TORONTO - The financing company behind a cancelled gas-fired electrical generating station in Mississauga has launched a $300 million lawsuit against the Ontario government for breach of contract and conspiracy.
EIG Management, a Washington, D.C.-based fund manager that invests in energy infrastructure projects, is seeking an additional $10 million in punitive damages in its suit against the Ontario Power Authority and the provincial government.
The suit was filed March 27 in the Ontario Superior Court of Justice, but only came to light at the end of business Friday.
In its filing, EIG alleges it wasn't given any warning the 280-megawatt gas-plant was being cancelled until Premier Dalton McGuinty made the announcement in the middle of last fall's election campaign.
"There was no prior discussion or arrangement with respect to this announcement with either EIG, or to its knowledge, Greenfield," the company said in its statement of claim.
The allegations have not been proven in court.
The developer, Greenfield South, which operates as Eastern Power in Toronto, was not available to comment after business hours Friday when The Canadian Press obtained the statement of claim. EIG's offices in Washington were also closed for the weekend.
EIG also alleges the government and OPA "conspired together" to stop the power plant and ensure that it never became operational as intended by their agreement.
A statement issued Friday by Energy Minister Chris Bentley said the province would vigorously defend against the claims, but declined further comment because the case is before the courts.
The Opposition said Ontario taxpayers were being hit with the cost of what it called the "Liberal seat saver" program.
"How can you defend cancelling the project," asked Progressive Conservative energy critic Vic Fedeli.
"The cancellation was politically motivated. It had nothing to do with our energy requirements, our generational requirements."
The New Democrats said cancelling the Mississauga plant to save Liberal seats will prove very expensive, but warned taxpayers will be paying the tab.
"When you make bad planning decisions and then you overturn them because you need to save a seat, it's going to be really pricey," said NDP energy critic Peter Tabuns.
"Those people who were counting on making a fortune are not going to be happy and they're going to try to exact their pound of flesh."
Construction was well underway on the Greenfield South generation station in Mississauga when the Liberal government cancelled the plant, and work continued on the site for weeks after the Oct. 6 vote. It finally stopped Nov. 18, 2011, after the Progressive Conservatives set up a web cam to show the daily progress on the plant.
The mid-campaign, Saturday afternoon announcement by the Liberals, who were reduced to a minority government, caught many observers off guard, but it wasn't a total surprise.
The year before, the Liberals cancelled a $1.2 billion gas plant in another Liberal riding in nearby Oakville after activist Erin Brockovich added her voice to strong, local opposition to the project.
McGuinty and Bentley have steadily ducked questions about the potential cost of cancelling both gas plants, saying the government was negotiating with the developers to find other projects and avoid lawsuits.
More costly lawsuits are likely, warned Fedeli.
"We've got two gas plants that were cancelled for nothing other than political reasons, and that can only end up costing the taxpayer," he said.
"Everyone will be looking at this particular lawsuit and taking their lead from there. This is only the beginning of what we're going to see now."
Bentley had said the government would find another location for the Mississauga plant, but no new site has been suggested publicly by the province.
