Ontario HydroÂ’s legacy of debt

ONTARIO - The line shows up on every hydro bill in the province: Debt Retirement Charge.

It's an extra $6 to $8 a month on a typical household's bill.

The charge results from the restructuring of the old Ontario Hydro, which was broken up in 1998 and turned into two main operating companies – Ontario Power Generation and Hydro One.

But Ontario Hydro had run up such a massive debt during its massive nuclear expansion in the 1980s that Hydro One and OPG couldn't absorb it all if they were to operate as commercially viable firms.

The province created the Ontario Electricity Financial Corp. to hold the debt that Hydro One and OPG couldn't absorb. It became known as "stranded debt."

To help pay off the stranded debt, a special charge was levied on every kilowatt of power.

The stranded debt amounted at the outset to $19.4 billion, and success in paying it down was limited. In fact, the stranded debt increased marginally through 2005.

Since then, it had trended downward, and is now declining at about $1 billion a year. If that keeps up, you'll only have to pay the debt service charge until 2026.

Consumers also pay a fee to cover the costs of administering the electricity system, including a special levy imposed this year to pay for conservation programs.