by Graham Lane
Published in the Winnipeg Sun, December 15, 2017
Public Utilities Board’s legal counsel has asked Hydro whether the utility made a formal ask for financial assistance from the Pallister government. The question itself suggests that PUB sees government help as a feasible approach to lowering proposed massive rate hikes. Before answering, Brian Pallister needs to understand the risks involved in forcing ratepayers to shoulder a burden not of their making. He should also take into account recent Ontario developments.
Electricity is the lifeblood of economies. Understanding both that and the pain to be caused if Hydro was allowed to go ahead with annual 7.9% rate hikes through to 2024, Pallister should realize that if he doesn’t intervene and bring rate hikes down he will not only seriously damage Manitoba’s economy but also risk the second term he seeks.
The electricity pricing policies of Ontario’s political parties are a major factor ahead of Ontario’s 2018 provincial election. And, since Ontario competes for industries and jobs, with Manitoba, a major cut to Ontario’s electricity rates will affect Manitoba as well.
A misguided contest is on in Ontario over electricity rates. The struggle began when Liberal Premier Wynne, then with a voter approval level around 13%, foresaw electoral defeat coming in 2018. So, she attempted to buy another election victory with a subsidy scheme cutting electricity bills by 25%. After first condemning her plan, then upon recognizing that Wynne’s cuts enhanced her election prospects, Ontario’s PC party promptly upped the ante, conjuring up a 37% rate cut.
This is an unsavory contest. While rates will fall, the cost of electricity will not. A decade or so from now, rates will be even higher than they were before the cut. Ontario politicians will have borrowed billions of dollars to make up revenue lost through the 25% or 37% cut – leaving the next generation of Ontario ratepayers to repay the loans with interest.
Sky high electricity rates damaged Ontario’s economy for years. Past political meddling in utility affairs and a ridiculously expensive “Made in Ontario” green strategy brought about very high rates. Those rates not only proved a disincentive for new industry and potential expansions of existing plants, but drove firms out Ontario – together causing the loss of thousands upon thousands of good-paying private sector jobs.
So far here in Manitoba, and give Pallister some credit, the extent of our electricity boondoggle is being revealed. Yet, he is wrong to want ratepayers, alone, to fund the mess. It is well known that internal expertise within Hydro opposed the NDP’s wildly risky expansion and that it was ultimately NDP politicians who pushed it through, jeopardizing not only Hydro’s health but Manitoba’s economy.
But, between Ontario’s massive electricity rate cuts and Manitoba Hydro’s plan for soaring rates (to pay for projects that should have been postponed and cancelled), Manitoba’s electricity rates could end up higher than Ontario’s. Such an outcome, combined with an ill-conceived new carbon tax, would seriously damage Manitoba’s prospects to attract industry and build its economy.
To avoid potential calamity, Pallister has but two choices. Either meet Riley’s ‘ask’ positively and provide a significant cash infusion, or stop raiding Hydro with massive annual levies. Otherwise, he will seriously damage the economy while reducing his prospect of winning Manitoba’s next election.
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