01/11/2012 05:17 EST | Updated 03/12/2012 05:12 EDT

Toronto Hydro workers face layoffs

One company that does work for Toronto Hydro laid off more than 100 people Wednesday, and the city utility is warning of hundreds of layoffs of its own.

The axe has already dropped at Scarborough's Powerline Plus Ltd., a contractor that runs overhead wires. The company laid off 150 people Wednesday.

Toronto Hydro told CBC reporter Mike Crawley that the utility has told its contractors to stop work because it has to reassess its plans after being denied a rate increase by the Ontario Energy Board.

There have been no layoffs yet at Toronto Hydro, but spokesperson Tanya Bruckmueller said as many as 400 employees could be let go.

Over the longer term, officials warn that unless the utility fixes its aging transformers and other equipment there will be more frequent power outages.

"Some of our equipment that we need to replace is past its life expectancy already," she said.

The Ontario Energy Board questioned Toronto Hydro's bleak assessment when it turned down the $5 monthly rate increase the utility was seeking earlier this month.

The board said there was no evidence the power grid was in as bad a state as Toronto Hydro claimed.