Municipal leaders say the 3.36 per cent interim rate increase granted Manitoba Hydro this month offers only temporary relief from higher energy costs and longer-term solutions are needed.
“It’s certainly better than 7.9 per cent but it’s still an increase everyone is going to have to deal with,” said Randy Henuset, deputy reeve of the RM of Pipestone.
The Public Utilities Board (PUB) announced July 31 that Manitoba Hydro would get the more modest interim rate rather than the 7.9 per cent it was initially asking for.
Hearings for a full general rate application begin later this year in December.
Pipestone made its opposition to the higher rate known during June district meetings of the Association of Manitoba Municipalities saying 7.9 per cent — plus another 7.9 proposed for next April — would have been more than cash-strapped communities could take.
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They can live with a 3.36 per cent interim rate, but with costs for hydro inevitably rising, something will have to give, Henuset said.
The solution is to get serious about switching to solar power and other alternative energy sources, he said.
“We’re going to have to start looking at alternative sources because we can’t keep paying these prices,” he said. “Our big power uses are places like our recreation complex. I know (alternative energy) can initially have startup costs but it can probably be recouped.”
Pipestone reeve, Archie McPherson said the 3.36 per cent rate increase is “somewhat of a relief” but will still mean additional energy costs of $5,000 for their RM. Bringing in natural gas from neighbouring municipalities may be another way to reduce their reliance on electricity, he said.
In its ruling released July 31 the PUB said all members of the board concluded Manitoba Hydro’s financial situation for the current and next fiscal year had improved from what it forecast in May and that the 3.36 per cent interim rate increase “is consistent with the considerations of rate stability and predictability.”
The PUB awarded the lesser rate increase, stipulating all additional revenues from it flow into the utility’s Bipole III deferral account in anticipation of costs related to it going into service July 2018.
Hydro’s debt has increased to $16 billion and is expected to climb another $8 billion over the next five years largely due to costs related to rising budgets for its mega-project Bipole III transmission line, now pegged at $5 billion.
In a statement last week Kelvin Shepherd, president and CEO of Manitoba Hydro said they are pleased the PUB saw need for the interim increase, but remains concerned that the PUB “has not taken quicker action to begin to address the serious financial challenges and risks facing Manitoba Hydro.”
Manitoba Hydro needs the extra revenue to fully fund operations, invest in upgrades to aging infrastructure and withstand risks associated with rising interest rates and drought, his statement said.
“Our business is subject to a great deal of volatility in terms of water flows, which are extremely hard to predict and can have a very major and rapid impact on our revenues,” he said.
Shepherd said Manitoba Hydro looks forward to the comprehensive PUB review of Manitoba Hydro’s full General Rate Application and expects that detailed process will ultimately confirm the need for the level of rate increases that were requested.