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Power line to U.S. 'ill-advised' for Manitoban rate-payers: Pallister

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Opposition Leader Brian Pallister charged today the NDP is recklessly "Americanizing" Manitoba Hydro at the expense of Manitobans under its plan to build two new dams and a new transmission line to the United States.

"The fact is what we’re guaranteed with here under the NDP’s agenda is a power-aid program," he said. "We get to do all the sweating up here and they get the juice down there."

Pallister said an example of that is that the Crown utility wants approval to build and co-own a proposed transmission line that will run from Winnipeg to Duluth, MN. Under a proposal now being studied by the Public Utilities Board, Manitoba Hydro will own 49 per cent of the 500 KV transmission line with Minnesota Power owning the rest.

The PUB has heard that Hydro’s stake in the line was needed so that it would be upgraded, at Hydro’s request, from the originally-proposed 230 kilovolts to 500. The larger line would allow Hydro to ship more power into the Wisconsin market and import more power to Manitoba from U.S. utilities when needed.

Hydro’s involvement in the line has been described at the hearing as being "an owner of last resort" in order to see it upgraded.

"Who says Manitoba Hydro had to get it done?" Pallister said. "This government, obviously, is driving Manitoba Hydro’s agenda and pushing Manitoba Hydro to make deal that may well be ill-advised for Manitoba ratepayers."

The PUB has heard this week that under a confidential deal with Minnesota Power to build the transmission line, Manitoba Hydro -- at this stage -- will be responsible for 66 per cent of the line’s construction and maintenance. That’s because Minnesota Power does not need the full capacity of the line so it only wants to pay for the portion it will use.

"So with regard to the question of who will pay, Minnesota Power intends to rate-base the cost of their 250-megawatt share of the large (750 MW) interconnection," Hydro's division manager of power sales, David Cormie, told the PUB on Monday. "That means their customers, through their rate-recovery mechanisms with their customers, will recover the cost of their investment.

"That leaves Manitoba Hydro with the obligation to pay for the balance of 66 per cent, including the cost of providing the transmission services to Wisconsin Public Service. However, as we intend to be an owner only of last resort, we are making provisions in these discussions on the business relationship so that a third party can step in and participate."

Cormie also said despite Hydro’s 66 per cent involvement in the 850-kilometre line, it’s still a benefit to the utility because it provides it with an electricity pipeline into the American Midwest.

"Under the contracts dependent on the line, Manitoba Hydro's energy gets shipped first," he told the PUB. "Whether it's dependable or surplus fixed-priced energy or additional energy that Manitoba Hydro intends for the spot market, we own the transmission rights in Canada. They may own the transmission rights on the U.S. side associated with their ownership position, but it's always Manitoba Hydro's energy that will flow on that -- on -- under those firm rights."

He also said it makes sense to build a larger-capacity transmission line now, instead of a smaller one, because having to add another line to Minnesota in later years will be more expensive and more scrutinized by regulators.

Pallister asked if American investors didn’t want to get involved in the line in its earlier stages, why they would get involved after it’s built.

"The fact is Manitoba Hydro has entered into a commitment that obligates Manitoba Hydro ratepayers to subsidize U.S. purchasers of hydro," he said.

Pallister also questioned Hydro’s expectations, and the government’s, that by building the proposed Keeyask and Conawapa generating stations the province will reap billions selling power to Americans as U.S. utilities close old, carbon-belching coal plants and add hydro power as part of state-mandated plans to use more renewable energy.

He said experts to testify at the ongoing PUB hearing will say Hydro’s expectations are overblown.

The PUB is examining whether there are alternatives to building the $6.5-billion Keeyask and $10.7-billion Conawapa generating stations, and if the line to Duluth is needed.

It’s to file its report to government June 20.


Updated on Thursday, March 13, 2014 at 2:08 PM CDT: Corrects figure re: $6.5-billion Keeyask dam

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