Manitoba Committee Hansard — 25 October 2010 (Crown Corporations Committee, Sitting 5, 39th Legislature, 4th Session)

39-4-cc5

Manitoba — Debates (Hansard)

Fourth Session - Thirty-Ninth Legislature of the Legislative Assembly of Manitoba Standing Committee on Crown Corporations Chairperson Mr. Daryl Reid Constituency of Transcona Vol. LXII No. 5 - 6 p.m., Monday, October 25, 2010 ISSN 1708-6604

MANITOBA LEGISLATIVE ASSEMBLY Thirty-Ninth Legislature Member Constituency Political Affiliation ALLAN, Nancy, Hon. St. Vital N.D.P. ALTEMEYER, Rob Wolseley N.D.P. ASHTON, Steve, Hon. Thompson N.D.P. BJORNSON, Peter, Hon. Gimli N.D.P. BLADY, Sharon Kirkfield Park N.D.P. BLAIKIE, Bill, Hon. Elmwood N.D.P. BOROTSIK, Rick Brandon West P.C. BRAUN, Erna Rossmere N.D.P. BRICK, Marilyn St. Norbert N.D.P. BRIESE, Stuart Ste. Rose P.C. CALDWELL, Drew Brandon East N.D.P. CHOMIAK, Dave, Hon. Kildonan N.D.P. CULLEN, Cliff Turtle Mountain P.C. DERKACH, Leonard Russell P.C. DEWAR, Gregory Selkirk N.D.P.

DRIEDGER, Myrna Charleswood P.C. DYCK, Peter Pembina P.C. EICHLER, Ralph Lakeside P.C. FAURSCHOU, David Portage la Prairie P.C. GERRARD, Jon, Hon. River Heights Lib. GOERTZEN, Kelvin Steinbach P.C. GRAYDON, Cliff Emerson P.C. HAWRANIK, Gerald Lac du Bonnet P.C. HICKES, George, Hon. Point Douglas N.D.P. HOWARD, Jennifer, Hon. Fort Rouge N.D.P. IRVIN-ROSS, Kerri, Hon. Fort Garry N.D.P. JENNISSEN, Gerard Flin Flon N.D.P. JHA, Bidhu Radisson N.D.P. KORZENIOWSKI, Bonnie St. James N.D.P. LAMOUREUX, Kevin Inkster Lib. LEMIEUX, Ron, Hon. La Verendrye N.D.P. MACKINTOSH, Gord, Hon. St. Johns N.D.P.

MAGUIRE, Larry Arthur-Virden P.C. MARCELINO, Flor, Hon. Wellington N.D.P. MARTINDALE, Doug Burrows N.D.P. McFADYEN, Hugh Fort Whyte P.C. McGIFFORD, Diane, Hon. Lord Roberts N.D.P. MELNICK, Christine, Hon. Riel N.D.P. MITCHELSON, Bonnie River East P.C. NEVAKSHONOFF, Tom Interlake N.D.P. OSWALD, Theresa, Hon. Seine River N.D.P. PEDERSEN, Blaine Carman P.C. REID, Daryl Transcona N.D.P. ROBINSON, Eric, Hon. Rupertsland N.D.P. RONDEAU, Jim, Hon. Assiniboia N.D.P. ROWAT, Leanne Minnedosa P.C. SARAN, Mohinder The Maples N.D.P. SCHULER, Ron Springfield P.C. SELBY, Erin Southdale N.D.P. SELINGER, Greg, Hon. St.

Boniface N.D.P. STEFANSON, Heather Tuxedo P.C. STRUTHERS, Stan, Hon. Dauphin-Roblin N.D.P. SWAN, Andrew, Hon. Minto N.D.P. TAILLIEU, Mavis Morris P.C. WHITEHEAD, Frank The Pas N.D.P. WIEBE, Matt Concordia N.D.P. WOWCHUK, Rosann, Hon. Swan River N.D.P.

129 LEGISLATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON CROWN CORPORATIONS Monday, October 25, 2010 TIME – 6 p.m. LOCATION – Winnipeg, Manitoba CHAIRPERSON – Mr. Daryl Reid (Transcona) VICE-CHAIRPERSON – Ms. Marilyn Brick (St. Norbert) ATTENDANCE – 11 QUORUM – 6 Members of the Committee present: Hon. Mses. Howard, Irvin-Ross, Wowchuk Mr. Borotsik, Ms. Brick, Messrs. Cullen, Dewar, McFadyen, Pedersen, Reid, Ms. Selby APPEARING: Hon. Jon Gerrard, MLA for River Heights Mr. Bob Brennan, President and Chief Executive Officer, Manitoba Hydro Mr.

Victor Schroeder, Chairman, Manitoba Hydro-Electric Board MATTERS UNDER CONSIDERATION: Annual Report of Manitoba Hydro-Electric Board for the year ended March 31, 2008 Annual Report of Manitoba Hydro-Electric Board for the year ended March 31, 2009 * * * Mr. Chairperson: Good evening, everyone. Will the Standing Committee on Crown Corporations please come to order. The first item of business for this committee is the election of a Vice-Chai rperson. Are there any nominations? Ms. Erin Selby (Southdale): I'd like to nominate Marilyn Brick. Mr. Chairperson: Ms. Brick has been nominated.

Are there any further nominations? Seeing none, Ms. Brick has been elected as the Vice-Chairperson of this committee. For the folks that are here with us this evening, I'd like to mention to folks that if you're unable to find a seat in this room, we also have made available the additional committee room just down the hall from here. We're hoping that the sound system will be adequate in there. Please bear with us if we encounter some technical difficulties for a period of time.

But that overflow room is available for you if you wish to proceed there to listen to the proceedings of this committee hearing this evening. This meeting has been called to consider the annual reports of the Manitoba Hydro-Electric Board for the fiscal years ending March 31st, 2008, and March 31st, 2009. Before we get started, are there any suggestions from committee members on how late we wish to sit this evening? Mr. Rick Borotsik (Brandon West): Yes, Mr. Chairperson, I would suggest 9 o'clock and then review at that point in time. Mr.

Chairperson: It's been suggested to the committee that we sit until 9 p.m. and then review the sitting time at that point. Is that agreed? [Agreed] Thank you. Are there any suggestions from committee members as to which order we wish to consider the reports that I had previously mentioned? Mr. Borotsik: Certainly, we can do them in order as listed, but, as Mr. Brennan is going to have a presentation, I do know that he's going to deal with more than just simply out of the statements themselves. So I would suggest that we do global. Mr.

Chairperson: It's been suggested this committee consider reports in a global fashion. Is that agreed? [Agreed] Thank you. Does the honourable Minister responsible for Manitoba Hydro wish to make an opening statement? Honourable Minister Wowchuk, and would you also please introduce your officials in attendance this evening. Hon. Rosann Wowchuk (Min ister charged with the administration of The Manitoba Hydro Act): Thank you very much, Mr. Chairman. I do have an opening statement, and I'm very pleased to be joined by: Mr. Vic Schroeder, who is

130 LEGISLATIVE ASSEMBLY OF MANITOBA October 25, 2010 the chairman of the boar d; and Mr. Bob Brennan, who is the CEO and president of Manitoba Hydro; and there are two staff people behind that I will–that Mr. Brennan will introduce. Mr. Bob Brennan (Presiden t and Chief Executive Officer, Manitoba Hydro): We have my helper, to make sure I get through all the technology issues, Randy Ptashnick [phonetic], who works for Manitoba Hydro and provides a great deal of support on these type of issues; and a person who looks after corporate relations issues with Manitoba Hydro, Nelly Rakita. Mr.

Chairperson: Thank you, Mr. Brennan. Honourable Minister, to continue your opening statement. Ms. Wowchuk: Well, thank you, Mr. Chairman, and I would like to begin by welcoming all the committee members, the staff and CEO from Manitoba Hydro, and all of the visitors that are here with us this evening. It has been a–we have been here a few times over the last few years. In fact, there was two meetings of this committee this year, as well, where we have had–we have appeared with–Manitoba Hydro has appeared before the committee. And I know that both Mr.

Brennan and myself are always interested in hearing the question and providing the information about the growing financial stability of Manitoba Hydro and about the valuable investments that Hydro is making for our clean energy future. We know that Manitoba Hydro is in the strongest financial position of its 57 years in history. Not only has it reached a debt-equity target of 75 to 25 percent three years ahead of schedule, they–but they are even exceeding th at. That's really a major improvement over the 1998-99 situation when the debt-equity ratio was 82 to 16. And I have to say that a lot of credit goes to Mr.

Brennan and his staff, and Mr. Schroeder and the board, and I know that we are going to get an elaborate presentation of the current financial situation. But I have to say that I'm also pleased with Manitoba Hydro's retained earnings which, as of June of this year, are $2.224 billion up from 2.092 billion from the previous year. That is–again, a commitment–and I have to commend the people who have worked to reach–get us to this state at Manitoba Hydro.

The corporation has aggressively pursued exports in the last year, expo rts that helped to secure the company's long-term financial growth and that also help keep rates low here at home, and that's what's very important to all of us here in Manitoba. In the past 10 years export sales were brought in at 5.5 billion and are projected to be 22.5 billion over the next 20 years, and that would be 30 percent of the revenues. This unprecedented financial achievement was accomplished while maintaining affordability in Manitoba. We pay the lowest rates in North America for power in our homes.

Our government believes that Mr. Brennan and his staff should continue to work–continue the work that they do to ensure these rates remain affordable. While others want Hydro to abandon their current business model by keeping–of keeping rates affordable in–for Manitoba's families and businesses, we do not agree with that statement. We want to stay on the same path. Families in other parts of Canada pay significantly more than Manitobans. In Regina, for example, they pay $584 more per year. In Toronto, they pay $709 more.

It is truly unfortunate that members of the opposition have repeatedly and recklessly misled Manitobans about these basic facts, because we do indeed have some– the lowest rates, and I applaud Manitoba Hydro for what they have done in this area.

We know that Manitoba Hydro has achieved this at the same time as it's securing the company's financial future and strengthening its fiscal stability, and we know that we need this stability and reliability to continue with the company's long-term investment plan to keep building Manitoba's hydro future and to power Manitoba's future economic growth. * (18:10) And, of course, it was not always this way.

Even when risks in the system were clear, such as when both Bipole I and Bipole II were knocked out because of weather in 1996, the government of the day still failed to act on securing Manitoba's power, but now for the first time since Limestone, since Limestone project of the 1980s, Manitoba Hydro is building a new generating station. Wuskwatim on the Burntwood River is our first new hydro-electric generation station in 20 years. It's on

schedule to be completed next year and will provide 200 megawatts of renewable, reliable energy for generations to come, for Manitobans and for export. And I have to say that I'm very proud of the way this dam was built. It is a model for a new way

October 25, 2010 LEGISLATIVE ASSEMBLY OF MANITOBA 131 of building hydro-electric projects, an equity partnership with the local First Nations, Nelson House Cree Nation. I had the opportunity to visit Wuskwatim earlier this year and was very impressed with the scale and the hard work and what is being done there from the trades to the apprenticeship and local people being employed there. It was–it is quite impressive, what this partnership is doing. Of course, wind power is important to us and Manitoba has its second wind farm coming on line at St.

Joseph, and that is the largest wind farm being built this year in Canada. And all of this new hydro-electric power generation, all of it, all of it that's being developed, needs new transmission lines and it needs converter stations. That's why Manitoba Hydro is building the Bipole III line, the Keewatin oow station in the north and the Riel station in the south. The line and the converter stations are urgen tly needed to secure the reliability of our power supply, and they are fundamental to Manitoba's hydro future and to Manitoba's future.

In addition to the urgent reliability needs, the Bipole III line and the converter stations will address–it is also a major infrastructure project that helps to build the future. Our new transmission line will carry new power generated at Keeyask and Conawapa. Manitoba Hydro has a long-term vision, one that our government shares, and that is to further–the further development of our export markets. The company has a well-deserved reputation for providing clean, reliable power to its customers. That reputation is one of Hydro's greatest assets when selling itself to the export market.

It wasn't that way many years ago. A different approach was taken. Hydro-electric companies often flooded thousands of acres in building dams, and consultation with First Nations didn't always take into account their traditional knowledge and their concerns about hydro projects. Companies didn't consider the long-term effects of the power generation on the environment that we're leaving for our children. Today, we take a different approach and Manitoba Hydro is indeed a leader. Manitoba Hydro is looking at the long-term consequences of building Bipole III.

By taking responsible steps to protect our boreal forests while building Manitoba's future by investing in new hydro projects, they are bringing clean, affordable power to families and to businesses, and First Nations leaders–including those gathering right here in this building this evening to receive an award for their work that they are doing to protect the intact boreal forest on the east side–are consulted as partners in the development.

Hydro is proceeding with the Bipole III route that can actually get it built in the real world, that can get it built on time and that can get it built in a way that doesn't undermine Manitoba Hydro's reputation. If we talk about turning back now and attempting a new route, this would have serious consequences. This committee has heard that trying to build a comparable line on the east side would delay the project by at least three years if not longer.

Unfortunately, we have heard that the opposition– from the opposition that they haven't–and I believe they haven't thought through what would happen if you tore through this boreal forest by running the Bipole III on the east side. Our government isn't willing to take such a risk–reckless approach and neither in my–is Manitoba Hydro. The good news is that the Bipole III project on the west side of the province is now well under way and has been for years. I want to say that we know that there are landlords who have concerns and I understand why they would.

There has been a lot of misinformation that is been–has been put out there. That's why Manitoba Hydro is consulting with them to determine the final route, and that's why Manitoba's Hydro compensation package for the landlords is comprehensive and fair. That is why the route was chosen–the route that is chosen is one that will have the least impact on agriculture land. We also know that there is a growing need for green power on the west side of our–to the west of us. We recently met with Saskatchewan Power and the new CEO of SaskPower, and there is a definite interest in purchasing power from us. Mr.

Chairman, there are many other things that I could say about what Manitoba Hydro has done with the new building, the record that we have on energy efficiency, the Power Smart program that Manitobans have endorsed very strongly, but again, I want to say that I am very honoured to have the privilege of serving Manitobans as Minister responsible for Manitoba Hydro over the last year and I look forward to hearing questions from this committee. Thank you, Mr. Chairman. Mr. Chairperson: We thank the honourable minister for the opening statement, and before I

132 LEGISLATIVE ASSEMBLY OF MANITOBA October 25, 2010 proceed to the critic for the official opposition, I want to make a couple of points here as Chairperson of this committee this evening. First, that I'm asking fo r the co-operation of all committee members to direct all of your comments and questions and answers th rough the Chair, please.

And we'll have–to ensure the smooth proceedings of this committee here this evening, and also for the benefit of our audience who are with us here this evening, that in the public gallery here, there's to be absolutely no participation in any way, whether it be laughter or applause or any other means of participating in the committee hearings this evening, unless this particular committee decides otherwise. I just want to draw that to your attention. We'll now proceed to the critic for the official opposition for an opening statement. Mr.

Borotsik: In the interest of time and in the interests of the comfort of the gallery, the many persons in the gallery that are here today I'm going to dispense with my opening statement because I do believe that the gallery, rather than hearing political rhetoric, would much rather hear answers, some to very pertinent questions that are going to be posed to Manitoba Hydro. Mr. Chairperson: I'm going to say this for the second time: there's to be no participation.

As Chairperson I have the obligation of making sure that this committee proceeds in a smooth fashion, and if there's participation from members of the public that are in the gallery, I'm afraid I'm going to have to ask the folks that are in the staff here to clear the room, and I would not want to have to do that. So, please, I ask for your co-operation as we start the committee hearings this evening. Mr. Borotsik: Yes, just one other comment, if I may. I know I talked to Mr.

Brennan before the committee, and I do know that he has a presentation, and I wonder if it's possible just to make sure that the presentation is kept fairly concise and a fairly limited amount of time because there are other questions that are going to be posed to Mr. Brennan and others, and I do know that it would better–rather than have people stand as long, maybe just keep the presentation a little shorter. Mr. Chairperson: Okay. Thank you, Mr. Borotsik.

And also for further info rmation with respect to the additional committee room, I understand that the sound system is working in there and there also seating available for members of the public who are here with us this evening. We'll now proceed with further opening statements. Do the critic–or, to the officials for the Manitoba Hydro–have an opening statement? Mr. Brennan? Or did you wish to proceed with your presentation, sir? Mr. Brennan: Just proceed with it, Mr. Chairman. Mr. Chairperson: Thank you, Mr. Brennan.

Is it the will of the committee to allow for the presentation to occur from Manitoba Hydro folks here with us this evening? [Agreed] Please proceed when you're ready, Mr. Brennan. Mr. Brennan: I'll go as fast as I can, Mr. Borotsik. I usually–you can slow down later on, not at this particular time. But, having said that, this is just an outline of what I propose to talk about, and I will go through quite quickly for you.

This is just a transpar ency that shows where our generating stations are within the province, our export capability outside the province, as well as where our energy is produced in the last fiscal year on our system. And as you can see, 82 percent of the energy came from the Nelson River. * (18:20) A little bit from our financial results are in the last annual report from March 31st, 2010, and it just summarizes the results of our operations.

I'd like to point out the two most important items from my perspective is the net income of $163 million and the retained earnings of $2.2 billion, which has grown quite significantly in the last 10 years or so. This is a transparency that shows our net income for the last 10 years and a projection into the future. This is based on the currently approved forecast, which was produced last fall, and we're in the process of coming up with a new forecast now.

The preliminary numbers for the next two years, and they are preliminary, show our net income going up from what it was in the last presentation you got to the figure that would approximate what our net income was last year. Oh, and I sh ould also point out that that big loss was as a result of the drought we incurred in 2004. This is a graph that shows our net extraprovincial sales, net of fuel and power purchases and water rentals, and they–pretty well follows our net income line, with the exception of

October 25, 2010 LEGISLATIVE ASSEMBLY OF MANITOBA 133 once we get new generation in line near the end of the forecast period, it goes up dramatically. These are financial targets that I review with you every time, and as you can see, our debt-equity target–or will see, our debt-equity, we've now surpassed the 75-25. Our retained earnings are gradually increasing and that's despite the fact we have a very large capital program under way.

Interest coverage: It dropped, of course, when we had the drought in 2004, but for the most part our interest coverage pretty well takes care of all our capital expenditures other than new generation transmission. This is a graph that goes out 20 years, and it is the one we made up based on the currently approved forecast, but it shows how our debt-equity goes with the addition of new plant and the benefit of the sales we're proposing to enter into.

And as you can see, although our debt-equity ratio drops, it certainly returns quite dramatically and gets to the point where we're almost in a position of having 50 percent equity and 50 percent debt. Now, I'm sure that wouldn't happen, because rate increases would be adjusted accordingly. A little bit on the general rate application that is before the Public Utilities Board right now. The hearing is scheduled to commence January the 5th of next year. We applied last December 1st, and we asked for two rate increases of 2.9 percent effective April 1st, 2010, and April 1st, 2011.

And the–we got an interim increase of 2.8 percent from the Public Utilities Board for implementation April 1st of 2010. There's been some talk in the press about the fact that we've had very dramatic rate increases and, as you can see, that the cumulative rate increases over the last five years came out to 13.5 percent. And with the exception of Hydro-Québec and Newfoundland Power, that our rate increases were pretty well–well, were certainly in line with Hydro-Québec, and all of the rest of the utilities were quite a bit higher. This is a graph made up by the U.S.

Department of Energy and Edison Electric, and it shows rate comparisons right across the country, including the United States, and it's based on the cost of energy within those provinces–or states, and as you can see, Manitoba Hydro is clearly at the bottom of the list. Residential monthly bills: This is a comparison in Canada only, and you can see that at 1,000 kilowatt hours a month Manitoba Hydro is $2 a month higher than the lowest, which is Montréal.

As soon as we get into higher usage of 2,000 the Manitoba Hydro becomes the lowest supplier of energy in the country and the differential between us and the next one is dramatic. If you compare us to Toronto the spread is quite dramatic. Three days ago I got my bill for my cottage, which is in Ontario. I compared it using Manitoba Hydro prices and the bill using Manitoba Hydro is 38 and a half percent of the Ontario bill. A little bit on a commercial bill. Once again Manitoba Hydro is the lowest in the country. Industrial is–its situation is the same way only the spread is much more dramatic.

This is a graph that we don't identify because the agreement we have with other utilities is to not disclose who the other utilities are. But, as you can see, the graph is designed to compare average outage times with the domestic electricity rate. And, as you can see, Manitoba Hydro is pretty well–has the lowest duration rate as well as the lowest cost. A little bit on export marketing activities. We're able to sell all our energy that we can at market prices subject to limitations of our transmission system. We have–we're pretty well able to sell almost everything we can at this particular point in time.

We've had lower prices although they are returning to the good levels we've experienced in the last little while. We need new transmission lines to make sure we market all our surpluses, especially to market the surpluses we ha ve with new plant that we're proposing to build. This is the portion of our provincial generation with Ontario, Québec, British Columbia, Manitoba and an average for Canada. And, as you can see, the portion or our total generation that is exported is the highest in the country.

The energy that is available for export, what we've done here is we've shown our actual energy that we've exported in the last 10 years and a forecast for the next, I guess it's 20 years, and it brings in both all of–it brings in Wuskwatim into the system, Keeyask and Conawapa, and this is average flow conditions. And, as you can see, we're able to export everything from Wuskwatim, everything we have for Keeyask and as well as th e majority of Conawapa. That proposes that we have a new transmission line to the United States that is part of our proposed agreement with Wisconsin Public Service and Minnesota Power.

This is annual energy and where

134 LEGISLATIVE ASSEMBLY OF MANITOBA October 25, 2010 it's coming from and how we export virtually everything that's available to us to export. The energy that is above dependable is opportunity sales and that's–we take advantage of the market when we have the energy, which we're never sure we got, and are not able to get the good firm prices that we get with a firm contract. This is, in terms of energy, the amount of actual exports of various utilities across the country. Potential sales from new generation, we've recently signed an agreement with Northern States Power.

We've also got term sheets signed with Minnesota Power and Wiscons in Public Service and we've also signed MOUs with Great River Energy and Wisconsin Public Power as well. * (18:30) In case of NSP, we have three different sales contracts, and–which we signed this year in May. The first one is a system participation sale; the next one is another system participation sale that's for a shorter period of time and it differs between summer and winter, as does the other one; and the third one is a diversity arrangement.

The agreements provide price certainty, market access into the United States, and reduced drought risk because we have the ability to import power back. Minnesota Power, it's a 250-megawatt sale, and that's a 15-a-year sale, and it goes from 2020 to 2035. Both of those sales are contingent upon the construction of a new generation on our system as well as a new transmission line to Minneapolis on both the Canadian and American system. The same thing applies to the 500-megawatt sale to the Wisconsin Public Service. Ontario, we've been talking to.

They certainly have a requirement for a lot of capacity and energy in their system. They have limited transmission capability from northern Ontario to southern Ontario, but we continue to talk to them about their requirements and how we can work with them to improve their situation and, at the same time, improve ours, and we continue to sell power to them on the spot market. We have been talking to Saskatchewan for some time.

Their interest was recently confirmed between a meeting between the Minister responsible for Manitoba Hydro, myself and the chairman of Manitoba Hydro, and we met with the Saskatchewan minister, as well as the president and CEO of SaskPower. They maintain they're certainly interested in purchasing more power from Manitoba Hydro, and they also, of course, would like to increase our transmission capability. Bipole III, as you all k now, the fourth round of consultations started in August of this year, and they're scheduled to be complete by the late fall.

We've been talking to every type of stakeholder that's pretty well possible and giving those individuals the opportunity to provide feedback to the corporation, and that feedback will be considered when we review the preliminary preferred route. We've agreed to a community development initiative for communities in the vicinity of Bipole III. It depends how close you are to the right of way itself, as well as the size of the community. The total annual budget is approximately 5 million a year, and the program will run for 10 years and be reviewed at that time.

We've also come up with a landowner's compensation policy. It provides for a one-time payment for the acquisition of the easement to accommodate our transmission line. Of course, the line can still be used for whatever purpose the landowner wants to use it for. We also provide a one- time payment for each tower on the land representing the value of the lost production plus the inconvenience of having to work around the tower. Any other damage compensation will be considered, and, of course, anything we do in terms of damage or disturbance to farming operations, which, of course, we've always done.

SaskPower has a policy as well. I asked staff to compare their policy with Manitoba Hydro's, and we–they have an option where you can do it on an annual basis, where our present policy is to take a one-time payment. But this particular one is for an assumption we made of $1,000-per-acre value, with a 10-acre easement requirement with two structures on a quarter section. And when you compare Manitoba Hydro's to Saskatchewan's–wait a minute. This is a–what I was provided with.

In reviewing this, I recently found out the difference between a row crop and a cereal crop and found out the row crop was a market-garden-type operation. This is the dates we have of what we're proposing to meet in terms of milestones. We are looking to–well, as you know, we started the consultation in August. We're looking at submitting our environmental impact statement in June the 30th next year, and we're hoping a year later or so to get our environmental licence with an in-service date for

October 25, 2010 LEGISLATIVE ASSEMBLY OF MANITOBA 135 the project at 2017. This is the budget that was presented to you before and it shows the difference between the east and west line–or, proposal. A little about–we set up–or I set up a concept review panel on the potential use of submarine cables for long-distance electricity transmission after Bipole III, and the panel ha s been working for some time on that use and I expect a report within the next month. This is the panel members that were on the committee that reviewed that–or panel. A little bit–I've already talked about the Saskatchewan transmission.

A little bit about new generation. All our new generation is designed to minimize flooding and any environmental impacts, and there's a graph coming up that shows you how we did that. We require, based on the sales scenario, Keeyask in 2019 and Conawapa in 2023; under a no- sale situation we need another generating facility by 2023. This is a graph that shows the area flooded by the Wuskwatim, Keeyask and Conawapa.

This is just putting in graphic form and, as you can see, this one also shows how Manitoba Hydro was planning the system prior to us making a policy decision to go into low-head plants and minimize any environmental impacts to the environment. A little bit about Wuskwatim. It's certainly coming along quite well. We expect power out of it next fall, which is ahead of

schedule and it's on budget. As of July 31st, we had over 1,000 workers at site, of which 264 are Aboriginal, and since the project inception of August 2006 the total number of project hires is 4,445, of which 1,819, or 41 percent, were Aboriginal. The earliest possible in-service date for Keeyask is 2019, and that requires the construction to start in 2014. As you know, at previous meetings we talked about a joint project development agreement with the four communities, and that was signed with each of the partners–our potential partners.

We are proposing to get an environmental licence for some preliminary infrastructure work in the fall of this year. We're also looking at working with the Province on upgrading Provincial Road 280 and we expect some preliminary contracts to be awarded shortly, and, as a matter of fact, it was announced that we were going to start that last Friday, I believe. * (18:40) Conawapa, the earliest in-service date is 2023, and that takes a longer time to build, and we'd start in 2014 to achieve that. On a per-unit energy basis, Conawapa is the lowest generation option in our system.

We've also signed project process agreements to talk to the communities on how they might participate in Conawapa and the benefits of Conawapa with all the communities in the area, including Shamattawa which is somewhat outside. The development opportunities for Aboriginal communities are reflected in the project planning, in the environmental processes, and we expect, as we have in the past, to incorporate traditional knowledge in doing that. We would like the communities to benefit in some way from the operations that we're proposing to get and the benefits of those facilities.

We're also looking at training and training opportunities for them and project employment including preferential hiring as we have right now. And we also expect to have business contracts, including direct negotiated contracts, with those communities. Customer service. This was just some awards Manitoba Hydro has recently got in terms of our customer service rankings and we're quite proud of all of those. Power Smart. Manitoba Hydro is certainly a leader in Power Smart activities, and energy conservation is certainly one of the cheapest ways to provide for meeting our future load.

As well, anything we sell–or save, we can sell on the export market and for the most part, depending on the type of customers, get a better rate or just as good a rate. As I pointed out earlier, it defers the requirement for new facilities. Customers benefit by having lower energy bills and so everybody's a winner. Manitoba Hydro and the Province got the Canadian Energy Efficiency Alliance record or achievement by getting another A-plus rating. It's the fourth consecutive report card that Manitoba Hydro and the Province has either tied or led the first place in the overall national ratings.

I guess this is probably a good time, too, to mention that for the first time, Manitoba Hydro applied for one of the 100 best employers in Canada. And we applied for the first time this year, and it was awarded to be one of those best 100. So we're pretty proud of that as well. Power Smart targets every type of customer we have. We have over 40 incentive-based programs and other customer-service initiatives. And we've been working on Power Smart activities now for 20 years, and all our programs are totally integrated

136 LEGISLATIVE ASSEMBLY OF MANITOBA October 25, 2010 with the federal government programs–participation of both for residential and commercial and industrial customers and how that has grown dramatically. In the future, this just sets out what our projection is in terms of investment as well as our targets for energy in the next 15 years, and our target results in the same amount of dependable energy–it works out to 74 percent of the dependable energy Keeyask provides.

And the same thing applies to natural gas in terms of the savings which our target is to get 180 percent of the residential and commercial use in Brandon in 15 years. This includes the savings to date and takes us out to '24-25. It also indicates that we're going to spend $950 million to achieve that. And this is just saying the same things I said before, and it adds a little bit in terms of greenhouse gases, and, also, it shows the $217 million in improvement loans for energy efficiency purposes. Geothermal: Manitoba Hydro is the leader in the country in geothermal as well.

From April 2009 to March 2010, we installed 550 geothermal heat pumps in the province, and I think we–in terms of per capita basis, we lead the country in geothermal installations. We have a Lower Income Energy Efficiency program, and this allows people to get–take advantage of energy efficiency items, including natural gas furnaces, and if you qualify for that, for $19 a month for five years, you can get a new natural gas furnace supplied in your home. I'll back up.

We deliver the Lower Income Energy Efficiency progr am three ways: One is through individual approach from customers; the second one is community approach through some organization within the community; and, then, the third one is working direct with First Nation communities. This is just the status of our low-income program today. I should also mention that we've been recognized as one of the leading Lower Income Energy Efficiency programs in Canada, and we've been featured in Chartwell's Best Practice Newsletter in December 2008. I'll try to go a little faster, Mr. Borotsik.

You seem to be getting a little itchy. We have a bioenergy optimization program, which is a program Manitoba Hydro set up and provided assistance to in the order of $5 million, and we've identified five diffe rent biomass projects to take advantage of that. And we also were able to take advantage of $2.5 million in cofunding that we were able to get from the Government of Canada's Clean Energy Fund. We've identifi ed the projects and are working with those particular projects to take advantage of them. A little bit about the landfill gas at Brady Road.

The City has gone out to the marketplace, and we haven't heard back as to what they're proposing to do, but they were asking for proposals to take advantage of that gas in some way that would benefit both the City as well as, potentially, Manitoba Hydro if they could come up with the right situation, as well as the community at large. Those particular ones are involved in your package, anyway, should you want to get them. A little bit about wind. As you know, St. Leon wind farm has been operating for a few years now. It began commercial operation in June of 2006, so it's four years.

We got a 20-year power purchase agreement and it's privately owned, and it seems to be working quite successfully. The St. Joseph one, the turbines are going up. At St. Joseph, now, we expect to get power in January, and certainly it looks like everything seems to be on schedule. They're somewhat behind because of rainy weather, but they seem to report to us that they are going to be able to pick it up. Whether they will or not, who knows? The–we–the Pattern Energy invested $95 million in the project, and we offered a term loan at a rate that allowed them to proceed at the same time.

It was in excess of our borrowing rate, and so we're going to make a little bit on that. At this point, we've advanced them $79.8 million of that loan. * (18:50) This is just details on the commissioning of the facilities. The commercial operation, the

schedule date is January the 24th of next year. We continue to work with anybody that our operations have had an adverse effect on. I think any claims that have come in to Manitoba Hydro we've certainly worked on settling. NFA, we settled four out of the five participants from First Nations communities. Cross Lake did not settle with us but we're working quite closely with them, and I'm happy to report for the first time in a few years we seem to be working with them quite effectively.

October 25, 2010 LEGISLATIVE ASSEMBLY OF MANITOBA 137 Aboriginal employment, we have a pretty fair push on within the company to do what we can to attract Aboriginal people within the employ of Manitoba Hydro. We have various types of access programs. We have cultural awareness programs for all our staff and various other kinds of initiatives for pre-employment training, and then, of course, we had the famous $60-million fund that we use for pre- project training on our facilities. We also have an Aboriginal purchasing policy which promotes business contracts with First Nation communities.

Employment within Manitoba Hydro, we have a target that we continually adjust. Our target for corporation to whole is 16 percent. Our actual experience to date is 15 percent. In the north our target is 45 percent. At the present time it's 40 percent, but during the summer we're as high as 44 percent. That's a target that's really hard to attain, and if you attain, to maintain. If you lose a skilled worker, you have to replace him with a skilled Aboriginal worker and that's not always possible. A little bit about our office building. I can tell you it's a real nice building to work in. You get fresh air.

It's just a nice place to work. As of March 30th of this year, the building was substantially complete. There is some deficiencies that are worked on, but they're pretty minimal. As of January 30th of this year, all the people that were working–that were supposed to be in the building, have been moved in. As of September 1st, over 5,500 people have toured the building. There's some talk about the estimate. I have reported quite a few times. Original estimate for the building was $258 million. We've revised that estimate up by $20 million and our final cost was 283. This is the awards we've got for the building.

There's certainly tons of th em and I expect them to continue to come in for some period of time. Natural gas operations. Centra's primary gas rates reflect a cost of acquiring natural gas, and the cost of natural gas is passed on to customers directly without markup. The cost of operating the distribution system is a separate rate that is charged for usage. We adjust the primary gas rate four times a year and the next quarterly change is scheduled for November of this year.

This is what's happened to natural gas rates for the last two years starting on August 1st of 2008, and as you can see, they're mostly decreases. This is a graph that sets out the various components of your gas bill, and as you can see, transportation and primary gas costs reflect the majority of your gas bill. For the first time we offered a fixed-rate service option, and although the take-up is not high, it–you would think at this particular time with gas rates being low, it'd be a perfect time to take advantage of this.

Certainly it has had an impact on other people that are in the market, and I think it's had a good impact on gas prices generally. Little bit on the risk review that's going on, and this has been in the paper for an extensive–and in the media for an extensive period of time. We engaged two consulting company to conduct a comprehensive review of our risk in th e export marketing area. ICF issued a report dated September 11th of 2009, and KPMG issued theirs in April of this year.

Both of those are available at [inaudible], and I won't go through all their conclusions, but for the most part they didn't have much of a problem with what they do and for the most part endorsed the way we operated our system. In

summary, Manitoba Hydro has the lowest electricity rates in North America. We have the highest customer satisfaction, and our system reliability is among the highest on the continent. We have a greatly improved safety record, which is something that I find–something that's really hard to get to a position where we're No. 1 continually, but having said that, we have been, for the last few years, in our gas operations. We're in the strongest financial position we've ever experienced.

We have the highest Aboriginal representation in the industry, our best energy conservation program, and we believe our environmentally–environmental responsibility record is second to none. Mr. Chairperson: Thank you, Mr. Brennan, for the presentation. The floor is now open for questions. Mr. Borotsik: Thank you, Mr. Brennan, for that abbreviated presentation. I do appreciate it. Mr. Chairman, I do have a motion that I'd like to present to the committee. The first motion says, and I will move, THAT the Standing Committee on Crown Corporations of the Legislative Assembly of Manitoba allow Mr.

Len Bateman, a former chairman and chief executive officer of Manitoba Hydro, to make a brief presentation to the committee on behalf of the engineers who are in attendance this

138 LEGISLATIVE ASSEMBLY OF MANITOBA October 25, 2010 evening regarding the ro uting of the Bipole III transmission line. I would ask the committee to consider this motion, and Mr. Bateman is in the audience today– Mr. Chairperson: Hold on, Mr. Borotsik, I need to– Mr. Borotsik: Okay. Mr. Chairperson: It's been moved by Mr. Borotsik, seconded by Mr. McFadyen, THAT the Standing Committee on Crown Corporations of the Legislative Assembly of Manitoba allow Mr.

Bateman, Len Bateman, a former chairman and chief executive officer of Manitoba Hydro, to make a presentation to the committee on behalf of th e engineers who are in attendance this evening regarding the routing of the Bipole III transmission line. The motion is in order. Comments or questions? Mr. Borotsik: Very brief comment. Mr. Bateman is here. He is a previous CEO of Manitoba Hydro. He certainly has a presentation to make. I believe that this committee would be more than acceptable of hearing from a man of his stature.

It's going to be a presentation that–other presentations have been made before the committee before, Mr. Chairman, so I would ask for the indulgence of the committee to allow Mr. Bateman to make that presentation. Hon. Jon Gerrard (River Heights): I would support allowing Mr. Bateman to make the presentation. * (19:00) Hon. Jennifer Howard (Minister of Labour and Immigration): We have some concerns, I guess, with the kind of precedent and kind of changing the rules as we go that's being suggested by making this kind of change.

It hasn't been the practice, in my experience on this committee, that we hear from public presentations. I think the agenda we have in front of us is quite clear that we're considering the annual reports of Manitoba Hydro for the year ended March 31st, 2008, and March 31st, 2009. We have the officials who are here to answer questions of the members of the committee.

There hasn't really been any process, in my mind, established for public presentations outside of when we consider bills to be made, and I don't think that it's helpful to the rules of the House to set a precedent at the eleventh hour for such a presentation. No comment on the content of the presentation, but I don't think that this is the forum for that kind of presentation. We have heard from the presentation from Mr. Brennan that there is public consultation that's ongoing.

There's certainly been other opportunities for public discourse of this issue, and this committee is very clear in its mandate to allow members of the Legislature an opportunity to hear from and question officials from Manitoba Hydro on those operations. So, for those reasons, we won't be supporting that motion, Mr. Chair. Mr. Hugh McFadyen (Leader of the Official Opposition): Mr. Chairman, I would just want to express our very strong disappointment and disagreement with the points made by the member.

We are talking about what is an unusual situation in that we have a major capital project to be undertaken by Manitoba Hydro known as Bipole III. It will have a generational impact in terms of the impact on the province of Manitoba. And that decision, it is important to recall it was not one that was recommended by Hydro or by the officials of Hydro who are undertaking the public consultations. It was, in fact, directed by the former minister of Hydro and, given the unusual background to that decision and given the significance of it, the presence of Mr.

Bateman who is–got obvious expertise as a former CEO of Manitoba Hydro, we believe that we should do what we always do at these committee meetings and allow for some flexibility and common sense to prevail when somebody has something to offer to the committee. And, with regard to the opportunities for public input, the public input process which has been run by Hydro under direction from the minister has not allowed for consideration of the various east-versus- west arguments. It's been a public process on what is the preliminary preferred route, which is the west- side route, which was directed.

And so this is the right forum, given that the decision maker on Bipole III is a political decision maker. This is a political committee, and we ought to allow Mr. Bateman to have 10 minutes of this committee's time with an opportunity for five minutes of questions, 15 minutes to hear from a former CEO of Manitoba Hydro who's present and ready to present. It seem s like a very reasonable request, and I would ask members opposite to reconsider their position.

October 25, 2010 LEGISLATIVE ASSEMBLY OF MANITOBA 139 Ms. Wowchuk: Well, thank you very much, and thank you for those comments. I would have to say that I would agree with Ms. Howard in the precedent that would be set here. I want to say that–you know, the members of the opposition wanted, have called several times for this committee to be coming. This is the fourth time in two years to talk about issues related to the board and the operations of Manitoba Hydro. This is the opportunity to do those things.

If we were at the last minute to say we are going to allow one person to have a say here, you have to– if we–if the opposition might have come to us and looked for a different foru m where other people who might have wanted to make presentations could have been notified that there was an opportunity to make presentations, that would be a different story. But on–as we come to this table and to suggest that one person should be able to make a presentation without giving notifications to others who might be interested, I would–could not support that.

And I have to say that, as members of the Legislature and committee–members of this committee, there are opportunities for the members of the opposition to ask questions or make statements on behalf of–to share what they've heard from other people. And I would say that there are other opportunities that, if people have issues that they want to raise, there is always the opportunity to set up a meeting to hear what people have to say. But I do not believe that this is the forum for that, and I would suggest that we not support this motion. Mr. Borotsik: Well, Mr.

Chairman, I must say I'm extremely disappointed, as this NDP government has always taken great pride in the fact that they've allowed presentations and presenters to come to committee meetings to have their opinions heard. We have people right now in the gallery who wish to have their opinions heard. They are directly affected by the Bipole III decision–[interjection] Mr. Chairperson: Mr. Borotsik, let me stop you there for a moment please.

As Chairperson, I'm requesting the co-operation from the members of the public who are here with us this evening to please refrain from injecting your applause or comments into the proceedings of this committee here. Please, I'm asking for your co-operation in that regard. Let our committee members have this debate free flowing here without that interruption, if you will co-operate with me, please. Thank you. Mr. Borotsik, to continue. Mr. Borotsik: Again, as I said, I'm terribly disappointed.

This particular government takes great pleasure in the fact, great comfort in the fact in those that they do listen to–others' opinions–at committee. This is a committee hearing. It's one that we cannot set precedent at. We're simp ly giving a consideration to people who are going to be affected by the most serious decision that this government and this corporation is going to make on behalf of Manitobans ever in the history of Manitoba Hydro, and I think anybody who is here should have that right. The minister is correct. Should there be others who wish to be heard by Mr. Brennan, Mr.

Schroeder and the minister responsible, then by all means let's have another meeting. What are we hiding? Why wouldn't we have another meeting, make that open to those individuals, whether it be proponents or opponents to it, and make this committee available to hear what it is that people really want to say? To not allow Mr. Bateman, who was appointed by the way by Mr. Schreyer as CEO of Manitoba Hydro, not to allow him to make a 10- minute presentation is a dereliction of our duties as members of this Legislative Assembly. And to not do it, I think, is absolutely disrespectful to not only Mr.

Bateman but to the people of Manitoba. So, please, seriously cons ider what it is that you're doing–15 minutes of time is not the end of the world. We will forgo 15 minutes of questions as opposition to Mr. Brennan, in fact, in order to have Mr. Bateman make his presentation. So, please, reconsider what you're thinking of right now. Mr. Cliff Cullen (Turtle Mountain): You know, the minister is speaking with forked tongue here. In her opening address, she said that her government and Manitoba Hydro want to be open with Manitobans and here we are, obviously, this is a very important issue for Manitobans.

We've–you know, we've–several people here from across Manitoba have taken the time out of their

schedule to be with us tonight, and they just want the opportunity to, you know, vent some of their frustrations and ask some questions. I would just ask that the NDP members across the way reconsider their approach here. Certainly, I think it's in our interest as Manitobans; we're looking

140 LEGISLATIVE ASSEMBLY OF MANITOBA October 25, 2010 at a very major capital investment here. We should be–have the opportunity to have all sides of this very important decision debated. Mr. Chairperson: Seeing no further comments, is the committee ready for the question? An Honourable Member: Sure. Mr. Chairperson: We should have the motion reread? Some Honourable Members: Yes. Mr. Chairperson: It's been moved by Mr. Borotsik, seconded by Mr.

McFadyen, THAT the Standing Committee on Crown Corporations of the Legislative Assembly of Manitoba allow Len Bateman, a former chairman and chief executive officer of Manitoba Hydro, to make a presentation to the committee on behalf of the engineers who are in attendance this evening regarding the routing of th e Bipole III transmission line. Shall the motion pass? Some Honourable Members: No. Some Honourable Members: Yes. Voice Vote Mr. Chairperson: All those in favour of the motion pass, please signify by saying aye. Some Honourable Members: Aye. Mr. Chairperson: All those opposed, signify by saying nay.

Some Honourable Members: Nay. Mr. Chairperson: In the opinion of the Chair, the Nays have it. Formal Vote An Honourable Member: Recorded vote, please. Mr. Chairperson: Mr. Borotsik has requested a recorded vote. A COUNT-OUT VOTE was taken, the result being as follows: Yeas 4, Nays 6. * * * Mr. Borotsik: Yes, Mr. Chairperson, I have another motion if I may, please. I move, seconded by the member from Fort Whyte, the Leader of the Official Opposition (Mr.

McFadyen), THAT the Standing Committee on the Crown– Committee on Crown Corporations of the Legislative Assembly of Manitoba allow Karen Friesen of Niverville to make a presentation to the committee to explain the impacts of Bipole III transmission line routing on her land and the impact that the route is having on many other affected landowners, including landowners who are in attendance this evening. * (19:10) Mr. Chairperson: It has been moved by Mr. Borotsik, seconded by Mr.

McFadyen, THAT the Standing Committee on Crown Corporations of the Legislative Assembly of Manitoba allow Karen Friesen of Niverville to make a presentation to the committee to explain the impacts of the Bipole III transmission line routing on her land and the impact that the route is having on many other affected landowners, including landowners who are in attendance this evening. The motion is in order. Comments and questions. Mr. Borotsik: This is a motion that should be accepted by all members of the committee, precedents aside.

There are individuals who are being impacted by the decision that was made on the behalf of Manitoba Hydro by the government of Manitoba. I know that the excuse is going to be that there are other venues, there are other open houses that are going to be held. I would ask simply whether the Minister responsible for Manitoba Hydro, the chief executive officer, and the Chairman of the Committee are going to be at those hearings because I believe that all three of those individuals should in fact give audience to the people who are being affected by this decision.

If they aren't going to be at those public hearings and those public meetings and not going to hear these opinions and only are going to depend on their staff to recount what those issues are, then it's wrong not to hear them at this point in time. So I do beseech members of the government to in fact allow Karen Friesen, who is a landowner, who is directly affected by this decision, to allow to give her opinion on behalf of not only herself but other landowners in the area to this committee, to the chief executive officer of Manito ba Hydro, the chairman

October 25, 2010 LEGISLATIVE ASSEMBLY OF MANITOBA 141 of Manitoba Hydro, and the Minister responsible for Manitoba Hydro. Thank you. Mr. McFadyen: I'm proud to second the motion and would just add to the points already made by the member for Brandon West that Ms. Friesen is here representing more than a hundred landowners who are impacted by the decision. We will not be bringing forward motions for other speakers on behalf of landowners. This is one individual who has volunteered to come forward and speak on behalf of a larger group. It is a very reasonable request.

It will use up 15 minutes of this committee's time this evening. This is time that would otherwise be used by opposition questioning which we're very happy to forgo in order to allow Ms. Friesen to make this presentation on behalf of the others who are present, and the other point which is important in all of this is that as good as the staff and consultants for Hydro are in terms of the public consultations, the frustration that I think lots of people are feeling is that the decision makers, the political decision makers who have directed this, are not present at thos e hearings.

They're not listening to what's being said. They're not hearing what's being said, and most importantly, they're not acting on what's being said, and the only way for that to happen is for landowners represented by Ms. Friesen to have an opportunity to present directly to the minister and to this committee here tonight, and I would ask members to leave the D in NDP, New Democratic Party, and allow Ms. Friesen to make her presentation tonight. Mr. Blaine Pedersen (Carman): I have had public meetings and I had over 165 people show up, farmers, landowners who are very concerned about this, but Mr.

Brennan wasn't there, Mr. Schroeder, Minister Wowchuk wasn't there. The best that the government could do was send out one of their staffers to take notes. If that's how they treat southern Manitoba and rural landowners, you have–you should be ashamed of yourself. These people have taken time out of their busy day to come here. They fully understood that they could not all present to this committee tonight, but they were willing to let one person speak for them and the least you could do is hear them out, hear that one person out on behalf of the rest of them. This is a huge issue in my area.

It's not going to go away. You're not going to be able to shame these people, bully these people, or make them sign anything. They are resolute in their defiance to you and to your reckless spending of Manitoba taxpayers' money and the outright fabrications–I'll use a nice word–fabrications that you've used up telling landowners that this won't affect them.

Try getting out in the country and try meeting with these landowners, and if you want, we can take a break right now and you can meet with them in the other committee room, and they'll soon tell you the effect on their land and on their homes and on their livelihoods. To not let these speak tonight is a shame. Mr. Gerrard: Mr. Chairman, I support allowing this presentation. We are not opening the floodgates; we are just trying to hear from a responsible landowner. You know, we spent 10 minutes debating the presentation on whether Mr. Bateman might make a presentation.

We could've used that time productively actually listening to Mr. Bateman, and I suggest we get on with supporting this motion and listen to the presentation. Thank you. Ms. Howard: I'm just going to reiterate our concerns regarding the process of committee and how the rules are made for committee. And that process is well known to all members of this committee that there is a process for the House leaders to meet to make rules regarding committees. It hasn't been within our practice to hear submissions from the public at Crown Corporations meeting.

It's our practice to hear submissions from the public when bills are presented. And we have some of the most open process in the country from what I've seen of other legislatures in terms of hearing from people during bills, and that process existed under the former government, under this government. But there's a process when we listen–when we hear from the public about bills. There's an ability for them to call, to get put on a list. There's an orderly way for people to make their views known, and there is a possibility in that context to have a plurality of views heard.

So that's why we have that kind of process because that kind of process does serve democracy well. If the opposition–if the members of the opposition are seeking a rule change, I would submit that they know the process to engage in that. The discussions of the House leaders can happen to change the rules for a committee. That hasn't happened. If the suggestion is to change the rules on the fly tonight, they knew that well before they came in here

142 LEGISLATIVE ASSEMBLY OF MANITOBA October 25, 2010 that that was unlikely to happen. If people were misled and told that they would be able to present here when they knew well that that was not the practice of the committee, th en I regret that. But the practices of this committee in this Legislature are well known to all of the members. We have a responsibility to work within those rules, to work together to change them when it warrants, but we're not going to do it on a whim at the committee. So I apologize to the folks that are here. I know they come a long distance.

They're welcome to stay and hear the very capable questions I'm sure that the opposition is ready to put to Mr. Brennan and the officials, but we will not be supporting this motion. Mr. Cullen: The point the member is trying to make here is about openness and a process, and the member should rightly know–and, Mr. Chairperson, you can correct me if I'm wrong here, but my understanding in sitting on committee for several years is if it is the will of the committee, the committee can make a decision to allow witnesses to speak.

It's not a process that's outside of the legalities of this particular committee, and if the committee and the members are really willing to be open and transparent, they would allow this presentation. Mr. Chair, if you could correct me if I'm wrong on that particular point. Mr. Chairperson: Thank you, Mr. Cullen, for your comments. Ms. Wowchuk: Mr. Chairman, the member, Mr. Pedersen, said that people came here anticipating that he–that they would be able to speak and I think that he should– An Honourable Member: Mr. Chairperson, point of order. Point of Order Mr. Chairperson: Ms. Howard, on a point of order. Ms.

Howard: I know we're all striving at this committee to have a debate about what I know people feel very passionately about. I appreciate Mr. Pedersen's passion about representing his constituents, and I believe it's sincere. But I think, you know, we have tried very hard to give consideration to the members opposite to hear their point of view respectfully, and I would respectfully ask you, Mr. Chairperson, that you ask for that same kind of respect to be shown to the members of this committee from the government side. Mr. Chairperson: Any further comment on the point of order?

Seeing no further comm ent, I thank Ms. Howard for the advice and the Chair will accept that advice. * * * Mr. Chairperson: And I ask all members in co-operation, in a spirit of co-operation, for this committee and for members of the public here, we want this committee to proceed smoothly, and we want to allow for a free-flowing range of debate to occur in this committee.

If we don't follow the rules and the processes we have in place, that's not going to occur, and that would go against my obligation as the Chairperson of this committee. * (19:20) So I'm asking for the co-operation of the members of this committee to allow that debate to occur, for us to–not only for this motion that is before us, but also for fu ture questions that we're going to have here, and answers as well. And I ask for, again, for co-operati on of the members of the public who are here with us this evening.

We want to allow members of this Legislature who are elected here to have that debate on your behalf, and I ask you again, please co-operate and do not participate in these proceedings in this–unless this committee dictates otherwise. On a new point of order? An Honourable Member: No. Mr. Chairperson: Because the minister has the floor. Minister Wowchuk to continue. Ms. Wowchuk: Thank you, Mr. Chairman.

If some people thought that they were able to present here tonight, I'm disappointed that they were given information that made them think that they could present here because that has not been the tradition of this committee. Other people have said that we haven't heard them. And I would say to those people who feel they haven't been heard, whether it be Mr. Bateman or others in the committee, I would be happy to meet with them at any time to talk about their issues. However, this committee is not that forum; this committee is to talk about the annual reports.

It's the opportunity for members to ask questions of the CEO and the chairman of the board, and I think that that's what we should get to. Mr. McFadyen: The–there's a difference between tonight's meeting and many of the other committee

October 25, 2010 LEGISLATIVE ASSEMBLY OF MANITOBA 143 meetings that take place in this building. And the member for Fort Rouge (Ms. Howard) has made a comment about the process used for reviewing bills and the public input, and I think it's worth putting that in some perspective. When–we've had many, many bills go though this House that have permitted public input at committee, that have been of far lesser, far more minor significance than the impact of this decision on Manitobans, and Manitobans have been given that opportunity to come here and speak at committee.

And for the member to say that the rules don't permit these presentations is not correct.

The fundamental rule of these committees is that the committee makes its own rules and the committee will make rules by agreement where there's a majority that is in favour of doing something at committee, that majority rules and there's an absolute ability on the part of members opposite to ask for reasonable restrictions on the length of presentations, on the length of question and answer, the number of presentations, and if we look back at precedent, there are precedents for committees of this nature to make adjustments to their procedures in order to permit presentations and other discussions in unusual circumstances.

And these circumstances are unusual. The alternative, as we've said, to having these presentations is opposition questioning, and as much as we are looking forward to getting on with our questions, as we have said, we think that there are two people in the room tonight who have something important to add to the discussion, and we would simply ask that they be given that opportunity. Mr. Borotsik: Just a simple comment to add to what Mr. McFadyen said. A rule change is not necessary.

This committee does have the ability, with consensus of both the government and the opposition, to allow those speakers to make a very short, limited presentation. A rule chan ge is not necessary. A motion has been put forward. That motion is in order. That motion has been considered to be in order by the Clerk of this committee. So we do have the ability and I would say, the responsibility, to allow one speaker, two speakers, preferably, to make a short presentation.

And again, I have to reiterate: The individuals that are sitting at this table right now, as much as the Minister of Manitoba Hydro says that she's available to meet with any individual at any time, the individuals at this table right now I know are not able to do that. So I think it's only right that we take the opportunity right now for 10 minutes to hear what a landowner, the landowners, have to say about how they are being affected. A nd if you don't listen to them, effectively you're saying their opinion doesn't matter. And I know–I know the people at that side of the table, and I know you care.

I know you care about what their opinion is. I know you care how you're affecting them as landowners. All we're asking is, please, 10 minutes of this committee's time to listen to that one person put forward the position that is going to be put forward by the people who are affected by this decision. It's all we're asking. We can make that decision amongst ourselves. We don't need a rule change by the Speaker or by the government House leaders. We are the masters of that destiny. And all we have to say is, yes, 10 minutes.

And if it's too much out of our time for 10 minutes, then we've lost touch with what we're doing here as members of this Legislative Assembly. Thank you. Mr. Chairperson: Any further comments or questions? Is the committee ready for the question? An Honourable Member: Question. Mr. Chairperson: Do you wish to have motion reread? Some Honourable Members: Yes. An Honourable Member: No. Mr. Chairperson: Yes. That–the motion that's been moved by Mr. Borotsik, seconded by Mr.

McFadyen, THAT the Standing Committee on Crown Corporations of the Legislative Assembly of Manitoba allow Karen Friesen of Niverville to make a presentation to the Committee to explain the impacts of the Bipole III transmission line routing on her land and the impact that the route is having on many other affected landowners, including landowners who are in attendance this evening. The committee's ready for the question? Shall the motion pass? Some Honourable Members: Yes. An Honourable Member: No. Mr. Chairperson: The Chair hears a no. Voice Vote Mr.

Chairperson: All those in favour of the motion, please signify by saying aye. Some Honourable Members: Aye.

144 LEGISLATIVE ASSEMBLY OF MANITOBA October 25, 2010 Mr. Chairperson: All those opposed, please signify by saying nay. Some Honourable Members: Nay. Mr. Chairperson: In the opinion of the Chair, the Nays have it. Formal Vote An Honourable Member: Recorded vote, please. Mr. Chairperson: Mr. Borotsik has requested a recorded vote. A COUNT-OUT VOTE was taken, the result being as follows: Yeas 4, Nays 6. Mr. Chairperson: The motion is accordingly defeated. * * * Some Honourable Members: Oh, oh. Mr. Chairperson: Thank you, sir.

On that note, this committee is going to take a five-minute recess, and we'll have some discussions with the members of this committee. Committee's in recess for five minutes. The committee recessed at 7:27 p.m. ____________ The committee resumed at 7:52 p.m. Mr. Chairperson: Will the standing committee please come to order again. The floor is open. Mr. McFadyen: Thank you, Mr. Chairman, and I want to, again, express our disappointment at the view of the majority of the committee members with respect to the two individuals who were prepared to present tonight.

But, listening to the comments of members opposite, it seems that there are a couple of concerns. One was just the lack of notice provided in terms of allowing people to present tonight, and the second was the concern about bei ng selective in terms of who presents and who doesn't. And so in order to– and we also heard from the minister a public offer to hold a meeting and to hear from these individuals.

And so, in light of what I think is clear support for members opposite for a different approach, I want to make a motion that I know members will want to support warmly and unanimously, and the motion goes as follows: THAT the Standing Committee on Crown Corporations of the Legislative Assembly of Manitoba hold a special meeting, by no later than December 8th, 2010, to hear presentations from members of the public interested in the matter of the proposed Bipole III transmission line, and that House leaders be asked to set a date for this special meeting and to make arrangements for reasonable notice to interested parties. [interjection] Thank you, Mr.

Chairman, the Clerk has very correctly pointed out that the motion needs to come in the form of a recommendation to the House, and so I would modify the motion and propose as follows: THAT the Standing Committee on Crown Corporations of the Legislative Assembly of Manitoba recommend to the House that the committee hold a special meeting by no later than December 8, 2010, to hear presentations from members of the public interested in the matter of the proposed Bipole III transmission line, and that House leaders be asked to set a date for this special meeting and to make arrangements for reasonable notice to interested parties.

Mr. Chairperson: It's been moved by Mr. McFadyen THAT the Standing Committee on Crown Corporations of the Legislative Assembly of Manitoba recommend to the House to hold a special meeting by no later than December 8, 2010, to hear presentations from members of the public interested in the matter of the proposed Bipole III transmission line, and that House leaders be asked to set a date for this special meeting and to make arrangements for reasonable notice to interested parties. Motion is in order. Mr.

McFadyen: Just to reiterate the reasons for the motion, I think it addresses the concerns that were raised by members opposite with the approach that had been attempted at this committee earlier tonight. And just to identify the thinking behind a couple of the points in the motion, the date of December 8th was chosen simply because the House is in session until the 9th, and so to hold it by no later than the 8th would provide allowance for a meeting to take place while the House is still sitting.

October 25, 2010 LEGISLATIVE ASSEMBLY OF MANITOBA 145 Secondly, the–we are aware–and, in fairness, we are aware that there are interested parties who support the government's position in terms of the route of Bipole III and we want to be sure that they're given every opportunity to present as well.

I know the Natural Resource Defence Council and others south of the border who support the decision would probably want to come and have that opportunity to present and there may be others as well, even here inside the province of Manitoba who support the decision, and we should give them the opportunity to come and support the government's decision as well as hearing from those who may not support it. Ms. Howard: I want to clarify for members of the committee what our concerns have been with regards to the attempt to change the practice, change the process of committees in committee.

Generally speaking, the practice of the House has been that House leaders meet on many topics and they have discussions and they come to agreements, and, in fact, a record of our Hous e leaders on agreeing for committees to meet I think is stellar in the last few years. My understanding is this committee has met four times in the last two years, which I think if you were to look back to the previous decade you would not find as often the Crown corporations or frankly any committee meeting.

I know the Public Accounts committee that several of us have served on has met a record number of times in the last few years. So I think our House leaders have shown their capacity to co-operate and to make agreements. None of those House leaders are here present as part of this committee. I don't know if there was any notice given to any of the House leaders that any of these motions would be coming forward tonight. I think that members opposite know well how the business of the House is conducted.

They know well that giving advance notice, having those discussions with the House leaders, oftentimes that can accommodate everybody's needs and desires for the smooth functioning of the House. That's not the approach that they chose to take tonight. I regret that that's not the approach they chose to take because I think we have shown a lot of capacity to be co- operative as House leaders. So we're not going to support this motion. The House leaders are free to meet to agree on further meetings.

The House leaders are free to meet and to initiate a discussion of the rules of the House and of the rules of committees. That's always been the case. That continues to be the case, and we'll see what the future will bring in that respect. But we're not going to change the rules, the pr ocesses, the traditions of the House tonight with two minutes notice. Mr. McFadyen: Well, the member has completely misstated the role that th e House leaders play with respect to House business.

The House leaders' role is to represent the government and opposition caucuses with respect to resolving issues of procedure, and their job is to undertake negotiations between meetings of the House and committees to resolve issues. * (20:00) We have a unique opportunity tonight with all the principals being present at the table to proceed and do as we are empowered to do, which is to set our own rules. And that's happened on many occasions before.

In fact, I was recalling, just a short while ago the many changes that were made in the course of bill debates in connection with Bill 37, 38, to sit on weekends, to sit in evenings, often long into the night, outside of the normal rules of even committees to consider bills. And that was done with the agreement of all parties because it was clear to everybody involved at the time that there was a significant level of public interest in Bills 37 and 38.

As a result of that, the normal sitting hours for committee were suspended and overridden by the committee itself, which was able to take account of the size of the crowds, the level of the interest, and our desire as legislators to hear directly from the people who we get our mandate from. And when we have so many citizens of Manitoba, who are not our subjects, but who are citizens and who are ultimately our bosses, I think it behooves us to listen to what they have to say. Ms. Wowchuk: Thank you very much for the comments that have been made.

I want to say that when I was speaking earlier, I said to the people that are in the room here, that if they have issues–if they want to talk about this issue and raise their concerns with me, I would be more than willing to sit down and meet with them and talk about these issues. I do not believe that this is something that should be negotiated at this table and we–and that this–the purpose of this meeting tonight, of this standing committee, is to talk about the annual reports of the Manitoba Hydro-Electric Board, their annual reports.

The issues that people have with bipole have been the subject of a lot meetings, and as I have said, if there–I–we don't have to have presentations at this

146 LEGISLATIVE ASSEMBLY OF MANITOBA October 25, 2010 table to have a meeting to talk about these issues. And I've always had a very open-door policy, and if people want to call my office, we can arrange a meeting. But I do not support the motion that is being put forward here, Mr. Chairperson. Mr. McFadyen: I–we're–I'm disappointed in the minister's response. The trouble with the approach that she's proposing is that there individuals who are not present in the room tonight who are impacted by this decision.

There's the next generation of Manitobans who don't yet have the right to vote or be present, who are going to pay for this decision. And that, Madam Minister, calls for an open, public meeting, not a private, clos ed-door series of one-off meetings. This is an important public issue. And you should be prepared to defend it in public and with opposition members present in a format that's open to the media and open to any member of the public who may not–who may have an interest in the issue. That's really at the heart of openness, transparency and democracy.

And we ask the government to really seriously reconsider this closed-door, secretive approach that they seem to want to take when it comes to dealing with this issue. Mr. Cullen: It's interesting to hear the comments of members opposite. And I think maybe they missed the point of the resolution that was put forward by the member for Fort Whyte. And we as a committee can make recommendations, you know, to the Assembly or to whoever we like. And strictly, this resolution is just a recommendation.

And it's a recommendation that we allow the public more input into one of the biggest decisions facing Manitoba Hydro and, in fact, the province of Manitoba. So all we're asking is that the government support our resolution asking for a more open and transparent process and in looking at the next Bipole III. Mr. Chairperson: Any further comments, questions? Committee ready for the question? An Honourable Member: Question. Mr. Chairperson: Do you wish to have the motion reread? An Honourable Member: Please. Mr. Chairperson: It's been moved by Mr.

McFadyen THAT the Standing Committee on Crown Corporations of the Legislative Assembly of Manitoba recommend to the House that a special meeting by no later than December 8, 2010, to hear the presentations from members of the public interested in the matter of the proposed Bipole III transmission line, and that House leaders be asked to set a date for this special meeting and to make arrangements for reasonable notice to interested parties. Shall the motion pass? Some Honourable Members: No. Some Honourable Members: Yes. Mr. Chairperson: The Chair hears a no. Voice Vote Mr.

Chairperson: All those in favour, please signify by saying aye. Some Honourable Members: Aye. Mr. Chairperson: All those, please signify by saying nay. Some Honourable Members: Nay. Mr. Chairperson: In the opinion of the Chair, the Nays have it. Formal Vote An Honourable Member: A recorded vote, please. Mr. Chairperson: Mr. Borotsik has requested a recorded vote. A COUNT-OUT VOTE was taken, the result being as follows: Yeas 4, Nays 6. Mr. Chairperson: The motion is accordingly defeated. * * * Mr. Chairperson: Mr.–[interjection] Mr.

McFadyen– [interjection] The floor– [interjection] The floor–[interjection] Madam, madam, I'm asking for your co-operation, please. [interjection] Then the Chair will have no obligation, then, but to either ask the room to be cleared or to ask that you–for your co-operation, madam. That's all I'm asking for, is your co-operation. The minister has made– An Honourable Member: I said I'll meet with them.

October 25, 2010 LEGISLATIVE ASSEMBLY OF MANITOBA 147 Mr. Borotsik: Mr. Chairman, if I can, as you could tell, there is some emotion, obviously, when people's livelihoods are affected. There is another opportunity for Mr. Brennan, Mr. Schroeder and Madam Wowchuk to meet with these individuals. On November the 8th, Manitoba Hydro has already struck a meeting at the Holiday Inn South. There's an open house on November the 8th, Mr. Brennan. Your department has already set that open house. There's a meeting. I would ask you now– Mr. Chairperson: Through the Chair, please. Mr.

Borotsik: Through the Chair, I ask through the Chair to Minister Wowchuk, Mr. Brennan and Mr. Schroeder, if they are prepared to be at that meeting on November the 8th, the open house that is already advertised, already put in place by Manitoba Hydro, if–through the Chair–those three individuals would be prepared to be at that open house so that these individuals would have an opportunity to make their opinions known. Mr. Chairperson: Comments? Questions? Ms. Wowchuk: Mr.

Chairman, I have said, and I'm– to the individual who was speaking earlier and to others–that I am willing to meet with those people who want it–[interjection] Mr. Chairperson: Please. I'm asking for respect from members of the public– [interjection] I am asking for respect for the proceedings of this committee this evening.

My obligation as Chairperson is to ensure the smooth proceedings of these committee hearings, and to allow members of the public to participate in these proceedings is part of the format that we have in the Manitoba Legislature, a tradition that we are proud of, but that does not involve inclusion of comments or participation in these committee proceedings. That's the rules that I have to work within. That's the practice of this Manitoba Legislature. It allows for free-flowing questions from the members of the opposition or any member of this committee to the minister and members of the Manitoba Hydro.

We're asking for co-operation of members of the public, please. Please respect the–have respect for each other in this room and for the people that are trying to do this job here this evening to represent your viewpoints. We can get to the comments and the questions you might wish to pose through your members, whoever they may be in this committee room, and ask to the minister or to members of the Manitoba Hydro. That's one way to achieve your purpose here this evening. So I ask for your co-o peration and respect for these proceedings here this evening.

That's all I'm asking–[interjection] I am– [interjection] I'm asking–allowing any member of this committee to ask questions of the folks from Manitoba Hydro or from the minister. So I'm asking for that co-operation, please. [interjection] I'm asking– [interjection] I'm requesting– [interjection] I'm not asking you to leave, madam. All I'm asking is for respect for the proceedings that are here this evening. We're prepared to proceed? * (20:10) Ms. Wowchuk: Mr. Chairman, what I would like to say to this individual, if you call my office tomorrow morning, we'll work out a date.

I cannot–I will set up a time to meet with you. I– Mr. Chairperson: Further comments, questions? Mr. Borotsik: Well, I'd like an answer from the minister if I could, please. There is a meeting on November 8th. Are you prepared to make that meeting on November 8th? It's a public meeting. It's open to the public, well advertised. Madam Minister, can you attend that meeting on November the 8th? Ms. Wowchuk: Mr. Chairman, I have said that I would check tomorrow morning. I do not have my calendar in front of me.

I have some other issues to deal with, but I will–I have committed that I will meet with this group of people and if they call my office in the morning, I'll make arrangements to meet with them. To say specifically tonight whether or not I can be there that day, I cannot do that, but in the morning I can arrange a time for a meeting. Ms. Howard: Mr. Chair, I have a question for Mr. Brennan on his presentation. We're at the question period, I understand. Mr. Chairperson: Yes, we are. Ms. Howard: Okay. So thank you for your presentation, Mr. Brennan.

I thought it was extremely thorough, and you always come very well prepared to the committee. So my question has to do with page 22, Mr. Chair. So on page 22 of your presentation, Mr. Brenna n, on your Bipole III budget, you make, if I'm reading the line correctly

148 LEGISLATIVE ASSEMBLY OF MANITOBA October 25, 2010 where it talks about converters, it appears to me that in either scenario, west side or east side, that those converter stations would be necessary. Am I reading that table correctly? And maybe you could give us some more background on the necessity for those converter stations. Mr. Chairperson: Mr. Brennan, would you please pull your microphone closer to you, sir, before you proceed. Mr.

Brennan: When we originally looked at the proposal to build the line down the east side, it was at that point being tied in to the existing conversion equipment, and at that point, it was–the converter stations, without considering new generation being added to the system or the reliability associated with something happening to the existing converter stations, it was not included at that point.

When we went to the west side, there was a need to have conversion equipment which, in our opinion, took away reliability issues that we had at that time and at the same time provided for new generation to be able to come down the line at that point in time. So conversion equipment should be considered on both sides in our view. Ms. Howard: One of the suggestions that I've heard is that we should cancel the planned converter stations, and some concerns that I've heard with regards to that is the impact that that could have on reliability of the power supply.

So I'm wondering if you could talk about what kind of impact that could happen to Manitobans if we were to cancel those converter stations that are in the plan for the bipole. Mr. Brennan: If there was some issue associated with the southern conversion station at Dorsey, we'd have a major reliability issue. In addition to that, as soon as we added new generation, we'd need a converter station at both ends for the line. So there's two major issues there that have to be dealt with almost right away. Ms.

Howard: So would the plans to increase power generation–I think we saw in one of your slides, you know, quite a tremendous trend upwards in power generation when some of the new dams come on line. When those new dams come on line, we are going to require extra converter stations. Have I got that correct, Mr. Brennan? Mr. Brennan: I believe I understood your question. Mr. Chairperson, 2019 we'd need it and right now we're proposing to put it in 2017. Ms. Howard: Thank you, Mr. Brennan. Mr. McFadyen: I'm pleased that the member for Fort Rouge (Ms.

Howard) has opened up the issue of capital expenditures related to Bipole III. My question to Mr. Brennan relates to the estimate of just over $2.2 billion in total for the project and that estimate was confirmed in Hydro's capital estimates over the last three years. The number was originally provided in CEF07, which is the 2007 capital estimates. The same $2.2-billion number was in–presented 2008; the same number in 2009. I just want to ask Mr. Brennan whether he expects any revision of that number for the 2010 capital estimates. Mr. Brennan: That issue is under review.

We've–at this point in time, don't believe there'll be any change, but we are reviewing the issue to some degree of debt. Mr. McFadyen: Just looking at the way Hydro prepares its capital expendit ure forecast, just note in CEF09, which you know is the Pointe du Bois transmission project, which involves about a total of 60 kilometres of transmission lines with some additional other components to it. It's an $85.9-million project and roughly 5 percent the size of the bipole project.

And we note in the capital expenditure forecasts that there are adjustments that have been made over the life of the construction of that project every year: 2010 a $10-million adjustment; 2011 a $13-million adjustment; 2012 a $2.8-million adjustment; and so on. In two other capital projects, the Riel Reliability Improvement Initiative contains adjustments for every year up to 2014 as does the Firm Import Upgrades which is another smaller project totalling $4.8 million.

And I'm wondering how it is that a project as large as bipole would have no adjustments over a four-year period in terms of the estimated cost, when such small projects seem to be being adjusted on such a regular basis. Mr. Brennan: I think we'd likely get more of the actual design taking place so we get a good handle on what we're actually going to build. At this point in time, most of our work has been on environmental issues and not on the design. Once we get more fully into it, we'll have a better handle on what the costs are.

October 25, 2010 LEGISLATIVE ASSEMBLY OF MANITOBA 149 Having said that, we are going to do a major extensive review of the costs in the next year. Mr. McFadyen: Thank you very much. Mr. Brennan, can you just indicate, with the capital expenditure forecasts whic h are printed on annual basis, what is the normal timing for the publication of those re-estimated numbers? Mr. Brennan: The actual integrated financial forecast is usually approved by the end of November. That's the time we usually make our application to the public utility board, is the end of November, an approved change to the IFF. Mr.

McFadyen: And through that process, when would the revised numbers normally be published? If the internal process is completed by end of November, when would the revised numbers normally be made available to the public? Mr. Brennan: It'd be shortly thereafter because it's at that point everything goes to the Public Utilities Board and becomes public. * (20:20) Mr.

McFadyen: In Hydro's response to a Public Utilities Board question, PUB/MH 11-56, where the PUB was asking about the capital requirement of 2.2 billion, Hydro's response was, and I quote: The ultimate cost of Bipole III may be greater than 2.2 billion; however, there are many aspects of the project that are to be decided and it's not yet possible to develop a project cost estimate with the degree of confidence necessary to warrant an update to the CEF. That was provided to the Public Utilities Board in June of this year, the document stated June 24th, 2010.

Have there been any updates in terms of any internal re-estimation of the costs of the project since the date of that reply to the PUB? Mr. Brennan: As I mentioned to you, we're proposing to do a major review within the next year of both the capital costs of the line, as well as the conversion equipment. Mr. McFadyen: Can I just ask whether the normal internal process would be that the vice-president responsible for a particular project would make a presentation of numbers to the executive of Hydro prior to those numbers making their way to the board?

Can you just indicate whether any such presentation has been made in connection with Bipole III over the past number of weeks? Mr. Brennan: I don't think any formal discussions have taken place. We have decided with–through the vice-president that this review I talked about would take place. Mr. McFadyen: Because in the normal process and, in particular, related to Bipole III, would it be Mr. Tymofichuk, as the vice-president of Transmission, who would bring forward an estimate to the executive of Hydro for its review and consideration as part of the process? Mr. Brennan: It would be in two components.

One would be the line which would come through Mr. Tymofichuk, and the conversion facilities which would come through Mr. Adams. Mr. McFadyen: And, Mr. Brennan, can you just indicate whether you believe, based on current information, that Bipole III, the capital estimate of 2.2 billion, remains realistic. Mr. Brennan: I've seen some indication that the line would be reasonably close and there's some expectation that conversion equipment–there's indications it may go up in some places and there's some indications based on recent purchases that it may go down. Mr.

McFadyen: Just in terms of the updating of the capital estimates for Bipole III, Mr. Brennan, can you just confirm that as a result of the number of jogs that the line makes that require reinforced towers wherever there's a corner. And just to back up on that, our understanding is that towers built in a straight line don't need to be as heavily reinforced as those on a corner because of the weight of the line, that where the line makes a jog, those corner towers are considerably larger and more heavily reinforced because of the weight of the line and, accordingly, considerably more expensive.

And can you just indicate what impact those developments have had on the current capital estimate for the–for Bipole III. Mr. Brennan: I think your concept that you were talking about is–I do agree with. I have no idea whether there's been more jogs, if you will, that require reinforcement. That I don't know. Mr. McFadyen: Just in light of where Hydro is in terms of the process on Bipole III currently, can you indicate what is the target completion date for the revised capital estimate for Bipole III?

150 LEGISLATIVE ASSEMBLY OF MANITOBA October 25, 2010 Mr. Brennan: We would like to–without a complete design, we'd like to complete our review of the estimate within the next year. Floor Comment: And– Mr. Chairperson: Sorry, Mr. Brennan. Mr. Brennan: Excuse me. The design won't be complete at that point though. Mr. McFadyen: In light of the impact–sorry, am I hearing you correctly that the design, never mind construction, but the design for Bipole III won't even be complete a year from now? Floor Comment: I don't believe it will. Mr. Chairperson: Mr. McFadyen–or Mr. Brennan. Mr. Brennan: I will confirm that, Mr.

McFadyen. Sorry. Mr. Chairperson: You have to wait for your– gentlemen, for the microphones to be turned on to allow the Hansard folks to record. So, if you just wait, sir, for the Chair to indicate your name and then you can proceed to ask your questions and respond with the answers, that would be appreciated. I'm not sure if it made it to the records. Maybe Mr. Brennan could–[interjection] Mr. McFadyen: I'll retry the question and let Mr. Brennan–I think we'll just repeat what we just said, that the question was whether that Mr.

Brennan could confirm that Hydro won't even complete the design of Bipole III until a year from now, never mind embarking on any construction. Mr. Chairperson: Mr. Brennan. Mr. Brennan: For once I got it right, after all these years, too. I apologize. I believe that's right. I will confirm that. Mr. McFadyen: Now, the–if memory serves, the date that the towers collapsed during the wind shear of–Bipole I and II, I believe it was 1997, was that correct? Mr. Brennan: '96 or '97. Mr. McFadyen: And so that's now going on 14 years. And so what you're saying is that if it was–the minister said 1996.

If it was 14 years ago that event took place and we're not even going to be complete design for another year, I wonder if you can just comment on why it's taken so long all the way from 2006 or 2007 until–sorry, 1996 or 1997 until 2011 before we even have a design complete, never mind beginning any construction. Mr. Brennan: We have had siting issues associated where the line would go. Certainly, from Manitoba Hydro's perspective, we would have liked to have the line in service by now. Matter of fact, some of our original estimates would have the line in service now. Mr.

McFadyen: In light of this delay in completing design, could you just indicate whether 2017 remains a realistic in-service date? Mr. Brennan: Yes. Mr. McFadyen: Just back on the matter of capital estimates, can you just confirm that some numbers have already been presented to the board, to the executive of Manitoba Hydro, with respect to Bipole III for the purpos es of the 2010 capital estimates process? Mr. Brennan: I don't think anything formally has gone to the executive committee, but I'll have to check that for you. Mr. McFadyen: Can I just ask Mr.

Schroeder whether anything has gone to the board, either formally or informally, with respect to revised estimates on Bipole III? Mr. Victor Schroeder (Chairman, Manitoba Hydro-Electric Board): There hasn't been anything formal. I'd have to check on whether there was anything informal. I don't recall anything. Mr. McFadyen: Can I just ask Mr. Brennan whether anything informal has come either to the executive or to the board of Hydro with respect to re-estimation of the costs of Bipole III? Mr. Brennan: I think I answered that question before. I'll have to check into it, but I don't think so.

Not–I don't think there's anything been on the executive agenda. Mr. McFadyen: Can I just ask you, then, whether it's not–whether or not it's been on the agenda, have you been presented with any revised estimates for Bipole III, either formally or informally? Mr. Brennan: I've been–I have discussed various estimates with vice-presi dents on the Bipole III situation. Mr. McFadyen: Can you just indicate what the number was that was presented to you in those discussions?

October 25, 2010 LEGISLATIVE ASSEMBLY OF MANITOBA 151 Floor Comment: I don't know what they were. Mr. Chairperson: Mr. Brennan. Mr. Brennan: Sorry. I don't recall what they were. Mr. McFadyen: Would you be able to undertake to get back to us with the number that was presented to you within the next short period of time? * (20:30) Mr. Brennan: I don't know if our policy is to release unapproved numbers. I'd have to check. Mr. McFadyen: I guess I'd ask the minister whether she's been briefed on any estimates, any changes to the estimated cost with respect to Bipole III over the past four weeks. Ms.

Wowchuk: No, I have not. Mr. McFadyen: And can I ask the minister then, going back a little bit further, whether she's been briefed on revised cost estimates over the last three months with respect to Bipole III. Ms. Wowchuk: No, I have not. Mr. McFadyen: In light of the significance of the project and the province's significant fiscal challenges, I wanted to ask the minister whether she's asked for an updated cost estimate on Bipole III. Ms. Wowchuk: We have–as Mr. Brennan has indicated, there is going to be a review of those costs and we will wait for the results of those costs when the review is done. Mr.

McFadyen: Can I just ask the minister, in light of the very significant impact of this decision on hydro and on ratepayers, whether she's asked for a briefing on any revisions to the cost estimates associated with Bipole III? Ms. Wowchuk: Mr. Chairperson, I'm briefed regularly on things that are happening and when there is information available, but I will–that will be provided for me.

But if I look at Hydro's financial statement and their reserves–their accumulated revenue, I am comfortable that Hydro will be able to make the necessary investments that are required, and I believe that they're in a good financial footing. Mr. McFadyen: Which isn't responsive to the question. I just want to ask the minister whether she's asked for a briefing in light of the expenditure, the impact and obviously the political debate surrounding Bipole III, whether she's asked for an updated capital expenditure estimate connected to that project. Ms. Wowchuk: Mr. Chairperson, I have not been given an update.

We have had discussions as to where the costs will be and I've been told that we anticipate that the costs will be within the numbers that have been–the projected budget of $2.247 billion. There may be some movement on the converter side of it. There may be some movement on the line side of it. We've had those discussions, but there have been no firm numbers that have been given as to changes, and I think as we move closer to having the final design and length of the line, then there will be–that's–there may be some adjustments.

But at this time, I have had discussion with Hydro but I have not been given information as to some dramatic change in the cost of Bipole III. Mr.

McFadyen: I just want to ask the minister, just in light of the amount of re-estimating that's gone on in connection with other capital projects, whether she has any concerns at all that the estimate that's currently being debated of just over $2.2 billion is a three-year-old estimate first published in 2007–we now are within weeks of the 2010 capital estimates being published–whether the minister has any concerns about the fact that there's been no re- estimation done whatsoever with regard to the largest capital project under–going on under her watch? Ms.

Wowchuk: I know the member wants to get an answer as to what change is going to be made in those numbers and I've indicated I don't have those numbers. And a review is going on of the total costs of what the project will be, and when that full review happens then we will have those numbers. But it is not–there is not going to be, as I understand it, there's–you have to get a licence first. So that licensing has to happen before construction can take place. So there–the construction costs will not show up in this year. Mr.

McFadyen: The–Hydro currently has a general rate application–rate increase application from the Public Utilities Board. There's going to be some public hearings into that process, and one of the relevant considerations is the estimated capital cost of Bipole III. Can the mini ster indicate whether or not Hydro will be permitted to share the actual current estimates with the Public Utilities Board in advance of those rate hearings taking place in 2011? Ms. Wowchuk: I'm going to refer to Mr. Brennan as to what they are able to share with the PUB and what they're not able to share with the PUB.

152 LEGISLATIVE ASSEMBLY OF MANITOBA October 25, 2010 Mr. Brennan: Well, first of all, the–these costs that we're estimating–we don't even start construction until 2014. They don't come in service till 2017. So a customer won't have to pay a cent till after 2017. So it won't affect the current rate increases at all. The second thing is that we will indicate to the Public Utilities Board that we are going to do an extensive review of the cap ital costs of the–both the conversion equipment as well as the line itself over the next year. Mr.

McFadyen: Just in that response, there's something new contained in it, and that is that construction won't even begin until 2014. Are you saying that the construction has now been moved back from the original capital plan that's currently published? Mr. Brennan: Yes, it'd be 2012. I'm sorry. Once we get the licence we'll start. So that'd be 2012. Mr. Chairperson: Mr. McFadyen–[interjection] Mr. Brennan, sorry, sir, you have to repeat that, if you will, to put it on the record. Mr. Brennan: I'll give you a complete schedule. Once we get the licence we'll definitely start.

So construction will start then, and that would be 7012– 2012. Mr. McFadyen: Right. So just to confirm, you're anticipating receiving a licence by 2012 and starting construction shortly thereafter.

In light of the fact that the construction would be starting presumably less than two years from now, I'm just curious as to how it is that we could be this far down the road, now, three years since the original announcement and still not have a re-estimation of the capital costs on this project when the re- estimation on a project 5 percent the size of this is provided in great detail in the documents that have been made public. Mr. Brennan: I think the ones you're referring to, construction is either under way or about to start. So they're not two years away as they are right now. Mr.

McFadyen: And in light of the information already worked up internally and presented, I want to ask you whether you believe that the $2.2-billion number is even close to what the actual cost is going to be. Mr. Brennan: We've been experiencing an awful lot of competitive prices in the large electrical equipment field in the recent past, and so I'm not confident that it'll go up. You know, certainly, we're purchasing equipment that has a limited number of suppliers, and that causes us difficulty.

So I don't think I'd–that the recent past has really made me a little more–I'm not comfortable with the estimate because I think we should have the design complete and know what we're going to actually purchase before I'm real comfortable with an estimate. So I think it's hard for me to answer your question, Mr. McFadyen. Mr. McFadyen: Can I just ask whether any estimate has been provided to you that would suggest that the actual project cost is in excess of $4 billion? Mr. Brennan: I don't recall that number at all. * (20:40) Having said that, I looked at the numbers in two ways, and the–two breakdowns.

One was the line and one was the conversion equipment. The–one of the numbers I saw on the conversion equipment, it was more significant than the change on the line. Mr. McFadyen: Would you just undertake just to get back to us of the latest estimate that Mr. Tymofichuk and Mr. Adams would have provided in terms of the internal work that's been done at Hydro, just to provide us with some indication prior– particularly prior to the PUB process getting under way, so that we know the public and the regulators have access to the information they need to make informed decisions. Mr.

Brennan: I have to take that under advisement in that we have an awful lot of unapproved numbers floating around, and in the past we've always only released approved numbers, numbers approved by the Hydro board. Mr. McFadyen: Can you just indicate whether there's been any discussion at board level of any of the revised estimates conn ected with Bipole III in recent months? Mr. Brennan: I can't recall anything in a recent time. Having said that, the chairman and I talk every day, so certainly the chairman and I talk about issues like that, so I'm sure we would have talked about that in some fashion.

The financial forecast goes to the Hydro board in November, so it'll be discussed there for sure. Mr. McFadyen: So just to confirm, then, there will be a–just to get the terminology right, a capital expenditure forecast, CEF10, in connection with

October 25, 2010 LEGISLATIVE ASSEMBLY OF MANITOBA 153 Bipole III that will be pr esented to the board in November. Is that right? Mr. Brennan: Yes. We revise both the–our operating plans as well as our capital plans, and it all ends up in a new document called IFF10. Mr. McFadyen: And can you just indicate whether you know at this stage what the number is going to be that's presented to the board in November in connection with Bipole III, whether any decision has been made? Are you going to leave it at 2.247 billion or whether there's going to be any variation to that number when it goes to the board. Mr.

Brennan: I think the recommendation that we'll have will be to leave the number the same and to do the review that I suggested we do. Mr. Chairperson: Mr. McFadyen. [interjection] Mr. Brennan, to conclude. Mr. Brennan: Sorry. That would be my recommendation, in any event. Mr. McFadyen: I'm just wondering, if the internal work has already been done, what's precipitating the need for a further review of the numbers? Mr. Brennan: I'm not sure the work has been totally done. You seem to have more knowledge than I do in that regard. We certainly know that there's indication that some costs are going to go up.

We also have recent indication that costs are going to go down, and I think we want to take a real good look at the whole thing to see where they go. And I'm of that view, and that's what I would recommend to the Hydro board. Mr. McFadyen: I guess it just seems really unusual that for every other project there's an annual adjustment even for much smaller projects, but for this project, for some reason it started off at 2.247.8 billion in 2007. The very same number was reprinted in 2008.

The very same number was reprinted again in 2009, and I think what you're saying is that the very same number is going to be reprinted again in 2010, even with all of the work that's been done to this date. I wonder if you can just explain how it is that we've got this very unusual circumstance of the biggest capital project at Hydro having the identical estimate four years in a ro w when the estimates for every other project are changing on an annual basis. Mr. Brennan: I thought I did.

I thought the answer was–and it's the same thing I'll recommend to the Hydro board–is that we do a major review of that estimate to determine whether there should be a change in it or not. And that's what I would recommend happen. And I think there's a good indication that there's some of that major equipment that will be the same or even go down, but we'll have to wait and see. Mr.

McFadyen: Just based on information and advice that you've been provided up until tonight, would your best guess be that the costs of 2.2 billion–the cost of the project will go up or go down from the 2.2 billion by the time all is said and done? Mr. Brennan: It's my indication that there'd be a modest change, if any, to the transmission line itself, and I think we have less knowledge about the conversion equipment. And I think that is what's causing us to really take a good look at just what's involved. Mr.

McFadyen: Just note that, in some other cases, costs have gone down and those have been printed, but for whatever reason the number remains stuck where it was over three years ago in connection with Bipole III, and I wonder if you can just indicate how it is that, if a cost goes down, it seems to get printed, but if there's internal advice that the cost is going to go up, then it gets delayed. Mr. Brennan: I don't think I can agree with your assumption. Mr. McFadyen: Is there a view, then, that the cost of Bipole III is likely, th en, to be less than the 2.247 billion that's already been estimated? Mr.

Brennan: I don't think I'm comfortable in saying that. Mr. McFadyen: What will the timing be of the revised estimate for Bipole III, then, if you're not going to revise the number in 2010? When would be the next public revision to that number taking place after this review takes place? Mr. Brennan: I think we'd want one for the filing of the environmental impact analysis, which is a year away. Mr. McFadyen: So you're saying perhaps late October of 2011, then, by the time a new number comes out?

154 LEGISLATIVE ASSEMBLY OF MANITOBA October 25, 2010 Mr. Brennan: I think we're proposing the

schedule provides a June of 2011 date, but so I think we might have to get something approved prior to the IFF process if we want to file a good estimate with the environmental impact statement. Mr. McFadyen: So just then to confirm what you're saying is that the re-estimated number and the review that you're talking about will be complete and made public by June of 2011. Mr. Brennan: That's my best guess at this point. Mr.

McFadyen: The discussion which took place internally after numbers were presented to you, I just wonder if you can indicate whether you provided any advice directly to the minister with respect to the revised internal estimates. Mr. Brennan: No, I don't think I did. I did talk to the chairman and about what I'd like to do in terms of a review, and he said, take that to the–we'll take that to the Hydro board and get a discussion with the Hydro board and then decide how we're going to proceed. Mr.

McFadyen: I wonder if I can just then direct the question to the chairman and ask whether he has briefed the minister with respect to any revised estimates for this project over the past period of time. Mr. Schroeder: No, I have not. There isn't a revised estimate. As I understand it, there's a process starting to review, to make sure that when the review is done, that there will be a number that we can live with. So there is nothing–there is no number to discuss with anyone. Mr.

McFadyen: Well, Hydro goes through an annual review of its capital expenditures, and that relates to all of its projects, including Bipole III. And those revised estimates make their way up to the vice-presidents who then bring them forward, and I'm just wondering, Mr. Schroeder, if you're indicating that no such number has been presented, then, in connection with Bipole III, any movement away from the $2.247-billion estimate. * (20:50) Mr.

Schroeder: As I understand it, the 2.247 billion is what is currently being recommended and there is a review to ensure, based on further knowledge in terms of the equipment bidding and purchasing, whether that number needs to be adjusted, and that review will take place over the next year, and, presumably, as Mr. Brennan has indicated, we'll be in a position to deal with that some time next summer. Mr. McFadyen: I certainly underst and that there's a new review process that's been initiated, but the question is whether there's already been a review done and a number presented. Mr.

Schroeder: There has not been a number presented. I thought I'd made that clear earlier. Mr. McFadyen: And to be clear, you're saying there has not been a number formally presented to the board. Has there been a number that's been brought forward and discussed informally that precipitated the request for a second review of the estimate? Mr. Schroeder: I have heard no changed number from the 2.247 billion. There have been suggestions that, as Mr.

Brennan has indicated, that the expectation currently is that the transmission line will be somewhere around what was originally estimated, and the area wher e there is concern–and he has indicated to me that it could be upward or downward–is in the area of the switching stations and the equipment, the cost of that. Mr. McFadyen: And so from what you're saying, then, you have had numbers presented, then, in connection with the line and the converter stations. Mr. Schroeder: I don't know in how many different ways I can say there have been no numbers presented. Mr.

McFadyen: I appreciate that there are some distinctions here. I just want to ask whether informally–just one more time–informally has there been a revised estimate for Bipole III discussed with you, Mr. Schroeder? Mr. Schroeder: There have been no changes. There have been no numbers that I can recall discussed with me. There have been indications that the transmission line itself is roughly on target and that there are concerns abou t the switching station equipment both up and down, both upwards and downwards. I don't have–have not been given a number. Mr.

McFadyen: Now, when you say concerns about both upward and downward, why would you have a concern about a downward movement in the cost of the conversion equipment? Mr. Schroeder: Well, we would like to record the accurate number when it has been determined.

October 25, 2010 LEGISLATIVE ASSEMBLY OF MANITOBA 155 Mr. McFadyen: I wonder if you would be prepared to give permission to the relevant vice-presidents to address the issue of the current cost estimates on this project. Mr. Schroeder: We have a process in place and I think it's an appropriate process. I'm not prepared to, just at 9 o'clock one Monday evening, decide to change the manner in which the Hydro-Electric Board governs Manitoba Hydro. Mr. McFadyen: Can I just ask whether–if Mr. Tymofichuk and Mr.

Adams were here tonight, they would say we have absolute confidence that the 2.247-billion estimate is accurate as of today. Mr. Schroeder: I suppose if they were completely confident, we wouldn't be doing a review. I'm not suggesting that they're confident in the specific numbers right now. Mr. McFadyen: Can I just ask if those vice- presidents were here, what would they say about their current view as to what the cost of this project is going to be? Mr. Chairperson: Mr. McFadyen, could I ask you to rephrase that please.

You're putting it into the hypothetical context and you know our rules with respect to that issue. Mr. McFadyen: Okay, what is the view of Mr. Adams and Mr. Tymofichuk with respect to the current estimate of the cost of Bipole III? Mr. Schroeder: Yes, their views are passed on to the CEO, and you're hearing them here. Mr. McFadyen: Now, just to Mr. Brennan, if you can just indicate what's the current view of Mr. Tymofichuk and Mr. Adams with respect to the current cost of the Bipole III project in terms of the estimates? Mr.

Brennan: As far as I know, they were part of the discussion we had on doing the review to confirm the estimate and as far as I know, they think that's the appropriate vehicle to use. I don't know otherwise in any event, Mr. McFadyen. Mr. McFadyen: And I don't doubt that they would support a direction to do further review of the numbe

Document details

Collection	Manitoba — Debates (Hansard)
Citation	39-4-cc5
Type	hansard
Volume / chapter	39th 4th hansardpdf cc5.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	2706e2f8604ba5b8c5b50ca9e458c22d9d0e08ca

Source file is stored in the law ingest library (pdf).