Heavy was the head wearing Crown’s independence; new Hydro chair stood up to Tories at MPI

Opinion

Hey there, time traveller!
This article was published 04/12/2023 (669 days ago), so information in it may no longer be current.

Why would the newly minted NDP government appoint a former president and CEO of Manitoba Public Insurance to be the chair of the Manitoba Hydro-Electric Board?

You need only look at the track record of that former MPI chief executive to answer the question.

Ben Graham was only at the helm of the Crown auto insurer for 2 1/2 half years, but even in that relatively brief time he left an indelible impression on the former Progressive Conservative government. On Monday, he was officially unveiled as the new chair of a completely overhauled Hydro board.

The Graham-MPI story goes back to 2019 when leaked MPI correspondence obtained by the NDP showed the PC government had forced MPI to continue paying private insurance brokers generous commissions for online insurance sales that were conducted directly through the Crown corporation’s website.

Publicly, Graham said the transition to online insurance was an opportunity to provide better customer service and reduce the tens of millions of dollars paid to brokers for everything from driver’s licence and Autopac renewals to new vehicle registrations. The reduction in broker fees would, Graham argued, help keep Autopac rates down.

A registered insurance broker by trade, former premier Brian Pallister, not surprisingly, decided brokers would continue getting a commission on all Autopac and licence renewals, even if a customer did the transactions directly with MPI through its website. The leaked correspondence showed the Tory government had secretly directed MPI to cut a deal with brokers — contrary to provincial legislation that is supposed to ensure the independence of Crown entities — and that Graham had tried unsuccessfully to push back.

Although he never made his fight with Pallister public, the correspondence showed he was more than fulfilling the role of the chief executive of an arm’s-length Crown entity.

Graham left MPI in October 2020 to take a position at Manitoba Blue Cross. MPI, meanwhile, went on to suffer massive financial misfortune under the stewardship of Graham’s successor, Eric Herbelin.

Herbelin was fired earlier this year by the MPI board following salary and expense controversies. He left behind a Crown entity crippled by financial mismanagement and paralyzed by hundreds of millions of dollars in cost-overruns in its information technology overhaul.

Which brings us back to the issue of Graham’s role as Hydro’s board chair.

Why would the NDP bring back a Crown corporation chief executive with a history of pushing back at the political level of government?

The question is, quite likely, also the answer.

Under the Tories, Manitoba Hydro was manipulated in just about every way possible. The Tories set rates by cabinet decree while undermining the ability of the independent Public Utilities Board to oversee Hydro finances and review rate applications.

Under the Tories, Manitoba Hydro was manipulated in just about every way possible. The Tories set rates by cabinet decree while undermining the ability of the independent Public Utilities Board to oversee Hydro finances and review rate applications.

The Tories also rejected volumes of advice from consumers rights groups and insurance-industry experts and set new retained earnings targets for Hydro that required decades of sharp electricity rate increases. The Tories did this to fatten Hydro equity which, in turn, helped balance the summary budget and pave the way for an unrelenting series of deep tax cuts.

In other words, a classic case of one hand giving while the other hand was taking away.

Despite being repeatedly condemned for meddling with Hydro by everyone from anti-poverty groups to lobby organizations representing large industrial electricity users, the PC government forged ahead.

That has left the NDP, now in power, with a long Hydro to-do list. A list that Graham inherits as the new chair.

On the positive side of the equation, Hydro has been able to secure long-term export contracts with customers in the U.S. and neighbouring provinces that will pour billions of dollars into the utility’s coffers.

On the negative side, the threat of drought and the natural growth of electricity demand in Manitoba from an increasing population present enormous challenges for Hydro moving forward.

The NDP government will need a Hydro board and senior management that is able to undertake a transformation of enormous magnitude, on many different fronts.

Hydro needs to move ahead much more aggressively on demand-side management (energy-efficiencies measures) while also looking for opportunities for the growth of wind and solar generation. Without these measures, within a single generation Manitoba could go from a net exporter of electricity to a net importer.

At the same time, the utility needs to moderate rate increases, roll back the PCs’ crippling debt-to-equity targets and restore the PUB to its full oversight capability to ensure transparency and fairness in rate-setting.

The new NDP-appointed board may also want to look at the performance of current Hydro president and CEO Jay Grewal, who has led the utility since 2019.

It is arguable that no chief executive could have beaten back the creeping influence of the highest political levels of a government hell-bent on using Hydro as a piggy bank to fund tax cuts.

On the other hand, given that much of this manipulation was improperly done without the authority of a ministerial directive, it might have been nice if Grewal had found a way, somehow, to raise an alarm.

Much the way Graham did when he was at MPI.

dan.lett@winnipegfreepress.com