It’s time for the Progressive Conservative government of Manitoba to put our money where its mouth is and fix Manitoba Hydro's finances, once and for all.

Hydro is currently before the Public Utilities Board seeking a five per cent electricity rate increase, effective Jan. 1. This would cost the average residential customer with electric heat about $10 per month.

Hydro has underpinned its rate proposal on two main issues: a drought this year that reduced its export sales and led to a loss of about $200 million; and the ongoing need to service higher debt levels from the construction of the Keeyask generating station and Bipole III transmission line.

To be blunt: only a sucker would buy into Hydro’s deeply flawed narrative.

There was a drought last year, and it definitely impacted Hydro revenues. And there is no argument sizable new debt from capital projects is just now starting to make its full presence felt on the Crown utility’s bottom line.

However, at the same time, Hydro is earning new export revenue from those investments, particularly the $5 billion (over 30 years) in deals with Saskatchewan directly related to the increased generation capacity from Keeyask. Interest rates are extremely low and, although this past summer was dry, one year of drought does not a financial crisis make.

The five per cent interim rate application is a politically motivated sham, a con job started by then-premier Brian Pallister and continued by Premier Heather Stefanson to fulfil two goals: perpetuate the allegation the former NDP government broke Hydro’s financial back with the decision to build Keeyask and Bipole III; and divert attention away from the $480 million the Tory government is taking out of Hydro operations every year to feed general revenues.

While all this has been going on, the Tory government tried to stop the PUB from reviewing Hydro rate applications and, for nearly two years, set electricity rates by cabinet decree. That means two years without any independent analysis of the utility’s finances — a problem that has PUB intervenors infuriated.

That gap in regulatory oversight gave the Tories (who were voted in in 2016) the opportunity to push the political theory any rate increases in the future are due to decisions made by the former government, sparing themselves any critical attention.

Even so, there have been a few moments when the PCs have showed their true strategy.

Pallister hired former Saskatchewan premier Brad Wall to do a review of Keeyask and Bipole III, despite the fact the PUB and others had already dug deep into the projects. His unremarkable November 2020 report concluded, to no one’s surprise, imprudent decision making and incompetent management had left Hydro under a mountain of debt.

However, Wall also suggested government reduce or suspend collection of fees and taxes it collects on Hydro operations.

This year, the Stefanson government will reap $480 million from Hydro. This includes $131 million from water rental rates (literally a charge on the volume of water that flows through hydro dams), $231 million from loan guarantees (to ensure Hydro gets the lowest possible interest rates), and $118 million in tax on the value of Hydro’s capital assets.

Here’s the really ironic part: the fees and taxes have nearly doubled since the Tories came into office because of the additional debt required to build Keeyask and Bipole III and the increased value of Hydro assets.

You can see why the Tories want to direct attention to the former NDP government, and away from their own record.

When asked, the minister responsible for Hydro, Jeff Wharton, would only say he is considering the recommendation to suspend or reduce the amount of money government takes from Hydro.

It certainly could be argued those surcharges and taxes paid by Hydro are needed to support government programs, particularly with a record budget deficit and the COVID-19 pandemic continuing to threaten life, limb and the economy.

On the other hand, the last thing Manitobans need now is a bump in Hydro rates.

To find an effective middle ground, Stefanson and her cabinet will need to focus on the here and now. There is no doubt the NDP made a hash out of Keeyask and Bipole III, but the debt from those projects is not the only challenge facing Hydro.

Those capital projects doubled Hydro’s debt. However, it happened at a time of historic low interest rates and even with cost overruns, it gives the utility tons of room to increase export sales at a time when clean power is becoming increasingly important. Keeyask may still prove to be a dog of a project, but it will be decades before Manitobans have all the information to make that determination.

Stefanson is now facing a unique situation where she has the opportunity to have her Hydro cake and eat it, too.

She can take a bit less money off the top of Hydro revenues in the next fiscal year, thereby sparing ratepayers from a significant increase in electricity costs. It would still leave hundreds of millions of dollars available to help eat into the budget deficit and fund government services.

Stefanson will only find her way to a fair and effective solution if she can put aside petty political grudges. And that’s a pretty big ‘if.’