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Hydro poles stand in Toronto's west end.The Canadian Press

Toronto Hydro will be asking the Ontario Energy Board to reconsider a request to increase hydro rates, which was turned down earlier this month.

On Friday, a letter signed by the chairman of Toronto Hydro's board of directors was sent to the energy board, outlining why it says an increase is necessary.

The board, which regulates spending and rates, turned down an early-stage application last Friday. Toronto Hydro wanted to present its case for raising monthly hydro rates by an average of $5 a household to pay for infrastructure improvements totalling $1.5-billion over the next three years.

"At this point it's just a clarification and giving them some background on our position," said hydro spokeswoman Tanya Bruckmueller.

When Toronto Hydro's application was turned down, a standard, inflation-based rate was instead approved. The increase totals $141-million a year, short of the sum Hydro says it needs.

The letter says upgrades are necessary to bring Toronto's grid up to modern standards. Some components are beyond their life expectancy and others will be soon. As well, 40 per cent of power outages in Toronto are caused by equipment failures, the letter says, which doesn't meet reliability standards.

"We continue to believe in the need to renew Toronto's end-of-life infrastructure and look forward to an opportunity to present this case to the OEB. In light of the above, we will be filing a request to the OEB to review its decision shortly," the letter concludes.

It mentions potential strains on the system, including the upcoming Pan Am Games.

Ms. Bruckmueller said two executives were let go earlier this month, part of the utility's downsizing. An internal employee reorganization has been put on hold but there are about 700 external contractors facing layoffs, she said.

The Ontario Energy Board could not be reach for comment Friday evening.

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