Even with this significant competitive advantage, adding higher cost nuclear and fossil to the Ontario Hydro generation portfolio has left the utility vulnerable to competitive threat. Remove the hydraulic portfolio, and its significant moderating impact on Ontario Hydro's total generating costs, Ontario Hydro's vulnerability to lower-cost alternatives increases dramatically. In fact, a number of Hydro's accounting assumptions are holdovers from the days when Hydro was planning on adding many new generating stations, principally nuclear. There are many ways to analyze the cost of power, and no method is absolutely perfect. In fact, when forecasting, the one certainty is that actual costs will be different than those which have been forecasted.
Good forecasts result from knowledgeable assumptions and methods.
Whether looking at accounting, market or economic costs, assumptions concerning lifetime, capital, operating, fueling and performance provide the key variables to any assessment of the cost of power. And each of these input assumptions can have a significant impact on the resulting forecast of cost. In addition, whether a facility is public or private can have a significant impact on the analysis, depending on financing vehicles and capital structure. Before turning to the core of our analysis, some measure of the differences between our forecast of the cost of power, and Ontario Hydro's accounting treatment is necessary. This assumption was from the time that Ontario Hydro assumed heavy water from retired stations could be simply moved to new stations.