POWER CORPORATION AMENDMENT ACT, 1991 / LOI DE 1991 MODIFIANT LA LOI SUR LA SOCIÉTÉ DE L'ÉLECTRICITÉ
SCARBOROUGH CHAMBER OF COMMERCE
CANADIAN BAR ASSOCIATION -- ONTARIO
COALITION OF ENVIRONMENTAL GROUPS
SOCIETY OF PROFESSIONAL ENGINEERS AND ASSOCIATES
MILLBROOK-CAVAN ENVIRONMENTAL WATCH
PICKERING HYDRO-ELECTRIC COMMISSION
CANADIAN ENVIRONMENTAL LAW ASSOCIATION
CONTENTS
Monday 20 January 1992
Power Corporation Amendment Act, 1991, Bill 118 / Loi de 1991 modifiant la Loi sur la Société de l'électricité, projet de loi 118
Scarborough Chamber of Commerce
Clancy Delbarre, representative
Canadian Bar Association_Ontario
Erica James, vice-president
Bruce MacOdrum, representative, natural resource and energy section
Sharon Dowdall, representative, natural resource and energy section
James Shantora
Toronto Hydro
Bob Coyle, chair
Bruce MacOdrum, counsel
Coalition of Environmental Groups
David Argue, consultant
Greenpeace
Kevin Jardine, energy researcher
Society of Professional Engineers and Associates
Frank Giudice, president
Aero Environmental Ltd
Michael Brooker, executive vice-president
Millbrook-Cavan Environmental Watch
Jeff Brackett, spokesperson
Pickering Hydro-Electric Commission
Jim Mason, vice-chair
John Wiersma, general manager
Canadian Environmental Law Association
Zen Makuch, counsel
Craig Boljkovac, researcher
William Copps
Adjournment
STANDING COMMITTEE ON RESOURCES DEVELOPMENT
Chair / Président: Kormos Peter (Welland-Thorold ND)
Vice-Chair / Vice-Président: Waters, Daniel (Muskoka-Georgian Bay/Muskoka-Baie-Georgianne ND)
Arnott, Ted (Wellington PC)
Cleary, John C. (Cornwall L)
Dadamo, George (Windsor-Sandwich ND)
Huget, Bob (Sarnia ND)
Jordan, Leo (Lanark-Renfrew PC)
Klopp, Paul (Huron ND)
McGuinty, Dalton (Ottawa South/-Sud L)
Murdock, Sharon (Sudbury ND)
Ramsay, David (Timiskaming L)
Wood, Len (Cochrane North/-Nord ND)
Substitution(s) / Membre(s) remplaçant(s):
Conway, Sean G. (Renfrew North/-Nord L) for Mr Ramsay
Clerk pro tem / Greffière par intérim: Manikel, Tannis
Staff / Personnel: Yaeger, Lewis, Research Officer, Legislative Research Service
The committee met at 1315 in committee room 2.
POWER CORPORATION AMENDMENT ACT, 1991 / LOI DE 1991 MODIFIANT LA LOI SUR LA SOCIÉTÉ DE L'ÉLECTRICITÉ
Resuming consideration of Bill 118, An Act to amend the Power Corporation Act / Projet de loi 118, Loi modifiant la Loi sur la Société de l'électricité.
The Chair: Good afternoon. We are ready to start. It is 1:15 pm. We have a sizeable number of groups and people who want to participate this afternoon, so we are going to have to be careful to utilize the time frames set out in the schedule. I would ask people making submissions to restrict their comments, if at all possible, to under the first 10 minutes, so that there are at least 10 minutes left for questions and conversation.
SCARBOROUGH CHAMBER OF COMMERCE
The Chair: The first participant is the Scarborough Chamber of Commerce. Here on behalf of the chamber is Clancy Delbaine --
Mr Delbarre: Delbarre.
The Chair: -- Delbarre, chair of the government affairs committee. Please proceed with your comments. My apologies for mispronouncing your name.
Mr Delbarre: It is all right.
The Chair: It has happened to me once in a while too.
Mr Delbarre: I have been called worse.
The Chair: So have I.
Mr Delbarre: Ladies and gentlemen, we are not here to present a brief but instead we wish to make what perhaps may be a gratuitous comment related to this subject.
We are of the opinion that governments of whatever political stripe have never proven to be efficient producers or manufacturers of goods. Worldwide events of the last few years will attest to that. We believe the involvement of the Ontario government in Hydro is not going to prove efficient for the consumers. We therefore submit that the privatization of Ontario Hydro be pursued forthwith. Let it compete fairly and openly with other fuel sources in the private sector. We believe consumers will be best served in that manner.
Mr Conway: I am interested in that observation because it was a long time ago in this province that a group of business people, Adam Beck probably being the most notable, decided that public power and a public utility, namely, the Hydro-Electric Power Commission of Ontario, was absolutely critical to the economic development of this province, because one thing they could not imagine is something so fundamental as electricity being in the hands of a small group of private cartels. Was Adam Beck wrong?
Mr Delbarre: He may not have been wrong at the time he made that statement. I suggest that conditions have changed. The fact is that there are other means of properly controlling that sort of quasi-monopoly, if you want to call it that.
There are very good examples of other monopolies providing efficient and economical service to the consumers, such as Bell telephone. There is no reason to consider that the generation of power and electricity be any different from any other service that is provided.
Mr Conway: There are a variety of functions in Hydro today, if one looks at the entire operation. There is the generation of electrical power, the transmission of that power and then, of course, the very large construction development component to Ontario Hydro. Is it the view of the Scarborough Chamber of Commerce that we ought to privatize all three of those functions?
Mr Delbarre: In principle, yes, it is our view that it would be privatized.
Mr Conway: You would see no danger to the public in the privatization of the generation and transmission of electricity?
Mr Delbarre: We do not see that as any different from the transmission and generation of natural gas or any other energy source the public now makes use of.
Mr Conway: I live in rural Ontario and we have no natural gas at all. It is a bone of some contention that we just do not have what you people in Scarborough take for granted. But we do have electricity and it would be almost unthinkable to be denied electricity on the basis that we are routinely denied natural gas.
Mr Delbarre: I do not profess to be of sufficient knowledge and expertise to explore that factor in depth, but I believe in principle that the energy sources should be competitive with each other as opposed to having certain of them operating solely in the private sector and others in the public sector.
Mr Arnott: Thank you for your very brief brief. I have one quick question for you.
The Chair: Sir, you are not off the hook yet. Please stay with us. You have obviously provoked some discussion here and we are pleased to have it.
Mr Arnott: Premier Cameron in Nova Scotia recently announced his intention to privatize Nova Scotia Power Corp in the very near future. Do you think it would be a sensible thing for the province of Ontario to watch that one to see what the outcome is and what pitfalls they may fall into, prior to going ahead on its own?
Mr Delbarre: Yes, I suggest it is highly desirable.
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Mr Jordon: Thank you very much for your brief presentation. Brief it may be, but it is very interesting and certainly covers a large scope, the result of which could have many side-effects. What would be the three main advantages, in your opinion, of privatizing Ontario Hydro?
Mr Delbarre: The first advantage, as we see it, is that it would be required to compete fairly and openly with other energy sources operating in the private sector. Second, we are of the opinion that the way it is currently structured, as a crown corporation, probably leads to some bureaucratic -- I am not sure of the correct term I might use in that -- but inefficient bureaucracy which will likely not be cured by the increased control of the ministry.
Mr Jordan: Do you have an understanding of the product, electricity?
Mr Delbarre: A technical understanding of the product, yes.
Mr Jordan: Having taken into account that you understand the product itself and the technology required for generation, transmission, distribution, measuring, metering and so on, I assume you are aware of the research department that Ontario Hydro supports within the utility. I assume you are aware of the technology and the engineering division, hydraulic, mechanical and technical, that we have established over the years?
Mr Delbarre: Yes.
Mr Jordan: I assume you realize that the past history of Ontario Hydro has been the engine of Ontario as far as the development of industry and manufacturing are concerned.
Mr Delbarre: Yes.
Mr Jordan: Yet you think it has been a failure.
Mr Delbarre: No, I did not say it was a failure, sir. I merely indicated that it is our opinion that it may operate more efficiently and economically as a competitor in the private sector.
Mr Jordan: Energy such as electricity is difficult to compare with a fossil fuel, and the immensity of the capital that is in a transmission generation and distribution system alone is just -- I find it difficult to picture private enterprise still making that energy. Remember, the other fuels depend on that energy. Your gas furnace in your home is absolutely useless without electricity.
Mr Delbarre: Yes.
Mr Jordan: So there is a need, from lighting to television to computers, a basic need of all people in the province for that energy, and for that reason, not letting government get involved in the actual running of the corporation, but letting government give policy statements to the corporations so that they are aware of the elected officials' feeling of what is good for the province of Ontario under their regime, and then letting it continue on as a corporation, run like a business, for the benefit of all people in Ontario, whether they are adjacent to natural gas and whether they depend solely on electricity -- would that not be a fair use of water resources, nuclear energy, steam generation, cogeneration or whatever it might be?
Mr Delbarre: Perhaps we differ in philosophy, as opposed to in our objectives and aims. We believe that whether it be Ontario Hydro and those factors you mentioned -- the same thing could be argued for communications, that we should all have the means to be supplied with service and phones and so on.
Mr Jordan: Which would you --
The Chair: Mr Jordan, the problem is that now it is Mr Huget's turn.
Mr Huget: Thank you for your presentation. It is seldom we have to lasso somebody on the way out the door. We have to sometimes shove them out.
I will comment on Mr Arnott's comments about Nova Scotia. Your views are interesting in terms of what in fact amounts to changing a public monopoly into a private monopoly, and I think there are concerns about that. It is something about which I certainly will be very interested to see what happens as they proceed along that path because, as it looks to me, it is a private monopoly rather than privatization.
In Britain, I think there are some experts -- they have gone through a privatization program as well -- who are now very concerned about the reliability of supply, the reliability of the facilities and a whole host of problems that they were not concerned about before, so it will be interesting to watch what goes on there.
But assuming that we are not going to privatize Ontario Hydro this afternoon, do you think that Ontario Hydro needs to become more accountable to the taxpayers of the province?
Mr Delbarre: Yes, we do.
Mr Huget: Would you agree that the elected officials and elected members of Parliament are in the best position to make sure that there is that accountability to the taxpayers of the province? I would like your views on that.
Mr Delbarre: If we look at the expansion of government control -- if that is the word -- represented in this bill, I suppose our concern would be that with the minister being authorized to issue directives, and the sense that the cost of complying with those directives ultimately be borne by the public, we are not certain whether sufficient safeguards exist to guard against political whims or goals not directly compatible with the economical and efficient production of power.
Mr Huget: For example, where there was a policy directive to ensure that energy in the province was used efficiently, and it was a conservation strategy, would you see that in the public interest or not in the public interest?
Mr Delbarre: We do not have a quarrel with the objective being in the public interest. I suppose our concerns are with the means to achieve those objectives. I suppose it is more a question of our being somewhat -- what is the correct word? -- sceptical of government interference in services where other goals are brought in which are perhaps considered of importance but may in fact affect the core.
The Chair: Now to Mr Waters.
Mr Waters: Part of what I wanted was a clarification. Earlier on I believe you had said privatizing Ontario Hydro, and I thought I heard you say the PUCs as well, the public utilities commissions. I was not absolutely certain. I wanted to get that clear. Would you go so far as to privatize the local public utilities?
Mr Delbarre: I think this should be considered in steps or stages, if in fact it is Ontario Hydro, if that is the correct term to identify it. If privatization proves as successful as we think it might, we see no reason why other services downstream should not also be privatized.
The Chair: At that, sir, we say thank you. I should tell you that there has been tremendous interest from across the province in this legislation. We appreciate the Scarborough chamber taking the time to make a presentation here and its interest in the issues. I trust you and your organization will keep in touch with the personalities involved to see the progress of this bill. Thank you, sir.
Mr Delbarre: Thank you very much for your time.
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CANADIAN BAR ASSOCIATION -- ONTARIO
The Chair: The Canadian Bar Association -- Ontario is here this afternoon. Please seat yourselves and identify yourselves so that we know who we are speaking to.
Ms James: Good afternoon. I am Erica James and I am the vice-president of the Canadian Bar Association -- Ontario. I am here on behalf of Kenneth Alexander, our president, who unfortunately is not able to be here today. I have with me Bruce MacOdrum and Sharon Dowdall. They are representatives of our section on natural resources and energy in the Canadian Bar Association -- Ontario.
The Chair: You have written materials which are being distributed and which will form an exhibit, part of the record.
Ms James: Thank you. The Canadian Bar Association has for 80 years represented the legal profession in Canada, and in Ontario it represents at least 15,000 lawyers. In pursuance of the objectives of the association, which include the promotion of improvements in the law, legal research, law reform and improvement of public and social policy, our association examines current issues, including proposed legislation and its effect on the legal systems and the public. We achieve our goals through an enormous contribution of volunteer time by lawyers and we are very proud of the representative input that goes into our submissions. We have the opportunity to have lawyers who act within the perimeters of the law and those whose duty is to enforce it, so our submissions we feel represent a coming together of the different perspectives. With that, I would like to ask Bruce MacOdrum to speak to you about the submission that is before you.
Mr MacOdrum: Thank you, Erica. Mr Chairman and members of the committee, as you know, on June 5 the minister introduced Bill 118 into the Legislature and the bill was given first reading.
The Power Corporation Act is the corporate charter of Ontario Hydro. The act describes Ontario Hydro's relationship with its customers, including the municipal electric commissions which distribute electricity in the urban areas of Ontario.
The concerns of the Canadian Bar Association -- Ontario arise from two fundamental legal principles. These are generic concerns and do not arise from the particular subject matter of the Power Corporation Act.
First, section 6 of Bill 118 would permit cabinet, by policy directive, to change the scope and objects of the legislation without further amendment of the Power Corporation Act. Fundamental changes in legislation should be undertaken by legislative amendments, not subordinate legislation.
Second, section 9 of Bill 118 invalidates, effective the date of first reading, any action taken by the president as chief executive officer, and assigns the responsibilities of the chief executive officer to the chairman as of that date. This proposed amendment, which places the corporation, its president and persons dealing with the corporation in a very difficult position, is an inappropriate use of retrospective legislation.
First let me comment on section 6. This proposed section would permit cabinet to expand in a fundamental way the scope and objects of Ontario Hydro without seeking an amendment of the Power Corporation Act. Currently, Ontario Hydro's activities are confined to those permitted by the wording of the Power Corporation Act. Any action attempted to be undertaken beyond this wording could be struck down by the courts.
Section 6, however, would change this and vest in the cabinet the power to change the business of Ontario Hydro. This section amounts to a delegation by the Legislature to cabinet of the power to change the scope and objects of the Power Corporation Act.
In my presentation, which I have handed out, I refer to certain comments of former Chief Justice McRuer of the High Court. I will leave those to you, in the interests of time. I would note also that I am aware that the minister has introduced certain modifications to this section, but what we have is the first reading copy of the bill and we are really reacting to and commenting on the first reading copy of the bill.
As practising lawyers, we have an additional objection to section 6. Ontario Hydro is a creature of statute. It can only do what it has been authorized to do. Until Bill 118, that body has been the Legislature, and lawyers seeking to know whether Ontario Hydro has the necessary authority for a particular action have needed only consult the Power Corporation Act.
This is the concept of ultra vires which we hear so often in the constitutional debate that is going on. It also applies to corporations created by a statutory charter and which do not have the powers of a natural person. If policy directives are permitted to expand the scope and objects of Ontario Hydro, people dealing with Ontario Hydro will have to consult these directives. This surely will be an unsatisfactory and confusing situation.
The Canadian Bar Association -- Ontario is also concerned about section 9, which divests the president of certain authority and confers it on the chair retroactively to September 5, 1991. For nearly eight months, Ontario Hydro has had one form of organization in law while purporting to implement another in fact. This unsatisfactory situation has resulted from the misuse of retroactive lawmaking.
These comments are intended to elaborate on our written brief to the Minister of Energy, copies of which were also made available to the clerk, as well as this presentation. We would be pleased to answer any questions the committee may wish to put to us.
The Chair: Interesting comments and observations. Mr Arnott? Mr Jordan.
Mr Jordan: Thank you very much for your presentation and interest in Bill 118. We as a party are concerned in that the Power Corporation Act as it now stands, subject to amendment by Bill 118 -- it is our understanding that this is still in effect, yet we have been presented with a revised demand-supply plan to go before the Environmental Assessment Board based on Bill 118 being part of the Power Corporation Act. How do you view the presentation of a demand-supply plan before an environmental hearing when its parts are dependent on the implementation of Bill 118 which has had only first reading?
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Mr MacOdrum: That was not a matter addressed by the committee and did not go through the approval process, so I would really not be in a position to speak on behalf of the Canadian Bar Association -- Ontario on that matter. I think you should consult your own legal advisers on that.
Mr Jordan: You do not have a personal opinion on it?
The Chair: He has indicated he is not in a position to speak for the bar association.
Mr MacOdrum: I have the situation where I will be appearing later on behalf of Toronto Hydro because I also happen to be the general counsel of Toronto Hydro. Perhaps you might raise that with me then.
Mr Conway: Lawyers are like cabinet ministers; they are not paid to have personal opinions.
The Chair: Why did you not tell me that 17 months ago?
Mr Huget: With regard to section 6, you mentioned amendments and there are amendments forthcoming. If the nature of those amendments clarified the policy directive section of the bill, would you be satisfied with that; in other words, so that we cannot use Ontario Hydro to buy the SkyDome or build an amusement park or the types of things that have been attributed to that policy directive issue that is in the bill?
Mr MacOdrum: I think we would like the opportunity to take a look at those amendments and then we would be in a position to comment on them.
Mr Huget: Could you clarify section 9 a little bit for me, not being a lawyer? Could you put that in the sort of terms that a non-lawyer can understand, or your views in your brief here?
Mr MacOdrum: The most common form of retrospective legislation that a member of the Legislature is likely to encounter is on each budget day, when legislation is brought in and the Treasurer stands in his place in the House and says, "Effective tonight, we are bringing certain taxes" and matters like that. The public interest reason for that is of course to prevent speculation and profiteering as a result of the changes in taxes. Clearly the need for retrospective legislation is recognized on those kinds of occasions.
However, generally speaking, retrospective legislation is not considered good statute-making. The legislation should speak as of the day it actually passes the Legislature or the day it is proclaimed by the Lieutenant Governor in Council, or often the legislation reads "at a day to be proclaimed later," and it should speak as of that day. In other words, legislation should speak prospectively. People should be affected by legislation after it is passed, not be affected by and have their rights changed while the Legislature is still debating it. It is offensive to the democratic principle, except where it is necessary for some overriding public interest purpose, such as in the case of tax legislation to stop speculation or profiteering.
Clearly this situation where we have had the powers of the president stripped from him in law as chief executive officer and yet the bill has not been passed is unsatisfactory. The Power Corporation Act nowhere explains what the authority of the chief executive officer is. What assumptions are people to make regarding documents, contracts and other documents signed by the president or signed by the chairman, or should they be signed by both? Who has the authority to make organizational change? I understand there has been major organizational change in Ontario Hydro recently. Is that organizational change the prerogative of the chief executive officer, and what was the authority for that, given that Bill 118 has not been passed? What if Bill 118 is never passed in the present form? What was the authority for these actions? Surely that is an unsatisfactory situation. As lawmakers, for you to put Ontario Hydro or any organization -- it does not necessarily relate to Ontario Hydro, but any organization. It is not an appropriate use of retrospective lawmaking. That is basically the point.
Mr Huget: Okay, thank you.
Mr Conway: Thank you very much, Mr MacOdrum and others at the Canadian Bar Association -- Ontario. That is a very specific presentation. The last point is a good point around section 9.
You do not need to comment, because this is more rhetorical than interrogative, but what is one to do when one has a triple A power struggle? I mean, these things are not as neat and clean as we would like them. I think most people most of the time would agree with you about retroactivity. It is a very serious matter.
I chuckle a bit, because every time I see the late, sainted J. C. McRuer I am reminded that it was one of his pals 57 years ago who was minister for Hydro and Minister of Justice for the province, who brought forward legislation -- the so-called Power Bill of 1935 -- where he sought to cancel a series of contracts which the Justice minister must have known was, as the Court of Appeal found a few years later, ultra vires of the province. Then they stuck into the bill a provision where Hydro would be unattackable in the courts for same. So we have a history in this province of some of the most rich Hydro legislation, some of it brought forward, I must say, by some very sainted members of our legal community. That is a bit of history, but it is useful, I think, to recall.
Mr MacOdrum: I might just observe, Mr Conway, that when I was wearing another hat, different from either of the ones I am wearing today, that is, when I was a senior public official with the government of Ontario, I carried on discussions with the government of Quebec regarding Hydro contracts and Hydro purchases and speculations about what that might be. They raised Ontario's past practice with respect of cancellation of Hydro contracts.
Mr Conway: I raise it as well, because when one looks at Mr Roebuck, one of the things that strikes me is that Arthur Roebuck, for all his talents, was a fanatic on the Hydro question. He led the government of which he was part -- a Liberal government, I might add -- into some of the most outrageous public policy that we have ever seen. So fanaticism on the Hydro question always gives me some real concern. Now, we do not see any fanaticism these days around Hydro, happily, because the debate is always dispassionate and very evenhanded.
More important is the question about the directive power. You raise a very good point. I appreciate what you have said. You are just commenting on the bill as originally introduced, and I appreciate that. One of the concerns I have, and I do not know whether you would care to comment on this, because you may feel uncomfortable, but for me one of the most interesting developments in recent years is what I call the Elliot Lake order in council of June 5 or 6, 1991. Have you had a chance to look at that?
Mr MacOdrum: I have, personally, sir, but it is not something that has been reviewed by the natural resources and energy section of the Canadian Bar Association -- Ontario.
Mr Conway: The minister has recognized that the bill, as originally written by whomsoever -- I would never be so bold as to speculate who might have written the original bill, but clearly section 6, as originally written, was dangerously, mischievously expansive in a way that clearly cabinet, once it understood what was intended, quite understandably retreated from, and we are going to see an amendment to contain that.
The current government views the Elliot Lake matter, as dealt with in that order in council, as falling within the normal mandate of the Power Corporation Act as amended by Bill 118. My question remains: Am I just being a cynical oppositionist in imagining that the order in council is perhaps more expansive than the way previous governments or previous Hydro boards have interpreted that directive power?
Mr MacOdrum: That is a matter which would require quite careful research, as you can imagine, Mr Conway, and that is not something we have done.
Mr Conway: Thank you.
The Chair: With that, we say to the Canadian Bar Association -- Ontario, thank you for your obvious interest in this and in so many other matters that the CBAO visits in terms of assisting the Legislature. We appreciate your interest, we appreciate your coming today and we thank you.
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JAMES SHANTORA
The Chair: Mr Shantora, please come forward and have a seat. Tell us what you will about yourself and then proceed with your comments. Please try to keep them brief so we have time for conversation and questions.
Mr Shantora: My name is James Shantora. I appear before you in the capacity of a concerned consumer of electric energy. I have direct interest in Bill 118. My wife and I purchase electricity directly from Ontario Hydro to our cottage and we purchase electricity from the Scarborough Public Utilities Commission for our home in Scarborough.
I am concerned about the availability and reliability and the continuing supply of affordable electric energy. Electricity should be plentiful and affordable because it is a necessity of life like fresh water and air. Should any committee member have doubt about the truth of this, I would respectfully suggest that they pull their electric main in their apartment or home and leave it off for 24 hours and they will see.
What Ontario Hydro is, how it is managed and operated and what policies it follows directly impact on the price and universal affordability of electrical energy. Last summer, the chairman of Ontario Hydro announced that the price of electricity in Ontario would be going up by 44% over the next three years. For 1992, Ontario Hydro increased the price of electricity by 11.8% on average.
We had just been through a municipal election, and in the city of Scarborough we had an opportunity to elect the members of the Scarborough Public Utilities Commission. An elector in a free and democratic society has a right, I suggest, to expect that his or her elected representative, specifically a person elected to the local electric commission, would be effective in his or her ability to look after and attend to some of the concerns that I have just expressed, namely, electricity availability and reliability and affordable pricing.
The astonishing fact is that all these elected commissioners in Scarborough can be held accountable for is 14 cents of every dollar that I pay on my electricity bill. The other 86 cents is paid by the Scarborough Public Utilities Commission to Ontario Hydro for the purchase of bulk electricity. The elected Scarborough Public Utilities Commission can effectively do nothing but pass on to its customer Ontario Hydro's 11.8% increase. I as a customer have absolutely no right under existing legislation to require Ontario Hydro to account for the cost-effective or efficient use of my 86 cents that is indirectly passed on to Ontario Hydro by my local electric commission, or even the money that I pass on to Ontario Hydro directly at my cottage.
There are over 300 municipal electric utilities in Ontario, most of which are elected. Compare this situation to the supply of other utilities, such as gas or telephone, where the services and prices are regulated by regulatory tribunals, where the process is open, where the public can attend as a right, make its concerns known and influence the outcome.
Let me put the cost of electricity and the lack of consumer control over it into perspective. The average home in Scarborough pays more for electricity on an annual basis than it pays to the city of Scarborough for the city's share of municipal taxes. The political career of the mayor or city councillors would be very short if city taxes were to increase 11.8% or if there were even a suggestion that municipal taxes might increase even a fraction of the 44% Ontario Hydro's electricity rates are promised to increase over the next three years.
The existing municipal election process for the electric utility commissions and the municipal electric commissions, elected or appointed, does not give the elector/consumer the right he or she should have over the generation, supply and pricing of electricity. Bill 118 does nothing to address this shortcoming.
I have heard it said that Ontario's growth as the industrial centre of Canada has been due to the abundant, reliable and affordable supply of electricity. Even if that statement was only partly true, should the government not do everything possible to at least maintain the competitive edge by ensuring our industries continue to enjoy affordable electricity? Only if our industries can be competitive will we be able to maintain the established industrial base and maintain the jobs that are there.
Given these and other concerns, I have looked at Bill 118 to see to what extent these concerns might have been recognized. I was thoroughly disappointed.
In the classification of organizations -- government department, crown corporation and private enterprise -- Ontario Hydro is not a crown corporation. I say again, Ontario Hydro is not a crown corporation. It is also neither a government department nor a government agency. The public has been led to believe that Ontario Hydro is a crown corporation. Some ministers of the crown have referred to it as such. The press often refers to it as such.
Ontario Hydro is a municipal cooperative. It was established by a handful of municipalities to bring to the ordinary citizen the benefits that affordable electricity could bring. What is also important to recognize, and is not recognized by Bill 118, is that Ontario Hydro is a regulatory tribunal like the Ontario Energy Board. Ontario Hydro regulates the electrical energy rates charged by the various electric commissions to their customers. As previously mentioned, there are over 300 such local electric commissions. Ontario Hydro is also a self-regulating body of its own electrical rates.
In 1971 Task Force Hydro, a royal commission, looked at Ontario Hydro's structure, functions and activities. Suggestions were made that Ontario Hydro's regulatory authority be transferred to the Ontario Energy Board and that Ontario Hydro remain as a producer and distributor of electrical energy only. Some very good reasons were advanced for this suggestion: elimination of an inherent conflict of interest, and public accountability.
The suggestion was not accepted. What did follow was for Ontario Hydro to continue with its regulatory and self-regulatory functions, but its announced electricity rates would be reviewed by the Ontario Energy Board. This annual ritual of Ontario Hydro rates being merely reviewed by the Ontario Energy Board is patently a useless, time-consuming and costly exercise serving no practical purpose. The cost of this whole exercise is borne by Ontario Hydro and is passed on as a cost of power to the electricity customer. Bill 118 does nothing to address a flawed, inefficient and ineffective regulatory process.
What does Bill 118 purport to do? The pith and substance of Bill 118 is to make Ontario Hydro a government department. Let us look at the prospect of Ontario Hydro becoming a department of government. At the present time a large department in government is one that contains about 3,500 employees. The Ministry of Energy, I understand, is about a 10th of that size. Ontario Hydro has approximately 30,000 employees, which is about one third the size of the total government civil service.
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The objective of a government department like the Ministry of Natural Resources or the Ministry of Transportation is to generate and collect revenue for government. This is implicit in Bill 118 as the role for Ontario Hydro as well.
What Bill 118 would effectively do is destroy the principle of power at cost, a principle that has made electricity affordable to all Ontarians and has given Ontario industry a competitive edge. Electrical energy will not be affordable if Ontario Hydro should become a revenue source for the government. The bill will destroy the existing regulatory board, flawed as it might be, and substitute a mechanism whereby electricity rates would be artificially increased at the whim of the provincial government, relative to the fiscal needs of the government for social programs.
Bill 118 does nothing to eliminate the useless waste of time and money of referring proposed Ontario Hydro rates for rate review by the Ontario Energy Board. What it does do is destroy my heritage, and yours, of Ontario Hydro, the trustee. The government does not have to possess or own Ontario Hydro as a government department to have Ontario Hydro carry out government policy of general application, such as pay equity, minimum wages, safe working conditions, and sulphur dioxide and nitrogen oxide emissions or other environmental concerns.
You have heard what it does not do. My recommendations for what it ought to do are:
1. Get government out of the electricity production, distribution and price-setting arena and ensure that Ontario Hydro, while continuing as a municipal cooperative, operates at arm's length from the government.
2. Ontario Hydro's regulatory functions should be transferred to the Ontario Energy Board.
3. The sale price of the electricity supplied by Ontario Hydro or by a private or government entity should be regulated and set by the Ontario Energy Board in the normal regulatory process and under the same general rules and practices that are applied by the Ontario Energy Board to the regulation of rates and activities of gas companies.
4. The price of water power that the Ministry of Natural Resources charges to Ontario Hydro, or other water- or land-related fees, should be set and regulated by the Ontario Energy Board. Any other fees or charges that the government exacts from Ontario Hydro should also come under the full Ontario Energy Board regulatory authority.
5. Government red tape relating to government approvals respecting Ontario Hydro's activities should be eliminated. Any approvals that might be deemed necessary in the public interest should come under the jurisdiction of the Ontario Energy Board.
6. The government should establish a nominating committee from among the elected members of the municipal electric commissions, and the nominating committee would select the members that would comprise the Ontario Hydro board, ensuring the broadest representation of regional views and talents.
7. The members of the Ontario Hydro board should be selected from among the elected municipal electric commissions. The chairman of Ontario Hydro should be elected by the Ontario Hydro board from among its members.
8. The remuneration of the Ontario Hydro board members and of the Ontario Hydro chairman should be set by the Ontario Hydro board. The remuneration so established by the board should be made public and be reviewable by the Ontario Energy Board during the rate-setting process.
9. The local operation and distribution of electricity should be made more cost-effective and efficient.
10. Enable the local municipal commissions to purchase their bulk electricity needs from any source of supply and not just Ontario Hydro.
11. Enable purchases of bulk electricity from other than Ontario Hydro to be wheeled over Ontario Hydro or any other electric utility's transmission lines, on terms and conditions and at rates as determined by the Ontario Energy Board.
12. Since the economy and the consumers of electricity cannot afford the arbitrary 11.8% increase in the price of bulk power set by Ontario Hydro for 1992, Ontario Hydro should be required to roll the price back to 8.9% immediately. The cost savings are to be passed on to the ultimate electric customers. The actual rate for 1992 should be determined by the Ontario Energy Board, and it might be higher or lower.
I can summarize these 12 recommendations by the simple statement that the committee should be unanimous in its recommendation to the government that Bill 118 or any other piece of legislation that might represent the policies this bill represents should not be proceeded with. Having no bill is better than Bill 118.
The Vice-Chair: Due to time, I am going to allow one quick question from each caucus.
Mr Huget: You mentioned in your presentation that, among other things, you do not feel there is decent representation on the board of Ontario Hydro. We expanded the board from 17 to 22 members to do exactly that. That has made a better cross-section of representatives on that board. Is that enough, or are there other suggestions you would have?
Mr Shantora: Put the regulatory control under the Ontario Energy Board. As far as the representation of the board is concerned, as I have suggested, pick them from among the elected commissions.
Mr Huget: In your view, the commissions represent the consumers?
Mr Shantora: I believe the commissions are a better representation of consumers because the members of the commissions are elected by the people. I think the commissioners have a better pulse of what is going on in the community. As I said, electricity in my opinion should be as affordable as fresh air and water. I think that is what the local consumer wants.
Mr Conway: This is quite a stimulating presentation. Scarborough is becoming a more radical place than the Scarborough I used to know. This may be altogether a good development. There are so many places here where I would like to start some questions, but I am very cognizant of the time. I have one two-part question. Given your hands-off policy, what I think I hear you saying is that other than those elected PUC commissioners, the rest of the politicians would do well just to stand back and keep their hands off.
Mr Shantora: Ontario Hydro is a large organization. It provides a specialized service, and you ought to select people who understand that particular service.
Mr Conway: I am going to specifically ask you then, should the provincial politicians back away from their age-old guarantee of the Hydro debt, the Hydro financing, which has always brought cabinets at Queen's Park closely into line with whatever is going on at Hydro? You are aware that since the beginning the province has guaranteed or stood behind Hydro borrowing.
Mr Shantora: Yes, and charges some fee for the guarantee as well.
Mr Conway: Should the province back away from that and get out of that business? Second, given the complexity of a modern society where there are a lot of stakeholders outside of the ones you have mentioned -- the ones you have mentioned are obviously very important -- how does the Legislature deal with the environmental questions that are going to obviously attach everywhere to Hydro policy locally and generally in the 1990s and beyond?
Mr Shantora: I have almost forgotten the first question.
Mr Conway: Whether or not the Legislature should be involved at all with Hydro financing; whether we should bother to offer a guarantee.
Mr Shantora: I do not think that guarantee is necessary. I can appreciate that the amount of funds Ontario Hydro may borrow may very well approximate the amount the province may borrow. Perhaps there ought to be a coordination between the two as to when they enter the market field. As far as the financial regulation of Ontario Hydro in terms of the borrowing, it attempts to regulate itself at the present time. I do not see why it cannot be regulated by the Ontario Energy Board. If there are some general policy directives that must be provided, I would expect that the Ontario government would establish these in legislation so that anybody can see what is required.
In terms of the environment, I have forgotten what it was you asked.
Mr Conway: I am reading your brief and I am impressed by a lot of what you have had to say, and then I try to imagine this world that your brief suggests. I am trying to think about all the environmental interests that are going to be stimulated if not otherwise affected by your new world and how they are going to be accommodated. I have a feeling that a lot of those environmental interests are going to come to the Legislature for some redress.
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Mr Shantora : I do not see the environmental problems. If the Legislature sees environmental problems in terms of CO2 emissions, in terms of noxious gas emissions, you have your Environmental Protection Act. All you have to do is to put the regulation in place and then it is binding on everybody.
There is nothing spectacular in terms of the kinds of emissions Ontario Hydro is going to produce. If you are talking about nuclear, that does not come under the province; that comes under the federal government, so you are going to be talking about smokestack emissions and you are going to be talking in terms of sulfides and carbon dioxides. Surely there are other industries, perhaps not as large as Ontario Hydro, but perhaps smelting industries, that are going to put more pollution into the air than Ontario Hydro ever would.
Mr Conway: I was thinking about the damming of the creek at your cottage.
The Vice-Chair: Thank you, Mr Conway, but we are way over our time now. Mr Jordan would probably like to ask a question.
Mr Jordan: Thank you, sir, for your excellent presentation. You have referred to the 14% that your elected officials can actually govern on the utility. I assume you also realize that the municipal politicians in Scarborough can possibly govern about 20% or 21% of the taxes they collect. The rest is regulated, preassigned before they are even elected by the senior government. That is the condition we find ourselves in.
Mr Shantora: As I understand it, for the streets they have full jurisdiction; for the zoning they have full jurisdiction in terms of putting forth the plan. It may well be that there is an appeal procedure at the Ontario Municipal Board and it may well be that the Ontario Municipal Board may overthrow the decision of the local authority, but we do not have that with the Scarborough Public Utilities Commission.
All they can argue about or look after is the 14 cents. When I go to them and say, "Why does my Hydro bill go up by 11.8%?" they say: "Well, what can we do? That is the amount that we were billed." True enough, when I look at the distribution of the dollar that they get from me, 86% goes to Ontario Hydro, and there is nobody who can influence Ontario Hydro, presumably, not from Scarborough.
Mr Jordan: I think you have made some excellent recommendations in that area in your 12 points of summary. How do you feel about the makeup of the Ontario Energy Board?
Mr Conway: What did you think of Bob Macaulay?
Mr Shantora: A great person.
Mr Conway: I agree, and very interesting.
Mr Shantora: An experienced individual. We have judges who are appointed. Presumably, they are appointed on the basis of their experience. I expect that the energy board members will probably expand it and that the government of the day will pick individuals who have the background to handle the kinds of problems and issues that come before it. Those members are appointed for a limited duration. There will be a turnover of expertise in the Ontario Energy Board.
Mr Jordan: Are you satisfied that they should be appointed?
The Vice-Chair: Thank you, Mr Jordan. I am sorry, but we are way over the time. I thank you for your presentation. As the Chair has stated before, the information will be flowing back and forth with you.
TORONTO HYDRO
The Chair: Good afternoon, gentlemen. Please tell us who you are and proceed with your comments. Obviously, you have noticed that the questions and dialogue are of great interest to this particular group of legislators.
Mr Coyle: My name is Bob Coyle, the chair of Toronto Hydro. We are pleased to have the opportunity to present the views of Toronto Hydro on Bill 118. Our legal counsel, Mr Bruce MacOdrum, will make the presentation. I just want to say that when Bruce made his presentation earlier with the Canadian Bar Association, he was on his lunch hour from us.
Mr MacOdrum: Thank you, Mr Coyle. The Toronto Electric Commissioners, more commonly known as Toronto Hydro, has three areas of concern with Bill 118 as it was introduced in the Legislature. Our three areas of concern are as follows:
1. The granting of the power to cabinet to issue policy directives to Ontario Hydro beyond objects set out in the present statute related to the supply and use of electricity is inappropriate. It also weakens the authority of the Legislature to make changes in the Power Corporation Act in this important area.
2. Bill 118 requires Ontario Hydro to implement policy directives beyond the objects of the corporation as stated in the Power Corporation Act and requires Ontario Hydro to include the cost of such implementation in the costs of power. It is unfair to expose electricity customers to the costs of activities unrelated to the supply and use of electricity in their electricity bills.
3. Bill 118 would permit Ontario Hydro to financially assist the conversion of electric heating installations to non-electric applications such as natural gas. This provision is unnecessary. Consumers who live in areas where natural gas is available already benefit financially by converting to natural gas as a result of the lower cost of natural gas energy. Further subsidy from the electric customers, many of whom live in areas where gas is not available, is unnecessary and unfair.
I would just like to briefly comment on the circumstances of Toronto Hydro which lie as background to our views on Bill 118. Toronto Hydro is the largest municipal electric utility in Ontario. It serves approximately 235,000 customers in the city of Toronto and has a peak demand of approximately 1,600 megawatts. It was established by an act of the Ontario Legislature in 1911 and continues as a body corporate under the City of Toronto Act and the Public Utilities Act. It is governed by five commissioners, two of whom are city councillors, two of whom are appointed by city council and a fifth commissioner appointed by Ontario Hydro. It purchases all the electricity it uses from Ontario Hydro.
Toronto Hydro is under great cost pressures as a result of embarking on the largest capital program in its history to literally rebuild large sections of its distribution network. This program has already resulted in rate increases to customers in the city of Toronto larger than those in other parts of Metropolitan Toronto. Faced with these increases in its own costs, Toronto Hydro is concerned that the cost of electricity supplied by Ontario Hydro be kept as low as is reasonable to permit Ontario Hydro to fulfil its essential task of the reliable supply of electricity.
As I mentioned, we have three concerns. Our first relates to the scope of the policy directives. I would briefly like to comment on our second concern, which is the cost impact of incorporating the cost of doing things beyond the current scope of the legislation in the cost of power.
Our second area of concern is that section 7 of Bill 118 takes the objectionable sections 2 and 6 one step further and provides that the cost of power Ontario Hydro may charge its customers, such as Toronto Hydro, shall include the cost of implementing these new policy directives.
When the electricity customer receives an electricity bill from Toronto Hydro, the customer believes the charges are necessary for the supply of electricity. The government should not be permitted to bury its revenue needs in the cost of electricity by requiring Ontario Hydro to undertake some new activity not related to the supply and use of electricity. Such practices would be confusing and costly to the electricity customer. It is also unfair to determine a taxpayer's contribution to such programs based on his or her consumption of an essential product such as electricity.
Our third concern arises from section 4 of the bill, which permits funding by electricity customers of conversions to a non-electric form of heating. Natural gas, not electricity, is the major form of energy used for space heating in Ontario. Wherever it is available, it is cheaper to use. Much of the recent installation of electric heating was undertaken by government agencies seeking to minimize initial capital cost even though such installations would result in significantly higher future operating costs.
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Market signals have encouraged and will continue to encourage consumers to make the appropriate choice of energy to heat their homes. In a few cases, consumers may have particular health or personal reasons that require the use of a more expensive type of energy to provide the unique features only available through electric heating technologies.
The government should not try to distort market signals. In the early 1980s the federal government, with the assistance of the provincial governments, offered grants to consumers to convert from oil to natural gas and electricity. This was done because of the significant increases in the price of oil and the perceptions of future oil shortages.
Now, conventional wisdom is that to defer the building of new electrical generation, consumers who may have converted to electricity with the aid of a government grant in the early 1980s should be encouraged by a subsidy from the electricity customer to convert to another type of energy. A lesson of the 1970s and 1980s is that we have very limited capabilities to predict future energy prices, particularly the timing of price changes and relative energy prices. The experts, whether in business, governments or universities, have been wrong as often as right. This is because of the complexity of the international, regional and local factors which interact in determining energy prices.
Electricity customers should not have their bills increased to subsidize other customers' use of a cheaper form of home heating fuel based on today's conventional wisdom of energy supply and prices.
The issues I have commented upon are in the Toronto Hydro submission to the Municipal Electric Association which was provided to the Minister of Energy shortly after Bill 118 was introduced. I believe you also have copies of the complete presentation I have summarized today, and with that I would be pleased to answer any questions.
Mr Conway: Thank you, Mr Coyle and Mr MacOdrum. I find this a very interesting presentation, with which I find myself in substantial agreement, but I just have a couple of quick questions. Are you really constituted, as page 3 suggests, five commissioners: two from city council, two appointed by city council and one appointed by Ontario Hydro?
Mr Coyle: Correct.
Mr Conway: Is that a function of your legislation in 1911?
Mr MacOdrum: It is a function of our legislation from 1911.
Mr Conway: I do not want to take up valuable time.
Mr MacOdrum: This is a slight simplification. The mayor is a member of the commission by right, but the mayor by the amendments to the legislation is permitted to appoint another councillor. It was changed from three to five in an amendment to the City of Toronto Act, 1981.
Mr Conway: It is very interesting because I still have Mr Shantora's presentation ringing about my head and I am thinking of what he suggested.
Mr MacOdrum: There are a number of appointed hydroelectric commissions: Toronto, Ottawa.
Mr Coyle: Hamilton.
Mr MacOdrum: I believe a number of the regional governments are.
Mr Conway: I am aware of that, but just to see it in bold print like that is to remind me of how varied is the structure of local commissions across the province. Now to my main question: I find a lot of what you say quite attractive, particularly around the difficulties in trying to predict the intermediate and long-term energy situations, as you indicated on page 10. Our experience there is largely as you have described. My question for you "hydrophiles," to use that wonderful phrase in the morning paper, is that if I wanted to agree with you, what is to comfort me against the fact that essentially you hydrophiles are simply going to continue on as you have in the past, insensitive to the great opportunities in demand management and buying into the kind of technocratic wonders of high technology, whether nuclear power or whatever.
Mr MacOdrum: I would like to answer, Mr Conway, but I do not understand your question. I will try, nevertheless.
Mr Conway: I am looking at your brief and I find a lot of it quite attractive. But the other side of this argument -- and we are told it repeatedly -- is that the difficulty with the people who sit on the commissions -- not totally, but largely -- is that there is a real hydro establishment. They mean well and they try hard, but a long time ago they just settled into a groove from which there is no escape. They see only one kind of future and it is on the supply side; it is not on the demand side. They do not understand the opportunities that are out there in demand management.
Mr MacOdrum: If I can help you with that, Mr Conway, from 1980 to 1988 I was a senior official with the Ministry of Energy, ending up as assistant deputy minister for energy policy. We obviously had concerns and we had a major conservation program under way even before those major price shocks of 1979-80. We are of course endeavouring to encourage the widest possible takeup of conservation programs, including, but through, the municipal electric utility.
Since the late 1970s Toronto Hydro has been a leader in the delivery of energy conservation programs like our home audit program; we have been vigorous in the delivery of energy management programs and are strongly committed to them. They are as much a part of our customer service as the delivery of the electricity. Therefore, we are very committed to that part of our activity.
Mr Arnott: I have one brief question. You talk about the issue of legislative authority over Hydro, and reading from your comments, I guess that Ontario Hydro, as a result of Bill 118, will be less accountable to the Legislature itself; is that correct?
Mr MacOdrum: I do not think we say that in our brief, sir.
Mr Arnott: I am reading that into it, I guess. More accountable to the executive and less accountable to the --
Mr MacOdrum: I prefer not to use the word "accountability." Looking at Mr Conway, I have debated the meaning of "accountability" in this room many times in relation to Ontario Hydro. I really do not think Bill 118 addresses the issue of accountability. I think it addresses the issue of policy direction --
Mr Arnott: Authority.
Mr MacOdrum: -- and responsibility, but if anything it blurs the issue of accountability.
Mr Arnott: Do you expect there will be any reason for this government to bring forward another Hydro bill throughout the course of its mandate, after it gets the power that it wants in Bill 118?
Mr MacOdrum: You are asking me to read the government's mind. I cannot do that, sir.
Mr Jordan: Thank you for your presentation. Is your commission in favour of uranium-fired steam plants?
Mr MacOdrum: Uranium-fired steam plants?
Mr Jordan: Yes.
Mr MacOdrum: We purchase electricity from Ontario Hydro and we distribute it within the city of Toronto. We do not generate electricity.
Mr Jordan: Yes, I realize that, sir. Are you in favour, was my question.
The Chair: Mr Waters, please.
Mr Waters: I keep hearing "accountability, accountability" from different presenters. One of the things I am curious about is, do you feel it is government's place to tell Ontario Hydro where it can make a saving to the people of the province of Ontario or that it should run more efficiently? Do you think that is our place? Without Bill 118, we seem to have a problem in saying some of these things, such as: "These are the directions in which we want you to go. We want you to run Ontario Hydro like a business; we want you to be efficient and conserve and make good business decisions." Do you think we should be doing that?
Mr MacOdrum: Mr Waters, if I might be allowed to share a thought with you that I had when the previous government introduced the amendments permitting policy statements, my thought was -- and I have the same views with Bill 118 and I am sure my chairman is not going to appreciate me getting into a quasi-political observation -- that was the kind of bill a government would bring in if it was thinking it was going to be only one term in office.
The reason for that is that once you have your own board of directors there, and you have the people you want in the corporation, if you have appointed good people in whom you have confidence, you are going to want them to get on with the job. You are not going to want to have questions every day in the Legislature -- when a farmer was not compensated properly for a transmission line, give Ontario Hydro a direction to pay farmer X or Y more. You only put in this kind of legislation where you have to have these policy directives. It is only necessary if you do not have confidence that the board of directors that has been appointed will carry on business in a businesslike manner and a manner that you are comfortable with, so that is why I suggested it is sort of a first-term type of bill.
I have pointed out in this room on many occasions that for any government that wants to make Ontario Hydro accountable, there are a myriad of opportunities in the Power Corporation Act. Any major thing that Ontario Hydro wants to do, the signing of major fuel contracts, the approval of new facilities, be they transmission lines or generation facilities, all require the approval of the Lieutenant Governor in Council, ie, cabinet, so there are plenty of opportunities in the legislation as it stands now for Ontario Hydro to ensure that what it wants to do is in keeping with government policy.
The Chair: Thank you, gentlemen. We want to thank Toronto Hydro for its interest, for coming here this afternoon. I trust that you will keep in touch.
We also want to thank Toronto Hydro for letting Mr MacOdrum spend his lunch hours working with the Ontario bar association. Take care.
Mr MacOdrum: Thank you.
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COALITION OF ENVIRONMENTAL GROUPS
The Chair: The next participant is the Coalition of Environmental Groups. This is David Argue.
Mr Argue: That is right, sir.
The Chair: There has been a well-written brief that has been distributed. You can read it, if you wish, but if you do that, as compared to highlighting the points you want to make, you are going to use up all the time that could be far more productively spent dialoguing and, on occasion, debating with the people here.
Mr Argue: We are in agreement, Mr Chairman.
Mr Kormos, members of the committee, my name is David Argue, and for the past nine years I have worked with Passmore Associates International. My consulting work is primarily related to utility planning and economic analysis.
The last time I appeared before a legislative committee was in 1988, when Passmore Associates was acting as principal consultants to the select committee on energy during its review of Ontario Hydro's demand-supply planning strategy.
In December of this past year, Passmore Associates was engaged by the Coalition of Environmental Groups to answer the following question: What are the economic and environmental implications of fuel switching in Ontario?
This past Thursday, we were asked a further question: What are the potential rate impacts on municipal utilities if fuel switching leads to declining sales?
Through that, I have put forward before you -- and the clerk has distributed -- two documents, one of which is bound, the Economic and Environmental Implications of Fuel Switching, and the second one, which is just stapled in the corner, entitled Addendum: Impact on Electricity Rates. I only intend to very briefly scan the results of this investigation.
Our investigation concluded that between 1975 and 1991, electrically heated households were billed a total of $8.94 billion, in 1991 dollars, for basic heating services. If these households had used natural gas where available, and oil in those areas without natural gas, they would have saved $3.9 billion, in 1991 dollars, over the same time period.
Electric heating is by far the most damaging to the environment, and we have prepared calculations and present them in the report for you to consider.
We found that fuel switching was a win-win proposition for the environment, consumers and Ontario, and that for all ratepayers, not simply those who would benefit from incentives in a switching program, the benefits would be between two and five times better than building new central generation facilities.
I would like you to look briefly at a graph that I have provided on page 3 of our main report, the economic and environmental implications. That graph displays the costs, the bills, those things that people get from time to time to pay to their utilities or their provider of fuel for basic heating services. It shows that from 1975 through 1991 there was a persistent price advantage to oil and natural gas. Regardless of this, there has been a market failure and there is a considerable portion of the home heating market on electricity.
I would like to share with you a quote from the former Ontario Hydro chairman and president, Robert Franklin, and this is what you are really looking at here. It is a question of either looking at our neighbours who are on electric heat and making an investment with them or, in turn, having Ontario Hydro make an investment. This is what Mr Franklin suggested in a speech last fall: "If a builder installs 15 kilowatts of electric heat in a house in Ontario, Hydro has to spend over $50,000 to build the capacity to keep that house warm. This is not a cheap heating system."
In this report I have also gone through a considerable section on the pervading reasons for market failure and why there is a requirement for investment in the fuel-switching option. I would like to turn briefly to the addendum, the impact on electricity rates, on which you have had some discussion this afternoon with previous presenters. What we took a look at in this particular report is, again, the whole question of rates and bills, and for that I have attached what I think is still one of the best pieces written on this section. It was written by Jim Litchfield from the Northwest Power Planning Council in the United States for the former Liberal Minister of Energy, Robert Wong, in the Electricity Planning Technical Advisory Panel.
The second part of this addendum takes a look at municipal utilities, how much of the costs of electricity provision comes at the local level and how much from Ontario Hydro. What I did was simply compare how much sales would have to drop for these municipal utilities in order to equal the impact of a decline in sales to the municipal utilities resulting from a fuel-switching program. Basically, what this shows is that local sales would need to decline by between 34% and 64% in the utilities that we examined before it would have a greater impact on what people pay for their electricity than what they have experienced with the 11.8% increase in the wholesale cost of power this year.
Those are my submissions and I look forward to members' questions.
The Chair: Thank you, sir. Mr Arnott, Mr Jordan.
Mr Jordan: You quoted Mr Franklin, I believe. Do you have any breakdown of the $50,000?
Mr Argue: That is, I believe, based on the cost of the Darlington nuclear generation station. I go on to suggest that perhaps he has overemphasized what it costs Ontario Hydro and I come up with a slightly lower figure than his.
Mr Jordan: Do you have a strong feeling for or against a uranium-fired boiler to create steam for generation?
Mr Argue: My primary position as an economist, Mr Jordan, is that we should be pursuing those options which offer the most cost-effective advantage. I do not hold any strong biases for or against particular forms. I have more concern about some and less concern about others.
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Mr Jordan: At our last meeting in Ottawa it was pointed out to us that nuclear generation produced power at about four cents per kilowatt, and for gas it was 8.9 cents. I do not have figures here with me, but I did look them up after the meeting in Ottawa when it was presented, and that is over the life of the plant.
Mr Argue: Right. I am not sure which particular figures you are referring to, but they would be close to figures that Ontario Hydro presented in its Update last week to the Environmental Assessment Board. What you have to remember is that they are still assuming that nuclear plants can operate 80% of the time, which as an economist I am beginning to question. To come up with those figures for natural gas generation, that would be for a peaking facility, which is a totally different sort of plant than a base load plant, which they are considering for nuclear, at 10% of the time.
Mr Jordan: Yes, I am speaking of base load plants.
Mr Argue: The figures for base load for natural gas that I have seen show a cost advantage to natural gas at this time.
Mr Jordan: I see. Then there are two sets of figures for this.
Mr Argue: That is right.
Mr Jordan: On the question of the demand-supply plan, Mr Franklin, in his letter to the municipalities and the people, said, "After five years of study, we are now in a position to present a plan to you the people that will cover perhaps the life of an employee's career in this organization." After five years of study, their research department, their environment department, their engineering, their technology, all the excellent departments that Ontario Hydro has within its own organization -- they spent five years, and in five months we have a revised plan that to me depends partly on Bill 118 and has now been presented to the board as the new official plan. Would you comment on that?
Mr Argue: First of all, it has not come over the last five months. Ontario Hydro has moved back from the start of the hearing, which started a year ago last April, before there was a change in government, and those changes were simply all assembled at the end of this line in the Update that was released last week. The principal reason for this Update is that we have had not load growth but a decline in load the last two years, which requires an adjustment of what your demands are going to be over that period of time.
The second thing I would bring forward to you is that Ontario Hydro, within its consideration of risks, its forecasting, still over the next 25 years has included provision for the fuel-switching program not to take place at all within its margins and its sensitivities in that situation. So the Update took advantage of a wide range of possibilities and still it came to that conclusion.
The Chair: Mr Huget.
Mr Jordan: If you listen, you will learn something.
Mr Huget: Thank you, Leo.
The Chair: Please, we have only a limited amount of time and if we interrupt, people will not be able to ask questions and people will not be able to give answers.
Mr Huget: I am interested in your $3.9-billion figure in terms of what the consumer has paid. I have heard that referred to as a $4-billion ripoff, and a ripoff to me means there has been some deliberate action. Could you explain that to me?
Mr Argue: I briefly covered some of the reasons why I think there is a market failure. Economists like to forecast, and one of my more interesting courses during my academic career was in how to have fun with numbers. If I forecast that my competitors' prices are going to go through the roof and I am going to achieve greater efficiencies in the future, I can make assertions that I am going to be the cost-effective option.
On page 9 I listed a few examples of the sort of information that has been put out to the marketplace by Ontario Hydro during the 1980s on the cost advantages of electric heating. I think that is a large part of the problem. There is a very tremendous information gap. People do not have a complete understanding of the costs of the various options.
Mr Huget: I am also interested in your chart, the addendum, that shows the percentage of local sales that would have to decrease and then the corresponding per cent of the local rate increase. If I read this right, are you saying for example that in Rockwood it would have to lose 51.4% of its load to be looking at that 10% rate increase?
Mr Argue: To be correct, the 10% refers to the percentage of the rate that is local. They would have to lose 51.4% of their load, and this would make the broad assumption that they are not going to make any savings in their local fixed costs from having to provide fewer kilowatt-hours, and that would equal the impact of the 11.8% rate increase that Hydro introduced this year in the wholesale rates.
Mr Huget: Is that the kind of thing you would expect to see happening overnight?
Mr Argue: No, not at all. This would be an effort equivalent to the building of a major power plant and would take several years to reach what I would consider to be a market saturation level.
Mr Huget: Could you briefly explain to me how it is, on the fuel-switching issue, that ratepayers are already subsidizing people who use electric heat?
Mr Argue: In order to have what I would consider to be a non-subsidized rate, there would have to be a level of computers and monitoring equipment in order to really trace where those costs are incurred by Ontario Hydro in order to provide that kilowatt-hours. There are definitely imbalances within those rate classes. Rates are an imperfect way of divvying up the costs, so there are some who benefit and some who do not. Certainly, from our investigation, people who are using electric heating are subsidized by the rest of the residential bucks.
Mr Conway: I just have to peruse this quickly. I am very impressed, and I am most impressed because I feel as though I have entered the promised land. This has a remarkable degree of symmetry with the chairman's presentation to the demand-supply hearing last week. You do not have to comment, but I am quite impressed with that happy coincidence.
I guess I have two questions. First, we heard a presenter in Ottawa last Thursday afternoon, no shrinking violet, Mr Goldsmith of Ivaco, a major manufacturer or steel fabricator in eastern Ontario. He made the comment at the end of his presentation that it was his view that a substantial amount of the demand management advantage was going to have to be won in the commercial and in the residential sector. Is that your view?
Mr Argue: No. I have done some consulting in industrial plants. There is a general view in plants that they are as efficient as they possibly can be. On the four occasions I have been involved in those areas, we have always been able to find cost-effective additions to the efficiency of their operation.
Mr Conway: Help me to understand this. We had three presenters, and I do not hold them out as any pattern but it certainly was a pattern last week. I am thinking of two in Timmins, one representing Inco and the other representing Kidd Creek, and then Mr Goldsmith representing Ivaco in Hawkesbury, L'Orignal. It seems to me that all those people said that in their operation over the decade of the 1990s, they felt they had been able to achieve significant improvements in energy efficiency. But in each of those cases, and they were all very significant electrical consumers, the efficiency gains in the energy sector came at the expense of the electrical component of that rising.
I am not competent to detail it, but my colleagues on the committee may remember this as well. I was struck certainly by those northern -- all three of those people happen to be in the resource sector. They are people with huge appetites for electricity and they all said the same thing, that to become more efficient in terms of their energy consumption, they had to do things that brought their electrical component up, not down. They all made the comment that we as a committee would do well to understand that overall energy consumption can, for some industrial manufacturing players, mean a net increase in the amount of electricity required.
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Mr Argue: The only advice I can offer you, Mr Conway, is that in looking at similar resource industries, for example in Scandinavia, the amount of electricity per unit of output is considerably less than we have in Ontario, which suggests to me that for similar products and production we can achieve greater efficiency in that area, which would be of benefit to industry in Ontario.
Mr Conway: I am just sharing with you what three people said to us just last week, and I do not doubt that they were telling us the truth and I do not doubt what you are telling us; there is just a rather fundamental difference of opinion.
Before my time runs out, my other question would be one I have bored this committee with, and it is this equity argument. Help me understand again how it is that Mr Jordan's rural consumers out there in Lanark or my rural consumers out in Renfrew --
Mr Jordan: North.
Mr Conway: North -- thank you, Leo -- are going to benefit by a policy that would see their hydro rate increase, a portion of which rate increase may very well be applied to allow their urban cousins to switch to a lower-cost alternative, ie, natural gas, to which they do not now nor are ever likely to have access. Is it your view that a fuel-switching policy intends more than just a natural gas option?
Mr Argue: I would certainly suggest it should be very broadly based and include a variety of energy technologies and fuels.
I could just point out to you again -- I did not dwell on it very much during the initial presentation -- on page 11 of my report I looked specifically at the equity between participants in these programs and non-participants, and the real comparison is not between participant costs and non-participant costs but between investing in your neighbours' or investing in new supply. Through that analysis, using Ontario Hydro data that have existed for the last four years, all electricity ratepayers are better off by at least a factor of two and as high as a factor of five in making those investments.
The Chair: Mr Argue, thank you very much for your participation here this afternoon. It has been of great interest to this committee, the number of groups and individuals and organizations who have interest in this legislation. I say to you and others who are here who have made presentations, your own MPP or the clerk of the committee will provide you with transcripts of not only today's proceedings, but your MPP's office can and should provide you with transcripts -- no charge, of course -- of the proceedings of the whole committee.
Mr Argue: Thank you, Mr Chairman.
The Chair: I appreciate your time and your interest.
GREENPEACE
The Chair: The next participant is Greenpeace. Good afternoon. Please tell us your name.
Mr Jardine: I am Kevin Jardine and I am the energy researcher for Greenpeace Canada.
The Chair: Proceed with your comments and, once again, try to leave us the second 10 minutes at least for dialogue.
Mr Jardine: Okay. You all have copies of my brief, but before I begin I just want to make some introductory comments. My brief deals entirely with the question of fuel switching, because from an environmental perspective that is the most significant part of Bill 118. I want to talk about what we all agree on and then try to focus on where our differences have arisen.
I think we probably all agree that generating electricity causes environmental damage. Coal-fired power plants cause acid rain and they release carbon dioxide, which causes global warming. Nuclear power plants also create nuclear waste and environmental damage through uranium mining. We all agree that there is an environmental price to pay for Hydro's power plants.
I think we also agree that conservation is a good idea. We may disagree on how that should actually be achieved, but I doubt there is anybody here who would say that conserving on our resources, whether they are energy, water or other materials, is not a good thing. However, there is a major disagreement on how conservation can actually be achieved.
In the area of electricity conservation, especially if you look in the residential sector, which is about 36% of all electricity consumed in Ontario, the largest single use of electricity is for electric heating. In fact, more than one half of all the electricity used in homes and apartments is used for electric heating, and also this is space and water heating, with smaller amounts for ovens and clothes dryers.
There seems to be a major difference of opinion on what should be done to conserve on electric heating, to try to reduce the amount of electricity which is used for that, just as we are also trying to reduce the amount of electricity used for lighting, appliances and so on.
A number of groups, including the Municipal Electric Association and, I believe, the Association of Major Power Consumers, have come out with the position that market forces are sufficient. Apparently, if we are to believe what they say, market forces will make electric heating go away. However, when discussing the need for new supply, the MEA and AMPCO project that electricity consumption will continue to rise. Included in that, of course, is a large percentage for electric heating. So it seems, when they are talking about demand management they are talking about one thing, and when they are talking about new supply they have different projections.
Greenpeace believes market forces will not make electric heating go away. If that were the case, it would be absolutely wonderful. There would be no need for any investment in programs to get rid of it. There would also be no need for future power plants, because if electric heating went away altogether, if you include commercial buildings and industry, that would be approximately one quarter of all Ontario's electricity. There are in fact a number of real market barriers to achieving the elimination or severe reduction of electric heating. One of the major market barriers is the fact that electric heating equipment is very cheap to install. It is also, however, very expensive to run, as I am sure we all know. But there is something called a split incentive, where a builder or landlord building a home will try to reduce their initial capital costs, so they install electric heating equipment.
On the other hand, the people who actually have the equipment do not have the money to get rid of it. They do not have the responsibility for that, but they do have to pay the electric bills, so that is part of the problem, the initial capital cost. That does not include the real cost of the entire consumption of energy throughout the lifetime of baseboard heating or the electric furnace.
Second, Ontario Hydro and the municipal utilities have had programs for years and years which have promoted electric heating, based on an unfortunate and incorrect forecast of the cost of electricity. But as we have seen before, Ontario Hydro is not very good at making forecasts, either for electricity demand or for the price of electricity.
For these reasons we believe market forces will not achieve the elimination or substantial reduction of electric heating. On the other hand, it is Ontario Hydro's real concern to reduce that. The reason is that when it comes time to do something to increase the amount of electricity available because of population growth and economic growth, Hydro has two options: They can either build a new power plant or several new power plants, or introduce demand management programs which will free up a large amount of electricity Hydro can sell for other purposes.
According to Robert Franklin in his speech to the Canadian Electrical Association Inc in October, 1990, a typical electrically heated home requires $50,000 worth of generating capacity to supply that electricity. So from Ontario Hydro's point of view, it needs more electricity now. When it is looking at an electrically heated home it can build more capacity, do fuel switching, thermal envelope improvements or other ways to reduce the amount of electricity used in that home to free up the power. That power is worth $50,000 to Ontario Hydro -- each electrically heated home -- yet the fuel-switching and thermal insulation programs cost significantly less than that. So Hydro has two options: it can do demand management or build new power plants. Demand management turns out to be cheaper; it is usually cheaper. In fact, it is substantially cheaper than building new power plants. It also makes sense from an environmental point of view because power plants damage the environment; conservation programs do not.
It makes sense economically as well because power plants, being more expensive, will drive up electric rates. They will drive up electric rates at considerably higher amounts than conservation programs and, especially in this case, programs to get rid of electric heating.
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There are a lot of more detailed numbers about what our exact position is on electric heating and the exact environmental damage caused by it. I will leave you to read the brief, but I want to quickly make three points. Greenpeace supports a three-step program to phase out or substantially reduce electric heating and replace it with forms of heating that are much less damaging to the environment.
First, we should reduce the amount of heat required in homes. Space heating needs can be sharply reduced by improving the thermal envelopes of homes and apartments through insulation, air sealing and energy-efficient windows to substantially reduce the energy required to heat homes. One third of the single-family homes in Ontario right now have little or no insulation. That is an environmental scandal, given our northern climate. A lot of other things can be done to reduce hot water needs and to reduce the heat required in clothes dryers and so on. Again, I will leave you to read that, but the first thing is to reduce the amount of heat required.
Second, we should be switching to efficient, renewable energy sources wherever possible. For example, passive solar heating can be used to reduce heating needs. Wood is also a good fuel because, if replanted, it has no net carbon dioxide emissions, and according to the Canadian Wood Energy Institute, 35% of the homes in Ontario already have a wood stove heater or fireplace. They are usually extremely inefficient, but they can be upgraded so that wood can provide a substantial portion of our homes' heating needs. I also talk about solar-assisted water heaters which have now matured as a technology and they are practical.
Finally, switching to natural gas to provide any remaining heating needs, Greenpeace accepts natural gas only as a transitional fuel. Because of the severe implications of global warming ability, all fossil fuels, including natural gas, should be phased out as soon as possible.
I also talk about technologies other than high-efficiency natural gas furnaces that Hydro should consider. I will leave that for you to read.
Basically, Greenpeace's position is that we need to reduce the amount of electricity we use. Market forces will not do that entirely. Hydro needs to intervene because it makes sense both environmentally and economically from Hydro's point of view and the point of view of the people of the province.
Mr Huget: Thank you for your presentation. I have a brief comment and a quick question. It is interesting that you mentioned the thermal envelope issue and all those other things we could be doing to ensure we are not wasting heat or energy, no matter how we are supplying it.
I was recently in Atikokan and in the northern community the number of homes insufficiently insulated is really quite amazing. You would have thought the farther north you go from Toronto, the more that would be an issue. But there are many homes there inadequately insulated.
On the fuel-switching issue, some people are raising the argument, "Why should we substitute fuel, and why should electrical consumers or ratepayers pay for that substitution?" Why should we?
Mr Jardine: The reason is that electrical ratepayers have a vested interest in making sure electricity use is reduced as much as possible in the province. It is cheaper to reduce electricity use than to build new power plants, so we have to do everything we can to avoid building new power plants in the future. Once we have to start constructing those plants, rates will go up, just as they have now gone up because of Darlington. Rates are going up, as it has already been pointed out, up to 44%. Once new power plant construction begins, and we have to start paying for the cost of that in the rates, that will continue to happen. Conservation programs are a lot cheaper; they are also much better from an environmental point of view, but you do not need to use environmental arguments to justify it, you can use both.
Hydro supports fuel switching, for example, simply from a dollars and cents point of view. Even people who do not participate in fuel-switching programs will have lower electric rates as a result of the people who do switch to natural gas, so everyone will benefit. Of course, if the proposals Greenpeace is suggesting -- thermal envelope improvements or renewable energy sources and so on, besides the fuel switching to natural gas -- that again is a way of spreading the benefits of the program.
It is really important that the fuel switching debate not just become a debate of electricity versus natural gas. There has been a historic rivalry between the municipal electric utilities and the natural gas companies for a variety of reasons, so the debate has tended to be distorted in that area. That was not the original intent of the idea of fuel switching; at least as it was proposed by environmental groups.
The Chair: Thank you. Mr Conway, three minutes.
Mr Conway: It is very interesting: At the risk of being marginally provocative, I remember as a teenager watching Réal Caouette on our local television station describe Social Credit economics. God, he was good; he was really effective. He talked about these terrible banks, tight credit and all this pain that need not be felt. Like a lot of the soft money people, he painted just a marvellous new world in which all kinds of things which had not been thought of previously were possible. I could never understand why people just did not buy Mr Caouette's line and tell the Canadian Bankers Association to take the noon balloon to Rangoon.
I listen to you and you make a very sane and sensible presentation, particularly following upon the Passmore presentation. It just seems so easy and so painless. We do not need to have these 12% increases. We do not need to build expensive new nuclear or gas-fired stations; we just need to conserve. I am sitting there thinking, "All right; I want to put this question."
I own a cottage up in the Precambrian bush of Renfrew county. I disagree with you to some extent, because market forces are starting to have an effect on me. I am finding that the price my friendly public utility is charging me now is getting to the point where I do not want to pay it to that extent. I am listening to Passmore, I am listening to Greenpeace and I am ready for the new religion. I am going to do something and I want you to tell me what I do.
In Pembroke, my electric bill is nothing and I do not mind paying some of these additional charges, because on the basis of an annual electric bill of 150 bucks, it is peanuts. Out at my cottage, where my annual bill is 1,200 bucks, I start to get very antsy because on that kind of base those sorts of rates begin to really start to mean something.
I want to be responsible. I want to buy into the new religion. Who would be foolish enough to take the hard, painful way when there is such an alluring, easy, painless way? What do I as a responsible citizen in the 1990s do at my cottage, which I keep open all year long and which is heated electrically? I had no choice, since I am not there a great deal of the time. What should I do?
Mr Jardine: The first thing you should do is to make sure your cottage is well insulated.
Mr Conway: Done.
Mr Jardine: Second, install a high-efficiency wood stove.
Mr Conway: But you see, I am not --
The Chair: You have asked the question. That is the answer. Now it is for Mr Jordan, and I hope he leaves one minute for his friend Mr Arnott.
Mr Conway: This new religion may be more complicated than I thought.
Mr Jordan: Three minutes go by very quickly, especially when you watch the clock.
Thank you for your personal interest in Bill 118. Although you support fuel switching and you keep relating to the environment, you are almost at a case of environmental hysteria here, saying that we may not survive unless we proclaim Bill 118. I really do not believe this province or this country is really at that stage yet.
Mr Jardine: I believe we are. At the rate at which --
Mr Jordan: At the environmental hysteria stage?
Mr Jardine: I believe we have reason to be extremely concerned about the state of the environment.
Mr Jordan: Concerned, yes.
Mr Jardine: If we do not substantially reduce our carbon dioxide emissions, according to the world's most respected and renowned climatologists the earth's temperature will increase dramatically over the next century. According to Greenpeace's own studies, which are confirmed by climatologists around the world, we are going to have to reduce our carbon dioxide emissions by 70% by the year 2050 or we will pay the consequences in terms of massive coastal flooding, droughts, the spread of tropical diseases into northern climates and tremendous storms. The earth's ecosystem will be dramatically altered because of the way in which we are damaging the environment.
Mr Jordan: What would happen then with the CO2 from gas generation?
Mr Jardine: The amount of carbon dioxide emitted by natural gas is substantially less than the amount generated by coal-fired electricity. In fact, because of the inefficiency of the coal-fired power plants, 70% of the energy is lost. Only about 30% of it or so gets into homes. Because of the fact that coal generates so much more carbon dioxide than natural gas -- coal-fired electricity generates five times as much carbon dioxide per unit of delivered heat as natural gas does, so fuel switching by itself can accomplish a great deal in reducing our CO2 emissions. Thermal envelope improvements and renewable energy can accomplish even more. The combination is very good.
Mr Arnott: You have stated that fuel switching requires incentives and giveaways, because the free market, to create the fuel switching you had hoped to find, has not been as successful as you would like.
Mr Jardine: I would not call these incentives or giveaways. It is a little bit like calling Darlington an incentive or giveaway. The question is whether Hydro should invest in a power plant or invest in renewable energy.
Mr Arnott: That is not my question. My question --
The Chair: That was the answer. Mr Jardine, I want to thank you very much, you and your organization, for taking the time to come before this committee today, for your interest, obviously, historically in this matter. I trust you will keep in touch with members of the committee, with the parliamentary assistant and with critics.
Mr Conway: And who is stoking my wood stove when I am not there?
The Chair: Should Mr Conway wish to invite us to his cottage this summer, I am sure we could sit down for a couple of evenings and solve his personal energy consumption problems.
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SOCIETY OF PROFESSIONAL ENGINEERS AND ASSOCIATES
The Chair: I have the Society of Professional Engineers and Associates here this afternoon. Mr Giudice is the president of the society. We have 20 minutes. Please try to leave us at least 10 of those minutes for conversation and dialogue. You have a written submission, which will form part of the record.
Mr Giudice: Thank you for the chance to voice our concerns about the proposed amendments to the Power Corporation Act. I would point out that I represent only the Society of Professional Engineers and Associates, or, as we call it, SPEA, not any other trade union. I would also note that the society has been in contact with many other unions connected with the nuclear industry and to a large extent they all share our concerns.
Let me say at the outset that the society sees the changes already made to the proposed Bill 118 by the government of Ontario as a step in the right direction. But any amendments to the act that permit Ontario Hydro utility policy to be determined by government decree should bear careful examination. What is at stake is more than just greater political control over Ontario Hydro's planning activities. It is really the future direction of energy policies in the province, with all this implies for jobs and the economy.
Much of the debate on Bill 118 in the Legislature has in fact focused on the government's policy towards nuclear power. That is why I am here today, to make the nuclear case as strongly as we can.
The government has already imposed a moratorium on further development of nuclear power in Ontario. Who can predict the potential for future restraints or even cutbacks if major decisions affecting the power system are left to government decree? Governments tend to operate with horizons no longer than four to five years, their maximum term of office. But decisions on major power supply options must be made at least 12 years ahead of predicted need. You can see that the priorities of politicians and power planners, who both have the best of intentions, differ dramatically.
Last week Ontario Hydro released its updated demand-supply plan. It indicated that no major generating stations, fossil fuel or nuclear, will be needed until the turn of the century. No one can argue the impact of reduced power demands in this recession, and any thinking person has to welcome any reductions due to demand management and conservation programs.
We can make a strong case for keeping the nuclear option open, but with the kind of uncertainties introduced by Bill 118, this may prove difficult.
Let's briefly examine the impact these amendments could have on Canada's nuclear industry. For starters, SPEA represents nearly 500 professional engineers and other degreed associates. They are involved in the development, design and marketing of the highly successful Candu nuclear reactor. But these highly trained men and women are just the tip of the iceberg.
With 100,000 jobs in everything from research laboratories to uranium mining and manufacturing, the nuclear industry makes an enormous contribution to Canada's economy. AECL and Ontario Hydro spearhead the industry, but the private sector list runs the gamut from General Electric Canada to Zircatec, a manufacturer of fuel bundles.
Every Candu reactor built and operated in this country is 90% Canadian. Parts are supplied by dozens of companies across the country, but mostly from Ontario. To name just a few recent contracts keeping workers gainfully employed, there are steam generators from Cambridge, valves from Burlington, control systems from Schomberg, pressure tubes from Arnprior, fuelling machines from Peterborough and calandria tubes from Port Hope and Cobourg. In fact my company's sale of a second Candu reactor last year to South Korea provided direct and indirect employment for about 7,000 Canadians, more than 5,000 of them in Ontario alone.
It was great news when General Electric announced last week it would create 190 jobs in Oakville to manufacture energy-efficient lighting, but let's remember which energy system creates thousands of jobs in Ontario with a single overseas or domestic sale: the Candu energy system.
Most of the unionized workers in Ontario's nuclear industry are well paid. If our jobs disappeared, the loss of government revenues through income and other direct and indirect taxation would be considerable. That is not to mention the resulting drain on the economy through evaporating spending power, and let's not ignore the economic impact on local communities of the power stations themselves. They employ thousands of people during construction and sizeable operating and maintenance staffs after they go on power.
Let's compare nuclear with coal. Over a typical 40-year lifespan for two such plants, both operating at 80% capacity, the coal alternative has almost twice the total labour content of the nuclear option. But remember that most of Ontario's coal comes from the United States, which gives nuclear its price advantage. So if you talk Canadian labour content, nuclear is more than double that of coal and the jobs are high-paying, high-tech and highly skilled, as I will discuss a bit later.
About a third of the coal now purchased by Ontario Hydro comes from western Canada. This does not change the fact that for the nuclear option a full 80% of the jobs are in Ontario. Ontario's nuclear program has saved $16 billion in foreign exchange to the end of 1989 and has created approximately 25,000 direct jobs right here in Ontario.
Canada has been assembling the world-class expertise to design, build and operate Candu reactors for more than 25 years. Part of it is the ability to manufacture heavy water and uranium fuel. If the government moratorium continues and the industry is on indefinite hold, these skills are in danger of being lost.
As Ontario-based contracts dwindle, layoffs will be inevitable and workers who have spent years building competence in high-tech jobs and through apprenticeships of various kinds will leave either the province or indeed the country or drift into other work. Rebuilding that body of Candu expertise would be akin to rebuilding an Avro Arrow from the cut-up pieces in the scrap heap, armed only with a screwdriver.
Early in the nuclear program the CSA developed stringent requirements for all safety equipment installed in nuclear plants. Known as the Z299 series, these standards were adopted in 1975. As well, vigorous pre-qualification criteria for suppliers were put in place. It can take years for a new supplier to meet these qualifications, which include developing fully competent trades people.
These high standards set in the nuclear field have benefited manufacturers by making them competitive in other pursuits that also call for superlative quality control. The aerospace industry is a good example. It is likely then that dwindling nuclear work would see its numbers evaporate, which would also affect other high-tech employment.
Nuclear plant operators spend eight years in classrooms and on-the-job training before they can hope to pass the examinations leading to an operator's licence. Young people ambitious to become nuclear operators may think twice about such a career in what may be perceived as a dwindling job market, and that means a shortage of operators when and if Ontario's nuclear program is revived.
Strict quality assurance standards also apply to construction trades engaged in building nuclear power stations. At the risk of sounding repetitive, a prolonged moratorium may lead to the loss of many skilled people. It gets right down to this: While some may argue that these amendments save resources, I believe they squander our most valuable resource -- our people.
When it comes to impacting the environment, nuclear stations have decided advantages over fossil-fuel plants: They do not emit either acid or greenhouse gases, and a small amount of spent uranium is confined and safely controlled within the plants themselves.
1520
Why then the government moratorium on future nuclear development? The primary reason may be the government's reaction to the incorrect perceptions of a vocal minority that opposes nuclear energy on ideological or misguided grounds.
Other, more sincere, opposition to nuclear power may arise from doubts of safety, but the facts tell another story. Since the first electricity was fed into Ontario's grid by the nuclear power demonstration plant at Rolphton 30 years ago, Canada has achieved an outstanding safety record. No member of the public has ever been hurt or even threatened with harm from the operation of Hydro's Candu stations, whose record for safety is unrivalled. Indeed, the same can be said for the entire Candu industry. It has recorded more than 200 million man-hours of operation without a fatal injury to a worker or member of the public. How many other manufacturing sectors can equal that claim?
The Candu industry works under the mantle of the most stringent safety regulations and monitoring of any industry in Canada. Working with radioactive substances demands this, and the industry accepts the responsibility willingly. Stations are inspected frequently, and they are built to withstand potential and natural disasters, ranging from earthquakes to tornadoes. At the stations, there is a continuing effort to make potential radiation exposure to workers and the public as low as reasonably achievable.
For those who like to stir up anxiety in surrounding communities, you should all be aware that workers inside the plants themselves have lower cancer rates than the population at large, so let's lay the anti-nuclear myth to rest. The reality is this: Under a normal operation, the Candu plant emits far less radiation than a station burning coal which contains thorium.
Primarily Ontario-based, the Candu industry has developed into a world-class national industry. It has been the major contributor to Ontario's path to self-sufficiency in energy -- economically and reliably. How else did Ontario, with its larger nuclear program, achieve electricity rates 20% to 30% cheaper than most North American jurisdictions? Let's not knock nuclear. Let's give credit where it is due.
Remember the Middle East conflicts and the past history of the OPEC cartel? Remember the mid-1970s when crude oil supplies became scarce and we paid substantially higher prices for what was available, along with natural gas? More and more disposable income disappeared in order for people to heat their homes, run their cars and purchase other items made from oil byproducts. The net result was a lower standard of living and inflation.
Even earlier than that, the government of the time made the right move to start Ontario on the path to energy self-sufficiency. This would ensure that we would not be at the mercy of others for energy supplies at times of unrest. The goal was to see Ontario able to maintain a good standard of living.
The Candu nuclear industry has certainly supported this goal, allowing cheaper electricity rates than other comparable North American jurisdictions and helping maintain our enviable standard of living. We have an excellent and reliable nuclear technology that is the envy of many countries of the world.
Switching to alternative energy supplies will result in reliance on foreign and out-of-province sources which are unreliable and, without doubt, will be more costly in the long run.
Here is our primary concern: The proposed changes to the Power Corporation Act creates uncertainty for future planning in the nuclear industry at a time when uncertainty abounds in the economy as a whole.
Naturally, the Society of Professional Engineers and Associates applauds this government's demand management and conservation initiatives, but is it really possible to quantify how much of the recent electricity-demand slowdown is due to conservation measures and how much to the current recession that is damaging industry across North America? What happens a year or two from now when an economic upturn gets under way? Will power demands take a surprising leap, once again catching the planners unawares? If they do, will the nuclear moratorium be lifted, or will it be kept in place for reasons that may well be more ideological than practical? What will be the result of scrambling to meet new demand?
The only thing we will be able to do is import expensive polluting power from elsewhere or build expensive polluting gas-fired plants which can only erode the cost advantages we have attained over decades of nuclear power. Every utility in the eastern part of this continent will be turning to gas in the 1990s, given public paralysis of new plant decision-making, especially nuclear plants. What do you think this will do to the price of gas, an inflation-prone, non-renewable resource that releases carbon dioxide during combustion, thus contributing to global warming?
Sooner or later, major new sources of base load generation will be needed in this province. It could well be a sad day if the nuclear infrastructure to provide a major proportion of this electricity is no longer in place. Thank you.
The Chair: Thank you, sir. Mr Conway, one short, concise question per caucus. I see the pained looks.
Mr Conway: There is something almost insulting about these strictures, but I understand the pressure the Chairman has.
I think your brief is a very interesting one. It concerns the fundamental policy that informs this government's energy outlook, and in that sense I think it is an extremely timely, if somewhat controversial, assessment of that whole question. But surely you, being an engineer, understand that we do not need any of these new alternatives on the supply side, because a whole generation of politicians and engineers -- actually, two generations of politicians and engineers -- have just either misunderstood or ignored the possibilities of creative, almost painless, demand management. Would you not agree?
Mr Giudice: Mr Conway, you asked a question of one of the previous speakers about your cottage, your concern for high rates, who suggested that you use wood. I do not know if you ever burned wood in a fireplace. I have. If you buy it, it is very expensive in fact in comparison to heating probably your home, your cottage, with electricity.
Mr Conway: I close the fireplace when I am not there 95% of the time, but that is another matter.
My point on demand management is fairly serious, and perhaps I prefaced it a bit grandiloquently. My point is that the thrust of the government's policy, and most especially the thrust of the chairman's update to the demand-supply plan of last week, suggests that we can provide reasonably for the needs of industry and residential consumers in this province for a full generation by almost a chiropractic-like manipulation of the supply we already have.
The Chair: That statement having been made, we go to Mr Arnott.
Mr Arnott: Thank you, Mr Chairman. I wonder, sir, if you can give an explanation to the committee in layman's simple language as to why a Chernobyl-type accident could never happen to a Candu reactor?
Mr Giudice: I would not answer that by saying nothing could ever happen, but certainly, with the type of system we have, our containment system, we have several shutdown systems that prove to be reliable. They are consistently being monitored as well and tested on regular frequencies. This is the type of confidence we have in our type of reactor.
Mr Klopp: I can appreciate where you are coming from. We had some people here a couple of days ago who really promoted natural gas. They also sold natural gas appliances and they really like the idea. You know, they are in their corner and you are in your corner. I can appreciate that. I do not have a lot of qualms about nuclear energy sources; I do not care. Energy sources produce electricity. It does not come from there naturally.
On page 3 it says no public person has ever been hurt by a nuclear plant. I do not know if any public person has ever been hurt by any electricity-producing plant in Ontario, but I could be wrong.
Mr Arnott: Mining coal.
Mr Klopp: That is not producing electricity. There have been people hurt in uranium plants, have there not?
Mr Giudice: Well --
Mr Klopp: Okay. The question I have is, when this province says we are not looking at producing any more of any kind of plants, particularly nuclear, for the foreseeable future, how does that affect your selling of this business around the world?
Mr Giudice: Because the industry was created here in Ontario, basically, in partnership with the Ontario provincial government, through Ontario Hydro. For Pickering units 1 and 2, it was a shared partnership on those particular units. There was a lot of exchange of the engineering and knowhow, individuals and so forth.
Certainly the next class of nuclear reactors, which was termed the Candu A, or the start of it, had commenced roughly a number of months ago. When the moratorium got placed it got cancelled, and that was again conceived to be a partnership of Ontario Hydro and our engineering staff, working for AECL, in developing a much more advanced nuclear reactor.
It is very difficult to sell on the world market if they see that within your own province, your own country, nuclear power is not an option any more.
The Chair: Thank you, sir. The whole committee thanks you for your participation and trust you will be in contact with members of the committee or with your own MPP to find out the progress of this legislation and to keep the channels of communication open.
Mr Giudice: Yes, I will. Thank you.
1530
AERO ENVIRONMENTAL LTD
The Chair: The next participant is Aero Environmental Ltd. Good afternoon, sir.
Mr Brooker: Good afternoon. I am Michael Brooker, Aero Environmental.
The Chair: Please, sir, your comments and then time for questioning. We have a total of 20 minutes.
Mr Brooker: I will be short and sweet. Thank you for the invitation. Aero Environmental is a manufacturer of oil-fired heating equipment, specifically oil burners, oil-fired water heaters, flame retention oil burners, indirect water heaters, and we have been established in this province since 1945. Aero supports proposed Bill 118, and it has our full support for the following reasons. I am looking at this specifically from a domestic heating point of view; I am not looking at the commercial end of it.
First and foremost -- I am sure you have heard it all -- generating electricity by burning coal or other sources of fuel is not cost-effective nor it is efficient, and in coal's case neither is it environmentally sound for this province.
Oil heat has survived three major price shocks since 1973 and seems to have come out reasonably well, so much so that I am still paying 1984 rates for my fuel oil today. Granted, it is market-related, but there I am, 34 1/2 cents a litre.
Oil survived the misguided federal initiative to get this country off oil completely. It survived, and the question was, why did it survive? It was because the oil heating industry kept pace and kept going and the equipment today is efficient. It has progressed so well in design development that we do not see any need to generate heat by the use of electric resistance. It just does not make any sense to use one fuel to generate another to produce heat or hot water, whatever the case may be.
The technology is in place today for oil. For example, our company manufactures a domestic oil-fired hot water heater that conforms to Ontario's new Energy Efficiency Act. This regulation is quite demanding, and I am quite proud to say that we are the only manufacturer to date in Canada who has met the Energy Efficiency Act. It will become law in I believe April 1992.
We believe that if electric water heaters are replaced by either oil- or gas-fired water heaters, the demand on that electrical grid will be greatly reduced. Oil-fired water heaters, and gas, to an extent, produce a lot more hot water on demand, in the case of oil five times quicker than electricity, and resultant amount. They can also be vented through a wall where there is no chimney available; ie, electrically heated homes that are in existence today, if they had to be converted, can be converted to oil with what they call through-the-wall technology venting.
In conclusion, we feel it is imperative that Ontario adopt alternative sources of energy to be put in place of electricity so we can conserve our energy supply and most important, reduce the burden on the Ontario taxpayers. We feel it is the only choice that makes sense for our province. If you have a copy of my figures on cost comparisons of electric water heaters versus oil heating efficiency, it pretty well tells the story.
Heating water is very expensive; those figures are based on 64.3 US gallons per day usage, and this is a commonly accepted figure. That translates into 24,000 gallons of hot water annually that an average household will use. If we look at the second page and the cost comparisons -- no GST is included in any of this, by the way -- if you took oil at 34 cents a litre, the bill to heat 24,000 gallons of water would be approximately $296. If we were to take an electric rate of approximately eight cents a kilowatt-hour, we are now looking at $634. There is a considerable difference.
This is our position. We think the Ontario government should promote those alternative uses of energy, as opposed to strictly electricity. Thank you.
The Chair: Thank you, sir. Mr Jordan.
Mr Jordan: I am interested in your assessment of the heat pump.
Mr Brooker: I do not want to sound too jaundiced but our climate is not the best suited for it. There is technology coming on stream today that will utilize the ground source, be it water or the ground itself. I have seen an experiment conducted by Ontario Hydro through a ground source heat pump -- they had all the best technology at this house and it just did not work. Heat pumps I liken to central air conditioning. They do use a lot of electricity, especially when the temperature starts dropping. You generally need a backup in this climate, especially as you get farther north. This has been done in Quebec. Heat pumps have a place but they tend to be shining in a more moderate climate; Toronto, perhaps.
Mr Jordan: I would like to ask you where you saw an Ontario Hydro heat pump project that was bad.
Mr Brooker: In Etobicoke.
Mr Jordan: Because of the installations there?
Mr Brooker: The whole installation, the way it was conducted; they had --
Mr Jordan: But let's stick to the principle of extracting heat from the ground.
Mr Brooker: What they had to do in order to realize the whole efficiency of this thing, they were having to fill the lines with --
Mr Jordan: I understand that part, but I am talking about the relationship and the principle of a heat pump for future heating and cooling. To me, it is an excellent technology and it is improving continually.
Mr Brooker: You are still using electricity to a great extent.
Mr Jordan: Very much so, and I am for my lights also.
Mr Brooker: True enough, but when I see a compressor on a heat pump, it consumes electricity at quite a great rate and, given the rates that we have for electricity today, I do not really think they are that cost-effective. Who knows, they now have natural gas heat pumps which are an alternative down the road. There is something to be said about them.
Mr Jordan: Very much, and I just noticed that you do not have a comparison here, whether it is gas-fired in conjunction with a heat pump, or electric-fired.
Mr Brooker: No, we do not.
Mr Jordan: But there is a big saving in that -- and looking at our summer load growing year after year, almost to a summer peak condition because people are demanding air conditioning, a controlled environment in their homes, to such an extent that we now have to have controlled air inlets.
Mr Brooker: That technology is a long way away.
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Mr Jordan: Well, the building code is asking for it at the present time.
Mr Brooker: It is a mess right now.
Mr Jordan: The building code is asking for it, right?
Mr Brooker: I understand, yes.
Mr Huget: I would like to quote Mr Franklin, the former chair of Ontario Hydro, who made it very clear that in his view electricity was far too important and too expensive a commodity to heat dishwater with, and I have to say I agree with him on that.
A lot of the connection has been made to fuel substitution as only gas, and frankly that is incorrect. But if we look at oil heat and I were to adopt the sort of adopted perception of oil heat, and that has been I think in the public's mind a fuel that is dirty, inefficient and costly and a supply that is non-reliable, given that perception, why would we switch to oil?
If there have been improvements made in the technology, please do not tell me that there have just been improvements. I want to know specifically what has changed in terms of the efficiency and all those other issues related to oil heat, because it is the same oil.
Mr Brooker: To answer your first question, why would you ask somebody to switch? First of all, gas pipelines do not go to Fanbelt, Ontario. They are not all --
Mr Huget: You can't get there from here.
Mr Brooker: Right.
That is one good reason. Natural gas is not available to a lot of places within this province.
You ask, what technology has changed? Oil burners have changed. The heat exchange process has changed. They are getting more BTUs out of a gallon of oil as opposed to pre-1975.
The key in your perception is probably true of a lot of people: "It's dirty, it's smelly, it's expensive." It is not that expensive, it is not dirty and it is not smelly, provided it is serviced correctly. I guess that is the biggest battle our industry has had. You change the oil in your car, I presume, on a regular basis. That is what our industry is always fighting for, training that service end of it to look after the equipment. If it is looked after, it is not dirty, it is not smelly and it is efficient.
Mr Huget: You mention on the back page of your brief Nova Scotia's Power Smart program. Can you tell me a little bit about that?
Mr Brooker: It is basically going in the direction that Ontario Hydro has been going. They are promoting the lightbulbs. They are going to adopt a new CSA efficiency guideline. Ontario was the front runner for oil-fired heating equipment, and basically that is what Nova Scotia is doing. I believe it is going to become effective in April 1992 that oil-fired heating equipment has to meet a certain standard. This is part of the program. It is again analogous of what Ontario Hydro is doing.
Mr Huget: You would agree with the setting of efficiency standards, I assume.
Mr Brooker: We have it in place now. We have had it for some time, gas and oil. We have a minimum efficiency standard for oil-fired water heaters now. It is tough, but we met it, and there are other manufacturers who can. We have it for all oil-fired heating equipment. There is a minimum efficiency that you have to attain with oil-fired heating equipment. It is 80% combustion by the way. Otherwise, you do not get certified.
The Chair: You should know that when we were in Ottawa on Thursday, we had a rather full dialogue with the Canadian oil heat association, which made its case well, as did you today. We thank you very much for your interest, for coming out. We trust you will keep in touch and keep your views circulating around Queen's Park and the people who try to make the decisions.
You should know that I enjoy the opportunity to say this. I and I suppose a few others are a very critical of the $1,000-a-day consultants who tend to hijack governments and sometimes political parties. But you and the other people who have been here today and throughout the process of these committee hearings demonstrate you do not really need those $1,000-a-day people. There are a whole lot of people with a whole lot of talent and skills who are prepared to help and eager to assist. You have demonstrated that, along with the other people here today, and we thank you for it.
Mr Brooker: Thank you.
The Chair: The next scheduled participant is Jim Harris, who is not here yet.
MILLBROOK-CAVAN ENVIRONMENTAL WATCH
The Chair: What we will do, then, is proceed with the next participant, Millbrook-Cavan Environmental Watch. I understand Jeff Brackett is here for that organization.
Others of you who have come, there are coffee and some juices there -- some from Ontario, some as a result of cross-border shopping. Feel free to make yourselves comfortable.
Mr Brackett: Thank you for having me. I will not keep you too long. First of all, my name is Jeff Brackett and I am a co-founder of a group called Durham Nuclear Awareness. I helped to found that group about five or six years ago when I lived in Durham region, which is home to the Pickering and Darlington nuclear power stations. Two years ago, though, I relocated to Millbrook which is just this side of Peterborough, about 10 or 15 minutes this side of Peterborough down Highway 115. Since that time, I have become active in a group known as Millbrook-Cavan Environmental Watch, or MCEW. I noticed in your correspondence to me, a letter was changed around and it became Millbrook-Cabin and I thought that was kind of cute because it does justice to the small-town rural setting.
Millbrook-Cavan Environmental Watch is a small committed group of people who have been around for ages working on raising environmental awareness and appreciation through workshops. They have had people come into town to speak at public events, such as Tom Drolet from Ontario Hydro, people from the Ministry of Natural Resources speaking on wetlands and land use, and there is a move in town to have mini-hydro installed in the local mill. There was a generator there years ago, and hopefully soon there will be one there again.
MCEW is also a member of the coalition of environmental groups, which is a participant in the environmental assessment hearings into Ontario Hydro's demand-supply plan. Today I am speaking to you on behalf of Millbrook-Cavan Environmental Watch, and I am here to notify you of our full endorsement for Bill 118. We feel that passing Bill 118 will do a great deal to help protect the environment and the economy of this province.
If my friends were here giving you an idea of what I was like, they would tell you I tend to apologize an awful lot. So I will get that out of the way right off the bat and tell you that I am not an expert and that I cannot dazzle you with figures and things like that. However, in preparing for this presentation I did quite a bit of reading and found the history of relations between Ontario Hydro and the government of Ontario to be fascinating.
As I read Bill 118, I was equally impressed by the common sense which seemed to spring from its pages. Bill 118 is part of an ongoing progression towards greater accountability and responsibility at both Ontario Hydro and Queen's Park. As a bonus, it clears roadblocks which have prevented energy-wise decisions, decisions that now may pay both economic and environmental dividends. I believe this bill is an important step towards a more comprehensive approach to energy planning in Ontario.
As you know, the bill deals with accountability and the structure of the board and so on. For years it has been my personal opinion that Ontario Hydro has behaved as a power unto itself, and at the select committee hearings in Bowmanville a few years back I remember hearing Cyril Carter, Jenny Carter's husband, speak and he referred to the utility throughout his presentation by its initials OH. He preferred to call the utility "on high," this in reference to the crown corporation's power and influence which he likened to a sort of corporate omnipotence. They are seemingly above the law and beyond regulation.
Another familiar image that environmentalists like to put forward is that in the relationship between the Ministry of Energy and Ontario Hydro the ministry is the tail trying to wag the dog, and the utility is out of control.
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Changes suggested by Bill 118 should help to clarify matters and help to clean up communications. Subsection 3(1) serves to increase the size of the Hydro board from 17 to 22 members. This increase will allow for a wider representation of public interests on the board. I think Jenny Carter said that herself. This section also would include the Deputy Minister of Energy on the board as a non-voting member. This would be to increase communication and liaise between the two groups to keep each aware of what the other is doing. We cannot overestimate the value of communications. Subsection 3(1) will see to it that both the corporation and the government get some instant feedback and input on energy decisions and are totally up to date with each other's activities.
I also read that section 2 goes further still in allowing the Minister of Energy to issue policy directives and obliging Ontario Hydro to implement these promptly and efficiently and to update the minister on its activities related to policy directives. Hopefully these directives and responses will eliminate any rumoured backroom dealings and make both government and Ontario Hydro more accountable to the people of Ontario.
I have also read the criticism given by the Municipal Electric Association that this bill goes too far in giving the government unrestricted ability to interfere with Ontario Hydro affairs. While there may have been room for clarification in the bill, it was an extreme position for the MEA to accuse the government of setting up some sort of opportunity for a tax grab.
Others have suggested that through the government's directives to Ontario Hydro, Hydro's resources may be misused for the government's own purposes. I think that is a little extreme as well. Obviously directives will only apply to matters relating to Hydro's exercise of its powers and duties under the existing act.
While accountability is important, probably the issue which draws me here today is that of fuel switching. That is the one that tugs at my heart and the one that brought me all the way in here from Millbrook and got me off work on a short leave of absence to come here and see you today.
Subsection 56a(3), while not limiting Hydro's activities, does seem to restrict any energy conservation programs to those which apply to electrical applications. By focusing on improving electrical efficiency, which is a good goal in itself, this section ignores the fact that electrical heating of homes and water is really not an appropriate use for electricity at all. Other heating systems may be, and are, more environmentally and economically desirable. I was shocked to become aware of this. After I wrote this, I thought you would notice the pun, so pardon the pun. I could not help wondering how much this wording, this focus on electrical efficiency and so on, might have restricted Ontario Hydro in its efforts to conserve energy.
Shock might not be an appropriate reaction to reading this information, as Hydro is in the business of providing power at cost, and that power is indeed electrical. The trouble is that somewhere along the line Ontario Hydro became very wrapped up in promoting the use of electric home heating. They have been very successful at this. This has forced consumption up and created an unnecessary or perhaps unreal demand for their product.
It was really easy, as you know, for electric heat to catch on. Builders like it because baseboard heating is extremely easy to install. It does not require duct work. People like it because at that point of use the consumer really has no evidence of the dirty business generating electricity can be. Meanwhile, former Hydro president Robert Franklin once said that if a builder installs 15 kilowatts of electric heat in a house, Hydro has to spend $50,000 to build the capacity to keep that house warm. There are hidden costs the builders and the consumers do not see. The changes proposed by Bill 118 for this section really open up new options and possibilities by taking out reference to electrical energy and inserting reference to energy and energy systems.
When I moved to Millbrook I bought a really nice old home about 100 years old. I guess you might think it probably leaks like a sieve, but it has good installation. We checked and it has good wiring, plumbing and so on. Two years before I moved in, it had been retrofitted with a brand new electric furnace, which gave me some concern because I knew what the electrical rates were like. We moved in in March and the heating bills were something that we could not have imagined and that bowled us over. We had to do something quick. I had checked into it earlier. I knew there was natural gas on the street and in the town. We called the gas company and the gas company said, "You get some of your neighbours together and we'll come out there and do a mass conversion." Me and my neighbour were enough. They came out and did both of us at once.
My neighbour's house is very similar to mine, about 100 years old. They had the same new furnace. There must have been some people rolling through town putting new electric furnaces in at the time. They were on equal billing and paying $240 a month for electricity. I was really glad to find out that when we switched to natural gas -- we bought a high-efficiency furnace and we pay $55 a month now equal billing for heating and hot water. Of course, you have to take into account the electricity we would use for lighting and so on, but even with the purchase of the furnace, which was $89 a month over five years at 19%, which works out to about $5,000, I am still way ahead every month.
One has to wonder why these houses were ever converted to electric heat over the option of natural gas, which was readily available throughout the town. The duct work was easy to install and, as I said, the whole town is serviced with natural gas.
I have read in researching for this that even where natural gas is available, quite a few homes are converted to electricity. There is just no good cause for that and it should be -- what is the word? -- restricted. It should be discouraged. It should not be allowed when there is natural gas in town to go electric.
Electric, as you know, involves a lot of environmental side effects. There is acid rain from the coal that provides the peak energy required for winter months and summer air-conditioning. I think a lot of people like myself found out that if you go electric you also go broke. So we have switched to natural gas.
As I walked in the door I have some new information here that pertains directly to my town. The Municipal Electric Association has suggested that fuel switching will result in increased rates because the municipal utilities would lose electrical load and they have fixed costs. As you know, I live in Millbrook and would like to give you some background on the Millbrook Hydro Commission, as they call it there.
Earlier this afternoon you received a paper from Mr David Argue of Passmore Associates on behalf of the Coalition of Environmental Groups. I refer you to the addendum to that paper, if you have it with you. On page 2 you will see a table entitled "The Impact of Declining Electricity Use on Municipal Rates." Millbrook is about halfway down the page. The table notes that in 1989, which are the most recent figures, only 13.9% of our rates in Millbrook were local distribution costs. These amounted to $88,537, as opposed to the amount of power purchased from Ontario Hydro, which was $546,874.
In other words, the fixed costs of Millbrook Hydro Commission are a relatively small part of the overall costs. For that reason, the impact of fuel switching on Millbrook's electricity rates would be minimal. By the calculations in the Passmore study, electricity sales in Millbrook would have to decline by 42.2% to result in a rate increase equal to Ontario Hydro's 1992 rate increase of 11.8%.
I am sure my neighbours and other members of the Millbrook-Cavan Environmental Watch would agree that there is a real need for fuel switching in our area. Get us off electric; it is not an appropriate use of that power option. I think I will close at that and if you have any questions I would be happy to try to answer them.
The Chair: Thank you, sir. Mr Huget, two minutes.
Mr Huget: Thank you very much for your presentation and for taking the time and going through whatever it was you had to go through today to get here. I really appreciate that.
Mr Brackett: Thanks. It was a trip.
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Mr Huget: You mentioned I think very briefly the accountability factor, in terms of Ontario Hydro and policies like energy efficiency and conservation. I have heard from some presenters that Bill 118 does not go nearly far enough in terms of trying to address the accountability factor. Do you think it goes far enough?
Mr Brackett: I am really not sure of that. I am glad that the deputy minister will be on the board, even as a non-voting member. It might be interesting if I had more information on who those other additional members might be. Up until that point, I cannot really say.
Mr Huget: On the fuel-switching issue, there has been some reference to an approximate extra cost of about $4 billion that is being incurred in terms of heating. In other words, the cost would have been $4 billion less to the consumer had natural gas and oil heat been used. Why do you think that there is so much opposition to fuel switching, particularly when there is obviously a $4-billion benefit to the consumer? That opposition comes from primarily municipal electrical authorities who tell us that they represent the consumer.
Mr Brackett: I am not sure that they do represent the consumer. If the consumer had a chance, he would switch to -- I am now living in a rural community where I am really lucky to have natural gas. A lot of my neighbours outside of the village, out on the concessions and so on, have no option except electric lines that come in, or a lot of them work with oil, and there is a lot of wood heating out there. But I really do not think that the Municipal Electric Association does speak for the consumers, and I think it is perfectly natural for them to be wary of these changes.
Mr Cleary: Thank you for our presentation. I am sorry I missed the first part of it, but I take from what I heard of it that you are a very happy gas customer.
Mr Brackett: That is right.
Mr Cleary: In the area I represent -- and there are many areas like this -- we do not have the same luxury of having gas. What would you tell these people? How would we satisfy them: by paying for conversion to gas? Yet they do not have it. What do we tell those people?
Mr Brackett: Where it becomes possibly too expensive to pipe in the gas, there are other options, such as heating oil, and I guess that involves deliveries and so on, but there are also improved conservation-efficiency measures that could be encoded into the building code to make houses make use of available passive solar heating and so on. I understand passive solar heating, if used properly, can provide approximately 75% of our heating needs.
Mr Cleary: Should this program pay for that, too, as well as conversion to natural gas?
Mr Brackett: Should the fuel-switching program pay for that?
Mr Cleary: Yes.
Mr Brackett: Should it pay for the switch?
Mr Cleary: To wood, or whatever it might be.
Mr Brackett: I paid for my own switch because it made real economic sense. I am saving about $100 a month -- even buying my own new furnace. The old one is still in the basement, if you want to come and pick it up.
Mr Jordan: I thank you for your presentation, and I thank you for your interest in Bill 118. Obviously, you have at least read the bill and attempted to understand it, like the rest of us.
Mr Brackett: I have read the portions that are being adjusted.
Mr Jordan: Exactly. I think certainly one strong thrust of this bill, even at this date, has been to smother the nuclear industry. Would you agree with me?
Mr Brackett: It might be said that because peak load, which occurs in the winter with the extra heating that is needed, is looked after for Hydro by coal and so on that it is an attempt to smother the coal industry, rather than the nuclear industry.
Mr Jordan: You do not see any need to be concerned about the nuclear industry?
Mr Brackett: I am concerned about the nuclear industry. I have a five- or six-year history of working with citizens' groups to oppose the nuclear industry, but that is not particularly why I am here.
The Chair: Mr Brackett, I want to thank you and the Millbrook-Cavan Environmental Watch. Your comments are interesting and obviously have provoked some thought on the part of committee members. I appreciate you making your way into Toronto this afternoon. As I have told others, transcripts, not just of today's proceedings but of the whole proceedings dealing with this bill, are available to you at no charge. Get hold of your MPP and he or she will be pleased to make sure you get a copy of them. Keep in touch. Thank you very much, sir.
Mr Brackett: Thank you very much. I appreciate the opportunity.
PICKERING HYDRO-ELECTRIC COMMISSION
The Chair: Pickering Hydro is here this afternoon. Let us know who you are. We have 20 minutes. If you could keep your initial comments under the 10-minute line, it would give us time for conversation and questions.
Mr Mason: Mr Chairman and members of the resources development committee, my name is Jim Mason. I am a long-time resident of the town of Pickering and am vice-chairman of the Pickering Hydro-Electric Commission. With me today is John Wiersma, our general manager.
Pickering Hydro is one of the 312 member utilities belonging to the Municipal Electric Association, commonly known as the MEA. The MEA member utilities distribute electric power to about 75% of Ontario's electric power consumers. The balance is distributed by Ontario Hydro directly.
Pickering Hydro itself services the town of Pickering, an area of about 225 square kilometres bordering the east side of Metropolitan Toronto. We purchase our electric power from Ontario Hydro at an annual cost of about $36 million, which represents about 86% of our operating expenses. We in turn supply electric power to 23,000 customers who rely on us for reliable power at reasonable rates.
Clearly, then, we also have a significant interest in Ontario Hydro's continuing ability to provide us with reliable electric power at reasonable rates. In fact, our customers demand that we hold Ontario Hydro accountable, especially in the face of double-digit increases.
At the outset let me clarify that I speak on behalf of the commission and its 23,000 customers and not on behalf of the MEA or in support of the MEA positions. I will limit my comments here essentially to four concerns: the composition of Ontario Hydro board, the accountability of Ontario Hydro, the matter of fuel substitution and the capitalization of conservation programs.
Bill 118 proposes the expansion of the board from 17 members to 22 members, including the deputy minister. Respectfully, the 17-member board is already too large for effective accountability and decision-making. We are concerned that the larger board becomes a rubber-stamping process for executive decisions.
Indeed, we need an empowered board consisting of knowledgeable people from the province's regions and communities of interest. This board must be empowered to give leadership at a crucial time in the development of the province's electric industry. The board must be competent in making tough business decisions, yet sensitive enough to be the conscience of all the people of this province.
There is already a vast resource of people meeting the requirements for a board member. These are the commissioners of Ontario's 212 municipal electric utilities. They are individuals with grass-roots sensitivity to the customer, the one who pays the bill. They are familiar with the industry and with making sound business decisions in their own utilities. The current practice of appointing only two commissioners to the Ontario Hydro board is an injustice to the talented individuals in the distribution arm of our business. We also believe the board should be free of politics and operate within a framework of sound, sensible business decisions.
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We recommend, then:
1.1 That the Ontario Hydro board of directors be reduced to a chair, vice-chair, president, deputy minister and 12 directors;
1.2 That the directors of the Ontario Hydro board be appointed as follows: six commissioners from commissions that are members of the Municipal Electric Association and six appointed at large;
1.3 That in the appointment of Ontario Hydro board members due consideration be given to representing Ontario's regions and communities of interest.
Ontario Hydro was founded under the leadership of Sir Adam Beck in response to a municipal lobby for a single organization to generate and transmit electrical power throughout the province.
Through the years Ontario Hydro has become the economic engine of this province. Ontario Hydro created numerous jobs through the development of indigenous energy resources and a home-grown high-tech industry. Ontario Hydro also developed a climate of low-cost power which attracted many industries to Ontario.
Today's expectations have not changed. We still require made-in-Ontario electricity and we still need to attract industries to create jobs. Ontario Hydro is now a giant among industries, a major employer with assets in the $35-billion range. Clearly a firm of this size has a major impact on the province's economy. It must continue to supply reasonably priced electric power and do so with the highest standards of reliability. Ontario Hydro must be a bottom-line business.
The mandate for Ontario Hydro is defined in the Power Corporation Act. Ontario Hydro must continue to operate within this mandate as a business supplying low-cost, reliable electric power. Power at cost is still a valid principle, even for today.
We respectfully submit that the policy directives from the government open the door for Ontario Hydro's mandate to become blurred and unfocused, adding to the cost of electricity. It is better to leave Ontario Hydro at arm's length and retain the current provisions in the act which provide for government policy statements. Ontario Hydro must not be subject to the political winds of time.
This is not to say that Ontario Hydro does not need more accountability. The effectiveness of the Ontario Energy Board, for instance, is not very clear to us. Ontario Hydro makes rate proposals to the board and the board goes through an extensive process of hearings at tremendous costs, yet in the final analysis, unlike the gas companies, Ontario Hydro is not bound by the Ontario Energy Board decisions. This is quite unlike the American system, where the state public utility commissions have the power to make binding decisions on both private and public utilities.
On this point we recommend:
2.1 That the Power Corporation Act remain as is with respect to policy statements and that the proposal for provincial policy directives be abandoned;
2.2 That the Ontario Energy Board Act be reviewed with regard to the accountability of Ontario Hydro and that greater regulatory powers for the energy board be considered.
The amendments to the act, as proposed, give Ontario Hydro the power to provide non-refundable cash incentives for the conversion to other energy forms. Who pays for these incentives? All electricity consumers both now and in the future, including our children? These costs will be capitalized and the funds will have to be borrowed.
If I were a shareholder in Consumers Gas or Union Gas I would be buying shares right now, because this is an opportunity to expand market share with promotion costs and grants coming out of the electric customer's purse. At a time when Ontario Hydro is already experiencing crucial problems with its debt management, this approach is highly questionable. These programs are a form of subsidy from those who cannot participate to those who can and from future customers to today's customers.
Let me quickly summarize the unfair subsidies our customers are already paying through their electric bills.
They subsidize the provincial consolidated review fund through an artificial charge imposed on Ontario Hydro to guarantee Ontario Hydro's debt and through a charge for water that runs through the electric plants.
They subsidize the rural customers through subsidizing the operation of Ontario Hydro's rural power system.
They subsidize the government through payment of the goods and services tax.
Now it appears our customers can also subsidize select customers who take advantage of the fuel substitution as well as subsidize the private gas and oil companies to increase their market share.
Is it any wonder that our electric power rates are as high as they are? We are facing further double-digit increases for 1993 and 1994. However, how much can our customers really bear? Ontario, which had low electric power rates and a reliable power supply, is now seen by commerce and industry as an expensive place to do business and an environment where reliability of future supply is far from certain.
Energy management and fuel substitution incentives and costs will be embedded in our rates and capitalized, so the effects will be felt for years.
The true injustices of fuel substitution only become apparent when you take a good look at the benefactors. Benefactors are generally people with electrically heated homes who typically have an electric furnace with a ducted air-handling system which is easily convertible to oil or gas. These are typically found in large homes, and the people who usually consider conversions are those who have surplus cash to invest. Low-income families and the jobless, who are cash-poor, will not participate in most programs.
Low-income families tend to be higher electricity users, because they live in rental town houses and apartments which are usually electrically heated with baseboard heaters. The baseboard heating is sold on a basis of lower first cost and to maximize floor space. Conversions to gas or oil in such accommodation is virtually cost-prohibitive. Extensive interior renovations are required to install the ducts and chimneys and at a considerable loss of space. With rent controls, landlords are not likely to participate, nor are the tenants interested in the loss of space.
In the commercial and industrial sector, marginal establishments are not going to invest in fuel substitution programs. These firms have far more significant priorities to stay afloat. They will, however, pay for such subsidies to others through the electric rates.
The benefit of these programs appear to be targeted towards the well-to-do and the cost weighs heaviest on the economically disadvantaged.
I believe we must look to the whole issue in a lot wider context. The whole basis for energy management and fuel substitution stems from Ontario Hydro's original demand-supply plan, which examined both supply and demand and management options for Ontario's future power requirements. The original plan is now clearly out of date.
When the plan was released we were at the end of an economic boom period. This was before the current recession, before the cross-border shopping and before free trade. The plan put a cost on new power supply based on high interest rates and high inflation. The need was based on continuation of the booming economy of the late 1980s.
But let me simply ask, what costs are we avoiding today? Our load is not growing; in fact, it is shrinking. Major power-consuming industries are restructuring and these loads will not come back. Why then are we giving away subsidies for energy-efficiency improvements? Why are they as large as they are? They must be reviewed.
It is our clear understanding that the higher electric rates already lead to higher energy efficiency in new design and in retrofits. Our customers are shifting from electric water and space heating to gas without incentives.
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In conclusion, the energy management and fuel substitution incentives should be reviewed in the context of the new demand-supply plan, recognizing current economic realities. We therefore recommend that the amendment to Bill 118 for the addition of paragraph 3 to subsection 56a(3) providing for fuel substitution be deleted, that is, the paragraph which includes, "The conversion of a space heating system to a system that results in the greatest energy conservation in the circumstances" as part of Ontario Hydro's business, and that the government requests Ontario Hydro to place a moratorium on the expansion of energy management incentive programs until their economic justification can be clearly determined in the context of the updated demand-supply plan.
Section 95a is a proposed amendment which allows utilities to expense the capital energy conservation programs. We are opposed to this amendment for various reasons. We are primarily concerned with the amendment because it is very loosely written. Our rates and our capital budgets are quite closely regulated by Ontario Hydro, but this seems to imply no regulation. Let me ask, could this be misused by municipalities to attract industries through energy conservation grants? Could it be misused to finance public relations programs of questionable value? No doubt such capital expenditures require Ontario Municipal Board approval if the funds were to be borrowed. This places a burden on future commissions and ratepayers.
Our submission simply is this: Do not capitalize programs other than the hard assets such as the facilities, the equipment and the plant. We recommend that section 95a pertaining to the capitalization of energy conservation programs by municipal utilities be deleted.
In conclusion, Mr Chairman and members of the committee, I appreciate the time you have given both John Wiersma and myself, and we are available if you wish to ask any questions.
The Chair: Gentlemen, thank you. Mr Cleary, one question.
Mr Cleary: I know the Chairman is keeping a pretty close eye on us here. I think you gentlemen have made a lot of good points and we appreciate your taking time out of your busy schedule to come in and do so, and I will leave someone else a little more time.
The Chair: I should point out, and I am not intruding on anybody's time, that we appreciate the summarization of the recommendations that is at the back of the submission.
Mr Jordan: I too would like to thank you both for your well-researched presentation. As the chairman has noted, taking into consideration the summary of recommendations, do you really see a need for Bill 118?
Mr Wiersma: If I could answer that, I think the accountability mechanism for Ontario Hydro probably needs some review. We made reference to the Ontario Energy Board, what role it really plays. To date it has not played a regulatory role, and we question whether that is an appropriate role. Do we see a need for Bill 118? Clearly, we do not see a need for a lot of it.
Mr Jordan: Under your conservation programs, this is a $7-million program.
The Chair: Describe what you are talking about, because the transcript will not show the picture, unless you want to file that as an exhibit.
Mr Jordan: The $7-million program by the present government to give away two lightbulbs. It says on the package, "Compliments of Ontario Hydro and your local utility." Were you consulted on this program?
Mr Mason: Not really.
Mr Wiersma: We were not consulted on the program and as a matter of fact, it was not accepted by our commission. It was deemed to be wasteful and we questioned the mechanism for delivery.
Mr Huget: Thank you both for your presentation. Just for the record, you will notice that Mr Jordan's exhibit is still in the bag. There are questionable results from energy efficiency initiatives that are still in the bag in which they were mailed out, so perhaps we can have some more education from Mr Jordan as well.
Mr Jordan: You will find that across the province.
Mr Huget: We were talking about the accountability of Ontario Hydro and you mentioned there is some need for some enhanced accountability. I wonder what your view would be on that accountability coming from the government of the day and elected officials and elected members of Parliament, ensuring that accountability to the people of Ontario, whether you see that as something that is beneficial or what.
Mr Wiersma: Our concern is that this mechanism may lead to extra costs, other than the costs of simply supplying power. That would be our primary concern, that this would increase the cost of power if policy directives pertain to other types of programs that are not confined to the Power Corporation Act.
The Chair: This committee thanks you for taking the time to be here this afternoon. It is important that you and others like you across the province have been interested enough to get involved and to make your views known. We appreciate it, we thank you, and have a safe trip back home.
CANADIAN ENVIRONMENTAL LAW ASSOCIATION
The Chair: We are now going to speak with the Canadian Environmental Law Association. Please come on up, have a seat, tell us who you are or what you do for the Canadian Environmental Law Association. We have 20 minutes. Please try not to spend any more than the first 10 on your submission, because we have your written material. Obviously the productive part of this is the exchange that takes place between committee members and presenters.
Mr Makuch: All right, let me begin by introducing myself and my partner. My name is Zen Makuch. I am a lawyer with the Canadian Environmental Law Association. My partner is a researcher with our association. His name is Craig Boljkovac. What we do as an association falls into two streams. We represent public interest groups when it comes to administrative tribunals and court cases in environmental matters. Aside from that, we have a long history of speaking to various levels of government on policy matters. We have something of a history when it comes to energy as well, although you will notice from the youth of the people who are speaking to you that we do not go back 20 years in terms of our expertise in these matters.
I would like to thank all of you for the opportunity to address the committee. We understand the importance of the work. That is why we are here today. We do not want to lose you with respect to all the tiny technical details of our submission. We have 15 pages for your review. There are essentially two aspects to what we will speaking to you about today. They include the public accountability aspect of Bill 118 and the fuel-switching aspect. I will start with the public accountability aspect and I will pass on to my partner. He will talk about fuel switching.
We want to get a few very direct messages out to the committee. The first one reflects our concern as a public interest organization with the necessity of getting some kind of control over this massive corporate monster that we call Ontario Hydro. Our sense of it is that when the mandate of Ontario Hydro first developed, utility experts were really the focal point of the electrical system planning aspect of what we do here. My sense of it now is that over the past 20 years, beginning in 1971 or so, various royal commissions and other committees have gradually come to know that the citizens of Ontario are increasingly concerned with the ongoing activities of Hydro. I conceive of Bill 118 as the logical progression along that road.
Very recently it has been made clear to me that all three political parties are very interested in understanding how public accountability fits into Hydro's agenda and I think Bill 118 is consistent with an analysis of how that might take place. It seems to me that accountability is the largest problem we are facing here, aside from the fuel-switching matter which my friend will speak of, and my sense of it is that it is not only accountability to citizens of Ontario but, through the Legislature, it is through regulatory institutions and, of course, to the customers of Ontario Hydro.
Why is it needed? It seems to me that economic decision-making, as it has taken place through this institution over the past 20 years, has resulted in some problems, including a $30-billion deficit. Can you conceive of any private corporation that can manage that kind of debt financing?
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The second concern that is most eminent when it comes to us as an environmental law association is that environmental decision-making tends not to have happened. There seems to be a kind of policy vacuum around environmental decision-making, and what that has perpetuated is a number of problems coming from nuclear, coal and hydraulic generation. Then, as I have said before, there is a clear desire by the citizens of Ontario to become more involved in this process as the politics of power generation become more and more apparent in the public arena.
In terms of what Bill 118 accomplishes, I think there are a number of mechanisms that seek to go down the road of public accountability, the most prevalent of which comes with respect to section 9a dealing with policy directives. The language is much stronger than it was previously. We are talking about policy directives now instead of policy statements. We are also talking about prompt and efficient implementation of those directives. Beyond that, I think one way of accomplishing some further transparency or an effective, accountable role would be to make such policy directives in the future a matter of public record.
To move on, as far as expanding the board of directors is concerned, the recent slate of appointments would seem to represent in a much better fashion the public interest, and an additional four appointments could only achieve that in some further measure. That is consistent with the Liberal policy from the previous administration. The establishment of a position for the deputy minister and that kind of appointment also provide a useful liaison and watchdog function. I agree with former minister Jenny Carter's remarks in that regard.
As far as the chairmanship of Hydro is concerned, it seems that by making the chair the CEO and knowing that the chair is a government appointee there is something more to be gained through the accountability function in that regard.
As far as what we might be able to do to enhance regulatory power beyond the Power Corporation Act is concerned, if you could permit a small digression, it seems to me that OEB reform is a necessary part of that. We have outlined what we would like to see changing with the OEB's mandate over Hydro in chapter 8 of the Ontario Global Warming Coalition report entitled Degrees of Change. I would be willing to make that available to any members who are concerned about that issue.
Finally, we would like to see a Power Corporation Act amendment at some time in the future, which we do not have slated now, that creates something of a new conservation strategy for Hydro. That mandate is very important, given developments in the United States and across other provinces.
That is the substance of my remarks. There is a very clear message here: As a public interest organization, we encourage the enhancement of some accountability function for Hydro. I will pass the speaker's chair on to my partner, Mr Craig Boljkovac, who will talk about fuel switching.
Mr Boljkovac: Zen mentioned a few minutes ago that CELA was a member of the Ontario Global Warming Coalition, which is a coalition of 10 different environmental groups with highly varied interests across the province that released a report entitled Degrees of Change in June of this past year.
Degrees of Change came about in response to a need to address the problem of global warming. The intergovernmental panel on climate change, which is a United Nations and world meteorological organization body that brings together approximately 200 to 300 of the most eminent scientists in the world that do research concerning climate change, have recommended that a 60% reduction in greenhouse gas emissions for the long-term greenhouse gases such as carbon dioxide is essential to get back to 1990 levels in order to combat climate change. It is one of the most incredible challenges that we face environmentally today.
Fuel switching does not go a heck of a long way towards addressing that, but in a perfect world, if all the electrically heated homes in Ontario switch 50% to natural gas due to availability, and oil for the other 50%, we will get a figure of a 3.3% reduction in carbon dioxide emissions. Once again, that may not seem like a lot, but in combination with thermal envelope improvements, other energy conservation programs and other endeavours, such as cogeneration, it would go a long way towards reaching at least the 20% interim Toronto target we have cited in degrees of change, which was seen as a necessary interim short-term step in combating global warming itself.
For the capital expenditures for fuel switching in Ontario, we have also used some statistics from some of the other groups that are now appearing before the demand-supply plan hearings and we have broken it down within the brief to approximately, for a multistorey home, which is one of the most expensive types of home to get duct work into, under a $10,000 capital expenditure for fuel switching. Mr Franklin, the former chair of Ontario Hydro, mentioned in a speech, I think about a year and a half ago, that it cost something like $50,000 in capital expenditures to provide the approximately 15,000 kilowatts the average house needs to be electrically heated. That is totally unacceptable.
The environmental consequences of massive hydroelectric projects, such as the Conawapa dam -- Conawapa is something Ontario Hydro is planning on buying electricity from -- or something like Hydro-Québec, from thermal plants that use coal, which are only about 30% efficient, and from other sources definitely have effects on the environment. There are also transmission losses from source to point of use as well. So we feel that fuel switching, while it is switching to yet another type of fossil fuel and is not a great long-term solution, at least is a good interim step in eventually getting us on the road to having renewable energy sources for home heating and for all energy use in Ontario. That is about it. Thank you.
Mr Makuch: Now of course we are available for any questions you might have, although I would like to reserve the right to provide written remarks since we do not have that much time to deal with the questions.
The Chair: Quite right. I am sure there are questions.
Mr Arnott: Thank you for your presentation. I am not sure if you were here for the presentation of the Canadian Bar Association -- Ontario earlier this afternoon.
Mr Boljkovac: No.
Mr Arnott: In their submission they indicated that it was the view of the Canadian Bar Association -- Ontario that Bill 118 included a retroactive change which meant that the chairman of Hydro became CEO of Hydro effective the date of first reading. I believe the gentleman used the word "offensive" in that respect, that it was offensive to the Legislature if that sort of tactic was being employed. How does your organization feel about that?
Mr Makuch: I am not particularly concerned about the political struggles that have been taking place around the personnel involved and that appointment, to tell you the truth. My concern is that for the future we have those two separated and that the chairman should be the CEO for Hydro because of the accountability function that would be served thereby.
Mr Arnott: But no concern about the nature of the situation now?
Mr Makuch: I have not given a great deal of thought to that. It would seem to me there was a quite a bit of political wrangling about it at the time. In terms of outcomes with respect to that move, if you want to call it dirty politics, I have not seen any negative impacts in terms of decisions that have taken place since that took place.
Mr Arnott: Normally the legislative process would suggest that not until a bill has passed third reading, been given royal assent and been proclaimed do the provisions of that bill become law.
Mr Makuch: It would seem to me that this is a technical legal point. If there is any real damage done, then someone may want to pursue that through the courts.
Mr Boljkovac: I just have a quick statement. In my opinion, it is not that big a deal. I am just a little dismayed by the fact that the appointment of Mr Holt to the Ontario Hydro chairmanship was done in a way that set a precedent as well. I am not agreeing that two wrongs make a right, but the fact that a subcommittee of the board made a virtually unilateral decision to put someone else in to replace Mr Franklin without consulting the government to me is a greater problem with usurping the democratic process than decisions that are made by the democratically elected government of the province.
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Mr Jordan: Thank you very much for your presentation. I will direct this question to the research division. As you have stated, for instance a gas-fired steam generating plant is not very friendly to the environment, the CO2 emissions are not acceptable. Would you enlarge on that?
Mr Boljkovac: A gas-fired central plant?
Mr Jordan: Yes.
Mr Boljkovac: No. I was saying coal-fired plants have only about a 30% efficiency. Gas-fired furnaces in the house, at the point of use, have efficiencies of up to 93%. So while you are still burning the fossil fuel, you have taken away transmission losses from the source of the energy to the point of use and you have also increased efficiency tremendously as well in providing home heating.
Mr Jordan: You would prefer individual chimneys on each house or exhaust from each house from a gas furnace, rather than one large central gas --
Mr Boljkovac: One large central gas supply system?
Mr Jordan: Right.
Mr Boljkovac: As it stands right now, peak period demand is usually met by coal-fired plants.
Mr Jordan: You are missing my question. Relative to the environment, would you sooner have one large emission stack or would you sooner have stacks across the province from each household?
Mr Boljkovac: I do not think either is a great idea. We are not incredibly thrilled with the use of fossil fuel for any utility generation.
Mr Jordan: You would have to agree that is where we are headed should we need new generation in a short period of time.
Mr Boljkovac: I will have to study that and get back to you.
Mr Waters: There has been much discussion during these hearings about who should pay for the cost of switching. I am going to pose it maybe in a different way than other members have posed the question. Do you see that it is any different that we are asking Hydro to come up with a plan to assist people to switch? Do you see that as being any different from Hydro building power plants we do not need because of inefficiencies within its system or not promoting conservation or paying people to go off the other forms of fuel to go on to hydro, which is inefficient, which really did not save them any money to start with? We are now saying to Hydro: "We want some conservation. We want to have a look at this and we want to have people use a more efficient heat." Do you see any difference in subsidizing people going one way or the other?
Mr Boljkovac: Going one way? You mean off electricity instead of on?
Mr Waters: Yes, than when we subsidized them to go on to it and it was not efficient at all.
Mr Boljkovac: The efficiency speaks for itself.
Mr Waters: What I am saying is that we see that as a correction.
Boljkovac: To me, it defies logic that you would go on to electricity in the future. It is pretty well proven, given the type of electricity that is generated in Ontario that goes towards space heating, that it would not be logical for Ontario Hydro to continue to encourage that. In fact, CELA takes the position that environmentally it is highly detrimental and we, as a public interest group, do not accept that. For Hydro to turn around and try to make amends for a mistake that was made 30 years ago and a policy that has continued to this day and is enshrined in the present act, CELA does not believe that is a big problem.
I am not sure exactly what you are getting at here. It may be that another body might be more suitable in encouraging conservation, other than Hydro? Is that what you are suggesting?
Mr Waters: No. We have had some hydro commissions and so on come in and say that hydro customers should not pay for the people to switch, yet --
Mr Boljkovac: But what they are doing is avoiding a capital expenditure in the future for increased power plants. We are taking people off electricity. Thus demand for new capital expenditure for new plants to meet the growth that is expected once we get out of this recession, whenever that will happen, is sort of a banking on the future, that there will be extra supply there.
Mind you, the supply itself -- coal-fired generation that occurs at peak periods -- is not a desirable thing, but at least there is time to bring non-utility generation on line that is less detrimental to the environment. It buys us some time and it frees up some generating capacity so we can mothball the really nasty stuff that is really bad for the environment and try to bring on line power generation that is less detrimental.
Mr Waters: Hydro at the present time is just starting, and I do not know how wide it is, to look at replenishing some of the turbines in its hydroelectric plants throughout the province, these plants that have been sitting there since the early 1900s running on the original turbine. They are finally starting to look at putting in something somewhat more efficient. I was wondering if you feel Hydro should move towards that, checking on them all and bringing all those plants up to maximum efficiency, if you said would be a good way for Hydro to move.
Mr Boljkovac: To make a blanket statement without knowing what plants are out there, the size of each hydroelectric project and the effects of each project on the environment -- I do not think I am prepared to answer that. You see, to increase efficiency, we are still going to need electricity to some degree in the future, and to upgrade these plants would be a more acceptable capital expenditure than upgrading the turbines in a thermal plant.
Mr Waters: I am not saying, "Build new dams." What I am saying is taking strictly the turbine that is in there. You have the same headwater pond as you had before. All I am saying is that if you could increase the efficiency of any plant two to three times what it is now -- the production.
The Chair: Thank you, Mr Waters.
Mr Conway: Gentlemen of CELA, because I think my friend from Cornwall may have a question, I have just one area of interest in what is a very thought-provoking presentation. I am very struck by the opening pages of the brief, which concern themselves with accountability. I am bit puzzled, however, that you seem to find this as comforting as you do.
We are dealing with the bill as presented in first reading. There have been some amendments offered.
Let me play the devil's advocate for a moment. What would you say if I said, in response to your sense that this bill really provides quite a good level of accountability, that what we have here, as initially presented, is a bill that does the following: At an administrative level, it takes away the right of the cabinet to set the salary and terms of employment for the CEO and chairman. I do not want to make too much of that, but it seems to me that if I were advancing a brave new world in which accountability and openness were going to be the order of the day, I would not have moved back, as Bill 118 did in the first instance. To the government's credit, recognizing the difficulty with the contradiction contained in that, it of course has moved to reinstate the provision.
Second, we have a situation in this bill as originally introduced that the directive power, very sweeping in Bill 118, is not contained at all. Of course with the amendment the minister has offered, it will be contained to some extent. But nowhere in this bill, either as presented or amended, do I see, for example, a provision that would say that any directive power, such as the type that is now contemplated, with the cost to the Hydro ratepayers that will attach to that, must be laid before the people of the province.
When I take all these things together, I ask myself the question, where is this accountability, presumably to the Legislature, although I notice, and you make a very telling point on page 3, I think it is, that you imagine, and I think to some extent rightfully so, accountability not just to the Legislature but to regulatory agencies and to the public at large? Tell me why I should not be a little suspicious of your te deum of praise to accountability in this legislation, where there seem to be two or three things, right off the top, with the bill as presented in June 1991 that would make me very dubious about the accountability.
Mr Makuch: We did not get to the point with respect to who ought to be determining the salary of the chairman. In that regard, given the recent debacle and the ultimate decision of this government to set it out at $260,000, it would seem to me that you are right, we should probably leave it to the cabinet, not the board, to make decisions about salary.
As far as directive power goes, we know that the intention of the minister has been to deal with that matter only in so far as it applies to the present mandate of Hydro, so MEA's concerns about using this as a tax grab do not really matter to us.
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Mr Conway: But you are lawyers, gentlemen. You are lawyers, presumably.
Mr Makuch: He is not.
Mr Conway: Well, one of you, I presume, from the Canadian Environmental Law Association. Surely you know enough to realize that we are dealing with statute here, and what this minister might intend. Just six months ago we were being told that we were looking at two and three years of double-digit price increases, and now happily that policy has changed. Ministers can change and apparently ministers' ideas of the world can change.
We are dealing with legislation, a significant amendment to the Power Corporation Act, and I would have thought CELA would have wanted to tie these things down without any regard to a minister per se, but the policy that must stand the test of at least a government or two.
Mr Makuch: It would seem that there has to be some qualification of the nature of the policy directives that would take place. We are concerned even at present about the way some of those policy statements, one of which you supported, have created some significant problems in terms of costs for the citizens of this province. I would agree to the extent that perhaps that directive power should be fleshed out in more qualified language, especially since the Minister of Energy has already decided that he would make such qualifications. So an amendment in that regard would be necessary.
Mr Conway: Would you support an amendment that would say any directive that is issued should, within a very short period, be laid before the Legislature or the public generally so we could see what this new directive was? No provision for that is contained in Bill 118 as it is currently written.
Mr Makuch: When we asked for one mechanism, the mechanism we supported was one of making policy directives public. That is one way of dealing with that problem. I suppose the second way that the problem is dealt with, not so much from a public accountability aspect but certainly one which deals with the relationship between government and Hydro, comes by way of the consultation that is supposed to take place before implementation of the policy directive. We have seen that amendment. We are comfortable that is another way of achieving it, but I do not necessarily believe we can deal with policy directives by referendum.
It would seem to me that the process does have to be fleshed out, but we simply cannot afford, in terms of government efficiency and efficiency with respect to decision-making, to go in such a full-blown manner every time a policy directive takes place. There should be greater public involvement than was the case with respect to the now policy directive with respect to the AECL situation and the Elliot Lake situation. We are clearly not comfortable with that kind of secrecy, but we believe Bill 118 does head us down the road towards some further public accountability, so those situations can be brought out more effectively in the future.
Mr Cleary: Thank you, gentlemen, for your presentation. I just wonder what you think of a program that Hydro had initiated. My friend Mr Jordan here has been carrying around a pair of lightbulbs for a week or so now, a package like the one that has been delivered to every household in this province at considerable cost. I just would like to get your remarks on what you think of this particular program.
Mr Boljkovac: We at CELA think it was basically a waste of money. I am not sure of the exact figure. How much was spent?
Mr Jordan: It was $7 million.
Mr Boljkovac: To spend $7 million on a program to give people incandescent lightbulbs when compact fluorescents last longer and use far less electricity is not in the best interests of the people of Ontario. There are good conservation programs and there are bad ones. We believe it was not necessarily in Hydro's best interests to make that decision.
The Chair: One wonders who was consulted. It was obviously not CELA nor me.
In any event, Mr Makuch and Mr Boljkovac, thank you very much for your time here this afternoon. We appreciate your coming. As I have told others on behalf of the committee, we are impressed with the eagerness of so many people to participate in this process and the skill, talent and insight they provide to the committee. Once again, it supports the argument that those $1,000-a-day consultants are overrated. There are obviously a whole lot of smart, hardworking, interested people who are willing to help government. We should be looking to them more often. Thank you, gentlemen.
Mr Makuch: Thank you, Mr Kormos. We were happy to take part.
WILLIAM COPPS
The Chair: We have one more participant today, William Copps. Sir, please have a seat. We have 20 minutes. Please try to leave us some time for some dialogue.
Mr Copps: Yes. Ladies and gentlemen, the reason I am here today is that I am a victim of Ontario Hydro and the city of Toronto Hydro. I have been subjected to their whims for the past 25 years.
First of all, I will start at the beginning. In 1966, I bought a home in midtown Toronto. It was a 100-year-old home, just like the gentleman from Millbrook. I listened to the TV ads that said, Live Better Electrically. Everybody was going electric. I called Toronto Hydro and got the information and they said they would send a man around. This was before I moved into the house. It was still occupied by the previous owner and it was just this time of year, February. I remember his words saying, "It's a good time of year because it is cold and we will be able to do a heat-loss survey in your house."
He went and did the heat survey and he sent me a letter saying what it would cost approximately per year to heat the house. Granted, that was 25 years ago. He said I could heat the house for $700. Gentlemen, I must say it has never been anywhere near $700; $1,500 perhaps is more like it, and now it is into $2,000 a year.
I am caught in the middle here. I must apologize for coming without a presentation. I called Hydro. Perhaps that was my first mistake. I am getting off the track here. I called them and they were to get back to me as to when this committee was meeting here. I called here to the House a couple of times and to the committee office, and they said they were going to start up north last week. I saw where you were in Thunder Bay or somewhere up there, so I called them last Friday and asked when you were going to be here. We went through three or four different calls here in the building to find out where this committee was and what it is all about.
This is how I got here today. The girl came back on and said, "Would that be under An Act to Amend the Power Corporation Act?" My first thought was that the power corporation, the giant that we all know about, was in Montreal. I said, "Well, maybe it is." Then she said, "I think this is it," and that is how I got on to this. This was closing time on Friday, so I am apologizing for not bringing in a presentation. I do not think I could really put in writing what I have to say.
My first hassle with Ontario Hydro by way of Toronto was when I put in the wall units. My electrician put them in. The inspector from Ontario Hydro came and he went around and looked all around. He said, "Where is your service box?" I said, "It is downstairs," and he said, "How did you get down there?" I said, "I had to go down the ladder." You understand that I had gutted the whole house. He said, "Ontario Hydro doesn't pay me to go down ladders," and I said, "Well, come back when we get the stairs in." He said: "I'm not coming back. Toronto will have to do it."
We went through all that to get the installation on. I thought, here it is, here is that wonderful "living electrically." It is starting for me now. I guess at noon the first day I had her on everything was humming. It was great, but it just never got up to any particularly comfortable spot in the heating. I said, "Look, there's something wrong." My kids were children then and they were running around in their snowsuits. They couldn't get warm.
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I called Toronto Hydro. They sent over a guy and he gave me gobbledeflap saying, "You're on the wrong circuits, you're on this, you're on that." A whole bevy of them came over and said: "Something's happened here. This area is the grid. Between Spadina and the Don, between Bloor and the lakeshore it's in the grid." I said, "What does that mean?" They said: "All this is going to be high-rise. We're all going to be 208 volts, and you are 220 to 240. You are only getting two thirds of the heat that you should be getting." I said: "Whose fault is that? Your inspectors were here and looked at every one of these things," and they said, "We didn't know."
I cannot turn on the washer. It is still not on. It is still sitting in the basement gathering dust because I cannot put in a 208 line to where it is located. I burned out every switch in the stove. Attempts to get the heat up to where it was supposed to be burned out every switch.
The only consideration I got from Toronto Hydro was Mr Hyde, who at that time was the general manager. He came over on his own time one Saturday morning and he just shook his head and said, "My God, what is wrong here?" I told him: "Look at this. You try any one of these burners, the oven, the whole thing; they're all shot." These were brand-new stoves. By the way, when I went to get the stove at Eaton's, to get it changed, the people selling appliances at Eaton's had never heard tell of 208 volts. Guys who were selling appliances there for 25 or 30 years had never heard tell of 208. Anyway, Mr Hyde was the only one who gave me any concession. He sent over a converter with a man and converted the stove to 208 from the 220 or 240 I had.
I am not an engineer. I do not know anything about it. Mind you, I know a little more about it now that I did then. Several bevies of experts came over. Everybody had a different thing. They said, "Oh, your insulation is wrong." I said: "Well, you guys supervised it. You told me exactly what to put in here. You sent people over here to check and everything was fine." They said, "Well, it's terrible," so I said, "Get it out." I told them, "Look, if this is Live Better Electrically, I'm going to take this stuff out of here if I have to take it out myself."
In the meantime, I got the bill. I could not afford to get out. I think the first bill I got from them was $2,100, because that thing was spinning around all the time. I got the Ontario Hydro guys and they just said: "Take it up with Toronto again. That's theirs. That's it."
I tried to locate some of those people who I dealt with in the first place. Most of them have gone to their rewards or perhaps the alternative route I offered them a few times when they came by, but they all said the same thing, "Well, you should have got us here," but I did get them there.
As a matter of fact, I went up the street and I saw that a guy right at Charles Street was installing electric heat and he had a sign up. I went up to the fellow and I said, "What size are your burners? What size are your heaters?" He said, "They're 220." I said: "Yes? Check them again." He said, "They're 208." I said, "If you want 220s, I got some." He checked it out and he was told he needed 220, not 208. That was just something else entirely. Yet again I was told by Hydro from Bloor Street to The Bay it was all 208. This is planning, eh? This is when we were going to be all high-rises.
One of the Hydro people had the colossal gall to tell me to go to the Toronto school board because they had lots of used stoves, that they would sell me one that is 208 and that I could get a refund from Eaton's. How about that?
One of their men came over and he said, "I don't think there's much you can do about it." I said: "There isn't, eh? We'll see about that." I think I was one of the first cases in front of the Ontario Ombudsman. My submission was turned down: "That's city. Go to the city. We're too busy with other things."
I am still bugging Hydro. The last time I had anything with them, I sent them a letter saying I wanted my case reviewed. I got a nice letter back saying they did not know what I was talking about. They said the only record they could find for me is that I have always been at the top of the list of accounts receivable -- unpaid. The gentleman talked about the poor people here living in high-rises. There are some people who really are not what you would call below the poverty line, like myself, because we are supporting Hydro on this deal. I am, anyway.
I am sure if your committee -- again I will be a little critical -- had advertised this a little better, you would have plenty of people here in front of this committee saying how they have been used and abused by Ontario Hydro.
The Chair: I should tell you before we open for questioning that yes, Mr Copps, we have had an incredible response to these committee hearings.
Mr Copps: In Toronto?
The Chair: In Toronto and across Ontario. You are not alone in your concern.
Mr Jordan: Thank you for expressing your dissatisfaction with service, Mr Copps. I understand this installation would be done by an electrical contractor.
Mr Copps: That is right.
Mr Jordan: I do not want to be protecting anybody here, but my observation of what you have explained this afternoon is that rather than a real problem with the utility, the contractor must have given you an installation price to do that job.
Mr Copps: Yes, he did.
Mr Jordan: Then I would suggest to you that he had a responsibility, surely, to establish the type of equipment needed to function on the service that was available to your home, and 208 voltage is a quite common voltage off a three-face circuit.
Mr Copps: You are talking above my head again. I am not an electrician. I do not know. All I know is that the gentleman who was installing it knew nothing about 208 in downtown Toronto.
Mr Jordan: Yes, so you had a combination of power.
Mr Copps: I had a combination of power. I called Hydro in. They got Ontario Hydro. The guy would not go down the stairs; he would not go down the ladder. He said, "Hydro doesn't pay me to go down the ladder."
Mr Jordan: I think, in fairness to the utility, we cannot judge the whole utility by one individual.
Mr Copps: The reason I said that is that right now I have a town house. As I said, it is 100 years old. I only use the first floor where there is the kitchen and the family room. Upstairs has been off for three years because I cannot afford to heat it. There is something wrong. If that is the case, I do not know why Hydro has to raise the rates, because it sure is taking in a lot of money if they are all like me, believe me.
Mr Waters: I am going to ask a question similar to what I asked the last people. You said that what got you hooked on this was Live Better Electrically.
Mr Copps: That is right.
Mr Waters: From the local municipality's Hydro you moved on into Hydro and you took it at its word.
Mr Copps: Yes.
Mr Waters: It has cost you a lot more than what you ever expected it to be.
Mr Copps: That is right.
Mr Waters: You found it to be inefficient and unsatisfactory. Do you feel now that same Hydro that convinced you that you should go to its service should pay for you to go off or assist you to go off and go to something that is more efficient and that will heat your home?
Mr Copps: I think so. I think I have already paid the down payment on it more than once.
Mr Conway: Mr Copps, you sounded like you were back in your old reportorial days, ready to slay the dragon.
Mr Copps: You complimented the good CBC pension. The CBC pension is going to Hydro.
Mr Conway: I would have thought your experience at the mother of all corporations would have given you a particular ability to take on Hydro.
Mr Copps: I must say that I have not given up yet.
Mr Conway: One of the questions we have struggled with in this debate and will continue to struggle with for some time, because it has faced all legislatures and all governments since the creation of the Hydro-Electric Power Commission of Ontario some 90 years ago, is the accountability. I was struck by the previous witnesses because they find great comfort in this bill in so far as accountability is concerned. I am not as comforted, simply because I cannot find the evidence. I think they are more disposed to take a leap of faith than I am, and that is probably not a great surprise.
On the basis of your very happy experience, richly detailed a moment ago, what would you say or see as a better kind of accountability mechanism to deal with unsatisfied customers such as yourself in the case before us?
Mr Copps: I think first of all you would have to get it down in common sense, common language. As an example, a few years back I was running a hydro water tank and it started to leak so I called them and they said, "Well, we'll change it." Fine. So they brought the tank over, put it down and we are hooking it up. I said to the fellow, "Did you know this is a 208 house?" He said, "208? No." I said, "Yes, it is." The other tank was already out on the street ready for the garbage. He went out and took the plate off it, brought it back in and he said to the other guy, "Look, he's right, it is 208." So I had to wait two days for them to bring another tank.
Now, either their staff is not informed of what is going on or -- when I asked for a converter for my dryer they said, "We don't have converters any more." I still have one under my stove, from 240 or 220 to 208. It says right on the plate of the heaters you get: "Under 208, you get 500 watts, 5000 or whatever it might be. Under 220 to 240, you get three quarters of that." In other words, if it is a 1000-watt heater you get 750. If you are using a --
Mr Jordan: If you put 208 on a 240-watt heater.
Mr Copps: Yes, that is right. That is why the house is only getting three quarters of its heat. We heard a few people here say in their remarks, young people -- I do not know whether you remember, but Hydro went through the whole province some years ago and changed 25 watts to 60 watts right here. You could not go live in the Annex. You could not move downtown because it was 25 watts downtown and 60 watts out here. Remember when they went right through the whole province?
Mr Klopp: Cycles, you mean?
Mr Copps: Cycles, yes.
Mr Klopp: Okay, I thought you said watts.
Mr Copps: They went across the province and did the whole thing.
The Chair: Mr Copps, the transcripts of these proceedings are well read. The Office of the Premier reads them, no doubt, at the very least to see whether I have said anything out of order, and I have no doubt that Hydro is reading them carefully. I trust they will take heed of what you have said. I appreciate your coming; all of us do. Your insights as a home owner and a consumer are valuable. You have been most forceful in your presentation and we appreciate the chance --
Mr Copps: I think that is what happened to Hydro: They have forgotten about the consumer.
The Chair: Thank you, sir. Good luck with the issue. We are adjourned now until 10 o'clock tomorrow morning and I hope all of us would make every effort to be here on time because persons wishing to participate are inevitably here and it is unpleasant to have them wait.
The committee adjourned at 1713.