Premier Brian Pallister's plan to set Hydro electricity rates at the provincial cabinet table may have hit a snag.
After successfully delaying legislation that would enshrine cabinet control over electricity rates for the foreseeable future, the opposition New Democratic Party has asked the Public Utilities Board to step in and hold an emergency rate hearing. It would be the first time the regulator has examined the inner workings of Manitoba Hydro in more than two years.
In a letter dated March 11, NDP Leader Wab Kinew and MLA Adrien Sala ask the PUB "to call on Manitoba Hydro... to present a general rate application to the board at the earliest opportunity" to consider a range of issues, including cabinet directives to Hydro on collective bargaining agreements.
Right now, Hydro employees who are members of the International Brotherhood of Electrical Workers are on strike, after rejecting a two-year wage freeze that was dictated to the utility by the provincial cabinet. The NDP alleges that this amounts to an illegitimate intrusion into Hydro operations that could threaten the viability of the utility.
The letter noted that the last general rate application submitted by the Crown electricity and gas utility was in November 2018; the PUB issued a decision on that order in June 2019. Even though the PUB had planned for another general rate application for the fall of 2019, Hydro made no submission either that year or the next.
Instead, Premier Brian Pallister has set hydro rate increases by cabinet order. First, through a measure that was built into the 2020-21 budget implementation bill; in the future, rates would be set by Bill 35, a proposed law that allows cabinet to set annual electricity rate increases and would limit formal PUB hearings to once every five years.
That bill is stalled in the legislature. The NDP announced last week it was designating Bill 35 as one of the bills that will be delayed and debated until the fall. Under legislative chamber rules, opposition parties are allowed to designate a handful of bills to be delayed in exchange for a promise not to use procedural tactics to slow down legislative proceedings
Bill 35 will turn Manitoba Hydro into a black box for many years," said Kinew. "The PUB process is important for many reasons. The people of Manitoba, who are really the owners of Manitoba Hydro, need to know what's happening in this Crown corporation. Right now, nobody knows what's going on.
Kinew said that because Bill 35 provides for a general rate application every five years, if it passes in the fall, it could be seven years before the PUB gets its next look at Hydro operations and financial forecasts.
Pallister has said Bill 35 will strengthen the PUB by expanding its scope to fully consider capital expenditures in the setting of electricity rates. Critics point out, however, that by eliminating annual rate hearings and allowing cabinet to set electricity rates, the public has considerably less information about how Hydro is performing and what effect it might have on their electricity bills.
The NDP may not be alone in pressuring the PUB to step in.
The Consumers Association of Canada (Manitoba) is extremely unhappy with the Pallister government's decision to take rate-setting away from the PUB and put it into the hands of cabinet ministers. In a statement, executive director Gloria Desorcy said "many things have changed since the last full rate hearing in 2018.
Although the association would not comment on the details of the NDP's argument, she said her organization opposes the provisions in Bill 35 and would like to see a special or interim rate hearing held as soon as possible. "As ratepayers and citizens, we need up-to-date information through an independent PUB process to know whether we are paying the right rates," she said in the statement.
The association noted there has been considerable change at Manitoba Hydro in the last two years, including the completion of a widespread organizational review, the signing of new power deals with Saskatchewan, and significant reductions in interest rates. As well, the utility brought both the Keeyask generating station and Bipole III, the new north-south transmission line, into operation.
Despite that change, Manitoba Hydro has not updated its integrated financial forecast, its principal source of data on where it expects operations and market conditions to go in the next five years.
Under the Crown Corporations Governance and Accountability Act, citizens can appeal directly to the PUB to conduct special hearings on issues related to Hydro rates and operations. Given that Bill 35 is stuck in procedural limbo, the PUB still has the legal authority to review rates for all services provided by Hydro. This can include an examination of the "current and planned expenditures" of Hydro as part of the PUB's mandate to set "just and reasonable rates."
PUB officials could not be reached for comment.
Last year, the PUB declined a similar request by the NDP to hold a special rate hearing, to investigate the impact of an $86-million budget cut at Hydro that was ordered by the Pallister government. The PUB indicated the NDP's concerns would be examined "at the next hearing relating to Manitoba Hydro's rates" or if it was asked to by cabinet.
At the time, the PUB expected the next general rate application to take place in the fall of 2019.