Hydro rates for all consumers are going up effective May 1.
The Manitoba Public Utilities Board today approved a 3.5 per cent Manitoba Hydro rate hike. As well it made permanent interim increases of two per cent granted on April 1, 2012 and 2.4 per cent granted on Sept. 1.
In a ruling today, the PUB said the main reasons for permitting the latest rate increase included:
- Reduced revenues from export sales;
- Higher operating costs from the new Wuskwatim Generating Station;
- Higher operation, maintenance and administration costs;
- Funding of initiatives to make electrical service more reliable; and
- To improve Manitoba Hydro’s long-term financial standing.
However, the PUB ruled the Crown corporation must place revenues from part of the new rate increase – 1.5 percentage points worth – into a separate account to "mitigate rate increases" when the new Bipole transmission line comes into service. And it said Hydro should tighten its belt to make up the difference.
"Overall net export revenues projected by Manitoba Hydro over a 20-year forecast have declined by over $6 billion in the current forecast" from earlier forecasts, the PUB said. "Lower revenues mean increased borrowing to pay for capital expenditures."
The board said it is concerned with the "projected future deterioration of Manitoba Hydro’s financial targets," especially its debt-equity ratio that will fall to 90:12 from the current 75:25 by 2021 – even with projected annual rate hikes of about four per cent.
"This deterioration will put Manitoba Hydro in a weaker financial position given its planned capital spending over the next two decades," the PUB said.
The board said electricity rates are forecast to more than double from current levels over the next 20 years, rising at about twice the forecast level of inflation.
The PUB said it therefore believes that Hydro should boost programs to help consumers reduce their consumption.