How much will carbon price push up P.E.I.'s electricity rates?

P.E.I. hasn't yet come forward with a plan to implement a price on carbon as directed by Ottawa in October nor does the province have a clear answer as to how much electricity rates could increase as a result.

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Carbon pricing 'could result in higher costs'

P.E.I. generates about one-quarter of the electricity it uses through on-Island wind generation. The rest is transmitted through undersea cables from NBPower.

NB Power has been warning about major rate increases over the next decade, pointing to the carbon price as the biggest reason why the increases would be necessary.

One internal document obtained by CBC through a Freedom of Information request states: "Applying performance standards to the electricity that P.E.I. purchases from N.B., could result in higher costs. Any rate increase demands from Maritime Electric would have to be approved by IRAC."

The same document notes Islanders already face "some of the highest electricity rates in the country," and includes a commitment from the federal and provincial governments "to invest in initiatives that help low-income Islanders and key economic sectors ease the transition to pricing carbon pollution."

NB Power warning of rate increases up to 37.8%

In a document tabled with the New Brunswick Energy and Utilities Board in December, NB Power said, factoring in the price for carbon, it may require a cumulative 37.8 per cent in rate increases by the year 2027. Previously, it has estimated that increase to be just 14.9 per cent.

Maritime Electric said it refuses to speculate on future rate increases because it doesn't have enough information on how the P.E.I. government (or New Brunswick, for that matter) intends to proceed with carbon pricing.

Maritime Electric has an energy purchase agreement with NB Power that expires on February 28, 2019. The utility also has a rate plan approved by IRACwhich expires on the same date, allowing annual increases of 2.3 per cent.

The City of Summerside, which operates its own electric utility, says it's been informed by NB Power it should expect annual increases of 2.4 per cent in the rate it pays to the New Brunswick utility.

The city has determined that would result in annual local rate increases of 3.85 per cent.

Expanding clean energy

No one with the P.E.I. government was able to shed any more light on how the province's electricity rates would be affected by carbon pricing. The province says it still hasn't decided whether to implement a carbon tax or try to develop a cap-and-trade system as a way to comply with Ottawa's call to put a price on carbon.

Government has previously signaled it intends to expand local production of clean energy. A new energy strategy for the province is expected to be completed soon.

The province did confirm this much, however: the way carbon pricing is factored into P.E.I.'s electricity costs will be determined by the New Brunswick government and the approach it chooses to take. That's because almost all the carbon associated with P.E.I.'s electricity consumption is created on the mainland.

That will likely also mean that provincial revenues associated with a carbon price for electricity on P.E.I. would also flow to New Brunswick.

Projected increases for fuel under carbon tax

While there may not be an answer as to how the price of electricity would be affected, documents obtained by CBC News through Freedom of Information showthe province has projected what a carbon tax of $50/tonne would do to gasoline, diesel, fuel oil, natural gas, propane, and even jet fuel prices on the Island by 2022.

(Source: P.E.I. Department of Communities, Land and Environment)

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