Renewable Energy Law Passed for Prince Edward Island

The Government of Prince Edward Island (PEI) continues to move forward with its plans to make PEI a national leader in renewable energy research and development. A new energy policy for the island, called the “Renewable Energy Act,” has been proclaimed with the exception of one section. The PEC government has approved three sets of regulations that will govern key aspects of renewable energy development in the province.

Passed during the fall 2004 session of the Legislative Assembly, the Renewable Energy Act requires utilities to acquire at least 15 percent of electrical energy from renewable sources by 2010. This week, the government approved Minimum Purchase Price Regulations, Designated Area Regulations, and Net-Metering System Regulations. This has allowed for the act to be proclaimed law. “Islanders have told us they want Government to pursue cleaner sources of energy that can be produced right here in Prince Edward Island, reducing our reliance on imported energy and giving PEI some control over our own energy future,” said Minister of Environment, Energy and Forestry Jamie Ballem. “This is another significant step forward in reaching that goal. Prince Edward Island now has all the ground rules in place to allow us to encourage both large- and small-scale renewable energy developments.” The one section of the original policy that was not enacted at this point related to a robust target for renewable energy use. Minister Ballem said the section of the Renewable Energy Act requiring utilities to have the capability to obtain the equivalent of 100 percent of electrical energy from renewable energy sources by 2015 will be proclaimed at a later date. “Government remains committed to that target,” Ballem said. “We want to have at least 200 MW of renewable energy and we are well on our way to reaching that goal. However, there has been some concern that the current wording in the act does not accurately reflect that intent. So before proclaiming that section of the act, we simply want more time to consider whether the wording needs to be amended.” The policies that were enacted follow. Minimum Purchase Price Regulations: The Minimum Purchase Price Regulations establish the price utilities must pay for power produced by large-scale renewable energy generators — that is those capable of producing more than 100 kW of energy. The rate has been set at 7.75 cents per kWh with 5.75 cents of that a fixed rate and 2.0 cents a variable rate that may be adjusted annually to reflect changes in operating costs. The variable rate will be tied to the Consumer Price Index. “We are confident the minimum purchase price for renewables is very competitive — when you consider both the price increases that are projected for traditional sources of energy, and the price for renewable energy in other parts of the country,” said Minister Ballem. “In fact, recent requests for proposals for renewable energy projects in Quebec and Ontario have resulted in an average purchase price in excess of 8.0 cents per kilowatt hour.” The Province has consulted with PEI’s main utility in establishing the Minimum Purchase Price Regulations. Based on those consultations, Minister Ballem said he believes the minimum purchase price of 7.75 cents per kWh will be considered reasonable. “Government recognizes that the minimum purchase price cannot place an unreasonable burden on utilities, and therefore ratepayers,” Ballem said. “That was a key consideration when establishing the rate. We want to encourage development of renewable energy, but it also has to make economic sense for all parties involved.” The minimum purchase price of 7.75 cents is based on analysis of the operations of the North Cape Wind Farm and projections for the wind farm being developed in eastern Kings County. The Minimum Purchase Price Regulations will apply to wind projects until utilities meet the requirement to acquire at least 15 percent of electrical energy from renewable sources. The regulations will remain in effect for other renewable technologies such as biomass and solar energy, regardless of compliance with the 15 percent requirement. Designated Areas Regulations: The Designated Areas Regulations are designed to ensure that large-scale (more than 100 kW) wind farm projects take place in areas where development is economically viable. The criteria for identifying the Zones of Inclusion — areas where development may occur — was an average wind speed of 7.5 meters per second. The regulations do not mean that any development may proceed. Proposed projects must receive all necessary approvals and are subject to any existing development restrictions and the Environmental Impact Assessment process. They must also comply with requirements under the Planning Act Subdivision and Development Regulations for setbacks from buildings and other structures. Net-Metering System Regulations: The Net-Metering System Regulations make it more economically feasible for Island homeowners, small businesses or farmers who have an interest in generating their own electricity to install small-scale generating systems — those that produce 100 kW of energy or less. Under the regulations, any excess energy that small-scale generators supply to the electrical grid will be credited at the same price as they pay for power that they purchase from the utility. The Minimum Purchase Price Regulations, Designated Area Regulations, and Net-Metering System Regulations went into effect on December 31, 2005.


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