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Manitoba Hydro’s Rate Increase Exceptional, But Unacceptable

February 17, 2018 8:19 AM | Columns

By Kate Jackman-Atkinson, Neepawa Banner & Press

Hydro Tower

A hydro tower is seen in Toronto on Wednesday, November 4, 2015. (THE CANADIAN PRESS/Darren Calabres)

NEEPAWA, Man. — Public hearings are currently underway and their outcome will determine how much Manitobans will be held responsible for past government action. Right now, the province’s Public Utilities Board is hearing arguments for and against an increase in Manitoba Hydro rates, which Patti Ramage, Manitoba Hydro’s legal council, called “exceptional.”

The proposed increase calls for rates to rise 7.9 percent per year until 2023/2024, the increases would then fall to what Hydro calls “sustainable” levels. The cumulative effect of those increases will see rates rise close to 60 percent above current levels.

In early January, a panel of ratepayers stepped forward to oppose the magnitude of the proposed increases. Organized by the Manitoba branch of the Consumers Association of Canada, Keystone Agricultural Producers and Winnipeg Harvest, the panelists argued that the increases were too much, too quickly and would have a detrimental impact on farmers, pensioners and low-income Manitobans, in particular. The Association of Manitoba Municipalities has also registered its concerns. Many municipalities own and operate high consumption facilities, such as arenas and recreation complexes, and the proposed rate increases could be disastrous.

The reasons why Hydro needs more money aren’t surprising; the Crown corporation has two expensive projects on the go. The company’s 2017 annual report highlighted the findings of a recent review, saying, “The results of this review were troubling. Manitoba Hydro had initiated massive capital projects — the Bipole III Reliability Project, which had been directed along a more expensive western route, and Keeyask Generating Station — under conditions which would drive the corporation’s debt-to-equity ratios to such a leveraged position that Manitoba’s overall credit rating would be put at risk. Manitoba Hydro’s debt is set to double.”

When you add to these capital projects the risks of declining prices in the export market, potential interest rate hikes, potential cost overruns and ongoing risks, such as drought, it’s easy to see why the board and management find themselves asking for more money.

But the problems don’t just stem from two large projects being undertaken simultaneously. For many years, provincial governments have pulled money from the Crown Corporation, most notably in water rental and loan guarantee fees. In 2017, the province collected $122 million in water rental fees, which are charged based on the volume of water flowing through the corporation’s hydroelectric dams, as well as $136 million in debt guarantee fees. Both of these amounts were up from 2016. These cash grabs, which don’t correspond to an actual cost incurred by the government, have been collected for a number of years.

Those who have spoken out at the PUB hearings don’t oppose a rate hike, but they object to the amount and the time frame, especially when the corporation has done little to convince Manitobans that they have done everything else that they can. Hydro is a murky corporation with a recent history that isn’t high on examples of being responsive to the wishes of Manitobans and a lack of transparency is an issue that comes back time and again.

Last week, the coalition once again presented to the PUB and this submission included input from experts hired to look at the rate increases and Hydro’s finances. These experts found that a 2.95 percent increase would meet Hydro’s needs, without unduly impacting Manitobans.

In the end, Manitoba Hydro is owned by Manitobans and one way or another, we will be paying for any challenges the company faces. But ratepayers don’t want to be treated like an ATM and don’t feel they should bear the brunt of poor planning and government greed.