Manitoba Hydro proposes electricity rate hike of nearly 11% over 3 years

Manitoba Hydro is seeking permission to raise electricity rates by nearly 11 per cent over the next three years in order to fix aging infrastructure, increase generating capacity and mitigate the effects of drought and debt.

The Crown corporation asked the Public Utilities Board to approve three annual rate hikes of 3.5 per cent, beginning in 2026, according to documents published Friday afternoon.

The hikes would follow a one-year rate freeze promised by the NDP government — but criticized as reckless by consumer advocates and the Progressive Conservative Opposition.

In its application to the Public Utilities Board, Hydro says it must spend $31 billion over the next two decades to improve the reliability of its existing infrastructure and expand its capacity to generate electricity.

Some of the infrastructure along Bipole I and Bipole II, two of Hydro's three main transmission lines, is more than 50 years old, which is "one to three decades past the industry expected service life," and will alone requires billions worth of upgrades in the coming decades, the corporation writes in its rate application.

Hydro also states it must increase its generating capacity by 2030 in order to avoid electrical-capacity shortfalls during peak-use periods in the winter. This winter, the corporation notified the Public Utilities Board of its intention to build a pair of new fuel-combustion turbines at a cost of $1.4 billion to meet this demand.

In its rate application, Hydro warned it may need to build more gas turbines from 2035 to 2045, despite a provincial NDP directive to stop burning fuel to create electricity by 2035.

"The current load forecast does not represent a path to net zero [carbon emissions] and as such there is the potential that additional investments will be needed," the application states. "In addition, inflationary factors continue to evolve and create uncertainty in current and future capital costs."

Hydro is already carrying $24.6 billion worth of debt, which is $940 million higher than the forecast from its last rate application. Hydro revenues were down because of "drought and low water over the last two years," the rate application states.

In a statement issued Friday evening, Hydro noted the proposed rate hikes would be the first for the Crown corporation since rates went up by one per cent on April 1, 2024.

"We realize this is a challenging time for Manitobans already paying higher prices for many goods and services," Hydro president and CEO Allan Danroth said in the statement. "Manitoba Hydro is also facing increased costs and the rates we're requesting will ensure we can continue to provide safe, reliable energy now and into the future."

Hydro has been warning about the need to spend billions on infrastructure and new generating capacity since 2023. The provincial NDP nonetheless promised to institute a Hydro rate freeze when it ran for office that fall and has lauded a rate freeze for the 2025 calendar year.

Katrine Dilay, a lawyer representing the Manitoba branch of the Consumers Association of Canada, has repeatedly questioned the fiscal wisdom of a Hydro rate freeze.

Last fall, she warned rate hikes are required to meet Manitoba's energy and capacity needs over the next decade.

"So from our clients' perspectives, the commitment from the government creates a significant risk for future consumers of higher than necessary rate increases," Dilay said in November.

PC Hydro critic Lauren Stone has also questioned the wisdom of the rate freeze.

In a statement issued late on Friday, NDP government spokesperson Amy Tuckett-McGimpsey said the Hydro rate freeze provided "much-needed relief for families."

The trio of 3.5 per cent rate hikes, which works out to a compound hike of 10.9 per cent over three years, she said, "balances affordability with investments in Hydro to ensure we build our economy for the future."

Hydro is also committed to cutting costs, Tuckett-McGimpsey said.