From: howard.smith@spacebbs.com (Howard Smith)
Newsgroups: sci.energy
Subject: Ontario Hydro
Date: 11 Dec 92 09:33:00 GMT
Reply-To: howard.smith@spacebbs.com (Howard Smith)
Organization: SPACE BBS - Menlo Park, CA - 10 Lines + 4gB - 415-323-4193

Strong to head Ontario Hydro

Calls utility's long-standing emphasis
on nuclear power a 'financial disaster'

By Richard Mackie

TORONTO -- Ontario's NDP government has named Maurice Strong,
Canada's best-known environmentalist, as the new chairman of
Ontario Hydro.

Mr. Strong brings to the job a commitment to conservation,
concern for the environment and a skepticism about nuclear power,
which until recently has been Hydro's area of growth. He said
this emphasis has led to "a financial disaster."

At a news conference yesterday, Mr. Strong said: "I'm not one of
those who feels that nuclear power provides a miracle answer to
our energy supplies. Neither as I a person who believes that
there is no place for nuclear power."

He said that in taking up the job as chairman and chief executive
officer, he will face challenges in making Hydro a more
efficient utility and in increasing its emphasis on conservation.

The utility, North America's largest, is in serious trouble, said
Liberal critic Sean Conway, who criticized the appointment.
"Given the financial situation in which Hydro now finds itself, I
do not think that Mr. Strong has the mix of talents that this
enormously difficult job requires at this time." Hydro is, "in a
financial sense, on the critical list."

Mr. Strong must make "difficult and immediate choices that are
going to affect every citizen and certainly every business in the
province of Ontario," Mr Conway said.

The difficulties facing Hydro were highlighted last week when the
corporation's board, led by departing chairman Marc Eliesen
announced cuts of $7 billion in planned capital spending over the
next 10 years. The board added that is was seeking to trim
another $3-billion from planned spending.

These cuts are expected to have a substantial effect on the
province's economy in the form of layoffs, elimination of
construction contracts and reduced purchases from suppliers.

But the utility is trying to cope with low growth in demand at
the same time that much of its ability to produce and transmit
power is deteriorating. Some existing generating plants at
Pickering and Bruce in particular need repairs. The new nuclear
plant at Darlington has taken much longer than forecast to come
into use, and even some major transmission lines need to be
replaced.

The cost of upgrading forced Hydro to raise rates last year by 11
per cent, Energy Minister Brian Charlton said. This year, rates
are to go up by 7.9 per cent. "Our projected rate increases next
year and the year after will get down to the 6 and the 4 ranges."

Mr. Charlton said he hoped the recent cost-cutting at Ontario
Hydro would enable it to keep rate increases about even with
inflation after 1994.

Premier Bob Rae promised that power-rate increases in the future
will be restrained so that they do not further erode Ontario;s
competitive position in attracting industry,

Mr. Strong did not blanch in the face of the generally gloomy
outlook at Hydro. "I accept it with a great deal of enthusiasm
and commitment. I've got a lot to learn. I do understand as well
that Ontario Hydro os one of the major elements in the economic
and social life of Ontario."

He said he had discussed the problems with Mr. Rae and with Mr.
Charlton. "It certainly would be too early for me to pronounce
myself on those problems. I intend to go through a process of
listening to the voices from within the organization, from within
the community and from within the government."

Mr. Strong did admit to having strong views about his new job,
which still must be confirmed by a committee of the legislature.
"Far from being deleterious to our economic investment, a
commitment to the environment and sustainability is indeed a real
source of competitive advantage to those who can achieve the
transition."

He added, " I have very real reservations about nuclear power.
reservations, however as much on the economic side. I have seen
utility after utility get into a disastrous situation
economically by its commitment to nuclear power, including
Ontario Hydro."

But Ontario Hydro is not the only utility to have been enmeshed
in financial disaster through its commitment to nuclear power. It
has that commitment. It's part of the fact of life. And we
obviously must make the best of it."

Mr. Conway said that although a case could be made for Mr.
Strong's proposed salary, "I'm not happy that in the third year
of a recession and with Hydro on a corporate critical list, that
the ratepayers of Ontario are going to be paying Mr. Strong
$425,000 annually." (Mr. Eliesen was subjected to so much
criticism for a similar salary that he took a pay cut to
$260,000.)

Mr. Rae defended this salary, noting that chairmen of utilities
across Canada make a salary of that level in the private sector.
Thus the $425,000 "strikes me as a fir salary range, given the
economic challenges and given the very serious management
challenges."

The Premier agreed Mr. Strong's appointment will be important to
the future of Ontario and to the future of his government. "There
is no job, in my view, that is more challenging from a management
perspective...."

"Ontario Hydro now faces a tremendous challenge. We have an
organization with assets of $40-billion, with a debt of $31-
billion. We have had an exercise in megaprojects, in the case of
Darlington, with an overrun of nearly $10-billion.... We have a
rate structure that has been high and places us in a very tough
competitive situation."

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