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Energy and Resources Former Manitoba Hydro chair takes aim at Premier Brian Pallister’s account of board exodus

Manitoba Premier Brian Pallister holds a media scrum to discuss the resignation of nine Manitoba Hydro board members after Question Period in the Legislature on Thursday

ruth bonneville/WINNIPEG FREE PRESS

The former chairman of Manitoba Hydro angrily challenged Premier Brian Pallister Thursday, saying the Premier's account of the board's resignation is "deeply offensive and wrong."

Sandy Riley – a Winnipeg business leader and Progressive Conservative supporter – said Premier Pallister fundamentally mischaracterized the board's decision to resign en masse Wednesday when he related it to a proposed Manitoba Hydro deal with the province's Métis Federation.

"I'm so disappointed that the government has elected to go down this course," Mr. Riley said in a telephone interview from Palm Springs, Calif., where he is vacationing.

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Nine Tory-appointed members of the Manitoba Hydro board resigned, leaving only Progressive Conservative MLA Cliff Graydon in place.

In their letter of resignation signed Wednesday and released Thursday, the nine directors said they felt they no longer could function as a board and pointed to Mr. Pallister's decision to offer Mr. Riley a position on a different board.

"Despite repeated attempts we have not been able to have a meaningful dialogue with the government and we have reached an impasse," the directors said. "We have been informed the government intends to remove the chair and has therefore lost confidence in the board.

Mr. Riley said board members felt they could no longer perform their duties given Mr. Pallister's refusal to meet with them even as the government issued new guidelines saying it would oversee negotiations with Indigenous communities.

At the same time, the board was unable to engage the Premier in any discussions about the financial options for dealing with a highly indebted provincial utility, he said.

"Manitoba Hydro was mismanaged by previous governments and we called them out on it," said Mr. Riley, who is also chief executive officer at Winnipeg's Richardson Financial Group Ltd.

"If you find out there's a mess and are responsible for fixing it and don't, then you're equally responsible."

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Mr. Pallister insisted Thursday that he refused to meet with Mr. Riley and the Hydro board because there was a rate hearing before the Public Utilities Board and he did not want to be seen to be interfering with that process.

However, he added: "We've been communicating in numerous ways for a long time."

Mr. Riley said he was speaking out to defend the reputations of the other eight board members, all prominent members of Manitoba's establishment.

On Wednesday, Mr. Pallister said the board quit because the government had vetoed a $67-million deal with the Métis federation, a payment he described as "persuasion money." That characterization was "deeply offensive and wrong," Mr. Riley said Thursday.

The former board chair noted Manitoba Hydro routinely entered into financial claims agreements with Indigenous people whose traditional territories would be impacted by the utility's dams and transmission projects.

The Métis agreement came after the Supreme Court of Canada ruled two years ago that Métis people must be accorded all the Indigenous rights that apply to First Nations and Inuit, giving them greater leverage over resource projects.

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Under the 50-year agreement, the Métis Federation agreed not to oppose Hydro's planned new transmission line to Minnesota as well as several other proposed projects. In return, $67-million would be deposited in a trust account to be paid out over the life of the agreement.

"This basically would bring peace in the valley for 50 years," Mr. Riley said.

Métis Federation president David Chartrand angrily accused the premier on Wednesday of "playing the race card" in tying the resignations to what Mr. Pallister called "persuasion money" to be paid to the Métis, and said the rejection of the agreement would result in costly project delays, litigation and damages.

Because it was such a sweeping deal, Mr. Riley said he submitted it last November to the government for feedback. Since then, the Premier has refused to meet him or talk about the agreement. Instead, the government issued a statement giving itself authority over all talks with Indigenous Manitobans.

"He's reeling things in but not exhibiting the kind of leadership that is required in this situation," Mr. Riley said. "You can't have Hydro negotiating in bad faith. … How is this supposed to work?

Mr. Pallister acknowledged he received what he called a "proposal" regarding the Métis agreement last fall, but had serious reservations. He said he had officials review it and concluded this week that the deal should not stand, and that the government needed to exercise greater oversight over Hydro's dealings with Indigenous communities.

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He said the Métis deal purported to bind future Métis generations not to oppose Manitoba Hydro projects.

"I can't see our government, in all legitimacy, agreeing to an agreement that would take any rights of children yet unborn," the Premier said.

On the financial issue, the board had proposed to the government that it convert $2-billion of Hydro debt into equity in order to shore up its balance sheet. The utility expects to have a $25-billion debt after two major projects are completed, and its equity-to-debt ratio would fall to 11 per cent, a level Mr. Riley called dangerous that could drive up its borrowing costs.

While Mr. Pallister rejected the equity injection, he provided no guidance as to how the utility's financial problems should be addressed.

Hydro has asked the provincial Public Utilities Board to approve annual 7.9 per cent rate increases over the next five years, and decision on that request is pending. Mr. Pallister said Wednesday that it would have been inappropriate for him to meet with the Hydro board while the rate request was in front of the PUB.

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