Manitoba Hydro said Nov. 29 that it has reduced its requested rate increases for the next two years.
Previously, the Crown corporation was seeking increases of 3.5 per cent in 2023 and 2024 but is now asking the Public Utilities Board only for two per cent increases in each of those years.
The reduction comes after the provincial government announced it would reduce the amount it collects each year in provincial debt guarantees and water rental payments by half, which is expected to save Hydro about $190 million in the 2022-23 fiscal year.
“The reduction announced by the government will help keep rates low for customers, and that’s great news when we know many customers are struggling with the cost of living,” said Manitoba Hydro CEO Jay Grewal in a press release. “It also gives Manitoba Hydro the ability to start to reduce our debt while making investments in our system so our customers get the service they demand. The reduction also helps ensure that Manitoba Hydro will have the financial resources available to handle risks created by factors out of our control like fluctuating interest rates, prices on the export market and drought like we saw last year.”
Manitoba Hydro currently has about $24 billion of debt and has been spending approximately 40 cents of every dollar customers pay to cover the interest on that debt.
Finance Minister Cameron Friesen said when he announced the reduction in water rental and debt guarantee payments that applying that savings towards debt would save the Crown corporation and its ratepayers $4 billion in accumulated debt over the next 20 years.
Manitoba Hydro said it expects to only require annual rate increases of two er cent per year over the next 19 years.
“We know customers want greater certainty of any future rate increases so they can budget for their energy costs,” Grewal said. “Starting to reduce the debt now will begin reducing annual interest costs, providing savings for customers in the long-term as the need for higher rate increases is reduced. Regular, predictable rate increases also help Manitoba keep pace with reinvesting in the system, such as replacing old wood poles to retrofitting older generating stations to enhance their power production and efficiency. We’ll also be in a better position to meet the needs of our province in the future as we see increased electrification, resulting in the need for new generation and transmission, coupled with improvements to our distribution system and technology enhancements, all with the goal of serving our customers better.”
For a customer without electric heat using approximately 1,000 kilowatt-hours of electricity per month, a two per cent rate increase would make their bill go up about $2 per month in 2023 and again in 2024. Customers with electric heat using an average of 2,000 kilowatt-hours per month can expect their bill to go up about $4 per month with each two per cent rate increase.
Manitoba Hydro is also asking the PUB to confirm the 3.6 per cent interim rate increase that took effect in January 2022.