Hey there, time traveller!
This article was published 24/8/2014 (947 days ago), so information in it may no longer be current.
What's the real reason why Manitoba Public Insurance has picked a fight with the Public Utilities Board?
My guess is that they see an opening and have the political blessing to take advantage of it.
It's difficult to believe that newly-minted MPI boss Dan Guimond is doing this in isolation, and would not have briefed Attorney General Andrew Swan, the minister in charge of MPI, before letting loose the Crown corporation's lawyers on the PUB.
Guimond says in a recent letter to the PUB that its process, to evaluate MPI's request for a 3.4 per cent rate increase for next year, has strayed too far from its legislative mandate. He also says the PUB and various intervener lobby groups are asking too many extraneous questions that have nothing to do with the rate request.
Guimond says the PUB and the intervenors can ask all the questions they want about compulsory driver and vehicle or basic insurance, but nothing else. Some 400 submitted questions have gone answered by MPI.
Does he have a point?
The PUB is supposed to be an independent body, set up by the province, that acts in the best interests of Manitobans, not only in how much we pay for car insurance, but also in electricity and natural gas.
Until now, it's been generally thought that it can poke its nose as far as it wants to do its job.
In doing so the PUB has created a little bit of an industry, a nit-picking industry. It's created a rate-hearing process where the applicant, be it MPI or Manitoba Hydro, has to vigorously defend itself from the PUB and the phalanx of interveners on the sidelines, which have been approved by the PUB to ask questions.
The stage is set that upcoming rate-request hearing will be adversarial. MPI is the monopoly evil-doer and the PUB and the intervenors are white knights on horseback riding to the rescue. No matter what MPI says or does in this process, it's doomed to fail.
The interveners in this particular case are the Manitoba branch of the Canadian Consumers' Association, the Coalition of Manitoba Motorcycle Groups, CAA Manitoba, the Automotive Recyclers Association of Manitoba, Bike Winnipeg and the Insurance Brokers Association of Manitoba.
MPI has made it no secret that because it's their rate hearing that they pay the freight for the entire hearing, meaning they get to pay for the PUB and the interveners to ask them all sorts of questions. MPI's ballpark estimate for the hearing is about $2 million.
Guimond says MPI has had enough of all those "confrontational" questions. He says he wants a more defined process rather than the scattergun approach now. Examples of intervener questions in this rate application include how it calculates the value of its assets, hires contractors to upgrade its IT, trains young drivers and buys used auto parts to fix damaged cars.
The PUB has its own questions on these subjects:
- the Dynamic Capital Adequacy Test, or what should be the target rate stabilization reserve level; and total equity level;
- Road safety, or what MPI is doing to reduce crashes and a review of related expenditures, including efforts regarding vulnerable road users; the cost of operations; benchmarking, including with respect to other provinces;
- Interest-rate forecasting methodology;
- The disposition of excess reserves in the extension and special risk extension lines of business;
- the value proposition for drivers for the rate increase being requested;
- new or enhanced services being developed or examined by MPI;
- alternate rate indications based on accepted actuarial practice;
- unfavourable run-off of prior year claims during 2013-14; IT projects, including the physical damage re-engineering project;
- the performance of the investment portfolio and the content of the portfolio and the investment policy statement.
"The board will also consider a variety of other issues as they may arise," PUB hearing chairwoman Karen Botting said at an earlier hearing. "As always, MPI bears the onus in this proceeding of satisfying the board that its application should be granted on the whole of the evidence that it provides."
Reading this it appears the PUB believes it has carte blanche when it comes to MPI, or any other applicant, and that effectively, the buck stops with them. Reading this it appears the PUB believes it, a government-appointed tribunal, can ask whatever it decides appropriate above anyone else who oversees MPI's operations; MPI's executives, its board of directors, Swan's office, cabinet, Crown Corporations Council, the auditor general and legislative standing committees.
In response, MPI basically says the PUB become the chamber of second-guessing.
PUB chairman Régis Gosselin has said that the board does not tell MPI how to run its operations.
"The board's function is not only to protect consumers from unreasonable charges, or changes rather, but also to ensure the fiscal health of the corporation in fairness," he added.
"It seems pretty clear to me that there's a responsibility on this board, based on this precedent, there's a responsibility on this board to scrutinize the costs of the corporation."
Gosselin also took umbrage to MPI's claim, that's its basic line of Autopac insurance and its rate stabilization fund are unhealthy, because the PUB didn't grant them their full rate increase last year.
"So to assign the responsibility to PUB for having failed to grant you what you wanted, I think is disingenuous," he said. "I'm really perplexed by your statement that would be made to that effect."
Which leads me back to my first question: What does MPI really want?
It goes back to a 2011 court case which saw MPI and the PUB fight it out over the disclosure of information by MPI to the PUB.
The appeal court said while the fight between the two was interesting, it lacked the specific evidence of what the two were actually fighting about.
"The court will not entertain or answer a stated case where the question is abstract, hypothetical, speculative, or overly broad," the appeal court said.
Guimond and MPI are now giving the court something meatier to chew on.
Guimond and MPI are going to get the province's highest court to lay down the ground rules for how it and the PUB are supposed to play.
Not the Selinger government. Whatever the court decides, it won't stick to the NDP. In theory, anyway.