Hey there, time traveller!
This article was published 8/9/2011 (2176 days ago), so information in it may no longer be current.
The order issued on July 29 by the Manitoba Public Utilities Board contains a host of contradictions of the rosy picture of the utility painted by Manitoba Hydro CEO Bob Brennan and by Gregg Selinger and Rosann Wowchuk, consecutive ministers responsible for Manitoba Hydro.
First there is Hydro's understatement of the costs of the Bipole III transmission-line project and the Keeyask and Conawapa generating stations. The PUB estimates that using more realistic estimates would add 25 per cent to the rates that Manitobans will pay for their electricity over the next 15 years.
Then there is Hydro's underestimation of export revenues because it hasn't taken into account the impact of the recession and other economic issues in the United States, nor has it factored in the competition from natural gas that can now be produced less expensively as a result of new technologies for extracting it from shale deposits.
The PUB estimates that more realistic assumptions would have added another 26 to 39 per cent to our electricity rates during this 15-year period.
Another concern expressed by the PUB, but not included in these calculations of additional rate increases, is Hydro's practice of "capitalizing operating, maintenance and administration expenditures."
Basically, this practice represents little more than putting operating expenditures on the credit card so that they don't have to be paid in the year that they are incurred. But the PUB says that they don't "go away" and they will get added to the long-term debt when capital development projects are complete.
The PUB order reveals that a whopping 43 per cent of Hydro's operating, maintenance and administration expenses are capitalized. While this practice is allowed today under Canadian accounting rules, power utilities in Canada are in a year of transition. Beginning Jan. 1, 2012, Hydro will have to comply with the more restrictive international rules for accounting. The PUB says that Hydro has asked it, in future submissions, "to accept amendments to MH's audited accounts for rate setting purposes" (i.e. two sets of books).
There is a host of other irregularities in Hydro's presentations to the PUB. The general picture is one of a house of cards that is very vulnerable to collapse. How could Hydro have allowed Manitoba's crown jewel to have been pushed this far by a party of rapacious NDP politicians intent only on maximizing government revenue from water licensing and from loan-sharking its credit rating?