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The Globe and Mail

Testimony at gas-plant hearing centres on political interference

The office of a former provincial energy minister told the Ontario Power Authority to offer a "richer settlement" to the company that had been slated to build a cancelled gas-fired power plant, a committee investigating the projects heard.

The revelation, in testimony from an OPA official Tuesday, is the latest evidence politicians interfered with the sensitive and costly file.

The government killed two plants, in the Toronto suburbs of Oakville and Mississauga, at a total cost of $585-million. The move was widely seen as a bid to hold on to Liberal seats in the 2011 Ontario election.

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After former premier Dalton McGuinty ordered the Oakville plant terminated, the OPA entered into negotiations with TransCanada, the Calgary-based firm contracted to build and run it. The government wanted to find a different project for the company as compensation, and the OPA suggested other possible plants. These projects, however, would not provide TransCanada as much revenue as the Oakville deal.

"[TransCanada] was upset our counterproposal didn't have enough financial value for them, so they went and complained to the government," testified Michael Killeavy, the OPA's director of contract management.

The energy minister's chief of staff then told them to put together a new offer that would give the company more money, he said. "We were surprised," he said of the new orders. "We thought the counterproposal we'd offered … offered fair value."

TransCanada rejected even this sweetened deal. It would not be until more than a year later, in the late summer of 2012, that the province finally reached an agreement with the company that will see it build a plant near Napanee, Ont.

This was not the first time political staffers meddled in cancellation talks. As The Globe and Mail first reported Tuesday, documents indicate two of Mr. McGuinty's aides told TransCanada in October of 2010 that the government wanted to compensate the company for the value of the Oakville contract – even though the province apparently had no obligation to pay such damages.

That pledge was later reiterated in a letter from the OPA to TransCanada. Had it not been for political involvement, Mr. Killeavy said, the OPA would not have given the company this promise. He also confirmed that politicians made it harder for the OPA to reach a deal by allegedly telling TransCanada it wanted to reach a settlement by December of 2010 (a deadline that was ultimately missed), and that the government knew cancellation costs would be higher than the $40-million figure Mr. McGuinty and his ministers cited for months.

Liberal committee member Bob Delaney insisted political staff only communicated with TransCanada and the OPA to gather information.

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"They're not there to negotiate, but they are there to carry information back to their minister, their member, the premier, and that's what each and every one of them did," he said.

But NDP MPP Peter Tabuns said Mr. Killeavy's testimony, along with The Globe's earlier revelations, show the government was trying to satisfy TransCanada at public expense.

"They should not have been messing in and effectively tying the hands of the OPA when they were trying to look out for the interests of ratepayers in Ontario," he said.

Progressive Conservative MPP Vic Fedeli said Mr. Killeavy's testimony also showed that the government "knew all along" cancellation costs would be higher than they were claiming publicly.

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