New seasonal, time-of-use rates and programs to curb electricity demand during the depths of winter could be on deck for Manitoba Hydro customers, as the utility forecasts its current capacity may be reached within a decade.
The Crown corporation released its first integrated resource plan Wednesday. The 108-page document is billed as a road map to meet Manitobans’ power needs over 20 years, at the lowest cost possible amid growing demand for non-emitting electricity sources.
“The IRP makes it clear that considerable investments will be required to meet additional electricity needs and the pace of those investments will put upward pressure on rates,” Manitoba Hydro chief executive officer Jay Grewal wrote in a forward to the document.
New seasonal, time-of-use rates and programs to curb electricity demand during the depths of winter could be on deck for Manitoba Hydro customers, as the utility forecasts its current capacity may be reached within a decade. (John Woods / The Canadian Press files)
Currently, the utility’s energy and capacity resources are limited and the corporation is anticipating some export contracts will not be renewed in order to meet increasing demand in Manitoba, the CEO reported.
Assuming current energy trends and population growth continue, the electrical system will be at capacity by the early 2030s. “And, while there is some uncertainty in the timing of Manitoba’s need for new energy resources, it could be within the next 10 years,” Grewal wrote.
Four possible scenarios were analyzed in the IRP to compare the energy demand and infrastructure required by 2042, based on the speed of decarbonization and decentralization (or the adoption of energy options available to customers beyond what is provided by Manitoba Hydro, such as consumer solar generation).
None of the scenarios include a target year to achieve net-zero carbon emissions.
Under three scenarios, new energy sources will be required in the early 2030s, the IRP notes. Under a rapid decarbonization scenario, additional capacity could be needed as early as 2025.
The IRP includes five near-term actions Hydro will attempt to finish within the next five years to prepare for the future energy demands.
Managing peak demand for electricity in the winter is the first item on the utility’s to-do list.
Hydro will develop a new rate structure and “demand response” products to promote efficiency and reduce energy consumption and to shift electricity use to off-peak periods. Such changes could delay the need for additional capacity.
According to the IRP, Hydro’s current rate structure doesn’t use seasonal or time-varying differences in cost or value, while other utilities have rate structure that allow for “dynamic pricing with the goal of shifting energy use to lower demand times in the day.”
Consumers Coalition attorney Byron Williams said pricing electricity to reduce demand in peak periods is good in theory but, in practice, the results have varied and can create inequities.
“If you think about heating, air conditioning, maybe laundry and the dishes, some of those things you can’t shift,” said Williams, who regularly represents the coalition (that includes Harvest Manitoba, Aboriginal Council of Winnipeg, and Consumers Association of Canada-Manitoba) during hearings at the Public Utilities Board.
“The people who we know will win under time of use rates are people who have a lot of capital.”
Finance Minister Cliff Cullen, who is responsible for Manitoba Hydro, said any rate changes intended to reduce energy demand will be subject to review by the PUB.
“It’s a combination of things — obviously, creating efficiencies, finding mechanisms that will work to do that, at the same time keeping rates low for Manitobans and making sure that we have power available.”
Cullen said the Manitoba government is committed to keeping electricity rates low in light of the IRP warning customers will feel the financial pressure of adding capacity. The government’s new clean energy road map is part of the equation, he added.
“We’re serious about that because we reduced both the water rentals rates and the debt guarantee fees the government charges Manitoba Hydro,” the Spruce Woods MLA said. “We’ve invested in that commitment. We think that will keep rates low for Manitobans.”
The IRP also calls for a dual fuel space-heating pilot project; high-value energy efficiency programs; enhancements to existing hydro power plants; additional planning and strategizing to meet future power needs; and to develop options to reduce carbon in natural gas.
Natural gas also features heavily in the plan, with thermal generation a source of new energy that will be used to meet demand 20 years down the road.
Other sources could include wind and hydrogen power, and in some cases, battery storage, in addition to upgrades to existing hydro power facilities. Solar power, new hydro dams, small modular reactors, and biomass were not included in the resource mix for the four scenarios.
“It’s surprising how much natural gas is in all those scenarios, and so there will be profound questions about how this fits with federal regulations,” Williams said.
Williams said a government-commissioned energy policy framework by consultant Dunsky Energy and Climate Advisors should be released, so the public can compare it to the IRP.
Opposition NDP critic Adrien Sala said he doesn’t trust the Tories to develop a fair rate structure, adding the government has not made meaningful progress on energy efficiency.
“Manitobans have every reason to be concerned that the PCs will use demand-response tools like time of use or surge pricing… as a Trojan horse for bringing in much higher rates,” the St. James MLA said.
The NDP will release its plan to freeze electricity rates in the near future, Sala said.
