TORONTO - A company that's suing Ontario's troubled lottery agency over the ownership of an $81-million casino power plant is offering to drop the lawsuit and take the plant off the agency's hands.
Buttcon Energy will drop its $355-million action against the Ontario Lottery and Gaming Corp. if the agency sells the Windsor Energy Centre to Buttcon for up to $71 million -- the same amount incurred by the OLG to build the plant, a lawyer for the company said Tuesday.
The plant, which sits atop the Caesar's Windsor parking garage, was paid for by the OLG to provide energy to an expansion of the casino.
It heats, cools and provides backup power to the casino's expanded facilities, but doesn't generate electricity and isn't connected to the local grid as originally intended, according to court documents.
Buttcon Ltd., which is part of the consortium that designed and constructed the plant, and its affiliate Buttcon Energy, which operated the plant, launched the lawsuit in August after OLG cut its ties with the companies.
If accepted, the deal would get taxpayers off the hook for the costs of the plant and an expensive legal battle, said Michael Miller, Buttcon's lawyer.
"We're not looking for any advantage," he said. "We're looking for what the original deal was, which was we will build and operate and own (the plant)."
The deal would also require the OLG to buy energy from Buttcon, which would be priced at fair market value or better, Miller said.
"The casino cannot work without energy," he said. "There's no other place for them to get energy, that's why they had the plant built."
Finance Minister Dwight Duncan was caught off-guard by news of the offer, which came from the Opposition Conservatives during the daily question period in the legislature.
Duncan, who assumed responsibility for the OLG five months ago, said he hadn't seen the offer and didn't know whether it would be accepted.
"I wonder if ... maybe (Buttcon's) worried they're going to lose their lawsuit," he told reporters afterwards.
"So I'll leave that up to our lawyers, our board of directors and others to decide."
Duncan also appeared angry that the offer was disclosed to the Tories before he was told about it.
"I do think it's important what time that arrived," he seethed. "And I'll have more to say about that."
The OLG, which is countersuing Buttcon for $60 million, is considering the offer, said spokesman Rui Brum. He declined further comment.
The agency has until Nov. 30 to make a decision.
Contrary to Buttcon's claims, the OLG said in court documents that it never signed a final agreement with Buttcon to transfer ownership of the plant.
It also alleges that Buttcon misled the agency and had no experience in constructing or operating an energy centre, leaving behind a poorly designed plant that can't be safely connected to the local power grid.
Buttcon has denied those allegations, saying the plant met all requirements approved by the OLG.
The company's offer comes as a third lawsuit claiming ownership of the plant has come to light and new questions were raised about whether a former cabinet minister was aware of growing problems at the plant.
According to an OLG affidavit, Buttcon Ltd. CEO Michael Butt sent a letter last March to the minister responsible for the OLG complaining about the company's dispute with the agency over the plant.
The minister at the time was George Smitherman, who recently resigned from cabinet to pursue a bid to become Toronto's next mayor, but has not yet given up his seat in the legislature.
A spokeswoman for Smitherman declined to comment on the matter and directed all questions to his former staff at the energy and infrastructure minister's office. Amy Tang, a spokeswoman for current minister, Gerry Phillips, said she couldn't confirm whether Smitherman saw the letter or not.
The agency is also facing an $80-million lawsuit from Windsor Clean Energy Centre LP that claims the OLG reneged on an agreement to sell the plant to them.
According to a statement of claim filed in October 2008, the company is also seeking $500,000 in punitive damages, alleging "vindictive and reprehensible behaviour" by the OLG.
The OLG has denied the allegations made against it in both the Buttcon and Windsor Clean Energy lawsuits.
However, it harbours little hope of getting what it paid for without sinking more money into the plant, according to court documents.
The OLG believes "large portions" of the energy centre will have to be redesigned and constructed, and equipment will need to be replaced. It currently has four natural-gas fired generators, but they've never been turned on, the OLG said.
"Even with the redesign and reconstruction work, as a result of problems created by Buttcon's design, the energy centre will be unable to operate in an efficient, cost-effective manner," the OLG said in its statement of defence.
The governing Liberals should take Buttcon up on its offer to buy the plant, said Progressive Conservative Peter Shurman.
"It strikes me as the appropriate thing to do if what we're in is a financial crisis here in the province, where we've got a monster deficit of $25 billion, and there's a company that's basically willing to give back all of the money that's been expended by OLG at this point," he said.
Even if the OLG accept the deal, it still won't recover all the money that was sunk into the plant, said NDP Leader Andrea Horwath.
"It seems to me that this situation is just a big dog's breakfast and the only people that are making any benefit out of it are the lawyers that are involved in all these lawsuits," she said.
"Even if that's what's decided, people are still out 10 million bucks and they have nothing to show for it."
