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PUB hears arguments against Hydro rate increase

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Manitoba’s Public Utilities Board should reject Manitoba Hydro’s request for a 3.5 per cent rate request because it’s too rich for today’s times.

The three-member PUB panel was also told today that the Crown Utility should put more effort into a robust energy efficiency program to get Manitobans to cut back on their power consumption so that more electricity can be shipped to the United States for sale.

Hydro presentation

 Read Manitoba Hydro's presentation to the Public Utilities Board about the increase (1.22 MB .PDF)


The Green Action Centre, Manitoba Branch of the Canadian Consumers’ Association of Canada and the Manitoba Industrial Power Users Group (MIPUG) each made presentations today. Final arguments continue Wednesday.

Manitoba Hydro wants the PUB to approve the 3.5 per cent general rate increase effective April 1 to put more money into its back account ($197 million) as it prepares to build the $3.820 billion Bipole III transmission line — an environmental hearing for the project resumes March 4 — and the Keeyask and Conapawa generating stations, estimated to cost $6.220 billion and $10.192 billion respectively.

Manitoba Hydro is also asking for final approval of earlier interim increases approved by the PUB, including a two per cent increase effective April 1, 2012 and a 2.5 per cent increase effective Sept. 1, 2012.

Hydro says even with the increase and past increases over the past year, totaling 5.5 per cent, Manitobans pay the lowest for power in North America.

Included in Hydro’s request is for the PUB to release a $23-million pot of money that was created when the PUB ordered a one per cent rate claw back two years ago.

Manitoba Branch of the Canadian Consumers’ Association of Canada says that money rightfully belongs to rate payers and should be rebated. It also said Manitoba Hydro could also apply to have a portion of that money, but only if it uses it towards improving its energy efficiency programs.

The consumers’ association also says Hydro has not made a strong enough case for the 3.5 per cent increase, especially at a time when its retained earnings sit at a record $2.510 billion.

The Green Action Centre, on the other hand, supports the 3.5 per cent increase because of the recent hit the utility has taken on the export market and lower forecasted surplus power sales.

On Friday, Hydro released its third quarter results which showed it had a posted a net loss of $38 million for the first nine months of the fiscal year. Last year, it earned profits of $29 million during the same period.

The Green Action Centre also said it supported a $41-million annual expenditure by Hydro over the next three years to support its efficiency programs.

That might not be a bad idea.

A recent report by the American Council for an Energy-Efficient Economy found spending on energy efficiency upgrades puts more money into the economy than building new infrastructure for energy production.

MIPUG, which represents the biggest industrial consumers of electricity in the province, told the PUB it should reject the 3.5 per cent rate increase request as Hydro had not justified its need for the money above the total 5.5 per cent increase the PUB has already approved under the earlier rate requests made by Hydro.

It also called on the PUB to refund or credit to customers the $23 million sitting in a deferral account under the one per cent rate rollback.

"The 5.5 per cent increase over two years exceeds inflation, which is problematic for customers, but does lead to a predictable transition to the higher rates that may ultimately be required over the coming decade," MIPUG said in its submission.

At the beginning of Hydro’s 3.5 per cent rate application, it signaled that it wants increases of 3.95 per cent in each of the remaining 18 years of its 20-year financial forecast.

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