Steve Howard, MLA for Summerside-South Drive and Opposition critic for Transportation, Infrastructure and Energy
I am inviting all Islanders to share with me their thoughts on a proposal I am making to modernize PEI’s energy laws.
Recent government announcements have committed our province to reducing greenhouse gas emissions to net-zero by 2040. These goals are reconfirmed in the Net-Zero Carbon Act. This was introduced by my fellow Official Opposition member Lynne Lund, MLA for Summerside-Wilmot, in the Legislature last fall. It became law after all parties and MLAs agreed unanimously to pass it.
A major part of the transition to Net-Zero will require modernizing our electricity system. This system is primarily regulated by the Electric Power Act and the Renewable Energy Act. I am planning to introduce two bills in the PEI Legislature to amend them. The House will resume again on February 23, 2020. In advance of this, I am asking you for feedback on the proposed changes.
Changes to help prepare PEI for a cleaner and fairer energy future
In a nutshell, the changes I am proposing will:
- Provide legal requirements to transition to 100% clean electricity by 2030;
- Create more affordable electricity by removing the minimum purchase price for large producers;
- Introduce electricity rates that promote energy efficiency and reduce bills for most Islanders;
- Give farmers protections against rate shock;
- Reward and invest in people powered solutions such as home energy generation, storage and vehicle-to-grid technology in PEI;
- Introduce time-of-use rates for electricity.
The proposed changes will align the Renewable Energy Act with our Net-Zero goals. This will be done by creating legally binding targets for how much of our electricity must come from renewable sources. These renewable electricity standards will require utilities to provide 50% of our electricity from renewables by 2025, and 100% by 2030.
There are also requirements for the utility to issue a public report annually on their progress.
Another major change proposed for the Renewable Energy Act is to eliminate the minimum purchase price for renewables purchased by a utility on PEI.
According to the PEI Energy Corporation (PEIEC) annual reports, the cost of wind power has dropped significantly since 2005, and is now well below the minimum purchase price. This drop in cost means, as the main seller of renewable electricity in the province, PEIEC is making a significant profit.
While these revenues do ultimately end up going to the provincial government, this money is made on the backs of Islanders, including low-income and vulnerable people who face inflated costs to heat their homes and keep the lights on. This places an extra burden on those who have no extra income to give, and who may end up having to make impossible choices between paying the power bill or buying food and medication. This revenue should not come from their wallets. Government has other tools it can use to pay for the important services it delivers to Islanders.
Currently, electricity rates are structured so that customers pay a lower price when they use more electricity. This encourages people to use more and that increases the overall cost of electricity for all users. It also increases emissions. The proposed changes to the Electric Power Act would change the way electricity rates are set. This will encourage energy efficiency and reduce bills for most Islanders.
This proposal includes the creation of a temporary rate structure for farmers. This will allow farmers to continue to have the same rates as they do now for a transition period. This will allow farmers to prepare for these proposed changes.
This also separates farms from other residential users. This will allow the residential rate structure to be altered so it can bring the most benefits to Islanders without affecting farming operations.
There are also minor changes to the Renewable Energy Act to lay the groundwork for the adoption of home storage, including vehicle-to-grid technology, in the province.
Home storage would permit people to store power they generate from renewables or the electrical grid for use at a later time – for example during a power outage, when time-of-use rates are higher, etc.
Vehicle-to-grid technology uses the batteries in electric vehicles (EVs) while they are plugged in to help stabilize the electricity grid. This can create a new revenue stream for EV owners while at the same time improving the electricity grid. Time of use rates would also allow for smart charging that charges when rates are low, saving home storage and EV owners even more.
Another opportunity these changes could help bring in is the ability to encourage a distributed grid. For example, this could permit Islanders who generate solar or wind power the opportunity to sell their excess energy to other organizations or the utility company by grouping many small resources together to be treated as a larger system. The same can be done with batteries and home storage.
In short, Islanders can be paid by the utility for helping supply electricity to the grid. Currently, tens of millions a year are sent off island for services that Islanders could be providing given the chance.
Time-of-use rates for electricity will be an important tool for PEI in the future. By varying the price of electricity based on when the wind is blowing, we can encourage people to use electricity when our inexpensive Island wind (and increasingly solar) farms are producing the most power.
This will also help reduce how much power we have to import from off-Island or the need for expensive peaker plants or battery backups that might only be used once a year.
Overall, this should help reduce electricity rates for consumers while promoting the use of Island-generated renewable energy.
What are your thoughts?
I invite you to review the legislation that I am proposing and send me your thoughts. Consultation draft of the legislation can be found here:
- An Act to Amend the Electric Power Act – Draft Consultation – v6 – March 2021
- An Act to Amend the Renewable Energy Act – Draft Consultation v4 – March 2021
Please send your thoughts, comments, and questions to me by email at email@example.com or by calling our office at (902) 620-3977.
Please be sure to submit your comments before February 7, 2021. Thank you!
Frequently Asked Questions
Q: Will this change increase my electric bill?
A: These changes will create a fairer rate structure. For some high energy users, this may mean an increase in rates. However, there is a transition period proposed to help provide short term stability and time to adapt. In the long term, bills should decrease for about 70% of households.
Q: What measures are being proposed to help farmers transition to a new rate structure?
A: A transition period will provide farmers with short term stability and time to adapt to the new structures. We have also called on government to provide additional supports to help farmers reduce their energy consumption and generate more of their own energy.
Q: How will I know when electricity rates are cheaper so I can plan my usage?
A: This depends on how the utility decides to implement time-of-use rates. The City of Summerside uses smart meters which can automatically control appliances such as heaters to draw power when it is cheaper. Some provinces use set rates for different times of the day when demand for electricity is typically higher or lower (see Managing costs with time-of-use rates, Ontario Energy Board).
Q: How will this help PEI meet its net zero targets?
A: While PEI has done a good job of installing wind energy, most of our electricity is still generated by burning fossil fuels (including much of the power that we import from New Brunswick). The proposed changes would make it mandatory for 100% of our electricity to come from renewables by 2030, which would eliminate all of the greenhouse gas emissions associated with our electricity.