January 2, 2006

PEI proclaims Renewable Energy Act after approving accompanying regs

On December 22, the Prince Edward Island government proclaimed the provincial Renewable Energy Act, with the exception of one section, and approved three sets of regulations which will govern key aspects of renewable energy development in the province.

The legislation, passed during the fall 2004 session of the Legislative Assembly, requires utilities to acquire at least 15% of electrical energy from renewable sources by 2010. Environment, Energy and Forestry Minister Jamie Ballem noted that the section of the Act requiring utilities to have the capability to obtain the equivalent of 100% of electrical energy from renewable energy sources by 2015 will be proclaimed at a later date.

The newly-promulgated regulations, which enabled the act to be proclaimed, include the Minimum Purchase Price regulations, Designated Area regulations, and Net Metering System regulations.

The Minimum Purchase Price regulations establish the price utilities must pay for power produced by large-scale renewable energy generators, i.e. those capable of producing more than 100 kilowatts (KW) of energy. Following consultations with PEI's main utility, the rate has been set at 7.75 cents per kilowatt-hour (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.

The minimum purchase price of 7.75 cents is also based on analysis of the operations of the North Cape wind farm and projections for the wind farm being developed in eastern Kings County. These regulations will apply to wind projects until utilities meet the requirement to acquire at least 15% of electrical energy from renewable sources. They will remain in effect for other renewable technologies such as biomass and solar energy, regardless of compliance with the 15% requirement.

The Designated Areas regulations are designed to ensure that large-scale wind farm projects (more than 100 KW) are constructed in areas where development is economically viable. The prime criterion for determining Zones of Inclusion, i.e. suitable areas for development, was an average wind speed of 7.5 metres 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 as well as 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.

The Net Metering System regulations are intended to make it more economically feasible for PEI homeowners, small businesses or farmers who have an interest in generating their own electricity to install small-scale generating systems, i.e. 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 three sets of regulations came into effect December 31, 2005.

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