The whole truth about the gas plants

  • The Ontario Legislative Committee examining the relocation of the Oakville and Mississauga gas plants tabled its final report on February 17, 2015. Click here for the findings.

To grasp the whole truth about the Mississauga and Oakville proposed gas-fired, peak-power electricity generating stations (which is what the so-called ‘gas plants’ were), you have to start with the August 2003 power blackout. Among the last areas to regain power were Mississauga and Oakville. The power blackout showed a need for more electricity supply in Mississauga and Oakville.

Based on projected demands for electricity in the Mississauga-Oakville area made on the watch of the former PC government, the Ministry of Energy in 2004 issued a Call for Proposals for peak-power electricity generating capacity to serve the two municipalities. Two proposals went forward: one by a firm called Trans Canada Energy in Oakville, and another by a firm called Eastern Power in Mississauga.

As peak-power plants, more than 90 percent of the time, the plants would not operate at all. They would be licensed to generate electricity at peak-demand times such as mid-summer, the winter or if a power outage occurred.

How were the plants placed where they were?

It was the responsibility of the power plant proponents above to find land zoned by the municipalities for power production, and then buy the land on which they could build their plant. Both the Town of Oakville and the City of Mississauga had zoned the proposed sites for precisely such projects.

  • In the case of Mississauga, the site near Sherway Gardens had been zoned “Industrial/Power Plant” in several consecutive municipal plans. On July 12, 2005, the City of Mississauga – not the Province – granted the go-ahead to Eastern Power to begin construction of the power plant. To see the actual letter, click here.
  • The Oakville plant was clearly located in the wrong area, but owing to Oakville’s zoning of the land, and that the proponent legally acquired it, Oakville lacked the authority to cancel the plant. Trans Canada Energy and the Province agreed in 2011 on a move of the plant to the Sarnia area, where they did need the power, and the community was a ‘willing host.’

Mississauga took Eastern Power to the Ontario Municipal Board, which ruled against the city, stating that in several versions of its own municipal plan, Mississauga had zoned the land specifically for the purpose of power production, and could not change its mind once a proponent had legally acquired the land, received permission to build and held a license to generate electricity.

The only entity that could act in the case was the Province. As with Oakville, there was little point in paying cancellation costs if Ontario ratepayers got no electricity for their money. Note: this is exactly what the PCs and NDP both proposed. The Province worked out a swap with Eastern Power to have them relocate the plant, and repurpose as much of the equipment as possible to a site near Gananoque, close to Kingston. The Oakville plant was relocated to Sarnia following a negotiation with Trans Canada Energy.

What did the relocations really cost?

As reported in the Legislature, the cancellation cost for Oakville was $40 million. This amount was fully paid out in 2011. For the Mississauga plant, the cancellation costs were $275 million, fully paid out in 2012. The balance of the costs — and savings — were for changes (both up and down) in gas delivery costs, transmission costs, renegotiation of other contracts and the like. Those costs and savings were not paid out, and both costs and savings will be spread out over the next 30 years, or the expected life span of the two plants after they enter service.

Those extra costs and savings amount to this:

  • Over a span of 30 years, extra costs of between one and two one-hundredths of one cent per kilowatt-hour;
  • During the same time span, extra savings of between two and four one-hundredths of one cent per kilowatt-hour;
  • Your mental math tells you that the extra savings will cancel out the extra costs, and you would be right. For a western Mississauga home that consumes about 1,000 kWh of electricity every two months, your additional bi-monthly costs would be between 10 and 20 cents, offset by additional savings of between 20 and 40 cents, netting out to an average of a saving of between 10 and 30 cents to such a household over the next 30 years.

Here is how the fanatical critics distort the truth on the total costs of the move of those two power plants:

  • They don’t take into account the savings realized during the same period as extra costs are incurred;
  • They add up the extra costs over 30 years and flat-out misrepresent them as having already been paid. This is simply false.

What about the need for the power?

In the middle of the cancellation controversy over the two plants in 2010-11 came two things:

  • By 2010, a new electricity transmission corridor had been completed between the Bruce Peninsula, site of the eight large CANDU reactors, that connected that generating source to the big substation in Milton. This substation distributes electricity to Mississauga and Oakville. This line allowed electricity to get to Mississauga and Oakville in the event of an unscheduled outage or a storm, part of the reason the July and December 2013 rain and ice storms did not keep the power off for very long, if it went off at all in some areas;
  • The 2010 Ontario Long-Term Energy Plan showed that the growth in demand for electricity had been much slower than was forecast when the original call for proposals had been made in 2004.

The bottom line of the Oakville and Mississauga proposed gas-fired, peak-power electricity generating stations (the ‘gas plants’) was that even if they had been built, there was simply no need for the electricity they would have produced in the area in which they were located. Rather than pay for the building of two unneeded generating stations and wage a costly legal battle later, the Province opted to at least get electricity for its money and re-locate them. Any other alternative would have cost even more money — a lot more money.

Background: The power plant outcome

  • All three Ontario political parties favoured cancelling both plants. Each would have faced cancellation costs if they had formed government in 2011. Neither the NDP nor the PCs had a plan to get electricity when they cancelled the plants. Only the Liberals did. Neither the PCs nor the NDP had done any homework, costing, or legal research at all. It was all political;
  • The opposition, in committee in May of 2012, demanded that the Minister of Energy, a lawyer, breach solicitor-client privilege and release correspondence documents that were the subject of a legal proceeding, or face a procedure called a Contempt Motion for refusing to comply with the terms of a request by a Committee of the Legislature.
    1. The Minister offered to show opposition Members the requested correspondence in a protected place until the negotiations were concluded, and solicitor-client privilege lifted. They refused;
    2. The Minister said he would release the requested material on the conclusion of the negotiations, and promptly did;
    3. The issue was whether a Minister of the Crown would (or could) breach solicitor-client privilege, and take other actions that could lead to a disbarment hearing, or face possible sanctions by the Legislature for refusing to act in an irresponsible manner. In essence, the Minister of Energy was maneuvered between a rock and a hard place by a majority Opposition.
  • Both the NDP and PC parties made a reckless, uncosted, blind, blank-cheque announcement that they would (before the Liberals) cancel the Oakville and Mississauga gas-fired generation plants. Despite being repeatedly asked in the Ontario Legislature and committees to produce their own cost estimates, neither the PCs nor the NDP ever tabled as much as a piece of paper. They seem to have made no cost estimates, done no studies, and asked for no information from anybody before they pledged to cancel both plants;
  • Neither the NDP nor the Conservatives knew how to do what they promised in 2011. They refused to seek advice before pledging a blank Ontario taxpayer cheque on an ideological commitment in 2011;
  • One thing you can be sure of is that if Ontario had done it their way, it would have cost more than it eventually did, and will during the upcoming years;
  • After 2½ years of hearings in the Standing Committee on Justice Policy, through 91 witnesses, lasting 140 hours of testimony, yielding a third of a million pages of documentation, the committee tabled its report, with 16 specific recommendations, on February 17, 2015. Nobody was found in contempt of anything, and the people who gave testimony showed that they had acted responsibly, stayed within the law, documented their processes and the Ontario Power Authority gave accurate estimates for the costs of the power plant relocations as they knew these costs at the time of the decision;
  • Despite more than a dozen demands for PC and NDP candidates to show up and explain who told them to take a stand against the two power plants in the 2011 election, all blithely ignored the committee’s demands, knowing that a majority opposition would never allow its own candidates to be asked about the truth.

Background: Who does make power plant siting decisions?

Power plant licensing is governed by an arm’s length (i.e. the government does not control it) agency called the Ontario Energy Board. Site selection is governed by the Ontario Power Authority, or OPA. Prior to the establishment of the OPA, the Ontario Ministry of Energy specified a geographic area in southeast Mississauga as suitable for a power plant. Here is how the issue evolved. In the fall of 2004, the Ontario Ministry of Energy released a Request for Proposal for Clean Energy Supply. In May of 2005, three sites for gas-fired power plants in Mississauga were approved.

Background: What did the City of Mississauga do?

A key point in the location of the Mississauga gas plant is that the City of Mississauga official plan had zoned the sites as industrial, and its use as a power plant was foreseen in the City of Mississauga official plan. The site, when selected by the proponent, had been approved by the City of Mississauga as being suitable for a power plant.

Two proposals were abandoned by the proponent, Greenfield Power. In August 2005, the proponent submitted a development application. In September of 2005, the proponent applied for a building permit application with the City of Mississauga.

Mississauga City Council adopted an Official Plan Amendment, and zoning by-law amendments in March of 2006. In April of 2006, the proponent appealed the City’s amendments to our least-favourite agency, the Ontario Municipal Board. In October of 2007, the OMB issued an order approving the development of a 300 MW gas-powered generating plant, notwithstanding the City’s objections.

The introduction of Ontario’s Green Energy Act in 2009 provided a business case for the development of renewable energy, and a great deal of new electricity generating capacity came on line. In fact, more electricity than expected came faster than expected from green energy. By the time construction start of the Mississauga gas plant was getting near, Ontario’s Long-Term Energy Plan showed that forecast electricity demand in the area to be served by the proposed Greenfield gas-fired plant was lower, and the electricity the plant would have generated was not needed. Transmitting the power into Mississauga was, in fact, a better solution.

In April of 2009, the City of Mississauga issued a site plan approval in accordance with the OMB order. Construction activity on the plant began in March of 2011. Peel Regional Council and the City of Mississauga were opposed. So were local residents, and local MPPs. So were both opposition parties.

Background: What did the Ministry of Energy do?

Whether citizens groups; city council; or other elected representatives, everyone knew that to cancel a project nobody had wanted, and where the electricity output was no longer required, somebody would incur cancellation costs. In September of 2011, the Ontario Ministry of Energy cancelled the plant. At this point, all three Ontario political parties had campaigned on cancelling the Mississauga plant if elected.

And now you know the whole truth!


Comments

Gas Plants — No Comments

Leave a Reply