Months late, Manitoba Hydro has finally reported its poor financial results for 2019-20 and the first quarter of the current year. It also has disclosed that it has sold its long-standing 40% stake in electrical engineering consultancy Teshmont (to global engineering firm Stantec), froze what had been the successful world-wide consulting operations of Manitoba Hydro International (MHI), and raised questions as to the future of Manitoba Hydro Telecom (MHT), a promising local data services provider.
Jay Grewal, Hydro’s new President and CEO, having been at the helm of the troubled monopoly utility only since February 2019, has declared that “Manitoba Hydro’s core business is to supply Manitobans with reliable, renewable energy and clean-burning natural gas at the lowest possible cost.” Apparently Teshmont, MHI and MHT weren’t considered “core.”
Teshmont, specializing in high voltage power transmission and distribution engineering has worked in more than 50 countries. Stantec, along with buying out Manitoba Hydro’s long-standing stake in Teshmont, also bought out other investors to end up owning 100% of Teshmont – suggesting significant value in Teshmont. Manitoba Hydro has not disclosed the price it got from Stantec.
MHI, being a wholly-owned unit of Hydro, has been successfully providing energy consulting and management services globally for decades. MHI has participated in World Bank projects in the third world, originally drawing on and then, later, discarding assistance from local engineering companies including Teshmont. Hydro’s review of MHI has involved at least two management consultancies (Grant Thornton and Price Waterhouse Cooper – PWC). Copies of their reports have not been released.
While Ms. Grewal has noted “no decisions have been made,” MHI staff have been directed to stop new consulting activity. As current consulting projects come to an end, will the unit’s staff have anything to do? Grewal promised to be “as transparent as possible” with MHI’s staff through the review. Presumably in defence of Hydro’s shut-down review rationale, she noted that MHI’s annual revenues had slipped from 2017, with profits down by 22% and revenues down 40%. Yet, Manitoba Hydro’s 2019-20 annual report reveals continuing significant revenues at MHI.
Before selling off or shutting down MHI, Ms. Grewal, her board of directors, and the Pallister government should carefully consider a September letter of warning (by Dr. Mohamed Rashwan) addressed to Premier Pallister entitled: “The Preservation of Critical Software of MHI Within the Province.”
Since MHI owns critical world-dominant digital power system simulator software (PSCAD), MHI’s continued ownership of PSCAD and the component marketing and research staff should be carefully considered. In whatever outcome arrives out of the on-going review of MHI, local engineering companies, along with Manitoba Hydro, both depending on PSCAD, should be given a full opportunity to provide technical input towards the continued development of PSCAD.
Finally, as to Ms. Grewal’s quest to best serve her perspective of what is Manitoba Hydro’s “core business,” there are opportunities that lie within the current mandate of Manitoba Hydro Telecom (MHT). It is ideally positioned to be an ever more critical player in an emerging telework and telecommuting environment dependent on excellent high-speed urban and rural internet. Those opportunities should be carefully explored. MHT, without sound justification, should not be “dumped off” to firms seeing economic riches.
Manitoba Hydro needs to be far more open. Important changes are in play.
Graham Lane, a past Chairman of the Public Utilities Board, is a retired CPA CA. He is a long time member of the Frontier Centre for Public Policy’s Expert Advisory Panel.
