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Hydro set to post loss: leaked memo

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1 Hydro set to post loss: leaked memo on Sat Aug 21, 2010 8:38 am

grumpy old man

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By: Larry Kusch

Manitoba Hydro is poised to post its first quarterly loss since severe drought battered the Crown corporation’s bottom line from 2002 to 2004.

News of the loss for the period ending June 30 is contained in an internal Hydro memo leaked to the provincial Tories. The size of the loss was not specified.

In the memo to department heads dated Aug. 13, Hydro president Bob Brennan blamed the economic downturn for declining revenues and the loss.

He told senior staff that it will be necessary for Hydro to expand cost-cutting measures and "improve operational efficiencies."

Brennan said new cost-cutting measures would include: further restrictions on non-essential travel, including within the province; a freeze on filling vacant staff positions; a reduction on overtime costs; changes to banked vacation and vacation carryover and cash-out provisions; and a potential freeze on executive and management salaries.

Brennan also said that the Crown corporation would be closely scrutinizing capital projects.

"As you know, Manitoba Hydro is embarking on a major capital expansion program," he wrote. "While planned investments in new generation and transmission are very large and will require debt financing, regular or ‘base capital’ will continue to be funded through internally generated funds. To accomplish this, all proposed capital additions must be rigorously scrutinized and only those capital items necessary ‘to provide an ongoing safe and reliable supply of energy in the most efficient and environmentally sensitive manner’ will be approved."

Brennan didn’t refer to any specific construction projects in his memo.

However, Conservative Leader Hugh McFadyen told reporters this afternoon that Hydro’s new financial struggles make it more imperative that the utility build its controversial BiPole III power transmission line down the eastern part of the province. The Conservatives claim the NDP government’s insistence on a western route will drive up total costs by an additional $1.75 billion.

"This political interference could potentially cost the average Manitoba family about $7,000 in additional, unnecessary costs," McFadyen said.

Brennan said in an interview today the first-quarter loss is largely the result of declining prices on power sales to the United States. He said he expects Hydro to be profitable this year as domestic demand picks up.

Hydro's first-quarter 2010-2011 financial results and its annual report for 2009-2010 will be released in the next few weeks, Brennan said.

He said he disagrees with a Conservative Party figure that a western BiPole III route will cost Hydro an additional $1.75 billion. He said Hydro's own estimate is that the line will cost $250 million to $350 million more, and even that might be high.


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2 Re: Hydro set to post loss: leaked memo on Sat Aug 21, 2010 8:40 am

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Hmmmmm, I wonder if Hydro could use a larger reserve fund???

Hmmmmm, I wonder if Hydro will still throw away half a billion building that line down the WRONG SIDE OF THE LAKE?


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3 Re: Hydro set to post loss: leaked memo on Sat Aug 21, 2010 8:45 am

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I think they can get back to profitability by eliminating free breakfast offers?


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4 Re: Hydro set to post loss: leaked memo on Sat Aug 21, 2010 2:38 pm

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grumpy old man wrote:Hmmmmm, I wonder if Hydro will still throw away half a billion building that line down the WRONG SIDE OF THE LAKE?

It's far worse than that.

AFTER bringing it down the wrong side of the lakes, they keep going south, so that they have to do a wide loop around Winnipeg with it.

The line comes from north-east of the city.

It'll run south, west of the city. Then it'll run south of the city, just south of Niverville. Then it'll turn north near Steinbach, and eventually connect with a substation in the north-east corner of the city.

5 Re: Hydro set to post loss: leaked memo on Sat Aug 21, 2010 3:56 pm

Jondo

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Have they ever provided the logic for insisting to do this? Don't say no or I will be angry.

6 Re: Hydro set to post loss: leaked memo on Sat Aug 21, 2010 4:20 pm

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Jondo wrote:Have they ever provided the logic for insisting to do this? Don't say no or I will be angry.

They don't want to run it through the interlake like the other power lines. It would put too many eggs in one basket - one wind storm or ice storm, or one aboriginal protest in Grand Rapids, could cut of almost all power to southern Manitoba.

That's sound reasoning, and I support it.

They don't want to run it east of Lake Winnipeg because being "untouched", the area is in the running to become a UNESCO World Heritage Site.

However...

"BiPole 3 should be built down the east side of Manitoba," said former UNESCO World Heritage Committee President Jim Collinson. "A transmission line could be located down the east side in a way that would not prejudice designation as a World Heritage site." Collinson previously chaired the committee responsible for such decisions.

And they're building a road up the east side of the lake. The footprint of the hydro line is much less than a road.

But the NDP caved in to a massive email campaign. That campaign later turned out to be organized by American lobbyists, with the emails coming almost entirely from Americans.

7 Re: Hydro set to post loss: leaked memo on Sat Aug 21, 2010 5:00 pm

St Norberter

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The question is:How much in kickbacks is the NDP government and senior Hydro brass getting to make this decision.

It is important to remember that Hydro's preferred option was to build on the east side. The NDP has essentially given 3 reasons for not building on east side.

a) Too many first nations to be built through - too much money in settlements.

b) The building of a Hydro line would endanger the possibility of having eastern boreal named a UNESCO heritage site.

c) The risk of losing hydro sales to US because of environmental concerns.

All 3 are LIES.

a) First nations issues. You can build south on east side by going through less first nations than on the west side. As well, the gov't is building an all season road. Here's the negotiation in a nutshell - "You want road access? then you have to give bipole access"

b)Endanger chance of UNESCO designation? They're planning on building an all-weather road on east side. How is that going to affect the UNESCO designation. And building a hydro line and road on the same track would be of less impact than building a line and road on separate track.

c)Risk of losing contracts? Who negotiates these contracts? Hydro or the Gov't. It's not the Gov't. It's Hydro, and they would have done their due dilligence and found this out before making the recommendation to the government. If this was such a huge risk, Hydro would not have recommended the east side route.

How much is Selinger putting in his personal pocket on this one?


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8 Re: Hydro set to post loss: leaked memo on Sat Aug 21, 2010 5:59 pm

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Good Post!


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9 Re: Hydro set to post loss: leaked memo on Sat Aug 21, 2010 8:54 pm

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Rumour has it that the NDP provincial government is trying to arrange with Harper's Conservative government to move the aboriginals off the land into condo's being proposed off route 90 in Wpg, where the empty Kapyong Barracks are located.


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10 Re: Hydro set to post loss: leaked memo on Sat Aug 21, 2010 9:27 pm

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rosencrentz wrote:Rumour has it that the NDP provincial government is trying to arrange with Harper's Conservative government to move the aboriginals off the land into condo's being proposed off route 90 in Wpg, where the empty Kapyong Barracks are located.

I don't buy it. Any urban reserve would be in addition to existing reserves:

- When a leadership battle on an interlake reserve 10 or 15 years ago turned into an armed standoff with the two factions burning each others' houses, the government response was to move one faction off and give them their own reserve.

- Likewise in 2002 after rival factions on a reserve voted to split, the government response was to spend $44 million to build a new reserve, just 30km from Lynn Lake. This was when Lynn Lake and nearby Leaf Rapids were suffering from mine closures and the bulk of the population had left. All the infrastructure was in place, and you couldn't give houses away. Nevertheless, the government decided to build a new reserve with roads, sewage, hydro, telephone, schools, and houses, etc., right next to it.

The government may give them land in Winnipeg, but you can count on them keeping the old reserve too.

A hydro line down the east side of Lake Winnipeg can easily avoid reserve land.

11 Re: Hydro set to post loss: leaked memo on Mon Aug 23, 2010 1:57 am

Deank

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"Hmmmmm, I wonder if Hydro could use a larger reserve fund???"


or the NDP could stop raiding them ie 300 million here to help balance the budget.... 1 million there for a mandated donation...


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12 Re: Hydro set to post loss: leaked memo on Mon Aug 23, 2010 8:48 am

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My point precisely.


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Yes, I really am that Grumpy...

It's their, they're and there; in Canada it's colour, cheque, rumour and zed...

13 Re: Hydro set to post loss: leaked memo on Tue Aug 24, 2010 10:47 pm

St Norberter

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Apparently Hydro paid out over $4 Million last year in untaken sick leave at retirement. This is also common practice with Winnipeg Fire Department and Winnipeg Police.

Paying out sick time at retirement is counter to the whole concept and rationale of having sick time in the first place. If you pay out sick time at retirement, people are less likely to take time off when sick ( which is the idea behind sick time) which means they are more likely to make other employees sick.

This needs to be stopped.


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14 Re: Hydro set to post loss: leaked memo on Wed Aug 25, 2010 9:29 am

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Also, I believe that the number of days allowed is much too generous. People can take their sick days when actually sick and still build up a reserve.

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