This article was published in November 2021 and may be outdated.
Manitoba Hydro filed its 2021–22 Interim Rate Application with the Public Utilities Board (PUB) yesterday requesting an overall average five per cent electricity rate increase, effective Jan. 1, 2022. The Corporation was directed to file an application with the PUB following cancellation of Bill 35 and the associated electricity rate increase.
The higher rate ask is a direct result of the impact of the ongoing drought on the Corporation’s finances.
If approved by the PUB, a five per cent increase for a residential customer who does not heat with electricity, using about 1,000 kilowatts per month, would result in an approximate $5 increase on their monthly energy bill. For a customer who heats with electricity, using about 2,000 kilowatts a month, the increase on their monthly bill would be approximately $10.
Despite the proposed increase, Manitoba Hydro will continue to have some of the lowest electricity rates in North America, according to a comparison of rates prepared annually by Hydro-Québec. A Statistics Canada report on household spending, released earlier this year, shows the average Manitoba family pays more for cellular, internet and TV services annually than on their energy bill.
“We know no one wants to see a higher electric bill,” said Jay Grewal, President and CEO of Manitoba Hydro. “Unfortunately, we’re in a situation where the drought is having a major impact on our finances and we don’t know when precipitation levels will return to normal. Without a rate increase, our ability to continue to reinvest in our system so that we can continue to serve Manitobans with reliable, clean energy will be hampered.”
Manitoba Hydro is forecasting a potential loss in its consolidated operation of between $190 million and $200 million for the current fiscal year. Manitoba Hydro had budgeted a positive net income of $190 million for the 2021–22 fiscal year in its 2020–21 Annual Report.
Grewal said the lack of significant precipitation across much of Manitoba Hydro’s watershed over the past year and lower water flows — water inflows to the southern portion of the system are the lowest in 40 years — has weakened the utility’s ability to generate and sell surplus energy on spot markets in the United States and Canada.
“The money we make from opportunity sales of renewable energy is vital to our financial health,” Grewal said. “That additional revenue is money we use to help keep rates for our customers here in Manitoba lower than they would be otherwise.”
Grewal added any rate increase will be reviewed and approved by the PUB, following their public processes. The last electricity rate increase was 2.9 per cent which went into effect on Dec. 1, 2020.
“The loss of net income because of the drought and risk to the self-sustaining nature of Manitoba Hydro’s debt obligations and financing is indisputable,” she said. “Having a financially healthy utility will help protect Manitoba energy consumers over the long term.
“That’s why this increase is needed to help ensure we have the revenue we need to operate, rebuild and expand the electricity system so we continue to serve our customers with reliable renewable electricity as we have for the last 60 years.”
View Manitoba Hydro’s full rate application to the PUB.
For more information, please contact:
Bruce Owen – Media Relations Officer
204-794-8270
bowen@hydro.mb.ca
Additional background information Manitoba Hydro rate application
- Manitoba Hydro will work through the process determined by the Public Utilities Board (PUB) in a fully transparent manner, in keeping with all regulatory requirements. The PUB has not yet established the process and timelines associated with the review of Manitoba Hydro’s application.
- The withdrawal of Bill 35 resulted in the government directing Manitoba Hydro to file an interim rate application with the PUB.
- Manitoba Hydro forecasts an approximate $400 million reduction in net export revenues due to the ongoing drought, as detailed in the utility’s second quarterly report for the first six months of the 2021–22 fiscal year.
- Continued drought conditions across the southern portion of the watershed feeding Manitoba Hydro’s renewable energy plants mean the utility now forecasts a potential loss of between $190 million and $200 million in its’ consolidated operations for the current fiscal year, a negative swing of approximately $385 million when compared to the budgeted net income of $190 million for the fiscal year noted in its last annual report (based on water conditions and predictions at that time).
- Lower water flows impact Manitoba Hydro’s ability to sell surplus energy on interruptible opportunity, or “spot” markets in both the United States and Canada.
- With the rain season ending, it is unlikely water conditions will materially change during the remainder of the 2021–22 fiscal year. The effect of any rate increase Manitoba Hydro receives — once reviewed and approved by the PUB — has the potential to impact the range of potential loss for the 2021–22 fiscal year.
- Any time Manitoba Hydro has average to above average water flows we take advantage of that by running that water through our turbines and selling that excess energy on the opportunity or spot market, rather than simply spilling it downriver. That additional revenue is money we use to help keep rates for our customers here in Manitoba lower than they would be otherwise.
- The importance of export power sales cannot be understated. In 2020–21, export sales contributed $611 million in revenue to the corporation — approximately 25 per cent of all electricity-derived revenues — an increase of $143 million from the previous year.
- This increase was largely due to new firm export sales contracts, made possible by the 695-megawatt Keeyask Project under construction in northern Manitoba and the 500-kilovolt Manitoba-Minnesota Transmission Project (completed in June 2020) which helped counter the impact of lower opportunity sales.
- Despite the financial impacts, there is no danger of an “energy shortage”. Manitoba Hydro’s system is designed to ensure we can meet the electrical demands of our customers during the lowest recorded flows in the province’s history. We continue to manage our water resources and system from an energy security perspective to allow us to meet all domestic and firm export commitments.