What’s the truth behind the Liberal gas plant closings?

Posted: June 8, 2014 in Current Events, Election, politics

What’s the real, nonpartisan story about the supposed $1.1 billion gas plant relocations? The first thing you have to consider is the fact that over $400 million of the “waste” has been calculated from the cost that will have to be reimbursed to the builders in the future because the plants were relocated farther away from their market. This will require building additional power transmission wires and will need longer pipelines in order to transport the fuel, natural gas, to the plant. I’m not sure it is reasonable to include these costs in the “waste”.

That $400 million was one of the principal reasons for the decision which located the plants in their original spots (-or at least I presume it was, as I haven’t been able to find mention of this-). Shaving that additional cost off the price of servicing the plants was a fiscally prudent move. However, it was an unpopular location because of its proximity to urban areas. Perhaps that was the first real mistake here, -that it was located in a place that was financially efficient but that ultimately would be unacceptable to the NIMBY crowd. But the important thing to consider here is that, had the plants originally been placed in the more distant location, the $400+ million would have simply been bundled into the plant costs and would have been regarded as “the cost of doing business”.

However, the plants became unpopular for what may very well have been somewhat valid reasons (at least from the point of view of its future neighbours) and there was pressure on the government to move the plants, supported by all three parties. At the time, there was very little discussion by any party about the fiscal consequences of making that move, totally aside from the wasteful costs of closing a construction site. Nobody wanted to acknowledge the fact this was NIMBY was trumping economic efficiency, whether justly or unjustly. These costs should, therefore, not be regarded as “waste”.

There is the totally valid matter of the other $500+ million and many questions surrounding some of the decisions. It is clear that the timing of the decision was for political gain, hoping to tip two swing seats. It seems that such timing resulted in unnecessary penalty costs which could have been avoided. Make no mistake, that is totally wrong and just plain incompetent. (I’m not sure if stupidity qualifies as corruption, though.) Also if e-mails were illegally deleted in order to facilitate a cover-up, then those responsible should be held fully accountable, even it reaches to higher ranking government officials (or past officials).

Even so, the exaggeration of the $1.1 billion and the lack of proper analysis of this situation are unbecoming of both the media and the campaigns. It was a similar situation with the recent MaRS scandal, which definitely had mistakes attached to it, but nothing like what the opposition parties were dancing around about. Proper analysis of that situation would show that the mistake was a much smaller one than was being suggested, and was likely both unavoidable and in the end fiscally expedient. Notice that there hasn’t been much more information about it beyond the original cry of “foul!” I find it interesting to note that the term “fact checking” has become popular in the media. It speaks to the fact that lying or distortion of the truth (which is essentially the same thing) has become so commonplace in political rhetoric that it is necessary to “fact check” routinely.

It is interesting that I’m not totally confident that I have my story correct with what I’ve written above. Oh, I’ve researched it and done my best analysis to try to be objective. (Certainly, if any part of my analysis or information is mistaken, I’d love to hear about it.  That’s one of the reasons that I post here; I hope to stimulate some kind of debate.)  However, in doing that research, I’ve noticed that there is a notable lack of information and analysis by the media. When I can look into an important matter and still have some significant, unanswered questions afterwards, it is a poor reflection of our media’s ability to do investigative journalism.

  1. mmmmw says:

    1. I totally agree that the media is falling down on their job here. It may be because straight answers are unavailable, or because of lazyness or some other reason. I don’t know. I do know I’m not getting credible answers from reading the media.

    2. It has become very popular for politicians to do what we used to call “creative accounting”. There’s nothing wrong with calculating net present value of future payments, but then say so. And don’t add it into the column with current debts. It’s a different time base. If you are not careful with units, you end up adding together apples and oranges and coming up with, at the very least, a sloppy answer, if not an outright misleading one. This is high school physics and maths – only combine like units. If these people didn’t pass high school physics and/or math, I’d be glad to enroll them in night school courses to make up for their lack of education. They should, in the mean time, abstain from public speaking and/or budget making until their math skills improve and they pass at least high school math.

    3. Whether this confusion is being done purposely or not is also unclear. I had a boss who used to say it was wrong to assume a conspiracy when simple stupidity was adequate to explain the circumstances. Maybe, but I’m not sure I want to hear about stupidity in elected officials either, so that’s not good new. I tend to think that when I see this much FUD, spread by people who should know better, it’s being done on purpose. But that’s hardly proof.

    4. Then there is the part where we have to ask – why didn’t public consultation and/or the realization that this wasn’t a good site happen before the cancellation clauses came into effect? Wouldn’t that be a prudent order of operations?

    5. Having grown up in the area where the Sunrise propane explosion and fire was, I get why having such a facility in a residential area isn’t such a good idea. Although Sunrise was sloppy, and Sunrise had on site more propane than the gas plant would probably need to keep directly on site, still I can see people being nervous.

    6. If Mississauga isn’t a good location, why is the next option so far away? 3 hours drive? There’s nothing closer? We have to build all that power transmission and gas pipeline infrastructure? There are no other cheaper options? What about the old stelco plant? It’s already zoned industrial. I’d like to see the details of why there are no closer options. It sounds like more FUD to me.

    • pwiinholt says:

      The facts around the new decision for location of the gas plants isn’t available anywhere. I had the same thoughts about it. I will, however, suggest that the decision was probably not one initiated at a political level, but rather by the Board that oversaw it. Undoubtedly alternative sites were considered in the original process. Another thought is that moving it to another urban area probably wouldn’t win the Liberals any votes either.
      As for the initial site being inappropriate, I can see the point. But on the other hand, look at the Darlington and Pickering Nuclear Plants. They are far more dangerous where they are than any gas plant could ever be. The decision to locate them where they are was entirely expedient, which is probably the same reason as the gas plants. Cheaper. Had the election not been imminent I think they would have stayed put.

  2. pwiinholt says:

    I recently asked a FB friend who is working on the PC campaign if they could forward me a link to any clear explanation of the PC platform on Hydro costs. Yes, I asked nicely. I’m still waiting. Myself, I couldn’t find anything other than a few talking points and a lot of articles condemning the Liberal platform. The condemning articles, like the situations I’ve outlined above, tend to make some good points about Liberal mistakes, but totally ignore the wider scope and perspective of the problem.

  3. mmmmw says:

    From: http://en.wikipedia.org/wiki/Ontario_power_plant_scandal

    From immediately after the Oct 6, 2011 election until March 18, 2013, the Liberal government continued to say the cost of the cancellations was $230 million — $190 million for the Mississauga plant and $40 million for the Oakville plant. A final report by the Auditor-General released on October 8, 2013 found the total cost of the cancellations was $675 Million.

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