Farmers fear 'huge hit' if power rates increase

Many Prince Edward Island farmers expect to plant nothing but debt this year, especially if the pending elimination of cheaper electricity rates for rural subscribers proceeds in the next 30 days.
Reduced energy rate charges by Maritime Electric could be eliminated April 1 following an approval order granted by the Island Regulatory and Appeals Commission two years ago that has caught many groups, even government, off-guard.
"This increase in energy costs, on top of the highest rates in the country, will be a huge hit," says Ernie Mutch, president of the PEI Federation of Agriculture. "Agriculture can't cope with this and it will impact small business and tourism as well."
The IRAC approval grants Maritime Electric the option to eliminate the second lower rate charge in the two-tiered system. According to Order UE08-01 dated Jan. 24, 2008, the two-tiered rate will be eliminated for residential users on April 1, 2010. Power rates will be set at 13.55 cents/kwh (kilowatt hour).
The lower rate package kicked in for a rural user who required more than 2,000 kwh per month and assisted farmers who required more electricity - at a cheaper price - for their operations. The effect on a rural residential homeowner might be negligible unless a dwelling is heated electrically and the usage rate climbs over the 2,000 kwh monthly limit.
"This order was approved by IRAC and we need government to intervene and stop it," said federation executive director Mike Nabuurs. "If this goes ahead it will only help more farms go out of business."
Many farmers at the International Potato Expo last Friday (Feb. 26) were unaware of the looming increase since the order is two years old. However, Greg Donald of the PEI Potato Board made veiled reference to the matter during his 2010 crop overview.
"That's what I meant when I said we need to work together with common sense this year," said Donald. "And that doesn't mean a power increase. We can't afford this at all."
Some farmers estimated their electricity bill for an average farm could increase by $8,000 a year while larger operations - especially potato operations with electrically driven fans to maintain proper storage ventilation - could tack on another $20,000 in power costs.
Agriculture Minister George Webster was uncertain about the claims levelled by the federation and said he would immediately review the accuracy and ramifications.
"I would be disappointed if this was forthcoming, but I intend to review these claims to make sure they are correct," he told The Guardian. "If they are ... we would try and stop this."
According to a Maritime Electric communiquÉ, the "two-tiered rate approach was deemed to counter to the desired objective of encouraging people to use less energy because it actually rewarded them for using more energy."
The company said most electrical operations in North America have phased out the two-tiered approach and this brings Maritime Electric in line with other such utilities.
"The government has to step in and prevent this change from taking place or risk increasing the rate of farm closures," Mutch said.
The federation expects it won't be the only group fighting the proposed increase and intends to request a public hearing before IRAC as soon as possible.