Author : Dr. Douglas J. Gotham (for CAC Manitoba).
Based on the market valuation, export sales revenue represents a very significant part of the plan to meet expenditures (over $9.3 billion in present value from exports). Thus, if export prices are even slightly lower than the projected price, there will be significantly reduced revenue. Alternative plans have reduced (but still significant) revenue from export sales.
Manitoba Hydro uses an export price forecast that is an average of six forecasts provided by various consultants. With the exception of one of these forecasts, prepared by The Brattle Group, these forecasts are not available due to the proprietary nature of the models and the competitively sensitive nature of the information. Furthermore, the assumptions behind these forecasts are not available. Thus, it is not possible to speak definitively about the reasonability of the export price forecast and assumptions. Manitoba Hydro did include supporting information in its Business Case that raises concerns about the assumptions behind its export price forecast and thus, about the export price forecast itself.
This document looks at three general areas: the applicability of the supporting information provided by Manitoba Hydro, the implication of the inclusion of carbon costs in the export price forecast, and the reasonability of the export price forecast from The Brattle Group.