Oakville gas plant cancellation price tag: $675-million
Ontario's auditor general says the cost of the Liberals' decision to cancel a planned gas plant in Oakville will be at least $675 million, far above the $40 million the government originally claimed.
Auditor general Bonnie Lysyk also warns the cost could rise another $140 million for gas deliveries to the new site of the generating station near Kingston.
Lysyk also says the cost of killing the Oakville project is ``significantly more than may have been necessary'' because of a number of what she calls ``questionable decisions'' by the premier's office.
The auditor's report puts the total cost of scrapping the Oakville gas plant and another in neighbouring Mississauga at a minimum of $950 million, and it could reach almost $1.1 billion.
The opposition parties call the cancellations an expensive Liberal seat saver program for the 2011 election, when the governing party was reduced to a minority but kept all five ridings near the gas plants.
Premier Kathleen Wynne has apologized for the way the Liberals cancelled the gas plants, and said she too disagreed with the way the energy projects were handled.
The auditor found the premier's office promised to compensate the developer, TransCanada Energy, for the full financial value of the contract, even though she believes the province could have gotten out of the deal at a much lower or even no cost if it simply waited.
"Given Oakville's strong opposition to the plant, it may well have been possible for the (Ontario Power Authority) to wait it out, with no penalty and at no cost,'' said Lysyk.
The premier's office also failed to rely on protections in the contract that could have minimized any damages as a result of cancelling the plant, added Lysyk.
"The OPA could have invoked a clause in the contract that made it liable for reimbursing TCE for lost profits only in the event of a discriminatory action, and argued that the cancellation of the plant would not have met the contract's definition of such an action.''
Lysyk also found a key decision that drove up the cost of cancelling the Oakville plant was the promise from the premier's office to ``keep TransCanada 'whole'."
"We believe that the settlement with TCE will not only keep TCE whole, but may make it better than whole,'' the auditor said. The report lists ``the estimated benefits to TCE of approximately $225 million from the settlement negotiated for the Napanee plant.''
The 24-page special report also criticizes the Ministry of Energy for agreeing to relocate the Oakville plant to Napanee, which would mean higher costs to deliver gas from the Sarnia area to Napanee to burn and higher costs to transmit the electricity back to the Oakville area.
The OPA wanted to build the new plant in the Kitchener area, where there is also a need for a local power supply.
"TCE's parent company, TransCanadaPipeLine, will be one of the transporters of gas to Napanee,'' wrote Lysyk. ``TCPL's pipeline would not have been required for a plant in the Oakville or Kitchener-Waterloo-Cambridge.''
NDP Leader Andrea Horwath says the governing Liberals were never honest with taxpayers on the true cost of cancelling the gas plants.
Former premier Dalton McGuinty has said it was his decision to cancel the two gas plants, insisting the government was slow to realize local residents were right not to want the projects near their homes