Ontario could have saved more than half a billion dollars on the cancellation of a gas-fired power plant in Oakville if it had built a replacement facility in the Toronto area, Auditor-General Bonnie Lysyk has told a legislative committee.
Instead, the government of former premier Dalton McGuinty put the alternative plant in Napanee, 250 kilometres away – over the objections of the Ontario Power Authority – which more than doubled the cost of pulling the plug in Oakville.
Earlier this week, Ms. Lysyk estimated the cost of killing the Oakville plant at $675-million to $815-million. Added to the previously revealed total to cancel a similar plant in Mississauga, Mr. McGuinty's Liberals will ultimately spend up to $1.09-billion.
In follow-up testimony at the legislature's Justice committee on Thursday, Ms. Lysyk said cancellation costs were much higher than they needed to be.
When the government dropped the Oakville plan, the government promised to compensate TransCanada Corp., the company slated to build it. The OPA wanted to do this by giving TransCanada a contract for a smaller plant near Waterloo, Ont., an area that needed electricity. TransCanada rejected the offer because it was not as lucrative as the Oakville contract would have been.
The government then told the OPA to give TransCanada a contract for a larger plant in Napanee, one that would pay the company more than it would have received had Oakville not been cancelled, Ms. Lysyk said. The OPA did not think Napanee was the best location for the plant, because the electricity it will produce must be shipped back to the Toronto area, where it is needed.
Under questioning from Progressive Conservative MPP Vic Fedeli, Ms. Lysyk added up the additional costs of putting the plant in Napanee, including getting gas there and sending electricity back. The total came to $513-million.
"The majority of the difference in the cost between the Oakville plant and the Napanee plant relates to the fact that there's distance from the southwest [Greater Toronto Area]," she said.
The plant cancellations were widely seen as a move to save Liberal seats ahead of the 2011 provincial election.
The cancellation of two gas power plants in Ontario will cost roughly $1-billion, according to Auditor-General Bonnie Lysyk — much higher than what was estimated over a year ago. This chart shows different estimations over time, dating back to July, 2012. Read the full story on the cancellations.
Estimated cost of gas-plant cancellations, over time
- July-October 2012: $230-million
Original estimates put the total cost of the gas-plant cancellations at around $230-million. Then-premier Dalton McGuinty pegs the cost of the Oakville cancellation at around $40-million. Chris Bentley, then the energy minister, says the Mississauga gas plant would cost about $180-million.
- Early April 2013: $275-million
As more details emerge, the cost of cancellations continues to rise, with the total cost reaching an estimated $275-million.
- April-May 2013: $585-million
The prevailing estimate for both cancellations hovers around $585-million. This includes $310-million for the Oakville cancellation, as estimated by the Ontario Power Authority. The Mississauga gas plant is pegged at $275-million by then auditor-general James McCarter.
- October 2013: $950-million
The latest estimates put the total cost at around $950-million, according to Auditor-General Bonnie Lysyk. This includes $675-million for the Oakville plant and $275-million for the Mississauga plant.
- What's to come: Potentially more than $1-billion
The Auditor-General also warns the total for cancelling the Oakville plant could rise by another $140-million, putting the total over $1-billion.