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The PUB on MPI and Hydro

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Over the past few weeks I’ve asked Manitoba Public Insurance and Manitoba Hydro about how much in legal bills each has paid so far in their jurisdictional disputes with the province’s Public Utilities Board.

Why I asked is simple—the money going to lawyers comes out of our pockets.

In short, the PUB wants access to more financial information about the two Crown corporations so that they have a better picture of things when they set Autopac and utility rates. MPI and Hydro have repeatedly said no to the PUB, declining to hand over information that they say either has no bearing on the setting of rates or is confidential in nature.

The PUB has taken both Crowns to the Manitoba Court of Appeal. The court’s decision in the MPI matter is here.

To date, MPI’s legal bill for this action is about $500,000. Hydro’s legal bill is more than $300,000.

I asked the PUB for its legal costs, too. What follows is its response, plus its reason why it needs the additional information from the two Crowns:

"In response to your enquiry, the legal costs incurred by the Board in the MPI and MH matters you referred to were $46,408.10 and $86,142.00, respectively. In both the MPI and MH cases, interveners covered their own legal costs. In both cases, court appearances were required, which necessitate considerable presentation development.

"In the case of MPI, the Board sought the Court’s perspective after several years of attempting to gain information from MPI through the annual General Rate Applications proceedings. To set just and reasonable rates for Basic insurance, the Board, to meet generally accepted regulatory principles, needs to both (a) assess the prudency and reasonableness of the underlying costs which are allocated to Basic insurance, MPI being an integrated operation, and, (b) assess the position and prospects of the overall operation (in MPI’s case, the majority of its assets are co-mingled, i.e. relate to both Basic and non-Basic operations, and subject to allocation formulae).

"MPI was incorporated to serve and benefit motorists, and 96 per cent of non-Basic Extension policyholders are also Basic policyholders, in short non-Basic operations represent a near-monopoly. In the case of a monopoly, to protect the interests of the customers/ratepayers, regulation is the norm across North America. The Board has never sought to manage MPI, and has explained to MPI that the information required with respect to overall and non-Basic operations is very limited, and the receipt of same from MPI would not result in damage to MPI; the Board can, by its Rules and in accordance with its governing Act, consider information commercially sensitive and not publicly disclose it. Indeed, MPI provided some of this information previously.

"With respect to MH, export revenues represent a significant percentage of MH’s overall revenues and actual and projected export revenues (and the associated costs) directly impact on "domestic" (Manitoba customers) rates. In setting rates, the Board, historically and again consistent with generally accepted regulatory principles, seeks to fully understand the basis for the Utility’s projected export revenue (as well as the projected costs associated thereto).

"Throughout the recent General Rate Application proceeding, the Board sought the receipt, in confidence, of the export contracts and term sheets (term sheets representing export agreements that are conditional and reached in principle) that, presumably, provided the basis for MH’s export revenue projections (some of those contracts and term sheets were reviewed by MH’s external consultants). The Board issued its subpoena only when it became evident that MH would not provide the information, even under the terms of the information being held confidential by the Board – the Board’s published Rules allow for the receipt of information in confidence, and the Board has never breached such a restriction. Furthermore, in the past the Board has subpoenaed information from MH, and MH has complied.

"Legal costs end up being reflected in customer/ratepayer rates, and thus the Board attempts to restrain legal costs; costs related to Court actions can be avoided, simply by the regulated utility providing the Board the information the Board has concluded it needs to review in its development of fair and reasonable rates, rates based on prudent actions, which includes the regulated entities assumptions and forecasts of revenues. In both the cases, MPI and MH, the Board did not anticipate the regulated entities employing external legal assistance with respect to, in the case of MPI, the stated case put before the Court of Appeal by the Board, and in the case of MH, its effort to quash the Board’s subpoena, as both entities have large and competent internal legal staff. None of these costs would have been incurred if the two regulated entities had cooperated with the Board and provided the limited amount of information the Board sought and still seeks.

"The Board cannot meet its mandate by simply accepting the "word" of the regulated entity that the information not provided supports their application. The Board is charged to protect consumers, and to fully meet that responsibility the Board, , has determined it requires the additional information it has sought from regulated entities formed and operating to serve and benefit its customers/ratepayers. The Board, is independent with respect to its adjudicative functions and every member of the Board has signed a Members’ Code of Professional and Ethical Responsibilities, which address not only the required confidentiality (non-disclosure) but also the necessary avoidance of conflict of interest. The Code can be found on the website."

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About Larry Kusch and Bruce Owen

Larry Kusch has been a journalist for 30 years, the last 20 with the Winnipeg Free Press. His is one of the newspaper's two legislative bureau reporters.

Raised on a Saskatchewan farm, he received an honours journalism degree from Carleton University in 1975.

At the Free Press, Larry has also worked as a general assignment reporter, business reporter, copy editor and assistant city editor.

Bruce Owen joined the Winnipeg Free Press in 1990 after four years working in other media.

He's worked in a number of positions at the Freep, including pet columnist, assistant city editor and police reporter. Right now he takes up space at the Manitoba legislature.

Bruce is one of five reporters who won a National Newspaper Award for the paper’s coverage of the 1997 Flood of the Century. He's also the recipient of the 1996 Volunteer Centre of Winnipeg Media Golden Hand Award and the 1995 Canadian Federation of Humane Societies Media Commendation Award.

In a past life Bruce worked at YMCA-YWCA Camp Stephens. He has a blog where he and others write about camp and the people who worked and played there.

You can also find Bruce on Twitter where he posts and retweets all sorts of stuff.

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