Manitoba Hydro forecasts $190-M net loss for fiscal year By: Danielle Da Silva Posted: 6:16 PM CST Thursday, Feb. 22, 2024

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Financial losses at Manitoba Hydro are forecast to deepen amid ongoing drought conditions in the province.

The publicly-owned utility announced a projected $190-million shortfall in its third-quarter report released Thursday.

Its forecast loss for the year ending March 31, 2024, worsened by $29 million from its last quarterly update. The Crown corporation had previously projected a net income of $450 million for the fiscal year.

“The net loss was driven by lower net export revenue related to drought conditions, export market prices below budget, as well as unprecedented congestion levels at its settlement point in the northern (Midcontinent Independent System Operator) market, which resulted in an increase in the purchase price of power imports,” the report stated.

The utility also attributed the increased net loss to the Public Utilities Board decision to green-light rate increases that were lower than requested and other directives issued in August.

Hydraulic generation is forecast to be about 23 per cent below the 2023-24 budget, despite starting the year with higher-than-average reservoir levels, due to low precipitation.

“Uncertainty around water conditions has narrowed, as flow conditions are historically more stable after the end of October. However, hydraulic generation can still vary due to factors such as outages, ice restrictions and snowpack conditions through winter,” the report reads.

Last month, Hydro started to use some of its existing reservoir storage to service winter load demand and to mitigate the need to import power at elevated prices.

The utility’s financial picture still has significant uncertainty particularly related market prices, according to the report.

Electric revenue was down $280 million compared to the same period last year, attributed to lower domestic revenue and lower extraprovincial revenue.

Domestic electricity sales were four per cent lower than last year, owing in part to an unseasonably warm fall; export revenue was down $234 million, or 25 per cent. Despite having to import electricity, the utility still sold seven billion kilowatt-hours to out-of-province customers, down from 11.2 billion kWh last year.

“The variance in fuel and power purchases compared to the previous year grew substantially between the second and third quarter as Manitoba experiences heightened energy demands during the fall and winter months,” Hydro said.

“This increased energy demand also occurred while there were periods of elevated energy market prices.”

Finance Minister Adrien Sala, also minister responsible for Manitoba Hydro, said the NDP government still plans to fulfill its election promise to freeze electricity rates for one year within its first term.

However, a rate freeze is not in the near future, owing to the utility’s forecast loss, he said Thursday.

“We recognize the drought year and the financial challenges that’s creating and this why we proposed to delay that rate-freeze commitment,” Sala said. “Given the current situation, this is not the time.”

Hydro board chairman Ben Graham said the Crown corporation’s directors are looking at ways to achieve a rate freeze at the PUB.

“It’s up to the team at Manitoba Hydro, through the board, to come up with a plan to make sure that we can deliver the operating income that we need to — weather would help — to allow us to do all those types of things,” he said.

danielle.dasilva@freepress.mb.ca