Government P3 Addiction
Premier Dalton McGuinty is at fault. No one else. You cannot blame the Minister. He could not help himself even if he tried. He was hooked and clearly could not escape.
The Premier cannot pass the buck to anyone else. He was insenitive. His colleague needed help. He did not have to appoint him to the position that he did. He knew about his…errrrrrr “problem.” He did not care. For that, he should be ashamed.
You know how it is with people who have addictions. It is cruelty to put them in a position where they deal every day with the substance that has abused them.
- "a state in which the body relies on a substance for normal functioning and develops physical dependence"
You know exactly what I mean. Yes, dear reader, there was no reason why the Premier had to appoint Dwight Duncan as Minister of Finance. Of all the Government Ministries, the Premier put him into the position where it was most likely that he would fall back into his old habits again. And he did.
You see, Dwight has a problem, a very serious one that he is not yet prepared to admit to. Our local MPP/Cabinet Minister is an addict, a P3 addict.
It is even worse as I explained before at the Federal Level where every deal over $50M with federal funding must consider a P3. Why we even have now PPP Canada Inc. if you can believe it.
It is so clear: the body politic relies on private money now from P3 operators for normal functioning and has developed a dependence on that money no matter how bad a deal for taxpayers!
In his previous job, as Minister of Energy, Dwight was involved with a public-private partnership at the Bruce nuclear plant. The Toronto Star Headlines screamed:
- “Nuclear deal too costly: Auditor”
Yet Dwight, poor Dwight was quoted as saying:
- “Energy Minister Dwight Duncan said he would sign the same deal all over again.
"The trade-off is what you pay for power," said Duncan, who was energy minister when the deal was negotiated, before becoming finance minister in October 2005 for seven months and then returning to the energy job.”
He obviously could not bring himself to admit that Departments errors might have been made. Notwithstanding the criticism, he would say:
- “In the end, this deal is fair for both sides," Duncan told a news conference”
It was so sad to see that he could not recognize that he had a problem, or rather the Taxpayers did because they were paying too much money. Here are excerpts from the Star article:
- “Nuclear deal too costly: Auditor
Apr 06, 2007, Rob Ferguson, Queen's Park Bureau
Ontarians would have saved $1.5 billion on their hydro bills over the next 25 years had the government negotiated a smarter deal to refurbish the Bruce Power nuclear station, the provincial auditor general says.
A review also found the government had "only partial success" in reaching its goal of protecting electricity ratepayers from cost overruns that have plagued past nuclear projects.
Among other concerns, the $4.25-billion pact to modernize four reactors at the Lake Huron plant included a "mechanical error" that cost ratepayers an estimated $88 million, and $514 million for pricey enriched fuel.
"It's not clear cut it's a good deal," Auditor General Jim McCarter said yesterday after completing a government-ordered review of the pact.
However, he did find it "successfully" limits ratepayer exposure to most of the financial risks Bruce Power faces in operating – if not refurbishing – the nuclear power plant.
"It was a bit of a mixed bag..."
The review found the actual price of electricity from Bruce is 7.1 cents per kilowatt-hour and is poised to rise depending on construction costs and other factors.
"That is significantly higher than what we're paying," he added, noting the average market price for electricity from all sources in Ontario over the last five years is 4.9 cents per kilowatt-hour…
Still, Energy Minister Dwight Duncan said he would sign the same deal all over again.
"The trade-off is what you pay for power," said Duncan, who was energy minister when the deal was negotiated, before becoming finance minister in October 2005 for seven months and then returning to the energy job.
But Hampton and other critics pounced on the findings, charging that some of the costs were hidden in the deal through measures like accepting lower payments for the plant leased to Bruce Power by Crown-owned Ontario Power Generation.
"The government's reputation as a defender of the ratepayer has suffered a serious blow here," said analyst Tom Adams of Energy Probe.
He said the report found the deal was structured so that prices will rise at a higher rate in later years of the agreement, an arrangement politically advantageous to the government, which is facing an election in October.
"They created an artificially low price at the beginning."
The auditor also found the Liberal government went into the talks two years ago at a disadvantage because of the Liberals' election promise to close coal-fired power plants by 2007.
That promise – later broken with no firm closing date in mind for several more years – left nuclear as the only practical alternative to meet Ontario's growing power needs.
"After this deal was signed, the government started to get flexible on coal, so it was a political mismanagement of the negotiations," Adams said…
Duncan said the alternative to this deal was exposing ratepayers to more risks than the government was willing to take given massive cost overruns like the ones that plagued the Darlington and Pickering nuclear plants years ago.
"In the end, this deal is fair for both sides," Duncan told a news conference…
The auditor's review, a complicated 29-page document, was critical of the way government negotiators handled a number of elements in the deal.
"We thought these were all reasonable things we thought they could have put on the table. ... They could have done better," McCarter said.
Some examples:
The review questioned why ratepayers are paying for the Bruce reactors to use enriched fuel, which boosts electricity output, but not getting a price cut in return. Enriched fuel costs two to three times as much as regular fuel.
A "mechanical error" in calculations saw the government double-count the net effect of tax savings on some interest expenses to the advantage of Bruce Power.
The goof was discovered two days before the deal was signed but not corrected because government negotiators found errors elsewhere that favoured the government.
However, McCarter found "the documentation that the ministry provided to us did not support its assessment of the errors it cited as offsetting."
In terms of cost overruns, ratepayers are more protected from major ones than minor ones and there was not enough evidence to agree to pay a $250 million addition to the total cost of the project in the final days before it was signed, McCarter said in an interview.
Bruce Power will get full market price for the electricity it would normally produce if the province fails to build enough transmission lines to get it to customers.
"Our concern is that Bruce will have a higher profit margin when the plants are not operating than when the plants are operating," the review said, arguing a better arrangement for ratepayers would have been to negotiate a lower "floor price" instead. "
Just so that you know, dear reader, Bruce Power
- “is Canada’s first private nuclear generating company and the source of more than 20% of Ontario’s electricity.”
One of the partners is:
- “BPC Generation Infrastructure Trust, a trust established by the Ontario Municipal Employees Retirement System.”
You remember OMERS don’t you…..the DRTP co-owner.
Do not try and make excuses for the Premier. He knew what he was doing. He knew what he wanted.
Here is what one commentator said about the 2005 Ontario Budget that was introduced by Dwight’s predecessor, Greg Sorbara:
- “the Ontario budget has sent a clear indication that the government is opening the door to so-called public-privatepartnership (P3s) investments to fund much needed infrastructure improvements in the province… Leading up to the Budget, the Finance Minister met with some leading would-be investors, such the Ontario Teachers’ Pension Plan and OMERS, who both make substantial infrastructure investments outside Canada. Both indicated this is a positive sign, but are waiting for details. By including this so prominently in the Budget, the Finance Minister has clearly indicated that he is willing put the public policy framework in place to make private investing in infrastructure more attractive.”
When Sorbara shockingly stepped down as the Finance Minister in 2007, a kinder, gentler Premier would have not put a person with Dwight’s errrrr “problem” in the job. The alarm bells should have gone off with the Premier when the Auditor General came out with the devastating report on the Brampton Civic Hospital Public-Private Partnership Project in 2008 that I Blogged about previously.
Of course, Infrastructure Ontario, who refuse to call themselves P3 addicts but are instead AFP addicts also refused to recognize their errrrr “problem.” They claimed:
- “Infrastructure Ontario, the Crown agency now responsible for managing most government infrastructure projects, and its ministry partners indicated that most of the issues we raised are now being handled differently to better ensure the cost-effectiveness of current P3 projects.”
Of course, the reason for me being so critical of the Premier is the announcement in the Star:
- “Border access road will be public-private partnership
The province will embrace a public-private partnership to build a border access road and could begin engaging construction consortiums as soon as the spring, according to Infrastructure Ontario.
The road to a new crossing will be taken on by the arm’s length Crown corporation as an alternative financing and procurement, or AFP, project, which means the private sector could finance, construct and even maintain the road.”
Since it is an AFP, Infrastructure Ontario is involved. Who was the Minister of Infrastructure from 2003 until mid-2008? David Caplan. Oh my, does Minister Caplan have the errrr “problem” too? Naturally, since money is involved The Ministry of Finance is involved whose Minister is our own Spanky.
Wait a minute… Caplan, Duncan. Oh no, it’s the Gong Show boys. Premier, don’t you remember:
- "Minister sorry for speaking too soon:
Border cash news catches mayor, Pupatello off guard; 05-27-2005
Ontario infrastructure minister David Caplan apologized Thursday for revealing a closed-door government decision to spend $500 million beyond 2010 for new infrastructure to fix Windsor's border problems.
The funding was announced by Caplan and MPP Dwight Duncan (L -- Windsor-Tecumseh) late Wednesday in a hastily arranged news conference inside Duncan's cramped constituency office...
Caplan was on a plane Thursday headed for Vancouver to visit family, but his spokesman admitted the error.
Wilson Lee said the minister's intention to reveal the funding commitment was done to show provincial government support for the city's $1-billion border traffic solution created by New York traffic expert Sam Schwartz.
"We wanted to show a full commitment to the Schwartz Report," said Lee. "I suppose we should have held it back, but good news is good news at any time..."
Meanwhile, stakeholders in the border traffic debate levelled criticism at the province, questioning why the $500-million announcement for funding to alleviate local border traffic woes was not in writing, done with little fanfare and will not start flowing until after 2010.”
Oh my goodness, it is almost 2010 now. They supposedly supported the Schwartz plan in that story but they never really did. That allowed the Mayor to fight for full tunneling, Greenlink ONE, Greenlink TWO, and maybe even GRANDSON of Greenlink.
I cannot believe it. Eddie has been able to stall everything until just about the time when money was supposed to start flowing. What an amazing and remarkable coincidence that is!
Do you think that this was a deliberate ploy by the Premier? Did he knowingly take advantage of their errrr “problem?” If so, for shame!
There is one slight little fly in the ointment as we say in Windsor. Our Mayor is against P3s. I am certain that he will stand shoulder to shoulder with his friend Brian Masse, the NDP MP, to fight this Provincial Liberal ploy to take money from taxpayers no matter what money they throw at him for more Air Races. After all, as our Mayor told us about the border file before he was first elected, he is consistent in his approach. Accordingly, he will never change his position:
- “He reiterated his concern that investors such as… private infrastructure funds could make a bid to take control of the Detroit side of the tunnel."
posted by JoeBlog at 10:45 a.m.
<< Home