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Ontario Premier Dalton McGuinty

Peter Power/The Globe and Mail

Ontario Premier Dalton McGuinty's office established a high-level initiative codenamed Project Vapour to manage the fallout from the government's decision to pull the plug on a multibillion-dollar power plant, documents show.

A dozen e-mails, contained in thousands of pages of correspondence made public days before Mr. McGuinty resigned, show that the Premier's closest advisers were directly involved in sensitive talks with TransCanada Corp., the Calgary energy giant that was to build the province's third-largest gas-fired power plant in Oakville.

The cost of scrapping the project is at the heart of Opposition accusations that the Liberals did not comply with an order from the Speaker of the Legislature, which said the government must release all information about the cancellations of two power plants. The complex nature of the negotiations, which took two years to reach a settlement, has led the Opposition to conclude there must be more to Project Vapour than a handful of e-mails.

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The day after the documents were released, Mr. McGuinty informed his closest advisers, including his former chief of staff Chris Morley, that he would step down after nine years in office. On Monday, he announced the news to his caucus and the public – and also asked the Lieutenant-Governor to prorogue the legislature. All business has ground to a halt, circumventing a legislative committee that was to probe allegations that Mr. McGuinty and his senior ministers had not disclosed all the documents associated with the project or revealed the true cost of cancelling it.

Mr. McGuinty has said taxpayers are on the hook for $40-million for the cancelled Oakville project, but evidence indicates the actual tab is much higher. Documents released by the government show that it will cost an extra $200-million just to build a transmission line to get electricity from the plant's new location in Eastern Ontario to homes west of Toronto.

The e-mails on Project Vapour, a name used to describe the protracted settlement talks between TransCanada and the government, provide a glimpse into the involvement of Mr. Morley and David Livingston, his successor as chief of staff. Opposition members insist that the government has not released everything on the power plant.

The e-mails are buried among 20,000 pages of documents the government released last Friday. These documents were not identified as part of an initial search, and followed the release of 36,000 pages last month.

The Progressive Conservatives accused the government of holding back documents that would shed more light on the government's handling of the decision to cancel the power plant, which they say was done solely to save a Liberal seat in last year's provincial election.

Tory officials had staff members spend the past few days wading through the documents released on Friday.

"No wonder Dalton McGuinty resigned," Tory energy critic Vic Fedeli told reporters on Wednesday. "These documents make it abundantly clear Dalton McGuinty and his government are still not complying with the order of the Speaker."

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Mr. McGuinty's office referred all questions to Energy Minister Chris Bentley. A spokeswoman for Mr. Bentley said the government released 56,000 documents, including those that refer to Project Vapour, after two "thorough searches." She said it is routine practice for the government to assign project names on matters involving commercial negotiations.

But Mr. Fedeli said there is a conspicuous absence of documents written by senior government officials in reference to the power plant among the emails. Most of the 56,000 documents were written by bureaucrats.

The e-mails high lighted by the Tories were written in July and August of 2011. They show that along with Mr. Morley, cabinet ministers and Shelly Jamieson, cabinet secretary at the time, were involved in Project Vapour.

The government cancelled the project in October, 2010, amid stiff opposition from local residents and was in settlement negotiations with TransCanada in the summer of 2011. In an e-mail titled "Confidential advice to the Cabinet," Mr. Morley says if a resolution cannot be reached with TransCanada, both sides have agreed to go to arbitration.

At one point, the documents show, TransCanada turned down a settlement offer of more than $700-million from the Ontario Power Authority. TransCanada reached a deal with the government on Sept. 24 to relocate the plant to Eastern Ontario. The company will receive $3.28-billion over the 20-year life of the contract.

Many of the e-mails with "Vapour" in the subject field are redacted.

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THE TWO CANCELLED POWER PLANTS

Oakville

Commissioned: September, 2009.

Megawatts: 900.

Contractor: Calgary-based TransCanada Corp.

Price tag: $1.2-billion.

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Cancelled: Oct. 7, 2010, after protests from residents and city council. Project moved to Bath in Eastern Ontario.

Cancellation costs: Government announced last month that the price tag will be $40-million. Opposition quotes an energy analyst who says the true figure is more than $700-million.

How they voted: Local Liberal MPP Kevin Flynn, who opposed the project, was re-elected in 2011.

Mississauga

Commissioned: May, 2005.

Megawatts: Initially two plants were commissioned, each generating 280 megawatts. In September, 2005, the government scrapped one plant because of local opposition.

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Contractor: Toronto-based Eastern Power Ltd.

Price tag: $400-million.

Cancelled: Sept. 10, 2011, just before Oct. 6 election. Project moved to Sarnia.

Cancellation cost: Government announced in July put the total at $190-million. Opposition says the true cost is higher.

How they voted: Four Liberal MPPs in ridings around the plant were re-elected.

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