TORONTO - With summer approaching and electricity demand on the rise, the Ontario government announced Thursday a plan to encourage more small-scale energy producers, including aboriginal and northern communities, to add power to the grid in the future.

The province is taking a cue from the Ontario Power Authority and will offer financial incentives to help reduce barriers for small clean-energy projects to go online.

Energy Minister Dwight Duncan said the province is expanding an incentive program to encourage more clean, water-based energy projects in northern Ontario that would power underserviced areas and create opportunities for aboriginal communities.

Duncan recently met with three grand chiefs in Thunder Bay, Ont., and said First Nations are "extremely important'' to the province's energy future.

"There's 69 First Nations communities in Ontario that are still not electrified,'' Duncan said. "They're using diesel--I mean, that's just obscene.

"We want to work with them, they want to work with us.''

The province is also launching two new incentive programs that Duncan said makes Ontario a North American leader in supporting the small-scale projects, which each add up to 10 megawatts to the power grid.

One program will encourage projects based on natural gas or surplus energy, and the other will support combined heat and power co-generation projects.

The incentives are modelled after the Ontario Power Authority's renewable standard offer program, which has generated about 400 megawatts of clean, renewable power through 75 projects.

While New Democrat Leader Howard Hampton said he supported co-generation and small-scale energy production, he accused Duncan of breaking a promise he made in 2005 by not hiring a facilitator to speed such projects along.

"The McGuinty Liberals are in full pre-election mode,'' Hampton said in a statement. "They are making promises that they have already made and failed to keep. If the minister of energy was serious about co-generation, he would have appointed a co-generation facilitator like he promised back in 2005.''

The province's power supply has been tested in the past week with rising temperatures, although it's still far from being hit with a "summer strain,'' and way off the record demand of 27,005 megawatts set last August, said Terry Young, spokesman for the Independent Electricity System Operator.

"Even (Wednesday), when you think about how hot it was, the peak was still only about 23,338 megawatts, so we haven't hit the summer strain,'' he said.

"Typically we won't see our peak until probably the second week of July, and that'll depend on the temperature too. The longer you go in a heat wave, the higher the demand will climb because the air conditioning essentially works harder.''