Ontario offers $140 million in power rebates for pulp and paper

The program is intended to provide assistance during a "transition period" while the companies make efforts to reduce costs by improving their energy efficiency.

Electricity accounts for about 30 per cent of the operating costs for pulp and paper companies, and electricity prices have risen 60 per cent in Northern Ontario over the last four years. Meanwhile, falling prices and the strong Canadian dollar have also hurt forestry revenues, leading to mill closures and job cuts.

According to the Ontario Forestry Coalition, more than 5,000 people have lost their jobs due to pulp and paper mill closures in the province since 2002. The organization is a partnership between industry, municipalities and aboriginal organizations in areas that rely on forestry.

It had asked for a 36 per cent break on electricity rates.

McGuinty told Canadian Press that the government had looked into regional pricing for electricity, which had been proposed by some Northwestern Ontario mayors, but decided against it.

"It does not provide the benefits that some had expected that it might," he said.

The new plan is being endorsed by some major forestry companies such as Bowater Inc. and Tembec.

Michael Power, mayor of the Northwestern Ontario town of Greenstone, said he was optimistic that the plan will help.

"We have to see how it rolls out, but we think on balance this will make a big difference and allow us to move forward on other fronts to ensure that we remain competitive," he told the Canadian Press.

Greenstone is one of the municipalities in the Ontario Forestry Coalition.

Ontario NDP Leader Howard Hampton criticized the plan for doing nothing to help tens of thousands of forestry workers who have already lost their jobs.

Cec Makowski, Ontario region vice-president of the Canadian Energy and Paperworkers union, criticized the timing of the announcement even before it was made.

"The government has been delaying this announcement for months as the industry continues to fall into further jeopardy," he said.

Ramsay said the Ontario government has committed $900 million over five years to help the forestry sector in the past year-and-a-half, including the latest announcement.

Most of the money has been targeted at helping the industry invest in areas such as value-added manufacturing and energy conservation.

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