October 20, 2019

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Hydro to post first quarterly loss in years

Plans to institute cost-cutting measures

Hey there, time traveller!
This article was published 20/8/2010 (3347 days ago), so information in it may no longer be current.

The North American economic downturn has caught up with Manitoba Hydro, which will post its first quarterly loss in seven years in the next few weeks.

The size of the loss is still unknown, as Hydro has yet to report it. The red ink came to light Friday when the provincial Conservatives leaked an internal memo from Hydro president Bob Brennan to senior Hydro staff.

The memo, dated Aug. 13, says Hydro will lose money in the quarter ended June 30 and outlines a series of cost-cutting measures, including restrictions on staff travel, a hiring freeze on vacant positions, reductions in overtime, caps on banked vacation and a "potential" freeze on executive and management salaries.

Manitoba Hydro is a huge economic generator, and its profits are sometimes used to help balance the province's books. Last year, the NDP government posted its first deficit since the party came to power in 1999. Hydro last suffered losses in 2003-2004, when prolonged drought conditions curtailed electrical production. That year, the corporation posted a whopping annual loss of $436 million.

Hey there, time traveller!
This article was published 20/8/2010 (3347 days ago), so information in it may no longer be current.

The North American economic downturn has caught up with Manitoba Hydro, which will post its first quarterly loss in seven years in the next few weeks.

The size of the loss is still unknown, as Hydro has yet to report it. The red ink came to light Friday when the provincial Conservatives leaked an internal memo from Hydro president Bob Brennan to senior Hydro staff.

The memo, dated Aug. 13, says Hydro will lose money in the quarter ended June 30 and outlines a series of cost-cutting measures, including restrictions on staff travel, a hiring freeze on vacant positions, reductions in overtime, caps on banked vacation and a "potential" freeze on executive and management salaries.

Manitoba Hydro is a huge economic generator, and its profits are sometimes used to help balance the province's books. Last year, the NDP government posted its first deficit since the party came to power in 1999. Hydro last suffered losses in 2003-2004, when prolonged drought conditions curtailed electrical production. That year, the corporation posted a whopping annual loss of $436 million.

Conservative Leader Hugh McFadyen seized on the leaked document Friday to back his long-standing argument Hydro should build its new northern transmission line along the east side of Lake Winnipeg rather than to the west, as ordered by the NDP government. The Tories claim the western route will cost Hydro an additional $1.75 billion — a figure the province and Hydro dispute.

"What we see is, obviously, the company is in trouble financially right now," McFadyen said, adding he's worried Manitobans will have to pay higher hydro rates because of the more expensive route and what he referred to as Hydro's "out of control" costs.

In an interview Friday following the memo's release, Brennan said the Crown corporation expects to earn "a fair-sized profit" this year, despite the slow start.

He wouldn't release the size of the three-month loss until Hydro issues its first-quarter report in the next week or two. Hydro's fiscal year runs from April 1 to March 31.

Brennan blamed the loss largely on soft U.S. market prices for electricity that have slashed Hydro revenues. Demand for power has fallen in the United States during the recession and American utilities have shut down high-cost domestic power producers while maintaining imports from Manitoba. The result is cheaper overall market prices south of the border.

Hydro's sales percentage outside of Manitoba varies from quarter to quarter. For the first nine months of last year, the utility sold $821 million worth of power to Manitobans and $328 million to customers outside the province — mainly in the U.S. Sales of power beyond those covered by fixed contracts are typically at market rates.

Brennan said Hydro has periodically posted first-quarter losses in years past. It tends to make the bulk of its profits during cold winter months when consumers are using electricity to heat their homes.

larry.kusch@freepress.mb.ca

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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