Thursday 8 October 1998
Energy Competition Act, 1998, Bill 35, Mr Wilson / Loi de 1998 sur la concurrence dans le secteur de l'énergie, projet de loi 35, M. Wilson
STANDING COMMITTEE ON RESOURCES DEVELOPMENT
Chair / Présidente
Mrs Brenda Elliott (Guelph PC)
Vice-Chair / Vice-Président
Mr Peter L. Preston (Brant-Haldimand PC)
Mr David Christopherson (Hamilton Centre / -Centre ND)
Mr Ted Chudleigh (Halton North / -Nord PC)
Mr Sean G. Conway (Renfrew North / -Nord L)
Mrs Brenda Elliott (Guelph PC)
Mr Doug Galt (Northumberland PC)
Mr John Hastings (Etobicoke-Rexdale PC)
Mr Pat Hoy (Essex-Kent L)
Mr Bart Maves (Niagara Falls PC)
Mr Peter L. Preston (Brant-Haldimand PC)
Substitutions / Membres remplaçants
Mr Ted Arnott (Wellington PC)
Mr John R. Baird (Nepean PC)
Mr Toby Barrett (Norfolk PC)
Ms Marilyn Churley (Riverdale ND)
Mr Steve Gilchrist (Scarborough East / -Est PC)
Mrs Helen Johns (Huron PC)
Mr Wayne Lessard (Windsor-Riverside ND)
Mr Wayne Wettlaufer (Kitchener PC)
Also taking part / Autres participantes et participants
Ms Cynthia Brandon, counsel, legal services branch,
Ministry of Energy, Science and Technology
Mr Les Horswill, ADM, policy division,
Ministry of Energy, Science and Technology
Ms Anne Powell, manager, oil and gas section,
Ministry of Energy, Science and Technology
Clerk / Greffière
Ms Donna Bryce
Staff / Personnel
Mr Doug Beecroft, legislative counsel
The committee met at 0907 in committee room 2.
ENERGY COMPETITION ACT, 1998 / LOI DE 1998 SUR LA CONCURRENCE DANS LE SECTEUR DE L'ÉNERGIE
Consideration of Bill 35, An Act to create jobs and protect consumers by promoting low-cost energy through competition, to protect the environment, to provide for pensions and to make related amendments to certain Acts / Projet de loi 35, Loi visant à créer des emplois et à protéger les consommateurs en favorisant le bas prix de l'énergie au moyen de la concurrence, protégeant l'environnement, traitant de pensions et apportant des modifications connexes à certaines lois.
The Chair (Mrs Brenda Elliott): We're going to call the standing committee on resources development to order. As I recall, we were in the process of discussing the NDP amendment to subsection 118(3). Is there any further discussion on this?
Mrs Helen Johns (Huron): What I think we heard yesterday was that any liabilities the aboriginals have are contingent liabilities and they will be covered by the transfer order, and the transfer orders will be moved to the successor companies. I want to ensure that this is the policy we're hearing from the Ministry of Energy, Science and Technology.
Ms Cynthia Brandon: Yes, it is.
Mrs Johns: I think this amendment is covered in the bill we have before us, so we'll be voting against it.
The Chair: Further questions or comments? Shall this amendment carry? All those in favour? Opposed? This amendment is lost.
Further questions or comments to section 118? Shall section 118, as amended, carry? All those in favour? Opposed? This section carries.
Section 119: We have a government amendment proposed on page 113.
Mrs Johns: I move that section 119 of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by striking out the portion before clause (a) and substituting the following:
"119. Subject to subsection 118(2), nothing in this act and nothing done by or pursuant to a transfer order creates any new cause of action in favour of,"
The new section is subject to subsection 118(2), and that's the section on exempt contracts.
The Chair: Further questions or comments? Shall this amendment carry? All those in favour? Opposed? This amendment carries.
Further questions or comments to section 119? Shall this section, as amended, carry? All those in favour? Opposed? This section carries.
Sections 120 and 121: No amendments are proposed. Are there questions or comments to either of those sections? Seeing none, shall sections 120 an 121 carry? All those in favour? Opposed? Both of those sections carry.
Section 121.1: We have a Liberal amendment proposed. Since we have no one here from the Liberal Party, we will move on.
Sections 122, 123, 124 and 125: There are no amendments proposed to those four sections. Any questions or comments? Seeing none, shall sections 122, 123, 124 and 125 carry? All those in favour? Opposed? Those four sections carry.
Section 126: We have a government amendment proposed on page 115.
Mrs Johns: I move that section 126 of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by adding the following subsection:
"(2) Despite clause (1)(a), a transfer order may include provisions relating to the following matters:
"1. The disability benefits and life insurance described in subsection 92(7) and the amount referred to in subsection 92(8).
"2. Any liability or obligation associated with a proceeding or potential proceeding relating to the Ontario Hydro pension and insurance plan and the pension and insurance fund of Ontario Hydro or relating to the Ontario Hydro Financial Corporation pension plan and the pension fund for it."
Mr John R. Baird (Nepean): Just to clarify, the cabinet may not make transfer orders which affect the assets or liabilities of the pension plan without the prior approval of the superintendent of financial services.
The Chair: Further questions or comments? Seeing none, shall this amendment carry? All those in favour? Opposed? The amendment carries.
Further comments to section 126? Shall 126, as amended, carry? All those in favour? Opposed? That section carries.
We have a new section proposed by the government, 126.1.
Mrs Johns: I move that the Electricity Act, 1998, as set out in schedule A to the bill, be amended by adding the following section:
"Pension subsidiary of Financial Corporation
"126.1(1) The Lieutenant Governor in Council may make orders transferring officers, employees, assets, liabilities, rights and obligations of the subsidiary of the Financial Corporation established under section 102.1 to the Generation Corporation, the Services Corporation, the IMO, the board, the Electrical Safety Authority or any other person.
"Application of this part
"(2) This part, except section 126, applies with necessary modifications to an order made under subsection (1) and, for that purpose,
"(a) a reference in this part to a transfer order shall be deemed to be a reference to an order made under subsection (l); and
"(b) a reference in this part to Ontario Hydro shall be deemed to be a reference to the subsidiary of the Financial Corporation established under section 102.1."
Mr Baird: This again deals with transfer orders. It allows for a transfer from a pension subsidiary to one or more of the successor employers, being Genco, Servco, Finco etc.
The Chair: Further questions or comments? Seeing none, shall this amendment carry? All those in favour? Opposed? This amendment carries.
There are no amendments proposed for section 127. Any questions or comments? Shall section 127 carry? All those in favour? Opposed? Section 127 carries.
An amendment is proposed for section 128, a government amendment.
Mrs Johns: I move that subsection 128(1) of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by adding the following clause:
"(a.1) prescribing persons for the purpose of paragraph 8 of subsection 113.1(2);"
This is talking about the land registry that we have put a number of amendments in. We're talking about who can receive title to the Ontario Hydro land assets, and we're narrowing that down as a result of paragraph 8 in section 113.
The Chair: Further discussion on this? Seeing none, shall this amendment carry? All those in favour? Opposed? This amendment carries.
Shall section 128, as amended, carry? All those in favour? Opposed? This section carries.
No amendments are proposed to section 129. Any discussion? Shall section 129 carry? All those in favour? Opposed? It carries.
Section 130: We have a government amendment on page 118.
Mrs Johns: I move that subsection 130(1) of the Electricity Act, 1998, as set out in schedule A to the bill, be struck out and the following substituted:
"Municipalities may incorporate electricity businesses
"(0.1) One or more municipal corporations may cause a corporation to be incorporated under the Business Corporations Act for the purpose of generating, transmitting, distributing or retailing electricity.
"Conversion of existing electricity businesses
"(1) Not later than the second anniversary of the day this section comes into force, every municipal corporation that generates, transmits, distributes or retails electricity, directly or indirectly, shall cause a corporation to be incorporated under subsection (0.1) for the purpose of carrying on those activities."
We heard a lot about this section when we were out travelling. We heard from AMO, the Municipal Electric Association and the utilities themselves that they didn't feel there was a level playing field and that they should be able to enter into different businesses that they might not be in presently. So we've set that up in subsection (0.1). What we've also said, in the second one, is that they have to become an Ontario business corporation.
The Chair: Further discussion? Seeing none, shall this amendment carry? All those in favour? Opposed? This amendment carries.
We have an NDP motion, page 119.
Mr Wayne Lessard (Windsor-Riverside): I move that subsection 130(1) of the Electricity Act, 1998, as set out in schedule A of the bill, be struck out and the following substituted:
"New corporations may be established
"(1) A municipal corporation that generates, transmits, distributes or retails electricity, directly or indirectly, may cause a corporation to be incorporated under the Business Corporations Act for the purpose of carrying on those activities."
Once again, this follows from the comments we received from the utilities and from the Municipal Electric Association with respect to the requirement that they must incorporate a corporation under the Business Corporations Act and that it be done within two years. This gives them the flexibility to establish themselves as a corporation or not and removes that requirement that they do so within two years. It provides greater flexibility for the utilities.
Mrs Johns: One of the fundamental policy decisions that was made in the white paper was that these municipal electric utilities and the monopolistic businesses we have now were going to become Ontario business corporations so there would be accountability to the shareholders, so that we would see audited financial statements, so that there would be a number of requirements that the Ontario Business Corporations Act puts on a corporation that we felt were excellent accountability measures. We feel very strongly that all of these corporations should come under the Ontario Business Corporations Act. It's fundamental to our restructuring and adding competition to this sector.
The Chair: Further discussion? Shall this amendment carry? All those in favour? Opposed? This amendment is lost.
Another NDP amendment on page 120.
Mr Lessard: I move that section 130 of the Electricity Act, 1998, as set out in schedule A of the bill, be amended by adding the following subsection:
"(6) No person other than a municipal corporation shall hold or acquire the voting securities of a corporation incorporated pursuant to this section."
This amendment is being proposed to prevent the privatization of municipal electric utilities that we think can take place pursuant to Bill 35. We feel that municipalities may, as a result of the responsibilities that have been imposed on them through downloading, find themselves in desperate financial situations and be forced to look to their utilities as a lucrative source of cash and want to unload them. We don't want to see the sale of assets at firesale prices. We don't want to see that with Ontario Hydro's former assets, and we don't want to see municipal utilities selling their assets at firesale prices as well. This states that the municipality is the only person who can acquire securities in the corporations that are established to generate and distribute or retail electricity within municipalities.
Mrs Johns: This of course is fundamental, again, to the white paper. We believe that both Ontario Hydro and the municipal electric utilities should have the ability to be able to run a business in a much better way than they have in the past. To do that, they may have to look at different ways of raising funds, of doing things. I fundamentally disagree with Mr Lessard on this issue. He's basically saying that the people who are elected at the local level are not capable of making the decisions they were elected to make, that they're not capable of making decisions to get the best dollar for their product, so they're going to firesale them. I just disagree with that.
The other thing I want to make very clear is that an equitable transfer happened in this province. Dollars moved up and down, and services moved up and down, so that we had one representative as opposed to all three levels of government working on specific issues. There was an equitable transfer of funds and services that went with the Municipal Act.
The Chair: Further questions or comments? Seeing none, shall this amendment carry? All those in favour? Opposed? The amendment is lost.
Further discussion on this section? Shall section 130, as amended, carry? All those in favour? Opposed? This section carries.
There are no amendments proposed to section 131. Any discussion on this section? Seeing none, shall section 131 carry? All those in favour? Opposed? This section carries.
Section 132: We have an NDP amendment to this section. Actually, I stand corrected. This is not an amendment; it's in fact a piece of information. Shall section 132, then, carry? All those in favour? Opposed? Section 132 carries.
Section 133: We have an amendment proposed by the government.
Mrs Johns: I move that section 133 of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by adding the following subsection:
"(1.1) Despite subsection (1), a transfer bylaw may not transfer any liabilities, rights or obligations arising under a debenture issued or authorized to be issued by a municipal corporation."
In this section, we were trying to ensure that municipal debentures could not be transferred. We felt that people, when they were buying debentures at the municipal level, were depending on the municipal corporation as a guarantee, so they could not be transferred.
The Chair: Further discussion? Seeing none, shall this amendment carry? All those in favour? Opposed? This amendment carries.
Further discussion on 133? Shall this section, as amended, carry? All those in favour? Opposed? This section carries.
Section 134: No amendments. Any discussion? Shall this section carry? All those in favour? Opposed? Section 134 carries.
Section 135: We have an NDP amendment on page 123.
Mr Lessard: I move that section 135 of the Electricity Act, 1998, as set out in schedule A of the bill, be amended by adding the following subsection:
"Collective agreements, etc.
"(2.1) The transferee is bound by any collective agreements, employment contracts and other arrangements conferring rights on employees as if the transferee had been a party to those agreements, contracts and arrangements."
The purpose of this amendment is to ensure that all employee rights, not just those that are included in collective agreements, must be upheld when there is a transfer. I think that may have come as a suggestion from the Canadian Union of Public Employees. I just can't recall where that came from, but the reason for it is that there may be other rights that employees enjoy that may not be included in collective agreements, and the purpose of this section is to cover off those rights as well.
Mrs Johns: I don't remember having been asked for this, but it's my understanding that this bill doesn't refer to successor rights, which means that the existing successor rights provisions under the Labour Relations Act will continue to apply. Can I get some legal opinion on that?
Ms Brandon: That is covered.
Mrs Johns: So in effect this amendment is covered by what we already have.
Ms Brandon: Yes. The only thing I'm not clear on is this reference to what these other rights may be and where they'd be coming from. If it was something that wasn't being covered by the collective agreement and the successor rights, it could be dealt with in a transfer bylaw if we knew what these things were.
Mrs Johns: Did you have any idea what you were talking about when you were saying "other rights?"
Mr Lessard: I was just citing an example. Maybe you can tell me what other sorts of rights may be covered other than what's in a collective agreement under the Labour Relations Act.
Ms Brandon: I'm sorry, I can't help you out on that. I don't know.
The Chair: Further discussion? Seeing none, shall this amendment carry? All those in favour? Opposed? The amendment is lost.
Further discussion on section 135? Shall section 135 carry? All those in favour? Opposed? This section carries.
Section 136, we have a government amendment proposed.
Mrs Johns: I move that section 136 of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by adding the following subsections:
"Use of amount transferred
"(2) Any amount transferred under subsection (1) shall be used by the transferee only to pay for capital costs in respect of electrical power services for which the amount transferred was collected.
"Effect on municipal bylaw
"(3) A municipal bylaw that relates to development charges in respect of which an amount is transferred under subsection (1) ceases to apply in respect of electrical power services on the date of the transfer but otherwise continues to have effect, with necessary modifications."
The Chair: Shall this amendment carry? All those in favour? Opposed? The amendment carries.
Shall section 136, as amended, carry? All those in favour? Opposed? Section 136 carries.
No amendments are proposed to sections 137 or 138. Shall sections 137 and 138 carry? All those in favour? Opposed? Both sections carry.
Section 138.1 is a new section proposed by the government.
Mrs Johns: I move that the Electricity Act, 1998, as set out in schedule A to the bill, be amended by adding the following section:
"Statements in registered documents
"138.1(1) A statement, in a registered document to which a corporation incorporated under the Business Corporations Act pursuant to section 130 is a party, that land described in the document was transferred to the corporation, by or pursuant to a transfer bylaw, from a municipal corporation or from a commission or other body through which a municipal corporation generated, transmitted, distributed or retailed electricity, and any other statement in the document relating to the transfer bylaw, shall be deemed to be conclusive evidence of the facts stated.
"No new interest
"(2) Subsection (1) does not give any person an interest in land that the municipal corporation or the commission or other body did not have.
"References to unregistered transfer by-laws
"(3) A document that is otherwise capable of being registered or deposited under the Registry Act or registered under the Land Titles Act and that refers to an unregistered transfer bylaw may be registered or deposited under the Registry Act or registered under the Land Titles Act despite any provision of those acts.
"(4) In this section,
"'land' means land, tenements, hereditaments and appurtenances, or any estate or interest therein; ('bien-fonds')
"'registered document' means a document registered or deposited under the Registry Act or registered under the Land Titles Act. ('document enregistré')"
This is a mirror amendment to the Ontario Hydro ones for the municipal electric utility.
Mr Lessard: As we have the lawyers here, maybe they could explain to us what a hereditament is.
Ms Brandon: It's property that's capable of being inherited. Beyond that, I honestly don't really know a whole lot about it.
The Chair: Further discussion? Shall this amendment, section 138.1, carry? All those in favour? Opposed? This section carries.
Section 139: No amendments are proposed. Any questions or comments? Shall this section carry? All those in favour? Opposed? Section 139 carries.
Section 140: A government amendment found on page 126.
Mrs Johns: I move that section 140 of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by adding the following subsection:
"Release of transferor
"(2) Subject to subsection (1), the transfer of a liability or obligation under this part releases the transferor from the liability or obligation."
This again mirrors the Ontario Hydro amendment that we put through and this is for the municipal electric utility.
The Chair: Shall this amendment carry? All those in favour? Opposed? This amendment carries.
We have an NDP amendment to this section.
Mr Lessard: I move that section 140 of the Electricity Act, 1998, as set out in schedule A of the bill, be amended by adding the following subsection:
"(2) Subsection (1) does not apply to collective agreements, employment contracts and other arrangements conferring rights on employees."
What this subsection seeks to do is ensure that once a transfer takes place, employees are not bounced back and forth between the former employer and the new employer in seeking to enforce any rights they may have, or had in the past.
Mrs Johns: I was actually trying to ascertain what Mr Lessard was talking about. I'd like to hear from the legal department, if I could, if his concerns are covered in Bill 35.
Ms Brandon: The transfer bylaw can provide that the obligations shall be enforced against the new employer. Subsection 140(2), which we just added, would legislatively provide that the municipality no longer has any responsibility for that. So it would only be to the new employer that the person could look, and should look.
Mrs Johns: So there's no way that an employee could get bounced back and forth. They would go from the municipal electric utility to the new corporation once the transfer order was done?
Ms Brandon: That's right. I assume you're talking in terms of enforcing their rights that they don't get bounced back and forth, not that they don't get bounced --
Mr Lessard: That's right.
Ms Brandon: If the transfer bylaw provides that their rights and obligations under the agreement should be enforced against the successor employer, which a transfer bylaw can provide, then 140(2), which was just added, says that the transferor, the municipality, has no further liability or obligation to that. So they wouldn't have any basis to tell the employee, "Go back to the municipal corporation," because the municipal corporation was completely released.
The Chair: Further discussion? Seeing none, shall this amendment carry? All those in favour? Opposed? The amendment is lost.
Further discussion on section 140? Shall section 140, as amended, carry? All those in favour? Opposed? This section carries.
Section 141: A government amendment is proposed.
Mrs Johns: I move that section 141 of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by striking out "deemed to have been commenced" in the sixth and seventh lines and substituting "continued."
This mirrors what we did in the Ontario Hydro section.
The Chair: Further discussion? Shall this amendment carry? All those in favour? Opposed? The amendment carries.
Further discussion on section 141? Shall this section, as amended, carry? All those in favour? Opposed. This section, as amended, carries.
Section 142: There are no amendments proposed. Any discussion? Shall section 142 carry? All those in favour? Opposed? Section 142 carries.
Section 143: A government amendment is proposed.
Mrs Johns: I move that subsection 143(1) of the Electricity Act, 1998, as set out in schedule A to the bill, be struck out and the following substituted:
"Certain rights not affected by transfer
"(1) A transfer by or pursuant to a transfer bylaw,
"(a) shall be deemed not to constitute,
"(i) a breach, termination, repudiation or frustration of any contract, including a contract of employment or insurance,
"(ii) a breach of any act, regulation or municipal bylaw, or
"(iii) an event of default or force majeure;
"(b) shall be deemed not to give rise to a breach, termination, repudiation or frustration of any licence, permit or other right;
"(c) shall be deemed not to give rise to any right to terminate or repudiate a contract, licence, permit or other right; and
"(d) shall be deemed not to give rise to any estoppel."
This mirrors again what we did for Ontario Hydro in a previous section.
The Chair: Further discussion on this amendment? Seeing none, shall this amendment carry? All those in favour? Opposed? This amendment carries.
Further discussion on section 143? Shall section 143, as amended, carry? All those in favour? Opposed? This section carries.
No amendments are proposed to sections 144, 145 or 146. Any discussion on these three sections? Shall sections 144, 145 and 146 carry? All those in favour? Opposed? These three sections carry.
Section 147, an NDP amendment.
Mr Lessard: I move that subsection 147(1) of the Electricity Act, 1998, as set out in Schedule A of the bill, be amended by striking out clause (b).
What this does is eliminate the ability of the Lieutenant Governor in Council to make regulations that may exempt contracts from successor rights.
Mrs Johns: I would like to hear the legal opinion on that. It's my understanding that by taking out clause (b) what in effect is happening is that contracts are not breached if they're transferred. It is conceivable that some contracts such as financing or debt contracts should not be transferred and you're stopping that from happening. I just want to hear the legal opinion on your motion.
Ms Brandon: I agree with what Mrs Johns has just stated. Section 143 itself actually mirrors a provision that was put into the Ontario Hydro provisions. There were contracts there, and again it had to do with some debt-financing matters, that the government in developing this stuff thought that maybe when they are transferred it should be treated as a breach of the contract so that the parties have to go back and renegotiate. That was why we put in a provision to carve out some of these contracts from what we're calling the curative provisions. So the effect of excluding some of these contracts from the application of clause 147(1)(b) would mean that they are terminated or could be deemed to be terminated.
The Chair: Further discussion? Seeing none, shall this amendment carry? All in favour? Opposed? The amendment is lost.
Further discussion on section 147? Shall this section carry? All those in favour? Opposed? This section carries.
Mrs Johns: That's just an information piece from the government and we're going to be voting for this section.
The Chair: Then no amendments are proposed. Any further discussion on section 148? Shall section 148 carry? All those in favour? Opposed? The section carries.
Sections 149 and 150 have no amendments proposed. Are there any questions or comments on these two sections? Shall sections 149 and 150 carry? All those in favour? Opposed? Both these sections carry.
We're about to move into Schedule B, so I ask, shall Schedule A, as amended, carry? All those in favour? Opposed? Schedule A carries.
Now moving into Schedule B, the first amendment proposed is a Liberal amendment and since we have no Liberal member present that is out of order.
The NDP motion, then, on page 133.
Mr Lessard: I move that section 1 of the Ontario Energy Board Act, 1998, as set out in Schedule B of the bill, be amended by striking out paragraph 6 and substituting the following:
"6. To actively promote energy efficiency and the use of cleaner, more environmentally benign energy sources.
"7. To reduce electricity bills for all consumers."
What this does is change the wording in the existing section to read that instead of "facilitate," the Ontario Energy Board is mandated "to actively promote energy efficiency," and it also removes the phrase, "in a manner consistent with the policies of the government of Ontario."
Just to echo our concerns about what that means, I think the wording, "in a manner consistent with the policies of the government of Ontario," is redundant and actually restricts the mandate of the Ontario Energy Board because, as we know, the environmental policies of this government have been very seriously criticized by the Environmental Commissioner in her last two reports and I don't even know why the government would want to have the words "in a manner consistent with the policies of the government of Ontario" in there just to attract a flag to that record.
Number 7, "To reduce electricity bills for all consumers," is something that's been the subject of much debate during our clause-by-clause hearing because the title of the bill states that this is not only, "An Act to create jobs and protect consumers," but to do it "by promoting low-cost energy," and nowhere in the purpose or objects of the bill is that set out. We've argued to have that put in, but that has been consistently defeated by government members. This is another opportunity to ensure that what is in the title of the bill is actually reflected in the bill, the intention being that there be low-cost energy as a result of Bill 35.
This gives the Ontario Energy Board the mandate to ensure that there is low-cost energy for all consumers in the province. I think it's essential that this be one of the responsibilities of the Ontario Energy Board. The minister has been consistent in his remarks in the Legislature and outside that the purpose of the bill and his intention is that it result in lower-cost energy for all consumers, and this ensures that the Ontario Energy Board has that goal as part of its mandate.
Mr Doug Galt (Northumberland): Just a couple of quick comments. Essentially this was debated about four days ago under a different heading of this bill, going into a different act. The member opposite makes reference to item 6 in the changes, dropping, "in a manner consistent with the policies of the government of Ontario." Under a general heading of "Objectives," it seems logical to me to put in a statement. It could be a party of a different colour in government and I would think they would want to have a similar reflection that it would look to the policies of the government of the day as to how it would function.
I think we've been into quite a bit of debate on item 7 that he is making reference to, "To reduce electricity bills for all consumers." Certainly he knows what happens when you put a ceiling or a floor on any price. It artificially distorts the reality of competition. The experience throughout the world, when competition has been brought in for electricity, is that prices have either held their own or gone down. In some areas they've gone down very significantly. To put a ceiling on the price would be unrealistic. I know this isn't a specific ceiling, but it's certainly suggesting and enabling the opportunity to put a ceiling on, and our government is not supportive of putting ceilings on the price of anything.
Mr Lessard: Once again, this isn't putting a ceiling on the price of energy at all. We have an Ontario Energy Board, which has a mandate that includes protection of the interests of consumers of energy. In that mandate there are a number of functions that they've been mandated to undertake: "to facilitate competition...to provide...non-discriminatory access...to protect the interests of consumers...to promote" energy "efficiency...." A number of things are put in there as part of their mandate to ensure that the Ontario Energy Board deals with that responsibility they have to the public in a manner that's in their best interests.
We've given the energy board that watchdog mandate for a reason; that is, so they do have some independence from the government in looking after the interests of consumers. If the government says that the energy board, in undertaking that mandate, shouldn't be looking out for their best interests to make sure they have lower-priced energy, then I guess that really sends a signal to the energy board and to consumers that they'd better not be looking forward to lower rates, because the Ontario Energy Board certainly isn't going to be looking to promote that, and the government in defeating the amendments to the Electricity Act as well with respect to promoting low-cost energy really doesn't support that principle either. It's no surprise that they don't want the energy board to be struck with that mandate either. I think that really sends the signal to consumers in Ontario that you'd better be prepared for higher electricity rates as a result of Bill 35.
Mr Sean G. Conway (Renfrew North): I have a question for Les and the staff. Can you tell me whether there is another jurisdiction in the developed world that is or has recently moved to deregulation of the electricity marketplace which has, like Ontario, the preponderance of nuclear power that we have here, representing roughly 60% of our generation base at the point of transition? Is there another jurisdiction?
Dr Galt makes the point that there are few places where there's been a move to deregulation where prices have not come down. I'm trying to find a jurisdiction in the developed world that has moved or is moving to deregulation, moving to a competitive marketplace, that is like Ontario in that roughly 60% to 65% of generation at the time of transition is nuclear. I raise that because the experience in most jurisdictions is that one of the really complicating problems around rates in the transitional period is stranding, particularly associated with nuclear assets. Have we got another jurisdiction that has Ontario-like nuclear capacity?
Mr Les Horswill: Not precisely.
Mr Conway: What would the closest be?
Mr Horswill: Sweden has a very substantial nuclear program and deregulated and enjoyed substantial price reductions immediately thereafter and didn't have much stranded debt. I can't recall --
Mr Conway: That's a helpful answer. If I want to do some research I should look at the Swedish example. That might be the best one, in your view.
Mr Horswill: I think so.
Mr Conway: I've got my answer. I don't want to take any more time.
Mr Galt: I just have to respond to the member of the third party and some of his comments that the government doesn't care. I think if he looks under part I, section 1, "General," every one of those six points makes reference to prices. Let me reiterate the content, just so he's clear. Number 1 talks about "facilitating competition in the generation and sale"; item 2 talks about "non-discriminatory access to transmission", which is about competition; item 3 talks about "to protect the interests of consumers with respect to prices"; item 4, "to promote economic efficiency"; item 5 talks about "to facilitate the maintenance of a financially viable electricity industry"; item 6 talks about "to facilitate energy efficiency."
I don't know how many more times you can say this. I suppose we can put it in 99 times, but I would think how it's being said here is just fine and the addition that they're suggesting really doesn't add anything to the general overview of this bill. I think it's said very well. I just wanted to point out to him that the government is indeed very concerned and his comments really do not fit at all with what the government has put into this bill.
Mr Lessard: Let me ask Dr Galt why the words "promotion of low-cost energy" appear in the title of the bill but nowhere else.
Mr Galt: How much duplication would you like?
Mr Lessard: So it's excessive wording, right? We want to try and reduce the number of words we put in bills, so we only have these good intentions in the title but we don't want to include them anywhere else as objects of the bill or responsibilities of the Ontario Energy Board. It's all well and good to list all of those things in there as the responsibilities of the board, but to have something that says something far different in the title of the bill, that says promote low-cost energy, that's what the minister touts as part of the objectives of this bill. I think it's misleading to have it in the title of the bill and not to have it in the objects of the bill or in the mandate of the Ontario Energy Board.
You can say all you like about all the words that are in there. I would say that 1 to 6 are probably redundant. It should just say that what the Ontario Energy Board should be doing is promoting low-cost energy for all consumers through competition. That would eliminate a whole lot of words and coincide with the title of the bill and what the minister is trying to sell to electricity consumers here in the province.
The Chair: Further discussion? Seeing none, shall this amendment carry? All those in favour? Opposed? The amendment is lost.
Further discussion to section 1 of schedule B? Shall this section carry? All those in favour? Opposed? This section carries.
Schedule B, section 2: We have an NDP amendment on page 134.
Mr Lessard: I move that section 2 of the Ontario Energy Board Act, 1998, as set out in schedule B of the bill, be amended by striking out paragraph 5 and substituting the following:
"5. To actively promote opportunities for energy efficiency."
What that amendment seeks to do is to give the Ontario Energy Board a mandate with respect to its dealings with gas regulation, the mandate to promote opportunities for energy efficiency. It once again removes those words "consistent with the policies of the Ontario government." If Dr Galt is concerned that maybe there are too many words in this bill, this is an opportunity to meet his desire to remove some of them. There are some excessive words here that we can eliminate. I would hope that he would support this amendment on that basis.
Mr Galt: We just want to be consistent.
The Chair: Seeing no further discussion, I put the question. Shall this amendment carry? All those in favour? Opposed? The amendment is lost.
Further discussion to section 2? Shall section 2 carry? All those in favour? Opposed? This section carries.
Sections 3 to 21, inclusive, have no amendments proposed. Any discussion on those sections?
Mr Conway: Yes, I have a question for Les. What is the current commitment of the government to provide additional resources to the energy board to carry out the not inconsiderable functions that are being visited upon that august regulator? I should add, new responsibilities. Can you just give the committee some sense of where we were prior to Bill 35 in terms of full-time-equivalent staff and where you expect to be at or about day one of the brave new world?
Mr Horswill: I think the base has hovered around 45 to 50 employees. Management Board has released resources for the board to presently expand by 19 positions and we expect that the OEB will be coming forward with another submission later in the fall after they've looked more carefully at the structure of the board. The initial release of resources provides them ample resources to acquire responsibly new staff this fall and to spend adequate consulting dollars to assist in the interim licence development and the initial tariffs.
The initial transfers basically constitute the equivalent resources Ontario Hydro had been spending on distribution regulation. It is assumed that over time the resources of the OEB will have to be increased in addition to the 19 new positions by some equivalent thereof if the case is agreed to by Management Board.
Mr Conway: So the full-time equivalent was about 45 to 50 before the brave new world and that's expected to increase by about 30% for day one of competition.
Ms Anne Powell: The 19 relate to the balance of this fiscal period, so that would take us to April 1, 1999. Then again we will be looking at more permanent resources that will be required in the next fiscal period, from 1999 to 2000. By the time competition opens up, that number will be larger than the incremental 19 positions.
Mr Conway: What is your expectation then? What does "significant" mean relative to the 45 or 50 that had been there through, say, the 1990s?
Ms Powell: There hasn't been an approved plan done but there have been estimates that the number would double. But those have not been approved numbers and we did not go forward with those because we needed to think out the process in more detail.
Mr Conway: I don't wonder.
The Chair: Further questions or comments to those sections? Shall sections 3 to and including 21 carry? All those in favour? Opposed? Those sections carry.
Section 21.1: A new government amendment, please.
Mrs Johns: I move that the Ontario Energy Board Act, 1998, as set out in schedule B to the bill, be amended by adding the following section:
"Hearings under Consolidated Hearings Act
"21.1(1) Despite subsection 4(4) of the Consolidated Hearings Act, the establishing authority under that act may appoint one or more members of the board to be members of a joint board holding a hearing under that act with respect to an undertaking for which, but for the application of the Consolidated Hearings Act, a hearing before the board is or may be required.
"Where term of member ends
"(2) If a joint board commences to hold a hearing under the Consolidated Hearings Act and the term of office on the Ontario Energy Board of a member sitting for the joint hearing expires or is terminated before the proceeding is disposed of, the member shall remain a member of the joint board for the purpose of completing the disposition of the proceeding in the same manner as if his or her term of office had not expired or been terminated."
What we're trying to do here is ensure that members of the board can sit on another board that would fall under the Consolidated Hearings Act, and also that if a member's term is finished, if they're in the middle of a hearing, they can finish that hearing.
The Chair: Further discussion? Shall this amendment carry? All those in favour? Opposed? The amendment carries.
Moving now to schedule B, no amendments are proposed to sections 22, 23 or 24. Shall these three sections carry? All those in favour? Opposed? Sections 22, 23 and 24 carry.
Section 25, we have an NDP amendment found on page 136.
Mr Lessard: I move that subsection 25(6) of the Ontario Energy Board Act, 1998, as set out in schedule B of the bill, be amended by adding the following clauses:
"(e.1) providing for intervenor funding, in the prescribed circumstances, for parties making presentations before the board;
"(e.2) prescribing circumstances for the purpose of clause (e.1)."
The purpose of this amendment is to provide opportunities for intervenor funding for proponents before the Ontario Energy Board hearings. This is being placed in here because the current government, in its wisdom, eliminated intervenor funding, and this gives people who want to protect the public interest and the environment an opportunity to seek intervenor funding so that they can make representations before the board.
Mr Conway: A question in this connection for Les again. As it currently stands, how does the department imagine Ma and Pa Kettle having any kind of sensible and affordable involvement with any number of proceedings at the board that may touch on vital interests of their consuming situation? There was some talk about this in the hearings, if you recall. The Consumers' Association, I think Mr Laughren and a couple of others made the point that this is a new kind of regulation. It's going to be significant and meaningful. It's an extremely complicated business. One's natural worry is that you're going to have to be a high-powered lobby, a big-time law firm or some kind of very special interest to afford any kind of involvement on hearings that may in fact be very material to your own situation. What's the latest expectation of how that process is going to work and how the average consumer might interact with that?
Mr Horswill: The board is determined, with the new statute, as in the past, to enjoy the benefit of third-party evidence to help them make public-interest decisions as prescribed by the act. It is anticipated that the flexibility provided to the regulator to use public hearings, to use written hearings, to use flexible devices will not inhibit but in fact could broaden ease of access on a cost-effective basis to the board in making decisions. Certainly the act recognizes and the board recognizes that where substantial third-party interests are involved, there has to be access to third parties to comment in advance of the decision, particularly with regard to tariffs. Of course in the interim period, as we've discussed, the minister will take responsibility, as well as the board, on the interim provision of licences and tariffs.
I'd like to turn the question on funding over to our solicitor to assist.
Mr Conway: Before you do that, though, if one sits in on a National Energy Board hearing or the CRTC, particularly as a private citizen, one quickly understands that this is purely a game for corporate interests. You just cannot imagine participating in most of those exercises if you're not part of some corporate arrangement. I'm thinking of federal operations, which I've just happened to observe on occasion, and I just can't imagine citizens wandering in there, trying to interact with that process and doing so on the basis of his or her own resources or his or her own knowledge base. I'm trying to imagine how this scheme is going to work.
Ms Powell: You're quite right that the federal system with the National Energy Board is a very corporately run system, run by lawyers. The Ontario Energy Board, because it deals with end-use consumers and a number of landowner issues in the construction of facilities, has traditionally operated in a different mode and has made their hearings more accessible to individuals off the street. For instance, there's a notice of hearing that goes out in the newspapers and is required to be published. They invite people to participate through providing letters or as an intervenor. If they elect to take the intervenor route, they are provided assistance by the board's solicitor in making their presentation before the board, or if they want to participate in a way of drawing evidence, they're assisted in doing that, and they would be eligible for cost awards which the board presents. Those are done after the fact.
Mr Conway: I know something about how the energy board has worked in the past and I think you've described it quite precisely, but in many ways that's almost irrelevant. That's not fair; it's not irrelevant, but this is a totally new world. I can imagine Ma and Pa Kettle going to the energy board tomorrow and finding out that it's a hell of a lot different than yesterday, because what this board is going to now regulate is a very different breed of cat than they've been regulating in the past.
I would expect very quickly the energy board hearings to take on some, if not all, of the disagreeable character of those federal bodies to which I made reference, simply because the interests now are going to be much, much more significant and the players are going to be more numerous and more powerful. I can imagine situations where you're going to go to hearings and find yourself in a room with -- I've been to a number of those hearings and I know how they've worked, but I'll tell you, the new ones are going to have a whole host of new players, many of them very significant, well-resourced, aggressive players who are used to this game in other jurisdictions.
I'm just trying to imagine the ladies' aid coming in from wherever to make a pitch and finding out that they're there with Enron and Duke Power and the Acme Energy Services Corp who have this thing much more thoroughly cased than the poor ladies' aid will ever figure out.
Ms Powell: I quite agree with you that the mandate of the board will be different as we move into that future, and the players will be different and to an extent more sophisticated. There will be more sophisticated players there: however, I think reform is being introduced for administrative tribunals which you're probably aware of, the agency reform, where government is working with the agencies to try to assure that the people off the street can participate. I think the board will continue to move in that direction. It's not easy, but they will try to do it.
The issue we're discussing here is intervenor funding. Whether that would provide a better participation is --
Mr Conway: I have some very real concerns with intervenor funding, but I understand the point of Mr Lessard's amendment. Enron won't need intervenor funding, trust me, and if governments continue to pursue partial or full cost recovery for these oversight functions or these regulatory functions, and that certainly seems to be the general direction of policy, both locally and nationally, then I'm not so sure that I wouldn't say to the ladies' aid: "Don't waste your time at the energy board. Get to the street."
Mr Horswill: Could I just add, if I may, that the new world for the Ontario Energy Board is to a large extent about its powers, not its constituency. The Enrons and the Pollution Probes and the Northwatches have been before the Ontario Energy Board on numerous occasions in the last 25 years talking about electricity policy and talking about electricity rates. The difference now is that the board will be in a position to make decisions and not simply advise.
Mr Conway: But again I come back to a point that the consumers' association made, and I thought they made it very well. There are such enormous and powerful commercial interests at play in this. This always sort of reminds me of the parliamentarians in the British system, who pray for the free vote. They want the free vote because they want the independence that brings them. What they don't understand is that it exposes them to all of the pressures of lobbying that you see in the congressional system -- easily assaulted and picked off one by one.
The parallel here, it seems to me, is that we've now got a situation where, as the consumers' association pointed out in their presentation: "Electricity is to residential consumers an essential commodity. They cannot live without it.... Individually, residential consumers have virtually no economic bargaining power. That is in stark contrast to the major industrial consumers of electricity and the entities who would supply electricity in the restructured market." The point that the consumers' association rightly made is that individual consumers are going to find themselves in now with very focused, very powerful corporate interests at all levels, and I've got to believe that's going to include the regulatory stream.
We're pure in Ontario and none of this happens here, but if I look at the American experience, at the lobbying they're forced to report there around just the structure of their legislation, I see behaviour that is precisely what I would expect, just sharks everywhere. I have no reason to believe that those sharks are going to just assiduously avoid the regulatory world, where key decisions are going to be made. Because there are going to be so many things that are so bloody complex, there's a delicious kind of irony about this exercise we're engaged in now. I have no idea how many significant things are in the stream that's passing under our feet here every day, and I don't think anybody in the committee does. I just look at 175 or 200 government amendments, which are the first cut of changes and refinements and whatever. Again, as many have commented, this is enabling legislation, so the devil will be in the details, and most of the details are yet to be written.
I come back to where a lot of these decisions are going to be made. Mr Lessard's amendment would strike a lot of average citizens as being relatively sensible. I know that in some ways it isn't, because, as I said earlier, I have some very real concerns about intervenor funding and the kind of industry that it produced, particularly around Hydro hearings in an earlier time. Having said that, you'd have to be a dolt of the first order to imagine that you're going to have a situation before a regulatory panel where it's Ma and Pa Kettle versus Duke Power, or Ma and Pa Kettle versus Baton Broadcasting. It's an unfair fight. One group is going to be heavily resourced, highly focused, and the others are going to be pretty well on their own. You're telling me that the culture we've seen at the energy board, which is user-friendly, kind of informal, will continue and solve most of those problems. Is that basically what you're telling me?
Ms Powell: I think so, and I believe that Mr Laughren has committed to that too, that he wants to make the board's services more accessible.
Mr Conway: What Mr Laughren wants to do and what he will be able to do once this process begins -- again, if I look particularly to the United States and Great Britain, the complexity of the task here is very significant. This is not easy business, as just the reading of these amendments ought to make plain.
Anyway, enough said. I have some real concerns here about how this is actually going to work for the regular citizen.
Mr Lessard: What this is attempting to address, and what the opportunities that people have to access intervenor funding have been set up to address in the past, is really the inequity in bargaining power between competing forces who may be attending at hearings. As Mr Conway has said, there's going to be one group that's going to be well financed, well prepared and have unlimited resources to do research and make presentations, and then we have consumers, who are only trying to see lower prices for energy, as has been promised in this bill, but may find that they're not getting that and want to try to make presentations to the board to protect that interest they have to ensure that they do get lower prices.
We know the legislation includes the promotion of lower-cost energy in the title, but it's not one of the objectives of the bill, it's not one of the objectives of the mandate for the Ontario Energy Board. So it's only going to be left to consumers to look out for their own interests, and they're going to be looking out for their own interests in a system that is going to be a market-based one, not one that is focused on the public interest but is going to be focused on the interests of large corporate players and their shareholders. I have a very real concern about who is going to be the winner in a fight like that.
I have high regard for Mr Laughren's intentions to ensure that consumers have easy access to make presentations before the board. However, what his intentions are and what he's able to do are two different things, and he's not going to be there forever, I presume. This is legislation that's going to have an incredible impact well into the future, and there needs to be some mechanism to ensure that small consumers can adequately defend themselves at the Ontario Energy Board level and that they have some financial resources available to them to be able to do that.
Mrs Johns: I just wanted to draw to your attention that I heard from the ministry that the board could award costs. We have to be aware that we have had some experiences with intervenor funding in the past that have not worked well. But this approach of the board awarding costs has worked fairly well in the short term that we've been using it, and I see no reason to move away from that unless we have some specific examples where we find that it's not working, and then we should look at our policy of that again.
Mr Conway: I think the member makes a good point. The only other thing I want to cite is a point I made some days ago. I was talking about the Union Gas fandango of 10 years ago. I'm telling you, I can just imagine -- I don't care if you're Solomon herself and you're chair of that energy board -- if you get one, God forbid that you should get two Union Gas activities the likes of which we saw in the mid-1980s, you're going to need 900 people to figure out who's on first and what's on second. I can guarantee you, at the end of the day, your best hope will be that three years after it's all over you might figure out what was going on.
I just make the point. I think Mrs Johns's last intervention was a good one. But I am under no illusions about this new world order. These are going to be shark-infested waters. It's not all going to be bad, but you won't need very many bad cases to really tie up the regulator and many of the resources. We'll just have to see what we see, but I cite again the Union Gas case of the mid-1980s. I would not want to be Mr Laughren trying to figure out what was going on under my feet. As I say, the OEB had at least one reference and I think there were one or two separate Ministry of Energy reviews, and I don't know that they ever figured it out.
Another NDP amendment.
Mr Lessard: I move that section 25 of the Ontario Energy Board Act, 1998, as set out in schedule B of the bill, be amended by adding the following subsection:
"(8) In exercising their powers under this section, the board and the Lieutenant Governor in Council shall ensure that members of the public are not prevented from bringing issues of public importance before the board."
That prevents the awarding of costs against an intervenor specifically to discourage that intervenor by imposing a financial penalty against them.
Mrs Johns: I know one of the members up here from the ministry used to be on the Ontario Energy Board, and I'm just wondering if we could hear from Anne. Is it often the case that an intervenor is awarded costs, as Mr Lessard is concerned about, and why would that happen?
Ms Powell: Intervenors are awarded costs at almost every Ontario Energy Board hearing. You remember that when the Consumers' Association of Canada came before the committee and spoke, they made a proposal, and I believe it's in a future Liberal motion that will be discussed later. The Consumers' Association of Canada, as far as I know, has never expressed concerns with the cost-award system of the board. It provides adequate cost coverage for them, and they have been quite satisfied by it. That section is in the current act and is identical in this proposed act.
Mrs Johns: I think I misstated my question. I thought I heard Mr Lessard say that there was some penalty if they brought forward a frivolous suit.
Ms Powell: That's quite correct. In the case of intervenor funding, the funding is up front. That amount is given and is not audited. In the case of the cost-award system, following the hearing, the board makes cost awards to parties based on the contribution they have made in the hearing to the decision. In cases where there is evidence brought before the board which has delayed hearings, has not focused on the issues that have been decided prior to the hearing commencing, the board has denied costs in those cases as it sees that the evidence is not relevant to the issues that were set out before the hearing commenced.
Mrs Johns: What I'm hearing you say is that there isn't really a penalty; they just don't get their costs or they have to return the costs that they've been provided if they don't follow the mandate or they don't provide information that's relevant and useful in the Ontario Energy Board's eyes.
Ms Powell: That's correct.
Mr Lessard: Have there been occasions when intervenors have been forced to pay costs to the other side?
Ms Powell: I'm not aware of any, but I'm not that close to it, so I can't answer that question with certainty.
Mr Conway: Just on that, I'm just reviewing the Consumers' Association of Canada's brief, and they say some things here that I think should give us some comfort about the past practices of the OEB. Let me again cite from the board's report and just ask for a quick response. In their brief, the Consumers' Association of Canada indicate on page 5 that, "The Ontario Energy Board is directed to facilitate competition," but they go on to say, "The energy board does not have the power to create competition." One of the board's objectives is "to protect the interests of consumers with respect to prices." The consumers' association then observes that it's unclear what powers the board has to do that.
Maybe this is a good opportunity to ask the panel, what, in your view, is the answer to the Consumers' Association of Canada's rather good and pointed question? What are the specific powers that the board has to actually carry out its mandate to protect the interest of consumers with respect to prices, as you understand both the act and the environment in which it will operate?
Ms Powell: The board is also charged with the other parts of the objectives, that you haven't cited, concerning prices. Those very definitely are to protect consumers.
Mr Conway: The consumers' association is around the OEB a lot more than I am, so I was just struck by what --
Ms Powell: And to ensure that there is a reliable source and supply of energy. The Ontario Energy Board has been given greater powers relating to consumer protection, and those were strongly supported by the Consumers' Association of Canada. So they now have better tools to protect consumers.
Mr Conway: Notwithstanding the fact that CAC can't -- I'm reading from their brief. They like the fact that the board is to protect consumers, but they say to this committee that it's unclear to the Consumers' Association of Canada what specific powers the board has to do that, namely, protect consumers in the matter of prices. It's their brief. I'm not making this up out of whole cloth.
Mr Horswill: Of course, the regulator can't create businesses, but the board certainly has a mandate to facilitate access of generators to this market through the regulation of the transmission systems and inter-ties, and certainly it has a capacity in the licensing provisions to ensure transparency so customers can make informed decisions regarding alternative sources of electricity. Those are two, we think, quite positive responsibilities of the board to facilitate and broaden competition; literally, the creating of it we're talking.
The Chair: Further questions or comments? Seeing none, we have an NDP amendment on the floor. Shall this amendment carry? All those in favour? Opposed? The amendment is lost.
Shall section 25 carry? All those in favour? Opposed? The section carries.
Schedule B, section 26: a Liberal amendment.
Mr Conway: I move that the Ontario Energy Board Act, 1998, as set out in schedule B of the bill, be amended by striking out section 26.
This is, for me, an important point. One of the evils of the old order is that we've had a monopoly that has been unregulated by any kind of an independent authority but it has been closely directed on many occasions by cabinet. I would have thought that one of the cornerstones of the new policy would be that we were going, to the greatest extent possible -- and I don't want to be Pollyanna on this, because I understand some of the constraints. But I would have thought the one thing we would want to do would be to not give government, cabinet, the direct power that has caused so much of the problem over the past number of decades.
In section 26, the minister, meaning the cabinet, the Minister of Energy "may issue, and the board shall implement, policy directives that have been approved" by cabinet "concerning general policy and the objectives to be pursued" by the energy board.
That's sweeping, unfettered directive power for the cabinet to basically write the tune and call the tune for the regulator. Les, you look a little incredulous, but I think one can be incredulous for other reasons. I would have thought this policy intended significant steps back from the directive power that has caused a lot of the problem. Make no mistake about what I am saying here. I believe that if this policy is going to work -- I haven't got their paper with me, but I think Tom Adams and his group, Energy Probe, were quite concerned about some aspects of this, and rightly so.
Either you're going to have a reasonably free and clear market and independent regulator or you're not. Section 26, as far as I can tell, carries on the old evil, the directive power of cabinet. Les, I fought against this vigorously five years ago when we were amending the old Power Corporation Act with Bill 118, because I think this kind of directive power in the hands of any politician is going to create real difficulty.
I thought one of the attractions of the current policy was that we were going to step back from that and that we were going to give the regulator a much freer hand in respect of key decisions. I lost an amendment some time ago where I moved a similar concern, and it stands out more starkly in this particular section of the energy board act, but I repeat that the argument here is that the board ought to have the power to make judgments with much less direction from the government than section 26 intends. Therefore, I'm moving that it be struck.
The Chair: I want to indicate to the members that this motion is actually out of order because the proper procedure would be that you would simply vote against it. But I know you want to speak to that issue and I'm sure --
Mr Conway: This is a technical point. I haven't done this kind of legislation in some time, but when I submit a memorandum to legislative counsel indicating what I want done, I don't expect legislative counsel to send back to me things that are technically out of order. I'm a grown person. I don't mind being told, "You can't do this." Let that be registered, for whatever purpose. If things are out of order, they should be so indicated. I'm not here to move things that are out of order. I'm basically putting material that was provided by legislative counsel.
Mrs Johns: I want to comment on what Mr Conway has said. As the shareholder of some of these corporations, we of course have some concerns. I think what is excellent about section 26 in schedule B is that for the first time these policy directives are going to be out in the open. They're going to be clear. Everybody's going to know what they are, as opposed to what used to happen before, where it would be nudge, nudge, wink, wink and off you'd go to the energy board, the Minister of Energy, and they'd say, "I think you should do this," or, "I think you should do that."
These are out in the open. They're recorded in the Ontario Gazette so people can see what the policy directives are and what we're moving towards. You can't expect the Ontario Energy Board to operate in isolation from the government of Ontario. That's the way things are. They need to know what the policy is.
When Mr Laughren was in front of us he thought this was an excellent way to move forward. I asked him this question specifically, "What do you think of the policy directives?" because he came in right after Tom Adams. I think he said: "I need to see these. It's good that everybody sees what the government is telling me to do." It's a more open, accountable process as a result of that.
Mr Conway: Let me just speak to that. I think the member is right in saying that on some occasions in the past the directive power has been very surreptitiously used, but there have been many occasions when it's been very publicly used, and it has the same perverse effect in both cases. In the debates of the early 1990s the government used a directive power in broad daylight to do some things that were clearly not things that -- I'd better be careful how I choose my language here, but the point of the matter is, either you want an independent regulator or you don't. Mrs Johns, you've got to decide.
It's like the competition argument. Do you want competition or don't you? If you want competition, then you're going to have to accept what the vast majority of experts tell us are the preconditions to get that very thing. You cannot, conversely, establish barriers to prevent the very thing you say you want. Competition and regulation are, I thought, the two cornerstones of this policy. I have had deep and deepening worries about what the bill doesn't do with respect to actually creating a condition where true competition is going to be fostered. You and I will continue to differ on that.
Now I get over to the regulatory side. Trust me; I understand. I can just hear the arguments inside the department and the government over this question. These are the old arguments. "Oh my good grief, we can't let an unfettered regulator loose on something as vital as electricity and energy. They might do something on the eve of an election that would cause us no little bit of difficulty."
The little homily that Dr Galt gave a few minutes ago about how we shouldn't put caps on things -- don't mistake what was done two and a half or three years ago. "I, as government, decree there shall be no rate increase for a five-year period." That's a directive power exercised -- Les shakes his head. Damn right it's a directive power: That's the government telling the utility, "You're not going to raise rates for a five-year period regardless of what the market requires or what circumstances suggest."
Mrs Johns: That was Ontario Hydro where the shareholder is very different from a regulator. Let's get on to the topic.
Mr Conway: It's not different in effect. It's not different at all in effect. What is a directive power? It's government saying to a board, agency or commission, "This you can do, and this you won't do." Again, I understand that. All I thought we were doing in this policy was saying we wanted to have, for the first time, significant and meaningful independent regulation. To give you some credit, I think you are moving somewhat in that direction. However, section 26 of this particular schedule of the bill places, I think, an undue constraint on that very important aspect of this policy and I think it should be removed.
Mr Laughren gave exactly the answer I would expect him to have given. It's exactly the one I would have given had I been in his position. But we're not in his position. We're the Legislature. I look at the policy and say, "Independent regulation: I like that." Then I read section 26 of this schedule of the bill: The minister through the cabinet has got general directive power to tell the board to do any number of things. I see that as a very significant constraint on the working of the regulatory function.
Mrs Johns: I'd just like to say that I think it's important for the people who read the Hansard to understand what kind of policies we could set up under this directive. One of them would be that we could relax the constraints on green power. That's one that these people here have come up with. I think that's an admirable kind of policy. I think we need to talk about that and I think people need to know that's something we're trying to do. I think from that standpoint it sounds like this is some ominous thing, but in effect it's important that we get these policies out in the public, that people understand them, that they can work towards meeting government's policies. In that particular case, I think that would be a very attractive one to do.
Mr Conway keeps harping about the rate freeze. I'm prepared to always deal in politics, I suppose, but I have in front of me, thanks to some of my staff behind me, a December 14, 1993, Hansard from Mrs McLeod who was then, I guess, the leader of the Liberals, saying: "Ontario Hydro has decided to freeze rates. As I said, we applaud that." From that standpoint, you people were talking about freezing rates at Ontario Hydro too, so let's call a spade a spade here.
Mr Conway: You've been doing a very good job of that for a long time, and part of your compelling charm is your revolutionary commitment to a brave, new world order.
Mrs Johns: Yes, because the system is broken and it needs to be fixed.
Mr Conway: That's absolutely right. The trouble is that your revolutionary zeal just fades at the point --
Mr Conway: No, there's such a puritanical fervour about your determination to not make the mistakes of all of those terrible old Tories and Liberals, farmers and New Democrats who were in government trying to deal with Hydro over 75 years. I applaud you for that. But what are you doing here? That's a nice little speech about, "We would not want to encumber ourselves about the possibility of directing greater green power."
That's not what you're doing here. You're doing what every old centralizing cabinet, whatever, wants to give itself. You're giving yourself absolute unfettered power to direct anything under the sun. Now it may be that you don't ever intend -- I've never heard of a minister, a government say that they ever intended to do anything but the most limited things to advance the public good. Trust me, everybody says that. Look at what you're giving yourself here. There's just wide open directive power to do anything and everything. You're the one who's arguing that we've got to change the paradigm, we've got to move away from the decisions that have caused so much of the difficulties.
Make no mistake about it. One of the problems that governments of all stripes have faced in this policy area for a long time is that they don't like some of the obvious and painful political consequences of some decisions that might have to be made in the energy or the electricity sector. They're always anxious, whether they're Liberal, Tory, New Democrat, to find some way to ameliorate those because the politics of electricity are so powerful and sometimes so very painful.
I thought this policy intended to move away from that. Again, if what you're really saying is, "Independent regulation if necessary, but not necessarily independent regulation," that's something of which I will take note. I simply make the point that this is a sweeping directive power. It doesn't limit itself to green power, it's wide open.
Mrs Johns: Wide open and transparent.
Mr Conway: My point is, we've had transparent directives before.
Mrs Johns: When?
Mr Conway: The situation in the early 1990s about the Ontario government directing Hydro to do some things that a lot of people felt --
Mrs Johns: We're talking about regulators.
Mr Conway: Trust me, it's a directive power. I don't see that there is a very great difference. There is some difference but I don't think it is a qualitative difference.
I guess my question is, why do you think you need it? What is it that a good regulatory panel wouldn't understand? Presumably they read the Globe and Mail. They might even read the North Bay Nugget. What is it that the regulator might fail to understand?
Mrs Johns: Are you suggesting that the regulator should get the policy directive of the government out of the newspapers?
Mr Conway: No, I'm suggesting that if you believe in independent regulation, you believe in independent regulation.
Mrs Johns: There are policies that are decided, for example, the green power environmental issue here, where it's important for everyone to understand those kinds of issues. This is a very important way for the government to let the regulator know some of the policy directives they have. This does not stop the regulator from enforcing to the fullest extent of his abilities. It's not taking any power away from the regulator. What it is in effect doing is saying: "These are some of the broad policies that the government believes in. For example, with green power please consider the ability to promote green power," or whatever it might be.
These are very open and everybody in Ontario knows it. In the past, people have chosen whether they wanted to tell the world or the people of Ontario about this. Right now, we're going to have to be very open and say exactly what our policy directives are when it comes to electricity and gas, and I think that's a very good thing. I don't see how you could run this thing if you didn't have policy directives unless you did it under the table, and I think that's wrong.
The Chair: Mr Lessard, you wanted to speak to this.
Mr Lessard: I want to speak in support of the motion because what I see this section doing is really opening the door wide to political interference. As Mr Conway has said, either you believe in independent regulation or you don't. I'm reading from one of the backgrounders dated June 9, "Energy Competition in the New Marketplace." On the third page it says: "The bill also proposes amendments to the Ontario Energy Board Act. Under new legislation, the Ontario Energy Board would continue to be the independent regulator for the natural gas sector with a strengthened mandate to regulate the electricity sector and to protect energy consumers."
I have to ask the government members where the independence is for the regulator with this section being in place. The government members have been consistent in saying that what Bill 35 is supposed to do is to introduce a competitive marketplace to energy in Ontario. They're saying that in order to ensure that competitive marketplace serves the public interest and leads to lower prices, they're going to have an independent regulator, the Ontario Energy Board, with that mandate.
This is really another example of the government saying that they don't want to have power centralized in Queen's Park, and we heard that with respect to education as well, but we've seen increased centralization of power here at Queen's Park. If the intention here is for the government to continue to exercise some power in energy marketing, I think they should just say that.
There are no restrictions in this directive power in section 26, and Ms Johns has given at least one example of an area where this directive power may be useful for the government. I'm sure there are others, and if there is some intention for the government to continue to retain directive power in certain areas because they think that is in the public interest, then it would make a lot more sense to me to say that the minister may issue directives in those specific areas, because the way the section is set up right now, there are no restrictions whatsoever.
This really permits political interference if the government so chooses, and all of the good intentions of the government to have an independent regulator to ensure that a competitive marketplace is in the best interests of consumers is really defeated by this section being there. Maybe they say they never intend to use that directive power section -- I doubt that -- but the fact that it's there affects people's perception of what is really going on here, and that perception is that the government says they want to have an independent regulator but they still want to retain these wide-ranging powers to tell this independent regulator what to do.
I think it's wrong to retain that ability unless it's restricted in some way. That's why I support this motion, and unless the government wants to introduce an amendment to this section to say that this directive power is restricted to certain areas, I have no comfort in what the parliamentary assistant is trying to assure us this section really means in view of what it plainly says.
The Chair: Dr Galt, you're on my speakers' list. Did you want to go forward?
Mr Galt: Heavens, you remembered.
The Chair: I did. I have a list.
Mr Galt: When Mr Conway made the comment about the five-year freeze on hydro rates -- he may have put it in different wording. There's a big difference between down the road and competition and having put a five-year freeze on the present monopoly. We're dealing with a monopoly, as he's quite aware. That was part of our commitment in the campaign, part of our platform, so business would know where they're at until we could bring competition into the electricity field. I just wanted to make a quick reference back to that. He'd referred to my comments earlier.
Mr Conway: Listen, I understand why a political party would do that. We've all done it, but it's not done without consequence. That's all I'm saying. The consequence is reported in this, and next year's will be even more delicious. At some point, somebody is going to have to then apportion the hundreds of millions or billions of dollars worth of downstream financial consequences of that decision. But I don't fault a politician or a group of politicians for trying to say to the broader community, "This is just terrible and painful."
It's like the US Congress. They're all for a free market until something happens with commodity X or commodity Y or until a tight election is underway and there are a few seats in the Midwest. I see all of these freewheeling free marketeers in agriculture are now suddenly changing their tune about what Washington is going to have to do, because there are political and economic realities that weren't anticipated when they made the great speeches of three or four years earlier.
There are a couple of other things I want to say in this connection, and one of these sort of anticipates the next motion, but let me say it now as well. Why am I concerned about the government having this kind of direct power? Because it seems antithetical to a fundamental tenet of the new policy in ways that I've tried to articulate. But it's more than that. In this new world order, the government of Ontario has a major interest. It's not neutral, as we'll see in the next section when we get to a directive power around market power.
Who's the principal shareholder in Genco and Servco? I'm back to the old argument that I don't like a referee who also is a player in the game, and boy, is this referee -- in this sense I'm talking about the cabinet and its use of a directive power. It's an unfettered directive power. It's wide open. I'd have a little less problem maybe -- but it's still a fundamental concern -- if it was more narrow in scope, but it's wide open.
I raise it simply because, remember, the government is not without an interest in issues that are going to be before the board. It's not without a financial-commercial interest in some of the major questions that may be before the board and it would be possible, not hard to imagine, a situation where a government might be sorely tempted to use its directive power in this very intricate and complicated business to effect some benefit to its own commercial or financial interest with respect to matters that are before the regulator.
Ms Johns's concern about, "Please don't fence us in in our desire to do good works in the environment" -- I can't believe I'm going to do this, but I'm going to read from an editorial which appeared in this morning's edition of the Ottawa Citizen.
Mrs Johns: Is this the one that says don't blame Bill 35 for the stranded debt and gives you the little rocky road?
Mr Conway: No, it's the one entitled "Power Surge." It says: "But Bill 35 politicizes decision-making. For starters, it asks the Ontario Energy Board, a rate-setting body accustomed to operating under a clear mandate, to also act as an environmental regulator. The energy board knows nothing about the environment" -- I don't agree with that -- "Yet as Bill 35 is currently worded, the board would be facilitating 'cleaner, more environmentally benign energy sources in a manner consistent with the policies of the government of Ontario.'"
The editorial goes on: "Those few words contain enough confusion and potential conflict of interest to undermine not only the integrity of the board but Ontario's entire energy sector, gas utilities included." The editorial goes on, and I guess maybe this is the point that I would want to stress, that if the government wants to set out an environmental policy, it should do so in legislation apart from directives to the energy board. I don't want to take the time to read the entire editorial.
The point here, as far as I'm concerned, is that we have a situation where the government is not without an interest, together with the fact that I thought we were trying to create a situation where the temptations for government to use a directive power would be reduced and that does not appear to be happening here. The fact that the directive power is sometimes public and sometimes private doesn't affect, in my view, the impact of that directive power on the marketplace, including the policy marketplace.
Mrs Johns: I have two comments. The first one is that I think, since we're reading this article in, we should read the first part. It says: "Some time in the next several weeks, a sad saga in this province's history -- the century-long reign of an out-of-control Ontario Hydro -- will end with the breakup of the giant utility's monopoly. We will start cleaning up its mess: $30 billion in debt, exorbitant rates, a mismanaged nuclear program, the dirty coal that we continue to burn while cheaper, cleaner alternatives languish. Bill 35, the draft legislation that will lead us out of the Hydro hell, is for the most part sensible."
I also would like to --
Mr Conway: Do you want to read it or shall I?
Mrs Johns: You can in your time, if you'd like to.
What I think is important to put on the record here too is that, as I understand it from the ministry right now, what happens at this particular time up until the new world, is that cabinet could veto a decision from the Ontario Energy Board; they could revise a decision from the Ontario Energy Board. With this new age, they will not be able to do any of that, and this is, as I understand from them, the case that happens and still exists in the National Energy Board. I think we have to say if we're up front, everybody understands the policy directive and the Ontario Energy Board makes the decision. They still have ultimate power to come out with a decision that we have to accept, which hasn't been the case in the past. I think that's good news.
Mr Conway: I'll read the last paragraph of that editorial: "If the government wants to protect the environment, it can do so directly, by passing appropriate legislation. Turning the energy board," says the Ottawa Citizen this morning, "into its puppets is only a prescription for political chicanery." In some ways I think this editorial is too strong and it's misguided, particularly in the sections that you read, Ms Johns.
Mrs Johns: Oh, of course.
Mr Conway: If, in Bill 35, the government was actually doing what it said it wanted to do, I would be a lot less concerned, but it is manifest that you are not doing what you said you were going to do. You are not breaking up Ontario Hydro. You are keeping Ontario Hydro largely intact because the government has bought the line that the real agenda here doesn't appear so much to be competition as it is to have a strong Ontario-based utility that can take its market power and its long expertise and get into the United States market. That's the new agenda.
That's an interesting proposition. It's one that Hydro's been actively flogging for the last two or three years. I'm not nearly as expert on those possibilities as some other people, but we're not breaking up Hydro. We are clearly not breaking up Hydro. The kind of breakup that I would have expected is the kind that Macdonald advertised, that you unbundle the utility into at least three or four competing companies, to get at least a reasonable competitive environment. We're not doing that.
I want to say that for the nineteenth time: We are not breaking up Hydro. We heard from Ron Osborne himself about their intentions on the services side to grow and get bigger and stronger. We are now seeing that the government is giving itself a significant directive power around the role of the regulator.
It may very well be that a lot of my concerns are going to be shown by future developments to be unfounded. I accept that as a possibility. But I just ask myself: What are we doing here? I can't get into the head of individuals as to what their intentions are going to be. I understand that opposition politicians are by nature, and I guess by function more than by nature, people who are always looking for the concern and the bad possibilities. That is, in a sense, our job. The prosecutor is paid to make the case and the defence counsel is paid to make a different kind of case, but it's the bundle of policy decision that I'm looking at.
I guess I'll leave it at that. But I say to my friend the parliamentary assistant, and I'm deadly serious, that we're not doing some of the key things we said we were going to do and that troubles me because I worry that we will continue the possibility at least for the very kind of behaviours that you rightly do not want to see continued, your passionate protestations about the inevitability of a brave new order notwithstanding.
I was reading last night some of the material out of the United States and if I look at what's going on in some places like California, where they're further along with this thing than we are, the way this market is behaving and the things the politicians are having to do to backfill -- at one level I'm not surprised. This is really complicated stuff.
I was struck by a comment made by the chair of the US Senate energy committee, Senator Murkowski, from Alaska. I just thought he put it very well when he said: "We all support competition. The challenge is making sure we get from the current fully regulated market to a more deregulated, competitive one without littering the path with unhappy consumers, bankrupt electric utilities and poor service." I think that's awfully good advice, and I will conclude my remarks with that.
The Chair: Further questions or comments? Seeing none, shall section 26 carry? All those in favour? Opposed? Section 26 carries.
Section 27: We have a Liberal amendment on page 140.
Mr Conway: I move that section 27 of the Ontario Energy Board Act, 1998, as set out in schedule B of the bill, be struck out and the following substituted:
"Directives re: market rules, conditions
"27(1) In order to address the abuse or possible abuse of market power in the electricity sector, the board may issue and implement directives concerning market rules made under section 30 of the Electricity Act, 1998 and existing or proposed licence conditions.
"(2) A directive issued under subsection (1) shall indicate whether the board intends to hold a hearing or not."
Essentially what I'm trying to do here is remove the government's power to direct issues around -- to leave market power issues to the regulator. The point I was making a moment ago is, when we talk about market power, and we're talking about a central issue, the single biggest item that stands in the way of the competitive marketplace that we all want is anybody having, particularly in the early going, a dominant position in the market.
Seventy percent of the bill has to do with generation. If there are going to be real and meaningful savings for the broad range of customer categories, we are going to have to deliver the benefits of competition in the generation sector especially. That is not to say, as my friend from Scarborough would want me to say, that we should be looking to get the efficiencies downstream in distribution and transmission. I agree with him, but let's not kid ourselves: 15% of the bill is in distribution, 70% of the bill is in generation. That's where all the analysts say the single biggest benefit of competition is going to arise.
There's no doubt that there are real concerns about market power; Hydro itself has acknowledged that. It's just this bizarre situation in which we find ourselves. I thought we were about unbundling Hydro and returning it to a condition where it once existed. There's a lot of misunderstanding that Hydro was intended to be, or always was, the monopoly supplier. That was never the original plan. It became that over time, but in the post-Second World War period, and particularly with the nuclear commitment, it did become for all intents and purposes the monopoly supplier.
The intention was, I thought, to create a competitive marketplace; as a critical first step to disaggregate, unbundle Ontario Hydro, at least into three or four competing utilities, as was suggested by the Macdonald committee in vivid, powerful and, I thought, compelling language. When I look again at the second report of the Market Design Committee and I look at what they found, in particularly some of the Australian experience as reported in the June 30 report, it was quite interesting. We're not doing that, because the government in the white paper said, "That's off limits." We've got a situation where we're not going to unbundle Ontario Hydro. We're not. That's clearly not an option. You heard the --
Mrs Johns: We're unbundling Hydro. There's the Generation Corp and the Financial Corp.
Mr Conway: We're not going to disaggregate the generation of Ontario Hydro. Thank you for that. That's a very helpful correction. That ignores powerful advice from powerful people who say that, without that, you really do cause yourselves some real difficulty in getting the benefits of competition you've got to get to deliver the rate benefits that people are expecting. Now we have, in addition to that, the situation where we've got a regulator that is going to be directed by the principal shareholder of the very people who are going to cause us the trouble with market power. That's the problem I have with 27.
I'm trying to think of an analogy, but it's so breathtaking that it's hard to imagine one, where you would be in a situation in a multi-billion dollar market as the principal shareholder in the players that everyone expects are going to cause uncompetitive pressures, are going to cause the problems of market power. Why? Because as Osborne told us, on day one Ontario Hydro is going to have about 85% to 90% of the market share. Now we're giving, in this section, a power to the minister that he may direct the energy board to implement directives that have been approved by the cabinet with respect to market rules made under section 30 of the Electricity Act.
I just think, given the conflict of interest that exists there, we would want to deal with that. I think the only way we can deal with it is to say that as big and as powerful a player as the Ontario government is, the sole shareholder in Genco is not going to be in a position to play and referee that game. The game here is about market power and the abuse of market power. Remember, that's what we're talking about.
I just don't think we would tolerate this as a government in very many other places because people would be just laughing at you, saying the conflict here is so transparent that you do not want to create a fiction that you're going to be able on the one hand to be the owner of the very player that is likely to give you the problem, and at the same time split your personality and imagine a second part of yourself as directing the regulator to ensure that the other half of yourself, which owns the big player that's likely to cause you the uncompetitive problems, is going to be directed to behave itself. The more you think about it, the more laughable it becomes.
It's hard for me to imagine how this isn't a real problem. If the government wasn't the sole shareholder in Genco going in, then I think much of my complaint would be set aside, but that's not the case. Because it is, I think there has to be some action taken to deal with the problem; hence, the amendment.
Mrs Johns: We've dealt with this abuse of market power issue on a number of Liberal amendments and I think it's important for me to say again that there are a number of ways that the Ontario Energy Board can deal with an abuse of market power. They could use the ministerial policy directive, which is what we're talking about in this particular case. They could also consider a request from any person. For example, if someone feels that they are being unfairly dealt with as a result of abuse, they could make a complaint to the Ontario Energy Board and the Ontario Energy Board could look into abuse of power.
Of course, the IMO's Market Surveillance Panel can ask the board to look at that. The IMO, as we all know, is where all of this power is going to be collected. They're going to be watching the power come into this system and they will see if there's abuse of market power in the purchasing of their electricity. So to suggest that this is an unfettered power I think is incorrect.
What Liberals want to do in this amendment is change it from ministerial policy directives to the Ontario Energy Board policy directives. I think it's important to note that the Ontario Energy Board has a number of opportunities on how they can remedy abuse of market power, and we've talked about them.
The other thing that is a fundamental kind of comment that the Liberal Party has made over the last four days we've been in clause-by-clause is this whole thing about the Market Design Committee -- and I understand; everybody's concerned about market power. We talked a bit when Ron Daniels was here in committee. He came to us and he said: "The Market Design Committee," and I think I'm quoting exactly, "has studied the market power problem in considerable detail over the past few months, and our second-quarter report makes specific recommendations to the government on how to curb Genco's power in the short term while reducing it over the long term, over time. We believe an effective package of market power mitigation measures must accomplish three things. The measures must control Genco's ability to exercise market power as long as the company remains Ontario's dominant power generator; the measures must encourage the development of competitive alternatives so that over time Genco's dominant position in the market will be reduced; and the measures must provide some incentive or inducement for Genco itself to work towards reducing its dominance in the market."
We've made a number of amendments and gone through a lot of amendments, and we apologize for that. But what happened was that this bill came out before the second report, and we've made a number of amendments to ensure that the abilities to curb market power that were outlined in the Market Design report have been put in. They specified some six or seven of them, maybe more: divestiture, corporate reorganization of the dominant generator's assets, auctioning, bidding contracts, vesting contracts for differences, cross-ownership limitations, new capacity limitations, demand-side responses in bidding, bilateral contracts, refinement of power pool rules, price caps and bidding caps.
So as much as you would have preferred to see Genco split a different way, and I understand that we all have different visions of how we would like to see this done, there is a way to curb market power. There are ten ways, I guess, that the Market Design Committee has come up with to curb market power. We're sure that the strength of the Ontario Energy Board and these measures that the Market Design Committee has come up with, will allow us to do that.
Mr Conway: I appreciate what the member is saying, and let there be no mistake about it: I understand, on the basis of what Ron Daniels and others from the Market Design Committee said when they testified here in late August, that a number of measures to mitigate market power are contemplated. That is obvious. What is equally obvious is that by common consent, the measures being considered are all in the second-best category. There are few people in the debate who would not agree with the Macdonald recommendation about the first-order importance of disaggregating the generating assets of Ontario Hydro. That is, by common consent, the third option. The government, for reasons that I can privately understand, specifically ruled that out in the white paper. So we are now left to see what other measures are possible. Presumably we will be hearing about that in the next report and in later reports from the Market Design Committee and other bodies. But I repeat, we didn't do what most people say you ought to do to get the best and the cleanest policy with respect to market power.
I make the final point, as the days draw to a conclusion, three cheers to Farlinger and Osborne. They are getting virtually everything I have heard Hydro brass say they have wanted for the last four or five years -- everything. It may be that they are actually getting more. We won't know that for a few months and maybe a year or two to come. So I tip my hat to people who can pull that off. That's not what I thought we were about. I'm not here to destroy public power. There is an important role for public power. But I think the member for Huron has passionately and persistently made a good case for why we would not want to give Ontario Hydro almost everything they have said they wanted over the last three or four years. But three cheers to 700 University -- yet another coup d'état under a bright Ontario sun.
Mr Lessard: I just have one question, on reading this section and the amendment: How is it that the minister, the representative of the sole shareholder, can tell the regulator that the very corporation he represents as the sole shareholder is abusing market power? I can't understand how that works. If Ms Johns can help me clarify that, I could try to understand this. I understand what you said. The government is the main shareholder. The minister represents the shareholders, but he's retaining the power to tell the regulator that the corporation he's the shareholder in is abusing market power.
Mrs Johns: That's not exactly what is said in here. Everybody agrees that we're the main shareholder, for better or worse. We have been forever and we will continue to be for a period of time, depending on whether we enter some joint agreements with other people or what we do with it. So I agree that we are the major shareholder of Genco and Servco for a period of time. There is no question about that.
But it's not just the minister who suggests that there is abuse of market power. It can be any individual who comes to the board and says there's abuse of market power. It could be the market surveillance people. What Mr Conway is basically saying in this amendment is that he would like the Ontario Energy Board, under its own directive, to be able to search out market power. I understand that that's where he would like to be.
We're saying that there are other options of who can be concerned about market power and can ask the Ontario Energy Board to look at it. It's not only the minister; it's the people who actually buy the power from the generators, who would obviously be aware of that. It's also any person who feels that they are poorly treated, in the initial cases, as a result of Ontario Hydro abusing its market power. In the future, it could well be Northland Power that has all the power. It could well be Duke Energy, as Mr Conway has said. It could be any one that was there. As the shift changes, I think the minister has a role, as do the people who feel the abuse of market power and the people who are buying the power.
I just don't understand where your problem is with this, because it's not always going to be the Ontario Hydro problem. In the future, it could be the Duke problem, it could be the Hydro-Québec problem, it could be the Manitoba Hydro problem. It could be anywhere in the world. If you have a crystal ball that tells you it's only going to be Ontario Hydro from now to eternity, you've got a better crystal ball than I do.
Mr Conway: On that, I think the member from Windsor says it so much better than I. In fact, I'd almost like him to repeat the way he put that, because it's so wonderfully delicious -- it is. Just think about it. Think about what he said. We are setting up a situation in which we know that in the transition phase, market power and the abuse of market power has the potential to be the single, biggest impediment to delivering the biggest, single benefit that we would advertise with this policy, namely, downward pressure on rates due to competition. Right? Right.
I'm thinking now about the transitional phase. What Ms Johns says is potentially quite right seven years out, 10 years out, 15 years out, whatever. At that point, abuse of market power is certainly going to still be there, but it's not going to be of the order of magnitude you will have going into an unregulated market with one player having 85% to 90% of the market.
We've got this situation where, in the early going of a transition to a competitive marketplace, we have mother Hydro, now in the name of Genco, the sole shareholder of which is going to be the Ontario government, the Ontario taxpayers. We are worried, rightly, that there may be some anti-competitive behaviour in the marketplace by the gargantuan Genco. Most reasonable people tell us that that's a legitimate worry. So now what are we doing? We're saying we're going to give the minister a significant role to play in directing the energy board in the mitigation of potential market abuse, except the minister is also the principal shareholder of the corporate entity that is likely to be the problem that is going to be the issue before the energy board. This is where you get to the conflict of interest.
I don't have any difficulty with what Ms Johns said about other players. It's kind of like, I don't want the Royal Bank directing the federal competition bureau on matters of framework consideration for the bank mergers. Why? Because, notwithstanding the wonderful qualities of the Royal Bank, they are not without an issue in the matter before the competition bureau.
Mr Baird: The Royal Bank's a private business.
Mr Conway: That's right, but trust me, it doesn't make --
Mr Baird: Let's hope the minister will look at the public interest. Let's hope we have a Minister of Finance who does that.
The Chair: Order. Through the Chair, please. Mr Conway has the floor.
Mr Conway: My point is that in this matter, the Minister of Finance and the Minister of Energy have a public interest, but they've also got an institutional and corporate interest. It's one that's clearly set out by this policy. They have dividend considerations from their holding in Genco. They have other considerations of a financial kind that have to be expected to animate their behaviour, all of which is to say that the minister is a major player because he is the owner, at first instance, of the biggest fish in this pond. We expect that that fish is going to give us some anti-competitive behaviour in the critical transition phase from regulation to deregulation, from monopoly to competition. It's an obvious conflict of interest that the minister, as the trustee for the shareholder in Genco, has that is the reason for this concern and for the amendment.
Mrs Johns: I'm sure the Ontario Energy Board, if you look at section 2, has the ability to hold a hearing or not hold a hearing with the minister's directive. It has the ability to hold or not hold a hearing as a result of an IMO market surveillance report. It has the ability to do that. So we're not saying, "Oh my God, you have to listen to every" -- they have to consider the policy directive, but they have the ability to decide how they want to proceed and on what they're going to proceed and how tough they're going to be on the abuse of market power. I guess I just don't get what you're saying. I'm sorry.
Mr Conway: Andy Scott believes Dick Proctor has poor hearing too.
Let's look at section 27. Section 27 says that in matters relating to real or potential abuse of market power "the minister may issue, and the board shall implement" --
Mrs Johns: The minister and Lieutenant Governor, that means the cabinet.
Mr Conway: Exactly.
Mrs Johns: The cabinet has the public interest, one would like to assume.
Mr Conway: Don't test me on the intricate political science -- "the minister may issue, and the board shall implement...." There are other things in here, but let's not kid ourselves about what 27 provides. The language is very clear. I'm not going to belabour the point. It's obviously not going to go anywhere. But the minister is clearly both player and referee in a game. In this particular instance, the concern we have is that the player, namely, the minister -- going in we're worried about misconduct. We know that Big Bobby Clobber has a very bad tendency to elbow, and we're worried about elbowing. But we're letting Big Bobby Clobber kind of direct the referee on matters relating to elbowing and other such misconduct. That's what 27 is all about.
Mrs Johns: I have a message from the Ministry of Energy here and I'd just like to read this into the record. It may help us here:
"Policy directives were used in one circumstance as a last resort in 1991. All this section does is say, when there is a clear trade-off between general public interest, the taxpayer and competition, then the elected government can intervene."
Mr Conway: Again, that's helpful. But I'm looking at 27. We're talking about market power. If you had done what people said you should do about being with market power in the plainest and most appropriate way, then again, I wouldn't have this concern. But you didn't do that. You've created a situation as we head into the new, competitive marketplace. You're setting it up so that Genco is going to have 85% of the market power on day one, give or take a bit, overwhelming market power. That's what we're dealing with here.
I think that since market power is a central concern, and will be to the possibility of there being lower rates, or these competitive rates, for all classes of customers, then I have to tell you that I'm very troubled by a situation in which government is allowing a dominant Genco to continue to head into a marketplace where that kind of dominance is, on the basis of a lot of good evidence, very likely to lead to a variety of uncompetitive practices.
We are saying in 27, should this not be amended? But it doesn't trouble this legislature that on matters of market power, the owner of the biggest and most likely to offend player, with respect to market abuse, is going to have a significant if not a central role in directing the regulator about how that regulator might behave with respect to mitigation measures for bad behaviour that the government, through the Minister of Energy, might be directly or indirectly responsible for developing and sustaining. I think that's incredible.
Mrs Johns: And I think that's fundamentally where we disagree. I'd say there is -- I stepped in; I'll just wait until Mr. Lessard speaks.
Mr Lessard: I just want to emphasize that the critical period for consumers here is going to be the transition period, where this new, competitive marketplace comes into being.
I understand Ms Johns comments about how abuse of market power in the future makes it important for the minister to retain this directive power to the Ontario Energy board. But I think that seven or 10 years down the road if Duke Energy or somebody else is abusing their market power, that's going to be apparent in the marketplace and to consumers and to the government.
My concern as we head down this road into a new world order, so to speak, is that it isn't going to be so apparent to consumers or to the government during that transition period, and that's the time we need to be on the lookout for. I think it's completely inappropriate for the minister to be the one who is going to make that call. I agree with Mr. Conway's suggestion that the reference to the minister having that power should be removed. I think it would give us all a great deal of comfort to know that he or she is not the one who is making the calls. That's my point.
Mrs Johns: I guess this is where we're going to disagree, because I believe that we have to be concerned about what the people of Ontario think. They're the people who have the $32 billion. If, as Mr. Conway has suggested, you give the responsibility to the Ontario Energy Board -- and he really is saying in isolation, although I don't agree with that because there is the IMO and there are other people. But if you give that power to the Ontario Energy Board, who is representing the people of Ontario?
Mr Lessard: That's a good question. They're not even going to know what's happened to them until two or three years after this policy gets implemented.
Mrs Johns: They're going to know what's happened if this system doesn't work. Trust me on that issue. They're going to know very well what happened --
Mr Baird: They know what happened to the rates.
Mrs Johns: Yes. They understand what happened in the last 20 years.
Mr Conway: Let me just say, to be fair to the last 20 or 25 years, that very little was done at a macro level in the last 25 years that did not enjoy a very clear democratic sanction. I have to tell you, at the risk of being impolitic, that what we have today bears the clear imprint of big labour, big business and big government. They were all singing from the same hymn book, three hallelujahs of praise to what we were doing.
At critical points the matters did get submitted to the general electorate. But because these things are so complicated -- I can remember people, for example, talking about the old system. Some very powerful arguments were made about the way you brought the capital cost of the big nuclear plants into rates, and a lot of very good criticism was advanced. None of the decision-makers paid any attention to it. It certainly wasn't changed.
It led to a very real calamity in the early 1990s when the Darlington plant was finally completed. As luck would have it, we were heading into an awful recession, when the last thing people wanted to see showing up on their bills, both residentially and industrially, was 15 years and $15 billion worth of Hydro spending and borrowing and costing for that particular facility. I just want to say that this stuff was debated quite vigorously. The difficulty was that it was complicated, very complicated. And I'll tell you, this stuff is equally complicated, if not more so.
I'm sure that any number of people will look at my comments and say: "What a clown. He doesn't know anything of which he speaks." In many cases they're right. I'm just a generalist. I'm just a legislator. I haven't got the faintest idea of how many of these intricate administrative and regulatory and corporate policies are going to work. What I am concerned about is that we establish a framework that provides reasonable protection. One of the reasons that I'm as keen as I am about the amendments to 26 and 27 of the Energy Board Act is that I do not like the fact that government is in this business not just as a trustee for the broad public interest, but with very real and significant corporate and financial interests, which are entirely understandable.
Mrs Johns: We have no choice.
Mr Conway: That's absolutely right. We have no choice. But I don't think people should just expect that when governments have financial and corporate interests, they are going to behave in a purely altruistic sense. I quite frankly expect governments, in the management of their financial and corporate interests, to behave like most people would behave with respect to their financial or corporate interests.
On this I think there is a very real problem, as my friend from Windsor says, particularly through the transitional stage. But I understand that we're not going to agree. I think I've said enough, maybe too much, on this question. Time will tell. Ten years from now some academic at the University of Toronto will produce a fascinating study about how the people of Ontario got hosed to the tune of $800 million through a variety of intricate mechanisms that no one understood until Les Horswill wrote the definitive piece published by the Queen's school of business and commerce or something.
Mrs Johns: On the other side maybe you could write the piece that says how we finally came out of a debt that was going to continue to accrue on the backs of the shareholders and the taxpayers of Ontario, and that the system is working so much better 10 years down the road than on the other side. We can look at it both ways, and we can certainly work towards having the latter as history, as opposed to the former.
Mr Conway: Absolutely.
The Chair: Further questions and comments? Seeing no further questions and comments, shall the Liberal amendment on section 27 carry? All those in favour? Opposed? The amendment is lost.
Shall section 27 carry? All those in favour? Opposed? This section carries.
Mr Steve Gilchrist (Scarborough East): Madam Chair, I wonder if I might ask the indulgence of the Chair and the other members to introduce two amendments out of order. The first one will require going back. It's my understanding that both of the opposition members are amenable to that suggestion as it affects the amendments that would create a new Toronto District Heating Corporation Act. I guess I have to seek unanimous consent to revert.
Mr Conway: Unlike the government member for Nepean, I'm not in the business of denying unanimous consent for good works.
Mr Gilchrist: Such charity is duly noted.
Mr Conway: I just noticed yesterday.
Mr Lessard: In the spirit of co-operation and camaraderie that we have enjoyed during our clause-by-clause hearings, I want to offer my consent as well.
The Chair: You have asked for unanimous consent that this be introduced, even though you know that it's out of order and that you also need to reopen section 1. Unanimous consent has been received. As the Chair, I have to allow the deadline for this to be waived, and I agree upon this receipt. OK, no problem. The deadline's changed for receipt of amendments as of now only. I guess you need to move this first and then we'll have discussion of it.
Mr Gilchrist: The first is a fairly minor amendment. The substance is in the second.
I move that section 1 of the bill be amended by adding the following subsection:
"Toronto District Heating Corporation Act, 1998
"(2.1) The Toronto District Heating Corporation Act, 1998, as set out in schedule B.1, is hereby enacted."
The Chair: Do you want to discuss this?
Mr Gilchrist: I'll save my comments for the second amendment.
The Chair: The advice from the clerk is that we should vote on this first and then read the remaining one in. The amendment has been moved. All those in favour of this motion? Carried.
You can start reading the second one.
Mr Gilchrist: I move that the bill be amended by adding the following schedule:
"Schedule B.1, Toronto and District Heating Corporation Act, 1998;
"1. In this act,
"'corporation' means the corporation continued under subsection 2(1); ('société')
"'hospitals' means Mount Sinai Hospital, Sunnybrook and Women's College Health Sciences Centre, the Hospital for Sick Children and the Toronto Hospital; ('hôpitaux')
"'regulations' means the regulations made under this act; ('règlements')
"'steam' means steam or hot water. ('vapeur')
"2(1) Toronto District Heating Corporation is continued as a body corporate with share capital.
"Business Corporations Act
"(2) The corporation shall be deemed to have been incorporated under the Business Corporations Act.
"Articles of incorporation
"3. The following provisions shall be deemed to be the corporation's articles of incorporation and may be amended or restated in accordance with the Business Corporations Act:
"1. The name of the corporation shall be the Toronto District Heating Corporation.
"2. The address of the registered office of the corporation shall be P.O. Box 310, Royal Trust Tower, Suite 4018, Toronto-Dominion Centre, Toronto, Ontario M5K 1K2.
"3. The number of directors of the corporation shall be a minimum of one and a maximum of 10.
"4. The corporation is authorized to issue an unlimited number of common shares. The rights, privileges, restrictions and conditions attaching to the common shares are as follows:
"i. Payments of dividends: The holders of the common shares shall be entitled to receive dividends if, as and when declared by the board of directors of the corporation out of the assets of the corporation properly applicable to the payment of dividends in such amounts and payable in such manner as the board directors may from time to time determine. Subject to the rights of the holders of any other class of shares of the corporation entitled to receive dividends in priority to or concurrently with the holders of the common shares, the board directors may in its sole discretion declare dividends on the common shares to the exclusion of any other class of shares of the corporation.
"ii. Participation upon liquidation, dissolution or winding up: In the event of the liquidation, dissolution or winding up of the corporation or other distribution of assets of the corporation among its shareholders for the purpose of winding up its affairs, the holders of the common shares shall, subject to the rights of the holders of any other class of shares of the corporation entitled to receive assets of the corporation upon such a distribution in priority to or concurrently with the holders of the common shares, be entitled to participate in the distribution. Such distribution shall be made in equal amounts per share on all the common shares at the time outstanding without preference or distinction.
"iii. Voting rights: The holders of the common shares shall be entitled to receive notice of and to attend all annual and special meetings of the shareholders of the corporation and to one vote in respect of each common share held at all such meetings.
"5. No share in the capital of the corporation shall be issued or transferred without the consent of the directors expressed by the votes of two thirds of the directors at a meeting of the directors or by an instrument in writing signed by two thirds of the directors.
"6. The number of shareholders of the corporation, exclusive of persons who are in its employment and exclusive of persons who, having been formerly in the employment of the corporation, were, while in that employment and have continued after the termination of that employment to be, shareholders of the corporation, is limited to not more than 50, two or more persons who are the joint registered owners of one or more shares being counted as one shareholder.
"7. Any invitation to the public to subscribe for securities of the corporation is prohibited.
"4(1) Common shares of the corporation shall be deemed to have been issued on the day this section comes into force to the following persons:
"1. Her Majesty in right of Ontario.
"2. The city of Toronto.
"3. The governing council of the University of Toronto.
"4. The hospitals.
"Number of common shares
"(2) The number of common shares of the corporation that are deemed to have been issued under subsection (1) is as follows:
"1. To Her Majesty in right of Ontario, 2,000 common shares.
"2. To the city of Toronto, 4,000 common shares.
"3. To the governing council of the University of Toronto, 2,000 common shares.
"4. To each of the hospitals, the number of common shares prescribed by the regulations, so that, in total, 2,000 common shares are deemed to have been issued to the hospitals.
"5. The directors of the corporation who hold office on the day this section comes into force shall continue to hold office in accordance with the terms of their existing appointments.
"Supply of steam to hospitals
"6(1) Despite section 55 of the Public Utilities Act, the board of directors of the corporation shall conduct the business of the corporation so that the requirements of the hospitals for steam throughout the year for their facilities that were supplied by the corporation on the day this section comes into force, and for any new expansion of or modification to those facilities, will be given priority over any other users of steam supplied by the corporation.
"No breach of contract
"(2) Nothing done under subsection (1) shall be deemed a breach of contract by the corporation or entitle any person to rescind any contract or release any guarantor from the performance of the guarantor's obligation, or render the corporation, its officers, directors, employees or agents liable in any action at law or other legal proceedings for damages or otherwise.
"Rates for steam
"7(1) Subject to subsections (3) and (4), the rates for steam supplied by the corporation to its customers shall be set by the corporation in such amounts and for such periods of time as the corporation considers appropriate and in setting such rates the corporation may use its discretion as to the rates to be charged to the various classes of its customers.
"Charges for work etc.
"(2) The corporation may fix the charges for the cost of any work or service done or furnished for the purpose of a supply of steam, and the rent of or charges for fittings, apparatus, meters or other things leased or furnished to its customers.
"Collection of accounts
"(3) The corporation may provide for the collection of the rates, charges and rents referred to in subsections (1) and (2) and the times and places when and where they shall be payable, and for allowing for prepayment or punctual payment such discounts as may be considered expedient.
"Appeal to Ontario Energy Board
"(4) Where the rates referred to in subsection (1) are increased by the corporation, a customer affected thereby may appeal to the Ontario Energy Board, which may fix just and reasonable rates, and the decision of the Ontario Energy Board is final and binding.
"(5) A decision of the Ontario Energy Board under subsection (4) remains in effect for the period of time for which the rate was originally fixed by the corporation, and thereafter until such time as the corporation changes the rates under subsection (1).
"Purpose of corporation
"8(1) For the purpose of the Public Utilities Act, the corporation shall be deemed to have been incorporated for the purpose of supplying a public utility.
"Municipal Franchises Act; Public Utilities Act, section 58
"(2) The Municipal Franchises Act and section 58 of the Public Utilities Act do not apply to the corporation.
"Work on highways etc
"9(1) The corporation shall notify in writing the municipality or other authority having jurisdiction over any highway, public lane or public communication on, over, under or across which the corporation proposes to put down, place, install and maintain conduits, pipes, wires, poles, rods, cables, transformers, machinery, apparatus, devices, appliances, equipment, materials, structures or works, and shall submit to the municipality or authority the corporation's plans therefor.
"(2) The conduits, pipes, wires, poles, rods, cables, transformers, machinery, apparatus, devices, appliances, equipment, materials, structures or works shall be put down, placed and installed in such manner, and in such location on, over, under or across the highway, public lane or public communication, as the municipality or authority may direct, and the corporation shall restore the highway, public lane or public communication to its former state and any dispute between the corporation and the municipality or authority as to the manner and location of putting down, placing and installing shall be referred to the Ontario Municipal Board, and the decision of the Ontario Municipal Board shall be final.
"(3) The corporation shall indemnify and save harmless the municipality or authority against, from and for any and all damages, claims, losses, costs and expenses sustained or incurred by reason of the negligent use, operation, maintenance, installation, placing and putting down of the conduits, pipes, wires, poles, rods, cables, transformers, machinery, apparatus, devices, appliances, equipment, materials, structures or works by the corporation, its agents, employees, contractors and subcontractors.
"(4) The corporation and any municipality or any other authority referred to in subsection (1) shall enter into agreements which incorporate the provisions of subsections (1), (2) and (3) and further provide for the continuing and future use by the corporation of any highway, public lane or public communication, the compensation to be paid to the municipality or other authority therefor and such other terms and conditions as may be agreed to by the parties.
"Public Utilities Act
"(5) This section applies despite the Public Utilities Act.
"City may provide funds
"10(1) The city of Toronto is authorized and empowered to provide funds to the corporation to enable it to carry out its activities and the funds advanced to the corporation by the city shall be on such terms as the city may from time to time determine.
"Subsection 111(1) of the Municipal Act
"(2) The operations of the corporation shall be deemed not to be a manufacturing business or other industrial or commercial enterprise for the purposes of subsection 111(1) of the Municipal Act.
"City may own shares
"11. The city of Toronto may acquire, hold and sell shares in the capital of the corporation and of any corporation into which it may be amalgamated.
"Hospital Labour Disputes Arbitration Act
"12. The steam plant of the corporation located on the steam plant site described in the trust deed dated as of the 15th day of December, 1972 between the Toronto Hospitals Steam Corporation and the Canada Permanent Trust Corporation and all related equipment and facilities and any other site used to generate the supply of steam are deemed to be a hospital and persons employed thereat are deemed to be hospital employees for the purposes of the Hospital Labour Disputes Arbitration Act as long as the steam generated therefrom is being supplied to the hospitals or any of them.
"13(1) The Lieutenant Governor in Council may make regulations,
"(a) fixing, for the purpose of subsection 4(2), the number of common shares of the corporation that are deemed under subsection 4(1) to have been issued to each of the hospitals;
"(b) limiting the business activities in which the corporation may engage;
"(c) providing for such transitional matters as the Lieutenant Governor in Council considers necessary or advisable in connection with the implementation of this act;
"(d) respecting any matter that the Lieutenant Governor in Council considers necessary or advisable to carry out effectively the purposes of this act.
"Regulations under clause (1)(b)
"(2) A regulation under clause (1)(b) shall not restrict the corporation's ability to engage in any business activities related to the production, generation, transmission, distribution or sale of steam, chilled water, electricity or anything ancillary to steam, chilled water or electricity.
"Toronto District Heating Corporation Act, 1980
"14(1) Sections 2 to 14, 17 to 22 and 26 to 31 of the Toronto District Heating Corporation Act, 1980 are repealed.
"(2) References in the Toronto District Heating Corporation Act, 1980 to provisions that are repealed by subsection (1) shall be deemed to be references to those provisions as they read immediately before subsection (1) came into force.
"15. This schedule comes into force on a day to be named by proclamation of the Lieutenant Governor.
"16. The short title of the Act set out in this schedule is the Toronto District Heating Corporation Act, 1998."
I think the members opposite have been briefed by their staff. I'm most grateful for their co-operation.
Speaking to the reason for its coming when it did, this was a matter that had to be dealt with by Toronto city council, to be fair to them. They have sent documentation that they are in full support of the amendments which have just been read into the record. We have a letter from Dennis Fotinos, who is currently the chair of the Toronto District Heating Corp. In addition, we've received letters from everyone from Pollution Probe to Canadian Institute for Environmental Law and Policy and the mayor, the University of Toronto and Hospital for Sick Children and others supporting these changes.
It changes the existing heating corporation into a corporation incorporated under the Business Corporations Act, which allows them certain greater flexibility in terms of dealing with the competitive marketplace which we are now envisaging under Bill 35.
The Chair: Further discussion?
Mr Lessard: I had an opportunity to speak to Jack Layton from Toronto city council with respect to this amendment. He was very enthusiastic about the prospect it holds with respect to deep-water cooling in Lake Ontario and the benefits, environmental and economic, that would deliver. It's as a result of that conversation I had with Councillor Layton that I'm happy to support this amendment.
Mr Conway: I'm similarly happy to support the amendment. I didn't speak to anybody on council. I just spoke to the lobbyists. I must say it was a reminder -- a wonderful fellow. I won't name him because it's so secret. It made me think. I thought, "This is a good idea."
The lobbying around the minor but very good idea just made me think about what's going on that I'm not hearing about because, let me tell you, the lobbying on this little happy front, which I'm pleased to support, was one very vivid reminder of all the other kicking and scratching that's going on underneath the waterline in this endless game of water polo, where the Marquess of Queensberry Rules apply above the waterline and that which goes on underneath is an entirely unregulated matter.
Mr Baird: Tell us more.
Mr Conway: I wouldn't want to embarrass you.
The Chair: Further questions or comments? Seeing none, shall this amendment carry? All those in favour? Opposed? The amendment carries.
Time to introduce one more amendment before lunch. It's an NDP amendment to section 28, found on page 141.
Mr Lessard: I move that section 28 of the Ontario Energy Board Act, 1998, as set out in schedule B --
The Chair: We have a vote called. I'm sorry. I'm going to interrupt. We will recess and we'll reconvene this afternoon at 3:30 in this room.
The committee recessed from 1157 to 1531.
The Chair: Good afternoon, colleagues. We resume clause-by-clause deliberation of Bill 35. Mr Lessard was just about to introduce an NDP amendment to section 28 found on page 141.
Mrs Johns: Can I just ask a question? Mr Lessard's amendment would be before mine at 28(3)? Is that because his is 28 as a general?
The Chair: His is subsection (1.1).
Mr Lessard: I move that section 28 of the Ontario Energy Board Act, 1998, as set out in schedule B of the bill, be amended by adding the following subsection:
"Meaning of 'public interest'
"(1.1) In subsection (1), the public interest includes, but is not limited to, protection of the environment and protection of consumers."
In the previous section it says that the board shall refrain from exercising its power if there's enough competition to protect the public interest. I think it appropriate to define the public interest and not just assume that competition itself defines what's in the public interest. In that regard, I'm concerned somewhat about the possibility of cutthroat competition or the limitations on the amount that competitors have to spend on the environment. By putting the definition of "public interest" in the bill, it's not restrictive of the definition of "public interest" but is inclusive so that it does include protection of the environment and protection of consumers as part of that public interest, so that when the Ontario Energy Board is determining what is in the public interest they do include considerations with respect to the environment as well.
Mr Galt: I appreciate the member's comments and concerns; however, in the Environmental Protection Act there is a broad definition that already covers this as it relates to an adverse effect and everything that would have a negative impact on human health to loss of enjoyment of property. I think it is reasonably well covered and will be further covered in regulations that will be made to ensure that consumers are also protected. I appreciate his comments and concerns but I think his concern is well covered in the existing legislation and in future regulations.
Mr Lessard: I'd like to know how the Environmental Protection Act relates to the work that the Ontario Energy Board does in protecting the public interest. I understand that the Environmental Protection Act provides for environmental protection pursuant to that legislation; I don't know how it relates to the work that the Ontario Energy Board does, however.
Given the lack of response that I'm receiving, I can only assume that the two aren't related and I think that's a good enough reason to ensure that protection of the environment is included as part of the definition of public interest in the work the Ontario Energy Board does.
I don't know if my friend is going to give me the same argument that maybe we're adding too many words to the bill this time, but if he's interested in ensuring that protection of the environment is considered by the Ontario Energy Board when they're doing their work to protect the public interest, it doesn't take away from that responsibility they have. It doesn't change the policy direction of the bill, I wouldn't think; it just further enhances their responsibility to consider the environment in making their decisions. I think that's a reasonable suggestion.
Mr Galt: The Ontario Energy Board is not there as a protector of the environment; that's not its main purpose. The Environmental Protection Act is there for that protection, in the area you're concerned about, and also the fact that regulations will be made to be part of this particular act for the Ontario Energy Board to ensure that consumers are protected. As I said earlier, I think the protection is there.
Mr Lessard: I take it from the response that protection of the environment isn't going to be part of the considerations at the Ontario Energy Board when they're determining the public interest. If that's the policy decision of this government, then so be it.
Mr Galt: It appears that the NDP insists on getting in the last word to try and indicate that the government isn't concerned, but I can assure you that the government is very concerned. If you had a track record in the NDP government of environmental protection that this government has, it would be one that you would be proud of. Instead, what you people were doing was a lot of talk and very little action.
Mr Lessard: I leave it to the independent Environmental Commissioner to make that judgment and I depend on the opinion that she has given with respect to the performance of this government, which hasn't been very complimentary.
The Chair: Further questions and comments on this amendment? Seeing none, I put the question: Shall this amendment carry? In favour? Opposed? The amendment's lost.
We have a government amendment to the same section, 28.
Mrs Johns: I move that subsection 28(3) of the Ontario Energy Board Act, 1998, as set out in schedule B of the bill, be struck out and the following substituted:
"Where determination made
"(3) For greater certainty, where the board makes a determination to refrain in whole or in part from the exercise of any power or the performance of any duty under this act, and does so refrain, nothing in this act limits the application of the Competition Act (Canada) to those matters with respect to which the board refrains."
We put this in because the Competition Bureau felt that some people may interpret that the Competition Act did not apply when the Ontario Energy Board had decided to forbear. We put this in to give them a degree of comfort.
Mr Lessard: I guess that's kind of in line with the amendment I just put that was defeated, to give consumers and people who are concerned about the environment some sort of comfort. But I guess those people really aren't as important as the other ones that are referred to in this motion.
Mrs Johns: Mr Lessard, as you know, we have set up in the purpose clauses that we're concerned about the environment, we're concerned about consumer protection.
Mr Lessard: Talk is cheap too.
Mrs Johns: That's what we do as politicians, is talk and make sure things get implemented. I'm sorry you feel that way.
Mr Conway: I'm for making those trains run on time. The Rome-Bologna express will be made to run on time, Parliament be damned.
The Chair: Further questions and comments on this amendment? Seeing none, I put the question: Shall this amendment carry? All those in favour? Opposed? The amendment carries.
Further questions or discussions to section 28? Shall section 28, as amended, carry? All those in favour? Opposed? It carries.
Section 29: We have a Liberal amendment found on page 143.
Mr Conway: I move that section 29 of the Ontario Energy Board Act, 1998, as set out in schedule B of the bill, be amended by adding the following subsection:
"Application of ss. (1-5)
"(6) Subsections (1) to (5) also apply, with necessary modifications, in respect of any formal or informal process that is not a proceeding but through which the board performs its functions under this act and the Electricity Act, 1998."
This amendment derives from advice tendered to the committee by the consumers' association in its presentation and the subsequent cross-examinations back in late August when the committee was hearing presentations. It's fairly straightforward. The amendment essentially would require that the energy board, in its decisions as to the awarding of costs, treat informal processes as they treat formal process.
Mrs Johns: I missed that. They would treat the informal process as -- I'm sorry?
Mr Conway: Let me just read the language: "Subsections (1) to (5) also apply, with necessary modifications, in respect of any formal or informal process that is not a proceeding but through which the board performs its functions...."
Remember what the consumers' association said, that they wanted, recognizing all of the issues -- was it Anne who was here earlier? Yes, I think you were making reference to this. The intention of this is to capture the advice tendered by the consumers' association to make sure that, in the awarding of costs, it wasn't just a matter of awarding costs through the formal proceedings but that the awarding of costs should also be available in any of the informal proceedings that may develop or are already the case.
I'm no expert at how the board operates but I thought it was a good point that the consumers' association made, simply to recognize that in the awarding of costs there be no real difference and that the board should not be prevented from awarding costs in informal proceedings, should the board decide to do so, at the board's discretion.
Again, it's just an effort to make it more --
Mrs Johns: If I could ask the ministry a question on this, Anne, could you tell us, with Bill 35 the way it is, without this amendment, can the Ontario Energy Board award costs in an informal process?
Ms Powell: Yes. The board in the past has awarded costs to both formal and informal hearings. They've looked at the word "proceeding" and interpreted it in a broad sense. Sometimes they do provide it for an informal hearing and sometimes they do not. Examples of where they have provided this is that they have indicated to the utility for consultations relating to externalities or consultations relating to their demand-supply management programs to provide funding. That's one area where the board has used that.
Mr Conway: I appreciate that, but I paid particular attention to what the CAC said to us. They were rightly concerned about the new scheme and the tremendous number of items that are going to be coming to and from the board. Many of them I think we all feel should be done as informally as possible, because it's got to be user-friendly. It's hopefully going to be consumer-friendly, and by that we mean individual consumers as well as big, corporate consumers. The CAC made a point in requesting this amendment, and I thought it was something we would want to do.
If it's being done, great. Let's just make it clear in the statute that that's what we expect the board will continue to do, recognizing that there will be, potentially, an exponential growth in the kinds of informal proceedings and decision-making that this board's going to have to make and engage in on a daily, weekly basis. An effort to make it consumer-friendly -- that is the process, I should say.
Mrs Johns: I just need to ask legal counsel, having heard that explanation, is there some concern with this section from this side?
Mr Lawrence Fox: I think the matters at the board under the statute would be proceedings, the various applications that we have and other matters. The language is a bit unclear to me, in terms of what a formal or informal process is.
Mr Conway: I'm quite happy to try to deal with that. But remember the discussions. I don't know whether you were here for them, but certainly the people from the energy board and the people from the consumers' association and the public interest advocacy group in Ottawa were talking about the way this is going to work. If it works well, there's got to be a very substantial reliance on informal proceedings. That seems to make a lot of sense to me. This is a new scheme. This is a very different world than the one we are leaving behind. I just thought the consumers' association made a very good point.
Also, I have some concern about this business about intervenor funding. We're not going to have intervenor funding. The member for Huron made a good point this morning about, "Let's put our faith in the ability of the board to award costs." All right. But if a growing amount of the activity of the board is going to be in these informal proceedings and we don't allow the board to at least consider the awarding of costs in that part of its activity, then it seems to me we are potentially disadvantaging regular folks and consumers.
Mrs Johns: That's not what I heard said over here. I heard said from the Ministry of Energy, Science and Technology that the board, with its capacities now, could award costs at their discretion, both in a formal and an informal hearing. Am I correct?
Ms Powell: That's correct. They have done that in the past and I would expect that under the new legislation, which is the same as what was there before, they would continue to do that. It would still be at their discretion whether these costs would or would not be awarded.
Mrs Johns: OK. Because I am very concerned here. I want there to be an ability for the board to assess costs or give costs, but on the other side I want to leave it to the discretion of the board. Not everybody should get costs. I think Mr Conway and I are saying the same thing. So you're telling me here that without this section we have in place in Bill 35 an ability for the Ontario Energy Board to award costs in a formal or an informal hearing, and that you do not believe I need this amendment to be able to ensure that that happens?
Ms Powell: That's correct, because the board has interpreted "proceeding" in a broad sense before, and I would think it would continue to do so in the future.
Mrs Johns: Could I ask that you call this group and talk to them about this tomorrow?
Mr Conway: Let me just read the brief. This is the consumers' association brief:
"Section 29 of the OEB Act grants the board power to award costs to any participant in a 'proceeding.' This is a restatement of the power which the board has in its existing legislation. The board has recently broadened its interpretation of 'proceeding' to include any process commenced by it. There remains, however, a real question as to whether the board can award costs when it is, for example, assisting the government in drafting regulations. The board will be undertaking a number of informal, non-hearing processes to develop, for example, a generic set of conditions that will apply to the licences it is required to issue to distributors and retailers of electricity. It is equally clear that the government will be asking the board to take a lead in drafting the many regulations which will define the content of the new regulatory and market structures. The board has already issued an invitation to interested parties to make submissions to it on the conditions which should be attached to licences. The board's existing powers to award costs might mean that, for example, stakeholders representing the interests of residential consumers would receive no costs to participate in the informal processes, with the result that they would not be able to participate effectively. By contrast, however, those interests with a financial stake in the outcome of the restructuring would be able to participate fully. What is required, in CAC's view, is an amendment to the legislation to make the board's power to award costs both broader and more flexible. Section 29 of this act should be amended to broaden the meaning of the word 'proceeding' to include any process, whether formal or informal, generic or specific, by which the board carries out the obligations assigned to it under the Electricity Act or the Ontario Energy Board Act."
That was the specific concern. It seemed to me a pretty straightforward concern and I'd like someone from the panel to speak to it directly.
Ms Powell: The Consumers' Association of Canada have made that statement in the brief. I've discussed this matter with them and I believe the minister has had correspondence with them. It's our belief that it's in the discretion of the board to award costs. You noted the consultation for the gas marketers' licence. It was in the discretion of the board to award costs for that particular exercise and the board elected not to.
Mr Conway: But my concern here is that everything we know about what we're proceeding into is that there is going to be a pile of work and proceedings and activities that are going to dwarf a lot of what these people would ever have had to consider before. The point of the amendment is to try to provide some reasonable certainty to average folks that they are not going to be intentionally or unintentionally marginalized by their inability to participate in a number of these.
I'd forgotten actually that, for example, there are going to be -- invitations have already been extended for stakeholder groups to come to the table with their ideas as to how certain structures should be established, how certain regulations should be written. That's going to be potentially a real issue for some people. It will not be an issue for everybody, but some people are going to be much more able to cope with that, including paying for that, than others. That's essentially why this amendment is here.
The consumers' association does this stuff; I don't. I thought they were good witnesses. I thought they made a good point. They articulated it very clearly. I don't think this is a particularly radical proposition. The language -- well, enough said.
Mrs Johns: I think I'm getting a clearer picture here, with some help from some people around me. This is the first time we've seen costs trying to be awarded for things that are not hearings. In this amendment they are saying that even if this is not a proceeding, the board could award costs. Are we talking about any time the board wants to consult with anybody, the board would have to consider whether they would award costs? For example, if the stakeholders are coming into a meeting because they want to get their licensing rights, because they care where their licensing is in the future, is this amendment saying that the board could award costs to those people for giving them the best advice to get them set up in their licences?
Ms Powell: Quite frequently when parties participate in matters before the board, which could be interpreted as proceedings, they request costs to participate, and the board uses its discretion and decides on whether costs should be awarded for that particular situation. It may be a bit broad to say every meeting, but it is true in the new legislation that we will have more informal consultations than perhaps in the past, but these have occurred in the past and the board has used its discretion on which ones should receive funding.
Mr Conway: Section 29(1), Helen, is very clear: "The costs of and incidental to any proceeding before the board are in its discretion...." The board's got to have that discretion. It's clearly not an automatic entitlement. I would fully expect that in many cases the board would say no, and hopefully in a lot of cases there wouldn't be any expectation that there would be any awarding of costs, but there are going to be cases in this new world order where there are going to be informal proceedings of an important and complicated kind. They're not necessarily formal proceedings. They might very well fall outside the --
Mr Fox: Can I jump in for a second?
Mr Conway: Don't be shy. Jump in.
Mr Fox: In the case of tribunals, the notion of costs goes to usually one party being told or ordered to pay another party's costs. It's not a question of the tribunal giving its money to a participant. So the notion we have here is one where one party or another is being in a sense compensated for its participation. In courts the way that usually works is that when you win a case, some portion of your expense or your lawyer's fee is paid. So it assumes a process in which there is, shall we say generally, if not more than generally, two or more parties trying to make a case before, in this case, the board, and the board has to decide.
What's interesting here is that this board, in subsection (5), "is not limited to the considerations that govern awards." That's a special sort of provision that's unique. It's designed to encourage participation in proceedings. You see that in very few cases. It's for the energy board, the Consolidated Hearings Act and the Environmental Assessment Board.
I've digressed a bit but I just want to set out some context here for the discussion. Costs generally mean there are players before the board, and you're telling one player or another, "You pay his costs in part." Applying these principles to an informal process of consultation where people are invited to, let's say, advise on a policy, it seems to me as a lawyer, is somewhat different.
The consumers' association may be concerned about empowering people to come forward to make submissions about what you call the brave new world should look like in a certain area. That's almost like participating in a legislative process or a policy-making process. It's somewhat different, in my lawyer's mind, when costs are used in tribunals.
Mr Conway: I don't want to take too much time on this. I thought the consumers' association people made a good point. They intervene routinely in these matters; I don't. I've been to the board. My experience with these tribunals is virtually the same in all cases over many years, that it is a college of cardinals. These are very specialized proceedings that lay people are not generally found at, with some exceptions. It's a real brotherhood and sorority of specialists, with specialized information and significant resources required to play the game.
Part of me would say I'm not going to worry about this, because I would say to plain folks in the streets, "Go to the street. Don't waste your time because you'll go broke." But I do get annoyed and a lot of citizens get annoyed when they see big corporations, including governments -- for example, in this proceeding one could argue, and I'm not going to argue but one could argue, that the Ontario government has very substantial resources. I don't know what the payroll is of the Ministry of Finance or the Ministry of Energy, but they have a lot of very good, bright people. But at the end of the day, the taxpayers will pay for millions of dollars of outside advice from a lot of very bright, high-powered, high-cost specialists from New York and London and San Francisco and a lot of other places. It is going to be the view of the client, the government of Ontario, that a lot of very specialized information is required.
It's beyond the in-house time or ability of the Ministry of Finance. I understand that. That doesn't surprise me. That's what I would expect the government to do, and I expect other players will do the same. It's just the folks in the middle. Where do they fit into this? By grace and favour, subsection (5) may cover it, you tell me. Well, maybe you're right. It will be judged by results.
One of the reasons we got into that intervenor funding boondoggle of the 1980s was that so many of these proceedings, particularly on energy matters, Hydro matters, just became a joke. Farmers were looking at these proceedings and seeing that you didn't even get to play the game without hiring your specialist from Toronto or London, some law firm, and there was a lot of upset about that. Now we're heading into a situation where there are going to be -- the more I think about what this is going to mean, the more fascinated I am about the combinations and permutations and possibilities.
All of this to date is just academic for most people, but when this thing actually starts to happen I think there will be a lot of interest. I would like to believe that when the network goes live, when people actually start -- it's like the assessment stuff. We talked about it for a year and now it's live and on television. Now people understand, some very positively, some less so. When this stuff starts to happen in your neighbourhood, I think there are going to be a lot of businesses and farmers and just plan folks who are going to be very interested and might very well want to intervene. I want to make sure that the proceedings of the board are as user-friendly as we can make them. Enough said.
Mrs Johns: I'm interested in this argument. I am not going to sign a blank cheque for the government so that it is putting out dollars that we don't know what they are. What I would like to have happen here is I'd like you to get in touch with the association tomorrow, send a notice to Mr Conway and myself with respect to this, and see, if it doesn't meet their needs, if there is something we can do in regulations.
It is certainly our intention to ensure that people have the ability to come before the board and that the board has some discretion to be able to award costs, so a legal opinion, a discussion with the group. We'll move on and we'll see what we can do. If I have missed this and it's not handled properly, we'll have to come back and talk about that through some other method.
Mr Conway: I just want the committee to know I communicated with the CAC after their presentation. I was struck by it and I wanted to be sure that I didn't misunderstand it. They seemed to be quite comfortable with this kind of an amendment. They're not unmindful of some of the things you've said about the past. Their concern is the new scheme is going to be a much more complicated, expansive and potentially costly operation. The hope is that we have a real good development of the informal proceedings to speed things along. Both Mr Laughren and various of the consumer groups said that was their hope. That's the only way this thing is ever going to be made workable.
Mr Fox: If it's a proceeding, it's within subsection 29(5). Anne spoke to this. If the board takes, within the statute, a liberal reading of what "proceeding" means, it's covered.
The Chair: Further comments or questions to this amendment? Seeing none, I put the question. Shall this amendment carry? All those in favour? Opposed? This amendment is lost.
We now have an NDP amendment on page 144.
Mr Lessard: I move that section 29 of the Ontario Energy Board Act, 1998, as set out in schedule B of the bill, be amended by adding the following subsection:
"(6) In awarding costs, the board shall ensure that members of the public are not prevented from bringing issues of public importance before the board."
This really is the NDP take on the submission that was made by the consumers' association on the same issue we've just been speaking about. The remarks I make on this section are basically a repetition of what I said this morning with respect to the possibility of intervenor funding. Although it doesn't need to be intervenor funding, and I understand the government's position on intervenor funding, there needs to be some assurance, I believe, that residential consumers and farm customers feel they have some real way of dealing with that inequity of bargaining power in a market-based system to ensure that the public interest is protected and that when they're swimming in the shark-infested waters, the objective of lower price is one that is going to be met for everyone similarly.
This is an attempt as well to make the proceedings before the energy board consumer-friendly and, as the consumers' association brief says, to have a process that's broader and more flexible. We as well don't want to see consumers left out of the process. Although I understand that the board has discretion to award costs, I believe this provides further clarification to the board in awarding those costs so that the public doesn't perceive there's any discouragement from bringing matters of public importance before the board as a result of the exercise of that discretion to award costs. If you don't like the Liberal take on the consumers' association brief, maybe you'll like this one a little bit more.
Mrs Johns: I actually like it less. I was more taken with the argument from the Liberals than from this one, to be quite frank. My problem here --
Mr Lessard: It's the same argument that applies.
Mrs Johns: No, it isn't the same argument that can apply, actually. My problem here is this implies that the Ontario Energy Board might, if we don't put this in, be trying to prevent the public from bringing public interest issues before the board. It is the Ontario Energy Board mandate objective to protect the interests of consumers. How could they possibly be trying to prevent the public from bringing issues before the board?
If we have to put this in, we've got something very fundamentally wrong with the bill, because in section 1 of the Ontario Energy Board Act, paragraph 3, the broad objectives of the Ontario Energy Board are "to protect the interests of consumers with respect to prices and reliability of the quality of electricity service," those kind of issues. I just don't see a reason for this.
The Ontario Energy Board is not to be an Ombudsman, but it certainly has a mandate to do a job. I don't think they should be out there beating the bushes to ensure that the public interest is served, but on the other side, when the public comes forward they have the responsibility to hear from the board. People can write letters, they can come into proceedings, they can do a number of different things.
I actually take a little bit of offence to this one. I think Mr Laughren has said quite clearly that he views as his mandate protection of the consumer.
Mr Lessard: I don't think I was implying that the energy board should be beating the bushes to get people to make appearances before them. I think this is just a matter of perception, so that people who do feel they want to bring matters of public importance before the board don't feel they are intimidated by the prospect of having costs awarded from them and not bring those issues before the board. That's the only point we're trying to make here.
Mr Conway: The other thing I will say here too, and where I might even differ with the consumers' association, is that the politics of electricity in a jurisdiction like this are so powerful and so pervasive that there is always the recourse to beat the -- I won't say what -- out of the politicians in the Legislature, and it will happen. There's just no way that's not going to be a possibility. In fact you might argue, I say to my friend from Windsor, that it might be your cheapest and most efficient, least costly route.
Mr Conway: I'm deadly serious. You've got to get people's attention. The regulated market has had its share of problems but one of the things that it has meant is that certain of the -- some kind soul gave me a Scottish newspaper, a staff member of the Legislative Assembly. I was just reading this stuff. The headlines are just everywhere about all kinds of stuff that we haven't seen in this province for 50 years. We are going to start to see it. There will be a very rich opportunity to appeal to members of the assembly, whether they want to be appealed to or not, in a very cheap, easy and regular way. I suspect that will provide some real measure of protection, so-called. We shouldn't lose sight of that.
The Chair: Further questions and comments? Seeing none, shall this amendment carry? All those in favour? Opposed? The amendment is lost.
Shall section 29 carry? All those in favour of this section? Opposed? This section carries.
Section 30: We have a government amendment on page 145.
Mrs Johns: I move that section 30 of the Ontario Energy Board Act, 1998, as set out in schedule B to the bill, be struck out and the following substituted:
"Power to review, etc.
"30(1) In addition to its powers under section 21.2 of the Statutory Powers Procedure Act, the board may at any time rehear or review any matter before deciding it.
"Review by director
"(2) Despite subsection 49(4) and section 63, the director may review all or part of his or her decision and section 21.2 of the Statutory Powers Procedure Act applies, with necessary modifications, to the review."
We added the first part of subsection (1) because we felt that we needed to incorporate the part about section 21.2 of the Statutory Powers Procedure Act. We're trying to outline under what conditions the board is able to review decisions in both of these cases. We wanted to clarify that.
The Chair: Further questions or comments? Seeing none, shall this amendment carry? All those in favour? Opposed? This amendment carries.
Further questions or comments to section 30? Shall section 30, as amended, carry? All those in favour? Opposed? This section carries.
Section 31 of schedule B, section 32 and section 33 have no amendments proposed. Any questions or comments to those three sections? Seeing none, shall sections 31, 32 and 33 carry? All in favour? Opposed? Those three sections carry.
Section 34: a government amendment, page 146.
Mrs Johns: I move that section 34 of the Ontario Energy Board Act, 1998, as set out in schedule B to the bill, be amended by striking out "Lieutenant Governor in Council" and substituting "Minister".
What we're doing here is reflecting the current practices, what happens when the board is asked to consult with stakeholders and report back on stakeholder positions.
Mr Conway: I think this is a really radical measure that should give us all great pause. It's going well beyond the pale of reason. Taking all this power away from the cabinet and giving it to the minister? I'm only kidding. Let's move on.
The Chair: Further comment? Seeing none, shall this amendment carry? All those in favour? Opposed? This amendment carries.
Further discussion on section 34? Shall section 34, as amended, carry? All those in favour? Opposed? This section carries.
New section, 34.1: This is a Liberal amendment, page 147.
Mr Conway: I move that part II of the Ontario Energy Board Act, 1998, as set out in schedule B of the bill, be amended by adding the following sections:
"Energy conservation measures
"34.1(1) The board has power to undertake energy conservation measures as it considers appropriate.
"(2) Examples of energy conservation measures are:
"1. The imposition of a systems benefit charge.
"2. The establishment of a renewable portfolio standard.
"Hearing, fund for reactor decommissioning and radioactive waste management
"34.2 The board shall hold a hearing into the possibility of establishing a special fund to finance the cost of decommissioning nuclear reactors and managing radioactive waste, shall prepare a report on the hearing, including recommendations, and shall make the report public."
We had several submissions from people like the Green Energy Coalition, Pollution Probe, Citizens for Renewable Energy, the Ontario Medical Association, the Canadian Energy Efficiency Alliance, the Sierra Club and the Nuclear Awareness Project, to name seven or eight, all of which strongly recommended the importance of providing a mechanism in this new policy and the legislation which would deliver it. The creation of energy conservation measures, those people felt, in the broad public interest, would be very important; important, in a sense too, to ameliorate what they all recommended might be the nasty environmental consequences of a pure market.
We heard, I thought, some very powerful testimony. I thought the Ontario Medical Association was particularly strong at Mississauga in pointing out that this is a policy that essentially assumes the market is going to make key decisions. I don't have a problem with that so long as there are reasonable constraints on the behaviour of all markets to create nasty or unintended consequences. We're already seeing the concerns that are brought in the land about what an energy market might do if its first, second and third concerns were only price.
There will be choices made that are going to be not in the public interest where the environment is concerned. In the old scheme of things, it was a matter of a state-controlled monopoly, and there were opportunities, not just in Ontario but in most of the North American jurisdictions where Ontario-Hydro-like operations were certainly the monopoly supplier. There was a much easier way to mandate certain behaviours. If the government was concerned about scrubbers, they just ordered Ontario Hydro to install scrubbers. In fact, one of the strong cases for the whole nuclear commitment was an environmental one. It didn't involve the degradation that you get with other kinds of electricity generation. That was part of the case for atomic power back in the 1960s.
The question is, then, where in this new deregulated marketplace are we going to get the mandates that are actually going to produce things like the renewable portfolio standard, any kind of energy conservation measure that individual players in their own circumstance are not likely to develop?
This amendment, the first part, 34.1, is a straightforward amendment to reflect the testimony of many, many people that we should provide a mechanism to permit this undertaking. Generally, as I reviewed the advice, people weren't unanimous on this, but one looks for a place to actually assign the responsibility. When I looked at the testimony and looked at the various possibilities, I felt that this would be the most appropriate place to install that responsibility. It's in that spirit, and on the basis of the very strong evidence that we had in this respect from a lot of individuals and groups, that I developed and placed the motion this afternoon.
Mr Galt: There are quite a few things in this particular suggestion being brought forward by Mr Conway, looking at promotion of energy efficiencies through a systems benefit charge. Certainly, as you look at something like this, there's a risk of the possibility of the price actually increasing by setting up dear knows what to administer this. Some sort of bureaucracy would probably be necessary to oversee it. Dear knows, we could end up subsidizing some uneconomic forums of electricity supply.
He moves on into looking at "a renewable portfolio standard." I think Bill 35 is already proposing very effectively that it will create a level playing field and open access, which should be very helpful. It's enabling legislation that will help to control emissions. There are also enabling regulations to ensure that emissions disclosure will be there on retailers' bills when they receive them so they'll know what kind of emissions they're responsible for.
In section 34.2, I'm certainly sympathetic to the concern relating to nuclear reactors. He's absolutely right that we did hear a lot of concern being expressed about that, but in fact that is a federal jurisdiction. It's my understanding that guidelines for financial assurance will be coming from the AECB sometime this fall. So in that area, it would be duplication, and it is an area of federal jurisdiction.
Mr Conway: The member makes a good point. There is federal jurisdiction involved with the regulation of our atomic reactors, but what is clearly a provincial responsibility is the payment of the downstream, decommissioning and waste management costs. Again, I noted that the Financial Post -- I guess it was yesterday; I can't remember if it was yesterday or today -- quotes a senior Hydro official as saying that their best latest estimate is about $15.7 billion of downstream costs. That is an important issue. The federal government is the regulator, but the Ontario taxpayer is the payer of that.
Again, a concern I have, on the basis of what I saw last year and what I continue to hear from inside and outside Ontario Hydro Nuclear, is about trying to get some transparency, some clarity as to what it really is, what its constituent parts are and how that is likely to affect rates in the short and intermediate terms.
On the main point, Mr Galt makes the point that we really have to be careful about imposing any strictures or constraints that might in fact increase costs. That is going to be something we're going to have to recognize, because if you recall those deputants -- and I'll just focus on the medical association -- you're going to have a choice to make. There is absolutely no question that there will be real market pressures in the short and intermediate term to offer up cheap, dirty power. In some cases, there will be some very real opportunities to give to one group of people attractive, environmentally benign power with a lot of very nasty environmental degradation found hundreds of miles away, perhaps thousands of kilometres away.
We won't have time to deal with it in these proceedings, but I was struck the other day by actions taken in Washington with respect to new caps that the US federal energy commission is apparently going to be applying to the generators of electricity. I didn't bring the news articles that were in the Toronto, Canadian and American press as to what the implications of that most recent action in Washington will mean, particularly to Ontario Hydro. As I read the articles, it appeared that we would be required, as a utility -- now I'm talking about Ontario Hydro -- to expend hundreds of millions of dollars to bring our fossil plants to the new requirements of the latest -- I don't know whether they were amendments to the Clean Air Act. I can't remember.
There's every indication that not just our own governments but not very far-distant foreign governments are going to be establishing caps and rules and regulations that are clearly going to be imposing some costs in the name of environmental protection. I come back to the point that a lot of those people I mentioned earlier -- the medical association, Citizens for Renewable Energy, the Canadian Energy Efficiency Alliance -- told us that in a pure market, particularly in the current situation, there's going to be enormous pressure to accept a lot of dirty, coal-fired electricity, which will be cheap, cheaper, than a number of the alternatives.
The point of this amendment is to give the energy board the option, the opportunity, to take some reasonable, modest steps to develop certain energy conservation measures, like the establishment of a renewable portfolio standard. I don't think there's any reason to believe that, without some of that kind of direction, this market, in the short and intermediate term, is going to deliver those kinds of possibilities. What it will do, on the basis of the evidence I heard, is create some very strong market pressures to pollute in ways that I think will trouble a lot of our constituents.
Mr Galt: If I may respond, there have been several comments made that I think are important to respond to. I'm certainly empathetic to his concern about how clean those little electrons are going to be, at least the production of those little electrons. I should remind the member that Ontario Hydro, as it is -- and we're keeping it there as Genco, one unit -- is the second-cleanest in the northeast of North America, in total. I would suggest that probably on a per-kilowatt hour it is the cleanest, as it relates to emissions.
There have been many things that this government has been doing to ensure that the emissions are as low as possible. If we had broken it up and had competition between the nuclear plants and the fossil fuel plants, I could see real concerns that we might have. There's no question that we're committed in regulation. These are going to be very difficult regulations to write, to ensure that the companies we buy power from are going to be every bit as clean as Ontario Hydro.
The Acting Chair (Mr Toby Barrett): Mr Galt, excuse me for interrupting. It's my duty to read a statement. I think this committee knows about this.
Mr Galt: I was just getting fired up here.
The Acting Chair: I apologize, Mr Galt.
Pursuant to the order of the House dated June 24, 1998, as it is now 4:30 on the fifth day of clause-by-clause consideration, those amendments which have not yet been moved shall be deemed to have been moved, and the Chair of the committee shall interrupt the proceedings and shall, without further debate or amendment, put every question necessary to dispose of all remaining sections of the bill and any amendments thereto.
We are presently at the Liberal amendment 34.1. This is on page 147 and has been moved. Does this amendment carry? Opposed? Lost.
Continuing with schedule B, section 35: As I understand it, in keeping with the tradition of this committee, we would collapse several sections. We would collapse sections 35 through 41, including all sections within that collection of sections.
Section 34: One amendment was lost and we haven't passed it as amended. I believe there's a motion that's missing. I see no amendments on the list. I'll repeat the list, Mr. Galt. Shall sections 35 through 41 carry? Carried.
We now come to section 42. Shall the government amendment as described on page 148 carry? Carried.
Shall section 42 of schedule B, as amended, carry? Carried.
Continuing in section B, I see on page 150 an amendment to section 43. Shall this amendment carry? Carried.
Shall section 43 of schedule B, as amended, carry? Carried.
Section 44: There's an amendment on page 151. Shall this amendment carry? Carried. Shall section 44 of schedule B, as amended, carry? Carried.
Again in keeping with the tradition, I wish to collapse sections 45 through 55 and include all sections therein. Shall sections 45 through 55 carry? Carried.
With respect to section 56, there is an amendment on page 152, a government motion. Shall the government amendment to section 56 carry? Carried.
Shall the Liberal amendment on page 153 to section 56 carry? No? Lost.
Shall the NDP motion described on page 154, an amendment to section 56, carry? Defeated.
Shall section 56 of section B, as amended, carry? Carried.
Shall section 57 of schedule B carry? Carried.
A government amendment on page 155. Shall this amendment carry? Carried.
Shall section 58 of schedule B, as amended, carry? Carried.
I wish to collapse several subsequent amendments. Shall sections 59 through 64 carry? Carried.
With respect to section 65, there's an NDP amendment on page 156. Shall this NDP amendment carry? Defeated.
Hearing that, shall section 65 of schedule B, as amended, carry?
The Acting Chair: Yes. It is now not amended, based on that vote. Therefore, shall section 65 carry? Carried.
Collapsing several sections, shall sections 66 through 68 carry? Carried.
Section 69, a government amendment on page 157. Shall this amendment to section 69 carry? Carried.
Shall section 69 of schedule B, as amended, carry? Carried.
Section 70, a government amendment on page 159. Shall this amendment carry? Carried.
Shall section 70 of schedule B, as amended, carry? Carried.
Shall section 71 of schedule B carry? Carried.
Section 72: There is a government amendment on page 160. Shall this amendment carry? Carried.
I wish to declare the amendment on page 162 out of order.
Next is an NDP amendment. Shall the NDP amendment to section 72, on page 164, carry? No.
Just as a point of clarification, the Liberal amendment on page 163 is a point of information. It's not an amendment.
Shall section 72 of schedule B, as amended, carry? Carried.
I wish to collapse sections 73 through to and including 76. Shall these sections carry? Carried.
On page 165 there is an NDP amendment to section 77. Shall this amendment carry? Lost.
Shall section 77 of schedule B carry? Carried.
On page 166 we have an NDP amendment to section 78. Shall this amendment carry? Defeated.
Shall section 78 of schedule B carry? Carried.
Section 79, a government amendment on page 167. Shall this amendment carry? Carried.
Shall section 79 of schedule B, as amended, carry? Carried.
Section 80: On page 168 there's a government amendment. Shall this amendment carry? Carried.
Shall section 80 of schedule B, as amended, carry? Carried.
Section 81: On page 169 there is a government amendment. Shall this amendment carry? I declare that carried.
On page 170 there is an NDP amendment to section 81. Does this amendment carry? Lost.
Shall section 81 of schedule B, with that amendment, carry? Carried.
I wish to collapse sections 82 through 84. Shall sections 82 through 84 carry? Carried.
Continuing with schedule B, section 85: On page 171 there is a government amendment. Shall this amendment carry? Carried.
On page 173 there is an NDP amendment. Shall this amendment carry? I declare that amendment defeated.
Shall section 85 of schedule B, as amended, carry? Carried.
Shall section 86 of schedule B carry? Carried.
Section 87: On page 174 there's an NDP amendment. Shall this amendment carry? I declare that amendment lost.
Page 175, a government amendment to section 87. Shall that carry? I declare it carried.
Page 176, shall the NDP amendment carry? Lost.
Page 177 is out of order.
On page 178 there is an NDP amendment. Shall this amendment carry? Lost.
The NDP amendment on page 179 is also declared out of order.
Shall section 87 of schedule B, as amended, carry? Carried.
I wish to collapse sections 88 through 97. Shall these sections as grouped together carry? Carried.
On page 180 there is a government amendment to section 98. Shall this amendment carry? Carried.
Shall section 98 of schedule B, as amended, carry? Carried.
I wish to collapse together sections 99 and 100. Shall these sections as grouped together carry? Carried.
On page 181 there is a government amendment to section 101. Shall this amendment carry? Carried.
Shall section 101 of schedule B, as amended, carry? Carried.
On page 182, shall the government amendment to section 102 carry? Carried.
Shall section 102 of schedule B, as amended, carry? Carried.
Shall section 103 through to and including section 105 carry? Carried.
On page 183, shall the government amendment to section 106 carry? Carried.
Shall section 106 of schedule B, as amended, carry? Carried.
On page 184, shall the government amendment to section 107 carry? Carried.
Shall section 107 of schedule B, as amended, carry? Carried.
Shall section 108 of schedule B carry? Carried.
On page 187, shall the government amendment to section 109 carry?
Shall section 109 of schedule B, as amended, carry? Carried.
Shall sections 110 through 121 carry? Carried.
Shall the government amendment on page 188 to section 122 carry? Carried.
Shall section 122 of schedule B, as amended, carry? Carried.
Shall sections 123 and 124 carry? Carried.
Shall the government amendment on page 190 to clause 125 carry? Carried.
Shall clause 125 of schedule B, as amended, carry? Carried.
Shall the government amendment on page 191, referring to section 126, carry? Carried.
Shall the NDP amendment on page 192, an amendment to section 126, carry? I declare that lost.
Shall section 126 of schedule B, including that amendment, carry? Carried.
Shall section 127 of schedule B carry? Carried.
Shall the government amendment to section 128, on page 193, carry? Carried.
Shall section 128 of schedule B, as amended, carry? Carried.
Shall sections 129 through 132 carry? Carried.
This completes schedule B. Shall schedule B in its totality, as amended, carry? Carried.
We go on to schedule C. Shall the government amendment to section 1 of schedule C on page 194 carry? Carried.
Shall the government amendment to section 1 on page 195 carry? Carried.
Shall section 1 of schedule C, as amended, carry? Carried.
Shall sections 2 through 6 carry? Carried.
Shall schedule C, as amended, carry? Carried.
With respect to schedule D, shall the government amendment to section 1 on page 196 carry? Carried.
Shall the government amendment on page 197 carry? Carried.
Shall section 1 of schedule D, as amended, carry? Carried.
Shall sections 2 through 4 carry? Carried.
Shall the government amendment on page 198, referring to section 5, carry? Carried.
Shall section 5 of schedule D, as amended, carry? Carried.
Shall the government amendment to section 6 on page 199 carry? Carried.
Shall the government amendment to section 6 on page 200 carry? Carried.
Shall section 6 of schedule D, as amended, carry? Carried.
On page 201, shall the government amendment to section 7 carry? Carried.
Shall section 7 of schedule D, as amended, carry? Carried.
Shall sections 8 and 9 carry? Carried.
On page 202 there is an NDP amendment to section 10. Shall this amendment carry? I declare that lost.
Shall section 10 of schedule D carry? Carried.
Shall sections 11 and 12 carry? Carried.
Shall the government amendment to section 13 on page 203 carry? Carried.
Shall section 13 of schedule D, as amended, carry? Carried.
I wish to collapse sections 14 through 21. Shall these sections carry? Carried.
Shall the government amendment to section 22 on page 204 carry? Carried.
Shall section 22 of schedule D, as amended, carry? Carried.
Shall sections 23 through 26 carry? Carried.
On page 205, shall the government amendment to section 27 carry? Carried.
On page 206, shall the government amendment to section 27 carry? Carried.
Shall section 27 of schedule D, as amended, carry? Carried.
On page 207, shall the Liberal amendment to section 28 of schedule D carry? I declare that amendment lost.
Shall section 28 of schedule D carry? Carried.
Shall sections 29 and 30 carry? Carried.
On page 208, shall the government amendment to section 31 carry? Carried.
Shall section 31 of schedule D, as amended, carry? Carried.
On page 209, shall the government amendment to section 32 carry? Carried.
On page 210, shall the government amendment to section 32 carry? Carried.
On page 211, shall the government amendment to section 32 carry? Carried.
Shall section 32 of schedule D, as amended, carry? Carried.
Shall section 33 carry? Carried.
On page 212, shall the government amendment to section 34 carry? Carried.
Shall section 34 of schedule D, as amended, carry? Carried.
Shall sections 35 and 36 carry? Carried.
On page 213, shall the government amendment to section 37 carry? Carried.
On page 214, shall the government amendment to section 37 carry? Carried.
On page 215, shall the government amendment to section 37 carry? Carried.
Shall section 37 of schedule D, as amended, carry? Carried.
On page 216, shall the government amendment to section 38 carry? Carried.
Shall section 38 of schedule D, as amended, carry? Carried.
On page 217, shall the government amendment to section 39 carry? Carried.
On page 218, shall the government amendment to section 39 carry? Carried.
Shall section 39 of schedule D, as amended, carry?
Shall the government amendment on page 219, referring to section 40, carry? Carried.
Shall section 40 of schedule D, as amended, carry? Carried.
On page 220, shall the government amendment to section 41 carry? Carried.
Shall section 41 of schedule D, as amended, carry? Carried.
On page 221, shall the government amendment to section 42 carry? Carried.
On page 222, shall the government amendment to section 42 carry? Carried.
Shall section 42 of schedule D, as amended, carry? Carried.
Again, in keeping with tradition, I wish to collapse sections 43 through 52. Shall these sections carry? Carried.
Shall schedule D, as amended, carry? Carried.
Shall the long title carry?
Ms Churley: I want to put something on the record, but I can wait until you've gone through the motion.
The Acting Chair: Pursuant to the order of the House dated June 24, there is no debate in clause-by-clause consideration as of 4:30.
Shall the bill as amended carry? Carried.
Shall I or the Chair of this committee report the bill as amended to the House? Agreed.
As ordered: That the Chair report bill 35, as amended, to the House? Agreed.
I declare these deliberations adjourned.
The committee adjourned at 1657.