The Power Plant Scandal by the Numbers

by doconnor

The most quoted number for the cost of the Ontario Liberals moving two natural gas power plants away from urban locations in order to win a few more seats is $1.1 billion dollars.

If you look at the Auditor General reports that the number is based on you can see that the much of the 1.1 billion dollar cost would still be needed even if the plants would built in their new locations in the first place, as the NDP and Conservatives claim they would have done if they where in government at the time.

This cost breakdown uses the Auditor General’s numbers. The units are in millions of dollars in net present value. The total is different because I also include the addition profit the companies are likely to make at the new locations, which presumably they would not have made if the new locations where selected during the bidding process.

Cost of
different location
Cost from move
Missassauga to Lambton
To Greenfield 72
To Greenfield’s lender 150
To Greenfield’s suppliers 67
Legal fees 4
Line loss 60
Saving from delayed opening -76
Reduced gas delivery -65
Finance savings 5
Total -5 222
Oakville to Napanee
Gas turbines 210
Sunk costs 40
Legal fees 3
Gas delivery 577
Gas and hydro connections 43
Additional gas for modified turbines 35
Transmission upgrades 81
Line loss 32
Replacement power 91
Lower power cost -275
Saving from delayed opening -162
Construction savings 170
Site cheaper -55
Total 678 112
Grand Total 673 334

Some interesting observations can be made. The Lambton location is just as good as the Mississauga location because the addition line loss is made up for by lower gas delivery charges. It also explains why moving the Oakville plant cost more even though it wasn’t under construction yet. Moving the plant was actually cheaper, but the costs of the new location was much higher.

With these substantial costs to putting the plant in Napanee you can understand why the Liberal government made decision they did. I wouldn’t be surprised if the NDP or Conservatives had been in office, they would have tried to put the plant in Oakville.

The decision to move the plants was, of course, political and done to try and win a few extra seats, but parties make decision like that all the time. This was just an unusually blatant example. The same thing happened during the Scarborough—Guildwood by-election where all three major parties came out in support the Scarborough subway over the LRT despite its higher cost and shorter length.

The gas plant costs plus other scandals have given the Liberals a reputation for wastefulness. If you say they wasted $2 billion over 10 years of government that amounts to 0.1% of total government spending of about 2 trillion over that period. Very few households could say they waste so little money and any corporation would be proud of such a small percentage. Some commenters on the Toronto Star website seem to think the Liberal’s waste could pay for an entire transit network for the GTA. 200 million per year would pay for less then one tenth of the expected cost.

On the other hand the possible cover up of emails relating to the gas plant decision can not be justified. While it is not definitive emails where purposely hidden from the committee’s requests they have admitted they deleted emails. The federal Conservatives had a similar problem during its minority government and was found in contempt because of it. The modern practice of not admitting to the genuine justification for a policy (because they are made to appeal low knowledge voters, therefore the justification doesn’t stand up the scrutiny) clashes with the absolute power of parliament to demand the documents that contain the justification which can be wielded under a minority government.

"The Power Plant Scandal by the Numbers" was published on May 23rd, 2014 and is listed in Liberal Party, Politics.

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Darwin O'Connor | doconno@gmail.com