The Public Utilities Board came out with its long-awaited decision in the Manitoba Hydro general rate application on Tuesday.
Within hours Manitoba Hydro said it was appealing it and the Selinger government quickly brushed it off.
That’s unfortunate, even sad, but here’s why:
For the past two years the PUB and Manitoba Hydro have locked horns over the PUB’s desire to examine the financial risk facing Hydro and its plan to build Bipole III and the Keeyask and Conawapa generating stations.
The estimated total price tag will be more than $20 billion and the PUB fears that if something goes wrong with Hydro’s planning, like a drought or a prolonged economic recovery in the U.S., Manitobans could be saddled with a boatload of debt if lucrative export markets go bust.
Nothing wrong with that. It’s all good, in fact. For the most part, Hydro and the government welcomed the PUB’s scrutiny to get Hydro’s plan out there.
Over the past two years that scrutiny has included at my count three separate, independent reviews of Hydro and elements of its development plan, each looking at whether Hydro has all its ducks in a row. There were four reviews if you include a New York consultant who now, for the most part, has been written off as not credible.
The reviews were done by KPMG, ICF International and McMaster University economists Atif Kubursi and Lonnie Magee. Their reports and testimony have been posted on the PUB’s website for your scrutiny for quite some time.
While each found things Hydro could be doing better, none of them raised any alarm bells that Manitoba Hydro was being run by a bunch of buffoons rampaging in the monkey house.
So it came as a bit of a surprise that the PUB wants the government to order another "independent" review of Manitoba’s Hydro’s risks as Hydro gears up for Clean Environment Commission hearings on Bipole III and Lake Winnipeg Regulation: Hydro uses the lake as a reservoir to power its northern dams during peak months.
Board chairman Graham Lane and vice chair Robert Mayer say there’s too much at stake for there not to be another, more in-depth review that can also look at building more wind farms and building plants to burn cheap natural gas to make electricity instead of dams.
Throwing another wrench into things is that board chairman Graham Lane and vice chair Robert Mayer don’t agree on the scope of this supposed independent review.
Lane, a chartered accountant, is the former vice-president of Public Investments of Manitoba, CEO of Manitoba Public Insurance and University of Winnipeg’s vice-president of finance. Mayer is a lawyer from Thompson.
Lane wants Bipole included in the review with the two dams; Mayer does not.
Here’s a snippet from their 232-page order:
"The Chairman is of the view that MH’s assumptions, which support a requirement of Bipole III if Keeyask is built, should be
fully tested prior to MH making a final commitment to both Keeyask and Bipole III. The Board’s Vice Chair is of the view that Manitoba Hydro has established that Bipole III would be required for reliability purposes in any case."
"Both the Chairman and Vice Chair believe that absent Keeyask, the construction of Bipole III can be expected to increase domestic rates. The question that remains is whether if Keeyask is built, the construction of Bipole III will still increase domestic rates.
"The Chairman is hopeful that both capital projects will be subjected to a full NFAAT (Needs For And Alternatives To) hearing. The Chairman notes that if an economic case can be made for the deferral of Bipole III, Manitoba ratepayers would be the beneficiaries of lower electricity rates, as 100 per cent of Bipole III’s costs (not only the capital costs, but also the finance and operating costs associated with it) will, under MH’s cost allocation, be borne by MH’s domestic consumers.
"The Vice Chair does not share this view, and believes that while an NFAAT may be warranted for any new generation capacity, Bipole III should not be delayed."
Critics of Hydro will say there’s plenty more in the board’s order that justifies another review. The board’s order doesn’t touch on Bipole III on the west side of the province one way or the other.
What it does deal with is its gripe Hydro won’t willingly give in to their request to see confidential export agreements it has with power utilities in Wisconsin and Minnesota. Whether that’s ever to happen is now up to the Manitoba Court of Appeal to decide. Hydro went to court saying the PUB has no business examining the contacts as to do so could potentially reveal and harm its deals with the two states and future deals. Hydro also says the PUB has no business determining its development plans—cabinet does that.
Anyway, the PUB isn’t prepared to wait for appeal court’s decision.
"Therefore, the Board remains of the view that to date MH has either failed or refused, and continues to fail or refuse, to provide information that the Board considers critical to its mandate of fixing just and reasonable rates for the services provided by MH," Lane and Mayer say in their order.
So, it seems to me that this order isn’t so much based on what the independent consultants had to say or anything else submitted during the lengthy rate application hearing, which started in earnest a year ago.
It boils down to Lane and Mayer’s non-access to the contacts.
And that’s sad. Because even if they do get a peek at those documents, it won’t change things one bit.
If you’ve paid any attention to Premier Greg Selinger and Gary Doer before him, Manitoba Hydro is the key in getting Manitoba off the teet of federal transfers and shedding its rep as a have-not province.
That means Bipole III down the west side of the province. It means Keeyask. It means Conawapa down the road.
And the PUB is powerless to do anything about it. It was since Day One.