Manitoba Hydro recently released its annual report showing a total consolidated net income of $37 million for the fiscal year ended March 31, 2018, down from $71 million in 2016-17.
The $37 million in net income was comprised of $18 million in the electric segment, $7 million in the natural gas segment, with $10 million from subsidiaries and $2 million related to accounting adjustments to harmonize accounting polices between electric and natural gas operations.
Net income decreased by $34 million primarily as a result of $50 million in restructuring charges incurred as a result of the utility’s significant efforts to streamline the organization and reduce costs, including the implementation of a Voluntary Departure Program for employees.
Higher domestic electricity revenues resulting from colder weather and growth in the number of customers, along with a reduction in operating and administrative expenses as a result of the corporation’s cost reduction program, provided positive contributions to the utility’s financial results. These improvements were partially offset by lower extraprovincial revenues due to reduced hydraulic generation. A major contributor to the corporation’s cost reductions this past year was the Voluntary Departure Program. Manitoba Hydro achieved a reduction of more than 800 positions that will save the company over $90 million per year in annualized expenditures. In addition, the number of executives was reduced by 30 per cent, and overall the corporation reduced its management ranks by 26 per cent.
As part of its financial plan to address risks brought about by increasing debt as the utility adds critical infrastructure to meet the needs of the province – including the Bipole III Reliability Project and the Keeyask Generating Station in northern Manitoba – Manitoba Hydro had applied for electricity rate increases as part of its 2017-18 and 2018-19 General Rate Application. On May 1, 2018, the Public Utilities Board (PUB) confirmed previously awarded interim 3.36 per cent rate increases effective August 1, 2016 and August 1, 2017 and approved a 3.6 per cent average rate increase effective June 1, 2018.
“Manitoba Hydro continues to deliver safe and reliable gas and electric service to Manitobans, at some of the lowest rates anywhere in Canada,” said Kelvin Shepherd, President & CEO of Manitoba Hydro. “To remain an industry leader, Manitoba Hydro must continue modernizing and enhancing our customer experience. While we have always been driven to serve our customers and meet their energy needs, our focus is now on taking that service to an even higher level in the upcoming year.”
Manitoba Hydro is projecting net income of $70 million for the 2018-19 fiscal year, which would reflect an approximately 20 per cent reduction in net income from 2017-18 when adjusted for restructuring costs.
