Hydro still wants 3.5% rate increase despite big jump in projected revenue

Manitoba Hydro is arguing itstill needs to hike electricity rates by 3.5 per cent for 2019-20, in spite of the Crown corporation projecting that would bring in tens of millions more in revenue than it originally anticipated.

In a letterto the provincial government, Hydro revised theestimated revenue it expects to bring inwith the rate hike.

The public utilitynow anticipates $115 million in net income for 2019-20 with the 3.5 per cent hike, up from the $31 million originally projected.

The briefing noteexplained the Crown corporation is now projecting higher export revenuesfrom improved water flow conditions. Hydro also spent less on capital projects and had lower borrowing requirements and finance expenses than originally anticipated.

Rate hike offsets future struggles

Still, the Crown utilitymaintains it needs the 3.5 per centincrease to guard against the unknown, according to the memo obtained by the Opposition New Democrats and presented Tuesday at the Manitoba Legislature.

Theincrease "continues to be necessary and is in the best interests of ratepayers in order to reduce the likelihood of future rate shock," the briefing note said.

Hydro will argue for the rate increase in front of the Public Utilities Boardthis spring.

The proposed3.5 per cent rate increase, which would take effect in June,is in line with the board's decision to permit a3.6 per cent rate jumpin 2018-19.

Hydro's most recent request, however, is notably less than the 7.9 per cent hike the utility previously said it would need every year until 2023-24 in order to address its debt.

In the application, Hydro said its new board is reviewing the financial health of the utility and would come up with a multi-year rate proposal in late 2019.