A Valuation of the Centra Gas Division of Manitoba Hydro

Research Paper, Crown Corporations, Ian Madsen

The Frontier Centre for Public Policy today released A Valuation of the Centra Gas Division of Manitoba Hydro authored by Ian Madsen.

Fifteen years ago, Centra Gas was a private, investor-owned company.  However, since then it has been a division of the Crown corporation Manitoba Hydro.  Centra still has separately delineated assets and liabilities, and its own income and cash flow statements.  Hence, Centra Gas can be valued separately from Manitoba Hydro.

Using two different, standard valuation methods, Centra Gas could be worth as much as $1 billion, benchmarked against comparable Canadian utilities; perhaps as much as $1.7 billion.  The upper figure would be theoretically possible if a buyer thought the company could optimize its operating margins and expand its market.

This study is designed to help guide the provincial government, taxpayers, and ratepayers decide if Centra Gas should be sold, identify pertinent financial issues.  It also explores whether Centra sale proceeds could be used to reduce the burden of the capital spending plans of Manitoba Hydro.  These projects’ costs are estimated to approach $10 billion and may raise power bills by 4%-10% each and every year.

Read the entire paper here: FC17007_CentraGas_JN0517_F3