Minister’s rebuke suggests leadership change in the wind at Hydro

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This article was published 02/02/2024 (830 days ago), so information in it may no longer be current.

Is Manitoba Hydro in the market for a new CEO?

In a speech this week to the Manitoba Chambers of Commerce, CEO Jay Grewal made headlines by stating that Hydro was starting right away to look for more power from private entities to meet the province’s future energy needs. She went as far as to say Hydro is on the verge of issuing requests for proposals to private power partners.

Grewal’s comments drew a swift and somewhat surprising rebuke from Finance Minister Adrien Sala, the minister responsible for Hydro.

The day after Grewal’s speech, Sala said the new NDP government would not support a plan to contract with private partners for more electricity, insisting that generating assets would be built, owned and operated by the Crown utility.

“There’s no question that we need to find ways of building new capacity here in Manitoba, and we do have energy needs that need to be met, but our position is that that new generation should be publicly owned,” Sala said.

At first glance, it’s hard to tell why Grewal’s speech triggered a response like that.

It is well-known that, despite being a net exporter of surplus electricity, the combined impacts of population and economic growth mean that Manitoba will eventually need nearly three times more electricity than it can generate now. That surge in demand won’t come for decades, but even so, it is coming.

It is also well-known that given the volatile economics of building additional hydroelectric plants, the future will require better energy efficiency, while adding to the grid with geothermal, wind and solar.

Consider, as well, that all of the wind and solar electricity in Hydro’s grid is purchased from two privately owned wind farms in St. Leon and St. Joseph, and from a 3,000-panel solar farm owned by the Fisher River Cree Nation. And for the record, the deals with the two private wind farms were negotiated and signed by a former NDP government.

Finally, it’s not the first time Hydro has talked publicly about looking more to “independent power producers.” Last July, when the utility released its long-term energy plan, former board chair Edward Kennedy said there would an increasing emphasis on looking for additional privately generated electricity.

So, given all that, what is driving Sala’s angst?

First, the NDP government is hyper-sensitive to suggestions Manitoba is somehow on the verge of running out of electricity. That’s not exactly what Grewal said in her speech, but you certainly got the impression that shortages were coming sooner rather than later. The reality is that the anticipated surge in home-grown demand won’t come for decades, and Hydro has lots of options within its existing grid to mitigate the impacts.

Second, the NDP is also super-sensitive to any suggestion Hydro could be entirely or partially privatized.

The NDP has invested a lot of political capital over the years to convince voters the Progressive Conservatives were planning to sell off Hydro, just as a previous Tory government did with Manitoba Telephone System (now Bell MTS) in the 1990s.

All that said, Sala’s dream of relying solely on public assets to meet Manitoba’s future energy needs may prove to be more than a little naive.

Hydro is burdened with a heavy debt load from the enormous costs of building the Keeyask generating station and Bipole III, a major transmission line from Manitoba’s northern generating stations. Even if the debt itself wasn’t an impediment, the cost is so huge and the amount of electricity a single station would generate is so relatively small, it would be hard to earn a return on the public’s investment.

Hydro could certainly throw itself into wind and solar generation; technological advances have made the cost much lower. But given that the utility has no real expertise in either solar or wind, going in-house could be a risky proposition.

Given all this background, it’s probably safer to conclude the public spat is less about the speech, and more about Grewal reaching her best-before date.

During her tenure at Hydro, Grewal was a central figure in the former PC government’s strategy of using Hydro as a political chew toy.

The Tories vilified Hydro and the NDP for cost overruns with Keeyask and Bipole III. They also tried to gut the ability of the Public Utilities Board to set rates, and forced Hydro to adopt unrealistic reserve targets that would have triggered huge rate increases.

Perhaps it’s unfair to judge Grewal for the sins of the Tory government. On the other hand, you cannot escape the fact she sat idly by and said nothing as the Tories manipulated Hydro.

Even though what she said was not controversial, the timing of her speech and the certainty with which she talked about the need to find privately owned power generation was profoundly naive.

But then again, so was Sala’s response.

Two big tasks await Manitoba’s new finance minister.

First, Sala needs to explain how the new government will finance future power needs with public money.

And second, if Sala has indeed lost confidence in Hydro’s chief executive, he should look for someone else.

It’s unclear how long it will take to do the former. The latter, however, appears to be imminent.

dan.lett@winnipegfreepress.com