Electricity rates go up while utility plans future pricing

Maritime Electric rates will increase 2.2per cent starting March 1, but the utility says it's too early to know where rates will be this time next year when theP.E.I. Energy Accord ends.

Next month's increase is the third of three 2.2 per cent planned increases written into the accord in 2010, says CEO Fred O'Brien.

The five-year strategy between the province and Maritime Electric rolled back rates by 14 per cent in 2011.

But, over the past few years, the cost of electricity has been creeping back up to about half of the amount that was originally knocked off the price.

Maritime Electric is making assessments and will be applying for new rates through the Island Regulatory and Appeals Commission forMarch 1, 2016.

New, bigger generator

Meanwhile, other new developments will play into the utility's pricing plan.

Maritime Electric expects to file plans with IRAC this spring to build a new combustion turbine generator on the Island a plan that's being fast-tracked because of a growth in the demand for electricity, says O'Brien.

Originally, the company was going to build a new generator in 2020, based on 2012 estimates by the P.E.I. Energy Commission that in 2018the Island would see its energy use peak at 250 megawatts. However, in January of this year, the peak use was 263 megawatts.

The target was exceeded three years earlier than expected.

O'Brien says this is, in part, because people are switching to electric heat pumps.

He estimates 10 per cent of Island homes are now heated with electricity, much higher than five years ago.

The utility must be able to produce enough energy on the Island to meet peak use on the slim chance something happens to the undersea cables that run under the Northumberland Strait thatimport power fromthe mainland.

Third power cable

Also, the cables can only supply a maximum of200 megawatts of electricity, so on days the Island needs more than that, Maritime Electric has to fire up its on-Island generators.

So now Maritime Electric is now weighing whether it needs a bigger generator than originally planned, says O'Brien.

"We know that the price of furnace oil has come down, so we want to try and see if there's any impact on the other sources of energy for space heating. You know, are we going to slow down in growth or is it going to continue with this pace? And we're trying to accomplish that analysis over the next few months."

Regardless of the size, O'Brien expects the price tag for the generator will be more than the original $40-million estimate.

The unit would be purchased from a U.S. supplier or in U.S. dollars, so the weak Canadian dollar won't help.

Plans for a third power cable to the mainland are still in the works as well. O'Brien says, the province, which isthe lead on the project, has appliedfor federal funding for the project, which hasbe estimated in the $80- to $90-million range.

The province confirmed talks continue withOttawa, but saidthere isn't any more to say at this point.

O'Brien and the province agree the cable would have to be in place by the end of 2016 due to growing demand.

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