The Manitoba Minnesota Transmission Project is Not Needed
Summitted to the National Energy Board For its Hearing on the Manitoba Hydro – Manitoba-Minnesota Transmission Project By Manitoba Wildlands
By
Dennis Woodford, P.Eng, Electranix Corporation www.electranix.com
May 1, 2018
Full Text available at: https://apps.neb-one.gc.ca/REGDOCS/Item/View/3559918
Download file: A91730-2 MW - MMTP - MMTP is Not Needed Report - May 2018 - A6E0L3
Recommendation
It is recommended that approval by the National Energy Board for the Manitoba Hydro – Manitoba-Minnesota Transmission Project be delayed at this time. This is to provide opportunity to avoid environmental and societal adverse impacts and divert the surplus electric energy back to Manitoba. In doing so build Manitoba’s economy rather than the American economy. Our recommendation is based on Manitobans are being asked to pay increasing hydroelectric rates being imposed in order to subsidize the low and unprofitable electricity export prices received in return.
- Introduction
It has been stated that in Manitoba, “hydroelectricity is our oil”. Certainly, in the latter half of the 20th century, electric energy exports to the USA were profitable and Manitoba Hydro’s electricity rates became the lowest in Canada. This has changed dramatically in the 21st Century. The cost of hydroelectric projects escalated as in the Manitoba Hydro Wuskwatim and Keeyask hydroelectric projects, built for export, but these export rates are unprofitable for this transmission for export application. It appears Newfoundland and Labrador with Muskrat Falls, and Site C in BC may very well suffer the same fate. It remains to be seen if Wuskwatim Generation Station will ever show a profit, and the same fate may befall Keeyask when it is finished given the spiraling increases in costs.
There is still an obsession in Manitoba that export of electricity, even when unprofitable, is the way forward. The Preferred Development Plan of Manitoba Hydro, reviewed by the Manitoba Public Utilities Board (PUB) in June 2014 recommended no more expenditure on the proposed Conawapa hydroelectric project, still leaving the province in an oversupply of electricity.
So, is increasing export of this excess electricity at an average of 4 cents/kwhr, generated at high marginal prices from Keeyask at 12 cents/kwh or greater, the most profitable way forward for Manitoba Hydro? Is cost of constructing the MMTP line to Minnesota Power going to be more than earnings received from export sales?
In order to sustain Manitoba Hydro’s Preferred Development Plan as it was approved by the Manitoba Public Utilities Board (PUB) in June 20141, Manitoba Hydro applied to PUB for their General Rate Application 2017/2018 and 2018/2019 (GRA) for a 7.9% rate increase for six years. The conclusion by Drs. Simpson and Compton from the University of Manitoba who provided witness to the PUB for the GRA hearing is: “Our preferred estimates indicate that due to the proposed increase in real hydro prices, the Manitoba economy will be 3.4% smaller after seven years than it would have been in the absence of hydro price increases above the inflation rate. Moreover, the hydro price change will result in close to 3900 fewer jobs in the province after seven years than would exist without the price increases .”
The evidence from Simpson and Compton indicates that Manitoba Hydro’s extraordinarily high GRA request is evidence that the economy of Manitoba will suffer as a consequence of proceeding with the June 2014 PUB approved Preferred Development Plan. It indicates that Manitoba Hydro ratepayers would be subsidizing the proposed electricity exports to the US, with the MMTP being stated as necessary by Manitoba Hydro to proceed forward. The PUB recognized the detrimental effect the 7.9% electricity rate increase will have on the Manitoba economy and limited the 2018/2019 rate to 3.6% as of 1st June 2018 . Is the obsession Manitoba Hydro has with exporting electricity at a loss the only way forward? If it was indeed a profitable way forward, they would not need to seek a 7.9% rate increase for six years,
It was during the last decades of the 20th century when electricity exports were profitable, Manitoba’s electricity rates became the lowest in Canada. This is no-longer the case. Is the MMTP IPL the most profitable way forward for Manitoba ratepayers or is it just contributing to the problem?
- Conclusions
6.1 Manitoba Hydro has not addressed other alternatives for the excess generation in the province. Their requirement to adhere to the Manitoba Hydro Act to “promote economy and efficiency in the development, generation, transmission, distribution, supply and end-use of power” as assumed by Manitoba Hydro that this can only be achieved by exporting their surplus electricity into an ever-softening US market. This has been an abject failure as evidenced by ratepayers paying for the economic losses of the approved Manitoba Hydro Preferred Development Plan with requests for dramatic increases in their electricity rates. Passing the blame to the PUB for approving the Preferred Development Plan is not acceptable. It is not the PUB’s responsibility to plan Manitoba’s electric power system. It also not acceptable to justify proceeding with the MMTP interconnection because the PUB approved it, particularly in the nearly four intervening years, Manitoba Hydro’s marginal generation costs will be increasing with Keeyask while in the US marginal generation costs have reduced with their low cost solar and wind generators with energy storage.
6.2 Manitoba Hydro in its Environmental Impact Statement for the MMTP line as presented to the Manitoba Clean Environment Commission (CEC) did not provide alternative means to reduce environmental impact. Instead only one transmission alternative was presented and that is what all who were consulted or intervened had to accept. The Canadian Environmental Assessment Act, 2012 under “Factors to be Considered”, Section 19 (1) states: “g) alternative means of carrying out the designated project that are technically and economically feasible and the environmental effects of any such alternative means;”. This was clearly not done by Manitoba Hydro and when an alternative transmission configuration to the lattice tower structures with 100 m right-of-way width was presented to the CEC by Manitoba Wilderness proposing tubular steel towers with a narrower right-of way as alternative with less environmental impact, it was rejected by Manitoba Hydro.
6.3 There are opportunities for Manitoba Hydro to assist in developing local markets for their surplus electric energy if they apply the same vigor that they have applied in their attempts to obtain export markets. In doing so they should collaborate with businesses, local, provincial and federal governments. There are great changes occurring in the generation and use of electricity, and insightful advantage needs to be taken of the opportunities that are forthcoming. The total cost of the MMTP line is stated above at $1.1 billion. A portion of the money that can be saved from this by not constructing the MMTP line can be applied to co-fund initiatives with governments and business to build up the Manitoba economy.
6.4 Use of electricity for mobility to displace imported oil must also be a consideration in planning the economic development of Manitoba.
6.5 The transition to building provincial markets for electricity from developing only export markets will not happen overnight. The existing interconnections will remain a valuable support to Manitoba Hydro bringing in revenue from contracts and the spot market. New markets will develop in MISO over time but may not require more interconnection capacity between Manitoba and the US while surplus electric energy would be diverted into Manitoba to build up its reducing economy. Approval for the MMTP line should be delayed until comprehensive studies of possible new market options within Canada show benefit/cost analyses that are profitable and will ease the demand on Manitoba electricity ratepayers.
6.6 To minimize environmental, agricultural and societal adverse impacts of any future MMTP line or any high voltage interconnection that Manitoba Hydro participates in, they need to consider to head off future blocking as is happening today with pipelines and in some cases, transmission lines that are visually unacceptable.