Total cost of moving Oakville gas plant in 2010 could reach above $1 billion

A damning report from Ontario’s auditor general suggests the financial cost of cancelling a gas plant formerly destined for Oakville and moving construction to another community may reach higher than $1.1 billion, although some of that would be offset by future savings. Still, the resulting cost of the 2010 cancellation appears to be exceptionally higher than previously estimated.

In a report released by new Auditor General Bonnie Lysyk on Thursday, it was revealed that the total cost of the decision to move the controversial plant to Napanee "could reach $1.112 billion," a price tag that would to be offset somewhat by estimated future savings.

Lysyk noted that $437 million would be saved through the negotiated price of power generated and deferred payments. The final cost is estimated to be $675 million over the next 20 years, plus another $140 million for gas deliveries to the new plant site.

"This cost is significantly more than may have been necessary," Lysyk said in a statement. "A number of questionable decisions made along the way contributed to this situation."

That echoes what Premier Kathleen Wynne said of the situation on Monday, telling reporters, “I'm not defending those decisions. In fact, I've said that there were decisions that were made that shouldn't have been made."

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Opposition parties have railed against the Liberal party for the timing of the gas plant cancellations, shortly before the 2011 provincial election, and now-Premier Kathleen Wynne has said the decision was made to secure votes in the region.

The full cost of the cancelled plants has been slow to come to light. The Liberals previously estimated the cost of cancelling the Oakville plant in 2010 at $40 million, but the Ontario Power Authority has suggested it could be $310 million.

A cancelled plant under construction in Mississauga was pegged to cost $190 million to cancel, but a report later put the cost at $275 million.

According to a Globe and Mail report, former premier Dalton McGuinty could have walked away from that project without paying anything in compensation.

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The Oakville plant, a project led by TransCanada Energy Ltd. (TCE), faced a number of road blocks during its planning phase, including a bylaw passed by the local government to block construction of the plant and a promise from the mayor to take the battle to the Supreme Court of Canada. Famed activist Erin Brokovich even came to Ontario to participate in protests against the construction, deemed to be too close to a residential area.

The 24-page special report released on Tuesday says that the Premier's Office told TCE that it would be compensated for the full value of the contract instead of receiving a cancellation payment.

The report also found that the Ministry of Energy instructed TCE to build the new plant in Napanee, where it was more expensive to transport natural gas and more expensive to transmit electricity back to the Greater Toronto Area.

Wynne is expected to address the report later today.

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