The NDP government won’t be pulling the plug on its promise to freeze electricity rates after Manitoba Hydro slashed its projected profits by $225 million following a disappointing first quarter.
The publicly owned utility is forecasting a massive hit to revenues attributed to lower water levels in its first-quarter update for the period ending June 30.
Hydro had budgeted a net income of $450 million in 2023-24, which would have flowed to the provincial government’s coffers; however, the Crown corporation now expects to generate half as much revenue.
MIKE DEAL / WINNIPEG FREE PRESS FILES The NDP is still committed to delivering on its promised hydro rate freeze, says Adrien Sala, the minister responsible for Manitoba Hydro.
“That’s going to have a big impact on Hydro’s bottom line, but at this point, we need to see where things go,” said Adrien Sala, the minister responsible for Manitoba Hydro.
“We are committed to delivering on that hydro rate freeze.”
During the election campaign, the New Democrats pledged to freeze rates for one year by reducing the utility’s debt guarantee fee, which it pays to the province, and cutting revenue the province receives from Hydro.
A one-year freeze would save ratepayers an estimated $37.5 million and the province would have to forgo about that much annually for three subsequent years to avoid rate shocks, according to the NDP’s plan.
It also hinged on the government creating the financial conditions for the Public Utilities Board to approve a freeze the next time Hydro applies to the independent rate-setting authority.
Electricity prices for the 2024-25 fiscal year have already been set, with the consumer watchdog approving a one per cent average rate hike effective April 1 — half of what Hydro had requested.
The Crown corporation also noted in its first-quarter fiscal update that the PUB’s decision could further impact its revenue projections.
And while the quarterly report is dated Aug. 14, it was only made public Sept. 29, less than a week before the Oct. 3 election.
The Crown corporation’s financial results were not publicized owing to the election blackout on government communications, Hydro spokesman Bruce Owen said in a statement.
“The decrease in expected net income is largely due to the unfavourable low water conditions we experienced earlier this year, which negatively impacted our ability to generate surplus energy,” Owen said.
As a result, spot export sales decreased alongside market prices, he said. Domestic electricity sales were three per cent lower compared to the same period last year, and out-of-province revenue dropped by seven per cent.
Hydro had a net income of $52 million in its electric segment and a $16 million net loss in its natural gas segment. Consolidated net income for the quarter was $40 million, compared to $82 million for the same period last year.
“The change from one year to the next is a clear reminder Manitoba Hydro’s net income is largely driven by weather and water flow conditions, which we cannot control,” Owen said.
The finance minister called the expected revenue hit significant and concerning. He noted the government may need to look at other ways to achieve a rate freeze, but didn’t offer specifics.
“Hydro’s financial position will influence how we go about approaching that decision, but at this point, we’re still working through this process,” Sala said.
“We still have time to sort of get a better sense of where Hydro is at currently.”
His office is still working through the books to get clarity on the overall state of the province’s financial affairs, he said.
The government’s first-quarter update from July alluded to lower-than-budgeted Hydro profits; however, it did not include any changes to revenue and held the provincial deficit at $363 million.
