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 adopted the symbol to knock some sense and the right questions into the heads of Legislators, pundits, and other opinion makers.

Name:
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: black_rod_usher@yahoo.com

Tuesday, October 27, 2009

Bellringer, O'Learygate and Crocus: The NDP's Hallowe'en House of Horrors

Transcripts of meetings of Legislature committees are generally pretty dull reading. So why, we asked ourselves, were we getting a chill up our collective spines.

Suddenly, it was clear. Without knowing it, we had entered----

the NDP's Hallowe'en House of Horrors.

Page after page of last week's regularly scheduled Public Affairs Committee meeting were filled with demonic scenarios, ghosts of scandals past, and disgraces risen from the dead to scare us once again.

Continue reading at your own risk. There are no treats here.

Audits that go bump in the night or, Don't Call Me Quasimodo

Carol Bellringer knows how fishy it looks for her to be auditing her friends and colleagues at Manitoba Hydro.

But she's determined to plow ahead, the public's concern for ethics be damned.

"I don't actually believe that I do have a conflict, but we do acknowledge and accept the fact that there could be that perception with the public," Bellringer, Manitoba's Auditor General, told the Public Affairs Committee.

The committee got an in-camera briefing from Bellringer on plans for a speeded up special audit ordered by new Finance Minister Rosann Wowchuk to address a whistleblower complaint into mismanagement at Manitoba Hydro. Afterward, Bellringer made a brief statement in the public session.

"I was indeed a member of the board of directors of Manitoba Hydro prior to my appointment as Auditor General. I was on the board from September 15th, 2004, until my appointment in July of 2006. I was chairing the audit committee, and I was on the board. I therefore signed off on the financial statements for the '05 and '06 fiscal years. There has been a reference to my signing off on the '03-04 drought year, which was not the case."

So there, you haters. Just because she was a trusted member of the same management team that's currently under scrutiny, doesn't mean she can't (ha ha ha) be scrupulously fair in judging their work, and, if need be, her own audits and knowledge of Hydro affairs.

Isn't that obvious?

And if it isn't, she told the committee, "the office has implemented a number of safeguards that we believe will--certainly we're hoping that-- they will alleviate any concerns."

Bellringer then proceeded to bamboozle the MLA's with ways she's devised to keep control of the investigation in her own hands while making it appear the opposite.

She's "had discussions" with the Institute of Chartered Accountants of Manitoba.


Translation: I'm looking for loopholes to get around rules against conflict of interest. If I can convince the Institute of CA's to give me the okay, I'll be invincible against allegations that I'm breaching ethics, or ... whatever. Bite me.

And, she added, she's looking for a former auditor general from out-of-province to "oversee the entire process."


Translation: Bellringer's hand-picked consultants will conduct the audit, the hired auditor will "oversee" their work, and Bellringer will "oversee" him, writing the final report and submitting it to the Legislature.

The real issue is control, and Bellringer isn't giving it up to anyone else.

The government is counting on her.

* She sat on the whistleblower complaint for four months and did nothing with it.

* Then, once it became known in August that the Public Utilities Board had a copy of the complaint and was examining it, she tried to snatch control of the issue away from them.

* She announced with great fanfare that she intended all along to do a major study of Hydro's risk assessment practices and policies, which would incorporate the whistleblower's complaints, and which would take at least another year and a half.

Then, last week, as the various news media began running stories about the whistleblower complaint, the NDP moved to get ahead of the storm by ordering a special emergency audit from Bellringer, with results expected in about three months.

Bellringer, who has now had the file on her desk for nine months during which she's done nothing, says she can complete the job in the required time -- provided you overlook her cozy personal and professional relationships with Hydro board and staff.

Hey, Bob, call me.

Oh, and she's signalled to Hydro and the government that if she, and she alone, decides there's nothing to the whistleblower's complaint, she's going to deep-six the risk assessment study.

Starting an 18-month audit in the spring of 2010 would mean you finish it just about the time of the 2011 provincial election.

And who wants that, right Greg Selinger?

Do you want to know how frightening the idea is of this Auditor General throwing ethics to the curb so she can control the investigation of her boardroom pals?

The next chapter of the Public Affairs committee has the gory details. Read it and you'll know why Carol Bellringer must have no role in auditing Manitoba Hydro.

The Ghost of O'Learygate Walks Again or Tories: Dumber Than Carved Pumpkins

The second item on the agenda of the Public Affairs Committee was the special audit Carol Bellringer conducted in 2007 into "Property Transactions in the Seven Oaks School Division."

Do these elements sound familiar?
- Financial mismanagement by a board of directors connected closely to the NDP,
- huge losses,
- a whistleblower,
- a hasty coverup,
- a bogus audit, and
- two layers of whitewash from Carol Bellringer.

The Black Rod exposed this scandal, named O'Learygate after the man at the centre, Brian O'Leary, the NDP's former campaign manager. He most recently made the rogue's gallery again with the revelation of the NDP's 1999 election fraud on his watch, another horror Premier Selinger wants to forget.

Longtime readers of The Black Rod know the details of O'Learygate, so we won't belabor the point. New readers can catch up at

http://blackrod.blogspot.com/2005/05/olearygate-land-development-ndp-style.html

http://blackrod.blogspot.com/2005/06/black-rod-exclusive-seven-oaks-land.html

http://blackrod.blogspot.com/2005/06/flagging-olearygate-3-stages-of-cover.html

http://blackrod.blogspot.com/2005/09/education-minister-glued-to-olearygate.html

http://blackrod.blogspot.com/2007/08/auditor-gives-olearygate-makeover.html

http://blackrod.blogspot.com/2007/08/olearygate-follow-money.html

http://blackrod.blogspot.com/2007/09/auditor-approves-enron-math-to-mask.html

http://blackrod.blogspot.com/2007/09/olearygate-provincial-auditors.html

In a nutshell, the Seven Oaks School Board secretly used taxpayers' money to buy land, develop it and sell it off as residential lots. The board had been denied permission to build a new school, so they planned to create the demand for the school through the new subdivision they would create, plus the profits would pay for the land needed for the school.

They ran into two problems. They lost their shirts on the land development. And they got caught by a whistleblower.

When the whistleblower started asking questions, Education Minister Peter Bjornson lied to him and said everything had been done properly.

Tipped off that the jig was up, the Seven Oaks board worked frantically to get their land development approved retroactively, breaking every rule set up to catch and prevent such mismanagement.

The Doer government was eventually shamed into ordering a special audit which Bellringer conducted, shamefully. The Seven Oaks School Division produced two sets of accounts.

One showed that they lost more than $300,000 on the land deal, but the other miraculously turned the loss into a profit. How? By declaring that they valued the land they didn't sell at $819,000 if they sold it to themselves for a new school. Therefore, if they eventually wrote themselves an imaginary cheque for $819,000, they would erase the actual loss they paid to others, and "make" an imaginary profit of $500,000.

Makes sense to me, said Bellringer, without breathing a word about
- the lies told to the whistleblower,
- the lies told to the Public Schools Finance Board which was never notified about the land development,
- the outbreak of amnesia by the people who made the deals, or
- the panicky meeting where the paperwork was retroactively approved despite the rules that should have prevented it.

At the Public Affairs committee, Gerald Farthing, Deputy Minister of Education, was asked if his department ever independently verified the value of the land that Seven Oaks claimed was worth $819,000. Nope, he said.

Bellringer admitted she took the school division's word for it. In other words, Seven Oaks was allowed to audit themselves and the Auditor General rubber stamped it.

Is it any wonder that Bob Brennan, Hydro's CEO, welcome the special audit with a great big smile?

Hey, Carol. Call me.

Oh, and don't forget about the pumpkins. The Conservative members on the Public Affairs Committee, particularly Rick Borotsik and Heather Stefanson, were so totally unprepared they didn't know or understand a single thing about the very issue they were supposed to be examining. They hadn't spend even a minute researching O'Learygate as demonstrated by the appalling ignorance of their questions.

Bellringer showed her contempt for them by failing to bring, or professing she hadn't at hand, information the Tories wondered about but hadn't taken the time to learn themselves.

It was a scary performance by a bunch who claim they're ready to be a government. Now there's a nightmare.

Crocus The Undead Rises From the Grave

You can't kill it. No matter how many times the Crocus Scandal has been proclaimed dead, it rises to walk the land to scare investors (and Greg Selinger) all over again.

The Public Affairs Committee of October 2009 was examining the "Auditor General's Report - Examination of the Crocus Investment Fund, May 2005". Yep, it's taken four years for the legislators to get around to the Crocus audit. If that doesn't scare you, what will?

The MLA's by this time were acting like the undead themselves, showing little interest in the topic, when unexpectedly Larry Maguire (PC-Arthur-Virden) began asking pointed questions.

"He's alive. He's alive," we shouted.

Well, almost.

Maguire was questioning Hugh Eliasson, Deputy Minister of Competitiveness, Training and Trade, and a former member of the Crocus board. He asked in the most convoluted, mind-numbing way about what Greg Selinger knew as Finance minister at the time the Crocus Fund had turned into a de facto Ponzi scheme.

"Also, at times, I think he's even indicated that they knew about the fact that people were still investing, being encouraged to invest in Crocus at that time, when, in fact, the funds that were coming in were hardly offsetting the amount that some of the previous shareholders, earlier, were taking out."

I wonder if you can just elaborate on any of those occurrences, in fact, confirm that, in fact, sometimes the funds coming in and being collected and still encouraged to be collected in that '04 period, some of the latter parts of it were, in fact, hardly covering what was going out."

Eliasson ducked the question.

But despite the deputy minister's zombie-like mindless adherence to regurgitating the party line, he did reveal two new pieces of information regarding the Crocus debacle.

Eliasson sat on the board as a government representative from April 2000 to April 2001. He said he eventually resigned when he couldn't reconcile "the conflicting duties that a director had and a deputy minister had."

"…I began to seek legal advice as to what remedies could be taken, and there are several remedies that members of a board can take when they're presented with a conflict, but none of them seemed sufficient to me to give me sufficient comfort to carry out both those duties simultaneously, which is why I resigned from the board in April of 2001."

Mr. Maguire: And so you pulled yourself out because of the conflict of interest you felt because you were directly involved in the department in policy making? Am I correct there?
Mr. Eliasson: I wouldn't characterize it as a conflict of interest. I would characterize it as two duties that were in conflict or potentially in conflict.


And Eliasson finally answered the question everyone has been asking since the day the investment fund imploded five years ago. The government appointed a director to the Crocus Board to look after the interests of the public taxpayer. What was that representative telling the Finance Minister as the fund crashed and burned?

Eliasson took 102 words to answer the question. We can summarize his answer in one: nothing.

How can that be? Liberal MLA Kevin Lamoureux asked.

Mr. Lamoureux: You indicated the Province's appointment to the board was more for the shareholders' interests as opposed to the Province's interests. Was there any obligation at all in terms of that representative reporting to the Minister of Finance?

Mr. Eliasson: The director did not have an obligation to report to the Minister of Finance. The director owed his duty-his or her duty-to the shareholders of the corporation, and the actions of the director should have been in the best interests of the shareholders.


In other words, according to the NDP, they appointed a director to the Crocus board of directors to represent the taxpayer, but once appointed, he couldn't tell the government anything.

If that reasoning doesn't send shivers up your spine, you're dead.

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Wednesday, October 21, 2009

EXCLUSIVE: HYDRO WHISTLEBLOWER SAYS BRENNAN LIED TO FREE PRESS

"It was Brennan who specifically asked me not to substantiate the findings."

With those 12 words, the woman who has become known as the Manitoba Hydro whistleblower has assured the need for a full-blown investigation of Hydro---and specifically its President and CEO, Bob Brennan.

"Brennan's comments need to be refuted as completely false and incorrect," she told The Black Rod in an exclusive correct-the-record expose on Monday.

Miss Whistle, as we'll call her, has gone to war over Brennan's sly campaign of attacking her credibility in light of the decision by the Public Utilities Board to look into her whistleblower complaint of gross mismanagement at Hydro. She had been a risk consultant for Hydro up to the day she gave Brennan an advance copy of a report she had prepared warning of huge and avoidable financial losses and the possibility of power blackouts.

His latest salvo against her came in the Winnipeg Free Press http://www.winnipegfreepress.com/local/hydro-warned-of-bankruptcy-64901057.html


Brennan insisted he had been unable to substantiate the allegations in Miss Whistle's report; he blamed her for refusing to waive the confidentiality clause in her contract so that Hydro could have another consultant examine her findings; and he sniffed that she was paid $500,000 ("a fortune") for next to nothing in results.

She wasn't about to let those attacks go unchallenged. She told us:

"There is no request of any information from the CEO to ask for any substantiation (which was very surprising to me) and in fact the opposite occurred, he deliberately asked me to put nothing more in evidence that could prove the serious and alarming facts that were brought to his attention."

" (I) was never asked to send information to another consultant until media reports started running, and over one year later, after the fact."

" Brennan's claim that none of the findings were substantiated are factually dishonest. Multiple explanations were provided to the CFO (Chief Financial Officer...ed) over numerous lengthy phone calls and hundreds of pages of reports and the CFO agreed with me. Any facts that were asked of me, by any executive were provided promptly."

"Therefore Brennan's statements are not true. It was, in fact, me, that pleaded with Brennan (as can be proven in emails) to substantiate the facts, and it was the CEO himself, who wanted no explanations documented in writing, leaving the "advance copy" of the report incomplete."

She even addressed Brennan directly.

"Your comment that work of no value was provided is incorrect. My reporting line was directly to the CFO, and emails show both the CEO and CFO, saying that I was adding immense value to the company even up until August."

To back up her point, she provided us with emails sent by, guess who--- Bob Brennan, himself---commending her for the work she had done for Hydro.

August 2008
" I appreciate the considerable time and effort you put into completing this report by the deadline date of July 31. Thank you again for the assistance you have provided to Manitoba Hydro."

July 2008 from the CEO
"I certainly appreciate your efforts in assisting Manitoba Hydro with identifying risks and opportunities in this important area of our business.
Thank you again for your consulting assistance and advice provided to Manitoba Hydro."


She notes that nowhere does Brennan ask for any further information to substantiate the elements of her report.

"He asked me for not one question!"

Miss Whistle also wanted to correct errors in the latest Winnipeg Free Press story.

The $500,000 paid to her firm was for 4-5 years of work (!). By contrast, she said, another consultant was paid $400,000 by Hydro for 3 months work.

Furthermore,

"I never said that about the Drought in FY0304. (That's insider-speak for Fiscal Year 2003-2004...ed.) What CBC said was correct and should be taken from their website."

Winnipeg Free Press error
"Mismanagement may also have cost Hydro more than $1-billion in the last several years, including the $436-million lost in 2003-2004 during a drought, the reports claimed."

CBC Winnipeg
"Bellringer was on Hydro's board of directors and chaired its audit committee in 2004 and 2005, examining data immediately after the period when the whistleblower report alleges that mismanagement, combined with a drought, led to the loss of more than $400 million."


*************

The battle lines have been drawn. If Bob Brennan thought he could intimidate Hydro's whistleblower it's obvious he's sorely mistaken.

It's also obvious that a full and immediate investigation of her complaint is necessary, both to address the concerns in her reporting to Hydro and to serve as an example to Hydro and to every other public utility and government service that whistleblowers will be taken seriously and no intimidation will be tolerated -- no matter how disingenuously its couched.

Do you hear that, Bob Brennan?

It's additionally obvious that the NDP government and their lap dog Auditor General must have nothing to do with any investigation of Hydro or the whistleblower's complaint.

Newly imposed Premier Greg Selinger used to be the Minister in charge of Hydro. Auditor Carol Bellringer sat on the board of Manitoba Hydro at the very time of the alleged mismanagement, yet claims to be blind to any perception of a conflict of interest.

It's no wonder that Bob Brennan, upon learning the complaint had wound up in Bellringer's lap, said he welcomed her investigation.

By contrast, he's dead set against having the Public Utilities Board look at the whistleblower's evidence.

He's managed to deflect for more than a year demands from the PUB for Hydro's risk assessments on its grandiose plan for $18 billion in new dam construction over the next 15 years. The government has supported his stall, proceeding with construction of the dams and refusing to order Hydro to turn over the information demanded by the alleged watchdog of the public interest.

*****
Miss Whistle cannot discuss the details of her whistleblower complaint without breaching a confidentiality agreement she signed as a consultant. The best summary of her concerns that we could find was in Saturday's Globe and Mail.

http://www.theglobeandmail.com/news/national/secret-complaint-could-bankrupt-manitoba-hydro/article1327802/


Secret complaint could bankrupt Manitoba Hydro
Whistleblower's report subject of intense speculation

Patrick White
Winnipeg - From Saturday's Globe and Mail Published on Saturday, Oct. 17, 2009

"Feeling that Hydro had given the consultant's report short shrift, the whistleblower filed a 70-page complaint with the Manitoba Ombudsman last December outlining the consultant's concerns:

* The company's $436-million loss in 2004 due to drought was largely avoidable.

* Manitoba Hydro had so badly miscalculated its energy supply that the province's lights could go off.

* Annual report filings regarding drought were incorrect.

* Power export forecasts were overly optimistic.

* The utility had lost more than a billion dollars because of mismanagement."

Editors note: Since many of the issues we raised over a year ago in the Black Rod overlap with the concerns of Miss Whistle, here are links to our previous research and commentaries.

http://blackrod.blogspot.com/2008/09/who-will-go-broke-first-manitoba-hydro_08.html

http://blackrod.blogspot.com/2008/09/manitoba-hydro-series-part-two.html

http://blackrod.blogspot.com/2008/09/manitoba-hydro-series-part-3.html

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Wednesday, October 14, 2009

Winnipeg's First Family of millionaire moochers have outdone themselves

Last week it was announced that "Penny" Lenny, "Brother Can You Spare A Dime" David, and Gigglin' Gail Asper had managed to ride their daddy's Canwest Global empire into the toilet.

It's been an open secret for more than a year that these business sharpies were headed for bankruptcy court. It was last October that Canwest shares officially became a penny stock. In 2000 the stock traded at $18.55 a share; it had collapsed to 93 cents in the fall (pun intended) of 2008. It hit bottom at 12 1/2 cents before bouncing up to a whopping 20 cents a share in September.

And now we learn that the Aspers' plan for restructuring includes stiffing their employees for their vacation pay.

When it comes to their own pet projects, they've got their hands out; when it comes to their employees, it's "talk to the hand."

Among their victims are local favourites Meera Bahadoosingh and Andrea Slobodian who left Global TV Winnipeg last month for new jobs with Shaw TV (Andrea in Calgary, Meera in Murda City).

It turns out the former Global employees had been working to subsidize the millionaire owners of the TV station. They've been cheated out of thousands of dollars as the Aspers play Big Shot for their Winnipeg sycophants.

With more than a year to prepare, you would think that Penny Lenny Asper, Canwest Global president and CEO, would have set aside the cash to pay the money owed to employees leaving the company.

He prepared alright.

When filing for bankruptcy protection last week, Canwest requested the court to set aside $9.8 million in bonus payments for "key employees" to keep them on the job during the restructuring instead of bolting for the exit doors to find new jobs.

And just in case...the executives have strapped on their golden parachutes.

As of last September, Canwest Mediaworks president and CEO Dennis Skulsky was being paid $750,000 a year in base salary and bonuses. If he loses his job, he's guaranteed two years base salary and the average annual bonus collected over the previous three-year period

In an email to staff last week, Canwest chief executive Leonard Asper, who last year collected a $900,000 salary and a bonus of $153,780, cried crocodile tears over the 60 or so employees he's cheating out of the money they earned. "We sincerely regret the impact to them," he sniffed.

Meanwhile, Canwest spokesman John Douglas said that any ex-employee screwed out of money can take a number and line up with the other creditors. They could, he said pompously, " be part of the claims process."

Such callous treatment of the "little people" should be a huge red flag to the local governments who have been treating the Aspers like royalty instead of the panhandlers they've become.

...because stiffing the help is a pattern with the Aspers, not the rich man's burden they pretend.

In 2008, back when David Asper was still considered a "playa", he spent like a drunken sailor to win CRTC approval for his planned takeover of the license granted to radio station 107.9 FM. The license was for a campus radio station, but the owners had done an end-around the CRTC, dispensing with actually enrolling students, and running it as a commercial hip-hop station under the name 'Flava'.

Phat David bought up the private owner of 'Flava' and set up a company called YO Management to run the station. He promised the CRTC everything under the sun to let him keep the license, including taking over all the debts to former staff owed by 'Flava'.

Enter Duvol Dryden, a DJ and Flava radio host who was owed $10,000.

Dryden, taking Asper at his word, tried to collect his money after winning a federal Labour Board order, only to get the royal Asper runaround at every turn. He finally wrote to the CRTC during the hearing process to plead his case.

Frank Magazine found Dryden's letter in the CRTC files, from which we quote:

"I was supposedly a student representative on the board. For the record, I was never a student in any affiliated school course," he wrote in his intervention. "I was never invited to a board meeting, I never saw or approved minutes of a board meeting, and I was never invited to an Annual General Meeting."

"I see that the new supposed management of Harmony Broadcasting includes David Asper. Mr. Asper is behind a museum of human rights that going to cost a few million dollars. Human Rights? Here I am being treated like a black slave, being cheated out of my wages by someone Mr. Asper wants to reward with a high-paying guaranteed job, and he's sitting there saying 'Nothing personal, boy. Just business.'"

Nothing personal. Sound familiar?

Local governments fawned over the Aspers when they were known as the billionaire family owners of a media empire, promising them tens of millions of dollars for their pet projects. In return, the Aspers played their roles as rich benefactors, although the recipients of their largesse were usually themselves (the Canadian Museum for Human Rights) or their millionaire friends (The Friends of Upper Fort Garry).

Now that they've been exposed as the better-off brethren of the begging bums on Portage Avenue, it's time governments got off their knees and sounded the forbidden words: NOT ANOTHER PENNY.

C'mon. Does anybody believe David Asper can pull $100 million out of his hindquarters and buy the Blue Bombers, build a new stadium and finance a high-end mall for the luxury set? This year? Next year? The year after? The year after the year after?

Haven't we heard that chorus before? Little sister Gail has been singing it for years with her pet project, the Canadian Museum of Human Rights. You know, the one she's never been able to raise the money for despite years of begging.

Her last publicity stunt fundraiser was a grape-stomping event a local restaurant where she raised $25,000, which barely covers six months of globetrotting by the museum's Chief Operating Officer Patrick O'Reilly.

The museum hasn't been built yet and it's already on the verge of going belly up. $45 to $50 million in the hole. Not a hope of ever seeing that money without digging into the taxpayers' pockets.

The tradesmen better start asking for certified cheques in advance.

Just ask Andrea Slobodian and Meera Bahadoosingh what the Aspers' word is worth.

* H/t to The Great Canadian Talk Show

********
Professional Reporters at Work

Mary Agnes Welch, Winnipeg Free Press, Oct. 10, 2009, "Museum globetrotters"

"The museum is asking Ottawa to cover a $5.2-million budget shortfall this year by advancing money ear-marked for the 2010-2011 fiscal year. Museum communications director Angela Cassie says the original star-tup estimates first submitted to Ot-tawa have since been revised to allow more of the work to be done this year.
The museum will still be at least $5 million short of annual operating funds when it opens, thanks to main-tenance costs and property taxes not originally factored into the price of running the facility. The museum plans to fundraise to cover some of those costs, but warned in its annual report released Friday that future operating budgets presented to government could include requests for more money."

James Adams, Globe and Mail, Oct. 14, 2009, "Human-rights museum dodges financial crisis"

"The Canadian Museum for Human Rights, still an estimated three years from opening its doors in Winnipeg, has dodged a financial crisis, thanks to an accounting sleight of hand.

In its 2008-09 annual report tabled late last week in the House of Commons, the museum announced that the government has approved a request for an advance of $5.2-million to meet its operating budget for the current fiscal year. The money is being "reprofiled" from the $21.7-million the Conservative government previously had benchmarked for the Crown corporation's operations in 2011-12.


Previously, the CMHR, the construction of which began this year, had been budgeted to receive $3.4-million to operate during the 2009-2010 fiscal year ending March 31. The $3.4-million was part of a $6.1-million operating package Ottawa provided for 2008-09 and 2009-2010."

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.

http://blackrod.blogspot.com/2008/09/who-will-go-broke-first-manitoba-hydro_08.html


http://blackrod.blogspot.com/2008/09/manitoba-hydro-series-part-two.html


http://blackrod.blogspot.com/2008/09/manitoba-hydro-series-part-3.html

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.


-snip-

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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