The Canadian Hydropower Association welcomes the new Canadian Environmental Assessment Act. It will reduce federal-provincial overlap and duplication, which costs taxpayers, electricity ratepayers, and project proponents. Bill C-38 reforms will concentrate the federal process on areas of federal jurisdiction. They will put the emphasis on projects that are likely to have significant impacts. The process improvements should allow the system to comfortably accommodate the timelines proposed in CEAA 2012, and provide quality environmental assessments. Proponents will be able to dedicate resources to really solving priority environmental issues without being sidelined by process distractions that do not contribute to actual environmental outcomes.
I’d like to emphasize that predictability and timeliness in project review and authorization are critical to our industry. Currently, the approvals for major projects in Canada take about four years. Developers usually begin environmental studies many years before the official EA starts. This is too long for investments that are sensitive to market timing, especially in comparison to the shorter time to market for competing fossil fuel generation. Delays can have a significant impact on project economics. For example, even just a one-year delay in Manitoba Hydro’s proposed $8 billion Conawapa generating station would result in a half a billion dollars in lost revenue. This represents a loss to Manitobans and a loss of export revenue to Canadians.
But the impacts of a faulty regulatory system can be even broader. They can lead to suboptimal choices both for the environment and the economy. Let me give you an example, again from my own company. Manitoba Hydro recently signed power purchase agreements with Minnesota and Wisconsin for future electricity delivery, and we need to invest over $15 billion to expand hydro facilities to meet the contract requirements, while also meeting Manitoba’s growing domestic requirements.
We are a preferred supplier in the U.S. and elsewhere. Our electricity is clean, renewable, and reliable. We will act as a battery to support wind power in the mid-west of Canada and the U.S. Our hydro would displace thermal generation and reduce greenhouse gases and air pollution in North America. If the EA process runs more slowly than expected and we miss our contract deadlines, the contracts can be cancelled. Manitobans and Canadians would suffer significant economic losses.
Just as important, though, is that our customers would turn to U.S. coal or gas-fired generation to meet their needs. The advantages of reducing greenhouse gases and air pollution by using Canadian hydro power would be lost. The answer is not imposing new timelines on the old system. The current regime has problems of duplication, inefficiency, lack of focus, and lack of coordination. We believe that Bill C-38 addresses these fundamental challenges.
Bill C-38 also addresses other legislation important to us. The Canadian hydro power industry supports the protection of fish and fish habitat, but the Fisheries Act has been a source of frustration, especially regarding its undefined authorization processes and its tendency to overlap with provincial fish protection statutes and regulations.
DFO has imposed mitigation measures on hydro power developers that are sometimes disproportionate to the potential environmental improvements that are being sought. The proposed changes to the Fisheries Act offer better clarity and an ability to reduce duplication with provinces. The ultimate implications for hydro power will strongly depend, however, on regulations that are yet to be written. We believe that if sound regulations are adopted, both fish and the hydro power industry will benefit.
We are keen to be engaged in this important future work, in terms of the regulations. We are particularly encouraged that Bill C-38 addresses some major shortcomings in the third piece of legislation we're going to talk about, the Species at Risk Act. Currently, SARA has a five-year limit for an agreement, and a three-year limit for a permit concerning activities affecting listed species or their critical habitat. These limits are out of step with the needs of the hydro power industry, whose facilities operate for decades. In fact, behind this building, on the Ottawa River, lies the oldest hydro power facility in Canada, the Chaudière Falls generating facility, which is over 130 years old.
Clearly, three-year to five-year SARA authorizations are not workable for facilities that can take longer than five years to build and that can operate for more than a century. Any hydro power developer is going to be leery of proceeding with millions or billions of dollars in investments if the authorization expires before construction is even complete.
Bill C-38 allows for longer-term authorizations under SARA. This will be a big improvement, but more needs to be done to improve the act. For example, there is an opportunity for government to enable industry to focus its efforts on activities that more effectively conserve and enhance the population of species. The current act requires us to focus activities on a few individuals of that species instead. This improvement can be done by linking stewardship and conservation agreements with compliance in the act.
In summary, the Canadian Hydropower Association has pleaded for greater efficiency and predictability in the environmental regulatory process for years. Improvements to the regulatory system are clearly required. We see Bill C-38 positively addressing many of the regulatory problems. The proposed improvements will not adversely affect our industry's environmental performance; instead, they will encourage further investment in clean and renewable hydro power. This will help Canada reduce North American greenhouse gases and air pollution.
Thank you, Mr. Chair and committee members.