Spotlight on Hydro as it seeks 2.9% rate hike

Hey there, time traveller!
This article was published 5/1/2011 (3235 days ago), so information in it may no longer be current.

Manitoba Hydro is heading into a decade of multibillion-dollar spending as it finishes one northern dam and builds two more to send more electricity south to power-hungry customers in Canada and the United States.

The bold plan comes on the heels of a recession that took a chunk out of the province's biggest Crown corporation's bottom line, and at a time when it was put under a microscope after a whistleblower alleged Hydro lost $1 billion because of poor management.

Now all that dirty laundry and more will be aired over the coming weeks at a sweeping public hearing into how Manitoba Hydro manages its business.

The focus of the Public Utilities Board hearing, which started Wednesday, is whether Hydro has the right tools in its toolbox to keep rates affordable — it boasts the lowest rates in North America — while growing into one of the continent's largest producers of hydro-electric power.

"We can't risk ratepayers' money with anything else," Hydro's chief financial officer Vince Warden told the three-member PUB panel on Wednesday.

Hydro wants the public regulator to grant its request for a 2.9 per cent rate increase for 2011. The PUB already approved an interim 2010 rate hike of 2.8 per cent.

If the new rate is approved, residential customers will pay between 40 cents and $20 more in 2011, depending on how much power they use. The higher rates, which are forecast to go up to 3.5 per cent in 2012-13, will put about $68.5 million into Hydro's pockets.

The request comes at a time when the U.S. recession has taken a bite out of Hydro's profits and net income from sales is forecast to drop to $149 million by the end of this budget year, from $160 million last year. That number is expected to drop even more and won't recover until the U.S. economy improves and there's more demand for hydro power, Warden said.

Hydro forecasts show that number will jump to $292 million by 2019-20 as new export contracts kick in.

Byron Williams, a lawyer representing the Consumers Association of Canada and Manitoba Society of Seniors at the PUB hearing, said a rate increase more in line with inflation (1.7 per cent) would be more appropriate.

"We're just saying to the board, that's too much," Williams said of Hydro's proposed 2.9 per cent increase.

Williams also said while Hydro's growth in power exports is a big opportunity for the province, it also comes with significant risk to Manitobans should the Crown utility suffer a prolonged drought and not have enough water to power its dams.

Warden and Hydro spokesman Glenn Schneider both said the threat of drought has been built into Hydro's plans.

"We start from a foundation where we have the lowest rates in Canada," Schneider said. "We'll still maintain that position going forward."

bruce.owen@freepress.mb.caw

Power it up

Manitoba Hydro's dam-building and electricity-export plan

St. Joseph Wind Farm (138 megawatts) developed with Pattern Energy comes online in the next few weeks: Cost: $345 million

Wuskwatim generating station (200 MW) comes online next fall. Cost: $1.6 billion

Bipole III transmission line to be built by 2017-18. Cost: $2.2 billion

Keeyask generating station (695 MW) to see first power by 2019-20. Cost: $5.5 billion

New interconnection with U.S. by 2019-20. Cost: $200 million

Conawapa generating station to see first power by 2023-24. Cost: $7.7 billion

Pointe du Bois spillway replacement by 2014-15. Cost: $400 million

 

— Source: Manitoba Hydro