November 21, 2012
Northern Dams in Doubt
Province orders study of need for Keeyask, Conawapa
Bruce Owen, Winnipeg Free Press, November 17, 2012
The Selinger government wants the Public Utilities Board rate watchdog to tell it if there's a better alternative to Manitoba Hydro's proposed northern Keeyask and Conawapa generating stations.
The two dams will cost more than $13.4 billion and are key to Manitoba Hydro's ambitious plan to sell more surplus power to the United States.
But there's a catch.
Since Hydro unveiled its plan, the U.S. economy went into a tailspin it's only now coming out ot and new American drilling uncovered a wealth of untapped, cheap natural gas.
The shine of two new massive dams isn't as shiny as it once was.
"Building Keeyask and Conawapa represents a major economic development opportunity for our province," Dave Chomiak, the minister responsible for Manitoba Hydro, said in a release Friday. "The purpose of the Needs For and Alternatives To (NFAT) review is to provide an independent assessment of the need for new generation and to compare the benefits of building new hydro generation to alternatives such as natural gas."
The NFAT review will be conducted by a sub-panel of the PUB. Panel members are to be announced and detailed terms of reference will be provided by the province to the board in the new year.
The PUB has said in earlier orders that Manitoba Hydro should revisit its plans to build Keeyask and Conawapa because of lower revenue caused by the availability of cheap natural gas. The board has already said Hydro could build a natural gas-fired plant to supply Manitobans with power cheaper than that from the two northern dams.
The NFAT review does not include the proposed Bipole III transmission line, which is the subject of an environmental review before the province's Clean Environment Commission.
Progressive Conservative Leader Brian Pallister said Friday the Selinger government only announced the NFAT now to reduce criticism on Hydro from the opposition benches as the legislative prepares to go back into session Monday.
He said building the two dams has a risk -- Manitobans could pay higher rates if export revenue falls short of expectations.
The province also asked the Clean Environment Commission Friday to hold environmental hearings on the proposed Keeyask project.
How soon that hearing would start is unknown because the CEC is in the middle of its Bipole III hearing, which is to be adjourned for about two months at the end of November to allow Manitoba Hydro to do further consultations on changes to the line's preferred route.
The CEC is also to hold hearings on Lake Winnipeg regulation, the level at which Manitoba Hydro keeps the lake to provide enough water to power its northern dams.
Hydro reports $43-million loss
NOTICES that the Public Utilities Board and Clean Environment Commission are to review plans for the proposed Keeyask and Conawapa generating stations came on the same day Manitoba Hydro released its second-quarter report for the 2012-13 fiscal year.
The province's power utility said it incurred a net loss on consolidated electricity and natural gas operations of $43 million for the first six months of the year, compared to net income of $13 million for the same period last year.
The net loss comprised an $18-million loss in the electricity sector and a $25-million loss in the natural gas sector.
The loss in the electricity sector is blamed on decreased revenues from export electricity sales and higher operating expenses mainly due to accounting changes and pension-related cost increases, Hydro said in the report.
The reduced electricity-sector revenues and higher expenses were expected and the loss on the natural gas side is the result of seasonal variations in the demand for natural gas and should be recouped over the winter heating season.
Manitoba Hydro also said it continues to see low export market prices as a result of low natural gas prices and lower demand for electricity due to economic conditions in the U.S.
It said these low export prices are projected to result in continuing downward pressure on net income in 2012-13.
However, based on current water flows and export-market conditions, Manitoba Hydro says financial results will improve over the remaining six months of the fiscal year and net income should exceed $30 million for 2012-13.
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