Opinion: Inevitable price increases | Opinion | ABnews24

Sat, November 17, 2018
Opinion: Inevitable price increases
Roger King: As Minister Biggar’s recent opinion piece revealed (Guardian June 25), it is indeed good news that Maritime Electric Co. Ltd. (MECL) has negotiated a new five-year electricity purchase agreement with New Brunswick Power (NBP) starting early in 2019. What the Minister cannot explain at this time, however, is the extent of the inevitable price increases in our electricity bills for 2019 to 2024, beyond what has been negotiated with NBP on energy cost.
 
We have learned from the past that the MECL costs for energy distribution, capital depreciation, debt financing and shareholder return increase each year and contribute significantly to our billing rates. But how do these costs get reflected in our monthly bills?
 
The most recent cost study (2014) commissioned by MECL showed that our electricity unit price could be broken down into three parts: energy costs (including NBP and our own wind energy) at around 50 per cent, 37 per cent is for the cost of providing transmission and distribution infrastructure to meet our peak load demand and 13 per cent is for providing customer service.
 
In the past two years, the MECL capital budgets have spent close to $15 million each year on expanding transmission lines, building new sub-stations and expanding others all adding to the 2014 peak load demand cost at 37 per cent.
 
The future threat of requiring additional P.E.I.-based fossil fuel generation still looms; witness the recent proposal that Summerside Electric Utility may need a 16-megawatt fossil fuel generator. The impact of peak load demand doesn’t just affect P.E.I.; within the details of the new purchase agreement with NBP will be a charge for New Brunswick transmission capacity that will increase as our peak load demand increases. All of these continuing expansion costs are due to daily peak load demand that we are collectively causing.
 
The minister claims that “the cheapest energy is the energy we don’t use” and that is very true for individuals but the MECL costs included in our bills do not go away by using less energy. While we can only hope that MECL and NBP will provide us with fair energy purchase costs, we consumers are still directly and collectively responsible for the (at least) 37 per cent peak load demand cost. By changing the way and when we use electricity we could reduce this 37 per cent. The win-win here is that whatever we do individually, every consumer will benefit.
 
So how do we get started?
 
EfficiencyPEI is in the process of submitting a Demand Side Management plan to IRAC, which focusses upon providing additional and expanded energy efficiency programs (for individuals) but steadfastly excludes programs that target directly the reduction of peak load demand.
 
Our minister and her departments need to take the next step and apply some of the recently announced federal and provincial “Energy Saving Funding” of $47.8M to introduce new programs that guide and help consumers to contain and hopefully reduce our daily peak load demands for electricity.
 
The government is dependent upon the electricity utilities to implement the requirements of effective “demand management,” like smart metering, improving communication with consumers and changing the electricity tariffs but this government and particularly Minister Biggar have shown leadership on the electricity file in the past so we need more of the same.
 
Roger King of Hunter River is a former member of the P.E.I. Energy Commission
 
Source: The Guardian
 
ABN/Adrian/Jasim/AD
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