Opinion: Solar Energy Tax Rules from P.E.I.

Solar

November 9, 2017

A solar energy proponent on P.E.I. says Islanders who generate their own solar electricity are getting a good deal, despite rules from the Canada Revenue Agency that lead to government “taxing the sun that’s hitting your roof.”

Steve Howard is president of Renewable Lifestyles, a Summerside-based company that sells and installs household solar electric systems. While he doesn’t hold a seat in the provincial legislature, Howard has also been named the energy critic for the P.E.I. Green Party.

Most homeowners who install solar electric panels join the province’s net metering program.

Under that program, they feed excess energy into the provincial grid when their panels produce more than their home is using. In exchange, they receive credits to draw electricity back out of the grid when the sun isn’t shining.

Howard said the Canada Revenue Agency considers feeding that electricity into and out of the grid a financial transaction, even though, under P.E.I.’s system, net metering households never receive financial compensation for the electricity they generate.

Steve Howard is the P.E.I. Green Party energy critic and president of Renewable Lifestyles. (Submitted by Green Party of PEI)

That means homeowners have to claim the electricity they generate as income, and they’re also charged HST on the electricity they draw back out of the system, even if they’ve earned enough credits that they don’t pay for the electricity itself.

Howard said when he first installed his own solar photovoltaic (PV) system and saw his first electric bill, “this felt wrong to pay tax on power I produced … like paying tax on food I grew myself.

Howard said homeowners can takes steps to avoid the tax — at least for a time. By registering as a business they can claim back the HST they pay. They can also claim the cost of their solar panels against the income declared from the electricity generated.

But once the panels have paid for themselves, homeowners have to start paying income tax on the electricity they generate.

“Whenever my system has paid for itself and I’ve depreciated all the value of my system against the energy I’ve sent into the grid, I am going to end up paying income tax on sunshine that’s hitting my roof,” he said.

“I don’t agree with the idea of taxing the sun that’s hitting your roof. That’s the bottom line.”

Howard said the CRA’s rules make more sense in jurisdictions like Ontario and Nova Scotia, where homeowners can actually receive cash payments under net metering. But under P.E.I.’s system, they can’t.

Households taking part in P.E.I.’s net metering program never receive a cash payment for excess electricity they feed into the grid. But Steve Howard says CRA still considers the electricity as taxable income. (Randy McAndrew/CBC)

Howard said he’s tried to convince the CRA to change its policy, and he doesn’t think that’s likely to happen. So he’d at least like to see the P.E.I. government change its net metering program to allow homeowners to earn income from excess electricity they generate.

“That’s maybe the easy, small change that can be made is to offer full compensation for over-production.”

Another homeowner who participates in net metering said he feels he’s being “cheated” by the tax rules for net metering.

“My system cost $23,000.00 plus tax and I accepted that as part of the cost but I was actually shocked when I saw my first bill and realized I was being cheated, no other word for it,” Paul Brown told CBC News via email.

“This makes no sense but no levels of government seem interested in actually understanding and explaining the issue and then correcting it. If we are actually serious about private investment in ‘green power’ which is what should be encouraged, then we have to have governments at least be ‘fair’ with the tax system.”

The P.E.I. government recently commissioned a review of the province’s electrical grid, which government says could lead to changes to the province’s net metering program.

The CRA confirmed to CBC News that electricity transferred through a net metering program is considered a taxable supply and thus subject to HST/GST.

Maritime Electric says it has 157 P.E.I. customers enrolled in net metering.

original source: www.cbc.ca/news/canada/prince-edward-island/net-metering-solar-pei-hst-tax-1.4143624

 

Related Articles


Latest Articles


Changing Scene

  • Leviton Canada Announces Structural Changes to the Sales Organization

    Leviton Canada Announces Structural Changes to the Sales Organization

    January 16, 2025 Leviton Canada is pleased to announce structural changes to its Canadian Sales Department, effective January 1, 2025. These changes aim to enhance sales synergy, optimize resource allocation and strengthen their relationships with customers across the country. Jason Denstedt now assumes the role of Vice-President of National ED Sales, overseeing the national Electrical… Read More…

  • Nesco Announces New Sales Agent for Northern Ontario

    Nesco Announces New Sales Agent for Northern Ontario

    January 16, 2025 Nesco is pleased to announce the appointment of Sean Atkinson at Resilient Sales as their sales agent for Northern Ontario, effective January 1st, 2025. “Sean is replacing Steve Wallace, who after decades of providing tireless customer service and sales support is focusing on family and enjoying some well-deserved downtime in retirement,” commented… Read More…

  • ABB and Wieland Electric Partner to Redefine Efficiency in Modular Construction

    ABB and Wieland Electric Partner to Redefine Efficiency in Modular Construction

    January 15, 2025 ABB Electrification’s Smart Buildings Division and Wieland Electric have announced a strategic partnership to revolutionize modular and serial construction with advanced prefabricated electrical installation systems. The collaboration combines Wieland’s innovative connector technology with ABB’s extensive portfolio – including switches, sockets, installation boxes, energy distribution, and smart home solutions – to deliver plug-and-play… Read More…

  • ABB Expands Residential Energy Management Portfolio in North America with Lumin Acquisition

    ABB Expands Residential Energy Management Portfolio in North America with Lumin Acquisition

    January 15, 2025 ABB has announced the acquisition of Lumin, a U.S.-based pioneer and leading provider of responsive energy management systems, to expand its home energy management capabilities in the North American residential sector. The acquisition follows a strategic minority investment by ABB into the company in 2023. Financial terms of the transaction were not… Read More…