On July 21, 2006, the Ontario Energy Board issued a Decision and Order granting Hydro One Networks an interim distribution license to operate Cat Lake Power Utility Ltd.'s transmission and distribution system. This license to operate does not change the ownership of the assets that remain with Cat Lake Power for the transmission component, and the Ontario Electricity Financial Corporation (OEFC) for the distribution component. Hydro One is to take on this operational responsibility no later than Aug. 14, 2006.

Cat Lake Power requested the board relieve the utility of its responsibility to operate its system because the utility indicated it was no longer able to operate the transmission and distribution systems. A management/maintenance agreement between Cat Lake Power and Sioux Lookout Hydro Inc., in which Sioux Lookout Hydro agreed to service the Cat Lake Power transmission and distribution systems, expired July 1, 2006. While Sioux Lookout Hydro continues to operate the system on a best-efforts basis until a resolution to the situation is achieved, it did not want to continue that maintenance arrangement with Cat Lake Power. The board noted that the reliable supply of electricity to consumers in Cat Lake may be compromised without a means of providing that maintenance support on an ongoing basis.

At the board's request, Cat Lake Power submitted a detailed proposal dealing with how the system could be maintained in the future. In the proposal, the utility requested the board direct Hydro One Networks to purchase the transmission and distribution systems serving the Cat Lake community. In the decision, the board notes that it took the action to protect the interests of consumers with respect to the adequacy, reliability and quality of electricity service.