Nationalizing Gas Utility a Reckless Risk

Author: Victor Vrsnik 1999/06/27

WINNIPEG: At the first day of public hearings, the Canadian Taxpayers Federation spoke in opposition to the nationalization of Centra Gas by Manitoba Hydro, recommending the Public Utilities Board rule against the proposed transaction.

"The province's central planning model for the energy industry is unlikely to deliver any benefit to Manitoba taxpayers," said Victor Vrsnik, CTF provincial Director.

The CTF concluded that the risks of nationalization should be avoided at all costs.

Highlights of the CTF's presentation to the PUB today are as follows:

The accumulation of a $486 million liability guaranteed by Manitoba taxpayers is an unwelcome burden in an era characterized by accelerated debt retirement.

Hydro's explanation as to how $12 million in cost savings are to be achieved is far from convincing. The danger that operational costs may in fact escalate disproportionately over the years and push gas rates up cannot be ruled out.

Abandoning the competitive model between gas and electricity distributors in favour of a virtual power monopoly may diminish the discipline of competition, and consequently erode financial targets.

Potential political meddling in the utility raises fears that if the Crown Corporation becomes an instrument of public policy, financial targets may be compromised.

Taxpayers and consumers are on the hook for any errors in judgement by the utility management. No shareholders will be available to absorb any losses.

Mr. Vrsnik will be available for comment at the PUB hearings scheduled at 1:15pm today at the Radisson Hotel, Provincial Room A. Cel: 782-7044

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