Manitoba Hydro requests a 3.5% rate hike to deal with large debt load

Manitobans could see their hydroelectric bills rise by 3.5 per cent in October.

Manitoba Hydro President Jay Grewal told a legislature committee the Crown-owned utility needs the increase to help pay down debt from large capital projects in recent years.

Grewal says the increase is in line with annual rate hikes approved by regulators at the Public Utililties Board over the last 15 years.

The board normally holds public hearings to review Hydro's requests and financial situation, but the Progressive Conservative government has temporarily stopped that process and has approved rates itself.

Opposition NDP Leader Wab Kinew says the increase will hurt consumers and businesses during the COVID-19 pandemic.

Restore public review process: Kinew

Kinew would not commit to banning or limiting rate hikes if the NDP wins the next election, but said the public review process must be restored.

"We should hear a clear accounting of the finances so that we can have the Public Utilities Board make those decisions around rates and then have public confidence that those decisions were the right ones," Kinew said Tuesday.

Manitoba Hydro saw its debt triple in 15 years as it built two megaprojects the Bipole III transmission line and the Keeyask generating station, which ran a combined $3.7 billion over budget.

One credit rating agency, Moody's, warned in 2019 that the utility had a weak financial profile but benefited from the financial backing of the government. Hydro applied for annual rate hikes of 7.9 per cent as recently as 2017, but regulators approved increases of less than half that amount.

Grewal said the 3.5 per cent hike now being sought would help the utility address its debt gradually.

"The rate increase that we've presented will allow Manitoba Hydro, over the longer term, to move toward being able to start to generate net income, to be able to pay down its debt and to get closer to achieving that 75-25 debt-equity target," Grewal told the committee.

NDP hydro critic Adrian Sala told Grewal the debt reduction plan is aggressive.

"The concern here is that the burden is being shifted on to current ratepayers instead of ensuring that that burden is shared for future ratepayers and over a longer period of time."