One of the issues during the gas plant scandal was how Eastern Power ever got the OK to build the power project in the first place. According to the Auditor General, and numerous media reports, the company’s financial position was propped up by a US-based hedge fund that charged exorbitant interest rates to Eastern Power on a loan. The hedge fund, in other words, knew it was dealing with a risky investment, but the government of Ontario did not. In the end, the Globe and Mail reported that the hedge fund took in $149 million from the cancellation of the Mississauga gas plant. That’s a tidy sum of money.
Today we learn that the same thing is playing out over at the Nanticoke Solar project. You remember the story: the Ontario government closed down the dirty coal-fired power plant and in its place, it had a glitzy green energy announcement for the site about two weeks ago. One of the featured companies in the project is SunEdison (see link). The other featured company is the development corporation for the Six Nations Reserve.
What’s going on with SunEdison today in the stock market? Reuters reports that SunEdison is at risk of bankruptcy and its share price has tumbled by more than 60%. On Monday, the Wall Street Journal reported that the company was being investigated by the Securities and Exchange Commission for overstating its cash position. This is a company that has received an energy contract to build a solar project in Ontario. It’s déjà vu!
So here’s the question: What is wrong with Ontario’s energy procurement system when we can only discover problems with company financing for projects far after they have been awarded these massive projects? Controls need to be stronger. Taxpayers cannot keep bailing out companies that may have never been in a position to deliver the contracted projects to begin with. How much Ontario taxpayers will be on the hook for as a result of this potential bankruptcy remains to be seen.