Plans for 'double-digit' hydro rate hike worry business owners and poverty advocates

Small business owners, people below the poverty line and those on tight fixed-income would suffer under electricity rate increases several times greater than the cost of inflation.

'I might as well shut my doors because I'll give it to [Manitoba] Hydro,' says butcher

Double-digit electricity rate increases could have devastating effects for some businesses and people below poverty line. (Darren Bernhardt/CBC)

Something has changed radically in Manitoba Hydro's view of its fiscal future and there is growing concern over who will feel the brunt of big rate increases.

At the end of 2015 the utility was requesting increases of 3.95 per cent year-over-year until 2024. Now a message from the board of the Crown corporation says double-digit increases will be needed for at least five years.

On Friday Manitoba Hydro announced it would seek a workforce reduction of 900 staff, starting with offering severance packages to employees. The press release announcing the cuts also came with a statement from Hydro board chair Sandford Riley saying staff reductions would not be enough to improve the company's fiscal problems. 

"Even with these reductions, double digit annual rate increases would be required for at least five years in order to re-establish Manitoba Hydro on a proper financial footing," Riley said in the statement.

The statement also reiterated the board's interest in getting an injection of capital from the provincial government.

Business owner calls double-digit increases 'mind-boggling'

Just about every piece of equipment in Denny's Meat Market, from coolers to saws and grinders, consumes electricity and owner Denny Dueck sees double-digit rate increases for electricity as "mind-boggling."

Denny Dueck, owner of Denny's Meat Market, says double-digit rate increases could put his business in jeopardy. (Jaison Empson CBC News)

"We have equipment that runs on it on a daily basis, 24-7. It never quits," Dueck says. "You have an increase on that product; where am I going to get the money for the increase on that bill?"

Dueck says possible rate hikes that large are just another in a long string of increased costs his business has been facing, citing bumps in property taxes and water rates. He fought off stiff competition from big-box groceries and rising meat costs, but rate hikes larger than perhaps 10 per cent a year are tough to chew.

"When I heard about the increase, I said, you know what? I might as well shut my doors because I'll give it to Hydro," Dueck said.

Dueck also has plenty of sympathy for Hydro staff who may face layoffs.

"I feel bad for 1,000 people that are going to lose their jobs. That's ludicrous! It sucks!" Dueck said.

Dueck has a message for the board, management and minister in charge of Manitoba Hydro on rate hikes.

"Give your head a shake. What are you doing out there? It's not just hurting me, its hurting everyone in the city. What, are we going to get a second job now to pay for the Hydro?" Dueck said.

Food or electricity?

Business owners aren't the only people looking at the electricity meter and worrying about the bill.

Josh Brandon with the Social Planning Council says rate increases could create a food-vs.-Hydro bill struggle for some people living below the poverty line. (Jaison Empson/CBC )

Josh Brandon with the Social Planning Council of Winnipeg says people living below the poverty line and on fixed incomes will struggle to make ends meet if the cost of electricity rises so much over the cost of inflation.

He says in some rural and northern regions, where natural gas is unavailable, the impact could be even more acute.

"People living below the poverty line are already struggling. They are having to make impossible choices already about whether they are not going to pay their Hydro bill or cut back on food or rent or other basic necessities," Brandon told CBC News.

Brandon says it's even more frustrating because it's not clear how much of an increase Hydro will request from the Public Utilities Board. He says the signals from the utility are confusing because his organization was already concerned about the 3.95 per cent increase previously granted to Hydro.

The Social Planning Council provided some analysis for Hydro last fall on the effect of increases from four to eight per cent. Now it may go much higher — increasing what Brandon calls the energy poverty rate.

"Now if we are talking about 10 or more per cent it's going to be pretty difficult for a lot of families," Brandon said.

Pallister 'concerned' about rate hikes, won't commit to Hydro bailout

Progressive Conservative Premier Brian Pallister told reporters Monday that rising power rates and Hydro's poor fiscal fortunes were created by the former NDP government.

Premier Brian Pallister blames the previous government for Hydro's fiscal hole. (CBC News )

"We all know the mess at Hydro and we understand the overreach of the previous administration was a mistake. We see that already in rapidly escalating hydro costs and that's hurting Manitoba families, so we are very concerned about the increasing costs and how we can strengthen Manitoba Hydro," Pallister said. 

Pallister was asked several times if his government was willing to make an equity investment to help Hydro's bottom line and perhaps ease a rate hike, but he told reporters it was up to the PUB to determine where the rates will be set.

Riley has spoken publicly about Hydro's need for a cash injection from the province and it was mentioned last Friday in the board chair's statement on job cuts and rate increases.

Pallister says his government doesn't want to see double-digit increases for electricity, but suggested the NDP went around agencies such as the Clean Environment Commission and the Public Utilities Board. Pallister says his government won't do that and will allow the PUB to make the decision on any future rate increases.

"I do not believe that circumventing those processes is in Manitoba's best interest, so I respect the protections that Manitobans have with those agencies and we'll make sure that we follow the proper procedures in dealing with any rate application increase," Pallister said.

About the Author

Sean Kavanagh

Provincial Affairs Reporter

Born and raised in Winnipeg, Sean has had a chance to live in some of Canada's other beautiful places (Whistler, B.C., and Lake of the Woods, Ont.) as well as in Europe and the United States. In more than a decade of reporting, Sean has covered some of the seminal events in Manitoba, from floods to elections, including a stint as the civic affairs reporter responsible for city hall.