Prince Edward Island’s utility regulator allowed Maritime Electric to recover 90 per cent of its Hurricane Fiona restoration costs from customers, but left shareholders responsible for the remaining 10 per cent because inadequate vegetation management had increased the cleanup burden.
The Island Regulatory and Appeals Commission’s June 5, 2026 decision, Order UE26-04, Docket UE21505, approved $17.37 million in capital costs, $13.77 million in operating costs and $5.94 million in financing costs. It refused to let the utility earn a return on the operating and financing portions.
A follow-up order issued July 29, Order UE26-07, approved the resulting rate adjustment for electricity consumed from August 1, 2026. The commission put the annual cost impact at approximately 3.1 per cent for a benchmark residential customer using 1,000 kilowatt-hours a month, until the approved costs are recovered.
The June ruling is under appeal to the Court of Appeal, according to the commission’s official electricity-regulation page.
Emergency response accepted, full recovery refused
Maritime Electric sought to recover about $41.2 million: $19.3 million for capital work, $15.3 million in operating expenses and $6.6 million in carrying costs forecast to April 2026. Its earlier accounting deferral had not decided whether all those costs could ultimately be charged to customers.
Fiona left approximately 83,200 Maritime Electric customers without power in September 2022. The company mobilized hundreds of line and vegetation-management crews. The commission expressly praised the front-line restoration work and accepted that the utility’s emergency plans, materials and response arrangements were prudent.
But a utility’s duty to restore service does not automatically make every claimed expense recoverable. Under the Electric Power Act, Maritime Electric had to establish that its costs were reasonable and prudent. The regulator had to protect customers while allowing the utility to recover appropriate costs and earn a fair return on invested capital.
Affordability alone could not justify disallowing prudent expenses. The commission therefore examined whether the claimed amount included work that should have been done before the storm.
Tree-management evidence proved decisive
Just months before Fiona, Maritime Electric had told the regulator that its vegetation-management program needed urgent investment. Its earlier filings identified extensive line sections requiring attention and acknowledged that inadequate trimming could worsen reliability and increase costs during major storms.
The company argued that trees outside its permitted rights-of-way caused nearly all the infrastructure damage. It could not freely cut trees on private land, and it maintained that more prudent vegetation management would not have prevented Fiona’s damage.
The commission accepted those limits and the exceptional severity of the storm. It also recognized the company’s efforts to obtain broader tree-management permissions. An independent technical expert supported much of the emergency response.
However, the expert also concluded that preventable tree contacts had increased the restoration effort. Maritime Electric’s witness acknowledged that unattended vegetation within the rights-of-way could have added to cleanup costs included in the application.
The company had not tracked the source of tree damage sufficiently to substantiate its estimate that 99 per cent came from outside its rights-of-way. Nor had it separated the cost of repairing damaged infrastructure from the cost of restoring outages. The commission would not resolve those evidentiary gaps in favour of the company that bore the burden of proving its claim.
It found that some restoration costs more likely than not reflected vegetation that should already have been managed. The 10 per cent reduction was a regulatory assessment of a reasonable disallowance, not a measured finding that exactly 10 per cent of storm damage had one particular cause.
Different treatment for assets and operating expenses
The approved capital costs can be recovered over the lives of the replacement assets, with a return on that invested capital. The operating and carrying costs are recoverable over eight years, rather than the five years Maritime Electric proposed, to moderate the annual impact on customers. The commission acknowledged that stretching repayment increases financing costs.
Those deferred operating and carrying costs cannot be placed in the rate base to earn an additional return. The disallowed amounts, and further financing costs attributable to them, cannot be recovered from customers. The company was directed to account for the disallowance as a shareholder responsibility.
In July, the commission accepted the company’s compliance filing and its auditor’s confirmation that the reduction had been properly applied. It approved implementation of the adjusted rates and required monthly reporting on recovery and the remaining balance.
The decision also requires regulatory approval for the treatment of any later government funding related to Fiona. Such funding cannot be used to cover the costs disallowed from customer recovery.
