HANSARD

Printed and Published by Nova Scotia Hansard Reporting Services

ECONOMIC DEVELOPMENT COMMITTEE

Mr. Keith Colwell (Chairman)

Hon. Judy Streatch

Mr. Keith Bain

Mr. Chuck Porter

Mr. Clarrie MacKinnon

Ms. Vicki Conrad

Mr. Leonard Preyra

Ms. Diana Whalen

Mr. Harold Theriault

[Mr. Keith Bain was replaced by Hon. Ronald Chisholm.]

In Attendance:

Ms. Jana Hodgson

Legislative Committee Clerk

Mr. Gordon Hebb

Legislative Counsel

WITNESSES

Department of Energy

Ms. Alison Scott

Deputy Minister

Ms. Nancy Rondeaux

Engineer

Ms. Sandra Farwell

Policy Analyst

HALIFAX, TUESDAY, DECEMBER 9, 2008

STANDING COMMITTEE ON ECONOMIC DEVELOPMENT

9:00 A.M.

CHAIRMAN

Mr. Keith Colwell

MR. HAROLD THERIAULT (Chairman): Good morning, everyone, we'll bring this meeting to order. I'm sitting in temporarily as chairman - not usually the chairman, but I'm a good chairman because I make meetings go fast. (Laughter) We have to be out of here by 11:00 a.m. so maybe we could start with some introductions around the table, please.

[The committee members introduced themselves.]

MR. CHAIRMAN: With that, maybe we can get going, you can start with your presentation.

MS. ALISON SCOTT: I'm Alison Scott, deputy minister of Energy for Nova Scotia. With me today is Sandra Farwell, the manager of Strategic Policy in the Department of Energy, and Nancy Rondeaux, a professional engineer responsible for the renewable energy file in our department.

I've got a presentation for you today. It will provide you with an overview of the tidal energy market, Nova Scotia's position in the emerging in-stream tidal industry, and information about our demonstration facility.

To begin, an overview of the world ocean energy potential. As you can see, the current world electricity generation is 20,000 tetrawatts per year but the total ocean energy resource, including tidal, is 31,000 tetrawatts per year. Nova Scotia's electricity demand, on a much smaller scale, is 11 tetrawatts a year. So there's huge potential worldwide for ocean energy and Nova Scotia anticipates that it will have a place in that energy market.

Here's an overview of the Canadian tidal sites - red being the strongest regimes and blue being the weaker. As you can see, Nova Scotia has a very strong site in the Bay of Fundy, but it's not the only site. Anywhere you find pinches of land and flows of water between it, you find very good regimes, and the northern part of our country is blessed with very good tidal regimes but they're a long way from the grid. So the best opportunity for tidal power generation in Canada, indeed in North America, is Nova Scotia.

Here's an early estimate. There are two things I'd like you to notice from this slide: an estimate of the electricity possibility from two sites on the Bay of Fundy, the grid travelling down through the spine of Nova Scotia and the close proximity of those tidal sites to the existing grid which, again, distinguishes this from other sources of tidal electrical generation in Canada. The Minas Passage is believed to have at least one site - 166 megawatts - and the Minas Channel - 131. Our own existing tidal power generation plant, the barrage system on the Annapolis River, produces 20 megawatts a year and has done so since about 1984.

[9:15 a.m.]

The technology is growing, it's emerging rapidly. You can see from 2003 to 2006, there were five types of tidal technology under investigation, but by 2006 that number had increased to 25. The number is continuing to grow as electrical generation costs continue to rise as well.

Here are some examples of in-stream tidal prototypes. The one in the centre is the open hydro technology chosen by Nova Scotia Power to deploy in the Bay of Fundy. The one below it is the Clean Current technology that has been demonstrated on a smaller scale at Race Rocks in British Columbia. On the upper right-hand corner is a turbine produced by Verdant, which has been tested successfully in the East River in New York State, and the one above the open hydro is technology that is perhaps best used for lesser flows in the Bay of Fundy. And we have a couple of others there as well.

So where are we as a province, as a country, in terms of our progress in tidal power relative to the rest of the world? You can see the UK is well ahead of everyone. They've spent about £250,000 in developing the technology to where they are, but relatively, Canada's not doing too badly. Given our investment and state of technology development, we're about third in the world.

Production costs. If I leave you with one message, it ought to be that this is an emerging technology; it is pre-commercial. Currently, wind production in Nova Scotia is sold at around 8 or 9 cents a kilowatt hour. Tidal power is a long way from there yet but, as you can see, it is more efficient and cost effective than wave devices, which is something else we might be deploying here. The price will come down as we understand better and as

production ramps up, as more units are produced, and these are early days. Right now, it is not competitive with other sources of renewable energy.

The economic potential from tidal power is pretty self-evident. We have one of the best regimes in the world. Unlike wind, it is completely predictable. It's much easier to integrate into a coal-fired system like ours, backstopped either by coal generation or, more favourably, gas turbines. It is potentially, over the long haul, one of the lowest cost renewables that we might be able to bring onto our grid, if it is commercially developed. There's a world potential for an industry if we develop the prototypes here in Nova Scotia; if we build them to satisfy the harsh environment of the Bay of Fundy, we could perhaps establish the Fundy standard of tidal power generation devices. To borrow a phrase from our cousins to the south: If you can make it here, you can make it anywhere - that refers to the Bay of Fundy.

We also have in Nova Scotia an existing offshore supply chain capacity, which is a good fit for the service of this emerging industry. There are a lot of parallels between what our offshore petroleum supply vessels do and industry does that is easily transferrable to an environment like tidal power generation.

If we are able to establish ourselves as a leader in this area, we believe that we stand the potential of perhaps occupying the position that the Danish have with wind turbines - that it would provide good jobs, sustainable jobs and a value-added industry for our province. It would also, we hope, create local exportable manufacturing as we establish the Fundy standard and our turbines are sent around the world. There's potentially, in terms of investment and jobs, a very sizable opportunity for Nova Scotia.

Ocean energy in Europe. The state-of-the-art facility now doing demonstration is the European Marine Energy Centre in Scotland, in the Orkney Islands, and it demonstrates both wave and tidal power. It has been in operation for a number of years now. A wave hub is being proposed for England and a wave energy centre in Portugal as well. There is an in-stream tidal demonstration facility proposed for France. The United Kingdom has completed strategic environmental assessments in 2008 and is planning a first round of commercial lease applications for December of this year for in-stream tides in the Pentland Firth. The UK is completing a feasibility study on tidal range technologies for the Severn Estuary.

A little bit more information about the EMEC facility. It's a multi-berth test facility. At the moment it is one of a kind, state of the art, and it is grid-connected as well. If you care to follow up and have a look at the site and see what they do at that site, the e-mail address is there - the Web address.

The challenges to development in Nova Scotia - or anywhere else in the world for that matter. The technology development costs are expensive and there is a lack of opportunity to demonstrate this type of technology. The solution that we're proposing for that

is to ensure that there are appropriate levels of government support at each phase of development as we proceed to commercialization of this technology. We propose to do that through the development of the common demonstration facility, which would see not one but three devices tested at the same time.

Environmental assessment costs are expensive. This is a precious resource not only in terms of tides and water, but in terms of the fishery. It's important that whatever we do, we get it right. While it is expensive to do, government has supported the investigation of the strategic environmental assessment. This Spring, the government sponsored a SEA in the Bay of Fundy and we're also working with our federal partners to streamline the regulatory process. As you know, while Nova Scotia may own the seabed, the water column above it is subject to federal regulation - both in terms of the fishery and the environment - so it's important that we bring all of the regulators together.

Again, from our offshore experience, we know we can do this. We have the appropriate connections and we have the appropriate relationships to facilitate this kind of concerted effort on behalf of Nova Scotians.

So where are we today? Well, it is early days and we do need to learn.

The most recent initiatives. The tidal centre is a not-for-profit demonstration facility to be incorporated by the Minas Passage group. It has carried out data collection - bathymetry and other kinds of data have been collected at key sites - and simulation and modelling have been carried out. We are in the process of developing codes and standards with the international green energy committee and we did complete, as I mentioned, the strategic environmental assessment in June 2008, which saw us hold six public workshops and a stakeholder round table. We issued a final report and the province gave its response to that report - I have copies available for committee members if you're interested.

So why did we choose a demonstration facility? Well, we wanted to lower the risk for Nova Scotians overall. As you saw at the beginning of the presentation, there are a number of prototypes for tidal power in-stream generation. We don't know frankly, we don't know particularly at this point, which one is going to be the best one for Nova Scotia. So we want to make sure that we can maximize as best we can, with the available resources we can, the number of devices that do get tested.

For the developers, it will lower the risk of the cost of developing their prototypes in the pre-deployment R&D costs, permitting costs, interconnection and integration costs, and monitoring costs - this is something they will all share in this common-user facility. We all anticipate as well that there will be common understandings, common experiences and common opportunities for education by all of the device demonstrators as well.

The objectives of the centre. It is a not-for-profit organization. Its board of directors is comprised of members from the companies that are demonstrating tying into the facility, and one provincial government representative, so we are not the majority on the board. We're also looking at additional independent representation as well as the province. The centre will report on device performance, it will act as a clearing house for environmental research, and it will manage the power purchase agreements on behalf of developers. The electricity that's generated from the prototypes will be owned by the centre as opposed to the individual proponents, and it will also go to offset the cost of the operation of the demonstration facility.

The agreements necessary to make the centre operational and useful to the developers. A 10-year Crown lease for the seabed, with the option to renew for a further 10 years, and each of the device demonstrators will have a sublease for a two-year period and the option to renew for a further two years. At the end of their term of lease, they are under an obligation to remove their device from the facility. There is no guarantee as a result of demonstrating at the facility that anyone has particular rights to any one particular piece of geographic location on the seabed of the Bay of Fundy. At the moment, the timelines we're looking at, we anticipate the first deployment of a device by 2009 which we will see grid-connected by 2010.

The facility infrastructure is estimated to cost between $12 million and $14 million, of which approximately $5 million has come from the Government of Nova Scotia; $3 million has come from EnCana Corporation as an interest-free loan; and $3 million from the developers in total. There will also be revenue from the sale of the electricity. The total public-private investment in this demonstration facility is about $45 million. So there are the individual costs that each of the device developers have invested in their own particular device, there's the money the government has invested, there's the money EnCana is investing, and it's a substantial piece of infrastructure.

I'm not going to read this to you, but it is a record of the activity to date, the accomplishments, the milestones that we have accomplished. It is in the handout that will be the presentation - I think we have copies for everyone, don't we? No? (Interruptions) In any event, there's a lot of information there.

We have been very busy and it has required the work of a lot of people beyond the Department of Energy and the Department of Environment and the Department of Fisheries, our federal partners, and various funding agencies as well. We have some Aboriginal communities as well.

This is just to give you a bit of a sense of the site. Nearest to us, at the bottom of the picture, is a location close to Parrsboro, in the centre of the picture is Cape Split, and in the background is the mainland of Nova Scotia. Here's the indication of the bathymetry of the area, the red areas being the shallowest and the dark blue areas being the deepest. But the

industry in tidal generation is not necessarily interested in just the question of the depth of water, what they're really interested in is speeds of the currents.

[9:30 a.m.]

This slide is included because there were questions this summer about a device that was lost, damaged during data collection - this is a picture of the device. It was not lost, it was damaged - it was recovered, it has been repaired. It was a relatively minor experience for the company, it's operational again. It was not a serious setback for the project at all.

As I indicated, it's speed that counts and this is the flooding of the Bay of Fundy by tides, and those are speeds in metres per second. This is the ebb flow of the Bay of Fundy tides, again, in metres per second. It's fast, which is why companies are interested in coming here.

Here's the statement of the environmental assessment that we carried out in May to assess social, economic, environmental effects, and factors associated with potential development of renewable sources in the Bay of Fundy with an emphasis on in-stream tidal. The SEA intended to inform decisions on whether, when and under what conditions we would allow a tidal power project to go ahead.

The SEA process was led by a research association which was incorporated two or three years ago now. Those letters stand for the Offshore Energy Environmental Research Association. Lawyers named it, I won't take credit for it. The association was funded by the province, but its board of directors is largely academic, with one representative from the province and two independent board members.

It funded the SEA process as a result of a grant from the province of $250,000 but, as a result of the Crown share settlement in July, that organization has received approximately an additional $3 million which is to be devoted to the Offshore Energy Environmental Research Association as well. It was initially funded by the province with a $2 million grant, back about two or three years ago. It's well equipped to do the environmental research that we believe needs to be done in the Bay of Fundy.

The work of the SEA group was guided by a technical advisory team made up of 15 members representing government and environmental interests: the R&D community, the universities, Fisheries and Oceans, and the Government of Nova Scotia had four members. It was headed by Lesley Griffiths. The background work for the study was done by Jacques Whitford providing a background report on the Bay of Fundy, including the science and socio-economic background, and the work was cost shared with the Province of New Brunswick.

We held six community forums in Yarmouth, Digby, Wolfville, Parrsboro, Truro and Halifax. Over 300 people attended and SEA created a round table with 24 members representing municipalities in the areas that may have tidal power available to them, fisheries representatives, tourism, the Aboriginal community, the RDAs, the developers and business in September 2007, and the round table met seven times from October to April. SEA was delivered to the Minister of Energy on April 30^th and held six subsequent community forums after the document was released to determine whether there was additional information that communities felt ought to be reflected in the document.

There were 29 recommendations in SEA. It gave the nod to go ahead with in-stream tidal demonstration. It urged the adoption of 10 sustainability principles. I brought a copy of the document for you so you can have a look at them yourselves. It urged a cautious approach, incremental and removable developments of in-stream tidal devices. It urged marine renewable energy legislation, the establishment of a research committee and program, a common GIS database, and that fishermen be compensated in the event of negative effects.

The province's response to the SEA recommendations was a commitment to the creation of renewable energy legislation, the establishment of enabling regulations for future benefits packages, the commitment to develop a demonstration program - which is what I'm telling you about today - the creation of research opportunities and the demonstration facility, the commitment to consult with the Aboriginal community, and to work with the RDAs to target socio-economic benefits.

For the milestones that we see ahead of us, the site-specific environmental assessment will be concluded - well, the consultations will begin in the winter of 2009. We believe Nova Scotia Power will deploy its device as early as the Fall of 2009 and the cable installation will occur in 2010. We anticipate a commissioning of the facility and being grid-connected after the cable installation. We see lots of opportunity.

MR. KEITH COLWELL (Chairman): Thank you very much. We'll start a round - I'm going to start with Mr. Preyra first.

MR. LEONARD PREYRA: Thank you very much, Ms. Scott, for a really clear and concise overview of the tidal projects in this area. It's obviously a very important area and there are lots of opportunities here. Most of my questions will revolve around the framework, mostly with your conclusion, the concluding part where you talk about the provincial legislation, the development of framework legislation, enabling regulations. In particular, I want to talk about the SEA recommendations and the government's response to it. So if you don't mind, I'll just start with the recommendations and we'll see where we go.

MS. ALISON SCOTT: Sure.

MR. PREYRA: Recommendation 1.1 says, "The marine renewable energy resource in the Bay of Fundy should remain under public control and management." Recommendation 1.7 says, "Development of marine renewable energy should be planned and managed to ensure lasting stewardship of the resource in order to deliver durable socioeconomic benefits to present and future generations in Nova Scotia." The government's response is, "The Environmental Goals and Sustainable Prosperity Act (2007) aims to protect Nova Scotia's economy and environment, and decisions around tidal energy will be made within this legislative context."

So my question is, has there been any consideration given to what public ownership or public control and management means in this context, you know, does it mean that it's going to be developed the way the offshore has been developed, or Nova Scotia Power, or is it going to be a P3 type of arrangement, or is it just outright public ownership of the resource itself? I'm wondering, has there been any thought given to the framework that will govern these regulations?

MS. ALISON SCOTT: Well, it's early days yet and our first priority is determining whether or not commercial development is feasible. We're certainly optimistic - we hope it is going to be feasible, but at this point in time we don't know.

It's difficult to give you specifics about how we might manage the resource in the absence of a commercial reality, because at this point in time the cost of electricity generated from tidal demonstration facilities is not competitive with other sources. Usually when you think of a public resource, whether it's oil and gas or whether it's minerals, you think of economic rents associated with them. If we were to pursue that line of logic with our tidal resource at the moment, we would be placing a burden on developers that may well deter the development of the devices. So our priority at the moment is seeing devices demonstrated, proved and, once they are commercial, then we will have - there will be time for us to develop our approach to the question of the public benefit, aside from the obvious fact that tidal power is a source of clean, green energy and it's something that all Nova Scotians want to see more of in our grid.

MR. PREYRA: I was wondering, because your presentation seemed to suggest that this was a parallel process, that enabling legislation and frameworks were going to be set up while the research was being conducted and while the studies were being conducted. I guess what I hear you saying is that we don't really know enough about the commercial potential at this stage, so any enabling legislation or framework will have to wait until - at least the research project is not going to start until 2010, it appears now . . .

MS. ALISON SCOTT: Well, the research will begin when Nova Scotia Power deploys their first device - we'll all learn from that - the second and third device

owners/operators will learn from the experience of Nova Scotia Power. So research will begin the minute that they start ramping up to put that device in the water.

To be a little more clear, in terms of the regulation of deployment now, there is a pretty robust regulatory regime around it in the sense that our environmental laws all apply. Transportation Canada regulates the work of vessels in the area now. Fisheries and Oceans has a very great concern about environment and habitat and they'll be watching it very carefully, as will our own Department of Environment and quite likely federal Environment as well. So there's a pretty robust regulatory regime around it now.

What is unclear at this point in time is the appropriate level of economic rents, if I could describe it that way. But that doesn't mean we can't start working toward it and that a marine environmental renewable legislation shouldn't be developed in parallel. We have begun discussions, because this is not something that the Department of Energy can do on its own because it is such a complex area involving many government departments, not only at the provincial level but also at the federal level, that we work collaboratively together on this, and we are beginning that work.

MR. PREYRA: I understand that. I was just wondering, since it is going to be on the seabed or submerged land, and there will presumably be some ownership or control attached to whoever gets the right to use that space, whether or not we had thought about that.

I do have another question about where this initiative fits into other renewable energy initiatives. The government has talked about wind energy, for example; there has been a lot of discussion about Churchill Falls and the next phase; there has been talk about solar - and at the same time we're moving forward on offshore exploration, we're using coal. Where does tidal power fit in the total scheme of things, in terms of the government's priority?

Now I know it's easy to say it's top of the list, but all of these things seem to be top of the list and I'm wondering, has the government given any thought to saying that this is our first priority, then we'll move down as one fails?

MS. ALISON SCOTT: Well, hopefully none of them will fail. We need all of them, we believe. We need our petroleum resource, we need to integrate as much wind as we can into our grid and we also need tidal power.

We think, in terms of the future, when projects are commercial, that this does truly pose an opportunity for Nova Scotia because of the economic spinoff benefits that are potential, because of the leadership opportunity that is potential for us. As you know, we've established targets for emission reductions in this province and we think tidal power can provide a significant ability to allow us to meet those targets.

At the moment, we know, as a result of our grid, there is a limit to the amount of wind that we can take on to our grid because of transmission capacity. As I mentioned, tidal power, if and when it's commercial, is going to make management of our grid, in terms of the integration of renewables, much easier because it is totally predictable - unlike the wind, which does, on occasion, not blow.

MR. PREYRA: I'm glad you mentioned wind because there's a fair amount of frustration with how slowly those initiatives have developed. If that's going to be the pattern for tidal, I hate to think how long and how difficult the negotiations would be over that.

[9:45 a.m.]

Two issues in particular, one is special market pricing structures and the other is access to the grid itself - they have been huge challenges in the wind. I'm wondering if any thought has been given to how that'll be addressed in the tidal energy. This would be a megaproject, right?

MS. ALISON SCOTT: Your question is premised on an assumption that there is difficulty in getting wind projects up and running. The framework that wind power operates within in Nova Scotia, the legislative framework, requires - if I can just back you up to the Public Utilities Act, it says that, number one, Nova Scotia Power has a firm obligation to provide electricity in Nova Scotia. It has to do that, first and foremost, at the lowest cost. That is its legislated mandate to accomplish.

In approaching the question of renewable energies and wind integration, Nova Scotia Power has gone to a competitive process and there has been success in negotiating those contracts. The world credit crunch has had some consequence on some projects proceeding, but the framework within which Nova Scotia Power operates, I believe, requires them to continue to pursue that course of action. I don't necessarily see parallels with the tidal demonstration facility in particular at this point, because it is in a completely different category. While Nova Scotia Power will be seeking to recover its integration costs, its grid upgrades, to take tidal power from the rate base - which it would do in any event - similar questions won't feed into the rate base with respect to the rest of the demonstration facility.

MR. CHAIRMAN: Order, please. Time has expired. Mr. MacKinnon, please.

MR. CLARRIE MACKINNON: Thank you very much. First I would like to apologize for being late. I left Pictou County earlier than usual, but there was a five-car accident close to the Macdonald Bridge and I had to re-route and I think everyone else did, so apologies to you.

I'm really excited about this project, and in particular looking at the benefits to Cumberland and Colchester Counties, the Parrsboro area and all of northern Nova Scotia. Has there been any economic analysis of the benefits that could accrue in that area?

MS. ALISON SCOTT: I'm not sure you were here during the early slides, but certainly there is and will be economic benefits to communities when tidal power is commercial.

In the early days of these demonstration facilities you can appreciate that they are relatively small operations and while it is a $45 million project overall, much of the money will be spent on the construction and engineering of the turbines. Deployment will be a significant challenge, which you will see local providers engaged in but there are only three of them, it's not going to be an ongoing industry right away. The challenge for us is to make this thing commercial and then there will be the opportunities.

I understand, talking to the developers now, though, that they've been very pleased with the local content they've been able to achieve. They have found very little reason to go outside our region in looking for resources. In particular, they're relying heavily on the fishing community for their knowledge of tides, their knowledge of how to operate in the water, things that you don't acquire off the shelf anywhere else in the world. So there are going to be economic benefits and consequences to local communities. At this point in time, though, until it's commercial, it's difficult to anticipate exactly how much. We do know that the demonstration facility wants to house an interpretive centre in Parrsboro, which we're hopeful to see up and running shortly after grid connection.

MR. MACKINNON: Of course we're hopeful that this will go much further beyond the initial demonstrations and so on. Are there some visions of looking for some land-based infrastructure in that area? Are there some needs that we should be looking for down the road a bit?

MS. ALISON SCOTT: Are you talking about lay-down facilities, perhaps, in terms of deployment?

MR. MACKINNON: Yes.

MS. ALISON SCOTT: I expect there will be but those are questions that are a little more technical, in terms of the actual requirements of the individual companies.

MR. MACKINNON: Now, you're saying this is somewhat different from wind power. I'm a strong proponent of wind power, certainly looking at some real activity in my constituency with Shear Wind Inc., and I certainly support the efforts there. It looks as if some of these initiatives may be held up somewhat by the economic climate that exists out there. There's no fear of that happening here, is there?

MS. ALISON SCOTT: As far as I'm aware, the projects are well-funded at this point, yes, but these are difficult times.

MR. MACKINNON: There's a lot of expertise in Scotland and that expertise is being utilized. There will be spinoffs to Dalhousie and Acadia and so on as well, so that's something that is good for Nova Scotia.

MS. ALISON SCOTT: Yes.

MR. MACKINNON: What level of co-operation has existed with Nova Scotia Power Inc. and the Department of Environment and so on, in relationship to progress? There has been good co-operation throughout?

MS. ALISON SCOTT: Oh, I think there's been excellent co-operation. There really hasn't been much of a requirement for NSP or any of the other demonstrators to engage the Department of Environment, so much of what's happening now is between government departments and there's been excellent co-operation.

The proponent, the company, the demonstration centre, will apply for an environmental assessment, as opposed to Nova Scotia Power or as opposed to Clean Current, or as opposed to any other device demonstrator; it will be the corporation, the not-for-profit corporation, that will apply for that EA. So that's where the engagement will be and I'm not aware of any problems at this stage.

MR. MACKINNON: We are very dependent on coal for the electrical generation. In the United States there is a lot of talk recently about clean coal. Certainly in Hillside, in my constituency, I would lose votes if I talked about clean coal because they live in the immediate area of the Trenton generating facility. This is sort of an aside from your presentation here, but it's interrelated - are we trying to do anything in relationship to new technology with coal?

MS. ALISON SCOTT: Two things I'd like to say about that. One, about our approach to clean energy in Nova Scotia which has been informed by the integrated resource plan that the Utility and Review Board carried out with Nova Scotia Power, and the second thing is carbon capture and storage.

I'll start with carbon capture and storage, it may be the shortest story. The federal government, in its last budget, gave the Province of Nova Scotia $5 million to use for the purpose of investigating carbon capture and storage opportunities in Nova Scotia. We're in the process of establishing another not-for-profit corporation with Nova Scotia Power and Dalhousie University, which will use that $5 million, and also about $2 million that Nova Scotia Power is investing and potentially other federal sources to investigate carbon storage opportunities in Nova Scotia. When I say investigate carbon storage opportunities, what I'm

referring to there is understanding the geology of Nova Scotia to determine where we could potentially store carbon gas.

Carbon gas, apparently - I'm not a chemist - has an affinity for other carbon molecules and can be stored in saline aquifers. What we don't know about Nova Scotia at the moment is whether or not we have appropriate saline aquifers that could be used for the storage of carbon. So we are investigating that through this not-for-profit corporation that we set up with Dalhousie and NSP.

The other thing we've done to understand how we can clean our energy sources in Nova Scotia is with the Utility and Review Board and other stakeholders - Emera, which I'm sure you're familiar with. We participated in the IRP - integrated resource plan - for Nova Scotia Power. The conclusion of that report, which all stakeholders participated in, was the cheapest sources of energy for Nova Scotia in the long haul come from two sources - one is energy efficiency, if you can call that a source, and reducing Nova Scotia Power's need to supply energy; and secondly, from renewables and the integration of renewables into our grid, which is why we're working so hard on tidal and wind to make sure they do happen.

MR. MACKINNON: As we move toward the 20 per cent goal of clean energy, there is much talk at the federal and provincial levels of infrastructure stimulus for the economy and I'm wondering if some of these projects themselves may be one of the stimuli that may be very useful to put forward in the coming months.

MS. ALISON SCOTT: The department carried out, independent of Nova Scotia Power but certainly relying on them for access to data, a wind integration study. It concluded we could take an additional 518 megawatts of wind power in this province. However, that may be the limit unless we upgrade our grid. We have two places that we need to upgrade our grid in particular. One is the interconnection with New Brunswick - that door goes both ways. If we improve the grid there we can backstop tides and we can backstop wind better from New Brunswick. Or even Cape Breton, we have a relatively weak connection with Cape Breton, where much of our electricity is coming from. If we improve that, we could take more wind from Cape Breton if we have the balancing possibility from New Brunswick.

So there's reason to anticipate that there is a need for improvement of transmission infrastructure in Nova Scotia and certainly it would be a stimulus if it were undertaken. But Nova Scotia Power is a private corporation and those decisions would be taken certainly by Nova Scotia Power.

MR. CHAIRMAN: Order, please. The time has expired. Ms. Whalen.

MS. DIANA WHALEN: Thank you very much and again I apologize for missing the beginning of the presentation. So hopefully if I ask any of those questions, you can just reiterate them for those of us who were a little bit late. I'm certainly very interested in this

topic and there are a lot of threads to it. I mean tidal is one part, as we've said, as my colleagues have raised, but there are other issues at hand as well to reach that - I believe it's an 18.5 per cent goal of renewable by 2013, if I'm right on that. I guess just to set the context with tidal, could you tell me when the timeline might be that this would be commercialized, because you've indicated it's very early days?

MS. ALISON SCOTT: Well, the earliest possible, I suppose, would be at the end of the demonstration period, that would be the earliest possible - I think.

MS. WHALEN: So a turbine goes in the water in 2010 - or it actually begins to be connected then. So when would you say the end of the demonstration project is?

MS. ALISON SCOTT: Well, the subleases are for two, two-year periods. So it's two years and then a renewal for two years - 2015 perhaps. And just to correct you, the 18.5 per cent is by 2020.

[10:00 a.m.]

MS. WHALEN: Okay, that's important. Is there another date that's 2013?

MS. ALISON SCOTT: There is another date in the EGSPA . . .

MS. WHALEN: And what's your goal for 2013?

MS. ALISON SCOTT: For 2013, 10 per cent.

MS. WHALEN: Okay, so I've gotten you too aggressive on that one, but I knew 2013 had some significance. Certainly, you know, we want to be a world leader in the tidal, there's no question, and I was pleased to see we're third - although we're a long way back from the UK, it is good to see that we're third. You've spoken about the opportunity to create an industry around the technology that works best. If it works in the Bay of Fundy, it should work almost anywhere in the world, I would say, given the strength of the tides and really the massive amount of water that transfers there.

I actually have family in Parrsboro and spend a lot of time there and I know there's a lot of excitement around what could possibly be benefits to that community. We can look at the socio-economic ones a little bit later, but right now I think we have a big issue around the grid itself. I wonder if we could talk a little bit about the shortcomings of our grid as it stands right now. Could you kind of maybe sum up what the shortcomings are?

MS. ALISON SCOTT: Well, as I indicated, there are limitations on our ability to move molecules between New Brunswick and Nova Scotia, which is our only other connection. We are essentially an energy island but for that one connection to the international system. So that is a limitation.

MS. WHALEN: That's the first one?

MS. ALISON SCOTT: Yes.

MS. WHALEN: On that, you know, I understand there's about 300 megawatts coming and going, maybe 350 megawatts between Nova Scotia and New Brunswick. Is it fully utilized right now?

MS. ALISON SCOTT: In winter I believe it is but if you compare what New Brunswick's connection is with Quebec, for instance Quebec and Maine is about 1,400, so they have considerable capacity to bring molecules in from outside their jurisdiction to backstop renewable energy there.

MS. WHALEN: Where we don't have that at all.

MS. ALISON SCOTT: We don't have that capacity.

MS. WHALEN: Can you tell me if there have been any discussions with the New Brunswick Government, or anything government to government, that would be looking at that limitation and making plans to improve it?

MS. ALISON SCOTT: There certainly have been discussions and we're in the process of going out for a request for proposals to study the implications of a regional grid. Whenever you change a system, there are positives and there are negatives. We know what the positive is, or what we believe the positive is, which is the access to considerably better sources of backstop energy. But we don't know, necessarily, what the downsides are - how much more expensive is it going to be for Nova Scotians, is it going to be more expensive for Nova Scotians, how would we regulate that in terms of priorities.

As you know, in our electrical rate system we have interruptible electricity rates. How would you have those electricity rates and how would you decide who was going to be interrupted and when, if you have this regional grid as opposed to one that is contained on our little energy island? As well, that study will look at what's necessary to improve transmissions, if and when Churchill Power did come to Nova Scotia.

MS. WHALEN: That was my next question - certainly I wanted to go to the Churchill area as well, the Lower Churchill, and talk about that. Just to begin with, would we not have some immediate plans to improve our link to New Brunswick simply because we are in a

position now that if we don't take aggressive steps to improve our supply, we'll be building another power plant here - I want to say coal-fired, I hope it won't be coal-fired.

We have the fifth worst polluter in Canada, which is Nova Scotia Power, providing power to less than one million people. We shouldn't be going to another power plant, I don't believe at this time, for our population if we can replace it with cleaner energy from New Brunswick which, if we had the opportunity to bring that in, or if we look aggressively at partnering or working with Newfoundland and Labrador. So I see an urgency of us moving because my understanding is Nova Scotia Power needs a new plant within 10 years, if we don't make some major changes.

MS. ALISON SCOTT: The integrated resource plan did consider just the question that you've asked me. And its recommendation was to avoid construction of a coal-fired generation plant that would be operational by 2029, Nova Scotia Power had to do two things: one was enter into a demand-side management program, energy efficiency; and the second thing was integrate renewables, which are cheaper than the overall amortized cost of a new coal-fired generation. So that is the route that Nova Scotia Power has followed on the recommendation and advice of the Utility and Review Board and those 13 stakeholders, which may include some members of this committee.

MS. WHALEN: Both of those recommendations require some aggressive moves to change our pattern. I didn't realize it was 2029 that they're talking about it being operational, but to get a plant built they would have to start their planning very soon.

MS. ALISON SCOTT: That's my understanding, yes.

MS. WHALEN: As you said, they're legislatively obligated to ensure that we have power in Nova Scotia, so they will move that way . . .

MS. ALISON SCOTT: At the lowest cost.

MS. WHALEN: . . . unless we, in a government way, make connections to provide other power coming in, which could be New Brunswick, particularly if they're building another nuclear power plant, they'll have extra power, and we know that the Lower Churchill is another option.

MS. ALISON SCOTT: That's why we've got the RFP on its way out our door, virtually as we speak, to study the implications of regional integration . . .

MS. WHALEN: I'm a little concerned as well that when we do these studies and have some very good input, that things don't happen. I'm going to go back to the 2003 study on the electricity marketplace, which had about 100 recommendations. One which is spoken about a lot, Recommendation 51, which has been nothing but a huge obstacle to the

development of renewable energy in this province. It's the elephant in a room that we don't have a marketplace, we have a single provider of power in Nova Scotia. It's been very difficult to see how we're going to get over that hurdle - it's taken five years and nothing has happened.

That was a multi-Party committee, included Nova Scotia Power, and it was one of their recommendations. Can you explain to me what's happened to Recommendation 51? Government has made prior promises to open the marketplace.

MS. ALISON SCOTT: The marketplace has been opened.

MS. WHALEN: Six municipalities? That's it - is that the best we can do?

MS. ALISON SCOTT: That's right. In terms of urging Nova Scotia Power on with the introduction and integration of renewable energy to its generation mix, we did establish the renewable energies standards portfolio which requires them to have 5 per cent of electricity from renewable resources by 2010 and 10 per cent by 2013.

In terms of integration of renewable energy in this province, in terms of the wind power, it's not been a resistance of Nova Scotia Power to taking electrical generation from wind - we've seen them go out to tender, and they have 60 megawatts on line now and a further 240 pending. So that's not been a problem.

What Nova Scotia Power has done is, through a competitive process, gone to tender, solicited bids, people have committed to provide their electricity at a certain cost and they're in a process of building that electrical generation. If I compare our situation to that in Ontario - and I'd urge you to talk to the Canadian Wind Energy Association - our progress has been steady. It is measured and we believe it's in keeping with the legislative mandate that the Utility and Review Board Act sets up for lowest cost production of electrical generation for Nova Scotians.

MS. WHALEN: It is tying our hands.

MR. CHAIRMAN: Order, please. Time has expired. Ms. Conrad.

MS. VICKI CONRAD: Thank you for your presentation. I do think it's very exciting to see the Bay potentially developed for renewable energy. That being said, it's still a work in progress and there's a lot of work that has to be done over the next few years for sure.

I understand from the presentation that so far there's been $45 million invested through public-private partnership. Given the economic climate right now - we've already seen two major wind projects that are struggling to secure investments - and understanding that Nova Scotia Power's demo model is to be put in the water in 2009, if there are any snags

in that system, do you see the potential for investment being harder to secure to move the project to the next phase, which is connecting to the grid in 2010?

MS. ALISON SCOTT: It's difficult to anticipate what the economic climate might be like after the demonstration projects are concluded. All I can say at this point is that we don't see a problem with Nova Scotia Power's device going in the water. We understand that Minas is fully intending to proceed with its project, and at this stage Clean Current as well. It's difficult to assess that far ahead what the credit climate might be like.

MS. CONRAD: But that could certainly throw a lot of things off in terms of those timelines.

MS. ALISON SCOTT: It possibly could, but it's difficult to know what position the government itself might be in to be able to assist these projects or what other entrepreneurs around the world are looking for in terms of opportunities. It's just difficult to say.

MS. CONRAD: There are two other companies that are also putting demos in the Bay. Do you know the timelines for those companies? I think one is Clean . . .

MS. ALISON SCOTT: Clean Current, which is the British Columbia device, and Minas Basin Pulp and Power is the proponent that is responsible for developing the demonstration facility at this point in time. I believe they intend to have their device in the water in 2010.

MS. CONRAD: And then there's a company from the UK - do they have a . . .

MS. ALISON SCOTT: UEK was a partner of Minas. I only know what you know from reading the newspaper about that commercial relationship, but it's my understanding that Minas will have a device to demonstrate, whether it's UEK or some other . . .

MS. CONRAD: So the structure of the governance for the in-stream technology centre will govern the companies coming forward with their prototypes and they'll all kind of be working under the same agreements and the same sorts of conditions as set out by that governance.

MS. ALISON SCOTT: That's right.

MS. CONRAD: The potential for commercial development is huge. Certainly the province's investment on behalf of Nova Scotians is also huge in terms of the green energy, the renewable source of energy, and also the potential for royalties sometime in the future. I was reading a release earlier put out in June 2008, where it states the province has committed to not only create legislation covering benefits, but also to cover royalties. Do you know where that discussion is right now and if all partners around the table are discussing

potential royalties after that commercial development - and including in that partnership, of course, New Brunswick, because they are a partnership in this development?

MS. ALISON SCOTT: Our focus in early days is getting us to the stage where we are commercial. While we can set up the framework for the participation of benefits by Nova Scotians in tidal power, at this stage, given the price of the electricity that's being generated, it's not necessarily something that we can give definitive answers to. When we know what the entire package costs, it will be easier to understand what we can expect for Nova Scotians, in addition to the jobs, in addition to the cleaner, greener sources of energy. It's a little bit too early to put a number on anything now.

MS. CONRAD: But that discussion certainly is happening.

MS. ALISON SCOTT: It's happening within government, yes it is.

MS. CONRAD: With New Brunswick as a partner, as we're moving forward - and certainly they are assisting with the environmental assessments, or have invested on that end of things - the legislation between the two provinces has to be really compatible. Whether we're talking about legislation, whether we're talking about transmission of that energy once it's up and running and, of course, if there's discussion around royalties or benefits between the two, and also selling the power elsewhere, outside of the Provinces of New Brunswick and Nova Scotia, do you see any difficulties in seeing two provinces with various pieces of legislation that may or may not be compatible and how that is going to be worked out?

[10:15 a.m.]

MS. ALISON SCOTT: Well, as close neighbours sharing transportation infrastructure not only for molecules but highways, we have a lot of areas of common interest with New Brunswick and we're constantly working to try to harmonize what companies' investors can expect on one side of the border or the other, whether it's in onshore petroleum regulation or whether it's in proceeding with tidal power. At this point we wouldn't be regulating, per se, from necessarily a common regulator, because we do have some common regulators already with Fisheries and Oceans, Transport Canada and so forth, and we have our individual Departments of Environment. But we can work toward establishing common standards in terms of our practices.

The regional grid study that we're undertaking is being undertaken, in part, to allow us to advance discussions with the Province of New Brunswick about the ability to move to a single-system operator for our region. That's the purpose of it, understanding what the benefits are. We believe we know what the benefits are but let's confirm that and let's understand what the costs are, what the difficulties, what the challenges will be in terms of regulation. Tidal power will fit in that analysis as well.

MS. CONRAD: I have one other question and that's the opportunity for job creation here in the province. In the presentation there was a section that indicated there's opportunity for high-paying jobs and sustainable jobs for people - and I'm hoping here in the province - which leads to my question: do we have, in our workforce here in Nova Scotia, the type of expertise and skill sets that will be needed to move forward with the development of tidal power, whether it's actually developing the devices themselves, working in the in-stream centre, working on the grid or working on other aspects as we move forward?

If we don't, what do we need to do to ensure that we do have highly skilled people with the expertise needed here so that we can hire Nova Scotians?

MS. ALISON SCOTT: There are two elements to the kinds of jobs that we're talking about here. One speaks to the engineering, the conceptual work necessary to create the devices. Much of that has happened outside of Nova Scotia already. The UK, as I mentioned earlier, has spent £250 million on developing the technologies in many areas, and Clean Current is the only Canadian company that I'm aware of that has actually done work on the engineering side of how we get these turbines up and running. But then there's the question about - if we are commercial, when we are commercial - the manufacturing jobs. There's a natural kind of affinity, we believe, for opportunities between shipbuilding and the construction of these turbines. We're hoping that we will see that capacity developed in Nova Scotia.

When it comes to some of the other technologies, like the service and supply sector, what we found in our offshore is that our companies, as a result of supplying offshore Nova Scotia, had become worldwide competitive. We're supplying our services all over the world in terms of the petroleum supply sector, and if tidal power is commercial and becomes a reality - and I believe it will be - our supply services here in Nova Scotia will have that same opportunity to export their services around the world much as our petroleum support sector does, and I believe there's a tremendous synergy between the petroleum service sector and the potential tidal energy service sector.

MR. CHAIRMAN: Order, please. Mr. Theriault.

MR. HAROLD THERIAULT: Thank you, Alison, for your presentation - very interesting. I always knew the Bay of Fundy had great potential for more than just scallops and fish. I have lived on the Bay all my life and you can shut a 200,000-ton or 300,000-ton ship off at the first of the flood and in six hours it will move it 18 miles; that's a lot of power.

There are other places in the Bay of Fundy on our shores, Nova Scotia shores, for great potential for hydroelectricity and they're down in my area, the Digby area, Digby Gut, Grand Passage, Petit Passage, with just as much tidal flow as the Minas Basin. On the full tide there it's up eight or nine knots a tide in those Passages and they're 200 feet to 300 feet

of water deep, or deeper. Is Nova Scotia Power looking at these areas for later development for hydroelectricity?

MS. ALISON SCOTT: I can't speak for Nova Scotia Power really, Mr. Theriault. That's not necessarily information that they would share with me.

MR. THERIAULT: But you don't know of anything that's going on there to look at those areas?

MS. ALISON SCOTT: Well, I know that some developers, not just Nova Scotia Power, have looked at various locations. You're familiar with the EPRI study, the Electric Power Research Institute study, out of Palo Alto, California. They considered eight sites on the Bay of Fundy for potential, and I believe Petit Passage - what others, Nancy?

MS. NANCY RONDEAUX: Grand Passage, Digby Gut.

MS. ALISON SCOTT: Those were assessed by the Californian institute and it was a study that was sponsored by the State of Washington, City of Seattle; California, San Francisco; the Government of Maine; New Brunswick; and Nova Scotia. Those sites that you mentioned were identified as having significant potential, but the process we did put out for the creation of this centre was we called for proposals and we left it to developers to choose their sites. They're the ones who are aiming at the Minas area but that's not to say that development in the areas that you referred to isn't possible, it's just that developers haven't chosen that yet - I believe it's yet.

MR. THERIAULT: So wouldn't the Department of Energy be promoting these areas? The Bay of Fundy, on Nova Scotia shores alone, we have enough potential in tidal power to run all the hydroelectricity for all of Canada.

MS. ALISON SCOTT: Yes, 12 hours a day.

MR. THERIAULT: Well, 24 hours a day.

MS. ALISON SCOTT: We can only collect it 12 hours of the day.

MR. THERIAULT: Why is that, tell us that? Answer that question - why only 12 hours a day?

MS. ALISON SCOTT: I don't know if I agree with the 12 hours a day. You're right, you can collect it 24 hours.

MR. THERIAULT: There are four tides a day, every six hours. There are two flood tides and two ebb tides, it's 24 hours a day.

MS. ALISON SCOTT: It seems to me that I got into this discussion with somebody else at some point in time in our department and . . .

MS. RONDEAUX: There are periods where there is slack tide, so that's probably what you're referring to. Yes, there are moments where you . . .

MR. THERIAULT: As a fisherman, though, in places in the Bay of Fundy the tide never stops. In these areas I'm talking about, the tide never stops - it just eddies. It turns, just keeps flowing, but turns around the other way. That's why you need this information from fishermen, like you said earlier.

MS. RONDEAUX: Exactly. There is a minimum amount of power that you would - at the point where you'd actually extract it so you wouldn't be continually producing power, or in those areas where there are eddies, it's probably not the best place to put a turbine because you'd want linear flow back and forth so that you wouldn't be damaging the turbine. If you're in an area of turbulence, that would probably not be the preferred area for turbines.

MR. THERIAULT: You just need a turbine that turns with the tide.

MS. ALISON SCOTT: We haven't developed that prototype yet.

MR. THERIAULT: You will; I'm sure you will.

I want to talk about other tidal energy that's in western Nova Scotia. It's in Annapolis - we know that, we see it and it's running daily, I believe; we have energy in the Sissiboo River in the Weymouth area; we have energy, hydroelectricity, in Bear River; and we have it in Tusket River. I believe there are three or four generators through the Sissiboo River area - how much energy is that producing? Are all those generators producing down there?

MS. ALISON SCOTT: I'm not sure I can answer that.

MR. THERIAULT: Does the Department of Energy know anything about that?

MS. ALISON SCOTT: Well, we certainly do know, but me - the individual capacity of each of them, no I don't. I'm not familiar with that, but we do have officials - unfortunately not with us - who could answer that question for you.

MR. THERIAULT: Do you believe they're running at full capacity or not at all, some of them - do you know that?

MS. ALISON SCOTT: I have no reason to believe they aren't running - now, whether they're at full capacity or not, I'm not certain.

MR. THERIAULT: But somebody in the Department of Energy could answer that question?

MS. ALISON SCOTT: Yes.

MR. THERIAULT: When?

MS. ALISON SCOTT: Probably as soon as I leave here, or perhaps if Matt e-mails them, before we leave.

MR. THERIAULT: I'm going to hold you to that.

Just one more question. The environmental assessment on the fishery, you mentioned that once or twice, has that been completed yet?

MS. ALISON SCOTT: I'm sorry - I was just thinking about your previous question, I was thinking that the operation of those individual projects is not something that the Department of Energy does monitor per se. If there is electrical generation at each of these sites, the owner of that facility would have that information. It's not something that necessarily we have to know, because we don't regulate it. So while we might have a general knowledge about what capacity is and who is running what, it's just because people are interested, it's not because we have to regulate it.

So your question was about SEA?

MR. THERIAULT: Yes, the fishery, the environmental assessment - has that been completed yet?

MS. ALISON SCOTT: What we did in the SEA process was look at the Bay of Fundy. We didn't do a site-specific environmental assessment because we didn't know at that point in time where devices might be located, so what we did was gather information that we knew would be useful to inform decisions that the government had to make and also assist developers when ultimately they decided on a particular site.

So the general study has been done; it was done last June. The site-specific study will be undertaken in January.

MR. THERIAULT: Thank you, Mr. Chairman.

MR. CHAIRMAN: Ms. Streatch.

HON. JUDY STREATCH: Thank you very much, deputy and team, for coming in. Very informative, lots of information to try to absorb - I have to admit, as a former teacher, I always like it when I learn something new.

I'm looking for a little bit of explanation, if you could, please. I understand tidal, we've had discussion of wind, and we've had discussion of carbon storage and coal-fired. I must admit I'm a little undereducated when it comes to the issue of wave technology - could you explain wave technology to me a little bit, please?

MS. ALISON SCOTT: I'll let Nancy take you through the technical elements of it.

MS. RONDEAUX: Well, wave is something that is being looked at in a lot of areas. We don't necessarily have the best wave resource. The best wave resources are actually on the West Coast and the west coast of England, because you have a long stretch of water with no impediment. So wind generates waves and you have a long stretch where the wind can generate larger waves, whereas our coast in Nova Scotia, there's a large land mass which impedes the types of waves that can be produced. Also . . .

MS. ALISON SCOTT: Because winds are prevailing northwest.

MS. RONDEAUX: Yes, generally the wind does move in that direction. So there are areas that are really pursuing wave development - it's not a real priority for us in Nova Scotia, I don't believe.

MS. STREATCH: And I found that very interesting when I was reading through here and that was the finding - and when you try to think about the fact that we have the highest tides in the world, we always, you know, look at the issue of that being the natural flow - I guess I was a little bit taken aback that we wouldn't have wave potential. And I'll check with my honourable colleague, the member for Digby, to make sure that's the case - no disrespect to the engineers, but I'll check to make sure I fully understand that after.

MS. RONDEAUX: We certainly have the potential, although it may not be the best.

[10:30 a.m.]

MS. STREATCH: My second question is related to a statement that you made just a moment ago actually, deputy, that I was going to ask about. I have had some interest in the New Ross area and some of the folks, who remember a few years back further than I, can talk about the fact that we used to have, on the river, six to eight mills that operated from the flow of the river, of course taking the energy out of the river.

MS. ALISON SCOTT: Grist mills, sawmills?

MS. STREATCH: Sawmills for the most part. I must admit I was a little bit surprised by the statement that you made a second ago that we don't regulate it. So is that the Department of Energy that doesn't regulate it, or is it the Province of Nova Scotia - does the Department of Environment have something to say about it?

MS. ALISON SCOTT: Fisheries and Oceans would have something to say about it.

MS. STREATCH: So to Mr. Theriault's inquiry about who would know how much energy, were we maximizing it, that would be an issue the Department of Environment . . .

MS. ALISON SCOTT: The Utility and Review Board is interested in everything that Nova Scotia Power does as collection, and in the process of that we would be aware of it. We wouldn't be negotiating the agreements between the producer and the utility and we don't have a role per se in regulating that relationship. So while we're aware of it generally, and we certainly have experts who know this information - to repeat it backwards, I expect - but it's not something that we actually regulate.

MS. STREATCH: So even though we don't regulate it through Energy, some of those individuals who perhaps might be interested in going out and recreating those mills on the river would still have to go through quite a rigorous . . .

MS. ALISON SCOTT: Environmental process.

MS. STREATCH: . . . and DFO would have a keen interest I'm sure.

MS. ALISON SCOTT: Yes, they certainly would.

MS. STREATCH: Excellent. My final question, I guess, would pertain to our targets as set out in EGSPA - are we on track, deputy, with our targets?

MS. ALISON SCOTT: Yes, we are.

MS. STREATCH: And do you anticipate we'll meet our targets?

MS. ALISON SCOTT: I believe we will.

MS. STREATCH: Thank you.

MR. CHAIRMAN: That was easy. Mr. Chisholm, do you have any questions?

HON. RONALD CHISHOLM: I guess yes, just to follow up on what Mr. Theriault was talking about in the fishery. The round table that has been struck awhile back, has that round table finished its work?

MS. ALISON SCOTT: The one that was guiding the original SEA?

MR. CHISHOLM: No, the Aquaculture Association of Nova Scotia is on it . . .

MS. ALISON SCOTT: Yes, it has.

MR. CHISHOLM: It has finished its work?

MS. ALISON SCOTT: Concluded its work, yes.

MR. CHISHOLM: The consultation with the fishing industry in the Bay of Fundy, is that still ongoing?

MS. ALISON SCOTT: We found it a good thing to engage in. We find information from it. We don't have any formal process underway right now, but I understand we are still in communication with them.

MR. CHISHOLM: Well, I guess I just want to go back to 1997-98 when the Sable project came about and the landfall for the pipeline was Guysborough County and how important it was and how well it worked, the association that the Sable group have with the fishing community in that area. Still to this day it's an ongoing process and it worked very well and the fishermen in that area had buy-in right from the start. It's very important to keep that going, as well as the Mi'kmaq, the Aboriginal community. They were involved in that process and it worked tremendously well.

I just urge you to keep up the work with the fishing community and the industry, because this is a very important project for the province and for the community on the North Shore.

MS. ALISON SCOTT: I agree, Minister, and my observation of Minas Basin Pulp and Power, which is spearheading the construction of the demonstration facility, is that they certainly appreciate the importance of that relationship. They have been guided in their decisions by the fishing community. Every deployment they have had of any kind of work has been with the fishing community. They fully anticipate that they will need the co-operation and the knowledge, as I mentioned earlier, of that local community. I think there is good engagement between the corporation and the fishing community.

MR. CHISHOLM: The other issue I see in your presentation is that New Brunswick was a partner in the environmental assessment and the economic assessment that's been done?

MS. ALISON SCOTT: Yes, they were.

MR. CHISHOLM: Is there any - will they continue to be a partner in this project, financially?

MS. ALISON SCOTT: New Brunswick actually launched their own process last week, I think - they announced a call for proposals similar to our RFP for the demonstration facility, they're intending to do their own. They have a different regime, they have a different location, they have different needs and different opportunities.

MR. CHISHOLM: And they own the utility as well, the province.

MS. ALISON SCOTT: They own the utility, unlike Nova Scotia Power.

MR. CHISHOLM: Will they be partnering with the private sector to . . .

MS. ALISON SCOTT: Will the utility be partnering with the private sector, or will the government?

MR. CHISHOLM: Yes, the government, I guess.

MS. ALISON SCOTT: I'm really not familiar with their approach enough to say. Sandra might know.

MS. SANDRA FARWELL: I'm not sure what their plans are, either.

MS. ALISON SCOTT: I did see the RFP out last week though.

MR. CHISHOLM: Okay. I guess I can't emphasize enough how important it is to be involved with the fishing community . . .

MS. ALISON SCOTT: And the Aboriginal community.

MR. CHISHOLM: . . . and the Aboriginal community. We do have some ongoing negotiations with the Aboriginal community through Danny Graham, the work that he's doing. Fisheries is a very important part of those negotiations. I just want to make sure those people are involved and consulted. Thank you.

MR. CHAIRMAN: We have a tight schedule, we have to be out of the room today by 11:00 a.m., there's another committee coming, but I think we have enough time for each caucus to ask one question. I'll start with Mr. Preyra.

MR. PREYRA: I just have a comment following on my earlier questions, and a question. My comment, just related to Nova Scotia Power - and I know there are people from Nova Scotia Power in the room, but I don't want to hear from them. It's not so much about Nova Scotia Power, but it's about single providers and about natural monopolies. It's been very hard to get Nova Scotia Power to move to renewable energy, to accept special pricing, to accept access to the grid or move into demand management, to consider socio-economic benefits. My earlier question just related to how we get this single provider or this natural monopoly to address those public policy goals.

But my question really is about Recommendation 4, that recommends, ". . . that the Province of Nova Scotia facilitate the development of a collaborative research program for marine renewable energy in the Bay of Fundy." The response was, "The Province created the OEER with a mandate to develop ocean energy research." And it says, "The Province would like to minimize the number of entities that oversee this research."

I'm asking in particular about Dalhousie University's proposal to create a Canadian Marine Energy Research Network, but also Ron Scott's response - the Maritime Tidal Energy Corporation - saying that we need a little bit more diversity in research and in focusing on other possible partners to open up the competitive process so that we can develop research and design, or manufacturing, or services, or workforce development in this area.

I'm wondering if focusing on a single research entity or focusing on a single set of partners - a couple of them have not failed but have expressed an inability to do what they've promised to do. Clean Current, for example, is having problems finding backers and Minas Basin has scrapped its kite technology. I'm wondering if we should move to diversify, both in terms of research and in terms of industrial partners or commercial partners that we look at.

MS. ALISON SCOTT: I'll address your comment first on special pricing; just to reiterate, that special pricing in Nova Scotia has the reality of the Utility and Review Board Act, which says that Nova Scotia Power is under an obligation to provide electricity to Nova Scotians at the lowest cost. Special pricing, if it were ever to exist, would have to fit within that limitation. The approach Nova Scotia Power has taken has been to do it through a competitive process, which does accomplish its legislated mandate.

What the province has done to ensure that Nova Scotia Power does honour its commitments to introduce renewable energy to the grid is introduce the renewable energy standard portfolio, which requires them to have, as I mentioned earlier in answer to Ms.

Whalen's questions, the 5 per cent and up to 10 per cent in 2013, and attach to that fairly significant per diem penalties if they don't comply. We have every reason to believe they desire to comply and that they will comply.

As far as the Offshore Energy Environmental Research Association is concerned, OEER is not the Province of Nova Scotia. It is, in fact, an organization which is operated in conjunction with Cape Breton University, Acadia University and St. F.X. So we have three universities on that board and they oversee the mandate. The government has invested about $5 million in the organization to give it the capacity to do whatever research is necessary.

Certainly it doesn't actually carry out the research - OEER - it funds it. So if Dalhousie marine energy has proposals to do work in the Bay of Fundy, we'll fund that - "we", I'm saying here, I do sit on the board of that organization - the board would fund whatever proposals come forward. So it's not a question of doing the research and only doing the research that it decides to do, this board of directors, which is fairly broadly representative of the academic and research community, decides. Certainly Dalhousie is quite able to receive funding from it.

They're well-funded, they've carried out a gap analysis of research, and research proposals are being prepared as we speak.

MR. CHAIRMAN: Order, please. Ms. Whalen.

MS. WHALEN: Thank you very much. I've got a couple of just quick questions around Lower Churchill. Could you tell me what discussions our government has had to date with the Newfoundland and Labrador Government about this opportunity?

MS. ALISON SCOTT: There have been meetings between the Minister of Energy and the Newfoundland and Labrador Hydro officials. There have been meetings between government officials here in Nova Scotia and the representatives of Hydro.

MS. WHALEN: Would the Premier have spoken to Premier Williams as well?

MS. ALISON SCOTT: I was not present but I believe that did take place.

MS. WHALEN: Would you consider this a priority for the government?

MS. ALISON SCOTT: It's important but you have to put it in context. At this point in time it is a proposal by the Newfoundland and Labrador Government and it has not yet received financial backing to allow it to proceed. In discussions that would allow it to proceed, if it proceeds, we definitely want to see Nova Scotians have an opportunity to participate in it. At this point in time, though, our ability to influence whether it happens or not is fairly constrained as ultimately a consumer of a product that is being proposed.

MS. WHALEN: But it does offer a good opportunity for us in the future.

MS. ALISON SCOTT: It certainly does.

MS. WHALEN: I mean it could be the answer to a lot of our problems as well.

MS. ALISON SCOTT: Yes.

MS. WHALEN: I just want to quickly go to Recommendation 51 again, and going back to where we left it, you were saying that basically Nova Scotia Power has been good, you said they've been offering RFPs and moving forward. I'd like to suggest that they're doing that primarily because of public pressure and that the government's goals come from public pressure and it's the public really leading government along in this regard.

It's a good thing, so we have public policy priorities that are saying we should make this change. I want to know when it's going to come, when are we going to open this marketplace? I'm speaking on behalf of the people that I represent - six municipalities having an opportunity to market energy is just not enough. The progress is too slow.

MS. ALISON SCOTT: Well, how are we making Nova Scotia Power contribute to the improvement of the renewable energy generation mix in Nova Scotia? One of the most important things we did was establish the RES, which was supported by all Parties of the - I'm sorry, I was talking about the EGSP Act there. The goals were set out in the EGSP Act, which was supported by all Parties of the House. In addition, we passed the Renewable Energy Standard. It's not just a matter of saying, do it, we like what you're doing, it's a matter of establishing legislative targets and holding them to it. We certainly set up the monitoring and the mechanisms in the legislation to allow us to ensure that progress is appropriate and in keeping with opportunity and the ability of Nova Scotians. It goes beyond public pressure, it goes to a legislated commitment as well.

[10:45 a.m.]

MS. WHALEN: We've had five years, Ms. Scott - five years since the report that gave 89 recommendations, which was the Electricity Marketplace Governance Committee report which should have laid out all of the governance and legislative needs.

MS. ALISON SCOTT: What Recommendation 51 actually says is that we will move to do what is prudent. In my opinion, we've done that.

I'd just like to correct one assumption in the statement you made about one provider. In fact, we have other providers of electricity. Any individual municipality can generate for itself. Any entity that wishes to generate on its own property, provide itself, can do that. We have a net metering program which is available to producers.

MR. CHAIRMAN: Order, please.

MS. WHALEN: Can I just ask one more, it's a follow-up - just one, we have another 15 minutes. It's my understanding that there are several large municipalities like HRM, Annapolis and Canso, as well as Abitibi-Bowater and New Page and Michelin, that want to enter into agreements, in fact, have them ready to go if the marketplace were open. They want to have their own agreements for green energy. Is this true? And, what's holding up the movement?

Right now we have Abitibi-Bowater in Liverpool that's really shutting down for six weeks over Christmas because it needs to have some more financial support. This could be an answer to that plant. So what's holding it up? That's the question.

MS. ALISON SCOTT: I'm not sure if the reason for Abitibi-Bowater's recent shutdown . . .

MS. WHALEN: No, we can speculate that, the costs are big.

MR. CHAIRMAN: Order, please. I have to stop you there. Madam Minister, do you have another question?

MS. STREATCH: Thank you. No, I would be quite satisfied with the presentation we've had and we'll just say thank you.

MR. CHAIRMAN: Ms. Conrad, one very quick question.

MS. CONRAD: It isn't the question I had anticipated asking, but I would encourage very strongly that we go back to the drawing board and look at that Electricity Marketplace Governance Committee report and start moving aggressively to adopt most of those recommendations, and certainly Recommendation 51. I think it's important. Can you assure me, or assure us here, that those discussions are taking place, or will take place, and we'll move forward with them?

MS. ALISON SCOTT: Certainly it's always in our mind, but I go back to the question of price. We have legislation which requires Nova Scotia Power to produce electricity at the lowest cost for Nova Scotians.

When you're talking about taking electricity in methods, simply opening up the grid, you have to have regard for the ability of the utility to backstop that electricity and the cost of backstopping that electricity. The worst possible scenario you can see is integration of more wind into our grid that's backstopped by coal because then you'll have a situation where you have a higher cost of electricity, you have coal-fired backstop which really is no backstop. It means that you're generating all the time in case the wind stops blowing. So

you've got coal-fired generation and you've got wind generation. You've got a surplus of electricity that you don't need, so it's not cost efficient.

This is an extremely complicated area and if it were as simple as just saying let's open it up and take all the electricity that we can from all producers who want to come, you would have backstop issues and you would have cost issues. What we've been doing over the last number of years, in conjunction with the Utility and Review Board and with the utility provider, is a prudent approach to integration of renewable energy in our grid, understanding what our capacity for that wind integration is. We spent a considerable amount of money studying that issue and we know we have limits.

MR. CHAIRMAN: Order, please. Mr. Theriault, you have a quick question, a very quick one?

MR. THERIAULT: Yes. Alison, we know the wind may not blow some days but we know that tidal power is there - unless the moon falls out of the sky.

MS. ALISON SCOTT: Then we're all in trouble.

MR. THERIAULT: Yes, then we probably won't need any electricity - lights out. (Laughter) Does the Department of Energy know or have an idea what the megawatt production potential is for this province from tidal power?

MS. ALISON SCOTT: Absolute megawatt potential - I've heard extremely large numbers, but as I embarrassed myself earlier with my guess at numbers, I'm not going to do it again. I'll ask Nancy.

MS. RONDEAUX: The only confirmed study that we have is from the Electric Power Research Institute which estimated 300 megawatts of in-stream tidal resource. Now, that's a very conservative estimate, we would say.

MS. ALISON SCOTT: And it only looked at eight sites as opposed to the entire Bay of Fundy.

MR. THERIAULT: It has to have more potential than that.

MS. ALISON SCOTT: I believe it does.

MS. RONDEAUX: I would agree with you.

MR. CHAIRMAN: Thank you very much. We have some committee business we have to conduct. So I would like to thank our guests for coming today. It was very informative, and I hope that as time goes on we become more and more self-sufficient in

energy in Nova Scotia without having to use technologies that are indeed not clean in the province. Again, thank you and we appreciate your time.

MS. ALISON SCOTT: Thank you.

MR. CHAIRMAN: We have a couple of issues here to discuss and I think I'm going to start with the annual report. We have an annual report that we have to sign, so we can just send that around and we can do that as we go. So as that's going on, I'm going to skip the second thing, the Port of Halifax on our list because we have to go in camera to discuss that. So we have a referral from the Standing Committee on Human Resources for a topic. Ms. Streatch.

MS. STREATCH: On this issue, Mr. Chairman?

MR. CHAIRMAN: Yes.

MS. STREATCH: I'm just a little confused. Mr. Dexter specifically asked the Standing Committee on Human Resources to take up the issue. That was his direct request and, with all due respect to the Committee on Human Resources, I'm wondering what their rationale was in punting it over to us. When you read through Mr. Dexter's letter, it's very clear that he's looking at the issue from a human resource point of view, so I'm a little bit confused. Do you have any additional information other than the letter sent to us?

MR. CHAIRMAN: No, unfortunately I don't, and it's up to the wishes of the committee. We could refer it to another committee, we could not accept it, or we could send it back to the Human Resources Committee if you want.

MS. STREATCH: That would be my suggestion, that it go back to the Human Resources Committee.

MR. CHAIRMAN: Ms. Conrad.

MS. CONRAD: With all due respect to this issue, there is a response from the Human Resources Committee which indicates the committee was feeling that although there is the human resource component, the primary issues associated are economic and that of justice. So they've already indicated in their response the reason why they're putting it in our direction.

MR. CHAIRMAN: Ms. Streatch.

MS. STREATCH: Absolutely, I had read their letter, but I don't think that's what Mr. Dexter was looking for. I don't think he was looking for the economic implications - he was

looking for the human component and the safety component, which is beyond the mandate of this committee.

MR. CHAIRMAN: Mr. Chisholm.

MR. CHISHOLM: Mr. Chairman, I think the Human Resources Committee has a mandate to look at issues of labour.

MR. CHAIRMAN: Yes, I believe that's correct.

MR. CHISHOLM: And I think maybe that's where it, to me - I'm just a fill-in here today, but being on the Human Resources Committee for about five years, it seems to me I recall that it was issues of labour and I think this issue that Mr. Dexter raises is an issue of labour.

MR. CHAIRMAN: Mr. Preyra.

MR. PREYRA: Well, Mr. Chairman, I think this is a really important issue and it's not something that should be punted back and forth between different legislative committees. I think the fourth paragraph there says that we want to take this issue to hear from retail dealers, oil companies, the department, and health and safety representatives. It clearly is an economic development issue as well.

I agree that there might be a connection to Human Resources but because there is a connection to Human Resources, it doesn't mean that we cannot look at it as an economic development issue because we want to hear from industry representatives as well, to see what their reaction would be to these situations and how they would suggest we respond to them.

MR. CHAIRMAN: Mr. Theriault.

MR. THERIAULT: Well, I agree that this seems to be a safety concern. There doesn't seem to be anything about economic development. I mean it states it's about safety - safety of the employees who work at an area. I agree, it should go to Human Resources.

MR. CHAIRMAN: Okay, maybe with all this discussion we could have someone put some kind of a motion on the floor, what direction you want to go in and we can go from there. Anyone willing to put a motion forward? Ms. Conrad.

MS. CONRAD: I put a motion on the floor that we respectfully ask Human Resources to re-look at this request and that they look at it from a health and safety point of view.

MR. THERIAULT: I'll second it.

MR. CHAIRMAN: It has been moved and seconded. Is there any discussion?

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

The motion is carried.

It turned out to be not too bad. Okay, the other one we have here is the Port of Halifax meeting cancellations. We've circulated letters to . . .

MR. GORDON HEBB: Do you want to officially go in camera?

MR. CHAIRMAN: Yes, we should officially go in camera on this. I think we pretty well have to, yes.

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