Transport Committee on April 9th, 2024

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Mr. Chair.

I thank all the witnesses for being here with us today.

I will start with Mr. Winfield.

In your opening statement, you said that there was a solution other than the connector project under Lake Erie. I remind everyone that this project is suspended and we don’t know if, in the end, it’s going to happen. The other solution, which would have been less costly, involved using Hydro-Québec’s existing network, which is already connected to the United States.

As an expert on this issue, can you enlighten us by telling us why this option was not considered?

[Dr. Mark Winfield]

Thank you, Mr. Chair.

My comments were mostly focused on the question of the relationship between Quebec and Ontario. In my view, it would make far more sense to strengthen the interties between Ontario and Quebec for a number of reasons.

The principal reason is the nature of the Hydro-Québec system, which has a very large storage capacity. It would be, in many ways, an ideal partner for the deployment of intermittent, renewable resources in Ontario—wind and solar, principally. The two could balance each other off very nicely in terms of Quebec helping Ontario when there is lowered output from renewables. When Ontario's outputs are high, they could sell to Quebec. That's often in the winter, when Quebec has challenges around meeting peak and when Quebec doesn't run the hydro dams. It effectively stores the energy behind the dams.

There's been quite a lot of work done on this question. We worked with colleagues at HEC at the Université de Montréal on this question. There was work done by the IESO, as well, about the cost of the necessary reinforcements to the the interties that already exist between Ontario and Quebec. The corridors are there. They would have to be upgraded, but we have quite good costing on what that looks like. Many people have looked at this and said this would make far more sense as a way of avoiding a large increase in gas-fired generation in Ontario and all the increases in greenhouse gases that go with that.

Ontario should have focused on the relationship with Quebec. As I mentioned, Mr. Legault made repeated overtures to Ontario about this and got no meaningful response, so that was very concerning. Frankly, I and many others cannot understand why Ontario would not engage in a more constructive conversation with its neighbour to the east.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

As a federal entity, the Canada Infrastructure Bank has a federal point of view on investment, meaning a broader point of view than that of a single corporation like ITC Investment Holdings or a new business that now wants to get involved in the project. From the broader point of view that the Canada Infrastructure Bank needs to have, this project is not the most worthwhile on a financial level, or at least not the most appropriate. Based on my understanding, the Canada Infrastructure Bank should instead focus on finding ways to better connect Quebec and Ontario. This investment would be less expensive and more beneficial on an environmental level. Is that right?

[Dr. Mark Winfield]

Yes, I think that's very much the case. There's been quite a lot of modelling done on the Ontario-Quebec relationship and the ways in which that can be optimized. Yes, that would make sense to me in terms of particularly the Canada Infrastructure Bank to be looking at financing the strengthening of the interties between Ontario and Quebec.

There are similar cases, although it's complicated, but of course there's the question of the Atlantic loop in Atlantic Canada and indeed between Saskatchewan and Manitoba as well. Again, Saskatchewan has very high intermittent renewable potential, but needs storage, and Manitoba Hydro has, like Hydro-Québec, storage capacity in its hydroelectric system. It would make far more sense to be focused on strengthening the east-west ties in the electricity systems in Canada rather than on the north-south.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you.

Mr. Cory, at the CIB, did you consider anything that corresponded to this or was similar to it? Did you at least ask these questions at the time before deciding to get involved in the project?

[Ehren Cory]

Thank you for the question.

Sashen, I may turn to you in a moment.

I just have three points. First, I absolutely agree with the idea that more transmission connections across this country are important to creating a reliable grid and meeting our electricity needs, whether that's in the Atlantic region as Professor Winfield mentioned.... Saskatchewan and Manitoba he didn't mention, but in British Columbia and Alberta, there's a similar story about creating better connections, and for sure Ontario and Quebec. I would say it's not a question of either-or. We would absolutely be...and we have been talking to the electric utilities.

I met with people from Hydro-Québec last week, for example.

We talked about their priorities and their needs for investment.

Second, we're investors, we invest in projects. When the Ontario Independent Electricity System Operator and the Ontario government say it is a project they support, meaning the Lake Erie connector, and they think it's important to the reliability of the grid, GDP and export potential for us, and GHG emissions reductions, it's a project with benefits so we're willing to invest in it. If they also come to us and want to upgrade interties to Quebec, that would be very interesting for us as well.

The last point I'll make is this line actually does provide benefit to Hydro-Québec. Right now Hydro-Québec does not have a way to export power to PJM either. They connect to New York very well, but not to PJM. In the modelling that's been done, there is some economic benefit from Hydro-Québec also moving power through Ontario into the U.S. market using this line.

[The Chair, Liberal, Peter Schiefke]

Mr. Barsalou-Duval will have another round of questioning and then you can follow up and provide additional resources.

[Ehren Cory]

Thank you.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Schiefke]

Thank you.

Next we have Mr. Bachrach.

Mr. Bachrach, the floor is yours for six minutes, please.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair, and thank you to all of our witnesses for being here today. Before I start my questioning on this topic I would like to quickly move the motion that I put on notice at a previous meeting. I believe there's agreement amongst committee members. That motion reads:

That the committee extend the study of accessible transportation for persons with disabilities by at least one additional meeting, in order to hear testimony from persons with disabilities with lived experience, and organizations representing persons with disabilities.

While the motion says “at least one additional meeting”, I think we've settled on the idea of one additional meeting to hear testimony. Really the rationale for this is that, as folks around the table know, we heard some excellent testimony from regulators, from companies, but the testimony from people with lived experience was quite minimal. I think the study would benefit, and the report would benefit, from hearing those voices at one additional meeting.

I'll move that motion and look forward to any discussion.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Bachrach.

We have had discussions on this. Do I have unanimous consent to adopt the motion put forward by Mr. Bachrach?

[Some hon. members]

Agreed.

[The Chair, Liberal, Peter Schiefke]

(Motion agreed to)

Thank you, Mr. Bachrach. The floor is yours.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you very much, Mr. Chair.

Thank you, colleagues.

This is an interesting study, because we're talking about a project that was originally analyzed and discussed by the CIB over three years ago.

What we're trying to understand is the CIB's thinking around the public good that's involved in these investments. The CIB isn't just an investor; it's an investor of Canadians' money, so we shouldn't be seeing the bank simply making investments in projects that the private sector can finance itself unless there is some tangible public good. That's why the piece around greenhouse gas emissions is so interesting.

My first question is for Professor Winfield.

You've heard the discussion so far, and you've heard Mr. Cory's explanation of the rationale when it comes to greenhouse gas emissions. I'm wondering what other assumptions you would need to know in order to better understand the CIB's analysis of the picture three years ago when it came to greenhouse gas emissions.

To really understand the climate benefits of this project, what other information would you need to know that the CIB had before it at the time?

[Dr. Mark Winfield]

That's a complicated question.

It requires a fairly detailed understanding of how electricity dispatch works in Ontario and what resources would be available at any given time. The complicating factor here is the assumption that there would be significant surplus generation available for export. Everything we're seeing in Ontario suggests the opposite.

As I've mentioned, virtually all of the units at all of the nuclear facilities will be going off-line for refurbishment over the next 20 years or so, and some are due for retirement. These have been the primary source of the surplus baseload generation, which we have had to export at a negative price, because we've had to pay Michigan to take it off our hands.

What we're seeing, as I mentioned, including from the IESO, is almost vertical growth in fossil gas-fired generation and the associated greenhouse gas emissions. That was becoming apparent even as of 2014, but it is now empirically apparent in the IESO's latest figures, which show it has tripled since 2017. As I said, that curve is virtually vertical through the 2020s, so the implication here is the marginal fuel in Ontario is unabated fossil gas.

I keep coming back to this question. I can't see where the surplus generation of any significance is going to come from over the next 20 years, given what we understand about how things are evolving in Ontario. Indeed, that question has been maximized further because there are then questions around the impact of electrification, which would increase electricity demand even further in Ontario so that there would be no surplus, as the IESO is telling us very emphatically. They want to spend a lot of money building generation.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Professor Winfield.

Mr. Cory, I'll turn to you now, and I'd like to ask one more question, so please make your answer is relatively brief.

Based on what Professor Winfield has said, did the CIB's analysis of the Lake Erie connector show there would be surplus baseload generation in light of the fact that these nuclear power plants will be going off-line for refurbishment or retirement?

[Ehren Cory]

I'd love to bring you on the road with me, because your description of the CIB at the start of your comments was perfect, and I agree with every word you said. That is our job.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

I still want to abolish it.

[Ehren Cory]

That's okay. You can come with me, and we'll tell the story of the CIB.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

I'm happy to share that message across Canada.

[Ehren Cory]

I liked your first message.

The modelling done by the IESO is an hour-by-hour net model of all the supply in the province, imports and exports.

The modelling that was conducted by the independent system operator and verified by our external adviser said there will be lots of hours in the year, particularly in the next 10 to 15 years, when Ontario will have a surplus of clean power to export.

There will also be many hours in a year when Ontario will have to import. It can import bilaterally, for instance, by contracting with a nuclear or renewable power supplier in the U.S. instead of firing a gas plant in Ontario in those peak moments when there's a day of unscheduled maintenance, a day that's not windy or a day that's really hot.

The benefits of GHG show on both sides of the border.

As per MP Murray's question, we will test that again because, as Dr. Winfield said, conditions have continued to change since 2019-20, and we wouldn't make the investment without verifying our due diligence.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Cory.

Thank you, Mr. Bachrach.

Next we have Dr. Lewis.

The floor is yours once again for five minutes.

[Leslyn Lewis, Conservative, Haldimand—Norfolk, ON]

My question is also for Mr. Cory.

I note that every year, the bank reports in its annual report how much it spends on staff and bonuses. For almost every year of its existence, the bank has spent more on salaries and overhead than on actual infrastructure projects.

Let me put these numbers to you. Salaries for 2022-23 and bonuses came to $30,200,000. Salaries for 2021-22 and bonuses came to $23,973,000. Salaries for 2021 and bonuses came to $17,742,000. You get the picture.

Why should Canadians, who are struggling with daily living expenses, not be concerned about these hefty bonuses and salaries that your non-profitable bank is dishing out?

[Ehren Cory]

I appreciate the question. You're right. The CIB really does focus on transparency. You see the finery in our reports, all of our expenses, an explanation of our bonuses and an explanation of our performance targets, along with when we meet them and when we don't. The performance bonuses are just that. They're based on the achievement of goals.

To be clear, last year, which just finished on March 31, the CIB made $3.7 billion in new investments. The year before that, it made $4.3 billion in investments.

There are staff costs to do that. Since the CIB launched in 2018, we've been ramping up staff.

Dr. Lewis, as you've described, that's the natural function of our hiring investment professionals. They're market experts and folks like Mr. Guneratna, who has a long experience in both energy and banking. They're folks like Monsieur Duguay, who comes to us from the private sector as well.

Yes, we've built a team. That team is getting incredible leverage on Canadian dollars by investing billions of dollars in new infrastructure projects.