The potential for massive financial rebound at Manitoba Hydro has not softened the Tory government’s contempt for the Keeyask generating station and Bipole III transmission line.
Finance Minister Cameron Friesen says not much thought has been given to a ribbon-cutting after the northern hub fully came into service in early June, adding Manitobans have nothing to celebrate about two former megaprojects that went $3.7 billion over budget.
"On one side, opportunity in respect of revenue — undisputed," Friesen, the minister responsible for Manitoba Hydro, said this week in an interview with the Free Press. "On the other side, (the) downside being, the real and unavoidable impact of amortization schedules. We have to pay for these assets."
"On one side, opportunity in respect of revenue ‐ undisputed... On the other side, (the) downside being, the real and unavoidable impact of amortization schedules." – Finance Minister Cameron Friesen
Friesen was responding to a recent Free Press column that estimated a $430-million profit for Hydro in the 2022-23 fiscal year — based on information from the Crown corporation’s latest rate application to the Public Utilities Board — attributed in part to the two New Democratic government-era projects.
Hydro has yet to release its latest annual report for the year ending March 31, 2022. A first-quarter financial update is being prepared, a corporation spokesperson said.
While the minister acknowledged record precipitation levels and electric export prices mean the energy utility’s finances are in better shape compared to the 2021-22 fiscal year, when drought conditions led to a forecast $234-million loss, Friesen described the potential rebound in revenue as "half the story."
According to Friesen, Manitoba Hydro will be servicing its $23.8-billion debt at approximately $1.1 billion this year, and that number is expected to increase.
Meanwhile, the provincial government is budgeted to collect at least $497 million in debt guarantee fees, water rentals and capital taxes from Manitoba Hydro.
Despite the stream of revenue coming into the province from Manitoba Hydro, Friesen, who previously described Keeyask and Bipole III as the "biggest economic scandal of our time," said his views on the infrastructure projects are unchanged.
"It’s going to take incredible work to be able to guide Hydro back to a place of stability," he said, adding contentious legislation introduced in March is intended to protect rates and bring debt-to-equity ratios down. "If unaddressed, the situation would become dire."
While Manitoba Hydro’s debt is a legitimate policy concern, some political experts say, the Tories ought to be extolling the potential of Keeyask and Bipole III to generate revenue and clean energy for the province.
“It’s going to take incredible work to be able to guide Hydro back to a place of stability... If unaddressed, the situation would become dire.” – Finance Minister Cameron Friesen
To date, neither the utility nor the provincial government have acknowledged the completion and in-service of the hydroelectric project. However, a spokesman for Hydro said the corporation is planning an event with its four First Nations partners during the third week of July.
"It was an NDP project and the Tories don’t want to give credit for it, but we as Manitobans should all be really proud of both Bipole III and Keeyask," University of Winnipeg associate professor of political sciences Malcolm Bird said. "If we’re going to transition to a low-carbon economy, we need Keeyask."
It would also be wise for the Tories to change the tone on Manitoba Hydro leading into the 2023 provincial election and frame any jump in revenue as sound financial stewardship on behalf of government, University of Manitoba adjunct professor of political studies Christopher Adams said.
"This is an opportunity to take advantage of a Crown corporation that’s generating, now, revenues for the public coffers," Adams said. "Now the situation has changed, and I think the strategy for the PCs has to change on how to deal with this.
"It’s a good-news story in that this helps them balance a future budget, it helps them look at paying down debt, and it looks to help them not have Hydro as a problem but as a solution."
“It’s a good–news story in that this helps them balance a future budget, it helps them look at paying down debt, and it looks to help them not have Hydro as a problem but as a solution.” – Christopher Adams
Manitoba NDP Leader Wab Kinew said the Progressive Conservatives have prioritized their own "political story" over providing essential information on the performance of the Crown corporation.
"These clean energy investments we’ve made are now in a position to pay dividends to the people who own them — which is the people of Manitoba," Kinew said. "It’s very clear now that Keeyask and the other investments that Manitobans have made in Hydro over the years have put us in a position where we can be a showcase for the world."
The Opposition leader argued potential record revenue at Hydro should also result in financial relief for Manitobans struggling to get by with the rising cost of living and inflation.
"There are a few approaches we could take with Hydro to make life more affordable, but certainly in a year where you have a huge amount of revenue coming in and you have the people who own the utility struggling under a rising cost of living, it doesn’t seem like further rate hikes are the right path forward."
Danielle Da Silva
Danielle Da Silva is a general assignment reporter.