Winnipeg Sun, March 28, 2018
It’s a bit rich listening to the NDP demand “answers” this week from the Pallister government about Manitoba Hydro after it spent over 17 years driving the Crown corporation’s finances into the ground.
This is the same political party that from 1999 to 2016 treated Hydro as its personal piggy bank and forced the Crown corporation to invest in some of the worst boondoggles in Manitoba history.
NDP leader Wab Kinew is demanding the legislative committee that oversees Crown corporations be convened to review why Manitoba Hydro’s board of directors resigned last week. The board walked out after discovering their chairman Sandy Riley was about to get fired by government. The board didn’t see eye-to-eye with government on numerous files, including a shady proposed payout to the Manitoba Metis Federation.
A new board has since been appointed, one government hopes will be more aligned with its corporate priorities.
In the meantime, the NDP is hardly in a position to complain about the mess at Hydro. They were the authors of the carnage that led to it.
After winning government in the fall of 1999, one of the first things the NDP did was launch a multi-year raid on Manitoba Hydro coffers.
On April 1, 2000, the NDP increased the debt guarantee fee the province collects from Hydro from 0.5% to 0.65%. A year later, they jacked it up again to 0.95%. Prior to the increases, the province was collecting about $30 million a year in debt guarantee fees from Hydro. That jumped to $65 million by 2002.
They didn’t put out a press release on it at the time. In fact, Manitobans weren’t even aware of it until a few years later when it was reported in the Winnipeg Sun.
But that’s not all.
On April 1, 2001, the NDP government also increased the water power rental fee it charges Hydro for using the water that flows through its turbines. It more than doubled the charge. The annual fee jumped from $46.5 million in 2000 to $103 million in 2001.
But even that wasn’t enough for the NDP. They wanted more.
So they passed Bill 41 in 2002, an amendment to the Manitoba Hydro Act which gave them the authority to siphon up to $288 million over three years from Hydro in “special payments.” And, shockingly, they blamed it on terrorists and Ottawa. They said the payments were necessary because of “the economic slowdown that followed the terrorist acts of September 11, 2001,” and because of a federal accounting error on transfers to the province. You couldn’t make this stuff up.
Under the legislative change, they took $150 million from Hydro in 2001-2002 and another $53.5 million the following year. They spared Hydro in the third year mostly because there was nothing left. They bled them dry.
All told, they took $203.5 million in special payments from Hydro and siphoned hundreds of millions more through increased water power rental and debt guarantee fees.
And then things went from bad to worse for the Crown corporation.
When Hydro management proposed building a new transmission line, Bipole III, on the shorter, less expensive side of Lake Winnipeg, the NDP government intervened and reversed the decision. They directed the Crown corporation to build the line on the much longer west side of the lake, even though there were no compelling reasons to do so. A report at the time showed the environmental impacts of the line were similar on either side of the lake. The only difference was the west side option was far more expensive and less reliable. The NDP proceeded with the west side option anyway, adding about $1 billion in extra costs to the project.
And then came the proposed Keeyask Generating Station. Despite a collapsing export market and a slowing of domestic demand for electricity sales, the NDP government went ahead with a plan to build a new, massive dam at a cost of $6.5 billion. There was no business case to support the project, but government proceeded anyway. And they chose a flawed, open-ended contract that’s causing billions in cost overruns that continue today. The final price tag could now be as high as $10.5 billion.
All of this explains why rates could be going up as much as 7.9% a year. Which means the NDP is hardly in a position to lecture anyone on how to run Manitoba Hydro. They drove the Crown corporation so far into the ground, it will take a generation to recover.