  We present the results of the first spectroscopic observations of two
planetary nebula (PN) candidates in the Local Group dwarf irregular galaxy
IC10. Using several spectral classification diagrams we show that the brightest
PN candidate (PN7) is not a PN, but rather a compact HII region consisting of
two components with low electron number densities. After the rejection of this
PN candidate, the IC10 planetary nebula luminosity function cutoff becomes very
close to the standard value. With the compiled spectroscopic data for a large
number of extragalactic PNe, we analyse a series of diagnostic diagrams to
generate quantitative criteria for separating PNe from unresolved HII regions.
We show that, with the help of the diagnostic diagrams and the derived set of
criteria, PNe can be distinguished from HII regions with an efficiency of
~99.6%. With the obtained spectroscopic data we confirm that another, 1.7 mag
fainter PN candidate (PN9) is a genuine PN. We argue that, based on all
currently available PNe data, IC10 is located at a distance 725+63-33 kpc
(distance modulus (m-M) = 24.30+0.18-0.10).
