Ontario Liberals set aside $900-million for cancelled gas plants

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The Ontario government budgeted $900-million to pay for the cancellations of two gas-fired power plants, even though Liberal cabinet ministers insisted for months afterward the cost was just a fraction of that.

The revelation prompted the opposition to charge that the Liberals deliberately misled the public by low-balling the price tag for ending the projects when they knew the cost could be far higher.

The Liberals pulled the plug on the plants in the Toronto suburbs of Mississauga and Oakville in what was widely seen as a political play to save the party's local candidates from defeat in the 2011 election.

Until earlier this year, the government repeatedly insisted the province was on the hook for $230-million. But newly released Finance Department documents show that, in early 2012, finance officials actually set aside nearly four times that in their spending estimates for fiscal year 2012-13. The money is labelled a discretionary expense, listed in "electricity sector outlook" under a "risks" section.

"Government is currently in negotiations to settle the cancellation of these plants with the developers with an exposure identified up to $900-million depending on the outcome and mechanism of settlement," reads a footnote.

The documents – which also include an e-mail chain where a civil servant confirms the amount – were released through a legislative committee probing the plant cancellations. In hearings Thursday, MPPs asked Finance Minister Charles Sousa to explain the discrepancy between the money set aside and the much-lower total the Liberals were citing in the legislature.

He said the $900-million was a "worst-case scenario" figure drawn up by bureaucrats in case negotiations between the government and the contractors building the plants went terribly wrong.

"Someone has taken precautions, that it's still under negotiations and that it makes reference to the fact that it's dependent upon those negotiations," said Mr. Sousa, who was not finance minister at the time the number was floated. "They were obviously putting forward a discretionary amount to offset."

But opposition MPPs argued the number was proof cabinet ministers knew the costs could be substantially higher than they insisted publicly.

"Everybody in the government knew," Progressive Conservative energy critic Vic Fedeli said. "When you've got the Ontario Financing Authority and cabinet aware that there's a potential upside of $900-million, how they can all stand there and continue to say in the legislature it's [far less] is beyond me."

Added New Democrat House Leader Gilles Bisson: "They have a responsibility to the people who pay the bills in this province – and that's the taxpayer – to expose how much potentially this could cost. And the fact that they chose a lower number tells you they were trying to do political damage control."

The most recent estimates put the final cancellation costs at $585-million.

The revelation comes a day after the committee released its interim report on the hearings. In a dissenting opinion, PC members wrote that Liberal witnesses gave contradictory answers by claiming they did not know the costs were higher than $230-million until earlier this year. Witnesses from the bureaucracy and the OPA, however, said the higher costs were clear from the start.

A Liberal appendix to the report, meanwhile, highlights the testimony of witnesses who buttress their case, including an OPA executive who provided the government with an earlier, much lower, total amount for the cancellation of the Oakville plant.