Manitoba Hydro to hike electricity rates, cut staff

Manitoba Hydro will need to raise rates and reduce staff to address ongoing financial concerns, the utility's CEO said Wednesday

President and CEO Kelvin Shepherd said the Crown corporation will have to cut costs in the form of staff reductions andsmaller raises as well as increase revenues becauselarge infrastructure investments dug the utility into a very deep hole.

A balanced approach

Manitoba Hydro's current financial forecast puts rate increases at 3.95 per cent over 15 years, but Shepherd said that will likely have to change to pay down the utility's high debt. That debt currently stands at $13 billion, he said, and it's projected to nearly double to $25 billion over the next several years.

Low rates over the past 10 years alongside major investments in projects like Bipole III and the Keeyask dam project are partly to blame.

"When you're going to make major investments in infrastructure and there's a need for some investments in infrastructure, the rates have to be there to support it," he said.

Shepherd couldn't say yet how much rates will rise, but he said the corporation won't be relying solely on the hikes to recover financially.

"It's got to be a balanced approach," he said. "I don't believe we can solve everything with rates."

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Shepherd said the corporation also has to do a better job at managing capital expenditures and operating costs, including reducing overall staffing and reining in raises.

Previously, some senior managers at Hydro received base salary increases of up to 23 percent in one year, while the majority of front line workers got raises of more than 15 percent over six years.

Shepherd has said he'd like to shave Hydro's current workforce of about 6,000 employees by 15 per cent. Shepherd said there's an opportunity for staff reductions without layoffs, with around 900 employees on staff who could retire. Hydro has already eliminated about 400 full-time positions over the last three years, largely through retirements and managing vacant positions.

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No matter what, Shepherd said it won't be a quick fix.

"This isn't a problem that happened overnight," he said.

"We didn't get into this situation in four or five years, and so I think time is another question It's a longer-term approach that we're going to have to take."

No plans for privatization

Amidfinancial challenges, Shepherd said he doesn't see privatization in the corporation's future.

"It's not something that's even on my mind," he said. "People will bring up this issue of privatization, but certainly I didn't come to Hydro to be part of that."

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He said the board is similarly committed to remaining a publicly-owned asset.

Manitoba Hydro has committed to scheduling public information sessions over the next few weeks to answer people's questions about its financial situation.