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The easy-to-understand Risk Analysis that Manitoba Hydro doesn't want you to see---ours.

You don't need an advanced degree in Economics to understand why people are worried about Manitoba Hydro's finances.

All you need is a bank book.

Two years ago the Public Utilities Board looked at Hydro's multi-multi-billion dollar plans for expansion and it made them antsy. From what they could see, Hydro was taking risks worthy of high rollers at Monte Carlo. Maybe there was something they didn't know, so they asked Hydro to produce the risk analyses behind the expansion plans.

"Sure, sucker," replied Hydro.

So far they've managed to keep the PUB in the dark for another 14 months and counting, knowing that the government minister in charge of Hydro (and the current unelected Premier) Greg Selinger wasn't going to support the public watchdog over the NDP's milk cow.

What Hydro CEO Bob Brennan didn't plan on was the news that one of the consultants he hired to look at the risks, and who he thought he had muzzled, would be so concerned about what she discovered that she would become a whistleblower and make Hydro's high-risk expansion a topic of public debate.

Here's where you should get your bank book.

The way Hydro runs its operations is no different that the way you run your household. They just have more money to play with.

You work hard and save your money in the bank. When you have enough, you buy a GIC, a Guaranteed Investment Certificate. Your money is locked in for, say, 5 years and you collect interest that's higher than the bank pays on regular deposits. You use the money to help with the bills, buy stuff, or to build up your savings.

Hydro does the same thing. Thanks to hydro developments completed in the 1970's, we produce more power than we need in the province. We sign contracts with American power companies to sell them our surplus power at top dollar. The money we earn is used to keep our rates down.

See how simple that was.

But there will be a time when we will need that power and we won't have power to sell to the U.S. Hydro, therefore, is planning on playing the futures market.

They want to borrow (billions) to buy more GIC's (build three dams and a power line) to keep that interest (profits) coming in.

They've signed contracts with American customers who want our electricity; but it's the price that's got the PUB worried. Hydro promises the new GIC's will pay terrific rates which will pay off the loans and return big profits at the same time. The PUB is worried Hydro is promising Bernie Madoff rates but will wind up in line at the Steinbach Credit Union.

Then there's that 800 pound gorilla in the corner. For you, it's called Unemployment.

If you lose your job, you can't cash in your GIC's because they're locked in. So you borrow and hope you find a job before you need to go on welfare to cover the bills.

For Hydro, it's called Drought.

An average drought lasting an average 5 years will technically bankrupt the utility---the debt will be more than the utility is worth.

Hydro has been socking away money in a Scrooge McDuck-sized piggy bank to cover the cost of that average drought, but nobody knows how much we'll have to pay the Americans to keep up our end of the contracts we've signed.


If we can't produce the power they've bought, we have either to buy the contract out or buy the power somewhere else at whatever price its selling for and deliver it to the U.S. at the price we accepted.

That's the risk Hydro doesn't want anyone to know.

That's when Hydro goes on their own Welfare, which is another word for Y-O-U.

Now let's look at the specifics.

Hydro is currently building the Wuskwatim dam to provide power to Northern States Power starting in 2015.

Wuskwatim will be at least two years late getting into service, reducing the years of profit from 5 to 3. The PUB, in its 2008 report, said even then the dam was barely at a break even point. Two years of growing costs later, and with the Canadian dollar nowhere near the mid-80's U.S. that Hydro banked on, it's looking more and more that we're building a dam to provide subsidized power to the U.S.

The Wuskwatim dam is the last one we can build with the existing infrastructure. To build the other two dams on the books, we need a new power line---Bipole III.

The line has to be up and working in 2017 because we're committed to supplying power to Wisconsin Public Service in 2018. Hydro still has to hold two rounds of public consultations, then launch a 3 l/2 year crash construction schedule.

Only it gets worse.

* We also have to complete the Keeyask dam in 2017 as well to provide the power for Wisconsin. So we'll be building the pipeline and the dam at the same time on an extremely short margin of error.

* In 2020, only two years after Keeyask dam comes into service, our 15-year contract with Minnesota Power goes into effect.


* And Hydro has pencilled in 2022 as the in-service date for the Mother of All Manitoba Dams, the $5 billion Conawapa project to pick up the slack as the previous dams reduce the power they have for export because of the growing local demand for electricity.

Oh, and Bipole III will only carry Manitoba power to the U.S. border.

The Americans have to build their own power line to link up with it and distribute the electricity to their customers. Their line will cost at least $1 billion. And you can bet that if they are investing $1 billion, they are going to insist they get power into that line, Manitoba drought or no drought. They are in the business of business, not charity.

If there's a drought sometime during this tight construction period---all bets are off.

Now you see why Hydro is hiding its risk analyses.

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