A year ago, a critic of Dalton McGuinty’s Ontario energy policy speculated that the government’s decision to cancel a couple of unpopular gas plants just before the 2011 election – a transparent ploy to win votes – would wind up costing taxpayers upward of a billion dollars. Mr. McGuinty, who had already announced plans to resign as premier, angrily denied it. “I fully reject that calculation,” he said. “We’re very confident that the costs are in total $230-million. We’ve released all of the documentation.”
On Tuesday, Ontario’s Auditor-General weighed in with her verdict: The gas plants could wind up costing more than $1-billion. Mr. McGuinty was wrong. But so what? It worked. Five crucial ridings went Liberal and the government hung on to power. In my unscientific reckoning, the price of victory was about $90,000 a vote. People are mad as hell, but who are they supposed to draw and quarter? The guilty party has left the room and his successor, Kathleen Wynne, says she’s very, very sorry.
The true price tag of Mr. McGuinty’s energy shenanigans is actually much higher still. The gas plants were just the last chapter in the amazing saga of political manipulation of energy under Mr. McGuinty. The Liberals’ reckless policies enriched big corporations (many of them foreign), lined the pockets of lawyers and consultants, alienated small communities throughout rural Ontario and stuck the citizens with higher power bills for years to come.
Mr. McGuinty was elected in 2003 on a promise to close Ontario’s coal plants and replace them with clean power. His first target was the pollution-spewing Lakeview Generating Station. The dream was to eventually replace that stinky coal with good, clean, righteous wind.
But shutting down Lakeview left a big hole in the grid. And wind power needs a steady backup, because it’s unreliable. The answer to these problems was gas plants. Suddenly, Ontario needed lots of them. It started signing contracts for new plants, and most of them got built. The government also rushed headlong into wind, offering long-term contracts, huge subsidies and guaranteed returns for suppliers. Ontario became a magnet for energy companies around the world. Local fixers and consultants got rich.
“The signal went out that cost is no object,” says Tom Adams, the widely respected independent energy analyst who made the billion-dollar prediction dismissed by Mr. McGuinty.
Mr. McGuinty staked much of his legacy on green energy. He wanted to make Ontario an international leader. Green energy would be a powerful job-creator, he claimed, but he didn’t reckon with the good burghers of Oakville, who are both sophisticated and prosperous. They didn’t care about his green dreams. A gas plant was going to be built in their backyard, and they didn’t want it.
The government probably could have unwound the contract at little or no cost. But that would have taken time. And Mr. McGuinty, facing a tough election, decided to take no chances. As an aide noted at the time, his view was that “maybes will kill us.” So the Liberals decided to pull the plug and relocate the plant to Napanee, in eastern Ontario. TransCanada Corp., the company with the contract to build the plant, was not only made whole but possibly, as the auditor wrote, “better than whole.”
A Mississauga plant was cancelled, too. Perhaps we should be grateful there were only two of them.
If it’s any consolation, Ontario’s ratepayers have lots of company. The politicization of energy policy has produced disastrous results everywhere – in Britain, Germany, Spain and California, to name a few.
Heads should roll in Ontario, but I doubt they ever will. The new premier will keep repeating that it’s not her fault. By now, the cancelled gas plants are old news, and the public has moved on. A recent opinion survey found that 45 per cent of respondents were actually satisfied with the way the government was handling the energy file. Too bad they’ll be paying for Mr. McGuinty’s fantasies for years to come.