Staff recommend increase that, coupled with HST, translates into 11.2 per cent power hike

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Basil Stewart

SUMMERSIDE – Facing a $2.5 million deficit, staff at Summerside’s municipal services department want council to increase power rates by 2.2 per cent on March 1.

Municipal Works director Greg Gaudet said the 2.2 per cent hike translates into $60,000 that the city can put towards its operating deficit.

Mayor Basil Stewart raised the issue of the Harmonized Sales Tax that comes into effect on April and will increase power rates a further nine per cent. He said with the city’s proposed hike, customers are looking at the possibility of an 11.2 per cent increase in their rates on April 1.

The recommendation also brings the city in line with a 2.2 per cent increase in rates by the Maritime Electric Company, which provides electricity to Islanders outside of Summerside. Figuring into the recommendation are 600 to 700 residences within city limits not presently serviced by the city utility, but by Maritime Electric. Efforts to secure those customers from Maritime Electric have so far failed.

Stewart suggested the city keep its rates below Maritime Electric’s.

“If we’re going to have some kind of incentive to attract business, to attract development, or attract whatever, we should lower our electrical rates,” Stewart said. “Plus if the other customers on Maritime Electric, they would push that much harder to become part of the city system because their bills are going to be higher with Maritime Electric than with ours.

“Is this a lever for us or a way to attract development?”

Gaudet said the city has incentives in place for some new businesses that meet certain requirements and those incentives will not change.

But Stewart said it would be a stronger incentive if rates were lowered across the board.

The mayor said he knows it would result in a loss of revenue, but believes new development acquired through the reduction in rates could offset any potential losses.

“We have an asset here that we control,” Stewart said. “If we can keep our electrical rates a little lower, I think it would be an attraction for development.”

Councillor Jeff Sullivan said he would not be supporting any increase in electrical rates.

Through the entirety of my time on council, and for a very long time preceding my election to council, I was of the feeling that this is an asset that we can take advantage of,” Sullivan said. “I’ve long seen lower electricity rates as being a very effective growth strategy. I have never, ever been a fan of the automatic increases which follow Maritime Electric. I think the automatic increase that occurred in 2010 (14 per cent) was excessive and ill-advised and particularly, with the introduction of the HST on April 1, I wish to make note that I am not supporting anything but a complete freeze on electric rates.”

Councillor Cory Thomas said he is in favour of keeping rates low, but added if there is revenue lost by not increasing power charges, any shortfall will have to be made up somewhere else in the city’s general budget.

Thomas said he is certainly not opposed to reviewing the city’s general

revenue fund, but added it is something council needs to consider as budget deliberations take place.

All of council agreed that it is time for the city to play “hard ball” in bringing the 600-700 customers being serviced by Maritime Electric under the city’s umbrella.

Council advised Gordon MacFarlane, the acting CAO, to discuss with the city’s auditors, to negotiate with Maritime Electric and the province to buy back these customers.

Council was of the opinion that this plan would at least give the city a point to begin serious negotiations with Maritime Electric.

The 2.2 per cent increase was part of the three phase plan by the province. The first phase of that agreement involved a 14 per cent increase in power rates and then a freeze for the next two years. That time frame ends March 1, when the agreement called for a 2.5 increase this year. That was later reduced to 2.2.

The city is faced with that deadline, but council was unanimous that they need to discuss the issue during budget deliberations. The budget will not be ready until the end of March.

One plan the city is looking at is the implementation of the March 1, 2.2 per cent increase and then, through budget deliberations, find a means of eliminating that hike by identifying other areas of the budget that could make up the shortfall.

If that can be accomplished, all city residents including the 600-700 customers not being serviced by the Summerside Electric Utility would receive a 2.2 per cent rebate on their power bills.

mcarson@journalpioneer.com

 

 

 

Organizations: Maritime Electric Company

Geographic location: SUMMERSIDE

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Comments

Comments

Recent comments

  • fed-up
    February 08, 2013 - 08:18

    People are going to be moving away from this town in hoards. Doesnt make sense to live here anymore. Aside from the beaches this province has minimal to offer for the common citizen. See you folks out west.

  • John W. A. Curtis
    February 07, 2013 - 08:12

    The province should have exempted HST on electricity . The province wants HST revenue to pay the 450 million dollar pension shortfall. The City should have demanded a referundum on HST

  • Maggie
    February 06, 2013 - 20:19

    It is interesting that the Summerside Electic Utility is bothered by Maritime Electric supplying energy to several hundred customers, but it is ok for Route 2 to compete in rural areas using tax based funds. Go figure....double standard. Maybe Route 2 should stop hiding their operational costs in the energy budget.

  • Path Etic
    February 06, 2013 - 19:11

    That's it, we're moving!

  • brian edwards
    February 06, 2013 - 18:41

    I thought the wind turbines would eleminate the need for increases?!?

  • ODB
    February 06, 2013 - 18:02

    I think they should just build another roundabout! that should solve this problem.... what a joke our council are and so is this town!

  • dave
    February 06, 2013 - 14:11

    if any one was working for a company and lost 1.2 million they would be fired and probably be charged . Do you need more money to waste?

  • Sarah
    February 06, 2013 - 14:08

    If the current city council can't do their jobs efficiently enough to keep the books in balance, perhaps they should stand aside and allow a new council to be brought in to see if they can do it better. People have become far too relaxed about paying extra taxes in whatever form in order to cover up the wrongdoings of those who are actually spending our money, regardless of the level of government. It's time for our elected officials to stand up and take responsibility for the disgusting spending habits that are all being paid for by the taxpayer. And it's time for the taxpayers to stop being mindless sheep and start fighting back.

  • John W. A. Curtis
    February 06, 2013 - 13:51

    Summerside will get power line and end maritime Electric's monopoly. Summerside won't get the 600 customers from Maritime Electric. It will be the customers who decide to go with the city of summerside or Maritime Electric. The rest of Summerside's customers will be able to choose the Summerside's Electric or Maritime Electric just like buying gasoline or which telephone company.to use.

  • Irony
    February 06, 2013 - 13:43

    what do you wanna bet the 2.5 million deficit is exactly what was lost/spent on that idiotic MJ Tribute concert....? We all knew when we read that fiasco we would be paying for their mistakes somehow....

  • intobed
    February 06, 2013 - 12:37

    The HST is going to destroy PEI, just like Harper and Ghiz want it to. Remember those who lobbied hard to have the HST brought in. Never forget, or forgive.

  • DJ
    February 06, 2013 - 11:03

    Why must we keep paying the price for thier mistakes, they do what they want with no one to answer to, the people of this city should stand up to these people before they break us as well. Hard to accept the cost of living here, just keep driving people off the island, way to go Basil.

  • Donald A Baker
    February 06, 2013 - 10:14

    Did anybody on Councill ever read the Electric Detartment's Charter?

  • Serious Issue
    February 06, 2013 - 06:02

    This Greg Gaudet is nothing more than a Terry Murphy want to be. Mayor Stewart should be investigating the ongoing leaks in City Hall, how can an email from Deputy Mayor Bruce MacDougall to Greg Gaudet get into the public domain. Yes, this is fact has happened recently, people have seen it and circulated it. Comments from Deputy Mayor Bruce MacDougall about the Smart Meters is absolutely laughable and so unprofessional. The email was cc to Mayor Stewart so he can't deny it. This is very serious stuff when personal emails leave City Hall and are in the public eye about a vote of Smart Meters, oh by the way the price tag is millions. CBC and Journal Pioneer have a copy of this email that was leaked.

  • G Arsenault
    February 06, 2013 - 00:57

    I can't believe how much it costs to live in this small town I grew up in. I live in Vancouver my house is worth $650,000. And I pay less property tax than a $150,000. In Summerside, your electric rates are out of sight now add HS? I really feel for the citizens. It looks like the town has done a lousy job of managing the citizens money.

  • Concerned Taxpayer
    February 05, 2013 - 21:12

    This is absolutely unbelievable tactics by our municipal officials to increase electicial rates after all the mismanagement of money be the Concert Fiasco, wasted money on lawyers over the years on the high profile malicious persecution of our past Deputy Chief of Police, than the cover up costs associated with the hidden Hopping Investigation and than add Smart Meters. Looks to me the long overdue leadership and cover up Seniour Managers are finally being exposed for what they really are. Stop the BS, we are not all as stupid as you high paid people think we are, we are just hard working citizens trying to feed our families. Good for Coun Sullivan, speaking out and trying to do something right, now this proves why Basil wanted you and others moved out of the way. Hurry up election 2014, this Stewart, MacDougall, Dowling, Holman and Steele have to go.Mayor Stewart ran the last election spouting off with a $30 million dollar debt, low and behold its around $100 million, again stop the BS.