1982 Legislative Session: 4th Session, 32nd Parliament

Hansard

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

( Hansard )

FRIDAY, MAY 21, 1982

Morning Sitting

[ Page

7737 ]

CONTENTS

Routine Proceedings

Commercial Appeals Commission Act (Bill 43). Hon. Mr. Hyndman

Introduction and first reading –– 7737

Geothermal Resources Act (Bill 5). Committee stage. (Hon. Mr. McClelland)

section 5 as amended — 7737

Mr. Skelly

Report –– 7738

Transpo 86 Corporation Amendment Act, 1982 (Bill 45). Committee stage.

(Hon. Mr. Hyndman)

section 7 –– 7738

Mrs. Dailly

Mr. Nicolson

Third reading –– 7738

Hydro and Power Authority Amendment Act, 1982 (Bill 40). Committee stage.

(Hon. Mr. McClelland)

Section 1 –– 7739

Mr. Lockstead

Mr. Skelly

Mr. King

section 2 –– 7741

Mr. King

Mrs. Dailly

Mr. Hanson

Mr. Skelly

Mr. Mussallem

Mr. Mitchell

Appendix –– 7755

FRIDAY, MAY 21, 1982

The House met at 10 a.m.

Prayers.

HON. MR. GARDOM: I know all members

would like to pay official recognition to our legislative interns, as

this is the last day of their caucus assignments and the final week of

their program. They are going to tour the federal Houses of Parliament,

heading to the wilds and uncertainties of central Canada from the

peace, calm and tranquillity of this Legislative Assembly. I know all

members would like to thank them for the time they have been here and

wish them good fortune in the future.

I would like to

introduce them, if I may: David Burgess, Jane Friesen, Cliff Hewitt,

Catherine Holt, Mary Macdonald, Iain MacVay, Lawrence Pillon, Peter

Seidl, Carla Wilson and Murray Wolf.

MR. HOWARD: We

too want to be very closely associated with those words of appreciation

to the parliamentary interns. We had the extreme pleasure this morning

of meeting with the interns who were assigned to our caucus, and heard

from them some thoughtful ideas as to how the parliamentary internship

program can be improved in the future. We will be taking those thoughts

and passing them on to Your Honour. We want to wish the interns every

success in their venture into the House of Commons in Ottawa and hope

they are not overly influenced by some of the shenanigans that go on

there.

MR. BARRETT: I want to add a couple of

comments in terms of the interns' experience. This is one of the rare

times in our Legislature when we have unanimity about a program. In

that regard, I would like to offer to you, Mr. Speaker, an attitude

that I think prevails in this chamber. For a few more dollars we might

get a better bang out of our buck, so to speak. The interns did not

have the opportunity budgetwise to travel to constituencies. Perhaps it

would be worthwhile to express this — and I don't know if other members

of the House feel contrary to this opinion — but with a very small

addition to your budget that I don't think would have difficulty

passing in this House, we might broaden the experience of the interns

who follow this group.

I just add those words, Mr. Speaker,

knowing that no member would oppose additional budget for the interns'

travel. I want to thank the interns, Mr. Speaker.

MR. SPEAKER: It's a good suggestion. Perhaps it could be referred to the appropriate committee for consideration.

HON. MR. SMITH:

Mr. Speaker, I'd like to introduce to the House today a group of 25

exchange students from Quebec who are visiting Mount Douglas Secondary

School. It has been a reciprocal visit. They're here with their

teacher, Mrs. Carol Beatty. I would ask the House to make them welcome.

Introduction of Bills

COMMERCIAL APPEALS COMMISSION ACT

Hon. Mr. Hyndman presented a message from His Honour the Lieutenant-Governor: a bill intituled Commercial Appeals Commission Act.

Bill

43 introduced, read a first time, and ordered to be placed on orders of

the day for second reading at the next sitting of the House after today.

HON. MR. GARDOM: I ask leave to proceed to public bills and orders, Mr. Speaker.

Leave granted.

HON. MR. GARDOM: Committee on Bill 5, Mr. Speaker.

GEOTHERMAL RESOURCES ACT

The House in committee on Bill 5; Mr. Davidson in the chair.

Sections 1 to 3 inclusive approved.

section 4.

HON. MR. McCLELLAND: I move the amendment standing under my name on the order paper. [See appendix.]

Amendment approved.

Section 4 as amended approved.

section 5.

HON. MR. McCLELLAND: I move the amendment standing under my name on the order paper. [See appendix, ]

Amendment approved.

section 5 as amended.

MR. SKELLY:

I wonder if the minister would explain how many properties are

currently under development in B.C. for geothermal energy purposes.

HON. MR. McCLELLAND: One, Mr. Chairman.

MR. SKELLY: Is it the intention of the government that B.C. Hydro will continue to develop that particular property?

HON. MR. McCLELLAND: Yes, Mr. Chairman.

Section 5 as amended approved.

Sections 6 to 12 inclusive approved.

section 13.

HON. MR. McCLELLAND: I move the amendment standing under my name on the order paper. [See appendix.]

[ Page 7738 ]

Amendment approved.

Section 13 as amended approved.

Sections 14 to 24 inclusive approved.

section 25.

HON. MR. McCLELLAND: I move the amendment standing under my name on the order paper. [See appendix.]

Amendment approved.

Section 25 as amended approved.

Sections 26 and 27 approved.

Title approved.

HON. MR. McCLELLAND: Mr. Chairman, I move the committee rise and report the bill complete with amendments.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 5, Geothermal Resources Act, reported complete

with amendments to be considered at the next sitting of the House after

today.

HON. MR. GARDOM: Mr. Speaker, I call committee on Bill 45.

TRANSPO 86 CORPORATION

AMENDMENT ACT, 1982

The House in committee on Bill 45; Mr. Davidson in the chair.

Sections 1 to 6 inclusive approved.

section 7.

MRS. DAILLY: I would like to ask the minister if he

could tell the House how the directors were selected. Perhaps it's my

ignorance, and it's been in the paper, but I wonder if you could tell

us the makeup of your board.

HON. MR. HYNDMAN: Mr.

Chairman, perhaps I can outline the existing structure and then the

reason for the amendment. I think that would answer the member's

question. Presently, under the existing legislation, provision is made

for a board of 13, of which two are to be nominated by the federal

government and three by the city of Vancouver. The amendment provides

for an increase in the maximum size of the board by two up to 15, and

deletes reference to the specific nominations of necessarily two and

three from the federal and municipal governments respectively.

outlined the reason for that yesterday and I'll just review it again.

As a result of the reorganization of Expo, there will now be two

portions to the Expo site. The provincial government will have total

jurisdiction over that portion of Expo taking place within the B.C.

Place site. The federal government will have complete jurisdiction over

the second portion of the Expo site, to be at Pier B-C, and the new

ALRT line will link the two. Senator Jack Austin, the minister

responsible from the federal government, has not yet released details

of the structure and composition of the senior management and board of

the federal Crown corporation which will manage, supervise and plan the

federal portion of the Expo site. My general understanding is that the

federal intention is to have federal, provincial and civic

representation, but until we know that, we would like the flexibility

to not necessarily be wed to a minimum of two and three from the

federal govern ment and the city.

I would reconfirm that, in

any event, with respect to the city of Vancouver the existing level of

representation of three will certainly be continued. Presently the two

members from the city of Vancouver, Mr. Don Hamilton and Mrs. Alison

Robinson, have been continuing under the new situation, as they have in

the past, at regular meetings. There is a third vacancy because of the

untimely passing of Mr. Douglas Sutcliffe, who had been a city of

Vancouver nominee, and we're awaiting a suggestion from the city of

Vancouver. But I can assure the member that we want the city of

Vancouver participation to continue at its present level at least.

Also, 1986 is the centenary of the city of Vancouver. We're very

enthusiastic about the participation we've had from city

representatives; of course, it's vital to the success of Expo.

MR. NICOLSON:

I'd just like to say thank goodness the government has returned to the

practice of setting limits on boards of directors. An increase from 13

to 15 has been asked for; it is spelled out in the legislation. Unlike

ICBC, unlike a whole bunch of other boards, unlike the number who can

be in cabinet, which is left totally open-ended.... I would recommend a

return to this practice in this particular piece of legislation.

Sections 7 to 13 inclusive approved.

Tital approved.

HON. MR. HYNDMAN: Mr. Chairman, I move that the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 45, Transpo 86 Corporation Amendment Act, 1982, reported complete without amendment, read a third time and passed.

HON. MR. GARDOM: Committee on Bill 40, Mr. Speaker.

HYDRO AND POWER AUTHORITY

AMENDMENT ACT, 1982

The House in committee on Bill 40; Mr. Davidson in the chair.

section 1.

[ Page

7739 ]

MR. LOCKSTEAD: Mr. Chairman, I have a couple of questions for the minister relating basically to projects currently underway or proposed.

HON. MR. McCLELLAND: I thought you were going to ask me out in the hall.

MR. LOCKSTEAD:

Yes, I was going to ask the minister these questions in the hall to

save getting them on the record, but I thought my constituents might be

interested in some of these answers, so we had best do it in here.

have a few preliminary remarks here before I ask specific questions.

Every year this bill for Hydro borrowing comes before this Legislature;

every year the amount of money increases greatly. We're not talking

millions or hundreds of millions of dollars; we're now talking billions

of dollars. That's a lot of money when you consider that you've

probably got the shirt from my tail right now.

Here we are

discussing billions and billions of dollars of taxpayers' money and we

want to know that this money is being well spent. We're paying interest

on these funds and we're mortgaging the future generations to repay

these horrendous debts. The indications are that in some cases the

moneys are not being well spent, Mr. Chairman.

Interjection.

MR. LOCKSTEAD:

My colleague points out that I'm probably a bit out of order here and

should be discussing this in the second

section of this two-section

bill, but let's do the whole thing in one fell swoop. That will save a

lot of fooling around.

I did want to point out to the

committee, Mr. Chairman, that if the government's plans for Hydro are

approved, power rates will triple over the next decade, and the

guaranteed debt of the authority will increase from $5.3 billion to $24

billion — about $10,000 for each and every British Columbian. Site C

alone will cost $2.64 billion, and you can bet your boots that if that

project proceeds there will be cost overruns on that project as well.

This will increase Hydro's debt by almost 50 percent, necessitating a

sharp increase in rates. We're aware that Hydro has indicated that

they're going to once again ask for horrendous rate increases.

Yesterday

someone facetiously said out in the hall: "Perhaps we should give the

whole province of British Columbia to Hydro and we'll take over Hydro.

We'd be better off as taxpayers." I'm not sure that that makes sense —

I don't think it does, actually. But in any event, there is no

question, Mr. Chairman, that Hydro does wield a great deal of influence

with this government, and I don't know why. Are the treasury benches

afraid of Mr. Bonner for some reason? Whatever Hydro wants, Hydro gets,

and I don't understand it. I would think that Hydro has grown to such

proportions that it must be controlled by treasury benches. In my view,

Hydro is out of control.

I'm aware that we have the Utilities Commission and these so-called safeguards.

Nonetheless, if Hydro wants to proceed with projects which may not be necessary

or required.... This brings me to the Cheekye-Dunsmuir transmission line,

for which construction is well underway. I have a couple of specific questions

on that project for the minister. What are the overruns to date? How much will

we have to borrow? This is the appropriate place to discuss this borrowing,

because moneys are being borrowed to complete that particular project. I'm not

satisfied, Mr. Chairman, that that project was necessary in the first place.

It may well have been. Had B.C. Hydro and the government done its homework,

we may have found that the extra energy required by Vancouver Island could have

been supplied through a natural gas pipeline. That may have been quite possible.

The government is now looking at calling hearings on a natural gas pipeline

to Vancouver Island, and I might ask the minister if he has a date when terms

of reference will be given to the Utilities Commission so that hearings can

get underway. There is a great deal of anxiety in my riding, particularly in

the community of Powell River. Many people there are hoping that the commission

hearings will get underway and that the recommendations coming out of those

particular hearings will favour the northern route. That remains to be seen.

Personally, I want to look at the economic impact, when these figures become

available to the Utilities Commission, and the environmental impact of these

proposed projects. They should be getting underway. I don't know why the

government is stalling and waffling.

You

will recall, Mr. Chairman, that for well over a year in this House the

minister said there was no question about it: Hydro was going to build

that natural gas line. There will be no hearings; the issue was

settled, and that was the end of it. That would cost somewhere in the

neighbourhood of — I am going from memory here — $130 million for Hydro

to complete the project. Maybe it was $230 million. I don't recall the

figures, but what I do know is that the minister suddenly changed his

mind. To this day we don't know why, but we do know that the figure

that was used at the time by the government, Hydro and the minister was

not correct. We pointed that out to the minister at the time, and he

disagreed with us. Now we do know that the eventual cost of that

proposed pipeline will be considerably above the figures used in this

House at that time. Maybe the minister can explain now why he did

change his mind and why, if and when we are going to hearings. Perhaps

he could give us some estimate of how much money is going to have to be

borrowed for this particular project.

In terms of

Cheekye-Dunsmuir, just to get back.... I know the minister is making

notes and listening. I did ask what the cost of overruns to date are on

that project, what the anticipated cost of overruns will be on that

particular project and whether the project is on time. The completion

date, I think, was somewhere early in 1984. I would like the minister

to tell me if the project is on time. Just for your information, Mr.

Chairman, the original estimate of the cost of the Cheekye-Dunsmuir

line was some $350 million. That was a couple of years ago. Then, in a

secret memo which somehow found its way over to our office, an internal

Hydro document said that the cost of the transmission line would be

about $700 million, but: "Don't make that figure public because we

don't want to upset people." Do you remember that? My colleague here

raised the issue in the House at that time. That was about a year and a

half ago.

MR. SKELLY: 1972.

MR. LOCKSTEAD:

No, it was later than that. In any event, we now know that the

Cheekye-Dunsmuir transmission line is going to cost in excess of $1

billion. I predicted about a year and a half ago that when the final

costs for that project — we are able to get those costs in about 1985 —

are in, the cost to the taxpayers of this project will be $1.8

[ Page 7740 ]

billion.

Our research indicates the final cost in that project with overruns,

inflation and construction problems will be $1.8 billion. That is a

figure the minister can't prove or disprove, and neither can I at this

time, but we'll see. I'm on the record as saying that that project will

cost $1.8 billion by the time it is completed. We will see what

happens, if we're all still around here.

MR. KING: We'll be here. We'll be over there.

MR. LOCKSTEAD: Yes, we'll be here, but I don't know if you guys will be.

While

I have the floor I want to ask the minister about another project which

will require large amounts of borrowing. This particular proposed

project which I am about to ask the minister a few questions on will

cost, in 1982 dollars, approximately $8 billion when it is completed,

some eight or nine years down the road. There are the preliminary

engineering studies which are now taking place on the Homathko River,

which rises in the interior and flows into Bute Inlet in my riding.

Hydro is currently proposing that four particular dams.... This is

public knowledge; Hydro has put out a press release on this particular

item.

Interjections.

MR. LOCKSTEAD: I want the minister to hear this. We're talking about $8 billion here, possibly.

The

project is the Homathko River project: the proposed diversion of rivers

mostly in the Chilcotin country. If the project proceeds it will be

completed eight or nine years down the road, after hearings and all the

things are held. As I said before, basic engineering studies are now

underway. I'm informed by Hydro that test drilling will continue this

summer on that project. I know the project is only in the basic

engineering stage. I doubt if the board of directors of Hydro have had

the opportunity to discuss the merits of this particular project.

There

are environmental considerations. The Homathko River is a major

fish-spawning ground, for starters. It's a very beautiful valley that

will be flooded, of course. But what we're talking about here is a

proposed project which will equal — if the total project proceeds with

its present engineering concept — the amount of energy that would be

put out by the Site C dam, whatever that is; I forget the numbers and

don't have them in front of me. It's a monster project.

What

worries me about these proposals is that Hydro, in spite of the fact

that the demand for electricity and energy has dropped in this province

and is flattening out because of the economy.... Much of the current

economic problem was brought about by this present government. Hydro

has so much energy that they're selling it to the United States at

pretty cheap rates.

AN HON. MEMBER: They want the darkness to shine in.

MR. LOCKSTEAD: Let the dark shine in. That's the view of the government. That's a good slogan for that party.

question the need. I don't question Hydro's need to look at all of

these projects. What concerns me is that once Hydro starts looking at a

project, and has received and made up these monstrous briefs, they

usually decide to proceed with them come hell or high water. They go

ahead blindly, whether the energy is required or not, at a cost of

billions — not millions — of dollars to the taxpayers of this province.

With his Homathko project, I have that sinking feeling that once the

engineering studies are done, the board of directors of Hydro will sit

around and say: "Well, what's $8 billion? We might need the energy.

What are a few fish? What are a few valleys? We'll just go ahead and

build the darn thing. We won't be around to have to pay back that money

anyway." That is a real concern of mine.

With those few remarks, perhaps the minister could respond.

HON. MR. McCLELLAND:

I'll just respond very briefly to some of the questions the member

raised. I haven't got the up-to-date total figure on Cheekye-Dunsmuir

today. If the member would like to drop me a note, I'll get it for him

as quickly as I can. In the borrowing that we're discussing now, there

is some $232 million designated to the mainland–Vancouver Island

interconnection.

I wish to comment about whatever Hydro

wants, Hydro gets. That's been true to a large degree, but a couple of

significant things have happened. We have now put Hydro under

regulation of the B.C. Utilities Commission. Yesterday I said that I

don't think there's another Crown corporation in Canada that's under

that kind of regulation.

MR. SKELLY: Have you checked that one out yet?

HON. MR. McCLELLAND: Yes, I'll check that out.

MR. SKELLY: What about Newfoundland?

HON. MR. McCLELLAND: I don't know about Newfoundland. I'll check Newfoundland. I would doubt it, though.

MR. SKELLY: They're way ahead of you.

HON. MR. McCLELLAND: I would doubt that very much. They're a half-hour behind.

You'll

recall that the commission just recently ordered Hydro to improve its

efficiency and cut its operating expenditures by 5 percent. Hydro, at

first reluctantly but then more cooperatively, managed to cut its

expenses by over 9 percent, and that's reflected in some of the

borrowings that we're talking about here today as well.

The

other thing, of course, that's happened is that Hydro now has a real

board of directors, which represents the various regions of this

province. Mr. Chairman, you'll recall that in the last few days some

very serious rethinking by Hydro of some of its major projects has

taken place, and as a result, some of them have been put back a bit and

are being rethought. That is, I believe, a direct result of the board

of directors of B.C. Hydro questioning some of the operations of B.C.

Hydro. That's very healthy and I hope it continues. I believe it will

continue. Coupled with the board of directors having active

responsibility for management of Hydro is the opportunity for real rate

regulation and regulation of the systems as a result of that rate

regulation. I believe that Hydro is going to be more accountable to the

people than ever before. I think that's very healthy as well.

The

member asked why I changed my mind on the natural gas pipeline. Well, I

took a second look because of some of the things you said and some of

the things the people in one of

[ Page

7741 ]

your communities, Powell River, said. And we said:

"Okay, if the communities want that public hearing that badly, we'll

have that public hearing." It has not taken place, and when I announced

it, I said it would probably be spring or summer before we could get to

the hearings, simply because the Utilities Commission, in its infancy,

hasn't got the physical capabilities to have that hearing earlier. I've

said that we've put out the call for proposals. That ends June 15, and

it's my hope that I will have both the terms of reference and a panel,

however that panel will be composed, done and announced by June 15. So

that's our deadline now, and I hope to be able to make it.

Mr.

Chairman, I think that was pretty well all the questions the member

had, and I hope I've been able to help him out a little bit, anyway.

MR. LOCKSTEAD:

I was going to get up, Mr. Chairman, but the minister answered my

question with his last remark. I wanted a time-frame for the public

hearings on the proposed natural gas line to Vancouver Island.

might ask the minister how many companies have submitted briefs to date

— the submissions that you've asked for — on the proposed natural gas

line to Vancouver Island, and what companies are they?

HON. MR. McCLELLAND:

Mr. Chairman, I'm not sure. I'll find out this morning and let you know

either in this debate, if it goes on, or in my estimates.

MR. KING:

Mr. Chairman, I have a brief question on

section 1. The general purpose

of the bill is to increase Hydro's borrowing power very significantly.

But as I understand this section, payments for leases by B.C. Hydro

will be guaranteed by the province out of general revenue. That is

totally unrelated to the increased borrowing power provided for in

section 2. So, in effect, what we have here, as I understand it, is at

least the potential for virtually unlimited guarantees of debt to B.C.

Hydro. Why is there not some limitation placed on

section 1 — the

amount of money that B.C. Hydro may receive through general revenue for

leases? Perhaps when the minister is responding, he could also indicate

what kinds of leases this refers to. Are they leases on lands and

resources or would they include, as an example, leases from

construction companies, related to major dam construction and so on? If

so, one can see that the guarantee could indeed be a very substantial

one. Can the minister respond to those questions?

HON. MR. McCLELLAND: Mr. Chairman. I haven't got a list of what

those leases might cover, but you will notice that the guarantee cannot be given,

first of all, without the approval of the Lieutenant-Governor-in-Council. The

member may not accept that that's a limitation, but I believe that it

is — that the government has the opportunity to, first of all, review what those

leases would be before the guarantees are given. I would expect that it would

allow Hydro to include in its prospectuses, for instance, in going to the borrowing

markets, some of the assets which, in effect, it has under long-term lease,

but which it is now precluded from including because there is no guarantee by

the provincial government on them. If the member would like a list of any leases

which now or in the future may be affected by that or will be asked for, I can

certainly get that for him. Again, I give him the commitment that I'll do

it during debate here or in my estimates, whichever he wishes. I believe it's

a matter of adding to assets, in terms of prospectuses and in other Hydro operations,

things which it can't add at the present time.

MR. KING:

I appreciate the minister's response. If it is indeed for leases on

potential sites for energy production, I appreciate that. No, I'm not

interested in having that particular information. What I would much

rather have from the minister is his undertaking that this authority

will not be extended to leases relating to construction companies who

may lease equipment or that type of thing for contracts relating to the

construction of dams.

HON. MR. McCLELLAND: I have no hesitation in giving that commitment. I wouldn't want to see the government get involved in that kind of guarantee.

Section 1 approved.

Section 2.

MR. KING:

Mr. Chairman, on

section 2 I'm going to be very brief. I indicated some

of the concerns I have in second reading. The increase in borrowing

authority here permitted to Hydro, from $7.2 billion to $8.3 billion,

is a really staggering amount. A lot of the major construction projects

have taken place in my particular area of the province, and one of the

concerns I have relates to perhaps inadequate supervision or overall

management of dam construction programs. These are enormous projects.

The amount of equipment and materials used for projects like the Mica

Dam, the Revelstoke Canyon Dam and very similar projects in the north

boggles the mind. I haven't got proof, but I have heard some horror

stories from people on site with respect to waste that goes on in those

projects. For example, relating to the Mica Dam, there are people from

the work force and some supervisory staff who tell me that they could

show the government where there are massive amounts of structural steel

buried — never utilized — lumber, forms and things of that nature, in

addition to equipment, buried out in the wilderness, for whatever

reason — I presume because there was a profit there to someone. I don't

know who's responsible, and I can't say, nor do I suggest that there's

some major wrongdoing here.

The frequency with which I as

the local MLA receive these kinds of stories would certainly indicate

to me that there's probably a need for some better overall scrutiny of

those massive projects to ensure that the cost overruns are not related

to waste, not related to sloppy or inadequate overall management.

Usually these projects are broken up into a number of different

managerial responsibilities, and I don't want to cast aspersions on any

particular person related to the dam, because I think in the main they

do a very good job. They seem to proceed with construction and make

great progress and pretty well stay on stream in terms of the

schedule

for construction, But it does concern me, and I think it would concern

the government, when there is the suggestion of pretty massive waste.

What we see on virtually every one of these major construction projects

are alarming cost overruns. That's become a hallmark of all major

construction projects over the last 10 or 15 years.

With

respect to the Revelstoke Canyon Dam, which is very close to my own

doorstep, I'm aware that there were major problems relating to the rock

work, finding adequate and appropriate footings for that construction

project. I know

[ Page 7742 ]

that

there are major cost overruns related to the difficulty they had in

finding a solid foundation for that dam project. There are enough

vagaries in construction projects of that kind without incurring more

costs through inadequate supervision, through wastage of supplies and

so on. I wonder if the minister has talked to Hydro about some method

of more appropriately monitoring and supervising the total project. I

want to say to the minister, if I have his attention, that it's not

necessarily Hydro per se that might be responsible for the wastage

involved. As he knows, a variety of major contractors and

subcontractors are involved. Certainly, in my view, there's a need for

stronger overall supervision of the performance of all those

contractors; if there is wastage, I suspect that's where a lot of it

takes place. I'm making that suggestion to the minister.

final question related to this

section is: what specifically requires

this increased borrowing power of $1.1 billion at this point in time?

Is that related to the capital costs of specific projects now underway,

or is some of that increased borrowing authority in anticipation of new

capital-cost projects? I'd appreciate having the minister's reply,

particularly his feelings with respect to the first issue I raised

about wastage.

HON. MR. McCLELLAND: I appreciate the member's questions and his concern.

don't want to sound like I'm belabouring this, but there is a board of

directors now in place at Hydro. I can tell you that in the short time

they've been in place they have worried over this matter of

construction overruns, efficiency and management at practically every

meeting. It's a big concern to us. I don't know whether the kind of

wastage is going on that the member points out — as he doesn't know —

but we would like to find out. I guess one of the problems is that if

some things have been happening, by the time the member brings it up

here it's probably too late for anything to be done. I understand

people's reluctance to come to the government and say such-and-such is

happening. It would be helpful if when an MLA gets that kind of

information he does bring it to the government. It's the people's money

that's involved here, and it should be looked at as quickly as possible.

there is a reluctance to come to, say, a government minister or a

government member or someone like that, I think the board of directors

as well could play a part here. That's why we try to choose directors

from all over the province. If a person has a problem or if he sees

some of these so-called horrors going on and he doesn't want to come to

the government or to an MLA, then he should go to a member of the board

of directors from his area. They're also interested in the people's

money. Maybe that's partly a way out.

But we are worried

about that. When you get into the kind of project that you described

that costs a couple of billion dollars, you know, it's worse than

trying to run the government, in trying to keep a handle on everything

that's happening. It would be very helpful if all the MLAs could help

us when they hear about those things. I like it's being mentioned here,

the same as everybody else, but it would be better if we could get at

it right away when we first hear stories like that.

There

have been some serious problems at Revelstoke, as the member pointed

out, with rock work and other things; the cement strike and all those

things that put back the project have been very difficult. But I hope

we can bring a better degree of supervision to that whole area.

The

question was asked: "What is this money for? Is it for projects today

or is it in anticipation?" The answer to that is: it's a little bit of

both.

I could quickly run over some of the major items, if

you like, Mr. Member. On the electric side, during this fiscal year

about $451 million will be spent on Revelstoke. I mentioned earlier to

the member for Mackenzie (Mr. Lockstead) that about $230 million will

be spent this year on the connection from the mainland to Vancouver

Island. About $40 million to $50 million is being spent on the further

development of Murphy Creek, Site C. Of course, Hat Creek has been

slowed down a bit; there will still be some development money, but not

very much, spent on that. Future energy studies are still being held on

the Homathko River, which the member for Mackenzie mentioned; about $6

million is being spent there. We're spending a couple of million on

developing a pressurized-fluidized, bed-combustion development, because

we think that's the answer. If we're ever going to get into thermal

development, that's the cleanest and best way to go. In this fiscal

year about $20 million is being spent on geothermal studies, and

another few million will be spent on other development studies. On the

gas service side, in this fiscal year we will be spending about $67

million; I would say it is evenly split between future and present

projects. About $12 million will be spent on upgrading the railway

service. Basically that $1.176 billion is actual expenditure in the

present fiscal year.

MR. KING: Certainly, if I ever

received any hard data relating to the kind of wastage that I've heard

about, there would be no reluctance on my part to contact the minister

and B.C. Hydro personally. What has happened, of course, is that I hear

after the fact about these things. They are allegations pertaining to

structural steel and that type of thing, which may be three, four or

six feet under the ground — indeed, under the reservoir now. So it is

very difficult to determine whether it is a valid thing; whether it is

the truth or simply someone's pipe dream. The main reason I raise it

here is in the hope of getting a bit stricter supervision, monitoring

to make sure that that just cannot happen.

I appreciate the

minister's information on the direction of the payments for the

projects involved. One final thing: could the minister tell me whether

or not any moneys are included in this appropriation relating to the

Kootenay diversion, or is that inoperative at the present time? I would

appreciate some indication on that.

HON. MR. McCLELLAND: It isn't in my list of projects. I will make a further check on it, though, and bring an answer back to the member.

MRS. DAILLY:

The member for Shuswap-Revelstoke was discussing the need for more

scrutiny on large projects. As we are debating here the passage of a

bill which authorizes another $1.1 billion to be paid out under this

clause to B.C. Hydro, I would like to express my concern with the need

for scrutiny of some little things. As we know, the taxpayer is

sometimes most concerned when it is pointed out that there appears to

be considerable waste under a Crown corporation.

It was

pointed out in the morning news — and I have the clipping in front of

me so that I can bring it to the minister's attention as quickly as I

can — that yesterday a former employee of B.C. Hydro came before the

B.C. Utilities Commission as a witness. When I talk about waste of

public

[ Page

7743 ]

money, maybe it is in small degrees, but that is

really what concerns the taxpayer. Here we are authorizing the

borrowing of $1 billion, yet we hear of stories like this one — and I

make my point briefly; I just want the minister to be aware of this,

since he is on the board of directors, I believe. This man particularly

mentioned that he thinks Hydro should exercise control over what

appears to be, according to his experiences working with Hydro for many

years, extreme waste in the administration of the utility. He went

through a number of utterly ridiculous examples and I will give one

here briefly. As site chief in 1979 and 1980, supervising a $3 million

drilling program on the Meager Creek geothermal project, he said that

he was forced to order a $4 air cleaner through the head office

purchasing department, instead of buying one locally. A man in

Vancouver had to pick it up and put it on the bus; and there was a

minimum freight charge of $10. Another man had to drive from the camp

to get it, and then return. He said the total expense came to $70. We

are talking about $1 billion, but let's face it: that $70, for most

taxpayers who see their Hydro bills going up and relate it to this kind

of waste, is something that really concerns them. As a member of this

House, I am concerned if this kind of ridiculous waste is going on. He

went on to say that he feels many of the things happening show areas

that appear to be out of control in the administration, that show the

feeding at the public trough.

I particularly mention this

because the minister is one in the Social Credit government which swept

to power in 1975 with the cry to the people of British Columbia that

they were going to look after the public's money, that NDP had been so

wasteful. The interesting thing is that since they have been in office

we have seen a lot of these excesses compounded, not decreased.

think the minister has a responsibility, as a member of the board, to

look into what appears to be unnecessary waste in the administration.

I'm bringing this to his attention in the hope that as a member of that

board, he will take it seriously and bring it to their attention.

HON. MR. McCLELLAND:

I'd like to thank the member for her comments. I read the story too,

but fortunately I had an earlier opportunity than its appearance in the

Province . The member will

notice that the person quoted in the paper happens to be one of my

constituents who visits me quite often in my office. He brings concerns

to me and I try, to the best of my ability, to look into those concerns

and have Hydro correct them if there is some substance to them. We've

had several meetings with that particular person.

Again, I

go back to the question of accountability. I believe greater

accountability will happen more and more, given the direction that B.C.

Hydro is going now in terms of the B.C. Utilities Commission and the

board of directors. The reduction in operational costs ordered by the

B.C. Utilities Commission this year has resulted in Hydro's having to

take a really hard look at what it's doing, and maybe for the first

time. I'm not sure about that. I'm sure Hydro's management has been

pretty efficient in the past, but sometimes, unless you get a little

pressure from the outside, you don't do some things that could be done.

I believe that's happening now. I think Hydro, for the size of that

corporation, has done a darned good job for the people of British

Columbia for a lot of years. But that's not to say that things can't be

improved, and I believe they are being improved.

MR. HANSON:

I rise under this

section to indicate to the minister that I will be

opposing this bill. I wish to bring to his attention an injustice in

terms of the rate structure of Hydro, which is one of the aspects that

leads me to vote against this bill.

As he is aware, there is

no natural gas on Vancouver Island. The energy requirements of the

Victoria area are served in part by B.C. Hydro's synthetic gas

division, air butane. That air butane distribution contravenes the

postage stamp principle that applies to the distribution of electrical

power and gas in British Columbia. Victoria is singled out to pay three

and a half to four times more for the same billing unit of energy, of

power, from that gas as do mainland recipients. Someone on the lower

mainland — I'll give you the figures — with access to natural gas, as

of March 31, 1981....

MR. CHAIRMAN: I can appreciate

the concerns the member is putting forward, but the Chair is having

some difficulty in relating the member's present arguments to the bill

before us. I'm not trying to cut the member off, because he may be

making a point before going into this particular aspect, but again,

examples of that nature must be very brief and then we must return to

the principle before us. Clearly, in the Chair's opinion, the matter

that the member is attempting to canvass at this time would be much

better canvassed in the ministerial estimates, which as a matter of

fact are also before the committee.

MR. HANSON: Mr.

Chairman, I appreciate your point. I'm trying to make the argument that

my constituency is not well served within the present borrowing

authority of B.C. Hydro, and that I cannot authorize more borrowing

when my own constituency is discriminated against in terms of the rate

structure of B.C. Hydro. I will be raising in more detail, under the

minister's estimates, this particular question, but the fact is that

the minister is on the board and has the authority over the

administration and expenditure of those funds. Clearly I must be in

order raising my objections to that increased borrowing by the fact

that my own constituency is discriminated against by Hydro's rate

policies at present.

MR. CHAIRMAN: Again, I

appreciate the member's concern. Quite honestly, the course of debate

that the member is currently engaged on must be canvassed in the

ministry estimates, which, although it's beyond the Chair to say when,

we could be into very shortly, even within the next few minutes

possibly. In that case, the entire debate of the member would be very

much in order, but under this particular

section on that particular

argument, the Chair would have to say that that course is not

appropriate under either of the two sections presently before us but

would certainly be appropriate even later this morning under the

minister's overall estimates.

MR. HANSON: Mr.

Chairman, I listened to the debate that preceded mine. There were

specific examples of dams, of other capital expenditures, of operating

expenses of B.C. Hydro that will come within the domain of this clause.

I am raising that particular concern, which is my own constituency's

concern, but it has to do with the expenditures of B.C. Hydro; it has

to do with their policies, with their expenditures of money — the money

that they're going to borrow and use in this system.

[ Page 7744 ]

Mr.

Chairman, your argument fails to convince me. I am in order. The

postage-stamp principle, Mr. Chairman, is a fundamental aspect of B.C.

Hydro's policy:

section 2 funds the borrowing, and no matter where you

live in British Columbia, you're served equally on the electrical grid

and the gas distribution system in terms of the rate policy, with the

exception of the greater Victoria area. The minister is a member of

that board, and I'm trying to bring to his attention that this area is

discriminated against on the basis of the present expenditures. How can

we possibly authorize increased borrowing when this area is not served

fairly at the present time?

Interjection.

MR. HANSON:

I'll tell the Attorney-General through you, Mr. Chairman, what I would

like him to do. I would like him to treat the people of southern

Vancouver Island the same way that citizens in every other part of this

province are served for their energy requirements. No matter where you

live on the mainland, at the end of a long transmission line or at the

end of a long gas pipeline distribution system, you pay the same amount

of money per billing unit, with the exception of Vancouver Island. They

cannot make that conceptual leap to say to themselves that for the gas

that is being burned on Vancouver Island — whether it's natural gas or

synthetic gas — the residents should be paying the same amount per

billing unit as they are in every other part of British Columbia.

Mr.

Chairman, I will be giving this in far greater detail during the

minister's estimates, but I would like to point out to the minister —

and I hope the minister is paying attention, because it's a matter of

great concern to 5,000 residences, including a number of businesses, in

this area — that as of March 31, 1981, residents on the mainland are

paying 25.3 cents per billing unit. In the greater Victoria area it is

74.9, three times the cost per thermal billing unit. B.C. Hydro applied

to the Utilities Commission for a 1982 rate increase, which was granted

on an interim basis and which raised the cost on the mainland for

residents to just under 30 cents per billing unit, and what happened on

Vancouver Island in the greater Victoria area? It was increased to

$1.05 per billing unit — over triple.

Another interim

increase is to come into effect, if the Utilities Commission approves

it, which will raise the cost on the mainland by 2 cents per billing

unit to 31 cents, and the residences in my own riding in Victoria will

be $1.29 — four times the cost for the same amount of energy. How can

the minister possibly expect anyone on Vancouver Island to vote for

increased borrowing for B.C. Hydro when this area is so severely

discriminated against? I would like the minister to give me some kind

of rationale as to how he can possibly defend this particular anomalous

situation when it does not exist anywhere in British Columbia. Even for

electrical power that is provided by diesel generation, where they burn

oil to provide electricity, they pay the same amount of money.

Interjection.

MR. HANSON:

Well, there is a billing formula whereby the rate structure is greater.

However, it's really an industrial compensation. In other words, to get

into the higher rate structure residents would have to use a far

greater amount of power than they would normally use. So for all

intents and purposes it's an identical formula. It's from your own

figures, if you'd like to check your own annual reports.

HON. MR. McCLELLAND: You should write a doctoral thesis on that. You'd confuse the whole world.

MR. HANSON:

I think the minister should be able to understand it. Basically it is

that we pay four times more than you do. Do you understand that? That

is unfair. That is contrary to the policy of B.C. Hydro in its

postage-stamp distribution for electricity and gas. How do you argue

that we have to pay more? Is it just on the basis of the fact that it's

a different kind of gas? That is indefensible. I will go into it in

greater detail in your estimates.

Due to the fact that you

sit as one of those 15 directors on B.C. Hydro, I would like you to

give us the rationale for that second anomalous pricing policy. It

hurts small business here: laundromats, restaurants and hotels. The

B.C. Hydro gas division, rather than anticipating a distribution system

for gas, either through a pipeline or through liquid natural gas or

whatever the ultimate outcome will be, is laying off its gas employees.

There are 60 employees on staff and they are going to lay off 36 of

them. That doesn't look like we're going to have natural gas on

southern Vancouver Island. If we're not going to have natural gas on

southern Vancouver Island, shouldn't it be appropriate that the people

on this island pay the same amount for their synthetic gas as the

people on the mainland do for theirs and allow the whole system to

assume the cost, as is the case for the entire electrical and gas

distribution system for the province? How can you create an anomaly on

southern Vancouver Island? As a director, the minister should be able

to answer that question.

HON. MR. McCLELLAND: The

answer to the question is that the member is wrong. There is no

postage-stamp rate for natural gas in British Columbia. Natural gas

prices are based on the utilities costs of service and they are

different in every part of British Columbia. I would like the member to

go and refresh his knowledge about what a regulated utility is and who

sets the rates for a regulated utility. For the first time in history

B.C. Hydro is now a regulated utility. The decision on the rates for

that utility are not politically set; they are not set by the cabinet

of British Columbia or by anybody else except the Utilities Commission

after due and fair hearings.

[Mr. Strachan in the chair.]

MR. SKELLY:

One of the areas in which Hydro is not regulated, and which we drew to

the attention of the minister when the Utilities Commission Act came

down in this province, was in the area of borrowing money. When they go

into the market to borrow money, the only people who decide how much

and where are the B.C. Hydro board of directors within the limits set

out by the Legislative Assembly. They do not have to go to the

Utilities Commission, and it is my understanding that there is still a

section in the Utilities Commission Act which says that the borrowing

of B.C. Hydro does not come within their jurisdiction.

Under

this

section of the act we are allowing Hydro, in one and a half lines

of a piece of legislation, to borrow one seventh of the total

provincial budget. When the provincial budget expenditures come down we

are given a huge book of estimates that outline in some detail what the

expenditure of that money is going to be and under what categories the

[ Page 7745 ]

money

is going to be expended for travel, ministerial office furniture,

ministerial grants, staff wages, staff travel and that kind of thing.

We are given a detailed breakdown of what that money is going to be

spent for.

Right now under one line in one

section of a very

small act we are being asked to vote to a corporation, which has very

little accountability to this Legislative Assembly, one seventh of the

total provincial budget with about three or four lines in a speech by

the minister yesterday in which he says they are going to be spending

$1.18 billion on projects and they're going to require a $333 million

cushion. Can you imagine what the debate would be if a minister came

into this House under the debate on his estimates and asked this

Legislature to vote him a $333 million cushion? Many ministers approach

that in furniture budgets, travel budgets and bills at Umberto's, etc.

is unbelievable that we would be asked to vote $1.1 billion under this

section with a three-line explanation as to what this money is going to

be spent on and the assurance that Hydro needs a full one-third of it

as a cushion. We have seen in the past two years — to the credit of the

Utilities Commission.... We were a little suspicious about the

Utilities Commission at first, that they might simply be an arm of the

provincial cabinet. Of course, there's still that possibility. We're

still concerned about that possibility.

A great deal of

information has now come before the Utilities Commission, as a result

of their right to regulate B.C. Hydro, that confirms that our

suspicions were correct and proper. We simply cannot accept a

three-line speech by the minister as justification for voting this

corporation $1.1 billion. We would like far more detail as to what this

money is going to be spent on. How much money is going to be spent on

the Stikine project and on the Laird project, both of which have severe

national and international ramifications that have yet to be dealt

with? Yet we're voting money that will continue to be expended on the

Laird and Stikine systems, until we almost reach the point where we've

spent so much money on those projects that it's impossible to turn

back. It will be a waste of the provincial taxpayers' and ratepayers'

money to turn back those projects, even though they have severe

economic and environmental repercussions, not only in this province but

internationally and in other territories of Canada.

We're

concerned. We're asking, in detail, what this money is going to be

spent on. I think it would be irresponsible for members of this

Legislature, regardless of what side of the House they're on, to vote

in favour of this

section without having detailed expenditures spelled

out for them. We don't receive the budgets of B.C. Hydro and Power

Authority in this Legislature. We receive the financial statements, a

little behind the time and late. We don't receive the budget

projections of B.C. Hydro. We don't know which projects are onstream

and projected. We don't know which ones are grossly overrun in terms of

the projected economic costs. We simply don't know that information. We

don't get detailed information from the minister; he asks us to sign a

blank cheque which allows Hydro to borrow another $1.1 billion. We have

a right to question those figures.

When we left office in

1975, B.C. Hydro was roughly $3 billion in debt. In 1980, the debt had

doubled to $6 billion. By the time we finish passing this bill it will

have gone to $9 billion. Hydro's blueprint for the eighties suggests

that they're going to require an extra $17 billion to $20 billion. All

around us, in every other province and nationally, people are

questioning the economic requirements of the energy megaprojects.

Megaprojects are being cancelled all over the country. People are

questioning the economic rationale of whether those projects are going

to provide the needed jobs and energy for this country at a price this

country can afford to pay. Hydro seems to be able to go on and on,

building huger and huger projects, with virtually no limit imposed on

them. As those megaprojects and the economic feasibility and value of

them is being questioned all over Canada and the world, we continue,

through Hydro, to stumble on in our blind way, adhering to the dictums

of the 1950s that bigger energy is better energy, without giving any

concern whatsoever to the damage we cause.

In this case,

thank God for the public utilities commission panel on Site C. The

member for North Peace River (Mr. Brummet) wants to do away with it and

get on with the construction. Thank God that we have some kind of

public review of that dam development. I wish we had the same review

procedure for the Cheekye-Dunsmuir project, which represents a

tremendous waste of public money, as far as the energy requirements of

Vancouver Island are concerned. This is one of the few opportunities we

have to question what expenditures are going to be made out of these

borrowed funds. Over the next few years we are going to be asked to

approve an additional $26 billion in debt for B.C. Hydro.

first question to the minister is this: give us a detailed breakdown of

these projects. Don't simply tell us $1.8 billion is to be spent on

Hydro projects or tell us about the need for a $0.3 billion cushion;

give us a detailed breakdown as to what Hydro's specific requirements

are. How much goes to the Cheekye-Dunsmuir project? How much goes to

Site C? How much goes to the Stikine and Laird? If the minister can

provide those figures across the floor.... I'm sure he has them

somewhere. He could consult his staff and obtain those figures for us,

or we could adjourn the bill until such time as he can get the figures

— within hours, I suspect.

Mr. Chairman, this is probably

not an appropriate time to make an introduction, but it relates to B.C.

Hydro. I'm not asking leave, but I am saying that a few minutes ago I

met with a group of students from Ucluelet Elementary School, grade 5

students under the direction of their teacher, Mr. Richard Lattimer.

One of the things we talked about regarding the village of Ucluelet was

the fact that you can't keep Hydro operating during the winter. Here's

a community of well over 2,000 people. The transmission and transformer

system in the area is constantly breaking down. It is an area of very

rough weather during the winter, but Hydro has pulled its crews from

Ucluelet and Tofino back to Port Alberni, so it takes a long time to

get people out there to repair the system. For a good part of the

winter, Hydro doesn't provide power to Ucluelet, a village of 2,000 to

3,000 people. Those kids asked me: "Well, what about Hydro. If that's

what you're talking about in the House? Why aren't we getting adequate

service in a community like Ucluelet?" Why is Hydro spending billions

of dollars on new dams, selling electricity to the United States, and

people in Ucluelet — British Columbian citizens, who contribute to the

economy and pay their electric bills — aren't getting the proper

service? The system out there is deteriorating. Hydro is neglecting the

system and has even pulled back its maintenance crews.

Why

should I, as a member of the Legislature representing the people of

Alberni and Ucluelet, vote any more money to be spent on projects like

the Stikine and the Laird, when the transmission and the distribution

system on the west coast

[ Page 7746 ]

my riding is being ignored and allowed to deteriorate? That's a

question I'd like to ask the minister on behalf of those grade 5

students who have just visited the Legislature. They did say one thing,

Mr. Chairman: they said it doesn't matter if the power goes out between

9 and 3 on school days, because then they're allowed to go home. But

they are concerned about power the rest of the time, and of course

their parents are concerned about power all the time because the

distribution system in that area provides power for the local logging

operations, log-sorting operations and local businesses. Every time

Hydro goes out, as it does very regularly on the west coast, they have

to wait for a crew to come from Port Alberni — 79 kilometres — to

repair it. It's time away from business, money lost, jobs and wages

lost.

We need a better distribution system, and that's where

our priorities should be, where our money should be spent. But as far

as I can understand, in the minister's breakdown of where this new debt

money is going to be spent, I'm not aware if new money is going into

that distribution system on the west coast of Vancouver Island. That

distribution is totally inadequate.

It would be

irresponsible of members of this Legislature to vote $1.1 billion for a

semi-accountable Crown corporation when we don't know in detail how

that money is going to be spent. Really, the only system of

accountability that this Legislature has, so far as B.C. Hydro is

concerned, is through the Crown corporations committee. As you know,

Mr. Chairman, that committee is dominated by the government party. They

prevent information from coming into this Legislature. We were talking

about accountability previously in this debate, and the minister

boasted about the accountability of Hydro. We must know how Hydro is

performing before we're willing to vote an extra $1.1 billion. That's

why accountability is critical in the debate on this section. As I

said, we do have the Crown corporations committee, but they're not

really accountable to this Legislature. I think the establishment of

that committee was simply an excuse to pay the member for Omineca (Mr.

Kempf) an extra salary so he won't leap across the floor and join the

Western Canada Concept.

MR. CHAIRMAN: Order. Hon. member, that is not appropriate or relevant to the

section before us.

MR. SKELLY:

It is certainly relevant to what's happening in the Legislative

Assembly of B.C. under that government, when private members are being

paid government salaries.

MR. CHAIRMAN: Hon. member,

I regret that that is not relevant. There could be another forum for

that, but it is not in this committee on this section.

MR. SKELLY:

But, Mr. Chairman, they are not being held accountable for those Crown

corporations in this Legislature, and that is one of the problems with

dealing with B.C. Hydro's legislation in the Legislative Assembly. That

committee was simply set up to provide somebody with a salary who might

otherwise turn maverick and leap across the floor somewhere.

MR. CHAIRMAN: Order! Discussion such as that is not relevant to the

section before us.

MR. SKELLY:

Mr. Chairman, somebody has said that Hydro is out of control, and I

think that that's a line of argument that's been set up by the

government themselves. It's kind of the good cop, bad cop routine. If

Hydro is doing something that people in the area don't like, then the

government can say that Hydro is an entity all of its own, that they

are pretty much in control of what they do, and it's difficult to tell

Hydro what to do. But Hydro is in control. Hydro is one of the few

organizations in the present government that has a well-defined

objective as to where they're going in the future and knows how they

intend to meet those objectives. Hydro requisitions additional moneys

from the government and uses this government to prop up its borrowing

authority. Hydro knows exactly where it's going and the government

knows exactly where Hydro is going, and any excuse that Hydro is a bit

out of control is an attempt by the government to say: "We're not

responsible for all those projects that you don't like; Hydro is. Go

and attack Hydro." It's the good cop, bad cop routine; it's a sham;

it's a bit of theatre. Hydro is definitely in control — and more in

control of this government than the government chooses to admit.

know that Robert Bonner, as chairman of the B.C. Hydro and Power

Authority, was the Social Credit bagman prior to 1975. We know that he

raised the money and the contacts to get this government in office and

to keep them there, and we know that when Robert Bonner comes to

cabinet, he comes to cabinet to give orders, not to take orders. So we

know that Hydro is in control, and there's absolutely no question about

that.

I would also like to mention one of the problems about

the postage-stamp principle, and that is that Hydro's mandate is to

sell electricity at the most economical rate possible and at the same

rate all over the province. There are some exceptions with diesel

generation areas and with REA rates and there are some exceptions

around the province, but one of the things that hasn't been examined by

the Utilities Commission or, obviously, by B.C. Hydro is how the

postage-stamp rate actually distorts the economy of the province of

British Columbia and how it discourages other forms of electrical

generation.

We in this party are advocating that Hydro

purchase power generated by private utilities at a rate that represents

the cost of production, rather than at Hydro's own rate or at a rate

which reflects Hydro's rate. We are also concerned, for example, that

if Hydro provides power at the same rate in Cowichan or Port Alberni as

it provides to Quesnel, Revelstoke or McKenzie, it's going to encourage

an allocation of resources — for example, chips and raw material for

pulp and paper — in a way that is not economically beneficial to the

province of B.C. For example, if there's a surplus of chips in Quesnel

and there's an already established mill on Vancouver Island, then those

chips will flow to wherever it's cheaper to process them. It will cause

problems for our transportation system in terms of overloading, it will

cause problems for our highways in terms of overloading by heavy trucks

that increase the wear and tear on those highways, and it will cause

expansion of mill capacity in areas where it's undesirable to do so

because there's no basic resource to support them. If established mills

have to pay an electrical rate which is equal or represents the cost of

production of electricity, then it would encourage cogeneration or the

establishment of mills where there is an adequate resource base

elsewhere in the province.

[ Page 7747 ]

some analysis should be done both of the rate at which Hydro sells its

electricity — and I'm talking about the industrial rate — and of the

rate at which Hydro purchases electricity in order to encourage

cogeneration. It has been said, for example, using the greater

Vancouver solid-waste disposal problem, that if Hydro has a different

policy with respect to purchasing energy, then a solid waste disposal

site that incorporates resource recovery and the burning of solid waste

to produce energy would be more economically feasible than finding new,

cheap landfill sites in the minister's riding and in the Pitt Polder

area. It is really Hydro that is the impediment to the whole issue,

because they distort the economics by not purchasing the energy

produced at a rate which represents the cost of production of that

energy. I would like the minister to respond to that. What plans are

there in the government to instruct B.C. Hydro to purchase co-generated

energy at a rate which represents the cost of production to the

co-generator?

Can the minister: (1) give me a detailed

breakdown of where this money is going to be spent; (2) tell me why

Hydro needs a $333 million cushion in its borrowing authority; (3) tell

me if money is available to improve the distribution system to

residential communities which are now suffering from blackouts and

brownouts on a regular basis — the thing that Hydro threatens the rest

of us are going to be suffering from if we don't continue to build new

dams and new megaprojects; and (4) tell me about the pricing of Hydro,

both in purchasing from co-generators and using it as a fiscal tool and

an economic development tool to make sure that development goes to

certain areas of the province where it is more desirable rather than to

areas where the resource base has already been thoroughly committed and

where it is not desirable to bring in additional resources?

MR. CHAIRMAN:

Before proceeding, and without trying to frustrate the debate of the

hon. member who has just taken his place, this

section does discuss the

borrowing limit of the B.C. Hydro and Power Authority. We must remain

relevant. The Chair is also aware, from our Journals ,

that we are in the process, in another committee, of discussing the

estimates of the Hon. Minister of Energy, Mines and Petroleum

Resources. Some subjects could be dealt with better during those

estimates.

HON. MR. McCLELLAND: I would like to

answer the member's questions. If you rule me out of order, Mr.

Chairman, I guess I will have to accept that. I don't know if I'll

answer them in the order you gave them or not, Mr. Member.

the opening remarks during my estimates yesterday I mentioned that

there would be, during this session, amendments to the Utilities

Commission Act — I certainly won't go into the details of that, as we

will have the opportunity to debate that when it comes — which will

encourage better opportunities for co-generation and alternative energy

sources. We could deal with that at that time, but those amendments

will be coming before this Legislature this session.

I agree

with the member that Hydro is certainly not out of control, but I don't

agree with his premise when he made that statement. It is very easy for

us to kick Hydro around. It is the sporting game in British Columbia. I

would like to say at this time that while Hydro is a very large

corporation which obviously has inefficiencies built in — like any

large corporation, including government — there can be improvements.

have said that before, but I do want to compliment both the chairman,

Bob Bonner, and the president of Hydro, Mr. Norman Olsen, for the way

in which they have handled some difficult times, particularly in the

last year. They have been subjected to the Site C hearing, which the

member mentioned. It is the first time they have ever had to come under

that kind of scrutiny. It has been a learning process for everybody

involved. At the same time they have also had to go through the very

lengthy proceedings of rate hearings, in public for the first time.

That is going to be a healthy exercise, but it has put a tremendous

strain on the Hydro operation. I would just like to thank them for the

way in which they have handled that in public.

The member brought up the matter of the problems Ucluelet has. I appreciate that he will probably take a copy of Hansard

and send it to the local paper to make sure that the people in Ucluelet

know what he said in the House. But I had not heard of that specific

problem before. If it has been a problem for a long time.... I will go

check my files and see how many letters the member for Alberni has sent

me about the Ucluelet problem. It is the duty of MLAs — all of us — if

we have problems in our communities, to try to see the minister

responsible and see if there can be some resolution of those problems.

I would appreciate it if that member would do that in the future when

he has a serious problem in his community.

It is not true

that there has been no questioning of what Hydro has been doing. That

questioning process is starting, and the results of it are evident in

what has been happening in the last little while. We have seen very

dramatic changes in Hydro forecasts in the past little while. These

were brought about — somewhat, at least — because of the questioning

that is being done by the B.C. Utilities Commission, and also because

Hydro itself realizes that times and needs are changing and perhaps

some of the projects which Hydro has been putting forward need to be

rethought. That is not precluded by British Columbia Hydro at the

present time. We've seen it happening in the last little while.

The

$333 million is not a cushion of money which will be borrowed; rather

it is a cushion in the borrowing power. If Hydro does not need that

money, it will not be borrowed. There isn't some $333 million lying out

there collecting interest, dust or whatever. It's simply a matter that

if for some reason during the year Hydro finds that it needs the total

amount that's being approved, it will have that additional opportunity

without having to come back to the Legislature. Let me make it very

clear that no matter how much money we vote to Hydro in this bill,

Hydro cannot go out on its own and borrow that money.

The

member's opening statement that — I believe I'm probably paraphrasing

him — the only people who can borrow are Hydro isn't correct. That

simply isn't the case. The Minister of Finance of the government of

British Columbia is the fiscal agent for British Columbia Hydro. It is

the fiscal agent of British Columbia, the Minister of Finance, who

arranges the borrowings in cooperation with British Columbia Hydro. It

is the board of directors of Hydro who gives the first borrowing

approvals. I believe that's correct, because it's the board of

directors of Hydro which must have that opportunity. But following

that, it's the fiscal agent of the province of British Columbia who

must give the final approvals for borrowing. As a matter of fact, in

the last two or three years the Minister of Finance in this government

has built up what I consider to be a very expert team to assist with

[ Page 7748 ]

Hydro borrowings. They are working more closely now than has ever happened in this province.

believe if the member thinks about that for a minute he will agree that

it's the proper process. It is, after all, the people of British

Columbia who give the guarantees for this debt. So it should be the

Minister of Finance who bears the ultimate responsibility. Through the

Minister of Finance that responsibility rests with this Legislature,

because his estimates are before this Legislature each year, the same

as everybody else.

I partially answered the question of the

member for MacKenzie (Mr. Lockstead) and the member for

Shuswap-Revelstoke (Mr. King) about where the money is going. I can

quickly go over the total amounts again: there will be $451 million for

the Revelstoke project; $232 million for the mainland–Vancouver Island

interconnection; $17 million in development procedures for Site C; $25

million for Hat Creek; and $8 million for Murphy Creek. There are some

funds being expended for future energy sources which may or may not

ever come on stream. There's $26 million for the Stikine-Iskut; $14

million for the Laird; $6 million for the Homathko, which the member

for MacKenzie mentioned; $20 million for geothermal studies; and $2

million for pressurized-fluidized bed-combustion development. There are

recurring development additions. Those would include the kinds of

upgrading of current facilities like Ucluelet and other parts of

British Columbia of some $80 million and other electric projects —

pages and pages of them — of some $200 million, for a total of just

over $1 billion on the electric side.

On the gas side,

there's $32 million available for distribution additions — in other

words, gasification of further areas of the province — $8 million on

the liquefied natural gas expansion; $8 million on further studies into

the Vancouver Island crossing; and approximately $19 million for other

facilities around the B.C. Hydro distribution network; for a total of

$67 million. There's about $12 million on the further addition,

upgrading and development of the railway service, which comes, as I

said yesterday, to just under $1.18 billion. That $1.18 billion

reflects the reductions which are built in by the revised energy

forecasts which have been most recently produced. The original

requirement was $1.4 billion, so there's a significant reduction as a

result of those renewed forecasts.

I'd like to quickly

answer a couple of other questions that I've had some information given

to me on — particularly on the Homathko. The member isn't in the House

at the moment, but it will be in Hansard for him to review.

Hydro has completed an overview study. Last year the study concluded

that there is a potential development of four dams. We believe

feasibility studies should go ahead. Those studies could be completed

by about 1987. If construction started in 1990, the first power could

not be available until 1995. Hydro is interested in this proposal for a

number of reasons. The two most important are that as there is a

relatively short transmission line requirement, the project would be

close to Vancouver, the major population area, and there would be a

relatively small reservoir needed for the amount of energy available.

If all four projects were built, the capacity would be about 900

megawatts.

The member for Mackenzie also asked how many

formal submissions we have received on the Vancouver Island pipeline.

We have none at the present time. We have had contact with

representatives of a number of the companies listed in the press

release which I sent out April 14. We are anticipating that at least

those companies, and perhaps some we don't know, will hold off their

submissions until closer to the June 15 deadline.

MR. CHAIRMAN:

Without trying to frustrate the legitimate concerns of the hon. member

for Alberni (Mr. Skelly) and, of course, the comments from the hon.

minister, the Chair must once again remind the committee that this

section deals with the borrowing limit of the Authority. There is

another committee, as the Journals

indicate, which is sitting to discuss the estimates of the minister.

Some discussions might be more appropriate to the estimates of the

minister. Again, the Chair says that, of course, without trying to

frustrate the concerns brought up in this section.

MR. MUSSALLEM:

I believe it is almost impossible for this House to debate the issues

when speaking of the mind boggling figures presented by this bill.

Hydro is an immense organization. What it really amounts to, when you

analyze the debate, is whether or not we have confidence in the

management of Hydro. I support this section. Hydro has good management.

It is managing well. It is the mainstay of the production of energy in

the province of British Columbia. I believe that if we in any way

tamper with the ability of Hydro to produce more power and build more

projects, we would be tampering with the very lifeline of the province,

which has established itself today on energy. As we face the future

loss of non-renewable resources, such as oil and gas — although we will

have gas for many years to come — Hydro's development of power is

essential to the province. Unless we recognize this important facet,

unless we develop Hydro, British Columbia will stand still; unless we

develop their power to produce power we will stand still.

a province we owe Hydro our gratitude for their ability to master huge

projects and do them well. Certainly there are errors. Certainly there

may be losses. Certainly there may even be careless expenditures at

times, but when we're dealing with sums of this size, I defy anyone to

be accurate to the dollar. I think they are doing a very good job. I

refer this to the minister: in a time of restraint I believe that Hydro

should look very closely at restraint; the head office of Hydro should

carry out a very close examination. Economies are made in head office,

but from my seat I'm unable to suggest what they should be. From my

limited knowledge of that vast institution, B.C. Hydro, in Vancouver

and in their various major offices, I believe that tremendous economies

could ensue. The minister, as a member of the board of Hydro, should

take a strong look at this.

Private enterprise has had to

cut back enormously. I think Hydro should not be an exception. They are

an exception at the present time. I think they are sailing along with

their high salaries and large staff without regard.... It's always been

a sore point with me that because they have millions they are a little

careless with expenditures. I've been very careful about making this

statement, but I believe that in this time of restraint something

should be done there.

But overall, Hydro has done a

magnificent job. If British Columbia is to progress, we must pass this

section. Without additional power, without the power to make British

Columbia grow, certainly the key to the future would be lost.

think the member for Alberni (Mr. Skelly) mentioned how Ucluelet could

be out of power for a limited time, in referring to this section; they

didn't get enough money to maintain the line. I want to tell him that

is not the reason at all.

[ Page 7749 ]

is impossible to maintain a line of that length over wilderness areas

without extensive breakdowns in transmission. I want to tell him also

that he did not mention the men who go out in a storm when you wouldn't

want to leave your door; they go out and work on 120,000-volt

powerlines in the darkness of night, in the middle of a storm. I think

this House should pay tribute to these men who do this almost daily. If

we called for a gold-plated system where we'd never be out of power, it

would be impossible to maintain.

I'd say additionally that

this bill gives Hydro the ability to extend its strength in development

and safety measures that these men need. We very rarely give them

credit in this House, but if we turn on the switch and the power does

not go on, we say: "Where is Hydro? What's gone wrong?" Well, what's

going wrong has gone right; the men are out there in the dead of night

under tremendous difficulties doing the job for us, and I commend them

highly. The member for Alberni should commend them highly, but he does

not do so. That is why there are outages occasionally.

would tell the member also that from my knowledge in conversation with

men of Hydro — people who do the work — there will be more outages and

they will be for longer durations all through the system, because under

the present wage structure Hydro cannot afford to have crews except

those that are essential. I think the people of British Columbia should

be prepared for more outages and outages of longer duration. That has

nothing to do with this section, because we could not supply the

millions; we could not supply the people to do that.

The

Chairman waves his hands at me. He doesn't want to stop me, but he's

suggesting that I'm not on the section. I am on the section. I'm on the

section of expenditure. I say that the expenditure has to be curtailed

— but in curtailing it we still must have this

section passed. We must

have economies, but we must also have power. It would be easy for this

province to stand still, stop Hydro and within ten years the debts

would all be paid, but we would stand still, and it would again be a

backwoods province.

I commend Hydro on their work, and I commend this section. I assure the House that I'll be voting for it.

HON. MR. McCLELLAND:

Mr. Chairman, just a very quick reply to the member who has just taken

his seat. I would remind all members of the House that Hydro is subject

to the same restraints that everyone else should be subject to, and

that the British Columbia Utilities Commission recently, in awarding

Hydro an interim rate increase, ordered Hydro to reduce its

expenditures by 5 percent. In reviewing its operations, Hydro has been

able to reduce its expenditures by over 9 percent. That's an ongoing

review that will be kept up by British Columbia Hydro and, of course,

under the jurisdiction of the B.C. Utilities Commission.

MR. SKELLY:

Mr. Chairman, somehow I didn't think I was getting through to the

member for Dewdney (Mr. Mussallem), and I think he's made that speech

on every single bill that has come into the Legislature.

One

thing should be said about the employees of B.C. Hydro: this side as

well as that side recognizes that they are doing a fine job within the

constraints imposed upon them. They do an excellent job in keeping the

power flowing throughout this province, and we recognize that as well

as anyone in this House.

There are many good things about

Hydro, and it's unfortunate that this corporation has become a bit of a

pawn in the hands of politicians, especially when you're dealing with

projects that have a heavy impact on local areas. Sometimes people feel

that they're involved in a battle between giants, and that they're

sitting on the sidelines and being affected pretty dramatically, but

their comments are not sought.

I would like to thank the

minister for advising us that there is a list of projects that come

under this allocation of debt, and I'd appreciate it if the minister

would table that in the House when he has an appropriate opportunity.

I'm aware, as you are, Mr. Chairman, that he can't table it in

committee, but we would appreciate it. It's unfortunate that we don't

see these lists beforehand; it would give us a better and more informed

opportunity to debate the bill.

The minister criticized me

because he hadn't heard anything from me about the power problems that

they have in Ucluelet and Tofino. Well, certainly you go to the manager

in the area and discuss it with him, and when it reaches a problem,

then you bring it to the floor of this House, and that's why we're sent

here. But I criticize the minister for not making that information

available to members of the Legislature, and it would be very much

appreciated if he would do that now or at some time when it's more

convenient. I think that if he had done it before the bill was debated

in the House, we'd all be a lot better off and a lot better informed in

debating this legislation. I would give the same advice to other

ministers of the Social Credit government, because it would certainly

remove some bills from the area of contention and make the debate in

this House a lot easier.

The minister didn't answer one

question, though, and that was the question of purchasing from

co-generators. The Department of Energy in the United States has now

insisted that utilities are required to buy....

HON. MR. McCLELLAND: I did answer that question. I said we'd be bringing in an amendment to the B.C....

MR. SKELLY: Oh, that will be part of the amendments to the Utilities Commission Act?

HON. MR. McCLELLAND: Yes.

MR. SKELLY: Okay, that answers my question.

Another

thing is that I didn't see the $333 million cushion in the list, but

possibly that is the difference between the total of projects on the

list and the amount by which we are raising the borrowing authority.

But I am concerned that a number of the things on the list are projects

that have not been approved by the Utilities Commission. One is the

Site C development; another is the Hat Creek development; others are

the Stikine, the Laird and the Homathko. All of these developments have

not been seen and approved by the Utilities Commission. We are spending

a tremendous amount of ratepayers' money on projects which have not yet

been approved to go ahead.

The minister, in discussing a

previous bill — the Geothermal Resources Act — suggested that the

taxpayers should not be responsible for taking the risks involved in

the exploration and development of geothermal projects; but here we are

authorizing the expenditure of money, which is essentially risk money,

on hydroelectric developments and coal-electric developments which may

not be allowed to go ahead because the Utilities Commission, in their

wisdom, find that these have such a great negative economic or

environmental impact

[ Page 7750 ]

the province that they should not be permitted to go ahead. So we are

actually risking these funds on these projects. The minister said, with

respect to a previous bill, that the taxpayer shouldn't be taking these

risks. In fact, as we all know, whether it is a private company

drilling a dry hole or a private mining company involved in a prospect

which may or may not produce, the taxpayer still assumes the burden

through a tax-expenditure system, a write-off system. So we really

assume the risks in any case, and the risks are spread over the

taxpayers as a whole rather than on the private companies. In this case

we are approving debt funds for risky operations which may or may not

be approved somewhere down the line.

I've been in

correspondence with the minister, and people from the Peace Valley

Environmental Association and other groups have been in correspondence

with the minister, saying that, before we go to Utilities Commission

panels on each of these projects individually, we should have a

Utilities Commission hearing on Hydro's total system plan — the

blueprint for the eighties or the nineties or whatever — to allow the

Utilities Commission to analyze whether Hydro's overall plans for the

future should be proceeded with, whether some elements of it should be

struck out or whether Hydro should be instructed to go in different

directions: into alternatives, energy conservation, different pricing

mechanisms and that kind of thing. At that time the minister responded

positively to the suggestion that the Utilities Commission should look

into Hydro's total system plan and its projections for the future. I

wonder if the minister, before he approves the referral of these

projects to the Utilities Commission, is willing to set up a Utilities

Commission hearing into Hydro's overall system plan and their

projections for the future, so that, rather than essentially voting

risk capital for these projects on a year-by-year basis, we will have

some assurance from the Utilities Commission that some of these

projects will go ahead,

whereas others will be eliminated, and we can

avoid that wasteful expenditure of public money. In this system, where

Hydro is a Crown corporation, nothing can be written off; it is all a

direct loss by the taxpayer.

I have one last question, and that relates back to

section 1, which allows the government to guarantee leases.

HON. MR. McCLELLAND: We've already passed that.

MR. SKELLY:

I am dealing with this

section and relating it to

section 1. I don't

know how the government plans to handle this. When we lease something

from somebody and the lease is guaranteed by the government, does the

value of the lease or the accumulated value of all those leases come

under B.C. Hydro's borrowing limit, or are the guaranteed leases

outside the borrowing limit completely? Let me give you an example. Is

it possible for Hydro to build a dam, sell it to some company and then

lease it back? Theoretically, of course, it is possible. Is it possible

for B.C. Hydro and its railway system to build a railway and railway

cars and then sell them to someone, as was done with the ferries, and

lease them back? Does the value of the lease come within the borrowing

limits of B.C. Hydro? Essentially all you're doing is borrowing money.

I'm asking the minister if the leases in

section 1 come under the

borrowing limits established in

section 2.

HON. MR. McCLELLAND:

Mr. Chairman, I thought we had passed

section 1. I'm not sure if I can

answer the member's question directly, but I guess that if the scenario

followed which the member raised — that we build a dam and then sell it

to somebody and lease it back — that would have been covered under the

current borrowing authority for the years in which that dam was being

built. In that instance, I guess it would be within the borrowing

limits which are established by this legislation.

MR. SKELLY: What about trains and train cars?

HON. MR. McCLELLAND:

Mr. Chairman, I would think the same thing would apply, to any capital

asset, but I'll ask my ministry to get a little more detail on that and

perhaps you could raise the question again when I've had that

opportunity.

You'll recall that I had the unique opportunity

of appearing before the Site C hearing in Fort St. John. It was a very

interesting day. The question was asked about the hearings into B.C.

Hydro's system plan on a number of occasions by a number of people. I

said there — and I can't add very much to that now — that that matter

is under review. I remind the member that the commission has its plate

full right now, and I expect it will be full for the rest of this

summer at least. I wouldn't be able to put any more work on them and

expect them to do a decent job of the things that they're handling now.

Mr. Chairman, that possibility is still one that is under active

consideration. As a matter of fact, I think it could probably be

helpful to Hydro as well, because I think for once Hydro would like to

have some clear understanding of where the province wants them to go. I

don't think they've ever had that under any government that has

operated Hydro. I don't see Hydro being concerned with that kind of

thing happening. When we can sit down with the commission — when

they've got a little breathing room — to talk to them about it, then I

expect that could happen.

I don't agree with the member that

the money I've listed for him that's being spent on various kinds of

studies into various kinds of projects is wasteful expenditure of

public funds.

MR. SKELLY: I didn't say that; I said "risk."

HON. MR. McCLELLAND:

No, the member said "wasteful expenditure of public funds," Mr.

Chairman. If he wants to withdraw that statement, I'd be happy to have

him do that, but I do agree that it's a risk. I do believe that in most

development the risk should be at the expense of the private sector and

not directly at the expense of the taxpayer. The province of British

Columbia decided a long time ago that electric development in this

province was going to be done by a Crown corporation, so that Crown

corporation needs to act in a responsible way. In carrying out that

responsibility, it will of necessity have to take some of those risks

to develop long-term plans that may in fact not be approved at some

place down the line. In the last week or so we've seen projects put

ahead by a year, two years, or more — projects which have had

considerable amounts of public money spent on them. We must remember

that the provision of adequate supplies of electrical power to the

people of our province require very long lead times. We talk about 15

or 20 years of planning for many of these projects. We're talking

today, in the list that I mentioned in the debate, of power into the

1990s and beyond the year 2000. There will have to be developmental

work done which provides for money to be spent. I don't

[ Page 7751 ]

apologize

for that, and Hydro would be derelict in its duty if it didn't spend at

least some of that money. I think the people of British Columbia must

accept that risk, because we have chosen to accept that risk through

B.C. Hydro and Power Authority.

MR. SKELLY: Mr.

Chairman, what I was contrasting was the minister's attitude on the

Geothermal Resources Act. He said: "The public should not be taking the

risks; they should be taken by the private sector." In this case, he

said that the public has decided to take the risk and that therefore we

should take the risk.

HON. MR. McCLELLAND: It's out of my hands.

MR. SKELLY:

It's now out of his hands in the Geothermal Resources Act, because he

chose to put it out of his hands. It's not an all-encompassing

principle with that minister.

Where there is an opportunity

for the friends of Social Credit to make money, the opportunity is

given by Social Credit. That is simply what it amounts to.

HON. MR. McCLELLAND: Don't be such a snipe. The debate was on a high plane until you got up.

MR. SKELLY: It was on a high plane when you weren't feeling the heat; that's what you're talking about.

The

minister has contradicted himself is what it amounts to. He's saying

that in some cases the public should take the risk, and in other cases

they shouldn't take the risk. What I was proposing is that now that the

Utilities Commission has given us a two-year breathing space by putting

some megaprojects ahead by two years, we have an opportunity to do

public Utilities Commission analysis into B.C. Hydro's system plan,

which, as I understand it, is supported by the minister, by the

commission and by many other people in this province who are concerned.

If the commission's plate is full right now with some of these other

projects, then maybe we should be withdrawing those projects and doing

an analysis of the system plan, thereby being in accordance with the

minister's wishes that the taxpayer should not be bearing the full

risk. As a result of these Utilities Commission hearings into the

system plan, we may be able to eliminate some of the risk which

involves these expenditures and take them off the taxpayer's back.

That

was the only suggestion that I was making — that we reschedule the

analysis of Hydro's system plan and put off until some time in the

future, now that we have breathing space, the analysis of certain

specific projects which can be left until later in the game. That was

the suggestion I was making to that minister.

HON. MR. McCLELLAND:

Mr. Chairman, in answer, the matter is under review. We have no plans

to cancel the Site C hearing to make way for a systems analysis by the

B.C. Utilities Commission, but we have no other applications before us

from B.C. Hydro at the present time.

MR. SKELLY: You said the plate was full.

HON. MR. McCLELLAND:

Well, Mr. Chairman, the commission is doing two very major simultaneous

hearings into Hydro's rate structure, which, in effect, in many ways is

a systems review hearing. If you had been reading any of the

transcripts, I think you would agree with me. In some parts, although

it was never designed to be, Site C has turned out to be that as well.

Those are two very major hearings being held by the commission now. You

will know that there is another hearing being held by the commission on

the proposed takeover of Inland Natural Gas and there are dozens and

dozens of other routine matters dealt with daily by the commission.

That's what I meant by having a plateful. It is a very busy time for

that commission.

I forgot to answer this question when I was

up before. The information about capital expenditures on various

projects by B.C. Hydro is not some dark secret that I've kept until

this moment to reveal; it is in their ten-year systems plans, which are

made fully public and are available to any member of this House and

have been as a routine matter.

MR. HANSON: Mr.

Chairman, a couple of moments ago, in response to my comments on this

section, where I argued that the B.C. Hydro policy, with respect to the

postage-stamp rate structure, was violated in the Victoria area in that

the users of air butane pay four times what they pay on the mainland,

the minister stated that the B.C. Hydro natural gas division does not

have a postage-stamp rate and that I should double-check that. Well, I

did double-check that, and there is a postage-stamp rate for natural

gas in Hydro service. That postage-stamp principle holds that all

British Columbians, no matter where they live, shall not be

discriminated against by their utility if they belong to the same rate

class. It just so happens that in Victoria we use air butane mix as

opposed to natural gas, so we are then condemned to pay three and a

half to four times the amount that they pay on the mainland.

Diesel-generated electrical power exists in some areas where the

postage-stamp rate applies to all electrical service. In locations

where there is a diesel-generated electrical service, the rate

structure there is that the first 1,500 kilowatts of power is supplied

to the residential user at the same rate as the normal hydro. This

represents 200 percent of average residential consumption over the

billing period. I wanted to correct the minister's statement that there

was no postage-stamp rate for B.C. Hydro's natural gas division, which

there is. He sits on that board. He should know. He is a director of

the corporation.

I would like to ask him a question with

respect to

section 2. In the additional amount of money that is being

borrowed — this $1.1 billion, the increase in borrowing from $7.2

billion to $8.3 billion — is there an allocation for the construction

of the natural gas pipeline to Vancouver Island?

HON. MR. McCLELLAND:

It would save a lot of time if the members would listen in the House. I

gave a list of exactly what the borrowings would cover. The member can

read it in Hansard . Mr. Chairman, I would like you to read Hansard

so that you can straighten out the House. The second member for

Victoria specifically said in this House that there was a postage-stamp

rate for gas for everybody in British Columbia. There is not.

MR. HANSON: This is Hydro.

HON. MR. McCLELLAND:

B.C. Hydro is the same as any other utility. B.C. Hydro has a group of

customers in Vancouver, for instance, and in the Fraser Valley, and

they charge a certain rate, now approved by the British Columbia

Utilities

[ Page 7752 ]

Commission.

B.C. Hydro has a group of customers on Vancouver Island. Inland Natural

Gas has a group of customers in another part of the province. Pacific

Northern Gas has another group of customers. Fort Nelson Gas has a

group of customers. Mr. Chairman, I would like you to look at Hansard

and see what that member said. He said there is a postage-stamp rate

for natural gas for everybody in British Columbia, and there isn't.

MR. CHAIRMAN:

One moment, please. Once again I will remind the committee that under

this

section we are discussing the borrowing limit of the B.C. Hydro

and Power Authority. There is ample opportunity elsewhere, as the Journals

tell us, to discuss the estimates of the minister, which are before

another committee at this time. This

section deals specifically with

the borrowing limit of the Authority, and the committee would be well

served if all members would remain strictly relevant to the

section

before us.

MR. HANSON: The postage-stamp principle of

B.C. Hydro.... The title on this bill is Hydro and Power.... It's for

British Columbia Hydro. I assumed that the minister knew what we were

talking about. I know that Inland Natural Gas exists and that there is

a different rate for exchanges of gas between Hydro and Inland Natural

Gas, etc. The postage-stamp rate for the natural gas service of B.C.

Hydro does exist. The minister tried to convey misinformation to this

House.

Interjections.

MR. CHAIRMAN: Order,

please. Will all hon. members come to order, and will the second member

for Victoria kindly relate his remarks to the

section before us and

address the Chair.

MR. SKELLY: I rise on the point of

order that the Premier has just come into the House, missed the first

part of the debate, hollered twice across the floor that the member for

Victoria was "dumb." That's an unparliamentary, puerile statement. I

ask the Premier to withdraw that statement, which is unbefitting a

member of this House.

MR. CHAIRMAN: If the hon. Premier made any unparliamentary remark to another hon. member, I'll ask the Premier to withdraw.

HON. MR. BENNETT: Mr. Chairman, I said that the member should be struck dumb before he gets himself in more trouble.

MR. CHAIRMAN: Will the hon. Premier please state that he would withdraw any unparliamentary remark.

HON. MR. BENNETT: All right. I apologize and encourage the member to speak and get in more trouble.

MR. CHAIRMAN: I will ask the hon. Premier to withdraw and say that he has not made any unparliamentary remark in this chamber.

HON. MR. BENNETT: That's right. I apologize, and have not made any unparliamentary remark about that member.

MR. HANSON:

I have a question for the minister so that the record is clear: are

there no funds available in this increase of borrowing for any aspect

of the natural gas pipeline to Vancouver Island?

HON. MR. McCLELLAND: Mr. Chairman, I advise the member to read the Blues.

MR. MITCHELL: I'm pleased to note that the minister mentioned that we are dealing with a ten-year program for Hydro.

Interjections.

MR. CHAIRMAN: Order, please. I ask the hon. Premier and member for Alberni not to interrupt the member who is speaking.

MR. MITCHELL: I was happy to note that the minister mentioned in his speech that we are discussing Hydro's needs for the next ten years.

HON. MR. McCLELLAND:

On a point of order, Mr. Chairman, I think it's probably time we got

back to the relevancy of this section. We are not talking about ten

years of borrowing for B.C. Hydro. We're talking about approval for a

one-year borrowing requirement being asked of this Legislature.

MR. CHAIRMAN:

The point is well made.

Section 61 of our standing orders commends to

the committee that all debate in committee must be strictly relevant to

the

section before us.

MR. MITCHELL: Yes, Mr.

Chairman. It's like building a house. You have to have a

section piece

by piece; you look at the end house.... You can't look at one and a

half billion dollars and not say that it is part of the long-range

program by Hydro in British Columbia. I think it's important, Mr.

Speaker....

HON. MR. McCLELLAND: I rise on a point of

order, Mr. Chairman. That's exactly what I am saying is the point of

order: we are now in committee stage of this bill, dealing with a

one-year borrowing requirement for British Columbia Hydro. I suppose if

there had been a time in this bill to talk about the long-range plans

of Hydro, it would have been during the principle of the bill, which

has already been passed.

MR. LEA: I rise on the same

point of order. When you talk about a bill in second reading, yes, it's

the broad principle of the bill which is under discussion; and when you

get to each section, you must only speak about that section. But that

does not eliminate the principle of that specific section. If you

weren't going to talk about the principle of a specific section, what

would you talk about? Nothing.

MR. CHAIRMAN: I will

recite standing order 61(2) to all hon. members of the committee. Upon

hearing it, perhaps we can decide how we will continue to debate this

section. "Speeches in Committee of the Whole House must be strictly

relevant to the item or clause under consideration." The

[ Page 7753 ]

principle of a bill is discussed in second reading; I'm sure all members are aware of that.

Second

reading has been passed by this House. I ask all hon. members to read

61(2), page 23, in our standing orders and make their remarks to this

section strictly relevant.

MR. LEA: On the same point

of order, I thank you for clearing it up: that when you are speaking in

this part, in committee, you must only speak about the strictly

relevant principle of that particular section. What the Chair keeps

saying is that keeping it strictly relative excludes principle. I take

exception to that. It means that it must be strictly relevant to the

principle of that clause. I'd like to ask the Chair again: if you're

not going to talk about the strictly relevant principle of that clause,

what would you talk about?

MR. CHAIRMAN: You make the

point that you must be strictly relevant to the principle; I'm making

the point that you must be strictly relevant to the clause or item. The

clause or item is the borrowing limit of the authority. I think that's

quite clear in the bill. I will ask all hon. members to be strictly

relevant. I will also commend standing order 43 to the hon. member:

"Mr.

Speaker, or the Chairman, after having called the attention of the

House, or of the committee, to the conduct of a member, who persists in

irrelevance, or tedious repetition, either of his own arguments or of

the arguments used by other members in debate, may direct him to

discontinue his speech, and if the member still continues to speak, Mr.

Speaker shall name him, or, if in Committee, the Chairman shall report

him to the House."

MR. LEA: On a point of order, I

would like to go back to the point you made on being strictly relevant,

and the principle, because I think it is important that every member of

this House, when we are talking about a word or a phrase, have exactly

the same understanding of that word or phrase. I would like the Chair

to define for the members of this House what the Chair means when it

says "the principle," because unless the Chair can define that you will

have 56 other opinions as to what "principle" means when discussing a

clause. If the Chair could define it for us, maybe we could then

perform better.

MR. CHAIRMAN: The Chair must strictly

abide by the standing orders in front of you. For the second time in

this committee I have read standing order 61.

MR. MITCHELL:

I thank you for that lesson in parliamentary laws, for the benefit of

the people in the galleries. But if that minister thinks that he is

going to shut me up because he wants to play his petty, parliamentary

adult games by saying that the significance of this $1.5 billion

borrowing bill is not part of Hydro's ten-year program, then he can sit

there and stew all he wants.

I say sincerely that when we

are looking at a borrowing program for one of the major Crown

corporations of this province we have to took at how it affects the

people of British Columbia. We have to look not only at how that will

affect them ten years down the road. We will still be paying it ten

years down the road like we were paying it....

HON. MR. McCLELLAND:

On a point of order, I have no wish to shut that member up. He has a

perfect right to take

part in the debate, the same as the rest of us in

this House. The point of order I wish to make, though, is that he must

take

part in that debate the same as the rest of us, under the rules of

debate in this House. That member had every opportunity in the world to

speak on the principle of this bill in second reading yesterday. That

member chose not to, and I just think that we've got to get back to

relevancy in this debate or we'll never get anywhere in this House. The

member chose not to speak on the principle of the bill.

MR. CHAIRMAN:

The committee is not aware of that. However, the Chairman must advise

all members of the committee — and this is in response to previous

questions — that during second reading the principle of a bill is

discussed. There is adequate time in the speaking order given for all

members of the House to discuss in second reading the principle of any

bill before us. The specific purpose of a Committee of the Whole House

is to discuss a bill

section by section, being strictly relevant to the

item or clause before us and confining your remarks to a strictly

relevant attitude. I'm sure the hon. member is aware of that, and I

will once again ask him to be strictly relevant to this item,

section 2.

Mr. Member for Esquimalt–Port Renfrew, please continue.

MR. MITCHELL:

As I said before the last point of order, Mr. Chairman, the payment for

this particular loan will still be being made ten years down the line —

and I haven't heard the minister in all his speeches tell me that that

is not a fact. I think it's important that we know about the minister's

tour of the Site C dam, how he appeared before the commission, and all

of these things which are relevant to this bill. What I have to say on

the projects of B.C. Hydro for the next ten years or on what happened

to B.C. Hydro 10, 15 or 20 years back is very important, because it is

part of what is happening in British Columbia. The most important part

of what is happening in this province is the massive debt that this

government is getting us into — the massive debt that is going to be

the millstone around future generations who try to pay it off.

[Mr. Davidson in the chair.]

I think that when we deal with this bill — and I'm dealing with this particular borrowing....

MR. CHAIRMAN: Order, please, hon. member. The hon. minister rises on a point of order.

HON. MR. McCLELLAND:

On a point of order, I would just like to have the Chair's comment on

the relevancy of this debate. This debate would have been relevant

yesterday during second reading of this bill, because that was when the

principle should have been discussed. That member chose not to discuss

the principle of the bill. I would suggest, Mr. Chairman, that other

questions up to this point about how the money is going to be spent,

where it's going to be spent, and why isn't it going to be spent here

are all relevant under committee stage of a bill. But the principle of

the bill is not relevant at this time.

MR. CHAIRMAN: Hon. member, the Chair might also take this opportunity to advise the member that another

[ Page 7754 ]

opportunity

will also be at hand during estimates where some of the points that the

member is currently canvassing could be more appropriately discussed

under the broader guidelines of ministerial estimates. Unfortunately,

at this time the Chair must advise the member that his comments are

more adequately suited for another opportunity to debate, rather than

at this particular stage. And if we were to leave this stage, we would

possibly find that opportunity at hand.

MR. MITCHELL:

You know, I find it quite interesting, Mr. Chairman, to sit here and

listen to the logic that what I am going to say is not relevant, when I

haven't said anything except "ten years." And every time I say it, up

jumps the minister, and then it's out of order. I've never realized....

stand here and we associate them with the Trudeau Liberals, and they

jump up. Now we've got a new way to raise them; all I have to say is

"ten years," and up jumps the minister on a point of order.

that is relevant to my debate, I don't know why you didn't call me out

of order, because it's not. But what will be happening in British

Columbia under Hydro for the next ten years is important, because we'll

be paying that part of the bill for the next ten years, or better.

MR. CHAIRMAN: Order, please.

MR. MITCHELL: If this is the part that's relevant.... Will you tell that minister to sit down...?

MR. CHAIRMAN:

Before entertaining the point of order from the minister, I must again

draw to the member's attention that we are on

section 2, discussing a

one-year item. It is entirely out of order at this time in this

particular debate to discuss anything beyond what appears in

section 2.

The remarks by the member, while they are certainly important to the

member, are going to be acceptable in a forum that will be available to

us very shortly, but, hon. member, not at this time under this bill. I

would urge the member — in fact I will instruct the member — to confine

his remarks to

section 2 or possibly delay his remarks until the

opportunity will be afforded to canvass in a more general direction,

without having to worry about the Chair restricting him according to

our standing orders.

HON. MR. McCLELLAND: On the

point of order, I'd like to commend you for your ruling. I am perfectly

willing to listen to that member and respond to him. The point is that

under the rules of debate in this House, during second reading the

minister has the opportunity to respond to questions that arise in

debate from all members of the House. I assume that if we are to move

into debate of a principle of the bill at this stage, I would not be

allowed to respond because I assume you would rule me out of order. I

don't think that is within the bounds of fair debate within this

Legislature.

MR. CHAIRMAN: The minister makes a fair comment on his point of order.

MR. MITCHELL:

I appreciate all you have said, Mr. Chairman. I will try to keep

everything within a year. I won't mention that awful word, that I won't

say, because I know it will trigger that particular minister to jump up

again.

I think that when you look at what happens to that $1.1 billion, you have to

look at how that particular $1.1 billion in this bill fits into B.C. Hydro.

I think it is important that we look at B.C. Hydro and look at what we really

need in this province. Each year all B.C. Hydro's booklets and reports have

predicted the need to develop the hydro needs of this province. In one of their

reports they predicted that they need around 500 million kilowatts of new power

each year. This $1.1 billion that the minister is asking us to give him, so

he can allow the Minister of Finance to go out and borrow and then go out and

give that to B.C. Hydro as they need it, fits into the program that B.C. Hydro

is looking down the road to develop. It's all part of that program because

they have to plan ahead. They have to make their proposals; they have to do

their onsite studies; and they have to invest the taxpayers' money. In spite

of it, Mr. Chairman, some of those taxpayers happen to live in my riding and

will be footing the bill for this $1.1 billion that this minister wants.

MR. KEMPF:

Mr. Chairman, on a point of order under standing order 43, I ask what

relevance this $1.1 billion has to the taxpayer? This is not taxpayers'

money. It will not be paid back with taxpayers' money; it'll be paid

back by the people who actually use the hydroelectric power, gas or

whatever that this money is borrowed for. I see no relevance whatsoever

in using the taxpayer as a for instance in this particular

section of

the bill.

MR. CHAIRMAN: The member does make a point,

but that point could possibly be canvassed at another time. The member

for Esquimalt–Port Renfrew continues.

MR. MITCHELL:

Mr. Chairman, it must be Friday, and it must be a Friday before a long

weekend. I never profess to be a big businessman like the voice of the

north, but never in my longest period in this world have I ever said

that the people who guarantee the debt of British Columbia are not

taxpayers.

MR. KEMPF: I stand again on a point of

order under standing order 43. I ask what relevance.... I don't mind

the member talking about the taxpayer of British Columbia. If that's

his wish, he can do that, but in a different forum and at a different

time. Certainly it's in order when discussing or debating other issues

in this House but not in this

section of Bill 40.

MR. CHAIRMAN: The Chair has the member's point of order.

MR. MITCHELL: Mr. Chairman, because it is a crazy Friday, I would move this House stand adjourned.

MR. CHAIRMAN: You move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The House resumed; Mr. Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

Hon. Mr. Williams moved adjournment of the House.

Motion approved.

The House adjourned at 12:47 p.m.

[ Page

7755 ]

Appendix

AMENDMENTS TO BILLS

5 The Hon. R. H. McClelland to move, in Committee of the Whole on Bill (No.

5) intituled Geothermal Resources Act to amend as follows:

SECTION 4 is amended (

a) in subsection (2) by deleting '"drill a test hole or", and (

b) by adding the following subsection'.

"

(6) No person shall conduct geothermal exploration other than by way of

well drilling or test hole drilling unless lie was notified the

commissioner in writing in the form prescribed of his intention to do

so."

SECTION 5 is amended by deleting, subsection (4) and substituting, the following:

"

(4) A permittee has the exclusive right, subject to

section

13 (2) and the regulations, to apply for well authorizations for wells to be

drilled within the boundaries of his location."

SECTION 13 is deleted and the following is substituted:

"Limitations on issue

"13. ( 1) No well authorization shall he issued except to

(

a) a permittee or lessee, or

(

b) a person who has made an agreement with a permittee or lessee for the drilling or operation of the well.

"

(2) A person referred to in subsection (1) (

b) may apply for a well authorization."

The following

section is added:

"Land Act Amendment

"25.1.

Section 47 (1) of the Land Act , R.S.B.C. 1979,

c. 214, is amended

(

a) in paragraph (a) 00 by adding 'geothermal resources and any' before 'minerals,', and

(

b) in paragraph (

b) by adding 'geothermal resources as defined in the Geothermal Resources Act ,' before 'minerals'."

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