Manitoba Hydro projects $190M loss this year, up $29M from previous projection

Manitoba Hydro expects to lose more money this fiscal year than it previously projected, mainly because of widespread drought conditions across the Lake Winnipeg basin.

In a third-quarter fiscal report published Thursday, the provincial Crown corporation projected a $190-million loss for the 2023-24 fiscal year, which ends on March 31.

That’s up from a second-quarter projection of $161 million.

Hydro initially expected net income of $450 million for this fiscal year. That changed when widespread drought led to low water on Lake Winnipeg, which drains into the Nelson River, where Hydro’s largest generating stations are situated.

Hydro says this low water “significantly reduced net export revenues” and is expected to drive down power production this fiscal year by nearly a quarter of what was predicted.

“Uncertainty around water conditions has narrowed, as flow conditions are historically more stable after the end of October. However, hydraulic generation can still vary due to factors such as outages, ice restrictions, and snowpack conditions through winter,” Hydro said.

“In January, Manitoba Hydro began to use some of its existing reservoir storage to service winter load to mitigate the need to import power at elevated prices.”

Hydro also warned its final loss may change due to fluctuations in export market prices.

The new loss projection was published shortly before Hydro board chair Ben Graham, interim CEO Hal Turner and Manitoba Finance Minister Adrien Sala faced almost four hours of questions from a pair of Progressive Conservative MLAs during a Crown corporations committee meeting at the legislature.

Finance critic Obby Khan (Fort Whyte) and Hydro critic Grant Jackson (Spruce Woods) asked how it would be possible for Manitoba Hydro to spend billions of dollars on new electricity generating capacity while managing to keep a handle on its debt and simultaneously fulfilling an NDP campaign pledge to freeze hydro rates for one year.

Hydro’s debt already stands at $24.6 billion.

“Yeah, there’s a lot of problems in that equation,” said Graham, who was appointed board chair in December, when the NDP dismissed board members appointed by the previous Progressive Conservative government.

Graham said Manitoba Hydro will work with the Public Utilities Board to balance its competing demands.

Sala, meanwhile, acknowledged there will be no hydro rate freeze — a move that would curtail revenue for the Crown corporation — until both weather and fiscal conditions improve. He promised the rate freeze will come into effect before the next provincial election, slated for 2027.

“We’re still committed to delivering a one-year rate freeze but we’re going to have to wait longer to see how conditions change in the future,” Sala said.

Jay Grewal was dismissed from her job as CEO of Manitoba Hydro two weeks after speaking about a capacity crunch during a public address. (Jeff Stapleton/CBC)

Khan also questioned why Hydro’s board dismissed corporation CEO Jay Grewal earlier this month. He called the timing of that dismissal suspicious, because it took place two weeks after she issued a warning about a looming generating capacity crunch during a speech in Winnipeg.

During that speech, Grewal said Manitoba could run out of excess electricity generating capacity by 2029. She also reiterated a six-month-old Hydro plan to partner up with private companies to build new wind farms.

Khan accused the NDP of ripping up that plan with no alternative means of building up hydro’s generating capacity.

“I am very concerned that the NDP have no plan, and when you have no plan, you’re just shooting from the hip,” Khan said. “That’s going to result in catastrophic damage to this province.”

Sala said Hydro and its board are working on a new plan to generate more electrical capacity, but could not say when that plan will be presented.