Warden’s Rosy View

Blog, Crown Corporations, Energy, Manitoba, Public Sector, Publius Tacitus (historic), Uncategorized

Publius read with interest former Manitoba Hydro’s former Chief Financial Officer’s claim that the Utility is in “the strongest financial position in its history” – Manitoba Hydro finances on firm footing (Winnipeg Free Press, November 25, 2013).

Mr. Warden values paper entries too highly, for a firm to have its complete capital base represented by deferred costs, intangible assets and non-performing assets is not a sign of financial strength, but of financial weakness. When a Utility is embarking on a $34-billion development gamble, one of such magnitude that it risks the Province’s future economic footing and its ratepayers’ pocketbooks, many of them of lower-income households, it is not a gamble to be financed by debt.

His declaration that Hydro “… must conduct its affairs in a businesslike manner” is almost amusing when one considers the endless stream of incorrect Hydro’s forecasts that blight its past and raise valid concerns for its future. And, his defense of the likely $4-billion or more construction cost of Bipole III ignores consideration of feasible, and much less expensive, options allowing for a safe deferral.

His claim that “Hydro’s accounting practices are in full compliance with accepted accounting standards (and) are subject to rigorous external audit” provide no comfort, given that the accounting being employed flatters current period net income reports and moves costs (soon to be accompanied by further rate hikes) well into the future. Mr. Warden’s calming words imply Hydro hopes for a ‘sleepy’ ratepayer base, one not to ‘wake up’ until the gamble has fully played out.

But when Mr. Warden refers to an annual takeoff $287-million by the provincial government from ratepayers’ pockets (a take drawn from Hydro operations), he confirms a significant conflict of interest of significance, one that will grow significantly if the $34-billion adventure continues.