by Graham Lane
Published in the Winnipeg Sun, December 8, 2017
Manitoba Hydro has moved from being a major asset for Manitobans to being an albatross around our necks.
What was once the Manitoba Advantage, this before the 1999-2016 NDP government got its claws into it, has become a millstone — now on a path to bleed ratepayers dry.
Sanford Riley is an experienced business executive. His worries need to be taken seriously, particularly when he, given his position as Hydro’s board chairman, suggests that a yet-to-be new carbon tax be used to assist lower-income ratepayers. After Riley spoke at a Manitoba Chambers of Commerce breakfast last week a spokesperson for the Pallister government said Riley’s suggestion would be considered. This signal confirms that Hydro is the “mess” Riley has called it.
This is not good news for either taxpayers or ratepayers. Riley has underscored Hydro’s case before the Public Utilities Board — the publicly “owned” monopoly energy corporation is in deep, deep trouble. Riley and his colleagues have been directing and assessing Hydro for a year and a half. Their review has been assisted by an international consultancy, the Boston Consulting Group, along with analysis and suggestions from interveners to PUB’s hearing and local knowledgeable critics.
And, despite that lengthy, extended time of analysis, Riley and his board have not found any way to bring prospective annual 7.9% rate hikes (expected to continue through to the year 2024) down to a reasonable level (i.e. the annual rate of inflation).
Hydro suffers from three major maladies. First, we have an unnecessary expansion. Second, we have successive provincial governments bleeding Hydro ratepayers dry through annual levies of (now) $400 million on Hydro — invisible levies embedded in our monthly bills. Third, we have a timid Pallister government that clearly hasn’t a clue what to do.
There was a fourth malady, but, fortunately for both ratepayers and taxpayers, Riley and his crew are addressing it. It was a swollen personnel complement, one accumulated through Hydro’s expansion phase. Riley and his board should be congratulated for reducing employees by 15% overall — including 30% of senior and 25% of middle management.
As to the first three maladies, it seems there is not much to do but to take it on the chin. The expansion has likely wasted $5 to $7 billion. That expected loss is represented in annual rate requests four times higher than would have been needed had the expansion not happened. As to the second malady, the annual “rip off” of $400 million (and growing) from Hydro by its provincial government, it seems nothing can be done there either. The Pallister bunch plans to pocket that annual rip off, just as the NDP did. As to the third malady, the government having no clue as what to do, I have two suggestions.
Don’t further complicate the mess by building another bureaucracy to use a damaging carbon dioxide tax to provide bill rebates to lower-income households. Address the ridiculous proposed annual rate hikes directly. Bring down the rate hikes to the level of inflation for all ratepayers, and use the Consolidated Fund to do it. Either move debt from Hydro’s ledger to the government’s, but not the way Ontario has, or stop the annual invisible levies of $400 million.
Finally, a public inquiry please.
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