Industry Committee on June 17th, 2010

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

No.

[The Chair, Conservative, Michael Chong]

Okay, Mr. McTeague and Mr. Rota, go ahead.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

I'll be very brief. I just have a couple of short questions on rural gas stations.

The two-year inspection period has been discussed quite a bit, yet I'm hearing numbers, or a discussion, that in urban centres maybe it should be every six months, or it should be based more on volume. How was the decision made to choose two years over volume? Where does that come from?

[Gilles Vinet]

This was discussed during our consultations. We looked at what's done in other countries as well. We don't know of any country that would make a regulation based on the throughput of the gas dispensers. The maintenance and the coordination of that would be very difficult. Of course, under the act the retailers are responsible for making sure their devices are accurate. So if a station had a very high volume of products, a good retailer will often have those devices calibrated every year.

Every two years there would have to be a mandatory certification to make sure that, yes, they are in compliance with the act. For really high volume, that would be possible, but to base it on the throughput, to administer, enforce, and monitor that, it would be extremely difficult and extremely costly.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

So the two years was a random number?

[Gilles Vinet]

No, but two years seemed to be reasonable, given the technology that is used and what is done in other countries. That was determined to be appropriate.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

On the regulation, you mentioned that if someone has a rural gas station or is out of the way, they can apply to have a one-year extension.

On a previous study we had economists come in and say that if the government was serious about something or wanted to put something in, they should put in a subsidy of some sort to get service to that point. Has that been discussed or considered for rural Canada or remote gas stations, so that remote Canadians can have a gas station that has accurate measures? Is there any kind of subsidy that has been discussed?

[Alan Johnston]

No.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Nothing. Okay, very good.

I'll just make one last comment, and you can comment on it if you like.

You mentioned that probably for retailers the greatest thing they have, or the biggest asset they have, is consumer confidence. That's basically all they have. I mean, if people aren't confident in it... The minister has made some pretty extreme accusations. How has that affected the retailers?

[Alan Johnston]

I don't think they're very happy.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

That's good enough. Thank you.

[The Chair, Conservative, Michael Chong]

Mr. McTeague.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Johnston, Mr. Vinet, Mr. Cotton, Madame Roussy, thank you.

I want to get to some very helpful questions, I hope, that will allow you to provide us some guidance here in this committee as it charts its way through what appears on the surface to be a very easy issue but in fact can be very complicated and have unintended consequences. I think that's one of the missions that certainly our party is trying to resolve.

The issue of pump accuracy, as you can appreciate... My experience with tomorrowsgaspricetoday.com is that it gets 40,000 to 50,000 visitors a day with commentary even when there is no change in the price of fuel, so the public is extremely sensitive to this. We're all caught as legislators and you are as administrators, as those who are behind that wonderful seal that is put on every pump, or most pumps, across Canada.

I'm wondering, and it's further to what Mr. Rota suggested, and it leads to where I left off, about the concern about throughput volume. I take it that responsible retailers will in fact inspect more frequently. I give the example of the one in my riding. It's an Esso station next door with a substantial volume of throughput, and it will inspect every two to three months. They just get that much, and they are concerned about wear and tear. At the same time, we may have a prospect of a small pump, a single pump, an old Tokheim that's been around for 30 years. Sullivan's Grocery Store in Ennismore, Ontario, has a single pump whose throughput is 115,000 litres every year. It's hardly worth keeping there, but it is nevertheless filled there and they do maintain it.

Since we have not seen the draft regulations, I want to ask you if any consideration has been given to looking at the prospect of regulating on a sliding scale for the purpose of certification, where the time period would be relative to throughput. I think this would demonstrate that the government clearly recognizes that two cars coming off a parking lot, one will change oil every 5,000 kilometres, and the other changes every 100,000 kilometres, even though it's in the same period of time. I think you will find the analogy is very apt.

Would it not be preferable to have a sliding scale, considering what you're trying to address here, which is the prospect of wear and tear? Retailers have told us that wear and tear is primarily responsible for the skew. Is that something you would consider?

[Alan Johnston]

The short answer to that is no, we did not consider a sliding scale. Just as you indicated, and my colleague Mr. Vinet indicated, the owner of the device is required to keep the device accurate. If large retailers with that kind of throughput are getting their pumps checked every three months, as you indicated, that's good. It improves the accuracy within Canada. At some point, if you don't have those pumps checked, if you do go simply on throughput, you could have a device maybe in a rural area that wouldn't be inspected for five years. I don't think that's fair to the consumers in rural areas that their device would be inspected only once every five years based on throughput, when there are many other factors involved relating to the accuracy of the pump.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Johnston, that is probably for us a troubling perspective in the legislation, again, not having the benefit of the regulations. The duty of care for the retailer is what I think you're referring to, that they must perform the due diligence which you referred to specifically. Those regular calibrations... Right now the legislation allows virtually anything, if I read it correctly, to attract violation or even a publication of the name of the retailer. Obviously, this has been cited as a great concern for a number of retailers. They suggest, and again you've heard it many times, that there are many things that cause a meter to go out of whack and beyond the tolerance of calibration, but it is not within their control.

So you have a situation where you would want to mandate to ensure accuracy and whether they do it or not. I think it would be incumbent on us to perhaps recommend a sliding scale so in fact there is compliance. This is, after all, the raison d'être of your legislation. Why would you allow a two-year lassitude when you could use a sliding scale that takes into consideration the various types of pumps, the ages of the pumps, what the pump is putting through, and the different qualities of gasoline, which might have an impact? Why would we not consider that?

I understand the international standards. I notice that Option consommateurs in its 2003 report suggested that you also adopt an international standard in measurements. I believe they referred to it as NIST. You don't do that here. I think you have subjected it for years to the National Research Council. l have no difficulty with that. I'm suggesting that if we're going to trot out the international standard, we also should be doing it here, in that the consideration of a sliding scale is something...

Was it suggested in your deliberations when you were dealing with retailers? Did any of them suggest a sliding scale whatsoever?

[Alan Johnston]

To the best of my knowledge, no, they did not. We're not aware of any country that does it through a sliding scale on throughput. As my colleague Mr. Vinet said, we think that would be extremely difficult to administer, both from a cost perspective and from an administrative perspective, because some gas stations might need to be checked every month and some wouldn't be checked for ten years. We'd have to look at the sliding scale. We don't think it would be equitable across the country based on throughput. We believe they would have the ability to have their pumps checked more often. As I said earlier, if they're giving away product, it affects their profit margin.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

You can't use a standard and pick it out of air and say it's every two years and if you're out of calibration within that two years you're going to be caught. Obviously we should be providing an indication to suggest... We haven't heard from Gillbarco or Tokheim or Dresser Wayne. It's unfortunate that we haven't brought them here as witnesses, whether they've been offered and declined. We're dealing with a lot of very important, pithy information that is going to require us to make sure we get this widget right. Considering that we pay 3¢ a litre above world prices for fuel, considering the skew as a result of temperature compensation, and all those things set aside, which have a far more meaningful impact on consumers, if the intent of the legislation is to provide consumers with a guarantee of a modicum of accuracy, regardless of cost, I think the sliding scale is something we ought to consider.

Now, having said that, has my question of sliding scale ever been discussed among yourselves up until now?

[Alan Johnston]

I certainly haven't discussed it. But I just want to make it clear, when you say we pick the period of time out of the air, that we did not pick it out of the air.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Oh, the two years.

[Alan Johnston]

The two years is not picked out of the air. We did this based on discussions, based on previous data and that kind of thing.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

The reason I pushed that point, Mr. Johnston, is that if you look at—and you've asked for and I think you'll receive—most oil companies trading in Canada, you'll see that they have contractual obligations to ensure that accuracy is done on a more frequent basis and that accuracy is within a certain tolerance, both of which well exceed what you are proposing as an outside minimal standard.

I would strongly urge you to consider that and speak to the stakeholders and key players on the other side of this to give assurances as to whether it is in fact feasible to do this.

Chair, I have three requests. So do we go on to...?

[The Chair, Conservative, Michael Chong]

Three requests? Go ahead and make your requests.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Would it be possible to get—I think Mr. Garneau has asked this, and I think you've alluded to it—the raw inspection data that led to the conclusions you've made?

[The Chair, Conservative, Michael Chong]

Yes, we will.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Two, would it be possible to provide to the committee the procedure for testing pump accuracy?

Would it also be possible to provide us with the complete methodology for the $20 million claim Monsieur Vinet has made?

Finally, can we get the draft regulations?