Gas Busters Part 13: Themes from Disclosed Gas Documents

Here are themes emerging from the disclosed gas documents. Many of the points here were identified by Parker Gallant. The new Google-powered search capabilities, called “Site Search” in the top right hand corner of your screen, makes it much easier to find the source documents for specific text strings. You can also search within a specific document you have opened using your browser search functions.

+++

The government didn’t care about the magnitude of the costs, only the visibility of the costs. Here is an example. At some time around early 2011, TransCanada Energy offered to settle with for a sum around $950 million. The OPA counter offered about about $462 million. Here is what happened next in the OPA’s own words of May,18, 2011

“- OPA was instructed by the government to make a second counterproposal to the TCE proposal of 10 March 2011.
- This government-instructed counter-proposal to settle was submitted on 21 April 2011.  It had an effective financial value of $712 million.”

(source: http://www.tomadamsenergy.com/wp-content/uploads/badgas/SWGTA%20Privileged/SWGTA_Privileged_Part30.pdf)

TCE rejected the $712 million settlement offer. I haven’t yet found details on the value of the ultimate settlement.

During the Legislature’s debate on the censure motion against Minister Bentley, the government side argued over and over that the cost of the Oakville power plant move was just $40 million — a figure contradicted by the government-instructed counter-proposal.

+++

In many places, the bureaucrats are tasked with burying the costs. Here is an example of the bureaucrats looking for options to smooth the cost impacts over a period of years.

(Sent by the CEO of the OPA  Sunday,  November  20,  2011,11:57  AM)

“Subject:  Question
What is our  guesstimate  of  ratepayer  impact  and  when.  (Will  be  asked  so  we  will  need  a sequence. of  answers  as  answer·: develops  over· ·next  days … and  months) .. what  can  we do  to smooth/split between 2011 so  not  all’d in  2012.  Anything  we  need·to  contemplate  in  agreement  now?  KV small  but  spreading  over  4  years  helps.”

(source: http://www.tomadamsenergy.com/wp-content/uploads/badgas/GreenfieldSouth2/Greenfield_South_2_Part1.pdf_)

The concept of smoothing rate impacts so that they are less identifiable to consumers is fashionable in those regulatory circles not focused on transparency.

+++

Many bureaucrats are recorded in the documents pleading with McGuinty to minimize harm to consumers, only to be overruled or actively undermined by the Premier’s office. Look at this summary prepared by a top OPA official:

“March 6, 2011
We are doing a disservice to the rate payer by not getting to a point of either a deal or litigation.  Delays on the Government or the OPA will only increase the risk and therefore, increase the final cost of this procurement. Litigation is not preferred.  It is not cheap; we will not necessarily win and the ratepayer will get no MW’s out of it. TCE will litigate based on the promises received by them from the Premier’s office.”

(source: http://www.tomadamsenergy.com/wp-content/uploads/badgas/SWGTA%20Privileged/SWGTA_Privileged_Part23.pdf)

Jim Hinds, chair of the OPA, appears throughout the documents pleading the case for protecting ratepayers and promoting some semblance of cost responsibility by allocating some of the costs to taxpayers. Here is Hinds in his own words trying to find some value for consumers:

“My  point  is  that  the  real  question  here  is  this:  what  is the  value  for  ratepayer  of  Lennox  as presently  run  and  Lennox  reconfigured  with  the  Oakville  turbines?  Costs  to  the  ratepayer under  the  latter will  probably  be  higher,  but  the  question  is  the  value  to  the  ratepayer.  We need  to  have  a  more  practical  and  financially  articulate  position  before  we  engage  in  this discussion  this  afternoon.”

Source: http://www.tomadamsenergy.com/wp-content/uploads/badgas/SWGTA%20Privileged/SWGTA_Privileged_Part27.pdf

+++

The government’s negligent handling of the Mississauga power plant move put ratepayers on the hook for yet another financial gouging. Right at the beginning of this document is a discussion of the negotiating approach re. Mississauga. What grabbed me is how Eastern Power used the Mississauga dispute as leverage to cash in on an unrelated dispute between Eastern Power and the Ontario Electricity Financial Corporation, another Ontario government agency, related to the Keele Valley landfill gas generator built in the 1990s.

http://www.tomadamsenergy.com/wp-content/uploads/badgas/MississaugaOct12Release/Mississauga-Oct_12_Release_Part8.pdf

What we have found is payments to Eastern Power for Keele Valley litigation of $5.4 million from OPA + $10 million from OEFC. The government’s decision to kill the Mississauga plant appears to have put ratepayers on the hook for costs associated with an unrelated dispute between Eastern Power and the OEFC. Search for “Hinds” as in Jim Hinds, Chair of the OPA, in this document for additional details:
http://www.tomadamsenergy.com/wp-content/uploads/badgas/GreenfieldSouth1/Greenfield_South_1_Part6.pdf

It is not clear so far whether the $15.4 million ratepayer impact associated with Keele Valley is included in the government’s admission of $190 million costs for moving the Mississauga gas plant. If you uncover details on this point, please share.

+++

Here is a warning from the Ministry of Energy that it might have been cheaper to pay off Eastern rather than move the power plant. The context for this next quote is that the ADM at the Ministry of Energy is urging the government to be more careful in public statements about the potential resolution to the Mississauga cancellation.

“It is quite possible that the lowest cost solution is a cash settlement, this wording may preclude reaching it. Better wording would be : ‘our intention to have development at the site cease.’”

Source: http://www.tomadamsenergy.com/wp-content/uploads/badgas/MississaugaOct12Release/Mississauga-Oct_12_Release_Part4.pdf

I have found no indication that the government heeded the advice to find a cheaper solution through a cash settlement.

+++

The McGuinty government initially claimed that the cost of relocating the Mississauga plant would be $180 million, but then quickly revised the figure to $190 million. I have been unable to find a detailed derivation of these figures, why the government changed its tune from $180 million to $190 million, and how the settlement arose. There is an indication that at one point the OPA’s experts thought that the settlement would be $150 million. (*reference required) None of these figures appear to include the costs for the transmission solution required. (*reference required)

 

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>