Ontario Lottery Corporation under fire again



    
    Injunction needed to keep the lights on and the public safe at
    Windsor Casino
    

    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
Entertainment Centres.
    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 complex.
    "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
budget.

    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
instruments.
    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 Problems

    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

        Urban environment

        Environmental considerations (green and clean)

    The Solutions

    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
        Operator).

        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
        the RFP.

    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
              Ontario.
    





For further information:

For further information: Michael Butt, Chairman, Buttcon Energy Inc.,
(905)907-4242

Organization Profile

BUTTCON ENERGY INC.

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