With Manitoba Hydro determining a new way forward under its new board and CEO, it still has to deal with a massive debt approaching, and possibly exceeding, $25 billion. Much of this debt is being accumulated on the misconception hydroelectricity exports will be profitable. Hydro’s overpriced and questionable recent developments are much to blame.
If hydroelectricity exports are and will be profitable, why are our electricity rates in Manitoba increasing at a greater rate than the cost of living?
The generation and use of electricity around the world are changing as consumers have more say in how they use power. This historical change is being referred to globally as the democratization of electricity. Residential rates in Manitoba were once the lowest in the country; now, they are 30 per cent higher than in Quebec and gaining on other Canadian utilities, leading to increased energy poverty for many consumers.
The Manitoba government has a conflict of interest in benefiting significantly from Hydro’s growing debt through debt guarantee fees, water rental fees and capital taxes from asset growth. This is devastating to Hydro, as well as to the provincial economy.
Even though it was a different political party that promoted Hydro’s preferred development plan, it was, after all, the current government allowing it to continue. The bulk of the debt attributable to the Manitoba/Minnesota Transmission Project, Bipole III, Keeyask and the Wuskwatim generating stations should be aggregated in a separate government account and paid down through provincial budgets.
This would be fairer to consumers, as this account would be written down under our graded tax system, so those less able to afford the increasing Hydro rates would pay a lower share than those with wealth. In addition, Hydro’s rate increases would be less for all if they were brought down below cost-of-living increases, and the economy would benefit.
The influence of government on Hydro has been part of a pattern for all Crown corporations in Manitoba. It doesn’t have to be that way. In the case of Hydro, the business of producing and marketing electricity is so complex, corporate decision-making should be left to Hydro’s board.
This all begs a significant change to the Manitoba Hydro Act, which served us well in the past century, but which is well out of date today.
The democratization of the industry globally is evident in the increasing number of electricity consumers who also produce, store and generate electricity.
Today, if Manitobans sell electricity, they can only sell it to Hydro at a price Hydro sets. True open access to the distribution transmission lines feeding their homes does not exist in Manitoba. Consumers in other jurisdictions with their own generated or stored electricity are beginning to demand a say in marketing their surpluses. They will pay a surcharge to compensate for access to the distribution and transmission lines for marketing their electricity.
This is peer-to-peer trading of electricity. There are cities and communities in the United States and other countries aggressively embracing such change. The incentives to do so include increased reliability through lower frequency of local blackouts and protection against excessive rate increases.
Changes in the Manitoba Hydro Act should be made by those without real or perceived conflict of interest and with a deep knowledge of the changing electricity industry. It would be best if funding for development of the new act is also provided independently, without influence of conflicts of interest. Provincial stakeholders could offer guidance to, but not have authority over, the study and the resulting draft act.
This change must be done with a supportive government. Given the unpredictability of the future in the electricity industry, flexibility and adaptability need to be incorporated into a new Manitoba Hydro Act, finally allowing the utility to move into the 21st century.
The future will include a move toward the democratization of electricity for consumers and producers alike, in which a market system develops that is not one monopoly as Manitoba Hydro is now. Consumers require a reliable and flexible grid, implying a need for modernization and investment in profitable new technologies.
Dennis Woodford is a member of the Manitoba Energy Council.