September 19, 2020

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Information blackout leaves Hydro subsidiary in the dark

Mandated slowdown at utility's 30-year-old consulting, technical-services arm generates anxiety for 125 staffers

Staff at Manitoba Hydro International are on pins and needles about the future of the enterprise that contributes millions of dollars to Manitoba Hydro’s bottom line.

In a leaked internal memo from the international consulting arm of Manitoba Hydro from last week, staff were told that for the Sept. 2-Oct. 7 period, "MHI is not to aggressively pursue new work. This means it is not to actively pursue bids or seek out new customers."

The memo goes on to say that all potential new work would require sign-off from senior management and any new work must have an end date of Dec. 31, 2021 or earlier.

The reason for the mandated work slowdown is not clear.

Crown Services Minister Jeff Wharton said the province has not ordered Manitoba Hydro International to restrict its business and that there is no plan to sell off or to wind down the international consulting arm of Manitoba Hydro. (Mike Deal / Winnipeg Free Press files)

Crown Services Minister Jeff Wharton said the province has not ordered Manitoba Hydro International to restrict its business and that there is no plan to sell off or to wind down the international consulting arm of Manitoba Hydro. (Mike Deal / Winnipeg Free Press files)

Senior management at MHI directed questions to Manitoba Hydro.

Manitoba Hydro spokesperson Bruce Owen said MHI was included in a recent strategic review of the utility's operations conducted by a third party.

"It's part of Manitoba Hydro’s long-term strategic planning process," he said. "The report is currently being reviewed by Manitoba Hydro. As part of this process, MHI’s business areas were moved into a non-aggressive approach for new business development to allow the review to continue without complication. No decisions have been made."

MHI's cooling-off period ends a day before a scheduled Hydro board meeting on Oct. 8

A staff person from MHI who spoke on condition of anonymity, said there has been increasing uncertainty for some time about the future of the organization and that last week’s memo was the first official communique staff had received about current situation.

"This has all been absolutely insane," the staffer said. "They have not been giving us any information. Are they looking to dissolve the company? That is what we want to know."

"It's part of Manitoba Hydro’s long–term strategic planning process. The report is currently being reviewed by Manitoba Hydro. As part of this process, MHI’s business areas were moved into a non–aggressive approach for new business development to allow the review to continue without complication. No decisions have been made." – Bruce Owen, Manitoba Hydro spokesperson

MHI has been in business for about 30 years. In addition to offering consulting work on every element of the electricity business to more than 120 countries, it is also the parent company of Manitoba Hydro Telecom (MHT). It also owns technology, including tools that it licences to detect transmission-line faults and planning tools to deal with blackouts, among other services.

One veteran in the electrical consulting industry in Manitoba who is aware of MHI’s operations, said the company has a great reputation in the international market.

"The Canadian Trade Commissioner service will tell you all the great work it has done around the world and how strong the demand is for its services," the industry veteran said.

He said in the past other provincial Crown utilities from provinces across the country operated international consulting divisions and that MHI is one of the last remaining.

"The precedent for shutting these things down is there from other provinces," he said. "One of the main reasons is that they are not considered a core business and perhaps it is a nuisance to run a $50-million business, versus the utility at $2.5 billion."

The internal MHI memo was issued while the company is seeking third-party management for its Manitoba Hydro Telecom division. Submissions to a public request for proposals are expected to be closed sometime in October.

Another leaked memo, apparently from MHI senior managing director Wesley Mueller said, "(Manitoba Hydro) has a strategic and operating model review process underway and MHI is being assessed for its strategic fit."

It goes on to say that because of the telecom RFP the "non-aggressive approach" to new business from the remainder of MHI’s business for the next while is to give the opportunity for the telecom matter to "be completed without further complication."

Over the past two years MHI has generated $109.1 million in revenue and contributed $15.8 million to Hydro’s bottom line.

It has about 125 employees, mostly highly skilled electrical, software and computer engineers.

On Tuesday, the Free Press reported that earlier this year the provincial government discouraged Manitoba Hydro Telecom from bidding on a lucrative data network contract.

It is not clear how that relates to the broader back-pedalling at MHI.

On Tuesday Crown Services Minister Jeff Wharton said the province has not ordered MHI to restrict its business.

"I can tell you that I’ve never issued a directive to that matter," he said.

Wharton said there is no plan to sell off Manitoba Hydro International or to wind it down.

"There’s no discussion of that right now," he said.

MLA Adrien Sala, the NDP’s Hydro critic, said "there are very real indications" that Premier Brian Pallister is preparing to "privatize what is a valuable asset (MHI) that is currently making money for Manitobans."

Reacting to Wharton’s assertion that he had not directed Hydro to restrict MHI’s business dealings in any way, Sala questioned whether the minister was even on top of his portfolio.

"It would appear that we have a minister of the Crown, responsible for Hydro, who doesn’t seem to be aware of these directives (to) the organization that he is overseeing… from the highest levels of government," Sala said.

martin.cash@freepress.mb.ca

larry.kusch@freepress.mb.ca

Martin Cash

Martin Cash
Reporter

Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.

Read full biography

Larry Kusch

Larry Kusch
Legislature Reporter

Larry Kusch didn’t know what he wanted to do with his life until he attended a high school newspaper editor’s workshop in Regina in the summer of 1969 and listened to a university student speak glowingly about the journalism program at Carleton University in Ottawa.

Read full biography

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