Manitoba Hydro is arguing it still 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 letter to the provincial government, Hydro revised the estimated revenue it expects to bring in with the rate hike.

The public utility now 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 note explained the Crown corporation is now projecting higher export revenues from 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 utility maintains it needs the 3.5 per cent increase to guard against the unknown, according to the memo obtained by the Opposition New Democrats and presented Tuesday at the Manitoba Legislature.

The increase "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 Board this spring.

The proposed 3.5 per cent rate increase, which would take effect in June, is in line with the board's decision to permit a 3.6 per cent rate jump in 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.