Friday, January 28, 2011

Manitoba Consumers Pay More Than American Utilities

- A Closer Look At Manitoban Electrical Exports & Future Hydro Development

The construction of Bipole III is very much tied to the idea of building new dams in Manitoba's North. If the $5.5 billion 695 MW Keeyask dam and $7.7 billion 1485 MW Conawapa dam are built a Bipole IV and V will likely also be needed. So we as Manitobans need to ask ourselves do we need all this power? And do we need all this debt?

Most Manitobans seem to be under the false impression that Manitoba Hydro charges more per kilowatt hour (Kwh) for power exported to the U.S. than charged to local consumers.

Basic charges and rates vary among customer types in Manitoba: residential rates start at 6.38 cents per Kwh and ratchet up as demand increases, small and medium size general service customer rates start at 6.84 cents per Kwh and ratchet down as demand increases, large size general use customers pay less than 3 cents per Kwh but face additional demand charges.

In contrast Manitoba Hydro receives from 5.4 to 6 cents per Kwh for long-term fixed price contracts, and 2.4 to 4.5 cents per Kwh for power sold on the short-term spot markets. Manitoba Hydro's 59th Annual Report (pp. 100-101) shows: roughly 13.6 billion Kwh in annual sales to Manitoban general service customers grossed Hydro $669 million; nearly 7 billion Kwh in annual sales to Manitoban residential customers grossed Hydro $477 million; and of the nearly 10 billion Kwh in net exported electrcity Hydro grossed 427 million.

Now exports are bulk sales and the price to individual residents and businesses in Manitoba reflect the added costs of distribution lines, converter stations, maintenance costs, etc. Higher costs to Manitoban customers is therefore justified to a certain extent. Additionally revenue from export sales is used to subsidize domestic rates (not to mention helping spendtrhift governments balance the books from time to time).

But what about the risk of building these new dams in Manitoba's North?

There is obvious financial risk. The billions of dollars of debt being accrued to construct dams largely for export outside of Manitoba creates the risk that adverse fluctuations in currency and/or energy prices could threaten Hydro's profitability. Likewise, with a warming planet the threat of drought increases and lower water levels also threaten Hydro's profitability. Additionally if water levels or delays in dam construction result in Manitoba being unable to meet contractual power sale obligations, this could also harm Hydro financially. Since we the taxpayers underwrite Hydro's debt, we will be on the hook if Hydro defaults.

There is also the ecological and social costs of futher dam construction. Flooding, mercury poisoning, shoreline and river embankment destabilization, habitat disruption, introduction of new species in foreign water systems, and greenhouse gas emissions from reservoirs are some of the ecological costs of large-scale hydro-developments.

Socially, Manitoba Hydro certainly has a checkered past in regards to its relations with First Nations peoples. Construction of Dams in the 1960s and 1970 resulted in flooding, mercury poisoning, and the relocation of entire First Nation communities. The new model, set by the Wuskatim dam presently under construction, appears to be one of “engaging” First Nation communities in so-called “joint partnerships”. However observers, such as Peter Kulchyski of the University of Manitoba's Native Studies Department describe the Wuskatim agreements as “deeply flawed” and note how Nelson House band council came to power in a “deeply divided election.” Blocakdes of the Wuskatim Dam construction site in the summer of 2009 is further evidence of the continuing divisiveness of Hydro development in Manitoba's North.

These risks and external costs should be enough to give us pause, or atleast to argue for greater scrutiny of Hydro's risk management. Fortunately the Manitoba Public Utilities Board is presently undergoing a review of this very same issue. Manitobans would be wise to pay close attention to the hearings as they develop.

Getting serious about energy conservation in Manitoba, rather than patting ourselves on the back for a baseless A+ is a good place to start. Over the past ten years per customer electrcity demand in Manitoba has been relatively stable. Manitobans remain among the most wasteful users of electricity in the world. Hydro has some incentive to reduce energy use to free up additional electrical capacity which could then be exported. But it is the Government of Manitoba rather than Hydro which needs to take the lead on this. Helping consumeres to reduce electrical consumption is good government policy. It will help residents and businesses to save money, and it can avoid the financial, social and ecological costs of additional Hydro development.

Editors Note: I will return this issue again, but in the meantime I encourage your feedback on this issue. (jbeddome at

1 comment:

Scott Harrison said...

Great post. You show both sides of the issue here. I like the fact you use the past native issues when talking about the present situation about Hydro's plans to build three more dam's in the north. I think this money should be invested in the south where the majority of the people live instead of up north out of sight. Wind, solar,bio-gas (burning wood, agriculture and pulp waste) and methane capture from large landfills are options that have worked in other parts of the world. The Manitoba government has to take this in to consideration on a larger scale than they are. It could improve and diversify the economy by providing more green jobs for people in this province. Also last comment. This technology could also be integrated in the north with minimal damage to the environment. Whatever way Energy is produce it will have an impact on the environment. I would like to see the one that has the lest impact. I am afraid that Hydro even though it is a reliable and relatively clean source of energy that the other forms mentioned about have lest of an impact on the environment studies have shown.