Assemblée législative de l'Ontario

POWER CORPORATION AMENDMENT ACT, 1991 / LOI DE 1991 MODIFIANT LA LOI SUR LA SOCIÉTÉ DE L'ÉLECTRICITÉ

SIOUX LOOKOUT HYDRO ELECTRIC COMMISSION

ATIKOKAN CITIZENS FOR NUCLEAR RESPONSIBILITY

BRIAN DELL

GOLDEN RED LAKE ENVIRONMENTAL GROUP

CONTENTS

Tuesday 14 January 1992

Power Corporation Amendment Act, 1991, Bill 118 / Loi de 1991 modifiant la Loi sur la Société de l'électricité, projet de loi 118

Sioux Lookout Hydro Electric Commission

John Bath, chairman

Atikokan Citizens for Nuclear Responsibility

Glenn Nolan, representative

Brian Dell

Golden Red Lake Environmental Group

Brian Dell, representative

Adjournment

STANDING COMMITTEE ON RESOURCES DEVELOPMENT

Chair / Président: Kormos Peter (Welland-Thorold ND)

Vice-Chair / Vice-Président: Waters, Daniel (Muskoka-Georgian Bay/Muskoka-Baie-Georgianne ND)

Arnott, Ted (Wellington PC)

Cleary, John C. (Cornwall L)

Dadamo, George (Windsor-Sandwich ND)

Huget, Bob (Sarnia ND)

Jordan, Leo (Lanark-Renfrew PC)

Klopp, Paul (Huron ND)

McGuinty, Dalton (Ottawa South/-Sud L)

Murdock, Sharon (Sudbury ND)

Ramsay, David (Timiskaming L)

Wood, Len (Cochrane North/-Nord ND)

Substitution(s) / Membre(s) remplaçant(s):

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

Wilson, Gary (Kingston and The Islands/Kingston et Les Îles ND) for Ms S. Murdock

Clerk pro tem / Greffière par intérim: Manikel, Tannis

Staff / Personnel: Yaeger, Lewis, Research Officer, Legislative Research Service

The committee met at 1430 in Columbus Hall, Sioux Lookout.

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.

SIOUX LOOKOUT HYDRO ELECTRIC COMMISSION

The Vice-Chair: Can I get the members to take their respective seats?

I would ask that representatives from Sioux Lookout Hydro please come forward, introduce yourselves for the sake of Hansard and, at your will, make your presentation.

Mr Bath: My name is John Bath, a member of the Sioux Lookout Hydro Electric Commission.

The Vice-Chair: Would you just sit down and repeat that, because you have to speak into the mike or they do not get it. To the members, yesterday we got a little wee bit lazy and laid back and Hansard was not picking up everything. They were having some difficulty. I do not believe we have to worry about turning it on, do we?

At your leisure, sir.

Mr Bath: My name is John Bath. I am the chairman of the Sioux Lookout Hydro commission and I have a brief presentation for you on Bill 118.

Mr Chairman, members of the committee, on behalf of the town of Sioux Lookout and the Sioux Lookout Hydro commission, I would like to welcome you. I commend the government of Ontario for its open policy regarding public input to this very important legislation. Any legislation that impacts on the supply or cost of electricity to the citizens of Ontario is very important legislation. The Sioux Lookout Hydro commission directly represents 5,000 Ontario citizens and hydro users.

Public power at cost, the very basis of electric power in this province, first became a political issue in the 1905 Ontario general election. In 1907, the Power Commission Act set the guidelines for a power system partnership which saw the province distributing electric power to the municipalities for resale to their constituents. In 1974, the Power Corporation Act was passed and Ontario Hydro's mandate was set. Since 1905, and throughout the various amendments, at no time has the concept of power at cost been questioned.

Recently, however, taxes and levies against Ontario Hydro and electric power in general have severely tarnished the concept of power at cost in this province. Water rental charges, $102 million; Ontario Hydro's debt guarantee, $133 million; rural rate assistance, $100 million, and the Elliot Lake bailout, $65 million are all examples of how provincial governments have subtly eroded the principle of power at cost.

These levies are nothing but instances of governments using electric power to finance pet programs and policies at the expense of the electricity users of Ontario. Electricity is Ontario's lifeblood. Ontario has prospered because of the availability and the economics of electric power. We must not allow shortsighted government policies to bleed Ontario to death.

Bill 118, An Act to amend the Power Corporation Act, contains provisions that do not support and in fact further erode the original concept of the Power Corporation Act and concepts that will be adverse to our customers, and 50% of Sioux Lookout Hydro customers depend entirely on electricity for their domestic energy use.

We recognize the right of the provincial government to enact legislation and amendments to legislation in the interest of the majority of the citizens of the province. While we welcome changes to the Power Corporation Act that will benefit the people of Ontario, we will stand firm against any changes that deviate from Ontario Hydro's mandate to provide electric power to the citizens of Ontario at the lowest possible cost consistent with safe, reliable service.

Ontario Hydro, through its marketing policies since the 1960s, is largely responsible for the problems that we see in our provincial supply systems today. Ontario Hydro aggressively sold and still sells electricity and in fact openly competes with other forms of energy. The water heater rental program, declining rate structures, rural rate assistance and many of the current incentive programs are all forms of competitively marketing electricity.

Ontario Hydro's marketing policies smack of a desire to build, control and maintain an empire. Ontario Hydro has no place in the marketing of electricity and certainly has no place in the marketing or promotion of other forms of energy. Energy must be a market-driven commodity.

Provincial energy policies, whether enacted through Ontario Hydro or other provincial agencies, must be fair and consistent for all of Ontario's citizens. Policies and programs that favour conversions to alternative fuels, to alternative heating systems, or for that matter any programs that are not universally available, do not benefit the majority of Ontario's citizens, and most programs are not available universally. Not everyone can afford to convert to an alternative fuel or an alternative heating system. Not everyone has access to alternative fuels or alternative heating systems, and not everyone benefits when plant-specific conservation installations are paid for by Ontario Hydro or the province.

The programs proposed through Bill 118 and many of those in place today are driven primarily by fear created by Ontario Hydro, by vocal minority special interest groups, and by the policies of this and past provincial governments. The programs proposed through Bill 118 do not consider the rising summer demand in much of Ontario. Elimination of electric heating loads may not only be unnecessary but will be detrimental to the economic health of Ontario's electrical utilities, to Ontario's economy in general, and devastating to this utility.

Sioux Lookout Hydro has just completed a voltage conversion program to allow extra kilowatt load on our system. This program was paid for by long-term debenture financing and is reflected in our rates. Elimination of kilowatt-hour loads will negatively impact on our economics as well as the economics of Ontario through higher kilowatt-hour unit costs and lost jobs in the electrical industry. Elimination of peaks, however, constitutes sound energy management and will save Sioux Lookout and Ontario citizens megadollars. Energy conservation must also be market driven.

The Power Corporation Act and any amendments to it must be consistent with the original intent of the acts preceding it, that is, to provide power at cost. Bill 118, as it is written, is not consistent with the original intent of the act.

We propose that the following amendments be considered: that Ontario Hydro stop financing any form of energy management or conversion programs; that Ontario Hydro stop marketing or promoting the use of electricity; that Ontario Hydro's rate-setting policies accurately reflect demand and kilowatt-hour consumptions; that Ontario Hydro be responsible for the supply of electric power to municipalities and that municipalities be solely responsible for the distribution of power to end users, and that, as the Municipal Electric Association represents over 75% of Ontario's electricity users, MEA representatives form proportionately the board of directors of Ontario Hydro.

In closing, I would like once more to commend the government for allowing us to participate in the design of this legislation. As a municipal utility and an active member of MEA, we voice our strong concern with the current state of electric power and the energy management programs in place in the province today, with the structure and direction Ontario Hydro has taken and with the position this government has taken on the future of electricity in Ontario.

We strongly endorse the active role the Municipal Electric Association is taking in representing the municipal utilities in the province and would ask that the government deem mandatory the involvement of the MEA in all matters related to electrical energy. Sioux Lookout Hydro is completely committed to the maintenance of a safe, reliable electrical system through demand reduction and though prudent conservation measures.

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Many years ago Sir Adam Beck, a father of electric power in Ontario, said:

"The generation and transmission of power on a wholesale scale is dealt with by a commission which, although appointed by the government, acts independently in the capacity of trustee for the partnership of the municipalities. The basic conception of the whole municipally owned electrical undertaking, as administered by the Hydro Electric Power Commission of Ontario, is a partnership of municipalities formed to obtain power at cost."

Sir Adam Beck's statement was and must once more become the basis of electric power in Ontario.

Mr McGuinty: Thank you for your presentation. It is a particular pleasure for me to be here, and I am sure it is for a number of the other committee members who have not had the opportunity to visit your community before. As well, I am particularly interested because yours is the only community we will be visiting during the course of these hearings which is not supplied with natural gas, so I would like to direct my questions to that area. I understand that you supply hydro to approximately 5,000 customers. Is that correct?

Mr Bath: That is correct.

Mr McGuinty: And about half of those depend entirely on electricity?

Mr Bath: That is correct.

Mr McGuinty: Can you tell me something of the cost of oil heating here and how much more or less expensive it would be to heat by oil?

Mr Bath: The last time I compared oil heating, it was approximately the same price as electric heating.

Mr McGuinty: What about the other source of heat up here, propane? Is that more expensive?

Mr Bath: Yes, I believe that propane is approximately 130%, 125%, more than electric.

Mr McGuinty: If the government proceeds with Bill 118, how do you think your customers are going to feel if they in effect will be financing through their rates conversion programs in communities which are supplied by natural gas, which will allow customers in those communities to switch from electric to natural gas but your customers will not have access to that kind of program?

Mr Bath: I do not think our customers will feel very good about it. Our hydro rates are certainly high enough already because of the conversion program we have gone through, just because of the size of our community and our demand loads. I certainly do not think they would be very susceptible to agreeing to that type of legislation.

Mr McGuinty: If your customers were going to switch to some alternative energy, what would that be?

Mr Bath: We really do not have one. Propane or oil are the only alternative energies we have, or else I think our most efficient system is to upgrade and make our electrical systems more efficient and continue with electricity.

Mr McGuinty: Are there any programs in place now? Is it possible for your customers to receive any subsidies for any kinds of energy conservation programs?

Mr Bath: Yes, there are. There are programs in place for the installation of heat pumps, which certainly do not apply to everybody within the community. There are programs we will be introducing that will allow us to upgrade electrical systems within our residences.

Mr McGuinty: All right, thank you. Those were my questions.

Mr Conway: Just as a matter of interest, how many people would use wood either as a a full or partial heating system in Sioux Lookout?

Mr Bath: I would suspect about a third actually use wood, and probably not all those are using it full-time. I think probably 20% would use it as a relatively full-time heating method.

Mr Conway: Would I be right in saying that if hydro rates continue the pattern of the last couple of years, along a projected double-digit increase over the next two to three years, the amount of wood burned in the Sioux Lookout area would be sharply increased?

Mr Bath: No, I do not think so. It was about 10 years ago, when hydro rates first started climbing and people were more energy-conscious, I believe, and wood did pick up quite significantly then. What we are seeing now is that most people, even with the high rates, are converting away from wood just because the cost of wood is certainly high. Even though we are right in the bush it is still quite an expensive fuel by the time you get it and process it and burn it. With the environmental problems coming out of wood burning, we are finding that people living in neighbourhoods with wood burners are starting to lodge complaints because of the smoke.

Mr Conway: But what is my heating bill in this community if, let's say, I have a standard 12,000-square-foot bungalow or house? What is my total electric bill for the year going to be this year, roughly?

Mr Bath: The heating bill?

Mr Conway: Yes, my electric bill.

Mr Bath: Your electric bill would be in the neighbourhood of $2,000.

Mr Conway: We are going to put 35% or 40% on top of that over the course of the next two to three years. That is going to put another $800 or $900 on top of that. I would expect the market forces are going to make people do some things, particularly in tough times, so I am trying to think of what they will do. They might think the local commission is a wonderful group, and I am sure it is, but that is $800 or $900 over a couple of years, when you may be losing your job or not getting as much employment as you might like. I come from rural eastern Ontario. The market certainly seems to be pretty active right now with these kinds of increases under way and projected. I am just wondering whether that may be the case here, and if it were, what would I do?

Mr Bath: We hope that people will start to use the energy a little more wisely, and we feel they will with the increasing cost -- that is an automatic thing that will happen -- and also use it wisely by upgrading their houses. If we want to talk about houses, they will upgrade their houses and increase their insulation and also increase their weather-stripping and whatnot. We hope they will use the energy more wisely and reduce their bills.

Mr Conway: Is your commission actively engaged in these kinds of conservation and other policies?

Mr Bath: Yes, we are. We are starting a program in a couple of weeks, and it will carry on until --

Mr Conway: So what are you going to offer me? I am one of these consumers who is in a bad way. I just lost some income and I have these bills and I am going to stick with electricity because it is my only option. What kind of deal are you going to make me?

Mr Bath: We are going to do an energy analysis of the structure -- your house -- and from that try to determine what we can do to your house to increase its energy efficiency and possibly upgrade your heating system a little bit so it will be more efficient.

Mr Conway: How much baseboard heating would you have in Sioux Lookout? Are most people who use electric for heating purposes on baseboards?

Mr Bath: I suspect about 50% of our electric heat is baseboard.

Mr Conway: And the rest is forced air?

Mr Bath: That is correct.

Mr Jordan: Thank you for your presentation and the general knowledge of the Ontario Hydro system, as you have shown through the different points you have brought out in this presentation. I would like to dwell on three of them, if I might, starting on page 2.

Ontario Hydro aggressively sold and still sells electricity, and in fact openly competes with other forms of energy. Prior to that, you felt Ontario Hydro had more or less been responsible for creating a problem. I could partially agree with that, but on the other hand I would like to put on the record that I believe Ontario Hydro, in its marketing program back in 1967 and so on, was basically concentrating on what we refer to as off-peak load. Your sitting reserve was there to handle the peak. Basically we were giving it something to do in the off-peak time in supplying the kilowatt hours, which was a cash flow to the municipal utility. Would you agree with that?

Mr Bath: Yes, I would agree with it, if that was what was happening. It is possible that was happening then. I was not there then. I do not believe that is what is happening now so much, because of what Ontario Hydro did in those days, but it is possible that is why it was set up.

Mr Jordan: Would you see that as a subject that could be looked at?

Mr Bath: Or, as we would agree, we should be filling in the valleys. We have to shave some peaks off because that is where the big savings will come from. But we definitely have to fill the valleys to make our equipment operate at higher efficiencies, higher power factors.

Mr Jordan: Is your commission presently interested in looking at ways of filling the valleys and controlling the peaks?

Mr Bath: That is what we are doing by some of our proposed furnace upgrades and proposed heating system upgrades. We will be mostly shaving peaks. We do not feel we are going to fill our valleys too much with that, but we should be decreasing the size the valley, or the peak, anyway.

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Mr Jordan: I was thinking of the new technology available to control, for instance, baseboard load at peak times with a controller in a central location. It could send a signal by radio to cut out the heat for that 20 minutes. If that was a known factor to people, they would be willing to accept it, knowing there was that much of a saving to the utility.

Mr Bath: We have not actually addressed anything like that yet. We are setting up a new system this year that will allow us to monitor our heating systems that way. We really probably have not looked at it that far ahead, that we will do it by that method.

The problem we see with some of the conservation techniques is that the customer does not actually see the benefits immediately. He will see the benefit in the long term, certainly, but he does not see the benefit immediately. It is going to take a little bit of a selling job and we are not quite that far along yet.

Mr Jordan: The other paragraph I would like to refer to is at the bottom of page 3: "The programs proposed through Bill 118 do not consider the rising summer demand." I personally think that is very important because of the air-conditioning load and the different shift of the peak.

Mr Bath: That is exactly what we are concerned with. With today's technologies and today's buildings and today's demands by customers, air-conditioning loads will not decrease just because there is a hydro shortage. There will be air-conditioning loads and they are going to increase. They will cause a summer peak. If we slash our winter load and get rid of it, then all we are really doing is shifting the peak to a different time of the year and nothing is going to change.

Mr Jordan: But you are losing the revenue from the kilowatt-hours of the winter peak.

Mr Bath: Most important, we are losing the revenue from the kilowatt-hours. Exactly.

Mr Jordan: So your unit cost has to go up.

Mr Bath: Exactly.

Mr Jordan: The other point is on page 4, the fifth paragraph, "That Ontario Hydro be responsible for the supply of electric power to municipalities and that municipal utility commissions be solely responsible for distribution of power to end users." To me, that is exactly what Ontario Hydro was originally commissioned to do. As with other things in a municipality, our provincial governments have been coming in and imposing programs and sometimes subsidizing them, but without due respect for the elected officials at the municipal level.

I personally would like to see us return Hydro to that mandate of the generation and transmission of power as a wholesaler and let the elected representatives locally distribute it.

Mr Bath: That is exactly how we see it. We feel we are in a better position to monitor our own market. Perhaps Ontario Hydro wants to spend money we do not particularly agree with. We feel we could spend it better. We could spend it where we feel it is needed. Ontario Hydro should deliver the power to us and we will look after it from there.

Mr Jordan: Finally, on page 5, your last paragraph frames up the whole framework of the Hydro-Electric Power Commission of Ontario, Ontario Hydro, the Power Corporation Act as amended. The whole thing is in that last paragraph.

Mr Arnott: Thank you very much for your very insightful presentation. I was pleased to see that a number of times you repeated the concept that energy must be a market-driven commodity, because I could not agree more.

You did not touch upon the aspect of the bill that gives the minister of the day, the Minister of Energy, the power to send policy directives which must be binding and which must be, I believe, implemented efficiently and immediately, as it says essentially in the bill. How do you feel about that aspect of Bill 118?

Mr Bath: I think power at cost quite fully explains it. Ontario's mandate is to supply power in a safe, reliable manner. When we add anything to that mandate, we are changing the concept of power at cost. I guess that is why I did not put it in there. I left it out intentionally. I said it so many times that I got tired of saying "power at cost."

Mr Wood: Thank you for making your presentation here. I would like to start off by saying I am pleased to be here as part of the committee and to listen to your presentation.

As you are probably aware, Ontario Hydro has built up an enormous debt over the years and a lot of it is because of nuclear power. When our government was elected, a decision was made that a moratorium on nuclear power be put into effect. About half the latest increase is effected by nuclear power, to pay for the nuclear power stations that are coming on stream or that are on stream.

You referred to the $160 million that was put into Elliot Lake as a bailout, compared to the $1.2 billion it would have cost to continue those contracts at market value for uranium. I just want to know what your comments would be on the $160 million to help out the community by phasing out the purchase of uranium from Elliot Lake compared to continuing it at $1.2 billion.

Mr Bath: I feel the $65 million is purely a social welfare move. There is no other way I can look at it. The $1.2 billion was a business transaction between Ontario Hydro and Elliot Lake. Certainly Elliot Lake was going to suffer because of it, but I do not think that suffering should be put on our Hydro bill. It should possibly go into our tax structure as welfare or social restructuring, whatever is required, but I do not think it should be added on to the hydro bill and in effect hidden in the hydro bill. If the $1.2 billion on uranium had been spent and hydroelectricity had been produced, then theoretically, kilowatt-hours would have generated revenue and it would have worked itself out, but this $65 million is a straight lump sum put into their welfare system.

Mr Wood: Along the same lines, although you did not mention Spruce Falls, I am sure you are aware of Ontario Hydro's involvement in purchasing the Smoky Falls powerhouse. That is another community very similar to Elliot Lake. I wonder what your feelings on that are.

Mr Bath: It is probably not fair for me to comment at all. I am really not too aware. I am aware of this happening and I feel the same way. If they bought power then they should pay for the power, but they should not pay for anything else. I really do not think I should be commenting on it, though.

Mr Wood: The amendments that are being brought forward to Bill 118 are in a sense making Ontario Hydro directly responsible to an elected body, which is the Ontario government. We had comments yesterday during presentations that the language that is being used in Bill 118 was not nearly strong enough to bring the board of directors and the chairman of Ontario Hydro to answer to the government, to be responsible. I know you have made some recommendations, but do you feel the bill itself is going to do what the government intended it to do, that Hydro will take some direction from an elected body?

Mr Bath: If the Ontario Hydro board of directors of the past is any indication, I would think probably not. I do not know how you can lay authority on an elected board. They are elected. The people have elected them in trust. I think that is the amount of the authority they have. Obviously, if people do not trust them, at the end of the term they will not be re-elected. I think that with the board of directors of Ontario Hydro the same concept would apply. Is that the question you asked me?

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Mr Wood: Yes. During your presentation you were saying you felt that power at cost -- but the way we have seen Hydro operating under previous governments, it has built up an enormous debt load that has to be serviced, a $30-billion debt. A lot of it is for nuclear power stations. There are different versions: whether they are efficient, whether they should have been built in the first place, one thing or another. Do you not feel that the government, because it is responsible for the debt Ontario Hydro builds up, should have some control over the way Hydro builds up a debt of this kind?

Mr Bath: They would have if the elected members were represented. I have suggested that MEA representatives become 75% of the board. Then you do have at least 75% who are elected people representing the citizens of Ontario. In that way the citizens of Ontario certainly have some control over Ontario Hydro.

The Vice-Chair: I would like to thank you for your presentation. When we get this all boiled down and get through clause-by-clause, we will be sure to forward you a copy for Sioux Lookout Hydro.

Mr Conway: As the next witness is coming, I would like to ask the parliamentary assistant -- we do not need to take any time now, but before the afternoon is out, I would like somebody to explain this figure of $1.2 billion that keeps coming up in some of the questioning. I am totally perplexed by that number. Just for my own elucidation I would like somebody to explain that number before the end of the day.

The Vice-Chair: Certainly.

ATIKOKAN CITIZENS FOR NUCLEAR RESPONSIBILITY

The Vice-Chair: The next group is the Atikokan Citizens for Nuclear Responsibility. Please introduce yourself for the sake of Hansard.

Mr Nolan: Good afternoon, and thank you for inviting me to these hearings. My name is Glenn Nolan and I am representing the group Atikokan Citizens for Nuclear Responsibility. Just to give you a brief outline, ACNR has been actively involved in energy issues, particularly nuclear, for the last 13 years. We still think the possibility of Atikokan being targeted for high-level radioactive waste is a significant reason to maintain our group.

I am not going to go into particulars on each individual point. I am just going to talk about the reasons the changes to the Power Corporation Act should be implemented. Essentially what Bill 118 suggests is that Ontario Hydro should become more accountable for its actions and also look at conservation or demand-management methods through conservation. Both of these are a direction change from their present mode of operation.

Once this act comes into place there will be a significant change to the way they operate compared to the way they do business right now. I think they and other groups that oppose the amendments are probably frightened of the change they are going to have to go through. They are frightened of the loss of control. They are frightened of being more accountable to the public. In some ways they are frightened of the whole aspect of energy conservation. I think it is time that they, as the saying goes, wake up and smell the coffee.

Since the early 1960s, Ontario Hydro has followed the direction of large-scale electric production, and the only reason for this is so they could sell more electricity to unwilling, uneducated in energy matters, customers. People just do not understand the cradle-to-grave reality of electrical production. It is harmful to the environment, it costs consumers enormous amounts of money, and all aspects of electrical production, as I mentioned, cradle to grave, should be looked at.

As was mentioned earlier, Ontario Hydro is the largest corporation in Canada right now just by its assets alone. It is also the largest debtor in Canada: $30 billion is a significant figure, with an hourly interest payback of $375,000. That is pretty significant. If that was put into energy conservation, that would mean a significant reduction in the environmental costs to Ontario and even globally, because we are an enormous energy consumer.

Environmentally, as I mentioned, we do not even know what the costs are. Hydraulic development floods enormous amounts of land and removes people from those areas that are traditionally their hunting grounds or where they have lived traditionally. Coal-fired generating stations put enormous amounts of carbon dioxide, SO2 and nitrogen oxide into the environment. We do not really know what the total damage is to the environment, and the cost of trying to repair that damage is going to be astronomical.

Hydro continued to expand during the 1960s and 1970s and into the early 1980s with really no accountability. It was not until recently, with the demand-supply plan hearings, that they have actually had to answer to the public in a very significant way.

I would like to point out table 1 in my presentation. This is the estimated use of electricity by Ontario Hydro. In 1975 they projected they would need in the area of 140,000 megawatts of power with a reserve of almost 40,000 megawatts. You can see where the actual figure was; it was down around less than 15,000 megawatts. That is a significant difference. Right until 1989 their estimates were still exaggerated from what the reality was.

The only reason Ontario Hydro and the Municipal Electric Association consider expansion in need is because of their promotional packaging of the need for electric energy; for no other reason. It should not be a market-driven commodity. It should be something that is used because of need, and the need has been exaggerated by Ontario Hydro and the Municipal Electric Association.

The rates are going to go up, are going to continue to go up. We are going to see an enormous amount of difference between the price of natural gas for heating as opposed to electricity for heating. The significance of cost and environment should be looked at.

We are in a world that is changing incredibly fast -- we have seen countries disintegrate and new ones being formed -- and Hydro is going to have to change as well. It is going to have to be fiscally responsible and at the same time promote and push stronger energy conservation methods. Of course it is a radical change, and any change is scary for people. They can look to the United States, to some utilities down there, they can look to BC Hydro for some of the conservation methods that are being used elsewhere. They are still running their own ship. They still do not look at how other organizations are doing things.

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In the United States, public utilities actually save money by not building new power generation plants and then they pass those savings on to the customer. As it is now, they want to promote more nuclear power, they want to promote more development to increase their debt. It is not just the customers who are paying, it is all taxpayers in Ontario when you consider that over half the debt in Ontario is in the pocket of Ontario Hydro.

There have been recommendations in the past. I hope these hearings will significantly increase the accountability of Ontario Hydro. In the past when they have had task forces, commissions and public hearings to try to figure out some answers for making Ontario Hydro more accountable, they came up with some amendments that were ignored, or the ones that were implemented -- for example, the Ontario Energy Board Act was changed so that Ontario Hydro would have to tell the OEB it was going to have another rate increase at least eight months in advance. The OEB would then go public with it and, four months before the change, would table a report. It was just a recommendation, but it is important to note that the OEB was instructed to only review and make recommendations on rates; it does not actually set them. It is different from the gas rates, which they actually set. Hydro has retained the authority to determine its own rates. To me, the OEB has more bark than bite.

The bottom line to these amendments to the Power Corporation Act is that Ontario Hydro will be more accountable to the government of the day. While the Power Corporation Act is still very limiting, we have to start somewhere. There has to be an effort to change the way we are going because we just cannot continue on this route. Accountability to the public by the government is a step towards a more democratic and fair system.

As I mentioned earlier, Ontario is one of the largest energy users in the world. Canada is second only to Norway. In Canada itself, Manitoba and Quebec use a little more per capita, but we are still way up there. One of the implications is fuel switching. If we were to switch 500,000 electrically heated homes in Ontario to cheaper, cleaner fuels, we would ultimately save the customers money, we would save the corporations money and we would cut greenhouse gas and acid gas emissions significantly.

I will give you an example: Between 1975 and 1991, homes heated by electricity were billed a total of $8.94 billion. If these same homes had been heated with gas, or oil if there were no gas service available, they would have paid a little over $5 billion. That is a real saving of almost $4 billion in costs to those customers, and also a significant saving to Ontario Hydro for not having to produce more electricity.

Looking at the environmental side, for the same time period, heating with electricity contributed between 119 million and 193 million tonnes of carbon dioxide. If the houses were heated with gas, it would be between 53 million and 120 million tonnes of carbon dioxide. That is a significant reduction: almost 50% at the high end of it. The saving in dollars could have been almost 78% over the same time period for the customers.

Ontario Hydro has laid out its plans for 25-year development and it is shown that its costs are usually underestimated. It is looking at $200 billion for all forms of development, but past history has shown us that it generally underestimates construction. It is not just Ontario Hydro; most construction projects that are of a large size are usually underestimated. All sorts of factors come into account, delays of materials and so on, that increase the cost. So if Ontario Hydro is proposing to build nuclear power stations, for example, and I do not know if it will happen, the cost estimated at $60 billion I think will be much higher.

MEA and Ontario Hydro suggest that customers who switch off natural gas will benefit and that the ones who do not will subsidize the customers who do. The fact is that Ontario Hydro has subsidized electric rates for the last 20 to 30 years, so what is the difference? They have also subsidized Atomic Energy of Canada Ltd by giving it millions of dollars to look into research for nuclear development. There really is not much difference in subsidizing for gas as opposed to nuclear. The fact remains that Ontario Hydro has subsidized those electric ratepayers who use electricity to heat their homes and at the same time the ratepayers have paid almost $4 billion more to heat electrically over the last 15 years.

I would like to point out a couple of examples that I do not have photocopied. The first one is the 52-watt lightbulb. If they were more accountable, I do not think they would have gone ahead with it. They sent them out to -- I am not sure -- every household in Ontario. I did not get one; I do not know why. They sent out the 52-watt lightbulb to every home in Ontario. The cost was $7.5 million. The projected energy savings if people actually replaced 60-watt with 52-watt -- give and take, a 40-watt is going to go out and they are going to put a 52-watt bulb as the 40-watt replacement -- they estimated as the best possible scenario they would save $5 million. That is just not acceptable, and this is what they try to do to so-called encourage the consumer to use energy efficiency and conserve energy.

The second example of accountability is the Goldfarb report that came out in, I think it was, August 1989. It was a secret document that the president at the time, Mr Franklin, said he did not know anything about, and other top-level executives said they did not know anything about, even though they were at the meetings. Goldfarb is a consultant who looked at how people in Ontario look at the need for a new supply of energy.

The recommendations came out that people felt there was no need for new power plants because energy efficiency would come on stream and people would conserve just out of their own choice. But on page 9 the recommendation to sell need that Ontario Hydro actively promoted was to encourage blackouts and brownouts. This happened in the Christmas of 1989, or it may have been 1988. I think it was 1989. If they were more accountable, would they do this?

In conclusion, I would like to emphasize the importance of reducing our electrical dependency. Economically it just does not make sense. Environmentally it makes sense to switch to cheaper, more economic and cleaner fuels. Do not be swayed by believing groups that are just looking out for themselves or their own organizations. Keeping the status quo will benefit no one over the long run. Let us use the past so that we learn from our mistakes as we look towards the future.

1520

Mr Jordan: Thank you, Mr Nolan, for taking the time to come and represent your group and for the time you have spent in preparing your presentation.

I think on three or four different occasions you have referred to the accountability of Ontario Hydro to the people of Ontario, to the customers. Mr Bath, in his presentation, which was just prior to yours, suggested that members of the Municipal Electrical Association be members of the board of directors, that a percentage of the board be made up of those commissioners.

You have a hydro commission in Atikokan, do you not? How would you feel if one of your commissioners were one of the board members in Toronto who was helping to devise policies that were acceptable to people and other commissioners across the province, thinking of the old concept and the concept that perhaps would be good today, where Ontario Hydro authority stopped at the delivery point?

They had authority to generate and transmit, but when it came to the retail part of it, it came under those elected commissioners at that location. So you get right to the customer and that elected person is right there, and if you do not like what he is doing two or three years from now, whatever, he is not there any more. Do you think that would be acceptable?

Mr Nolan: I am not sure how accountable -- are you saying that all the board members would be --

Mr Jordan: No, a percentage of them, so that you would make sure the views of a good cross-section of the province were there. You could not dominate the board, because the board should be represented by industry -- the MEA represents about 75%, so the other people have to be represented also. You would need someone from rural Ontario, someone from industry and manufacturing and so on.

Mr Nolan: I think a wider representation of the general public is needed on the board of directors. I would not have a problem with being on the board with MEA officials or local utilities officials. I think it would be an asset to be in on a board like that.

Mr Jordan: Your main objective is to have some input by the people who are using the product?

Mr Nolan: Yes, essentially.

Mr Jordan: The other thing that has been referred to several times has been the debt. It sounds like a very large debt and it sounds like a cumbersome figure, but actually what we do not do when we are talking about Ontario Hydro debt is talk about its assets. If you look at Ontario Hydro assets relative to its debt, it is like having a $30,000 mortgage on a $150,000 home. A lot of us, if we had that situation, would think we were in pretty darn good shape. When you talk about Ontario Hydro debt, I think it is only fair that you have some knowledge of the assets of Ontario Hydro.

Mr Nolan: I would like to respond to that, in that the assets Ontario Hydro has include nuclear power plants that have to be taken apart, mothballed and stored.

Mr Jordan: May I interject there also? It does include that, but it also includes hydraulic plants that have been written off. They are no longer seen as part of the plant because they have served their time, but they are still producing the kilowatts and the only place they show up in costs is on the maintenance budget. So there is a certain balance there.

Mr Nolan: I know, but the fact is that 40% of our electrical energy comes from nuclear power plants right now and we do have a significant number and they want to expand. The fact is that 40 years is the maximum life of a nuclear power generating station, and what do we do with the waste?

People do not look at that. People do not look at the tailings of the uranium mining. We are lucky. Most of it comes from Saskatchewan right now, but what about the Serpent River first nation? They have to live with the contamination that is a day-to-day problem for them. We have to look at the fact of storing high-level radioactive waste. We have to look at the storing of the irradiated components in a nuclear power reactor. To me, those assets are liabilities and they are not looked at as liabilities. You cannot call them assets.

Mr Klopp: Thank you for your presentation. You brought out some very good points. The speaker beforehand talked about and we have talked about for the last two days power at cost. In my business, my neighbour has $50,000 worth of equipment. He does about the same amount of work on his land, and I have $40,000 worth of equipment to do the same work. I guess you could say we both have our equipment at cost, although it is different. I understand this association is going to do some conservation work, or at least ask people to look at conservation. I assume that is going to be figured in their power at cost locally.

Sir Adam Beck talked about power at cost. In fact yesterday there were some people who said, "Well, nuclear plants have gone up in price." It was commented on by a colleague who I assume is far more of a historian than I am, and he said, "Well, Sir Adam Beck would have been accused also because he estimated the first plant would cost $100,000 to build." But even back then engineers were wrong, with inflation and everything. So the first plant cost more money, but it was still power at cost.

I think you bring out some good points that all the costs have to be figured in. If Ontario Hydro were to spend $1 billion to save energy but would save $2 billion in electrical use, ie, not have to build another power plant, would you consider that a good deal? Would you consider that part of the mix, spending $1 billion helping to be the mix of power at cost?

Mr Nolan: I think that would be a step in the right direction. If Ontario Hydro spent money on conservation the same way it spent money on development, I think we would be much further ahead than we are now. Right now they spend about $3,300 to make a kilowatt-hour of energy and if we were to ask for that amount of money for conservation over the same amortized 40-year period that they do to build nuclear power stations, then we are going to be saving the idea of building new power-producing stations and at the same time we are going to be reducing emissions and are going to be more efficient as a society.

As for power at cost, the power at cost is going up. Adam Beck, sure, generates a fixed amount of electricity right now, but the reality is the costs of every new station they bring on line are higher. I cannot remember the exact figure, but I think it is half a cent per kilowatt-hour to produce electricity at Adam Beck, but they sell it for five cents a kilowatt-hour or something like that, so they actually save money. The cost avoidance that Ontario Hydro talks about is actually about that.

They average out the high cost of nuclear power production and the low cost of the old hydraulic stations that are paid for and the only real costs are maintenance and staffing. They average it out to about five cents but we are getting more and more new stations being put on line that are more and more expensive to produce. You are going to have higher cost avoidance and higher cost of production.

1530

Mr Cleary: I would like to know a little bit more about your organization. Once you have made your recommendations, who do you recommend to?

You also said it makes more sense to convert and subsidize to change fuel at the expense of all users of Ontario Hydro. I will just give you an incident from the area I come from -- it is a fact because I saw his bill -- this man runs a big farm operation. His monthly hydro bill was $1,800. He brought it in and showed it to me. He has no access to gas or anything to convert to. This particular gentleman sells his corn and his barley at under $100 a tonne at the present time. I would like your comments on that.

You say Bill 118 will make Ontario Hydro more accountable, and I would just like you to explain that to me too.

Mr Nolan: First of all, I think the gentleman you are referring to could look at some conservation methods, whether it is lighting or using different types of motors that are more efficient -- just upgrading his basic electric needs. There are better refrigerators out there. Those costs should be handled by Ontario Hydro. If he were to switch, there are other fuels than natural gas. He could use oil or he could use propane for heating. Those are real alternatives to electric heat. Electric heat is not the only thing, but the MEA, the utilities and Ontario Hydro will have you believe that is it, that it is either gas or electric.

If we have more people on the board of directors, we are, I hope, looking at a wider number of people who represent different factions of society, more representation from non-technical groups like women's groups, native organizations, the MEA. I do not have a problem with putting my so-called opponents on a board like that as long as we all work together to encourage what I consider a cleaner society.

If the deputy minister sits on the board as an observer, a non-voting member, that is someone who has direct access to the government's policies and directions who can explain to the board at the time. If some issue comes up, the deputy minister can make some clear statement about what the directions are, what the policies are of the government so the board would not be confused. I would have to look at the rest of them to actually get a clear understanding or to make comments on it.

The Vice-Chair: Mr Conway, very quickly.

Mr Conway: Thank you, Mr Chairman. It is not as though we are pressed for time this afternoon. I am not going to be difficult, but to justify the taxpayers bringing us here -- I am very interested in this presentation. I think I am probably the only one of this group who was there almost at the beginning. It was 12 or 13 years ago that I spent some time in Atikokan one winter week when ACNR was presenting before a previous version of this committee concerns that Mr Nolan has, I think, very effectively reiterated today. I am pleased to have an opportunity, a decade later, to resume the debate. I have a number of questions, but I am very sensitive to the Chair's concern about time.

There is an element of that old-time religion in this debate and I think you have been very helpful in presenting ACNR's views on what is for many a fundamental crux of what they would argue is the only kind of energy policy we can have in this province. I would submit it is a very significant part of what this whole exercise is about, that is, the theological belief many have that we must not, as a matter of religious commitment, among other things, have any more nuclear power in this province. It is passionately felt. Quite frankly, I believe it is the view of the government, and as a democratically elected government it clearly has that right. I think ACNR has said, and you have repeated today, the views I have heard on previous occasions.

You started your presentation, Mr Nolan, by dealing with the question of greater accountability. I am intrigued by the whole concept of accountability, because the government has quite rightly advertised Bill 118 as an improvement in public accountability. My difficulty -- I am just a farm boy from rural eastern Ontario; I am not learned in the law. I look at this legislation and I try to find precisely how and where it is Bill 118 provides for greater and better accountability. I do not see it. My friend the parliamentary assistant would rightly observe that the deputy minister now becomes a non-voting member of the board. I think that is interesting but it does not impress me as being particularly relevant. As you raised the issue, my question to you is how Bill 118 specifically improves the accountability of this gargantuan public corporation to the people of Ontario.

Mr Nolan: Once barriers are taken down, whether in a country like Russia or in a corporation that is pretty well running on its own right now, you have greater flow of information. In fact, in 1984 Vince Kerrio, when he was the Liberal Energy critic, stated in an interview or was quoted in the Toronto Sun that Hydro could ignore a request for information. They could also ignore the recommendations of the OEB and pretty well had absolute control over the direction they were going in. As I said before, I think and hope that if we have greater representation on the board, not just a select group of people -- if the 22 members of the board were all members of the Municipal Electric Association, I would have a serious problem with that.

Mr Conway: But in the beginning the Hydro-Electric Power Commission of Ontario, in terms of its board of directors, was made up entirely of members of the Legislature. In fact, for a long time the board of directors consisted of ministers of the crown who held elected office. One of the questions I have, because there is a great interest, rightly so, in the business of accountability, is that I wonder whether we should return to the good old days from 1905 to probably about 1950 when in fact the only people who got to sit on the Hydro board were people who were elected to the Legislature and appointed by the Legislature to the Hydro-Electric Power Commission.

I submit that Adam Beck, one of my favourite characters, was one of the most forward-looking people the province has ever known, but I do not think there was ever a more colourful, more determined tyrant in Ontario, a man who was quite prepared to blackmail premiers and badger legislative assemblies. The tactics Beck employed as an elected official were, I suspect, not ones any appointed board member would even dream of, but my question remains: Why would we not tie the accountability directly to people who were elected so that if they behaved badly, if they engaged in conservation schemes that cost more than they returned, you could simply throw the rascals out.

Mr Nolan: Good point.

Mr Conway: Thank you.

The Vice-Chair: That was a very short question, Mr Conway. I compliment you on the way you dealt with that in such an expeditious manner. Does anyone else on the committee have any further questions? We really do not have that big a time constraint.

Mr McGuinty: Why do I not take a moment?

The Vice-Chair: Our next presenter is here.

Interjection.

The Vice-Chair: You have lots of time. Okay, then.

Mr McGuinty: On that gracious note I will continue. Mr Nolan, I am very interested in your presentation as well. I want to try to paint a little picture for you. Let's say I am elderly pensioner and am receiving a fixed income. I pay property taxes and am suffering under a terrible burden because my property taxes have been going up to the point where I might be forced to move out of the house. I also pay my utilities, so I pay my hydro bill.

At some point the government, which is made up of politicians, decides for political purposes -- that has been known to happen -- that it is going to use Hydro rather than government funds in order to make some kind of expenditure. So the expenditure does not show on government books, it does not show up in a deficit. It helps the government politically, but it hurts me because my hydro rates are going to go up. Had it put taxes up, I would not be affected as much as somebody who is earning more than me, because of course you pay taxes as a function of your income: The more you make, the more you pay. But when it puts up my hydro bill in order to subsidize something which is probably a government initiative, because government is now running Ontario Hydro, I am going to be hurt more.

You probably know that Bill 118 is going to remove the only protection I have between me and these politicians. Those are my directors who are legally accountable to me. Bill 118 is going to provide that when the government issues a directive, the only way the directors can keep out of hot water is to go along with the directive, because if they do they will be exempted from any kind of liability. Do you really have that much confidence in politicians running Hydro?

1540

Mr Nolan: I have some stories about politicians, but I am not going to talk about them here.

Mr Conway: But you can throw them out.

Mr Nolan: You can. Also, having so-called government programs funded by Ontario Hydro that have nothing to do with conservation I do not agree with, but the payoff period for Elliot Lake was a conservation effort. The reason I believe that is that there are no more tailings involved. The so-called cradle scenario is dealt with and then the production, refining and the eventual disposal of the wastes is not dealt with, so we are looking at cost savings there. Also, we know that in using Ontario Hydro's nuclear power plant the costs continue to go up. They continue to have breakdowns and they continue to have problems, so the cost should be factored in there of using more nuclear energy. Paying them whatever the figure was -- somebody said $65 million -- in some sort of social program ultimately saves the province billions of dollars in cleanup costs and problems associated with nuclear electrical production.

Mr McGuinty: But remember, Mr Nolan, I am the pensioner now and I would rather that come out of the general revenue fund, out of taxes, and not out of my hydro rates.

Mr Nolan: Right now how is the debt being paid? It is coming out of taxpayers' pockets anyway. They are not completely covering their costs through their rates; they are subsidizing the rates right now. They are low right now and they continue to go up. If they continue to go up at the present rate it does not matter if you are a senior on a fixed income or myself who is self-employed: I am going to have problems meeting those payments. Ontario Hydro should be actively promoting switching off of the incredibly dangerous and dirty electrical energy to a more efficient and clean fuel.

I am not going to make any money from this. I am here because I am completely convinced that the direction Ontario Hydro has taken over the last 30 years is the wrong direction. It has nothing to do with me making money out of this and it is not about the people who work for the local utilities and are afraid for their jobs; it is just because I am concerned about the environment and I am concerned about the problems that are associated with coal production, hydraulic production or nuclear electrical production.

Mr Conway: How would you feel, for example, about slapping a special levy of 10% on natural gas users like myself? I do not depend on electricity for space heating so why would we not slap a 10% levy on natural gas users, the revenues of which would go to stimulate interest in solar energy? That is not at all inconsistent with the thrust of this policy. I suspect if that were suggested, natural gas consumers, to say nothing of bond holders for British Gas, would be apoplectic because it would be seen to be transparently unfair.

It is not that you do not want to stimulate more interest in research and development in those kind of renewable sources of energy -- that is all to the good -- but the question would be asked: "Why should I pay? Why should Conway and Pembroke pay through their natural gas rate for that kind of highly desirable enterprise?" McGuinty's senior citizen would say it is probably a good thing we are doing some of these things for Elliot Lake and the Smoky Falls plant, but the question is one of equity. Why should I pay a disproportionate share of that cost because I am wholly dependent on electricity and my neighbour is not at all, or to a much lesser extent? The issue of equity is so transparent in there that I do not understand why it is not more evident to people.

Mr Nolan: I think the fact remains that people make a decision that will in some way benefit them. I make this decision because it is going to benefit me, it is going to benefit the residents of Ontario and it is going to benefit people globally.

As for costs, if natural gas had to be taxed or some sort of supplementary cost was added to it, I would not have a problem. I do not pay that much for gas rates because I have made my home energy-efficient. I have done it on my own and I am going to have a five-year payback period. I put compact fluorescent bulbs in my home before they had the $5 rebate because I wanted to do it and wanted to save energy, and my costs are down. The list goes on. I am doing this and I do not make money like you guys. I am on the same fixed income as these seniors.

The Vice-Chair: I am going to jump in here and this time I am going to call a halt. I thank you, Mr Nolan, for your insightful presentation and the fact that you were willing to stay on the hot seat for an extra 15 minutes for some of the members.

Mr Conway: It was a lot hotter in Atikokan 13 years ago, wasn't it?

Mr Nolan: I heard an interesting thing on the CBC news out of Winnipeg yesterday. It related to moving Parliament, the national capital, to Winnipeg. The 10th reason was they needed the hot air.

BRIAN DELL

The Vice-Chair: Brian Dell and the Golden Red Lake Environmental Group, please. Could you come forward and introduce yourself for the sake of Hansard and the members.

Mr Dell: Two hats, a hat trick; not quite, two thirds of a hat trick: This one here is me and that one is the Golden Red Lake Environmental Group. I am a little bit on the radical side for these people so I opted to first present a very generalized view of Hydro etc.

I would like to express my appreciation to this government for providing a forum for the general public to express opinions, ask questions and help provide answers to these complex problems. As in the old song Sixteen Tons by Tennessee Ernie Ford, Ontario Hydro has basically sold out the taxpayer to the company store -- read "the banks" -- a debt of billions, some estimate as high as $30 billion. That is "billion," not "million." I guess you people are familiar with large figures, but coming from a small town of 5,000 -- if Sioux Lookout can claim 5,000, so can Red Lake -- it is an astronomical figure. It is very hard to visualize these things.

A debt this large makes one wonder about this company's -- I am calling it a company; it is a corporation actually -- performance. We must remember that an estimated $13.4 billion of this debt is tied up in the Darlington nuclear plant, which has not produced one single kilowatt of power to date. This can be fixed however by adding another paltry $10 billion to the pot to make it work.

Debt obligations are one thing, but I shudder to think of the interest we are paying on these mega-amounts of money. Who reaps the interest on this huge debt? Good question. Domestic or foreign banks, pension funds, Canadian institutions, foreign investors perhaps? Some or all of the above? So much for fancy financing.

1550

Let's examine the operating scenario of Ontario Hydro. Here we have a corporation which has a virtual monopoly on electrical power in this province. It has a monopoly on power generating, generator construction, design, transmission, distribution and maintenance of almost all electrical power used in Ontario, not to mention what it exports, primarily to the United States. I am admittedly oversimplifying it, but it is a virtual monopoly.

To top it all off, Ontario Hydro also has the power to charge whatever amount it likes for its services, as you can see by the latest 13% hike. If this is not a total monopoly, what is? Most businesses I know would love to have such control over production, markets, distribution and regulation of this commodity.

How can such a sweet deal go wrong? How can it get so deep in the hole? I know I will get an argument on whether we are in the hole or not, but I am assuming that nuclear power plants cost just as much to shut down as to start up, not to mention the disposal of nuclear waste, which is why I am here in the first place and how I got interested in this. They have been trying to put it in Red Lake for about 18 years.

How can such a sweet deal go wrong? Now add to this positive scenario a generous sugar-daddy, the Ontario taxpayers and ratepayers, to bail Hydro out of any costly mistakes, cost overruns or whatever, or possibly mismanagement -- I do not know how many lawyers are here; I could get sued for this -- such as nuclear power and other megaprojects, perhaps borrowing at bad times, high interest rates, borrowing at the wrong time, building at the wrong time, high waste.

This is truly a vision of the Ontario Hydro tail wagging the Ontario government dog, and it seems our present government is trying to come to grips with it. I do not necessarily think this is the way to do it, but they are trying. I support this government's efforts to try to control Hydro, but I fear it is too late for halfway measures, such as these amendments, to make much effect.

In the private world, when a large entity such as Hydro ceases to be financially responsible, it goes bankrupt or becomes restructured. Any large corporation, General Motors, for instance, has ways of staying afloat; fire half the people, whatever. It is hard for a government to do that. It is hard for a government corporation to do that. But perhaps the corporation should check a few things out with some other CEOs, some private guys who are making it work; Honda, maybe. In my opinion, Ontario Hydro should be restructured. I am not an expert on restructuring companies. I am raising more questions than answers, that is for sure. In my opinion, Ontario Hydro should be divided into smaller, more manageable units -- perhaps; I am not even sure of that -- either public or private or a combination of the two.

Whatever form Hydro evolves into in the future, it must become financially responsible, businesslike and operate with a true regard and respect for its customers and shareholders, who are the people of Ontario.

I would like to do the other part separately, please.

The Vice-Chair: You would like to do the other part separately? Move over.

Mr Dell: I will move over after.

Mr Dadamo: Mr Dell, I thought we were going to get the second one by the time I was going to ask this question, so I was going to say that in book 1, on page 3, the top paragraph, you say, "In my opinion, Ontario Hydro should be divided into smaller, more manageable units, either public or private or a combination of the two." I think that midstream in the paragraph you said you were not sure. Could you explain?

Mr Dell: I am not sure exactly how to do these things. In my opinion, Ontario Hydro is too huge to be efficient. I think it has reached a critical mass, to use a nuclear phrase, a very dangerous critical mass. It is too unwieldy. An amendment such as Bill 118 -- if I were Hydro, I would welcome that bill; it would expand my empire, I think. Anyway, maybe they do; maybe they do not. I do not know, but I think -- this is just my personal opinion.

I come from a small place and I get a certain amount of Ontario Hydro. We have a generating dam 40 miles down the road at Ear Falls. That is the name. For years they have refused to have servicemen locate in the Red Lake district proper, 40 miles away, but have kept their Hydro colony -- Hydro colony is the term -- going in Ear Falls. We had a power outage last February, about the fifth. It was something like in the neighbourhood of 45-plus below zero. I have a couple of tenants seven miles away from where I am. I had to go and bring sleeping bags for them. I had to worry about my water lines freezing. The power was off for 12 hours. That is just one little thing, one instance. They have been trying to upgrade it.

I know I am getting from great generalities to small particulars, and maybe trying to justify a political hard-on for Hydro or something, but not really. I think if Ontario Hydro was more responsible to the people of Red Lake, it would have a man in Red Lake who could switch over a transformer properly so that it does not kick out five more transformers. That is expensive. Transformers are $50,000-plus, even little ones. These are -- what? -- 45,000 volts.

Anyway, maybe what I am saying is small is beautiful. Maybe what I am saying is that I do not think Ontario Hydro actually is responsible to the people, especially financially. I do not buy that asset argument that says nuclear plants are worth something. As long as they are working, they are worth something. As long as they are working fine, they are worth something. The lifespan of a nuclear plant is -- what? -- 30 years, 50 years; probably 20 or 30.

Mr Conway: Forty. Ask Leo.

Mr Dell: Okay. I am going to wait till he cools down. I am not going to let him get a word in edgewise.

But anyway, then when you do, when a nuclear plant shuts down, you just cover it over with some dirt or push it into Lake Huron or push it into that park. What is that park called by Bruce -- does anybody know? -- the park that is no longer good because of the radiation? Anyway, I do not know. Shall we say that I am raising a lot of questions? But I, definitely, deep down, think that serious moves have to be made on this problem.

Mr Dadamo: You were talking earlier about finances and how out of control you feel Ontario Hydro is today. We know there is this $30-billion debt. If you were the representative from your environmental group, sitting around this large table in Toronto somewhere --

Mr Dell: He is over there.

Mr Dadamo: But you are over here now. What would you say to these people about this $30-billion debt they have, if you were allowed to speak to these people?

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Mr Dell: I would say that, number one, from a business point of view, you would have to have some kind of an audit to start out with. Okay, what have you actually got? I realize that the demand-supply plan is supposedly trying to have a look at this or trying to estimate the power needs and the power capabilities of Ontario Hydro, basically, but I guess some of the smaller producers also. I think Ontario Hydro really has to be looked at from a basic standpoint: Is Ontario Hydro efficient, is Ontario Hydro responsible, and is Ontario Hydro fiscally responsible?

It is by far the largest part of Ontario that is owned by whomever, Germany, New York, Japan, the Bank of Nova Scotia -- I have no idea.

Mr McGuinty: Mr Dell, I am intrigued by the wording found on page 3 as well, that Hydro should be divided into smaller, more manageable units, either public or private, or a combination of the two. You must have heard of the recent British experience with privatization of their public utility. From what I understand, the net result has been beneficial environmentally. The private power producers are now buying cleaner coal. If they are building new generation, they are building gas-fired. Nuclear is simply not economically feasible.

I am not sure whether it would have the same effect here, but it would appear in that case that they did not look to government to control Hydro, they did not look to the public utility or Hydro's directors to control Hydro; they looked to a force which they saw as being a stronger force: the market force. I am wondering if you think we would benefit from that kind of experience here in Ontario.

Mr Dell: You have a very good point there. Another thing about the British experience, I guess British Hydro, or whatever they call it -- is that what they call it? Is it British Power?

Mr McGuinty: I am not sure.

Mr Dell: It is much easier for a person to be responsible to a smaller group in a smaller area. Maybe that is what it is. Maybe there is a Bristol or Liverpool Power Corp now, where if you had a complaint you would have to talk to London, maybe even 10 Downing Street; I do not know. Maybe even just by the structure they made they became more involved, more accountable and more easily accountable.

You know the old right-hand/left-hand story, where the right hand does not know what the left hand is doing. If you only have one hand, sometimes it is not bad; sometimes it is not good.

Another thing about British Power, though. Apparently they had a heck of a time selling their nuclear plants off. I do not think they did. There are no buyers, not fiscally, not financially.

Mr McGuinty: They have had the same experience with some plants in the United States.

Mr Conway: May I have a supplementary on that? What would you suggest we tell the representatives of organized labour if they were to come and present us with an anxious concern about such Thatcherite privatization?

Mr Dell: We all know what happened to Thatcher.

Mr Conway: I have a feeling the president of CUPE Local 1000 might be a bit nervous to hear this kind of revolutionary doctrine. What kind of advice should we offer to ease the passage into this revolutionary new world?

Mr Dell: I do not know if we can ease the passage. They were trying to ease the passage in the former Soviet Union for a while and it did not work. They ended up kidnapping the boss there.

Mr Conway: So what you are saying is that we take a Yeltsin, not a Gorbachev, approach.

Mr Jordan: I think it is becoming clear that we should ask the question, who is Ontario Hydro? We just had an excellent presentation telling us that it is made up of 314 municipalities with elected commissions that represent the people in those municipalities. I cannot think of anything more democratic. The only thing is that rural people do not have a so-called municipality where there is a commission, and they are dependent on the Ontario Hydro rural office as their representative, or their member for that district in the Ontario Legislature.

Mr Dell: Basically, what you have is a federation, then.

Mr Jordan: Excuse me a minute, but when we say Ontario Hydro is a monster out of control, the definition of "monster" is "a figment of the imagination."

Mr Dell: I did not say "monster." I said "company."

Mr Jordan: But it has been stated that Ontario Hydro is a monster out of control. Some Minister of Energy apparently made it, but I think it is time we got to know the makeup of Ontario Hydro and realize that maybe you and I as customers have been just as lax as some of the people you are referring to in your district who do not know how to phase a switch to the proper size so it does not have a sequence of blowing the other ones down the line and things like that. Those can all be corrected without any major overhaul of the corporation.

I wanted to go back to the fact that in my opinion Ontario Hydro is not a huge monster at all, it is made up of 314 municipalities with elected representatives. The rural areas are looked after by rural offices, which in my experience are very answerable to the member of the Legislative Assembly for that district. If you come into the constituency office with a legitimate concern and I take it to the person in charge and he does not give a satisfactory solution or a satisfactory answer, then it is not very long until someone else is going to know about it and it is going to be properly dealt with.

Mr Dell: How would you as a member for Hydro for Ear Falls effect policy in Ontario Hydro?

Mr Jordan: Does Ear Falls have a Hydro commission?

Mr Dell: No, it is Ontario Hydro. Okay, how would Sioux Lookout --

Mr Jordan: I think Mr Bath earlier made it very clear in his presentation not only how he deals now with Ontario Hydro, but how he would like, as my colleague the member for Renfrew North said a while ago, maybe to go back to the days of Sir Adam Beck when the elected representatives were appointed to the board and answering to the people. These elected representatives could also be made up of the members from the Municipal Electric Association who come right from his town and are answerable to the people.

Mr Dell: The role of a public board is not to have -- I sit on the hospital board. No employees are allowed to be on the hospital board.

Mr Jordan: Excuse me, you misunderstood. I do not mean an employee.

Mr Dell: The administrator cannot vote, etc, and why he sits there is a good question.

Mr Jordan: Not the manager, who is a staff person, but the elected commissioners who look after the hydro in that town. Ontario Hydro should be just wholesaling power to that community.

Mr Dell: But it is the only wholesaler. There is no competition; ie, monopoly. If you do not have competition, you are the only one. How many people in Ontario, seven million or eight million?

Mr Jordan: You might say that about a government with a majority of the seats. But the democratic process is there.

Mr Conway: Or my neighbourhood gas company, more to the point.

The Vice-Chair: I am going to jump in here and put a break in the interaction and ask that we go on to the second brief. I know we have ample time, but I always like to make sure everybody gets something near equal time.

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GOLDEN RED LAKE ENVIRONMENTAL GROUP

Mr Dell: The Golden Red Lake Environmental Group would like to thank the committee for the opportunity to present for consideration its views on the Power Corporation Amendment Act, Bill 118.

It must be stated initially that if, as is commonly perceived, the purpose of Bill 118 -- and this is what the committee thinks is the purpose -- is to make Ontario Hydro more accountable and responsible to the people of Ontario and more subject to their control, and to encourage and facilitate Ontario Hydro's participation in fuel-switching programs which may in turn lead to an improvement in the utility's economic performance and result in greater use of more environmentally benign fuels and fuel systems, then we applaud that effort.

It is important, however, to recognize the significance of the changes that are implicit in Bill 118. The effect of these provisions designed to permit involvement in fuel switching is to allow, perhaps even to pressure, Ontario Hydro to become involved in areas other than the production and sale of electric power. It thus makes possible the encouragement and equalization of opportunity for conservation measures and other energy sources and technologies. Significantly, it also broadens the economic base that is influenced, perhaps even dictated, by Ontario Hydro.

The question that must be addressed becomes, is this a wise move given the history of Ontario Hydro vis-à-vis accountability and public responsibility? Concomitantly, are the provisions for increased public control which are contained in Bill 118 an acceptable tradeoff for the potential increase in Ontario Hydro's sphere of influence and control?

The answer on the basis of available information is no, that is, Bill 118 as currently proposed does not go far enough, or, in the more poetic expression of some disgruntled member in a recent meeting, what this bill is doing is giving a blood transfusion to this dinosaur so it can stomp around on us some more.

Recommendation 1: The broadening of Ontario Hydro's power which is implicit in Bill 118 should be granted only if the act simultaneously places control of the corporation very firmly in the public sector.

Let us examine the bill more categorically.

Structure of the board: While recognizing that the amendments proposed under this bill are focused on a very specific area, we believe it is imperative to examine the complex relationships between Ontario Hydro, the Ontario government, the consumers of electrical power and all those affected by its generation.

Especially since the Second World War, a series of important sectors of the economy have passed into the hands of the state. This has been variously described as a system of state intervention, a system of allegedly ensuring an element of planning within the economy, a system to supposedly monitor that section of the economy and make it accountable to the public. This has not succeeded in Canadianizing the economy nor has it ever contributed to the wellbeing of the public -- that is a little strong there.

In reality, the giant corporations which monopolize key sectors of the economy, when they are nationalized, only make use of the funds of the state treasury, collected in taxes from the public, in order to protect these corporate giants against risks while they can profit from state-funded research and development. The state is also used in the construction of the infrastructure; the state has poured billions into development projects.

Industries can obtain their power requirements at a much lower rate than ordinary people. The state underwrites the cost of construction projects and in the process goes deeply into debt. The extent of borrowing can be illustrated by the fact that 10 years ago Ontario Hydro was the largest foreign borrower on the New York Stock Exchange. The authority of the state is thus used to intensify the concentration of capital, accelerate the annexation of small and medium enterprises and further the monopolization of the economy.

Bill 118 is a classic example of this process. Under the guise of increasing the accountability of Ontario Hydro, it actually opens doors for its further control into other parts of the energy sector. Consequently, the provisions of Bill 118 to increase the accountability and public control of Ontario Hydro must be strengthened.

The increase in members of the board is commendable. However, an increase in membership alone does nothing to guarantee better representation. A director from Toronto cannot be expected to understand or to enunciate the energy needs of the residents of a northern, semi-urban community such as Red Lake, nor can a director from Red Lake be expected to understand or enunciate the needs of a resident of an isolated first nations community even further north.

Recommendation 2: Therefore, Bill 118 should stipulate that appointments to the board will be made on both a regional and a socioeconomic basis. For example, a division of the province into 10 regions would allow for the appointment of two directors from each region, two persons from differentiated socioeconomic backgrounds, thus reserving two seats on the board for the chairperson and the deputy minister.

The significance of the ability of energy policies and practices to impact on almost every aspect of a citizen's life cannot be overstated. At the same time, it should be recognized that the best representation will be given by a director who is directly accountable to those he or she represents. It is therefore not unreasonable to suggest that ultimately the board of directors should be elected on a regional basis. Each director would thus be dually responsible to the public, through election and through policy directive from the elected provincial government of the day.

Policy directives: That Ontario Hydro should be subservient to policy directives of the elected provincial government, particularly until such a time as it becomes an elected body itself, is a step in the right direction.

Broadened energy conservation programs or fuel switching: Bill 118 seeks to conserve energy by using the most appropriate fuel for a particular task. We believe the use of electrical power for space and water heating is extremely inappropriate. The fact that so much of Ontario's heating requirements are met by Ontario Hydro indicates serious mismanagement by this crown corporation. Here, we are primarily referring to the costliness of electrical heat. While we support that part of Bill 118 which encourages the use of the most efficient fuel for heating, we must ask whether a corporation with such a poor track record should be given the task of coordinating the switch. Should it be given the opportunity to broaden its power base through economic leverage?

While we recognize that past policies of Ontario Hydro have created a distorted and economically unjustifiable dependence on electric space heating and that it therefore has some obligation to correct that distortion, and while we understand that fuel-switching costs can easily be paid for by Ontario Hydro with the savings that accrue from such switching, we are not convinced that Ontario Hydro should control the process.

Recommendation 3: That the fuel-switching program be developed and administered by an independent body and that Ontario Hydro be responsible for funding the program with such controls as are deemed necessary by the government of Ontario.

Conservation as addressed in Bill 118 emphasizes energy saved by using the most efficient fuel. Reducing the overall requirements for heat energy by means such as improving the thermal envelope, insulating, adding heat exchangers and using heat sinks etc are a means of achieving real conservation. Only after heating requirements have been minimized should the question of fuel efficiency be addressed.

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Recommendation 4: Overall priority should be given to the real conservation of energy realized by programs which reduce the amount of energy needed for space heating.

There is a tendency for discussions on heat energy to dwell on the major utilities: gas, oil and propane. These are largely non-renewable fossil fuels which not so long ago were a dirty word in terms of cost and pollution. Alternatives such as solar and geothermal energies and district heating, if developed, could go a long way towards reducing our dependency on the non-renewables, as well as electricity. Since they are effective on a small scale, they can easily be implemented without impacting too severely on the environment.

A consideration of megaprojects, with their consequent large-scale economic, social and environmental disruptions and their contribution to massive debt loads, make them unacceptable.

Recommendation 5: We recommend that when implementing fuel switching, a higher priority be placed on research and development of existing and potential safe technologies which are compatible with a smaller-scale implementation.

Conclusion: Bill 118 is a commendable and necessary attempt to place Ontario Hydro into a more accountable and publicly responsible position. However, in order to ensure significant change, the bill must place control of the corporation firmly in the public sector. Therefore, appointments to the board should be made on a regional and socioeconomic basis if the intent is truly to ensure a wider representation of the public's interests.

It is evident that we cannot continue the unrestricted supply of electric power. Implementation of a fuel-switching program is a valid means of achieving this change. Funding of the program by Ontario Hydro is appropriate, but it must be delivered by an independent body to ensure that its objectives are achieved.

In formulating these objectives, overall priority should be given to real conservation realized by initiatives which reduce the need for heat energy. Priority should also be given to research and development of emerging technologies and the utilization of small-scale alternatives.

Bill 118, if it is significantly strengthened by these measures, will be an acceptable means of reducing our dependency on electricity. It should be seen, at best, as a short-term necessity on the way to a more effective and less centralized long-term solution. Thank you.

Mr Klopp: Thank you very much. You make things very clear on what you think are the concerns. I am going to draw into some of the comments that were made.

You mentioned that Ontario Hydro should be more accountable. You even mentioned privatization. I, with some of my colleagues, am a little confused. They have been jumping around. One moment we say to a person here, "I defend power at cost," and we say that is the way it should go, yet privatization means power for profit. In fact, that was even argued among two colleagues on the same side and we brought up about England. I am not so much against the idea of looking at Ontario Hydro to get more strictly working better. In fact, some would say private power might be more efficient, so that the kilowatt costs would not be any higher than what we have with our company here in Ontario: power for cost.

I think Sir Adam Beck was right, though, in his principle of power at cost and not allowing privatization. I am sure they had quite an argument back in those days on that, because they had an election over it. But I am sure Mr Beck did not foresee whoever the board of directors would be in 20, 30, 40 years after he was gone, ie, that in the 1970s, 1980s they would forget they were to represent all groups, from the farmer to a large corporation, and to look, as the original board would, I guess, where there were more elected people who had to partake. I think we should still be looking at that principle.

An interesting point is that you say here you actually think Bill 118 is not even strong enough to mandate Ontario Hydro to do more conservation. On page 5 you say, "That Ontario Hydro should be subservient to policy directives of the elected provincial government," and you applaud Bill 118 and in fact you even think it should be a little stronger. Is that correct?

Mr Dell: Yes.

Mr Klopp: The local member or at least the member from around here --

Mr Dell: Frank Miclash?

Mr Klopp: Yes. He says in here that actually Bill 118 should be stopped because it interferes too much with Hydro's mandate. So one person is wrong. Frank is telling people this bill actually mandates to Ontario Hydro too much to do the things you are talking about, and you are actually telling us we should even strengthen it.

Mr Dell: I am a little confused.

Mr Klopp: Should I listen to you or to Frank?

Mr Dell: No, do not listen to Frank. Is he a fellow party member? He is a Liberal.

Mr Klopp: I do not know. He is an MPP.

Mr Conway: That means he won an election someplace.

Mr Dell: As a matter of fact, I think he won twice, so now he can retire, the lucky son of a gun.

Mr Klopp: Seriously, you are saying we should actually strengthen Bill 118 even more down the road. Is that correct?

Mr Dell: Yes, according to this, page 5. Is that it?

Mr Klopp: On page 5 you think we should have more people on the board of directors, which I think I agree with, and you say you agree with the intent of Bill 118, that it should be following directions of the people.

Mr Dell: Do you want this hat or that hat?

Mr Klopp: Whatever.

Mr Dell: I guess I had better stay with this hat. The committee seemed to think -- does think -- that the makeup of the board of Ontario Hydro right now is definitely not reflective of the wishes of the rural north, for instance. Some discussion was on to parcel it into socioeconomic groups etc. Myself, I believe it should be elected and I believe the chairman of Ontario Hydro should be elected by the membership of the board. I do not know if that is feasible. It has never been done, but that would be an interesting experiment. I do not know. What would Sir Adam Beck say?

Mr Klopp: I think he might agree. Thank you.

Mr Arnott: I have a couple of questions. It is my opinion that appointments to public boards should be made, first and foremost, on qualification. Are you saying you disagree with that?

Mr Dell: The committee does agree, yes. It should be on -- say that again, please?

Mr Arnott: Appointments to public boards should be based on qualifications, first and foremost.

Mr Dell: I think what the committee would like to see are qualifications from a wider spectrum of people, not just former Hydro employees perhaps, something like that.

Mr Arnott: Okay. How many socioeconomic groups do we have in Ontario?

Mr Dell: God, I do not know. The committee just said more.

Mr Arnott: How do you break those down, subdivide them? Based on income?

Mr Dell: Basically 10 regions, two each.

Mr Arnott: No, the socioeconomic groups, I mean. Is it just rich and poor?

Mr Dell: I think probably what the majority were thinking of was that they should perhaps have a woman on the board -- perhaps have two or three -- qualified women. I am qualifying that.

Mr Arnott: Thank you very much. That is fine.

Mr Dell: And maybe native groups or something.

Interjection: One retired.

Mr Dell: Yes, one retired guy.

Mr McGuinty: There are a couple of points I want to raise. First of all, with respect to your proposal of improving the quality of appointments to the board so that they would be more accountable, what good would it be if we were to improve the appointment process and we still had a provision in Bill 118 that those directors would have to do as they are told, and if they did that, and only if they did that, they would be provided with a special safety net, they would be exempt from liability? What good are our directors going to be for us?

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Mr Dell: So you feel that Bill 118 takes initiative away from the board members by appointing the deputy minister?

Mr McGuinty: No, I am just referring to the specific provision which provides that the government steps in and says: "Look, folks, you're going to do this. That is an order. If you do it, we are going to afford you special protection. You can't get sued." For instance, when Hydro did what it did at Elliot Lake, the people on the board said, "We're very uncomfortable with that and we think our ratepayers are going to sue us, so we'll only go along with this if the order in council specifically provides that we'll be exempt from liability," and that is exactly what the order in council provided: "We're going to exempt you from liability for going ahead and doing what you're doing at Elliot Lake."

What good will it be if we go ahead and make these improvements, as you suggest, to the appointments process to make the members of the board more accountable, yet the government can tell them what to do and provide them with a special safety net?

Mr Dell: Another way to do it would be to select or elect board members in the Legislature itself, which is made up of elected representatives.

Mr McGuinty: What do you think of that? Let me put it to you this way --

Mr Dell: I do not know if it is possible, if there is a conflict of interest or not. That might be apparent there, too.

Mr McGuinty: As a ratepayer my question is, who is looking out for my interest? Who is looking after me? Whom could I sue if they made a mistake, if they were negligent? Should it not be my director, the person who in law is accountable to me, who has a fiduciary duty to look out for my interest?

Mr Dell: The way you put it, it sounds like you should. We have a similar situation with our hospital board. We have a clause in there too in which the hospital will pay if any of the board members are sued during any kind of board business: if you are sued for an auto accident travelling to a meeting; if you are sued for making a decision where a medical error is made; if you make a policy for, say, abortions and somebody sues you because of this abortion procedure. I guess it is not uncommon to have this sort of thing, but you do have a very good point, that you are taking the responsibility away by covering these people. Is that what you are getting at?

Mr McGuinty: Yes. My final point, because I know some members expressed some disbelief about liability of directors, is that I want to read into the record a very small paragraph contained in the order in council which was approved and ordered on June 6, 1991, signed by the Lieutenant Governor, Frances Lankin and Jenny Carter, then Minister of Energy. In paragraph 3 it says, "Officers and directors of the corporation who exercise a decisional discretion in compliance with the policy set out herein will be saved harmless and indemnified jointly and severally" -- good legal words -- "from and against any and all liability incurred arising from such exercise." They did that because they were afraid that in paying $250 million to the good people of Elliot Lake they would be sued by that pensioner I told you about earlier on who is very concerned about her rising hydro rates.

Mr Dell: We have exactly the same wording in our hospital bylaws.

The Vice-Chair: I am going to move over to Mr Jordan now. I have missed him.

Mr Jordan: I want to quickly refer back to the assets of Ontario Hydro. Correct me if I am wrong, but you sort of referred to them as not having value.

Mr Dell: Not as great a value as perceived.

Mr Jordan: Especially the nuclear plant.

Mr Dell: The nuclear plant especially.

Mr Jordan: Are you familiar with the nuclear plant at all?

Mr Dell: Yes, I am.

Mr Jordan: You have been through the plant?

Mr Dell: No, I have done a lot of reading on it. As they were going to ship it to my town, I figured I had better check it out.

Mr Jordan: You are talking about the permanent storage of waste.

Mr Dell: Yes.

Mr Jordan: You would not have had the opportunity to visit the present storage at Winnipeg that they plan to use, wherever they might choose a site? Have you seen that, or read about it at all?

Mr Dell: I have read about it lots, yes.

Mr Jordan: Just on the problems, let's go to Darlington, for instance. The nuclear action creating the heat is here, and then it heats natural water, which becomes steam, which drives a turbine over here. So really, that steam generator is the same whether it is driven by gas, oil or anything else. It is just over here where the heat was initiated that it was done, and we use the heavy water to slow down the reaction so it will be better and more efficient.

Mr Dell: So it does not blow up.

Mr Jordan: No, no, so we can use the natural uranium. That is why you do it. When you mention blowing up, with the Candu system the only danger you have to think about is lack of water. If something happened and the water --

Mr Dell: But I was primarily concerned that it seems to be quite an expensive way of generating electricity in the short term, and in the long term there still has not been a reasonable process for dismantling and disposing of the high-level nuclear waste, to my satisfaction, and I have done a lot of research into it.

Mr Jordan: Perhaps; I do not debate that with you. Atomic Energy of Canada Ltd feels it has established a satisfactory method of dealing with the waste, but it has to be accepted, especially by the people of Ontario, and then the location in Ontario has to be acceptable to the people in that area. In the meantime, it is quite safe in the so-called swimming pools where it is presently stored.

Mr Dell: And I think it should stay there. Actually, perhaps we should store it in Queen's Park. It would really be well watched with you sharpies keeping an eye on it.

Mr Klopp: Leo's got a big office.

Mr Jordan: It might not do any harm.

The final point I was trying to make is that the maintenance and the expense is really not relative to the source of heat. Go and see it at Darlington. The shaft was made in Sweden. There was a problem with the shaft. Really, technically, in my personal opinion, it should not have been accepted in the first place, because of a defect in the shaft; although because of the size of the unit, the defect in the shaft was not detected.

Mr Dell: So who at Ontario Hydro is responsible and who gets sued for this? A board member can get sued --

Interjection: Not any more.

Mr Jordan: First of all, the manufacturer has not backed away from its responsibility, as far as I know. They are still very much involved, and that is why there is not that much concern financially. A lot of these figures are being thrown around -- the cost of the plant was at $9.5 billion and now it is at $13.5 billion -- and I have yet to find the actual construction breakdown of that plant.

The mistake, if it was a mistake that was made by other governments, was tampering with that reserve fund. It does not matter whether it is a hydraulic plant or a nuclear plant, there is a reserve fund there, because as soon as you transfer that plant from capital to operations and it is generating kilowatt-hours -- mind you, when it comes on line you start paying for the plant over 40 years or over the life of the plant. You and I do not pay for it right away; it is spread out to us and our children into the system, the same as all our hydraulic plants were.

But over the years, sometimes instead of increasing the rates, some of that reserve fund was used, I believe. Perhaps, in hindsight, it should not have been, because now it would have provided the proper buffer zone to bring that plant on line without a major effect on your operating costs of the day. If I were a member of a commission of the local utilities, I think I would have a loud voice at my meetings in that regard, because you are getting whacked a little heavier than you should have been for it. It is just kind of frustrating to me.

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Mr Dell: Maybe people would not have gone to electric heat if the price were more reasonable. I was involved in one of these switch programs from oil to electric heat. I believe I actually made $868 toward my investment in baseboard heat at the time. I am considering switching to a heat pump now, economically.

The Vice-Chair: At this point, I am going to call a halt. We have expanded from half an hour to almost an hour with this witness. We do have to close down.

Mr Conway: Is there another witness? I would just like to make one quick observation or question. I have never been in a committee which had so much free time or felt under such time constraints, but if that is the wish of the committee, I am quite happy to go and sit at the airport for two hours and twiddle my thumbs and read my magazine.

The Vice-Chair: If you make it a very quick question.

Mr Conway: One of the things I am struck by in some of the presentations here today, this one included, is the issue of accountability. I have created the impression that there might be some benefit in going back to the old idea of directly elected members running Hydro. I think that is just nightmarish. I cannot imagine it.

Mr Dell: Not running Hydro. A board is to ask questions, to report to.

Mr Conway: But the point is accountability. I do not know whether you have ever watched the British series Yes, Minister. It is a marvellous series because it takes the doctrine of responsible cabinet government and shows what can sometimes happen when there is not the will or the intelligence or just the determination to make that highly desirable theoretical concept a practical reality.

When Hydro was established in this province, one of the things its supporters were paralysed by was the fear that it was going to be run like the railroads and the post office, that it would be driven by parish politics. The determination of its architects was to create some kind of mechanism where in fact it would be the people's power but it would be run along some kind of businesslike principles.

Mr Klopp: That got short-circuited.

Mr Conway: As my friend says, that certainly got short-circuited. Adam Beck's views on what should have been done with the rural customers is not something I would take the time of the committee with today but I think your points around accountability are interesting. Various governments have struggled with this. This is a huge public corporation dealing in an area of enormous technological complexity. The nature of the relationship between so technical a corporation as Hydro with the kind of financing requirements that are going to be required -- by the way, all the things you people have said about nuclear were said as a charge against Hydro in the hydroelectric era. There is not a paragraph I would have to change to make all that criticism attached to Ontario Hydro in the pre-nuclear age.

The question that remains for this committee and this Legislature in 1992 is how can we best strike a good relationship between accountability, which we all want, in a public corporation where the dictates are infinitely more complicated, for the reasons you very excellently cited in our presentation, and at the end of the day ensure that the miners in Red Lake or the farmers in Huron county have the juice when and where they need it at an affordable price.

Mr Jordan: The farmers in Renfrew.

Mr Conway: The farmers in Renfrew, I should add as well.

The interesting thing, by the way, about your concept is that much of Hydro was originally a private corporation. There is something deliciously ironic about the taxpayers in 1992 paying one last multimillion subvention to the heirs of F. J. Sensenbrenner over at Smoky Falls. I do not know how many times we have paid for that, but we are paying one more time, apparently. I have very grave doubts about what the government did at Smoky Falls, but quite frankly it would have to be pretty crazy to be crazier than some of the things successive governments have done there over the last 35 years.

Mr Wood: But that was privately owned.

Mr Conway: Exactly. Sensenbrenner owned it. But the whole story of how that plant came to be there, the point about turning over a lot of these operations to private -- we took them in. We took all kinds of these little hydro plants across eastern and central and northern Ontario, largely from local resource producers who could only do business in northern Ontario --

Mr Wood: The Liberal government made the deal.

Mr Conway: Of course we did. We made all kinds of interesting and some perfectly crazy deals. The interesting thing I want to end with, however, is the concept that informs some of what you have said here. It is significant, and to a very large extent the new government has bought into it. It is a radical departure from the energy policy that every government of Ontario has pursued since the days of Adam Beck.

For good and for ill, successive governments in Ontario have, since the turn of the century, felt that if there was one sector we should control to the greatest extent possible with a made-in-Ontario public policy, it was energy. The new government and many of its supporters are advocating a policy that would essentially -- that, by the way, is one of the significant justifications for the acceptance of nuclear power, that we had the technology, that we had the natural resource and that we had some of the capital required. That combination could ensure that for its difficulties -- and atomic power certainly had that -- we had a very real benefit and capacity that we could contain and recirculate within Ontario.

The energy policy that the new government is advancing and that is supported by a lot of people and I think is supported by some of what you have said, is essentially that to some extent we have to go beyond conservation. I accept that we are going to conserve vast amounts. How we do this without returning to the cave remains, for me, to be understood.

If we are going to have any new capacity, it is going to be thanks to Messrs Getty and Lougheed and the people who control natural gas. That is explicitly the policy of the new government and they have a right to advance that. But I simply say that in turning over that kind of energy sourcing to an out-of-Ontario community, in this case those people who control natural gas, we are making a very significant departure from --

Mr Dell: So you do not believe in Canada?

Mr Conway: I am not saying we -- I certainly believe --

Mr Dell: Just Ontario?

Mr Conway: I certainly believe in Canada, but I tell you that one of the policies --

Mr Dell: You just do not trust those buggers out west.

Mr Conway: One of the things about the nuclear alternative is that it has had very significant Ontario benefits whether you worked at Babcock and Wilcox in Cambridge, at the research facility in my community at Blind River, at Eldorado Nuclear. You can scoff at those tens of thousands of jobs. Those were jobs in Ontario.

I can accept the argument that says there is a better way. Clearly you and the previous speaker have made that case. That is your perfect right to do. It is simply a point I wanted to make that in advancing the case the government has advanced, we are taking a more pan-Canadian view. That is, at a certain level, very commendable, but I suspect it will have consequences in Upper Canada that some of the people who pay the rates and send us to the provincial Legislature might at some time want to talk about. I thank you for your very interesting submission.

Mr Dell: To get back to the board business, basically what I got from you and Mr Jordan was that -- I may be reading into it -- your average layperson is not fit to sit on the Hydro board because he does not know anything about Hydro.

Mr Conway: No, that is certainly not my view at all. The question I am trying to understand is what your concept of effective accountability can be. I am perfectly comfortable myself with the basic principle that was contained in the Power Corporation Act of 1974 which ended the politicization to the extent of the board being run by cabinet ministers, and that a body, granted, in 1974 not nearly as representative as I think it ought to be -- the point has been made by my friends in the New Democratic Party and others that we need to have a more broad-based representation of native peoples and women and a variety of stakeholders. I personally think that is a very legitimate criticism. That is the point I am simply making, and I am trying to understand again how people who support Bill 118 as making Hydro more accountable believe this legislation is going to do that. That is my rhetorical question.

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Mr Jordan: I would just like to clarify. Mine was that the members of the Municipal Electric Associations in your municipality or mine who have been elected would serve --

Mr Dell: Not in mine.

Mr Jordan: No, I understand.

Mr Dell: I voted for what's his name, the $200,000 guy who runs the show down in Hydro, Featherstone or whatever his name is. I forget. The boss anyway, the CEO.

Mr Conway: The new boss.

Mr Dell: Well, I do not know.

The Vice-Chair: With this, I am calling a halt.

Mr Conway: We have provoked the Chair.

The Vice-Chair: It has gone on for in excess of an hour. As much as some people would like us to have our support staff hitchhike back to Thunder Bay tonight, they do need time to pack up and prepare to leave with us and therefore I am going to call a halt to the proceedings. I thank you very much for coming in and wearing both your hats.

While the staff is packing up, if members wish to continue the conversation, I am certain that everyone will enjoy the time. At this point I believe Mr Huget was to answer a question Mr Conway had posed earlier on. I will allow that and then I will recess.

Mr Huget: The reference to the $1.2 billion as referred to in the Elliot Lake situation is actually $1.5 billion. It is arrived at when you take into account the current market price of uranium being $8 to $12 a ton. In the contracts for uranium from Elliot Lake, that uranium was being purchased at a cost of $50 to $60 a ton, which by the way had an overall impact on rates in the neighbourhood of about 2.6%. It is projected that not paying those fuel penalties at those inflated prices under those contracts will save the province $1.2 billion to $1.5 billion.

Mr Conway: It is the saving I am still confused about. The argument is that by cancelling, by not renewing the contracts beyond 1996, we will save the ratepayers $1.5 billion.

Mr Huget: As I understand it, that is correct. What I can do for you is get as many specifics as possible from Hydro itself, which I am perfectly prepared to do, in terms of how that figure was arrived at precisely and how it was extrapolated to come up to the $1.2 billion. We are perfectly prepared to do that. It is, I think, fairly easy information to get and we can get that for you.

Mr Conway: I appreciate what the member has said. The argument is, I think, sometimes being advanced that the $250 million, the order in council, to which my friend Mr McGuinty has made reference this afternoon re Elliot Lake, the $250 million or the financing that went with that order in council is significant but pales in comparison with a $1.2-billion or $1.5-billion saving. It is that saving, and I am still confused as to what that means.

I would certainly argue that if one looks at those contracts over the course of the 15- or 18-year lifespan -- and it is that; it is not 40 as someone was saying the other day -- clearly we were paying a premium relative to what some of the other market conditions were in Canada and in the world.

But that is not an issue here. The government has decided, quite understandably, that it is not going to extend those contracts beyond 1996. It is prepared to extend for three years at a premium price of $160 million, I think it is, which I understand. I just then do not see where this $1.5-billion figure comes from. I would appreciate it if somebody would just get me the information.

Mr Huget: Certainly. We can clarify that. I do not have the exact term or length of the agreements, but they were to continue for quite some period of time. The $250 million or so that is going to Elliot Lake is considered an investment when you look at the potential of $1.5 billion in savings. We feel it was a sound business decision to do that.

We talk about accountability. I have the same questions you do in terms of accountability. I wonder who is accountable for the $50 to $60 a ton when uranium is selling for $8 a ton. Clearly, when I listen to presentations today, that whole question of accountability comes very much into play, and I of course am not about to make a value judgement on the signers of those contracts. All I am saying is that it does tend to point, to me anyway, to raise that whole question of accountability.

Mr Conway: It is not my understanding, however, that the government has nullified contracts. My understanding is that one of those contracts had concluded in this year or next and was simply not renewed. At any rate, I am going to pursue it as well, because it has been oft repeated.

Mr Huget: We are very happy to get you the information, to Thunder Bay as quickly as possible.

The Vice-Chair: With that, once again I would encourage everyone to join in an informal discussion as we pack up so that our support staff can travel with us. It is an interesting concept. I will adjourn now till 1 pm tomorrow, 15 January, in Timmins.

The committee adjourned at 1656.