Pallister, Hydro ending Manitoba “advantage”

By: Graham Lane
Published by: The Winnipeg Sun, June 22, 2017

Upon the election that put Brian Pallister’s PC party in power, Hydro’s board of directors was replaced by a group assembled by Sanford Riley – a well-known and respected Richardson-family affiliated businessman.

Pallister assured Riley that he would not interfere in the new board’s assessment and direction of Manitoba’s largest and most troubled Crown corporation. During the election campaign, Pallister promised to halt Hydro’s expansion and call a thorough public review, as sought by farmers (whose lands were to be disturbed), and critics questioning the economics of the gamble.

Assailed by strong and continuing criticism of Hydro’s ongoing massive expansion coming from knowledgeable critics, including: past Hydro executives, past premiers, Filmon (PC) and Schreyer (NDP), professional engineers, utility consultants, and a former PUB chair, me, Riley brought in an American consultancy with no prior knowledge of Hydro. Boston Consulting Group then relied on Hydro executives (under the third president in three years) and their ‘always-wrong’ forecasts, and did not engage with the critics. Pallister’s promise of a halt and review was not honoured. During the consultant’s assessment process, the expansion continued, perhaps at $10 million a day.

By the time the new Riley board was satisfied that the expansion was uneconomic and would place an enormous burden on Hydro’s ratepayers, a verdict coming roughly six months after the election, they decided too much had been spent by then to stop it. Worse yet, the forecast of the expansion’s cost soon grew again, now estimated at $14 billion for Keeyask and Bipole III alone.

If only Mr. Pallister had honoured his pre-election promise (halt and review) before so much more money went down the drain! He now shares responsibility for the biggest boondoggle in Manitoba’s history with the previous Selinger-NDP ‘masterminds’.

With Boston Consulting’s verdict in and, allegedly, too much spent to stop, Riley then sought ‘help’ for ratepayers from Pallister in the form of a ‘capital infusion’ from government. Riley’s idea was sound, despite unfortunately blowing a couple of billions in more spending before realizing its need. An infusion of cash from Broadway to Hydro would relieve rate pressure on ratepayers.

With no help coming from Pallister, Riley’s Hydro has filed a rate application with PUB, seeking two years of annual 7.9% rate hikes (while expecting 5 years of 7.9%). Rate shock following more than a decade of annual double inflation rate hikes. Hydro’s new President, Kelvin Shepherd, went one step further. He suggested that the annual rate hikes should really be doubled (15% a year). So much for Manitoba’s ‘advantage’. Good-bye low rates. Hello energy poverty and slowing economic growth.

Why didn’t Pallister come through for Riley and Manitoba’s captive ratepayers? Because his tinkering, go-slow approach to deficit control means he needs every cent he can get from Hydro (now approaching $400 million a year already included in rates, and still growing). If his government reduced its enormous levies on Hydro they expect Pallister would struggle to reduce the provincial deficit and meet his promise to cut 1% off the PST.

Better for him if he keeps the heavy levies, profits from the boondoggle, and pushes rates up enough to put Hydro results into the black, while helping balancing the province’s summary accounts.

So Pallister stumbles along with his essentially NDP model. Ratepayers, the innocents, be dammed.

Graham Lane leads Manitoba Forward (manitobaforward.ca).

Wake up, Canada!

By: Graham Lane
Published in the Winnipeg Sun on June 15, 2017

Canadians are a diverse bunch. Not just with respect to ethnicity, country of origin, religion, political leanings, sexual orientation, wealth, and health, but also as to recognizing why we are a fortunate bunch.

Our country was not born out of a war, we have liberal laws that are mostly followed, our society provides for upward mobility (jobs and wealth) and we get to elect our political leaders (some work out). For all these blessings, too often too many of us forget what got us here and what still “butters our bread.”

There is but one major asset — leaving aside our people — that puts Canada in the “rich country” category, and it allows us to have universal health and education, pension and welfare systems. We are certainly not in the first tier of countries when it comes to technology, innovation and manufacturing. What put us and has kept us in the first tier is our God-given natural resources: Space, agricultural land, minerals, fossil fuels, and forestry.

Without our natural resources we wouldn’t be a first tier country, let alone have the population we have. The millions of immigrants that have come here over the years didn’t come for our savage winters. Without our natural resources, equalization transfers to the “poorer” provinces would never had begun. Without our resource revenues, how would the $18 billion or more that flows annually from federal and provincial taxes to First Nations be funded? Without natural resources, would Canada be able to increase funding to our military, increased funding now demanded by our major ally?

Natural resources have supported our economy from the days of the fur trade. Today, segments of our diverse society delude themselves into thinking we would do better if we left our oil and gas in the ground, walked away from mining opportunities and focused on being greener than green.

In recent years, the Canadian dollar has been in the “dumps,” having fallen from par with the U.S. greenback to now hovering around 75 cents. The fast fall from currency grace pushed up the cost of our imports, reduced our travel expectations and lowered our standard of living. We enjoyed our dollar being a par, a situation brought almost solely by our exports of then higher-priced fossil fuels.

Our low dollar now suffers not only from currently stuck low fossil fuel pricing, but also because the Bank of Canada’s holding its base interest rate well below that of the U.S. In doing so, our central bank deprives savers from reasonable yields while allowing foreigners to pick up our properties at discount prices, all to boost manufacturing exports by lowering the USD price of those exports. The Bank of Canada recognizes poor manufacturing productivity resulting in uncompetitive results. To compensate, we rely on currency manipulation that hurts consumers.

Our richness of natural resources allow us to play the currency game while resource prices remain low. The groups that fight pipelines and resource exploration — such as B.C. Green and NDP supporters — should understand that the flow of tax-generated funds that they would devote to their causes would dry up if they ruin our extraction industries. And, extraction industries keep the lights on for scores of uneconomic northern reserves and climate-obsessed agencies.

Wake up, Canada!

— Graham Lane leads Manitoba Forward (www.manitobaforward.ca)

Cinderella Centra can help solve Hydro mess

By Graham Lane
Published on June 9, 2017 in the Winnipeg Sun

According to Hydro’s projections, there will be no domestic demand needed for the Keeyask dam project until at least 2039. By breaking his promise to pause Keeyask’s construction and call a public inquiry upon forming government, Premier Pallister has seriously jeopardized Manitoba’s finances.

Within a few years, the monopoly utility is expected to have $25 billion in debt — this before a dollar of revenue from Keeyask. The American spot market for importing power from Hydro — the market for Keeyask — will be likely to shrink due to growing renewables and cheap shale gas. To compensate for the lack of profitable exports, watch your power rates soar as Hydro struggles to avoid bankruptcy.

For now, financing the Keeyask and Bipole projects are dependent on annual 7.9% electric rate increases into the indefinite future; perhaps the increases will be even higher. Such increases will be unaffordable for low-income households and many businesses.

Embattled Manitoba Hydro has one seriously overlooked potential “Cinderella” asset — namely its natural gas division, Centra Gas, which was acquired 20 years ago from a private owner. Hydro should sell it to reduce now projected massive electricity debt rate increases.

Unlike other gas utilities in this gas revolution era, Centra has had stagnating sales and decreasing numbers of customers served. Because Hydro focuses on selling electricity, Centra has underperformed, been neglected, and been unable to expand its market.

Opportunities to provide economic gas to rural communities, dependent on ever increasing expensive electric heating, have been ignored. However, if Centra were to be sold to institutional investors or a large private utility investor, the proceeds could have the double benefit of reducing Hydro debt and expected rate increases, as well as offering a more affordable heating service outside of the current gas grid.

So what would Centra Gas be worth if it were to be sold? According to a study done by the Frontier Centre for Public Policy, it could be worth $1.67 billion, when its value is compared with Canadian gas utilities such as Newfoundland-based Fortis. It could be worth even more in time if it became an efficient top-performing utility, improving operations and marketing to boost growth and profitability.

An aggressive natural gas utility in Manitoba would boost the chances of expansion of businesses creating jobs. It would also be one practical route to lessen the debt burden on Hydro. Manitoba firms are now rightly worried about surviving when their Hydro debt and bills begin to soar. Selling Centra would display a willingness to change.

The Pallister government must understand that few will invest in a province where electricity rates are bound to soar, and where the alternative energy supply is owned by the same debt-ridden monopoly utility. By separating the two, Manitoba becomes much more attractive for new investment.

For political pundits that say we shouldn’t sell the “family silver,” Centra Gas: we wouldn’t be! Centra Gas would only be returning to the private sector, from where it came.

Centra’s sale could lessen some of the risk of Hydro’s uneconomic expansion for ratepayers and taxpayers, saying to many worried, shivering people in Manitoba it is not business as usual. And, Centra will not flourish until it is cut loose and sold off. Manitoba consumers and industries need an alternative to increasingly expensive monopoly services from Manitoba Hydro.

Graham Lane leads Manitoba Forward (www.manitobaforward.ca)

Honourable Fletcher strikes again

By Graham Lane
Published on June 1, 2017 in the Winnipeg Sun

How lucky we have Steven Fletcher.

Tremendous responsibilities have politicians — municipal, provincial and federal. We elect them for policies, promises and general behaviour that we think will work for us. If truth were told, acting in the general public interest — assuming we know what is the public interest — is secondary. PC or NDP, taxpayers play second fiddle to politicians looking after themselves.

Make no mistake, whether government is democratic, oligopolistic or a dictatorship, office is sought for power and power brings opportunities for both the good and the bad. Opportunities for the good, properly seized and delivered can bring better health systems, reasonable taxes and fees, good laws, efficient public services and better lives for citizens.

Too often, the elected enjoy power for selfish purposes — such as wealth and power for the regime and friends. Power is centred in the leader.

Canada’s democracy often yields majority governments, where ultimate political power rests with the prime minister, provincial premiers, mayors. The spoils of victory open for the winner.

The premier names his cabinet, changing them and their duties at his pleasure. The premier, assisted by his cabinet members, appoints the heads and members of a blizzard of government agencies and enterprises. Virtually none of the appointments come through an application process. All serve at his pleasure: no fixed terms. As for the benefits bestowed to hundreds of appointees, decent compensation and open door to opportunities for travel and other perks.

Recently Pallister demanded that Crown agencies reduce their management ranks by 15% — providing him the opportunity to “weed out” previous NDP appointees. The party in government puts in who they want and push out who do they don’t want — loyalty is not to the public interest, but to the party and premier.

Early in May, a Manitoba PC provincial backbencher tabled a bill which, if enacted, would reduce the risk that elected officials would feather their own nest and their friends while administering monopoly power through laws, government operations and trusted subordinates.

Bill 212, The Conflict of Interest Act, a private member bill, sought to contain the actions of MLAs of all political parties in the Manitoba Legislature within reasonable limits. Tabled by Steven Fletcher, seemingly a rebel with a cause, it was not supported by the majority government that he is a member of, and thus died. As matters stand, the current law governing the actions of MLAs needs a major overhaul. Saskatchewan’s conflict of interest law is a model to guide towards.

The Honourable Steven Fletcher — the “honourable” title earned from his stint as a federal cabinet minister under Stephen Harper — correctly assesses Manitoba’s current legislation to be weak, open to disuse, and dated.

The fact that Mr. Fletcher tabled his bill without the support of his own party “speaks volumes.” The lack of support from the PC caucus, including its ring-master, Premier Brian Pallister, leaves stand a law that a truck could run through.

Pallister’s pre-election musings included that, if elected, his government would be marked by “openness and accountability.” He started well with sharing his mandate letters to his cabinet members. So much for that. Since then, we have closed doors, closed thinking and a government without a clue as to how to successfully re-float the Good Ship Manitoba.

— Graham Lane leads Manitoba Forward at manitobaforward.ca.