Gas margins for P.E.I. retailers up half-cent in 2020

Islanders are paying an extra half-cent per litre of gas at the pumps in 2020, thanks to a permanent increase in retail margins ordered by the Island Regulatory and Appeals Commissionas of Jan. 1.

In an order dated Dec. 19, IRAC ruled the minimum retailer mark-up for self-serve gas and diesel should increasefrom 5.5 to 6 cents per litre. The commission ruled the maximum mark-up increase from 6.5 to 7 cents per litre.

The increased margins were reflected in IRAC's first regularlyscheduled pricing order of the new year, issued Jan. 3.

This was the first review of retail fuel margins by IRAC since 2012.

Among the submissionsthe commission received as part of its review was a submission from a group of retailers requesting an increase in allowable margins from 2.02 to 2.95 cents per litre.

In its order, IRAC said there was "very little information" included in that submission "to justify the request for such an increase."

The commission sent its own questionnaire to retail outlets and engaged the accounting firm of Fitzpatrick & Co. to determine whether a change in margins was justified.

In its order IRAC also referenced a report commissioned by the New Brunswick Energy and Utilities board, which recommended a margin increase of 0.3 cents per litre in that province.

Full-serve can now compete at self-serve prices

IRAC didn't change the maximum mark-up for full-serve fuel, but it did decrease the minimum mark-up to put it in line with the minimum for self-serve fuel.

The commission said it could find "very little justification" for the previous practice of setting the minimum margin for full-serve two cents higher than the minimum for self-serve.It calledthat an "intrusion into what otherwise would be a competitive market," allowing retailers to offer full-serve fuel at self-serve prices.

According to the commission, there are 31 outlets across the province that offer full-serve fuel.

While the new margins pushed up pump prices, that was temporarily offset by a decrease in the provincial gas tax of 1.2 cents per litre on gas and 1.7cents per litre on diesel which also kicked in Jan. 1.

Those decreases will be offset by increases in the province's carbon levy of 2.2 cents per litre on gas and 2.7cents per litre on diesel, which come into effect Apr. 1.

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