Drought lowers river levels to the point where Manitoba Hydro expects $200M deficit

The extreme drought across the Canadian Prairies over the past year is expected to leave Manitoba Hydro with a deficit in the $200-million range for the current fiscal year.

The Crown corporation disclosed low river levels will deprive the utility of about $400 million in export revenue over the coming months.

This will leave Manitoba Hydro with a deficit between $190 million and$200 million for the 2021-22 fiscal year, the corporation disclosed after publishing its second-quarter financial report.

"The lack of significant precipitation across much of Manitoba Hydro's watershed over the past year and lower water flows water inflows to the southern portion of the system are the lowest in 40 years have weakened the utility's ability to generate and sell surplus energy on spot markets in the United States and Canada," Hydro said in a statement.

The deficit forecast is the continuation of a trend initially disclosed in September.

The low water levels are not expected to impact power needs for Manitobans.

"Despite the drought, Manitoba Hydro's customers can rest assured their energy needs will be met throughout the winter months when heating loads kick in," the corporation says in its statement.

"The utility is managing its system to maintain energy security and reliability to ensure it can continue to meet all domestic and firm export commitments."

But domestic customers may feel a financial pinch. Revenue from Hydro exports is usually used to keep domestic rates relatively low, the corporation says.