POWER CORPORATION AMENDMENT ACT, 1991 / LOI DE 1991 MODIFIANT LA LOI SUR LA SOCIÉTÉ DE L'ÉLECTRICITÉ
CONTENTS
Tuesday 18 February 1992
Power Corporation Amendment Act, 1991, Bill 118 / Loi de 1991 modifiant la Loi sur la Société de l'électricité, projet de loi 118.
Adjournment
STANDING COMMITTEE ON RESOURCES DEVELOPMENT
Chair/ Président: Kormos, Peter (Welland-Thorold ND)
Vice-Chair / Vice-Président: Waters, Daniel (Muskoka-Georgian Bay/Muskoka-Baie-Georgianne ND)
Arnott, Ted (Wellington PC)
Cleary, John C. (Cornwall L)
Dadamo, George (Windsor-Sandwich ND)
Huget, Bob (Sarnia ND)
Jordan, Leo (Lanark-Renfrew PC)
Klopp, Paul (Huron ND)
McGuinty, Dalton (Ottawa South/-Sud L)
Murdock, Sharon (Sudbury ND)
Ramsay, David (Timiskaming L)
Wood, Len (Cochrane North/-Nord ND)
Substitution(s) / Membre(s) remplaçant(s):
Brown, Michael A. (Algoma-Manitoulin L) for Mr Ramsay
Coppen, Shirley, (Niagara South/-Sud ND) for Ms S. Murdock
Farnan, Mike (Cambridge ND) for Mr Wood
Jamison, Norm (Norfolk ND) for Mr Kormos
Marchese, Rosario (Fort York ND) for Mr Dadamo
Also taking part / Autres participants et participantes:
Ciemiega, Ed, Ministry of Energy
Jennings, Rick, Ministry of Energy
Clerk pro tem / Greffière par intérim: Manikel, Tannis
Staff / Personnel:
Cutbert, Graham, Legislative Counsel
Yeager, Lewis, Research Officer, Legislative Research Service
The committee met at 1040 in committee room 2.
POWER CORPORATION AMENDMENT ACT, 1991 / LOI DE 1991 MODIFIANT LA LOI SUR LA SOCIÉTÉ DE L'ÉLECTRICITÉ
Resuming consideration of Bill 118, An Act to amend the Power Corporation Act / Projet de loi 118, Loi modifiant la Loi sur la Société de l'électricité.
The Vice-Chair: I am going to call the meeting to order.
Opening statements from the three parties are going to take place this morning and then we will adjourn. Maybe the subcommittee can get together just prior to this afternoon's meeting and iron out the last few things we have been talking about informally.
Mr Arnott: On a point of order, Mr Chair: Is it possible for members of the committee to have copies of the parliamentary assistant's statement?
Mr Huget: It is not CIA-type material. Copies can be made available.
The Vice-Chair: Have they been made available?
Mr Huget: We can get them made available. Mr Arnott usually listens intently to everything I say, so I am sure he probably will not need the written words.
Mr Klopp: He is keeping them for his album.
The Vice-Chair: Can we have a little order, please, Mr Klopp? We will get some copies made up for everyone. Can we proceed in the interim? Mr Huget, the floor is yours.
Mr Huget: Good morning, ladies and gentlemen. With me is Rick Jennings, acting manager of policy coordination at the Ministry of Energy. As we begin our clause-by-clause examination of Bill 118, it might be helpful if I briefly go over some of the issues the government is addressing with this legislation. I also want to tell you about some important motions I will be introducing in the course of these proceedings.
I would like to begin by reminding this committee that Bill 118 was introduced to help the government keep an important promise. That promise, made in the speech from the throne in November 1990, was to take Ontario in new energy directions. These are new energy directions that, more than ever before, emphasize the need to control the demand for energy and reduce our traditional dependence on increasing the supply. At the same time, the new energy directions recognize the need to ensure that Ontario continues to have reliable supplies of energy at reasonable prices.
An essential component of the new energy directions is the principle of partnership. The government obviously cannot make Ontario energy-efficient all by itself. We all have to work at it together as partners. That is how the Ministry of Energy is proceeding, by building partnerships with business and industry, environmental groups, labour and communities across the province. Let me say that "partnership" is not just a word we are throwing around. Partnership works. It produces results.
A good example is the recent announcement that Canadian General Electric plans to start making high-efficiency lighting products in Oakville. To help make that project a reality, the government provided CGE with a $30-million repayable loan. That investment will bear important dividends. It will help create 200 new jobs for Ontario workers, it will create new export earnings and it will add new strength to the province's high-tech industrial sector. That is the sort of thing we mean when we talk about partnership.
Another important partnership is the one between the government and Ontario Hydro. Hydro has been given a leading role in the drive to point Ontario in new energy directions, and Hydro has responded. It has raised its demand-management targets, and raised them again. In the course of this decade the utility plans to spend between $5 billion and $6 billion on energy efficiency and conservation.
Before I go on, let me make a comment on that figure. I know $5 billion or $6 billion is an awful lot to spend on saving electricity, but what we have to remember is that what is not saved must be produced, and it costs more to produce electricity than to save it. In this case, the electricity Hydro expects to save with its $5 billion to $6 billion would cost $8 billion to $10 billion to produce. In these days, when bargains are few and far between, that, I respectfully suggest, is a real bargain for the people of Ontario.
As you can see, partnership between Hydro and the government is absolutely essential to the government's energy policy, and strengthening the partnership is an important objective of Bill 118. But it is not the only objective. The bill will also make Hydro more responsive to the priorities and concerns of the people of Ontario. It will make the relationship between Hydro and the government more open and visible. It will guarantee Hydro's independence in its day-to-day operations. It will allow Hydro to expand its demand-management efforts.
I want to look at these objectives more closely, starting with the issue of Hydro's responsiveness. Bill 118 addresses this issue by proposing to add four new members to Hydro's board. We believe this will bring a broader range of interests and outlooks to bear on Hydro decision-making and help keep Hydro in closer touch with the community it serves. With an expanded board, no one can call Hydro a closed club.
The bill also clarifies the critical question of who runs what. To start with, it leaves no doubt that Hydro is its own boss in the day-to-day conduct of its business. At the same time, the bill enables the government to provide Hydro with direction in matters of policy. We believe this is both necessary and right. As I said earlier, Hydro has a pivotal role to play in implementing the government's new energy directions. It would make no sense at all for Hydro to be pulling in one direction and the government to be pulling in another. The directive power contained in Bill 118 ensures that both Hydro and the government will be pulling in the same direction, towards a more energy-efficient Ontario.
There will be another important benefit as well. Under the Power Corporation Act, government direction to Hydro has been subject to a highly complex set of procedures and approvals. In order to get anything done at all, past governments have provided direction informally, frequently in closed sessions with Hydro management. That will change. Government directives to Hydro will create an open, visible channel for communicating the government's wishes and priorities. There will be no more closed doors.
We know this proposal has caused some concerns. The municipal electric utilities in particular say they are worried that the government might want to use this directive power to turn Hydro into an instrument of social and economic policy. This view has been stated during the course of this committee's hearings and in representations to the Ministry of Energy.
The government has responded to these concerns. It has given assurances that Bill 118 was never designed to allow anyone to misuse Hydro in this way. But if people are still worried, maybe we have not made our intentions clear enough. To make doubly sure there is no misunderstanding on this important point, I intend to present this committee with a motion to amend Bill 118. The motion will make it clear that the government's directive power will be limited to matters relating to Hydro's exercise of its powers and duties as set out in the Power Corporation Act.
Now to the question of fuel switching. As this committee knows, Bill 118 would allow Hydro, for the first time, to encourage electricity users to switch to other energy sources, where appropriate. I said earlier that an important aim of Bill 118 is to let Hydro make a more effective contribution to demand management. Allowing Hydro to promote fuel switching is a way of doing that. The potential payoff is immense. Hydro estimates that fuel switching can save between 870 and 2,100 megawatts of electricity by the end of this decade. These figures come into clearer focus when you reflect that the saving would be equivalent to the output of between one and three nuclear reactors the size of the reactors at Darlington.
There will also be a payoff for consumers. Most fuel switching will involve going from electricity to natural gas, and that reduces space heating costs by two thirds. If the switch were to be to oil, heating bills could be reduced by one third. For the most part, natural gas will replace electricity that has been produced from coal. That is another benefit. Natural gas is much cleaner-burning than coal, which means reduced emissions of combustion gases. Here again, the result will be less smog, less acid rain and lower levels of greenhouse gases. If you ask me, fuel switching is a winner all the way around.
Not everyone is convinced of this, and we know that. During your hearings on Bill 118 there were witnesses who felt fuel switching might benefit those who switch at a cost to those who do not. But the fact is that virtually everyone in the province stands to benefit.
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To start with, the option of switching to gas or oil for space heating is available to the large majority of Ontario citizens. Another reason for saying everyone will benefit is that to move away from electricity will reduce the pressure on Hydro to build large new generating facilities. As we all know so very well, such facilities cost a great deal of money, and the cost ultimately finds its way into the rate structure. In case anyone was in danger of forgetting that, Hydro has just reminded consumers with an 11.8% rate increase to help pay for Darlington. The environmental benefits of fuel switching are something else that will accrue to all the people of Ontario.
So far as implementation of the fuel-switching program is concerned, the government has told Hydro that the methodology must be worked out in consultation between Hydro and its key partners. These will include the municipal electrical utilities, the gas utilities and the companies supplying propane and oil. Through these discussions, the criteria and appropriate financial mechanisms for implementing fuel switching will be established. They will be established with due regard for the impact on all the parties involved.
As I indicated a few moments ago, Hydro has proved to be a willing and energetic partner in the drive to increase energy efficiency in Ontario, and it wants to be able to do even more. In discussions with the Ministry of Energy, Hydro has told us the changes proposed in Bill 118 need clarification to provide the latitude the utility needs to make a full contribution to demand management. Specifically, Hydro has asked the government to consider an additional change that would provide it with greater flexibility to provide incentives to encourage energy conservation. The government considers this a reasonable request, and during our clause-by-clause examination of Bill 118 I will be introducing a motion to that effect.
I will be introducing one other motion as well, this one dealing with the salary of Hydro's chair. Under the Power Corporation Act, responsibility for setting executive salaries at Hydro rests with the provincial cabinet. But in framing Bill 118, the government took the view that Hydro should be able toset its own salaries, just as private corporations do. However, it became clear that the public did not agree. Members of environmental groups and a lot of private citizens argued that the principle of accountability would be better served by leaving the responsibility for setting Hydro executives' salaries with cabinet.
When this government first took office, we promised the people of Ontario that we would listen. We have been doing that, and we were listening when people gave us their views on this particular matter. Accordingly, I will be introducing a motion to strike out the proposal in Bill 118 that would have transferred responsibility for setting the salary of the chair to Hydro's board. The responsibility will remain with the government.
To sum up everything I have been saying in the past few minutes, let me state simply that we believe Bill 118 is good legislation and that the changes I will be placing before you, changes resulting from dialogue and consultation with our energy partners, will make it even better. On behalf of the government of Ontario, I urge you to give Bill 118 your full and enthusiastic support. Thank you.
Mr McGuinty: I think it would be appropriate at the outset to extend our thanks, and I am sure I speak for all members of the committee, to all presenters who appeared before us. As we heard from people in this city and other communities throughout the province, I was struck by the genuine concern and overall regard shown for the government's plans with respect to Hydro as contained within Bill 118.
I found it difficult to get hold of information that was, I guess I would call it, 100% reliable, and I think I would caution all members of the committee in the sense that presenters, quite understandably zealous in making a certain point, presenting a certain case, tend to present information which bolsters that case and to set aside, not bring to the fore, other information which perhaps detracts from it. Of course, our job here is to put all this together and, at the end of the day, to make findings, in essence, as to what the facts are and what the best way to proceed is.
I was also struck by the representatives of the public utility commissions, and it is good to know that there are people out there on the front lines, not housed in that building a block away from here in downtown Toronto, but people who are elected to hold public office, who are accountable directly to their local ratepayers, who have a very thorough understanding of the concerns of their ratepayers.
Certainly one of the biggest issues of the day relating to Hydro are rates and the fact that they are increasing. They would seem to be increasing at an ever more rapid rate, and it is important that we understand that whatever we do with respect to Hydro must have some element of concern shown for the effect it will have on rates. That is particularly important because hydro rates effectively constitute a regressive tax, and when rates go up, the retired pensioner will be paying more, effectively speaking, than would people who have greater wealth. If we are ever in a position where we are using Hydro to perform certain functions which are more properly those of the government, then we are penalizing that pensioner, we are penalizing that single parent, we are penalizing small business, we are penalizing everybody who has no option, of course, but to pay for hydro because it has become absolutely indispensable to our way of life.
Just to expand on that a bit further, when you pay an income tax, you are paying it as a function of your income, but when you are paying hydro, you are not paying it as a function of your income, and whether that pensioner I have made reference to is paying any income tax or not is irrelevant. If the hydro rates go up, he or she is going to be faced with an increase which he or she may not be able to withstand, and the same would apply to small business and to large industry.
Much has been said about Bill 118 in terms of how it is going to make Hydro more accountable. For the life of me, I fail to see how Bill 118 is going to make Hydro more accountable, either to me as an elected member of the Legislature or to me as a ratepayer.
The government proposes to give itself the power of issuing directives. I am not really sure how directives differ from statements which are contained within the existing Power Corporation Act, but in any event, it is going to give the government power to issue directives. It issued, effectively speaking, a directive in the matter of Elliot Lake. That matter, which has sent out the alarm bells to the Municipal Electric Association and public utility commissioners, just for instance, was not discussed in the House, and to my knowledge, it was not even discussed in the NDP caucus. It was discussed only in cabinet, and it was certainly not discussed with ratepayers. That is symbolic of the kind of openness and accountability that is going to take place in the future when it comes to the approach taken by this government with respect to issuing directives. There is not even a requirement that a directive be made public.
I guess the other thing, of course -- and I mentioned this yesterday to Mr Eliesen -- is that from the ratepayers' perspective, we have been telling ourselves: "At least, thank God, if the government does something which is not in my interests as a ratepayer, my directors, those people who sit on the board, those people who are accountable to me, who owe me a fiduciary duty to look out for my interests, will be able to say, `No, we won't do something if it's not in the interests of the corporation, the interests of ratepayers.'" Well, look what happened to Elliot Lake. The board of directors went ahead and followed the directive only after ensuring that the order in council issued by cabinet said that it would be exempt from liability. They would not be held responsible for going ahead with what they did at Elliot Lake.
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So my overriding question at the outset, and it remains the same today, is, "Who is looking out for the ratepayers?" If the government is not looking out for the ratepayers because it is tempted, for whatever reason, to use Hydro as some kind of tool to perform some kind of function that the government ought to properly be performing itself, if government is doing that and the directors are thwarted as a result of the wording contained within this legislation from looking out for my interests, then nobody is looking out for my interests as a ratepayer.
This brings us back to the issue of prices, and prices are always important, for the reason I referred to earlier, in particular because hiking up a Hydro rate can effectively be a regressive tax, and also because, as all members of this committee are very much aware, we are now living within the context of a recession. More and more people are categorizing this as a depression, and at this point in time, the people of this province and industry are extremely sensitive to any kind of an effective increase in their cost of living over which they have no control.
There is this policy of fuel switching that the bill would have us become involved with. Of course, it is an outgrowth from the energy conservation policy, and I do not think in 1992 anybody in his right mind can argue that conservation is not a good thing. That has become motherhood. It is an idea whose time is long overdue. It is a good thing. The question is, if we get into fuel switching, who is going to pay for it? Is it going to be Hydro's ratepayers? That is what the public utility commission people told us, I believe without exception. They told us that rates were going to go up, and I find it very difficult to dismiss out of hand all their presentations, all those people who are on the front line, who are accountable to the people who elected them.
If ratepayers do not pay for it, then I guess the issue of fairness arises, and that is, "Why shouldn't the natural gas people, for instance, be making some kind of contribution to this?" We heard presentations from the natural gas utilities -- very polished, very professional, articulate presentations -- and of course, why would they not be? Why would they not be strongly in favour of this program which could be used to compel Ontario Hydro to use Hydro funds to send business to the natural gas people? I know, Mr Chair, that you have been reviewing the stocks recently and that you are seriously considering investing in the natural gas industry, and I would not blame you at all for that. But I think any costs associated with fuel switching ought to be, quite properly -- I am kidding, of course, Mr Chair; I see the look of concern in your face.
The Vice-Chair: Just do not tell Judge Evans.
Mr McGuinty: I think in fairness to ratepayers and in recognition of the solid presentation made by the public utility commission people, who are telling us that rates are going to go up, that if we are going to go ahead with fuel switching, we had better darn well make sure we implement some kind of program which requires that those who benefit, the natural gas industry or the oil industry, participate to a very large extent in that kind of program.
I do not think it is too strong a word to use. I was shocked yesterday when the Hydro presenter, Marion Fraser, indicated that Hydro had not conducted studies in order to determine what the full economic impacts of fuel switching would be. What we have in essence here is an abstract concept, an idea which is being reduced to the concrete in Bill 118. There is no doubt that this government is going to go ahead with it; otherwise it would not put this business of fuel switching in here. Yet Hydro has not yet determined specifically what the impacts of fuel switching will be and in fact whether it is going to cause rates to go up. I find that shocking. There is no other way around it.
I think Mr Eliesen has indicated that he feels it will be a positive development to have provided Hydro with the ability to go ahead with fuel switching. But for the reasons I stated yesterday, Hydro has a record of providing us, the government and the people of Ontario, with estimates which are much less accurate. We have the experience of Darlington. We have the experience of projections that were made in the beginning of the last recession in the early 1980s. We even have the projections that were made in 1989, after five or six years of study which told us, for instance, we are going to need our first nuclear generator on stream by 2002. Then two years later Hydro tells us, lo and behold, it had not accounted for certain factors and that we do not any large generation to come on stream now until, I believe, 2014.
We have in the past as well wondered sometimes why we have to swing from one end of the pendulum to the other and whether we are kind of held hostage to that way of operation by human nature or something. There was a point in time when we paid people through our taxes to switch off oil, and now we are going to pay them to switch back on to oil. The problems that existed at the time the federal government had its off-oil program are still in existence. There are still difficulties in ascertaining and guaranteeing prices and supply. With natural gas, apparently we are in what they call a bubble phase. There is all kinds of gas available at this time, but the American market certainly has its eyes on that. We have recently opened a pipeline to supply the northeastern United States. California and some of the western states are also looking to take advantage of that supply.
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You just wonder about the wisdom of switching people off one form of energy to another and paying them to do it, when if we look at the federal experience, we used our taxpayers' money to tell people to get off oil and on to electric heat, and now we are using Hydro rates to pay people to get off electricity for the purposes of heating and on to oil. You wonder if we would have gotten ourselves into these kinds of difficulties had we simply let the market play itself out. Certainly the gas utility people who were before us were telling us of the wonderful results they have been having in increasing the numbers of customers, just by virtue of the operation of the market. It is quite a bit cheaper to heat by gas than it is electrically.
I am going to wrap up. My colleague may have a few words to say.
The Vice-Chair: You have about three minutes left for your caucus. You pass? Okay, Mr Jordan, your 20 minutes is starting now.
Mr Jordan: Thank you, Mr Huget, for your presentation relative to Bill 118. I would like to say that my colleague who spoke previously has certainly given a general coverage of Bill 118 as it was highlighted to us as he travelled around the province. I would just like to take a few minutes to talk about Bill 118's effect on the operation of Hydro, and Hydro without Bill 118.
Something that was not mentioned by the previous speaker was the fact that when the previous government interfered and revised the Power Corporation Act for policy statements and brought Darlington to its knees for two years, they added $6.5 billion to the Hydro ratepayers of this province. That is not talked about too much. But I am concerned that we are off on a similar track, only we are going to get more involved.
If we go with Bill 118, we are getting involved now to the point, as I understood the chairman to say yesterday -- this is not a quote, but the understanding I took from him was: "I'm in place for five years. My board of directors are going to be responsible to me, but they're not going to be necessarily accountable for their actions if directed by the government to do something they don't feel is good for the ratepayer. They're going to be asked to go ahead and approve it immediately, regardless of how they feel about it." My understanding was that the government will have to take the effects of it at election time. What we are building here is just more uncertainty of policy, uncertainty of cost.
The uncertainty comes, as we are just experiencing, with the Minister of Energy. Who is going to be the Minister of Energy tomorrow? How can you possibly run a corporation the size of Ontario Hydro without some consistent direction and long-term planning? You say we are going to leave the day-to-day operations with the president of Ontario Hydro. We do not leave that with the president of Ontario Hydro; he leaves the day-to-day operations with his staff down the line. The president, in conjunction with the board and the chairman, should be coming up with long-term policy for the corporation. That is going to be taken away. That is going to be the responsibility of the Minister of Energy.
In so doing, as I said earlier, we add to the uncertainty of supply and the uncertainty of cost. These are the two things we cannot have in this province today. I do not care who we talked to across the province on our tour, they were all concerned, and not only relative to Hydro. There is such a lack of confidence out there to go ahead and develop, spend money and create jobs. It is just not happening. As we all know, it is not just layoffs, it is plant closings and some relocations.
I have to say that Bill 118 is in the interests of this government, not in the interests of Ontario Hydro and its ratepayers. We can make it look as though it is, but it is going to give this government the right to direct Ontario Hydro to fall into what this government thinks, with 38% of the vote of the people. They are going to tell the people of Ontario how they are going to use electricity, what energy they are going to use, whether it is going to be fossil fuels, but it is definitely not going to be nuclear energy. We are not going to fire boilers through the use of uranium. That is the number one objective of this government. If they did not have that, they would not really need Bill 118. The Power Corporation Act gives government all the policy space it needs to bring to the attention of the board of directors how the government feels about its method of running the corporation.
I summarized the visits across the province. Power cost was the number one issue, and certainty of supply was number two. I cannot repeat too often that the feeling out there right now is that we do not have either one. The chairman is projecting double-digit increases, up to 44% over the next two or three years. The Minister of Energy says he will not allow such a thing to happen. We do not know what the Ontario Energy Board is going to say about the issue, but what it does for you or me, planning to make a large investment and expansion of plant or a new plant, is leave us out on a limb. We just do not have the confidence to go ahead.
I can understand government from the outside looking in at Ontario Hydro and saying: "This is a monster out of control. We've got to get a hold of this thing. They just are not responsive to the people of Ontario." If you think Ontario Hydro is strictly a generator and distributer of a product, electrical energy -- they are producing it and they are wholesaling it to 312 companies across the province who have elected officials for their board. They are not appointed, they are elected by the people in that community. I was pleased yesterday, when Mr MacCarthy said he would not come in on a utility such as St Catharines or any other utility and mandate a policy of fuel switching or conservation without consultation with that utility's representatives, the ones elected by the people.
We should keep in mind when we are, if I can use the term, Hydro-bashing, that we as ratepayers have sat in our house or farm, and did not even bother going down to the rural area office to let our wishes be known. We let that district office carry on as it was doing, saying, "There's nothing I can do about it." Oh, yes, there is something you can do about it if you are not in agreement with what they are doing. The offices are all across the province. Seventy-five per cent of the customers are represented by these 312 utilities, and Ontario Hydro has the balance in direct customers and rural customers.
I would think the latitude being given to the government under Bill 118 is completely unacceptable to industry and to the utilities, even taking into consideration, Mr Huget, the amendments you have proposed. For instance, already you have loaned $30 million to General Electric. Since when did we get into the loan business? Why are we in there? There are companies out there whose business is to lend GE $30 million. Why Ontario Hydro? What rate of interest did we loan it at? We did not hear what rate of interest. Are we just giving them the money?
Mr Huget: To make the record somewhat accurate, Ontario Hydro did not lend Canadian General Electric any money. It was through the Ministry of Industry, Trade and Technology.
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Mr Jordan: That is not the way your document read.
Mr Huget: The document refers to an energy issue and the fact that Canadian General Electric received a loan from the government. It is written, and I said "the government." I did not say "Ontario Hydro."
Mr Jordan: I will be interested in seeing a copy of the document because I made a note to write it as you read it.
Mr Huget: No problem.
Mr Jordan: "General Electric has just received from Ontario Hydro a $30-million repayable loan."
Mr Huget: This is exactly what was said: "A good example is the recent announcement that Canadian General Electric plans to start making high-efficiency lighting products in Oakville. To help make the project a reality, the government provided CGE with a $30-million repayable loan."
Mr Jordan: Thank you. I stand corrected on that. So it was not from the Ontario Hydro budget. Was it an interest-free loan, or are you prepared to comment on that?
Mr Huget: I am not prepared to comment on that.
Mr Jordan: Relative to that type of issue with Bill 118 in place, is that the type of thing we could be looking at through our Ontario Hydro policy? Bill 118 leaves Ontario Hydro completely subjective to the directives of this government.
You have added four new members to the board. You are telling us that this is going to make it more open-door, more representative to the people across the province. I do not think the purpose of the board by membership is to represent the province of Ontario. I think the purpose of the board is to have people with the qualifications on the board who understand and can contribute to policymaking and general management of the corporation and to have a manageable group.
I suggest we go back to 12 members, not adding four more and to try to sell the people of Ontario on further increased costs in that area. By saying this will be more representative to you, to me, does not wash. That is not where representation takes place as far as people go. Representation on the board should be of the different major facets of the industry that are going to be using the product, and people who understand the effects of change on those customers and on customers generally. If you added 20 more, you could not begin to have the board representative of the people of this province.
If I might go back to Ontario Hydro as it is today with the present Power Corporation Act, the main basis of the government's thrust is to pollute the air with CO2 rather than have to worry about storage of the spent fuel bundles from a nuclear station. We might as well face that head on, because that is the issue here. We are going to do any damned thing we can to come up with generation, as long as it does not involve uranium to heat the water to make the steam to turn the generator.
Really, we are progressing. That industry is relatively new, not only in North America, but worldwide -- the nuclear industry relative to the generation of power. We have Candu 3 coming on. You are talking about a huge plant; it is only 450 megawatts. The progress is being made and it has been agreed, I believe, by all concerned that the boiler fired by uranium is the most benign to the environment of any of the other fuels.
Your concern is based on the storage, as I said before, of the spent bundles. I personally am quite confident that in conjunction with Atomic Energy of Canada that problem is solved. Suitable storage arrangements are available. It is a matter of determining location basically. It is like any other waste management site. Everyone says, "Not in my backyard." But that is something you are going to have to face, in my opinion, at some stage as we develop in Ontario, because it is our main base supply source and it is and could be containable right within the province.
The many mistakes Ontario Hydro has made in forecasting the projected load were referred to yesterday. I do not think you should dwell on that, because your government -- and we are turning control, mind you, of Ontario Hydro over to this government. That is really what we are doing. Think of the mistake this government has made through its budgetary process. Things change out there. I do not care how good the planning is and the predictions are. The demands on government and the demands for energy have changed.
You look back and say, "Ontario Hydro's planning in the past has been so much in error that we don't have any confidence in its planning for the future so we're going to take it over, we're going to do the planning." If you are going to do the planning, where is your research department? Where is your environmental department? What staff has the Ministry of Energy got that can duplicate the staff the ratepayers have paid for and set up in Ontario Hydro?
That staff Ontario Hydro has has been rated second to none, and for us to be sitting here assuming that the Minister of Energy and his staff can override that and come up with better ways of supplying the people of Ontario is very difficult to accept.
For instance, the 25-year demand-supply plan, five years in the making: Ontario Hydro, in response to the people, took this plan right across the province. They came to our little municipalities in eastern Ontario. They came to county councils. They met in the township halls. They brought the people out. They had visual aids; they showed us what they were doing. They were making the best use of all the fuels available. That was the research that was done then.
What we have done now with this government is just picked the centre out of it, the base load supply, the nuclear supply, and then tried to replace it with gas-fired fuel switching and so on in order to meet the demand. Yesterday Ms Fraser informed us that they do not have a study yet to know how successful fuel switching will be. They do not have a study to know what cost there will be to fuel switching, because it is impossible, she said, to start until Bill 118 has received royal consent. Yet the update here, this thing depends entirely on Bill 118 receiving royal assent.
What we are doing is bringing more uncertainty of costs and uncertainty of supply into this depressed -- and I am not concerned about using the word "depressed" -- province of Ontario. This economy is in such a condition at the present time that anything that adds one cent to the cost of energy is not acceptable. I feel this is the time Ontario Hydro should be tightening its belt and stabilizing the rates, and if they are going to move in any direction, reduce them to try and get industry back on track, to try to instil confidence in the manufacturers of Ontario and in the municipal utilities of Ontario.
As was mentioned by the previous speaker, the gas companies -- I was really taken back by the presentation in Guelph, I believe. Was it Union Gas that came there? They had a very glossy -- not even recyclable paper -- annual report there, and they came very professionally and tried to express their interest in Ontario Hydro, their interest in saving the poor utility when it is in the corner, and they are going to help it in all these different ways. Do you not think the interest of the gas companies generally in this new bill was quite clear?
The Vice-Chair: Mr Jordan, I warn you that you only have about 30 seconds left to wrap up.
Mr Jordan: I am sorry. I thought I was leaving some time for Ted here.
The Vice-Chair: No, you have eaten it all up.
Mr Jordan: I am sorry. I just want to summarize then, Mr Chairman, after listening to the chairman yesterday and his explanation of the operation of the board, and his vice-president of energy conservation, I believe, Mr MacCarthy anyhow, who was with him, and Marion Fraser and Mr Horton. These gentlemen certainly presented themselves as a group who can and could manage Ontario Hydro and I really do not believe they need Bill 118 and the interference from government.
I know one thing. If I was the Minister of Energy, I would feel damned uncomfortable with people running this thing, and then when the thing goes wrong they say: "It's your fault. You issued the directives. We only work here. Whether I am here for two years or three years, I'm going to get paid for five, and my board of directors is not accountable for its actions."
That is my concern. I would like you to reconsider the bill, Mr Huget, and the need of it. Ask yourself: Can we not implement the policies we want relative to conservation and new generation under the present Power Corporation Act? Thank you very much.
The Vice-Chair: In 10 seconds then? That is it.
Mr Arnott: I have nothing really to add to Mr Jordan's comments except to congratulate and commend him on his comments and his presentation. I think we in the Legislature are very fortunate to have in our midst someone who understands the very technical nature of these issues, one of the few members who does. We are very fortunate to have him in our caucus and I want to thank him and commend him once again on his fine presentation.
The Vice-Chair: Thank you, Mr Jordan and Mr Arnott, for your presentation. The committee will now stand in recess until 2 o'clock, but I would ask that the subcommittee come in at 1:45 for a subcommittee meeting to resolve a couple of outstanding issues.
The committee recessed at 1134.
AFTERNOON SITTING
The committee resumed at 1435.
The Vice-Chair: I will call the meeting to order. There has been a further amendment put forward by a government motion. I am informed by the clerk that this should go into the package as page 4. Everybody has their package now so we will proceed.
The Vice-Chair: We will deal with section 1 of the bill. I believe Mr McGuinty has something he wishes to say at this time.
Mr McGuinty: Before actually moving the motion I want to address this amendment. What I am trying to do here is go to the heart of what Ontario Hydro is all about. The amendment would have the definition of "energy conservation program" changed so that it is restricted to a program to conserve electrical energy in essence. It also deals with conserving heat energy, but essentially to conserve electrical energy. As it stands right now, technically under the terms of the Power Corporation Act Hydro could become involved in conserving the amount of propane a car uses or gasoline or oil or anything of that nature dealing with any other kind of energy source. It is my contention that Hydro's job should be in relation to electricity and it should be to conserve electrical energy. It should not be in the business of conserving any other kinds of energy.
It is in the Ministry of Energy's interest of course to promote conservation generally. It can do that through its various arms and through consultation and cooperation with the various energy producers and suppliers. But I do not think it should be using Ontario Hydro to perform that kind of work.
Mr Arnott: I think this -- shall we call it a proposed amendment -- amendment under discussion is certainly in line with my thinking. I think it makes sense to proceed on the basis that Hydro should be in the business of conserving electric energy and not energy in general. Do you have anything to add, Mr Jordan?
Mr Jordan: Referring to "energy conservation program" in the present act, it means an energy conservation program under clause 56(a) of the present act? Is that what we are talking about here?
The Vice-Chair: We are talking about the proposed amendment, section 0.1 of the bill, subsection 1(1) of the act, the very first yellow page.
Mr Jordan: Yes. I am a bit confused in that subsection 1(1) of the present Power Corporation Act --
Mr McGuinty: I think Mr Jordan is referring to an older edition of the act. The clerk kindly provided me with this updated version.
Mr Jordan: Is this not the last one?
Mr McGuinty: No.
Mr Jordan: I am sorry.
The Vice-Chair: Mr Huget, do you have any comments to make about this proposed amendment?
Mr Huget: Yes. The motion here really narrows the definition of "energy conservation program" and restricts "programs" to mean electrical energy and heat energy. The purpose of section 4 of the bill is to widen the definition of "conservation programs" and to include fuel switching, a key element of the government and Hydro's energy efficiency strategy. As well, the bill does not deal with definitions in section 1 of the act.
Mr McGuinty: May I move the motion now?
The Vice-Chair: I am afraid I will have to rule your motion out of order, but we have to let you read it in.
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Mr McGuinty: I move that the bill be amended by adding the following section:
0.1. The definition of "energy conservation program" in subsection 1(1) of the Power Corporation Act is repealed and the following substituted:
"`energy conservation program' means a program to conserve electrical energy or to conserve heat energy produced in accordance with section 67."
The Vice-Chair: I have to rule that it is beyond the scope of the bill and therefore out of order.
Section 1:
The Vice-Chair: Now we will move on to section 1 of the bill. Is there any debate or amendments arising out of section 1 of the bill?
Mr Jordan or Mr Arnott, I believe you have something.
Mr Jordan: Can we move the motion now?
The Vice-Chair: Yes.
Mr Jordan: I would like to move a motion relative to subsection 1(1) of the bill, subsection 3(1) of the act.
The Chair: Mr Jordan moves that subsection 3(1) of the act, as set out in subsection 1(1) of the bill, be amended by striking out "eighteen" in the fourth line and substituting "twelve."
As we have done in past times and we will do through this, we will allow you now to explain your rationale for that. Then we will enter into discussion, after which we will make the decision.
Mr Jordan: I think I would just like to say a few words to the motion, in that I realize presently there are 14, but I am looking at the establishment of a board that is going to be meaningful and workable as being relative to managing and directing the corporation.
I do not think it possible, by increasing the numbers on the board, to be able to sit back and say, "We've made it more open and more representative of the people of Ontario," because that is not really the function of the board itself, to be representative. The function of the board, in my opinion, is to represent the ratepayers of the corporation in making policy and decisions in their best interests. Therefore, the concentration should be on the qualifications of the person to be able to provide a managing policy direction function, rather than be representative of a particular group.
Mr Farnan: I think the intent of Mr Jordan is very admirable. I think you have to have good people on the board, and of course that is the purpose of the government, to have the best possible people on our boards across all the various agencies. That of course is why the government put in place a process which allows for all-party scrutiny and very extensive input.
But I do believe also, in terms of looking at a magic number -- the argument you take that 12 is right, 10 is better, eight is even better, 14 and 20 are getting too far and so forth -- that does not make sense at all. I think you can have effective boards in various degrees, but the reality of the matter is that new people are being added to the board. I think if you look at the people who are added to the board, they are very fine individuals who can contribute. If you have a problem with the types of individuals who have been added, maybe this would be an opportunity to say, "This individual isn't qualified." I think the people who have been appointed are outstanding individuals who can make a contribution.
Mr McGuinty: What we are talking about here is of course the board of directors for Ontario Hydro. Hydro is a corporation pretty well unlike any others in many regards. It has some 35,000 employees, it has a debt, I believe, of some $30 billion, last year's annual revenues were over $7 billion, it deals with arguably some of the most sophisticated technology on the planet today, so I do not think we should get hung up on the business of numbers so much as we should get hung up on the business of qualification.
There is a certain kind of thinking going around today which says it is important that we have representation from all walks of life, all groups, in order to ensure that some kind of agency, some kind of corporate body, is going to run effectively, and ensure that these different groups are represented. That has a tremendous amount of merit to it but it has its limitations, and I do not think it is the kind of thing that can be applied to Ontario Hydro.
I will tell you a little story, Mr Chair. Before I began to practise criminal law, I was articling with a lawyer who sent me down to the holding cells to speak with a potential client who wanted to retain him, and he was francophone. My principal said, "Go down" -- because I could speak French -- "and tell this fellow that I would be pleased to represent him, but I do not think I can represent him properly because I do not speak French." I went down to see the gentleman in the holding cell and I told him this, and he said to me -- I will never forget this -- he said, "I don't want a francophone lawyer, I don't want an anglophone lawyer, I don't want a male lawyer, I don't want a female lawyer, I just want a good lawyer, and I think that your boss is a good lawyer."
Now, that has limited application as well, but I think there is some grain of truth in it. We have to be concerned about making sure we put the best possible people on this board, and we should not get into a game of dealing with the numbers of people. If more is better, then why are we limiting it to 18? Would not 24 give us a greater cross-section?
Mr Klopp: Thank you for agreeing with our colleague.
Mr McGuinty: I am quite content to leave it as it is. I do not see any reason to broaden it. That general line of thinking today -- we can get carried away with these kinds of things, the way that we do by saying that we have got to have a complete cross-section of representation on any kind of public body or agency. Well, it has its limitations, as I said, and I do not think, when it comes to Ontario Hydro, because of its special circumstances, that we should get hung up on that kind of thing, but rather we should put the best people on there rather than trying to put more people on there.
Mr Arnott: I would like to speak in support of this amendment. I certainly agree with my colleague Mr Jordan's statement to restrict the number of board members from 18 to 12. I think, for a number of reasons, it is self-evident. Just from my experience in working with groups, the larger the group becomes, after a certain point you lose a certain amount of the dynamism of the group and it is very, very difficult to function as an effective decision-making body. In my experience, that has been borne out to be true.
If you follow the line of thinking that has been suggested by the government, you would assume that 60 or 70 board members would be better, or 100 or 200 board members; the more the better. That just does not make sense in my mind, I cannot see that as being an effective line of reasoning at all. I think that in the past, when the Ontario Hydro board was composed of 12 members, it did function very effectively as a decision-making body, and that is one of the reasons why I would support this amendment.
The member for Cambridge talked about the issue of the all-party scrutiny of memberships. I have not seen the government's appointments and I would not dispute that they are fine people -- I am sure that they are. I would not dispute that they are not qualified. But I think it is very, very important that qualification be the number one reason why someone is appointed to the board, not their membership in a particular group.
I think I understand why you are putting that view forward, but, as I say, I think qualification should be number one. First and foremost, qualification and background in the Hydro issues -- all of those things are very, very important. If you start saying that we are going to reserve a particular position on the board with a number of groups, you run into problems and you expand the number beyond infinity, I suppose. So I have great concern about that philosophy.
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Mr Farnan: I think it is important, Mr Chairman, to reaffirm that the government's position is that the best people qualified for the job are appointed. And of course when we look for the best people, we look right across the board -- we do not exclude people because they happen to be from a particular minority group. I think that is probably the fairest, and I think that is something you could support then.
The Vice-Chair: Thank you for your words of wisdom, Mr Farnan. The next time I would appreciate --
Mr Farnan: My apologies.
Mr Brown: I do not think this amendment is about qualifications. It is about number, it is about how many will be there, it is not about who will be there. So I find the discussion of that not to be particularly important, except it seems obvious that we want the brightest and the best and the most informed on the board.
I do have a little bit of difficulty with the amendment, with the government's proposal I guess, especially for the 18. I think we as members have to be cognizant of the fact that Ontarians, the people we serve, are very interested in the size of government. They are interested in whether government is expanding, whether there are more people at the so-called public trough, and whether that is being essentially useful to the public interest that they are trying to serve.
I do not really know why 18 is better than 14, or 12 is better than 14, or 14 is better than 12. But I would suggest to you that the government is sending a very bad signal to the province of Ontario by coming to power and immediately trying to increase the size of the board for no good reason that I have heard. I think the present number is 14. I am not sure that is right, but I do not know if there is any number that is better.
It seems to me that a government that wishes to expand the number of the board should have a very good reason. I think that within 14 you can get representatives of all areas of the community. I do not think 18 helps that tremendously. I am just concerned that I have not heard any good reason to expand this board and yet we are, and that is a signal I think Ontarians are not going to be terribly happy with.
The second point is, I think that this new government -- this open, responsible government -- does not want to appear as Franklin Delano Roosevelt did back in the 1930s, when he had a Supreme Court that would not do what he wanted to have done, and so Mr Roosevelt's suggestion at that time was, "We'll just appoint more justices to the Supreme Court and we'll get whatever we want." He could not get that through the state legislatures, which had to ratify the change to the Constitution, and so it did not happen. But I would suggest to you that by expanding this board the government is giving at least the public perception that what it wants to do is pack the board. I do not think that is the signal the government is trying to send, but I will tell you that in many quarters that is how it is perceived.
I cannot support Mr Jordan's amendment and I cannot support the government's intent here. I think that we should stay at the 14 that are presently in the act. I think they can do the job and can serve this province well.
Mr Huget: Mr Jordan's motion is a reduction in the existing 14-member board, and I do not feel that it would be consistent with the public's desire for increased representation on Hydro. I think that quite clearly we have heard that the public wants increased representation. Certainly the government is committed to having increased representation from various sectors of Ontario. The wording that says "may appoint up to 18 members of the board" of course does not legislate 18 members but provides us with the flexibility of having between 14 and 18 members to get a wider range of all those interest groups in Ontario to serve on the board. So I cannot support Mr Jordan's motion either.
Mr Cleary: In our travels I had never heard anyone or any delegation say that we should increase the size of the board except the occasional special interest group which wanted a position on it. I think that is wrong. We are now in the 1990s and most companies and other businesses are restructuring and downsizing; this government is going in the opposite direction.
Mr McGuinty: My colleague Mr Brown made reference to Franklin Delano Roosevelt's legacy with respect to Supreme Court appointments. We do not have to go that far back of course; we can just look to the recent events at Parliament Hill and the appointment of senators by our current Prime Minister to find out how ripe this kind of thing is for abuse and certainly if not the intention to abuse, the perception is there. The government of course has to be, and I am sure it is, concerned about that.
Just to confirm something my colleague Mr Cleary said, it seemed to me that those groups which were in favour of expanding the size of the board were those which wanted to have one of their members sit on it, putting themselves in a blatant position of conflict.
The other thing we should keep in mind is that we are the MPPs. We are the generalists and we sit in the Legislature. As a ratepayer, I do not want a generalist on Hydro's board of directors; I would like an environmentalist there, but I do not consider that person to be a generalist. Hydro is the largest construction company in Canada, possibly in North America. It runs nuclear plants; it has 36,000 employees. I want people with expertise to get in there and deal with some of the very difficult challenges the corporation has to deal with in these times.
I am just hearkening back to what I said earlier, that numbers provide us with no assurance whatsoever that we are going to have greater efficiency. In fact it runs counter to all the current thinking which is towards downsizing and improved efficiency in government and agencies' operations. The focus should not be numbers but rather qualifications. Contrary to what my colleague Mr Farnan said, I do not believe that we have in place right now a government appointments process that is going to ensure that we put the best people on this board.
Mr Brown: I have a question for the parliamentary assistant. I was wondering if the ministry has any information that would show us that an expanded board is empirically better. Do we have some studies of other major corporations that have expanded their board and thereby improved their performance?
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Mr Jennings: I am Rick Jennings, acting manager, policy coordination section, Ministry of Energy.
In terms of this provision of the act, there was not any detailed view of what size boards were effective or more effective or any kind of comparison done. The thinking, as Mr Huget has said, was that the idea was to expand the representation on the board to represent more public interests. I am not aware of any empirical data. I am not aware of any studies of that sort.
Mr Brown: I am a little puzzled by that response. How did we decide on 18? Why was it not 16? Why was it not 20? Could we have an explanation of how the number was chosen?
Mr Jennings: The existing number was 14 and the decision was made to increase the number. The number that was chosen was 18, not including the chair, vice-chair and the deputy minister. It was consistent with expanding the size so they would be able to add a wider representation from the public. There is no magic to the number as was stated here; it could have been 19, 17 or 20.
Mr Brown: So we just spun the wheel, so to speak.
Mr Jennings: The 14 or 12 was not an empirical number either.
Mr Brown: I know.
Mr Jennings: When it was established as 12, it was just a number that was chosen as well.
Mr Jordan: When we are speaking of the numbers on this board, is the information available to us? How many are on the board presently? How many have been appointed? It says "up to 18." Are we there now? Is the board full or do you know?
Mr Jennings: It would not be 18 unless this section of the bill was passed. The current number is 14.
Mr Jordan: You are still at 14?
Mr Jennings: Yes.
Mr Jordan: But there have been some new members?
Mr Jennings: Yes, to replace members whose terms have expired.
Mr Jordan: The thing that was concerning me was I got some reports in my riding of members who did not any longer wish to serve on the board; if Bill 118 was to become law, they were not going to be comfortable on the board. I would just like to make that known to this committee. They were very upset when speaking to me because their ability to assess policy was not going to be given its full weight, if I may use that term, because they were not going to be accountable for their actions; if they were not seeing a directive from the government as being something that would be better for the ratepayer, they were to implement it immediately and not worry about the consequences because they would not be accountable.
These people had taken their jobs as board members very seriously, and on that basis they indicated to me that they were not comfortable on the board. In fact in my office I have a letter, which I did not bring, from an ex-board members who would like to meet with me to discuss it further. I throw that in because there is that concern out there. It is not my personal concern.
Mr Klopp: On this issue of credibility stuff, being taken seriously, I am sure this person was, but a $30-billion debt of a company, all the eggs in one basket -- we have heard a number of people from all sides who are concerned that Ontario Hydro has not made good decisions, so I question whether the board of directors before was doing such a good job. I have no problem saying I do not support your motion on what you are amending here, this whole argument that the board was so well qualified. I think the actions of Ontario Hydro for the last 10 years have proven somewhat the opposite.
Mr Brown: I was just wondering what additional, total expense to Ontario Hydro would be represented by the four additional directors.
Mr Ciemiega: They are paid a per diem, but I believe it is under $200 a day. I am not sure.
Mr Brown: I am not interested in the per diem; what I am interested in is the total expense.
Mr Jennings: There is one board meeting a month, on average. If the per diem is around $200, that would give you an idea on an annual basis. It would not be very high.
Mr Brown: They would obviously also be paid expenses which would be appropriate?
Mr Jennings: Yes.
Mr Brown: So that is about $1,000 a month?
Mr Jennings: Yes, approximately.
Mr Farnan: Mr Brown makes a good point. It is always interesting to look at the expense, but if for example this meant that northern Ontario had more representation on the board or eastern Ontario had a stronger voice on the board, that is something all members of the House would support, and obviously I think we can all support it.
Mr McGuinty: In light of Mr Jennings's frank response that really there were no impact studies that went into a determination of 18, just as there were apparently none with respect to setting the number at 14, I think what we are doing is operating in the dark here. It is very obvious to me that this is just purely political in terms of broadening. There is no reliable, concrete evidence which would lead us to believe that by increasing the size of the board from 14 to 18 we are going to address the three biggest problems at Hydro: too many people, salaries too big and too many large projects, the history of large projects in the past that has come to haunt us.
There is no evidence whatsoever that expanding from 14 to 18 is going to improve it. Certainly that is the issue. If we are going to change it, let's change it so that it helps. There is no evidence that it is going to help. If there is no evidence before us it is going to help, that means we are just doing it for political reasons. Let's get on with it.
Mr Huget: I guess in light of Mr McGuinty's comments, perhaps he could explain to me the empirical studies that were done when his government in 1989 increased the board size from 12 to 14. To suggest that we are spinning a wheel must have meant that the previous government spun a wheel in 1989 and said 14 is all right but 12 is not all right. There is certainly no reference to the increased costs, there is no reference about that increase from 12 to 14 other than being purely political. That may have been the case in 1989 when it was indeed purely political; however, today that is not the case. We are increasing the size of the board for reasons that make sense to the people of Ontario.
Mr Brown: I was one of the people who had the good fortune to be reviewing the amendments to the Power Corporation Act in 1989. I do not recall this conversation taking place at that time, at least in terms of anyone, particularly a New Democrat, objecting. Maybe some of Mr Arnott's or Mr Jordan's friends objected to the 14, but certainly no New Democrats did back at that time. They seemed to think that was an appropriate number. As a matter of fact, the present acting Minister of Energy was there, and I do not believe that he had any objections to the 14, and I do not think he had any suggestions for 18 at that time.
Mr Klopp: Sure he did; he said if he ever got in that would be the first thing he would do.
Mr Brown: That is not what he said. I am just not convinced, as Mr Farnan might indicate, that more northern representation might be accomplished. I think we have to ask at what cost. Could it not be accommodated within the 14, within a redistribution of how the appointments occur within the 14? Those things can all occur. I think very strongly that we are sending the wrong message, that we think we need more people at the top rather than fewer or at least the same.
I do not really know what more I can say. You have no empirical data showing this is going to be any better, you cannot show us that any groups are going to be represented that could not be under the 14, and you have not told us why.
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Mr Farnan: I think we have to put this in the broader context of what we listened to yesterday, the board coming before us with a plan of streamlining and fiscal responsibility. That is the broad backdrop.
On a more cynical note, I think it was John F. Kennedy who said, "A committee is a group of 12 that does the work of one." I mean, you can take your argument and say, "Let's have no board."
I think what we have is a board, and I would think boards over the years have done an excellent job of public service. But this government does have a commitment to representation that does indeed reflect the province, and indeed we talk about the best people and bringing forward people to make a contribution from their talents and their skills. We have a situation, for example, if you want to look at housing authorities, where there were no tenants involved. I do not believe that you have to be the absolute expert to sit on a board. I think consumers can sit on a board, for example, and play a very significant role. They bring common sense, they bring good judgement, and I think if there are consumer groups that need representation on boards like this, the government is wise to allow that kind of representation to come forward and to have input in the deliberations of Hydro.
I think we could go on with this discussion all afternoon, because there is obviously a difference of opinion, but I think it is rather trivial in the light of the overall efficiencies that were clearly mapped out to us yesterday by the chairman.
Mr Cleary: This government at the present time is encouraging municipalities to restructure in the county system, to downsize the number of board members there are. We are promoting that. They did lots of studies on it and they feel it is more efficient and you could get better service under Municipal Affairs.
Mr Klopp: Mr Chairman, on a point of order: That is out of order.
Mr Cleary: Just wait a minute.
Mr Klopp: For the record, that is totally out of order. Dave Cooke has never told any municipality it has to get regional government.
Mr Brown: That is not a point of order, Mr Chair.
The Vice-Chair: No, that is not a point of order. Thank you for your pearls of wisdom.
Mr Cleary: I have the floor here, sir, I would like you to know.
Mr Brown: He can put up his hand like anybody else.
Mr Klopp: I apologize. It is not out of order.
Mr Cleary: I guess what I have to say is that I was surprised at Mr Huget's last statement. I just wanted that on the record. The other thing I have to say here is that when we hear an extra four board members might only cost $1,000 a month more, I find that very difficult to believe too, just for the record.
Ms Murdock: I just wanted to add another point here. As has been stated eloquently by everyone, we could argue the numbers game for hours on end and I do not imagine we would come up with any number that was particularly acceptable to anyone.
Having said that, I unfortunately was only able to be at the hearings for two days out of the three weeks we went on, and in that time part of the concerns I heard were not only in relation to representation, and in terms of qualifications as well, but also in terms of the government involvement that is being proposed in this bill. So I think that this section cannot be looked at in isolation to the other proposals and that everyone should be thinking of how this is going to apply, and that if there is more government involvement, whatever the decision of this committee may be, we will then have more people in general and, as my friend Mr Farnan has stated, the general consumer will be represented. I think it is important.
Mr Brown: I was interested in what I am hearing. Ms Murdock has just told us that there is going to be greater government involvement under this bill, and I guess that is probably true. So we have greater government involvement, which is greater policy direction from the government, which means probably Ontario Hydro is going to be run out of the corner office, and make no mistake. If we have Ontario Hydro being run out of the corner office, now we need more board members to sit there. The logic of that is just beyond me.
That aside, from the government members I am hearing it has been expanded to allow more broadly based representation within the board. Could you tell me if you have targets? Do we have so many environmentalists, so many of each group, so many consumers? What are the qualifications? How are you breaking down this 18? You have just told me it is more broadly based. When we go after these appointments, how are you going to target those into the slots to make sure we do not end up with 18 of one particular group? Are we going to have so many of each? How does that work?
The Vice-Chair: That is a question?
Mr Brown: Yes.
The Vice-Chair: Okay.
Mr Huget: That light is flashing on both sides. You do not know who to talk to, so I will talk to this mike.
There are no targets, there are no target groups, there are no specifics around who can or cannot. The intention is to increase the number and provide the flexibility to ensure that the broad interests of Ontario are represented on the board, and that may include a different structure than is there now. There may be interests that are out of the process now that should be in the process, but clearly there is no target group of individuals and no target numbers of interests.
Mr McGuinty: I wanted to note a couple of things. First of all, as I can recall, the Consumers' Association of Canada, the Ontario section, which made a presentation before us, indicated in its brief that unless there was a reason, some kind of evidence to make the change, they as representative consumers were very leery of increasing numbers for the sake of having a larger number of people on there, and I think they are a very credible authority in terms of telling us the concerns of your average consumer.
Second, Mr Brown makes a good point as to the reality of this Bill 118, and that is that when we are increasing from 14 to 18, all we are really doing is increasing the size of the number of people who are going to have to do as they are told when it comes to policy directives. Bill 118 contains a provision which exempts directors from liability as long as they do as they are told. That is still in there. They are going to have to ensure the policy directives are implemented promptly and efficiently.
Maybe the real question here is, do we any longer need a board of directors? Maybe it would facilitate the government's aims if we were to simply remove the board of directors, rather than to simply supplement the existing number of directors there who are going to have to abide by instructions which are delivered to it and under shelter of that wonderful provision contained within Bill 118 which absolves directors from liability as long as they do as they are told.
The Vice-Chair: I am going to ask once again, I guess, any further discussion?
Mr Farnan: I just wanted to clearly understand that the position of the Liberal party is that it would do away with the board of directors of Ontario Hydro. Is that what I understand?
Mr McGuinty: No, that was just a rhetorical question, Mr Farnan.
Mr Farnan: Okay. I am glad to see that you have withdrawn from the brink and come back to sanity. We welcome you back aboard.
Mr McGuinty: It is just the Irish in me, Mr Farnan.
The Vice-Chair: Thank you, Mr Farnan, Mr McGuinty. Thank you both. Seeing no one wishing to enter into further discussion, I would like to put the question on this motion. All those in favour of the motion? All opposed?
Motion negatived.
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The Chair: We will move on to the next one we have, which I believe once again --
Mr Brown: Mr Chair, just on a question of procedure, are we going through subsection by subsection or are we dealing with the entire section at once?
The Vice-Chair: Oh, okay. It was my error.
Mr Brown: No. It can be done either way.
The Vice-Chair: We will deal with it as we go. I would therefore ask, all those in favour of subsection 1(1) as --
Interjections.
The Vice-Chair: Wait a minute. I am doing something here. What did I do?
Interjection.
The Vice-Chair: Maybe we should get some sort of consensus from the committee. I am at your pleasure. If you wish to deal with each one individually, fine. If you wish to deal with them collectively at the end of subsection (1) or (2) or (3), that is fine.
Mr Brown: It is totally procedural and I do not really feel strongly one way or another about it; I just think that occasionally it is better to deal with each subsection as we go through, unless there are no amendments in that section. It sometimes gets confusing to the committee members as we go through with amendments to various sections, just in terms of procedure and everybody knowing where they are at. If other members want to deal with it otherwise, that is fine. I just wanted to know how we were doing it.
The Vice-Chair: I am at the pleasure of the committee members on this, because I have no preference.
Ms S. Murdock: Is the suggestion that we, for instance, as an example, do all the amendments in section 1 before we vote on it? Is that the recommendation? That would be very confusing, I would think, with different amendments coming from all three parties. I would imagine that if you did not remember at the end of the section you were dealing with which way the debate had gone, it would be quite confusing.
Mr Farnan: Would it not be section 1, as amended? No?
Ms S. Murdock: Not yet.
Mr Farnan: No, but I mean, if we dealt with all the various amendments in section 1, get that out of the way, and then pass section 1, as amended?
Ms S. Murdock: Yes.
Mr Farnan: Then take section 2 and so forth.
Mr Brown: To be clear, Mr Farnan, and I do not think it is too different, all I was suggesting is that we could deal with subsection 1(1), pass it, then move to (2), and then we can carry the whole section once we are finished. It is just, I find, an easier way for us to deal with the bill and everybody knows where they are.
The Vice-Chair: I think that after having a quick discussion with the clerk and looking at it from a different light, my preference would be to deal with each one, in this case with 1(1), close it off and move on to the next. I would prefer that. Okay? Then it is closed and we are on to the next. So that is what I was at. I was calling all of those in favour of subsection 1(1), as amended -- no. All those in favour of subsection 1(1), please signify.
Mr Ciemiega: As it stands.
The Vice-Chair: Yes, as it stands in the bill.
Mr Brown: Mr Chair, before we do that, could we not have an opportunity to speak to that clause?
Interjections.
Mr Brown: No, we were debating the amendment.
The Vice-Chair: This is getting even more confusing. Okay.
Mr Arnott: Is it not the parliamentary assistant's responsibility to move the --
Mr Brown: Only the amendments.
The Vice-Chair: Okay. We are open now for discussion on subsection 1(1) of the bill. Mr Brown.
Mr Brown: I will be very brief. For the reasons we just outlined when we were discussing the amendment, it is our position that we cannot support this portion of the bill.
The Vice-Chair: Okay. Any further discussion? Mr Arnott.
Mr Arnott: Mr Chairman, as we indicated in our motion, we still believe the board should be composed of 12 members, so we will not be supporting this part of the bill.
The Vice-Chair: Thank you, Mr Arnott. Any further discussion? Seeing none, all those in favour of subsection 1(1) of the bill please signify.
Mr Brown: Can we have a recorded vote?
The Vice-Chair: A recorded vote? Okay.
The committee divided on subsection 1(1), which was agreed to on the following vote:
Ayes -- 6
Coppen, Farnan, Huget, Jamison, Klopp, Murdock, S.
Nays -- 5
Arnott, Brown, Cleary, Jordan, McGuinty.
The Vice-Chair: On to the next amendment. We are going to subsection 1(2) of the bill. Mr Arnott.
Mr Arnott: You ruled that one out of order.
Mr Brown: Is there not a government amendment?
Clerk of the Committee: There is a new numbering system in legislative counsel, so the government amendment is to subsection 1(2.1), so that will be a new subsection in the bill. That will come after subsection 1(2).
Ms S. Murdock: So it is subsection 3(2.1).
Clerk of the Committee: No. We are still on section 1 of the bill. Subsection 1(2.1) will be the government amendment.
Ms S. Murdock: Yes. I understand that.
The Vice-Chair: Shall subsection 1(2) of the bill carry, and then we move on to the other one. Mr Brown.
Mr Brown: Mr Chairman, it would be helpful as we went through if the parliamentary assistant could give us a brief explanation of the purpose of each clause. I am sorry, but "subsection 3(3) of the act is repealed" does not tell me a whole lot. If we could just have an explanation of what that is as we go through, it would be helpful.
Mr Ciemiega: Mr Chairman, may I give an explanation?
The Vice-Chair: Yes.
Mr Ciemiega: My name is Ed Ciemiega. I am the director of legal services with the Ministry of Energy. The current subsection states, "The chair shall carry out the duties that are assigned to the chair by the board." If the chairman is to be the chief executive officer, then you do not want the board telling the chairman what to do, per se.
The Vice-Chair: Does that answer your questions, Mr Brown?
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Mr Brown: Yes.
The Vice-Chair: Is there any further discussion on subsection 1(2) of the bill? Hearing none, all those in favour of subsection 1(2) of the bill please signify. Opposed? Passed.
We will move on now to subsection 1(2.1).
Mr Huget moves that section 1 of the bill be amended by adding the following subsection:
"(2.1) Subsection 3(4) of the act is amended by striking out `the chair and the president' in the first and second lines and substituting `the chair, the president and the deputy minister.'"
Explanation, Mr Huget, and then we will get into debate.
Mr Huget: Subsection 3(1) makes the deputy minister a member of the board ex officio. Therefore, there is no need to have him appointed by order in council.
The Vice-Chair: Thank you, Mr Huget. Discussion?
Mr McGuinty: I am a bit confused by that explanation. What we are doing is adding the words "and the deputy minister" to the existing subsection 3(4), is that correct?
Mr Ciemiega: That is correct. You have passed an amendment to the act which in effect states that the deputy minister is to be a member of the board of directors. The deputy minister is appointed by order in council. This act in effect says, because of this amendment, that by virtue of his office he will now be on the board of directors, so there really is no need to have another order in council. All this does is take away the necessity for that second order in council. He is there by virtue of the fact that he is deputy minister and for no other reason.
Mr McGuinty: The job goes along with the office.
Mr Ciemiega: That is right.
The Vice-Chair: Is there any further discussion? Seeing no further discussion, shall the amendment carry? All those in favour of the amendment? Opposed? Carried.
Motion agreed to.
The Vice-Chair: There is a Progressive Conservative motion. There is an error in the typing of it. It should be 1(2.2).
Mr Arnott moves that subsection 1(2.2) of the bill, subsection 3(4.1) of the act, be amended by adding the following subsection:
"(2.1) Section 3 of the act is amended by adding the following subsection:
"Persons nominated by Municipal Electric Association
"(4.1) Three of the directors appointed by the Lieutenant Governor in Council shall be appointed from persons nominated by the Municipal Electric Association."
I would ask now for explanation of your motion and then we will get into debate.
Mr Arnott: Quite simply, we in our party feel that the Municipal Electric Association has a great deal of expertise in this area. The government has indicated in response to our earlier motion that there should be places preserved on the board for certain groups. They have been quite clear in that respect. Obviously they feel quite strongly that certain groups merit special places on the board, and they have made that quite clear.
We think the Municipal Electric Association merits that sort of place on the board if the government is going to indicate that there are places reserved for certain groups. When you look at the issue of ownership of the corporation you find it is the public utilities that own much of the stock in Ontario Hydro. Their interests are represented through the Municipal Electric Association and we feel very strongly that three of those places on the board, at minimum, should be reserved for nominees by that association.
It is my understanding that in the past, by convention I guess, two positions have been made available to the Municipal Electric Association on the board. We feel that three would be better, following the government's line of reasoning, and that those positions should be put in the act as a means of ensuring that those positions will be there.
Mr Klopp: I have to disagree with the motion because a few minutes ago the argument seemed to have been around the 12 to 18, that we were going to set up special sections for everybody and there are more than 18 groups in Ontario. Now you are saying we want to specialize this group in stone, only this group. The parliamentary assistant made it clear that we do not want to do that. In fact, as was pointed out by you, there has always been a kind of unofficial status that they have been eligible for, and that has not changed and will not change. Therefore, I do not want to just all of a sudden single out one group for a lot of the arguments that you told me a few minutes ago.
Mr McGuinty: I am going to speak in favour of this motion for a couple of reasons. The arguments that were made in connection with the earlier discussion relating to the number of members who sit on the board are not particularly relevant here. First, we are not changing the overall number; we are changing a particular number within the set number of directors, which is now going to be 18.
Second, the reason we should increase the number of the members who represent the Municipal Electric Association is because they offer a special expertise. The elected members of the public utilities commission are of course accountable to voters, and nothing concentrates the mind, Mr Chair, I am sure you will agree, quite like voters. Those people, the PUCs, are on the front line. Hydro and Hydro's directors in their discussions may be wont to discuss concepts in the abstract in a kind of rarefied atmosphere in a downtown Toronto office building, but these people with the PUCs deal with ratepayers and deal with fundamental problems which affect people living within their areas, whether it is home owners, small business or large business. They can offer a great deal of expertise and insight which has been lacking on the board.
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Mr Huget: I have to say that I have likely witnessed the fastest conversion of a point of view in history. It seems like only seconds ago that the third party and the opposition were saying that the board should not be expanded, that this was a mistake and that there also should not be any special interests groups paid special attention on the board. The clock has ticked maybe a minute or two and we have had a complete 180 in their views.
The motion, as it is presented here, would grant the Municipal Electric Association special status by ensuring that the three persons nominated by it were on the Hydro board. For all intents and purposes, it would make the association responsible for board appointments. The Lieutenant Governor in Council is responsible for board appointments. There are, as members are probably aware, a large number of groups that claim special status. To formally recognize any of them in the act would limit the government's flexibility in ensuring the appropriate mix of interests. Traditionally, the municipal electrical utilities, as Mr Arnott has pointed out, have always been ensured representation. Increasing the size of the board from 14 to 18 members will provide increased opportunities to ensure that interests such as those of, but not restricted to, the Municipal Electric Association are included on the board. I cannot support this motion.
Mr Jordan: I would like to clarify the apparent misunderstanding. We are not suggesting that because the board number has been increased the Municipal Electric Association be given places for three representatives on the board. The intent of the motion was brought to light as we travelled the province. These are the owners of the majority of the corporation. The Municipal Electric Association is in fact the stakeholder in Ontario Hydro, as I understand it. Certainly, then, would it not follow that these people should have some form of proportionate representation on that board, not only because they are elected by the people of Ontario -- the government has been strong on saying, "We're trying to make it more representative" -- but by the fact that they in fact are the majority owners of the corporation? They are the ones who can really bring, as previously stated, many concerns of the different ridings and cross-sections of business, large and small, to be considered by the other board members. They are certainly not going to control the board, but they are going to have good, strong, logical input as stakeholders in the corporation.
Mr Farnan: As always, I am moved by Mr Jordan's logic. He always makes a good argument. There is just the one difficulty that I have, and that is in the area of flexibility. We support the intent of ensuring representation but also that degree of flexibility which allows for a variety of interests to be served, not to be locked into structures. I can understand the intent, and even sympathize to a degree, but I think the principle of flexibility is one we want to bear in mind as well.
Mr Brown: I also wish to support Mr Jordan's amendment. It seems to me that it would be almost impossible not to have three directors from the Municipal Electric Association in a proper cross-section of the now 18, three or one-sixth, excluding the vice-chairman, the chairman and the deputy minister. It does not seem to me to be an inordinate number to guarantee. I frankly cannot understand the government's being very concerned with this amendment. It seems to me that they would want to ensure that at least three of the directors came from the Municipal Electric Association. Accepting this would just put into the legislation what I believe would be any government's intent. I do not understand why the government feels this would hurt its flexibility. Are they telling us they would not appoint three? That is the only reason for not doing it that I can see, that you are not prepared to appoint three people from the Municipal Electric Association. I urge the government to carefully consider this amendment.
Mr Arnott: I would like to address the comment made by the parliamentary assistant, I guess it was five or 10 minutes ago perhaps, that our party's motion which would have limited the number of directors to 12 was defeated on the grounds that we have to expand the board to allow representation for a number of groups and individuals which previously have not had proper representation. That was the rationale given for the government's position to defeat that amendment. Now, if there are going to be special positions given on the board, this group merits special positions. The government's position has been demonstrated just now. The government feels that positions should be there for certain groups. I find it very ironic for the parliamentary assistant to accuse me of having circular thinking or an about-face. On the other hand, I suggest that he has engaged in that himself.
The Vice-Chair: Mr Jordan, on a point of clarification.
Mr Jordan: I just wanted to bring to members' attention that, "Three of the directors appointed by the Lieutenant Governor in Council shall be appointed from persons nominated by the Municipal Electric Association." We are looking at them as an informed body well familiar with and able to put forward names for the board. They do not necessarily have to be members of the Municipal Electric Association. We are using their expertise to present these people as board members, but they do not necessarily have to be members of the association. I just want to leave that open.
Mr Klopp: For the precise reasons we talked about earlier as to why we cannot support this motion, it has never been stated that we have quotas on any special groups. The potential for any persons or groups to get a chance on the board is what we have talked about. This actually almost talks about a quota, that we are going to have to have three. Maybe, heaven forbid, the flexibility of the Lieutenant Governor of the time may want to have 16 members from the MEA on the board. That is the decision they wish. They are actually declaring that we are only going to have a certain group of people, period, from one area. We do not want to have kind of special status. We just want to have the opportunity to see more and more people. If their qualifications are good enough, the Lieutenant Governor may pick them, if they happen to come from the MEA, the north, the south -- or a farmer or a business person from downtown Sudbury. This would actually smack of setting up a quota system and tying the hands of the people. That is wrong.
Mr Farnan: Again, it always amazes me how close we are in our thinking and just that there may be some differences in interpreting or looking at the same issue. It is conceivable that the group Mr Jordan refers to could wish to put forward more than three recommendations. I do not think they should be bound or hindered in any way. I mean, whether it is police commissioners or whoever being appointed, you go out to the people in the field and ask for recommendations. Those recommendations will come in from this group, as from other groups that have qualifications within the field to make recommendations. I think all three parties are agreed that by going and seeking the source of best recommendations, we can then appoint the best qualified, bearing in mind the principle of having a broadly balanced board. I think we are very close, and sometimes the way we put forward a position actually makes it appear as though we are not as close as we are on these issues. I just wanted to put that forward.
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Motion negatived.
The Vice-Chair: I believe there is a motion on subsection 1(3) of the bill. I am getting ahead of myself again. I will ask the parliamentary assistant if he wants to give an explanation for subsection 1(3) of the bill.
Mr Huget: I am sorry, I got ahead of or behind myself as well. Until 1974 the chairman was the chief executive officer. Between 1974 and 1989 the chairman was the chief officer. Redesignating the chairperson as chief executive officer will strengthen the links between the board and the management of the corporation. The government feels this is the most effective way to structure the corporation. It is also consistent with the position in British Columbia, Alberta, Saskatchewan, Quebec, Nova Scotia, New Brunswick and Newfoundland, where the chairperson is also the chief executive officer.
The Vice-Chair: Discussion?
Mr McGuinty: Before I proceed, Mr Chair, are we going to have a PC motion on this?
The Vice-Chair: No, it was ruled out of order.
Mr McGuinty: All right then. What we are doing here is having the chairman, who is a political appointment, made the chief executive officer of Hydro. I have already described several times today how unusual a corporation Ontario Hydro is. By virtue of that, of its size and its complexity, it takes a great deal of time for someone occupying the position of CEO to come to grips with the questions faced by Hydro, let alone some of the answers. What we are doing when we make this change is to say, "Well, CEOs are going to change with governments." If you were to go into Alcan, Falconbridge or any other of the major corporations and say, "Look, we are going to change CEOs as often as we change governments in the province of Ontario," you would be laughed out of the room, because it is absolutely critical that the CEO have continuity, and particularly so when you are dealing with a complex organization such as Ontario Hydro.
It may be that the systems are different than other provinces. They may have some special reasons in their legislation which somehow makes that appropriate, but I fail to see how, simply by virtue of that being the practice elsewhere, it makes it right here. I do not see how it does, given, again, the nature of the beast and Ontario Hydro's complexity. So for that reason, I will not be able to support this.
Mr Farnan: It is an interesting argument that Mr McGuinty raises, but it is an argument based on the presumption that people would be appointing a CEO based on some kind of partisan basis and based on, perhaps, an individual not qualified.
Probably the reason it works, and works across the country -- I mean this sincerely. I am not talking about New Democrats; I am talking about all political parties. I genuinely think most political parties have a sense of the responsibilities entrusted to them, and in those major corporations that come under the broader area of government and the appointments that are made, I think there is a real effort made to rise above the partisan and to appoint the very finest people. When we look at the qualifications of the individual in this particular case -- I think this was discussed yesterday -- we see an individual whom I think any government of any persuasion would be prepared to look favourably on for the type of experience and leadership this particular individual brings to this board.
I think the argument that Mr McGuinty puts forward is the worst scenario, that of individuals poorly qualified, misplaced, out of touch; they are simply there for partisan reasons. Governments come and go, so that would not be in the best interests. But I think the reality of the matter is that governments of different persuasions appoint individuals from other political stripes, good people, and they appoint them precisely because they are good people. I do not think any government would want to exclude or disqualify people because they happen to have some connection or similar political persuasion.
My sense is that, on the whole, governments can change and senior bureaucrats and civil servants can remain in place simply because of the quality of the men and women who are in the civil service and who are appointed to senior positions. I think all governments of every political stripe have a pretty commendable record. There are occasions when we all may put a question mark, but I think in this particular case I have not heard that question mark at all.
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Mr Brown: I cannot support this change, bringing back the chair and the chief executive officer to be the one person. I think if members will recall, it was not too long ago -- I believe in 1989 -- that committees sat and decided it would be best to separate these two positions. There were some reasons for that. It was not airy-fairy stuff. It was that the chairmen of the board are the chief policymakers of the corporation. That is their reason to be. They are to develop the policies that will best serve the corporation and the ratepayers of the province.
The CEO is the guy or gal who is going to be running the show, the actual operations. He or she takes directions from the board and puts those directions into being. It seems to me -- and I think to the former government and the former committee, because I think even your party agreed with this back then, although I have not looked up the Hansard and really cannot recall -- that the separation was a good thing, that there is at times almost a conflict between operations and policy, and that having two different people fulfil those functions would be a commendable way of operating the largest public utility in North America.
We are not talking about Manitoba or British Columbia, which are small entities in comparison to this beast we are trying to wrestle to the ground here. This is a huge corporation which has huge operational difficulties, as any corporation of that size would.
We over here think that what was done in 1989 makes a lot of sense. Have somebody who implements the directives of the board and have someone who considers both the short- and long-term policy along with the other board members. I think that makes ultimate sense, and I am very disturbed by this regression to almost a conflict situation at times that has occurred.
I know that much of this discussion is really moot, because in the past, following the Legislature changing the legislation to permit this, there was only one person doing both jobs. He held both titles. But I do not think that was the intention of government. I think it was the intention of government to put someone solidly in control of day-to-day operations and have someone separate look after the long-term, albeit short-term, policy, decisions. And I think there are enough policy decisions to be made in Hydro.
Now, perhaps within the context of this bill, this does make sense, because there are not going to be policy decisions made there; there are only going to be operational decisions. The decisions on policy are going to be made in the corner office, so why have two people? Why separate the positions? They are going to be made in Mr Rae's office at the corner of this building, and really, that is all we need to know. With that, Mr Chair, I will yield the floor.
Mr Farnan: I regret the very partisan and small-minded approach of Mr Brown -- on this particular issue, I might add, because very often he puts forward a much more generous approach in discussing these issues.
This is one of those situations where you can argue a case on one side and talk about a separation of roles. You can talk about an integration of roles and a greater efficiency and a greater understanding and integration. The government is looking at it. The thinking, to me, would be that there are arguments that are supportive of this. I do not think Mr Brown would say that there are no arguments that support this. Basically, just looking at the same picture from a different angle, this is the position the government has come down with, and I think it will work. It works in many organizations, so time will tell.
Mr McGuinty: This particular provision is very symbolic, I think, of the government's real intention through Bill 118, which is not to gain some kind of control over Hydro so much as to dominate it. I think the element of control certainly is in the information flow, and liaison is created through the appointment of the deputy minister to the board. That achieves that objective.
But when we make the chair and CEO one position, we are effectively eliminating any opportunity for a CEO to act objectively, to at some point, when the time is opportune, stand up to the government and say: "Hang on a sec. I don't think that is in the interests of Hydro. I don't think that is in the interests of ratepayers, and I'm going to say that notwithstanding the fact that you happen to have appointed me to this job."
When there is a government appointment, there are always two considerations. First of all, is the person competent? Second, is that person prepared to go along with my policies as the government? That is fair game; that is the way it has worked and that is the way it is going to continue to work. I disagree with Mr Farnan when he says we are just going to put the best person for the job. It is the best person for the NDP when they form the government, the best person for the PCs when they form the government, and for us when we form the government. I do not think it it that simple. We are always looking for someone who is going to carry the ball when it comes to our particular idiosyncratic policies.
I think it is important here to keep the interests of ratepayers in mind, and they want a CEO in there who is not going to be beholden to government policies at all costs. That is the chair's job. We have a liaison with the deputy minister, so this is overkill. Again, it is indicative of the government's intention not to control, but rather to dominate.
Mr Brown: I am, as I think the people of Ontario should be, confused by this particular clause. I think there was no indication by the party now in power that this was the direction they wanted to go. The position that was articulated before the election of 1990, when they became the government, was that the way to get control of Hydro was to make it accountable to the Ontario Energy Board; to make the Ontario Energy Board the arbiter of whether what Hydro did was right or wrong. It was not to just make Hydro a more direct arm of the government. So I am puzzled. I really do not know what would have indicated to anyone in the electorate that this was the direction this government would take once it was in power.
I go back to the 1989 amendments. I am sure there was no great objection from the New Democrats to the separation of this, and I agree with Mr Farnan that there can be arguments made on both sides of this issue. However, I believe strongly that on balance, the arguments for separation are far greater. I concur with my colleague Mr McGuinty, who suggests that a professional whose job it is to operate the utility can be separated from the policy person and that it is in the interests both of the ratepayers and the people of Ontario in general to have that be the case.
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Mr Huget: Just for clarification, Hydro has historically had two top executive positions, a chair and a president. This is consistent with how all large corporations are organized. In general, the chair was responsible for strategic planning and policy direction, while the president was responsible for operations of the corporation.
The senior executive level at Hydro was reorganized this summer to ensure that both of these received proper attention: long-term planning and policy-setting, and operations and day-to-day performance of the electricity system. The chair and chief executive officer, Mark Eliesen, is responsible for strategic planning functions, overall policy direction for the corporation and the implementation of the government's policy priorities, including new energy directions. The president and chief operating officer, Mr Alan Holt, continues to report to the chair but is directly responsible for operations and the production, supply and distribution of electricity.
That is for clarification on the two positions.
The Vice-Chair: Any further discussion? Mr Arnott.
Mr Arnott: I would just like to indicate that personally I am not supportive of this initiative by the government. I have listened very closely to the debate that has ensued since this provision was suggested, but I think the one other point that has not come up is the issue of consolidation of power in one individual. I think that is a very compelling point.
I think that with the whole of Bill 118, we see power shifting to the Minister of Energy, naturally, with his new ability to bring in policy directives that I guess must be followed instantly. And we see power being stripped from the board itself and ensuing liability being taken away from them. They do not have to worry about that any more. If the policy directive is coming from the government, that is okay. And of course with the chief executive officer's responsibility going with the chairman, as I say, I have concerns about the consolidation of excessive power essentially within these two individuals.
When we look at the way this has been handled, certainly the appointment to the chairman's position has been made by the cabinet. It by nature and by definition becomes a political appointment, and I dare say that anyone who did not, broadly speaking, support the objectives of the present government, any of those, anyone, was immediately ruled out of contention for that particular position. For anyone to suggest otherwise, I think, is dreaming.
The other point that will come up later in the bill is the feature of Bill 118 that indicates that the chairman becomes CEO effective the date of first reading. I have grave concerns about that, so it indicates that once again, this committee process is at best a joke.
Mr Farnan: I have a very brief comment in response to Mr Arnott. When you use words like the "stripping of powers," it has all kinds of connotations. In fact, it may be increasing the accountability. So it is how you use words and how you phrase things that can colour an issue. I would just say that if we look at this rationally, we can see a very plausible approach on the part of the government to increase responsibility, and I would prefer to look at it as increased responsibility, as a very positive approach.
Mr Brown: For who?
Mr Farnan: Increased accountability right across the board: from the board, from the chairman, from the CEO.
Mr Brown: To whom?
The Vice-Chair: Mr Brown, do you have a comment to make?
Mr Brown: No.
The Vice-Chair: No? Seeing no further discussion, I would like to put the question on subsection 1(3) of the bill. All those in favour?
Mr Brown: Mr Chair, we would prefer a recorded vote.
The Vice-Chair: Okay. This will be a recorded vote.
The committee divided on Mr Huget's motion, which was agreed to on the following vote:
Ayes -- 6
Coppen, Farnan, Huget, Jamison, Klopp, Murdock, S.
Nays -- 5
Arnott, Brown, Cleary, Jordan, McGuinty.
The Vice-Chair: I have had members from various caucuses indicating they would like to have a five-minute recess to stretch their legs. Could we recess for five minutes and be back promptly? Thank you.
The committee recessed at 1615.
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Mr Huget: As you know, I have had two government motions distributed which would provide that subsection 1(4) and section 6 of the bill be struck out.
It is my understanding that a motion to strike out a subsection or a section of a bill is not in order if no substitution or amendment is being made. The proper course is to vote against the subsection or section standing as part of the bill. My purpose in distributing the two motions was to inform the committee of our intentions relating to subsection 1(4) and section 6. Rather than moving motions which are out of order, the government members of the committee propose to vote against the said subsection and section standing as part of the bill.
The Vice-Chair: Thank you, Mr Huget. We are now dealing with subsection 1(4) of the bill. Mr Huget, do you have any explanations that you wish to give at this time?
Mr Huget: In a moment, Mr Chairman. I will defer to Mr Ciemiega.
Mr Ciemiega: We are going back to the status quo. Under the bill, the remuneration of the chief executive officer would be set by the board of directors. Now we are going back and having it set by the Lieutenant Governor in Council, so there is no need to amend the act. That is why we are repealing it.
Mr Klopp: I am glad we decided to pull it out, because in our discussions it became clearly evident that this is one issue that everybody in the public felt was a good idea. I know when I sat here, especially on the government side, trying to decide what side of the fence to lean against, depending on arguments, it was very hard, and I think the amendments that we have come up with are very good. But this one here is one that everybody from both sides, whether he agreed with Ontario Hydro's being a saint or being a villain, agreed very clearly that the government should take full responsibility with regard to the salary. They are going to get blamed for it anyway. So I am glad we decided to withdraw that motion, and I fully support Bob's proposal.
Mr McGuinty: I applaud the government members for amending the bill by deleting this particular subsection. I am sure that our subtle overtures in the House with reference to this matter had some bearing on it and I am delighted that they were so sensitive.
Mr Huget: I appreciate the flattering comments from the Tory party and the opposition.
Mr Arnott: We did not say anything yet.
Mr Huget: Well, they are about to. I am just trying to move ahead of the third party a touch. Anyway, I think it is important that the fact is we did respond and did listen to the concerns that were raised by a number of individuals and groups throughout the province in terms of this issue, and I think it speaks of our motivation in terms of doing exactly that -- responding to the concerns of the public and responding to the best interests of the people of the province.
Mr Jordan: Just a question, Mr Huget. In reverting back to the present act for policy on this section, do you plan to continue with the formula as expressed in the House by the previous Minister of Energy that, in fact, the chairperson and chief executive officer's salary would be set at 80% of the president's? That was the formula that was used to establish the present salary, as stated in the House.
Mr Huget: Yes, that is correct. We will proceed with that.
The Vice-Chair: Shall subsection 1(4) of the bill carry? It is defeated.
Section 1, as amended, agreed to.
The Vice-Chair: We will move on to a motion by the Liberal caucus.
Mr McGuinty moves that the bill be amended by adding the following section:
"1.1 The act is amended by adding the following section:
"Duty of care
"7.1(1) Every director and officer in exercising his or her powers and discharging his or her duties shall act honestly and in good faith with a view to the best interests of the corporation, and shall exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
"Compliance
"(2) Every director and officer shall comply with this act and the regulations made under this act and with the bylaws of the corporation.
"Non-liability if reliance in good faith
"(3) A director or officer is not liable for a breach of duty under subsection (1) or (2) if he or she relies in good faith on,
"(a) financial statements of the corporation represented to him or her by an officer of the corporation or in a written report of the auditor of the corporation as fairly reflecting the condition of the corporation; or
"(b) a report of a lawyer, accountant, engineer, appraiser or other person whose position or profession lends credibility to a statement made by that person.
"Provision does not exclude liability
"(4) No provision in a contract, bylaw or a resolution of the corporation relieves a director or officer from the duty to act in accordance with this act and the regulations made under this act or relieves him or her from liability for a breach of that duty."
Mr McGuinty, do you wish to elaborate?
Mr McGuinty: What I am attempting to address here is a shortcoming, as I see it in the act, which becomes extremely more important in light of the provisions contained within Bill 118.
To my knowledge -- and I do not profess to be an expert in these matters -- the Power Corporation Act is a bit unusual in that it does not contain a statutory obligation as to the duties of the directors and officers. In other words, if I am a director or officer of Hydro, I cannot look up the act and say, "Well, what am I supposed to be doing, and how do I know if I am doing the right thing or the wrong thing?"
There are other provisions that would guide me in terms of obtaining an answer to that question, which is, "What am I supposed to be doing as a director or officer?" and those are common law provisions which are essentially traditions that have developed over the years. But I thought it should be in the act in black and white.
My amendment imposes a positive duty on the directors. There is a test there. It says, "What are you supposed to do?" Section 7.1 says, "Every director and officer in exercising his or her powers and discharging his or her duties shall act honestly." So, first of all, you have to act "honestly and in good faith with a view to the best interests of the corporation, and shall exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances."
It is not a special or particularly onerous burden. We are not saying you have to exercise the care, diligence and skill that a reasonably prudent electrical engineer, physicist, economist or legal expert would exercise; it is just what a reasonably prudent person would exercise in those circumstances. What it would do is allow ratepayers, directors and the government to understand in a concrete way what those directors' duties are. It gives all of us a test that we can apply to see whether the directors are fulfilling that duty.
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As I said before, directors can always consult this provision to see what it is they are supposed to be doing. Of course, my concern is that the government may, at some point, ask them to do something which they feel may not be appropriate. That may not lead them to discharge their duty properly, and this provides them with a test. But it goes on to say, again to be reasonable, "Look, in subsection 3, essentially, you're not going to be liable if you rely on financial statements that are prepared by the appropriate experts," or "You're not going to be liable if you rely, as directors in corporations quite regularly do, on advice that you get from an lawyer, an accountant, engineer, appraiser or other person who has some credibility or professional expertise."
But it goes on to say as well that you cannot get off the hook in subsection 4 by putting some kind of provision in a contract, a resolution or a bylaw. You always have to fulfil this duty of care. That is going to be paramount. It does not matter what the government tells you; at the end of the day, you are going to be held accountable for exercising a duty of care which is set out here. Again, it is not one that is particularly onerous. It just says you have got to exercise the "care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances."
Mr Huget: The Liberal motion deals with the duty, liability and indemnification of members of the board and officers. These matters are dealt with extensively in the Business Corporations Act. Section 136 of the act, dealing with non-liability, applies specifically to Ontario Hydro through reference in the Power Corporation Act. I will ask Mr Ciemiega to elaborate.
Mr Ciemiega: Basically, the provision you would have in duty of care is really a common law provision that is applicable to every director, regardless of whether it appears in the statute or not. This is really not necessary, and I do not see why you would want to put something like this into a bill if it really is not necessary. You have the other provisions relating to section 136 which are referenced directly in the Power Corporation Act.
Mr Arnott: I just have a question, Mr McGuinty. On a number of occasions you have expressed the concern that with Bill 118, the board would no longer be in a position to represent the interests of the ratepayers. I wonder if you feel this is inherent within this amendment, because you have mentioned that the "director shall act honestly and in good faith with a view to the best interests of the corporation." I wonder if the best interests of the corporation and the best interests of the ratepayers would always be the same, in your view, or would they, on some occasions, be in conflict?
Mr McGuinty: Yes, but those two should never come into conflict. This amendment, together with other amendments that I am going to propose, would ensure that directors always exercise that duty of care, particularly in light of subsection 4. This amendment says that this duty of care will be paramount and it can never be displaced, even by a government issuing a policy directive, for instance, which tells them to do something that they feel, in their heart of hearts, is not right for the shareholders. It ensures that, in doing anything, the directors have to place the interests of the ratepayers first and foremost.
Mr Arnott: Mr McGuinty, can you tell me if at the present time -- perhaps the representatives from Hydro can answer this -- there is an oath that directors take beyond the oath of allegiance?
Mr McGuinty: I do not know.
Mr Huget: I am certainly not aware of a specific oath they take. That is something I suppose we can find out.
Mr Arnott: I would be interested in knowing that, if Hydro could respond.
Mr Jennings: We are not aware of any.
Mr Arnott: At a later date.
Mr McGuinty: Legislative counsel for the ministry indicated that this is found to some extent within section 136 of the Business Corporations Act, and he is quite right. What I think is important is that directors know specifically what their obligations are. I think it is more appropriate that it be contained within the act, so that if you become a director and somebody tosses you a copy of the Power Corporation Act, if you have the energy to read through it and perhaps the experience to understand it, that will give you some idea of what you are all about.
Second, a very important provision in my amendment is subsection (4), which is what I call a paramountcy provision, which says that the government cannot overrule that duty of yours to look out for the interests of ratepayers by properly fulfilling your duty of care that is owed to them.
The Vice-Chair: Mr Jordan?
Mr Jordan: Mr McGuinty has just answered my question.
Mr Farnan: Can we take a break, Mr Chairman?
Interjection.
Mr Farnan: Maybe I would have a question, then, a very short question.
The Vice-Chair: Yes. I was waiting for your question.
Mr Farnan: On reflection, I think the answer probably comes back to me now. I just wanted further clarification on the points that were raised by the counsel of Hydro, but I think I am comfortable with the explanation we received.
The Vice-Chair: Thank you, Mr Farnan. All those in favour of the amendment?
Mr McGuinty: Could we have a recorded vote, please, Mr Chairman?
The Vice-Chair: This will be a recorded vote.
The committee divided on Mr McGuinty's motion, which was negatived on the following vote:
Ayes -- 5
Arnott, Brown, Cleary, Jordan, McGuinty.
Nays -- 6
Coppen, Farnan, Huget, Jamison, Klopp, Murdock, S.
Section 2:
The Vice-Chair: We are moving on to section 2. We have four amendments to section 2. Do you wish to deal with them today or do you wish to hold them over, it being nine minutes to 5.
Mr Klopp: Hold them over.
Mr McGuinty: I know we could probably deal with my first one in short order. I am in your hands, Mr Chair. I am prepared to go along.
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Mr Farnan: If it is indicated that the Liberal position would be to carry on, I think we should facilitate. We agreed to 5 o'clock.
The Vice-Chair: Mr McGuinty moves that subsection 10(3) of the act, as set out in section 2 of the bill, be struck out and the following substituted:
"Directors
"(3) The directors shall ensure that policy directives are implemented promptly and efficiently and, if in implementing a directive the directors act in accordance with section 7.1, they are not accountable for any consequences arising from the implementation of the directive."
Mr McGuinty: This would have been a companion to the earlier one, Mr Chair.
The Vice-Chair: I am just getting a clarification on the ruling on this.
Upon discussion with the clerk and legislative counsel, I find that I must rule this out of order -- and I will put it this way -- as it is an established principle of parliamentary procedure that an amendment cannot be admitted if it is governed by or dependent upon amendments which have already been negatived. It is therefore ruled out of order.
Mr McGuinty: I had a feeling that would be a pretty brief matter.
The Vice-Chair: Mr McGuinty moves that subsection 10(5) of the act, as set out in section 2 of the bill, be struck out and the following substituted:
"Report to minister
"(5) The board shall report to the minister whenever it exercises a power or performs a duty to which a policy directive relates and shall specify the actual or estimated cost of giving effect to the directive.
"Accounts
"(5.1) The cost of exercising a power or performing a duty relating to a policy directive shall be specifically reported in the corporation's accounts required by section 14."
Mr McGuinty: What I am trying to address here is the costs associated with carrying out a policy directive. In particular, I am concerned about what those costs might be. We have already had criticisms levelled against Hydro by the Ontario Energy Board with respect to the costeffectiveness of some of its conservation efforts. This amendment will require Hydro to keep the minister informed as to what the real costs of compliance with a policy directive are, and it is going to require that there be a specific entry at year-end audit that will make the cost public. Then the public and the Legislature, at that point in time, will all be able to determine in a concrete way whether a government policy is cost-effective.
If we are talking about accountability, if we are talking about openness, then this is the kind of provision that is going to ensure that we have the facts at our fingertips at least annually and that the minister will have the facts at the outset, when he or she asks that a certain policy directive be carried out, because it requires that the actual or estimated cost to carry out that directive be filed through a report with the minister.
Mr Huget: Reports are dealt with in the bill in the government motion on section 2. The costs of implementing policy directives are included in the cost of power. These costs are reviewed by the Ontario Energy Board as part of the annual review by the Energy Board, as part of the review of Hydro's annual rate application. All of Hydro's costs are included in Hydro's accounts and are audited annually. Hydro's activities are also subject to review by the Provincial Auditor. The government feels that these matters are better dealt with through a memorandum of understanding between the Minister of Energy and Hydro.
Mr Farnan: I commend Mr McGuinty for his concern with fiscal responsibility. I think that is something we all support. Listening to the chairman of the board yesterday, I think it is a thrust in a direction that he is determined to bring to the board to an even greater degree, and of course it fits in with the overall government objectives of fiscal responsibility. We are all on track on this. I think it is something where we have to work together in the future for the benefit of the taxpayers of Ontario.
Mr McGuinty: As the bill exists right now, there is no specific requirement that I can see that requires that the board file a report with the minister whenever it exercises a policy directive that specifically requires that it set out the actual estimated costs. If I am mistaken in that regard, I stand to be corrected.
Furthermore, it is my understanding that there is no specific requirement that the annual audit contain an entry specific to costs associated with carrying out a policy directive. Again, if I am mistaken in that regard then I will stand to be corrected.
Mr Chairman, I am directing this as an interrogatory.
The Vice-Chair: This is a question?
Mr McGuinty: Yes, it is a question.
Mr Jennings: Section 2 of the bill does have an item which says:
"(5) The board shall report to the minister whenever it exercises a power or performs a duty to which a policy directive relates."
Mr McGuinty: My concern is that there is no reference to costs. That is what I am getting at here. There is no reference in this subsection (5) to the fact that this report must contain within it an outline of the costs, your actual estimates.
Mr Jennings: The cost of complying with a policy directive, in a later section of the bill, section 7, refers to section 92 of the new act, but the cost of complying with the policy directive is one of the costs of power under section 92 of the act. Those costs are reviewed by the Ontario Energy Board on an annual basis.
Mr McGuinty: Is there a requirement that the audit retain a specific entry with respect to policy directives?
Mr Jennings: Not in the bill as it stands. In addition to the legislation, what would be covered in the Power Corporation Act, there is general provision for a memorandum of understanding between the minister and Ontario Hydro. In general, things like reporting requirements are usually included in the memorandum of understanding rather than specifically in legislation.
Mr Ciemiega: We could put that requirement in the memorandum of understanding. Under the legislation as it currently exists they are required to answer any question the minister asks. I would think that one of the questions he would ask when he ships them a proposed directive, as he is required to by the statute, would be, what would this thing cost? That would just be a logical question. What minister would want to issue a policy directive without knowing what carrying out that directive will cost?
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Mr Brown: I am concerned with the very same issue. It may be that the minister will ask and it may be that it will be reported to the minister. I would think that would happen. I really believe, as you say, that any minister doing his job would ask that question and would get an answer. But that does not mean that the public knows.
If we are going to be accountable, I do not see any provision in this act -- and again you can help me if I am just not reading it correctly or understanding it properly -- that says the cost of this policy directive is this much, and that appears as a line item in the financial statements of Ontario Hydro at the end of the year to be reviewed. I see, as you are telling me, that this cost is a power cost essentially and will be included in that. But that does not mean that it will be separated out as "this policy costs this much to implement." I think what Mr McGuinty is trying to get at is that, so that not only does the minister know, but that the people of the province of Ontario and the auditor can determine exactly the cost of a policy directive from the minister. Am I wrong? Will there be a line item that says, "The policy directive costs X dollars?"
Mr Jennings: There are a lot of specific line items with specific expenditures that Ontario Hydro makes, and not all of them have line items. But, in general, Ontario Hydro's costs are reviewed annually at the Ontario Energy Board. These are the intervenors; it is a quasi-judicial tribunal. Anyone can seek that information if there is a particular item there is controversy about or interest in. Ontario Hydro would have to provide the information at that forum.
Mr Brown: True, I understand that. But I would expect any initiative of the minister's that is being implemented will cross a wide range of accounting items. It will show up here, and over here, and over here, as increased costs. But are those costs ever going to be brought together in one place to say "This costs this much"? I am not quarrelling that the numbers will not be there somewhere, and that some forensic accountant might be able to figure it out. What Mr McGuinty I think is looking for is a clear statement that says, "This is what this initiative costs." I am not getting a feeling that is going to be there.
Mr Jennings: The issue of what Hydro is spending on certain costs is addressed by the review at the Ontario Energy Board. In fact, at last year's rate hearing there was the question of what impact the Elliot Lake initiatives would have on the rates for the next year. That question was answered by Ontario Hydro. I think it is the same with any other initiative. If that question were posed, Ontario Hydro would at that time be able to provide the answer.
Mr Brown: But what we are saying is that we do not think we should have to ask the question; we think it should be there. The public has a right to know without pursuing it, that it is out there, black and white, this cost, this amount of money to implement this directive, that we do not have to worry about whether the Ontario Energy Board decides to ask the question.
Mr Jennings: No. There are intervenors, and there is in fact funding for intervenors, at the Ontario Energy Board.
Mr Brown: I understand all that. I am not really too worried about the Ontario Energy Board. What I am worried about is that the ordinary ratepayer of Ontario Hydro can see that clearly in the statement, the board of directors can see it in the statement, and the people responsible can see it in the statement without waiting for the OEB to have a look at it.
Mr Jennings: The Ontario Hydro board of directors can certainly get the information as well. The Ontario Energy Board annual review of Hydro rates is the forum set up in this province for Ontario Hydro's costs to be reviewed publicly.
Mr Brown: So what is the problem in putting the cost of the directive out there?
The Vice-Chair: I am going to jump in here for a second, because if the debate is going to carry on, I am going to adjourn. But if there are a couple of more quick points that people wish to make and then we can get on with the vote, then I will finish this one amendment. Otherwise, I am going to adjourn.
Mr Brown: Are there final speakers?
The Vice-Chair: There is one other speaker who wishes to speak.
Mr Brown: I am going to surrender.
The Vice-Chair: You are going to surrender? So Mr Jordan, if it is a long debate --
Mr Jordan: I just wanted to make a quick point relative to Mr McGuinty's motion in that we saw yesterday an example where the Minister of Energy and the chairman are moving ahead with fuel switching, but they had not done any costing of it. They said, "Well, we haven't got that far yet." Yet it is a policy, it is in the update, it has gone to the board. But they have not costed it out, so they cannot tell us what it could cost because they have not studied it yet. I think this might make that a requisite of the board: to know what the hell a policy directive was going to cost before they lunged ahead and implemented it. That is the concern that I see in not being able to identify it separately as the motion suggests.
The Vice-Chair: Mr Huget, you may answer.
Mr Huget: I think we can certainly commit to giving that issue consideration when we are considering the process of strengthening the memorandum of understanding between the minister and Hydro.
Mr McGuinty: The memorandum of understanding, so far as the public at large is concerned, is something rather ephemeral. We do not get a copy of the memorandum of understanding distributed to us automatically, even as members of the Legislature. I am looking for a specific entry which will make the government, make the minister, understand very clearly that any particular initiative has a cost associated with it, and this cost is going to be made public. It makes the ratepayers, the people who are footing the bill here, take some comfort in knowing that. But we will be able to make some kind of assessment at the end of the day here. We will be able to determine specifically what the costs are associated with every specific policy directive.
Mr Farnan: One cannot help but support the intent. I think this applies not only to Ontario Hydro. It applies to every body where we want fiscal responsibility. I think what you have seen is a government -- and again I think you have to go back to the broad picture -- that is clearly setting forward a policy of tight fiscal restraint throughout all its ministries and throughout the agencies and boards across the province.
Mr Brown: Now you know why we want this amendment to pass.
Mr Farnan: There are in place many measuring tools for the government. But the reality of the matter, when you are in a mode of fiscal restraint, is that the government and the ministry, and indeed the agencies, are looking very tightly at policy directives and of course looking at creative and innovative ways in which to implement services in a cost-effective manner. That is the direction of the government, and I suspect the direction of Ontario Hydro. Of course we welcome all parties supporting that directive and commend Mr McGuinty for his support.
The Vice-Chair: Thank you, Mr Farnan. Hearing no further debate, all those in favour?
Mr McGuinty: Recorded vote.
The Vice-Chair: Oh, and it is a recorded vote.
The committee divided on Mr McGuinty's motion, which was negatived on the following vote:
Ayes -- 4
Arnott, Brown, Jordan, McGuinty.
Nays -- 5
Coppen, Farnan, Huget, Klopp, Murdock, S.
The Vice-Chair: The committee now stands adjourned till 10 am tomorrow morning, at which time we will resume clause-by-clause of Bill 118.
The committee adjourned at 1706.