Ontario Power Generation is in such desperate shape that it had to resort to the corporate equivalent of selling future paycheques to Money Mart at a discount, says energy minister Dwight Duncan.

He said all options for healing the company’s financial wounds are on the table, including the possible sale of assets. During the election campaign, the Liberals had said: "We will not sell any public generating stations or the transmission grid – period."

But yesterday Duncan appointed a three-man review panel to consider OPG’s options. When asked whether they’d be allowed to recommend selling assets, Duncan said: "I’ve ruled nothing in and nothing out in the context of the review panel. I’ll leave it to them what options they’ll look at." The panel will be headed by former federal finance minister John Manley.

The other members are Peter Godsoe, just retired as chief executive of Scotiabank, and former federal energy minister Jake Epp, who is interim chair of OPG’s board. The committee is to report by March 15. Duncan said the full extent of OPG’s woes came to light only during a briefing last Thursday.

The company is scrambling for cash just to pay its bills, Duncan said. OPG is so short of cash that it recently had to raise $300 million by selling receivables at a discount, he said. He wouldn’t reveal the extent of the discounting.

Receivables are revenues a company expects to receive in the near term, such as payments from customers. A company that needs immediate cash can sell payments due over the next 60 or 90 days to another party for immediate cash, but it gets only a fraction of the full value of the payments.

Even with the sale of receivables, OPG will come up $350 million short of cash this year, Duncan told reporters yesterday. It could fall up to $750 million short of cash next year – money that OPG will have to borrow, backed by a government guarantee.

OPG’s financial results tell the tale. The company’s corporate plan called for a $600 million profit in 2004. But the company’s current projection is for a loss of about $250 million – an $850 million difference.

Industry watchdog Tom Adams of Energy Probe said OPG must have been selling electricity at "political prices." By that he means low prices designed to keep the market in check, a practice that was quickly denied by an OPG spokesperson.

High electricity prices in the summer of 2002 had embarrassed the then-Conservative government into freezing the price for consumers and small businesses. But maintaining the freeze for the first year cost the government more than $600 million.

Former energy minister John Baird denied that the Conservatives had ordered OPG to deliberately low-ball the market. A surveillance panel oversees Ontario‘s electricity markets and is supposed to catch any price manipulation, whether it’s done for political or other motives.

The surveillance panel is expected to make one of its regular reports shortly, but it’s not expected to point a finger at OPG for manipulating prices, according to one source.

Baird noted that OPG’s ability to earn profits is constrained by a rule that forces it to refund 50 per cent of its revenue to consumers whenever the market price of power rises above 3.8 cents a kilowatt hour. But Duncan said no matter what rules are in place, OPG should be able to turn a profit.

"What is astounding in all this is how anybody with 80 per cent of the production in Ontario of something like electricity can be in the financial straits they’re in right now," he said.

"It was bad government policy, bad oversight on the part of the previous government."

The Tories had budgeted to receive $800 million in income from OPG and Hydro One together in the current year, Duncan noted – roughly half of it coming from OPG. With OPG’s profits disappearing, that income won’t materialize.

Duncan said he’s asked for a financial audit of OPG to find out whether the company’s financial position has been properly reported. The company’s board will choose the auditor.

Duncan said the problems in restarting the Pickering A nuclear generating station have contributed to OPG’s profit swoon. One of the four reactors, mothballed in 1997, recently returned to service, nearly three years behind schedule. It could cost $4 billion to complete the entire job – up from the original approved cost of $1.1 billion.

New Democratic Party leader Howard Hampton said the new review panel won’t solve the problems at OPG.

"None of these people know how to run a hydro utility," he said.

"None of them have any experience. They are all essentially from Bay Street. "And they are going to tell the Liberals what Bay Street wants, not what the people of Ontario want."