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Hydro signs U.S. power deal

Will justify need to build Conawapa dam, premier says

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A deal the province says will trigger the proposed Conawapa generating station involves two export agreements with Green Bay-based Wisconsin Public Service (WPS).

In a news release today, the province says the first sale, running from 2016 to 2021, is for 108 megawatts of firm power. The second is for 308 MW of firm power for up to 10 years and would require electricity produced by Conawapa on the Nelson River beginning in 2027.

The government says the deal brings Manitoba Hydro's total signed export contracts since 2010 to more than $9 billion.

In the statement, Premier Greg Selinger said the details of the sale's financial arrangements will be filed with the Public Utilities Board as part of its review of the Crown corporation's plan to build the Keeyask generating station, also on the lower Nelson River, and a transmission line to run from south of Winnipeg to Minnesota. The hearing starts Monday.

A previously announced 100-MW sale to WPS is scheduled to run from 2021 to 2026, bridging the gap between the two new deals, the province says. The 308-MW sale announced today also requires the 500,000-volt Manitoba-Minnesota transmission line.

Selinger is to speak on Conawapa today at the Canadian Energy Innovation Summit being held in Toronto. He is scheduled to speak at about 11:45 a.m. Manitoba time. The link (you have to register) to watch it live is here.

WPS, a wholly owned subsidiary of Integrys Energy Group, Inc., is an investor-owned electric and natural gas utility headquartered in Green Bay, Wisconsin. It serves approximately 443,000 electric customers and 321,000 natural gas customers in residential, agricultural, industrial, and commercial markets. It also provides electric power to wholesale customers. The company's service area includes northeastern Wisconsin and an adjacent portion of Upper Michigan

"If approved by the Public Service Commission of Wisconsin, the agreements we signed with Manitoba Hydro are going to help WPS continue to offer our customers long-term access to an affordable, reliable supply of carbon-neutral electrical energy at stable prices," said Chuck Cloninger, president of WPS.

In a statement, Scott Thomson, president and CEO of Manitoba Hydro, added that the deals show the value of developing hydroelectric facilities in Manitoba ahead of when they are required to meet domestic load if export sales can help minimize the cost to ratepayers.

"Export opportunities are fundamental to our preferred development plan," Thomson said in the statement. "The agreement we are announcing today validates our plan, and means all Manitobans will continue to benefit from exports through enhanced reliability and lower rates.

"The first 108-megawatt sale will use existing generation and transmission resources and then use some of the capacity from the proposed Keeyask generating station when it comes into service in 2019," said Thomson. The 308-megawatt sale will also use approximately 30 per cent of the energy produced by Conawapa.

"These are firm, non-interruptible power sales, meaning we have to have the capacity available in order to make the contract work," Thomson said. "Long-term planning is critical."

"Between these new and existing sales to WPS, and previously-announced energy sales to SaskPower, Minnesota Power, and Xcel Energy - plus ongoing growth in Manitoba energy consumption and load - the proposed Keeyask generating station is already 'sold out' and significant capacity utilization of Conawapa is already starting," Thomson added.

Reagrding the deal, Selinger told the Free Press Thursday, "It will confirm the interests in our export markets for buying Manitoba Hydro as part of a diverse portfolio of energy that our customers want to have in the United States. This will trigger Conawapa."

'It will confirm the interests in our export markets for buying Manitoba Hydro as part of a diverse portfolio of energy that our customers want to have in the United States. This will trigger Conawapa'

-- Premier Greg Selinger

The 1,485-megawatt Conawapa, if it passes all regulatory and environmental hoops, will be the largest generating station built in the province after Limestone, which began operations in 1990.

Conawapa is located about 850 kilometres north of Winnipeg, 30 kilometres downstream from the Limestone generating station, and about 80 kilometres from Hudson Bay.

The most recent estimate of Conawapa's construction cost is $10.2 billion. Construction will take more than eight years, and under current plans, Conawapa would start producing electricity in 2025.

"Building it for export pays down the cost of the dam through the export revenues, which keeps the rates low for Manitobans," the premier said.

Previous deals between Hydro and utilities in Minnesota and Wisconsin necessitated the construction of the smaller $6.2-billion Keeyask generating station, also on the lower Nelson River. Minnesota and Wisconsin utilities have signed term-sheet, power-sale, seasonal-diversity and energy-exchange agreements for more than $5.5 billion in hydroelectricity exports to Northern States Power of Minneapolis and Wisconsin Public Service.

U.S. utilities, particularly in Minnesota, are looking to buy electricity from Manitoba because of state legislation that, over the next decade, requires up to 25 per cent of the power they distribute comes from renewable sources, including wind and solar.

"The advantage of our clean, renewable power, it's very competitive in terms of price so it's profitable for Manitoba Hydro, and the people buying it know that it's one of the better deals compared to the other sources of alternative sources of energy that they're considering," Selinger said.

Both Keeyask and Conawapa are to be studied by a special sitting of the Public Utilities Board starting Monday. The PUB is to examine whether the two dams, and a transmission line to run from Winnipeg to Minnesota, make economic sense.

Selinger said the timing of the PUB hearing and word of the Conawapa deal is coincidence.

"It's because the sale was concluded," Selinger said. "We announce these things as they get concluded."

Selinger was speaking from the Richardson International Airport, where he was on his way to Toronto to participate at the Canadian Innovation Summit, a conference on renewable and energy efficiency, hosted by Ontario Premier Kathleen Wynne.

It's not the first time Conawapa has been slated for construction. It was green-lighted more than 20 years ago, but then cancelled by then premier Gary Filmon's Progressive Conservative government in 1992 after Ontario backed out of a long-term power-purchase deal.

Conawapa was one of several sites in Manitoba's north identified as early as 1911 as potential sources of hydro development, and studies began in the mid-1950s as transmission capabilities over long distances improved.

Conawapa is named after the native guide who helped Hudson's Bay Company explorer Henry Kelsey in the late 1600s. Kelsey was the first European to travel extensively in Manitoba's north.

bruce.owen@freepress.mb.ca

Is this deal rich enough to justify building Conawapa? Join the conversation in the comments below.

Republished from the Winnipeg Free Press print edition February 28, 2014 A3

History

Updated on Friday, February 28, 2014 at 5:47 AM CST: Replaces photo

11:05 AM: Updates with announcement Friday, adds link to livestream

11:25 AM: Updates with statements re WPS

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