Tuesday, October 8, 2013

Backgrounder for Auditor General's report on Oakville Gas plant

Today the new Auditor General of Ontario will deliver, to the legislature, a report on the cost of cancelling/moving the Oakville Generating Station (I'll refer to it as the OGS, although now it is to be located hundreds of kilometers from Oakville).
The report will tell us more about the capabilities of the new Auditor, and the mainstream media, than it will about the gas plant.

It's been almost exactly a year since analyst Bruce Sharp provided the public with reasonable estimates of the full cost of the bumbling on the OGS (directly here, and second hand in the Star).  Former head of the Ontario Power Authority Jan Carr took a different route to arrive at essentially the same figure.
There have been higher estimates: Terence Corcoran found a way to put the ''one billion dollars' tag on the debacle, and documents released due to the legislature, and posted at Tom Adams' site, indicate the Ontario Power Authority (OPA) was authorized to go as high as $1.2 billion to make the problem go away.

There are estimates that appear lower, and they are they ones the mainstream media bundles into its reporting.  $241 million and $310 million are figures that came out from a Nera Consulting study prepared for the OPA, and a simplified presentation from the OPA (both here).  The figures are magically still close to Bruce Sharp's original estimates, with the exception that the OPA deducts $539 million as savings from starting the payments later ("Savings from Time Deferral of Payments from 2014 to 2019").

An interesting thing about Toronto's mainstream media is its lack of interest in the validity of that claim.

One would think the question might be asked about the cost of deferring 900MW of firm, dispatchable (a.k.a. valuable) supple instead of:

  • deferring 900MW of non-dispatchable industrial wind supply contracted at up to $145/MWh
  • deferring 900MW of non-dispatchable solar supply contracted at rates up to $820/MWh

It seems to me that unless the media cares to note a cost of billions for delaying the Oakville Generating Station instead of delaying far more expensive supply, they shouldn't note figures which deduct for delaying the most valuable new supply option.


I wrote on this at the time the Nera/OPA estimates were presented; In Ontario, A preference for fraud

The Globe and Mail has an article on the soon to be released report; McGuinty could have cancelled gas plant with no compensation costs, audit to show.
The articles main point seems to be the project would likely have died on its own if the government had not killed it - my recollection is that is a point made by OPA staff in the documents found at Tom Adams' site


A press release and the full report are now posted on the Auditor General's site

First impressions are that it is as expected since Bruce Sharp's estimates cited earlier in this post

And I missed Bruce Sharp's first online analysis, which was posted at Tom Adams Energy many days before the story hit the papers.

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