November 21, 2019
Province Introduces Amendments to Manitoba Hydro Act
The Manitoba government has introduced legislation that would increase Manitoba Hydro’s short-term borrowing limit, Crown Services Minister Jeff Wharton announced today.
“Manitoba Hydro has the opportunity to save Manitobans money by updating their financial investments,” said Wharton. “This long overdue change will save ratepayers up to $41,000 a day in interest.”
The original $500-million loan limit was established in 1992 and has not been reviewed in 27 years. Since then, Manitoba Hydro’s asset base has grown substantially with major capital projects such as the Bipole III transmission line, the Keeyask Generating Station, and the Manitoba Minnesota Transmission Project.
The borrowing limit is currently undersized relative to Manitoba Hydro’s existing and future needs, noted Wharton. Increasing the short-term borrowing limit to $1.5 billion from $500 million would assist capital projects in various stages of construction where a loss of funding would delay the project.
Emergency funding is also needed in times of unexpected events, such as the recent October snowstorm. The final October storm damage bill for Manitoba Hydro is estimated to reach $100 to $120 million.
The loan potentially reduces annual costs for Manitoba Hydro customers by between $8 to $15 million, depending upon market conditions and cash balances. This is viewed positively by credit rating agencies.
Amended through The Manitoba Hydro Act, the loan increase would bring the Crown corporation more in line with Canadian peer utilities. B.C. Hydro’s loan limit is $4.5 billion while SaskPower’s is $2 billion.
This initiative shows the government’s priority and commitment to fixing the provinces’ finances and helping save Manitobans money by shopping smarter. By changing Manitoba Hydro’s short-term borrowing limit, the cost for ratepayers to service Manitoba Hydro’s debt will be reduced, added Wharton.
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