STANDING COMMITTEE ON ESTIMATES
COMITÉ PERMANENT DES BUDGETS DES DÉPENSES
Wednesday 9 May 2012 Mercredi 9 mai 2012
The Chair (Mr. Michael Prue): Good afternoon, committee members. We are here today for the consideration of the estimates of the Ministry of Energy, which was selected for a total of 15 hours of review.
The ministry is required to monitor the proceedings for any questions or issues that the ministry undertakes to address. I trust that the deputy minister has made arrangements to have the hearings closely monitored with respect to questions raised so that the ministry can respond accordingly. If you wish, you may, at the end of your appearance, verify the questions and issues being tracked by the research officer.
We will begin with a statement of not more than 30 minutes by the minister, followed by statements of up to 30 minutes by the official opposition and the third party. Then the minister will have up to 30 minutes for a reply. The remaining time, if any, will be apportioned equally among the three parties. The floor is yours, Minister Bentley.
Hon. Christopher Bentley: Thank you very much, Mr. Chair. I’d like to thank you and members of the committee and, of course, the staff who are here who will be assisting over these 15 hours. I very much look forward to the discussions. I’m here with my deputy, Serge Imbrogno. There are three assistant deputy ministers from the ministry: John Whitehead, Sue Lo and Rick Jennings, as well as other staff.
I look forward to the discussion. It is, as everybody knows, a very exciting area—always has been. I thought what I would do is take a few minutes and sketch out a few of the directions that we have been going in since 2003. My story, of course, begins as part of the government in 2003.
The ultimate goal is for a clean, modern, reliable system of electricity that is affordable for families and businesses. Our power system has long been a foundation for the people of the province of Ontario, for families, businesses, for the economy and for economic activity. Whether it’s electricity or other aspects of the energy system, Ontario has long been a leader in our system of energy; we’re acknowledged to be, in so many areas around the world. We continue to be. In fact a number of the initiatives that have been undertaken by the government with various ministers over the past eight years have not only cemented that leadership but, in many ways, it has enhanced it.
In 2003, we had come off a number of very challenging times. One of the things that was recognized was that we did not have enough generation in the province of Ontario. During the previous eight years, our generating capacity had in fact decreased by about 8%—a little less than 10%—but the demand for electricity in the province of Ontario—and I’ll just focus on electricity for a few minutes—had actually increased by 10% over the eight years leading up to 2003.
That created a challenging situation, and there were a number of instances where the ability of Ontario to generate the power that it needed on a day-to-day basis was not there. It forces you to import electricity, and we did. In particular, in 2002-03 we were net importers to the tune of—we were net importers overall, but we had more imports than exports to the tune of almost $1 billion that we paid for electricity that was coming in from somewhere else.
The government of the day took a number of different initiatives up to 2003 to try and deal with this, apart from importing, and one of them was to set up portable diesel generators in a number of different communities.
It was pretty clear when we became the government in 2003 that one of the things we had to do was to deal with matching supply with demand. It’s great if you can actually find the power to import, but in Ontario we usually have summer peaks, and so when Ontario is looking for power, the chances are pretty good that the jurisdictions to the south of us and jurisdictions to the east and the west of us are also looking for power. So the market for power is very robust; the supply is no greater than it was. That created some huge challenges for Ontario in the years leading up to 2003.
In fact, those challenges continued after 2003 because you don’t bring on new generation instantly. It takes a while. Whether you’re talking about nuclear, whether you’re talking about gas, whether you’re talking about renewables, whether you’re talking about hydro, you don’t bring it on instantly. So, for years after 2003, the perennial summer/late spring/early fall question was: “Do we have enough? Will the lights stay on?” If there’s a gap between that that you can’t meet, you get brownouts, as there were in some instances in 2002-03, or worse. So one of the goals of the government coming in in 2003—and this is reflected in some of the actions that we’ve taken—was to make sure that we have enough electricity to meet the demand. We’ve taken a number of initiatives over the years to make sure that we have enough generating capacity, and I can return to that in a few minutes to talk in more detail.
A second, very striking feature of where we were in 2003 was that the system itself—poles; wires; the technology which supports it—had not received the degree of investment that was necessary to keep it up. As the population increased, as the power demands increased, as the types of businesses drawing different power at different times developed, the demands on the poles and wires and related infrastructure were huge, but much of the infrastructure was very old. The amount of investment by, for example, Hydro One or its predecessor, Ontario Hydro, was about one third what it has been the last couple of years to support the poles, wires and related infrastructure. That is a huge difference in investment by the agencies and by the people of Ontario in their infrastructure.
Why is infrastructure important? Why are the poles and wires important? Well, it’s great if you generate the power, but if you can’t get it to the families and businesses that actually need it, you’re no further ahead. And again, you have to get it in a reliable way. You have to get it to communities as large as Toronto and the GTA. You have to get it to communities much more modest in size. You have to get it to every recreational property where somebody may happen to go on a weekend and decide to turn on the lights and everything else. There’s a pretty constant expectation in the province of Ontario, and that expectation is that when we flip the switch, we expect it to work. Reliability is often taken for granted, but reliability in fact means a huge series of actions that people have undertaken at many different levels, few of which are inexpensive, to make sure that when you flip the switch, something actually happens.
The investment that has been required in the poles and related infrastructure—and over the last nine years now, we’ve seen, for example, 5,000 new kilometres of wire in the province of Ontario. Just to give us some sense of what that is, 5,000 is roughly from here to the Yukon. That’s a lot of wire, and it’s not cheap. Along with the wire, of course, are the transformer and the related technology—a very substantial investment. And once investment is made, investment needs to be paid for. So as we bring on new generation, as we renew the infrastructure that carries it and delivers it, all of this is being invested in in current dollars and has to be paid for today. Anybody who has done any sort of building project around the house, or renovation of apartment, condominium or recreational property, will know that building things today is substantially more expensive than building something 20, 30, 40 years ago ever was. All those bills come due, and they need to be paid by the ratepayer today.
Renewing the system to make sure it is actually reliable is number one. It is, as I say, something that we absolutely take for granted. It’s fascinating that we take this for granted. There are many jurisdictions in the world that don’t, including, from time to time, I understand, places in the States. But we can take it pretty much for granted in the province of Ontario because of the good, hard work done by men, women and companies throughout the province of Ontario to make sure that that is reliable and available.
Apart from being reliable and modern, another aspect of the energy system that we are building in the province of Ontario is that it be clean. Now, what do I mean by “clean”? Well, when we became the government in 2003, the generation mix for the electricity, for example, that we consume consisted of a number of different sources. There was nuclear; there was hydro; there was gas. There would have been coal, and coal had increased to be about 25% of our energy source by 2003. It had increased rather substantially. We needed every bit of power we could find, and coal was seen as a source. It was seen as an available source. It was seen as a cheap source—more on that in a second.
The challenge with coal, of course, is that burning coal creates dirty air, and dirty air has very serious health and environmental effects. In fact, the health and environmental effects are rather substantial. Everybody here has heard of the studies. Various medical reports indicated up to 2,000 premature deaths every year from dirty air, of which coal was part; hundreds of thousands of illnesses caused by—linked to—the burning of coal; many hospital admissions related to coal. So the determination that we made was to clean up our sources of power; clean it up to make sure that everybody had the opportunity to breathe cleaner air; clean it up to make sure that we did not degrade the environment. We set on a course from 2003 to do just that.
Now, when I say that we made a determination to get out of coal, we actually did. The then Leader of the Opposition, Dalton McGuinty, stood on a rooftop in London, Ontario, and said, “We’re getting out of coal”—a rather easy thing to say; rather far-reaching policy implications, because as I say, many would suggest that burning coal is a cheap source of power, and after all, jurisdictions to the south of us did that.
It’s only cheap if you look at the direct cost of burning coal. It’s not cheap when you take into consideration the health costs of burning coal. It’s not cheap when you take into consideration the environmental costs of burning coal. And that’s quite apart from the human costs of burning coal. So in that sense, it’s not cheap at all; in fact, it’s enormously expensive.
The determination we made in 2003 to get out of coal, to make sure people had the opportunity to breathe clean air, to make sure that people weren’t being admitted to hospitals through illnesses generated by dirty air, was a very significant policy decision by the government and had rather far-reaching policy decisions.
Getting out of coal has meant that we look to alternate sources of generation, some of which are not as cheap, at first blush, as coal appears to be. It also meant that at a time when Ontario was looking for absolutely every last bit of power we could find, we not only had to find extra power for basic demand, but we also had to replace the coal generation that we were relying on. So from that point on, we have been looking and procuring cleaner sources of power, to make sure that we could get out of coal and to make sure that we could meet the demand in the province of Ontario.
To accelerate the getting out of coal—and it is part of the mix—we started investing in renewable energy—wind, solar, bio—through a number of different programs in the years 2004, 2005, 2006 and early 2007. It was never going to be the sole source of power in the province of Ontario. It’s part of the mix, but we invested in it to assist as a source of power in getting out of coal, assist in the supply mix.
Later on, in 2009, we brought in the Green Energy and Green Economy Act. And the Green Energy and Green Economy Act, from which sprang the feed-in tariff approach, was not only about accelerating the use and the development of renewable energy in the province of Ontario to further assist getting out of coal; it was also about building a clean, green economy in the province of Ontario. You’ll remember that in late 2008 the world economic recession struck. Actually, in my community in London, we felt it strike in the spring of 2008. Very serious; not confined to Ontario; not confined to Canada; not confined to North America—the most serious economic recession since the 1930s. I see that my colleague Teresa Piruzza from Windsor would know very well down in Windsor—very serious implications. So not only did we want to bring on more clean, green energy; we wanted to do it in a way that would create a strong green economy here in the province of Ontario and attract investment to the province of Ontario, attract investment at a time when money was not moving, when jobs—well, not only were they scarce; nobody knew where they were going to come from. Investment: Nobody knew whether it was going to flow into Ontario, or anywhere else, because money simply wasn’t moving.
It’s important to recognize—and I anticipate I may have one or two questions about green energy; all friendly, of course—that the approach that we have taken with respect to green energy is different than the approach that other jurisdictions have taken. There are many, many jurisdictions with feed-in tariff programs. Our feed-in tariff program, our means of procuring clean, green energy, required the combination of not only bringing on clean, green energy but making sure that there was a jobs component for the people of the province of Ontario inherent in it. That’s why we required Ontario content in the projects. That’s why we required it.
You can say, “Has it been successful?” It has been enormously successful. Thousands of megawatts of power have been contracted through this program. Approximately 30 manufacturing facilities have been set up in the province of Ontario or converted to clean, green energy manufacturing. Billions of dollars of investment have flowed into or been committed to the province of Ontario already—more than $27 billion worth of investment. Remember, this is from a time when we did not know—nobody knew—whether any investment would flow into the province of Ontario—or anywhere else, for that matter. Tens of thousands of jobs already can be pinned to the feed-in tariff program or the green energy economy itself in the province of Ontario—tens of thousands—and we expect many more over the course of the next several years. In fact, we expect that over the next two years we will have more wind, solar and bio actually hooked up in the province of Ontario than cumulatively ever in our history. We expect that over the next two years we’ll have more parts for those projects manufactured in the province of Ontario than cumulatively ever in our history. And we expect that over the next two years there will be more jobs created and related to those projects than cumulatively ever in our history. That is a pretty strong signal of success—a very strong signal of success.
You might say, “Well, that’s great. That’s Ontario. We’re building a clean, green supply mix here. We’re creating jobs. So what’s next?” I think it’s the “What’s next?” that’s probably one of the most exciting things we have to look forward to.
People often have asked me over the past couple of years, particularly in my area of southwestern Ontario: “As you see traditional manufacturing challenged, where are the jobs of the future? Where are they coming from?” The world is going greener. The market for renewable energy alone, it’s estimated, is going to double from just under $200 billion in 2010 to $400 billion in 2020. The market for the clean-tech economy, generally speaking, is going to be about $3 trillion in 2020—that’s the worldwide market. Ontario is already a leader in clean tech: clean green tech. We’re already a leader. We want to continue and cement that leadership. We are nicely positioned to grab a substantial part of that huge worldwide economy.
You might say, “We could have done that anyway without investing in clean, green technology here.” No, you can’t. If you don’t believe in it, you can’t sell it. You’ll never be taken to believe in it if you’re not doing it yourself; won’t happen. If you’re not buying it, nobody else will. So we have positioned ourselves very well to take advantage of this huge worldwide market. Does it guarantee success? No; nothing guarantees success these days. But it is important to recognize, as we deal with the questions about the Green Energy Act, that it really was a twofold initiative: to bring on the clean energy but also to build a very robust, strong green energy economy here in the province of Ontario, particularly to do so from the depths of the world economic recession, by attracting international investment. And the results of that are very significant. I know I’ll be asked some more robust and detailed questions about different aspects, and I’m looking forward to that and to sharing some of the further details about this.
As all of the members of the committee will know—and, Mr. Chair, you as well—we just conducted a review of that green energy approach. Deputy Minister Fareed Amin and the team completed that very robust review. We launched the results of that about four weeks ago now. We are proceeding on the basis of the recommendations that we received in that review—enormously helpful—which will enable us to continue to bring on clean, green energy in the province of Ontario; enable us to continue to get out of coal—we’re going to do that by the end of 2014; enable us to continue to grow the clean, green jobs economy here in the province of Ontario; has enabled us to reduce the prices and has also enabled us to listen very carefully to what we’ve heard, to make sure that as we locate these renewable energy projects in the future, we have good, strong community participation and support. It’s really a substantial evolution and strengthening of the program that has already delivered very significant results in the several years that it has been in place and in force. I look forward to speaking about that and to working with those in this room as we continue to develop that economy.
When I talk about clean, green energy, of course, I know that you’re all waiting for me to say something about hydro, because hydro is a great source of clean, green energy. It has long been the solid source for the province of Ontario; at one time it was just about the only source for the province of Ontario. So what are we doing to add to, to enhance, to build on? Very significant projects. I’ll just mention two: The largest hardrock tunnel in the world is being constructed, completed, right now down in Niagara Falls—and I see the member for Niagara Falls, who has been there many times. That is expected to come on stream next year, 2013, and will provide additional fuel for the generating stations that will power the equivalent of about 160,000 homes.
Up north, the Lower Mattagami River project is a massive redevelopment of a number of existing hydro facilities, in partnership with the Moose Cree First Nation. They have very substantial participation there. It is going to see the development of a hydroelectric project of about 440 megawatts—an extremely large project up there. That is slated for completion several years later.
So hydro is absolutely part of the mix in the province of Ontario—always has been; is today. We expect to be adding to it, and of course through the feed-in tariff program we have the opportunity to continue to add much smaller-scale projects where those might be appropriate in the province of Ontario. I wanted to mention hydro, Mr. Chair, because I know some people were probably wondering if I was.
I wouldn’t want to leave my remarks without mentioning nuclear, because nuclear has been, for many decades—I see the member for Danforth has come back in, and I just wanted to save my nuclear remarks for when you came in because we’ve had good conversations from time to time. Nuclear has long been a significant part of the energy mix in the province of Ontario—long been—and it’s going to continue to be. It’s about half of the electricity that we generate, and it’s going to continue to be about half of the electricity we generate. It’s clean, it’s reliable and it is, once it’s built, cost-effective.
We are engaged right now in refurbishing the four units at Darlington, and that project has just started on a very robust initial planning stage. That work will continue for several years. It’ll actually continue while the units are being operated. The marvel of engineering and technology will allow that to be done in sequence.
I just want to finish on the nuclear by saying that we have some of the leading nuclear experts in the world. In fact, I think we have the leading nuclear experts in the world: Tom Mitchell, who heads Ontario Power Generation, and Duncan Hawthorne, who heads Bruce Power. Whenever the world looks for experts on nuclear energy, they call on those two. In fact, they often call on them to lead any international efforts. I think that’s a testament to the industry here in the province of Ontario, a testament to its record of safety and a testament to the great work that they’ve been doing.
I know there is so much more to speak about, and I have no doubt that the first thing that will happen is, somebody will say, “You didn’t talk about this,” and to all those who will have that question, I say that I’m looking forward to the rest of my 15 hours. There are many things that I haven’t spoken about, and I know that they are equally as important as what I have spoken about.
Mr. Victor Fedeli: Yes. Thank you very much, Chair. I made an hour-long statement yesterday, and I guess I’m all statemented out. If I wanted to, I would summarize my statement with “the Green Energy Act that spills water, vents steam and drains jobs,” I guess, but I don’t want to get into that today. Today’s an exciting day.
When I first came in, we talked about the fact that I didn’t go north today. In the north, there was an announcement by the province and by Cliffs. I wrote the headlines down, actually, since we’ve spoken. I want to just read them. The headline of the Cliffs Resources press release says, “Cliffs’ Canadian Based Chromite Project Advances to Feasibility Study Phase.” The government’s press release was equally dull, if I may. It said, “McGuinty Government Supports Responsible Ring of Fire Mining Development.” Those were the headlines of the two press releases today—a little different than the finance minister’s talk this morning of billions of dollars in investment and thousands of jobs.
I bring this up because Cliffs has said in the media to one of your predecessors and now consultant, George Smitherman, “We’re not coming to Ontario unless we have an affordable energy price.” So my first question to you would be, were they offered an affordable energy price?
Hon. Christopher Bentley: Thank you very much for that. I have the Ministry of Northern Development and Mines’ press release. It’s hard to think of Minister Bartolucci, in making this announcement, as being anything other than enthusiastic, and well he should be. The Ring of Fire is an enormous opportunity. I know the member for Nipissing has—
Hon. Christopher Bentley: I know when you went up there, you could sense the excitement. So many have spoken about the opportunities that are presented there from this chromite and related mineral discovery. The chromite discovery alone is thought to be worth billions and billions of dollars and decades’ worth of work, which will affect every part of the north—probably every part of Ontario, but in particular the north, from east to west and from the top all the way down, even below North Bay and—
Hon. Christopher Bentley: I think it’s very significant that companies that are engaged in the exploration, the development work there, have been looking at processing here in the province of Ontario. We do a lot of processing in the province of Ontario—I think about a quarter of the minerals in Canada. A number of those processing facilities—Vale, Xstrata—bring minerals in from elsewhere. Processing, as the member would know, is a very energy-intensive process, so the companies that do it have found a way to do it in the province of Ontario with our approach to energy that makes it economical for them to do it.
Cliffs—a huge mining enterprise, investments all around the world, probably opportunities to take their minerals to various places all around the world—obviously would be looking, as one can anticipate—I don’t speak for Cliffs—to the best place to have a processing facility.
Hon. Christopher Bentley: The press release I’m reading is announcing their intention to build a $1.8-billion chromite processing facility. I understand that Cliffs and the Minister of Northern Development and Mines and the government of Ontario are engaged in the discussions about the exact form of the agreement and the approach.
I do understand, as the member would know, that energy is a very significant cost component for a processing facility, that energy issues were absolutely one of Cliffs’ issues and part of their consideration. I know that the final details are being hammered out and finalized between the two parties. I’m sure that the minister will want to speak at greater length about it—because he is the lead—when the deal is actually concluded in all of its final form.
But I think it’s important to note that what I took from the announcement today was much more than just a hope to think about the feasibility. It is significant that a major mining company has decided to attend an announcement about a processing facility in the eastern part of northern Ontario—
Hon. Christopher Bentley: As I say, when the deal is completed and when the details are fully hammered out—I understand that there are still discussions between the parties—I know that the minister who’s leading it, Minister Bartolucci, and Cliffs will have more to say about it as it’s concluded.
Hon. Christopher Bentley: Thank you very much for the question. There was, in the beginning, in the very early years—as I say, 2003, 2004, 2005, 2006—not enough generating capacity in the province of Ontario. Decisions were made about how to procure additional generating capacity to make sure that we had enough in all parts of Ontario, but particularly in southwestern Ontario. An announcement was made in September 2009 that there would be a 900-megawatt generating facility. The Ontario Power Authority is the authority that was procuring the generating facility in Oakville.
Hon. Christopher Bentley: I have no doubt, Mr. Chair. We’re all anxious to engage in a good question-and-answer. I think one of the challenges is that it’s important, in providing the answers—and I’m sure the members would appreciate—that the proper context be placed around some of the questions and some of the answers, just so we don’t get into a situation where things are maybe heard in a way that they weren’t intended to be said during the course of it.
As I say, about a year later the decision was made that the generating facility would not proceed in Oakville but that a transmission solution would take place which would feed the needs of that southwest part of the GTA.
The IESO, which is responsible for making sure that there’s enough power for particular parts of the province, has indicated that there is enough supply in that area. At the moment, the forecast is fairly robust, so we are looking for a transmission solution.
Hon. Christopher Bentley: It probably would be helpful if we just stepped back and provided a little bit of context for some of the questions. Chair, if you just would give me a tiny bit of latitude so I could provide some context for the questions. I anticipated that there would be some questions about the Oakville plant, and I wouldn’t be surprised if there were questions about another plant.
Hon. Christopher Bentley: I appreciate that. So I’d just sort of step back and maybe provide a little bit of context. On August 20, 2008, the Ontario Power Authority was directed to assume the responsibility for the procurement of a gas plant in the southwest GTA. They announced on September 30, 2009, that they would sign a contract with TransCanada to design, build and operate a 900-megawatt electricity generating station in Oakville. As I said before, the demand for electricity in the southwest GTA was not as robust as expected. In fact, the load in the southwest GTA, I understand, remains below its pre-recession levels. So the announcement on October 7 by the then Minister of Energy was that the plant would not be proceeding. The province would not be proceeding with the construction of the Oakville plant. I did mention that the 18-month outlook of the Independent Electricity System Operator is such that they’re able to manage the system and meet the current needs of the southwest GTA without that plant. Study efforts are under way between Hydro One, the OPA and the IESO to develop solutions to address the transmission and supply issues that are very much important and relevant to the Oakville and GTA area.
As the member knows, there are a number of discussions going on surrounding that—and I’ve spoken about that from time to time in answer to various public questions—between the government of Ontario and TransCanada. Those discussions are ongoing and they are obviously very commercially sensitive.
Mr. Victor Fedeli: I understand. I wasn’t asking about the ongoing discussions. I was asking: In the contract that was signed back in the announcement days of September 2009, was there a cancellation clause in the contract?
Hon. Christopher Bentley: As I say, the discussions are very commercially sensitive, and I know no member here would want to get into the details of the discussion. Obviously, part of the discussion will involve, I would anticipate—I’m not there at the table, but I would expect—what was agreed to, what are the issues, what is the transmission solution going to be—
Hon. Christopher Bentley: As I say, the discussions are ongoing. They have not reached a conclusion. When they do reach a conclusion, I’ll be looking for the opportunity to speak about them in greater detail.
Hon. Christopher Bentley: —and the nature of those discussions is not only protected; they are confidential discussions; they are commercially sensitive discussions—the member would know this—and there are various privileges that attach to many of the discussions. It would not be of assistance to the families and businesses that we represent, the people of Ontario, to get into the step-by-step or the details of those discussions, because to do so might—
Hon. Christopher Bentley: If I could, maybe, just finish—prejudice the position of the people of the province of Ontario, might not enable those discussions to come to the best possible conclusion for the people of the province of Ontario. As I say, they are confidential discussions. There is no conclusion that has been reached—
Mrs. Teresa Piruzza: On a point of order: This issue, as you may know or some may know, has been discussed and brought forward at another standing committee—actually the Standing Committee on Public Accounts. They’ve had quite a bit of discussion on that. It has been determined that these are highly sensitive, commercial negotiations due to the discussions that are ongoing. That committee is currently seized of this issue, with respect to both the Oakville and Mississauga facilities.
I would suggest that we move forward into some other questioning, given that that committee is looking at it. They’ve actually asked the researcher to look into the level of questioning that can occur with respect to these projects.
The Chair (Mr. Michael Prue): I would have to state that the point of order is not well taken. This is the estimates committee, and the members have every right to ask the questions that are being asked. They are not asking questions that are outside the boundary of what estimates is supposed to do in dealing with energy.
Mr. Victor Fedeli: Let me move to another one that perhaps I can get answered, then. If we’re not going to learn today the cost of cancelling the plant and we’re not going to learn if any interim payments have been made, let’s talk about the future, then. When the costs are finally disclosed by you and the government, will it be the taxpayer or the ratepayer that pays it?
Hon. Christopher Bentley: As the discussions proceed, they will reach a conclusion at some point, we all hope and expect. When they reach a conclusion, I’m looking forward to sharing more information, not only with the members of this committee but, beyond the committee, with the people of the province of Ontario.
Until they actually reach a conclusion—they haven’t reached a conclusion. So I appreciate that the member is interested in details, but if the final details are not in existence, there is not—I’m not in a position to engage in further detailed answers because there isn’t a conclusion to these discussions. The member would appreciate that it’s really in the conclusion that you find the details.
Hon. Christopher Bentley: Again, I appreciate the point and I appreciate the member wanting, on behalf of all, to determine exactly what that conclusion to the discussions will be. They have not reached a conclusion. It’s important. I would expect that it is a dynamic process. The member will have been involved in a number of discussions, negotiations over the years. It’s always a dynamic process. It is a confidential process. It’s essential that confidentiality be maintained, because that’s the only way you can have a free, full and fair exchange of ideas. It’s also extremely important that the interests, from our perspective, of the people of Ontario be fully protected and respected through confidentiality.
I was going to ask whether there was a cancellation clause between the government and Greenfield. I was going to be asking, what is the cost of cancelling the Mississauga power plant? I would be asking if there are any interim payments that have been made to anyone involved in the Mississauga plant. I would be asking how much you’ve spent in legal bills on the Mississauga cancellation. I would be asking whether the additional costs, if any, would be on the taxpayer or the ratepayer. Would it be rolled into existing charges on the hydro bill or listed as a separate item?
Hon. Christopher Bentley: I appreciate that. In fact, there is an additional layer of complexity in this, as you’re probably aware, because not only are there discussions between the Ontario Power Authority and Greenfield with respect to the relocation of the Mississauga gas plant, not only are those discussions extremely commercially sensitive and confidential—and they are ongoing—but there is also litigation—
Hon. Christopher Bentley: —litigation in both Ontario and in the United States. So the various interests of the people of the province of Ontario are at risk in different ways, and it’s essential that we maintain a confidentiality of the proceedings, confidentiality of our position and our ability to make sure that the interests—commercial, financial and other—of the people of the province of Ontario are fully protected.
Hon. Christopher Bentley: No, I think that’s a fair question. Let me just make the statement. It was procured in 2005. The permit was actually issued in May 2011, I believe, after a long series of environmental and other assessments, the various planning and related reviews that had to be conducted. Over the years, from the time the project was announced, there was a building community opposition, and it would be fair to say that, in Mississauga, in Etobicoke, from residents, from the council. Actually, following the election, there was a council resolution, but a building opposition and an opposition that was building pretty much at the same time as the run-up to the provincial election. So it was recognized that this plant should not be constructed on that site in Mississauga.
Hon. Christopher Bentley: So the decision that was announced, or the intention that was announced—I think it was September 24, 2011—that it was our intention not to construct the gas plant on that site in Mississauga. That was a decision or an intention which, as I recall, was supported by the PC candidate in the same riding, by the leader of the PC Party about a week later—I might have the date wrong—and supported, as I recall, by the NDP. So, indeed, all parties appear to have taken the position, and have taken the position consistently, that there should not be a gas plant constructed on that site.
Mr. Victor Fedeli: Thank you. So we know that there are going to be costs from the cancellation in Oakville and we know there are going to be costs from the cancellation in Mississauga. As this is the estimates committee, I’m trying to find in the budget or the OPA’s budget, whoever is responsible—I would like to know the estimates that have been given to the minister and basically the specific line item where these costs will be paid out of.
Mrs. Teresa Piruzza: The minister has indicated for both these plants that there are negotiations going on and different issues, so I would suggest that any questions with respect to Mississauga or Oakville would currently be out of the purview right now, given where it stands and given this section.
Hon. Christopher Bentley: The long-term energy plan anticipates not only the refurbishment of the Darlington units—and that’s under way—and also the refurbishment of further units at Bruce, but it also speaks to new build. In any projection, costs are rough, but the plan and the projection are based on estimates of not only refurbishment but new build.
As you know, we have not made any decision with respect to building new units. We’re taking a look, and we can talk about that more in detail if you like, but we have not made a decision with respect to new build. I notice that the member is looking in a way that makes me think he might be wondering what was reported in the paper a couple of weeks ago. What was reported was that we are working with two potential bidders to see if they would be interested in preparing a bid so that we can take a look at that; determine whether, first of all, of course, do we need it in the long term, and if we need it, what would it be, whether it’s nukes or renewables or other forms of generation.
There has been no commitment to new build, other than to make sure that we continue to have nuclear as a robust part of our energy supply mix and our determination that it will be roughly just under half of generation in the future.
With respect to the refurbishment costs, they’re extremely rough in the plan. What we’ve done with respect to the refurbishment of Darlington is to take an entirely different approach than had been taken, I think, anywhere in the world.
Mr. Peter Tabuns: I’ll go back. You’ve named a number of projects. Somehow, in the plan that you ran on, you had a $33-billion figure for investment in nuclear generation. I would like to know what generating assets make up that $33 billion and what number, even though it’s rough—in fact, I argue in the House that it’s very rough—what number is assigned to each component.
The $33 billion in the long-term energy plan consists of the estimated cost of refurbishment of Darlington—that’s four units, 35 megawatts, at Darlington—and the remaining six units at Bruce that are currently operating and are to be refurbished. The total cost estimated for those—and this is a range, but it’s estimated at up to $18 billion, and that’s for over 8,000 megawatts of capacity.
Mr. Rick Jennings: The Darlington one, which is probably more advanced in terms of the planning, is going to start in October 2016. So there has been work already done setting up the training facilities and breaking out the work into very short-term components and in terms of actually having had a competitive process for hiring people—
Mr. Rick Jennings: Okay. There has been more work done on the actual precision of the work. The remaining part of the $33 billion is an estimate or a number for the cost of a new build, and the new build would be up to 2,000 megawatts. So the number there would be about $15 billion, which would be equivalent to about $7,500 a kilowatt, which would actually be a bit above the range of some of the ones that are recently under way. There are a couple in the US that have recently started that would be at a lower cost than that.
Mr. Rick Jennings: The refurbishment costs are based on—they’re looking at experience that’s been done, and also the planning estimates of the companies that will be doing them, so Ontario Power Generation, Bruce Power. The new-build costs: Basically, one of the things that is looked at is—as I had referred to before, some is some experience in recently completed projects or in terms of started construction. There are two under construction in South Carolina, the United States, and various other ones. In terms of most comparable jurisdictions from labour and various other things, we would pull our weight to that. There are other ones under way in other parts of the world.
Mr. Peter Tabuns: So effectively, these were in-house studies. I’m not saying that in a critical way, but you didn’t have an outside consultant come in and do an assessment and say, “This is your likely cost.” There’s a fairly extensive research department within OPG to look at comparable construction in other jurisdictions to see what cost would be.
Mr. Rick Jennings: The ministry did, before the undertaking of the first competitive process, which was back—that started in 2008. There was a study that was undertaken the previous year. I think that was by McKinsey, so it was back in 2007. There was work at that time, looking at different technologies. More or less of that has been updated, some of it by resources such as OPG and Bruce Power, what have you.
Mr. Peter Tabuns: Can you tell us about whether the decisions to go ahead with Darlington refurbishment and Darlington new build will depend on the price of the projects? Is there an upset price beyond which you’ll say, “It isn’t economically viable”? Because I understand, Minister, that you haven’t made any decision to go ahead with new build.
Hon. Christopher Bentley: Let me take the questions in order. The Darlington refurbishment: We’ve taken a different approach there than you would have seen with refurbishments before, which is probably a bit of the—I sense, from some of your questions in the House, you might have been a bit frustrated with my answers because—
Hon. Christopher Bentley: And that’s for several reasons. The worldwide experience has been, on very large construction projects of any type, that it’s very difficult to predict final price. Nuclear is no different.
So we’ve taken a different approach to this refurbishment than many others. One is to break it down, in this case, into seven different contracts. Every single one will be competitively procured. We haven’t got the rest; we haven’t finished the rest. They’re going to be competitively procured.
The first one, the one that we announced, for the $600 million, includes another element that is very different than you’ve seen anywhere else, and that is that they have engaged in—I will simplify it by calling it a very extensive planning, scoping exercise which effectively plans out the first major part of the refurbishment into 30-minute intervals so that they know who’s going to be required, what they’re going to be doing and where they’re going to be at 30-minute intervals.
One of the things from previous refurbishments, that you’re aware of and others may be interested in, is that when you get into the face of the reactor in particular, and the piece of equipment that you have doesn’t fit the little fuel rod exactly, everything stops until they get—
Mr. Peter Tabuns: So what’s the cut-off price for you? If I’m going to buy a car and I’ve got 10,000 bucks, if the car comes in at 20,000 bucks, I can’t buy that car. I’ll buy a car for 10,000. So what’s your cut-off price?
Hon. Christopher Bentley: —to the extent that I have one, because I’m going to be—not me. OPG will be negotiating six more contracts and holding the feet of every prospective contractor to the fire with these, to make sure that we get the best possible price.
With respect to the new build, as I said, we are working with a couple of prospective bidders, and the idea would be to get these two prospective bidders—it will probably take more than a year—to come up with some bids that you can rely on and then make a decision about whether we actually need more power when it would come on stream 10, 12 years down the road. If we need more power, is this the best way and what are we competing with? Who else has a possibility? Conservation might be one. Gas might be one. There might be other possibilities. What are they? And then you can make that decision with more information on cost, with respect to nukes, than we’ve tended to have in the past.
And you’ll know this: One of the challenges is, when people are giving a price about nukes so far away from the conclusion of the build, they’re not only building in all sorts of risks but they’re not able to estimate the risks properly, so we end up bearing it. By taking a different approach, we’re removing a lot of the risk, better protecting the taxpayer, the ratepayer, and making sure that we have a better basis on which to make the decision on whether we actually want them in the first place.
Hon. Christopher Bentley: When OPG, which is the one doing the negotiating, is in these competitive procurement processes for potential contractors for each of the stages, and when those contractors are in their own competitive process with subcontractors, nobody announces their walk-away price at the beginning of a negotiation. The best way to make sure that you’re going to end up on the bad end of a negotiation is to tell the other party everything they want to know.
Hon. Christopher Bentley: In fact, you want to keep poking them and prodding them so that you get them to give as low a price as possible, and then you go back and you get some more. And then you walk away, and you say, “Well, let’s see if they come back.” And then you figure it out. It’s a very dynamic process, and I know you would want and everybody else would want every single penny to be saved for the people of the province of Ontario. And, gosh, we’re going to do that, but we’re never going to be able to do that if we tell the other side everything they want to know about our final position right now. I can’t do that, because OPG is in charge of it anyway.
Mr. Peter Tabuns: Well, I’ll say this right now: If you’re going into a process and you either don’t know or will not tell the public at which point nuclear is no longer economically viable, then we can’t hold you and the public can’t hold you accountable.
Anyone around this room who has bought a house or bought a car or, frankly, bought a washing machine knows that you decide what you can afford and then you buy within that parameter. Frankly, if I say I can spend 500 bucks on a washing machine, that I won’t buy anything after that, and I’ve got two competitors, well, I’ll take the least costly of the two competitors.
In the past, in estimates, it actually has been the case that a minister has said that there’s a point at which it’s too expensive. So if you’re no longer going to tell the public when nuclear becomes too expensive or any other form of power becomes too expensive, we need to know that.
Hon. Christopher Bentley: Well, in fact, what we’ve done by setting up the refurbishment approach in this way is to build in a level of accountability and oversight that has not existed in these projects, either in Ontario or elsewhere, in the past. By breaking it down into seven different contracts, announcing the first part, the first point, we’re accountable for that. You know what work is going to be done, and you know how much. You’ll be able to measure, as will everybody else, whether this is going to come in on time, on budget. That’s accountability.
We are building in oversight into this process to make sure that not only do we have the robust planning approach, not only have we broken down the construction and refurb planning approach into 30-minute increments, but we’re building in an oversight that will add to that.
Competitive procurement processes in any area—and I appreciate the simplicity of buying a washing machine. I think we’ll all agree that maybe refurbishing nuclear units is a little more involved and complicated than a washing machine. There are a lot of dollars at stake in these discussions. We need to make sure that OPG is able to bring their best to bear on this. I think they brought a very creative approach so far in not only breaking it down into seven different contracts, but making sure that in this first one, they break down the work into 30-minute increments. The best protection we can all hope and expect is that OPG, representing, ultimately, our interests, is learning from past situations, is not repeating the same approach that hasn’t always given the results that different parties around the world want, and is building in protections for ratepayers at every stage. That’s what they’ve done.
They are commercially sensitive discussions all the time, but there will be, unlike in the past, obviously contracts that are let at every stage here. If there are seven different contracts, competitively procured, then you’ll know when number two comes in, and you’ll be able to say, “Okay, that’s for X, and then we’ve got the rest.”
So unlike other major refurbishments in the past, when all of a sudden there’s a headline saying, “This is where we are”—and it’s not always been a happy headline—you’re going to see this move incrementally through, knowing that, at every stage, OPG, because it’s competitively procuring this, is going to be able to say to anybody who’s not toeing the mark, “Well, maybe you’re not the one for us.” So that is a very significant piece of protection, and because it’s so big and involved, what they appear to have learned—you know, OPG was brought in to help the nuclear refurb at Point Lepreau get back on time, get it done. They were brought in to do this. What they’ve learned from that and other projects is that what we’ve done in the past hasn’t always delivered the best approach, so break it down, plan meticulously, then plan some more and hold the contractor’s feet to the fire at every single, solitary step of the way.
Gosh, I don’t know, but I’d never tell somebody at the beginning of the process where I was determined to end up. I always want them to think they’re about to lose the contract unless they sharpen their pencil even more. In fact, when I’ve got the price I want, I’m still looking for more. If you offer me the price that I want today, I know I haven’t bargained hard enough. I’m walking out and I’m waiting for you to come chase me. There’s a lot of money in these contracts.
Mr. Peter Tabuns: Well, Minister, every contractor knows that you’ve committed $600 million to planning. And every contractor knows that myself or Mr. Fedeli—if you got up in the House and said, “We’ve spent $600 million. We can’t afford the next stage. Sorry, that $600 million is down the sewer”—you’re not going to do that and your successor is not going to do that. You’ve spent 600 million bucks. You’ve committed to spending 600 million bucks. We’re on the hook for all the rest, because politically it is almost impossible to say we wasted $600 million.
You can’t tell me, even though in your long-term energy plan, you project what you’re going to spend in total capital—you tell us how the hydro prices are going to rise. Anyone who has an accountant or an energy analyst can do a backwards projection and say, “That’s what you expect to be spending per kilowatt hour.”
Look at the American experience. Figure out what it cost them. You can get a pretty good sense of what you’re expecting us to be spending. I’m asking you to tell the public. This is not a private corporation. This is a public organization, and the public deserves to know whether you’re running risks with our dollars. Where is it that you say, “You know, we’re not going to go down the nuclear path. We’re going to go down a different path”? Where is that?
Hon. Christopher Bentley: As you know, it’s a very dynamic conversation. Five years ago, gas prices were heading upward. Now we have historic lows in gas prices, with great supply—apparently—all over North America. Five years ago, renewables were much higher-priced than they are today. Five years ago, we would take a look at the demand construct and say, “Gosh, we’re going to need new power in 2015, 2016, 2017—it’s not the case at the moment—maybe 2018, 2019.” Then the worldwide economic recession hit.
We are taking every step to make sure that, every step of the way, the interests of the people of Ontario are fully protected and better protected than they have been in the past. Don’t take the estimates in the long-term energy plan, which is a very rough sketch about what things are going to be costing, because they have to be trued up with market realities today, to how we can get a better price today—
If you think that I’m just going to accept the deal in there as the best possible—we’re always looking for the better deal. You’ve got to look for the better deal. Every minute of the day, you look for the better deal. You tell me it’s going to be 33 for something; I want to know, can I make it 29? And that’s what we’re doing at every step of the way. So if anybody out there is listening to this, and they’ve settled into this comfort zone and they think, “Oh, great, the government of Ontario is absolutely going to pay for something,” whatever they want us to pay for it, just because we said we’re going to do it in here—that’s not on. I’m standing up for families, for businesses: best deal, every minute of the day; clean, reliable, affordable power. And you know what? If somebody comes up with a clean, green alternative that’s cheap and cheerful, I’m all ears. I’m not turning a blind eye to that, whether it’s in that long-term energy plan or not. That’s our planning document. A lot of work went into that. We’ve used that as the basis. I’ve said that many, many times. But if somebody comes with a better deal, I’m not going to say I’m not going to do it, just because it’s not in there.
Hon. Christopher Bentley: What I’ve always said is that’s the plan, but if you come up with a better deal, just because it’s not in there, I’m not going to tell you to go away. It’s a 20-year plan. So if you come up with a better deal, are you suggesting that I’d say to the people of your riding or my riding, “No, I can’t look at that, because that deal wasn’t in the plan”? No, no. In fact, that’s what we’re doing. When we bring in the consolidation legislation for the OPA and the IESO, that makes the point. The whole point—
Hon. Christopher Bentley: —is to make sure that the very important planning function that can be done in both of those areas is brought together to strengthen it, and that as you develop a plan like this, you’re able to use the consumer oversight function, the Ontario Energy Board, in a more robust, real-time way, not only in developing the plan—that’s important—but also to make sure that they have oversight over the parts of the plan to get a better deal. Who knows what the Ontario Energy Board might say? They might say, “What are you doing that for? This is cheaper.” They might give us that advice.
The point is, this is enormously important. The long-term energy plan: Of course we ran on it. A lot of work went into that. Thousands of people participated in the discussion. My point to you is simply this: If somebody comes along and says to me, “You know what? I’ve got clean, green power at half the price,” you bet I’m going to pay attention. I can’t imagine that anybody watching these proceedings would want me to say anything otherwise.
Mr. Peter Tabuns: So, Minister, are you engaged in an ongoing search to displace most of the very expensive nuclear power with substantial investments in efficiency and conservation that will allow us to dramatically reduce the nuclear footprint in this province? Because you know very well that standard costs for power generation show new nuclear as very expensive; in fact, Citibank today said that new nuclear in the UK would be more expensive than offshore wind. You know that efficiency and conservation costs out at two to four cents a kilowatt hour. Why are you not announcing that your plan is going to put efficiency and conservation first, displacing the need for this new risky and very expensive generation?
Hon. Christopher Bentley: It does, by the way, happen to support almost 80,000 jobs in the province of Ontario. We are world leaders in nukes. It is our determination to make sure that nukes continue to be just about half of the baseload power in the future, but I say to the member—
Hon. Christopher Bentley: I say to the member that if you or others come forward with a reliable, cost-effective proposal for the huge numbers of megawatts we have to have every minute of every hour of every day in some other way, of course I’ll take a look at it.
Nukes are reliable, strong baseload power. They run 24-7. They run on holidays; they run on off days; they run on busy days. I haven’t seen too many proposals out there for the type of clean, reliable power that you can always count on. But if it comes, you bet I’m going to take a look at it. I’m on the lookout for everything. But realistic proposals—please, bring on those realistic proposals. I’m really excited by the possibilities, and I say once again, this is the plan, it’s our determination, but gosh, if you bring me something that’s not in there or if you say, “I can get you that cheaper,” I’m all ears.
Hon. Christopher Bentley: Thank you so much. I’m delighted to take some time. You know, I wanted to build on a little bit of the conversation around nuclear and then maybe develop some other things. I think my first experience with nuclear was in the late 1960s when I, with the family, drove by the proposed nuclear power plant, the Bruce, and of course, I was interested in this technology that I was not aware of before.
Nuclear, from that point on, has been a very reliable and very clean source of power for the people of the province of Ontario. It’s baseload power, which simply means you can rely on it, it can run and it runs 24-7. There are few sources of power, once it’s built, that are more efficient and effective and none that are cleaner than nukes—none that are cleaner than nukes. There may be some that are as clean, but none cleaner. So it has been a very significant and important source of power in the province of Ontario for a long period of time. It’s not surprising that when we developed and when we got extensive public consultation and submissions on the long-term energy plan, the view was it should continue to be a source of power in the province of Ontario into the future. About 50% of our baseload power—it’s about a third of the generating capacity, but because it runs all the time, it’s about half of the power that we actually rely on and use. The fuel is relatively inexpensive, fuel prepared up in the great riding of Peterborough.
In fact, the nuclear industry in the province of Ontario supports—I’ve seen various accounts—I think it’s close to 80,000 jobs; not only those directly involved in the nuclear facilities, but by both Ontario Power Generation and Bruce Power.
Also, who prepares the fuel cells, puts it into the fuel rods? Who does the retooling? Who does the year-to-year maintenance? Who does the research, the development? All of those spinoff industries, many of which are strung around the GTA—but every part of Ontario, and I mentioned Peterborough, is touched in some way by the nuclear industry.
I think we just need to remember that the nuclear industry has not only been a very good, reliable, clean source of power in the province of Ontario, but it also happens to support about 80,000 jobs. From what I’ve heard, and to use a phrase that I hear from another part of the House from time to time, particularly from the third party, those are good jobs. These are highly skilled jobs. These are very-good-wage jobs. These are jobs that support families. These are jobs requiring a high degree of skill, a great deal of technical expertise, a lot of training. These are long-term jobs. These aren’t 60-minute jobs. We’re talking about a lot of very highly skilled jobs that last a long period of time.
Of course, the nuclear reactors in the province of Ontario, the Candu technology that has been used in them, sold around the world—we have engineers here. We have experts here in the province of Ontario who take that expertise that’s developed, nurtured, right here in Ontario all around the world. We’ve got nukes with the Candu technology all around the world—a very significant factor, a major export industry for us.
We also happen to have some of the world’s foremost experts in nuclear technology and running nuclear power facilities. I mentioned Tom Mitchell, who’s the head of Ontario Power Generation—so the Darlington and Pickering sites. He led the international effort, went over to Japan, to deal with the issues related to the tsunami, the terrible tragedy there that affected so many and caused such loss of life and huge long-term damage. Duncan Hawthorne was part of that, as well. They happen to be running our two facilities right here in the province of Ontario. What’s interesting—
The Chair (Mr. Michael Prue): We have a 30-minute bell, which means in about 25 minutes we will be finishing. The minister has up to that much time left—about that, almost perfectly—so he can continue. If he doesn’t want to continue, we’ll probably break at that point.
I was talking about Tom Mitchell, who’s the head of Ontario Power Generation, leading the international effort that assisted in the tsunami-related issues around Fukushima, a very important effort. Of course, from efforts like that, we learn. We learn safety issues. We learn how to further enhance and build on safety.
The fact that we have the leaders right here in the province of Ontario—I mentioned Tom Mitchell and, of course, Duncan Hawthorne—is extremely important for us. They all work very closely with the Canadian Nuclear Safety Commission, which of course is the federal regulatory oversight. They are always working, constantly probing, doing studies. But on top of that, there is an international agency that travels around the different nuclear facilities and does an inspection. The purpose of doing that and the reason every country lets them in is to make sure that the international agency is learning best practices and the nuke facility is learning best practices as well. Every jurisdiction is trying to build on its safety record and the best possible practices approach.
You’ve heard me speak an awful lot about refurbishment and you probably say, “Okay, what is this?” I really should have explained that a little bit more. There’s ongoing maintenance all the time, the type of maintenance work you’d expect in any facility, whether it’s a power facility or a manufacturing facility—absolutely anything. But the nuclear facilities, after about 25 or so years, it’s time for them to have a full overhaul. Again, you can probably push it out further, but safety is always number one. So they have what’s called a refurbishment, a major overhaul, which really gives another 25 to 30 years of life. You’re taking an asset after 25 or 30 years and you’re saying, “Well, we’d really like that asset to last for 60 years.” That’s why they do a refurbishment.
Not surprisingly, when you do any sort of overhaul, you often don’t really know what you’re looking at until you get in there. You’ve heard many engineers, mechanics and millwrights speak about doing machinery overhaul, and gosh, when they got in there, they found something or other. Not surprisingly, that can happen in a nuclear refurbishment as well. It’s important to learn the lessons of the past, to build on those lessons to make sure that you can control not only the time a refurbishment will take and how long the unit will be out of production, but also the cost of the refurbishment. Unlike the washing machine that the member from Danforth referred to earlier, a refurbishment of a nuclear facility is a very long and involved process, a highly skilled and technical process. It’s important to get the approach right.
The approach being followed at Darlington, which is the refurbishment that we were speaking about before, is a different approach than has been followed either in the province of Ontario or, to my knowledge, anywhere else—OPG may correct me, but anywhere else. That approach is to do three things, essentially: One, you learn the lessons of before. They were involved with New Brunswick Power to make sure that the refurbishment at Point Lepreau got back on track and was brought in, and it’s coming online now, as I understand. They actually were able to learn a lot through that. They also learned from other jurisdictions which are conducting refurbishments.
But in addition to that, they’ve learned a couple of things that they’re implementing here. First, break the contract down so that everyone who’s participating in part of the contract knows exactly what they’re doing over a much shorter period of time—much better to manage the progress, much better to manage costs—and then competitively bid on all of those. A contractor who gets part 1 is not guaranteed of getting the other six parts, if they’re needed for the other six parts—they’re not guaranteed. That does two things, of course. It makes them sharpen up the pencils when it comes time for the bid price, but it also puts extra pressure on them to bring it on time, on budget.
I really like that extra pressure. I like that little bit of uncertainty in everybody’s mind, that little bit of uncertainty whether you’re really getting the next day’s work. I make no apology for that; I make absolutely no apology for that.
They’ve built that in, but then what’s this 30-minute planning that I was speaking about? Gosh, I’m not the engineer. My father was an engineer and my brother is an engineer, but they knew I’d never become an engineer, so I had to become a lawyer. I’m probably going to explain this incorrectly, but one of the things that they’ve learned as these refurbishment projects take place is that you’re dealing with a very sensitive area—the fuel face, reactor face—and you’re dealing with many different pieces of equipment that need to be handled, and the machinery to handle these pieces of equipment is very specialized itself.
When this delicate process is taking place, like taking the fuel rods out, you want to make sure that the equipment you’ve got is going to fit the fuel rod exactly. If it’s a little too big, then it can’t be handled properly; if it’s a little too small, it’s not going to fit, and that’s not going to work. That’s not a simple run down to the basement to get the right pair of pliers. That can cause the whole effort—dozens or hundreds of workers—to come to a standstill while the new equipment is obtained—that’s the lesson of before—especially if that new equipment has to be specially manufactured.
What they’re doing in this case is actually—well, it’s a bit of a dress rehearsal, in many ways. They’re building a replica of the reactor face, and they’re going to be able to test out the equipment with the person who’s actually doing the procedure, to make sure that they know what they’re doing exactly and the equipment works precisely, so that when they go in to do the actual reactor, they’re replicating what they’ve already done. They’re planning that out to 30-minute increments.
Now, planning anything out to 30-minute increments, even planning a minister’s concluding statement on the first day of estimates, is an interesting process. But when you’re actually planning sequential work over months or years to 30-minute increments, that’s a rather large and significant undertaking. If you’re 31 minutes and you’re still on it, they know they’ve got a problem. I like knowing that. I want to know that. Why is it taking 31 minutes? Why is it taking 32 minutes? They can get on it right away. Then you can go back to the contractor, back to the sub, back to whoever’s responsible and make sure it gets fixed. I like that accountability.
You can also say to them, “Well, you know what? You’re not doing the work the way you’re supposed to be doing it. You’re not going to be doing it for much longer.” I really like that. I like the uncertainty that’s around that: certainty of safety, certainty of completion, certainty of the goal, and uncertainty with respect to whether people are going to be continually getting work if they don’t deliver on time and on budget. I like the accountability that is built into that. That’s one of the lessons learned from projects that we’ve had in the past and over the years.
My colleague from Danforth and I had a good conversation about, “Well, are you looking at anything else?” Well, absolutely. We’ll look at everything; we’ll look at anything else. At the end of the day, what we’re trying to do is make sure that we have a clean, reliable, modern, affordable energy foundation for the people of the province of Ontario. If we can generate our electricity, our power, here in the province of Ontario—we’re just focused very much on electricity here. If we can generate power in the province of Ontario, that actually gives us a degree of control that we wouldn’t have if we had to import it from somewhere else. That’s important, because we’ve had the import story before and it wasn’t always a happy story.
So, generating it here is important. It also means that we’re benefiting from the jobs here in the province of Ontario. The energy industry here is very strong, very vibrant. We’re world leaders in so many ways. I spoke to clean; I spoke to nuclear. We are leaders in so many ways. Supporting good jobs here in the province of Ontario by having them produce, manufacture, generate the power that we’re actually using has got additional benefits, huge spinoff benefits, because as I say, most of these jobs are highly skilled, very technical and people get paid for their expertise. Let’s just put it that way. So they are good jobs; they’re very, very, very good jobs, so supporting that very robust industry here in the province of Ontario is important.
So, are we looking at other things? Well, one of the characteristics of Ontario’s supply mix is that we have a number of different ways of generating electricity, so we’re not relying on just one form. Other provinces may just have hydro. We’d probably like to have the vertical challenges of other provinces and just have hydro.
We’ve got hydro. We’ve long had hydro. It doesn’t generate all of our electricity, although, as I said, both at the Beck station in Niagara Falls and the Lower Mattagami River, among other places, we are developing more and more hydro.
We’ve said no to coal. We’ve decreased that 25%. We are down to much less than 10% right now. In fact, much of our coal capacity is really just there for peaking issues and to integrate renewables from time to time and a just-in-case scenario as we get out, but we’re going to be out of coal by the end of 2014—no later. We are absolutely on track by the end of 2014. That is a very significant change in the supply mix of the province of Ontario.
My friend mentioned, and I know will speak again, about conservation. The people of Ontario, the families and businesses in the province of Ontario, have been doing a remarkable job around conservation. In fact, it’s probably the first and the easiest way to reduce your energy bill. Whether you’re a family or whether you’re a business, you want to keep doing what you’re doing but do it with less. Businesses have recognized this, and we’re continuing to develop ways of making sure they’re aware of opportunities to continue their production or increase their production while reducing their use of electricity, of power.
Conservation can, in fact, make sure that we don’t need to invest in what is expensive generation, no matter which form you choose. No matter what your choice, building something is going to be expensive. There’s no question around that. So if we can create the equivalent of a power plant by reducing demand, by conservation, that’s money that the people of Ontario, families and businesses, don’t actually have to pay. That is a great, great result.
More and more conservation has occurred in Ontario. We’ve set enormously ambitious targets. We’re well over 1,700 megawatts of power—I know; kilowatts, megawatts, terawatts—that’s about the same as a nuclear reactor, to put it in context: 1,700 megawatts.
What you need to make sure with respect to conservation is that you can always count on that power. You can always count on that reduced demand because if you’re only conserving Monday, Wednesdays, Fridays and Saturdays, it doesn’t help. So conservation can displace, can mean that you don’t have to invest in new generation if you can always count on it all the time.
That’s where we’re trying to move with conservation initiatives. We make sure that we can always count on it or we can always count on it during those peak periods of demand use, like hot summer days. We’ve got some industrial conservation initiatives that really address this. If we can get big power users to agree not to use power during the hottest times of the year, when we’d otherwise have to bring on expensive additional generation or import power, that can be a major saving for families and businesses throughout the province of Ontario.
So we’re very alive to the importance of conservation, but there are other possibilities in the future. I mentioned before that gas is now at historic low prices. Those historic prices today: Are they something that you can count on in the future to get electricity that’s generated from gas at a lower price than it has ever been in the past? It will be interesting to see what that actually means in the future. You have to plan for the long term; that’s why it’s a long-term energy plan. Because what looks great today is not so good in five or 10 years’ time sometimes. We always have to remember that when we’re dealing with reliability, we are dealing over the long term and you don’t build generation overnight. That is a lesson that we learned in the run-up to 2003 and for a few years after that. So we’re always mindful of that.
But I say to everybody that if there are other ways of bringing on the new power that we may need—or making sure we don’t have to bring on new generation—that are more cost-effective and that are as reliable and that are clean—not interested in going back to coal; not interested. It has huge health effects, big environmental effects. But if there are other ways, I want to see the cost proposition. I’m very, very interested in that. At the end of the day, it’s what is going to work best for the families and businesses in the province of Ontario.
You know what’s interesting about coal? That even among states in the United States that have drawn a lot of their power from coal generation, they’re now looking at green sources of power. The governor of Illinois was up here not too many months ago, talking about their intention to start obtaining green power by 2018. They had a target; they’ve already set a target.
So it’s interesting that even those places you would have thought maybe they’re not so interested because they’re either sitting on or historically have burned or they’re right beside a heck of a lot of coal, they’re now looking at cleaner, greener sources. Why? Well, not because it’s cheaper, necessarily, but it is cheaper when you factor in the health care costs, the environmental costs, the lost productivity from people being sick—not to mention the number one for me is the human suffering: people getting sick, premature deaths, hospital admissions, families and individuals devastated by illness, millions of people across this country who have breathing difficulties and for whom taking a breath is a real struggle.
We say in many different contexts that we should take steps to make sure that somebody with a health issue gets the help they need. We don’t stand to say, “Oh well, you know what? I’m not sure I’m going to give them the help they need because I don’t want to pay an extra buck or two.” We don’t say that. We just expect it.
Well, a lot of people were getting sick from dirty air and there were a heck of a lot of smog days, as I recall, in 2002-03 and yes, continued into 2004-05—a lot less last year, the last several years.
The effect of what we’re doing, the leadership that we’re taking, is being felt. It’s being felt all across this province. It is a very significant initiative; it is the largest greenhouse gas reduction initiative, I believe, in North America. It will be the equivalent, I believe, of taking about seven million cars off the road. It’s a huge, huge greenhouse gas reduction initiative, very significant for people with breathing and other health-related issues and difficulties. We happen to be doing it in a way—we’re adding to, accelerating our getting out of coal in a way that is developing a clean, green economy here in the province of Ontario.
And I’m just going to go there. I’ve got my hand-held device here, my BlackBerry. Over the past five years, we’ve done the equivalent of what took 50 years before, which was going from that black rotary phone to the hand-held device, and hand-held device that’s enormously powerful, that can search the Internet, communicate with people all over the world. We’ve done that here in the province of Ontario with smart meters.
We’ve done that here in the province of Ontario with smart meters. We’ve employed technology which has the potential to be as powerful as going from the rotary phone to the hand-held device. What we haven’t yet done is develop and give people the instruction manual on what you actually do with the information that we gather, and we’re just starting to do that. We’re just scratching the surface of that. That’s where the money-saving for families and businesses comes from. That’s where the system benefit of actually not needing to generate as much power because we can move it around better comes from. That’s where the ability to identify breaks in lines, identify issues of congestion and deal with them electronically will come from: smart meters and the related smart grid.
The Chair (Mr. Michael Prue): I just want to tell you: You have three minutes left. You actually have three minutes and 30 seconds, but you only have three minutes today. You’ll have to use the last 30 seconds next time, if you really need it.
Hon. Christopher Bentley: I will probably just end on this, because I know everybody is anxious to get up to the vote, as I am. I will simply end by saying that I’m really looking forward to the next couple of years as we let families and businesses know what they can do to manage their consumption of power through smart meters, through the smart grid, with the information that’s now available to them. Save energy, reduce overall need, save money: perfect combination. It’s the great unexploited opportunity.
Guess what? The world’s taking notice. International journalists are coming here to see what we’re doing in smart meters, smart grids and related technology. They’re coming here because they know we’re the leaders. Where are the jobs? We’ve got them. We’re the leaders. That’s where the jobs of the future are going to come from, in part.
The Chair (Mr. Michael Prue): Okay. We are going to be adjourned at this point until Tuesday, May 15, at 9 o’clock. That gives everybody just over six minutes to get upstairs. Meeting adjourned for today.