Most Prince Edward Islanders will be paying more for their electricity in the new year, with a rate increase approved for Maritime Electric effective Jan. 1.
The decision from the Island Regulatory and Appeals Commission is dated last week and was posted Tuesday morning.
Maritime Electric provides electricity for virtually all Islanders outside of Summerside. That city has its own electric utility.
The rate for the first block of electricity, up to 2,000 kWh per month, for residential customers is going up 3.8 per cent. The monthly service charges of $24.57 for urban customers and $26.92 for rural customers are unchanged, so the overall increase in cost will be less than 3.8 per cent, depending on how much electricity a household uses.
For small industrial users the price is up 3.6 per cent on the first block, and 4.4 per cent for electricity use above that. Large industrial users are seeing a 3.6 per cent increase.
The commission is not prepared to allow the inequities in Maritime Electric's rate structure to continue beyond the current rate setting period. — IRAC written decision
"It is the first time in three years that we've had a rate adjustment and we certainly appreciate that, you know, customers will need to budget and plan accordingly," said Maritime Electric's president and CEO Jason Roberts.
Roberts said overall demand for electricity has fallen in 2020.
"We are doing our best to manage our costs. We've taken steps this year to reduce costs where we can," Roberts said. "And we're trying to manage these rate increases as best we can."
Initial application denied
The utility had initially applied in the fall of 2018 for a series of rate increases totalling 4.1 per cent over three years, but that application was denied by IRAC. The pandemic led to further delays in adjusting rates.
Currently, it is the average Islander and low electricity consumer that bears the higher cost for that power. — Steven Howard, Opposition energy critic
IRAC's decision also allows Maritime Electric to increase the rates for a period of up to 14 months to recoup lost revenues resulting from the delay in increasing rates.
The regulator ruled the utility can recoup $2.8 million by boosting its rates through to February 2022. Without that measure the company was projecting a 7.88 per cent return on investment for operations in 2020, below the maximum 9.35 per cent allowed under provincial regulations.
No change to second block billing
The utility didn't include a plan to end second block billing in its most recent rate application. Under its current rate structure, Maritime Electric charges a lower rate to residential and farm customers who use more than 2,000 kWh of electricity during a monthly billing period.
For years IRAC has told the utility to end that practice, saying large farming operations end up "paying less than the cost of service and are being subsidized by other ratepayers."
"The commission is not prepared to allow the inequities in Maritime Electric's rate structure to continue beyond the current rate setting period," IRAC wrote in its decision on the current application.
A spokesperson for Maritime Electric said the company is preparing to put forward a proposal for a new rate structure early in the new year. IRAC has suggested a gradual phasing out of second block billing "within a reasonable period of time."
'Unfair advantage' for large users, says Opposition
"It seems the new rates, though only approved for one year, continue this unfair advantage for high electricity users," said Green MLA Steven Howard.
As the Opposition energy critic, Howard applied for and was granted intervenor status by IRAC in its assessment of Maritime Electric's rate application.
"Currently, it is the average Islander and low electricity consumer that bears the higher cost for that power."
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