law, Maritime Electric has been allowed a profit margin of no more than 9.35 per cent. The company wanted IRAC to raise the cap.

But the P.E.I. Energy Corporation had been advocating to keep the cap at 9.35 per cent because it didn't want to see power rates go up — despite an independent expert's recommendation that Maritime Electric should be allowed a profit margin of 9.7 per cent at a minimum.

Company would have to cut costs

Under the new agreement, Maritime Electric will be allowed a profit margin of 9.7 per cent, as long as the number used to calculate customer rates doesn't change. That means the utility has only one option to make more money: cutting its costs.

The rationale behind the newly proposed rate increase is to let the company keep up with inflation and rising costs, its president and CEO said — not to recover costs from post-tropical storm Fiona.

"It's really just the energy supply costs, the vegetation management increase in the budget, that we're looking for. And inflation, which has been a big problem for all of us. We're not immune to it either," said Jason Roberts. 

We had experience that in some cases, some of our material supplies have gone up 10, 15 and 20 per cent.— Maritime Electric CEO Jason Roberts

"We had experience that in some cases, some of our material supplies have gone up 10, 15 and 20 per cent. But for the application, we estimated about 2.5 to 3 per cent for inflation. And we continue to working towards that."

IRAC says both the province and Maritime Electric have agreed the company will not cut its budget for tree trimming as it looks to lower costs. Such maintenance work can help prevent power outages caused by branches falling onto transmission wires.

The proposal hasn't yet been approved by IRAC. Islanders still have time to submit comments, with a public hearing for the rate application set for April 18.

As well as providing guidance to the provincial government on energy policy, generation and transmission matters, the P.E.I. Energy Corporation owns and operates wind farms at Elmira, Hermanville/Clearspring and North Cape, and owns electrical transmission facilities in Prince County.