The PEI Energy Commission’s recent proposals address key issues such as power supply, utility regulation, and regional opportunities. While most of the proposals are positive, some could lead to unnecessary cost increases.

The commentary, PEI Electricity Policy: A Review of the PEI Energy Commission Report, written by Gordon Weil, reviews the commission’s proposals for possible risks, especially to customers.

According to the commission, Maritime Electric should give up electric generation and let the PEI Energy Corporation take on full responsibility for power supply. If the corporation does not collect profits or pay taxes, this will reduce costs over the long run. However, as Weil points out, Maritime Electric would have to be compensated, and the investor-owned utility and province may have differing views of the fair amount to be paid.

The commission wants energy efficiency measures transferred from the utility to the province. That makes sense, if the provider is selected by competitive bid. Another sound proposal is the addition of a new transmission link to New Brunswick, which is essential to maintain system reliability.

In its utility regulation proposals, the commission departs from usual practice.  They propose a new three-person IRAC panel to handle electricity matters. Weil proposes that PEI might instead want to make the IRAC staff slot for electricity a full-time position. The commission also wisely proposed a consumer advocate, and there are good reasons why that position should also be full-time.

Weil suggests that an independent regulator is the best way of assuring a balance between meeting necessary costs and protecting customers. The commission wants to make IRAC’s procedures more informal and reduce or eliminate hearings. He explains that the risk is that IRAC would not get the chance to see informed parties confront one another, which is the normal regulatory process. Many regulators are now using informal technical conferences as the run-up to shorter formal hearings which could make sense for the IRAC. The commission also fails to address whether the corporation, as the power supplier, would be regulated.  It should come before IRAC before making decisions that can have an effect on electric rates.

Weil concludes that the commission’s review underrates the potential for regional cooperation. He says that PEI would greatly benefit from a power pool as it could increase its power supply options, while reducing its costs.

Read the full commentary here