Analysis of Electric Rates on Prince Edward Island
Synapse conducted a detailed analysis of Maritime Electric Company's rate designs and cost of service methodologies, with a particular focus on the utility's declining block rate and revenue-to-cost (RTC) ratios. Synapse's analysis found that elimination of the declining block rate structure for the residential class is appropriate, and doing so would significantly enhance cost reflectivity and the residential RTC ratio. We also found that a separate rate class for large farms is reasonable and warranted, but that the lack of interval metering data makes the development of cost-reflective rates for this group of customers difficult. Finally, we recommended that the method for determining the residential service charge be reexamined, as the existing methodology is is not rooted in cost causation and does not promote energy conservation, thereby contravening two important rate design principles.