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Hydro dims the future of private generation by cancelling projects.

The economic diversification efforts of several Northern Ontario communities may have been thwarted by Ontario Hydro.

Hydro announced last month that it had terminated or deferred approvals for 53 private cogeneration and hydraulic generation stations because the utility's conservation efforts have reduced the demand for electricity.

Thirteen proposals, including ones for Atikokan, Blind River, Hearst, Cochrane and Iroquois Falls, were deferred. These must be either downsized or redesigned for improved efficiency before being renegotiated with Hydro.

Forty additional proposals were shelved altogether. These were submitted for communities throughout Ontario, including Sudbury, Wawa and Elliot Lake.

"The anticipated near- and intermediate-term demands are not as high as we had forecast," explains Paul Vyrostko, the director of Hydro's non-utility generation division. "The short-term need is gone."

However, investors, opposition politicians and some economic development officials disagree.

"I don't accept the argument that there has been a drastic reduction in the amount of electricity we need for the future," says provincial Liberal leader Lyn McLeod.

"To say that the government's decision was unfortunate is inaccurate because that is not a strong enough word," adds McLeod, an energy minister in the David Peterson cabinet. "It looks as though there's no plan for the future."

In 1990, while McLeod was minister, Hydro unveiled a 25-year strategy which identified the need for private generation stations to bring the province's supply of electricity in line with future demand.

The projected demand has since been reduced, leading McLeod and others to question Hydro's forecasts.

"I really wonder how accurate their demand-supply curve is," says Iroquois Falls Mayor Jim Brown.

"I am confused by Hydro's decision. We already have major power consumers concerned about their future needs," adds Paul Tosolini, a development officer with the Sudbury Regional Development Corporation (SRDC).

The SRDC had been working with a U.S. firm to bring a 250-megawatt cogeneration generation facility to the Sudbury area.

Tosolini says a formal proposal was submitted to Ontario Hydro last year, and that "there was a general agreement on the proposal.

"But you have to realize that nothing is sacred and nothing is certain," he adds.

The Sudbury proposal would have resulted in approximately $250 million being injected into the local economy during the facility's construction as well as the creation of almost 90 permanent jobs.

Vyrostko admits that the decision to reduce private development was based on a level of demand which could rebound when the economy recovers.

"The question is: What do we need for our long-term needs? If we approve all the projects and buy the electricity, the supply will increase too quickly," he says.

In the future, Vyrostko says Hydro will conduct annual and semi-annual reviews of its demand and supply projections.

However, that is little consolation to the communities which were counting on the jobs private generation projects would create.

"During a depressed economy it's nice to see private companies willing to invest this type of money," says Brown. "We're not talking about public money. This all would have been financed by the private sector."

Northland Power wants to build a 350-megawatt cogeneration facility in Brown's community. The project would employ up to 40 people and create an additional 40 spin-off jobs in the town.

"With 25 per cent of the workforce unemployed, this project would have had a big impact on the town," Brown says.

Any downsizing of the proposal to meet Hydro's new forecasts would reduce the investment in the community as well as the number of new jobs, adds the mayor.

Brown hopes the project will receive approval by summer. However, John Brace, the director of business development for Northland Power, believes that possibility is unlikely.

"They (Hydro) said that they want the plant smaller, but we have no idea how small," he explains.

Elliot Lake economic development officer Diana Bratina says she is still waiting for word on the fate of the proposal for her community. She says the $120-million project was expected to create 30 full-time jobs.

"In this day and age when there are so many plant closures and layoffs, 30 jobs mean quite a lot to any community," she notes.

Bratina reports that there have been some discussions with cabinet ministers and there is still a possibility the Elliot Lake proposal will be approved under a special designation.

A cogeneration proposal for Hearst could receive a similar designation.

The $148-million plant has been proposed by the Northern Ontario Power Corporation of Timmins. The facility would burn waste from three area sawmills. The waste has been piling up since the local bioshell plant closed in March of last year.

Hearst Mayor Gilles Gagnon says the designation is justified because the plant is necessary to burn massive accumulations of wood waste.
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Title Annotation:Ontario Hydro
Author:Krejlgaard, Chris
Publication:Northern Ontario Business
Date:Mar 1, 1992
Previous Article:Lack of consumer confidence slows market activity.
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