Manitoba Hydro losses continue; brass blames restructuring, PUB rate increase denial
Quarterly report shows loss of nearly $90 M between March and September.
Manitoba Hydro's losses continue after the latest quarterly report shows a loss of about $89 million between March and September of this year.
This is up from $72 million for the same period last year, according to the report.
"The increase in the net loss is primarily attributable to restructuring costs driven by the implementation of a significant cost reduction program," reads the report.
The Manitoba government directed the crown corporation to cut 900 positions from its core operations last year. According to the report 325 people have left under the Voluntary Departure Program, with 500 more scheduled to leave by the beginning of 2018.
That program and other restructuring processes has cost the utility about $42 million.
"Excluding the restructuring expenses, net loss would have been $45 million, an improvement of $24 million over the prior year," said the report.
The report goes on to say the restructuring program is expected to save the crown corporation $90 million annually once fully implemented by January.
Revenue projections down
Revenue projections are down after being denied a 7.9 per cent rate increase by the Public Utilities Board on July 30. Instead, the board approved a 3.36 per cent interim rate increase.
After the 7.9 per cent increase application was rejected Byron Williams, the director of the Public Interest Law Centre, said the PUB's decision demonstrates Hydro doesn't need the full increase.
"It sends a message that Hydro could not back up with evidence its claims of an imminent financial emergency," he said.
Hydro still asking for big rate increases
In the wake of the PUB denial Hydro modified their 10-year-plan to call for "six years of 7.9% rates increases starting in 2018-19, a 4.54% increase in 2024-25 followed by two years of 2% increases."
Electricity sales are up by about 2 per cent to a total of $629 million over the past six months due to higher consumption by Manitobans.
But without the significant rate increases, the corporation says they will be short $800 million to "fund core operations" over the next five years, not including the two major construction projects currently on the books.
Hydro earlier this year pegged its long-term debt at $16 billion and said it was climbing with ballooning budgets for the Keeyask generating station in northern Manitoba and the Bipole III transmission line, which is up $389 million to a largely debt-financed $5 billion.
Bipole III is slated to be complete by March 31, 2018 to fulfil contractual obligations, said the report. "To maintain completion dates, helicopters are being used for tower installation, hanging of insulators and stringing of conductor wire."