P.E.I. Energy Accord could cost $220M

Energy Minister Richard Brown admitted Tuesday a deal to cut electricity rates for P.E.I. consumers could cost as much as $220 million, adding to the province's debt.

Brown made the admission after being pressed on the numbers in the legislature by energy critic Mike Currie.

The P.E.I. Energy Accord was the cornerstone of the throne speech earlier this month. It promised a 14 per cent reduction in electricity rates next year, and no change in rates in 2011. But Currie said the government glossed over the costs of the deal with Maritime Electric, the province's principal electricity provider.

Those costs include $47 million in charges for replacement power while Point Lepreau is being refurbished, $45 million for a third power cable to the mainland, and the costs of 30 megawatts of wind power.

"That adds up to $220 million. That's something the premier of this province forgot to tell people last week," said Currie.

"We've got to finance that now to pay for his 14 per cent promise of a reduction in rates, when I think the industry itself was going to give us 10 per cent anyway."

Energy costs have been falling across the continent as the economy has been slow to recover.

In the legislature, both Brown and Premier Robert Ghiz admitted the accord does add to the province's net debt, but Brown noted not all of it is on the province's books.

"If we get the cable, and if the wind farm is built financed through government, yeah, that could be the number," said Brown to reporters outside the legislature.

"But this is not affecting the books of the government of Prince Edward Island. Most of this money will be guaranteed by the province, and it's not a part of the debt."

Ghiz said the debt had to go somewhere, and if it had gone on Maritime Electric's books, the company's shareholders would earn 9.75 per cent in dividends on that debt, due to an odd quirk in the existing legislation.

"The member from Georgetown-St Peters believes that Island ratepayers should be paying that debt to Maritime Electric so that their shareholders can be making more money," Ghiz said.

"On this side of the house we don't believe that, Madame Speaker, and that is why we were able to lower down electricity rates 14 per cent."

Currie maintained the savings on electricity rates over the course of 20 months will be less than the cost of the deal to taxpayers.