Set record straight on false rate freeze ads

Opinion

Hey there, time traveller!
This article was published 23/01/2025 (239 days ago), so information in it may no longer be current.

When something appears too good to be true, it usually is — and that’s the case with the latest advertising campaign by Manitoba’s NDP government.

The government is currently running an extensive, and no doubt expensive, advertising campaign that heralds a “hydro rate freeze” that has not yet been approved by the province’s rate regulator.

The advertisements, which reportedly include billboards and social media posts, claim that a one-year electricity rate freeze began on Jan. 1 and that the freeze will help lower costs for Manitobans. That may sound like good news to those who are struggling to overcome the affordability crisis that continues to afflict our province, but the message in the ads isn’t true — and may never be true — for at least five reasons.

First, the government doesn’t set the rates charged by Manitoba Hydro for electricity. That is the role and responsibility of the Public Utilities Board, which is an independent agency that considers a range of factors in determining the appropriate rate to be charged by Manitoba Hydro. It has the legal power to accept, deny or alter any rate application.

Second, Manitoba Hydro hasn’t even filed a rate application with the PUB that seeks approval of such a freeze, and is not likely to file such an application until April at the earliest. That means that contrary to the message in advertisements, there is no PUB-approved rate freeze in place at present. It could be months before such a freeze is authorized by the PUB, and that is far from guaranteed.

Third, there is a strong argument that Manitoba Hydro cannot afford a rate freeze at this time. The Crown corporation owes approximately $25 billion to its lenders, and may soon have to borrow billions more to spend on the construction of additional generating capacity in order to meet an anticipated growth in demand. Beyond that, credit rating agencies have already warned that the utility has higher debt levels than similar utilities in other provinces.

Fourth, Hydro’s debt load is a serious concern, but so too is the fact that it has suffered two consecutive years of unanticipated multimillion-dollar deficits due to low water levels. In the 2023-24 fiscal year, an anticipated profit became a $157-million loss. For this fiscal year, a profit was once again expected, but the latest estimates predict an even larger loss than last year, at $164 million. Given the accelerating pace of climate change, it may become increasingly difficult for Hydro to produce electricity at a profit without higher rates.

Fifth, a coalition of Manitoba consumer groups has indicated that they will oppose any application for a rate freeze because they are concerned that it could end up resulting in large rate increases in future years, causing rate shock for Manitobans.

Manitoba’s finance minister, Adrien Sala, says his government is “committed to bringing in this rate freeze and we’re able to deliver on that for 2025. So we want to make sure that Manitobans know that this rate freeze is going to be in place.” The reality is, however, that his government doesn’t set Hydro rates — the PUB does — and there is ample evidence that Hydro doesn’t have fiscal strength to go without a rate increase for an entire year.

Premier Wab Kinew says “We’re confident that the (PUB) will approve this because we think that its financially sustainable,” but the PUB has a statutory obligation to balance the interests of Manitoba Hydro’s ratepayers with the financial state of the utility.

Given Hydro’s sky-high debt load, the two years of unexpected losses and the need for expanded generating capacity, there is little reason for the premier and his government colleagues to feel any confidence the PUB will approve an application that seeks a rate freeze. It is far more likely the board will impose a rate increase that improves, not worsens, the financial health of Hydro.

Given that strong likelihood, it is fair to ask what the government thought it would accomplish by spending thousands of public dollars on an ad campaign that made a factual claim — that a rate freeze is in effect — that is not true today, and is unlikely to be true anytime soon.

Manitobans are being misled by ads purchased with their own tax dollars. Given the false nature of the advertisements, the Kinew government has an obligation to immediately end the ad campaign and set the record straight by telling Manitobans the truth: There is no rate freeze.