Manitoba Hydro posts $63M loss after another dry year, expects more red ink in spring

Two years of continuing drought have left Manitoba Hydro’s finances marooned in the red.

The Crown corporation’s 2024-2025 annual report, released Friday, showed a consolidated net loss of $63 million for the fiscal year that ended March 31.

That loss came after the utility sank $157 million into the red the previous year.

And the losses continue; the utility already lost another $61 million in the first three months of this fiscal year, from April to June.

“As with any hydroelectric utility, we are at the mercy of Mother Nature when it comes to precipitation,” CEO Allan Danroth said in a statement released Friday.

“While we remain hopeful, for a return to more normal precipitation levels this autumn and into winter, we are continuing to manage our water and financial resources to ensure the security of the energy system going forward.”

Hydro has now faced drought-caused losses in three of the last four years.

The utility lost $248 million in the 2021-2022 fiscal year, but that was followed by a profit of $638 million a year later.

Overall, Hydro has posted a profit of only $109 million since April 2021.

Finance Minister Adrian Sala said unless there’s a change in the weather, the corporation expects to report another loss at the end of the fiscal year in March.

“We still have some more time for us, for a rain season, and I do continue to hope for lots of rain, but at this point we are being transparent with Manitobans about that possibility,” Sala said.

“We had a hot and dry summer. This has impacted water levels across Manitoba Hydro’s basin.”

The government has a $200-million revenue contingency to help offset anticipated losses this year by Hydro, he said.

“We are continuing to ensure Hydro has what they need to keep energy rates low for Manitobans while generating new capacity, including 600 megawatts in Indigenous-owned wind that was announced as part of our affordable energy plan.”

Byron Williams, a lawyer who represents the Consumers Coalition — the Consumers Association of Canada (Manitoba branch), Aboriginal Council of Winnipeg and Harvest Manitoba — at Public Utilities Board electricity-rate hearings, said while it’s not possible to predict future water levels, Manitoba Hydro do more to improve its bottom line.

Williams noted the utility’s operating expenses went up 7.8 per cent annually between 2021 and 2024, and are expected to go up another six per cent in 2025.

“What are they doing on the cost-control side?” he said.

“We do expect Hydro to have bad years, but while drought is never good news, and low water levels are never good news, prudent management could control expenses. We would expect a vigorous effort to control operating expenses, but also capital expenses to delay and defer where prudent and reasonable.”

Hydro lost $49 million last year in the electric segment and $27 million in the natural gas segment. Those losses were offset by a net income of $13 million from subsidiaries.

The improvement, compared with the prior fiscal year’s losses, was largely because of lower fuel and power purchases costs, and increased domestic and electric natural gas revenues, the release said.

The utility said it also faced higher operating, maintenance, administrative and finance expenses.

“While the financial impacts of the drought weren’t as severe as they were last year, these low-water conditions once again led to less energy being available to sell in wholesale markets,” Danroth said. “They also meant we needed import power to meet customer requirements in Manitoba more than usual.”

kevin.rollason@freepress.mb.ca