Pallister PCs’ Quarter Billion Dollar Tax Grab Must Be Deferred

THURSDAY, AUGUST 30, 2018 ‒ WINNIPEG ‒ The Pallister PCs’ quarter billion dollar a year carbon tax that the provincial government announced in its 2018/19 budget cannot take effect on September 1, 2018, as previously announced because the Legislative Assembly has not yet passed the necessary legislation to implement it.

“Well that’s great news,” said Manitoba First interim leader Markus Buchart. “This is one case where the Progressive Conservatives’ inefficiency is good for Manitobans.”

The Pallister Government outlined its carbon tax in its March 12, 2018, budget. The budget announced the start-up date as September 1, 2018. The new tax was slated to raise $248 million in its first year alone.

Three days later the PCs rolled out Bill 16, The Climate and Green Plan Implementation Act. Although the Bill received first reading on March 15, 2018, it stalled thereafter and had not been passed by June 25, 2018, when the Legislative Assembly broke for summer recess. The session is set to resume on October 3, 2018. Therefore, Bill 16 cannot become law before then.

The carbon tax would add 5.32 cents to every litre of gasoline and 6.71 cents to every litre of diesel sold in the Province. As well it will increase the cost of heating with natural gas by 4.74 cents per cubic meter. Propane will also be taxed at 3.87 cents per cubic meter.

“They were going to pick a quarter of a billion dollars from Manitobans’ pockets,” said Buchart. “And they know that it will not reduce peoples’ use of gas, diesel, natural gas and propane for driving and heating. Every economist knows that driving and heating are not very sensitive to price increases. Pallister’s carbon tax is not about environmental protection. It is a tax grab, pure and simple.”

Manitoba First will be applying for registered party status this fall. It is the only Manitoba political party that opposes Pallister’s carbon tax. The party plans to run candidates in the next provincial general election slated for April 2020. Interim leader Markus Buchart is a former provincial government economist and lawyer. He was the leader of the Green Party of Manitoba from 1998 until 2005.

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For more information, contact Markus Buchart at 204-771-0953.

Putting the Cat With the Pigeons?

by Graham Lane,

Published in the Winnipeg Sun, August 24, 2018

The mass resignation of Manitoba Hydro’s Board in March likely surprised Brian Pallister, requiring the unplanned appointment of a new board for the financially troubled Crown Corporation. Pallister recently bolstered his inexperienced initial appointees by recruiting Vince Warden. Prior to retiring, Warden was Hydro’s Vice-President and Chief Financial Officer. His appointment could look positive, particularly now that Hydro’s latest President, Kelvin Shepherd, is retiring.

But Warden had a checkered record before the Public Utilities Board during my time as Chairman. Warden had key responsibility then for several twenty-year financial forecasts. Those rosy forecasts never matched reality. The best you can say for them is that they weakly supported the rate hikes Hydro then sought.

Forecasts of Hydro’s expansion costs, export prices and its personnel complement during Warden’s time were always way out. Actual costs for the Wuskwatim and Keeyask generating stations, the Bipole III transmission line, and major renovations to the Pointe du Bois dam routinely soared past initial and revised estimates – major projects undertaken just as Hydro began addressing growing requirements to make improvements to its aging existing system.

With Wuskwatim costing more than TWICE the estimate to gain the go-ahead, Warden relied on questionable logic to defend the supposed worthiness of the new dam. For example, he assigned a portion of Hydro’s so-called equity – none of it solid – to offset 30% of the total costs. This to get Wuskwatim’s operating results to look better. Better still if he that had acknowledged the economic disaster it remains.

That ‘whopper’ was outdone by crediting Wuskwatim with a share of an overly-generous forecast of average system revenue (instead of a share of opportunity-market export revenues) and not allocating it full costs. The plant was built for the export market. But, with the export market ‘in the toilet’ and the new dam’s costing twice that expected, a flawed revenue and cost sharing formula allows Wuskwatim to produce better operating results than registering large losses. The flawed revenue and cost sharing formula ascribed to the Wuskwatim partnership to keep the First Nation partner onside.

On another project, when forecasting the cost of Bipole III, Warden, sworn-in under oath as a witness in a Hydro rate hearing, claimed he had never seen a revised cost forecast that cast the project in a very negative light. Later, Warden had little option but to admit the truth – a document initialed by the executive, of which he belonged, contradicted his evidence.

Past Hydro Board Chair Sandy Riley, supported then by President Shepherd and his executives, publicly recognized Hydro’s expansion as a financial blunder. Both pressured the government, suggesting that without a capital infusion by government massive rate hikes were required.

PUB’s latest rate decision ignored Riley’s warnings. But by again kicking the can down the road Pallister might get through the next provincial election without ‘wearing’ responsibility for a major electricity rate hike. It will allow the Government to continue raiding a debt-ridden Hydro to the tune of over $400 million a year, thus reducing the provincial deficit while punishing ratepayers.

But, with Riley and Shepherd gone and with Vince Warden incredibly chirping in that Hydro’s finances are much better than portrayed, Brian Pallister’s cover-up of the debacle continues.

Hydro’s Catastrophe Continues

by Graham Lane,

Published in the Winnipeg Sun, August 10, 2018

Brian Pallister’s recent appointment of Colleen Mayer to the post of Minister for Crown Services should raise major concerns for all Hydro customers. New to cabinet and with no known experience dealing with a large, complex and troubled Crown corporation, Minister Mayer should have taken a pass.

Hydro provides critical electricity and natural gas services to virtually every residence, business and institution in Manitoba. The importance of Hydro is magnified exponentially because it is a mandatory monopoly (we cannot do without the services and have no choice but be served by it). Hydro is in the throes of a highly questionable expansion that is on track to drive up electricity rates 50% or more by its conclusion. Manitoba’s Advantage – cheap power – is no more .

Why would Pallister appoint a new person to cabinet to oversee Hydro?  There is a pattern here.  First of all, Mayer, like other ministerial appointments to persons lacking portfolio specific knowledge and experience, has no prior experience with Hydro and, by her own admission, little knowledge of it’s workings. And, she is the third Minister for Hydro since the PCs assumed power in 2016.

The first appointee, Ron Schuler, had been the Hydro Critic while in Opposition, but Pallister had stripped that responsibility from him well ahead of the election. Surprisingly, he was appointed as Minister for Hydro in May 2016 with, being fair here, only spotty and out-of-date knowledge of the situation. His performance as Hydro Minister was abysmal.

During his watch came the ill-fated decision to abandon Pallister’s campaign promise to halt construction and conduct a full-fledged review of Hydro. The result: two unneeded projects, Bipole III and Keeyask, continue towards completion at a cost to ratepayers exceeding $15 billion. It was also during Schuler’s ‘reign of error’ that legislation for the illogical separation of Power Smart from Hydro was conceived.

Pallister’s second appointee, Cliff Cullen, maintained the pattern of having no experience in Hydro matters.  It was during his term that the ill-founded crown corporation Efficiency Manitoba was launched.  (It now languishes, no progress since it was created 15 months ago.)  Also during Cullen’s short term, what was a strong Hydro Board (led by Sandy Riley) resigned en masse, replaced with a cadre of inexperienced and likely yes-men and yes-women.  The recent appointment of Vince Warden (retired Hydro VP of Finance who was deeply involved in the planning of Bipole-Keeyask) to the Board legitimized someone who was part of the problem and not likely part of any good solution.

Add to this, the imminent court case with the Manitoba Metis Federation, precipitated by actions taken during the Cullen term, and the blurry picture becomes more complete. Conclusion: Pallister has no inkling of the seriousness of Hydro’s financial situation and wants to ensure that the Minister responsible for Hydro is easily malleable, putty in his hands. That way, Hydro issues can be dealt by him personally, towards keeping the cap on the boiling kettle.

Apparently, new and very inexperienced Hydro Minister is a card-carrying member of the Manitoba Metis Federation.  It will be interesting to watch if that too becomes a factor in the court case. Hydro has many difficult days ahead.