Manitoba Hydro ends two US contracts, seeks to sell power to Nunavut and possibly Saskatchewan

WINNIPEG – Manitoba Hydro will not be renewing two contracts totalling 500 megawatts of power capacity, and will instead be offering it for possibly two energy corridors – one to the north, and one running east-west. And the Manitoba premier is definitely looking to Saskatchewan for future power sales.

The April 14 announcement tied heavily into increasing talk during this federal election of a national energy corridor.

Manitoba Premier Wab Kinew told a press conference in Winnipeg, “I have an order here to bring back 500 megawatts of power that we’re currently exporting to the United States of America, and I have an order here to dedicate 50 of those megawatts of power to stand up a new transmission line to Nunavut.”

His signing of the “order” was a spin on President Donald Trump’s extensive use of executive orders. But the intent was serious – Manitoba, through its Crown corporation Manitoba Hydro, is ending the export of 500 megawatts of power to the US and seeking to redeploy it in Canada, internally in Manitoba, but also for export within Canada. And that really means to Nunavut, Saskatchewan or Ontario. Kinew strongly suggested much of that could go to the west.

The shift marks an end of two contracts with Xcel Energy which were signed in 2010. Manitoba will continue to sell approximately 1,300 megawatts of power to the US, however, and would continue cross-border power arrangements.

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How Saskatchewan ties in

SaskPower currently has 350 megawatts of intertie capacity with Manitoba, some of which is used to send power to northern Saskatchewan via the Manitoba Hydro grid since there is no direct connection between SaskPower’s northern and southern grids. That 350 megawatts worth of intertie capacity is largely maxed out, so any additional power sales to Saskatchewan would require the building of additional intertie capacity. SaskPower is currently doing a similar scale project with the Southwest Power Pool, adding 500 megawatts of intertie capacity with North Dakota. That project, currently under construction, will cost around a billion dollars.

Kinew first spoke of a new powerline to bordering Nunavut to the north, with 50 megawatts capacity. Known as the Kivalliq Hydro-Fibre Link, it would tie the southwest portion of Nunavut to the national grid. The project would also include fibre optic communications capacity.

While reporters questioned the viability of such a project for a population of just 11,000 people, Kinew countered that there were mining opportunities as well that could be serviced by this power, as well as connecting it to Churchill, part of the province’s continued efforts to “build up the port.” He made reference to it being a high voltage direct current (HVDC) line, which would be similar to the province’s Bipole I, II and III lines which bring the bulk of Manitoba Hydro’s power from northern dams to the south.

The Nunavut line’s opportunity to enhance the port of Churchill would improve its capacity for other exports, he noted. Kinew suggested the possibility of hydrogen exports (by way of converting it to ammonia) as one possibility. “The hydrogen industry sounds so exciting. It’s not there yet, but maybe it will be. We’re talking about a timeline between now and 2032. Maybe there will be hydrogen that we could export in the form of ammonia by then. And if we’re talking about other trade corridors. We’re saying we’re serious about starting the conversation.”

“If you get us a polar class icebreaker to have in Churchill year round. Sky is the limit in terms of what Canada can do as an exporter, to the EU, to Brazil, to other jurisdictions,” Kinew said, suggesting the federal government should put up the billions of dollars it would cost to “park an icebreaker there,” year round, thus extending the shipping season.

Referring to power, Kinew said, “It’s great for Manitoba because it allows us to find a new export market for our hydro electricity. And it’s great for Canada, because it brings on board more housing, more mining and more industrial opportunities in both Manitoba and in one of the northern territories.”

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Looking west

Kinew continued, “Then when we look west, when we look at our other provincial neighbors, and we think about the prospect of building trade corridors in Western Canada or across the country, in whichever direction, we know that those trade corridors are going to need power. So with that remaining 450 megawatts of power, we have the ability to say we, in Manitoba, are serious about talking with our western neighbors, with our northern neighbors, with all other jurisdictions in Canada. And not only are we serious and stepping up to talk, we’re putting action behind those words, and we’re saying we’re bringing back some of this power to our country so that we can build up the next generation of Canadian infrastructure.”

But Kinew is not really interested in having Manitoba paying for export lines. First referring to the line to Nunavut, he said, “For this to work for Manitoba Hydro, and for Manitoba, we’re not, we’re not going to be building the transmission line. We’re going to be hosting the construction activity. That’s what we’d like to see. That’s why I want to have the Feds at the table, right? To have them see this as a nation-building project that they would invest in through whatever mechanism they deem appropriate. But for Manitobans, we’re saying, What can we bring to the table to bring it to move these conversations on forward? Well, we’ve got the power, so let’s say we’re willing to dedicate 50 (megawatts) to this. We got another 450 (megawatts) that we just freed up for planning purposes. If another trade quarter comes across our desk, we could talk about devoting it to that purpose. And at the end of the day, I want us to be able to build new infrastructure in the province, and have other people pay for it, and us to own it.”

Selling to other neighbours and paying your mortgage

This is a notable shift in policy for Manitoba. The opportunity for SaskPower to buy additional hydro power from Manitoba Hydro had appeared to be off the table. In recent years SaskPower president and CEO Rupen Pandya had noted several times that Manitoba Hydro had informed SaskPower there would not be additional power available to buy, and indeed, Saskatchewan could expect less power would be available in the future.

Kinew said, “Well, if you wanted to pay off your mortgage and have folks in Nunavut pay for it, would that sound like a good deal to you? If you wanted our western neighbors to pay off your mortgage, would that be a good deal? I think if you can structure something that’s a win-win, where they’re paying our mortgage and we’re turning the lights on in their backyard, that’s a win-win, and we have the opportunity to do so.”

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Kinew continued, “We have the opportunity to do so when it comes to the environment. That’s why we’re looking at the wind farms and partnering with indigenous nations to stand those up. It helps to diversify the power supply. And again, a lot of folks talk about energy transition, but we also need to do we also need to be thinking about energy addition, which is just we need to add more power to the grid in every in every way that we can that’s consistent with our values as Manitobans.

“Well, you know, I love the folks at hydro, and I’m sure if you ask them, you know, what do you think of Katy Perry landing from space? What do you think of the Jets winning the President’s Trophy? What do you think of the Premier’s press conference today? I’m sure their answer is going to be ‘to build a new dam.’

“‘Build a new dam’ to all those questions. For me, though, let’s do one thing at a time, you know, and I’m saying transmission line to the north, transmission line to the west to other parts of Canada, sounds like a nation building project Manitobans can really benefit from.”

Kinew noted earlier in the press conference, “Baseload power is the most valuable thing in the world right now. Baseload power meaning power that’s not depending on the wind blowing or the sun shining, but what electricity that flows 24/7.

“It’s the most valuable thing in the world right now because of AI. Every time you fire up a filter or search something on Google or Chat GPT, it’s a huge draw on base load power. And the reality is we could probably continue to increase our exports to the United States of America for the foreseeable future. Everyone’s telling us that the price is going to be bid up. But we think that the same economics around baseload power are just as strong in Canada, and we’re making a strategic priority here to invest in Canadian uses for this hydro electricity.”

Manitoba’s announcement comes at a time when the Government of Saskatchewan is seriously considering rejuvenating its existing coal-fired power fleet. It is also exploring the possible development of small modular reactors, with the first ones to be built near Estevan. A final determination of which of two sites would be chosen is anticipated in the coming months. The Manitoba announcement would not be enough to make up for a replacement of the coal entire coal fleet, either. And it’s currently expected SaskPower’s next 370 megawatt natural gas combined cycle power plant will cost between $1.4 and $1.7 billion.

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