Natural Resources Committee on Feb. 14th, 2013

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you very much, Mr. Chair.

Thank you to our witnesses for being here.

I have a couple of quick questions for the folks from Surrey.

When you did your phase one, you talked about being able to assess the numbers. Did you come up with a number, a cut-off in terms of the number of households' waste it was going to take to make your overall project economic?

You said in response to one of the questions from Mr. Julian that you've optimized your plant for double the needs. Did you go into this with an idea of the minimum optimal size to even run it in the first place?

[Robert Costanzo]

If your question is relative to the size of the facility, we determined that 80,000 tonnes a year based on the size of the land. We have city-owned property where the facility will be established. With that, we then looked at our entire customer base to determine what kind of feedstock we could generate to deliver to an 80,000 tonnes a year facility.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

What percentage is Surrey going to contribute to this?

[Robert Costanzo]

We're going to contribute 50% of feedstock to the facility. Based on the results to date, it appears we'll likely be running 40,000 tonnes a year. It will be closer to 50,000 tonnes a year, based on high participation from 100% of our customer base.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

You said there'd be $16.9 million from P3.

What is the total cost of the project?

[Robert Costanzo]

It's approximately $68 million.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Did you say you expect to have your facility up and running in 2015?

[Robert Costanzo]

Correct. By mid-2015.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

The sale of renewable gas is a projection based on where you can sell this to. Is that because of the mandatory use of natural gas vehicles in the area?

Do you anticipate being able to sell all of this output into Surrey and the adjoining areas, or are there other markets you're considering?

[Vincent Lalonde]

I'll answer the question.

We've determined that the volume of gas we'll create is probably about four times what we can use in the waste collection trucks. That's the first place we will use it, again, to offer the value proposition to our customers. The other two-thirds of the gas can be used by other vehicles in our fleet. At our central works yard, we have a natural gas fuelling station. We anticipate putting some of that gas into the grid and then being able to extract it at our operations plant.

After we meet our own needs, we will then sell it off to either industry, or through FortisBC, our local gas provider, as a green gas component that they can offer to their clients.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you very much.

I'm going to turn to Mr. Bradley now.

You talked about the investment that's going to be required over the next 20 years. Given that the utility business, as you've identified, is a significantly capital-intensive business, how have your utilities been able to capitalize on partnerships they've created so we don't have what we'll call wasted and stranded investment?

[Francis Bradley]

That's an interesting question.

Certainly all of the utility companies are subject to regulation, principally those that are in transmission distribution. Some of the generators, depending upon the province, of course, fall under provincial regulatory authorities. Their decisions that are made with respect to investments are reviewed by regulatory authorities. Whether an investment is made or not made is something that first and foremost is reviewed by an independent regulatory authority, in every jurisdiction in this country.

In some jurisdictions, on the generation side, there is wholesale competition. In those instances, the determination on whether or not investments get made is purely on a business basis.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

You talked about the new demands on electricity services like plug-in services. Can you tell me how much of the innovation in the last five or ten years has been driven by that and by policy decisions on feed-in tariffs and things of that nature?

[Francis Bradley]

Feed-in tariffs are a very interesting policy instrument. We see the feed-in tariff in Ontario. Feed-in tariffs of course have been used in other jurisdictions, in Europe for example. They do tend to push changes more rapidly in the marketplace. They tend to push innovation into the marketplace as well. That's one of a number of policy instruments that will spur further innovation, because they create further opportunities in the market.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Allen.

We will go now to Mr. Leef, for up to five minutes.

[Ryan Leef, Conservative, Yukon, YT]

Thank you, Mr. Chair.

Thank you to all our witnesses.

I have gotten rid of my eight-tracks and rotary phone, but I'm afraid I still do have the meter rocking around my cabin up north. In that vein, for the $347 billion investment required, can you give me a picture? Is that a compilation of every jurisdiction's infrastructure input needs over that time? You noted that it's for a replacement of analog. Is this the Cadillac investment version to get everything perfect? What would the dollar value investment look like if you just moved it to the locations where it was required most? Are there places in this country where analog is still sufficient, still delivers the client services needed, and still meets all our energy needs? Can you give us a sense of that?

[Francis Bradley]

Sure. We partnered with the Conference Board of Canada when it was working on this study, so we have a fair amount of familiarity with the details. They in fact did a province by province and territory by territory look at what the requirements were going to be for generation, transmission, and distribution. In fact, the bulk of that investment, more than two-thirds of the dollars, is for generation. Roughly 10% is going into transmission, and roughly 20% is going into distribution.

While the distribution system that will be built in the future will be a smarter distribution system, a smaller portion of the investment is required for that than, for example, for the generation side.

[Ryan Leef, Conservative, Yukon, YT]

Does the generation-side requirement have to do with population growth or industry development? What's the rationale?

[Francis Bradley]

It's driven principally by two things. One is certainly population growth and changing energy demand. For the other side of it, I'll go back to my earlier analogy of the roof. These assets do not last forever. It doesn't matter what kind of asset you're talking about. If it's a thermal asset, a nuclear asset, or even a hydraulic asset, a hydro plant, investment is required to bring it up to speed. So the largest portion of that investment, over $200 billion, is going to go into either upgrading existing generating facilities or building new generating facilities to meet the increasing demand.

In terms of that increasing demand, if you think back even 10 years ago about how many screens you typically had in one house, it was typically two. There'd be a computer and a television. Today in most houses there are sometimes a dozen.

[Ryan Leef, Conservative, Yukon, YT]

It has a lot to do with household use as well, and consumer use of the products.

[Francis Bradley]

Absolutely.

[Ryan Leef, Conservative, Yukon, YT]

Thanks. That was helpful.

To the gentlemen in Surrey, I have a quick question. You noted in your presentation that you have a 90% customer satisfaction rate, obviously related to the use of the natural gas vehicles. What kinds of things are you hearing that aren't positive around this project? What accounts for the 10% dissatisfaction?

[Vincent Lalonde]

I'll answer the question.

The 90% satisfaction rate was not so much regarding the trucks but the whole rethink waste program. The main thing in what we were doing is getting.... We're only picking up garbage now every two weeks versus before when we used to pick it up every week. However, organic we pick up every week. So from a customer perspective, what was changing was the calendar and the frequency of when they could put out garbage, organics, and recycling.

The other one was really the cart system. We introduced the cart system for full automation of the pickup. A big part of it had to do with customers accepting having three city-issued carts versus having the myriad different garbage cans they had. I would say that it's a 90% satisfaction rate. A lot of it is driven from doing the right thing with the waste.

On the negative side, the main complaints revolved around some of the carts being too big. They couldn't be stored in a garage, things like that. So we have introduced four different sizes and people can choose from small to large. There is customer satisfaction around the selection of the size of carts and how fast we can change them if they're not happy with their carts.

I would say from a general—

[Ryan Leef, Conservative, Yukon, YT]

Just this essentially [Inaudible—Editor]

[Vincent Lalonde]

That is correct.

Actually one thing that surprised us both as a result of the pilot and now the city wide is the issue of going to garbage being picked up every two weeks. We thought there would be more people concerned about that. When we did our pilot, it turned out that people were not concerned once they did it. There was certainly some apprehension before we did it, but now that we've rolled it out, there have been very few complaints regarding that.