HANSARD

Printed and Published by Nova Scotia Hansard Reporting Services

ECONOMIC DEVELOPMENT COMMITTEE

Ms. Diana Whalen (Chairman)

Hon. Judy Streatch

Mr. Keith Bain

Mr. Chuck Porter

Mr. Howard Epstein

Ms. Vicki Conrad

Mr. Leonard Preyra

Mr. David Wilson (Glace Bay)

Mr. Harold Theriault

[Hon. Judy Streatch was replaced by Mr. Alfred MacLeod.]

IN ATTENDANCE:

Mrs. Darlene Henry

Legislative Committee Clerk

WITNESSES

Nova Scotia Co-operative Council

Mr. Bob Williams, Executive Director

Ecology Action Centre

Mr. Brendan Haley, Energy Coordinator

HALIFAX, THURSDAY, JANUARY 25, 2007

STANDING COMMITTEE ON ECONOMIC DEVELOPMENT

9:00 A.M.

CHAIRMAN

Ms. Diana Whalen

MADAM CHAIRMAN: I think it's just after 9:00 a.m., so I would like to call the meeting to order. Perhaps one or two other members may arrive, but we have a quorum. This morning I would like to introduce our two guests. We have with us Mr. Brendan Haley, who is the Energy Coordinator from the Ecology Action Centre, and - I think Mr. Williams has just stepped out for one second, and that's okay - Mr. Bob Williams, the Executive Director of the Nova Scotia Co-operative Council. Before we begin, we like to, first, introduce the members of the committee so that you know who's here. Hansard has asked that each time, before you speak, I make sure I say your names, so they have it right for the Hansard. So I'll be careful to do that this meeting, as well.

What we do generally, Mr. Haley, is fairly informal. We'll have about 10 minutes each for the members, and then there could be a second round of questioning, after your presentation as well. Maybe we could begin.

[The committee members introduced themselves.]

MADAM CHAIRMAN: I wonder if we could turn the floor over to you, then, Mr. Williams. I'm sorry you weren't here when I introduced you.

MR. BOB WILLIAMS: Sorry about that.

MADAM CHAIRMAN: No, that's just fine. We'd like you to make your presentation, and then we'll have questions after that.

MR. WILLIAMS: My presentation is first?

MADAM CHAIRMAN: Yes, please. Or either one, you can decide among yourselves. I don't know if you have two separate . . .

MR. WILLIAMS: Actually, we had decided . . .

MADAM CHAIRMAN: The other way? That's fine, please do it your way.

MR. BRENDAN HALEY: My name is Brendan, and I very much appreciate the chance to appear before you today on an important and timely issue. I suppose the background of this starts in 2001, when the Energy Strategy was created for this province. I think it's fair to say that the Energy Strategy was mostly concentrated on the oil and gas development. At that time, oil and gas was seen as an economic development opportunity for this province.

During the public sessions for that Energy Strategy, there were also demands for more renewable energy generation here in Nova Scotia. The strategy made comments about renewable energy, but in our mind few specifics. Then along came the Electricity Marketplace Governance Committee and they completed their report in 2003. One of the major recommendations, which is now currently being talked about - Recommendations 51 and 52 - was for renewable energy producers to be given the opportunity to market their product, renewable energy directly to consumers. So here we are four years later and these recommendations have yet to be implemented, and we're still discussing them today.

I think it's important to realize how rapidly the world has developed since 2003, and how rapidly the world has developed since 2001. First off, opportunities for offshore oil and gas have dwindled since 2001. A second thing that has happened is that public concern has erupted over the issue of climate change. It's now the top voting issue in Canada; it's also the top voting issue in Nova Scotia. What's important for any discussion is for us to realize that we are extremely close to reaching an irreversible level of climate change this century. We could be seeing, if we reach, oftentimes, above a 2-degree Celsius warming, that could create a mass die-off of the Amazon rainforest. The oceans, which are currently sequestering global warming and pollution, could start emitting that pollution.

Now if we reach that point, we're not going to be able to turn it around. To have a realistic chance of not reaching that point, what most of the modelling projections are telling us is that about an 80 per cent cut in carbon pollution is going to be needed by 2050. Another thing we should realize that's happened since 2001 is, we've had four electricity rate increases, principally driven by the cost of fossil fuels. We're so used to these rate increases now that we're discussing a fuel adjustment mechanism where we

might have an automatic increase, which has been agreed to by some of the interveners, but not all of them, in the current rate case.

Another more sunnier thing has happened since 2001, which is that Nova Scotia started, I think, to realize that the environmental industries could create a competitive advantage for this province, could be an economic development opportunity. We've had the Premier's Advisory Council on Innovation say that the environmental economy should be the focus for economic development in our province, and we've had the current government come out with an update of the economic growth strategy, which focused on a concept of sustainable competitiveness.

So it seems to me that some of the things that I see coming out of the Department of Economic Development today, and at times the Premier's Office in statements, is that maybe we're having a revelation here. Maybe we're understanding that what's going to be necessary to prevent a mass die-off of our planet this century is also what's going to drive innovation and economic development this century. Indeed, those two are going to have to come together.

The 19^th Century - the base industries, that wave of economic growth was based on steam and railway; in the 20^th Century, it was arguably the oil and the automobile. Many people are now saying that the 21^st Century, the next wave of economic progress, will be based on decentralized energy. This will be our base technologies which will have spinoff opportunities from them. So we're living in exciting and very crucial times, but it's disappointing, in my mind, that we're still bickering and stalling on what is a fairly marginal policy proposal that was made about four years ago. To be very clear, the Ecology Action Centre absolutely supports the EMGC recommendation to allow renewable energy sales to the retail market, principally through financial contracts, which is what Recommendations 51 and 52 said.

What has become clearer and clearer in some of the stakeholder discussions around the implementation of this policy is that this province lacks an overall industrial strategy for renewable energy. A second question we should be asking at this time, since we're four years from when those recommendations were made, are those recommendations adequate? In my mind they are totally inadequate, given the purported environmental and economic objectives in this province.

The experience elsewhere, in other jurisdictions that have already implemented this policy, is that a very small percentage of consumers buy renewable energy on the open market. Some do, it's nice, but it doesn't drive economic development. Other jurisdictions have already tried this policy and found that it doesn't work as well as we thought, it's not adequate. So clearly, to drive renewable energy in this province for economic development, further considerations have to be made. At its base, what we need is an aggressive and realistic mandatory renewable energy target. Thus far, we've

only seen voluntary targets. Nova Scotia Power created a 50-megawatt voluntary target in 2005; they missed that target. They have purported to make targets in 2006; they've missed those targets as well, as we've seen in the cancellation of a wind project in Amherst.

Maybe as we speak there might be an announcement moving towards more mandatory targets, but even that isn't going to change things very much. Currently the way things work in this province is, Nova Scotia Power sends out requests for proposals and we see contracts signed, but still many of those wind turbines never see the light of day. So most recently we've seen the cancellation of a 31-megawatt wind project in Amherst. I think what is important to realize is that this was not a one-time setback, this is actually the norm in a competitive bidding process.

The track record is that, when left open for bids, there are oftentimes underbids and those bids are made at prices where the developer is not able to find financing. This leads to projects just simply not being built. Setbacks oftentimes become a regular occurrence. So the question in my mind - as someone representing an environmental interest - is, how are we actually going to get wind turbines built?

In Europe they have a price-per-kilowatt hour that's needed to develop renewable energy, calculated by engineers and economists. That price is then fixed in long-term contracts. It is oftentimes called the feed-in law. It has been called lots of other things, standard offer contracts, recently, it was implemented in Ontario. This policy makes sure wind turbines actually get built, makes sure they actually get developed. A feed-law system has installed eight times more wind capacity worldwide than the system we're currently using right now in Nova Scotia. So making sure wind turbines actually go up - well, it has obvious environmental benefits, but what's more important to this committee perhaps - or also important to this committee, sorry - is it's an integral part of an economic development strategy.

There are two major sectors that I could see benefiting from a more comprehensive renewable energy development strategy in this province. First and foremost is absolutely the rural communities. Our rural communities are faced with depopulation pressures, they're in need of economic revitalization.

Now, we could see money flowing into our rural communities as they sell clean power into the grid; it could help offset our use of fossil fuels in this province. Wind can become a cash crop for farmers, it can help supplement their income. Under our current policy, even if we implement the EMGC recommendations, this market is not going to be open to our rural communities. Right now to participate, you have to engage in a lot of sophisticated gaming, you have to deal with a significant amount of financial uncertainty. If the EMGC comes in, that'll open up a new market and you'll have to be involved in marketing, which is a further complication that might present further barriers.

So a farmer, for instance, how is that farmer supposed to secure the capital to make money by selling clean power into the grid? Now a feed-law system simplifies this process. It reduces uncertainty, it opens up that market to participation from some of the communities that need the help the most.

The second sector, which is crucial to economic development, is our university sector. In Nova Scotia, we have a geographically distributed university sector. We have lots of small universities scattered throughout the province; now traditionally, that has been a real disadvantage for us. We haven't been able to get the economies of scale to win some of the larger research contracts, but I think we can turn that into an advantage if we connect our universities with a decentralized energy system and that can produce numerous spinoff innovations.

There are two major projects I think the university sector needs to undertake. One is to take a system-wide look at our transmission and distribution systems, to assess its compatibility with renewable energy. Such a study has not yet been developed, has not yet taken place in Nova Scotia. Second, we need to start building university-community linkages and we need to kick off the development of emerging technologies, technologies such as solar, tidal and wave power.

[9:15 a.m.]

In our current system where it's sort of the lowest-price bidder, even if we implement the EMGC, market barriers are not going to come down for emerging industries. Now a feed-law system has been very useful as an instrument in developing these industries elsewhere, such as solar. If you fix that price based on the cost of production, you can then reduce that price over time, as the technologies develop, as the price gets brought down and as the technology starts to improve.

Thus far, some of the opportunities I've outlined I think unfortunately have had very little consideration in our policy discourse in Nova Scotia, in part, I think, because an economic development lens has not been cast on our energy policy. I think you here, as the Standing Committee on Economic Development, it's crucially important for you to engage in these issues. It's your job to think dynamically. It's your job to think about that next wave of economic development and it's your job to think about those communities where economic development is needed the most.

I think it's very important that your voice be heard. So to finalize, I'd like to make three recommendations which I think would fit your mandate. Number one, I absolutely think that the implementation of the EMGC recommendations that allow renewable energy access to retail markets should be supported immediately. This is a beneficial policy, but it certainly is not sufficient; from an economic development perspective, I would see it as a defensive strategy. My fear is that if it's not implemented in the Spring

session, we're going to lose some further capacity in a homegrown renewable energy sector in this province.

The second recommendation I would like to make is that our current Energy Strategy in this province, I think, needs to be re-evaluated, in light of some of the new economic development and environmental objectives of Nova Scotia. I would like to make a slight caveat to that recommendation, which is that at this stage of the game, we should be really moving from theory to practice. We should be at least piloting a feed law here in Nova Scotia, given that it has worked so well in Europe, and it has been discussed in other provinces at this point. We should be gaining hands-on knowledge with emerging industries such as solar, tidal and wind. We should really promise ourselves to never return to a situation where we just talk about a policy for four years and watch opportunities pass by.

We need to start experimenting, we need to start learning by doing, as we continue to develop and modify a more comprehensive renewable energy strategy. Thank you for your time.

MADAM CHAIRMAN: Thank you very much. Mr. Williams.

MR. WILLIAMS: Good morning. I, as well, appreciate the opportunity to come before the committee and speak on behalf of the Nova Scotia Co-operative Council and their initiative relative to renewable energy. I think it's very appropriate that it is, indeed, the Standing Committee on Economic Development that's interested in considering renewable energy within the field of economic development.

The document that I had sent out, and I understand that everyone has received, I'm hoping it has been read and understood by all members of the committee because my submission, as requested by this office, is to be fairly summarial from that point of view, but it will refer back to both this document and the larger document, which is entitled Opportunity Awaits.

I started out with the idea, why renewable energy, particularly within the framework of economic development? Well, the first thing we have to recognize is that renewable energy and the development of it is a different type of energy and it's developed differently and it has the opportunity to be developed much differently than do our standard forms of energy. Our standard forms of energy are always very, very high capital, large centralized projects that really have no way of being - let's say, having those benefits accrue to the citizens and residents of Nova Scotia, other than the fact that we hope it's an inexpensive source of power.

Renewable energy is different; renewable energy exists everywhere. If you think of the wind, it blows over our communities. If you think of the ocean, we're surrounded

by it. If you think of solar, it is everywhere. It's also available in smaller doses; in other words, you don't build a massive wind energy plant. Admittedly, there are wind energy farms but when you have a way to deal with renewable energy, the model is much different.

It's more than just clean energy, it lends itself to a smaller-scale distributed generation. Used in that manner - and it is used in that manner to a great degree in European countries, where the growth of renewable energy has been unprecedented - it lends itself to locally-owned ownership. It can be owned by municipalities, by farmers, by co-operatives and by citizens; there is that opportunity to do so. When that happens, the revenues and the profits associated with that renewable energy flow back into the communities, our communities.

It provides a stimulus for further energy and industrial growth. In other words, it spawns businesses associated with the renewable energy field. We have a marvelous opportunity here. Maybe not as much in wind energy because it's getting rather mature, but if we think in terms of what I call "ocean motion", we have all kinds of opportunities for research within that. Think of the opportunities that we have with the Bay of Fundy, where the oceans are constantly in motion - waves or tides. So we have a very important mechanism there that we can tie in directly with economic development.

We look at other beneficiaries - agriculture. Farms can be energy centres. It's being recognized that a new model of farms in the future many times will be incorporated with energy centres. It's a great place to develop and locate either biomass in some cases, tidal energy of some sort possibly, wind energy for sure. We have all those opportunities.

Municipalities - I know here in HRM, they're interested in wind energy to supply some of their electrical requirements. Right now they're stymied, they don't have the opportunity to do that, because the framework isn't there for them to do this in a very expedient and - I don't want to say risk-free - supportive manner.

Rural development agencies are in agreement with this because they recognize that the rural communities, the rural regions, can all benefit from this. Needless to say, we have a very, very strong beneficiary in the environment and, as Brendan pointed out, the environment is a major driver. It's no longer a secondary issue that's nice to be aware of, it becomes a major driver in our decision making. All you have to do is see the approach that the federal government was taking six months ago versus the approach it's taking today. It's a recognition that the environment is not something to be put as just a secondary consideration.

When we take a look at the way wind energy is developed, there are basically two broad approaches. One, we have a quota, what we know as an RPS, a renewable portfolio standard , which says that we will develop a certain amount of energy within a certain

amount of time. We have that now, only they're voluntary rather than mandatory requirements. The simplest way is to simply tender out those opportunities; we tender them out to the highest bidder. Many times what happens is that we end up with very large, centralized projects, supported by finances that come from outside the province.

There are certain advantages to this. From my point of view, those are simpler in their administration requirements and simpler in the way they are developed. Basically, it puts all the onus on someone else to develop a large project somewhere.

We have our problems with that in that many times, because of the competitiveness of the bids, jobs are underbid and they don't get developed. We saw that recently in the situation in Amherst. The other thing we have to recognize in that situation is it does mean that we are auctioning off our renewable energy resources, which are infinite in value, to the highest bidder. The only thing that flows in that particular instance as a beneficiary back to the province, from an economic development point of view, is some people are getting lease agreements on their land but the true profits - and there will be major profits, I mean the renewable energy sources within Atlantic Canada are looked at enviably by the rest of the world - they will be developed. I think we have to decide, are we going to be the primary beneficiary of ours or are we willing to just auction them off to the highest bidder?

The other way of dealing with this is in a decentralized development. The European model has worked to a great degree along this line. In that particular instance, usually the mechanism that spurs that is an electricity feed law. As Brendan pointed out, that's a feed regulation that basically says anyone can sell their power back into the grid at a preset rate and also you will be guaranteed that for the lifetime of your facility. That also means you have an agreement and you have regulations that give you access to the grid.

This opens up the opportunities for distributed, smaller-scale and locally-owned projects. If we stimulate those locally-owned projects - I don't mean we just look and, well, if they happen, they happen, and I don't mean large subsidies associated with them. If we create an environment in which we have determined that our objective is to have the revenues from our resources flow back into our communities, then we've taken the opportunity to use renewable energy in a way that's much more beneficial to our entire province and its residents.

The thing that I see we have to do here in Nova Scotia - because right now, the approach from the Department of Energy is pretty much totally based on the idea of a request for proposal and then a tendering out. That's all done with the large projects. What's done with small projects - through Nova Scotia Power, there is some allowance for small projects and they have dictated those to be under two megawatts, which is really quite small, but basically it's a process where they negotiate on an individual basis

with Nova Scotia Power. So you can see that there are opportunities to have various biases, and I'm not saying that they exist, but the opportunity is there that you can kind of pick and choose who develops. You really have to ask, okay, is that going to stimulate? That's what we're trying to do here, we're trying to stimulate it to the advantage of the entire province.

I don't need to go over it, but just very quickly: European models - in Denmark now, 25 per cent of the electrical power is generated through wind. There's over $1.7 billion coming from 100,000 communities that have participated in the development of wind energy in their jurisdiction. The growth rate has been unprecedented and the government has supported this from the beginning in its - and not in subsidies, but in support mechanisms that show their commitment to local ownership and co-operative ownership of these facilities.

Germany is another major model - there's over $7 billion Cdn. invested by over 300,000 individuals owning shares in renewable energy. Is that directly transferrable to the Nova Scotia situation? I can't say for sure, but considering the fact that a majority of the European countries are all using electricity feed-in laws and are all working towards local ownership of these facilities in distributed networks, you can't just disregard them out of hand.

Just quickly, we're here relative to the EMGC and I can only say the EMGC - those regulations, that report and those regulations - really didn't take into account what I think is the most important situation that we're dealing with here. What do we need to do? We need to look at the development of renewable energy from a cross-sectoral and a cross-departmental view. We have to recognize that the Department of Energy have their mandates that they want to accomplish and they are readily stated if we discuss them and I have had discussions with them, but we also have other departments, if we think in terms of the government situation. We have the Department of Agriculture and we have the Department of Economic Development. They also have mandates and they have obligations that can be readily dealt with or can be affected by the development of renewable energy. At this point in time, that's not taking place.

[9:30 a.m.]

What we've called for is a collaborative approach. Interestingly enough, that collaborative approach ties in directly with the approach that's pretty much requested and considered to be optimal for development of sustainable prosperity, in the document Opportunities for Sustainable Prosperity, 2006. It's pointed out in that document - and I understand the document is pretty much supported by Economic Development - that collaboration between not only government bodies but government and agencies, the people of Nova Scotia, a collaboration is required. That's what we're requiring, that's what we're requesting.

We're saying we need to get at a high level, the people who would be your decision makers within Economic Development, your decision makers within Environment, your decision makers within Agriculture, to work on this from a collaborative approach. I think it's only when that happens, and people become aware and understand the situation, that we're going to see actual change taking place. So that's where we're headed.

MADAM CHAIRMAN: Thank you very much. Mr. Epstein, would you like to begin and just for the format, I think we'll go 20 minutes for the caucuses for the first hour, if that's good.

MR. HOWARD EPSTEIN: Sure, thank you, and in that case I guess Mr. Preyra and I get the 20 minutes because I've just had a note that Ms. Conrad won't be here today, unfortunately. So we'll take our full 20 minutes this time.

I want to thank you both for coming here. It seems to me that the committee is engaging now with probably one of the most important topics we've had the opportunity to deal with. The theme that emerges as I listen to you is that there is a theme of transformation of one important sector of our economy - it seems to me inevitable. That is, it seems to me inevitable that there will be a transformation of the electricity sector, and the choices that we have are whether to manage it and try to think about it in advance and do it as an instrument of public policy, or be overwhelmed by it when inevitably the models emerge elsewhere, and you've pointed to Denmark and Germany. Clearly they're happening elsewhere, and they'll become models and we'll just ultimately have to make a big shift.

I guess the question becomes whether we can take the information we now have, and move in a managed and thoughtful way in order to try to achieve the main benefits that we can here. It seems to me that the benefits are pretty clear. Mr. Haley, you've pointed to the congruence of environmental and economic benefits when it comes to transformation in the electricity sector. I think that's exactly correct; it seems to me that this is our best choice.

Although I think I agree with everything I've heard you both say, I'm still left, I think, with a few questions that might need some exploration. Let's start with the idea of how the new system might be administered, so this question of an alternative to a renewable portfolio standard and one in which there is, I guess, the feed system. I wonder if you can tell us, who is going to set the price and by what principles? Right now the negotiations go on between our essentially monopoly electrical utility, Nova Scotia Power, and any independent power producers that come along saying they want to get into the business of supplying electricity to them.

What I've heard you point out as weaknesses in that system, really critiques the process of negotiation that goes on between Nova Scotia Power and any other entity that comes along saying they want to sell electricity to Nova Scotia Power. So I take it that you must be suggesting something different. You must be suggesting that either the Utility and Review Board or some other entity puts an overlay on that process and essentially says it won't be done by requests for proposals - Nova Scotia Power will have to pay the following amount per megawatt of energy. So I guess what we need to know is who you have in mind to do this and according to what principles would they set the price. Any suggestions?

MR. WILLIAMS: I would say this, and this is - recently I've had some positive meetings with the Department of Energy and the same sort of question was brought up: well, what do you suggest we do? I know that personally I'm not an expert in the field of setting prices for feed laws; I'm not an expert in the field of energy as such. I see just a real opportunity here and my view is the big blocks come together and we need, from an objective, to be able to implement distributed power with local ownership in this province.

Now the "hows" of that - I would suggest this, there are experts in that field. I know that in Ontario, they brought in some people from Europe when they were going through their discussions and dialogues relative to this. In the end result, a formal proposal was put forth to the government and the government accepted it.

I guess what I would say is I can't tell you exactly how it would be developed, but there are certain criteria that we have to look at. For one thing, we know we have our wind regime and the quality of that wind regime and there are so many different ways to set this price. Sometimes those prices are set - if we talk wind, they're set - so much will be paid in different geographical locations due to the wind capacity. The reason for that is to support so that all the high quality places are the only ones that get developed. There are all kinds of options there.

I think first of all we have to get an agreement and insistence that we follow up on this approach and we bring the resources - we connect ourselves with the resources that can provide us with the background on dealing with those things.

MR. EPSTEIN: Okay, I think I understand that. Mr. Haley, do you have comments on this?

MR. HALEY: One comment I'd like to make is that a feed law would not necessarily be in opposition to a renewable portfolio standard or some sort of renewable energy target. They can be very complementary. So if the government now set renewable energy targets, the next question is, well, how are we actually going to meet those targets, how are we actually going to get these projects built? The feed-law system has been

shown to be more successful in building projects. So I see a feed law as a way to build those projects, to make sure we reach that target, maybe even as a way to assess if our target is too conservative and there are opportunities to go beyond that target.

In terms of how you set the price, I think this is maybe more your area of expertise than mine, but the price is basically calculated by engineers and economists. You would need a study, you would have to see what objectives there were. So the price for solar would have to be different from the price for wind, certainly. In Ontario the price for solar is 47 cents a kilowatt hour, I think; the price for wind is 11 cents a kilowatt hour. That will develop solar and you can ratchet down that price for solar, hopefully, as that technology starts to develop.

The only way I see doing it would certainly be legislation from the government to say that, and I suppose it would be done by making an amendment to the Public Utilities Act and saying that a certain percentage, or there will be opportunities to procure renewable energy at this price and the URB will inform that. The price could then be re-evaluated every couple of years, depending on how it's working for different technologies in different areas of the province. I suppose that's the way it would work, but that's more your area than mine.

MR. EPSTEIN: I didn't mean to say that the feed laws would displace a renewable portfolio standard, RPS. What I meant to say, if I didn't say this, was that it would replace the RFP, the request for proposals. But in any event, let's talk about the RFPs, the renewable portfolio standard levels. What I'm concerned about is right now the government's policy has been to move to a total percentage of the electricity capacity in the province that's quite small. The target is not very large and it is also, at the moment, kind of limited to the small municipal electrical utilities.

I'm wondering if you have in mind either percentages of the total electricity generated that you think should be generated through renewables, and a timetable. Are there suggestions there? If we're looking at transformation of a sector, we have to move along according to some stated timetable and I don't think I heard that.

MR. HALEY: Currently I guess the target that has been talked about, and I hope is still being talked about, is at least 10 per cent of the renewable energy by 2013. We've always said we thought you could get there by 2010.

One thing that really has to happen in this province is we need to do an assessment of the capacity of our system, and that still hasn't happened yet. I think that assessment has to happen amongst the Maritimes and possibly Maine, because one way we can increase our overall use of renewable energy is to balance the intermittency sort of amongst the region.

MR. EPSTEIN: You mentioned the capacity before, do you mean the capacity of the transmission and distribution system?

MR. HALEY: It would be transmission and distribution, and I think you would also have to look at the top-up and spill. You would have to look at when the wind isn't blowing, how can you fire up the backup power supplies, that kind of thing.

A rigorous assessment of that in our province hasn't been completed, so we get into these sort of strange arguments about what we can actually do and New Brunswick is now starting to undertake a study like this and we still haven't undertaken a study like that. It seems to me like that's quite crucial.

The other thing to really explore is, what are the costs and benefits between putting sort of one big wind farm in one area of the province versus a whole bunch of small turbines all across the province, connected to distribution? What we think is that if you have small wind turbines all across the province you would actually enforce the system. You would actually help the system and you would help deal with that intermittency issue.

MR. EPSTEIN: One more point and then I'll turn it over to Mr. Preyra. The comments that I've heard, I think from both of you really, focused on a part of a restructuring of a system in which independent power producers would sell to the electrical utility. There is another alternative, or another way in which business could be done, and that's wheeling. Wheeling is the technical term in the industry for an independent power producer running their electricity along the utility's lines, but with a direct relationship to some particular customer. So someone could enter into an arrangement, say, with Stora and say, we're going to generate electricity for you, but we're a few miles down the road so we'll just run our electricity along Nova Scotia Power's lines into your facility - we won't be selling to Nova Scotia Power, we would just be paying the open access transmission tariff to Nova Scotia Power.

I guess my question is, what about wheeling? Is wheeling something that you would like to see introduced into the system?

MR. HALEY: Absolutely, and that was the recommendation from EMGC, that was the recommendation made four years ago, I think it would be beneficial. The question I ask is, if you can market directly to consumers, who are the consumers? So who is going to buy this? Some people are going to buy it, I think. I'm not too sure, because I'm not a wind producer so I'm not privy to their business plans and those types of things. But the markets that would buy renewable power would tend to be municipalities, would tend to be large industries, people who have capital and can think about long-term investments, right? So they might sign sort of a levellized contract, they might fix a price 20 years down the line.

Now is the person on the corner going to buy renewable energy in that manner? That's not the case. If we want to buy renewable energy in that manner, which I think is a good way to buy it, sort of a long-term, 20-year contract or so, we're going to have to buy that as a province, right? We're going to have to buy it sort of as a collective entity. So I think the wheeling proposal is absolutely important. A number of renewable energy producers have drawn up business plans and have projects ready to go in this province, based on that proposal, and they haven't been able to get them off the ground yet and if they can't get them off the ground soon, my fear is that they might leave and that would be quite detrimental to this province.

It's sort of the icing on the cake and I'm interested in some cake. I'm interested - it's sort of a nice thing that would happen, it'll add some more renewable energy. At its base, a renewable energy development policy for this province that the government should really be looking at is, what's the big target we're aiming for and how do we reach that target? Also, how do we really bring in rural communities and make this an economic development proposal?

[9:45 a.m.]

MR. WILLIAMS: Could I just make one point in response to your point? I think we have to be careful here in talking about the idea of if we're selling directly to a specific customer access to the grid, one of the big problems particularly if we're not talking about distributed generation and development of small-scale systems, one of the problems that has to be dealt with or one of the considerations is there has to be good financing available for these things. If we make the whole thing too complicated, the administration of it, the regulations, the lack of secure contracts, you don't get financing.

The point is that in situations where renewable energy has really flourished, it's done usually through the use of a feed law of one sort, and one of the components for that to work properly is it has to have unfettered access to the grid, you have to have access to the grid. Whether it's to be to sell it to somebody else, whether it's just to pump it back in and receive revenues from it, it has to have that, you have to have that. You have to have a fair price being paid for that power and you also have to have the recognition that that price would be in place for the life of the facility. Without those things, from a financial point of view, there's too much risk, there's hesitancy. If it's there, then you'll get a lot of opportunities for financing of those projects. Without that, that's a critical component for these things to move on.

MR. EPSTEIN: A good point, thank you.

MADAM CHAIRMAN: Mr. Preyra.

MR. LEONARD PREYRA: Thank you very much, Madam Chairman. Thank you very much, Mr. Williams and Mr. Haley, for coming here today. I found the presentations and the supporting documentation very informative and I was very impressed with the material.

It seems to me that there's a common theme in both your presentations. If I can just point to them: we have declining stocks and resources and we're facing scarcity in terms of these raw materials that we use for energy, especially fossil fuels; there's a recognition of climate change and environmental degradation; and the fluctuations in the price of energy itself causes troubles. We can address some of these problems by adopting renewable energy.

It seems to me that in your presentations there almost appears to be a consensus that we need to invest in renewable energy. You didn't mention the political will, but there seems to be quite a remarkable political will, as well, at various levels of government in terms of the need to deal with the issue; yet we don't see much progress if you follow your two presentations.

I want to ask specifically about one recommendation that you both have in common, and that is the focus on rural economic development and small-scale economic development, that energy be produced, allow for the potential for energy to be produced and consumed in small locations. We seem to have a similar problem with buy local, with groceries and in other areas. Everyone seems to talk about buy local and produce locally, but it doesn't happen. The preference seems to be, certainly in Nova Scotia Power and other agencies that are really in control at the moment, that we go with large-scale, because there's stability and the security of supply. Maybe there's even a way of resisting change.

How do you break that pattern? How do you actually go to promoting local economic development or local community development? I know you've talked about access to the grid, but it must be more than that that's causing this resistance.

MR. WILLIAMS: Can I respond to that? I think that your question is crucial to what I'm supporting here. Your question, how do we go about that? My view is, and the document that you received that is the larger document, it says Opportunity Awaits, it talks about a collaborative approach. I'm saying that we have the opportunity here that renewable energy is amenable to a different type of development than large, centralized.

To do so, we have to recognize that we have to put multiple objectives associated with the development of it and those multiple objectives are going to be not only from the Department of Energy, but from Economic Development and from Agriculture.

I see that there are advantages for all. Right now - and understandably so - the Department of Energy is the prime architect of the policy. In so doing, their concern is to meet the mandates of just Energy, and I'm saying that there are other mandates that would be very advantageous to these other departments. I think it has to happen from all levels of government, and that's exactly what I'm advocating with Energy, with Economic Development, with the Department of Agriculture. I've had discussions with all of them, that we need to bring those parties together and we need to collaborate. Each one of those groups has to literally insist, hey, we have an opportunity here and we want our needs dealt with. I don't think that's improper to do so. We wouldn't expect that Energy would have a real strong consideration for local ownership of renewable resources. That's not what they're trying to do. They're just trying to meet that mandate and reduce greenhouse gases and keep the costs low to customers.

We have a more holistic approach that I really think we need to take. So that's exactly what I would see as one of the roles of this committee, being an Economic Development Committee, is that there be a demand, if you will, that we see that economic development can be advantageous to our mandate and we want it included with the development of a renewable energy policy.

MR. HALEY: I think you raise a good point. It's sort of a mind shift because what we're used to now, and you see it in the ratings all the time, is energy is something you consume and we all pay for it, it's not something we produce. What renewable energy allows potentially the opportunity to happen is that we can all be producers, or a significant amount of people in this province can be producers, and can start making money when they sell kilowatt hours. It's not going to be just Nova Scotia Power making money by selling energy, it's also going to be other people making money by selling energy, not necessarily at the expense of NSPI but maybe at times, I'm not too sure.

We need lots of these little energy generators across the province. Everyone should have an opportunity to buy into a co-op, every farmer should have the opportunity, if they have a good regime, to put up a wind turbine in the future. People in urban centres should have the opportunity to put up solar panels.

One sort of interesting thing, we've recently been working on a project with green power labs and maybe trying to get this going on. We talked about, well, when you prospect on the offshore you get these big, huge machines and boats and stuff and it's really something that's sort of out there, but if you want to prospect for solar, you have to go up to people's roofs and figure out if they've got some good sun on the roof. That's why the services of the Ecology Action Centre could be enlisted for that purpose, because we do public outreach.

You're absolutely right, there is a bit of a mind shift to this sort of decentralized energy system. I think what would have to happen, if you really want to start engaging

communities in this, you would have to start having energy resource centres in different places, and I think our universities could be well placed to do that. A farmer isn't going to be able to figure out how to put up a wind turbine just like that, they're going to need some help to do that. But there should be opportunities through organizations like the Co-operative Council to pool resources to do that type of thing.

What government needs to do is not sort of set a target necessarily and say this is what we're going to do, it's not a top-down thing. What government needs to do is enable this policy to happen. Again, I think Nova Scotia should be well placed, I mean the co-operative movement was founded in this province, we have university sectors that are distributed throughout the province. We have a province that's small enough where a lot of people know each other, there's a lot of social capital here. Nova Scotia should be very well placed for this to happen.

MADAM CHAIRMAN: Thank you. I'm going to turn the time over to the Liberal caucus. Mr. Theriault.

MR. HAROLD THERIAULT: Thank you, Madam Chairman. Thank you for your presentation. I don't believe you'll find too many people in this province who won't agree with you. I speak to a lot of people about renewable energy, and I would say that 95 per cent agree we need to do this. Anybody who can't see the change in our environment on this earth is blind, and probably that's the other 5 per cent.

Down in the Bay of Fundy you spoke about when the wind's not blowing. One of our ministers in the government spoke about that, too, when the wind stops blowing. I've been on the Bay of Fundy all my life, on it and in it sometimes, and the wind never stops blowing on the Bay of Fundy. In the summertime, on your most beautiful day, you'll have your westerly flow of air going across that Bay of Fundy. It's called the westerly and sou'west prevailing winds. It never stops.

The odd time, just before a big storm comes, something will stop that prevailing wind - and I believe it's the storm - for maybe an hour or two, but in that hour or two it does stop two or three times a year. You have six hours of three-knot of tide running into that Bay of Fundy and running out of it every six hours. That stops for only a very few minutes and then it's going the other way.

So the energy in the Bay of Fundy from the wind and the tide is enough - there's enough tidal power in the Bay of Fundy to run all the electricity in Canada and, if properly harnessed, probably in all North America. The power that's in that bay is just - if you lived in it you would know what I'm talking about, I guess, but it is powerful, 130-fathoms deep and three-knot of tide going.

Now you can figure that up. I know there are figures out there for this power but there's nothing that can stop it, unless the moon fell out of the sky, that may slow it up. The wind doesn't stop either, it's there, the western part of this province is there, the wind is there and the tide. Solar, I don't know about solar unless it works through fog. There's lots of fog in the Bay of Fundy, so I wouldn't fool around with too much solar power down there. The wind and the tide, you would never stop having power, continuously, you would never, ever run out unless the moon fell out of the sky. Anyway, I just wanted to get that across, because you mentioned that wind stops blowing and it doesn't stop blowing; the minister said it's going to stop blowing and it doesn't stop blowing.

One problem we have down there, and there are many people down there speaking about this and they're excited about it but exactly as you're saying, the government is not behind it, Nova Scotia Power doesn't seem to be behind it too much, you have a little wire running around there about as big as that pencil, in western Nova Scotia. You could never produce, you could never get enough power out of there through this system, the grid system. That has to be completely redone if you want to talk about the power running Nova Scotia, you could run Nova Scotia with the Bay of Fundy easily. I might be exaggerating about North America but, properly harnessed, I believe you could do it.

The grid system has to be changed. Who would be responsible or who is going to be responsible to rebuild the grid system in western Nova Scotia to make this happen?

MR. HALEY: I dealt with this a little bit in the submission we made for a stakeholder bid and you caught me on my words there, I should be more careful than what if the wind isn't blowing. I think you're absolutely right and I think in some of the discussions on how much renewables can we put on the grid right now, it's sort of the grid is this constraint. I mean my original point was that if we want to prevent catastrophic implications for this province, a position where children and grandchildren of everyone in this room are going to be living in a fairly frightening world, we're going to need about an 80 per cent cut in carbon pollution by 2050.

So the answer is not, well, the grid is the barrier, the answer is, how do we move towards this final end point? Europe said we need a new industrial revolution, this is the place we're going. That's certainly - so the question for me is, what upgrades are needed for the grid? How do we do that? Where is R and D necessary? Those types of things.

[10:00 a.m.]

Currently in the EMGC there is a bit of a discussion of well, okay, if a wind turbine needed to connect to the grid and there needed to be some upgrades, would the

wind producer pay for that or would the ratepayers, in effect, pay for that? Would those costs be socialized essentially amongst the rate base?

What I said in the submission is that there's a social cost. If that extra cost on that wind producer meant that wind turbine or that wind farm or whatever did not go up, well, there's a social cost for everyone in this province because we miss out on the environmental benefits, we miss out on the economic benefits, we miss out on all those benefits. So I think there's good reason to socialize those costs and they would most likely be socialized across the rate base. So if all of us pitched in a little bit, we could make those investments.

The other thing that I think potentially socializing those costs could lead towards is a more rational planning of what our grid is going to have to look like to bring on renewable energy, instead of something that could potentially become sort of ad hoc, like here and there, whoever wants to connect, whoever can get the best wind regimes the fastest - and I mean what's starting to be talked about in Europe now is that they're absolutely going to have to do a major restructuring of their energy infrastructure.

The other mind shift that's going to have to happen with our energy infrastructure is that we pay for roads in this province and every single business uses a road. If there's going to be an opportunity for lots of people in this province to become energy producers, maybe we should treat the grid more like a road, that we all pay for and we all get to use. I think that's another good reason why perhaps we should be paying for this as a province.

MR. THERIAULT: Our roads need rebuilding down there, too. How do you get Nova Scotia Power to do this, if they're not prepared to do this? They own this company, and they're not prepared to put a new grid in western Nova Scotia so energy can be taken from there. How do you get this done?

MR. HALEY: Well, Nova Scotia Power is a regulated utility. It falls under the purview of the Utility and Review Board and yourself, as legislators, can make amendments to the legislation that governs the Utility and Review Board.

MR. THERIAULT: That they have to do this.

MR. HALEY: That they have to do this, absolutely. I think it's the job of legislators in this province to say that this is important, there are many social benefits associated with this and we're going to direct the utility appropriately.

MR. WILLIAMS: In the end result, the people are going to pay for it, whether it be Nova Scotia Power who pays for it - and they have a mandate, they have to maintain a profit to be there, so that's going to be an additional expense to them that will somehow

go on the rate base - or it's going to be through taxpayers' dollars, but in the end result the people are going to pay for it.

I think I would have to totally agree with Brendan's point of view - really, how important is it that it gets built? If we accept the fact that we have wind energy down there that's of very high calibre and if we accept the fact that we can generate that and have local ownership of those facilities and have a real opportunity for those revenues to flow back into that region - in the same way you make the comparison to the roads, that is a road not for cars and trucks but it's a road for energy.

In the end result, I would be presumptuous to say, well, here's the actual plan that will be adopted, but it's going to be, in the end result, the people who will pay for it. There is this big issue, particularly at the Department of Energy, of not wanting to see the price of energy increase. Well, aren't we seeing the price of energy increasing on a yearly basis now and aren't we expecting that to continue to increase? We have to be able to offset those price increases with the advantages we're gaining from them. My view is that we just have to do that in such a way that most of those benefits of the development of renewable energy remains within our region, that we don't just sell or auction off our resources to the highest bidder, which we have a bit of a history of doing.

MR. THERIAULT: One more stumbling block . . .

MR. WILLIAMS: Oh, there's more than one, for sure. (Laughter)

MR. THERIAULT: One more that I'm going to ask - how much opposition is there against renewable energy from big coal and big oil, and how much lobbying is going on behind closed doors, with government?

MR. WILLIAMS: I'd be presumptuous to make any comments of much value, except that they have their vested interests and they're powerful and you can be sure that they're working in their best interests. I'm more interested in where we're going rather than in what we can do on this end to bring about those things.

MR. THERIAULT: But that could be a big stumbling block.

MR. WILLIAMS: That's all part of the democratic process, I guess.

MR. THERIAULT: Thank you.

MR. HALEY: Could I respond to that briefly?

MADAM CHAIRMAN: Yes, if you'd like to briefly. Mr. Wilson wants to ask some questions.

MR. HALEY: It's a political stumbling block, but it's also an economic stumbling block because for emerging technologies to get into a market, they are at a higher price originally and you have to create sort of essentially a niche market for those prices to be able to come down and those technologies to be able to develop. That's why the EMGC recommendation for opening up the market is not going to allow emerging technologies to come in, because those technologies are going to be crowded out. That's why it has taken a long time to develop wind and people who have developed the wind sooner than us have created those niche markets, so it's also an economic stumbling block.

MADAM CHAIRMAN: Mr. Wilson.

MR. DAVID WILSON (Glace Bay): Thank you, Madam Chairman. Gentlemen, your presentation has been informative and eye-opening, perhaps. I have a few questions that worry me. I represent an area that at one time produced about 45 per cent of the electrical power generation in Nova Scotia. We did it because we mined coal, and we all know the end result of that. There is no coal mined anymore in Cape Breton, but it's still being used to generate electricity in Nova Scotia and still being talked about to generate electricity in the future in Nova Scotia, by the way.

So I guess I'm sort of split. If I look out my front window, I see the Lingan generating station and if I look out my back window, I see a turbine on the shoreline. I know, realistically, that that turbine, or a large number of those turbines, will never replace the electricity that's generated by that very large generating station. So I guess the question has to be asked, how do you get to that point and how long does it take to get there?

Another question I would like to ask, and I'm not saying you're suggesting, but I get a feeling from the presentations that perhaps - correct me if I'm wrong, and I'm sure you will - are we looking at the possibility of subsidizing renewable energy producers in this province in order to make it possible for them to produce that energy and to feed into provincial grids and so on? I'll pose those couple of questions to you and take it from there.

MR. WILLIAMS: There's always that issue. You know, you talk about a feed law, and the feed law basically says the producers will be paid a fair - that's the term used commonly - a fair price for their power. Now that means a price that if you do your business properly, it's a good investment for developers, for owners, and so on.

Right now the feed-law price would probably be more than what Nova Scotia Power is paying for them; exactly how much, I don't know. Why do I say I know it would be more? Well, that's my expectation, so from that point of view that might be considered to be a subsidy. I think we get back to that same issue - I don't truly see it as

a subsidy. I do see it as a stimulus because you're trying to compare - Nova Scotia Power would like to buy that power certainly, as inexpensively as it can.

There are various views of those particular facilities that have been built and have sold their power at that price, as to whether they represent a strong, successful, economic model for the future. So I don't think - we don't want to see subsidies as such that go into economic development, but we do need to see support policies that provide an environment that make renewable energy a good investment. That's the way I would answer that question - no, I don't think subsidies are a good idea, it's not part of the free market world that we live in and they're not going to be supported. But that's different than I would see what we call a fair price for the type of energy that's being developed and in recognition of the demand and the real need and requirement that this energy be developed under the circumstances that we live in today.

MR. HALEY: On your question on sort of just the scale - yes, it's a large challenge, but the road maps are out there. I mean I can show you a number of documents that show almost exactly how to get to in the area of 50 per cent greenhouse gas reductions with known technologies right now. One of those things that most of those studies show, as something we oftentimes neglect - not renewables but energy efficiency. These lights, how do we make sure that they're the most efficient possible?

One person, Ralph Torrie, looked at our energy use - sort of per unit of GDP - for the span of about two decades and what he found is that if you count up the energy we've saved over that period of time, that energy we've saved is actually bigger than all of the energy we've produced in those two decades. Efficiency is actually the largest energy resource we have in Canada - what if we actually developed a strategy to tap it? Oftentimes we don't look at some of the more abundant, I think, cost-effective and clean resources that are out there.

In terms of subsidization, one point I certainly would make is that the fossil fuel industries are certainly subsidized right now, and they're subsidized socially as well as economically. In Nova Scotia, we've already given subsidies to wind producers, in my mind. I didn't follow it too closely, but this Legislature did pass some tax changes for wind producers, possibly for good reasons.

Take a step back and look at what, in my mind, the argument about taxes in this province for wind production is a symptom of a procurement system that's somewhat broken. The reason we argue about taxes is because the margins for wind producers are so thin and the wind projects that have been built in this province have been based on this competitive bidding process where the person with the cheapest price always wins. So a subsidy was given to existing wind producers in this province for wind turbines that have already been set up. That has been a subsidy - in my mind it has just been a subsidy of a bad procurement policy instead of a subsidy of a good procurement policy.

The thing to also consider about renewable energy technologies is that almost all of the costs are up front. You set up a wind turbine and put out that initial capital outlay and then there are no fuel costs - you don't have to pay to use the wind. So it's not so much a subsidy as in providing some financial security so that people can make that initial capital outlay and then pay off that capital outlay over time by selling the kilowatt hours. Currently farmers, rural communities and those types of people cannot get that financial security so they can't put up that wind turbine. In my mind, that's what the feed-law system allows for.

You certainly made a point that in other jurisdictions - in France, for instance, they've recently had - the feed price was actually lower than the bid price recently in France. So a feed-law system is not necessarily more expensive than the system we're actually currently using right now, with the competitive bidding.

[10:15 a.m.]

MR. DAVID WILSON (Glace Bay): You're not suggesting that if you're going ahead with an electricity feed law, you're guaranteeing me that the price of electricity won't go up?

MR. HALEY: No - well, not necessarily - but what I could guarantee is a price over 20 years. If I told you that I'm going to fix the price of gas for $1, but I'm going to keep that price for 20 years, then maybe some people - that might sound like a pretty good deal, considering the way gas prices can shoot up. That's the benefit of it, that you can fix that price because there are no fuel costs attached to it and we don't have to deal with the volatile fuel costs that have been responsible for rate case after rate case.

I'm not too sure, we have to study exactly how the feed-law system would work in Nova Scotia and with our system right here.

MR. DAVID WILSON (Glace Bay): That's fine then, thank you.

MADAM CHAIRMAN: Thank you. I'm going to turn it over to Mr. MacLeod.

MR. ALFRED MACLEOD: Thank you, Madam Chairman. I would like to thank both the gentlemen for their presentations today. I'm not a regular member of this committee, but I seemed to have lucked out and came to a very interesting topic. I'm a firm believer that wind energy is going to play a major role in Nova Scotia in the years to come.

I'm curious, though - you mentioned, Mr. Haley, about having the wind farms - not necessarily a big wind farm, but wind farms spread all across the province. I don't

understand the rationalization behind that. Most things, when you talk about them, it's about economies of scale and operation and that, so I just wonder if you could . . .

MR. HALEY: Well, if the wind isn't blowing at one moment in time in Cape Breton, it might be blowing at that same moment in time on the South Shore, or it might be blowing in New Brunswick. So one way to deal with the intermittency issue is to have lots of wind turbines spread across the province, so we don't get these large fluctuations.

Currently, right in Nova Scotia, the Pubnico plant is a very large wind farm, so if the wind isn't strong at Pubnico you can go from sort of zero to 100 very quickly, but if you had wind farms spread all over the province there would be a more sort of even keel. You'd be able to smooth out some of those intermittency issues. That tends to be the point for distributed generation, why it could be beneficial.

MR. WILLIAMS: The other side of that thing is one of the major issues we're talking about here today, that renewable energy allows itself to be, it is amenable. In fact, it's even easier to develop when it isn't done as large wind farms. You can put those facilities at the locations that they occur and, again, my view here is if we really want those revenues that are being generated to flow back to that community, then they're located in that community and it allows for local ownership.

Again, we're talking about farmers and municipalities and co-ops. There are real opportunities there for those facilities to be - and we want to create an environment where those are locally owned. You know if we build a major wind farm on the Tantramar Marsh and it's owned by one of the large wind energy developers of Toronto or Europe, we build another one out in Cape Breton, all those revenues associated with that, all the profits, they flow back and out of Nova Scotia.

This is one of my major points that we have to look at the development of renewable energy from a different viewpoint, with different objectives, with the recognition that we can develop it in such a way that it's more beneficial to the entire province and all of its residents.

The other day I received an e-mail from one of our business development officers in Cape Breton and he informed me that a local landowner, who owned a piece of land with a ridge on it, had been approached by an Ontario company that wanted to put a wind farm there. Now at this point in time this individual has pretty much one option: he can agree to allow them to put that there and he would get some sort of a lease fee. That would go on for the life of that facility and it would be up to that development company to deal with - depending on the size of it - Nova Scotia Power to get a price for that.

The way I see it, and I see this is where we're really willing to lose out on this major opportunity, is that individual doesn't have the opportunity to form a group within

that community - I'm assuming that he probably wouldn't do it on his own, but whether it be as an individual or to form a group - that could choose to have local ownership of that facility. Indeed, to review these things as a business proposition, they're not a hard thing to do. There is no other cost, other than as Brendan mentioned, the capital cost of building it and the only variable in that mix is the actual wind capacity that you have in that facility. From that, you decide the size of the turbines you want.

If you had direct access to the grid, and my understanding is that the grid, the very capable grid, runs very close to that location, so it's a very opportunistic place to have that wind farm. Right now the only opportunity for that individual is to sell his rights to that wind, which is going to blow forever, instead of being able to have another opportunity that allows him to have local ownership, local development. That's where I see the real advantage of distributed wind, it allows us to develop it with multiple objectives in mind.

MR. MACLEOD: Well, I could probably agree with you and understand the idea of distributing the windmills to different areas. I don't understand your thought that the only opportunity this individual has is to lease his land, because there are other people, a number of Nova Scotians who are in the business of wind farms. There is a major wind farm developed in the Lingan area, with Cape Bretoners operating it, so this individual would have the opportunity, in my mind anyway, to approach these people and see if there's an option of building it there. So I'm not sure I would agree with you when you say the only option he has is to lease it to an Ontario company, but I'm certainly willing to hear what your response to that is.

MR. WILLIAMS: What I'm saying right now is we don't have an environment in place that stimulates the development and local ownership. I think there was a point made earlier, someone made the point at the table here, that it appears that over the last 15 years there has been a lot of talk about renewable energy, but there has been very little progress. I think that says a lot. You're absolutely right, there has been a lot of talk, there has been a lot of commitment - supposed commitment. There have been contracts made and contracts broken. Over the course of that time, there has been truly, very little developed.

Without getting into the specifics of that situation, all I'm saying is, history shows that we don't have a vibrant, growing, developer community or any ownership of any sort, that is other than fairly large corporate in this province right now. I'm saying that based on the models that you see in Europe, the accelerated rate of development in those places, particularly when you see it on a graph, is extremely - what would you say? - poignant. That's what we need to do here. I'm saying we don't have that environment right now.

MR. MACLEOD: Mr. Haley, when you spoke before about building wind generation stations, you said there would be an extra cost on the wind producer to do these types of things. Again, I would like you to elaborate on that, but that's what you said.

MR. HALEY: I'm trying to recall.

MR. MACLEOD: Just before you talked about the socialized cost, you said there would be . . .

MR. HALEY: Right. There would be an extra cost for them to essentially hook up to the grid. So if there needed to be an upgrade in a transmission line or an upgrade in the connections somewhere, that cost could be borne by the wind producer. That is currently sort of in discussion right now, should the wind producer bear that cost for the upgrades that would be needed to transmit the power, or should somebody else bear that cost, like the ratepayer?

MR. MACLEOD: I would probably suggest to you that it's the ratepayer who is going to pay it. It doesn't matter who pays it up front, at the end of the day it's the ratepayer who is going to pay for whatever type of system is put in place, whatever technology is put in place, and certainly whatever type of transmission. At the end of the day, it's going to be the ratepayer who is going to be paying it. It's not going to be the wind producer, it's not going to be a socialized cost, at the end of the day it's going to come back to the ratepayer, because if it's got socialized costs, it's the ratepayer who is also paying the taxes in this province. So at the end of the day it's what's best for the ratepayer, and how do we accomplish that?

MR. HALEY: I think it's very difficult when you're dealing with something - I kind of view the transmission system as a road, and it's very difficult for us to pay for roads as individuals in this province. We pay for it, by the government, through our taxes. In the same way, I think we might have to start paying for the transmission system in this province, through taxes or possibly through rates.

MR. MACLEOD: I guess I'll end like this, it's going to be the same person paying the rates and the taxes. At the end of the day, it's going to come out of an individual's pocket. The cost is going to be borne by the consumer, in one way or another. Thank you very much, I appreciated your talk.

MADAM CHAIRMAN: Are there more questions? Mr. Bain or Mr. Porter? You have more time.

MR. CHUCK PORTER: I have a couple. Thanks for coming in, a good presentation. Something we really haven't talked about, we've said the word "cost" but

I haven't heard any real dollar figures. If I wanted to go out and say, today I think I might want to set up one of these windmills in my backyard, if I had five or 10 acres of property, or maybe a few of them, a small farm, whatever you're suggesting, Mr. Williams, what would the cost of something like that be? We must have a projected cost at this point in time, do we?

MR. WILLIAMS: In round figures, it depends on the size of it, but I know the one that was recently put up over in River John was an 800-kilowatt, just under a megawatt, and it was a little over $1 million. Usually what's bandied about is for these particular units to go up that are somewhere between one and two-and-a-half megawatts, you're looking at between $1 million and $5 million.

MR. PORTER: That's a big gap.

MR. WILLIAMS: All I'm saying is there's a big difference in the size of those units, as well. There's a considerable difference in the size.

MR. PORTER: So I could get one for $1 million that would be put up, installed, ready to run, hooked to the grid?

MR. WILLIAMS: In round figures. I think you're looking in terms of round figures for this, not less than that. There are smaller units, and it depends on what you're trying to accomplish with them. For something that you might consider to be big enough and to have the efficiency that you require to make it viable, those are the numbers that are bandied around. Would you agree with that?

MR. HALEY: Definitely . . .

MR. WILLIAMS: They're not inexpensive, that's for sure.

MR. HALEY: It's not the type of thing that you can kind of just put up in your backyard. In Denmark, it's why co-operatives have really gotten involved. It's sort of a medium-scale capital investment. That's a lot to me as an individual, but that's sort of peanuts to someone building a coal-fired power plant. It's the type of capital that can be amassed through loans and other mechanisms, and here in Nova Scotia we have the CEDIF funds, which have started to get more and more into wind, that can start to, hopefully, sort of amass this sort of medium-scale capital.

MR. PORTER: Why aren't we, then, using the standard operating contracts, the SOC acronym, to encourage investment in smaller, renewable energy projects?

MR. WILLIAMS: Why aren't we? I don't want to speak on behalf of the Department of Energy, but their view is that the best way to go is with renewable

portfolio standards and requests for proposals, tendering it off to the highest bidders. That's the approach that they've taken. That's one of the things that I'm having discussions with the Department of Energy now. Interestingly enough, I just recently had a good meeting where indeed there was agreement to have dialogue with the other departments, Economic Development and Agriculture, to consider this broader approach. The why, you'd really have to ask them. They feel that's the best way to go. But I also think there's a real lack of understanding, not necessarily in the Department of Energy, but there's a lack of awareness and understanding as to the options that are there for the development of renewable energy. That's really what we're here talking about today.

[10:30 a.m.]

MR. PORTER: Again, these folks could come from anywhere. I like your idea of Nova Scotians being able to buy into this and, I guess I would say, profit at some point. Any idea - again, talking about dollars and cents here, and individuals or small co-ops or whatever putting these things up - what you would have for a turnaround time so that myself or a group - and I'll just use that as an example - could make a profit on such an item? Obviously you're going to have a capital cost, but I'm just thinking about the encouragement. Great idea, good to have Nova Scotians doing it, but how long before you're making some money at it, if we're going to set up a little business here?

MR. WILLIAMS: The spreadsheet that I've seen, and maybe it might be somewhat - I can't attest to its authenticity, but it's a fairly simplistic approach. If you take the power that you're generating at a certain amount and you basically apply that against the capital cost, on a 20-year life of this facility, I've seen that it would be paid off in between five and 10 years, and then the remainder, those revenues would be flowing directly back to yourself.

MR. PORTER: So you have about a 20-year lifespan out of one of these?

MR. WILLIAMS: That's what's commonly used as the length of the facility. Now, whether that's because the expectation is it will be replaced after that time because it has just become obsolete, or whether it truly is not viable because it wears out, I don't know.

MR. PORTER: Now, we've talked about the larger set-ups, you've talked quite a bit about the smaller set-ups, is there a set-up, five, 10, 25, is there a number that would really be beneficial - I know it all kind of comes back to how much energy you can produce as to how much money you can make. But I think from a business perspective, to try to talk Nova Scotians into this, they're going to want to know the answers to some of these questions. How much money am I going to make; how much risk is involved; how much difficulty am I going to have with regulations, getting hooked to the grid and all those things?

Unfortunately, it always seems that it always does come back to the almighty dollar. To encourage, again, Nova Scotians to be involved, I'm just kind of curious, is there a certain number in your mind? You seem to have put a lot of time into this, obviously.

MR. WILLIAMS: What has to be done, and the manner in which that is done, there are a number of ways you can approach it but, you're absolutely right, it's an investment. It has to be an attractive investment. You have to look at it from the point of view, my view is, how do we make this an attractive investment, such that it will stimulate the development for local ownership of these facilities throughout the whole region? It is that approach that has made the exemplary development of distributed power in the European countries. It's that approach that's bringing - and the linchpin of that is an electricity feed law.

In the end result, that's what we're saying. It isn't like, if it is a good investment. It has to be a good investment, not something that is a real "gimme" if you will. It has to be an investment that if you do your due diligence and it's developed properly, there will be a sufficient return to make it worth your while, that you're willing to invest in it.

MR. PORTER: Not unlike real estate, perhaps.

MR. WILLIAMS: Not unlike anything.

MR. PORTER: Real estate just comes to mind, housing, because, unfortunately today, it's not uncommon for people to be paying $400,000 and $500,000 for a home, and still there seems to be a good investment in that. They tend to make money on it, as well, at some point. As someone who gives this a fair bit of thought, I think it's a great idea, and I'd certainly like to see us, as Nova Scotians, become more interested, but I'd like to be able to see us have something out there as a sales pitch, I guess for lack of a better word, but to get that interest from local Nova Scotians and say, if energy is going to work on this - and there are issues, and we all know there are target dates and global warming, and there are all of these issues about how we need to be at certain target dates - there has to be a plan in place to . . .

MR. WILLIAMS: The primary thing that I'm doing as part of our initiative at the Co-operative Council is we are looking at this thing as information and awareness, but also we're lobbying for recognition that we have to look at the multiple opportunities that exist and the multiple objectives that can be accomplished from it. But you're absolutely right, there are other ways.

I know this changes with the political flavour of the day, but I know one of the things that was implemented within Denmark was that if owners of these facilities who were generating a revenue from them, and they also were using electric power, the

amount of revenue that they generated, that was offset by the cost of the power that they used, was tax deductible. In other words, they didn't start paying any income tax, if you will, on that until it got above what you used in your domestic situation. So there are certain tax breaks there, and you can understand that that seems like a reasonable approach.

There were things like that that were put in place to create the environment, which is what government should do, create the environment to stimulate what needs to be done for the greater good of the people.

MADAM CHAIRMAN: I'm going to turn it back over to Mr. Preyra. We have about seven minutes each in a final round. So maybe short answers would be good.

MR. PREYRA: Madam Chairman, I'll try to keep the questions short, too. Mr. Williams, you talked about examples of silo thinking and how departments don't seem to talk to each other, and we need to have a little bit more collaboration, certainly if renewable energy is to be developed. My question really is for Brendan, and particularly with the Utility and Review Board, we have hearings going on this week, and as part of what appears to be an agreement, we have this fuel adjustment mechanism that will allow Nova Scotia Power to change its rate in accordance with the fluctuations in the world price of oil and coal. I'm wondering, what are the implications of accepting that agreement for the development of renewable energy and the development of conservation measures?

MR. HALEY: My main concern about that is that it's essentially a distraction from some of the more fundamental issues. We've been fighting a lot in this province over fuel costs, but we've had a year-long delay in the demand-side management plan - energy efficiency, using our energy, not having to burn those fossil fuels at all in the first place because of programs that help people replace their light bulbs, upgrade insulation, those types of things, that is an abundant, cost-effective and clean resource. We need to maximize that before we start to discuss a fuel-adjustment mechanism. Likewise, a fuel-adjustment mechanism is purported as something to deal with fuel volatility, but you can reduce the overall impact of that fuel volatility if you build power plants that don't have fuel costs.

If we make those investments today, the importance that is being placed on the need for coping with these volatile fuel costs, I think, would be reduced. My concern is that, essentially, a powerful group of interveners got together and are more dictating the schedule of the board, or attempting to, when there are a lot of other more crucial issues that really need to be built with, first and foremost.

MR. PREYRA: A quick question for Mr. Williams, as well. You refer to Denmark quite often and co-op arrangements that have succeeded. It seems to me that

what we're talking about here involves smaller communities, that we don't have the same economies of scale that we might have in Denmark. I'm wondering if you have any examples that you can point to where co-ops worked, what kinds of partnership, financing, opportunities and constraints have those co-ops faced, and what do we need to do there to develop that co-op model in terms of the production and distribution and maybe even consumption of renewable energy?

MR. WILLIAMS: I don't have a specific example of what you're asking for. What I am saying is this, though, that you're absolutely right in what you're saying, if we are comparing, we want to make sure that we're comparing apples to apples. I would say that what I see that we need to do here is to recognize what the uniqueness of Nova Scotia is, smaller communities might be one aspect there, and then recognizing, with that objective of developing renewable energy in a way that is most advantageous for Nova Scotia, we would have to develop a solution that would be unique to Nova Scotia.

Again, I don't want to indicate that - we know there are differences, there are cultural differences, there are size differences, there are geographical differences, many differences. So the point I'm making is, you're absolutely right, we have to deal with our unique situation, but we have to move forward on reaching those overall objectives.

MR. EPSTEIN: I'm hugely supportive of transformation of the electricity sector, and I think that a number of the things you've said to us are the right direction, but I'm also aware of the possibility that things could screw up. When I look at what happened in the United States, a number of individual states, California and I think a number of the Midwestern states and so on, tried, essentially, kind of opening up their electricity marketplaces by using wheeling, and by using a whole variety of open access to the grid and so on. What happened is that a number of intermediaries appeared, companies that essentially bought and sold and then resold the power. What they did was they tried to achieve marketplace dominance, and they were able to gain some control of the marketplace. They drove the price up.

Although there was sort of at least some nudging towards renewables, what happened is that the natural tendency of a marketplace towards a kind of oligopoly or monopoly emerged. So what I'm wondering is whether you have anything you want to suggest to us by way of lessons from the experience in the United States, or is that a whole new topic that we ought not to try to deal with in 30 seconds?

MR. HALEY: I think what has been proposed by the EMGC is a fairly modest restructuring, with a vertically integrated utility. It is pretty far away from some of the more wholesale restructurings, sort of deregulation that has happened in other areas. I think it's also important to realize that the markets that will buy renewable energy, as consumers, will be fairly niche markets. I don't see it driving a great deal of price competition in the market, although I do have that concern.

My main concern is that we would crowd out two groups; one is small-scale producers who will not be able to participate in that market and the second is emerging technologies such as wind, tidal and solar.

MR. EPSTEIN: Fine, thank you.

MADAM CHAIRMAN: Okay, thank you very much. I'm going to take some questions for the next few minutes for the Liberal caucus. So, with your indulgence, I'll stay in the Chair.

Thank you very much, and again thank you for coming in today. I was particularly surprised with your initial statements, that would be Mr. Haley saying that the EMGC report is not it anymore, it isn' the standard we need to be going to, if that's what I heard you saying, we need to go beyond that now. For a number of years we've been thinking, when will they act on this report? So I think you've really set the stage, that we need to be thinking more boldly about newer measures that are being quickly adopted elsewhere, so that sets a note for me.

I had a couple of specific questions; one I would like to ask you, who speaks for this industry? I feel the industry is quite fledgling, really, in terms of our province. Who speaks for independent producers?

MR. WILLIAMS: Right now I think that's a bit up in the air. There is an organization, and I don't want to speak on behalf of that organization, it was the Renewable Energy Industry Association of Nova Scotia, but there has been a bit of fracturing within that group. So I don't think I'm speaking out of turn to say that the group still exists, I'm not sure who the spokesperson is for that group, and probably it needs a strong body to represent its best interests.

[10:45 a.m.]

MADAM CHAIRMAN: I appreciate that. As you know, in the Fall we did talk about municipal taxation of wind farms and we were told that the industry supported that, but that was just a couple of voices of people who were currently in the business and it did not represent other people who might want to be in that industry or want to be part of it and I felt that there wasn't a voice.

It's interesting that just today there was an energy announcement that deliberately, or perhaps by chance, was held at the same time as this meeting, which had to do with the energy, a green energy market reform is what the press piece says. In that announcement it says that the independent power producers welcomed the announcement and they quote one company only, Cape Breton Power Ltd. Would you say that's proper consultation with the industry, to get a feedback from the industry?

It's just a bit of a blanket statement, independent producers support it. For those of us even in the Legislature, we think, well, that's good, they've consulted with the industry. It's important to me that we do consult with the industry.

MR. HALEY: I don't feel I can speak for industry, but certainly there are a number of different business plans and there are a number of different business models out there. Some people want to sell to Nova Scotia Power, some people want to sell directly to consumers. I think what Bob Williams is bringing here today from the Nova Scotia Co-operative Council is that there is a whole other sector that's completely crowded out from this market, and that's our rural communities. In a lot of ways before the Nova Scotia Co-operative Council has stared speaking out on this, that sector has not had a voice whatsoever, that is the sector rural communities, farmers, co-operatives, municipalities. Those are the sectors that have tended to develop renewable energy technologies quite aggressively in other countries.

MADAM CHAIRMAN: I appreciate your dealing with that. It's kind of a tough question, but I think it's important for us to understand if we want to know if there's a single voice or a common position but there isn't, you're telling me.

MR. HALEY: I don't think you're going to get a single voice, because there are some people who are quite comfortable in winning out in a competitive bidding process. In the process we have right now, the big dogs can play and the big dogs win. There's a whole sector of this province that are stakeholders in this and are just starting to realize that they're stakeholders.

MADAM CHAIRMAN: You mentioned earlier the CEDIF funds, which are the Community Economic Development Investment Funds, which I think are a bright light, really, in terms of how we can go forward. I gather they have something like eight different companies, or maybe it's more than that, around the province, separately formed to . . .

MR. WILLIAMS: The wind fields.

MADAM CHAIRMAN: The wind fields, and then they've sold shares to Nova Scotians in those areas to support the $1 million or $2 million it takes to put up the turbines. Can they go forward if there isn't a market with Nova Scotia Power?

MR. WILLIAMS: They're stymied, the same way as the smaller producers are. There's a lot of discord within that community right now, and I don't mean just the wind fields community but I mean the developer community. I'll put it this way, I've been told, when we talk about who's speaking for the industry, that industry has broken into two factions, those who feel that, look, we've been working for certain things for 15 years and we haven't seen a change, so we're going to have to adjust, and as a

consequence they're working - and there's usually large corporate money behind these groups, who are saying, we're satisfied with the situation as it is now because we're willing to bid on the large projects. The small project developers, and anyone who will benefit from that, they're being left out.

MADAM CHAIRMAN: One of the questions I had, really, you mentioned about companies may get tired and go elsewhere, I've heard already of companies that have raised money on the capital markets, can't go anywhere in Nova Scotia, and they're in Alberta, building these wind turbines or in the Caribbean, another company I spoke to. So isn't it already happening, that we have an exodus of our expertise and even our capital?

MR. WILLIAMS: Or to Ontario, where they put a feed law into place, and it opened up the market to smaller development opportunities. That's where the money is flowing.

MADAM CHAIRMAN: So it's fair to say we haven't moved fast enough to really meet the demand of industry that wants to develop and wants to be involved.

MR. WILLIAMS: That's more than fair. There's a very small window here, and we keep running up against it, that window keeps closing and closing. I don't mean to sound alarmist about it, but we have opportunities here. We have tremendous opportunities from these resources, and I've said we seem to be willing to just auction them away to the biggest bidder instead of benefiting ourselves.

MADAM CHAIRMAN: Another question I have in terms of the future of the industry here, we did mention Nova Scotia has perhaps the best - what did you call it? - wind regime or wind capacity in the country, maybe ourselves and P.E.I., at least, so what about the value of those leases on land around the province? Are they being bought up now by people from anywhere in the world? Is there a worry that they would be sewn up now, even though our industry isn't ready to move, or our government isn't ready to move, and start to build them? If you get the leases on the land, then we're in trouble.

MR. WILLIAMS: I don't know about specific leases, but you're very much right. The big money interests in renewable energy have recognized the opportunities that exist in Atlantic Canada, all of Atlantic Canada, and they are positioning themselves to their best advantage right now. Again, I think we need bold but informed government action, progressive government action to recognize that fact and deal appropriately with it.

MADAM CHAIRMAN: We haven't talked a lot about tidal power today, although it was mentioned by one of the members. Is there a concern, as well, that perhaps we don't have the regulations in place to control who owns the body of water

and who can either charge municipal taxes, since we talked about municipal taxes in the Fall, but who really has the rights to that power or that body of water?

MR. HALEY: It's a very interesting issue. I know at Dalhousie there has recently been a study on that, dealing with those interprovincial, provincial-federal, sort of who owns the rights to that. I think you're absolutely right. At the EAC, where we've started to have some discussions about tidal power, there are major opportunities for innovation there, but to let that innovation happen, you have to have a number of people trying out their technologies, a number of people experimenting, a number of people from different disciplines finding out a lot about the Bay of Fundy. I think that has to happen in sort of a safe space, in a university-based atmosphere, and if we leave it open to simply one company, I'm worried those spinoffs wouldn't happen.

Another important thing about tidal is, let's not repeat the same mistakes as we did with wind, in terms of local opposition to wind and stuff like that. We should really seriously consider opportunities for local ownership down the line for tidal resources.

MADAM CHAIRMAN: That sounds good. I just wanted to mention one other thing. We've talked about the cost to consumers. In some jurisdictions consumers are allowed to say that they will pay extra on their bill in order to support green energy, so as a consumer I can feel a little better about my use of energy because I'm paying a small premium, which in turn would work up through the system to the company providing the power, that they would guarantee that much would be coming onto the grid. Is that a possibility here in Nova Scotia?

MR. HALEY: That's the type of thing that the EMGC recommendations would allow for. It's not quite clear if the person at their house is going to be able to sign that off on their energy bills, or if it's going to be more like large businesses, municipalities and that type of thing. That's done in Ontario, there's a company called Bullfrog Power that does that and people can do that. It tends to be about 2 per cent to 5 per cent of the market. It's a very small, niche market that is willing to do that.

You see polls of people saying - well, into the 70 per cent to 80 per cent to 90 per cent range - we are willing to spend more on our bill to procure renewable energy, but very few people in the market actually do that. I think the reason why is because the reason we want renewable energy in this province is because it's a social good, we want it for its environmental benefits, we want it for its economic development benefits, so it's something that should be procured by all of us and not left up to one individual.

MADAM CHAIRMAN: Right, so it would be a small section anyway that would actually opt for that.

MR. HALEY: Yes, but it's nice.

MADAM CHAIRMAN: I wanted to ask the committee if it's possible for me to put a motion on the table - or do you have any more questions, Alfie? The others said no. You're fine? So if that's fine - I had checked already, just so you know.

I just wanted to make a motion, I think this is one that makes sense from what we've heard today: that the Economic Development Committee request that the government insist that the Department of Energy formally involve the Department of Economic Development and the Department of Agriculture in the development of programs, legislation and regulations that will guide the development of the renewable energy industry.

So it's just asking them to create a formal mechanism to involve the other departments . . .

MR. EPSTEIN: And policies and programs.

MADAM CHAIRMAN: And policies and programs, I'll add that, too. So I said programs and policies?

MR. EPSTEIN: Either way, sure.

MADAM CHAIRMAN: Okay, so in the development of programs, policies, legislation and regulations that will guide the development of the renewable energy industry.

MR. EPSTEIN: I'd be happy to second that.

MADAM CHAIRMAN: Okay, thank you very much. Any discussion on that motion?

Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried. Thank you very much.

That will be the end of our session today.

Just a little bit of business, not much, just to say what our next meeting will be. We did, actually in terms of business, receive a letter back from Peter MacKay, which we have copies of, and it related to the CAP program when we had representatives in to talk to us about CAP. We wrote to federal ministers and a few other people who were copied, so Peter MacKay has answered us, so if everybody could just have a note of that.

There is no other committee business so our next meeting is confirmed for February 6^th. We will be speaking then to the Retail Gasoline Dealers Association of Nova Scotia.

So if there is no further business, we stand adjourned. Thank you very much.

[The meeting adjourned at 10:56 a.m.]