1989 Legislative Session: 3rd Session, 34th 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)

WEDNESDAY, JULY 12, 1989

Afternoon Sitting

[ Page

8419 ]

CONTENTS

Routine Proceedings

Regional and Economic Development Act (Bill 84). Hon. Mr. Veitch

Introduction and first reading –– 8419

Municipal Amendment Act (No. 3), 1989 (Bill 80). Hon. Mrs. Johnston

Introduction and first reading –– 8419

Islands Trust Act (Bill 78). Hon. Mrs. Johnston

Introduction and first reading –– 8419

Presenting Reports –– 8419

An Act to Continue the Moratorium on Offshore Oil Drilling and Exploration

(Bill M221). Mr. Harcourt

Introduction and first reading –– 8420

An Act to Prohibit the Dumping of Toxic Materials in British Columbia and Its Coastal Waters (Bill M222). Mr. Harcourt

Introduction and first reading –– 8420

Oral Questions

Forest resource development agreement. Mr. Miller –– 8420

AIDS needle exchange programs. Mr. Perry –– 8420

Purchase of property along Cassiar connector route. Mr. Clark –– 8421

St. Ann's Academy. Mr. Blencoe –– 8421

Sale of BCEC land at Whistler. Mr. Williams –– 8422

Free trade agreement. Mr. Barlee –– 8422

Committee of Supply: Ministry of Energy, Mines and Petroleum Resources estimates. (Hon. Mr. Davis)

On vote 20: minister's office –– 8422

Hon. Mr. Davis

Ms. Edwards

Mr. Perry

Mr. Clark

Mr. Kempf

Indian Land Tax Cooperation Act (Bill 77). Second reading

Hon. Mr. Weisgerber –– 8447

Mr. Williams –– 8448

Hon. Mr. Weisgerber –– 8448

Litter Amendment Act, 1989 (Bill 60). Committee stage. (Hon. Mr. Strachan) –– 8448

Mr. Williams

Mr. Lovick

Mr. G. Janssen

Third reading

Waste Management Amendment Act, 1989 (Bill 58). Committee stage.

(Hon. Mr. Strachan) –– 8451

Mr. Lovick

Mr. Perry

Third reading

Health Statutes Amendment Act, 1989 (Bill 39). Second reading

Hon. Mr. Dueck –– 8461

Mr. Perry –– 8462

Hon. Mr. Dueck –– 8462

Hospital Amendment Act, 1989 (Bill 69). Second reading

Hon. Mr. Dueck –– 8462

Mr. Perry –– 8462

Hon. Mr. Dueck –– 8463

Labour and Consumer Services Statutes Amendment Act, 1989 (Bill 46).

Second reading

Hon. L. Hanson –– 8463

Mrs. Boone –– 8464

Hon. L. Hanson –– 8464

Residential Tenancy Amendment Act, 1989 (Bill 47). Second reading

Hon. L. Hanson –– 8464

Mr. Blencoe –– 8465

Hon. L. Hanson –– 8465

Income Tax Amendment Act (No. 2), 1989 (Bill 79). Committee stage.

(Hon. Mr. Couvelier) –– 8466

Mr. Clark

Third reading

Financial Administration Amendment Act, 1989 (Bill 37). Committee stage.

(Hon. Mr. Couvelier) –– 8467

Mr. Clark

Mr. Williams

Ms. Edwards

Third reading

Municipal Amendment Act, 1989 (Bill 19). Second reading

Hon. Mrs. Johnston –– 8473

Mr. Blencoe –– 8474

Hon. Mrs. Johnston –– 8474

Mineral Tax Act (Bill 73). Second reading

Hon. Mr. Davis –– 8474

Ms. Edwards –– 8475

Mr. Clark –– 8475

Mr. Williams –– 8477

Hon. Mr. Davis –– 8478

The House met at 2:05 p.m.

Prayers.

MR. PELTON :

Hon. members, on the floor of the Legislature today we have the Hon.

John James Doohan and his son, Mr. John Doohan, who are visiting us

from Sydney, Australia. Mr. Doohan was elected to the New South Wales

Legislative Council in 1977 as a member of the National Party and

currently holds the office of Whip. Would you please welcome the

Doohans to our beautiful province.

MR. GUNO : I am

pleased to introduce to the House two special friends of mine who are

in the gallery today: Mr. Gary Youngman, who is the executive director

of the Aboriginal People's Business Association. I went to school with

Gary, so I can confess that between lectures we were able to knock back

a few. With him is Debra Hoggan, who is a private consultant. Miss

Hoggan is probably one of the few aboriginal persons who has the

training and background to conduct a small business seminar, and I have

seen the results of her work in the Nass Valley. I would ask the House

to join me in welcoming them.

HON. J. JANSEN : In the

gallery today are two special people from my own community in

Chilliwack: my son and daughter, Darren and Teresa. Please make them

welcome.

MR. MOWAT : In the gallery today we have Mr.

Don Coghill, the public affairs manager in British Columbia for

Imperial Oil. Imperial Oil was one of the first corporate sponsors to

support Rick Hansen in his Man in Motion world tour. I would ask you to

please make Mr. Coghill very welcome to our House.

HON. MR. PARKER : I would ask the House to welcome a long-time friend of mine and one of the best Forests ministers we ever had: Tom Waterland.

MR. PERRY :

I'd like to introduce to the House the better half of the member for

Prince Rupert (Mr. Miller), Mrs. Gayle Ballard, who's in the Speaker's

gallery, and also a wonderful constituent of mine, Lynn Salter, who's

an incipient novelist. I ask the House to make them welcome.

Introduction of Bills

REGIONAL AND ECONOMIC

DEVELOPMENT ACT

Hon. Mr. Veitch presented a message from His Honour the Administrator: a bill

intituled Regional and Economic Development Act.

HON. MR. VEITCH : In speaking briefly to this bill, I'm pleased to

bring before the House a bill that represents but another step in our government's

continuing efforts to consolidate and update the province's economic development

legislation. Members will recall that the throne speech noted plans to introduce

consolidated and enhanced business incentive legislation. The Regional and Economic

Development Act will combine and update two acts, one ten years old and one

almost five years old: the Ministry Industry and Small Business Development

Act and the Industrial Development Incentive Act. In line with our government's

regional development initiative, the new act will provide the flexibility to

take complementary action to realize development opportunities in each and every

region of British Columbia.

look forward to further discussion of the bill with members during

second reading. I move that the bill be introduced and read a first

time now.

Bill 84 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.

MUNICIPAL AMENDMENT

ACT (No. 3), 1989

Hon. Mrs. Johnston presented a message from His Honour the Administrator: a

bill intituled Municipal Amendment Act (No. 3), 1989.

HON. MRS. JOHNSTON :

The Municipal Amendment Act (No. 3) contains a variety of measures

designed to improve the operation of our municipalities with respect to

development agreements.

Bill 80 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.

ISLANDS TRUST ACT

Hon. Mrs. Johnston presented a message from His Honour the Administrator: a

bill intituled Islands Trust Act.

HON. MRS. JOHNSTON :

Bill 78 contains a variety of measures designed to improve the

operation of the Islands Trust, enhancing its autonomy and increasing

its flexibility.

Bill 78 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.

Presenting Reports

MR. PELTON :

I have the honour to present a report from the Select Standing

Committee on Standing Orders, Private Bills and Members' Services, and

I move it be read and received.

Motion approved.

[ Page 8420 ]

CLERK-ASSISTANT :

"Mr.

Speaker, your Select Standing Committee on Standing Orders, Private

Bills and Members' Services begs leave to report as follows: that the

preamble to Bill PR404 intituled Applied Science Technologists and

Technicians Amendment Act, 1989, has not been proved and recommends

that the bill not proceed to second reading.

"All of which is respectfully submitted. F.A.C. Pelton, Chairman."

MR. PELTON : Mr. Speaker, by leave I move that the rules be suspended and the report adopted.

Motion approved.

Introduction of Bills

AN ACT TO CONTINUE THE MORATORIUM

ON OFFSHORE OIL DRILLING

AND EXPLORATION

Mr. Harcourt presented a bill intituled

An Act to Continue the Moratorium on Offshore Oil Drilling and Exploration.

MR. HARCOURT :

This act places a moratorium on both exploration and drilling for oil

and natural gas in B.C.'s coastal waters. In the absence of iron-clad

safeguards, this measure is necessary to protect our coastal

environment and economy from damaging spills, blow-outs and leakages.

Unlike the present five-year moratorium, this bill bans exploration as

well as drilling. Some U.S. states have also banned seismic testing

exploration in response to concerns over the impact on marine

environment and fisheries. It is necessary to take this step in B.C.

until a full environmental assessment of seismic testing can be

completed and reviewed.

To protect our environment, marine

life and our multi-billion dollar coastal fisheries and tourism

industries, the province of British Columbia has no choice but to place

an indefinite moratorium on both offshore exploration and drilling.

Bill

M221 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.

[2:15]

AN ACT TO PROHIBIT THE DUMPING OF

TOXIC MATERIALS IN BRITISH COLUMBIA

AND ITS COASTAL WATERS

Mr.

Harcourt presented a bill intituled

An Act to Prohibit the Dumping of

Toxic Materials in British Columbia and Its Coastal Waters.

MR. HARCOURT :

This act places a moratorium on both exploration and drilling for oil

and natural gas in B.C.'s coastal waters. In the absence of ironclad

safeguards, this measure is necessary to protect our coastal

environment and economy from damaging spills, blowouts and leakages.

Unlike the present five-year moratorium, this bill bans exploration as

well as drilling. Some U.S. states have also banned seismic testing

exploration in response to concerns over the impact on marine

environment and fisheries. It is necessary to take this step in B.C.

until a full environmental assessment of seismic testing can be

completed and reviewed.

To protect our environment, marine

life and our multi-billion dollar coastal fisheries and tourism

industries, the province of British Columbia has no choice but to place

an indefinite moratorium on both offshore exploration and drilling.

Bill

M222 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.

Oral Questions

FOREST RESOURCE

DEVELOPMENT AGREEMENT

MR. MILLER :

To the Minister of Forests: would the minister confirm that he has

reached agreement in principle with his federal counterpart on a $1.4

billion reforestation agreement?

HON. MR. PARKER : We're discussing a replacement for the forest resource development agreement, and that is future policy.

MR. MILLER :

Would the minister also confirm to the House that the province of B.C.

will now be saddled with 65 percent of the costs, unlike the current

agreements which offer fifty-fifty cost-sharing?

HON. MR. PARKER : The same answer, Mr. Speaker.

AIDS NEEDLE EXCHANGE PROGRAMS

MR. PERRY :

I have a question for the Minister of Health. Last Wednesday the

minister told this House that he would not participate in a federal

anti-AIDS needle exchange program until he had reviewed the proposal

more thoroughly. Having had a week to review the federal proposal, is

the minister now prepared to announce that he will participate in this

federal-provincial preventive health measure?

HON. MR. DUECK :

Mr. Speaker, up to this point in time I've only got a letter from the

Hon. Perrin Beatty. I have not got the outlines of that program, and I

cannot comment any further.

MR. PERRY : Mr. Speaker, may I ask the minister to tell this House what steps he has taken — or his officials have taken —

to pursue this offer and explore the possibility of federal-provincial

cooperation, given that the present program, which has been

[ Page 8421 ]

an extraordinary success, rests entirely on funding by the city of Vancouver for a provincial problem?

HON. MR. DUECK :

Mr. Speaker, there's more to the needle program than what appears in

the letter that I received. When we're talking about preventing AIDS

transmission — the virus transmission — by way of the dirty

needle exchange, we also have to look at things like outreach

education, testing, counselling, drug detoxification, withdrawal

programs, street-nursing programs and support and referral services;

all these things play a

part in that program. It is not just a matter

of clicking your fingers in the wind and saying: "Here it is, and this

is what we'll do."

There is much more to it than what

appears from that member for Vancouver-Point Grey. So as I said before,

we have not received the full information on this program, and I cannot

comment on it until I receive further information.

MR. PERRY :

A supplementary, Mr. Speaker. I'm very flattered to perceive that the

minister has obviously studied my statement on AIDS strategy from last

week, despite the interference from his colleague who tried to tell him

it wasn't an important subject.

I find it ironic that the

minister refuses to participate in a highly successful program, which

was pioneered in British Columbia.

The question for the

ministers is: does the minister expect the city of Vancouver to

continue to bear the entire cost of fighting the AIDS epidemic among

intravenous drug abusers.

HON. MR. DUECK : That's an

absolutely insulting remark, because we are doing many things. We have

got six street nurses in Vancouver counselling street people and we do

many other things in the AIDS area. To say, just because it funds one

particular part of the AIDS program, that we are now depending on the

city of Vancouver to fight the total disease of AIDS is insulting and

it's not true.

MR. PERRY : Mr. Speaker, I agree it would more fruitful in this House if there were less insults and more rational discussion.

Interjections.

Mr.

Speaker, would the minister commit himself, then, on behalf of the

government to provide treatment services for those addicts uncovered in

the needle exchange program who are seeking treatment and for whom

there are presently no treatment services?

HON. MR. DUECK :

As Minister of Health we are concerned about all diseases, all

illnesses, and wherever possible we will implement treatment services

We have done so in the past; we will continue to do so in the future.

MR. HARCOURT : Well, do something.

HON. MR. DUECK :

I can read you that whole list if you want to take up another fifteen

minutes. I can tell you all the things we have done in the AIDS area. I

can eat up the whole clock if you wish.

PURCHASE OF PROPERTY ALONG

CASSIAR CONNECTOR ROUTE

MR. CLARK :

A question for the Minister of Highways. The Cassiar connector is to be

built through the riding of Vancouver East. The Ministry of Highways is

currently purchasing houses along the route, but the remaining houses

adjacent to the open depressed freeway will be only six metres

away — that's about twenty feet. All that separates the houses

from the open depressed trench is about twenty feet and a ten-foot

chain-link fence. Clearly that's not good enough.

Has the

minister decided to direct his staff to review the situation along the

Cassiar corridor with a view to purchasing more homes and doing more to

mitigate the impact on Vancouver East of this freeway that cuts right

through the neighbourhood?

HON. MR. VANT : Now that

the price of homes has somewhat stabilized in the overheated real

estate market, my staff is progressing very carefully and slowly in

acquiring the necessary right of way. We've now approached about 50

percent of the properties we need in order to proceed with that very

worthwhile project, because that is the most congested intersection

this side of Toronto — one of the worst spots in North America.

is the tradition in my ministry, we always proceed very sensitively in

these projects. Certainly I will take due notice of the observation the

member opposite has made and consult with my staff, who have a very

good reputation for being very sensitive to these local neighbourhood

issues.

ST. ANN'S ACADEMY

MR. BLENCOE :

I have a question for the Minister of Municipal Affairs, Recreation and

Culture. It's been several months since the Provincial Capital

Commission announced that it had reached an agreement with Peter

Daniel, a well-known supporter and friend of this government, to lease

the publicly owned building and grounds of St. Ann's Academy. None of

the details of that lease or the arrangements for that incredible asset

have been announced to this community. When will the minister reveal

the terms under which Mr. Daniel has obtained a lease for St. Ann's and

the arrangements that have been made for that public building?

[ Page 8422 ]

HON. MRS. JOHNSTON : The full range of points included in the lease will be made available in due course.

MR. BLENCOE :

A question to the minister again. These arrangements and discussions

have been going on for months and months and months. The entire process

has been in total secrecy. People in this community have had no input

into that decisionmaking process. Will the minister make a commitment

to the people of this region that she will table the details and the

arrangements for how that building is to be used by the private sector?

HON. MRS. JOHNSTON : You are absolutely correct. This process has taken a considerable length of time —

far longer than I had expected. The Provincial Capital Commission is

very concerned about protecting the provincial asset. They are making

sure that all the t's are crossed and the i's are dotted before it's

finalized.

SALE OF BCEC LAND AT WHISTLER

MR. WILLIAMS :

To the Minister of Crown Lands regarding the north village area in

Whistler, the lands held by BCEC. This is a large block of land, again,

that has been in the hands of BCEC. Can we be assured by the minister

that that block will not be sold as a big block like the Westwood lands

and the Expo lands before it were?

HON. MR. DIRKS : Negotiations are going on with the rural municipality of Whistler right now as to the disposition of that property.

MR. WILLIAMS : Has the minister's staff then carried out an analysis

which would indicate the economic benefit of one route versus the other, that

is, the smaller-parcel sale rather than the large parcels?

HON. MR. DIRKS :

Well, I'm very pleased, Mr. Speaker, to say that we do more

investigation than the member opposite did when he purchased lands in

Whistler and was the minister responsible for everything. Let me assure

him that we will look at all alternatives.

MR. WILLIAMS :

With respect to the golf course lands and the convention centre at

Whistler, can we be assured that they will remain either in public or

community hands?

HON. MR. DIRKS : Mr. Speaker, I am

very pleased that he has brought up the whole matter of Whistler,

because this government has prided itself in talking to municipalities

and dealing with municipalities and local governments, and we're

certainly in the process of doing that right at this time concerning

the convention centre and the golf course.

FREE TRADE AGREEMENT

MR. BARLEE :

To the Minister of Agriculture. Several weeks ago I asked the minister

whether there was anyone on the staff of his ministry who had been

specifically delegated to monitor the negative effects of the free

trade agreement and the long-term trends or options open to those areas

of the agricultural community that are at risk: namely, grapes, soft

fruits and so on. I received an answer which was perhaps evasive. My

question is this: can the minister confirm that there is no one on

staff at the ministry to monitor the impact of the free trade agreement?

HON. MR. SAVAGE :

I would tend to agree that if you're asking for a specific designation

of a person on staff, no, there is not. There is the deputy minister's

level, who are looking at the overall impact of trade on the specific

commodities. We are also looking at the impact of future free trade

issues relative to the horticultural industry — which includes grapes, I might say —

and at the fact that if there are negative impacts, how we can best

serve that impact. That's being monitored by our whole ministry in the

specific areas. But the issue of free trade is that of the federal

government relative to the federal government in the U.S. Our ministry

is taking a good look at what the impacts will be. To say that we're

monitoring on a specific person basis, no, we're not; it's an

observation by the ministry as to what the impact will be.

[2:30]

If I can use a good example, in the discussions on free trade there

was the grape agreement. I can tell you that in the agreement to pull

out a number of the grape vines, there is a great deal of enthusiasm

about the vinifera-type grape vines that we left in the ground. There's

terrific optimism, and they believe that the government is on the right

track. We're going to help those producers market a premium product in

this province, throughout Canada and also throughout the world, if

possible.

So I believe that there are some very positive

issues that have come forward relative to that agreement. From the

perspective of the Okanagan grape growers, they do have a great future,

and we will help them maintain that. It's extremely important, I

think, not only from the agricultural perspective but from a

tourism point of view. These little boutique or farm estate wineries

will have a great opportunity in the future, and I don't think there's

anything negative that we can say about what is being proposed.

Orders of the Day

The House in Committee of Supply; Mr. Rogers in the chair.

ESTIMATES: MINISTRY OF ENERGY,

MINES AND PETROLEUM RESOURCES

On vote 20: minister's office, $282,636.

[ Page 8423 ]

HON. MR. DAVIS :

I want to make a few introductory remarks about the budget of my modest

little ministry. The estimate for the ministry is down from $39 million

last year to $36 million this year. When I say "modest, " I want to

point out that expenditures in Energy, Mines and Petroleum Resources

are one third of 1 percent of the total budget of the government. The

budget is roughly 1 percent of the gross value of production of the

industries with which it is concerned, and the revenue to government

from those industries is of the order of 20 times the budget of the

ministry, so that gives some idea of its size and of the scale of its

operations.

Some years ago there were approximately 500

employees in the ministry. Currently there are of the order of 360

employees. We have been engaged in a streamlining process, although in

the last few months we have expanded the geological survey operation,

and that has added a few FTEs. Streamlining has focused primarily on

taxation, simplifying the tax regime both in respect to metals and

energy commodities so that the taxes are more readily administered,

with fewer personnel and less likelihood of errors being made either in

collection or accounting.

Our priorities currently

emphasize more geological information for industry, more mapping and

more activity in support generally of the mining and energy industries,

but also incidentally supporting forestry, the environment and others

through the mapping process.

Reclamation in respect to

mines is of increasing importance, particularly because of acid

leaching, which is common in the wetter areas of the province We are

focusing more on mine operations, screening new mining operations and

vetting existing ones with a view to ensuring that pits, etc., when

they are abandoned, will be properly serviced for all time Reclamation

is an important activity; it is much more important than in the past.

Over

the last several years, several substantial projects have been

launched. In 1987, along with the federal Department of Fisheries, we

managed to get the Kemano completion project launched. That followed a

very careful environmental review. While the project was scaled down

somewhat, construction is now underway, and a sizeable new source of

hydroelectric energy will be available at half or less of B.C. Hydro's

cost. It is economic, environmentally clean and a significant addition

to the resources in the northwestern part of the province.

Last

year there were several privatization efforts B.C. Hydro's gas division

was sold to the private sector, and later in the year the local railway

operations of B.C. Hydro were also sold to the private sector. Both

yielded satisfactory returns in terms of cash payments to Hydro and to

the government.

Generally, from a policy point of view, our thrust might be described as non-interventionist

and certainly market-oriented. The pricing of our commodities is dictated more

and more by market forces than by government. We have encouraged deregulation

not only of natural gas pipelines but also of B.C. Hydro and other utilities'

transmission lines — de-regulation in that case meaning that they are more and

more to act as common carriers, and that buyers and sellers can work through

their transmission or pipeline facilities, buying their own supplies at source

and determining their own prices by negotiation rather than as a result of rate-setting.

The

industry outlook on the energy side is reasonably optimistic. As far as

power is concerned, we are still substantially overbuilt and won't need

large new facilities for some years. On the gas side there are some 40

years of supply in hand. We certainly have all the coal we can sell and

more. The price outlook for oil is for a continuation of present world

prices for some time. They are relatively depressed compared to a few

years ago, and that has pulled gas prices down and also influenced coal

prices. So the situation, in a nutshell, is one of oversupply, of

adequate but efficient capacity and low or relatively stable prices as

far as consumers are concerned.

I think that covers the

broad outline of the ministry, its size, the emphasis from a policy

point of view. I'll certainly look forward to remarks from members of

the House in connection with my ministry.

MS. EDWARDS :

Thank you, Mr. Minister, for describing this as a modest little

ministry. It certainly gives me a challenge, I can tell you. It seems

to have a lot of things to be done.

Before I begin, I would like to welcome Mr. Horswill and the other mines employee to the House.

The

direction that I think needs looking at overall in all the questions

I've prepared and the kinds of things I want clarified has several

directions which it might be useful to lay out now. Particularly

interesting is the idea of public process. This is a matter of

particular importance to me and my colleagues and I think has

traditionally been that way. It's a matter of some considerable concern

how this matter of public process continues so that it can adequately

address the concerns of the citizens of the province, with the kind of

initiatives being made by the government towards privatization,

deregulation, centralization — the whole business of letting the

market take control of what happens. When the market takes control, of

course, the government has a harder time directing what should be done

in the public interest. So it creates some problems, I would suggest,

as to how the public has input into what is being done.

The

minister and the government, certainly within this ministry, is

declaring a particular interest in what happens with the environment,

and I think some of my questions will certainly test that determination

by the minister. Whether the judgments that will be made, and over

which the minister has some influence, will in fact take into account,

in a serious and effective way, the costs that otherwise go to our

environment.... In a world where environment is certainly more on the

minds of people, what we do, particularly with energy, may well

determine our opportunity to survive on the planet. I think that

attitude is very clear in our world now. Our choices, particularly with

reference to energy, are extremely

[ Page 8424 ]

important

as to whether or not we last, whether or not we have a reasonable place

to live, a reasonable environment and an ecosystem that is still intact

in the next century. So our short-term policies have to look forward to

the long-term policies.

I think people are ready for that.

I think they are demanding that. In the ways that we exchange views, we

have to ensure that those kinds of goals are met. Partly because of

that, partly because of what the minister is doing, I think the whole

energy

section of this ministry is in a state of flux right now, and

we're looking to what will be the setting of precedents. The ways that

things are done are going to have a great determination on what comes

next.

In the mines part of the ministry, I think mines are

recovering from some very difficult years. In particular, metal mines

currently are experiencing relatively good prices after some years of

very poor pricing. The coal mines are beginning to come out of their

slump. Many changes are being made. Certainly they have been introduced

by the minister in legislation, which in some sense precludes some of

the discussion that we might have had in these estimates. However, I

basically think it's important that we remember constantly that the

questions I have are largely directed to those particular goals: to

increase the involvement — and the important and effective involvement — of the people of this province.

follow along with that, I might say to the minister that I expect to

talk mainly about the energy sector of the ministry first; so we will

begin with that and deal with questions on the mines section, not

totally discretely perhaps, but I am trying to keep it as discrete as

possible.

To begin with, I want to talk about B.C. Hydro and, of course — you might even call it the bible of B.C. Hydro —

the 20-year resource plan. It's a new plan this year and different from

last year, which is a good idea. Institutions like B.C. Hydro should be

doing constant planning and putting out that kind of thing. This year

it's a very large document. According to the preface, that's because of

the requests that it be larger and have more things in it.

[2:45]

The nature of these reports, as the minister has probably observed — I certainly

have — is that it's highly repetitive. You'll find the same phrases

over and over again in these reports in different places. One of the phrases

in this 20-year plan is that B.C. Hydro will be undertaking during 1989 — this

is the phrase that I would like the minister to respond to — "a comprehensive

analysis and public discussion of the options available." I applaud the

idea that we look at a comprehensive analysis of the many decisions that are

being made on the energy front. I would applaud public discussion of the options

available.

question to the minister is: what does he have planned to flesh out

this declaration by B.C. Hydro? When is it going to begin? I imagine

the minister is going to say that it began with one conference in

Vancouver this spring. That was a very good conference and probably a

very good beginning. Would the minister respond to that particular

point: the comprehensive analysis of what's going on, when does the

public discussion expand from that conference, and how does the

minister see that it will happen?

HON. MR. DAVIS :

Last fall B.C. Hydro began a process which is novel in British

Columbia. It called publicly for expressions of interest from the

private and public sector, particularly relating to new generating

plants. There were no holds barred. It could be anything from small

hydro to co-generation at forest products operations through to large

hydro, coal or gas-burning plants.

The response was

remarkable in the sense that there have been several hundred

submissions, many of them from small operators, but a few dozen from

larger engineering companies.

B.C. Hydro is presently

vetting those proposals and developing a short list. From the short

list, it will make some selections. As far as public debate is

concerned, those selections will then have to go to the B.C. Utilities

Commission, and the new generation which emerges as both economically

the most desirable and environmentally the safest will have gone

through the public hearing process before the Utilities Commission. To

recap, B.C. Hydro has invited the world to indicate what projects could

be built in the province and has been screening as to economics and the

environment. They will be putting forward the best.

There

will be an opportunity for those who have been turned down to appear

also before the Utilities Commission, but the public process will

really begin when B.C. Hydro has developed its short list. That will go

to the Utilities Commission for public hearings.

MS. EDWARDS :

Is that all? That is true; the Hydro utilities certainly did ask for

expressions of interest for generation of power. Very few members of

the general public were involved in that. I thought you meant that this

would be for the general public. I thought you meant that the general

public would be able to have its input and to balance the options that

are available.

There are several options put forward here.

This would be a good basis for a public discussion. There are other

sorts of things that have been prepared and other ways of doing it: for

example, the kinds of discussion groups that could go on and the kind

of thing that goes on around Power Smart. I would applaud that that is

being taken to the public. It's being taken with a specific planned

initiative to go out and do it. People have been hired to do it; they

have been trained as to what there is to be done. They are going out

and taking to the public the ideas about Power Smart. But if that is

the extent of what the public is going to know.... If you are a postman — if there happen to be any anymore —

in British Columbia and you go home after work ready to wonder about

the electrical energy policy of this province, you may go to a meeting

on Power Smart. But beyond that, what do you do? You are certainly not

going to

[ Page 8425 ]

make

a proposal for the generation of electrical power. If you are left with

the only input to the process being to attend a Utilities Commission

hearing after the decisions have been made by B.C. Hydro and the

government as to which of the three alternative directions they may go

to, that seems to me not an adequate way to have input into the

direction that the utility is going to take.

I would like

the minister's response. Is there more? How does the ordinary citizen

in the province have some input into the choices? Probably the most

important choice to the man and woman on the street is going to be how

much of our policy is going to depend on conservation and how much is

going to depend on a different way, because that is one of the issues

on the front burner.

HON. MR. DAVIS : As the hon.

member knows, B.C. Hydro has been quite assiduous in getting around the

province and talking to people generally — certainly in a number of regions —

as to the advantages of using power more efficiently. The member made

reference to the Power Smart program. The use of more efficient

lighting, more efficient motive equipment and so on can not only save

energy but postpone for several years the construction of any new

generation.

The Power Smart program, which is in the

direction of conservation and better economics as well as better

environmental practice, is underway. I could simply say that B.C. Hydro

may, through the Power Smart program, save the equivalent of half of a

Site C— something of that order of magnitude — over the next three

or four years. To put it more realistically, it simply postpones the

construction of a Site C or some equivalent plant or plants for some

years.

This is done for environmental reasons, but I think

also for good, sound economic reasons. It's cheaper to conserve in that

manner, educating not only the public but industry, if you like, as to

the more efficient use of energy. This will cost a fraction of the cost

of building a new plant. It's good economics as well as being sound

environmentally. I think if there is one characteristic of Hydro's

current policy it is emphasizing conservation—Power Smart, if you like — for both environmental and economic reasons.

[Mr. Peterson in the chair.]

That process can, in its initial stages and throughout, involve the public.

I can't imagine the public, even though the public had every opportunity

to make submissions as to new generation.... They'd have to have some engineering

background. They'd have to have some idea of the sites of fuel or water

licences to make submissions for new generation. But at least it's a call

to other than Hydro's engineers to look at new resources for the future.

Until those highly technical submissions are in, and until the preliminary screening

has been undertaken by experts, there is not much point in acting or pretending

that every one of those projects needs to be examined in depth by the public

at large, because it's uneconomic and irrelevant in most cases. There are

many projects that will have been quantified in that early submission but set

aside because they are either too expensive or environmentally risky and so

on. The process in that case — and I am not talking about conservation now;

I am talking about new production — will occur when the short lists are developed.

Then the public will have an opportunity through public hearings before the

Utilities Commission.

MS. EDWARDS :

That's my concern: that the public doesn't know whether the minister

considers all of the projects that may have been proposed through the

request for proposals — whether he measures them equally or on

what grounds he is going to make the decision that they are

environmentally too risky. They don't know; they basically don't have

any idea what kinds of proposals were made.

I think that in

some way the people deserve a say in whether or not they think the risk

that comes from thermal-generation, from carbon-producing fuels, is

greater in certain circumstances than a hydro dam and the flooding of

land. They don't know whether they're talking about dams right across

the province or about 17 thermal-generation plants of a certain size,

and what the fuel might be. That's why I'm suggesting to the

minister — and I've suggested it time and time again — that

there be public input and public discussion of the options available.

That should mean that the options are made known to the public and that

the public should be able to look at them in a way they can understand.

You

have said another thing that's very true: not everybody understands all

of the details of developing power. But there are certain general

principles that the public understand very well, and they need to be

able to deal with them. My first point is that they aren't put forward

to them; my second point is that even if they are, how does the public

know to whom they are to feed back what they might feel about them? If

they have to wait until such time as we're doing a Utilities Commission

hearing into a specific project, not a number of projects, and they

don't know how a single project will impact on the total, then we have

limited the ability of the public to tell the government what they

want, what options they want, and whether in fact they want Power Smart

and Resource Smart to continue or to be increased substantially.

this regard, I might also ask the minister what the public process for

Resource Smart is. I mean, as far as I know, we keep falling back to

this single example: Power Smart. Resource Smart is stressed in the

20-year projection, and I'm not sure how that is going to be taken out

or whether the public is going to have impact on that aspect of what

Hydro is proposing. I suspect that it will be an extremely positive

process, as the Power Smart process would be.

So my

question again to the minister is: does he plan at all to allow the

public to have some input into the terms of the very broad policy?

[ Page 8426 ]

HON. MR. DAVIS : Mr. Chairman, the hon. member says that she — perhaps even her party — endorses

Power Smart because that's conservation. Resource Smart is a program

whereby a selection will eventually be made of the least costly and

environmentally least-damaging generating and power transmission

projects. Hydro is developing a shortlist. The shortlist will then be

put out in full public view, and the final selections will be made as a

result of a public process.

I wonder if the member, who

comes from the Kootenays, would immediately outlaw any coal-fired

plants. Has she some reason to outlaw any number of these different

projects before they are even advocated by different groups:

engineering companies, coal-mining companies, hydro companies, and so

on? Hydro has asked for input. Anyone could have put an idea in. Hydro,

with our ministry, is screening the various submissions, and it is only

the shortlists that will really be scrutinized in some depth. Certainly

all of the considerations, particularly the environmental ones, will be

addressed.

[3:00]

I think that among the projects on the shortlist will be

co-generation developments at several of our major pulp mills and

sawmill complexes, particularly in the Cariboo. They will eliminate

beehive burners and so on and hopefully will generate electricity at or

close to the price which Hydro would otherwise have to pay by

developing Site C.

So there will be a number of projects.

They will be reduced to a shortlist, and the shortlist will be examined

in the full public gaze in a proper hearing before the Utilities

Commission.

MS. EDWARDS : The minister makes a good

point He asked me whether I would outlaw a thermal-generation plant in

the East Kootenay. Of course, because there has been a proposal for one

thermal-generating plant in the East Kootenay, I have examined it as

closely as I can. A second application has been made, but there are no

plans for it. There is practically nothing you can get your hands on to

say: "What is it? What is proposed?"

But those are only

two, Mr. Minister. I read, when I go through this, that these two

plants are 120 megawatts and at the outside 720 megawatts of power, and

I read in here that there is a projection, when you look at the

resources there, for 3,900 megawatts. That's an awful lot of megawatts

of power to come out of coal out of the Elk Valley. If I'm looking at

3,900 megawatts being burned in that valley and being produced for some

other part of the country, it's going to be a different political

issue, and what we're talking is politics. It's going to be a different

political issue than if we're talking 120 megawatts or maybe 720

megawatts, and that's what I'm suggesting to you.

It's not

okay to go ahead with one or two of these projects when, in fact,

overall the utility and the ministry may be looking at a much larger

conglomeration of generators together, and the effects may be very

different. Besides that, I suspect the people of the province are not

too sure how the ministry does its valuation and calculates the costs.

believe I brought this up before. The northwest power council — I

haven't got the name exactly right, but the power council for the

northwest states —

has brought forward a policy that there be a 10 percent increase in any

cost calculation for the environment. That's a pretty blunt instrument

to be using, but it at least gives some value to some of the

environmental damage that doesn't otherwise get into the costing of a

project.

My question to the minister is: has there been any

work done on trying to determine the basic costs of.... I don't think

we've even adequately put a basic real cost to the people of the place

for flooding a valley. But have we put any costs to putting carbon

dioxide into the air in such great amounts that we are contributing to

the greenhouse effect? Obviously the minister is not going to be able

to say right off the bat that it costs 0.2 percent of this kind of

project and 0.7 percent of a different kind of project.

Because

we can't do that and because it is a political issue — power is

something that everybody in the province wants to say something

about —

has the minister considered some way to get that public input and

clarify to the people of the province how the decisions are made that

this is environmentally safe and that's not environmentally safe? There

are some major questions about that which are not clear in the public's

mind, and I suspect not in some other minds either.

HON. MR. DAVIS :

The hon. member mentioned a figure: I think 3,900 megawatts. I think I

said in my opening remarks that we're overbuilt. We're not about to

build a number of projects. We've got time. There will be one, two or

three projects of some scale nominated for closer scrutiny in the next

six months or so.

One or perhaps two will finally emerge from the public hearing process. During that process, were a thermal plant —

for instance, a coal-fired plant in the Kootenays.... It's unlikely,

but were one of those to qualify for the short list, that plant would

have to meet the province's environmental standards. The question

really is: are the standards not only realistic, but are they tough

enough? The manner in which acid rain from a coal-fired plant must be

reduced substantially would have to be very carefully explained,

canvassed, costed and so on.

I think in the case of thermal

plants located in the Kootenays, even though it's relatively

low-sulphur coal, the cleanup plant could add 15 percent, 20 percent or

even 25 percent to the capital cost of the project. That obviously

impacts on its economics relative to hydro, to wood-waste-burning

plants in the Cariboo and indeed to natural-gas-burning plants, which

are the cleanest of all the thermal plants. So the environmental

concerns are there, and they'll be costed.

There's a lot of

information around the world as to how to improve the cleanup of all

those kinds of plants. It will, however, be produced in respect to the

[ Page 8427 ]

shortlist —

not all conceivable projects. For the moment we're looking at all

possibilities, including thermal generation. We're not ruling it out

altogether.

For environmental reasons the disposition is

towards hydro or perhaps natural-gas-fired plants, but hydro has its

own particular kind of environmental impact, as was obviously

demonstrated in the Site C hearings. Those kinds of hearings will have

to be held for new projects.

MS. EDWARDS : It may be

time to ask the minister whether in the public process related to Site

C, he intends, when Site C is reactivated, that there be new public

hearings into Site C?

HON. MR. DAVIS : Site C went

through the full gamut of public hearings over a period of three years.

As I recall, the conclusion reached by the special inquiry was that

given certain precautionary measures, construction of Site C could

begin. However, at that time they pointed out the obvious: there was a

surplus of generating capacity in the province and Site C wasn't

needed. I am not convinced myself that we should invest another three

years going over the same old ground to check out its environmental

acceptability.

MS. EDWARDS : Would the minister agree

that there may be new environmental evidence on what is a danger to

human health and that it wouldn't be going over the same ground,

because we would be considering new knowledge?

HON. MR. DAVIS :

If there is new information, fine; I think it's up to people to bring

it forward. I can't imagine new information relative to human health

dealing with a hydroelectric project. It is simply storing water in a

river system with a conventional dam. I just can't imagine human health

concerns that haven't already been addressed.

MS. EDWARDS :

To follow that up, what about such decisions as on the Columbia River

Treaty? How does the public have any input into the Columbia River

Treaty and what the minister decides to do with it? The minister is

going to have to make up his mind in less than a year, I believe, so

that B.C. Hydro, as the entity, can put forward its plan a year ahead

for five years ahead so that we know what we are doing.

is not a lot of time for the Columbia River Treaty. There are a lot of

ideas about what's to be done with the Columbia River Treaty downstream

benefits, and I gather that the minister plans to make some trade-offs

with the downstream benefits. If the minister wants to do that, I think

he should be letting the public know what he intends to do and give the

public some say in it. Does the minister have any intention of getting

public input for that decision?

HON. MR. DAVIS : I

think the principal forum for that debate is this chamber. The

downstream benefits, which are the equivalent of another Site C, will

be flowing into Canada roughly a decade from now, and a decision has to

be made at some point on whether we simply take that power, which is

currently being generated for U.S. consumption, bring it to Canada and

postpone the Site C or its equivalent.

That energy belongs

to the people of the province, not to B.C. Hydro. It is an important

decision. My instinct is to bring it back and use it. I mean, it is

currently being produced. Obviously it is environmentally benign —

it's already being generated. We wouldn't have to build any new plant;

in fact, the Americans have to provide the necessary transmission to

the border free, so its economic cost is zero. It's the least-cost

energy that we will ever have. it's one of the principal benefits of

the Columbia Treaty. Admittedly, it's taken 30 years for it to

materialize, but those benefits were sold in the States for 30 years in

order to help pay for the dams.

I don't believe that we — you, us, British Columbians —

have to make a decision on the downstream benefits for some years. We

mustn't be panicked by B.C. Hydro or anyone else into making a decision

on the downstream benefits. If we were to leave them in the United

States, and I'm taking a purely businessman's approach to it, we should

at least know what they're worth in the United States, what the

Americans least-cost alternatives are and then add something to that.

Otherwise, they come home. Because they'll cost us nothing, because

they are considerable in volume and capacity, I think they are a

resource we should use in our long-term planning for our energy supply

in this province.

I don't agree with those who say we have

to make a decision shortly. The energy isn't available for ten years,

and it's unique. It's power generated in the United States as a result

of controlled water flowing from Canada. It's ours forever. It's an

important resource. Always keep it in the back of your mind as one of

the alternatives to a Site C or alternatives to other generations in

the province. We're just in a fortunate position that a treaty was

concluded and projects built which set up a regime which gives us

zero-cost power in significant amounts roughly ten years from now.

MS. EDWARDS :

Would I be interpreting you correctly then to say that unless the House

were given notice differently, your intention is that the downstream

benefits would be repatriated and any five-year plan that B.C. Hydro as

the entity has to make would depend on that determination? Otherwise,

as you say, the Legislature would be the place to debate anything

different, and therefore, were you minister, you would bring it back to

this Legislature if you planned to do something different?

HON. MR. DAVIS :

It's a very important decision not just in power terms but also in

monetary terms. It depends what price you put on U.S. alternatives. You

can pick a figure anywhere from $2.5 billion to $5 billion as its

lifetime value. That's a big decision.

[3:15]

B.C. Hydro does have a problem. It exchanges power with the Americans with the Bonneville Power

[ Page 8428 ]

Administration.

There are economies in cooperation. The Bonneville Power Administration

particularly is forever putting pressure on B.C. Hydro to make up its

mind what it's going to do with downstream benefits before they'll

enter into other arrangements. That's where the pressure is coming

from: the American side.

While I sympathize somewhat with

the executive of B.C. Hydro, they have some interesting cooperative

arrangements with Transalta in Alberta, Alcan and Bonneville in the

States. Nevertheless, my inclination is to resist that kind of

short-term planning process and say: "This is too valuable.

Environmentally it's the best energy we'll ever get. Let's decide on

its future in the fullness of time." As far as I'm concerned, I think

it's a great resource for the province.

MR. PERRY : I

don't want to interrupt the member for Kootenay for long, but I wanted

to interject in this discussion with a few questions. My colleagues had

told me it would be interesting to listen to the minister, and I'm

delighted to assure you, Mr. Chairman, it is fascinating. He has a very

interesting background. I suppose he's been involved with energy

questions at least double the length of time that any of the rest of us

have, possibly longer, even though he's still young.

think there are some interesting lessons that we should strive to learn

from his experience and the experience of this Legislative Assembly in

the history of the Columbia River Treaty. If memory serves me —

I'm sure the minister will correct me if I'm wrong — he

served on the staff of General McNaughton at a time when General

McNaughton attempted to avoid some of the mistakes of the Columbia

River Treaty and prevented other mistakes which might have been made by

ensuring, for example, the right to divert the Kootenay River or

achieve alternative benefits.

General McNaughton had great

foresight. In my view, he was one of the few Canadians who began to

realize what was at stake with the Columbia River Treaty and had the

intellectual resources to deal with the Americans, who were far

superior in their research strength and the strength of their

government, in the intellectual power they brought to bear on the

treaty negotiations, and who therefore snookered us.

It's a

matter of open historical record that the Columbia River Treaty was a

very bad deal for Canada, and I think we need to ask ourselves why we

got into it, as we approach the renewal of the treaty. Far be it from

me to recount all that history. I only know it in a fragmentary way. If

we had time to review the accounts of the debate in this assembly and

in the Parliament of Canada, I suspect we would find much great humour,

looking backwards historically in those debates, and we would think it

pathetic how foolish some of the speeches would sound now. Part of the

lesson is: how do we avoid that mistake now?

Therefore it

was reassuring to me to hear the minister say that his bias is to

restore the power to Canada. It's reassuring to see that he admits the

complexity of the decision; that doesn't surprise me, but I was pleased

to hear him lean towards his bias. What disconcerted me more was his

assumption that the debate over the treaty should proceed as its

highest and final point in this assembly. Why do I say that? We are,

after all, the final arbiter of government in British Columbia, at

least in theory. But I think we're among the least prepared. Mr.

Chairman, that's the lesson — that we need to be modest enough to

learn from the history of the treaty: very few of us will have, at the

time we debate it, any understanding of what we're debating. We won't

understand the Bonneville Power Administration and the tie-ins to B.C.

Hydro; we won't understand whether $2.5 billion or $5 billion as a

discounted present value of that power is a genuine value, any more

than the former Premier, W.A.C. Bennett, understood what he was doing

more than 30 years ago in signing the Columbia River Treaty.

Interjection.

MR. PERRY :

The Minister of Forests (Hon. Mr. Parker) says: "Don't ever speak for

him." I'm glad that I don't have to answer for his record, Mr.

Chairman. I don't think anyone would want to have to answer for his

record on the treaty or on smaller but equivalent deals, like, as the

minister well knows, the negotiated settlement in the Skagit Valley,

where the government of the time, the former minister of resources, Ray

Williston, signed for roughly $35,000 per year for power that

ultimately was valued at $4 million (U.S.) per year, and simply

assigned the same flooding rate to very valuable land in the Skagit

Valley, $5.60 per acre per year, that he had assigned to Crown-owned

land in the Peace River valley, to flood Williston Lake behind the

Bennett Dam. When you look back on that record you wonder: how could

the civil service of British Columbia have recommended to a minister

something so ludicrous? How could a minister and in fact a cabinet, by

order-incouncil, have voted for something so ludicrous? You have to

ask, I think: how do we ensure that we don't make the same mistake

again?

To me, Mr. Chairman, there are two possible answers,

and I do not think that one of them lies here in our Legislative

Assembly, as much as I wish it were otherwise. I certainly don't

profess to have the wisdom to make a decision on a subject like this

intelligently, with the knowledge that we will have before us. The two

solutions I see are: (1) the widest-ranging possible public debate

through a royal commission or some sort of public review commission,

led by the ablest Canadians we can find; and (2) using our legislative

committee system to pursue this issue, with a long timetable, not a

timetable of one session or a couple of months but one of several years

to review the issue in a non-partisan way and look at what's best for

the province of British Columbia over the available time. I see this

not as superseding the responsibility of the Minister of Energy or the

cabinet or the Premier, but simply as complementary, and potentially

adding the ability to

[ Page 8429 ]

find

information or see perspectives which we would not otherwise have

available to us; and perhaps an exceedingly modest investment of public

funds, in attempting to avoid a major error that could cost us billions

over the years.

I wonder what the minister's perspective on

that would be. Does he feel so confident, in light of the historical

record, that he is certain in his conscience that he can make the best

decision, faced with the monolithic and intensely nationalistic and

self-serving nation that we face south of us, who historically do...?

Interjection.

MR. PERRY :

The minister asks whether that's why I left the United States. No, it's

not. Mr. Chairman, I'd like to ask the Minister of Forests to withdraw

that remark. I think it's completely inappropriate and insulting.

MR. CHAIRMAN : May I remind all members to address their comments through the Chair when they do have the floor.

MR. PERRY :

Mr. Chairman, I think it's inappropriate, because I am not accusing or

implying that the Minister of Energy is stupid or incompetent nor am I

in any way denigrating him. I am simply asking him to consider and to

tell us his opinion on how one deals with this historical reality.

you look back at Canadian history, look at the Alaska boundary

commission where we were snookered. Look at the A-B line in Hecate

Strait, where now the Canadian fish skippers are being pirated by the

Americans because it is a superior country, it has more resources and

they have negotiated better than we have historically. Let me leave it

at that and ask the minister to respond.

HON. MR. DAVIS : I think the downstream benefit issue for the future — not the past —

is a simple one. There is a large block of power generated in the

United States. It comes off generators in Grand Coulee and the other

dams down to the sea, and it is ours as a matter of law, treaty and

economic right.

A simple decision has to be made whether we

will bring it home and use it as a zero-cost resource, both

environmentally and economically, to benefit consumers in this

province, or whether at some price we leave it down there. That's the

simple decision. It's not a complex issue; it's nowhere near as complex

as the negotiations which led up to the treaty itself.

[Mr. Pelton in the chair.]

The

hon. member implied that the Columbia River Treaty was a bad deal. In

some words at least, he extolled General McNaughton. I was seconded off

and on to General McNaughton, and I worked for C.D. Howe. General

McNaughton was an engineer. The NDP in those days, as now, were

Canada-firsters and they blindly followed an engineer. The engineer was

going to dam every valley in British Columbia, fill it up with water

and divert it into the Fraser River system.

Environmentally

and ecologically, that was the most damaging thing that could ever have

been done, but the NDP followed that throughout. I can remember Tommy

Douglas going to Golden. Tommy was about as innocent a subject as most

of the NDP at that time. At a by-election, he went to Golden and gave a

speech extolling the McNaughton plan for the Columbia, and was

immediately told: "Tommy, if your idea was in place, you would be under

300 feet of water."

That's as much as the NDP knew about

the subject in those days, and they know about as much today. They

backed an all-Canada project which would fill up the mountain trench

from the international boundary line up through Canal Flats, through

Golden, around to the McNaughton dam, and then they would put a

diversion tunnel into the Thompson. That was the McNaughton plan.

thought that short-term he could also do a deal with the Americans.

Naturally when they saw that scenario, there was no deal possible. But

that was the McNaughton plan. The plan that actually developed was in

response to the American need for controlling a wild river flowing into

the United States, and the projects built had a dual function: (1) they

created storage capacity in Canada and controlled water flowing into

the United States; but (2) those dams served as the platform for

generators.

The

dams were substantially built free of cost

at the expense of the Americans, so the Columbia in Canada was

developed. It's not going to be developed again. We are not going to

repeat that scenario. We don't have another Columbia flowing into the

United States; we don't have another river of any scale — save a

tributary of the Columbia, the Okanagan, which doesn't happen to have

hydro potential — which could be developed in cooperation with the

Americans. It's history.

The

Columbia River Treaty was a much more modest development than the

McNaughton plan. When I was Environment minister, in retrospect, I

asked staff to do an environmental analysis of the McNaughton plan

versus the actual treaty plan, and on every one of 25 counts, the

treaty plan was superior to the NDP-endorsed McNaughton plan.

repeat: environment wasn't in style in those days. It was just

kilowatt-hours. The whole thing was measured in engineering terms: what

would generate the most kilowatt-hours? Admittedly you can store

Columbia River waters at a high level in B.C., shunt them through into

the Fraser and put dams all up the Fraser. You can well imagine what

the fisheries industry reaction to that was. It just didn't fly.

General

McNaughton was a great gentleman and Canadian patriot. For a time, he

was head of the Canadian Armed Forces in Europe during World War II.

But he wasn't all that practical, and that's one of the reasons he

didn't continue to head the Armed Forces over there. He had his scheme

developed —another scheme — which was much more modest and

[ Page 8430 ]

saw

us control a wild river mostly at American expense. There was flooding

and considerable environmental impact. I don't think much of that would

be tolerated these days, but nevertheless it came to happen. It's all

in place. We can divert the Kootenay into the upper Columbia; we still

have that opportunity. We can divert over the Rockies and into the

Prairies if we want, but it isn't economical. We can divert into the

Fraser, but it isn't politically acceptable.

[3:30]

1 think the Columbia River Treaty that we have in place is going to

last for a good long time. It has set up a water regime that's

tolerable. I realize that the flooding back into the Kootenays from the

Libby Dam presents us with a difficulty. Were we to divert the upper

Kootenay, the Libby Dam would be irrelevant. Anyway, that's all history.

Today we certainly have to concern ourselves — mostly because of public concern —

with environmental aspects. I doubt very much if anything resembling

the McNaughton plan would ever take place currently. Indeed, I think

the present dams would certainly meet a lot of opposition before they

were built.

MR. PERRY : I would thank my colleague

for her indulgence. That was a very elegant answer, but it wasn't an

answer to the question I raised. I was encouraged to see that the

minister changed his earlier statement from a few minutes before, which

had been that the Columbia power was obviously environmentally benign.

I'm glad to see he recognizes that the Libby Dam, in fact, flooded the

finest wildlife range in North America. It was staunchly opposed by the

wildlife biologists and ecologists at the time.

There

was

not a time when nobody knew about these things. That was a time when

the Social Credit government wouldn't allow those reports to be

published. You could see leaked copies, but you couldn't introduce them

into any kind of official hearing, because the government

officials — the wildlife biologists like Mr. Ray DeMarchi —

weren't allowed to attend the public hearings. They were kept in their

pens like good quiet rabbits.

MR. KEMPF : Sheep.

MR. PERRY :

Like good quiet sheep. They weren't sheep; they knew what was going on.

They told us, and it was known. Earlier, at the time the treaty was

negotiated, clearly there was much less understanding of that. Even

then there was some.

When looking at the Columbia River

Treaty, I'm not going to apologize for anyone who supported plans to

divert rivers into the Fraser River. I don't know whether Tommy Douglas

supported that or not. Be that as it may, if he did, people and

policies change. We don't support that. I've fought much of my life

against hydroelectric dams of that kind against the Moran dam, for

example, when the government wanted to build it on the Fraser. That was

W.A.C. Bennett's government.

The

question with the Columbia

River Treaty is not: should we undo it? Of course not. The question is:

can we avoid some of the mistakes? For example, it was widely

considered by some relevant experts like the economists at Resources

for the Future that the same benefits could have been achieved without

the construction of the Duncan Dam. It gave no power benefit, flooded a

very beautiful and wonderful wilderness valley and had major ecological

impacts on fisheries in Kootenay Lake. I forget the other dam —

Keenleyside Dam or one of the others in the system — which was

considered potentially to have been unnecessary.

think the complexity which I was alluding to is: how do we know? If

we're not going to follow the minister's bias — which I hope we

will —

of restoring the power back to us, at what price will we sell it, and

how will we know whether we're getting a good deal? The Americans are

not going to negotiate softly. They will drive the hardest possible

bargain they can, just as they did in the free trade deal and just as

they have in every other negotiation they ever handled. We will be

negotiating with a country which is ten times as large and has even

more economic power than that, relatively speaking.

The

price at which we would sell power to Bonneville, if we elect not to

return it, is what I'm talking about. How will we know what a good

price is.? How will the public have confidence in that? Are we simply

going to leave it to the Minister of Energy, Mines and Petroleum

Resources and his ministry? Competent as they may be, is that

responsible in light of the mistakes we've made in the past in similar

negotiations? I submit that it's not, no matter whether it be this

minister or my colleague from Kootenay at the time as a minister. I

don't think we have that omniscience, and we can use all the advice we

can get.

For

example, how will we know how to deal with

that option to divert the Kootenay River? Given that there are strong

environmental arguments not to do it, is that something we should now

be prepared to negotiate away, but for a price? If so, what will be a

fair price? I think these are very complex. That's why my suggestion,

Mr. Chairman, was that the minister consider some more open process to

achieve our negotiating strategies — be it a committee of this

Legislature, which has precedent in many of the other Legislatures in

Canada. We're one of the few whose committees never sit. We're one of

the few that doesn't make use of our members— even our government

backbenchers — throughout the year. Be it a royal commission or

some other commission of inquiry — one that can hear from the

interested public, including academics and independent engineers.

HON. MR. DAVIS :

B.C. Hydro, under chairman Larry Bell's leadership, has held a number

of town hall meetings — I'll call them that — relative not

only to conservation or Power Smart but also to new

[ Page 8431 ]

resources, new power developments. I believe he's held as many as half a dozen in the Kootenays over the last 12 months.

Talking

about various alternatives, when I said downstream benefits were

environmentally benign, I was talking about the electricity coming off

U.S. generators. I'm assuming that the treaty regime that's in place

will continue. As far as we're concerned, we can bring that power into

British Columbia at no economic or environmental cost. I'm not talking

history; I'm only talking about future decision-making.

Diversions.

I think the diversion of the upper Kootenay waters into the Columbia is

environmentally and politically so difficult that it may never occur.

It's not very costly to do it, but I don't think it will happen. I

don't see a government of this province advocating it, and I think B.C.

Hydro, paying attention to environmental and other local concerns, is

not going to seriously advocate it. So the Kootenay continues to run

into the Libby reservoir, on down into the States and back into Canada

again.

Diversions into the Fraser and so on were certainly

mooted at a time when power was all-important and the environment was a

minor consideration Today I don't think there's any possibility of

diversion of Columbia water into the Fraser system, for both economic

and environmental reasons, but I think principally environmental.

There's no point in diverting water, at least for power purposes,

unless you have a generating plant downstream. You'd have to build a

series of relatively low-level dams on the main stem of the Fraser from

Yale up to Lytton and beyond, and I can't imagine that happening in

view of the opposition from fisheries, tourism and other local

interests. I think the question of diversions of Columbia water is

essentially academic from now on

MR. PERRY : Mr.

Chairman, as much as I like to hear that answer from one perspective, I

think it's an example of the point I was making. I think the minister

has just potentially given away millions of dollars of benefit by what

he just said. He has given away our negotiating position, negotiating

the renewal of the treaty, because he has said that we will never

divert the Kootenay River. With those very words he has given away to

the Americans something for which General McNaughton fought very hard

at the time. I remember that during the attempt to find a solution to

the Skagit Valley controversy, one of the potential options for British

Columbia was to threaten or plan to divert the Kootenay River into the

Columbia.

Incidentally, diversion into the Columbia does

not involve dams on the Fraser; it involves passing that water through

the Mica Dam, the Revelstoke Dam and the dams downstream, be there new

dams at Murphy Creek or be there generation added at Keenleyside. It

involved diverting it away from Libby Dam into our dams. To stand in

this House and say publicly at this point that he will never do that is

lunacy. It's exactly the example of total incompetence in negotiating

with the Americans that has cost us so dearly in the past in this

country.

see the Minister of Forests (Hon. Mr. Parker)

there looking rather sombre. He baited me earlier as to why I came to

this country from the U.S. There are many reasons why I came here. But

one thing I can tell you, Mr. Chairman, having grown up partially in

the U.S., is that — if any of our ministers don't realize it by

now —

they're very tough businessmen; they drive very hard deals. They

negotiate only in their interest; they don't negotiate in Canada's

interest when they negotiate with us. From one end of the country to

the other — if you go back to the old Woody Guthrie song, from

Maine to California, from the 49th parallel down to the Gulf of

Mexico — they're all Americans. They think of themselves as all

one country, and they negotiate for their own national interests.

can't believe what I've just heard the minister say. I think it is a

stunning political mistake, and we will pay for it in the future.

HON. MR. DAVIS :

Interesting, Mr. Chairman. None of us is here forever. An opinion I

express in this House is certainly not binding on any future government

or indeed the present government. I expressed an opinion. I can imagine

the hon. member for Kootenay (Ms. Edwards) reacting to any suggestion

that we divert the Upper Kootenay into the Columbia. You have to build

a dam, you have to divert water, you have to flood Lake Windermere to,

say, another ten or twenty feet, and so on. You have to do a fair

amount of environmental damage to a very sensitive, beautiful area of

the province. I expressed an opinion. I said from an environmental

point of view that that particular diversion was unlikely. I didn't say

it would never happen. I didn't say that it would never be considered.

recall when the NDP was government and the Libby Dam was just

completed. The hon. first member for Vancouver East (Mr. Williams) was

the Minister of Lands, Forests and Water Resources, and he went

representing British Columbia. He was asked to say a few words and his

contribution to what was supposed to be a great event — ribbon-cutting on an immense dam —

was to simply state that his government would immediately consider

diverting the waters flowing into the Libby reservoir into the upper

Columbia. It's always a possibility. He didn't make many friends in the

United States that day. I don't think he would make many friends today

if he recommended it in the Kootenays in Canada.

Nevertheless,

it's a possibility. It can still happen. The treaty doesn't preclude

diversions, but what it does say also is that if you divert and cause

damage downstream, you are going to have to pay the consequences, so I

think there is not only the environmental impact of diversion to

consider but downstream disadvantages which also have to be paid for

financially.

The hon. member mentioned Resources for the

Future, a well-known, well-thought-of American economic body. Resources

for the Future concluded in

[ Page 8432 ]

the mid-1960s that the Columbia River Treaty projects — the regimes set up by the treaty —

were, if anything, more advantageous to Canada than the United States,

so I rest my case. I don't think the treaty was a bad deal. I think it

set up a good regime. No one in those days counted the downstream

benefits, which were worth anywhere from $3 billion to $5 billion then

as a bonus, so I think it was a good deal.

MS. EDWARDS :

I do have to say that we haven't yet thrashed this one out, the second

member for Point Grey (Mr. Perry) and myself. And I might say that you

may well have given great joy to the U.S. by a comment like that, but

you certainly didn't lose any votes in the Kootenays. It is not

something that the people in the Kootenays want to do.

[3:45]

They have questioned sometimes whether in fact the government might be able

to take some other steps which would be bargainable because we have not diverted

the waters of the Kootenay into the Columbia. I don't know whether that's

possible or not. I think about what the second member for Point Grey said about

the Columbia River Treaty, in particular that it's an important issue and

that people have opinions about it and they should have the opportunity to say

what they have to say about it and to know what the plans are. That, as I say,

is one of my major concerns today.

want to move on to talk a bit about the conservation policies of Hydro

and certainly of the government — as Hydro reflects government

plans, government policy —

to use conservation as part of its management structure. As I said

before, the Power Smart program has been an excellent one. It marks a

change in direction for B.C. Hydro. It marks a change for the

provincial policy on conservation, I happen to think, and our party

believes that is an extremely important direction to go. In fact, as

citizens of the world, we can't afford not to begin to practise

conservation, and I guess the only thing that we could say is that we

think there could be more.

In practical terms, I will say

that you begin small and work more toward it, but I would ask the

minister if he has considered some kind of direction that says that

this is almost the least expensive power that we can get and that's

shown in the resource plan If it is that inexpensive, has the actual

planning for that... ? Has it made an attempt to look at the most we

can squeeze out of it? In other words, is it simply an attempt to sort

of take a whack at the consumer society and say, "Likely we can grab

this much off the top and that will be easy," or is it really saying

that in practical terms we can do this and if we really go at it we can

do more for conservation? Could the minister respond to that and tell

us his feeling about the extent to which we should pursue a

conservation policy in British Columbia?

HON. MR. DAVIS :

I think we should pursue the conservation initiative as thoroughly and

consistently as we can. It is very difficult to anticipate what the

reaction of the public will be, even what that of industry will be, but

Hydro is devoting a lot of staff time to going out, particularly to

companies, and indicating that they can use less lighting, or modified

lighting regimes; that they can install one-horsepower motors rather

than two, and so on. There are many more elements to this initiative.

We'll find out as the years go by what the success is, but I've no

doubt that there are very substantial economies over time simply by

people being more knowledgeable about the wise use of energy. It's more

an educational program than it is a matter of.... Well, it's not a

matter of decree, because clearly the consumers are deciding whether or

not to modify their plant, equipment or processes.

As the

hon. member knows, this is a practice which has been followed

increasingly by utilities faced with very expensive new plant of their

own and, in some instances, inability to get approvals to build new

plant. So they're using the Resource Smart approach to their customers

to modify their demands, and in the process they've found this is the

cheapest energy they can get. It's much less expensive to educate and

promote the wiser use of energy than it is to add bricks and mortar and

plant and equipment.

MS. EDWARDS : The resource plan

suggests that if British Columbians used something other than

electricity to do all the space-heating, water-heating and cooking, we

would be in a position to save 3,000 gigawatt-hours a year. How does

that fit into our goals? Is that where we're going? Is that what Hydro

says we're going to, or is there a different level? Is it this plus

more? Where did we find the goal that we have, if we have a stated one?

HON. MR. DAVIS :

Electricity is not an efficient source of energy for space-heating.

It's certainly not as efficient as the cheapest and cleanest source

available to us now, natural gas. Neither is it the cheapest source of

energy for water-heating. Any sensible heat application of electricity

can be supplied more efficiently using a fuel, and if you have a cheap

fuel like natural gas, even better.

One of the reasons we

privatized the gas division of B.C. Hydro was to have a utility in the

gas business really go after water-heating, space-heating and so on. As

a very loose generalization, it costs roughly four times as much in

plant and equipment to build power dams, transmission lines and

distribution systems for space-heating than it does to drill wells and

build a pipeline and a local gas system. So for any of these

competitive sensible heat applications, gas is a quarter of the capital

cost of electricity, and if Hydro can progressively shed the

water-heating load and not be building space-heating load with

electricity, this too is like Power Smart in a way, but it means a

different commodity is doing that job more efficiently. So taking the

total energy approach, natural gas is much better for those sensible

heat applications.

[ Page 8433 ]

MS. EDWARDS :

This brings a question to mind which I may put a bit clumsily. When the

gas utility took over Hydro Gas and became B.C. Gas.... There is now an

incentive program which takes money out of Hydro's coffers in order to

have people convert to gas water-heaters. Is that correct? You get $80,

$90 or $100, somewhere in there, and that is funded by Hydro. It seems

to be a great benefit to the gas company. Is that a fair deal?

HON. MR. DAVIS :

I know that the gas company counted on picking up a lot of the

water-heating load over a period of five or ten years in the lower

mainland. I can only assume from what the member is saying that Hydro,

as part of its Power Smart program, has a very modest subsidy. That

must be for an old tank or something like that if it's $50.

Regardless,

Hydro is not unhappy to lose water heating, because what that means is

that it has to build Site C or something like that not immediately but

perhaps a year a two later. It's again a Power Smart initiative to the

extent that Hydro's involved. It's not a subsidy to the gas company;

Hydro has no incentive to do that. But Hydro must be focusing on

postponing big investments by moderating its load curve. Remember that

Hydro's sales of electricity went up more than 5 percent last year

despite these kinds of conversions. So Hydro is really having to look

very seriously, beginning in a couple of years' time, at new generation

and new transmission. If it can postpone in any way having the gas

company take over some of its less desirable loads, I think it favours

both the gas company and Hydro.

MS. EDWARDS : I have

another question about a program that was there for, I guess.... It's

not really a conservation program, but I'll ask it anyway — I have

it written here. The Electric Plus program, Mr. Minister, as applied on

Vancouver Island, is now being withdrawn, just as we're talking about

getting natural gas to the Island instead of propane. Could the

minister explain to me the extent of the Electric Plus program on the

Island and why it's now being withdrawn? Why is the timing the way it

is?

HON. MR. DAVIS : Electric Plus, I have to admit,

is essentially my invention. Electric Plus is provincewide; it's not

just on Vancouver Island or the Sunshine Coast. Electric Plus will

continue, but Electric Plus really only makes sense in areas where

natural gas is unlikely to be available. Electric Plus is possible

because much of the time Hydro, because it's a hydroelectric system,

has surplus energy, so it's able to sell this surplus energy at a low

price. The Electric Plus program takes advantage of that surplus

energy. It generally sells for half the price of electricity.

I built a cottage on Bowen Island last summer and put in an Electric Plus installation.

Bowen Islanders are tending to go that way, because natural gas isn't going

to get to Bowen Island. Straight electric heating is expensive. But if you have

a backup fuel, like firewood, and Hydro can vet your installation and be sure

it is in fact sufficient to heat the building, they will let you buy, through

a separate meter, half-price power — and that's really what it is.

It's

available all across the province. It's available in downtown

Vancouver. It doesn't make sense in downtown Vancouver, because gas is

cheap. But it makes sense in areas where you've got a powerline into

your house or cabin or whatever and you've got firewood or some other

backup source of energy. On Vancouver Island right now, with the gas

line likely to be built, it doesn't make sense for people to go to

Electric Plus in the cities. It still makes sense in the outlying areas.

MS. EDWARDS :

I have another question about another program. There is a program which

suggests power audits be done by Hydro and so on. There are people who

come out and do power audits and proposals for making your house more

energy-efficient and that kind of thing. This is exactly the kind of

program that was in existence and that the federal government funded

totally, I believe, for some time. It then proposed a number of pilot

projects throughout the province, to be funded jointly by the federal

government and the provincial government. The provincial government

turned them down. I gather that you're now doing the same thing, but

you're doing it through Hydro.

My question is: considering

that the federal government was willing to do that kind of work, and in

fact did it very well, and still, one would suppose, has an interest in

energy conservation, has the minister addressed the federal government

for funding to assist in this kind of energy conservation program?

HON. MR. DAVIS :

The hon. member is quite right. Beginning in the late seventies the

federal government, as part of the national energy program, made money

available for better insulation of homes and so on. That program was

wound up in the mid-1980s, so there is no federal money now available.

The federal government's retirement from the field came about partly as

a result of the drop in world oil prices.

Hydro, however,

still has an incentive to continue using what's really the Power Smart

philosophy. It's doing something thoroughly economic from its point of

view. It's simply postponing heavy investment, and on balance it makes

sense for Hydro to do that. I think the Hydro approach — going to

individual homes and carrying out these assessments, going to plants

and office buildings and making these assessments and giving advice—

is the right way to go. It's educational; and where people make new

investments and can save money as a result of using less power, they

benefit in that way too.

The province doesn't have any supplementary program, nor does the federal government at the present time.

[4:00]

MS. EDWARDS : I know I can't knock the minister for failures to do something in the past, because

[ Page 8434 ]

that's

not allowed, but it was a great regret in our area, where we had a very

active energy conservation unit. They had retrofitted a house, they

were operating, and they were going out and doing suction tests on

houses and doing computer readouts of people's needs. It had all sorts

of community involvement. It was an extremely good program. It was

different from the Power Smart program, but it was extremely effective.

It was at the right time too; it was even earlier than now. I think

it's a great regret that we didn't have that program continue. I felt

very badly, because once the provincial government withdrew from the

program our municipal government was unable to fund it as well. We

would have had in our community one of the pilot programs — that

would have continued. It's a great regret that we didn't have that.

The

budget speech says that the Minister of Energy, Mines and Petroleum

Resources will be spending $3.1 million this coming year on a new

program to produce energy from waste products, including municipal

garbage, wood wastes and possibly coal wastes, and seeking matching

federal funds for the initiative. I have a couple of questions on that.

First

of all, it says $3.1 million. I notice in the actual estimates that the

amount for that is $3.01 million. Was there to be another $99,000 in

that budget from somewhere else? Is that why it would be in the budget

at 3.1, or was it a misprint? The second question is: what exactly has

happened on that?

HON. MR. DAVIS : I gather that the

$3.1 million figure includes administration, and the $3.01 million

perhaps doesn't. The proper number is $3.1 million.

We are

currently negotiating with the federal government, hopefully to find

matching dollars, so perhaps we can double the effectiveness of the

amount. It will apply in a number of areas: heat energy from garbage,

utilization of waste wood at sawmills and conceivably although I doubt

whether this would happen the utilization of waste coal for power

production.

I think in the first few years it will be

allocated in relatively small amounts to a number of projects, rather

than to one or two massive projects. The thrust is conservation and

better utilization of waste, so it has an environmental kick as well as

an energy value to it.

MS. EDWARDS :

Does that mean, Mr. Minister, that you are going to be waiting until

you get an answer from the federal government — you haven't yet

persuaded them to participate — or does it mean that the $3.1

million will be spent for these purposes this year, in this budget?

HON. MR. DAVIS :

We are certainly not waiting for projects. We hope, however, to be able

to double the amount of money by getting the feds on board. We have

made a policy decision and are going ahead, but we'd like to have the

federal government share in this kind of initiative. There is, at least

in general policy terms, acceptance at the federal level. They've had a

program for industry, and they welcome the province's initiative.

Again, we don't have conclusive agreement right now saying that the federal dollars will match our dollars.

MS. EDWARDS :

Could the minister explain what kinds of projects are going ahead and

how the people who are doing the projects were chosen? Did they apply?

How did they know they were going to apply, or have they been chosen

because they emerged out of some other process?

HON. MR. DAVIS :

One project for which money has been committed is a hydrogen-fuelled

bus project for Vancouver. I will come back to that. Another

possibility — and arrangements haven't been concluded — is for a

co-generation development in the Williams Lake area utilizing wood

waste from sawmills. Those are two.

the first one, the paper is virtually all complete. We happen to have a

company in North Vancouver, Ballard, which is now attracting worldwide

attention. It has developed a hydrogen cell which effectively takes in

hydrogen on the one hand and air on the other into a cell the size of

an ordinary automobile battery, with no moving parts, and electricity

flows out. The modification which the province is helping to finance

under the energy-from waste program is to eliminate the hydrogen and

simply use methanol. We will have methanol in the tank of a bus and air

coming in from outside, pumped into this unique cell. A few of them

will drive a bus. This, if it all works out, is by far the least

polluting way of driving vehicles.

The breakthrough,

essentially, has been in the membrane which is used between the

electrodes in the cell. It's state of the art. It's attracting a lot of

attention. The British navy, the American navy, Dow Chemical in eastern

Canada and several others —Daimler-Benz in Europe — have now

got versions of the cell, and they are seeing how they can apply it to

their development. It is promising, but that is a state-of-the-art,

leading-edge kind of development which hopefully will work out and give

us a real boost in British Columbia on the technological side.

MR. CLARK :

It is a fascinating discussion and I apologize for only hearing part of

it. I can't engage the minister in any kind of technical debate, but

hydrogen has always been touted as the fuel of the future— the

non-polluting fuel, the by-product of hydrogen burning being oxygen,

and on and on. The problem has always been that it takes more energy to

produce hydrogen than hydrogen produces. I know that some over the

years have argued that spilling water over dams and the like.... If

there is any surplus, that might be a source of generating hydrogen.

This

is a fascinating discussion about new technology which sounds quite

promising. I just wonder how this technology gets over that hurdle,

which

[ Page 8435 ]

appears to be the most insurmountable to the use of hydrogen fuel in any capacity.

HON. MR. DAVIS :

The simple answer is that this particular cell is so much more

efficient than earlier cells that the energy-efficiency difficulty is

overcome.

Quebec is interested in the hydrogen business,

mostly because they see hydrogen as a product of hydro power,

electrolysis of water producing hydrogen. So Quebec is pushing

hydrogen, at least as a source of hydrogen for the world. What Quebec

is up against is that a far cheaper way of making hydrogen is from

natural gas, and Alberta is pushing that approach.

There is

a lot of hydrogen now produced from natural gas, and that hydrogen is

combined with nitrogen to make fertilizer. Much of the fertilizer in

the world Is now made that way. Hydrogen is a product along the way, so

natural gas is your best and cheapest source.

In the case

of this particular battery, they would not use natural gas. Natural gas

would be converted into methanol. This is done at Ocelot's plant in

Kitimat, for example. It is a liquid, like gasoline. You can then have

it in a tank in a bus. Your methanol and your air go into this battery,

and electricity flows out and drives the wheels. Hopefully we have got

all of the inputs necessary. We have got the natural gas; we can have

methanol produced handily anywhere in the province; and this bus

demonstration event will be watched with great interest around the

world. Los Angeles is certainly very interested in anything that can

convert methanol into a fuel which is really electricity.

While

it is not totally pollution-free, because the methanol has one or two

carbons in it, it's the next thing to pollution-free.

MR. CLARK :

It sounds fascinating, and I am interested in the concept. It just

seems to me intuitively that you're taking an extra step. In other

words, it seems to me that the technology is in existence, is it not,

to burn methanol to propel cars. So to burn methanol, so to speak, or

put methanol into a battery and then turn it into electricity to run a

car or vehicle is intuitively inefficient, it would seem to me. I

wonder why this extra step, and not just moving directly to propulsion

from methanol.

HON. MR. DAVIS : The hydrogen, if I

can put it that way, is conveniently carried around as methanol. There

has to be a miniature reformer that takes methanol to hydrogen in the

bus. Then hydrogen goes into the cell and, combining with air or

oxygen, makes water. But electricity is the other product Methanol is

just a step along the line. It's a way of packaging the energy and

handling it reasonably, but it ends up momentarily as hydrogen and goes

into the cell as hydrogen.

It is certainly the least polluting of the ways of driving mobiles. Mind you,

its first applications will be in plants that have a surplus of hydrogen. They

can simply produce some electricity using this battery. You can imagine that

in defence and other applications it is unique, so the first applications will

probably be military and so on. But we are putting our money into a bus demonstration

scheme.

Incidentally,

with the hydrogen cell there are no nitrous oxides, no ozone damage and

so on. So theoretically — and the hon. member will have to take my

word for it in terms of energy economics — it works out.

MS. EDWARDS :

I am going to ask the minister if he could clarify his reference to a

co-generation project using wood waste in Williams Lake. It's been a

matter of some interest. The Premier made an announcement that you

would have some such project. He was in Salmon Arm when he made the

announcement. The Minister of Environment (Hon. Mr. Strachan) was

unable to tell me that the Premier was correct in making that

announcement. There is still some question, I understand, as to what

company might do the project. That is to be determined by B.C. Hydro.

Or is there another involvement? How is that project going ahead, how

is it going to be decided, and will these two projects take up the $3.1

million?

HON. MR. DAVIS : Part of the $3.1 million

may be available for a development at Williams Lake. There are two

different projects being examined. Both essentially use wood waste. The

resource is the wood waste spun off by the sawmills. Using the wood

waste to produce steam and/or electricity will reduce the pollution

problem there by a considerable amount. The choice as to which project

goes ahead is, I understand, yet to be made. But they're both good news

from the environmental point of view; they use wood waste beneficially.

Hydro's

role is simply this. Hydro has told the world, in effect, that it will

buy surplus energy from co-generation activities, whether it be a pulp

mill, a sawmill or a smelter, and it will pay around 3.5 cents per

kilowatt-hour for that energy. That's up from around 2 cents, which

Hydro used to offer some years back. The 3.5-cent figure is a rough

approximation of what Site C would cost. So they're saying to these

industries: "If you've got waste and if you can produce electricity for

3.5 cents, we'll take it." Hydro is not bidding in this; Hydro is

simply saying: "We stand ready and willing to take electricity and pay

3.5 cents for each kilowatt-hour." Hydro is not a decision-maker in the

process, but they're a willing buyer— at a price. It's their offer to

buy at that price that makes these several developments possible. As to

which one it will be, I certainly can't say.

MS. EDWARDS :

I understood, Mr. Minister, that these came in response to a request

for proposals, and that, in fact, Hydro decides which project goes, and

indeed, whether or not the project goes at all. My question is: if

Hydro is making that decision, how does the funding from the ministry

fit into the kinds of bids that these companies are making to compete

[ Page 8436 ]

for the provision of private power to Hydro in that particular process?

[4:15]

HON. MR. DAVIS :

Mr. Chairman, I don't want to be too explicit about this, because there

are a number of players in this game. Hydro has announced that it is

prepared to buy co-generated energy for 3.5 cents from — I won't

say anyone, but from reliable suppliers; and they have to check them

out. That is Hydro's role. We're talking about wood waste in this case.

There has to be a wood supply. The Forests ministry has to be involved

in assessing whether the wood supply is there for a decade or two.

Regional Development is involved. There may or may not be a request

from one or several of these companies for assistance of various kinds,

and I have no doubt that it will occur to them to request some money

from us. But again, this has to not only fit our budget but also appear

to be a breakthrough, proving up something that hasn't otherwise been

done in the province. That sort of rationale would have to be applied

by us, because we've got many other demands for energy from wood

waste — or will have.

I don't want to pretend that I'm

fully on top of the development at Williams Lake. That is a matter for

several ministries, and the projects are essentially competitive — or they may be merged; I don't know.

MR. KEMPF :

There are two or three things I'd like to discuss with the minister in

these estimates, but I'd like to start out, Mr. Chairman, by thanking

the minister for finally making available to me a copy of the Cheni

loan agreement. I just want to get on the record as having said that

it's rather unfortunate that agreement was not available to me before

this time. It took in excess of a year for an elected representative to

get a copy of an agreement between the government and a mining company

in this province, and I think that's unacceptable. I certainly do hope

that the new Mining Right of Way Act — and I understand that I

can't speak of this legislation; but I do have some concerns on

thoroughly reading it —

will in fact overcome the kinds of problems that we had with Cheni

Mines, which are totally unacceptable as far as doing business in the

province of British Columbia is concerned.

I want first to

canvass the question of Kemano 2. I've mentioned it in other ministers'

estimates, but I hope in these estimates to get some answers. It has

been interesting to listen to some of the answers given to other

questions, and in my mind I've related them to Kemano 2 in the process.

But I think the question still remains: what sort of deal does B.C.

Hydro have with the Aluminum Co. of Canada with respect to Kemano 2?

That's very important to a great number of the people I represent

because of the fact that a promise was made, an undertaking was given,

by the Aluminum Co. of Canada to build, in the process of developing

Kemano 2, a pulp mill in Vanderhoof that would be of great benefit not

only to that community but also to the communities of Fraser Lake and

Fort St. James. Kemano 2 is well underway

There is

absolutely no indication by the Aluminum Co. of Canada that they're

going to start or in fact ever construct a pulp mill in Vanderhoof. So

what I want to know from this minister are the terms of the agreement

between B.C. Hydro and the Aluminum Co. of Canada.

I heard the minister say a little earlier — perhaps he will correct me if I'm wrong — that

at present we're overbuilt with respect to hydroelectricity in British

Columbia. I also heard him say that within a decade or so we could

possibly have the return of a great deal of hydroelectricity from the

United States. That leads me to a number of questions, the main one of

which is: why at this time is the Aluminum Co. of Canada going ahead

with Kemano 2? Is there some other usage on the horizon for the

electricity that's going to be produced there? If not, then certainly

some kind of a deal must be struck. Was it taken on because of the

surplus energy policy of B.C. Hydro with respect to the building of

hydroelectric, or any kind of electricity-generating, facilities?

HON. MR. DAVIS :

Perhaps I'll start with the Alcan development. As the hon. member

knows, Alcan currently has a surplus of power from Kemano 1, and that

has been, and is still, available for developments in the northwestern

part of the province, including as far east as Prince George. It is

proceeding with a scaled-down Kemano 2 of 520 megawatts. They were

talking larger amounts earlier. With the postponement — or

elimination really — of the Nanika development, it was dropped to

520 megawatts.

is Alcan's intention throughout to use all of the power eventually in

sales either to its own additional plant in the area or to other

industry in the area, including pulp mills. All that is holding up the

development of those sales is really the other industries — say, a

forest products industry finding a mill economic in that area. Were

they to build it, Alcan is willing, ready and able to supply the

energy. They are supplying additional energy to an expanded pulp mill

operation in Kitimat — that's new in the last 18 months — but

they would like to be able to sell more of their surplus. So it isn't

for lack of power that these developments are not taking place; it's

for other reasons: forest resources, economics of a new mill, location,

markets and so on.

Alcan

does have an arrangement with

Hydro, and I'll read it out in

summary form in a moment. Essentially,

Alcan needs a substitute source of power while they're bringing their

second tunnel in. In other words, they'll have to shut everything down

for a bit, so they need Hydro to come on line and support their

industry, including, of course, their potlines at Kitimat. Also, if a

neighbouring utility like Hydro will buy their surplus for a time, it

improves the economics of their project. So essentially Hydro agrees to

occasionally be a supplier of Alcan — i.e., the tunnel-driving

interlude — and a source of revenue to Alcan pending other

industry coming into the northwest to locate, including Alcan's own

expansions.

[ Page 8437 ]

Alcan is choosing this time to build additional generation, but it's

doing it partly on the back of a sale to Hydro, knowing that Hydro can

take its surplus. Alcan's costs are far below Hydro's, so Hydro has

been able to strike a price arrangement with Alcan which is preferable

to Hydro itself building hydro capacity. Here is a relatively cheap

source of power coming on earlier than it would otherwise, being a

resource available to Hydro for a time but essentially, in the long

term, utilized in the northwest and not sold to Hydro. There will be

some exchanges and coordination of reservoir operations, but

essentially the long-term prospect is Alcan using that additional power

in its own industry or in other industries in the general area.

don't think anyone can say that the agreement with Hydro or the

arrangement to get a modified Kemano completion underway in any way

holds up a newsprint mill or thermochemical pulp operation at any

location, Prince George and west. In fact, Alcan will have surplus

energy. It has it now and will have even more in the future. It's good

news, not bad news— if I can put it that way.

Let me just

give you the essentials of the B.C. Hydro and Alcan agreement. B.C.

Hydro and Alcan have signed the principles of agreement applying to a

long-term power purchase, a coordination agreement and an exchange

agreement. Final agreements are expected to be signed in September

1989. The longterm power purchase is a 20-year sales agreement,

beginning in 1995, when the Kemano completion project begins operation,

under which B.C. Hydro will purchase about 2,500 GWH per year of

electricity. This sale has a present value of some $200 million to B.C.

Hydro. In other words, without the sale, B.C. Hydro would have had to

pay $200 million if they had to build this capacity in their own system.

coordination agreement provides the best means of optimizing the two

reservoir systems, that of Alcan and that of Hydro, and means energy

and capacity provided from the Alcan system will be available to B.C.

Hydro customers. In turn, Alcan will receive a guaranteed 9,070 GWH per

year from B.C. Hydro, representing the firm capability of the expanded

Kemano project if it was to be operated independently. The exchange

agreement allows B.C. Hydro to provide electricity to keep the Kitimat

smelter operating during certain periods when the existing Kemano power

plant must be shut down due to Kemano completion construction.

I said before, Alcan is able to earn money in the early years, but will

always have an excess of capacity and energy to sell, and its long-term

objective is to patriate all that power to the northwest and sell it to

industry.

MR. KEMPF : Well, it's worse than I

thought. He mentions good news and bad news, and we'll talk about the

bad news, because it's not all good news.

What the minister

has just told me is that the Aluminum Co. of Canada intends to be a

hydroelectric company, rather than a company which produces aluminum,

which was the original intent.

The minister shakes his

head. There's nothing on the horizon with respect to another aluminum

plant or anything else for that matter. The Aluminum Co. of Canada,

with Hydro's help, is going full speed ahead on Kemano 2 when we

already have a surplus of electricity in British Columbia. What am I to

take from that, if it's not that the Aluminum Co. of Canada is becoming

a hydroelectric company in British Columbia? That's to the detriment of

the people who live in my constituency, because it's not all good news.

[4:30]

We don't even know to what extent these problems are going to exist

with respect to the drawdown of Ootsa Lake; they are going to be

horrendous. The problems with respect to the reduction in the flow of

the Nechako River to 50 percent of its present flow are going to be

horrendous because of Kemano 2.

Now there was a trade-off

that the people in that area were willing to take. You can talk about

it having nothing to do with the construction of pulp mills, etc., but

it does. The trade-off was for the construction of a pulp mill by the

Aluminum Co. of Canada to provide employment for the three communities

of Vanderhoof, Fraser Lake and Fort St. James. That's not going to

happen; it's certainly not happening now. Again I say: the time to

voice these concerns is before the final agreement is signed.

The

question I guess I have out of all that is: what public input is there

going to be before the signing of the final agreement between B.C.

Hydro and the Aluminum Co. of Canada? Certainly as construction has not

begun on a pulp mill to this point in time, it can't be started before

September, because of the oncoming winter and the problems inherent in

constructing anything in the winter in that part of British Columbia.

There

is a problem, and the problem is that the Aluminum Co. of Canada has

hoodwinked the people of central British Columbia into believing that

they were going to do something for them as a trade-off for the

problems which will exist with the drawdown of Ootsa Lake and the use

of more water for Kemano 2.

I would suggest in this chamber

that there was no intent in the first place on behalf of Alcan, as

there was no intent to make good the promises they have made for

several years to build another aluminum plant in British Columbia.

There was no intent by that company to build a pulp mill in central

British Columbia to utilize some of the hydroelectricity which will be

produced. Scaled down or not, they have a surplus of electricity now,

even with their expanded operations at Kitimat. There was absolutely no

need for Kemano 2.

So the question still arises: what deals

have been made? If a deal hasn't been made between Hydro and the

Aluminum Co. of Canada, then what deal has been made between the

Aluminum Co. of Canada and the government of the province of British

Columbia? There is something rotten in Denmark, and we are going to get

to the bottom of it.

[ Page 8438 ]

The

people of central British Columbia are expecting that the commitment

made by the Aluminum Co. of Canada be kept, and I would suggest that

it's the responsibility of the provincial government to make sure that

it is done. Has the minister been involved? Was there any mention in

the agreement between Hydro and the Aluminum Co. of Canada of the

building of that pulp mill?

The minister suggested

involvement of other ministries and other projects and possibilities in

the province. Has the Ministry of Environment been involved in this

with respect to the drawdown of the Nechako River by 50 percent because

of Kemano 2? Yes, I can bring it up in this minister's estimates, Mr.

Chairman, because it is apparent that without Hydro's help Kemano 2

cannot be constructed, although I don't know why. I guess it's because

portions of Kemano 1 will be affected.

There is something wrong here. We are not getting the complete story. I just ask the minister to answer those questions.

HON. MR. DAVIS : Naturally, having listened to the member on other occasions, I anticipated this question.

have recently been in touch with Alcan. Alcan Aluminium Ltd. remains

active in its efforts to locate a pulp mill in Vanderhoof. That's what

they tell me. Technical and feasibility studies have been completed.

Alcan has received a number of inquiries expressing interest in the

proposal and is also taking the initiative in seeking a partner with

considerable experience in the pulp and paper sector. I know of several

firms with whom they have been negotiating.

Alcan currently

has enough surplus power to serve the proposed pulp mill load, and will

continue to have sufficient power to supply several mills between

Prince George and Kitimat. In other words, serving the mill with power

is not linked to the Kemano completion. Obviously, if they have the

power now, they will continue to have the power available to a mill

when it's completed. Kemano completion by itself is not a problem.

Incidentally,

as to timing, the Kemano completion will take five or six years. A mill

could be built in two to two and a half years. Good news, Mr. Member.

If you and the private sector generally can put together a wood supply,

clear environmental considerations and itemize the economics in such a

way that a mill is financially feasible, the power is there today and

it will continue to be there and be available at a much lower price

than B.C. Hydro would have charged had Kemano completion and so on not

been a prospect.

I don't know why the hon. member wants to

be so pessimistic about his area. He's been a member here since 1975.

He's talked to Alcan many times. He knows about the various projects or

proposals that Alcan has advanced — I'll admit, partly as bait —

to get Kemano completion built. The Kemano completion project has been

scaled down several times; it's more modest. But there's a power

surplus up there, and the power price is low.

There have to

be factors other than power that are postponing the construction of a

mill at Vanderhoof. It's not power. It's available in quantity. It's

available at a relatively low and attractive price. That's the fact of

the situation.

The hon. member, when he first got up, made

reference to Cheni road. We've had problems there. He should know

better than I, because he was a member of cabinet when the agreement

was signed; I wasn't. He said that he hadn't seen it. He should have

seen it when he was a member of cabinet. Indeed, last year when he

asked my staff for it, they offered to bring it over to him and he

refused to see it. You've got a copy now. We finally got Cheni to agree

to your having a copy to keep. But you should have been fully aware of

that matter from the beginning. You were one of the authors of the

agreement. You know more about it than I do, so don't go after me on

it. If there are holes in it, you're to blame, not me.

MR. KEMPF :

I wasn't going to elaborate on the Cheni road situation, but what the

minister just said is absolutely false. I was not in cabinet at the

time. It was not made available to me. I did not tell your staff that I

didn't want to see it. I wanted a copy— as a duly elected representative of this chamber —

of an agreement between the provincial government and an offshore

mining company. That's not too tough a request, I wouldn't think.

HON. MR. REID : It's called "my way or no way."

MR. KEMPF : If the Minister of Tourism wants to speak in these estimates, I wish he'd get on his feet.

MR. CLARK : It's the Premier's motto: my way or no way.

MR. KEMPF :

Right. We've seen that in many instances both in this chamber and

throughout the province. If the minister wants to get into that kind of

argument, I certainly can. But I'll tell you what: for a government to

have to go cap in hand to get this agreement to give it to a duly

elected representative is not, in my estimation, the best situation in

the world. That's what has happened for 18 months, and it has cost my

constituents untold thousands of dollars. It has cost this province

untold thousands of dollars for exploration work that has not been

done, because the road couldn't be used by the ordinary British

Columbian without paying a $500 toll.

Interjection.

MR. KEMPF :

That's incorrect, Mr. Minister, in anybody's province or anybody's

language. If you want to get into that, I can certainly do so. But, Mr.

Chairman, let's just follow the Kemano 2 discussion.

The

Aluminum Co. of Canada, like the government, is saying: "Believe me." I

find that very difficult to do, given the track record of both. The

Aluminum Co. of Canada has made promises to this province for I don't

know how many years that they

[ Page 8439 ]

are

going to build another aluminum smelter so that they can use their

surplus power and provide more jobs. Have they done it? Now I should

believe them even though they are going full steam ahead to build

Kemano 2?

They have no use for the power, as the minister

has said this afternoon. What are they going to do with it? All good

news. Is that right? Well, tell the people on Ootsa Lake that. Tell the

communities and the people that live along the Nechako River that,

because it isn't all good news, and they're not going to find out how

much bad news there is until it is done. That is the problem. If we

want to get into that kind of discussion.... There's something rotten

here.

I can go out to the private sector and beg that they

build a pulp mill so that they can utilize some of Alcan's low-cost

power. Is the minister telling this House that he can assure the

citizens living in that area and any industry that situates there that

they are going to have lower-priced power than anywhere else in the

province? Is that what the minister is telling this House today?

[Mr. Mowat in the chair.]

Have

you an agreement between the government and the Aluminum Co. of Canada

that they are going to sell this power at less than is being charged by

B.C. Hydro because it is costing them less to generate? Is Hydro

selling for less what they are already taking from Kemano 1 from the

Aluminum Co. of Canada, to its citizens, because they are buying it for

less and it is produced for less? I don't think so. I don't think there

is going to be a situation where cheaper power is made available

because of the construction of Kemano 2 — not at all. Let's not

get into that