Gas plant Relocation $85 Million Higher: AuditorApril 15, 2013
QUEEN’S PARK – Today Ontario’s Provincial Auditor Jim McCarter revealed that the cancellation of the Mississauga gas plant will cost Ontario’s taxpayers $275 million – not the $190 million previously estimated by the government.
“I’m disappointed that the government would spend $275 million on a political decision to relocate this gas plant and then try to mislead taxpayers about the real cost,” said Ernie Hardeman, Oxford MPP. “This is $85 million more than government repeatedly announced and all of that will come from the people of Ontario.”
Partway through the 2011 election the Ontario Liberal campaign announced the cancellation of the contentious Mississauga gas plant. The Auditor found that political pressure contributed to the increased cost of cancellation.
“The circumstances surrounding the cancellation decision weakened the Ontario Power Authority’s
(OPA) negotiating position,” McCarter said. “We found that the OPA was under significant pressure to get the construction of the plant stopped as quickly as possible, and this likely resulted in the final cancellation costs being higher than they would otherwise have been.”
Some of the relocation expenses identified in the Auditor’s report are:
$43.8 million to Greenfield’s for sunk costs not paid directly by the OPA to its suppliers;
the cost of an interest-free loan provided to Eastern Power for the construction of the relocated plant -$16 million;
the cost of settling a dispute Eastern Power had with the Ontario Electricity Financial Corporation (Eastern Power demanded this settlement before it would negotiate with the OPA to permanently stop construction of the Mississauga plant and relocate it)—$8.4 million;
the OPA’s reimbursement to Eastern Power of the purchase price of the cancelled plant’s site and an adjacent warehouse -$4.2 million;
$149.6 million from the OPA to the lender that was financing Greenfield’s construction of the Mississauga plant, $90 million of which related to penalties and fees for cancelling the project.
the OPA paid Greenfield’s suppliers $64.6 million for equipment and other sunk costs;
$4.4 million in legal fees and other professional fees incurred as a result of the cancellation-and-relocation decision.
The Auditor also estimated that there will be about $60 million in extra future costs for delivering power from Lambton County, the site of the relocated plant, rather than from Mississauga.
Ontario Provincial Auditor Jim McCarter conducted the investigation at the request of the Legislative Standing Committee on Public Accounts. The report is available at www.auditor.on.ca.
The Auditor’s office is still investigating the cost of relocating the Oakville gas plant.
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For more information, contact:
Ernie Hardeman, MPP Oxford