Groups fear 'devastating effects' as Hydro asks for interim rate increase
If approved, rate hike of nearly 8% would come into effect Aug. 1, 2017
The water flowing through Manitoba has helped cash flow into Manitoba Hydro, which is the reason the Crown doesn't need to bump up its rates nearly eight per cent, interest groups argued on Tuesday morning.
They argued their case at the Public Utilities Board hearing on Tuesday as the Crown corporation made a formal application for an interim increase of 7.9 per cent.
Hydro CEO Kelvin Shepherd has said the rate jump is necessary to counteract mounting debt incurred by the utility during two major projects: the Keeyask Generating Station and Bipole III transmission line.
But Byron Williams, director of the Public Interest Law Centre, said that's just not the case. He said capital project spending is locked-in at low interest rates and the Crown has a projected net income of $92 million.
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Speaking on behalf of the Consumers Coalition, which includes Winnipeg Harvest and the Consumer Association Canada Manitoba branch, Williams said such a drastic increase is unnecessary.
"Based upon Manitoba's financial situation … for this year it's looking, even with no rate increase, at a $92-million profit. Its cash flow is just fine. There is no basis in law for an interim base increase," he said.
He added Manitoba Hydro is breaking its promise to keep rates affordable, which it made when it took on the projects.
"Manitoba Hydro has radically rejected that commitment it made to Manitoba rate payers to keep current rates affordable and to have measured rate increases," he said. "Really [it is] a fundamental betrayal of Manitoba Hydro commitments to Manitobans and one that is not justified by the empirical evidence."
If approved, the new rate would come into effect Aug. 1.
The PUB approved a rate increase of 3.36 per cent last year. Manitoba Hydro has said it plans to raise rates by almost eight per cent in each of the next five years. That means cumulatively, between 2016 and 2021, rates will rise by 46.25 per cent.
The board heard how it will push more people in Manitoba into "energy poverty".
"Affordability has to be tied into any rate increase," said a speaker with Green Action Centre.
George Orle, legal counsel to Manitoba Keewatinowi Okimakanak, said an interim rate increase can only be applied in unforeseen or emergency situations. All the evidence shows, including Hydro's own, there is no need for the increase, he said.
"They don't meet the standard for an interim rate increase at this time," he told the board.
He said northern Manitoba residents pay the highest bills in the province because of the weather, lack of access to natural gas, and because they need more lighting during the winter.
"The rates that are being … proposed are going to have devastating effects on the northern communities. A rate increase of 7.9 per cent will basically put many people at the level that they will be in energy poverty," he said.
In recent years, he said, the board has made it a condition that before Hydro increases rates to that level that certain things put in place to allow people in the north better access to energy-saving programs or special rates. He said he is concerned the high rates will go forward, without action to level the field.
Scott Powell, director of Corporate Communications for Manitoba Hydro, said the hike is important to ensure financial strength in the future.
"We have to maintain that financial strength to withstand those risks that are out there," he said on CBC Radio's Up To Speed on Tuesday afternoon.
While its had years with good water flows, Powell said Hydro can't use Mother Nature as a business plan because the energy industry is volatile.
Hydro can appreciate that no one wants to pay more for their energy, Powell said, but "in the long term it's about making sure that we are protecting them."
The Public Utilities Board hearing will continue on Wednesday.