Manitoba Hydro has made clear that a review of its dam-building plans does not need to consider the wisdom of constructing Conawapa, a massive northern hydroelectric generating station that repeatedly has been shelved. Numerous critics have said there is a better option. The Crown utility says it won't make a decision on Conawapa for at least four years.
Hydro's lead official at the hearings, Ed Wojczynski, has said the logical approach is to put the $10.7-billion dam aside. Hydro, however, has concluded that building Keeyask, with a new international transmission line and a natural gas-fired power plant, is justified. The benefit of Hydro's preferred development plan that includes Conawapa with Keeyask and the transmission line doesn't look "as clear," Mr. Wojczynski told the Public Utilities Board's review into the "needs for and alternatives to" Hydro's long-term capital program.
That raises the question why, then, the government included approval for Conawapa in the review. The quick answer is this dam has been central to the NDP government's vision of turning Manitoba into a major player in the energy-export markets.
Former premier Gary Doer painted Hydro, and the potential for billions of dollars in sales to export customers, as key to this province's future. Premier Greg Selinger has refused to let the vision die, even in the face of shifting market forces -- specifically fracking technology that has opened new natural gas fields in the U.S. and could do so in Manitoba. Increased supply has dragged down prices, including for hydroelectricity. Yet days before the hearings began, Mr. Selinger insisted a new contract to sell 308 megawatts of power to Wisconsin Public Service solidified the need for bringing Conawapa into service in 2026.
Manitoba Hydro officials, however, are now highlighting the option of substituting a gas-fired plant for the massive northern dam.
The PUB panel has heard the capital costs of Keeyask and Conawapa are rising and forecasts on demand for power have been revised. Furthermore, Manitoba Hydro is having to invest more money to build the transmission line that will serve its customers in Wisconsin and Minnesota. With more effort to conserve energy in Manitoba, Hydro believes it makes more sense to build Keeyask, a gas plant and the transmission line.
All of this is why Hydro president Scott Thomson last week publicly noted Conawapa may be delayed indefinitely. That triggered alarms on Broadway and Mr. Thomson was pressed to reassure in a memo to the NDP government that the utility is still seeking approval of the preferred development plan, which includes Conawapa, because of its broader economic appeal. The memo noted the preferred plan would give the lowest electricity rates for Manitobans over time and the lowest regional greenhouse gas emissions, increase Manitoba Hydro's assets and spin off more jobs and socio-economic benefits.
The new emphasis on a natural gas-fired plant also pulls into focus the wider concern that Hydro is risking too much in building Keeyask ahead of required domestic demand, on the premise export contracts will defray the costs to Manitoba ratepayers. (The utility's financial analysis rests on rate increases of 3.95 for the next 20 years; if Conawapa is off the table, it would require hikes of 3.5 per cent.) Numerous critics, however, point out that building capacity with a gas-fired plant is a far cheaper, less risky option that can make building Keeyask and Bipole III right now unnecessary.
That view was buttressed by reports from expert consultants, solicited by the PUB, that questioned the utility's forecasts of the export market and growth in demand at home, and also suggested looking at the cheaper gas plant option.
Mr. Struthers has said he is sure the PUB's review will conclude building Keeyask and Conawapa is the right decision. Hydro itself says it doesn't know whether or when Conawapa is needed. Any thought to granting its approval now, then, is hasty and unwise. The PUB should tell Mr. Struthers that, and seek a new mandate to allow it to concentrate on the utility's case for Keeyask and the transmission line.