Manitoba Hydro calls for higher interim rates to reduce debt on capital projects – Winnipeg

Manitoba Hydro is asking the province’s Utilities Board to approve an interim five percent rate increase effective Jan. 1.

It is the latest decision in an ongoing battle over how the crown corporation could consolidate its finances, cope with drought and tackle a level of debt that is engulfing a lot of money in interests.

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“Manitoba Hydro’s balance sheet is already heavily indebted and the company expects to spend 42% of all revenue on interest charges in fiscal year 2021/22,” the utility wrote in its request to the board this week.

“Manitoba Hydro’s current debt ratio is 86 percent. All other peer Crown corporations (in Canada) have either met lower targets or plan to reach lower debt levels within 10 years.

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Added to this year’s financial challenges were a long period of drought that left rivers and lakes low, reducing excess energy to be sold in the spot market.

Last week, the utility revised its financial outlook for this year from a surplus to a deficit of between $ 190 million and $ 200 million.

Manitoba Hydro has seen its debt triple in 15 years by building two megaprojects – the Bipole III transmission line and the Keeyask plant – under the former NDP government. The projects exceeded the total budget by $ 3.7 billion.

A credit rating agency, Moody’s, warned that the utility had a weak financial profile but received financial backing from the government. Manitoba Hydro’s debt now represents about 40 percent of the province’s total.

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The utility requested annual tariff increases of 7.9% as recently as 2017, but the regulatory council has approved increases of less than half that amount.

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The Progressive Conservative government bypassed public regulatory hearings last year and set a rate hike of 2.9 percent. He planned to set further rate increases of 2.5% per year for three years, but withdrew the required bill from the legislature. The government then ordered Manitoba Hydro to submit an interim rate increase request until a more comprehensive review of the state of the utility could be completed.

A coalition of consumer groups said they welcomed the return of public hearings on electricity tariffs and were not sure the drought warrants a five percent increase.

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“We recognize that there is a drought in Manitoba, but this is an expected part of the business cycle that Manitoba Hydro is planning and preparing for,” spokesperson Gloria Desorcy said in a prepared statement.

Opposition New Democrats criticized the government for wanting to unilaterally set rates. They did not promise to keep rates lower, but did promise to let any adjustments go through the board.

© 2021 The Canadian Press

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