The presentation provided to almost 300 guests at a special breakfast event by the Manitoba Chambers of Commerce offered meticulous detail on the current state of Manitoba Hydro, and some sobering prospects for its future.
Hydro board chair Sanford Riley pulled few punches on how partisan political decisions and poor planning on legacy projects (Keeyask and Bipole 3) led to debt of over $25 billion and how an extended rate increase of more than 7 percent is needed just to get the company back to a comfortable equity position. Mr. Riley took the business audience through the state of disrepair in which, as he stressed, the new board inherited from the previous board and government. The new board, named after the tory election in 2016 and more experienced in business, conducted a massive review and after the numbers were added up, they were left with, as Riley described, an iceberg of debt.
Riley explained that after the review process and other ideas being pitched to the board, the only way to stabilize Manitoba Hydro and get back to a comfortable level of equity, which would sustain the company through unexpected downward cycles, is to increase the cost to its users. But, as he highlighted, once the company reached its goals, they would be able to provide rate decreases and continue to provide the lowest costs for energy in North America. Between the inevitable rate increase and the province’s recently announced carbon tax, Riley suggested that potentially a portion of the collected carbon revenue go back to lower income Manitobans to offset the increased costs.
As he concluded his address, Riley addressed the suggestion that the government-owned asset do nothing to correct the escalating costs and hope the landscape changes. Riley said pointedly, “hope is not a strategy.”