Manitoba Hydro subsidiary told to halt new contracts as operations under review

Over 130 employees at a Manitoba Hydro subsidiary are in limbo as they await a review by the Crown corporation that some fear could mean the company will be privatized and sold off. 

Manitoba Hydro International, which is the commercial branch of the Crown corporation, was given a directive earlier this month to stop pursuing new work and to make sure any new contract has an end date of Dec. 31, 2021, or earlier.

The company is "being assessed for its strategic fit" with Manitoba Hydro, according to internal emails obtained by CBC.

"The question then becomes: Is this a harbinger for privatization? We don't know," said David MacKay, executive director of the Coalition of Manitoba Internet Service Providers.

"What is the end game? I hate to say it, I don't have answers. I just have questions."

Manitoba Hydro International is a wholly owned subsidiary of Manitoba Hydro and has multiple commercial divisions that do everything from consulting on international energy projects to providing local data services through Manitoba Hydro Telecom.

If … the keys to the kingdom get handed to a private competitor, then that is by nature the creation of a monopoly.- David MacKay, Coalition of Manitoba Internet Service Providers

Internal emails sent this month reveal Hydro International is in a holding pattern until at least Oct. 7 — after which further announcements are expected.

"Manitoba Hydro International's business areas have moved into a non-aggressive approach to new business development for the next while," Wesley Mueller, senior managing director of Manitoba Hydro International Ltd., wrote on Sept. 8.

"MHI is not to aggressively pursue new work," Mueller wrote on Sept. 10.

Another email said no new contracts can be signed until they have been reviewed by a legal team, and those contracts that are signed must include a termination clause that favours Hydro International.

A spokesperson for Manitoba Hydro refused to answer further questions about Hydro International's future.

"Manitoba Hydro International was included in a recent review of Manitoba Hydro's operations conducted by a third party. The report is currently being reviewed," spokesperson Bruce Owen said in a prepared statement. 

As a part of this process, new business development was moved to a "non-aggressive approach" to avoid complication while the review was underway.

"No decisions have been made," said Owen.

MHI made profit last fiscal year

The latest annual report for MHI shows the company made over $50 million in revenue in 2018-19, which resulted in just under $6 million in total profits.

The Hydro International directive comes at the same time that Hydro Telecom, a division of Hydro International, was told to suspend all activity related to new broadband services during the request for proposal process for new rural broadband expansion. 

MacKay's group, which is made up of several local medium- to small-sized telecommunications companies, relies on Manitoba Hydro Telecom to access Manitoba Hydro's fibre optic network, in order to provide internet to rural Manitoba. 

He now wonders if Manitoba Hydro Telecom will soon cease to operate the fibre optic network, or if that will move to a large telecommunications company that will either jack up the prices, or make it impossible for the smaller internet providers to compete.

He describes his group of smaller internet providers as the "builders of the final mile," but they rely on access to Hydro Telecom's network to provide the backbone of the network.

"If it is not Manitoba Hydro Telecom [providing that service] at reasonable rates, and the keys to the kingdom get handed to a private competitor, then that is by nature the creation of a monopoly. It won't create services or drive prices down," MacKay said. 

Manitoba Liberal Leader Dougald Lamont says he is concerned that a decision to sell off Hydro International could mean job losses, even as the company continues to turn a profit. 

"These [could be] job losses from a profitable company," he said. "Those people who are doing that work are making money for Manitoba Hydro."