Manitoba Hydro has spent about $1 billion on the Keeyask generating station to date but it's not certain it will get built.
The revelation came Monday on the first day of a two-month hearing before the Public Utilities Board into whether Keeyask and its sister generating station, Conawapa, should be built over the next two decades, and whether there are less expensive options such as increased energy conservation to help supply the province's growing electricity needs.
The $1 billion has been spent on the design of the proposed 695-megawatt Keeyask dam on the Nelson River, signing up construction crews, building a road to the site and clearing an area for a construction camp. Manitoba Hydro has also negotiated a deal with four First Nations stating their members get first dibs on jobs and training and are co-owners of the dam and share in its revenues.
Scott Thomson, Manitoba Hydro president and CEO, told the hearing Monday the expected cost of building Keeyask will rise above its earlier estimated $6.2-billion price tag.
"I can tell you today it's going to be adjusted upwards," Thomson said, adding the new estimated cost will be tabled at the PUB hearing later this week.
Thomson said the most critical decisions for the PUB are Keeyask and a proposed transmission line to run from south of Winnipeg to Minnesota. A final decision on the estimated $10.2-billion Conawapa isn't needed for about two years as the recently announced power export deal to Green Bay-based Wisconsin Public Service does not kick in until 2027.
"What we will be doing over the ensuing years is continuing to monitor and update our analysis to ensure moving forward with (Conawapa) makes sense at the time we have to make those decisions," Thomson said.
Public Interest Law Centre director Byron Williams, who acts for the Manitoba branch of the Consumers' Association of Canada, said the most critical decision for the PUB is whether Hydro has a good business case for building Keeyask.
Williams said the American energy market is too uncertain for Hydro to be "gambling" so much money on building a new dam. Increased use of wind and a larger supply of natural gas to generate power add to that uncertainty.
"We think there is a lot more that can be done to protect consumers," Williams said, adding Manitoba's electricity rates are to more than double during the next 10 years under Hydro's plan.
"What are the Americans doing? They're diversifying. Manitoba Hydro has taken a radically different approach. Should Manitoba Hydro continue on its single-minded focus or should it be looking more broadly at alternatives?"
Thomson said not proceeding with Keeyask and the transmission line would put Hydro and, by extension, the province, at risk of not being able to exploit growing demand for power in the American Midwest.
He added if Keeyask gets the green light, it means the PUB -- for now -- has thrown cold water on an idea for a Crown utility to burn natural gas to make electricity.
If Keeyask clears all regulatory requirements, construction could start this summer. However, work could be delayed two years without jeopardizing export contracts with U.S. utilities.
"If it's put on hold, it's almost certain it will cost more," Thomson said.
The province's environmental regulator, the Clean Environment Commission, will soon issue its report on whether the province should issue an environmental licence for Keeyask.
The PUB's report, including recommendations, is to be submitted to the government by June 20.