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Hydro gets green light for Keeyask dam

But Conawapa should remain on hold: PUB

Manitoba Hydro spent $1.4 billion on the Keeyask dam project before getting full regulatory approval. The province issued a licence for the dam Wednesday.

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Manitoba Hydro spent $1.4 billion on the Keeyask dam project before getting full regulatory approval. The province issued a licence for the dam Wednesday.

The Selinger government put the best spin it could on a report released Wednesday that examined Manitoba's Hydro's plan to build two northern dams and a new transmission line to the United States.

The main recommendation of a sweeping review by the Public Utilities Board is the Keeyask hydroelectric generating station be built immediately.

The NDP government declared that alone was confirmation its dam-building agenda was worthy, but the PUB's report wasn't so glowing. That's because Hydro had spent $1.4 billion on Keeyask before getting full regulatory approval, and to recommend it be cancelled would mean Manitobans would have to basically eat that money.

"Cancelling the Keeyask project now would result in material consequences for ratepayers, because Manitoba Hydro would have to recover the $1.4 billion spent on the project to date," the PUB said. "The arrangements with First Nations would have to be terminated and significant economic opportunities lost. Manitoba Hydro's commercial reputation may suffer."

To avoid a repeat, the PUB said no more money should be spent on any future generation or transmission projects -- including the proposed Conawapa mega-dam -- until the province comes up with a new plan for a clean-energy future that includes wind and solar.

"It is now time to build a more diversified resource portfolio," the PUB said in its 306-page report.

The PUB said building Keeyask immediately, so it's producing power by 2019, five years before Manitobans need it, still makes economic sense. Hydro has forecast it can earn $6.9 billion in selling Keeyask's power to the Americans, who are under state and federal edicts to supply more renewable energy. On Wednesday, the NDP government issued a licence to construct the project.

The PUB also said the new dam will create Manitoba labour income of more than $500 million and almost 7,000 'person years' of employment. Plus, the dam is being built in partnership with four First Nations, creating benefits to an area of the province where there is little large-scale economic opportunity. The dam is a joint project between Manitoba Hydro and Tataskweyak First Nation, York Factory First Nation, War Lake First Nation and Fox Lake Cree Nation.

The PUB also gave the green light to the 750-megawatt transmission line to run from south of Winnipeg to near Duluth, Minn. Hydro wants to start working on the line as soon as possible, despite opposition in southeastern Manitoba to its proposed route.

In coming to its decision, the five-member PUB panel also threw cold water on proposals to build a cheaper natural-gas generating plant to produce power.

"The panel concluded that natural gas generation does not represent an acceptable alternative, as it is less economic than hydro electric generation and relies on burning fossil fuel," the PUB said. "Furthermore, any short-term capital cost advantages are offset by significant ongoing operating cost risk, primarily fuel costs."

The Opposition Progressive Conservatives, who touted natural-gas generation as a cheaper alternative to Keeyask, gave the PUB's report a thumbs-down.

"It's good for the government but not necessarily for ratepayers," Hydro critic Ralph Eichler said. "They're the ones that are going to carry the burden of the cost."

Hydro has said it will need annual rate increases of about four per cent to pay for Keeyask and new transmission lines. The PUB recently awarded Hydro a 2.75 per cent increase for this year.

Byron Williams, a lawyer representing the Manitoba branch of the Consumers' Association of Canada, said the PUB did not fully consider the cumulative effects of northern hydro development in approving Keeyask -- something that has been raised in past environmental reports.

"We've got a Nelson River system that's under incredible strain," Williams said. "We don't know where the tipping point is."

The PUB also said there was no rationale for proceeding with the proposed 1,485-megawatt Conawapa dam. Hydro has already said it doesn't need a decision on the estimated $10.7-billion dam for four years.

Hydro Minister Stan Struthers said he asked Hydro to firm up contract sales with potential customers to make a better business case for Conawapa.

"Conawapa remains vitally important to Manitoba's energy future," he said.

The PUB also recommended the responsibility for energy-efficiency programs be stripped from Manitoba Hydro and given to a new, arm's-length entity.

bruce.owen@freepress.mb.ca

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