A review of Manitoba Hydro’s capital expenditures program states that costs for the company’s largest current project, the Keeyask Generating Station near Gillam, could soar above expectations.
Hydro and the Manitoba Public Utilities Board (PUB) financed the report, issued by Calgary-based consultants MGF Project Services. The report was made in part to investigate a 7.9 per cent rate increase requested by Manitoba Hydro that is currently under review by the PUB.
The report states that the final cost of the Keeyask project is likely to increase to “the $9.5 billion to $10.5 billion range.”
The expected finish date for the Keeyask project may also be delayed by over a year, going from an initial completion date of Oct. 2021 to as late as Nov. 2022.
MGF cites “performance issues related to the GCC [General Civil Contract] and their consequent impacts on other contracts” as the main cause of the increase.
The report, which was publicly released on the PUB website on Dec. 21, also mentions that the contractor hired to work on the project in the general civic contract is paid for actual costs, instead of construction work performance, saying the contractor is both over budget and behind schedule.
“The General Civil Contract (GCC) and its performance is the largest single contributor to planned cost and schedule not being met,” reads the report.
MGF also mentioned that there had been more than 70 cases of workers at the Keeyask site working more than 16 hours per day, including some personnel working as much as 21 hours per day and 16 hours per day for three days straight.
“These extended hours will not be as productive as straight time hours and will result in diminishing output for every hour worked. This raises concerns about personnel safety,” states the report.
The Keeyask project, which was initially budgeted to cost $6.5 billion, has already increased to an estimated $8.7 billion in final costs.
Costs for Hydro’s Bipole III transmission line project have also increased, going from $1.66 billion to nearly $2 billion since 2014.
Manitoba Hydro is currently applying to PUB for a series of rate increases to help offset internal debt and costs associated with the Keeyask and Bipole projects. The proposed hikes would increase existing rates by 7.9 per cent in April 2018 and bi-annually through 2023-24.
