Natural Resources Committee on Dec. 8th, 2016

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

I have just a quick question.

I really liked that comment, by the way.

Mr. Stensil, I think there was something you wanted to add to that.

[Shawn-Patrick Stensil]

I just wanted to mention to the committee that in terms of storage, that is also developing really quickly. In October I attended the first conference of the Canadian storage association. That industry did not exist in Canada four years ago. I really encourage the committee to invite them here. Ontario has already rolled out some storage facilities. Texas has large ones. Again, this is where the innovation is happening, and you should invite them in front of you.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

I have a quick question on the backgrounder you provided us with, Mr. Stensil. With regard to Point Lepreau it states, “This estimate does not include the hundreds of millions of dollars in cost over-runs transferred to the federal government.” I'm wondering if you could elaborate on that.

I know there are two ongoing lawsuits, one on behalf of the AECL and one on behalf of New Brunswick Power Corporation—one for $204 million, one for $320 million—against the seven insurance companies that had backstopped the project when they bought the original half-billion-dollar policy when they started the project. In addition to that money from the cost overruns, which cost overruns were you referring to when you said that they had been put over onto the federal government?

[Shawn-Patrick Stensil]

Thank you. That's a great question, and I think a very important one.

For Point Lepreau, the cost estimate is about 10¢. That figure comes from the New Brunswick public utilities committee. I followed the Point Lepreau debate back in 2002, and way back in the day, they said it was going to cost 5¢. So ratepayers in New Brunswick have been hit by those cost overruns in the long term.

In addition to that, the federal government signed risk transfer agreements through Atomic Energy of Canada for the life extension of Point Lepreau. If you look back at the supplementary estimates over the past 10 years, you'll see that over $1 billion in cost overruns from Point Lepreau, the Bruce station, and Wolsong in South Korea were transferred to the federal taxpayer. So those—

[The Vice-Chair, Conservative, John Barlow]

Sorry, Mr. Stensil, that's seven minutes. Thank you.

Mrs. Stubbs, you have five minutes, please.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thank you, Mr. Chair.

Maybe I would just invite both of you to pick up on some of the conversation we've been having about Europe's experience with renewable energy. I acknowledge your accurate claims about the downward trend in cost, but even today German power prices are at an all-time high in 2016 on low wind energy.

I was reading earlier about the European Commission's winter package of energy measures. I understand they have a goal of at least a 27% share of renewables in gross European energy consumption by 2030. My understanding is that this is set at the EU level, not at the member state level. The European Commission has criticized both the target in place and also the governance framework, and suggests that modelling demonstrates that the EU is not on track to meet that target. They say that new measures will be needed to maintain even the 2020 status quo goal. They suggest that neither the governance frameworks nor the evaluations in place would be able to achieve the target. Relying solely on the EU measures would not be cost-efficient, and would lead to an uneven uptake of renewables across the EU and ultimately a failure of those targets.

Mr. Edwards might have comments on this as well, but since you referenced it, Mr. Stensil, I wouldn't mind hearing your comments on that in general, on the applicability that you would foresee for Canada, and on any lessons learned. Obviously you're familiar with what's going on in the European Union. If you want to look ahead, I invite you to discuss any jurisdictional comparisons.

[Shawn-Patrick Stensil]

Thank you for the question.

In terms of doing this in a few minutes, European federalism is a lot more complex than Canadian federalism sometimes. There are leaders and followers in the European Union on renewables, for sure. Germany is the main leader, and actually the world leader in that, so you'll see a lot more uptake in places like that. The U.K., for example, is not seen as a leader in the same sense.

I think the difficulty with finding the right mechanism.... Mr. Strahl had asked a question about subsidies, and I admitted that Ontario has made some mistakes. The problem with finding the right policy framework on renewables is because the price point is moving so quickly, how do you find the right mechanism to protect ratepayers but also encourage innovation and encourage uptake of these new industries?

What we've seen is that it's a success story. It's the kind of problem that you want to have. The price points have been changing so quickly with renewables that there's a lot of back and forth about how to do that in a just fashion, so you'll often hear stories here that are trying to dismiss what's going on in Germany, where they're adjusting their renewables framework. They're doing it for a reason; they're doing it to try to protect ratepayers while continuing to deal with this rollout. So in a general way for the European Union I think it is a bit of a mishmash.

I think what we need to look for in North America.... Ontario has made a commitment in its climate plan to make it the easiest and most affordable place in North America for homeowners and communities to install renewable or storage facilities. That is an interesting way to pose the question. They don't know yet what the mechanism will be. What's happening with energy markets is that in Canada we started with selling big hydro, like in Ontario and Quebec, really large power stations, and everyone was a consumer. The word that's now being used is “prosumer”. There is an actual two-way market that's taking place. People who have solar power on their roof are also selling it into a market. So it's about finding those market mechanisms that enable that, that are also fair to other consumers, which I think Mr. Strahl was getting at, and also for maintaining some basic facilities on the grid. That is the struggle we're dealing with in North America.

New York state is doing some renewable.... I forget what it's referred to as, but in their energy vision they're doing a lot on micro-grids and trying to enable how we allow communities to develop power on their own. I think that's something where across party lines we could find some agreement, and it is about finding those mechanisms. I don't have a clear answer to that because it's in development. But watching Ontario, it's kind of at the leading edge of it in Canada, but there are other areas like New York state in the United States that could also be looked at.

I think that tension is just because of the innovation, and it's about finding the right policy mechanism. With a nuclear plant, they come online and then you charge them the price and you increase it with operation maintenance costs for 30 years. It's fairly simple.

With renewables, we have to change our thinking from top down to bottom up.

[The Vice-Chair, Conservative, John Barlow]

Thank you very much, Mr. Stensil.

Thank you to our witnesses. That's all the time we have for this first part of our meeting. Again, thank you very much for providing your testimony. We appreciate it—

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

Mr. Chair, on a point of privilege, there are still four minutes left in this 50-minute round, and we have the privilege to speak. It's supposed to end with us.

[The Vice-Chair, Conservative, John Barlow]

I have one minute past the time allotted.

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

I have 9:46 a.m.

[The Vice-Chair, Conservative, John Barlow]

Yes, and 9:45 a.m. is the end time. Thank you very much, Mr. Whalen.

Thank you very much. We will adjourn for a couple of minutes and get our next witness ready.

[The Vice-Chair, Conservative, John Barlow]

We will now get ready to carry on with our next witness.

From the International Union of Operating Engineers, we have Mr. Steven Schumann.

Thank you very much for being with us today. I know you had an opportunity to see how things work, but you'll be given an opportunity for a 10-minute presentation, followed up by questions from committee members.

We'll start with you, Mr. Schumann, for 10 minutes, please.

[Steven Schumann, Canadian Government Affairs Director, International Union of Operating Engineers]

Thank you.

On behalf of the International Union of Operating Engineers, the IUOE, and our nearly 55,000 members across Canada, we thank the committee for allowing us the opportunity to appear today.

My name is Steven Schumann. I am the Canadian government affairs director for the operating engineers. Unfortunately, Lynda Cloutier, who was supposed to be here with me today, had a family emergency, so I am here by myself. She gives her regrets.

The IUOE is a progressive and diversified trade union. We are involved in all facets of natural resource extraction. We work in the oil fields and build pipelines, hydroelectrical facilities, wind turbines, and solar farms, and of course we build and maintain nuclear facilities. As you can see, we build it all. I'm here today to give you a labour perspective on how we see the future of nuclear.

For our members and the members of the Canadian building trades union, who we belong to, the future looks very bright at both the Darlington nuclear facility and the Bruce Power nuclear site. The Darlington nuclear station will invest $12.8 billion over the next 10 years to refurbish all four units. This refurbishment, which began in October, will create jobs for thousands of skilled trades workers in the province of Ontario and provide an opportunity for apprentices to gain valuable work experience. The passing of industry expertise down to our apprentices is something you cannot put a price tag on. It allows future construction workers to work throughout Canada. Bruce Power is also scheduled to begin refurbishment on its fleet of CANDU reactors in 2020, with a targeted completion date of 2033. This massive undertaking again will supply thousands of highly skilled jobs to our members.

Most of this work will be under a project labour agreement, a PLA, and anything not covered by the PLA falls under a collective bargaining agreement, a CBA. Both the PLA and CBA language emphasize that skilled trades workers must be “nuclear ready workers”, and our local unions for each of the crafts are responsible to ensure the training so that their workers meet this threshold. It gives a great opportunity for us to provide the necessary training to our workers.

So we would agree with those who appeared before you that the future looks bright for these two facilities in terms of providing construction and work for our members.

I would now like to discuss the Canadian Nuclear Laboratories Chalk River facility and its subsequent facilities. I believe the committee also has been given a very rosy picture for the future of Chalk River. However, we do not completely agree with that view. Under the previous government, it was decided that Chalk River and its related facilities would be transferred to a GOCO model, government-owned and contractor-operated. This operating model is the first of its kind in Canada. We find it concerning that the nuclear sector would be chosen as the first model for a GOCO model. Proponents of GOCO say it operates well in the U.K. and the United States. I cannot speak on the U.K. experience, but I do believe, from talking to my colleagues in the U.S., that it is not a perfect model. We clearly do not support the GOCO model in Canada's nuclear sector, and believe it may be asking for problems.

Just because it works well in one country does not mean it will work well in other countries. Countries operate under different regulations and are governed differently, and therefore success in one country does not mean it is destined for success in another country. To be clear, we do not oppose change. For example, we are one of the few unions that believe there is a benefit in the P3 model. We're very open to new ideas, we're just very concerned about this model.

Our first concern with this new approach is the fate of the roughly 3,400 employees. Under the GOCO agreement with all employees, all employees will no longer be able to participate currently in the public service pension plan, the PSPP, which they belong to now, and they will no longer be considered government employees, although the facility remains owned by the Government of Canada.

Under this model, all employees are being forced to move into a new pension plan that will be developed in conjunction with the employer and the employees. Negotiations to develop this plan are currently taking place, but they are not progressing very well. If an agreement cannot be made between the employer and the employees by September 2018, the GOCO agreement forces all employees to go into a plan that has already been set in agreements.

The current PSPP is a defined benefit plan; the new plan will be a defined contribution pension plan. We can provide you with more detailed differences between the two plans...to focus on more things on Chalk River.

We are not sure why the employees are being forced out of their current plan. One argument appears to be around savings. However, one thing we know is that we are unaware of any cost analysis done on the GOCO model. Nothing has been shared with us. Neither CNL operators nor AECL have been very forthcoming in sharing any details of the GOCO model to us or any other unions.

The reason this is a problem is that it creates uncertainty, and there has been a lot of uncertainty around the Chalk River facility. The creation of this new plan and the direction of the new operators have greatly affected the morale of the employees. New hires currently are without a pension plan, and this issue is yet to be resolved.

How do you attract new people if there's uncertainty, and if they don't even know if they're going to be part of a pension plan that others have around them?

There's also uncertainty around the numerous upcoming collective bargaining agreements, since bargaining units have no idea what the pension plan will look like in the future. How can you bargain when you have no idea what your pension plan will look like?

One of the biggest clouds hanging around this GOCO model is the fact that the SNC-Lavalin operating consortium, as we understand it, currently has a five-year contract with an option to renew. What happens if they decide after five years not to renew? How do you attract a new suitor in this situation? What if the new suitor doesn't want to come in under the current agreement, i.e. the pension plan? What if there is no new suitor? Does the government take over the facility again? What would this mean for our employees? Do they get back into the pension plan? There's a lot of uncertainty that hangs around this facility, and it has a negative impact on employees and employee morale.

Chalk River once was a shining star for employment in the nuclear sector. However, over the last few years, for various reasons that reputation has greatly diminished. It has been hard to attract and retain new people to work at the facility. Part of the problem is that the location of the Chalk River facility makes it difficult for people who want to move out there.

Beforehand, the public service pension plan was used as a sort of lure to incentivize people to come and work there, but now this lure will no longer exist. Under the current direction of the facility, we're not sure how they're going to attract these new, high-quality people they talk about for the facility.

We do not share the optimism that has been expressed by others who have appeared before you about Chalk River and subsequent facilities. We encourage the government and all parties to re-examine the use of a GOCO operating model. If we want a bright and thriving nuclear sector, a GOCO model may not be the best option for the future.

I'll leave it at that and answer any questions.

[The Vice-Chair, Conservative, John Barlow]

Thank you very much, Mr. Schumann. I appreciate your testimony.

Now we will go to monsieur Lemieux for seven minutes, please.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Chair.

Thank you for your presentation, Mr. Schumann.

This is the first time I have heard of your involvement in the nuclear sector. I certainly did not expect to hear only about pension fund problems this morning. I would like to ask you some questions that are more closely related to the nuclear sector. I do not know if you will feel comfortable answering, but I will ask you all the same.

Groups opposed to nuclear energy have told us that the extraction and processing of uranium puts workers in your industry in danger. What is your opinion on that? Is it dangerous for workers in the nuclear industry in Canada?

[Steven Schumann]

I believe those in the unionized sector who work in construction in our nuclear facilities are some of the best trained in the world, so from their end, they will work in the safest environment possible.

I know the speaker before me talked about an incident in Bruce. It's not from our end that there will ever be a danger at a nuclear facility. If there is an accident...it does occur, which is unfortunate. Again, from the construction sector, we are very well trained to work in those environments before we go into them.

That's probably the best I can answer that question for you, at the moment.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

Are you involved in the construction of plants only? Are you also involved in the operation of plants, mines and uranium deposits?

[Steven Schumann]

When it comes to Pickering and Bruce, we're only involved on the construction sector, but at Chalk River we also work in the HVAC and some of the power plant facilities. We are a small percentage of the roughly 3,200 members who work at Chalk River.

I'm unaware of any of our members who work on the mining side, but when it comes to Chalk River, I know there have been some questions around some safety, because the facility itself is not being given the attention it was given in the past. In the grand scheme of things, it's becoming sort of—I don't want to say “derelict”, but it is not the shining star it once was. It's not only a matter of employees. The facility itself does need some work. I don't know if that could hamper safety.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

There is a question that I have always asked myself. If you are involved in operations and there is a major labour conflict, could the safety of the plants be affected?

[Steven Schumann]

Under the collective agreements, there is never a work stoppage. We work very hard on that. In every agreement we'll ask for x number of years, and we guarantee no work stoppage, unless there would be a great issue involved. But no, from our end, we would not create a work stoppage to create a safety risk; no.

There was a strike at Chalk River in the past, and on the issues around that, I cannot go into great detail. Lynda, who was going to be here, probably could have enlightened you on that. I'm not the expert on old strikes, so I can't comment.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

In closing, I would like to go back to Ontario Power Generation, which intends to invest $12.8 billion over 10 years to refurbish the Darlington nuclear station.

What does that represent for your members in terms of job creation and generating wealth for the people in your community?

[Steven Schumann]

At the peak, there will be 11,800 construction workers on site. For us, there will be roughly 1,000 of our members, but for the building trades this will have a huge impact, due to the fact that not only will 11,800 members be working, but apprentices also will be working. One aspect about apprentices is to ensure that they have time to actually work, develop, and become journeypersons. In our collective agreements, I believe it's almost a 1:1 ratio in some of the trades that will have apprentices, so we will be training the next generation of construction workers on this site, which is vastly important. You can't put a price on that.

Unfortunately, in the late 1980s and 1990s, the construction sector was not great at training apprentices. If you look at the average age of construction workers now, you can see that, to paraphrase my boss, they're old white men who are past their prime. We really need to reinvigorate the sector. This will be an opportunity to bring a lot of young people—men, women and first nations people—into the jobs and allow them to work in the construction sector in the future.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

Could our government do more or do something different to help you train the next generation of workers in the industry?

[Steven Schumann]

As you know, I think, the government had a role in Chalk River. At one point, it was a very prominent facility for creating isotopes and other things. Unfortunately, Chalk River has lost its prestige, not just through the government's fault but through the changing world and a changing market. For facilities like this, I believe, putting them into a GOCO model, where the operator obviously wants to make some money, I don't believe.... Is the way it's structured right now the best model? I believe the government needs a bit more control in the transition phase.

Again, I don't think the GOCO model may be the best. I think the government should re-examine it. After the contract is up in five years, the government should re-examine it to see if this model actually is best for these types of facilities, these smaller facilities that exist in Chalk River, Port Hope, and Fredericton, and at Whiteshell in Winnipeg. I believe there is one more, but I don't know it off the top of my head.