Legislative Assembly of Ontario

ENERGY COMPETITION ACT, 1998 / LOI DE 1998 SUR LA CONCURRENCE DANS LE SECTEUR DE L'ÉNERGIE

CONTENTS

Wednesday 7 October 1998

Energy Competition Act, 1998, Bill 35, Mr Wilson / Loi de 1998 sur la concurrence dans le secteur de l'énergie, projet de loi 35, M. Wilson

STANDING COMMITTEE ON RESOURCES DEVELOPMENT

Chair / Présidente

Mrs Brenda Elliott (Guelph PC)

Vice-Chair / Vice-Président

Mr Peter L. Preston (Brant-Haldimand PC)

Mr David Christopherson (Hamilton Centre / -Centre ND)

Mr Ted Chudleigh (Halton North / -Nord PC)

Mr Sean G. Conway (Renfrew North / -Nord L)

Mrs Brenda Elliott (Guelph PC)

Mr Doug Galt (Northumberland PC)

Mr John Hastings (Etobicoke-Rexdale PC)

Mr Pat Hoy (Essex-Kent L)

Mr Bart Maves (Niagara Falls PC)

Mr Peter L. Preston (Brant-Haldimand PC)

Substitutions / Membres remplaçants

Mr John R. Baird (Nepean PC)

Mrs Helen Johns (Huron PC)

Mr Wayne Lessard (Windsor-Riverside ND)

Hon Jim Wilson (Simcoe West / -Ouest PC)

Also taking part / Autres participantes et participants

Ms Cynthia Brandon, counsel, Legal Services Branch,

Ministry of Energy, Science and Technology

Mr Steve Dorey, ADM and chief economist,

Office of Economic Policy, Ministry of Finance

Mr Bill McLean, senior policy analyst,

Taxation Policy Branch, Ministry of Finance

Clerk / Greffière

Ms Donna Bryce

Staff / Personnel

Mr Doug Beecroft, legislative counsel

The committee met at 1534 in committee room 1.

ENERGY COMPETITION ACT, 1998 / LOI DE 1998 SUR LA CONCURRENCE DANS LE SECTEUR DE L'ÉNERGIE

Consideration of Bill 35, An Act to create jobs and protect consumers by promoting low-cost energy through competition, to protect the environment, to provide for pensions and to make related amendments to certain Acts / Projet de loi 35, Loi visant à créer des emplois et à protéger les consommateurs en favorisant le bas prix de l'énergie au moyen de la concurrence, protégeant l'environnement, traitant de pensions et apportant des modifications connexes à certaines lois.

The Chair (Mrs Brenda Elliott): Good afternoon, colleagues. We convene our committee of resources development for the purpose of clause-by-clause consideration of Bill 35.

I understand we begin today on page 60. This is a Liberal motion. Mr Conway.

Mr Wayne Lessard (Windsor-Riverside): On a point of order, Madam Chair: At the end of the meeting on Monday I reiterated a request that I had made about possibly adjourning the hearings that we have scheduled tentatively for tomorrow until next Wednesday. There wasn't any decision made with respect to that and I was wondering if that was something we might be able to deal with today. That's the suggestion I'm making.

The Chair: Any discussion?

Mrs Helen Johns (Huron): On Monday I suggested that my staff and Mr Lessard's staff should discuss exactly what time frame problems we had and try to deal with that. My staff called Mr Lessard's staff late yesterday and we haven't heard from them about the timing problems, so we don't know exactly what times we have the problem with. We of course have staff from both the Ministry of Finance and the Ministry of Energy and we're trying to move forward as quickly as we can. I guess we don't understand the issues yet and what times it is and if we can move around with staff or we could sit in the evening and finish this off or how that would work. We don't have enough information to be able to deal with this issue until Mr Lessard's staff calls back or lets us know what's going on. From our standpoint, until we get more information, we're going to have a hard time changing this.

Mr Lessard: Let me make it simple: My request is that we not meet tomorrow afternoon but that we meet next Wednesday.

Mr Sean G. Conway (Renfrew North): I have no problem with that.

The Chair: Is that a motion that you want to put on the floor? Mr Lessard has moved that we do not meet tomorrow, that this committee reconvene on --

Interjections.

Mrs Johns: It's my understanding that there's a time allocation on this and I am unsure whether this will work as a result of that. That's why we were trying to find different times tomorrow. I am confused and I ask not for the motion but for some understanding of this. Then if we insist on voting on this right now -- I think we could leave this until the end of the day again and we'll see if there's something we can't do about that.

The Chair: Just for everyone's information, we're just checking the House order. The House order said, "...for a fifth day of clause-by-clause consideration from 9 am to 12 pm and then following routine proceedings until completion of clause-by-clause consideration."

Mrs Johns: What I think that means is we can't do part of the day tomorrow. Whatever day we decide to do this, we have to do all this --

The Chair: All on one day is the way I read it as well. I would agree. Maybe, Mr Lessard, you could have your staff -- do you want to leave this until the end of the day because you're not sure of the rationale? Could you have your staff write a couple of notes to Mrs Johns's staff?

Mr Lessard: I'll send her a note that my staff aren't going to help.

The Chair: Just to discuss why we would go to this point, because it is kind of at the last moment and I think plans have been made for many people.

Mr Doug Galt (Northumberland): I was just going to comment, Madam Chair, that I've certainly made a lot of shifts and I would like to have the Thursday morning off, to be quite honest. But I've moved an awful lot of things around to accommodate the time frame as I understand was legislated. I'm a committee member and I'll be here. I would think that the rest of the committee members have a similar obligation and if they can't be here, then they should find a substitute.

The Chair: Why don't we begin our clause-by-clause consideration. We'll come back to this at the very end of the day and we'll discuss this further just before we break.

Mr Conway, would you read your amendment, please?

Mr Conway: Is there any need to? I think your predecessor the other day ruled that the Chair was finding this class of amendment out of order.

The Chair: You can withdraw it if you wish. It will be ruled out of order.

Mr Conway: I just want to be helpful, these are similar. That was the ruling, Donna, as I recall it.

The Chair: If you withdraw it, that's fine, but it would be ruled out of order.

Mr Conway: I withdraw.

The Chair: Moving to page 61, a government amendment, Mrs Johns.

Mrs Johns: I move that subsection 83(2) of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by striking out "After a date prescribed by the regulations" in the first and second lines and substituting "After part V is repealed under section 81."

The Chair: Questions or comments? Mr Baird.

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Mr John R. Baird (Nepean): This is similar to the previous amendment to section 81 and just clarifies that the payments in lieu of provincial corporate taxes payable by Servco and Genco would cease to be paid to Finco, when Finco is dissolved pursuant to section 81.

The Chair: Further questions or comments? Seeing none, I put the question, then. Shall this amendment carry? All those in favour? Opposed? Carried.

Any further amendments to section 83? Shall section 83, as amended, carry? All those in favour? Opposed? It's carried.

Section 84, a Liberal motion, withdrawn.

A government motion also on section 84, Mrs Johns.

Mrs Johns: I move that subsection 84(2) of the Electricity Act, 1998, as set out in Schedule A to the bill, be amended by striking out "After a date prescribed by the regulations" in the first and second lines and substituting "After part V is repealed under section 81."

The Chair: Further discussion on this amendment on page 63?

Mrs Johns: This is a consequential amendment as a result of changing the date prescribed in regulations, as a result of the section 81 change.

The Chair: Further questions or comments? Seeing none, shall this amendment carry? All those in favour? Opposed? This amendment carries.

Further questions or comments on section 84? Shall section 84, as amended, carry? All those in favour? Opposed? It carries.

Section 85 is a government amendment on page 64.

Mrs Johns: I move that subsection 85 of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by adding the following subsection:

"Restriction

"(1.1) No payment may be required under subsection (1) if the payment would impair the ability of the Generation Corporation, the Services Corporation or a subsidiary of the Generation Corporation or the Services Corporation to meet its financial liabilities or obligations as they come due or to fulfill its contractual commitments."

The Chair: Comments on this section?

Mr Baird: This is with respect to bringing a parallel change as we did earlier to put Servco and Genco on the same footing as the government with respect to debt under the FAA, the Financial Administration Act.

The Chair: Further questions or comments? Seeing none, shall this amendment carry? All those in favour? Opposed? This amendment carries.

The Chair: We have a Liberal amendment.

Mr Conway: Withdrawn.

The Chair: OK. We have a government amendment on page 66 to subsection 85(2).

Mrs Johns: I just need a minute, Madam Chair, for Mr Baird to come together here. He thinks we've missed a section, so just give us a second.

Mr Baird: OK. Amendment to the amendment presented under 85(2).

Mrs Johns: I move that subsection 85(2) of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by striking out "After a date prescribed by the regulations" in the first and second lines and substituting "After part V is repealed under section 81."

Mr Baird: It's the same amendment we just made to 83(2).

The Chair: Further questions and comments? Shall this amendment carry? All those in favour? Opposed? This amendment carries.

Any further questions or comments on section 85? Seeing none, shall section 85, as amended, carry? All those in favour? Opposed? This carries.

Schedule A, section 86, a government motion.

Hon Jim Wilson (Minister of Energy, Science and Technology): I move that clauses 86(1)(a) and (b) of the Electricity Act, 1998, as set out in schedule A to the bill, be struck out and the following substituted:

"(a) the amount of taxes that it would be liable to pay in the year for municipal and school purposes if the assessed value of land owned by it on which are situated generating station buildings or structures or transformer station buildings or structures were determined on the basis of the amount prescribed by the regulations for each square metre of inside ground floor area of the actual building or structure housing the generating, transforming and auxiliary equipment and machinery; and

"(b) the amount of taxes that it is liable to pay in the year for municipal and school purposes in respect of land owned by it on which are situated generating station buildings or structures or transformer station buildings or structures."

Mr Baird: You'll recall the instruction of that the other day with respect to the amendment presented under 78(3). This just expands buildings to include structures to capture transformer towers.

The Chair: Further questions or comments? Shall this amendment carry? All those in favour? Opposed? This amendment carries.

We have a Liberal amendment. Mr Conway is absent.

This amendment is out of order, so we'll move on to a government amendment on page 69.

Mrs Johns: I move that subsection 86(3) of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by striking out "After a date prescribed by the regulations" in the first and second lines and substituting "After part V is repealed under section 81."

Mr Baird: Not to sound repetitive, this is the complementary amendment to 83(2) with respect to revenues after Finco is dissolved.

The Chair: Further questions or comments? Seeing none, shall this amendment carry? All those in favour? Opposed? It carries.

Further questions or comments on 86? Shall section 86 as amended carry? All those in favour? Opposed? It carries.

Section 87, a Liberal amendment. Again, this amendment is out of order pursuant to standing order 56.

We also have a Liberal amendment on page 71 to subsection 87(1.1). This amendment is out of order. It is a redundant amendment to work we've already covered.

Page 72 is a government amendment to section 87.

Hon Mr Wilson: I move that section 87 of the Electricity Act, 1998, as set out in schedule A to the bill, be struck out and the following substituted:

"Municipal electricity utilities: payments in lieu of federal corporate tax

"87(1) If a municipal electricity utility is exempt under subsection 149(1) of the Income Tax Act (Canada) from the payment of transfer under that act, it shall pay to the Financial Corporation in respect of each taxation year an amount equal to the amount of the tax that it would be liable to pay under that act if it were not exempt.

"Same: payments in lieu of provincial corporate tax

"(2) If a municipal electricity utility is exempt under subsection 57(1), section 57.11 or subsection 71(1) of the Corporations Tax Act from the payment of a tax under that act, it shall pay to the Financial Corporation in respect of each taxation year an amount equal to the amount of the tax that it would be liable to pay under that act if it were not exempt.

"Payments to Minister of Finance

"(3) After part V is repealed under section 81, all payments required by this section shall be paid to the Minister of Finance, instead of to the Financial Corporation.

"Commencement of new taxation year

"(4) A corporation that is required to make payments under this section shall be deemed, for the purposes of this section, to commence a new taxation year on the day this section comes into force."

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The Chair: Just one note: Under section 87, the third line, I think you read "payment of transfer" and it actually says "payment of tax." Is that correct?

Hon Mr Wilson: I'll take your word for it.

Mr Baird: This amendment reflects the input we received from a good number of MEUs, from the MEA and from AMO with respect to the tax treatment of local municipal electrical utilities.

The Chair: Further questions or comments? Seeing none, shall this amendment carry? All those in favour? Opposed? It's carried.

Page 73 is not an amendment. This is tabled for information.

Any further questions or comments on section 87? Seeing none, shall section 87 as amended carry? All those in favour? Opposed? It carries.

Schedule A, section 88, a government amendment on page 74.

Hon Mr Wilson: I move that subsection 88(1) of the Electricity Act, 1998, as set out in schedule A to the bill, be struck out and the following substituted:

"Municipal electricity property: transfer tax

"(1) A municipal corporation or municipal electricity utility shall not transfer to any person any interest in real or personal property that has been used in connection with generating, transmitting, distributing or retailing electricity unless, before the transfer takes effect, it pays to the Financial Corporation the amount determined by multiplying the fair market value of the interest by the percentage prescribed by the regulations.

"Same

"(1.1) For the purpose of subsection (1), an interest in real or personal property that has been used in connection with generating, transmitting, distributing or retailing electricity shall be deemed to include any interest in a corporation, partnership or other entity that derives its value in whole or in part from real or personal property that has been used in connection with generating, transmitting, distributing or retailing electricity.

"Deductions from amount payable

"(1.2) Subject to subsection (1.4), the amount payable under subsection (1) in a taxation year by a municipal electricity utility may be reduced by the following amounts:

"1. Any amount that the municipal electricity utility has paid under section 87 in respect of the taxation year or a previous taxation year.

"2. Any amount that the municipal electricity utility has paid as tax under part II, II.1 or III of the Corporations Tax Act in respect of the taxation year or a previous taxation year.

"3. Any amount that the municipal electricity utility would be liable to pay as tax under part I of the Income Tax Act (Canada) in respect of the taxation year if that tax were computed on the basis that the municipal electricity utility had no income during the taxation year other than the capital gain realized on the transfer of its interest in the property.

"Same

"(1.3) Subject to subsection (1.4), the amount payable under subsection (1) in a taxation year by a municipal corporation may be reduced by the following amounts:

"1. Any amount that a municipal electricity utility that is related to the municipal corporation immediately before the transfer has paid under section 87 in respect of the taxation year or a previous taxation year.

"2. Any amount that a municipal electricity utility that is related to the municipal corporation immediately before the transfer has paid as tax under part II, II.1 or III of the Corporations Tax Act in respect of the taxation year or a previous taxation year.

"Same

"(1.4) An amount referred to in paragraph 1, 2 or 3 of subsection (1.2) or paragraph 1 or 2 of subsection (1.3) may be applied under those subsections to reduce the amount payable by a municipal corporation or municipal electricity utility under subsection (1) only to the extent that it has not previously been applied to reduce an amount payable by a municipal corporation or municipal electricity utility under subsection (1).

"Same

"(1.5) A municipal electricity utility shall be deemed to be related to a municipal corporation for the purpose of subsection (1.3) if they are related persons within the meaning of section 251 of the Income Tax Act (Canada)."

Mr Baird: This just helps to make some consequential changes with respect to the calculation of the transfer tax. We heard a lot of MEUs, and I think AMO, come forward with respect to how that transfer tax was calculated, and this amendment seeks to respond to that concern. Basically, when an MEU or, I suppose, a municipal corporation, calculates a transfer tax, they could deduct payments in lieu of corporate taxes, taxes paid out under the Ontario corporate tax or any federal capital gains taxes that are liable.

The Chair: Further questions or comments? Seeing none, shall this amendment carry? All those in favour? Opposed? This amendment carries.

The next is a Liberal amendment. I'm sorry, this too is out of order because it contravenes standing order 56.

Government amendment, page 77.

Mrs Johns: I move that subsection 88(3) of the Electricity Act, 1998, as set out in schedule A to the bill, be struck out and the following substituted:

"Same

"(3) Subsection (1) does not apply to transfers prescribed by the regulations."

Mr Baird: It's another transfer tax amendment that I'll seek to clarify for my colleagues. Simply put, if the transfer tax is already paid, you won't have to pay it again. This just seeks to clarify that.

The Chair: Further questions or comments? Seeing none, shall this amendment carry? All those in favour? Opposed? This amendment carries.

Government amendment on page 78.

Mrs Johns: I move that subsection 88(5) of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by striking out "After a date prescribed by the regulations" in the first and second lines and substituting "After part V is repealed under section 81."

Mr Baird: This is a complementary amendment to the amendment we adopted under 83(2).

The Chair: Further questions or comments? Seeing none, shall this amendment carry? All those in favour? Opposed? This amendment carries.

Further discussion on section 88? Shall section 88 as amended carry? All those in favour? Opposed? This section carries.

We have a new section, Mr Conway, on page 79, a Liberal motion.

Mr Conway: I move that the Electricity Act, 1998, as set out in schedule A of the bill, be amended by adding the following section:

"Cessation of payments

"88.1 Despite sections 83 to 88, no further payments shall be made under those sections after the Minister of Finance has determined under subsection 79(6) that the residual stranded debt has been retired."

The purpose of this amendment is to support the point I've made on many earlier occasions, that upon the retirement of the residual stranded debt it's the view of my colleagues and myself that the government should not be automatically in possession of the windfall revenues that would accrue to its treasury without there being some clear understanding of what's occurring. We think that while the level playing field argument is an understandable one, there should be, as Mr Dorey himself indicated in some of his testimony, a requirement that the government come to the Legislature and articulate a tax and revenue policy that speaks to the hundreds of millions of dollars -- perhaps billions, who knows? -- of new revenue that will be available to Her Majesty's treasury at the point when the residual stranded debt is deemed to have been paid down.

Mr Baird: I'll just speak briefly to that. I think the creation of a level playing field is something we all would agree is central to attracting new investment, particularly in this area. I suspect TransAlta wouldn't want to make an investment, especially the investment they're making in Sarnia, if their competitors were going to be on a different playing field. I think, if we don't have a level playing field, there will only be one player on the field. It's central to that. So at that time, in eight years, 10 years, 15 years, 25 years, when that stranded debt is paid off, obviously the government of the day would want to look at its revenues, as it does every year.

There are a good number of tax cuts passed through Bill 15 that are yet to go into effect that are certainly in the hundreds of millions of dollars over the next seven years. That's a considerable amount of tax cut into the future, which I think signals that this government's all about cutting taxes, so there's certainly no attempt to raise any additional revenue in 10, 20 or 25 years with this provision. It's just to ensure there's a level playing field. The government of the day, at that time, will obviously want to look at that and make some decisions based on the best information they have in 10 to 20 years.

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Mr Conway: The amendment reflects the view of groups like Hydro Mississauga and Thunder Bay Hydro, two that came to my mind. I think it is prudent for the Legislature to exercise this kind of oversight, particularly when the finance minister and the finance department have such obvious institutional interests in a number of these matters. I accept the argument about the level playing field, but I also advance the argument that the referee is not neutral. Any time a referee with this kind of power has this opportunity to benefit from critical decisions in this area, I think there is an added duty that the finance minister, on behalf of the government, come to the Legislature and indicate what the tax policy is going to be with respect to what I would imagine to be very substantial windfall revenue gains to the treasury.

I accept the argument about the level playing field. I can remember a very lively discussion one Friday afternoon, I think it was, about two months over at the Frost Building where these good people from treasury sitting before us this afternoon took me through this in some detail, for which I thank them now and then. I don't quarrel with, I understand the argument about the level playing field. I think you have to have that, but I just observe that in this game there is a point at which certain other things happen and those are not insignificant happenings.

The special payments to which this amendment makes reference are going to represent, presumably, substantial new revenue streams to the government. Like a number of the people who presented to the committee during the earlier stage, I would just feel much more comfortable that those payments, upon the retirement of the residual stranded debt, were then understood to be part of a new tax policy. I just think, in the public interest it should be incumbent on the Minister of Finance of the day to come to the Legislature and clearly articulate what that policy is going to be.

I also move the amendment in the broader picture too, that this timing is going to be controlled. The timing of the termination of the residual stranded debt is in the control of the Minister of Finance. The mix of instruments by means of which it's going to be paid down are in the control of the Minister of Finance. He or she will just be in the happiest of all positions, a conflict of interest on more sides than I could imagine.

I suppose if one wants to be -- and this is another one of those positions where you can either be Pollyanna or I.F. Stone. I'm just more inclined to be I.F. Stone than Pollyanna. I just think the notion of sunsetting this, to at least force the Minister of Finance of the day to come before the Legislature and say, "This is the new tax policy that's going to govern the revenue streams that will be made available" -- understandably, because of the level playing field. I'm not arguing that point. I'm just arguing what happens as a result of there being a "level playing field" and the situation in which the Minister of Finance finds himself or herself at the time.

If one believes in a kind of executive tyranny for which this place is famous, this amendment will be nothing but a parliamentary nuisance and treated as such.

Mr Baird: The general issue which you raise is certainly one which we've all thought about and which had a terrific number of presenters come forward, so this is not an issue that any of us takes lightly. I do have a number of concerns with what you've said. I think we'd want to have a public policy discussion over the general tax revenue policies and taxation policies of the government, but I think that with the amendment, it would somehow indicate to any potential investor that the tax policy is an open question and that we would be questioning, in 10 or 25 years time, or whatever time that residual stranded debt is paid off, that we were open to establishing an un-level playing field. That level of uncertainty would have a negative effect on investment. Some of the MEUs obviously would like to be able to help keep some of their potential competitors at bay.

One thing I would want to add in is that the CTC, if it was required, would be required to be dropped immediately once the residual stranded debt was paid off, and that's something that's important, if it was required. On the issue of the timing at the end of the stranded debt, that is not something that could be done -- I mean, the debt's either going to be there or it's not going to be there. I don't think the minister, if he wanted or she wanted at that time, 10 or 25 years from now, to drag it out or to expedite completion -- if it's securitized there's going to be a revenue flow going to pay off an existing debt if it's completed. I don't see there's a particular advantage to them doing it sooner rather than later. They're still going to inherit any bondholders or any revenue streams.

I think also at that time obviously there would want to be discussion, if there is a degree of new revenue coming in in 10 or 25 years, sure they'd want to have that discussion on taxation policy. But I think that, with this amendment, it would leave a level of uncertainty there that would say that the Legislature is indicating that an unlevel playing field is an option in the future. While that's not the intent of the amendment, I think it would leave a level of uncertainty there.

Mr Conway: I think the member makes an interesting point and I would have to acknowledge that that is a point to be taken account of. There is another possibility, however. If I were an investor or if I were a consumer, a residential or an industrial consumer, I would note that this policy imposes significant new charges and taxes on electricity -- significant new charges and taxes on electricity. This is the point of people like Mississauga Hydro and others. Those taxes are acceptable on the basis that there is a special obligation. There is an obvious requirement that whatever that mountain of residual stranded debt is it has to be retired.

But the question then arises, are these politicians going to -- and let me tell you, for decades there has been a great interest around here and around various treasury offices to find ways to tax electricity. It's been a very old and lively debate. Well, we are taxing -- for reasons that I understand, you cannot have the kind of competitive marketplace that some of us want without levelling the playing field. I understand that.

In a perfect world we wouldn't have this stranded debt issue and we could get to a more transparent tax policy right up front. But, for reasons that we all understand, we don't have that luxury. But, I say to the committee, I'm a business person, I'm an investor who's looking at Ontario, or I'm just a consumer, and I'm thinking, boy, this is an interesting policy. We don't know what these new charges are going to be and in what mix. Some of them drop away once the debt is paid off, and others carry on to keep a level playing field.

But again, finance -- if I'm the finance minister this is exactly what I want. I want the maximum flexibility to have available to me all of the instruments, particularly new instruments, ones that I've never had before. This bill gives me new tax instruments of the best kind because they're the ones that get at the big rate base, that get at the entire playing field.

You bet, if you are sent here to flack for treasury, you'll do exactly as the member from Nepean did irrespective of who is in government. There is no treasurer extant who wouldn't publicly and privately salivate over the taxation possibilities that this policy offers, and there's this absolutely wonderful front, the level playing field. And they're right, they're absolutely right, you have to have it, but it doesn't just end there. It gives the treasury the right now to impose new charges on the entire province in whatever measures and in whatever mixes they choose.

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I know I would never get it, but I'm sure there are models three or four people in finance or the people over at Hydro have looked at. I can just imagine the models for this level playing field business: What portion of a percentage would I need from a rate base of X million to give me a quarter of a million dollars worth of revenue? A half a billion dollars worth of revenue? We're talking about new revenue. This is new to the treasury, with the odd, minor exception. We're not talking nickels and dimes.

When Macdonald tabled his report, and I was talking to the commissioner at the time, they were looking at a stranded debt in the neighbourhood of $15 billion. Their estimates were that you could write that down in, I think they used a figure of something like six to eight years. That was on a $16-billion figure. The figure, apparently, is probably going to be higher than that. I read the Financial Post, and today I see that Greg Crone has a column where Hydro has the latest estimate, I think for the first time publicly, although this is just putting a number to Mr Farlinger's speech of some months ago, that the nuclear liabilities are at $18.7 billion. This is the first time I think I've seen this. That is, presumably, a figure that's got to be factored in. That, by the way, is how Mr Farlinger got to the $50 billion.

At any rate, the number that Hydro is apparently now making public as their best estimate of -- you've all seen today's Post, I presume. He may have it all wrong. It looks about right to me. But the main point here is that the government, the Minister of Finance, is going to have, as a result of this policy, what ministers of finance have wanted for a long time, the right to tax electricity. I just think that should be taken note of.

Again, the point I was making a moment ago is that when the estimates were being advanced as to what kind of time schedule would be required to write off a $15- or $16-billion stranded debt, in the days of Macdonald two years ago figures were being kicked around of six to seven years. That Scotia McLeod session in New York in April had some pretty well-known people giving estimates that were even less in terms of time. Again, the timing is going to be critical, both to rates and to other things, because the shorter the period of time, presumably the greater the yield you have to get from whatever instruments you apply, and the more likely that would have an adverse effect on rates.

If you're thinking about rates, you'd probably want to have a longer rather than a shorter period of retirement. If you're thinking about the treasury and getting at new revenue streams, you'd want that period of time as short as you can make it. These are open questions. Again, the government will argue, as any government will argue under these circumstances, "Trust us." I just think that if I'm a consumer, if I'm a would-be investor, I might like to know just how the government is going to treat the question of taxing electricity, because I would probably conclude that, on a commodity that important, the more charges and the more taxes that are imposed on the commodity the higher the price.

Now I suppose if somebody could tell me, "But we're going to be replacing high-cost power from generation X with very low-cost power from generation Y," then there is a lot of room to fill some of that gap with new charges or new taxes, the net effect of which would be to enrich the treasury and not appear to unduly inflate the price of electricity.

Again, in summary, my concern here is not with the level playing field -- that I understand -- but with the consequence of the level playing field to the referee in this game. This referee has virtually all of the decision-making instruments around the amount and the nature and the timing of the residual stranded debt in his or her hands. I think some requirement that, at the point when that residual stranded debt is deemed to be paid off -- and obviously it would have to be somewhat beforehand so there would be an opportunity for the minister to come to the Legislature and say, "This is now how we intend to treat the hundreds of millions of dollars of new revenue that will be available to the province, because the debt will be retired within six months and we are going to do the following things with that money."

Mr Baird: I don't want to drag this discussion on, but I guess I share my colleague from Renfrew North's view that this is an important question. I think he has made some excellent points, but there is a gulf between the political discussions and valid public policy concerns that he has raised and the amendment. The amendment leaves open the option that there may not be a level playing field, and that's one that I think most of us would find unpalatable. It would be a real disincentive to new investment.

If I'm thinking about getting a concrete slab and putting a turbine generator with natural gas in Nepean and I have to compete against Nepean Hydro across the street and -- surprise, surprise -- in 10 or 25 years I know that Nepean Hydro isn't going to have to pay any taxes any longer, there will only be one team on the field and we will not have competition. It just simply will not happen. It will be a tremendous disincentive to investment early on. That is something I think we all want, some new investment in this area in job creation. In particular, I think of TransAlta in Sarnia.

The member mentioned some significant new charges in electricity with respect to retiring the debt. Consumers today are paying to service and to retire that debt. I regret, and I know those of us who travelled on committee will regret, I don't have my pie charts with me, but we are paying those charges today and, yes, the day after this bill is proclaimed we will continue to pay those charges, the most substantive of which, if required, the CTC, is completely sunsetted once the end of the residual debt is paid off. That's something that is very important.

I think, though, to speak about credibility, and I mean this in a positive sense, and I don't think even our worst detractors would suggest this, though I do accept the notion that, institutionally, new streams of revenue would certainly always be welcome to many who follow this area or who would work in this field, but this minister and this government are all about tax reduction: 66 tax reductions. I think if there was any thought that this is all some sort of backdoor way of finding a few hundred million dollars in revenue in the year 2020, let me put it to rest. That is not the intention.

In fact, many of the tax cuts that the government has passed, whether it's cutting commercial-industrial tax rates here in the city of Toronto, whether it's cutting the corporate-small business tax by 50%, have been enacted to go into effect well into the next millennium because of the priority with which this government holds tax cuts.

The member opposite mentioned, "If I was Minister of Finance, I would love this." Perhaps he would. Perhaps the future Conservative Minister of Finance would. I'll certainly continue to argue, over my time in this place, if I'm privileged to be here at that time, that tax cuts are a good thing. When the Minister of Finance of the day brings forward the budgetary policies of the government in a budget, there will be opportunity to hold that minister accountable for that new revenue. That's something I would expect all members of the Legislature would want to do. But to simply allow the amendment which would leave the door open to one team not having to pay taxes -- if Bell Canada didn't have to pay taxes, I suspect Mr Sprint and Mr AT&T wouldn't be hanging around and wanting to make investments. Those are just some comments to put on the record.

Mr Conway: I'd just like to make some additional comments. I find it interesting that the spokesman for the Minister of Finance would feel so warm and favourable to the attractions of competition when he sits there happily supporting a policy that systematically does not do the fundamental things that experts have said you've got to do in energy restructuring to get the benefits of competition. The member makes a very strange argument when, on the one hand, he argues for competition, and then throughout the piece supports most of the monopoly protection for Ontario Hydro. He ignores, with his colleagues, the central recommendations of expert panels who have told us that the single biggest impediment to the creative juices of competition is the market power of the main supplier in the province, in this case Ontario Hydro. The government has specifically ruled out in its white paper the single biggest policy change that is required to get the benefit of competition.

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If he's concerned about actual experience, he need look no farther than Alberta, at the problems the Klein government is experiencing in years three and four of their so-called deregulated market, because from what I'm hearing the three players that dominate that market are viewed to be still sufficiently so strong as to be keeping a number of new players out on the generation side.

I find it fetching that on this particular matter we get a paean of praise in support of competition from the spokesperson for the treasury, but the government of which he's a part steadfastly refuses to accept the fundamental policy ingredient which all people who've looked at this electricity market redesign say you have to have if you're going to get the true and significant benefits of competition for all classes of customers.

The argument that the hydro bill we're now paying fully reflects the obligations of Ontario Hydro is just manifestly not true. The government can say what it wants but there is no person, no credible authority that is going to say -- again, today's report. I can tell you that the hydro consumers of Ontario are not paying today for the full cost of the nuclear decommissioning and related costs.

It is interesting that Hydro has told us in recent times that the $2.5 billion or $3 billion they've collected from our rates for this particular item has all been spent. I don't doubt that some figure like 35% or 40% of the average hydro bill today reflects debt servicing, but my point remains that the debt-servicing charges we pay through our current rates do not reflect the full measure of the real debt that has to be acknowledged and paid for.

I don't think we ought to insult the intelligence of the people of Ontario in telling them that they are now paying for the full measure of debt retirement obligations in their rates. Mr Crone's article in the Financial Post today is just yet another reminder of how that is not so.

Mr Baird: The rate freeze.

Mr Conway: When the board of directors at Ontario Hydro tells us, as they told us in their 1997 financial report -- let me read it again, page 52, "Notes to the financial statements":

"In 1996" -- this is the board justifying a $6.3-billion writedown in its most recent financial report -- "the board of directors of Ontario Hydro used its rate-setting authority to charge the nuclear recovery expenditures plan to be incurred over the period 1997-2001 to the operations in 1996."

They go on to talk about the fact that this is in large part because the government of Ontario has imposed, for reasons we all understand, a five-year rate freeze, and the board of directors is saying to anyone who cares to read the report that because there is a rate freeze, they are having to use their rate-setting authority to essentially park X billions of dollars of cost that by normal accounting standards would be, to a greater extent at least, reflected in the 1997, 1998 and 1999 rates. That's what the Ontario Hydro 1997 annual report tells the world, and it couldn't be clearer.

The reason they're having to do it, they say, is that there is a rate freeze and so they've got no way to recover those costs in that period, from 1997 through to 1999-2000, those costs which will be incurred in the early going. Some of the costs of course are going to be incurred later on, and I accept the point the member for Huron has made that not all of these costs are going to be incurred up front. Certainly some of them are, but they can't be recovered in rates because of the rate freeze, the board of directors tells us.

So don't tell me that the bill I've got in 1998 reflects those costs. They've been parked, particularly the ones that have already been incurred in that period from 1996 to 1998, in what measure I don't know, but there will be hundreds of millions of dollars that will be parked that have already been spent, not reflected in rates. As I say, to have Hydro today say, "Our best estimate is $18.7 billion" is -- well, the member for Huron --

Mrs Johns: But you know that they're not going to take the liability for nuclear disarmament, if you will, for decommissioning costs over 10 or 12 years. That's a 90-year process that was there in the beginning, it's there now and it's going to be there in the end. You're putting some kind of a false slant on this. I understand why you're doing this, but at the bottom line we should have been taking a decommissioning charge and accruing it 15 years ago when you were the minister, we should be doing it now and we should be doing it in 40 years when these plants are existing. This isn't going to be written off over one year, two years, three years, and it's not going to affect the rates over one year, two years, three years either.

Mr Conway: I don't disagree. The member's frustration is understandable. I simply point out that Hydro did collect something in the neighbourhood of $2.5 billion to $3 billion for this purpose. I think the phrase they used was, "It was notional." It was collected and spent for other purposes. I'd need to have somebody who comes from one of these high-priced firms like Ernst and Young to explain how that happened, but billions of dollars were collected for this particular --

Mrs Johns: I think $2 billion or $3 billion, to set the record straight --

Mr Conway: That's a multiple.

Mrs Johns: -- and that certainly wasn't enough. Previous governments should have stopped that from happening and we're going to stop it from happening.

Mr Conway: The declaratory firmness of my friend from Huron is quite impressive, but I simply make the point that it was collected.

Mrs Johns: It's 2.8 billion; I stand corrected.

Mr Conway: I said $2.5 billion to $3 billion, so I was in the ballpark. It was collected and it was spent for other purposes. One of the questions I've said to the committee on many occasions -- and I think back to what we were promised by the ministry, by the government in June as to what kind of financial picture we would have before this clause-by-clause process began. We don't have that. We're going to get a briefing on the financial architecture of the restructuring soon. I see Mr Dicerni has circulated a memo telling the world, or certainly telling the Ontario Hydro board of directors, that some key decisions about that financial architecture are being made this week, if our committee is going to get some kind of a briefing three weeks from now.

The point I'm making here is that the financial aspects of this are significant, intricate and are clearly going to have an impact on rates. Today's Financial Post article again makes that point as to -- let me just quote the article:

"Ontario Hydro's latest estimate of its nuclear decommissioning and waste disposal liabilities is $18.7 billion."

Now quoting Ken Nash, the vice-president of nuclear waste management at Ontario Hydro, "[The AECB] will be requiring financial guarantees to ensure that the money is available."

The article goes on -- where does that money come from? Well, it comes from two sources only: the provincial government, which is already guaranteeing $32 billion worth of the utility's debt, or the electricity consumers. I'm not just talking about this figure --

Mr Baird: They're the same people.

Mr Conway: Well, it may be. It's not entirely the same people. It depends on how this restructured environment works. I'm fully expecting that some of this government's best and closest friends are going to use their influence and their authority and their connections to avoid as much of this as they can possibly avoid. My concern is that the broad base of residential and farm customers are going to get stuck for a disproportionate amount of the stranded debt and paying it down.

I repeat, the government had an opportunity to come to this committee this summer, as it promised, and give us in some detail a clear picture of the so-called financial architecture. We are well into the clause-by-clause stage with nothing but a promise that we're going to see that on October 26, a day or two before I expect the government will want the bill passed at third reading. That's the government's right, and I'm trying to be reasonable. The government will clearly do what it wants to do.

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I am determined to point out in the remaining days of this exercise the gap between promise and performance, to point out that there is now a very, very different agenda than the one we started with. We started with an agenda to make Ontario Hydro competitive and we're not doing that. We're basically now talking about a strong Ontario Hydro that's going to begin the new world order with most of itself intact, with a big question mark around Ontario Hydro Nuclear, and they're going to go off into the United States to do important work. That may be a good thing. That's just not what this policy was advertised as being. It's not what we started out to do.

I repeat that in this particular amendment, to conclude my remarks, I am concerned that the government has finally found itself in a position where after many decades they are going to have, for very interesting and good reasons -- the level playing field argument -- the right to tax electricity in a significant new way. The result of that will be a major new tax revenue yield to the provincial government and I am concerned, not that we not accept the argument for the level playing field, but I just make the point again that the government itself, the Treasurer, the Minister of Finance, who's a critical referee in all of this, has a huge administrative and pecuniary interest in these decisions and I just don't think he should be allowed to proceed into the happy clover field of hundreds of millions of dollars of new annual tax revenues without some -- well, it's more than a clover field, I'll tell you.

Mrs Johns: The $32 billion is a problem and I don't think you should speak lightly of that.

Mr Conway: Of course it's a problem. The ex cathedra judgments of my friend from Huron about what cannot ever happen on her watch are truly impressive.

Mrs Johns: Thank you very much. I appreciate that.

Mr Conway: I thought infallibility was the doctrine only of Rome, but I see it also applies to certain parts of south Huron, and I hope she's right. Because the argument for my skepticism is that I've just heard that from too many people before on this question. "We can no more have a deficit with the Olympics than I can have a baby," said Jean Drapeau. "The Ontario nuclear commitment will produce the cheapest power that Ontario and the free world has ever seen." "These uranium contracts at Elliot Lake are the best deal that you could imagine." "The 'Preserve It, Conserve It' campaign is the beginning and the end of happiness in the energy services world," and on and on it went.

I hope Helen Johns is right when so many other people from Bob Macaulay to Adam Beck to Darcy McKeough to you name them have been proven wrong.

Mrs Johns: Sean Conway?

Mr Conway: Listen, I've got my sins of omission and commission for which I'm properly upbraided.

But I find that I'm getting so nervous and angry about this because I see it happening again, and this may turn out to be the biggest Hydro hoodwink of them all. I can't believe that's going to happen on Helen Johns's watch, but she will do what she has to do.

I just want to see a provision where the Minister of Finance does not quietly back into a revenue source that is going to produce, in the name of the level playing field, hundreds of millions of dollars of new tax revenue because Hydro will be taxing electricity in significant new ways without the Minister of Finance having to come to the Legislature and clearly articulate what the tax policy is going to be for that revenue once the stranded debt is deemed to be retired, a decision that of course will be made by that selfsame Minister of Finance.

Mr Lessard: With no appeal.

Mr Conway: And with no appeal. Thank you, I say to my friend Mr Lessard. With no appeal.

Mr Lessard: I thought it was interesting to hear the member for Nepean using as a defence and argument against this section that the reason this couldn't turn into a revenue stream for the Treasurer well into the future is because this is a government that supports tax cuts and has been consistent in that message.

Mr Baird: That wasn't my argument.

Mr Lessard: However, to say that they wouldn't want to derive revenue from the sale of energy, I think one needs to take into consideration the other revenue streams that this government has derived. Ask students who have to pay increased tuitions whether they feel as though they've benefited from those tax cuts, seniors who have to pay prescription user fees for their drugs to see whether they've had benefit --

Mrs Johns: Oh, God -- Hydro.

Mr Lessard: -- and renters who have had to pay higher rent as well, to see whether they've gotten the benefit of those tax cuts.

Mr Baird: I was a student who was promised no tuition and it went up double digits every year you were in power.

Mr Lessard: I can understand the government wanting to take this argument, but I hope they understand my cynicism with respect to this, and the sharing of that cynicism Mr Conway shares.

I think it would have been quite simple for us to avoid the frustration of the debate we're going to through right now if we would have had more information about how the stranded debt was going to be determined and what that amount was going to be before we engaged in clause-by-clause debate, so that we wouldn't have to have this debate essentially in a vacuum, and that's what we were being faced with right now.

I think the skepticism the member has is quite justified. There is going to be a tremendous impact on rates based on those decisions and that determination and I would have liked to have that information before we began this debate. I can't believe that the member for Nepean continues to want to promote this myth that Bill 35 is all about bringing a competitive energy market to Ontario and nothing else. We've heard over and over again that this is legislation that deals with deregulation or reregulation or whatever it is you want to call it, but as long as the bill goes through the way it is, we're not going to have true competition in Ontario. I don't know how he can deny the submissions that have been made to us over and over again.

I read the most recent Circuit Breaker from the Municipal Electric Association. In that there are a couple of good articles on page 3. One says that the Market Design Committee is going to release its third-quarter interim report on September 30, and here we are on October 7, a week later, and we still haven't got that report. I think that would have been helpful for us in our deliberations.

There's also a letter from Bob Lake, who's the MEA president who attended a convention in Houston, Texas. I don't think he's a really strong opponent of what the government is trying to do, but in his letter he makes this admission and I think it's worth repeating. He says:

"I don't have the perfect answer for these and other complex questions" -- they're questions about whether there should be more privatization or deregulation -- "but I think you will agree that there is a strong risk that Ontario is moving too quickly towards the goal of deregulation and more private ownership of the electricity business."

I think that Bob Lake is somebody who has some expertise in making those sorts of comments. Why we would want to be in a big rush to get through this clause-by-clause debate with the limited information we have at this point in time is troubling to me. I think that, considering the complete lack of information, the motion for the amendment by Mr Conway is justified.

It's the least we can do, as legislators at this point, to try and protect consumers in the future, after we're long gone from here, from continuing to have to pay additional taxes or user fees or whatever it is you want to call them for energy in Ontario, because I share the member's concern that ultimately it's going to be small residential and farm consumers who are going to end up paying the biggest part of that stranded debt, and that those who have the strength, the ability, the money, the wherewithal, will be able to avoid having to pay their fair share. Until I see some concrete evidence to indicate that won't be the case, I just won't believe it.

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Mrs Johns: I hesitate to enter into this because we've gone completely away from the amendment, but I think that something fair needs to be said.

Mr Lessard: John got me on that.

Mrs Johns: I understand that we're lobbying about how we can stand against the government in this bill at this particular point and I understand that that's happening, but I'd like to remind the two members opposite me that to a person, I think, as people came up to the podium here to talk to us over eight days, they said that Bill 35 was necessary, the system wasn't working and there needed to be substantial change.

I don't think we heard from anybody who said the government has moved too quickly. What we heard was that it is too bad that it took so long to move forward on this. We felt we needed to get it right and so it took us time to do this. I think what we heard was, you have to continue to move because Ontario is uncompetitive in the world marketplace and certainly in the northeastern marketplace and we're losing business, we're losing job opportunities, we're losing investment as a result of not moving forward from this.

Mr Lessard: Let's not leap down into the abyss without knowing what's at the bottom.

Mrs Johns: I also hesitate to say that Mr Conway seems to be judging what the Market Design Committee is going to put out in their third report about market power and how to mitigate it. The Market Design Committee certainly said in their second report that there are ways you can mitigate market power that will allow this market to be a very competitive marketplace, and we look forward to their answers. They talked about bilateral contracts and we moved with our amendment to ensure that there was an ability for bilateral contracts. They talked about leases, they talked about other opportunities, and we have made sure that there is a venue to be able to work with the Market Design Committee to move forward.

What's happening right now in this amendment, to get back to this specific amendment, is that if we move this amendment and at the end of the time frame we take away the PILs, the payments in lieu, that are being paid by the municipal electric utilities, independent small and medium-sized businesses will go bankrupt because they will no longer have a level playing field on which to compete with the municipal electric utilities, and we're just not going to let that happen.

Mr Lessard: I wonder if the parliamentary assistant could give me an answer as to when we can expect the Market Design Committee's report that was due on September 30.

Mrs Johns: I certainly understand that they have agreed on some of the issues. I think the report is close to being printed. I don't know for sure when it's coming out, but I expect it imminently. I would be happy to give you Ron Daniels's number if you'd like to call him and ask him.

The Chair: Further questions and comments? Seeing none, I should put the question. Shall the Liberal amendment to section 88.1 carry? All those in favour? Opposed? The amendment is lost.

We move then to section 89. There are no amendments proposed to section 89. Questions or comments on that section?

Mr Conway: I have a question. I'd like to just do it now. It's for Steve Dorey. I have in my hand a memo from Richard Dicerni, the senior vice-president, corporate and environmental affairs of Ontario Hydro. It's dated September 11, 1998, so it's now four weeks old. I'm happy to make copies available. I want to just read from Mr Dicerni's memo. It is a memo from Mr Dicerni to Ontario Hydro board of directors, entitled "Update to the Restructuring Planning Calendar," talking about the restructuring of Ontario Hydro.

The first point has to do with legislative activities. I'm more interested in the financial matters. Under the subheading, "Financial architecture," Mr Dicerni, the senior vice-president of Ontario Hydro, says on September 11:

"The Ministry of Finance continued to finalize its assumptions regarding the financial architecture of the successor companies. By mid to late September, finance will provide its assumptions on payments in lieu of taxes, dividends and the proposed taxation regime to Ontario Hydro. This information will be used by Hydro to develop the proposed rate orders in early October and to finalize the business plans for the successor companies in early November."

Then a little later on, Mr Dicerni in the same memo says, and I quote:

"Early in the week of October 5, the Ministry of Finance will make a number of key financial decisions for Genco and Servco, including (1) assigning debt; (2) debt-equity ratio; and (3) financial policies. Government will make decisions on (1) governance issues; (2) key elements of market design; and (3) financial architecture by late October."

Could you tell me whether the Minister of Finance has been keeping to the timetable that Mr Dicerni outlined to his board of directors on September 11? Let me read again the first part of that memo. Mr Dicerni tells the board of directors on September 11 that the Ontario Ministry of Finance will be finalizing its assumptions regarding the financial architecture of the successor companies.

Here's the key line: "By mid to late September, finance will provide it assumptions on payments in lieu of taxes, dividends and the proposed taxation regime to Ontario Hydro. This information will be used by Hydro to develop the proposed rate orders in early October...."

Has that work been done consistent with the timetable that Mr Dicerni outlined in that memo of September 11?

Mr Steve Dorey: We're a little behind. The work of the Market Design Committee in its third-quarter report, the work around market power mitigation, is quite complex and will, I think, have a substantial bearing on the financial architecture that we're in the course of putting together. We are, as you are, awaiting that piece. We've obviously been talking to the Market Design Committee and Ontario Hydro about some of the possibilities, but those discussions continue.

We are confident that within the timelines there, late October, early November, we will get the financial architecture done, the basic structures done and be able to provide you with a briefing on our best estimate of stranded debt, the debt-carrying capacities of the new companies and so on. That's where we're at.

Mr Conway: What is your best information as to when the report of the Market Design Committee will be in a polished and finished form?

Mr Dorey: I don't know.

Mr Conway: You don't know that. But that's very important information in terms of the work you're doing.

Mr Dorey: Yes, it's important information.

Mr Conway: I take it that Mr Dicerni's point -- let me read it again from his September 11 memo: "Early in the week of October 5" -- that's this week -- "the Ministry of Finance will make a number of key financial decisions for Genco and Servco...assigning debt...debt-equity ratio...financial policies." That's what finance was going to do and those were going to be the preconditions of the laying out then of the broader financial architecture.

I take your earlier answer to mean that you are not now in a position to say that you have in fact met that deadline, that time frame, that you are running a bit behind?

Mr Dorey: Yes.

Mr Conway: A week behind, two weeks behind, a month behind?

Mr Dorey: It's difficult to tell but certainly not a month behind. We've made a commitment to you that we will have our best estimates by October 26 and some of those elements you mentioned are key elements to providing that estimate.

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Mr Conway: Is it the plan of the Ministry of Finance to advertise more generally all of the good work that you will have done on things like the debt-equity ratios, the assignment of debt to the broader public, or at least the financial and related communities, before this matter is concluded in the Legislature, given the complexity of the questions being raised and answered?

Mr Dorey: At this point, no, that's not our plan.

Mr Conway: Could you tell me where the Ministry of Finance is? Have you received any of the final evaluation reports from the several and star-studded investment banking houses that have been retained by Her Majesty's government to assist on the valuation question?

Mr Dorey: We continue to work with them on a whole host of issues around valuing the corporations. There is not a single report that says, "Here's the valuation." No, we haven't received one but we're working on that.

Mr Conway: When will the taxpayers, who will be paying millions of dollars for these several and star-studded analyses, be able to get a document that they can actually read and understand, with some help, as to what the conclusions of the several and star-studded investment houses concluded around the evaluation question?

Mr Dorey: We don't have a date for releasing that kind of document.

Mr Conway: Is it your plan to release that information into the public domain?

Mr Dorey: Our plan would be to release a summary of the results of that analysis. Some of the work is clearly confidential commercial information, and that's not appropriate.

Mr Conway: When do you --

The Chair: Excuse me. Mrs Johns.

Mrs Johns: It's my understanding we're talking about the application of the Corporations Tax Act. We're in section 89 of the bill.

Mr Conway: That's correct.

Mrs Johns: We had these people here before to make a presentation to us and for us to ask questions, so I'm just wondering if the member opposite can explain to me how this relates to the section on the Corporations Tax Act.

Mr Conway: Again, I don't mean to be difficult, because I don't expect to get the answers that a respectable Legislature would expect before it passed judgment in the final analysis on this bill. The member's point earlier is well taken. I started out as one person who felt clearly that the status quo was not an option. I still believe that very strongly. With every passing day, I get more and more worried and more and more angry about what's happening here. I have a lot of regard for the member, but I'm just not convinced that, on the basis of what I see or, more importantly, what I don't see, I can just simply take bland assurances: "Don't worry. Trust me. Be happy."

This is as important a decision and matter that this Legislature will decide in years, with enormous consequences. I don't offer myself as any kind of an expert, but there is a level at which this exercise is now bordering on pure contempt. That we are being asked to make judgments around the fundamental redesign of the electricity sector, months after the bill was passed, with hardly a scintilla of hard evidence as to what the professional valuators are saying about the successor companies, about the assignment of debt, I tell you, is just breathtaking. If that's the will of this Legislature, then clearly it's the will of the Legislature. But I will say again, I will have no part of this exercise if that's the way I'm going to be treated, because I consider it to be a total, naked, abject abandonment of my responsibilities to the people who sent me here.

You're absolutely right, you and your colleague from Nepean, to be waving around the terrible mistakes of the past and what they mean today. We've got those mistakes because previous legislatures behaved more or less -- actually, you've got to go some to find one quite like this. I will say this for the old Denison contract. I think it was into this room that Bill Davis walked on a sunny afternoon and stared everybody in the eye and said, with cameras everywhere, "It's a good deal." There is a lot of evidence that it wasn't a good deal, and there were bright people here, but at least that was done in broad daylight, with good cross-examination around a certain measure of hard data. It turns out that the critics were vastly more right than they were ever given credit for, but I don't fault Mr Davis. Then he took his basic position to the electorate and got a reconfirmation. That's what democratic politics is all about.

What have we got here? We've got a fundamental redesign of one of the core economic and social realities of the province and we've got virtually none of the financial data. It's just breathtaking. I can't imagine, if I went to Exeter to consult with my friend Mrs Johns on the purchase of a farm or a home and I asked for her opinion, in the absence of any information, she would just laugh and tell me to tell the bank or the financial institution to go jump off the nearest bridge. Well, I'm not about to go jump off the nearest bridge without at least a greater understanding of what some of the central financial questions are.

I'm not here to tell people that I've got any great expertise, but I think the Legislature is clearly owed a far greater respect and far more information than the virtually nothing it has on these critical questions, without which no sensible person could make a judgment one way or the other. In the absence of that information, I don't know why you would embrace something that has these kinds of multi-billion dollar consequences.

Mrs Johns: Because the system is not working, as I said before, and the system needs to have fundamental change. The stakeholders, the people involved and the consumers we've heard from agree that this has to happen. So answer my question, Mr Conway. What does all this line of questioning have to do with the application of the Corporations Tax Act, which is section 89?

Mr Conway: There are certain understandings with which I cannot help my good friend from Huron. There is a certain -- well, I'll just leave it at that.

The Chair: Mr Lessard, did you have any questions or comments to this amendment?

Mrs Johns: It's not an amendment; it's a section.

Mr Lessard: As a result of this line of questions I need to ask Mr Dorey what it is that we're going to expect to receive at this briefing on October 26. It was my understanding that we were going to know what the stranded debt was and how it was determined and now I'm not so sure that that is the information we're going to be getting.

Mr Dorey: Yes, that's correct. We will explain to you the magnitude of the stranded debt, the way we've gone about determining it, the size of residual stranded debt and so on, all those key variables, or at least our best estimate done at that time. We can't promise that it will necessarily be absolutely final.

Mr Lessard: Your best estimate, though. You qualify that and you also said that you weren't going have all the information until possibly sometime in November and that's the reason I asked the question.

The Chair: Mrs Johns has a point. We are off. This is a section, not an amendment. I stand corrected. It is a section. Are there any further questions or comments related to this section?

Mr Conway: I will admit, it is more fun and it is much less taxing to hear the member from Exeter read, with that felicitous voice of hers, page after page of government technical amendments. I know --

The Chair: Seeing that you like that so much, perhaps we should move on to the next.

Mr Conway: A more felicitous and euphonious voice I have not heard in a long time.

Mrs Johns: I understand I'm annoying you, but I would like to move on.

Mr Conway: I know I'm annoying you and I should be, and the taxpayers should be. I've said enough and I'm going to let the member go and read until she falls over from the sheer act of reading. Although I must say, this plethora of government amendments on technical matters should just make us all think about what we're not catching on the policy ground. I'm telling you, this is the easy part.

I raise it here because I think it's a central point. It is the government's view that the Legislature, and this committee particularly, should be treated as a mushroom farm, and I understand that, not for the first time. I just don't go happily into the role of a mushroom and that shouldn't surprise anyone.

As I say, it is contempt of the Legislature that we would get virtually nothing on these key financial matters. If it is the government's view, and I suspect it is, we will get a briefing of a general sort on October 26 and the final disposition of the bill will come a day or two later. At one level, you really make my life easy, and I don't intend to be obstreperous. If this is what you want, trust me, this is what you will get and you will wear it, for good or for ill. That's the fun of being in government.

But we're going to sign the mortgage without knowing the interest rate, without knowing the retirement period. The member talks, and I won't read it -- I was just looking at the submission made by the Metropolitan Toronto Board of Trade, and again, I didn't hear very many people come to the committee and say that the status quo was an option. It is clearly not an option. But this policy is increasingly a Trojan Horse. It advertises one thing but it's delivering something quite different. That's my rub; that's my fundamental problem, aggravated by the fact that we're going to get none of the financial data, nothing.

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The Chair: Further questions and comments to section 89? Seeing none, shall section 89 carry? All those in favour? Opposed? It's carried.

On section 90 we have a government amendment on page 80.

Mrs Johns: I move that clauses 90(1)(a) to (h) of the Electricity Act, 1998, as set out in schedule A to the bill, be struck out and the following substituted:

"(a) prescribing modifications to the method of calculating the amount of any payment required by section 83, 84 or 87;

"(b) prescribing amounts for the purpose of clause 86(1)(a);

"(c) prescribing percentages for the purpose of subsection 88(1) and prescribing modifications to the method of calculating the amount of the payment required by section 88;

"(d) deeming a transaction or series of transactions, for the purpose of section 88, to be a transfer to a person of an interest in real or personal property that has been used in connection with generating, transmitting, distributing or retailing electricity;

"(e) prescribing transfers to which subsection 88(1) does not apply, subject to such conditions or restrictions as may be specified in the regulations;"

Mr Baird: This deletes the specific regulatory powers of the AGRT, obviously, as we're not going forward with it, and makes a minor amendment with respect to the regulation powers of the transfer tax.

Mr Conway: I would ask the spokesperson from the finance department to use language and not acronyms, because we're not all as literate in the way that he quite obviously is.

Mr Baird: The adjusted gross revenue tax.

Mr Conway: I have a question, then, for Mr Dorey on section 90, as amended. This is the mechanism -- and again, I observe a very significant regulatory power. Everything from Laura Secord's cow to the kitchen sink is possible under this section. Since this regulatory power is the engine that's going to drive the money tree, I have to ask Steve a question. Has there been any modelling done at the Ministry of Finance to simulate -- not to simulate, but has there been any modelling done at the Ministry of Finance to show the various yields of these special payments once the full course of the legislation kicks in?

Mrs Johns: Can I just ask, are you talking about the adjusted gross revenue tax that we've just pulled away from?

Mr Conway: I'm talking about section 90. You're amending section 90. I'm just looking at the regulatory power. The Minister of Finance may make regulations prescribing the amounts essentially for the instruments. Knowing what I know about finance departments, they're very good at doing the models. This may have all stopped on June 9, 1995, like a lot of other terrible things did, I'm sure. I know Mike Gourley would never have carried on those bad old practices. But finance departments are famous for modelling on the basis of, "We've got the following instruments that potentially yield X dollars." It's the sort of exercise you do pre-budget.

Have you done any similar modelling looking at the instruments under sections -- well, the whole part preceding part VI, really, the special payments. Section 90 essentially talks about the minister's regulatory power, setting the amounts and related issues of those special payments. I've got to believe that you did or are doing some modelling over there as to what the yields might be if you did model A, model B or model C.

Mr Dorey: Modelling these kinds of things under various assumptions is a major or a significant part of the whole financial restructuring exercise, yes.

Mr Conway: Would you be willing to share with the committee any of the models you've developed to date on that, just to give at least myself some indication of what the possibilities here are?

Mr Dorey: I'll check on that.

Mr Conway: I would very much appreciate it if you would check on that, Mr Dorey. You're a smart guy surrounded by very able people, and since we're all taxpayers paying for this good work and we're trying to understand, at least in the macro element, just what the opportunities under section 90 of this bill might afford, I would very much like to see some of the modelling that has been done at finance. Anybody else who wants to speak to this up there I'm more than willing to hear at this point.

Mr Bill McLean: The special payment sections apply to Genco and Servco and the municipal electrical utility payments in lieu of federal and provincial corporate taxes. Part of the exercise is determining what net taxable revenue a company has and then applying the generally known provincial and federal corporate tax rate to those amounts.

Mr Conway: I'm particularly interested in yield. I always find finance very helpful on these matters. I know you do a lot of good modelling work, so I appreciate Mr Dorey's offer to consider and I will await with bated breath a response, which I hope will be in the positive.

The Chair: Further questions or comments on this amendment? Seeing none, shall this amendment carry? All those in favour? Opposed? This amendment carries.

Further questions and comments on section 90? Seeing none, shall section 90 of schedule A, as amended, carry? All those in favour? Opposed? The section carries.

On section 91 of schedule A, a government amendment on page 81.

Mrs Johns: I move that the definition of "successor employer" in subsection 91(1) of the Electricity Act, 1998, as set out in schedule A to the bill, be struck out and the following substituted:

"'successor employer' means a person who is required to establish a pension plan under subsection 96(1);"

Mr Baird: This amendment seeks to clarify the definition of a successor employer. It's the employer who is required to establish a pension plan, who may not have done so just yet, obviously, as a transitional move.

The Chair: Comments or questions? Seeing none, shall this amendment carry? All those in favour? Opposed? It's carried.

Further questions or comments on section 91? Shall section 91, as amended, carry? All those in favour? Opposed? Section 91 carries.

On section 92, schedule A, a government amendment on page 82.

Mrs Johns: I move that subsections 92(7) and (8) of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by,

(a) striking out "this part" in the first line of subsection (7) and substituting "this section";

(b) striking out "this part" in the fifth line of clause (7)(a) and substituting "this section";

(c) striking out "this part" in the fifth line of clause (7)(b) and substituting "this section"; and

(d) striking out "this part" in the third line of subsection (8) and substituting "this section."

Mr Baird: This amendment just seeks to clarify that a worker wouldn't lose pension credit rights in the transition.

The Chair: Further questions or comments? Seeing none, shall this amendment carry? All those in favour? Opposed? This amendment carries.

Further questions and comments on section 92? Shall section 92, as amended, carry? All those in favour? Opposed? Section 92 carries.

Section 93: There's a government amendment on page 83.

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Mrs Johns: I move that section 93 of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by adding the following subsections:

"Refund of contributions

"(3) Despite subsection 78(1) of the Pension Benefits Act, the administrator of the FCPP shall refund to the Financial Corporation, without interest, the contributions made by Ontario Hydro that were required to pay the normal cost of the pension plan in respect of service after March 31, 1998 and before the day that subsection (2) comes into force.

"Unfunded liability or solvency deficiency

"(4) If a report on the FCPP filed with the superintendent reveals a going concern unfunded liability or solvency deficiency or both, each successor employer shall pay to the pension fund for the FCPP, as its share of the total amount of each monthly special payment required as a result of the report, the amount determined by the plan actuary in accordance with the following formula:

"(A/B) x C

"in which,

"'A' is the total of the actuarial liabilities of the FCPP for the pension benefits and ancillary benefits of members and former members of the FCPP who will become members or former members of the successor plan established by the successor employer;

"'B' is the total of the actuarial liabilities of the FCPP for the pension benefits and ancillary benefits of members and former members of the FCPP; and

"'C' is the total amount of the monthly special payment required as a result of the report.

"Definition

"(5) In subsection (4),

"'actuarial liabilities' means,

"(a) in the case of a going concern valuation, the going concern liabilities; and

"(b) in the case of a solvency valuation, the solvency liabilities."

Mr Baird: This, among other things, results from the collective agreement that was ratified between Ontario Hydro and the Power Workers on June 20 and provides for reduction or suspension of employer contributions to the pension plan effective April 1, 1998.

The Chair: Further questions or comments? Seeing none, shall this amendment carry? All those in favour? Opposed? This amendment carries.

Further questions and comments to this section? Shall section 93, as amended, carry? All those in favour? Opposed? Section 93, as amended, carries.

Section 94: There are no amendments. Questions or comments? Shall section 94 carry? All those in favour? Opposed? It carries.

Section 95: There is a government amendment found on page 85.

Mrs Johns: I move that subsection 95(3) of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by striking out "Subsections 92(4)" in the first line and substituting "Subsections 92(5)."

Mr Baird: Bill 35 cites the wrong subsection number, and this corrects that error.

The Chair: Questions or comments? Seeing none, shall this amendment carry? Opposed? It carries.

Shall section 95, as amended, carry? All those in favour? Opposed? It carries.

Section 96: A government amendment is found on page 86.

Mrs Johns: I move that subsections 96(1) and (2) of the Electricity Act, 1998, as set out in schedule A to the bill, be struck out and the following substituted:

"Successor pension plans

"(1) The IMO, the Generation Corporation, the Services Corporation and the Electrical Safety Authority shall each establish a pension plan to provide pension benefits and ancillary benefits for the following persons:

"1. Its employees whose employment is transferred to it by or pursuant to an order made under section 108 and who are, or are entitled to be, members of the FCPP before their employment is transferred.

"2. Such other employees as it considers appropriate.

"3. Such former members of the FCPP as the Financial Corporation, in its sole discretion acting in its capacity as employer, designates for transfer to the pension plan.

"4. Such other persons as this part may require.

"Selection of former members

"(2) In determining which former members of the FCPP are to be transferred to a successor pension plan, the Financial Corporation shall comply with the following rules:

"1. All former members of the FCPP must be transferred to the successor pension plans.

"2. The Financial Corporation shall consider which successor employer, if any, would most likely have become the employer of each former employee of Ontario Hydro (assuming, only for the purposes of this rule, that the former employee had been employed by Ontario Hydro immediately before the date on which employees of Ontario Hydro are transferred to the successor employers by or pursuant to orders made under section 108).

"3. If the Financial Corporation concludes that a former employee would most likely have remained an employee of the Financial Corporation or a subsidiary of the Financial Corporation, the Financial Corporation shall transfer the former member to the successor pension plan established by the Generation Corporation.

"Status of plan

"(2.1) During the period that employees of the subsidiary of the Financial Corporation established under section 102.1 are members of the pension plan established under subsection (1) by the Generation Corporation, that plan shall be deemed not to be a multi-employer pension plan for the purposes of the Pension Benefits Act."

Mr Baird: This amendment basically requires the Electrical Safety Authority to establish a pension plan and gives the administrative requirements thereof.

The Chair: Further questions or comments? Seeing none, shall this amendment carry? All those in favour? Opposed? It carries.

A government amendment on page 88.

Mrs Johns: I move that subsection 96(5) of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by striking out "and may do so after the date has passed" in the fourth line.

Mr Baird: This amendment just ensures that no double pension contribution happens during the change. It's a technical amendment.

Mr Conway: I just raise a question here, and it fits into the general area, and I have a question to Mrs Johns. A few days ago I got a call from the society -- I'm sure you did too -- from John Wilson. They were concerned and actually they were proposing a new amendment to part VII, section 104.1.

I don't understand the intricacies of the Pension Benefits Act, but this is the concern of the Society, which is, as you know, the professional group at Hydro, and I want a response generally as to whether in the view of the government this is deemed to be a problem. This has to do with the pension plans of successor companies. I'll just read in part from Mr Wilson's letter to me of September 29:

"As Bill 35 now reads, restrictions would be placed on pension plans established by Ontario Hydro's successor companies that go beyond the provisions of the Pension Benefits Act."

The proposed amendment which the society advanced to me, and I'm sure to you as well, removes those restrictions that allow Ontario Hydro's successor pension plans to be treated the same as other pension plans under the Pension Benefits Act.

Has there been any discussion around the government as to whether this is a matter to which they want to turn their attention, or is there a view that it is a problem in the way that the society sees it as a problem?

Mr Baird: I can speak to that for a moment. Ontario Hydro is currently the administrator and sole sponsor of the pension plan and has been for many years. I don't think Bill 35 changes that fact. I know this issue has been discussed for many years with respect to governance, but at this stage there hasn't been any agreement. It certainly isn't something that we've been convinced that we would want to change through Bill 35 at this time.

Mr Conway: I appreciate that.

The Chair: Further questions and comments? Shall the amendment carry? All those in favour? Opposed? This amendment carries.

Shall section 96, as amended, carry? All those in favour? Opposed? Section 96 carries.

Section 97: A government amendment is found on page 89.

Mrs Johns: I move that subsections 97(1) and (2) of the Electricity Act, 1998, as set out in schedule A to the bill, be struck out and the following substituted:

"Members of successor plans

"97(1) An employee of a successor employer who has established a successor pension plan becomes a member of the successor pension plan on the following date:

"1. If the employee was a member of the FCPP immediately before becoming employed by the successor employer, the later of the following dates:

"i. The date on which he or she becomes employed by the successor employer.

"ii. The commencement date for the plan.

"2. If, under the terms of the successor pension plan, the employee is required to be a member of the plan, the latest of the following dates:

"i. The date on which he or she becomes employed by the successor employer.

"ii. The date on which, under the terms of the successor pension plan, he or she is required to become a member of the plan.

"iii The commencement date for the plan.

"3. If, under the terms of the successor pension plan, the employee is required to become a member of the plan after meeting certain conditions, the later of the following dates:

"i The date on which he or she meets those conditions.

"ii The commencement date for the plan.

"4. If, under the terms of the successor pension plan, the employee is entitled, but not required, to become a member of the plan after meeting certain conditions, the later of the following dates:

"i The date on which he or she becomes a member of the plan.

"ii The commencement date for the plan."

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Mr Baird: Basically Bill 35 did not take into account the fact that a small number of employees would still be on probation and not required to join the pension plan on the first day of their employment and this just makes some amendment in that area.

The Chair: Further questions or comments? Seeing none shall this amendment carry? All those in favour? Opposed? The amendment carries.

Further questions or comments to section 97? Shall this section carry then as amended? Opposed? This section carries.

Sections 98 and 99 have no amendments proposed to these sections. Any questions or comments to these two sections? Then shall sections 98 and 99 carry? All those in favour? Opposed? They carry.

Section 100, a government amendment found on page 91.

Mrs Johns: I move that subsection 100(3) of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by striking out "Subsections 96(4)" in the first line and substituting "Subsections 96(3)".

Mr Baird: This is to correct an error in terms of identifying a subsection.

The Chair: Further questions or comments then on this section? Seeing none, shall this amendment carry? All those in favour? Opposed? This section carries.

Shall subsection 100 as amended carry? All those in favour? Opposed? It carries.

There is a new section proposed, 100.1, government amendment on page 92.

Mrs Johns: I move that the Electricity Act, 1998, as set out in Schedule A to the bill, be amended by adding the following section:

"Reciprocal transfer agreements

"100.1(1) this section applies with respect to the pension plans referred to in subsections 95(1), 96(1) and 100(1).

"Same

"(2) The administrators shall ensure that reciprocal transfer agreements between each of the pension plans are entered into and filed under the Pension Benefits Act.

"Same

"(3) The reciprocal transfer agreements may be bilateral or multilateral.

"Dispute resolution

"(4) If the administrator of the pension plan fails to enter into a reciprocal transfer agreement with the administrator of another pension plan before the prescribed date, the matters remaining in dispute between them shall be resolved in accordance with such requirements as may be prescribed.

"Regulations

"(5) The Lieutenant Governor in Council may make regulations,

"(a) prescribing, for the purpose of subsection (4), dates applicable to pension plans that are specified by the regulations;

"(b) governing the resolution of matters remaining in dispute between the administrators of specified pension plans after the prescribed date.

"Costs

"(6) The costs of dispute resolution after the prescribed date shall be borne equally by the applicable pension plans and are payable out of the pension funds of those plans."

Mr Baird: This amendment basically requires that the successor employees of Ontario Hydro, be that Genco, Servco, the IMO, Independent Market Operator, the ESA, Electrical Safety Authority, enter into reciprocal transfer agreements with each other, whether they be bilateral or multilateral.

The Chair: Further questions or comments? Shall this amendment carry? All those in favour? Opposed? The amendment carries.

We move now to section 101, the government amendment found on page 94.

Mrs Johns: I move that subsection 101(1) of the Electricity Act, 1998, as set out in schedule A to the bill, be struck out and the following substituted:

"FCPP membership temporarily extended

"(1) In any of the following circumstances, an employee of a successor employer is a member of the FCPP until the commencement date for the applicable successor plan:

"1. The employee was a member of the FCPP immediately before becoming employed by the successor employer.

"2. The employee would be required to be a member of the FCPP, if the employee were employed by the Financial Corporation.

"3. The employee would be required to be a member of the FCPP after meeting certain conditions, if the employee were employed by the Financial Corporation. The employee meets those conditions before the commencement date.

"4. The employee would be entitled, but not required, to become a member of the FCPP after meeting certain conditions, if the employee were employed by the Financial Corporation. The employee becomes a member of the FCPP before the commencement date."

Mr Baird: This is another amendment to provide for the transition from Ontario Hydro to the successor employer so that people's pension rights continue until the new plan is established.

The Chair: Questions or comments? Shall the amendment carry? All those in favour? Opposed? The amendment carries.

Shall section 101, as amended, carry? All those in favour? Opposed? Carried.

Section 102, there are no amendments proposed. Questions or comments? Shall this section carry? All those in favour? Opposed? This section carries.

A new section proposed by the government on page 95.

Mrs Johns: I move that part VII of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by adding the following section:

"Subsidiary to act as agent of Financial Corporation

"102.1(l) The Financial Corporation shall establish a subsidiary and shall retain the subsidiary to act as the agent of the Financial Corporation in its capacity as administrator of the FCPP.

"Application of section 67

"(2) Section 67 does not apply to the subsidiary established under subsection (1).

"Employees

"(3) The employees of the subsidiary shall be deemed not to be civil servants, crown employees or public servants for the purpose of the Public Service Act or any other act.

"Application of subsections (5) and (6)

"(4) Subsections (5) and (6) cease to apply when the subsidiary is no longer retained for the purpose referred to in subsection (1).

"Participation in FCPP

"(5) The following rules apply until the commencement date for the successor pension plan established by the Generation Corporation:

"1. The employees of the subsidiary are, or are entitled to be, members of the FCPP on the same basis as employees of the Financial Corporation.

"2. The subsidiary is an employer who is required to make contributions to the pension fund for the FCPP.

"3. Section 102 applies, with necessary modifications, with respect to the rights and duties of the Financial Corporation and the subsidiary.

"Participation in successor pension plan

"(6) The following rules apply on and after the commencement date for the successor pension plan established by the Generation Corporation:

"1. The employees of the subsidiary are, or are entitled to be, members of the successor pension plan established by the Generation Corporation.

"2. Section 97 applies, with necessary modifications, with respect to the employees of the subsidiary.

"3. The subsidiary is an employer who is required to make contributions to the pension fund for the successor pension plan.

"4. Section 102 applies, with necessary modifications, with respect to the rights and duties of the Generation Corporation and the subsidiary."

Mr Baird: This amendment is in relation to Finco's requirement to create a pension subsidiary to act as agent or administrator of their pension plan and various administrative aspects of that.

The Chair: Questions or comments? Shall this amendment carry? All those in favour? Opposed? The amendment carries.

Moving now to section 103, a government amendment found on page 97.

Mr Baird: I move that the French version of the definition of "A" in subsection 103(3) of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by striking out "avant qu'ils ne" in the 12th line and substituting "antérieur au moment où ils."

This is a technical amendment with respect to the French translation.

The Chair: Questions or comments? Shall the amendment carry? All those in favour? Opposed? It's carried.

A government amendment on page 98.

Mrs Johns: I move that subsections 103(6) and (7) of the Electricity Act, 1998, as set out in schedule A to the bill, be struck out and the following substituted:

"Dispute resolution

"(6) If the administrators do not enter into a transfer agreement before the prescribed date, the matters remaining in dispute between them shall be resolved in accordance with such requirements as may be prescribed.

"Regulations

"(7) The Lieutenant Governor in Council may make regulations,

"(a) prescribing, for the purpose of subsection (6), dates applicable to pension plans that are specified by the regulations;

"(b) governing the resolution of matters remaining in dispute after the prescribed date.

"Costs

"(8) The costs of dispute resolution after the prescribed date are payable out of the pension fund for the FCPP."

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Mr Baird: This amendment provides for deadlines for reaching agreement on the division and transfer of the pension assets.

The Chair: Further questions or comments? Shall the amendment carry? All those in favour? Opposed? The amendment carries.

Shall section 103, as amended, carry? All in favour? Opposed? That section carries.

Section 104, a government amendment found on page 99.

Mr Baird: I move that the French version of paragraph 1 of subsection 104(2) of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by striking out "avant qu'ils ne" in the seventh and eighth lines and substituting "antérieur au moment où ils."

This is just a French clarification.

The Chair: All those in favour? Opposed? That amendment carries.

A government amendment found on page 100.

Mrs Johns: I move that paragraph 2 of subsection 104(2) of the Electricity Act, 1998, as set out in schedule A to the bill, be struck out.

Mr Baird: Basically this provision is no longer required as it's now covered in paragraph 1 of subsection 104(2).

The Chair: Shall this amendment carry? All those in favour? Opposed? This amendment carries.

Shall section 104, as amended, carry? All those in favour? Opposed? This section carries, as amended.

Section 105, there are no amendments proposed. Shall section 105 carry? All those in favour? Opposed? Section 105 carries.

Section 106, we have a government amendment found on page 101.

Mrs Johns: I move that subsection 106(1) of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by,

(a) striking out "subsection 25(3) or (4)" in the second line of clause (e) and substituting "subsection 25(3), (4) or (6)"; and

(b) adding the following clauses:

"(e.1) prescribing the amount of electricity referred to in the definition of 'low-volume consumer' in subsection 25(9);

"(m.1) deeming a reference in any act to Ontario Hydro to be a reference to a person or other entity specified in the regulations, subject to such conditions as may be prescribed by the regulations;"

This is a consequential amendment as a result of our changes to subsections 25(9) and 2(3) where we talk about a low-volume consumer. So these are just consequential amendments.

The Chair: Questions or comments? Shall this amendment carry? All those in favour? Opposed? This amendment carries.

We have an NDP amendment. Do we have unanimous consent to stand down the NDP motion found on page 102? If we do that, just so you know, we have to stand down all amendments to that section. Do I have unanimous consent for that?

Mrs Johns: No.

The Chair: Then we shall move on.

Any questions or comments on the complete section 106? Shall section 106, as amended, carry? All those in favour? Opposed? That section carries.

Section 107, there are no amendments proposed. Questions or comments? Shall section 107 carry? All those in favour? Opposed? This section carries.

Section 108, we have a government amendment found on page 103.

Mrs Johns: I move that section 108 of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by,

(a) inserting "the subsidiary of the Financial Corporation established under section 102.1, Her Majesty in right of Ontario" after "Electrical Safety Authority" in the sixth and seventh lines of subsection (1);

(b) Striking out "or" at the end of the English version of clause (5)(d); and

(c) adding the following clauses to subsection (5):

"(f) the subsidiary of the Financial Corporation established under section 102.1; or

"(g) Her Majesty in right of Ontario."

This is a consequential amendment that takes into effect previous changes that we've had with the Electrical Safety Authority and it also takes into account some issues on the subsidiary of the Financial Corp that were finance amendments in the previous section.

The Chair: Questions or comments? Shall this amendment carry? All those in favour? Opposed? This amendment carries.

Shall section 108, as amended, carry? All those in favour? Opposed? This section carries.

We have a new section proposed by the government, section 108.1.

Mrs Johns: I move that the Electricity Act, 1998, as set out in schedule A to the bill, be amended by adding the following section:

"Notice of date

"108.1(1) The minister shall, within 90 days after the date that a transfer order is made or amended, publish notice of the date in the Ontario Gazette.

"Amendments

"(2) Notice of the date that a transfer order was amended shall identify the transfer order that was amended.

"Non-compliance

"(3) Non-compliance with this section does not affect the validity of a transfer order or any amendment to a transfer order."

What we were concerned about here was that we were preparing transfer orders to move assets and liabilities from the old Ontario Hydro, which will now become the Financial Corp, through to Generation, IMO, all the companies we listed before that will come out of Ontario Hydro, and we wanted to ensure that the public was aware of how those transfers were happening, so they're being required to be gazetted in one of the sections, and we're going to keep records of those transfer orders.

The Chair: Questions or comments? Shall this amendment carry? All those in favour? Opposed? The amendment carries.

Moving now to section 109, there are no amendments to pose.

Questions or comments? Shall section 109 carry? All those in favour? Opposed? Section 109 carries.

A new section proposed by the government, section 109.1.

Mrs Johns: I move that the Electricity Act, 1998, as set out in schedule A to the bill, be amended by adding the following section:

"Approvals under the Power Corporation Act

"109.1 If the approval of the Lieutenant Governor in Council was at any time required under the Power Corporation Act or a predecessor of that act with respect to an asset, liability, right or obligation that is to be transferred by or pursuant to a transfer order, the approval shall be deemed to have been given."

We're trying to ensure that the assets follow through to the corporations, so as we're transferring for this transfer order, we have given the right for these to be deemed to have been given.

The Chair: Questions or comments? Shall this amendment carry? All those in favour? Opposed? This amendment carries.

On sections 110 and 111, there are no amendments proposed. Questions or comments? Shall sections 110 and 111 carry? All those in favour? Opposed? Those sections both carry.

Section 112, there's a government amendment proposed, page 106.

Mrs Johns: I move that subsections 112(1) and (2) of the Electricity Act, 1998, as set out in schedule A to the bill, be struck out and the following substituted:

"Province may assume obligations in return for securities

"(1) If, pursuant to a transfer order, the Generation Corporation or the Services Corporation issues securities to Ontario Hydro, the Lieutenant Governor in Council, by order,

"(a) may authorize Her Majesty in right of Ontario or an agent of Her Majesty in right of Ontario to assume obligations of the Generation Corporation or the Services Corporation under the securities; and

"(b) may require the Generation Corporation or the Services Corporation to issue, and may authorize Her Majesty in right of Ontario or an agent of Her Majesty in right of Ontario to acquire additional securities in such amount as the Lieutenant Governor in Council may specify.

"Exchange of securities

"(2) The Lieutenant Governor in Council may by order require the Generation Corporation or the Services Corporation to issue securities to Ontario Hydro in exchange for securities it previously issued to Ontario Hydro pursuant to a transfer order.

"Application of section 28 of the Financial Administration Act

"(2.1) Section 28 of the Financial Administration Act does not apply to anything done pursuant to an order under subsection (1) or (2).

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Mr Baird: This amendment expands the entities through which the province can indirectly enter into a debt-for-equity swap with Genco or Servco to include crown agents other than Finco.

The Chair: Questions or comments? Shall this amendment carry? All those in favour? Opposed? The amendment carries.

Shall section 112, as amended, carry? All those in favour? Opposed? That section carries.

On section 113, there are no amendments proposed. Questions or comments? Shall this section carry? All those in favour? Opposed? This section carries.

Section 113.1, a government amendment, found on page 107.

Mrs Johns: I move that the Electricity Act, 1998, as set out in schedule A to the bill, be amended by adding the following section:

"Statements in registered documents

"113.1 (1) A statement, in a registered document to which a person referred to in subsection (2) is a party, that land described in the document was transferred to the person from Ontario Hydro by or pursuant to a transfer order, and any other statement in the document relating to the transfer order, shall be deemed to be conclusive evidence of the facts stated.

"Persons referred to in subsection (1)

"(2) The persons referred to in subsection (1) are:

"1. The Generation Corporation or a subsidiary of the Generation Corporation.

"2. The Services Corporation or a subsidiary of the Services Corporation.

"3. The IMO.

"4. The board.

"5. The subsidiary of the Financial Corporation established under section 102.1.

"6. Her Majesty in right of Ontario.

"7. The Electrical Safety Authority.

"8. Any other person prescribed by the regulations.

"No new interest

"(3) Subsection (1) does not give any person an interest in land that Ontario Hydro did not have.

"References to unregistered transfer orders

"(4) A document that is otherwise capable of being registered or deposited under the Registry Act or registered under the Land Titles Act and that refers to an unregistered transfer order may be registered or deposited under the Registry Act or registered under the Land Titles Act despite any provision of those acts.

"Definitions

"(5) In this section,

"'land' means land, tenements, hereditaments and appurtenances, or any estate or interest therein; ("bien-fonds")

"'registered document' means a document registered or deposited under the Registry Act or registered under the Land Titles Act. ('document enregistré')"

What we're trying to do here is facilitate registration of these lands under the Registry Act, but we're also trying to ensure that they're being transferred to Ontario Hydro's successor companies, if you will. That's why we've specifically outlined them here in subsection (2).

The Chair: Questions or comments? All those in favour of this section? Opposed? This amendment carries.

Section 114, there are no amendments proposed. Questions or comments? Shall section 114 carry? All those in favour? Opposed? This section carries.

Section 115, there's a government amendment found on page 109.

Mrs Johns: I move that section 115 of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by adding the following subsection:

"Release of Ontario Hydro

"(2) Subject to subsection (1), the transfer of a liability or obligation under this part releases Ontario Hydro from the liability or obligation."

As these assets are being transferred from Ontario Hydro to the successor corporations, we're trying here to ensure that the liabilities attached to those assets move with the assets and that no liabilities are left with the old Ontario Hydro.

The Chair: Questions or comments?

Mr Conway: I feel very confident that with the aggressive leadership of Dr Farlinger, it will not be the leaving behind of assets that will be the issue facing the nation, but it will be the leaving behind of a considerable bag of debt that will occupy the minds of the good burghers of Clinton and Exeter. With that I will --

Mrs Johns: I want to assure the member opposite that it's the assets and the liabilities associated with those assets that we're moving forward. I know he's talking about the stranded debt, however, and we certainly will do everything to keep him apprised of the stranded debt.

Mr Conway: I just think we will be awakening and finding all manner of discovery that will even perhaps undermine the Gibraltar-like confidence of the honourable member in the efficacy of what she is embracing here.

Mrs Johns: You're awake again. You've come alive.

Mr Conway: Listen, some members take great pride in being mail persons; other members seem to take delight in being readers. To each, his or her own.

The Chair: Questions or comments? Shall this amendment carry? All those in favour? Opposed? This amendment carries.

Shall section 115, as amended, carry? All those in favour? Opposed? The amended section is carried.

Section 116, a government amendment.

Mrs Johns: I move that section 116 of the Electricity Act, 1998, as set out in schedule A to the bill, be amended by striking out "deemed to have been commenced" in the seventh line and substituting "continued."

We wanted to ensure here that we had stronger wording. There were some questions by people who came forward and were trying to ensure that existing actions will, and can proceed.

The Chair: Further questions or comments? Shall this amendment carry? All those in favour? Opposed? This amendment carries.

Shall section 116, as amended, carry? All those in favour? Opposed? This section carries.

Section 117, there are no amendments proposed. Questions or comments? Shall section 117 carry? All those in favour? Opposed? This section carries.

Section 118, a government amendment found on page 111.

Mrs Johns: I move that subsection 118(1) of the Electricity Act, 1998, as set out in schedule A to the bill, be struck out and the following substituted:

"Certain rights not affected by transfer

"(1) A transfer by or pursuant to a transfer order,

"(a) shall be deemed not to constitute,

"(i) a breach, termination, repudiation or frustration of any contract, including a contract of employment or insurance,

"(ii) a breach of any act, regulation or municipal bylaw, or

"(iii) an event of default or force majeure;

"(b) shall be deemed not to give rise to a breach, termination, repudiation or frustration of any licence, permit or other right;

"(c) shall be deemed not to give rise to any right to terminate or repudiate a contract, licence, permit or other right; and

"(d) shall be deemed not to give rise to any estoppel."

Some of those words are pretty technical so I asked the lawyers about it. What we're trying to do here is to ensure that the transfer order doesn't breach any kind of statute. We've added in subclause 118(1)(a)(ii) "act, regulation or municipal bylaw," and in clause (b) we've added "a breach, termination, repudiation or frustration." So we've added those to it to ensure that this transfer order does not allow anyone to enter into a breach of contract.

The Chair: Questions or comments?

Mr Conway: Is Shari Lewis dead or alive? She died, didn't she?

Mrs Johns: She just died and so did Lambchop.

Mr Conway: I'm not sure.

The Chair: Back to the bill. Shall this amendment carry? All those in favour? Opposed? This amendment carries.

We have an NDP amendment on page 112.

Mr Lessard: I move that section 118 of the Electricity Act, 1998, as set out in schedule A of the bill, be amended by adding the following subsection:

"Aboriginal claims unaffected

"(3) An aboriginal claim against the crown or against Ontario Hydro is not affected by,

"(a) a transfer by or pursuant to a transfer order; or

"(b) the sale of an asset of Ontario Hydro."

The reason for this amendment is as a result of a submission that we received in Sudbury from Wanapitei which indicated they had a grievance with Ontario Hydro with respect to flooding of their lands. This was a grievance that hadn't been resolved. It never resulted in any court proceedings. At the time we didn't have an answer whether that was something that would be covered under the definition of "liability" in section 108 of the bill. For further clarification and protection of that grievance for aboriginal land grievances, for lack of a better word, this amendment is being put forward so that in the event there may be some ongoing discussions for compensation for land claims for the flooding of aboriginal lands, those grievances, even though they may not be considered as claims, would still go with any transfers and that the liability that may come about in the future can't be avoided.

1750

Mrs Johns: I think we were all moved by the Wanapitei presentation. I've asked our lawyers to read the presentation by them and to assure us that their concerns are taken forward in Bill 35, so I'd like to hear from the lawyers on this, please.

Ms Cynthia Brandon: The transfer order provisions provide for the transfer of liability. The term "liability" is a very broad word and would include contingent liability. It doesn't have to be an action that's already started.

Mr Conway: Excuse me, these are lawyers for whom?

Mrs Johns: Energy, science and technology.

Ms Brandon: So it does not have to be an action that had already been commenced in order to transfer it. The transfer orders will speak to the transferring of the contingent liability to specify against whom that claim may be enforced. That's a decision that actually could still be made in the future when the transfer order itself is done. It's not a question of whether liability includes contingent liability; yes, it can. With respect to the amendment, the transfer orders aren't transferring any of the crown's liability at all. It would be a liability of Ontario Hydro that would be transferred. So that wouldn't be a concern or shouldn't be a concern. It's the potential to transfer the crown liability.

With respect to if it's a policy decision whether the liability or the contingent liability would be transferred, as I say, it's a decision that can be made when the transfer orders are actually done, but I believe the thought is that the liability should perhaps most appropriately follow the assets, so whoever is realizing on benefit of the assets should also be responsible for the liability that flows with them.

Mr Lessard: Just to follow up on that, I'm satisfied that contingent liability is included in the word "liability," but does a contingent liability need to be specified in the transfer order or can a contingent liability continue to exist without anyone being aware of it?

Ms Brandon: I believe it can continue to exist, but I think with the greater certainty you'd want, it should probably be something that is addressed in a transfer order when it's prepared.

Mr Lessard: That's part of the reason Wanapitei raised it and part of the reason we've raised it here today, so that in the future, if there is a transfer order that's made, with respect to these lands at least, people are aware that this grievance is still outstanding and needs to be taken into consideration.

Mrs Johns: I'd like to add a question on this. On our amendment, which said that in a transfer order the liability followed the assets, does that amendment take into consideration Wanapitei's concerns and are they covered there so that if they have a contingent liability now, they will have someone to go after to be able to remedy that contingent liability?

Ms Brandon: The amendment that we made to section 115, that new subsection we added, has to be read in context along with subsection (1). Subsection (1) gives the ability to the LGIC to set out against whom the liability should be enforced. So the amendment we've made is actually more of a clarification in terms of where we transfer it on. It is in fact transferred on and the liability would no longer remain with Ontario Hydro, to become Ontario Hydro Financial Corp.

I think to answer your question, you have to read both subsections (1) and (2) together to see what would happen with the liability on the transfer order.

Mrs Johns: Can I just extract from that that Wanapitei is protected?

Ms Brandon: Wanapitei can be protected in the drafting of the transfer order.

Mr Conway: As they would say on the BBC: "End of news. Here again are the main points." What are the main points of the protection that the Wanapitei have?

Ms Brandon: With respect to the transfer orders, what can be transferred can include contingent liability because the word "liability" in and of itself is so broad. The transfer orders can set out very clearly what is being transferred and against whom with respect to liability that right should be enforced.

Mr Conway: Are you essentially saying that Mr Lessard's motion here is redundant, given the changes the government introduced elsewhere in the package? I must say, I'm not particularly --

Ms Brandon: I can say with respect to the aboriginal claim against the crown, it's not necessary at all because the transfer orders do nothing with the crown's liability. With respect to saying that it doesn't affect a claim against Ontario Hydro, and leaving aside that if it were going to be adopted, I'm not sure really what aboriginal claims would mean to make it clearer or what it means to say it's not affected by, but I assume what that meant would be that it was going to stay with Ontario Hydro, which would become Ontario Hydro Financial Corp. We have to say that I don't believe that's necessarily the policy that will be pursued.

Mr Conway: But I'm left --

The Chair: I'm sorry. I'm going to interrupt because the House is rising and some of us have to be in the House again at 6:30, so I think we should end our discussion and we'll come back to that.

Mr Conway: We'll come back to this.

The Chair: The question is, are we coming back to this tomorrow or are we coming back to this next Tuesday? Any further discussion?

Mr Lessard: I've put forward the motion and we can vote on it. But in the proceedings on September 28 this is what the Chair stated: "Let's say we're going to have our fifth day on Thursday, October 8. We can book for that. If we see that there is a problem and if members want to note that to me, then perhaps we can revisit it, but at this point we'll tentatively book that."

I got in touch with the clerk last Thursday and indicated that I had a problem with tomorrow afternoon. I'm just asking that that be rescheduled. I think it's a reasonable request considering the comments the Chair made. If upon revisiting that, the government doesn't want to take into consideration my reasonable request, then so be it.

The Chair: Further discussion or comments?

Mr Conway: I have no problem accommodating the member from Riverside, my always agreeable self.

Mr Baird: Madam Chair, this is by way of trying to be of assistance. I think we're scheduled at 4:30 to go into time allocation and vote on the amendments, as they are deemed to have been made. Would it be helpful -- I'm just trying to find a way that would help the member -- that at 12 o'clock it could be deemed to be 4:30 and in that way we could be finished by 1:30 when the House went into session? We have an approximate amount of time for discussion and debate, but that way the critic from the New Democratic Party could be here.

The Chair: The time allocation motion says "following routine proceedings."

Mr Baird: We could, at 12 o'clock, deem it to have been, if there's unanimous consent, and if not --

The Chair: I don't think the committee has the power to do that. Even if we did want to do it, I don't think we have the power to do it.

Mr Galt: So possibly the comments you made were in good faith at the time but out of order? Is that my --

The Chair: No.

Mr Conway: Now he's taking to insulting you, Brenda.

Mr Galt: No, no. I would have probably made the same ones under the circumstances, but now understanding it's legislated --

The Chair: The only thing that can be changed is the day we meet. We can either meet tomorrow from 9 to noon or at 3:30 through to finish the day. So it's only a matter of day change.

Mr Baird: Could we do this and ignore the clock at 12 o'clock and then just vote on the amendments --

The Chair: No.

Interjections.

Mr Galt: Madam Chair, I've already made all kinds of changes just to accommodate the timing that this is scheduled for and --

The Chair: OK, I'm going to put it to a vote. The motion is placed that we don't meet tomorrow, that we meet next -- what was your motion?

Mr Lessard: I think to comply with the -- I guess it doesn't need to be a Thursday. I was saying next Wednesday.

The Chair: It could be Tuesday?

Mr Lessard: Tuesday.

The Chair: All right. That's the motion on the floor. All those in favour of that motion? Opposed? It's lost. Sorry.

We're going to reconvene tomorrow morning at 9 o'clock, but we will be meeting in room 2 next door.

The committee adjourned at 1800.