Fifth Session, 41st Parliament (2020)
REPORT OF PROCEEDINGS
(HANSARD)
COMMITTEE OF SUPPLY,
SECTION C
Virtual Meeting
Thursday, July 9, 2020
Afternoon Meeting
Issue No. 6
ISSN 2563-352X
The HTML transcript is provided for informational purposes only.
The PDF transcript remains the official digital version.
CONTENTS
| Committee of Supply | |
THURSDAY, JULY 9, 2020
The committee met at 1:38 p.m.
[R. Leonard in the chair.]
Committee of Supply
Proceedings in Section C
ESTIMATES: MINISTRY OF
TRANSPORTATION
AND INFRASTRUCTURE
(continued)
On Vote 43: ministry operations, $928,920,000 (continued).
The Chair: I want to recognize that I’m participating today from the homeland of the Lək̓ʷəŋin̓əŋ-speaking people, today known as the Songhees and Esquimalt Nations. We extend our appreciation to them for the opportunity to undertake the work before us on this land.
We’re meeting today to continue consideration of the estimates of the Ministry of Transportation and Infrastructure.
Minister, I would like to ask if you would like to make a few comments.
Hon. C. Trevena: I’m not going to make any comments because I know time is tight. We only have half an hour left. But I did want to read into the record a response to one of the members who had a question earlier. The member for Cariboo-Chilcotin was asking last week about the investments in gravel roads for the year.
I just wanted to get on the record that program and quantified plan expenditures related to the gravelling of side roads and aggregate production of the coming season is, for Cariboo-Chilcotin, the member’s riding, $1.862 million; and for the neighbouring Cariboo North riding, $2,468,083.
J. Thornthwaite: Before the break, I referred to a letter that I had sent to the minister, dated June 5. I just wanted to reiterate that I would appreciate her sending a response, because I didn’t get, exactly, a clear response verbally. She has got the letter, so she can get that back to me.
My last question. Thank you very much to my colleague the Transportation critic for allowing me one more question. This is pertaining to the Burrard Inlet rapid transit study on the North Shore. The first phase had produced a shortlist of routes, and the next phase will go to a technical feasibility study of the shortlisted routes. When can we expect the results of phase 2?
Hon. C. Trevena: Thank you very much to the member. I appreciate the question. I think we’re very well aware of the congestion on the North Shore. I know that our government has been working hard to work on congestion. MLA Ma helped instigate the INSTPP process and is now on to the Next Step process.
We’re also, obviously, partnering with TransLink and the cities on this study on the Burrard crossing. As the member notes, stage 1 is complete, and we’ve been working on stage 2. Stage 2 was looking at the six options provided by stage 1. The study is complete; it’s just being reviewed at the moment. What will happen next is that it will be put into working with TransLink for their future planning.
M. Hunt: I cede the floor to the member for West Vancouver–Capilano.
R. Sultan: I wish to ask the minister nine questions arising from the government’s decision to cancel the ten-lane bridge across the Fraser River to replace the existing four-lane George Massey Tunnel built in 1956. Chair, in view of the limited time which remains for me to ask these questions, I will, with your permission, simply read them into the record and await a written response at the minister’s pleasure, if that’s okay with you.
This project will improve transportation along the Highway 99 corridor, which, of course, is a vital link in our commercial, tourism and other connections to the United States. The project was announced in September 2012 and was finalized for procurement in October 2016. It specified a ten-lane cable-stayed bridge and also involved upgrades to 30 kilometres of approach highways, replacement and upgrade of five overpasses and provision for a half-billion-dollar investment in mass transit infrastructure which would occupy two of the ten lanes on the bridge.
Engineering services were provided by MMM Group, affiliated with WSP Global, one of the largest engineering and infrastructure groups in the world, with a history tracing all the way back to the building of the New York subway in 1885. Their preliminary capital costs estimate was $3½ billion. It was perhaps a tribute to the reputation of this province that the final bids were awarded at only $2.6 billion, almost $900 million cheaper than the original estimate.
Work commenced virtually right away. However, in September 2017, five months after the last election, the project, which some opponents had unfortunately labelled “Christy’s vanity project,” was cancelled, with a reported write-off of $100 million of work already underway. So the British Columbia taxpayer took a $100 million hit and got nothing in return.
My first question to the minister, to be answered, I hope, in due course. Are these figures which I have cited more or less accurate? You never know in this business.
I would like to read into the record eight other questions.
What was the detailed total of the termination charges on the work to date which was written off and charged to the taxpayers?
Why on earth would the minister seek an opinion from Stan Cowdell — a personal friend of mine, by the way — and his associates at Westmar and COWI as to the advisability of the ten-lane bridge project after the minister made the decision to cancel it, and not before? Isn’t that, in a rather peculiar fashion, putting the cart before the horse, Minister?
Third question. It would seem probable that the minister expected Mr. Cowdell and team to reject the ten-lane bridge option ex post facto — in other words, to provide a cover story for the peculiarity of putting the cart before the horse. Does the minister agree?
It appears the Cowdell report did not take the hint and trash the ten-lane bridge but instead praised the professionalism and cooperation received from the team already at work building it, praised the traffic studies, praised the structural engineering and really didn’t quibble much with the project except for several considerations. Mind you, these were important too. Most fundamentally, it was more bridge than was needed. It would ease traffic congestion even as distantly into the future as 2045, 25 years from now, which seems to have been cast as a negative rather than a positive. Does the minister view that as a negative or a positive?
Four. The report seemed dismissive of the need for mass public transit on the new Massey crossing, which might be a convenient reason to eliminate two of the promised ten lanes. Does the minister attach a low priority to public transit?
Fifth. Did the minister see anywhere in the Cowdell report the statement that we should not build a ten-lane bridge to replace the tunnel, even though this was quite clearly part of the assignment in writing?
Number 6. There’s the suggestion, page ix, that the ten-lane bridge paid insufficient attention to three other important design considerations “not to be carried forward as primary goals into the later stages.” These were, first, alignment with community, regional and national objectives; next, community livability; and finally, cost.
Does the minister agree that the ten-lane bridge project, which involves community consultation with close to 10,000 people, failed to align with community, regional and national objectives and costs, and if so, how? Please detail that for me.
Number 7. Since the minister received the Cowdell report almost two years ago, it then proceeded to commission yet another engineering site, this time by famous North Vancouver engineering firms COWI and Stantec — big names in the industry. COWI Stantec submitted their final report in December 2019, about six months ago. Here’s the critical bottom line of the three COWI Stantec options that they sorted through and presented.
Option 1, a deep-bore tunnel. Cost: $12 billion to $17 billion or so.
Option 2, an immersed tunnel at the bottom of the Fraser, like the present tunnel but much bigger. Cost: $4 billion to $5 billion.
Option 3, an eight-lane bridge — ten lanes, of course, being forbidden. Cost: $3½ billion to $4½ billion, without much in the way of mass transit.
COWI Stantec seemed to confirm the engineering adage that tunnels are more expensive to engineer, more expensive to build, more expensive to operate and more expensive to maintain. But the mayors wanted a tunnel, even if it might cost as much as $17 billion. And why not? If it’s to be paid for by somebody else, including taxpayers in places like Prince George and Kelowna, let ‘er rip.
Question to the minister. In making these massive infrastructure investments serving the entire economy of British Columbia, do local mayors have a veto? I’m curious.
Number 8. My final question to the minister is whether there is a smidgeon of regret in the ministry over the fact that since the cost range of these three options identified by COWI Stantec ranged from a low of $3½ billion for a bridge to a high of as much as $17 billion for a tunnel…? Does the minister feel any remorse over having cancelled an option to solve this transportation problem with a bridge for only $2.6 billion, or should we conclude that capital costs are really not part of this government’s mindset when it comes to public infrastructure decision-making?
I really look forward to your answers, Minister.
Hon. C. Trevena: I realize that the member does want written answers, and the member will get very detailed written answers to the questions.
The one question is: do I as minister have remorse? Does the ministry have remorse? We have made a decision based on a very rational approach that the previous project was too big for the region. We had the interim report, which the member cited, and also acknowledge that the author of the report is a friend of his and I know will respect his judgment.
We are looking, obviously, at ensuring that we match the regional growth strategies for the communities with the appropriate piece of infrastructure. We haven’t made the decision on what it is going to be yet. That is going to be happening later this year.
Obviously, there’s been a lot of consultation on this. The member cites the consultation. We also have to acknowledge that the previous government, of which the member was part, did not do — and it was very clear in the report that we commissioned — due diligence on options. I think it is incumbent, when we are spending public money on public infrastructure for the benefit of the whole province, that we do proper due diligence and do not go with something because it is done with whatever level of research.
We are doing absolute due diligence, and I think that the people of British Columbia, when they get the crossing that has come after this work…. It will be a toll-free crossing. So people who live south of the Fraser as well as those who live north of the Fraser, who work on both sides of the river, who are using this very regularly — and I know that people are frustrated and want to see that crossing move — will be crossing that without having to pay tolls.
I am very pleased that the member has had the opportunity to put his point of view very publicly. I am very comfortable with the position of our government and the actions of our government on this. I think that it will serve the people of British Columbia well, because the work that has gone into this project to get to the outcome that will come when we have the business case has been done with an extremely assiduous and hard-working approach.
M. Hunt: Recognizing that we only have three minutes left to our time, I’m going to ask one question of the minister that I’d like a verbal answer to, and then I will read all the rest of the questions into the record just so that we can get it covered off and let the other ministers get on with theirs.
If a company is successful in winning government work, their employees are forced to quit their current employ and become an employee of the Crown corporation B.C. Infrastructure Benefits and join the union selected by the government.
In imposing this policy, did the minister balance the charter rights of workers with the objectives she was trying to achieve?
Hon. C. Trevena: The BCIB, the B.C. Infrastructure Benefits, is the responsibility of the Minister of Finance. Her estimates are coming up, and I’m sure she’ll be able to have an answer for the member.
M. Hunt: Okay. If that’s the case, we’ll skip the next set of questions. If that’s the Minister of Finance, we’ll put all of those to her, then.
So then, reading questions into the record. The grading of the Dominic Lake Road, which is a road that’s 19 kilometres long. It reaches from Highway 5 from the Logan Lake exit. It was last graded in 2014. Now it is largely impossible to navigate. Residents are asking: “When will it be upgraded?”
Next question. Safety is obviously a great issue to the ministry and to the minister herself. I am wanting the question of the impact trailers that are often put at the front end of a worksite along the roads. My question is: how many impact trailers does the ministry have? How much do these trailers cost, and why aren’t they required for all outside worksites throughout the province?
The next question is concerning the commercial vehicle safety enforcement. Again, a month or two ago we had a situation where the local RCMP were doing a commercial vehicle check, and almost 50 percent of the commercial vehicles failed. This is the second time. We saw this last year as well.
My question is concerning the CVSE. What was the budget last year? What is the budget this year? Considering the fact that we seem to have a problem with enforcement, should there not be a reallocation of resources to ensure enforcement?
Moving on the container trucking commissioner, what is the budget for the container trucking commissioner’s office this year compared to last year, and how is that being allocated? Can the minister provide us with an update on the work of the container trucking commissioner over the past year?
The new rate review is scheduled for this year. Has it commenced yet? If so, what areas will the commissioner be focused on? When will the review findings be made public?
Finally, what information, advice or report has the commissioner provided to the minister regarding licensees who call containers but are not paying the regulated off-dock rates? What enforcement actions are being taken by the commissioner?
With that, I notice it’s exactly two o’clock, and I would thank the minister for her time and certainly all of the staff for the tremendous work that they do throughout the province, as is evidenced by all of the members who have given glowing reports of what is happening in their areas.
Hon. C. Trevena: I appreciate, again, the acknowledgment of the fantastic staff at the Ministry of Transportation, both here in Victoria and right around the province. They do stellar work. I think that the whole province is fortunate to have such professionals working on so many different fields, whether it’s major projects, CVSE, trucking, right across the board. And obviously our highways and the safety of that.
I thank the member for the questions. We will get answers to him. Staff were taking notes of the questions, and we will get answers to him as soon as we can. I appreciate his collegiality in the approach we’ve had. I think we’ve been able to address most of the issues right around the province. I thank the member for his time through this process.
The Chair: Now, seeing no further questions, I think, I’ll ask the minster if she would like to make any closing remarks before I call the vote.
Hon. C. Trevena: I’m not going to take any time, because I know other people need to get on with their estimates. Again, I just wanted to thank the staff in the ministry for the exceedingly professional approach they have. I think we’ve been seeing around the province, specifically recently with the freshet work. We’ve had people out clearing up just very quickly. Every time we have people who are working extremely hard on behalf of the people of B.C., and I thank them for that.
I look forward to estimates for next year, when we’ve got more things that our government is doing to help the people of B.C. to make sure that they are living an affordable life, and they can have really good services provided as well.
I thank Madam Chair for the ability to have final remarks.
The Chair: Seeing no further questions, I will now call the vote.
Vote 43: ministry operations, $928,920,000 — approved.
The Chair: Thank you, Members.
I would like to now call a recess for ten minutes.
Thanks to the members and to the minister for this session.
The committee recessed from 2:04 p.m. to 2:21 p.m.
[R. Leonard in the chair.]
ESTIMATES: MINISTRY OF ENERGY,
MINES AND PETROLEUM
RESOURCES
On Vote 22: ministry operations, $110,935,000.
The Chair: Minister, do you have opening remarks?
Hon. B. Ralston: I do, Madam Chair. With your permission, I have a brief opening. I know that members opposite will be anxious to proceed with their questions, and I’m looking forward to that.
The Premier asked me to become the minister for this ministry in January of 2020, so this is my first session as the minister responsible, in the estimates. It’s an exciting, dynamic ministry, with a lot of really talented, great people, both in the ministry and in the sectors that we work very closely with.
I view the ministry as being responsible for the building blocks of our low-carbon energy future. We’re responsible for mining, for B.C. Hydro, for the oil and gas sector and for alternative energies and systems, such as electric cars and the charging network that powers them. We’re also responsible for considering new forms of energy, such as hydrogen and biofuel.
Understandably, the recent past has been dominated by COVID. I do want to address…. I expect members may choose to explore some of the measures that we’ve taken, but let me just briefly give a flavour of how the ministry, in conjunction with the government, generally, has approached the sectors that this ministry is responsible for.
In mining, following the directions of the Minister of Health and Dr. Bonnie Henry, we have focused on safe operation. Other jurisdictions in the mining sector chose to direct their mines not to remain open. We chose otherwise. With proper procedures — social distancing and the vast array of measures that are now very familiar to everyone — mining continued in the province.
We did implement a number of measures to extend financial relief, and that may be the subject of some questions. For example, we extended all claims and leases, such as coal licences and leases, to December 31, 2021, giving recorded holders more time to register work, make cash-in-lieu-of-work payments and make rental payments. We allowed for the extension of mineral and coal exploration permits to December 31, 2021. We extended the traditional framework for the CleanBC industrial incentive program, ensuring that companies will continue to receive a minimum rebate of 75 percent of their paid carbon taxes above $30.
In conjunction with B.C. Hydro, which I’m responsible for, recognizing that electricity is one of the largest costs for industry, industry was able to defer — thanks to the direction of B.C. Hydro creating a program — 50 percent of their B.C. Hydro payments to the end of August. An additional three-month extension to that program has now been announced.
For mines operating in the province, this builds on B.C. Hydro’s existing mining customer payment program. All major operating mines can defer 50 percent of their bill payments for three months, now six months. And copper and coal mines can do it for up to 75 percent of their bill payments under the terms of this agreement.
One of the things that, throughout the business sector, we hear about is the ability to meet cash flow requirements. This has given mining companies more leeway. Obviously, they are susceptible to world prices for their commodities, and that’s something about which we don’t have control. But in this environment, that’s what we did.
In the oil and gas sector, I might just give an example of what measures we took. We enabled the granting of a one-time, one-year continuation of drilling licences and leases due to expire between June 1, 2020, and May 31, 2021. Most significantly, as a measure, we, in conjunction with the federal government — the federal government, Minister O’Regan, supplied the money — created two new programs with $120 million in funding to clean up dormant and orphan wells in British Columbia while promoting job opportunities for oil and gas service workers.
That program was out the gate very, very quickly and oversubscribed in a huge way — very enthusiastically embraced. It’s open to eligible B.C. companies, and there are some requirements about determining that you are, in fact, a B.C. company. Alberta, in the northeast, is obviously close, and we were interested in, understandably as a provincial government, supporting the workers and companies in our region.
There are also other programs that were announced as well — a further extension of the orphan well program. There’s an existing program that’s funded, and we put in another $15 million there, and a program called a legacy program of $5 million. It largely focuses on seismic lines, which have been cut through vast swaths of the wilderness in the northeast historically, and on re-vegetating those.
Those programs have been taken up and are an effort to give the companies in the sector work that is important, meaningful and creates employment at a time when there is certainly pressure, as everyone recognizes, on employment numbers.
The final thing that I want to talk about is, again, to return to B.C. Hydro as an example of what COVID relief B.C. Hydro implemented and we enthusiastically supported. A program to give relief to all customers, whether residential….
So 124,000 B.C. citizens were accepted into the program and received bill credits. That’s the number as of June 30. Commercial customers, $3.7 million in waived bills; and industrial customers as well, $25.3 million in deferred bills as of a month or two ago.
We’ve attempted to work very consciously and deliberately with all of the sectors and the citizens that this ministry is responsible for. Those programs will be evaluated and looked at as we put together, at the direction of the Premier, the major recovery program that we’re in discussion on and receiving submissions on and which will be announced in due course. I expect very soon.
With those opening comments, I’m looking forward to the questions that are going to be posed. I want to thank the MLA for Kootenay East, who seems to be leading the charge and has set out a schedule, which is always helpful for arranging staff and briefing time. At this point, then, as I say, I look forward to the questions that are coming.
The Chair: I’ll recognize right now the member for Kootenay East.
Do you have any opening remarks?
T. Shypitka: Yes, thank you, Chair. It’s a delight to be in the Legislature for estimates here once again — remotely, of course, from the East Kootenays, gateway to the province for the rest of the country and also the home and the territory of the very proud Ktunaxa First Nation.
Before I start, I just want to congratulate the minister on his new appointment. I mean that sincerely. As he’s going to find out, mining and energy and petroleum resources in the province are a very fundamental, key part of our economy — very complex in some ways but very simple in other ways. I’m sure he’ll have a ball of fun with this file, as I have had as a co-critic.
I also want to recognize and thank the former deputy minister, Dave Nikolejsin, who spent a lot of time on the Energy and Mines file and did some amazing work. I got to know him a little bit in the last three years, and I know he’ll be sorely missed. In saying that, we’ve got a new deputy minister. I have yet to meet him, but his reputation is very solid. I’ve done a little checking, and I’m very excited to see the work that he’ll be doing with the ministry. I look forward to meeting him.
What I’ll do is just kind of lay out a little bit of a framework here. As the minister will find out, he gets a little bit of a grab-bag of MLAs on this file. We’ve got four co-critics in Energy and Mines. He gets a little bit of everything so that it keeps things exciting.
We’re going to start off. I’m going to ask a few preliminary questions for about 30 minutes. Then we’re going to go into B.C. Hydro, because we want to make sure that we’re looking after the time from the staff that, I assume, is in the precinct right now, and I want to get them on their way. Then later on this afternoon, we’ll get into some others. The Greens will have some time with B.C. Hydro, and then we’ll finish off the day with some local issues on Energy and Mines, and I’ll finish off the day.
To the minister, just a few preliminary questions, like I stated. COVID-19 has been a real challenge in many ways. We’ve had a lot of sectors that have been up-ended by this pandemic. A lot of them have stalled out or are slowing down, and we need some recovery.
The first question to the minister is: how has COVID-19 impacted government revenues, expenses, capital expenses and capital timelines for this ministry?
Hon. B. Ralston: Thanks very much for the question. The broader questions about the revenue projections for the government as a whole will be given by the Minister of Finance, I believe. There’s a financial statement scheduled for sometime next week, I understand. In terms of its impact on ministry revenue, that is not known just yet.
In my opening, I referred to a number of revenue deferrals. Those are being monitored, and there’s been no discernable impact on the capital budget of the ministry as of yet. But much of this is…. Tomorrow will be a projection of the labour force survey, which is an important element of an attempt to predict where government revenue might be going in step with the economy. But it is a bit premature to be giving detailed and reliable estimates on revenue for the ministry.
T. Shypitka: What the minister is saying is that he doesn’t see any impact on revenues to the industry so far. We’ve been through this pandemic for well over three months now. Surely there must be some kind of indication or some kind of level of revenue loss or revenue gain during this time from year to year or from month to month.
Is the minister saying that there is no information on that?
Hon. B. Ralston: I don’t think it is accurate to say that I’m saying there’s been no impact on industry. My understanding was that your question was focused on government revenue. For example, in the case of the mining industry, I have been meeting with the mining association and other industry players — the exploration association; the Sand, Stone and Gravel Association; the mining equipment suppliers — roughly every two weeks.
Certainly, that’s the subject of discussion, the impact on industry revenue. As you will appreciate, taking the example of mining, their revenue depends on global prices for their commodities — copper or gold, for example.
Our concern as a government is about the impact on government revenue. I took that to be the point of the member’s question. What we’re saying is that it’s being closely monitored, and there is a certain amount of revenue that’s being deferred. The overall revenue picture of the government will be provided by the Minister of Finance in an economic statement next week. I wouldn’t want to be rash and make predictions about where government revenue is going.
I think, though, in the example of the mining sector, the fact that mines have continued to operate, sometimes at reduced levels, is a sign that there will be a resulting amount of government revenue from these operations. But it’s too early to predict accurately, and I think it would not be a good practice to predict just what government revenue will be at this stage of the economic downturn.
T. Shypitka: Okay. Well, we’ll come back to that one a little later. Maybe I’ll start with the next one.
Were there any additional funds provided to the ministry for COVID-19, and how were these allocated within the department?
Hon. B. Ralston: In the meetings that I’ve had, both with the mining sector, as I gave you an example, and with the oil and gas sector as well, is a problem of cash flow, liquidity, which has given, on the company side, sometimes a collapse of revenue or, certainly, a much slower arrival of revenue.
We have used the tools available to us — that’s the deferrals that I’ve spoken of — for both the mining sector and for oil and gas, through the offices and tools available to B.C. Hydro. The effort has been to help companies and create liquidity by deferring many of their impending obligations and putting them on a very different timetable.
That’s the major way in which this particular ministry has endeavoured to help companies, communities and citizens during this difficult time.
T. Shypitka: To the minister, was there any accountability of these deferrals and these other programs the minister is speaking of? Surely the ministry isn’t just rolling out these programs without some kind of allocated amount of funds. Can the minister be more specific on what was allocated to take care of these deferral programs and such?
Hon. B. Ralston: The accounts that have been deferred are obviously…. They are known and accounted for. The money continues to be owed on the timetable that has been agreed to. Whether it will be necessary to extend individual account deferrals or there needs to be developed a policy at some future date will be determined, if it’s necessary.
The money, for example, in the mining sector that has been deferred still continues to be owed.
T. Shypitka: The minister stated that these deferrals and programs are accounted for. So the question still remains: how much? What is the accounting on these programs that the minister has stated? How much is coming from the $5 billion that was allocated to offer relief and help during this pandemic? The minister is responsible for those dollars allocated. The question is simple: how much was given, and what departments were they given to?
Hon. B. Ralston: I just want to be clear that none of the deferrals that we’re talking about have come from the $5 billion that the member speaks of. These are separate. They are still owed. At this point, they’re on the books. They’re known, down to the penny, as to what is owed. The $5 billion is a separate process, which will be new spending, depending on the direction that’s given by the Premier and the cabinet. They’re basically two separate financial streams.
T. Shypitka: Okay. Well, maybe the minister can get me the number on every penny that has been deferred so far. It would be interesting to know.
The minister also stated that this is new spending. once again…. I’ll just read you a quote from the Minister of Finance on the $5 billion that we are talking about. She said: “As I said that day when those dollars passed, we are accountable for every dollar of that $5 billion. The members know that. They know they have an opportunity here, in estimates during this session, to debate those dollars. Each of the ministers who have individual programs will be responsible.”
The question is to the minister. Has money been allocated? Where is it going, and to which departments?
Hon. B. Ralston: First, dealing with the $5 billion — I can’t help but agree with the Minister of Finance that the Legislature, the minister and the cabinet will be responsible for that spending — none of the $5 billion, as it relates to this ministry, has yet been allocated. What have been deferred are the taxes. Those are calculated, and a ledger is kept by the Ministry of Finance. Of course, they know exactly how much has been deferred and by whom.
I understand that the Ministry of Finance estimates have not yet taken place. Detailed questions that the member seeks a response to would be best directed to the Minister of Finance, because she’s the keeper of those particular ledgers. The broader question about $5 billion is, again, something that the Minister of Finance, I’m sure, will be pleased to answer.
T. Shypitka: Thanks to the minister for the answer. I’ll come back to those ones later. I’m looking at the time for B.C. Hydro to come up.
We’ll go to another little bit of a different direction. Has the ministry been hampered in its ability to process applications or interact with stakeholders, and if so, how? This is in relation to COVID.
Hon. B. Ralston: Thanks very much to the member for the question.
Obviously, COVID has had an impact, but nothing has ground to a halt. In some areas — for example, consultation with First Nations — it has slowed down. The ministry has been doing some consultation for the Hydro phase 2 review. That was impacted by COVID, in the sense that consultation in person was often not possible. It moved online and, in some cases, to webinars and other ways of speaking with people, just as we’re doing here at this very moment.
Generally, the work of the ministry has continued, albeit at a somewhat slower pace, given the limitations that we’ve all been living with.
T. Shypitka: All right. Which major stakeholders have reported significant impacts, if any, from COVID-19, and how has this ministry attempted to mitigate them?
Hon. B. Ralston: What the ministry has endeavoured to do is to make sure that major stakeholders who are impacted by what has been…. I think the principal concern is the impact COVID has been on cash flow. The ministry continues its operations — safe operations. That is, I think, a distinguishing characteristic that British Columbia undertook, beginning with the arrival of COVID, advised by Dr. Henry and the Ministry of Health and the regional health authorities.
For example, Rio Tinto Alcan continued its operations at a reduced workforce. LNG Canada continued its operations, albeit at a reduced workforce, with all the Ministry of Health requirements in place. Those have been the principal impacts, and that’s what we’ve endeavoured to do, bearing in mind the commercial survival of these companies depends upon their cash flow. We’ve endeavoured to respond to that as best we can. I think the general view from the feedback I get from industry stakeholders is that our response has been an effective one.
T. Shypitka: Just in response to the minister, we saw a lot of great things happening up here in our mines in Kootenay East. Our largest employer, our largest industry up here, Teck Coal, did a tremendous job in mitigating or eliminating any type of outbreak. Their workforce went down to 50 percent and still kept those employees that were off paid. It’s great to see a company like that step up and do the right things and do it safely.
With that, I think I’ll turn it over to my colleague from Shuswap for some questions on B.C. Hydro.
G. Kyllo: Thank you very much for the opportunity to ask a number of questions with respect to B.C. Hydro. I’m just going to start….
First off, we did hear some news reporting that demand for B.C. Hydro electricity was down significantly due to COVID. Can the minister just share with us what the actual reduction was with respect to the power consumption by consumers throughout British Columbia during the COVID period? What anticipated reductions in revenue does B.C. Hydro forecast for this current fiscal?
Hon. B. Ralston: Thank you to the member for the question.
I’m advised as follows. Overall demand is down by approximately 10 percent, beginning March, April, May. Residential customer load is up by about 3 percent. General service — that’s commercial and light industrial — is down by approximately 13 percent. And large industrial customer demand is down by approximately 13 percent as well. So the average is the 10 percent that I spoke about at the outset.
In terms of long-term impact, I’m sure everyone wishes they had the answer to that question. Certainly, that’s a key to any business these days, but the impacts of COVID are uncertain, as I think we all acknowledge. Will there be a second wave in the fall? What change to consumer behaviour will there be? What will be the impact on various industrial and commercial sectors in the province?
Those impacts are uncertain. It’s not that people aren’t earnestly trying to find and gauge answers to those questions. It’s just not possible to do that accurately at this point.
G. Kyllo: Can the minister provide what the actual reduction in total electrical volume is? He shared some percentages, but I’d appreciate hearing an actual number.
Then, also, what was the reduced revenue for the COVID period for the current fiscal up until this point, and how does that relate to the overall financial picture of B.C. Hydro? I’m anticipating, or would assume, that the 10 percent reduction must result in a significant reduced amount of revenue coming to B.C. Hydro. I appreciate it’s hard to predict what the future may hold, but if the minister would provide some details with respect to the total volume of electricity that was reduced up until the current period and then, also, what the reduced revenue to B.C. Hydro was for this period as well.
Hon. B. Ralston: Officials here tell me that they can undertake to calculate what the 10 percent reduction means in terms of actual volume. It’s not available at the moment, but I’m putting it on the record, and that will be provided.
In terms of the reduction in revenue, the year-end for B.C. Hydro is March 31. The year-end figures are released with the government’s public accounts, which typically is released in July. I’m not sure whether a date has been set for the release of the public accounts, given that it’s obviously been an extraordinary year for the Ministry of Finance and for everyone else. I’m not sure when that is, but at that point, then, B.C. Hydro’s year-end figures to March 31 would be released simultaneously with the government public accounts.
In terms of the first quarter — April, May, June; it just finished nine or ten days ago — those results typically come forward in August. When they’re available, we can agree to provide them, once the necessary steps have been taken, to the member as well.
I appreciate the member’s question. I think it’s a valid question. I ask him, perhaps, to understand and be patient in terms of the processes that are required to be followed before figures like that are in the public domain.
G. Kyllo: I thank the minister for that answer. I’ll look forward to receiving the first-quarter results in August. That would be fantastic.
As a follow-up question, has B.C. Hydro identified, in their forecast for the remaining three quarters of this fiscal, a continued reduction in power by B.C. customers and industry? Or are they retaining their original forecasted amount for electricity demand in our province?
Hon. B. Ralston: I want to thank the member for that question. The question of the ability to accurately forecast the future in the present environment is a very difficult one. Every company, everyone, is endeavouring to do that, obviously, as the prudent part of financial planning.
There are internal scenarios, as you can well imagine. I don’t think these would be secret. There are consultations with peer groups, such as other public utilities; our forecasting agencies; the Bank of Canada, for example. But there’s no certainty at all. In fact, there’s probably radical uncertainty. Will there be a vaccine? Will there be a dramatic downturn in COVID cases in North America? Given what’s happened south of the border, one wouldn’t want to make that prediction.
What the senior officials at Hydro are endeavouring to do is to have as broad a consideration of variables as possible and do some planning that is capable of adapting to emerging and changed circumstances.
It’s just not possible, in this environment, to say with certainty what the future will be in terms of future electrical load.
A range of scenarios, as I’ve tried to set out, are possible. Senior management is endeavouring to deal with those as best they can.
G. Kyllo: Thank you to the minister.
I would follow up. There was a forecast that was provided by B.C. Hydro, and it is just that: a forecast. In light of COVID…. And I certainly appreciate that nobody has a crystal ball to have any indication of whether there’s going to be a second or a third wave.
My question. Has B.C. Hydro adjusted their load forecast for the remaining three-quarters of this fiscal in light of all of the uncertainty that we have seen with respect to COVID and, obviously, the reduced economic activity in our province? I appreciate that no forecast will ever be 100 percent accurate. But my question: has B.C. Hydro adjusted their original forecast for the load demand for the remaining three-quarters of this fiscal, and if so, by how much?
Hon. B. Ralston: Thanks very much for the question. The question was focused on the remaining three quarters of this fiscal. How the company is managing is they have created some scenarios, depending on what happens in terms of recovery. Is it a faster recovery or is it a slower recovery? So that’s the calculation for the remaining three quarters of this year.
In terms of a formal load forecast, that’s required in preparation for the integrated resource plan, which will be coming out in 2021. There is working going on to settle on that, notwithstanding all the challenges in doing that. That work will likely produce a result in the late fall of this year.
G. Kyllo: As a follow-up, I would assume that B.C. Hydro has established a forecast for what their revenue expectations are for the remaining three quarters of this year. Do not want to belabour the point, but is the minister able to share or can he advise if B.C. Hydro has made any adjustments to its forecast for the remaining three quarters?
I think we’d all appreciate and estimate that the economy and the power consumption of B.C. will not be the same as it was last year, certainly not as originally forecast. Is the minister able to identify if B.C. Hydro has made any adjustments to its forecasts, either for load or for revenues, for the remaining three quarters of this year? If not, could he provide some justification or reasons why B.C. Hydro would want to proceed without taking into consideration all of the various factors that have actually had an impact on energy consumption for our province?
For the estimates process, we’re certainly trying to have a better understanding of what the impact of COVID has been on the revenue for the first quarter and also what the estimated and forecasted impact would be on the remaining three quarters of this year.
Hon. B. Ralston: Thank you very much for the question.
In normal times, what Hydro would do after the first quarter, in August — that is, the results for April, May, June — would be to adjust the load forecast and settle on a single number. In the present circumstances, that would be a very uncertain and unreliable number. In an era where one economic commentator has spoken of managing in an era of radical uncertainty, it’s just not possible to do that.
I appreciate the import of the member’s question — that he wants to get a sense of the corporation settling on a single number. It’s just not possible, in the sense that the result would not be reliable. I think the watch word, in terms of managing in this era, is to manage in a very uncertain time and rely on scenarios that can be very responsive to what the broader economy and what the specific economics of the business bring.
It’s not for a lack of attention or a willingness to manage tightly. It’s just not possible to produce the single number, as you would in an ordinary time.
G. Kyllo: I see the reluctance of the minister wishing to provide any information. So maybe I’ll put it this way.
Can the minister confirm that B.C. Hydro has not made any adjustments to their revenue forecasts for the remaining three quarters of this year? In which case, it would then be anticipating receiving revenue as forecasted prior to COVID? So is the minister able to confirm that B.C. Hydro is operating based on the forecast that was provided prior to COVID? If that’s not the case and there are these other scenarios being presented, is the minister willing to share those different scenarios with the opposition so that we could better understand what the true fiscal picture is of B.C. Hydro?
The minister has shared at the outset that revenues, on account of COVID, reduced B.C. Hydro revenues by upwards of 10 percent during that period. That’s a significant hit on revenue for one of our largest Crown corporations in British Columbia. I think it’s really important that British Columbians have an opportunity to understand how big of an impact has hit B.C. Hydro.
Also, is B.C. Hydro being responsible in establishing a forecast going forward that reflects the new reality that we’re in? I certainly appreciate that nobody has a crystal ball. Nobody is able to determine with certainty what the future will hold, but every business in British Columbia is under a very similar situation. And all businesses also have to provide forecasts and cash flow analyses to their financial lenders. I’m certain that B.C. Hydro would have done the same. I’m hoping that the minister will be able to come forward and actually share that information with us here today.
Hon. B. Ralston: I want to thank the member for the question.
I want to make a correction just so that the record is clear. The 10 percent was a reference to a reduction in demand, not a reduction in revenue.
Secondly, the corporation is very clearly not operating as it did pre-COVID. That would be an inaccurate statement of the way in which the board of directors and the senior executive of B.C. Hydro is managing the corporation at this time. In the ordinary course of business, after the first quarter, in August, the executive would update the projections for the remaining part of the year. That would be reported to the Ministry of Finance. But this year it’s expected, for all the reasons that we both discussed, that while the process will be the same, the forecast will be a very conditional one, with a reflection of the greater uncertainty and conditionality of that forecast.
Again, I appreciate the wish of the member to nail down a hard number. It’s just not possible in the present environment to do that in any accurate or meaningful way.
G. Kyllo: The process that we’re under now is to have a good understanding and to provide British Columbians with an opportunity to have a better understanding of how the government is performing and our Crown corporations are performing. Going on the last 45 minutes now, I have yet to actually get a concrete number from the minister with respect to the reduced revenue that has been received by B.C. Hydro this year.
I appreciate that we’ve just ended the first quarter, but it would not be a very difficult calculation. I am sure that B.C. Hydro already knows, with some level of certainty, what the reduced revenues were for the month of April, for the month of May and also for the month of June. But I’m seeing a bit of a reluctance of the minister providing those numbers to us.
Once we have established what the reduced revenue has been to B.C. Hydro during that quarter, it would also, I think, be incumbent for B.C. Hydro to at least provide some semblance of a forecast the corporation may have for energy, both consumption by British Columbians and, obviously, the revenues to the Crown corporation for the remaining three quarters of this year. It’s extremely frustrating to not have these numbers.
It’s apparent that the minister’s either not able…. With all due respect to the minister, is the minister unwilling to share those numbers, or is he just clearly stating that B.C. Hydro does not have those numbers and is not able to report them?
Hon. B. Ralston: Thanks very much to the member for the question.
As I’ve said, the ordinary course of first quarterly results is that — and B.C. Hydro and its staff are working on those results — they are compiled, and they go to the board in August. That’s the normal process of approval. There’s an internal process of audit and verification. Then that result goes…. It becomes released publicly in September.
I appreciate that the member is exhibiting a certain impatience about the process, but that is the orderly, dictated, mandatory or financially required process that is followed in the case of every quarterly result. I’m not able to reach my hand in and release some raw figures simply to satisfy the member, and I’d urge him to be patient with that. I’m quite confident that this issue and the very real strains upon the corporation in the present circumstances are being very well managed by the board and by the senior executives.
G. Kyllo: Just one follow-up to that. Is the minister, then, through his answer, indicating that the only manner in which financial numbers are going to be released to this House is through the scheduled release of a quarterly report, as the minister has laid out, and that the numbers — which, I’m sure, B.C. Hydro knows already, internally — are not able to be shared with us?
If that is the case, is the minster able to identify what regulation sets out the ability for B.C. Hydro to keep those numbers secret from British Columbians at this point in time?
Hon. B. Ralston: I thank the member for his question.
Let me just repeat. In my judgment, it wouldn’t be prudent for the minister responsible for B.C. Hydro, nor for B.C. Hydro itself or me as the minister to reach in, grab some of the raw numbers and release them. There is an internal process that these financials go through. It’s the process that will be followed, and it will be released. It’s not secret. It simply has to go through the appropriate process.
The member will be familiar, from his own time in business, that ordinarily the board of directors is the guiding body. They will see these results and make a determination about them. After there’s a further internal process of auditing and verifying, they’ll be released. So these are not secret figures. They have to go through a process, though, and to do otherwise would be irresponsible.
G. Kyllo: Madam Chair, I just wanted to remind the minister of chapter 12.7.3, “Scope of debate.” It clearly states: “The supply process can be lengthy and detailed, providing members the opportunity to review all government ministries by asking questions about ministry plans and proposed spending, and to consider and approve the money requested by government.”
Now, with respect to the questions that I’ve been raising, the minister was able to share with us, with some certainty, what the reduction was in load forecasts for residential, business and industrial customers. Those numbers are certain.
We also know, with some certainty — I’m sure B.C. Hydro knows with certainty — what rates are being charged for all those different rate classifications. I know that the minister has access to the numbers. If the minister is able to provide those numbers with a caveat, say…. I appreciate that the final, audited numbers may not be able to be released until the final report is tabled.
It’s really important, I think, for British Columbians to have a good understanding that the anticipated 10 percent reduction in electricity consumption that the minister had referenced earlier also has an impact on the revenues of B.C. Hydro. It’s extremely important that British Columbians have an opportunity to have a better understanding of the net impact of COVID-19 on one of B.C.’s largest Crown corporations.
Certainly, again, one more time, to the minister: can the minister provide us with some level of certainty what actual reduced revenues to B.C. Hydro have been anticipated in the first quarter, and have they actually made any adjustments to the revenue forecast for the remaining three quarters of this year?
Hon. B. Ralston: I appreciate the member’s question, which is directed to the results of the first quarter. That is, April, May and June of this year. B.C. Hydro, as a government entity, is bound by the Budget Transparency and Accountability Act, and in subsection 10(3)(a), it states as follows: “(3) A quarterly report must be made public on or before (a) September 15” for the first three months of the fiscal year.
That reporting period is designated by that particular act. That’s what Hydro is following, in the sequence in which I’ve described, but they’re going to release the quarterly results.
I hope that provides the member with some solace.
G. Kyllo: That absolutely does not provide any solace for the member. It is unfortunate that the minister seems to be undertaking this secrecy. I know that B.C. Hydro has the numbers. I’m sure that the minister has access to them.
The Minister of Finance is looking to provide a fiscal update with respect to the impact of COVID-19 on the province’s revenues and expenses. The minister is not providing any information to us here through this estimates process.
Can he confirm that the Minister of Finance will not be provided any numbers from B.C. Hydro and not be provided with any revenue forecasts as far as what reduced revenues were received by B.C. Hydro during this first quarter, and what their anticipated future reduced revenues would be for the remainder of this year?
As a follow-up to that, if that is the case, the Finance Minister’s economic update will have no use or benefit or effect for British Columbians.
Hon. B. Ralston: The question that the member poses would be best directed to the Minister of Finance. The answers, I think, will be forthcoming from the Minister of Finance insofar as she is able to do so.
G. Kyllo: That is most unfortunate. It is extremely frustrating, and I think for British Columbians that might be at home watching, extremely disappointing for them that the minister is apparently, or appears to be, unwilling to actually abide by Parliamentary Practice, fifth edition. I read this into the record earlier.
I appreciate that B.C. Hydro, for their reporting, may have a different guideline which they follow, but the minister does have access to the information. It’s very unfortunate that he’s being less than forthcoming in providing those numbers to us here today.
A further question, I guess, to the minister. Is the minister able to indicate…? Does B.C. Hydro anticipate they will be in an energy surplus or deficit for this current fiscal, and what amount of electricity would that be?
The Chair: Members, we are going to take a five-minute recess at this point so that we can change the Chair.
The committee recessed from 4:04 p.m. to 4:10 p.m.
[R. Kahlon in the chair.]
Hon. B. Ralston: The question concerned Hydro’s energy surplus or deficit for this fiscal year. I am advised that the projected surplus sales volume for the ’20-21 budget is 3,032 gigawatt hours.
Before I go any further, I just want to caution that that is in the present circumstance of economic uncertainty, and it’s a number that fluctuates, given water inflows into the reservoirs in the system as well. That number is one that is variable, but that’s the projected surplus in the budget that was set to late last year.
G. Kyllo: Thank you very much, Minister, for that number. It’s interesting how you’re able to identify what the surplus volume will be for this current fiscal.
I need to go back one more time. This is the estimates process. We are not looking for final numbers. It would appear to me — and, certainly, in conversations I’ve had with previous Energy Ministers — that they do receive regular fiscal updates on the performance of our largest Crown corps.
Is the minister saying that he has access to the numbers? Again, I’m not looking for final audited numbers. I’m looking for the estimated financial revenues for the first quarter of this year. Is the minister indicating that through this process, he has the numbers available but he’s unwilling to share them with British Columbians here today?
Hon. B. Ralston: I’ve stated this previously, and I’ll state it again. The quarter — that is, April, May, June — just ended nine days ago. The numbers will be compiled and provided to the board in August and will be, after an internal process of audit and verification, released as is required by the Budget Transparency and Accountability Act in September.
G. Kyllo: Again, that is a most unfortunate…. It’s apparent that the minister has access to very important numbers with respect to the performance of one of B.C.’s largest Crown corps. There’s no ulterior or secret motive.
All I’m trying to determine and find out is the fiscal losses that have occurred to one of our largest Crown corps. in this province on account of COVID. The cause of that can’t be attributable to any one individual or to the Crown, but I think it’s really important. This is what the whole idea and purpose of the estimates process is — so that opposition members have an opportunity to ask questions of the ministers who have responsibility either for their ministry or for the Crowns.
It is extremely frustrating and disturbing that the minister is unwilling to share with British Columbians numbers that I know he has access to with respect to the fiscal performance of one of our largest Crown corporations. The Minister of Finance is, as we understand, going to be providing a fiscal update for British Columbia next week, probably without the detailed information of the performance of B.C. Hydro.
One more time. Can the minister please provide us either the information with respect to the reduced revenues that B.C. Hydro received in the first quarter…? And if he continues to be unwilling to share that, can he advise if B.C. Hydro has provided information to the Ministry of Finance for the economic update that is going to be provided to British Columbians next week?
Hon. B. Ralston: I’ve answered those questions.
The Chair: Member, I think the minister has answered the questions. It’s time to move on to a new line of questions.
G. Kyllo: With respect to the minister’s previous answer indicating that B.C. Hydro is going to be in a significant surplus, it has come to our attention that a number of independent power producers have been forced to go into curtailment.
Just wondering if the minister can share with us…. B.C. Hydro obviously has had reduced electricity demand on account of COVID. What criteria…? How did B.C. Hydro determine who was going to take the hit?
It’s my understanding that about 25 percent of British Columbians’ power is produced by independent power producers, with the remaining 75 percent provided by B.C. Hydro assets.
Is the minister able to provide information with respect to the reduced energy production that was provided by B.C. Hydro for their existing assets and what reduction was required of IPPs? Further to that, in determining if there indeed has been a reduction or curtailment of independent power producers, what was the selection criteria by which B.C. Hydro determined who was going to take the haircut and who was not?
Hon. B. Ralston: Members, the question was: “How were the independent power producers selected?” The answer is as follows. B.C. Hydro issued notices of force majeure to a number of run-of-river IPPs to help B.C. Hydro safely manage its operations while reducing environmental risks and potential infrastructure damage that can arise when spilling large quantities of water.
Run-of-river projects have their peak generation during the spring freshet, when demand for energy in B.C. is lowest. Those IPPs that were issued force majeure notices were generally larger and deliver a high volume of non-firm energy at this time of year.
G. Kyllo: Thank you, Minister. You did indicate that those that received the force majeure notifications to go into curtailment were, primarily, larger producers.
Was that the criterion by which they were selected? Was B.C.’s Hydro’s determination that the large producers were the ones that were going to take the full hit, with respect to the reduced energy and curtailment requirement? Or were there other criteria that were established that actually led to the force majeure notifications going out to specific independent power producers in B.C.?
Hon. B. Ralston: The answer that I just gave described all the criteria that were considered.
G. Kyllo: That’s interesting. The only criteria used to determine energy producers put or forced into curtailment were those criteria which the minister identified. That is extremely troubling.
Now, while we’re on IPPs, is the minster able to provide the total number of current IPPs that are operating in British Columbia? Of those, how many are currently under curtailment? As well, of the total number of IPPs in B.C., if he can share with us, how many of those IPPs also provide economic benefit agreements to First Nations?
Hon. B. Ralston: That was a multipart question. Let me try to work my way through it. B.C. Hydro has, as of June 2020, about 130 energy purchase agreements with independent power producers. That represents over $48 billion in future energy purchase commitments.
In terms of the impact to First Nations, Hydro has a limited knowledge of specific agreements, arrangements or royalties, as these are commercially confidential between the parties involved. As a result, Hydro is really unable to comment on the impact on various First Nations, if any, unless they have said something publicly themselves. In terms of the number of IPPs that were curtailed, I’m told that the number is 16.
G. Kyllo: Thank you very much, Minister, for your response.
Going back, if I may, just to the curtailment. Is the minister able to share what the curtailment actually results in, as far as the total reduction in electricity production? Could he also share with us if that proportionally is also shared with B.C. Hydro? Has B.C. Hydro also curtailed energy production with their existing assets?
What I’m looking for is just kind of a ratio. Has the reduction or the curtailment been evenly distributed to the IPPs as well as B.C. Hydro, or has the curtailment only impacted, largely, the independent power producers, and what might the proportionate share be?
Hon. B. Ralston: Let me just set out some of the steps that B.C. Hydro is taking to manage the risk arising from current conditions. They include the following.
One is shutting down operations at some of its smaller plants to reduce generation. Two is spilling water from some of its facilities to balance the generation and the province’s electrical mode when needed. I’m giving the examples of Seven Mile and Revelstoke. And exporting electricity to other jurisdictions through Powerex, B.C. Hydro’s trading subsidiary — difficult to make sales, given the prices. But that’s a third response as well.
G. Kyllo: The minister did not actually answer my question. Maybe I’ll pose it this way. The minister indicated that due to COVID, energy production was down about 10 percent. Assuming the estimated number of IPPs provide about 25 percent of B.C.’s electricity with the other 75 percent coming from B.C. Hydro, can the minister share what the proportionate share of the curtailment has been?
If the 10 percent number holds true, proportionate curtailment would mean that IPPs reduce their energy production by about 2½ percent with 7½ percent being taken in reduced energy production by B.C. Hydro.
Is the minister able to provide more detail with respect to the allocation of the curtailment that was achieved both by B.C. Hydro and by our independent power producers?
Hon. B. Ralston: Let me correct the record again. The member said, in his last question, that production was down 10 percent. In fact, what I said was that demand was down 10 percent.
In terms of his broader question, when there are disputes between commercial parties, there are a number of alternatives available to them. I don’t think that it is prudent for me to enter into a commercial dispute and what alternatives parties may choose in an effort to resolve that dispute.
G. Kyllo: I’m certainly not encouraging the minister to get involved in any commercial dispute. I’m just asking for real numbers. The curtailment that has been requested of the independent power producers…. Can the minister provide what that volume of curtailment is? Then, as a further follow-up, if he could also provide what the curtailment has been for B.C. Hydro assets during that same period.
Hon. B. Ralston: The way in which the member has posed the question seems to me to be inviting a response that would be asking me to venture an opinion that, really, more properly is a subject of the dispute between the parties, potentially. I don’t think it’s prudent for me to respond to that question.
Secondly, the officials here wanted to provide a correction. It was not to 16 IPPs but 15.
G. Kyllo: Well, I think that the questions come down to fairness and transparency with respect to the curtailment that has been put in place or that is being borne by independent power producers. I certainly do not see how that would put the ministry in a poor situation. Obviously, there has been a requirement for independent power producers to go into curtailment, at a significant financial loss to their bottom line.
I’m just wondering. Is the reduction in overall power generation in the province borne solely by the independent power producers, or has B.C. Hydro also indicated or actually moved forward with a reduction in power from their own assets? I’m hoping the minister can provide a little bit more clarity with respect to the criterion that actually led to B.C. Hydro making the determination to require 15 independent power producers to go into curtailment.
Hon. B. Ralston: The member has suggested that I didn’t provide any answer to steps taken by B.C. Hydro to manage in these conditions. In fact, I’ll repeat the answer that I gave earlier.
B.C. Hydro has done the following. One, shut down operations at some of its smaller plants to reduce generation. Two, spilled the water from some of its facilities to balance generation and the province’s electrical load when needed. I gave the example that was provided to me about Seven Mile, in Revelstoke. Thirdly, exported electricity to other jurisdictions through Powerex, which is B.C. Hydro’s trading subsidiary. In other words, it’s trying to sell power in view of these circumstances. Those are the three steps that B.C. Hydro has taken in these circumstances to manage the conditions that are being addressed by others as well.
Let me repeat the answer about how the IPPs were selected. B.C. Hydro issued notices of force majeure to a number of run-of-river IPPs to help B.C. Hydro safely manage its operations while reducing the environmental risks and potential infrastructure damage that can arise when spilling large amounts of water. Run-of-river projects have their peak generation during the spring freshet, when demand for energy in British Columbia is at its lowest.
G. Kyllo: I’m going to quickly just go back to a previous question that I had asked the minister. Has B.C. Hydro provided an economic update to the Minister of Finance that would be used in her fiscal update that’s being provided next week? So again, is the minister able to confirm with B.C. Hydro if they have provided detailed financial updates for the Minister of Finance?
Hon. B. Ralston: I understand that the Minister of Finance is delivering a fiscal update next week.
I’m not sure it’s accurate to describe it as a forecast. Obviously, the Minister of Finance and her officials will speak to all of that. I think it’s important to bear in mind that the public accounts for the last fiscal year have not yet been released. There is a regular system of reporting of quarterly reports, the next one being, typically, in September.
The Minister of Finance and her officials consult widely with banks, economic agencies, take information from all the Crown corps., from the business community, from labour, from a wide range of sources, in order to give as accurate a fiscal picture as can be done in the present environment. For the member to draw, based on his hypothetical, a conclusion that the report would be inaccurate because of what he deems to be an omission is simply wrong.
G. Kyllo: The question was a yes-or-no answer. Has B.C. Hydro provided a financial update to the Finance Ministry, which would be used with her fiscal update that’s being provided next week? With all due respect to the minister, the answer is yes or no. Either they have provided additional information to the Finance Ministry or they have not. I’m hoping that the minister can provide us that yes-or-no answer.
Hon. B. Ralston: I’ve answered that question. Thank you.
G. Kyllo: With all due respect, the minister did not answer that question. But in any event, I know that I have a significantly long list of additional areas of inquiry. I’m hoping that the minister would allow me to submit a list of follow-up questions that we would submit on the record no later than tomorrow afternoon. I’m hoping that the minister would provide an opportunity to provide a rapid response or a prompt response to those additional questions with respect to B.C. Hydro operations, Site C and rates for British Columbia.
Hon. B. Ralston: Certainly, provided the questions are in order, I’m prepared to endeavour to answer them.
G. Kyllo: Thank you to the minister for his time today. I’m certainly looking forward to the opportunity to provide a long list of additional questions that we’ve put together to try and provide British Columbians with a better understanding of the operations and the future direction of B.C. Hydro. Thank you, once again.
Thank you to my colleague from the Kootenays who has provided me an opportunity to participate in today’s estimates.
The Chair: I’m going to go to the member for Cowichan Valley.
S. Furstenau: I may have been a little pre-emptory there. I think we’re waiting till 5:15. So I’ll put it to the member for Kamloops–North Thompson.
P. Milobar: Thank you to the other member for giving me this time as well.
A couple of quick questions for the minister in regards to CleanBC and some of the programs that he is responsible for. I’m just wondering. There was recently the announcement around the low- to no-cost loans for energy retrofits for a home. Is that money part of the existing home energy retrofit program of $41 million under CleanBC, or was it new money?
Hon. B. Ralston: It comes from the existing program. It’s not new money.
P. Milobar: It’s from the existing program that used to be called EfficiencyBC. I’m assuming that’s now called better buildings B.C. Has that program been oversubscribed or undersubscribed over the last year?
Hon. B. Ralston: The program…. I think the full title, and I’m sure we’re talking about the same thing, is better homes, better buildings. There has been a slowdown in the uptake — I think fairly attributed to COVID.
P. Milobar: Was it previously, though, on track to be fully expended? I’m trying to ascertain how effective this new program will be if it’s just being inserted into an existing program with no new dollars. It seems there’s more openness to the program, which is a good thing on the one hand, but if it’s the same pot of money, I’m trying to figure out how that’s going to work to actually bring any extra added improvements.
Hon. B. Ralston: Thank you to the member for the question.
In the previous program, typically what the interested party, the person, would do would be to purchase the heat pump and then collect or seek out, providing they’re qualified, the rebates after the fact. Sometimes that was financially difficult for some people.
What the present refinement of the program does is that there was a partnership with a finance company called FinanceIt. So what you do is agree to have the heat pump installed, yet you can finance it. In other words, you don’t have to wait for the rebate. You can pay it over time as you would any other consumer purchase.
It’s early days. I think we just announced the program maybe a week and a half or two weeks ago. But that was felt to be an impediment to people taking up the program previously. This is an effort to offer citizens another way of installing a heat pump or other energy-saving device in their home.
P. Milobar: Was the contract to the finance company sole-sourced, or did it go through a competitive process to land on that company?
Hon. B. Ralston: It went through a competitive process.
P. Milobar: Thank you for that.
In terms of other programs, with CleanBC, in the first about 16 months of the new government, they went through about $56 million for the electric vehicle program. Last year CleanBC, for all three years, only had $42 million put in. They were warned about that. I warned them at length, the previous minister, of how they would run out of money. That wound up being borne out. Then the rules changed from $5,000 to $3,000, but the $42 million still ran out, it’s my understanding, over the last year.
How much more was put in, and where did that contingency money come from?
Hon. B. Ralston: Certainly, an objective of CleanBC over the long term is to switch the light-duty-vehicle fleet here in British Columbia to electricity as much as is possible. It has been a very popular program. I think the member, by his question, has identified the popularity of it.
Budget 2020 includes over $32 million for the CleanBC Go Electric program. That is broken down in the following way: $20 million for vehicle rebates, $5 million for home and workplace charger rebates, $2 million for investments in public charging and $5 million for rebates on infrastructure to switch bigger trucks, ferries and other medium- and heavy-duty vehicles to zero-emission technology.
P. Milobar: Yes, I know that this year has $20 million. The question was…. There was $42 million in last year’s. It was oversubscribed, and contingency money needed to go in. How much more contingency money needed to go in to top up the $42 million, and where did it come from?
Hon. B. Ralston: I thank the member for his question.
In the budget year 2020, there was an initial allocation of $41.5 million, and there were two separate draws on the CleanBC contingency, both for $10 million — two separate draws of $10 million each.
P. Milobar: The other charging infrastructure — the minister referenced it in his previous answer to the last one. In CleanBC’s first budget, which came out in the 2019-2020 budget year, there were several charging-station infrastructure pieces in there — $20 million for this, $5 million for that.
Are the $5 million, the $2 million and the $5 million the minister referenced part of that overall package, or is it new money coming in to CleanBC?
Hon. B. Ralston: The member referenced my previous response, and I spoke of $5 million for workplace charging rebates, $2 million for investments in public charging and $5 million for rebates on infrastructure to switch bigger trucks, ferries and other medium- and heavy-duty vehicles. That is, I’m advised, new money for the 2020 budget.
P. Milobar: Then does that mean that all of the previous money that was identified in the previous budget has been expended on those similar charging station–type programs? Or are there still moneys remaining to go to that program — things like charging stations and the like?
Hon. B. Ralston: The money that the member references in the 2019-2020 budget has been expensed. In other words, it’s been spent by the ministry, fully, but some of the recipients of the funds will be still spending some of that. The partner organizations may be spending that in this fiscal year as well. But from the perspective of the ministry, the money was expended in the previous year.
P. Milobar: It sounds like, then, although there were several tens of millions of dollars in the first year of CleanBC for charging infrastructure, there was $12 million in this year’s budget for charging infrastructure, and that’s it.
Hon. B. Ralston: I’m advised that in fact the figure is $5 million for home and workplace chargers and rebates and $2 million for investments in public charging. The member came up with a figure of $12 million, and I think he has added in the subsequent $5 million. But that’s not for charging infrastructure in particular. That’s just to switch trucks and ferries to zero-emission technologies.
P. Milobar: That is, I have to say, underwhelming, then. We have $7 million, when in previous years we’ve fully expended everything possible thrown at charging. We now have a $20 million EV program, when last year we expended $61½ million on the electric vehicle program. Again, I don’t understand how any of this math is going to work to have any type of sustainable programs in place to help facilitate the changeover of electric vehicles. I’ll move on. I’ll follow up with the Minister of Environment in his estimates.
Another question for the minister. I noticed in the beginning of last week there was quite a lengthy article that had come out. The headline was: “B.C. Eyes Emissions Trading to Offset Effects of LNG development, Government Documents Show.” I’m just wondering if the minister can confirm that in fact the government and the ministry are pursuing this avenue. Or has it been discounted and no longer being pursued as a way to offset LNG?
Hon. B. Ralston: Just before I give my answer…. I’m hoping that the member will be able to persuade the Minister of Finance that the electric vehicle program deserves more money in the next budget, or maybe as an economic recovery program. I appreciate his comments on that front.
Let me just say that as a ministry, we are responsible for implementing many of the CleanBC initiatives, and indeed, we’ve been talking about a few of them. But at the policy level, in terms of the topic that the member has referenced, that’s a discussion that is led by the Minister of Environment. I believe that the member is one of the Environment critics and will probably be able to take that up with the Minister of Environment in his estimates.
P. Milobar: I will certainly be bringing this up with the Environment Minister as well. I will be happy to point out to the Finance Minister that, given that they’re collecting about $1.3 billion extra in carbon taxes that is not going to CleanBC, there’s probably somewhere that they could find the money, within that bucket of money, to actually properly fund some of these green initiatives.
However, the article actually does reference this ministry as one of the governmental departments that is looking at the emissions trading to offset the effects of LNG. I recognize that this current minister was not the signatory to the LNG project, but his predecessor was, as was the Minister of Environment. So I’m just wondering. Does his ministry not have any part in the negotiations or the discussions around using emissions trading to offset the effects of LNG? Was this started, and was the discussion started, under his watch, or did they start under the previous minister’s watch?
Hon. B. Ralston: The Ministry of Energy, Mines and Petroleum Resources is a co-lead or co-administrator of the CleanBC programs, and certainly those discussions are engaged in. But from what I understand, what the member is referring to is a specific reference to the Paris Agreement in section 6. At the policy level, the lead there would be the Ministry of Environment, so that’s not something that I’m directly responsible for.
P. Milobar: Well, thank you. Now, if you’re watching and sitting through the Hydro estimates and seeing how the minister can avoid a question, and given that the two longest breaks have been to come back with an answer that’s “I’m not responsible,” I will leave this and move on, given the time. I noticed that my colleague from Cowichan Valley perked up when I asked this question. I’m sure she may have some questions, moving on, around a similar vein.
The reason I would want to tie in, though, with credits is something that is very clearly, I hope the minister would agree, under his purview. It’s the low-carbon fuel standard, which is part of CleanBC. That is responsible for almost 23 percent of the overall emission reductions that are needed to accomplish CleanBC. That’s only of the 75 percent, because we still don’t know what the other 25 percent of programs are going to be.
Will there be the ability for manufacturers, for sellers of fuels, to be able to purchase credits and be able to sell any ten or any 15 instead of the 20 percent that’s mandated by CleanBC to bring those emissions down?
Hon. B. Ralston: I just want to clarify that the 20 percent that’s being referred to is a 20 percent reduction in the carbon intensity, rather than a percentage of renewable fuel in the fuel that’s being sold. But fuel suppliers who supply fuels at a lower carbon intensity can earn credits if they sell it to other suppliers.
The Chair: Members, we’re going to take a five-minute recess. I’ll see if the member for Kamloops–North Thompson has one more question, and then we’ll take a five-minute recess.
Member, go ahead.
P. Milobar: I can wait. I have got about four, maybe five, other questions, depending on the minister’s answers. So I’ll pick it up after the five-minute recess, if that’s all right with you.
The Chair: Why don’t we go a couple more questions. I know the member for Cowichan Valley also had her hand up. Maybe I’ll let you have a couple more questions, and then I’ll come to the member for Cowichan Valley.
Go ahead.
P. Milobar: As I say, these can be very quick and to the point if the minister will provide the answer.
This is why I have to re-ask the question. The question that didn’t get answered was this, to be made very clear. The low-carbon fuel standard is about a 20 percent standard. The question is: can the workaround be, for other companies, to provide a 10 percent fuel or a 7 percent fuel or a 12 percent fuel and pay for offsets for the difference? This would mean that people are still burning a fuel that doesn’t meet that, which means in our own local environment you’re still getting the emissions, but some forest in some far-flung part of the world is getting trees planted.
Hon. B. Ralston: I’m told that a fuel supplier can go partway to the required standard by purchasing credits — I think that was the gist of the question — although the credits are generated locally, so the reference to forests in some other country is inaccurate.
P. Milobar: Well, then that differs from what the Environment Minister said last year about credits being able to be bought anywhere in the world at a world-market price — for as low a price as someone can find.
To sum up. We have CleanBC. The programs for transportation under this minister’s responsibility are the electric vehicle program and charging infrastructure and the low-carbon fuel standard. Between those two programs, that is responsible for about 33 percent of the emissions reductions that CleanBC is supposed to deliver. And what we have is an electric vehicle program that is grossly underfunded. We have a charging infrastructure that is grossly underfunded. And we have a low-carbon fuel standard that will rely on people buying carbon offsets.
Can the minister explain to me…? Last year I asked his predecessor, at length, what modelling had been done that the low-carbon fuel standard would add to an extra cost per litre. It has been another year. Surely there’s been more work done on this now that we’re getting closer and closer in heading down this road.
What has the modelling shown? What information do the minister and his staff have of what the average cost per litre is expected to happen with this low-carbon fuel standard moving forward?
Hon. B. Ralston: I thank the member for his question. Based on 2018 data, the cost per litre was 3.5 cents. For 2019, because some of the reporting standards were relaxed because of COVID, data is still coming in and is not completely compiled yet.
S. Furstenau: I’m delighted to have our chance up here. Thanks to the opposition members and the ministers for the interesting discussion that has unfolded this afternoon.
I’m going to move back to B.C. Hydro. We have some questions. I have some questions on Site C, and then my colleague is going to pick up on some questions of his own.
As we know, Site C was already over budget and over schedule in 2017, as determined in the independent report of the BCUC. We’re in this time of…. Hopefully, we’ll be looking at a time of economic recovery ahead, and we’re wondering about the top priorities of government in that.
The BCUC panel found that it is unlikely that Site C will be completed on schedule by 2024 and even that construction costs could escalate beyond the costs, already nearly doubled, that were initially predicted, from $6.6 billion to $10.7 billion. The overrun of expenses and the mounting delays will likely have a pretty significant impact on British Columbia ratepayers.
My question for the minister. To start with, could he provide an update on the current projected cost of construction for the Site C dam and whether COVID-19 has delayed the schedule for construction? How has COVID-19 impacted the budget for construction?
Hon. B. Ralston: Thank you very much to the member for the question. I appreciate the member giving an indication of the direction of the questions in advance of being here this afternoon.
Prior to COVID-19, it was acknowledged that the project was already managing significant financial pressures. Those are due to a number of factors. Let me list some of them. Additional scope and design enhancements to the foundations of the structures on the right bank. Amendments to the main civil works contract. Increased costs associated with reservoir clearing, transmission line construction and highway realignment work. Additional labour resource requirements. First Nations treaty infringement claims and an injunction application. And, probably not surprising, pandemic-related delays will present further cost pressures on the budget.
As the evolution of the pandemic is uncertain and the date of resolution is unknown — I think that’s been the subject of some earlier debate this afternoon — there is cost, and the schedule impact scenarios continue to be assessed and refined.
S. Furstenau: No specific figures there. I guess I’ll just go back to the original question. Does the minister have, taking into account all of these reasons for expanded cost…? Is there a new update on the projected overall cost of this project?
The Chair: I recognize the member for Kootenay East on a point of order.
T. Shypitka: Thank you, Chair. I just wanted to call a point of order on the proceedings that just happened, just recently. The Chair recognized the member for Cowichan Valley, although the member from North Thompson wasn’t done yet. The Chair also recognized that taking a break or offering the member one more question — in almost an attempt to speed him up or get his questions done. I’d like to raise that concern.
The Chair: Thank you, Member. My understanding was there was an agreement between the official opposition and the Third Party. I let the member ask additional questions on top of the time that you had already arranged. In the interest of making sure that everyone gets opportunities to ask questions, I skipped the break so that people could continue to ask questions and get all the questions they want in.
As per your agreement, I’ll let the questioning continue. Happy to get the member in once the time is up.
T. Shypitka: Can I respond, Chair?
The Chair: Yes, Member for Kootenay East. Go ahead.
T. Shypitka: Well, we’ve all made some reconsiderations here on the length of the questioning or the length of the non-answers that we’re receiving, and we’ve had to ask questions multiple times. It has pushed a lot of our members out of discussions for today. We have to submit those questions now because of the time. It’s been taking so long to get any kind of answer from the minister on multiple questions that we’ve asked, whether it was on B.C. Hydro, through the member for Shuswap or myself….
This has created a lengthy process here today — a very frustrating one, I might add. So I just wanted to say that I think that it’s a little unfair.
The Chair: Thank you, Member. The estimates will continue. The member will have a continued opportunity to ask questions. Again, I will remind the member that you had made arrangements. I assumed there was an agreement. So now I will go on to recognize members as their hands come up, and I will honour the agreement unless I hear otherwise from the member for Kootenay East. Thank you for raising your concern.
T. Shypitka: I’m sorry, Chair. You’re waiting for a response?
The Chair: No, I’m not waiting for a response. Unless you have anything else, member for Kootenay East?
T. Shypitka: No.
Hon. B. Ralston: I thank the member for the question.
The public budget, at this point, is $10.7 billion. Obviously, there’s…. With COVID, there was a ramping down of the project and then a return, ramping back up. But the uncertainty due to COVID continues. The next major milestone in the project is the river diversion that’s anticipated. And although not entirely certain, I think everyone’s pretty confident that it will be reached. In September…. After river diversion takes place, then there will be a revisiting of the budget in the fall. But until then, that won’t be taking place.
S. Furstenau: Just to clarify with the member for Kootenay East, we had been both in discussion with staff from his offices as well as with the other critics that the member for Kamloops–North Thompson was ceding the floor and had sent me a note indicating so. I’m not sure about the confusion, but we have been working very hard. There are two of us and a very limited staff, and we work very hard to set out times for this and to be available and ask our questions. So I appreciate that opportunity now to continue.
I’m just going to ask one more question on Site C, and then I’ll hand it over to my colleague to ask some questions about our energy imports and exports. The list of reasons why there are delays and overruns in costs seems pretty significant. And as the minister indicates, COVID-19 is also going to exacerbate the growing costs of this project.
When we look to the other side of the country in Muskrat Falls and the state of the project out there, a very similar major dam project that had some pretty serious controversies, as has Site C here…. And many of the things that the minister has outlined were issues that had been raised by those who had had serious concerns about Site C, including our caucus.
I guess this is more of a question just for the minister. Is there a point at which there’s a level of cost that is reached that makes this project unsustainable economically, as it is unsustainable environmentally? We know that to be. At what point do the overruns of cost become something that makes this project unsustainable?
Hon. B. Ralston: I appreciate the member’s question. Thank you for the question. I, too, am concerned about the cost of the project, but I’m convinced that every reasonable effort to mitigate the cost of the project is being taken. So I think the concern is legitimate, but also the efforts to contain the costs and….
Certainly, there have been some unexpected costs due to COVID in terms of its impact on the schedule, which have obviously had some financial impact. Those will be assessed in the fall. But certainly, every reasonable effort to contain the costs is being taken.
A. Olsen: Sounds like, from that answer, it’s actually a bottomless pit. There isn’t a number. There isn’t a threshold. As long as we’re continuing the efforts to contain, then that’s enough effort. That’s problematic.
I have to share the sentiment of my colleagues from Kootenay East, Shuswap and Kamloops–North Thompson. We specifically shared our questions with the minister earlier today in a hope that these long delays…. I recognize that last question that was asked by my colleague was not on the list, but we’ve provided these questions. I’m hoping that we can, in an effort to try to make the best use of the time….
The former Minister of Energy, Mines and Petroleum Resources said on the record in 2019 that the province was a net importer of energy. From 2019 to 2020, was B.C. a net importer or exporter of energy?
Hon. B. Ralston: In fiscal 2020, B.C. Hydro was a net importer of electricity, with net imports of approximately 2,000 gigawatt hours.
A. Olsen: Thank you, Minister.
What is the total surplus of energy that is produced in British Columbia each year, on average, and who is the largest purchaser of this power?
Hon. B. Ralston: The total surplus energy is about 4,000 gigawatt hours, on average, each year — the surplus of clean energy that can be sold by Powerex to its trading partners within the western interconnection. Powerex will export energy when the B.C. Hydro system has more power than we need to meet demand in B.C. and when market prices are high. This provides additional revenue and helps keep B.C. Hydro rates low.
A. Olsen: Thank you for the response, Minister.
How much power did we import from Alberta and from the United States? And if the minister could briefly characterize the sources of this power, whether it be hydro, coal, natural gas, etc.
Hon. B. Ralston: In fiscal ’19-20, B.C. Hydro was a net exporter to Alberta of 1.2 million megawatt hours and a net importer from the U.S. of 3.4 million megawatt hours. Approximately 98 percent of the electricity B.C. Hydro generates is from clean, renewable resources.
Since 2011, imports from Alberta have made up less than 0.5 percent of total gross supply in B.C. Hydro’s system and 3 percent of total imports. It’s also important to note that Powerex typically exports five to six times more electricity to Alberta than it imports, which helps substantially reduce greenhouse gas emissions in Alberta.
Powerex imports power during periods of low prices, which is increasingly periods of high renewable output in the United States. There is an increasing amount of renewables available on the market during midday periods when solar generation is high, which leads to low prices.
A. Olsen: Not quite what we were trying to get there but….
Can the minister confirm that the majority of power that B.C. Hydro, via Powerex, imports to B.C. is from natural gas, coal-fired power plants? I guess it’s just digging in a little bit further on that previous question.
Hon. B. Ralston: I’m not able confirm the mix of the electricity that’s imported for the following reason: when Powerex purchases unspecified market electricity, it’s a blend of all the resources in the market. Although I think it’s fair to comment that an increasing amount of renewables — wind and solar — has been added to the grid, and this trend is widely expected to continue.
A. Olsen: Thank you to the minister for the response.
Can the minister please provide the number for the carbon intensity of energy imports as determined by Powerex and the Ministry of Environment and Climate Change Strategy for the past year, and can the minister comment on what the historical trend has been for the carbon intensity of our energy imports? Is it going up or going down?
To the last point that the minister made, what are the future projections of the carbon intensity of the power that we are importing?
Hon. B. Ralston: If you were to benchmark comparables of emissions intensity of imports to B.C., typical comparables would be natural gas, which is 0.50 tonnes of CO2 equivalent coal, 1 tonne of CO2 equivalent; “market energy” from the U.S., 0.43 tonnes of CO2 equivalent; and Alberta, 0.52 tonnes of CO2 equivalent.
In British Columbia, the latest figure that’s available is…. The emissions intensity of imports for British Columbia is 0.141, so dramatically lower than all those comparables that I just listed.
A. Olsen: Thank you to the minister for those responses. I’m going to cede the floor to the member for Cowichan Valley for one question about mining. As with the members for Shuswap and Kamloops–North Thompson, we’ve submitted you some other questions, which I didn’t have time to ask today. I’m hoping that our caucus can get a response to those from your ministry. There are some important questions there around the topics we’ve been asking.
As you can imagine, we’d love more time, but it’s not there. Thank you for your responses today.
S. Furstenau: I just have one more question. We’re changing gears here. It’s a question from my constituency related to mines permitting and approval, so I’m hoping the minister can speak to that. I’m just going to give a little bit of background. I’ve asked the previous minister questions about this as well.
There is a community in the Cowichan Valley called the Kingburne area community, and it’s had some pretty challenging experiences with some mining activity that’s happened there.
There was an approval by the Agricultural Land Commission in 2004 on a property in the Kingburne community for extraction of rock for an irrigation pond. That extraction went on for over 13 years. Then the owner was required to apply for a mines permit in 2017. Over that period of time, the excavated rock came within about 20 metres of Kingburne Drive. It caused multiple problems for residents, who raised their concerns with the Ministry of Mines repeatedly. It was only after many, many complaints from the residents that this GT Farms was required to apply for a mines permit.
Unfortunately, now the situation is that the same owner has gotten another approval from the Agricultural Land Commission to blast and extract 36,000 cubic metres of aggregate and has been given three years to complete it under an ALC notice of intent. When the residents asked about this, the Ministry of Mines said that no mining permit was required.
The residents of this community are feeling like it’s kind of a déjà vu scenario, where the same operator is using ALC permits to do significant extraction of aggregate but that there are not available to them the same kinds of measures that would be available if there was a mining permit. So this is really challenging for them.
My question for the minister is specific to this case, and then a broader question about when we are seeing extraction of aggregate, extraction of any kind. That is a mining activity.
I’m wondering why the Ministry of Mines does not, essentially, regulate mining activity, whether it’s on ALR land or not, because the ALC does not have the same tools of regulation that the Ministry of Mines does. This comes back to the bill that was introduced in the House earlier this month.
The public needs to have confidence that regulation is happening. When they see the extraction of aggregate go on for 12, 13 or 14 years with no regulatory oversight from the Ministry of Mines and then the same process beginning again, they’re not feeling a lot of confidence and trust in the regulator to do its job.
My question for the minister is: does he not see that the role of the Ministry of Mines is to regulate extraction in this province? Why is it that in this case, with the operator, the same experience is being allowed to unfold, where they’re extracting under an ALC permit?
Hon. B. Ralston: The details of this example require, or lead me to offer through the staff, a more detailed briefing about the specifics of this particular site.
The general principle, I’m told, that is being applied is the following. If the production of aggregate is a by-product of the intent — for example, a person needs to remove rock in order to develop his or her property — the ministry will generally not require a permit. That’s the general rule.
How that’s being applied in this particular case probably would be better dealt with by a more detailed briefing by ministry staff. So that’s an offer to the MLA on this particular question.
T. Shypitka: I want to touch on a point of order. In no way was that directed at the Green Party. In no way was it directed at the Chair himself. Just on the proceedings, it’s been a little bit frustrating.
I apologize to the Greens if they think I was getting on their case at all. I was not, certainly. They deserve their questions answered, as we do.
We didn’t get a lot of answers here today. That was a little frustrating. We got no answers on…. We had frustration by the members for Shuswap and from North Thompson. Even the Greens didn’t get any answers on some of the questions they submitted already. Yeah. A little frustrating. But we’ll carry on.
Maybe there’s a question that the minister can answer. It won’t be based around numbers. It will be, maybe, about his own personal perception of the file. He’s fairly new to this file.
The question to the minister is: can he give me the feedback he has received from industry on the carbon tax and the tax structure in this province and how it factors into the global competitiveness?
Hon. B. Ralston: I appreciate the member raising this question. I note, from my review of the estimates transcript of last year, that he raised a very similar question last year. So he’s being consistent; that’s for sure.
Maybe just talking broadly about the carbon tax. It was introduced by a previous B.C. Liberal government, by Premier Campbell. I think he regarded it as one of his major achievements, the first carbon tax in North America. Also, Carole Taylor was the first Finance Minister to introduce a carbon tax. So there is a strong connection of the carbon tax to the member’s political party. It’s widely considered by economists to be effective, a Pigovian tax, which basically taxes what you don’t want in order to incent what you do want. I think that’s the basic principle.
More specifically on the issue of competitiveness, there are a number of factors that go into competitiveness, beyond just a simple consideration of one tax. Dealing specifically with the carbon tax, CleanBC has implemented an industrial incentive program for that portion of the tax above $30. Emitters can earn back, if I can put it that way, the extra costs by meeting a certain world-leading emissions standard. That’s been well received by many industries and big emitters throughout the province.
Finally, just talking more broadly about cost. What is prevalent in the world of investment these days is that many investors — pension funds, people like BlackRock, major private equity firms, national pension funds — recognize the importance of what are called the ESG considerations — environmental, social and governmental. Where a jurisdiction demonstrates its commitment to Paris accord goals, demonstrates its commitment to a low-carbon economy and has specific programs to advance that, that is something that attracts investment rather than detracting from it.
The member may not be willing to accept that, but that is actually the behaviour of many pension funds, private equity firms and individual investors globally. What British Columbia has is the opportunity in some sectors, such as the mining sector, to create a brand of the lowest-carbon-intensity mineral products in the world. While that won’t attract all of the market, it certainly will attract a substantial portion of the market. There are major companies which regard that as something that is very desirable, and they are actively looking for it in their suppliers.
The global CEO of Rio Tinto Alcan told a story, which I heard personally at a meeting, where Apple Computer came to both him and Alcoa, two leading aluminum producers, and said that they wanted to source, for their product, low-carbon or no-carbon aluminum. They brought those two companies together because they felt that they each had a part of the puzzle about how to create an industrial process that would produce low-carbon aluminum. In fact, that’s what they’re doing. They’re engaged in a process which, according to the CEO, will come about in 2024 or 2025.
There is a market for that. It is actually a competitive factor that people are looking for, rather than a negative factor. Certainly, there are ongoing concerns in some sectors. I do hear those from time to time. Overall, I think the kind of economy that we want to create and that we can attract and build here is one that is served by CleanBC, of which the tax in its present form is a component. That’s how I would endeavour to answer the member’s question.
T. Shypitka: Well, okay, we’ll talk about that. First of all, when the minister first started his little speech there, he talked about me being consistent, about asking the question from last year. It’s not me being consistent in asking the questions. It’s industry that is constantly asking me the question on being globally competitive.
If the minister has read what the Mining Jobs Task Force tabled in 2019, a lot of the information was given from the Ernst and Young report of the same year. In that report is a quote from the Mining Jobs Task Force, page 13:
“EY’s strongest competitiveness finding is that B.C. is not competitive in its treatment of carbon. Although government has proposed some targeted support to industry…to companies operating in B.C. currently, and will continue to pay substantially more than their competitors in other jurisdictions. This cost burden has a direct effect on the competitiveness of existing operations and creates a challenging investment environment for new mines and mine expansions.”
Then from the Ernst and Young report, on page 6 of the 2018 report: “As a simplified example of how the federal backstop compares to the B.C. carbon tax….” This is the question I’m asking the minister on the structure of the carbon tax. Yes, the B.C. Liberals did bring the carbon tax in, but it was a revenue-neutral structure. It went back to industry. Now, with the new structure the NDP has brought in, that has been removed. It’s not apples and oranges, in the way the minister wants to illustrate it.
Going on:
“As a simplified example of how the federal backstop compares to the B.C. carbon tax, one can estimate how much a facility, which emits 100 tonnes of carbon per year and has average emissions performance, would pay in Ontario compared to B.C.
“In B.C., this company would pay the $30 carbon tax on all of its emissions, equating to, at minimum, $3 million per year in carbon tax — and potentially more, depending on how the facility performed against international benchmarks. The equivalent facility in Ontario would only pay the carbon tax on 20 percent of its emissions or roughly 20,000 tonnes of carbon per year, amounting to a full carbon tax payment of only $400,000 in 2019, at $20 a tonne, or roughly $1 million in 2022 at $50 a tonne.
“In general, a carbon tax that is broadly applied to all fuel use, such as in B.C., will always impose a higher cost to facilities than they would face under a cap-and-trade or OBP system, as those systems provide reallocations of a majority, than they would face under a cap-and-trade system to cover their emissions.”
The question is a simple one. It was the same question I asked before, basically. Does the minister recognize that we are losing our competitiveness due to the carbon tax structure of our province?
Hon. B. Ralston: The member cited a passage from the Mining Jobs Task Force, which was a major piece of collaborative work led by the previous minister. It had industry representatives, Indigenous nations and labour, chaired by the ADM responsible for mining, Peter Robb. It came up with a number of recommendations, all of which have been implemented or are being implemented.
What the member neglected to read was the following paragraph from the one that he read in the Mining Jobs Task Force, which I think paints a much more positive figure and leaves a much more positive impression than he is prepared to acknowledge. Let me read.
“However, B.C.’s mining sector has worked to reduce its carbon footprint and has become a model internationally for how to lower emissions. Industry continues to work with government and the clean tech sector to develop innovative solutions to reduce emissions and keep B.C. operations competitive.
“The province’s recently announced CleanBC program is an opportunity to continue these efforts, reducing carbon tax costs and investing directly into emissions reduction projects. This program will help the sector and its workers thrive, create a clean industry brand for B.C. and help the sector compete in a global market where consumers are increasingly demanding cleaner products.”
That’s from the same report, the following paragraph from the one that the member had said.
Yes, we want our B.C. mining companies to be competitive, and they are. As I think I said in the House last week or the week before, I recently met with the CEO of Artemis Gold, which is initiating a major gold project — just raised $200 million to develop a gold mine in the Blackwater country. Ultimately, the project will be a $2 billion project. They have their environmental approvals. They’re anxious to go forward and go create jobs and prosperity in that particular region of British Columbia. It will benefit us all.
British Columbia is a good jurisdiction for mining, a competitive jurisdiction for mining. I want to thank the member for raising these questions and giving me an opportunity to talk about B.C. mining, of which I’m a passionate advocate.
The Chair: Thank you, Minister. Can I ask you to move the motion?
Hon. B. Ralston: I move that the committee rise, report resolution and completion of the estimates of the Ministry of Transportation and Infrastructure and report progress on the estimates of the Ministry of Energy, Mines and Petroleum Resources.
Motion approved.
The Chair: This committee now stands adjourned.
The committee adjourned at 6:34 p.m.