An op-ed analysis by Peter Miller (recent board member and policy committee chair for Green Action Centre) published June 25, 2014, in the Winnipeg Free Press comments on Manitoba Hydro’s development plans. Links to our earlier evidence and commentary can be found here.

Winnipeg Free Press – Print Edition

Seize chance for U.S. link

By: Peter Miller

Manitobans’ demand for electricity has risen by about 1.5 per cent a year for decades. At that rate, Manitoba Hydro would run out of capacity to supply dependable energy shortly after 2020. Yet Hydro is mandated to meet Manitobans’ need for power while also pursuing export benefits. Doing nothing is not an option.

So of any critic of Hydro’s preferred development plan, it is fair to ask — what is your preferred alternative, and how does it stand up in comparison with other alternatives? Green Action Centre, an intervener before the Public Utilities Board (PUB), considered that question and concluded the two most robust green power solutions were an aggressive conservation, efficiency and fuel-switching program and proposed new transmission to the Duluth area.

The most cost-effective, low-risk strategy to ensure supply meets demand is to flatten demand. Conservation, efficiency and customer-sited solar, geothermal or biomass alternatives (and natural gas, where available, for heat and hot water) can achieve this result. Hydro should aggressively support these measures, including reintroducing higher rates for higher power users.

There is no need to swallow the elephant whole and adopt Manitoba Hydro’s complete preferred plan. Indeed, all interveners — and Manitoba Hydro itself — agreed conditions are not right for Conawapa. The immediate decision is whether or not to seize a limited window of opportunity to build a new transmission link to the U.S. along with its preconditions — the Keeyask dam and contracts with Minneapolis Power (MP).

Green Action Centre concludes we should not let this opportunity pass. The transmission component in particular (in combination with Lake Winnipeg storage) is a robust asset that would greatly enhance Manitoba Hydro’s system in a number of ways.

It adds reliability in case of a failure of northern transmission or a converter station by enabling the emergency import of U.S. power.

It allows increased diversity exchanges with U.S. utilities, whereby we export to them in summer when their air conditioning is cranked up and they export to us in winter to help meet our peak heating load.

It enables better pricing of our export power by selling more in profitable on-peak hours and opening new markets. This adds value to existing generation, new generation (whether hydroelectric, wind or another source), and Power Smart savings.

It enlarges a profitable opportunity to supply hydro when wind and solar power is not available in the U.S. Indeed, that is how MP is persuading U.S. regulators to permit the new transmission.

It increases opportunities to buy low-cost U.S. power off-peak and resell it for higher prices during the day. Sometimes off-peak power is negatively priced — they pay us to take it if wind turbines or nuclear plants are producing more power than needed.

The risks of Keeyask can be managed. We’ll likely never face more favourable interest rates than today, and all of Keeyask’s dependable power is tied up in profitable export contracts that provide protection in the early years.

There is a strong case against new natural gas generation, especially for baseload, as former PUB chairman Graham Lane and others have advocated. Not only does gas generation risk higher future fuel prices, our prime export market, Minnesota, has legislated against new base power supply from fossil-fueled generation. Manitoba may lose export customers (or pricing advantages) if it surrenders its clean energy brand and adopts gas generation for new supply. These economic considerations only strengthen Manitoba’s commitments to clean energy.

Finally, because rates will rise faster than inflation under all generation plans, vulnerable persons with a high-energy burden require bill mitigation through targeted retrofit and efficiency programs, special rate design and, in some cases, bill relief. Much more than gas generation, new hydroelectric power adds to the provincial government’s revenue stream from water rentals, capital tax and the debt-guarantee fee to provide additional resources for addressing energy poverty or other social needs.

Peter Miller is a retired University of Winnipeg philosophy professor and member of the Green Action Centre policy committee.

Republished from the Winnipeg Free Press print edition June 25, 2014 A9