IRAC approves P.E.I. smart meter switch, but remains concerned about the pricetag

The Island Regulatory and Appeals Commission has finally granted approval for Maritime Electric to switch its more than 86,000 customers on Prince Edward Island over to smart meters.

But IRAC continues to raise concerns about how the estimated cost of the project has ballooned.

On Oct. 4, the regulator issued an order authorizing Maritime Electric to spend $66.8 million on the conversion, which will also include an upgrade of the company's customer information system.

The federal government has agreed to cover $19 million of those costs. The rest will be recouped by the company through a rate increase, which the company has pegged at 2.7 per cent, once the meters are installed.

When Maritime Electric first applied for the project in November 2022, the total cost was estimated at $47.6 million.

In its decision this month, IRAC said it continues to have "serious concerns about the substantial increase in the cost," and added it "does not accept" the company's assertions "that this substantial increase is due to inflation, supply-chain issues, interest during construction or the strength of the Canadian dollar."

The regulator called it "one of the largest and most complex capital projects undertaken by [Maritime Electric] to date," and is requiring the company file annual updates to the regulator including an opinion from an independent auditor "that verifies and deems appropriate the capital expenditures incurred."

IRAC also warned the company not to assume the commission will let any cost overruns be passed onto customers through further rate increases.

Switching to smart meters will let Maritime Electric offer variable electricity rates based on the time of day, which other utilities have used as an incentive to divert some power use away from peak hours.

For example, customers might be able to choose to run appliances like washing machines or dishwashers late at night at a lower rate.

That could help ease pressure on P.E.I.'s grid during the busiest hours of the day and in turn reduce the need to expand infrastructure to deal with higher peak loads.

But a consultant hired by Maritime Electric calculated the cost of the conversion would outweigh the potential benefits to the tune of $12 million. Only by including the $19 million in federal funding was the company able to put forward a positive business case for the switch.

Maritime Electric also said the new meters will make it easier to respond to outages during significant weather events such as post-tropical storm Fiona, which two years ago knocked out power to almost the entire province.

In its initial application, Maritime Electric said it would store data and software locally rather than remotely on the cloud, in order to avoid the risk of losing access to crucial information if the internet went out during extreme weather events.