View From the Legislature

Report Reveals NDP Hydro Burden

  • Kelvin Goertzen, Author
  • Member of the Legislative Assembly, Steinbach

On Friday of last week, former Saskatchewan Premier Brad Wall released his independent investigation into the approval and construction of the Bipole III hydro line and the Keeyask generating project. Manitobans will remember that a debate raged on for more than a decade about these projects related to their need, their cost and, in the case of the Bipole III line, its location. For years Manitobans argued that the NDP refused to ensure any proper oversight or analysis occurred on these projects and it has been determined that they were right.

The report found that the two projects have created an unnecessary financial burden that is now left to be dealt with by Manitobans. The Keeyask generating station which took seven years to construct was originally budgeted to cost $6.5 billion. That cost grew and ended at least $2 billion overbudget. The Bipole III transmission line was estimated by the former NDP government to cost $2.2 billion in 2007. Manitoba Hydro now estimates that the cost is more than double that at $5.04 billion dollars. These projects have added significantly to debt that Manitoba Hydro, and by extension, all Manitobans are responsible for. Over the last 15 years Manitoba Hydro’s debt has tripled to $23 billion and is now a very significant concern as it relates to the overall financial health of our province.

In reading though the Wall Report it is clear several things allowed this situation to occur. The first is that under the former NDP government there was optimism bias when it comes to the ability to sell hydro electric power at prices that were not backed up by realistic projections. The report also makes it clear that there was significant interference by the government on critical aspects of the project, notably which side of the province the Bipole III line would be located. By refusing to allow Manitoba Hydro to use the preferred east side route and instead requiring it to go down the west side of the province on a much longer more expensive route, it greatly escalated the project costs. In addition, once these decisions were made by the NDP government, the report indicates they paid little attention to the fact that the actual costs of the project were escalating.

On the Keeyask project, it became clear that the project was not being build for the power needs of Manitoba, which is the mandate of Manitoba Hydro, but rather to sell hydro into the United States. The review shows how the NDP government overestimated the potential for export sales even as demand continued to drop due to other forms of energy becoming cheaper and more widely used in the United States. And yet, the NDP did not allow for any “off-ramps” for the project by which it could be reconsidered at various stages. As a result, it continued ahead despite widespread predictions that it would result in a tremendous cost burden on current and future generations of Manitobans.

The Wall investigation determines that Manitoba Hydro is and should remain a publicly owned corporation and that when run properly and performing its mandate of providing reliable and affordable hydropower to Manitobans, it is a tremendous advantage to Manitobans. There are years of work ahead to clean up this monumental mistake made by the previous NDP government, but it is important and needed work to return Manitoba Hydro to the crown jewel of our publicly owned entities.