The Black Rod

The origin of the Usher of the Black Rod goes back to early fourteenth century England . Today, with no royal duties to perform, the Usher knocks on the doors of the House of Commons with the Black Rod at the start of Parliament to summon the members. The rod is a symbol for the authority of debate in the upper house. We of The Black Rod have since 2005, adopted the symbol to knock some sense and the right questions into the heads of Legislators, pundits, and other opinion makers.

Location: Winnipeg, Manitoba, Canada

We are citizen journalists in Winnipeg. When not breaking exclusive stories, we analyze news coverage by the mainstream media and highlight bias, ignorance, incompetence, flawed logic, missed angles and, where warranted, good work. We serve as the only overall news monitors in the province of Manitoba. We do the same with politicians (who require even more monitoring.) EMAIL:

Thursday, October 08, 2009

Why Manitoba Hydro is keeping secrets from the PUB

Manitoba Hydro is waging an under-the-radar power struggle with the Public Utilities Board.

For over a year Hydro has been playing cat-and-mouse with the PUB, promising to deliver information the board wants, then reneging, promising, then reneging again. At issue is the utility's risk analyses for its plans to spend $18 billion over the next 15 years to build new dams in northern Manitoba.

The PUB wants to know how Hydro can justify the huge expense and what alternatives they have if Hydro's profit projections evaporate into thin air. The fear is that the entire cost of the new dams will fall on the shoulders of Manitoba electricity users, not to mention the very real possibility that we will be forced to buy electricity at an unknown price in order to fulfill our obligations to provide it to American customers at a fixed price----in other words, to subsidize the U.S. buyers.

Last September, The Black Rod examined PUB documentation to produce a three-part expose of Manitoba Hydro's dam construction plans.

The bottom line:

"Manitoba Hydro's house of cards is built on the premise that the exchange rate will drop to 86 cents U.S., that a carbon tax in the U.S. prices coal out of the market, and interest rates stay the same for the next decade or so. Not one of these factors --- all of them have to come true for Hydro to make any money."

It's no wonder that the Public Utilities Board is becoming more and more worried, and Manitoba Hydro is doing its best to hide the facts.

It turns out that a month after The Black Rod's series, Hydro responded to the PUB's demand for their risk studies. The PUB amended its order by eliminating deadlines for Hydro to provide the information it wants. The main reason is that Hydro said it has always had the risk analyses, but has been keeping them from the PUB. Here's how the PUB reported that bombshell:

Board Findings
In Order 116/08 the Board indicated that a risk analysis should be undertaken incorporating all of the major risks faced by MH. The Board directed MH to undertake:
"a thorough and quantified Risk Analysis, including probabilities of all identified operational and business risks. This report should consider the implications of planned capital spending taking into account revenue growth, variable interest rates, drought, inflation experience and risk, and potential currency fluctuation" [Directive 12]
MH has indicated that it will be filing its Corporate Risk Management Report on January 15, 2009. That report may address the major risks of the Corporation however, the Corporate Risk Management Report has, in the past, not provided the information sought in Directive 12.
That said, in its October 8, 2008 reply MH candidly acknowledges that its prior filings of the Corporate Risk Management Report excluded the appendices to the Report.
The appendices apparently detail and quantify MH's business and operational risks.
MH now proposes to file the appendices, from the new Report, in confidence with the Board.


To date, the Board has not been provided with specific analyses of the risks related to pending long-term export contracts, pending major capital construction for generation and transmission facilities, and the 'sticker shock' impacts on the longterm profitability of such ventures.
However, MH now asserts, in its October 8, 2008 reply, that its Corporate Risk Management Report will identify and quantify all major operational and business risks and provide an explanation of all risk mitigation measures undertaken or planned by the Corporation. Additionally, the expanded IFFs to be filed will include a projection of MH's capital structure showing the impact of capital expansion now planned or contemplated, with risks quantified.

To allow the Board the opportunity to determine whether MH's new filings by January 15, 2009 address the Board's concerns, the Board will vary this Directive by removing the deadline date. Should the Board require additional information after its review of MH's January 15, 2009 filings, the Board will consider further revisions to this Directive.

Well, guess what? January, 2009, came and went and Manitoba Hydro failed to give the PUB the information it wanted.

A new deadline was set---Sept. 30, 2009. Once again, nada from Hydro.

Hydro CEO Bob Brennan now says they need to provide the proper "context" for their risk studies and they'll provide the information when they feel like it and not before.

By stalling for a year, Hydro has managed to make a start on the money-losing Wuskwatim hydro project, and to ask for a waiver on environmental regulations to build a work camp preparatory to starting on the Keeyask dam. They know the PUB is powerless to stop them from plowing ahead with their plans.

Now you can see why the PUB has seized on a whistleblower's complaint about Hydro mismanagement, even though they technically have no authority to do so.

The hot-potato complaint has been circulating through the bureaucracy for well over 6 months. It landed in the hands of the Auditor General in April, six months ago. Carol Bellringer said she would get around to it sometime. But before she could apply the usual NDP whitewash, the complaint, with accompanying documents, was slipped through the transom at the offices of the Public Utilities Board.

They're examining the figures, and trying to determine how much to make public.

If they have a hard time, The Black Rod won't.

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