NDP offloads blame for Centra rate hike

Opinion

The Public Utilities Board approved three years of rate hikes for Centra Gas last week, and in doing so it laid bare a concerning problem regarding the Crown corporation that should have made more of a splash in the daily news cycle than it did.

As the PUB report noted in its executive summary, the board imposed a 4.5 per cent rate increase for Centra Gas Manitoba Inc. — a subsidiary of Manitoba Hydro — for Nov. 1, 2025 and a four per cent increase starting Nov. 1, 2026.

That follows an increase of 4.5 per cent Centra imposed on Nov. 1, 2024, which the board finalized as part of its Sept. 16 order.

Ironically, Centra’s original application only called for a single-year 4.5 per cent general revenue increase last year. However, the PUB, noting the fact that Centra Gas has been losing millions of dollars annually since the 2020-21 fiscal year, concluded that the viability of the Crown corporation was in jeopardy, and increased the rates by the amounts above “to protect the financial health of the utility.”

As the Sun reported last week, a 2018 projection showed Centra was expected to have a net income of about $7 million each year in the early 2020s, the decision said. Centra started losing money in 2020-21 and has lost money every year since, spiking at a projected $34 million in losses in 2023-24.

“The escalating losses were caused primarily by increasing costs to run the utility without adequate revenue increases to recover those costs,” the report reads. “As the utility began to accrue back-to-back annual losses, it also had to take on an increasing amount of debt to finance ongoing capital expenditures and operations, increasing the amount of interest it needed to pay. By the end of the 2024-25 fiscal year, the utility had almost completely eroded its retained earnings.”

To avoid confusion, it’s worth noting that these three rate hikes deal with the distribution of natural gas delivery to Centra Gas customers — a fixed charge — and does not affect the utility’s commodity rates, which are based on variable market rates, without markup. Distribution rate hikes cover the regulated costs for maintaining and operating the natural gas delivery system, including pipelines, gas meters and administration costs such as billing.

Centra Gas must make rate applications as necessary in order to recoup these costs, but instead of asking for what the utility needed, the Crown chose to ask for a single rate hike that would not come close to stabilizing its financial situation.

That is concerning on a number of levels.

Not only do customers now have to pay the price of increased utility costs, the public is invited to question the health and viability of Centra Gas itself — not to mention the quality of the government’s fiscal oversight through Manitoba Hydro.

But that’s where the politics of the situation comes in.

Prof. Malcolm Bird with the University of Winnipeg’s political science department says it made sense that Manitoba Hydro and Centra Gas essentially waited for the PUB to step in and enforce these increased rate hikes, so that the government could pin the blame on the board instead of taking the blame itself.

“Hydro did not ask for this increase because it would rather have the utilities board impose it on the rate payer,” Bird told the Sun. “What this does is it alleviates political pressure on the government regarding this rate increase. You can kind of pin stuff on the utilities board. It’s offloading political culpability, or responsibility for this rate increase, onto the public utility force.”

That’s certainly not beyond possibility, given the financial mess in which the province currently find itself.

Earlier this month, The Canadian Press reported that credit-rating agency Moody’s was forecasting a deficit of $900 million for Manitoba for the 2026-27 fiscal year, even though the Kinew government predicted a $327-million deficit. And with Moody’s also forecasting a deficit of $1.9 billion in the current fiscal year, it’s clear that the province’s fiscal books are ablaze in red ink. And at some point, that comes home to roost — with taxpayers.

The Kinew government is already staring down the barrel of its own promise to balance the books before the next election, even while ordinary Manitobans continue to struggle from inflation pressures, and the economic uncertainty imposed upon us by the Trump administration’s tariffs.

For a Manitoba Crown corporation to apply for several new rate increases that will negatively affect customers provincewide — well, it would be politically unhelpful at the very least.

Finance Minister Adrian Sala — who is also the minister in charge of Manitoba Hydro — predictably blamed the previous Pallister and Stefanson governments last week for not making timely applications. In this particular case, that tired whipping post will offer a reasonable excuse, considering that such applications take time to be processed — and the fact that Hydro critic Lauren Stone did not have a ready answer when asked why Centra went from making $2 million in 2019-20 to losing $34 million in 2023-24.

But it’s also intellectually lazy considering that the NDP have been overseeing the file since the end of 2023.

This ministerial portfolio is now yours, Mr. Sala. And it’s up to you and your government to ensure that Centra Gas and Manitoba Hydro remain viable into the future.