Overview of Electricity Sector

An island province, smallest both in size and population, Prince Edward Island (PEI) is the only province that cannot substantially supply all its own electricity resources. It imports the vast bulk of its electricity from oil, diesel and nuclear plants in New Brunswick, which are transmitted across the Northumberland Strait via two large submarine cables[i]. PEI is the only province with a larger share of installed wind energy than fossil fuel fuels and has the highest percentage of wind integration in Canada, even higher than Denmark’s[1]. Both privately and publicly owned, PEI’s 204 MW of wind capacity met 30% of the province’s electricity needs in 2014. On-island oil and diesel generators are primarily owned and operated by Maritime Electric, the province’s biggest utility. They generally serve as back up for when the supply from off-island sources is interrupted, particularly during times of peak loading, or when the domestic supply becomes the lowest-cost option[ii].

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As a result of its dependency on expensive off-island electricity, the rates of which are set by the New England wholesale market, PEI residents have long paid the most for electricity out of all the Canadian provinces[iii]. This has rendered the cost of electricity a key political issue for several decades.

In 2011, under pressure to lower electricity rates, the PEI government signed the PEI Energy Accord with its biggest supplier, Maritime Electric. The accord was aimed at lowering and stabilizing electricity rates, as well as increasing provincial wind energy capacity[iv]. Under the accord, electricity rates were reduced by 14% and the rate of increase was frozen at 2.2% per year until 2016 (CBC). Since the Accord was signed, electricity demand has risen, in part, due to the widespread adoption of electric heat pumps initiated during a period of high oil prices. Peak use has substantially exceeded forecasts, highlighting the need for new on-island generation. Thus far, Maritime Electric has proposed a new combustion turbine for the island, as well as a third power cable to the mainland.

 

[1] Percentage of wind integration is the ratio of installed wind capacity to peak demand.

[i] Maritime Electric. “Our Island Electricity”, Retrieved 19 Oct 2015 from http://www.maritimeelectric.com/about_us/ab_our_island_electricity.aspx

[ii] Maritime Electric. “Our Island Electricity”, Retrieved 19 Oct 2015 from http://www.maritimeelectric.com/about_us/ab_our_island_electricity.aspx

[iii] Ontario Hydro, 2013. “Electricity rates by Province”, retrieved 22 Sept 2015 from http://www.ontario-hydro.com/index.php?page=electricity_rates_by_province

[iv] Department of Transportation, Infrastructure and Energy, 2015. “PEI Energy Accord”, Retrieved 19 Oct 2015 from http://www.gov.pe.ca/energy/index.php3?number=1036200&lang=E

 

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