Do they really know what they are talking about?
Deputy Premier and Finance minister Rosann Wowchuk sent me a letter recently about Manitoba Hydro. The letter was in response to a challenge I sent to the NDP government about the money they had spent on consulting with First Nations communities. I asked if I could publish her letter and permission was refused but the letter was re-written as a letter to the editor and part of it is quoted below.
“Manitoba Hydro is entering an exciting new decade of investment in the future of our province. Major new hydro-electric generation and transmission projects require large capital investments but the returns to Manitobans are many times greater and will endure for generations to come. The $160 million of payments provided to Aboriginal communities must be considered in the context of the total costs of these major projects. In the case of the new Wuskwatim and Keeyask generating stations, the funds provided are less than 2.5 per cent of total estimated project costs.”
Now Mrs. Wowchuk may think “Manitoba Hydro is entering an exciting new decade of investment in the future of our province”, however, given the track record of the NDP in particular, and governments in general, I doubt that all the “due diligence” has been done. Aside from investing $160 million into consulting with First Nations, by the government’s own figures noted above we are about to spend $6.4 billion on Hydro expansion. We all know they plan to waste over half a billion by putting the Bi-Pole III line in the wrong place.
Just this week the government blasted the PC Manitoba party, not for questioning where the line will go but accuse the PC party of “delaying” the line and costing Hydro future sales. The NDP conveniently forgets one thing, that Manitoba Hydro was aiming for the shorter cheaper line at least a decade ago. The delay has been of their doing by not building the line on the east side 10 years ago. We would be selling power by now if they had moved ahead 10 years ago. Perhaps the grandiose and inefficient new Hydro office sidelined their thinking.
So why didn’t they move ahead? Basically the promise of new Hydro dams is to Manitoba politics like mid-Western U.S. politicians promising to send money to the farmers. It’s just how you appease the voters. So, the longer the Manitoba politicians can stretch out the promise of Hydro prosperity, the longer you can get re-elected.
There is likely another reason that the NDP didn’t go ahead. There may be little guarantee of new markets. Hydro has two markets. One is domestic, the Manitoba market and the other is the holy grail of U.S. exports.
We were supposed to see unbridled prosperity in Manitoba if we kept domestic Hydro prices low. Businesses would flood into Manitoba to take advantage of our cheaper Hydro rates. That hasn’t happened and it’s because Manitoba isn’t all that business friendly. If a company was planning to build or expand in Manitoba, and all things were equal in their analysis against other places, why would they come here and pay a payroll tax? Even if the payroll tax here was off-set by higher income taxes in another place, the company would go there. Why? Because with a payroll tax you have to pay every month. With income tax, you only pay when you have a net income. Even if you lose money in Manitoba, you pay the payroll tax. Manitoba may as well have a “Stop, don’t stay here” sign on every entrance to Manitoba. In other words, the tax policy of Manitoba far offsets cheap Hydro rates.
Export markets are elusive. One has to wonder if Hydro will ever sell more power to Ontario or Saskatchewan or the United States. In order to sell more power, there has to be an increased market. Saskatchewan and Ontario may well develop their own power sources rather than pay us. The same could be said of the United States, especially as nuclear power becomes more efficient, is reported to be safer and is more accepted in the public eyes. There is another fact that is doubtful that the NDP have even looked at. Have they drawn a line on the map along state lines of the area they hope to sell power to? Have they looked at the population stats for that area? I’m willing to bet that population isn’t increasing that much in those ares. Without a population increase, there’s no need for more power.
How about industrial needs? Could it be that the power needs of the declining U.S. industrial base is also declining. Those are questions that need to be asked. If in fact the markets are as elusive as they appear, have we asked the really tough questions? In its simplest terms, will the markets be there after we have invested billions in new hydro dams, new power lines? Given Hydro’s record of obtaining and then losing Ontario power contracts, we should be very wary of where we place our debt dollars. And what happens if interest rates go up significantly?
These questions need to be asked. Perhaps the future of Hydro should be placed in the hands of people who are lot farther from retirement than Rosann Wochuk, Greg Sellnger or Hydro CEO Bob Brennan. After all if they screw up, it won’t be they who will have to pay for it. Just a thought.