GAS PLANT TAB TOPS $1B
Liberals had cheaper options, AG report finds
The gas-plant scandal that has plagued Kathleen Wynne’s first eight months in the premier’s office was made significantly worse on Tuesday with an Auditor-General’s report that suggested the cost to the public of cancelling and relocating the Oakville plant could run as high as $815-million, or about 20 times more than the governing Liberals originally claimed, bringing the total tab for cancelling two plants to an estimated $1.1-billion.
Citing a number of “questionable” decisions by the government of former premier Dalton McGuinty, which decided to scrap the Oakville plant in the run-up to the 2011 election amid strong local opposition, Bonnie Lysyk’s report describes a government that repeatedly made choices that would increase the final bill, including promising the developer, Alberta-based TransCanada Energy, that it would be “made whole” in the event of a cancellation, and ordering the power authority to locate a replacement facility in Napanee, which added close to $600-million in additional gas-delivery costs to a site more than 200 kilometres away.
Ms. Wynne said, as a member of the cabinet that made the decisions, she “takes full responsibility and I offer a full apology.”
“It should never have happened,” she said. “It was a big mistake.”
The Premier also said the province would implement new rules around the siting of large energy projects, and she would seek “new rules limiting political staff involvement in commercial, third-party transactions.” The latter decision is a response to revelations that staffers in the former premier’s office were directly involved in the gas-plant settlement discussions.
As with the April AuditorGeneral’s report on the Mississauga gas-plant cancellation, which also significantly increased the costs to the public above those announced by the Liberals, the Oakville report says that a considerable amount of the costs will be borne by electricity ratepayers. The power authority now has to deliver gas to Napanee and transmit power back to where it is needed.
When the Liberal government said last year that the costs of the dual cancellations would total $235-million, it was speaking only of the sunk costs that would have to be repaid by taxpayers. Former government staffers have since acknowledged that the McGuinty government chose to avoid discussing the much higher cost to ratepayers. On Tuesday, opposition politicians accused the Liberals of “hiding $1-billion,” with PC energy critic Lisa McLeod calling on Ms. Wynne to resign. The PCs also renewed calls for a full judicial inquiry. NDP leader Andrea Horwath said the public will be disappointed by the waste of money, but she said she would not immediately seek to topple the minority Liberal government.
In many ways, Tuesday’s report confirmed what has been known about the gas-plant controversy for more than a year: poorly sited facilities that were part of a poorly conceived energy plan, followed by two politically motivated decisions that were executed either with no awareness of the costs to be borne by taxpayers and electricity ratepayers — or with some awareness of the costs, but total disregard for them.
Staggering incompetence, with a veneer of shameless opportunism.
The total costs of the two cancellations could be as high as $1.1-billion, or even $1.6-billion if future anticipated savings are not realized. Ms. Lysyk’s report lays out just how many mistakes were made in the McGuinty government’s haste to cancel Oakville and claim a win in a riding that was seen as politically vulnerable. And the mistakes were legion.
It says the government could have walked away from the Oakville plant at a much lower cost because TransCanada Energy had run into serious problems getting past legal roadblocks thrown up by the town of Oakville. Ms. Lysyk suggests the government was in a position to just “wait it out” — essentially allow TCE to default on its commitments because of its problems getting past municipal interference. This has long been a contention of NDP MPP Peter Tabuns at the ongoing justice committee hearings into the cancellations, but the government response has only been that their lawyers advised them to take no chances, and to avoid litigation. Ms. Lysyk says the Premier’s Office told TCE that the company would be “kept whole” in the event of a cancellation, rather than just letting the legal procedures take their course.
The auditor-general also notes that the government entered into an arbitration agreement that was favourable to TCE, and it ordered the Ontario Power Authority to put the relocated plant in Napanee, which is not serviced by a gas pipeline. In the original Oakville contract, TCE was responsible for transporting natural gas via a pipeline that runs from Sarnia.
On the whole, the report suggests that the Liberals repeatedly took steps that guaranteed a better outcome for TCE, and higher costs to the public. “One of the key decisions that im-
The mistakes were legion
pacted the cost to the public of cancelling the Oakville plant was committing to keep TCE whole,” the report says. “We believe that the settlement with TCE will not only keep TCE whole but may make it better than whole.” The auditor-general says that the relocation was a likely windfall of $225-million for the company.
In the early days of this controversy, the Liberals insisted quite strenuously that the final bill for two cancellations and relocations was $235-million, and not a penny more. Then tens of thousands of pages of documents were released, Dalton McGuinty quit and pro- rogued the legislature, and it became obvious that there were the numbers that the Liberals presented, and then there were the real numbers.
Under the government of Ms. Wynne, the Liberals’ preferred method of defence — their only defence, really, since the premier has admitted that the cancellations were political in nature and has said repeatedly that she wishes the whole thing was handled differently — has been to try to rationalize the mistakes away by arguing that the two opposition parties were prepared to make them too.
This argument, though, sidesteps the fact that the government of the day has to take responsibility for its decisions, and it was the Liberal government that decided to site the plants in Oakville and Mississauga, that signed contracts with developers, and that decided 0to scrap both of them, at a time when all the leverage was with the private power companies, at a cost of what could end up being more than $1-billion. Make no mistake here: It was the Liberals that wanted to take credit for the cancellations, as was evident by the celebratory announcements that took place each time. It was only when things went sour did the government try to make the PCs and NDP equal partners in the decision to scrap the plants.
No, this scandal is the Liberals’ to wear alone. With the final bill now in, it’s all the more evident why Mr. McGuinty decided to quit a year ago next week. He knew this was coming. He had many reasons to run.