McGuinty’s dark secrets on cancelled power plants revealed – by Terence Corcoran (National Post – November 1, 2012)

The National Post is Canada’s second largest national paper.

Documents show cancelling Oakville plant alone will cost $1-billion

As Premier Dalton McGuinty prorogued the Ontario legislature and announced his retirement last month, he would have known that some of the darker secrets of his government’s handling of energy policy would soon come to light. Today, those secrets — until now buried in 56,000 pages of released but unreadable documents — are appearing in the open.

In sordid and alarming detail, the documents show that the McGuinty government’s cancellation of gas plants in Oakville and Mississauga are likely to cost as much as $1.3-billion, possibly more. Killing the Oakville plant and moving it to Bath will alone burden Ontario ratepayers and taxpayers with costs that exceed $1-billion.

These numbers — openly discussed in documents as part of the government’s legal negotiations with TransCanada Energy and other companies — are a far cry from the $40-million Energy Minister Chris Bentley recently announced as the cost of killing the 900-megawatt Oakville Generating Station.

More than the numbers, the documents — analyzed by Toronto energy consultant Tom Adams in a posting to his website Tuesday and in FP Comment Thursday — also show that the premier’s office played a role in the gas-plant debacle. Under instruction, bureaucrats and government agency staff, especially at the Ontario Power Authority (OPA), were also dragged into litigation negotiations aimed at containing the major liabilities the government had created.

In May 2011, a presentation to the board of directors of the OPA, which runs electricity policy under cabinet directives, outlined the negotiation spiral. Titled “Winding Up the Oakville Generating Contract” and “prepared in contemplation of litigation,” the presentation summarizes the history of the government’s battle with TransCanada Energy (TCE), which had a signed contract to build the plant. In March 2011, the government offered TCE a settlement worth $462-million, which TransCanada rejected.

In April, the government came back: “OPA was instructed by the government to make a second counterproposal to the TCE proposal…. It had an effective financial value of $712-million. On 29 April TCE rejected the government-instructed counter-proposal.”

The government was clearly over a litigation barrel. The same OPA board presentation spelled out the stark options. A graphic shows the “worst case” cost of going to court at about $750-million that could be awarded to TransCanada in compensation for the government’s breach of contract. TransCanada asked for more than $900-million. Mr. Adams says that so far he has been unable to find the final settlement number within the 56,000 pages of documents.

But there are clearly more costs to ratepayers than the TCE settlement. Moving the Oakville plant to Bath requires building transmission lines, a point made in an October 2010, email from Rick Jennings, assistant deputy minister at the Ministry of Energy. The OPA, he said, estimated that “the transmission investment required would be in the order of $200-million … [including] a combination of three transmissions projects” that would run through urban areas.

For the rest of this article, please go to the National Post website: http://opinion.financialpost.com/2012/10/31/terence-corcoran-mcguintys-dark-secrets-revealed/

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