Biz group wants minister to scrap proposed Hydro increases

Hey there, time traveller!
This article was published 29/05/2023 (331 days ago), so information in it may no longer be current.

Manitoba independent businesses want government relief from rising energy bills while warning electricity rate hikes could devastate operators struggling with pandemic debt.

Canadian Federation of Independent Business provincial director Brianna Solberg urged Finance Minister Cliff Cullen to cancel Manitoba Hydro’s plans to raise electricity rates, in a letter dated May 19.

“In addition to decreased revenues and mounting debt, this Hydro rate increase comes at a time when small businesses are also facing skyrocketing inflation, higher labour, rent and insurance costs and increased government costs,” Solberg wrote.

“Small business owners simply cannot afford to take on any additional cost burdens at this time.”

Manitoba Hydro has asked the Public Utilities Board to approve two consecutive rate hikes over the next 12 months in its latest multi-year general rate application.

The application calls for a two per cent rate increase for the average customer on Sept. 1, 2023, followed by a second two per cent rate increase on April 1, 2024.

The Crown corporation is asking the regulator to confirm an interim 3.6 per cent rate increase that took effect in January 2022.

“While we recognize that Manitoba has some of the lowest power rates in the country, the timing of this rate increase could not be worse considering all the obstacles small businesses are currently facing,” Solberg said.

The federation said 49 per cent of its 4,000 members are carrying pandemic-related debt averaging over $80,000, and 20 per cent are thinking about closing. It called on the Tory government to freeze rates until more businesses have recovered.

NDP critic Adrien Sala raised the federation’s appeal in the legislature Tuesday and challenged the government to “cancel the rate hike” during question period.

“Higher electricity costs mean small businesses will have fewer resources to create jobs, invest in their businesses and contribute to the provincial economy,” said Sala.

Cullen responded by saying Manitobans have some of the lowest electricity rates in the country, and the proposed increases will not substantially change that.

The government’s decision to cut Manitoba Hydro’s water power rental and debt guarantee fees — which are paid to the province — also saved the corporation $190 million in the 2022-23 fiscal year and reduced its rate request by 1.5 per cent, he noted.

“What is shameful was the legacy the NDP left Manitoba Hydro in: $24 billion of debt, obviously having to be serviced on the backs of (Manitobans),” he said.

Sala would not elaborate on how the province should go about cancelling proposed rate increases without meddling in the corporation’s affairs or interfering with the independent rate-setting process unfolding at the PUB.

“Today we’re really lifting up the voices of small businesses in Manitoba who are being negatively impacted by this government’s Bill 36,” Sala told reporters after question period.

The Manitoba Hydro Amendment and Public Utilities Board Amendment Act (Bill 36) passed into law last November. It caps electricity rate increases at five per cent or the rate of inflation effective March 31, 2025, and enshrines debt-reduction targets in law.

In its application, Manitoba Hydro set out a rate path to reach the statutory targets. It would require average annual rate increases of two per cent for the next 19 years and is contingent on the province maintaining current fee reductions.

The NDP has promised to freeze electricity rates for two years if it forms government in the election scheduled for Oct. 3.

The party has refused to say how it plans to keep rate increases at zero per cent, but promised to release details during the campaign period.

The PCs have said an electricity rate freeze would hurt the province’s credit rating and could lead to future rate shock.

Solberg was not available for an interview Tuesday but provided a written statement.

“Small businesses are looking for affordability measures to be introduced in this area, so if it’s not freezing Hydro rates then we have recommended other cost-relief measures the Manitoba government could take, such as suspending the collection of the provincial fuel tax,” she said.

Cullen said the government recognizes challenges faced by small business and proposed rate increases would have been higher if not for the province slashing fees paid by Hydro.

“We’ve invested $190 million to keep these rates low. They have to be cognizant of that and also cognizant that other jurisdictions’ rates are going more than double that,” Cullen said.

He emphasized proposed rate increases are well within the range of other jurisdictions while stabilizing the corporation and addressing its debt.

danielle.dasilva@freepress.mb.ca