The review was requested after Maritime Electric notified the provincial government that the company had incurred higher-than-expected expenses for purchasing electricity over the past year and was planning a rate increase.

The review will ask IRAC to determine whether those expenses can be passed on to consumers under the province's Base Rate Adjustment Regulations.

"Government felt that, prior to these increases going into effect, we needed an independent look at the company's financial situation. Just over a year ago, the company indicated to us that there would be no rate increase. I was very disappointed when it was indicated that's no longer the case," said Minister Currie.

Government's request comes as a number of other provinces deal with electricity rate issues. Both the provinces of Nova Scotia and New Brunswick have proposed or are considering rate increases.

"We want to make sure that Island consumers are receiving the very best rates they can. We appreciate that power costs have risen significantly all over North America. But we want to make sure any rate increase for Islanders is completely justified," said Minister Currie.

The current regulations in Prince Edward Island were enacted to provide Island electricity consumers with reasonably priced electricity while at the same time allowing the utility to earn a reasonable return. The review will help Government to determine that the balance is being maintained.

The Island Regulatory and Appeals Commission will begin its work immediately.