One of the colder winters in memory is benefiting Manitoba Hydro not only in the pocketbook, but in its argument to build two new northern dams.
The Crown utility said in its third-quarter report released Friday its consolidated net income sat at $72 million for the first nine months (to Dec. 31) of the 2013-14 fiscal year, compared with a net loss of $38 million for the same period last year.
Driving that increase is higher domestic and export electricity sales, Hydro said.
On the export side, revenue was $338 million, up 21 per cent ($58 million) from the same period last year. That reflects favourable water conditions to spin turbines and higher export prices. Energy sold in the export market was 9.2 billion kilowatt-hours, compared with 7.6 billion kilowatt-hours sold in the same period last year.
On the domestic side, revenues from electricity sales in Manitoba totalled $990 million for the nine-month period, up nine per cent ($84 million) from the same period last year. Hydro said the increase is because of recent electricity rate increases and colder weather resulting in higher heating loads.
December also saw Manitoba Hydro set a new record for electrical demand in the province, when the system saw a peak demand of 4,632 megawatts (MW) on Dec. 31. Increased heating load due to the colder than average weather, combined with a growing population and economy, were behind the new record. For comparison, Hydro's total installed generating capability is 5,675 MW.
The third-quarter report showed Hydro's results included a $78-million profit on the electricity side and a $6-million loss on the natural gas side. The loss in the natural gas sector should be recouped over the remainder of the winter heating season.
Hydro said if things stay as they are, it's forecasting net income should exceed $130 million by budget year-end March 31.
Hydro also repeated what the North American energy sector has seen this winter -- natural gas commodity prices remain volatile as heating demand puts pressure on supply. That uncertainty of where natural gas commodity prices will go in the coming years in part, Hydro says, gives more weight to the construction of the Keeyask and Conawapa generating stations over the next two decades.
The third-quarter report comes as Hydro ramps up its PR machine to tell its side of the story in the debate over the two dams in advance of the March 3 start of a Public Utilities Board hearing into whether they are needed. Hydro and the Selinger government say the two stations must be built to meet growing domestic demand and to sell more power to the northern United States. Hydro also has a $100-million deal to sell electricity to Saskatchewan over the next eight years and inked a memorandum of understanding on a potential 500-MW sale to start after 2020.
"We're very confident in our plan," Hydro spokesman Scott Powell said. "We welcome the (PUB) review and we believe it is the best way to meet the needs going forward."
The two dams and accompanying transmission lines have faced a barrage of criticism as being too expensive and based on faulty projections. Critics say the province would be wiser to build a cheaper natural gas-fired generating station instead of spending an estimated $16.5 billion on the two dams. Pending approval, construction of the 695-MW Keeyask station is scheduled to start this year, with an expected in-service date of 2019.
Hydro says while natural gas generating stations have lower upfront construction costs compared with hydroelectric generating stations, they have a significant fuel cost and a shorter service life. Hydroelectric generating stations have almost no fuel costs and can operate for 100 years or more.
The utility makes that argument in Seven Things You Should Know About Manitoba's Energy Future, an infographic recently posted on its website.
Powell said the corporation has condensed about 5,000 pages of its submission to the PUB on why the two dams are needed into easily-digested graphics. It was initially designed for the utility's roughly 3,500 employees.
"We're just about to start a Twitter campaign to drive people to it because we really think it takes that development plan and distills it down to something that's easily understandable, explains what our plan is and why we think it's a good idea, and why we think it's the best solution going forward," Powell said.