Ontario Power Generation has sold four hydroelectric stations on the Mississagi River in northeastern Ontario to Brascan Corp. for $340-million, the two companies said yesterday.
The stations have a total output of 490 megawatts, representing about 1.5 per cent of the province's generating capacity. They produce enough electricity to supply all of the needs of a city the size of Sudbury.
OPG president Ron Osborne lauded the sale, which he said will lead to increased competition in Ontario's $10-billion power market.
"This sale comes as a result of an open and international auction process that places almost 500 MW of generating in the hands of another competitor," Mr. Osborne said in a statement.
The stations are being privatized under a government order forcing provincially owned OPG to divest about 60 per cent of its generating capacity to create more competitive conditions in the Ontario electricity market, which has been operated until now as a government-controlled monopoly.
An OPG spokesman said there were other bidders for the stations, but he declined to identify them.
The sale is expected to close in May, about the time that Ontario will begin allowing electricity generators to offer power at competitive rates for the first time.
Proceeds of the sale will be turned over to the Ontario government through a dividend by OPG and used to pay down debts from Ontario Hydro, the former provincial electricity monopoly.
Toronto-based Brascan said the purchase will allow the company to be a bigger player when Ontario opens its power market.
"This transaction positions Brascan as a key participant in the Ontario deregulated electricity markets," said Harry Goldgut, chief executive officer of Brascan Power.
The four plants expand Brascan's capacity by about 50 per cent, and give it 31 generating stations in Ontario, Quebec, Maine, British Columbia and Louisiana.
He said OPG's plants, which were built between 1950 and 1970, are in excellent condition, have low operating costs and a long life expectancy.
With this sale, OPG has four other stations on the auction block under the government order forcing it to reduce its share of Ontario's electricity capacity. These include three coal-fired stations and one duel fuel natural gas oil fired station.
Brascan had a special interest in the Mississagi plants, located about 110 kilometres east of Sault Ste. Marie, because it already has 12 other hydroelectric stations at nearby sites in Northern Ontario, and is keen to use its new plants to sell power in Quebec and Michigan.
The facilities sold were:
Wells Generating Station, which has a capacity of 239 MW.
Aubrey Falls Generating Station, with a capacity of 162 MW.
George W. Rayner Generating Station, with a capacity of 46 MW.
Red Rock Falls Generating Station, with a capacity of 41 MW.
The purchase will also include four water storage dams on Rocky Island Lake.