A change in provincial regulations means Liberty Energy, which has spent two years and millions of dollars trying to win approval for a $60-million Hamilton power plant fuelled by sewage sludge and wood waste, must start its environmental screening process all over.

Critics are pleased and the company can't believe the rules are being changed at so late a date and supporters say the move will discourage private investment in renewable energy in Ontario.

Liberty CEO Wilson Nolan said yesterday: "We are shocked and dismayed that a government process can take away something that a company has accrued in spending millions of dollars and two years of time in good faith in meeting the requirements."

The California-based company applied in July 2005 as an electricity generator. That required only a Class B screening -- not as a waste plant, which would have had to undergo a more rigorous Class C assessment -- and was encouraged to proceed by the Environment Ministry.

The City of Hamilton, Hamilton East MPP Andrea Horwath, Councillor Sam Merulla and Environment Hamilton all argued the proposal should have been treated the same as a garbage incinerator.

The city and other parties asked the ministry to bump up the application to Class C, and a decision on those requests was expected any day. But now the ministry says Liberty's plan falls under regulations passed in March aimed at streamlining the assessment of energy-from-waste projects.

Spokesman Mark Rabbior said there is no provision for continuing the old screening, the bump-up requests will die with it and Liberty has to begin a new screening, but not a full assessment.

"From the government's perspective," he said, "it's all about ensuring projects are properly reviewed."

Environment Hamilton's Lynda Lukasik said, "We're happy." But John Dolbec, chief executive officer of the Hamilton Chamber of Commerce, called the ministry action "fundamentally unfair, unfair and bizarre."

Environmental law specialist Dianne Saxe, who noted bump-up requests are normally turned down, said: "There's no justification I can think of for requiring an environmental assessment to start over after two years ... especially if we want investors to build more facilities. One thing they need is certainty."

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