Today the Frontier Centre fror Public Policy released its latest report, Pipe, Dam and Electricity Dreams: Burdening Manitoba’s Next Generation written by Andrew Pickford.
On June 20, 2014, the Public Utilities Board panel provides its report to the Manitoban Government on the proposed Keeyask and Conawapa dams and the associated Bipole III transmission line, a new interconnection with the Utility’s American utility customers and a refurbishment and expansion of its existing grid. The cumulative cost of these projects is in excess of $34-billion. If approved, they will have profound implications for Manitoba and its public finances.
Investments by Crown corporations to build, expand and maintain the electricity system usually result in higher costs for consumers. At times this is necessary, be it to provide power to new subdivisions from population growth, or simply replace aging and old assets. For the general public, the terminology can be bewildering and simply understanding exactly what is being proposed or physically built is often unclear. This presents a problem as public debate is restricted and the conversation over the use of public funds is limited to a small group of insiders. So to broaden discussion on this issue, think-tanks such as Frontier Centre for Public Policy produces policy papers to explain the issue to a wider audience and propose new ideas.
In Pipe, Dam and Electricity Dreams: Burdening Manitoba’s Next Generation, Pickford examines the proposed investments of Manitoba Hydro. He reviews the development of the Manitoba electricity sector as well as how the interaction of gas and power markets is changing decades-old realities. Mr Pickford includes examples from other jurisdictions where government involvement in electricity has led to unintended consequences, thus providing a cautionary tale. In showing historical electricity demand forecasts that vastly differed from reality, as well as describing the impact of disruptive new technologies, the paper illustrates the fragility of demand and the sales assumptions made by Manitoba Hydro to justify the large investment.
In unpacking assumptions behind the proposed projects, six options are put forward for the debate over the $34-billion investment and future industry structure:
1. Do Nothing (and defer the decision to build more dams)
2. Do Not Gold-plate (only invest in assets that are needed, rather than include every design feature)
3. Consider Natural Gas (as a fuel source instead of focusing on hydro power)
4. Address Conflict of Interest (within Manitoba Hydro for its various roles and duties)
5. Increase Oversight (of Manitoba Hydro so to ensure taxpayers get value for money)
6. Structural Separation (of Manitoba Hydro so there can be competition between the different successor entities)