Injunction needed to keep the lights on and the public safe at
TORONTO, Aug. 26 /CNW/ - The Windsor Casino Hotel, Convention and
Entertainment Centres could be facing a shut down next week because there
won't be any electrical power to keep the games going and the staff working.
However, Buttcon Energy Inc., the operators of the natural-gas fired
electrical plant that is the source of power and water for the Windsor Casino
Hotel, Convention and Entertainment Centres, will be in court in Toronto this
Friday, attempting to keep the lights on and the water running past next
Monday at midnight. That's when Buttcon's long-standing contract with the
Ontario Lottery and Gaming Commission, (OLG), expires. The injunction seeks to
force OLG to grant a contract extension so power can continue to flow.
Buttcon won a competition in 2006 to design, build, operate and own the
power plant, but the OLG has been dragging its heels for months on finalizing
the deal. In the meantime, OLG has been paying Buttcon on a monthly basis to
run the plant that powers the Windsor Casino Hotel, Convention and
There are now fears that the provincial lottery corporation is actually
scheming to take over and run the plant itself, even though provincial law
does not mandate such a move.
"Power generation is a highly regulated industry precisely because public
safety is at stake. OLG doesn't have the expertise to run a major electrical
plant. This looks like a power grab by an outfit that knows nothing about
power," says professional engineer and Buttcon Energy Chairman, Michael Butt,
who adds, "If the OLG wants to run power plants, maybe the Ontario Energy
Board should get into the lottery business."
OLG has ignored repeated attempts by Buttcon to get either a contract
extension or instructions on what to do when the current agreement expires
next Tuesday, September 1st. Without an extension, Buttcon will be legally
required to start shutting down its plant, leaving much of the Windsor tourist
attraction without power and water. There is no alternate source of energy for
"The OLG should take its own advice; know your limit, play within it.
Clearly, they don't know their limits and they are playing a dangerous game
and putting public safety at risk," says Butt.
There are also serious safety concerns. Because of the highly technical
and complex nature of the electrical plant, it cannot simply be switched on
and off at a moment's notice. As the licensed operator, Buttcon Energy is
legally responsible for the safe operation of the facility, and for compliance
with numerous safety and environmental laws and regulations.
The OLG was forced to outsource the power and water requirements when it
realized, with the casino expansion already well under construction, that it
needed a dedicated power plant that it didn't have the money for in its
Buttcon Energy - Windsor Energy Centre Fact Sheet
In 2006, the Ontario Lottery and Gaming Commission, (OLG), entered into
agreements with Buttcon to design, build, maintain, own and operate the
Windsor Energy Centre ("WEC") to supply heating, cooling and secure
electricity to the "West Block" expansion of the Windsor Casino Hotel,
Convention and Entertainment Centre.
There was no money in OLG's budget for construction of the WEC thus an
"off book" solution was requested by OLG. In order to be "off book" the WEC
was required to generate up to 20 percent of the electricity produced to be
sold onto the Ontario power grid without any capital expenditure to OLG.
Electricity supplies in the Windsor area are "constrained" (i.e. supply
often does not meet the demand resulting in numerous brown-outs and spikes in
electricity on the grid). Notwithstanding, OLG intended to build an
entertainment complex to augment and broaden the scope of the Windsor Casino
Facilities to include large entertainment theatres where "A-List" acts such as
Celine Dion and Billy Joel perform for larger audiences. These "A" List
entertainers have no tolerance for electrical power surges, brown-outs or
black-outs. Even a minor electrical power surge could result not only in a
momentary disruption to the show but can knock off-line the audio and video
equipment used in modern day events as well as irreparably damage the musical
Accordingly, a single power surge or failure event could have
catastrophic consequences on the viability of the Entertainment Complex -
being black listed by A-List entertainers and ultimately result in loss of
future revenues of the venue.
The Windsor Casino expansion faced numerous problems, including:
"Constrained" electrical power in the Windsor area
Casino "west block" expansion was well under construction but
required heating and cooling
Construction budget constraints
Environmental considerations (green and clean)
Accordingly a solution was sought and identified as follows:
The construction of an "off-book" power generation plant capable of
generating heated and chilled water together with supplying all
electricity needs of the Casino, hotel and entertainment centre
The total energy usage not to exceed 80% of generation (maximum
requirement to qualify under GAAP not to be capitalized to the Casino
expansion Project), hence to be "off-book", and
The remainder of energy to be sold to the Ontario power grid
The Buttcon Group was selected through an RFP by OLG in September of
2006 to design, build, operate and own an "off-book," power
cogeneration facility for the Windsor Casino expansion.
In addition to meeting the needs of the Casino using an innovative
energy management solution, Buttcon Group's project is designed to
provide the City of Windsor downtown core with much needed additional
power that will substantially alleviate, if not eliminate the City's
power consumption deficit. The City was considered a constrained
power region as defined by the IESO (Independent Electricity System
The RFP for the power generation facility was tendered with very
strict requirements for an "off-book" solution with very tight dates
in terms of construction and operation requirements. The reason for
the tight dates was that the "West Block" was partially complete and
no arrangements were in place for the supply of energy to the
facility. As a result, many of the elements of a final and definitive
ownership and operating agreement were neither required by the RFP
nor included as part of Buttcon Group's successful proposal. Rather,
the RFP and the response spelled out processes and timelines for the
OLG and Buttcon Group to arrive at a definitive and final ownership
and operating agreement.
The decision by the OLG to build a stand-alone generating plant came
late in the expansion progress and was a rush job from the very
beginning. The process, as dictated by OLG, was to begin work and
negotiate terms on the fly.
It is essential to understand that the design, operation and
ownership of a power cogeneration process facility are inexorably
linked. Design and commissioning involve significant intellectual
property in the form of energy and facilities process management and
in turn are driven by financial models associated with ownership. In
addition, it is important to note that the power generating licence
can only be issued to the owner of the facility and to date, OLG is
prohibited from being a licenced power generator operator.(1)
The OLGC is governed by the Ontario Lottery and Gaming Corporation
Act, 1999 (the "Act"). Section 2 of the Act establishes OLG as a
corporation without share capital and is a crown agent of Her
Majesty. Section 3 of the Act sets out the objects of OLG which is
limited to developing, undertaking, organizing and conducting, and
managing lotteries on behalf of Her Majesty in Right of Ontario, to
provide the operation of gaming premises, to ensure that the gaming
premises are operated and managed in accordance with the Act and the
Gaming Control Act. As such, the OLG is limited to gaming and
lotteries not operating registered energy plants.
In this context, Buttcon Group was required to initiate construction
of the facility and commence a parallel track of negotiations
surrounding the design, operation and ownership thereof.
Through late fall 2006 and winter and spring 2007, numerous meetings,
discussions and proposals involving OLG took place in pursuit of a
final ownership and operating agreement.
Despite this process, the Buttcon Group were informed in early May
2007 that the OLG was canceling the negotiation process and taking
ownership of the power generation facility. OLG cited the lack of
agreement on ownership and operations by the date stipulated in the
RFP as the reason for cancelling the negotiations. This despite the
fact that the OLG willingly participated in numerous meetings and
discussions regarding the ownership after the deadline stipulated in
Edmonds Case Puts OLG Into Turmoil
Buttcon believes the real reason that the negotiations collapsed and
the ownership arrangement could not be documented at that time was
because OLG was in turmoil from the publicity surrounding the Edmonds
Case. In short, Bob Edmonds of Coboconk, Ontario, was defrauded of
his lottery winnings by a convenience store clerk where he checked
his ticket. Mr. Edmonds was told that he won a free ticket, yet in
fact he had won a free ticket plus $250,000.00. Edmonds contacted OLG
and the OPP to report the theft and sued OLG.
By Ruling Dated March 15, 2005, Madam Justice Sacks found that OLG
did owe a duty of care to Mr. Edmonds.
On March 17, 2005, Edmonds settled out of court but was bound by a
non-disclosure agreement. In early 2006, producers of the CBC news
program "The Fifth Estate" began to investigate the high number of
"insider wins" of Ontario's lotteries and interviewed Mr. Edmonds.
OLG initially refused to release Mr. Edmonds from his non-disclosure
obligations but on the eve of a court date seeking to be released
therefrom, OLG capitulated, permitting the Fifth Estate to air the
special exposé on October 25, 2006. The Fifth Estate program and the
extensive negative press resulted in Ontario's Ombudsman André
Marin's investigation into OLG. The Ombudsman's critical report led
to the resignation on March 23, 2007 of OLG's president Duncan Brown.
(1) OLG's mandate is enumerated by legislation and regulation. It
is prohibited from operations outside its mandate unless
expressly authorized by the Minister of the Government of
For further information:
For further information: Michael Butt, Chairman, Buttcon Energy Inc.,