The world’s economy continues to grow every year by between two and four per cent.
As far back as 5,000 years ago, harnessing energy has been critical to the growth of human civilization.
In these environmentally conscious times, efforts are intensifying to reduce energy consumption and switch consumption to renewable resources. At a time when unique solutions are required, Manitoba finds itself in a very unique situation — being one of the world’s few jurisdictions producing all of its electricity from renewable sources.
Manitoba Hydro produces significant surpluses of electricity, exporting the surplus mostly to the United States in support of its effort to reduce its fossil-fuel production of electricity.
When the under-construction Keeyask dam is completed, Manitoba will have an additional 700 megawatts of electricity which are not currently required for domestic consumption and will, for the foreseeable future, be exported to the U.S. Unfortunately, the export market now yields between only one to three cents per kilowatt for opportunity sales (in comparison to the 13-cent cost related to the dam and accompanying transmission).
The difference will need to be made up by what is effectively a subsidy paid by Manitoba Hydro’s domestic ratepayers, who will endure higher rates to pay for the unprofitable surplus-production capacity.
One of the alternate options available for using Keeyask’s surplus power is developing more uses for domestic consumption. Unfortunately, the thrust of Manitoba Hydro’s marketing efforts to date has been to reduce domestic consumption, resulting in increased surpluses which need to be sold in export markets.
This approach made sense when higher prices made exports profitable, but export prices have tumbled as a result of declining American domestic prices associated with the falling cost of American wind and solar renewable generation, backed up by low-cost gas-fired generators and batteries. No change in this dynamic is expected in the future.
To reduce the likelihood of a future electricity-rate shock, Manitoba Hydro should look for ways to increase domestic demand by displacing non-renewable energy consumption. Options such as electric cars and buses are obvious targets to pursue.
But one of the oddities of the Manitoba Hydro Act is that it does not allow for the private purchase and resale of electricity. Currently, all electricity must be sold directly by our power monopoly, Manitoba Hydro.
An unexpected consequence of this restrictive law is that it is virtually impossible for those living in multi-family dwellings (condos or rental) to have access to individual charging stations for electric and plug-in hybrid cars. The reason for this is that in order for Manitoba Hydro to sell power directly, it must have a meter directly from its input feed to the actual charging station. This means that if you own a condominium or rent in a high-rise, Manitoba Hydro must run new lines from its power supply directly to your charging station.
Given that the power used represents only a dollar or two per day, this is entirely uneconomical. No residential multi-family dwelling in Manitoba would consider such an expense. Approximately 300,000 people in Winnipeg living in multi-family dwellings are currently unable to take advantage of the increasing benefit of electric and plug-in vehicles.
A simple solution would be for Manitoba Hydro to allow for sub-metering at low voltage (120 or possibly 240 volts). This would have the building manager install inexpensive sub-meters at individual charging stations and then collect payment for Hydro. While building managers would expect to receive some benefit for their service, the management fee could be stipulated in revised legislation to ensure that the end user was not paying substantially above market prices for this service.
The cost benefit of low voltage (with preferential night rate) charging sub-metering is substantial, compared to spending tens of thousands of dollars running lines to individual charging stations. In order to accomplish what would be a relatively simple fix, the Manitoba Hydro Act would need to be amended to provide for this arrangement — a change that wouldn’t cost a penny of public money or require a subsidy from Manitoba Hydro.
There are likely other ways of using Manitoba Hydro to offset fossil-fuel consumption and/or reduce the unprofitable export of excess electricity. The mandate of the newly formed Efficiency Manitoba should include such objectives.
This should not just be part of its mandate; considering the huge discount at which Manitoba is selling electricity to the U.S., it should be Efficiency Manitoba’s primary focus.
How to use Manitoba Hydro’s renewable energy to offset non-renewable energy? No doubt there are lots of other opportunities, but sub-metering would be a good first step.
Randy Boldt is a research associate at the Frontier Centre for Public Policy.