Premier calls NDP management of Manitoba Hydro megaprojects 'scandal of the century' following report

Premier Brian Pallister is characterizing the NDP's handling of Manitoba Hydro megaprojects as "the scandal of the century" days after a report on the past management of the Bipole III and Keeyask projects.

An economic review of the Bipole III and Keeyask dam that was released Friday said NDP mismanagement of those projects contributed to Manitoba Hydro's overall debt tripling during the course of construction.

"This is the largest and most significant mismanagement of taxpayer funds that we have ever seen," Pallister said on Monday.

"There was political interference with the Bipole and Keeyask projects and … as a result, Manitobans have been left with a massive debt burden." 

Pallister said his government is mulling strengthening referendum legislation to ensure the Public Utilities Board and Manitobans have more say in the approval of Hydro megaprojects moving forward.

The premier declined to provide details of what those changes might entail, but he said it would prevent megaprojects and the sale of any of Hydro's core assets from occurring without a referendum.

The economic review of the Keeyask and Bipole III projects by former Saskachewan premier Brad Wall was commissioned by the Pallister government. Wall led the Saskatchewan Party, a party formed by a coalition of Conservatives and Liberals, from 2004 to 2018.

The report contains 68 recommendations and 85 findings, including scathing criticism of the former NDP government's management of the projects.

Keeyask and Bipole III were built over the past 15 years, during which time Manitoba Hydro's debt has tripled to more than $23 billion. 

"They were not needed when approved and have significantly eroded Manitoba Hydro's financial health," the Wall report said, adding the NDP government failed to provide oversight after approving the projects.

Both projects carry electricity to southern Manitoba and will become valuable in time, the report says, but they collectively went billions over initial budgets.

Past annual reports from Hydro have shown the Keeyask generation station was originally pegged at $6.5 billion but ballooned to $8.7 billion, while Bipole III costs more than doubled from $2.2 billion to $5.04 billion.

'Fake boogeyman of privatization'

Among dozens of recommendations, the Wall report advised against privatizing Manitoba Hydro, but suggested the public utility lose subsidiaries and divisions that don't align with Hydro's core function of providing affordable electricity to Manitobans. 

Official Opposition Leader Wab Kinew suggested that recommendation amounts to an endorsement for breaking off pieces of Hydro to privatize them. 

Last month, Hydro said it would wind down Manitoba Hydro International, the commercial branch of the public utility, because it was "least aligned" with Hydro's core operations.

Kinew said that — along with 2.9 per cent recent hydro rate increases approved with no public hearings — is evidence of the government's "privatization and deregulation agenda."

Pallister said the NDP is trying to distract from they party's past failures.

"I don't think Manitobans will be fooled by the old fake boogeyman of privatization, because the reality is we haven't got any intentions of privatizing Manitoba Hydro," Pallister said on Monday.

Pallister said the NDP has circumvented referendum legislation in the past that needs to be shored up so the Public Utilities Board and Manitobans have a say on major decisions. In addition to Hydro projects, he pointed to NDP premier Greg Selinger's government raising the PST almost a decade ago after saying it wouldn't.

Kinew suggested the government's Bill 35, which will be voted on this spring, would effectively remove PUB oversight of Manitoba Hydro.

"The PCs under Mr. Pallister coming out and saying they're going to protect Manitoba Hydro from being privatized is like the fox saying they're going to put a fence up around the chicken coop," he said.

Report done 'behind closed doors'

Pallister also defended the decision to appoint Wall as head of the commission; he said the former Saskatchewan premier delivered an impartial report.

Byron Williams, who represented Hydro customers at PUB hearings during the years when Keeyask and Bipole III were approved, said "there is a lot of good" in the report. But he said there some valid criticisms of it, too.

"The problem with the Wall commission was that it was done behind closed doors," said Williams, who now serves as director of the Public Interest Law Centre. "There would be a lot more confidence in the outcomes of the Wall commission if we would've had the hydro officials, the elected officials, tested in a public process."

Williams hailed other elements of the report. Like Wall, he said Hydro should be considered as providing a service to Manitobans rather than reaping a profit from them.

He also supports Wall's recommendation that stipulates Manitobans shouldn't be on the hook for the "imprudent" megaproject decisions of past administrations. Government should shoulder that financial burden, according to the report.

Williams thinks there needs to be more transparency and earlier involvement of the PUB in future Hydro project, and he's in favour of the report recommendation against forcing strict financial targets on Hydro, such as the debt-equity ratio.

Bill 35 would entrench Hydro debt-equity ratios and financial targets, he said.

"That could have the impact of imposing double the rate of inflation rate increases for the next 15 years for Manitobans," he said.

In a statement on Friday, Manitoba Hydro said the corporation was reviewing the report but wasn't ready to comment on its findings.