Based on Dan Lett’s report in the June 6th edition of the Winnipeg Free Press, that hot on
Publius
the tail of an earlier report that Canadian Tire will be installing ‘banks of servers’ in downtown Winnipeg, it appears that Manitoba Hydro was (and is) prepared to have Manitoba residents and businesses subsidize ‘energy hog’ server farms through raising rates for residents and existing business.
Large server farms, while employing few employees, require large amounts of electricity. Hydro’s rates for large industry (about 3 cents per kilowatt hour) are less than one-third of the marginal cost of supply. Large industry now draws about one-third of Hydro’s supply to provincial ratepayers.
The overall cost per kilowatt hour of power delivered from the newest dam, Wuskwatim, is 10 cents, while the cost of power from a Bipole III (western route) carrying power from Keeyask and/or Conawapa (the new dams promoted by Hydro and its sponsor, the provincial government) will be higher than that.
Prior to Hydro’s latest rate application, which was approved by a too compliant, too trusting Public Utility Board, both Hydro and PUB (that is, PUB’s previous panel) were concerned with the risk that ‘energy hogs’ would come to Manitoba and drive demand up, requiring the advancement of construction of new generation and transmission at high absolute and unit power costs, with the new entrants expecting to be billed at current large industry rates (which are based on the ‘cost’ of Hydro’s old highly depreciated generating and transmission assets).
To protect existing ratepayers, Hydro proposed the introduction of a new Energy Intensive Industry Rate (EIIR), to be based on the marginal cost of ‘new production’, thus saving existing residents and businesses from subsidizing new high-demand low-employment energy hogs.
It seems Hydro didn’t pursue an EIIR in its last rate application, and, as well, withheld its involvement in pursuing Canadian Tire and Facebook. Is the government driving Hydro’ marketing of power? What else is out there?
Ring the alarm bells! Hydro and its government are willing to have existing ratepayers subsidize not only American utilities but, also, new energy hog entrants to the Province.
