Hydro seeks annual rate hike of 7.9% until 2024

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This article was published 13/09/2017 (2957 days ago), so information in it may no longer be current.

Manitoba Hydro is taking a “pay me now or pay me later” approach with its provincial regulator as it seeks to meet its financial targets.

In a letter to the Public Utilities Board last week, Hydro said it will now require annual consumer electrical rate increases of 7.9 per cent until 2023-2024 — two more years than it previously projected. For 2024-2025, the Crown corporation figures it will need a rate hike of 4.54 per cent.

Manitoba Hydro said it had to revise its revenue requirements after the PUB denied its request for a 7.9 per cent rate increase in July. The regulator instead granted an interim increase of 3.36 per cent, which took effect Aug. 1.

Kelvin Shepherd, Hydro’s president and CEO, said Tuesday the corporation needs to improve its cash flow. It also wants to improve its debt-equity ratio to 25 per cent within the next decade, placing it on a solid financial footing and preventing the need for potentially higher rate increases in the future.

When Hydro didn’t receive the nearly eight per cent increase it sought this year, its financial goals became more elusive, Shepherd said.

“It shows you the impact when you defer rate increases to future years,” he said in an interview.

The PUB will hold public hearings from Dec. 4 to Feb. 9 on Hydro’s general rate application for this year and next.

In its letter to the PUB, dated Sept. 5, the Crown corporation expressed dismay at the growing time and cost of processing information requests from intervenors in the application process. Hydro is required to cover intervenor costs as well as the appearance of expert witnesses before the PUB.

This summer, Manitoba Hydro responded to 1,547 information requests from the PUB and six other groups in an initial round of information requests concerning its rate application. The responses took up 9,000 pages. That followed an initial 2,700-page application by Hydro to the PUB in June and 12,000 pages of follow-up information, Shepherd said.

“It consumes a tremendous amount of staff time,” the Hydro executive said, wondering out loud if “people are really reading that much information and getting value out of it.”

Hydro estimates the cost of funding intervenors for the current application process at about $2.2 million — well above the cost in previous years. Intervenors include the Manitoba branch of the Consumers Association of Canada, Winnipeg Harvest, Indigenous organizations, industrial power users, the Business Council of Manitoba and the Green Action Centre.

“Ratepayers bear 100 per cent of the costs of this regulatory process,” the corporation reminded the PUB in its letter.

The City of Winnipeg was also recently granted intervenor status but did not request funding from Hydro, a city spokesman said Tuesday.

Byron Williams, a lawyer representing Winnipeg Harvest and the consumers association, said intervenors play a vital role in the regulatory process.

He said the costs of funding intervenors is fairly modest when you consider Hydro is seeking rate increases that will cost consumers more than $200 million over the two-year application period.

Williams questioned Hydro’s budgeted need for two more years of 7.9 per cent rate increases simply because it didn’t get all it wanted in the PUB’s interim order this summer.

“Hydro’s math in extending the 7.9 (% hikes) seems pretty questionable. But we’ll test this in the regulatory process,” he said.

NDP MLA James Allum said the PUB has already rejected Hydro’s 10-year plan for boosting its debt-equity ratio to 25 per cent.

“They’ve rejected this approach because it’s a politically driven approach that will only hurt families, hurt businesses and only hurt the economy,” he said.

Manitoba Hydro incurred a huge debt after undertaking several massive capital projects in recent years, including the Keeyask Generating Station and the Bipole III transmission line.

larry.kusch@freepress.mb.ca