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Province plans to legislate 2.5 per cent annual hydro rate hikes for the next three years this fall

The provincial government is planning to legislate Manitoba Hydro rate increases of 2.5 per cent for 2021 to 2023 when the legislature resumes sitting in the fall.
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The provincial government is planning to legislate Manitoba Hydro rate increases of 2.5 per cent for 2021 to 2023 when the legislature resumes sitting in the fall.

These set increases will be introduced as amendments to Bill 35: the Public Utilities Ratepayer Protection and Regulatory Reform Act.

The government says by 2024, the Public Utilities Board (PUB), which sets utility rate increases, will have been altered to allow multi-year rate approvals and have the power to review any major projects and contracts worth more than $200 million.

Finance Minister Scott Fielding said at a July 8 press conference that the 2.5 per cent figure was decided upon by taking the average approved increase from the past 10 years and reducing it by 25 per cent. The government says it will be the lowest rate increase in 10 years and that it will result in an increase of about $35 per year for an average residential customer.

Fielding says the rates will give consumers and businesses greater budget stability as they recover from the economic effects of the COVID-19 pandemic while still enabling the Crown corporation to reduce its debt-to-capitalization ratio, currently around 87 per cent, to 75 per cent or lower.

“Manitobans deserve a break during the pandemic and our government is committed to keeping life more affordable,” Fielding says.

Manitoba Hydro CEO Jay Grewal told the legislature’s standing committee on Crown corporations June 29 that the utility was budgeting using an assumed 3.5 per cent rate increase this year.

“Management determined through our analysis that a 3.5 per cent rate increase effective October 2021 is important," Grewal said. “This is something that was submitted to Treasury Board in August of 2020 when we were doing our initial forecast. It is an assumption that Manitoba Hydro management believes is the rate increase required to set a trajectory to achieve the current 75/25 debt equity target that we are to reach.”

Manitoba Liberal leader Dougald Lamont decried the government’s plans to allow rate increases without PUB oversight on Thursday.

“Hydro’s rates should be set by the PUB after public hearings, not figured out on the back of a napkin in the premier’s office. The actual price the PCs have picked has nothing to do with Hydro’s future needs. Why do we even have a Public Utilities Board, or an independent board for Hydro, when the PCs are just running it from the cabinet table?”

During the July 8 press conference, Fielding and Crown Service Minister Jeff Wharton repeatedly blamed Manitoba Hydro’s high debt load on reckless decisions by the previous NDP government that increased Manitoba Hydro's debt load.

“Let's be honest, that’s why rates are going up,” Fielding said.

If the legislative amendments are approved by a majority of MLAs, it will be three years before Manitoba Hydro submits a general rate application for the next five-year period to the PUB.

In May, the Consumers Coalition, a group made up of the Manitoba Branch of the Consumers’ Association of Canada, Manitoba Harvest and the Aboriginal Council of Winnipeg, asked the PUB to hold a transparent review of Manitoba Hydro’s financial situation for the first time since 2018. The Crown corporation replied in late June, saying that the situation has not changed substantially since then.

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