HST exemption on home heating oil should be phased out: report

The P.E.I. government should phase out the provincial HST exemption on home heating oil, according to a draft of the province's new energy strategy.

A second draft of the province's strategy was released this week by the P.E.I. Energy Corporation.

It says the exemption on the provincial portion of the HST on home heating oil, brought in when the province switched to the new taxation system in 2013, creates an uneven playing field when it comes to home heating, and provides an incentive to sustain the wrong kind of energy reliance.

Uneven playing field

"The intention of this reduction in taxes on oil was positive: to address the high cost of heating homes for a majority of Island residents, including low-income homeowners and renters," the report states.

"However, the reality is that subsidizing oil purchases does not align with the direction we wish to go as a province. It is not sustainable, and it supports fossil fuel imports."

The report recommends phasing out the exemption, "in a manner that does not adversely impact low-income Islanders and encourages uptake of alternative heating sources."

The report suggests the province move to a direct rebate on home heating costs for low-income residents, regardless of the type of fuel used. It also includes a recommendation that the province "develop incentives for Islanders to switch from oil heat to more sustainable options."

About-face on solar energy

This second draft of the new provincial energy strategy includes specific recommendations that government offer incentives to help homeowners in the province make the switch to solar energy.

That's an about-face from the first draft of the strategy which was criticized for shying away from solar incentives out of concern an uptake in households producing their own solar electricity could increase electricity rates for those that don't.

"Solar is a renewable energy source that provides local jobs and reduces imports. Therefore, we do not want to discourage it," the revised strategy states.

Other recommendations: cars, tides and wind

• Government create a new, independent "energy efficiency utility" to be responsible for reducing all types of energy consumption, rather than the current patchwork of different players responsible for reducing different types of energy usage, for example, Maritime Electric being responsible for reducing electricity consumption.
• Government re-introduce incentives to encourage Islanders to purchase electric vehicles. The report says there are only 40 electric vehicles currently registered on the Island, and when the previous government incentive for hybrid vehicles was cancelled with the introduction of the HST in 2013, "sales essentially halted."
• The report recommends the province develop two additional wind farms generating a combined 70 MW of power by 2025. The report says tidal power isn't currently feasible for P.E.I. It says tidal currents in the Northumberland Strait reach only 2 knots, rather than the flow speed of 4 knots required by present-day technology.
• The report recommends P.E.I. begin a program of vehicle emissions testing, similar to the testing done in Ontario.

One more public consultation on the second draft of the energy strategy is scheduled for June 29, with a final report expected to be made public around the end of July.

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