Cancelled gas plant cost $275 million

TORONTO – Ontario’s Liberal government knew it cost a lot more than $190 million to scrap a partially-built gas plant in Mississauga but “lied” to the public, the opposition parties charged Monday after the auditor general put the real tab closer to $275 million.

The cost of cancelling the power plant just days before the 2011 election will be about $85 million more than the Liberals have been claiming, Auditor general Jim McCarter concluded after a special investigation.

McCarter estimated the cost of cancelling the 280-megawatt generating station and relocating it to the Sarnia area was about $351 million, but said the province will save about $76 million by not having to buy the cancelled plant’s electricity.

“I suspect at that time they didn’t have a good feel as to what it would cost,” he said.

“Given that construction of the Mississauga plant was estimated to cost slightly less than $275 million, and we still have to pay for the Lambton plant, (so) the people of Ontario will have essentially paid for two power plants but have gotten just one.”

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The auditor’s report confirmed what the Progressive Conservatives and New Democrats have been saying all along, that the cost of scrapping the Mississauga plant would be far higher than the Liberals were admitting.

“I think the Liberals have been lying about this from Day 1, and I think they’ve done everything in their power to try downplay the costs and to try to pretend they had no idea what was happening here,” complained NDP Leader Andrea Horwath.

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“The evidence is clear from the auditor general’s report that in fact they did know.”

The Tories were equally doubtful of the credibility of the minority Liberal government.

“Frankly, I feel they lied to the people of Ontario, and they should ‘fess up to that and apologize,” said PC critic Rob Leone.

Energy Minister Bob Chiarelli ignored all questions about apologizing for the government’s persistently wrong claims on cost, and said the Liberals relied on the Ontario Power Authority when they said the price for Mississauga was $190 million.

“I believe in their minds they allotted a much higher number to savings that would come from the lower power price,” said Chiarelli.

“That’s an area on which the OPA and the auditor general still have a disagreement, but we accept the auditor general’s numbers.”

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The decision to cancel the Mississauga plant in mid-construction hurt the province’s ability to negotiate a good deal with Eastern Power, the developer of the project, and pushed the cancellation costs even higher, concluded McCarter.

“The circumstances surrounding the cancellation decision weakened the Ontario Power Authority’s negotiation position,” he said.

“We found that the OPA was under significant pressure to get the construction of the plant stopped as quickly as possible, and this likely resulted in the final cancellation costs being higher than they would otherwise have been.”

In fact, construction continued for weeks after the Liberals announced the plant was being cancelled, and McCarter said every day crews kept working “put the government in a more untenable position.”

The OPA also agreed to allow Eastern Power to use about $100 million worth of equipment the agency purchased for Mississauga at the new gas plant in Lambton, but negotiated an electricity price reduction worth only about $20 million.

“On balance, the OPA believes that a commercially reasonable deal was negotiated,” the agency said in its response to the auditor.

The Progressive Conservatives and New Democrats call the decision to scrap the Mississauga plant “an expensive Liberal seat saver program.”

The auditor general has also been asked to investigate the Liberals’ decision to cancel another gas plant in neighbouring Oakville in 2010, which the government says will cost taxpayers about $40 million.

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The opposition parties estimate the actual cost will be in the hundreds of millions of dollars, but the auditor’s report on Oakville isn’t expected until the summer.

“They also know the cost of Oakville and aren’t telling us,” charged PC energy critic Vic Fedeli.

Premier Kathleen Wynne has already admitted it was a political decision to cancel the gas plants, but said she wasn’t in the room when the Mississauga project was halted.

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