CONTENTS
Monday 11 February 1991
Estimates, Ministry of Energy
Adjournment
STANDING COMMITTEE ON ESTIMATES
Chair: Jackson, Cameron (Burlington South PC)
Vice-Chair: Marland, Margaret (Mississauga South PC)
Carr, Gary (Oakville South PC)
Daigeler, Hans (Nepean L)
Hansen, Ron (Lincoln NDP)
Haslam, Karen (Perth NDP)
Lessard, Wayne (Windsor-Walkerville NDP)
McGuinty, Dalton (Ottawa South L)
McLeod, Lyn (Fort William L)
Perruzza, Anthony (Downsview NDP)
Ward, Margery (Don Mills NDP)
Wilson, Gary (Kingston and The Islands NDP)
Substitutions:
Charlton, Brian A. (Hamilton Mountain NDP) for Mr Lessard
Jamison, Norm (Norfolk NDP) for Ms M. Ward
Jordan, Leo (Lanark-Renfrew PC) for Mr Carr
Clerk: Carrozza, Franco
Staff: Campbell, Elaine, Research Officer, Legislative Research Service
The committee met at 1302 in room 228.
ESTIMATES, MINISTRY OF ENERGY
The Chair: This is the standing committee on estimates for the 1990-91 estimates and today we will begin with the Ministry of Energy. I am pleased to welcome the Minister of Energy (Mrs Carter). Before we proceed I will briefly indicate that I see a quorum before me. I also would like to say that since we are time-sensitive -- we have a total of only seven hours to do the Ministry of Energy -- we will proceed now, and the clock is running and we will finish today at 6.
I have a personal matter that I should set out for the record. In my capacity as Chairman I hold a position of neutrality, but two of the six estimates are in areas of responsibility that I have as a critic. It is my intention to remove myself from the Chair and sit in the chair of the critic for my party, and so I would like to do that without any explanation. Unless there are any questions, that is how I propose to proceed in case there are any questions about how the Chair acts. At that point the Vice-Chair, if she is present, will be asked to Chair those two estimates -- the Ministry of Community and Social Services and the Office Responsible for Senior Citizens Affairs.
Mr McGuinty: Mr Chair, tell me generally, what are we going to do in terms of procedure here today? The Minister will address us initially. Is there a time limit? Those kinds of things.
The Chair: The precedents and the standing orders combine to suggest that the minister would speak first for a half-hour, followed by the official opposition critic or designate for approximately half an hour and then the third party will follow with its approximately half an hour, and they may use it any way they wish. Then the half-hour following, the minister would respond to questions raised, or it is generally referred to as summary comments. The minister would respond in whatever fashion she saw fit. Then we will proceed approximately after the second full hour to follow the vote structure as set out in the estimates book. There being no further questions I would ask the minister --
Ms Haslam: I missed it. Would you go through it once more, please?
The Chair: The minister takes one half-hour. The official opposition takes one half-hour. The third party takes a half-hour. Then the government responds through the minister for the final half-hour segment. That is the tradition and the standing orders set out that suggested format.
Then I will proceed. Again as I say, we are time-sensitive. Welcome, Minister. Thank you for being here, and thank you to your staff. Would you please introduce for purposes of Hansard those members of your ministry who have accompanied you today and then the floor is yours.
Hon Mrs Carter: Good afternoon. I am pleased to have this opportunity to comment on the Ministry of Energy's estimates. Marc Eliesen, my deputy minister, and Sean Meagher, my legislative assistant, are assisting me, as you see. We have a lot of ministry representatives here but we will introduce those later.
As you know, energy is a tremendously complex subject. It would be difficult to overestimate its importance to the social, economic and environmental fabric of Ontario. There is a lot to talk about, but since we have limited time available I have chosen to confine my remarks to two main areas.
First, I want to outline the government's new energy directions and discuss the rationale that underlies them. In this context I will also be making some comments about the security of Ontario's energy supply and about some of the benefits we expect to see from the energy path we have chosen for Ontario.
The second area I want to discuss is the strong emphasis the government has placed on energy efficiency and conservation. This policy is central to the government's new energy directions and I want to describe for the committee some of the social, economic and environmental benefits this policy will have for the people of Ontario.
With that general orientation, I will begin my remarks by looking at our government's new directions for energy in Ontario.
An important part of the Ministry of Energy's mandate is to ensure that the people of Ontario have access to secure supplies of affordable energy. By extension that makes energy security one of the fundamental responsibilities of the provincial government.
In our government's view, Ontario's traditional approach to meeting the rising demand for energy has been decidedly one-dimensional, because it is focused almost exclusively on adding new supplies.
In the past, growing demand for energy was seen as one of the indicators of a vibrant provincial economy, almost as something we should be proud of. Ontario's increasing appetite for energy was perceived as a given, not as something you could limit or control. The only question ever asked was, how can we meet our society's growing demand for energy. As long as energy supplies were relatively inexpensive and readily available, the simplest answer to the supply question was always to buy more energy or build more generating stations.
In today's environment this approach appears to have been short-sighted, even imprudent. Left unchanged, an open-ended approach to energy supply could have been ruinous for Ontario's economy because of the mounting capital costs it would have imposed.
Today we recognize that what we should have done long ago was to begin investing in energy efficiency, in sensible measures that would slow the growth in demand. In fact while we were looking for ways to add energy supplies we should also have been looking for ways to use energy much more efficiently.
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Ontario is currently one of the most energy-intensive societies in the industrialized world. We use nearly 10% more energy per person than the United States and almost twice as much as some European countries. This high rate of energy consumption per unit of economic output is not something we should be proud of, nor is it something we can afford. If it remains unaltered, intensive energy use has the potential to hurt our economy and inflict further damage on our environment.
In the 1970s the industrialized world experienced two major energy price shocks. These events led to significant changes in the patterns of energy use among other industrialized societies. Ontario's high rate of per capita consumption improved, but not as quickly and not as much as most of our competitors.
In the early 1980s the world experienced a major economic recession and we are now going through another one. During these economic downturns, economies that have learned to use energy efficiently perform better. Our government's goal is to accelerate energy efficiency improvements in Ontario to enhance economic performance during good times and bad.
There is another very pressing reason to adopt energy efficiency. Ontario's current energy consumption rates are not environmentally sustainable. We live at a time when the environment is under tremendous stress all around the world. In Ontario, we have an obligation to do as much as we can to reduce that stress. We all want a healthy, prosperous economy and we all want a cleaner environment. Reducing our high growth rates in energy use can take us a long way towards achieving those goals.
Our government is committed to promoting a change in attitudes to energy across the province. The first thing we must do is to help people and businesses in Ontario become more aware of the economic and environmental consequences of their energy choices. Ultimately Ontario must begin to move in new energy directions, away from the supply-side thinking that this characterized our past and towards the goals of efficient use and demand restraint.
I want to stress here that we are talking about practising greater innovation and ingenuity in energy matters, about becoming smarter energy users. We are not talking about some kind of puritan, belt-tightening exercise. We are talking about discovering ways to do more while using less. And let's be very clear about the fact that there are good, sound economic and environmental reasons for adopting this approach to energy in Ontario.
Over the past two decades we have spent more than $27 billion on nuclear plants alone. The estimated cost of a new nuclear station is $23 billion. The money for these large facilities has to be borrowed and the debt takes several decades to be retired. We have already passed on to future generations the unknown costs of safely disposing of the spent nuclear fuel that gives us power today. Is it not time we asked ourselves how large a mortgage we want to put on Ontario's energy future?
The government's new energy directions are designed to ensure that Ontario has a range of safe, responsible energy alternatives. Fundamental to those alternatives is a commitment to increasing energy efficiency in Ontario and to encouraging the implementation of energy conservation measures wherever they make sense. We want to make Ontario a truly energy-efficient society, indeed, one that is efficient and competitive in all respects.
The previous government made some commitments to supporting energy efficiency and some progress was made in this direction. But the present government, both on its own and through Ontario Hydro, is pursuing the most comprehensive energy conservation and efficiency program in North America, and we are committed to getting significant results.
As I indicated, managing energy demand instead of simply feeding it offers many benefits for Ontario. One of these benefits is enhanced energy security. In effect, reducing demand adds to the available energy supply. But the costs of energy reduction measures are considerably lower than the costs of building new facilities.
And economic costs are not the only factor. Producing and consuming new energy supplies adds to our existing environmental burden. Reducing our energy needs, on the other hand, offers tremendous environmental benefits.
Changing Ontario's energy directions will require a concerted effort throughout our whole society, and the government must do its share.
I am pleased with the direction of the ministry's existing programs to promote energy efficiency and conservation. In the coming months we will be looking carefully at where we can introduce new or expanded initiatives, programs to encourage significant reductions in energy use right across the board, in transportation, industry, commercial and institutional buildings, and in the home.
We have already introduced measures to put the government's own house in order. Last December I announced that Ontario Hydro will conduct power-saver energy audits on more than 7,000 government buildings over the next five years. These audits will show us where we can make the greatest energy efficiency gains, and where to implement retrofits and other improvements to government buildings and operations. This program will help to reduce the amount of energy used to operate government buildings. It will enhance the government's cost-effectiveness, and reduce the environmental impact of the energy we use. But making energy efficiency improvements in government will also provide leadership, by setting an example for people and businesses throughout the province.
Another way in which government can show leadership is by enacting appropriate legislation. As I indicated earlier, our government is moving forward to develop regulations for energy efficiency standards in household appliances and other energy-using products. These regulations are being developed in consultation with industry to maximize their potential economic benefits for Ontario.
The goal of these regulations and other new measures is to help achieve major reductions in the use of all major forms of energy -- oil, natural gas and electricity. At the same time we hope to be able to kick-start a whole range of new business and manufacturing opportunities that are related to energy efficiency and conservation.
As we make progress towards our goal of an energy-efficient society, I believe we will discover many untapped sources that can strengthen Ontario's economy. As new markets for energy-efficient products open up, enterprising businesses will have opportunities to manufacture new products and provide new services, and to create thousands of new jobs throughout the economy in all regions of the province.
In many ways, becoming an energy-efficient society involves significant challenges for Ontario, but we must remember that it will also bring many new opportunities. To the extent that our industries and manufacturers can reposition themselves and their products and take advantage of these opportunities, their competitiveness will be enhanced in markets all around the industrialized world.
Here in Ontario electricity has always been special because it is the only major form of energy we produce ourselves. The government's commitment to energy efficiency and conservation includes a number of new directions in electricity demand and supply.
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Ontario Hydro will continue to play a fundamental role in helping the government carry out its plans for meeting Ontario's electricity needs. We are committed to the concept of public power, produced by an effective and accountable public utility. We support Ontario Hydro as one of the world's leading public power producers. That support, as I told the Legislature soon after my appointment, extends to Hydro's present management and to its president and CEO, Bob Franklin, who will be joining me here later this afternoon to answer any questions you would like to raise.
I want to say a few words at this point about one of the government's most-discussed new energy policies, and that is our approach to the issue of nuclear power.
As the committee is aware, the speech from the throne called for an immediate moratorium on spending for new nuclear facilities for Ontario. The moratorium means that Ontario Hydro will not spend $240 million on developing new nuclear stations. Instead, Hydro will redirect that money to electricity conservation programs.
Hydro will reassign the engineers who were to be involved in the development of new nuclear facilities, and the utility has renegotiated its contract with the federal government and Atomic Energy of Canada Ltd to ensure that its funding is used only for maintenance and improved safety at existing nuclear stations.
Work on the Darlington station will continue and the plant will be finished. This is a sensible and responsible course of action, since more than $10 billion has been spent on the facility and it is very close to completion. When Darlington begins full production it will add an additional 3,600 megawatts to the system. At that point, some time next year, about 60% of Ontario's electricity supplies will come from nuclear power.
Some people have criticized the government's moratorium on spending for new nuclear facilities on the basis that it could threaten the province's energy security. Frankly, this is nonsense. The truth is that our new energy directions will ensure that Ontario continues to have access to adequate supplies of secure, reasonably priced electricity, supplies that will be provided in an environmentally responsible manner.
On the supply side, the government has called on Ontario Hydro to give priority to early environmental assessments of new and existing hydroelectric projects. These developments could bring an additional 2,000 megawatts into the power grid. Hydro has also contracted to purchase an additional 1,000 megawatts of electricity from Manitoba. We have asked the utility to undertake an early environmental assessment of the new transmission facilities that will be required to carry these additional supplies.
The government has also decided that the Environmental Assessment Board hearings on Hydro's 25-year demand-supply plan should continue. The hearings provide an opportunity for an independent public evaluation of the economic, social and environmental aspects of all options for supplying Ontario's future electricity needs.
The measures I have outlined will ensure that Ontario's near-term electricity needs are met. To strengthen the provincial outlook even further, the government has also asked Ontario Hydro to give more emphasis in two areas: the development of parallel generation facilities and the expansion of demand management programs.
With respect to parallel generation, our policy is not to develop these facilities at any cost. Rather, we want to take advantage of all the opportunities that are economically and environmentally appropriate. Substantial progress has already been made in this area. For example, Centra Gas and Boise Cascade are working together on a 100-megawatt cogeneration facility in Fort Frances. Northland Power is building another 100-megawatt plant in Kirkland Lake. This facility will be partly fuelled by waste wood. At Ottawa's Health Sciences Centre, Transalta is using state-of-the-art cogeneration technology to build a new 65-megawatt facility. Construction of a new, 100-megawatt cogeneration plant is also under way at McDonnell Douglas in Toronto.
In addition to these large facilities, the government believes there are many small hydraulic projects that can be developed economically and with minimum impact on the environment. In fact, some of these sites are so small that they might be overlooked by Ontario Hydro. It may be that many of them can be best developed by small producers.
In all, Hydro has received proposals for about 6,000 megawatts of non-utility generation. The utility's demand-supply plans originally called for developing just over 1,600 megawatts of this by the year 2000. Hydro has now raised its target to about 2,100 megawatts. We think much more can be done and we have asked Hydro to greatly increase its efforts in this area.
Hydro has also estimated that it can achieve between 5,000 and 6,000 megawatts of demand reduction potential. The utility was planning to achieve 2,000 megawatts of this by the turn of the century. Here again, the government believes Hydro can do much better and we have asked for greatly increased efforts.
The government's new energy directions will have many benefits for Ontario. Our initiatives will increase energy efficiency, develop hydroelectric and parallel generation potential that is economically and environmentally appropriate, and pursue demand management in a very aggressive way. These measures can be accomplished relatively quickly and they are both prudent and responsible.
In recent months, demand for all forms of energy and for electricity in particular has slowed considerably. In part, this slowdown is related to the recession. But it also reflects some initial savings from Ontario Hydro's conservation and demand management programs. The slowing of demand offers us a breathing space, an opportunity to see what conservation and demand management can really accomplish. Our government is determined to take advantage of that opportunity.
I would now like to discuss some of the environmental reasons that underlie the government's new energy directions. There is no doubt, of course, that adequate energy supplies rank high among the necessities of life in Ontario. But just as certainly as it supports life, the energy we produce and use also damages the environment that sustains us. Supplying and using energy resources, in all forms, means making some environmental tradeoffs. The key is to minimize the environmental impacts of energy and to reduce its impact in areas where it is causing significant problems.
The environmental crisis we face is not limited to Ontario. Indeed, the problems are global. Nevertheless, addressing the environmental impact of energy is the responsibility of all societies and individuals. In part then, reducing energy's impact on the environment is a matter of conscience. But, as I have already indicated, the goal of an energy-efficient society is not one that should be pursued in isolation. It also serves other, very important social ends.
One of these ends is a healthy, prosperous and competitive provincial economy, an economy that provides jobs and a high rate of secure employment. At the end of the day, it is the strength of our economy that will determine whether Ontario succeeds as a caring and decent society.
The other important end we can achieve by targeting energy efficiency and conservation is a healthy environment, an environment that benefits and sustains our people both today and in the future.
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The economic arguments for adopting energy efficiency are well established and will continue to be relevant throughout the coming years. But, as we move through the 1990s, the environmental reasons for becoming an energy-efficient society will become increasingly compelling.
One of the most important areas we must address is the public's lack of awareness that individual energy choices have tremendous environmental implications. Most people are very concerned about the environment and they want to do what they can to help. But many people have not yet made the link between their energy use and its impact on the environment. The government has a responsibility to provide leadership by helping to make all members of society aware of this connection. When they know, I believe they will act wisely.
Just look at what happened when Ontario Hydro began promoting energy-efficient compact fluorescent lightbulbs for use in the home. The units cost a lot more than ordinary incandescent bulbs, but people quickly understood that they could get their money back through energy savings and also help the environment. Those lightbulbs sold out faster than the manufacturers could produce them. To me, this is one indication that the people of Ontario are ready, perhaps even anxious, for new energy directions, and our government's initiatives will point the way.
People need to know that their cars put out the equivalent of their own body weight in carbon dioxide, which leads to global warming, every 300 kilometres. They need to know about the energy-saving techniques and technologies that are available to them right now.
In the near term, what we are talking about is the widespread adoption of practical attitudes and existing technologies: public transit and car pooling; alternative transportation fuels; efficient domestic appliances; setback thermostats; light dimmers and automatic timers; and a whole range of existing techniques and technologies that can dramatically reduce energy demand in all sectors.
As I have said, the government has a major leadership role to play in helping people to make these connections and to encourage the adoption of energy-efficient attitudes. I also believe that, once we have built a strong public awareness about the economic and environmental implications of energy supply and use, people will change their attitudes to energy.
My ministry is taking the lead role in the government's promotion of energy efficiency. We will carry the message to all sectors of Ontario's economy and to every energy consumer. We will use our budget allocation strategically to create awareness, encourage change, remove market barriers and measure success. I emphasize the word "strategically" here, because the ministry alone does not have the human or financial resources to achieve the social goals we have set. Achieving those goals will require commitment and action from across the whole social spectrum.
My ministry can accomplish a lot by acting as a facilitator, as a catalyst, and by demonstrating energy leadership. In the coming months, we will be expanding our range of programs for business, consumers and industry. As I mentioned earlier, we will also be adding new regulations under the Energy Efficiency Act.
We will continue to work closely with other government ministries, like Housing, Transportation, Government Services, Environment, Municipal Affairs and Industry, Trade and Technology, to ensure all provincial government organizations are practising responsible energy use and to help them contribute, through their own mandates, to furthering the government's new energy directions.
I am pleased that we have already begun to act in this area. I have already mentioned the power-saver energy audits which Ontario Hydro will conduct in all government buildings over the next several years.
As well, my colleague the Minister of Transportation recently announced a $5-billion commitment to energy-efficient transportation in Ontario, a commitment that supports the increased use of mass transit, such as subways, LRTs, busways and ride-sharing. This transportation initiative will result in major energy savings. It will also contribute to significant reductions in harmful, environmental emissions throughout the province.
I want to point out here that a number of our new energy directions represent significant economic development opportunities for aboriginal and northern people. The potential includes employment, skills training and business development, as well as the possibility for partnerships or ownership of some non-utility generation projects. In addition to the potential for new developments, Ontario Hydro's ongoing activities can also have a significant impact on and many benefits for the people and the economy of the north. I want to make two points about these opportunities.
First, the government is committed to ensuring that northern and aboriginal communities are consulted about any proposed energy developments that might affect them. Second, the government is committed to ensuring that northern residents benefit from Ontario Hydro's ongoing activities as well as from any proposed energy developments that receive environmental approval.
I have focused my remarks today on two main areas: the government's new energy directions and the fundamental economic and environmental reasons that underlie them. I have chosen not to focus on the ministry's 1990-91 spending, as most projects were well under way when I was appointed.
As I bring my prepared remarks to a close, it might be useful to re-emphasize one of our government's basic principles about energy. This is that Ontario's high rate of energy consumption, and with it the attitudes that individual energy consumers and organizations across the province bring to energy, must change. As the old attitudes change, new approaches to energy will replace them. Today, we are all becoming more aware of the close relationship between Ontario's energy use, the economy and the environment. These connections are likely to become even more apparent in the future.
In the coming era, one of our most significant challenges will be to discover how to create high-quality jobs and rising incomes in ways that are compatible with prudent, efficient and sustainable energy use. We must change the emphasis from energy supply to the provision of energy services in the most efficient possible way.
Technology, innovation and individual commitment will play important roles in helping Ontario meet this energy challenge. So will government leadership. My commitment is to ensure that the Ministry of Energy's policies and programs help lead the way. I believe we have the capacity to meet the challenge successfully and that together we can transform Ontario into a truly sustainable society.
The Chair: Thank you very much, Minister. I would now like to recognize and call upon the spokesperson for the official opposition, the Liberal Party. Mr McGuinty, are you prepared to proceed?
Mr McGuinty: Yes, thank you, Mr Chair. May I begin by seconding your welcome to the minister. I think I can say that the tasks and the challenges ahead of you are somewhat formidable. They are daunting, but I do not believe they are insurmountable. I want to offer you my encouragement and my support, at least in spirit.
I also want to take the opportunity, in light of the fact that so many members of your staff are here, to offer them my encouragement as well. In many ways, they are the unsung heroes. Governments rise and fall, politicians come and go, and even political parties, but the civil service is always there lending guidance and support and they are the ones who implement our policies. I want to thank them for their ongoing work.
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You know, Minister, you have a special responsibility as a member of the government, as distinct from my special responsibility as a member of the opposition. Someone once said that no man is a ready critic of his own measures. A government has it within its power to do things harmful for the province as well as things that are good for the province. I am sure you will do things which are good for the province, but I am equally certain that you will do nothing perfectly. My job is to bring to light of day those imperfections, those shortcomings, and to make them the subject of public debate. Some members of the government, I think, see the opposition as a brake on a car going uphill. From my perspective, we often see ourselves as a brake on a car going downhill. In any event, I have confidence in our process of criticism, answering counter-criticism, a process which, although it is not perfect, is intrinsic to our democratic process.
The first thing I want to look at in some detail is the context within which the government assumed power. I think that is crucial, to understand that when a government takes power it does not do so in any kind of abstract void; it enters with some baggage, if I might put it that way. And that has to do with promises. A particular promise I want to address is the NDP promise to phase out existing nuclear reactors, and it also supported no new nuclear reactors.
The challenges before us, as you have outlined very aptly in your presentation, to meet the future energy needs of Ontario are indeed formidable, The issues that arise are complex. The concerns are no longer simply economic, but as well they are social and environmental in nature.
In addressing the question of future energy needs, I think it is crucial that we establish a framework. In order to do so, I would suggest that there are three objectives we ought to meet. First of all, we ought to draw upon the best expertise available. Second, we ought not to allow our thinking to be clouded with preconceptions. Third, we ought not to allow our thinking to be coloured by emotion. I am confident that those three objectives will be met, and ably so, in the form of the environmental assessment hearing which is treating Hydro's demand-supply plan.
In short, any approach we bring to such a crucial question must be completely objective. That is why, viewed in that light, the NDP promise to phase out nuclear reactors, to prohibit the construction of new nuclear facilities, is so unfortunate, because it introduces an element of subjectivity, and that is in a matter where subjectivity is a luxury we simply, to my mind, cannot afford.
If we are to maintain a reliable supply of electricity in the province, if we are to meet the needs of the residential, industrial and commercial sectors, if we are to maintain the quality of life we have come to enjoy in the province, if we are to give our full objective consideration to the means available to meet future electricity needs and the costs, economic, social and environmental, which are inherent in any particular means, in short, if we are to do justice to the task before us, then we cannot afford the luxury of dismissing outright any particular means of electricity production.
That is why the campaign promise is so unfortunate, from the aspect of the environmental assessment hearing. Of course, the promise brings into question the purpose of a full and partial review. The fulfilment of the promise would require, assuming that the environmental assessment hearing were to endorse a plan which contains a nuclear component, that your government override that approval.
I do not envy your predicament, particularly in the context of an all-time high of cynicism among the electorate of Ontario. It may very well prove to be that your options will be to break that promise or to override the environmental assessment approval of a nuclear component.
You addressed the matter of conservation and efficiency throughout your presentation. That is certainly a worthwhile objective in order to reduce our demand. However, what I am looking for, now that we have established an objective, are specific targets. I am looking for plans, I am looking for mechanisms which would monitor our success in achieving targets and, most important, I am looking for a backup plan in the event we are unable to meet those targets.
Conservation and efficiency are wonderful concepts in the abstract, but we need something concrete to comfort us, and I have seen very little of that to date. The primary concern I have, of course, is what happens if we do not succeed, and where the monitoring mechanism is to tell us how we are proceeding in that vein at this time, and how we distinguish between benefits which are accruing as a result of the ongoing recession and benefits which are accruing as a result of new programs.
I might make reference to some of the programs which are ongoing, which were implemented originally by the former government, lest the committee be left with the impression that somehow this is a radical development in terms of thinking in Ontario. The former government had a number of initiatives implemented in order to meet the goals of energy conservation efficiency. We established the Energy Efficiency Act. There was the improvement of the government fleet average fuel economy. There were amendments to the Power Corporation Act to make Hydro more responsive to public priorities, including conservation and parallel generation. We released a parallel generation policy statement. We implemented a requirement that Ontario Hydro submit a conservation plan: 3,500 megawatts by the year 2000.
We strengthened provisions in the Ontario Building Code, and there were future proposals for the next revision round. There were conservation programs implemented, like municipal building and street lighting efficiency, the industrial energy service program, EnerSearch, and the commercial building energy management program. Parallel generation programs were implemented, like the wood energy program, and the cogeneration encouragement program. There were increases in Hydro's buyback rate implemented. There was an end to Hydro advertising for space heating and the establishment of incentive conservation programs, for instance, Loblaws' lightbulb program.
Intrinsic to this process, of course, was the development of the environmental assessment and intervenor funding.
I think we would be remiss if we did not acknowledge or recognize that what you are doing is carrying out, to a large degree, policies which were developed by the former government.
I do not want to say anything further at this point. Certainly my objective here is to hear more from you, Minister, so I will end on that note.
The Chair: Are you passing the floor to the other party or did you wish to use up --
Mr McGuinty: If we have time remaining, I would like to permit another member from the opposition to speak in the remaining time.
The Chair: That member is Mrs McLeod. Proceed.
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Mrs McLeod: I appreciate our critic leaving a few moments for me to add one or two words, recognizing the fact that I am in a somewhat unique position in approaching this set of estimates. I can assure you, Minister, that there is both a certain freedom and a certain frustration in approaching the Energy estimates from my position rather than yours this afternoon.
I want in essence to second what our critic has already acknowledged, that is, that while in your remarks you indicate that you are not focusing on the 1990-91 estimates but wanting to look towards the future, in fact, I think without exception, all the positive initiatives you have highlighted are initiatives which you are carrying forward from the previous government. They were initiatives which I had the opportunity and the pleasure of supporting and in some cases enhancing during my brief tenure as minister, and I am pleased indeed to see your continued support for those positive initiatives. I was convinced at the time that we were on the right track and that we were making a significant difference to the energy requirements and the energy security of Ontario.
I cannot help but add an aside, that it is a generally held feeling in our caucus, of course, that your government is at its best when it is continuing our government's initiatives.
There are two aspects of your statement which I would not have been concurring with, would not have been stating had I been the minister presenting these estimates rather than one of the members of the opposition expressing concerns about the estimates and, in fact, the way in which the estimates reflect the directions of your ministry. One in particular is the area our critic has already acknowledged, a concern that in your statement you seem to dismiss as nonsense the concerns that people have about energy security, specifically electricity security, in Ontario.
As our critic has noted, we have a great many questions which we will come back to in a very specific way during the estimates process: Just what is the new energy direction of your government? What are your targets? What are your goals? What research do you have to back up the targets, the goals? How do these compare to other jurisdictions? What evidence do you have of successful achievement of these goals, either in this jurisdiction or in other jurisdictions?
I think it is only fair to say that in an issue as important as this it simply is not sufficient to dismiss the concerns as nonsense. There must be some evidence, some basis for being able to make a bald statement that new energy directions will ensure that Ontario continues to have access to adequate supplies of secure and reasonably priced energy, electricity.
A second area which you will find we are coming back to in our questions is the issue of the government's relationship with Ontario Hydro. I think it is perhaps possible to say that Balance of Power is not just the name of the DSP that Ontario Hydro has presented, it is also a reality of the governance structures which determine our electricity supplies and in fact our energy supplies in Ontario. As our critic has noted, objectivity is one of the reasons those governance structures have been created. Being very familiar with the Power Corporation Act and why it was written the way it is written, I will want to attempt in our questions to reconcile what I believe to be inconsistencies in some of the statements you have made about the government's relationship with Ontario Hydro.
We will look forward to the estimates process and to making much more specific some of the opening statements which you have made.
Mr Jordan: I, too, would like to thank the minister and her assistants for coming this afternoon to put forward her presentation on energy for the province.
I do not plan to repeat the comments of the official opposition. I thoroughly agree with those comments. I find it strange, though, that they too, to a point, did oppose nuclear energy. It was only in May 1990, I believe, that they conceded to have the studies continue for further development.
Minister, I find it difficult and have found it difficult in the House to try, as politely as I knew how, to get a policy from you for the provision of energy for the province. I plan to repeat today my concern in that regard, because the Canadian Manufacturers' Association, the industrialists, are all writing me and expressing concern that they do not know in what direction this government is taking Ontario Hydro.
The programs you have mentioned are not new. In fact, some of them have been in place since 1967. As my colleagues ahead of me have mentioned, it is a very difficult thing to measure, because you are dealing with human beings. You can legislate and you can promote and you can advertise, but I ask you, Minister: How are you going to measure the reaction of the people to your so-called desire that this be the kind of province we would like to see? Are we going to tell the people to go back and have an electrical industry that only supplies an electrical service, or are we going to continue and have in Ontario what we like to refer to as an electrical industry?
I might at this time mention an open letter dated 20 November 1990. I would like to ask who received this letter. The one I have says "Dear Friend." To how many people of Ontario did this letter go out?
The letter states that Ontario Hydro will do three things. They will stop spending $240 million on developing nuclear stations and they will redirect that money to conservation programs. Ontario Hydro was already in a conservation program. How much of that money had already been spent?
The letter also stated that 100 engineers who were involved in the development of new facilities would be redirected to conservation. Have those 100 engineers been directed to conservation, and what possible role would 100 engineers play in the type of conservation program you have been laying before the Legislature?
It also instructed Hydro to renegotiate the contract with the federal government to ensure that Hydro funding is used only for maintenance. What is the value of both the old and new contracts between Ontario Hydro and the Atomic Energy of Canada?
My problem is that with a lot of the points made in your presentation neither I nor, I think, very many citizens of the province would disagree, because we are all interested in conservation, we are interested in efficiency, and we are certainly interested in developing any suitable hydraulic site or other means of generation. But the point still comes to the fore: How do you plan to replace that percentage of the base supply for Ontario Hydro that is now supplied by nuclear energy? The other question is: Do we really want to kill nuclear energy, not only in the province of Ontario but in Canada?
I have great difficulty accepting the so-called reasoning put forward for us as residents of Ontario to have fear, to actually be afraid, of nuclear energy. It has proven to be the cleanest form relative to the environment of any of the energies we are now using, outside of hydraulic, for the generation of electricity. Its storage of the waste -- that facility is almost complete. It is only subject now to the environmental assessment and the federal government as to the approval of the storage.
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So it really concerns me that you can generate enough emotion among the electorate without having to put forward some actual facts as to what these statements are based on. I think in the interests of keeping Ontario the leading province in manufacturing, in industry, Ontario Hydro was one of the main reasons that Ontario developed. We had an abundant supply of reasonable-cost electrical energy. The manufacturers, the industrialists, they all recognized this, and now we have them moving out of the province because they do not have confidence in the present administration.
If I may read an article here: "One major Ontario company, Abitibi-Price, stated that its last two paper mill machines had been established in Alabama and Georgia rather than Ontario. These developments, according to Linn Macdonald, executive vice-president, paper group, represent the loss to Ontario of about 300 skilled jobs. One of the major reasons for this location...was the future shortfall in available electrical energy supply in Ontario. Two other unidentified companies dropped plans this year to build in Ontario for the same reason."
Again, I come back to trying to fill the void through efficiency and conservation, because we are not dealing with buildings, we are not dealing with furniture. We are dealing with human beings, and human beings do not react in a measurable way to regulations that you want to put forward and assume that you are going to save X megawatts on that basis.
So I think as a government, Minister, you do have the responsibility to somehow come up with a solid figure of the amount that is going to be either generated through cogeneration or saved through conservation and put it down, relative to the growth of the province of Ontario and relative to the sustained growth, enough to instil confidence in the manufacturers and the people of Ontario that they are going to continue to expand and build new plants here and progress as the province has done, together with Ontario Hydro, through its complete history.
I might mention that Ontario Hydro is recognized as having one of the best research divisions of any North American utility. And I can say to you this afternoon that Ontario Hydro has very conscientiously looked into all aspects regarding the environment, regarding conservation, efficiency, and has been doing so, as far as I am told, since approximately 1967. It has been a joint effort with the manufacturer, with the contractor, with the builder. In fact, in 1967 Ontario Hydro progressed to the point that it was able to supervise the construction of a residential building to the point, if it was not heated electrically, if it was heated by a fossil fuel, you in fact had to have a fresh air intake in order to provide the extra oxygen. The infiltration and the leakage of air had been cut down in the building at that time to that extent and the reason for that was, Ontario Hydro at that time wanted its energy to be competitive with natural gas and oil as a heating fuel.
But the point I am making is that I get very nervous. All the things that you are saying, no one can differ with, except the fact that I do not have confidence in your policy that you in fact can, through conservation and efficiency, replace that base electrical energy, which is now up to 60% in Ontario, which is supplied by nuclear.
Ontario Hydro and Atomic Energy of Canada are not standing still; they are progressing with nuclear energy. It is becoming more safe, it is becoming more efficient, and it is coming to the point where it is costing less per kilowatt hour in capital expenditures.
I do not think I will go on any further at this time, but I do hope that through this committee I am able to get some reassurance of what a moratorium on nuclear energy means. The previous government had it on. They did not allow pre-engineering on the sites, until they changed their minds, I believe it was in May 1990, and came on side and saw it as a necessary capital expenditure to keep Ontario viable in manufacturing and industry.
As far as, again, your conservation and efficiency are concerned, I do not have an argument with it. My sole concern is that if I were in manufacturing or industry, I would not be comfortable starting in the province of Ontario depending on my energy from what was going to be saved by my neighbour or by some other means. Thank you very much.
The Chair: Thank you. Do you wish to use up any additional time at this point, Mr Jordan? You have more time if you wish, but if not, then we can proceed with the minister's response.
Mr Jordan: Would the minister entertain a question?
The Chair: If you wish to use some of your time to engage the minister in a dialogue, that would be permissible. It is your half-hour.
Mr Jordan: Perhaps the minister could advise, as to the 100 engineers who were reassigned, what they were reassigned to.
Hon Mrs Carter: Yes. I know and have known all along that there was in fact work for them to do. Mr Franklin made a commitment very early on that the people who would have been working on the work paid for by that $240 million would not in fact be out of work. Some have gone to work on safety programs with nuclear reactors and on efficiency. If you want greater details on that, Mr Franklin will be here later on and I am sure he could give you those.
Mr Jordan: If the Environmental Assessment Board eventually approves a nuclear plant, would you as minister direct Ontario Hydro to renegotiate a contract with AECL which allows Hydro to contribute to the development of nuclear technology?
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Hon Mrs Carter: That is a hypothetical question and I am not going to give you a firm answer on that one. I think we shall all listen with great interest to what happens in the environmental assessment of the demand-supply plan hearings, and we will consider what happens at that time. By then, of course, we shall have had probably three years to see how our other policies have fared and what the situation as regards power is in this province.
Mr Jordan: Again then, what you are saying is that your moratorium on nuclear energy is dependent on the response of the people and the success of your conservation --
Hon Mrs Carter: I am saying that we shall listen very carefully to that response. I am also saying that the moratorium is open-ended and that we have no plans to discontinue it, as far as we know. But then that is something that will have to be thought about further in the future.
Mr Jordan: But may I say, Minister, that the reason your moratorium is open-ended is that you yourself have some real doubts about the success of filling the void with the methods put forward.
Hon Mrs Carter: But you see, I could turn that around and say that you can only see nuclear as the means to solve our problems.
Mr Jordan: No, I am sorry, I do not mean to give that impression. What I am saying is, as an individual and as a representative of the party, from the information available to us we have no reason to fear nuclear. Your group in a report here refers to the Hydro study as "nuclear nuts" or some expression like that. Well, really, some of the best research people available and some of the best scientists, not only in the Ontario government but in the federal government, have studied it and I think, rather than fear-mongering with the people, we should be trying to give them confidence in the fact that we have looked into all aspects of the nuclear as much as we can and we are going to continue to do so and that we should have faith, even to the point that you would concede that if your plan does not work, you would be agreeable to lift the moratorium and let nuclear fill the void so that we do not, in fact, have a shortage in Ontario.
Hon Mrs Carter: You are in a sense prejudging the outcome. I do not think there has been any fear-mongering. I am not aware that we have said anything in that way about nuclear power. One of the main reasons why we feel it should be discontinued, or at least suspended, is the financial aspect. I think if you looked at the Globe and Mail on Friday, you would have seen that Ontario Hydro is getting increasingly into financial problems as a result of having to pay for some of its past commitments in this respect. We have not been covering the real cost of power and this chicken is beginning to come home to roost.
Also, I would just point out that there are still problems related to nuclear power. For example, we have not solved the problem of making uranium mines safe or dealing with the tailings that result from that mining. We have not found satisfactory ways of disposing of the waste materials. And there is always the looming possibility of disaster, which may be a one-in-a-million chance, but we have seen from Chernobyl and even from Three Mile Island that things can happen which could not happen with other means of generating power. Now, I am not saying it is likely, but people are aware of that and when we put this moratorium policy into effect, we were in fact doing what we said we would do in our policies before the election, and that is what people who voted for us voted for.
Mr Jordan: Perhaps then you could tell me quickly, why is the moratorium open-ended?
Hon Mrs Carter: Why should it not be?
Mr Jordan: Why is it necessary that it is? That is my question.
Hon Mrs Carter: We are having a hearing, and if I said we were on no account going to build any more nuclear power stations regardless of what the hearing said, you would accuse me of prejudging the issue. So can it not be said that if we say we are going to build them, then we are prejudging the issue too?
Mr Jordan: I am sorry. You are misunderstanding my question. My question is that if I, in your shoes, have faith in my new form of supply of electrical energy for the province of Ontario, then I do have faith in it and I go forward with it and I do not need nuclear energy to supply the void.
Hon Mrs Carter: But why would I say that at this point, when the demands hearings are just coming up? I do not wish to prejudge it.
Mr Jordan: No, no. It has nothing to do with the hearings. You see, the hearings are not going to do anything that the government cannot say yes or no to.
Hon Mrs Carter: That is true.
Mr Jordan: And this is the concern. If I am committed that I can supply the province of Ontario through conservation and efficiency, cogeneration and development of small hydraulic sites, then I do not need nuclear energy. That is the question. But, you see, to be able to do that, you have to have some facts and figures to provide to industrialists so that they are comfortable with it. They are not comfortable with it. They are leaving Ontario, they are afraid to expand in Ontario, and I am saying to you this afternoon that you, as the government, have to come forward with something concrete for these people to feel comfortable here in the province.
The Chair: At this point in time we are into question and answer and I would not want it to move into a debate per se; otherwise I would be stretched to have a ruling. At this point, if we could proceed in the tone of a question and answer. But it is your time, Mr Jordan. I just wanted to make that point. You can proceed.
Hon Mrs Carter: What I am saying is that I do not want to prejudge either the results of the hearing or what is going to happen in the next few years. We are having a review. We think it is going to be very full and open, large numbers of people of all kinds are going to participate and there is no way we want to commit in any way to what the outcome is going to be.
Mr Jordan: I think in all fairness, what I am saying is, the lead time required to build a generating station can be 10 to 14 years, and if you are going to play a wait-and-see game to see if this is going to work and then we find ourselves in dire need, brownouts for the province of Ontario due to the fact the people did not respond -- and I can honestly say to you, right here in our own building, I would like to know how many people in this room use a window to regulate the heat in their office.
Ms Haslam: Is that a question? Do you want an answer?
The Chair: I think it was a rhetorical question.
Hon Mrs Carter: That was a rhetorical question. It seems to me you have the same lead time in either case unless you prejudge the issue, because if you spent that $240 million on preparing to build nuclear power stations, you have prejudged the issue. Or you have not prejudged it any more than you say we are prejudging it, so I am not quite sure what your problem is.
Mr Jordan: I am not talking about the $240 million. If you want to talk about that, I would like to know how much of it is left.
Hon Mrs Carter: Oh, most of it. Yes.
Mr Jordan: What is most of it?
Hon Mrs Carter: I forget the exact figure. I think some very small amount has been spent already, but I am sure Mr Franklin will be able to tell you that when he comes. I know it was a very small proportion.
Mr Jordan: I guess in closing then, you are not comfortable in saying that in the next 10 years we will not need another generating station.
Ms Haslam: Is this question period? If this is question period I am going to ask a supplementary.
The Chair: I think the Chair already described what the process is and I think Ms Haslam knows that, so unless you wish to be recognized, I ask you to go through the Chair. Mr Jordan, you were completing your statement.
Mr Jordan: Thank you, Mr Chairman.
The Chair: Mr Jordan has two minutes left of his 30-minute block.
Mrs Marland: May I use it?
The Chair: If you wish to use it, you may proceed.
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Mrs Marland: I would like to use it. Through you, Mr Chairman, to the minister, a few moments ago, in discussing nuclear generation, you referred to Three Mile Island and Chernobyl as examples of what can happen with nuclear generation. I wonder if you could tell this committee what, if any, are the similarities between Three Mile Island and Chernobyl and the Candu reactors in Ontario.
Hon Mrs Carter: I cannot go into a technical discussion. I know that in some ways Candu reactors are different, but in a lot of ways they are not. I was just using this as an example. As you pointed out, Three Mile Island and Chernobyl were different examples. But I do not think it can be denied that there is the same long-odds chance that something could happen with the Candu reactor.
Mrs Marland: It is a very serious example that you give and you cannot give examples without knowing what it is you are saying. I say with respect, that you can look at anything and say there are long-odds chances. I think as Minister of Energy of this province you should know the difference between Chernobyl, Three Mile Island and the Candu reactor.
Hon Mrs Carter: I think I do, with respect. In each case, there are radioactive materials contained within the reactor and, if anything causes those to be released, then we have a disaster. So that basic situation is the same.
Mrs Marland: As minister you obviously do not know the basic inherent differences in the design, and it is the basic inherent differences in the design that are in fact a feature of the element of risk to which you refer. I am not a technocrat, yet I know the differences between those three examples you have just given. I am simply saying to you as minister, if you are going to use examples, I would ask you to explain what the examples are and what the differences are. You cannot just make a blanket statement on something as critical as the provision of electricity in the future in this province in one mode of generation or another unless you know what those differences are.
Hon Mrs Carter: As I say, I have had expert information on these matters and I stand by what I have said. Now it may be that there are safeguards. I know that there is a vacuum containment building and the idea is that it would implode rather than explode. This does not totally remove any possibilities of problems. For example, you have got nuclear fuels stored in areas which are not within these domes. That is one example I can give you.
Mrs Marland: I would suggest with respect, Minister, that your staff could tell you what the Three Mile Island incident was and what the Chernobyl incident is. If you are going to argue, if you --
The Chair: I am going to ask the Vice-Chair of the committee if she will recognize my ruling, which is that that was your last question. Your time has expired. Thank you, Mr Jordan and Mrs Marland. I will now, in accordance with my previous clarifications, call upon the minister who has listened and even participated. Would you care to use your half-hour as you choose to respond?
Hon Mrs Carter: I would like to join Mr McGuinty in thanking the ministry staff. I am very well aware of the vast contribution they make to what we achieve. I certainly want to back up that statement.
I also agree with Mr McGuinty that we all make mistakes. I think my caucus would be the first people to agree with that. In fact, the Premier has on several occasions said there is nothing wrong with making a mistake now and again. The thing is to admit it when you do. We are all at least trying, and it seems we all agree on the social and environmental relevance of energy production. I do not think we have any disagreements on that.
I also agree with Mr McGuinty that we should draw on the best expertise available. I am sure we are doing that and I can say there that part of our policy is to make sure that all generating capacity is and transmission lines are maintained to the utmost degree, so that some of the money that might have gone on new developments will be spent on such things as retubing, making sure that reactors are working safely and, as I say, there is work in progress to upgrade the transmission lines, which apparently are beginning to show signs of age.
Nuclear phase-out -- that is not quite a correct way of expressing what we are doing. We are not engaged in a nuclear phase-out. That was a policy that was happening in Sweden. We have said we will continue to operate the existing nuclear facilities and we will complete Darlington. We have no plans that I am aware of to phase out any of that capacity. That is a future option, just as many other things are future options, but it is not something that is at present what we are doing. What we are doing is simply what we have said. We have a moratorium on the development of further nuclear power stations and that is it.
As to blind adherence to ideology, I do not know that is called for. I think we are being as pragmatic and as scientific as anybody could be in this respect. We are looking at what is happening in other parts of the world. We are looking at scientific facts and studies that have been done and so on. We are not coming up with some fairy-tale scheme that will not hold water. We think we are being as practical as it is possible to be.
I think the basic problem with both your speeches, Mr Jordan's in particular, was that you just basically do not believe we are going to be able to manage without building further nuclear capacity, so maybe it would be pertinent for me to go over some of the ideas we have on that score.
First of all, we have been accused of reducing the province to a danger of imminent brownouts. That is total nonsense. It is nonsense because our policies have made no difference whatsoever to the availability of power at this time and will not affect the availability for several years to come. New nuclear power stations will not come on stream for quite a long time, and unless the demand-supply hearings had been -- unless work on power stations is being pursued in advance of the conclusions of that hearing, they are going to make no difference to the possible startup time. The decision would be made three years from now.
We do have more capacity coming on stream, because we are completing the Darlington stations. There are some problems with that as it happens, but nevertheless the potential is there and will hopefully be available within the next year or two. Because of the recession, as you pointed out, there has been a reduction in demand and it is impossible to tell how much of that is due to the recession. Probably most of it is, and I gather it is the first time since the Depression years of the 1930s that such a thing has happened. Some of it may be due to our conservation and efficiency efforts, and I certainly hope that it is and I hope that hydro usage will not be taken as a yardstick of how bad the recession is because of that factor that is included in those figures.
There is no immediate problem. The brownout that happened just over a year ago in December of 1989 was not to do with basic capacity. It was due to a combination of factors that just all came into play on that one occasion, like very cold weather, problems with oil supply at the backup station and the fact that a lot of the existing stations were undergoing repairs at that time.
This brings me to what I think is an important point: Why is it assumed that nuclear power is so reliable? Any problems that we have had recently with supply are due to the fact that nuclear power is turning out to be less reliable than had been hoped. Last year quite a large amount of power was imported from the United States to make up the fact we were rather short of power. This was due to the fact that we could not run our fossil-fired stations without possibly exceeding the limits on acid gas emissions, which have been quite rightly put into place to try and reduce acid rain. Those regulations are being tightened up gradually, which they should be, so that Hydro has to be aware of that.
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Because we did not want to exceed those limits, we brought in the power from the US, which of course was totally illogical because some of that power was being produced in the US by fossil fuels. But the problem was due to the fact that our nuclear power stations, which provide the base load as it were, were not functioning well. Now I believe some of those have been repaired. They are back on track and actually we have a fairly healthy margin of supply.
We have a whole arsenal of things that are going to make sure that our supply does not fall below demand, and I must emphasize that the main one of these is efficiency. People do not seem to understand that power saved is as real as power generated. It is not just as real, it is better, because it is cheaper and it does not cause any pollution and it cannot have any outages. It is totally reliable. If somebody does not need it, and we have reduced our demand, that is it. Actually, in some places in the US I believe negawatts are traded. People buy and sell saved electricity, just as you can buy and sell generated electricity. This is not some kind of phantom. It is real. If we can do things more efficiently, we do not need the same generating capacity.
We realize that some people will see this as a bit of a phantom and we are not exactly sure how much we can gain from efficiency. We think it is a lot because Canada uses energy inefficiently and that means there is a lot to be gained. But we do have other ideas. For example, there are quite a large number of hydraulic supply options available, and those are things that would be brought on as a priority if we feel that there is a need growing for more capacity.
The Adam Beck station is going to be refurbished and expanded, and I believe that is going to generate another 550 megawatts. There are several hydraulic supply options in northern Ontario, and what they are doing in regard to those is to speed up the environmental assessments so that if we need to build them, that hurdle will have been overcome and work can proceed without delay. We are also having the environmental assessment on the Manitoba transmission option, something which has already been signed between the Ontario government and the Manitoba government which would bring 1,000 megawatts on line. That would take a few years to bring on but we are in no immediate difficulty, and that is something that could come at least as soon and probably sooner than other nuclear stations.
We are also looking at parallel generation, which used to be called non-utility generation or NUG. This means generation which is sold to Ontario Hydro rather than being produced by it, and estimates of what can be produced by this means have been climbing steadily. Quite recently, Ontario Hydro was saying that by the year 2000 it would have 1,600 megawatts of this kind of generation. Now they are saying it will be 2,100 megawatts and there is no reason why this estimate should not continue to climb. A large amount of this power would be the result of cogeneration, which means that an industry which is using, probably, gas for an industrial process, uses that same fuel to heat steam and to generate electricity. In a sense you are getting the use of that fuel twice, so you are achieving much greater efficiency. Obviously, you are saving money for the industry if it can gain a profit from selling it to Ontario Hydro.
There are already various places where this is happening, and I think I mentioned some of them in my initial remarks: Boise Cascade, Transalta is bringing on some ideas of this kind, and so on. This is very practical and solid and, as long as industry sees that it can get a reasonable return on this, this is something that is capable of considerable expansion. Also, as I believe we mentioned before, there are smaller hydro developments which can be pursued independently, ones which probably Hydro would not be concerned with, but added together they can produce a considerable amount of power, very often with very minimal environmental impacts.
So this is a kind of sketch of the things that are available. I think we have no reason to believe that in any foreseeable future these means of providing electric power are going to be inadequate. Meanwhile, further research and development is going on in the field of renewable energy. There are all kinds of possibilities.
In the Ministry of Energy we get letters from all kinds of people. Some of them have quite complex ideas and projects and inventions and so on attached to them, which go to the staff and are evaluated. Some of them receive subsidies, some do not. But there are all kinds of possibilities out there for generating power in renewable ways, ways which have far less of an effect of polluting the environment than the burning of fossil fuels does, and we believe that we are going to have considerable possibilities in that direction too.
I also mentioned in my talk that we feel the direction we are taking, more efficiency, is going to add to the number of jobs available in the long run. These jobs will not be in one place, as the jobs, for example, building Darlington are. They bring workers from all over the place, so they have to leave their homes and do something very intensive and temporary and then they are on their way again. These will be jobs that people can do in their home towns. There will be new industries, sunrise industries that will cater to the market that is generated by this kind of approach, where we are making energy-efficient appliances, which will give us vastly improved opportunities for export.
If you create goods that are behind the times, they end up being dumped on the market in backward areas for sale prices. If we can produce goods that are state-of-the-art, we are going to find that they are much easier to export and we will get better prices for them. This will help Ontario to become strong, help our balance of payments. We can already see some beginnings of that kind, for example, there is a bus company in Mississauga which is producing buses that function on natural gas rather than gasoline. They have very good prospects for exporting these and for generating good permanent jobs in this province.
I think I have probably covered the main points raised. The main point did seem to be the absence of faith in the possibility of carrying into the indefinite future without generating more nuclear power.
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As I said, there was an article in the Globe and Mail. In fact there were two articles, one above the other. The first one was headed "Hydro's Finances Shaky," and Hydro is saying that it is going to have to charge more for power in the years to come to cover the expenses it has already incurred. Most of these expenses are the result of nuclear facilities coming on track, and it is true that the more generating capacity we build, the higher the marginal cost, and the more power rates have to go up. By using efficiency, we are in fact helping to keep the cost down.
I might also point out that if we can keep demand down, not only does this keep the price down but it means that if people are actually using less, if they are doing the same job with less power, which is what we are trying to do, for example, when people get a lightbulb that burns 15 watts and gives the same light a 60-watt bulb gives now, people are going to be using less power. Therefore, even if power costs twice as much, if they are using half as much, they are only paying the same bill, so efficiency is related to what it costs people to have their power as well. If we are efficient, then it does not matter quite so much if the price has to go up, and it does look as though the price is going to go up anyway as a result of past policies; nothing to do with what this present government has done.
Also it seems that performance has been flagging because of the wearing out of some facilities, and as I said, we are infusing new efforts into making sure that performance is raised.
Mr Jordan had something to say about industries leaving Ontario because they are afraid there will not be enough power. Now I really repudiate that one. I know that a lot of jobs have been and are being lost in this province, that a lot of industries are leaving, but I would say the number one reason for that is the free trade policy of the federal government which means that a lot of branch plants have been repatriated to the USA. I would say a reason is the high dollar that we have in this country at the moment, which makes it difficult to export, and I would say a reason is our high interest rates.
We did in fact have quite a -- what shall I say? -- frank discussion with some representatives, I think it was of Abitibi-Price, who said that it had in fact taken a factory out of Ontario and put it back into the United States, the inference being that this was because it had no faith in our future power supplies. Now, we looked into this question. We found that the factory concerned had moved or the decision had been made in 1987, so we could hardly be blamed for this. They went to an area in the United States that has a largely non-nuclear utility in any case, and they now plan to build their next plant in Ontario. So really they were just using this as a kind of smoke-and-mirrors tactic to scare us into thinking this was a reason for leaving Ontario.
Our power rates in this province have been very low, very competitive, and I think there is room actually for them to go up a little at least, without industry being scared off for that reason. I do not think power rates are actually one of the major considerations that industries have when they are deciding whether or not to locate in Ontario. So I really think that one is a bit of a red herring. I do not accept that as an argument. We are in the grip of a recession, but it is nothing to do with our policy to have a nuclear moratorium in this province.
Mr Eliesen: Maybe I can add, Minister, on that specific example, the article that was mentioned, I believe, by Mr Jordan, the executive from Abitibi indicated to us after we wrote to him that he was misquoted, that there had been no decisions made by his company which had resulted in a loss of a plant to the United States. He did indicate to us that there were two plants for which in 1987 and 1988 they had made decisions to go to the southern United States. They had nothing to do with energy reliability in the province of Ontario and he indicated that he was misquoted in the article mentioned.
Mr Jordan: If I might say, Mr Chair --
The Chair: There is not room for debate of points. The minister has the floor and at the conclusion of the statement period there will be -- we have seven hours to get into all of this, so we will just be patient here. Save your energy.
Hon Mrs Carter: How are we timewise, Mr Chairman?
The Chair: You have about four and a half minutes or five minutes.
Hon Mrs Carter: Five minutes, yes. I would like to come back again. Mr Jordan, you said, and quite rightly, that Ontario Hydro was one of the main reasons why Ontario developed. I would be the first to admit that Ontario Hydro has a wonderful history of being a very efficient utility and that its reliability of supply is second to none. I do not think that has changed in any way. I think their reliability of supply is still second to none and we intend to make sure it stays that way. That is an absolute priority.
But Ontario Hydro has developed in a certain way. They have tended to build capacity, to say, "Oh dear, we are not going to settle on this capacity." They have gone out and advertised with such slogans as "Live Better Electrically," which I believe was their slogan for quite a long time.
Ontarians have responded. They have surrounded themselves with electrical appliances, which is great. They have gone in for electric space heating. This has been a province where electricity has very high usage, but nothing can go on growing for ever. What happens is that they sell this power, then they begin to worry again about the availability of it and then they build a whole new lot of generating facilities, and there has been a kind of leap-frogging effect which has gone on for decades.
Now we are beginning to look at the environment. Now we are beginning to realize that the world is a finite place and that we cannot go on expanding things for ever. Also the financial aspect of doing this is beginning to catch up with Hydro. I think people within Hydro itself have made statements indicating that they are aware of this problem. I think it has been called the ratchet effect. We are coming to a point where although it may have served us well in the past, it is not something we can continue doing into the indefinite future. We do have to look at other ways of going ahead in this province.
The Chair: Thank you very much, Minister. That completes your remarks. I had hands; the Chair was flagged.
Mr Charlton: On a point of procedure, Mr Chairman: I was led to believe earlier that it was your intention to move through the various votes in order and I do not have any objection to that when it comes to voting on those votes. On the other hand, I understand the minister has made the president and chairman of Hydro available from 4 till 6 today and that one of the Conservative members would like to return to the issue of grants tomorrow morning, which sort of bumps us in and out of order in terms of the votes. It may be wise if we were to stay under the first vote for purposes of our discussions, regardless of the order in which we might vote on those votes at the end of the process.
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The Chair: Thank you, Mr Charlton. I was about not to recognize the two who were trying to get my attention, to explain the importance of the procedure. This is a first-time committee for many people and it is the first estimates of the new government. So I would like to indicate that we have completed the first phase in accordance with the standing orders. We now have to divide according to our records the four votes --
Mr Charlton: Mr Chairman --
The Chair: I am giving an explanation. I would appreciate it if you would allow me to finish, as I did you.
Not only am I called upon according to standing orders to divide those equally in time, but also between the parties present on the committee. However, that can be reordered if it is required and if we have consensus. This is done when the special presentations are called upon, and in this instance the minister can guide us as to the availability of certain key individuals in accordance with those for both areas.
As the Chair, I would like to suggest that is our first matter to quickly discuss and then we can decide it, but for those new members I wanted to make it clear that we will be dividing the time unless there is unanimous agreement to spend more time on one vote over another, and second that that be done and that we have prior agreement so that the staff can be called forward where appropriate.
Now, I will answer questions on that as requested. Mrs McLeod is first.
Mrs McLeod: I would like to raise the issue of an equal division of time among the votes. I think that by far the majority of our questions, and I suspect that may be true for many of our colleagues, will be on vote 1403 and it would really not do justice to our interest in the estimates process to divide the time equally among the votes.
Mrs Marland: I concur with Mrs McLeod's comments.
The Chair: Okay, and I am sure the minister does not have any problem with that.
Hon Mrs Carter: I guess not.
The Chair: Fine, then the Chair is in the hands of the committee with respect to the order that we might call these up. I asked the question earlier. Could the minister or the deputy indicate to us if there are any personnel who cannot be present or who will be here to deal with certain sections of the estimates?
Mr Eliesen: We will ensure that whatever personnel are required for whatever votes will be here.
The Chair: As the Chair, I have not received any special requests and neither has the clerk of the committee, so I wanted to make that abundantly clear. If there are any requests for key or specific individuals under the minister's mandate, it is helpful always for the Chair to know that in advance.
Mr Charlton: Am I assuming then that what the Liberal member has suggested, Mrs McLeod has suggested, implies that we can move in and out of votes?
The Chair: No, she just said the time allocation. It would not be my hope that you are going to complicate the discussion by moving in and out of votes too frequently, but there will be some flexibility there. I think the request was simply that we not divide the remaining five hours of the estimates as we now have them before us -- five hours and 10 minutes -- in four equal parts. We will be flexible. But in terms of calling up the order, I am prepared to proceed with what the committee wishes to proceed with. I am told by the minister that she does not have any specific personnel who cannot be here, so we are led to believe they are all here who are going to be here.
Hon Mrs Carter: I think we are up to strength.
The Chair: We are up to strength. If I do not hear, then I will naturally proceed with 1401 and I will remind the committee from time to time that you have now spent one quarter of the time and you may wish to proceed. That is how I will proceed as the Chair unless specifically guided.
Mrs Marland: Mr Chairman, I think as you have said that although there are standing orders for how we proceed through estimates, there can be a consensus of the committee, and frankly I really feel from my previous experience where we decide on the amount of time that is available -- first of all, to the new members on the committee, you will find it is never enough, no matter what ministry, and I think the easiest way, particularly for the first time into this process, is that we not be structured as to whether or not we are going in and out of votes.
We have only got five hours now, and if Hydro is going to be here from 4 to 6 today, and people have questions in that area and if there are people who are here today and may not be able to be here tomorrow morning and have questions in other areas, I support the flexibility of them being able to ask those questions. I think simply what we should do is go through the votes at the end tomorrow.
Mrs McLeod: If it is the decision of the committee to go in and out of votes, I think we would be quite comfortable with that. If it is your feeling that we should take the votes in some order, I would like to recommend that we begin with vote 1403, so that we can get a sense of how much time that vote will consume and save the rest of the votes for later.
The Chair: Energy development and management program: If they want to go right to 1403, I just need one moment.
I am told that we can proceed with 1403 for discussions, but Mr Franklin is not expected here until four and therefore we may have to stack some questions that are pertinent to him, but that does not inhibit us from proceeding. Is that understood? We are not going to decide at this time the amount of time. It will be the Chair's and the clerk's job to advise you of how much time is left and what is remaining for us to deal with.
Mrs Marland: Mr Chairman, are you saying as Chair that you have accepted the consensus of the committee that we are very flexible?
The Chair: I said that 10 minutes ago. What I said was that, hearing no other debate, we can proceed with 1403. I wish to determine when exactly Mr Franklin will be here to make sure that you are able to have a full and frank discussion on 1403. I have advised the committee that he will not be here for another hour, but if you still wish to proceed, fine. No one commented after that, so I presume that you are willing to proceed.
Mrs McLeod: Everything is under control.
The Chair: I know, I am in control; do not worry about that. Are there any further questions about how we are proceeding?
Ms Haslam: As a point of clarification, Mr Chairman: What happens is that all the votes are taken at the end.
The Chair: If you wish. If you wish to stack the votes, you have every right to do that.
Ms Haslam: No. That is what I wanted to have clarification on: that we are very flexible and that the voting would take place at the end.
The Chair: It was not going to be an issue until the Chair suggested we should start voting, but that can be right close to the end, if you wish.
Ms Haslam: Thank you.
The Chair: I would like to proceed with some questions and answers because I sense that is what the committee would like to do and that is why all the ministry staff are here. I should offer some clarification here. We will proceed with the official opposition. The Chair will attempt to ensure that there is balance in the access to questioning and for all parties represented in accordance with the standing orders. We will start with the official opposition. However, we will attempt to balance that off today. We are no longer on a time schedule, but people respect that others may wish to question and comment in fair rotation. On that understanding, please proceed, Mr McGuinty.
Vote 1403, energy development and management program:
Mr McGuinty: I wonder, Minister, if I might begin by exploring the area of energy from waste with you. You are probably aware that in a letter dated 14 August 1990 -- I believe it was signed by the Premier -- to a coalition of environment groups, the NDP committed to an immediate ban on municipal garbage incineration and has indicated -- this is a matter of record -- a vigorous opposition to such a program.
A question, of course, that was raised was how can the 3R program be successful in conjunction with a garbage incineration program? There was also some criticism levelled at the capital assistance program which was being used to fund waste management, and of course there are the problems associated with global warming.
Can you tell me, first, is that ban currently in effect?
Hon Mrs Carter: I would not say there was a ban, but I have asked my staff to review the energy from waste program. I guess we have two possible problems with it. One is the environmental one -- although I know there is advanced technology in this field, nevertheless in practice there have been a lot of environmental problems with plants of this kind -- and second, the relationship of the energy from waste strategy to the 3R program, reduce, reuse and recycle.
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The main thrust of the Ministry of the Environment's waste program is to reduce garbage. This is the thing we really want to do. If you are going all out to reduce the bulk of garbage that has to be disposed of, you do not at the same time commit yourself to large, expensive plants which are going to burn this garbage. I would say the thrust is to see how much we can achieve by reducing garbage and then reassess the position with regard to energy from waste after that point. I am going to ask my deputy minister, Marc Eliesen, if he would like to comment or call on staff to comment on that.
Mr Eliesen: The program, as some members of the committee may be aware, has been in place since March 1987. Formal applications were not received for the program until early in 1989. The current status is that there are three projects that have received approval under the energy from waste capital assistance program. The details can be provided in a written form in a much more detailed way.
We have been asked by the minister to review the entire program, together with the Ministry of the Environment, and to come back in the near future to make recommendations for cabinet's consideration.
Maybe I can ask Jean Lam, who is the assistant deputy minister for programs and technology, if she can add any additional update information on that particular program.
Ms Lam: As the deputy mentioned, the capital assistance program has been in effect for some time, and the major rationale behind the program was to consider waste facilities as an option for both waste management as well as an indigenous source of energy.
The three projects that have received funding under the energy from waste capital assistance program include a 23-megawatt project at the Brock West landfill site. This project is due for completion in 1991. It makes use of landfill gas. The second project is a 100-megawatt project which uses a combination of wood waste and natural gas, and this project is in Kirkland Lake. The third project is a 9-megawatt project outside of Brampton. It is the Peel resource recovery facility and that makes use of municipal solid waste. Together they will have the capacity to produce approximately 132 megawatts of electricity, and the total provincial funding for these three projects is in the neighbourhood of $12.7 million.
As the deputy has indicated, staff are reviewing the program jointly with the Ministry of the Environment to ensure that it does meet the government's overall waste management strategy, dealing primarily with the emphasis on reduction of waste.
Mr McGuinty: What kind of time frame are we looking at with respect to completion of this review, Minister?
Mr Eliesen: If I may, the review should take approximately three to five months. Clearly, we are looking at all aspects of the current program and the different kinds of incineration that are commensurate with the government's 3R program. There are clearly different implications if you are attempting to produce generation from methane gas from landfills as opposed to wood waste, another form of incineration. Proposals have been put forward in the context of the tire problem in Ontario, of burning tires. All of these are currently being reviewed in detail, and it is hoped that within the time period I mentioned we will be back to both ministers with specific recommendations.
Mr McGuinty: How are applications for financial assistance which are being submitted at present -- that is, in the period during which the review is being conducted -- being treated?
Ms Lam: We are not receiving any applications at this time, given that the program is under review.
Mr McGuinty: I gather you are not accepting applications.
Ms Lam: That is correct. We are informing all interested parties that the program is under review by the government.
Hon Mrs Carter: The moneys for that have been, as it were, taken out of our current estimates.
Mr McGuinty: I have a question relating to a facility located in London, Victoria Hospital. I understand they are experiencing significant difficulties there. There is an estimated $7-million operating shortfall for fiscal year 1990-91, which could ultimately lead to bed closures and staff layoffs. I understand they burn there some 270 tonnes per day of waste from the city of London. There is no positive cash flow at the present time. A number of solutions have been advanced. I wonder if the minister can comment with respect to this situation.
Hon Mrs Carter: This is something that was developed a few years ago. It started operating in 1987 with various government grants. Unfortunately, I believe it costs more to run than had been foreseen. Also, there is difficulty because the tipping fee for garbage in the London area is not as large as it is in some other places, so they were not getting as much return on this as might have been the case.
The present government was not responsible for the initiation of that. It is, in fact, in the hands of the Ministry of Health rather than of this ministry. All I can say is that we respect the current decision to sell or close and will negotiate the most appropriate means of assisting with the operating deficit on that. The deputy minister might like to comment.
Mr Eliesen: If I can just make a couple of observations, this clearly is one of the areas that we are looking at as part of our overall review. The whole notion of adequate tipping fees by municipalities is a question of concern with such waste facilities, because it can make or break the operation of these facilities. The fact that there has been such a low tipping fee in the London area clearly has led the hospital, because of the mounting deficits associated with running the operation, to close the facility and to now basically make it available to any buyers on the market. It is one of the main factors causing the review, the degree to which tipping fees are adequate in all the municipalities of Ontario and at what level they are required in order to make these operations more successful in the future than that experienced by London's Victoria Hospital in the past.
Mrs McLeod: Minister, I would like to take you back to the review itself. A concern I have is that in the responses to the questions about energy from waste seems to be the implication that there would be environmental concerns about the projects being undertaken. As ministry staff has indicated, there have been three projects undertaken within the fiscal year of the estimates we are looking at, all of which passed the most stringent environmental regulation standards, which leads me to ask: Specifically what were your concerns in instituting this review and what have you asked people to examine?
Hon Mrs Carter: I think you are right that some facilities are operating satisfactorily. As far as I know, the Victoria Hospital facility has not given a problem environmentally. But if you think of the Windsor-Sarnia area, for example, they are having serious trouble there as a result of energy from waste burning. I believe the Minister of the Environment just recently had a report on the air quality in that area and she was seriously concerned at the results. As I say, it is associated with waste-burning plants, probably in the United States rather than in Canada, but nevertheless the same principle applies.
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Mrs McLeod: I hope we are looking at our own jurisdictions, because we have set our own standards and I would not want to see our jurisdiction compared to American standards or the problems seem to be synonymous.
May I ask whether you have empirical studies or have asked for empirical studies as to the amount of carbon which might be produced in the course of incinerating waste -- I am thinking particularly of solid waste -- and how that would compare to the methane that would be released from an equivalent amount of waste going into a landfill site; and as well, as part of that study, the question of how much potential pollution is saved by not having to generate that equivalent amount of energy by an alternative means?
Hon Mrs Carter: I certainly take your point about landfills, but if we reduce the garbage in the first place, as I was suggesting, particularly if you compost the wet waste, then maybe that problem will not arise. Maybe staff would like to comment on that.
Mr Eliesen: That aspect is included in the review, ensuring that comparisons of the different forms of incineration are made available to the government; and the implications, obviously, because as I mentioned earlier there are different environmental aspects associated with the burning of different kinds of waste. Current Ontario air standards and the alternatives, how this would be dealt with in other forms, clearly will be included in the review.
Mrs McLeod: Just so I can be clear, you are not suggesting that the comparison is only between the product of different forms of energy from waste, but that you are also looking at a comparison of energy from waste to other forms of energy generation and also to landfill disposal of waste.
Mr Eliesen: That is correct.
The Chair: You have had about 15 minutes. If you want to complete this line of questioning, we could proceed and then we will be back to you in a moment. Do you have another question?
Mr Daigeler: On that very question. First, I want to excuse myself for having slipped in and out, but I had to witness the rather sorry event of seeing another NDP promise being broken by the Treasurer's transfer announcements today. I was rather busy in that regard.
The Chair: Have you issued a press release or did you just save this for estimates?
Mr Daigeler: I am not too clear about this review that is under way. I would like to get a little clearer idea of what the criteria are that the minister has given for that review of energy from waste products. What is it that you have asked the administration to do?
Hon Mrs Carter: As I said, there are the two concerns, the environmental and the question of waste disposal as such. Again, I think we should ask the deputy.
The Chair: She is deferring to the deputy minister. Did you have a further clarification?
Mr Daigeler: I find it amazing the minister would not know what she has asked of the administration. Are you telling them to reduce this approach as much as possible, in view of more or less eliminating this energy from waste idea, or are you saying review what the costs are? What are they supposed to look at?
Hon Mrs Carter: Of course, the Minister of the Environment is responsible for waste as such, and her main thrust is to reduce it so that there will not be so much to dispose of.
Mr Daigeler: So you want to reduce the approach of energy from waste?
Hon Mrs Carter: We want to reduce the amount of waste, in which case, obviously, this affects what facilities one would or would not build. We also want to look at the cost impact of doing this as compared to other ways of disposing of waste.
The Chair: Did the deputy wish to respond?
Mr Eliesen: These are the directions the minister has given to us: to work with the Ministry of the Environment, which is the lead ministry in the whole question of waste reduction, to evaluate the role that energy from waste can play in the future; to look at it in the context of the 3Rs policy of the Ministry of the Environment; furthermore, to evaluate and review the economics of these operations.
As I mentioned earlier, there is concern, clearly, given the results of Victoria Hospital and its decision to close a facility, a facility which met all the standards, yet the economics of the operation and the continuing deficits led the board of directors of Victoria Hospital to close the facility. That has caused a major part of the review to be looked at, specifically the tipping fees that are available in the various municipalities. Together with the environment, these are the aspects we will be looking at.
Mr Jordan: First, Minister, I just wanted to clarify that I was quoting the chairperson of the association of major users of electricity, him saying that was the reason it had moved. I do not know if this man has been misquoted, but if you want reference to it --
Hon Mrs Carter: I think it was at an Association of Major Power Consumers in Ontario session that this arose.
Mr Eliesen: The AMPCO representative, Mr Lounsbury, referred to the statement made by Abitibi-Price. We got in touch with the individual, who denied saying what he is alleged to have said in the article. He provided us with the information which I made available to you earlier.
Mr Jordan: We can still, I guess, assess that there is a concern, regardless of whether the quote is word for word.
The other point under vote 1403 is that this activity makes up almost 60% of your ministry's budget, energy development and management. That makes up 60% of your $51-million budget. Will the funding for these projects be continuing if the Premier declares a moratorium on incineration of waste?
Hon Mrs Carter: I do not quite understand you, because this is a whole range of programs we have. Energy from waste was only quite a small part of this.
Mr Jordan: Where would you, as the Minister of Energy, find yourself should the Premier declare a moratorium on spending moneys on research on energy from waste?
Hon Mrs Carter: As I say, this is a program which we have, as it were, sidelined at the moment, in any case. We have a large number of other programs that come under that budget.
Mr Jordan: I realize that, but there was $11 million for this purpose.
Hon Mrs Carter: I see.
Mr Eliesen: We can provide some updated figures on the expenditure flow within this edition. Jean, if you would like to provide the details.
Ms Lam: The three projects in question, as I indicated earlier, will be receiving a total of $12 million over a period of a number of years. This current fiscal year I believe our expenditures to date are in the order of $8 million.
Mr Jordan: Am I to understand that $8 million of the $11 million has been spent? Is that what I am hearing?
Hon Mrs Carter: Yes.
The Chair: That is concurred with by Ms Lam.
Ms Lam: But the $11 million noted in the estimates figures is only a part, as the minister said, of all of the program activities. We have a wide range of program activities that cover all sectors, including education, transportation, municipal buildings.
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Hon Mrs Carter: I said I think we can make a distinction here between energy from waste in the sense of garbage and energy from wood waste, which you get in conjunction with logging firms and so on, because that does appear to make environmental sense. So although it comes under the heading of energy from waste, it is a rather different category.
Mr Jordan: Relative to that, I was also wondering about the $1.2 million on transportation projects. How much of that is going to be spent on the potential use of alcohol fuels for automobiles?
Hon Mrs Carter: I will ask my deputy to refer that to the staff.
Mr Eliesen: Maybe we can ask Jean if we can get the details on that.
Ms Lam: Barry Beale, the manager for energy efficiency programs, whose responsibility is transportation energy programs, will be happy to provide that information.
Mr Beale: We have one project under discussion with the industry right now related to the use of methanol, which is one of the alcohols I think you are referring to. We have no projects for the use of ethanol as a transportation fuel at this time.
Mr Jordan: Do you plan to have money spent in that area?
Mr Beale: In my section we deal with commercial demonstrations and there have been no projects that have been identified to us that we would be moving forward with in the near term. There may be projects of a research nature which one of my colleagues can comment on.
Mr Greven: I am Bob Greven, manager of research and development. We have currently two projects that fit into the category of ethanol production. Over the past number of years, the Ministry of Energy has funded a great deal of activity in the production of ethanol for fuel purposes from wood. The total expenditure is approximately $4 million. Unfortunately, while there have been technological improvements, there have not been any breakthroughs that make ethanol from wood competitive with ethanol from grain, which in turn is not competitive with gasoline.
The two projects that we have going on this year are with two major companies who are co-operating in an attempt to convert waste paper -- not newsprint, but rather the type of waste paper that we are looking at here today -- into fuel ethanol. One of the problems with waste paper is that anything that is laser-printed apparently cannot be recycled, so it is at an early R and D type stage, as most of the projects in my area are. But we do hope that in three or four years we may have found a mechanism to get some improvement in the landfill problems of paper, while at the same time hopefully producing fuel ethanol at a more cost-effective price.
Mr Jordan: I also understood that the Minister of Agriculture and Food was working with you people on the ethanol from grains to see if he could put together a project to help the agricultural industry.
Mr Greven: Yes, this has come about from time to time. The difficulty with it is that the cost of ethanol from grain is still extremely high compared to the cost of, let's say, the conventional fuels. At the moment, while it does occur in the United States, it is only at a level of subsidy which is not deemed as being appropriate here. The current provincial government gasoline tax rebate, if you wish, is equivalent to 11.3 or 11.4 cents a litre on gasoline. Unfortunately, that is not enough to create a viable fuel ethanol business in Ontario, whether it is from grain or from wood.
Mrs Marland: Minister, I would like to ask you a question as the Minister of Energy and not get an answer from the staff. To get back to the EFW concept, do you, as minister, support energy from waste projects?
Hon Mrs Carter: It depends, does it not? You know the 3Rs: reduce, reuse and recycle, and I think the main thrust has to be to reduce.
Mrs Marland: I am asking you a direct question. Do you support the energy from waste concept? I know the 3Rs and fourth R very well.
Hon Mrs Carter: There again, it probably depends on the instance. I am waiting at the moment for a review of that question, but the kind of thing that comes to mind is, "Can you do something special with old tires?" There are people who say they can put them in a vast microwave oven and come up with whatever the constituents are, and that might be a special case.
Mrs Marland: So you do not actually have a position on energy from waste at the moment?
Hon Mrs Carter: I think the main thing is to reduce our waste stream by other means, but there will not be particular kinds of --
Mrs Marland: As I was going to --
The Chair: Please, Mrs Marland, let the minister finish.
Hon Mrs Carter: There might be particular instances in which it makes sense, but I think in the sense of taking municipal garbage and burning it, our approach would be to reduce that garbage flow in the first place. That is our first thrust, because we feel that most of that stuff is not really garbage at all if you find out what you ought to be doing with it.
Mrs Marland: Yes, I understand that, but when you have reduced the amount of garbage and you end up with garbage to be disposed of -- I am not talking about volumes, I am talking about a concept -- when you have reduced and you have recycled and you have reused and you still have garbage to be disposed of, do you support the concept of energy from waste?
Hon Mrs Carter: I believe that question is being reviewed and I do not want to pre-empt the results of it. It is possible that there might be something valid there. I really could not say.
Mrs Marland: So as minister, you do not have a position on that at the moment?
Hon Mrs Carter: Not at this moment.
Mrs Marland: I am very concerned when I hear that whether or not energy from waste as a concept works depends on the tipping fees. I understand the economics of it very well and I understand what has happened to the London Victoria Hospital. But speaking for the taxpayers of the province, I have a great deal of concern if a decision whether or not to go ahead with energy from waste depends on the tipping fees. What we are saying to the people of the province is, if you are willing to pay highly enough on your property taxes for your tipping fees, and they are the only people who pay in terms of municipal garbage, then we might have a goal for an EFW plant. That gives me a great deal of concern, because I do not think a goal for EFW has to depend on whether or not we can ram it through on the backs of the property taxpayers.
I am very interested to hear that the three projects that are under review include one that is not even operating yet, and I am wondering why that is. I refer to the Peel resource recovery project in southeast Brampton, which I think formerly was SNC, if I am correct. What do you mean when you say that that is one of the EFWs under review?
Hon Mrs Carter: First of all, tipping fees are not my area of jurisdiction.
Mrs Marland: I did not use it. You used it.
Hon Mrs Carter: I think this is a fairly technical one, and I will ask the deputy minister to answer.
Mr Eliesen: To answer the question, the two revenue sources for any energy from waste project really derive from tipping fees, which in the province of Ontario can vary anywhere from $15 to $100 a tonne. This really depends on the municipality and its alternatives of landfill that are available. So there is a wide variety within most Ontario municipalities on the tipping fees.
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The second source of revenue, is, of course, the revenue from the steam sales. Those are relatively low. The economics of energy from waste projects primarily, at the current time, relate to the tipping fees. So that is part of the review and one of the questions that has been raised in the past is whether there should be a uniform tipping fee applied to all municipalities in Ontario. This is one area we are reviewing particularly because of the London Victoria Hospital experience.
To answer your question on the Peel resource recovery project, that is now being built and due for completion, I am advised, in 1992. This is one of the three projects that have not received approval prior to the review that has been deemed by the government.
Mrs Marland: But your ADM said it is under review.
Mr Eliesen: No, I am sorry, the three projects have been approved. The project that you refer to is due to be completed in 1992. All other projects now coming in will be put on hold pending the review and the government decision in the future. Jean, do you want to confirm that?
Ms Lam: That is correct.
Mr Hansen: Minister, there was one thing that was already answered. Mr Jordan had said, you know, his concern was that companies coming into Ontario were not coming in because of Ontario Hydro, but that has been cleared already.
The other one is in regard to the advertising that we are doing, like we are not a throwaway society any longer, in the papers and on TV. How is the message getting across to the people and how are they responding to this? Maybe just as a supplementary to that, your staff can answer also: Have we seen any reduction in the homes and in industry with some of this program ongoing, and what would be the approximate savings coming along on our conservation program?
Hon Mrs Carter: If anything, the ad campaigns have been too successful. Prior to the introduction of that number, the ministry received about 150 calls a month, which was manageable. Now it is about 2000, so we have really seen a difference there.
Since the throne speech showed that this government was really concerned about energy efficiency, one million pieces of material on energy efficiency have been requested from the ministry by the public. Sometimes I think the public is ahead of us on this. They are really pushing out there. People are worried about the environment and they are worried about what we are doing to the world. There is a lot of interest out there and a lot of pressure on this. Would you like to take that on?
Mr Eliesen: Minister, maybe I can ask Dick Dickinson, who is our director of communications, to provide some details on the kind of public education campaigns that we have under way and more specifically some of the responses that are coming back, not only from residential but also from commercial and industrial people.
Mr Dickinson: We have targeted three groups: the industrial, commercial and institutional sectors. You may have seen some of our advertising in newspapers that outlines the programs that Jean has been mentioning. We have had a good response from those advertisements and we continue to get requests for information from those sectors.
We have also targeted women in the 18-35 age group because they have concerns about the environment and it is important that people understand when they use energy, they have an impact on the environment. They are a target group for us and we use a number of routes to approach them. One is through magazines that are popular and have a long shelf life such as Chatelaine and Canadian Living.
We have also produced some advertisements that you have seen on TV called "Energy and You," and they link directly to our "Energy and You" campaign in the two ladies' magazines. We have also developed that to target home owners in general and car users through our program of media campaigns that we have been running over the last two or three months. The result has been quite phenomenal.
In the early part of last year, about a year ago, we were receiving a total of about just over 1,000 calls a month. In October this had risen to something over 4,000. In November and December, because of all the promotional activities, we are absolutely inundated with calls. It went to 19,000 individual calls in November, dropped to 12,000 in December, thankfully, and we have managed that okay. But the interest is maintained and during January it was well in excess of 7,000 calls. Those calls are a combination of requests for information, publications and other material.
Hon Mrs Carter: Can I come in here with some more about our programs? We have quite an array of them. They come under three general areas: research and development, industry programs, and public, institutional, transportation and education.
We give research and technology development and we give financial assistance to Ontario industries to do innovative things. The EnerSearch program has been in operation since 1986. We have industry programs which promote and facilitate adoption of wise energy-using practices in Ontario industries. That includes the development of parallel power generation and transfer of technology and information to the industrial sector through demonstrations and seminars.
We have a cogeneration program which promotes and assists in the development of Ontario's cogeneration potential in industrial, commercial and institutional sectors. Of course, this means that you are getting power from fuel that has been used to do something else, so that this is a very rewarding way to go.
We have already looked at the energy from waste program. We have a process equipment demonstrations program to encourage Ontario industry to increase its competitive advantages through leading-edge technologies. We have a small hydro and renewable energy program to help the general public and renewable energy organizations with information and help them to overcome barriers. We have a building, training and technology transfer program to promote energy-efficient construction, operation and maintenance of buildings.
We have a transportation energy program to help industry, government and consumers understand the economic and environmental benefits of energy efficiency and fuel diversity. We have a municipal buildings energy efficiency program, affectionately known as MBEEP, which I always enjoy when I see that, which helps far-flung municipalities, for example, to run their ice rink more efficiently, this kind of thing. We have a commercial building energy management program which helps by providing funding for a consultant and seminars that can help building owners.
We have an institutional energy management program which gives grants of up to 50% for professional audits, technology demonstrations and so on. We have codes and standards revisions under the Energy Efficiency Act which improve the efficiency of appliances and products sold in Ontario and we have an energy education program which disseminates information to teachers, students, families, whoever. We are supporting the Energy Educators of Ontario, the Kortright Centre for Conservation, Science North, the Durham Board of Education and many more.
As you see, we have got a lot of projects going on to encourage and improve education and efficiency in this province. I will ask my deputy to call on staff to give some firm numbers on how much energy we are saving as a result of these programs.
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Mr Eliesen: I will have to call on Jean, since I do not have the numbers in my head. But clearly the thrust of the ministry, which continues under the new government, is to ensure that there is much energy conservation and energy efficiency taking place, and these programs which apply to the fiscal year ending 31 March 1991 have really been taken up. Jean, maybe you can give a summary of the expenditures related thereto and the kind of savings that we anticipate.
Ms Lam: Sure, I would be happy to. Let me just give you an example of a couple of the successful programs. For example, the municipal buildings energy efficiency program, the MBEEP program the minister mentioned, by the end of the three-year program through an expenditure from the government of about $3 million for energy audits and retrofit grants, we anticipate saving approximately 34 million kilowatts as well as an energy savings of over $850,000 per year. This means that these energy savings which result from municipalities putting in building improvements to their own infrastructure will result in energy savings; year after year, lower energy bills.
The industrial energy services program is another very successful program, and I know that Linda Ploeger, the manager, would be delighted to give you some of the details because what we are doing in that program is assisting Ontario industry to be more cost-competitive as it meets the global competition.
Ms Ploeger: Thank you, Jean. Some of you here today will be familiar with our industrial energy services program. This is where we provide engineering services to the industrial plants in this province. The program is over three years old. It is one of our core businesses. We have been very successful with this program in that almost 50% of the recommendations that our ministry engineers have made to the industrial plants in this province have been implemented so far.
I can share with you the types of results that we have accomplished over the first three years of this program. We have completed 323 energy audits, and these audits have identified energy savings of $12 million in electricity and over $25 million in fossil fuels. I always like to give examples because I think sometimes they are more meaningful for those of us who are not engineers. This was enough lighting and appliances for a city the size of Burlington and all the space and water heating for a county the size of Perth. Those are the types of overall aggregate energy findings that we are finding in industry.
One year, actually examples of the results for the 1990-91 year, we have potential energy savings estimated at $3 million of electricity and over $9 million for fossil fuels. Again, an interesting comparison is that this is equivalent energy savings for a city the size of Orillia.
We could go on and share with you some of our other technology demonstrations, but I will wait for the call of the Chair.
The Chair: If you did, then the other member of the government caucus would not be able to get one of her stimulating questions in.
Ms Haslam: Thank you for the compliment.
The Chair: We are waiting with bated breath.
Ms Haslam: I know you are. It is just that they have answered half of the question I already had. So I am going to make a couple of comments and ask another question. I am interested that you targeted women from 18 to 35. I would like you to take that up a few years. There are more of us over 35 -- and there I am making this big, big announcement here -- who are interested in energy savings, and I will pass that on because the media campaign was something that I found very interesting.
I am going to ask two or three different questions, and maybe you can answer. One is that, if it is so successful, I am wondering if there are any plans to have it expanded. I also wanted to know about the $240 million, whether some of this money from the $240 million not going into nuclear plants has been used in this particular program. There are so many programs, is that where some of the $240 million went?
I also was very interested -- because you mentioned Perth and any time you mention my home riding of Perth, my ears prick up -- in your assistance to industries to be more cost-efficient -- is what you were saying or what the Chair introduced it as? -- and your use of engineers here. I am wondering if those engineers are some of the ones used out of the $240 million saved from the moratorium. And that 50% of those energy services were being used -- I wondered about the next 50% that should be used up.
The Chair: The Chair recognizes Mr Dickinson. Good luck with that run-on question.
Ms Haslam: I like to ask all my questions quickly.
The Chair: You only had a minute, but you did.
Mr Eliesen: If I can just make one clarification, there is a difference between the Ministry of Energy's programs and expenditures and the $240 million referred to. The $240 million is Ontario Hydro. You will have an opportunity later on this afternoon of asking Mr Franklin on the redirection of that $240 million in Ontario Hydro. This has nothing to do with the efforts by the Ministry of Energy to --
Ms Haslam: So the short answer is, "No, Ms Haslam, there are no engineers from the $240 million in this, and no, Ms Haslam, there are no moneys from the $240 million in these programs."
Mr Eliesen: D'accord.
Ms Haslam: Thank you.
The Chair: Well done, Mr Dickinson.
Hon Mrs Carter: We do not have that kind of money.
The Chair: You should show up more often. The question has been answered.
Ms Haslam: I am very impressed with the ads. They struck me the minute they started and I want to know if you are going to expand them. You have targeted women 18 to 35; I want to know, if you have become so successful that you are getting 19,000 calls a month, if you are going to expand this and how you are going to expand it and, back to the industry question, whether there are plans for the next 50% to be used.
Mr Dickinson: Okay, I will deal with the advertising program. I do not want you to feel that ladies outside the 18-to-35 age group were excluded, not at all. But a psychographic analysis that has been undertaken by various attitude survey companies indicates that particular group are the ones who are most concerned about the future and we have targeted them because we feel they are good ambassadors for the direction we are taking. They are concerned about their families and their children in particular and the future for their children. So we have used the advertising route to get information to them about the impact of their energy use on the environment, and if you have seen them, you will note that we have put environment up front. We also give them tips, and that is the other thing people are always asking for. "How can I save energy? What can I do?" Some of the simple things they do not think of, so we are pursuing that.
I do not want to create the impression that the 19,000 calls are all from advertising alone; they are not. They are a combination of various promotional vehicles we use. Advertising is part of that, but it has had a significant impact.
In terms of expanding it, at the moment we feel we have probably a reasonable mix, but the impact will take place over a long period of time. We do not expect to change attitudes towards energy use overnight. We are dealing with entrenched values and lifestyles, and we are talking about lifestyle changes to some extent. So we see this as an evolving campaign that will develop over time and we will measure our success by tracking the impact of those advertisements and then modifying them or changing them if the need arises.
Mr McGuinty: I would like to explore the issue of nuclear generators. I guess at the outset I would like to address the matter of the demand-supply plan. In connection therewith, the ministry prepared a review of the plan, which was submitted to the Deputy Minister of the Environment, and in there, as I understand it, the ministry set out its position, recommendations, conclusions with respect to the plan. I am wondering if you have any intentions to revise the recommendations contained therein, first of all.
Hon Mrs Carter: I think I am going to ask my deputy minister to comment on that.
Mr Eliesen: The ministry has no intention of reviewing the submission that has been made already to the DSP. There will be an opportunity in the interrogatories for the ministry experts to take the stand and to amplify on some of the written material that has been provided, but that is the degree to which there would be additional information brought forward.
Mr McGuinty: If I might quote a specific from the summary found on page 3 of this review, the first sentence in paragraph one says, "Ontario Hydro's plans and proposals do not contravene any ministry policy." Does that still hold true for your ministry?
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Hon Mrs Carter: You mean the plans to go ahead with nuclear?
Mr McGuinty: The proposal put forward by Ontario Hydro, yes.
Hon Mrs Carter: We are going to review all the options on this and we are not going to state categorically at this point what the conclusion is going to be. There is not much point in having an inquiry if you have prejudged the results of it.
Mr Eliesen: If I may say, that is consistent with what was included in the review. The ministry did not take a position with regard to any specific technology. The ministry reviewed the proposals put forward at that time, which again was two years ago in the demand-supply plan, what kind of load forecast and the demand-supply scenario and made analyses and recommendations which it still stands by. Additional amplification -- because we have been through now two years of additional experience -- would be provided, as I mentioned, through interrogatories.
Mr McGuinty: If I may, Minister, your response seems to be somewhat contradictory then to the stated moratorium with respect to new nuclear facilities. On the one hand, the review provides that Ontario Hydro's plans and proposals do not contravene ministry policy; on the other hand, you indicated that there is a moratorium in place. Furthermore, we have yet to contend with the other campaign promise, which was to eliminate all nuclear facilities. I am wondering how you can reconcile those.
Hon Mrs Carter: I never did promise to eliminate all nuclear facilities.
Mr McGuinty: You did.
Hon Mrs Carter: The moratorium is open-ended. We have not said that there is a definite point at which it finishes. How does that contravene the environmental assessment?
Mr McGuinty: On the one hand, what you have done, to my mind, is that the government has indicated its preference not to resort to a particular option, that being the nuclear option. I am wondering specifically if the ministry intends to formally advance that position at the environmental assessment hearings.
Hon Mrs Carter: No, but then to do the opposite, to continue with preparation for nuclear plants, which is what would have happened I believe under a different government, the money that we were just talking about would have been spent on planning for more nuclear facilities and so on. So I do not see that we are prejudging the issue any more than would have been done in that case.
Mrs McLeod: As a supplement to that then, do I understand from your statements, recognizing that you are proceeding with the environmental assessment as you have indicated today, that a considerable amount of money is going to be spent by proponents, including the government, I would think, in making representation to the environmental assessment panel? It is important that we understand what the value of that environmental assessment process will be.
Do I understand then that at the conclusion of the environmental assessment first phase, if the Environmental Assessment Board presents to government a recommendation that new generation is in fact needed and that the optimal mix of new generation, both environmentally and economically, should include some new nuclear generation, the government is receptive to that position from the Environmental Assessment Board?
Hon Mrs Carter: I think we want to be very careful about getting into a hypothetical situation as to what this review might come up with.
Mrs McLeod: That is not hypothetical; that is the mandate of the Environmental Assessment Board, and I am asking how the government will receive its report.
Hon Mrs Carter: We shall receive it in a very broad-minded, open-minded manner. This does not mean that we can guarantee to do what is recommended, because, as I say, that is hypothetical and we will consider that question when we come to it.
Mrs McLeod: Since you are prepared to consider a nuclear option at the conclusion of the first phase, may I ask, now that there is a moratorium on spending for feasibility studies for new nuclear plants only -- I think, first of all, that may in fact prejudge the outcome -- but since there is that moratorium, should the Environmental Assessment Board recommend proceeding with some new nuclear generation, how long will it take to do the environmental assessment feasibility studies that would be required?
Hon Mrs Carter: I think I will ask the deputy minister if he can clear that up.
Mr Eliesen: I guess I can answer that question in two parts.
One, the moratorium on new facility development, I should emphasize, is on new facility development. The $240 million that has been planned by Ontario Hydro between the years 1991 and 1993, which was the expected, anticipated termination of the environmental assessment, we are planning for the environmental studies related to any new nuclear facility, and the new government felt that that was prejudging the outcome and that should be held in abeyance.
That did not mean that the existing nuclear system would not continue, and in that regard the decision was made, one, that Darlington be completed, that only 90% of it is due to come now into operation, as the minister mentioned, 3,600 megawatts by the year 1992-93, and two, that $100 million be spent by Ontario Hydro to improve the operational performance of the existing nuclear system.
Now, the second part really relates to the timing that is involved. It is the judgement of the ministry at the present time -- ironically in part related to the recession that we have under way, but there is more than sufficient time to await the results of the Environmental Assessment Board recommendations so that the necessary planning can take place if the government accepts whatever recommendation is made by the Environmental Assessment Board at that time for any new facility that may be judged to be desirable in the future.
Mrs McLeod: Just as a point of clarification, I thought I would know what the deputy minister's answer was going to be, but I was a bit confused by one reference and I may have misunderstood. The moratorium is on spending for new nuclear facilities, as I understand it.
Mr Eliesen: That is correct.
Mrs McLeod: There is still a feasibility study being done on other alternative forms of new generation as was part of the DSPS plan.
Mr Eliesen: You will have to ask Mr Franklin when he is here on the conduct of planning that is currently under way in Ontario Hydro. The government's instructions to Ontario Hydro were not to prejudge which particular technology would be utilized and therefore whether it is coal or natural gas, or nuclear for that matter, and in the government's judgement, $240 million being directed in advance of any recommendation from the Environmental Assessment Board was prejudging the outcome. But Mr Franklin, I am sure, would be able to answer the specific question on the kind of studies that they have currently under way pending the results of the EAB and a final on the recommendation to government and government's penultimate decision.
Mrs McLeod: I will redirect that question to Mr Franklin. Thank you.
Mr Daigeler: I will ask a general, perhaps non-partisan question first and then it becomes partisan afterwards.
I am always struck with the statistics that say that here in Canada we are so much less energy efficient or so much more waste-producing than either the United States or European countries, and I am really wondering where that is coming from. I have, quite frankly, some basic mistrust in statistics, so I am really wondering, how can you calculate that and compare ourselves? Do you have any information -- and I am sure the ministry does -- on why we, as Canadians, should be so much more wasteful?
Hon Mrs Carter: I do not think we are that much worse in that respect from the United States, though I believe we are --
Mr Daigeler: According to your statements on page 5, "10% more than the United States and almost twice as much as people in some of the European countries."
Hon Mrs Carter: I think some of that is to do with the kind of industries we have in Canada, the resource industries, which do tend to be very energy-intensive, and it is partly I think due to the success of Ontario Hydro, which has encouraged the use of electricity very successfully in this province. However, I will ask my deputy minister to try and fill in the details on that.
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Mr Eliesen: In the interests of time, we can make available and can either verbally right now or in a written form provide the member and other members of the committee with country comparisons, both on energy intensity and energy efficiency, and those are two separate --
Mr Daigeler: I would be definitely interested in that, yes.
Mr Eliesen: Okay, and as the minister has mentioned, it is true Canada is a much more energy-intensive country, if only because we have had relatively lower, inexpensive, indigenous resources, such as falling water in three or four main provinces, which has allowed the establishment of energy-intensive industries to be located here. But we are concerned. We recognize that particular fact, but we are concerned with the energy efficiency of those enterprises and in that regard the statistics do not show Canada or Ontario in a good light. We can provide that detailed information, how Canada fares vis-à-vis the other countries, to the committee.
Mr Daigeler: What I am getting from your comments is that really the fact that we are using that much energy is not necessarily related to our wastefulness, but has something to do with the type of industry we have.
Mr Eliesen: It is a combination of both. The fact that we have been successful over the years in attracting energy-intensive industries, whether it is aluminum or pulp and paper or some other, related to the fact that Canada did have rich, inexpensive energy resources, but the degree to which we have those in the future, obviously, is much more limited, given the kind of costing that is taking place plus the environmental concerns on the method and manner in which we have generated that electricity. So the degree to which Canada has an opportunity in the future of continuing the method, whether it is through hydro development or through nuclear or through coal, obviously there are all sorts of environment concerns related to the future production of that, and that is what we are trying to come to grips with in our studies.
The Vice-Chair: Mr McGuinty has another question, Mr Daigeler. I do not know if you want to yield the floor.
Mr Daigeler: How much time do I have left?
The Vice-Chair: You have about three minutes left.
Mr Daigeler: I will get back to it later on.
Mr McGuinty: I would like to quote from the same review again, Minister, the one wherein your ministry, under the auspices of a former government, reviewed Hydro's demand-supply plan. I am just going to quote the first paragraph from the second conclusion, which is drawn in a summary which is found at the head of the report, and it says: "The Ministry of Energy develops its own forecast of the demand for energy, particularly electricity. On the basis of that forecast, and the information provided in the demand-supply plan, the ministry believes that major new supply facilities are needed to meet increasing demand and to replace existing facilities as they reach the end of their useful lives."
My question is, does the ministry continue to hold this same opinion today?
Hon Mrs Carter: I think we have brought a new element into this, which is that by using efficiency and conservation, we can limit the growth in demand for electric power, so we have not limited the need for the hearing, which we think will be a valuable process of discussing energy in this province and how we should be producing and using it, but we are bringing in major new hydraulics in any case and I think it is a mistake to view this whole process as a confrontation between nuclear power and other means of producing power. The hearings are going to be looking at the whole energy field, not just this particular aspect of it, and we feel they will be very valuable.
Mr Franklin is now with us.
The Vice-Chair: Minister, I am chairing the meeting and I am waiting until Mr McGuinty has finished his question and then at that time I will say what we are going to do next. Mr McGuinty, you have one minute left.
Mr McGuinty: Minister, it appears to me from just a cursory view of the ministry's review that there was a rather exhaustive study done of the load forecast. It talked about band widths, how optimistic the forecasts were, and the conclusion was, after taking all that into consideration, that major new supply facilities were needed. Now I am asking, what has changed since that time? Has the ministry come into new information of which we are not yet aware? How is it that no longer holds true?
Hon Mrs Carter: I think there are new factors, yes, and we believe that we can take all kinds of steps to minimize the need for electricity, largely through efficiency, but I believe my deputy minister has something he would like to say to this.
Mr Eliesen: There are two aspects and they relate to energy conservation and energy efficiency, both on behalf of Ontario Hydro and also on behalf of the government of Ontario in its responsibilities for housing, transportation and a whole variety of other aspects in our society. It is possible, for example, within an enhanced demand management program for, let us say, 50% more than what Ontario Hydro has deemed possible until the year 2000, because it does recognize that there are 5,000 or 6,000 megawatts of potential, but it is aiming at 2,000. It may be possible to substantially increase that, and if you did it by 50%, both for the demand management and also for parallel development, you could defer any decisions on new supply another three or four years. That is one aspect.
The second aspect is the manner in which we organize ourselves collectively in society, and that is the kind of regulations under which housing is constructed, the manner in which transportation is being utilized, the kind of density that is related to municipal areas and the energy utilization of that particular area, and those are the areas, the two aspects in which a ministry has been given a mandate by the minister and by the government to co-ordinate for the future.
The Vice-Chair: Members of the committee, I just want to draw your attention to the fact that the chairman of Ontario Hydro, Mr Franklin, has arrived, and Mr Niitenberg. We are going to proceed as we agreed earlier, which is that we are dealing with the minister's estimates in whatever informal way of questioning we wish in terms of subject area.
We are going to try to be very fair about the time, however, and Mr Franklin and Mr Niitenberg are here as a resource for any questions you particularly want to address to them as it pertains to Hydro, but you also, of course, understand that it is the minister's estimates we are reviewing and we may wish to continue with the minister's questions as well. It is up to the members of the committee.
It has been suggested that the chairman of Hydro has a speech to make. Now in fairness, I want to say to the members of the committee that the purpose of these hearings is to review the minister's estimates. The only thing that is laid down in our procedure is that the minister makes a statement at the outcome of the hearing. I am at the direction of the committee as to how you wish to proceed.
Mr McGuinty: Do we know how long the speech would be?
Mr Franklin: I have not timed it. It is maybe 10 minutes or something like that. Quite frankly, the remarks are general and as far as I am concerned I am indifferent whether I deliver it. I am in your hands.
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The Vice-Chair: What is the wish of the committee?
Mr Daigeler: Usually, whether it is a minister or someone from the outside, they can work their speech into the answers to some questions, so not to set a precedent, I think I think I would prefer if Mr Franklin would make his remarks in the context of answering questions.
Ms Haslam: As a new member, I am not aware of the precedent. Somebody said there is a precedent; somebody said there is not. But I would be interested in hearing, because as a new member I would be interested in what he has to say about this commission. He can talk fast or he could make his comments. I would like to hear them.
Mr Jordan: I would be in favour of hearing the president's presentation.
Mrs McLeod: Obviously we want to hear everything Mr Franklin has to say. I think he will be addressing questions that we are very interested in. I would only be anxious that if there is a substantial amount of time devoted to a presentation in addition to the hour and a half we have already taken, we might look at some additional time, if needed, at the end of the session.
Clerk of the Committee: You only have seven hours.
The Vice-Chair: I think the problem is that we are locked into seven hours, so there is no additional time. If you wish to hear from Mr Franklin now, that is in the residue of time that is left before the committee. We cannot add to the time of the committee. So we have an hour and 50 minutes this afternoon and two hours tomorrow morning.
Mr Charlton: Carried.
Interjections.
The Vice-Chair: You want just to proceed with questions, as we were?
Ms Haslam: I would like to hear him.
Mr Perruzza: I would like to hear him.
Mr McGuinty: I do not want to make a mountain out of a molehill, but certainly a possibility exists for Mr Franklin to file his speech with this committee. Is that not a possibility?
The Vice-Chair: Yes.
Mr McGuinty: He could file the speech with the committee. He could provide us with copies.
The Vice-Chair: Yes, he could do that.
Mr McGuinty: I am concerned. Perhaps one of the parties here is prepared to give up some of its time, but we have some important questions we would like Mr Franklin to address and we are just concerned about losing some time.
Mr Perruzza: On a point of order, Madam Chair: You asked for a general consensus. I think you got consensus from this side.
Interjection: No, you do not. You do not have consensus.
Mr Perruzza: And you have got some consensus on the other side as well. We are taking up the 10-minute presentation that --
The Vice-Chair: Excuse me, Mr Perruzza, that is not a point of order, I say with respect. Consensus has to involve all three parties and we do not have consensus. I am suggesting that we proceed as we were and that is my ruling. We do not have consensus of all three parties. I am suggesting that we proceed as we agreed to earlier this afternoon, and the next party is the third party with questions for 15 minutes. Mr Franklin, I would, however, ask that you would at least join the table with Mr Niitenberg so that you do not have to move if there are questions to you.
The Chair: With the indulgence of the committee, Mr Franklin, do you have your prepared comments in printed form to share with this committee?
Mr Franklin: I can make them available, Mr Chairman. They are in kind of rough notes now and I can deliver them later on today or tomorrow morning.
The Chair: Fine. I wanted to establish that.
Mr Jordan: It is a pleasure to welcome you, Mr Franklin, Mr Niitenberg, and I do not believe I know the other gentleman.
Mr Franklin: Perhaps I may just introduce Al Holt, whose responsibility is vice-president of corporate planning.
Mr Jordan: Thank you. I believe for some time, Mr Franklin, you have had the honour and distinction of serving Ontario Hydro, not only as president but as chairman of the corporation. I was interested to know, in that you have been capable of doing that for a period of time, your personal assessment as to the need for both positions, or can in fact the president fulfil the duties as chair and president, as you see it?
Mr Franklin: I think the history of Ontario Hydro has been that sometimes the chair and president have been combined and sometimes they have been separated. I have had the chair now for three years and the presidency for five, and I hope that I have conducted them both to the satisfaction of the board and the government.
There is no question that it is a hectic pace, that it does demand a lot of your time and your personal time. I think it really depends upon the degree of activity that would be involved with regard to interfacing with the government.
When Mr Campbell was the chairman and I was the president, we kind of interfaced with the government together, and so there was not a great change in the amount of time as president that I had to bring to the chair under that kind of working relationship between the chairman and the president. If a new chairman were to come in and the duties were separated, then I think it depends upon the kind of relationship between the chairman and the president as to how much the president would be involved in these interface responsibilities.
To answer your question more directly, I have done it for three years. It has been a hectic three years. It could go on for longer or it could be separated. I do not think there is a fixed blueprint that you would want to use.
Mrs Marland: I have a question to the minister. You said earlier this afternoon that there is no immediate problem when we were talking about demand and supply. You said there is no immediate problem. You said we could not run the fossil fuel stations because of emissions. You said that nuclear stations are not reliable. I would like to hear why you are saying nuclear stations are not reliable.
Mr Perruzza: Mr Chairman, a point of procedure --
The Chair: I will quickly listen to your point of procedure if you will make it quickly.
Mr Perruzza: Yes, I am going to make it quickly. You asked the ministry staff to come before us to make a presentation and to --
The Chair: No, Mr Perruzza, the committee orders up its own business and the committee requests the presence of individuals. The minister does not do that. Her staff are here to assist her. That is the custom and procedure. That is the way I would like to leave it. Proceed, please. Mrs Marland has completed her question?
Mrs Marland: I have.
Hon Mrs Carter: While I think it is true to say there is no immediate problem with supply, we are in a recession and that may not continue. To say that the nuclear power stations were not as reliable as previously hoped, they are, I believe, functioning at about 62% of capacity on average at the moment. There certainly have been problems. We have had some repaired and others have developed problems. Maybe Mr Franklin would like to enlarge on that.
Mrs Marland: Excuse me, Mr Chairman. With respect, I am asking the minister about her statement. Her statement is very significant because she is the Minister of Energy.
The Chair: I understood your question. you have the right to ask a question.
Mrs Marland: So I am asking about her statement. She said that nuclear stations are not reliable and it is such a major statement that I want to know why she said it.
Hon Mrs Carter: I think the facts are there, Mrs Marland, with respect, that as the years go on the performance of the stations seems to gradually dwindle. Now this was not foreseen, but this is what is happening in practice. So Hydro is being faced with problems it was not expecting in this regard.
Mrs Marland: Can you give examples of where the problems are that are making the nuclear supply unreliable?
Hon Mrs Carter: I am afraid I do not really have chapter and verse in my head, but I know there are problems with some of the --
Mr Daigeler: Can you give that to us later on?
Hon Mrs Carter: We could get chapter and verse, but certainly there are ongoing problems.
Mr Perruzza: Mr Chairman, Mrs Marland had the floor. You have allowed an interjection from Mr Daigeler.
The Chair: Mr Perruzza, some day you may be fortunate enough to be Chairman. I will thank you to go through the Chair and I am sure Mr Daigeler will be so apprised, as well. Please proceed.
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Hon Mrs Carter: As I say, the average efficiency does seem to have been decreasing in recent years; there have been unforeseen problems. Even with the Darlington reactors, which, as you know, are just gradually coming on stream, we have had problems with one of those that was supposed to be functioning. Actually, there were problems with, I believe, a fuel bundle that became stuck or something. So that has not been contributing as much as was expected and has been causing problems. Even the newest reactors are not trouble free, as had been hoped.
Mrs Marland: Earlier today, when you lumped nuclear generation in Ontario into the problems associated with Three Mile Island and Chernobyl, you said you did not know what the differences were, yet you made another major statement. If you are saying that something is not reliable and you are relating our Candu reactors to Chernobyl and Three Mile Island, I need to know on what basis you are making these statements as Minister of Energy.
Hon Mrs Carter: I think you are reading rather a lot into what I said. I did not say they were the same. Candu is different; it has several important differences from other types of reactor. But that does not mean to say there are not still problems that could occur and which could be very disastrous if the right -- or wrong -- combination of events occurred. Because in any case we have human judgement and human error and people who are human working these things, and we are still dealing with what is inherently a very dangerous technology. There is no doubt about that, whichever particular system we employ.
I do believe the Candu is the best; we do have a good record. If I had become Minister of Energy and I had believed that these things were an imminent menace, then I would not have agreed to a policy that said we would keep the existing stations running. I am not saying I am expecting an imminent disaster. On the other hand, I am saying this technology is inherently dangerous. Hydro very rightly takes all kinds of precautions to make sure nothing untoward occurs. Still, residually, there is a very small possibility of something going badly wrong. Whatever the difference between Candu and the other types of reactor, we cannot rule that out, not absolutely. I am not saying it is likely, but we cannot rule it out.
Mrs Marland: You are saying nuclear stations are not reliable, and I cannot seem to get the answer from you as to why you say that.
Hon Mrs Carter: They are not reliable as far as running 100% efficiency goes; this is a different question, the safety, of course.
Mrs Marland: And you are saying they are unsafe as well.
Hon Mrs Carter: There is that possibility. It is the thought people have at the back of their minds. But that is not the main reason we are pursuing the policies we are pursuing.
Mrs Marland: Would you agree that on the subject of nuclear generation there has to be more than just thoughts, that there have to be basic data to support your statements?
Hon Mrs Carter: To which statements are you referring?
Mrs Marland: Any statement to do with nuclear generation. Would you agree that you cannot just philosophically be opposed to something, that you have to have empirical data that support your position and your argument?
Hon Mrs Carter: You are making the assumption that I am saying all this off the top of my head. That is not the case.
Mrs Marland: With respect, I am not suggesting it is off the top of your head, but when I ask you for specific answers you are not giving them to me, so I have to assume that it is off the top of your head because you are not giving me examples in the answers.
Hon Mrs Carter: But we are in this province having an environmental assessment to look into the basis of our means of producing power, and I do not see it, as some people seem to see it, as just a set-to between nuclear and the rest. I hope it is going to be a very constructive exercise in looking at all the different possibilities we have in this province, including saving energy by greater efficiency and so on. But we are not prejudging the results of that. As you know, we are continuing with that and --
Mrs Marland: But Minister, if you are --
The Chair: Please, Mrs Marland, let the minister finish.
Hon Mrs Carter: I would like to ask the deputy minister to call on a member of staff to enlarge on some of this.
Mrs Marland: Excuse me, Mr Chairman. My question is to the minister. It is not a question that staff can answer, because it was not a statement made by staff; it was a statement made by the minister.
The Chair: Mrs Marland, you may interject to suggest that you are not interested in the response from staff, but we cannot suggest solely that the minister be limited in her ability to call her staff. After all, that is one of the reasons they are here.
Mrs Marland: It was not a staff statement.
The Chair: I do not wish to debate with you, either. The point is that if you do not wish to have the staff respond, that is fine. The minister has suggested she would like that deferred and you have indicated you would prefer not. It can be left as simple as that. You have a few more minutes if you would like to proceed with another question.
Mrs Marland: On the subject of energy from waste, the minister talked about the necessity of the review for the economies and everything else that is related; you talked about tipping fees and so forth. I want to get back to this question: If the economies are there for energy from waste facilities, if the tipping fees are whatever your ministry decides they need to be in order to make it economically sound, do you support energy from waste?
Hon Mrs Carter: I do not think it is so much whether one supports energy from waste or not. You see, the first objective we have, the first of the 3Rs, is reduction in waste. In other words, we are taking a different view of waste. We are saying that all this stuff we see here -- these cans, these bottles, this glass, this vegetable matter, whatever -- can be used in some better way. We do not need to call it garbage. We can be constructive about it and say here is the raw material for something. In the case of the wet waste, obviously it is fertilizer; glass can be melted down and remade, cans and so on. What we are saying is that we want to look at reducing garbage to the absolute point where we cannot reduce it any more --
Mrs Marland: I understand that. When you get down to that last bit of garbage, would you burn it?
Hon Mrs Carter: -- and then we might find that energy from waste does make sense for some categories. But of course, even then we have to consider the environmental aspect of it and make sure we are not burning anything so that we end up with pollution, so that we are just transmuting the problem rather than solving it.
With tires, for example, somebody wants to microwave them -- I do not know whether you would call that burning them or not -- or you can use them, it has been suggested, in a cement factory, as part of the fuel for that. It may be that that kind of thing might be valid, but we need to look into that further and meanwhile we do not want to be committing quantities of waste to energy from waste plants that could probably be better disposed of in some other way.
Mr Jordan: I think the question really is, after the waste has been recycled and so on, would you agree that the residue that is left could be burned as a means of generating steam for the purpose of generating electricity?
Hon Mrs Carter: I think when we get to that point the question is the environmental one, as to whether we can do this with complete environmental safety.
Ms Haslam: I love to look back at newspaper articles, and this one was really interesting to me:
"In embarking on a future with less dependence on nuclear energy, Ontario is joining an international trend. Six nations -- Austria, Italy, the Philippines, Poland, Sweden and Yugoslavia -- have taken the radical step of announcing a phasing-out of their nuclear plants. Four others, along with the Russian republic, have announced nuclear moratoriums similar to Ontario's."
Some "see a mother-lode of potential contracts from the move....`Between conservation and non-utility generation, there is no problem filling the gap left by the nuclear moratorium.'...
"`If you lift up the rug and look underneath, you find that there is a tremendous amount of co-generation capacity in industry.'"
What I would like to know is, as the $240 million --
The Chair: If you could attribute that article, it would be helpful.
Ms Haslam: That was the Globe and Mail, 24 November, "Ontario Hydro Faces Reversal of Energy Policies." That came from the researcher assigned to the committee.
I asked where the $240 million was going. As it was not going into the ad campaign and the engineers over there -- and the Hydro people are now here -- I would like to know what concrete projects there are out of that $240 million. Are there places where you have that $240 million slotted, concrete projects?
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The Chair: Do you understand the nature of the question?
Mr Franklin: Yes, I do.
The Chair: He was not here when it was raised, but I think he understands it. If you are comfortable, proceed, please.
Mr Franklin: The $240 million that has been reallocated from the design and engineering, the conceptual work for a Candu station, has been switched to our energy management branch. That $240 million was to be spent over three years. We are now in the design stage of new programs which will be funded from that $240 million. I cannot tell you specifically what the $240 million will be used for, but I can give you some ideas of how we are going to do it.
First, we are launching a very much heightened energy audit program -- energy audits of homes and businesses and other institutions -- in order to identify where additional savings could be made in energy savings.
Ms Haslam: On a point of information, Mr Chair: When he mentions something, could I ask him a specific or do you want me to wait until he is done and then ask my specific?
The Chair: I think the two of you can get into a comfortable exchange.
Ms Haslam: Oh, good. That is my favourite way.
The Chair: As long as you go through the Chair, I have no problems.
Ms Haslam: If I may ask a supplementary, you mentioned homes. Do you have any details about how you are going to do that?
Mr Franklin: No, not yet. We do have an energy audit program for homes now, and so do the municipal utilities, but what we are looking for is perhaps doing more of them sooner in order to get more complete coverage in a quicker period of time. Some of the money will be allocated towards two different lighting programs, one in the commercial sector and, again, one for residential usage.
Ms Haslam: In commercial, are you talking about the new lights on highways, the new yellow? Is that a project where you could infuse some money for that type of municipal --
Mr Franklin: We already have a municipal lighting program that is available to municipalities in Ontario. It has been very successful, as a matter of fact, and we continue to promote that. I do not know of any change or acceleration of that program. The ones I was thinking more about were in office buildings and in industrial locations.
With me today is the vice-president of energy management. If you like, he could probably give you a more complete answer to your question about how these funds are tentatively being reallocated to new programs.
Ms Haslam: My question basically was: Are there concrete projects? The short answer is that there are concrete projects for the $240 million.
Mr Franklin: There are concrete programs under development for the additional $240 million. We wanted to direct that money either into an enhancement of existing programs or preferably new programs.
Mr Jamison: My question deals with supply. There has been a scare about blackouts lately. I would like to know how Hydro's record on system reliability compares to other jurisdictions, such as Quebec and Michigan, say, New York state; how we stand as far as that goes.
Mr Franklin: I can answer that generally and perhaps Mr Niitenberg, who is charge of operations, can flesh it out. The reliability of Ontario's system is better than Hydro-Québec's, for instance, the one you mentioned. That is not to disparage Hydro-Québec. They happen to have a transmission system and a generation system where the generation is way up north and the use of electricity is way in the south, with long ribbons of transmission in between. When you have that kind of situation in difficult climatic conditions, as Quebec does, then you have reliability problems. Our generation is more strategically located around the province and our transmission lines are generally shorter, so we have not had the experience as badly as Hydro-Québec has had.
I do not know whether Mr Niitenberg can respond more fully to your question. You are looking at system reliability as the customer sees it, I assume.
Mr Niitenberg: Over the last four years our generation reserve has been reduced; this has been the case because of a much higher than predicted load growth in the previous five- or six-year period. So we went into 1989 and 1990 with fairly low reserves in terms of generating capacity. Over the next four years, the reserves will be increasing. This year the reserve margin will increase because of Darlington production and next year another Darlington unit will come in, so we will be better off from a generation point of view.
As far as customer delivery point reliability is concerned, we are still considerably above average as compared to Canadian utilities.
Mrs McLeod: I had earlier asked a question of the minister, and I was asked to redirect the question to Mr Franklin when he was here, so I will do that at this time.
Mr Franklin, it is our understanding that the government has essentially directed that there not be feasibility studies done on sites for potential new nuclear generators and that you have diverted those funds at present. Could you tell me whether research is being carried out on other forms of generation, of new generation, as you were proposing to do when the DSP was set forward?
Mr Franklin: As a result of a government directive, we have ceased all of what we call definition work on a Candu station, that is, the environmental assessment gathering work as well as preliminary engineering work. That has been stopped and the moneys, as I mentioned to Ms Haslam, have been diverted there. We continue to do definition work on hydraulic stations, for instance, gathering the environmental assessment material needed in order to support an application. For instance, we have filed an EA for the upgrade of the Niagara River, we have been doing work on the Little Jackfish River and other hydraulic sites like that. We have been doing some modest amount of work with regard to combustion gas turbines as well.
I guess the short answer is that we have not put a moratorium on other kinds of technology and continue to do a modest amount in other technologies.
Mrs McLeod: Can I ask you then, because, as you know, I am very familiar with the amount of work that went into ensuring that the environmental assessment process that was set out to review the DSP would be very objective and would look carefully at your plan from all aspects: Is it your belief that, in having a moratorium on the work that is being done on only one of those alternatives while work on the other potential new generation alternatives continues, the outcome of the review of the plan is essentially being prejudged?
Mr Franklin: No. I do not think it is being prejudged. I think there is a question of timing. We had expected to do this kind of work in parallel with the main hearing. We are not doing that now, and I think what it means is that we will have to do it in series if the hearing decides that nuclear is the right technology and the government agrees with that. I think it is not so much prejudicing the choice of technologies but it may have a constraint on time.
Mrs McLeod: I will leave the questioning with perhaps just a statement, because I recognize the sensitivity of being able to respond. I guess it is a concern from an opposition perspective that the government having given a directive that applies to only one form of alternative generation does constitute at least a suggestion of prejudging, which causes us in turn to be very concerned about the dollars that are being spent and the time that is being taken on the environmental assessment process if in fact the government is not receptive to considering whatever recommendations that panel brings.
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I would like to go on to a second question, because we have a number of questions and I know we will run out of time. Perhaps I could direct this question to the minister, and she may wish in turn to call on Mr Franklin for some further comment. There have been, as you indicated a little bit earlier, a number of articles in the papers that have related to the way in which electricity rates are set, the inclusion of the capital costs for Darlington. You cited one of those articles a little bit earlier this afternoon.
One part of the article that you cited suggested that the government might act on an Ontario Energy Board recommendation and change the way in which electricity rates are established. Given the fact that Ontario Hydro, by law, is independent in the setting of electricity rates and given also your statement of raising some real questions about the establishment of electricity rates, I would like to ask, Minister, whether it is your intention to look at intervening directly in the establishment of electricity rates and, if so, if you are planning to bring in changes to the Power Corporation Act.
Hon Mrs Carter: I have asked my staff to review the report and consider all the board recommendations and comments from Ontario Hydro. I do not think I can give you a dogmatic answer on that straight away.
Mrs McLeod: We do recognize then that Ontario Hydro is independent in the establishment of electricity rates and there is no intent to --
Hon Mrs Carter: It certainly is at the moment, but this is something that may be under review.
Mrs McLeod: I will yield the floor to my colleague.
The Chair: I am not in any political party's time frame at the moment. I am just having a general list of speakers. I have Mr Jordan on it, but if you wish to continue in rotation, I am at your guidance.
Mrs Marland: Why do we not go back to 15 minutes. They were finished, apparently.
The Chair: That is fine. We will proceed on that basis. Mr McGuinty.
Mr McGuinty: Arising from Mrs McLeod's question, I have a question regarding buyback rates. Can you shed any light, please, Minister, on any advice or direction you have given to Ontario Hydro with respect to increasing the buyback rates?
Hon Mrs Carter: I believe they have already increased them to some degree on small scale renewables. This is certainly something we are looking at very seriously, because I think the people who produce this power should at least get equivalent payback to what is being paid for regular power. This is certainly something that we are working on, that we shall be discussing more with Ontario Hydro.
Mr McGuinty: Arising out of that then, I will address this question to Mr Franklin and take advantage of his presence here. The Power Corporation Act, as I understand it, requires that Ontario Hydro supply power at cost. That is one particular demand that is placed on it. The other demand, as I understand it, is that Hydro respect government policy. I see a potential conflict there in terms of increasing buyback rates and supplying power at cost. I wonder if you see that potential conflict. Would you comment on that for us, please?
Mr Franklin: The buyback rates of Ontario Hydro are based upon its avoided costs, and the demand-supply plan hearing that we are about to enter will determine whether or not our avoided costs calculation is fair. It is something we review every year and we have been moving them up every year, as our avoided costs change.
The Power Corporation Act requires Ontario Hydro to respect an order in council giving it directives. As I understand that, we are to leave no stone unturned in order to respond positively to a direction from the government. I think the phraseology that was chosen there was to ensure that the directors of Ontario Hydro always had the freedom, as a result of fiduciary responsibilities, to accept the directive or to respond that they were not able to. I think that that will be a determination in each director's own mind at the time they are faced with a particular directive order.
My own view is that if the board was to respond positively only with regard to things they would have done anyway, then there was no need for the directive power. Clearly, the directive power was to require Ontario Hydro to do something that it would not otherwise have done itself, and for the directors to so vote. It will become a matter of conscience for each of those directors as to whether it violates their individual fiduciary responsibilities.
Mr McGuinty: I take it from that then that the most recent increase has not given rise to such a twinge of conscience?
Mr Franklin: Increase in what, sir?
Mr McGuinty: The buyback rate.
Mr Franklin: The increase in the buyback rate was a decision by the board of directors, without any comment from the ministry or the government. It was our annual review that we do every year and we increased it because we felt that that was a change in our avoided costs.
Mr Daigeler: This question is really directed to the minister and it relates to this directed reallocation of moneys regarding nuclear development. I think that directive from you, Minister, was certainly a departure from the previous understanding of the independence of Ontario Hydro or a somewhat arm's-length relationship.
Can you describe for us how you perceive the relationship between the Ontario government and Ontario Hydro? Are you in future planning to intervene in the same way in requesting Ontario Hydro to allocate certain staff and spend its money in particular ways? I think it was implied in Mrs McLeod's earlier question: Are you looking at changes to the Power Corporation Act?
Hon Mrs Carter: We do see our relationship with Ontario Hydro as being a co-operative one. We want to work with them in a friendly way. But we have been asked to review the options for strengthening Hydro accountability and responsiveness to the government and to the legislation and the people of Ontario. I think the demand-supply plan hearings will be useful in this regard. Nominally at least, the Ministry of Energy is in a position of giving directives to Ontario Hydro. I think that has always been the case, and it may be that different governments have viewed that in different ways. But that is the position. We are certainly willing to review the Power Corporation Act if that appears to be necessary.
Mr Daigeler: Is this presently under way?
Hon Mrs Carter: No, it is not.
Mr Jordan: Mr Franklin, I am a bit concerned over that fact that over the years we have developed in the province of Ontario what I would like to refer to as an electrical industry for the province and it would appear now that, if we follow the format of our new government, we are going to be pointed towards providing an electrical service, something that our old sign used to hang out, saying, "Hydro is yours -- use it!"
The people of Ontario did make good use of it and I do not believe they were wasteful. I think they made good use of it but maybe they made a more diversified use of it than some of these other countries that we are being compared with. I think we did go ahead and develop the technology to be able to keep that in front of the people of Ontario, that we do have the expertise to supply you with the electricity required and we would like to do that. I am wondering how comfortable a corporation can be when its product is being displayed as something that is causing a real problem with the environment and "Don't use it unless you have to."
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I am not talking about conservation and efficiency. We always had that. I know, as I said earlier, since 1967 we went through conservation of energy many times through insulation of homes, commercial buildings, a new style of motors for farms, all those kinds of things. We were always conscious of that but we were more conscious that we maintained an electrical industry that this province was built on.
I see it now in jeopardy if we are going to try to convince industry that it is welcome in Ontario with an abundance of power, because we are going to have it because he did not use it and he did not use it. That is really what I see happening. I do not know if it is a fair question, but I am not comfortable with it. I was wondering how you as a corporation feel. Do you see it as a turnaround?
Mr Franklin: I think you are quite right in almost all your remarks, Mr Jordan. Utilities, generally speaking, up until the 1980s saw themselves as a supplier of an electrical system and they took great pride in doing so. It resulted in having abundant electricity at a reasonable price. I think it is also true to say that, since the 1980s, electricity utilities have been more customer-focused. In that regard I am saying to you that they started to look at how they could best meet the customer's requirements.
Was it more productive to meet that from the customer's point of view by simply increasing supply? Or was there a way of showing customers how they could meet their requirements by using no more electricity or indeed even less electricity? We have been planning and pursuing a policy of what is right for the customer. If we can meet customers' demands by an alternative way, by showing how they could meet their demands without using electricity or by using less of the electricity, then that is the right thing to do. If we can show that a heat pump is better than a baseboard heater and it is in their economic interests to do so, then that is our obligation.
But we became focused on the customer and how to meet that customer's need, rather than simply saying that every continued requirement for demand must be met by increase in supply. We do not pursue conservation or energy efficiency for its own sake. We believe that our mandate is to pursue it to the extent that it is more economic than providing supply. So in some respects we have moved, and most utilities have by the way, from being simply suppliers of kilowatt-hours to suppliers of energy service, bringing into the equation total value to our customer.
I believe that if you do that, that if you try to meet demand the most efficient way for your customer and do not lose sight of both alternatives, the reduction of the demand through energy efficiency or conservation or indeed the provision of supply in the most economic way, that is the best way for us to fulfil our mandate.
Mr Jordan: I appreciate your policy of providing what you think is best for the customer. I believe that was again always the policy generally. But what I am concerned about is that we can sort of con ourselves into believing that, rather than having to come up with new product, if you will, new generation facilities, we can in fact through negative marketing or conservation have energy available for new uses that would have been used inefficiently in other ways.
If the province is going to continue to grow and expand and be a leader in Canada as it has been, I would have to see some figures that said these are the megawatts we can save and these are the megawatts that we need to keep Ontario humming, and I have yet to see that anywhere.
Mr Franklin: If I could point you to a document that says that in spades, I would commend to you the reading of our demand-supply plan. The demand-supply plan does not envisage responding to the demand in a single way. It is a balanced approach. We have examined for five years how best to meet the growing demand for electricity in this province and we have come to certain fundamental conclusions.
One is that we should try to meet as much of that growing demand by rehabilitating our plant and ensuring that we can extend the useful life of it for as long as we can most efficiently. We have said that we should embark on an energy efficiency and conservation program which is economically based, where it is less expensive to diminish the demand than it is to build new supply for that demand.
We have said that we should exploit to the extent that is economically justified the production of electricity by cogeneration or by parallel generators. We have said that we should get as much of the remaining economic hydraulic that is still available in the province to go towards the supply side of it. We have produced a contract with Manitoba for 1,000 megawatts of power which we believe again meets the economic test.
It is only when we have done all of those economic things first that we believe we should turn to the next supply issue, which is a major generating station, and in that case, we have brought balance as well to the plan. We have not said we should rely on any single technology.
We have said for the base load, in our opinion, the most economic and environmentally sound is to use nuclear power. For the intermediate load, we believe we should use coal properly equipped with scrubbers, and to that extent we can rely on our existing coal stations to handle that once they are so equipped. We say that if demand continues to grow beyond that, we should use gas turbines for the very few hours a week or day that you need it for peak load.
I really would commend you the plan, because I think it addresses your concerns. It predicts, as best we can, what the load will be. It predicts how much we can achieve in meeting that by conservation, by cogeneration, by rehabilitating our existing plant, by buying power either for cogeneration or from Manitoba, and finally how much we think is left over that is needed for a major generating station.
Mr Jordan: So it is quite clear that the best way to provide the base load, along with all these other types of supply, at the present time is with nuclear generation.
Mr Franklin: We think that that is the best from the point of view of trading off both the cost and the environmental impacts. There is no benign way to generate electricity. They all have their environmental impact cost. If we had relied solely on fossil fuel, then we believe that we could not meet the impending CO2 limitations which are bound to come, probably in this decade. This is a tradeoff. As I say, there is no benign way. We think it is important that we choose a technology. We recommend nuclear for the reasons that are contained in our plan, but the more important decision is that we choose a technology.
Mrs Marland: Mr Franklin, as you know, you and I have discussed scrubbers before a number of times with having the Lakeview generating plant in my riding. I am always happy to hear you say when they are properly equipped with scrubbers and I recognize the financial constraints on doing that quickly.
Earlier this afternoon, the Minister of Energy made some very significant statements. In the discussion of nuclear generation she referred to Three Mile Island and Chernobyl. Frankly, I am very concerned about when we deal with this subject with the public that anybody in a position of responsibility gets into fear-mongering, because it is so easy to upset the public unnecessarily on any matter whatsoever, let alone nuclear generation. I believe the public has enough to cope with in today's life without unnecessary concerns.
Even with an NDP government moratorium on nuclear generation, according to the minister's statement, some time next year about 60% of our Ontario electricity supplies will be from nuclear power. So I have to ask you, in your position, how you feel about the suggestion that the risk with nuclear generation is based on the comparison with Three Mile Island and Chernobyl, the risk in Ontario today?
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Mr Franklin: I believe I will let my colleague answer that because he is more familiar with the actual situation at Three Mile Island, which pre-dated my arriving at Ontario Hydro, and anyway, he is an engineer and I am not.
My own view of it is that the station at Three Mile Island is considerably different from a Candu station. It is a light water reactor as opposed to a heavy water reactor. If you have a dispassionate view of what happened at Three Mile Island, I do not think it was anywhere in the order of the Chernobyl situation.
The Chernobyl station again is a different technology than ours. I visited the Chernobyl station since that accident. I have seen it up close. I do not pretend to be an engineer, but I did remark that there is quite some difference. It did not have a containment building of any kind. It had an operating system which acted at the same time as its safety system and of course when it was decommissioned, so was the safety system.
The safety system I believe worked in 12 seconds, when it worked, and of course the nuclear reactor ran away in something less than two, so if the person who was sitting there with a finger on the button ready to push it would have been too late in any case. I think there were eight operating criteria that had been violated. You almost had to set out to make this thing happen, and the reactor tried desperately to compensate for that.
We are dealing in a country where the public oversight is entirely different than it is in Ontario and in Canada, thank goodness. I am told, and I will have to turn this over now to Mr Niitenberg, that the type of accident that happened in Chernobyl and that happened in Three Mile Island could not happen here in Ontario. I am not saying accidents cannot happen, but I am told that those kinds of accidents cannot happen.
Mr Niitenberg: Our system, the Candu system, really is designed in terms of defence in depth and it has the basic assumption that people will make errors and components will fail, so a number of safety systems have been designed into it, the main one being a strong containment in a vacuum building. These are components that were not present in Chernobyl.
I would like to draw attention to one key difference, and I have also visited the largest RMBK which is Ignalina. It is a 1,500-megawatt, Russian-designed station after the Chernobyl design, and the main difference between that and Candu is that our moderator, or what surrounds the fuel channels, is heavy water. Theirs is graphite or very highly refined carbon. The difference really is pretty fundamental. Carbon burns and water does not.
So we have a considerably different design. We have considerably different control systems and protection systems.
Mrs Marland: And the fuel rods are horizontal in the Candu, are they not?
Mr Niitenberg: Yes.
The Chair: I appreciate that. Before I recognize Mr Charlton, I just wish to advise the committee that we have spent two hours on vote 1403 and that we have three hours remaining in estimates. I just bring that to the committee's attention. Mr Charlton.
Mr Charlton: Mr Franklin, we have had a number of exchanges over the years; sometimes we have agreed, sometimes we have not quite agreed. But I have been interested in the line of questioning that has been pursued this afternoon and I would suggest my impression is that perhaps the opposition is not utilizing you very well here today in terms of the issues that it was pursuing earlier in the day. So perhaps I will help them out by pursuing with you some of the issues they pursued with the minister earlier.
Mr Jordan suggested to you in a question a few moments ago that -- it was a question around whether or not it was dreaming -- I do not know if that was the exact word that he used -- but whether or not it was reasonable to assume that you could go into the future without any supply options in addition to the efficiency that we have talked about. Has the government at any time ever suggested to you or any other officials at Ontario Hydro that there was a future with no new supply options?
Mr Franklin: I do not recall any such suggestion, and I think that the difference between us, if there is a difference, is to what degree can we rely on conservation and non-utility generation and for how long can we postpone the date when we will need another generating station.
Mr Charlton: That is precisely my understanding of what the government's new energy direction is. So having said that, would it be fair as well to say that if you extend that difference between the government and the DSP that is now in environmental assessment, the difference is in the assessment of the amounts that you get from the major pieces in the mix, rather than a fundamental difference about the need for a mix?
Mr Franklin: I believe that is so, but I think it has also been made clear that if one can meet the generation mix of the future without nuclear, this government would prefer to do so.
Mr Charlton: That is correct and I do not think the minister has hidden that at all. I think the impression the opposition was trying to leave, and that leads me to my next question, was that some people out there in this society, and specifically some large industrial consumers, have expressed the view that perhaps the government's policy, the new direction, is in fact leading this province down the road to an unreliable electrical system and that we may face brownouts and blackouts down the road.
Now, my understanding again is that the government's policy was discussed with you at length prior to its announcement, and I do not perceive the approach to a different mix as necessarily an approach to disaster, provided that when push comes to shove and a decision has to be made somewhere down the road, that the decision is made. Is it your opinion that the new direction, including the moratorium on nuclear development, is careening us down a road to disaster in Ontario in terms of reliability?
Mr Franklin: I think that we are talking about the post-2000 era, because that is when new generation will come in. I think that we have to be careful about the timing, that we have to be prepared for the alternative in case load grows more than the 2.5% that we talk about, that we do not get as much from conservation as we thought, that the non-utility generators cannot produce as much as we thought. I think there is a question of being prepared for those eventualities.
The concern we have is that if we postpone too long being prepared for a nuclear option, then we will in effect delay the opportunity for being able to implement that option and therefore we will have to bring in other forms, in our opinion less economic forms -- gas turbines, for instance.
So I think it is a question more of economics and how much it may cost if it is, rather than whether or not we will have reliable supply. But it is our view that we cannot dally for ever in making the judgement about a menu of technologies and a menu of sites without jeopardizing the economics of our system.
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Mr Charlton: I think we agree on that precisely and I guess if I can interpret what you are saying, and then you can comment on my interpretation, as long as we are monitoring our progress carefully, in consultation with you people at Hydro on conservation, on non-utility generation and on the hydraulic options that are part of your plan, that we have asked you to speed up and so on and so forth, as long as we are dealing with that on a monthly and an annual basis and understanding all the time where we are at and whether we are ahead of target or behind target and staying in the game, is there any real jeopardy in the different approach that we have suggested, as long as that monitoring and consultation goes on?
Mr Franklin: I think the one jeopardy that we could face if we procrastinated too long or took too long in our deliberations is whether or not the Candu technology will still be available to us. Certainly at Ontario Hydro, because we have so many units to run, there will always be a core of nuclear capability and nuclear expertise. Certainly for the next seven years, as we have an agreement with AECL to participate in the funding of research and the federal government has agreed to match its appropriate sums, it is not a question of that being lost as well in the seven-year period.
I cannot speak for the individual suppliers of valves and tubes and things like that. Whenever I meet them, they naturally tell me that they are hanging on by their fingertips and are concerned that they will not be there when we need them. That is not a judgement that I can make, frankly, whether that is so or not. I mean, that may be nothing more than good marketing by these people.
But I think except for that particular concern, then as long as we monitor carefully and as long as we track a load growth which we are predicting at 2.5% and make sure that it does not double that or something, as it did in the past, and as long as we are able to make timely decisions -- and I say that because in our society today one can derail even the best-intentioned organization of Ontario Hydro or the government, through the courts -- as long as we do not face that kind of sidetrack, then I think your assumptions are right.
Mr Holt has been wanting to interject and if you do not mind, I would like him to comment.
Mr Holt: I just wanted to comment on a couple of other parts of the problem that have not been mentioned. Electricity systems, plants and facilities do get older. The minister referred earlier to the fact that nuclear plants were starting to decline in performance because of their age, but those plants are only in the order of 10 to 15 years old. Some plants and facilities that we have are as old as the company itself. They are in the 80-year age, and they are going to be retired like anything else and any other facilities over the time frame. So when we come to replace those plants, we have to look at whether the same technology is appropriate or something different.
The other factors that affect our planning are unknowns regarding such matters as federal immigration policies, and we know that people come to Ontario. There is evidence that if pollution control legislation affects industries, there may be a switch away from their use of fossil fuel to electricity, which some people see as more benign, and when you put all that into the planning question, then you can quickly move yourself towards the higher load growth and in the demand-supply plan, which Mr Franklin referred to, the higher load growth does require major new supply soon after the turn of the century.
If hearings continue -- and they are taking longer than we had initially expected, for a variety of reasons -- and if that time does go by and we do not start major new plants until after the mid-1990s, then it is very clear that you cannot bring them into service until soon after the year 2000. It is going to be after 2005 or close to 2010. Therefore, if all that does come about and even if we get the enhanced energy efficiency gains and contributions from private power generators, we could still have difficulty in meeting supply. Our reliability levels can quickly go from being very adequate to being inadequate, which as Mr Niitenberg mentioned, has happened from 1986 to 1990. So it is a very dynamic planning scene. Coupled with that are huge lead times of 12, 14 years to put major supply in place. And that is the dilemma we face.
Mr Charlton: I think we all understand, though, that the worst-case scenario, which is what you have just described, would be difficult to meet under anybody's plan.
Mr Franklin: Perhaps, but we have managed to do it for 84 years and we have had some surprises along the way.
Mr Charlton: Yes, but you have never had the 25-year projection of a worst-case scenario involved.
Mr Franklin: No, but we have had acceleration in growth. We have had early retirements of plant and things like that which Mr Holt refers to, so it is possible to do. Mr Holt said we may not have the supply post the year 2000; I believe we would. It might be a more expensive supply; it might be gas turbines. The only caveat I have there too is, with new legislation or new limits coming on CO2, will we be able to use fossil fuels in the future? I am not certain. Second, the kind of quantities we are talking about would probably increase the use of, say, natural gas in Ontario by 40% and it is questionable whether you can expect to have pipeline capacity very quickly, because pipelines take a while to build as well. I do not want to create panic either because I am interested in industry remaining in this province and coming to this province because that is what, after all, our quality of life in some respects is relying on, but I think we have to recognize that in 25 years there are tremendous uncertainties. It is not an exact science.
Mr Charlton: I think we all understand that. I think the point that has to be made for the committee here is that or you were going to proceed in terms of the DSP in terms of planning and preparation for the future, not at the high load growth but at the middle load growth and that the problems you are talking about in timing, if we end up in the high load growth, would have existed for Hydro. Whether you could have accomplished it or not as you have done in the past is another question, but the problems in terms of timing to have to up your plans would have existed in either scenario.
Mr Holt: I just wanted to add that planning is a pretty inexact science. I was involved in 1979 and 1980 in doing forecasts of load forward and, you know, in 1979 we forecast the load for 1989, as we do, 10 years forward. I was looking at that forecast the other day and we were right on. We entirely missed the depression of the early 1980s and we missed the recovery at the end of the 1980s, but we hit it right on for 1989. It is very difficult to know what we are going to need in 1990 and the demand-supply plan is not about dealing with the current recession, but is dealing 10, 15 years into the future. That is the only point I was really trying to make.
Mr Charlton: Just one last question and then I will pass it. Mr Jordan mentioned, when he was questioning the minister earlier, that industry depends on reliable supply of electricity and he implied that it was likely that industry was already leaving this province as a result of the government's policies and perceptions of unreliable energy futures in Ontario. So, first of all, are you aware of any industries that have left this province because of unreliability of supply problems, and second, because it goes back to something you said earlier, Mr Franklin, the other utilities -- I should not say the other utilities -- some other utilities on this continent are already moving in precisely the same direction that has been set out by the government, in the jurisdictions where these people are reputed to be moving.
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Mr Franklin: I am sorry. Which government direction did you mean by that?
Mr Charlton: This government's direction.
Mr Franklin: Moratorium on nuclear, is that --
Mr Charlton: No, the whole new energy direction, not just the moratorium on nuclear. Thrust to efficiency; small non-utility generation.
Mr Franklin: I think most utilities have a measure of conservation and energy efficiency in their response to growing demand. There are some like TVA that have completely abandoned energy efficiency and conservation, but there are others that have not, that are still pursuing them in the same way we are, in kind of economic terms.
I do not know personally of an industry that has decided not to invest in Ontario as a result of concern about reliability, but an article came across my desk this afternoon which I did not have a chance to read through in its entirety. I think it was in Electricity Today or something, a magazine like that, quoting extensively from the major power users of Ontario who say that is exactly what is going on today. I do not know whether it is credible or not. I am just reporting what I was reading in that magazine.
Mr Charlton: But you are not aware of any?
Mr Franklin: I am not aware of any at the moment, no. I know of an awful lot of companies, though, that expressed concern about it.
The Chair: Your reference to the TVA, that is the Tennessee Valley Authority?
Mr Franklin: Correct.
Mr McGuinty: Mr Franklin, I gather, and I had somewhat of an inkling of this before in any event, that there are significant difficulties associated with forecasting accurately in terms of being able to predict growth and demand for electricity. How can we be satisfied that the mechanisms that are in place now to monitor the effect of the conservation programs are accurate enough or sufficient enough to give us an idea of when we are going to need more facilities?
Mr Franklin: Tracking and measuring the results of energy and conservation programs are exceedingly difficult. We are told that we have the state of the art kind of tracking system, but it is not easy. I think what we are concerned about is that to the extent we can measure each program, we should measure each program, but the ultimate measurement is what is the total load at the end of the day, and that is what I think we want to monitor to make sure that regardless of what is causing it, the amount of demand that we have to meet after energy conservation is available from the capacity of the system.
We are introducing new energy-efficient monitoring systems every day and we will continue to do so, but I cannot tell you that it is an exact art. It is much like forecasting the future as well. There is a certain amount of estimating.
Mr MacCarthy is here, our vice-president of energy management, and he is the one which I charge on that very same question, "Tell me how much I am getting for my money in energy efficiency?" and he might be able to augment what I have been saying, if you want to hear from him.
Mr McGuinty: Sure, by all means; yes.
Mr MacCarthy: My name is Dane MacCarthy. I am vice-president of the energy management branch. Some of the monitoring mechanisms that we use right now are things like individual metering activities. That is probably the most extensive and the most reliable, where we are pursuing energy efficiency initiatives and we have monitors right in place, meters in place that measure the difference that existed, before and after. Another mechanism we use is an estimate of the average savings associated with, say, an energy-efficient motor. We know the load patterns within a specific industry from the data that we get on the billing system, and so with the introduction of an energy-efficient motor, for example, into that industry, assuming it has the load shape that others in that industry have, we can multiply the normal use within that industry and get a calculation. This is typically what is done in other jurisdictions, essentially engineering estimates.
Mr McGuinty: Have you been able to factor in the function of the recession in terms of the diminution of demand?
Mr MacCarthy: The recession has had an interesting effect and I am not sure whether it is entirely working for us or against us. Where the economy is booming, the focus of industry in particular is on additional production and not on energy efficiency. In a recession, they are interested in saving as much as they can, but they do not have a lot of capital to do it, so there is a balancing effect. But our programs provide significant incentives, so if there is a quick payback in a recessionary economy it is still quite attractive.
Mr Franklin: I guess that same kind of reluctance to invest is true of the householder too, who in times of recession is not likely to go out and buy that new refrigerator which is energy efficient, but postpones it for a day when the paycheque is bigger. And so you get kind of contradictory forces working in a recession versus a boom time.
Mr MacCarthy: If I might just continue with the measurements, each of our field representatives, when he is visiting commercial and industrial customers, notes the specific application that took place, their involvement in that process, and we also measure in terms of the system impact so that it is not only the impact at the customer level; it is an impact at the system level. So we have a detailed monitoring system. It is about as good as you can get, but as Mr Franklin said, it is not perfect.
Mrs McLeod: Mr Charlton referred a little bit earlier to the new directions of energy policy of the new government. As I suggested at the beginning of our session, the only new directions that I can determine exist at the present time are a stance on new nuclear generation and a tendency to want to directly intervene in Ontario Hydro. So I am going to return to both of those issues with my question. Minister, I apologize for not having the specific reference before me, but during the sitting of the Legislature in the fall, you made a statement at one point that indicated you had given some directive to Ontario Hydro in terms of the direction of its research money, I think in relationship to AECL. I wonder if you might tell the committee what that directive was.
Hon Mrs Carter: That the money should be used for research on how to improve the existing stations and things of that kind rather than on the development of new ones.
Mrs McLeod: Right, so that is research money being expended not only by Ontario Hydro itself, but being expended by Ontario Hydro through AECL.
Hon Mrs Carter: Right, and also on safety in the nuclear plants.
Mrs McLeod: I wonder if with your agreement I might then ask Mr Franklin if he could give us some indication of how much money was being contributed by Ontario Hydro to AECL, how that money is being allocated, and specifically whether any portion of those funds is being directed towards the marketing division of AECL.
Mr Franklin: Our expenditure to AECL in support of the research program was at a level of about $40 million per year. That money was used primarily for work that we wanted with regard to our existing stations. The program that we now have with them has increased that to about $72 million a year. There was a small portion of that to be earmarked for the Candu 3 type of technology. which is the next phase of Candu technology, but we have since asked that all of our funds be directed towards technological research that would enhance the operation and safety of our existing stations.
Mrs McLeod: So all funds are going to research and none is going to the marketing division.
Mr Franklin: No, we never made any funds, to my knowledge, available to the design and engineering group marketing reactors abroad or indeed in other provinces, that I know of.
Mrs McLeod: I should know this and I have simply forgotten. The branch of AECL that operates out of Mississauga: What is the focus, the range of work they do at that plant?
Mr Niitenberg: Candu ops.
Mr Franklin: They do design and engineering, rather than research.
Mrs McLeod: Of Candu operations, so there would be no dollars allocated to the Mississauga operation.
Mr Franklin: I do not know of any, except where we will contract with them to provide us with engineering services which we would normally do ourselves, but do not have enough people or something like that.
Mrs McLeod: Thank you and I am going to yield the floor. I would like to perhaps serve notice of a question to ask the minister tomorrow, and coming back to some of Mr Charlton's earlier comments and the fact that I think Mr Charlton was suggesting that a different mix would be possible in the DSP. The discussion that ensued recognized the fact that this mix would obviously take both Ontario Hydro and the Ministry of Energy beyond the targets which they felt were realistic in energy efficiency, and would therefore require, if there was to be a different mix, new generation involving what Mr Franklin has described as potentially less economical alternatives.
I want to relate that back to the minister's indication earlier this afternoon that perhaps a little bit of an increase in Hydro rates would be acceptable, given the fact that we may be looking with these new directions at less economical energy alternatives. I am wondering what impact she will feel that will have on rates and for the sake of estimates, where we have to be a little more specific than just "a little," whether she might tomorrow give us an indication of how much is "a little."
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The Chair: I see the minister is making some notes, as are her staff, and she will take that under advisement. Mr McGuinty briefly and then Mr Daigeler. You have about four minutes left.
Mr McGuinty: Mr Franklin, I understand that Hydro is presently purchasing uranium from two sources in Elliot Lake. In addition Hydro is also purchasing uranium from Saskatchewan. I understand as well that the uranium from Saskatchewan is less costly than the uranium being purchased from Elliot Lake. Is that correct?
Mr Franklin: Yes, that is correct.
Mr McGuinty: I understand as well that Hydro has an option to opt out of one of the contracts it has with one of its suppliers at Elliot Lake, and that this option expires at the end of this year. Does Hydro intend to exercise that option?
Mr Franklin: I cannot tell you whether we will or not. It is a question that is under review now by my board and the management, and we have not reached any conclusion.
The Chair: Would it be helpful if Mr Holt was given an opportunity to respond to that?
Mr Holt: No.
The Chair: Okay, I did not think so.
Mr McGuinty: A follow-up to the minister: I understand that the NDP during the course of the campaign and in fact prior to that indicated its position would be that if it formed a government, Ontario Hydro would be directed to purchase 100% of its uranium from Elliot Lake. Do you intend to carry out that commitment?
Hon Mrs Carter: That is a difficult one. We do have problems with the Elliot Lake mines. It seems to me they are less safe in their functioning than some of the others. But on the other hand, of course, we are concerned about the adverse effects of layoffs at those uranium mines last year on the economy of Elliot Lake and the surrounding communities. There has been a $15-million package of projects announced by the Minister of Northern Development to stimulate job creation and economic diversification.
I understand that the prospects for continuing those mines are not brilliant, although I know the people of Elliot Lake would like that, both cost-wise and because they do not have much of a future as far as the deposits available are concerned. So Ontario Hydro has been asked to consider what it can do to assist these communities and I hope that when the House is back in session, we shall have some answers to announce on this question.
Mr McGuinty: I gather from that --
The Chair: If Mr Daigeler's question is to get on, I did try to flag you for yielding, but we are just so lucky as a committee that next Thursday we get to do the estimates of the Ministry of Mines, so hold that thought, please.
Mr Daigeler: We have already had a crack at it and Mr Charlton is just coming back. Mr Charlton referred earlier to the fact that the government is monitoring the energy savings, and on the other hand the increase in demand. He asked Mr Franklin whether there was any difficulty with that as long as we were closely watching that, and that it was in balance. My question to the minister is, have you set yourself any kind of timetable or target for that monitoring process, and when will the time come for you to make a decision as to whether in fact we can meet the energy supply in light of the energy savings that may be coming through the initiatives that you put in place? In other words, are you going to monitor for ever? Or are you going to say at any particular point, and when is that point, "No, the demand is going to be higher and we have to make a decision"?
Hon Mrs Carter: We do have an environmental assessment coming up, and I think it will be the job of those people to look at what the position is in this province. I do not want to come to conclusions before we have heard what they have to say.
We are keeping an open-minded approach on this. We are encouraging people to save energy because we think that is environmentally sound as well as sound in other ways. But we are not going to commit ourselves too deeply before we know what the result of those hearings will be. I do not know whether you want to say something on that.
Mr Eliesen: Just to add to what the minister has said, the Ministry of Energy is reviewing this on an active basis. We do plot the current demand trends. We note, for example, that Ontario Hydro, because of the load demand that is taking place, has deferred plans to bring on stream the Hearn generating station for a couple of years. These are gas and combustion turbines units that would be brought in at Hearn because of the low level of demand.
We are monitoring the demand level on one side, and on the other side, we are monitoring the degree to which Ontario Hydro is successful on demand management plus on parallel generation.
If I could deal with parallel generation for a second, we have noted over the last two or three years that Hydro has seen a significant improvement in terms of its objectives of bringing on parallel development. The goals for the year 2000 have increased from about 1,000 megawatts to 1,650, and the current goal that they think is possible is 2,100. So there has been a positive movement on parallel generation.
Similarly, we will be reviewing and monitoring demand management, not only what they are able to do but more specifically what the government is able to do in some of the changes I mentioned earlier, particularly in the housing and transportation areas.
The Chair: Thank you. I do have a list but I do want to thank Mrs McLeod for practising restraint. I know she would like to comment on the transfer of ore from her riding, especially ores from western Canada, but I appreciate that restraint. If I could recognize Mr Jordan and then Mrs Marland.
Mr Jordan: I would just like to question Mr Franklin for a minute. He mentioned the technology and the fact that the engineering staff had been redirected to other duties as requested by the government and, in so doing, the progress on technology for Candu 2 had been brought to a standstill, I believe. Is that right?
Mr Franklin: The expenditures by Ontario Hydro of definition work on the next Candu station has been stopped, yes.
Mr Jordan: No, but also the next stage in upgrading the nuclear station itself.
Mr Franklin: On the research activity that we have, funding with AECL, we are not funding any of their advanced Candu reactor technology.
Mr Jordan: Would you be free to tell us what stage we were at in that technology relative to nuclear plants? Was it going to be a substantial change?
Mr Franklin: My understanding is that that research would not have been utilized in the next nuclear station or any of the ones after that.
Mr Jordan: Would we be looking at something completely different?
Mr Franklin: No, the basic technology would be the same but it would be the engineering design that would be different.
Mr Jordan: I see.
Mr Franklin: There would be single-end fuelling, if that means anything to you and I am sure it does, instead of what we have today, and other changes like that.
The technology for that particular station that they were pursuing, Candu 3, was for a small, stand-alone reactor, which we would not necessarily be interested in ourselves, but the technology that goes into it could have been utilized in a larger reactor that we would be interested in. Arlo has got an answer.
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Mr Niitenberg: I will just make a couple of quick comments. The focus was to come up with better materials and better maintainability in the design, better operability. It was not to revolutionize the Candu design, which is basically good.
I would like to just make a comment on some of the performance figures. As the minister stated, 1990 performance of our nuclear reactors was very disappointing and very poor, but that has to be taken in context of our expectations. Our expectations for the Candu have been very high, the highest in the world. We set ourselves a target of capability of 80%. No one else does it for their designs, and we have achieved 80% on an average from time to time.
To give you an example, for instance, US utilities have set a target for 1990 of 76%, and those four percentage points are a considerable difference. France has set a target in the mid-seventies, 75%, for its reactors. To put our performance for 1990 -- our poor performance from our point of view; we were very disappointed in it -- in a worldwide context, our total capability for all our nuclear units was 65%. This compares to 66% as the preliminary figure for the United States and 66% for France, which regards itself as having and does have a world-class nuclear program.
From a comparison with a large number of world reactors, our performance was on average. From our own point of view and expectations, it was a very disappointing year and we have taken steps, both with AECL and our own engineering programs, to get that performance up, because there is economic potential in it.
Mr Franklin: I think it also can be misleading if you look at a single year as a kind of a snapshot of what happens. I believe it was in 1990 that we had a vacuum building inspection at Pickering, which means that you have to turn down all eight units that are there for two months or whatever it is in order to go through an inspection once every 10 years of the vacuum building. That is naturally going to impact on your capability factor for that particular year, your capacity factor for that particular year, because for two months you have deliberately taken all eight reactors out of service.
Mr Niitenberg: Just one more comparison on the various reactors. The worldwide data for 1989 are available; for 1990 they are not available yet. But the Candu design availability worldwide was 75.1% from 1989. The pressurized light-water reactor, PWR, which is the US design, was available 68.4%, the boiling light-water reactor, BWR, which is another US design, was available 63.1%, and the gas-cooled reactor, which is basically an older British design, was available 48% of the time. So, again, in a world context, our basic design is very sound.
Mrs Marland: Minister, I served on an all-party legislative committee that visited 17 mines in this province looking at mining safety, and you have just said that the uranium mines functioning in Elliot Lake are unsafe. Would you like to explain that statement?
Hon Mrs Carter: I cannot give you great details just now, but I understand that when the mines were first set up, they were done so on what you might call a cost-saving basis and the galleries were actually cut through the ore, instead of alongside them, as is normally done, so the radioactivity to people in those galleries is much greater than it would otherwise need to be, although the ore is less concentrated than it is in Saskatchewan mines. Those are safer because they have been built with the galleries not going through the ore in the same way. Also, they are either on the surface or not so deep, whereas the Elliot Lake mines are very deep in the ground.
Mrs Marland: You said when they first opened. I am asking you, are they unsafe today?
Hon Mrs Carter: I believe the ventilation and so on has been improved over what it was in the first place, but there are still some concerns, I think.
Mrs Marland: Are you saying that those mines are unsafe today?
Hon Mrs Carter: I am not saying they are outrageously unsafe.
Mr Perruzza: Mr Chairman --
The Chair: It had better be a point of order, Mr Perruzza.
Hon Mrs Carter: I do not think that I personally would choose to work in one, but then when people are put into a position where they need to earn an income, then sometimes there are tradeoffs which people may see as reasonable.
Mrs Marland: I mean, you said on the subject of nuclear generation, "We're not going to commit ourselves too deeply until the results are heard." Then you go on to give an example by saying that the source of the uranium is in mines which are unsafe, and I am trying to get very clear from you what your arguments are. Are your arguments against nuclear generation because the mining of the energy source is unsafe?
Hon Mrs Carter: There is a certain risk involved in it, I think, yes, even with the best conditions made possible. I do not think any mining is altogether safe and healthy and, of course, when you have radioactive dust as a complication, that does certainly increase the problem. But there are, of course, other related concerns. The health of the miners is not the only one.
We have the problem of the tailings which are deposited on the surface and which either can blow around or leach into waterways and so on. That is quite a serious problem, I think, certainly south of Elliot Lake. Then, of course, at the other end of the nuclear fuel cycle we have the disposal of the used fuel, which is also a problem that we have not totally managed to solve at this point. So to focus attention on the actual power stations is not to realize the full extent of the problems that we do have with nuclear power.
Mrs Marland: Would you agree, Minister, that a moratorium is pretty significant? I mean, what is your interpretation of the word "moratorium"? Would you agree that "moratorium" is a pretty significant word in its intent?
Hon Mrs Carter: Yes, I certainly would. It means something is put on hold until further notice.
Mrs Marland: Right. So when you say you are not going to commit yourselves too deeply, would you agree that a moratorium is a pretty deep commitment?
Hon Mrs Carter: Yes, but it is only a moratorium on the development of new nuclear power. We are not in the same position that they have been for some time, for example, in Sweden, although I believe they have reversed that now. We are continuing to use the existing stations and to bring the new Darlington stations on stream, so that no nuclear power that would have been brought on in the foreseeable future has been affected by this decision, because we are looking at past the turn of the century.
Mrs Marland: Okay. You are saying that next year 60% of our generation is going to be nuclear. You also, I am sure, would agree that Ontario's demand is going to increase, and you are saying that you are looking at alternative generation. I would suggest that looking for alternative generation has not just happened in the last, even I would say, five years, but obviously, looking for alternative generation is not a unique idea.
I would like to know from you, as Minister of Energy, when the new limits for CO2 emissions come into effect post-1994, which we certainly can anticipate. If not, I would suggest that your ministry will be in conflict with the Ministry of the Environment. Also with increased load demands, while you are still looking at R and D and alternative generation and knowing how long it takes to plan for any major producer of electricity, what is going to happen post-1994, in your opinion, in terms of the provision of energy in Ontario?
Hon Mrs Carter: We have quite a range of shorter-term options. Our favourite one is to use less.
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Mrs Marland: I know. I am talking about generation.
Hon Mrs Carter: Yes, but after all the two are connected. If you use less, then you do not need to generate as much.
We are also very interested in the non-utility generation, which is either small hydro or cogeneration. We think there is a lot of potential in that direction, which can yield further power supplies to this province. Also, of course, we still have hydraulic options to look at, starting with the Adam Beck, which, as far as I know, there is no problem with, which is going to bring on quite a lot of extra power supply. We have other possible options in northern Ontario and in parts of Manitoba which we have negotiated for.
Mrs Marland: Is the power from Manitoba environmentally safe? Do you know that? Are you concerned about that?
Hon Mrs Carter: If it is hydro power, as far as I know there are no major concerns with that.
Mrs Marland: If I could ask Mr Franklin's opinion, do you believe that to meet the demand that will be required of Ontario Hydro, the balance between what we can conserve and the increase in demand because of the increase in population and, hopefully, in industry that requires electricity, do you think that conservation and the alternatives that are being talked about in practical terms are a reality, at the same time as we slip behind with the very real option which is nuclear power, if Hydro is going to have a limitation on further CO2 emissions from its existing fossil fuel plants?
Mr Franklin: I am not quite sure I understand the question.
Mrs Marland: If post-1994 you have reduced possibilities from the existing fossil fuel plants because of reduced CO2 emissions, how many options are you going to have in your hand? Do you agree with what the minister is saying, that if we save electricity we will have that much more to meet the increased demand? Is that a realistic option, the fact that we will be able to save enough in the next three years or five years in conservation to balance off the increased demands from the increased load requirements?
Mr Franklin: I understood that if we are faced with CO2 limitations, they may be announced in 1994 but they would not click in, I do not think, until post-2000. I may be wrong about that, but my colleagues will correct me if I am. So I think the CO2 limitations were more troublesome for us when we are talking about post-2000, which after all is kind of what our demand-supply plan really is all about.
Our view, as expressed in that plan, I do not think has changed. We may be able to debate the timing of new generation and things like that, but our view is expressed there that when that time comes, if we rely on fossil fuels for base load, we will not be able to meet what we see to be pending CO2 limitations.
Mrs Marland: Even with conservation?
Mr Franklin: That is correct. Again, we can argue among ourselves, because it is arguable, about how much conservation there is. We have to remember that 28% of our plant will become obsolete and not in existence during this planning process we are talking about. So we not only have to meet the increasing growth, we have to replace what we have. I think the debate is not whether you need new generation but when you will need it. How long can you postpone the date?
In our view, as we expressed in that plan, we have taken our best judgement on what load growth will be, what we can get from non-utility generation, what we can get from conservation, etc, what we can get from hydraulic, how much we can buy from other provinces, and we have come to the conclusion in that report, after five years of study, that somewhere in the year 2002-03, in that area, we will need another major generating source. I do believe that if we rely on fossil fuels to do that and these limitations come on that we are talking about, we will bump our heads on those limitations. It is a question of when.
The Chair: We have about 10 minutes left. We will go past the hour of 6 so that we can square the hour. We started at 1:04 and we will entertain an adjournment at 6:04.
Ms Haslam: I would like to preface my question to the minister with a couple of research things I have been able to come up with.
First, in 1988 when Larry South was the Liberal member for Frontenac-Addington, he said, "We need a very brave politician who would stand up and say: `No damned way are we going ahead with any more nuclear energy. We are going to put our money into conservation.'"
Bob Nixon, 14 months before he became Treasurer, instructed the Conservative government to take steps to bring nuclear power under control, since it clearly had dubious characteristics. "The government will never be able to negotiate the long-term storage of high-level radioactive waste anywhere in this jurisdiction."
In the select committee on energy, January 1989: "Other Major Supply Options: The Ministry of Energy should compile on a systematic basis the best available information on economic, environmental and social benefits and costs associated with supply alternatives such as power purchases, clean coal technology, natural gas and Candu nuclear generation, which are currently being evaluated in the power planning process." And, "The environmental implications of candidate supply options must be a major factor in selecting additions to the Ontario power system."
And the one I like the best, 11 December 1990, Leo Jordan, Progressive Conservative from Lanark-Renfrew, rose in the House to state that the new government was "recycling Liberal programs and legislation and reviewing past Liberal decisions."
Minister, in the face of all of this, when we ask whether we are going in new directions, could you explain to me what some of the new directions are?
The Chair: Maybe you should read some of your own party's stuff.
Ms Haslam: I am hoping the minister has that for me.
The Chair: You have been reading everybody else's. Please proceed.
Hon Mrs Carter: That is partisan.
The Chair: Was it? I did not see it as partisan. I thought it was highly informative. I just thought the member should expand her reading list.
Mr Perruzza: Mr Chairman, you are not a Conservative, are you?
The Chair: No, I am the Chairman. Thanks for acknowledging that. Please proceed, Madam Minister.
Hon Mrs Carter: Our new energy directions are to direct the efforts of the government and Ontario Hydro towards sustainable energy development and away from nuclear power, which is why we presently have a moratorium on the development of further nuclear power.
So we are emphasizing efficiency. We are giving and hope to give more strong leadership in the field of energy efficiency. We will bring in new programs to encourage people to save energy. We want to make the government itself an example of energy-efficient use, so Ontario Hydro is looking at our different government offices and suggesting to us what we can do in order to run them with a greater degree of energy efficiency.
We have asked Ontario Hydro, as you know, to cease spending on new nuclear plants and to increase spending on conservation and parallel generation. There will be early environmental assessments for proposed hydroelectric developments and for the transmission line from Manitoba so that if necessary those can go ahead in good time.
As you know, we are proceeding with the public hearings to review Ontario Hydro's demand-supply plan. These will provide a valuable public forum for reviewing all the options for meeting the demand for electricity services in this province, including nuclear power.
So, as I say, the main effort is directed towards efficiency at this point. We believe there is a lot of slack that can be taken up, ways in which power is used wastefully, so we can, by becoming more efficient, achieve the same amount of work without using as much power. We feel that for the moment this is an ideal way to go.
Mr Jamison: The question I have is one that relates to the transmission system and how well that transmission system is going to be maintained and kept in repair. What is the minister or Hydro doing to ensure that the transmission system is in good condition?
Hon Mrs Carter: I believe that a project of attending to this has just started, but maybe Mr Franklin would like to elaborate on that.
Mr Franklin: The transmission system of Ontario Hydro, like some of its other plant, is aging. I believe the average age for our transmission lines is something on the order of 40 or 50 years old. Some of them have been in since near the turn of the century. We have a program under way now, which is expected to cost about $850 million, if my memory serves me right, which is a 20-year program to rehabilitate up to 400 kilometres of line per year. This is a special program beyond that which is in normal maintenance or normal rehabilitation, so we do have a very active and a special program to improve the transmission quality and reliability.
Mr Jamison: Supplementary to that: We have talked a lot about conservation. I guess it is more a comment I have at this point, that is, that it is confusing to me that really when we talk about conservation, people even in this room seem not to take that as a serious effort. I have come to the conclusion that even the Alberta Conservatives are saying that a lot more can be done with energy efficiency. I would just like the minister to comment on the importance of that direction at this point in time.
Hon Mrs Carter: Energy efficiency is the song we are singing, that is what we want to do, and it seems to us that it has every possible advantage. Megawatts you save are non-polluting. They have every possible advantage as opposed to what you are doing -- when you have to create power you are producing environmental problems almost inevitably. We have not yet found a way of producing power that is totally environmentally neutral, although I guess some hydro developments come the nearest to that. It is cheaper; I think Ontario Hydro is at the moment having problems with the cost of the power it is generating. It is better from every respect, so we feel that to push this as far as we possibly can is the very best way to go.
As time goes on, we are going to run out of fossil fuels in any case eventually, quite apart from the fact that they pose a pollution problem, so we are hoping that as we get to the turn of the century and beyond we shall have more and better renewable ways of producing power. So in a sense we have a holding operation until we can get to that point.
The Chair: I see that we have come to an appropriate time to break. I would like to let members of the committee know that we will reconvene tomorrow in this committee room at 10 am sharp.
The committee adjourned at 1804.