IRAC criticizes Maritime Electric for not trimming trees often enough

Maritime Electric is coming under fire for the lack of money it spends on trimming trees back from P.E.I. power lines, as it seeks approval from the Island Regulatory and Appeals Commission to increase its profit margin.

Fallen trees, about 40,000 of them, were the main reason for the widespread power outages that dragged on after post-tropical storm Fiona hit Prince Edward Islandlast fall, according to the power utility.

The entire province lost power initially, and it took Maritime Electric three weeks to cut away whole trees and giant treelimbs and replace fallen power poles to get the lights back on for all its customers.

At a public hearing Tuesday, commissioners with IRAC took the company to task for spending just a fraction of what other utilities in the region spend to keep foliage away from their grids.

According to Maritime Electric's rate application, filed with IRAC in June 2022, the company was spending just $238 per kilometre of distribution line on vegetation management.

By contrast, NB Power spent twice as much ($476 per kilometre), Nova Scotia Power four times as much ($1,000 per kilometre), and Central Hudson Gas and Electric, a US-based subsidiary of Fortis Inc., the same parent company as Maritime Electric, spent nine times as much ($2,197 per kilometre).

According to Maritime Electric, the three other companies all operate in areas "that have a similar vegetation profile as Prince Edward Island."

35-year cycle

In its application, Maritime Electric said those other three companies operate on cycles in which they trim trees around distribution lines more often ranging from once every 4.5 years for Central Hudson, to once every eight years for Nova Scotia Power.

Maritime Electric said that based on its funding for tree trimming of $1.4 million in 2020, it was on track for a 35-year cycle in clearing trees around distribution lines.

For main transmission lines, the company said it was operating on a 14-year cycle.

Opposition MLA Robert Henderson says what's being done currently isn't anywhere near enough.

"It's really almost laughable. As an MLA who pays note to this stuff when I drive around my district, I can see that there's all kinds of problems that are about to occur, when we see all the other things that have to be done to our infrastructure on our power line system throughout Prince Edward Island."

'Significant deterioration of reliability'

According to the company's rate application, Maritime Electric conducted a vegetation inspection of its systemin 2019, and concluded that "60,600 distribution spans and 6,400 transmission spans require urgent vegetation management to avoid a significant deterioration of reliability."

The company calculated the cost to address those concerns at $54 million. It's not clear from its submission how many of the problem spans were addressed. The company declined to provide an interview to CBC News until after IRAC has ruled on its rate application.

But in its filing, Maritime Electric concluded that the cost to switch to a six-year cycle of vegetation management would be too high to pass along to customers: $8.1 million per year, compared with the $1.4 million the company spent in 2020.

Instead, the company has proposed increasing its budget to $5 million by 2025, and up to $5.7 million by 2027, which would put the company's per-kilometre spendingroughly on par with Nova Scotia Power, and result in a 10-year vegetation management cycle for distribution lines and a seven-year cycle for transmission lines.

But even at that level, the company told IRAC Tuesday, it probably won't be enough to keep up with the increasing risks from climate change.

Seeking 9.7% profit margin

Earlier this month, Maritime Electric struck a deal with the provincial government to use a return on equity of 9.7 per cent in the calculation of annual earnings, while still using the old rate of 9.35 per cent to set electricity rates.

In effect, this would allow the corporation to increase profits by an average of $700,000 in each of the next three years as long as it does so by cutting costs or by growing its business not by charging customers more. But the province has stipulated the company can't cut costs on vegetation management.

The day the agreement was announced, Maritime Electric also said it was reducing its request for customer rate increases for the next three years, down from three per cent per year to 2.6 per cent in 2023 and 2024, and 2.7 per cent in 2025.

The deal still requires approval from IRAC.