Private generation projects dealt a severe blow by Hydro.

Ontario Hydro chairman Maurice Strong's cancellation of the Manitoba hydro purchase would normally have been applauded by independent power producers in Ontario.

However, the accompanying cancellation of all non-utility generation projects (NUGs) not yet approved by Orders-in-Council dealt a severe blow to these private power producers as well as to the economy of Northern Ontario.

One of the northern communities most affected by the announcement is Hearst, where the local lumbermen's association is seeking to construct a wood-waste burning plant. The future of that plant, and of similar cogeneration projects, now depends on the outcome of a two- to three-month review of Hydro's short- and long-term power needs.

While Hearst Mayor Gilles Gagnon said he understands Hydro's predicament of over-supply, he insisted that if his community's 30-megawatt woodwaste plant does not go through, it "will kill the Town of Hearst."

According to Gagnon, the provincial Environment Ministry has threatened to shut down the community's sawmills if something is not done about the mounting sawdust problem in Hearst. Gagnon said the burning of sawdust to generate electricity is the only realistic option to save the town's industry.

"While for many communities these projects are important economically, our drawback is we need this project to keep what sawmills we got," he pointed out.

Strong's announcement also jeopardizes the future of two TransCanada Pipelines' cogeneration projects in Kapuskasing and North Bay and of an Iroquois Falls project planned by Northland Power and Abitibi-Price Inc.

"It is obviously disappointing news," responded Iroquois Falls Mayor Jim Brown. "Twice this project has been pulled. Ontario Hydro cannot continue to play with private enterprise like this," he charged.

Brown cited the millions of dollars Northland has spent on the project, and the engineering and consulting work that has had to take place.

Meanwhile, Frank Dabbs, the public affairs director with TransCanada Pipelines, insisted that his company's projects are not cancelled.

"We are assessing our position and we have been invited to a meeting (this month) where Ontario Hydro will take us to the next step - whatever it is," said Dabbs.

A fifth cogeneration project, planned for Sault Ste. Marie by Lake Superior Power, was not affected by the Hydro chairman's announcement. The company had previously received an Order-in-Council for Hydro to purchase power from the facility.

Sudbury's controversial Sunthetic proposal was also not affected. The cogeneration aspect of the much-publicized project was ruled out by Hydro last February when a total of 40 NUG proposals were turned down.

However, Strong's announcement did affect a host of smaller generation projects planned throughout Northern Ontario. These projects fell under the moratorium when the chairman expanded it to include projects which are less than five megawatts in size.

The affected projects include a hydroelectric station at Twin Falls, northwest of Manitouwadge, three-megawatt hydroelectric developments in Dryden and on Finlayson Lake near Atikokan and a fish-processing project in Elliot Lake involving four five-megawatt generating stations.

Tom Adams, a utility analyst with Energy Probe soundly condemned Hydro's decision to review all NUGs, calling it a case of a utility going bankrupt and trying to restructure itself on the run.

"The decision to shelve Manitoba is a good one, but if they are looking for positions to cut then they should find the people responsible for that Manitoba contract and sack them," Adams added.

He accused Strong of being sold a bill of goods by the utility and dismisses Hydro's claim of a power surplus. Adams maintained that Ontario is a net-exporter of electricity and he called for the utility to be privatized.

"The first thing we need to do is to fix the electricity system through competition and privatization, and then stop the debt from growing."