Here is an exchange in the Ontario legislature from December 3 where Opposition Energy Critic John Yakabuski demands an explanation from Energy Minister Bob Chiarelli for the careless waste now driving up power rates. Compare Minister Chiarelli’s comments about Lower Mattagami with what the Auditor General said and what she might also have added.
Mr. John Yakabuski: To the Minister of Energy: The minister calls surplus power an opportunity. It has certainly been treated as an opportunity by our neighbours, who have picked it up from you at yard-sale prices.
Energy planning should not be done for short-term political gain. The government shouldn’t be intervening in energy day after day to save seats in the Legislature, yet this Liberal government wasted $9.2 billion playing politics with their renewable energy contracts, $1 billion playing politics with the Lower Mattagami hydro project and the infamous $1.1 billion playing politics with the gas plant scandal.
If this government just listened to the experts, like any reasonable government would, ratepayers would have saved $11.3 billion.
The Speaker (Hon. Dave Levac): The Minister of Transportation is warned.
Mr. John Yakabuski: Does the minister think the auditor still doesn’t know what she’s talking about, or is $11.3 billion just another Liberal cup of coffee?
Hon. Bob Chiarelli: I’m pleased to talk about Lower Mattagami in the first instance. First of all, that project came in under budget and under time. As well, there were comparisons made to the cost of power to Lower Mattagami and other hydroelectric projects. The other hydroelectric projects referred to were built 15, 20, maybe 50 years ago. The capital cost has already been paid.
The other issue is that building a modern facility has tougher environmental requirements and has tougher requirements in terms of accommodating First Nations. There are now the legacy grievances of all the old hydro programs that are now under dispute and will eventually cost money.
It was a good project that created 1,800 jobs, 500 jobs for First Nations, and we make no apology—
Here is an excerpt of the Auditor General’s comments on the Lower Mattagami redevelopment:
In January 2010, the OPA noted that the estimated cost for the Lower Mattagami project had increased substantially to $2.56 billion after conducting further engineering studies. The OPA asked the Ministry for directions because it was concerned about the cost of the project, and wanted to confirm with the Ministry whether or not to proceed given the significant projected cost increase. In February 2010, the Ministry sent a letter to the OPA acknowledging that the cost increase was significant but instructing the OPA to go ahead with the project anyway…According to the IESO, the average cost for this hydro facility is $135/MWh compared to the average cost of $46/MWh for two other recent hydro projects in Ontario outside of the Mattagami River: One of the projects was adding an extension to an existing facility and had a lower cost of $35/MWh; The other project involved building a brand-new facility and had a higher cost of $56/MWh.
As he often does, Minister Chiarelli attacks the Auditor General, this time with the nonsense claim that her cost comparisons are based on old projects.
A little history on Lower Mattagami will show that the AG’s findings about the project, harsh as they are, are understated. Lower Mattagami is more wasteful than it first appears. Ontario deserves an Energy Minister with enough integrity to admit McGuinty’s redevelopment project is a disaster for ratepayers.
In the early 1990s, then Premier Bob Rae ordered then Ontario Hydro to purchase Smokey Falls, the one of four Lower Mattagami hydro-electric facilities it did not own, from a failing paper company. (That purchase was part of a hidden subsidy scheme to gift the worker cooperative taking over the paper mill with a long term free power deal.) Rae’s intent was to redevelop the four power dams to increase the supply of renewable energy. To its credit, the former Ontario Hydro managed to persuade Rae that the project would be a stupid waste of ratepayer dollars. While it is true that more power could be produced by redevelopment, almost all of the incremental production would be delivered during the spring run-off when Ontario demand is low. Bob Rae proved to be a much more careful custodian of Ontario’s power system than Premier McGuinty, who proceeded with the same project Rae cancelled. While the AG is correct to say that the levelized cost of power from the Mattagami redevelopment is $135/MWh, what that figure does not reflect is the fact that the incremental production is nearly useless due to its unfavourable seasonal timing. Notice that the Ontario Liberals have shielded the rate impacts of the Lower Mattagami redevelopment from all forms of detailed disclosure and regulatory review.
Instead of coming clean, Minister Chiarelli is defending the indefensible. Lower Mattagami is yet another Liberal looser. The jobs created by the Lower Mattagami redevelopment were anti-productive jobs.
How can the Premier keep Bob Chiarelli in cabinet?