Modest rate increases necessary for Hydro to keep the lights on

Opinion

Hey there, time traveller!
This article was published 11/02/2025 (214 days ago), so information in it may no longer be current.

Considering the aging condition of Manitoba Hydro’s infrastructure and the critical need to invest in new generating capacity, it is utter madness that the NDP government is pushing for a rate freeze in 2025.

It’s probably why the Crown corporation has commissioned a public opinion poll to gauge whether Manitobans support modest rate increases to ensure the province has reliable power today and in the future.

The NDP promised voters during the 2023 election that it would freeze Hydro rates for one year. It was a misguided and irresponsible pledge, given Hydro’s serious financial problems.

Manitoba Hydro has confirmed it will follow that political direction and seek no rate increase for 2025. It also plans to file a multi-year rate application this year, but has not said whether it will seek a rate increase for 2026. It should. And it should this year, too.

Why? Because according to the Crown corporation’s own internal analysis, it needs to spend hundreds of millions of dollars a year to replace, repair and refurbish aging infrastructure, including generating stations, transmission towers, distribution lines, wood poles and underground cables.

“Manitoba Hydro is projecting that many of its asset populations will require significant intervention today, and increasing in the near future, in order to avoid accelerated system performance degradation and diminished supply,” Hydro’s 2022 asset management report says.

About 27 per cent of its generator assets exceed the economic life cycle of 60 years “where there is an increased risk of a prolonged outage should a failure occur,” the report says. Another 23 per cent fall within the 40- to 60-year range “where planning of unit overhauls should be initiated,” it says.

“Manitoba Hydro is projecting that many of its asset populations will require significant intervention today, and increasing in the near future, in order to avoid accelerated system performance degradation and diminished supply.”– Manitoba Hydro’s 2022 asset management report

“This need conservatively projects that overhauling 50 per cent (53) of the fleet in the next 20-30 years with an intervention rate of approximately two generators per year is the most economic choice to avoid prolonged outages and lost generation,” the report says. “Manitoba Hydro can anticipate a large number of generator assets approaching economic end-of-life prior to intervention, if the current intervention pace is not significantly accelerated.”

The problem is Hydro has fallen behind in its maintenance schedule over the past couple of decades and is now trying to catch up.

For example, equipment such as “exciters,” which are devices used to control the voltage output of an electrical generator, must be replaced over time. Hydro has replaced 18 exciters in the last 10 years, or 1.8 per year. However, the corporation says it needs to replace four per year to keep the lights on.

Naturally all of this costs money, hundreds of millions of dollars a year. And Hydro doesn’t have a lot these days.

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It has tripled its debt over the past 15 years to build megaprojects (including going over budget by $3.7 billion to construct the Bipole III transmission line and the Keeyask generating station) and has posted several steep deficits in recent years, owing mostly to dry weather and low water levels.

That’s not all. Hydro says it will need more generating capacity to meet rapidly growing power demands in the very near future, something the Crown corporation seems ill-prepared for.

Add to that weaker exports markets in recent years than expected and it’s easy to see why Hydro is asking the public in a recent poll about supporting modest rate increases.

“Without investments to maintain or replace aging infrastructure, Manitoba’s electricity system is expected to decrease in reliability,” the poll states. “This would lead to more or longer power outages in coming years.”

The poll asks, among other things, whether people would support paying an extra $9 a month on average to reduce the risk of prolonged outages. Seems like a small price to pay to keep electricity flowing into our homes, businesses and public facilities.

“Without investments to maintain or replace aging infrastructure, Manitoba’s electricity system is expected to decrease in reliability.”– public opinion poll commissioned by Manitoba Hydro

Even with modest increases, Manitoba would still have among the lowest electricity rates in North America, and among the most reliable.

But that could change if political interference prevents Hydro from raising the revenues it needs to make crucial investments in infrastructure upgrades and in expanding generating capacity.

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Low-cost, reliable electricity is one of Manitoba’s key advantages in attracting and retaining industry, which is critical to maintaining and creating jobs. It would be foolish not to preserve that advantage.

But every time governments interfere in Hydro’s affairs with misguided, populist pledges, such as freezing or limiting rate increases (the former Progressive Conservative government did it, too), Hydro suffers. And by extension, Manitoba’s economy suffers.

Most Manitobans and businesses can afford modest rate increases. For those who can’t, the province could offer targeted support in other ways.

Across-the-board rate freezes right now would be reckless and would hurt Manitoba’s economy in the future.

tom.brodbeck@freepress.mb.ca

Tom Brodbeck
Columnist

Tom Brodbeck is an award-winning author and columnist with over 30 years experience in print media. He joined the Free Press in 2019. Born and raised in Montreal, Tom graduated from the University of Manitoba in 1993 with a Bachelor of Arts degree in economics and commerce. Read more about Tom.

Tom provides commentary and analysis on political and related issues at the municipal, provincial and federal level. His columns are built on research and coverage of local events. The Free Press’s editing team reviews Tom’s columns before they are posted online or published in print – part of the Free Press’s tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.