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Hydro CEO sees crisis if $20-billion plan stalls

By: Bruce Owen

Posted: 09/20/2012 1:00 AM | Comments: 0

Manitoba Hydro's Scott Thomson: 'What appears to be cheap today may not be so cheap tomorrow.' (WAYNE GLOWACKI / WINNIPEG FREE PRESS ARCHIVES) Photo Store

Manitoba Hydro's new CEO Scott Thomson came out swinging Wednesday, telling a jam-packed crowd the province risks rolling blackouts and a potentially crippling hit to the economy if it doesn't go ahead with a $20-billion plan to build two new dams and the Bipole III transmission line.

In his first major speech since replacing Bob Brennan seven months ago, Thomson told the Winnipeg Chamber of Commerce luncheon audience the plan also includes replacing 117,000 wood hydro poles and 20 aging city substations, including spending $50 million on the oldest one on King Street.

Hydro's plans have been condemned by critics, including Progressive Conservative Leader Brian Pallister, but Thomson made it clear domestic demand is, in part, driving Hydro's plan to increase its generating capacity.

"To put this in context, the capacity of the new Wuskwatim facility (near Thompson) at 200 megawatts will be fully consumed in the next 21/2 years," Thomson said. "To supply the growth, we're anticipating requiring an additional major resource just after 2020."

That's the 695-megawatt Keeyask generating station on the Nelson River, in which Hydro is negotiating a partnership with four First Nations.

"We're also planning the 1,485-megawatt Conawapa station on the Nelson River, with a planned in-service date of 2025," he said.

Thomson said export deals already signed with Wisconsin and Minnesota will help cover the cost of the two new dams, despite the abundance of cheaper shale gas south of the border as an alternate fuel supply.

"What appears cheap today may not be so cheap tomorrow," he said, adding growing demand for natural gas in the U.S. and around the globe will increase prices, making stable hydro power more attractive.

However, Manitobans will pick up some of the expansion costs through higher rates, he said.

The Public Utilities Board recently approved a 2.5 per cent Hydro rate increase on an interim basis starting this month. Hydro wants another 3.5 per cent increase for April of next year. Thomson said Hydro's current forecasts call for annual 3.5 per cent increases over the next few years.

"No one wants to pay higher prices, myself included," he said. "But I compare this to B.C. which will see an artificially restricted 17 per cent increase over the next three years and which starts from a higher base price."

He said in the 1970s, during Hydro's last major expansion, residential rates went up substantially, as much as 20.6 per cent in 1974.

In his speech, he also touched on the controversial Bipole III transmission line project, which heads into environmental hearings at the Clean Environment Commission Oct. 1.

Thomson said the estimated $3.28-billion project, to run down the west side of the province, is designed to bring more reliability to Hydro's system.

bruce.owen@freepress.mb.ca

Republished from the Winnipeg Free Press print edition September 20, 2012 B2

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