Industry Committee on June 3rd, 2010

[Serge Cardin, Bloc, Sherbrooke, QC]

They are perhaps easier to adjust, as well.

[Gilles Vinet]

That is not the conclusion we have drawn from our inspections carried out in the retail food sector. When we did a review of the sector and consulted retail stakeholders, be they consumers, consumer protection groups, merchants, measuring device manufacturers, it was agreed that five years was an acceptable period for these devices, in a commercial sector context. But in the other sectors, inspections are usually done every one or two years.

[Serge Cardin, Bloc, Sherbrooke, QC]

Therefore, generally speaking, the fact that this bill is called the “Fairness at the Pumps Bill”, is attributable to the reality that most deviations occur in the gas and fuel sectors. But you must have done some kind of an evaluation after the publication of the article; you must have verified the evaluation. Approximately how much of a loss to the consumer does this phenomenon represent annually?

[Gilles Vinet]

Our evaluations cover the year 2008, but we checked again in 2009, and the results are more or less the same. With regard to gas pumps only, for Canadian consumers, we are talking about the equivalent of 20 million dollars worth of gasoline that was not poured out because the pumps registered errors that were over and above the legal tolerance level. That does not include the high flow truck refuellers; we are talking here only of gas pumps. Clearly, the majority of the complaints that Measurement Canada receives relate to gasoline.

[Serge Cardin, Bloc, Sherbrooke, QC]

Is the lack of accuracy of gas pumps due to breakage or to other things?

[Gilles Vinet]

No. The vast majority of the measurement errors that we see are not due to fraud or tampering. They are due to either a failure to properly maintain and calibrate these devices, or to wear and tear... These devices often remain in service for a long time without being calibrated. Wear and tear is inevitable and these devices become less accurate over time. But in the great majority of cases, it is not a matter of fraud or other such things.

[Serge Cardin, Bloc, Sherbrooke, QC]

No, I understand. For the retailer, it is easier to adjust the price of gas by a tenth of a cent; the industry will pocket $40 million as opposed to the $20 million lost by consumers. That is the reason why there is not necessarily tampering.

So in your view, this $20 million loss justifies an increase of inspection costs by how much? It is the retailers who pay for the inspections, which cost between $50 and $200. What could the annual cost amount to for the merchants, the retailers?

[Gilles Vinet]

That depends on the number of gas pumps they have. The inspections are done every two years. If one considers the volume of gasoline that flows through gas pumps during the course of a year, there is obviously no relationship between the $50 or the $200 paid out and the quantity of gasoline measured by the device. People can therefore do their own calculations.

One must however realize that, generally speaking, a merchant should have his equipment calibrated every one or two years to ensure that it is running properly. He can use that opportunity to have the device certified by an authorized service provider.

The advantage of the model, as Mr. Johnston stated earlier, is that in the present system, when Measurement Canada goes out to do an inspection and a non-compliant device is discovered, the merchant must call up a service provider to have someone come out, calibrate the device, repair it, and we then have to go back and check that the device has indeed been repaired.

There is therefore a lot of running around, as well as costs for the merchant and for us, whereas with the new system being proposed, the company authorized to certify the device would be able to repair it on site as soon as it encounters a device that is not providing accurate measurements. It will be able to make the adjustments, do the calibration and the certification, confirming that the device is now up to standard.

All of this information will then be provided to Measurement Canada. We will therefore have the information.

[The Chair, Conservative, Michael Chong]

Thank you Mr. Cardin et Mr. Vinet.

Mr. Lake.

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

Thank you, Mr. Chair, and I thank the witnesses for being here.

In the original statement you made you touched a little bit on the history of the program in inspections. I just want to clarify. In the mid-1970s the requirement was amended. So there was a requirement to have them certified regularly. It was amended to be two years. Then it says that government inspectors charged fees for those inspections. So this new law basically takes us back to the way it used to be, except that it's not government inspectors, it's recognized technicians. Is that accurate?

[Alan Johnston]

That's an accurate statement, yes.

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

So it's something that's been done in the past. The government inspectors charged fees to the gas stations themselves back then.

[Alan Johnston]

That's correct.

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

Do you have any idea what those fees were back then? Obviously, the numbers would be--

[Alan Johnston]

I honestly don't know what the fees were at that time. I know they were relatively small compared to the cost today, but the cost of living has gone up significantly since then.

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

Okay.

In terms of compliance, 94% of gas pumps are compliant, but what is the acceptable range? How is that measured? What defines what compliance is?

[Gilles Vinet]

On what's an acceptable range, for gas pumps our target is 100% compliance. We hope we can get there. Of course these are all mechanical devices, so there will be things that will happen.

If we look at what is going on in other countries--because this is not something that's unique to Canada, and other countries do also have regular inspection of devices--our analysis shows that it increases compliance significantly. We believe that it should bring us very close, hopefully, to the 100%.

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

What I was asking is 94% are compliant--

[Gilles Vinet]

Yes.

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

--so what is compliant? What defines whether they're compliant or not? Obviously 94% aren't 100% accurate.

[Gilles Vinet]

The 94% means that 94% are measuring within the legal tolerance.

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

Which is what?

[Gilles Vinet]

Which is, for gas pumps, half a percent, or 0.5%.

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

Okay, then 6% are out.

In terms of the news report, the way it was reported, the public reacted fairly strongly, as you mentioned. I think the idea was that obviously people thought that because so many of them were skewed in favour of the traders that people were deliberately messing with their pumps to accomplish that.

Is there another explanation as to why this was happening in favour of traders versus in favour of consumers?

[Gilles Vinet]

We don't have a clear explanation as to why it's more biased towards traders versus consumers. It could be wear and tear. In some cases that is more a natural transition in the measuring of the devices. If those are calibrated on a regular basis, it would address that problem.