What IRAC is, and how it works

The Island Regulatory and Appeals Commission is an innocuously named institution that has its hands on the controls for a lot of the money P.E.I. residents spend every year.

From gas prices to rent to car insurance, electricity and sewer and garbage collection rates — pretty much anywhere the province sees a need to regulate prices — the first stop is the Island Regulatory and Appeals Commission, or IRAC, as it is commonly known.

The commission was established in 1991 with the amalgamation of several different agencies playing the regulator role in disparate areas: the Public Utilities Commission, the Land Use Commission, and the Office of the Director of Residential Rental Property.

Commissioners are appointed by cabinet, and IRAC delivers an annual report to the Department of Education.

Since 1991, IRAC has added other responsibilities. Here's a brief breakdown of what it does:

Petroleum

IRAC's most visible role is probably setting the price of gasoline, diesel, heating oil and propane under the authority of the provincial Petroleum Products Act.

This happens every Friday, but there can be unscheduled changes when market conditions are changing quickly.

On its website, IRAC lists regulated prices for gasoline going back to January 1998 (when gas was about 60 cents a litre).

Back then, IRAC set the price monthly, but increasingly volatile markets saw reviews happen more frequently: twice a month starting in 2004, and then once a week starting in 2019.

Prices are based on what's known as the rack price. In P.E.I., that's the price charged to trucks at the oil tanks on the shore of Charlottetown Harbour. Added to this are various taxes, and profits for wholesalers and retailers.

The rack price is typically higher than benchmark prices used on the mainland, which are set in New York. Most of the time, that leads to higher prices for Islanders.

You can find a more detailed explanation of how that works here.

Residential property rental

IRAC attracted a lot of attention last fall for its role in rent control.

Every year, the regulator sets a maximum allowable percentage for rent increases. In October, it announced a record high increase, up to 10.8 per cent for units heated with oil. The increase was ultimately overruled by the housing minister.

Those were unusual — perhaps unique — circumstances. Normally, IRAC is empowered to administer the rules and regulations laid out in the Residential Tenancy Act.

Unlike most other jurisdictions, rent control in P.E.I. is attached to the unit, meaning that even if an apartment changes hands, the maximum allowable increase still applies. The new tenant may not be charged more than the old tenant would be.

Landlords may apply to IRAC for an increase above what's normally allowable. Typically, in order for this to be approved, the landlord must show the property faces increased expenses.

While IRAC controls rents, it does not actively police them. Tenants who believe they are paying an illegally high rent must make a complaint to IRAC before the commission will act on it.

If there's a dispute between a landlord and tenant, whether it's related to rent or required repairs or eviction, that dispute goes to IRAC for a hearing and decision.

Electricity

When it comes to electricity, IRAC has power over more than just rates.

Under the Electric Power Act, it regulates the generation, distribution and transmission of electricity by Maritime Electric. 

That includes approving rates, but also capital budgets, transmission line changes and energy efficiency programs.

While the industry is highly regulated, the commission's goal is to set fair rates for customers while letting Maritime Electric earn a fair return on its investment.

Auto insurance

One of the lesser known rates under IRAC control is auto insurance premiums.

Unlike petroleum prices, these are not published. They vary considerably from one company to another — and even more from driver to driver and from vehicle to vehicle.

But every auto insurance company must make an application to the commission annually for approval of its premiums. These, according to the IRAC website, "must be based on a risk classification that is just and reasonable."

If you are concerned that there is something wrong with the rates you are paying you can make a complaint to IRAC, but the commission encourages Islanders to make an effort to sort out any issues with the insurance company first.

Land protection

IRAC is charged with administering P.E.I.'s Lands Protection Act.

This includes monitoring the holdings of large landowners. Under the act, the amount of land owned or controlled by anyone is limited to 1,000 acres (400 hectares) for individuals and 3,000 acres (1,200 hectares) for corporations.

These calculations can be complicated. Some kinds of land are exempt, and who controls a particular parcel of land can be difficult to determine given sometimes complex leasing arrangements.

People with aggregate land holdings of more than 750 acres (300 hectares) and corporations holding more than 2,250 acres (900 hectares) must file a land holding disclosure statement annually.

The Lands Protection Act also regulates land holdings by non-residents. Land purchases or lease agreements of more than five acres (two hectares) require prior approval from cabinet. IRAC will review applications and make recommendations.

Municipal governments

IRAC advises the government on proposals to establish, restructure, or dissolve communities.

This is not something IRAC commonly deals with, but it did address and make recommendations on a number of amalgamations in 2018.

Water and sewer

If you live outside of P.E.I.'s four largest communities but you are hooked up to municipal water and sewer, IRAC must approve your water and sewer rates.

Charlottetown, Summerside, Stratford and Cornwall are exempt from this regulation. In those cities and towns, setting the rates is the sole responsibility of the local council.

Communities where IRAC does approve the rates include Three Rivers, Souris, Victoria, and Kensington.

Waste management

In P.E.I., garbage is collected and processed by the Island Waste Management Corporation.

Households on the Island are charged by IWMC annually, which arrives as a line on your property tax bill.

And, yes, that charge must be approved by IRAC.

Given high inflation on the Island, the provincial government intervened on waste management fees last year as it did with rent.

The province provided a grant, which it said would be one-time only, to cover the increase in fees, meaning households saw no increase in their bills.