The Keeyask Hydropower Limited Partnership (KHLP) and Manitoba Hydro announced a new control budget of $8.7 billion March 7, as well as a revised in-service date of August 2021 for the Keeyask Generating Station, currently under construction on the Nelson River in northern Manitoba.
This represents an increase from the previously approved control budget of $6.5 billion and a delay of 21 months from the previous in-service date of November 2019.
The Keeyask Generating Station is owned by the KHLP, a partnership between Manitoba Hydro and four First Nations: Tataskweyak Cree Nation, Fox Lake Cree Nation, York Factory First Nation and War Lake First Nation. Manitoba Hydro has been contracted by the KHLP to build and operate the 695-megawatt station on its behalf.
The potential for the increased cost estimate was first identified in the Manitoba Hydro-Electric Board's (MHEB) review of capital projects completed in the fall of 2016. That analysis, conducted by the Boston Consulting Group (BCG) for the MHEB, identified costs for Keeyask were expected to rise from the 2014 control budget of $6.5 billion up to a possible $7.8 billion, along with a potential delay in completion of up to 31 months.
The new control budget includes an additional $900 million in contingency funds, interest and escalation not included in the BCG analysis. The utility believes these allowances are prudent to help address potential cost and schedule risks still present in the project.
"Keeyask is a large and very complex project and the updated control budget is a realistic estimate based on what we know today," said Kelvin Shepherd, President and CEO of Manitoba Hydro. "However, there is always a chance of additional risks materializing that could impact the schedule and costs."