John Spears
Toronto Star
September 5, 2002

The unfunded debt left by the former Ontario Hydro has increased during the past year, newly released financial statements show.

And one energy critic predicts the special debt reduction charge that consumers are now paying on their hydro bills will have to be increased if there’s to be any hope of paying it off.

The annual report of the Ontario Electricity Financial Corp., or OEFC, which holds the Ontario Hydro debt, shows the unfunded portion of the debt has grown by $700 million since OEFC assumed it in 1999.

Ontario Hydro left debt of $38.1 billion, but part of it was offset by assets worth $18.7 billion, leaving an unfunded debt of $19.4 billion when OEFC took over. It is also referred to as stranded debt.

The latest annual report shows the stranded debt had grown to $20.1 billion as of March, 2002. It was $20.0 billion a year earlier.

The province has earmarked incomes generated by Ontario Hydro’s successor companies, and payments in lieu of taxes made by the province’s local utilities, toward paying it.

But Ontario Power Generation, which owns about 70 per cent of the province’s generating capacity, restated its earnings last year, which reduced the money flowing to OEFC.

Tom Adams, executive director of Energy Probe and a critic of Ontario Hydro’s financing, said the news is discouraging.

"At the rate we’re going, we’ll never pay off the stranded debt," he said. "We’re not quite treading water."

Electricity users in Ontario are paying a special charge of 0.7 cents a kilowatt hour to help pay down the stranded debt. But Adams said the charge – which was supposed to be temporary – will become long term, and will likely increase to 1 cent a kilowatt hour.

Adams noted that OEFC’s report projects the debt will be retired in 2012, rather than earlier projections of 2010.

"From year to year, they might be changing all kinds of things," he said – including, perhaps, an assumption that the special debt reduction charge might be increased.