McGuinty pushed gas plant costs to $1B: auditor

Many ‘questionable decisions’ made by ex-premier’s office

The cost of cancelling two gasfired power plants in Liberalheld ridings west of Toronto could top $1 billion — a figure that might have been far less were it not for some “questionable decisions” made by the office of former premier Dalton McGuinty.

His spectre continued to haunt Kathleen Wynne’s minority Liberal government Tuesday as Auditor General Bonnie Lysyk tabled a special report that confirmed cancelling the Oakville project and relocating it to Napanee cost taxpayers $675 million.

And that figure could rise by another $140 million for gas deliveries to the new site, Lysyk said. Add that $815 million to the $275 million it cost to cancel and relocate the Mississauga plant and the figure could rise to $1.09 billion.

The staggering costs confirm what the opposition parties have been saying for months — that the gas plants scandal was a billion-dollar boondoggle designed to save Liberal seats — and could prove hugely embarrassing for a minority government that initially claimed that cancelling the Oakville project would cost $40 million.

The auditor found the cost of killing the Oakville project is “significantly more than may have been necessary” because of a number of what she called “questionable decisions” by the premier’s office and the Ministry of Energy.

“Hydro customers will be paying higher rates for electricity in the future as a result of not only the cancellation of the Oakville contract, but also because of the OPA not being able to take full advantage of the terms within the contract that may well have enabled the province to get a better deal,” she said.

The province could have paid far less in penalties if it had let the Ontario Power Authority negotiate with the developer, TransCanada Energy, without interference from the premier’s office, which promised to fully compensate the company, added Lysyk.

“At the time of the cancellation, the government appeared to tie its own hands by committing to keep TransCanada Energy ‘whole,’ by promising to compensate it for the full financial value of the Oakville contract,” she said.

“We believe that the settlement with TCE will not only keep TCE whole, but may make it better than whole,” added Lysyk.

The report lists “the estimated benefits to TCE of approximately $225 million from the settlement negotiated for the Napanee plant.”

The government wanted to avoid a lawsuit by TCE, so it agreed to fully compensate the company instead of waiting to see if strong local opposition could delay the project by two years, giving both parties an option to break the contract, she added.

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

Reaction to the report was swift and merciless.

“Someone needs to be held accountable and responsible,” said Lisa MacLeod, the Progressive Conservative energy critic and MPP for Nepean- Carleton. “Someone’s head needs to roll and someone needs to be fired, and I would suggest it be Kathleen Wynne.”

MacLeod accused the Liberals of helping a private company at the expense of taxpayers and said the updated cost of cancelling the gas plants will be a “lightning rod” for an angry public.

“This could have built 25 brand new, state-of-the-art high schools at 50 million bucks a piece,” MacLeod said. “People aren’t going to take this anymore.”

She also blasted the New Democrats, which have kept the Liberals in power by supporting the last two provincial budgets. “At some point, the NDP is going to have to say, ‘Enough is enough.’”

NDP Leader Andrea Horwath said she is proud of what her party has accomplished during past budget negotiations, and wouldn’t say whether Wynne can continue to count on her support.

“It’s a day-by-day process around here and I’m certainly not making any guarantees about what the future is all about,” she said.

“It’s taken some time but the answers are finally out there and everybody knows not only what the price tag was but the fact it was politically driven decisions that actually ratcheted the price tag up instead of managing it down,” Horwath told reporters.

Wynne said she accepted the auditor’s report and pledged that similar decisions would not occur “under my watch.”

The government plans to implement recommendations from the OPA and the Independent Electricity System Operator to improve the siting of large energy infrastructure projects and will create a new set of rules to limit the involvement of political staff in commercial, thirdparty transactions.

“It never should have happened and it pains me that it did,” Wynne said. “I believe that it’s imperative that we make sure that it not happen again. This is not the way the decisions should have been made, it shouldn’t have happened and so we need to do better and we will.”