Final Project

Social Entrepreneurship Case Study of Manitoba Hydro

Presented By:

Kilda Jahja, Will Anderson, Kieran Baydock, Levi Lock

BUSI-2500 Social Entrepreneurship

James Magnus-Johnston

April 13, 2021

Table of Contents:

Section 1 - Introduction of the company, key partners, and key resources key activities

Section 2- Value propositions, customer relationship and segments

Section 3- Channels

Section 4- Cost structure and revenue streams

Section 5- SWOT analysis

Section 6- Opportunity for Improvement and Conclusion

Section 7- References

Presentation PowerPoint :

https://studentcmu-my.sharepoint.com/:p:/g/personal/jahjaki_student_cmu_ca/Edgy2TcdLJJGvBX_eGG8SYsB4eoBxRdzVrSx_zbDhtbbLQ?e=7XkIMB

Section 1 - Introduction of the company, key partners, and key resources key activities

Manitoba Hydro is a provincial Corporation and one of the largest integrated electricity and natural gas distribution utilities in Canada. They are leaders in providing renewable energy and clean-burning natural gas.

Key Partners:

Manitoba Hydro has multiple partners depending on the projects that they are developing. However, the partners that are key to Manitoba Hydro activities consist of the government of Manitoba, Indegionius communities in Manitoba and the Manitobans themselves. They are the primary partners that have and will give their support.

One of the projects that they are currently building which are called Keeyask generating station is being developed with the partners Tataskweyak Cree Nation, War Lake First Nation, York Factory First Nation, and Fox Lake Cree Nation. When completed in 2021, the Keeyask generating station will add 695-megawatts of renewable hydroelectric power to our system.

Key resources:

Manitoba Hydro produces around 96% of its electricity by using renewable power generated by hydroelectric generating stations. The needs of Manitoba are filled by using 2 thermal generations, 4 diesel generating stations, and wind or solar panel power. Apart from electricity, Manitoba Hydro offers natural gas to 130 communities.

Key activities: How does Manitoba Hydro produce electricity?

Manitoba Hydro generates energy from water, thermal, wind, and solar energy.

Water power:

Energy generated using water power is called hydroelectricity and uses the natural force of rivers as energy.

Thermal power:

Next time you are boiling water, put a lid on the top of the pot. As the water boils, it expands and turns into steam. The pressure of the expanding steam will eventually shake or raise the lid. A thermal generating station uses this same energy to turn turbines that drive electric generators. The fuel used to heat the water can be coal, oil, natural gas or a nuclear energy source.

Wind Power:

When you’re outside on a windy day, you can feel the wind push against your body. That push can also spin blades on a wind turbine which produces electricity. However, wind generators have 2 main drawbacks. First, they are expensive. Second, not all locations have consistent strong winds.

Solar power:

We can use the sun’s light to make electricity. Panels made from silicon are able to convert sunlight to electricity through the photovoltaic process. Voltaic is another word for electricity. One of the advantages of solar energy is that it doesn’t need fuel. PV panels are expensive to set up and operate. Solar energy in Manitoba is more expensive than our low-cost and renewable hydroelectric power and may increase your carbon footprint.

Section 2

Value propositions

Manitoba Hydro provides value through clean, sustainable, and reliable electricity. This obviously helps solve the problem of access to electricity. Customers use electricity in their day-to-day lives for simple things like lighting, heating/cooling, and attending classes online. Manitoba Hydro seeks to provide low-cost electricity and natural gas.

Customer relationship

Customer relationships are also extremely important for Manitoba Hydro. They gain and retain their customers through population growth, service, and low rates. Manitoba Hydro has established relationships with the people in the industry and the people living in Manitoba. Manitoba Hydro is always looking to improve by developing its clean and efficient energy. With all this in mind, they keep their customers happy by maintaining a low cost.

Customer Segments

The value created by Manitoba Hydro is for the people and businesses in Manitoba with the most important customers being those in plants, mining, smelting, and universities. All customer archetypes will be involved with Manitoba Hydro because everyone needs electricity and natural gas.

Section 3- Channels

Channels analyze through what way customers are delivered the goods, how competitors do it, what the best way is if they are doing it cost-efficiently and if they are integrated with the customers' routines. At Manitoba Hydro their “goods” are electricity and natural gas. They deliver this resource to customers through transmission lines, like bipoles one, two, and three, and for natural gas through pipelines. Manitoba Hydro does not have any direct competitors but there are similar companies in Canada, like BC Hydro, that we can compare to. These similar companies also use transmission lines and pipelines to deliver energy to customers as it is the most cost-efficient and best method. For Manitoba Hydro there is much importance placed on the customer routines. They plan ahead to be able to provide enough energy whenever Manitobans need it; day or night, summer or winter, and even in times of drought when the hydroelectric generating stations are producing at a lower capacity. This plan includes producing enough electricity to sustain periods of high demand and having dealt with neighbouring provinces and states in place to sell electricity in times of low demand.

Section 4- Cost Structure and Revenue Streams

Cost Structure

The cost structure analysis of a business asks what costs are necessary to the business, and what resources and activities require the most capital. At Manitoba Hydro the costs necessary to their business are the costs related to building generating stations. The most expensive resource at Manitoba Hydro is labour; although arguably their most important resource is the water that flows through the generating stations. The labour they require is used for the construction, operation, and maintenance of the generating stations and transmission lines as well as administration costs associated with the business. The activity that requires the most capital is the construction of new generating stations. Keeyask, Manitoba Hydro’s latest generating station, which is almost completed is expected to cost $8.7 billion dollars.

Revenue Streams

Revenue streams are the ways a business generates income for itself, be it production, retail, service or any other way. Revenue stream analysis investigates why customers want the product, what customers pay for it, what the company’s revenue model is, and how the product is priced. Manitoba Hydro produces electricity and resells natural gas; so the value customers are willing to pay for is clean, reliable energy. Customers currently pay a standard rate of 8.983¢/kWh for electricity and 10.12¢/m3 for natural gas along with a base monthly charge as well. Manitoba Hydro does not determine the rates for electricity, they are determined through hearings with the Public Utilities Board. These rates are made to be low enough to keep demand high and people happy, but still high enough to cover costs and service debt. Natural gas is resold at cost as it can be purchased on the open market as well. Some of the strategies that are employed when pricing electricity balance customer happiness with efficiency. At a low rate customers are happy and freely use the energy, but at a high rate customers lower their usage and look to more efficient alternatives to lower their energy bill; so Manitoba Hydro and the Public Utilities Board typically have lengthy hearings when deciding to raise or lower the rates.

Section 5- SWOT analysis

Strengths:

Clean Renewable energy: hydro is one of the cleanest energy sources and it does not require burning or release harmful chemicals into the atmosphere
Controllable: Manitoba hydro is able to control the flow of water over dam’s to create as much energy as needed, they are able to control over production and wasted energy created
Transportable: the energy Hydro creates a dam’s far from cities can be transported through hydro lines to the desired destination. This allows for dams to be located where best suited as opposed to near cities or where energy is needed
Working with others: Manitoba hydro has worked with companies such as Aki energy to subcontract out jobs that help give indigenous communities jobs and the ability to make money. Hydro also typically has a great relationship with the government that allows them to receive money to fund multi-million dollar projects.

Weakness:

Indigenous land: Hydro has built dams on indigenous land without permissions using their resources and profiting off it while no money goes to the local communities affected
Cost: Dams cost hundreds of millions of dollars to build and take a long time, takes a while to get your return on investment, without proper funding dams can be a dangerous investment
Displacement: when dams are constructed it causes a massive shift in water level. Flooding occurs and the natural boundaries of the body of water are changed, displacing fish species and creating a distinct barrier aquatic animals can not pass. The flooding also has forced whole communities to relocate
Potential for disaster: if a dam were to burst the consequences could be monumental, flooding of major cities resulting in the destruction of life and land

Opportunities:

Exporting: Manitoba has a surplus on rivers and offers the opportunity for Manitoba hydro to export its energy into other provinces and the United States. This is a major opportunity for Manitoba to use existing infrastructure to profit off of
Meeting the need: with car manufacturing industry transferring towards zero-emission electric vehicles, the demand for electricity is on the rise and Hydro has the opportunity to meet this need, through more dams and running more frequently

Threats:

Development of other energy sources: Other renewable energy sources such as wind and solar are continually being developed and one day may be a threat to Hydro energy
Nuclear energy: typically cheaper than hydro to produce and new technology is making it much less dangerous and has many of the same benefits as Hydro energy
Provincial Hydro rates: with governments continually increasing the price of hydro many people are becoming dissatisfied along with workers as their wages are being cut while people pay more for the same service.

Section 6- Opportunity for Improvement and Conclusion

What they want to achieve/improve in the future:

Develop a strategy for rebuilding Manitoba Hydro brand with a focus on what customers and stakeholders value
Support the smooth transition of Demand Side Management functions to Efficiency Manitoba
Provide information to support the independent review of Bipole III and Keeyask Generating Station decisions
Communicate corporate direction to stakeholders and manage key stakeholder issues
Work with the Public Utilities Board (PUB) to streamline rate filing processes
Meet mandatory regulatory compliance requirements
Support the achievement of cross-government priorities