Natural Resources Committee on Nov. 29th, 2018

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

Okay. Perfect.

Thank you, everyone. I'll start with my friends from Ontario.

Gentlemen, picking up from what Marc Serré was talking about, I'm just going through a bunch of articles here. One says, “Ottawa's SunTech Greenhouse shuts off million-dollar lighting system...”. Gone.

One says that the Kingsville greenhouse is expanding outside of Ontario, and that was on November 28, 2016.

On March 23, 2017, the government announced $19 million to help keep Ontario greenhouses in Ontario.

I'm assuming that was paid from the global adjustment fund, or was it through another fund?

[Terry Young]

I have no awareness of that arrangement; I apologize for that. I'm not up to speed on that one.

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

That's okay.

On your energy manager issues, according to the article I am reading now, Ontario, between 2003 and 2014, eliminated about 7,500 kilowatt hours of energy, but it added almost 14,000 of capacity, and during that time, bills rose by 80%. We know that.

Is that correct so far?

[Terry Young]

I don't have the article, but yes, it's true that their demand did drop. The increase in demand that was projected did not emerge. If you look at the statistics, you'll see both a lower peak demand as well as a lower overall energy use, if you will, than we had in 2006.

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

During that time, Ontario lost about 300,000 manufacturing jobs. Given the news we heard in Oshawa regarding the General Motors plant, given that they pay about $15 million in energy and taxes—they pay $16 million in Ontario for energy, so they would be a company that would be big enough to hire an energy auditor—and given that companies are choosing to leave before they even get an energy auditor, should we not be looking at ways to reduce the price of hydro before many more decide Ontario is just not a competitive place to do business?

[Terry Young]

As you may be aware, since June the government in Ontario has taken a number of steps to reduce the cost of electricity. A number of wind and solar contracts were cancelled. There have been a number of steps.

I had the opportunity to listen to the Minister of Energy, Northern Development and Mines speak yesterday about some of this. Yes, I think we're seeing Ontario take steps to reduce the cost of electricity now.

With respect to some of the things we're doing in energy efficiency, there is the opportunity to continue to look at ways of reducing costs of electricity, not just for customers who are participating today but also for tomorrow. As I mentioned, for every dollar we invest in energy efficiency, we're avoiding $3 of future infrastructure cost. We are reducing that demand for electricity not just today but for tomorrow as well. We are, in the most cost-effective way possible, looking for ways of meeting future demands.

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

I understand that it's not your fault that Ontario has some of the highest energy rates in North America. You're just sitting in front of me and you happen to be the lucky people I get to ask these questions to. I do apologize.

Just for those who may be listening at home, can you tell me, as you are lowering these prices—which, I agree, is a good thing to do—how the global adjustment fund is paid? Who funds that?

[The Chair, Liberal, James Maloney]

You'll have to answer very quickly.

[Terry Young]

The global adjustment is a component of the electricity cost. The people who pay electricity bills in Ontario are also paying that global adjustment. The global adjustment was set up a number of years ago. It covers certain fixed costs. If you're paying a fixed cost for a particular source of generation that may be over and above what the market price is or the hourly price is, the cost of that contract is recovered through the global adjustment.

[The Chair, Liberal, James Maloney]

Thank you. We'll have to move on.

Mr. Hehr.

[Kent Hehr, Calgary Centre, Lib.]

Thanks, Mr. Chair.

Thank you very much for the opportunity to ask questions to these very esteemed guests who have come to chat with us today.

I would like to start with Mr. White.

Mr. White, in your introduction you were noting the many things that in your view have made your business a success, including not only the creative people who are working with you, but also the timing of the thoughts and ideas around energy reduction in B.C. You also said one of those things was that B.C. was putting a price on pollution.

I would like you to expand on that and tell me how a price on pollution could make your business more successful and make other businesses more energy-efficient and reliable.

[Brad White]

Thank you.

I assume you're referring to the B.C. carbon tax in your question.

Really, the impact the carbon tax has had is.... Our electricity is largely carbon-free in B.C. It's a very small footprint. With natural gas, obviously, it's much more significant. For the last almost 10 years now, the natural gas prices have been extremely low.

What we've seen, effectively, is that the carbon tax has added a couple of bucks per gigajoule to the price of natural gas. That comes back into the business cases for the energy efficiency projects. Projects that otherwise would have had a 10-year payback might have a six- or seven-year payback now because of the carbon tax. That makes it something that businesses want to invest in bringing down. Really, it's all about the business case and improving the business case for investing in efficiency. That way, it's a market signal that, I would say, incents investment in energy efficiency. Then more efficiency projects happen. Of course, that creates more business for us, indirectly.

[Kent Hehr]

Has that also brought more awareness to your average customer, the fact that there is a price on carbon? Has that signalled to them that, “Hey, we're serious about climate change and we have to do something about it in that regard”?

[Brad White]

I certainly think it does.

It's interesting. One thing I've noticed just in the last year or two with our customers is that, previously there was very much a focus on energy costs, but more recently.... We have two or three major clients, both public sector and private sector, who report that the main driver for them investing in efficiency is carbon reduction. They are doing it for the carbon....

Part of that is the City of Vancouver setting up a zero-emission building strategy. There are a bunch of different ways that government has taken some leadership in the sector. I think some of that is now filtering down to public sector organizations and private sector organizations.

We hear from our clients, “We want to reduce carbon. That is our primary goal.” Obviously, the energy savings are a benefit, and the projects have to make sense from an investment point of view, but they're really looking for those carbon savings.

[Kent Hehr]

At the end of the day, they're saying that climate change is real and that they, as a business, have an obligation to be part of the reduction in carbon and to try to lead to a better way, not only of doing business but also of leading the planet.

[Brad White]

That's certainly fair for some of our clients. Not all, but some definitely have that view.

[Kent Hehr]

I'd like to ask this of my friends from the Independent Electricity System Operator: Is that the same sort of sentiment you're finding with people who use your organization? Are they coming in from both an economic perspective and also, for lack of a better term, a moral imperative to reduce carbon, given global warming?

[Terry Young]

I would suggest a couple of things. Generally speaking, it's very much focused on electricity and energy efficiency. We run the province's electricity grid.

I would note that the grid we operate was essentially 96% carbon-free in 2017. Of the electricity sources we relied on in 2017, 96% were not emitting carbon. So we have a clean system here.

The programs we are operating are focused on electricity measures.

[Kent Hehr]

Are all businesses in Ontario allowed to take part in your program? Or are there certain distinctions and certain levels that you have to achieve to become eligible to take part in what you—

[Terry Young]

No. All businesses are eligible to participate. In the programs we offer, we look for an investment from the business itself. I mentioned the level of investment we provide, but there's a greater level of investment, cumulatively, that businesses would make to be part of this program, as well.

We're well aware of the need for businesses, industries and even residents to, themselves, commit some level of investment, to participate in our programs.

[The Chair, Liberal, James Maloney]

I'm going to have to stop you there.

Mr. Schmale, we'll go back to you for five minutes.

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

Thank you very much, Chair. I appreciate the opportunity.

Bruce, I'll have a question for you in a moment. I just want to get back to Mr. White.

We were talking about British Columbia and the carbon tax that Mr. Hehr brought up. Now, there was an article out today saying that B.C. has dropped to 58th in the global investment rankings. Alberta has dropped from 14th to 43rd place. The article cites numerous factors—taxes, regulatory burdens, etc.—but one that was in both was high energy costs.

Now again, you are in a unique position, such that companies that have the ability to pay for your services are paying for your services. Given the fact that energy costs are, as I pointed out in my previous line of questioning, destroying the manufacturing sector in Ontario—despite the carbon tax in B.C., emissions still went up—how are we continuing to keep investment here in this country if energy, according to this article and according to the article I talked about before, is pushing people out, and they're not even bothering to do energy audits?

[Brad White]

I'm not sure, as a small business owner, that I'm necessarily in a great position to answer that question.

Certainly within the context of energy efficiency, that is an incentive for energy efficiency. There's a larger question obviously. Your point is more about total energy costs. It remains that because the B.C. grid—and it sounds as if the one in Ontario as well—is largely carbon-free. One thing I would mention is that the cost of energy is rising for a lot of reasons that are not related to carbon tax.

I would say the majority is not carbon tax-related, because as I said, despite the carbon tax, gas costs much less today in B.C. than it did in 2008, for example, prior to the last recession. It was up to $15 or $16 a gigajoule. The price of gas today for most commercial customers is, even with the carbon tax, $7 or $8 a gigajoule, much less than before. That's simply an issue of supply and demand.

There are a lot of fluctuations that are, as I said, not related. The price of electricity has gone up quite significantly, and it's largely carbon-free. I think it would be a mistake to kind of pin a lot of this on the carbon tax.

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

Never pin it all on the carbon tax. I'm just saying it's bad government policy, especially when LNG in British Columbia is exempt from the carbon tax.

[Brad White]

The rise in emissions, I think, is largely industrial and from the production of natural gas. There are things that are outside of the context of the conversation around energy efficiency, I would say. There are a lot of other issues that need to be looked at under a broader lens that are not related to energy efficiency, and obviously they play a role.