Finance Committee on Oct. 5th, 2010

[Sean Whittaker]

Thank you very much for the question. Alberta is a leader in wind energy. Pincher Creek is home of some of the first large-scale wind farms, and they've been very successful.

On the question with respect to integrating wind, one of the things we benefited from in the last five years is seeing what happens when you bring a bunch of wind into various systems, be they hydro or thermal. One of the things the utilities have realized is that while a single turbine's output may vary over the course of a day, if you're on a system that's big enough, and it doesn't have to be that...if it's a few hundred kilometres away and you have a second turbine, its output will often be different from the output of the first turbine. Then if you get a hundred turbines or a thousand turbines, what you find is that they tend to balance each other out extremely well. In fact, a lot of utilities with a lot of wind on their grids find that the variability of the fleet of turbines across their jurisdiction actually varies less than the demand they get.

[The Chair, Conservative, James Rajotte]

Because of different locations.

[Sean Whittaker]

Exactly. It's a case where size matters. Having a geographic diversity is important, and certainly Alberta has a remarkable wind resource. There are currently plans to build 3,200 megawatts of transmission in the south. Part of that is based on the understanding that this will give them that diversity they need to balance with thermal.

Alberta is an interesting case as Canada's only deregulated electricity market. And just to answer your question about cost, Alberta is the only province right now that has essentially carbon pricing. The cost differential right now between wind and conventional technologies is fairly small. The general feeling is that once a carbon-pricing mechanism comes into place, it will basically reduce that gap to zero. Minister Prentice indicated earlier that there was an interest in having Canada follow the U.S. on a carbon pricing mechanism. Once we get to that point, that gap will close. From now until then, we do still have that gap, essentially to deal with the external cost of carbon emissions.

[The Chair, Conservative, James Rajotte]

Does the price that Alberta is putting on—it's $15 per tonne—need to move in order to have the costs narrow even further?

[Sean Whittaker]

The sense is that the best carbon market you can have is one that's operating freely, and Alberta has really led the way in terms of establishing that market, but it has capped the price, which hasn't really allowed it to move as it should have. Many of our members, many companies—TransAlta, Suncor, Shell—that are developing wind farms would prefer to see that cap lifted to better reflect the actual carbon price. In Alberta, because it's a deregulated market, wind is competing head to head against every other technology, so it needs that price gap to close as much as possible.

[The Chair, Conservative, James Rajotte]

Okay. I appreciate that very much.

Colleagues, I have a couple of things. We do have a meeting with a visiting finance committee from Germany tomorrow. We have 22 members coming, so I just want to remind members and hope that you will show up. It's an optional meeting, but I'm hoping you will show up at 1 p.m.

The meeting is officially over, but I have a special request from Monsieur Paillé, who would like to ask a couple more questions. It's actually out of order of the rounds, but I'm asking the indulgence of the committee to give him a couple of questions.

As long as you're nice to the government, Monsieur Paillé.

[Daniel Paillé, Bloc, Hochelaga, QC]

I just want to ask something about the meat industry. I would like to know where the Levinoff-Colbex slaughterhouse situation stands.

There were problems with the slaughter of heads of cattle. There was a gap between the cost of slaughter in Canada and the cost in the United States. A number of farm producers found it worthwhile to send the animals to the United States.

Has this issue gone anywhere? How could the government satisfy the demands of producers?

[James M. Laws]

That slaughterhouse is actually taking advantage of a federal program that helps pay the costs associated with those specified risk materials.

[Daniel Paillé, Bloc, Hochelaga, QC]

But there is still a gap of $25 or so per head, in terms of slaughter.

[James M. Laws]

In fact, it is around $30 right now. It helps them a lot. Quebec has a lot of dairy businesses, a lot of cull cows. These people are now able to pay out more for the animals, so as to keep them in Quebec.

We also have a project. Margo helped the Riopel company in Quebec, which used a federal program to acquire new equipment and develop innovations, in particular, trying to remove the brain from the animal's head to further reduce the quantity of products to be included in the specified risk materials. Riopel in Quebec produces a lot of equipment for the agrifood processing sector.

[Daniel Paillé, Bloc, Hochelaga, QC]

Thank you, Mr. Chair.

I was nice. Mr. Wallace is not here.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Paillé.

I want to thank all of our witnesses for your presentations. It was a very interesting discussion. If there's anything further to submit to the committee, please do so through the clerk.

We look forward to the report in November or December.

Thanks colleagues.

The meeting is adjourned.