FOR IMMEDIATE RELEASE: October 27, 1998

IPPSO interim response to the stranded debt estimations
released by the Ontario government

IPPSO Executive Director Jake Brooks says that the estimates of stranded debt released yesterday raise a number of questions about the impact on future generation competition.

"The estimated value of the generating company appears to be much too low," he said, stressing that the numbers raise more questions than answers. "We tend to think that the hydroelectric assets alone are worth several times the $3.2 billion amount quoted. Those are highly competitive, low cost plants." In addition, the value shown for the NUG contracts "appears to seriously undervalue the energy and other services produced by the NUG contracts."

Underestimating the value of Ontario Hydro assets at this stage is difficult but can have serious consequences for other competing generation companies. IPPSO is concerned that if too much debt is off-loaded from Hydro's new generating company, it will gain a competitive advantage over other market players. Also it could eventually end up subsidizing the costs of subsequent operators or owners when Hydro moves to give up control of most of its generating plants.

"The amount of money involved in this whole exercize probably warrants the kind of regulatory review that goes on in neighboring jurisdictions with which Ontario is competing," said Brooks.

"We expect that the government is about to begin a phase of detailed discussion with stakeholders on what's behind this work." IPPSO looks forward to learning more details and providing further input during this process.

IPPSO is a non-profit organization representing over 500 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.

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For further information:

Al Barnstaple, President 416-224-9569

Jake Brooks, Executive Director 416-322-6549

Tom Brett, Director 613-236-3882

John Brace, Director 416-962-6262

Bruce Ander, Director 416-667-5724

Rob McLeese, Director 416-366-4820

Linda Bertoldi, Director 416-367-6700

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/newenergy/ and http://www.marketdesign.org