Manitoba Hydro has reported total revenues of $478 million for the third quarter of fiscal 2008, compared with the total revenues of $460 million in the year-ago quarter. It has also reported a net income of $66 million for the third quarter of fiscal 2008, compared with the net income of $77 million in the year-ago quarter.

Financial Overview

Manitoba Hydro’s consolidated net income from electricity and natural gas operations was $217 million for the first nine months of the 2008–09 fiscal year compared to $220 million for the same period last year. Consolidated net income was comprised of a $230 million profit in the electricity sector and a $13 million net loss in the natural gas sector. The loss in the natural gas sector is the result of seasonal variations in the demand for natural gas and will be recouped over the remaining months of the winter heating season.

Consolidated net income was $3 million lower than the same nine-month period last year. The decrease was the net result of higher domestic and extraprovincial revenues off set by higher operating costs for fuel, power purchased, depreciation and system maintenance. Net income will improve over the last quarter of the fiscal year and is projected to exceed $300 million by year-end.

Electricity Operations

Revenues from electricity sales within Manitoba totaled $796 million for the nine-month period, an increase of $36 million or 5% higher than the same nine-month period last year. The increase in domestic revenues was attributable to a 5% rate increase implemented in the second quarter of the fiscal year as well as to volume growth across all sectors. Extraprovincial revenues of $532 million were $28 million or 6% higher than the same period last year reflecting favourable conditions in export markets.

Expenses attributable to electricity operations totaled $1,098 million, an increase of $70 million or 7% higher than the previous year. The increase was primarily the result of a $32 million increase in power purchased costs, a $23 million increase in operating and administrative expenses, and a $17 million increase in depreciation and amortization expense. The increase in power purchased costs was primarily the result of higher purchases to support profitable electricity resales. The increase in operating and administrative expenses was primarily due to higher maintenance requirements on the generation, transmission and distribution systems. The increase in depreciation and amortization expense was the result of additions to capital assets over the past year.

Capital expenditures for the nine-month period amounted to $643 million compared to $578 million for the same period last year. Expenditures during the current fiscal year included $169 million for Wuskwatim generation and transmission, $63 million related to future Conawapa and Keeyask generation facilities, $31 million for upgrades to the Kelsey Generating Station, $27 million for Demand Side Management programs, and $63 million for Manitoba Hydro’s new head office. The remaining capital expenditures were incurred for ongoing system additions and modifications necessary to meet the electrical service requirements of customers throughout the province.

Natural Gas Operations

In the natural gas sector, a net loss of $13 million was incurred for the nine-month period compared to a $16 million net loss for the same period last year. Revenues, net of cost of gas sold, were $91 million, an increase of $6 million compared to the same nine-month period last year. The increase in revenues was primarily attributable to a 1% distribution rate increase implemented May 1, 2008 and increased weather-related demand over the nine-month period. Delivered gas volumes were 1,300 million cubic metres compared to 1,262 million cubic metres in the prior period.

Expenses attributable to gas operations amounted to $104 million compared to $101 million in the first nine months of the prior year. The current year increase was due to higher operating, maintenance and amortization costs.

Capital expenditures in the natural gas sector were $32 million for the current nine-month period compared to $25 million for the same period last year. Capital expenditures included $24 million related to system improvements and other expenditures necessary to meet the natural gas service requirements of customers throughout the province, and $8 million for Demand Side Management programs.

New Fixed Rate Service for Natural Gas

Manitoba Hydro is introducing a new fixed rate service for natural gas which will allow customers to fix their natural gas rates for terms of up to five years. The fixed rate service is a new option offered to residential and commercial customers in addition to the quarterly rate-setting methodology currently offered by Manitoba Hydro. Customers will also be able to continue to purchase their natural gas through a number of natural gas marketers which are active in the province.

Wuskwatim Generating Station General Civil Contract Awarded

Manitoba Hydro has awarded the contract for the Wuskwatim Generating Station’s general civil construction to the O’Connell-Neilson-EBC Partnership. The consortium consists of H.J. O’Connell Construction Ltd., from St. John’s, Newfoundland; Neilson Inc. from Saint-Nicholas, Quebec; and EBC Inc. from L’Ancienne-Lorette, Quebec.

The general civil work includes rock excavation, building the earth dams and dykes, coffer dams and concrete structures. In addition, the consortium will be responsible for supplying and installing the powerhouse walls, roof, and superstructure steel. A key feature of the contract is a schedule that advances the in-service date of the generating station to 2011.

Residential Solar Water Heating Program Introduced

Manitoba Hydro has partnered with Natural Resources Canada to offer a $1,200 rebate to homeowners who purchase and install a solar water heating system. As well, an additional $500 rebate may be available to customers who participate in Manitoba Hydro’s ecoENERGY In-Home Energy Evaluation program.

Manitoba has an abundance of solar energy, which can be harnessed and used in solar water heating systems. These systems use heat from sunlight to pre-heat water that enters water tanks. Water heaters will then need less energy to reach the desired temperature for all household hot water needs, which will help reduce energy bills and impacts on the environment.

The cost of heating water accounts for around 20% of the energy that is used in most homes. Solar water heating systems can reduce this energy requirement by up to 60% and can save up to $175 on annual residential energy bills.