Transport Committee on April 11th, 2024

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Pawlowski.

We will now turn over the floor to Mr. Iacono for five minutes.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you, Mr. Chair.

I'd like to thank the witnesses for being with us today.

My first question is for Mr. Farmer.

With the CIB involvement, how are we keeping the cost down for Canadians? Give a short answer, please.

[Chuck Farmer]

Again, we have to build a lot of infrastructure in Ontario to meet the needs of Ontarians, and we welcome any involvement from any level of government that helps to manage that cost for Ontarians.

I do want to stress that, in our assessments, we focus on the economic value of the line to ratepayers. We also look at things like the emissions profiles, but we are focused on the economic value. We would not build the line at any cost; I want to be clear about that. We need to understand what the value of the line is to Ontario's ratepayers, which will tell us what we would be willing to pay for it, and that would then form the negotiation that would take place between the proponent and the IESO.

Anything that helps the proponent to be in that cost range is going to be helpful for them.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

My next question will for the Honourable Lisa Raitt.

Can you tell the committee about the importance of public-private partnerships? Do you believe that public-private partnerships are one of the keys to solving the infrastructure need across Canada?

[Lisa Raitt]

When I was lucky enough to be a member of Parliament, from 2008 to 2015, and to 2019 in opposition, one of the key programs that we had was P3 Canada, and P3 Canada was a really important way to ensure that, for the really large projects that clearly need to have some kind of government involvement for infrastructure, there is a vessel to do that. P3 Canada got many projects built, and it was something that came out of Finance Canada, so, yes, the principle of having P3 projects makes a lot of sense.

I know that from the banking side it certainly is helpful. For some of these projects, you have to have it, but the question for the members is determining the method by which you do the funding. In the case of this Liberal government, you've chosen to go through the Canada Infrastructure Bank. The previous Conservative government went through P3 Canada. The notion of it, I think, is something that makes a lot of sense. It's just the implementation and the execution of it that are very different.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you.

Mr. Pawlowski, earlier you stated that you and the Canada Infrastructure Bank were not only looking at the financial side of things.

You said several times that you were also looking at other aspects. Can you elaborate on that?

[Matt Pawlowski]

Yes, absolutely. Again, when we think about the CIB, I think it's enabling Canadian infrastructure. However, I also think, as I mentioned, that having the mechanism for first nations' involvement is very important. Going back to my previous answer, I think that when we look at the CIB, that enables a potentially easier path for first nations to be involved in a project like this.

We will work together with both parties, but at the same time, the CIB brings that to us in, I think, an easier way. I think it's important for us to have that relationship, both from a financing perspective and from a local perspective.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

So the communities will be invited to take part in this project. How will the communities and the Province of Ontario benefit from this?

[Matt Pawlowski]

That's exactly what we're starting to go into discussions with.

I know the previous owner potentially had some agreements in place. We did not inherit those with our purchase, but that is exactly why we're starting the conversations, and we are very excited about the letters of support that we've gotten. We'll continue to have those discussions to determine what the right level of involvement is and what benefits we can provide to both the first nations and other communities in Canada, including where we interconnect.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Will the work already done by the Canada Infrastructure Bank be integrated into your new projects?

[Matt Pawlowski]

Yes, absolutely.

I think the due diligence work that the CIB has done has a benefit to us. I think the benefit is—from my previous answer to MP Rogers—that we don't have to start from scratch in our due diligence efforts with the CIB. They already have some of the fundamental information there, and we can build on that information to determine whether the CIB investment is right for us and also for the CIB and the Canadian taxpayer.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Iacono.

Thank you, Mr. Pawlowski.

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

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

Thank you, Mr. Chair.

Mr. Pawlowski, I'd like to ask you a question about your project to connect the Midwest and Ontario.

There's a practicality to this project. To solicit funds, you talk to the Canada Infrastructure Bank. If Lake Erie were located on Quebec territory, you'd have dealt with a different contact. You should have discussed this type of project with Hydro‑Québec.

Do you think Hydro‑Québec would have been excited at the prospect of working with you on this connector project had it been located on Quebec territory?

[Matt Pawlowski]

I really can't speak to what Quebec would do or not do, but I will tell you that I think one of the reasons this project is viable and makes sense to us is the connection between Ontario and PJM. That is a very strong connection and a very important connection for reliability and resiliency. Quebec is a very different system. I know it's neighbouring Ontario, but at the same time, it is a connected system that has different criteria.

We look at it from IESO to PJM, looking at the economics of that and the reliability aspects of that. That's why it makes sense to us.

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

Thank you.

I asked the question simply because Quebec taxpayers' money is also used to fund projects under the Canada Infrastructure Bank. That concerns me to some extent. Quebec once had a project to export its electricity to the United States, but the Canada Infrastructure Bank decided not to invest in it. In fact, you opposed the project.

That said, in this case, importing your energy into Canada would be financed with Quebeckers' money. Personally, I find that peculiar. If Quebec territory were involved in this project, the context would be very different and what would result from our differences wouldn't be the same either.

I'd like to use the rest of my time to—

[The Chair, Liberal, Peter Schiefke]

Unfortunately, your time is up, Mr. Barsalou‑Duval. You can always ask your question in the next round.

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

I'll give my friend 30 seconds or so of my time to finish.

No? Okay.

[The Chair, Liberal, Peter Schiefke]

That's perfect.

Thank you, Mr. Barsalou‑Duval.

Mr. Bachrach, the floor is yours. You have two and a half minutes, sir.

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

Thank you, Mr. Chair.

Mr. Farmer, at our last meeting, we were trying to understand some of the assumptions behind the modelling that helped the CIB arrive at its conclusions about greenhouse gas emissions reductions from the Lake Erie connector. I understand they relied heavily on the IESO's modelling to reach that conclusion. They have provided the committee with their consulting company's summary report based on its review of your modelling. We've shown that to various independent experts, and they have had a hard time making sense of it, because the underlying assumptions aren't included in the summary report; they're in the model.

Could the IESO provide additional information to the committee to help us analyze and better understand the assumptions that led to the conclusion that it's going to reduce greenhouse gas emissions by a certain number of tonnes over a certain number of years?

[Chuck Farmer]

Our assessments did reveal that there would be a reduction in greenhouse gas emissions. That modelling was based on our understanding of the system at the time. Those reductions could happen in a number of ways. For example, it would give Ontario access to renewable energy within the PJM footprint, and it would give PJM access to clean energy available in Ontario, which has a strong base of nuclear and hydro power. It would also sometimes allow access to energy from natural gas generation in Ontario, but it would displace a less efficient or higher-emitting resource in the PJM footprint, which would lead to a net gain in the overall airshed that we share.

In response to your question, I can certainly see what we can give you. It would help us if you could tell us which details would be helpful to the committee, so that we can be sure we give you a fulsome answer.

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

The area of interest was the net flow of electricity that the IESO projected in the near, medium and long terms based on these assumptions around greenhouse gas reductions. We've dug into that a little bit.

If you read the press releases and the communications from the CIB, they pitch this as an exporter of clean energy from Ontario. There's very little reference in the documents to importing electricity from the United States, and yet when we dig into the greenhouse gas implications, a lot of the benefits seem to come from importing power from PJM's area into Ontario, because they have pretty aggressive decarbonization goals in those states.

That's really what we're trying to get at, and any information you could provide in that regard would be very helpful.

[Chuck Farmer]

Certainly. We—

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Farmer. Unfortunately, you're going to have to provide that response in Mr. Bachrach's next round.

Thank you, sir.

Next we have Mr. Muys.

Mr. Muys, the floor is yours for five minutes, please.

[Dan Muys, Conservative, Flamborough—Glanbrook, ON]

Thank you, Mr. Chair.

Thank you to the witnesses.

At the last meeting, I asked the CEO of the CIB why it is that 18% of its operating expenses were spent on bonuses. It is actually worse than that. In fiscal year 2022-23, $30.2 million was paid out in employee compensation, and of that, $8.1 million was bonuses, which is 27%. In my experience in the private sector, that is an absolutely astronomical amount. We're looking here at a flagrant waste of taxpayer funds on a bank that has accomplished zero to few projects over seven years.

Mr. Pawlowski, do you think that level of bonus compensation is justifiable? It works out to $65,000 for non-executive employees, on average.

[Matt Pawlowski]

I certainly can't comment on the CIB's structure, as I'm not familiar with it.

However, again, when we consider this project with the involvement of the CIB and its due diligence efforts, it is really important for the CIB to understand what the true project looks like, what the investment return is on their side, and whether it's an investment they should make.