Board rejects Hydro’s request for rate hike

Hey there, time traveller!
This article was published 30/07/2011 (5463 days ago), so information in it may no longer be current.

The Public Utilities Board expressed concern Friday about rising projected costs of Manitoba Hydro megaprojects and raised doubts about the value of its U.S. export contracts while denying the utility a rate hike.

In a 111-page ruling, the PUB said it is concerned rising capital costs and soft export revenues due to a weakened American economy could cause future hydro rates in Manitoba to rise far beyond what is currently projected.

The regulator also noted Hydro has spent hundreds of millions of dollars on preliminary work for unapproved projects, such as the proposed Keeyask generating station in the north.

The PUB and Hydro are currently locked in a court battle over whether the utility should turn over details of its sales contracts with American utilities. Hydro claims these are commercially sensitive documents while the regulator has argued it can’t assess the utility’s financial position without them.

Hydro had requested a 2.9 per cent domestic rate increase for both 2010 and 2011. The PUB had granted interim rate increases of 2.9 and 2.0 per cent respectively for those years. On Friday, it denied the final 0.9 per cent rise — representing revenue of roughly $10 million — that would have taken effect Aug. 1. It also refused to make the previous interim orders permanent.

Hydro president Bob Brennan said the utility would find a way to manage without the hoped-for increase. He said other factors, such as weather, can account for even bigger swings in revenues.

“In the whole scheme of things, it’s not the end of the world,” he said. However, he said he found it puzzling the PUB refused to make permanent the two previous rate increases.

Brennan also defended Hydro’s capital-spending plans, noting the province has promised a major review of them.

Hydro’s newest dam, the $1.6-billion Wuskwatim generating station comes online next fall. On the drawing board is the $3.28-billion Bipole III transmission line to be built by 2017-18, the $5.5-billion Keeyask generating station to see first power by 2019-20 and the $7.7-billion Conawapa generating station to see first power by 2023-24.

Brennan said he, too, is concerned about rising projected costs for some of these projects. But he said hydro generating stations have proven to be good investments “as long as you can afford to build them.”

larry.kusch@freepress.mb.ca