Second Session, 41st Parliament

(2017) OFFICIAL REPORT

OF DEBATES

(HANSARD)

Tuesday, November 7, 2017

Afternoon Sitting

Issue No. 56

ISSN 1499-2175

The HTML transcript is provided for informational purposes only.

The PDF transcript remains the official digital version.

CONTENTS

Routine Business

Introductions by Members

Orders of the Day

Committee of Supply

Estimates: Ministry of Energy, Mines and Petroleum Resources

(continued)

Hon. M. Mungall

E. Ross

T. Shypitka

M. Bernier

T. Redies

A. Weaver

P. Milobar

Point of Order (Chair’s Ruling)

Proceedings in the Douglas Fir Room

Committee of Supply

Estimates: Ministry of Attorney General (continued)

Hon. D. Eby

A. Wilkinson

D. Barnett

M. Morris

J. Isaacs

J. Yap

J. Thornthwaite

L. Throness

P. Milobar

S. Bond

TUESDAY, NOVEMBER 7, 2017

The House met at 1:33 p.m.

[Mr. Speaker in the chair.]

Routine Business

Introductions by Members

Mr. Speaker: Leader of the Third Party.

A. Weaver: Thank you, hon. Speaker. I must say that sounds quite nice when you do

say that.

Interjection.

A. Weaver: The ring to it, exactly. Thank you.

It gives me great pleasure to introduce a young man here today,

Michael Ribicic. Michael Ribicic is visiting the precinct. He was here in

question period, and I unfortunately missed introducing him then.

He’s a student at Vancouver Island University’s political studies and

history departments. He’s a member of the student union. He’s on the

university senate. He’s chair of the city of Nanaimo Youth Advisory Council,

long-time family from Nanaimo, and I’m absolutely delighted that he’s come

here to visit today. He’s in the gallery. Would the House please make him

feel very welcome.

Orders of the Day

Hon. M. Farnworth: In this chamber, I call continued debate for the Ministry of Energy and

Mines. In Committee A, I call continued debate of the Ministry of the Attorney

General estimates.

[1:35 p.m.]

Committee of Supply

ESTIMATES: MINISTRY OF ENERGY,

MINES

AND PETROLEUM RESOURCES

(continued)

The House in Committee of Supply (Section B); R. Chouhan in the

chair.

The committee met at 1:36 p.m.

On Vote 21: ministry operations, $95,006,000

(continued) .

Hon. M. Mungall: Before we get started with questions from members opposite, I just

want to introduce the House to some of my staff who are joining me

today. We have Les MacLaren, who is the assistant deputy ministry for

the energy side of the ministry. We have Chris O’Riley, who is the CEO

of B.C. Hydro. As I understand it, the members opposite are moving

towards B.C. Hydro questions this afternoon. And Cheryl Yaremko is just

behind me here.

E. Ross: Thank you to the minister for the answers yesterday as

well.

Yesterday when we left, we were talking about investor confidence

in relation to comments made by this government. I’m sorry to the

minister for giving quotes out of context. I’ve got the context here

today. So when we left yesterday, we had begun to talk about the 0.16

benchmark for LNG. The minister was recently quoted in the Globe and

Mail touting this benchmark as a good thing.

My question to the minister: if she now believes that the 0.16

benchmark is good for LNG and GHG emissions, why did she vote against

the Greenhouse Gas Industrial Reporting Act on October 29, 2014, and

subsequent amendments to this bill on April 6, 2015? Was this for

political purposes? It did send a negative signal to

investors.

Point of Order

Hon. M. Mungall: I would like to bring the House’s attention to the Standing

Orders and to, particularly, the fourth edition of the

parliamentary rules that guide the Parliamentary Practice in British

Columbia . If we look to Standing Order 40 and to 40(3): “No member

shall be irrelevant in debate….” Then we move forward to the Standing Order

61 that actually guides the process for Committee of Supply as well as

Committee of the Whole. Again here, we are guided in this House to be

relevant to the topic at hand, which is the budget and programs of this

ministry.

My understanding is that that member’s question based on a past vote

that occurred in a previous parliament is out of order.

The Chair: Member, on the point of order — do you want to speak on

that?

E. Ross: No. I want to go on to my next question. It was in relation to the

budget and in relation to where I thought this government was going in

relation to the markets.

The Chair: Member, take a seat. Let the Chair see what we can do about

it.

[1:40 p.m.]

Members, the Chair will consider all of the comments made by both

sides and make a ruling on that later on. In the meantime, we’ll

continue with the estimates of the budget.

Debate Continued

E. Ross: The question remains, because it’s a change of approach when it

comes to the LNG industry. There are huge numbers at stake — $67.5

billion just on three projects alone mentioned by the minister

yesterday. So can the minister answer the original question?

The Chair: Member, can you rephrase the question, please?

E. Ross: Rephrase the question?

The Chair: Yes.

E. Ross: I’m wondering about the change of opinion from the minister — from

opposing legislation that was actually put in place to address emissions

as opposed to the recent position where the minister now supports the

act.

The Chair: The Chair thinks that’s a fair question, and the minister

should address that.

Hon. M. Mungall: First off, my question to the members opposite is if…. We were

told that at this time we would be doing questions on B.C. Hydro, and

that’s why we have relevant staff. If that’s not the case, can they

please confirm, and then we will bring in the appropriate staff. So

that’s my first request.

Then the second one is that I have answered the question on this

government’s perspective on the LNG industry repeatedly. We have an

opportunity to move on to some substantive issues, or you can continue

asking those questions. I will provide the exact same answer, or inform

the members opposite that I have provided the answer to those

questions.

M. Bernier: Just to advise the minister that she might want to bring in the

appropriate staff, because we have numerous questions still on LNG that

have not been canvassed nor answered yet.

[1:45 p.m.]

Hon. M. Mungall: Because our side was under the impression that we were going to be

dealing with B.C. Hydro following the lunch break, not all of our staff

who are our relevant staff leads on LNG are available at this very

moment. They will be available later in the day.

We can move forward with questions, if the members opposite want

to at this moment, and we’ll do our best to answer. Or we could bring in

B.C. Hydro, and we could move on to that. I’ll let them decide their

course of action.

T. Shypitka: Yesterday it was laid out fairly clear what the

schedule was going

to be for what we’re going to do here in estimates. We indicated that

there’d be three hours for mining, three hours for LNG and about four

hours for B.C. Hydro. We decided to have it in that order so that we

would save time and also allocate the proper questioning to B.C. Hydro

staff that would have to be flown in from Vancouver. So we’ve made every

effort in order to accommodate staff on the government side, and it was

laid out very clear on our scheduling.

M. Bernier: Can the minister repeat? You’ve got one or two members here.

You’re missing one person. When will that person be here so that we can

continue on?

The Chair: The committee will recess for five minutes, and we are going

to sort it out before we continue.

The committee recessed from 1:47 p.m. to 1:50 p.m.

[R. Chouhan in the chair.]

Hon. R. Fleming: I seek leave to make an introduction.

Leave granted.

Introductions by Members

Hon. R. Fleming: Joining us in the gallery today is a wonderful group of students from

the school that is the closest you could possibly be to the Legislative

Assembly. I’d ask all members of all sides of the House to please make

students welcome from James Bay Community School.

Debate Continued

M. Bernier: Thank you for bringing in the staff for B.C. Hydro. We will get

back on to

schedule with LNG afterwards, once we know that the

appropriate staff for that are going to continue.

We have estimates laid out for at least the remainder of the day.

We’ll see how the time goes — if we get the remainder of the answers —

whether we finish by today. There’s a good likelihood that we’ll

actually end up continuing to tomorrow, now, because of some of the

extra questions that we’ll want to ask, or some of the delay that

happened.

Can the minister actually start, just again, by introducing her

staff that she has with her and the roles they have.

Hon. M. Mungall: With me today I have Les MacLaren, who is the Assistant Deputy

Minister of Energy. I have Chris O’Riley, who is the CEO for B.C. Hydro,

and Cheryl Yaremko, who is the chief financial officer for B.C.

Hydro.

M. Bernier: So B.C. Hydro now has an executive chairman, I believe. There’s

been some restructuring or changes. I’m hoping the minister can explain

this, because it replaced a former chair of the board of governors. Can

the minister explain the role of the executive chairman versus the

former role of the chair of the board of governors, in terms of

responsibilities?

Hon. M. Mungall: There was a change in titles. There wasn’t very much of a change

in an actual job description, other than, we’d say, that the new

chairperson is more involved with the strategic direction and the

strategic planning for B.C. Hydro.

M. Bernier: Can the minister explain, then — with that comment — how the roles

of the executive chairman and the president are split, and who is doing

what function?

Hon. M. Mungall: Both the president — or COO — and the chair of the board work very

closely together, but their functions are different. So the COO does the

day-to-day operations and management of B.C. Hydro as a whole, and the

chairperson of the board provides, along with the board, the role of

governance to B.C. Hydro.

M. Bernier: Can the minister explain what the executive chairman is getting

paid for that role?

[1:55 p.m.]

Hon. M. Mungall: The compensation has not changed for this role, even though there

has been added duties. They’re getting about $30,000 per year plus

meeting fees.

M. Bernier: Can the minister explain, within her role as the minister, what

kind of contact, discussions or meetings that she has actually with the

executive chairman? Does she meet with him individually, or does she

meet with the CEO? What’s the format that she uses for

meetings?

Hon. M. Mungall: In terms of the question about how do I meet with the board chair

of B.C. Hydro…. So no doubt about it, the relationship between the

minister and chair of the board of B.C. Hydro is an important one. It

always has been, regardless of which government is in power.

The way we’re conducting that is that whenever I’m being briefed

by B.C. Hydro, the chair is generally there. We have meetings,

one-on-one meetings. But primarily, we have group meetings where there

is staff involved.

M. Bernier: Is the president involved in these meetings too?

Hon. M. Mungall: Yes.

M. Bernier: I’m just curious, then, from the minister, when she is getting

advice from B.C. Hydro and there are all these always people in the

room…. How does she take that advice? Hopefully, if they’re all in the

room at the same time…. How does she gauge the advice from B.C. Hydro

and their opinions when she’s making her decisions? I’m

curious.

Hon. M. Mungall: I see that the B.C. Liberals have a real penchant to understand

personal views rather than what’s actually taking place within the

ministry. But okay. We can run with this for a little bit until the

Chair decides that perhaps it may not be relevant. That being said, I

take any advice, as any other minister — such as the member opposite

when he was a Minister of Education — would have taken advice. You take

it all under consideration.

M. Bernier: I appreciate that because, again, just to remind the minister, the

whole point of these questions are not just specific to the ministry,

but it’s also her as the minister and how she takes advice and how she

makes decisions.

Obviously, the minister is in a very important role. She,

hopefully and assumedly, takes that role seriously, which means she has

to be looking at advice — not only internally from her ministry staff

but from outsourcing, Crown ministries and the public.

[2:00 p.m.]

So it’s very relevant when we ask these questions, because it is

important to find out where the minister’s mindset is when she takes

advice. That’s not just from that group but from employees as

well.

Maybe I’ll ask the minister: does she know when the last employee

survey was done at B.C. Hydro?

Hon. M. Mungall: My understanding is that the member opposite is talking about the

work environment survey that B.C. Hydro conducts about every 18 months.

The last time it was conducted was in January 2017.

M. Bernier: Can the minister explain what the level of engagement was, what

kind of results they received from those and give me an overture of what

kinds of opinions that the employees have of the agency?

Hon. M. Mungall: Overall, the results of that survey were quite positive, and there

is a very high level of engagement. We don’t have the exact numbers

right now in terms of overall percentages. If the member wants that,

we’ll absolutely get that for him.

One of the things that B.C. Hydro does with this survey, even when

it’s positive, is say: “Okay, what are the opportunities to improve?”

For example, this year one of the things that they decided to start

working on, based on the results of that engagement survey, was looking

at career development opportunities and hiring practices so that they

can really grow people’s opportunities from within.

M. Bernier: I know in the past it’s been done. Has there been a recent

employee engagement survey or any discussion with the B.C. Hydro staff

engaged specifically on the Site C project?

Hon. M. Mungall: We do have that number for you. It was an 83 percent engagement

rate. We just got that.

In terms of how the survey is done, it’s not project-specific.

It’s B.C. Hydro–wide.

M. Bernier: On the capital side of things within the ministry — I want to ask

a few questions there. We’re going to get into some very succinct

questions around budgeting in a second here, around B.C. Hydro and the

ministry.

Can the minister explain…? In B.C. Hydro’s ten-year capital

expenditure program, outside of Site C, there was around $20 billion

spent. What plans do we have for that over the next ten

years?

[2:05 p.m.]

Hon. M. Mungall: There have been no changes to the overall capital plan. I’ll just

draw the member’s attention to my mandate letter, where it specifically

does say to continue to deliver planned capital projects on time and on

budget to maintain the reliability of the service.

M. Bernier: I appreciate that comment. The minister says “continue.” Is she

now saying, then — and can she confirm that with B.C. Hydro — that on

average over the last five years, most capital projects have come in on

budget?

Hon. M. Mungall: This is one of the measures in the service plan. What it says

there is that B.C. Hydro has delivered 540 capital projects at a total

cost of $6.4 billion, which is actually just a little bit under budget

overall.

M. Bernier: From, I assume, the advice from the members she has around her

from B.C. Hydro, is she confident, then, in future projects that we

have? We know there is going to be at least — hopefully, continuing on —

$2 billion, $2.5 billion within the service plan being delivered in

capital projects over the next years. Does she anticipate those will all

be coming in on budget?

Hon. M. Mungall: In that broader portfolio, there have been some projects that did

go over budget. As a whole, in terms of the final capital numbers, like

I said, it was, overall, delivered slightly under budget, just less than

1 percent under budget.

In terms of moving forward, B.C. Hydro always works to do their

due diligence in terms of meeting projects on time and on budget. But as

I said, in the past, there have been some projects that did go over

budget.

M. Bernier: Can the minister confirm, then, again for me that over the ten

years, within the plan, it’s approximately $2.4 billion a year. That’s

up substantially in capital expenditures over the last 16 years. I just

want to confirm that that is going to be unchanged.

Hon. M. Mungall: What is happening is that B.C. Hydro is spending an average of

more than $2 billion per year over the next ten years on capital

projects. I understand the member opposite might have been looking for a

potential change. My understanding is that there has been no change in

the budget.

[2:10 p.m.]

M. Bernier: I just want to confirm with the minister, then. She said there is

no change in budget, but there have been announcements of rate freezes

by this now government. I’m curious if she can now confirm for me, then:

is going to mean more borrowing? Is it more changes? If we have less

money coming in, I’m curious, from B.C. Hydro’s perspective, where that

money is now going to come from.

Hon. M. Mungall: If the member will recall from the election as well as moving

forward since the election, our government’s commitment has been to

freeze hydro rates, yes, but we also tied that to an overall review of

B.C. Hydro to ensure we are making sure that ratepayers are paying for a

lean and very well functioning and efficient utility. As a result, in

terms of how we would pay for a rate freeze, that is part of the

review.

T. Redies: To carry on with the previous question, can the minister recall

the reductions in operating expenses that have been taking place at

Hydro over the last several years?

Hon. M. Mungall: The member opposite would note that in 2011, B.C. Hydro did do a

review of its operating costs and made some reductions at that time, to

a total of $33 million. That was six years ago, and I believe it would

be good practice to do a review right now and look at those

opportunities for reducing costs to ratepayers once again, as we’ve seen

rates increase 28 percent just in the last four years.

[2:15 p.m.]

We need to get this under control. We have committed to making

life more affordable for British Columbians. That is why we’ve committed

to a rate freeze tied to an operating review that would occur over the

next year at B.C. Hydro so that we can get those costs under

control.

I would also note to the member that since that time, there was

that $33 million reduction. In 2013, the base operating cost at B.C.

Hydro was $705 million, and presently, in this fiscal year of 2017, it’s

$750 million.

T. Redies: Thank you for the answer, Minister.

Is the minister aware that under the previous government, B.C.

Hydro was held to an operating cost increase of 1 percent annually?

Could the minister also explain how much a rate freeze, and the duration

of the rate freeze, will cost B.C. Hydro? The so-called review that the

government is planning to undertake — will that realistically find more

savings that will offset the rate freeze?

Hon. M. Mungall: A one-year rate freeze would be the equivalent of about $150

million in savings to ratepayers. In terms of looking at how does that

impact B.C. Hydro’s overall costs, I should mention that a review would

include a variety of things. It wouldn’t just look at operating costs.

It would look at the deferral accounts, which members opposite would

know very well about. It would look at transfers to government as

well.

Most importantly is that our starting point right now is going to

actually be the B.C. Utilities Commission’s review of operating costs

and the rate plan, and so on, that is going to be coming up by the end

of this fall season.

T. Redies: So $150 million a year from a rate freeze. That’s essentially a

$150 million drop in revenue for B.C. Hydro. I’m very curious how, more

specifically, B.C. Hydro is going to offset this without impacting its

capital plan, its debt repayment, its operational investments, given

that the last review only seemed to find about $30 million in costs. It

doesn’t seem to add up from my perspective.

Hon. M. Mungall: I was about to deliver an acronym to the member opposite in my

previous answer and recognized that we live in acronym soup. So I held

back, and I said rate plan. What I meant to say was the revenue

requirements application. I’ve gone right into acronym soup, call

everything RRA. I apologize for that.

In terms of where things are at, I think it’s very important to

note that British Columbians were very, very clear in the last year —

and, in fact, for much longer than that — that they want to see life

more affordable, that they’re struggling to make ends meet. One the

reasons they’re struggling to make ends meet is because they’ve seen

their hydro bills go up and up and up due to rate increases. One of the

issues around that is that people are struggling to pay those

bills.

As part of our commitment to British Columbians to make life more

affordable, we committed to freezing hydro rates for a year while we

conduct a review so that we can find those savings.

[2:20 p.m.]

Now, I appreciate the member’s questions. We have those questions

too, and that’s exactly what the review is all about.

T. Redies: All right, so maybe we’ll backtrack a little bit. I wanted to ask

some preliminary financial questions, if I may. For example, can the

minister describe the fiscal position of B.C. Hydro as at the end of

June 30, 2017 — specifically, how it was performing, relative to budget

expectations in terms of net income, its balance sheet and

revenue?

Hon. M. Mungall: The net income for the three months ended in June 2017 was $92

million. That’s $4 million higher than the same period in the prior

fiscal year and $10 million favourable to the fiscal 2018 service plan.

The bulk of that increase was a result of rate increases by the previous

government.

T. Redies: Would the minister, on that basis, say that Hydro was performing

well to plan?

[2:25 p.m.]

Hon. M. Mungall: Yes, B.C. Hydro is performing on plan. I did note that right now,

as of June 30, 2017, in that first quarter, their revenues are higher

than the previous year, and they are higher than what was originally

expected, due primarily to that rate increase by the previous

government. Because this government is focused on affordability, we look

at that very seriously.

T. Redies: Can the minister speak to what has happened with demand since this

rate increase occurred? Has residential demand gone up or gone down? Has

business demand gone up or down?

[2:30 p.m.]

Hon. M. Mungall: The member will note that there’s a variety of things that

determine demand, weather being often the most notable one. For

residential and commercial, we’re slightly above. For industrial, we’re

slightly below in demand. And for an overall situation, it’s a 0.5

percent increase above the load forecast is where we are at.

T. Redies: Thank you for that. I’m sure the minister must know that B.C.

Hydro rates, which she referred to as having been increased under the

previous government, are still the fifth-lowest in North America. It

doesn’t appear that the price increases have affected demand. But let’s

move on from there.

The minister spoke about deferral regulatory accounts. I’d like to

understand how large these are at this point in time. Perhaps the

minister could tell us what the regulatory accounts are supposed to do

and if she has any concerns as to the current amount of the regulatory

accounts.

Hon. M. Mungall: Regulatory accounts are commonly used by utilities throughout

North America. B.C. Hydro has a total of 26 regulatory or deferral

accounts for a total of about $5.6 billion across those 26 accounts. The

member did ask for what those accounts are. I can provide her with a

list outside of this, or I can read off all 26 accounts.

Interjection.

Hon. M. Mungall: I’ll give her a list.

[2:35 p.m.]

For the viewers at home, some of the items that do make it into

these deferral accounts, for example, are storm restoration costs,

amortization of capital additions, asbestos remediation. As well, rate

smoothing has been an account that’s been used quite a bit over the last

few years.

I would mention at this point, too, that the Auditor General has

actually raised her concerns about the way in which some of these

deferral accounts have been used, and that’s precisely why B.C. Hydro

and this government will be including those deferral accounts in our

overall review.

T. Redies: There is, I believe, a deferral accounts plan and a plan to start

paying them back. Can the minister confirm at what amount currently do

the deferral accounts peak, when do they start being paid down, and is

that plan going to be continued by this government?

Hon. M. Mungall: The year that the deferral accounts peak at is presently at fiscal

year 2019, when it would be just over $5.7 billion. Again, I did mention

that deferral accounts are used by utilities throughout North America.

It’s not unusual. It’s how they are used that was of concern to the

Auditor General, and noting that concern, that’s why we want to include

them in our review.

T. Redies: I’d just like the minister to answer my previous question, which

is: will the government commit to the decline of the deferral accounts

as per the previous B.C. Liberal government’s plan with B.C. Hydro?

After the deferral accounts peak at $5.7 billion, is the plan going to

be that they will continue to be paid down until they are

eliminated?

[2:40 p.m.]

Hon. M. Mungall: I mentioned the review. Sorry if I didn’t make it clearer for the

member opposite in terms of answering her question. Part of that review

will be looking at the deferral accounts. It’ll be looking at the

paydown rate. It’ll be looking at affordability. It’ll be asking a

variety of questions in terms of how all of that translates back into

rates for the ratepayer.

T. Redies: Okay, so there’s some uncertainty here in terms of whether or not

the plan to continue the repayment of the deferral accounts is going to

continue. I think it’s what I’m hearing. Can the minister describe what

the impact is on the fiscal position of Hydro if those deferral accounts

continue to increase beyond what is currently…? It’s supposed to be

peaking at $5.7 billion I think she said.

Hon. M. Mungall: The member’s question, if I recall correctly, was if the amounts

in the deferral accounts go up, does that affect the overall financial

position of B.C. Hydro? Well, in a short answer, yes, it does. And the

fact that the deferral accounts are already at $5.6 billion under the

previous government is hugely concerning to this government and is

precisely one of the many reasons why we want to do this review so that

we can start tackling this problem that has been identified by the

Auditor General around these deferral accounts.

T. Redies: Thank you for that comprehensive answer, Minister.

Before I move to some more specific financial questions, I want to

ask if the minister could speak to the competencies and skill sets and

years of experience of the executive team at B.C. Hydro — in particular,

the financial group.

[2:45 p.m.]

Hon. M. Mungall: I’m sure the member, as a former board member at B.C. Hydro and

chair of B.C. Hydro’s audit committee, will be aware that the staff at

B.C. Hydro — the executive staff — are professionals with exceptional

backgrounds and skills, and provide very good service to the ratepayers

of B.C.

T. Redies: I appreciate the minister saying that. I tend to agree with her

that she has a very talented team over at B.C. Hydro, based on my

previous experience with them.

I just want to confirm, based on the talent of the team, that the

minister has confidence in her team and takes advice from them in terms

of any decisions that have to be made with respect to B.C.

Hydro.

Hon. M. Mungall: Yes.

T. Redies: I just want to turn now to the ten-year rates plan. The ten-year

rates plan calls for the dividend that was paid by B.C. Hydro to

government to end on March 31, 2018. Can the minister please confirm

that there will be no dividend paid by B.C. Hydro to government until

Hydro’s debt-to-equity goes down to 60-40, as set by the previous

government?

Hon. M. Mungall: So I heard the member opposite say the dividend would end in 2018.

Actually, there’s been no change from previous government to current

government. But the last payment is actually 2019.

T. Redies: Good to know. I would like to turn back to the rate freeze, just

to pick up a couple of things on that, that weren’t covered earlier.

Before the now current Premier made the announcement that his plan was

to freeze hydro rates, was there any analysis done with B.C. Hydro on

how that might impact B.C. Hydro?

[2:50 p.m.]

Hon. M. Mungall: It is not customary and is not a practice, and there are some real

issues around why that is, for a political party to consult with any arm

of government or any Crown corporation on policies that they put in

their election platform. Whether it’s the Greens, whether it’s the NDP,

whether it’s the B.C. Liberals, it is not customary to be doing that

type of consultation for reasons in terms of the non-partisanship that

government is supposed to be.

Our commitment has always been and always will be to make life

affordable for British Columbians, and we want to do it in a responsible

way. That’s exactly why we tied the rate freeze to doing a comprehensive

review of B.C. Hydro.

T. Redies: I guess the answer to that is that there was no analysis done,

though the Premier was prepared to make an announcement that cost the

company $150 million each year the freeze was in effect.

Can we just confirm how long the freeze is going to be? Is it one

year or two years? We’ve heard different numbers out there in the

press.

Hon. M. Mungall: As I’ve already stated in this exact budget estimates process this

afternoon, it’s one year.

T. Redies: Can the minister speak in more detail to the impact that the

freeze will have on things like the future requirements for rate

increases, the capital plan, the debt. I guess the dividend to

government will no longer be paid after 2019, so that’s not

necessary.

What I’d like to understand is what analysis there has been done

on this rate freeze, respecting that there is still a review to come.

But the company is still operating. It still has a capital plan it has

to meet. It still has debt that it has to pay. I guess my question is:

what analysis has been done on how this freeze is going to impact all of

those particular areas?

Hon. M. Mungall: I would just say to the member that those are great questions, and

those are the exact questions that we’ll be having as part of our review

process.

Like I said, we want to make sure life is affordable for British

Columbians. That has been our commitment to them. We want to make sure

that we’re doing it in a responsible way so that future generations are

not taking on burdens as a result of addressing those affordability

crises for people now.

All of those issues that you’ve brought up are precisely what this

review is about.

T. Redies: Minister, I appreciate what you’re trying to do….

The Chair: Through the Chair, Member.

T. Redies: Sorry, my apologies, Mr. Chair.

Through you to the minister, I appreciate what the minister is

trying to do; however, the review is going to take a period of time.

We’re essentially going to have $150 million in lost revenue to B.C.

Hydro, which has to impact the company somewhere, unless the minister

plans to put that lost revenue into a deferral account, which she’s

already said is too high. Or are there going to be capital plans that

are going be deferred because the company has $150 million less to work

with? I’d just like to understand what the immediate impact is, because

the company has to operate on a day-to-day basis.

[2:55 p.m.]

[L. Reid in the chair.]

Hon. M. Mungall: These are fair questions. And I want to just say that I really

appreciate the questions from the member opposite. I think she’s really

demonstrating tough questions that should be asked, and I really

appreciate the respectful delivery that she’s putting them forward with.

So thank you very much.

Just to answer this question, how it works is that the rate freeze

wouldn’t occur until the next rate application, which would be April 1.

So the fiscal impact doesn’t occur until after that. In that meantime,

we’ve been able to answer those questions, those very questions that you

brought up, with our review process.

T. Redies: To the minister, through the Chair, thank you for her comments and

her answer.

Hydro is a very complicated business. I learned that in the couple

of years that I was able to work with the company. One of the key areas,

of course, is the ten-year capital plan. One of the reasons why I am

concerned about the rate freeze is the ability for B.C. Hydro to

continue on with that capital plan.

I guess maybe what I’d like to understand from the minister is how

much she understands around why the company is undertaking this

ten-year, almost $24 billion capital plan. If she could just give us

some insight on her understanding of why this is being done.

Hon. M. Mungall: I appreciate the member opposite’s concern for the overall capital

plan. It’s very important, and I know that her experience on the board

would give her the insight into why it is important — for example, the

safety of our dams.

Between my house and the member for Kootenay West, the Minister

for Children and Families, there are ten dams. Some of them are not B.C.

Hydro dams, but several of them are, and there is no way we’d want any

one of those to fail.

A large part of that capital plan — in fact, 50 percent of it — is

dealing with things like dam safety and other items, making sure they’re

seismic-ready or seismic-proof as much as possible. Another 20 percent

is related to new infrastructure. For example, that would be Revelstoke

6 up in the Kootenays, new transmission lines, new substations to manage

increasing load, and presently, 30 percent of that capital that we

talked about is actually directed towards Site C.

[3:00 p.m.]

T. Redies: Thank you, Minister. Can we then confirm with government that the

government will not stop or, through their actions, prevent B.C. Hydro

from reinvesting in its transmission and distribution lines and creating

new capacity? In other words, are they committed to the $24 billion in

capital spend through this ten-year plan?

Hon. M. Mungall: I’m going to read to the member opposite the mandate letter that I

gave B.C. Hydro, just because it’s a really clear phrase that addresses

her concerns over whether the capital plan is going to continue as is

and, I should say, notwithstanding Site C. We all know the decision

that’s happening there. We don’t need to belabour that point.

My mandate letter to them was to “continue to deliver your planned

capital projects on time and on budget to maintain the reliability of

the system.” So absolutely, we want to maintain that reliability of the

system. The existing capital plan ensures that we do.

Should something change and load increases and we require future

capacity or generation to meet that future load increase, the capital

plan would change accordingly.

T. Redies: Thank you for that clarification. I think what we’re saying here

is outside of Site C, the existing plan will remain on track, and the

only thing that would change is additional capital projects that would

be required to meet new capacity.

I’d just like to turn now to the debt position of B.C. Hydro. Can

the minister speak to the current debt position of the company? What is

the current debt, and what is it expected to peak at over the next few

years?

Hon. M. Mungall: Currently for the fiscal year 2017, the debt is at $19.796

million.

[3:05 p.m.]

Pardon me. I read this a little bit wrong. It’s $19.796 billion,

and that makes more sense. It’s forecasted to peak in 2023 at $23.761

billion.

T. Redies: I’d like now to turn, if I can, to the financial impacts of Site C

and the recent events. First, can the minister — I guess, with the

president of B.C. Hydro — confirm that the project was on time and on

budget as of June 30, 2017, based on their presentation to the then

government?

Hon. M. Mungall: The member was asking if the Site C project was on time and on

budget by June of this year. B.C. Hydro contends that it was. She’ll

note that the Deloitte report also agreed with it being on time and on

budget as of June 2017. I don’t know if the member wanted to ask more

questions in terms of what has been discovered since then.

Interjection.

Hon. M. Mungall: She’s got some. So I’m going to let her ask her questions rather

than go on, and we’ll see what information she wants.

T. Redies: Thank you, Minister, for confirming that the project was on time

and on budget as of June 2017. Now, based on recent events — and, I

think, the admissions of government — it now is clear that the decision

before cabinet is to continue or to terminate Site C. Can the minister

confirm what analysis has been done in terms of the impact of a

termination on B.C. Hydro’s financial position? And please explain what

that analysis has been and what the findings are.

Hon. M. Mungall: That analysis, on top of the BCUC report, is being conducted right

now and is for advice for a cabinet decision. So I’m not able to comment

any further.

T. Redies: I’m just again trying to clarify here. There has been no parallel

process around the financial impacts of the various decisions that the

BCUC was asked to look at for B.C. Hydro? That would seem to be a bit

curious, because we’re talking about billions of dollars. I would be

very surprised, based on my past experience with Hydro, that some

analysis would not have been done.

[3:10 p.m.]

Hon. M. Mungall: In terms of B.C. Hydro’s analysis…. I was understanding the

question from the member to be in terms of government analysis. B.C.

Hydro obviously has done their own analysis that was presented to the

B.C. Utilities Commission. It is all available publicly on line. They

had done that analysis, absolutely.

It is normal procedure for the B.C. Utilities Commission to then

take that as part of their review, conduct their analysis and for

government to then further take that information, should it be

warranted, and conduct its own analysis, which is exactly what we’re

doing.

T. Redies: Can the minister explain what the impact of terminating Site C

will be on B.C. Hydro’s financial situation?

Hon. M. Mungall: As I noted, the B.C. Utilities Commission had done that analysis.

It was released in a report last week, on November 1. What the B.C.

Utilities Commission is saying is that the cost of terminating Site C,

in sunk and termination costs, would be a total of $3.8 billion. If we

look at what has been spent to date, it would be $2 billion and then

another projected $1.8 billion for the termination costs.

T. Redies: On the sunk costs, is that going to be an immediate write-off, or

is the plan to put that into a regulatory account and amortize it over a

number of years?

Hon. M. Mungall: Madame Chair, the member…. I’m sorry. I just can’t answer that

question, because she’s essentially speculating on a decision when no

decision has been made to date in terms of how that decision will be

dealt with.

T. Redies: I’m not speculating. The government has indicated that the project

will either be continued or cancelled, so I think the public does

actually deserve to understand what the impact to B.C. Hydro is going to

be, because it will affect ratepayers, industrial users in the province.

I think we do have a right to understand what analysis has been done and

how a termination would be handled in terms of B.C. Hydro’s financial

position.

Hon. M. Mungall: I do agree with the member that the public does have a right to

know these questions. But at this stage, where we are at is that

analysis, where the member is asking some very specific questions in

terms of what the overall fiscal impact will be, is presently being done

on a basis of supporting a cabinet decision. Therefore, I’m not able to

comment.

[3:15 p.m.]

M. Bernier: Since we’re on the topic of Site C and we’re only going to stay on

this for a few more moments…. We’ll come back to it later. We will go….

I assume, looking at the clock, that staff is coming that can support on

the LNG questions, so we can go back to where we had planned on

being.

Can the minister explain, then, prior to Site C starting, how many

reviews and how many years of reviews were done before a project

decision was made?

Hon. M. Mungall: The first time it was reviewed publicly, through a public process,

was in 1982 and 1983. At that time, Site C was reviewed by the B.C.

Utilities Commission. Their conclusion was that it was a good project

but not for that time frame — that the load and the load forecast in the

’80s just didn’t warrant that expenditure at the time.

Under the previous government, there was a joint review panel that

occurred from 2011 to 2014. This was a provincial-federal government

joint review panel. I’m sure the member remembers it. The scope of that

review, however, was strictly on environmental, social and First Nations

impacts. The due diligence that is typically required under a B.C.

Utilities Commission review was not in the scope of that

review.

That the B.C. Utilities Commission has a past history reviewing

this project. That it is typically the process by which government goes

for any major capital project such as this and that it wasn’t done was

very unfortunate. It was regrettable. That’s why we’ve chosen to move

forward with that present-day review.

That brings it to a total of three public reviews.

M. Bernier: I’m hoping that the minister is not trying to diminish, when she

says three public reviews, the actual decades of discussion and reviews

that took place.

With her comment, too, I’m wondering if the minister can confirm,

then: did the W.A.C. Bennett and the Peace dam, which are both on the

Peace River, go to BCUC for a decision?

Hon. M. Mungall: Those dams were all built in the 1960s. The commission didn’t come

into being until the 1980s.

As someone who comes from an area of the two rivers policy…. The

member opposite comes from the north side of that two rivers policy and

the Peace River. I come from the southern side on the Columbia Basin. We

have several dams in my area. I often talk about the ten dams that exist

between my house and the member for Kootenay West’s house. None of those

dams were reviewed under B.C. Utilities Commission either, because they

were all built either before or during the 1960s.

Coming from that experience and listening to the elders in my area

and the people who lived through that, I would say that the B.C.

Utilities Commission reviewing these types of projects is a better way

to go.

M. Bernier: I am going to assume by the answer, what the minister has just

said, is no other dam — really, major project — has actually gone to the

Utilities Commission prior to.

[3:20 p.m.]

It’s unfortunate, from the comments in the past, that the minister

has actually talked about this exact issue, when, in fact, other dams

have not gone to the Utilities Commission prior to that because the

Utilities Commission wasn’t around. The decisions were made based on

what was best for the province of British Columbia, based on what was

needed for the people and for the future generations of the

province.

Can I actually ask the minister, then: on this particular project,

how many local agreements do we have with local communities? How many of

the eight First Nations have we got agreements, and local impact

agreements, with and that are working on site?

Hon. M. Mungall: As a Columbia Basin resident, I just want to say and make sure

that the member opposite understands that the way in which the dams were

erected in our area in the Columbia River Treaty and the way in which

all of that happened has, to this day, been a sore spot for all of us.

We don’t feel that that process was at all respectful of our region. It

wasn’t respectful of the people who lost land. We would have very much

welcomed a more appropriate process like the B.C. Utilities Commission,

if it had existed at that time.

To answer the member’s question in terms of the

impact-and-benefits agreements and which communities, there are six

First Nations who have benefit agreements with B.C. Hydro around Site C.

In terms of local government, there’s Fort St. John, Hudson’s Hope and

the Peace River regional district.

M. Bernier: With the minister’s comments, can she confirm that when we talk

about working with local governments and local First Nations…? She still

hasn’t answered that question directly. If she did while I was

distracted, my apologies. I’m still waiting to hear, then. I’m sorry.

Can the minister repeat that, then?

Hon. M. Mungall: Happily. I can happily repeat that. The local governments that

B.C. Hydro has been working with and that have benefit agreements are —

actually, I only listed three, but there are two more, so my apologies:

Fort St. John, Hudson’s Hope, Taylor, Chetwynd and the Peace River

regional district. Then there are six First Nations who presently have

agreements as well.

M. Bernier: I assume that the minister is aware of this, but there were 7½

years of consultation and work that was done in the region. I actually

sat on the board, so I’m quite acutely aware of the work that was done,

the consultation that was done and the arrangements and agreements that

took place.

We had the senior vice-president, Susan Yurkovich, at the time,

who had been appointed. That was a separate group under B.C. Hydro that

was actually doing regional and local consultations. Can the minister

maybe explain a little bit more in detail about how she feels those

went?

Hon. M. Mungall: I appreciate that the member opposite was involved in some of

those consultations. So he will have direct experience of them and

probably wasn’t surprised, then, when the courts were…. These have been

reviewed by the courts. They were actually quite complimentary of how

those consultations took place.

[3:25 p.m.]

M. Bernier: I just want to agree with the minister. When you look at the

court’s decisions that have been made to date, B.C. Hydro did an

incredible job, I would say, in consultations not only with local

communities, local landowners and local First Nations…. In a project

like this — like, I would say, any project — there are always going to

be some people who are in favour and some people who are against, for

different reasons, especially people who are personally impacted, and we

need to respect the thoughts and the decisions of those people

there.

That aside, as important as it is, a decision needed to be made by

government to move forward for the long-term power security of the

province. But through all these consultations — and the minister

highlighted this — there was the joint review panel. They did about a

three- or three-and-a-half-year study, again, as the minister

highlighted. This was joint provincial and federal, looking at, as the

minister said, mostly the social and environmental positions of Site C

on the completion or the building of the project and how that would

mean.

Can the minister then explain or confirm whether she respects and

agrees with the joint review panel findings?

Hon. M. Mungall: There is one recommendation from the joint review panel that I

most wholeheartedly agree with, and that was the recommendation that

government then take Site C through a proper review process at the B.C.

Utilities Commission. Unfortunately, we didn’t get an opportunity to

have a fulsome review prior to shovels in the ground, but we are where

we are, as I’ve said many times. We have conducted that review now, and

I absolutely do agree with that recommendation.

M. Bernier: Is the minister actually acknowledging and saying, then, that a

rushed, 90-day review is a comprehensive review by BCUC?

Hon. M. Mungall: I’m not going to stand here and join in any sidelined attack of

the B.C. Utilities Commission, but what I do think is very important is

that ratepayers had a lot of questions about this project, and they

deserve answers to those questions.

The fact that it never went through the appropriate process that

it should have, because the previous government made the choices they

did…. Members on this side of the House feel that those choices…. To not

send Site C to the B.C. Utilities Commission was the wrong choice, and

British Columbians, by and large, I would say, agree with that. Because

they chose not to send it to the BCUC — as recommended by the joint

review panel, and as is a typical process in modern day — it has just

been a drag on the project ever since, because ratepayers had valid

questions that deserved valid answers.

The BCUC has been able to do the best job afforded it in a time

frame that was respectful of workers, of landowners, of everybody who is

in that member’s riding who is directly impacted by this, and that’s why

we wanted to make sure that the process was as timely and as

comprehensive as it possibly could be.

M. Bernier: I’m not going to allow the minister to put words in my mouth,

because I was actually in no way complaining or having any issues with

the Utilities Commission at all. I know a lot of people at the

commission. They’re great people. They do great work.

My concern was that the minister mentioned that years and years of

consultation that took place weren’t adequate, but she figures that 90

days for the Utilities Commission is, and I’m just asking her to clarify

that. She has members of the B.C. Hydro executive right next to her. I’m

wondering if she can ask them if they agree with all of the findings,

after 90 days, of the Utilities Commission.

[3:30 p.m.]

Hon. M. Mungall: I did not say the consultation prior to the B.C. Utilities

Commission, or the BCUC, review was inadequate. What I said was that the

courts were very complimentary of the process. In fact, I think my

response was quite a respectful one.

What I did say is that, ultimately, there is a process that is

required to be done on behalf of ratepayers. The previous government

chose not to do that. We believe that was wrong, most British Columbians

believe that was wrong, and we’ve done our best to right that

wrong.

M. Bernier: Maybe the minister can answer my question. Can the members from

B.C. Hydro inform her of whether they believe, with all the findings and

the review that was done by the B.C. Utilities Commission…?

Hon. M. Mungall: As can be anticipated, B.C. Hydro is examining the input from the

B.C. Utilities Commission and participating in the ministry’s analysis

and government’s analysis. As I’ve been discussing before, that will

ultimately be advice to cabinet.

M. Bernier: Just back when we were talking about the joint review panel that

was doing all of the work and the studies and the recommendations, the

minister would also be aware of the fact that one of their comments that

they put forward after they did the review was a reminder to the people

of B.C. that a few decades hence from now, after inflation and work is

eroded away in the province, it will appear that Site C will be a

wonderful gift from the ancestors to the future societies of B.C., just

as B.C. consumers today thank the dam builders of the 1960s for the

decisions they made.

I wanted to make sure that was on the record, because I think it’s

important to stress again — back to my earlier point — that those dams

that were built in the province of British Columbia years ago are paying

off for the province of British Columbia. We have some of the lowest

electrical rates in North America for a reason.

When I was doing part of my energy policy degree, in fact, we were

looking at all of the other energy production units in North America.

When I was travelling around the United States and looking at nuclear

plants, at wind farms, at solar farms that they were trying to

establish, talking with the elected officials when I was in Washington,

all of them said, almost completely, that British Columbia is the envy

of North America because of its hydro, because of its Crown corporation

and because of the work that has taken place in previous

generations.

My question, then, to the minister: first of all, would she agree

that we have some of the lowest electrical rates in North

America?

Hon. M. Mungall: Sorry, I was waiting to see if the member was listening. I just

know that he’s working on something.

The answer is yes, that B.C. hydro rates have typically been in

the lowest five in North America.

[3:35 p.m.]

M. Bernier: I want to ask a question of the minister then, as we’re just

trying to deliberate here on going back, noting the time, if she has her

staff. We have many, many more hours of Hydro questions but also want to

be respectful to the fact that we said we were going back to natural

gas. Is her staff ready for that?

Hon. M. Mungall: Just a question back to the member in terms of organization. B.C.

Hydro staff are all in Vancouver, so if you intend to do questions

tomorrow on B.C. Hydro, they would have to come back. I’m wondering if

you’d be interested in saving a little bit of taxpayers’ dollars and

family time for these staff people by having them stay throughout the

day, and if you want to move to LNG, we can do that later in the evening

or we can do that tomorrow. I leave this up to you. I just wanted to

make sure you were informed of that.

E. Ross: I’ll leave that decision to the leader of this file

here.

I’ve just got one question related to my constituency. The Nisga’a

Lisims Government is assuming that this government will do something

about their higher-than-normal hydro rates. I just want to know if

you’re aware of that issue. It was promised that it would be looked into

and that they’re considering a solution as proposed by the Premier on a

recent visit.

Hon. M. Mungall: I just want to get some clarification from the member opposite,

because our understanding is that Nisga’a communities are on the grid,

so they would be paying regular rates. But perhaps what he might be

talking about is the two-tier rate structure, and that perhaps in a

cold…. This is what happened in my riding. This happened in other

ridings, and it’s something we’re looking into.

In a cold winter, which happened in my riding, anybody who is on

electrical heat or had electrical heat pumps or whatever found

themselves going up into the second tier of the rate structure because

they were using more electricity as the demand grew to generate heat in

their homes due to the colder winter. So I’m wondering if that may be

what he might be referring to and what has happened for Nisga’a

communities, or if he’s referring specifically to an entirely different

rate structure. We’re just making sure that wouldn’t be the case. If he

can comment….

E. Ross: It’s a she. It’s President Eva Clayton. She just recently had a

meeting with the Premier, and she talked about the rates for Nisga’a

members, specifically the elders, and how high it was in relation to

neighbouring communities. She didn’t talk anything about structure. She

just talked about how it was her assumption, after the meeting, that it

would be looked into. Also, in addition to that, she would produce two

hydro bills from every community to actually prove that.

[3:40 p.m.]

Hon. M. Mungall: It’s our understanding, in my conversations here with staff, that

all Nisga’a communities would be paying the same rate structure as

anybody else in B.C. I’m thinking that what the member might be talking

about is this.

What B.C. Hydro has is tier A and tier B — or tier 1 and tier 2 —

rate structure. Once you use a certain amount, and I think it’s…. We’re

going to get that. Once you hit a certain amount of kilowatts, you move

into the second tier. The idea is to promote energy conservation. For us

in rural areas, where people are often heating their homes with

electrical heat or they don’t have very good insulation or whatever,

poor windows and so on, they are moving very quickly in a cold winter

into that second tier.

It’s a concern for us, absolutely. We want to make sure life is

affordable for British Columbians. We don’t want to penalize people

because there was a cold winter, so we’re going to be looking into this

two-tiered structure. That being said, we’re going to double-check to

make sure that there is no separate rate structure for any particular

community. I will confirm that with the member opposite, and maybe get

in touch with him to ensure that if there are any further concerns,

we’re able to deal with them.

E. Ross: Thank you, Minister, but it’s really not me. I was actually

basically just asked to bring the message down, based on the meeting. I

actually brought it up with the Indigenous Ministry as well — I’m not

going to try to say the acronym — but they said it was more of an Energy

file.

I just want to tell the president of Nisga’a Lisims that there is

a person down here that they can come talk to, to follow up on the

commitments that were made earlier.

Hon. M. Mungall: Absolutely, they can call my ministry office directly. Like I

said, we’re trying to look and figure it out, making sure there is not

some separate rate going to any one particular community in B.C. If they

need any help at all, never hesitate to give my ministry office a direct

phone call.

M. Bernier: To the minister, to the previous question. We will continue on to

accommodate the staff — specifically, I know how they come from over the

water — and do a couple more hours. We’ll see how that goes, with our

questions specifically around B.C. Hydro. Then we will finish off the

day and into tomorrow with the rest of LNG, which, for the most part,

are local staff, I believe. They will be able to handle that. The

minister is saying yes, so that’s what we will do. Hopefully, that works

the best for all the staff and for everything.

Just one more question. Under OIC 244, the order-in-council that

this government gave the Utilities Commission to do the work…. I’m just

curious. The minister, I assume, being in charge of this file, would

have spoken with the chair of the Utilities Commission when the OIC was

administered.

I’m curious on how those discussions went, if there were any

concerns that a 90-day window would be adequate for the work that they

needed to accomplish.

Hon. M. Mungall: Yes, the ministry did have extensive conversations with the B.C.

Utilities Commission about the terms of the reference. Would they be

able to meet the scope of the terms of reference in the time provided?

They actually responded with a yes and a structure that would enable

them to do so.

[3:45 p.m.]

They have delivered on exactly what they said they would do. They

have delivered on meeting the terms of reference in the time frame, as

we all know, by delivering their report at 10 a.m. on November

A. Weaver: I have a couple of questions, which I believe are within the

mandate of the staff that you have present, with respect to electrical

vehicle infrastructure. The questions are as follows. First off, what

are the minister’s plans in terms of building out the electrical vehicle

charging infrastructure in this province?

Hon. M. Mungall: Thank you to the member for the question. I’m actually really

excited about the potential electric vehicles have in our future. How do

we get there? Of course, the infrastructure for charging stations is

really important, so I’m glad the member brought this up. He’ll take

note that there is $40 million in this year’s budget, over the next

three years, to invest in the electric vehicle program, and $7 million

of that is specifically earmarked for infrastructure, so for those

charging stations.

We’re partnering with other utilities — B.C. Hydro being one of

them, but others utilities like Columbia Power Corporation, FortisBC and

local governments — to increase that overall $7 million and make those

dollars go even further so that we can get more charging stations all

across the province.

[3:50 p.m.]

I’ll just let the member know, as well, that B.C. Hydro currently

owns and operates 30 electric vehicle fast-charging stations. They have

29 more slated for construction. To accomplish that, they are partnering

with FortisBC; with the province, as well, as I mentioned; Natural

Resources Canada; and site hosts. So for example, you pull up to the

Canadian Tire, and you see a B.C. Hydro fast-charging station. Well,

that’s a result of that partnership.

A. Weaver: I do appreciate there being the high-voltage DC chargers that B.C.

Hydro has done. Unfortunately, those chargers are not maintained by B.C.

Hydro, and it is not uncommon to pull up to such a charging station and,

actually, to have it inoperable.

My next question is: to what extent is B.C. Hydro planning to

actually ensure that these high-voltage DC charging stations are in

operation and are not going to go down on an ongoing basis? For example,

Duncan was down for a couple of weeks. We also have one in the Interior

where the executive director of the New Car Dealers Association was

trapped with a Bolt that could not charge because the HVDC was down.

Nobody told anyone about it.

The question is: to what extent is B.C. Hydro going to invest

money to ensure, in the ones that they operate in collaboration with

Greenlots, that these are actually in operation on an ongoing

basis?

Hon. M. Mungall: It’s a new technology, as the member well knows. As we install

these new technologies, we’re learning a lot in terms of how we do

maintenance. That’s why B.C. Hydro has a program where they are ensuring

that they’re doing their best in terms of maintenance. Also, what are

they learning in terms of how this infrastructure rolls out and how it’s

built?

Part of that $40 million that I talked about earlier, that $40

million envelope…. Well, $1.5 million is going to job training and

public outreach and program analysis. For example, when we have these

types of issues with the infrastructure around charging stations, we’re

able to learn from it very quickly. We’re able to train people so that

they’re able to maintain it appropriately and on time.

I appreciate that being out of a charging station for two weeks is

excessive, and I’m sorry to hear that that happened. But moving forward,

we’re definitely looking to learn from those lessons and ensure that

we’re doing a better job.

A. Weaver: I would argue that the single biggest barrier to the introduction

of electric vehicles in the province of British Columbia is, in fact,

B.C. Hydro. In British Columbia, if you want to install a charging

station, you simply cannot charge for power. B.C. Hydro and other

utilities are the sole organizations that are able to charge a consumer

for power. If you go to a gas station and you fill up with gas, you pay

the gas station for the amount you wish to fill up.

We don’t need a public subsidy for the introduction of

electric-vehicle-charging stations if malls, individuals and companies

were actually allowed to install, in partnership with companies, and

charge users for the ability to consume the power they do. That’s not

possible in British Columbia, and that is the single biggest barrier for

our introduction of electric-vehicle-charging stations.

My question is: to what extent is she exploring, as part of these

measures, and looking at changing the requirement to be a registered

utility in order to charge for electricity to use in your car? And to

what extent can that be done through consultation with BCUC?

[3:55 p.m.]

Hon. M. Mungall: B.C. Hydro is not the barrier that the member is talking about. In

fact, B.C. Hydro is looking to partner with private businesses and

individuals and is looking to see that infrastructure expanded. What is

the barrier? There is one, and the member is right to identify it. It’s

actually in the act with the B.C. Utilities Commission.

Responding to that, the ministry is working with BCUC on ways to

address this barrier, on ways to allow private businesses to own

charging stations and to flow through the charge of power that they

would be purchasing. They’d also have a sound business model. They would

be able to charge for the parking, for example, while somebody is

charging their car while, maybe, they’re shopping at Canadian Tire. I

obviously have a particular love for Canadian Tire because I keep

bringing it up.

The point is that we do recognize that there are some barriers,

and we are working on them.

[4:00 p.m.]

A. Weaver: I do wish to acknowledge, I believe, the Chair, who showed

leadership, which is what I’m arguing is needed here, through the actual

installation of electric-vehicle-charging stations here at the

Legislature. Unfortunately, the Legislature must subsidize the paying

for that. The Legislature cannot allow, even though all of these are set

up for swiping a credit card, for me to pay for my electricity or the

Minister of Environment to pay for his electricity.

I come back to the issue. B.C. Hydro is the barrier to innovation.

Twenty-nine charging stations across British Columbia, high-voltage DC,

is hardly innovative when we have some down for weeks. This is not new

technology. This is technology that is widespread and is in production

around the world.

B.C. has the highest uptake of new electric vehicles in Canada.

Four percent of new cars are electric cars in British Columbia, not too

dissimilar from what California does with their own ZEV standard, yet we

do not meet the infrastructure. The barrier is actually a proactive,

innovative way of looking forward as to what’s happening in the

future.

Coming back to the question then. Will the minister commit to

actually work with industry — not with B.C. Hydro — to ensure that

there’s a means and ways for industry to use their capital to install

charging infrastructure, to allow electric vehicle users to swipe a

credit card to pay for power that they want to pay for so that people

will have incentive to install them, rather than requiring schools and

hospitals and municipal halls and the Legislature and malls to pay for

that?

Charging for parking does not work, because it is patently unfair

unless you charge everyone for parking. You pay for the energy you use.

Again, coming back to that, will the minister work with industry, not

with B.C. Hydro, to ensure that these can be installed in British

Columbia like they can in most jurisdictions in the world?

Hon. M. Mungall: As I said, the ministry is already working with industry and being

a mediator between industry and B.C. Utilities Commission on this very

issue.

The member did ask that we not work with B.C. Hydro. Obviously, we

will be working with our Crown corporation on this issue as

well.

T. Redies: I appreciate the minister got very animated over clean energy,

vehicles and the possibilities around infrastructure. It is, I think, an

exciting future.

I’d like to confirm, though, if the minister and her government

are truly committed to supporting climate change prevention and

adaptation. And can the minister explain what commitments B.C. has under

the Paris Agreement and the Clean Energy Act?

Hon. M. Mungall: This question might actually fall under the scope of the Ministry

of Environment and Climate Change Strategy.

T. Redies: Can the minister confirm that B.C. has requirements to electrify

our economy in order for Canada as a whole — and the province — to meet

its climate energy targets under the Paris Agreement?

Hon. M. Mungall: The Paris accord does not dictate how to meet our GHG reduction

commitments. What we have said is that electrification is one way to

meet that. Other ways include an expansion of public transit. Now, while

most public transit in the Lower Mainland is electrified, my area

definitely is not. In fact, we’re using biodiesel in Nelson. That being

said, electrification is one way to achieve those goals.

T. Redies: Would the minister agree that it’s probably the most likely way

that we will meet our targets under the Paris Agreement?

[4:05 p.m.]

Hon. M. Mungall: To answer the member’s question: absolutely. We all can

acknowledge that electrification plays a very significant role in terms

of being able…. Especially in B.C., where 96 percent of our electricity

is produced carbon-free, and we hope to maintain those numbers. So

electrification will play a very important role in terms of reducing our

greenhouse gas emissions, but it’s not the only role, as I said. I would

be in a lot of trouble right about now if I didn’t acknowledge those

biodiesel buses by the city of Nelson.

T. Redies: Is the minister aware that the Mica dam has to undergo

considerable maintenance that will eliminate about 410 megawatt hours

for six years, beginning, I believe, in 2018-2019? How is the loss of

that power going to be made up by B.C. Hydro if Site C is not

continued?

Hon. M. Mungall: Before I answer that question, I’m hoping that we can have a brief

five-minute recess so we can tend to some necessities.

The Chair: This House will recess for five minutes.

The committee recessed from 4:07 p.m. to 4:19 p.m.

[L. Reid in the chair.]

Hon. M. Mungall: Thank you very much for indulging the recess.

[4:20 p.m.]

The Mica outage overhaul — the member is correct to say that it

will take place over six years. It’s because there’s an overhaul of

turbines for units 1, 2, 3 and 4. The work will start in 2025 and is

then slated to end in 2031. In that time frame, there will be a

400-megawatt reduction in energy produced. This is far enough into the

future that should government choose not to proceed with Site C, B.C.

Hydro will be able to make alternate plans.

T. Redies: I just want to turn to the minister’s understanding of the Clean

Energy Act and what B.C. Hydro can actually use for energy and firm

power. If she could just clarify what actually Hydro can use under the

Clean Energy Act for firm power. Also, can she confirm that she and her

government believe that B.C. should have firm, reliable and

cost-effective power going forward?

Hon. M. Mungall: I think it’s common knowledge that we need to have firm energy,

absolutely. December 21 hits, and I know that in my area, it gets cold.

People start cooking, doing laundry, all that kind of stuff. We need to

plan with firm power for that high demand at any given time of the year

but most notably those particular times of the year.

The Clean Energy Act does mandate that B.C. source its clean

energy within the province and that 93 percent would be renewable. The

definition of “renewable” is standard, whether it’s hydroelectric,

solar, wind or geothermal. And 7 percent can be non-renewable as a

result of that.

T. Redies: I’d just like to turn to the BCUC report now and speak a little

bit about the various analyses and comparisons of Site C versus the

alternative portfolios that were raised in the BCUC analysis.

Could the minister explain the difference between the unit energy

cost comparison between B.C. Hydro and the alternative block of power on

page 6 of the executive

summary of the preliminary report, and versus

the

summary of the B.C. Hydro Site C comparison with the alternative

portfolio comparison in the executive

summary of the final

report?

[4:25 p.m.]

Hon. M. Mungall: Ministry staff are in the process of reviewing that report in

detail and putting some good analysis to it. As I’ve mentioned before,

if the member has any specific questions about the report — how the B.C.

Utilities came to any conclusions, what types of measurements they used,

and so on — those questions would be best delivered to the independent

B.C. Utilities Commission.

T. Redies: While I appreciate that we’re being directed to BCUC to answer

these questions, the government is going to be making a very big

decision in the next month and a half with respect to Site C. It’s very

important that we on this side are convinced that the minister actually

understands what is in this analysis. If they make a decision without

understanding the comparisons, then we’re talking about billions and

billions of dollars that could go by the wayside.

We could be jeopardizing the future of this province, the future

ability of our province to attract and keep energy-intensive businesses.

You talk about the affordability of electricity for ratepayers. This is

huge.

I’d like to get the minister to explain to me…. Forget about the

preliminary report. Could the minister explain to me what the difference

is between the energy portfolios of the alternative portfolio put

forward by the BCUC and Site C?

Hon. M. Mungall: In the B.C. Utilities Commission envelope, their illustrative

alternative portfolio that they put forward in the low-demand

projections included wind. They also focused heavily on demand-side

management. In the medium- to high-load forecasts, they included about

80 megawatts of geothermal in that. We don’t have any geothermal on line

right now, but they anticipated it may happen. That was their

portfolio.

This is public information. B.C. Hydro’s portfolio, as submitted

in their public submission to the B.C. Utilities Commission, was wind,

and pump storage to firm up that intermittency of wind.

I would like to assure the member opposite that I do very much

understand the details that are coming forward in this very serious,

very significant decision. I do understand the full scope of the

difference of alternative portfolios being put forward.

T. Redies: Does the minister believe that wind power and conservation are

truly a comparable to firm hydro power?

Hon. M. Mungall: We’re going to be analyzing all of this in full detail. There’s a

lot of new information. There’s a lot of information coming from a lot

of different sources.

[4:30 p.m.]

The member will know that in terms of the energy experts out

there, whether they be Mark Jaccard, Marvin Shaffer or Harry Swain….

There’s not consensus with these experts. We’re going to be analyzing

all of these details as we move forward.

My personal beliefs, however, are not a part of this decision. We

have to be objective in this decision, not subjective.

T. Redies: Thank you, Minister. It’s good to know that your personal beliefs

on this are not going to colour this decision-making, because we know

that you have participated in anti–Site C rallies.

But I want to go back to the importance of this decision and what

we are potentially putting our province at risk with. If the government

believes that conservation and wind power are the same as firm hydro

power, we have a real problem, because they’re not. They’re quite

different.

My question is: assuming that conservation is an approach, has

Hydro done any analysis on what types of price increases or incentive

programs would be required in order to achieve that level of

conservation?

[R. Chouhan in the chair.]

Hon. M. Mungall: As the member will note from B.C. Hydro’s submission to the BCUC

process, they obviously have very different views in terms of the

ability for demand-side management to meet our future capacity needs.

That being said, I would refer the member opposite…. If she’s looking

for those exact numbers, all of that is made public through the BCUC

process. But, yes, they do have different views.

T. Redies: Would B.C. Hydro be prepared as the Crown utility to accept the

analysis of BCUC and proceed with just a wind- and conservation-based

portfolio? Yes or no?

Hon. M. Mungall: The member will note from the B.C. Utilities Commission report on

Site C that they acknowledge that their alternative energy portfolio was

illustrative. It wasn’t a suggestion; it wasn’t set in stone. They

recognized, as well, that there were risks with that particular

portfolio.

[4:35 p.m.]

So, going forward, should government choose to not proceed with

Site C, B.C. Hydro will be looking at potential alternative energy

sources, renewable energy sources specifically. Will they be doing

exactly what BCUC has suggested? Well, not even BCUC has suggested that

that’s necessarily always the best way to go.

T. Redies: I’m trying to understand what this whole BCUC process was then. At

the end of the day, it was apparently critical for them to review Site C

and determine whether or not Site C was necessary for this province.

Instead, we have a comparison of an alternative portfolio of

intermittent energy and no analysis around what type of conservation

measures would have to be taken in order to achieve the type of

conservation that the BCUC is suggesting.

What I’m trying to understand is: why did they do the BCUC study

if they’re not going to pay any attention to the report? What is the

basis on which this government is making a decision as to whether or not

to terminate Site C? The analysis in the BCUC certainly doesn’t suggest

that Site C should be terminated, but it just seems that this government

has a bee in its bonnet with respect to terminating the

project.

So I’m just trying to understand. Why did the government do the

BCUC report? Why can they not rely on the analysis? Really, what is the

point of this whole exercise other than to put a lot of workers in

significant concern and to potentially put our province at risk of not

having access to clean, reliable and firm power?

Hon. M. Mungall: The fact that the member opposite even asks the question of why we

need to go to the B.C. Utilities Commission shows exactly why we need to

go to the B.C. Utilities Commission. It was because that side has

complete contempt, disdain, for the independent body that reviews these

types of projects for ratepayers’ best interests. That’s why we do it.

That the member doesn’t know that, or any other member from the opposite

side, shows exactly why this government has done the right

thing.

T. Redies: I just want to be clear that I have no disdain for the BCUC. What

I’m trying to understand is what the point of all of this process was.

If B.C. Hydro can’t realistically use the portfolio that is being put

forward by BCUC as an alternative portfolio, then on what basis is the

government going to be making a decision to go forward or to terminate

Site C?

Hon. M. Mungall: Again, the reason why…. This has been canvassed broadly, not just

in estimates but, I would say, during the election period and during the

years leading up to this government making a decision and the previous

government making a decision on Site C. The general consensus around the

province was that this should have always gone to the B.C. Utilities

Commission.

The joint review panel even said that. After their three-year

analysis of Site C, they said: “Next step: B.C. Utilities Commission.”

The only people who ever disagreed with that were the B.C. Liberals. The

only people who’ve ever put anything, any uncertainty, in people’s lives

when they failed to go to the B.C. Utilities Commission were those

members across the way when they were sitting here. That’s the

reality.

The purpose of the B.C. Utilities Commission — let me tell you,

Member — is to ensure that ratepayers’ interests are being considered

and are being met by an independent body. That is why. The fact that the

B.C. Liberals don’t get that shows exactly why they should be over

there.

T. Redies: The minister is not answering our question, so maybe I’ll just

make it simple. What factors are the government going to take into

consideration in terms of a yes-or-no decision on Site C?

[4:40 p.m.]

Hon. M. Mungall: I appreciate the member opposite delivering a clear question

without a bunch of political

preamble. To answer that question, we have

been very clear with the public what the factors are going to be. I’ve

repeated them multiple times over the last few months.

Obviously, the B.C. Utilities Commission final report — we’re

taking that into consideration. We’re consulting with First Nations on

that report, and we’ll be taking that into consideration as well. We

will be looking at the information that was brought forward during the

joint review panel. We’ll also be considering other consultation with

communities as well as just a joint review panel. We’ll also be looking

at expert analysis as well as the analysis that I have discussed already

from the ministry.

T. Redies: With all due respect to the minister, when I am talking about

workers’ situations and concerns with respect to the ability of this

province to continue to have firm, reliable cost-effective power for our

businesses and our communities, going forward, this is not political

posturing. This is real concern about the decision that the government

is going to make and put us into, potentially, if they walk away from

Site C….

I’d like to return a bit to the financials on Site C. Can the

minister please confirm exactly how much has been spent on Site C to

date? What’s on the balance sheet? And could she also confirm what

dollar amounts are outstanding in terms of the contracts that have been

agreed to?

Hon. M. Mungall: As I’ve said previously — and, as was confirmed by the B.C.

Utilities Commission report and Deloitte, as well as B.C. Hydro’s

submission to the BCUC process — what will be spent by the end of 2017

is $2.1 billion.

T. Redies: Can the minister answer my second question, which is: what is the

value of the outstanding contracts on Site C?

Hon. M. Mungall: As I mentioned, $2.1 billion has been spent. The total amount of

contracts at this stage rests at $4 billion.

T. Redies: I’d like to ask a few questions about the termination costs. Are

the…?

Actually, back up. In terms of the dollar value of outstanding

contracts, does this include the First Nation benefit agreements, and if

not, what are the value of those agreements?

Hon. M. Mungall: Those contracts are included in the $4 billion I already

discussed. The details of those contracts are subject to

confidentiality.

T. Redies: Thank you for that clarification. Could the minister again give us

some insight with respect to the $1.8 billion in termination costs that

the BCUC articulated would impact B.C. Hydro? Does the $1.8 billion

include legal costs — or legal cases or legal claims?

[4:45 p.m.]

Hon. M. Mungall: The $1.8 billion does include the cost of winding down the work in

the existing contracts. It includes remediation. What it presumes with

those contracts is that there would be an agreement between all parties

and B.C. Hydro in terms of those wind-down costs. So if there’s a

negotiated agreement, it’s already been built into that $1.8

billion.

That being said, should there be any legal challenge or an

inability to come to a negotiation — and, therefore, it has to go before

the courts — the anticipation would be that it would be a little bit

more, not extensively more, than the $1.8 billion.

M. Bernier: We just heard the minister say two answers ago or one answer ago

that “spent” or “committed to” is close to $4 billion, and the report

shows the minister just confirmed that the remediation’s wind-down costs

are $1.8 billion. So we’re actually looking at almost $6 billion,

according to the minister’s numbers now, to cancel Site C. She’s shaking

her head, so I’m wondering if she can explain the contradiction in the

things that she’s just said.

Hon. M. Mungall: I wasn’t contradicting myself at all. Perhaps I failed to make it

clear for the member.

There is $2.1 billion that’s been spent to date. There has been $4

billion committed, but that total $4 billion has not been spent. If Site

C does not go forward, that remaining $2 billion is not expected to be

spent. It is merely committed at this stage. Therefore, a termination

cost…. As BCUC found, as Deloitte found, and as B.C. Hydro’s analysis is

proving, as well, the wind-down and remediation would be $1.8

billion.

M. Bernier: I’m having a hard time understanding. Maybe the minister, then,

can complain when she says “committed,” because, in essence, we’ve got

$8.6 billion committed to build Site C project. When she’s talking about

the $2 billion, I’m just curious, talking to the contractors on sites….

I’m not sure. Maybe the minister can tell me in her answer if she’s

actually toured Site C on site and talked to the workers.

[4:50 p.m.]

When I’ve been down there talking to them, when we talk about

committed…. We have $2 billion spent. We’re spending about $60 million a

month as we continue on through this process. But we also have

contracts. We also have money that has been, as we say, committed. Is

the minister saying, then, to those companies, that if Site C gets

cancelled, those committed costs are no longer going to be

paid?

Hon. M. Mungall: As with any project, including Site C, B.C. Hydro has termination

rights in its contracts. They’re publicly available. The member opposite

is able to go on line and look at them right now, if he’s got his phone.

In those termination rights, it allows for B.C. Hydro to not spend on

activity that has not taken place.

That being said, there’s $2.1 billion that’s been spent to date.

Therefore, that is why everybody has found that termination costs would

be $1.8 billion on top of the $2.1 billion, not on top of the $4 billion

that has actually been committed to contract.

M. Bernier: Can the minister explain or confirm, then, that if Site C is

cancelled, there are going to be implications and lost revenue to the

six agreements for the local First Nations who are working at site who

have impact agreements with government?

Hon. M. Mungall: Those contracts with First Nations are subject to confidentiality.

I’m not able to comment here, as I told the other member.

M. Bernier: The numbers, obviously, in some of those are confidential, but I’m

talking about not the numbers specifically. I’m talking about the

generality of the issue. There are contracts with local First Nations at

site, and there are benefit-impact agreements with local First Nations —

some of them that are public — and even with local governments. We have

long-term contracts of impact settlements that are going to the Peace

River regional district, Fort St. John and other communities up in the

area.

If Site C is cancelled, are those communities going to be paid out

what was committed to them if Site C went ahead, or are those cities now

going to be losing out as well?

Hon. M. Mungall: The point of those contracts was to offset impacts. Should Site C

not go forward, those impacts will not be realized. That is another

reason why B.C. Hydro has termination rights in those contracts as

well.

P. Milobar: I took the minister up on her suggestion to go to the Site C

project site in the last couple of minutes. I can totally understand the

minister’s answer around existing contracts that are in place and

termination clauses. I’m wondering about the current RFP that’s out for

the two transmission lines to be built. I note that it opened on

September 15. It’s scheduled to close this Thursday.

I’m wondering. Obviously, we don’t need to know the names of the

companies involved, but do we know if we have anybody, under the current

uncertainty, investing any time and considerable resources into an RFP

of such nature, knowing that they may not actually have a contract? In

other words, has there been any response to the RFP to this point, given

that it closes in about 48 hours?

[4:55 p.m.]

Hon. M. Mungall: The member will know that during this process with the B.C.

Utilities Commission, no contracts are being signed. That being said,

the procurement process has been carrying on, as he noted from looking

at the website — calls for requests for proposals. And there has been

interest.

P. Milobar: Well, thank you for that.

Sometimes B.C. Hydro would be working in conjunction with

questions and answers back and forth as RFPs are being developed, and I

would imagine that for the size of transmission lines that we’re talking

about, there would be very few companies looking at the bid for

this.

Do we have a sense, based on previous procurement, if we’re

already seeing a premium potentially being attached through the dialogue

that B.C. Hydro is having with these companies — as they’re in a time of

such uncertainty with the procurement process — and whether or not,

indeed, there will actually be a project for them after investing

considerable time and resources putting together an RFP?

Hon. M. Mungall: The member is right to say that in a normal process, there would

be questions back and forth, and there would be conversations and

discussions between a bidder and B.C. Hydro in this case, and that is

happening.

In terms of a final bid taking place, that has not taken place

yet. There’s been, like I said, considerable interest. In terms of a

premium as a result of this process with the B.C. Utilities Commission,

there is just no evidence of that whatsoever.

P. Milobar: I apologize. I didn’t have enough time to read through the full

RFP document, so perhaps the people here with B.C. Hydro can better shed

some light on it.

I note that the RFP closes November 9. The government, in spite of

this side of the House trying to encourage a November 30 decision date,

has instead indicated an end-of-December decision date.

I’m wondering when the closure of the RFP will be and the

anticipated contract signed and if that is going to trigger one extra,

unnecessary potential termination payout to a successful bidder, if the

timeline syncs up with the end of December.

Hon. M. Mungall: The website has yet to be updated, but B.C. Hydro has actually

extended the RFP process till November 30. Once they have all the bids

in, they will then be doing an evaluation of the bids, and that takes

some time, regardless.

Once they have analyzed those bids and have chosen one, it’s

likely that this government will have made a decision anyway. But if it

hasn’t, they will not be signing any contracts until a decision has been

made, and therefore, they would not be dealing with the termination

rights and contract or any types of terminating contracts.

P. Milobar: Just one last follow-up to that, then. The timing seems a little

suspect that now we have a three-week extension to an RFP that has a few

bidders on it in a line of work that would be very specialized, with

very few companies that would do transmission line work to this size and

scale.

[5:00 p.m.]

One, I think, could easily conclude that there’s a lot of

uncertainty within industry around this project as to whether or not the

bidding and the work put into an RFP is worth undertaking, so therefore,

an extension has been granted.

I’m just wondering. Do we have an idea on the other RFPs leading

up to the BCUC called-for six- or eight-week review, and how many of

those RFPs wound up with a three-week extension to them throughout the

bidding process leading up to the BCUC review?

Hon. M. Mungall: I appreciate that the member is concerned that for some reason

there is…. What is the reason behind the RFP extension? Well, these

types of extensions happen all the time. They happened during the

16-year tenure under the B.C. Liberals many, many times as well. In this

particular case, one of the bidders actually requested an extension so

they could pull more information together.

T. Redies: B.C. Hydro and its civil works contractor are now engaged in a

legal dispute, which I believe has claims on both sides. Can the

minister advise where this legal dispute is currently, the nature of the

dispute? And will it further impact the timelines of Site C if the

project is not cancelled?

Hon. M. Mungall: Just so the member knows, yes, there is a legal dispute, but

there’s no litigation going on at this time. B.C. Hydro is actually

actively engaged in negotiations on this. In the BCUC process, they were

completely transparent with BCUC. They were completely transparent with

Deloitte. But because of the nature of those negotiations right now

being confidential, I can’t really offer too many details.

[5:05 p.m.]

T. Redies: Can the minister or B.C. Hydro confirm whether or not the fact

that the government refused to allow any of the contracts that were

supposed to be inked and underway during the summer has any bearing on

the civil works contractor’s claims?

Hon. M. Mungall: The issue around the Highway 29 realignment over the summer was a

separate issue. It has no bearing whatsoever on the current situation

between B.C. Hydro and the main civil works contractor. That issue was

dealt with, with the Ministry of Transportation, and did not cause any

delays either.

T. Redies: So can the minister confirm that if this does go to court, there

will be no claims of government interference or slowdowns because of the

BCUC report impacting the civil works contractor’s timelines?

Hon. M. Mungall: There’s actually no dispute with the contractor over the BCUC

process or changes that took place this summer.

T. Redies: Much has been said with respect to B.C. Hydro’s load forecasting

methodology. In the BCUC report, the BCUC chose to use the low-load

forecast in terms of making its comparison with the alternative

portfolio. Can the minister advise us of any other time in B.C. Hydro’s

relationship with the BCUC as regulator where the low-load forecast has

been used?

Hon. M. Mungall: Based on the multi-decade experience that is joining me today,

there’s no recollection of any time the B.C. Utilities Commission has

done that.

T. Redies: Why does the minister think that the BCUC would use the low-load

forecast in this very important analysis?

Hon. M. Mungall: Their rationale for why they chose that low-load forecast is set

out in their report. I think that they did that because that’s what they

said in that report.

T. Redies: Isn’t that a bit inconsistent with past practice, and doesn’t that

raise some red flags for the minister?

Hon. M. Mungall: The member is correct to ask if we would like to have further

clarification from the B.C. Utilities Commission for this choice — and

absolutely. It’s one of the many things that we are analyzing in terms

of their report.

T. Redies: Thanks for that, Minister. You know, I think it’s really important

— our line of questioning, with respect to the alternative portfolio and

how BCUC is positioning Site C versus the alternative

portfolio.

[5:10 p.m.]

It raises a lot of concerns on this side of the House that the

government will use this comparison as a significant factor in their

decision-making with respect to terminate or proceed with Site C. It

just appears that the analysis has been heavily loaded against Site C,

and we worry about what that means in terms of the government’s decision

and how that will potentially impact ratepayers and electricity users in

our province going forward.

That is the reason behind our questions. If there’s too much

reliance on this comparison to make a decision around Site C, I think

our whole province could have significant negative

repercussions.

With that, I know my colleague from Oak Bay–Gordon Head would also

like to ask a few more questions, if that’s okay.

A. Weaver: I have a series of very short questions on the Columbia River

entitlement. My first question is: how much power is British Columbia

entitled to under the Columbia River entitlement?

Hon. M. Mungall: The Columbia River treaty is under the purview of the Minister for

Children and Family Development. It’s not under this ministry,

unfortunately.

A. Weaver: This line of questioning is very germane to the topic at hand. I

would suggest the minister should be able to answer this question,

because the amount of power that British Columbia is able to get under

the Columbia River entitlement is exactly the same, almost precisely the

same as the amount that Site C would provide.

My question, then, to the minister is: how much is British

Columbia getting, on average, from electricity sold to the U.S. spot

market that could otherwise come to B.C. under the Columbia River

entitlement?

Hon. M. Mungall: It’s $125 million at current market prices.

A. Weaver: What does that translate to in terms of per kilowatt hour or per

megawatt hour, in terms of costs, that is being sold?

I didn’t mean this question to take so long. It was almost a

rhetorical question, because the answer is about $40 per megawatt hour,

and that calculation is done very, very quickly.

[5:15 p.m.]

The reason why I wanted to ask that question is I would have hoped

that the minister would be on top of this file. Because $40 per megawatt

hour is less than half what the projected future cost…. The revenues

being brought to the province are $127 million a year. Why is B.C. Hydro

not considering power available under the Columbia River entitlement to

meet this hypothetical demand in either the low or medium

forecast?

Hon. M. Mungall: Sorry I was taking so long. There’s no need to be antagonistic. I

was just trying to get some further information to provide to the member

in reference to his question. He doesn’t want that, so okay.

The reason why B.C. Hydro isn’t looking at the Columbia River

entitlement is partly that the Columbia River treaty is up for

renegotiation. I would hope the member would know that. As a Columbia

Basin resident, it’s one of the things that we’ve been working on since

well before 2014, the first opportunity to give notice for renegotiation

because the treaty comes to an end at 2024. It’s one of the reasons

we’re not able to ensure that it’s with any certainty.

I see the member for Kootenay East. He will know this as well. Any

Kootenay MLA will know this and know what’s going on presently with the

Columbia River treaty.

A. Weaver: Frankly, I find that answer quite remarkable. Of course I’m aware

about the Columbia River treaty, and Site C is not to be built any time

before 2024…. I mean, it will be 2021 before that’s built. The reality

is that there is power available today, firm power to the amount

available for Site C for any interim costs.

My follow-up question to the minister is this. Why is it that we

have about 170 megawatts — or 117, I believe it is — in the standing

offer program that’s gone through and there’s no call for power? Why is

it that B.C. Hydro did not put a call out for power at ten cents a

kilowatt hour and take, accepting those applications in the standing

offer program…? Because we know that the price of Site C, as noticed by

the BCUC and the ongoing tension cracks that we’re seeing, is going to

come in higher than that. Why was no call for power at ten cents per

kilowatt hour issued?

Hon. M. Mungall: First, the standing offer program and calls for power were

different types of programs.

The call for power — B.C. Hydro did calls for power in 2003, 2006,

2008. After the last one, the recommendation to the previous government

was to go forward with Site C rather than another call for power. Their

rationale, at the time, was that B.C. needed more firm power, not more

intermittent power and that intermittent power was being generated at a

higher cost than what B.C. Hydro felt they could do in terms of

constructing Site C.

[5:20 p.m.]

That’s the reason why there hasn’t been a call for power since

then. The member will note this government took action in terms of

bringing Site C to the B.C. Utilities Commission, as that decision to

move forward without a review by the B.C. Utilities Commission was done

by the previous government, not ours.

A. Weaver: I correct my previous statement. There are 137 megawatts in the

standing offer program ready to go, including 15 megawatts of an amazing

solar facility by Rocky Mountain Solar in the Cranbrook area ready to go

— on private land, with support of the local community, transmission

lines through the property, ready to go, scalable to 50 megawatts. Give

them a price. They’ll deliver. We have examples of pump storage on

Vancouver Island and in the Kootenays as well, ready to go, but again,

B.C. Hydro is not bringing them into the fold.

So my question to the minister is this. In light of the fact that

we have the BCUC, why are you not making a decision today to terminate

Site C? For four years now, the B.C. Greens have pointed out the fiscal

folly of moving down this path solely to deliver to below-market

contracts that were signed with LNG proponents that have left British

Columbia. Why, based on all the evidence, are we kicking the can down

the road until December when a decision could have been made in May, it

could have been made in June, it could have been made in September, and

it could be made today?

Hon. M. Mungall: I just wanted to ask my staff a quick question. The member brought

up pump storage, and I interpreted that to mean pump storage that is

active in the Kootenays, and that was something I wasn’t aware of going

on. The reason why I wasn’t aware of it is because it’s actually not

taking place in the Kootenays. There may be proposals that are currently

being developed by some entrepreneurial individuals, but in terms of it

actually existing right now, it doesn’t. So I was just curious about

that.

To answer the member’s question about why a decision isn’t being

made today, why a decision wasn’t being made in May or in June. I think

looking back in terms of what has happened over the summer…. The member

was very active in it, so I think he knows the answer to those

particular timelines.

In terms of today, we’ve been very clear with our process. We’ve

sent things to the B.C. Utilities Commission, as we committed to the

electorate that we would do, as we committed that we would do in our

supply agreement with the member and other members of the Green Party.

That process has now finalized in terms of the BCUC’s report on November

1. And as we’ve said, to answer the member’s question, we have to do our

due diligence. We have to provide appropriate analysis of the B.C.

Utilities Commission report. We have to do that due diligence, and we

have to take the time appropriate to do so, so we are doing

that.

That being said, we also recognize that there is a lot of

uncertainty for people. I mean, I can absolutely empathize with people

in the north. I know that members opposite in the B.C. Liberal caucus

are representing their interests very well in terms of wanting to make

sure that a decision is done in a timely manner, and that’s why we’ve

committed to doing that by the end of this calendar year.

T. Redies: Just a couple of final questions from me, Minister. First off, I

would like to acknowledge the B.C. Hydro staff who were here today. We

also had a chance to meet with them this last week, so I appreciate

their time and being made available to answer our questions.

[5:25 p.m.]

I just want to go back to the BCUC report and some of the

discussions we’ve had earlier today around regulatory accounts. I

appreciate that the minister says they’re still doing analysis on what

the impacts are going to be, but the BCUC report indicated or inferred

that if Site C was going to be terminated, there was the potential for a

very large regulatory account to be created that would be amortized over

some period. The BCUC remarked that they hadn’t come to any agreement as

to how long that would be amortized.

In our briefing the other day, I had the opportunity to ask the

B.C. Hydro folks about this. I just want to confirm and get this on

record. When asked if the termination costs and the sunk costs of Site C

were put into a regulatory account and amortized over ten years, the

B.C. Hydro folks indicated that, in order to do that, that would require

a 9½ percent increase in rates.

So, Minister, when the decision is being looked at over the coming

weeks, can we be assured that you are going to take into consideration

the whole affordability question, which you talked about earlier?

Because it would seem to me, based on the analysis that Hydro has done,

that the termination is going to result in a substantial increase in

rates to ratepayers.

Hon. M. Mungall: Yes, as I have said previously to media particularly and perhaps

some time this afternoon. We’ve had a lot of conversations. Absolutely,

the lens of affordability will be included in our decision-making

process. That’s one of the reasons we wanted to send things to the B.C.

Utilities Commission to do that analysis for ratepayers, so that we

could get those hard numbers from them in terms of suggestions on what

would happen if we did terminate.

T. Redies: Could the minister or the B.C. Hydro CEO confirm that terminating

Site C and putting that amount into a regulatory account, amortized over

ten years, would cost ratepayers an extra 10 percent in their

rates?

Hon. M. Mungall: The figures that the member is citing were part of the evidence

that B.C. Hydro did put forward in the BCUC process. B.C. Hydro can

confirm here. It already confirmed with the B.C. Utilities

Commission.

T. Redies: I think what we’re confirming here is that the termination of Site

C will result in substantial increases to ratepayers, create a future of

uncertain reliance on intermittent power and unproven conservation

records. I sincerely hope and plead with the government to make sure

that they are looking at this very, very closely, and they make the

right decision for B.C. ratepayers and British Columbians in

general.

Interjection.

Hon. M. Mungall: Now that the member is here, I’d like to let him know that we have

an answer on the question he asked earlier around rates for Nisga’a

communities. They do pay the same rates as everyone else in B.C. But

some Nisga’a communities are on an integrated system, which

has….

[5:30 p.m.]

If you want to give me a moment, I’ll go through this with my

staff so that I can give you that answer right away. Is that

okay?

E. Ross: I’ve already sent a message to the president of Nisga’a Lisims to

contact your office directly, so they’ll be expecting the same answer

anyway.

To let the minister and the Chair know, we’d like to switch to LNG

now for questioning.

Hon. M. Mungall: Can I confirm that you’re done with B.C. Hydro and that they can

go home? Or do they need to spend the night?

T. Shypitka: No, we’re good with B.C. Hydro. Thank you very much.

E. Ross: To the minister, sorry for my comments and then not providing the

context for the quotes yesterday. I was just trying to clarify or

reconcile the comments made by your party in relation to the support for

LNG previous to today.

I’ll take the minister’s answers that there are full benefits for

British Columbians. It’s a tremendous opportunity to move Asia away from

coal-fired plants in Asia. I’ll just start by asking then: does that

mean that this government places LNG as a high priority within the

government?

Hon. M. Mungall: I’d say so. It’s a very important aspect in the ministry. I know

it disappoints some of the members opposite to have to maybe come to

terms with the fact that our position has actually been the same for the

last five years, in terms of our four conditions. Those four conditions

do still stand, and they’re in my mandate letter.

That being said, it’s one of the key issues that we are working

on. I do believe I mentioned yesterday that the competitiveness issues

that British Columbia faces, in terms of moving forward with an LNG

industry and getting those final investment decisions, is something that

we recognize and that we are working on with industry, with First

Nations and with local communities.

E. Ross: The previous government, the B.C. Liberals, had LNG as a high

priority as well — so much so that they had LNG as a stand-alone

ministry. Can I ask the minister why this government has chosen to

absorb LNG back into a united ministry, as a turn?

[5:35 p.m.]

Hon. M. Mungall: Well, as any government change happens, there are new focuses. For

example, our government wanted to have a stand-alone ministry for mental

health and addictions addressing the current opioid crisis. I think that

is an appropriate direction to take, and I would hope members opposite

feel the exact same way in the current light of what’s going on with

mental health and additions in this province.

That being said, I would like to reassure the member opposite that

there’s been no change in actual staff. There’s been no change in actual

budget. We actually have the same deputy, who has just joined us, Dave

Nikolejsin, who, I must say, is the head of the A-team. If we get him

some gold chains, he would be our very own Mr. T.

We have very, very competent people who have always been working

on this issue, continue to work on this issue, and they really do bring

an incredible expertise to the ministry.

E. Ross: I agree with your assertion on Dave.

The priority that the B.C. Liberals put on LNG was trying to

achieve certainty in B.C., of course, but also trying to access Asian

markets. I’m just trying to get an understanding of how high a priority

it is with this government. How aggressive will this government be in

getting LNG exported to Asia, to achieve the goals that the minister

quoted yesterday, in terms of emissions as well as opportunities for

British Columbians?

Hon. M. Mungall: The member is wondering how much emphasis we are putting on this.

I want to reassure him that we are putting quite a lot of emphasis on

this. We do see the opportunity. I believe I mentioned yesterday that

one of the first things that came to my attention was the

competitiveness issue that British Columbia has and that there’s a lot

of work that we can do as a government to resolve some of those issues

so we can get to those FIDs. I started working on that very issue with

my deputy minister, with ministry staff, immediately.

We’re going forward. I look forward to working with the member

opposite as we move forward and we do our very level best so that we can

get those final investment decisions. I know that he’s very passionate

about this issue. He has a lot of experience on this issue, and no doubt

he has a lot of insight as well. I think that we can come to this in a

very non-partisan way and actually achieve our mutual goals for British

Columbia.

E. Ross: I’m going to assume that it’s just as high a priority with this

government as it was with the previous government. In saying that, I’m

wondering if the minister is aware of the duty that’s facing LNG

companies right now in British Columbia. It’s being proposed,

percentage-wise, a 45.8 percent duty being imposed on the LNG companies.

We already know the total value of these projects in B.C. already. It

is, at a minimum, $67.5 billion. I’m wondering if the minister has plans

or put in place plans to address this.

Hon. M. Mungall: In my previous answer, in terms of who we were working with on

this competitiveness review, I failed to mention the federal

government.

[5:40 p.m.]

We’ve actually been engaging with them at, I’d say, an

unprecedented level. It’s been just absolutely stellar, their

involvement with this competitiveness review.

The issue of duties that the member opposite brings up in terms….

This is a federal duty, and they’ve been highly engaged in this

competitiveness review and looking at those very issues.

E. Ross: Thank you, Minister. Yes, you’re correct. It’s a federal issue.

But this issue came up before. AltaGas had a proposed project in Haisla

territory. It was actually the B.C. Liberal government and the Haisla

Council that teamed up to lobby the government to get that duty dropped,

and that was successful.

I’m wondering if this government has any plans, or has already put

into place plans, to do something similar, as LNG is a priority for this

government.

Hon. M. Mungall: So the duties that we’ve been in negotiation with the federal

government on, as part of our competitiveness review, I think, are

different, maybe, than the ones that the member is most curious about,

but I’ll talk about them both. So the ones that we’ve been looking at

specifically are the fabricated industrial steel components.

I’m sorry. Are you having trouble hearing?

The Chair: Members. Members on the floor, please keep your voices down.

It’s very difficult for the minister and the member to communicate

with each other.

Hon. M. Mungall: The day is almost over. Sorry, I just recognize that because I am

also finding it difficult to hear and do estimates in the big House as

compared to the little House.

So back to the comments around the duty. The fabricated industrial

steel components, which are often referred to as FISC…. We’ve been

addressing those ones more immediately with the federal government in

our competitiveness review, because those particular duties have the

largest impact on the particular projects that are, I guess you could

say, closer in queue to actually getting an FID.

However, there are some other duties, and I think this is the one

that the member might have been more curious about. This is called the

federal finance exemption on floating liquefied natural gas facilities —

so the floating storage.

Right now, in terms of where those applications are for facilities

that would be floating facilities, rather than sedentary facilities that

are grounded…. There are other ways of doing this, as the member will

know. Those floating facilities — we don’t yet have applications for

them.

[5:45 p.m.]

Once we do, we anticipate that we’ll be able to build on the

previous government’s, the member’s, good working relationship on this

very issue, on the success that we’re having right now with our

competitiveness review and partnering with the federal government on

that and be able to advocate to review those duties as well.

E. Ross: Thank you, Minister. Right now it’s a tribunal decision. There are

other organizations, specifically the LNG Alliance, that are making

submissions for the tribunal to review the decision. So it’s a number of

LNG companies that are joining forces. Does the minister believe that

there is an opportunity for B.C. to do the same and make a submission on

behalf of the LNG industry or parallel to the LNG industry?

Maybe I could clarify that. Specifically, LNG Canada, Suncor and

Fluor Canada have all filed motions before the Federal Court of Appeal,

seeking a review of the tribunal decision. Does the minister or this

government have a plan to do the same?

Hon. M. Mungall: So the specific duty that the member is talking about is FISC,

which is what I was talking about earlier. I’ve already said the

acronym. Anybody who is actually watching Hansard can go back and see

the acronym there.

As I said earlier, we’re actually already very engaged with the

federal government on FISC specifically. So in terms of a submission to

an alternate process, I think that might be superfluous to the very

engaged process that we already have with them.

E. Ross: Your faith in these federal processes is to be commended. I don’t

have that. It took a lot of effort and a lot of time on our behalf, as

well as on behalf of the provincial government previous to this

government. I’m sorry. It’s just that a submission to the tribunal is

something definitive. It’s something that really states the priority of

LNG to this government and the previous government.

So maybe a simple yes or no question, then. Will this government

file a motion before the Federal Court of Appeal seeking a review of the

tribunal decision, similar to LNG Canada, Suncor and Fluor Canada, to

protect the interests of British Columbia LNG?

Hon. M. Mungall: Our existing process with the federal government is going very

well. We’re also engaged with all the companies that he

identified.

Our conversations with them…. They’ve responded that what we’re

doing, and the existing process that we are engaged in with the federal

government around FISC…. They’re satisfied with that, and they’re

actually very happy with the approach that we’ve taken.

E. Ross: I don’t view this as a competitiveness issue. I never did, even

with the previous duty I was involved with. I view it as a make or break

for B.C. LNG.

It just seems to be the companies fending for themselves against a

federal process. It just seems to me that the provincial name there,

even if it’s just the name only, to show that they support B.C. LNG as

well as these LNG companies…. It would have more weight to it if the

B.C. government made a submission.

The question remains: will this government make a submission to

the Federal Court of Appeal, seeking a review of the tribunal

decision?

[5:50 p.m.]

Hon. M. Mungall: I don’t want to leave the member with the impression that we have

ruled anything out. In fact, quite the opposite. We’re not ruling out

any necessary steps, going forward, in terms of our relationship and

working with the federal government. As it stands right now, things are

going very, very well. What we are doing is supported and appreciated by

the industry. They are feeling supported and valued by this

government.

We’re going to stick with the path that we have laid forward right

now. The member says it’s not a competitiveness issue. He says it’s make

or break. To me, that is a competitiveness issue. For these companies to

come, they have to review if it’s going to be a competitive project with

other jurisdictions. The process that we have laid out and are well

underway with right now, like I said, is valued and supported by

companies, and they are feeling valued and supported by this government

through the process.

E. Ross: I’ll stick with my statement that I don’t believe this is a

competitiveness issue. I believe competitiveness can be worked out

between both levels of government and municipalities by working on

incentives, tax breaks, credits. Something within the control of the

provincial government. This is out of our control.

I just think it’s a huge issue given the fact that PNW left with

all its investment dollars. Then Aurora left with all its investment

dollars. There are 18 more projects still on the books waiting to get

built, and two of them are in my riding. They’ve done all the work.

They’ve got all the permits. They’ve got the environmental certificates.

They’ve got everything. All they need now is a little push to get them

to FID. That little push doesn’t involve a duty at 47.5

percent.

That is not competitiveness. I mean, that’s really an issue of

whether or not a module that they’re talking about can be built in

Canada