Auditor general finds $275 million tab for cancelled gas plant in Mississauga

TORONTO -- The decision by Ontario's Liberal government to scrap a partially-built gas plant in Mississauga, just days before the 2011 election, will cost at least $275 million.

Auditor general Jim McCarter's special investigation found cancelling the gas-fired generating station cost $85 million more than the $190 million the Liberals have been estimating.

McCarter found the costs of scrapping the project and relocating it to the Sarnia area were about $351 million, but the province will save about $76 million by not having to buy the cancelled plant's electricity.

The auditor says the decision to cancel the plant in mid-construction weakened the province's negotiating position with the developer of the project and results in some costs being higher than they otherwise would have been.

In fact, construction continued for weeks after the Liberals announced the plant was being cancelled, and McCarter says every day crews kept working "put the government in a more untenable position."

The Ontario Power Authority, negotiating on the province's behalf, will allow Eastern Power to use about $100 million worth of equipment the agency purchased for Mississauga at the new plant in Lambton, but negotiated an electricity price reduction worth only about $20 million.

"On balance, the OPA believes that a commercially reasonable deal was negotiated," the agency said in its response to the auditor.

The auditor general has also been asked to investigate the Liberals decision to cancel another gas plant in neighbouring Oakville in 2010, which the government says will cost taxpayers about $40 million.

The opposition parties estimate the actual cost will be in the hundreds of millions of dollars, but the auditor's report on Oakville isn't expected until the summer.

Premier Kathleen Wynne has already admitted it was a political decision to cancel the gas plants, but said she wasn't in the room when the Mississauga project was halted.

Wynne has repeatedly offered to appear at the justice committee hearings into the cancelled gas plants and testify under oath, and said she's doing her best to make sure the opposition parties get all the answers they're looking for.