2009 Legislative Session: First Session, 39th Parliament
HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

official report of

Debates of the Legislative Assembly

(hansard)

Thursday, November 26, 2009

Morning Sitting

Volume 9, Number 6

[ Page 2853 ]

THURSDAY, NOVEMBER 26, 2009

The House met at 10:02 a.m.

[Mr. Speaker in the chair.]

Prayers.

Orders of the Day

Hon. M. de Jong: I call, in Committee A, Committee of Supply — for the information of members, the estimates of the Ministry of Public Safety and Solicitor General; and in this chamber, Committee of Supply, the estimates of the Ministry of Energy, Mines and Petroleum Resources.

Point of Privilege
(Reservation of Right)

R. Austin: I reserve the right to raise a matter of privilege.

Committee of Supply

ESTIMATES: MINISTRY OF ENERGY,
MINES AND PETROLEUM RESOURCES

(continued)

The House in Committee of Supply (Section B); C. Trevena in the chair.

The committee met at 10:05 a.m.

On Vote 24: ministry operations, $67,793,000 (continued).

J. Horgan: I'm pleased to be able to finish off the estimates for the Ministry of Energy, Mines and Petroleum Resources today. I've been in discussion with the minister on the areas we want to cover, but before I get to….

I guess as an introduction to those discussions around the Columbia Power Corporation, the Waneta dam purchase, the Waneta expansion and then, later on, some questions about the newly appointed advisory committees, I passed on to the minister a freedom-of-information response that we received from B.C. Hydro. The request was for any and all information pertaining to the purchase proposal by B.C. Hydro for one-third of the Waneta dam from Teck Resources.

I have here correspondence from the Columbia Power Corporation with respect to a similar request for information. This request came back stating that there were no documents from Columbia Power.

As the minister will know, after having a chance to review the material that I've passed on to him, B.C. Hydro provided to the official opposition information from the Columbia Power Corporation. It's that information I'd like to touch on with the minister.

At the bottom of the second page of the material that I provided to the minister, the former CEO of Columbia Power, Barry Chuddy, is corresponding with Richard Deane from the Trail branch of Teck Resources, saying that he will set up a meeting with B.C. Hydro and Teck Cominco to discuss the purchase.

My question to the minister is: what happened at that meeting? Was there an agenda? Who attended the meeting? If it did take place, why was it not contained in the package that we requested from Columbia Power Corporation? If it did not take place, why?

Hon. B. Lekstrom: Good morning. I will start by introducing…. I have two gentlemen with me, my staff. Greg Reimer, to my right, is my deputy minister. Assistant Deputy Minister Les MacLaren is behind me.

[1010]

On the issue of the FOI request with CPC, I will endeavour to check into that. You've raised an issue here. I will get you the information, as you've indicated, as to why you didn't receive it there and you did from B.C. Hydro.

The meeting you refer to, I believe, was a meeting that was to do an update on the purchase discussions and what was taking place there, as well as the Waneta expansion project. CPC was in discussions or an update there on that. I believe it was a verbal discussion. I'm not aware of an agenda that was there.

J. Horgan: Well, in the materials from B.C. Hydro pertaining to Columbia Power Corporation, Richard Deane writes: "Teck and B.C. Hydro are hoping to meet with CPC to review the proposed sale of the one-third interest in the Waneta dam to B.C. Hydro."

That strikes me as a fairly definitive subject for discussion. The subject line in the e-mail says: "Re: Waneta transaction; CPC, B.C. Hydro, Teck meeting." So my sense is…. We talked about this last week in estimates.

The minister and I are familiar with the Columbia Power Corporation intimately. In my case, I used to work for the Columbia Power Corporation. I'm aware that the mandate of that corporation — it is outlined in the shareholders' letter of expectation — is to develop three power projects, among other possible purchases within the basin.

In 1996 the Columbia Power Corporation purchased the Brilliant dam in its entirety from, at that time, Teck Cominco. It was a prudent business move. It stabilized the assets of CPC and the Columbia Basin Trust, and it provided an opportunity for growth and meeting the objectives of the two institutions: job creation, economic development and, also, sharing the resources, as a result of the impacts of the Columbia River treaty. These were
[ Page 2854 ]
laudable goals. They were supported by both sides of the House.

At the time, Columbia Power started with the Keenleyside project. They then moved, after the purchase of the Brilliant facility, to the Brilliant expansion. The last project in the envelope of opportunities for Columbia Power Corporation was the Waneta expansion. The expansion rights to Waneta were purchased by the province of British Columbia in 1993 — again, from Teck Cominco.

The expectation was that Columbia Power — small, nimble, entrepreneurial — was better placed than B.C. Hydro to work on these projects. This is almost the argument that the minister will use for the development of independent power projects.

So I'm curious. Hon. Chair, through you to the minister: why would you not allow Columbia Power Corporation to vigorously pursue the opportunity to purchase a one-third interest in Waneta, which — as I understand it — would enhance the value of the expansion project?

Instead, B.C. Hydro was allowed to do it. They already control the water flows through the Canal plant agreement. There are some that are arguing that it's an inherent conflict of interest to have Hydro at the end of the line. That may well compromise values to Fortis, values to Columbia Power Corporation. So why wasn't CPC at the front of the line in these discussions rather than an afterthought?

The Chair: Might I ask other members of the committee who are having separate conversations to keep their voices a little bit quieter. Thank you very much.

[1015]

Hon. B. Lekstrom: There were a number of factors, I believe, in that question, actually. Teck had already begun discussions with B.C. Hydro, and after a period of time had a discussion with CPC. I believe Teck at the time made a determination that they were far enough into the discussions with B.C. Hydro. That's where they were going to pursue this avenue. But also at that time CPC was focused on the expansion. I believe we're going to speak about that in the future. That's where we were at. That's how we have reached the point we're at today.

J. Horgan: Of course Columbia Power Corporation staff and the Columbia Basin Trust board would be focused on the Waneta expansion, but when word got out — and the minister knows; he comes from a small, rural community — the bush telegraph in small outlying areas is fairly efficient. It was no secret to people in the Trail-Castlegar region that Teck needed to get an infusion of capital, that Teck was looking at the Waneta facility as a potential cash cow.

So this was not new news, certainly, to the people in the community. It may well have been news to the absentee chair of the board who, I believe, lives in the Victoria region, but those that live in the region would have been aware of this. They would have seen the opportunity, as they did with the Brilliant purchase in 1996.

So again, my question is to the minister who signs off on the appointment of board members to both CPC and B.C. Hydro and has very capable staff that would understand the electricity sector from a broader public policy perspective rather than the interests of either of these two Crown corporations.

Why didn't the minister and his staff recognize the opportunity for Columbia Power and do something about getting them at the front of the line rather than deferring to B.C. Hydro to make the purchase?

Hon. B. Lekstrom: Going back to the question and the answer I gave before, I believe CPC was focused clearly on their expansion at that time. I mean, this was an $825 million discussion that was taking place. I think it's fair to say that the member has raised that question before. That is higher than the combined total of CPC's investment in their previous capital expenditures. The expansion discussions were going forward. There was capital that would be needed to deal with that.

Teck had entered into discussions with B.C. Hydro. They were in that process. They then had a discussion with CPC. Teck determined that they were going to continue down the road of the discussions with B.C. Hydro.

But I do want to go back, I think, and I know that, for some reason, there was a bit of a shot at the chair. I think our chair does an incredible job. I think he does for the CPC. Sometimes, again, I know we're both…. You mentioned small communities and the bush telegraph. I found on occasion it works well, and I've found on occasion that that type of telegraph has a substantial amount of misinformation in it.

[1020]

J. Horgan: It's more difficult to wiretap the bush telegraph. I know that.

I'd like to go back to the two assertions the minister just made.

Firstly, with respect to CPC's capacity to negotiate a purchase agreement. They're backstopped by the government of British Columbia, as is B.C. Hydro. They have real assets. They have power purchase agreements, power sales agreements for three facilities. It's a going concern.

Columbia Power Corporation and the Columbia Basin Trust are doing very, very well. I'm fairly certain that absent the disagreement we're having right now, the minister would be the first on his feet to speak well of both organizations.

Of the people currently employed at Columbia Power — although they are without a full-time chief executive officer, and there's debate about how long that's been the case….
[ Page 2855 ]

The challenge, I think, that the corporation has is not that it can only focus on one thing but that it is at the end of those things that it was to focus on. The Waneta expansion was the last of the three primary projects, so an opportunity to further diversify and further grow the corporation would, in my sense, be a good business move.

To the minister: why didn't CPC avail itself of that good business opportunity?

Hon. B. Lekstrom: I have attempted to answer this, I believe, a number of times. I'm not sure that we're going to make much headway on that.

Teck was already in discussions, as I said, with B.C. Hydro. They were well down that path. They had a discussion with CPC. It is no secret — and the member has said — that Teck was in a financial situation at that time. The discussions continued, and at the end of the day, we have a one-third purchase agreement that is moving forward with Teck and B.C. Hydro.

I think it's an incredible deal for the ratepayers of British Columbia, for B.C. Hydro and for all British Columbians, who are truly the shareholders of B.C. Hydro.

J. Horgan: Will the one-third purchase of Waneta by the B.C. Hydro and Power Authority have a positive or a negative impact on the Columbia Power Corporation?

[1025]

Hon. B. Lekstrom: This will have a neutral effect on the CPC. Both Teck and Hydro were aware of the Waneta expansion at that time, so it will be neutral on the Columbia Power Corporation.

J. Horgan: Will it have an impact on the Canal plant agreement and the arrangements that B.C. Hydro has with the other signatories to that agreement?

Hon. B. Lekstrom: The parties are in discussions right now on the Canal plant agreement and how those allocations will be adjusted. I think this is not new. I think there were discussions more recently — when the Brilliant expansion, for example, was developed. These parties work cooperatively together. They have always, to the best of my knowledge. Again, in this situation, they're sitting down; they are working together and in discussions presently.

J. Horgan: I can well imagine. My understanding of the Canal plant agreement is that it's an ongoing, constant, ever-evolving negotiation with the various players.

My question, I suppose, to the minister is: now that B.C. Hydro has a vested interest at the end of the road — or the river, more appropriately — does that have a negative impact on Columbia Power and any of the other partners in terms of the flexibility that they have and the dominant position that B.C. Hydro is already in?

[1030]

Hon. B. Lekstrom: No, there will be no negative effects. I'll go back. The Canal plant agreement provides fixed entitlements to the parties that are associated with this. Actually, all the parties look to maximize the best use of the available water that is there. As you indicated and I think I said earlier, the parties to this agreement have a good working relationship. I think they work collaboratively in the best interest of all.

J. Horgan: This is a common refrain these days from this government. Everything is neutral; nobody loses. I don't know. That's not the world that I live in. People lose all the time. The B.C. Lions got slaughtered. It wasn't a revenue-neutral or a score-neutral eastern conference final.

I'm not certain that the public is buying this "everything's neutral" argument, not just in this instance but right across the piece, from this government.

I'll ask again: does the purchase of one-third of the Waneta facility have a positive or negative impact on the Columbia Power Corporation?

Hon. B. Lekstrom: It is neutral. Whether you like the word "neutral" or not, that's where we're at today. Comparing this to the B.C. Lions, I think, is a big stretch. But, Member, that's the answer. This is a neutral impact.

J. Horgan: Well, again I'm just trying to illustrate that sometimes people lose. I know that in "the best place on earth," despite all the evidence to the contrary, everything is neutral on the government side.

Someone benefits. Certainly Teck Cominco benefits. Their shareholders have benefited greatly from this. It certainly wasn't neutral to them, and I didn't ask that question beyond the purview of the minister.

I want to say this, before we move on to the Waneta expansion questions. The minister said that by purchasing this one-third asset, B.C. Hydro was now benefiting more than they would have otherwise. Again, I'd like to draw the member's attention to the export permit from the NEB to Teck Cominco. The minister's assertion that somehow there is more electricity available than there was before, in my read of these documents, is not correct.

I'd like the minister to perhaps revisit that question and explain to me how it is that before we put forward $825 million of ratepayers' cash on the barrelhead for Teck Cominco shareholders, we already had unfettered access, with the arrangements under the NEB, to that electricity.

Hon. B. Lekstrom: Well, I will reiterate where I stand on this issue. This is a good investment for the people of British Columbia.

[1035]
[ Page 2856 ]

I know the member indicated that it's good for Teck shareholders. That may very well be. My job is the fact that I'm here to ensure British Columbians have a good power supply, one that will allow us to once again be electricity self-sufficient in this province — something we're not today, but will be by 2016.

We look to generate new, clean, renewable electricity on a number of fronts. I know that we've had the discussion on clean, renewable energy partners coming in, but B.C. Hydro also has an obligation to look at opportunities. This opportunity, I think, was a good one. I think B.C. Hydro has taken the right course.

But a very important part that I would close this answer with is: presently this is before the B.C. Utilities Commission. It's something that they will look at and make a determination on whether this is in the best interests of British Columbians or not.

J. Horgan: The minister had to make a determination before he signed off on this or while he was being briefed on this as to whether this was a good or bad deal for ratepayers. The commission will do its work, subject to special directions or legislation that we may see. You never know. We've seen it before. We've seen it in the past couple of months.

I want to just pursue this a little bit further. This transaction commits B.C. Hydro to buying Teck's surplus power to fixed upfront payments. I'm looking at your capable ADM as he scribbles down where I'm going with this. The levelized price for this purchase is, according to the materials filed at the BCUC, about $65 a megawatt hour, which is well beyond the forward-looking market price that B.C. Hydro has tabled and also well above the long-term market forecast for the next 20 years.

Again to the minister: if this is such a good deal, why are we paying more than Hydro projects the cost of electricity to be, going forward? How is that a good deal? Again, back to those shareholders at Teck. They're probably pretty happy, but I'm thinking as my electricity rates go up, even as I watched the B.C. Lions lose…. I'm not feeling neutral about this, and I don't think ratepayers will either.

Hon. B. Lekstrom: As I said, I will stand by this as an incredible deal for British Columbians, for the ratepayers of British Columbia. I know that the member had mentioned in our initial exchange, going back to when we first began estimates talking about the spot market…. I believe it was 2000 he referred to at the time, where the spot market was in the range of $1,200 a megawatt.

The issue is about long-term firm power that's there — the commitment to be electricity self-sufficient. I think we're somewhat vulnerable if we remain dependent on that spot market, although the forecasts….

Forecasts are just that. We certainly respect the work they do, and on many occasions it's correct. On the odd occasion things change in the world, and those forecasts are not correct. This is about a long-term firm power supply for British Columbians. We think the price is a very good price when we look at that. It is a different price than the spot market, but it doesn't also come with the volatility that the spot market provides to British Columbians or anybody else who purchases power off of that.

[1040]

J. Horgan: Again, I'm failing to understand how it's in the ratepayers' interest. Let's touch for a minute on the self-sufficiency argument, which I am pleased to hear the minister is still using. Looking at the PR materials coming out from the public affairs bureau, I thought we were now moving to exporting electricity so that we can save California from air conditioners failing and temperatures of the swimming pools getting a little below comfort level. I'm glad that we're back on self-sufficiency.

Then I'm curious. This power already existed in British Columbia. The surplus power to the needs of Teck's smelting operation in Trail was available to B.C. Hydro already, at the market rate. In their own submission to the Utilities Commission, over the long term B.C. Hydro says the price is in excess of what the market rate will be.

I don't dispute that markets go up and down, but the $1,200 that I reminded the minister of back in 2000 was a result of bad public policy in the United States and malfeasance by Enron. It really had nothing to do with the normal flows of the marketplace, and I know the minister would agree with that.

Again to the minister: how is it possible that we are purchasing power we could have already purchased at sometimes half the price? How is that good for ratepayers in the long term?

Hon. B. Lekstrom: Just reiterating his comments on self-sufficiency. I can assure the member and all British Columbians that self-sufficiency is our first priority and has been since we made a commitment to British Columbians that we were going to be electricity self-sufficient again by 2016. I think all British Columbians probably found a bit of a surprise that we weren't — in a wonderful, beautiful, resource-rich province like British Columbia.

Although the electricity already existed, as the member has said, it was not guaranteed that that electricity would be for B.C. Hydro, as you said. This is about firm clean electricity that B.C. Hydro has secured on behalf of the ratepayers of B.C. Hydro, which are British Columbians. Well, it's a matter of fact. It wasn't that long ago that the spot market was in excess of the $65 number.

So although the spot market is there and we see the numbers today, I think there is quite extreme volatility
[ Page 2857 ]
in that on occasion. The ability for B.C. Hydro to secure firm clean energy on behalf of British Columbians is the right move for B.C. Hydro to do on behalf of all British Columbians.

J. Horgan: This, I guess, is an ideal opportunity to segue into the Waneta expansion, which would have provided all the benefits the minister just articulated. In fact, it would have provided 435 megawatts of new clean, green energy not yet created to meet the objectives that the minister has articulated.

If B.C. Hydro had 825 million bucks lying around, why would they not have entered into a power purchase agreement with the Columbia Power Corporation to begin work on the Waneta expansion, which would provide not only electricity but capacity for future energy developments?

[1045]

Hon. B. Lekstrom: Just to clarify something. I believe that the member, if I heard him correctly, said it was a 435 megawatt. Actually, it had been scaled to a 335 megawatt, just for the member's information on that.

The project is not dead per se. In the work that CPC had completed on this, it became clear that this was not a cost-effective project in its present form. So they're presently back relooking at the project, trying to figure out if they could make this project viable for CPC, if there are other partners that they could have discussions within this.

It just was not competitive with other options at the point that they had originally, so they have made a determination. They recognize that and have gone back to the drawing board to see if they can come up with something that will work.

J. Horgan: Well, I'd like to know from the minister when the project was scaled down from 435 megawatts to 335 megawatts. I would also like a more fulsome explanation as to why it's not cost-effective.

People who have been following these issues for some time will know that of the three projects that were on the table for development by Columbia Power Corporation and its partners, the Waneta expansion 12 years ago was the most cost-effective. So what happened?

[1050]

Hon. B. Lekstrom: I don't have the exact date with us. I will endeavour to get that to the member as quickly as I get it in my hands.

You talked about how 12 years ago it was cost-effective. Certainly, a lot has changed in 12 years. For example, you know, there was a difference. The EA, the environmental assessment that was received in 2007…. Since that time, and the bids that were received this spring on the project, an increase of over $100 million was seen on that project.

There are a number of things. I know the member would agree that comparing something to 12 years ago, although many of us would like to in some instances, just would not work. The issue of this scaling back from 435 to 335 had to deal with achieving a hydraulic balance for the other facilities on the Pend d'Oreille River. I think the member is well aware of the other facilities that exist there and generate electricity.

J. Horgan: A couple of questions flow from that. Did the upgrades at Waneta undertaken by Teck have a negative impact on the expansion viability? Also, in the last proposal that the minister saw from CPC, what was the cost per megawatt hour?

Hon. B. Lekstrom: The issue of the upgrades at the Teck Waneta facility uses the water that's existing today. Should the Waneta expansion go forward, those rights are given over to the Waneta expansion. So no, there will be no impact that way negatively. We can assure the member of that, as well as the residents of the area and British Columbians.

You spoke on the price. Right now CPC is in discussions. I don't think it would be in the best interest to divulge that information at the present time, while these discussions are ongoing, and I'm going to respect that confidentiality.

K. Conroy: The minister said "should the Waneta expansion go ahead," and that raises huge alarm bells for me. It was a vision of the Columbia Basin Trust and the Columbia Power Corp when these two organizations were created back in the '90s to move forward with three construction projects: the Arrow Lakes generating station, Brilliant expansion and then the Waneta.

[1055]

It was known in those early days of this vision that the Waneta was the most viable. The Waneta was going to be the easiest to do, was going to be the best for the region in some ways. When you look at the employment that would be provided, 600 person-years of employment is estimated to be provided by this one project. We're looking at approximately $65 million in employment dollars to be generated by that project. The two other projects alone were $80 million — this one project alone, $65 million, and $25 million in sales to the region.

That is a huge stimulus project. I think that would be the largest stimulus project to be entered into in the province right at this time. I think it is one of the most viable projects. So for the minister to say, "should the expansion go ahead," that is raising huge alarm bells to myself and to people in the Kootenays, workers sitting there waiting for this project, who have been told — who in fact know — that there is an agreement with the contractor at this time.
[ Page 2858 ]

All of the environmental studies have been passed. Everything is ready to go. The agreement with the contractor expires on Monday, November 30. So where is this project going? It needs to go ahead — not should it go, but when will it go?

Hon. K. Falcon: I seek leave to make an introduction.

Leave granted.

Introductions by Members

Hon. K. Falcon: Joining us in the gallery today we have a number of students from a great elementary school in my riding of Surrey-Cloverdale. Clayton Elementary is an outstanding school with some outstanding teachers, one of whom is here today, Mr. Ron Shell. He's joined by almost 50 kids from the elementary school, along with a number of their parents.

I would ask the House to please give them a warm British Columbia welcome.

Debate Continued

Hon. B. Lekstrom: The member raises an issue and, I guess, a concern because I said "should it go ahead" in one of my comments. I do have to tell you that I'm not sure where she received the information that it was the most viable. If that information is from 12 years ago, that would be fine. Things have changed, as I said to the previous member.

I am a big supporter of economic development in every region of this province, including the member's region. She raises some valid points. I'm hopeful that a project can go ahead, but I think the key factor — and I know I've heard it from the members opposite — is that our electricity generation is not about buying electricity at any cost.

We have to ensure that we can get cost-effective electricity for British Columbians, because on numerous occasions I've heard the opposition stand and say: "You're making deals with independent power producers in this province. The price is astronomical." Then I guess I'm somewhat confused because I'm hearing the member say that regardless…. Build this regardless of the cost. That's not a responsible move.

I'm confident that CPC, through their discussions, will hopefully come back with a cost-effective alternative to the proposal that's presently before them in the Waneta expansion. We can see the type of economic development that the member wishes to see, which we wish to see on this side, but I do want to reiterate that this is not about buying power at any cost.

This is about ensuring that we look after the ratepayers' interests as well as find cost-effective electricity for all British Columbians on our journey to become electricity self-sufficient once again in this province by 2016.

K. Conroy: The minister is right. It's not just about buying power at any cost, because what this project provides is capacity. It doesn't just provide power.

[1100]

It provides capacity, unlike Glacier-Howser, for instance, which my colleague from Nelson-Creston and I have spoken against, because not only does that not provide capacity; it is environmentally not sound. It doesn't have the environmental…. It has more environmental issues than Waneta does. All of the issues for Waneta are taken care of. There are no environmental issues. They're all done. They're taken care of.

It provides power. It provides capacity. It provides jobs. It provides investment in a region that needs that investment. It was viable 12 years ago. It was viable six years ago. It was viable a year ago. It was viable when the contract was given out just recently.

Now that contract expires. That's a real concern to the people of the region. That contract expires November 30. That's Monday. What's going to happen? Is there going to be an extension?

What is the minister doing, in cooperation with the CPC, to make sure that job is going to go ahead, that contract's not going to expire? We're going to lose the key time that we have now to move forward on this project.

Hon. B. Lekstrom: I know that the member can talk about whether it was viable 12 years ago or six years ago or one year ago. The fact is that it's not viable today. I can't express that any clearer. With the business work that they have done…. They have looked at it, and it just isn't in the cards for the proposal as it existed.

The key here is that CPC continues to work on this. They recognize that. They're trying to ensure that they can come up with some form of project to carry forward which will address not just the member's concerns but concerns of all British Columbians — that is, the opportunity to create economic development in every region of this province.

The contract that she refers to. It's my understanding that they are presently in discussions to look at an extension to the Monday deadline. I'm hopeful that extension can be reached with the contractor.

K. Conroy: To the minister: why isn't this viable? It just doesn't make sense. We need to know the rationale for why. This is providing capacity as well as power. It's ready to go. We are not unaccustomed to hydroelectrical projects in our region. I think we've shown that we work well, that our region is geared to it.

It doesn't make sense. We're not getting an answer as to why. I think a project that can provide both capacity and power is far above a lot of the projects that the min-
[ Page 2859 ]
ister has entered into agreements with. The ministry has entered into agreements that can only provide power. There's no capacity in the majority of those projects that the minister has already entered into agreement with. This can provide power, capacity. It's ready to go. Why?

[1105]

[L. Reid in the chair.]

Hon. B. Lekstrom: Again, I'll try this further. First, I'll say that our government's record with CPC and the projects has been, I think, extremely good. I think back to the Brilliant expansion, where we actually had cost-effective electricity that was developed there.

The member is saying: "Why not now?" The reality is that it is not cost-effective at this point. As the member has said, possibly 12 years ago, six years ago, one year ago it was. Today it isn't, and that's why the CPC is back at the drawing board, trying to ensure that the project, if they redefine it or alter it, is going to provide cost-effective electricity.

I fully understand the member's issue around capacity, and that's actually taking that into consideration as well. Presently, as it existed, it was not cost-effective. Financing costs have changed. There are a number of factors. But we did take in the issue of capacity as well, as the member indicated with her concerns and her question.

K. Conroy: It almost seems, then, that perhaps there's a bias towards a public corporation. Columbia Basin Trust, Columbia Power Corp, is a public corporation that provides benefits right back to the community. It's not a private corporation.

It seems that you might be comparing apples and oranges if you compare the agreements made with power producers that just produce energy. Here's a corporation, a public body, that can produce capacity as well as power. Is there some sort of bias within the ministry towards a public body, as opposed to a private corporation?

Hon. B. Lekstrom: No, there is no bias. I think, as I said in my previous answer, we have a great working relationship with CPC. We are certainly fortunate in British Columbia to have the CPC and the work they do. I think the member would concur. So no, there's no bias.

J. Horgan: I'd like to continue on, following up on the member for Kootenay West. The minister said in his response that it was the responsible move. Yet last week we were talking about the B.C. Transmission Corporation and potential expenditures of hundreds of millions of dollars for a transmission line that may not go anywhere in the northwest. That was going ahead, come hell or high water.

We have a public utility that has a demonstrable record of success at Keenleyside and at Brilliant — that's provided employment, that's provided electricity and that's provided social and other economic benefits to the region — yet it's not prudent to move forward.

That brings me back to the management of the corporation. The minister will know that the previous CEO had a rocky tenure. I believe it was two or maybe three years at the helm with the benevolent leadership of the chair of the board.

If this was a facility that was viable just in our recent past — a managed river in an area that embraces hydroelectric development…. With government guarantees backstopping debt, revenues from the downstream benefits, how is it possible that they screwed this up?

[1110]

The Chair: Member for Juan de Fuca.

J. Horgan: Hon. Chair, upon your recommendation, I will certainly withdraw the reference that I made that was unparliamentary and perhaps insert, instead, "botched" or "mismanaged."

The Chair: Thank you very much, Member.

Hon. B. Lekstrom: We'll canvass this again. I know that I have spoken about this before. I'm not sure; maybe I wasn't clear enough.

This is not a cost-effective project in its present form. I am hopeful — as I'm sure the member opposite is — that as they work through this and look to redefine that project or rescope it, it will become a cost-effective project.

One of the reasons, when we look at what has taken it out of that cost-effective realm that we're talking about — and I know the member is seeking clarification — is that from the time the EA was approved on this project in 2007 to when the bids came in, in the spring of 2009, costs increased over a hundred million dollars.

The CPC is also working today with other partners, and we're hopeful, as the members are across and the previous member that was asking questions, that a project can move ahead for the benefit of the people of the region, through economic development for the people, and for the benefit of British Columbians, when we look at secure, firm, reliable, clean energy for British Columbians.

As it was presently prescribed in the original Waneta expansion, it just was not a cost-effective project in today's world.

J. Horgan: Can the minister advise us what private partners CPC and CBT are currently engaged with?

Hon. B. Lekstrom: CPC and CBT, as you said…. CPC would be in discussions presently with Fortis.
[ Page 2860 ]

J. Horgan: For those unaware, Fortis is a private sector utility that used to be called West Kootenay Power. Unlike most of British Columbia, it distributes electricity to the South Okanagan and some portions of the West Kootenay.

My question, then, to the minister. Although Fortis certainly brings expertise in generation…. It brings expertise in distribution and has a management team that is focused totally on electricity. Would they be coming to the table with cash? Would they be coming to the table with a better credit rating? I rather doubt it. What is Fortis bringing to the table that we don't already have either in government or in collaboration between B.C. Hydro and Columbia Power Corporation?

[1115]

Hon. B. Lekstrom: These discussions are ongoing. What they would bring to the table…. They're looking at all options right now. As we said, we are hoping that CPC, through its discussions with Fortis, as we're talking about here today…. Should that prove to have a positive end result, it would be to the benefit of all.

I mean, at the end of the day, these discussions are ongoing. We're hopeful. I'm an optimist, as I'm sure the member is, that an agreement can be reached that would take a project that in its existing format is not cost-effective to do and move a project forward — whether it has to be rescoped or whatever they're going to look at to achieve that and make sure it is cost-effective to move forward. That would benefit, as the previous member had asked — a number of economic benefits to the region — through jobs for the families that are there, benefits to the ratepayers, benefits to people that need electricity.

There are a number of issues being worked on. Again, as an optimist, I'm going to remain confident on this that an agreement of some form will be reached, with a cost-effective alternative to the existing Waneta expansion proposal as it was presented.

J. Horgan: I'm pleased that the minister is optimistic. I know that to be the case, and I'm hopeful that we can get to a place where the Waneta expansion will proceed for all of the benefits that we've inventoried this morning.

In our questioning of the minister, the answers keep coming back that it's not cost-effective. The only tangible rationale that was given was financing. That's the only word I've heard that would fill in the blanks of "I can't tell you what's going on; it's not cost-effective."

If I take that one thread that the minister has provided to the House — that the financing was a problem — I'm wondering how Fortis is going to possibly help in that regard. If there are other issues beyond financing…. If, as I've been trying to do for 40 minutes now…. If the minister could inventory those, as we always do on this side of the House, perhaps we could offer some solutions for the minister to contemplate.

Hon. B. Lekstrom: Through to the member: as he looked at the clock and said that for the last 40 minutes he'd been trying, I thought that for the last 40 minutes I'd been giving the answer that there were a number of factors. Financing costs are different. Construction costs are different today.

As I said, from the time the EA was put out and they achieved their environmental assessment in 2007 to when the bid came in, in the spring of 2009, there was an increase of over $100 million for this project.

So those come forward, but I'm sure the member wouldn't want me to disclose something — the discussions that are ongoing with CPC and trying to make this project viable…. I'm pretty sure the member would concur that the last thing we want to do in this Legislature is put that in jeopardy in trying to secure a deal that could move forward with CPC and benefit the people of the region and all the residents of this province.

J. Horgan: I concur with the minister. I regretted very much last week, while we were doing our estimates, when I provided the opportunity for the minister to say that even if he didn't have a private partner, he was going to proceed with Highway 37, which probably significantly compromised those negotiations. That's not my intent.

[1120]

I'll move on reluctantly. I was hopeful that the minister would see the wisdom of our position and, rather than await some pixie dust from somewhere to change the balance between public and private focus by this government…. The overemphasis on the private sector is one of the profound differences that we have — the minister and I, on a personal level, as well as these two sides of the House.

I will leave Columbia Power for the time being. The minister assured me he would get back to me with the information that has not yet come forward through the Freedom of Information and Privacy Act from the entity that I requested it from.

I'll now move on to the announcement last week of the appointment of the Green Energy Advisory Task Force. There are four subgroups. I'm wondering if the minister can advise what the time frame is for these panels, when they will begin and when they will end, and if he could also advise what the cost of these panels will be and who will be paying it.

Hon. B. Lekstrom: I know we have shifted gears here. We're speaking now about the Green Energy Advisory Task Force, but the member did close by talking about the difference between public and private power. I do want to reiterate that we're committed to public owner-
[ Page 2861 ]
ship of B.C. Hydro — so committed, in fact, that our government enshrined it in the B.C. Hydro Public Power Legacy and Heritage Contract Act.

I don't want to leave the impression that there is anything else in our minds. This is an incredible Crown corporation, B.C. Hydro. I know the member would agree. I think it will be for a long, long time. I can tell you that we have every intent to maintain this in public ownership. The people of British Columbia should be extremely proud of that asset.

Now, going to the question at hand. Under the Green Energy Advisory Task Force, the work will begin immediately. We expect the committee to report out by the end of January. The members that have agreed to serve on this committee have agreed to serve without compensation. There will be, of course, travel costs and so on, but no compensation will be paid to any of the members on this committee.

J. Horgan: In the materials that were provided to the public at the appointment of these individuals, the secretariat support is to come from the Ministry of Energy, Mines and Petroleum Resources; Ministry of Environment; B.C. Hydro; and B.C. Transmission Corporation.

[1125]

Can the minister advise the committee how many staff from these organizations will be devoted over the next eight weeks — minus, I'm sure, a day or two at Christmas — to do this herculean task?

Hon. B. Lekstrom: For each of the four working groups, we'll have a secretariat support. There is one overall coordinator for the task force, as well as resource staff, should they need it. We would have to utilize them at that time based on the work that is brought forward.

J. Horgan: I'd certainly like to know who the coordinator is. I will also say that I would expect they would need a little bit of research, having read the terms of reference, which are broad and numerous. I mean, there's a lot of stuff here and a lot of work to do.

I would suspect that all of government has been devoted to many of these things for a considerable period of time, and how these wonderful folks that have been appointed to spend their Christmas coalescing and gathering to answer some of the riddles of our time…. I think it's grand.

I suspect there will be some research involved in that, and I'm wondering if the minister could advise: will that be predominantly done by his ministry or someone else — and the coordinator's name?

Hon. B. Lekstrom: The overall coordinator is a member of the Ministry of Energy, Mines and Petroleum Resources, Miss Katherine Rowe.

The research will be done, I think, through really a cross-section. It will be based on the climate action secretariat; Energy, Mines and Petroleum Resources; B.C. Hydro; B.C. Transmission Corp.

Based on what comes from these subgroups that are working on this and the questions that they would have, we'll determine what research will have to be done and brought back.

[1130]

J. Horgan: I've just been discussing with my colleague from Saanich South the inventory of issues that are going to be canvassed over the eight weeks, excluding Christmas and Boxing Day, and perhaps New Year's Day, as we go forward anxiously and aggressively into the next eight weeks.

In that inventory of questions, what's missing, hon. Speaker? Maybe it's implied, and the minister can help me out here, because it's my view that you don't have to sell something to give it away. The systematic bringing on of independent power projects that are taxing the value of our reservoir system to benefit shareholders rather than to benefit ratepayers is the beginning of the thin edge of the wedge, in my opinion.

You can put in legislation all you want. You know this full well. Rhetoric is rhetoric. Reality is that the value of our system is eroded every time we subsidize an independent power project by allowing them access to public facilities, whether it be the system operator, whether it be the reservoir.

The question that I would have preferred to see put to the task force would be: how can we maximize the value and benefit of our public system — whether it be our transmission system, our reservoir system, our distribution system — to meet the interests of British Columbians? I don't see that anywhere explicitly in the terms of reference. Perhaps it's implied.

For me, the value of our public utility is the reservoirs. It's undisputable. Everyone recognizes that. If we have to manage those reservoirs in the interest of the private sector, we're not managing them in the interest of the ratepayer or of the Crown, who receives dividends as a result of our good management of that system.

Of all the questions that are inventoried here — how we prepare for climate change…. An important question, and I'm sure the capable people that have been appointed will have the answers by the end of January to that question. But what, instead, are we going to do to ensure that our reservoirs are there for the benefit of all British Columbians, not just private power players who want to get into the market to sell south of the border?

Hon. B. Lekstrom: I would hope and believe that he wasn't referring to our estimates when he talked about the rhetoric that may be exchanged. I think we've had a
[ Page 2862 ]
good dialogue, and I make every effort to give the answers to the questions that the member raises.

The other one I do want to point out before I go into the meat of the question was: we don't subsidize independent power producers. I mean, that was a comment made by the member. I want to assure the people of the province of British Columbia and the people in this chamber today that that doesn't take place, but B.C. Hydro does manage their reservoirs right now in the best interest of their ratepayers, of all British Columbians.

But as we look forward…. That's what this Green Energy Advisory Task Force and the subgroups are doing. The resource works well for us now. Our first priority, and I will reiterate that, is to become electricity self-sufficient again in British Columbia, something we're not today. We are a net importer of roughly 12 percent of our electricity needs in British Columbia. We are going to ensure that we meet our own demand here in British Columbia through the diverse opportunities we have with clean renewables.

As well, when you look at the green energy task force, and I believe the member will get there on this…. I believe, and have for a long time, that this resource can do so much more. It can do more than just meet our own domestic demands, and I know the work that this committee is doing is going to look at that. How can it benefit not only the ratepayer but the taxpayer of British Columbia? We are a resource-rich province across a wide variety of resources.

[1135]

Electrical generation is another resource that, although we've exported power for roughly 30 years in this province, has been a net benefit to the ratepayers of British Columbia, to the taxpayers. I believe this resource can do a great deal more for British Columbians as well. This has been something I've heard, not so much from the member but from others — that there's a thought to buy high and sell low. That is not the case.

We have a resource here that can work tremendously well for all British Columbians and maintain our competitive advantage. Traditionally we're between second- and fourth-lowest electricity rates in North America. That is a competitive advantage for us, and we're going to maintain that.

J. Horgan: Well, I do say that we buy high and sell low. I'll put that on the record so the minister knows.

Hon. Chair, I don't know if you were here when we began, but the minister and I both offered up to this place and those that pay attention that we would try and do this in a civil manner. I would ask questions that were thoughtful and incisive, and the minister would give answers that were not circuitous and leading us down a rabbit hole. He's kept his part of the bargain; I'm not so certain I've done mine.

I do want to focus in quite seriously. I need the minister to come to terms with this issue. It strikes me that this group was assembled…. I know many, many names on here. Tim Newton is an outstanding individual, beyond reproach. I'm delighted that he's participating in this process.

But we've had a series of events, a series of potentially unfortunate circumstances that have led us to the creation of this task force. They all seem to me and others on this side of the House and other people in the general public who follow these issues…. We're not small in number, although the minister suggested that on Public Eye Online the other day.

There are a lot of people that are very concerned about this issue — very concerned about the erosion of the value of our public asset by a fixation on accelerating our privatization process, which is to bring on more private players so that they are, at the end of the day, using B.C. Hydro and our reservoirs as a clearinghouse for private power.

Our objective, as the minister has articulated — and he has been fairly steady to that since we began — is that we are to try to the best of our ability to become energy self-sufficient. We can get into the argument about high water years and low water years. We can talk about whether it's economic to import at certain times of the day and export at other times of the day.

I know the minister's staff are erudite and would be able to answer those questions, but we'll still be going around and around the corner. We are in a privileged position. The minister has acknowledged that.

My concern, our concern, the general public's concern is that this elaborate process that's been set up is designed not to strengthen B.C. Hydro but to diminish it and allow less-fettered access to our reservoirs and our public infrastructure.

So can the minister assure British Columbians that his primary focus is protecting our reservoirs and ensuring that we are not cross-subsidizing by providing storage at times when IPPs need it instead of when British Columbians need it?

[1140]

Hon. B. Lekstrom: Let me start by assuring not only the member but all British Columbians that our first priorities are British Columbians and the electricity self-sufficiency that we committed to by 2016. We are committed to that. I'm sure I would share the member's view that this is an incredible province, blessed with a diversity of natural resources. When it comes to electrical generation, our clean, renewable opportunities in this province, I believe, are second to none — anywhere on the planet.

There are opportunities in other areas of the world, which may share one or two, whether it be wind or geothermal. But we're blessed with a diversity of all opportunities there.
[ Page 2863 ]

As well, you mention that there is a concern out there about the erosion of a public asset, being B.C. Hydro. I don't know how much clearer I can be.

First and foremost, I'm a proud British Columbian. I can tell you as the Minister of Energy, Mines and Petroleum Resources and responsible for the Crown corporation B.C. Hydro, that if it isn't the best, I would hazard to say that it is certainly near the top of the best Crown corporations in North America. The others would be other Crowns that British Columbia has. It has done a tremendous job for us. So there is no thought or worry that the public of British Columbia should have.

I guess what I would say is that there has been a great deal of misinformation put out there. I'm not talking about the member opposite but from organizations I've seen, talking about: "Hands off public power." It's unfortunate that the reality is that they weren't using factual information, at least from my perspective.

As well, the issue of private power providers in this province is not something new. I think it sometimes comes as a surprise with some of the dialogue that takes place in the province, particularly even during the last election, about independent power producers.

I believe that the first one in British Columbia was in 1988 under the Social Credit government. I think there were — and I know we've mentioned this before, Member — 17 projects approved by the previous New Democrats in the 1990s. I think they evaluated those and thought they were in the best interests of British Columbians.

We're carrying forward with that. We think that the opportunity in this new world in which we live — where people are trying to reduce greenhouse gas emissions, clean up our environment — and the ability we have to not only meet our own demands but help others reduce the impact they have on the environment and create a brighter future for themselves, their children and future generations is a resource opportunity that's going to be welcome for British Columbians and be a significant benefit for us.

J. Horgan: I want the minister to understand that I was involved in the IPP discussions in the 1990s. This is kind of the cleansing period we have. When government members make reference to the 1990s, they usually do it in the negative. In the past couple of weeks, it's all to the positive. The NDP started the IPP rush. The NDP introduced the Freedom of Information and Privacy Act.

The NDP apparently did a lot of good things in the 1990s — just while I have the opportunity to get that on the record. I'm not getting applause from the other side, but it's certainly permeating the language in question period. So I'm sure we'll hear again today about regulatory processes and regimes that were put in place a decade ago that still hold firm and that benefit all British Columbians.

With respect to the development of independent power, at the time in the 1990s these were small, modest proposals designed for local generation to meet local needs. There's been a shift. The minister will acknowledge that. The advisory committees are designed and being directed to find ways to generate more power than we need so that we can export it to other jurisdictions, the theory being that we'll displace other generation sources that are more noxious. That's the theory.

In theory, I don't have a problem with that. However, conservation used to be the mantra, and conservation should be the highest priority. It's referenced in the terms of reference, but if we are going to be providing abundant green energy to other jurisdictions, what is their motivation to conserve — other than price points? If we are generating electricity at a price that's above the market rates, what's their motivation to buy that?

[1145]

The green premium that we often hear about from PG&E and from potential California purchasers, and even the Governator — who, by the way, owes us 300 million bucks…. I'd be interested to get an update on when we're going to send down the Ministry of Finance to collect that debt. But perhaps we'll leave that for another day — not part of his responsibility.

The thrust of the question is that we want, first and foremost, to protect our assets, those being our reservoirs and hydro-generating facilities. Second in line, I thought, was conservation. So where does that fit in the stack here? At what cost are we going to be producing independent power? Is there a point where we're going to say that it's too expensive, and let's instead refocus and redouble our efforts on conservation?

Hon. B. Lekstrom: It was interesting. I mean, I know that we'll digress a bit. The IPP issue apparently is not whether to have IPPs anymore, but rather the size of them. We can enter into that discussion at another time, I'm sure.

We all actually have a responsibility. The question you asked about how we ensure…. Last year under the Utilities Commission Act, this government brought in and actually indicated that utilities have to look to demand-side measures first before new supply is brought on. We made a commitment in our drive to be electricity self-sufficient by 2016 that 50 percent of all new supply would come through conservation.

I'm happy to say — and I believe the member knows this — we are actually well ahead of that at 73 percent today in British Columbia. That comes as a result of numerous programs that were initiated. Really, a thank-you goes out to not only the residents but industry and our commercial sector in British Columbia for the innovation they've brought forward as well.

I think everybody realizes that as we move forward in today's world, everything we can do is going to help us.
[ Page 2864 ]
It's going to help us today. It's going to help our children in the future. There are things we do today that you and I, Member — although we're not that old, and I don't want to think that we are…. We may not reap those benefits, but we can rest assured that our children and grandchildren will.

That responsibility is something I know that both sides of the House share. That is to ensure that what we do with our resources is done in a responsible manner that benefits the people we represent in British Columbia and that ensures that our environment is looked after for future generations.

J. Horgan: We've been so good at avoiding flights of rhetorical fancy, so I won't go after IPPs now. They certainly know my position. They haven't sent me a Christmas card in years. I won't belabour that.

When the B.C. Hydro long-term acquisition plan was sent back for revisions — I guess that would be a generous way to say it — by the Utilities Commission this summer, the main focus for opponents of IPPs was…. This was the Utilities Commission saying: "You don't need this power; go back to the drawing board."

[1150]

For proponents it was, "Well, we've got to do away with Burrard Thermal," which apparently is going to be phased out, but its operations will remain unchanged. It will stay where it's at. It will continue to be there as a backyard generator for the Lower Mainland, and that's all to the good.

The point I want to get to…. And I hope the minister will resist the opportunity to talk about Burrard Thermal again. I shouldn't have done that myself; I apologize.

In the findings of the commission this summer, they pointed to Hydro's long-term expenditures on conservation and found them wanting in the latter years. Although I am delighted to see that we're making progress today, the commission suggested that we might not be making that same progress as we get closer to 2020 — when we're wanting to reduce our emissions, when we're wanting to demonstrate that we are maximizing our expenditures and our emphasis on conservation.

Can the minister just comment on that as we get closer to wrapping up?

Hon. B. Lekstrom: I won't take a great deal of time, but Burrard, that issue…. I just want to make sure that we're clear. It is there for emergency backup for the Lower Mainland load centre, and that's all I'll say. It isn't going to be used in the planning purposes as we move forward, and the member, rest assured, will get his Christmas card from me again this year. I can assure the member.

The issue under the LTAP that you refer to. They did approve the $631 million of the $633 million ask. Of that, $418 million, an unprecedented level, was approved for demand-side management issues on that. We certainly are encouraged.

If Hydro can go farther than that, we would welcome that. But I do go back to the legislation that I referenced in my previous comments about our commitment to that. We actually even brought it in under the Utilities Commission Act. When it comes to conservation, I think all of us have a role to play in that.

I thank all British Columbians for paying attention to that and doing the small things. There are many times that people think that it's only the large consumer, only the industrial customer that can make a difference.

I think the member would concur that each and every one of us can make a difference in our day-to-day lives by just simply paying attention to what we do — turning off lights, unplugging electronics that we aren't using. There are numerous other ways to do it. I think we've come a long way as a province, and the people of this province should be proud of what they've accomplished so far.

J. Horgan: Hon. Chair, I think we've come to the end. I have many, many more questions. I know that I have access to the minister at any time. I appreciate that.

Although we have profound differences on electricity policy and have profound differences on pipelines, on tankers, on tar sands and a whole host of other issues that are very significant and important to the people of British Columbia, I want to thank the minister for his candour. I want to thank his staff very much for all the work I know they did in preparation for these estimates.

With that, hon. Chair, I want to thank you for your benevolence and kindness over the past session. Hopefully, you'll extend that into the new year.

Vote 24: ministry operations, $67,793,000 — approved.

[1155]

Hon. B. Lekstrom: Member, just before I move Vote 25, as well, I want to express my thanks to my critic across the way and the others who asked questions. I think this is a great opportunity for not only the members of this Legislative Assembly but for the viewing public to hear about the issues, to have questions raised and answers given on the many — in my case, with Energy and Mines — diverse areas that we cover.

As the member said, we have approached this in a way that, as questions were asked, answers would be put forward, and I do want to thank the member. I think that we have raised the bar, Member, to this point.

At this time, I will also, before moving this vote, thank my staff for the work that they have done, as the member indicated. Our jobs, we think, are difficult on occasion. I think our staff have equally difficult jobs in trying to do the work that we require — each and every one of us that are elected as well as the people from British Columbia.
[ Page 2865 ]

Vote 25: contracts and funding arrangements, $1,875,000 — approved.

Hon. B. Lekstrom: At this time, I would move the committee rise, report completion of the estimates of the Ministry of Energy, Mines and Petroleum Resources.

Motion approved.

The committee rose at 11:57 a.m.

The House resumed; Mr. Speaker in the chair.

Committee of Supply (Section B), having reported resolutions, was granted leave to sit again.

Committee of Supply (Section A), having reported resolutions, was granted leave to sit again.

Hon. B. Bennett moved adjournment of the House.

Motion approved.

Mr. Speaker: This House stands adjourned until 1:30 this afternoon.

The House adjourned at 11:58 a.m.

PROCEEDINGS IN THE
DOUGLAS FIR ROOM

Committee of Supply

ESTIMATES: MINISTRY OF
PUBLIC SAFETY AND SOLICITOR GENERAL

(continued)

The House in Committee of Supply (Section A); H. Bloy in the chair.

The committee met at 10:07 a.m.

On Vote 38: ministry operations, $625,431,000 (continued).

The Chair: Before we start I want to remind everyone in the gallery that there's no use of BlackBerrys, Palms or cellular phones. At no time in this House is there ever to be any voice communications. For the ministers and the support staff in the area, they're allowed to use BlackBerrys to provide information.

We are in Committee A, the Douglas Fir Room, and we're hearing the budget estimates for the Ministry of Public Safety and Solicitor General.

I'll call upon the minister to make an opening statement.

Hon. K. Heed: Last week during the debates I committed to provide the opposition critic with information about the integrated child exploitation team and the integrated sexual predator observation team as well as some statistics around gang crime. I would like to provide him with that information now.

The B.C. ICE team is responsible for coordinating and investigating Internet-based exploitation of children. The team was created in 2003 to address the growing demand for child pornography investigations, culminating from the dramatic increase in this crime via the Internet. Its mandate is to investigate individuals involved in Internet child pornography and the luring of children on the Internet, and to promote youth and public awareness in relation to Internet safety and child exploitation.

ICE is one of the two integrated cybercrime units. The other one is ITCU, known as the integrated technological crime unit. ICE and the ITCU work to identify and assist child victims of sexual abuse and target those responsible for the abuse, and to recommend appropriate criminal charges for assaults, creation and distribution of images.

[1010]

ICE and ITCU work as operational support units for law enforcement agencies within B.C. and have a need for investigational support. They offer subject-matter expertise to local police about Internet-based, child-exploitation-related crimes and the offenders who perpetrate those crimes.

When ICE was initially created, it only had two members. As of November 2009, ICE has ten full-time dedicated members and one temporary civilian employee, for a total of 11. ICE is currently fully staffed.

ITCU authorized strength is 20, which includes ten provincial RCMP and ten federal RCMP members working. As of September 30 there were a total of 18 working, including nine provincial and nine federal positions. There are two vacancies in that particular unit at this time.

ISPOT, known as the integrated sexual predator observation team, was created in 2005 to monitor sexual predators and reduce the risk of sexual assaults and other crimes. The unit's mandate is to conduct proactive enforcement, investigation and surveillance on identified high-risk sexual predators throughout the province. ISPOT is a strategically focused, intelligence-led operational group capable of collecting information, creating intelligence, assessing strategic targets, implementing operational plans and evaluating the results of operations focused on sexual predators.

When ISPOT was announced in 2005, we indicated it would have 19 positions. Currently ISPOT has 18 positions staffed — 16 provincial positions and two Vancouver police department positions. As of last week 13 staff are working on the team, which includes 11 RCMP provincial positions and the two VPD positions.
[ Page 2866 ]

Further, last week a member of the opposition raised questions about the interministry restorative justice committee. I'd like to provide the information requested to the member today.

The interministry restorative justice committee was initiated in early 2009 by the Criminal Justice Reform Secretariat. The committee is co-chaired by the Criminal Justice Reform Secretariat and the victim services and crime prevention division. The committee is a partnership of between the Ministries of Public Safety and Solicitor General, Attorney General, Children and Family Development under youth justice, and Environment.

The primary purpose of the committee is to foster a sense of community within government among key staff working in areas related to restorative justice. As such, committee membership does not extend outside government. The committee does include a community liaison from my ministry to facilitate community input into the committee's work.

A review of the funding delivery model is outside the mandate of the committee. However, such a review may be undertaken by the victim services and crime prevention division.

On organized crime or gang crime. Based on the latest information we have from the RCMP, there are 133 organized crime groups and/or gangs operating in our province. There are nearly 800 organized crime and gang members that are represented in these groups. Over 30 street gangs, which bear the hallmarks of having some longevity in criminal activity, have been identified and comprise an additional 200 to 300 members and associates.

M. Farnworth: I thank the minister for that information. I wish question period was so forthcoming with answers.

A Voice: Be nice.

M. Farnworth: I am being nice. It was a compliment.

In the time that we've got available to us today, there are a few areas that I'd like to explore with the minister. There will be members who have additional questions on some of the areas that we're covering today and probably some general questions that may involve areas that we haven't or that we dealt with last week. If the staff are not here, then we can get the questions and the information to them. That will be great as well. That won't be a problem.

[1015]

I'd like to start with ICBC. That's a significant part of the minister's portfolio. It would also be helpful if the minister could for the record introduce his staff as well.

Hon. K. Heed: We have David Morhart, Deputy Solicitor General; Wes Shoemaker, Deputy Minister from Public Safety; Ted Stevens; and I think Tara, part of management services branch, just joined us. We have Anwar Chaudhry, a comptroller for ICBC, and Cindy Brown, vice-president of communications for ICBC.

M. Farnworth: I guess, the first issue around ICBC that I'd like to talk about is the issue that involved the repair centre in Burnaby and the issue about the vehicles that were being auctioned or sold when they really should not have been. Since that whole issue broke, what has happened in terms of any ongoing investigation? What has happened in terms of changes in policy at ICBC? What is the status of the situation regarding that series of events?

[1020]

Hon. K. Heed: In response to this matter, several processes were put in place. One was ICBC utilizing PricewaterhouseCoopers to conduct an internal review and to do their part of the investigation. They actually responded with a report that was made public.

This report had several recommendations with respect to ICBC's policies, procedures, employee training, system access, internal reviews. ICBC has subsequently implemented all of those recommendations. As a matter of fact, ICBC has even gone further to ensure that they have procedures and policies in place around claims, etc.

There is still an ongoing RCMP investigation with respect to this matter.

M. Farnworth: A couple questions. What changes over and above the recommendations have taken place? Can the minister outline what those changes are?

[1025-1030]

Hon. K. Heed: The additional processes include reviewing ICBC's policies and procedures and controls over the ICBC claims with claimants and the service providers. This includes reviewing all appropriate controls through the entire claims process. When they identify areas where they could have more controls in place, they move forward on implementing those particular controls.

M. Farnworth: I just want to clarify. Is that an ongoing review, or is the review done? If it's an ongoing review, when are you expecting to have it completed?

Hon. K. Heed: This is an ongoing review in anticipation of being completed in six months.

M. Farnworth: The PwC, PricewaterhouseCoopers, report stated that those in the line of authority who allowed the system of vehicle purchase to develop and continue are no longer with the company. I think every-
[ Page 2867 ]
one would agree that that is appropriate. But did the investigation go beyond that — the internal investigation? I'm not talking about the RCMP investigation, because clearly that's still ongoing.

But in terms of the internal investigation, did that look at those individuals outside the line of authority who were involved or supported and benefited from the activities that were taking place?

[1035]

Hon. K. Heed: ICBC looked at each individual involved and applied appropriate sanctions. Anyone involved…. They were reviewed. The cases were reviewed, and appropriate action was taken.

M. Farnworth: I understand the issue around personnel and privacy issues, so I'm not going to ask for any of these. But can the minister give an approximate number of individuals who were disciplined or sanctioned in this affair — those outside the direct line of authority?

Hon. K. Heed: There were approximately nine individuals, and the range of discipline went from a written reprimand on their file right up to dismissal.

M. Farnworth: I'm going to move away from that, because we don't have a lot of time.

I'd like to go on to some other areas of ICBC, particularly around the traffic safety area. I'd be interested in, if the minister could outline: have there been any reductions or staffing reductions in the area of the traffic safety components of ICBC, and in particular, if so, what are they?

[1040]

Hon. K. Heed: As far as traffic safety–related people that are involved in it, there have been no reductions.

M. Farnworth: So on the capital side of things in terms of products, ICBC is looking at continuing, for example, intersection and road improvement areas. Is there going to be an increase in work on that, or will it be continuing at the same level as in previous years?

[1045]

Hon. K. Heed: Capital investment is going up in order to ensure that we have road improvements and road safety programs here in B.C.

M. Farnworth: Can the minister tell me where those improvements are going to take place and when they're going to take place? Is there a list of approved projects?

Hon. K. Heed: With reference to the road safety cameras, ICBC is using strategic data to determine where they should proceed with installing these particular cameras. The installation will start in January of 2010, and we hope to have all of them installed by the end of 2010.

M. Farnworth: How many are we looking at being installed?

[1050]

Hon. K. Heed: Currently we have 120 sites that are operational. We have 30 cameras that are rotated between these 120 sites. We will be moving to 140 sites, and we will have cameras in every one of those 140 sites by the end of 2010.

M. Farnworth: My colleague has a few questions relating to ICBC, so he's going to ask those questions at the current time.

H. Bains: I have some questions about express shops related to ICBC. I just want to say at the outset that express shops are a wonderful idea, actually. Most of them do a fine job. You can take your damaged vehicle, and they do the estimate and get your repair done there. So it's very convenient. But there are some cases that have been brought to our attention and to ICBC's attention that are of concern to the folks who use ICBC or who are involved in the accident.

My first question would be: how many cases actually go through the express shops compared to going through the ICBC centres?

Hon. K. Heed: There are approximately 430 express shops in British Columbia, and we have over 900 shops in total in British Columbia. The express shops write approximately 20 percent of the claims.

H. Bains: Are there automatic or regular audits done to compare whether the estimates done in the express shop coincide and actually match what the ICBC estimate would have been for the same damage?

[1055]

Hon. K. Heed: There are ongoing quality audits done at all express shops — as a matter of fact, at all of the shops we have. For example, with just express shops, in 2008 ICBC made 13,000 visits to ensure quality control and to complete quality audits.

H. Bains: My question was more specific. Are there regular audits being conducted to make sure…? Are there random audits — perhaps that's the right word — where the ICBC estimator will go into a shop to compare whether the estimate done on a particular vehicle is the one that should have been the right one?

The reason I say this is that there are some complaints, especially during the time when individuals, because of
[ Page 2868 ]
the small damage to the vehicle, wish to pay out of their own pocket rather than going through ICBC, to save the premium increase. That's when they actually catch up — if the individual believes that the damage that the express shop has written up shouldn't be as much, because the damage was much lower. That's when they complain to ICBC.

There are cases where ICBC will go and check that particular vehicle and find out that the estimate done by the express shop is much, much higher. In some cases they get it corrected; in other cases they do not. So in order to deal with that problem in the system, whether….

What had happened was that not only was the amount higher, but it was additional damage added on that was totally unrelated to that particular accident. That's when the individual would say: "Look, why would I be paying for damages that are not caused by this accident? I'm not responsible."

Are there any regular audits done to make sure that that kind of practice does not exist, so that we, overall as ICBC clients, don't end up paying a higher cost to run the ICBC?

[1100]

Hon. K. Heed: Visits are done on a random basis but on a regular basis. So far this year we've done 121 regular audits. When issues are brought forward, they are reviewed. If required, a full audit is done on that particular shop.

Now, I just want to explain the process. When one of these express shops does an estimate, they send the estimate and photographs of the damage electronically to an ICBC claim centre. That is reviewed by staff at the claim centre almost immediately, and they get back to the express shop that did the estimate within an hour. The review is to ensure that it's an accurate estimate that is done.

Now, in some of the comparisons and research that has been done or data that has been collected, on average, the costs of an estimate is the same from these express centres as done by ICBC for the repairs of vehicles.

H. Bains: The minister said 120 audits were done. First of all, on the picture, if you talk to the estimators at the ICBC centres, they'll tell you. I mean, no one wants to come out because of obvious reasons, but they'll tell you that the picture quality from some of these express shops and from the distance that they are taken…. There's no way that they can actually determine what the real damage is to the vehicle and whether the damage that is listed on that estimate is related to that accident, based on the pictures. There's that problem. They'll tell you if you ask them.

[1105]

That's one issue. The other issue is that out of these 120 audits that have been conducted…. My information, based on one of the media stories that came out as a result of some of the cases that I'm going to mention to you later, is that 82 percent of these individual audits done failed. Failed means that the estimate that was done by some of these express shops was higher or they added additional damage that was unrelated to the accident itself.

My question to the minister is: are those numbers correct as far as the failure rate is concerned?

[1110]

Hon. K. Heed: As far as picture quality, if the person that's reviewing the picture at the claim centre, the estimator, is not pleased with the quality of picture he or she may have, they can certainly follow up with respect to that.

I'm unsure as to what media story the member is referring to. In the statistics I have at hand, 2009, the random visits to express shops, which are approximately 12,000 visits, found errors for various reasons — whether it's picture quality, administrative errors or others — resulting in only 200 of those particular cases. That's approximately 1½ percent. What ICBC has done with those is made sure that they're coaching the individuals through, whether it's related to their administrative practices, their picture quality or their judgment.

H. Bains: If you go by those numbers, I think the percent is much higher than the 1.2 percent you suggest, I would say. Because of the time constraint that we have, I'm not going to go too deep into this issue. It's quite extensive, and we will deal with it at some other time. I want to talk about a couple of specific cases, similar cases as I have talked about.

One was resolved to the satisfaction of this one person. He was involved in a rear-ender. Both drivers came out, and both agreed that there was no damage. Later on he received a bill of $2,000 for the damage caused by this accident. When he complained, ICBC first kind of resisted looking into it. But then ICBC finally did the audit and agreed that there shouldn't have been any damage paid on this vehicle. They said that they actually corrected it. Nobody said how, but it was corrected so that ICBC recovered, perhaps, the money that was already paid to the other side.

But in this particular case, the second case that was brought to me, this woman was involved in an accident where they kind of sideswiped each other. There was damage caused to her side-view mirror and damage caused to the other truck. The truck went to the express shop. When she asked if, because of the smaller amount of damage on her car and because her car was fairly old, she could do her own repair and pay for the damage on the other vehicle, she was told that it was $3,100. When she complained to ICBC that there was no way there could be $3,100 damage caused by that accident, ICBC did the review, came back.

[1115]
[ Page 2869 ]

I was able to speak to this estimator. This was brought out. A name was mentioned, so I talked to the supervisor, talked to that person. He said: "I did the estimate, and I corrected it to $1,800." According to him, it was $1,800 because of giving benefit of the doubt to a few of the damages that were added, that should not have been added. The original damage actually added damage to the rear licence plate area, the bumper. It had nothing to do with the accident. He corrected the $1,800 based on the benefit of the doubt.

Then he did a third one to see what the real cost to this individual should be arising out of this accident, and he came back with $825. Now, we went every which way we could to speak to the ICBC supervisors and their supervisors. There's no explanation why their three estimates existed, and ICBC admit there's one for $1,800. That's ICBC, and that's what they're sticking by.

But $825, which is a written estimate…. A copy of that was given to the customer and to our office, but the ICBC is still not moving to go to that $825, when this estimator has done the estimate. According to that estimator, this is the cost that should go to the person who is involved in the accident.

My issue is this, Minister. Perhaps you could answer this. So $3,100 down to $825, and ICBC insists that you've got to pay $1,800. How do you deal with that situation? This person was willing to pay the damage caused by her during that accident. The estimator said it is $825. They're coming to her with all kinds of excuses why he shouldn't have done the third one, why he's wrong, but that's ICBC's estimator. He insisted that that is the only damage that was caused, during this estimate, and that other damages should not be added on. See what's happening here?

In this particular case, I need to get some guidance from the minister and your office. How do you deal with this situation? We're told: "Go to small claims court." I think there's mediation or some arbitration available, but why does a person have to go through this when ICBC has a written estimate that shows it should be only $825?

Hon. K. Heed: There are processes in place. If the member would like to provide us with particulars with respect to just this one case, we will have staff look at it and get back to him.

H. Bains: I appreciate the offer, and I will provide all of the documentation that has been provided to us. I would appreciate it if the minister looks into this case and helps us out on this.

M. Farnworth: We have a short amount of time available. I've got some of my colleagues with questions. I'd like to ask a question around the coroner's service.

[1120]

There's a lot we could get into, but I'll get specifically to a particular issue that I'm concerned about, and that is the circumstances at which point a coroner's inquest is normally done when a homicide has taken place. If a suspect has been…. If the RCMP investigation has been completed, then it's pretty standard for a coroner's inquest to take place if one is required, and that could take place fairly quickly after the investigation has been complete. Is my assumption correct in that regard?

Hon. K. Heed: Joining me on the left is Norm Leibel, the deputy coroner.

I just want to make, first, a notation. There are actually very few inquests that are done as the result of a homicide.

Now, in answer to the member's question, if there's a homicide…. Generally, if that is an active investigation being conducted by the law enforcement agency, the coroner will step back and work with the individuals but not interfere with that active investigation, which needs to be completed by law enforcement. Now if, in fact, all investigative leads and the law enforcement agency have exhausted it, then the coroner will review that file, and if there's a need for an inquest and it certainly meets the criteria, the decision will be made at that point.

[1125]

M. Farnworth: I understand exactly what the minister is saying. I agree that there are not a lot of inquests taking place, but when they do take place…. I can share information with the minister later. I have a specific case and a set of issues that I'm looking at. So I'm not trying to put the person's and the individual's name up there, but I'm just trying to establish some principles so that there's the ability to look at it and maybe make a decision.

I guess the question, then, is…. The coroner has that ability to conduct an inquest if they feel that all the leads have been exhausted, that basically the active part of the investigation is over. In many cases that's fairly straightforward.

But if the situation is around the questioning of what happened after — how the individual was dealt with, how the crime scene was dealt with, how a whole series of questions related to the death of the individual and what happened at the crime scene and whether or not that had a bearing on the police investigation itself or on how, in fact, the individual ended up dying — and there is no lead, and the case does not close and remains open, how would a coroner's inquest take place in a set of circumstances like that?

The coroner has the ability to decide that there should be a coroner's inquest? There's nothing statutorily preventing an inquest from taking place. That's the question I'd really like to get answered.

[1130]
[ Page 2870 ]

Hon. K. Heed: I think I know which case the member's referring to, and we have to recognize that this is an ongoing police investigation.

In answer to his question, yes, the coroner has the authority to call an inquest at the completion of those parts of the active investigation, whether it's done by one law enforcement agency or some other entity that may be looking at the particular matter.

As a matter of fact, I have the authority to call an inquest at any time also with respect to this. The coroner has the ability to use the information that is garnished from those law enforcement agencies or other entities that are looking into the particular matter.

M. Farnworth: My colleague from Alberni–Pacific Rim has a question around domestic violence.

S. Fraser: Thanks to the minister and his staff for being here today.

Just for expedience here, the issue I'm dealing with specifically is the Westcoast Community Resources Society, and it'll be dealing with the Stopping the Violence work that's now been put, at least in part, under the purview of the Solicitor General.

I'll see if I can give a little tiny bit of history here. There was a change on August 1 this year. That was the effective date of a transfer of four of the programs from the Ministry of Housing and Social Development. The transition house was transferred to B.C. Housing, but the counselling programs that were for women facing violence and abuse and for children witnessing that and the transition housing outreach were put under the Solicitor General's umbrella, if you will.

The concern is that there was a cut announced when this transfer happened, a 2 percent cut. It doesn't sound like much, but it was over halfway through their fiscal year. There is no flexibility in financing here. They're oversubscribed. It would be an understatement. The 2 percent cut amounts to a 4 percent annual cut. That was rescinded. I thank the decision being made.

The concern is when the contract comes up in 2010. So for next year the contracts — for the Stopping the Violence, the women's counsellor; children and witness abuse, the children's counsellor; and the transition house outreach, women's support workers — now resting with the ministry are up for renewal in 2010. Will there be any attempt to renew those cutbacks, which would be a big problem? And is there any thought about going back to an RFP, which would basically halt a lot of the good and essential work that's being done by the centre and the society right now?

[1135]

Hon. K. Heed: There are reasons why government has taken it upon themselves to put many of the programs related to domestic violence under one umbrella under our ministry. That is, in my opinion, based on my experience and my current assignment, a very progressive approach to this problem, so there is a seamless delivery to victims of domestic violence when and where it is required.

Government has to follow processes with respect to procurement, and at times the service provider remains the same when you go through that RFP. There is an overlap put in place so the seamless transition of that program, if there is another service provider providing it, does take place. There's no stopping the delivery of the program.

Our government has made a commitment here that we will not reduce any front-line services and will continue to protect the front-line services with respect to domestic violence in this province.

S. Fraser: Thanks to the minister for that, and I'm happy with his response. The centre, the society, does a huge service for a large area, including the Nuu-chah-nulth communities, and they've got a lot of challenges. Every dime is levered very well, and they have developed local trust, which is essential for first nations and non–first nations women in crisis and the children.

With that in mind, I just want to say one thing, though. Having it all under one umbrella — there is a potential problem here. The transition housing outreach has certainly been put under the one umbrella with the women's counselling and the children-who-have-witnessed-abuse counselling, but the transition housing itself has been hived off to the Ministry of Housing. So there is a bit of a disconnect, although this may still be heading in the right direction.

I just want to make sure the minister is mindful of that, that there is going to be a…. I mean, there's a physical disconnect with how that works now.

I'll be able to return to the society and let them know that you've heard the concerns and that there won't be any cutbacks, that these services will be allowed to continue, hopefully — without any unforeseen things happening.

K. Conroy: Just yesterday in response to the concern about the negative impact of Olympic security issues on airlines, the minister referred to…. They were working with airlines to find solutions. Both the president and the vice-president of Pacific Coastal Airlines would like to know who the ministry is discussing this issue with in their airlines. If the minister would be kind enough to reveal that information.

[1140]

Hon. K. Heed: If I can just respond to the issue with respect to domestic violence programs that was brought up before this member asked this particular question. We have to be very cognizant of the fact that there are
[ Page 2871 ]
processes that these service providers would have to go through. But my commitment, our government's commitment, is not to reduce front-line services with respect to domestic violence.

In relation to the question that was just asked around Olympic security and how it relates to…. Sorry. I just caught the one particular airline service provider, Pacific Coastal. I'll just talk in general, because we're certainly well aware of the amount of effort that has gone out to connect with these people; to engage them in discussion; to ensure that all agencies are working with stakeholders, working with the communities and the local governments that will be affected during the times of the games.

We have to remember that this is the largest security event we've ever experienced here in Canada. We have to realize that the airspace around the events and around Vancouver and Whistler is the most complex airspace of anywhere in North America and the fact that….

The security guidelines that are being led by the federal government are international guidelines with respect to these large international events that take place all over the world. The federal government is actively involved in dealing with this.

I know that the Integrated Security Unit has been actively involved with all airlines that are going to be affected with respect to this. I know CATSA, which is a federal entity, is actively involved, again, with all of the airlines that will be affected.

M. Farnworth: We appreciate all those comments and understand exactly what the minister is saying. But yesterday the minister specifically said that they are working with the airlines, and what we've got back from the airlines, from the president and the owners of the company is that no one has contacted them.

The question is: who has the ministry been talking to at Pacific Coast Airlines? It's certainly not the owner, and it's certainly not the president. That's the situation that we're hearing from other airlines too. They don't know who is being spoken to, because they certainly don't feel they're being spoken to.

[1145-1150]

Hon. K. Heed: Noting the time, hon. Chair.

The discussion with these airlines has been ongoing for quite some time. We're in the process of gathering the exact name of the person that the Integrated Security Unit, which…. The federal government has the lead on this. It's part of ISU, the Integrated Security Unit, who they have actually spoken to from…. You mentioned that one airline, Pacific Coastal Airlines. We are in the process of getting that name. But recognizing the time, we may not have that right now.

K. Conroy: Recognizing the time, thank you for that. There are a number of airlines on the coast. There's Pacific Coastal. There's West Coast. There's Tofino Air. There's KD Air. All have been told that they will not be able to provide services during the Olympics, that the discussions are over, that it's finished. The minister yesterday said that solutions will be found; solutions will be mitigated.

What we would like to know is what those solutions are. How will these airlines be compensated for their losses? There will be considerable losses. There are negative effects. The community of Trail has to shut down their airport. Unlike Saltspring Island, which has had security installed there, Trail will not have security installed. We're talking about a community with winter roads and difficult conditions. So that community is going to suffer.

Not only are the airlines suffering; the communities are suffering. They'll lose the fees that would be coming into the airport. Other airlines are in the same situation. So what we would like from this minister at some point — we know that we're not going to get it now, but at some point — is: what solutions are going to be found for these airlines so they are not detrimentally affected by the Olympics? We're looking forward to those solutions so that these airlines cannot be in a negative position once the Olympics are over.

Hon. K. Heed: I'll make mention that many of these airlines that the member opposite has mentioned have been consulted during the time. They have been consulted. We're attempting to get the exact name of the individuals that were spoken to, but let's recognize the fact that the federal government has the lead on here. They're working with the Integrated Security Unit so that we can deliver the safest and most secure games possible. When you have international events of this nature — when, in fact, you have to put security precautions in place — this is part of doing it.

Vote 38: ministry operations, $625,431,000 — approved.

Vote 39: Emergency Program Act, $20,975,000 — approved.

Hon. K. Heed: Hon. Chair, I move that the committee rise, report resolution and ask leave to sit again.

Motion approved.

The committee rose at 11:54 a.m.

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