Ontario’s auditor general has found that the Liberal decision to cancel a partially-built Mississauga gas plant will likely cost $275 million -- $85 million more than the previous Liberal estimate.

Releasing his report Monday afternoon, Jim McCarter found the total cost of scrapping the project and relocating it to Sarnia was around $351 million, but about $76 million of that total is saved from not having to buy the cancelled plant’s electricity.

Ontario’s governing Liberals had pegged the cancellation costs at around $190 million.

The cost breakdown released by McCarter included the following:

  • $149.6 million paid to the financing lender, with $90 million of that related to fees and interest related to the cancellation.
  • $72.4 million in compensation to Eastern Power—the plant builder’s parent company-- for costs mostly associated with the cancellation
  • $64.6 million paid to the builder's suppliers
  • $60 million in additional future costs to deliver electricity from the Sarnia area instead of from Mississauga
  • $4.4 million paid by the OPA for legal and professional fees

McCarter told reporters that he could not comment as to how the Liberals came to their estimate – which they announced in July 2011. However at that time, the Ontario Power Authority was already aware that cost would be much higher and had already paid around $240 to $250 million, or around 85 per cent of the actual cost, he said.

"I think the OPA was aware that they were basically going to be shovelling cash out of their jeans,” he said.

Ontario’s Energy Minister Bob Chiarelli on Monday ignored questions about apologizing for the government's incorrect claims on cost, and said the Liberals relied on the Ontario Power Authority when they said the price for Mississauga was $190 million.

"I believe in their minds they allotted a much higher number to savings that would come from the lower power price," said Chiarelli.

"That's an area on which the OPA and the auditor general still have a disagreement, but we accept the auditor general's numbers."

The decision to cancel the plant as it was being constructed put the province in a weak negotiating position against Eastern Power, the project’s developer, McCarter said. As a result, some of the costs ended up being higher than expected.

Even weeks after the Liberals announced the cancellation in 2011, construction continued, putting “the government in a more untenable position.”

"The circumstances surrounding the cancellation decision weakened the Ontario Power Authority's negotiation position,” he said. "We found that the OPA was under significant pressure to get the construction of the plant stopped as quickly as possible, and this likely resulted in the final cancellation costs being higher than they would otherwise have been."

While the OPA managed to negotiate a deal with Eastern Power so that about $100 million worth of equipment purchased for the Mississauga plant will be used at a new plant in Lambton, Ont., they were only able to negotiate an electricity price reduction worth around $20 million.

McCarter said the OPA believes a commercially reasonable deal was reached.

Before McCarter’s announcement, Progressive Conservative energy critic Vic Fedeli said he expected the report would find the true costs to be close to the Liberals’ estimate. He maintained that the Conservatives are more concerned about the cost of cancelling the Oakville plant.

The Liberals say the cost of cancelling the plant in Oakville was $40 million, but the opposition believe it’s closer to $1 billion.

The governing Liberals decided to halt construction on the Mississauga plant days before the 2011 provincial election, prompting critics to accuse the Liberals of buying seats.

NDP energy critic Peter Tabuns said he wouldn’t be surprised if the AG report finds additional hidden costs from the cancelled Mississauga plant, adding hundreds of millions more to the total bill.

"I think the Liberals have been lying about this from Day 1, and I think they've done everything in their power to try downplay the costs and to try to pretend they had no idea what was happening here," NDP Leader Andrea Horwath told The Canadian Press.

"The evidence is clear from the auditor general's report that in fact they did know."

The Progressive Conservatives were equally doubtful of the credibility of the minority Liberal government.

"Frankly, I feel they lied to the people of Ontario, and they should 'fess up to that and apologize," said PC critic Rob Leone

Premier Kathleen Wynne has admitted that the cancellation of the plants was a political move, but maintains that she wasn’t in the room when the plug was pulled on the Mississauga plant.

She has offered to appear at the justice committee hearings into the cancelled plants, as well as testify under oath.

With files from The Canadian Press