And the noose gets just a little tighter for Manitoba Hydro and the Progressive Conservative government.

For weeks now, Hydro has defied attempts by the Public Utilities Board to reveal its true financial status. That information appears to be hidden from public view at the direction of the PC government, which is in the process of passing legislation to gut the independent rate setting regime in favour of one that allows cabinet to set electricity rates by decree.

However, even as the PUB deliberates on how to handle Hydro's obstinance, the parties that kicked off this whole process with a complaint to the PUB are continuing to ratchet up pressure on the regulator, the utility and the PC government. None more than the Manitoba Industrial Power Users Group (MIPUG), a lobby that represents the province's biggest consumers of electricity.

In a letter to the PUB, obtained by the Free Press, MIPUG lawyers argue Hydro's response to the PUB order requesting financial information was "highly disappointing" and did not "meet even the most rudimentary requirements." MIPUG said Hydro's blatant refusal to comply is "contemptuous."

MIPUG is unable to conclude whether Hydro is incapable of producing the directed forecasts, or simply unwilling to disclose those forecasts," the lobby group stated in a June 24 letter. "Neither inference gives comfort, nor supports the public interest.

It's important to remember that these comments, although included in a letter to the PUB, are really directed at Premier Brian Pallister and his government.

Decidedly pro-business in most regards, the Pallister government has nonetheless found itself engaged in a high-stakes game of chicken with the province's largest power consumers.

The 11 companies that make up MIPUG employ thousands of Manitobans and generated $380 million for Hydro last year, one fifth of the utility's entire domestic revenues. In a previous PUB submission, MIPUG threatened to postpone or cancel plans for additional investment in their Manitoba operations.

What has Hydro's response been to all these allegations? Incorrigible would not be the wrong word.

Hydro issued a news release Monday that was largely in response to a Free Press story on the Citizens Coalition, an umbrella group for the Consumers Association (Manitoba), Harvest Manitoba and the Aboriginal Council of Winnipeg. The coalition has joined MIPUG in alleging Hydro is deliberately concealing financial information.

In the release, Hydro President Jay Grewal said the allegations were "verging on offensive." She said Hydro has supplied all information needed to determine whether "there's been a substantial change in Manitoba Hydro's finances. And we’re confident the information we provided clearly demonstrates that there has not been a substantive change since the last (General Rate Application)."

Of course, Hydro has not complied with the original PUB order. Both the coalition and MIPUG have provided long and detailed lists of the internal reports that they know exist, but which have been excluded from Hydro's response. In that context, Grewal's protestations carry the undeniable scent of political manipulation.

The news release is remarkable, if only for the fact that Hydro appears oblivious to the fact it is playing a particularly weak hand.

In this conflict, Hydro is facing opponents that have decades of experience reviewing the utility's financial information. They all know exactly what information Hydro has tucked in its books. Or, as MIPUG put it in their letter, they only seek "documents that are notorious and known to exist."

It is simply impossible to believe that Hydro, which has been through many scraps at the PUB, would make such outlandish claims in the face of so much evidence to the contrary. At least, not without some prodding.

Lurking in the background of this entire mess has been Pallister and Crown Services Minister Jeff Wharton, who have refused to get involved to force Hydro to comply with the PUB's orders. Wharton went as far as to suggest he thinks Hydro has released enough information.

Why would the Pallister government pick a fight with the PUB? Pallister has significant political interests in keeping Hydro's finances under wraps.

First, Hydro's financial future has improved significantly thanks to the signing of a huge power sale with Saskatchewan and the utility's ability to lock-in long-term debt at historically low interest rates. Pallister needs all good financial news to be kept in check so that he can continue to hammer the former NDP government for mismanaging capital projects.

Pallister also plans on forcing steep increases in electricity rates to help pay down Hydro debt and provide a boost to the bottom line of the province's summary budget. It is, in essence, a hidden tax on electricity customers.

Pallister and Wharton have disputed any suggestion they are directing Hydro to defy the PUB, but it's hard to believe the utility could flout the PUB's orders so flagrantly without the support and encouragement of cabinet.

Hydro has been given until early July to change its tune. Although it's unclear what will happen, there is a good chance the PUB will be forced to take extraordinary legal measures to force compliance.

That sets the stage for an unprecedented showdown between the regulator on the one side, and government and Hydro on the other.

Although the dispute does seem convoluted in many respects, it's important to remember that nothing less than the future of electricity rates are at stake.