Manitoba Hydro subsidiary winding down international consulting arm

Manitoba Hydro says it plans to wind down the international consulting part of its commercial branch after a review said the division was the "least aligned" with the public utility's core operations.

The utility announced the restructuring of Manitoba Hydro International following a third-party review and months of media scrutiny over its future. 

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. It employs about 130 people.

A news release from the Crown corporation says international consulting is a competitive industry dominated by large firms whose sole focus is on that line of work. 

Hydro president and CEO Jay Grewal said the consulting leg of the business operates in politically risky countries. 

"The last thing we would ever want is to have an employee … operating in one of these higher-risk geopolitical jurisdictions, and there is unrest … and we need to quickly pull our employees out to a place of safety," she said in an interview. 

There is also financial uncertainty, with Hydro reporting diminishing returns on an annual basis, she said.

"It's an industry where those that we would compete against, this is their core business, this international consulting, versus a very small business within MHI," Grewal said.

"It's not aligned with where we're headed as the utility of the future."

A recent MHI annual report says the company made over $50 million in revenue in 2018-19, which resulted in just under $6 million in total profits.

Grewal said selling off MHI's consulting arm, which operates under MHIUS, doesn't align with Hydro's interest. The value in the consulting business is in its contracts, which Hydro will honour as the remaining deals expire, she said.

"It's not our core business to build an organization to then take private. We are a public entity owned by all Manitobans."

Staff impacted by the reorganization will be offered employment at Manitoba Hydro.

Manitoba Hydro International will continue to operate as a subsidiary of Manitoba Hydro but focus on its other commercial activities, including its telecom division.

However, its telecom division was told last year to suspend all activity related to pursuing new broadband services, and that order remains in effect, Grewal said.

Questions surrounding the future of Manitoba Hydro International first surfaced in September after leaked internal documents revealed the subsidiary had been told to stop pursuing new work as it was "being assessed for its strategic fit" within its parent company.

The review of MHI was part of a broader examination of the entire Crown corporation. Grewal said Hydro will reveal more details about Strategy 2040 — its long-term strategic plan — in the coming weeks.

NDP skeptical of Hydro plans

The Opposition New Democratic Party argued the news about MHI will result in higher utility bills for Hydro customers, though it's unknown if the reorganization will affect electricity rates in any way. 

"The real loser here is the Manitoba Hydro ratepayer," said Adrien Sala, NDP MLA for St. James and the party's Hydro critic, during a scrum Tuesday.

Sala questioned if the reassigned staff can be absorbed into the public utility's operations. 

"Even if somebody is offered a permanent role, the potential for being made redundant is very high," he said. "These are individuals whose skillsets are very specialized ... and, frankly, their skillsets don't necessarily relate strongly to the core functions of Manitoba Hydro.

"This is essentially a giant giveaway to the private sector, and it's privatization by a different name."

Manitoba Liberal Leader Dougald Lamont disagrees with the NDP raising the spectre of privatization, because technically Hydro is just shutting down its consultancy.

Lamont's main concern is the Pallister government has a report about MHI that he and other politicians have yet to see, he said. 

Crown Services Minister Jeff Wharton said he's pleased the review will strengthen Hydro's focus around their core business: providing "cheap, affordable and reliable energy" for Manitobans.