Manitoba Hydro faces tough choices to battle massive debt
'There's going to be pain, relative to where we are today, suffered by everybody'
Manitoba Hydro is billions of dollars in debt and must make tough decisions to return the Crown corporation to a healthier position, executives said at a public meeting Tuesday evening.
That means, among other things, instituting a hiring freeze and increasing electricity rates.
Sanford Riley, chair of the Manitoba Hydro-Electric Board, spoke about the company's current debt, which sits at $13 billion. That's expected to climb to $25 billion over the next three or four years.
"That's an extraordinary increase and a huge concern for the board," Riley said.
"The question everyone asks me is, 'How are we going to get out of this mess?' There's going to be pain, relative to where we are today, suffered by everybody. Clearly, Hydro's operations are going to require a significant restructuring and that will not be pleasant for the people at Hydro."
Certainly, it's been messaged for the last number of years that Hydro rates will likely be up 3.5-4 per cent a year over the next 15 to 20 years. If I had to bet, it'll be higher than that- Sanford Riley, Manitoba Hydro-Electric Board chair
Riley, CEO and president of Richardson Financial Group, was one of the people appointed to the board by Manitoba's Progressive Conservative government in May.
Compared to prior Hydro boards appointed by the former NDP government, the current one has strong representation from people with financial and business backgrounds, Riley said. As such, the operation of Hydro is being scrutinized through that lens.
The purpose of Tuesday's open house was to share the findings of an in-depth Hydro review ordered by the PC government shortly after it won the election in April.
"Hopefully you will understand the conclusions that we were drawing as we went about our work. This was not an easy undertaking," Riley said.
About 100 people gathered at the Victoria Inn near the airport to listen to Riley and Kevin Shepherd, CEO of Manitoba Hydro. It was the first of four planned meetings with the public.
"It's great to see so many people. It's an indication how important Manitoba Hydro is to the province," Riley told the crowd.
- Manitoba Hydro to hike electricity rates, cut staff
- Manitoba Hydro losses from Bipole III, Keeyask 'are going to be huge,' warns former PUB chair
- Bipole III route a mistake that can't be changed, Manitoba Hydro board says
Shepherd discussed how the company will look at reducing its operating costs, taking a harsher look at capital projects and focusing on completing projects with the funding they already have.
The company has taken immediate steps to freeze hiring and has plans not to fill vacant positions whenever possible, he added.
Riley said he's been asked by people what the rate changes will be and how customers will be affected. The answer to that is not an easy one, he said.
"It really depends on how fast we feel we have to get ourselves back on track, and it will depend on how well we do in our restructuring efforts at Hydro and how much equity we put into the business. Then we'll make a determination on rates," he said.
"Certainly, it's been messaged for the last number of years that Hydro rates will likely be up 3.5-4 per cent a year over the next 15 to 20 years. If I had to bet, it'll be higher than that."
The board has decided the best approach is to move ahead with Bipole III and Keeyask, he added.
"We're going to do our best to complete those projects as quickly as we can and as low a cost as we can," Shepherd said. "It's not going to be easy and realistically, the costs are going to be higher than the previous budgets."
The 20-minute presentations were followed by a Q&A session with those in attendance.
David Grant was in the crowd and was pleased that the meeting was offered to the public.
"I think more public utilities and other entities like regulators should engage with the public. I'm glad they did this. It has been absent from Hydro," Grant said.
The next public sessions take place Oct. 25 in Winkler, Nov. 3 in Thompson and Nov. 9 in Brandon.