Manitoba Hydro in Canada has filed its 2021–22 Interim Rate Application with the Public Utilities Board (PUB), requesting an overall average 5% electricity rate increase, effective Jan. 1, 2022. The higher rate ask is a direct result of the impact of the ongoing drought on the corporation’s finances, according to a release.
“We know no one wants to see a higher electric bill,” said Jay Grewal, president and chief executive officer of Manitoba Hydro. “Unfortunately, we’re in a situation where the drought is having a major impact on our finances and we don’t know when precipitation levels will return to normal. Without a rate increase, our ability to continue to reinvest in our system so that we can continue to serve Manitobans with reliable, clean energy will be hampered.”
The corporation said it was directed by the government to file an application with the PUB after cancellation of Bill 35 and the associated electricity rate increase. The last electricity rate increase was 2.9 per cent which went into effect on Dec. 1, 2020.
Despite the proposed increase, Manitoba Hydro will continue to have some of the lowest electricity rates in North America, according to a comparison of rates prepared annually by Hydro-Québec. If approved, a 5% increase for a residential customer would increase their monthly energy bill by $5 to $10, Manitoba Hydro said.
Manitoba Hydro is forecasting a potential loss in its consolidated operation of $190 million to $200 million for the current fiscal year. Manitoba Hydro had budgeted a positive net income of $190 million for the 2021–22 fiscal year in its 2020–21 Annual Report.
Grewal said the lack of significant precipitation across much of Manitoba Hydro’s watershed over the past year and lower water flows —inflows to the southern portion of the system are the lowest in 40 years — has weakened the utility’s ability to generate and sell surplus energy on spot markets in the U.S. and Canada. “The money we make from opportunity sales of renewable energy is vital to our financial health,” she said. “That additional revenue is money we use to help keep rates for our customers here in Manitoba lower than they would be otherwise.”
Manitoba Hydro forecasts an about $400 million reduction in net export revenues due to the ongoing drought, as detailed in the utility’s second quarterly report for the first six months of the 2021–22 fiscal year.
“The loss of net income because of the drought and risk to the self-sustaining nature of Manitoba Hydro’s debt obligations and financing is indisputable,” Grewal said. “Having a financially healthy utility will help protect Manitoba energy consumers over the long term. That’s why this increase is needed to help ensure we have the revenue we need to operate, rebuild and expand the electricity system so we continue to serve our customers with reliable renewable electricity as we have for the last 60 years.”
Manitoba Hydro serves more than 586,000 electric customers in Manitoba and nearly 285,000 natural gas customers in southern Manitoba. About 96% of the electricity the company produces is generated at 15 hydroelectric stations on the Nelson, Winnipeg, Saskatchewan, Burntwood and Laurie rivers.