Sunday 18 November 2012

The Scrutinization of Manitoba Hydro

It's agonizing, it is. The glacially slow creep towards sanity in how Manitoba develops it's hydro resources. As the government confidently powers ahead with its plan to spend billions on misguided dams and power lines, it is being slowed by occasional bumps of scrutiny as people increasingly question the wisdom of what the government and Hydro are doing.

Reluctantly, Manitoba Hydro agreed to file a supplemental environmental assessment because of changes to the controversial west-side Bipole III route, after the Manitoba Metis Federation and others complained.

Days later, the province has begrudgingly ordered a "Needs For and Alternatives To" review of it's northern hydro projects, the Keeyask and Conawapa generating stations. Even as the NDP government announced the review, they repeated their lines about how these projects are critical to the economic success of the province -- as though the review is nothing more than a silly formality.

The government's backwards thinking on this issue is striking. For example, take everything Minister Dave Chomiak says in the following quote ...

"The estimated $13.3-billion investment in Manitoba's north that would result from Keeyask and Conawapa would propel the province's economy for decades to come and provide clean, low-cost and reliable power for future generations of Manitobans," Chomiak said. "Moving forward with these projects is an important decision and Manitobans need to be assured that they are in the best long-term interest of the province." -fp-

... and reverse everything, and see how much more sense it makes:
"The estimated $13.3-billion debt that would result from Keeyask and Conawapa would cripple the province's economy for decades to come and drive up the cost of power for future generations of Manitobans," Chomiak said. "Moving forward with these projects is a terrible decision and Manitobans need to be worried that they are not in the best long-term interest of the province." 
Wouldn't it have been a refreshing change of pace if Chomiak had a sudden surge of integrity and actually made that second quote instead of the first?

The province has so far neglected to request a similar review of Bipole III, but Bipole III is directly related to the NFAT for the generating stations.

Here's how: The existing HVDC power lines are sufficient to carry the existing generating capacity to the south. If the review determines that there are better alternatives to the proposed generating stations, then Bipole III is not necessary either -- at least not strictly necessary. It would still provide redundancy in power delivery to the south. However the value of that redundancy will need to be weighed against the $4 billion cost of Bipole III.

Here's something else you should know: even if it's decided that a Bipole III line is required without new power dams up north, there is a huge cost impact. The original shorter east-side route for Bipole III would only require costly converters if the additional generating capacity is added. Otherwise they are not needed. This is stated in Hydro's own documents including the routing study and this leaked 2005 report. However, converters are required for the longer west side route just to function.

This means that if the NFAT finds that the additional generating capacity up north is not needed, and the government continues to insist on building the Bipole III route down the west side of the province instead of the east side, then Manitobans are not just getting pooched out of an additional $871 million (according to my calculations) but also an additional $2+ billion for converters. This makes the west-side Bipole III route a head-shaking $3 billion mistake.

But all is not grim. What once appeared to be fait accompli is now somewhat less so as more questions are raised and scrutiny is applied. For example in the past two weeks there have been 10 or more articles and editorials in the Winnipeg Free Press about reviews of Manitoba Hydro plans or concerns about those plans, including this one from a former Manitoba Hydro Vice-President.

And of course there is the needs for alternatives review. There is a good chance that it will find that the proposed new generating stations are not a good investment at this point in time in spite of the government's insistence to the contrary, especially considering the week export market alluded to in Hydro's quarterly report and the likelihood that final projects costs will be much higher than the current $13.3 billion estimate.

So you see, even as the government continues to commit to it's ill-advised plans, there is a light at the end of the tunnel. Keeyask and Conawapa are not a sure thing anymore, and therefore Bipole III may not be a sure thing anymore either. Sanity may yet prevail.

Probably not.

But maybe.


Anonymous said...

What irritates is that instead of MB Hydro being a tool to leverage job and business creation in the manufacturing sector, they want to sell low cost power to Americans to do it.

The NDP piss away Hydro profits balancing their political books and placating the FN, instead of creating something with long term returns like the Alberta Heritage Fund.

At the same time Hydro development is impacting the lakes & watershed negatively to the point of no return.

Anonymous said...

HydroDebt50Billionby2020 ....
Thank you for this insightful article ....
Hydro has Never made a Profit on Export Sales ...
What costs 12 cents is Sold for 2 cents .... NET LOSS 10 cents.
We have been duped .... Semantics !
" Income " is NOT " Profit ' !
Stopping Exports Today will save $1 Billion a year NOW !

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