Manitoba fires Manitoba Hydro CEO, looks to public power to meet looming shortfall

Jay Grewal had previously said Manitoba Hydro was looking to independent producers to avoid the time and cost of building another big generating station, according to the CBC.

Former Manitoba Hydro CEO Jay Grewal recently said that Manitoba Hydro would obtain the new power via purchase agreements with independent producers. The NDP government wants Manitoba Hydro to be owned by the public utility. Winnipeg Free Press photo.

This article was published by The Energy Mix on Feb. 15, 2024.

By Mitchell Beer

The Manitoba government has dismissed the CEO of provincial utility Manitoba Hydro, Jay Grewal, two weeks after she warned the province could need new sources of electricity by 2029 or 2030 and indicated she planned to obtain the capacity from private wind developers.

The parting of the ways, as board chair Ben Graham described it, would appear to be about how the new capacity will be built, not the electricity sources the province will rely on.

Grewal flagged the need for new generation capacity two weeks ago, in a breakfast talk to the Manitoba Chamber of Commerce. “There was a perception that we have lots and lots and lots of surplus electricity. I hate to have to say that that is not the case,” the former mining, utility, and financial sector executive said. “We may need new electricity by 2029, 2030—new sources of generation,” unless electricity conservation measures are successful.Once that new capacity is in place, “you also need the wires to move those electrons to where they need to be,” she added. “That is the impact of policy. That is the impact of decarbonization, and every utility is facing this.”

At the time, Grewal signalled that Manitoba Hydro would obtain the new power via purchase agreements with independent producers. “When we go to the market, we will be going for wind,” she said. “Why? Because it is the lowest possible cost and we can optimize the wind with our system.”

She later told media it would take two years to get those deals in place, CBC reports. “The reason why we aren’t making decisions yet is because there’s so many levers that can be pulled to shape this energy landscape,” she explained. “To what degree will there be support from policy-makers to pull those levers?”

Finance Minister Adrien Sala answered that question a day later, telling the Winnipeg Free Press the province’s new NDP government would ensure the new capacity would be owned by the public utility. The local paper described that as a role reversal for a utility that “previously touted hydroelectricity as the gold standard of energy production in the province,” and a former Conservative government that favoured private producers.

“As it relates to the development of new energy resources, we want those to be publicly generated,” Sala, who’s also the minister responsible for Manitoba Hydro, told The Canadian Press at the time. He added that the government would not be considering “surge pricing or demand response options.”

At the time, Conservative Hydro critic Grant Jackson praised Grewal for laying out a clear energy supply path despite the utility’s large debt, CP reported. “She knew her job, ultimately, could be on the line here,” he said. “But she chose to make those comments publicly anyway because, regardless of political party or ideology, she believes that that’s the right path to bring this Crown corporation into the future.”

This week, CBC writes, Sala and Graham both said there was no connection between Grewal’s public positioning on private procurements and her dismissal two weeks later. “It was an assessment that took over 3½ months and that was the result of the analysis,” Graham said.

The Free Press cast the decision as part of a wider shift in philosophy. “While Hydro’s aversion to private wind power development seems to have softened under Grewal’s leadership, the current government’s appetite for independent energy production has waned when compared to its predecessor,” the paper editorialized. “It’s imperative that both parties find common ground—the future of our energy supply and ability to meet federal net zero emission targets depend on it.”

The Assembly of Manitoba Chiefs praised the decision to dismiss Grewal, CBC says, stating it had “no meaningful engagements or discussions” with the utility during her five years at the helm.

Carbon-Free Mandates

After the new provincial government took office last October, Premier Wab Kinew mandated Sala to make Manitoba Hydro carbon-free by 2035. The Crown utility, which generates the lion’s share of its electricity from hydropower, previously announced plans to use some natural gas until it could find carbon-free sources to replace it.

In December, Sala’s mandate letter to Graham described [pdf] the power company as “our province’s crown jewel” and called on the board chair to “harness the untapped potential of Manitoba Hydro so we can keep rates low for families, support our province’s economic development potential, advance Indigenous reconciliation, and move Manitoba into a clean energy future.” It emphasized affordability, including a one-year rate freeze, the 2035 net-zero target, increased use of wind, solar, and energy storage, heat pumps, energy efficiency, electric vehicle charging networks, and formation of an Indigenous Advisory Circle to advance reconciliation.

But as Globe and Mail columnist Konrad Yakabuski wrote in December, the letter did not include the word “debt”, even though the utility “has gone from cash cow to financial basket case after experiencing huge cost overruns on its 695-megawatt Keeyask dam and Bipole III transmission line,” projects that date back to 2012 when a previous NDP government led by Premier Greg Selinger was in office. The two projects combined ran C$3.7 billion over budget, CBC says.

The result is a Manitoba Hydro debt that now stands at C$24.6 billion, the Free Press writes, accounting for 40 per cent of the provincial total and undercutting the utility’s capacity “to meet growing demand in an increasingly electrified world,” the columnist opined. Grewal had previously said Hydro was looking to independent producers to avoid the time and cost of building another big generating station, CBC reports.

Yakabuski also cited the climate emergency as a reason for the government to treat the utility’s “debt overhang” as a priority. “Fluctuations in water levels are nothing new for hydro operators,” he wrote. “But Manitoba Hydro is likely to experience dry conditions more frequently in coming decades because of climate change.”

Hydropower Too Costly

Last July, CBC said the utility would rely on wind and “other forms of green power” to increase its generating capacity from 6,600 to between 10,000 and 16,000 megawatts by the 2040s. At that point, the province had determined that new hydropower was too expensive an option to meet growing power demand.

“Generating stations, unless power costs go to some stratospheric number, are likely not the medium-term, next 15- to 20-year solution, at all,” then-Hydro board chair Edward Kennedy told media last July, on the release of the province’s new energy strategy. “It’s going to be renewables, likely wind, with [long-]duration storage.”

With the province considering 18 new industrial projects that would require a combined 4,400 MW of new generation, and hearing that it was already running out of power to supply them, Kennedy said it would “require a lot of nimble, careful selection of technology and investment” to bring in the projects that brought the greatest economic impact with the lowest environmental impact. One of those options, CBC reported, was a $3-billion solar panel manufacturing campus near Winnipeg proposed by Germany’s RCT Solutions.

At the time, Hydro was working to control new demand by imposing an 18-month moratorium on connecting new cryptocurrency operations to the grid, and was looking to smart meters to support time-of-day pricing. But the then NDP opposition “said the idea, which they call surge pricing, is wrong,” CP reported.

“That means forcing you to pay more money for Hydro at the times when you need it most,” Kinew said.

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