An application by the Consumer Coalition to hold a public process over rate hikes from Manitoba Hydro has been accepted by the Public Utilities Boards.
In its decision, handed down on Tuesday, PUB said a public process needs to be held to determine whether the electricity Crown corp’s rates are “just and reasonable” and its costs are “fairly allocated” among the various consumer classes.
“The PUB has found that the circumstances of Manitoba Hydro have changed substantially, necessitating a public process to assess whether current electricity rates are just and reasonable and costs are fairly allocated,” the board said in a release. “The PUB notes several changes and when taken collectively, including COVID-19 and drought impacts, constitute a substantial change in Manitoba Hydro’s circumstances.”
PUB said they have also approved the coalition’s motion to submit new evidence in support of its application, namely, the Hansard transcript for a June 29 sitting of the Standing Committee on Crown Corporation, where Hydro CEO Jay Grewal said the Crown corps needs a 3.5% rate increase in 2021, 2022 and 2023. Hydro was eventually awarded a 2.5% increase for the next three years, the lowest in a decade.
The province argued that increases are needed to address the $10 billion in additional debt brought on by the Keeyask and Bipole III projects.
Tuesday’s decision by the PUB stems from the initial ask from the coalition on March 24, requesting the PUB to order a review into the current rates, arguing substantial changes at Hydro, including major new export sales to Saskatchewan and the operation of the $8 billion Keeyask Generating Station, warrant public scrutiny.
Grewal has stated that Hydro’s debt will peak at $25 billion in April 2022, when all units of the Keeyask Generating Station are in service. Once that peaks, Grewal said, Hydro will have a debt-to-equity ratio that is the highest among all of the utilities in Canada, including all Crown corps.
The Consumer Coalition, which represents residential electricity ratepayers, includes Harvest Manitoba, the Consumers’ Association of Canada (Manitoba), and the Aboriginal Council of Winnipeg. The coalition feels the public needs up-to-date information through an independent board process.
“We applaud the PUB decision to uphold the principles of accountability and transparency for Manitoba’s publicly-owned monopoly,” a statement from the coalition said. “A public process at the PUB allows all parties, including consumers, to question and understand Manitoba Hydro’s business decisions and whether electricity rates are fair and reasonable.”
The coalition argued that Hydro’s inability to produce versions of the 20-year Integrated Financial Forecast (IFF), Capital Expenditure Forecast (CEF) and Prospective Cost of Service Study should be considered an implicit admission that there has been a substantial change in circumstances.
Last fall, the province introduced legislation that raised electricity rates by 2.9% without the PUB’s approval. The last full hearing into rates took place in 2018. Annual reviews are not mandated.
The coalition is concerned about more than a 9% increase in Hydro rates among First Nations residents living on reserve since Sept. 2020. They are also wary of current legislation before the Manitoba Legislature — Bill 35 — which would allow cabinet to hike rates without PUB approval through March 31, 2024.
Crown Services Minister Jeff Wharton, in a statement, said he expects the panel promptly to determine the next steps.
“Our government understands that Manitobans need stability when it comes to Manitoba Hydro rates and we remain committed to keeping those rates affordable for Manitoba ratepayers,” he said, adding that Hydro’s financials are continuously updated.