Manitoba

Manitoba Hydro wants to raise rates 46% in 5 years

Mounting debt is forcing Manitoba Hydro to increase rates across the province, the utility says.

Crown corporation blames hike on large projects, future risks

Mounting debt is forcing Manitoba Hydro to increase rates across the province, the Crown corporation says. The company is asking the Public Utility Board if they can raise rates by 7.9 per cent this year and next. 2:33

Mounting debt is forcing Manitoba Hydro to increase rates across the province, the Crown corporation says.

The company is asking the Public Utility Board if it can raise rates by 7.9 per cent this year and next.

If approved, the new rates would come into effect Aug. 1, 2017 and then April 1, 2018.

This year's rate increase is on top of the 3.36 per cent rate increase approved last year. Manitoba Hydro says it intends to raise rates by almost eight per cent for five years. That means cumulatively, between 2016 and 2021, rates will rise 46.25 per cent. After that, the utility predicts it will only need to ask for two per cent annual rate increases.

Manitoba Hydro CEO Kelvin Shepherd called the rate jump absolutely necessary.

"Two major projects, the Keeyask Generating Station and Bipole III transmission line at the same time, has resulted in Manitoba Hydro taking on a significant amount of debt to finance the construction," he said in a news release.

After the completion of both these projects, Manitoba Hydro estimates its debt will have grown from $11 billion to $23 billion.

Businesses, poverty advocates concerned

Winnipeg Chamber of Commerce president and CEO Loren Remillard said the hike is disconcerting for the local business community, especially smaller manufacturers.

"What we're talking about here, a potential 46 per cent increase in a very short period of time — that may be such a sharp rise … it may present a hardship for small businesses to absorb that," he said.

Josh Brandon, a spokesperson with the Social Planning Council, said megaprojects should not be financed on the backs of the poor.

"That will be the highest rate increase we have seen in a generation," he said.

"That is going to have a very significant impact on the lives of low-income people who are already struggling."

Manitoba Hydro said along with mounting debt from the large projects, it is concerned about a range of other risks, including the potential for a drought hitting production and ongoing capital costs relating to maintenance of existing Hydro infrastructure.

A decline in electricity exports to the United States of 25 to 30 per cent since 2008 has hit the utility's revenue, said Manitoba Hydro.

Without rate increases, Shepherd said Manitoba Hydro's core business would be running at a loss.

Hydro rates in Manitoba have long been some of the lowest in North America, with only Quebec offering lower electricity rates.

Those low costs have historically been one of Manitoba's greatest competitive advantages, said Remillard. Despite his concerns that Manitoba will become less attractive to business, he said he understands why Hydro wants to increase rates.

"We do respect Hydro's management and board as it works to try to address what are some serious, significant financial challenges," he said.

Shepherd said Hydro's grand plan is to become leaner and more customer-focused.

In February, the Crown corporation announced it would be cutting roughly 900 positions along with reducing its executive team by 30 per cent.

with files from Marianne Klowak and Laura Glowacki