The following is an opinion piece that was published in the August 23, 2023 issue of Island Edition.
It seems Islanders should tighten their annual budgets whenever they batten down the hatches.
CBC reported this week that Ottawa has declined a request to help cover the cost of Fiona-related repairs to the Island’s electrical grid. Islanders will be stuck footing the $36M bill through a rate increase. Why? Because the grid is privately owned by a company that’s too large to qualify for federal disaster relief. Just dandy!
I expected most people would be peeved at the feds, it was the opposite. Most people, at least those who interacted with me on Twitter when I brought this issue up, seem to agree with Ottawa’s decision. That’s not to say people are pumped at the prospect of a rate increase, but they see this situation being the latest bad deal for Islanders when it comes to how electrical generation and transmission is regulated in this province.
It's no secret that Maritime Electric holds a monopoly here, it provides power to 90% of the Island. If a guaranteed client base is not enough, a regulated return on equity ensures shareholders have a vehicle to earn almost 10% a year. Not too shabby. When something eats into that return, such as a natural disaster fuelled by climate change, Maritime Electric can apply to transfer those costs to Islanders through a rate increase. That’s business, right? Not really. Most businesses have to factor in what their competitors are doing when setting rates. What a luxury it must be to operate in a regulated sector with zero competition.
So here we are, a tiny Island of 180,000 people heading down a path toward more frequent, stronger storms. Our federal government has made it clear that the cost to repair our privately owned grid is the responsibility of Maritime Electric, and our provincial government continues to support legislation that protects a monopoly from ever having to worry about taking a loss. Whatever way you look at it, Islanders lose.
Side Note: Maritime Electric recently submitted an application to the Island Regulatory and Appeals Commission for a 1.6% average increase to residential electricity rates. If approved, this increase would hit our bills for 12 months starting this October. This adjustment is not connected to Fiona-related repairs; it stems from Maritime Electric's $4.9 million losses attributed to higher expenses for purchasing power from off Island.
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