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Bipole III will cost $1B more, says Hydro's latest estimate

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BIPOLE III will now cost about $1 billion more than originally believed, according to a new estimate released by Manitoba Hydro Thursday.

Hydro president and CEO Bob Brennan said the new estimate is now $3.28 billion, up from the original estimate of $2.24 billion.

The estimated cost has a number of contingencies built in, Brennan said, to account for unforeseen circumstances that could affect the cost during construction. The high-voltage line is to be built by October 2017.

"Once we get a contract out, we'll see how good we are," he said.

Brennan said the new estimate should put to rest, to some extent, the political debate surrounding the project in the past few months and concerns about the project's rising cost, partly due to documents leaked from Manitoba Hydro to the Opposition Progressive Conservatives.

Since last October, the cost of Bipole III has been estimated as high as $4.1 billion and a more recent estimate of $3.9 billion.

"Manitoba Hydro does not like all these crazy numbers floating around," Brennan said. "We're not happy about that at all. It's just not good for us."

He said the revised estimate is based on independent experts' review and a detailed internal reassessment of the project.

Driving up the estimate are higher costs for two converter stations, the wires themselves and design changes required to meet new reliability standards. Hydroelectric power is converted from alternating current (AC) to high-voltage direct current (DC) for transmission, then back to AC for consumer use. The equipment for the conversions, to be built at either end of the line, would be needed whether Bipole III is routed west of Lake Manitoba, as now planned, or east of Lake Winnipeg.

Conservative Leader Hugh McFadyen has said if elected premier, he would cancel the 1,384-kilometre western route and build the line down the shorter, less expensive eastern route.

McFadyen said Thursday he expects the cost of Bipole III to rise even more, as he's now heard four different estimates for the project.

"It's a big number, no matter how you look at it," he said. "We know from past projects that every time Hydro sets a number for those projects, it comes in over budget. We don't expect Bipole to be any different."

The new estimate for Bipole was to be released publicly later this spring, but Brennan said an effort was made to get the work done sooner to clarify the issue in light of leaked Hydro documents.

He downplayed a suggestion Hydro sped up the process in advance of the new legislative session April 12. Premier Greg Selinger and Finance Minister Rosann Wowchuk have been under attack by the Conservatives on Bipole III's cost and route. Brennan has said for several months the cost of Bipole III is expected to rise because of the rising expense of converter equipment at either end of the line.

The line will include two new 2,000-megawatt high-voltage, direct-current converter stations -- Riel near Winnipeg and Keewatinoow near Gillam.

The new line allows Manitoba Hydro to build the Keeyask and Conawapa generating stations, adding 2,000 megawatts of additional power generation capacity. That allows Hydro to export more electricity to the United States.

bruce.owen@freepress.mb.ca

Republished from the Winnipeg Free Press print edition April 1, 2011 A3

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