Gas Plants

Hard truths about power plant cancellations

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, gas plants do not operate at all. Gas plants are licensed to generate electricity at peak-demand times such as mid-summer, the winter or if a power outage occurred. In electricity jargon, the power gas plants can produce is called ‘dispatchable.’

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.

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

Both the Progressive Conservatives and the NDP made reckless, uncosted, blind, blank-cheque promises to cancel the two plants.

Here is how the PCs and the NDP continue to 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;
  • The Ontario PCs and the Ontario NDP allege, without any basis, that the decision to relocate the two gas plants was connected to seats held in 2011 (which remain held today) by the Ontario Liberals. This is rubbish! The seats in the neighbourhoods close to the two gas plants were held with solid margins by Liberal MPPs in 2003 and 2007, all won in 2011 with greater margins despite the Ontario Liberal Party itself losing some support in 2011, and all held in the election of 2014.

What is true, however, is that the Ontario PC Party and the Ontario NDP party each fought two general elections on the issue of the reloction of these two gas-fired power plants, and lost both elections.

What about the need for the power?

In the middle of the cancellation controversy over the two plants 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 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 hadbeen 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.

The power plant outcome

  • All three 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;
  • 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 has to date, and will during the upcoming years;
  • After more than 14 months 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 concluded…. nothing! 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.

Power plant myths and PC mistakes

The fact is that neither the government, nor political parties, choose where a power generation site will be built, or how big it will be. That is the function of the Ontario Power Authority. To say, “Oh, we would have never built it there in the first place” is complete nonsense. Political parties and governments simply do not make that decision!

The Ontario Power Authority chooses electricity generation sites, and the City of Mississauga grants a building permit.

The last time the Conservatives were in government making electricity decisions, Ontario ended up buying expensive ($1 billion per year) and dirty U.S. coal-fired electricity, with the coal smoke from Ohio Valley stacks drifting right into Ontario and fouling the air over the GTA. By 2003, the year of the blackout, if you remember, The Tories were trucking diesel generators into cities to burn crude oil in case the rickety power generation structure they neglected and mismanaged collapsed altogether. That did happen in fact, in August of 2003. Ontario PCs are hoping you won’t remember that.