Manitoba Hydro predicts loss of $190 million due to drought

Manitoba Hydro logo

Canadian utility Manitoba Hydro released its second quarterly report for the first six months of the 2021–2022 fiscal year, forecasting an approximate $400 million reduction in net export revenues due to the ongoing drought.

As a result, Manitoba Hydro anticipates a potential loss of $190 million to $200 million for the current fiscal year. Manitoba Hydro had initially budgeted a positive net income of $190 million for the 2021–2022 fiscal year in its 2020–21 Annual Report.

Late fall and winter precipitation, as well as the effect of the rate increase Manitoba Hydro receives — once reviewed and approved by the Public Utilities Board (PUB) — have the potential to impact the range of loss for the 2021–2022 fiscal year. Manitoba Hydro is preparing a rate application to file with the Public Utilities Board on Nov. 15, 2021.

The revised forecast continues a trend noted in the corporation’s first quarter report issued in September. 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 — have weakened the utility’s ability to generate and sell surplus energy on spot markets in the U.S. and Canada.

“Drought is one of the major risks for any utility that is predominantly hydroelectric,” said Jay Grewal, president and chief executive officer of Manitoba Hydro. “For Manitoba Hydro, anytime we have average to above-average water flows, we take advantage of that by running that water through our turbines and selling that excess energy on the opportunity or spot market, rather than simply spilling it downriver. 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 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.

The quarterly report said Manitoba Hydro’s consolidated net loss (electrical and natural gas operations) was $90 million for the first six months of 2021–2022, compared to a $41 million loss for the same period last year. The increase in net loss was attributable to higher finance expense and depreciation expense largely due to the first four of seven units of the 695-MW Keeyask Generating Station being placed into service, as well as decreased spot market sales, offset to a degree by higher firm energy sales tied to Keeyask. Keeyask is being developed in a partnership between Manitoba Hydro and four Manitoba First Nations: Tataskweyak Cree Nation, War Lake First Nation, York Factory First Nation, and Fox Lake Cree Nation.

Previous articleNova Innovation and Atlantis Energy team to deploy tidal turbines
Next articleBitfarms acquires 24-MW hydro power plant in Washington State
Elizabeth Ingram is content director for the Hydro Review website and HYDROVISION International. She has more than 17 years of experience with the hydroelectric power industry. Follow her on Twitter @ElizabethIngra4 .

No posts to display