Cost of breaking Oakville contract unknown, McGuinty says

Published On Fri Oct 8 2010
http://www.thestar.com/news/ontario/article/873042--cost-of-breaking-oakville-contract-unknown-mcguinty-says?bn=1

LONDON, ONT. -- The government has no idea how much it will cost in penalties to cancel the $1.2 billion Oakville gas power plant, Premier Dalton McGuinty acknowledged Friday.

Negotiations will now begin with Calgary-based TransCanada Corporation on a deal after the Liberals killed the plant in the wake of stiff community opposition, saying the 900 megawatts of power it was to generate is no longer needed.

McGuinty suggested TransCanada will give the province a break because it already operates plants in Ontario and is hoping for future business, but the government refused to release details of the contract for "competitive reasons."

“I know that we're going to be able to find a way for both sides to sit down and determine what the best path is going forward,” McGuinty said after touring a new school with full-day kindergarten.

Opposition parties warned the penalties could be as high as the value of the contract, and that they will eventually filter down to hydro bills that are already rising because of new energy projects and the 13 per cent HST.

That will leave ratepayers on an expensive hook for a decision made on a purely political basis to save the seat of Oakville Liberal MPP Kevin Flynn in the provincial election next Oct. 6, said New Democrat energy critic Peter Tabuns (Toronto-Danforth).

“Is Kevin Flynn the billion-dollar man?” Tabuns quipped.
“I can't believe anyone would break a contract without knowing what it's going to cost.’’

That's further proof the Liberal government is making energy policy on the fly, said Progressive Conservative MPP John Yakabuski (Renfrew-Nipissing-Pembroke), his party's energy critic.
“They have an absolute responsibility to ratepayers who are already taking it on the chin to disclose all of the accounting issues surrounding this contract,’’ he added.
“If they say they can't release the contract details, they're covering up something.’’

The government's Ontario Power Authority will handle the negotiations with TransCanada and balance “value for ratepayers with fairness for investors,’’ said spokesperson Ben Chin.
“They're being very flexible.”

TransCanada has said it is entitled to “reasonable payments’’ but has declined further comment, including how much it has spent over the years trying to get the Oakville project up and running by 2014.

Chin said the amount spent is a “small percentage’’ of the overall cost.