[ Page 7737 ]

CONTENTS

Routine Proceedings

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

Introduction and first reading –– 7737

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

On section 5 as amended — 7737

Mr. Skelly

Report –– 7738

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

(Hon. Mr. Hyndman)

On section 7 –– 7738

Mrs. Dailly

Mr. Nicolson

Third reading –– 7738

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

(Hon. Mr. McClelland)

On Section 1 –– 7739

Mr. Lockstead

Mr. Skelly

Mr. King

On section 2 –– 7741

Mr. King

Mrs. Dailly

Mr. Hanson

Mr. Skelly

Mr. Mussallem

Mr. Mitchell

Appendix –– 7755

FRIDAY, MAY 21, 1982

The House met at 10 a.m.

Prayers.

HON. MR. GARDOM: I know all members would like to pay official recognition to our legislative interns, as this is the last day of their caucus assignments and the final week of their program. They are going to tour the federal Houses of Parliament, heading to the wilds and uncertainties of central Canada from the peace, calm and tranquillity of this Legislative Assembly. I know all members would like to thank them for the time they have been here and wish them good fortune in the future.

I would like to introduce them, if I may: David Burgess, Jane Friesen, Cliff Hewitt, Catherine Holt, Mary Macdonald, Iain MacVay, Lawrence Pillon, Peter Seidl, Carla Wilson and Murray Wolf.

MR. HOWARD: We too want to be very closely associated with those words of appreciation to the parliamentary interns. We had the extreme pleasure this morning of meeting with the interns who were assigned to our caucus, and heard from them some thoughtful ideas as to how the parliamentary internship program can be improved in the future. We will be taking those thoughts and passing them on to Your Honour. We want to wish the interns every success in their venture into the House of Commons in Ottawa and hope they are not overly influenced by some of the shenanigans that go on there.

MR. BARRETT: I want to add a couple of comments in terms of the interns' experience. This is one of the rare times in our Legislature when we have unanimity about a program. In that regard, I would like to offer to you, Mr. Speaker, an attitude that I think prevails in this chamber. For a few more dollars we might get a better bang out of our buck, so to speak. The interns did not have the opportunity budgetwise to travel to constituencies. Perhaps it would be worthwhile to express this — and I don't know if other members of the House feel contrary to this opinion — but with a very small addition to your budget that I don't think would have difficulty passing in this House, we might broaden the experience of the interns who follow this group.

I just add those words, Mr. Speaker, knowing that no member would oppose additional budget for the interns' travel. I want to thank the interns, Mr. Speaker.

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

HON. MR. SMITH: Mr. Speaker, I'd like to introduce to the House today a group of 25 exchange students from Quebec who are visiting Mount Douglas Secondary School. It has been a reciprocal visit. They're here with their teacher, Mrs. Carol Beatty. I would ask the House to make them welcome.

Introduction of Bills

COMMERCIAL APPEALS COMMISSION ACT

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

Bill 43 introduced, read a first time, and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

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

Leave granted.

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

GEOTHERMAL RESOURCES ACT

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

Sections 1 to 3 inclusive approved.

On section 4.

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

Amendment approved.

Section 4 as amended approved.

On section 5.

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

Amendment approved.

On section 5 as amended.

MR. SKELLY: I wonder if the minister would explain how many properties are currently under development in B.C. for geothermal energy purposes.

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

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

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

Section 5 as amended approved.

Sections 6 to 12 inclusive approved.

On section 13.

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

[ Page 7738 ]

Amendment approved.

Section 13 as amended approved.

Sections 14 to 24 inclusive approved.

On section 25.

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

Amendment approved.

Section 25 as amended approved.

Sections 26 and 27 approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 5, Geothermal Resources Act, reported complete with amendments to be considered at the next sitting of the House after today.

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

TRANSPO 86 CORPORATION
AMENDMENT ACT, 1982

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

Sections 1 to 6 inclusive approved.

On section 7.

MRS. DAILLY: I would like to ask the minister if he could tell the House how the directors were selected. Perhaps it's my ignorance, and it's been in the paper, but I wonder if you could tell us the makeup of your board.

HON. MR. HYNDMAN: Mr. Chairman, perhaps I can outline the existing structure and then the reason for the amendment. I think that would answer the member's question. Presently, under the existing legislation, provision is made for a board of 13, of which two are to be nominated by the federal government and three by the city of Vancouver. The amendment provides for an increase in the maximum size of the board by two up to 15, and deletes reference to the specific nominations of necessarily two and three from the federal and municipal governments respectively.

I outlined the reason for that yesterday and I'll just review it again. As a result of the reorganization of Expo, there will now be two portions to the Expo site. The provincial government will have total jurisdiction over that portion of Expo taking place within the B.C. Place site. The federal government will have complete jurisdiction over the second portion of the Expo site, to be at Pier B-C, and the new ALRT line will link the two. Senator Jack Austin, the minister responsible from the federal government, has not yet released details of the structure and composition of the senior management and board of the federal Crown corporation which will manage, supervise and plan the federal portion of the Expo site. My general understanding is that the federal intention is to have federal, provincial and civic representation, but until we know that, we would like the flexibility to not necessarily be wed to a minimum of two and three from the federal govern ment and the city.

I would reconfirm that, in any event, with respect to the city of Vancouver the existing level of representation of three will certainly be continued. Presently the two members from the city of Vancouver, Mr. Don Hamilton and Mrs. Alison Robinson, have been continuing under the new situation, as they have in the past, at regular meetings. There is a third vacancy because of the untimely passing of Mr. Douglas Sutcliffe, who had been a city of Vancouver nominee, and we're awaiting a suggestion from the city of Vancouver. But I can assure the member that we want the city of Vancouver participation to continue at its present level at least. Also, 1986 is the centenary of the city of Vancouver. We're very enthusiastic about the participation we've had from city representatives; of course, it's vital to the success of Expo.

MR. NICOLSON: I'd just like to say thank goodness the government has returned to the practice of setting limits on boards of directors. An increase from 13 to 15 has been asked for; it is spelled out in the legislation. Unlike ICBC, unlike a whole bunch of other boards, unlike the number who can be in cabinet, which is left totally open-ended.... I would recommend a return to this practice in this particular piece of legislation.

Sections 7 to 13 inclusive approved.

Tital approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

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

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

HYDRO AND POWER AUTHORITY
AMENDMENT ACT, 1982

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

On section 1.

[ Page 7739 ]

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

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

MR. LOCKSTEAD: Yes, I was going to ask the minister these questions in the hall to save getting them on the record, but I thought my constituents might be interested in some of these answers, so we had best do it in here.

I have a few preliminary remarks here before I ask specific questions. Every year this bill for Hydro borrowing comes before this Legislature; every year the amount of money increases greatly. We're not talking millions or hundreds of millions of dollars; we're now talking billions of dollars. That's a lot of money when you consider that you've probably got the shirt from my tail right now.

Here we are discussing billions and billions of dollars of taxpayers' money and we want to know that this money is being well spent. We're paying interest on these funds and we're mortgaging the future generations to repay these horrendous debts. The indications are that in some cases the moneys are not being well spent, Mr. Chairman.

Interjection.

MR. LOCKSTEAD: My colleague points out that I'm probably a bit out of order here and should be discussing this in the second section of this two-section bill, but let's do the whole thing in one fell swoop. That will save a lot of fooling around.

I did want to point out to the committee, Mr. Chairman, that if the government's plans for Hydro are approved, power rates will triple over the next decade, and the guaranteed debt of the authority will increase from $5.3 billion to $24 billion — about $10,000 for each and every British Columbian. Site C alone will cost $2.64 billion, and you can bet your boots that if that project proceeds there will be cost overruns on that project as well. This will increase Hydro's debt by almost 50 percent, necessitating a sharp increase in rates. We're aware that Hydro has indicated that they're going to once again ask for horrendous rate increases.

Yesterday someone facetiously said out in the hall: "Perhaps we should give the whole province of British Columbia to Hydro and we'll take over Hydro. We'd be better off as taxpayers." I'm not sure that that makes sense — I don't think it does, actually. But in any event, there is no question, Mr. Chairman, that Hydro does wield a great deal of influence with this government, and I don't know why. Are the treasury benches afraid of Mr. Bonner for some reason? Whatever Hydro wants, Hydro gets, and I don't understand it. I would think that Hydro has grown to such proportions that it must be controlled by treasury benches. In my view, Hydro is out of control.

I'm aware that we have the Utilities Commission and these so-called safeguards. Nonetheless, if Hydro wants to proceed with projects which may not be necessary or required.... This brings me to the Cheekye-Dunsmuir transmission line, for which construction is well underway. I have a couple of specific questions on that project for the minister. What are the overruns to date? How much will we have to borrow? This is the appropriate place to discuss this borrowing, because moneys are being borrowed to complete that particular project. I'm not satisfied, Mr. Chairman, that that project was necessary in the first place. It may well have been. Had B.C. Hydro and the government done its homework, we may have found that the extra energy required by Vancouver Island could have been supplied through a natural gas pipeline. That may have been quite possible. The government is now looking at calling hearings on a natural gas pipeline to Vancouver Island, and I might ask the minister if he has a date when terms of reference will be given to the Utilities Commission so that hearings can get underway. There is a great deal of anxiety in my riding, particularly in the community of Powell River. Many people there are hoping that the commission hearings will get underway and that the recommendations coming out of those particular hearings will favour the northern route. That remains to be seen. Personally, I want to look at the economic impact, when these figures become available to the Utilities Commission, and the environmental impact of these proposed projects. They should be getting underway. I don't know why the government is stalling and waffling.

You will recall, Mr. Chairman, that for well over a year in this House the minister said there was no question about it: Hydro was going to build that natural gas line. There will be no hearings; the issue was settled, and that was the end of it. That would cost somewhere in the neighbourhood of — I am going from memory here — $130 million for Hydro to complete the project. Maybe it was $230 million. I don't recall the figures, but what I do know is that the minister suddenly changed his mind. To this day we don't know why, but we do know that the figure that was used at the time by the government, Hydro and the minister was not correct. We pointed that out to the minister at the time, and he disagreed with us. Now we do know that the eventual cost of that proposed pipeline will be considerably above the figures used in this House at that time. Maybe the minister can explain now why he did change his mind and why, if and when we are going to hearings. Perhaps he could give us some estimate of how much money is going to have to be borrowed for this particular project.

In terms of Cheekye-Dunsmuir, just to get back.... I know the minister is making notes and listening. I did ask what the cost of overruns to date are on that project, what the anticipated cost of overruns will be on that particular project and whether the project is on time. The completion date, I think, was somewhere early in 1984. I would like the minister to tell me if the project is on time. Just for your information, Mr. Chairman, the original estimate of the cost of the Cheekye-Dunsmuir line was some $350 million. That was a couple of years ago. Then, in a secret memo which somehow found its way over to our office, an internal Hydro document said that the cost of the transmission line would be about $700 million, but: "Don't make that figure public because we don't want to upset people." Do you remember that? My colleague here raised the issue in the House at that time. That was about a year and a half ago.

MR. SKELLY: 1972.

MR. LOCKSTEAD: No, it was later than that. In any event, we now know that the Cheekye-Dunsmuir transmission line is going to cost in excess of $1 billion. I predicted about a year and a half ago that when the final costs for that project — we are able to get those costs in about 1985 — are in, the cost to the taxpayers of this project will be $1.8

[ Page 7740 ]

billion. Our research indicates the final cost in that project with overruns, inflation and construction problems will be $1.8 billion. That is a figure the minister can't prove or disprove, and neither can I at this time, but we'll see. I'm on the record as saying that that project will cost $1.8 billion by the time it is completed. We will see what happens, if we're all still around here.

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

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

While I have the floor I want to ask the minister about another project which will require large amounts of borrowing. This particular proposed project which I am about to ask the minister a few questions on will cost, in 1982 dollars, approximately $8 billion when it is completed, some eight or nine years down the road. There are the preliminary engineering studies which are now taking place on the Homathko River, which rises in the interior and flows into Bute Inlet in my riding. Hydro is currently proposing that four particular dams.... This is public knowledge; Hydro has put out a press release on this particular item.

Interjections.

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

The project is the Homathko River project: the proposed diversion of rivers mostly in the Chilcotin country. If the project proceeds it will be completed eight or nine years down the road, after hearings and all the things are held. As I said before, basic engineering studies are now underway. I'm informed by Hydro that test drilling will continue this summer on that project. I know the project is only in the basic engineering stage. I doubt if the board of directors of Hydro have had the opportunity to discuss the merits of this particular project.

There are environmental considerations. The Homathko River is a major fish-spawning ground, for starters. It's a very beautiful valley that will be flooded, of course. But what we're talking about here is a proposed project which will equal — if the total project proceeds with its present engineering concept — the amount of energy that would be put out by the Site C dam, whatever that is; I forget the numbers and don't have them in front of me. It's a monster project.

What worries me about these proposals is that Hydro, in spite of the fact that the demand for electricity and energy has dropped in this province and is flattening out because of the economy.... Much of the current economic problem was brought about by this present government. Hydro has so much energy that they're selling it to the United States at pretty cheap rates.

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

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

I question the need. I don't question Hydro's need to look at all of these projects. What concerns me is that once Hydro starts looking at a project, and has received and made up these monstrous briefs, they usually decide to proceed with them come hell or high water. They go ahead blindly, whether the energy is required or not, at a cost of billions — not millions — of dollars to the taxpayers of this province. With his Homathko project, I have that sinking feeling that once the engineering studies are done, the board of directors of Hydro will sit around and say: "Well, what's $8 billion? We might need the energy. What are a few fish? What are a few valleys? We'll just go ahead and build the darn thing. We won't be around to have to pay back that money anyway." That is a real concern of mine.

With those few remarks, perhaps the minister could respond.

HON. MR. McCLELLAND: I'll just respond very briefly to some of the questions the member raised. I haven't got the up-to-date total figure on Cheekye-Dunsmuir today. If the member would like to drop me a note, I'll get it for him as quickly as I can. In the borrowing that we're discussing now, there is some $232 million designated to the mainland–Vancouver Island interconnection.

I wish to comment about whatever Hydro wants, Hydro gets. That's been true to a large degree, but a couple of significant things have happened. We have now put Hydro under regulation of the B.C. Utilities Commission. Yesterday I said that I don't think there's another Crown corporation in Canada that's under that kind of regulation.

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

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

MR. SKELLY: What about Newfoundland?

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

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

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

You'll recall that the commission just recently ordered Hydro to improve its efficiency and cut its operating expenditures by 5 percent. Hydro, at first reluctantly but then more cooperatively, managed to cut its expenses by over 9 percent, and that's reflected in some of the borrowings that we're talking about here today as well.

The other thing, of course, that's happened is that Hydro now has a real board of directors, which represents the various regions of this province. Mr. Chairman, you'll recall that in the last few days some very serious rethinking by Hydro of some of its major projects has taken place, and as a result, some of them have been put back a bit and are being rethought. That is, I believe, a direct result of the board of directors of B.C. Hydro questioning some of the operations of B.C. Hydro. That's very healthy and I hope it continues. I believe it will continue. Coupled with the board of directors having active responsibility for management of Hydro is the opportunity for real rate regulation and regulation of the systems as a result of that rate regulation. I believe that Hydro is going to be more accountable to the people than ever before. I think that's very healthy as well.

The member asked why I changed my mind on the natural gas pipeline. Well, I took a second look because of some of the things you said and some of the things the people in one of

[ Page 7741 ]

your communities, Powell River, said. And we said: "Okay, if the communities want that public hearing that badly, we'll have that public hearing." It has not taken place, and when I announced it, I said it would probably be spring or summer before we could get to the hearings, simply because the Utilities Commission, in its infancy, hasn't got the physical capabilities to have that hearing earlier. I've said that we've put out the call for proposals. That ends June 15, and it's my hope that I will have both the terms of reference and a panel, however that panel will be composed, done and announced by June 15. So that's our deadline now, and I hope to be able to make it.

Mr. Chairman, I think that was pretty well all the questions the member had, and I hope I've been able to help him out a little bit, anyway.

MR. LOCKSTEAD: I was going to get up, Mr. Chairman, but the minister answered my question with his last remark. I wanted a time-frame for the public hearings on the proposed natural gas line to Vancouver Island.

I might ask the minister how many companies have submitted briefs to date — the submissions that you've asked for — on the proposed natural gas line to Vancouver Island, and what companies are they?

HON. MR. McCLELLAND: Mr. Chairman, I'm not sure. I'll find out this morning and let you know either in this debate, if it goes on, or in my estimates.

MR. KING: Mr. Chairman, I have a brief question on section 1. The general purpose of the bill is to increase Hydro's borrowing power very significantly. But as I understand this section, payments for leases by B.C. Hydro will be guaranteed by the province out of general revenue. That is totally unrelated to the increased borrowing power provided for in section 2. So, in effect, what we have here, as I understand it, is at least the potential for virtually unlimited guarantees of debt to B.C. Hydro. Why is there not some limitation placed on section 1 — the amount of money that B.C. Hydro may receive through general revenue for leases? Perhaps when the minister is responding, he could also indicate what kinds of leases this refers to. Are they leases on lands and resources or would they include, as an example, leases from construction companies, related to major dam construction and so on? If so, one can see that the guarantee could indeed be a very substantial one. Can the minister respond to those questions?

HON. MR. McCLELLAND: Mr. Chairman. I haven't got a list of what those leases might cover, but you will notice that the guarantee cannot be given, first of all, without the approval of the Lieutenant-Governor-in-Council. The member may not accept that that's a limitation, but I believe that it is — that the government has the opportunity to, first of all, review what those leases would be before the guarantees are given. I would expect that it would allow Hydro to include in its prospectuses, for instance, in going to the borrowing markets, some of the assets which, in effect, it has under long-term lease, but which it is now precluded from including because there is no guarantee by the provincial government on them. If the member would like a list of any leases which now or in the future may be affected by that or will be asked for, I can certainly get that for him. Again, I give him the commitment that I'll do it during debate here or in my estimates, whichever he wishes. I believe it's a matter of adding to assets, in terms of prospectuses and in other Hydro operations, things which it can't add at the present time.

MR. KING: I appreciate the minister's response. If it is indeed for leases on potential sites for energy production, I appreciate that. No, I'm not interested in having that particular information. What I would much rather have from the minister is his undertaking that this authority will not be extended to leases relating to construction companies who may lease equipment or that type of thing for contracts relating to the construction of dams.

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

Section 1 approved.

On Section 2.

MR. KING: Mr. Chairman, on section 2 I'm going to be very brief. I indicated some of the concerns I have in second reading. The increase in borrowing authority here permitted to Hydro, from $7.2 billion to $8.3 billion, is a really staggering amount. A lot of the major construction projects have taken place in my particular area of the province, and one of the concerns I have relates to perhaps inadequate supervision or overall management of dam construction programs. These are enormous projects. The amount of equipment and materials used for projects like the Mica Dam, the Revelstoke Canyon Dam and very similar projects in the north boggles the mind. I haven't got proof, but I have heard some horror stories from people on site with respect to waste that goes on in those projects. For example, relating to the Mica Dam, there are people from the work force and some supervisory staff who tell me that they could show the government where there are massive amounts of structural steel buried — never utilized — lumber, forms and things of that nature, in addition to equipment, buried out in the wilderness, for whatever reason — I presume because there was a profit there to someone. I don't know who's responsible, and I can't say, nor do I suggest that there's some major wrongdoing here.

The frequency with which I as the local MLA receive these kinds of stories would certainly indicate to me that there's probably a need for some better overall scrutiny of those massive projects to ensure that the cost overruns are not related to waste, not related to sloppy or inadequate overall management. Usually these projects are broken up into a number of different managerial responsibilities, and I don't want to cast aspersions on any particular person related to the dam, because I think in the main they do a very good job. They seem to proceed with construction and make great progress and pretty well stay on stream in terms of the schedule for construction, But it does concern me, and I think it would concern the government, when there is the suggestion of pretty massive waste. What we see on virtually every one of these major construction projects are alarming cost overruns. That's become a hallmark of all major construction projects over the last 10 or 15 years.

With respect to the Revelstoke Canyon Dam, which is very close to my own doorstep, I'm aware that there were major problems relating to the rock work, finding adequate and appropriate footings for that construction project. I know

[ Page 7742 ]

that there are major cost overruns related to the difficulty they had in finding a solid foundation for that dam project. There are enough vagaries in construction projects of that kind without incurring more costs through inadequate supervision, through wastage of supplies and so on. I wonder if the minister has talked to Hydro about some method of more appropriately monitoring and supervising the total project. I want to say to the minister, if I have his attention, that it's not necessarily Hydro per se that might be responsible for the wastage involved. As he knows, a variety of major contractors and subcontractors are involved. Certainly, in my view, there's a need for stronger overall supervision of the performance of all those contractors; if there is wastage, I suspect that's where a lot of it takes place. I'm making that suggestion to the minister.

My final question related to this section is: what specifically requires this increased borrowing power of $1.1 billion at this point in time? Is that related to the capital costs of specific projects now underway, or is some of that increased borrowing authority in anticipation of new capital-cost projects? I'd appreciate having the minister's reply, particularly his feelings with respect to the first issue I raised about wastage.

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

I don't want to sound like I'm belabouring this, but there is a board of directors now in place at Hydro. I can tell you that in the short time they've been in place they have worried over this matter of construction overruns, efficiency and management at practically every meeting. It's a big concern to us. I don't know whether the kind of wastage is going on that the member points out — as he doesn't know — but we would like to find out. I guess one of the problems is that if some things have been happening, by the time the member brings it up here it's probably too late for anything to be done. I understand people's reluctance to come to the government and say such-and-such is happening. It would be helpful if when an MLA gets that kind of information he does bring it to the government. It's the people's money that's involved here, and it should be looked at as quickly as possible.

If there is a reluctance to come to, say, a government minister or a government member or someone like that, I think the board of directors as well could play a part here. That's why we try to choose directors from all over the province. If a person has a problem or if he sees some of these so-called horrors going on and he doesn't want to come to the government or to an MLA, then he should go to a member of the board of directors from his area. They're also interested in the people's money. Maybe that's partly a way out.

But we are worried about that. When you get into the kind of project that you described that costs a couple of billion dollars, you know, it's worse than trying to run the government, in trying to keep a handle on everything that's happening. It would be very helpful if all the MLAs could help us when they hear about those things. I like it's being mentioned here, the same as everybody else, but it would be better if we could get at it right away when we first hear stories like that.

There have been some serious problems at Revelstoke, as the member pointed out, with rock work and other things; the cement strike and all those things that put back the project have been very difficult. But I hope we can bring a better degree of supervision to that whole area.

The question was asked: "What is this money for? Is it for projects today or is it in anticipation?" The answer to that is: it's a little bit of both.

I could quickly run over some of the major items, if you like, Mr. Member. On the electric side, during this fiscal year about $451 million will be spent on Revelstoke. I mentioned earlier to the member for Mackenzie (Mr. Lockstead) that about $230 million will be spent this year on the connection from the mainland to Vancouver Island. About $40 million to $50 million is being spent on the further development of Murphy Creek, Site C. Of course, Hat Creek has been slowed down a bit; there will still be some development money, but not very much, spent on that. Future energy studies are still being held on the Homathko River, which the member for Mackenzie mentioned; about $6 million is being spent there. We're spending a couple of million on developing a pressurized-fluidized, bed-combustion development, because we think that's the answer. If we're ever going to get into thermal development, that's the cleanest and best way to go. In this fiscal year about $20 million is being spent on geothermal studies, and another few million will be spent on other development studies. On the gas service side, in this fiscal year we will be spending about $67 million; I would say it is evenly split between future and present projects. About $12 million will be spent on upgrading the railway service. Basically that $1.176 billion is actual expenditure in the present fiscal year.

MR. KING: Certainly, if I ever received any hard data relating to the kind of wastage that I've heard about, there would be no reluctance on my part to contact the minister and B.C. Hydro personally. What has happened, of course, is that I hear after the fact about these things. They are allegations pertaining to structural steel and that type of thing, which may be three, four or six feet under the ground — indeed, under the reservoir now. So it is very difficult to determine whether it is a valid thing; whether it is the truth or simply someone's pipe dream. The main reason I raise it here is in the hope of getting a bit stricter supervision, monitoring to make sure that that just cannot happen.

I appreciate the minister's information on the direction of the payments for the projects involved. One final thing: could the minister tell me whether or not any moneys are included in this appropriation relating to the Kootenay diversion, or is that inoperative at the present time? I would appreciate some indication on that.

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

MRS. DAILLY: The member for Shuswap-Revelstoke was discussing the need for more scrutiny on large projects. As we are debating here the passage of a bill which authorizes another $1.1 billion to be paid out under this clause to B.C. Hydro, I would like to express my concern with the need for scrutiny of some little things. As we know, the taxpayer is sometimes most concerned when it is pointed out that there appears to be considerable waste under a Crown corporation.

It was pointed out in the morning news — and I have the clipping in front of me so that I can bring it to the minister's attention as quickly as I can — that yesterday a former employee of B.C. Hydro came before the B.C. Utilities Commission as a witness. When I talk about waste of public

[ Page 7743 ]

money, maybe it is in small degrees, but that is really what concerns the taxpayer. Here we are authorizing the borrowing of $1 billion, yet we hear of stories like this one — and I make my point briefly; I just want the minister to be aware of this, since he is on the board of directors, I believe. This man particularly mentioned that he thinks Hydro should exercise control over what appears to be, according to his experiences working with Hydro for many years, extreme waste in the administration of the utility. He went through a number of utterly ridiculous examples and I will give one here briefly. As site chief in 1979 and 1980, supervising a $3 million drilling program on the Meager Creek geothermal project, he said that he was forced to order a $4 air cleaner through the head office purchasing department, instead of buying one locally. A man in Vancouver had to pick it up and put it on the bus; and there was a minimum freight charge of $10. Another man had to drive from the camp to get it, and then return. He said the total expense came to $70. We are talking about $1 billion, but let's face it: that $70, for most taxpayers who see their Hydro bills going up and relate it to this kind of waste, is something that really concerns them. As a member of this House, I am concerned if this kind of ridiculous waste is going on. He went on to say that he feels many of the things happening show areas that appear to be out of control in the administration, that show the feeding at the public trough.

I particularly mention this because the minister is one in the Social Credit government which swept to power in 1975 with the cry to the people of British Columbia that they were going to look after the public's money, that NDP had been so wasteful. The interesting thing is that since they have been in office we have seen a lot of these excesses compounded, not decreased.

I think the minister has a responsibility, as a member of the board, to look into what appears to be unnecessary waste in the administration. I'm bringing this to his attention in the hope that as a member of that board, he will take it seriously and bring it to their attention.

HON. MR. McCLELLAND: I'd like to thank the member for her comments. I read the story too, but fortunately I had an earlier opportunity than its appearance in the Province. The member will notice that the person quoted in the paper happens to be one of my constituents who visits me quite often in my office. He brings concerns to me and I try, to the best of my ability, to look into those concerns and have Hydro correct them if there is some substance to them. We've had several meetings with that particular person.

Again, I go back to the question of accountability. I believe greater accountability will happen more and more, given the direction that B.C. Hydro is going now in terms of the B.C. Utilities Commission and the board of directors. The reduction in operational costs ordered by the B.C. Utilities Commission this year has resulted in Hydro's having to take a really hard look at what it's doing, and maybe for the first time. I'm not sure about that. I'm sure Hydro's management has been pretty efficient in the past, but sometimes, unless you get a little pressure from the outside, you don't do some things that could be done. I believe that's happening now. I think Hydro, for the size of that corporation, has done a darned good job for the people of British Columbia for a lot of years. But that's not to say that things can't be improved, and I believe they are being improved.

MR. HANSON: I rise under this section to indicate to the minister that I will be opposing this bill. I wish to bring to his attention an injustice in terms of the rate structure of Hydro, which is one of the aspects that leads me to vote against this bill.

As he is aware, there is no natural gas on Vancouver Island. The energy requirements of the Victoria area are served in part by B.C. Hydro's synthetic gas division, air butane. That air butane distribution contravenes the postage stamp principle that applies to the distribution of electrical power and gas in British Columbia. Victoria is singled out to pay three and a half to four times more for the same billing unit of energy, of power, from that gas as do mainland recipients. Someone on the lower mainland — I'll give you the figures — with access to natural gas, as of March 31, 1981....

MR. CHAIRMAN: I can appreciate the concerns the member is putting forward, but the Chair is having some difficulty in relating the member's present arguments to the bill before us. I'm not trying to cut the member off, because he may be making a point before going into this particular aspect, but again, examples of that nature must be very brief and then we must return to the principle before us. Clearly, in the Chair's opinion, the matter that the member is attempting to canvass at this time would be much better canvassed in the ministerial estimates, which as a matter of fact are also before the committee.

MR. HANSON: Mr. Chairman, I appreciate your point. I'm trying to make the argument that my constituency is not well served within the present borrowing authority of B.C. Hydro, and that I cannot authorize more borrowing when my own constituency is discriminated against in terms of the rate structure of B.C. Hydro. I will be raising in more detail, under the minister's estimates, this particular question, but the fact is that the minister is on the board and has the authority over the administration and expenditure of those funds. Clearly I must be in order raising my objections to that increased borrowing by the fact that my own constituency is discriminated against by Hydro's rate policies at present.

MR. CHAIRMAN: Again, I appreciate the member's concern. Quite honestly, the course of debate that the member is currently engaged on must be canvassed in the ministry estimates, which, although it's beyond the Chair to say when, we could be into very shortly, even within the next few minutes possibly. In that case, the entire debate of the member would be very much in order, but under this particular section on that particular argument, the Chair would have to say that that course is not appropriate under either of the two sections presently before us but would certainly be appropriate even later this morning under the minister's overall estimates.

MR. HANSON: Mr. Chairman, I listened to the debate that preceded mine. There were specific examples of dams, of other capital expenditures, of operating expenses of B.C. Hydro that will come within the domain of this clause. I am raising that particular concern, which is my own constituency's concern, but it has to do with the expenditures of B.C. Hydro; it has to do with their policies, with their expenditures of money — the money that they're going to borrow and use in this system.

[ Page 7744 ]

Mr. Chairman, your argument fails to convince me. I am in order. The postage-stamp principle, Mr. Chairman, is a fundamental aspect of B.C. Hydro's policy: section 2 funds the borrowing, and no matter where you live in British Columbia, you're served equally on the electrical grid and the gas distribution system in terms of the rate policy, with the exception of the greater Victoria area. The minister is a member of that board, and I'm trying to bring to his attention that this area is discriminated against on the basis of the present expenditures. How can we possibly authorize increased borrowing when this area is not served fairly at the present time?

Interjection.

MR. HANSON: I'll tell the Attorney-General through you, Mr. Chairman, what I would like him to do. I would like him to treat the people of southern Vancouver Island the same way that citizens in every other part of this province are served for their energy requirements. No matter where you live on the mainland, at the end of a long transmission line or at the end of a long gas pipeline distribution system, you pay the same amount of money per billing unit, with the exception of Vancouver Island. They cannot make that conceptual leap to say to themselves that for the gas that is being burned on Vancouver Island — whether it's natural gas or synthetic gas — the residents should be paying the same amount per billing unit as they are in every other part of British Columbia.

Mr. Chairman, I will be giving this in far greater detail during the minister's estimates, but I would like to point out to the minister — and I hope the minister is paying attention, because it's a matter of great concern to 5,000 residences, including a number of businesses, in this area — that as of March 31, 1981, residents on the mainland are paying 25.3 cents per billing unit. In the greater Victoria area it is 74.9, three times the cost per thermal billing unit. B.C. Hydro applied to the Utilities Commission for a 1982 rate increase, which was granted on an interim basis and which raised the cost on the mainland for residents to just under 30 cents per billing unit, and what happened on Vancouver Island in the greater Victoria area? It was increased to $1.05 per billing unit — over triple.

Another interim increase is to come into effect, if the Utilities Commission approves it, which will raise the cost on the mainland by 2 cents per billing unit to 31 cents, and the residences in my own riding in Victoria will be $1.29 — four times the cost for the same amount of energy. How can the minister possibly expect anyone on Vancouver Island to vote for increased borrowing for B.C. Hydro when this area is so severely discriminated against? I would like the minister to give me some kind of rationale as to how he can possibly defend this particular anomalous situation when it does not exist anywhere in British Columbia. Even for electrical power that is provided by diesel generation, where they burn oil to provide electricity, they pay the same amount of money.

Interjection.

MR. HANSON: Well, there is a billing formula whereby the rate structure is greater. However, it's really an industrial compensation. In other words, to get into the higher rate structure residents would have to use a far greater amount of power than they would normally use. So for all intents and purposes it's an identical formula. It's from your own figures, if you'd like to check your own annual reports.

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

MR. HANSON: I think the minister should be able to understand it. Basically it is that we pay four times more than you do. Do you understand that? That is unfair. That is contrary to the policy of B.C. Hydro in its postage-stamp distribution for electricity and gas. How do you argue that we have to pay more? Is it just on the basis of the fact that it's a different kind of gas? That is indefensible. I will go into it in greater detail in your estimates.

Due to the fact that you sit as one of those 15 directors on B.C. Hydro, I would like you to give us the rationale for that second anomalous pricing policy. It hurts small business here: laundromats, restaurants and hotels. The B.C. Hydro gas division, rather than anticipating a distribution system for gas, either through a pipeline or through liquid natural gas or whatever the ultimate outcome will be, is laying off its gas employees. There are 60 employees on staff and they are going to lay off 36 of them. That doesn't look like we're going to have natural gas on southern Vancouver Island. If we're not going to have natural gas on southern Vancouver Island, shouldn't it be appropriate that the people on this island pay the same amount for their synthetic gas as the people on the mainland do for theirs and allow the whole system to assume the cost, as is the case for the entire electrical and gas distribution system for the province? How can you create an anomaly on southern Vancouver Island? As a director, the minister should be able to answer that question.

HON. MR. McCLELLAND: The answer to the question is that the member is wrong. There is no postage-stamp rate for natural gas in British Columbia. Natural gas prices are based on the utilities costs of service and they are different in every part of British Columbia. I would like the member to go and refresh his knowledge about what a regulated utility is and who sets the rates for a regulated utility. For the first time in history B.C. Hydro is now a regulated utility. The decision on the rates for that utility are not politically set; they are not set by the cabinet of British Columbia or by anybody else except the Utilities Commission after due and fair hearings.

[Mr. Strachan in the chair.]

MR. SKELLY: One of the areas in which Hydro is not regulated, and which we drew to the attention of the minister when the Utilities Commission Act came down in this province, was in the area of borrowing money. When they go into the market to borrow money, the only people who decide how much and where are the B.C. Hydro board of directors within the limits set out by the Legislative Assembly. They do not have to go to the Utilities Commission, and it is my understanding that there is still a section in the Utilities Commission Act which says that the borrowing of B.C. Hydro does not come within their jurisdiction.

Under this section of the act we are allowing Hydro, in one and a half lines of a piece of legislation, to borrow one seventh of the total provincial budget. When the provincial budget expenditures come down we are given a huge book of estimates that outline in some detail what the expenditure of that money is going to be and under what categories the

[ Page 7745 ]

money is going to be expended for travel, ministerial office furniture, ministerial grants, staff wages, staff travel and that kind of thing. We are given a detailed breakdown of what that money is going to be spent for.

Right now under one line in one section of a very small act we are being asked to vote to a corporation, which has very little accountability to this Legislative Assembly, one seventh of the total provincial budget with about three or four lines in a speech by the minister yesterday in which he says they are going to be spending $1.18 billion on projects and they're going to require a $333 million cushion. Can you imagine what the debate would be if a minister came into this House under the debate on his estimates and asked this Legislature to vote him a $333 million cushion? Many ministers approach that in furniture budgets, travel budgets and bills at Umberto's, etc.

It is unbelievable that we would be asked to vote $1.1 billion under this section with a three-line explanation as to what this money is going to be spent on and the assurance that Hydro needs a full one-third of it as a cushion. We have seen in the past two years — to the credit of the Utilities Commission.... We were a little suspicious about the Utilities Commission at first, that they might simply be an arm of the provincial cabinet. Of course, there's still that possibility. We're still concerned about that possibility.

A great deal of information has now come before the Utilities Commission, as a result of their right to regulate B.C. Hydro, that confirms that our suspicions were correct and proper. We simply cannot accept a three-line speech by the minister as justification for voting this corporation $1.1 billion. We would like far more detail as to what this money is going to be spent on. How much money is going to be spent on the Stikine project and on the Laird project, both of which have severe national and international ramifications that have yet to be dealt with? Yet we're voting money that will continue to be expended on the Laird and Stikine systems, until we almost reach the point where we've spent so much money on those projects that it's impossible to turn back. It will be a waste of the provincial taxpayers' and ratepayers' money to turn back those projects, even though they have severe economic and environmental repercussions, not only in this province but internationally and in other territories of Canada.

We're concerned. We're asking, in detail, what this money is going to be spent on. I think it would be irresponsible for members of this Legislature, regardless of what side of the House they're on, to vote in favour of this section without having detailed expenditures spelled out for them. We don't receive the budgets of B.C. Hydro and Power Authority in this Legislature. We receive the financial statements, a little behind the time and late. We don't receive the budget projections of B.C. Hydro. We don't know which projects are onstream and projected. We don't know which ones are grossly overrun in terms of the projected economic costs. We simply don't know that information. We don't get detailed information from the minister; he asks us to sign a blank cheque which allows Hydro to borrow another $1.1 billion. We have a right to question those figures.

When we left office in 1975, B.C. Hydro was roughly $3 billion in debt. In 1980, the debt had doubled to $6 billion. By the time we finish passing this bill it will have gone to $9 billion. Hydro's blueprint for the eighties suggests that they're going to require an extra $17 billion to $20 billion. All around us, in every other province and nationally, people are questioning the economic requirements of the energy megaprojects. Megaprojects are being cancelled all over the country. People are questioning the economic rationale of whether those projects are going to provide the needed jobs and energy for this country at a price this country can afford to pay. Hydro seems to be able to go on and on, building huger and huger projects, with virtually no limit imposed on them. As those megaprojects and the economic feasibility and value of them is being questioned all over Canada and the world, we continue, through Hydro, to stumble on in our blind way, adhering to the dictums of the 1950s that bigger energy is better energy, without giving any concern whatsoever to the damage we cause.

In this case, thank God for the public utilities commission panel on Site C. The member for North Peace River (Mr. Brummet) wants to do away with it and get on with the construction. Thank God that we have some kind of public review of that dam development. I wish we had the same review procedure for the Cheekye-Dunsmuir project, which represents a tremendous waste of public money, as far as the energy requirements of Vancouver Island are concerned. This is one of the few opportunities we have to question what expenditures are going to be made out of these borrowed funds. Over the next few years we are going to be asked to approve an additional $26 billion in debt for B.C. Hydro.

My first question to the minister is this: give us a detailed breakdown of these projects. Don't simply tell us $1.8 billion is to be spent on Hydro projects or tell us about the need for a $0.3 billion cushion; give us a detailed breakdown as to what Hydro's specific requirements are. How much goes to the Cheekye-Dunsmuir project? How much goes to Site C? How much goes to the Stikine and Laird? If the minister can provide those figures across the floor.... I'm sure he has them somewhere. He could consult his staff and obtain those figures for us, or we could adjourn the bill until such time as he can get the figures — within hours, I suspect.

Mr. Chairman, this is probably not an appropriate time to make an introduction, but it relates to B.C. Hydro. I'm not asking leave, but I am saying that a few minutes ago I met with a group of students from Ucluelet Elementary School, grade 5 students under the direction of their teacher, Mr. Richard Lattimer. One of the things we talked about regarding the village of Ucluelet was the fact that you can't keep Hydro operating during the winter. Here's a community of well over 2,000 people. The transmission and transformer system in the area is constantly breaking down. It is an area of very rough weather during the winter, but Hydro has pulled its crews from Ucluelet and Tofino back to Port Alberni, so it takes a long time to get people out there to repair the system. For a good part of the winter, Hydro doesn't provide power to Ucluelet, a village of 2,000 to 3,000 people. Those kids asked me: "Well, what about Hydro. If that's what you're talking about in the House? Why aren't we getting adequate service in a community like Ucluelet?" Why is Hydro spending billions of dollars on new dams, selling electricity to the United States, and people in Ucluelet — British Columbian citizens, who contribute to the economy and pay their electric bills — aren't getting the proper service? The system out there is deteriorating. Hydro is neglecting the system and has even pulled back its maintenance crews.

Why should I, as a member of the Legislature representing the people of Alberni and Ucluelet, vote any more money to be spent on projects like the Stikine and the Laird, when the transmission and the distribution system on the west coast

[ Page 7746 ]

of my riding is being ignored and allowed to deteriorate? That's a question I'd like to ask the minister on behalf of those grade 5 students who have just visited the Legislature. They did say one thing, Mr. Chairman: they said it doesn't matter if the power goes out between 9 and 3 on school days, because then they're allowed to go home. But they are concerned about power the rest of the time, and of course their parents are concerned about power all the time because the distribution system in that area provides power for the local logging operations, log-sorting operations and local businesses. Every time Hydro goes out, as it does very regularly on the west coast, they have to wait for a crew to come from Port Alberni — 79 kilometres — to repair it. It's time away from business, money lost, jobs and wages lost.

We need a better distribution system, and that's where our priorities should be, where our money should be spent. But as far as I can understand, in the minister's breakdown of where this new debt money is going to be spent, I'm not aware if new money is going into that distribution system on the west coast of Vancouver Island. That distribution is totally inadequate.

It would be irresponsible of members of this Legislature to vote $1.1 billion for a semi-accountable Crown corporation when we don't know in detail how that money is going to be spent. Really, the only system of accountability that this Legislature has, so far as B.C. Hydro is concerned, is through the Crown corporations committee. As you know, Mr. Chairman, that committee is dominated by the government party. They prevent information from coming into this Legislature. We were talking about accountability previously in this debate, and the minister boasted about the accountability of Hydro. We must know how Hydro is performing before we're willing to vote an extra $1.1 billion. That's why accountability is critical in the debate on this section. As I said, we do have the Crown corporations committee, but they're not really accountable to this Legislature. I think the establishment of that committee was simply an excuse to pay the member for Omineca (Mr. Kempf) an extra salary so he won't leap across the floor and join the Western Canada Concept.

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

MR. SKELLY: It is certainly relevant to what's happening in the Legislative Assembly of B.C. under that government, when private members are being paid government salaries.

MR. CHAIRMAN: Hon. member, I regret that that is not relevant. There could be another forum for that, but it is not in this committee on this section.

MR. SKELLY: But, Mr. Chairman, they are not being held accountable for those Crown corporations in this Legislature, and that is one of the problems with dealing with B.C. Hydro's legislation in the Legislative Assembly. That committee was simply set up to provide somebody with a salary who might otherwise turn maverick and leap across the floor somewhere.

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

MR. SKELLY: Mr. Chairman, somebody has said that Hydro is out of control, and I think that that's a line of argument that's been set up by the government themselves. It's kind of the good cop, bad cop routine. If Hydro is doing something that people in the area don't like, then the government can say that Hydro is an entity all of its own, that they are pretty much in control of what they do, and it's difficult to tell Hydro what to do. But Hydro is in control. Hydro is one of the few organizations in the present government that has a well-defined objective as to where they're going in the future and knows how they intend to meet those objectives. Hydro requisitions additional moneys from the government and uses this government to prop up its borrowing authority. Hydro knows exactly where it's going and the government knows exactly where Hydro is going, and any excuse that Hydro is a bit out of control is an attempt by the government to say: "We're not responsible for all those projects that you don't like; Hydro is. Go and attack Hydro." It's the good cop, bad cop routine; it's a sham; it's a bit of theatre. Hydro is definitely in control — and more in control of this government than the government chooses to admit.

We know that Robert Bonner, as chairman of the B.C. Hydro and Power Authority, was the Social Credit bagman prior to 1975. We know that he raised the money and the contacts to get this government in office and to keep them there, and we know that when Robert Bonner comes to cabinet, he comes to cabinet to give orders, not to take orders. So we know that Hydro is in control, and there's absolutely no question about that.

I would also like to mention one of the problems about the postage-stamp principle, and that is that Hydro's mandate is to sell electricity at the most economical rate possible and at the same rate all over the province. There are some exceptions with diesel generation areas and with REA rates and there are some exceptions around the province, but one of the things that hasn't been examined by the Utilities Commission or, obviously, by B.C. Hydro is how the postage-stamp rate actually distorts the economy of the province of British Columbia and how it discourages other forms of electrical generation.

We in this party are advocating that Hydro purchase power generated by private utilities at a rate that represents the cost of production, rather than at Hydro's own rate or at a rate which reflects Hydro's rate. We are also concerned, for example, that if Hydro provides power at the same rate in Cowichan or Port Alberni as it provides to Quesnel, Revelstoke or McKenzie, it's going to encourage an allocation of resources — for example, chips and raw material for pulp and paper — in a way that is not economically beneficial to the province of B.C. For example, if there's a surplus of chips in Quesnel and there's an already established mill on Vancouver Island, then those chips will flow to wherever it's cheaper to process them. It will cause problems for our transportation system in terms of overloading, it will cause problems for our highways in terms of overloading by heavy trucks that increase the wear and tear on those highways, and it will cause expansion of mill capacity in areas where it's undesirable to do so because there's no basic resource to support them. If established mills have to pay an electrical rate which is equal or represents the cost of production of electricity, then it would encourage cogeneration or the establishment of mills where there is an adequate resource base elsewhere in the province.

[ Page 7747 ]

So some analysis should be done both of the rate at which Hydro sells its electricity — and I'm talking about the industrial rate — and of the rate at which Hydro purchases electricity in order to encourage cogeneration. It has been said, for example, using the greater Vancouver solid-waste disposal problem, that if Hydro has a different policy with respect to purchasing energy, then a solid waste disposal site that incorporates resource recovery and the burning of solid waste to produce energy would be more economically feasible than finding new, cheap landfill sites in the minister's riding and in the Pitt Polder area. It is really Hydro that is the impediment to the whole issue, because they distort the economics by not purchasing the energy produced at a rate which represents the cost of production of that energy. I would like the minister to respond to that. What plans are there in the government to instruct B.C. Hydro to purchase co-generated energy at a rate which represents the cost of production to the co-generator?

Can the minister: (1) give me a detailed breakdown of where this money is going to be spent; (2) tell me why Hydro needs a $333 million cushion in its borrowing authority; (3) tell me if money is available to improve the distribution system to residential communities which are now suffering from blackouts and brownouts on a regular basis — the thing that Hydro threatens the rest of us are going to be suffering from if we don't continue to build new dams and new megaprojects; and (4) tell me about the pricing of Hydro, both in purchasing from co-generators and using it as a fiscal tool and an economic development tool to make sure that development goes to certain areas of the province where it is more desirable rather than to areas where the resource base has already been thoroughly committed and where it is not desirable to bring in additional resources?

MR. CHAIRMAN: Before proceeding, and without trying to frustrate the debate of the hon. member who has just taken his place, this section does discuss the borrowing limit of the B.C. Hydro and Power Authority. We must remain relevant. The Chair is also aware, from our Journals, that we are in the process, in another committee, of discussing the estimates of the Hon. Minister of Energy, Mines and Petroleum Resources. Some subjects could be dealt with better during those estimates.

HON. MR. McCLELLAND: I would like to answer the member's questions. If you rule me out of order, Mr. Chairman, I guess I will have to accept that. I don't know if I'll answer them in the order you gave them or not, Mr. Member.

In the opening remarks during my estimates yesterday I mentioned that there would be, during this session, amendments to the Utilities Commission Act — I certainly won't go into the details of that, as we will have the opportunity to debate that when it comes — which will encourage better opportunities for co-generation and alternative energy sources. We could deal with that at that time, but those amendments will be coming before this Legislature this session.

I agree with the member that Hydro is certainly not out of control, but I don't agree with his premise when he made that statement. It is very easy for us to kick Hydro around. It is the sporting game in British Columbia. I would like to say at this time that while Hydro is a very large corporation which obviously has inefficiencies built in — like any large corporation, including government — there can be improvements.

I have said that before, but I do want to compliment both the chairman, Bob Bonner, and the president of Hydro, Mr. Norman Olsen, for the way in which they have handled some difficult times, particularly in the last year. They have been subjected to the Site C hearing, which the member mentioned. It is the first time they have ever had to come under that kind of scrutiny. It has been a learning process for everybody involved. At the same time they have also had to go through the very lengthy proceedings of rate hearings, in public for the first time. That is going to be a healthy exercise, but it has put a tremendous strain on the Hydro operation. I would just like to thank them for the way in which they have handled that in public.

The member brought up the matter of the problems Ucluelet has. I appreciate that he will probably take a copy of Hansard and send it to the local paper to make sure that the people in Ucluelet know what he said in the House. But I had not heard of that specific problem before. If it has been a problem for a long time.... I will go check my files and see how many letters the member for Alberni has sent me about the Ucluelet problem. It is the duty of MLAs — all of us — if we have problems in our communities, to try to see the minister responsible and see if there can be some resolution of those problems. I would appreciate it if that member would do that in the future when he has a serious problem in his community.

It is not true that there has been no questioning of what Hydro has been doing. That questioning process is starting, and the results of it are evident in what has been happening in the last little while. We have seen very dramatic changes in Hydro forecasts in the past little while. These were brought about — somewhat, at least — because of the questioning that is being done by the B.C. Utilities Commission, and also because Hydro itself realizes that times and needs are changing and perhaps some of the projects which Hydro has been putting forward need to be rethought. That is not precluded by British Columbia Hydro at the present time. We've seen it happening in the last little while.

The $333 million is not a cushion of money which will be borrowed; rather it is a cushion in the borrowing power. If Hydro does not need that money, it will not be borrowed. There isn't some $333 million lying out there collecting interest, dust or whatever. It's simply a matter that if for some reason during the year Hydro finds that it needs the total amount that's being approved, it will have that additional opportunity without having to come back to the Legislature. Let me make it very clear that no matter how much money we vote to Hydro in this bill, Hydro cannot go out on its own and borrow that money.

The member's opening statement that — I believe I'm probably paraphrasing him — the only people who can borrow are Hydro isn't correct. That simply isn't the case. The Minister of Finance of the government of British Columbia is the fiscal agent for British Columbia Hydro. It is the fiscal agent of British Columbia, the Minister of Finance, who arranges the borrowings in cooperation with British Columbia Hydro. It is the board of directors of Hydro who gives the first borrowing approvals. I believe that's correct, because it's the board of directors of Hydro which must have that opportunity. But following that, it's the fiscal agent of the province of British Columbia who must give the final approvals for borrowing. As a matter of fact, in the last two or three years the Minister of Finance in this government has built up what I consider to be a very expert team to assist with

[ Page 7748 ]

Hydro borrowings. They are working more closely now than has ever happened in this province.

I believe if the member thinks about that for a minute he will agree that it's the proper process. It is, after all, the people of British Columbia who give the guarantees for this debt. So it should be the Minister of Finance who bears the ultimate responsibility. Through the Minister of Finance that responsibility rests with this Legislature, because his estimates are before this Legislature each year, the same as everybody else.

I partially answered the question of the member for MacKenzie (Mr. Lockstead) and the member for Shuswap-Revelstoke (Mr. King) about where the money is going. I can quickly go over the total amounts again: there will be $451 million for the Revelstoke project; $232 million for the mainland–Vancouver Island interconnection; $17 million in development procedures for Site C; $25 million for Hat Creek; and $8 million for Murphy Creek. There are some funds being expended for future energy sources which may or may not ever come on stream. There's $26 million for the Stikine-Iskut; $14 million for the Laird; $6 million for the Homathko, which the member for MacKenzie mentioned; $20 million for geothermal studies; and $2 million for pressurized-fluidized bed-combustion development. There are recurring development additions. Those would include the kinds of upgrading of current facilities like Ucluelet and other parts of British Columbia of some $80 million and other electric projects — pages and pages of them — of some $200 million, for a total of just over $1 billion on the electric side.

On the gas side, there's $32 million available for distribution additions — in other words, gasification of further areas of the province — $8 million on the liquefied natural gas expansion; $8 million on further studies into the Vancouver Island crossing; and approximately $19 million for other facilities around the B.C. Hydro distribution network; for a total of $67 million. There's about $12 million on the further addition, upgrading and development of the railway service, which comes, as I said yesterday, to just under $1.18 billion. That $1.18 billion reflects the reductions which are built in by the revised energy forecasts which have been most recently produced. The original requirement was $1.4 billion, so there's a significant reduction as a result of those renewed forecasts.

I'd like to quickly answer a couple of other questions that I've had some information given to me on — particularly on the Homathko. The member isn't in the House at the moment, but it will be in Hansard for him to review. Hydro has completed an overview study. Last year the study concluded that there is a potential development of four dams. We believe feasibility studies should go ahead. Those studies could be completed by about 1987. If construction started in 1990, the first power could not be available until 1995. Hydro is interested in this proposal for a number of reasons. The two most important are that as there is a relatively short transmission line requirement, the project would be close to Vancouver, the major population area, and there would be a relatively small reservoir needed for the amount of energy available. If all four projects were built, the capacity would be about 900 megawatts.

The member for Mackenzie also asked how many formal submissions we have received on the Vancouver Island pipeline. We have none at the present time. We have had contact with representatives of a number of the companies listed in the press release which I sent out April 14. We are anticipating that at least those companies, and perhaps some we don't know, will hold off their submissions until closer to the June 15 deadline.

MR. CHAIRMAN: Without trying to frustrate the legitimate concerns of the hon. member for Alberni (Mr. Skelly) and, of course, the comments from the hon. minister, the Chair must once again remind the committee that this section deals with the borrowing limit of the Authority. There is another committee, as the Journals indicate, which is sitting to discuss the estimates of the minister. Some discussions might be more appropriate to the estimates of the minister. Again, the Chair says that, of course, without trying to frustrate the concerns brought up in this section.

MR. MUSSALLEM: I believe it is almost impossible for this House to debate the issues when speaking of the mind boggling figures presented by this bill. Hydro is an immense organization. What it really amounts to, when you analyze the debate, is whether or not we have confidence in the management of Hydro. I support this section. Hydro has good management. It is managing well. It is the mainstay of the production of energy in the province of British Columbia. I believe that if we in any way tamper with the ability of Hydro to produce more power and build more projects, we would be tampering with the very lifeline of the province, which has established itself today on energy. As we face the future loss of non-renewable resources, such as oil and gas — although we will have gas for many years to come — Hydro's development of power is essential to the province. Unless we recognize this important facet, unless we develop Hydro, British Columbia will stand still; unless we develop their power to produce power we will stand still.

As a province we owe Hydro our gratitude for their ability to master huge projects and do them well. Certainly there are errors. Certainly there may be losses. Certainly there may even be careless expenditures at times, but when we're dealing with sums of this size, I defy anyone to be accurate to the dollar. I think they are doing a very good job. I refer this to the minister: in a time of restraint I believe that Hydro should look very closely at restraint; the head office of Hydro should carry out a very close examination. Economies are made in head office, but from my seat I'm unable to suggest what they should be. From my limited knowledge of that vast institution, B.C. Hydro, in Vancouver and in their various major offices, I believe that tremendous economies could ensue. The minister, as a member of the board of Hydro, should take a strong look at this.

Private enterprise has had to cut back enormously. I think Hydro should not be an exception. They are an exception at the present time. I think they are sailing along with their high salaries and large staff without regard.... It's always been a sore point with me that because they have millions they are a little careless with expenditures. I've been very careful about making this statement, but I believe that in this time of restraint something should be done there.

But overall, Hydro has done a magnificent job. If British Columbia is to progress, we must pass this section. Without additional power, without the power to make British Columbia grow, certainly the key to the future would be lost.

I think the member for Alberni (Mr. Skelly) mentioned how Ucluelet could be out of power for a limited time, in referring to this section; they didn't get enough money to maintain the line. I want to tell him that is not the reason at all.

[ Page 7749 ]

It is impossible to maintain a line of that length over wilderness areas without extensive breakdowns in transmission. I want to tell him also that he did not mention the men who go out in a storm when you wouldn't want to leave your door; they go out and work on 120,000-volt powerlines in the darkness of night, in the middle of a storm. I think this House should pay tribute to these men who do this almost daily. If we called for a gold-plated system where we'd never be out of power, it would be impossible to maintain.

I'd say additionally that this bill gives Hydro the ability to extend its strength in development and safety measures that these men need. We very rarely give them credit in this House, but if we turn on the switch and the power does not go on, we say: "Where is Hydro? What's gone wrong?" Well, what's going wrong has gone right; the men are out there in the dead of night under tremendous difficulties doing the job for us, and I commend them highly. The member for Alberni should commend them highly, but he does not do so. That is why there are outages occasionally.

I would tell the member also that from my knowledge in conversation with men of Hydro — people who do the work — there will be more outages and they will be for longer durations all through the system, because under the present wage structure Hydro cannot afford to have crews except those that are essential. I think the people of British Columbia should be prepared for more outages and outages of longer duration. That has nothing to do with this section, because we could not supply the millions; we could not supply the people to do that.

The Chairman waves his hands at me. He doesn't want to stop me, but he's suggesting that I'm not on the section. I am on the section. I'm on the section of expenditure. I say that the expenditure has to be curtailed — but in curtailing it we still must have this section passed. We must have economies, but we must also have power. It would be easy for this province to stand still, stop Hydro and within ten years the debts would all be paid, but we would stand still, and it would again be a backwoods province.

I commend Hydro on their work, and I commend this section. I assure the House that I'll be voting for it.

HON. MR. McCLELLAND: Mr. Chairman, just a very quick reply to the member who has just taken his seat. I would remind all members of the House that Hydro is subject to the same restraints that everyone else should be subject to, and that the British Columbia Utilities Commission recently, in awarding Hydro an interim rate increase, ordered Hydro to reduce its expenditures by 5 percent. In reviewing its operations, Hydro has been able to reduce its expenditures by over 9 percent. That's an ongoing review that will be kept up by British Columbia Hydro and, of course, under the jurisdiction of the B.C. Utilities Commission.

MR. SKELLY: Mr. Chairman, somehow I didn't think I was getting through to the member for Dewdney (Mr. Mussallem), and I think he's made that speech on every single bill that has come into the Legislature.

One thing should be said about the employees of B.C. Hydro: this side as well as that side recognizes that they are doing a fine job within the constraints imposed upon them. They do an excellent job in keeping the power flowing throughout this province, and we recognize that as well as anyone in this House.

There are many good things about Hydro, and it's unfortunate that this corporation has become a bit of a pawn in the hands of politicians, especially when you're dealing with projects that have a heavy impact on local areas. Sometimes people feel that they're involved in a battle between giants, and that they're sitting on the sidelines and being affected pretty dramatically, but their comments are not sought.

I would like to thank the minister for advising us that there is a list of projects that come under this allocation of debt, and I'd appreciate it if the minister would table that in the House when he has an appropriate opportunity. I'm aware, as you are, Mr. Chairman, that he can't table it in committee, but we would appreciate it. It's unfortunate that we don't see these lists beforehand; it would give us a better and more informed opportunity to debate the bill.

The minister criticized me because he hadn't heard anything from me about the power problems that they have in Ucluelet and Tofino. Well, certainly you go to the manager in the area and discuss it with him, and when it reaches a problem, then you bring it to the floor of this House, and that's why we're sent here. But I criticize the minister for not making that information available to members of the Legislature, and it would be very much appreciated if he would do that now or at some time when it's more convenient. I think that if he had done it before the bill was debated in the House, we'd all be a lot better off and a lot better informed in debating this legislation. I would give the same advice to other ministers of the Social Credit government, because it would certainly remove some bills from the area of contention and make the debate in this House a lot easier.

The minister didn't answer one question, though, and that was the question of purchasing from co-generators. The Department of Energy in the United States has now insisted that utilities are required to buy....

HON. MR. McCLELLAND: I did answer that question. I said we'd be bringing in an amendment to the B.C....

MR. SKELLY: Oh, that will be part of the amendments to the Utilities Commission Act?

HON. MR. McCLELLAND: Yes.

MR. SKELLY: Okay, that answers my question.

Another thing is that I didn't see the $333 million cushion in the list, but possibly that is the difference between the total of projects on the list and the amount by which we are raising the borrowing authority. But I am concerned that a number of the things on the list are projects that have not been approved by the Utilities Commission. One is the Site C development; another is the Hat Creek development; others are the Stikine, the Laird and the Homathko. All of these developments have not been seen and approved by the Utilities Commission. We are spending a tremendous amount of ratepayers' money on projects which have not yet been approved to go ahead.

The minister, in discussing a previous bill — the Geothermal Resources Act — suggested that the taxpayers should not be responsible for taking the risks involved in the exploration and development of geothermal projects; but here we are authorizing the expenditure of money, which is essentially risk money, on hydroelectric developments and coal-electric developments which may not be allowed to go ahead because the Utilities Commission, in their wisdom, find that these have such a great negative economic or environmental impact

[ Page 7750 ]

on the province that they should not be permitted to go ahead. So we are actually risking these funds on these projects. The minister said, with respect to a previous bill, that the taxpayer shouldn't be taking these risks. In fact, as we all know, whether it is a private company drilling a dry hole or a private mining company involved in a prospect which may or may not produce, the taxpayer still assumes the burden through a tax-expenditure system, a write-off system. So we really assume the risks in any case, and the risks are spread over the taxpayers as a whole rather than on the private companies. In this case we are approving debt funds for risky operations which may or may not be approved somewhere down the line.

I've been in correspondence with the minister, and people from the Peace Valley Environmental Association and other groups have been in correspondence with the minister, saying that, before we go to Utilities Commission panels on each of these projects individually, we should have a Utilities Commission hearing on Hydro's total system plan — the blueprint for the eighties or the nineties or whatever — to allow the Utilities Commission to analyze whether Hydro's overall plans for the future should be proceeded with, whether some elements of it should be struck out or whether Hydro should be instructed to go in different directions: into alternatives, energy conservation, different pricing mechanisms and that kind of thing. At that time the minister responded positively to the suggestion that the Utilities Commission should look into Hydro's total system plan and its projections for the future. I wonder if the minister, before he approves the referral of these projects to the Utilities Commission, is willing to set up a Utilities Commission hearing into Hydro's overall system plan and their projections for the future, so that, rather than essentially voting risk capital for these projects on a year-by-year basis, we will have some assurance from the Utilities Commission that some of these projects will go ahead, whereas others will be eliminated, and we can avoid that wasteful expenditure of public money. In this system, where Hydro is a Crown corporation, nothing can be written off; it is all a direct loss by the taxpayer.

I have one last question, and that relates back to section 1, which allows the government to guarantee leases.

HON. MR. McCLELLAND: We've already passed that.

MR. SKELLY: I am dealing with this section and relating it to section 1. I don't know how the government plans to handle this. When we lease something from somebody and the lease is guaranteed by the government, does the value of the lease or the accumulated value of all those leases come under B.C. Hydro's borrowing limit, or are the guaranteed leases outside the borrowing limit completely? Let me give you an example. Is it possible for Hydro to build a dam, sell it to some company and then lease it back? Theoretically, of course, it is possible. Is it possible for B.C. Hydro and its railway system to build a railway and railway cars and then sell them to someone, as was done with the ferries, and lease them back? Does the value of the lease come within the borrowing limits of B.C. Hydro? Essentially all you're doing is borrowing money. I'm asking the minister if the leases in section 1 come under the borrowing limits established in section 2.

HON. MR. McCLELLAND: Mr. Chairman, I thought we had passed section 1. I'm not sure if I can answer the member's question directly, but I guess that if the scenario followed which the member raised — that we build a dam and then sell it to somebody and lease it back — that would have been covered under the current borrowing authority for the years in which that dam was being built. In that instance, I guess it would be within the borrowing limits which are established by this legislation.

MR. SKELLY: What about trains and train cars?

HON. MR. McCLELLAND: Mr. Chairman, I would think the same thing would apply, to any capital asset, but I'll ask my ministry to get a little more detail on that and perhaps you could raise the question again when I've had that opportunity.

You'll recall that I had the unique opportunity of appearing before the Site C hearing in Fort St. John. It was a very interesting day. The question was asked about the hearings into B.C. Hydro's system plan on a number of occasions by a number of people. I said there — and I can't add very much to that now — that that matter is under review. I remind the member that the commission has its plate full right now, and I expect it will be full for the rest of this summer at least. I wouldn't be able to put any more work on them and expect them to do a decent job of the things that they're handling now. Mr. Chairman, that possibility is still one that is under active consideration. As a matter of fact, I think it could probably be helpful to Hydro as well, because I think for once Hydro would like to have some clear understanding of where the province wants them to go. I don't think they've ever had that under any government that has operated Hydro. I don't see Hydro being concerned with that kind of thing happening. When we can sit down with the commission — when they've got a little breathing room — to talk to them about it, then I expect that could happen.

I don't agree with the member that the money I've listed for him that's being spent on various kinds of studies into various kinds of projects is wasteful expenditure of public funds.

MR. SKELLY: I didn't say that; I said "risk."

HON. MR. McCLELLAND: No, the member said "wasteful expenditure of public funds," Mr. Chairman. If he wants to withdraw that statement, I'd be happy to have him do that, but I do agree that it's a risk. I do believe that in most development the risk should be at the expense of the private sector and not directly at the expense of the taxpayer. The province of British Columbia decided a long time ago that electric development in this province was going to be done by a Crown corporation, so that Crown corporation needs to act in a responsible way. In carrying out that responsibility, it will of necessity have to take some of those risks to develop long-term plans that may in fact not be approved at some place down the line. In the last week or so we've seen projects put ahead by a year, two years, or more — projects which have had considerable amounts of public money spent on them. We must remember that the provision of adequate supplies of electrical power to the people of our province require very long lead times. We talk about 15 or 20 years of planning for many of these projects. We're talking today, in the list that I mentioned in the debate, of power into the 1990s and beyond the year 2000. There will have to be developmental work done which provides for money to be spent. I don't

[ Page 7751 ]

apologize for that, and Hydro would be derelict in its duty if it didn't spend at least some of that money. I think the people of British Columbia must accept that risk, because we have chosen to accept that risk through B.C. Hydro and Power Authority.

MR. SKELLY: Mr. Chairman, what I was contrasting was the minister's attitude on the Geothermal Resources Act. He said: "The public should not be taking the risks; they should be taken by the private sector." In this case, he said that the public has decided to take the risk and that therefore we should take the risk.

HON. MR. McCLELLAND: It's out of my hands.

MR. SKELLY: It's now out of his hands in the Geothermal Resources Act, because he chose to put it out of his hands. It's not an all-encompassing principle with that minister.

Where there is an opportunity for the friends of Social Credit to make money, the opportunity is given by Social Credit. That is simply what it amounts to.

HON. MR. McCLELLAND: Don't be such a snipe. The debate was on a high plane until you got up.

MR. SKELLY: It was on a high plane when you weren't feeling the heat; that's what you're talking about.

The minister has contradicted himself is what it amounts to. He's saying that in some cases the public should take the risk, and in other cases they shouldn't take the risk. What I was proposing is that now that the Utilities Commission has given us a two-year breathing space by putting some megaprojects ahead by two years, we have an opportunity to do public Utilities Commission analysis into B.C. Hydro's system plan, which, as I understand it, is supported by the minister, by the commission and by many other people in this province who are concerned. If the commission's plate is full right now with some of these other projects, then maybe we should be withdrawing those projects and doing an analysis of the system plan, thereby being in accordance with the minister's wishes that the taxpayer should not be bearing the full risk. As a result of these Utilities Commission hearings into the system plan, we may be able to eliminate some of the risk which involves these expenditures and take them off the taxpayer's back.

That was the only suggestion that I was making — that we reschedule the analysis of Hydro's system plan and put off until some time in the future, now that we have breathing space, the analysis of certain specific projects which can be left until later in the game. That was the suggestion I was making to that minister.

HON. MR. McCLELLAND: Mr. Chairman, in answer, the matter is under review. We have no plans to cancel the Site C hearing to make way for a systems analysis by the B.C. Utilities Commission, but we have no other applications before us from B.C. Hydro at the present time.

MR. SKELLY: You said the plate was full.

HON. MR. McCLELLAND: Well, Mr. Chairman, the commission is doing two very major simultaneous hearings into Hydro's rate structure, which, in effect, in many ways is a systems review hearing. If you had been reading any of the transcripts, I think you would agree with me. In some parts, although it was never designed to be, Site C has turned out to be that as well. Those are two very major hearings being held by the commission now. You will know that there is another hearing being held by the commission on the proposed takeover of Inland Natural Gas and there are dozens and dozens of other routine matters dealt with daily by the commission. That's what I meant by having a plateful. It is a very busy time for that commission.

I forgot to answer this question when I was up before. The information about capital expenditures on various projects by B.C. Hydro is not some dark secret that I've kept until this moment to reveal; it is in their ten-year systems plans, which are made fully public and are available to any member of this House and have been as a routine matter.

MR. HANSON: Mr. Chairman, a couple of moments ago, in response to my comments on this section, where I argued that the B.C. Hydro policy, with respect to the postage-stamp rate structure, was violated in the Victoria area in that the users of air butane pay four times what they pay on the mainland, the minister stated that the B.C. Hydro natural gas division does not have a postage-stamp rate and that I should double-check that. Well, I did double-check that, and there is a postage-stamp rate for natural gas in Hydro service. That postage-stamp principle holds that all British Columbians, no matter where they live, shall not be discriminated against by their utility if they belong to the same rate class. It just so happens that in Victoria we use air butane mix as opposed to natural gas, so we are then condemned to pay three and a half to four times the amount that they pay on the mainland. Diesel-generated electrical power exists in some areas where the postage-stamp rate applies to all electrical service. In locations where there is a diesel-generated electrical service, the rate structure there is that the first 1,500 kilowatts of power is supplied to the residential user at the same rate as the normal hydro. This represents 200 percent of average residential consumption over the billing period. I wanted to correct the minister's statement that there was no postage-stamp rate for B.C. Hydro's natural gas division, which there is. He sits on that board. He should know. He is a director of the corporation.

I would like to ask him a question with respect to section 2. In the additional amount of money that is being borrowed — this $1.1 billion, the increase in borrowing from $7.2 billion to $8.3 billion — is there an allocation for the construction of the natural gas pipeline to Vancouver Island?

HON. MR. McCLELLAND: It would save a lot of time if the members would listen in the House. I gave a list of exactly what the borrowings would cover. The member can read it in Hansard. Mr. Chairman, I would like you to read Hansard so that you can straighten out the House. The second member for Victoria specifically said in this House that there was a postage-stamp rate for gas for everybody in British Columbia. There is not.

MR. HANSON: This is Hydro.

HON. MR. McCLELLAND: B.C. Hydro is the same as any other utility. B.C. Hydro has a group of customers in Vancouver, for instance, and in the Fraser Valley, and they charge a certain rate, now approved by the British Columbia Utilities

[ Page 7752 ]

Commission. B.C. Hydro has a group of customers on Vancouver Island. Inland Natural Gas has a group of customers in another part of the province. Pacific Northern Gas has another group of customers. Fort Nelson Gas has a group of customers. Mr. Chairman, I would like you to look at Hansard and see what that member said. He said there is a postage-stamp rate for natural gas for everybody in British Columbia, and there isn't.

MR. CHAIRMAN: One moment, please. Once again I will remind the committee that under this section we are discussing the borrowing limit of the B.C. Hydro and Power Authority. There is ample opportunity elsewhere, as the Journals tell us, to discuss the estimates of the minister, which are before another committee at this time. This section deals specifically with the borrowing limit of the Authority, and the committee would be well served if all members would remain strictly relevant to the section before us.

MR. HANSON: The postage-stamp principle of B.C. Hydro.... The title on this bill is Hydro and Power.... It's for British Columbia Hydro. I assumed that the minister knew what we were talking about. I know that Inland Natural Gas exists and that there is a different rate for exchanges of gas between Hydro and Inland Natural Gas, etc. The postage-stamp rate for the natural gas service of B.C. Hydro does exist. The minister tried to convey misinformation to this House.

Interjections.

MR. CHAIRMAN: Order, please. Will all hon. members come to order, and will the second member for Victoria kindly relate his remarks to the section before us and address the Chair.

MR. SKELLY: I rise on the point of order that the Premier has just come into the House, missed the first part of the debate, hollered twice across the floor that the member for Victoria was "dumb." That's an unparliamentary, puerile statement. I ask the Premier to withdraw that statement, which is unbefitting a member of this House.

MR. CHAIRMAN: If the hon. Premier made any unparliamentary remark to another hon. member, I'll ask the Premier to withdraw.

HON. MR. BENNETT: Mr. Chairman, I said that the member should be struck dumb before he gets himself in more trouble.

MR. CHAIRMAN: Will the hon. Premier please state that he would withdraw any unparliamentary remark.

HON. MR. BENNETT: All right. I apologize and encourage the member to speak and get in more trouble.

MR. CHAIRMAN: I will ask the hon. Premier to withdraw and say that he has not made any unparliamentary remark in this chamber.

HON. MR. BENNETT: That's right. I apologize, and have not made any unparliamentary remark about that member.

MR. HANSON: I have a question for the minister so that the record is clear: are there no funds available in this increase of borrowing for any aspect of the natural gas pipeline to Vancouver Island?

HON. MR. McCLELLAND: Mr. Chairman, I advise the member to read the Blues.

MR. MITCHELL: I'm pleased to note that the minister mentioned that we are dealing with a ten-year program for Hydro.

Interjections.

MR. CHAIRMAN: Order, please. I ask the hon. Premier and member for Alberni not to interrupt the member who is speaking.

MR. MITCHELL: I was happy to note that the minister mentioned in his speech that we are discussing Hydro's needs for the next ten years.

HON. MR. McCLELLAND: On a point of order, Mr. Chairman, I think it's probably time we got back to the relevancy of this section. We are not talking about ten years of borrowing for B.C. Hydro. We're talking about approval for a one-year borrowing requirement being asked of this Legislature.

MR. CHAIRMAN: The point is well made. Section 61 of our standing orders commends to the committee that all debate in committee must be strictly relevant to the section before us.

MR. MITCHELL: Yes, Mr. Chairman. It's like building a house. You have to have a section piece by piece; you look at the end house.... You can't look at one and a half billion dollars and not say that it is part of the long-range program by Hydro in British Columbia. I think it's important, Mr. Speaker....

HON. MR. McCLELLAND: I rise on a point of order, Mr. Chairman. That's exactly what I am saying is the point of order: we are now in committee stage of this bill, dealing with a one-year borrowing requirement for British Columbia Hydro. I suppose if there had been a time in this bill to talk about the long-range plans of Hydro, it would have been during the principle of the bill, which has already been passed.

MR. LEA: I rise on the same point of order. When you talk about a bill in second reading, yes, it's the broad principle of the bill which is under discussion; and when you get to each section, you must only speak about that section. But that does not eliminate the principle of that specific section. If you weren't going to talk about the principle of a specific section, what would you talk about? Nothing.

MR. CHAIRMAN: I will recite standing order 61(2) to all hon. members of the committee. Upon hearing it, perhaps we can decide how we will continue to debate this section. "Speeches in Committee of the Whole House must be strictly relevant to the item or clause under consideration." The

[ Page 7753 ]

principle of a bill is discussed in second reading; I'm sure all members are aware of that.

Second reading has been passed by this House. I ask all hon. members to read 61(2), page 23, in our standing orders and make their remarks to this section strictly relevant.

MR. LEA: On the same point of order, I thank you for clearing it up: that when you are speaking in this part, in committee, you must only speak about the strictly relevant principle of that particular section. What the Chair keeps saying is that keeping it strictly relative excludes principle. I take exception to that. It means that it must be strictly relevant to the principle of that clause. I'd like to ask the Chair again: if you're not going to talk about the strictly relevant principle of that clause, what would you talk about?

MR. CHAIRMAN: You make the point that you must be strictly relevant to the principle; I'm making the point that you must be strictly relevant to the clause or item. The clause or item is the borrowing limit of the authority. I think that's quite clear in the bill. I will ask all hon. members to be strictly relevant. I will also commend standing order 43 to the hon. member:

"Mr. Speaker, or the Chairman, after having called the attention of the House, or of the committee, to the conduct of a member, who persists in irrelevance, or tedious repetition, either of his own arguments or of the arguments used by other members in debate, may direct him to discontinue his speech, and if the member still continues to speak, Mr. Speaker shall name him, or, if in Committee, the Chairman shall report him to the House."

MR. LEA: On a point of order, I would like to go back to the point you made on being strictly relevant, and the principle, because I think it is important that every member of this House, when we are talking about a word or a phrase, have exactly the same understanding of that word or phrase. I would like the Chair to define for the members of this House what the Chair means when it says "the principle," because unless the Chair can define that you will have 56 other opinions as to what "principle" means when discussing a clause. If the Chair could define it for us, maybe we could then perform better.

MR. CHAIRMAN: The Chair must strictly abide by the standing orders in front of you. For the second time in this committee I have read standing order 61.

MR. MITCHELL: I thank you for that lesson in parliamentary laws, for the benefit of the people in the galleries. But if that minister thinks that he is going to shut me up because he wants to play his petty, parliamentary adult games by saying that the significance of this $1.5 billion borrowing bill is not part of Hydro's ten-year program, then he can sit there and stew all he wants.

I say sincerely that when we are looking at a borrowing program for one of the major Crown corporations of this province we have to took at how it affects the people of British Columbia. We have to look not only at how that will affect them ten years down the road. We will still be paying it ten years down the road like we were paying it....

HON. MR. McCLELLAND: On a point of order, I have no wish to shut that member up. He has a perfect right to take part in the debate, the same as the rest of us in this House. The point of order I wish to make, though, is that he must take part in that debate the same as the rest of us, under the rules of debate in this House. That member had every opportunity in the world to speak on the principle of this bill in second reading yesterday. That member chose not to, and I just think that we've got to get back to relevancy in this debate or we'll never get anywhere in this House. The member chose not to speak on the principle of the bill.

MR. CHAIRMAN: The committee is not aware of that. However, the Chairman must advise all members of the committee — and this is in response to previous questions — that during second reading the principle of a bill is discussed. There is adequate time in the speaking order given for all members of the House to discuss in second reading the principle of any bill before us. The specific purpose of a Committee of the Whole House is to discuss a bill section by section, being strictly relevant to the item or clause before us and confining your remarks to a strictly relevant attitude. I'm sure the hon. member is aware of that, and I will once again ask him to be strictly relevant to this item, section 2.

Mr. Member for Esquimalt–Port Renfrew, please continue.

MR. MITCHELL: As I said before the last point of order, Mr. Chairman, the payment for this particular loan will still be being made ten years down the line — and I haven't heard the minister in all his speeches tell me that that is not a fact. I think it's important that we know about the minister's tour of the Site C dam, how he appeared before the commission, and all of these things which are relevant to this bill. What I have to say on the projects of B.C. Hydro for the next ten years or on what happened to B.C. Hydro 10, 15 or 20 years back is very important, because it is part of what is happening in British Columbia. The most important part of what is happening in this province is the massive debt that this government is getting us into — the massive debt that is going to be the millstone around future generations who try to pay it off.

[Mr. Davidson in the chair.]

I think that when we deal with this bill — and I'm dealing with this particular borrowing....

MR. CHAIRMAN: Order, please, hon. member. The hon. minister rises on a point of order.

HON. MR. McCLELLAND: On a point of order, I would just like to have the Chair's comment on the relevancy of this debate. This debate would have been relevant yesterday during second reading of this bill, because that was when the principle should have been discussed. That member chose not to discuss the principle of the bill. I would suggest, Mr. Chairman, that other questions up to this point about how the money is going to be spent, where it's going to be spent, and why isn't it going to be spent here are all relevant under committee stage of a bill. But the principle of the bill is not relevant at this time.

MR. CHAIRMAN: Hon. member, the Chair might also take this opportunity to advise the member that another

[ Page 7754 ]

opportunity will also be at hand during estimates where some of the points that the member is currently canvassing could be more appropriately discussed under the broader guidelines of ministerial estimates. Unfortunately, at this time the Chair must advise the member that his comments are more adequately suited for another opportunity to debate, rather than at this particular stage. And if we were to leave this stage, we would possibly find that opportunity at hand.

MR. MITCHELL: You know, I find it quite interesting, Mr. Chairman, to sit here and listen to the logic that what I am going to say is not relevant, when I haven't said anything except "ten years." And every time I say it, up jumps the minister, and then it's out of order. I've never realized....

We stand here and we associate them with the Trudeau Liberals, and they jump up. Now we've got a new way to raise them; all I have to say is "ten years," and up jumps the minister on a point of order.

If that is relevant to my debate, I don't know why you didn't call me out of order, because it's not. But what will be happening in British Columbia under Hydro for the next ten years is important, because we'll be paying that part of the bill for the next ten years, or better.

MR. CHAIRMAN: Order, please.

MR. MITCHELL: If this is the part that's relevant.... Will you tell that minister to sit down...?

MR. CHAIRMAN: Before entertaining the point of order from the minister, I must again draw to the member's attention that we are on section 2, discussing a one-year item. It is entirely out of order at this time in this particular debate to discuss anything beyond what appears in section 2. The remarks by the member, while they are certainly important to the member, are going to be acceptable in a forum that will be available to us very shortly, but, hon. member, not at this time under this bill. I would urge the member — in fact I will instruct the member — to confine his remarks to section 2 or possibly delay his remarks until the opportunity will be afforded to canvass in a more general direction, without having to worry about the Chair restricting him according to our standing orders.

HON. MR. McCLELLAND: On the point of order, I'd like to commend you for your ruling. I am perfectly willing to listen to that member and respond to him. The point is that under the rules of debate in this House, during second reading the minister has the opportunity to respond to questions that arise in debate from all members of the House. I assume that if we are to move into debate of a principle of the bill at this stage, I would not be allowed to respond because I assume you would rule me out of order. I don't think that is within the bounds of fair debate within this Legislature.

MR. CHAIRMAN: The minister makes a fair comment on his point of order.

MR. MITCHELL: I appreciate all you have said, Mr. Chairman. I will try to keep everything within a year. I won't mention that awful word, that I won't say, because I know it will trigger that particular minister to jump up again.

I think that when you look at what happens to that $1.1 billion, you have to look at how that particular $1.1 billion in this bill fits into B.C. Hydro. I think it is important that we look at B.C. Hydro and look at what we really need in this province. Each year all B.C. Hydro's booklets and reports have predicted the need to develop the hydro needs of this province. In one of their reports they predicted that they need around 500 million kilowatts of new power each year. This $1.1 billion that the minister is asking us to give him, so he can allow the Minister of Finance to go out and borrow and then go out and give that to B.C. Hydro as they need it, fits into the program that B.C. Hydro is looking down the road to develop. It's all part of that program because they have to plan ahead. They have to make their proposals; they have to do their onsite studies; and they have to invest the taxpayers' money. In spite of it, Mr. Chairman, some of those taxpayers happen to live in my riding and will be footing the bill for this $1.1 billion that this minister wants.

MR. KEMPF: Mr. Chairman, on a point of order under standing order 43, I ask what relevance this $1.1 billion has to the taxpayer? This is not taxpayers' money. It will not be paid back with taxpayers' money; it'll be paid back by the people who actually use the hydroelectric power, gas or whatever that this money is borrowed for. I see no relevance whatsoever in using the taxpayer as a for instance in this particular section of the bill.

MR. CHAIRMAN: The member does make a point, but that point could possibly be canvassed at another time. The member for Esquimalt–Port Renfrew continues.

MR. MITCHELL: Mr. Chairman, it must be Friday, and it must be a Friday before a long weekend. I never profess to be a big businessman like the voice of the north, but never in my longest period in this world have I ever said that the people who guarantee the debt of British Columbia are not taxpayers.

MR. KEMPF: I stand again on a point of order under standing order 43. I ask what relevance.... I don't mind the member talking about the taxpayer of British Columbia. If that's his wish, he can do that, but in a different forum and at a different time. Certainly it's in order when discussing or debating other issues in this House but not in this section of Bill 40.

MR. CHAIRMAN: The Chair has the member's point of order.

MR. MITCHELL: Mr. Chairman, because it is a crazy Friday, I would move this House stand adjourned.

MR. CHAIRMAN: You move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The House resumed; Mr. Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

Hon. Mr. Williams moved adjournment of the House.

Motion approved.

The House adjourned at 12:47 p.m.

[ Page 7755 ]

Appendix

AMENDMENTS TO BILLS

5 The Hon. R. H. McClelland to move, in Committee of the Whole on Bill (No. 5) intituled Geothermal Resources Act to amend as follows:

SECTION 4 is amended (a) in subsection (2) by deleting '"drill a test hole or", and (b) by adding the following subsection'.

"(6) No person shall conduct geothermal exploration other than by way of well drilling or test hole drilling unless lie was notified the commissioner in writing in the form prescribed of his intention to do so."

SECTION 5 is amended by deleting, subsection (4) and substituting, the following:

"(4) A permittee has the exclusive right, subject to section 13 (2) and the regulations, to apply for well authorizations for wells to be drilled within the boundaries of his location."

SECTION 13 is deleted and the following is substituted:

"Limitations on issue

"13. ( 1) No well authorization shall he issued except to

(a) a permittee or lessee, or

(b) a person who has made an agreement with a permittee or lessee for the drilling or operation of the well.

"(2) A person referred to in subsection (1) (b) may apply for a well authorization."

The following section is added:

"Land Act Amendment

"25.1. Section 47 (1) of the Land Act, R.S.B.C. 1979, c. 214, is amended

(a) in paragraph (a) 00 by adding 'geothermal resources and any' before 'minerals,', and

(b) in paragraph (b) by adding 'geothermal resources as defined in the Geothermal Resources Act,' before 'minerals'."