Manitoba Hydro proposes 'drastic' cost cuts
CBC News
Posted: Sep 29, 2011 5:49 PM CT
Last Updated: Sep 29, 2011 6:28 PM CT
A Sept. 27 internal memo from Ken Adams, Manitoba Hydro's senior vice-president of power supply, calls for 'drastic actions' to reduce expenses in the next two years. (CBC)
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Manitoba Hydro is planning to carry out serious cost-cutting measures that could delay the implementation of several capital projects, according to an internal memo obtained by CBC News on Thursday.
"It is clear that we need to take drastic actions to reduce expenditures in the next two years," states the memo from Ken Adams, Manitoba Hydro's senior vice-president of power supply, which was sent to all of the public utility's division managers on Tuesday.
Adams's memo asks officials to "delay all expenditures as much as possible" for the Keeyask and Conawapa hydroelectric dams — two of the largest projects in the province — while trying to ensure both projects go into service as planned.
The Keeyask project is slated to go into service in December 2019, while the Conawapa dam is scheduled to begin in the fall of 2025, according to the memo.
Adams also suggests deferring a power supply project known as the Ontario Firm Import Upgrade by five years to 2018.
As well, Adams proposes delaying the awarding of further contracts "for three to four years" for the Great Falls and Pine Falls projects, as well as the Pointe du Bois Powerhouse rehabilitation project.
Officials should "receive ordered equipment and mothball" in all three of those cases, according to the memo.
The measures outlined in the memo deal with capital budgets, not operational budgets. There is no indication that the cost-cutting proposal would affect payroll or staffing at the Crown corporation.
'Good management,' says president
Manitoba Hydro president Bob Brennan told CBC News on Thursday that the capital review is "just good management."
"You should spend the money at the right time," Brennan said. "If you don't have to spend the money, don't spend it. And I want that to occur all the time."
Brennan said fixed dates to open the new dams will not be pushed back and will not affect Manitoba Hydro's export sales. Officials will revisit the other proposed cost-cutting measures, he added.
"There might be some risks to some of them, and once we do a later review we'll find out what the risks are and say, 'We're not going to do that,'" he said.
A former Manitoba Hydro vice-president told CBC News that while some of the delays are likely standard, it is hard to figure out how the utility could defer work on some projects and still complete them on time.
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