Transport Committee on April 11th, 2024

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

I do not recall that motion M-96 was limited only to major airports. It was not my recollection that that was the motion. Now, that might be what Mr. Barsalou-Duval wants to have the transport department report on. Perhaps we could have Mr. Hardie's motion circulated. Obviously, I wasn't prepared for this today, but I would be interested in that, because, as Mr. Bachrach has correctly pointed out, the costs associated with this.... Perhaps we can bring this out in our airline competitiveness study, because this would result in an increased cost for Canadian travellers, but it would also result in a massive increase in costs to airports like the Abbotsford International Airport and the Kelowna International Airport in British Columbia. Mr. Bachrach mentioned that for his airports as well.

That is why we proposed this motion:

That the committee undertake a study on aircraft rescue and fire fighting at airports and aerodromes (Canadian Aviation Regulations, Section 303) allocating a minimum of three meetings to this study to hear from witnesses that include the International Association of Firefighters, the Canadian Airports Council and other interested parties, and that the committee report its findings to the House.

We certainly believe that we should hear from those airports about the impacts this would have on them. Motion M-96 is non-binding on the government. Perhaps that's why Mr. Barsalou-Duval wants to know if they're taking it seriously or not. However, we envisioned a more comprehensive study that would actually hear from people who would be impacted by this. That is the reason we would support actually having more discussion on this rather than simply reiterating what the.... The minister already has this motion at his department and will decide whether to agree with it or not. However, we wanted to hear from the firefighters, the airports and interested parties.

If others don't want that to happen, we can have a vote to see if we'd like to get this passed or not. That is the reason why we want to have a more comprehensive look at this, rather than simply asking what the department is going to do with a non-binding motion.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Strahl.

It's now Mr. Barsalou‑Duval's turn. After that, we'll go to Mr. Bachrach.

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

Thank you, Mr. Chair.

Mr. Strahl, if you have the opportunity, I would urge you to look at the motion I put forward to the committee. It's been distributed to committee members. This motion is the same as motion M‑96. Section (a) specifically deals with large Canadian airports that would jeopardize the safety of the travelling public, and point (i) in section (b) calls on the government to ensure adherence to the International Civil Aviation Organization's rules. Once again, we're talking about major Canadian airports. The motion makes it very clear that we're talking about major Canadian airports.

As I already mentioned, with respect to his suggestion that we study this issue, I'd be delighted if we did a study like this. In my opinion, the firefighters would be happy to come and testify on the issue, and the airport representatives could also explain their policies to us. That might be relevant, but it would also be relevant to get a response on the motion the House voted on.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Barsalou‑Duval.

We have Mr. Bachrach.

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

Thank you, Mr. Chair.

I'm just not familiar with any classification of airports based on size. Maybe someone else around the table has that information, but I know there are international airports, and some of those are fairly small. My understanding is that what distinguishes them as being international is that they have flights to other countries. However, I don't think that's the intention behind the word “major” in the motion. It's to indicate that these are the airports in Canada that have the most traffic and where this kind of equipment and preparedness could be accommodated within their budgets.

I don't think it's totally germane to Mr. Barsalou-Duval's motion. I think we can vote on that separately. Perhaps in the government's response to his motion, they can articulate their understanding of what constitutes a major airport. However, I won't amend it to ask for that. Let's keep our fingers crossed.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Bachrach.

Seeing no other debate on this, I will ask the clerk for a recorded vote.

(Motion agreed to: yeas 11; nays 0)

The motion carries.

Thank you, Mr. Barsalou‑Duval.

We can continue.

Mr. Barsalou‑Duval, you still have the floor for two and a half minutes.

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

Since I've taken up a lot of the committee's time, I'm going to give the others a chance to ask their questions.

[The Chair, Liberal, Peter Schiefke]

Thank you very much.

I will turn the floor over to you, Mr. Bachrach, for two and a half minutes of questioning, sir.

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

Thank you very much, Mr. Chair.

My apologies to our witnesses for the slight diversion while we took care of some business.

I'm interested in this idea of risk transfer, because this is one of the big arguments for CIB's role. It has been argued by the government that it's important in both directions. The CIB is important to de-risk public projects, essentially taking public infrastructure and flooding in private capital to help build public infrastructure. Maybe that's not de-risking, but the flow of private capital would largely benefit the building of public infrastructure. It has also been argued that, in the case of this project, it's essentially taking public capital and putting it into private infrastructure.

I guess my question is for Mr. Pawlowski. If a project like this has proponents with such deep pockets and if there's a strong economic case—your company wouldn't be involved in it if there wasn't a strong financial case for your company to profit off this project over the long term—why should the Canadian public be involved in building it? It seems like a project that can stand on its own two feet.

I would echo the sentiments of a former member of the committee from the Conservative Party who said that it feels like the eagerness of the CIB to get something built, to get anything built, has resulted in them essentially trying to convince the private sector to allow them to lend them low-cost money.

I guess what I'm failing to see is the real public benefit that would justify that.

[Matt Pawlowski]

It's a great point, a great question.

I think there are a lot of benefits that we have with any of our financing partners. When I look at this project, again, we've done our due diligence. We understand that there is viability for the project, and we have engaged in commercial discussions with the CIB, because we view them to be a good partner and a potentially good investor in the project.

I think the efforts they have gone through on their due diligence to date, and continuing going forward, are their way of understanding if this project works based on their investment criteria, which I can't speak to, but that is where the commercial engagement happens. Those conversations take place in order to figure out if it is the right investment for CIB. Is it the right investment for the Canadian taxpayer as a result of the CIB involvement? If the answer is yes, then we proceed to commercial arrangements.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Pawlowski.

Next we have Dr. Lewis.

Dr. Lewis, the floor is yours for five minutes, please.

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

Mr. Pawlowski, you stated that you haven't seen the due diligence that was conducted by Fortis, but you are comfortable that it will be useful. I'm paraphrasing you.

Is it your testimony here today that Canadians will not incur another million dollars in due diligence?

[Matt Pawlowski]

Again, I was not involved in the project when CIB was doing due diligence with the previous developer. I believe that there's going to be due diligence needed to go forward. I think it speaks to my earlier comment that the CIB and any other investor has to do their due diligence in order to understand what the right criteria for the project are.

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

Okay, but they have already done it, so are you saying that there's more due diligence on top of the million dollars they have already spent?

[Matt Pawlowski]

I can't speak to what kind of due diligence the CIB will be requiring going forward. What I can tell you is that we're going to bring forward the project to them and enter into commercial negotiations when the time is right in order to figure out whether this project, the Lake Erie connector, which we're very excited about, is going to be the right investment for the CIB and all the parties that are engaged.

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

So you haven't taken over the project yet, which is different from what we heard today.

[Matt Pawlowski]

I don't believe I said that. We have taken over the project. We have bought the project development rights to the general partnership for the project, and we are re-engaging with the CIB and all of the parties in order to start the negotiations for commercial arrangements.

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

Okay. You testified today that you don't have the same agreement as Fortis. Am I to understand that you have a different agreement with CIB?

[Matt Pawlowski]

We have just started negotiations with CIB, and we've come to the table with them to truly understand what that commercial arrangement is going to be. We did not inherit any funding. We did not inherit any arrangements that they may or may not have had with the previous developer.

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

You're not picking up on anything that Fortis has done with respect to agreements that they had with CIB. You're starting afresh. Is that correct?

[Matt Pawlowski]

What I'm specifically talking about is any kind of funding. In my opening statement, I was very clear about the fact that we, as NextEra and the current owner of this project, have not received any funding from the CIB to date, which is the reason we've engaged in conversations with CIB, to determine what their financing arrangements would look like and whether we can reuse some of the due diligence efforts that they've previously done.

That was my answer to MP Rogers' earlier question, that we don't have to start from scratch in order to get there, but I think it's important for us to engage with the CIB and figure out what that structure is going to look like and how we potentially move forward on the project.

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

Okay, thank you.

Mr. Farmer, the next question is for you.

As you know, the Lake Erie connector project failed because of volatile economic conditions, including inflation, and that's what Fortis communicated about the decision to suspend the project. Mr. Ehren Cory, the CEO of the CIB, in explaining why the project failed, stated, “Every [infrastructure] project dies a few times before it really lives”.

Can you tell me what happens to a $655-million loan and the cost of the project? Do these costs, specifically the cost of the project, impact ratepayers and the cost of electricity? Can you explain the connection between those?

[Chuck Farmer]

When we enter into an arrangement with a proponent, whether they're building a renewable energy facility, a transmission line or another kind of generation, we do not pay them anything until the project comes into service. Therefore, those would be some costs to the proponent, because they would not have met the obligations that they would have under their contract with the IESO. None of those costs would have been incurred by ratepayers.

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

Does the cost of the overall project impact the amount that ratepayers will pay in the end?

[Chuck Farmer]

Our assessment looked at the cost of the project against the benefits that ratepayers would receive from having the project: its ability to arbitrage energy across two systems, its ability to support the growth in southwestern Ontario and its ability to help us meet our reliability needs and our adequacy goals. We assessed that the benefits were greater than the costs, provided that we could negotiate the right terms on the contract, which we worked very hard to do.