Government-ordered cuts could lead to company moving to Alberta, says Manitoba Hydro's top boss

As plans move ahead for a new entity to take over Manitoba Hydro's energy efficiency programs, the Crown corporation's top boss is warning the Pallister government an edict to cut advertising for Hydro's Power Smart initiatives could spell the end of two programs, and lead to job losses in the province.

In a letter obtained by CBC, Kelvin Shepherd told a government official that these energy efficiency programs are on shaky financial ground and cuts to advertising could send at least one partner company packing to greener pastures in Alberta.

The letter was in response to an April 3 letter from Grant Doak, the deputy minister of Crown Services, which directed Hydro to cease all non-essential advertising for Power Smart, as it transitions from an initiative under Hydro to a new Crown corporation, Efficiency Manitoba.

"I would also be remiss if I did not bring to your attention the impact that the cancelled advertising will have on two of our contracted service providers," wrote Shepherd, Hydro's CEO and president, in a letter dated April 18.

We haven't heard anything from government about the transition [to Efficiency Manitoba]. That's part of the ongoing problem and our frustration with the situation.- Chris Mravinec, CUPE Local 998

Shepherd pointed to Ecofitt, a conservation-focused manufacturing company, which he says set up its business in Manitoba specifically to support Manitoba Hydro programs such as Power Smart's Water and Energy Saver Program (WESP). 

It is "largely dependent on multi-faceted advertising campaigns directed at the public," he said.

"With less activity for WESP … it is expected that there could be a short term loss in staffing levels and [could] potentially result in core operations being moved to Alberta where programs are starting to ramp up," he warned Doak in the letter.

Scott Sanders, the director of Ecofitt in Winnipeg, declined to comment on the letter, stating he had not seen it.

"[Ecofitt] is awaiting further direction. Ecofitt remains committed to energy efficiency in Manitoba," he said in a prepared statement.

Last spring, Premier Brian Pallister's Progressive Conservative government passed a law to set up Efficiency Manitoba, a Crown corporation that will take over energy efficiency programs from Manitoba Hydro.

Power Smart is the brand name of Manitoba Hydro's demand-side management plan, which facilitates, funds and promotes energy efficiency programs for Hydro.

'Impact the financial viability' of program

In 2017-18, it is estimated 23,650 households participated in Hydro's Water and Energy Saver Program through the use of free water and energy saver kits.

Right now, I know everybody in the Power Smart program is waiting for the transfer to Efficiency Manitoba.- Peter Creran, PureSphera

Shepherd's letter also points to the decline of Power Smart's refrigerator retirement program. The program pays people to pick up their old, energy-inefficient fridges and "retires" them.

The program is delivered by the Quebec-based company PureSphera. According to Manitoba Hydro, it created roughly 20 jobs in this province and almost 55,000 fridges have been picked up since its inception in 2011-12.

Shepherd said the company told Hydro in January that participation in the program, which makes up about 95 per cent of PureSphera's business in Manitoba, had declined.

"As they are contractually paid on a per unit processed basis, further declines in the number of units will impact the financial viability of the entire Winnipeg operation," Shepherd wrote.

'Everyone's been in limbo': contractor

Peter Creran, the operations manager for the Winnipeg branch of PureSphera, confirmed Shepherd's assertion the program participation is down and cuts to advertising will further affect business. He said he has only picked up 600 refrigerators this year, when normally he averages about 1,000 by April.

Creran said there are myriad reasons for the decline. It's in part because of a drop in how many refrigerators are still out there needing to be "retired."

But he also pointed to the disruption caused in the changeover to Efficiency Manitoba. He said there has been no indication from Hydro or government that the program will continue under the new corporation.

"Right now, I know everybody in the Power Smart program is waiting for the transfer to Efficiency Manitoba," he said.

"Everyone's been in limbo."

The slow transition to Efficiency Manitoba has been criticized by stakeholders and the union that represents Hydro's Power Smart employees.

Another critic of the Energy Efficiency plan was former Progressive Conservative MLA Steven Fletcher, who was ousted from caucus following his criticism.

The union that represents roughly 37 Hydro workers who work directly in the Power Smart program says those employees have no idea where they will be working in the next year or what job they'll be doing.

Decisions on Power Smart coming: minister

Chris Mravinec, the president of Canadian Union of Public Employees Local 998, says he has repeatedly asked for a meeting with the government to talk about the transition and has been denied.

"We haven't heard anything from government about the transition. That's part of the ongoing problem and our frustration with the situation," Mravinec said.

"It sounds like [Kelvin Shepherd is] having the same difficulty getting clarity on the path forward as we are."

Shepherd declined an interview and a Manitoba Hydro spokesperson declined to comment further on the letter.

A spokesperson for the Crown Services department said Efficiency Manitoba is expected to be operational by the end of the 2018-19 fiscal year, with a board being appointed in spring and a CEO hired shortly after.

There will be no costs to taxpayers released until the new Crown develops a three-year efficiency plan, he said.

Crown Services Minister Cliff Cullen also declined an interview, but in a prepared statement provided by a spokesperson, said decisions on spending and the future of Power Smart programs are still being made.

"We anticipate that once Efficiency Manitoba begins operations, determinations will be made in terms of how dollars are spent in energy reduction programming," he said.

"Efficiency Manitoba may in the future work with the organizations in question to adopt similar programs. However, this would be done through competitive processes to ensure Manitobans are getting value for money."

He added that both Ecofitt and PureSphera have been "great partners" and the province "would confidently suspect [they] will continue to be great partners with Efficiency Manitoba."