Manitoba Hydro consolidated net income drops by nearly half

Manitoba Hydro’s 2017-18 annual report shows total consolidated net income was $37 million for the fiscal year ended March 31, 2018, down by nearly 50% from $71 million in 2016-17.

This income was broken down to $18 million in the electric segment, $7 million in the natural gas segment, $10 million from subsidiaries and $2 million related to accounting adjustments to harmonize accounting policies between electric and natural gas operations.

Manitoba Hydro in Canada says the $34 million decrease in net income arose primarily thanks to $50 million in restructuring charges incurred through “significant efforts to streamline the organization and reduce costs, including the implementation of a Voluntary Departure Program for employees.” Through this program, Manitoba Hydro reduced more than 800 positions that will save the company more than $90 million per year in annualized expenditures, a press release says. The number of executives was reduced by 30% and the corporation reduced its management ranks by 26%.

In July 2018, President and Chief Executive Officer Kelvin Shepherd announced he was stepping down effective Nov. 16. This occurred shortly after the board of directors was brought back up to shape, after all but one member resigned in March 2018.

Positive contributions to the utility’s financial results included higher domestic electricity revenues resulting from colder weather and growth in customer numbers, along with a reduction in operating and administrative expenses as a result of Manitoba Hydro’s cost reduction program. “These improvements were partially offset by lower extraprovincial revenues due to reduced hydraulic generation,” according to a press release.

Specific to hydropower, the company referenced the addition of the 695-MW Keeyask Generating Station on the Nelson River in northern Manitoba, calling it “critical infrastructure to meet the needs of the province,” and said it had applied for electricity rate increases to address risks brought about by increasing debt arising from the addition of this and the Bipole III Reliability Project. The Public Utilities Board approved a 3.6% average rate increase effective June 1, 2018.

The Keeyask project is anticipated to be complete in 2021, at a cost of US$7 billion.

The corporation is projecting net income of $70 million for the 2018-19 fiscal year, which would reflect an about 20% reduction in net income from 2017-18 when adjusted for restructuring costs.

Manitoba Hydro is a Crown Corporation that serves more than 573,000 electric consumers and generates nearly all its electricity using 15 hydroelectric generating stations.

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