Right in the centre - Some reasons for high hydro rates

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Published on Friday, July 16, 2021

By Ken Waddell

Neepawa Banner & Press

The Manitoba NDP issued this statement last week:

“This will be third time in just over a year that the PCs have hiked hydro rates for First Nations communities living on reserve. Once this latest rate hike goes through, the PCs will have increased hydro rates by nearly 12 per cent during a pandemic. This kind of rate shock is damaging to our communities and our economy and will make it harder for First Nations to recover from the pandemic. If the PCs want to work towards advancing reconciliation, they need to listen to our First Nations communities and work towards making life affordable for Indigenous peoples living on reserve. Hiking hydro rates on reserve contradicts any type of reconciliation.”

While that statement is likely true, it is also ironic.

The main reason that hydro rates keep going up is that Manitoba Hydro’s debt is massively larger than it could have been or should have been. Just wind back the clock to about 2004. Manitoba Hydro wanted to build a third line, the so-called Bi-Pole III. The two previous lines run down the Interlake area and a third line, as deemed by the Hydro engineers, should go east of Lake Winnipeg. The NDP government of the day approached the First Nations communities and could not get agreement amongst the groups. Some wanted the line and the accompanying right of way with a potential for an all weather road joining all their communities to Winnipeg and the rest of the province. Some saw economic opportunity for both construction and long term employment. Some saw that maybe, just maybe, Hydro might run an AC line back along the same route and that real hydro could be provided to the communities instead of the fake hydro generated by diesel generators.

Whatever the pros and cons, agreement couldn’t be reached, so the plan was abandoned. Worse yet, the failure to get agreement was hidden under the pretence that the line would ruin boreal forests but somehow western boreal forest, and farmland, is not as pristine as east side forest. To further extend that myth, the premier of the day, Gary Doer, gave $10 million to a group to promote the mythical area as a UN Heritage site. A myth that never came to fruition, by the way.

The alternate route was on the west side of the province and it may well have cost $2 billion more than the eastern route. 

The simple message is that while First Nations, the NDP and all people would like lower Hydro rates, it would have made a lot more sense to go east side Bi-pole III and Hydro’s debt load would have been a lot lower, hence rates might have been lower. There’s plenty of blame to go around on this issue.

The other myth that was promoted by the NDP, and others, was that we had to build way more Hydro dams than were needed. We would sell all kinds of hydro to other provinces and to the United States. We were fed the lie that the United States would run out of oil, which they certainly have not, and that they would want our hydro and pay good money for it. Instead, the U.S. is producing more oil and electricity and has a stated energy policy that snubs Canada, be it our oil or our electricity.

There’s another little problem that escapes the usual public notice and that is that province charges Hydro for the water it uses. I think it’s about $600 million. That’s a bill to Hydro customers, but a revenue to the province. The province also charges Hydro for guaranteeing their debt with lenders, which is theoretically cheaper than Hydro having to pay more for their debt servicing costs if  they didn’t have the guarantee.

Lots of issues, not sure if there are answers, but don’t bet on hydro rates going down.

Disclaimer: The views expressed in this column are the writer’s personal views and are not to be taken as being the view of the Banner & Press staff.