Consumer interest groups are crying foul over a bill put forward by Manitoba Premier Brian Pallister’s administration which would limit some oversight over utility rate changes by the Public Utilities Board (PUB).
The PUB is a quasi-judicial organization that operates at arms length from both the government and its Crown corporations and provides oversight into capital expenditures and proposed rate changes, such as MPI or Hydro rates.
Pallister says Bill 35, The Public Utilities Ratepayer Protection and Regulatory Reform Act, will save taxpayers money by limiting how often the PUB meets.
“The Public Utilities Board process has been one of the most expensive in the country, and it’s a really, really onerous process,” Pallister told Global News.
“If you or I were trying to run (Manitoba) Hydro, it’s pretty tough to make long-term decisions with short-term rate applications. So we need our Crown Corporations to run with a long-term view, not just a crisis-to-crisis view.”
If the bill passes, electricity rates would be set by the government until March 31, 2024, after which point the PUB would meet every five years, as opposed to annually, to approve rates based on “anticipated revenue requirements.”
This could then limit the PUB’s ability to factor in socioeconomic factors, since the government would have the ability to establish policies the PUB has to follow when ruling on rate change proposals.
It says a general rate increase shouldn’t be more than four per cent or twice the rate of inflation, whichever is greater.
Gas rates would be calculated based on a ten-year period, also based on anticipated revenues.
It would also mean MPI must apply for insurance rates annually, and the PUB would only be able to conduct more extensive reviews every five years, or more frequently with Cabinet approval.
Byron Williams, with the Public Interest Law Centre, says the PUB provides an important service to Manitobans, and is already quite cost-effective.
“They’re the people that when Manitoba Hydro came in a couple years ago asking for a 7.9 per cent rate increase, they said that was not justified and it was way too much and they reduced it by half,” Williams says.
“It’s not only protecting consumers in an independent evidence-based way, it’s very cost effective. In your Hydro bill over the last three years consumers have been paying about $2.50 a year for PUB costs, but it’s been saving them $50 a year in just the last three years.”
Williams also points out it was a Conservative government under Premier Gary Filmon in 1988 that originally gave the PUB the final say in Hydro and MPI rates, due to concerns with political interference and the public’s loss of trust in the system.
Of primary concern for Gerry Forrest, who was chair of the PUB from 1991 to 2004, is how he says the bill would strip away transparency concerning how rates are calculated, curtail public input, and remove the PUB’s impartiality.
“It’ll probably be significantly cheaper, the question is: does that serve the need of the public? And from my vantage point and experience, I don’t think it will,” says Forrest, who was also a deputy minister of Municipal Affairs and Rural Development.
“As a person who spent most of his life in the democratic arena, it’s important that democracy completely understands and works with you, that you don’t work against democracy. I see this bill as working against democracy.”
In an email, Finance Minister Scott Fielding assured municipalities, stakeholders and Manitobans they would still have a say in the process, and the changes “are squarely about protecting customers and ratepayers by capping future rate increases and ensuring PUB review over the longer term.”
Williams says while that may be intention, the bill would still guide rate changes based on mandated financial targets.
“That’s the thing that will drive Hydro rates for the next 20 years,” Williams says.
“That will be the gift that keeps on giving to Manitoba Hydro far beyond any reasonable needs, and that’s actually going right into the legislation, taking that power away from the Public Utilities Board.”
Gloria Desorcy, executive director of the Manitoba branch of the Consumers’ Association of Canada, says the bill would remove two of the most important aspects of the PUB: oversight and access to information guiding decision-making.
“There’s not going to be as much opportunity for the PUB to access information about financial targets for Hydro, for example. No authority to ask about MPI’s spending and the prudence of that. Those are things that are key to making a rate decision,” Desorcy says.
Alternatively, Desorcy credits the bill for requiring the PUB to review and make recommendations about any proposals to develop any “major new power generating or transmission facility … before it is approved by Cabinet.”
“That’s great, because they did an excellent job when they reviewed the Keeyask and Conawapa projects. They were able to do that excellent job because they have that internal expertise, because they are aware of the operations of Manitoba Hydro on an annual or at least semi-annual basis,” Desorcy says.
“You lose that expertise and then it’s a huge learning curve, it makes hearings longer, and it ends up costing more. I really don’t see how that saves money.”