Manitoba Hydro has indicated that Bi-Pole III is now estimated to cost $3.2 billion, which is up $1 billion from their original estimate.
The cost of new hydro dam construction is also experiencing significant cost inflation. During recent PUB hearings, it was reported that the new Wuswatim dam will now cost $1.6 billion. That figure is nearly 80% above the initial budgeted cost of $900 million. Power generated from the dam is now expect to cost between 9 and 10 cents to produce.
Over the next 10 to 20 years, Manitoba Hydro is proposing to construct additional hydro dam capacity. Is there any reason to believe that the initial cost estimated will be any more accurate that the ones for Bi-Pole III and Wuskatim?
Why are Manitoba Hydro customers and Manitoba Tax Payers compelled to participate in these investments? Is there a compelling local need for the additional power generation and transmission capacity? That is not the case according the PUB…
“the Board does not agree that Wuskwatim is required for domestic purposes, particularly with its current expected in-service date”
If Wuskwatim is not required for domestic purposes, then why are Manitoba taxpayers and Hydro customers being compelled to invest in even more capacity in the form of additional northern dam and transmission capacity that will cost tens of billions of dollars?
MH’s plans for capital expenditures may involve the expenditure of $18 billion or more over the next 15 years, expenditures predicated in part on what may or may not be overly optimistic export prices
new generation and transmission facilities costing over $6 billion, costs which have not yet been incorporated in the forecasts of the Corporation.
Are the construction cost estimates of these new dams and transmission lines reliable or will they escalate by 100% or more over time? The accuracy of Hydro cost forecasts to date would suggest the latter is the more probable situation
Will export revenues be sufficient to pay for those new assets? Maybe, if we believe the aggressive planning assumptions used to support the investment business case…
MH’s future export price forecasts are predicated on imposition of a carbon tax, yet there is no current certainty of such a tax being implemented
“While MH forecasts the Canadian dollar falling back about 15 cents from its current level, the Board is not confident with that forecast, and if near parity remains MH’s export price forecasts are in jeopardy.”
While the political debate is fixated over the west-versus east side route of Bi-Pole III, the opposition parties are not asking a much bigger question, namely, why are Manitoba taxpayers and hydro rate payers being forced to invest in nearly $30 billion of new hydro dams and power lines? Will any material amount of power produced from that massive investment be needed in Manitoba in 10 years or even 20 years from now?
To put that number in perspective, the proposed investment equates to about $30,000 of debt for every man, woman and child in Manitoba. It is their debt because the tax payer in Manitoba owns Hydro and provides a guarantee on its debt.
If the Government of Canada was proposing to invest nearly $1 trillion in a speculative commercial enterprise, do you suppose there might be a bit of debate in the national newspapers and among the political players? Why is almost no attention being paid to the equivalent commitment here in Manitoba?
Pursuing export markets may or may not be a worthy investment. However, instead of forcing every person in Manitoba to make that investment, let’s step back and shine some light on the business case of the entire proposition instead of dealing with small slices of the pie like the routing of Bi-Pole III. In the big picture, the additional costs for following the west side route are rounding errors on the entire investments being made. If the business case is strong, let’s put together an investment prospectus and see if individuals will voluntarily invest in the enterprise?
In this election year, we all should challenge to opposition parties in Manitoba to focus on the big picture and require the NDP to justify forcing Manitoba taxpayers to commit to investing in this massive and speculative enterprise. Every person from Manitoba should be given a choice to opt in or opt out.