By: Graham Lane
Posted: Winnipeg Sun, July 22, 2016
Pallister’s PC government wants to make the right moves with Manitoba Hydro. Its borrowings
dominates the province’s debt load, and it is headed skyward.
Consider the export electricity markets available to Hydro – south (America), east (Ontario), west
(Saskatchewan and Alberta). The U.S. takes whatever volume of power we send them, but at
terrible prices. Going east could look best – Ontario would like to develop the massive “Ring of
Fire” metal deposit north of Thunder Bay, Going west requires interest from two provinces with
ample natural gas and an inclination to support much lower-cost gas-fired electricity generation
plants with the spin-offs of provincial employment and resource development.
Three months ago the worst government in Manitoba’s history fell. When the NDP came into
power in 1999 Manitoba owed $10 billion, Hydro debt included. Fast-forward 17 years: the
Pallister government inherits a gross debt of $32 billion potentially headed for $60 billion. With
that debt and a structural budget deficit, no wonder there have been two credit downgrades this
Manitoba’s finances are in terrible shape, even before uncovering questionable bookkeeping
and considering how to overcome union commitments designed to restrain quick cost-saving
The NDP’s past deals includes ones impossible to break and expensive to adhere to. The nolayoff
collective agreements and unprofitable contracts to export power at bargain basement
prices are but two examples. Employee compensation drives the budgets of core government,
Crown corporations and agencies funded by government, and lengthy poorly-priced power sale
The greatest problem is Manitoba Hydro. Ignoring major market changes and falling head-overheels
for everything green and indigenous, the NDP pressured Hydro into unneeded costly new
infrastructure and pushed it to spend $1 billion plus to buy northern First Nations agreements
offering risk-less gold-plated partnerships.
The expansion is difficult to stop. Bipole III is steadily snaking down from the north on a
circuitous lengthy and enormously costly route; hundreds of contracted workers are busy
constructing Bipole III and Keeyask; equipment has been bought and contractors are at work;
and, American utilities expect more below-cost power. Hydro now takes $500 million a year
more out of ratepayers’ pockets than before the expansion began. If completed, if not
courageously halted by the new government, ratepayers could end up paying a further $1.5
billion annually to keep Hydro solvent.
Hydro’s western prospects are limited by distance, cost and local preferences, seemingly
leaving the ‘Hail Mary’ pass for Hydro ratepayers being the federal government massively
subsidizing trans-Canada transmission and Ontario agreeing to take our power at full price,
Leaving aside the prospects of a massive federal subsidy, the Ontario government is years
away from building transport infrastructure to the Ring of Fire’s chromium deposit. Resource
prices are too low now and there would be delays consulting First Nations.
Then, there is NW Ontario’s over-supplied power market, a large electricity surplus due to paper
mill closures. Finally, the ore would be hauled to Sudbury for processing, so there would be no
smelter at the mine site.
With abounding excess power generation and low prospects south, west and east, would it not
be safer to take a loss now and wait for a ‘paying’ market before wasting anymore than
Graham Lane chairs Manitoba Forward (manitobaforward.ca).