Along with chairman Sanford Riley, these board members resigned from the Manitoba Hydro board
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This article was published 21/3/2018 (674 days ago), so information in it may no longer be current.
In a stunning and likely unprecedented move, Manitoba Hydro’s Tory-appointed board of directors resigned virtually en masse Wednesday, saying it had not been able to meet with Premier Brian Pallister for more than a year to "resolve a number of critical issues."
The resignations of nine of the 10 board members — only Progressive Conservative MLA Cliff Graydon remains — is seen as a political blow to the two-year-old Pallister government and a rebuke to the premier’s communications style.
The departing directors issued a statement Wednesday announcing their decision. Rumours had been circulating for at least a week that a walkout by the board was imminent. The directors included chairman Sanford Riley, president and CEO of Richardson Financial Group, and University of Winnipeg president Annette Trimbee.
Pallister said the reason for the departures was his government’s decision to veto a planned Hydro payment of $70 million to the Manitoba Metis Federation to keep the organization from pressing for extended environmental hearings on a proposed Manitoba-Minnesota transmission line.
"We expressed our opposition to that, and that has led to the decision that you see here today," the premier said.
Pallister told reporters that had the payment been allowed, it could have opened the floodgates to other such settlements — not only from Hydro, but from other government entities.
"I don’t believe it’s right to stand back as a government that’s committed to trying to fix the finances in this province for Manitobans... and then watch as a Crown corporation makes a $70-million payment to a special-interest group," he said, referring to the planned payout as "persuasion money."
Pallister said Manitoba Hydro told the government about its intention to make the payment "some weeks ago," and "they were immediately informed by the minister (of Crown Services, Cliff Cullen) not to do so."
A cabinet order Wednesday backed up that refusal.
In a statement announcing their resignations, Hydro board members said they had been unable to meet with Pallister to discuss a number of serious concerns.
"For over a year we have attempted to meet with the premier to resolve a number of critical issues related to the finances and governance of Manitoba Hydro, including matters related to Hydro’s efforts to further develop its relationship with Indigenous Peoples," they said.
"Despite repeated attempts, we have not been able to have a meaningful dialogue with the government and we have reached an impasse. We have been informed that the government intends to remove the chair (Riley) and has therefore lost confidence in the board. Accordingly, we have determined it is necessary to resign."
In addition to Riley and Trimbee, those tendering their resignations Wednesday include: Dave Brown, Earl Edmondson, Steve Kroft, Jennefer Nepinak, Michael Pyle, Allen Snyder and Dayna Spiring.
Most declined to comment or didn’t respond to a request for an interview Wednesday, but Riley — who was clearly offended at Pallister’s comments to the media earlier in the day — later sent the Free Press an emailed statement.
He said it was "cynical, offensive and wrong" for the government to suggest that the Hydro board would have paid any group ‘persuasion money.’
"With regard to the motivations for our resignations this morning, I absolutely stand by everything we said in our statement and our resignation letter to Minister Cullen," said Riley, who was out of the country Wednesday. "The suggestion that there were ‘untruths’ in that statement is simply untrue," he said, referring to remarks by Pallister questioning the board’s motivations for resigning.
"Despite repeated attempts we have not been able to have a meaningful dialogue with the government and we have reached an impasse." - Manitoba Hydro board statement
Manitoba Metis Federation president David Chartrand was so outraged that Pallister had called Manitoba’s Métis nation a special-interest group, he demanded the premier resign.
"He’s trying to use us as a scapegoat to cover up his tracks that he failed," Chartrand said in an interview. "This is language that’s absolutely unbelievable."
Chartrand said the federation and the Hydro board had ratified, but not yet signed, an agreement, and had been planning to hold a public event as a celebration of reconciliation that he insisted wasn’t about the money. He described it as payments totalling $67 million over 50 years.
Chartrand said the federation will take the province to court over the money, and will now go much further and sue for compensation for land affected by the Lake St. Martin and Lake Manitoba channels and flood-mitigation projects.
"I will never allow them to disrespect our people. He should consider resigning," Chartrand said.
There could be other political fallout for Pallister as a result of the resignations.
Retired political scientist Paul Thomas said the resignations reflect a "serious breakdown in communication" between the government and the (Hydro) board and a "failure in the political management of an issue that should not have been allowed to unravel the way that it did."
As well, according to Thomas: "It says something about the availability of the premier and his communication style that he couldn’t find time to meet with Sandy Riley, such an important business figure in this province."
Pallister told reporters he planned to appoint Riley to a different board. He didn’t identify which one. He said he soon plans to make major changes to various board appointments, including naming more women, as his government reaches its mid-term mark.
Asked when he last met with Riley, Pallister said "not recently," then added it was "a fair number of months ago." He said government officials have communicated with Riley.
Hydro has asked the Public Utilities Board to approve an annual rate increase of 7.9 per cent, which the Crown corporation wants to levy annually for the next six years. The PUB is expected to render a decision at the end of April.
When Pallister appointed the board on May 7, 2016, he said: "We are proud to assemble a versatile and experienced group of executives who will bring valuable input to the direction of Manitoba Hydro. It is a tremendous responsibility serving on this board as Manitoba Hydro endeavours to enhance energy service for the province and evaluates opportunities to employ renewable energy strategies."
Riley has been an outspoken board chairman, blaming the former NDP government for blunders in approving the Bipole III transmission line and Keeyask generating station megaprojects that he said will cripple Manitoba with debt that could reach $25 billion.
"If we had been the board at that time, we would not have proceeded," Riley said in September 2016. He said getting Hydro’s finances under control is the responsibility of the Crown corporation, the province and consumers.
"There’s no secret right now, ratepayers are going to be part of the solution," he said. "We have to fix Manitoba Hydro."
Pallister ordered the government and its Crown corporations to cut 15 per cent of management, but the Hydro board went far beyond that order, opting to buy out 15 per cent of its workforce, totalling 900 workers.
In February 2017, Riley went off-script with the Pallister program and publicly asked the Tory government to pump billions of dollars into Hydro or face a potential financial debt disaster. Without that money — which he vehemently denied was a bailout — Hydro would have to seek annual double-digit rate increases, maybe as high as 20 per cent.
"The province would invest a certain amount of money in Hydro as an equity investment," Riley said 13 months ago. "They’d buy common equity in Hydro. It’s severely undercapitalized."
Without an injection of provincial money, he said, "As a board, we’d have to look at even more draconian (rate) increases."
Pallister rejected any notion of putting billions of dollars into the utility.
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.
Along with chairman Sanford Riley, these board members resigned from the Manitoba Hydro board
"I am not looking to engage in a public debate, but I feel compelled to provide the following response.
"With regard to the motivations for our resignations this morning, I absolutely stand by everything we said in our statement and our resignation letter to Minister (Cliff) Cullen. The suggestion that there were ‘untruths’ in that statement is simply untrue.
"The suggestion that our board would have paid ‘persuasion’ money to anybody is cynical, offensive and wrong.
"The agreement with the Manitoba Metis Federation was carefully vetted by the board. It met our legal obligations, encompassed a multiplicity of projects, covered a 50-year period, and was structured to ensure the money went to the people who should benefit from it. Most importantly the agreement enabled Manitoba Hydro to build infrastructure projects and enabled power sales that take pressure off Manitoba ratepayers. In the view of our board it was a good transaction for Manitoba Hydro.
"It is not clear to me how the premier could have come to his view on these matters, given that he has refused to have conversations with us for over a year, and efforts that we made to engage with him on this issue were continually rebuffed."
How unusual is it for a Crown corporation board to resign en masse from the government that appointed it?
Retired University of Manitoba political scientist Paul Thomas says, as far as he can recall, it's unprecedented. “I can think of no instance where there has been a mass resignation from a board of directors of a Crown corporation in Manitoba. I can’t even think of one in another jurisdiction, either Canada or another province.”
What is the political fallout for the Pallister government?
“It’s a serious political problem... Hydro is a big, big presence in the Manitoba economy. It employs a lot of people…When you appoint somebody as intelligent, as well-respected and principled as Sandy Riley as board chair…you shouldn’t take him for granted. You should respect his judgement and his expertise...It says something about the availability of the premier and his communication style that he couldn’t find time to meet with Sandy Riley, such an important business figure in this province.”
What effect will the mass resignation have on Manitoba Hydro’s application to the Public Utilities Board for a 7.9 per cent rate hike in electricity rates?
It will not affect this year’s rate decision, says PUB secretary and executive director Daren Christle. He said the rate application and public hearing have concluded and a PUB panel is currently deliberating. “The new Manitoba Hydro board may choose to submit a general rate application next year which looks different than the one that has been presented by Manitoba Hydro in this hearing, but this is only speculation,” Christle said. “A new Manitoba Hydro board cannot withdraw the current application at this point in time. I’m not aware of any precedent.”
Will the resignations have any effect on the way lenders and bond-rating agencies view Hydro?
Premier Brian Pallister dismissed the idea the resignations would make lenders nervous. “Don’t inflate the importance of that. I understand bond-rating agencies very well. Bond-rating agencies care very much about the management at Manitoba Hydro. The board (of directors) is very secondary to that concern. Don’t over-inflate the importance of this.”
What is the Manitoba-Minnesota transmission project?
It is a proposed 500-kilovolt power transmission line that would run from the Dorsey converter station northwest of Winnipeg to the village of Piney at the American border, where it would link up with a U.S. transmission line. The 213-kilometre, $453-million project – currently undergoing a federal assessment – would expedite power exports to the United States.
What are the potential ramifications of the project being held up?
Crown Services Minister Cliff Cullen said Wednesday delays in completing the project have “the potential” to cost Manitoba Hydro money. Asked whether the cost of delays could surpass the $70 million in payments that Hydro had planned to set aside for the Manitoba Metis Federation, he said, “The potential exists for that.”
When is a new Hydro board expected to be named?
Pallister said replacements would be named soon, likely as part of an effort to "refresh" various government-appointed boards by adding new blood. "We want to expand the number of women who serve on our boards,” he said.
Updated on Wednesday, March 21, 2018 at 3:22 PM CDT: Updates formatting
3:42 PM: Updates
7:31 PM: Writethrough, format change
March 22, 2018 at 9:43 AM: Updated.
2:27 PM: Moves slideshow.