Ontarians are paying twice for a single power plant, Auditor General Jim McCarter says in a scathing report that found it cost $275 million to scrap a generating station in Mississauga and move it to Sarnia.

That’s $85 million, or 45 per cent, more than the $190 million former premier Dalton McGuinty claimed, prompting opposition parties to charge the government “lied” and providing fresh ammunition for a potential spring election.

The plant across from Sherway Gardens was well under construction and scrapped less than two weeks before the provincial vote of Oct. 6, 2011, a move Premier Kathleen Wynne admits was “politically motivated” to save Liberal seats.

McCarter said compensating the plant’s builder for that decision cost taxpayers “a lot.” New Democrats and Progressive Conservatives quickly piled on.

“Families are stuck with the bills,” NDP Leader Andrea Horwath told reporters as the audit noted $190 million will come from taxpayers, with the other $85 million will come from electricity rates.

Despite accusing the Liberals of “lying about this from day one,” Horwath said she’ll work with the government on a spring budget as early as next week on her demands for lower auto insurance rates and closing corporate tax loopholes.

“We’re more interested in getting results for people.”

Still, Liberal insiders fear the NDP may use McCarter’s damning findings as an excuse for pulling the plug.

Last Friday, the party began nominating candidates for an election that could come in June, while senior New Democrats urge Horwath to “go now” before memories of McGuinty fade and Wynne gains traction with voters.

Energy Minister Bob Chiarelli said the government accepts the auditor general’s figure but insisted it includes “a significant number of future costs.”

He denied the government lied with the $190 million figure even though McCarter said the Ontario Power Authority knew last summer it would be “shovelling cash out of their jeans” to the tune of $270 million.

“We have been extremely transparent,” Chiarelli said, adding “all parties made the same promise” to scrap the plant that faced community opposition.

McCarter’s long-awaited report , which pictured the plant’s steel superstructure on the cover, found the company building it had the province over a barrel in hasty negotiations to stop construction following the election.

The blatantly political decision left the Ontario Power Authority scrambling for a deal with Eastern Power subsidiary Greenfield South Power Corp., which outmanoeuvred the OPA on several fronts — including the payout of $41 million in unverified labour costs since 2004.

Greenfield wouldn’t let the OPA look at payroll records or at a financing contract with U.S. hedge fund EIG Management that included a penalty clause that ended up costing $90 million. The contract also included a 14 per cent interest financing cost.

McCarter said that made him “give his head a shake” and left the impression the Liberals cancelled the plant with little due diligence.

“I suspect that at the time they didn’t have a good feel for what it would cost.”

Progressive Conservative MPP Rob Leone said McCarter’s report shows the government was “taken to the cleaners” and suggests an upcoming auditor’s report on scrapping a similar plant in Oakville will reveal costs far in excess of the $40 million the government admits.

“This is only a sampling of what we’ll see,” said Leone (Cambridge), referring to McCarter’s point that the Oakville plant cancelled a year before the last election was 3.5 times larger than the Mississauga station and will be moved to the Napanee area, adding to natural gas shipment costs.

Witnesses to a legislative committee investigating the costs of closing both power plants have already estimated the cost could be around $800 million.

The auditor found other expensive concessions in the Mississauga deal, such as an interest-free loan of $45 million to Greenfield from the province to cover construction costs with little collateral and repayment over 13 years.

Loading... Loading... Loading... Loading... Loading... Loading...

The OPA defended the revamped contract, saying it “avoided potentially expensive litigation.”

“It is important to look at the deal as a whole rather than trying to quantify each of the give-and-takes . . . as with any complex negotiation, all parties made concessions and neither side was able to achieve all of its goals.”

With files from Robert Benzie Correction - April 16, 2013: This article was edited from a previous version that mistakenly said the $275 million cost to scrap a generating statio was about one-third more than the original estimate of $190 million.



Read more about: