Utility loses bid to set new price
Regulator orders a much lower rate increase for Manitoba Hydro customers
Manitoba Hydro has lost a bid to raise electricity rates by almost eight per cent and has been ordered to start charging a separate, lower rate in Indigenous communities.
The Public Utilities Board on Tuesday approved an average rate increase of 3.6 per cent as of June 1. It also told the Crown corporation that First Nations residents in the new customer category are not to face an increase this year.
Manitoba Hydro has been taking on large amounts of debt to build new generating stations in the north and an extensive transmission line to bring the energy south. Hydro has said it will seek annual rate increases of nearly eight per cent for the next several years to keep its finances in order.
The corporation’s president, Kelvin Shepherd, said finances are tight.
“At the level of debt we’re talking about, where our interest costs are going to approach about $1.3 billion on revenues of only $1.5 billion or $1.6 billion, we don’t have a lot of surplus … to pay for that debt,” Shepherd said.
But the board said Hydro’s plan to raise rates in order to keep debt down was more aggressive than necessary.
The board also made several recommendations to the provincial government, which Crown Services Minister Cliff Cullen said he will consider. They include:
• Reducing spending on programs
that encourage energy efficiency because they are not economic.
• Using water rental fees and other levies that Hydro pays the province every year to subsidize energy costs for low-income earners.
• Allowing Manitoba Hydro to forgo payment of $900 million in taxes and fees connected to the Bipole Three transmission line to make up for the previous NDP government’s decision to divert the line along a more costly route.
There was one recommendation from the board that Cullen ruled out immediately — giving some of the province’s planned $25-a-tonne carbon tax to the utility to keep rates down. The Progressive Conservative government has already said
it would use the carbon tax money to offset tax cuts to all Manitobans.
Cullen said the province is facing financial challenges of its own.
“The government of Manitoba is facing a $500-million deficit this year, so the government of Manitoba is in a precarious financial situation as well.”
The reduced rate for First Nations residents is needed because evidence has shown 96 per cent of people living on reserves are poor and are experiencing energy poverty, the board said in its 316-page decision.
“In addition, the poor housing stock on reserves in Manitoba and the fact that the vast majority of on-reserve First Nations residential customers …
have no access to the more economical option of natural gas for heating exacerbate the issue of energy poverty.
“The new customer class and related affordability measure of a zero per cent rate increase are also consistent with the principle of reconciliation.”
The Assembly of Manitoba Chiefs said the separate rate class for on-reserve homes is the first of its kind in Canada and is a victory.
“This decision recognizes the hardship faced by so many First Nations living on reserve. They see Hydro dams on their territory, generating revenue and electricity for Manitoba, while leaving only devastation and unaffordable bills behind,” Grand Chief Arlen Dumas said in a written statement.