Ontarians on the hook for hydro project overruns

Crews work in a hydro tunnel being built under the City of Niagara Falls. The project is $615 million over budget and four years behind.

Ontarians will soon be paying an extra 50 cents a month on their hydro bills to compensate for cost overruns as a private company builds a tunnel under Niagara Falls.

The tunnel will provide hydro power to the province for 100 years, according to Energy Minister Brad Duguid, and is better for the environment than its alternatives. But its construction has been plagued with delays and cost overruns -- it's now projected at $615 million over budget and is four years behind.

The 10-kilometre tunnel was initially projected to cost $985 million and was to be completed in 2009. It will now cost $1.6 billion and is to be finished in 2013. The overruns are equivalent to $137 for each Ontario household.

The province had initially said that Strabag, the German company drilling the tunnel, would carry any cost overruns. The Liberal government, which has already fielded criticism over rising hydro bills, has not explained how taxpayers have ended up on the hook for the money.

The government says the project is worth every penny and notes there are several legitimate reasons for the spending explosion. Daily cave-ins, with tonnes of rock falling into the tunnel, caused expensive delays and forced more detailed engineering to ensure worker safety.

Delays also occurred when the giant drill digging the tunnel hit shale rock that was softer and more fragmented than geological surveys predicted. Extra time was spent reinforcing the walls.

The Tories say the project is a good idea but is being mismanaged by the Liberals. Jim Wilson, the former energy minister under Premier Mike Harris, has gone a step further, saying the project isn't worth the cost.

"I didn't think the project was worthwhile when I was energy minister," he told CTV Toronto. "It's an out of control… government project."

With a report by CTV Toronto's Paul Bliss