Offer of Power to Ontario

The Premier's Office and the Ministry of Energy have received John Lavorato=
's letter setting out the offer of 500MW from New York . Judy Hubert (Ass=
istant Deputy Minister, Energy Policy) and her staff have been given the ta=
sk of reviewing the proposal and concept. Garrett Tripp and I spoke yester=
day to Chris Cincar, an economist who works for Judy. We reviewed the rati=
onale for the proposal with Chris and made the following points: a) we see =
no supply adequacy problem even in the event Pickering A is delayed; b) the=
purpose of the proposal is to offer an insurance policy so that the gov't =
can firm up a market opening date of March 1 without any concern about Pick=
ering; c) the prices in any transaction completed pursuant to the proposal =
or something similar would not set the pool prices in Ontario;and d) we em=
phasized that this was power for delivery during onpeak hours only. Chris a=
sked for some further data regarding historical NY prices for the March thr=
ough June period in 2001 and prior years and for a comparison of the onpea=
k prices with 7x24 prices. Chris is away next week and we will be speaking =
to him again after Labour Day. Chris indicated that he wants to talk about =
the proposal to the IMO and other potential power suppliers. Thinking more=
about this, if in fact this is something Ontario pursues, Garrett and I th=
ink that the obvious governmental agency to be the counterparty would be =
OEFC, which will hold a wholesaler licence in Ontario. OEFC could issue an=
RFP for the power required and secure the power from a range of suppliers =
outside the Province.