The regulatory agency has turned down a request from Manitoba Hydro for a 0.9 per cent rate increase on August 1.

The agency has also issued a warning to the Crown-owned utility that it may be seriously underestimating the risks from developing new hydro capacity.

Manitoba Hydro is planning to build three new generating stations with transmission lines, and a new transmission line to both supply Manitoba customers, and to fuel exports to the United States.

The PUB, however, says projected construction costs have soared by and export prices are dropping.

The board says Manitoba customers could end up subsidizing export sales and it's asking Manitoba Hydro to consider alternative construction plans.

During hearings earlier this year on other matters, Manitoba Hydro refused a Board subpoena to provide its export contracts. The matter is now before the Manitoba Court of Appeal. The utilities Board said Hydro also failed to provide an updated financial forecast.

"The corporation either refused or failed to provide the Board information that the Board considers critical to it reaching a comprehensive and final perspective on the prudency of (Manitoba Hydro's) actions and plans," the Board wrote.