The Public Utilities Board has taken a page from the province's past by recommending Manitoba Hydro be stripped of its role in managing energy-efficiency programs.
The PUB made the recommendation in a sweeping report released Wednesday that examined the Crown utility's plan to build the Keeyask and Conawapa generating stations and a new transmission line to the United States.
In giving its blessing to only the Keeyask dam and the transmission line, the PUB said Hydro should be divested of its energy-efficiency or demand-side management (DSM) responsibilities and a new "entity" be created by the Selinger government to set and measure targets annually for Manitobans to conserve power. The PUB found there was no business case yet for Conawapa.
"An inherent conflict of interest may exist when a utility that derives income from the power it sells also has the responsibility of promoting the use of less electricity through energy-efficiency programs. If a utility can make more money from selling electricity than it can if electricity is saved, there can be a disincentive to encouraging customers to reduce their energy consumption. Reduced consumption means less income, unless the energy can be sold on the export market at prices that are higher than domestic electricity rates."
"The panel concludes that there is an inherent conflict in Manitoba Hydro being both a seller of electricity and a purveyor of energy-efficiency measures," the PUB said in its 306-page report. "Residential, business and especially lower-income customers often need to be 'sold' on DSM. Programs and information need to be provided in a manner that speaks to them directly, and in a clear and convincing manner."
Hydro Minister Stan Struthers said the government accepted the PUB's recommendation and will begin to strip it of its DSM duties soon.
A blueprint for such a "delivery mechanism" exists under the province's 2012 Energy Savings Act. It requires Hydro to consult with government in developing its efficiency plans.
Included in the PUB's recommendation is for the government to treat energy efficiency as a stand-alone resource in a more integrated plan by Hydro to supply Manitobans with electricity in the coming decades. In other words, the PUB said energy efficiency must be treated equally regarding hydropower, wind, solar, gas generation or other technologies -- and it should be done before any more money is spent on Conawapa or any other generating plant.
"By failing to offer an analysis of conservation measures as a stand-alone energy resource competitive with other generation resources, Manitoba Hydro presented an analysis of conservation measures that was neither complete, accurate, thorough, reasonable, nor sound," the PUB said.
The move by the PUB was welcomed by the Manitoba branch of the Consumers' Association of Canada, one of several interveners in a three-month PUB public hearing.
"There's a powerful message in this report that energy efficiency can defer the need for Conawapa," CAC lawyer Byron Williams said. "Giving a fair shot to energy efficiency, wind and solar is critical and it's consistent with what's going on in modern jurisdictions."
The move to have someone else administer energy efficiency programs, including Power Smart initiatives now handled by Hydro, is not new to Manitoba or to what currently happens in provinces such as British Columbia and Nova Scotia. Each has significantly higher planned efficiency targets than Manitoba.
Energy efficiency was once the work of the former Manitoba Energy Authority, established by the Progressive Conservative government of Sterling Lyon in the early 1980s in response to a government-ordered report by Justice George Tritschler. The report examined Hydro's operations and cost overruns on the Long Spruce and Jenpeg dams, built in the 1970s under the NDP government of Ed Schreyer.
The MEA and Manitoba Energy Council, a five-member citizens' advisory body, were disbanded when Gary Filmon's Progressive Conservative government repealed the 1987 Manitoba Energy Authority Act under its 1994 Energy Act.