NDP promises to freeze hydro rates

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This article was published 22/08/2023 (790 days ago), so information in it may no longer be current.

New Democratic Party Leader Wab Kinew pledged to freeze electricity rates for a single year by passing up over $37 million paid by Manitoba Hydro to the province annually, if his party forms government in the Oct. 3 election.

On Tuesday, Kinew repeated his promise to give customers a break on electricity bills and doubled down on the NDP’s opposition to Bill 36 — the Manitoba Hydro Amendment and Public Utilities Board Amendment Act — as he promised to repeal the controversial legislation that became law last November.

“Manitobans have put down more than a down payment towards this amazing Crown corporation that we have that has a hugely strong balance sheet,” the NDP leader said during a campaign announcement near the Manitoba Hydro station at Grant Avenue and Stafford Street.

“Now it’s time for you, the owners of Manitoba Hydro, to enjoy some of what you’ve been paying into, and the first way for us to do that is to give you a Manitoba Hydro rate freeze.”

A rate freeze could be achieved by reducing the utility’s debt guarantee fee, which it pays to the province, and cutting revenue Manitoba receives from Hydro, Kinew argued.

He estimated a one-year electricity rate freeze would save ratepayers a total of $37.5 million. The province would have to forgo about that much annually for three subsequent years to avoid future rate shocks and keep energy prices affordable, he said.

The lost money would be recovered by dipping into a $520-million, taxpayer-supported contingency fund established by the Progressive Conservative government in its 2023 budget, Kinew said.

“Right now, in this year’s budget, which we’ve adopted as our fiscal framework, there are hundreds of millions of dollars set aside for contingencies,” Kinew said. “I can think of no greater contingency that we should be preparing for than to help the average Manitoban during this period of high inflation.”

The leader said his party would aim to freeze electricity rates for the 2024-25 fiscal year. Other than changing what Manitoba Hydro pays the government, all of the Crown corporation’s finances would stay “in tact,” Kinew said.

“That way we can guarantee stability in the financial picture for Manitoba Hydro.”

Tory Cliff Cullen, the finance minister, said his party has no plan to privatize Manitoba Hydro. He blamed the former NDP government for driving up the utility’s debt.

“Wab Kinew’s temporary fake freeze today will cost you more tomorrow, and distracts from his party’s failures: the NDP tripled Manitoba Hydro’s debt and nearly bankrupted the corporation, costing Manitobans billions that they’re still paying off today,” Cullen said in a statement.

“We put forward a long-term plan through the energy road map to ensure Manitoba Hydro remains financially sustainable and powers our growing economy while keeping electricity bills affordable.”

Manitoba Hydro has asked 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.

Each rate hike would cost the average residential customer without electric heating $3 more per month, and those with electric heating $6 a month, the utility says.

Hearings on Hydro’s general rate application concluded at the end of June and, as of Tuesday, the independent-rate setting authority’s order on the application was still being written.

The utility must also achieve a legislated debt-to-capitalization ratio of 70 per cent by March 31, 2040, under the Tory government’s Bill 36.

The legislation also capped electricity rate increases at five per cent or the rate of inflation (whichever is lower) effective April 1, 2025.

In November, the PCs retroactively reduced the water rental and debt guarantee fees it charges the Crown corporation by half, which saved Hydro about $190 million in the last fiscal year. The savings were applied to its debt, which is about $24 billion.

The change allowed Hydro to update its application, which forecast annual rate increases of two per cent for 19 years, and meet legislated requirements (assuming a two per cent inflation rate).

Consumers’ Association of Canada-Manitoba director Peggy Barker said Bill 36 should be repealed regardless of which party forms government following the election.

The association regularly intervenes in general rate application hearings as part of the Consumers’ Coalition, which also includes Manitoba Harvest and the Aboriginal Council of Winnipeg.

“Bill 36 sacrificed independent rate-setting and risks causing rate increases higher than necessary from now until 2040,” Barker said, noting the association argues Hydro wouldn’t need a rate increase if it controlled its costs.

“CAC Manitoba is strongly opposed to government interference in independent rate-setting. The (PUB) can and should be relied upon to set fair rates in an independent, transparent, and evidence-based process.”

Kinew said repealing Bill 36 could reduce pressure on ratepayers and “return power to the PUB” to approve a one-year freeze.

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“We’re going to work with Manitoba Hydro to make sure that their financial situation is strong, and then we’re going to make for these accounting changes on the government side, so that we can go back to the Public Utilities Board in a fair and open process and say, ‘here’s how we get to a rate freeze for Manitobans.’ We think this is well deserved.”

Manitoba Liberal Leader Dougald Lamont accused both the NDP and the Tories of ripping off his party’s ideas.

“This half-hearted policy to lower rates and cut Hydro costs is taken straight from the (Liberal party’s) 2019 election platform where we committed to ceasing the practice of raiding Manitoba Hydro of hundreds of millions of dollars annually,” Lamont said.

“You can’t trust the people who broke the system to fix it.”

danielle.dasilva@freepress.mb.ca