Business

Route for Manitoba hydroelectric project mistake that can't be changed: review

WINNIPEG — Decisions made by Manitoba's former NDP government about hydroelectric development put politics before business, led to a billion-dollar mistake and have left the Crown energy utility with a large debt, says the chairman of Manitoba Hydro's board.

Sanford Riley's comments came as he released a consultant's report Wednesday on two megaprojects — the Bipole Three transmission line and the Keeyask generating station. They were criticized in the report as costly and risky, but because work on both is well underway, there is no turning back, the report said.

"Hydro has embarked on an extraordinarily aggressive capital spending program, which I could characterize as imprudent, that's going to put severe stresses on Hydro's finances as its debt load doubles over the next three to four years," said Riley, who was appointed by the new Progressive Conservative government earlier this year and told to review the projects.

Manitoba Hydro originally wanted to build the transmission line along the east side of Lake Winnipeg. But the NDP government in 2007 ordered the utility to reroute the line far to the west, largely to preserve a stretch of boreal forest on the east side.

That made the line much longer and added roughly $1 billion to the project's cost, the report said.

It also noted that the Keeyask dam, also pushed by the former government, is being built several years in advance of its energy being needed.

Riley called that decision reckless and said both projects will push the combined debt of the government and Manitoba Hydro to more than $50 billion, or 60 per cent of the province's gross domestic product.

He said it leaves Manitoba "with no cushion."

Postponing or cancelling the projects, or rerouting the transmission line, is out of the question because it would cost up to $7 billion, Riley said.

Hydro customers are already facing planned rate increases of four per cent each year for the next two decades, and Riley said the report's findings could add to that figure.

The New Democrats, now in opposition, defended their decisions.

Hydro expansion and exports will pay dividends in the long run, and be to Manitoba what oil is to Alberta, NDP Crown corporations critic Ted Marcelino said.

The shorter, less-expensive route for the transmission line would have angered environmentalists and First Nations communities who want the boreal forest preserved, and the project could have been tied up in court, he added.

"How much does it really cost to protect ... the boreal forest? Does it really matter how much it will be?" Marcelino asked.

The review also noted the costs of the two projects continue to rise.

The transmission line is now expected to cost $4.9 billion, up $300 million from estimates last year. The generating station's price tag has jumped by $700 million to at least $7.2 billion.