Winnipeg Free Press

Re: Hydro rate hikes needed (Letters, Sept. 19.) see below.

Sanford Riley and the Manitoba Hydro board make the case for increasing hydro rates in terms of the need to address Hydro’s weakened financial position. He correctly characterizes the problem as one arising from "projects undertaken by previous boards and government — with no realistic plan to pay for them." He is right when he states that "Hydro’s situation is increasingly weakening Manitoba’s credit position."

But why do he and the Hydro board assume that the solution is to run to the ratepayer to bail it out?

The global market for electricity has been changing rapidly for a decade now. Fracked gas put the market on a different tack way back in 2007. The economic downturn in 2008 forced successful businesses to run a tighter ship. Conservation and efficiency measures are reducing per capita consumption.

The rapidly decreasing cost of solar and wind are challenging hydro as a source of clean energy. In some jurisdictions, parity with conventional sources (the point where solar and wind become cheaper) has already been reached. Yet Hydro treats solar as an "emerging technology" with nothing to worry about until 10 years out. Just about every power utility in North America is wrestling with market change, adapting their business accordingly.

So what are we doing in Manitoba? Hydro has admitted in its present rate request that Keeyask energy is not needed until after 2041. With this glut affecting Hydro’s ability to export its surplus energy at a fair price, the provincial government exacerbates the problem by mandating domestic energy savings larger than Hydro has ever achieved with its Power Smart programs. Amazing!

Staff cuts are fine, but where, for example, is the focused effort in Hydro to promote electric and hybrid vehicles (cars, trucks and buses)? Why isn’t Hydro taking more of a leadership role in promoting a western transmission grid that would allow Hydro to sell more of its electric capacity to Saskatchewan and Alberta? If Hydro were more aggressive on these fronts, we would not need eight per cent rate hikes over each of the next seven years.

The risks are financial (as well as drought, as Riley points out, and rising interest rates to name another). But the greater risk is that the leadership in Hydro hasn’t yet seen the light. It treats the present glut as something that just happened — something that can be easily fixed by rate hikes. Hydro is not adjusting to the new reality.