Doubts raised on efficacy of NDP government's proposed Manitoba Hydro rate freeze

Manitoba Premier Wab Kinew says a rate freeze on electricity in 2025 is achievable, despite another forecasted financial loss at Crown-owned Manitoba Hydro.

Kinew's NDP government promised a one-year freeze in the last election campaign as a way to help people with the rising cost of living.

That has raised concerns with the Consumers Coalition, a group made up of three non-profits, including the Manitoba branch of the Consumers Association of Canada.

The group says a freeze now may lead to higher rate increases in future years.

Manitoba Hydro posted a net loss of $157 million in the last fiscal year and is set to end up in the red again after initially predicting a surplus this year.

In a year-end interview, Kinew said he believes the one-year rate freeze is the right way to go. The final decision will be made by the Public Utilities Board, the province's energy regulator.

"Why we have Manitoba Hydro in our province, as a public utility in particular, is to have affordable rates," Kinew said.

Hydro officials were the ones who came forward to the government with the proposed freeze, Kinew said.

"We're confident that the [board] will approve this, because we think that it is financially sustainable."

'Too much risk'

A lawyer who represents the consumer coalition said Manitoba Hydro needs more sustainable money.

"Rates too low today create too much risk of rates needing to be too high in the future," said Chris Klassen, a lawyer with the Public Interest Law Centre of Legal Aid Manitoba.

Manitoba Hydro saw its debt triple in the last two decades, as cost overruns plagued major projects. Credit rating agencies have said the utility has a higher debt burden than its counterparts in other provinces.

Last year, dry weather reduced power-generating water flows and turned an expected profit into a $157-million loss.

The government's recent mid-year fiscal update said an expected profit this fiscal year at Manitoba Hydro is predicted to end up as a loss of $164 million.

Crown utility spokesman Peter Chura said a submission to the Public Utilities Board is still in the works.

"While we are not seeking a rate increase in 2025, our [general rate applications] typically consider rates for multiple years," Chura wrote in an email.

"The content of that application and any future rate path is still being developed, and ultimately the decision on rates rests with the PUB."