Former Saskatchewan premier Brad Wall’s report on the Keeyask dam and Bipole III transmission line expansion is a damning verdict on Manitoba Hydro’s past boards and executives, and various Manitoba governments.
While Wall’s public criticism concentrates on the NDP, there’s much room for the current Progressive Conservative government to share the blame.
Premiers former and current directed, allowed and spurred Manitoba Hydro on. As the result of two decades of political and managerial incompetence, Manitoba is on track to lose the province’s best economic advantage – cheap and dependable power.
The story of the decline and fall of Manitoba Hydro, as authored by Wall, gives Manitoba’s current government a pass. But there’s much missed in the report. To understand the full extent of the largest government boondoggle in Manitoba history, other chapters need to be added.
Wall focused on Bipole III and Keeyask, but there are also the Wuskwatim and Conawapa failed power generation dam projects, and the new Manitoba-Minnesota and Manitoba-Saskatchewan transmission expansions, plus the expensive rebuild of the Pointe du Bois dam. Much was left out of the mandate the Manitoba government gave Wall.
Limited to Bipole III and Keeyask, Wall says the “boondoggle” amounts to an overrun of $3.7 billion. But it’s much, much more. Comparing the initial projections for all of the expansion projects to current projections, the boondoggle could hit $10 billion.
First, the NDP Clean Environment Commission (CEC), with Manitoba Public Utilities Board (PUB) members involved, reviewed Wuskwatim, giving Hydro the green light for what was to be a merchant plant (a generating station supplying export markets exclusively).
But it blew past the cost expectations (five times) and with export prices below forecast, the dam’s expensive output was merged with the revenues of Manitoba Hydro’s much older and cheaper plants to protect the First Nation partner.
Then, eight years later, PUB’s review of Keeyask and Conawapa left out Bipole III, and it hasn’t had a stringent public review to this day.
Then-Manitoba premier Greg Selinger commissioned a review and PUB concluded, with reservations, that too much had been spent on Keeyask – too much to stop. While that review halted Conawapa, the project had already spent $400 million with no review.
With the PCs gaining government in 2016 and after having pledged to suspend Bipole III and Keeyask, and call a proper review, the provincial government simply let Manitoba Hydro continue spending on the two projects.
As costs continued to soar, Boston Consulting Group was commissioned to do a quiet internal review. Conclusion: too much had been spent to stop.
The woeful Manitoba Hydro saga, which began with former premier Gary Doer’s NDP government, should have been reviewed by a full public inquiry led by a judge, with a team of forensic auditors. Where was the provincial auditor general?
While Premier Brian Pallister now rages against the NDP and plans to “protect” Manitoba Hydro from privatization, he slyly protects the status quo in which his government pulls in about $500 million a year from Manitoba Hydro ratepayers. Those are the rewards of an incompetently bloated cost base at Manitoba Hydro after 20 years of government blunders.
The Wall report’s gift to the provincial government hangs the Manitoba Hydro debacle only on the NDP. That Wall manages to avoid sharing some of the blame with Manitoba’s current government suggests political gaming.
Graham Lane is a retired CPA CA. After a lengthy career in the public and private sectors, he was chair of the Manitoba Public Utilities Board from 2004 to 2012. This column was supplied by the Frontier Centre for Public Policy.
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