Fear, Shame and Silence – the New Hydro

Publius On the orders of its master, the NDP government of Manitoba, Manitoba Hydro doggedly continues to implement a risky and seemingly ever increasingly expensive development plan. (Is there anyone […]
Published on July 11, 2013
Publius Publius

On the orders of its master, the NDP government of Manitoba, Manitoba Hydro doggedly continues to implement a risky and seemingly ever increasingly expensive development plan.

(Is there anyone left that actually believes the forecasts of costs, export revenues and rates put forth by Hydro? The past record is clear, every new forecast appears to bring higher estimates for construction costs, lower estimates for the demand for electricity, lower estimates for export revenues, and higher estimates for ratepayer rates. Publius notes that neither Hydro nor the government has directly contradicted, with a different forecast, Graham Lane’s – former Chair of PUB – assertion, made at a Frontier Centre luncheon, that when the ‘dust settles’ two decades out consumers heating electrically are at risk for average monthly Hydro bills three times the current levels, $480 a month for electricity.)

The original Hydro plan, amended by the government to re-route Bipole III down the west side, was prepared before the underlying economic circumstances changed for the worse (cost estimates have soared, natural gas prices and wholesale export electricity spot prices have collapsed, the Canadian dollar has approached parity with the United States currency, industrial demand for electricity in Manitoba and Hydro’s American market has fallen, Wisconsin has markedly cut back on its planned imports from Hydro, etc.).

So, why this ‘dogged’ drive to implement an notably and known flawed plan, one that holds ‘great risk’ for Manitoba ratepayers? Hydro, under the direction of the government, has already spent a billion or two ahead of ‘final approvals’, let alone the ‘sham’ and unduly restricted capital expenditure review to be held by the government-appointed Public Utilities Board. As well, Hydro has made commitments (some binding contracts) to American utilities and First Nations and  hired hundreds of trainees and other employees, with hundreds more to soon be engaged to build a large encampment at Gillam, at a reputed cost of $70 million, to house those that are to begin to build Bipole III.

To ‘stop now’, and re-examine ignored options (which provide for needed diversity of supply; involve much lower capital expenditures and borrowing – ten year government bond yields are now climbing; have no need for hundreds if not thousands of present and future new employees; avoid having to build Bipole III and other lines through prime agricultural land; substantially reduce the potential eventual rate hike and bills for ratepayers; and, provide for better environmental outcomes) would allow for, at minimum, a lengthy deferral of the build and hire plans.

However, to ‘stop now’ would also require the government to admit the errors of its ways; repeal promises and commitments to First Nations, American utilities, employees, contractors and manufacturers and other service providers; and, likely, accept a major write-down of the assets of Manitoba Hydro (which would dramatically drive up the government’s summary account deficit).

Many employees ‘inside Hydro’, from the ranks of the general employee base to senior officials, quietly evidence distrust with the government’s ‘build’ and ‘borrow’ plans, but are, understandably, not willing to ‘go public’ with their concerns. As to the members of the Board of Directors of the Utility, they wouldn’t be on the board if they were willing to make a public stand for ‘sensibility’ and call for a proper review of the plans before further billions are spent.  Utilities, on major matters, are usually represented, at least occasionally, by their board, Hydro’s board members are silent. Hydro is represented by government, the ‘dividing line’ between the Utility and the government has, seemingly, disappeared.

So, on the madness goes.

Hydro agents now plan and meet with landowners on the various routes of Hydro’s transmission line projects. More than Bipole III is involved, Hydro plans to criss-cross southern Manitoba (for redundancy, export and other reasons), and ‘settle’ with the landowners (at low prices) before ‘awareness’ of the high value lost to the owners becomes understood, and ‘NIMBY’ (Not in my Backyard) arises.

The preparation for the Gillam staging base, land agent activities and other development plan activities and expenditures are ongoing (leaving aside the upcoming PUB ‘sham’ hearing) ahead of the Clean Environment Commission’s release of its decision on Bipole III and its routing.

Despite options having been put before CEC that would allow for a prudent deferral of Bipole III to at least 2025, no one should even entertain the thought that CEC will stand in the way of the government’s plans (anymore than PUB will).

Concurrently, Hydro, also on the government’s bidding, keeps spending ratepayer money while further reducing the Utility’s already lost reputation for credibility by advertisements and circulars (such as the latest Energy Matters inserted into Hydro’s bills  – Exports will continue to keep Manitoba’s residential electricity rates low), which shamelessly promote the government’s development plans.

What continues to be missing in Hydro and government publications and claims is a honest and forthcoming review of the risks inherent and options to the development plan.

Government has turned Hydro, a once trusted and operationally independent monopoly Utility, into a lapdog.  By doing so, the government has devalued the previously assumed ‘value’ of a Crown-owned enterprise, one expected to act in the interest of its ratepayers, not that of the government.

When, a decade or two ahead (it is amazing how ‘accounting’ can be employed to defer the recognition of costs well into the future), the ‘real’ cost to ratepayers, taxpayers and the overall Manitoba economy becomes clear, all those now involved in promoting and implementing this present ‘madness’ will be long gone.

Perhaps many current Manitobans, those with the ability to move, will be long gone by then too.

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