Hydro's debt up another $1 billion

Tom Blackwell The Canadian Press
Windsor Star
April 9, 1998

After years of chipping away at its massive debt, Ontario Hydro will add $1 billion to the figure this year and see no further reductions at least until 2000, says a business plan released Wednesday.

The report underlines the heavy toll taken on the Crown corporation’s bottom line by a sweeping project to overhaul its * troubled nuclear division.

Hydro, among Canada’s largest publicly owned corporations, says there’s nothing new in the figures that reflect a decision to spend * up to $8 billion on the nuclear recovery program and hundreds of millions more on other improvements.

It also won’t affect a promise to keep rates frozen for consumers until the turn of the century, the plan said.

Critics say the figures highlight the electrical giant’s sorry state.

* "The major theme of the report is the nuclear program is dragging Hydro down by the throat," said Tom Adams of the watchdog group Energy Probe. "It confirms Hydro is in a financial death spiral."

The report indicates that Hydro’s debt will jump to $32.3 billion this year from $31.1 billion in 1997, and stay at around the same level at least until 2000.

* The debt was stacked up over years of building expensive nuclear reactors. In the mid-1990s, the elimination of thousands of jobs and other cost cutting, combined with repeated rate hikes, began to wipe up the red ink.

Money redirected

But cash flow earmarked for debt reduction will be spent now on the * nuclear recovery program and other upgrades to the company, the plan said.

The corporation had earlier announced a 1997 write-off of $6.3 billion, believed to be the largest in Canadian corporate history, * to cover much of the cost of the nuclear refurbishment.

But the utility stresses that the investment is needed to keep the reactors viable and will result in a much more productive operation.

The plan also said Ontario Hydro will prepare for competition in the electricity market partly by getting rid of workers "no longer required."

The plan doesn’t mention a target for the "downsizing initiative."

But spokesman Terry Young noted that Hydro chairman Bill Farlinger has suggested a 10-per-cent reduction in the company’s 22,000-strong workforce might be in order.

"We have an over-complement of staff," Young said.

The corporation also wants to create more flexible labour relations and curb pension and benefits costs, the document says.

The company has asked that the workers’ $3.5-billion pension surplus be handed entirely to the corporation, said Power Workers’ Union president John Murphy.

The union has agreed only to share the surplus with Hydro in what’s become a major contract dispute.

Murphy said further staff reductions could be counterproductive, as proven during the ice storm when 100 laid-off linesmen had to be called back.

"The idea of simply cutting staff as a way of meeting a budget goal is a very short-sighted approach," he said.

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