The ink was barely dry on the Auditor-General’s report, and already Ontario’s governing Liberals had defaulted to a familiar excuse: The other guys would’ve done it, too.
Sure, it cost a lot – $275-million, by the auditor’s count, rather than the government’s claim of $190-million – to scrap plans for a gas-fired power plant in Mississauga and build it elsewhere. But considering that both of the province’s opposition parties would also have made that decision, Energy Minister Bob Chiarelli argued this week, they had no right to now feign horror.
Ever since the Liberals started invoking this defence, almost from the moment during the 2011 election campaign when then-premier Dalton McGuinty committed to cancelling the plant, it has seemed feeble. The Progressive Conservatives and New Democrats forced Mr. McGuinty’s hand by stoking local opposition to the project, but governments don’t usually respond by abruptly cancelling plans they have spent years defending just because they’re worried about losing a seat or two. And to look at Jim McCarter’s report and speak to those familiar with the project’s history is to see that a series of mistakes under the Liberals’ watch set the stage for a fiasco.
It’s highly questionable whether the contract should have been awarded in the first place, in 2005. Eastern Power Ltd. had no experience with this scale of development, and as it turned out lacked the resources to see the project through fits and starts. The company ultimately borrowed from a U.S. firm at a 14-per-cent interest rate, which drove up the government’s eventual costs.
That Eastern Power beat out several more well-established companies can seemingly be chalked up to a flawed but well-intentioned procurement process, in which the provincial Energy Ministry unduly rewarded whichever bidder came in at the lowest price. Responsibility for handing out such contracts was subsequently shifted to the newly created Ontario Power Authority, which established criteria that industry insiders say Eastern Power would have struggled to meet.
More baffling is that the government passed up several opportunities to get out of the contract when Eastern Power had difficulty holding up its end. The first such “off ramp,” sources say, came only weeks after the contract was awarded. There is some speculation that the ministry did not want to cancel a contract that helped bring down the average price of several awarded around the same time.
For several years thereafter, Mississauga’s municipal government threw up roadblocks to a project it initially supported. When that dispute ended, In 2009, the government upped the amount of revenue Eastern Power would be promised once the plant was operational, apparently on the basis that it couldn’t afford to build it otherwise. The government – or at least the OPA, which was managing the file – evidently believed the extra power supply was so badly needed in the GTA that it was willing to pay more for it.
Had the government decided in the couple of years that followed that such need was trumped by mounting opposition, it could still have gotten out of the contract for less than $275-million. Instead, Mr. McGuinty made that call at the worst time, in the worst way. By publicly committing to the cancellation before negotiating it, with the sort of high-profile campaign promise that would be very hard to back down from, he put the government in a uniquely terrible bargaining position. And Eastern Power took advantage, ramping up construction that drove up settlement costs, then playing hardball until it got the highest possible settlement.
Yes, none of this would have happened if opposition parties hadn’t cynically played to local sentiments in the first place. But the Tories and NDP can honestly say that, if at all, they would have cancelled the plant at the earliest opportunity and lowest cost available. The government can say neither of those things. That doesn’t make this one of the great scandals of the century, as the opposition parties have breathlessly tried to make it seem. But it does mean that the Liberals own it, more than they care to admit.