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)
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