Manitoba Hydro has reported a $20-million increase in net income thanks mainly to export sales made possible by the Keeyask northern dam — an NDP project the Tory government has railed against.
The increase is primarily from higher out-of-province revenues and firm export sales contracts that were made possible by the 695-megawatt Keeyask Project under construction in northern Manitoba and the 500-kilovolt Manitoba-Minnesota transmission line completed last year, says Manitoba Hydro's annual report, which was released Thursday.
The provincially owned utility reported a total consolidated net income of $119 million for the fiscal year ending March 31, 2021. Revenues from out-of-province electricity sales totalled $611 million — an increase of $143 million from the previous year.
We will build on our clean energy advantage to help the province and the country decarbonize," president and CEO Jay Grewal said in the report. She noted that vehicle manufacturers are moving away from combustion engines toward electric vehicles, and that Manitoba Hydro "is well-positioned to play an important role in shaping the changing energy landscape for the benefit of this province.
That type of positive outlook and analysis were nowhere to be found in a report by former Saskatchewan premier Brad Wall in February. The Tory slammed the former NDP government and Manitoba Hydro officials for overestimating the potential for export sales needed to justify building the Keeyask generating station and the Bipole III transmission line that together ran $3.7 billion over budget.
Wall's report, commissioned by then-premier Brian Pallister, said the former NDP government did little to prevent costs from spiralling and was more focused on getting the projects completed.
Keeyask and Bipole III were built over the last 15 years and Manitoba Hydro’s debt has tripled in that time to more than $23 billion.
On Thursday, when asked to comment about Keeyask receiving credit for Hydro's increase in net income, Crown Services Minister Jeff Wharton thanked the construction workers building the massive project that started to come online this year.
"First, I want to be clear on a group that has unfortunately been forgotten, which are the fine folks contributing to the construction of the Keeyask Generating Station. They are doing a tremendous job, under exceptional circumstances," Wharton said in an email.
Our issue lies with the NDP’s mismanagement of Manitoba Hydro. This is why we remain committed to implementing the Wall Report recommendations, and strengthening our commitment to better protect Manitobans from the mistakes and decisions made by the former government.
Adrien Sala, the NDP critic for Manitoba Hydro, said its annual report shows the PC government has misled Manitobans.
Hydro’s annual report makes it clear that the Crown corporation is profitable, and the PCs have been misleading Manitobans about Hydro’s true financial state," Sala said in an email. "This proves that (it) was wrong for the PCs to raise rates at the cabinet table and undermine public oversight with Bill 35.
The Public Utilities Ratepayer Protection and Regulatory Reform Act would have had the Public Utilities Board approve Manitoba Hydro rates in five-year intervals rather than annually, with the provincial cabinet setting hydro rates in the meantime.
Sala said the next premier, the PC leader elected by the party on Oct. 30, needs to tell Manitobans where they stand on hydro rate-setting.
The PC leadership candidates must publicly commit that they will not bring back Bill 35 so Manitobans can trust they are paying a fair price for Hydro.
Grewal said Manitoba Hydro's net income is extremely variable, and subject to factors such as water flow, weather, interest rates and export prices that — apart from firm power sales — can be unpredictable and are not in the utility's control. "The $20-million increase in net income is a good result for our customers in what was a challenging year for everyone," she said in a news release.
"Achieving this level of net income and making a modest contribution to improve Manitoba Hydro’s financial position is key to protecting our customers from steeper, unpredictable rate increases in the future, and will help keep Manitoba electricity rates among the lowest in North America in the long-term," Grewal said.
The annual report’s financial outlook for this fiscal year notes the below-average winter snowpack and below-average spring precipitation across much of Manitoba Hydro’s watershed has caused lower-than-average water inflows and reservoir storage levels.
Because of the drought, hydraulic generation for this year is expected to be below budget, putting downward pressure on Hydro's projected net income of $190 million due to less excess energy being available for export sale opportunities. There is no danger of Manitoba Hydro failing to meet its domestic energy requirements or export obligations, though, Grewal said.
But this does highlight the importance of ensuring we generate modest net income when conditions are good as a balance against years with lower water flows, such as this year.