Province empowers PUB to dig down into Hydro finances

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This article was published 18/04/2017 (3175 days ago), so information in it may no longer be current.

The provincial government has given the Public Utilities Board special authority to delve deeply into Manitoba Hydro’s debt and capital-spending plans when it considers rate-increase applications later this year.

What was not clear Tuesday is whether this will help or hurt Hydro’s chances of getting the significant double-digit rate increases the Crown corporation has warned it needs.

Finance Minister Cameron Friesen announced the move Tuesday.

Friesen said the provincial cabinet made the move at the PUB’s request after months of growing concern over Hydro’s debt and the impact that debt — fuelled by the Bipole III and Keeyask megaprojects — could have on the province’s finances.

This is the first time the independent PUB tribunal has had the power to require Hydro to table evidence of its financial health and capital situation.

“We don’t want to see Hydro rates go through the roof,” Friesen told reporters. “It is prudent for a government to provide that direction.”

Knowing the factors that could put Hydro’s ultimate health in question helps the PUB set the appropriate rates, and find the balance between the needs of consumers and the needs of the utility, said Friesen.

But Friesen would not speculate whether having that information makes it more or less likely that the PUB will accede to what Hydro wants.

Hydro has warned the two megaprojects could almost double the Crown corporation’s debt to $25 billion.

Hydro board chairman Sanford Riley has predicted that Hydro will be asking for significant multi-year double-digit increases when it takes its rate increase application to the PUB next month. A hearing date has yet to be set.

Riley has said in media interviews that Hydro needs — but has not yet formally requested — a cash infusion from the province.

NDP finance critic James Allum denounced the move Tuesday as “a smokescreen for Hydro to raise their rates. The government’s already decided that Hydro rates should be higher,” he said. “It certainly looks from our vantage point that everything that can be done to raise Hydro rates is being done.”

Instead of jacking up rates, Hydro should be looking for new export customers outside of Manitoba, Allum said.

Manitoba Hydro can’t comment on what the possible impact of the additional data might be, said public affairs officer Bruce Owen.

“Manitoba Hydro will absolutely comply with any changes to the process that are required by the government,” he said.

Darren Christle, the PUB’s executive director, said by email that the information will help the public be aware of all the information available, while allowing the PUB “to consider the financial consequences of Hydro’s capital decisions, and the impact on rates.”

Byron Williams, Public Interest Law Centre lawyer for the Consumers Association of Canada and Winnipeg Harvest, said consumer activists have urged the province to go much further and give the PUB the power to “disallow” Hydro spending plans if they adversely affected rates.

Williams said there’s “always been a tug of war” over how much information would be on the table at rates hearings.

“It increases transparency,” said Gloria Desorcy, the CAC Manitoba executive director. The PUB will be able to see what all of Hydro’s revenue needs are, she said, but could not predict if that information is more or less likely to lead the PUB to meet or lower Hydro’s rates request.

Recently, Hydro said the cost of the Keeyask generating station has soared another $2.2 billion, to $8.7 billion.

Hydro has slashed management ranks and has offered buyouts in a bid to eliminate 900 jobs and reduce its workforce by 15 per cent at an expected annual savings of $98 million.

The province said the cabinet order requires Hydro to provide the PUB with full details on existing projects as well as details on new, currently committed and proposed, planned or forecast major capital expenditures; records justifying projects and laying out cost-benefit analyses; and existing records related to revenues and income.

nick.martin@freepress.mb.ca