2008 Legislative Session: Fourth Session, 38th Parliament

HANSARD

The following electronic version is for informational purposes

only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, APRIL 8, 2008

Morning Sitting

Volume 30, Number 1

CONTENTS

Routine Proceedings

Page

Introduction and First Reading of Bills

Oil and Gas Activities Act (Bill 20)

Hon. R. Neufeld

Committee of the Whole House

Utilities Commission Amendment Act, 2008 (Bill 15) (continued)

J. Horgan

Hon. R. Neufeld

Report and Third Reading of Bills

Utilities Commission Amendment Act, 2008 (Bill 15)

Second Reading of Bills

Greenhouse Gas Reduction (Renewable and Low Carbon Fuel Requirements) Act (Bill 16)

Hon. R. Neufeld

J. Horgan

On the amendment

J. Horgan

Proceedings in the Douglas Fir

Room

Committee of Supply

Estimates: Ministry of Advanced Education and Minister Responsible for Research

and Technology

(continued)

Hon. M. Coell

B. Ralston

R. Fleming

[ Page 11021 ]

TUESDAY, APRIL 8, 2008

The House met at 10:02 a.m.

[Mr. Speaker in the chair.]

Prayers.

Introduction and

First Reading of Bills

OIL AND GAS ACTIVITIES ACT

Hon. R. Neufeld presented a message from His Honour the

Lieutenant-Governor: a bill intituled Oil and Gas Activities Act.

Hon. R. Neufeld: I move that the Oil and Gas Activities Act

be introduced and read a first time now.

Motion approved.

Hon. R. Neufeld: Mr. Speaker, I am pleased to present the

Oil and Gas Activities Act. The oil and gas industry in British Columbia has

become a major force in our provincial economy since 2001. The oil and gas

industry is the largest resource contributor to B.C.'s provincial revenues. In

this recent fiscal year we set a record-breaking $1.2 billion in oil and gas

rights sales, which contributed to an estimated $2.5 billion in total oil and

gas revenues.

This illustrates the confidence that industry has in investing in

British Columbia and in British Columbia's energy plan, released in 2007. The

B.C. energy plan outlined the province's commitment to become one of the most

competitive oil and gas jurisdictions in North America and to lead in

environmentally and socially responsible oil and gas development.

The sector has expanded and matured since the current regulatory

framework came into effect a decade ago. The Oil and Gas Commission was

established as the agent of the Crown and the regulator of the oil and gas

industry. The Oil and Gas Commission approved all elements of oil and gas

activity and relied on a number of acts governing the oil and gas sector, such

as the Petroleum and Natural Gas Act, the Oil and Gas Commission Act, the

Pipeline Act and the Forest Practices Code Act. The Oil and Gas Commission will

now have one act.

[1005]

There are a number of new elements in this new legislation,

particularly the strengthening of environmental regulations such as streamlining

the application and approval process for oil and gas permits; creating a modern,

comprehensive compliance and enforcement regime that fully equips the Oil and

Gas Commission with the compliance and enforcement tools needed to regulate a

complex industry; encouraging and enabling innovation for an increasingly

efficient and environmentally sound industry; setting new requirements for

notification and consultation with individuals affected by oil and gas

proposals; establishing new regulatory powers to improve the protection of

environmental interests; and establishing a new appeals process to address

administrative fairness principles with respect to the decisions of the

regulator.

This new legislation complements our approach as set out in the

B.C. energy plan. The Oil and Gas Activities Act will strengthen B.C.'s position

as a great oil and gas jurisdiction in which to invest and foster industry

innovation while at the same time supporting commitments to job creation,

healthy and prosperous communities and environmental leadership.

I move that the bill be placed on the orders of the day for second

reading at the next sitting of the House.

Bill 20, Oil and Gas Activities Act, introduced, read a first time

and ordered to be placed on orders of the day for second reading at the next

sitting of the House after today.

Orders of the Day

Hon. C. Richmond: In this chamber I call committee stage of

Bill 15, Utilities Commission Amendment Act, 2008, hon. Minister of Energy,

Mines and Petroleum Resources; and in the little House, Committee of Supply,

estimates debate on the Ministry of Advanced Education.

Committee of the Whole House

UTILITIES COMMISSION

AMENDMENT ACT, 2008

(continued)

The House in Committee of the Whole (Section

B) on Bill 15; K.

Whittred in the chair.

The committee met at 10:08 a.m.

section 14 (continued) .

J. Horgan: Good morning to members on the other side,

members here. I look forward to a briefing on Bill 19, the other energy bill —

the other, other energy bill — at some time in the near future.

We were yesterday, when we adjourned the debate, speaking about

section 14, which is the energy supply contract

section of the existing act. I'm

wondering if the minister could tell me if there's anywhere in this amendment

where the commission is to consider price as a factor in approving or rejecting

a contract.

Hon. R. Neufeld: Before we start, maybe I'll reintroduce

the staff with me here today: Deputy Minister Greg Reimer; and from the

ministry, Les MacLaren, the assistant deputy minister for electricity and

alternative energy. Shelley Murphy is the director of the electricity policy

branch in the ministry. They're the people with me today.

[1010]

[ Page 11022 ]

Yesterday we left off…. We didn't have very much time to discuss

this section, so I want to give a little more context to this section. I know

the member had asked for that yesterday, and in the shortness of time we

couldn't explain it as fully as he probably would have liked to have happen.

What happens now when B.C. Hydro or a utility goes out and makes a

call for electricity? They first have to go to the commission and actually get

approval to do that process. Then, once they've received interest — bids from

companies that want to supply electricity — they have to take each one of those

individually to the commission for a review. There's a way that we can actually

do this a little simpler and with less staff time involved and actually

streamline the B.C. Utilities Commission process.

What this

section does…. It does deal with costs. The utility will

come before the commission and say: "Here are the terms and the conditions and

the prices that we think we would get in this call."

There could be a range of prices that are for different types of

generation, but some range. Utilities have a pretty good idea what those costs

are. Everybody has a good idea what it costs to build this generation, whether

it's in British Columbia or some place else. They'll put that before the

commission. The commission will review that, in the first instance — the terms

and the conditions and the prices that are set out there.

What happens then is that the utility makes a call, and they can

actually move forward with awarding energy purchase agreements if in fact the

proposals meet the terms, conditions and prices that were set out in the first

place to the commission.

It makes the second step unnecessary, where the commission has to

individually go through every contract and look at them — as long as they meet

the conditions, terms and prices. In

section 2, and to answer the member's

question about, "Is there any place that the commission can deal with prices?" —

yes. We know that prices would be something that would be forefront, but

(2.6) is where they do. The other one is in (2.5)(d): "the interests of the persons in

British Columbia who receive or may receive service from the public utility…."

That's the ratepayers. Then (2.6) says yes.

That maybe briefly explains better to the minister — I mean the

member — where we left off yesterday.

Interjection.

J. Horgan: Prescient — yeah. I love saying prescient, just

for the ring in my ear. I don't have a ring in my ear. The ringing in my ear

would be a better way to say that.

Well, I thank the minister for that, and I reviewed the

section

overnight just so that we could have a quicker debate on this section. I believe

I get where the minister is going and why staff have recommended these changes,

but this is where I would like to move an amendment to, in my opinion, add a

little bit more certainty to this

section in the interests of ratepayers.

It would be an amendment to

section 14, 71(2.6)(b), and it would

go as follows:

SECTION 14 The following text, highlighted by

underline, is added:

(2.6) If the commission

issues an order under subsection (2.4), the commission may not issue an

order under subsection (3) with respect to a contract

(

a) entered into exclusively on the terms and

conditions, and

(

b) as a result of the process

Referred to in subsection (2.3) , unless the commission

determines that the price of the electricity to be supplied under the

contract is excessive .]

On the amendment.

J. Horgan: It's my view that by including this clause,

particularly with the word "excessive," it would provide some certainty to the

broader community that doesn't spend a lot of time reviewing the Utilities

Commission hearings and looking at orders and so on — that the fundamental

objective of the commission in this instance, when it comes to energy supply

contracts, is to ensure that the costs of those contracts are not excessive.

With that, I think I'll give this to the Clerk.

[1015]

The Chair: It's on the order paper, Member.

J. Horgan: It's on the order paper. Oh, good enough.

Just speaking briefly to the amendment, as I said, not everyone….

I know that many members of this place don't spend a lot of time contemplating

the activities at the Utilities Commission. I myself have said on occasion:

"Mothers, don't let your babies grow up to be regulatory lawyers and attend

Utilities Commission hearings."

I am eternally grateful to all those interveners and all those

staffers at the commission who go through the very, very difficult and sometimes

tedious work of ensuring that complicated contracts — whether they be with

independent power producers or they be projects initiated by B.C. Hydro — are

done in the least cost fashion and done with the ratepayer in mind.

One of the concerns that certainly we've been echoing on this side

of the House — and the minister would probably be tired of me saying it — is

that we're significantly concerned, in fact, that the cost of independent power

contracts are above what the market would bear because of the value of that

power, the time, the dispatchability, the reliability and so on.

What I believe we're doing by adding this amendment is ensuring

that at the end of the day, when the contracts are being deliberated upon by the

commission and the interveners have had their say and the utility has had its

say, the commission can, in the interests of the public, reject those contracts

if they believe that the costs are excessive.

I know that is a layer of complexity that the minister, by

introducing this amendment, is trying to relieve. I believe it's something that

the public wants to see. I believe it's something that the public expects from

its regulator.

When it comes to increasing energy costs, we talked about this

when we introduced the lifeline amendment

[ Page 11023 ]

yesterday to do what we could in this place to relieve some of the pressures

of escalating energy costs for seniors, people on fixed income, low-income

British Columbians. There are mechanisms available to us as legislators that

take this esoteric discussion down to a plane where ordinary folks can

understand it, and excessive cost is something that everybody understands.

If you can buy something for $45 a megawatt hour, why would you

then pay $75, which the minister said yesterday was the average cost of the last

call from B.C. Hydro? I think most people try and find least cost options when

they're doing their household purchases. When they're preparing for any

eventuality, they try and save as much money as they can. It doesn't grow on

trees. The minister is fully aware of that. Some might argue that it grows under

the ground in the Peace, and we're pumping it out.

The minister just said, in introducing his last bill, that

certainly there's a great deal of wealth coming to the treasury from energy

costs that are being realized as benefits to us here in this Legislature and

through other ministries such as Health and Education and social services.

We all want to see more revenue coming to the Crown, but we don't

want to see more costs coming to consumers. It's my view that this amendment, by

including in

section 14 excessive costs, would meet that test and would

demonstrate to the public that we in this place are working on their behalf, not

necessarily in the interests of independent power producers or in the interests

of utilities who want to find power that may be easier to get but more costly.

We would like to see people sharpen their pencils.

I know that the minister, when he was on this side of the House in

debate…. I can remember many times talking about inflated costs at B.C. Hydro

and an expectation by the then opposition that the commission had an obligation

to ensure we were paying as little as possible for our energy.

When the minister stands, I know he's going to say that we do have

among the lowest electricity costs in North America, and that's a good thing. We

want to preserve that position. And why not? When we have an opportunity, when

we're opening up a complex bill like the Utilities Commission Act, why not take

that opportunity, as we did with the lifeline amendment, and ensure that the

regulator has a bottom line — that is, excessive cost.

There are projects out there that may appear on the surface to be

easy to get off the ground. We have now in this bill a date certain for

self-sufficiency. Again, we talked about this yesterday, and I'm not going to

belabour the point, but the minister should take some comfort that we won't have

to spend a lot of time on this in estimates.

[1020]

There is a silver lining in this debate, and that is that if we

have to go into a negotiation in 2015 to meet our 2016 objectives, I think that

the public would expect that the commission will override the policy directive

of self-sufficiency if it's not economically viable to do so. If excessive cost

would result from signing those contracts to meet a policy objective that's now

becoming a law with respect to the 2016 date for self-sufficiency, I would think

that at a minimum, the public would expect us to protect their interests by

saying that we will not pay more than we have to pay for electricity in 2016.

That's the motivation for this amendment, hon. Chair. I know that

the minister will have some comments on it. I hope other members of the House

will participate in this debate. I think everyone here has constituents who are

on fixed incomes, who are feeling the squeeze of increasing energy costs and

other costs.

Energy costs, of course, lead to increasing costs for food,

increasing costs for other services and goods in the community. It's the

backbone, in fact, of our economy. The minister has said that many, many times,

and I share that view. But again, as legislators, we have an opportunity here

today, while this act is open before us, to amend it in a way to assist

individuals, not just streamline public policy for the government of the day.

Hon. R. Neufeld: We're not streamlining for the government

of today. I would assume that these amendments to the Utilities Commission Act

will remain in the act for a long time into the future, as long as they're

useful to meet the needs of British Columbians and as they relate to electricity

supply across British Columbia and how our Crowns and other utilities actually

develop those resources across the province.

I get that the member wants to be dependent on the U.S. and

Alberta for electricity in the province of British Columbia. I get that the NDP

wants to spend $300 million or $400 million, and an escalating number at

hundreds of millions of dollars per year, in those markets in the United States

and in Alberta to acquire electricity — what he thinks and deems to be real

cheap electricity. It's not always cheap electricity, as I brought out to the

member yesterday.

We think and we believe — and I think most British Columbians

believe — that with the resources we have in the province of British Columbia,

we should actually develop those resources in the best interests of ratepayers

in the province so that we can actually be self-sufficient in British Columbia

with electricity, as we were for decades prior to the 1990s.

That's when we started going backwards. That's when we started

being net importers. That, and in the early 2000s, is when we started requiring

up to ten to 15 percent of our total consumption of electricity in the province

of British Columbia…. We had to depend on places like the U.S. — Washington,

Idaho, not California so much, but Arizona, Nevada, all of those places — and

Alberta to actually meet our needs in the province of British Columbia.

I get that the member wants to send that investment, those jobs

and that certainty to some other jurisdiction. I get that the NDP doesn't want

the jobs and the activity to happen in the province of British Columbia. I

understand that. They've made it very clear that they don't

[ Page 11024 ]

care about jobs in British Columbia, that they don't care about the

investment in British Columbia, that they don't care about actually having

enough electricity to meet our needs in the province of British Columbia. I get

that.

I don't understand it, and the member has not said to me anything

yet that would make me think that that's what we should be doing or to agree

with him that that's what we should be doing. I get lots of calls and people

talking to me about the fact that we should be electricity self-sufficient.

This isn't built on any particular sector. This is actually to

look at how we can be energy self-sufficient in the province of British

Columbia. So the amendment that the member brings forward is not needed because

it's already taken care of in the act. I explained to the member earlier that

it's already there.

[1025]

Subsection (2.3). I'll say it again. Subsection (2.3) says:

did neglect to tell the member is that the commission does not have to use this

if it wishes not to. This is a part of the act, the amendment, to actually

streamline how the commission operates, not to interfere with how the commission

operates.

I mean, we get information from people that work on the commission

that they would like to see some streamlining. I know streamlining and moving

into the new world is something the NDP doesn't care about. We do. We actually

like to see people use their time productively. If the commission has the

utility come before it and say: "Here are the terms, the conditions, the

prices.…" It may be a cap. It may be a range. It may be different rates for

different production of electricity. The commission has the opportunity to say:

"No, I don't want to do that. I actually want to review every one of those EPAs

individually." So it's entirely up to the commission.

We've given a lot of ability to the commission to actually review

these in totally different ways, to streamline it. I think that would make

sense. I can't imagine why the NDP wouldn't want to streamline some of this and

still maintain the prices.

The amendments say that price is still a huge part of this, but

what they have to deal with along with price are the environmental concerns in

the province of British Columbia, and those kinds of things. There's nothing

wrong with that — nothing at all.

So the amendment is not needed. It's already there in the act.

It's already contemplated in the act. The sections lay it out. In fact, the

commission would not approve and has never approved a project that is way out of

balance. We know that. Even when the NDP were in power, when they were

constantly giving direction to the commission to exempt different projects….

Then the commission doesn't have the authority. But in here, the commission has

the authority to accept from the utility the terms, conditions, the prices — all

of those kind of things that might surround a call for electricity — and say:

"Yes, if you actually come in with your EPAs that meet those terms and

conditions and prices, you're okay to award an energy purchase agreement."

That's called streamlining. There's nothing wrong with that, but I

want to say, again, that the commission doesn't have to do that if it doesn't

want to. It can actually stay and do it the way they've always done it. First

the utility has to come to the commission and make the pitch. They have to back

it up that they need electricity.

It's certainly not a secret that we need electricity in the

province of British Columbia. Those are not my numbers. B.C. Hydro came forward

in their integrated electricity plan — a Crown corporation. Certainly, I didn't

tell them how to write that IEP. They wrote it. They said that in the next 20 to

25 years we need 30,000 gigawatt hours of electricity — new incremental supply

for growth that's taking place in British Columbia.

They came forward with that. They didn't just release that. They

went to the commission. A quasi-judicial body reviewed that IEP. In fact, I

think they asked some 3,000 questions about it, and the Crown actually had to

answer those questions. The BCUC approved it — totally arm's length from

government. It said: "Yes, we need that." I think it's incumbent now on

government to say: "Well, if it's 30,000 gigawatt hours, we better figure out

how we're going to get it."

Now, if the member is comfortable, and I guess he is, with

acquiring that new incremental supply, as we move forward for another 20, 25

years, from the United States of America, from other jurisdictions, from Alberta

and who knows where else, he can go ahead and do that. He can sell it to the

public. He can say to the public: "We think that we should be dependent on

another jurisdiction for up to 30 percent or 40 percent or 50 percent of our

electricity going into the future." Or you can actually start sticking up for

British Columbia, like we do, and say: "You know, there are entrepreneurs in

British Columbia. There are people in British Columbia. There are Crowns in

British Columbia — Columbia Power Corporation. B.C. Hydro has the ability to go

out and build new generation."

There are all of those kinds of things that could happen in

British Columbia that provide jobs and provide security for the province of

British Columbia in electricity supply, which we enjoyed through the '60s and

'70s and '80s.

What's wrong with that? I can't see anything wrong with it. Why

would you want to spend, in today's world, $300 million in the United States and

Alberta for electricity that we consume here today if we can actually generate

it ourselves and sell some of that back into the market instead of having to buy

it off the market?

[1030]

We can have an argument about market rates and all that. They are

volatile, and they change. I know that the member tries to use average market

rates. I appreciate that, but they don't always stay at that. And you know,

other jurisdictions are growing too.

In fact, I understand that a lot of the pension funds are buying

into things that are happening just south of the border with generation of

electricity, with billions

[ Page 11025 ]

of dollars of expansion. I for one think we ought to be able to build that

here in British Columbia.

This act allows that to happen, and the commission has every right

under this part to actually streamline how they do things or to stick with the

old way of doing things. They have the control, because they are there to

represent the ratepayers of the province of British Columbia, to make sure that

they're meeting their needs in the best way possible.

I don't agree with the amendment. We can deal with it in a hurry.

We don't need the amendment. It's already there. Member, we already put it in

the bill before you brought the amendment forward. I appreciate that you brought

the amendment forward and that you bring forward the issue you're talking about

— excessive. The commission already has that ability and, under sections of

this, has the ability to say yes or no to those.

J. Horgan: Again, the minister simplifies a complex debate

and, therefore, is maybe taking the public and those in the gallery here on a

course that I'm going to have to now correct. That's unfortunate, because we

were going to be moving through this fairly quickly this morning.

For the minister to characterize the position of the opposition as

not recognizing the need for new energy supply is not correct. Everyone

understands that we need new energy supply. We've always needed new energy

supply. In the 1990s new energy supply did come on stream. The minister knows

that. Some of it was natural gas–fired, which at the time was acceptable and was

happening all across North America.

We pull out of the ground a significant amount of natural gas. We

distribute that throughout North America, and it is burned to generate

electricity in many, many jurisdictions. If it's against his ethic to burn

natural gas, then perhaps we might not want to bring it out of the ground and

sell it to other people. When he comes up and says that Elk Falls — 300

megawatts of new energy supply in the 1990s — was somehow misguided and wrong, I

think I would beg to differ with that.

I also feel that the Keenleyside power plant, the Brilliant

expansion in the southeast, upgrades at Stave Falls, Seven Mile, and on and on

the list goes…. The minister is aware of that. To characterize the 1990s as a

time of no growth is not correct. To characterize the opposition as being

opposed to finding new sources of energy is not correct.

Our issue is with a directive to the Crown, to the utility, that

they cannot go forth and generate new sources of supply by way of micro-hydro,

by way of alternative energy supplies. That's the direction from the 2002 energy

plan as I read it. Certainly, based on the complete absence of any proposals

being put forward by B.C. Hydro, I would assume they are taking that direction

to heart, and we're leaving the field completely open to the private sector.

The minister knows that I support a mix of public and private. We

can have a debate. We have a debate internally on that issue, and I'm certain

the members on the other side have a debate internally on that issue. For those

in the gallery, for those at home watching, they want balance; they want

flexibility. Ultimately, they want the Crown corporation, which has served

British Columbians for generations, to do what it can to keep costs down, to do

what it can to generate new sources of supply in a clean and green and

environmentally conscious way. Everybody wants that, Minister. It's not an

us-and-them issue.

Where we divide, again, is on this

section in particular —

referring back to the directive to the commission, when this bill passes — in

the act that says that we shall be self-sufficient by 2016. I then go to new

energy contracts that come forward in 2015 to meet that 2016 date. Where's our

negotiating ability at that time? Where's the protection for the public? What

will the commission say or do in 2015 if it doesn't have some point to go to in

arrived at through consensus, negotiation and compromise, as the minister

suggests?

[1035]

Where is the public comfort that least-cost energy supply is going

to be a higher priority than just meeting the objective of self-sufficiency by a

certain date? That's the problem with this policy, Minister, and I'm not the

only person in B.C. who feels that way. I'm not the only person in this

Legislature who feels that way.

It strikes me that for the minister to say, "We're in favour of

this, and they're against that," is just not the appropriate way to proceed with

this debate. I know we're going to be doing that from now until the election,

and I guess that's the way it's going to go. We have a significant difference of

opinion on how best to meet our energy targets into the future.

Where we do agree is on conservation. We've talked about that. We

patted each other on the back. There's consensus. We are one on the question of

enhancing our conservation capacity at B.C. Hydro. But why not allow B.C. Hydro

to get into the game?

Why not put into that marketplace a competitive player who has

experience in electricity generation, understands the market, knows the

landscape, knows when they need power or when they don't need power? Why

wouldn't you want to see the utility playing the market in the interest of its

ratepayers, not just in the spot market but on generating new sources of energy?

Why wouldn't you let B.C. Hydro build micro-hydro in appropriate locations to

provide power at appropriate times? High value, useful to the utility and

certainly acceptable to the commission.

My concern and the rationale for this amendment are quite simple.

It's specifically to do with what will be

part 3,

section 13, of this bill —

which will become

section 64 of the Utilities Commission Act — which is to

ensure that when we get closer to the self-sufficiency date that the minister

has now prescribed in legislation, the commission has an overriding requirement

to ensure that any new contracts coming forward in that final year or subsequent

years, which is a requirement of that

section of the act….

[ Page 11026 ]

It says as follows: "…by the 2016 calendar year, achieve

electricity self-sufficiency according to the prescribed criteria" — which is

critical water years, if I recollect what the minister said yesterday — "and

maintain, according to the prescribed criteria, electricity self-sufficiency in

each calendar year after achieving it."

So every year after 2017, the imperative self-sufficiency may well

override least-cost options for ratepayers. By including this amendment, by this

one simple line, "unless the commission determines that the price of the

electricity to be supplied under the contract is excessive," I believe it

protects ratepayers. It protects the utility, B.C. Hydro, from having to

purchase high-priced power to meet the self-sufficiency objective.

I think it's a reasonable compromise.

I think the public would be quite satisfied to know that in this

place, at least on this day, there was unanimity that the ratepayer should be

paramount in these objectives. It shouldn't be independent power producers; it

shouldn't be perpetuating government policy, whether it be ideologically driven

or not.

The priority for B.C. Hydro, the priority for the commission,

should be to ensure that costs remain low for British Columbians. That's why we

have a public utility. That's why we've been served well by it for generations.

That's why we should continue to do that into the future.

I don't know if the minister might be reading more into this than

he has to, but I see this as a golden opportunity for compromise in the

Legislature. It's an amendment brought forward thoughtfully in consultation with

stakeholders.

We've talked to interveners about this. They believe that it's a

good course of action. It's not just me saying this. There's a range of people

that frequent the Utilities Commission who believe this is a reasonable

amendment to ensure that in outgoing years, as we get closer to the date that

the minister has selected for self-sufficiency, ratepayers will be protected —

not an unreasonable thing to do. Not an unreasonable thing for legislators to

do.

From all across British Columbia we're assembled here, 79 of us

coming from different communities and different perspectives. Each and every one

of us, virtually, with the exception of those in the southeast of B.C. and maybe

a few in Prince Rupert and New Westminster, is provided our electricity by B.C.

Hydro. By picking a date in the future to become self-sufficient when we know

there are ups and downs in the marketplace, there are mill closures…. I think 30

mills have closed in British Columbia in the past 18 months. That's a big hit on

our energy demand, I would think — a significant hit on our energy demand.

[1040]

When Hydro brings forward its integrated energy plans, or its IEPs,

they're taking forecasts as they assume industrial growth is going to continue

in a certain direction. Well, we've had a downturn in the forest sector. We had

a strike in the forest sector before that, which shut down our pulping capacity,

which is a big driver of energy use in British Columbia.

It goes up and down year after year. It's complicated. The

minister knows it's complicated. So to stand and say simply, "Oh well, you're

against this, and you don't want to generate power in B.C.," is just not

correct. Of course we want to generate power in B.C. We would prefer to see it

being public power.

Public power has served us well. We talked about this at great

length at second reading, and the minister has had it ringing in his ears for at

least a few days on this particular bill. If public power is important to those

on that side of the House, if ratepayers have a high priority in the

consciousness of the government side, why wouldn't they support an amendment

that says that contracts can be rejected if the price is excessive? It seems to

me a reasonable thing to do.

Hon. R. Neufeld: Yeah, it is. The commission has the

authority to do that already with these amendments. That's what I'm trying to

tell the member. We don't need a convoluted amendment from the opposition at

this present time to take care of what's already in the act and already in the

amendments that we're putting forward now.

The commission has the ability to reject it. If the terms and

conditions are not in the interest of the ratepayers of the province of British

Columbia, yes, they can turn it down. I think that's pretty well known. I'm not

sure whether the opposition doesn't know that or doesn't want to read it into

this.

What this is, is streamlining. I explained the process of

streamlining now twice. I have explained it twice that, actually, the commission

doesn't have to do the streamlining if they don't want to. This enables them to

do it. I can't imagine that the member or the NDP would want to not streamline

some processes that we have, instead of stringing them out forever. This has the

ability of actually looking at all the things that the member talked about — the

prices, all of those kinds of things.

What we're giving to the commission is enabling them to say: "Yes,

we can do it up front. Yes, utility, you can come forward to us with the terms

and conditions, which include the prices. If we think that's in the best

interests of the ratepayers, we can say to you, 'Yes, go ahead and do your

Or they can say: "No, we don't agree with that. We think some of

the conditions and terms or prices that you've put forward are the wrong ones.

What we want to do is actually review every one of them." Nothing wrong with

that. It gives the commission some latitude to actually look at all of those

kind of things, and they're there already, Member.

I mean, it's an interesting discussion that we have. There's a

huge difference of opinion. Actually, the difference is that on that side of the

House, the NDP thinks everything has to be built publicly. Government knows

best. A while ago you were talking about B.C. Hydro being excessive in things.

So what you're saying is that B.C. Hydro should build it all.

I don't think B.C. Hydro has to build it all. I think there's

opportunity here to use the entrepreneurship

[ Page 11027 ]

and the ability of other people to build some smaller projects. B.C. Hydro's

expertise is not building two- and three-megawatt run-of-the-river plants or

those kinds of plants across the province.

There could be a whole host of different things. Their expertise

is in large projects. You know, the member says that they're curtailed from

actually doing anything. Well, that's wrong.

I want to remind the member that they're actually in the process

now of installing another 500-megawatt turbine in Revelstoke — 500 megawatts.

They're actually in the process of talking about another 500-megawatt turbine in

Revelstoke. They're actually contemplating two more 500-megawatt turbines in

Mica. They're now working at W.A.C. Bennett and Peace Canyon dams across the

whole province of British Columbia, actually increasing the generation from

those projects that were built a long time ago with new technology. They're not

curtailed from doing that.

In fact, they're explicitly told to do that. That wasn't so in the

'90s, if we want to get back to the '90s. The member talked about the '90s.

[1045]

Interjections.

Hon. R. Neufeld: Across the way they say they do. Be

careful what you wish for.

In the '90s Campbell River…. The member talks about Campbell River

— the largest project in British Columbia that's an IPP ever undertaken. That

was undertaken in the 1990s. It's a natural gas–fired plant on Vancouver Island.

Remember, this is an IPP.

I go back to the '90s, and I can find dozens of comments — from

ministers responsible for B.C. Hydro to Premiers from the 1990s — from the NDP

era that all said: "There's nothing wrong with IPPs. We should be building them

in the province. This is good for the province of British Columbia."

In fact, the present House Leader for the NDP is on record in many

places saying that it's good for the province to have independent power

producers build generation in British Columbia. It came from Glen Clark. It came

from Ujjal Dosanjh. It came from the member for Yale-Lillooet. On and on and on.

In fact, even my critic, the member that's questioning independent

power producers now, is on the record saying it at different times. Maybe he

forgets that he's in favour of IPPs, that he's in favour of independent power

production — until we get in the House, where he wants to try and make some

political hay on: "Oh, we're not in favour of it. It just has to be public

power. You can't actually use any of the private power."

What is so contrary in that whole argument is the fact that that

member will talk…. The NDP have endorsed it. I guess they have a policy about

this. It would be interesting to see their energy policy, because it changes day

to day. They want to actually be totally dependent on the market for, it could

be, up to 50 percent of our electricity needs in the future — the market, folks.

To those out here listening, the market is in the U.S. and a

little bit in Alberta. Both those jurisdictions are building generation as we

speak today, too, that costs about the same as what it does in British Columbia

to build. But those are independent. That's private power, privately developed

power, in those jurisdictions, which the NDP advocate that we should actually

depend on for our electricity.

I can only take from that that you actually want to depend on

privately developed power, independent power producers in other jurisdictions,

to meet our needs into the future, but you're totally against having any of that

generation happen in the province of British Columbia. You would rather spend

$300 million or $400 million a year buying electricity off the market from the

U.S. or Alberta than actually spend that money in British Columbia.

I don't know how that socialist theory works, but it's

interesting. It's really interesting to me to listen to that argument.

You know, Member, when you talk about…. We set a date in here —

2016 — to be energy self-sufficient so that they can actually plan for that. I

told the member how we arrived at 2016 — through the integrated electricity

plan; through B.C. Hydro; through studies; through studies by the B.C. Utilities

Commission, an independent quasi-judicial body — and that 2016 was chosen as the

day that could actually be met.

So there's a target for them to go to. The member says: "We

shouldn't have a target. We shouldn't have a date. It's crazy to have a date."

Well, that's a very quick way of not meeting the target. The target to be first

in a game is actually to win, to cross the finish line at a certain time.

We actually want the Crown, the utilities in the province, to be

at that finishing line in 2016 so that we're self-sufficient, so that we have

enough electricity in the province to actually meet our needs in British

Columbia — still trade on the market, still buy and sell off the market, still

do those kinds of things.

The development of those projects in the province wouldn't go

ahead — the commission wouldn't allow it to go ahead — if those costs were

exorbitant. It wouldn't. But it's within the realm of what it costs today to

build that new generation, regardless of who's doing it — whether the public

purse is doing it or private developers. All we're saying is that we believe in

the private developers to actually be able to go out there and do those kinds of

things across British Columbia for the benefit of us here in the province.

[1050]

The member talked about mill closures. Yes, unfortunately, there

are mill closures. There are some negative things happening in the forest

industry. None of us relish the idea that that's great. I don't think so. But we

certainly can't plan electricity generation by saying: "Oh, I guess all of those

mills are going to stay closed forever." I think the member was referring to

that a bit. We can't do that.

We actually have to make sure that we have electricity. We'll

always be able to buy and sell off the market.

[ Page 11028 ]

We're in an integrated market. We can do that. So I have full confidence in

the commission. Maybe unlike the opposition, I have full confidence in B.C.

Hydro and in the utilities to actually do what's in the best interests of

British Columbians moving forward.

There are two checks and balances there. The utilities have to

plan it, and then the B.C. Utilities Commission gets an opportunity to review

that and say yes or no. It's a great system. It works good.

All this

section does is allow the commission to say there's a

different way we can go about it so that we don't have to do things twice, so

that we can actually look at them in a reasonable fashion. So I do have full

confidence in the commission.

The member talks a little bit about Campbell River. You know, I

would caution the member. Campbell River, as I said, is an independent power

producer. It's an American company that built a plant in British Columbia and

burns natural gas. The contract that was signed by the NDP at the time was that

the people of the province of British Columbia — the ratepayers, B.C. Hydro —

would have to guarantee the fuel supply, would actually have to guarantee the

space in the pipeline, would actually have to guarantee to the company that they

will take X amount of electricity. If Hydro doesn't need it and they curtail

that plant, they still have to pay that plant for that electricity. That's just

kind of a high level of the contract.

Maybe that's why the members opposite don't like IPPs anymore. I

don't know. But they're certainly on record — in radio talk shows, in Hansard ,

all over the place — that they approve of IPPs. That was in the '90s. This is a

little bit later, and today it seems to be in vogue to oppose them. I appreciate

that. There is a huge difference between that side of the House and this side of

the House as to how we should get new power.

Hydro is not curtailed in the development of electricity from its

present plants, and they're investigating Site C today. But let me tell you,

when the member says that if we haven't reached self-sufficiency by 2015, my

goodness, those prices are going to jump enormously…. Well, let me tell you, by

2015 if we aren't really close to self-sufficiency, we're in trouble.

You can't build a plant, you can't go through all the processes

that the member and I talk about here through the B.C. Utilities Commission, you

can't go through all those processes, and you can't go through all the

environmental processes and all the community processes you have to go through

and actually build a plant and get it on stream in a year. That doesn't happen.

It just doesn't happen.

You have to start planning for those things long before that magic

date of 2016 happens. That's what we want to actually have happen. That's the

difference — the huge difference. We actually want to have enough electricity in

the province of British Columbia for our own use and well into the future for

future British Columbians.

This act allows everything to take place. This

section is a

well-worded section. The amendment that the member put forward is not needed in

this

section at all because it's already there. In the interest of the

ratepayers in the province of British Columbia, the commission will make those

decisions.

So excessive prices would be, I would assume, without telling the

commissioner, because I don't do that…. I don't tell the commissioner unless

something actually happens, and this act allows that to happen. You can actually

send in an order that tells the commission what to do. But I don't tell the

commissioner to look at all those contracts. They make those decisions

themselves with all the information they have, and I think they do a darn good

job. We should depend on them and know that they will continue to do that.

J. Horgan: I don't know. I guess the minister wasn't

listening. I said not 20 minutes ago that I believe there needs to be a mix of

public and private in the energy sector. So I don't know if that's being on the

record or not. Those who were here heard it.

Hon. R. Neufeld: That's the first time you said "mix."

J. Horgan: No, it's not the first time I've said it. I say

it all the time. I'm Mr. Middle-of-the Road, hon. Chair. You know that. I get

tremendous support from my middle-of-the-road friends on the other side when I

say that.

[1055]

We can go around and around on this. I think we need to come to a

vote on the question.

Certainly, we on this side of the House want to ensure that energy

costs are not excessive now and in the future, to protect ratepayers, to protect

the people who vote for us and send us here to do their business — the people

who anticipate that when we come here, we're working on both sides.

Mr. Middle-of-the-Road, myself, my friend from Peace River South —

I know that he hates it when I associate myself with him because it brings him

down in the eyes of his more zealous colleagues…. Those of us in this place who

come here to try and do business in the interest of all British Columbians don't

think that this is a problem to say: "Let's put one more caveat on this

section

of the act to ensure that prices remain low." What better way than to say in the

legislation — all of us assembled here, laymen and women from around B.C., not

experts in regulatory processes, not experts in energy policy but ordinary

citizens elected by our peers to come here and speak for them….

I came here today after consultation with people who attend the

commission regularly, after consultation with people who watch the energy market

very closely. I said to those individuals and groups, "Would it be appropriate

to put this amendment forward?" and they said that it absolutely would be.

With the support of those who were paying attention, with the

support of the people in my community and those middle-of-the-road members on

the other side — I know there are four or five of them — I think it might

[ Page 11029 ]

be appropriate that we put this question to a vote, hon. Chair, and just see

how we go.

[1100]

Amendment negatived on the following division:

YEAS — 27

S. Simpson

Fleming

Farnworth

Kwan

Ralston

Cubberley

Hammell

Coons

Thorne

Simons

Puchmayr

Gentner

Routley

Fraser

Horgan

Dix

Trevena

Robertson

Karagianis

Evans

Krog

Austin

Chouhan

Wyse

Sather

Macdonald

Conroy

NAYS — 36

Coell

Ilich

Christensen

Les

Richmond

Bell

van Dongen

Roddick

Hayer

Lee

Jarvis

Nuraney

Cantelon

Thorpe

Hagen

Oppal

de Jong

Campbell

Taylor

Bond

Hansen

Penner

Neufeld

Coleman

Hogg

Sultan

Lekstrom

Mayencourt

Polak

Hawes

Yap

Bloy

MacKay

Black

McIntyre

Rustad

[1105]

Sections 14 to 16 inclusive approved.

section 17.

J. Horgan: This section, again for those who don't have the

benefit of this weighty tome, the actual Utilities Commission Act…. We're now

amending

section 125.1, if anyone's following on their computer. In this

section

it's the "Minister's regulations."

[S. Hammell in the chair.]

I'm just wondering if the minister could explain. In the existing

act it says "regulations." That refers to the Lieutenant-Governor-in-Council,

which, as we talked about yesterday, is the cabinet, of course. I'm wondering if

the minister could explain why we've added his, in this case, or future

ministers as the "Minister's regulations."

Hon. R. Neufeld: The regulations actually will speak to the

energy plan. It would make sense that the minister responsible for Energy be

responsible for this section.

J. Horgan: Well, there is some concern that these

amendments again give additional and potentially extraordinary powers to the

minister responsible for B.C. Hydro. The Utilities Commission Act is the

responsibility of the Attorney General, and yet it's the Minister of Energy

who's prescribing regulations.

In those regulations,

section 2, "The minister may make

regulations respecting the government's energy objectives, as defined in

section

1, including, without limitation…" the following…. It goes on from there for a

number of clauses.

My concern is that when we're doing such legislation as this, we

as legislators don't have a clear understanding of what those regulations might

be. They'll come in the future. They will come in waves. They will come without

notice to this place, and you have to be paying attention to pick up on it.

When will the minister be completing these regulations as outlined

in this section? Can he give me an indication? Again, this is an opportunity for

the minister to look forward. I know that he likes to do that, and I appreciate

that, sincerely, when I say that.

My concern is that…. By the amendments that we've been doing to

this point in time — getting to this stage, the very last few pages of the bill

— we've been saying, in essence, that the government's energy policy is now to

be the overriding preoccupation of the commission when it's setting rates, when

it's deliberating on contracts, when it's reviewing plans for the transmission

authority, plans from B.C. Hydro and others as we get to the back of the act.

How does the public get comfort that this is not going to be just

a moving target pending on the whims of the minister? I'm not suggesting that

the minister is whimsical when I say that, but again, the Queen sends us here as

her loyal opposition to shine light on these issues. I'm wondering if the

minister could give some comfort in the substance of this debate, as to what

authority he believes the minister now has by setting out regulations

prescribing government policy — which, in essence, is ideological, party-driven

policy rather than in the interest of ratepayers.

Hon. R. Neufeld: I appreciate the question. I think

yesterday we spoke a number of times that when those regulations become

available that I'll make sure, as I always have since the member has been my

critic….

[1110]

I've always been forthcoming and have had staff actually brief the

member on legislation and, in fact, estimates and those kinds of things. I will

not stop that with the regulations. I committed to the member that when the

regulations come out, we will make sure, once they're adopted by cabinet,

obviously, that he's aware of it and that the opposition is aware of it.

It's to deal with the detail. We now have an energy plan in the

province of British Columbia. In fact, we've had two energy plans — both brought

forward by me as the minister responsible. This government is proud of both

those energy plans. What we want to do is have the Crowns, B.C. Hydro, actually

respect those

[ Page 11030 ]

energy plans when they make their proposals to the commission.

The commission has to know, also, what kind of direction they

should follow, what kind of policy. What we're trying to do is put in this act

the basic policy. The member, I know, has been around long enough to know that

there are all kinds of nuances that come from that, depending on who's

interpreting one word. What we need to do is make sure that the plan is followed

and that the minister responsible for B.C. Hydro and the Power Authority Act has

the ability to make some of those regulations so it doesn't get off base and off

line. That's what this

section actually allows us to do.

J. Horgan: I do appreciate the minister's openness and the

amount of access I have to his very capable staff. I've appreciated that right

from the beginning of our relationship as adversaries in this place. For those

who are watching or here in the gallery today, this is an adversarial

relationship, but the essence of what we're trying to do here on both sides of

the House — and unfortunately, we weren't able to achieve a positive amendment

to the bill — is try and improve it, as we see it, to meet the needs of

ratepayers.

I know that the minister and his staff are always at my disposal

for discussions or questions on these issues. I'm grateful for that. But not

everybody has that access. One of the privileges of being in this place is that

I'm able to steep myself in this stuff, not just through access to the public

servants, who do such good work every day for the people in this place, but also

through talking to people who are participating as interveners, people who have

axes to grind, as it were, people who are unhappy with some of the decisions

that the commission makes or that B.C. Hydro makes.

That's the essence of this place. Most days it's adversarial, but

every now and again the minister and I nod at each other. I think the public

should know that it's not always beating each other up. That's in the interest

of public policy development.

I'll just continue. We're almost through this, Minister. You can

take a breath before we start the next bill. I'd like to go to the

section in

section 17 which will be the new 125.2, "Adoption of reliability standards,

rules or codes." There are a number outlined here — standard-making bodies such

as "(

a) the North American Electricity Reliability Corporation, (

b) the Western

Electricity Coordinating Council, and (

c) a prescribed standard-making body."

Can the minister explain to me what those are and why they're in

the act?

Hon. R. Neufeld: The reliability standard is actually

something that B.C. Hydro and B.C. Transmission have dealt with for decades.

[1115]

There's a reliability standard set by the North American

Electricity Reliability Corporation, the Western Electricity Coordinating

Council. What we're saying is that we want to actually make sure that our system

reflects what is in place in the Pacific Northwest in the areas that we

specifically trade in. We should make sure that our system is compatible so that

we can continue to do the trade and continue to sell and buy in the market south

of the border.

What we've said, to be sure that we still remain in control, is

subsection (2) of 125.2: "…the commission has exclusive jurisdiction to

determine whether a reliability standard is in the public interest and should be

adopted in British Columbia."

What we're saying to the commission is: "We believe that you have

the ability to make sure that what happens here to become…." I'm not saying

we're not in sync with the North American Electric Reliability standards, but to

make sure, as we move forward in the future, that we are. The commission has the

oversight to actually look at that and make sure that we remain as masters of

our own house, of our own transmission system.

Sections 17 to 20 inclusive approved.

section 21.

J. Horgan: Well, we're at the end of the bill. We're on

section 21, page 17. The

section is called "Commencement," and it makes

reference to when the provisions of the act will commence, at royal assent. It

particularly makes reference to

section 11, the rate rebalancing component,

which we voted unanimously in support of yesterday.

I want to conclude my remarks on this bill by highlighting just

one more time for the record our concerns and those areas which we support. We

do support the decision by the government to introduce legislation with respect

to the rate rebalancing component, and as I said, we supported that unanimously

yesterday.

We did submit an amendment in that

section that would have

provided for a lifeline rate which would have been a new tariff for electricity

consumers in British Columbia. It would have provided an opportunity to protect

low-income seniors, particularly those who are hardest hit by the increasing

costs of energy in our currently prosperous economy, by trying to find a way

that we can protect and buffer those residents, those citizens of B.C., from the

negative impacts of our prosperity.

As costs go up, as profits are made and people do well, those at

the lower end of the socioeconomic strata quite often are captured in this, and

in a negative way. We believe that the lifeline rate would be an appropriate way

for government to intervene through the commission to ensure that those that

need the protection most are afforded it. So I was disappointed that the

lifeline rate was not supported by government.

We've talked at length about the smart meters, the standing offer,

and the energy self-sufficiency components of the bill, where we took issue on

this side of the House with government. There are significant issues there, and

I'm not going to rehash those. Those who are interested in what was going on in

that debate can review Hansard . They'll see that our primary concern with

respect to smart meters was not the implementation of the

[ Page 11031 ]

technology. It was not seeing that as a demand-side management technique to

reduce consumption, to encourage ratepayers to not use as much electricity as

they're using today.

It's not the principle that we have trouble with; it's the

implementation. The implementation, as I understand it, as I read this, is to

see these smart meters proceed….

Hon. R. Neufeld: It's actually on

section 21.

J. Horgan: It's on the commencement section, yes. That's

what I'm speaking to,

section 11 and the rate rebalancing. I'm right on target,

Minister. Fear not.

[1120]

Those issues were raised in debate and are profound concerns for

us on this side of the House.

The last amendment, which we just defeated…. For those who have

been watching or paying attention this morning, it was the view of the

opposition that this was an opportunity, while we're debating the Utilities

Commission Act, to provide certainty to residents that excessive costs of new

contracts, which are being primarily supplied by independent power producers,

were held in check by the commission.

With that, we will be voting against this bill. That was fairly

clear at second reading. I know that my good friend, my dear friend, from Peace

River South, who I constantly draw toward me in the interest of spreading joy in

this place, will recognize that we will be voting against the bill for the

reasons I've outlined.

We do support those elements that bring costs down for residents.

We do support new energy supply in British Columbia, but we prefer to see a mix

on the marketplace. We prefer to see B.C. Hydro back in the game, looking at

micro-hydro as an opportunity for new energy supply developed by the Crown, not

exclusively by independent power producers.

Hon. R. Neufeld: I know — on

section 21, the commencement —

we outlined all the things that this government has done to actually deal with

people who may find themselves in a position where they're on a fixed income or

something that allows them not to meet some of the lowest hydro rates in North

America. We talked about the SAFER grant. We talked about removing income tax to

zero on people below $15,000 a year in revenue, something that the NDP had in

place prior to that. We talked at length about those kinds of things.

We talked about smart meters, and I'm glad to see that the member

is starting to realize that there is some technology out there that can start

helping us meet our demand-side management targets of 50 percent. I'm glad to

see that they're talking a little bit in favour of conserving, instead of just

continuing to buy off the market.

I know that self-sufficiency is an issue, and the member brings it

up again. I think the public says it would be pretty smart to actually be able

to be self-sufficient in the province of British Columbia and that we should

move forward with that.

We talked at length, in the last amendment, about the ability of

the commission to review costs associated with new projects. The member brought

up Campbell River. It was interesting to me that he would bring up Campbell

River in the context that he believes that the commission should review those

kinds of contracts really closely — should actually pick them apart, should

actually make sure that they're in the best interests of the public, all of

those kinds of things.

He talked about that an awful lot. But lo and behold, when we look

at the Campbell River deal, it's the largest IPP ever built in the province of

British Columbia — 265 megawatts of natural gas–fired power where the province,

the ratepayers, take on the expensive pipeline space. That's a yearly cost of

millions of dollars. They take on the cost for the natural gas, and that's an

awful lot. That's the biggest part of the contract. Actually, if they curtail

Campbell River for any length of time, they have to pay the proponent for

electricity that isn't generated. They felt so secure in that deal that they

exempted it from B.C. Utilities Commission oversight.

Public, when you hear the NDP talk about, "We want to have the

commission look at excessive rates and to be there for the public," that's

today. It wasn't yesterday, when they were in government, because what they did

was just direct. It's similar to directing B.C. Hydro to go to Pakistan to build

a plant in Pakistan instead of in the province of British Columbia. That

happened under the NDP's reign also.

Those two things, I think, stick in everyone's mind when we listen

to people that think they want to use the Utilities Commission to its best

advantage. We do, and this bill allows them to look at the energy plan, to say,

"This is where British Columbia wants to go. Sustainability is smart. Smart

meters are smart" — to look at those kinds of things, review all those costs as

we move forward.

[1125]

I think it's a great bill and one that everyone on this side of

the House — and I know, in their hearts, on that side of the House — actually

supports.

Section 21 approved.

Title approved.

Hon. R. Neufeld: I move that the committee rise and report

the bill complete without amendment.

Motion approved.

The committee rose at 11:26 a.m.

The House resumed; Mr. Speaker in the chair.

[1130]

Report and

Third Reading of Bills

UTILITIES COMMISSION

AMENDMENT ACT, 2008

Bill 15, Utilities Commission Amendment Act, 2008, reported

complete without amendment, read a third time on the following division and

passed:

[ Page 11032 ]

YEAS — 40

Coell

Ilich

Chong

Christensen

Les

Richmond

Bell

van Dongen

Roddick

Hayer

Lee

Jarvis

Nuraney

Whittred

Cantelon

Thorpe

Hagen

Oppal

de Jong

Campbell

Taylor

Bond

Hansen

Abbott

Penner

Neufeld

Coleman

Hogg

Sultan

Bennett

Lekstrom

Mayencourt

Polak

Hawes

Yap

Bloy

MacKay

Black

McIntyre

Rustad

NAYS — 29

Brar

S. Simpson

Fleming

Farnworth

Kwan

Ralston

Cubberley

Hammell

Coons

Thorne

Simons

Puchmayr

Gentner

Routley

Fraser

Horgan

Dix

Trevena

Bains

Robertson

Karagianis

Evans

Krog

Austin

Chouhan

Wyse

Sather

Macdonald

Conroy

Hon. C. Richmond: I call second reading of Bill 16,

intituled Greenhouse Gas Reduction (Renewable and Low Carbon Fuel Requirements)

Act — hon. Minister of Energy, Mines and Petroleum Resources.

Second Reading of Bills

GREENHOUSE GAS REDUCTION

(RENEWABLE AND LOW CARBON

FUEL REQUIREMENTS) ACT

Hon. R. Neufeld: I move that the Greenhouse Gas Reduction

(Renewable and Low Carbon Fuel Requirements) Act be read a second time now.

I am pleased to present the Greenhouse Gas Reduction (Renewable

and Low Carbon Fuel Requirements) Act. British Columbia is a national leader in

climate action and clean energy. We are taking positive, practical steps to

reduce our greenhouse gas emissions and decrease our reliance on non-renewable

fuels.

This legislation directly addresses a significant source of

greenhouse gas emissions in British Columbia — transportation fuels. It creates

a regulatory framework that will reduce the carbon emissions intensity of

transportation fuels to meet our reduction target of 10 percent by 2020. It will

enable the province to set requirements for the amount of renewable fuel in

B.C.'s diesel fuel and gasoline blends.

[1135]

[S. Hammell in the chair.]

This will enable us to meet the B.C. energy plan commitment of

having an average of 5 percent of renewable fuel provincially by 2010. It meets

our commitment to adopt a low-carbon fuel standard similar to California's.

This legislation uses market-based mechanisms to ensure that it

will be responsive to consumer needs and cost effective. It uses

performance-based standards with averaging, crediting and transferring to

facilitate implementation and compliance. The Greenhouse Gas Reduction Act will

promote a diverse fuel supply that includes renewable and low-carbon fuels.

This legislation will help to establish a sustainable market for

renewable fuels and low-carbon fuels in our province and create new economic

opportunities at the same time as reducing greenhouse gas emissions from

transportation and supporting our important climate action goals.

I am now pleased to move second reading.

J. Horgan: It's just a delight to be on my feet again here

at second reading of Bill 16, which is the low-carbon fuel standard bill, the

Renewable and Low Carbon Fuel Requirements Act.

I have tabled with the Clerks an amendment, or a motion, and I'm

just getting a ruling on that. So I'll continue on with my remarks here at

second reading in the hope that the Clerks can advise us on whether my motion is

in fact in order.

I will be the designated speaker for Bill 16, so that the Speaker

is aware of that. I want to begin my remarks by saying this is enabling

legislation. For that reason, I think that I can have some comfort that the

debate on this issue will be thoughtful. I'm advised it will be — I'm hopeful —

useful to the minister and the government.

One of the challenges we have as a community with low-carbon fuel

standards is that it, in essence, perpetuates the fossil fuel economy. It just

provides an opportunity to reduce the amount used at any one time. The theory

goes that by reducing the amount of carbon produced by the burning of the fuel,

you're somehow achieving a savings along the road. But the science on this

matter, hon. Chair, is shifting.

What we thought in the mid-1990s — even late 1990s, even the turn

of this century — about alternative fuels, biofuels, ethanol and so on…. The

science on these questions is starting to shift. I know that the minister will

know this. He gets briefed regularly by his very capable staff on these matters.

Just recently the World Wildlife Federation issued a very

substantive report following on the OECD. It's called Plugged in: the End of

the Oil Age . It's a very thick and useful document. If members of the

Legislature haven't had an opportunity to look at it, I know they

[ Page 11033 ]

can pick it up in the Legislative Library, and I commend it to their

attention as we debate this bill at second reading.

Again, one of the things that we see in the community, I know here

in the south Island, Columbia Fuels, provider of home heating oil for residents

in my community of Malahat–Juan de Fuca and across the south Island and in fact,

across the Island, have a big push on for biodiesel, biofuels to reduce

greenhouse gas impacts on using fossil fuels. The challenge, however, is that

we're finding that in some instances….

I'll interrupt my own remarks to move the following motion.

[That the bill be not now read a second time but that the

subject matter of Bill 16 be forwarded to the Select Standing Committee on

Legislative Initiatives to discuss the implications of this bill as it relates

to issues of food security, sustainability and secrecy.]

Deputy Speaker: The motion is in order. So we will now

debate the amendment.

[1140]

On the amendment.

J. Horgan: So I am again on my feet, and for those who are

trying to keep track at home, what I've just done is introduce a motion to

suspend debate on this bill until such time as a committee of the House, all

members, both sides of the House, can sit and review the subject matter, to

ensure that it is in the public interest.

This is an appropriate thing to do, I believe, on an issue such as

biofuels and alternative fuel sources. I made reference to food security as one

of the challenges. What we've seen, and what the scientific community is telling

us, is that ethanol production primarily from corn here in North America and

across the Peace has led to the creation of food for fuel. It has displaced

other food sources because there's a dollar to be made selling corn for ethanol

production. That displaces other food sources and pushes up the cost of wheat,

soy and other products, which has a negative impact not just on consumers but

also has a negative environmental impact.

The other challenge we have is in terms of sustainability when it

comes to this matter. Is it sustainable to use greenhouse gas–producing

fertilizers to rapidly grow food products for energy use? This is a significant

debate, one that we can have in this place, but I think, more appropriately, it

can be done at a committee where interested parties from across British Columbia

and international experts…. There's no shortage of them on this matter. If we

could find international experts to come to advise legislators here in this

place about the needs of food security versus the needs for alternative fuel

production….

As I say, it's not just me. The OECD and numerous periodicals have

been writing about the challenges of food for fuel: Time magazine, New

York Times — noted periodicals such as that. Just recently, B.C. Stats, an

entity of the government of British Columbia, issued a report in January of

2008. Hon. Speaker, I'll read from it, if that's all right with you.

Environmental Statistics is the heading, and the headline on the

article from January is: "It Ain't Easy Being Green: Why Biofuels May Not Be the

Answer."

Now, I pay a lot of attention to this stuff as the energy critic,

and I know others do as well. Certainly, many of my colleagues do. My good

friend from Saanich South is an avid watcher of these things. Emissions are

profoundly important to him and the people in his community. So we watch these

things quite closely to ensure that, as legislators, as people sent here to make

decisions about issues such as these on behalf of the broader community, we're

as informed as we can be.

I know, certainly in the Peace, that the notion of food for fuel

may or may not be an acceptable debate to have in this Legislature. I think that

it's an appropriate debate to have at a committee where we can work together in

a non-partisan way — a bipartisan way, rather — to come to some answers for the

broader public, because there is a divided community, whether it be the

scientific community, the agricultural community and so on.

So this is a bill that…. Although I was pleased to see it when the

minister tabled it, I looked at it carefully, and I looked at the enabling

components of it, and it felt certainly to me and to those of us on this side of

the House that this was an appropriate piece of legislation to be referring to

the committee on legislative initiatives in the hope that we could have a

fulsome debate and bring in experts from around the world and bring in our local

experts from B.C. Stats, who, as I said, have produced this recent report.

It talks about the supposedly environmentally friendly

alternatives to fossil fuels. The theory behind that, of course, is that there

are benefits in reducing our greenhouse gas emissions from burning traditional

fossil fuels. It's interesting to note that, in this bill, the only two fuels

covered are diesel and gasoline. Marine fuel is not covered by this. Jet fuel is

not covered by this. I don't know if we've….

Hon. R. Neufeld: Pretty easy to figure out what jet fuel

is.

J. Horgan: Exactly. The minister is quite right. One of my

colleagues said he didn't want to be on that pilot project when they're testing

biofuels on 747s.

[1145]

But certainly marine fuels are a great contributor to greenhouse

gases. B.C. Ferries, as I understand it, would be exempt from this. As a Crown

when it wants to be a Crown, as a private company when it wants to be a private

company, you would think that they would want to be on the vanguard here and

provide some leadership with respect to alternative fuels. Again, it's an

opportunity for us to have a broader discussion on these issues in committee,

where we can have a free flow of ideas and exchange of views on the matter.

[ Page 11034 ]

As I said, just from January, B.C. Stats has found that recent

studies claim that previous research has underestimated the impacts of

fertilizers. When you're growing food for fuel, your threshold for nitrous oxide

and other harmful climate change–producing chemical fertilizers is not

restricted. If you're growing food for consumption, there are levels of

fertilizers and growth enhancers that you are not allowed to use, and that's a

good thing.

When we move to massive food-for-fuel agriculture, what we see is

that the emission savings or the carbon intensity of the process, the ratio of

carbon produced to generate the product to reduce the carbon at the other end of

the life cycle is not in balance. In fact, in some instances, according to the

scientific community….

Again, I'm not an expert on this. I try to be as well read as I

possibly can be. It's the contradiction in the literature that brings me to this

place today, standing here on behalf of my constituents, urging this Legislature

to support a motion to refer this bill — an important bill and one that we were

welcoming when the minister tabled it. But as our in-boxes have started to fill

with people who are very concerned about us embarking on an alternative fuel

strategy over the next two to four years, that may well not be in the interests

of our climate change objectives.

One of the challenges we've got in general about the government's

climate change policies is that they are, by and large, being made in back

rooms. Whenever you hear the backroom argument, it's implied that there are some

nefarious aspects to that. That's not what I'm trying to do. What I'm saying,

though, is the discussion….

Interjection.

J. Horgan: Sure.

R. Lee: Madam Chair, I would like to seek leave to make an

introduction.

Leave granted.

Introductions by Members

R. Lee: I have a group of visitors from Jilin province in

China. They are led by the vice-director of the foreign affairs office of Jilin

province, Mr. Zhanwu Wang. The members include Dong Chen, the deputy chairman of

Jilin City Committee of Chinese People's Political Consultative Conference; and

Dahuo Chen, deputy mayor of Baishan City; Jianhua Lai, vice–secretary general of

the government of Songyuan City; Xianglin Chen, division chief of the overseas

Chinese affairs office of Jilin province; Yi Luan, director of the foreign

affairs office of Tonghua City; Jianguo Zhang, director of the foreign affairs

office of the Baicheng City. Welcome.

Debate Continued

J. Horgan: I thank the member for that introduction. It

gave me an opportunity to wet my whistle.

So I'll continue on. The debate in the scientific community, who

are passionate about these greenhouse gas issues, is that there are mixed

reviews. I'll read again from the B.C. Stats report from January with respect to

the impact of fertilizers. I believe that's where I was at when the member took

his feet.

The study claims that we are underestimating the impacts of

fertilizer. It goes on and reports on the nitrous oxide emissions from biofuel

production as calculated in what they call a carbon dioxide equivalent. Put more

simply, what this report says is that the fertilizers used in the production of

biofuels contribute as much or more to global warming as the amount saved by not

using fossil fuels.

[1150]

Again, B.C. Stats. has done this as a result of a broad literature

search, reviewing all of the scientific data, and they've come to the conclusion

that there are downsides to this biofuel initiative.

[Mr. Speaker in the chair.]

Now, that comes as a surprise, I think, to many people at home or

those watching in this place today. We've had campaigns by producers of biofuels,

producers of ethanol, extolling the virtues of these additives and the

reductions to greenhouse gases as a result of using them for combustion and

energy use. That's fair enough.

What we've discovered, probing a little bit deeper — peeling the

onion, as it were — is that the life cycle of the carbon dioxide train or the

greenhouse gas emission train is not as simple as just looking at the end

result. As much as this is enabling legislation — and the minister has brought

it forward with the best of intentions, I'm certain — it's not really up to the

mark with respect to ensuring that all of us in this place and all British

Columbians, in fact, have a clearer understanding of the pros and cons of

biofuels and ethanol as alternatives to gasoline and diesel. So I believe that

my motion to refer this bill to a committee of this Legislature is an

appropriate one to discuss at this time.

I've mentioned three issues in the motion to refer. One was the

question of food security. We've seen costs go through the roof. Wheat has never

been so high. If you're growing wheat on the prairie, you probably couldn't be

happier with that. If you're growing wheat in the Peace, you probably couldn't

be happier with that.

What's the impact of high wheat prices on consumers across British

Columbia and North America? More money out of your pocket. The prices, as I

understand it, are artificially inflated because land is being displaced from

agricultural production for food consumption to growing food for energy

consumption. We need to have a clear understanding as legislators, before we

approve or reject a bill such as this, that we're doing it in the best interests

of the broader community.

As much as we need to do everything we can to reduce greenhouse

gases, we want to ensure that by taking two steps forward that we're not taking

three steps backward. That's why I would prefer to see a

[ Page 11035 ]

little bit of transparency on the climate change file from the government on

the other side, allowing more input from members on this side of the House and

from broader community interests.

I know that the Climate Action Team has met with a number of

British Columbians over the past number of weeks and months. I don't know who

they are. Freedom-of-information requests have gone into the Climate Action Team

for a request of their meetings, their minutes, what's going on, and what they

are talking about. Nothing comes back. We get a lot of whiteout paper, a lot of

section 12s and

section 13s.

It's difficult for us on this side of the House and, in fact, for

all British Columbians to have any confidence that these discussions and issues

are being conducted in a transparent way.

Again, it's not just us on this side of the House. I have in front

of me a letter dated April 4 to the Minister of Energy from the Privacy

Commissioner, copied to me, expressing concern about the Freedom of Information

and Privacy Act exemptions within this bill.

That speaks to the secrecy in my motion. This is a serious

question. The Privacy Commissioner doesn't comment on every bill that comes

before the House, but he has commented on Bill 16 and Bill 18, the two flagship

pieces of legislation that we're dealing with in this session to address climate

change.

We have a challenge here. We have a concern on this side of the

House that not all members are getting equal access to information to service

our communities and our constituencies. Not all members of this place are

getting information so that we can go back to our peers, the people who sent us

here, and explain in layman's terms just what the heck is going on with respect

to climate change.

It's a profoundly important issue to people in my community. They

want to know that I'm making decisions in their best interests and in the best

interests of the planet. When it comes to Bill 16, when it comes to the

Greenhouse Gas Reduction Act with respect to low-carbon fuel standards, I'm not

confident today, as the Energy critic, that I can give them a reasonable

explanation as to why we should proceed down the road toward energy additives

such as ethanol and biofuels.

We're going to hear over the course of this debate, I'm sure, pros

and cons on both sides. I know my colleague for Esquimalt-Metchosin has some

very strong views on biofuels. She's a strong advocate for biodiesel here in our

community, and I listen to her very carefully.

[1155]

In fact, she has been such an advocate that she's won me over to

her position without difficulty at all.

Then again, I read Stats B.C., I read the OECD reports, I read the

report by the World Wildlife Federation, and I'm concerned. What's the deal

here? Who's right? Who's wrong? If we can't decide…. If I can't say in good

conscience to this Legislature and to my colleagues in the official opposition

on behalf of Her Majesty that this is the right way to go, then I would think

that my motion is an appropriate one.

I don't do it frivolously. As much as I enjoy standing in this

place talking about issues of importance, issues of public policy, this is a

profound issue that will set us down a course that we may well not want to

follow. It's with that sincerity that I move the motion.

Secrecy, food security, and the third issue of concern to me is

sustainability. One of the challenges we have, as we chase our tail on climate

change…. We're well behind the eight ball.

You'll know, hon. Speaker. You were a member of this place back in

2000. I was not. There was a greenhouse gas plan, a climate change plan, put

forward by the government of the day in 2000. It was exhaustive. It was

following shortly on the heels of the Kyoto protocol.

Everyone now knows the Kyoto protocol. It happens to be just a

city in Japan, but it has taken on mythic proportions. A leader of another

Liberal Party named their dog Kyoto. That's how profound the shift has been

toward trying to get an understanding of the importance of climate change.

Interjection.

J. Horgan: I need a rest, says my friend from Saanich

South.

J. Horgan moved adjournment of debate.

Motion approved.

Committee of Supply (Section A), having reported resolution, was

granted leave to sit again.

Hon. C. Richmond moved adjournment of the House.

Motion approved.

Mr. Speaker: This House stands adjourned until 1:30 this

afternoon.

The House adjourned at 11:58 a.m.

PROCEEDINGS IN THE

DOUGLAS FIR ROOM

Committee of Supply

ESTIMATES: MINISTRY OF

ADVANCED EDUCATION

AND MINISTER RESPONSIBLE FOR

RESEARCH AND TECHNOLOGY

(continued)

The House in Committee of Supply (Section A); H. Bloy in the

chair.

The committee met at 10:08 a.m.

[ Page 11036 ]

On Vote 12: ministry operations, $2,251,994,000 (continued).

Hon. M. Coell: I promised to get as much information as I

could for one of the members regarding UBC asset-backed commercial paper. I have

contacted the University Presidents Council and asked them a number of

questions. I can just read them into the record for the member, if that's all

right.

Who will be accountable for the potential $67 million loss? The

response back was: "We're not aware of any projected $67 million loss. UBC's

current impairment projection for the third quarter financial statements is $18

million. When first made aware of the challenge in this area, the university

moved quickly to limit its exposure and to communicate the challenge to the

community."

The other question was: where did they get the investment advice

from? Along with the other institutions and corporations, UBC treasury took

advice from money market brokers of the major chartered banks and relied upon

the ratings approved by Dominion Bond Rating Services.

I think those were the two questions in general.

B. Ralston: Yesterday the minister, in response to some of

the questions I raised about this issue, suggested — indeed, stated — that UBC

is an autonomous institution, that he was confident in their ability to manage

their finances and that everything seemed to be running very smoothly there.

[1010]

Usually, when one raises these types of questions, one is often

referred to the website. Indeed, the websites of public institutions are often

considered to be the portal through which public inquiries are attempted to be

answered.

So I did go there last night. This information is reasonably

current. The most recent minutes of the board of governors of UBC are May 22,

2007. So almost 11 months have gone by since the last minutes of this public

institution were posted to their website. According to what's on the website,

minutes will be posted to the minutes

section of this site once available.

According to their website again, they have meetings in January, March, May,

September, November and a retreat in July.

By my calculation, they met — if that

schedule is to be followed;

one doesn't know, because there are no minutes posted — in July, September,

November, January and March through 2007 and into 2008. Given that this public

institution, on its website, doesn't bother, apparently, to publish the most

basic public disclosure — the minutes of its board meetings — and that the

cabinet appoints the majority of the people to the board, is the minister

satisfied that UBC is performing basic public disclosure? And does that give him

increased confidence in some of the statements he made yesterday?

Hon. M. Coell: I was not aware of that, and I will look

into it.

B. Ralston: Well, perhaps I could suggest that it doesn't

appear that the minister's oversight of this important public institution is

taking place at all. This is the most basic level of public disclosure, and it's

not being done. I think it's shocking, frankly.

This is an issue of finance. On the website someone named Nicole

Byres is listed as chair of the finance committee. Again, on the website she's

not listed as a member of the board of governors. Can the minister explain why

the chair of the finance committee, who would be overseeing this loss, isn't

listed as a member of the board of governors? Or is that too trivial for the

ministry to make that inquiry?

Hon. M. Coell: It's my understanding that she is rotated

off the board, and they would have a new chair.

B. Ralston: Well, once again, the public disclosure of this

important public institution doesn't seem to have caught up. There's a media

relations department that appears to have a number of people working for it. Can

the minister explain why basic public disclosure doesn't appear to be a priority

of this institution, particularly under his watch?

Hon. M. Coell: The member knows that there is disclosure

from all the universities and colleges. I will check in to see what problems

they're having with their website.

B. Ralston: Doubtlessly there are back-channel discussions

between senior employees of the university and senior employees of the ministry,

but the point here is that this is a public institution with some obligation, I

would suggest, to make public disclosure on what it's doing. It hasn't published

its minutes for almost a year. The list of the board of directors…. The chair of

the finance committee, when this important issue is taking place, isn't even the

actual chair. It seems to me an absence of even the most basic elements of

public disclosure.

[1015]

I want to just continue for a few moments on what the universities

council has apparently reported. It is indeed true that when this matter first

came to light as a result of my questions to the Minister of Finance in January

of this year, the UBC treasurer, Peter Smailes, calculated a write-down of $18

million.

What has happened since then is that this issue has moved quite a

bit. There are a number of national discussions led by Purdy Crawford, and the

calculation that I provided is something that took place at the end of March. I

would suggest — and for the minister's comment — that this calculation of a

write-down of $18 million is completely out of date. More current information

would suggest that the write-down is much more likely to be in the neighbourhood

of what I've suggested.

Given that this information and that comment came out in early

January from the treasurer of UBC, does the minister have any further update on

what has taken place over the last several months?

[ Page 11037 ]

Hon. M. Coell: As the member knows, all of our institutions

have audited financial statements every year for accountability. They also have

a budget letter that is public every year as well. They did have, in UBC's case,

a press release in October of '07 with regard to the issue that we're

discussing. The comments I made earlier are from the University Presidents

Council as of yesterday.

B. Ralston: Back when this issue arose in January, Mr.

Smailes — and I'm quoting from the story in The Vancouver Sun — said that

the impacts…. "'There will be no budget cuts to university teaching and

research,' Smailes said, 'and no core programs will be affected. New students

will have the same opportunities and programs will continue.' He said: 'The

impact of the write-downs will be on discretionary spending, such as classroom

upgrades, additional teaching assistants or additional research support.'"

That was when the write-down was calculated to be $18 million. If

it is, as I suggest, the more realistic and more prudent write-down of $67

million, can the minister advise what the impact on UBC's operations, students,

faculties and programs will be?

Hon. M. Coell: UBC has confirmed this morning that their

write-down will be $18.3 million.

B. Ralston: Based on what?

Hon. M. Coell: Based on them getting back to me with a

number. I'm sure it's based on sound financial practices.

B. Ralston: Well, the minister may be willing to accept a

simple assertion from the UBC treasurer. I'm not, and I don't think that the

minister should either. More prudent and up-to-date analysis of this evolving

financial crisis of asset-backed commercial paper would suggest the write-downs

are far bigger than $18 million in this particular case.

I gave him the example of the analysis from the RBC Dominion

Securities analyst, Andre-Phillipe Hardy, who estimated that the market value of

asset-backed commercial paper is approximately 56 percent of its face value.

A simple assertion, I would suggest, is not satisfactory. Can the

minister advise the public in a more fulsome way than simply rehashing — and a

simple assertion from someone at UBC?

Hon. M. Coell: I can tell the member that the UBC website

is being revamped and the board package for February '08 and board of governors

are on the website, not just the minutes. The advice that I get from UBC is that

they'll have a write-down of $18.3 million.

B. Ralston: With respect, that answer is simply

unsatisfactory. The minister knows that the Lieutenant-Governor-in-Council, the

cabinet, appoints the majority of these governors to the UBC board of governors.

Has the minister had a discussion with Mr. Bennett, who is the

chair of the board, about this financial problem, or is that politically off

limits to the minister?

[1020]

Hon. M. Coell: Both the staff of UBC and my staff have

discussed this issue.

B. Ralston: Well, with respect, that wasn't my question.

The chain of accountability, I would suggest…. As the minister

said yesterday, this is an autonomous institution, according to him, and the

cabinet appoints the majority of the board of governors. Mr. Brad Bennett is the

board chair. Has the minister had a discussion with Brad Bennett about this

write-down?

Hon. M. Coell: I've met with the board chair and the

president of UBC many times over the last three years.

B. Ralston: Since January 11, 2008, has the minister met

with the chair of the board, Mr. Brad Bennett, and had a discussion with him and

had an explanation from him of this write-down?

Hon. M. Coell: I can assure the member that UBC's credit

rating has the highest rating of any Canadian university, and there's no reason

to be concerned. I have met with the president and the board chair to discuss

future growth of the institution and where we move to enhance the institution.

B. Ralston: Then I'm going to make the following

suggestion, and I'll ask the minister to disagree with me if it's wrong.

The minister has not met with Mr. Bennett, the chair of the board

of governors, to discuss this write-down at all since January and has no

intention of doing so apparently. Is that correct?

Hon. M. Coell: The president of UBC and the chair are doing

a fine job. I know my staff have discussed this and many other issues with him.

I have not.

B. Ralston: I'm going to suggest, with respect to the

minister, that the absence of any discussion between the chair of the board and

the minister on this important point — where UBC says the write-down is $18

million, a more prudent and realistic assessment would be $67 million, I would

suggest — will have a major impact potentially on UBC programs and teaching

staff, courses, teaching assistants and other UBC programs. For the minister to

simply leave that to staff to discuss, I would suggest, is an abdication of his

duty to prudently supervise and oversee one of the leading public institutions

in the province.

Hon. M. Coell: The member and I may disagree over a number,

but the auditors this year will do their audit of UBC finances and report out.

[ Page 11038 ]

B. Ralston: While we're waiting for that leisurely process

to unfold over the next nine months, I'm interested, and I'm sure others are

interested…. I would suggest there's an obligation to report publicly on what

the impact of the real write-down will be on UBC programs.

These funds are taken from what UBC describes as its $525 million

working capital fund. I would suggest that the impact of…. First of all, the

$122 million is frozen. The $18 million write-down is an accounting entry.

There's no access to the $122 million at all, because it's simply frozen. But if

there is to be a market created as a result of the negotiations and there is a

write-down of $67 million, I think the public is entitled to, and the minister

is obliged to exercise, some oversight over the B.C. Liberal government's

appointee — their chosen chair of this board, Mr. Brad Bennett — as to what is

going on and have some public accountability about that.

The minister seems willing to just wait for some leisurely process

of audit which will take place in due course, no doubt, but will not answer any

immediate questions. Is the minister going to aggressively move on this file, or

is he simply going to sit back and wait passively for things to unfold?

Hon. M. Coell: The member may not know, but within 90 days

the auditors will present their financial audit of UBC.

[1025]

B. Ralston: As the minister also knows, this is my one

opportunity — I'm the critic for Advanced Education — to question the minister

publicly in this forum. After the estimates debate closes, we don't have this

opportunity for another year. So this is our one opportunity, on behalf of the

public, to answer these questions.

The minister may prefer it that way. No doubt he prefers some

off-the-record chats between his staff and UBC staff, but this is our one

opportunity as the opposition — and for the minister — to account publicly for

what's going on here.

When the financial statements are released, unless there's

something raised in question period, there will be no opportunity for us to

question the minister directly. So this is the opposition's one opportunity. I'm

asking the minister to answer what he intends to do about this, rather than

simply wait for the outcome of the routine audit.

Hon. M. Coell: As the member knows, about 48 percent of

UBC's funds come from government. They have funds from many other sources. I

have confidence in their president and their board chair. Every year we have

audited financial statements from all of our institutions, and I think that is a

good way for accountability.

I did offer the member a technical briefing with UBC, the

University Presidents Council and my staff to go over this issue, if he wishes.

B. Ralston: As the minister knows and as I pointed out

yesterday, the technical briefing I will accept, but reluctantly. I think the

real forum of accountability should be here in the Legislature, not in some

technical briefing that will take place away from the public and where no record

is kept of it that can be produced to the public to advise them of what took

place.

I just want to conclude by saying that I think the minister's

oversight of UBC and his dealings with the board chair leave much to be desired.

In my view, the minister has not responded to the call for the necessary public

disclosure and accountability as to what is taking place in the finances of the

University of British Columbia as this financial crisis unfolds.

R. Fleming: I want to bring the minister back to the

overall ministry budget cuts that were announced by his ministry on March 12,

letting the college and institute, university presidents know of the 2.6 percent

reduction in funding against what was anticipated and outlined in the three-year

service plan.

Because I find myself hanging on the minister's every word, I had

to reread some of the Hansard from yesterday in his answers that we were

asking on an institution-by-institution basis. There was a discernible pattern.

It became clear, after reading a few pages, that in response to questions from

opposition MLAs about institutions in their communities, the minister would not

answer directly when he was invited to speculate what his ministry's cut on

anticipated funding would mean for those institutions. Rather, he fell into a

pattern of reading off lists of commitments from days gone by to funding other

projects.

I think that's disappointing, because obviously the minister would

have received strategic advice from inside his ministry as to what might be the

implications for not delivering on the second-year commitment of his three-year

budget plan. He's obviously received considerable feedback from board chairs and

from institution presidents as to the March 12 memorandum that was delivered to

those presidents.

I want to ask him again today: what strategic advice has he

received about the impact that a 2.6 percent funding reduction, as against

previous commitments, will have on these institutions? What is he prepared to

live with in terms of cuts to programs and course offerings in those

institutions?

[1030]

He said that one of the rationales for cutting is to then

reallocate moneys towards funding for aboriginal spaces, nursing students and a

couple of other areas now deemed a greater priority for him. But as he well

knows, the decision to fund that by reducing FTEs elsewhere will cause a great

deal of displacement in the institution.

I want to ask him again — the strategic advice that he received

from his ministry and the feedback from presidents of these institutions — to

give the committee here an indication of what cuts he's prepared to live with.

Hon. M. Coell: I appreciate the question.

I think that in the fullness of the last seven years, you look at

the budget increase of 40 percent for my

[ Page 11039 ]

ministry. A massive amount of detailed growth was managed by all of our

institutions, be they colleges or universities or university colleges. It took a

great deal of skill to manage that 40 percent increase in budget and make sure

that you have 120 new degrees, and the faculty needed to deliver those new

degrees. Also, I found their ability to manage $1.5 million worth of capital

infrastructure very impressive. In doing that, they've created new opportunities

for students throughout this province.

I think the crux of our discussions yesterday and the day before

was that we've come to a position where enrolments have slowed, where there are,

I think, glaring needs for new nursing and new trades and skill spaces and new

graduate spaces and research spaces in the system. What we changed was a pattern

that we had been developing of general growth throughout the system, to build

the system, to what is more specific and to focus growth for the next number of

years.

I think we can have both of those things in tandem, where you have

a period of general growth followed by a period of specific growth to pick up

the areas which you may have missed.

We talked about nursing, and, of course, I think that's probably

the most in demand of anything in the province when you have 1,800 nursing

vacancies. We had to move quickly, and we did move quickly. But I think one of

the things….

Every time you make change, there is a challenge with that. I

admit that the institutions will have a challenge to make this change. We're

working with them. We want to see them continue to be the successes they are and

to grow in areas that are helpful to British Columbia as a whole.

Over the next month we'll be working with them to see what changes

they'll make within their program mix to bring in the new seats and to possibly

not have some of the courses that may be redundant, which have been in the

institutions for decades. We're looking at that with them. I certainly have

confidence in them.

I know there have been a few that have said they'll make some

changes they don't wish to make, but I think working with them will make the

changes that will work for British Columbia as a whole.

R. Fleming: I think a lot of people are mystified by the

minister, in defending his budget cuts this year, publicly citing the statistic,

which he has repeated over and over again — often a different number — that

there has been a growth in funding to B.C.'s post-secondary institutions of 40

percent over the last seven years. It's news to those institutional presidents.

He has used the figure 36 percent on occasion too, depending on which media

outlet he's talking about.

I'm mystified, because if you look at the last seven years and

compare it to this year, and use the "Material assumptions and expense" pages

from his ministry's own records, the funding increase is more like 19 percent,

and the growth in operating grants to the institutions since 2001-2002 is 24.5

percent. Yes, that's growth, but when one looks at the increase in FTEs and in

the inflationary costs and the implications in negotiated agreements and

non-salary inflationary costs that institutions have to deal with, 24.5 percent

is not a substantive increase. It is not 40 percent, as the minister claims.

[1035]

Is he looking at a different set of books than the annual service

plan reports that his ministry provides to the Legislature and to the public? By

our calculation this government's first action in 2002-2003 when it took office

was that it cut grants, albeit slightly, to institutions. Cumulatively, over

seven years the total increase to operating funding is 24.5 percent, almost less

than half of the number the minister is using publicly.

Perhaps he's talking about own-source tuition fee revenue from the

deregulation experiment of tuition fees, which is actually costing FTE growth.

We've already established that. Or perhaps he's throwing in capital numbers. I'm

not sure, but I want him to comment on his use of that 40 percent figure,

because it is baffling to university presidents. It's confusing to anyone trying

to follow his ministry's actions over the last seven years, because

cumulatively, based on the service plan reports, it's a 24½ percent increase.

Hon. M. Coell: I would gladly give a detailed accounting to

the member, and we'll do that.

I think you need to realize that there are a number of changes,

with the ITA leaving my ministry. If you look at the restated numbers as to how

much funds are actually going to institutions…. I will definitely break that

down for the member.

R. Fleming: The minister should provide a thorough

explanation, because I think it's causing some annoyance to people out there —

institutions that have to be accountable to their boards and to their students.

The minister says that everybody has received a 40 percent increase, and

clearly, board statements do not reflect that. The ministry's own estimates do

not reflect that.

It's important — and I don't think I have to tell this minister

about that — that clear and real numbers be used when dealing with the public

and the media. I think many people would wish they had had a 40 percent increase

and would wish that the funding increase for this year in the service plan was

being delivered on, but the fact of the matter is that that's not the case.

Another number I want to check with the minister here this

morning…. Yesterday I asked about the trend line on per-FTE funding. I again

quoted his ministerial service plan for this year and the material assumptions

contained in the budget and fiscal plan. We calculated the number of per-student

FTE funding this year, ministrywide, as $8,852. That's a 3 percent decline from

previous amounts year over year. The minister answered and said: "No, that's not

the case. FTE funding is going to $9,301 per capita." So I wonder if the

minister can tell me again if his ministerial service plan is wrong in this

regard.

Hon. M. Coell: I want to clarify for the member, because I

don't want to leave any discrepancy.

[ Page 11040 ]

If you look at 2001-2002, the final operating grant allocations,

student FTE targets excluding ITA programs, you have a change from the subvote,

2001 to 2008-2009, of $524 million, which is actually a 41.8 percent increase.

That is in the entire budget. The budget for the institutions has gone up by 36

percent, and that's the difference between when the member mentioned the use of

the term 36 percent for the institutional budgets and 41.8 percent for the

ministry as a whole.

[1040]

R. Fleming: I thank the minister for that. I think, again,

that it's a matter that he has to transparently report these numbers, because

they are used intermittently. They are used at different times, and they don't

reconcile with numbers that people intend to rely on through the ministry

service plan that show the funding increase in terms of grants to institutions

over those seven years as an increase of 24½ percent.

I would ask the minister to, perhaps, produce a document — if he

would supply that to me, and I will, in turn, supply it to other interested

parties — that clearly outlines that and that is an apples-to-apples comparison

with and without the ITA funding. I know there's a change again this year, where

ITA skills training dollars are now back in this ministry and reflected there. I

would appreciate that very much.

I also think it's useful to describe some of the changes in the

ministry. There have been new institutions or new designations created during

this government's tenure, just as there were new institutions created in the

1990s at Royal Roads and at UNBC. If one were to look at the previous decade and

look at this decade, a fuller explanation would also look at institutional

changes and give an indication there. One might draw the wrong conclusion and

think that every institution had, in fact, received the increase that there was

in the ministry overall when, in fact, that is not the case.

I think where I'm going with this is as it relates to FTE

utilization in the universities. Whatever the funding increase to those

institutions…. My numbers say 24½ percent over seven years.

I want to ask the minister if he can comment to me and maybe give

me some numbers about FTE utilization in the university sector, really since

2001-2002. He gave me a number for this year yesterday, although it may have

been a 2006-2007 number, because that was the one available. If he could give me

now an indication on FTE utilization in the university sector going back as many

years as he might have data available, I'd appreciate that.

Hon. M. Coell: With regard to the member's request for more

detail on the percentage increase by year for the institutions, I will put a

package together for him.

The only information I've got before me is 2005-2006 actual and

the estimate for the fall of 2007-2008. The actuals for 2006-2007: Royal Roads,

100.6 percent; Simon Fraser, 106.2 percent; Thompson Rivers, 83.8 percent;

University of B.C., 100.7 percent; University of Northern B.C., 82.3 percent;

and the University of Victoria, 103.4 percent.

The estimate for the fall of 2007-2008 — I'll give that to the

member as well — is: Royal Roads, 105 percent; Simon Fraser, 107 percent;

Thompson Rivers, 83 percent; University of B.C. Vancouver, 99.6 percent;

University of Northern B.C., 88.8 percent; and the University of Victoria, 98.8

percent.

[1045]

R. Fleming: I thank the minister for those numbers. It's

pretty clear that in the bigger picture what's happening in this year's budget,

by taking out the 2.6 percent and also layering on a reduction in FTEs to the

university sector, is that in actual fact the minister's reward for institutions

that have been overproducing, if you like, on their FTE utilization — in other

words, doing a good job and working with this ministry to meet the targets set

out in his post-secondary expansion plan — is to lose funding for that effort

this year and also to have FTEs that were supposed to be part of their growth

plan reallocated to other institutions. We're seeing that at UBC Okanagan, 343

spaces, and we're seeing it elsewhere.

I want to ask the minister if that in fact is the case — to take

money and take expansion seats from those institutions that are generally

overproducing on their FTE utilization and redirecting that towards other

institutions within the post-secondary system.

Hon. M. Coell: I know that we did touch briefly on this, I

think a day or so ago.

The Campus 2020 report said one thing to me, that the system needs

to work as a whole. It has to be viewed as a system. I think what we tried to do

in this year's budget is to be fair with everyone, to make sure that the

restructuring challenges are across the board and that they would be of a level

to meet the targeted funds coming in. Universities do get all of the graduate

targeted funds. So they're getting graduate seats. Nursing seats are spread, of

course, through universities and colleges.

I think we need to — and they need to — look at themselves as a

system, as a group of institutions that function within one another and with one

another, for the benefit of students. I think that's what we're looking at in

the targeting. We're saying: "We can fill these seats with the new targeted

areas rapidly. They can help us achieve those goals."

From my perspective I really felt that when we did the Campus 2020

report there was a new way of working together for the entire system, not just

colleges separate from universities or university colleges or institutes.

They're all one and the same. They're all delivering a valuable service to

students in B.C. We try to treat them all as equals.

R. Fleming: What I think is interesting about Campus 2020….

There was a lot to digest in the recommendations in that report. What's

interesting is that the major

[ Page 11041 ]

recommendations, which pointed out some deficiencies and competitive

challenges that B.C.'s post-secondary sector has, all had enhanced funding

implications to them. While the minister described Budget 2008 as fair, I don't

think Budget 2008 is exactly what Mr. Plant or anyone who participated in that

consultation exercise had in mind as the first year of the rollout of moving

forward to 2020 in terms of investment in R and D, in terms of core

institutional funding and stability, and all of those things.

In fact, the previous policies around the modified block funding

model that the ministry is using has been backtracked in this budget, and that's

what we've been spending a lot of time talking about this morning.

I want to ask the minister about increases for institutions this

year. Yesterday he said that Simon Fraser University's overall budget increase

for next year is 3.8 percent. I want him to tell us how that 3.8 increase

compares to the combined effect of the government-approved wage increase, the

government-mandated increase in the number of student spaces for that

institution and the impact of inflation on that institution.

How does he anticipate that will impact on SFU's expenditures this

year as compared to last? In other words, there'll be a 3.8 percent increase

from the ministry. What does he understand that Simon Fraser's estimated

increase in expenses would be for this operating year coming up?

[1050]

Hon. M. Coell: The base budget that they're starting from

is $187,386,181. The growth that they're getting is $2,959,200. The grad seats

that they're getting is $2.18 million, and the negotiating framework is

$6,933,294. So their budget, as the member knows, is $194,226,785, and their

2009-10 budget is $206,960,221.

It should be noted, too, that for the first time in probably a

decade, I think, government is actually supplying the negotiating framework. I

can remember in the '90s when they had to find the negotiating framework within

their budget.

R. Fleming: I want to ask the minister about a comment that

the president of Douglas College has made in response to the sudden March 12

announcement that the institutions will have their funding increase rolled back

by 2.6 percent. I'll read the comment into the record and then, maybe, ask the

minister to comment on it.

This is a memo to staff and students at the institution who had

questions, so it's an information memorandum that has been typically circulated

at all the institutions. I'm picking this memo randomly. She said:

"The intense academic planning Douglas College

has undertaken over the last four years has been undermined with this last

minute abandonment of SIP allocations — strategic investment plan allocations.

It is unfortunate that the government is not continuing to support

institutions such as Douglas College that have strongly committed to the SIP

direction of new program development. It leaves institutions like Douglas

College, who were expecting significant new FTEs, in a very difficult

situation."

I want to ask the minister to comment, because these are the kind

of things that are being said around British Columbia as a result of his actions

from a few weeks ago. I know the minister understands the nature of academic

planning, that programs have durations of any number of years, that to see plans

through takes several years on a cycle and that these are things that are

carefully put together. They involve marketing, recruitment, hiring, those kinds

of things, in order to work students through to the completion of programs.

He is aware that the strategic investment plan was there for

institutions to follow in terms of expanding the programs they're delivering. I

want to ask him, in light of this comment, whether his ministry has lost

confidence and will no longer be using the brand name "strategic investment

plan" in its dealings with institutions, because it's no longer following that

plan.

able to achieve their goal of the B or better for university entrance…. There

are changes in the strategic investment plan, where we're now targeting funds in

specific areas.

I want to be clear, because the budget letters that went to all

the institutions last year were clear that the out-years, years 2 and 3, are

subject to legislative approval. We talked yesterday about BCIT, obviously,

doing a number of scenarios. I think that if they hadn't done a number of

scenarios, they're probably doing that now with consultation from my staff.

As I say, I have confidence in the sector to be able to manage

these changes. I think they're changes that we needed to make.

[1055]

R. Fleming: I think, from the minister's answer there….

Years 2 and 3 of any strategic plan or service plan are not legislated. That

really throws a lot of things into play in the sector. It raises more

uncertainty than maybe he intended in his answer. If institutions and boards and

presidents can't rely on plans developed by his ministry and commitments made to

be supported in expanding their efforts to increase spaces and to have stable

and secure funding, then I have to ask the minister how any student in B.C. can

have any confidence in his policy to limit tuition fee increases to 2 percent,

because that's not legislated either.

I ask the minister on the record: how can he expect students to

believe that he will follow through in future years on commitments made around

tuition fees when he has failed to follow through on commitments that were made

previously, here in estimates last year and publicly to institutional

presidents, on stable, long-term funding?

Hon. M. Coell: I think that I'm pleased with all of our

institut