Ontario eyes non-profit option for power firm

- TORONTO - Ontario's giant electricity distributor, Hydro One, could be transformed into a non-profit entity instead of a fully privatized commercial company under a new plan being studied by the provincial government.

A spokeswoman for the Ontario's Energy Ministry confirmed Friday that the non-profit option was now being considered.

Previously it had been thought that the government-owned transmission company, the largest in Canada and one of the biggest in North America, would be put on the market next spring in a public share offering, or be acquired by another company.

``(The non-profit) plan is just one of the options on the table. No decisions have been made,'' said Energy Ministry spokeswoman Christine Smith. ``That has to go to cabinet and if people are thinking it's the only option, it's not. It's one of many options.''

The alternative plan came to light in a story in the Globe and Mail newspaper Friday. The Globe said Premier Mike Harris and a select few government and financial insiders were studying the non-profit option, which would be modeled on Nav Canada, the country's non-profit civil air navigation service.

Ontario SuperBuild Corp., the government's privatization advisor, is leading the work on the project. ``We're looking at all options,'' a spokesman in SuperBuild's office, told Reuters.

Hydro One is one of two main spinoffs of Ontario Hydro, the sprawling provincial power utility. The other is Ontario Power Generation, which has also been slated to be turned into a commercial company.

The breakup and planned privatization of Ontario Hydro left C$21 billion ($13 billion) in stranded debt that had been built up over decades by the utility and which the province is ultimately responsible for.

The Globe reported that if the non-profit option was chosen, Hydro One would raise about C$10 billion ($6.29 billion) through the sale of bonds.

The option would be attractive to the government because funds from the debt issue could be used to pay down the stranded debt, and Hydro One's electricity sales would be used to pay interest on the bonds.

But, the Globe said, the non-profit option would derail plans for Hydro One to expand and become a major player in the deregulated North American electricity market.

``Any decision that is made is entirely up to the shareholder. It would be the government's decision to make,'' said Hydro One spokesman Terry Young.

Whatever decision is made will not affect the province's plans to open the market to competition next year, Smith said.

Ontario, Canada's most populous province, has already pushed back its original November 2000 deadline for electricity-system deregulation by 18 months.

Earlier this year, it said it would open the market by May 2002. A target date will be set in late December or January following the completion of a key report.

``What SuperBuild is doing to look at privatizing different government assets is totally separate from us opening the market,'' Smith said. ``It will not affect market opening.''

($1-$1.59 Canadian)