P.E.I. premier promises to cut power rates, one year before vote

CHARLOTTETOWN – The government of Prince Edward Island opened the fall session of the provincial legislature Friday with a throne speech that promises a cut in power rates, less than a year before the provincial election.

Premier Robert Ghiz said his Liberal government would reduce power rates next year by 14 per cent, to be followed by a two-year freeze.

While the speech didn’t explain how that would be accomplished, a spokesman for Ghiz said the province has reached a five-year power purchase agreement with NB Power, the Crown utility in neighbouring New Brunswick.

The government had been in discussions for more than a year with a number of utilities, including Hydro-Quebec.

Heather-Anne MacLean, a spokeswoman for NB Power, said the New Brunswick utility responded to a request for proposals and had the successful bid.

She said while the P.E.I.’s utility, Maritime Electric, is getting an improved deal, it’s not to the detriment of New Brunswickers.

"This is surplus power for us and by the sale of it outside the province it helps subsidize rates within the province," MacLean said. "The rates on P.E.I. will still be higher than they are here in New Brunswick."

New Brunswick Energy Minister Craig Leonard said the deal would provide benefits to both provinces.

"There is certainly depressed pricing for electricity in the marketplace on the open market, so clearly there’s going to be some advantages that all jurisdictions are going to be able to take advantage of," he said.

"With our relationship with P.E.I. it’s a natural fit, and obviously we were able to come in with a competitive package for them."

Leonard deferred questions about the value of the deal to NB Power, which deferred to the P.E.I. government. "It was their (request for proposals)," MacLean said.

Islanders currently pay the highest power rates in the country and more than 80 per cent of the province’s power is bought from New Brunswick.

If approved by the P.E.I. legislature, the power deal would save the province about $25 million, the government said.

The P.E.I. election is scheduled for Oct. 3, 2011, under fixed-date legislation.