City, Hydro settle tax dispute

The City of Winnipeg and Manitoba Hydro have reached a tentative deal on a longstanding tax dispute.

The City of Winnipeg and Manitoba Hydro have reached a tentative deal on a longstanding tax dispute.

The city launched a lawsuit a year ago, on Feb. 25, 2010, claiming Hydro owed $10.18 million. The provincial utility was supposed to be collecting the money from ratepayers' hydro bills between 1999 and 2009 then pay it back to the city.

In the documents, the city argued that under sections of the City of Winnipeg Charter and other bylaws, Hydro had the responsibility and duty to collect a levy on behalf of the city from personal and commercial gas and electricity users.

Under the agreement, according to the city, residential customers should be paying a 2.5 per cent levy on their monthly bill, and commercial customers five per cent.

But Hydro never collected the money, or collected it and didn't pass it on the city, the lawsuit alleged.

The utility denied the claim and the negotiations have been ongoing.

On Monday afternoon the city announced a settlement had been reached for $5.3 million.

The deal, which is far less than the city had claimed it was owed, must still be approved by council.

Administration is recommending council approve the deal and drop the lawsuit.

"The settlement provides both parties with a level of cost certainty, eliminating the potential for lengthy and costly court proceedings", Mike Ruta, the city’s acting chief administrative officer, stated in a news release.