Among the explosive details in the letter:
* Hydro is using obsolete computers, computers more than 20 years out of date, to make the sensitive and timely decisions necessary to prevent blackouts.
* The source codes for the complex calculations that Hydro depends on to keep the lights burning are known only to one or two programmers, a fact that would horrify our American customers.
* Manitoba Hydro has hidden $7 billion in potential future losses from the Public Utilities Board.
* Bi-Pole III is so crucial to to Hydro's future plans that even a slight delay in getting it built threatens a catastrophic shortage of power. Hydro is hiding information from the PUB that shows rates would skyrocket if we have to build new gas turbines to make up for the power deficit.
* Hydro got the result it wanted from consultants hired to examine the whistleblower's complaint by telling them what NOT to look at.
The Free Press received the letter Nov. 10. A CBC I-Team report referred to the letter, but gave no details. The letter was posted on the CBC's website. This is the letter in full (with minor corrections in spelling, removal of unnecessary commas and clarification of dropped words in the earlier draft.)
There have been some who think that the notion of bankruptcy and blackouts is incredulous for a Utility like Hydro.
In response, I would like to point out some facts. Even though Hydro is a Crown Corporation the word “bailouts” does not interchange with “bankruptcy” unless you are following the US model of companies like AIG.
To be specific, the risk reports that were sent to the CEO looked at the numbing $18BN spend out and proposed new debt as the Utility embarks on an ambitious spending spree, which includes sizable export contracts to the US. The multi-year drought analysis on this “future generation” build, including in-service dates, and contract dates, showed exposure to the Province of $7BN.
Obviously, this is more than the retained earnings, and under any definition, would wipe out the entire “solvency” of the Utility.
This $7BN was great cause for concern, and no responsible risk assessment would conclude that the public health of the company was fine. Subsequent consultants hired
to supposedly “look at the problems” were specifically given a scope that they not look at any of the new generation build out, Conawapa, or bi-pole III!
The risk number of $7BN was also being “withheld” from the PUB. The CFO also agreed and signed off on the number.
It was being replaced with a rubber-stamp consultant's report, whose analysis blatantly omitted any look at the bi-pole III and exposure to the Province of the future generation system. (see Page 21 of the publicly disclosed summary)
It did not include Government “bailouts” as a word to replace “bankruptcy”.
The comments about “blackouts” being impossible are also not based on fact.
To keep the lights on in the Province, Hydro’s computers rely on a complex formulae, which operates not just the reservoirs like Lake Winnipeg and Cedar Lake, but of course looks at the import tie-lines from the US, and Hydro’s ability to the run expensive gas units.
While it may be shocking to learn these problems exist, what was uncovered was there were “systemic and massive” computer system flaws - with obsolete computers
maintaining the calculations. Massive system errors and inadequate mathematics were found in the power calculation of “blackouts” or reliability conditions - which could lead to faulty results in keeping the lights on.
This could be seen as the equivalent of using rotary phones in the age of wifi and Bluetooth technology.
Manitoba Hydro now operates in US deregulation and the Midwest ISO. The rules of the game have changed. If it was learned, that the safety methods for keeping the lights on were programmed only by 1 or 2 persons (with source code and changes known only to them), on an outdated computer which hasn’t been changed since the 80’s, I think you too would be worried.
The ICF consultants were told not to look at the computers.
Don’t be too quick to assume the seriousness of the problem. In California ISO, no-one thought these things were possible - till they happened. (The California Independent System Operator is their non-profit counterpart to Manitoba Hydro....ed.)
Further, the Province, needs new generation like Wuskwatim, as quickly as possible to maintain enough energy to meet domestic demands (in other words to keep the lights on).
Beyond 2018 the shortage of generation in the Province is so extreme, that the new bipole III is in essence a “lifeline” to the Province.
Without it - you can’t stay afloat. That line, is not just a political talking point, it is an absolute necessity to keep the lights on in the Province. So who cares if it’s built west side or east side?
Without it - the lights cannot stay on in a multi-year drought.
You will face blackouts. So build it now, and build it quickly.
The risk analysis, shows catastrophic consequence, even from “slight delays” to bi-pole III going in service. Any setbacks, or any problems, would simply mean there is not enough generation to meet demand.
Just one delay in having that line come into the service is also of catastrophic risk to the Province.
In addition, the shortage of generation is so severe, that if the Export Power Marketing contracts (these US contracts being a huge contributor to Provincial risk and the bankruptcy problem) aren’t signed, the Province will need to go against its carbon friendly mantra and expedite the building of new gas turbines - dirty-old polluting thermal units - just to keep the lights on. These would have to be scheduled for 2019.
(Say bye-bye to low rates!)
These are facts. This information was also not being sent to the Public Utilities Board. The Province will need to build, potentially, new gas turbines to keep the lights on and rates would sky-rocket!
Even in 2011 and 2012 there are resource problems and a multi-year drought would threaten keeping the lights on---the same issue the PUB was raising.
Problems had accumulated in hundreds of pages of well-documented reports over 3-4 years. The CFO even paid me a bonus in Jan 2008 for my hard work and contribution!
During the fall of 2008, when I uncovered the computer-system errors in blackouts, I was so worried, I emailed the CEO directly.
The “Hydraulic Computer Report” which would have itemized line-by-line errors in massive computer system failures, which could cause the lights to go out, was sabotaged 24 hours after the CEO was notified that such problems exist.
The report was midway.
Computer failures of other exorbitant magnitude have also contributed to the billion dollars losses and the misforecasting of blackouts. Financial forecasts being incorrect also impact the Nisichawayasihk Cree Nation and profit sharing. I was told not to put any more in writing.
I realize now that what the Crown Corporation of Manitoba Hydro wants is just a “rubber stamp” consultant who will echo the publicity statements.
And I am proud to have been fired for having the courage to stand up for the truth and not just “yes” management to cover up such serious problems.
Contrary to the comments from the CEO, if I cared about money, I would have just “yessed” management to keep my job - but instead, ethics and integrity was more important. That’s called honesty ... not greed.
And that’s what WhistleBlower Protection laws are for…
A very ethical risk consultant in NY
The next legislative committee hearing on Hydro is this Tuesday.
- Will the somnambulent Opposition demand answers from Hydro CEO Bob Brennan?
- Will the Government members continue to cover for the Auditor General who has kept the whistleblower's complaint under wraps for eight months while claiming she's not in a conflict of interest just because she sat on the Hydro board of directors for two years with her pal Bob Brennan?
- Will the MLA's demand Auditor Carol Bellringer be removed for wasting a month doing absolutely nothing despite being ordered in October to prepare within, 3 or 4 months, a speedy special audit of the whistleblower's complaint?
- Will the Winnipeg Free Press give Brennan yet another free ride in its editorial pages to slander the person who is supposed to be protected under the government's own Whistleblower Act?
- Will the MSM finally start to examine the explosive specifics of the inside information provided to the alleged watchdogs of Hydro? Or is that too much to ask of professional journalists?
More Hydro tomorrow...