Manitoba Hydro debt rises another $1.9B due to Keeyask and Bipole III
Revenue shortfalls also expected, as U.S. solar, wind and oil fracking keep power prices down
Manitoba Hydro's debt rose $1.9 billion this year because of expenditures related to major projects in the north of the province.
In its report for the fiscal year ending on March 31, 2017, the provincial Crown corporation pegged its long-term debt at $16.1 billion, up from $14.2 billion at the same time in 2016.
The construction of the Keeyask hydro-electric development on the Nelson River at the same time as the Bipole III transmission line is the main factor in the increasing debt, according to the report published on Friday.
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"Previous decisions by Manitoba Hydro to build Bipole III while simultaneously advancing the construction of Keeyask will double the corporation's debt in a relatively short time frame," the report states.
"In addition, persistent low prices in the short-term opportunity export market, primarily as a result of shale gas exploration and subsidies for development of wind and solar resources in the United States, combined with lower than forecasted electrical load growth here in Manitoba, are expected to reduce projected revenues by approximately $1.5 billion over the next decade.
"Adding to the financial implications of this shortfall is a nearly $3 billion projected increase in the capital costs for Keeyask and Bipole III."
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While debt is up, the corporation's net income improved in 2016-2017 to $59 million, up $20 million from the previous year.
Manitoba Hydro president and CEO Kelvin Shepherd said he expects debt to grow by an additional $8 billion in the coming years as construction at Keeyask and Bipole III continue. He noted the utility has applied for rate hikes to help cover the cost of borrowing.
Winnipeg Harvest and the Manitoba branch of the Consumers Association of Canada oppose the hike on the basis Hydro can afford to live without the additional revenue, said attorney Katrine Dilay of the Public Interest Law Centre.
Steven Fletcher, the former Progressive Conservative MLA and a Hydro critic who will sit as an independent next fall, said he, too, is concerned about rate hikes but is less confident Hydro is on stable footing.
Crown Services Minister Ron Schuler said he too is concerned about Hydro's debt — but laid the blame at the feet of his predecessor.
"The major reason for Hydro's deteriorating financial position is the reckless decision by the previous government to proceed with Keeyask and Bipole III without proper scrutiny by the Public Utilities Board," Schuler said in a statement.
"Now with a proposed rate hike from Manitoba Hydro and our province's recent credit downgrade, Manitobans continue to see the harmful effects of the previous government's mismanagement and political interference of Manitoba Hydro."
The NDP accused the Tories of exaggeration.
"The premier needs to stop undermining the reputation of Manitoba Hydro and get back to the job of marketing our green energy to our Canadian and American neighbours," NDP press secretary Rachel Morgan said in a statement.