You probably won’t be surprised to know it’s not this province. It’s Manitoba.
The decision came after that province asked its PUB to examine Manitoba Hydro’s plans to build expensive hydroelectric generating stations known as Keeyask and Conawapa. Keeyask, at 695 megawatts and $6.5 billion, is going ahead: Conawapa, at 1,485 megawatts and $10.7 billion, has been frozen.
The board found that “Conawapa’s economic benefits have not been demonstrated. Furthermore, Manitoba Hydro has not put forward a business case that supports protecting Conawapa’s 2026 in-service date.”
It was, in fact, even more harsh than that. The board also found that Manitoba Hydro has not been effective at demand-side management — at making efforts to decrease electricity use to forestall the need for new energy sources. (Sound familiar? One of the few independent reviews of Muskrat Falls, the joint federal-provincial environmental impact statement, found the same thing in this province, disputing Nalcor’s contention that “conservation and demand management could achieve a maximum 12 per cent reduction in energy consumption during the period from 2007 to 2027.”)
In Manitoba, meanwhile, Manitoba Hydro was changing gears on demand-side management (DSM) in mid-stream, all of a sudden telling the PUB in that province that its new numbers meant that, with demand side management, it could offset 66 per cent of the expected load growth up to and including the year 2028.
There’s a clear economic benefit to that: here’s a snippet from the Manitoba board explaining how the much-cheaper DSM model throws big hydroelectric construction into the dumpster.
“To place this into perspective, the capacity savings in the supplementary plan amount to more than 80 per of the net system capacity addition from the proposed Conawapa Project. Similarly, the annual dependable energy savings from the Power Smart Plan exceed 85 per cent of the dependable energy output from the proposed Conawapa Project.
“To achieve these electricity savings, Manitoba Hydro budgets
$822 million, which is less than eight per cent of the $10.7-billion cost of building Conawapa.”
Translation? Demand-side management is far, far cheaper.
And as Manitoba Hydro’s preferred plan came under PUB scrutiny, it began to unravel: “Manitoba Hydro substantially and materially revised its assumptions, which caused the economics of the preferred development plan to deteriorate,” the board wrote in its final report.
Building the dams was supposed to be a $1.7-billion saving: that eroded to just $45 million in savings over 78 years. Things got even spookier when the possibilities of dramatic change in the electricity market were thrown in: utilities, the board pointed out, consider the status quo in their electrical projections. They don’t allow for game-changers.
There were, the board decided, clear-cut alternatives: “Manitoba’s energy future no longer lies exclusively with hydroelectricity. In a time of rapid technological innovation in both the demand and supply side, openness to alternative resources and new technologies will be required.
This may involve new methods of saving electricity as well as new methods of generating it, such as wind and solar power.”
The joint federal-provincial review panel made much the same point about Muskrat Falls:
“(T)he panel concluded that Nalcor had not demonstrated the justification of the project as a whole in energy and economic terms, and that there are outstanding questions related to both Muskrat Falls and Gull Island regarding their ability to deliver the projected long-term financial benefits to the province, even if other sanctioning requirements were met.”
It went on: “The panel concluded that if the recommended economic and alternatives studies show that there are alternative ways of meeting the electricity demands of the Island over the medium term in a manner that is economically viable and environmentally and socially responsible, the Muskrat Falls portion of the project should likely not be permitted to proceed for purposes of meeting Island demand.”
The final analysis?
Manitoba’s government involved its independent regulator and listened to the result.
Our government dealt out the PUB, giving it only the option to review the project based on an extremely limited set of options.
We’ll see, perhaps to our dismay, which one winds up working out better.
Russell Wangersky is The Telegram’s editorial page editor. Email: [email protected].
