Ongoing drought drives energy utility rate increase

MB Hydro seeks 5% rate hike effective Jan. 1

Manitoba Hydro filed its 2021–22 Interim Rate Application with the Public Utilities Board (PUB). The higher electricity rate ask is a direct result of the impact of the ongoing drought on the Corporation’s finances.

The lack of significant precipitation across much of Manitoba Hydro’s watershed over the past year and lower water flows — water inflows to the southern portion of the system are the lowest in 40 years — has weakened the utility’s ability to generate and sell surplus energy on spot markets in the United States and Canada.

“The money from opportunity sales of renewable energy is vital to our financial health,” said Jay Grewal, President and CEO of Manitoba Hydro. “That additional revenue help(s) keep rates for our customers, here in Manitoba, lower than they would be otherwise.

He continued, “We don’t know when precipitation levels will return to normal. Without a rate increase, our ability to continue to reinvest in our system so that we can continue to serve Manitobans with reliable, clean energy will be hampered.”

Despite the proposed increase, Manitoba Hydro will continue to have some of the lowest electricity rates in North America, according to a comparison of rates prepared annually by Hydro-Québec. A Statistics Canada report on household spending, released earlier this year, shows the average Manitoba family pays more for cellular, internet and TV services annually than on their energy bill.

Also in spite the financial impacts, no danger of an “energy shortage” exists. Manitoba Hydro’s system is designed to ensure we can meet the electrical demands of our customers during the lowest recorded flows in the province’s history

The Numbers

  • Manitoba Hydro forecasts an approximate $400 million reduction in net export revenues due to the ongoing drought, as detailed in the utility’s Q2 report for the first six months of the 2021–22 fiscal year.

  • The importance of export power sales cannot be understated. In 2020–21, export sales contributed $611 million in revenue to the corporation — approx. 25% of all electricity-derived revenues — an increase of $143 million from the previous year.