December 6, 2019

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New hydro line's cost may double

Could pass $4-billion mark due to price of equipment

Hydro CEO Bob Brennan says steel towers are easily attainable and inexpensive, but conversion equipment is not.

JOHN WOODS / WINNIPEG FREE PRESS ARCHIVES

Hydro CEO Bob Brennan says steel towers are easily attainable and inexpensive, but conversion equipment is not.

The cost of building Manitoba Hydro's new transmission line from the north could escalate from an estimated $2.247 billion to almost double that amount, Hydro CEO Bob Brennan said Friday.

But Brennan said the anticipated higher cost is not due to building Bipole III on the longer route on the west side of the province, but because of the increased cost of equipment needed to convert electricity for transmission.

"It's mainly not so much with the line," Brennan said. "The equipment going into the converter stations at each end, (on) that one we're getting conflicting advice."

Hydroelectric power is converted from alternating current (AC) to high-voltage direct current for transmission and then back AC for consumer use.

Opposition Progressive Conservative Leader Hugh McFadyen said Friday he expects the estimated cost of Bipole III to balloon beyond $4 billion.

"There are issues (where) some people think it could go up," Brennan said of the possible price tag for Bipole III. "Having said that, any number like that would have massive contingences in it. A contingency is just a 'plug' figure saying it's possible."

The new transmission line is one of Hydro's biggest projects over the next decade as it builds more northern dams to export more power to Minnesota and Wisconsin and works on deals to sell power to Saskatchewan and Ontario.

It's also one of the biggest political topics in the province as critics say the line should go down a shorter route on the east side of the province to save money. The NDP under former premier Gary Doer ordered the line go down a western route to preserve east-side forests and enhance a bid to have the area designated a UNESCO World Heritage site. Construction of the new line is expected to begin in 2012 and to be in service in 2017.

McFadyen said Hydro has stuck with its $2.2 billion cost estimated since 2007 and by now should have provided an updated estimated capital cost of the project. The $2.2-billion estimate is $1.1 billion for the line and $1.1 billion for the converter stations.

McFadyen said a new estimate should be disclosed by the end of the month and certainly before Hydro goes into hearings at the Public Utilities Board early in the new year on its general rate application.

"It's been three years since the last estimated came out," McFadyen said. "They've fully costed it. They have a number presented to them based on all the work that's been done internally. They haven't printed an update for this project now for three years and they're going to let this year go by again without an update. It makes me wonder."

Brennan said Hydro is currently setting up a group to fully study the possible higher price tag for the two converter stations, one at either end of the new transmission line. A report should be tabled in June before Hydro applies for an environmental licence to start construction.

Premier Greg Selinger said Friday converter stations will have to be built even if the line was being built down the east side.

Brennan said the longer western route is not behind the potentially higher cost for Bipole III. There is a suggestion that the some transmission towers will need extra, and more costly, reinforcement to support the cables strung between them.

"We really don't expect to see much of a change in the estimate for the line," Brennan said. "But the conversion equipment... there's a minimal number of people that make the equipment.

"If you're making steel towers, everybody and their dog can make them. There are a lot of Canadian suppliers for towers. But when you get into specialized conversion equipment, that is a limited number of people globally. That one, we just don't have the same sort of confidence in."

Meanwhile, those who oppose building the Bipole III transmission line down the west side of the province have formed a lobby group to try to force the NDP government to change its mind.

The Bipole III Coalition so far includes former Manitoba Hydro executives, retired engineers, the Canadian Taxpayers Federation and some 150 to 200 farmers, said spokeswoman Karen Friesen, a Niverville farmer who will see the line cut through her property.

"This has all come about in the last day or so," Friesen said Friday of the new group. It is demanding the transmission line be routed east of Lake Winnipeg, a significantly shorter distance but one that cuts through pristine boreal forest.

Colin Craig, Prairie director of the taxpayers federation, said one of the group's first orders of business will be to come up with an updated estimate of how much pricier a western transmission route would be. Hydro has pegged the added cost at $571 million, while the CTF has estimated it at $1 billion, once interest costs and power losses from a longer line are factored in.

bruce.owen@freepress.mb.ca 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.

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