The Manitoba government has passed an Order in Council (OIC) providing the Public Utilities Board (PUB) with special authority to access information on Manitoba Hydro’s financial health and capital expenditure plans during the process of the 2017-18 General Rate Application (GRA).
“Serious concerns have been raised in recent months about the debt of Manitoba Hydro and its impact on both the corporation and the province’s finances,” said Finance Minister Cameron Friesen, minister responsible for the Public Utilities Board. “We are providing the PUB with the authority to review not only the financial health of the utility but also to delve deeply into its capital finances while assessing the potential impact of both factors on Manitoba hydro rates.”
The Public Utilities Board is an independent quasi-judicial tribunal with oversight and supervisory powers over public utilities as set out in legislation. The regulator is charged with ensuring the financial health of a Crown corporation seeking a general rate application is balanced with the best interests of consumers.
In Manitoba, the PUB has struggled in its duty in the absence of capital information for the short, medium and long term, the minister said. The PUB has not been privy to all of the capital information related to potential cost overruns or the state of assets currently in use and the costs associated with anticipated repairs to those assets, he added.
Across Canada, it is common for public utility regulators to review and in some jurisdictions approve capital expenditures. Access to capital information allows for rates to be set with full understanding of the state of capital investments and assets including possible issues that could impact the financial health of a corporation, Friesen noted.
While the PUB has authority over capital expenditures of other public utilities in Manitoba, this OIC grants the PUB, for the first time, the authority to gain access to evidence regarding Manitoba Hydro’s financial and capital situation. This is the first time the PUB has been granted the authority to access information on capital spending on the Bipole III transmission line project, the minister noted. The OIC requires Manitoba Hydro to provide the following information to the PUB:
- capital expenditures: existing records related to planned capital expenditures, such as details on new, currently committed, and proposed, planned or forecast major capital expenditures and base/sustaining capital expenditures including copies of contracts, current and previous cost estimates, cost overrun justifications, schedule change justifications, current and future scheduled capital expenditure commitments and forecasts;
- explanatory: existing records related to project justification, such as capital project justification forms, cost-benefit analyses, business case and other supporting information related to Manitoba Hydro capital expenditures identified by the PUB including asset condition assessments for previous, current and proposed major capital expenditures and base/sustaining capital expenditures; and
- revenue and other: existing records related to revenues and income, such as any correspondence, agreements, term sheets, export contracts, externally commissioned or internally created reports, studies or analyses including forecasts (capital, capital structure, financial, export, import, load and power resource).
The OIC also provides for commercially sensitive information to be held in confidence by the PUB.
“Manitobans have expressed concern with the financial situation of Manitoba Hydro since reports revealed the corporation’s long-term debt is expected to nearly double to $25 billion within the next three or four years,” said Friesen. “Our government has been actively monitoring the ongoing efforts by Manitoba Hydro to address operational costs and we are confident that by allowing the PUB to review all of the corporation’s capital information, it will be better positioned to consider and set rates that balance the interests of Manitoba ratepayers with the financial health of Manitoba Hydro.”