Here’s how the crisis shapes up:
* Manitoba Hydro won’t be able to raise enough money to make its interest payments in eight of the next 13 years.
* Manitoba Hydro won’t earn enough money to cover the cost of replacing aging infrastructure in nine of the next ten years, never mind paying the billions required for new dams and transmission lines.
* If the Province has to backstop Hydro, the utility will lose its credit rating and borrowing costs will go way up.
* If Hydro loses its credit rating, it will take the Province over the cliff with it. In short, Manitoba will lose its credit rating, too, and taxpayers will pay the price.
* Manitoba Hydro can’t make up the difference by exporting more power. In fact, Hydro now predicts fixed export prices will be 7 percent lower on average over the next 20 years. Why? Fracking, which Hydro dismissed five years ago as a fad.
The rest at The Black Rod.
Manitoba should place some of the blame at the feet of Ontario. In 1988 there were initial discussions with ontario to fund and build hydro dams on the Nelson maybe even the Hayes rivers. At the time ontario had the money, and would have ended up majority owner of the dams and manitoba would have had quebec style electricity rates for as long as the waters shall flow, and the sun shall shine. Then we got Bob Rae, and he said nope, the indians will get screwed, which was never going to happen. And good old boob spent the next four years financing the welfare queens of ontario with 40 billion borrowed dollars at 11%. The cost of the dams and generation was going to be only 11 billion dollars in 1991 dollars, about 10 years to build, and then we would not have to pay what we are paying now for this hippie windmill solar panel crap that doesnt work. Manitoba hydro if it is governed the same way ontario hydro is governed, is stealing from everyone in that province. Hydro needs money? Cut salaries and pensions of everyone who works there and has worked there.
If Manitoba increases its hydro rates, its equalization subsidy from Alberta and Saskatchewan goes down. It’s not easy to give up spending other people’s money.
“But when provinces like Quebec and Manitoba sell hydro to its own population below the market rate, their clawbacks are calculated based on that artificially depressed rate and not on the fluctuating market value.”
http://www.torontosun.com/2012/10/11/critics-call-for-fair-play-in-equalization-payments
Considering that hydro-electrical management is on the order of a 20 – 30 year time frame in terms of siting, building and managing hydro assets; the best you can say is poor management has consequences.
Sorry, my father can’t help you any more, he’s retired. But hey, how about those Grand Rapids still churning out power 50 years later. And if Winnipeg isn’t under water you can thank him too for the Red River flood way control.
Cheers
Hans Rupprecht, Commander in Chief
1st Saint Nicolaas Army
Army Group ‘True North’
Isn’t hydro (renewable) energy way way cheaper than energy from fossil fuels and isn’t the NDP way much more efficient than the free market? Has somebody been not-telling the truth.
Break out the champagne! Bonuses all around!
Apparently states like Wisconsin don’t consider hydro a green enough electrical source, so Manitoba Hydro had to enter into contracts with the bird chopper electrical producers in order to show a percentage of that green energy to ensure sales. As a result, along Highway 75, which runs parallel to the Red River, and the Red River migratory bird route, there is a large wind farm. Thank-you NDP for all the stupid you’ve brought to Manitoba since your election to power in 1999.
As bad as MB hydro has been managed – and it has been – what is happening in NL with its hydro and transmission projects is appallingly bad by comparison – enough perhaps to sink the whole province’s finances. With low cost NG, it looks like the upshot will be free power delivered to NS – but that is just a small part of the cost to NLers – and ultimately to all of canada.
This is what happens when a government focuses on “maintaining the lowest cost bundle of utilities in the country” rather than running their state owned enterprises properly.
Not saying that this is something that the Manitoba NDP will latch onto next election, but it sounds like something they should be close to trumpeting.
Please tell me again how a monopoly on hydro power is the BESTEST way EVAH to deliver electricity to a province? I bet it has to do with science. And the children, right. Lets not forget the little ones freezing in the dark.
Hey Ontario! Look at your future!
Unfortunately, its BCs future as well. Budgets just balance themselves, dontcha know?
Who gives a rats ass about Manitoba? Manitoba receives about 1.7 BILLION from Equalization and only has 1 million people. That is 1700 dollars for every man, woman and child. Maybe we in Saskatchewan can dig a little deeper and help out our NDP SOCIALIST neighbor. Not a F’n chance.
No, we’re not getting ‘hosed’ by panels and turbines. They pay for themselves a hundred times over in making us feel good about ourselves and saving the planet and instilling that oh-so-hard-to-find feeling of superiority required by The Church Of Suzuki. The real waste is in our failure to harness the energy of sanctimonious finger-wagging that, if harnessed, would succeed in solving the world’s non-existent energy crisis. As an enormous side benefit, it would also rescue social gadflies like myself from being trapped in the corner of the next house party hosted by Prius drivers or recycled Birkenstock dealers. I long for the day…
Commenter in today’s Peterborough Examiner
There’s some serious misstatements of fact, both in the account by the Black Rod and comments here.
“If the Province has to backstop Hydro, the utility will lose its credit rating and borrowing costs will go way up.”
Well no. Manitoba Hydro would have the credit rating of the province. At this time, Manitoba’s credit rating is AA, better than all provinces except British Columbia, Alberta and Saskatchewan. It’s in fact above, and well, above the median in Canada for provincial governments.
“If Hydro loses its credit rating, it will take the Province over the cliff with it. In short, Manitoba will lose its credit rating, too, and taxpayers will pay the price”
Well no. Moodys which administered the negative outlook said flatly that Manitoba’s provincial debt remains small at this time. The reason for the negative outlook was that Moodys (rightly) doubts the willingness of the NDP government to control spending.
Usually Black Rod writes sensible stuff, but this is hysterical nonsense. Are things going in the wrong direction? Yes. Is it relatively easy to change that direction? Yes. The current provincial government just isn’t taking its financial situation seriously, something that can be fixed in an election.
As for the economics of gas vs. hydro dams, this was just stupid. Hydro dams last a century, time enough for at least six to eight full natural resources price cycles. And when the Black Rod says this: “It’s TIME TO PANIC!”, you know he’s being a complete dolt. Panic never solved anything.
Far from panicking, it’s time for Manitobans to vote out the gang of fools who put them into this situation in the first place.
This is a time for desperate measures. I’m sure they’ll dump tens of millions of taxpayer dollars into ………….POTATO FARMS!!!! Ya – that’s the ticket.
“This is what happens when a government focuses on “maintaining the lowest cost bundle of utilities in the country” rather than running their state owned enterprises properly.”
QFT. Sask had that disease until 2007, too.
Bureaucrats and socialist politicians are a poisonous recipe.
cgh — It seems you haven’t read the material. Manitoba’s debt will double if they have to take on Hydro’s debt. That’s the point. Everything is straight from Hydro’s own presentation. If you want to challenge Hydro’s own conclusions, I guess you can do that.
It gets the debt AND it gets the assets, Marty. You have to count both sides of the ledger, not just the down side. Of course Man Hydro presented this in as negative a light as possible. They want and need their rate increase, and justifiably so. As usual, the government is playing politics with the electricity rates. But is this an existential threat? No.