No time for tilting at ideological windmills

Opinion

Hey there, time traveller!
This article was published 06/02/2024 (612 days ago), so information in it may no longer be current.

This is either a failure by the Kinew government to appreciate the gravity of the situation or an unwillingness to put common sense ahead of ideology.

Manitoba Hydro is just years away from being unable to generate enough electricity to satisfy the expected surge in demand here in the province. According to the utility’s own projections, “Manitoba currently has an installed generating capacity of 6,600 MW” and “by the early 2040’s growing demand for electricity in (Manitoba) could require 10,000 MW to 16,000 MW of generating capacity.”

That means the amount of electricity being produced here in Manitoba will have to almost triple in order to meet our requirements just 15 years from now.

According to a confidential Manitoba Hydro briefing note dated Sept. 13 of last year, Hydro’s “near-term surplus electricity supply” is so small that even “a single energy-intensive connection may consume all remaining electrical capacity.”

That same note disclosed there were 57 project proposals that would require large volumes of electricity, but that “Manitoba Hydro is unable to offer firm commitments to prospective customers that may align with Manitoba’s energy roadmap and/or provincial economic development objectives… As such, Manitoba Hydro cannot reserve electric supply for particular projects.”

In other words, industrial-scale economic growth in the province is largely paralyzed by the existing situation, and it will likely worsen until much more generating capacity is added to the system.

Last week, Manitoba Hydro CEO Jay Grewal confirmed that the province could require new energy generation as early as 2029, and must begin looking for ways to encourage Manitobans to reduce demand.

She said that Hydro would not be building new generating stations because of the massive debt load it is already carrying. Instead, she indicated the utility would contract with independent energy producers to obtain electricity generated from wind and other sources.

That appears to have caught Adrien Sala, minister of finance and minister responsible for Manitoba Hydro, by surprise. The day after Grewal’s comments were published, he poured cold water on her plan to involve private power producers in solving the electricity shortage.

“We are a party that wants to ensure Manitoba Hydro remains publicly owned, that our energy generation resources are publicly owned… So we want to ensure that that’s the direction Hydro takes,” Sala said.

Those lines come right out of the NDP hymn book, but it would be fiscal suicide for Hydro to take that “direction.”

The utility is currently staggering under almost $25 billion in debt, due in part to NDP mismanagement of past projects. Approximately 33 cents of every dollar charged to Hydro customers goes toward paying interest on that debt.

Last July, Hydro estimated that the cost of new projects required to meet future energy demand could reach $27 billion, not including the cost of maintaining existing infrastructure. Adding that expense would more than double Hydro’s already-huge debt load, causing alarm bells to go off at the bond rating agencies that determine Manitoba’s credit rating.

As finance minister, Sala must know that a massive increase in Hydro’s debt would make a credit rating downgrade virtually inevitable. That downgrade would result in higher interest charges on debt for Hydro and the Kinew government, leaving less money to spend on health care, education, families, justice and infrastructure.

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Sala must also know that Manitoba Hydro already has long-term contracts with private power producers — the owners of the St. Joseph and St. Leon wind farms — and that those contracts were entered into by the previous NDP government.

With Manitoba’s energy crisis looming larger each day, this is no time for Sala to be tilting at ideological windmills. Manitoba Hydro cannot afford to borrow billions of dollars to pay for the projects required to produce the electricity Manitobans need in the coming years.

Even more importantly, Manitobans don’t care who or what is producing their electricity. They just want a stable, reliable power supply that meets their needs today and in the future.

If Sala can curb his ideological bias and accept those two realities, he will realize there is a viable path for Hydro to provide the power Manitobans need, without pushing the utility or the Kinew government into an even deeper fiscal hole. Just ask Jay Grewal.

Deveryn Ross is a political commentator living in Brandon. deverynrossletters@gmail.com X: @deverynross