Manitoba Hydro settles Ontario power dispute for $9.6M

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This article was published 20/10/2017 (2371 days ago), so information in it may no longer be current.

Although it admits no wrongdoing, Manitoba Hydro has agreed to pay $9.6 million to settle a dispute with the agency that operates Ontario’s electricity market and transmission system.

The Independent Electricity System Operator (IESO) approved the settlement with Manitoba’s largest Crown corporation earlier this year.

The two sides are providing few details about the deal because of a confidentiality agreement, but IESO had raised concerns Manitoba Hydro “may have breached” its trading rules in 2011 and 2012.

“We didn’t do anything wrong. It is a matter of interpretation as to what occurred,” Hydro spokesman Bruce Owen said.

Jordan Penic, senior manager of communications with IESO, said the agency’s market assessment and compliance division launched an investigation in September 2012. The allegations pertained to maximum amounts of energy that can be traded in the Ontario market.

Penic said IESO expanded its probe in December 2015, when it discovered Hydro may have breached another market rule.

Around the same time, he said, Hydro may have also breached a third rule by “refusing to answer a few questions around an information request that we had about the investigation itself.”

Penic said the settlement was “appropriate for the alleged breaches” and “fair for both parties.”

A brief synopsis of the settlement is posted on the IESO website under “negotiated settlements.”

IESO says its market assessment and compliance division monitors the operation of Ontario’s electricity grid and market, investigating potential non-compliance with Ontario market rules and North American reliability standards.

“Where appropriate, it enforces the rules by making determinations and imposing sanctions,” IESO says.

“It may also engage in alternative case resolutions, such as agreeing to settlements.”

A spokeswoman for Crown Services Minister Cliff Cullen declined comment on the issue Thursday, calling it a legal matter and referring queries to Manitoba Hydro.

David Cormie, director of wholesale power and operations at Manitoba Hydro, said he could offer little comment in addition to what IESO provided on its website.

“We participate in their market. They send us money that we generate in their market, and we’re returning some of that money to them as a settlement,” he said.

In addition to selling power it generates, Manitoba Hydro is an active trader in various electricity markets, Cormie said.

For example, Manitoba may buy power in Michigan when prices are low there and sell it to Ontario at a profit.

“Twenty-four hours a day, seven days a week, we have a trading floor that’s always looking at the (price) spread,” he said.

“This is a source of revenue that doesn’t involve Manitoba Hydro energy. All you’re doing is buying out of one market and selling into another market.”

Cormie said while Hydro does not admit to any wrongdoing, it agreed to a settlement, in part, so as not to damage a relationship in a market that has generated hundreds of millions of dollars for the corporation over the years.

larry.kusch@freepress.mb.ca