Electricity bills may get more expensive next year if Manitoba Hydro gets the rate increase it's looking for.

Manitoba Hydro is seeking a five per cent electricity rate increase that would start Jan. 1 if approved.

The utility says the request is because the ongoing drought the province is experiencing has put a strain on its finances.

The lack of significant precipitation and lower water flows have weakened Manitoba Hydro's ability to generate surplus energy to sell in markets outside Manitoba, president and CEO Jay Grewal said in a news release.

The utility is projecting a $190-million loss this year as a result, versus the net income of $177 million it had projected in its 2021-22 budget, its application says.

Manitoba Hydro estimates the five per cent increase will result in a $5/month cost hike for the average customer using natural gas or other heat sources, assuming they are using an average of 1,000 kilowatt-hours (kWh) a month.

For customers using electric heat, there'd be an extra $10/month on hydro bills.

The request will have to be approved by the Public Utilities Board, the third-party watchdog that approves electricity rates through public hearings.

In recent years, the Progressive Conservative government has made electricity rate changes through legislation and put forward a bill that would have had the PUB weigh in every five years rather than annually.

That bill was killed in September, with then-premier Kelvin Goertzen saying the government would let Manitobans have their say on Manitoba Hydro rates through a public hearing.

The government then directed Manitoba Hydro to file an application for a new rate increase with the Public Utilities Board.

Public Utilities Board approves request for review into Manitoba Hydro's finances In August, the PUB ordered a public review of Manitoba Hydro's financial state to determine whether its rates are reasonable and fair to customers, after being requested to do so by a group called the Consumers Coalition.

The group is made up of Harvest Manitoba, the Consumers' Association of Canada (Manitoba) and the Aboriginal Council of Winnipeg.

On Tuesday, the group issued a news release questioning why the utility needs a five per cent increase when its president and CEO Jay Grewal told a legislative committee in June that only a 3.5 per cent increase would be needed.

"We appreciate there is a drought in Manitoba, however this is an expected part of the business cycle that Manitoba Hydro plans and prepares for," said Gloria Desorcy, executive director of the Manitoba arm of the Consumers' Association of Canada.

The last rate increase happened in 2020 and was set at 2.9 per cent by the provincial government.

No public hearing dates have been scheduled yet, according to the Public Utilities Board website.