Time for Real Change at Manitoba Hydro (Part 3 of 3)

Commentary, Crown Corporations, Utilities, Graham Lane

Governments continue to mismanage publicly owned utilities, from East to the West.  

Newfoundland and Labrador’s government, still reeling from a 1969 agreement providing Churchill Falls’ electricity to Quebec at meagre prices (to 2041), built another utility albatross in the form of the Muskrat Falls Dam.  Ontario’s past Liberal government inked exorbitantly priced contracts for wind and solar power. BC’s government suffers as it completes, at incredible cost, its Site C Dam project. Here, in Manitoba, a PC government struggles to complete the fiasco Keeyask Dam Bipole 3 expansion started by a former NDP government. 

In each case of those four provinces, both taxpayers and utility customers depended upon decisions taken by average people with little expertise that populate their cabinets.  In Manitoba’s case, a province of low population, high taxes, tough winter environment, located a thousand miles from economic density, losing its ‘hydro advantage’ is a serious matter – higher energy bills, are yet another reason for industry to go elsewhere.

Brian Pallister’s PCs won the 2016 provincial election, throwing out a tired and divided NDP led by Greg Selinger.  Helping Pallister was the NDP-driven Manitoba Hydro expansion.  Pallister pledged to halt the out-of-control expansion, but, when he got the reins of power, he broke his promise and continued it.

After oddly refusing to hold a true open public enquiry, which would have hung the incompetence on his political foes Pallister chose to fund ‘behind the scenes’ closed shop consultants, including accounting firms and Brad Wall, a former prairie premier, none were commissioned to conduct a forensic audit of the lost billions. Instead, Pallister has grabbed the reins of Hydro effectively making it into another government department by ‘retiring’ open Public Utilities Board rate hearings. In many people’s books, he is living the socialist dream directing the monopoly utility without restraints, while moving $500 million a year (and growing) out of Hydro’s ratepayers’ billings to the government’s account.

Given the billions wasted and the several expensive reviews on questionable decisions already made, why now the Wall review?  Is Wall’s review to rain blame on the NDP, ignoring Pallister’s own failures to halt the expansion while throwing millions to consultants?  Wall’s focus should have been a ’structural review’ of Hydro – open to outsiders through a public enquiry, with a goal of reforming its monopolistic, opaque operations, for a better way forward. 

Recently, Pallister assured Manitobans that his government will not privatize Hydro.  It is an easy pledge to give, given Hydro’s shaky financials and his government’s reliance on the half-billion a year diverted quietly annually to the government from ratepayers).

Wall could help by recommending a public enquiry backed by a forensic audit of the contracts let by Hydro and its agents.  He could also suggest considering breaking up the massive monopoly that is now Hydro.  The Centra Gas operation could be sold off to pay down debt while splitting electricity operations (generation, transmission, and distribution) to foster competition and innovation.  

Wall could suggest transferring $10 billion of Hydro’s stranded debt to the government – taking pressure off utility customers, current and future.

Finally, Hydro’s focus should be on replacing abysmally priced export capacity by building more lucrative local electricity demand.  

Hydro’s advantage can be repaired if the politicians stay out of the way.

 

Graham Lane, a retired CPA CA, served as PUB’s chair from to 2004-12. He is a long time member of the Frontier Centre for Public Policy’s Expert Advisory Panel.