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CONTENTS

Routine proceedings

British Columbia Hydro and Power Authority (1964) Amendment Act –– 1979 (Bill 11).

Second reading.

Hon. Mr. Hewitt –– 305

Mrs. Wallace –– 307

Hon. Mr. Waterland –– 309

Mr. Nicolson –– 311

Mr. Mussallem –– 312

Mr. Lorimer –– 314

Hon. Mr. Wolfe –– 314

Division on second reading –– 315

British Columbia Hydro and Power Authority (1964) Amendment Act –– 1979 (Bill 11).

Committee stage.

On section 1.

Mr. Levi –– 316

Hon. Mr. Wolfe –– 316

Mr. Barber –– 317

Hon. Mr. Wolfe –– 317

Hon. Mr. Hewitt –– 317

Mr. Howard –– 318

Hon. Mr. Wolfe –– 318

Mr. Levi –– 318

Mr. King –– 319

Mr. Lea –– 319

Hon. Mr. Wolfe –– 319

Report and third reading –– 319

Presenting reports

Addendum, volume 11, report of the Royal Commission on the British Columbia

Railway.

Hon. Mr. Curtis –– 319

THURSDAY, JUNE 21, 1979

The House met at 8:30 p.m.

Orders of the Day

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

Leave granted.

HON. MR. GARDOM: Adjourned debate on second reading of Bill 11.

BRITISH COLUMBIA HYDRO AND POWER
AUTHORITY (1964) AMENDMENT ACT — 1979

(continued)

HON. MR. HEWITT: Mr. Speaker, there were some comments made before we adjourned for the dinner hour regarding the Committee on Crown Corporations. I mentioned that B.C. Hydro's officials made themselves available to that committee, and I believe it was the member for Shuswap-Revelstoke (Mr. King) — who is not in the House at the present time — who expressed some concern about that and, I think, felt that he could prove me wrong.

Well, I want to tell the House approximately how much time was spent by B.C. Hydro in attempting to provide detailed information to the Committee on Crown Corporations. The approximate number of hours spent by B.C. Hydro in researching, preparing and appearing before the committee was 6,000 man-hours; 6,000 man-hours went into the effort of B.C. Hydro to ensure that they did their homework, their research, prepared their responses to the members of the committee, to make sure that all the questions could be answered reasonably and intelligently.

[Mr. Rogers in the chair.]

I'm not defending B.C. Hydro, Mr. Speaker, because, let's face it, that organization probably could use some shaking up now and again, but I'm just indicating the effort that was made by B.C. Hydro –– 6,000 man-hours. Now that's a lot of hours.

Let me give you the names of the senior executives who appeared before the committee in order to tell the story of B.C. Hydro. Mr. Olsen, the president of the corporation, appeared before it, as did John Sheehan, the vice-president of administration and finance; Mr. Martin, the vice-president of engineering; Mr. Nash, the vice-president of corporate affairs; Mr. Mitchell, vice-president and general counsel; Mr. Walker, vice-president and chief engineer; Mr. Quirk, project manager; Mr. Spinney, project manager for Revelstoke; Mr. Foxall, project manager; Mr. English, internal auditor; and Mr. Milligan, manager of the construction division, plus other support staff. These are top-level senior officials who took the time and responded to the requests of the committee, and attempted to disclose to the committee what the problems were in dealing with a major project and tried to answer all the questions that were raised. I think it's an indication of the cooperation and the communication that the B.C. Hydro officials attempted to have with the committee.

The member for Shuswap-Revelstoke (Mr. King), I believe, also talked about the Revelstoke Dam and the concern about the Downie slide and its effect on the rest of the river and the engineering, I believe you said that it was inadequate or incompetent or just the poor pre-construction engineering that had been carried out. I had the opportunity to investigate it, and the direct costs of engineering, surveying, drilling and environmental studies up until the granting of the water licence in December 1976 — this is before you get the authority to proceed — were $11 million.

Interjection.

HON. MR. HEWITT: I’ll get to the $30 million — you're taking that out of context, as I'm sure you well know. The interest during construction and the overhead were another $2 million, and the total that was spent was $13 million.

You talk about the $30 million. It was in the headlines about the additional costs on the Revelstoke Dam. There was $11 million worth of work done in engineering to determine the ground structure. I'm not an engineer, so I can't think of some of the terminology, but to determine the stability of the soil and the rock, et cetera — including, I assume, the Downie slide area — outside engineers, not just Hydro engineers, determined through their test holes that there was a shaft of marble or granite going down the mountainside.

Drill holes were taken. It ended up that when they had the opportunity to investigate further they found it came down on a straight level, but because of the topography or the shifting of the structure centuries ago, it also came out under where the dam would be. It wasn't until they could reduce the flow of the water and did some further engineering that it was determined it was going to cost more, because they had to extract that marble and/or granite — I can't remember which one it was — to have a firm base for the dam. I think that's good, responsible management. If you are going to try and cover up something like that, then you might have a problem with the dam giving way and wiping out all the dams down river.

I would also advise — and I think the member for Shuswap-Revelstoke (Mr. King) knows — that in all construction projects, consideration is given to providing for the unexpected. B.C. Hydro, of course, has funds set aside for those things that may crop up during the construction. I am not saying that they will come within budget; I am just saying they have attempted to ensure that any problem is taken care of. They've attempted to cover all contingencies in their estimates.

Mr. Speaker, in regard to B.C. Hydro, the organization we often hear is out of control and doesn't get proper investigation....

AN. HON. MEMBER: The monolithic monster.

HON. MR. HEWITT: Yes, the monolithic monster. We have to look at some of the cost-control measures which have been brought into place. I think they would indicate to the opposition that there are efforts being made. Here are some staff levels, for an example: On March 31, 1978, there were 12,557 employees working for B.C. Hydro: on March 31, 1979, there were 12,550. That's not much of a difference, but I'm just saying that you end up with less

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employees this year than last — or, with the increased amount of customers, you are keeping your employees within reasonable levels. On May 31, 1978, there were 12,858; on May 31, 1979, there were 12,568 — 290 less.

Let me tell you the other side of the coin: on March 31, 1978, there were 952,000 electrical customers; gas, 278,000. In 1979 there were 984,000 electrical customers; gas, 286,000. The customers are up approximately 40,000 as opposed to staff, which is down — a good indication, I think, of good control in providing a service.

The project-financing expenditure controls continue to follow the normal practices of the utility industry in North America. They're comparing their operations with other utility companies across North America. One other indication, I think, of attempting to indicate control, so that the consumer, members of this House and the public at large have an indication of whether or not Hydro is becoming out of control or is within reason in their figures, is the debt per customer. We have $3,807 debt per customer as of March 31, 1979. As of December 31, 1978, Ontario Hydro had $3,657 per customer. As of December 31, 1978, Quebec Hydro had $3,924 per customer — an indication that we certainly are in the ballpark with those other major utilities.

One other item deals with what the Leader of the Opposition (Mr. Barrett) said. I can remember going through the election campaign. I had a great time, because he was talking about natural gas exports to the United States, and that we should get the same price the Mexicans got for exporting their natural gas to the United States. He went through this exercise, and I said I'd give $100 to the campaign of the Leader of the Opposition if he could prove that Mexico was getting a higher price for their natural gas — if, in fact, they sold natural gas to the United States — than we were. At that time the price was $2.16 per 1,000 cubic feet, or $2.30 per 1,000 cubic feet, and then went up. Every night I had a meeting I raised the ante until it was $2,000. I was prepared to give to the Leader of the Opposition a $2,000 donation to his campaign fund. And, you know, he never took it up, never collected, never questioned it.

Interjections.

HON. MR. HEWITT: It's as I'm going to tell you now, Mr. Minister. Earlier he made the statement that we spent $1 billion to build dams for the Americans. That's what he said. I'm going to try to establish where he was wrong. When the Columbia River Treaty was negotiated, the United States agreed to purchase, and Canada agreed to sell, its entitlement to one-half the downstream power benefits for the cost of providing storage in Canada. In addition to the power benefit entitlement, the United States agreed to pay Canada for flood control benefits provided by the upstream control of the Columbia River in Canada. The amounts received were: payment to Canada of $273.3 million; flood control benefits, $69.3 million. That's what we received. We also received bonuses paid to Canada for early completion of the storage projects. Early completion of the Duncan and Arrow Dam earned additional downstream power benefits, and we received $6.7 million. From the interest on those advance funds we received $47.7 million. We charged interest to the storage projects during construction and credited it to the treaty fund, because money that did not otherwise have to be borrowed amounted to $82.1 million.

So Canada received $479.1 million with regard to the storage dams. The generation and transmission costs in Canada were not part of the Columbia River Treaty. Any such installations were for Canada's account, as would be any other generation or transmission facility producing power directly for the benefit of Canada. The total cost can be set out as follows: the storage treaty projects, Duncan, Arrow, Mica dams, total expenditures to complete projects were $603.5 million, less the contribution that was paid to us in advance by the United States, plus the earnings of $479.1 million. The estimated total cost of the Columbia River Treaty storage products to B.C. Hydro was $124.4 million, not $1 billion.

Then you add the generation and transmission facilities in Canada that weren't part of the treaty, but because of the storage facilities we could provide electricity by using that water to generate power for Canada, for British Columbia residents, and for exports if we had the water storage available. The cost of the Mica generation for units 1 to 4, and the transmission, came to $687.9 million, plus with the storage cost of $120-some-odd million, it came to $812.3 million, but only $124 million related to the Columbia River Treaty and the storage facilities. Transmission and generation facilities were for Canadian consumption, for British Columbia's use. If it wasn't for those facilities, of course, we couldn't generate the power.

That, I think, should set the record straight. The statements that the Leader of the Opposition made regarding natural gas are proven wrong because he never took up my offer to assist him. In this particular case, he's wrong again — 1,000 percent wrong.

I'd like to respond to the member for New Westminster (Mr. Cocke), He makes a statement in the House — and the press, if they are listening, may take it up — about the terrible thing that was done in regard to B.C. Hydro and the level of water. I think he said that in order that we could sell electricity to the United States B.C. Hydro allowed the water to get to a critical level, which would imply that disaster was right around the corner. At every board meeting, the directors receive schedules or tables indicating just where those water levels are, how much we have in excess storage capacity to ensure that we always can meet the domestic consumers' demand. What we don't need we can export, and when we run out of that surplus water, we, of course, can stop the interruptible power.

Last year we made $30 million in export sales. The member for Nanaimo (Mr. Stupich) laughs. He's probably going to get up and make some comments, First of all, if they can indicate to me the "critical situation," which the member for New Westminster keeps alluding to, if he can get up and prove that wrong, I'd be glad to hear it. I suggest to you that you can't.

This is a bill that indicates that B.C. Hydro as a utility company has a responsibility in this province to supply power for industry, for residential dwellings, and make sure it is there at the peak demand. You can't average out. You've got to meet the peak demand. If we can't supply that peak demand, then we do have a problem and a possible disaster. They've got to provide power for the longest night and the coldest night of the year. They've got to make sure the wheels of industry turn. Yes, we can be critical. I'm not defending them, but let's state the facts as they are. We can be critical. We can have Crown corporations. We can have the bearded member for Victoria

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make his remarks, but let him give us some constructive criticism.

MR. LEA: Have you looked in the mirror lately? You've got a beard.

HON. MR. HEWITT: Yes, but mine's got a little salt and pepper in it.

In all seriousness, we can be critical of Hydro, but remember what Hydro's responsibilities are. It is a utility company that is responsible, I believe, for providing power to 90 percent of the population in this province. If it doesn't meet that responsibility, it isn't just that your lights don't go on; the economy can slow down and come to a shuddering halt. We must remember that. We must ensure that that power is there when it's needed, and that's what this bill is all about. That's why I support it.

MRS. WALLACE: I don't want to spend too much time discussing the remarks that the previous speaker made, but I do want to make one or two comments. As for the Columbia River Treaty, it happens that I was an employee of B.C. Hydro at the time that Columbia project was under construction. I recall very well, Mr. Minister of Economic Development, that there were a lot of problems surrounding the Columbia River project. There were so many problems, in fact, that they had a special coloured stationery for very confidential matters.

Requests were made in this very quiet and secretive manner to all departments, and I was working for the production department. We had requests as to whether we had any particular accounts that were going to be under expended for that year. If so, they wanted to know by how much and what the account numbers were so some of Columbia River costs could be charged to those accounts. Those were the kinds of things that went on in Hydro with that Columbia River project.

For that minister to stand up and say that everything was perfectly all right just rankles me a little bit because I happen to know that that was not the case. He spoke about the farmers in the Peace River and he said: "In the Peace River, the only land that was bought by Hydro was that which was offered by the owners." Now. Mr. Speaker, I am convinced that that minister really knows exactly what went on there. What he has said is only part of the truth.

HON. MR. PHILLIPS: Have you ever been up there?

MRS. WALLACE: I certainly have, Mr. Minister. Those farmers were approached by Hydro, and they were told that if they would sell before they applied for a water licence, Hydro would purchase their entire farm at a very good price. However, if they didn't accept, and if they applied for a water licence and got the approval, Hydro would take only that portion of the farm which was absolutely required and would take it for much less money.

HON. MR. PHILLIPS: That's called blackmail.

MRS. WALLACE: That's right. That's called blackmail. That's really what it was. Not only would Hydro buy the whole farm ahead of time, but they would rent it back at a very reasonable rate to the farmer, so he could continue to produce right until the water licence was granted.

That was what that offer was, Mr. Speaker. The minister talked about the debt, and he said that in B.C. we have $3,870 debt per customer. In Ontario it's $3,675, and in Quebec it's $3,942.

I would like to read into the record some remarks by Emory Lovins. Emory Lovins first became popularly known when he wrote an essay entitled "Energy Strategy: The Road Not Taken" published in Foreign Affairs, an American quarterly. That particular essay startled people in government and industry because here was a man who obviously knew what he was talking about. This man was a typical child genius. He was born in Washington, D.C. He won seven first-place awards with the national science fairs for research in measure theory and solid state physics. As a teenager he received awards and citations from General Electric, Westinghouse, the Atomic Energy Commission and the American Nuclear Society. He studied law, linguistics, chemical physics and even medicine at Harvard. Later he went to Oxford. England, where he took a research post as the youngest don in the university's history. Now I think that a man with that kind of a background is a fairly responsible authority.

He was speaking about Ontario Hydro. He was talking about their financial position. He said:

"Utilities finance their construction by selling debt and equity from their own funds. In most cases there is a legal limit on the permissible ratio of indebtedness to revenue. Many of the wealthy utilities in North America are at or near their limit. Some are borrowing money just to pay the dividends. They're borrowing short-term paper. The problem is that the electrical utility business requires extraordinary amounts of capital, and it takes a very long time to build facilities and to get them working so that they produce a revenue. While you're building them, you have to keep raising the price of electricity in order to finance the construction and so the people will buy your bonds. When you raise the price people can't buy as much electricity as you thought they could, and they can't afford it any more. It's a terribly simple effect."

He goes on to talk about Hydro Quebec, and he says:

"I had a curious experience when I briefed the Hydro Quebec people two years ago. One of them was emphasizing how it was a public corporation, and how the whole process is open. So I asked for his 10-year projections of the cash flow, showing financing and the rates they would charge in order to bear those financial burdens. And he said: 'No. we couldn't possibly show you those.' And Amory Lovins said: 'What, you haven't done them?'

"'No, we've done them, but we've gone to great pains over the years to build up a relationship of mutual confidence with the investment community in New York.'

"'You mean they wouldn't have so much confidence if they saw your projections?' And the answer was yes."

What Amory Lovins is pointing out is that Ontario Hydro and Hydro Quebec — and B.C. Hydro along with them because the debt ratio is very similar — are borrowing themselves into complete bankruptcy. And here we are discussing a bill to increase that borrowing power.

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The economics of following the recognized power supply are just impractical. In the United States 21 cents of every dollar that's spent on energy installations goes into generation; the remaining 79 cents is allocated to transmission. And here in B.C., I'm sure, it's even worse. We can't afford large, centralized electrical plants. The whole economics of it is just not feasible. We have to look at other alternatives because, if we try to assume that the energy of the future is simply a larger reproduction of the energy of the past, it's not economically feasible.

If you're talking about using oil for mass production of electricity, the laws of physics certainly indicate that that's a very uneconomic use, because for every one unit of electricity you're getting two units of heat that is normally wasted.

There are alternatives; we have to diversify — and, again, this is according to Amory Lovins, who certainly is a recognized authority. I'm not quoting anyone who is simply not knowledgeable; this man is recognized around the world as an authority on energy. He says that we have to diversify; we have to go into relatively small components. We have to look at renewable sources; we have to look at some of the soft technologies — and it's not the sort of bleeding-heart approach that he takes; it's a cold, hard economic approach. That's why I'm concerned when we come here and are asked to approve another $275 million for Hydro. We have no knowledge of how that is being spent.

The Minister of Energy, Mines and Petroleum Resources (Hon. Mr. Hewitt) talked a lot about this Power Perspectives 1979, and he assumed we hadn't read it. He talked about this particular little booklet setting out the alternatives.

Well, it's got 30 pages in it, and it is not until you get to page 24 that you come to anything in the way of alternatives. It talks about alternatives: it talks about hog fuel, and certainly hog fuel is something we should be using for energy. You can give lip service to this, Madam Member, but if you don't set your rate structures to industry at such a level that it encourages them to use that hog fuel for their own generation, and to feed it back into the hydro system, which can well be done at peaking periods, then it's not going to happen.

MRS. JORDAN: Are you going to subsidize it?

MRS. WALLACE: It is not a case of subsidizing: it is a case of setting your rates so it is feasible for industry to sell that power to you. And Hydro has historically charged more for the power they sell to industry than they are prepared to pay to industry for the power they need for peaking periods. You would get a lot more generation and a lot more use of hog fuel by industry if you had an equitable arrangement on your rate schedule. They talk about hog fuel, but their practical approach to it is not encouraging industry to get involved in using it. They talk about nuclear power, and the minister said we had so many plentiful reserves that we didn't need to use this. But I want to read just a little bit further down in this same booklet, Mr. Speaker, and it says: "However, B.C. Hydro cannot ignore the existence of such a possible major source of energy, and is continuing to gather technical and capital cost data on nuclear generation to determine its practicality for British Columbia in the future." Now that doesn't sound as if we're not really going to have any nuclear energy in British Columbia. It goes on to say: "Nuclear energy is not among the alternative sources of power available to Hydro in the 1980s." Why? Because the least time for any possible construction of a nuclear plant would be in the range of 13 to 15 years. So they are not discounting the use of nuclear power. Then they go on to a very interesting paragraph, Mr. Speaker:

"Studies on operating data from various parts of the world, including Ontario, indicate that the thermal effects resulting from the discharge of cooling water are not expected to present serious problems, that the probability of major nuclear plant accidents is extremely low, and that radiation levels in the vicinity of operating nuclear plants are lower than those existing naturally in many areas."

Now that, to me, sounds like a case for nuclear power. To suggest there is not any consideration of nuclear power by B.C. Hydro, and to quote this book as a source for that, certainly indicates to me the minister is not being entirely candid.

The very last of this book does talk about alternatives. It says: "B.C. Hydro is also keeping close watch on developments around the world in so-called alternative energy of the sun, wind and sea — research ranging from the depths of the ocean to outer space."

The minister talked about the solar plant in Burnaby, but he didn't say anything about this picture. This book is just a little misleading, because it gives you the solar panels installed on the Burnaby building, and then on the next page, without any definition of where it is or anything else, it says: "Experiments underway to directly harness the sun's energy and produce electrical power include this solar dome concept of 10 megawatts solar power plant." It doesn't say where that is, and though the indication is it could well be in B.C., that is not so, Mr. Speaker. I think it is misleading to put that kind of picture on the full page to indicate we have that kind of approach toward solar energy in Hydro when, in actuality, it is only the installation in Burnaby. It is very misleading to put that in there with that kind of a caption and not to have a location; that definitely isn't in British Columbia.

I had an interesting experience, Mr. Speaker. The Nitinat Indian reserve is miles away from a Hydro supply. They had two diesel motors supplying power for their village. It was costing them some $50 per family per month, and they had built up a terrific deficit because it wasn't even covering escalating fuel costs. They came to me, concerned about what could be done. "Could we get a rural extension in from Hydro, and how could this be done, and what would the cost be?" When we started looking at it I began to think about alternatives, and I talked to some of the people in the Federal Alternate Energy Bureau. They said they had been looking at that area and found it was a very high wind area, very steady, and they felt that it would be a good place for a trial of a wind generator to supply for the Nitinat Indian village. They were quite prepared to do the experiment and got the thing on the road, except they didn't have an anemometer to measure the wind velocity to see just what they need.

You know, Mr. Speaker, I tried for two months through various areas and departments of Hydro to get an anemometer to measure the wind velocity. They apparently had two — one was broken down, the other one they couldn't find — and there was no way that we could get an anemometer in there to measure the wind velocity. Now

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that's the kind of experimental programs and research into alternates that Hydro is involved in, because that's an actual example of trying to get some experimental work done to provide an alternate energy supply. There was absolutely no way that I could get any cooperation from Hydro to get that thing off the ground. The whole thing just died and those people are still paying untold amounts of money for their diesel generation.

There has been quite some mention of Vancouver Island and its shortage of power supply. But there are certainly ways in which we can improve our supply on Vancouver Island without getting into excessive amounts of extra generation. We're short. Sure we're short, particularly in peaking periods. We must remember that nearly half of the load on Vancouver Island is what Hydro calls "bulk sale customers" — the industrial load, the pulp mills, the mines, those large loads. Nearly half of the demand goes into those areas.

As I mentioned before, if Hydro was serious about having the hog fuel generation.... It's a top priority with those companies — energy is a very grave concern — and if Hydro was serious about looking at equitable kinds of rates, I'm sure that we could work out with those companies.... They will be quite happy to install further generation and use up some of their waste wood products in that generation, and feed back power into the system on Vancouver Island at peak periods in return for more power at off-peak periods from the Hydro grid. But as long as Hydro has the rate structure that they presently have, that's not going to be encouraged.

That would be one way that it could be done. It could presently be done just with the facilities that are there in the amount of approximately 100 megawatts by simply getting the mills to do their heavy loading at off-peak periods and to reduce load at peak periods. It's quite possible. It has been done. I know it has been done because I've been involved in it when it was being done, when we had troubles in Hydro on the Island a good few years ago. It can be done; it works very well. I understand that could reduce the peak demand on the Island system by something like 100 megawatts.

There is another way that it can be done. Our equipment is all geared to something like a range of about 25 percent in the voltage level required, the equipment that we use in our households. There is no reason that we couldn't drop our voltage in peak periods — just a little lower voltage. It doesn't need to be very much. For every 1 percent voltage you drop, you drop your kilowatt demand by 1 percent, and that's a very easy way to reduce your demand.

Interjection.

MRS. WALLACE: You've got a 25 percent factor to work in there; it certainly can be done, and that will help relieve your peak load. So what I'm suggesting is that there are ways that you can reduce your demand, and we don't always have to think about adding that extra capacity.

Hydro has already embarked on this program. If the average outage on Vancouver Island is between 4 and 12 minutes....

Interjection.

MRS. WALLACE: Your average outage, Mr. Minister of Forests (Hon. Mr. Waterland), is between 4 and 12 minutes, and if your water heater is off for 4 to 12 minutes you're not even going to know it. Hydro is already trying to embark on this program, and that's a good program: I give them credit for that. But I think there are more programs like that that can be undertaken.

There is no indication in this power prospectus where Hydro is spending money. They're certainly not spending it on research for wind generation. I found that out. Solar generation — maybe some. They do have solar panels on one of their buildings. But I believe that the major thrust for alternative energy is being directed at nuclear power. As long as Hydro is going in that direction, as long as it is looking only at the conventional methods of supply with economically self-destructive high costs, then there is no way that I am going to support a motion to increase their borrowing power. We have to do something to bring this Crown corporation to its senses, because we’re heading for nothing but bankruptcy if we continue in the direction we're going. It's going to happen in Ontario. It's going to happen in Quebec, and it will happen here. We have to re-evaluate the methods by which we're going to provide power for our use. It is possible it can be done, but we have to concentrate on that aspect of it. This report and the Hydro board of directors are not interested in those alternatives. Until such time as I see a more forward-looking attitude on the part of Hydro, I am not prepared to support any further borrowing.

HON. MR. WATERLAND: I wasn't planning on entering this debate, but after hearing some of the comments made by the members opposite, I felt that I should say a few things.

I'm very interested in the simplistic approach to power and power options presented to us by the hon. member for Cowichan-Malahat (Mrs. Wallace). She began by referring to the days when she was in the financial section or the production department, or whatever it was, at B.C. Hydro. She was privy to all the innermost financial undertakings and plannings of that corporation. I really don't know what her position was, Mr. Speaker, but to hear her speak, she was setting the most basic policies of that corporation.

She carried on from there to talk about how terrible British Columbia Hydro Authority was in offering to buy farms from people who perhaps could have been subject to flooding or displacement because of Hydro's developments. I guess that member would have preferred that B.C. Hydro had waited until such time as the properties that these people had were depreciated because of power development, speculation, and then come in and bought the properties at distress rates. I think B.C. Hydro, when they plan ahead and anticipate the problems which are being presented to people and try to save them from financial loss by planning, should receive credit.

You criticize Hydro for failure to plan ahead: you criticize them also when they plan ahead and try to overcome hardship by perhaps bailing them out ahead of time before their properties are depreciated.

I was very amused at some of that member's discussion about alternate power sources. I don't know what that member's background is, but she's talking about various alternate energy supplies. I'm sure there are other energy sources, and there will be additional energy sources coming in. She speaks about solar power, tidal power, wind power, thermal power, geothermal power and many other sources

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of power. Perhaps, at some point, they will be available to us. But she fails to recognize that there is an economic factor involved with power.

She spoke about the Nitinat Indian band attempting to determine whether they could have wind power to replace their diesel generating plants. They couldn't acquire an anemometer to record wind velocities, because Hydro didn't have one. Well, you know, an anemometer is a very readily available instrument. It can be acquired from almost anywhere and the cost is very minimal — perhaps $150 to $200 will buy a very good anemometer. Perhaps the reason Hydro wasn't interested in providing an anemometer was because they know that wind power, on the basis of today's technology, is completely unrealistic. There is no way that wind power can possibly replace any other source of power in an economic or reliable basis.

Wind power is something, my friend, that perhaps you can use if you have no other source of power available to you. In British Columbia, there are many, many options which are more reliable and less expensive than wind power. Wind power, at some point in time, perhaps, will become economic; at this time it is not. Hydro, I suppose, was trying to humour that member, to tell her: "Please go away. Go back to your books and understand what you are saying before you start talking about wind power."

Mr. Speaker, other members over there had various things to say, and the member for Shuswap-Revelstoke (Mr. King) tried to mix up dams and natural disasters, speaking, I guess, of the Downie slide at the 1880 dam. If that member was not at the hearings held in Revelstoke in 1976, in which there was a full engineering discussion about the possibility and the effect of a Downie slide, then he should be ashamed. If he was there, then he's deliberately misleading this House, because it has been....

MR. NICOLSON: A point of order.

DEPUTY SPEAKER: Please state your point of order.

MR. NICOLSON: The minister — and I would be surprised, Mr. Speaker, that you wouldn't have jumped on him, that it should have to be brought to your attention — said that the member for Shuswap-Revelstoke was deliberately misleading this House. He was certainly at those hearings, and I ask that member to withdraw.

DEPUTY SPEAKER: The Chair has no knowledge of where members are when they are not present in the chamber.

MR. NICOLSON: On the point of order, Mr. Speaker.

DEPUTY SPEAKER: Order, please. Before I recognize the member for Nelson-Creston, the Minister of Forests has been asked to withdraw an unparliamentary remark, and I would ask that he withdraw it.

I would also ask that the member for Nelson-Creston extend to the Chair the courtesy of at least finishing their statements.

Please withdraw.

HON. MR. WATERLAND: Mr. Speaker, if the member for Shuswap-Revelstoke was at the hearings, then he is fully aware of the very detailed studies and presentations made there, which very clearly indicated that there is no problem....

DEPUTY SPEAKER: Hon. member, it's simply a matter of asking for your withdrawal, and I must ask you to withdraw.

HON. MR. WATERLAND: In order to continue, Mr. Speaker, I will withdraw any comment that may have been offensive to the member for Shuswap-Revelstoke, who doesn't happen to be in the House now, but who is championed by the other member.

Mr. Speaker, it was very adequately demonstrated at those hearings, with engineering studies, models and any other form of demonstration which Hydro could bring to those hearings, that even if the Downie slide did take place, any wave action as a result of that slide would be fully dissipated before it ever reached the dam. He attempted to mix that up with the recent problems of instability with the strata underlying the site of the dam itself.

By trying to bring newly found problems and relate those to problems which were recognized and accounted for many years ago, the member is trying to bring forth the possibility of an imminent disaster because of the breaking of dams through the Downie slide and other terrible things. I think he is being very unkind to people who live downstream from these dams, because of all the hydro dams anywhere in the world, none of them is engineered with as much detail and foresight and thought as are the dams in British Columbia. The dams that we have in this province are, as far as can be humanly determined, absolutely safe. There is no hazard as a result of these dams. Any time dam construction proceeds, as is the case with the 1880 Dam, and the strata is unstable beneath the dam, the engineering construction is modified in order to look after those problems. Anybody who tries to raise the spectre of a number of dams being washed away by mixing up of two different problems, I think, is being very unfair to the people in this province.

The member for New Westminster (Mr. Cocke) made comments about B.C. Hydro and the province of British Columbia lumbering along in their same old ways. Let me tell you, Mr. Speaker, that if we don't have power in British Columbia, we won't be lumbering along at all. We won't be lumbering along, we won't be saw milling along, we won't be pulp milling along, we won't be mining along, we won't be anything along, because we won't have any power for these tremendous industries in British Columbia.

British Columbia, Mr. Speaker, is blessed with many, many fantastic resources. We have one-half of the forest resources in this country right here in this province. We have a forest industry which is very prominent at this time and can become much more prominent in years ahead. We have mineral resources which have not really been touched yet. We have a location on the Pacific Rim of North America which gives us an opportunity to enter into the new Pacific trading patterns of the world. But if we take all of these resources, and this location that we have, and the number of people we have in this province who are willing to go out there and work and produce, nothing will happen unless we add the other ingredient, which is power.

That is what this bill is all about: to try to make sure that British Columbia has the power it needs to put together with the tremendous natural and people resources we have, so

[ Page 311 ]

that we can enhance our way of life in this province. B.C. Hydro has a tremendous responsibility in predicting power requirements. As the minister responsible for B.C. Hydro pointed out, they have a very difficult job. They must provide power for the industry they predict will happen here and for the longest and coldest night of the year. There are no shortfalls allowed B.C. Hydro. Quite frankly, I think B.C. Hydro is being very conservative in their projections of power requirements for the future. Their projections are based upon recent history in British Columbia, and in the early 1970s their projections of power requirements went down tremendously because they couldn't see anything happening in B.C. The investing world thought B.C. was a bad place to invest in, and therefore they thought we would probably not need power. We do need power now. British Columbia is on the move. The power requirements of industry in this province in the next few years — just through the commitments that we know of now, not even considering those we know are coming — are going to tax the ability of B.C. Hydro to provide power to the limit.

This afternoon a member mentioned Crown Zellerbach's recent announcement of needing power to Vancouver Island before they can go ahead with their Campbell River paper plant — a $170 million investment dependent upon power. That is only one small power requirement coming to B.C. Hydro in the next few years. We know of the announcement made by B.C. Forest Products. They will require power in order to carry out their developments, in order to create jobs and opportunities for the people of B.C. We know of West Fraser's announcement made today about a thermal-mechanical pulp mill for Quesnel, which will require power in order to provide jobs and opportunities for the people of B.C. We know of the hundreds of millions of dollars committed by MacMillan Bloedel in order to provide jobs for the people of British Columbia. They will require power for their developments. We know of Rayonier; we know of Doman Industries, Weyerhauser, Can-Cel, Northwood, and many, many other companies in the forest sector which have expansion and new development coming along, all of which require power. none of which can go ahead without power. That is what we are talking about tonight: power to generate and fuel the industry of this province, to provide jobs for the people.

The members opposite constantly say: "What is the government of British Columbia doing about jobs?" As soon as commitments are made and we try to provide power for the industry which will create jobs, they say: "No, no, no. You can't do that."

The forest industry is but a part of our economy. Highmont Mines recently announced production plans which will require a lot of power. Equity Mining will require power. B.C. Moly will require power. Carolin Mines will require power. Valley Copper will require power. All of our industry in British Columbia requires power in order to utilize the resources we have to create jobs for the people of B.C., opportunities for the people of B.C., revenue for the government of B.C. If we don't have power, we might as well shut down the province. Yet those members opposite say: "No, B.C. Hydro doesn't need money. You can go to some of these perhaps futuristic types of energy sources" — which today are not practical.

Today hydroelectric power is the cleanest, safest, most economical source of power we have. If we don't allow B.C. Hydro to go ahead with their plans, then I would ask the last member of the opposition who leaves this province to please turn out the lights, because nothing will be happening here. I fully support this bill.

[Mr. Davidson in the chair.]

MR. NICOLSON: I don't know if one should debate with the member who just spoke. As a result of the member for Shuswap-Revelstoke (Mr. King) appearing before the Revelstoke hearings, Hydro changed their design and increased the freeboard on the dam to compensate for the possibility of a Downie slide. If that means that the slide is an absolute impossibility and that no one down the Columbia River should worry about it.... I'm not too willing to be reassured by a person who told us there was going to be a certain disaster in the forest industry if we didn't go out and spray the spruce budworm.

On this side of the House we said: "Leave them alone. It'll collapse and we won't get into the mess they're in in New Brunswick." We were proven right. That minister was proven wrong and he still has his big stash of spray hidden away at the cost of thousands and thousands of dollars to the people of this province. As a matter of fact, the member for Shuswap-Revelstoke (Mr. King) in cross-examination could not get the outside engineering consultants to give any guarantees in terms of the stability of the Downie slide.

Mr. Speaker, what I am most interested in this evening is the fact that we have the minister responsible to this House for B.C. Hydro, the Minister of Energy, get up in this House and make a speech and not mention one of the biggest conspiracies presently underway in B.C. Hydro, and that is for the export of firm power by B.C. Hydro. There is an application presently before the National Energy Board. Neither he nor the Minister of Finance made one mention of this conspiracy to build, not for the needs of British Columbians, as was just said from the other side of the House, but to build for export.

We're talking about exporting three billion kilowatt hours compared to the total domestic consumption in 1978 of 24 billion kilowatt hours. That is 12.5 percent. That is what B.C. Hydro, this government and this policy is all about. They are also going before the National Energy Board and asking to export up to ten billion kilowatt hours of interruptible power, which is 41.5 percent, making a total of 54 percent.

This indicates that they are expecting to have massive surplus and they are applying to do this. The reason they are applying to do this is to beef up their energy demands.

Mr. Speaker, I say that this is a scandal and a conspiracy which I first brought to the attention of this House over a year ago. I urged that an enquiry take place and that there could be the possibility of a ten-year pause in new Hydro dams. With the capability of adding generating facilities to existing dams, we could do this. I said that Hydro's projections were way above and beyond the actual needs of this province.

Mr. Speaker, one year later the technical report of the British Columbia energy supply and requirements forecast came up with the projection that the average rate of growth for B.C. Hydro was 3.5 percent, almost one-half of that projected by B.C. Hydro.

I want to know why that Minister of Energy did not get up and inform this House that B.C. Hydro is presently appearing before the National Energy Board and asking for

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permits to export firm power in the amount of three billion kilowatt hours per annum.

AN HON. MEMBER: To whom?

MR. NICOLSON: You don't even know. You don't even know.

Mr. Speaker, this little item might have escaped notice in the province of British Columbia. It came to the attention through a press agency called, I understand, the Dow Jones Wire Service. It was printed as a very small item in the Toronto Globe and Mail, where they announced that on May 30, 1979, the British Columbia Hydro and Power Authority of Vancouver "has applied to the National Energy Board for permission to export electricity to the United States for five years beginning October 1, 1979. The exports include up to three billion kilowatt hours a year of firm power and ten billion kilowatt hours a year of interruptible power. The licence would replace an existing five-year permit expiring September 30." This is to go to the Bonneville Power Authority.

The Minister of Energy seems not to be aware of this. But, Mr. Speaker, I want to point out to that minister, who seems to want to interrupt, that we're talking about 54 percent of our domestic consumption for the year 1978 in terms of magnitude. So what are we being asked to authorize the borrowing for? Another three-quarters of a billion dollars increase again this year in order that we can generate surplus electricity, in order that we can sell it to the United States.

I think that what we've got to do is bring in some kinds of assurances that this money will be borrowed at interest rates which are not going to lead to costs that are going to show some kind of a return on the dollar. The minister responsible for B.C. Hydro comes into this House and doesn't even mention such a thing, and this is the whole fundamental argument and this is what people have been saying for some time. I must say I was surprised. one year later, to see the B.C. Energy Commission come out with the very same forecast I had made back in January of 1978.

When a layman can come as close to the true situation, and it is not a position of the New Democratic Party — it is my personal feeling in this matter — it indicates there is need for thorough study and through investigation of the supply and demand forecasts of B.C. Hydro. I know the committee has looked into certain things: they've found out the waste, as we heard presented to the House today, in terms of what people are allowed, just to furnish their offices in Hydro. The fundamental question is: should B.C. Hydro be allowed to continue? It is not simply cost of financing this debt. It is the cost of the flooded valleys; it is the cost of dislocated people; it is the cost of the destruction of our environment and our way of life here in British Columbia. It is pretty doggone convenient for some of these Vancouver MLAs to get up in this House and talk about flooding another valley, as if people didn't live in those valleys; as if the very things that attracted people here to British Columbia, in terms of its wildlife resources, in terms of its mountains, its streams and its free-running rivers, were not what brought us here in the first place.

Mr. Speaker, there is a cost bigger than even the debt financing here, and that is why I'm going to vote against this authorization of another three-quarters of a billion dollars, another pig-in-a-poke without any up-front admission as to what the real things that this government is funding for. This government is funding for the "Bonnerville Power Authority." This government is in bed with the "Bonnerville Power Authority." This government is in bed with a continental energy policy. This government, through Robert Bonner, are part and parcel of an international group of people called the Trilateral Commission. They are after the water resources of British Columbia, and they are not serving the people of British Columbia. To vote for this bill will not serve the people of British Columbia.

MR. MUSSALLEM: Mr. Speaker, I could not possibly remain in my seat any longer after I heard the stirring address from the member who has just taken his seat. He probably forgets the good things the B.C. Hydro has done. Let me refer him to his own area of Trail. There are no more floods in Trail. Why not? Because they dammed the Columbia River. There are no more lives lost in Trail because of the same Columbia Dam. There is no more great loss of business in the Trail area, because they dammed the Columbia River.

MR. LEA: What about the Arrow Lakes?

MR. MUSSALLEM: And he would sit here — never mind the Arrow Lakes — and talk about the Columbia. He just can't sit still through this. He talks about the losses, he talks about what Hydro has done — destroyed everybody. Let me tell you about my constituency of Dewdney. Let me tell you about that. Well, Hydro built a dam on the Alouette Lake, and that valley now has 1,000 homes — 1,000 people live in it. And you say Hydro is all bad? I tell you, they're good, intelligent, upright and honest people.

Another thing they do. Whether it be Vancouver, Kerrisdale or Dease Lake the price for power is the same. Would he like to live in Manitoba where, they say, the price of power is low? It's cheap in Manitoba if you live in Winnipeg. But go 500 miles out of Winnipeg and you can't afford electricity. That's the situation. But our friends don't listen. They've got a block; they hate Hydro. I don't know why — it's a socialist operation. I don't want to say that very loud. It's a thing you've got to say quietly. I don't understand that. It's a terrible thing to say, but you know, stop and think. It's a socialist operation; it's owned by the people; and yet they knock it. It's the truth.

The reason that it's owned by the people is because Hydro has done a great job. An organization of this size that makes money, as it is with moneys everywhere, gets extravagant. By getting extravagant, they know very little cause for how money is spent. I was on the Crown corporations reporting committee, and my hon. friend from New Westminster (Mr. Cocke) was there. I looked Mr. Bonner straight in the face and said: "Mr. Bonner, the trouble with your corporation is you're too extravagant, and I think that's got to stop." He gave us a little lecture, and he told us it was bothering his officials because they all had to stay there just to watch.

I told him we were the eyes and the ears and the mouth of the people, and it took our government to establish the Crown Corporations committee that put a check on Hydro. They need a check and they are the ones that admit it. Mind you, it annoys them, but they admit it. But we investigate all Crown corporations, not only Hydro, and I want to say that Hydro has done a great job for British Columbia. I see

[ Page 313 ]

nothing wrong with selling power across the line; I see nothing wrong in asking for a permit to sell power.

We have a product that is more valuable than oil. They talk about thermal power, wind power, solar power. The member for Cowichan-Malahat (Mrs. Wallace) spoke about solar power, and showed us a picture. Well, tell me, what in the world is hydroelectric power but solar power? But you’ve got to have magnifying glasses in the sky; they call that solar power. Solar power, hon. friend, is hydroelectric power, the best kind of power there is. And why shouldn't we sell hydroelectric power? It is far more valuable than oil. The oil in Alberta will run out, but the sun will always shine in British Columbia. As long as the sun shines and the rain falls we'll have hydroelectric power. I say let us build more dams — yes, dams — because if we build more dams we'll never have to face the nuclear age in British Columbia. Let us have thermal power, and we'll never face the nuclear age in British Columbia. And that is the policy of our government.

The hon. member for North Vancouver–Seymour (Mr. Davis), a man who is qualified to make a statement of this nature, said that the $750 million being borrowed will produce power at $1,000 per kilowatt. Well, that is very low-cost power. Power developed by thermal energy at this present rate takes $1,100.

Interjection.

MR. MUSSALLEM: My hon. friend helps me; he says that in Latin "hydro" means water. We know what it means. Hydro may mean water but it is still solar power.

MR. BARBER: No, George.

MR. MUSSALLEM: It is. Hydro power is solar power because the sun shines and the clouds go up and the rain comes down — that's solar power, solar energy. The sun shines, it evaporates the water, the water goes up and the clouds come down — what more solar energy is there than that?

Interjection.

MR. MUSSALLEM: Listen, I could out talk you in Latin anytime. Ipso facto!

Interjections.

MR. MUSSALLEM: They talk further: they knock the Columbia, the Mica Dam project. They have the audacity to knock it. Do you know that the Mica Dam is on line now at $261 per kilowatt? That's the lowest-priced power in British Columbia. In 1956, '57 and '58, that party there fought the two-river policy of this government tooth and nail. I wish I'd got the newspapers: "The government has given away British Columbia. We'll be in debt. We don't need the power." Never need that power! Why, if we didn't have that two-river policy now, my friends, there would be no interior British Columbia, there would be no pulp mills, there would be no power on this island. It was the two-river policy that made the province of British Columbia, and you knocked it. Yet when we're talking now about borrowing $750 million to create more power at $1,000 per kilowatt — far less than any other power you can produce — they knock it. My hon. socialist friends get excited with big numbers. But let them understand this: British Columbia is big and the numbers are small by comparison.

Here's what they would do. Say I suggest to them that if we want to remove this debt totally from the people of British Columbia, all we need do is put Hydro up for sale. You would have them flocking here from every direction to buy Hydro, and they'd pay double the price of the debt. But then watch your Hydro rates go up; then watch the Interior close down.

MR. BARBER: Why don't you throw it in with BCRIC?

MR. MUSSALLEM: My friend, don't talk about BCRIC! That's the greatest thing that ever happened to this country. It will go down in history as a milestone.

In this debate the hon. member for Shuswap-Revelstoke (Mr. King) said what an awful thing Hydro had been doing. He said they were in such a big rush to get the bids on the Revelstoke Dam that they called the bids and then they put it on a cost-plus system. He said: "What a terrible thing. They just threw money away." He read the report. But you know who did that? Do you know? Let me tell you. They said "Fire Bonner." What a disgraceful statement to make. He's a Great businessman, a leader in our province. Fire Bonner? Why fire Bonner? He's doing a good job — he's an honourable man, and he should have our respect, and you should be ashamed to make a statement like that.

MR. LEA: They're going to fire him.

MR. MUSSALLEM: They're not going to fire him.

MR. LEA: Don't put your paycheque up for a bet.

MR. MUSSALLEM: I'll tell you, I don't know what they're doing. [Laughter.]

MR. LEA: Don't feel bad, neither do they.

MR. MUSSALLEM: We don't know what they do when they close the doors. Listen, just hold it. New Westminster, keep quiet. We do not know what they do when they close the doors.

MR. LEA: Nor does anybody.

MR. MUSSALLEM: Nobody knows. That's the system we work under. But I want to tell you this. If I had a say and if the hon. members here had a say, Bonner would be respected and not derided. You ought to be ashamed of yourself.

I was telling you who was the culprit that made this disastrous deal with Atkinson and various people. Who was it? Their man, Mr. Cass-Beggs, who over three years.... It was in the report, but I'm going to tell you now. I would never had said a word about it, but you brought the thing up and I'm telling you what they did. They said: "Oh, no, we can't pass that report if you leave Cass-Beggs' name in there."

We took Cass-Beggs' name out, but that was the guy who did all the damage. That was the fellow that messed up the bids. I'm not going to knock somebody for the disaster

[ Page 314 ]

he created there. Disaster after disaster, mess after mess, but we're not knocking it. We're merely saying they do not understand government and they never will. Excellent opposition.

We have some of the greatest chairmen. Hydro had great chairmen: Hugh Keenleyside, Gordon Shrum, all these great men. Why are we knocking them? We will pass it because it should be passed. My friend opposite said we were developing power for $1,000 per kilowatt hour. That's a good deal. It's not a debt. We could sell the whole company and make money, but why sell it? British Columbia needs Hydro, and why should this company knock a socialist enterprise? That I will never understand.

SOME HON. MEMBERS: More! More!

MR. LORIMER: I thought they were applauding me, but I guess it was the former speaker. I was ready to sit down when I was ahead.

We're discussing a very simple bill. It's three lines and spends three-quarters of a billion dollars. That comes out to a quarter of a billion a line. That's pretty heavy stuff.

The increased debt that this allows amounts to over $2,000 for every man, woman and child in this province. That is a terrific debt for any province to carry on one Crown corporation. I am not in argument with the member for Dewdney (Mr. Mussallem) in that Hydro is a good company. The company is fine. It's the directors that we have to question. It is the leadership of this company that has caused the need to bring forth a bill to borrow another three-quarters of a billion dollars.

The bill doesn't tell us for what the money is wanted. There have been a number of our members on the other side who have said that it was to prevent blackouts or brownouts. Certainly there is nothing here to indicate that that's the purpose of the borrowing requests in this bill. What it is is a blank cheque to Hydro to spend as they see fit.

The issue really isn't in the borrowing. The issue is that we're expected to pass a bill of this kind without any indication or suggestion of what the funds are required for. What are they going to use it for? At the present time — from their report for 1978-79 — 31.7 percent is set out for interest payments. That's well in excess of the amount of the money paid by Hydro for wages for their staff. Only 23 percent for wages and salaries, and 31 percent on debt payments. Now that's a lot of money: a third of a dollar, basically, goes into debt reduction in this Hydro performance. It's strictly financial irresponsibility by the directors in allowing this company to go farther and farther into debt, and not stopping the waste and the other matters that have created this debt over the last two or three years.

I might point out that one of the problems, it appears to me, is the fact that we have four directors on this Hydro board. One is the Minister of Energy, Mines and Petroleum Resources and Minister of Agriculture (Hon. Mr. Hewitt), who has been on the board for some six months; another is the Minister of Education, Science and Technology (Hon. Mr. McGeer), who's been on about the same length of time. For that length of time, they basically know nothing about Hydro and very likely have only learned where the executive dining room is. Hydro is a complicated company, and certainly you don't gain knowledge about Hydro in a matter of six or seven months. The other director is Charles Brazier, who is a lawyer and again a part-time director. So we have three part-time directors and Bonner, who is the only permanent director at Hydro.

[Mr. Speaker in the chair.]

Certainly it was regrettable to learn of the death of Mr. Steed, who had served Hydro very, very well as a permanent full-time director for many years. But now we have a case where there are three part-time directors and one full-time director controlling the affairs of Hydro.

Decisions are not being made by the directors, but are being forced to be made by the staff and the general manager. There's certainly no leadership in Hydro at the top. As a result, there is no financial responsibility, no accountability, and it's a financial disaster.

We don't know what they will be doing with this money. They've been selling some of their assets in the past year or two. They've sold a number of buses, and yet they have to borrow more money for their capital expenditures. If the money was used to increase the transit system, it might be worthwhile considering, but we have no knowledge of what this money is earmarked for. It might be earmarked for Bonner's atomic plant, for atomic energy, the start of development of power through atomic energy.

The waste at Hydro is another thing. Here we have an action in court which was settled out of court last year with a payment of $34 million to contractors on a contract which was completed somewhere around 1969. The people who were being paid were Morrison Knudsen Co., Northern Construction Co., J.W. Stewart, Perini Pacific Ltd., and so on. These people were given a settlement of $34 million without awaiting the decision of a court.

Now this is part of the waste that goes on in Hydro. One of the problems is the fact that it's a company of engineers, and there are probably too many engineers in Hydro. The directors have now hired an outside consultant to determine if there are now too many engineers on staff in Hydro. Of course, the answer is pretty obvious that that is the case. But they're going to spend thousands and thousands of dollars on this outside study of a problem that is reasonably obvious. There is waste, I suggest, throughout Hydro, because of the lack of leadership and lack of guidance by the directors of this company. Until we have an idea of what is required, for what purposes these moneys are required, I don't see how it is possible for any person in this House to vote three-quarters of a billion dollars as a blank cheque to B.C. Hydro.

MR. SPEAKER: The hon. minister closes the debate.

HON. MR. WOLFE: Mr. Speaker, as per usual on this borrowing bill, we had a wide-ranging debate on engineering aspects and various problems associated with British Columbia Hydro, but the simple fact is that this bill proposes to increase their borrowing authority to be used, if necessary, and based on current projects underway. As all members know, I circulated a detailed list of the reasons for this new borrowing authority, and I'm therefore rather surprised to hear the last speaker refer to the fact that no information has been given to him in terms of what this information was used for.

But generally speaking, Mr. Speaker, we've talked about the lack of accountability of Hydro; the fact that this

[ Page 315 ]

is rubber-stamping, a blank cheque; concern was expressed over the size and the cost of their debt by the Leader of the Opposition; a question or two was raised about where we're going to get all this money; concern was expressed about waste and extravagance in Hydro; and, of course, the fact that we just don't need this power — the suggestion that we can just shut it all down for ten years. That's really one for the books.

Just to talk about accountability. Mr. Speaker, we now have through B.C. Hydro a fantastic annual report that's been circulated to all members and now, through the introduction of this government, quarterly reports on British Columbia every three months — full disclosure every quarter. And, of course, we have them appearing before the Crown corporation committee on several occasions, and now we have the ultimate in disclosure and accountability, Malcolm Turnbull and Alex Young. So this just shows you the extent that we've gone to in terms of accountability.

Now in terms of the suggestion that this bill for such a huge authorization is rubber-stamping, Mr. Speaker, I would point out that it would be quite easy for the government to change the Hydro Act to allow for no accountability, to allow for full borrowing power without any limit, and this is the case in certain other provinces in Canada. I think we should be aware of the fact that it is this government's policy to place the bill before the Legislature every time we want to increase this authority and allow for this full and broad debate on this issue. There are other provinces in Canada which have no latitude or control over this same aspect of Hydro borrowing. And I might say that our predecessors, the former government, in 1974 — as an example — increased the borrowing authority of Hydro by $500 million. Where did they do it? Not in a special bill in the Legislature. Where did they do it, Mr. Speaker? In the Statute Law Amendment Act, buried with a whole series of other amendments — an increase of $500 million. That's the importance they gave public debate of an increase of this kind in the size of their debt. And we're asking here for no inflationary increase in the requirement for borrowing.

This is the same level of increase, when you look back over the last seven or eight years — and this bill has been before us for every one of those years, practically — that you found over those years: in the year 1975 there was an increased request by the former government of $750 million, and here we have the same amount being requested this year. So it does follow that same pattern: there has been no inflation in this amount. And I might say, Mr. Speaker, in terms of the concern over borrowing. that in the last two years there has been no new external borrowing, no outside borrowing since June 1977. That was the last public borrowing by British Columbia Hydro on behalf of their increased borrowing requirements. Every borrowing since then has been with the use of internal funds.

It was indicated by the member for Coquitlam-Moody (Mr. Leggatt) that there was no indication of where we're going to get this $750 million, and I would simply refer him to the full detail on this matter in pages 35 and 36 of the budget speech. There was a full statement of the funds and where they were provided from for last year's and for the coming year's requirements of all Crown corporations. So, Mr. Speaker, the member should refer once again to the budget speech for that kind of information.

Now as to the size and the cost of the debt. the Minster of Energy, Mines and Petroleum Resources (Hon. Mr. Hewitt) has already explained that the present size of debt per customer is very comparable to other Hydros in Canada. I only want to add to that that although we are concerned with the amount of interest which is a burden on the ratepayer of B.C. Hydro, you'll find if you look back over a number of years as related to their total operation, as related to their total revenue, that it varies from about 30 cents to 31 cents to 32 cents on the dollar of revenue, Notwithstanding the increased use of outside borrowing, this has been the pattern. If you look back over a number of years you'll find that the same relationship to the sales revenue of Hydro exists. And I might say that most of their debts — in fact all of them — have sinking-fund arrangements associated with them. When compared to many of the debts of Hydros across Canada, I think we are in better shape for the provision of repayment through sinking funds.

We talk about waste and extravagance. Members should have a closer look at this annual report, where you'll find that salaries and wages have increased only about 5.2 percent in their expenditures for the past year. The only expenditures which have increased more than that in the past year have been in two items: property taxes for school purposes, which went up 15 percent, a considerable burden on this operation, but to the benefit of school districts in this province; second, the only other area that increased above that was in the price of natural gas, which has escalated substantially and is a burden on the cost of providing natural gas to the customers of Hydro.

We've talked a lot about the demand for power and the need to provide these projects for the future benefit of this province. I don't think a case can be made that there is excessive Hydro development going on in this province.

In the newspaper this week, we see that Crown Zellerbach expansion plans at Elk Falls include a $171 million newsprint machine. The obvious concern expressed in this undertaking as to whether they are going to have the power availability in Vancouver Island is the new transmission line going to Vancouver Island not being available until 1983. It's going to be imperative that we move forward very rapidly with such projects so that there is not going to be a shortfall in these kinds of demands for power because of fantastic expansion and economic development going on in this province.

This bill means jobs: it means economic development; it means industrial reputation and expansion of investment in this province. I'm going to vote for it. The interesting thing is that our opposition, when they were in power, voted for it; when they're not in power, they don't vote for it. That's just something I want to leave you to think about.

I'm happy to move second reading.

Motion approved on the following division:

YEAS — 28

[ Page 316 ]

NAYS — 21

Division ordered to be recorded in the Journals of the House.

HON. MR. WOLFE: By leave, I move that the bill be referred to a Committee of the Whole House to be considered forthwith.

Leave granted.

Bill 11, British Columbia Hydro and Power Authority (1964) Amendment Act, 1979, read a second time and referred to a Committee of the Whole House for consideration forthwith.

BRITISH COLUMBIA HYDRO AND POWER
AUTHORITY (1964) AMENDMENT ACT, 1979

The House in committee on Bill 11; Mr. Rogers in the chair.

On section 1.

MR. LEVI: I missed my chance before, but in the committee stage I just want to deal with a very complicated section in this bill — the only section in the bill — which increases the amount from $4.9 billion to $5.6 billion. First of all I'll quote something, and then I'll ask the minister to comment on it.

In May 1978 the minister said the following when we were debating a similar bill: "The Authority did request a larger increase, but after study the government is only prepared to recommend an increase of $750 million."

Now we have the minister saying this afternoon and I quote: "Mr. Speaker, all these capital projects total $797 million. In the borrowing picture of B.C. Hydro, $274 million of the present borrowing authority still remains." Are we to presume that something like $500 million or $600 million of the amount that was approved was spent?

We don't really know how much Hydro asked for last year — presumably something in the order of $1 billion. They got $750 million; they spent, apparently, about $500 million of that. Now does that really represent a cut of 50 percent in the request that they made? We're at this end of the fiscal year now. If this is the case, what projects did the government cut out last year? The minister did say that "the Authority did request a larger increase but, after study, the government only approved $750 million." Can the minister tell us what he cut out? What was cut back, or what was put on the back burner?

Somebody made reference before to the brownout people. Exactly what was it that you retarded, in terms of development, that might result in the very problem that some of the people out there suggested? Can you tell us that, in respect to the kind of funding? That's why I raise the issue.

I would like to make reference to the whole question of accountability which was dealt with by the Minister of Energy, Mines and Petroleum Resources when he suggested that there is accountability. He made reference to the auditor-general as being one of the people who presumably takes a look at what Hydro does. If the minister was familiar with what the auditor-general does, he would know that the auditor-general has no concern at all with B.C. Hydro. That was the kind of thing we were looking at on the committee.

I served on the committee, and I found that the work that we did was worthwhile, but what we became familiar with was simply scratching the surface. We were constantly trying to understand the very large amounts of money that were being approved. We were trying to look at the kind of overruns that they had, and even at this stage of the game — and the report was one that I endorsed — we were still a long way from understanding exactly what was going on in that operation.

However, we do have some clue now — not, as the Premier is fond of saying, that Crown corporations are at arm's length and somehow the government doesn't have any involvement. We know very well that the government makes major financial decisions. What we were concerned about this afternoon, and have been for some time, is just who makes the policy decisions about where power is going in terms of its development or in terms of money. In terms of accountability, that is still a very serious problem, a problem that, frankly, I am not satisfied that either the minister responsible for Energy or the Minister of Finance understands exactly how you can do that kind of monitoring.

I would just like to refer the minister to the questions that I asked: last year, $750 million $270 million left over. What was cut out? What was put on the back burner?

HON. MR. WOLFE: Mr. Chairman, if I understand the member's question, he is referring to last year's estimates of Hydro's expenditures, which I commented upon at that time. Last year's increase request was for $750 million. What I think I was referring to at that time was that their original request was for some $900 million or $1 billion. In analysing the detail of that request, it was reduced to $750 million, which was the amount they would have to live with.

I don't recall your other question except you referred to the auditor-general in passing, and I believe she does have authority to comment on B.C. Hydro.

MR. LEVI: No, she doesn't.

HON. MR. WOLFE: I said Crown corporations.

MR. LEVI: You said this afternoon, and I will read it again slowly and then you can hear it: "Mr. Speaker, all of these capital projects totalled $797 million. The borrowing picture will be $274 million of the present borrowing." That relates to that $750 million that we approved.

HON. MR. WOLFE: But there was some left over at the beginning of the year from the previous year.

MR. LEVI: We can debate this in the hall, Evan. They came in with $950 million apparently as the request. The minister indicated $950 million to $1 billion, something of

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that order. It was cut to $750 million. Now what is it that you cut back? Presumably you don't just slash off $250 million. You have to look at projects. What were they planning to do that they didn't do? There are some unspent funds in here. Now did this result in the retarding of the development of various projects? That's what I want to know.

HON. MR. WOLFE: Mr. Chairman, on a technical matter, in 1976 the B.C. Hydro Act was revised to make the auditor-general's Act apply to it. Once again, the increased authority of $750 million last year was developed after analysing the detail of their revenue of $900 million, and arriving at the understanding that they could live with $750 million. I can't tell you what the individual items were in the $900 million and I don't think you want to know.

MR. LEVI: That's not true that I don't want to know. What do you think I asked the question for? The trouble is that the three of you over there can't sort out the information. You make quite a thing of saying that you did not spend $274 million of the appropriation and that last year you cut it down by an equal amount, pretty close to $250 million. That's almost a half a billion dollars, half of, presumably, the original appropriation requested, that is a very significant cutback or retardation in the programming.

With all of the accountability that the government claims, the Minister of Finance can't tell us, and the new Minister of Energy, Mines and Petroleum Resources can't tell us. Maybe we should ask the old Minister of Energy: he's probably very informed about this. We might even ask the chairman of the committee, but he doesn't know any more than I do, because we couldn't get that information.

The minister said that the auditor-general's Act was amended to take in B.C. Hydro. In the report of the auditor-general B.C. Hydro appears in the column which she is not concerned with and not in the 23 Crown corporations that she is concerned with. Maybe I'I have a chance to talk to the Minister of Energy about that. Don't look so surprised; that's what it is.

MR. BARBER: Does the amount which the Legislature is being asked to approve as an increase to Hydro's indebtedness include money for the construction of a natural gas pipeline to Vancouver Island?

It's a very important question. It's a legitimate concern of the residents of Vancouver Island and considerable concern about, about the future ability of residents and business on this island to provide for their own maintenance.

HON. MR. WOLFE: Under gas service it provides for the recurring cost of improving and expanding the gas distribution system and other facilities and additions needed to provide gas service to customers. I haven't got the answer to that question. I can get it for you later. As we all know, it obviously wouldn't provide in those amounts for the construction of a new pipeline to Vancouver Island. But there may be certain planning or engineering associated with this that I am not aware of.

MR. BARBER: From my own inquiries, Hydro isn't aware of it either. To the best of my knowledge — I certainly stand to be corrected — this amount doesn't include a nickel for the planning, the engineering or the construction of a natural gas pipeline to Vancouver Island. As the minister just said, the amount includes simple maintenance of the current system. I'd like to point out to the committee that Hydro has adopted a policy — I guess it was four or four and a half years ago — of in fact reducing its customer service on Vancouver Island in the field of natural gas. No natural gas customers on the Island have been permitted to increase their natural gas usage. On the contrary, when applying for changes within the current amount used by them on an annual basis as customers of natural gas, natural gas customers on Vancouver Island have been told they may not do that.

For instance, a perfectly simple illustration was brought to my attention by a businessman in town. He told me that he had a fish-and-chip shop which used to operate on two levels, downstairs and upstairs. The pipe bringing the gas into his facility — which is required in that particular business — used to go to some extent downstairs and to some extent upstairs — about a third of his total gas supply went upstairs. He had a fire, and after the fire he said: "I want to bring the third downstairs. Can I put in a new outlet?" No, Hydro said, you may not. Hydro, after many appeals from me and others, said you may not. Why, the Attorney-General asks" Because it has been their policy that they will not permit any expansion whatever of natural gas service on the Island. And when they can take the opportunity to do so, they will reduce service. He wanted what Hydro determined to be new service on the ground floor — that was the way Hydro interpreted it. We appealed it, up and up the management — it finally went to Norman Olsen — and we got nowhere. That has been Hydro's policy for some time.

During the recent campaign the Premier made a promise to the people of Vancouver Island that his government, should it be returned, would deliver natural gas in abundance to the people of Vancouver Island. The first case I make is that it's clear natural gas is not abundantly available. The second case I make is that, in fact, natural gas service has been reduced deliberately, purposely and consecutively over the last several years by B.C. Hydro. The third case I make is: if you're going to keep that promise, when will we see the financial commitment required in order that it be kept? I don't see it in this bill. If it's not to be found in this bill, in what bill, during this session or some other, will we begin to see a commitment to the requirement for planning and engineering, and finally the capital costs of construction of a natural gas pipeline to Vancouver Island?

HON. MR. HEWITT: In regard to the natural gas pipeline to Vancouver Island, some of the preliminary engineering and reports of the feasibility of that have been made by Hydro. Until such time as they determine the total costs involved. It's not, of course, in the capital fixed asset borrowing. When the feasibility, the environmental impact and everything else have been identified, then we shall do the proper budgeting. I think the member is aware of that.

MR. BARBER: I wonder if either minister — and I appreciate your answer — would be prepared tonight to indicate in a rough time framework when you expect that engineering and developmental material will be available.

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and when you expect the board of Hydro might be able to name the cost of keeping the promise that the Premier made in the last election.

HON. MR. WILLIAMS: He explained it yesterday in the debate. He said: "It's not there." You want to ask a question when it's not there. He said it wasn't there, and you want to ask questions as if it were.

MR. BARBER: I think it's a reasonable question, and if the Minister of Labour wouldn't mind keeping quiet for a moment....

HON. MR. WILLIAMS: Why should we keep quiet?

MR. BARBER: If the minister is willing to answer, why don't you let him answer?

HON. MR. WILLIAMS: It's not in his estimates.

MR. BARBER: He's willing to answer. Would you let him answer?

HON. MR. WILLIAMS: No. [Laughter.]

MR. BARBER: No wonder labour management relations are so bad. Look at cabinet relations.

If the Minister of Labour would keep quiet for a moment, I too would be happy to.... It's an important question; it's fair to raise it now. It's fair thereby to be better able, during the minister's estimates, to ask more questions about further problems associated with natural gas transmission on Vancouver Island.

HON. MR. HEWITT: Just a quick comment. I do have a task force dealing with the reports regarding natural gas pipelines. That's where it is at the present time. I will be making comments on that as soon as that report is complete, but B.C. Hydro — dealing with this bill as the Minister of Labour has pointed out to you — does not include the natural gas pipeline in the fixed asset expenditures for this year out of this bill.

MR. HOWARD: Much was made earlier of the statement in the annual report to the effect that Hydro had earned $34 million from the sale of energy to the United States. This was purported to be a very good venture and a good thing because it brought funds into the country and into B.C. Hydro's position.

I think that on the other side of the ledger — and this was ignored by those who were putting forth that sale of so-called surplus electricity as a good thing, and the earning of $34 million as a good thing — is the fact that Hydro pays out at least $100 million annually in interest on debt owed in the United States. There's a net loss position there of the difference between $34 million and at least $100 million — it's closer to $110 million or $112 million in interest paid out on money borrowed in the U.S.

Can the minister tell the committee: where does Hydro intend to borrow this $750 million that it is seeking permission to borrow?

Interjection.

MR. HOWARD: Has it borrowed any of it?

HON. MR. WOLFE: Mr. Chairman, the Crown corporation's estimated requirements for this fiscal year are listed on page 36 of my budget speech. I stated at that time that we expect to meet these financial requirements from the Canada Pension Plan and from pension sinking funds administered by the province.

MR. HOWARD: Apart from that, you know, we're still running a net shortage of $65 million to $70 million on the difference between this paying out of interest in U.S. funds and the money that comes in from the sale of energy across the line.

It also seems that what we are doing here is giving Hydro the authority to borrow money to pay interest on the debt that it already owes. That's a rather sad state of affairs, because paying interest to the extent of some $300 million a year means you're going to give Hydro the authority now to borrow another $750 million and $300 million of that will go to pay the interest on the debt that we already have, leaving a net of perhaps $450 million for projects, which is a rather silly way to do business. I think anybody who looks at borrowings and that sort of thing will see that when you go to the process of starting to borrow money to pay interest on the debt that you already owe, you are in some serious trouble. That appears to be the case in what's happening here.

HON. MR. WOLFE: Mr. Chairman, I won't debate this matter, but the member stated that the interest is being paid out of the debt we're creating. I refer him to the operating statement on page 34, where it's indicated clearly that interest charges appear as an offset against the revenues developed each year. It's a part of our operating expense.

MR. HOWARD: It also shows in the statement of changes in financial position as a source of funds in the year ending March 31, 1979, something called bonds to the extent of $473 million. That wasn't created out of thin air, I don't think.

MR. LEVI: I would like to have the House welcome the new member of the front benches over there. He's not waiting for the Premier to make any decisions; he's already made up his own mind. Well, you got my vote, son.

I just want to clear up one small matter with the two ministers. I would like the Minister of Finance to tell me whether the auditor-general actually has the power to look into the books of B.C. Hydro. Check with your mate behind you, and then let me know.

Let me just save the minister. I'll save you a lot of trouble. If you take the trouble to read the auditor-general's report, it says: "Public bodies of which the auditor-general was not appointed auditor" — page 55. Among a number of the Crown corporations appears British Columbia Hydro and Power Authority. She does not have the power to look at B.C. Hydro, and this was one of the issues that was a continuing problem in terms of the committee. What's being raised in here today is the question of accountability. It's all very well for the Minister of Energy, Mines and Petroleum Resources to make a smart remark about Arab control and no control. They do not exist — the kinds of controls that that minister thinks exist, That's one of the very serious problems that obviously has to be considered by the new Crown corporations committee again: what exactly happens about accountability.

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MR. KING: I just wanted to say that looking at the cabinet benches and the new members over there it appears that we've got a cross between the amateur magician that formerly hailed from Kootenay and the magic mushroom. He's popping up all over the place.

Mr. Chairman, I just want to ask the minister two things. Does he have any estimate at all of the overrun related to the Revelstoke Dam and the Highway 23 reconstruction? I understand there is a similar rock problem with respect to the replacement of that highway. Initially there was a $30 million overrun indicated on the dam. I understand that may be much larger now, and I want to know what the overall estimate is at this point regarding the dam site and the highway. The other question I would like to ask is whether or not there is any of the money allocated in this increased borrowing power for any further development work incident to the proposed Kootenay diversion.

HON. MR. WOLFE: Mr. Chairman, I think the question first asked about the Revelstoke Dam should be addressed to the Minister of Energy, Mines and Petroleum Resources (Hon. Mr. Hewitt) under his estimates. The answer to the second question is no.

MR. LEA: Mr. Chairman — just so the member for North Peace River (Mr. Brummet) has some idea of what he is voting for here — when the minister was talking about internal financing instead of going to the open market, and he mentioned the Canada Pension Plan and other pension funds, what sort of interest rate are B.C. Hydro going to pay for this money? Could the pension funds be invested in the open market for a better return and therefore help the member for North Peace and his pension plan when he gets back to being a school teacher? Does the member for North Peace really want this money from his pension fund to be invested below the market value in point of return? I'd like to ask the minister: will the pension fund be paid the same kind of interest that Hydro would have to pay if they went to the open market?

HON. MR. WOLFE: Mr. Chairman, the rate determined for internal issues is always based on current market. Therefore they become a considerable economy to both sides because there are no placement charges associated with them or brokerage, et cetera. The rate determined is the market rate from time to time — whatever it is at that time.

MR. LEA: Which market?

HON. MR. WOLFE: The market rate.

MR. LEA: The prime rate?

HON. MR. WOLFE: The bond rate, the open market rate.

Section 1 approved.

Title approved.

HON. MR. WOLFE: I move that the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed: Mr. Speaker in the chair.

Bill 11, British Columbia Hydro and Power Authority Act (1964) Amendment Act, 1979, reported complete without amendment, read a third time and passed.

Hon. Mr. Curtis filed the addendum, volume 11, report of the Royal Commission on the British Columbia Railway.

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 10:54 p.m.