Industry Committee on June 10th, 2010

[The Chair, Conservative, Michael Chong]

Mr. Dicerni, the microphones aren't working. We'll suspend for five minutes while they straighten out the...[Technical Difficulty--Editor]

[Mike Wallace, Conservative, Burlington, ON]

[Proceedings continue without recording—See Minutes of Proceedings]

[Proceedings continue with recording]

[The Chair, Conservative, Michael Chong]

We're coming out of suspension. Welcome back. We're moving on to the second item on our orders of the day.

We're here pursuant to the order of reference of Thursday, May 13, 2010, to study Bill C-14, An Act to amend the Electricity and Gas Inspection Act and the Weights and Measures Act. In front of us today we have Mr. Boag, who is president of the Canadian Petroleum Products Institute, and Monsieur Montreuil, vice-president of the same organization. We also have with us Madam Huzar from the Consumers Council of Canada.

Welcome to our three witnesses.

We'll begin with an opening statement from Mr. Boag of the Canadian Petroleum Products Institute.

[Peter Boag, President, Canadian Petroleum Products Institute]

Thank you very much.

Good morning, Mr. Chair and committee members.

As the president of the Petroleum Products Institute of Canada, I certainly want to thank you for the opportunity to be here today and to share the views of the institute on Bill C-14. With me today is Monsieur Carol Montreuil. vice-president of the institute's eastern Canada division.

The Canadian Petroleum Products Institute is the national association representing the public policy interests of the downstream petroleum industry for all aspects of petroleum refining, distribution, transportation, and marketing for transportation, home energy, and industrial uses. Collectively, CPPI members operate 17 refineries across Canada, representing 80% of Canadian refining capacity, and supply some 10,000 branded stations with transportation fuels across the country.

CPPI members include Chevron Canada Limited, Husky Energy, Imperial Oil Limited, North Atlantic Refining, Parkland Income Fund, Shell Canada Products, Suncor Energy Products Inc., marketing under the brand name Petro-Canada, and Ultramar Ltd.

At the outset, I want to emphasize that CPPI and its members are committed to the principle that consumers should get what they pay for. CPPI members operate with the highest levels of integrity and have developed trust with their customers by providing full value for high-quality and reliable energy products.

CPPI members support the concept of mandatory periodic device inspections that are enabled by Bill C-14. Having a two-year mandatory inspection cycle was a principal recommendation of Measurement Canada's 2004 retail petroleum trade sector review. CPPI was a participant in that multi-stakeholder consultation and endorsed the recommendations of the review.

I would also like to take this opportunity to reinforce some remarks made by Measurement Canada officials when they appeared before the committee last week. First, I would like to acknowledge that the retail petroleum sector has a very high compliance rate, which met Measurement Canada's standards: 94% for gasoline pumps over a 10-year period. In 2007, the compliance rate, as reported in the Canwest story referenced by Measurement Canada last week, was 97%. Clearly our goal is to get to 100%, but the mid- to high nineties--and certainly in comparison to the other sectors that were described last week--are very high.

Moreover, Measurement Canada officials confirmed that the calibration error threshold is low at 0.5%, which is really about one cup of fuel for a 50-litre fill-up. They also confirmed that there was no evidence to suggest that calibration errors are the result of intentional actions on the part of refuelers. I think this is an important point to make in the context of some of the public commentary on the issue at the time that Bill C-14 was first tabled.

The last point I would like to make refers to the title of Bill C-14, the Fairness at the Pumps Act. Given that the act amends both the Electricity and Gas Inspection Act and the Weights and Measures Act and is applicable to a broad range of trade sectors, I would respectfully suggest that the committee consider recommending a change to the bill's name to better reflect this broad application.

I would conclude by reaffirming our position that our members are firmly committed to the concept and the principle that consumers should get what they pay for.

Thank you for your attention. Mr. Montreuil and I would be happy to take your questions.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Boag.

We'll now hear an opening statement from Madam Huzar of the Consumers Council of Canada.

Welcome.

[Joan Huzar, Chair, Energy Committee, Consumers Council of Canada]

Thank you very much, Mr. Chairman.

Just for those who may not be aware of our organization, the Consumers Council of Canada is an independent, not-for-profit organization. We were federally incorporated in 1994. Our goal is to bring a consumer voice to important local, regional, and national issues, and of course that's why I'm here.

The council works collaboratively with consumers, business, and government to solve marketplace problems. We aim to inform consumers, businesses, and governments alike about their rights, obligations, and responsibilities. Our volunteer board of directors consists of experts in the fields of consumer issues, consumer policy development, and business development.

The council provides informed opinion through its public interest network, which is a volunteer think tank of more than 400 thoughtful, engaged leaders from many different fields of expertise from across the country. As well, we have a network of young consumers, which is a virtual forum of more than 100 young professionals who keep the council in touch with their consumer demographic and able to better understand their needs.

We are arguably the most active multi-issue consumer group in Canada.

I will tell you that I live in Victoria, British Columbia, where unfortunately, our weather is just about the same as it is here right now, but I'm here in Ottawa attending another meeting so I was happy to be able to come to this presentation. Our offices are actually in Toronto, Ontario.

In general, the council approves of the government's intent to provide greater protection for Canadian consumers from inaccurate measurements at gas pumps and other metering devices.

I would agree with my colleagues that the short name of the bill doesn't encompass the broad scope of the actual bill. That was a good suggestion.

We like the four particular things that we pulled out, which are the administrative monetary penalties and increased maximum fines, the new fine for repeat offenders, the mandatory inspection frequencies, and the appointment of non-government inspectors trained to conduct these mandatory inspections.

Having said that we approve of all those things, we do have some comments to make.

First, on the administrative monetary penalties, proposed new subsection 29.11(3) sets a maximum penalty for a violation at $2,000. Our opinion is that this amount is not going to promote compliance with the act. The offence penalties under section 33 set a maximum from $20,000 to $50,000 and under section 32 from $10,000 to $20,000. These penalties represent real inducements for compliance. The $2,000 penalty, we would argue, does not.

The council questions the government's provision of the payment of “a lesser amount that may be paid as complete satisfaction of the penalty”. My assumption is that this means that if you pay it on time you don't have to pay as much. Quite frankly, I don't understand that idea at all. How does a reduction in the penalty provide increased protection against non-compliance? Perhaps someone can explain.

Furthermore, the council questions the provision of compliance agreements, which are an admission of guilt but which may result in a “reduction, in whole or in part, of the amount of the penalty...”. How does a reduction in the penalty provide increased protection against non-compliance?

Proposed section 29.28 allows the minister discretion as to making offences public under the act. It says the minister “may” make these public. This, in combination with revision of compliance agreements, seems to us to undermine the deterrent quality of the act. We would hope that the minister “will” make public those people who have been found guilty of an offence.

The council believes also that it is unrealistic to have, as the only recourse in a dispute, an appeal to the minister. Surely Weights and Measures Canada can establish a realistic dispute-resolution process. An appeal to the minister should be a last resort.

The council applauds the provision for an employer to be liable for a violation committed by an employee.

On the area of a new fine for repeat offences, we agree with proposed section 29.24, which establishes that a “violation that is continued on more than one day constitutes a separate violation in respect of each day” on which it is committed, and we wonder why there isn't an increased penalty, as there is in section 32.

Concerning mandatory inspections, if the intent is to conduct mandatory timetabled inspections, and not inspections conducted as a result of consumer complaints, then we support this requirement. Our concern is the provision of financial and human resources to carry out this function. It is our experience that government often makes consumer protection laws and regulations, but fails to provide the resources to ensure that protection. We would hope that the budget is going to be increased so that Measurement Canada can carry this out.

Finally, there is the appointment of non-government inspectors. We approve this concept of the appointment of non-government inspectors trained to carry out the mandatory inspection. Now, this may be my inability to read the legislation, but it appears there is confusion in the proposed act about who is an authorized inspector. Proposed subsection 26(5.1) seems to be in opposition to proposed subsection 29.12(1). Who is an authorized inspector under the act? In my reading of it, I could not determine who that person is going to be.

In concluding, then, we support this bill in the principles on which it's built. We believe the concerns we've raised need to be addressed to make this stronger consumer protection legislation.

Thank you very much, Mr. Chair.

[The Chair, Conservative, Michael Chong]

Thank you very much.

Now we'll have about 40 minutes of questions and comments from members of the committee.

We'll not be moving on to the third item on the orders of the day because Mr. McTeague has indicated that he's not going to move his motion, so we'll use the remaining time to 11 o'clock for the study of Bill C-14.

We'll begin with Mr. McTeague.

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

Thank you, Mr. Chong.

Witnesses, thank you for being here today.

Like you, I had some doubt as to the motives of the legislation given the dearth of evidence that these issues were in fact taking place. That's not to suggest that consumers do not in fact have concerns about whether or not they're receiving the proper amount of fuel that they believe they're paying for.

I want to go to you, Monsieur Montreuil and Mr. Boag, and then to you, Ms. Huzar, as to the underlying concerns that this legislation may give rise to even further complications and does nothing to eradicate that perception.

I agree with you on the title. The title is misleading and I think is somewhat gratuitous. I was concerned that at the press conference the minister referred to retailers by demonizing them as “chisellers”—some of them, anyway—when the evidence may very well point to the fact that issues of impropriety or the perception of a lack of quantity the person believes they're purchasing may be the result of mechanical failure, of wear and tear, which I think is normal in any circumstance.

Mr. Boag and Mr. Montreuil, I'm wondering if you could ascertain from your members if they accept the standard Measurement Canada provides, of 100 millilitres for every 20 litres of fuel, as an acceptable tolerance. I say that because if I'm driving Mr. Van Kesteren's car, which might be fuelled up at 60 litres of fuel, it means that under the current tolerance levels a consumer may lose one-third of a litre of gasoline. At a dollar a litre, that's 30¢ to 40¢ a litre. I think that would continue to maintain the cynicism that the public correctly has.

Mr. Boag, do your members accept the 100-millilitre tolerance level? Or do they believe or do they operate on a lower tolerance level, both at the gas stations and the refineries?

[Peter Boag]

Well, certainly I'm going to talk about the gas stations specifically. They accept that as the regulated standard now under current standards. It's not a discussion we've had in terms of whether they think that should be a higher level of tolerance or not, so I'm afraid that I really can't answer that question.

Ultimately, it's up to the government to decide to promulgate a standard, which they've done. That's certainly the standard members now take very seriously and certainly have within their own organizations.

While I'm not privy to all the details of how individual companies respond to that, they take this as a very serious issue. They have compliance programs that in many cases, I'm told, exceed the two-year voluntary standard, with some companies doing it as frequently as annually on a regular basis, and even more.

With respect to the specifics of the tolerance, I don't have a particular view of where members sit on that.

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

Fair enough.

Would it be in the interests of any of your members' companies, if they could do it, to in fact skew or play with the current arrangement of gas pumps we have? Or would there be an inventory impediment to trying to skew, as it were, to skim off in favour of the retailer?

[Peter Boag]

First, let me again reiterate that our members believe firmly that consumers should get what they pay for. They want their pumps to be accurate. They, as business people, would not want to risk jeopardizing the trust of their customers by that kind of action.

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

There is a standard test procedure that is recommended by Measurement Canada. I won't get into the detail; it's quite involved. But I have spoken to several people who work in this field and suggest that the current standard procedure, field procedure, is too open to the risk of interpretation.

Therefore, you may well get an organization, a fly-by-night business, that says they're certified, they've made all the standards, they meet all their criteria, so they're going to slap the sticker on and allow the 100-millilitre tolerance, as an example, which could be the sign of a wearing machine, and they won't have to inspect this for another two years.

Is there the possibility under this scenario of creating further injury and further problems and complications if there's no standard, set, defined, and interpreted guideline for tests?

[Peter Boag]

Like you, I'm not an expert on the actual calibration activity, so I'm afraid it's really difficult for me, not knowing the details of that calibration level, to offer an answer to that question.

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

Mr. Montreuil.

[Carol Montreuil, Vice-President, Eastern Division, Canadian Petroleum Products Institute]

Clearly, any time you have human intervention in calibration or manipulation, you are adding errors. So it has to be clear that we seek to get 100%, but given that you're involving humans and you're involving equipment, obviously this is prone to error.

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

When this issue first appeared with Glen McGregor's article, it was apparently a study by Measurement Canada, which neither Measurement Canada nor anyone has been willing to acknowledge took place.

Knowing how gasoline works when you remove it from the ground, I know that if it's not done in a proper way, it is liable and suspect, and possible errors can happen. Exposing gasoline that's at an ambient temperature in a tank to outside temperatures could have the effect of contracting or expanding it and therefore making the process of calibration certification a bit redundant and perhaps even useless, if not suspect.

I'm going to ask you, Ms. Huzar, in your opinion--and I won't ask you about calibration--is it conceivable that the government's position with respect to the penalties may have something to do with individuals who may have had one of their pumps malfunction not as a result of something they'd done deliberately, so that's why there's a difference in the fines, a difference between $2,000 and $20,000?

Has your organization considered that unwanted and unintended mechanical failure is captured by the legislation's saying there are circumstances that warrant a lower penalty or fine versus a higher mandatory, which your organization seems to support?

[Joan Huzar]

I think the key here is consumer trust. When I pull up to the pumps or occasionally go to a store where a butcher weighs something, my expectation is that the measuring device is accurate. That's number one.

Number two, my expectation is that somebody up there--although as an ordinary consumer I probably wouldn't know that Measurement Canada was the organization--is ensuring that this is what's happening.

So anything that government can do to maintain that trust is very important. I think we're really getting at the fraudsters. My assumption is that this is what this is aimed at: those people who are setting out to make a quick killing by doing whatever it is they do. In that respect, the legislation has to be sufficient.

As to the mechanical failure, it seems to me there's an obligation of a business to ensure that the mechanical stuff it's using--in this case, pumps or scales or whatever it is--is working.

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

I wonder if your organization took into consideration in the hoopla over this issue, which took place at the same time that energy prices were going through the roof, the fact that the government, by its own admission, found that 4% of the tested pumps were not in favour of consumers, while 2% were, and 94% were within compliance.

What would your organization and its membership think of the fact that under the current regulatory framework, despite all the legislation, the song and dance, and the fanfare, they are still, on 60 litres of gasoline, going to lose anywhere between 40¢ and 60¢ every time they fill up?

Would your organization be concerned that the tolerance level accepted by Measurement Canada continues to undermine and provide for the cynicism that you've alluded to?

[Joan Huzar]

On this aspect, as in any place in the marketplace that I would use computer scanning errors at the checkout as a comparable sample, I think our expectation is that it's right, that it's accurate. The scanning at the checkout is a little different because, with luck, you have in your head the number that it should be, and when it shows up on the cash you can see it's different, so you have an opportunity to challenge the cashier. You don't here. The issue is trust. I think the issue is the retailer's obligation to make sure their things are accurate.

[The Chair, Conservative, Michael Chong]

Thank you very much.

Monsieur Cardin.

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you, Mr. Chair.

Madam, gentlemen, good day and welcome to the committee.

Fundamentally, the important thing here is to maintain the public's trust. When it comes to weights and measures, there are some things that are more or less important. If we're talking about a scale to weigh calf's liver, errors are less costly than if we were weighing gold.

I agree with you as far as the title of the bill is concerned. Again, it's a bit misleading. Consumers are, as we know, quite sensitive to any variations in gas prices. If, in addition to that, we're saying that there may be measurement discrepancies that hurt the consumer, well that makes the bill even more attractive. Conservatives excel when it comes to such things. For example, they called the minimum sentencing bill Sébastien's Law. When they wanted to bring in amendments to the Criminal Code, they tabled the Act to amend the Criminal Code (minimum sentence for offences involving trafficking of persons under the age of eighteen years); the short title of this bill is the Fairness at the Pumps Act. The bill should have been called the “Trust in Measurement Act“ and that would have covered all weights and measures systems, include electricity and gas.

All, or virtually all, industry and consumer representatives agree that appropriate fines should be imposed and that these should not be left to the minister's discretion. Everyone agrees that proper fines should be imposed.

I don't believe that gas retailers manipulate the system. Just imagine how much gas a retailer would have to sell in order to reap some kind of benefit, especially considering the fines that can be assessed. I doubt very much that a retailer would do that. However, we need to take steps to guard against negligence. It's possible that when inspections are done, the devices are used incorrectly. How do we determine if the individuals using the weights and measuring devices are in fact negligent? The regulations may be clear on that score, but overall, the potential annual discrepancy between the price paid by the consumer and the quantity received is pegged at $20 million. That's less than a 1 cent a litre variation in the price of gas at the pump. If I'm not mistaken, that's within the limit. I don't really see the problem. To my way of thinking, the problem isn't fraud, but primarily negligence.

The costs involved range from $50 to $200. What does the industry think about all of this? How has it reacted in general?

[Peter Boag]

On the cost issue, the general view of members looking in terms of what they're doing now... Again, I don't have the specific details of individual business transactions and the specific costs of individual firms, but I think the general information that members have been able to provide us suggests that the cost is anywhere between $50 to $200 to inspect and calibrate a pump. That's the kind of range there is.

[Carol Montreuil]

The industry goes further than the regulations require by carrying out inspections on an annual basis, or more frequently than is required, in the case of high-volume outlets. That shows how important this is to us and how cost is not an issue because we don't just do inspections every two years, as the regulations prescribe. Sometimes, we don't even let a year pass between inspections.

Aside from economic considerations, it's important to remember that the pumps are all part of a system that includes underground tanks and pipelines. We must ensure that there are no leaks in the system, from an inventory control standpoint and for the sake of the environment. The pumps are one component of the reconciliation process that allows us to ensure that environmentally speaking, the equipment is in sound working order. Therefore, cost is not a major factor. This is clear, in my opinion, from the industry's performance.

[Serge Cardin, Bloc, Sherbrooke, QC]

On the subject of consumer protection, have you done anything about water metering in general, Ms. Huzar?

Have you conducted any analyses of water consumption and have you any recommendations to put forward with respect to water metering?

[Joan Huzar]

Our organization specifically has not, but on general principles, water metering is I think desirable. People should know how much water they're using. I think that's a given. I know that a lot of communities in Canada are moving towards that.

I'll go back to consumer trust. Our assumption is that standards are set for how these things work. Our assumption is that the way you enforce standards is by having inspections. In the strongest terminology, I guess I would say that it's industry's responsibility to ensure that their equipment functions the way it ought to, and if a two-year inspection regime isn't sufficient, then maybe you need to look at something else at strengthening that.

But the standards are in place, I gather. It's the inspection regime that is the key to the whole thing, so anything you can do to strengthen that and make sure that inspection regime is above reproach will build consumer confidence, which is what this is about.