IRAC considers new fuel pricing model for P.E.I. — including calls for higher profit margins

The Island Regulatory and Appeals Commission is considering 11 recommendations on how fuel prices should be determined on P.E.I.

One recommendation from furnace oil companies presenting at a hearing Monday was to increase their retail margin — how much profit the companies are allowed to make per litre.

The retail margin on Prince Edward Island is currently 21.5 cents a litre. But suppliers say that needs to increase another five cents because of their operating costs, which they say have gone up 23 per cent between 2017 and 2022. 

Companies that sell diesel also want to see an increase. Currently, those in that industry don't report their costs on an annual basis. 

As for gasoline, IRAC is looking at keeping the profit margin of eight cents a litre on the price people pay at gas stations.

Irving Oil is the main distributor of fuel on P.E.I.

Ian Thompson, president of Advanced Biofuels Canada, told CBC News that he's worried Irving will take the same approach it did earlier this year during hearings in New Brunswick, where the Saint John-based company said it's going to rely on more expensive renewable diesel to meet Ottawa's Clean Fuel Regulations. 

Ethanol is a much cheaper option that would pass fewer costs on to customers, Thompson said.

"IRAC really should be getting all of the information that fuel suppliers do collect and they will in fact be supplying it to the federal government for their Clean Fuel Regulations compliance reporting," he said.

"They really should be getting, on a confidential basis, how much of what kind of renewable fuel they are blending into both gasoline and diesel."

Environment and Climate Change Canada also submitted comments to IRAC raising concerns about Irving relying on renewable diesel to meet its commitments. 

Thomson said Atlantic Canada is being harder hit by the Clean Fuel Regulations because the provinces in this region haven't adopted their own clean or low-carbon fuel standards. 

Ontario, Alberta and B.C. require a certain amount of gas to be mixed with renewable or low-carbon fuels, such as ethanol. 

"Places like British Columbia, they're not going to see any impact at all from the Clean Fuel Regulations all the way out to 2030, and that's because the blending to meet the provincial low-carbon fuel standard there is going to be above what the clean fuel reg requires."