he Manitoba government is sharply cutting fees it charges its Crown-owned energy utility in a move that could keep electricity rates down with an election less than a year away.
The Progressive Conservative government is halving two fees paid annually by Manitoba Hydro to the province — one for water rental and one for guaranteeing the utility's debt. The changes are retroactive to April 1.
The move will save the Crown corporation almost $190 million a year and help stabilize its finances, Finance Minister Cameron Friesen said Wednesday.
"Now is the time to act for a number of reasons, including rising interest rates and the high level of debt carried by Hydro," said Friesen, who is the minister responsible for the utility.
Manitoba Hydro's debt tripled over 15 years due in part to cost overruns on a generating station and a major transmission line under the former NDP government.
Moody's, an international credit rating agency, warned in the spring that recent electricity rate hikes have not been high enough to keep up with rising costs and debt-servicing at Manitoba Hydro. The agency said the utility's ability to be self-sustaining was at risk.
Manitoba Hydro welcomed the fee reduction and said it may respond by lowering the 3.5 per cent rate increase it is seeking from the provincial regulator, the Public Utilities Board.
"We'll have a board meeting, likely next week, to see management's reforecasted plan, which will now incorporate the [fee] reduction," said Edward Kennedy, chair of the Manitoba Hydro-electric Board.
The overall financial picture will be much more sustainable, I'm quite confident.
Hydro rates have become a key issue in the lead-up to the provincial election, slated for Oct. 3, 2023.
The Opposition New Democrats, who are leading in opinion polls, have promised to freeze rates if they are elected. They have refused to say how they might do so, and have only said it would be done without interfering with the regulatory board.
"Manitobans can absolutely assume we have a plan," NDP hydro critic Adrien Sala said.
We look forward to sharing more about how we are going to freeze rates in a responsible manner.
The fee reduction will mean less revenue for the provincial government at a time when it has been running deficits almost every year since 2009. Friesen said the province can afford the cut because it is running ahead of schedule on a plan to balance the budget by 2028.
The fee reduction won't affect the province's bottom line, though, because Manitoba's overall deficit or surplus calculations include money at Crown corporations.