LONDON, Ont. - Ontario taxpayers will foot the bill for their government cancelling plans for a billion-dollar gas plant west of Toronto, but Premier Dalton McGuinty said Friday it's not yet clear just how much they'll pay.
The government suddenly pulled the plug on the 975-megawatt Oakville plant Thursday amid intense local opposition, after saying for years it was needed to meet local energy needs.
The flip-flop drew howls of outrage from opposition critics, who accused the governing Liberals of scuttling the plant over fears they'd lose coveted seats in the affluent area west of Toronto.
McGuinty said he's not aware of the specifics of the contract with TransCanada Corp., which won the bid last year to build the $1.2-billion plant, and can't say how much the government will have to shell out to break the deal.
"I'm just saying that we have a very good, ongoing, working relationship with them, and I think there's a lot of goodwill on both sides to address this development," McGuinty said after touring a new school in London, Ont.
TransCanada (TSX:TRP) and the Ontario Power Authority are to discuss "reasonable payments" the company is entitled to, TransCanada said in a release.
One analyst said taxpayers could be on the hook for several million dollars.
The province may also have spooked private power companies that may want to invest there in the future, said Steven Paget, an analyst with investment dealer FirstEnergy Capital.
"However nice this kiss-and-make-up session is, it doesn't reduce the perceived political risk of investing in Ontario. In fact it's increased it," he said.
"But settling this contract amicably means that it's not going to be an absolute disaster for them."
Local opponents of the project, lead by former Microsoft Canada president Frank Clegg, argued the plant would be too close to homes and schools.
They launched a massive campaign to stop it and even brought in famed American activist Erin Brockovich -- who usually charges about $25,000 per event -- to help generate publicity for their fight.
Oakville Liberal Kevin Flynn battled his own government over the plant, which the province had said for four years was necessary to meet electricity demand.
The Liberals had a change of heart Thursday, saying the plant was no longer needed because of changes in energy supply and demand.
But that doesn't mean the government has second thoughts about building another natural gas plant in King Township, McGuinty said.
The project, which is slated to be built in a Progressive Conservative riding north of Toronto, has also generated opposition from local residents, who say it's not needed and will destroy protected farmland.
Asked to explain why he'd kill a plant in a Liberal riding and not reconsider one in Tory territory, McGuinty cited safety issues with the Oakville plant.
"What we were trying to do was put the biggest gas plant in the history of the country into a location where our rules would not permit the construction of a single wind turbine," he said.
"To me, you know, when somebody first presented that to me a long time ago, I thought, wow. I think we need to give this a rethink."
