PUB paid $2M for external review

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This article was published 19/12/2017 (2848 days ago), so information in it may no longer be current.

The Public Utilities Board (PUB) conducted an international search before paying Calgary-based MGF Project Services $2 million to review Manitoba Hydro’s capital projects.

“They had a lot of people working on this,” PUB executive director Darren Christle said in an interview Tuesday.

MGF concluded the Keeyask generating station megaproject is much further over budget and much further behind schedule than previously believed.

According to its report, Keeyask could cost as much as $10.5 billion and not be completed until November 2022.

Hydro insists its own current numbers are correct and the consultant is wrong. Hydro maintains Keeyask will cost $8.7 billion and be complete by the summer of 2021.

Crown Services Minister Cliff Cullen said Monday he accepts Hydro’s position.

Hydro and MGF will face off next month in the ongoing PUB hearing over Hydro’s application to increase its rates by 7.9 per cent through 2024.

The heavily redacted MGF report, and a separate report explaining how the company was chosen, will be on the PUB website later this week, Christle said. MGF has its origins in Australia and Europe, and has global project-evaluation experience.

“There are only a few companies the PUB is aware of who do forensic construction-management evaluations. It’s so specialized that only a few folks do it,” he said.

The PUB found only three companies qualified. The agency has never before conducted a review of capital projects as part of a rates hearing, but the provincial cabinet directed it to review Hydro’s major projects, Christle said.

“They’re a top-echelon firm. This firm is new to the PUB, but they’re not new to this business,” said Byron Williams, a lawyer representing Winnipeg Harvest and the Consumers’ Association of Canada, and a longtime thorn in the side of Hydro and its applications for rate increases.

“We’re not in a position to say who’s right and who’s wrong. If MGF is right, it’s very disappointing and it’s bad news.”

MGF’s analysis shows more evidence the PUB should spread Hydro’s rates increase over many years, during the decades Keeyask produces revenue, Williams said.

“These are very lifelong assets.”

MGF produced a 258-page review, a highly technical and heavily detailed analysis. Many of the numbers were redacted.

The company declined to get involved in the controversy Tuesday.

“MGF has been retained by the Public Utilities Board to provide a report as well as oral evidence regarding specific Manitoba Hydro capital projects. It will fulfil its obligations through the process established by the PUB and will not respond to questions from the media at this time,” the company said in a statement.

Written questions to MGF can be submitted starting Friday from Hydro and any other parties with standing at the hearing, Christle said.

Hydro will present its rebuttal to the MGF report at the hearing in mid-January, and MGF staff will appear in late January or early February to face questions. The PUB has received 2,300 comments to its website, which far exceeded its expectations. And more people than the PUB expected are checking out the hearing being live-streamed online, Christle said.

nick.martin@freepress.mb.ca