Gas-fuelled power plant on agenda for Toronto and Mississauga

Buried in the release of Ontario Power Generation’s 2006 financial results last Friday was an intriguing paragraph: “OPG is exploring the potential development of a gas-fuelled electricity generation station at its Lakeview site and is continuing with the decommissioning and demolition of the Lakeview coal-fired generating station.”

There is, as you might expect, a story behind this story and it sheds some light on how dysfunctional our electricity system has become over the past few years.

First, some background:

Ontario Power Generation, or OPG, is one of the successor companies that emerged when Ontario Hydro was broken into pieces in 1997. Still government owned, it runs all the old Ontario Hydro power plants, including the coal-fired facilities, which contribute to our air pollution and global warming and which the governing Liberals have promised to close.

In 2005, OPG’s Lakeview site, along Mississauga’s waterfront, became the first of the coal-fired plants to be closed.

But the Ontario Power Authority – an agency set up by the Liberals to plan for future electricity needs – says a replacement power source will be needed in the Mississauga area by the year 2011.

Hence, OPG’s interest in building a gas-fired plant on the old Lakeview site.

OPG has lined up a partner for the project – Enersource, the local electricity distributor, which is 90 per cent owned by the City of Mississauga and 10 per cent by Borealis, the infrastructure investment arm of OMERS (the municipal employees pension fund).

Also reportedly backing the project is Hazel McCallion, Mississauga’s formidable mayor (although, uncharacteristically, she did not respond to requests for an interview for this column).

With such an array of backers and a province thirsty for more power, the Lakeview project would seem to be a sure thing.

But not so fast. The power authority wants a competitive process before making a decision on a new plant. In this respect, the authority insists it is just following government policy, although insiders suggest the authority harbours a bias against OPG and in favour of private-sector suppliers.

As it happens, there is at least one private-sector firm interested in building a new gas-fired power plant in south Mississauga – Sithe Global, which already has regulatory approval for a site called Southdown (on the east side of Winston Churchill Blvd., between Royal Windsor Dr. and Lakeshore Rd.)

And more private-sector suppliers might come forward if they were allowed to make bids based on the OPG-owned Lakeview site, as the power authority has apparently suggested – to vociferous objections from OPG.

In any event, the power authority says the competitive process won’t begin until next year. That will create a tight timetable, however, as the electricity is said to be needed by 2011, and it takes three years to build a new gas-fired facility.