Ontario Liberals were stumped over how to kill power plant
Newsbot @ Fri Nov 02, 2012 2:16 pm
Title: Ontario Liberals were stumped over how to kill power plant
Category: Provincial Politics
Posted By: saturn_656
Date: 2012-11-02 13:06:05
Canadian
saturn_656 @ Fri Nov 02, 2012 2:16 pm
This could cost Ontarians a small fortune. Far and beyond the Liberals official figures.
http://opinion.financialpost.com/2012/1 ... more-25351
$1:
Others have begun searching the documents as well, providing fresh documentary evidence that the cost of the plant cancellations is much higher than Mr. McGuinty claims. In a commentary in the Financial Post Friday, Parker Gallant � who has also been combing through the documents � identifies Mr. McGuinty�s office as the source of advice to the Ontario Power Authority (OPA) on how to handle the legal battle with TCE over breach-of-contract liability on the $1.2-billion Oakville Generating Station.
In a slide presentation to the OPA board, one page details the instruction: �Premier�s office staff advised TCE that Ontario has other needs for gas-fired generation. OPA staff [is] advised that province would be pleased if the following or a combination of the following criteria were achieved: Negotiated solution does not exceed $1.2 B. No cheque issued to TCE.�
As Mr. Gallant, a former banker who has been watching Ontario�s power industry for several years, puts it, no cheque for $1.2-billion was ever issued to TCE, but ratepayers appear to be on the hook for that amount in the deals and offers the government made to TCE as compensation.
In a slide presentation to the OPA board, one page details the instruction: �Premier�s office staff advised TCE that Ontario has other needs for gas-fired generation. OPA staff [is] advised that province would be pleased if the following or a combination of the following criteria were achieved: Negotiated solution does not exceed $1.2 B. No cheque issued to TCE.�
As Mr. Gallant, a former banker who has been watching Ontario�s power industry for several years, puts it, no cheque for $1.2-billion was ever issued to TCE, but ratepayers appear to be on the hook for that amount in the deals and offers the government made to TCE as compensation.
EDIT: Why the hell is it every time I cut and paste this " ' " turns into this " � "?
OnTheIce @ Mon Nov 05, 2012 7:54 am
The cost of buying votes in Ontario.
you gotta give the Liberals credit...they sure do know how to blow a lot of money on a lot of projects that deliver little to no results.
Lemmy @ Mon Nov 05, 2012 8:10 am
Have we learned a lesson in this? We should demand that our governments NOT be allowed to put cancellation fees in their contracts. If you want to build for the government, you don't get paid if they change their mind. If your business is unwilling to take that risk, don't do business with the government. We should simply tell these business "Too bad, we don't have money to pay you for work you didn't do. Live with it."
He who pays the piper picks the tune.
OnTheIce @ Mon Nov 05, 2012 8:25 am
Lemmy Lemmy:
Have we learned a lesson in this? We should demand that our governments NOT be allowed to put cancellation fees in their contracts. If you want to build for the government, you don't get paid if they change their mind. If your business is unwilling to take that risk, don't do business with the government. We should simply tell these business "Too bad, we don't have money to pay you for work you didn't do. Live with it."
He who pays the piper picks the tune.
He who pays the piper picks the tune.
Wow, that's what you get out of that?
Years go into planning these projects. No company on Earth is going to sign these deals and put all their eggs in one basket and have the government change their mind mid-election to save a seat or two.
I think we've learned that you don't cancel multi-billion dollar projects mid-election to buy votes and then turn around and hide all the details about it.
dino_bobba_renno @ Mon Nov 05, 2012 8:29 am
Lemmy Lemmy:
Have we learned a lesson in this? We should demand that our governments NOT be allowed to put cancellation fees in their contracts. If you want to build for the government, you don't get paid if they change their mind. If your business is unwilling to take that risk, don't do business with the government. We should simply tell these business "Too bad, we don't have money to pay you for work you didn't do. Live with it."
He who pays the piper picks the tune.
He who pays the piper picks the tune.
Ya but come on Lemmy, it's the government. Flip flopping on decisions for political reasons is their trademark and add to that the fact that on large contracts the party you make the deal may not be around before the project nears completion. Larger projects like this have huge ramp up costs for the owners and contractors a like. It's only fair that if the client (the government in this case) changes its mind that it pay up. The problem isn't with the company charging a cancellation fee it's the poor planning and lack of commitment on the government’s side that's the real issue.
Lemmy @ Mon Nov 05, 2012 8:35 am
So what's the solution?
kilroy @ Mon Nov 05, 2012 8:41 am
It's not as if no one else ever changes their minds, it happens all the time, there's no reason why governments should be any different. They made an analysis that said it would be better to avoid the greater cost of completing the project. Sure there should be reasonable costs paid for cancellation, but companies should figure out that the golden goose can only take so much abuse, and keep their expectations to a minimum.
dino_bobba_renno @ Mon Nov 05, 2012 8:42 am
Lemmy Lemmy:
So what's the solution?
The Government doing their home work before committing to a project and not changing their minds for a few bonus political points might be a start. Also, negotiate the cancelation fees ahead of time and build them into the contract instead of being forced into arbitration might be another idear.
dino_bobba_renno @ Mon Nov 05, 2012 8:43 am
kilroy kilroy:
It's not as if no else one ever changes their minds, it happens all the time, there's no reason why governments should be any different. They made an analysis that said it would be better to avoid the greater cost of completing the project. Sure there should be reasonable costs paid for cancellation, but companies should figure out that the golden goose can only take so much abuse, and keep their expectations to a minimum.
Ya and anyone one else would also have to pay a cancellation fee. Why should the government be any different?
kilroy @ Mon Nov 05, 2012 9:00 am
I am not disagreeing with you, just asking contractors to open their eyes and be reasonable.
OnTheIce @ Mon Nov 05, 2012 9:25 am
kilroy kilroy:
It's not as if no one else ever changes their minds, it happens all the time, there's no reason why governments should be any different. They made an analysis that said it would be better to avoid the greater cost of completing the project. Sure there should be reasonable costs paid for cancellation, but companies should figure out that the golden goose can only take so much abuse, and keep their expectations to a minimum.
They made that same decision TWICE. Once in 2010 and again in 2011. They made the decision to win seats in the election.
This isn't about changing your mind for the greater good...that could have been done in the YEARS leading up to the start of the build.
dino_bobba_renno @ Mon Nov 05, 2012 9:29 am
kilroy kilroy:
I am not disagreeing with you, just asking contractors to open their eyes and be reasonable.
That is being reasonable. They went through the process of planning, lining up contractors and staff to manage the project, and most importantly they lined up the financing. You don't just call the banks and financiers back and say "sorry, the deal fell through, we don't need your money now". Those guys want the return on that investment that they were original promised, they don't care if the project has been cancelled or not. Same goes for the contractors if any of those bids had been let.
At the end of the day the government signed a contract and then at no fault of the other companies who were involved the government breached that contract. They are in the wrong not the companies whom they signed the contract with.
kilroy @ Mon Nov 05, 2012 9:43 am
They made the same decision in 2010 and in 2011? 
I don't know why that would be necessary, but it should act to advise contractors. Second guessing, or more properly, sober second thought, is a fixture of future government. All the evidence is never in, and when a government would look even more foolish, say in an example of a multi billion dollar power plant, if it did get built, they will change their mind.
dino_bobba_renno wrote
"That is being reasonable. They went through the process of planning, lining up contractors and staff to manage the project, and most importantly they lined up the financing. You don't just call the banks and financiers back and say "sorry, the deal fell through, we don't need your money now". Those guys want the return on that investment that they were original promised, they don't care if the project has been cancelled or not. Same goes for the contractors if any of those bids had been let.
At the end of the day the government signed a contract and then at no fault of the other companies who were involved the government breached that contract. They are in the wrong not the companies whom they signed the contract with."
They might have made a mistake, all I'm saying is that the bankers and contractors do have to realize that they haven't actually lost anything other than the time needed to negotiate the terms and whatever prep work, construction, has occurred. There are other costs associated with building up the workforce and infrastructure involved in building a big plant. There is no reason to suggest that there shouldn't be compensation for some of that, but presumably that is still there and available for other work, or sale.
OnTheIce @ Mon Nov 05, 2012 9:49 am
kilroy kilroy:
They made the same decision in 2010 and in 2011?
I don't know why that would be necessary, but it should act to advise contractors. Second guessing, or more properly, sober second thought, is a fixture of future government. All the evidence is never in, and when a government would look even more foolish, say in an example of a multi billion dollar power plant, if it did get built, they will change their mind.
I don't know why that would be necessary, but it should act to advise contractors. Second guessing, or more properly, sober second thought, is a fixture of future government. All the evidence is never in, and when a government would look even more foolish, say in an example of a multi billion dollar power plant, if it did get built, they will change their mind.
They cancelled the Oakville plant in 2010 and the Mississauga plant in 2011.
Sober second thought? This isn't a water heater contract.
Keep in mind, these projects are years in the making. Multiple public consultations, town halls, environmental assessments, etc.