After a lengthy deliberation following a complex and very expensive hearing, the Public Utilities Board (PUB) ignored Hydro’s and the wishes of the quite reputable and recently departed board of directors, and approved a 3.6% rate increase for most of Manitoba Hydro’s grid electricity customers.
The rate increase is it for this year, though the monopoly utility was calling PUB for 7.9% annual jumps for six years – Hydro’s President actually suggested rate hikes twice the that rate. By approving a much lower rate change for 2018 than sought by the utility, PUB leaves doubt as to ‘what happens’ for 2019 and on.
‘Punting the ball down the field’ through deferring costs, accounting moves, slicing back energy efficiency measures, and hoping for massive cost cuts and a better export future, while massively naïve, serves the government well by, maybe, temporarily delaying negative credit ratings and inevitable rates hikes to come. The PUB’s ruling may look good to ratepayers now, but pushing out rate pain and welcoming even more risk is the most cowardly route to take.
Brian Pallister’s government set the table with a 2018-19 provincial budget that provided no relief to Hydro ratepayers, neither relief from excess provincial levies nor from rate pressures from the massive expansion costs brought about by errors of commission and omission by the previous NDP government. And, through that public budget, PUB learned that there was to be no rate relief for ratepayers coming from the Pallister government. The surprise resignation of Riley and his Hydro board could well have cemented that view for PUB.
Pallister chose not to deal with this festering crisis. If rate relief was to come, it could only come from PUB.
With a low Hydro rate hike, based on highly questionably reasoning by PUB, Pallister’s first term goal of cutting 1% of the PST becomes more likely. Particularly with the electorally toxic carbon dioxide tax, which will vacuum in enough new tax money itself to fulfill the PST promise. With luck, increased federal transfer payments, restraining civil servant salaries, providing low grant increases to agencies, and trousering growing levies on Hydro, Pallister just might get a balanced provincial budget in sight as the 2020 election looms.
Pallister, and now PUB, have rejected the pleas of departed Hydro board chair Sanford Riley and his experienced board colleagues. Riley had suggested that government take on some of the rate load ‘coming’ (he thought) to ratepayers by either cutting provincial levies on Hydro (at a cost to Pallister’s budget), or to infuse capital into Hydro by shifting a portion of the company’s stranded debt on to the provincial ledger.
In the absence of real leadership and reform, Pallister knew that his taking rate pressure off ratepayers could nix cutting the PST and frustrate promises to balance government’s books. PUB’s surprise of a ‘low’ rate hike is politically convenient for Pallister’s next election campaign. Whatever happens to Hydro’s finances, don’t expect another PUB Hydro oral rate hearing before the 2020 election.
The same government that controls Hydro sets PUB’s mandate and names its members – no public process involved. Neither of the boards’ memberships – Hydro or PUB – come about through a public selection process.
Ratepayers shouldn’t celebrate the PUB decision, this only delays and compounds the coming pain.
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