How we got one power plant for the price of two

By MPP Toby Barrett

Hot on the heels of a damning Fraser its Institute report calling out government for costly Green Energy plan that finds us paying with lost jobs and higher rates, comes Auditor General Jim McCarter’s scathing review of the political decision to scrap the Mississauga Greenfield gas plant.

The now powerless plant was well under construction across from Sherway Gardens when it was scrapped in the middle of the last provincial election.

After months of government foot-dragging, document redacting, and proroguing to cover up the costly truth, the Auditor General’s report tallies a final price tag – $275 million – for the electioneered decision.

The total bill –some  44.7 per cent higher than the $190 million government claimed – is now the responsibility of Ontario tax payers and electricity ratepayers, many of whom don’t look too kindly on the move Ontario’s Premier now admits was “politically motivated” to save government members’ seats.

Bottom line, as Jim McCarter pointed out, at $275 million, “the people of Ontario will have essentially paid for two powerplants, but have got just one.”  Now, that’s quite a steal!

Once government had ordered the cancellation of a plant that was contracted and already under construction, electricity bureaucrats were behind the eight ball when it came to bargaining with the company – Greenfield South Power. And, as McCarter points out, “every day that construction continued put the government in a more untenable position”. When construction finally stopped, 58 days after the McGuinty/Wynne cancellation announcement, that position had the Greenfield company securely in the driver’s seat.

The report details a money-squandering trail where Greenfield perpetually delayed and underdelivered, then high-balled costs to extort more money from taxpayers and ratepayers. Greenfield outmaneuvered government’s Ontario Power Authority (OPA) on several fronts:

* the payout of $41 million in unverified labour costs, * reimbursement of $4.2 million paid for the plant site – then allowing  Greenfield to retain title, and * repaying $149 million to EIG Management with which Greenfield had arranged a line of credit at “a criminal rate” of 14 per cent interest – compounded quarterly.

And add in $4.4 million in legal and professional fees for the cancellation and relocation.

Auditor General McCarter went on to reveal “very significant additional costs” related to moving the gas-fired power plant from Mississauga to Sarnia – some 230 kilometres from the residences and businesses for which the electricity is targeted. His report estimates $60 million in future additional transmission and delivery charges and related costs.

To add insult to injury, the Auditor General details a series of savings and perks Greenfield continues to enjoy at taxpayer expense. For instance, Greenfield benefits from a $45 million upfront loan from the Ministry of Energy and OPA for the construction of the relocated plant – interest free, repayment only starts following the completion of the new plant. Further Greenfield is saving about $65 million in pipeline charges over the 20-year life of the contract – savings that will not be passed along to Ontario taxpayers or electricity ratepayers.

Stay tuned as Greenfield Mississauga is only half the story. We await the unveiling of costs found in the Auditor General’s upcoming report on the cancellation of the second gas-fired plant in Oakville. Independent energy experts have pegged that figure at $638 million – 16 times higher than the government’s $40 million claim.