TORONTO - An expert panel will recommend a new method to determine pay levels for public-sector executives in Ontario's energy sector, but sources say the report due Wednesday will not propose a salary cap.

When he set up the panel last winter, Energy Minister Dwight Duncan said multimillion-dollar compensation packages at Ontario Power Generation and Hydro One were too high for government-owned utilities.

The review was announced after former Hydro One CEO Tom Parkinson got $3 million in severance when he quit last year amid criticism of expense account irregularities and his $1.6-million salary and bonus.

Duncan asked the four-member panel to recommend new methods of determining executive compensation for energy officials that reflected the public nature of the jobs.

He said public utilities should not be trying to compete with private-sector salaries on Bay Street.

Sources say the panel will recommend salaries be lowered when new executives are hired, but that no one would see their current salary reduced.

The panel will propose a new formula for determining salaries that considers both private-sector salaries in the same field and public-sector pay levels.

The Liberal government claimed salaries at Hydro One, OPG and other energy agencies rose after the previous Conservative government tried - and failed - to privatize Ontario's electricity market, but the Tories say it was the Liberals who agreed to Parkinson's lucrative package.

In addition to Hydro One and OPG, the panel looked at compensation levels for executives at the Ontario Power Authority, the Independent Electricity System Operator and the Ontario Energy Board.

Opposition critics say the salaries of Parkinson and OPG CEO Jim Hankinson, who also pulls in about $1.6 million a year, dwarf the $480,000 paid to the head of Hydro Quebec and the $405,000 earned by the president of B.C. Hydro - both of which are combined generation and transmission utilities.

Parkinson's predecessor as Hydro One CEO, Eleanor Clitheroe, was fired in 2002 for lavish spending on top of her $2.2-million annual pay package, but subsequently launched a $30-million lawsuit against the province that is still before the courts.

The panel also looked at areas of overlap between the various provincial agencies involved in the generation, transmission, regulation and marketing of electricity.