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Why No Hydro Inquiry?

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by Graham Lane

Published in the Winnipeg Sun, December 22, 2017

Newfoundland Labrador’s government have announced an inquiry into its troubled Muskrat Falls hydroelectric
project, $5 billion over budget and with dismal prospects. Manitoba Hydro’s disastrous expansion tops Muskrat
Falls. Despite the fact that Pallister’s government isn’t the worst actor in the play, Manitobans are still left in the
dark about just how Hydro came off the rails.

Unless an inquiry is held, ratepayers and taxpayers will never know. There is a need to shine a light into why
and how Manitoba’s most important crown corporation imploded. Why do we need to know? Without knowing,
future governments and voters will not learn what not to do going forward, and what should be done now to
mitigate the damage.

Why were massive projects started – money flowing – before and after the business case for making the
investment had vanished? What options were available? Why were lower cost ones overlooked? Why was $1
billion spent encouraging northern First Nations to support building Wuskwatim, Keeyask, Conawapa and
Bipole III? Why were projects begun without firm construction contracts? Why without adequate volumes and
prices having been first negotiated with export customers? Already the largest boondoggle of our province’s
147 years, Hydro’s problems are still unfolding. The latest: a report predicting Keeyask will cost 62% more than
projected.  When the full cost of the overall expansion is ongoing blunder is properly tabulated, it will likely
exceed $5 billion.

Hydro’s rate application, now being heard by the Public Utilities Board (PUB), isn’t the inquiry that is needed.
PUB cannot neither roll back the boondoggle nor order the government to do anything, let alone take
responsibility for what Sandy Riley, Hydro’s board chair, has accurately named a mess.

Before the election, Pallister and his-then Hydro critic planned to halt the expansion and hold a real
independent inquiry. Before the election, his Hydro critic had assembled a knowledgeable and experienced
board-in- waiting, committed to both the promised quick halt and finding ways to keep the financial tab for
ratepayers somewhat manageable. However, immediately after the election, Pallister double-crossed those
ready to serve by announcing a different board roster and continuing the expansion. An “independent” Boston
Consulting report then took six months, while Hydro went on spending $10 million a day.

Boston Consulting relied on information from Hydro executives, many now long gone. While the original
shadow board, embraced by the PCs before the election, were more than willing to share their knowledge and
views about the expansion, they were shut out and ignored. The delay waiting for Boston Consulting’s report
added at least $2 billion in unnecessary costs, leading to the decision that while the expansion was a mistake it
was too late to halt.

Be clear, Bipole III was not, is not, needed, nor Wuskwatim, nor Keeyask, nor Conawapa. And, as to the new
Manitoba-Minnesota transmission line, it wouldn’t have been required had Hydro built an efficient natural gas
generation station in Brandon. Hydro will end up spending at least 15 times what was needed.

Pallister’s government has proved an “NDP lite” disappointment on several fronts, Hydro being the most
glaring. Why is Pallister protecting the NDP and previous Hydro boards and executives? Why indeed!

Pallister can still do the right thing – call a proper public inquiry. What’s he hiding?

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