Thursday 30 October 1997
Integrated Energy Development Corp; Commercial Alcohols Inc; Canadian Agra Corp
Mr Sam MacGregor
Mr Doug MacKenzie
Mr Doug Fletcher
Port Elgin and District Chamber of Commerce
Mr Kevin Carter
Mr Mark Kraemer
O.C. Long Contracting
Mr Clayton Long
Mrs Lenore Long
South Bruce Impact Advisory Committee
Mr Harry Thede
Mr Murray Thompson
Bruce Community Development Corp
Ms Lauri Cunningham
Mr Charles Merritt
Citizens for Renewable Energy
Mr Siegfried Kleinau
Mr Glenn Sutton
Dr Gary Gurbin
SELECT COMMITTEE ON ONTARIO HYDRO NUCLEAR AFFAIRS
Chair / Président
Mr Derwyn Shea (High Park-Swansea PC)
Vice-Chair / Vice-Président
Mr Monte Kwinter (Wilson Heights L)
Mr Sean Conway (Renfrew North / -Nord L)
Mr Doug Galt (Northumberland PC)
Mrs Barbara Fisher (Bruce PC)
Mrs Helen Johns (Huron PC)
Mr Monte Kwinter (Wilson Heights L)
Mr Floyd Laughren (Nickel Belt ND)
Mr John R. O'Toole (Durham East / -Est PC)
Mr Derwyn Shea (High Park-Swansea PC)
Clerk / Greffière
Ms Donna Bryce
Staff / Personnel
Mr Lewis Yeager, research officer, Legislative Research Service
Mr Richard Campbell, consultant
Mr Robert Power, legal counsel
The committee met at 0902 in the Best Western Governor's Inn, Kincardine.
The Chair (Mr Derwyn Shea): Good morning. Once again I bring the select committee to order for the public hearings. We are pleased to be in Kincardine, and yesterday the tour and the public deputations were very helpful for members of the committee. I particularly express our appreciation to all who made the effort to be here and also to those who have been sending in written deputations. They are being assembled and being digested by the committee. Again, Mrs Fisher, it's pleasant to be in your riding, and we appreciate the courtesies that you have extended to the committee.
There is one piece of business, just to advise members that I'll table with you a letter from the Power Workers' Union dated October 28 that you should have in your file. We will have receipt of that, and that will go into our correspondence and be considered by the committee in due course.
INTEGRATED ENERGY DEVELOPMENT CORP
COMMERCIAL ALCOHOLS INC
CANADIAN AGRA CORP
The Chair: Our first deputation this morning is a panel of industry. If the witnesses who are going to be making presentations would come forward now please and take their places at the witness table, we would appreciate that: Sam MacGregor, Doug MacKenzie and Doug Fletcher. We have approximately 55 minutes for the deputation. I need to be guided a little bit by the witnesses. We can either pause after each presentation or ask the three of you to make the presentation and then go to open questioning. Do you have any particular preference in that regard?
Mr Sam MacGregor: Mr Chairman, if it please the committee, we have about a six-minute, six-page statement that we would like to read into the record.
The Chair: That's done in concert; the three of you are sharing that?
Mr MacGregor: Yes.
The Chair: Why don't we do it that way? We'll do the one presentation. For the purposes of Hansard, would you be good enough to identify yourself and your colleagues and then we'll proceed.
Mr MacGregor: My name is Sam MacGregor. I am chairman of Integrated Energy Development Corp. With me are Doug Fletcher, long-time associate with Canadian Agra Corp, and Doug MacKenzie, president and chief executive officer of Commercial Alcohols Inc.
This is an overview of Ontario's nuclear facilities issue and beyond. It may be a little bit broader than your mandate because it's more site-specific, but we believe it to be very relevant.
Thank you for the opportunity to discuss the relevance of Ontario's nuclear recovery plan as it relates to Bruce nuclear generating station A and Bruce Energy Centre. As developers and proponents of the Bruce Energy Centre, we support the recovery of all of Ontario's nuclear facilities, providing the government of Ontario can ensure that the refurbishing and operational practices are carried out affordably and in accordance with normal business practices. Whether you advocate or denounce the nuclear option, there can be no denial that nuclear power does not exhaust gases which contribute to climate change, caused in part by carbon-dioxide-induced global warming.
First, it is important to note that the fissioning of uranium in Candu reactors generates heat energy which is used to boil water. I apologize if there is some redundancy here that you probably all understand, but it's the reason for the genesis of the Bruce Energy Centre. The primary steam produced through Ontario's uranium fuel boilers is used to rotate turbine generators which produce electricity. Steam exhausted through the turbines is then chilled or condensed with lake water and returned to the boilers, where the thermal cycle continues. Although the steam temperature and pressure generated in Candu reactors is lower than the steam conditions generated in fossil fuel boilers, the steam-generating principles are similar. In single-purpose electricity generating practices such as those carried out by Ontario Hydro, lakes, rivers and cooling towers are used to condense or chill exhaust steam. However, in cogeneration practices such as those carried out by industry and most independent power producers, the exhaust steam from turbine generators is used to energize process industry. As a result, secondary industry serves as a condenser, increasing the overall efficiency of the thermal cycle.
Secondly, it is important to note that the conventional demand for electricity varies greatly throughout the hours of each day. As well, large volumes of electricity cannot be readily stored, and Candu reactors are not designed to modulate or follow the load.
Finally, it is important to note that the Bruce Nuclear Power Development, consisting of eight Candu reactor/
boiler generator/condenser systems, had the collective capacity to generate up to 80 million pounds of steam per hour, which is equal to 320,000 barrels of oil per day. The full complement of BNPD steam was historically used to generate 6,000 megawatts of electricity, representing some 35% of Ontario's electricity consumption. Because cogeneration practices were not employed by Ontario Hydro in Ontario's Candu generating stations, the system was and is only 25% thermally efficient. By not practising cogeneration, BNPD rejected the thermal equivalent of up to 240,000 barrels of oil per day to Lake Huron in the form of low-grade heat when all units were operational.
It was on the enormous potential to harvest cogenerated steam, to use large volumes of electricity close to its source of generation and to develop unique uses for off-peak electricity which could withstand incremental interruptability that the Bruce Energy Centre was officially founded some 13 years ago. Even though the Ontario Power Corporation Act was appropriately amended in 1981 by a previous Ontario government in order to address the enormous potential of the Bruce Energy Centre, Ontario Hydro stubbornly refused to cooperate with the private sector proponents and developers of the Bruce Energy Centre.
Having heard the evidence of several internationally renowned energy efficiency experts during Ontario Energy Board's HR 22, the August 31, 1994, report to the board, recommendation 10.7, concluded the following:
"The board recommends that as part of its reconsideration of its rate structure, cost allocation procedures and customer classification, Hydro should consider the issues raised by supporters of the Bruce Energy Centre."
In spite of the above, Ontario Hydro continued to disregard the Bruce Energy Centre proponents' investment of time, expertise and private capital, as well as their increasingly accurate arguments in favour of diversification, increased efficiency and entrepreneurial participation required to improve the operation of Ontario's technology-driven energy system. Over time, the Bruce Energy Centre industrial proponents and developers became disillusioned with Ontario Hydro's arrogance and began investigating the consequence of expanding their enterprise in other regions, provinces and countries.
As a result, Commercial Alcohols Inc, represented by Doug MacKenzie, has gone on to develop a world-scale fermentation alcohol plant in Chatham, Ontario. Its electricity and steam source for the Chatham operation is by way of in-house natural gas fuel cogeneration. Commercial Alcohols Inc's second world-scale ethanol plant is about to proceed in Quebec, where its energy source will be by way of Hydro-Québec and its associated natural gas company, Gaz Métropolitain.
Commercial Alcohols Inc's original pilot fermentation ethanol plant continues to operate at the Bruce Energy Centre, where it is now required to pay rural electricity rates averaging between seven and eight cents per kilowatt-hour, including a demand charge.
The implementation of the IIPA introduces the uncertainty of a clean supply of steam at a reasonable cost to this facility beyond 1998. Since energy represents 60% of the basic operating cost of ethanol production, the energy cost at the Bruce Energy Centre places a serious strain on the ability of the Bruce Energy Centre to compete. Further, Commercial Alcohols Inc has been offered an electricity rate between 1.3 and 3.5 cents per kilowatt-hour in Quebec. Of course, the 1.3 is in the low-valley period in an interruptible mode.
Second, Canadian Agra Corp, represented by Doug Fletcher, became a major investor in the Bruce Energy Centre in 1989 and constructed the world's largest alfalfa dehydration plant in 1990. This plant was to be the cornerstone of a family of interlinked agricultural processing industries. A full description of these investments is provided in a document submitted to the Minister of Economic Development in March 1994. I believe Doug has left evidence of that report with the committee.
The second member of this family, a 200-million-litre-per-year fuel ethanol plant, was scheduled for construction in 1992, with the other plants following quickly thereafter. In March 1992, Ontario Hydro refused to supply a long-term steam contract for this plant, and in mid-1993 they applied rural electricity rates to all existing and future industries in the Bruce Energy Centre. This act rendered these investment plans uneconomical, and Canadian Agra Corp's further development of the Bruce Energy Centre was terminated.
As a result, Canadian Agra opened a new industrial park at Ste Agathe, Manitoba, and has purchased the necessary property for another industrial park in Fort Saskatchewan, Alberta. The 2,000-metric-tonne-per-day canola crushing plant originally planned for the Bruce Energy Centre is now nearing completion in Ste Agathe and enjoying a base electricity rate of 1.975 cents per kilowatt-hour, or approximately 2.5 cents per kilowatt-hour after demand charges are included. This leaves the alfalfa cubing plant originally designed as an integrated, multipurpose facility operating with a single product base. The 1993 application of rural electricity rates has now resulted in energy costs rising to 20% of this plant's variable costs. Under these circumstances, the long-term future of this plant and its contribution to the local economy is uncertain.
Integrated Energy Development Corp, represented by myself, initially developed a major greenhouse facility at the Bruce Energy Centre. This project, designed to serve as an end-of-the-line condenser for the Ontario-government-funded central steam distribution system between BNPD and the Bruce Energy Centre, was premised on the ability to access affordable electricity rates to enable the production of fresh winter produce growing under synthetic light. Now IEDC is required to pay rural electricity rates averaging between seven and eight cents per kilowatt-hour, including a demand charge. Like the other BEC industries, IEDC's source of steam and its associated costs beyond 1998 at the Bruce Energy Centre are uncertain.
IEDC has also developed a patented synthetic methanol synthesis process which would use off-peak electricity to produce hydrogen and oxygen from water. This hydrogen and oxygen, together with a reduced volume of natural gas, when burned only with oxygen from water in a zero emission process, will utilize carbon dioxide as a feedstock. I think, with respect, that's a very relevant and important opportunity for technology to drive the fuels of the future, because we all recognize what global warming is about. The end process is the synthesis of methanol, which can be used to operate fuel cells as an industrial feedstock and to improve the combustion of gasoline.
In 1993, a 200-megawatt plant was designed to produce 500,000 metric tonnes of synthetic methanol using IEDC's technology. This plant was planned for development at the Bruce Energy Centre in cooperation with a large Japanese trading and manufacturing investment enterprise. Unfortunately, Ontario Hydro refused to officially offer interruptible electricity rates averaging 2.42 cents per kilowatt-hour, and the project failed to materialize. Currently, IEDC is preparing to develop a 260,000-metric-tonne-per-year plant in a North American jurisdiction other than Ontario.
Taking all of the foregoing into account, it would appear that Ontario Hydro's problems are not limited to its nuclear component and that the problems are more pervasive and widespread than the IIPA report indicates. Indeed, if Ontario Hydro's senior management had worked with the private sector proponents at the BEC, perhaps at least some of the cultural and fiscal problems associated with the maintenance and operation of Ontario's all-important electricity system could have been avoided.
The proponents of the Bruce Energy Centre presenting to this committee have one common objective, which is to profitably add value to raw feedstocks, which for the most part require large inputs of electricity and steam. The menu of their collective activities includes:
(1) The production of fermentation alcohol, normally known as ethanol, which produces carbon dioxide and distiller-spent grain as byproducts.
(2) The production and concentration of high-quality food products which can serve as a carrier medium for secondary supplements from other processes.
(3) The production of synthetic methanol, which can absorb carbon dioxide, provide a liquid carrier medium for hydrogen and produce byproduct steam for use by neighbouring processes.
Other industries located at the Bruce Energy Centre but not represented at the hearing include St Lawrence Technologies Inc, which provides contract research and development services as well as analytical consulting and technology licensing services; BI-AX International, which manufactures specialty polypropylene film to the international market; and Bruce Agra Foods Inc, which processes raw vegetables, fruits and juices into concentrates, sauces and purees in accordance with customer specifications.
As a point of interest, the Bruce Energy Centre is North America's only energy-intensive industrial ecopark and is recognized as such by North American and offshore visitors seeking blueprints for sustainable development. Again, as an industrial ecopark, the Bruce Energy Centre concentrates on value adding to agricultural feedstock; synthetic fuels production, including ethanol, methanol and hydrogen; energy cascading, including passing on reduced-rate energy from higher processes to lower processes; and process synergy, including the utilization of byproducts between neighbouring industries.
The proponents of the Bruce Energy Centre presenting to the select committee on Ontario Hydro nuclear affairs respectfully submit that:
(1) The failure of Ontario Hydro's senior management to grasp the full potential of the Bruce Energy Centre as a vehicle for increasing the diversity and efficiency of its large central electricity generating stations is germane to and symptomatic of Ontario Hydro's fiscal, cultural and equipment problems of the day.
(2) Nuclear generation must remain a significant component in Ontario's energy mix or Ontario will face the consequence of future carbon taxes and increased degradation of its atmosphere.
(3) Nuclear's prolonged operation should be underpinned with industrial ecopark developments such as the Bruce Energy Centre.
(4) Bruce GSA should remain operational but with appropriate safeguards to provide continuity of skills in preparation for early rehabilitation.
(5) A new corporation should be formed to hold property title to Bruce GSA, and institutional debt and private equity should be sought immediately to finance the necessary rehabilitation, staffing up and training programs.
(6) A new board of directors should be formed to represent the new mix of equity holders, introduce conventional acumen with appropriate accountability and assume responsibility for the rehabilitation, recommissioning and long-term operation of Bruce GSA.
(7) A large high-pressure natural gas line should be developed and dedicated to the BNPD and the BEC immediately to ensure that the burner tip price for natural gas to both BNPD and the Bruce Energy Centre industries will be competitive with other jurisdictions.
That completes our submission collectively. We are available to answer any question the committee may wish to ask.
The Chair: Mr MacGregor, thank you very much for your presentation. Just before I go to questioning, may I ask you to turn to page 4 of your presentation. The price that you quoted in your third paragraph for electricity rate offered in Quebec running 1.3 to 3.5: Can you indicate if that's guaranteed and what period of time that rate --
Mr Doug MacKenzie: The 3.5 is a long-term rate for about five years.
The Chair: Thank you. We'll begin the questioning this morning with the opposition caucus.
Mr Monte Kwinter (Wilson Heights): Mr MacGregor, I visited the Bruce nuclear energy centre a couple of times and I am very impressed with what you are doing, but I want to question a couple of your assumptions. At the very opening of your statement you talk about "providing the government of Ontario can ensure that the refurbishing and operational practices are carried out affordably and in accordance with normal business practices." What is your definition of that?
Mr MacGregor: Competition and appropriate training, good scrutiny. I believe that a board of directors responsible to its shareholder constituents is the way it should be done. Then, because nuclear is nuclear, it's a technology-driven supply of heat energy, and that means it should follow a business acumen with proper discipline and proper regulation.
Mr Kwinter: I'm sure you know that when the Macdonald report came out, it called for a level playing field, which meant that Ontario Hydro should pay taxes and that the government should not guarantee their debt so that they would have the same constraints on them that the private sector has. That, just by its very nature, goes against or could complicate the whole idea of affordability. Do you have any comments on that?
Mr MacGregor: I think not. I think that taxes are only forthcoming if there's profit, and that profit can only be generated through a high level of management discipline and accountability at all levels. I believe in private sector participation in a joint venture, and I believe the Power Workers' Union recognizes that this would be a good way to rehabilitate that. It would be much better than laying it up. So I have no problem in seeing all parts. In fact, I made a submission to the Macdonald committee and recommended that Ontario Hydro become a vertically integrated company offering shares in its component parts, with proper debt allocation to each of the subparts or subcorporate parts of the corporation. I think, Mr Kwinter, that there's no problem with having to pay taxes because that's the way the economy works.
Mr Kwinter: The Bruce Energy Centre is really a byproduct of the Bruce nuclear facility. In other words, the nuclear facility wasn't in there to be able to supply the Bruce Energy Centre. The Bruce Energy Centre came because the facility was there and there was, supposedly, availability of cheap steam that could run all of these particular industries. Is that true?
Mr MacGregor: Yes.
Mr Kwinter: I'm not trying to read a conspiracy theory, but have you ever given any thought to the reason why Ontario Hydro Nuclear was not prepared to do the various things you wanted them to do and guarantee these things being because they had for some time thought that this facility may not be available to you and that as a result they were going to have to be put in a position where they would have to supply energy to you from a source other than their own facility? Has that been something that you've explored at all?
Mr MacGregor: I think not, Mr Kwinter. I think the reason the Bruce Energy Centre never became a more significant byproduct of nuclear power is because Ontario Hydro continued to suffer its not-invented-here problems. The Bruce Energy Centre could have been, should have been, a good opportunity to optimize that facility.
Mr Sean G. Conway (Renfrew North): Sam, it's great to see you again, but the pages in your hymn book must be getting a little worn.
Mr MacGregor: They are.
Mr Conway: I've known you for probably 18 or 19 years. You have come before several governments and made several very compelling statements around particularly an appropriate electricity rate structure to make the BEC viable. What's wrong, from your point of view, with senior management at Hydro? They don't seem to have been very cooperative over the last 15 years.
Mr MacGregor: That's an understatement.
Mr Conway: Why, though? What seems to be, from your perspective, the blockage in making what's now seeming to take root in Quebec and Manitoba take root here in the Bruce Peninsula?
Mr MacGregor: Donald Macdonald asked me that very question at our Macdonald committee submission, Mr Conway, and my response to him was, "Inertia." That is a very big flywheel, and if you try to change its direction, you'll find the pilot house is locked tight. It listens to nobody because its pilot house is inside a silo.
I'm sure if you talked to the people who work at Bruce GSA, Bruce GSB or the heavy water plant, trying to permeate their good ideas from the floor up, they'll have the same difficulty because the planning and decision-making policies that are inherent in Ontario Hydro's historic momentum are just impenetrable, even for somebody who has written as many hymns as I have.
Mr MacKenzie: Mr Conway, could I answer that comment itself? I'm the new kid on the block in a sense and I really have never, prior to 1992, had much experience with Ontario Hydro, although I've dealt in other jurisdictions across the country.
I can tell you that from my perception -- and by the way, we have just gone ahead and developed a world-scale alcohol plant in Chatham. To give you an idea of the complexity of that, we have completed 44 major agreements, including three government policies signed, sealed and delivered, with the one single exception. There are four contracts with Ontario Hydro we've been trying to get signed for at least a year. There's a basic incompetence there and I believe it's -- I wouldn't quite say "unethical," but it's incompetent, poor management.
Mr Kwinter, going back to your question earlier, there seems to be no accountability with respect to profit or efficiency or whatever, and therefore a profit-generating process in place would force more of that discipline.
To give you an example, and I'm going to run a little bit, we actually ended up trying to negotiate with Ontario Hydro not to put in a cogen facility in Chatham -- a small facility, shouldn't be there, relatively inefficient, yet we can do it significantly cheaper than Ontario Hydro. We're prepared to come to the table. Our capital costs were about $8 million versus $15 million. Ontario Hydro said it would cost us $15 million and it cost us $8 million. We had it guaranteed and they wouldn't believe it. So we built it for $8 million, as opposed to Ontario Hydro's $15 million. On top of all that, it's taken them nine months to design and not even implement yet a connect equipment for us for backup power and we've built the whole plant in 13 months, a $150-million plant.
So there's no accountability, there's no efficiency drive, there's no decision-making in the organization. It's into floats for everywhere. Nobody takes accountability and nothing gets done.
To operate an industry here -- it's so different in the rest of the world. I'm even dealing in the Ukraine, and it's much more fun to deal with them than Ontario Hydro.
Mr Conway: Now, that's an answer.
The Chair: I assume you won't be running against him either. Carry on. Mr Kwinter, you have time for one more question.
Mr Kwinter: The Bruce Energy Centre has a contract for 25 years of supply, but not at a fixed rate. That rate is negotiable. I don't know how often, but it gets negotiated --
Mr MacKenzie: Annually.
Mr Kwinter: Annually. You've just told us that with cogeneration, you can produce energy cheaper at Chatham than you can get it from here.
Mr MacKenzie: Yes.
Mr Kwinter: I've certainly heard that one of the options Hydro has is that they can't deliver the energy to you at a price that would be competitive for you, and that may be one of their options, to do exactly the same thing to fulfil their contract. Has that been discussed with you?
Mr MacKenzie: I have no confidence they can build anything efficiently. I think we could build a large cogen here, more efficient, from natural gas, say, than they could ever fathom in terms of the process they go through. I believe they don't have the ability to deal with engineering firms in a competitive and effective way like private industry has, and really work with them to get costs -- and, by the way, get efficient and safe equipment put in place. I don't think they can do it with the culture that's there, not just the nuclear division but everywhere.
We have just completed some work with Fluor Daniel, one of the best engineering firms in the world, to put in a large cogen facility here with natural gas at the site, which could produce steam for about $3,000 to $3,500 per thousand pounds, and reasonably competitive electricity rates -- a lot less than Ontario Hydro is charging us today. We know we could do that and provide electricity at a fairly cheap rate to Ontario Hydro, versus the coal-fired boiler systems they're going to run to generate additional electricity in the province of Ontario, which I suspect is going to be much more environmentally negative to the province.
Mr Floyd Laughren (Nickel Belt): Gentlemen, that was a very comprehensive brief. There's more in it than I can really comprehend, quite frankly, some of the technical information.
We were talking to Hydro people yesterday about Bruce Energy Centre. The impression I got -- and my colleagues will correct me if I'm wrong here, I'm sure; they never hesitate to do that -- was that it was a nice centre, but Hydro couldn't possibly subsidize you to the level that you want to be subsidized to with the rates of steam to you, and that especially, when Bruce A is laid up, as they say, for three years, it's not possible to provide you with energy at the cost that you want. In their contract, all it says is that they must provide you with energy; it doesn't say at what price.
I'm wondering to what extent the Bruce Energy Centre could function -- and tell me if I'm wrong on this -- without being subsidized by Ontario Hydro.
Mr MacGregor: I don't think the Bruce Energy Centre should be subsidized by Ontario Hydro, because at the end of the day, if it can't compete, it shouldn't be there.
The problem we have is that Ontario Hydro in its, if you will, wacky attitude -- it believed that it was in the electricity business and that's all that mattered, but the thermal cycle of that plant is only 25%. If they would expand that steam partially through their system, they could exhaust that steam after it had generated some centrifugal motion for power generation but before it went to the lake, and exhaust that to the Bruce Energy Centre rather than taking primary steam at 600 psi and sending it to a so-called transformer, which is really a reboiler, and reducing it in quality to 180 psi, with no power generation across its reduction in quality.
All it needs to do is look at it the way an entrepreneur would look at it, and say: "Here's primary energy. Let's expand that across a turbine, make some electricity and let the industry be the condenser." I'm sure the Bruce Energy Centre customers would pay more than the lake pays for the heat energy.
Mr Laughren: I think most of us really like the concept of the Bruce Energy Centre. It's a wonderful concept in any number of ways.
Mr MacGregor: You're not alone.
Mr Laughren: That's right. I think we all really feel we'd like to see this thing happen and grow and become a prototype, if you will. What's bothering me is that there doesn't seem to be any logic to it not happening.
Mr MacGregor: There's no logic to Ontario Hydro's head office planning.
Mr Laughren: Okay, but is it fair just to chalk everything up to wackiness? I'm having trouble thinking it's all so clear to you that it's simply Hydro's mismanagement and it's got nothing to do with anything else. Forgive me, but you make it sound as though that's absolutely correct.
Mr MacGregor: That is absolutely correct.
Mr Laughren: What's to gain by that?
Mr MacKenzie: Actually, it is correct. That's essentially what it is. As you know, Mr Laughren -- you were involved at the front end -- we built the Chatham plant. We tried to negotiate a long-term arrangement with Ontario Hydro for both electricity and steam -- not necessarily fixed price or subsidized, but a long-term arrangement that we could count on. "We can't do it. We'll give you a rate for a year for electricity, maybe." You can't build a plant that's going to operate 20 years on a one-year whim of Ontario Hydro, whose rates have just increased 30% or 40% in the first part of the decade. You can't do it. They wouldn't think long-term or take advantage of the capabilities that we do have here and develop the potential. That's both environmental and cost-efficient to do.
Mr Laughren: When Bruce A is laid up, am I correct that Bruce B cannot supply the steam to you?
Mr MacKenzie: Yes. There is a major issue now. The industries have been located here because of the facility and the encouragement of this government and former governments, so the industries in most cases, if the steam rates are up at the levels that Ontario Hydro says they may be -- yet to be defined -- will all close. There has to be another solution. We do know we could build steam and electric generation capacity here if we were allowed to do it, and be competitive and survive.
Mr Laughren: That was going to be my next question. I don't know how much time I've got.
The Chair: You still have a few minutes.
Mr Laughren: Good. What I'm not absolutely clear on yet is why Bruce B -- forgive me for not knowing this -- cannot supply steam.
Mr MacGregor: In the original planning notion of Ontario Hydro, a steam transformer plant was built adjacent to Bruce generating station A. In their plans there was a steam transformer plant -- I don't like using that word, because it's not transforming anything, really; it's just a chilling plant -- adjacent to Bruce GSB. Bruce GSA had stretch steam -- that is, the turbines were designed to accommodate less than 100% of the output of the boilers -- so they took that stretch steam and used it to produce heavy water. Although the capacity to send steam from Bruce A to a secondary transformer plant is there, there is no stretch steam, so therefore it would curtail power, curtail the production of electricity.
Secondly, we never really wanted stretch steam; we wanted expansion steam, which is cogeneration. It's large, central cogeneration, which industry would do if it had a demand for heat energy and a demand for steam and a demand for electricity. That's why we say wacky, because they have an electricity monopoly and they don't have to be thermally efficient because their rates, determined by the Ontario Energy Board, without teeth, can be pretty much where they want them to be.
We think it should be an energy company looking at what it has in its pantry first and how efficiently and with how much diversification we can put this public asset to work to encourage ecologically sound, energy-efficient, industrialized economies to expand. That's basically what's wrong. The system believes it to be an electricity system.
Mr Laughren: One final question: If at the end of the day you finally throw up your hands and say, "I can't cope with this wackiness any more. Life's too short" --
Mr MacGregor: And getting shorter.
Mr Laughren: Yes, I know -- can the Bruce Energy Centre attract a cogen plant, if that's the right word, to provide what's necessary to keep the centre alive and growing?
Mr MacGregor: It could have and it would have been much easier to address these problems of the day if Ontario had recognized the convergence of natural gas and electricity a long time ago rather than seeing them as competition. The natural gas availability as a feed stock to the Bruce Energy Centre should have been there years ago. Today it costs a lot of money to bring a natural gas line there because the bunker has kept it out.
Mrs Barbara Fisher (Bruce): Welcome to the hearing process. Nice to see you again. We have probably about 10 minutes here to cover 20 years' worth of history and we're going to have to be very succinct in how we get through this.
I want to reconfirm something. In fact the Power Corporation Act was changed to allow this type of introduction of ecopark participation at the Bruce Energy Centre. If that was the case, what's the disagreement with the Power Corporation Act and Ontario Hydro allowing us to get a rate?
Mr MacGregor: Their interpretation was that electricity and steam were not analogous, although the Power Corporation Act was amended some 15 years ago, I believe, to move Ontario Hydro out of its electricity realm into an energy realm. That was the whole notion of the government of the day, Barb. When we went to negotiate for electricity rates that would relate to, if you will, wellhead rates, because we wanted rates that were adjacent to the power source that did not carry with it the cost of transmission, they decided that the Power Corporation Act was not amended adequately. Our interpretation is that it was, but of course it's legalistic. When they initially defended the fact that the Bruce Energy Centre was not unique for electricity rate consideration they stayed that, and they've maintained that position ever since.
Mrs Fisher: Yet that was the whole intent of changing it in the beginning. Instead of using the word "electricity," it was "energy," so it was a cogeneration issue.
Mr MacGregor: That's right. It was unique to the Bruce Energy Centre too. That was explicit.
Mrs Fisher: On HR 22: There was a recommendation and it's included in your brief, but to highlight that, we've been having difficulties understanding, in interviewing with the OEB, how many recommendations they make and how many are rejected when it gets to board, almost without discussion, it appears, by some of the records. It was in 1994, I guess, HR 22, that they decided that the board recommended as part of the consideration a rate structure, cost allocations and so on. Was the intent of that not to recommend fairness?
Mr MacGregor: I think the presentations that were made to that board impressed them that there was something unique here, that Ontario's energy resource was technology-driven in its power generation and that they should consider some of the unique opportunities for industrial ecopark development because that's what was advanced by the collective panel not different from today. In fact we have some internationally renowned expertise brought to that hearing to give evidence of the opportunities and the global trends. The board recognized that, made its recommendations, I believe supported by the Ministry of Energy and Environment of the day, and when it went to the Hydro board it was rejected, as I understand. I'm not privy to those meetings, but that's the way I understand it.
Mrs Fisher: I want to explore three areas of something that has to do with where we are today and is there even a possible future here any more in terms of the Bruce Energy Centre. There are in place today some signed, or there was at least one, and some gentlemen's handshake contracts with regard to the legal commitment of the provision of steam. Last night we heard that it was more of a moral obligation. I would interpret it to be more of a legal obligation when you're on contract with somebody. Am I not right, that Hydro has to provide something? Right. Is that a yes?
Mr MacGregor: That's a yes.
Mrs Fisher: We had an opportunity to meet with Pat McNeil, one of the senior VPs, last week and he's coming back on Tuesday for additional questioning. My question is this: There was an insinuation that he was working with the proponents of the Bruce Energy Centre, given the new status of not being able to contract steam from the Bruce in what even to your way of thinking probably would be a reasonable fashion. Would you agree that he's working with you?
Mr MacGregor: Are you addressing that to me, Barb?
Mrs Fisher: I'll address it to anybody.
Mr MacGregor: If that's "working with," that's a very, very broad assessment of what working with is all about.
Mrs Fisher: It represents 400 jobs today: 300 normally and then there are some seasonal ups and downs and everything else. I tried last night to make the point that yes, we recognize there's a very significant impact as it relates to Hydro employees, but there's very much more at risk here as well. I understand the issue of 400 jobs and I understand what it's been able to do almost against all will of cooperation somewhere else. If this committee were to make a recommendation to government through our report on your behalf, what should it say?
Mr Doug Fletcher: I think, if I may, one of the responsibilities Ontario Hydro has is to return to the partnership that was originally envisaged in the creation of the Bruce Energy Centre. In terms of the steam supply, yes, they have a contractual commitment to supply steam. They have a contractual commitment to give us a price, a rolling price 10 years in advance that is cost-based. We recognized in the signing of that agreement that if they had to produce steam from the oil-fired standby boilers at some point in time, the cost of that steam would put the Bruce Energy Centre out of business and alternatives would have to be looked at.
They also have a contractual commitment in that same contract to provide on a best-efforts basis something better than a rural electrical rate, which has never been done. I'd come back to Mr Laughren's question about subsidization. Mr MacGregor said the Bruce Energy Centre should not be subsidized by Hydro, but neither should the Bruce Energy Centre subsidize Hydro or the rest of the taxpayers in Ontario. Why should an industrial park be charged a rural electrical rate? It's unheard of, and there's no other place in Ontario jurisdiction I'm aware of where this would be allowed to continue.
Ontario Hydro's position on that electrical rate has simply been, "You're in a rural area, you're not incorporated as a public utility, therefore the power act prohibits us from doing anything different." Yet we read in the paper every day where they've signed private contracts with private companies that give them electrical rates far better than a rural electrical rate, but they won't talk to us. I think after 27 months of trying to negotiate a new steam agreement when they had a responsibility to continue to supply in the first place, I had to conclude that Ontario Hydro executive management, not the nuclear division, was incapable of recognizing an opportunity. They were incapable of taking their vision beyond the glass walls of the Bay Street building.
They hid behind the power act when it suited their purposes to see the Bruce Energy Centre become less of an irritant to them. It was something that earlier generations of management had committed themselves to. The current generation of management didn't understand it, weren't willing to give it a chance and tried to throttle it at every turn.
This raises the question in my mind about, here we have an organization that has induced $35 billion worth of debt on to the Ontario people and now this same management is asking for our support in delivering another $12 billion or $8 billion. I think the committee and all of us have to ask ourselves the question, should this happen? That's what is behind Mr MacGregor's recommendation that Bruce A should be refurbished, but under the guise of something other than the straight control of Ontario Hydro's management.
Mrs Fisher: I want to ask one more question. We got the opportunity yesterday to at least drive by the Bruce Energy Centre. We have some additional documentation here which fully outlines the potential. I don't know if you want to answer this but I'll ask it anyway. Today we have seven facilities there, if I recall the right number. What would you guesstimate the total value of that to be? If we could ever get somebody to understand this and move forward, what do you think the potential growth could be?
Mr Fletcher: The Canadian Agra investment, not just in the Bruce Energy Centre but in the infrastructure that was designed to support it, totals something over $150 million, $170 million. Had it unfolded as it was envisaged to be, there now would be an investment in excess of $500 million there, creating something in the order of 7,000 jobs onsite and in support of the site, with something like $450 million worth of annual increased export revenue for Canada and Ontario. In addition to the 900 acres that were included in Hydro's original environmental assessment, there had been an additional parcel of 4,000 acres assembled and assigned to the Bruce Energy Centre for further development. That gives you some feel for the possibilities that were envisaged by at least one group.
Mrs Fisher: Is there anybody else who might help us?
Mr MacGregor: Can I just relate to an appraisal of the Bruce Energy Centre that was undertaken 10 years ago by David Scott in conjunction with the University of Toronto? Some of us may know Dr Scott as a renowned advocate of hydrogen-based economy. He was commissioned by the South Bruce Economic Development Corp to evaluate the potential. In the opening paragraph of his executive summary it says: "The Bruce Energy Centre is positioned to become one of the world's first integrated industrial parks. This would bring an industrial capital investment between $5 billion to $10 billion, creating about 10,000 jobs spread over a broad spectrum of occupations. Moreover, it would be a major demonstration of innovative government utility-industrial collaboration that will become a star in the international marketing of Ontario." That was the potential seen by somewhat of an academic but beginning to be recognized more and more as a pragmatist.
Mrs Fisher: In 1993, Mr Strong came to the site. He is world-renowned for his understanding of environmental issues. This community has supported this project forever, ever since its first day of announcement in 1976 or 1977, 20 years ago. I understand that your technology has been recognized worldwide as the future of clean air. Mr Strong indicated, as the chair of the board of Ontario Hydro, that this was a world-renowned ecopark potential, a beauty for a made-in-Ontario, made-in-Canada project. Is it not frustrating that it goes nowhere?
Mr MacGregor: Oh, a lot of things are frustrating, Barb.
Mrs Fisher: I can confirm that.
Mr MacGregor: One of the dichotomies in Mr Strong's appreciation for the concept was that it was not tied to a 6,000-megawatt solar panel farm; it was tied to a 6,000-megawatt nuclear generating complex.
Mrs Fisher: Or a rain forest in another country.
Mr MacGregor: I appreciate his commitment to the environment, but you can't have it both ways. Carbon is the culprit. Nuclear is an answer to that carbon-based problem. The Bruce Energy Centre is an answer, as an integral part of a nuclear generating energy option, to get us the fluids and the solids and the value-added products we need. Mr Strong saw that synergy but he had a difficult time living with or embracing its origin.
The Chair: Time for one very quick question from each caucus if you choose to use it.
Mr Conway: I would like you to explore or to expand a bit on your proposal, Mr MacGregor, about some new approach to the ownership of the Bruce A site. It's something we were discussing with some of the Power Workers last night. It's been raised in other contexts in this committee. Could you just maybe elaborate a little bit on what you see there as a workable, manageable possibility?
Mr MacGregor: Mr Conway, I'm not a significant capitalist, so I really can't speak for the industry that perhaps could participate in that or the investment community that could perhaps participate in that.
I believe that Bruce generating station A is now an island and it's an island that, if it's going to become a stranded liability to the province of Ontario, should be made available to whoever is prepared to work cooperatively with the expertise that's not only indigenous to that station but perhaps retired on the streets of Kincardine and Port Elgin and within the south Bruce impact community area.
I believe the Power Workers' Union -- in fact, I've communicated with John Murphy myself. He believes that a mixed venture could come together. He and his organization and I believe perhaps even his treasury -- I'm taking some licence there -- would be prepared to participate in the evolution, if you will, or pulling it from the jaws of demise into a new renaissance. I think that would work and I think it would be good if it were community-sponsored, in cooperation with the people who don't want to leave the community, who believe in the Candu system and know how to run and operate and maintain a Candu system and know how to train future staff for underpinning that long-term operation.
Mr Conway: Any advice on how you would --
The Chair: Thank you, Mr Conway.
Mr Laughren: I have a very simple question. To what extent would rural rates make a difference? How significant is that?
Mr MacGregor: About 150%.
Mr Fletcher: In the canola plant it's the difference of $6.50 per tonne of seed crushed, which on most days is more than the margin. So that, by itself, drove the canola plant to Manitoba.
The Chair: One last question.
Mrs Helen Johns (Huron): I'm looking at page 5 of your report, where you talk about the IIPA report really only looking at a very small group of the problems and that the problems are much more pervasive and widespread than the report indicates. Coupled with your recommendation number 1, that there seems to be a need for management to be able to understand and get a full grasp of the concepts of the Bruce Energy Centre, I'm wondering if you can -- and maybe you can't because of the touchiness of this. You need to deal with these people in the future.
I've heard slightly over the last half-hour that you've talked about executive management being the problem. Is it executive management in the financial end, executive management in the generation end or is it executive management in the nuclear end? Can you pinpoint that more for this committee? We've heard a lot of people talking to us and everybody is passing the blame here. Can you focus in on where you think this lack of vision is at Hydro?
Mr MacGregor: Yes. I think it's a one-way mirror. I think the windows should be turned around at 700 University Avenue so they can look at themselves instead of looking at the rest of the world, because the problem is there, primarily on the 19th floor. I believe that Al Kupcis, at the end of the day, became very frustrated with the fact that he could not delegate down, that there would be no action carried forward.
Rates are critical and joint venturing is critical. Nobody today lives on an island.
I can tell you that any dealings we've had with the Bruce station itself have been excellent. We've had management there who cooperated and supported all the way through. We've had workers who cooperated all the way through. When we get to the 19th floor of Ontario Hydro, they have a capacity to just turn it around and not listen.
Rate-setting is very critical, so you can go through your own structure to determine who sets rates.
The Chair: Mr MacGregor, Mr MacKenzie and Mr Fletcher, I thank you very much for appearing before the select committee today. We appreciate your testimony. I hope if there's more information required by the committee, you will respond either in writing or personally. We appreciate your presence today.
Mr MacGregor: It's been our pleasure and we'd be prepared.
The Chair: Thank you. You are excused.
Mrs Fisher: Mr MacGregor, during his presentation, referred to a document that I think it would serve everybody in this room well to get our hands on. It was the IEDC response to the Macdonald committee proposal. As the white paper unfolds and as our responsibilities with the long-term venue of Ontario Hydro are discussed and recommended upon, I think it would be in everybody's best interests to take a look at this. I would ask if we could all get a copy.
The Chair: We'll ask them to supply it.
Mrs Fisher: Thank you very much.
The Chair: In that regard, I have to ask a question of procedure. Mr Conway was in some distress a little earlier in this meeting. Many of his documents were disappearing. May I ask you, have we been able to curtail Mr Laughren's drive for public ownership of your documents, Mr Conway?
Mr Conway: The mail is getting sorted out, thanks to Donna.
The Chair: We sent the clerk over to investigate and I have the full story there, and pictures were taken, Mr Laughren.
Mr Laughren: Private ownership was the problem.
The Chair: That wasn't even joint-venturing.
PORT ELGIN AND DISTRICT CHAMBER OF COMMERCE
The Chair: We'll go to the next round of deputations. We're into the 20-minute cycles, so we'll judge the questioning accordingly. The Port Elgin and District Chamber of Commerce, Kevin Carter and Mark Kraemer, if you'd be good enough to assume the witness table, we'd appreciate that. Welcome to the committee. For the purposes of Hansard, would you be good enough to identify yourselves and please proceed with your deputation.
Mr Kevin Carter: My name is Kevin Carter. I'm a Rotarian, a member of the chamber of commerce and I own the Home Hardware store in Port Elgin.
Mr Mark Kraemer: Chairman Shea, my name is Mark Kraemer. I am also a Rotarian. I am a director of the chamber of commerce in the town of Port Elgin. It is a pleasure indeed to welcome you and the members of the committee to Bruce county.
Our presentation this morning is going to keep primarily to the social and economic impacts that the current plan Hydro has adopted is going to have on our friends, our neighbours, our backyards, our communities and, not to be melodramatic, our lives.
I will give you a bit of background in that. I came to Port Elgin in 1983 as manager of the Toronto-Dominion Bank. In 1986 I had an option to leave this fair community and venture on to further and higher responsibilities in that organization which would have taken me to either Ottawa or North Bay. At that point in time, I made a lifestyle decision rather than an economic decision and I decided to call Port Elgin home.
You have to understand that leading up to that decision I lived in 13 municipalities in the fair province of Ontario and I have actually lived, worked, played and survived in many municipalities represented around this table today, from as far north as Sault Ste Marie to as far east as Port Hope and virtually every community up and down Highway 11, including the fair burg of Metropolitan Toronto.
When I tell you that you are sitting on one of the finest areas in Ontario, I do not overstate that. I can give you that without qualification because I have the experience and I have seen this province, and you people today are sitting in one of the finest areas of this province.
I have to take you back 30 years to give you some history of Ontario Hydro. In that time frame, in the mid-1960s it was determined that the Bruce area, for a lot of good reasons, was an ideal community to establish a nuclear power facility, which we refer to now as the BNPD. At that time the town of Port Elgin consisted of 1,900 people. The current population of Port Elgin today is 7,000 people. I can assure you that growth is entirely and 100% the result of BNPD becoming part of our community.
We welcomed this facility with open arms. In fact we encouraged them, because we all recognized that they were going to bring to this area a diversification in our economy and a level and manner of stability and a degree of income that had never been achieved in this county before.
Up until that point in time, our economy was primarily geared to agriculture, furniture manufacturing, and tourism to a lesser degree. At that point, when Hydro made the decision to come to our communities, our entire focus changed from being a sleepy little community on the shore of Lake Huron to a major nuclear power-producing economy.
I came here last evening to listen to some of the questions that were being proffered from the committee. I think I will now open with a direct response to a question that was tabled very early in last evening's question period, which was, what is the effect going to be on our community? The only words I can think of that even come close to describing this are "utter devastation."
I'm reluctant to use terminology like that because it sounds sensational and it sounds melodramatic, but when you extrapolate the removal of 1,725 primary jobs from Ontario Hydro into our marketplace, recognizing that each primary job eliminates 0.78 secondary positions, the removal of 1,725 from Ontario Hydro removes over 3,100 jobs from our economy. That extrapolates into in excess of $150 million of gross income gone from our community. In real terms, the impact of 1,725 people leaving the Bruce generating facility is equivalent to 40% of the labour force in that BNPD development today. I ask and challenge any of you to go back to your ridings and determine how your market survives when you lose 40% of your market and 40% of your disposable income. It is a physical impossibility.
To take this thing further, it is not just a matter of examining the lost income in our community; that's going to have phenomenal ripple effects down through our entire economies. The value of real estate is going to plummet in our marketplace, and is already being manoeuvred by Ontario Hydro corporate. The best example I can give you is that a transfer has occurred in the last month from the town of Port Elgin of an individual who built a beautiful house in our very best subdivision. Ontario Hydro bought that house from that individual for $230,000 and it sits on the market today for $170,000. That is a $60,000 direct reduction in the value of every house on that street and will ripple right through our entire economy. In percentages, that's a 25% reduction right off the bat.
We are facing potentially 50% to 60% devaluation in our real estate values in this market area. What that does is, everyone who is affected by this thing, and that is everyone in this room facing you right now, ultimately is going to appeal their taxes. If they appeal their taxes and have the assessed value of that property reduced by 50%, I don't have to explain to you municipal politicians and former local politicians at this table what impact that has on the revenue to the municipalities in the Bruce impact area. You start spilling that down to the municipal level, and especially in light of the downloading that is going on right now and the amalgamation that's happening in Bruce county, and I want to know from Ontario Hydro how we are supposed to survive. The impact is unbelievable when you filter this thing down through the total impact of it all.
We represent the chamber of commerce, and as we've said before, there are 165 businesses that I represent today from the Port Elgin and District Chamber of Commerce. Suffice it to say that we right now are fighting for our very lives.
In 1986, I made a conscious decision to leave a very stable career, one that I think would have carried me comfortably through to retirement. But I made a choice on lifestyle, and when I made that lifestyle choice, I also made a major commitment to the Bruce community by investing everything I own into four businesses. As a result, I have generated 35 jobs into this marketplace. While that's small potatoes compared to Ontario Hydro, I am not alone in that dedication and that investment and that commitment to the Bruce community.
Contrary to popular belief, we did not look at Ontario Hydro, when I made my decision to leave the TD Bank, and assess it as being a finite or a limited lifespan in terms of what it did and the economic impact it had on this community. This is not a mine that sits on the shores of Lake Huron. It was not created knowing that there was a finite supply of mineral in the ground that could be extracted from that ground and thus sold, knowing full well there was a given and definitive lifespan to that facility.
Ontario Hydro, through the Candu system, has created one of the very few renewable energy sources worldwide and it has created a system that is the envy of the world by the very virtue of the number of Candu systems that have been sold worldwide. For Ontario Hydro and for this committee to look at Ontario Hydro in the manner of a finite lifespan and that it's just bad luck for our community that the lifespan is over is not only misdirected but misgiven and an absolute fallacy. I cannot emphasize that to you enough.
The IIPA report that's currently being implemented by Mr Andognini and the management staff of Ontario Hydro is substantially flawed for a lot of the reasons that you heard last night and also because of the impact it has on the previous presenters to this committee this morning. But of critical importance to this thing is to examine the entrails of that report.
We were fortunate enough to meet with Mr Andognini last Friday in his office on the 19th floor. From that meeting we were advised explicitly that the decision to lay up Bruce A in a dry state was absolutely 100% dollars and cents and that economic impacts, social responsibility, and God forbid that we should use the words "moral or ethical responsibility" in the same sentence as Ontario Hydro, were not ever presented as a mandate in his contract with the board of directors of Ontario Hydro. It was absolute, bottom-line dollars and cents, "You tell us the best method," and no other factors could be considered but dollars.
We are told that he presented six options to the board of directors of Ontario Hydro, recommended one, which was then accepted by the board and subsequently sent back to Mr Andognini for implementation, and that is where we are today.
What you have to understand is the main meat of that particular report has indicated that the cost of power production at Pickering A on an all-in basis, both rehabilitation and production cost, is currently projected at 2.5 cents per kilowatt. The same kilowatt of power out of Bruce A is projected at 3.5 cents and the fossil cost or alternative fuel cost generation is 4.5 cents per kilowatt. It is obvious that nuclear is the way to go and it's also obvious that Mr Andognini is very pro-nuclear, for which we are eternally grateful, considering where we live in this province.
The dilemma with his calculations is that there are multiple factors that are not considered in the 2.5-cent-per-kilowatt cost at the Pickering A generating station. First and foremost, the most critical function is that they've never performed a seismographic study on that site. The seismographic studies were completed at Bruce 15 to 20 years ago. It was absolutely determined to be one of the safest areas to construct nuclear on in terms of shifting of the earth's plates, and that seismographic study has to be done for Pickering A. That cost is not factored into the 2.5 cents.
The other problem have at Pickering A versus Bruce A is a horrendous problem with their electrical system because it is all wrapped in a PVC material. The entire station is contaminated with that particular type of wiring, and we are being told that entire system is going to have to be unwired and rewired, and by their own admission they have no idea what the cost of that project is going to be. Bruce A, conversely, has little or no PVC contamination in the entire station, and it is not a factor they've even considered because it's such a minuscule amount that is present in that particular station.
This community is absolutely pro-nuclear. They are pro-Ontario Hydro. We believe that we have been more than receptive in terms of our relationship with Ontario Hydro. This is a corporate citizen that we want and that we need. We are absolutely prepared to fight to our last breath to change the game plan that's currently out there in this report. We absolutely need Bruce A to survive and we need it retubed now.
We cannot go through a delayed period of five to seven years in the hopes that something possibly might happen, maybe, if the wind is blowing in the right direction in the year 2002. We need it done and we need it done now. In that respect, we would like to present you with some alternative plans. It's nice to speak rhetoric, but now I want you people to think about something and I want you to think very carefully about this.
The main problem with the current proposal of laying up Pickering A in a wet state on January 1 and Bruce A in a dry state on March 31, the first thing and the most obvious flaw in this thing is, what is the cost of the environmental impact of fossil versus nuclear? Everyone knows what the environmental impact is going to be of reverting back to a coal generating facility, but the real problem with that thing is, why are we going back to a method of electrical generation that we moved away from intentionally and that Hydro's own projections and own reports have clearly indicated is incapable of producing enough power to offset the loss of the seven stations they're taking out of service by March 1998?
We are effectively throwing our hands in the air and saying: "We have the ability to generate this power. We're going to go back to a system that's more polluting, that's less efficient, less effective, more costly, can't do the job, but in the meantime we're going to solve all these problems by importing external power into our grid system to service the citizens of the province of Ontario." I'm sorry, but I do not understand that concept. When you go into a proposal where you're going to spend over $2.1 billion to purchase external fuel, when you've got the ability to generate it safely right now, I don't understand those numbers. I don't pretend to be a genius, but you explain it to me, if you can.
We have a concept in place right now where we think we have a possibility that can work. The AECB chief regulator at Bruce A has indicated to us that unit 3 at Bruce A is capable of producing safe and efficient power for as long as seven years in its current state without spending one cent on it. He has also indicated that unit 4 at Bruce A is capable of a minimum five years, and possibly seven, with a very nominal investment.
I'm going to give them the benefit of the doubt and say that if these stations can keep running -- right now, at maximum production, they produce $500,000 per day in saleable electricity for the province. That's $1 million per day, $365 million per year or $1.9 billion in five years. We are told definitively that the rehabilitation cost of each station at Bruce A is $585 million; times four it comes in at slightly under $2.4 billion. If we operate units 3 and 4, we are generating dollars that under the current plan are not scheduled to be generated by Hydro at all. In fact, the current plan calls for not only a dry lay-up but a decommissioning of Bruce A over the next five to seven years.
I take you back to the decommissioning of Douglas Point and I remind you that Douglas Point cost you $100 million to decommission. What is Bruce A going to cost you to decommission? Again I will give you the benefit of the doubt and will use 1988 dollars, and let's presume for a moment that the decommissioning of Bruce A, which nobody has yet identified with a specific dollar value, is only four times Douglas Point. That is $400 million.
In addition to that, there is a definitive cost to take Bruce A into a laid-up dry state that is ongoing and will exceed $100 million. That is one half $1 billion, and you add that to the generation capability of two units over five years of $1.8 billion and what do you get: $2.3 billion. Can you not spend $100 million to rehabilitate four 800-megawatt reactors at Bruce A? I don't buy it. Now I'm being told, "I haven't got the manpower." We don't believe that either, sir.
If you analyse the potential of rehabilitating units 1 and 2 while you continue to operate units 3 and 4, even at 60% of their current capacity, you then bring units 1 and 2 back on to the grid when 3 and 4 go down, and 3 and 4 become rehabilitated and the whole process comes back on stream -- by Mr Andognini's own projections, it takes roughly 30 months to rehabilitate a nuclear reactor. We believe they're going to get better at it, and by their own admission, the PWU last night said they were too.
If you can generate those kinds of dollars and put four 800-megawatt reactors back on this grid for $100 million, how can that be a bad investment? The other factors that aren't considered in here are the social and human tolls. The stress in our marketplace right now is absolutely phenomenal. I'm sorry to put you in that boat, but Ontario Hydro right now is playing with the very fibre of our society. If you doubt that, there are people in this room tonight who have started support groups that are being voluntarily staffed by psychiatrists, by women's shelter organizations, by all kinds of social support groups. They have banded together to form a committee and a forum where affected people in our community can go to those people for help.
Yesterday morning at 10 o'clock there was an announcement made that the new concept for Ontario Hydro is to create what they call quad packs. If you're not familiar with that, they now want to approach nuclear generation in this province on the concept of four-unit nuclear bundles packed together, called a quad pack, and by their own admission, and this is coming from the American onsite maintenance manager, the staffing requirement of a quad pack is 1,820 people. Bruce B currently employs 1,400 people. Ontario Hydro wants to eliminate 1,725 people from my community -- my neighbours and my friends. If I can take 440 of those 1,725 and move them into Bruce B, and if I can run, if you'll pardon my new terminology, a twin-pack called units 3 and 4, that twin-pack will require employment numbers of approximately 1,150 to 1,200 people. We suddenly have 180 surplus positions at the BNPD. We have maintained the integrity of unit 3 because the licensed nuclear operators specific to those stations are still there and still running those stations. Whether you know it or not, a licensed nuclear operator at unit 3 of Bruce A is not a licensed nuclear operator at unit 6 of Bruce B or at unit 1 of Pickering A. They are licensed specific to the station in which they are employed.
There is a way here, ladies and gentlemen, to save the Bruce, and that is not overstating the scenario. You are devastating our economy, you are destroying our families and you are absolutely taking the social fibre of our system and throwing it down the toilet. We don't believe it's necessary. We want Bruce A, we need Bruce A, and we need your voice long, loud and clear, being directed to the people at Ontario Hydro who can make the decisions to protect this area of Ontario.
In summary, this is my town and that's why I'm here today. When you go away today, please remember the faces of those who are sitting in front of you, because each and every one of them is going to be tremendously impacted by the decisions and the recommendations you make to Ontario Hydro. We ask that you not abandon us. We have been supportive. We want this system and we can make it work. Don't underestimate the ingenuity of the people of Bruce county. That's about all I have to say. Any questions?
The Chair: Mr Kraemer, Mr Carter, I thank you very much for your presentation. While the time is exhausted, what I would like to do is ask you to table your plan in a written form for me and let me present that to the committee. Can you do that as quickly as possible --
Mr Kraemer: I can, sir.
The Chair: -- and get it to the clerk of the committee with all dispatch? By that, I would really appreciate receiving it within a matter of several days, if you can do that.
Mr Kraemer: Can I add one footnote to that, Chairman Shea? I'm sorry to go over time here. The one thing I did not identify to this committee is there has been substantial discussion through questions and through presentations about the potential and the possibility of privatization of Ontario Hydro or a working partnership with the private sector. It is important that this committee understand that this is not a new concept and that there has been a written proposal submitted to Ontario Hydro Corp which was a three-way partnership between Babcock and Wilcox construction firm, Siemens corporation and AECL to form a triumvirate company that has absolutely put a proposal in front of them that would have funded the cost of retubing unit 2 at Bruce A, which is everybody's big problem.
This is not unique. There are other corporations out there that have come forward and volunteered cash to assist in the rehabilitation of Bruce A. The most significant one I can refer you to is, the actual manufacturer of the fuel bundles for the fuelling process has gone on record and stipulated that they would make a cash investment in the rehabilitation of Ontario nuclear. We thank you for your time.
The Chair: If you have copies of those proposals, make sure they're tabled with us as quickly as possible, as well as the proposal you've outlined today. I'd like to have that, if I could, by Monday. Either courier it down or fax it to start with, and that would be very helpful.
Mr Kwinter: Mr Chairman, on a point of information: Mr Kraemer, just for your information, to help you when you give your written presentation, this committee has already been told by experts in the field that the cost of decommissioning the reactor could be as high as $700 million.
Mr Kraemer: Thank you for that information, sir.
Mr Kwinter: So when you're calculating, you may use that figure.
Mr Kraemer: That is a per-reactor cost, sir?
Mr Kwinter: Per reactor.
Mr Kraemer: We're talking $2.8 billion then to decommission --
The Chair: I don't want to stifle things, but Mr Kwinter knows that wasn't a point of information.
Mr Kwinter: It was information to him, all right.
The Chair: You keep me chuckling here, Mr Kwinter. Thank you, but you know what I'm saying. Point well taken. Thank you very much.
Mrs Fisher: Just a point, because I don't know what. So the one report that Mr Kraemer refers to, the assessment done in 1996 with regard to the recycle analysis and the offer of private sector participation -- it has been very difficult for anybody in the community to obtain that because it's considered to be an internal document. I don't think Mr Kraemer is going to be able to provide that. Some of the content is known, and that's what he's referring to. I would ask that we ask that of Ontario Hydro as opposed to Mr Kraemer, because he won't get it.
Mr Kraemer: In fact, its very existence would probably be denied if I were to pursue that.
Mrs Fisher: That's correct.
The Chair: Well, we'll pursue that as best we can. Let's assume that was a point of order and we'll just take it that way.
Mrs Fisher: I'm going to get it right on those points yet.
The Chair: I won't accept it as a point of order. I wanted to rule it out of order, but it's a point well taken.
I thank you very much. I look forward to receiving very promptly a copy of your proposals, please.
Mr Kraemer: You will have it, sir.
The Chair: Thank you very much. You're excused.
Mr Carter: Thanks for your time.
O.C. LONG CONTRACTING
The Chair: May I call upon O.C. Long Contracting. That's Clayton Long and Lenore Long, please, if you'd come up to the witness table. Welcome to the select committee. If I may ask you, for the purposes of Hansard, to identify yourself and then we are in your hands. You have 20 minutes for your presentation and that would include questioning time.
Mr Clayton Long: Mr Chairman, I'm Clayton Long.
Mrs Lenore Long: I'm Lenore Long.
Mr Long: Mr Chairman, members of the committee, I'm a building contractor in this area and I'm a past president of the Grey-Bruce Home Builders' Association, currently a director of that association, a past member of the Port Elgin municipal council, and I belong to service clubs. I also worked in the very initial advisory committee to help the commission on planning to develop the energy centre here at the Bruce. I've been a resident of the area for 27 years. It was the Ontario Hydro project that brought me to the area initially, and the growth associated with BNPD has helped me in business for the past 25 years.
If station A does in fact close and approximately 1,700 employees are relocated to other sites in Ontario or become unemployed, it will have a devastating impact on this area. Those residents who remain behind who do not work for Hydro have nowhere else to transfer to or any compensation package, and in many cases no retirement fund. We here in the Bruce impact area have suffered a recession for the past seven years. For the first time since 1990, things started to look a little more promising in this part of Ontario, and 1997 seemed to be the start of an economic recovery. The mood in the area was one of optimism and hope. Consumer confidence was restored, and then came the announcement from Ontario Hydro that left most of us in complete shock and disbelief. Can we withstand another several years of hardship?
The findings of this committee are critical to this area. If closure goes ahead as recommended, there will be more than a nuclear plant to overhaul. Many families will face serious financial hardships that will include moving to a metropolitan area where life is not so safe and homes and recreation are very expensive. Some families will have to separate, with the head of the household moving to another location and leaving the children and the remaining spouse here. Many homeowners will not be able to leave because their homes have suddenly been devalued below existing mortgages.
Our direct losses in the value of employee real estate calculated in the cost of all of this plan -- and when I say "direct losses," those are losses pertaining only to Hydro in a move that would affect an employee. There are many Hydro employees who have guaranteed prices on their homes, and that refers only to the guaranteed prices. It is therefore reasonable to expect a rise in the incidence of divorce, suicide, stress-related disorders, and the general overall health of the population would decline. The human cost of this decision will take years to tally and by then the damage will have been done.
Some factions of the Pickering area have been so adamantly opposed to a nuclear power plant in their backyard that the municipality is holding a plebiscite on that subject. On the other hand, we here in the Bruce have generally welcomed nuclear plants. It is ironic that this proposed plan by Ontario Hydro will refit the most unwelcome of the plants first and mothball the very plants that have welcomed Hydro openly. Even more ironic is the fact that the economy of Pickering may well flourish if there were no nuclear plants there and the opposite is true of the BNPD. I would ask you to focus on the large buffer area purchased by Hydro and relatively small population in close proximity to the BNPD.
If nuclear power has a future in Ontario, why can we not find a way to keep units 3 and 4 running while getting things sorted out? This would reduce the impact on our area and keep steam flowing to the energy part. Is it possible to keep units 3 and 4 running until units 1 and 2 are refitted? The ability of Bruce A to cogenerate is unique and should be given special consideration.
This committee must understand the economic devastation that this plant closure will create. Bruce A is also vital to the future of the energy centre both for the existing businesses and for any hope of future expansion. This proposed shutdown seems impossible to believe. Give this proposition the common sense test: If it doesn't sound right, then it probably isn't right. I have read some information that has been tabled and watched some of the deputations presented to you and so far I have not seen any real consideration to keeping units 3 and 4 running at Bruce A.
In summary, my reasons for appearing here today are: that I hope you would consider Bruce A unique, and apart from Pickering A, different from all the other plants in the nuclear forum, because of its ability to cogenerate steam for industry -- what a unique concept; give this area special consideration for its extreme dependence upon Hydro for its existence and give the children of this area maximum consideration when you make your recommendations; think of the consequences of moving the children from small-town Ontario to the fast track of the city; that you will seek the information and include the full financial costs of closing Bruce A; if our efforts fail to save Bruce A, that you will recognize our dependency and insist that we will receive a great deal of assistance to adjust. Thank you.
The Chair: Thank you. We appreciate that very much. There are about 10 to 12 minutes for questioning. Let me begin now with Mr Laughren.
Mr Laughren: Mr and Mrs Long, welcome to the committee. Your point about keeping units 3 and 4 running while the other units are refurbished or refitted, as you put it, is one that has been raised before by members of the committee and by the Power Workers' Union, who didn't think they should be laid up. The argument that comes back to us from Hydro folks is that it's not on, that they cannot do it for reasons that -- and I'm not saying they're wrong, because I don't know either -- they need to shut down all the units once in order to do it properly. I don't know whether you have any information or views on that that would be helpful to the committee.
Mr Long: I don't have any technical information that could add to my suggestion. I have discussed this possibility with people that are working in the plant and I assume that they would have some knowledge, but obviously they are not here to defend my suggestion. I don't have additional information, but there are those who think that it can be done.
Mr Laughren: I come from a community in northern Ontario that went through some extremely difficult times, massive layoffs and shutdowns. It just devastated the community. At the end of the day, it was the public sector that came in and bailed out the community of Sudbury. It wasn't the private sector.
You made reference towards the end of your remarks that if we're not successful in keeping Bruce A open -- and who knows, quite frankly, I almost hate to say this, if it even will reopen after the three-year period? That's sort of lurking there as well, whether or not it will actually reopen. We don't know that. I'm not trying to cast a pall over the community but that's just something that's there in the background. I'm wondering if you have any suggestions. By this, I'm not suggesting that you're giving up on the cause, because I think you should be fighting for what you are, but what would be a natural investment in this community that the public sector could engage in, if the unthinkable happens?
Mr Long: I think there are many ways in which it could be done. One is the public institutions that are moved around and planted in communities. Something like that could be an assistance, whether it be government offices like the Ministry of Natural Resources or some of those things.
We all know that demographics say there's a large retirement population coming in the future. We are not well served in that area right at this moment. We could use a lot of help in trying to transplant or market this area for that kind of growth.
There may be some industrial development that could be created with job incentives. All of those things have happened in many different ways in years gone by. I think of a combination of many different ways of helping the area adapt.
Mr Doug Galt (Northumberland): Good morning, Mr and Mrs Long. Thanks for the presentation. It was quite interesting. I appreciate your comment about the irony of Pickering wanting to get rid of it, so to speak, and you people wanting to keep it, when in fact that's the reverse of the recommendations. Whenever we have a large industry come into a community and we have them leave, it's a pretty rough experience on both ends. I've watched closely the Lennox generating station be built in the Napanee area and then be mothballed, and neither was good for various segments of society at the time.
What I'm coming around to and what's tough to measure here and to go away with a quantifiable feeling about -- we've heard the emotional side, and I can understand that and follow it very, very well -- is the social and economic responsibility of a public corporation. How much is that? If is was a private company, they close and are gone and you have no quibble with them. A public corporation is different -- and I say "no quibble." Sure, you can go and argue with them, but how different is it, in your opinion, and what responsibility do they have and to what level? Can you quantify that at all, to be helpful for the committee and myself?
Mr Long: It's hard for me to quantify that. When I worked on development and on the advisory committee, when we were trying to bring growth to this area at another low time -- we've had other lows before this -- we had done as a committee some research and at that time that was one of the mitigating factors that we thought would give us an edge in our negotiations with Hydro, in that there were examples in the past for some corporate responsibility for this kind of thing. The Tennessee Valley Authority, at that time, was the one we reached for. They had, through some challenge, been forced to compensate an effected community quite largely to help mitigate the losses in the community.
I don't think I can refer to anything we've done in the province of Ontario. I don't have that material any more. It's quite old now anyway. We're talking about the period of 1978-80 when I was working on this committee, so I don't have any direct ideas as to how much compensation there should be or in what form it should come, if it should all come from Hydro or if the province itself has some responsibility in this. I can't say.
Mr Galt: Mrs Long, on the social side, you haven't spoken yet. I'm curious. You are just sitting there full of information, I'm sure. Do you have any feelings or any thoughts you can express to us?
Mrs Long: I feel badly for the community because of the yo-yo effect on the market and people's lives. In our own family we've seen what moving from a small centre to a metropolitan area has done to the family; not ourselves, but in our close family. I think that we keep shuffling people back and forth and the price of property goes up and down. There doesn't seem to be any semblance to our life, and now this is just the worst possible news in the last 30 years. I really feel that the human suffering will be unbelievable.
Mr Kwinter: Mr Long, we heard from Mr Kraemer and from yourself. I have to tell you that sitting here and listening to the rationale for keeping 3 and 4 open while they rehabilitate 1 and 2 makes eminent sense to me, when I listen to it. But then I look at the report of Mr Andognini, and I just want to quote a couple of the reasons why he feels this can't be done. I don't know whether or not you have any comments on it but I just want to put it out to you.
He talks about the magnitude of this particular rehabilitation. He says: "Undertaking a recovery effort of this magnitude in keeping units running reliably adds significantly to the complexity of the task. No nuclear electric utility has accomplished a turnaround in this time frame involving more than two units and most efforts involve substantial non-generating periods."
Then he goes on to say, in the preparation of their report and subsequent to the report, "...the extremely degraded condition of the boilers at all Bruce A units that has resulted in the shutdown of those three units with a concern over their ability to be returned to service." In a letter the chairman of Ontario Hydro had published in the Globe and Mail yesterday, he alluded to the fact that these reactors may never come back.
We, as a committee, are parliamentarians. We're not nuclear experts. We have to listen to the various concerns. I can tell you, from a human point of view, there isn't anybody here who will disagree with you. As politicians, obviously that's the route we'd want to go. Reactors don't vote for anybody. There's no question about that.
The question is, somewhere along the line there's got to be some ability to come up with a decision that deals with the human factor but also has to make some kind of sense so that this isn't just prolonging a problem that's going to have to be addressed again. Do you have any reaction to that?
Mr Long: I would hope that our efforts to try to keep those units 3 and 4 going are a worthy effort. I can understand Andognini's comfort in shutting all four stations down. I understand that it frees up a lot of needed help to concentrate on the 12 remaining reactors in that proposal, but at the same time there is the loss of income by shutting them down.
I am acquainted with people who should know something about those units, they spend their whole lives around them, who claim that they should be able to run with limited repairs for another -- take a pick, four, five, six, seven years. I hear different numbers, but the lowest number I hear is four years, with limited maintenance.
I think Andognini's goal here is to be able to use that help somewhere else. Our goal here of course is to keep the employees in the area, and hopefully we can recruit some talent, both from the past and from other places to fulfil the labour needs. But anybody who is close to that plant, almost all agree, as far as I know, that it can run for at least four years with a limited investment, and I hear this morning as long as seven years. I don't know how accurate those numbers are. I have no ability to determine that.
The Chair: Thank you very much, Mr Long. We appreciate your deputation and your presence at the witness table. If the committee has further information it would request from you, I hope you would be able to respond in writing.
Mr Long: Will do, thank you.
The Chair: We appreciate your presence. Thank you very much. You're excused.
SOUTH BRUCE IMPACT ADVISORY COMMITTEE
The Chair: The next witness, representing the South Bruce Impact Advisory Committee, Harry Thede. Good morning, and welcome to the select committee. Would you be good enough, for the purposes of Hansard, to identify yourself and your colleague.
Mr Harry Thede: I am Harry Thede, the reeve of Saugeen township, one of the impact municipalities of the south Bruce lakeshore. I have been chairman of the South Bruce Impact Advisory Committee since 1986, when it was first formed. I will let my colleague introduce himself.
Mr Murray Thompson: I am Murray Thompson, reeve of Huron township, another member of the impact group.
Mr Thede: On behalf of the IAC, we thank you for the opportunity to appear before your board here on the Ontario Hydro select committee.
On behalf of the south Bruce lakeshore municipalities I would like to welcome you to Bruce county and express our appreciation for your taking the time to consult with those who will be most directly and negatively impacted if the proposed Ontario Hydro nuclear recovery plan is implemented.
The South Bruce Impact Advisory Committee, referred to as the IAC, encompasses elected officials from the nine municipalities that have been host to the BNPD site since its inception in the late 1960s. The IAC also includes representation from the county of Bruce and the Bruce Community Development Corp, with participation from senior BNPD site management.
The IAC was established in 1985 in response to the reduction of the 3,500 Ontario Hydro construction workers. Since that time, regular bimonthly meetings have been held to pro-actively address Ontario Hydro issues effecting the community. This has included economic development strategies, particularly as they relate to opportunities at the Bruce Energy Centre.
As the cornerstone to the area's economic diversification program, a competitive energy rate for the BEC has been a community goal for over 10 years. It has been most frustrating that Ontario Hydro has circumvented these negotiations on several occasions. It is our intent to proceed with continuing efforts to secure a competitive electricity rate, as the need is now that much more immediate.
Support for nuclear generation and innovation: The south Bruce lakeshore is a knowledgeable and supportive nuclear community, placing the safety of workers, the public and the environment as the primary consideration in all decisions. Economic considerations have always been secondary factors. This priority has consistently been stated in many submissions, public hearings and reviews over the past years. As a community we want to reiterate this position today. Further, we want to impress upon the select committee the degree of community confidence in nuclear generation and future opportunities.
The community of communities impacted by Ontario Hydro continues to support the inclusion of Candu reactors in the energy mix of Ontario. Indeed, the Bruce community has been an active proponent of the expansion of the nuclear component to include the MOX program. The BNPD impact community further supports the application of BNPD to initially provide the large volume of electricity required to energize the world's first international fusion test reactor, known as ITER, better known as the International thermonuclear experimental reactor.
Also, the BNPD Impact Community recognizes both the need and opportunity to expand the horizons of natural uranium and the integration of other fuels in Candu reactors through the development of North America's first industrial ecopark, known as the Bruce Energy Centre, referred to as the BEC.
Finally, as the BNPD host community, we recognize that the BNPD, in partnership with the BEC, can and should become a world-class centre of excellence for demonstrating sustainable development.
The BNPD impact community has been subjected to Ontario Hydro's actions and inactions for close to 40 years, the AECL Douglas Point development. Therefore, we are well aware of the symptoms that now haunt Ontario Hydro Nuclear, such as its regressive electricity rate-negotiating practices.
The NAOP implications for the impact community of Bruce: The Ontario Hydro IIPA report identifies the need for Ontario Hydro's nuclear culture to be reversed if it is to be a safe, viable and valued Ontario resource for the future. This report also states that all existing operating units are safe. The Atomic Energy Control Board, better known as the AECB, has confirmed that although nuclear safety performance has been encroaching on unacceptable levels, they remain within acceptable AECB standards. The Bruce community is confident that nuclear excellence can be restored, and we are anxious to be the host community to return nuclear excellence to Ontario.
Also released was the approved Ontario Hydro board of directors nuclear asset optimization plan, known as the NAOP. This recovery plan calls for the lay-up of Bruce A and Pickering A. The plan provides for the refurbishing of Pickering A starting in 1999, with the possibility of Bruce A being recovered after this date if the business case can be made to support the investment.
If implemented, this plan will have a profound, extensive and prolonged negative impact on the social and economic health of this community. The IAC is not aware of any socioeconomic impact analysis that was factored into Ontario Hydro's corporate survival plan. Ontario Hydro did not consult the community prior to the August 13, 1997, recovery plan announcement. The conscious decision by Ontario Hydro to exclude a community economic impact assessment leads the IAC to believe that the recovery plan has not considered all factors. It is not acceptable that the Ontario Hydro board and senior management have ignored the magnitude of this impact on the Bruce Lakeshore communities.
Community position: The NAOP is based on assumptions that demand further investigation, with a view to looking creatively at all options and alternatives. From a community perspective, there may be alternatives which would accomplish the goal of Ontario Hydro's recovery plan to return its nuclear operations to world-class status in a competitive environment while minimizing the negative impact to workers, families and communities.
The IAC is seeking intervention to Ontario Hydro's course of action to allow independent review of all possible options including:
Retention of Bruce A operations: Continue operating safe units while undertaking refurbishing activities and/or commit to advancing the refurbishing of Bruce A ahead of Pickering A.
Staff recruitment and training: Enact an Ontario-first, Canadian-second hiring policy. Offer recall incentives to qualified past -- 1993 package -- Ontario Hydro nuclear staff; provide displaced OHN workers, eg, heavy water plant, with assessment and training for integration into skill-demand fields; and supplement human resource needs with outside recruitment only if necessary. The BNPD nuclear training centre should become the main training location for all of Ontario Hydro.
Wet versus dry lay-up: Reconsideration should be given to the proposed long-term dry lay-up of the Bruce A units, as this has never been tested in the Candu system.
Private sector equity participation: This investment option should be considered to expedite the recovery process both in terms of time and cost factors. To the best of our knowledge, private sector investment has not been considered by Ontario Hydro, although some past interest has been expressed and should be explored.
AECB review: As the regulatory body for nuclear safety, the AECB should be formally requested to opinionate on any and all OHN recovery strategy. This would provide public and industry comfort that recovery actions are consistent with current and changing nuclear safety standards and requirements.
In summary, the Bruce community shares Ontario's direct and vested interest in the return of nuclear excellence. A safe, reliable, productive and cost-competitive electricity source is as important to Ontario's economic prosperity as the BNPD site is to the community health of the Bruce Lakeshore area. It is therefore formally requested that intervention be made to ensure that the impact on the community is a considered factor in the business case guiding Ontario Hydro's decisions. Further, it is requested that an investigation of alternative options and creative strategies be conducted prior to implementing any recovery plan.
I'd like to thank you for your attention to our concerns. We will be pleased to comment on any questions you may have.
The Chair: Thank you very much, Mr Thede. We have time for one very brief question from each caucus. I'll begin with the government caucus.
Mrs Fisher: Good morning, Harry and Murray. This will be brief. I know for a fact that you have been involved, Harry, for how long in the community, taking its plate to Toronto, Queen's Park, Ontario Hydro, wherever we could go?
Mr Thede: The past 11 years.
Mrs Fisher: Would you agree that you've made presentation on behalf of the community to the 25-year supply-demand study, to HR 22, HR 23, HR 24, to the Atomic Energy Control Board licensings for Bruce A and B for the past 10 years at least?
Mr Thede: We did that.
Mrs Fisher: I ask one question and it's got two parts. What has your relationship been on a local basis with site management of Ontario Hydro?
Mr Thede: It's been an excellent relationship with the local management and public relations and what not. As it was referred to earlier this morning, it seemed to be when you would go to University Avenue and the 19th floor, we were given assurance as long ago as five years ago that there would be a rate by next week. When that week ended, I felt that I was the loser in the chicken coop.
Mrs Fisher: Part (b) is, I guess you're feeling that the 19th floor and downwards located in Toronto hasn't been a whole bunch helpful to the community in the past.
Mr Thede: Not really. If they'd come right out and said off the bat, "It's not going to be available," or "We can't meet those conditions," or what not, we wouldn't have been leading our developers into areas that got very discouraged and moved to other provinces. We would have had very successful industries operating in the Bruce Energy Centre and there would be justification for refurbishing Bruce A ahead of Pickering A.
The Chair: Thank you, Mrs Fisher. I notice members are becoming very ingenious at finding ways to expand one question into three and four. The Conway syndrome is expanding. It's remarkable.
Mrs Fisher: Of course. I'm learning.
Mr Conway: When you have an ingenious chairman, you have to govern yourself accordingly.
Gentlemen, I want to turn to page 3 of your brief. I'm anxious to get an amplification of the community impact assessment tool that was apparently both developed and applied in some way in 1993. Can you just expand on that point which you raise on the bottom, the final paragraph on page 3 of your brief.
Mr Thede: One of our partners is the Bruce Community Development Corp, which is the manager, and she's also my secretary. I would have to ask her to come to the front.
Mr Conway: They're coming next, I believe. We can let them respond to that.
Just in general, I take it that there's very little that's happened since August 13, 1997, to improve the relationship between corporate head office and your group, the impact advisory committee, on mitigating matters, at least in the short term.
Mr Thede: We have made no contact with the head office since that time.
Mr Conway: And they've made none with you.
Mr Thede: No. We've had local input from the site manager.
Mr Laughren: On page 4 you talk about wet versus dry lay-up. You say, "Reconsideration should be given to the proposed long-term term dry lay-up of the Bruce A units, as this has never been tested." Do you have any information at all that it is a reasonable proposition, or is this just wishful thinking on your part?
Mr Thede: From what we've been told -- I'm not a nuclear specialist --
Mr Laughren: Neither am I.
Mr Thede: I'm just a farmer, but from what we're being told it's a much longer process. As far as cost and what not, I can't tell you.
The Chair: Thank you, reeve. I appreciate you both being here, for your presentation and the written documentation you provided for the committee. We thank you very much. You are excused.
Mr Thede: Once again, thanks a lot.
BRUCE COMMUNITY DEVELOPMENT CORP
The Chair: I invite to the witness table, then, Lauri Cunningham, representing the Bruce Community Development Corp. The reeve has already established the advance work for your presence, so welcome.
Ms Lauri Cunningham: I'd like to turn it over to the chairperson of the Bruce Community Development Corp for opening comments.
Mr Charles Merritt: May we add our names to the list of those who have welcomed you to the Bruce community. There is comfort in knowing that the select committee understands the importance of this issue to our area, and is providing an opportunity for input. My name is Charles Merritt. I have been a board member for the Bruce Community Development Corp since its inception in 1986, for the past three years as chairman. With me today is Lauri Cunningham, who is the manager of the Bruce CDC.
A written copy of our presentation has been provided, as well as the impact assessment and assumptions related to the August 12 NAOP decision. Lauri will review the key points of the submission, and we will make every effort to comment on your questions.
Ms Cunningham: Good morning. Just to provide a little bit of background as to the Bruce Community Development Corp, it is a not-for-profit corporation affiliated through Industry Canada's community futures program. We have a broad community economic development mandate. We have been in existence since 1986. At that time, it was established basically to assist with the economic community adjustment needs in response to Ontario Hydro's downsizing of the BNPD site construction workforce.
Over the past 10 years, the Bruce CDC has worked in active partnership with the community in efforts to effect positive change and economic diversification. This partnership has also included a positive and constructive relationship with BNPD site management. Over the past decade, however, efforts to implement diversification strategies have been undermined by Ontario Hydro corporate senior management.
With respect to the NAOP community impact, Ontario Hydro's board decision of August 12 sacrifices the socioeconomic health of this community. The effect of losing most of the 1,726 direct BNPD jobs within the nine impact municipalities along the south Bruce lakeshore has been assessed by our corporation using a tool that was developed for very similar purposes in the early 1990s. I'll come back to Mr Conway's question.
A copy of that impact assessment is attached for your review. In fact, what we have done is an update in terms of providing a cumulative effect of the first two years, which is the brunt of the hit in terms of the community. We have also provided the assumptions surrounding how those calculations were formulated.
Highlights of the impact assessment over the next two years effects 1,276 direct job losses from the BNPD site to the Bruce community. Remember that 79.5% of the BNPD workforce live within the nine affected municipalities; therefore, we factored that into our calculation.
This represents a 9% reduction in the total Bruce lakeshore impact area labour force population; a 35% reduction in the total BNPD site workforce population; an 11% total population decrease to the nine impacted municipalities; an additional secondary job loss of 995 and additional employment losses related to community services, including schools, hospitals and police; gross income loss of $102 million and a disposable income loss of $74 million; an increase in housing will affect housing values, therefore assessments and, as Mr Kraemer so adeptly pointed out, municipal receipts, which threatens the viability of municipalities; it also increases demand on the income support programs, both employment insurance and social assistance; and it directly increases the hardship and stress for workers, families and communities.
As a single-industry community, we are not in a position to economically adjust to this level of impact. Immediate intervention is needed to stabilize the impact on the community and return Ontario Hydro to nuclear excellence. We see these as interrelated and achievable goals. However, we also recognize the need for a new creative and entrepreneurial culture to make this happen.
The following is a summary of key objectives and related strategies, in response to the recovery plan. It includes specific actions related to the recovery plan and steps to address the immediate impact to the community, as well as initiatives to enable economic diversification to finally perhaps be achieved. The Bruce Community Development Corp is respectfully requesting that the parliamentary select committee consider these factors in your deliberations.
With respect to the community impact, we are requesting that a professional independent analysis of the NAOP be conducted to confirm the appropriateness of Ontario Hydro's August 12 decision, with specific consideration given to the economic and social consequences related to the BNPD impact area.
Specific actions may include:
Seeking ways and means to safely preserve a curtailed but continuous operation of Bruce A, concurrent with a refurbishing program for Bruce A, in which the private sector may be an equity participant.
Preparing a community plan detailing the socioeconomic recovery strategy and costs to mitigate the loss of BNPD employment income. The impact community may seek full retribution from Ontario Hydro and/or the Ontario government, premised on established financial precedents such as Elliot Lake.
Determining Ontario Hydro's outstanding financial responsibility to the BNPD impact community, premised on both the hard and soft costs required to fully mitigate the socioeconomic problems imposed by the loss of over 1,700 jobs. This would include a calculation and amortization of the economic fallout that Ontario Hydro's plan will have on each municipality within the impact community.
With respect to worker adjustment, we are looking to provide supportive programs and services to assist impacted workers and their families -- when I say "impacted workers," please remember that our constituency also includes the secondary job loss factor, the additional 995-odd families that are going to be in the same predicament.
We are also looking to:
Assess their skills, training needs and transitional support requirements to assist with the re-entry into the labour market.
Establish a central and coordinated professional centre offering support services and programs to assist with employment search, retraining, worker and family counselling.
Develop creative incentive programs to encourage existing business and industry to expand, resulting in additional employment opportunities.
Enhance existing financing and advisory services to assist with the creation of new businesses and therefore new jobs.
The diversification strategy for the area is premised on the Bruce Energy Centre. We need to stabilize the existing industrial base at the Bruce Energy Centre and create a unique environment for expansion and new industry attraction. These actions include:
Ensuring a low price for steam to the Bruce Energy Centre throughout the life of the existing Ontario Hydro 25-year supply contracts, as well as finally securing a price for electricity to the Bruce Energy Centre that is competitive with Manitoba and Quebec.
We need to establish a marketing program explaining the vision of the BEC as a fully integrated industrial ecopark, premised on process industry using cogenerated steam and electricity. This industry would also provide by-products to adjacent industries which would be used as feedstock.
We need to attract energy-intensive industry to locate at the BEC to avoid future electricity transmission charges. This is premised on electricity generation becoming competitive and a charge being incurred for delivering electricity. Industry within the BEC would purchase electricity without a transmission charge, given proximity to the site.
We need to promote private-public partnerships in developing new processes to use off-peak electricity and cogenerated steam to manufacture renewable transportation fuels, as Sam noted, those being ethanol and synthetic methanol.
Transfer the Bruce Energy Centre infrastructure to a private sector or perhaps community corporation to own, operate and expand the BEC electricity, steam, sewer and water system.
We also need to address the issue of competitive infrastructure to make the BNPD impact community infrastructure competitive with other Ontario jurisdictions.
To do this, we need to continue with our existing efforts to retain public access to the CN rail corridor between BNPD and Stratford; promote partnerships resulting in the installation of a large natural gas delivery system to the BEC; and ensure that the delivered cost of natural gas is competitive with gas that is delivered to places, such as London, Sarnia, Barrie and Toronto.
We need to develop and grow the progressive telecommunications strategy -- fibre optics -- to meet and exceed current and emerging industry trends, standards and requirements.
In conclusion, we're very concerned that the NAOP was conceived in absence of considering all factors, including the impact to the community. It is equally frustrating that Ontario Hydro is choosing a plan that again impedes the potential for economic diversification through expansion and development of the Bruce Energy Centre.
The Bruce community has been placed basically in double jeopardy. If the current recovery plan proceeds uninterrupted, the south Bruce lakeshore area will suffer two distinct but two related traumas. As a result of the NAOP proposed lay-up of Bruce A, growth at the Bruce Energy Centre becomes that much more important in efforts to provide replacement jobs and income. However, Bruce energy proponents are being actively pursued by other jurisdictions outside Ontario with offers of competitive energy rates and infrastructure services.
Due to Ontario Hydro's decision over the past 10 years to impede negotiating competitive rates for the Bruce Energy Centre, industry is now seriously considering relocation and new development investment outside the area. The export of these industries, technology and innovation presents a real and immediate second impact to the our communities, as well as to Ontario.
The Bruce Community Development Corp believes that the recovery of nuclear excellence in Ontario must and can be achieved, and further that this recovery must be accomplished without sacrificing the Bruce community. From the Bruce CDC's perspective, the BNPD impact community has always chosen to support Ontario Hydro, to diversify and to develop rather than litigate and mitigate for failure. Thank you.
The Chair: Thank you very much, Mr Merritt and Ms Cunningham. We appreciate your presentation. There's time for one question per caucus and let me begin with Mr Kwinter.
Mr Kwinter: I just wanted to get your reaction. As one of the objectives in the diversification strategy, you talk about "attract energy-intensive industry to locate at the BEC to avoid future electricity transmission charges." Are you aware that there's a lot of speculation that this white paper that is coming down hopefully very shortly is probably going to recommend that the Hydro operations be split? There's speculation it might be split in two or maybe in three, but certainly the feeling would be that there would be one company that would do the generation and the other one would be the transmission.
As a result of that, there's probably going to be some stranded assets and some stranded debt and the only way they can recover that is to apply some sort of surtax on the transmission because people will be able to feed into the grid, but they're going to have a responsibility whether they're from outside the province or outside the country to help ameliorate this particular stranded asset-debt basis, which means that regardless of whether you're next door to a nuclear generating station or further down the line, you're still going to have pay that and as a result it's still going to be a problem. Have you taken that into consideration or have you looked at that?
Ms Cunningham: I think one of the things that I'm aware that the private sector in the negotiations and the community in their negotiations with Ontario Hydro have been trying to impart to them is that when we have a Bruce Energy Centre, which is a high-energy user, high-industry activity and has the potential to develop more, one of the things that we need to do is provide an over-the-fence rate to eliminate those transmission charges, which would become a competitive advantage to this area. Much like Toronto has 407, 401 and the highway net system, we would have a transmission advantage.
Mr Laughren: I'm struck by a couple of parts of your presentation which deal with subsidies, either to business or to the community. I'm sure you're aware of a mood across the province, certainly encouraged by some, that businesses should not be subsidized, period. Communities should not be subsidized. You're on your own and the fittest will survive. What I want to know from you is, do you think you've got any hope of getting a program through that would give incentives to business, as you say on page 3, or to communities, as you say on page 5?
Ms Cunningham: With respect to "develop creative incentive programs to encourage existing business and industry to expand," I think there are already incentive programs in place primarily through Human Resources Development Canada which can provide an income subsidy or a wage subsidy program and a training subsidy for new employees that industry takes on or business takes on. It doesn't have to be industry.
In addition, there's also a program called the self-employment assistance program which assists new business startups. There may be some flexibility and some room to negotiate where that level of assistance could either be enhanced or prolonged in the event that that business generates enough activity to warrant the hiring of additional staff. I think those programs and services are already there. We just have to take a creative look at how they can better be applied.
The Chair: Ms Johns.
Mr Conway: Now over to the economic Darwinians.
Mrs Johns: This is the first time we've had a financial analysis of the economic impact and I just want to check some of the assumptions, if I might, if that's okay with you.
First of all, the job loss up in the top corner for years 1, 2 and 3: 1,032, 570 and 124, right out of the IIPA report?
Ms Cunningham: Those were provided by Ontario Hydro Nuclear.
Mrs Johns: You make the assumption that 55% of job losses will eventually go on EI. Is that how I should be reading that? I'm looking at your calculation of EI primary and you have the dollar values times the weeks times 55%. I assume the 55% is the number of people you believe you will move to EI, so 45% you're believing will transfer?
Ms Cunningham: What we're saying is, we are assuming that 70% of the affected employees will be offered and will take transfer positions, leaving 30% within the community. Of that 30%, once their severance program or once the time is such, they will go on to EI. It's 50% of those I think we calculated and of those, 50% will move on to social assistance when their EI runs out.
Mrs Johns: Okay. I'm interested because I did my MBA thesis on -- I'm going to sound like an egghead here -- the multiplier effect. How did you get the 0.78% as the secondary job impact?
Ms Cunningham: The 0.78% was actually -- I should make reference to, in 1992, I believe, the Bruce Community Development Corp, then under the watchful leadership of another manager, actually developed the model in consultation with some consultants, and it was at that time called the community concerns document. So this tool is basically a reflection of that tool.
I just pulled this out last night because I wanted to see how we were doing. To be very honest with you, this tool was developed because at that time there was some thought that there would actually be an expansion at the plant. The tool was developed to provide a basis for planning to municipalities and to see what the positive impact would be. Since it was developed, it has never been used in that regard, unfortunately.
The Chair: I thank you very much, Ms Cunningham, and Mr Merritt. I appreciate your presence here and your presentation to the committee. I know that if members of the committee have additional questions, they will table them and you'll be able to respond to that in writing. We would appreciate hearing from you.
Mrs Johns: Could I table my third question now? I therefore would like to if the 0.78% that they used has ever been tested and ever been proven to be valid.
Ms Cunningham: A really quick answer.
The Chair: Ms Johns has found a new way to expand her time. By all means, do give a quick answer and then we can dispense with a 45-cent stamp.
Ms Cunningham: The 0.78% was calculated based on 1991. It has proven to be true. In fact, we recently checked with Statistics Canada and they are using -- for every $1 million income lost, there is a 12-person secondary job loss. When you work the numbers backwards, we are right on.
The Chair: Thank you. Hydro accepts that information?
Ms Cunningham: Hydro has certainly the information. They have not commented on their interpretation as to its validity. But we haven't heard from then, so I guess silence is consent.
The Chair: Thank you very much, Mr Merritt and Ms Cunningham. I appreciate your presence and the information you've given to the committee today.
CITIZENS FOR RENEWABLE ENERGY
The Chair: The next witness is Siegfried Kleinau, which is Citizens for Renewable Energy. There is a document for members of the committee that you'll find tabled with you. Welcome to the committee.
Mr Siegfried Kleinau: Good morning. My name is Siegfried Kleinau, better known as Ziggy. I'm the coordinator for Citizens for Renewable Energy with over 700 members, and may I point out that quite a considerable number are in the Bruce region.
Thank you very much for giving me the time to make this presentation.
Safe, reliable nuclear operations are a top priority for the government. That kind of statement I find made in the terms of reference for the committee. This has also been confirmed by the Premier to me in recent personal correspondence and I have attached a copy of that. It's something that really stands out -- a safe, reliable nuclear operation -- and I would like to refer to that later on.
The terms of reference call for the committee to review the independent integrated performance assessment and the Atomic Energy Control Board's report on the findings of the IIPA. We have read both documents and already have made references to these in our submission to the Atomic Energy Control Board on the Bruce B licence renewal on October 9 in Ottawa.
Why has Ontario Hydro's nuclear operations sunk to a minimally acceptable level? From all the signals we're getting, and most of them come from these Atomic Energy Control Board hearings that we have attended, it's because Ontario Hydro had to cut back on staff and on expenditures just to be able to keep the costs down to make sure that the electricity rates are stable according to the government's promise. To accomplish that, staff cutbacks were introduced, with many of the senior experts leaving with "the golden handshake." At the same time, the premature aging of reactor components became evident and repair costs were rising rapidly. Even Darlington, the youngest nuclear plant, had huge problems and the estimated cost of its power generation is 9.5 cents per kilowatt-hour, more than proof that nuclear is not an economic energy choice. If people realize that most residential rates are between seven and eight cents per kilowatt-hour, I guess we have an eye-opener here.
The prospect of a wide-open, competitive energy marketplace prompted the government to ask the Advisory Committee on Competition in Ontario's Electricity System to make recommendations in regard to Hydro's affairs. That's the Macdonald commission, which is the popular name.
CFRE made a submission to this committee in London in March 1996 outlining shortcomings of the nuclear operation and stressing the competitive value of renewable energy generation and the acknowledgement is attached to our submission. The commission responded in their report with the following statement on page 91: "Where environmental objectives are concerned, similar to other public policy issues the advisory committee believes that the government will have to stay very much involved.... The committee believes that the process of restructuring...must be accompanied by consideration of the most appropriate regulation or other instruments to secure the protection of the environment and specifically to support energy efficiency and the introduction of renewable energy technologies," emphasis added to this.
This is exactly where Ontario Hydro has gone astray by concentrating on the nuclear sector and that has put them in the present predicament.
There are already calls for a rate increase from the chair of Ontario Hydro because they're feeling the pressure. The credit rating agencies have more or less gone along with the present strategy of Ontario Hydro, but there will be certainly another very critical look at what Ontario Hydro is doing in this new strategy, especially since there's a new report before the committee here from Ernst and Young saying that this restructuring report or the report to rebuild the electricity system, especially in nuclear, is certainly missing a lot of important information.
There's a lot of doubt on whether these figures are the real figures that needed to be put before the board of Ontario Hydro. They have, more or less, not all the information.
A double-pronged approach of energy alternatives, like energy conservation and integration of renewable energy generation, was started in 1992 and then abandoned because the $100-million cost for conservation measures, deemed to save about 5,200 megawatts by the year 2000, was called too expensive. The same happened to the RETs program costing $22 million per year -- peanuts for Ontario Hydro -- over five years, which was cancelled earlier this year. We have in appendix A a number of news clippings that expand on this.
Independent power producers were offering power production to the tune of 6,500 megawatts to Ontario Hydro as early as 1990 -- seven years ago -- with private investment potential to the province of approximately $6.5 billion. Most of this would still be available now if Ontario Hydro would open up the grid, and I have a news clipping in regard to that in appendix B.
Sure, at that time Darlington was about to come on stream, so there would be oversupply in generation. At today's stage, taking 4,300 megawatts out from the nuclear sector with the closing down of Pickering A and Bruce A still does not create a crisis situation. There would still be a cushion of 4,000 megawatts available if all the remaining reactors would be able to produce as expected.
Nuclear power was a dream. Now it has turned into a nightmare, a millstone around the neck of rates and also Ontario's taxpayers. We just have to wake up to the stark reality that this technology does not work now and will not work in the future, no matter how many billions of taxpayers' money we throw at it. The biggest costs we have to realize are still to come: nuclear waste disposal and decommissioning of the reactors, and we can't postpone this indefinitely. No matter how long we try to postpone the inevitable, it will haunt us and future generations. We already have signs from south of the border, where deregulation is really rampant now, to use that term. Top executives of Illinois utilities that have nuclear components have resigned en masse because they are trying to get away from the financial responsibility.
Thank God there is a technology that has come a long way in being able to replace nuclear, not from one day to the next -- nuclear plants take at least 10 years to build -- but with enhanced integration measures, as pointed out in the Macdonald commission report, and only a fraction of the $8 billion proposed for nuclear recovery, it will, over the next 5 years, even be able to replace some of the newer reactors.
Here are our recommendations:
(1) Abandon any plans to resurrect aging nuclear reactors. It would be highly irresponsible to increase Hydro's debt by throwing billions into an unsafe, outdated technology. There is also the threat of Ontario Hydro throwing more money into another outdated technology, which is the coal-fired. Let's remember that up until now and for the far future, there is no proven safe disposal method for nuclear waste.
(2) Take major proportions of funds, which are a fraction of the nuclear recovery cost, to immediately start enhanced conservation programs. The green community programs, of which you are all probably aware, are very eager to promote conservation measures successfully, but they've been lacking financial funding.
(3) Bring back an enhanced renewable energy generation program where private producers can provide green power, which is safe and clean, to customers willing to pay a premium in an open transmission system.
(4) Allow cogeneration and, in the transition stage to green power, gas-fired turbine generation to access the grid to complement Ontario Hydro's generation capacity and thereby create new jobs in this province.
(5) Retrain surplus nuclear employees to work in the renewable energy generation sector and installation and service. There doesn't need to be any job loss whatsoever.
I have more specific recommendations attached.
At this point, I'd like to thank you for giving me the time to make this presentation. I'll be open for questions.
The Chair: We have time for a question from each of the caucuses and we will begin with Mr Laughren.
Mr Laughren: May I commend you for coming forward with this presentation. I think it's important for the committee to hear views other than the simply pro-nuclear views that we've been hearing right from the beginning. I think that's an important part of the process.
I agree with most of your recommendations. The one that's troubling, and I suspect not just for me, is simply walking away from the nuclear reactors, walking away from Bruce A, for example, or Pickering A, because they are there, because of the massive investment that's already there and because of the huge debt that has been run up by Hydro. You need the revenues from Hydro to help pay that down, or somebody has to pay it down. My question to you is, how do you deal with that huge investment that's already there and the debt that's already there?
Mr Kleinau: This problem certainly doesn't go away. Ontario Hydro knows that within 40 years at the most nuclear reactors have to be decommissioned, because that's their lifespan. At the same time, they had the opportunity to put away money for decommissioning these reactors. Officially they have it in the account but they don't have the money in the bank, so to speak. They have spent it on more capital projects. I have not much regard for Ontario Hydro's financial management. What we have to do is get back to these programs, to try and get people to consume less energy. That way we will be able to recoup costs and we will be able to eventually look at the decommissioning of these reactors. We will have to raise the rates, there is no doubt in my mind. The government just can't keep their promise.
Mr John O'Toole (Durham East): Thank you very much, Ziggy, for your presentation. I'm sure it must be very difficult to survive in this community holding a varied view of the status quo. I guess that's a challenge that some of us have to take in our life.
I put it to you that we have a couple of options here. We can either be dark, cold or poor or we can make what we have a safe, affordable way of life. I'd like you to respond. It's my understanding, whether it's that large windmill up here or whatever, that every form of creation of energy creates byproducts which are waste, whether it's particulates or gas or transmission lines. The whole thing is a blemish on the landscape, I partly agree with you, but I still like to have lights and heat and some kind of economic base. How do you deal with those two diverging views?
Mr Kleinau: When I came here, I could count dozens of porch lights blazing away in bright daylight. I think we have to look at the way our electricity is being used. At the same time, I can point out -- you're talking about the 600-kilowatt wind turbine at the Bruce nuclear power plant. This energy project avoids over 1,000 tonnes of CO2 per year. Ontario Hydro already had a program going where they were asking for private developers to bring in more of these turbines. If they had kept up with it, we would have quite a proportion of this clean energy on stream by now. That is actually where Ontario Hydro went amiss.
If I can just point to these other recommendations, there are 150 to 175 megawatts of renewable capacity waiting to be installed within nine months. So we have all kinds of possibilities just from the wind energy sector to replace nuclear and coal. At this time we could replace at least the firing up of these additional coal-fired plants.
Mr Kwinter: Mr Kleinau, thanks for your presentation. You refer to several attachments that I don't have. I was wondering if they have been made available to us or if they could be made available to us.
The Chair: Let me break in for a moment. There's one set tabled and we'll make sure it's circulated.
Mr Kwinter: I just wanted to ask you a couple of things. Number one, you referred to the credit rating of Ontario Hydro. I can assure you that without the guarantee of the province of Ontario, Ontario Hydro would not be the company that it is today. They just couldn't viably sustain it on a business case. So the credit rating of Ontario Hydro is not Hydro, it's the government of Ontario. That's what happens.
The thing I really wanted to ask you -- it's not clear to me. You say, "Thank God there is a technology that has come a long way in being able to replace nuclear," but it isn't clear to me what technology that is.
Mr Kleinau: I can point to this booklet here from the Worldwatch Institute, which is a very well-known and very well-regarded private research company down in Washington. They are declaring that almost all of Canada's electricity needs could be produced by wind power. Of course, it would take time to bring in these installations but it certainly wouldn't take as much time as to build another nuclear plant or to refurbish these nuclear reactors.
Mr Kwinter: That's the technology you are referring to?
Mr Kleinau: That's one of the technologies; and make sure everything is diversified, so you have to look at other energy technologies too. Solar is definitely an option that is coming along very, very fast. It is coming down in price. There is reference in here that over the last 10 years solar PB panels have come down by 50%, and there is still all kinds of R&D going on to bring them down further. Ontario Hydro is part of Ontario, so in a way it does reflect on Ontario's provincial debt situation because Ontario is being brought into light as far as Ontario Hydro's bonds are concerned.
The Chair: Mr Kleinau, I appreciate your time and deputation. Thank you for the information you provided the committee. We appreciate that very much.
The Chair: The final deputant is Glenn Sutton. Welcome to the select committee. There is 10 minutes for your presentation and questions.
Mr Glenn Sutton: Good morning, Mr Shea and members of the select committee. Welcome to Kincardine. Thank you for allowing me to appear before this committee. I'd like to thank your clerk for her assistance in preparing for my appearance. I emphasize that I am appearing as a private citizen; I am not appearing as an employee of Ontario Hydro or as a Kincardine town councillor. I am also a member of the Canadian Nuclear Society. My presentation is split into two parts as follows: The first is energy security; the second is economic development. I'm going to skip the first paragraph because time is of the essence.
I'd urge the committee to check with the MOEE and determine the quality of Ontario air when all 20 of the OHN reactors are running flat out. I believe you will find that we had the best air quality ever. Coal purchases to alleviate the effects of the NAOP will adversely effect our air quality.
To address the concept of energy security we must review some basic facts of energy production in Ontario: There is no oil in Ontario, there is no natural gas in Ontario, there is some margin to expand hydraulic power and we have natural uranium in Elliot Lake.
Hydro has committed to nuclear power production as its mainstay. As the A nuclear units are removed from service, CO2 emissions will increase due to the greenhouse effect. Also, our coal purchases will support coal companies in the northeast USA. This will impact negatively on our balance of payments.
Natural gas is produced out west and moved by pipeline to Ontario. There has been some concern expressed in the last two years about the design pressure of the pipelines and the effects of MIC, microbiological-induced corrosion. Their regulator of pipelines reduced the operating pressure to 80% approximately of normal pressure for the pipelines after a massive fireball explosion out west. Gas is kept in underground caverns in southern Ontario for use during the winter. It is possible that the supply of natural gas could be depleted at the same time as several of the B reactors or Darlington tripped during the winter run.
Has energy security for our province been addressed by this committee? We have read newspaper articles about the load not being met this winter. What assurances can this committee offer that we won't freeze in the dark?
One of the strategies in the NAOP is a restart of Lennox GS with a dual-fuel concept. It will be operated with natural gas in the summer and oil in the winter. Why? The natural gas is needed for heating load in the winter to make up for the loss of nuclear-supplied electricity. Is this a sound energy-secure option? I don't know, but you should look into it. Natural gas is supplied mainly from Alberta and other western provinces. This illustrates a point of weakness in the strategy to replace nuclear power.
Would it not be better to refurbish the Bruce A units now and have them on line sooner? Consider refurbishing one unit of Bruce A at time right now starting with unit 2. Perhaps this option would have the effect of completing the refurbishing of Bruce A sooner and at the same time lowering the cost to Ontario ratepayers.
If the committee deems it necessary to supply natural gas to the BNPD, then it should give serious consideration to construction of a natural gas/biomass demonstration methanol plant at the BNPD as advocated in the report Energy Alternatives, 1981. There is a local initiative to construct a hydrogen facility at the BNPD. This should be pursued by your committee.
I bring two papers to your attention. The first one is Nuclear Hydrogen Cogeneration and the Transitional Pathway to Sustainable Development by G. Gurbin and K. Talbot. The second is Issues Pertaining to Electrolytic Hydrogen Production Using Nuclear Power by E. Jelinski and J. Stephenson. Both papers were presented at the INC93 conference, Towards a Better Future. We should aim towards a hydrogen-based economy.
Study the document A Summary Report of the Ontario Hydrogen Energy Task Force, 1981. The committee should endorse a concept of electrically produced hydrogen from base-loaded nuclear capacity.
Electric cars are much more feasible now. California has mandated pollution-free cars as a part of their strategy.
Finally, the rail system from Windsor to Kingston must be electrified. This is an idea whose time has come but it has been ignored year after year.
Economic Development: Douglas Point was built in 1967 as a tool of regional economic development. Major nuclear facilities were built soon after at the BNPD, including the BEC. The BNPD is Ontario's powerhouse.
Hydro started the impact grant system to help local communities alleviate the costs associated with municipal expansion of services. We can't let one third of our local population walk away without some form of assistance. This is not requesting a handout, just access to normal provincial and federal programs. There is a local community plan being formed, and I understand you had presentations last night on this. Please support those initiatives.
EDCO, the Economic Development Council of Ontario, met in Kincardine on September 12. I would like to read into the committee's records a copy of that motion. It was moved by Pat Olive, from Durham region, and Bruce Strapp, from Sault Ste Marie:
"Recognizing that Candu technology is world-leading, is safe, environmentally friendly and operationally efficient, it is necessary to look at the long-term interests of using nuclear power and promoting the technology to the world, both of which are integrally related to the economic prosperity of the province. Therefore, the EDCO board of directors and its membership support the recommissioning and the confirmation of use of nuclear technology in generating electricity in Ontario, and that this motion be sent to the Premier and Minister of Energy, the minister of MEDTT, the chairman and CEO of Hydro..." and mayors of local municipalities.
Going back to my presentation, I'd like to table with the committee a copy of a videotape that was produced by Ontario Hydro, called the Economic Development Project. It is 12 minutes and 28 seconds in length. I'd urge you to view it before you go back to Toronto tonight or this afternoon. See for yourself how our provincial economy is predicated on low-cost electricity. For 90 years, Hydro has been the engine fuelling Ontario's growth with electricity. The IIPA report has effected public confidence in nuclear power. As a nuclear engineer with 25 years' experience, I am concerned about the Candu system.
There is a public presentation tonight by the Bruce branch of the Canadian Nuclear Society at the BNPD about Candu 9. There are Candus 3, 6 and 9; 300-, 600- and 900-megawatts output. You are invited to attend. We must ensure that the Candu, Canadian deuterium uranium, reactor does not go the route of the Avro Arrow.
Team Ontario and Team Canada are promoting Canadian goods and services and technology across the world. How will the closure of the Bruce heavy water plant assist marketing of Candu across the world? Candu is a significant technical and engineering achievement. This committee must mandate that all necessary steps are taken to preserve our Canadian heritage.
I would like to ask three members a question.
Mr Conway, would you contact Robert Nixon, president of AECL, and find out why AECL and the federal government are so quiet on the closure of the Bruce heavy water plant?
Mrs Fisher, would you complete the ongoing requests for a special energy park rate for the BEC?
Mr Laughren, will you try and obtain assistance for the BNPD and BEC as provided for at the pulp and paper mill in Kapuskasing in northern Ontario vis-à-vis the Smoky Falls power station deal?
I also bring to the committee's attention -- it's not in my presentation -- a newspaper ad here from the Toronto Star, October 18. It's a big ad, an inch across and two inches deep, and it states, "Engineers-Nuclear, Ontario Province. Mechanical, electrical and nuclear engineers," and it goes on, "Commercial nuclear power experience desired. Send résumé to: Cataract Inc." I'll table that with the committee. There's also a printout from the Internet here that I'll give to you. This is in the public domain. It describes that Cataract is connected with three or four other companies.
I also have 17 copies of a booklet from the Canadian Nuclear Association that have questions and answers on nuclear power. I think if you read these they will help the committee in some of your deliberations. I'll leave that you with.
I have a tie to give to Mr Shea. It's not a blue tie; it's a red tie. I know he likes blue; Floyd likes pink. Anyway, this tie is from the Canadian Nuclear Society and it has a little maple leaf in there. It's Canadian. It's got the protons, neutrons and electrons. So a little hint to you: Maybe when you table this report on behalf of the committee and the Legislature, wear the tie that day to remind you of Canadian Candu technology.
Finally, the saying of Ontario Hydro that came from the HEPC, the Hydro-Electric Power Commission of the province of Ontario, was a Latin saying, "Donae natura pro popula sunt," "The gifts of nature for the people." Remember Sir Adam Beck's dream and vision from the past about producing power at cost. I'll leave it there. That's my presentation.
The Chair: Mr Sutton, thank you very much. You've actually landed up right on the button, so I appreciate that. I don't know how you knew I was a tie collector, but I will wear that. I will probably share it with members of the committee. They will all take turns sending along their notes for it, and it will be open to both sexes so they can wear it accordingly in the times available. I do appreciate that and your thoughtfulness. I appreciate the presentation of the documents and the video. The committee will try to find time to avail itself of that. That now concludes the presentation. There is no time for questioning, unfortunately, but hopefully if there is information we will try to get back and you will be able to respond to us in writing.
For members of the committee, there are no other deputants.
Mr Conway: Mr Chairman, I know that time is of some real urgency, but I see Gary Gurbin who's been in the audience all morning. Gary's a former MP for Grey-Bruce. I just wondered whether it would be possible to have a word or two from Dr Gurbin, who is now retired to private life here in Grey-Bruce. I know we don't have a great deal of time. I don't think he's been given any notice of this, but I would be interested in hearing a word or two from Dr Gurbin, if he has anything he'd like to tell us in his capacity as a private citizen, former member of Parliament and, I gather, one who had some involvement with one of the earlier presentations this morning.
The Chair: If I have all-party consent, if all the caucuses agree to five or six minutes, that will be fine. All right. Please, would you come forward to the witness table.
Dr Gary Gurbin: Thank you, Mr Chairman, and thank you very much also, Mr Conway. I didn't expect that consideration but appreciate it very much, because you're quite right, I would very much like to comment on what I think is an issue that's not only important to our community but extends far beyond that. I have a very great interest in the deliberations of this committee and the outcome.
I'm happy to leave a little bit of a backgrounder on myself for the purposes of the committee. I would like to clarify your acknowledgement of my association. Since 1991 I have been a member of the board of directors of the company called IEDC, which is Integrated Energy Development Corp. Our chairman, Sam MacGregor, made a presentation which I very strongly associate with from any understanding or experience I've had. I thought in fact he was quite restrained in his comments and anything I say now is without prejudice to that position. I will try to confine myself to my period of time from 1979 to 1988 when I was the federal member of Parliament here.
What I'm going to try to do in the three or four minutes I've got is to give a sense, particularly to the opposition members, of the Bruce Energy Centre and BNPD to this area. Douglas Point initially was created as an instrument, maybe not just of economic development, but we were far enough away from everywhere else that it was a safe place for an experiment for a first commercial reactor. Then we had this huge thing that now has been providing up to over 50% of the base load of the electricity in Ontario for some time. Then we had the energy centre, which came in certainly not with the full cooperation and understanding of Ontario Hydro.
My concern for you as members is what used to happen to everybody I saw in Ottawa. As soon as we start talking about electrons and protons and molecules, there's a veil that goes up and most of us become pretty insecure. I've had the advantage, probably because of my training, of seeing radiation cure illness, help save lives, so the peaceful use of atomic energy has always been something I've been pretty comfortable with.
During my time in Ottawa I was pretty much focused on energy and environment, and through that period of time saw the Bruce Energy Centre grow as a potential, not just prototype, but real, demonstrating model of nuclear energy which the rest of the world is going to now, I would say quite correctly from whatever I understand, to avoid the pollution factors that we have to deal with, which is not to say they don't have their own problems, watched the Bruce Energy Centre develop in spite of Ontario Hydro, you would have to say. I believe the testimony, with the exception of Mr Kupcis, I have seen this committee get from Ontario Hydro has been misleading. But it's very typical of what happens from whoever else you get here, you get them shifting the deck chairs as they try to salvage whatever they can of their own silo, so you get a lot of conflicting information coming at you.
This Bruce Energy Centre did have the potential that has been described to you -- it still does -- but has not had the cooperation of Ontario Hydro, because they've had their own interests at heart, trying to save their own positions, their own corporation to their own account. They have clearly been unable to do that. You've identified very well that they would never have survived if they hadn't had the guarantees of the government.
What I will say now in very short order is that the Power Corporation Act was amended in 1984; this was during my period in office. I can leave this with the committee. This gave the legislative authority and this describes the changes that were made to that act during that period of time by the province of Ontario to allow the Bruce Energy Centre to develop and flourish. Hydro could have, always could have, and could today as we sit here, in addition to what HR 22 said, made that work. The substance of that is in the changes in the act and I could table that to leave with the committee if you like.
As a federal government during that period of time, we put an airport in to help service and provide some of the infrastructure. We gave a repayable grant to allow the Commercial Alcohols plant to be there, and that was the only ethanol plant in Canada that was operating. There was one I think that was shut down for a while and now has maybe been brought up. We had studies for the deep port harbour which is adjacent to the BNPD, which would have allowed transatlantic shipping to come straight up to take products and bring in supplies. We helped, at least through that period of time, sustain the corridor for the CN to help make sure there was an infrastructure for large volumes of materials to flow to and from.
During that period of time I watched in frustration as we saw Ontario Hydro, time after time, come to the table and think they knew what they were doing and absolutely fail to make the energy centre work. They're still at it. At the end of the day, the interesting thing is that it's always the politicians that they blame, because it's a crown corporation and will hide behind either the Power Corporation Act or the fact that the government hasn't given them authority, or whatever.
Let me just say, in closing, that I have never seen them not be able to accomplish what they thought they wanted to do. I have seldom seen them do things that have been supportive of the energy centre and the private enterprise there that could have flourished.
The Chair: We appreciate that very much. That's to the point. I'm tabling that information with the clerk and we will make sure that's circulated to all members. That will conclude the deputations for today.
Just a point to Mr Sutton: I was also glancing at the tie. I do, once again, appreciate it. I can't help but observe it would look remarkably splendid in a marvellous royal blue, but I'll leave that entirely in your hands to design as well. He's got one. We'll take that as well.
Mr Conway: Far too understated for our chairman. You have to give him much more colourful ties.
The Chair: That concludes the deputations for today and that concludes our visit to the Bruce site. I would like to thank the communities involved. I want to tell you that this has been a remarkably important and helpful learning experience, certainly for me, and I'm sure it has been for all members of the select committee. We have been well received. There has been a great deal of information given to us and it will be taken back. We will learn, mark and inwardly digest all the information given to us and you can be certain that it will be given full consideration as this select committee deliberates its final recommendations.
For purposes of the committee, I will remind you that we continue our deliberations next week. For those who are here in these communities, may I remind you to watch the parliamentary channel. I think we're beginning to outdraw CBC and all the other channels now, so for that we're pleased. Please tune in and watch the deliberations. I remind you that on Monday there are deputations. We have a very extensive list of deputations from 2 until 6 and 7 until 9 on Monday. On Tuesday we have a series of expert panellists coming in to deputize before the committee. On Wednesday we will adjourn to the Pickering site and Wednesday evening, as you know, we will have hearings that will be combining both the Darlington and Pickering sites. On Thursday we'll attend upon the Darlington site and review that as well. We are continuing with our hearings and with our visits, and that will be next week's agenda.
Again, I would like to thank all the deputants who have met with the committee on this visit. All have spoken passionately. They have expressed well and they have offered a number of very important suggestions that I know will be considered by the committee. I appreciate it.
At that point then the committee will now adjourn, it being 12:05, and return to the Legislative Assembly.
The committee adjourned at 1203.