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Mayor "ecstatic" after city negotiates its way out of costly energy contract

$60 million in capital costs avoided and over $600,000 in security deposits returned to city
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20160201 Guelph City Hall Sign KA

Mayor Cam Guthrie said he is "ecstatic" the city was able to get out of two contracts related to the failed district energy initiative that could have cost the city $60 million.

"I'm ecstatic about this outcome for the city. This is definitely a good way to start the year off," Guthrie said.

ENVIDA Community Energy Inc, an independently-run extension of city-owned Guelph Hydro Electrical Systems, also recoups over $600,000 in security deposits related to an agreement made with the province's Independent Electricity System Operator (IESO) to build two 10-megawatt power plants, one in the Hanlon Creek Business Park and in Downtown Guelph.

Those plants would have cost $60 million and were to replace two smaller test facilities currently in use in supplying a centralized heating and cooling source to city customers through the cities since-failed district energy initiative.

It was revealed to Guelph City Council last July that the district energy initiative had failed miserably, already costing the city $14 million, due primarily to an inability to attract enough customers, poor initial revenues and other strategic errors.

Guthrie said it could have been worse.

"I believe that ideology was driving this forward and when you have blind ideology pushing things like this forward you start spending more and more and more money.

"To have something like this come to light early is a huge benefit to the community."

A full report on the development goes to council's Committee of the Whole meeting on Jan. 16.

The original district energy plan hoped to connect large customers like the University of Guelph and Guelph General Hospital to the district energy system, but that never happened.

City staff is currently reviewing the city's entire Community Energy Initiative. That report is due to council at the end of the first quarter of 2017.

"The biggest number is the capital avoidance of $60 million. That's what we would have been obligated to spend to fully build out all the capital costs for these two plants. That's now been avoided," the Mayor said.

"That's the burden that would have been on the city's shoulders."

The city has also been able to sell the 3.74 acres of city-owned land designated for the project to a private developer, recouping $1.3 million.

City staff negotiated for several months with the IESO to get out of the deal.

Guthrie praised the work of the city's executive team, General Manager of Business Development Peter Cartwright and Guelph Hydro and ENVIDA CEO Pankaj Sardana for getting it done.

"The intent from the outset was to try and meet the criteria and keep going," Guthrie said. "At my very first meeting on this as Mayor it was very clear right away there were problems."



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Tony Saxon

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