Cost of gas plant cancellations could top $1B

(Update)

After months of hounding by opposition politicians, Ontarians found out Tuesday afternoon how much it cost to cancel the Oakville gas power generating plant. And it was more than double the previous estimate of $310 million. The Auditor General puts the cost at $1.1 billion. Less potential savings and potential new costs, it works out to between $675 and $815 million. We already know cancelling the Mississauga gas plant cost an additional $275 million. So taxpayers could have to pay more than one billion dollars for the cancellations which many saw as Liberal party seat savers. Lisa Hepfner has reaction from the politicians at Queen’s Park.

It’s a confusing batch of numbers and we’re told that’s because these are estimates. Two-thirds of the costs and all the savings are still to come over the next 20 years. The Ontario Power Authority which estimated $310 million in costs says it used different rates and accounting manoeuvres to come up with its number.

However, Auditor General Bonnie Lysyk did find that the government interfered in negotiations between Transcanada, which owned the contract to build the plant and the power authority. And she found that we could have cancelled the Oakville plant with far fewer costs by just waiting it out because the Town of Oakville was determined to stop the plant and would have taken the case to the Supreme Court and by that time the deal could have been dead.

In fact, she found that Transcanada did very well in the negotiations and will actually make a lot more money with the new plant in Napanee than it would have in Oakville, because it will have to upgrade a pipeline and charge for the costs of transportation. Opposition members are calling for the Premier’s resignation over this but the Premier says she’s making the system better and it won’t happen again.

Lysyk:   “Given the situation in Oakville, it could well have been possible for the OPA to simply wait it out, with no penalties and a much lower cost if it was determined that the plant would not have been able to be up and running within 24 months of the original contracted in-service date.”

PC Energy Critic Lisa MacLeod:   “One billion dollars, ladies and gentlemen, for just one Liberal seat. And the worst part about that, when you read the auditor’s report, is that tab is still running with many of the costs still undetermined and the savings uncertain.”

NDP leader Andrea Horwath:   “Political manoeuvring by the Liberals drove up these costs. Liberal staffers, committed to paying the TCD the whole value of their contract, whether they had to or not. And at every step, they agreed to work in out in a way that would help Transcanada and would leave Ontario families paying more.”

Ontario Energy Minister Bob Chiarelli: “It was much better to negotiate this particular transaction rather than litigating it. Indeed, suggesting that the costs would be greater to litigate than to settle.”

Ontario Premier Kathleen Wynne:   “There have been assumptions made at various stages. There were assumption made at the former Premier’s office, there have been assumptions made at the OPA in calculating some of the numbers. There have been assumptions that have been made by the Auditor General. And I think that the quote that the Minister read about the uncertainty in all of this and the variation in the numbers is I think something that remains the case today.”

The Premier said she’s making two changes to the rules so communities have a say from the beginning over where gas plants are located. And she’s making new rules to limit political involvement in these sorts of commercial transactions.