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Losses force PUB to OK rate hike

By: Larry Kusch

Thursday, Aug. 30, 2012 at 8:42 AM | Comments: 0

artist�s rendering / Manitoba Hydro handout

THE Public Utilities Board said Wednesday it had no choice but to grant Manitoba Hydro a 2.5 per cent interim rate increase because of the depressed state of the Crown corporation's finances.

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Manitoba Hydro handout Both the Wuskwatim generating station (above) and the proposed Conawapa dam (below) are weighing heavily on Manitoba Hydro�s finances, the PUB says.

Although Hydro has yet to release results on the first three months of its operating year, ending June 30, the PUB reported the corporation suffered a "substantial net loss on its electricity operations" for the period.

(Hydro normally would have issued the quarterly report this month but was prevented from doing so by provincial election laws. Voters in the Fort Whyte constituency in southwest Winnipeg go to the polls Sept. 4.) The losses, combined with continued soft export sales and prices, warranted raising rates effective Sept. 1, the PUB said in its ruling. "The board has real concerns about the deteriorating financial position of MH (Manitoba Hydro)... " it said in a 25-page ruling.

The public watchdog also noted Hydro is burdened by preliminary costs for the proposed Keeyask and Conawapa dams. In the absence of strong export markets, the newly commissioned Wuskwatim generating station near Thompson is also weighing financially on the corporation, the PUB said.

Byron Williams, a lawyer representing the Manitoba branch of the Consumers' Association of Canada, said the new dam appears to be more of a drain on Hydro than a revenue generator so far. "I'm not sure anyone fully expected it to cover its costs in the first couple of years, but the results have been disappointing," he said.

Williams said his client does not have an opinion right now on the merits of the planned dams or the construction of the Bipole III power transmission line -- projects that could cost a total of $20 billion over the next dozen years. But he said there needs to a full independent review of Hydro's building plans.

The Manitoba Conservatives have accused the governing NDP of meddling in Hydro's affairs and encouraging reckless expansion. They, too, are demanding an independent review of Hydro's future capital projects. Conservative Leader Brian Pallister has argued Hydro and the province have yet to make a clear case for expansion.

Hydro spokesman Glenn Schneider said Wednesday while export markets are currently soft for electricity, Hydro must still plan for future needs and opportunities. "We can't make these decisions (on new dams) on short-range projections and what's going on in the market today," he said.

Schneider noted it was once felt the new Wuskwatim station would not be needed to serve Manitoba's growing power needs until 2018.

A week ago, Hydro revised that projection. It now expects Wuskwatim will be needed to supply domestic power as early as 2014.

larry.kusch@freepress.mb.ca

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