FOR IMMEDIATE RELEASE: April 1, 1999

$20 billion debt relief carries responsibility for risk reduction, IPPSO says

The financial structure of the five successor companies to Ontario Hydro was announced by the Ministry of Finance today, and it includes the estimate that $20.9 billion of the companiesþ debts will be unrecoverable in the competitive market -- and will need to be off-loaded to the public through special charges on consumers and tax diversions.

þDespite the $20 billion whallop of stranded debt, this could be a great day for Ontario as it should represent the beginning of a more accountable system for the Ontario Hydro group of companies,þ said IPPSO President Al Barnstaple. þThe key will be to keep them working as efficiently as possible, and avoiding the temptation for them to take new risks with all this fresh money that the people of Ontario are so generously providing.þ In addition to the $20.9 billion in new stranded debt, Ontario Hydro has lost more than $10 billion in equity earned from ratepayers through writeoffs.

þWith the ratepayers having to pick up all this debt, it has to be a primary objective that any further risk to the public be absolutely minimized. We need to make sure that Hydroþs sucessor company doesnþt do anything to increase the risk that it might not be profitable, and also that it does everything in its power to repay the publicþs investment in it. That will mean resisting the temptation to make any risky new investments until after the stranded debt is paid back, and until customers have the opportunity to do business with the new competitors expected to enter the market.þ

þIf Hydroþs successor company uses this new money to clean up its act and quickly reduces market share to the level agreed to, then the ratepayer can expect healthy competition and lower costs to result from all this,þ Barnstaple said. þThe task at hand is to make sure that the new companies are more cautious about taking on financial risks than their predecessor.þ

Barnstaple says þIt wonþt likely make much sense for OPGI to be out there buying up new assets, when itþs supposed to be reducing market share, and paying back its debts.þ Under a separate agreement with the government, Ontario Hydroþs generation successor company, known as Ontario Power Generation Inc. or OPGI, is required to reduce its market share down to 35% within ten years. Nevertheless, the temptation will be strong to use this money to make a fresh start with new projects, and past experience suggests the need for close scrutiny by the public.

IPPSO is a non-profit organization representing over 400 individuals and companies involved in independent power production and related efforts such as equipment supply, consulting and environmental work. IPPSO members produce power from cogeneration, small hydro, wind energy, waste wood and other sources. IPPSO's members currently produce about 10% of the electricity consumed in Ontario.

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For further information:

Al Barnstaple, President 416-224-9569

Jake Brooks, Executive Director 416-322-6549

Rob McLeese, Director 416-366-4820

Independent Power Producers' Society of Ontario (IPPSO)

PO Box 1084, Stn. F, Toronto, Ont. M4Y 2T7

tel.: 416-322-6549 fax 416-481-5785

e-mail: ippso@web.net website: http://www.newenergy.org and http://www.marketdesign.org