Manitoba Committee Hansard — 22 February 2024 (Crown Corporations Committee, Sitting 3, 43rd Legislature, 1st Session)

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Manitoba — Debates (Hansard)

First Session – Forty-Third Legislature of the Legislative Assembly of Manitoba Standing Committee on Crown Corporations Chairperson Mr. Tyler Blashko Constituency of Lagimodière Vol. LXXVIII No. 3 - 10 a.m., Thursday, February 22, 2024 ISSN 1708-6604

MANITOBA LEGISLATIVE ASSEMBLY Forty-Third Legislature Member Constituency Political Affiliation ALTOMARE, Nello, Hon. Transcona NDP ASAGWARA, Uzoma, Hon. Union Station NDP BALCAEN, Wayne Brandon West PC BEREZA, Jeff Portage la Prairie PC BLASHKO, Tyler Lagimodière NDP BRAR, Diljeet Burrows NDP BUSHIE, Ian, Hon. Keewatinook NDP BYRAM, Jodie Agassiz PC CABLE, Renée, Hon. Southdale NDP CHEN, Jennifer Fort Richmond NDP COOK, Kathleen Roblin PC CROSS, Billie Seine River NDP DELA CRUZ, Jelynn Radisson NDP DEVGAN, JD McPhillips NDP EWASKO, Wayne Lac du Bonnet PC FONTAINE, Nahanni, Hon. St.

Johns NDP GOERTZEN, Kelvin Steinbach PC GUENTER, Josh Borderland PC HIEBERT, Carrie Morden-Winkler PC JACKSON, Grant Spruce Woods PC JOHNSON, Derek Interlake-Gimli PC KENNEDY, Nellie Assiniboia NDP KHAN, Obby Fort Whyte PC KINEW, Wab, Hon. Fort Rouge NDP KING, Trevor Lakeside PC KOSTYSHYN, Ron, Hon. Dauphin NDP LAGASSÉ, Bob Dawson Trail PC LAMOUREUX, Cindy Tyndall Park Lib. LATHLIN, Amanda The Pas-Kameesak NDP LINDSEY, Tom, Hon. Flin Flon NDP LOISELLE, Robert St. Boniface NDP MALOWAY, Jim Elmwood NDP MARCELINO, Malaya, Hon. Notre Dame NDP MOROZ, Mike River Heights NDP MOSES, Jamie, Hon. St.

Vital NDP MOYES, Mike Riel NDP NARTH, Konrad La Vérendrye PC NAYLOR, Lisa, Hon. Wolseley NDP NESBITT, Greg Riding Mountain PC OXENHAM, Logan Kirkfield Park NDP PANKRATZ, David Waverley NDP PERCHOTTE, Richard Selkirk PC PIWNIUK, Doyle Turtle Mountain PC REDHEAD, Eric Thompson NDP SALA, Adrien, Hon. St. James NDP SANDHU, Mintu The Maples NDP SCHMIDT, Tracy, Hon. Rossmere NDP SCHOTT, Rachelle Kildonan-River East NDP SCHULER, Ron Springfield-Ritchot PC SIMARD, Glen, Hon. Brandon East NDP SMITH, Bernadette, Hon.

Point Douglas NDP STEFANSON, Heather Tuxedo PC STONE, Lauren Midland PC WASYLIW, Mark Fort Garry NDP WHARTON, Jeff Red River North PC WIEBE, Matt, Hon. Concordia NDP WOWCHUK, Rick Swan River PC

41 LEGISLATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON CROWN CORPORATIONS Thursday, February 22, 2024 TIME – 10 a.m. LOCATION – Winnipeg, Manitoba CHAIRPERSON – Mr. Tyler Blashko (Lagimodière) VICE-CHAIRPERSON – MLA Mike Moyes (Riel) ATTENDANCE – 6 — QUORUM – 4 Members of the committee present: Hon. Min. Sala Messrs. Blashko, Jackson, MLAs Khan, Moroz, Moyes APPEARING: Mr. Hal Turner, Interim President and Chief Executive Officer, Manitoba Hydro Mr. Ben Graham, Chair, Manitoba Hydro- Electric Board Mr.

Alastair Fogg, Vice-President and Chief Financial Officer, Manitoba Hydro MATTERS UNDER CONSIDERATION: Annual Report of the Manitoba Hydro- Electric Board for the fiscal year ending March 31, 2023 * * * Clerk Assistant (Ms. Katerina Tefft): Good morning. Will the Standing Com mittee on Crown Corporations please come to order. Before the com mittee can proceed with the business before it, it must elect a Chairperson. Are there any nominations? [interjection] Oh, sorry. MLA Moroz. MLA Mike Moroz (River Heights): Oh. I'd like to nominate MLA Blashko. Clerk Assistant: Mr. Blashko has been nominated.

Are there any other nominations? Hearing no other nominations, Mr. Blashko, will you please take the Chair. The Chairperson: Our next item of busi ness is the election of a vice-president. Are there any nominations? MLA Moroz: I'd like to nominate MLA Moyes. The Chairperson: MLA Moyes has been nominated. Are there any other nominations? Hearing n o other nominations, MLA Moyes is elected Vice-Chairperson. The meeting –this meeting has been called to consider the Annual Report of the Manitoba Hydro-Electric Board for the fis cal year ending March 31, 2023.

Before we begin, I would like to remind everyone that questions and comments must be put through the Chair. Are there any suggestions from the committee as to how long we should sit this morning? MLA Obby Khan (Fort Whyte): Up to four hours, if needed. The Chairperson: Four hours has been put to the committee. Are there any–sorry, is it approved? Hon. Adrien Sala (Minister responsible for Manitoba Hydro): I would suggest we stick to the previously scheduled time allocated. My under- standing is this was scheduled from 10 'til–until 1, so three hours.

The Chairperson: It has been proposed that we sit for three hours. Is it the will– Mr. Khan. MLA Khan: I was unaware of a previously agreed upon three hours. That's news to me. I'm requesting that we go up to four hours. We might not need the full hours, I don' t imagine it would be the full hours, but I do believe, with such an important commit tee today, that we do allow ourselves the flexibility to go up to four hours, if

42 LEGISLATIVE ASSEMBLY OF MANITOBA February 22, 2024 needed. Of course, we can adjourn before that, no problem. The Chairperson: It has been proposed that we sit for up to four hours, or until the business of the committee is completed. Is that the will of the committee? Some Honourable Members: Agreed. Some Honourable Members: No. The Chairperson: I hear a no. Are there any other propositions? MLA Mike Moyes (Riel): I would propose that we do stick to the three hours. The Chairperson: Three hours has been proposed. MLA Khan: Yes, in reference to the member 's comment, there was–we were unaware of three hours.

This is news to us. We were always under the im - pression this would be four hours. Again, I think that with such an important file, we can all agree a Hydro committee is one of utmost importance for this province. I'm simply requesting to go up to four hours. We may only need two hours. We might be done in half an hour. I don't know, but I imagine we will probably go closer to the three. A simple leave to go up to four hours, if we need, I don 't think is unreasonable. I don 't think Manitobans would agree that that 's an unreasonable request, to add an addi tional hour onto that.

That is what we 're paid here to do as legis lators and people here on the chair and the board. So, I don't see– The Chairperson: Minister Sala. MLA Sala: So, the proposed three hours was simply our understanding as to the length of the com mittee, but if we do need a little bit more time, I'm willing to accept the proposal. The Chairperson: So I'd propose that we go for three and half hours and then re-evaluate at that point. Is it agreed? [Agreed] Wonderful. Agreed and so ordered. Does the honour able minister wish to make an opening statement, and would they please introduce the officials in attendance.

MLA Sala: Good morning, and welcome to everyone. As the Minister responsible for Hydro, I am here today, along with senior officials from Manitoba Hydro, to present, for your approval, the annual report of the cor poration for the fiscal year ended March 31, 2023. I'd like to welcome the following members of the corporation's board and executive who are joining us here today.

First of all, Ben Graham, the chair of the Manitoba Hydro -Electric Board; Hal Turner, our interim president and chief executive officer; and Alastair Fogg, our chief financial officer, who are joining us here today, along with other Hydro executives and team members, and I 'd like to thank them all for being here today. I am very grateful for their leadership, expertise and the assist ance that they 'll be provi ding today here in my first standing committee as the Minister responsible for Manitoba Hydro.

Manitoba Hydro is our province 's Crown jewel, and we 're here today to talk about, of course, Manitoba's annual report for the last fiscal year, a year where we were quite fortunate to have higher than average water levels. Today, however, we know that Hydro released their third quarter update for the current fiscal year showing a loss of $151 million in the first nine months of this year. This year has been a more challenging one f or Hydro. We saw this clearly in Q2 when, instead of the $450-million net income projected by the previous government in their Budget 2023, Hydro showed a loss.

It was even clearer, back in Q1 of this year, that low water levels would pose a sig nificant challenge for this upcoming year. Unfortunately, the previous gov ernment pre - tended that this wasn't the case so they could put out a positive update in advance of last fall's election. We know that they should have accounted for this in their fiscal updates, and now, since the election, we are seeing this true picture again to be revealed.

We know there are challenges ahead and now, as our government sets the direction for Hydro, I'm really proud that we have such a strong team, including our board chair and our interim CEO, who I have every confidence will deliver on the mandate given to them. So, again, I'm here–proud to be here today as the minister, as part of a long line of NDP gov ernments who built up the utility and generated so much benefit for Manitobans, and that 's some thing our team is

February 22, 2024 LEGISLATIVE ASSEMBLY OF MANITOBA 43 incredibly proud of, is the history of our party and its role in growing Hydro in this province. * (10:10) Not only have NDP governments physically built the infrastructure that powers our province's energy generation, but we've also spent decades championing the benefits we all gain from the utility's success. Manitoba Hydro belongs to all the people of Manitoba. We have all, as Manitobans, spent decades paying into it as an invest ment into our collective future.

Manitobans deserve to see payback for that investment, and that is why our gov ernment will always keep Hydro publicly owned. It's easy to remember a time, not long ago, when Manitobans had a prov incial government who di dn't believe that, and for seven years the former PC gov - ernment made many efforts to break up and sell off profitable parts of Hydro. There is no telling where this would have gone had they been re-elected, and we know that they commissioned reports from some of their friends which wanted them to break off and privatize even more parts of Hydro.

Fortunately for Manitobans those dark days are over, and now we can look ahead to the future with some excitement. Manitoba Hydro is the source of our Manitoba advantage of affordable low -carbon energy. And the world around us is changing; it 's decarbonizing and electrifying. Thanks to decades of work and invest - ment in Manitoba Hydro, our province has the oppor- tunity to be at the forefront of a low -carbon energy future. We can see all around us how the energy landscape is shifting, and there are incred ible oppor- tunities for growth in hydro and other renewables.

In fact, that growth will be necessary to achieve our goals for emissions reduction and elect rification. Manitoba Hydro provides reliable, safe, clean, low-cost energy that Manitoba families can rely on, and our government's top goal is to keep hydro rates low to make life more affordable for Manitobans. It wasn't long ago that Manitobans had a govern- ment that hiked up rates by 20 per cent during their seven years in office. They disregarded the Public Utilities Board and set rates at the Cabinet table, hiking them up whenever they wanted, even over the holidays as Manitobans will remember.

Our gov ern- ment will take a different approach, one that puts Manitobans first and focuses on affordability. Manitoba Hydro provides thousands of good, family-supporting jobs for people across our province, and I remember in 2019, as others will, when we had that massive snow storm on Thanksgiving weekend, not after–not long after that 2019 election, how Hydro workers worked night and day to get the lights back on for Manitobans. They showed an incred ible dedi cation and perseverance to helping their fellow Manitobans, but how did the former gov ernment repay them?

They picked fights, caused multiple strikes and fired hundreds of workers. Our government is committed to treating Manitobans with respect, and we have the same expectation of our Crown corporations. One of our top priorities as government has been resetting the relationships that were, unfortunately, so badly damaged over these past seven years, and that includes our relationship with Indigenous com mu- nities. Our government has a responsibility to advance reconciliation in our province, and we include Manitoba Hydro in that responsibility.

I'm proud that our gov ernment has appointed Indigenous members to the board, putting in action our expectations that Manitoba Hydro will not only consult with Indigenous communities, but also partner with them to advance economic reconciliation. I'm also proud that our gov ernment removed the prohibition that the previous gov ernment had put in place that prevented Manitoba Hydr o from dealing directly with Indigenous gov ernments. It is our gov - ernment's vision that all Manitobans can benefit from our Crown corporation.

Manitobans are proud of Manitoba Hydro, and they're proud of of our low-carbon energy advantage. They're proud of the good jobs that we have and that our energy is affordable, and they 're proud that Manitoba Hydro is owned by the people of our province. Our government is committed to building on our Manitoba advantage, powering a low -carbon energy economy, keeping energy costs affordable for families and provi ding thousands of good jobs across our province. We recognize, though, that the road ahead will present unique challenges.

We have full confi - dence in our board and its chair to provide oversight, vision and sound fiscal stewardship of our cor por- ation, and we are excited for what the future will bring as Hydro searches for a new CEO.

44 LEGISLATIVE ASSEMBLY OF MANITOBA February 22, 2024 I would now like to welcome Hal Turner to make his opening remarks. I'm also going to take this oppor- tunity to recognize his leadership and his commitment to the corporation in assuming the position of interim president and CEO. And I know that Mr.

Turner is supported by a strong and professional leadership team, and I'm confident that with the oversight of the new Manitoba Hydro-Electric Board, led by our chair, Ben Graham, that Manitoba Hydro will reach its full potential, keep rates low for families, support our province's economic development potential, advance Indigenous reconciliation and move Manitoba into a clean energy future. Mr. Turner and Mr. Fogg, along with the chair of Manitoba Hydro-Electric Board, Mr.

Graham, will respond to questions relative to the corporation' s operations, and I 'll be pleased to respond to any questions that involve government policy. So we're really looking forward to the discussions this morning. Thank you, and with that, I 'll–like to pass it to Mr. Turner. The Chairperson: Thank you, honourable Minister. We will go to the critic first, but we will come back to Mr. Turner. So, does the critic for the official opposition have an opening statement? MLA Khan: Thank you all for attendance today.

The minister was remissed without a land acknowl- edgement, so if I could take a couple seconds to do a land acknowledgement. And this land acknowl - edgement I actually got from Manitoba Hydro annual reports. Being that we–as the Hydro committee today, I thought would be appropriate. So, today we join from Treaty 1 territory on the homeland of the Métis nation, where Manitoba Hydro has a presence across the province on Treaty 1, Treaty 2, Treaty 3, Treaty 4 and Treaty 5 lands, the original territories of the Anishinaabe, Cree, Oji-Cree, Dakota and Dene people and the homeland of the Métis nation.

We acknowledge these lands and pay our respect to the ancestors of these territories. With that, thank you, Mr. Chair. I also want to thank everyone in attendance today. I won 't go through all the names –the minister did a good job of that–but all the senior officials, everyone from Manitoba Hydro, the board, all those viewing and in attendance, thank you all for participating today. It's a very important committee. I also would be remissed if I didn 't call to the minister's opening remarks and his blatant disregard for the work of the Public Utilities Board.

His opening comments, I believe, were not just for the hard work that the PUB does. On this side of the House, we value the work they do, and I want to acknowledge that and get that on the record. I'd also in my opening remarks like t o acknowl- edge a person that is not in attendance, but someone– I want to thank her, and I think we should all thank her in this province of Manitoba, for her invaluable work in this province in the past five and a half years and long-serving CEO of Manitoba Hydro during some of the most challenging times.

Her tenure was cut short for reasons unknown, but today, hopefully, everyone in this room and Manitoba will get some answers and transparency as to why, so Manitobans can rest assured that Manitoba is in good hands. I want to thank Ms. Jay Grewal for her dedication, service, passion, vision, leadership to get Manitoba Hydro to where it was today. And we will talk about those financials, as well, along with dealing with the crippling debt left by the previous NDP government, the energy needs of this province and the need to look outside the box for solutions.

Sadly, she was terminated by this NDP govern- ment and this minister for her comments. Well, today, hopefully we'll get some answers as to why. Lastly, I'd like to state for the record: What we are doing here today is –very important part of the legislative process. Although it may seem we are combatting and we are going to war and we are attacking each other, that is not the intent. The intent is for a clear process and understanding of what is happening in Manitoba Hydro, the Crown jewel corporation of this province, so all Manitobans can rest assured.

I want that to be on the record, that this is of vital importance for the people of Manitoba and that these annual reports and this committee are a vital part of that process; the process of Manitobans having faith that the Crown corporation is being run properly, that it's being managed properly and that it will be here for future generations to come. With those opening remarks, there is a lot to get to today, since we only have three and a half hours instead of four, I will leave my opening remarks there. Thank you very much, Mr. Chair.

February 22, 2024 LEGISLATIVE ASSEMBLY OF MANITOBA 45 The Chairperson: We thank the member. Does the representative from the Manitoba Hydro-Electric Board with to make an opening statement? Mr. Hal Turner (Interim President and Chief Executive Officer, Manitoba Hydro): I'm honoured to appear here today before the Standing Committee on Crown Corporations to answer your questions about our most recent annual report and provide a brief update on the past fiscal year at Manitoba Hydro. I'm going to ask for a little bit of understanding on the part of those taking

part in committee today, given I have been in this position as interim president and CEO for just a little over a week. While I've been around Manitoba Hydro in a variety of roles since 1995, there may be areas of the business you ask about that were not in my purview until last week.

This is also my first standing committee, so I'll do my best to make sure I respect the processes, and I 'll do my best to answer your questions as accurately and efficiently as possible, but I may have to take some advisement–some under advisement to ensure we are able to provide you with correct information and make sure my answers that I provide are not wide right. I thank you in advance for your understanding on that.

Before as I –before I continue, as our practice at Manitoba Hydro, I 'd like to do a land acknowl - edgement and–sorry, a land and territorial acknowl - edgement. * (10:20) So, we join you today from Treaty 1 territory and the homeland of the Red River Métis. Manitoba Hydro operates throughout Manitoba on the original territories of the Anishina abe, Anishininew, Cree, Dakota and Dene peoples and on the homeland of the Red River Métis. We are committed to respecting and supporting Indigenous peoples in all aspects of our business.

Indigenous peoples have a strong cultural and spiritual connection to the lands and waters dating back in time immemorial. We acknowledge the impacts of our projects and operations, and we are committed to working col lab- oratively to strengthen, improve our relationships with Indigenous com munities. We support the advance - ments of recon ciliation with Indigenous peoples in Manitoba, and we will work to contribute to recon- ciliation efforts in our interactions with Indigenous peoples and communities.

Before I answer your questions on our annual report, I would like to acknowledge the great work being done each and every day by Manitoba Hydro employees across our province. Whether it is maintaining our power lines, generating stations, the natural gas system or supporting our province by planning the energy world of tomorrow, our employees are at the heart of every thing we do. In times of change, such as we are ex periencing now, I want them to know they are trusted and valued by me, our board, our board of directors and most impor- tantly, our customers.

I want to share just one example of the dedication of our employees in serving Manitobans. In October 2023, our crews responded to an outage in St. Theresa Point and Wasagamack caused by a pole fire due to wildlife contact. Our crews had a–had to barge heavy machinery and materials from St. Theresa Point and build a road through tough terrain to get access to where they could replace the damaged pole, with the aid of a helicopter, and restore power to the com mu- nity. It took detailed planning and teamwork to marshal all the equip ment to the work site.

It 's only one example of the commit ment our employees make to Manitobans each and every day. This is our job, one I know the board and me personally take very seriously. With that said, I would like to give you a brief overview of the past year at Manitoba Hydro. We began the 2022-23 fiscal year coming off one of the worst droughts on record in the 2021- 22 fiscal year. Water inflows from the southern portions of the watershed supplying Manitoba Hydro 's generating stations were well below normal, the lowest in over 40 years at some locations.

In '21-22–the '21-22 drought situation changed dramatically just days into the new fiscal year when a series of Colorado lows brought heavy snow and rainfall to southern Manitoba and northwestern Ontario and Minnesota. Together with snowmelt from above-average winter across the watershed feeding our system, it created record inflows on the Winnipeg, Red and Assiniboine rivers, Lake Winnipeg and the Nelson River, where our largest generating stations are located. To give you an idea of how much precipitation we received, Lake Winnipeg rose five feet in just four months between March 2022 and the July 2022 peak.

That's the fastest rise since records began in the early 1900s.

46 LEGISLATIVE ASSEMBLY OF MANITOBA February 22, 2024 While the drought in '21-22 had a signi ficant effect on our financial performance, the above- average precipitation in '22-23 buoyed our financial position with increased generation and surplus export sales. As a result of those higher water levels, increased gen eration and approved surplus energy sales, we experienced a total consolidated net income of $638 million for the fiscal year, which ended March 31, 2023, compared to a net loss –excuse me– of $248 million in the previous fiscal year. Unfortunately, we are in anot her drought.

These periods of low water flows drive home how vul ner- able Manitoba Hydro 's gen eration and financial outlook are on the weather and how important it is we strive to maximize the value of our product to ensure we continually meet our customers' energy needs. It's also important to point out that our service to domestic customers is never in danger, thanks to the design of our system, including our trans mission interconnections to neighbouring wholesale markets, which allows us to import energy as needed and how we operate our system during periods of low water flows.

On August 25, the Public Utilities Board approved an average electricity rate increase of 1 per cent effective September 1, 2022, and a further 1 per cent increase effective April 1, 2024. The PUB order also confirmed a 3.6 interim rate increase awarded in 2021 to help counter the effects of the 2021-22 drought. We know no one wants to pay more in this time of high inflation.

However, these rate increases do help us red uce the risk we face from increasing interest rates and fluctuating export market prices while also protecting our customers from the chance of higher rate increases if we experience a multi-year drought. They also allow Manitoba Hydro to continue making valuable invest ments in our system so our customers get the service they deserve and expect. The an nouncement on November 9 of joint funding of $475.6 million from the Province of Manitoba and Gov ernment of Canada help us continue to meet Manitobans ' energy needs. The funding is going to two projects.

We're installing eight new hydroelectric turbines at the Pointe du Bois Generating Station, which is about 110 years old, to increase the supply of renewable, dependable electricity and enhance our transmission capacity and reliability in the area so we can get the most value out of this energy asset to at least the mid century. The funding will also go to a new 230- kilovolt transmission line we 're building in the Portage la Prairie area to stre ngthen Manitoba 's clean electricity grid, support economic growth and ensure Manitobans continue to receive affordable and reliable low carbon energy.

We have also increased our trades train - ing/recruitment efforts to meet the challenges of attrition, so we have the proper employee complement to not only meet the demands of maintaining our system, but to meet the needs of our customers who require our service without unnecessary delay and so we can swiftly respond to outages and emergencies, protecting public safety. Our service levels have declined in recent years, and we intend to fix that.

In closing, let me just reiterate that we are here to ensure Manitobans enjoy safe, reliable and affordable energy to power their daily lives and help drive economic growth. Our clean energy can help Manitoba and Canada in the battle against climate change, and we also look forward to continuing our reconciliation efforts with Indigenous com munities affected by our developments. I am enormously proud of our emplo yees, and I thank each and every one of them for the work they do every day and the support they have given me over the last few days.

And I thank the members of the committee for their time, and I look forward to your questions on our 2022-23 annual report. Thank you. The Chairperson: Thank you, Mr. Turner. The floor is now open for questions. MLA Khan: Do I need to put my hand up every time, or is it understood that I'll get the questions? The Chairperson: If you'd like. We just also have a member on Zoom that we have to consider, but if all questions are coming through you, that's okay. An Honourable Member: From what I understand, the member on the screen isn't able to speak until I'm done my time speaking. The Chairperson: So, Mr.

Jackson can ask questions at any time. He would have to put up his hand visually to let us know, but I would default to you as the likely question asker.

February 22, 2024 LEGISLATIVE ASSEMBLY OF MANITOBA 47 MLA Khan: Thank you, everyone, again, and thank you, interim CEO–or, I'll just refer to you as the CEO for now, to cut out a word. So, you've been here for a week, congratulations. And, it's a lot to take on, so we will bear in mind that you have been here for a week and you might not know all the, you know, detailed answers of what we're looking for. I've only been here for less than two years, as well, so this is–I'm relatively new to the com- mittee process as well.

So, I'll start with a very simple one: Can the CEO outline in his words what the mission statement is for Manitoba Hydro? Mr. Turner: Yes, our mission is to help provide Manitobans with energy for life. So, we want to make sure they have safe, affordable and reliable energy to power their lives and busi nesses and help them navigate the evolving energy future. MLA Khan: Yes, and, I mean, that's a good

summary of pretty much what the mission statement is for Manitoba Hydro: help all Manitobans efficiently navigate the evolving energy landscape, leveraging their clean energy advantage, while ensuring safe, clean and reliable energy at the lowest possible cost. I believe I'm correct. I just want to make sure that that is aligned with what the CEO is saying. Mr. Turner: That is correct. MLA Khan: I told you, Mr. Chair, I 'll start off with some really easy ones. We' re going to get into some easy ones. We got to loosen it all up for everyone; it's still early in the morning.

Now, how does Manitoba adhere to this mission statement? What processes do you have in place? What systems? And again, this a high-level conversa- tion; I'm not looking for a 10-minute answer here. But just, in generally, your time at Manitoba Hydro and as the CEO, what are–documents are you using to adhere to this mission statement? The Chairperson: Just one second, just a slight reminder to bring questions through the Chair. Mr. Turner: Sure, thank you. * (10:30) So, of course, we have Strategy 2040, which would be our north star.

We would also have things such as our integrated resource plan, which we would have–which we have completed our first integrated resource plan this past year, which was an extensive engagement with the people of Manitoba to get a better understanding of how their energy needs may evolve over time. We have–of course, we have thousands of staff who maintain our existing assets, and we would have maintenance programs to allow us to do that. We have our capital forecast where we outline all the invest - ments we need to make in our existing assets to make sure that they remain safe and reliable for Manitobans.

So, those would be some of the documents that would–we would use to help us along this journey. MLA Khan: When was the –when was strategy 24 started and when was it completed? And I understand from the CEO 's comments that the IRP was just completed this past summer, correct? Mr. Turner: Mr. Chair, the Strategy 2040 was started in 2019, and I was –believe is completed in late 2020 or early 2021. Of course, we continue to monitor our strategy so it is a bit of a living docu ment. The–our first integrated resource plan was published in, I believe, August of 2023. MLA Khan: So, just to confirm that, Mr.

Chair; if you can confirm that Strategy 2040 and the IRP were both started and completed under the previous CEO. Mr. Turner: Mr. Chair, that is correct. MLA Khan: And, Mr. Chair, is there a rough cos t associated with creating these two documents? Mr. Turner: Mr. Chair, I don' t have those figures with me, so we'll have to take that under advisement.

MLA Khan: And just for clarity again, on committee process, if the member says it 's taken under a dvise- ment, do I have to repeat–can we get–confirm that the CEO will take this under advisement and report back and then can we have a timeline on when that will be reported back to us as well? The Chairperson: So, we track items taken under ad- visement during committee of supply, but not during committee meetings –or, sorry–standing com mittee meetings. MLA Khan: Mr. Chair, so, again, just to clarify then, can we, for today, that the CEO says he'll take it under advisement and report back.

Can we hav e a timeline on when the Chair will report back with the previous question? The Chairperson: Just for clarity, are you asking for a timeline from me as Chair, or the CEO? An Honourable Member: The CEO.

48 LEGISLATIVE ASSEMBLY OF MANITOBA February 22, 2024 Mr. Turner: Yes, Mr. Chair, we'll have that informa- tion within three or four weeks. MLA Khan: And I did look at the IRP document, and that is one living document, 108 pages, very well done, and Strategy 2040 as well. That is a very com - prehensive document, so well done on that front to you and all the people working at Manitoba Hydro and he said at the north star, I believe you said, or the gold star of standards. Now, wasn't there ever a strategy in place for this province prior to Strategy 2040? Mr.

Turner: I just want to make sure I understand the question. I believe the member asked was – did Manitoba Hydro have a strategy, part of Strategy 2040? MLA Khan: Yes, That 's the question–oh, sorry, Mr. Chairman. The answer is yes. And along with the previous strategy that you say was in place, Strategy 2040 has now taken that over. Was there ever an IRP created by Manitoba Hydro for working alongside with the strategy? Mr. Turner: The IRP that we published in August was our very first IRP, so we never had an integrated resource plan prior to that.

MLA Khan: Just a clarification : Is it normally best practice, or industry standard, with an organi zation such–as large as Manitoba Hydro to have an IRP along with a com prehensive strategy, and if so, why was the first one created –or has begun –sorry, I'll repeat the question. If there wasn't an IRP prior to this, as the CEO says, why–who started and commissioned this IRP report? Mr.

Turner: So, I can confirm, yes, that an integrated resource plan is an industry standard practice, and then the IRP was starte d in –when the member was asking his question–I'm going to do my best to answer it; if I get it wrong, I'm sure the member will rephrase the question. So we have a director of Integrated Resource Planning. So that director at the time was a Mr. Terry Miles, and he started that in 2020, and then was completed by Mr. Dave Bowen and Ms. Lindsay Melvin, who are also directors of Integrated Resource Planning.

All of those –that plan was created under my former portfolio as the vice -president of Asset Planning and Delivery. MLA Khan: So both of these documents, along with, I understand, there is an environ mental and social issues governance that has been conducted. Can the CEO speak a little bit about the environmental and social issues–social governance document they have. Mr.

Turner: Yes, the corporation annually produces a ESG report–this was actually our third ESG report– and the report would summarize some of our activities to try and minimize the impacts on the environment that we'd have, as well as any of the–our impacts from our operations on the com munities and stake holders within Manitoba. MLA Khan: So, just in clarifying, so this is the third report. So is one report done every year? When was the first report done? And from reading this it l ooks like the last report was done in this annual report. So if the CEO can maybe say when was the first report commissioned. Mr.

Turner: So our first corpor ate social respon si- bility report–so that's what we referred to it at the time–was published in 2020. Prior to that, a lot of that information would have been in our annual report. MLA Khan: So from what I've heard here from the CEO is that the Strategy 2040, which is the north star for Manitoba Hydro, the guiding star, gold star–one of those words, sorry, I apologize –was started in 2019 and done in 2021. The IRP, which is the first of its kind for Manitoba Hydro, which is an industry standard docu- ment, was also just completed this past year.

And also the environmental and social issues report, the first one was commissioned in 2020. All three of these very im portant, monumental, industry standard reports and processes and docu- ments that organizers have were all commissioned under the previous –under the time and tenure of the previous CEO. Sounds like this is a pretty good start for Manitoba Hydro and the CEO got off to a good start by creating these docu ments that are industry standard. So my question is for now the board chair. If these came under the CEO, the former CEO, and never been done before, why was there a need to remove the CEO? Mr.

Ben Graham (Chair, Manitoba Hydro-Electric Board): As I've mentioned in the past, the new board is appointed. Obviously, they assessed the leadership of the executive team and, despite these docu ments,

February 22, 2024 LEGISLATIVE ASSEMBLY OF MANITOBA 49 we often feel that sometimes a different perspective is always good. * (10:40) I'm sure we've all looked at reports and read them a hundred times. Then a fresh set of eyes comes in and has a different perspective and picks up things that maybe you've missed. So the board felt that it was time for a change, and we feel that sometimes change is good. MLA Khan: That's a valid point. You always want to assess leadership and look at things from a fresh perspective. But these docu ments are pretty fresh, if not, I would say, very, very fresh.

The IRP just came out this summer, strategy 2021 was just completed two years ago; environmental social issues has only run three reports, starting in 2020. So that's three years of reports, all very fresh perspective, and all of these are the guiding direction of where Manitoba Hydro is to go in the future. So these are fresh perspectives, unless the board disagrees and says –disagrees that these are not fresh perspectives for Manitoba Hydro. Maybe the board chair can clarify that a little bit on fresh perspective. Mr. Graham: Mr.

Chair, I think it would be remiss to say that despite the title of the integrated resource plan, for a number of decades, Hydro often assesses future power needs and what needs to happen in the future. The fact that its titled under something new called integrated resource plan, which is the new industry standard; that type of work has been going on for decades. As I've mentioned, the board came in and we, after discussing, you know, the next steps of where we need to go, delivering on the mandate letter, we felt that that fresh perspective was required.

Again, we thank Jay for her five and a half, almost six years of service with Manitoba Hydro. But, again, with those in camera discussions we felt that it was simply time for a change in perspective. I've been part of those conversations in the past in previous roles as well, so I know sometimes those conver sations are difficult, but I can see that the need for an organization to have a different leadership model or a change of term.

MLA Khan: Again, I don't disagree with the board chair's, you know, comments on a fresh perspective, but the documents that were created under Manitoba Hydro are the perspective of where Hydro is going. So, you know, the board chair wants to mention that there was previous work, not called an IRP. Will the board chair take an under taking and provide what those previous works were before they were called IRP, if those documents do exist? Mr. Graham: Yes, I wi ll. I'll take that undertaking. Yes.

MLA Khan: So, just for the record, I guess, repeat that: The board chair has agreed to take an under - taking, providing this committee with previous works of an IRP framework that he claims were in place before this IRP was officially labelled an IRP. Mr. Graham: Mr. Chair, I think if you go back to the records, I said that similar work had been done. So it's not going to be titled the 1983 integrated resource plan but there'll be similar types of discussions and works that were in place in relation to try to meet those future energy needs. MLA Khan: That's correct, Mr. Chair, apologize. Mr.

Board Chair, similar works, it will s uffice. So undertaking will be–undertake. Timeline on when that undertaking will be completed by, roughly? Mr. Graham: Mr. Chair, I'd like to take the issue–the documents from that under taking at the same time when Mr. Turner submits the other documents under his undertaking; so, three to four weeks. MLA Khan: Thank you, Mr. Board Chair, for your answers on that. To the minister, now, Mr. Chair. You know, I'd like to get the minister's opinion on his thoughts and an opinion on the integrated resource plan.

MLA Sala: I appreciate the question from the critic, and he is the new critic for Hydro. I think the IRP that's been developed is a great starting point, and we know that a lot of work went into it from the cor - poration. The IRP is effectively, as it's been said, it's a planning document. It's about outlining a path from A to B and showing how the corporation can get to an energy future based on whatever our needs are. An IRP should be informed by energy policy. That's something that we are, of course, looking at as a new government and developing.

And so we expect that their people will be at work in dev elopment, as has been alluded to. This is the type of work that Hydro has always done for years. This is the business that they're in, needing to look very far ahead into the future to plan for –to plan ahead. And we expect that that work will be ongoing as it relates to the IRP. MLA Khan: Thank you, Minister, for your answer. And, sorry, I believe the minister said it was a great

50 LEGISLATIVE ASSEMBLY OF MANITOBA February 22, 2024 document, fantastic, just to go back on what his adjective was for explaining this document. MLA Sala: This is a good start. That's how I would describe it. And it's a work in progress and it's a docu- ment that will continue to change. And this is, again, this is a part of Hydro's continuous planning and preparing for the future.

MLA Khan: And now to the board chair: Consid - ering that the IRP was commissioned under the previous CEO, and the minister says it's a good start, industry standard, it's going to guide Strategy 2040 for this province, why fire the previous CEO before she's able to present to this committee on this good starting document? Mr. Graham: Mr. Chair, as I've said before, a large number of those conversations are held in camera, as members of the board. I will say that, back to Mr. Turner's point earlier, the work was done by a number of members of Mr. Turner's team, and they remain with Hydro.

They will be contributing to the continuous evolution of that document, especially once we get the energy policy in place. And as that document evolves, under the future CEO's le adership combined with the expertise of those staff members, I think that will be the right team to deliver on that IRP.

MLA Khan: But the timing, I believe the board chair has to, you know –and everyone in this room and everyone in the province of Manitoba and anyone paying attention to Manitoba Hydro would have to say that the timing is suspicious, being that, again, the CEO today, the minister has said it's a good start, you yourself have talked highly of these documents –was all commissioned under the former CEO, all three of these fantastic docu ments going forward. They're going to shape Manitoba Hydro for the future, and yet she's fired two weeks before she can present to com - mittee today.

So, one would beg to ask that the timing looks suspicious as to her termination today when there was, what it seemed like in the media, was direct inter - ference from this NDP gov ernment. Can the board chair please comment on those? Mr. Graham: Mr. Chair, I don't know what their definition of suspicious is. I don't think it was suspicious. It was part of the evolution of a new board coming in, assessing the CEO and making a change. There was nothing suspicious about the timing. MLA Khan: Mr.

Chair, suspicious–you know, I don't have a Webster's Dictionary, I'm sure I could look it up on my laptop right here, but suspicious would be something that, you know, makes your hair stand up on your back, something that doesn't look right, some- thing that feels a little off. And I think the board chair can recog nize that it did look a little off when the former CEO spoke in front of a room at the Manitoba Chamber event about the needs for Hydro, the needs for looking for energy, our capacity, innovation, where she talked about the IRP and Strategy 2040, that within a week of that, that she was fired.

And when she was fired, the minister is standing there, when the minister has no, I guess, insight into this or no inter ference, is from what we've read, and from what you're saying, that she was fired a week after making those comments. * (10:50) So, I think suspicious is just –does it look suspicious that she made these comments, these docu- ments came out under her, fantastic documents to see how Manitoba Hydro's going to move forward, and comes out with comments –a week later , she's fired.

And the minister responsi ble for that is the one standing there making the announce ment when I –it should be the board chair. Mr. Graham: Again, I don't want to speak on behalf of others and their suspicious thoughts. But, again, throughout my professional career, to see a change in leadership after a new board is appointed is nothing new. It's happened many times before, and it will happen many times in the future. So, if timing is coincidental, fine. But there is nothing suspicious here. It was a board decision. We made it, and we're happy and we're living with it.

MLA Khan: So, not at all –this doesn't look suspicious to you at all, and the people that are watching this and paying attention, that the CEO is fired one week after makin g comments publicly that the minister came out and spoke against, and then she is fired. That doesn't look suspicious at all to you– Mr. Chair, through the Chair? The Chairperson: I ap preciate you putting that question through the Chair. Mr. Graham: Again, I don't know how many times I need to say this. We've been assessing the leadership team over a number of months since we took over. For others to say it's suspicious, that's up to them.

Because I was involved in the inner workings of that decision, I didn't see it as suspicious. I'll leave it at that.

February 22, 2024 LEGISLATIVE ASSEMBLY OF MANITOBA 51 MLA Khan: Now–and I'll get back to the assessment and–of the suspiciousness of that. And Manitobans have a right to know. I think everyone has a right to know. It looks a little odd to me reading it, and many other people –I have con stituents I speak to. They – raising some questions, and it's my job to bring those questions forward.

Now, with the importance of this com mittee coming up a week after the CEO's–two weeks–shortly after the CEO was terminated, and the importance of this committee and the CEO, you know, God bless him for doing his best, and being in the role for a week, admits that he might not have all the answers. He's only been there for a week. Why not allow the former CEO or the CEO to come to committee and to present at com mittee for all of Manitoba to know what's happening as opposed to putting someone who's very well ex perienced, has a great resume, knows what he's doing but has only been there for a week? Mr.

Graham: Well, the topic of today's meeting, I believe, is the '22-23 annual report, not the events of the last two weeks. And we have the great CFO Alastair Fogg here to present your questions on the annual report. So we do have the expert here to answer those questions based on the topic of today's meeting. MLA Khan: Thank you very much, Mr. Chair, and I think you'll also appre ciate that, you're right; we are here to talk about the '22- 23 reports. But the '23- 22 reports were commissioned under the previous CEO.

The '22-23 reports and reports to come in the future are all going to be within the framework of Strategy 2040, within the framework of the IRP and other documents that were done under the previous CEO. So, although we are here to talk about the '22-23– and we will get to that in the remaining three hours and eight minutes we have –but it is im portant for Manitobans. And I believe Manitobans are –have the right to know.

With this timing, with this suspicious firing, it looks like it's political interference when the CEO is to present at commit tee at a very important committee so Manitobans can be rest assured that the Province is headed in the right direction, and she's fired right before it, then to have an interim CEO who's been in the position for one week. So, with all due respect to the board chair, these questions are relevant. They are about the '22-23, as it was commissioned under her.

So, I will ask the board chair yet again: Does he believe that the timing of the termination of the former CEO was done correctly, was done appropriately and properly, one week before–or two weeks prior to com- mittee, or would it have been in best interests of Manitobans to actually hear what the CEO of five and a half years had to say about the future of Manitoba Hydro? Mr. Graham: Mr. Chair, I believe Ms. Grewal has spoken in a number of forums and a number of meetings, about her vision, or, you know, the issues facing Hydro, and I think you're all very aware of those.

But again, I would go back to the point of, you know, here, with the matter under consid eration, which can be spoken to at a very specialized level by Mr. Fogg, so I believe that Ms. Grewal's messages have been made public in the past. She's had many forums to speak. So I don't think anything would have changed by Ms. Grewal being here, and I also will continue to say, as someone involved in the inner workings, I did not think that it was suspicious what- soever. I don't know if there's ever a good time to have those conversations with a leader. I'm sure you would understand that.

MLA Khan: The former CEO has spoken numerous times publicly. She was not–she was stopped, she was muzzled from speaking here today. She was terminated two weeks before speaking here today on this report. And when she did speak out, she was fired. She spoke out, she was fired two weeks later, or a week later. That's the message that this board chair is getting across now; that when she spoke out, she was fired. The CEO had an oppor tunity, the former CEO had an opportunity to come here and speak to commit- tee on the future of Manitoba Hydro, and she was muzzled. She was stopped.

That's what the CEO is saying, so we'll move forward with that. And when it comes to assessing timing now, can the board chair please comment and give a timeline on when this assessment of executive leadership was started. Mr. Graham: First of all, I'd like to correct the comments made by Mr. Khan. I never said she was removed from her post because she spoke out. I said she had a number of way s to com municate those issues that you want to hear about today in other forums. So I think that that comment was obviously very misrepresented.

52 LEGISLATIVE ASSEMBLY OF MANITOBA February 22, 2024 Can you please repeat the other part of the question? MLA Khan: I apologize, board chair, if I misquoted there. I was simply stating that she was fired, what seemed like for making comments publicly; a week after she made those comments is what I had said, but the board chair denies any suspicious behaviour there. So, the question was in regards to the assessing of timing of executives.

So, can the board chair, for the com mittee today, enlighten us on when the assessment, when the leadership–of executive leader- ship assessment had started; as he said that was part of the process. Mr. Graham: I believe from day one, when we were appointed as a board. MLA Khan: Can the board chair clarify, was this a mandate given to the board from the minister to start an assessment process of executive leadership, was that what I'm under standing from day one: the minister had directed the board to start assesment of effective leadership? Mr.

Graham: There was no mandate given to assess the leadership of Manitoba Hydro. It's simply best practice of every new board that is appointed. MLA Khan: So there was –so, just to clarify, Mr. Chair, there was no formal process of starting an assessment of the executive leadership of Manitoba Hydro. This is some thing the board just does every single day throughout its time as a board, is what I'm understanding? That there's always constant executive leadership assessments and reviews happening? Mr.

Graham: Not reviewing –I reviewed the performance of Hal over the last two weeks, and despite some dubious fashion choices, I think he's doing a great job. Every board continues to assess the performance of the executive team, whether it's informally, formally, in whatever means. And then it's our duty to make sure that the right executive team is there to deliver on the mandate letter that was given to the board. MLA Khan: So to be clear, Mr. Chair, there's no formal process was conducted in the evaluation of the executive leadership at Hydro since this new govern- ment took place. Mr.

Graham: There is no written document. There were very strong in camera discussions. MLA Khan: So, to be clear, j ust what I'm under - standing from the board chair, it just –it kind of surprises me, I'm taken aback by this, that the –there was no formal process for removing the CEO of Manitoba Hydro. * (11:00) Is that what I'm –there was no formal review process done for the termination of the CEO –former CEO of Manitoba Hydro? Mr. Graham: As is common practice, boards will discuss the performance of the executive in camera.

It is not for public disclosure for us to be writing here are strengths, weaknesses, et cetera of those executive members. Was a review done by the board of Ms. Grewal and her ability to deliver on the mandate letter? Yes. Was that done in camera? Absolutely, as it should've been. MLA Khan: I mean, I'm –Mr. Chair, I'm dumbfounded. I'm sitting here –the CEO making $515,000 a year, who's been here for a very long time– serving CEO of Manitoba Hydro, who came up with these three fantastic living docu ments, which are going to govern this province or guide this province forward.

Came up with three of them under her leadership, is terminated with no formal review process, but there's very strong in camera discussions with government. This is odd. This is –Manitobans–I mean, I guess we'll leave it there, that there was no formal–just to be clear, this was a very strong in camera discussion that led to the termination of the CEO. There was no formal executive assessment of her leadership. Mr. Graham: Yes. When it comes to a parti cular process or standard, we would assess that leadership and discuss it at an in camera meeting at the end of every board meeting, as you should know.

And we decided that it was time for that fresh perspective. Let me rephrase–can I just rephrase that? The Chairperson: Yes. Mr. Graham: Again, those discussions take place, notes are taken, we discuss it, we make a decision as the board of directors, as they should–that's their role, I'm sure you understand–and we made that decision, absolutely. MLA Khan: So, from day one–the board chair says, Mr. Chair, that this review started on day one of this assessment of executive leadership at Hydro, and then

February 22, 2024 LEGISLATIVE ASSEMBLY OF MANITOBA 53 a week after she came out and made her public comments, she was fired. Does the timing of that not seem suspicious? I'll use that word once again to the board chair. If this review process was started day one, why wasn't it done earlier? Why wasn't the termination done earlier or why wasn't the termination done after committee to allow the CEO to present today? Mr. Graham: Again, I'll answer on the basis of the suspiciousness. I don't see the suspiciousness.

Again, I guess I would be remiss to ask–with another question, I'll answer the question with a question–is, should we have gone in there completely blind, started the assessment and then removed her after one or two weeks? Of course yo u have to take time to assess their leadership ability to move forward. We did that over a couple of months, or three or four months, and we decided to make a change. That is the proper process to make that change.

MLA Khan: I'll go back to a comment made by the board chair earlier, was that the board chair was reviewed–review was assessed on her ability to deliver on the mandate letter. So, I'm glad you brought up the mandate letter, because we're going to dive into that a little bit here. Which part of the mandate letter was the former CEO not able to deliver on? Mr. Graham: Mr. Chair, again, the mandate letter is very multi -faceted. You're looking at a number of changes here.

And again, I don't know how many times I have to repeat the point that we felt that a fresh set of eyes or a new perspective on the delivery of this mandate letter would be good for the organization. MLA Khan: It seems that the board chair doesn't want to dive into, you know, the specifics of this mandate letter, but, you know, from reading this mandate letter, and all Manitobans can read this mandate letter, looking at it from the annual report and what's been, you know, discussed that the CEO – former CEO was well on her way to achieving a lot of the mandates within this letter.

But we'll table this letter for later, and we'll come back to that one at another discussion. Can–sorry –we'll move on to another formal question. We'll come back to that mandate letter a little bit there. These questions I'm going to pivot to the CEO now for a little bit. And they're in regards to debt, income, expenses when it comes to Manitoba Hydro. So we'll start off with some easy questions. I know you've been there for a week, so we'll start off with some easier ones. What was Hydro's net income last year? Mr. Turner: Mr. Chair, I believe I spoke to that in my opening remarks.

Our net income in fiscal '22 -23 was $638 million. MLA Khan: I mean, that's a fantastic net income. Would the CEO, Mr. Chair, would the CEO agree that that was–that's a great performance year for Manitoba Hydro? Mr. Turner: I would suggest that Manitoba Hydro benefitted from some great weather and some favourable pricing in the export market. MLA Khan: So, Mr. Chair, yes. The answer is the– that's–the–it was a great year for Manitoba Hydro. Of course, given factors out of our control, but it was a great year for Manitoba Hydro. Mr.

Turner: I would say it was a fortunate year, given the weather that we ex perienced and the high export prices. MLA Khan: Can the CEO just quickly g o through maybe the top five avenues of revenue coming in to Manitoba Hydro in this annual report? Mr. Turner: Mr. Chair, I'm going to ask Mr. Fogg to speak to that. Mr. Alastair Fogg (Vice-President and Chief Financial Officer, Manitoba Hydro): I think if you turn to page 41 of the annual report you can see the primary services on the electric revenue. Between residential, extraprovincial re venue, there was also from our com mercial, industrial customers.

Those would be the primary sources of revenue. MLA Khan: Thank you very much, Mr. Chair and Mr. Fogg. Maybe I'll direct the questions to Mr. Fogg directly then, instead of going to Mr.–interim CEO – sorry. So, Mr. Fogg, maybe if he can highlight the cost of operations and expenses. Have they gone up or down in the–this annual report? Mr. Fogg: The–every year as part of our annual report, you'll see in our financial statements we produce a consolidated statement of income or loss, page 63 of the annual report. And you'd see the primary expenses. Those expenses vary every year.

You would see finance expense decreasing slightly, operating and administrative expenses increasing and then a series of other expenses that are in regular

54 LEGISLATIVE ASSEMBLY OF MANITOBA February 22, 2024 course; the expenses we see every year. And they'll vary depending on situations on a year-by-year basis. MLA Khan: Mr. Fogg, what was the revenue generated from exporting energy? Mr. Fogg: Yes, so the extraprovincial revenue for that year was $1.13 billion in 2023. MLA Khan: Maybe this is –thank you, Mr. Chair. Maybe it's back to the CEO. Can the CEO maybe comment on–that sounds like a very large number. Well, it's a 93.3 per cent increase over '21-22. What were some of the factors that led to that large number? Mr.

Fogg: Thank you for the oppor tunity to answer that question. Certainly, as our CEO mentioned, in the '22-23 year, we had quite a high water year, lots of opportunity for what we term op portunity sales into the export market. So, after we serve our domestic customers with the dependable energy and me et our dependable contracts, we then have an opportunity to use any excess water to sell into the marketplace. And in the '22-23 fiscal year, that aspect of our revenue, our opportunity sales, was significantly higher than any other year directly as a result of our water conditions. Floor Comment: Mr.

Chair, may I add something? The Chairperson: Yes, Mr. Turner. * (11:10) Mr. Turner: We also benefitted from Keeyask Generating Station coming online that fiscal year, or the previous fiscal year, so it allowed us to take greater advantage of the favourable water conditions. MLA Khan: And can the CEO or Mr. Fogg comment on–can Manitoba Hydro rely on that sort of export revenue every year with even Keeyask gen eration coming online? Mr. Turner: I think the–so, the short answer is no, and I think the last three years demonstrate that.

So, we started with a drought in '21 -22, and we had a loss of –excuse me–of $248 million in '21 -22. And then we made $638 million last year. And we are, as of our Q3 results, I think we've suffered a hundred and–forecasting $190-million loss at the end of this year. So, Manitoba Hydro's finances are heavily influenced by, of course, weather, as well as the markets that–the export markets that we export to. MLA Khan: And I know this is a very silly question, but I have to ask it anyways for the record, and does Manitoba Hydro or the prov incial gov ernment of Manitoba in any way control the weather? Mr.

Turner: Mr. Chair, I can't speak for the prov - incial government, but Manitoba Hydro does not. MLA Khan: I said it was a silly question, but I had to ask it. Thank you. And I'll ask the minister the same question: Does the minister, although new in his role, believe that the provincial gov ernment controls the weat her here in the province of Manitoba?

MLA Sala: Unfortunately, no, we don't, but I can say that, when we do observe weather patterns and see the direction that things are heading, that we should be ensuring that we ac commodate and adjust for that in the way that we communicate the financial position of our Crown corporations. MLA Khan: All right, thank you. Okay, good, we agree on that, then. That's a good start, or a good hour point. I'll now, Mr. Chair, like to get into the Keeyask coming online. How much energy is generated from Keeyask , Bipole III completion this year–or, last year? Coming online. Mr. Turner: So, Keeyask Generating Station– Mr.

Chair, Keeyask Generating Station has a nameplate rating of 695 megawatts, so that's how much capacity, and on an average water year will generate 4,400 gigawatts of electricity. MLA Khan: So, 4,400 gigawatts in a year, so, by percentagewise, for the entire energy production in the province, how much does Keeyask account for? Mr. Turner: So, if the member would like to refer to the back page of our annual report, Keeyask contribu- ted 11.71 per cent of the energy generated in Manitoba in fiscal year 2023. Now, I would like to add that number will change depending on weather.

So, a year like this yea r or in 2022, if Keeyask had been fully online, it would generate less energy than it would in a year like 2023, for example–or, excuse me, 2022-23. MLA Khan: Thank you very much, interim CEO – sorry, there's a lot of different titles now –thank you very much for that answer and great news Keeyask is

February 22, 2024 LEGISLATIVE ASSEMBLY OF MANITOBA 55 online and getting some energy going for this province. I want to get back into the weather question here, and we all agree that no one controls the weather that we know of –the Province of Manitoba, Manitoba Hydro, opposition–none of us control the weather. So, you know, the question is for the minister then. If he acknowledges today that he doesn't control the weather, we don't control the weather, why did the minister purposely mislead Manitobans on the financial situation of Hydro due to uncontrollable – Mr.

Chair, can the minister clarify why he would mislead Manitobans on the financial situation of Hydro due to uncontrollable weather events, which he simply stated for the record today that no one controls? The Chairperson: A gentle reminder that we aren't in a position to speak to people's intention of deliberately misleading. MLA Sala: Yes, I'd just like to ask for clarity on what instance of misleading the critic is referring to. MLA Khan: I apologize for the comment, of the wording there, and I'll circle back to that one.

It's somewhere in this pile and, when I have a second, I will find that docu ment and bring it back up for question, and the minister can clarify the thoughts on that. Moving on to contracts now, I believe Mr. Fogg did mention that there are existing contracts, dependable contracts, and then there's the spot market. Has Manitoba Hydro signed on to any new, or extended any existing contracts for export of energy outside of Manitoba since the start of this annual report, March–April of 2022? Mr. Turner: So the short answer is no.

Manitoba Hydro has not entered any long-term export contracts since–and I believe the member's question was, since the start of this fiscal, this annual report. We do have agreements where we will exchange capacity with other utilities, and we did enter an agreement this past fall. It was not an export agreement. MLA Khan: So thank you, Mr. CEO, for clarifying that there a re no new –sorry, are there any contracts under negotiations with current export agreements? Mr.

Turner: So, at any given time, Manitoba Hydro would be exploring agree ments that would benefit Manitobans with utilities that we would interact with. So we ar e in conver sation with utilities on potential agreements that could be beneficial to our customers. MLA Khan: And for those of you that don't know, can the CEO maybe clarify what a dependable contract or an existing contract is, and what that means for Manitoba Hydro if we have excessive– excess in energy, or if we are in the opposite and it's a drought year and we don't have enough energy for our own needs. What does that mean to these contracts? Mr.

Turner: So I think there's a number of parts to the question. I'll do my best to remember them all, and I'm sure the member will remind me if I miss one. There are a number of ways that we interact with the export market. So, one of the ways would be long-term dependable contracts; so where we've agreed with a counter party to provide them a certain amount of energy for a certain period of time. Those are referred to as dependable energy type sales. And then we would have spot market sales.

So historically, as we've brought new hydroelectric generating st ations online, the amount of capacity you'd bring on is more than you need in Manitoba, so we will sell that extra capacity and energy for some period of time. Depending on whether–or–sorry, I'll step back for one second. So we plan our system to make sur e that we can keep energy available to Manitobans under all situations. So we plan for the worst possible drought, and so–and when we consider the obligations we have to meet, we consider these long-term export contracts.

So they have no bearing on our abi lity to meet Manitobans' load–or, meet the energy needs of Manitobans. In times of drought we will import energy, because we are trying to protect that we can meet Manitoba's energy needs both today and tomorrow. There could be a drought again next year. So we will rely on that export market to bring in energy in times of low flows like we're experiencing now to make sure that the lights will come on and the gas is flowing in the coming years, should we happen to see a drought again. I apologize to the member if I missed part of your question.

MLA Khan: No, thank you very much, Mr. Chair, and for your first committee, it's great. So would the long-term dependable contract, just so I understand, those are what the title says, long- term dependable contracts that are inked, that

56 LEGISLATIVE ASSEMBLY OF MANITOBA February 22, 2024 Manitoba Hydro has to sell energy to out-of-province purchasers. In a time of drought, for example we're facing now, or in excess, as was report–but there was a drought in the previous year, what happens if Manitoba Hydro doesn't ha ve sufficient energy to export to those? * (11:20) Mr. Turner: So, this is a great–thank you for the question, and it's a great op portunity for me to talk about some of the amazing employees at Manitoba Hydro. So, we have dedicated professionals that plan our system, and we plan for drought.

So, we have planning criteria to make sure the energy is available when Manitobans need it. So we've planned for the worst drought on record, which was approximately 1940-41. Knock on wood, we have never experienced a drought like that since, so there is zero danger of us not being able to supply Manitobans' energy needs or meet our long-term firm export obligations. MLA Khan: So, sorry, just to be clear, so we always have enough energy to fulfill our export obligations, no matter what? Mr.

Turner: So, we plan, we consider our long-term dependable export obligations as part of our planning for our system, and so we –assuming we don't have a drought worse than 1941, the worst drought on record, we are able to meet those obligations. MLA Khan: So, again, just to clarify –sorry, I know we're going back, and this is relatively new for some of us, myself included, and this process, as well, so I ask for leniency on this question again. So just to be clear, Manitoba Hy dro has a long- term depend - able contracts that we have to fulfill, which are expor- ting energy out of the province.

And from what I understand from–the CEO has said, is that they have great people at Manitoba Hydro that work and forecast this and projec t this and that we can fulfill those obligations. But if there's a drought and there's a time where Manitoba is low on energy, then we are then importing energy, from what I understand, because we have to fulfill those long- term dependable contracts while Manitoba's going–drought we have to import energy from–we have to purchase energy. Is it, just to be clear, is that how the process works? Maybe, Mr. Chair, if the CEO can clarify that for me. Mr. Turner: Mr.

Chairman, so, we will import electricity in of f-peak hours to be able to conserve water to protect against future droughts. So we will – our long- term dependable export contracts are typically during day –during the day, approximately 16 hours a day. So we will meet those obligations, and then in periods where we don't have export obligations, we will, if it makes economic sense and it helps us protect against drought, we will import energy in those off-peak hours to save water and make sure we can supply Manitobans' energy needs into the future.

MLA Khan: So, and the CEO can maybe clarify this: Would it benefit Manitobans–as the mission statement for Manitoba Hydro says, sus tainable, reliable, low-priced energy–would it make sense for Manitoba Hydro to just keep all energy in Manitoba and not export it so that we can make sure Manitobans are taken care of first? Mr. Turner: So, again, we plan the system to make sure we meet Manitobans' energy needs today and into the future.

Those long- term dependable export contracts we have in place help pay for thos e assets that Manitobans have invested in, and it's one of the reasons why our rates are among the lowest in Canada. So I would suggest to the member that it's been beneficial to Manitobans that Manitoba Hydro has these dependable export contracts. MLA Kh an: I think that's great, the way you're planning, the people you have at Manitoba Hydro sound like they're doing a fantastic job.

So, again, to summarize before I move on, that the net offset – or there is a financial gain for these long -term dependable contracts, even in a drought year, for Manitoba Hydro is what I'm understanding. Mr. Turner: So, there is export revenue associated with these long-term dependable contracts in drought years or in years of high water. So, I think, correct. MLA Khan: I mean, I guess just last clarifying–sorry, you added one word in there.

So in drought years, when we are exporting, though, would there still be a net gain, financial gain, for Manitobans, if it is a drought year of, I mean, maybe not to the 1941 status; I gues s that would be the question, what defines a drought year. But I guess, historically, if we're looking back at the past, you know, 50 years, would there be a net financial plus to exporting energy even factoring in those drought years, of having to import energy? Mr. Turner: Mr. Chairman, there is a financial benefit to Manitobans in drought years by having these long-term export contracts in place.

February 22, 2024 LEGISLATIVE ASSEMBLY OF MANITOBA 57 MLA Khan: And this is going to make me –in the units of which we –Mr. Chair–maybe we can get a clearer–in the units in which we purchase and sell energy, is the unit price of purchasing energy into the province greater or lower than the selling price of what we export our long- term dependable contracts for? Mr. Turner: Mr. Chairman, this is going to sound like a politician's answer, so I'll apologize in advance, but it depends. So there will be times when we can import energy at very low prices.

There's, in fact, times when–where utilities will pay us to take energy, and there will be times when we have to pay mor e than our long- term export contracts. So it –market conditions can change and can vary. So there's no one answer to that question. MLA Khan: That was a very good answer. It wasn't politician at all. The –then would maybe the CEO could–have an undertaking of providing this commit- tee with a historical reference of what the selling and purchasing price index or price unit would be over the past two decades for this province? Mr. Turner: Mr.

Chair, so we cannot provide the specific prices that we receiv e as part of those contracts. That would be commercially sensitive information. I would direct the member to the Public Utilities Board. There will be lots of publicly available information at a more general level on the export revenue that we receive at Manitoba Hydro. MLA Khan: All right. Thank you very much, Mr. Chair. So we'll get back to the success of Manitoba Hydro for this annual report here: $638 million, I believe, is what was reported.

Given the numbers, given the export numbers – $1.13 billion of export revenue, and Keeyask has come online, more energy, spot market was higher than anticipated, would the CEO say that he was –if he had to describe –he was unhappy, happy, very happy, over-the-moon happy with the performance of Manitoba Hydro in the '22-23 annual report? Mr. Turner: There's a lot of options there. Unhappy, happy, over-the-moon happy– An Honourable Member: Angry. Mr. Turner: Angry? Okay. I think I would say I was happy.

MLA Khan: I–like I said in my opening remarks, I know at times it seems like we're confrontational in here, but we are here for the same purpose, and that's to make sure we move Manitoba Hydro forward for the best of all Manitobans. So I will throw in some nice, light questions then. So, happy is a good term for describing the financial reports. As a CEO, would you be happy with a report under your leadership–if this report was to come under–be under your leadership, would you be happy with that? Mr. Turner: Sure, yes. MLA Khan: This question goes to the board chair, then.

We have an interim CEO who says he's very happy with the reports –or happy –sorry, not very happy; he said he was happy with the reports and that he would be happy with this report if he was the CEO and this was done under his tenure. You would ha ve to assume that former CEO was also happy with the success under this report. Does this at all create any thought or reassessment of the termination of the former CEO by this board chair? Mr. Graham: Mr. Chair, as previously discussed, as the majority of these outcomes are hydrology driven and water based, unless Ms.

Grewal can predict the weather or create rain, we're still very happy with our decision. * (11:30) MLA Khan: Thank you, board chair. And I think we all agreed earlier that none of us her e can control the weather–politician, Manitoba Hydro, former CEO. But what the former CEO can control in this annual report, which is highlighted, was Strategy 2040, was the IRP that was created underneath her and many other commissioned reports that led to the success of Manitoba Hydro.

So would–is the board chair, although we agree he cannot control the weather, there is more than just controlling weather that affects operations around the success of an organization. So the question to the board chair is, does the board chair –what are his comments towards the foundation or the systems that the former CEO had put in place for the success of this annual report? Mr. Graham: Again, I can go on the record, just say thanks to Ms. Grewal for the work that she did while she was the CEO of Manitoba Hydro.

Back to the question about the annual report, again, we were very much focussed on the impact of water levels on the income that was generated in that

58 LEGISLATIVE ASSEMBLY OF MANITOBA February 22, 2024 annual report, and as we all agree, no one in this room can predict the–or create different weather patterns. So again, we thank Ms. Grewal for her work, and we look forward to the next

chapter in the organi - zation's history. MLA Khan: Speaking–this question will go to the CEO now –speaking of debt loads for Manit oba Hydro, can the current CEO tell us what the current debt load of Manitoba Hydro is? Mr. Turner: Mr. Chair, I'm going to let Mr. Fogg speak to that. But just before I do, I just want to clarify. So, the member asked if I would have been happy if I was the CEO when this annual report was produced. And so what I want to be clear is–and I said I was happy– it's not because of the $638- million net revenue.

It's because of –because our net revenue is very much dependent on weather in the markets that we work in, and because of the great work that our Manitoba Hydro employees did for Manitobans, which is why I would be very happy if this report had been done under my purview. And now I'll turn it over to Mr. Fogg to speak to the debt levels. Mr. Fogg: And so, certainly, as outlined in the annual report and you can see on page 116, we look at this from a net debt perspective.

And in the fiscal year 2023, once you look at our long-term debt, the current portion of that, any amounts of cash on hand at that time, net debt was just around $23.5 billion. The net debt as it would be today would be around approximately $24 billion. MLA Khan: Thank you very much, Mr. Fogg, for that. And I'm going to go back and touch on the comment that the CEO made, and I couldn't agr ee with him any more. I want to thank the hard-working employees of Manitoba Hydro for all the work they do, in and out, on the success of that annual report. And we all agree we can't control the weather.

I think we've said that, and everyone's well aware we can't. For such a silly question, I didn't know it was going to be such a main focal point. But what–but we are responsible for in leadership and executive roles is the employees, the team, the management, the structure that we have in place. So to your comments, Mr. Chair, to the CEO's – interim CEO's comments on the hard work of employees and the groundwork and the foundation that was laid, couldn't agree more.

That was laid due to leadership and systems that were in place by the former CEO and ex ecutive management, which this board chair has made very clear that felt needed a review. So now we have a board chair sitting here saying that they had a review, day one, that led to an informal review process, which led to the termination of the CEO a we ek after making public comments on the Manitoba Hydro, and you have an interim CEO saying that the hard work and the employees and the foundation in this annual report are great.

So, I mean, and they're two sitting side -by-side, so maybe, you know, those two need to get their ducks in a row here on what the minister actually wants them to say.

It's clear that the minister and this NDP gov ern- ment has inter fered in the –oh, I thought you were going to call him –it's clear that there is suspicious behaviour here and that there is reason for concern of Manitobans that a week after the CEO comes out with a happy report that they would be happy with, that the interim CEO would be happy with based on numer ous factors, one that we can't control the weather, but t he hard work of employees and groundwork and foundations in the system of Manitoba Hydro. And you have the board chair saying well, we started a review on day one to get rid of her.

Or we started a review on day one, and we got rid of her. So, it's very con cerning. Manitobans need to be concerned about what's happening on that side, and they need to be concerned with the minister's direction on where we want to take this Crown corporation. To Mr. Fogg's comment on the debt that we have in this provin ce: $24.61 billion approximately. How much on each dollar of Manitoba Hydro goes to servicing the debt paid by its customers? The Chairperson: Minister Sala would like to respond.

MLA Sala: I just want to make a comment broadly, because I know that the c ritic continues to repeat the same line, hoping that it will make things true. Unfor- tunately, that's not the way that things work. He just pointed to concern that Manitobans might have about what he's suggesting happened here, which he's heard re peatedly is not the case. And I just want to take a second here to highlight what I think Manitobans were really genuinely concerned about

February 22, 2024 LEGISLATIVE ASSEMBLY OF MANITOBA 59 and had good reasons to be concerned about under the leadership of the last government. Manitobans, under the leadership of the critic's former government, saw multiple strikes under their leadership: with IBEW; with Unifor; those folks that do the hard work of ensuring our homes are heated, make sure our gas networks are properly taken care of. That created a huge amou nt of instability.

And, frankly, in an environment like Manitoba, where you have–of course, we all know what our winters are like and how challenging those can be–we need to ensure that we protect reliability. The last gov ernment created a huge amount o f labour instability that, frankly, threatened the ability of IBEW workers to do that im portant work and threatened the ability of Unifor gas workers to do their important work. Again, we want to talk about concern ing. We know that the critic was a member of a gov ernment that worked very hard to sell off valuable Manitoba Hydro-owned assets; for example, Teshmont.

Recently, in October 2022, they sold off Real Time Digital Solutions from MHI for $68 million. They're in the business of privatizing. Manitobans know how important it is to keep Manitoba Hydro public. So, again, we want to talk about what's concern ing to Manitobans; I would encourage the critic to reflect on the record of his former government. Hiding the financial reality at Man itoba Hydro.

He was alluding earlier when he suggested that I was somehow involved in, you know, in his words, in misdirecting, and he couldn't remember what that instance was, but I'll remind him of what I think he was trying to allude to, which is when we spoke to the fact that his previous gov ernment released in Q1, July 28, a financial update for Manitobans. This was, of course, just a couple months before the election, which in no way reflected the drought year and the challenges that they knew Hydro were going to exper- ience financially.

And, of course, a Hydro Q1 was released just days before the election which showed that direction, but his government, as they did for seven years, failed to be transparent with Manitobans. That's something that people are genuinely concerned about. So, again, I ask that he reflect on some of the things that we saw happen under his gov ernment. Those are the kind of things that Manitobans are worried about: their lack of transparency; their lack of commitment to a public hydro; their willingness to undermine the workers that provide the im portant services that keep our lights on and keep our homes warm.

That's their record. So I really want to highlight their past and the decisions that they made. This, you know, trying to create some sense that there was some kind of inappropriate actions taken here, he can continue to repeat that. You'll continue to hear that that's simply not the case. Let's talk about the real challenges that his past gov ernment created. I think it's important that he reflect on those. Thank you. The Chairperson: I'll let Mr. Fogg respond to your question, and then we can come back. Mr.

Fogg: I believe the question was related to the amount of our revenue or percentage of our revenue that goes to service our debt on an annual basis. Maybe I'll ask the member if he could just confirm that. The Chairperson: Sure–MLA Khan. MLA Khan: Sorry, I was making another note on one of the minister's comments. So could you repeat that– sorry, the question was: how much of each dollar paid by Manitobans goes to servicing the current Hydro debt? Mr.

Fogg: So, when we look at that, we would look at it from the perspective of how much of our –the revenue we bring in from our domestic customer s may go to service our debt on an annual basis. And I believe that amount's been discussed recently. That's approximately 33 per cent of that dollar, if you will, would cover our annual interest costs on our current level of debt. But that will vary. As you would see in the '22- 23 annual report, between the twenty -two–2022 fiscal year to 2023 fiscal year, debt levels will change; debt -servicing level will change.

But, as it stands today, it's the 33 per cent. * (11:40) MLA Khan: I apologize I had to repeat the question, then we got lost there a little bit because, you know, the minister had to inter fere in the com mittee here today and interject with partisan politics. I'm simply asking questions on the –to the interim CEO and the board chair on, you know, the finances and the health of this annual report, and he wants to interject again. It's clear that this minister wants to interject–interfere in the committee and interject some partisan politics. Was asking about debt ratio.

I think that's what we're here to talk about, and it is im portant that we have a lack–that we have transparency in this process,

60 LEGISLATIVE ASSEMBLY OF MANITOBA February 22, 2024 that we can ask these open -ended questions and get answers on what's happening, because Manitobans have the right to know. So, I'll move on to the 33 cents now. I remember reading or hearing somewhere that it was 40 cents, Mr. Chair. I remember reading that it was 40 cents. I may be getting my numbers mixed up here, so maybe Mr. Fogg can clarify where the 40 cents –if it was 40 cents and then it went to 33, or am I misreading that number somewhere? Mr.

Fogg: You know, I can't spe cifically recall whether it was 40 cents or not that may have been mentioned previously versus the 33 cents that we have today. But I think that goes back to what I was mentioning earlier, is that that debt level and the cost to service that debt will change over time. It may have been 40 cents at one point. Certainly in a high water year such as this where a higher net income is generated, we were able to, as you'll–as you see in the long–in the annual report, we were able to retire a certain portion of debt and that will change that percentage, and that–but that will vary over time.

When we think about debt, we think about it over a long term and things do change, s o you will that number change as well. MLA Khan: Thank you, Mr. Fogg, and while you were speaking, I did recall. It was the '21 -22 annual report where the debt was 40 cents, and then this report, '22 -23, it's gone down to 33 cents is the servicing debt on each dollar. So can Mr. Fogg comment–and I know he said that weather con ditions were favourable. Anything else that led to the drop in servicing debt in this annual report? Mr. Fogg: So, Mr.

Chair, on page 36 of the annual report, it does note that long- term debt decreased by $520 million, and that was primarily due to an increase in debt maturities in the current year. During that year, the cor poration was able to retire $1.148 billion in debt while receiving proceeds from new debt. That is the dir ect result of why that percentage amount would change in terms of servicing costs on our debt. As debt can be retired, there's a lower servicing cost that goes with it.

As you will see in this annual report, as well, we've–we went from a drought year to a significantly high-water year with a large swing in revenue, and that would cause that type of swing in the inter - servicing costs because we were able to retire debt. MLA Khan: Any other factors that may have contri- buted to the debt being reduced i n this annual report, Mr. Chair, to Mr. Fogg? Mr. Fogg: Certainly we've noted the high net income, I believe, as you'll note in the report as well, and I'll just find the exact page.

There was other items of revenue in that year, and there were some reduced expenses in relation to water rentals and our prov incial guarantee fee that we pay that would have had an increase in that year and will impact subsequent years of revenue for Manitoba Hydro. The Chairperson: So we've had a request for a quick break, so I'd like to propose we take a 10- minute break. Is there agreement?

MLA Khan: I would just–unless it's an urgent break, which I also have a bowel disease, so I understand how urgent breaks are, but unless it's an urgent break, I would just ask if I could spend another maybe eight minutes in just finishing this line of questions on debt/equity– eight to 10 minutes, and then take a break, just so we can switch gears afterwards? The Chairperson: Is there agreement? [Agreed] MLA Khan: Mr. Chair, there was a comment made about something about servicing debt and water rental fees. Can Mr. Fogg comment on how much an impact that made to the overall debt owed? Mr.

Fogg: So those reductions and some of those fees that, for the particular fiscal year '22-23, did result in approximately a savings of $190 million. In Manitoba Hydro's overall expenses, that would have factored into the debt reduction. I can't say that it's a one -to- one relationship, but that would've been the change that we experienced. MLA Khan: Thank you, Mr. Fogg. And that, just to be clear, that was on the previous provincial gov ernment reducing the water rental in half and also reducing the debt servicing by 50 per cent as well. Is that correct? Mr. Fogg: Mr.

Chair, the $190 millio n that I referenced was specific to a reduction in the prov - incial guarantee fee, charges to Manitoba Hydro and the water rental fee as well.

February 22, 2024 LEGISLATIVE ASSEMBLY OF MANITOBA 61 MLA Khan: Thank you. So–thank you, Mr. Chair–so the previous govern- ment enacted something that saved Manitoba Hydro $190 million. That con tributed, amongst many other factors, to reducing the debt; and then reducing the debt servicing per dollar to–from 40 cents to 33 cents. How would it help or benefit Manitoba Hydro if the fee for water rental was completely eliminated? Mr.

Fogg: To try and answer the MLA's questions, the member's questions, I –it's–trying to give a comparison of what might be saved if that fee were reduced would cause me to have to forecast what water flows may be in the future. That would be a little difficult–certainly I can't give you a perspective on, we think it would have been a certain amount so we'd save that because we don't have the fee. I think it's a fair statement to say that if a fee is brought to zero there's a reduction in expenses. What is–the exact savings are, I wouldn't be able to speculate. MLA Khan: Of course, you know, Mr.

Fogg, I'm not looking for the number, exactly what it could be, but does Mr. Fogg or maybe the CEO could comment on, if that fee was to be completely eliminated, then this would result in ongoing savings for h ydro and ratepayers? Mr. Turner: If our expenses were reduced, then it would reduce the cost for our–we'd have to pass on to our customers. So the answer is yes. MLA Khan: So the debt would be decreased further from 40 to 33 and then potentially more, thus passing the savings on potentially to ratepayers.

When we look at the debt/equity of Hydro, largely reported on, the large debt that Manitoba Hydro has, can Mr. Fogg or maybe the CEO comment on, what is the debt -equity ratio for Manitoba Hydro and what does this debt -equity ratio mean for the health and operations for Manitoba Hydro? Mr. Fogg: The–as reported in the '22 -23 annual report, the debt -to-capitalization ratio for Manitoba Hydro for the year ended March 31, 2023 was 84 per cent. I believe the other part of the question was, what does a debt -to-equity or debt -to-capitalization ratio represent?

Really, that's a ratio that speaks to how much of our invest ments or funding we are making using debt versus equity for our own generated funds. And so that's a long-term financial measure that says how we've used those different forms of investment to invest in our assets over the long term. * (11:50) MLA Sala: I'd just like to follow up on this question just to high light something really concern ing that I know a lot of Manitobans were worried about when this previous gov ernment moved forward with the financial target that they set at the Cabinet table for Manitoba Hydro and outlined in bill 36.

Those targets were exceptionally stretch -type targets which really forced Hydro to pursue a much more aggressive path of rate increases. We know that was the previous government's goal with that bill. And that was genuinely concerning, of course. We spoke a lot about that in the House, in the media. And that's something that we know ultimately has created a situation where Hydro, under the rules outlined in that bill and the financial targets that it outlines, it forces Hydro to pursue a ve ry aggressive path of rate increases.

And so that's something that we do want to highlight here, that the last government's interference in Hydro in this way. And certainly, that's some thing that we know we've heard a lot about from Manitobans. So, just wanted to use this op portunity to high - light, you know, this discussion about debt to equity. And just to remind Mr.

Khan that his government last time around not only inter fered bu t they basically sought to set hydro rates at the Cabinet table, and that's something that was very worrisome, given their record of, like, an extreme focus on rate increases and their willingness to go to all types of new wild and creative measures to try to make h ydro more expensive for Manitobans. MLA Khan: You know, yet once again, I'm asking questions of the chair –well, not the chair in this instance, but the CEO and Mr. Fogg on debt /equity. And, you know, the minister feels that he needs to interject with partisan politics again.

And I'm simply asking about debt -equity ratios, and the minister wants to go on tangents and interfere and sideline the conversation when Manitobans have a right to know of what the debt -equity ratio is and what the financial health of this is. When we want to talk about rates, we'll get to that after our break as well and what that means for Manitobans. And in the interests –I know we said a couple more minutes we'll take a break. So, quickly, does Mr. Chair, maybe Mr. Fogg can just –can simply comment yes or no or higher or lower is better, is a

62 LEGISLATIVE ASSEMBLY OF MANITOBA February 22, 2024 lower debt ratio better or worse for operations of an organization? Mr. Fogg: I would say that a debt ratio is a very –the measure is relatable to the industry and the company we're talking about. So to–context of that is–is it better if it's higher or lower is a little bit difficult to answer specifically. I think what I would say is Manitoba Hydro has always identified debt to equity as a ratio amongst many others that it considers from a financial health perspective. And it's a long- term financial measure.

Debt to equity isn't some thing that changes dramatically one year to the next year. It's something that we look at over a long term. And we seek to get not to the lowest level possible but to the appro priate balance around debt -funded assets versus equity - funded assets. And that's an area we work very closely with: with the PUB and as an area of discussion. And all of our rate hearings are on what is that target appropriately set at, how long should we take to get there and what's the right balance between achieving that target and affordability for Manitoba Hydro's customers.

MLA Khan: I'll point to page 50 and 51 of the strategy 2024 where it talks about assets and debt. And maybe Mr. Fogg could take a read on this and, you know, give me another answer on a lower debt ratio. But it clearly states here that Manitoba Hydro's debt is the highest–debt-to-equity ratio is amongst the highest of all Crown or Canadian electric utilities. And with–utilities with lower debt ratios have room and flexibility in their response to the changing energy landscape and it can accom modate to lower rate increases. So, Mr. Chair, maybe after reading that last line on page 52–sorry, 51–Mr.

Fogg can comment on what a lower debt ratio means to rate increases for Manitobans. Mr. Fogg: There's a –there's likely a number of aspects in response to that question. I think what I would say is a debt -to-equity ratio today represents investments that an organization has made today, and that ratio will chang e as they need to make invest - ments in the future.

Our comparison with other utilities, that will change as well as they need to make investments as they see their grids electrify and they need to potentially make more invest ments in assets that Manitoba Hydro has, as we're already about 99 per cent green in this case. In regards to the question around affordability, I would say that there is a balance there.

Certainly a pursuit of a target that is considered too aggressive or to have it too fast will h ave an impact on rates, and really what I believe that statement in the report was related to is once you get to a certain level of debt/equity it does provide you a degree of flexibility around how you fund your assets using debt that may be available versus equity. However, there's different aspects to that: the pace at which you get to that target, how fast that should be, how you balance the trade -offs of that. That's a critical con sideration that we go through in the regulatory process.

And I would also add that the appropriate debt-to-equity ratio for Manitoba Hydro is not the same appropriate 'dequity'–debt-to-equity ratio for a different utility necessarily. So it needs to be considered in context with Manitoba Hydro as well. MLA Khan: This will be the last question because I know we're–the break, and I want to stay true to my word here. So thank you again, Mr. Fogg, and maybe this question will go to the CEO and we can get a, you know, a more clearer, concise answer on that.

So, it's clearer in this report, strategy 2024, and in the annual report, that debt-equity ratio is an important factor for ac commodating lower rates increases for Manitobans. We've said the mission statement is in regards to rates, affordability, reliability f or Manitobans, a lower debt -to-equity ratio. I mean, in your own document produced by Manitoba Hydro, would allow for that. With a heavy resilience on borrowing to fund the major capital projects, Manitoba's Hydro debt -to-equity ratio is among the highest of all Crown -owned Canadian electric utilities.

Hydro's focus is to minimize further debt growth and strengthen the financial health of the utility. All other Canadian Crown utilities currently have better debt ratios than Manitoba Hydro. I'll repeat ag ain: Utilities with lower debt ratios have room and flexibility in their responses to the changing energy landscape and can accom modate to lower rate increases.

So the question to the CEO – I mean, reading their own document it's clearly written out here that a lower debt-to-equity ratio is one that is sought after to have flexibility and ac com- modate lower rates, and given Manitoba Hydro's massive debt they have now, does this, Mr. Chair, does the CEO believe it is in the best interest of ratepayers and Manitoba Hydro to take on more debt?

February 22, 2024 LEGISLATIVE ASSEMBLY OF MANITOBA 63 Mr. Turner: So, as everybody's aware, we have a brand new board at Manitoba Hydro. Strategy 2040 was, as I mentioned earlier, was created a number of years ago and Manitoba Hydro is looking forward to working with the board to try and understand what is that right debt/equity target, given today's–where we are today, and to find the best ratio for Manitobans. So I think that was a perspective when we wrote Strategy 2040. I think we need some time to work with the new board on what is an appro priate debt/equity target today.

But one thing I will say is, and as it always has been, the Public Utilities Board sets rates for Manitobans, so this isn't some thing that we do in isolation. The Chairperson: As previously agreed, the commit- tee will recess for 10 minutes. The committee recessed at 11:59 a.m. ____________ The committee resumed at 12:11 p.m. The Chairperson: Will the com mittee please come back to order? MLA Khan? Oh, sorry. Mr. Jackson. Mr. Grant Jackson (Spruce Woods): I appreciate it. To Mr. Graham and Mr. Turner and Mr. Fogg and the other Hydro officials in the room, apologies.

I couldn't be there today to meet you in person, but certainly hope to do so at some point in the near future. Minister, alway s a pleasure to see you.

Before I get to the other officials there, I just have to ask this question because the minister made a comment in his comments earlier regarding the previous government, and how deplorable he thought it was about setting hydro rates at the Cabinet table, and yet that comment is just rife with hypocracy from a minister who not only intends to set hydro rates at the Cabinet table, but wrote it into a mandate letter and campaigned on freezing hydro rates, which is in fact setting the hydro rate, not at the Public Utilities Board, but by his political pen.

And so I'd just like the minister to comment on how he feels that's different, or how he plans to get the Public Utilities Board to approve a zero per cent hydro rate increase. MLA Sala: I appreciate the question from the critic, and want to welcome him here. I'll just say there's a lot of assumptions in his commentary there about our proposed hydro rate freeze, so I won't comment further there.

What I will say is that what we know is that his government, and the work that they did to try to create these very aggressive targets and put them in legis lation is – threatens to be one of the biggest drivers of energy rate increases on Manitobans for the distant future. That's a huge c oncern; that certainly is top of mind for us, and that is something that we are certainly looking to work through to rectify. Mr. Jackson: Well, simply trying to pay for the overpromised and overbudget projects of a previous NDP government, but I digres s. I will revert to the CEO through you, Mr. Chair. Mr.

CEO, you noted that you were just put in this role last week. The government controls the timing of these committees, and we've seen them move dates as recently as this year, with this same com mittee to consider Efficiency Manitoba's annual report. Given the importance to the democratic process of this com- mittee and it –the hearing dates, do you think it's a responsible decision for the gov ernment to have put you in the difficult position to answer detailed questions at this commit tee in that short period of time? The Chairperson: We're just having issues with the volume on our end, Mr. Jackson.

We might ask that you repeat the question; and if I could also just ask that you direct questions through the Chair. So rather than asking the CEO directly a question, you are asking the question through me, as Chair. So, Mr. Jackson. Mr. Jackson: Apologies. I'll try to speak up. I hope you can hear me a little better. The question is through you, Mr.

Chair, to the CEO: Does the CEO feel, given the short period of time that he's had to prepare, that it was a responsible decision of the gov ernment to continue with this committee hearing on this date rather than extending it as they have done for other committees such as the Crown cor porations standing com mittee hearing for Efficiency Manitoba's annual report? Mr. Turner: I can't comment and I won't comment on what happened on Efficiency Manitoba.

What I can say is, you know, the things that went into this annual report and the performance of Manitoba Hydro is a result of all of our employees, not a result of just the CEO. So, I've been here at Manitoba Hydro for a little over 28 years, and I'm happy to be in the interim CEO role and happy t o be here represen ting Manitoba Hydro.

64 LEGISLATIVE ASSEMBLY OF MANITOBA February 22, 2024 Mr. Jackson: I thank the CEO for the question. I think it was alluded to earlier by Mr. Fogg, but through you, Mr. Chair, just wondering if they could reiterate what the current debt load of Manitoba Hydro is and how much progress was made in paying down that debt in the fiscal year under consideration. Mr. Fogg: So, I would just refer everyone to the annual report for '22-23.

And I think page 116 does an accurate job under note 31, capital manage ment, outlining some of the back ground around our long-term debt and how that debt changed from the '21-22 fiscal year to the '22-23 fiscal year. And there's a–several items that make up what we would call our net debt. That's long-term debt, current portion of that long-term debt, notes payable and then adjustments for any cash and cash equivalents. What you can see there is the–a change from a $23.7-billion net debt to $23.5- billion net debt between those two fiscal years, as reported in the annual report. Mr.

Jackson: So, a slight decrease in the net debts, then. The annual report notes that the PUB allowed a lower than expected rate increase. Can you please explain to the public or Manitobans what impact that, you know, slight lower than expected increase would have had on the ability to pay down some of the debt? Mr. Fogg: Mr. Chair, I believe what the member is referring to is that when we went to the Public Utilities Board in the previous year for a general rate application, we submitted rate requests for a 2 per cent increase on September 1, 2023 and a 2 per cent increase for April 1, 2024.

Through a very thorough, comprehensive process, about seven and a half months, I think, in full, the PUB reached a decision to award a 1 per cent increase in both years– in both cases, for the September 1, 2023 date and for the April 1, 2024 date. Approximately, you know, a 1 per cent difference in rates may be around an $18- million difference in domestic revenue. I think it would be difficult for me to specifically say how that impacted further reduction in debt.

As we've talked about already today and as is in our third- quarter as well as our second -quarter report, Manitoba Hydro is currently facing drought conditions again. And the reduced revenue as a result of the wat er conditions far outweighs any impact of that difference in those rate increases. Mr. Jackson: So, just to confirm, as the financial officer just noted there, the rate application went through a signi ficant and robust conver sation at the Public Utilities Board, unlike the accusations with the–which the minister leveled of rates being set around the Public Utilities Board at the Cabinet table.

Just to confirm that that was the process that actually took place. * (12:20) Mr. Fogg: Mr. Chair, we alwa ys go to the Public Utilities Board to set our rates and go through that process. So I can confirm the rates that we have for September that were–just came in place in September and that would happen in April were based on the process with the Public Utilities Board. Mr. Jackson: Thank you very much for that confirmation, Mr. Fogg. Could you clarify, with the financial situation that's covered in this fiscal year, would you recom - mend a path forward where hydro rates are frozen? Mr. Fogg: Mr.

Chair, it would be difficult for me to comment specifically around aspects around a policy such as that. What we do at Manitoba Hydro is we look at rates from a long- term perspective and we consider a balance of our financial targets, of which that could be as one, but there are others. And we consider impacts that have come before, whether it was a year such as '22-23 in high water conditions or the drought that we're currently in, and consider what an appropriate long-term rate path would look like and as we've submitted to the PUB.

But what's im portant is, as a trajectory of rates, not a single rate in any one year, but how rates may change over time so that's it's appropriate and affordable for Manitobans and so that it's stable and predictable, as well, for all Manitobans, for our customers. MLA Sala: I ap preciate the commentary from the CFO, but just want to add to that.

I mean, when we got in government and we were able to see the degree to which the previous government had been hiding the realities at Hydro and the direction of this year and their net income –and, of course, we know –we just released this morning the Q3 report showing that we continue to see a worsening of our projected net income. Once that became clear, we did state, and this is not news here, that we were going to delay the proposed rate freeze in light of those financial challenges that we're seeing right now with our drought year in place.

So, you know, just seeing clearly where the critic's going, but just to be clear, we recognized the drought year and the financial challenges that's creating. And this is why we've

February 22, 2024 LEGISLATIVE ASSEMBLY OF MANITOBA 65 proposed to delay that rate freeze commitment, which we are still committed to, but obviously, given the current situation, this is not the time. Mr. Jackson: I respect the minister's comments.

I would argue that, you know, he probably noticed last summer when he was out knocking on doors that it didn't rain a lot, and so it was likely still irresponsible to campaign on that platform commitment given the fact that there was no water falling and he didn't need an umbrella while he was on the doorsteps, and yet he and the other NDP colleagues in the room decided to proceed with that commitment anyway. And so my question to the CEO, through you, Mr.

Chair, would be: Is Hydro in a place that it could be financially sus tainable with zero per cent–with a zero per cent rate increase, and what factors, in your opinion, would contribute to the Public Utilities Board approving a zero per cent rate increase? Mr. Turner: Mr. Chair, I believe it would be premature to speculate under those con ditions right now. We, as I mentioned earlier, we have a brand new board, and we need to sit down and have conver sa- tions with the board around the kind of decisions we need to ma ke, to make sure we continue to serve Manitobans with safe and reliable electricity.

And it's not appropriate for me to speculate on what the PUB would consider with respect to rate increases. Thanks. Mr. Jackson: My question to the CEO is, can he, the CEO, outline for us who creates Hydro revenue projections that would be published in quarterly reports? Mr. Turner: Mr. Chair, yes, I can. So there would be a number of employees at Manitoba Hydro that would generate the revenue projections. So it's –as I'm sure the member can ap preciate, it's a multi -step process.

So the first thing we would need to do would be to forecast domestic revenue requirements –or, sorry, domestic load, which would then allow us to calculate our domestic revenue. And then we w ould have to forecast water, what do we think the water's going to be like. And, in fact, we look at a number of different potential scenarios and calculate how much energy would be available for the export market. And then, using our export price 'forec asses'– forecasts, excuse me, we would then calculate the non-firm export revenue.

Of course, the firm export revenue associated with our domestic contracts is known, and we would just add that on. So it's a large number of people within Manitoba Hydro that make that calculation. Mr. Jackson: I thank the CEO, and it certainly sounds like he has a great deal of respect for these individuals. But I'd just like it for the record, would the CEO consider these individuals who make these forecasts and projecti ons, would he consider them experts in their field? Mr. Turner: So the short answer is yes, as far as the people that work at Manitoba Hydro.

For things like export revenue, we rely on third parties, a number of third parties, to give us price forecasts. I'm not–I would assume they are experts, but I can't say that I know, in fact, that they are experts, having not interacted with those folks and met them. But the people that work at Manitoba Hydro, absolutely. Mr. Jackson: And would the CEO consider those experts who work at Manitoba Hydro to be non- partisan? Mr. Turner: Yes. Mr.

Jackson: And so, with that on the record now, earlier this year, the minister, barely a month into his role, came out and made accusations about the credibility of previously published quarterly projections in terms of Hydro and the overall Province's general revenue. In the opinion of the CEO, does he believe that, you know, the forecasters got it wrong, or should they have simply done a better job projecting or predicting revenues and potential losses like the brand -new minister claimed? MLA Sala: I'd just like to offer some comments, then I'm happy to pass it to the team to fill out things here.

So what's being referenced, again, is what was referenced earlier by Mr. Khan, which is this notion that somehow we'd made misleading comments shortly after coming into government regarding what we learned about in terms of the last gov ernment's decision making. And so I'll say it again clearly, and this gives me a good oppor tunity to do this, and I'll share this for the critic so he can have a better understanding here of what we observe. We know that on July 28, his gov ernment released a Q1 report that showed no change from their projected deficit levels that they reported they were

66 LEGISLATIVE ASSEMBLY OF MANITOBA February 22, 2024 going to see in Budget 2023. So they suggested that the deficit was going to remain somewhere close to, I think, $363 million was their projected deficit in their budget. Q1 they reported July 28–this is deep into Q2– no change from that projected deficit level. And, of course, we know that they had a strong interest in not creating any concern for Manitobans shortly before an election that their budgeting skills, that their management prowess was to be put in question.

Deep into the second q uarter there, it was clear that we were facing a drought year here, and yet we know when they released their first quarter report on July 28–again, deep into Q2–which showed no changes from their projected deficit level, that they would have already known unquestionably about the direction of Hydro's net income for this year.

And then, of course, they did release the Hydro Q1 data on September 29, only days before the election, when it was much harder for Manitobans to begin questioning them about why the y, frankly, put forward a report at the end of July that wasn't quite transparent or honest. * (12:30) So, hopefully, that helps the critic to understand why that's a deep concern for Manitobans, that they, frankly, weren't given an honest assessment of where our deficit was headed this year. We know why they wanted to do that.

We know that they wanted to stay in government and, unfor tunately, you know, it was made clear that that game that they tried to play was revealed to all. So, happy to answer any further questions on the timeline there and how that transpired. And I think it's a good example of why gov ernment should always seek to be transparent with their citizens. Mr. Jackson: Thanks to the minister for that commentary.

The Quarter 1 report filed at the end of July would have also laid bare those facts for his party to still be able to adjust their irresponsible campaign promise for the next two months, which they decided to run on anyway. But, alas, they chose to continue to double down on a fake freeze which they knew, or should have known, that Manitoba Hydro couldn't afford. But I digress.

The question at hand is for the CEO: They–the new government has come out shortly after your predecessor made comments at the Manitoba Chamber of Commerce with highlighting the need to build strategic partner ships across the province to increase our generating capacity. We know this isn't new. British Columbia has over 13 per cent of their generating capacity generated by private partnerships, some owned by First Nations. And we have wind farms here in Manitoba which a previous NDP government created.

Yet, this new minister came out less than 24 hours later and said the new NDP gov ernment has no interest in partnering with First Nations or anyone else to build generating capacity in this province. So the question is: Do– does Manitoba Hydro or the new CEO think that the gov ernment should have the power to veto or stop initiatives outlined in Strategy 2040 to build more generating ca pacity in this province? MLA Sala: I'll take a first response, and again happy for the team to follow up on that.

Just in terms of the comments, we said, very clearly, and this won't surprise Manitobans, the Manitoba NDP supports Manitoba Hydro remaining public forever and always. That's not news; that's something that we fight for every day and we have fought for forever in this building and in Manitoba to keep Manitoba Hydro public. We know that the previous gov ernment and the party that the critic belongs to is strongly in support of privatization at Hydro. And we saw that over the seven years that they were in gov ernment, that they continuously worked to try to chip away.

They in fact had, again, a number of ex- Conservative premiers lead a report process that recommended that Manitoba Hydro sell off non- core assets. They'd sold off Teshmont; they worked to break up Manitoba Hydro Telecom. They sold off Real Time Digital Solutions in October 2022. So we know –again, it's not a surprise that th e critic is here fighting for more privatization, that that's really the destination that he wants and his party wants to go here with Hydro. They showed that to Manitobans over seven years. We want to protect Hydro. We want Hydro to remain public.

We're proud of that, and that's some - thing that we know Manitobans support. They're on our side. We know that Manitobans understand that a public Manitoba Hydro is the best way to ensure that rates remain as affordable as possible. So, you know, this –again, this isn

Document details

Collection	Manitoba — Debates (Hansard)
Citation	43-1-cc3
Type	hansard
Volume / chapter	43rd 1st hansardpdf cc3.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	3c83a8cd45ee9792103f480ae37660bb567e8150

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