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www.durhamregion.com THE CANADIAN STATESMAN, DECEMBER 11, 2002 PAGE 7 Cap puts crack in 'nest egg 1 Veridian braces for fallout from recent provincial moves BY LESLEY BOVIE Staff Writer DURHAM -- Veridian Corporation Corporation is bracing itself for a "loss of cash flow" when the provincial government caps hydro rates and delivery charges later this month. While chief executive officer John Weirsma acknowledges something something had to be done to bring the volatile energy market under control control for consumers? he said municipally-owned municipally-owned electricity companies like Veridian deserve special consideration consideration from the new legislative changes. Veridian will meet with the Ontario Ontario ministry, of energy next week to ask for just that, he said. "The government needs to let us become commercially viable," Mr. Weirsma argued. Owned by Pickering, Ajax, Clar- ington and Belleville, Veridian services services those communities along with Uxbridge, Brock and Port Hope. As part of its hydro relief package, package, the Province has promised to cap the price of power at 4.3 cents per kilowatt hour for the next four years, and rebate consumers for everything they paid above that price since the energy market deregulated May. 1. Mr. Weirsma said Veridian's retailer, retailer, First Source Energy,, won't be as affected by the cap. It offered a three-year fixed rate to customers at just over five cents per kilowatt-hour, but Mr. Weirsma said the Province has to honour those legal contracts and compensate compensate retailers for the difference. difference. At this point, the Province's new legislation only affects residential and small business customers, who make up a small volume of business for First Source Energy, he said. Commercial and industrial companies, which make up the majority of its customers, arc still paying the standard supply price of energy. Until that changes, First Source Energy doesn't anticipate anticipate a reduction in staffing levels. However, Veridian Connections, Connections, the corporation's electricity electricity distributor, will suffer a "loss of cash flow" when delivery delivery charges arc capped by the new legislation, Mr. Weirsma said. Veridian Connections was in the middle of a rate increase phased in over three years. The final increase was scheduled scheduled for March, which would have brought the distributor up to a commercial rate of return return of 10 per cent. Without the final increase, Veridian is stuck at somewhere somewhere between a five to six per cent rate of return, Mr. Weirsma said. "And that's only a modest return for our shareholders. We're not at a commercial rate," he said, adding municipalities municipalities invested in Veridian with the understanding it would have a 10 per cent return. return. Mr. Weirsma said the corporation corporation has come up with a loss estimate but hasn't for mally presented the figure to its board of directors. Pickering Ward 2 Regional Councillor Mark Holland said as major shareholder, the City needs to know how much the electricity company stands to lose. It should also urge Veridian Veridian to seek cost recovery from the Province for its recent "legislative flip-flop", he said. "Veridian was the City's only nest egg. The City of Pickering does not have a large amount of reserves. They're finite at best. Ask yourself after the provincial changes what Veridian is worth. "We're now stuck with a company that has a massive devaluation. Veridian made a decision, wc made a decision, on a system that changed without consultation." 2836 Holt Rd. 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