Group wants proof Manitoba Hydro needs rate hike to survive

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This article was published 18/07/2017 (3032 days ago), so information in it may no longer be current.

If Manitoba Hydro needs to jack up the cost of what customers pay for power in order to survive, it better cough up some proof, intervenors at a Public Utilities Board hearing said Tuesday.

“Manitoba Hydro is on the record as saying, ‘We need these big rate increases,’ because they they don’t think Hydro is self-sustaining without them,” lawyer Antoine Hacault, representing the Manitoba Industrial Power Users Group, said in an interview after the Winnipeg hearing.

Manitoba Hydro is before the PUB asking for a 7.9 per cent interim rate increase, which would take effect Aug. 1. It has also applied for a 7.9 per cent increase in each of the next five years, but that marathon session of PUB hearings won’t begin until November.

Hacault said Hydro’s negative assessment is based on reports provided by rating agencies (DBRS, S&P and Moody’s) which assess the province’s credit rating. The PUB has asked Manitoba Hydro to provide those reports, but two of them haven’t been filed, said Hacault.

The PUB has the legal authority to ask for the reports, which are considered a minimum filing requirement, he said.

Manitoba Hydro has said it is the first time the rating agencies won’t allow the reports to be included in the public hearing process, said Hacault, who also wants to see the reports and to be able to question how they came up with their assessments of the Crown corporation.

“How can we test whether or not the statements about Manitoba Hydro are correct or not?” he said.

Manitoba Hydro will have a chance to respond when the board sits again Wednesday at 9 a.m. The hearing at 330 Portage Ave. is open to the public and is livestreamed on the internet.

Some 900 viewers watched Tuesday’s proceedings on their monitors, when usually 10 or 12 people attend in person, said the PUB’s secretary and executive director, Darren Christle.

The Manitoba Industrial Power Users Group says Hydro’s long-term forecasts are unduly pessimistic, and debt on the Bipole III and Keeyask generating megaprojects has nothing to do with the proposed interim rate increase two weeks down the road.

The users group believes Hydro’s financial situation has not changed — rather, its new board has a different attitude towards paying down debt quickly and is taking “unconventional” approaches to Crown corporations, which again are not relevant to an interim increase.

On Tuesday, the PUB heard from lawyer Byron Williams, representing the Consumers’ Association of Canada and Winnipeg Harvest.

In an interview Monday, Williams said: “The imminent catastrophe Hydro is alleging is overstated.”

Hydro was to table a net income forecast requested by the PUB, showing the impact of no interim increase, Williams said. Hydro’s own figures show it is forecasting a net income of $92 million for the current fiscal year — even without the 7.9 per cent rate hike.

Williams said the Crown corporation is benefiting this year from high water levels, particularly on the Nelson River, allowing it increased power generation.

The projection also reflects Hydro having followed the orders of Manitoba Premier Brian Pallister to cut 15 per cent of managers, and its own decision to reduce its workforce by 15 per cent (or 900 jobs).

Williams said the cost of severance and buyouts, and the reduced payroll, are part of the $92 million forecast.

A spokesman for Hydro said Manitobans can’t gamble on weather. Its finances are volatile and dependant on weather, water supply and export prices.

The Crown corporation has been fortunate thus far in 2017, but there’s no guarantee that will continue, the spokesman said Monday.

— with files from Nick Martin

carol.sanders@freepress.mb.ca