Manitoba’s consumer watchdog will consider whether to hike electricity bills by four per cent over the next year as hearings begin on Manitoba Hydro’s latest general rate application.

The Crown corporation is asking the Public Utilities Board to approve an average two per cent rate increase that would take effect on Sept. 1, 2023, followed by a second two per cent increase effective April 1, 2024.

On Monday, the independent, quasi-judicial tribunal will open hearings on the multi-year, general rate application with representations from Manitoba Hydro and interveners, including the Consumers Coalition, Manitoba Industrial Power Users Group, and First Nations organizations.

Consumers Coalition attorney Byron Williams said his clients believe the rate hikes are “unjust and unreasonable” while Manitoba Hydro projects massive profits and plans to increase operating and administration expenses by nearly $100 million over the next two years.

The Consumers Coalition includes the Consumers’ Association of Canada (Manitoba), Harvest Manitoba and the Aboriginal Council of Winnipeg.

“Manitoba Hydro does not have its own financial house in order,” Williams said. “Our clients are deeply concerned that Manitoba Hydro is not keeping its day-to-day expenditures under control.”

According to submissions to the PUB, the proposed two per cent increase in September will generate $24 million for the corporation in 2023-24 and $37 million in 2024-25. The two per cent increase proposed for April 1, 2024 will add another $38 million to Manitoba Hydro’s coffers.

Meantime, the utility projects a $469-million net income on electrical operations this fiscal year and $295 million in net income next year, when the proposed rate increases are included. Hydro has forecast a $751-million net income in 2022-23.

Operating and administrative expenses are also budgeted to increase by $98 million, or 16.6 per cent, by the end of the 2024-25 fiscal year.

“Sixteen per cent over two years is not consistent with what prudent managers of Crown corporation should be seeking,” Williams said.

He said the Consumers Coalition intends to push the utility on the justification for rate hikes given rising administration and labour costs amid strong financial projections.

The group has not taken a position on whether any rate increase is warranted, he said.

Residential customers should also expect to see a rate increase slightly higher than two per cent if the PUB approves Hydro’s application as submitted, the Consumers Coalition argued.

Williams explained the two per cent billed by Manitoba Hydro is an average that includes other customer classes and the rate hike for residential customers will be 2.4 per cent.

“Our clients are asking when export revenues are at record levels… when export revenues are looking very handsome for this year, why they’re coming to ratepayers,” Williams said.

Hydro said each rate hike will cost the average residential customer without electric heating $3 more per month, and those with electric heating $6 a month.

Other groups scheduled to speak at the hearings include the Manitoba Non-Profit Housing Association, TransCanada Energy, Canadian Kraft Paper, and Maple Leaf.

In a written submission to the board, the Manitoba School Boards Association estimated the proposed rate increases will cost schools an additional $1.2 million by the end of 2025, and said money would be siphoned from programs to cover the bill.

“Given that we already seek to reduce reliance upon our ratepayers when providing the current goods and services that we make available to students through our public schools, there is little option remaining for us when faced with substantial proposed increases to our basic operating costs but to reduce the level of programs, supports and services that we are able to provide,” MSBA president Alan Campbell wrote.

Manitoba Hydro corporate communications director Scott Powell said the rate increases are required even in years where variable water conditions, such as record-high water flows, boost revenues.

“They (rate increases) provide us with the needed financial resources to handle future droughts or interest rate increases, both of which are factors outside of our control, while minimizing the impact of these events on our customers,” Powell said in lengthy, emailed statement.

The proposed hikes will address increased costs associated with major capital projects, including the Keeyask Generating Station, and go toward Hydro’s $24-billion debt while also maintaining the grid to deliver reliable service, the statement said.

The corporation must also achieve a legislated debt-to-capitalization ratio of 70 per cent by March 31, 2040, and proposes annual two per cent increases to reach the target.

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Meantime, Powell said the utility cannot postpone hiring new staff; it has lost 25 per cent of its workforce since April 2017 following a voluntary departure program intended to cut the payroll by 15 per cent, pandemic-related hiring freezes, and high attrition.

The corporation plans to add 233 full-time equivalent positions by 2024-25.

“This impacts our ability to perform the required maintenance needed to provide our customers with reliable service, and we are seeing our reliability and customer service levels trending down as a result. Our customers have told (us) this cannot continue.”

Hearings are scheduled to continue until the end of June.

danielle.dasilva@freepress.mb.ca

Danielle Da Silva
Reporter

Danielle Da Silva is a general assignment reporter.

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