View From the Legislature

As the province’s largest crown corporation, Manitoba Hydro rightfully garners a great deal of attention. The success of Hydro has a direct impact both on the financial health of the provincial government as well as on individual Manitobans who pay rates for hydro electricity.

In recent years, there has been a growing concern about the long-term debt that Manitoba Hydro carries. In fact, the debt of Manitoba Hydro, which is guaranteed by the province, tripled over 15 years because of the cost overruns that were incurred on capital projects under the former NDP government. The debt of Manitoba Hydro stands today at about $24 billion, essentially the same amount of debt the province itself holds. This has not only resulted in increases to hydro rates as the crown corporation pays for the interest on that debt but has caused credit rating agencies to question whether the challenging finances at Manitoba Hydro would start to impact the credit rating of the province itself.

As a result of these very challenging factors, our government last week took dramatic action to help stabilize the finances of Hydro by doing something that previous governments refused to do. For the first time, government has reduced, by half, the amount of fees paid annually by Hydro to government. These fees, for water rental and for guaranteeing the debt of the utility, have either remained the same or increased under previous governments. The cutting in half of these fees will save Manitoba Hydro $190 million annually, which they can use to reduce debt and keep hydro rates affordable. The news of these fee cuts was well received by officials at Manitoba Hydro who reiterated the need to be able to reduce the accumulated debt of the crown corporation.

In fact, the result of this important action is already being seen. Last month, Manitoba Hydro asked the Public Utility Board (PUB) to approve a rate increase of 3.5% for each of the next two years. Following the news that fees were being cut in half, Hydro refiled with the PUB and asked that the rate increase application be reduced to 2.0% for the next two years. The reduction in fees has the result of both stabilizing Hydro’s finances as well as keeping rates affordable for Manitoba Hydro consumers.

Manitoba Hydro remains one of the key assets in the success of our province. After years of financial mismanagement by the NDP which drove up debt and Hydro rates, it is critical that efforts continue to stabilize its finances while maintaining low rates in this time of high inflation. Our government is committed to not only keeping Manitoba Hydro as a public asset but ensuring that it is strong and sustainable for future generation of Manitobans.