Promised Land – Manitoba Hydro and Saskatchewan?

Blog, Commentary, Publius Tacitus

Out of the most recent meeting of the western premiers comes an indication that Saskatchewan’s Premier is interested in and may want Saskatchewan to purchase more electricity from Manitoba Hydro. Premier Selinger has seized the moment to relate the potential purchase to the Province’s plans to have Hydro proceed with the Keeyask and Conawapa projects (which also require Bipole III).

Hydro has sold power to Saskatchewan for years, but the quantity has been low, with the flow restricted by the capacity of the transmission lines between the two provinces. Discussions between energy rich (coal and gas included) Saskatchewan and Manitoba have gone on for years, without any major transaction resulting. Recognizing the transmission capacity limitations, Premier Selinger has been quoted as saying Saskatchewan’s current interest could potentially rely on existing transmission lines ‘with modest improvements’.

Publius suspects it would take far more than ‘modest improvements’ to existing transmission lines to support a major sale of additional power to Saskatchewan, and in the absence of a very major sale would neither require Keeyask or Conawapa (nor Bipole III).

Before visions of ‘sugar plum fairies’ form in the minds of Manitobans, details of any proposed sales (duration, timing, rates, volumes, terms including renewal terms, etc.), along with the implications for supply (cost, options, risks) and domestic rates, need to be carefully and expertly vetted.

It may also be instructive for Manitobans to consider the past ‘visions’ of government associated with Manitoba Hydro that have not worked out as originally forecast:

The 1980s aborted sale to Ontario Hydro (development losses incurred by both Ontario  and Manitoba Hydro); Wuskwatim (final cost, twice the estimate; receipts, half the forecast); the Doer government’s plans for Hydro’s wind development (the 2,000 MW then sought now apparently restricted to the existing 300, those largely financed by Hydro and supported by expensive long-term contracts); the purchase of Winnipeg Hydro and Centra Gas (Hydro over-paid);  the original cost projections for Bipole III, Keeyask and Conawapa (now doubled, more increases to come); Hydro’s past forecasts of export prices and volumes (spot prices now half, if that; volumes lower); Hydro’s original term sheet with Wisconsin Power (sliced back from 500 MW to 100 MW, able to be served by existing transmission lines); Hydro’s past forecasts of industrial load demand (plant and unit closures have taken more than a decade of expected growth ‘off the table’); 20-year domestic rate forecasts from 2004 (now doubled, likely to go even higher); Hydro’s forecast that the additional annual costs associated with its new head office would be met by ‘efficiencies’, complement reductions (complement has soared). etc.

The forecasting record of government and Hydro with respect to Hydro has been, to be fair, far from stellar if not simply ‘awful’. The record is so bad that the Utility and its sole shareholder’s (the government) forecast credibility has to be called into question.

Publius remains skeptical about the wisdom of virtually every aspect of the government-driven development plans for Manitoba Hydro, and ratepayers should be as well.

Before Bipole III proceeds, and before further millions and billions of borrowed money is spent on a plan that could lead to a tripling of domestic rates (with the increases spun out over two decades to reduce public outrage), a truly independent expert review needs to be conducted (not a sham NFAT).

The review is needed now for the full development plan,  including Bipole III. All the options need to be considered, and with ‘all the cards’ on the table.

The ratepayers are the party at risk, being called on to ‘carry the full load’. They deserve to know everything.  And, difficult as it may be, if the plans cannot stand up to a proper and open scrutiny, they should be changed (even if write-downs are required and commitments have to be withdrawn).