Co-authored by Dr. Wayne Simpson and Dr. Janice Compton
On May 5, 2017, Manitoba Hydro applied for a 7.9 % rate increase effective August 1, 2017/18 as well as a 7.9 % rate increase effective April 1, 2018. In Public Utilities Board Order 80/17, Manitoba Hydro was granted an interim rate increase for the 2017/18 year of 3.36% effective August 1, 2017.1 In a letter dated September 5, 2017, Manitoba Hydro indicated that it now projects rate increases of 7.9% for six years for the fiscal years 2018-2019 to 2023-2024, followed by one year at a 4.54% increase before returning to a price increase of 2.00%.2
With estimated consumer price inflation (CPI) rates of approximately 1.9% per annum during the period between 2018/19 and 2024/25 (Appendix 3.2, p. 10), in real terms the projected increases are 6% per year for the first six years and 2.64% for 2024-2025. The rate increases will cause households, businesses and government sectors to reallocate spending, which in turn will alter the demand for goods and services in the Manitoba economy.
Focusing on the rates increases projected by Manitoba Hydro between 2018-19 and 2024-25, this report provides an overview of the expected aggregate effects of the projected Hydro price increases on the sectors of the Manitoba economy, applying an input-output approach to determine the full effect on the economy.