Wednesday 22 January 1992
Power Corporation Amendment Act, 1991, Bill 118 / Loi de 1991 modifiant la Loi sur la Société de l'électricité, projet de loi 118
Canadian Nuclear Association
John Reid, president
John Marchildon, member, board of directors; business manager and secretary-treasurer, Ontario Allied Construction Trades Council
North York Hydro
Bob Dyer, chair
Carl Anderson, vice-chair
Mike Butler, assistant general manager
Canadian Coalition for Nuclear Responsibility
Dorothy Goldin Rosenberg, member, board of directors
Energy and Chemical Workers Union, Consumers' Gas Workers Council
Everette Lapointe, president, Local 001
Ed Currie, vice-president, Local 001
Dave Moffat, national representative, Consumers' Gas locals
Larry Solomon, research coordinator
Markham Hydro-Electric Commission
Bob Fabro, general manager
Jack Gibbons, senior economic advisor
Union of Ontario Indians
Allan Roy, environment director
Lennox Industries (Canada) Ltd
Doug Pilch, director of manufacturing
STANDING COMMITTEE ON RESOURCES DEVELOPMENT
Chair / Président: Kormos Peter (Welland-Thorold ND)
Vice-Chair / Vice-Président: Waters, Daniel (Muskoka-Georgian Bay/Muskoka-Baie-Georgianne ND)
Arnott, Ted (Wellington PC)
Cleary, John C. (Cornwall L)
Dadamo, George (Windsor-Sandwich ND)
Huget, Bob (Sarnia ND)
Jordan, Leo (Lanark-Renfrew PC)
Klopp, Paul (Huron ND)
McGuinty, Dalton (Ottawa South/-Sud L)
Murdock, Sharon (Sudbury ND)
Ramsay, David (Timiskaming L)
Wood, Len (Cochrane North/-Nord ND)
Substitution(s) / Membre(s) remplaçant(s):
Conway, Sean G. (Renfrew North/-Nord L) for Mr Ramsay
Jamison, Norm (Norfolk ND) for Ms S. Murdock
Hansen, Ron (Lincoln ND) for Mr Klopp
Wilson, Gary (Kingston and The Islands/Kingston et Les Îles ND) for Mr Waters
Clerk pro tem / Greffière par intérim: Manikel, Tannis
Staff / Personnel: Yaeger, Lewis, Research Officer, Legislative Research Service
The committee met at 1000 in committee room 2.
POWER CORPORATION AMENDMENT ACT, 1991 / LOI DE 1991 MODIFIANT LA LOI SUR LA SOCIÉTÉ DE L'ÉLECTRICITÉ
Resuming consideration of Bill 118, An Act to amend the Power Corporation Act / Projet de loi 118, Loi modifiant la Loi sur la Société de l'électricité.
CANADIAN NUCLEAR ASSOCIATION
The Chair: Good morning. It is 10 o'clock, the scheduled time for the first presentation. I see that Mr Wood, Mr Jordan and Mr Cleary are here. The representatives of the Canadian Nuclear Association came here expecting to make their presentation at 10 am, and they will. Gentlemen, please tell us who you are and proceed with your comments. We have 20 minutes. Please try to leave at least the last 10 minutes for dialogue, questions and general conversation.
Hon Mr Reid: My name is John Reid. I am the president of the Canadian Nuclear Association. With me is John Marchildon. He is the business manager and secretary-treasurer for the Ontario Allied Construction Trades Council. They represent 65% of all unionized construction building trades on Ontario Hydro projects. He also sits on the board of directors of the CNA as a member and on the executive committee of the CNA as a member. The brief was to be delivered by our chairman, David Anderson, but we received word that he was indisposed and in and out of hospital, so I am going to read his brief on his behalf.
The Canadian Nuclear Association's membership includes 12 employee and trade associations, 18 consulting firms, six major utilities, 44 manufacturers, three banks and insurance companies, six branches of federal and provincial governments, 13 educational and research institutions and 11 uranium mining companies.
We are here today to tell the legislative committee that we believe Bill 118 should be withdrawn. In our view, it is legislation containing flaws so deep as to make amendments futile.
The bill contains a number of changes to the Power Corporation Act. These changes will impede the ability of Ontario Hydro to perform its function as a utility mandated to provide an essential need. Ontario Hydro's mandate specifies that it is to provide power to all customers at cost. This bill as written, however, constitutes a direct threat to the principle of separating short-term political interests from the responsibility to be accountable to its customers, the industries, businesses and residents of Ontario.
This morning I want to discuss just one of the changes introduced by the new bill which would have negative effects on both the industry I represent and the electricity consumers of Ontario. The bill states that the board of directors of Ontario Hydro shall implement without question the policy directives of the government. Furthermore, the directors would be individually and collectively absolved from any of the consequences of any such directives as may be issued to them.
Please note the language used in section 2 of Bill 118. Subsection 9a(3) states that, "The directors shall ensure that policy directives are implemented promptly and efficiently." To me, this says there will be no discussion or debate of the government's orders. It is generally true that political decisions and engineering decisions do not go hand in hand. Through this clause we can see a clear attempt to override engineering decisions through political interference.
I would like you to think about that for just a moment. What we are witnessing here is the death of Ontario Hydro as a crown corporation and its rebirth as a department of the provincial government. No longer will Ontario Hydro be responsible for its activities. All responsibility will derive from government directives.
This is simply too great a responsibility for any government to assume without potentially severe repercussions. In justification for this inclusion in the act, we are told that the purpose of this clause is to ensure the greater accountability of Ontario Hydro to the government and thus to the citizens of Ontario.
While the current government may have this intention, it is creating an instrument with enormous potential for abuse. Already in the case of Elliot Lake and the Spruce Falls paper mill we have witnessed Ontario Hydro being used to fulfil policy objectives unrelated to the best interests of the power consumers of Ontario.
Moreover, by absolving Ontario Hydro directors of responsibility for the execution of cabinet directives this bill completes the transformation of Ontario Hydro from a crown corporation into a government department. By making Ontario Hydro the appendage of the government, any capacity for responsible accountability for long-term planning will be lost.
In fact, if the directors of Ontario Hydro's board are absolved of any responsibility, there is little need for a board of directors at all. In any corporation, be it crown- or investor-owned, the board of directors both individually and collectively have a responsibility to their stockholders. This means the directors are liable for any action taken on behalf of the corporation or any action taken by their predecessors acting as directors. By arrogating responsibility to cabinet, public accountability of Ontario Hydro is reduced, as cabinet ministers are protected by privilege.
The subjugation of Ontario Hydro's board of directors will undercut the utility's ability to conduct long-range planning that is so essential to keeping electrical rate increases low in Ontario. Planning horizons will shrink to a four-year electoral cycle, which is completely inadequate to the planning and operation of a modern bulk electrical system.
Mr Marchildon: It was true in the past and it is still true today that in general the most cost-effective form of electrical generation is a large generating station. Large stations realize economies of scale.
This was effectively demonstrated earlier this century with the construction of the large Sir Adam Beck hydraulic plants at Niagara Falls. These stations produced power at prices that compelled the dismantling of almost 600 small hydro dams. These small dams could not even be maintained at a cost competitive with Ontario Hydro's prices from large-scale power generation. Planning large stations effectively, however, requires the ability to plan far into the future, to anticipate the needs not just of ourselves but of our children and future Ontarians.
In this light nuclear energy, as typified by the Candu nuclear system, has proven to be the world's most effective and reliable thermal technology. In the early years of nuclear power it was hoped that nuclear energy would some day be cost-competitive with coal-fired generation. Today the Candu has not only become the most cost-competitive with coal; it has saved Ontario customers billions of dollars.
It should be noted that despite the cost overruns experienced with Darlington, electricity generated at that facility costing 4 cents per kilowatt-hour still retains a 15% price advantage over the cost equivalent of coal-fired generation, which costs 4.5 cents per kilowatt-hour. These economic advantages are in addition to the enormous environmental benefits of not producing the millions of tons of acid gases that would have been produced if Ontario had adopted a coal-fired thermal system.
The reliability of Candu has been well documented. It has consistently outperformed any other nuclear technology. While some in Ontario complain that nuclear performance has fallen in recent years, the truth is that the performance of our nuclear capacity on a lifetime basis surpasses that of all other nuclear and fossil-fired thermal technologies.
Moreover, Candu has demonstrated that even very small utilities can enjoy the cost efficiencies of nuclear energy. For a number of years the world's number one performing reactor has been Point Lepreau, owned and operated by the New Brunswick Electric Power Commission. Despite the fact that Point Lepreau is nearly 10 years old, making it older than any of the units at either Pickering B or Bruce B, this New Brunswick station continues to enjoy annual capacity factors in excess of 95%. It also has a lifetime reliability record unmatched by any nuclear or fossil fuel unit anywhere in the world.
Hon Mr Reid: By transforming Ontario Hydro into an internal branch of the government, the utility will be subject to the political whims of the present and lose its capacity to engage in responsible planning for the future. The provision of a reliable and competitively priced supply of electricity is an essential need in a modern industrial society.
The people responsible for the provision of this need should not be unaccountable to the government, but that accountability is already guaranteed by the need for the government of the day to approve all borrowings for the construction of equipment and the necessary environmental approvals. The proposed bill, which would allow the government of the day, of whatever stripe, to override the judgement of responsible planning experts, is not, in our judgement, in the best interests of future electricity users in Ontario.
Bill 118 negates continuity in the planning for the maintenance of electricity supply. It guarantees partisan interference in the planning process and thus is ill-advised. Planning will be based on a four-year electoral cycle rather than the much longer time frames required for the efficient introduction of new, highly economical additions of large generating units.
For the reasons of potential for political interference in the proper planning and the supply of electricity, the Canadian Nuclear Association is calling for the abandonment of Bill 118 by the Ontario provincial government. Thank you, Mr Chairman.
Mr McGuinty: Thank you, gentlemen, for appearing before us today. One of the things I think many of us have come to learn is that we have a problem in that we have been unable of late to ensure we have some kind of mechanism in place that will ensure that the interests of Hydro's ratepayers are always respected. We have had ample evidence in the past of Hydro's difficulties in ensuring that those interests are protected, and now we have the deliberate effort on the part of the government to weigh in and take certain steps, apparently under the guise of increasing accountability.
My concern is that this government will be placed in a position of conflict and that from time to time the interests of ratepayers will not be the same as those of taxpayers. I think we witnessed an example of that when the government directed Hydro to do what it did at Elliot Lake and Kapuskasing. I am not comforted by this government weighing in as it proposes to do under Bill 118. I am not comforted by the status quo with respect to Hydro looking out for my interests as a ratepayer. What alternative is there?
Hon Mr Reid: We have always thought that the idea of Ontario Hydro as a crown corporation independent of government, with the government having the power to appoint some members of the board of directors and other interests in the province having the ability to appoint other parts of the board of directors, would provide a greater stability in terms of Ontario Hydro's direction and control. We have never suggested that you would do away with the provincial government's power to insist on proper environmental hearings, nor its ability to control to some extent the borrowings of Ontario Hydro. I think the problem is to find that proper relationship between Ontario Hydro and the government so that we can have the long-term planning that is required and do not get the very sudden flip-flops that have taken place in terms of Ontario Hydro's long-term planning horizons.
We would like to see Ontario Hydro maintained as a crown corporation. We would like to see it maintained at an arm's-length distance from the government. We would like to see it have the ability to continue to do its long-term planning. By and large, the Ontario government should have some say on the overall financial markets, as it has had before this bill. But we do not like the current administration, which in effect makes Ontario Hydro part of a line department of government.
Mr McGuinty: I understand what you are saying, but that does not lend much comfort to me as a ratepayer. I am concerned, for instance, with some of the directions that Hydro has taken in the past. I am concerned with the number of people they have on staff. I am concerned with the salaries those people are receiving. I am concerned with the size of the utility.
The Chair: Having said that, Mr McGuinty, I am concerned, as I must be, about the time frames.
Mr Jordan: Thank you, gentlemen, for your presentation. I would like to follow up on your statement that you would like to see Bill 118 withdrawn because of the number of flaws in it and because of the changes it will make, not only for this government but which could follow with future governments, to the operation of Ontario Hydro. I would like to have your comments on why this government, using policy statements to the board -- picturing the board it has in place or is planning to put in place and the chairman, surely any reasonable request through a policy statement would be followed by this chairman and board without Bill 118.
Hon Mr Reid: I think one of the problems we have is that the bill states the board of directors has no choice. It must implement as effectively as possible any statement it gets from the government, so there is no debate.
Mr Jordan: But do you need that statement?
Hon Mr Reid: I do not believe you need it. My own judgement is that there has been ample to-ing and fro-ing on Hydro on innumerable legislative committees holding hearings on Hydro. An outside authority investigates Ontario annually. The Ontario Energy Board issues an annual report on the health of Ontario Hydro. The government does have the ability from time to time to influence the appointment of members to the board of directors, but what we really have is a destruction of a status of a crown corporation; that is, an independent body with an act that it must implement and the aims and objectives embodied in that act, with the government now having the ability to come in and change legislative direction by cabinet or ministerial fiat. As a citizen of Ontario I feel that is a very dangerous principle to have.
Mr Jordan: Thank you. Just another quick item. The 450-megawatt Candu --
Hon Mr Reid: Candu 3, yes.
Mr Jordan: Would you like to comment on that and its use in Ontario?
Hon Mr Reid: At present there are three sizes of Candus: the 900 series, the Darlington reactor; the 600 series, the one at Lepreau; and the new one, which is one of the family of advanced reactors in the process of being designed. It is about 80% complete in its design and that 80% has been approved by the Atomic Energy Control Board. It is a smaller reactor and will produce 450 megawatts of power. The idea is that it should be built in a three-year time period. As you know, the large cost of any megaproject, whether energy or whatever it happens to be, is not in terms of money but in the interest that is charged. The practice we have in Ontario is that we do not put any equity into the construction of these processes. We build it with 100% borrowed money and only then do we begin to pay it back.
The Chair: Mr Huget, parliamentary assistant to the Minister of Energy.
Mr Huget: Thank you very much for your presentation. I just have two or three quick questions.
The Chair: You can have as many as you want, Mr Huget, within the time frame.
Mr Jordan: He is using your time.
Mr Huget: He is using my time. Leo, make a note of that.
If I understand you right, you are saying the government should not interfere with Ontario Hydro at all. I guess my question is whether you are saying the government has no place in environmental regulations, no place in control of nuclear power, no place in giving direction to Ontario Hydro to emphasize the efficiency in conservation.
Hon Mr Reid: What I said was that there should be no restriction on the Ontario government's ability to insist on environmental protection; no reduction in their ability to control the overall financing. That is the way things are done now before this bill. Those particulars are already controlled.
It seems to me that the interest we are looking at is the ability to provide energy requirements for industry to go and develop, so we can have jobs in the province of Ontario and make sure energy is provided at the lowest possible price. My view is that if you had the government and Hydro implementing its current legislative mandate, which is power at cost, those would be met. The government under this legislation would be able to change that legislative requirement by Hydro so that Hydro could be mandated to bring in expensive power and increase costs. I do not believe it is necessary to pay more for power than you absolutely have to, but the government would be able to change that regulation, or that piece of law to be more precise.
Mr Huget: Following up on Mr McGuinty's concerns, I guess there are some concerns about Hydro itself, its cost-effectiveness and productivity. If we were to say to Ontario Hydro, "Look at your cost-effectiveness; look at your productivity as a corporation; look at a whole bunch of things" -- I think Mr McGuinty has referred to them quite legitimately -- would that not be a policy directive?
Hon Mr Reid: I would say that is already done more than adequately by the annual reports issued by the Ontario Energy Board. If you want to have a pretty good idea of what is happening, you can look at that regulatory authority.
Maybe what is required is not to give the power to the government over Ontario Hydro you are suggesting here, but to put more teeth in the Ontario Energy Board to impose its judgements on Ontario Hydro. They do not have that power right now, but I think that would give everybody in the province much more comfort than having it done by the government of the day.
Mr Huget: Are you convinced it would be done?
Hon Mr Reid: I am convinced if you gave the authority to the Ontario Energy Board to compel Ontario Hydro to do certain things, Ontario Hydro would obey the law.
The Chair: Gentlemen, on behalf of the committee, I want to thank you sincerely for your interest, obviously, and for taking the time to be here this morning. Mr Reid, Mr Marchildon, you have made a significant contribution to these proceedings. I trust you will keep in touch with members of the committee, be they critic or parliamentary assistant. The clerk will be pleased to keep you advised of any significant matters that arise over the course of these hearings.
Hon Mr Reid: Thank you very much, Mr Chairman.
NORTH YORK HYDRO
The Chair: The next participant is North York Hydro. On behalf of North York Hydro are three participants: Bob Dyer, who is the chair, Carl Anderson, vice-chair, and Mike Butler. Will you please tell us who is whom and proceed with your comments. We have your written submissions, they are an exhibit and form part of the record. Please highlight them, leaving the second 10 minutes at least for questions and conversation.
Mr Anderson: Thank you, Mr Chairman. I am Carl Anderson, vice-chair of North York Hydro, and I will make the presentation. Beside me is Bob Dyer, chairman, and Mike Butler, our assistant general manager.
I do not intend to read our brief. I would like to comment as we go through it. Bob and I have just gone through an election campaign in the fall of this year and three things came out very clearly in that campaign from the people we met and talked to at various all-candidates meetings. One is that they were concerned about reliability of electricity and their hydro. When they turn the switch on, they expect it to stay on. They expect it to be there all the time, they do not like any outages at all. That is their number one concern. Their second concern is rights, and they are willing to pay a bit if they have a bit more for reliability. Third, they were overjoyed that North York Hydro had no debt and wished all government groups were in the same position.
The Chair: So do we, sir.
Mr Anderson: We have been very fortunate. We have paid for things as we go, and some people say we should not be paying for the future. The people of North York have said, without question, they want this to continue and to pay as we go, because we do not want to saddle the future with debt. If we have to, fine, but that is different.
Fuel substitution: I have an electric furnace because my wife will not have gas in the house, and there are a number of people I know in the same boat. I went to electricity because the government suggested I go off oil, which I had at one time. They paid me to go off oil to go to either gas or electricity, and we chose electricity.
Now somebody is suggesting we pay everybody to go off electricity to gas, and I wonder if five, six, seven years down the road, when we are using up the gas bubble presently available and we have to go further afield to get gas in this country, if we will not be paying somebody to go off gas back to electricity again because we have nuclear power or whatever, or we develop more solar and wind power in this province or throughout the world. If you are going to go that way, ask those people who are going to benefit, the gas suppliers, the oil suppliers and others of this province, to also contribute to those fuel substitution costs.
One of the big problems is that Ontario Hydro talked people into Gold Medallion homes in the past, where you have all electricity. You have baseboard heaters and you have a great problem in getting people to switch off electricity now because you have to put in extensive ductwork which just does not fit into the house very well.
The other thing that is going to happen when you get into those changeovers is that if you go to ductwork you are going to have those people set up to go back to electricity in the summer time for cooling purposes. As you noticed from our paper, we are now a summer-peaking utility, and more and more utilities in this part of the province are becoming summer-peaking utilities. We are going to have a really great problem in air-conditioning in the future in the use of electricity.
Financing of conservation programs: We have no doubt that the way to go is energy management programs of various kinds, on which Ontario Hydro has become one of the leaders in the world. One of the areas we think they can definitely improve upon is that they must get the cooperation of the utilities throughout this province to do more.
Right now I think Ontario Hydro has tried to do too much without involving us. We have people in our organization who deal with our customers; we know them best. We know what their needs are and we can handle them best. Many times we get duplications of programs and people. They should be willing to pay us to do more because we can do it better. The number of calls Bob, Mike and I have had over the lightbulb program just boggles my mind, the delivery of them and everything else. You tried to get a mass program that fits all across the province. It just did not work that well.
Accountability of Ontario Hydro: I think the brief says just about everything we want to say in this area.
There is another hidden tax, and that is on water rental. Ontario Hydro pays a fair amount of money on water rentals for allowing it to run through a dam. The water is not changed; nothing happens to it. It comes right back a few feet down the river from where it went into the power station and all it has done is enhance this province by producing cheap electricity. We have some problems with those kinds of taxes and other things that increase the price of electricity. As we say, it has a double effect on our customers because the increased cost causes commercial and industrial customers to increase their costs. You pay it there and you pay it in higher bills at home.
Future direction: We said we need more energy management programs and those types of things within the province.
Board composition: We do not have too much of a problem with the government giving directions to Ontario Hydro, but the board of Ontario Hydro has the power to make the final decisions. We do not think that is a good thing because you may well know government but you do not know Hydro. The government has the power to appoint consistently people on the Ontario Hydro board.
We have a bit of a problem that at present there is nobody on that board who really understands the utility business in the Metro area and who can speak for about one third of the power users of this province located in Metro. We feel that one of the things the government should do when they are appointing people to boards is to look at different kinds of representation and even greater representation to the utilities. Maybe we will not have the problems we do in the energy management programs we are looking at in the greater participation. I think, unless Bob or Mike has anything to say, that will complete my speech.
Mr Dyer: You have basically said it all, Carl.
The Chair: Thank you gentlemen. Four minutes per caucus. Mr Jordan, please?
Mr Jordan: Thank you, gentlemen, for your presentation and concern over Bill 118. It has been previously stated that if we were to put more teeth into the Ontario Energy Board a lot of these perceived difficulties in the operation of Ontario Hydro could be solved. Would you comment on that?
Mr Anderson: Knowing that the Municipal Electric Association makes a fair presentation to the energy board, if the energy board listens to us I think that is a good way to go. One of the things we have suggested in the past is that one of the big problems for Ontario Hydro is debt. We have suggested in the past that they should have increased their rates somewhat to eliminate part of that debt, and our customers believe that. I think if you had gone back to 1950 and added 1% to the hydro bills at that time you would find we would have very little debt in Ontario Hydro and our electricity costs would be down considerably.
If the Ontario Energy Board really wants to put some teeth in I think that is the way to go. At least you have a chance of coming back the next year at them. I am not sure you always have the chance of coming back and getting the government to change in one year.
Mr Jordan: The financing of conservation programs, the lightbulbs mailed out to each customer, this $7-million program states, "Ontario Hydro and your local utility." My experience has been that across the province the utility was never consulted.
Mr Anderson: It may have been consulted at some time and the consultation may have been, "We're going to do it and this is what we're going to do and it's a good thing." Do not dump totally on that program, because it certainly made people aware that there is some kind of need. I do not know what it costs to run a campaign to get people's attention to the fact that energy management is important and to get a lot of discussion going, but this surely got going a lot of discussion and a lot of thinking. If nothing else, it was worth $7 million just to have that happen and to make people aware.
Mr Jordan: But not for conservation of energy.
Mr Anderson: I do not know how much conservation of energy those particular lightbulbs will do, but it made people aware that it was needed and they got talking about it.
Mr Huget: Some day we are going to get those lightbulbs of Leo's out of the bag, I am telling you.
Mr Anderson: They may be broken.
Mr Huget: All I know is that they will not work in the bag. They are really hard to screw into the fixtures.
Mr Anderson: As long as he does not replace the 40-watt bulb with it.
Mr Jordan: They are made in Quebec.
Mr Huget: Ontario Hydro I guess has set aside a substantial amount of money for energy conservation. I just want to pick up on that point. Do you feel that there should be money spent on consumer awareness and education around energy efficiency and conservation, and do you think it will be effective?
Mr Anderson: You are sure talking to the right person, because I have organized a tour of some American utilities by Ontario utility people for the end of March. We are going to a number of places. One of the places we are going to is the Seattle area, where they have an association with Bonneville. Power to customers there is 3.5 cents a kilowatt-hour on average. They are heavily into energy management even at that price of electricity, because they know that more electricity is going to cost a lot more.
We are going down to Pacific Gas and Electric, which is a private company that is spending tons of money on energy management. I suggest to you that when private companies find it is a good way of making money and it is profitable, then it seems to me that this is the way to go. I am a strong supporter of energy management in this province.
Mr Huget: Do you feel that what was happening in the past, for example the practice of promoting electricity for space and water heating, was in the best interests of your customers?
Mr Anderson: Yes. I think we could have done some other things and we can do some other things. One of the things we have used is load management on our water heaters to help take down the peaks of the load, which helps the Ontario Hydro system. One of the things we should have done was to make sure we had larger tanks so we could control it more and heat them up more for night-time use, where sometimes, to my understanding, Ontario Hydro had to spill electricity.
Mr Dyer: Storage.
Mr Anderson: We got into heat storage, a lot more, as they do in Europe, but with the price of electricity it has not paid. We should have encouraged more of that kind of stuff.
Mr Huget: How much of your winter peak is space heating?
Mr Butler: It would be very little. We have about 15,000 residential all-electric customers out of 125,000 residential customers. I do not have an exact figure, but the heating percentage of our total utility peak I guess would be somewhere in the vicinity of 5%.
Mr Huget: Would fuel substitution, for example for space heating and water heating, reduce that peak and therefore reduce your demand on Ontario Hydro?
Mr Anderson: Our peak is in the summertime, Mr Huget, so it would not reduce it. I may well increase our summertime peak, because if you get people now with baseboard heating, if they get ducts in they will go to central air-conditioning, which is going to increase our peak. I think the other thing is that a lot of people do not want gas, and you are going to get them.
In the province, I noticed that the number of conversions without any help at all has been doubling each year. I think there were 7,000 customers last year, 3,500 the year before and 1,500 the year before that. In some way those figures stick in my mind. This is going to happen. The economics of heating with electricity is going to change a lot of people without any kind of help.
The Chair: Mr Dadamo, quickly.
Mr Dadamo: In the past, a lot of people used oil and some switched back to electricity. Are people worried about the reliability of oil and whether the product will be there 20 years from now?
Mr Anderson: No. People do not think much beyond two or three years. That is the problem of going to gas today.
Mr McGuinty: Thank you for coming in, gentlemen. I want you to assume that I am a ratepayer living within your jurisdiction. Let's assume I give you a call and I say: "Listen, I hear the government has got this Bill 118 thing on the go and it's going to go ahead with this fuel substitution program. Can you assure me unequivocally, gentlemen, that this is a good thing for me?" I don't intend to switch to gas for whatever reason. I may not be comfortable with it. "I assume I have access to it there, but can you assure me that this is not going to hurt me rate-wise?"
Mr Anderson: No, I cannot. Our customers have said they do not want to pay for somebody next door to go off electricity to go to gas. They do not want that. That is what they have said.
All I can do is to assure you that if we have to build more expensive plants in the future, you are going to pay more for electricity. We had better find ways of conserving electricity and getting the same value from electricity with better motors, better insulation and better windows. I suggest the government would be far ahead to put in some construction programs and reconstruction programs to cut the use of electricity and all fuels. We just walk into these windows here. I do not know how you sit beside them unless these are double windows. They are totally inefficient.
Mr McGuinty: Do you have any numbers that you could share with us as to how many people there are in your jurisdiction who are heating their homes by electricity?
Mr Butler: It would be between 13,000 to 15,000, and that is out of 125,000 residentials.
Mr McGuinty: Has that number been declining?
Mr Butler: Yes, it has.
Mr Anderson: The number of water heaters in use that would be switching to gas has been declining tremendously.
Mr Dyer: We feel that the market itself will take care of any conversions rather than a substitution. In other words, what is eventually going to happen does not need to be reinforced with incentives, because obviously the price is getting to a point now where people are looking seriously at conversion.
Mr McGuinty: I have one other matter. With respect to appointing people to the board at Hydro, you propose a different system here. One of the arguments that has been advanced historically is that Hydro is such a complex utility, steeped in all kinds of exotic technology, that it is very difficult for the average person, the generalist, to begin even to understand the workings of Hydro. If you did have a generalist on the board who was competent and capable of absorbing the information that would be necessary in order to make an informed decision at some point in time, it would take three or four years just to kind of bone up on the material. Here the mechanism you are proposing would provide for some kind of rotation. Do you see a problem with that?
Mr Dyer: Can I speak to that?
Mr Anderson: Go ahead.
Mr Dyer: Inasmuch as the municipal utilities in Ontario I think control something like 75% or 80% of the load in Ontario, what Mr Anderson was alluding to was that we probably should have more sensitivity in the various areas. Especially in the Metropolitan Toronto area there is no sensitivity to the goings-on of Ontario Hydro and the input to counteract that. I think the important thing is to have representation that is effective to address the problems. I think that is basically what Mr Anderson was saying.
Mr Anderson: Yes, I think people in the utility business have a fair knowledge of it. We have had one or two at the most on the Hydro board and we really should have greater representation. I also think that the Hydro board needs good business people on it as well because it is a business and you need a good cross-section. You need the environmentalists on that board to make sure that the environmental impact is going to be taken care of. You need a broad range of people with different skills, and they should work more together and meet more together so that they begin to understand each other. I think one of the problems at the Hydro board is that they come in for a morning and they are gone. They do not get much interaction of the Hydro board, from my knowledge. They need to live together a bit more too. You cannot do that with Bill 118, though.
The Chair: At that, on behalf of the whole committee I thank you for your participation, Mr Dyer, Mr Anderson and Mr Butler. We appreciate your coming down south to Queen's Park to speak candidly, as you have, and you have contributed, as have a whole bunch of other individuals and groups, to this very important legislative process. Thank you.
Mr Anderson: From the land of Lastman, we wish you well.
The Chair: We are recessed until 11 am at which time we will start promptly. There is a subcommittee meeting in room 230. Mr Huget is substituting for Mr Waters.
The committee recessed at 1043.
CANADIAN COALITION FOR NUCLEAR RESPONSIBILITY
The Chair: It is 11 am, and we are scheduled now to hear from the Canadian Coalition for Nuclear Responsibility. Ms Dorothy Goldin Rosenberg, a member of their board of directors, is here to make their presentation. You have 20 minutes. If you could keep your comments within the first 10 minutes, that would leave us some time for conversation and exchanges.
Ms Goldin Rosenberg: Thank you. Good morning to all the members of the committee. I would like to congratulate the government of Ontario on this initiative. The fuel-switching amendment in Bill 118 allows Ontario to provide financial incentives to encourage switching from electric heating to less environmentally damaging and less costly ways of providing heating services. While the bill refers to space heating, only half of residential electricity is for heating, so there are major improvements needed in other areas as well.
I recently came to Ontario from Quebec and I have been involved in energy and environmental issues for the last 20 years. I am very encouraged by this process and the potential results. I am happy to tell you that Ontario is way ahead of la belle province in its efforts to address alternatives to the supply-driven policies of the utilities. Since the first phase of the James Bay hydro-electric project in the early 1970s, many environmentalists called on Hydro-Québec and the government to hold hearings and public consultations that might be meaningful, so it is a positive experience to be here at this crucial time when institutional change is actually taking place. CCNR has been formally involved in Ontario Hydro deliberations in the past through other commissions.
Environmentalists all over Canada have closely followed Ontario Hydro's developments over the years as the nuclear industry has received and continues to receive huge subsidies from Canadian taxpayers, a policy which is detrimental to the funding of other energy options. Last year it was announced that Atomic Energy of Canada Ltd will get $224 million for each of the next seven years, including an escalator clause to cover inflation. The implications of your policies here will be felt beyond Ontario. They will hopefully have an impact on Saskatoon and Point Lepreau, New Brunswick, where enormous pressure is being exerted on those communities by the nuclear industry for Candu 300 reactors, such as you heard about from the gentleman from the Canadian Nuclear Association.
It will also be important internationally, as Ontario Hydro, together with AECL, the Department of Energy, Mines and Resources and the Canadian Nuclear Association, with a consortium of organizations through the International Atomic Energy Agency, routinely promote the export of nuclear technologies to developing countries, even though people here do not like them too much.
I read with great interest several of the briefs that have already been presented to you. Clearly there are many in favour of Hydro switching to become an energy service company and of the fuel-switching program being implemented in the context of efficiency. This would include a mass retrofit program to reduce home and commercial building heat loss through improved insulation, air sealing, energy-efficient windows and doors, solar energy and a wide range of practical solutions and suggestions that I will come to later.
I was also moved by a speech delivered by the former president and CEO of Hydro, Robert C. Franklin, because he promoted some very interesting changes. But I was shocked to learn that it costs $50,000 to heat each Ontario home with electricity and that the debt of Ontario Hydro is $30 billion, which boggles my mind, and to hear that $375,000 per hour is what that comes to. It seems quite incredible. This is money that could certainly be used elsewhere in these difficult times, and I am happy, as I said, that some policymakers now understand this inefficiency.
When Dr Hélène Lajambe lived in Quebec -- she is now with the Organization for Economic Co-operation and Development in Paris -- she was the author of the Quebec soft energy path. She often criticized the debt that Hydro-Québec had, similar to Ontario Hydro. She compared it with the impacts of the need for structural adjustment in Third World countries, how we have to cut our social spending, social transportation, health care education and so on to pay the debt. I thought that was an interesting analogy.
The question we have to ask of course is, since Canadians are the greatest energy wasters in the world, does it make sense to spend our money this way? Japan, Germany and many other countries are not only more efficient than we are but are becoming more efficient faster. So the changes at Hydro, while they are gradually happening, need to happen even faster and we should look to some of the other countries to provide incentive to speed up the process.
I do not have much time, as you know, so I would like to address the conceptual framework in the discussion around Bill 118. We have all heard about the monopoly that Ontario Hydro is, and in the past it and the municipal utilities promoted inappropriate, inefficient and costly electricity for space and hot water heating. We know that electricity is environmentally destructive, as most of the electricity used for space heating originates with inefficient and dirty coal-fired plants, resulting in massive emissions of carbon dioxide, which cause global warming. Coal is also the cause of acid rain. The nuclear fuel chain from uranium mining to fuel fabrication, to reactors, to waste disposal is fraught with unresolved environmental problems. Now this is being more discussed than ever.
The gross inefficiency or overkill of using the very high-grade form of energy, electricity, for space heating has been well documented in other briefs. I noted that one of the engineers quoted Amory Lovins's expression, "Using electricity to heat a home is like using a chainsaw to cut butter." Other descriptions include, "It's like using a forest fire to fry an egg," or "trying to fill a bathtub without a plug."
We described that waste 15 years ago. I remember in my old days when I worked at the National Film Board on energy and environmental films, we produced a film that was narrated by David Suzuki in which we showed infrared auditing of a house and you could see the red glow all around. You could see the heat just escaping, so of course heating the outside. We are still filling bathtubs without plugs, and this building is probably one too, as someone else mentioned.
You heard from David Argue in the Passmore Associates International brief about how much fuel switching would save and how wasteful electricity has been and that the deliberate marketing of electricity encouraged consumers to spend 77.8% more for electric heating than had they used more cost-effective fuels. Of course, Hydro still underprices the electricity itself to its customers. It costs the economy billions of dollars a year and promotes waste and inefficiency.
In terms of the consumers, they do not pay tax on their hydro bills but they do pay tax on energy-efficient lightbulbs, solar panels, natural gas etc. Because electricity is the costliest form of energy, saving it is financially rewarding. The distortion caused by the subsidization of electricity makes it seem disproportionately cheaper than it really is.
Fortunately, according to Lovins, there are four revolutions which have occurred recently which can reverse that misallocation and give us the benefits we need. These are (1) technologies to wring more work from electricity; (2) new ways to finance and deliver these technologies to the customers who need them; (3) changes in the regulations of the utilities, and (4) changes in the utilities' mission and culture.
In terms of jobs, it is especially important to highlight that in the current recession, when unemployment is high, a full-scale energy conservation and fuel-switching program will result in a potential gain of thousands of jobs in building audits, renovations and alternative energy sources. This should be given immediate attention, as the payback period is relatively fast.
Two years ago in Montreal at the time of the World Energy Conference, a huge international energy- and nuclear-supply-oriented conference sponsored by governments and the nuclear industries, the Canadian Coalition for Nuclear Responsibility held a parallel conference called the Green Energy Conference: An International Symposium on Energy and Sustainable Development. At it, both University of Toronto professor Ursula Franklin and Amory Lovins of the Rocky Mountain Institute were keynote speakers.
Dr Ursula Franklin is the author of The Real World of Technology, her 1989 Massey lecture series on the CBC Ideas program. She was also the director of the Science Council of Canada's Toward a Conserver Society study in the 1970s, which did such a remarkable job of alerting Canadians to energy issues, policies and alternatives.
At the Green Energy Conference, she presented underlying values which she said should prevail in all deliberations on energy policy and she called for the need to address the root causes of energy problems. One of the real obstacles to a sane energy policy, she said, was not recognizing the direct link between the physical properties and utility of fossil fuels and electricity and power in the political sense. For many women, and a growing number of thoughtful men, understanding power relationships, domination and subordination of women and nature provides a theoretical and conceptual framework of how society is managed. Gender inequality is a reflection of that domination. Speaking of which, I noted with dismay that there is only one woman out of 14 on the list of your standing committee on resources development and that she is not even here today.
I call your attention to some excellent literature on science, technology and gender. I spoke with this woman earlier and I found out that she is from Hansard. I have listed some literature on science, technology and gender which you will have in my endnotes, but I think it is an important consideration when we talk about power and equality.
Whatever happened to the Science Council's conserver society study? In appraising its efforts, Dr Franklin noted three different strata in the responses to it. First, there were the ordinary people who responded by making changes in their lifestyles and workplaces. Second, there were institutions responsible for changing regulations, specifications, spending and research priorities, the things that individuals cannot do. Third, there were professionals who made private decisions to incorporate some of these concepts in their work, such as architects, engineers and other trained professionals who deal professionally with technology.
On the first and third levels, the study resulted in real and useful contributions to processes that were more energy-efficient and less polluting, but where it got stuck and reversed was on the middle level. The institutions were totally immovable. There was no change in the price and tax structures that encourage people to waste or conserve and no real changes in specification structures. It is this layer of institutional intransigence that needs to be addressed, and I am very pleased to see that it is beginning to happen here in Ontario.
These realities are obvious. I was particularly dismayed when I discovered that in North York, where I live -- and I was interested to hear the gentleman who went before me -- the cost of electricity is included in the rents in the apartments and the general fees of the condominiums. Where I live at York University, and it is a brand-new building, people do not even know what the electricity portion of their rent is. It is all together, so of course it encourages enormous waste. People use too much air-conditioning and they waste hot water etc. They use their appliances too much and if they are not paying for it, it is common sense that they are not going to save it.
What we learned from the conserver society and soft-path studies was that ultimately the questions to be asked have to include, "What is the job that needs to be done? What are the end-use services? How much is needed, at what scale, from what source? What is the most efficient and cheapest way to do it?" We learned that electricity, when used for obligatory end uses for which there is no substitute, lighting, appliances, computers etc, need not constitute more than 12 per cent of the energy budget or it is being misused. You can see in Ontario how much higher that is.
Times have changed and there is a much greater understanding that we do not say any more, "We must have more energy and more supply," but instead ask, "What is the job to be done?" Now is an opportune time for Ontario Hydro to adopt an environmentally appropriate end-use, least-cost approach that can be a powerful tool for understanding how people behave in a competitive service market. At the Green Energy Conference, Lovins reported that in the US a pattern is evolving in which hard-path sources, that is, nuclear, coal, fossil fuels etc, are being gradually squeezed out by a combination of energy efficiency and appropriate renewable energy sources.
He reported that over the last decade the US has obtained over seven times as much new energy from savings as from all net increases in energy supply combined, and of the new supply, more has come from renewables than non-renewables. He said that if they chose the best energy buys for the rest of the century, they could get accumulated net savings by then of several trillion of today's dollars, enough to pay off the whole US national debt. In a recent article -- and I notice you have been distributing it -- he says they could save more than the entire US military budget of $300 billion. If we make those kinds of calculations for Ontario Hydro, maybe we could write off the Ontario Hydro debt in the next 10 years.
Lovins reported that in terms of technologies, they are growing so fast that many of the best ways we have today to save electricity while providing unchanged or improved services were not on the market a year ago. They can now save twice as much electricity as could be saved five years ago, at only a third of the real cost. That is a sixfold expansion in cost-effective potential in five years and almost a 30-fold expansion in ten years.
Lovins felt this was just as dynamic an area of technology as computers or consumer electronics, and maybe even more so. He documented different efficiency technologies in lighting, heating, machines etc, illustrating that if you replace a 75-watt bulb with a 14-watt bulb, you are sending 61 unused watts, or negawatts, back to Hydro for it to sell to someone else without having to make it all over again. It is cheaper for Hydro and society to use these bulbs than to operate a plant, even if the building of it costs nothing. That could eliminate about five 1,000-megawatt stations in Canada. With other improvements, there is about a 90% savings potential in lighting all told.
Lovins suggests that commercial lighting is probably the biggest gold mine in the whole economy. He calculates that if the accumulated energy savings he referred to were added up, the utility and the people of Ontario could save roughly 75% of the electricity currently being produced in the province. I do not know if any of you have ever seen Amory Lovins do his suitcase show, but he has this suitcase full of lightbulbs and showerheads and other energy-efficient tools. As he holds up each one, he describes how many megawatts would be saved by everybody using this particular technology. It is quite dramatic.
Today in the United States, many large corporations such as Polaroid and Johnson and Johnson are pursuing energy efficiency with dramatic savings. High-efficiency lighting, heating and cooling systems are saving the Boston Globe $350,000 a year. The municipal utility in Osage, Iowa, saved so much money helping citizens weatherize houses that it repaid all its debts, had five rate cuts in five years and kept more than $1,000 per household per year in the local economy.
Also in the US, a growing number of states have changed their regulations to allow utilities to keep part of the money in their efficiency programs. That would help soften the municipalities' resistance in the case of Ontario. Now utilities in the States are saying that it is the most profitable money they make. In the next five years, New England utilities will spend $1 billion to help their customers become more energy-efficient. The utilities themselves will save even more money because they will not have to build expensive new plants.
A similar revolution is occurring in California, where utilities plan to meet three quarters of their new energy demand in the 1990s through customer efficiency and renewables. Also in California, as well as in other areas, it has to be proven that there is no other way to produce the energy services required before new supply can be built.
This of course is also good news for the abatement of acid rain and global warming and for the prevention of yet more highly radioactive wastes, for which there is no safe solution. Lovins describes how, over its life, one compact fluorescent bulb will prevent putting into the air from coal plants about a ton of CO2 and eight kilos of sulphur dioxide and various other polluting substances. What is exciting about all of this is that these advancements, while they were predicted years ago, have exceeded all expectations.
The results are that proposed major dams in Maine and Colorado have recently been cancelled because it was shown that alternatives were less costly. A debate is currently being waged in New York state about whether or not it should import Quebec, ie, James Bay, electricity or whether it should spend the money on its own efficiency improvements. With the abovementioned examples of remarkable progress, does it not seem the height of mismanagement and waste to continue along the nuclear electricity path with the aggressive attempts by the Canadian nuclear establishment in Saskatoon and New Brunswick to impose these Candu reactors as economic development?
Of course, Ontario continues to have severe problems with both its aging and its new nuclear reactors, and that will be long in the future despite recent pronouncements on limiting expansion. We from CCNR recommend that any money for the nuclear industry should go into solving the nuclear waste problems and learning about decommissioning reactors. You can understand why sophisticated scientists and environmentalists become a little bit cynical about politics when we have known so much of this information for years.
I would like to address education and culture, because I think they are crucial to this discussion. Environmentalists have played and will continue to play an especially important role as a source of conceptual and policy leadership, of education and consciousness-raising and of practical innovation in bringing these issues to the public sphere. Today the role of education and the media is crucial to promoting these positive alternatives. Mindsets and behaviour must change, and you have heard from people who really do not want this change. There are still powerful roadblocks, and we need to deal with them.
No doubt you have all seen the TV and magazine ads promoting nuclear power, an expensive media campaign to persuade people that it is safe and non-polluting. The image of the grandfather and the little girl is quite misleading. No doubt you are also aware of the massive pro-nuclear educational campaigns and programs by Ontario Hydro in the schools, in which they regularly take busloads of students to Pickering and Chalk River. Similar programs exist in the schools in Saskatchewan and New Brunswick. The environmental publication Green Teacher carried a revealing article on this topic recently, and I would urge you to have a good look at it.
The Chair: Ms Goldin Rosenberg, we have one minute left in which to wrap up, please.
Ms Goldin Rosenberg: Okay. I would also urge this committee to recommend that Ontario Hydro stop promoting nuclear energy as the best solution to meeting the province's energy needs, and use these resources to stimulate education and training for efficiency alternatives instead.
I will close with commonsense advice for energy policymakers offered by Dr Ursula Franklin at the conference. She said: "As technological society's currency, energy is the wherewithal to do things. And if we think of energy as money, then we know why we say: `Don't waste it. Spend it intelligently. Don't fall for the schemes of con men. Don't buy on credit if you don't know what you are doing. And most of all, don't leave bad debts.' These should be the hallmarks of a sane energy policy."
The Chair: Ms Goldin Rosenberg, we thank you and the Canadian Coalition for Nuclear Responsibility for your interest and your participation in these proceedings.
The Chair: Before we commence with the next presentation, I want to introduce to you, sitting in our audience in this committee room today, a delegation from Korea. It is a delegation visiting this assembly, the Legislative Assembly of Ontario.
There are 41 councilmen from Seoul and the surrounding cities. These parliamentarians were elected in a general election in 1991, the first election for a regional government in approximately 30 years. In their neophyte stage, the local autonomous governments of Korea are seeking operational information and skills so that these councils can operate more effectively.
The visit of these people to Queen's Park is part of a curriculum for a graduate program to train councilmen. The program is offered by the graduate school of industrial management at Chung-Ang University. The program is led by Dr Yun-Won Hwang, director of the local councilmen training program for the department of public administration at Chung-Ang University. Dr Hwang is accompanied, I am advised, by an associate professor.
These gentlemen are obviously very eager to learn about the British-Canadian parliamentary system and to meet parliamentarians. I welcome all of you on behalf of the committee and on behalf of all of the Legislature. Please let me explain to you who we have here.
This is an all-party committee. On your right is Dalton McGuinty, who is a member of the provincial Parliament. He is the opposition critic for Energy and is participating in these hearings as an MPP and as a critic. Along with two others, he represents his party, the Liberal Party.
Next is Leo Jordan, who is the opposition critic for the Progressive Conservative Party, which is currently the third party in the provincial Legislature. He is accompanied by his colleague Mr Arnott, who is, along with a few of the other people here, a first-time member of this Legislative Assembly.
With Mr McGuinty as well is Sean Conway, who is a long-time member of the Legislative Assembly. In previous governments he had been a cabinet minister in several portfolios, and he is currently active in the front benches of the opposition. He also has an entitlement to a pension that most people would give their left arm for, as a result of his long service in the provincial Legislature.
The balance of people sitting at these tables are from the government benches. Every single one of them is a first-time member of the Legislative Assembly, elected in the general election in 1990 from a variety of backgrounds, as are the opposition members. Among them is Bob Huget, the parliamentary assistant to the Minister of Energy and also an MPP in his own right. I am a member of the Legislative Assembly -- with not quite as many years of service as Mr Conway, but then again I am not as old as he is -- serving as Chair of the committee.
Then we have Mr Yeager, who works for the Legislative Assembly, and he is one of the research staff we have working for the Parliament serving all parties; the clerk of the committee, who works with the clerk's office and once again works for all of the Legislative Assembly, and Pat Girouard, who works with Hansard, which prepares the official transcripts. Seated at the console conducting the electronics of all this is another Hansard staff person.
We are about to hear a submission from representatives of the Energy and Chemical Workers Union, a labour union which represents workers in the energy production areas, among other places. We are discussing Bill 118, Power Corporation Act amendments which will, according to some members of the Legislative Assembly, make significant changes to the operation of Ontario Hydro, which currently has an interesting and unique quasi-monopoly on energy production in the province.
Seated in the audience is someone we have just heard from, Dorothy Goldin Rosenberg, who represents a lobby group, an activist group in the province, the Canadian Coalition for Nuclear Responsibility, and as well Larry Solomon, who is the research coordinator for Energy Probe, who will be making a submission immediately after the gentlemen from the Energy and Chemical Workers Union.
I say to all of you, welcome.
ENERGY AND CHEMICAL WORKERS UNION, CONSUMERS' GAS WORKERS COUNCIL
The Chair: The next participants are from the Energy and Chemical Workers Union, Consumers' Gas Workers Council. There are three persons making a presentation on its behalf. Please come forward, have a seat and tell us who you are. We have 20 minutes. If you leave us 10 minutes at the end, we will have time for some questions and dialogue, and if you leave us 15, we will have time for that many more questions and dialogue.
Mr Moffat: That just might happen too.
Mr Lapointe: Good morning. My name is Everette Lapointe. I am president of the Energy and Chemical Workers Union, Local 001. We are here this morning to appear before the committee and represent the members of the unionized workers at Consumers' Gas. With me is Dave Moffat, the national rep for our locals at Consumers' Gas. He is with the Energy and Chemical Workers Union. Also with me is Ed Currie, the vice-president of our local.
The number of workers in our group is around 1,700. We perform work in all phases of gas distribution, including new construction, service and maintenance of existing equipment and clerical support systems such as billing, customer service and meter reading. We represent workers in the greater Toronto area, north to Georgian Bay, Ottawa in the east and the Niagara region in the west.
The Energy and Chemical Workers Union represents workers in various industries across Canada, including oil refineries, petrochemical and natural gas distribution. Our policy in representing workers in the energy field is to take a leadership position in energy conservation and the effective use of energy while securing the future of our members.
The proposed amendments to the Power Corporation Act could have a drastic impact on our members through the expected expansion of the gas distribution industry. The abundance of supplies of natural gas is presently underutilized because the option of having a gas supply is not available to enough homes and businesses. Therefore, the environmental benefits and cost savings are not being realized.
Depending, of course, on how Ontario Hydro uses its fuel substitution resources, we feel there is a great potential for a more cost-efficient and environmentally sound energy policy in the province. As the cleanest-burning fossil fuel, natural gas can and should play a major role in improving the environment. When substituted for other, more polluting energy sources, it can minimize some of our most serious environmental problems such as urban smog, acid rain and global warming.
Apart from the direct price advantage of natural gas, which would offer substantial savings, the increased utilization of current gas distribution facilities should also result in a long-term cost saving to the public. Another short-term impact of fuel substitution is the encouragement this opportunity gives energy users to update their equipment. The conversion from older and less efficient equipment will result in less energy being expended to achieve the same result.
We would also hope that a new broader direction in energy policy would create a growth market for developing more energy-efficient equipment. Ideally this would allow the province to take a leadership role in developing the offshoot industries and would provide the potential for job creation.
As you may have gathered from my remarks, the unionized workers of Consumers' Gas are in favour of the amendments as proposed in Bill 118. We expect that with the potential growth in our industry, the workers we represent will be faced with new challenges. These are challenges which we are prepared to meet. Current collective-agreement language will allow us to adapt the workforce to these requirements, and we are open and willing to discuss arrangements that may be necessary to meet any new demands. Thank you.
Mr Huget: Thank you, gentlemen, for your presentation. I would also like to welcome the delegation from Korea and wish you an enjoyable and pleasant visit with the Ontario Legislature and in Ontario.
Gentlemen, the nuclear industry when it appears points to jobs and the economic benefits of having that industry in Ontario and the obvious investment spinoffs and economic spinoffs to that industry. I am wondering, in your view, are there opportunities for investment, for research and development and for high-quality jobs in your industry?
Mr Moffat: I will respond to that, if I may. Currently we represent 1,700 workers, and under the current gas distribution systems in the regions that we have identified we have what we would identify as quality jobs, and that is maintaining the current plant and facilities that are in place. Any expansion we anticipate would generate a broader number for that servicing.
As far as research and development is concerned, in the past in Ontario -- it is not common all over the world, the concentration of hydro power -- currently items in the household are serviced, or even communities are serviced, anticipating only distribution of hydro in some places. We feel that having the choice will create an opportunity for expansion and jobs, in the simple respect that an example they may use is that new buildings rough in wiring for electric stoves, while there is an energy alternative that some say works as well or better and certainly is more efficient in displacement of energy. There is no opportunity to rough in gas connectors for stoves in a house. For a simple thing like that, the technology is available. Whether Ontario takes the initiative to develop the sort of manufacturing industries needed in those fields is again up to the current government. We anticipate they will.
Mr Huget: If I understand you correctly, you are saying the building code mandates that a new construction must be wired for an electric stove and an electric clothes dryer and you are saying that should be more flexible?
Mr Moffat: We have no question that should be more flexible. We are representing the workers, mind you, and actually the two people who are with me work as service technicians. There is a viable option to an electric dryer and electric stove. Most people are aware that a gas stove is a viable option, because most of the fine chefs in the province still prefer to use gas in cooking -- not to do the commercial for it; it is just a reality. But currently if you were to buy a new house, not only would you have to buy the gas appliance but you would have to pay for the roughing in of the connectors. If you were to buy an electric appliance, you have the advantage that the builder is mandated to rough in a hydro connection.
The Chair: Mr Wilson, briefly, please.
Mr G. Wilson: In some of the hearings we have heard concerns about the safety of gas. You people work with it. I would just like to hear your comments about that. How safe is gas?
Mr Moffat: I imagine the gas associations will be making presentations. I thought that question was kind of dealt with historically. Currently there is already the plant service for gas. The hazardous side of it has been, we anticipate, dealt with. It is a very safe distribution system of energy. If you were to ask us as workers, we think the production of natural gas is a much safer process than building a nuclear generating site that would have to dispose of the waste materials after. By the way, I have worked as a representative for the workers at Atomic Energy of Canada in my career, and I am somewhat aware of the difficulties they have disposing of nuclear-contaminated tools, for example. Gas distribution, in our opinion, would be much safer as an alternative.
Mr McGuinty: Thank you for coming in. I think it is fair to say, and you acknowledge this, that your union would benefit if Bill 118 went ahead in its present form. Some of the people who have been coming before us are saying that the gas utilities should have some kind of obligation imposed on them to share in the subsidization of fuel switching. If I am heating my house electrically and I want to switch to gas, Consumers' Gas in my area should pay part of the cost for me to switch as well as Ontario Hydro. How do you respond to that?
Mr Moffat: Without having the backup research figures, I would anticipate that would probably be fair, if private ownership of Consumers' Gas is, accepted as standard. Ontario currently recognizes that part of the cost-benefit program analyses how long it is going to take to pay back for implanting services. The industry, of course, would argue that subsidies should cover a significant portion of that. Where it falls down is something for future discussions, I would anticipate, as to who consumes the most. But what we are more concerned with is the automatic advantage to Hydro. Hydro has the automatic advantage in its distribution system because it provides lighting. It virtually eliminates in some communities an opportunity to implant services for natural gas distribution.
Mr McGuinty: Let's assume, because I am still not convinced that it is otherwise, if I am not able to switch to natural gas because it is not available in my community, I have to pay for somebody in the Toronto area who is on electricity who has not been motivated by market forces today to switch to natural gas. I am up in Sioux Lookout. My rates are going to go up. That is what the public utilities commission people are telling us. My rates are going to go up in order to have somebody down here switch to natural gas.
Mr Moffat: Are you suggesting they mean other gas consumers?
Mr McGuinty: Electricity consumers.
Mr Moffat: Electricity consumers' rates would go up?
Mr McGuinty: Yes, as the public utilities commission people are telling me. Do you think that is fair?
Mr Moffat: I cannot agree to it offhand. I would have to see statistics. I cannot imagine why they would anticipate that. It is all part of a bigger picture of planning. There is such a variety of hydro developments. I imagine there are some people in this room who are more expert than I who would argue whether it is fair to have an electricity project built on nuclear, that being the most cost-efficient compared to a cogeneration facility that would create hydro power at much lesser cost. Those sort of things we anticipate the committee and other parts of government will be looking into as well. So in fact, in the long run in Sioux Lookout their hydro may be less if supported by cogeneration of a byproduct of a steam production plant, a pulp and paper mill, for example, that uses a lot of steam. If they were allowed to generate electricity as a byproduct, Sioux Lookout, as a consumer for lights, may not have to pay for the nuclear development or waste disposal.
Mr McGuinty: I take it that you are in the same position I am. We really do not know the full implications, the full consequences, of implementing a fuel substitution program in terms of the effects it is going to have on existing ratepayers.
Mr Moffat: I do not know what the effects are going to be on existing ratepayers in respect to no longer subsidizing hydro. I think everybody is up in the air in respect to that. Continuing on as we are, probably, as you do not know where it is going to come out.
Mr Jordan: I too would like to welcome the delegation from Korea. I am looking forward to having lunch with you later.
I thank you people for coming and giving your presentation on behalf of your workers. You represent 1,700 workers and you have predicted this will no doubt increase considerably as you expand to meet the fuel switching, which has already been more or less implemented in the new demand-supply plan. We can assume that it is going forward in that area.
I am wondering two things. First of all, do we need incentives or do you feel the marketplace will do a balance on the fuel switching without incentives from either the gas company or Ontario Hydro, and as your workers increase in numbers, do you see a corresponding layoff at Ontario Hydro?
Mr Moffat: To the second question first, no. The natural gas industry in Ontario is regulated through what services it is required to provide and the gas distribution companies through their organizations provide, in the bigger picture, much more extensive services than the hydro distributors currently do, Ontario Hydro or any of the municipalities in respect to hydro. All the gas distribution companies in the province actually have systems in place to service the equipment that is on the end of their line. Very few, if any, of the hydro facilities do. In fact we do not see it reducing the hydro opportunities.
Mr Jordan: What about Hydro staff? Will they correspondingly be laid off?
Mr Moffat: Not in our anticipation. No, we do not see a corresponding layoff in Hydro staff. The programs Hydro is currently on do not do what the gas distribution companies do in respect to servicing. We have in the Metro area approximately 250 high-quality jobs, if we could refer to them as that, in respect to servicing heating appliances. Hydro does not do that.
Mr Jordan: No, but I am saying that because we will not be expanding or picking up the heating load, then what you are saying is that our labour cost is going to stay the same because we have to go out for the lights and the connection anyhow.
Mr Moffat: No, I am anticipating what you were talking about as meeting the future requirements. What I anticipated was that you were meeting future requirements with construction of new facility.
Mr Jordan: No, I am saying that your workers are going to increase from 1,700 and your consumption is correspondingly going to increase. Ours is going to decrease. That is the purpose of it. Naturally you would expect that there should be a cutback in the personnel required, would there not?
Mr Moffat: Maybe you had better ask Hydro that and the gas employers. I do not anticipate that it would require a cutback compared to the amount of top-end jobs it would create. It would be disproportionate. If the gas distribution companies had their opportunities to expand and continued their obligations they currently have in relation to the regulation that affects them in respect to safety and servicing to the nth degree, then I cannot anticipate the cutbacks you suggest.
Mr Jordan: And the second part, can the marketplace handle the switching without incentive?
Mr Moffat: Not in all regions, no. Currently there is almost a constant switch as it is with the marketplace handling it. Some communities just do not have the opportunity because the costs are so prohibitive.
The Chair: Mr Lapointe, I want to thank you and your colleagues, Mr Currie and Mr Moffat, for your interest in the matter and the time you have taken to be here today and speak with us. We appreciate that involvement and we thank you. Take care, gentlemen.
The Chair: The next participant, and the last one for the morning, is Energy Probe spokesperson Larry Solomon. Please, sir, be seated. There has been material distributed on your behalf which will form part of the record. Tell us what you will.
Mr Conway: Having read the Globe and Mail, Larry, we can just all take it as read. You must feel particularly good today.
Mr Solomon: I have no quarrels with the Globe editorial.
I am grateful for the opportunity to comment on the proposed amendments to the Power Corporation Act because this act has had a profound impact on the Ontario economy. Each of you should have a copy of a study entitled Cross Border Electricity Rates: Ontario's Loss of Competitiveness. I would like to ask you to turn to the first graph, which is on page 4. This graph compares Toronto electricity rates to the US average.
Until 1978, the US and Ontario had very similar electricity structures, both being monopolized sectors. Some parts of the US, those with abundant hydro-electricity, had lower-cost electricity than Ontario, but most US utilities charged more for their power than Ontario Hydro because most did not have significant water resources. Overall, the US charged much more for power than Ontario Hydro did.
In 1978, the US federal government under the Carter administration passed anti-monopoly legislation that affected the equivalents to all of the state power corporation acts, that is, in all the 50 US states. The monopoly utilities challenged this legislation in the courts and eventually lost in the mid-1980s when the Supreme Court in the US ruled that the federal anti-monopoly legislation was constitutional. As a result, the various state equivalents to the Power Corporation Act had to be amended to allow competition.
The graph that we are looking at shows the result. With competition now allowed, vast amounts of cheap and clean power began to flood the US market. Coal and nuclear power expansion from the utilities was stopped dead in its tracks. Replacing these expensive and environmentally damaging technologies were safer and more economic technologies, renewable technologies such as windmills, but, most of all, high-efficiency gas technologies. In the US, the economy was ahead and the environment was ahead.
Let's look at the graph to see what happened in Ontario over that same period, during which Ontario's Power Corporation Act retained all of Hydro's monopoly powers. As you can see, Hydro's rates increased dramatically. They will need to continue their dramatic increase if the utility is to avoid taxpayer bailouts. Bill 118, if passed as is, will only speed up the utility's decline.
The effect of Bill 118 is to further distort the Ontario economy by having Hydro ratepayers pay for gas services, conservation services and other energy services. Bill 118 further politicizes Ontario Hydro, which can only make Hydro less competitive. Hydro should be accountable and subject to the laws of the land, the same as any other company. The problem in fact is that Hydro has been less accountable precisely because it has been politicized.
Rather than leading Hydro further from economic reality through passage of Bill 118, I propose that Bill 118 be amended to promote true accountability and environmental protection by removing Ontario Hydro's monopoly powers.
Ontario Hydro should lose its powers of expropriation of private property under section 23 and sections 32 to 37 which enable it to acquire a competitor's generating station, transmission lines, as well as lands and waters.
Ontario Hydro should lose its right to acquire municipal property without the assent of electors by having section 38 repealed.
Ontario Hydro should lose the government guarantee of Hydro bonds by having section 53 repealed.
Ontario Hydro should lose its absolute regulatory powers over all matters electrical, from private generating stations to toasters, under section 93 of the act.
Ontario Hydro should lose its power to determine utility borrowing by municipalities under section 94 of the Power Corporation Act.
Ontario Hydro should lose the power to set rates by municipal utilities, including the few private municipal utilities still left in the province, by having section 95 repealed.
Ontario Hydro, in short, should lose all of the extraordinary powers which have so ill served the economy and the environment of this province.
Thank you. I am ready for any questions.
Mr Conway: Not since Comrade Gorbachev painted his picture of perestroika have I heard such a fascinating set of proposals. Of course, I have followed your career for some time. As I say, now that you have brought the Globe and Mail on side, who are we, as caterwauling legislators, to do anything but line up and assent to this radicalism? But you certainly, I must say, make a case that a number of other people have been making, though with not nearly the power and effect of your concise argument here this morning.
Let me just ask you a question. Ontario Hydro became so powerful, I would argue, in the early days because Adam Beck had two things he could manipulate, to his everlasting political credit. One was the fact that the coal supply, from the private market, which fuelled a lot of the energy sector at the turn of the century -- the coal cartel in Pennsylvania turned off much of the tap and left the province in a very serious situation. At the same time, people started to look to the power at Niagara and found, my God, it was in the hands of William Mackenzie and Frederic Nicholls and Henry Pellatt, not exactly the people's concept of public-spirited philanthropists at the time. That combination of the private sector controlling on the one hand the coal supply and then a small group of Toronto plutocrats controlling the power of Niagara made unstoppable Beck's pitch for public power that gave rise to the Hydro that you complained about.
My question then is for those who argue the case of privatization, and at a certain level it is a very attractive case. The current government, with this bill and policy that informs it, has, I would argue, begun a significant move in the direction of privatization. But what do you say about the argument that would hold that this is so vital? To turn this system over to private interests, even though they might be regulated, would put so much of the province in a position of potential jeopardy that the very politics that drove Beck to the public power movement that he headed would return, only with greater vengeance.
Mr Solomon: First, the situation at the turn of the century is one that in many ways I think had a lot to commend itself, the situation that led to the rise of Ontario Hydro. Ontario Hydro was actually set up, not to generate power, but to bring Niagara power to Toronto and to 11 other municipalities. At the time, the coal barons in Ontario, the Pellatts you referred to, were coal generators. Ontario Hydro was not envisaged by our forefathers as being a monopoly generator; Ontario Hydro was envisaged as being a distributor. Really, it was a co-op at the time.
Mr Conway: That is correct.
Mr Solomon: I think there was some fundamental wisdom in that initial system. I think we would be well served to go back to such an initial system in which Hydro continued to be a transmitter of electricity for the province. Transmission is probably a natural monopoly. That is not where the main problems lie. Ontario Hydro could continue to retain that role, and Ontario Hydro could go back to the role that was initially set out for itself at the turn of the century by delivering other people's power for it. Public producers or private producers could all compete.
Mr Conway: But it was these scoundrels who controlled the private power that made that possible. These buccaneers were going to hold these poor municipalities to ransom. That is what led to the natural expansion of the Hydro mandate. My worry is that a lot of things have changed, and if I wanted to buy your argument, and a part of me does, what protection do I have against the thought that, my God, Conrad Black and Robert Maxwell or someone of that crowd would somehow get control of the new means of power production? Though I control the distribution, I would be distributing something at a very high price, and I might not get it under circumstances that would be very favourable either.
Mr Solomon: Here is what happened at the turn of the century. We went from a situation of private monopolies to public monopolies. I do not think it would be desirable to go back to private monopolies, but I do think it would be desirable to go to a competitive system. The electricity generation system is naturally competitive. There is no way, given existing technologies and the technologies we have had over the last century, that the sector could be monopolized without state intervention to assist that monopoly.
There is a reason that the Power Corporation Act includes all these provisions to keep Ontario Hydro in control, because without that help from you gentlemen, we would have a free-wheeling system in this province that would deliver electricity as reliably as farmers deliver food. We do not have state control. We do not have an Ontario food board making sure that our eggs, milk and meat are on the table, yet no one worries about the security of supply of our agricultural produce. I submit to you that if we had deregulation in the electricity sector, the way we have deregulation in many parts of the agricultural business, we would not have security of supply problems.
Mr Conway: I would like to take you to the Ontario Milk Marketing Board some day. But I would like Mr McGuinty to have a shot.
Mr McGuinty: Mr Solomon, thanks for appearing.
I think it was Mark Twain who said that there were three kinds of lies: lies, damned lies and statistics. I am looking at your charts here. I do not have the argument, but I gather Ontario Hydro has responded to this and it has said this does not represent reality. I think there was an article to that effect in the Globe and Mail some time ago. Do you recall that?
Mr Solomon: I have not seen any Hydro response. I understand that Hydro is preparing a response to this study and that it will be available today. I also understand that Ontario Hydro's criticism of this study is that we are comparing Ontario to US averages and that it is meaningless to look at average prices across the board. I do not really understand why it is meaningless, but the study, I think, would be every bit as dramatic if we compared Toronto with various municipalities in the United States.
Ontario Hydro, when it compares rates, has a habit of cherry-picking US cities that it compares Toronto to. The cities that Ontario Hydro invariably selects are very high cost jurisdictions. It does not look at Seattle which has prices that are much lower than we see in Canada. It picks utilities in the US that got into trouble, usually because they went into nuclear power. Ontario Hydro then points to them as justification for maintaining the status quo here in Ontario.
Mr McGuinty: There was a time when Ontario Hydro was telling me that the best thing I could possibly do in relation to electricity was to use it, and now the pendulum has swung the other way. Ontario Hydro is apparently telling me that the best thing I can do now is to save it, and the best way they can think of saving it is through expenditures on its part.
I am wondering why now, as a ratepayer, I should not be taking comfort in this new approach, and why in particular I should not be taking comfort in knowing that at least government now is going to hold Ontario Hydro in check. I can always contact my representative at Queen's Park if I have a problem with Ontario Hydro, whereas in the past I had to deal with my public utility commission, some distant board of directors with Ontario Hydro.
Mr Solomon: Ontario Hydro's conservation programs were scrutinized in great detail by the Ontario Energy Board, and what the Ontario Energy Board found after a detailed analysis of several of Ontario Hydro's conservation programs was that they were uneconomic. This is testimony that we brought before the Ontario Energy Board.
The effect of it is that the $6 billion Ontario Hydro is planning to spend on conservation will largely backfire. In some instances it will actually lead to increased electricity consumption, but what it certainly will do is raise rates for ratepayers, so you will get no comfort in the scenario you drew from the conservation programs of Ontario Hydro.
I do not think we need lower electricity rates if that means paying for them out of another pocket, paying out of taxes, or if that means letting the system degrade. A cap on electricity rates, which the government has proposed, would certainly undermine the electricity sector and therefore the province, so there is no reason to put any faith in political solutions to economic problems. It is an economic problem we have with the electricity business that should be treated like any other industrial sector, and the role of government in trying to direct the resources of the electricity sector will not serve us well in terms of rates or in terms of the environment.
Mr Jordan: It is nice to meet you and have you make your presentation this morning. I wonder, is it Ontario Hydro that is really in question here or is it the use of nuclear energy for supply? What is really causing this Bill 118?
Mr Solomon: I do not know what the motivation is behind bringing in Bill 118, but I submit that nuclear power is only a symptom of the problem that we have with Ontario Hydro's structure. Ontario Hydro favoured big coal before it favoured big nuclear, and at some point in the future it may again favour a technology that is not really the people's technology. When you let the markets decide and consumers decide what the electricity source of choice is, what they tend to choose is that which is most economic, and also the ones that have the fewest environmental externalities. Those happen to be the small-scale technologies that the private sector around the world is choosing whenever they have a chance to operate in a competitive environment. By private sector, I am including large companies like Texaco that are getting involved in a very large way in other countries, and I am also including farmers who are often the main beneficiaries of deregulated electricity systems.
In the United Kingdom, for example, farmers are finding that they had land that previously had no value because it was on a knobby hill, difficult to cultivate. But suddenly, because there is a good, strong wind regime there, the farmers are able to develop the sites themselves, as they are sometimes doing, or selling the rights to entrepreneurs, who then put up windmills on those sites.
We are finding that farmers are benefiting that way. Farmers are also benefiting because often a product from farms is chicken manure and other forms of animal waste which are becoming a significant source of generation in various jurisdictions in the United States as well as in the United Kingdom.
There are many resources that are community based across this province, which we would be tapping into, creating jobs across the province and also empowering communities through a deregulated structure. The alternative we have had has centralized control in Toronto and it has not served any interest really, except Hydro's.
Mr Jordan: That brings me to my final part of the question. Did industry really come to Ontario because of the certainty of cost of the supply, and if it did, what is going to happen now? We already are getting this mix that you speak of into our transmission system. I personally am not aware of what guarantee of continuity of service is coming from these independent power producers and cogeneration and so on, but certainly they are being welcomed into the system at the present time. Industry has been getting very sceptical of certainty of supply and cost.
Mr Solomon: Like all of us, industry does not like uncertainties, and a restructuring of the electricity system in Ontario would lead to uncertainties. But the evidence is overwhelming. In the United States, virtually all the new expansion that has occurred since this new anti-monopoly legislation was passed has been from the independent power sector. The large utilities have been priced out of the business of building new major generating plants. They are building a few small peaking plants.
In the United Kingdom, there is no utility any more; the generators are anybody who decides to get into the business of generating electricity, and although the way the restructuring there was done was in many ways haphazard, unplanned, the Thatcher government went from one error to another, nevertheless the results have been robust and the expertise within the electricity system has been so strong in the United Kingdom that there have not been problems with reliability of supply. In fact, supply is much more reliable now than it had been before. I think there is the same expertise in Ontario. There are independent power producers --
Mr Jordan: That is not the purpose of Bill 118.
Mr Solomon: No, but you were concerned about industry needing comfort that there would be a reliable source of power. The evidence everywhere is that the independent sector provides very reliable power, and the industry would be very pleased to see Ontario Hydro's monopoly disappear because rates in Ontario are about twice as high as they would be in a deregulated environment.
Mr Jordan: Thank you very much.
Mr Huget: I would like to go to the monopoly issue, and I apologize for not being here for your presentation, but I would like to get your views on a private monopoly as compared to a public monopoly. I think there are some concerns, particularly from Britain. Lately I have heard one or two of their analysts showing some concern in terms of long-term reliability. While there is reliability now, they are very concerned about the state of electrical generating facilities in the future and whether or not there will be that consistent reliability. I would like your views.
Mr Solomon: Moving from public monopolies to private monopolies is not Energy Probe's purpose. In the United Kingdom there are no monopolies. Some companies have an inordinate market share right now because when the Thatcher government privatized the system, it tried to create a large enough entity to absorb the nuclear plants because Thatcher was a strong admirer of nuclear power. It turned out that the private sector, even in a large corporate entity, still refused to take nuclear power because nuclear power was simply not economic, even if the plants were given away for free. For that reason, the system the United Kingdom started off with was highly distorted.
Nevertheless, what is happening is extremely dynamic. The private companies who inherited the coal and oil plants are realizing that the coal plants are not economic and they are laying off capacity. Everyone realizes now that the major expansion program that helped drive the privatization in the United Kingdom was not necessary. Once the plants were in private hands they were able to operate at much higher capacity factors. That delayed the expansion program, so the expansion program went by the board. The existing coal plants are going by the board. They are being shelved prematurely, and replacing all this is a host of new power. Some of it is small-scale renewable wind power and biogas generators that I refer to, but most of it is high-efficiency natural gas generation.
Among the companies building in the United Kingdom are Texaco, but also Canadian companies are forced to go to the United Kingdom to build their plants because there is no market here in Ontario for them. Companies like Canadian Utilities do not have the same access to the Canadian economy that they do to the United Kingdom economy, so there is a great deal of new plant being built in the United Kingdom. In fact, there is more new building in the United Kingdom now than there has been at any time since the OPEC oil crisis.
The system is in a state of great change, and it shows the resiliency of the system. Nobody is experiencing blackouts, and in fact the private sector is expecting prices to drop because an electricity futures market has been established in the United Kingdom in the same way there is an oil futures market. Companies are preferring not to enter into long-term contracts for their future electricity needs because they expect electricity will be available on the spot market at lower prices.
There are people who are very concerned about what is going on in the United Kingdom, but it is not industry that is concerned, because industry is expecting prices to go down, and industry is seeing a huge amount of new capacity being built in the United Kingdom. It is wide open there. Finnish utilities, even state-owned utilities, are building in the United Kingdom. It is everyone from the chicken farmer to state monopolies from other countries taking advantage of the United Kingdom system, to Canadian companies, to American companies like Texaco.
Mr Huget: Would private industry build and operate a nuclear facility, given the costs today?
Mr Solomon: No, I do not believe that. In no area in the world in which market forces are allowed to play themselves out are nuclear plants being built. It is only in jurisdictions that have large central monopolies with a great deal of control.
Mr Conway: This is very interesting testimony. I have a question and a request as well. We have a really interesting set of graphs, but you were reading from some notes, Larry. Do we have a copy of that text? You went through a very interesting litany of things that should be done to the Power Corporation Act beyond Bill 118. I think I have heard you speak on that subject before. I would not mind getting a copy. We would have it in our transcript, but if you wanted to prepare and just send to the committee a version of what you read, you were going through so many stimulating and radical measures I really could hardly keep track. But I was interested.
Mr Solomon: I would be happy to provide you with that.
Mr Conway: I get your faxes all the time. Generally they are my wake-up call.
The Chair: Try something radical, Mr Conway. Be brief.
Mr Conway: It is hard to be brief about something this stimulating.
The Chair: Then be concise.
Mr Conway: He was saying, for example, things about Bill 118 that are at some variance with some of the other testimony. I thought I heard you say that some of the fuel switching and fuel substitution provisions in the Act and the policy that informs it are in fact going to drive rates up.
Mr Solomon: That is correct.
Mr Conway: Just flesh that out, because there are some --
The Chair: Just flesh that out.
Mr Solomon: It is going to cost Ontario ratepayers more to fund these programs than they will be saving on their electricity rates. As a result, everybody's rates will have to go up to keep Ontario Hydro solvent. This is one of the factors forcing rates up in the future, the conservation programs. They have not been much of a factor in the past because they have only just started. The conservation programs have not had a chance to work, if they are going to work. But the big money is coming down the pipe now, and based on the Ontario Energy Board's determination that these programs are not cost-effective, we are going to see rates increasing, largely or in part driven by these conservation programs.
Mr Conway: The minister himself has told us that with all of these multibillion-dollar demand management and conservation mechanisms he is going to see are in place, we are going to head in a different direction. How could he possibly be wrong?
Mr Solomon: Very often the advocates of these utility-driven conservation programs are comparing the new, higher rates they are going to have to some mythical, even higher rates we would have had anyway if we had not put these programs into place.
The Chair: We understand that is what the Liberals did with car insurance during the no-fault debate. Mr McGuinty.
Mr Conway: Thank you, Minister Kormos.
The Chair: No, like you I am an ex-minister, Mr Conway.
Mr Conway: My point exactly.
Mr McGuinty: Mr Solomon, one of the problems I and I am sure other members of this committee experience as well is that we have difficulties as generalists getting a handle, on some of the numbers that come before us and some of the projections that are made by experts in the field. I want you to comment please on the advisability of our accepting information from Hydro without question.
Mr Solomon: When you look at Ontario Hydro's track record, its information has not been reliable. I am not saying that there was any bad intent on Ontario Hydro's part, but Hydro does have an institutional mandate and it does want to see things work out the way it would like them to work out. They would have liked their nuclear plants to perform at high capacity. They would have liked electricity rates to drop. Just a few years ago, they were predicting that electricity rates would drop something like 15 per cent. Instead they have risen 15 per cent. Ontario Hydro is not a very good judge of itself. I would say most entities and most people are not very good at judging themselves. Usually some objective measure is required.
Mr McGuinty: Can you comment on Hydro's latest projection that it will be able to conserve, through a variety of programs, some 9,900 megawatts by the year 2010, I believe?
Mr Solomon: It was a subset of those programs that we analysed in great detail at the Ontario Energy Board hearings, and the determination quite strongly, and in fact in uncharacteristically strong language, from the Ontario Energy Board was that these programs do not make economic sense. The savings that Hydro projects are extremely optimistic.
The Chair: Any brief comments or questions by any other members of the committee?
Mr Conway: I will make one last one. I think it is something the committee is really going to want to think about, because in the last week we have heard from the chairman very substantial updates to the demand-supply plan, the bulk of the change being even greater conservation in demand management targets. What you are telling us is that almost a year ago now the energy board agreed with your submission that much of what Hydro was suggesting by way of gains in conservation was illusory.
Mr Solomon: That is correct.
The Chair: You may well put that to the minister or the chair when they are here. With that, Mr Solomon, I want to thank you very much. Obviously you have provoked some dialogue and thought here. It has been interesting. Your contribution has been a valuable one. We thank you and Energy Probe for your interest and work in this area and for your participation here today. I trust you will keep in touch. I have no doubt about it. Thank you, sir. Take care.
We are now recessed until 1:30, at which time we are going to try really hard to start promptly.
The committee recessed at 1219.
The committee resumed at 1330.
MARKHAM HYDRO ELECTRIC COMMISSION
The Chair: Good afternoon. It is 1:30 pm and this is when the Markham Hydro Electric Commission is scheduled to make its presentation. Mr Klopp is here, Mr Cleary is here, and we are going to commence.
Gentlemen, please be seated and tell us who you are. We have 20 minutes. Please try to keep your comments to less than the first 10 minutes so we have plenty of time for questions and conversation.
Mr Fabro: My name is Bob Fabro, general manager of Markham Hydro, and I am accompanied by Bill Burnett, our chairman. I am speaking on behalf of my commission and our customers.
The Markham Hydro Electric Commission was formed on January 1, 1979. It has grown from an approximate 19,000 customers in 1979 to 48,000 today and for a number of years during the 1980s was the fastest-growing utility in the province. During that period we moved from the 30th-largest utility in the province to the 13th largest.
We pride ourselves in being innovative, having pioneered onsite billing for electrical utilities; progressive by assuming a leadership role in municipal utility transformer station ownership, and efficient through a well-designed distribution and supervisory control and data acquisition system.
We are also proud of our unqualified support for and implementation of government and Ontario Hydro programs designed to promote the wise and efficient use of our product: electricity. We do, however, have serious concerns that these programs are being implemented in an atmosphere of confusion, sometimes panic, and often without sufficient research or information on the ultimate consequences.
It is our conviction that utilities in this province are properly postured and prepared to assume more responsibility and to play a more active role in the design and delivery of demand management programs because we recognize that our customers are the beneficiaries.
Markham Hydro is a member of the Municipal Electric Association and supports its position on the proposed revisions to the Power Corporation Act. We are comforted by the minister's promise to bring forward amendments to restrict policy directives in Bill 118 to those relative to Hydro's current mandate.
Like other utilities that have preceded us at these hearings, we are concerned that the power-at-cost principle continues to be eroded and we are of the opinion that our industry would be better served if Ontario Hydro's board of directors had greater utility representation.
Today we wish to focus on the proposed fuel-switching or fuel substitution amendments to the Power Corporation Act.
As a result of Ontario Hydro's demand-supply plan presently before the Environmental Assessment Board, it was assumed by interested groups within our industry that demand for electricity would outpace supply around the year 2000, if not before. Recently announced forecasts indicate that there could be 5,000 megawatts of excess capacity by the year 2000.
We understand that the present economic climate and the success of non-utility generation initiatives have significantly altered the outlook for the 1990s. The complexity and degree of assumptions in preparing a long-range forecast of this importance and magnitude are appreciated and understood by Markham Hydro, but Ontario Hydro's ability to reasonably predict future provincial electrical requirements must be seriously questioned. Merely three years after presenting a major planning document, significant revisions are being recommended. How can any major business and economic decisions be made in the climate of such uncertainty?
Recommendation 1: That Ontario Hydro and the provincial government develop a comprehensive and coordinated demand management strategy based on reliable forecasts before proceeding with high-impact conservation programs where the probability of success is not necessarily assured and the ramifications not understood.
Markham Hydro has approximately 3,200 all-electric customers, the majority residential, and 7,000 installed electric water heaters. Over the past two years we have witnessed an average of 300 customers per year, 4.5%, convert from electricity to gas. Markham Hydro is not unique in this regard, as other jurisdictions are experiencing customers who are fuel switching based on market-driven factors.
Recommendation 2: That the provincial government and Ontario Hydro recognize and acknowledge that customers are converting to gas for space and water heating because market conditions justify this action.
Ontario consumers will voluntarily continue to convert to gas in increasing numbers during the remainder of the decade as the price between electricity and gas widens. Recognizing this eventuality, the need to offer incentives to convert from electricity to gas must be questioned, particularly when the remaining electrical consumers will be saddled with these costs and there has been no demonstrated need to accelerate this activity in this manner.
Recommendation 3: That Ontario Hydro not offer incentives or subsidies to consumers to convert to gas for space and water heating.
The level-playing-field question must also be addressed. Ontario Hydro and the municipal utilities service customers throughout the province, whereas the gas utilities will service only those areas where they expect a reasonable return on their investment.
Markham Hydro does not oppose the expansion of gas facilities and service to areas of the province where it is not now available provided that the electrical consumer is not burdened with the cost of such expansion. We suggest that other options are available and should be explored if these projects are to be encouraged and made financially attractive.
Recommendation 4: That if the provincial government wishes to encourage gas utilities to expand to presently unserviced areas of the province, they should allow them, through changes to the Ontario Energy Board rate-setting process, a greater return on their investment than is now permitted for such expansion.
Markham Hydro and utilities in southern Ontario are generally summer-peaking utilities. Utilities in other parts of the province where gas is not always available have significant space and water heating loads. Recognizing that recommendation 4 would allow more customers in these areas to offer gas, we also support the implementation of a load-shifting program for utilities.
Recommendation 5: That Ontario Hydro and the Ministry of Energy provide technical and financial assistance to winter-peaking municipal utilities for the expressed purpose of reducing demand through the control of hot water heaters during on-peak hours.
Fuel substitution is a complex issue. We have attempted to highlight some of the obvious issues with which we are familiar. We have not attempted to deal with external issues such as the impact on the environment, the future supply and price of fossil fuels -- particularly gas -- efficiency standards or the impact on the manufacturing or construction industry in Ontario. We will defer these issues to those most capable of addressing them.
The fuel substitution amendments in the Power Corporation Act, as proposed in Bill 118, have significant ramifications to the province, the electrical industry and the customers we serve. Markham Hydro requests that you give serious consideration to our recommendations, which can be summarized as follows:
1. Ensure that a comprehensive, well-thought-through demand management program, based on reliable projections, is in place before committing this industry to fuel substitution.
2. Acknowledge that market forces are directing customers to convert from electricity to gas.
3. That voluntary fuel switching will continue to increase as electricity becomes more expensive relative to gas, and subsidies paid by electrical consumers are opposed by Markham Hydro.
4. That gas utilities be allowed a greater rate of return than at present to expand to presently unserviced areas.
5. That assistance be available to winter-peaking utilities for the purpose of introducing load-shifting programs at the local level.
The original 25-year demand-supply plan implied that blackouts were imminent unless decisions were made immediately. If you accept the recently announced Ontario Hydro projections, there is time to make reasoned, intelligent decisions without the threat of the lights going out, and we encourage this committee to reflect this in their recommendations.
I hope we have demonstrated, in limited time and with limited resources, that our proposals are not self-serving but genuinely interested in doing what is best for Ontario and its consumers, whether electrical or gas, whether they live in Markham or elsewhere.
I thank you for your time and I welcome any questions.
The Chair: Thank you, sir. Three minutes per caucus. Mr Jordan, please.
Mr Jordan: Thank you, gentlemen, for your presentation. I think it is a very fair assessment, especially for the fuel-switching aspect of Bill 118, and I would certainly stress, with you, the importance of letting the marketplace control the fuel switching. If we do get into a lag where we think we are in trouble in Hydro and we need assistance, then start revealing some incentive money, if necessary, and decide who should be doing it: the gas company, Hydro, joint effort or whatever. But to want to get into that right now -- and, as you have said, you experience a summer peak -- what would fuel switching do for you?
Mr Fabro: Fuel switching would obviously reduce our peak, but it would reduce it in the summer and Ontario Hydro is a winter-peaking utility. So it would not have significant impact on the peak for Ontario Hydro, which is the --
Mr Jordan: Which is the real problem.
Mr Fabro: Which is the real problem. That is why we went further and recommended that those utilities that are winter-peaking utilities be offered assistance beyond what is happening with fuel switching, to shave that peak, through financial and/or technical assistance by Ontario Hydro or the ministry.
Mr Jordan: It was pointed out this morning that, as the Gold Medallion home and the general all-electric homes with baseboard heat switch to a forced-air system, they are now real candidates for air-conditioning and that again this is going to affect the summer peak.
Mr Fabro: Correct.
Mr Jordan: Do you feel, due to the recession, there is that much time for Ontario Hydro to back up and replan how it is going to supply energy to
meet that peak in the next 10 years?
Mr Fabro: I have reviewed the recently revised plan that will be going before the Ontario Energy Board, I think next week. I had problems with accepting some of the figures in the original plan because I did not think they accurately reflected the situation, but of course I am not an expert in that. I have some reservations about the revised plan, but one thing is clear: There is time, at least until the year 2000, to review thoroughly before any major decisions are being made.
I am on a number of committees with the Municipal Electric Association that work with Ontario Hydro on some of its demand management programs. I have been constantly amazed at how quickly decisions were being made, not only in fuel substitution but in many areas, just because there was the threat, according to the original plan, that the lights were going to go out. That threat has been apparently removed. It gives everyone much more time, to my way of thinking, to sit back, take a deep breath and have a sober second look at where the heck we are going and to determine if the projections are accurate.
They have spent many years and many dollars on a significant demand plan, and three years after come out with major revisions and justify it by saying, "Well, times have changed." I am sure they have. They say, "Three years from now we're going to come out and adjust the plan again," and I encourage them to do that. But there are significant shifts within the total revision. Three years after the original plan was submitted, how can fossil fuel plants all of a sudden become a major part of a revised plan they were not part of three years ago? Has technology changed that much in three years?
Mr Huget: Thank you for your presentation. There are two things I wanted to touch on. One of them is the fuel-switching initiatives. I think there is always a relationship made to natural gas, but there are obviously other sources of energy. I would like your views on the complexity of that and what you will be doing around those issues, particularly what your municipal electrical commission could provide in terms of guidance when programs are developed for fuel substitution and what legitimate role you would see in that.
Mr Fabro: Fuel substitution occurring now, particularly at the residential level, is occurring because the gas company is going into unserviced areas and making gas available primarily to all the electric subdivisions installed or built many years ago.
The role we would play in fuel substitution would be, I think, a passive one. The gas company, if it wants to go into these areas and have our customers convert to gas, should be in the position to convince them that it is economically viable and let the individual consumer make that decision based on the economics. There is no doubt about it that the payback on converting from electricity to gas, even at today's prices, is three or four years, less for the residential consumer in some instances.
From an industrial and commercial standpoint, I think there is room for the gas company and the utility to work together for the benefit of the consumer. That is a little more complex than the residential side of it, but there is room for cooperation in that area.
Mr Huget: But currently you see a role for your commission and the utilities?
Mr Fabro: Yes.
Mr Huget: The last point is that Ontario Hydro has committed a fair amount of money to energy efficiency and conservation. I would like your views on that from your commission's perspective, and I would like to know if public awareness and education and the funding which would come for that from Hydro is effective or can be effective, and whatever suggestions you would have about that.
Mr Fabro: Our position is that, as indicated in the brief, we support demand management initiatives. We support them primarily because the customer will end up spending less for his electrical needs, and anything we can do to reduce his costs we are in favour of.
We support the demand management initiatives presently being assisted through some form of incentive by Ontario Hydro, if the program is thought through. It has introduced some very good programs. We have done a very good job of working with Ontario Hydro, I believe, in making our customers aware of them. There are some programs we have not supported as enthusiastically as we might because they were not thought through. We were not consulted as to what would be best for our customers. We felt that if we had more input both in the design and the method of delivery, they could have been more effective.
Our biggest concern is that if we are spending a dollar for a demand management program, are we five years from now going to say that we have anywhere close to a dollar in return? I think some programs will not stand the test of time because they were being rushed, and they were being rushed because of the threat of the lights going out and people not taking time. I put fuel substitution into that same category. I think fuel substitution has a role to play, but we are going into it without enough forethought and review of the consequences.
Mr Cleary: Gentlemen, thank you for your presentation and especially your recommendations. It is always helpful to the committee when an organization like yours recommends how it feels about what direction we should be going.
One thing you may not have touched on, though, and which I would like a little bit more information on is the present board of directors and the proposed board of directors. How do you feel about that?
Mr Fabro: I think our position would be similar to that of other utilities. One, we do not think the board should be expanded. Two, we think the board should operate independently, or more independently than is being proposed under Bill 118.
Of course, because we feel we know our customers and are close to our customers and are more aware of the industry, a bigger or larger representation of utility people would immeasurably assist the future direction of Ontario Hydro, because we would be in a position to understand the issues and make more informed decisions. That is not to say they have to be a preponderance, but more than the present two.
The Chair: Gentlemen, we have one very brief question from Mr McGuinty. You will not be kept here very long by him.
Mr McGuinty: Gentlemen, you mentioned something I found rather interesting. You are telling me that if we proceed with fuel substitution it will alleviate a winter peaking problem, but that the summer peaking problem remains nevertheless. Is that correct?
Mr Fabro: Ontario Hydro is a winter-peaking utility. It is our opinion that if in fact fuel substitution is going to have impact, it should have impact on those utilities that are winter-peaking to assist Ontario Hydro. Sure, fuel substitution will help utilities that are summer-peaking, but I think if you talk to Ontario Hydro, it is more concerned about the winter peak than the summer peak. But fuel substitution will also help in the summer for summer-peaking utilities.
The Chair: Thank you, gentlemen. I tell you on behalf of the committee that we appreciate your participation, your attendance this afternoon. We trust you will keep in touch with your own MPP, as well as the critics for the respective opposition parties and the parliamentary assistant and the ministry. Your participation is sincerely appreciated and is very important.
The Chair: The next participant is Pollution Probe. Please have a seat, tell us who you are and tell us what you want to tell us. Try to leave us 10 of your 20 minutes for questions and conversation, gentlemen.
Mr Gibbons: Thank you for giving us the opportunity to speak to you about Bill 118.
I am Jack Gibbons, an economist with the Canadian Institute for Environmental Law and Policy, before I joined the Canadian institute, I was a staff member of the Ontario Energy Board. I have with me Mr Bruce Lourie, who is helping Pollution Probe with its intervention at the Environmental Assessment Board with respect to Hydro's demand-supply plan.
We have prepared a brief on behalf of Pollution Probe which addresses the fuel-switching amendments in Bill 118. Very simply, it is our position that these amendments are in the public interest because they will allow Ontario Hydro to act in the manner that is consistent with the principles of sustainable development. Put another way, it will allow Ontario Hydro to act in a manner consistent with meeting our energy service needs at the lowest social cost.
There have been a number of criticisms of the fuel-switching amendments by municipal electric utilities. In August of this year, the Municipal Electric Association put out a position paper on Bill 118 which outlined its objections to the fuel-switching amendments. In our brief, we have attempted to address those criticisms. I am now open for questions.
Mr Cleary: As I asked the other witness just prior to your presentation, I take it you are satisfied with the present makeup of the Ontario Hydro board. Or are you in favour of the proposed change?
Mr Gibbons: We were curious as to what the rationale was for the increase in the number of board members but right now do not necessarily have a position either for or against the change.
Mr Jordan: Are you basically in favour of Bill 118?
Mr Gibbons: Yes.
Mr Jordan: All parts of it?
Mr Gibbons: I am here representing Pollution Probe, but I am not an employee of Pollution Probe. My submission just addresses the fuel-switching amendments. I really only have authority to speak on the fuel-switching amendments, which Pollution Probe is in favour of. I could express some personal opinions if you want to address them, but only as long as you realize I am giving you personal opinions on other areas of Bill 118.
Mr Jordan: They would be welcome, yes.
Mr Gibbons: Your question is, am I generally in favour of Bill 118?
Mr Jordan: Yes.
Mr Gibbons: Yes, I am generally in favour of it. It seems it will increase the accountability of Ontario Hydro to the government, which I think is a good idea.
Mr Jordan: And the other portions of the bill, relative to the board of directors not being accountable for its actions and the increase in the number on the board?
Mr Gibbons: As to the size of the board, I believe the original rationale for increasing the size of the board was that government was afraid the majority of the board of directors would not be sympathetic to their new government policies. There was a need to increase the size of the board to deal with that problem, and I certainly have sympathy with that objective. I think there have been a number of resignations since the bill was first introduced, so maybe that rationale is no longer there. Maybe you do not need to increase the size to ensure that Ontario Hydro operates in a manner consistent with government policy.
Mr Jordan: Do you not think a director serving on a board would exercise his responsibility independent of his political affiliations?
Mr Gibbons: I am sure he would. But I think the government is the shareholder, and I think shareholders have a right to make sure a board of directors is acting in a manner consistent with their objectives. The prime objective of Ontario Hydro should be to meet energy service needs at the lowest social cost. I certainly think the government has a right to make sure that the people who are on the board are sympathetic with that objective and will promote it.
Mr Jordan: Then what we are saying is that the Ontario Hydro board will be basically run by the Ministry of Energy, and that the directives will come from there to the board and they will be carried out, as the bill says, immediately.
Mr Gibbons: Yes, when there are directives. But I am sure these directives are going to be just broad public policy directives. It is not going to tell them who to buy staples from.
Mr Jordan: Oh no, but surely we are not going to pay a chief executive officer, the president, to decide where to buy staples?
Mr Gibbons: No, but somebody in Ontario Hydro will.
Mr Jordan: You are saying that the president has been downsized to just daily operations and policy and that directives will be done by the Ministry of Energy?
Mr Gibbons: Well, they would be broad directives. To implement those broad directives, you are going to have to make a lot of very difficult decisions. I do not expect that the Minister of Energy or the cabinet is going to try to figure out all the nuts-and-bolts decisions of how Ontario Hydro should operate, but purely, I would assume, general policy rules. I think that is quite appropriate.
Mr Jordan: Supposing, just a scenario, that a policy directive to the board from an engineering and administration assessment is not helpful for the utility, but the CEO says, "You carry it out."
Mr Gibbons: If the CEO does not believe in it, I think he should resign. If he does not believe the government policy directives are in the best interests of the corporation or the province, if he fundamentally disagrees with them as a matter of principle, I think he is honour bound to resign and state why.
Mr Jordan: What if his board does not think so?
Mr Gibbons: If he is bored, I guess he should resign too, if he wants some more interesting work elsewhere.
We had the same issue when Mr Diefenbaker was Prime Minister and James Coyne was the governor of the Bank of Canada. He did not want to undertake government policy and eventually was forced to resign. I think that is the way it should be, and I think now, in the Bank of Canada Act, it explicitly states that if the governor of the Bank of Canada is not willing to implement government policy, he should resign. I think it should be the same here.
Mr Jordan: So then, bottom-line, a fair assessment would be that the Minister of Energy is now the Ontario Hydro board and all major policy directives will come from there.
Mr Gibbons: It could. The minister may not give directives in all areas, but certainly they will have the opportunity to do so, and in a democratic society, that is appropriate for a crown corporation.
Mr Jordan: I believe you stated earlier there have been some resignations.
Mr Gibbons: I believe so.
Mr Jordan: Perhaps they would be related to the fact that a board member is no longer allowed to think and have an opinion and add input without being accountable. They say, "Just go ahead and approve the directive."
Mr Gibbons: I cannot speak for the board members who resigned and the reasons they resigned. That may be their opinion of why they are resigning. I am assured that directives will be sufficiently broad that there will be a tremendous opportunity for board members still to think and that there will still be a tremendous discretion for them.
Mr Jordan: I guess I am just having difficulty seeing the need for this type of dictatorial power, if you will, to a board. They now have the right, under the present act, to issue a policy statement to the board.
Mr Gibbons: Right.
Mr Jordan: I think any board of directors getting a policy statement from a government is certainly going to give it serious consideration and use all the expertise and knowledge it has and then report back to the government with the reasons it could not follow that policy statement. I do not see that they have that freedom any more.
Mr Gibbons: I grant you that it reduces their freedom, but again, I think that is appropriate. I remember that back in the days when Mr Davis was Premier people would often criticize Ontario Hydro, and the government of the day would say, "That's very well, but Ontario Hydro is independent and we can't do anything about it." So Mr Davis's government was able to absolve itself from responsibility for what Ontario Hydro was doing. I do not think that is appropriate, especially as I believe Mr Davis gave directions to the chairman of Ontario Hydro privately in his office over the phone. Here we are making it upfront. Nothing has really changed.
Mr Jordan: How do we assume that a Premier did these things?
Mr Gibbons: I have been around for a while. I know quite a few people in the energy business, I know people who were prominent in Mr Davis's government and I have been told this. I think it is common knowledge in the energy business that the Premier has always had direct access to the chairman.
Mr Jordan: Well, they would have communication, but I am talking about issuing a directive. Issuing a directive in the form of a statement is different from issuing a directive that sets the policy position for Ontario Hydro without question.
Mr Gibbons: I agree with you that there is no question there is a change.
Mr Jordan: Do you think it might have been a better move to have let the Ontario Energy Board have a little more power and let it be the governing body to assess and follow up on direction with Ontario Hydro, rather than having the Minister of Energy, who could change every four years or so, coming in with new positions for a corporation of that size?
Mr Gibbons: There are a number of ways I can respond to that. First of all, the Ontario Energy Board changes quite often too. The chair of the OEB has changed quite often. The composition of the board members of the OEB changes quite often. Yes, generally I believe they probably should have more authority over Ontario Hydro, but let's face it, the members of the Ontario Energy Board are appointed by the government too and are not elected representatives.
I really think ultimately the elected representatives are the people who should be accountable for what Ontario Hydro does, so I think these proposed amendments that make the government accountable for what Ontario Hydro does are appropriate. I also agree that the Ontario Energy Board's power should probably be broadened too, so that it can give a more thorough review to what Ontario Hydro does.
Mr Arnott: Gentlemen, I am sorry I did not hear your presentation but I have had a few moments to look over it. I just wanted to ask you if, in your own personal opinion, naturally, looking down the road five or 10 years, you can foresee any negative impact or consequences of Bill 118, or is it all going to be wonderful?
Mr Gibbons: That is very hard to say. Obviously the government now has the ability to give policy directives, and certainly it could give bad policy directives. If they give bad policy directives, bad things will happen. Similarly, they can give good policy directives and good things may happen.
Getting back into the fuel-switching amendments, I think this will permit Ontario Hydro to promote natural gas and other fuels when they are cheaper. That will lead to a very significant reduction in our energy costs and in environmental damage. I think that will provide great benefits for many years to come.
Mr Arnott: So giving the power and the authority to the Minister of Energy to issue binding policy directives may very well lead to consequences that are going to be negative.
Mr Gibbons: Theoretically, of course it could.
Mr Klopp: You have interesting remarks. You brought up that policy directives were probably given over the phone versus that this is going to make it very clear to any government that is elected that it cannot use, "We're not part of the program." You think that is a good thing, right?
Mr Gibbons: I do, yes.
Mr Klopp: So I cannot use the excuse, "Well, Ontario Hydro is over there," no matter what happens.
Mr Gibbons: Right.
Mr Klopp: One of the things that has bothered a lot of people including myself, and it has been batted around, is that every three or four years Ontario Hydro makes a projection and then it seems to be totally in the wrong phase. I remember back in the 1970s, in the glory days of electrical consumption, that we were going to need more megaprojects, that we were going to be blacked out in 1978. I believe it was not too many years later that they said, "Whoops, we made a mistake."
Mr Gibbons: Yes.
Mr Klopp: The point was made a few minutes ago by another person that it was not that long ago that they said, "We need to double the debt, we need 10 more nuclear plants," and now this is another version. Does that really bother you that much, that they have these changes?
Mr Gibbons: Sure it bothers me. They have made many errors in the past. As a result, we have greatly overbuilt the electrical generation and transmission capacity. We are using electricity where often other fuels could provide our needs at a much lower cost. Yes, I think that is a very serious problem. It is terrible what has happened. But I also think Hydro is now moving in the right direction. They have been scaling down their projections of how much electricity we are going to use. They have been saying, "We're going to buy more NUGs." They say, "We're going to do more energy efficiency." They say, "If this bill is passed, we're going to do a lot of fuel switching." So we are moving in the right direction now anyway.
Mr Klopp: How does this bill do that if this bill is passed?
Mr Gibbons: It permits fuel switching. Natural gas is so much cheaper than electricity. Look at space heating. If we just look at the financial costs -- forget the environmental costs -- the incremental cost of electricity for space heating is about six times that of natural gas. It is just crazy to use electricity for space heating, but in 1989 50% of the multiresidential units in this province used electricity for space heating. It is just absolutely crazy. Ontario Hydro has always said in the past: "We can't promote alternative fuels. The Power Corporation Act forbids us." Now, if this amendment is passed, they can have beautiful TV advertisements sponsored by Ontario Hydro and Consumers' Gas saying: "Look, gas is much cheaper than electricity for space heating, water heating, clothes drying and cooking. Also, it is much better for the environment; it is much cleaner. Please use natural gas whenever possible." That could have a profound impact on people's choices. It would cost very little for those TV ads, compared to the immense financial and environmental benefits. The possibilities are wonderful now for us very cost-effectively making some very rational decisions.
Mr Klopp: Very quickly, it does not say anywhere in this bill or amendments to this bill that the company should still not review every day that these things are really happening so that they do not need to build new nuclear or new any kind of plants, right?
Mr Gibbons: That is correct.
Mr Klopp: We are not stopping the continuous checking and double-checking of the figures.
Mr Gibbons: In no way.
Mr McGuinty: Thank you for attending, gentlemen. I have a couple of questions. First, if I had been sitting on this committee simply as a ratepayer I would be rather confused. I am wondering, who can look out for my interest best? Is it government? As a ratepayer, I do not really trust government these days.
Mr Klopp: Based on your experience?
Mr McGuinty: What about my public utility commission? They seem to be closest to me. What about those directors on the board? Maybe I will focus on this issue. I am concerned about the fact that government is telling my directors, the people who are in law accountable to me and who owe me a fiduciary responsibility -- they have to look out for my interests. That is what it means, Paul, to look out for my interests. I am wondering why you would advocate on behalf of that particular provision of Bill 118 which says that the directors will be able to shelter themselves from liability. They will be exempt from liability as long as they do as they are told. I am wondering how that could be in my interests as a ratepayer.
Mr Gibbons: Clearly it will only be in your interests as a ratepayer if the government gives them directions that are consistent with your interests as a ratepayer. The fundamental reason I support it is that I believe in the democratic process. I believe politicians should be responsible for our crown corporations.
I also think Ontario Hydro's mandate is much broader than just keeping your rates as low as possible. It also has to act in a way that is consistent with minimizing environmental costs. In the past Ontario Hydro's board of directors has said, "Our primary responsibility is to keep the rates low." As a result, they have built generating stations which have had very significant negative impacts on the environment. That may be good for keeping your rates low, but it is not good for future generations, which do not have any votes and do not pay bills at the moment. As a fundamental democratic principle I believe the Legislature, the people who are elected as government, should have the responsibility.
I also think that often the people from the Legislature have a better understanding of the public interest than utility people. Let's be quite frank: The board of directors of Ontario Hydro in the past has mainly been a rubber stamp for the senior management. They have not disciplined it. They have let the senior management do what it wanted and often the senior management has not done what was in the public interest. They have gone ahead with nuclear power. It has been incredibly expensive. I do not think that was in the public interest.
Ontario Hydro has promoted electric heating for years, which is the most expensive way to heat your home. That was not financially responsible. Why did they do it? Fundamentally, they wanted their empire to grow. They were engineers and they wanted to have a bigger empire. They wanted to produce electricity, but that was not responsible. It was not in the best interests of this province from an economic point of view or an environmental point of view. It was just in the best interests of this big entity called Ontario Hydro.
The Chair: That, gentlemen, is going to have to be your closing commentary for this afternoon. We appreciate your coming here and taking the time to participate in these hearings. The committee will undoubtedly read your submissions with great care, perhaps even follow up on whatever footnotes there are, read the references there. Thank you very much. Take care.
The Chair: The next participant is Jim Harris. Two pieces of written material that are filed form an exhibit. I am trusting that you will not read from those, but rather will highlight the issues and then give us time for questions.
Mr Harris: In fact, what I have to say does not touch on those papers. They are merely background papers.
The key factor in determining what source of energy we should use should be an economic one: looking at payback. The way Hydro currently operates is that it will build large plants for us, nuclear or fossil fuel, whatever, and amortize the cost of those over a 40-year period and charge us as consumers pennies per bill over a 40-year period. But if we look at how conservation works right now, if I as a user want to be environmentally responsible, I have to go out and buy a $25 compact fluorescent lightbulb and get my $5 back from Hydro and save energy that way.
We need to begin looking at conservation as a source of power for the whole system, because if I retrofit my house with energy-efficient lightbulbs, those kilowatt-hours go back into the grid for someone else to use. We need to begin thinking of an energy-efficient fridge as a power source, triple-glazed windows as a power source and energy-efficient lightbulbs as a power source.
Let's compare the economic payback. If I have to buy a $25 lightbulb out of my pocket, I want a payback of one year. If I am in business, I might want a payback of two years but at maximum five years. But on the supply side Hydro is willing to go out and amortize for 40 years and charge back.
Let's take one year versus 40. That favours supply 40 to 1 over conservation; there is an economic incentive for more supply. But if Hydro were to become a leasing utility and buy all these conservation appliances and amortize their cost over 40 years, just as it amortizes supply costs, and charge them to me as an end user the same way it charges me for new supply, you would see conservation going rampant throughout Ontario. What I am arguing for today is a level playing field. Let's make it a one-year payback across the board, and you will never see any nuclear, any fossil fuel, any large plants, anything. But if we took it up to a 20-year period, you would see less nuclear and more conservation, and if we took it up to a level playing field on a 40-year period, you would see a whole lot of conservation. In essence, the environmental imperative demands that Hydro begin viewing conservation in this way.
Amory Lovins, from the Rocky Mountain Institute, has shown that we can do absolutely everything we do in our society using only one quarter of the energy. That is not only electricity, that includes fossil fuel use as well. It is funny that Hydro had never consulted Amory, the leading expert in the world on conservation, until the EAB hearings began a year and a half ago. That was the first time they had ever consulted the world's leading expert on conservation.
If you look at the staffing levels within Hydro, you see 10,000 people employed in the nuclear side and a drop in the bucket on the conservation side. I used to use the figure of 400 until I was debating a Hydro guy who said it has to be more than 400 now. I do not know what the latest figures are, but if you look at where the priorities are in terms of staffing, Hydro sees itself as a nuclear utility.
The advanced house is here in Toronto and it shows that by retrofitting a house -- well, they actually constructed efficiency into that house, and it uses only one quarter of the total energy inputs that a traditional home uses. In fact, it is more efficient than R-2000, so we need to put R-2000 in our building code, for instance. A very simple solution for cutting down on our use of energy for air-conditioners is to have trees which have leaves in the summer and protect the southern exposure of the house, therefore shading the house. In the winter all the leaves fall off, allowing the sun to hit the house and heat passively. Just simple solutions such as designing into your buildings energy efficiency will greatly increase what we are doing.
Perhaps one of the greatest reasons to do the fuel switching is that it is the peaks that drive supply. Whenever you have a peak in power, you have to have that capacity to supply it, and the peaks all come in the winter, so it is the winter peaks that are continuously driving new supply to come on line. It is the winter peaks that drive the electric baseboard heating and put those peaks through the roof. Fuel switching is a tremendous saving, not just from the costs, because I have gone through the other studies, but from the avoided cost of having to build new supply. We have to take that avoided cost of the billions to build the new supply into account, more than just the saving of gas or oil over electricity.
Finally, I want to turn to a more fundamental reason -- I do not know how I am doing for time; we have to have some questions -- for why we really need to change. If we look at the population of the earth, there were about 250 million people alive in Christ's time. Today, there are 5.3 billion. If you plot it on a graph, you get exponential growth; our population worldwide is doubling every 39 years now.
We in Canada consume more energy per capita than any other people in the world, so how can we, in good conscience, go to the Chinese, who now plan to build quite a number of coal-fired plants, and say, "No, you can't build those coal-fired plants because you're going to accelerate global warming"? How can we, as the most energy-intensive people, go to them and say that? We have no right to do that. It is we who have to begin by cutting back. Our environmental security is now interdependent and we lead the way. We show developing nations a vision of their own future, and if we do not begin cutting back, if we do not begin conserving, the whole earth game comes to an end very quickly.
If everyone in the world were to consume as much as we do, the predictions about the accelerated rate of global warming are just staggering. Scientists down at Harvard and Princeton and Yale are alarmed already, but if everyone else were to consume what we do, it would all be over very quickly.
I have read scientists E. O. Wilson at Harvard and Paul Ehrlich at Stanford and Richard Falk at Princeton, and together they tell us we have only 100 years left on earth. Now this is pretty impossible to conceive of, but if you think that the car never existed 100 years ago and today there are 400 million, and by 2000 there are going to be 600 million, each producing its own weight in carbon dioxide every year, it is little wonder that worldwide levels of CO2 have been increasing so dramatically.
E. O. Wilson is a botanist who studies species extinction and he has shown that in the historical course of time a species has become extinct once every 2,000 years, but currently species extinction is running at the rate of one every 25 minutes. By 2,000, 10% of all remaining species will have disappeared from earth for ever and all species will come to an end in 100 years.
Now that is the bad news; the good news is that this is like Dickens's A Christmas Carol. This is the ghost of the vision of the future, a rather bleak harbinger of bad news. The good news is that we can wake up and realize it is still Christmas morning and there is still time to change.
So you, as a committee, have an incredible responsibility, because you are making a decision not just for Ontario; you are making a decision that will affect the rest of the world, because we are the most energy-intensive country in the world. Where Ontario leads, it will affect, for instance, China's decision to build new coal-fired plants. It will affect how developing nations view their futures. If we cannot cut back to an Amory Lovins kind of model of using only one quarter of the energy we currently use, the whole future is doomed. The challenge is for this committee to take a world leadership position in getting aggressive on this fuel switching.
I have just one last point that came to mind: It is far more efficient to burn a fuel at source and get heat out of it than to burn it at a large plant, lose 30% of the energy in conversion, then lose 7% in transmission, to end up with heat at the final source. You are far better off to burn it at source and get full 100% value out of that oil. If we are going to burn oil and add to global warming, we might as well do it at source and increase the efficiency greatly. Thank you.
The Chair: Thank you, sir. Mr Conway, two and a half minutes.
Mr Conway: Thank you, Mr Harris. I feel as though I have gone to a religious revival and someone has offered to save my soiled soul.
Let me ask you a question that I have put to a couple of previous witnesses and that is, is it possible to enter this New Jerusalem that you talk about without me, as a typical Ontario citizen in the 1990s, having to change my lifestyle to any extent? Is it possible that I am going to be able to do all that Lovins wants without my lifestyle showing any change?
Mr Harris: Lovins takes the view that we can do everything we currently do -- without changing our lifestyle, in other words -- and still use only one quarter of the energy.
Mr Conway: Thank you, that is all I need to know. So it is going to be painless.
Mr Harris: Yes.
Mr Conway: Good. That is it, that is all I need to know.
Mr Harris: I do not want to give you a wrong impression. It is going to be painful in that it is going to require retrofitting all households. It is going to require bringing in new standards of R-2000. It is going to require all sorts of changes.
Mr Conway: That is kind of painless. That is going to be a few dollars maybe here or there, but I am just this energy pig living in Upper Canada and I just consume in a way that would make me look pretty embarrassed and naked in front of the world community. So I want to stop being an energy pig; I want to be ready for the New Jerusalem.
The Chair: Hold on, Mr Harris. He may be in the process of inviting you to his cottage.
Mr Conway: What I need to know is, am I going to have to forgo any of this sort of lifestyle that has been part of my extravagant past? Am I going to notice anything? Is it going to hurt?
Mr Harris: Amory would not think so, but I think we are going to have to go farther than Amory; it is going to have to hurt us. For instance, our great-grandfathers got along fine without a car. We have become addicted to a car.
Mr Conway: Now you are talking.
Mr Harris: We are going to have to begin changing our lifestyle with energy consumption on cars as well.
Mr Conway: Now you are talking. You are talking to a rural boy here, so I might just have to take a second look at my half-ton truck in my big, vast rural expanse there in eastern Ontario.
Mr Harris: Well, more for city dwellers, because rapid transit -- we are getting off the topic here -- is 80 times more energy-efficient than the private vehicle. We are going to have to begin changing our priorities and investing more in mass transit than private transit.
Mr Conway: It might hurt a bit. Thank you.
The Chair: Mr Jordan.
Mr Jordan: Thank you very much for your most interesting observations and presentation and your faith in the future, provided we change our way of life.
I just wonder, in all practical thinking, suppose in five years' time that Ontario has recovered from this serious recession we are in and industry is back in the province, the province is booming again, as it did for 42 years, and everything is humming well, the Premier is calling the chairman of Hydro on the phone and everything is going just fine. But we need kilowatts to feed the industry and we have to have them before they actually come, to show that they are in the design stage and will be ready to deliver. Taking that your conservation programs have been in effect, they have done the best they can, the rates kept going up, what is your solution for industry then?
Mr Harris: Amory Lovins, for instance, went into Compaq Computer Corp and he retrofitted its entire lighting system by providing reflectors over the lights, which increase your effective lumens so that light is not being wasted going into the ceiling. He saved Compaq $250,000 a year.
Mr Jordan: What would he do with steel plants?
Mr Harris: The Japanese have increased their efficiency of steel plants by not pouring to ingots and then heating up again and going to cold rolling, then heating again and going to hot rolling. The Japanese, for instance, have cut their energy usage by over 50% on their steel industries. We still go through ingots, cold rolling and hot rolling.
Mr Jordan: That is fine, but I want to make it clear. We have used all that expertise that we have, my back is against the wall --
Mr Harris: No --
Mr Jordan: No, but as we progress on. Then you come in as an industrialist and you tell me how many megawatts of power you are going to need in a year and a half if I want you to come and employ 1,000 people in the province. Now the manufacturer is willing to put all that technology into place, he is willing to use the most modern equipment, but still he needs this much load. What are you going to do?
Mr Harris: What I am trying to show is that if every house in Ontario were retrofitted --
Mr Jordan: No, I am sorry, we cannot do it through retrofit. Let's say we admit we have done everything we can through retrofit, through conservation, and I have to make it. How am I going to do it?
Mr Harris: But retrofit right now would allow us to go down to 25%. There is a lot of energy on the grid left over. We are oversupplied right now.
Mr Jordan: I understand that. You never see a day when I will have to generate some?
Mr Harris: I am saying if everybody in the world consumes as much energy as we do right now, the whole game is over, and what right do we have to go to developing nations and say, "No, you can't build those coal-fired plants"? We are way oversupplied right now.
The Chair: Mr Jamison, and leave enough time for Mr Wilson, please.
Mr Jamison: You spoke about basically the peaks in your studies that occur during the winter period.
Mr Harris: We are there.
Mr Jamison: So the whole purpose of switching from one energy source to another to really shave those peaks is a very important aspect. Secondary to that, I just have to comment on this because I spent 20 years in the steel industry and can assure you that there are major energy initiatives. It basically means money, the bottom line, to those companies at this point that are going on, hot rolling directly from one furnace on a slab right through.
The Chair: Let him answer the question, Mr Jamison.
Mr Jamison: Anyway, the whole initiative is to ensure that we do not have the peaks that indicate building more facilities, and the switching is in fact a major effort in allowing us to ensure that we do better with what we have. Is that the case?
Mr Harris: Yes. There is a very interesting device that is very inexpensive that you can put in your home. It is a fuel-switching device and it says, "We never want our household load to go over X," so for instance if our fridge is kicking in, the laundry machine is on and the kids are watching television, you prioritize and you say, "The laundry machine has to go off for a short while until the fridge goes off. Then the laundry machine can go back on." What it does is flatten the load for households at very little cost. It is a little box and it gets wired into all your appliances; a very easy way to load-shift. Basically it does not requires consumers to make any lifestyle changes because it is invisible to them. They do not see whether the laundry machine goes off now and comes back on two minutes later. We have to think about that load switching. But load switching is different from conservation. It still has a high base. We need to get below that base to conservation. But load switching is a very effective short-term strategy to flatten those peaks.
Mr G. Wilson: Just a comment on your very interesting submission. I wonder what your attitude is when you speak to a group here and the first question you get is that it is too painful to make changes, yet you are saying 100 years down the road all species will have disappeared, which sounds rather painful to me, at least to my successors, my kids, who I hope will have kids as well. How do you respond to that kind of question?
Mr Harris: Right now we just measure GNP, and if GNP increases, that is good. But there is something else that is invisible to us. That is GEP, gross earth product. Whenever we raze an entire forest, GNP increases but GEP decreases. Whenever we extinguish the life of whales, the Japanese GNP increases because they have whale meat, but GEP decreases. Whenever the Exxon Valdez spews its oil all over the place, GNP increases because of the $2 billion they have to spend on the cleanup, but GEP decreases. Right now our whole system values "Increase GNP, increase GNP," and it is always at the cost of GEP. But the earth is not something that will continue to give indefinitely. We are seeing limits and we are getting feedback through species extinction. They are voting with their feet. They are saying, "You're making life so intolerable on this planet, we're checking out," and they are doing it at an alarming rate.
We cannot even eat the fish in Lake Ontario. We should begin clicking in here that there is something very wrong if you cannot eat the fish. Bottled water sales have gone through the roof. Why? People do not want to drink the water any more. What are we going to do when we cannot drink the water, when our food is poisoned because of acid rain dropping on our farmers' topsoil? The whole game is up and we do not see it. We are going through a process of denial. That is the first stage when a relative dies; you go through denial and then anger and bargaining and so on. But we are denying what is going on, and we have to come to terms.
Listen to E. O. Wilson. Listen to Richard Falk. These are people far more knowledgeable than I. These are people who are in our highest institutions, our top scientists, telling us alarm bells are going off.
The Chair: Mr Harris, on behalf of the committee, we thank you for taking the time to come down here this afternoon as well as for the written materials that you have filed. I know you want all of us to update the brochure called Hydro Wants $100,000 from You by deleting, "Call or write Premier David Peterson" to read, "Call or write Premier Bob Rae."
Mr Harris: I am very sorry about that oversight. That was actually produced during the last election and I submitted it for background.
The Chair: I was very optimistically assuming that. Thank you very much, sir. We appreciate your interest, your enthusiasm and your time. Take care.
UNION OF ONTARIO INDIANS
The Chair: The next presentation is by Alan Roy of the Union of Ontario Indians. Sir, please be seated. We have your written material, which will form part of the record by virtue of being an exhibit.
Mr Roy: Thank you for the opportunity to talk to you. I will not follow the brief exactly. I just want to talk about the three issues that I have outlined in my brief in the context of the legislation.
Let me start by saying I will not take you through any religious revivals. I am going to deal more with process and accountability and how all of us can control the things Hydro does in the future. That is the crux of the legislation as I see it, and the Union of Ontario Indians supports the legislation the way it is drafted.
However, there are some things that we would like to take into consideration in the implementation of those amendments, some perspectives that you may find useful. Like everything, from a process point of view it can be implemented well and it can be implemented not so well. That is what I am going to try and illustrate by specific examples.
Before I go into that, let me give you a little background on the Union of Ontario Indians and our involvement with Hydro. We have spent 12 years working with Ontario Hydro, or working against Ontario Hydro, on a lot of issues. We have a lot of experience in dealing with Hydro from a process point of view. Most of the time we are intervening and we are trying to get Ontario Hydro to do other things than it wants to do. We are trying to represent the interests of our clients, which are 40 communities around the Great Lakes, essentially Ojibway communities. We have intervened in a lot of the major hydro-electric projects in Ontario and transmission lines that run through our territory. Our territory is from Thunder Bay to Ottawa, Sudbury to Sarnia. It is a fairly big territory.
We have been an official party to the Ontario Environmental Assessment Board hearings on supply and demand planning. We have facilitated the development of a small hydro-electric project on the Black River with one of our first nations, the Ojibways of the Pic River. We have five other feasibility studies going that could lead to more small hydro-electric projects. We were an official delegate to the Ontario task force on public participation and planning in Ontario Hydro. That was a task force developed in 1984 within Ontario Hydro to examine its public participation process and how different groups participate.
We presented a paper to Ontario Hydro vice-presidents in September on all the issues it is not addressing in relation to aboriginal concerns in the province. I must tell you that Ontario Hydro has not responded to that issues paper, and it was called for by Ontario Hydro. They do not seem to have a process within their corporation to deal with concerns other than Ontario Hydro. So I think your legislation and the amendments you are suggesting are very appropriate.
The first one I would like to talk about is the number of board members. Great, you want to increase the number of board members. That is fine. You want that representation to reflect more of a cross-section of Ontario. That is a very good idea. However, Ontario Hydro has just appointed a new board member for the aboriginal constituency of Ontario. The problem is that Ontario Hydro made that decision. Another problem is --
Mr Conway: No, it cannot be possible.
The Chair: Let Mr Roy make his presentation and then you will have your time, which you have used 30 seconds of, to question.
Mr Roy: Let him pull my leg.
Mr Conway: You calibrate time, Mr Chairman, like you do a lot of other things.
Mr Roy: The person who was appointed was not accountable to the Indian constituency of Ontario. It was an Indian person, but there is no tie between that person and the leadership in Ontario. There is really no way to bring forward the concerns of the aboriginal leadership to the Ontario Hydro board table through that particular person. It might happen, it might not: It is a gamble. It is not really the way to do things.
We believe that the amendment, when implemented, should have some accountability factor attached to it and some involvement of the leadership of a constituent group to the appointment of that particular board member. If we are going to jump from a dozen people to 22 people on the board, there could theoretically be a lot of very significant appointments to that board.
The second category I would like to deal with is the directives that would come from government to Ontario Hydro. This is a significant improvement from a concept point of view. If the government was in a position to direct Ontario Hydro to take conservation seriously and to actually suggest some guidelines for conservation, to the amount of conservation that is needed in Ontario, what we would be looking for as a constituency group would be conservation programs that would eliminate major power generation projects within Ontario. So we are talking on the level of 135, 150 or 200 megawatts at least. That could eliminate concerns or problems for first nations in the north that are faced with having to intervene with hydro-electric projects, for instance.
The government could also play a significant role in directives to industry which manufacture implements or devices that use electricity or to construction companies that are building homes. If in fact directives were issued that would facilitate conservation through better motor windings or not allowing electrical baseboards to be placed in housing developments, if the government would put some leadership guidelines on the table for industry to follow to practice conservation, you would have a double thrust. The directives would tell Ontario Hydro to do certain things, the directives would tell industry, and indirectly the consumers then would be practising conservation or would at least have the option of practising better conservation.
The third set of amendments I am looking at are the economic directives from the government to change the rates Ontario Hydro pays for the generation of electricity. It is unrealistic what is being charged for electricity in Ontario. It is unrealistic from the point of view of encouraging consumers to practice conservation. It is unrealistic from the point of view of other power producers to bring forward projects that are economically feasible.
If we are going to produce a small hydro-electric project at 5 1/2 cents a kilowatt-hour, we can do it, but it is really tough to do. There are a lot of projects that would be instantaneously feasible if that power rate was different. I have looked at power rates in other parts of North America, other provinces of Canada and in the United States, and yes, we have the lowest rate in North America. We also have the most unrealistic rate in North America, and it does not do a lot for the present situation that we are facing in the 1990s.
The last issue I would like to raise, and it is not in the legislation or in the amendments, is that Ontario Hydro has somewhat a monopoly in generating power in this province. Again, we have come up against this in the north. For anything over 20 megawatts, Ontario Hydro has the monopoly to develop a particular site or a generation mode. There are other ways to develop hydro-electric facilities on rivers than the way Ontario Hydro wants to do it, and there are other companies, other concerns that would be willing to consider alternative designs that would have less impact on the environment.
The monopoly concept is a problem and it could be addressed in this legislation. I will tell you, first nations in this country, first nations in this province, would be very willing to joint venture. I will tell you, we would not build installations that would impact on the environment the same way Ontario Hydro does. We have clearly demonstrated that with our first project on the Black River; that is a run-of-the-river project.
That is all I have to say.
Mr Arnott: Thank you, sir, for your presentation. You talked briefly about the process of appointments to the expanded Ontario Hydro board. If I heard you correctly, you expressed some reservation about one of the appointments. Could you explain how it could have been better undertaken?
Mr Roy: The appointment could have been done in a co-venture between Ontario Hydro and the Indian leadership. It is very well defined what organization in Ontario would be the Indian constituency, and that is the planning and priorities committees of the Grand Chiefs of Ontario. That option was not open to the leadership.
Mr Arnott: Do you think there would be fairly broad support among the native community for that sort of approach?
Mr Roy: Yes, absolutely.
Mr Arnott: Could you describe for me what you think would be the most important qualifications for a prospective candidate to the expanded board of Ontario Hydro.
Mr Roy: First of all, the ability to report back, the ability to carry information or input that is brought forward through a consultation process, that is connected to a consultation process, the ability to understand the technical material that is presented at board meetings; essentially emphasizing the accountability and a delegate's responsibilities, because those people can have advisers attached to them very much the way I play the role of adviser on technical matters to a grand chief.
Mr Jordan: Thank you, sir, for your presentation. I am particularly interested in your method of development of the hydraulic energy in the river. Are you prepared to enlarge a bit on that?
Mr Roy: I could take an example, if you like.
Mr Jordan: Would you, please?
Mr Roy: Little Jackfish River, north of Lake Nipigon: Presently, the project is looked at as a mode of generating 135 megawatts at somewhat peak power, fed into the grid. The river could be conducive to a series of run-of-the-river projects. The problem would be --
Mr Jordan: Do you mind just explaining for the benefit of the committee the run-of-the-river project?
Mr Roy: No reservoir and not conducive to producing peak power, unfortunately, but base load power anyway. The project that we built on the Black River is a run-of-the-river development.
Mr Jordan: So you do not have the big forebay to flood these areas.
Mr Roy: No flooding, less downstream erosion and less disruption of fish.
Mr Jordan: So it is basically natural flow of the river over a turbine?
Mr Roy: It is.
Mr Jordan: What are the serious setbacks of using that technology?
Mr Roy: No capability for peak power is one of the major drawbacks of run-of-the-river. But we are not talking about large hydro-electric projects that would be displaced by run-of-the-river; 135 megawatts is not a great deal, but the environmental impacts of that particular project as scheduled now would be enormous, and we are still recovering.
Mr Jordan: Excuse me. How many megs would we get out of run-of-the-river?
Mr Roy: The estimates I have been given by engineers would be about the same amount, but not peak.
Mr Huget: Thank you for your presentation. With regard to the board member issue, if I understand you correctly I think you are saying the first nations' leadership should really nominate or elect a representative it would like on the board. Is that correct?
Mr Roy: Yes, that is correct.
Mr Huget: The second point is, you mentioned government directives to Ontario Hydro to implement meaningful conservation programs. In your opinion, will we have meaningful conservation programs without some government directive?
Mr Roy: No. I think there is expertise within your Ministry of the Environment and Ministry of Energy that could in fact do a lot of that thinking and they can also pull in the expertise from universities and the academic-scientific world to base very good directives to Ontario Hydro. It is a mechanism to separate the vested interest of Ontario Hydro from the vested interest of the consumers in Ontario, with the government in the middle, with the ministry serving the government. That is the way I see it. It does not operate like that now.
Mr Huget: You also mentioned the government giving directives to industry. We certainly cannot give directives to industry in the same sense that we can, probably, to Hydro, but you say the issue of energy efficiency and those types of things, energy efficiency in motors and production for industry. Would you say then that the Energy Efficiency Act should be strengthened to give just exactly that?
Mr Roy: Yes.
Mr Huget: As well as the building code to do just exactly that?
Mr Roy: Yes, I think that is the way you would do it.
Mr Huget: Thank you very much. A final point: You mentioned that power rates in Ontario are artificially low. That implies to me that we are not getting power at cost; we are getting power below cost. Could you elaborate on that?
Mr Roy: Yes. If you build a nuclear facility in this province, the liability insurance that should go with the installation is not available. That is a cost saving to Ontario Hydro, but it is also an artificial aspect of the price of power coming out. You do not build in the cost of decommissioning that plant and that is a major cost, so you are giving Ontario Hydro a cost saving by letting it out of that and you are artificially holding the price low.
If you build a hydro-electric project on a river in the north and you displace a lot of people, for instance Indians, from a particular lifestyle and you put those Indians on welfare, the taxpayers of Ontario pay the welfare bill and whatever other social problem bills they pay with the kinds of aboriginal issues we have in Ontario. It is a big bill. Never mind the welfare; there is lots of other stuff we are paying for too. It is not reflected in the price of the power and therefore the power rate is lower.
I would say that realistically the power rate in the province would be 9.5 cents a kilowatt-hour. In New York state it is around 15 cents. If it ever jumped to that level, it would instantaneously have conservation programs kick in. It would instantaneously have all kinds of people trying to develop energy generation projects that would look like nothing Ontario Hydro is into now. It is an automatic reaction when you play with the cost and the economics of this issue. With this legislation, you would have the mechanism to do something like that through your ministries if the political will existed within the government of the day.
The Chair: Mr Klopp has a very, very short question.
Mr Klopp: You made it sound like over the years you have not been able to get Ontario Hydro to hear you, and you are glad we have Bill 118 to give stronger direction. You talked about vested interest and that they have not listened to you. Expand on this vested interest that you think is out there.
Mr Roy: Ontario Hydro has a way of doing business. They do not tend to listen to other people. I think there are certain personalities within Hydro that drive the system. I think that over the years Ontario Hydro has had a philosophy, from a historical point of view, of building the biggest and the best in the world, the biggest hydraulic, the biggest nuclear, the longest transmission line. They are very proud of the fact of doing those kinds of things, and when a constituency like aboriginal people comes along and says, "That's not the way that we want things built in our territory," they say to us: "We're not particularly concerned with what you have to say. We have a permit from the Ontario government to develop a project on the Little Jackfish River. We don't recognize your land claim. It's not our concern. You deal with the Ontario government. They've given us a permit to do something and we're bloody well going to do it." That has been the attitude I have had from Hydro for 12 years. I see this bill as a light in the forest. I just was so happy to read it.
Mr Conway: Thank you very much, Mr Roy. You will be happy to know the new chairman of Hydro, by all accounts, is very understated, a shrinking violet, ultrademocratic in his methodology, so I think you will find the new regime very comforting.
The new chairman, in a quiet, self-effacing way, went off to the demand-supply meeting the other day and brought forward a new update. I was struck by a variety of magical transformations that have occurred, but one of the areas where there was not a great deal of magic had to do with the changes to the hydraulic plan. According to the update, it is still Hydro's expectation that over the next generation, if you exclude the Manitoba purchase, which I do in more ways than most people because I do not think we will ever achieve that in my lifetime, there are 1,800 megawatts of hydraulic that presumably will be domestically produced outside the NUG. I take it that this anticipates the Little Jackfish and Pattern Post, among others.
Mr Roy: Little Jackfish is not in the plan. They assume that they are going to be able to go ahead and build it irrespective of the plan. Pattern Post was just dropped into the plan.
Mr Conway: Can you just give me a little bit of an update about what is happening with those two projects? I think there is an assumption around here -- I certainly have it -- that they are part of that 1,800 --
Mr Roy: No. They are not asking for Little Jackfish to be included in the plan. They are not asking the Environmental Assessment Board to give them permission to include Little Jackfish. They say they already have a mandate to build Little Jackfish and that they are going to take it in front of the Environmental Assessment Board as a site-specific.
Mr Conway: I really enjoyed your comments and your exchange with Mr Jordan, because you told me some things about hydro-electric generation that I did not understand, the river run concept. Say Hydro took a line and said, "Well, no, we're going to do the traditional kind of ponding project versus the river run." Would that kind of get the native population's attention? Would I be right in saying that, if in your view there was not willingness to consider the river run kind of development at Little Jackfish, it might not move forward very quickly?
Mr Roy: I will go beyond that and say I was shocked when I read the environmental impact statement that Ontario Hydro produced. They produced four of them. It went from a joke to something that was readable, but in the impact assessment statement they must consider alternatives for a particular site.
I thought the impact assessment statement submitted to the Ministry of the Environment was deficient and should not have stood up to the minister's scrutiny in allowing Ontario Hydro to go forward and actually schedule a hearing, because it did not consider those types of alternatives. To me they are viable alternatives that must be considered in an environmental assessment review process. Maybe Ontario Hydro has taken that to heart because it has not submitted its impact assessment statement for official review to the Ontario government and pushed for that hearing to proceed. So maybe they are cognizant of the deficiencies.
Mr Conway: I take it you are saying that Little Jackfish would probably proceed a little more smoothly if people looked seriously at the kind of river run development you were talking about earlier.
Mr Roy: If the board of directors of Ontario Hydro had more of a mechanism for input and was more serious about listening to different points of view, I think that might happen, yes. I think your amendments could drive it along that path.
Mr Conway: With the kind of democratic leadership we now have, I do not think these amendments are really going to be very necessary, because it is going to happen a priori, as we say in Pembroke.
Mr Roy: We have not had a way of getting at Hydro in a way so that it is mandatory for it to listen. I had to get the impact assessment statements under the table, by the way. I could not get those above board, because I was not entitled to review the documents of Ontario Hydro.
The Chair: Mr Roy, thank you very much for your interest and your participation in this particular series of inquiries.
LENNOX INDUSTRIES (CANADA) LTD
The Chair: Lennox Industries is here to speak to us. Sir, please tell us who you are and what you would like to tell us.
Mr Pilch: My name is Doug Pilch. I am the director of manufacturing for Lennox Industries (Canada). I thank you very much for the opportunity to speak today. I have put forward a very small brief. I want to be able to keep to the point as much as possible.
Lennox is very interested, of course, in developing environmentally friendly products. We have been in the process of providing climate control equipment in Canada for 40 years. We provide heating products and cooling products. We have, over the last 40 years, been very much on the leading edge of developing environmentally friendly products. We were the first with high-efficiency furnaces, we were the first with high-efficiency air conditioners and we have, by and large, been ahead of any legislation on energy efficiency.
We are very pleased to see the act as presented. We believe it is a public thrust to move in the direction of energy conservation. It is a public thrust to move energy consumption, for heating purposes specifically, to the point where you have consumption of the heating energy -- which in our case is natural gas -- being moved from the power generator to the home or business. This is a much more efficient use of the energy, and in combination with recent legislation that moves furnace efficiency up to a minimum efficiency of 78%, we believe this provides a very effective use of gas in Canada.
So from our perspective, this is supporting our own thrust that we have made in the past. We are also very glad to see it from a personal point of view. I believe it will provide for energy conservation and helps with the situation in Ontario.
As it has very much an impact on our industry, it is also an economic factor. We believe that the type of advertisement and promotion that will come from improved energy efficiency will be very helpful in our manufacturing sector. We believe it will provide for increased success of our industry and greater employment in the manufacturing sector of heating and air-conditioning.
Those, in summary, are my feelings on the subject.
Mr Huget: Thank you for your presentation. Where is Dave?
Mr Pilch: He is not here today.
Mr Huget: I wanted to get your opinion and your viewpoints on the potential for energy conservation and energy savings as we look at new technologies. Perhaps you could touch on some of the things that have been developed lately and then go on to things that may be coming in the future, not only with gas, but with other sources of energy as well.
Mr Pilch: I think probably the most interesting one we have right now is a dual-fuel heat pump. We will begin this year to market a commercial product that will provide for either using electricity for the heat pump process or for natural gas combustion. The system has an onboard minicomputer that calculates the least cost for the consumer. It will actually look at the time of day, the rates that are being charged in the location and the efficiency of the heat pump at the current outdoor temperatures, and compare that to burning natural gas. In some cases, a heat pump in ideal conditions is more effective than burning natural gas. So if the charges for natural gas and electricity reflect the true consumption of the energy, then the system will automatically be conservation in nature.
Mr Huget: If we in fact embark on an energy efficiency and conservation strategy and become a leader in that, do you see opportunities in Ontario for investment, research and development of new technologies, jobs and those related things that go with that?
Mr Pilch: Unquestionably. The recent thrust by Ontario in this direction will move to a lot more multiresidential buildings having natural gas. I think in the past you found that apartment buildings have gone to electricity. With the thrust towards natural gas, that is going to mean that apartment buildings will begin to use natural gas.
This is an area of product that is not too common. There are not a lot of companies out there right now providing for an individual unit, each individual apartment, to have gas heat and air-conditioning. Lennox currently does not have such a product. The thrust of that kind of thing will definitely mean that the Canadian industry will be the one requested to pursue it and develop something for Lennox Industries. If this becomes a trend across North America, there is a possibility that the Canadian branch of Lennox will be first into the US market with that product.
Mr Huget: It is a Canadian resource, and it only stands to reason that if there is going to be technology, certainly a Canadian company, an Ontario company, should be the trendsetter in technology around that resource. I guess my final point, for my own interest: Was there ever a Dave Lennox?
Mr Pilch: Yes, there was. Dave Lennox was the original inventor of the steel furnace, as opposed to cast iron.
Mr Huget: So "Atta boy, Dave" was really "Atta boy, Dave."
Mr Pilch: It really was true.
The Chair: Atta boy, Mr Huget. Mr Conway.
Mr Conway: Thank you very much, Mr Pilch, for a very concise and interesting presentation. I do not find myself disagreeing with a lot of your presentation. I just had one problem with the gas folks. I do not know how, if you were in the gas business, you could not like this policy, this bill. I would be so excited if I were in your business that I could not contain myself, as you are doing so very well here this afternoon.
I just am troubled by this old-fashioned notion of equity. Why the hell should I, as an electrical consumer, pay for your bonanza? I did not need one Bill 118 to switch. I switched five years ago because the market dynamic seemed to make it so clear. I was out there with my gas furnace and got all my money back in no time flat.
I just am struggling and trying to think why these Hydro customers, particularly the rural ones, should be subsidizing their urban cousins to switch to this wonderful low-cost alternative that I know will be low-cost until the end of time. When the entire world switches over to natural gas, I know the market dynamic will not move the price of gas upwards at all. That is one of the assumptions on which I make my analysis. But why should the Hydro customer, through increased rates, be subsidizing people to switch to an alternative that surely the marketplace is giving to you almost effortlessly?
Mr Pilch: I think one of the things definitely is advertising. We have all seen and we have all grown up with a Cascade 40. We know what that is: an electric water heater. We have seen that advertising on TV. We have been exposed to baseboard heating, electric heating. We have been exposed to resistant heating as being the most comforting and the most comfortable form of energy to provide.
Mr Conway: I accept that, but the advertising that really counts for me is the bill. A few years ago I just sat down and looked at my bill, and I went running out to the natural gas company so fast that you could hardly follow me.
Mr Pilch: But you are an informed consumer.
Mr Conway: Oh, no, I am not. I am a very uninformed consumer.
Mr Pilch: But you wished to be informed in that area.
Mr Conway: But I am saying, seriously, that the market was so strong and it has gotten even stronger in the intervening years. Why would we stick the poor old Hydro consumer with even more burden, part of which is going to be to subsidize an off-electric policy which surely the current market is doing just fine in supporting?
Mr Pilch: I would hope, and my anticipation from this is, that for even the Hydro consumer there would be a gain. What should happen is we should be able to avoid ever-increasing costly capital investment, and by getting better use out of our current capital investment, we should be in a situation where Hydro costs will eventually come down.
Mr Conway: I would recommend the testimony of Mr Solomon from Energy Probe, who, among others, has said that is not going to happen, at least in the intermediate term. In fact, he thinks this shift is going to drive rates upward, which I think would probably be the case.
Mr Pilch: I am not capable of commenting on that.
Mr Conway: Thank you very much, Mr Pilch.
Mr Jordan: Thank you for your presentation. I might also say that I have had a number of years' experience with Lennox products.
Mr Pilch: I hope happy ones.
Mr Jordan: Yes, most of the time. I would like to discuss for a moment the heat pump that you people have been leaders in. For me, if there was going to be any capital from a utility in the form of a substitution, to upgrade or go to a more efficient heating/cooling system, I would be choosing that one.
Mr Pilch: As I see the bill, it opens the scope of the corporation in that in previous times, could have programs that would encourage people to leave resistance heat and go to heat pump, which in all cases is more efficient. Now what has happened is that it is even wider. You can encourage people to go from resistance heat to either heat pump or natural gas. And there are many cases -- for instance, with a high-efficiency furnace -- where in energy consumption and costs a high-efficiency furnace is even more appropriate than a heat pump.
Mr Jordan: But for me, to spend $7 million on something like this is totally unacceptable, as compared to giving assistance. A lot of people just cannot afford the heat pump system because of the capital costs to get it installed. You or I or somebody else over 10 years will have their capital returned to them, and perhaps in a shorter period of time. They are not only going to have heat but they are going to have the comfort of cooling in the summertime, at basically the cost of running the fan and the pump. So whether it is electricity or gas, I feel strongly that Ontario Hydro, if it is going to get involved in the substitution of energy program and the subsidizing of same, should look at something like that, rather than this -- they are broken already.
Interjection: No wonder: they have gone all over Ontario in a truck.
Mr Pilch: I think the thrust has to go to significant energy consumption reduction, and I think the intention is to go to the best source of energy, from what I have seen from the bill, and I find that appropriate.
Mr Jordan: And education of the customer.
Mr Pilch: Education of the customer is very important, and most important, honest education of the customer, as opposed to education for the purpose of selling the product rather than education for the best use of energy.
Mr Jordan: The other thing I think customers should be brought up to date on is that instead of looking at Ontario Hydro as some monster out of control, they should realize that Ontario Hydro is nothing but a wholesaler to utilities. They should be going into their utility offices and making their concerns known, and getting the information and the education they can get through those offices.
I have talked to several people during this hearing, and they do not seem to make use of their local offices. As the manager of York Hydro told me this morning, when he was out campaigning they could not differentiate between their Hydro commission and Ontario Hydro. We keep throwing balls at Ontario Hydro all the time, when actually, once they wholesale it to the utility, instead of blaming old mother Hydro, why do they not get off their rears and be accountable at that level and institute policies of energy that are relative to their utility? If you try to blanket Ontario with one policy, you will bugger up my utility, but it may work well for yours.
The Chair: Did you want to respond to that, Mr Pilch?
Mr Pilch: My only comment was that I believe Bill 118 opens up opportunities for the power corporations to broaden their scope of activities. How that is implemented in practice, I think, is going to be a matter largely for the public and their inputs as to what they want to see Ontario Hydro do. That is going to come also from politicians such as yourself, and from industry leaders and labour leaders.
Mr Jordan: Get some more members on the board.
Mr Pilch: What is happening now is that the government is opening up the possibility for that action to be taken. How it is actually executed, I do not think that is going to be legislated.
Mr Conway: We are going to need an excess profit tax for the gas sector in about five years' time, but that is another issue for another day.
Mr Pilch: I hope so. If we are making an excess profit I would love to pay the tax.
The Chair: Mr Pilch, I want to thank you on behalf of the committee for coming here this afternoon, for tolerating us and for answering the questions candidly and clearly. We appreciate the interest you show, along with a whole lot of other members of the industry and the members of the community.
Mr Pilch: Thank you for your time.
The Chair: We are waiting for the prospect of one final participant. In the interim, however, Mr Arnott has a matter to raise.
Mr Arnott: Thank you, Mr Chairman. Yesterday in subcommittee there was a discussion, and the subcommittee raised the idea that written questions could be submitted and filed with the clerk, written questions which will be answered by Ontario Hydro. Our caucus has put together a number of questions, and our critic, Mr Jordan, would like to read those into the record at this time.
Mr Jordan: Mr Chairman, members of the committee, the questions for Ontario Hydro are as follows:
Question 1: What was the extent of consultations between Ontario Hydro and the Ontario government prior to the announcement of a nuclear moratorium in the November 1990 throne speech? To your knowledge, what information sources did the government rely on to make the announcement on the moratorium?
Question 2: Based on your discussions and contact with middle-level and senior managers throughout the organization, could you describe morale levels at the present time?
Mr Klopp: Morals or morales?
Mr Jordan: Morale. With some of the discussion that went on here today, it could be either, especially that tape the other day.
Question 3: In June 1991 Minister of Northern Development and Mines Shelley Martel rose in the House and stated: "After consultation with the provincial government, Hydro has delivered on its promise" to Elliot Lake and the communities of the North Shore.
a) What is Hydro's view of its commitment and promise to the Elliot Lake uranium industry?
b) Describe the consultations that took place between the government and Ontario Hydro on the commitment to the Elliot Lake community, particularly as they relate to the $250-million economic transition package.
c) What studies were undertaken by Ontario Hydro to determine the impact of the Elliot Lake assistance package on the corporation?
4. Describe the consultations which took place between Ontario Hydro and former Energy Minister Jenny Carter on the content of Bill 118 prior to its introduction.
5. Throughout the hearings on Bill 118 we have heard that the government has consulted thoroughly with interest groups, particularly the Municipal Electric Association, on amendments to Bill 118. What consultations have taken place between Will Ferguson and Ontario Hydro on revisions to Bill 118?
Proposed amendments state that "the minister may issue policy directives that have been approved by the Lieutenant Governor in Council on matters relating to the corporation's exercise of its powers and duties under this act."
What are Ontario Hydro's powers and duties under the Power Corporation Act?
6. In the current debate on Bill 118, we have heard two terms referred to on a frequent basis: "power at cost" and "power at reasonable cost." Could you supply your definition of these two terms?
7. We have a number of questions on the recent revisions to Ontario Hydro's 25-year demand-supply plan. Our understanding is that it took approximately five years to draft the original document.
How long did it take to draft the revisions? What were the primary information sources for the new document?
The revised document outlines plans to refurbish and extend the operation of coal-fired generating stations. What studies have been conducted to determine if this alternative is an appropriate course of action?
For many years people in this province believed Ontario was building a generating industry capable of supplying not only the province's needs, but helping to meet requirements in neighbouring jurisdictions as well. What is Hydro's view at present regarding its capability of exporting power?
Major industrial users, who are responsible for thousands of jobs in the province of Ontario in the manufacturing and resource sectors, have stated that the possibility exists for major power shortages in the future. How do you address these concerns?
8. Energy Minister Will Ferguson has stated that Hydro's decision to dismiss nuclear construction means that future rate increases may not be as great as anticipated. Does Hydro agree in principle with this theory?
Thank you, Mr Chair.
The Chair: Thank you, sir. You are putting those questions to Mr Huget as parliamentary assistant to the Minister of Energy, and the clerk will write to Hydro indicating that those questions were put and that you are seeking responses.
Mr Jordan: She would like a copy.
Mr Conway: I think they should be reviewed. Some of them are unduly provocative.
The Chair: It is kind of you to come to Hydro's defence.
Mr Conway: I just do not want Dusty to get upset.
The Chair: Any other matters?
We had a presentation scheduled at 2:50 pm by John Robinson. Mr Robinson was not here then. Is he here now? It is 3:20 pm, the clerk has looked for Mr Robinson in the hallways and thereabouts all afternoon, but he does not appear to have come, for whatever reason. In view of that, and there being no other matters, we are going to adjourn until 10 tomorrow morning.
The committee adjourned at 1520.