OPG to construct a generating unit

The unit will be a relatively small one, adding 12 megawatts to the plant's current capacity of 17 megawatts. By contrast, the big Sir Adam Beck 2 station on the Niagara River produces close to 1,400 megawatts of power.

But it may indicate a willingness of OPG and its shareholder, the Ontario government, to allow the company to expand.

The previous Conservative government had vowed to sell off many of OPG's assets, reducing its market share to about half of the current level.

The Liberals, who fired OPG's top executives and directors after taking office in 2003, said its key assets will remain in public hands, and said they would rewrite the company's mandate by the fall of 2004. They haven't yet delivered.

The Liberals say they want to encourage private investment in Ontario's power sector, but investors have been leery about OPG's dominant position in the marketplace.

At the same time, Energy Minister Dwight Duncan last week said the province needs to develop more of its hydroelectric potential and praised the performance of OPG's hydroelectric division.

OPG already plans a new tunnel at Niagara Falls to funnel more water through those generators.

At Ear Falls, the existing station can't handle all the water flowing past, so much of it runs through a channel bypassing the power plant.

"The additional unit will optimize the use of available water," OPG chairman Jake Epp said in a release.

Contracts for building the station are still being completed, but it will cost "in the ballpark of $40 million," said OPG spokesman John Earl.

The new unit will produce enough power to supply about 4,000 homes, according to OPG.