Natural Resources Committee on Nov. 29th, 2018

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

I guess one of my points, through all of this, is that government is driving up the cost of energy through whatever policies; and to kind of fix the problem, it is coming up with another program to help incentivize to save energy, but businesses could be doing that anyway. However, those that can't, or those that believe the gap is too big, are just leaving altogether—as in the greenhouse example.

I'll leave that with you.

[The Chair, Liberal, James Maloney]

You have 30 seconds if you want to ask Mr. Rebel a question.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Mr. Rebel, since you came all this way, I'll go to you.

You were talking last time you were here about the tariffs on aluminum and steel still hurting your industry. Obviously, you're paying more for material, or your industry is paying more, and that's being passed on to your consumers as a direct cost or it's hurting the volume of business you're doing entirely.

[Bruce Rebel, Vice-President and General Manager, Association of Home Appliance Manufacturers Canada]

Certainly, in terms of the manufacturing of appliances, we do use a lot of steel and aluminum in those appliances still, particularly the major appliances such as refrigerators and ranges. The cost of those materials has gone up, but it's a double whammy in the sense that a lot of that manufacturing is occurring offshore, in the United States in some cases, which means that the aluminum and the steel are more expensive to purchase.

On the flip side, in terms of bringing those appliances or the components thereof into Canada, there are now Canadian tariffs, retaliatory tariffs. So it's bit of a double whammy in terms of making the appliances, home appliances in particular, more expensive.

[The Chair, Liberal, James Maloney]

I'm going to have to stop you there. You can't say you didn't have enough time today, Jamie.

Mr. Whalen, you have five minutes.

[Nick Whalen, Liberal, St. John's East, NL]

Thank you very much.

Thanks for coming.

Mr. White, in terms of the energy efficiency that you showed us on your charts and how you measured it, are those year-over-year savings in energy use projected or are they audited and measured by your company? How does that work? How much rigour goes into that?

[Brad White]

That really varies from project to project. I think that, in two of those cases, those were completed projects, with which we will often stay involved post-project. We always try to verify savings at the completion of the project.

Occasionally, clients will want to know what the ongoing performance—in the case of the Vancouver General Hospital project, that was over a million-dollar investment. When you get to numbers that big, there's incentive for customers to make sure they continue to see the benefit.

We have a lot of customers who will pay for one year or more of monitoring and verification after completion. If it's a project that has had incentives, often the utility will mandate that the monitoring and verification take place, after the fact, to validate the savings. In some cases, it's just the customer looking at their energy bills and then concluding that yes, they have saved energy.

It varies a lot from project to project.

[Nick Whalen, Liberal, St. John's East, NL]

Does SES have a lot of competitors in the British Columbia market?

[Brad White]

Certainly. We are rare, in that we're one of the only firms that focus exclusively on energy efficiency. There's at least one other large firm that does similar work, and there are a large number of small firms and sole proprietorships that do similar work, so we are one of probably 20 different companies in B.C.—one of the largest—but certainly we face lots of competition on every project.

[Nick Whalen, Liberal, St. John's East, NL]

For the energy management services, do you face competition from the utility itself?

[Brad White]

No. The energy managers are employed by our clients. Sometimes we do contract energy management and sometimes we are hired to support energy managers in developing their strategic energy management plans or documents like that. It's a partnership.

[Nick Whalen, Liberal, St. John's East, NL]

Are you ever paid by controlling flows of funds? Rather than paying the utility for the pricing, the client would then pay you for five or six years. Is there any factoring that goes into how you guys collect your fees?

[Brad White]

We are fee-for-service consultants. There are larger organizations—what you're referring to is what we call an ESCO model or energy services company model. That tends to be for very large projects in which you might retrofit an entire municipality—for tens of millions of dollars. You have very large companies, like Johnson Controls, that take on work like that. It's not something that we would do.

[Nick Whalen, Liberal, St. John's East, NL]

On the Ontario side, Mr. Young, do you guys employ and pay the energy managers?

[Terry Young]

The energy managers are employed in the industrial programs. They are employed by a company itself. It's an incremental position that's been set up, and they are a member of that company.

[Nick Whalen, Liberal, St. John's East, NL]

Okay. Fair enough.

Do you guys find that, in Ontario, you're competing with private sector companies, like SES, in terms of the services you provide?

[Terry Young]

No. What you'll see are these energy managers, who are getting familiar with supply chains that are there as well, who use them to help drive efficiencies in their own organizations.

This is a program that we're funding that companies are able to access.

[Nick Whalen, Liberal, St. John's East, NL]

Great.

In terms of the way in which each of your organizations measures success, earlier in the presentations you were referring to reduced capital costs associated with grid expansion. I'm just wondering whether or not—

At our meeting earlier in the week, one thing we talked about was the need for grid expansion, not just to serve traditional demand but also to allow for the adoption and the expansion of transportation sector access to electricity sources, rather than oil and gas petroleum products.

I'm just wondering how much of what you're doing, in terms of your financial modelling, runs counter to the desire just to grow the grid?

[Terry Young]

In growing the grid, I think you're doing so at a cost. I think what we want to see is that it's an efficient growing, if you will, of the grid.

I've been in this business long enough to remember when demand for electricity was increasing at 7% per year, so every 10 years you were essentially doubling your needs, if you will. We certainly want to get away from that. We want to make sure that any growth that occurs is as necessary and as efficient as possible.

[Nick Whalen, Liberal, St. John's East, NL]

This is my last question for you guys.

I'm not sure if you have this data handy, but in order for us to be able to compare apples to apples, it would be great to see what your average kilowatt hour savings per dollar would be. I wouldn't want the utility to take into account anything associated with the fact that they didn't have to spend money on grid hardening. I just want to know how much the savings are and how well each of your organizations is doing in your clients' kilowatt hour savings, or metric tonnes of oil equivalent savings, per dollar invested in the projects. I would just like to get a sense of whether the private sector or the public sector is doing this better.

Thanks.

[The Chair, Liberal, James Maloney]

Can somebody answer that very quickly?

[Nick Whalen, Liberal, St. John's East, NL]

No, I think that's to table.

[The Chair, Liberal, James Maloney]

All right, that's perfect. I think I see a look of relief too.

Mr. Cannings, you have three minutes to finish this.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

Mr. Rebel, for curiosity's sake on my part, what is the proportion of home appliances sold in Canada that are made in Canada versus made elsewhere, in the United States or Mexico?

[Bruce Rebel]

Currently there are very few manufacturers of home appliances in Canada. I don't want to speak to some of the other HVAC industries, but particularly in the home appliance industry, the vast majority, like 95% plus, is probably being manufactured offshore.