Liberal deal to move gas-fired plant will cost $40 million

Construction continued on Monday, Oct. 24, 2011 at a Mississauga natural gas-fired power plant that is supposed to be moved.

TORONTO -- The Liberal government's decision to move a planned gas-fired electrical generating station in Oakville to the Napanee area will cost taxpayers $40 million, Energy Minister Chris Bentley said Monday.

"I am pleased to advise the House that agreements have been reached which will result in the relocation of the Oakville gas plant to the Lennox facility in eastern Ontario," Bentley told the legislature.

TransCanada Energy (TSX:TRP) will build the proposed 900-megawatt natural gas plant originally planned for Oakville on lands at Ontario Power Generation's Lennox Generating Station.

The Ontario Power Authority will purchase turbines and other equipment meant for the Oakville plant for $210 million, but that was calculated into the new agreement which will pay TransCanada less for the electricity it produces over the 20-year life of the deal, added Bentley.

"They will get from the province, when they start producing electricity, a monthly revenue that will be lower than the old contract," he said.

Bentley's surprise announcement came just hours before the government was forced to release 36,000 pages of documents on the cancelled Oakville project and on another gas-fired station the Liberals halted mid-construction in neighbouring Mississauga just days before last fall's general election.

The government admitted earlier that taxpayers would pay $190 million for the Liberal campaign team's decision to scrap the Mississauga project, but had warned early release of the documents regarding the Oakville plant would have hurt its negotiating position with the developer.

The deal reached Monday morning did not stop criticism from the opposition parties.

"After nearly two years and hundreds of millions of dollars, we're beginning to get some of the facts behind some of these private power deals, deals made by the Liberal party and paid for the by the people," said NDP Leader Andrea Horwath.

"We had a Liberal campaign team ripping up contracts, scrambling to keep them from the public, and the most expensive electricity in the entire nation."

The Opposition called the decisions to cancel the gas plants "a Liberal seat-saver program," and said holding seats in the suburban area west of Toronto was crucial to the government's re-election.

"The cancellation of two power plants amounted to nothing more than a selfish and desperate political manoeuvre to cling to power," said Progressive Conservative house leader Jim Wilson.

"Moving a power plant to eastern Ontario is building a white elephant, so it tells me that this $40 million is a complete waste of money."

Speaker Dave Levac had given the Liberal government until Monday to turn over the documents on the two gas plants, and found Bentley had violated a member's privilege by refusing to release them months ago to a legislative committee.

The newly-released documents state "political staff were involved" in talks with TransCanada about cancelling the Oakville project, and show the Ontario Power Authority was confused by the Liberals' promises regarding damages.

"Negotiations as to damages are an unmitigated disaster," government lawyer John Kelly wrote in a May, 2011 email to officials at the Ministry of Energy.

"The government has backed us into a corner," complained Ontario Power Authority vice-president JoAnne Butler in a 2010 email on the Oakville project.

"No one seems to know what the government's promise of 'keeping TCE whole' means," warned OPA director Michael Killeavy in an email to Butler.

"How do we reach agreement if we don't know what was promised?"

Despite the release of the documents, the Tories vowed to introduce a motion Tuesday declaring Bentley in contempt of the legislature, which would bring all other legislative business to a halt, including the daily question period.

"The eyes of the Parliamentary Commonwealth will be watching as the Liberal government's arrogance and profound sense of entitlement meets this chamber's powers of accountability," warned Wilson

The NDP said they too wanted the government held to account for trying to block the release of the documents.

"The government was definitely in contempt, the minister was definitely in contempt...and from my perspective that can't go without some kind of repercussion," said Horwath.

"There's no way that this government's bad behaviour can be reinforced by simply closing our eyes and walking away now that they've tabled some documents."