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Peter Wallace, the head of Ontario’s public service, holds up a blacked-out document as he answers question from MPPs during a committee hearing on March 19, 2013, looking into the cancellation of two gas plants.MOE DOIRON/The Globe and Mail

The office of former premier Dalton McGuinty meddled in negotiations to cancel a controversial gas-fired power plant, complicating the already sensitive talks. The political interference was so problematic, in fact, that the civil service told two of Mr. McGuinty's advisers to butt out.

The assertions came in testimony from high-ranking bureaucrats at a legislative committee investigating the mothballing of two plants in Oakville and Mississauga. Putting the brakes on the plants cost at least $230-million, but the opposition parties and an energy expert say it was actually far higher.

The Liberals cancelled the projects, which were unpopular with local residents, in what was widely seen as a political move to shore up the party's support in those areas during the 2011 election.

But the government's intervention didn't end there, the committee heard.

Two officials in the then-premier's office, Jamison Steeve and Sean Mullin, were in contact with TransCanada, the company slated to build the Oakville plant, said Peter Wallace, the head of the province's civil service. The contact so concerned Mr. Wallace's predecessor that she tried to stop them from having any further involvement.

"There was threatened litigation and they might be included in the legal aspect, and open the government to additional exposure," Mr. Wallace told the committee.

JoAnne Butler, a vice-president at the Ontario Power Authority, testified that Mr. Mullin and Craig MacLennan, the energy minister's chief of staff, circumvented the OPA in dealing with TransCanada, even though the authority legally held the contract for the plant.

"They were making commitments without my knowledge," she said, adding later: "In my 10 years at the OPA, I've never encountered that."

The government also hired Robert Prichard, a high-profile Bay Street lawyer and chair of provincial transit agency Metrolinx, to negotiate a cancellation deal, she said.

Ms. Butler said moving the Oakville plant to Napanee may have cost the province more than $400-million in additional gas management expenditures – far more than the $40-million cancellation figure often cited by the Liberals. The government tried to offset the gas management cost by negotiating a lower price for power with TransCanada.

Earlier in the day, the committee heard from Oakville Mayor Rob Burton, who was called by the Liberals to buttress their argument that they were simply responding to local concerns in killing the plants.

"There was an overwhelming consensus in Oakville that from a planning perspective, the proposed power plant site made no sense. From a community safety perspective, the proposed power plant made no sense. And from an air quality perspective, the proposed power plant made no sense," he said.

The committee resumes hearings Thursday when Mississauga Mayor Hazel McCallion is expected to testify.