TRAN Committee Meeting

     I call this meeting to order.

    Welcome to meeting number 108 of the House of Commons Standing Committee on Transport, Infrastructure and Communities.

    Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, February 1, 2024, the committee is meeting to discuss the Canada Infrastructure Bank's involvement in the Lake Erie connector project.

    Today's meeting is taking place in a hybrid format, pursuant to the Standing Orders. Therefore, members are attending in person in the room and remotely using the Zoom application.

    Although this room is equipped with a sophisticated audio system, feedback events can occur. These can be extremely harmful to our interpreters and can cause serious injuries. The most common cause of sound feedback is an earpiece worn too close to a microphone. We, therefore, ask all participants to exercise a high degree of caution when handling the earpieces, especially when your microphone or your neighbour's microphone is turned on. In order to prevent incidents and safeguard the hearing health of our interpreters, I invite participants to ensure that they speak into the microphone into which their headset is plugged, and to avoid manipulating the earbuds by placing them on the table, away from the microphone, when they are not in use.

    I'd like to now welcome our witnesses for today.

    First, from NextEra Energy Resources, we have Mr. Matt Pawlowski, vice-president. Welcome to you, sir.

    By video conference, from Independent Electricity System Operator, we have Mr. Chuck Farmer, chief energy transition officer and vice-president of planning, conservation and resource adequacy; and Barbara Ellard, director, resource and system adequacy. Welcome to you both.

    For the second half, we will also be joined by the Honourable Lisa Raitt. She will be joining us by video conference, and we will provide her with an opportunity for opening remarks at that time.

    Colleagues, before I turn the floor over to our witnesses for their opening remarks, I want to make three very quick statements.

    The first is with regard to photography in the room. When the committee is in session—for all those joining us in the gallery—photography is not permitted. If you've already taken photos, it is not permitted to share those online.

    The second is just some housekeeping for members of the committee. You've all been given the budget for this study. I just want to know if there are any questions or concerns. If not, I would ask for unanimous consent to adopt the budget as proposed.

    Some hon. members: Agreed.

    The Chair: Thank you, colleagues.

    Third—and finally—I'll turn the floor over to you, Mr. Strahl, as I believe you'd like to address the motion that you put forward.

    Thank you, colleagues.

    I introduced this motion previously, but it was adjourned due to another study we were undertaking. However, we would like, as our next study, to pursue this motion on Lynx Air or airline competition in Canada. I'll just read it again. The motion says:

    If there is agreement, I am hoping that this study would immediately follow the completion of these couple of meetings here on the Infrastructure Bank.

    I'd like colleagues' feedback if there is anything they'd like to see added or removed from the motion, but we think it captures a good group of witnesses who can be invited. Whether or not they can make it is another question.

    I turn it back to you, Mr. Chair, to see if there is agreement to adopt this motion.

    Thank you very much, Mr. Strahl.

    Are there questions or comments, colleagues?

    Mr. Bachrach.

    Thank you, Mr. Chair.

    I believe we planned to do a study on competition in the air sector, particularly how it relates to rural Canada. Is that correct? Perhaps you could let us know where that sits on the docket. I think there might be some overlap. Perhaps we could partition part of that study to deal specifically with the Lynx Air issue.

    I am very keen to get to the competition study to talk about the cost of air travel in northern Canada, as it's relevant to the communities I represent. I wouldn't want us to knock our work plan off-kilter too much, but at the same time, I agree that this is a worthy area of inquiry. I just wonder whether we can merge the two.

    Thank you.

     Thank you, Mr. Bachrach.

    The timing does coincide somewhat. As of now, a business planning meeting is on the schedule for Tuesday. Thursday we were going to address the final meeting of the accessibility study that we adopted at our previous meeting. The following Tuesday, we were going to begin the study as proposed by Mr. Strahl. Following that, we were going to dive into the study as proposed by Mr. Badawey about rural and remote airports and accessibility and competition. One would be going right after the other.

    If it is the will of the committee, perhaps they could be combined in some way, shape or form, or else they could just flow from one another. It really is the will of the committee on that front.

    Mr. Barsalou‑Duval, you have the floor.

    Thank you, Mr. Chair.

    I agree that we should study this topic, obviously. Like many other topics that have been submitted on the committee, I feel this is an important one. So I have no problem with us passing the motion.

    In terms of prioritizing the studies, we may have a chance to talk about that, because as I understand it, there is a business planning meeting scheduled for next Tuesday. We could deal with it at that time. It will be easier to do so if we can review all business at an already scheduled planning meeting, rather than at a study meeting.

    Thank you, Mr. Barsalou‑Duval.

    Ms. Murray.

    Chair, I'm supportive of your suggestion that this be combined with the other airline competition study. I would love to make sure that we have time to explore some issues around transport and conservation matters. I have a potential study on that in the works.

    I would like to make sure that we have time for some other issues. If that means combining two similar studies, then I'm in favour of that.

    Thank you, Ms. Murray.

    Mr. Bittle.

    Not to add too much, but just in agreement with my colleagues from the NDP and the Bloc and Ms. Murray, perhaps it's better if we sit down next week to discuss merging this. We're not opposed to this. I don't know if there's consent from the Conservatives to withdraw it so that we can discuss it next week and have a broader study on competition, which is something that we'd like to see.

    I'm not seeing anything, so I guess I'll move that we adjourn debate on this topic.

    Is there any objection to adjourning debate and resuming next Tuesday, when we have our business planning meeting?

    (Motion agreed to)

    The Chair: Debate is adjourned.

    We will now resume with the order of questions today.

    We'll begin with opening remarks from Mr. Pawlowski.

    The floor is yours, sir, for five minutes.

    Thank you and good morning, Mr. Chair.

    My name is Matt Pawlowski. I am vice-president of development at NextEra Energy Transmission. I am responsible for the development of the Lake Erie connector project.

    NextEra invests in, builds out and operates clean power solutions in North America. In Canada, NextEra has majority ownership of a 450-kilometre electricity transmission project located between Wawa and Thunder Bay, Ontario. We also own and operate wind generation and energy storage facilities.

     I would like to thank the committee for inviting me to speak about the Lake Erie connector project. NextEra is hard at work on this project, building on the efforts made by the previous owners and moving it forward.

    By way of background, the Lake Erie connector is a proposed 117-kilometre underwater high-voltage direct-current transmission line linking the province of Ontario to the Commonwealth of Pennsylvania. In July 2022, the original owners of the Lake Erie connector project suspended its development given the prevailing economic conditions. In January of this year, NextEra acquired the ownership interests in the project.

    NextEra sees great value in the Lake Erie connector. This includes local economic opportunities and increased reliability and resiliency for the Ontario electricity grid through new access to the PJM market. As the new owner, we are actively engaged in discussions with Ontario’s Independent Electricity System Operator and first nations. NextEra’s efforts are supported by the Mississaugas of the Credit First Nation, as well as the Six Nations of the Grand River elected council.

    Another important phase of Lake Erie connector’s development will be collaborative discussions with the Canada Infrastructure Bank. We view the CIB’s role as an important potential project investor and also as facilitating first nations' involvement in the project. However, let me be clear: The Lake Erie connector has not entered into any project financing agreements with the Canada Infrastructure Bank. It has not received any funding from the Canada Infrastructure Bank.

    While we are happy to assist the committee in understanding the viability of the Lake Erie connector under NextEra’s ownership, we are not able to address matters that predate our involvement in the project.

    I want to emphasize that NextEra stands ready to pursue the development of the Lake Erie connector. We are excited about the project. We view it as an innovative way to strengthen Ontario’s grid reliability and resiliency and to diversify Ontario’s access to power markets.

    I look forward to your questions. Thank you very much.

     Thank you very much, Mr. Pawlowski.

    Next, we'll turn it over to the witnesses from the Independent Electricity System Operator.

    The floor is yours. You have five minutes, please.

     Thank you, Mr. Chair, for the invitation to appear before this committee.

    I am the vice-president of planning, conservation and resource adequacy and chief energy transition officer for Ontario's Independent Electricity System Operator. My role is to ensure the long-term reliability, affordability and sustainability of Ontario's bulk electricity system, and my responsibilities include long-term system planning, overseeing the acquisition of new generation and other system infrastructure, and the delivery of energy efficiency programming.

    I am joined today by my colleague Barbara Ellard, our director of resource and system adequacy, whose role is focused on acquiring generation and other system resources. Barbara led the commercial negotiations on the Lake Erie connector project.

    As background, the Independent Electricity System Operator, or IESO, is the provincial agency accountable in legislation for maintaining the reliability of Ontario's electricity system. We operate and ensure the reliability of Ontario's power grid in real time, 24 hours a day, seven days a week, balancing supply and demand in Ontario and into neighbouring jurisdictions. We also plan for the reliability, affordability and sustainability of Ontario's electricity system over the long term, ensuring we have the infrastructure in place to meet the province's needs up to 30 years into the future.

    I believe it is important to note that the IESO does not own any of the system's assets or infrastructure. We are an independent operator and planner of the entire system. We ensure that all of our assets are working in unison and ensure the reliability of Ontario's electricity system without having any financial interest in the assets themselves. We can be compared to air traffic controllers, who don't own the airplanes or the runways, but instead of safely guiding planes, we move electrons around the system so that Ontario continues to have reliable access to electricity where and when the province needs it.

    As I noted at the beginning of my remarks, one of my responsibilities at IESO is to oversee the assessment and potential acquisition of new electricity infrastructure projects, often through competitive procurement processes or through bilateral negotiations. This work included assessing the value of, and subsequently negotiating a commercial contract for, the Lake Erie connector project that was being developed by ITC Holdings. These negotiations concluded in 2022, when ITC Holdings decided not to pursue the project, citing macroeconomic changes as impacting the overall project.

    What I would highlight is that the focus of any IESO involvement in the project was to ensure the best value for Ontario's ratepayers. Through this lens, our assessment at the time showed that the project, and its negotiated agreement, was expected to be of value to Ontario's ratepayers by contributing to the reliability and affordability of our electricity system.

     For context, Ontario has transmission interconnections with neighbouring provinces and states, including Quebec, Manitoba, New York, Minnesota and Michigan. Through these interconnections, we import and export electricity daily through our electricity markets. This adds competition that helps drive down costs, allows us to more efficiently use the assets within Ontario and serves as a crucial source of supply when Ontario is experiencing tight conditions on the system.

    We became aware of Canada Infrastructure Bank's involvement in early 2021. Overall, the focus of our interactions with the CIB was limited to understanding what its financial impact on the project would be for Ontario's ratepayers, as well as sharing our views on the value of the project to Ontario. The IESO was not party to any agreements between CIB and ITC, and if the project had proceeded, our contractual relationship would have been only with ITC.

    With that, I thank you for this opportunity, and we look forward to answering questions.

    Thank you very much, Mr. Farmer.

    We'll begin our line of questioning today with Dr. Lewis.

    Dr. Lewis, the floor is yours. You have six minutes, please.

    Thank you, Mr. Chair.

    Thank you for coming, Mr. Pawlowski.

     I understand that the Lake Erie connector project has been suspended since the summer of 2022. How likely is it to go forward under NextEra?

    We are actually very excited about the Lake Erie project. In the due diligence efforts that we performed over several months, we found it to be a great project for market access between Ontario and PJM. With the changes in conditions that are going on in the electricity system, including resources, low growth and other factors, we see it as a critical asset for Canada and for IESO going forward.

     We are very excited about developing the project. We want to move it forward, and that's why we're happy to testify here.

    NextEra is a Fortune 200 company valued at $120 billion. Last year, NextEra made $22 billion U.S. in profit, making it one of the most profitable energy companies in the world.

     You said that it hasn't received any money from the CIB. Is it your testimony today that your company has no plans to take low-interest loans from the CIB?

     We have actually just re-engaged in a conversation with the CIB and are looking forward to engaging it on this project as a potential partner. We look at the involvement of the CIB in multiple ways. Financing is just one of the ways we look at it. The other way is, as I mentioned in my opening statement, as a partner with first nations and as a way to involve first nations in the project. It's not just about the financing; it's about other things the CIB brings to the table.

    Why does a $120-billion company, one of the biggest energy companies in the world, need a subsidized loan from Canadian taxpayers in order to build this transmission line?

    The involvement of the CIB is not just from a financial perspective. We—

    But you do plan to take a low-interest loan from the CIB. Even though you are a $120-billion company, Canadian taxpayers are essentially going to fund this project.

    We have engaged the CIB in discussions, as we do with many other financing partners. We view the CIB as an investing partner.

    Have they told you what rate the loan would be at?

    We have just started those discussions, so we have not even gotten to that phase of the discussion at this point. That is going to be subject to negotiation with the CIB.

    Do you know what rate the Fortis loan was at?

    I do not.

    A multi-billion dollar corporation gets a taxpayer-funded loan from Canadian taxpayers at a low interest rate, probably around 3%, because that's usually the rate that I've seen so far. Canadians are paying interest rates of 7% on their mortgages, and a $120-billion company needs a taxpayer-funded loan, when Canadians can barely afford food.

    Does that seem fair to you, sir?

    When we look at our financing partners, we look at them from the standpoint of making the right investment on the right project. The way I really look at this is that a partnership with the CIB, if we reach an agreement, would benefit both parties. That is the way we are looking at it.

    Interest rates are certainly one part of it, but, again, there are multiple levels of what a financing partner brings to the table. We do financing with many different entities across our entire portfolio, whether with infrastructure banks such as the CIB or with the Department of Energy in the U.S.

    I have very limited time, Mr. Pawlowski, so thank you for your answer.

    Your company seems to be involved in some legal disputes in the U.S., involving a fight over the hydro power electricity line that would have Hydro-Québec supply clean electricity to New England. NextEra is opposing the deal.

    Why is NextEra opposing a deal that would benefit Quebec and Canada?

    We have been on the record about the reasons we are opposed to that line. However, I am not involved in that project. I am really here to talk about the reliability and resiliency benefits of the Lake Erie connector.

    Isn't it hypocritical that you are promoting the Lake Erie connector project, yet you are opposing the Hydro-Québec deal with New England, which would bring money to Quebec and Canada? Is that because this is your competition?

    It is not that at all. Every one of these transmission projects is a little bit different. For example, when you look at the Maine project, it really relies on generation on one side going into the U.S. The Lake Erie connector project is very different. It is truly a tie between Ontario and PJM, giving access to both regions and providing a critical link to prevent things like, for example, what happened in Alberta a few weeks ago, where there were significant brownouts. Transmission connections and resiliency connections are what the IESO needs in order to make the system as reliable as possible.

    In order to do that, do you have to oppose the project that would benefit Quebec and Canada? It seems a little bit rich, sir, to Canadian taxpayers, that your company is self-interested in promoting one project, but opposing another project that would benefit Canadians, and that your $120-billion company, the biggest energy company in the world, needs Canadian taxpayer money in order to get a project off the ground. It seems very self-interested.

    What would you say about that?

    I really think that the aspects of this.... The really important thing around the CIB is not just focusing on the financing, but focusing on the partnership that the CIB relationship brings. We will work with CIB, as we work with any other financing partner, in order to move the project forward.

    Thank you, Mr. Pawlowski.

    Next, we will go to Mr. Rogers, for six minutes, please.

    Thank you, Chair, and welcome to all of our witnesses today.

    Mr. Pawlowski, I will go to you for some questions around this project, and the concept of due diligence. We have heard some commentary about money being spent to assess the value of the project and whether it is beneficial going forward. All the arguments that came back said, why would you spend...? The CIB spent like $900,000, which represents a very tiny portion of a $645-million project, should it proceed.

    Do you think there was value in the work that was done, and will that be beneficial to your group moving forward?

     Thank you very much.

    I absolutely think the efforts that the CIB made on due diligence will benefit the project going forward. If you look at this, we have lots of different partners that we work with. If we were to start with a fresh partner, they would have to start their due diligence efforts from scratch. What we are looking at with the CIB is that we are not starting from scratch. We are starting from a very different place. Yes, different system changes have taken place and economic changes have taken place. There are lots of other moving pieces, but at the same time, not starting from scratch is really important, so I believe there is a reuse for some of the due diligence that has taken place.

    I'm not really familiar with exactly what due diligence the CIB has done, but I feel very comfortable saying that at least a portion of that could be redone and not started over again when we move the transaction forward.

     The CEO of the CIB was at our last meeting and talked about a lot of the work done by the bank on due diligence and the importance of doing that. It's so we don't have a financial disaster like the one I referenced in Newfoundland and Labrador, in Muskrat Falls, for example.

    This is my second question for you. In your intention to develop the Lake Erie connector project, you're seeking to collaborate with stakeholders, including regional grid operators, indigenous communities and so on. How do you think this will improve the project going forward, and are you taking a different approach from the last proponents of the project?

    That's a great question.

    We are certainly taking a very different approach, because there have been a lot of system changes that have taken place. I don't want to speak for the IESO, but even the generation resources on the system have changed since the project was essentially suspended. For example, there is much more battery storage in the province of Ontario. There are significant changes in the PJM interconnection, with a tremendous renewable queue that's waiting to be interconnected. We are certainly looking at that and engaging with all the stakeholders we have, including the first nations and the IESO, to make sure that we fully vet out what the true benefit is going to be, and that's how we're going to move it forward.

    I think the approaches may be somewhat similar, but there are a lot of changes that have taken place in the last few years. I will tell you that one of the most significant changes, which I think is happening all across the North America area, is the significant load growth. Huge topics of discussion in pretty much any setting with any utilities are the data centres and the AI, artificial intelligence, load growth. All of those things are creating a massive influx of electricity load, and that is creating a need for projects like Lake Erie.

    We have to engage all stakeholders, including load customers, to make sure that we understand how the system will look and where this project fits in with all the other resources the IESO has.

    I guess it's fair to assume, then, that the focus on clean energy going forward—electricity, wind, solar and so on—is a big part of what your company is focused on.

    Yes, absolutely. NextEra, as a company, is the largest wind and solar developer in the world. We pride ourselves on the fact that our projects are clean, and we develop those projects for our customers who need them.

    Absolutely, this type of project is, again, another resource that's added on to all the clean energy and other resources that are coming in.

    Thank you very much.

    Mr. Farmer, I'll ask you this question. Why was CIBC financing needed for this project? Is it absolutely necessary, and how is it helping the people of Ontario?

    I would stress that the IESO's relationship was with ITC, and that we were negotiating an arrangement to pay for an availability payment for the line. We were not involved in how ITC would then finance the project. It is up to any proponent to determine how it will do that.

    I will say there is a lot of infrastructure that needs to be built over the next number of years, and we would certainly welcome any way to reduce the cost of that infrastructure for Ontarians.

     Thank you.

    Thank you very much, Mr. Rogers.

    Thank you, Mr. Farmer.

    Mr. Barsalou‑Duval, you have the floor for six minutes.

    Thank you, Mr. Chair.

    Mr. Pawlowski and Mr. Farmer, thank you for being with us today.

    Mr. Pawlowski, you represent an American company headquartered in the United States that focuses on energy production. The connector under Lake Erie you're interested in would link part of the U.S. Midwest to part of Ontario.

    I can imagine that it would be worthwhile for you to seek out funding partners for projects, for example. That way, you can limit your investment and, as my colleague mentioned, get favourable interest rates that will help you expand your infrastructure to export the energy you produce.

    I understand why you're interested in a project like this. It's a matter of potentially carrying it out in a cost-efficient manner, mathematically speaking.

    Why should Canadian and Quebec taxpayers, among others, contribute to funding infrastructure owned by an American company so that it can increase its sales by exporting more energy to our country? What's in it for Canadian taxpayers if they fund your infrastructure?

    Thank you very much.

    I think the real partnership that we look at with CIB, again, is not just on the financing front. There are other aspects of the CIB relationship that we look at: our relationship and involvement with first nations and other aspects. We look at CIB as one of the investment vehicles that we could use for this type of transaction. We certainly do a lot of work to make sure that we vet out who the partners are going to be and then show those partners that there's value for them to be involved in the project.

    I think that the due diligence the CIB does and the efforts they go through really ensure that it's the right investment for the bank, just like any other investment they would make, and that it makes sense for them to be an investor in this project. Again, we look at it as a partnership, not just as a financing deal.

    I'd like you to provide me with more details.

    Basically, your company opposes projects to export clean energy from Quebec. Then your company asks for money from the government and taxpayers here in Canada so that you can export energy from your end.

    Don't you find this situation somewhat ironic?

    I really do not think that it's in the other direction. I think that what we look at with the Lake Erie project is really a project that has access to both markets. It is not what we call in the industry a generation tie line. A generation tie line is essentially generation on one end that is fully needed in order to transport down to another load. That is very different from what this project looks at. This project is not really tied to any one generation source. It is a tie between two separate markets.

    The market access that IESO would have to PJM, and potentially a contract with the resources of PJM and vice versa, creates dual flow. I think that's really important, because that's the kind of tool that's needed—not just generation flowing from one area to the next, but having what's called diversification of generation resources that helps the system have the right mix in order to meet the loads that are there.

    Your investment portfolio includes a gas-fired power plant. You said earlier that you intend to start producing wind and solar energy, but you didn't necessarily talk about gas-fired power plants.

    In other forums your company has been involved in, you've said that gas-fired power plants produce clean energy.

    To the extent that, as a society, we're moving away from carbon-emitting energy production—so we're looking at decarbonization—do you have any plans to eventually shut down those gas-fired plants and transition to 100% clean energy production?

     That's a great question. I think it speaks to what we're doing as far as the whole company is concerned. When we look at our company, we really have two main entities within that. NextEra Energy Resources is the wind and solar company that does development and operations of predominantly wind and solar, with some nuclear plants as well.

    On the other side, we have Florida Power & Light, which is our utility in the United States. It's the largest utility by megawatt hour in the U.S. We have a pretty significant gas presence there. It's a very efficient gas fleet, but what we also announced is a program called Real Zero, which is our efforts to get our Florida generation down to a zero-emissions profile by 2045. That includes conversion of some of the gas plants into hydrogen, and it includes more transmission for all the solar development that we're doing. It also includes battery storage. We have one of the largest battery storage projects in Florida.

    Thank you very much, Mr. Pawlowski.

    Thank you, Mr. Barsalou‑Duval.

    Next we have Mr. Bachrach.

    The floor is yours for six minutes, please.

    Thank you, Mr. Chair.

    Thank you to our witnesses, Mr. Pawlowski and Mr. Farmer, for being with us.

    I was noting that the conversation started to take a turn at the end with my colleague's questions towards the topic I wanted to discuss.

    In your opening remarks, neither of you gentlemen mentioned climate, greenhouse gases or emissions. The reason I raise this is that, when you look at the CIB's communications around the original iteration of the project, that was the primary rationale in terms of the public good that they were seeking. It was around greenhouse gas reductions and contributions to the climate plan, reducing emissions from Ontario's energy grid.

    I'd like to drill down a little more on that, because it looks like what we're looking at is a new iteration of this project. It's been very difficult for the committee to understand some of the assumptions that went into the modelling that resulted in this claim that somehow there was going to be a net emissions reduction from building this line. We heard about that at the last meeting.

    Perhaps the first question I'll ask will be for Mr. Pawlowski.

    Has NextEra conducted its own analysis of the greenhouse gas implications of the Lake Erie connector, and what was the outcome of that analysis?

    Thank you for the question.

    We certainly engaged our own independent experts when we did our due diligence efforts.

    Yes, the project is going to lead to greenhouse emissions reductions. Let me tell you why. The one significant way it's going to do that is by allowing you to have market access to larger geographical generation sources. When you look at, for example, what's happening in PJM and the PJM interconnection, there is a significant transition of that interconnection and all the generation sources from gas fleets, coal fleets and nuclear fleets into more renewable generation. Their entire interconnection queue is basically made up of renewable energy sources.

    What this project does is allow for contracts, for example, to take place in the PJM interconnection and move that clean power across our line into Ontario, and vice versa. It also allows any excess generation that Ontario would have to be transported to PJM. That's where you have the gas emission reduction, but you also have the market arbitrage opportunities where you can take advantage of the difference in prices between Ontario and PJM. It's both a greenhouse play and a market play to gain advantage for whatever party is selling.

    There are lots of assumptions built into that.

     Could it not be that if Ontario has a surplus of high-emission electricity that it's willing to sell at a low cost, it could then dump that into PJM and essentially undermine some of the decarbonization goals of the states that are part of that market?

    That is certainly a scenario, but I'll tell you the other scenario.

     The other scenario is that instead of dispatching a gas plant in Ontario, the IESO can take advantage of a resource that's in PJM that's already either dispatched or clean, or both, in order to not dispatch the plant in Ontario. I think that's the better scenario of the optimization that can take place when you have access to different markets.

    We asked some questions around this at the last meeting. I'm wondering what your analysis tells you about the net flows based on emissions reductions. This scenario of importing power from the U.S. to Ontario, as you just described, seems like it would potentially produce the greatest emissions reduction. Over the next 20 to 30 years, looking at what those different markets are doing, Ontario is bringing a massive amount of fossil gas-generated power onto the grid.

    Can we safely assume that what we would see under this project is a net flow of power, that Ontario would become a net importer of American power, in order to meet decarbonization goals? Is that largely what we would see?

     Yes. I mean, look, on a long-term basis, I think you would see that this is just another resource in the stack that the IESO has. I think that's what our studies are showing. There is an ability to have this resource and to optimize the system for both reliability and resiliency. That's really what our models are showing. That's why we're excited about this project. It really creates the opportunity for IESO to have one more access market to gain, whether it's greenhouse emissions reduction or from a financial perspective.

    Great.

    I'll turn now to Mr. Farmer with a question.

    Does the IESO have a decarbonization mandate? If so, how is that mandate articulated?

    We do not have an explicit decarbonization mandate. However, I would point you to the Ontario government's powering Ontario's growth plan and the IESO's own work on the pathways to decarbonization. When we look at what is happening in Ontario, given the recent developments particularly around demand, as my colleague from NextEra raised, we have a lot of battery plants being built. We have two going into southwestern Ontario. A lot of mining is starting to develop in the north and there is great population growth. We see demand increasing.

    In Ontario, we're just in the process of completing about 2,500 megawatts of storage procurements, which will enable renewable energy over the longer term. We are beginning a procurement for about 2,000 megawatts of non-emitting energy. We expect that to grow to about 5,000 megawatts coming into service in the 2030s. We have set in motion about 8,000 megawatts of new or refurbished nuclear.

    Thank you very much, Mr. Farmer.

    Before we begin the second round, I want to bring it to the attention of honourable members that the Honourable Lisa Raitt has joined us. She is now available for questions in the second round.

    Ms. Raitt, will you be providing opening remarks, or did you just want to jump into questioning?

    I'm happy to take any questions, Mr. Chair. I don't have any prepared remarks.

    Thanks.

    Thank you very much.

    With that, I'll turn the floor over to Mr. Strahl.

    The floor is yours for five minutes, please.

    Thank you very much, Mr. Chair.

    I note that Ms. Raitt is here and that the current minister, Minister Fraser, is not. I understand that they were just talking to one another, so it's unfortunate; maybe she could have invited him to jump in on Zoom. But perhaps he didn't have a House-conforming headset. We'll move on from that.

    Mr. Pawlowski, you said in your opening remarks that the Canada Infrastructure Bank is a “potential project investor”. Would you proceed with the project without the investment of the Canada Infrastructure Bank? Could it go forward if the CIB were not an investor?

    I do think that the benefits the CIB brings to the table are really important. Again, we look at it from the standpoint of financing, but we also look at it from the standpoint of other participation that's included. We view the CIB as a potential investor, because it's one of the investors that we would like to work with. As long as there are benefits that we provide to the CIB, and through their due diligence efforts they view this as a project that they want to invest in, I think that's where the benefit lies.

    Sure, but my question wasn't on what the benefit was for the CIB. Are there other investors that could fill the financial gap that the CIB would fill? Are there other potential project investors that are not backed by the Canadian taxpayer?

    NextEra certainly has many different financing partners, such as the large banks that I'm sure you've heard of, or other infrastructure plans, but again, I think that when we look at the CIB, there are benefits that the CIB brings that are unique to CIB and unique to Canada. That's why we go through the effort of—

    The CIB obviously provides you, a private company, with a benefit, in that it comes with low-interest loans backed by Canadian taxpayers. You've also mentioned numerous times that you believe that if you bring the CIB on board, you essentially fulfill your duty to consult and accommodate where necessary when it comes to first nations. It sounds to me a little bit like it's definitely a win-win for your company, in that you get a Canadian taxpayer-backed loan, and you also essentially check the box, or extinguish your responsibility, to fulfill the duty to consult and accommodate where necessary.

    If you don't bring on the Canada Infrastructure Bank, are you not responsible, then, to fulfill your duty to consult and accommodate where necessary? I realize that it's of benefit to bring them on, but if you don't bring them on, doesn't that bring additional responsibilities to your company that you would have to fulfill?

     It's a great point, and I am very excited to tell you that we have received two letters of support from the first nations for our CER application for the extension of the construction date on the project. To answer your question, I think we're already doing that, and we will continue to do that. It's not an “and/or”; it's really “and” and all the inclusive things that we need to do.

    We've started discussions with the first nations, just like we're starting discussions with the CIB, and we will continue to do those, because we view them both as a significant partner for the project.

     When ITC Holdings or Fortis suspended their participation in the project, they indicated in their filings, “Macroeconomic conditions relating to rising inflation, interest rates and foreign exchange impacted the viability of the project”. This was in July 2022.

    Is it your company's belief that inflation, interest rates and foreign exchange have improved since that time? We certainly haven't seen that underlying economic data in Canada. In fact, we've just had the Bank of Canada choose not to reduce interest rates. Many of the banks here are warning about inflationary pressures brought about by the upcoming budget from this government.

    Why is it so different for you when it looks to me like the macroeconomic climate is the same or perhaps even worse?

    Give a 15-second response, please.

    I'll give you a quick answer.

    There have been a lot of different changes in the system that our due diligence efforts have revealed are beneficial to the project. Yes, I'm certainly not going to argue that inflation has improved or the supply chain has improved. We're certainly working through those issues, but, at the same time, our own analysis and our experts' analysis have shown that this is a viable project, and we want to move forward.

    Thank you very much, Mr. Pawlowski.

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

    Thank you, Mr. Chair.

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

    My first question is for Mr. Farmer.

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

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

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

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

    My next question will for the Honourable Lisa Raitt.

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

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

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

     Thank you.

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

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

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

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

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

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

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

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

    Yes, absolutely.

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

    Thank you, Mr. Iacono.

    Thank you, Mr. Pawlowski.

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

    Thank you, Mr. Chair.

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

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

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

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

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

    Thank you.

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

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

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

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

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

    No? Okay.

    That's perfect.

    Thank you, Mr. Barsalou‑Duval.

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

    Thank you, Mr. Chair.

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

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

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

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

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

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

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

    Certainly. We—

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

    Thank you, sir.

    Next we have Mr. Muys.

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

    Thank you, Mr. Chair.

    Thank you to the witnesses.

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

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

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

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

     Are you not concerned about a partner that is spending an exorbitant amount of money, 27%, on bonuses?

     I have a point of order.

    Yes, Mr. Bittle.

    I let the first question go. This is nowhere in the range of relevance for what we're studying, and he's not even a witness who has any direct information—which he has testified to.

    It's absolutely relevant, because we're looking at the waste of taxpayer funds. I understand that the Liberals are not interested in transparency. They're interested in cover-ups. That's certainly their pattern.

    The question was whether that was a justifiable level of bonus structure at NextEra. Let me ask the same question of the IESO, which is an employer—

    Again, Mr. Chair—

    Is that, do you think, a justifiable level of compensation for bonuses?

    I see Mr. Bittle on his point of order.

    These may have been valid questions for the Infrastructure Bank witnesses, who were here the other day. I believe the questions about the bonuses were asked.

     The Conservatives wanted a lengthy study specifically on the Lake Erie connector project, and now they're asking questions that are completely irrelevant, which seems to be a pattern. They were doing it yesterday.

    I'm hoping they can get back to the actual project. If they're out of questions, maybe they can just pass the floor on.

    Thank you, Mr. Bittle.

    I'll ask all colleagues to stay on point and ask questions directly related to the Lake Erie project. Thank you.

    Again, I understand the efforts of the Liberals to cover up a ridiculous amount in bonuses.

    Let me switch gears. I'll ask this of the Honourable Lisa Raitt.

    When we look at the macroeconomic environment—that has to be an important consideration when we're looking at the costs of infrastructure projects, which keep going up and up—the CEO of CIBC last week made a comment that in the upcoming budget, there needs to be an effort to pursue policies that will tame inflation.

    You were part of a government that did an incredible job of keeping on the inflation target, managing spending and delivering infrastructure projects. Maybe you can comment on that.

    I can actually comment, MP Muys, on the question you had just before, with respect to bonuses. You may recall that we dealt with major infrastructure projects in our government through the P3 Canada model, which was a Crown corporation. Within a Crown corporation, any kind of bonusing actually goes through the Prime Minister, so it's a really good way to ensure that you are accountable for the bonuses and that they're kept to a certain level.

    I can understand the structure of the CIB. It can grant its own bonuses without being tied back to the government and the taxpayer. That can be difficult to see, without question. That's why I always preferred the P3 model and the Crown corporation model when it came to funding these infrastructure projects.

    To the second question, you raise a really good point. You can see that the Province of British Columbia actually suffered from a downgrading of its creditworthiness by Moody’s, and then a levelling off or a negative call from Standard and Poor's—or Standard and Poor's was the reduction, and then it was Moody's. The reason why they did it was that they were very concerned about the continuous deficits that we're having, and there was no ability to understand whether or not we were ever going to come out of them.

     There's a very real danger. Even though B.C. is spending a lot of money on infrastructure, it can't just spend on infrastructure and assume that it's all going to be okay on the credit rating side, because banks want to see that there's going to be a way out and that there's a plan out of all these deficits.

    In the case of B.C., it's a living example for all of us to look to the federal government in the same view: Are you sure that what you're doing isn't going to cause us to have a downgrade in our borrowing accreditation?

     The inflation and the interest rates are obviously going to have another macroeconomic impact on the cost of financing projects and building infrastructure projects in Canada.

    I would agree with you.

    Thank you very much, Mr. Muys.

    Next, we will go to Mr. Bittle.

    The floor is yours. You have five minutes, sir.

    Thank you so much, Mr. Chair.

    I'll continue with Ms. Raitt. It's good to see you.

     I'll build on the point from Mr. Muys. When he says the CIB has accomplished zero, would you agree with that assessment, Ms. Raitt?

    I haven't taken a look recently at what it has done or has not done. I know the CIB has lots of activity with various banks here in Toronto, whether or not it has had projects completed.

    I went to an announcement of one project that the CIBC was involved in. I don't know whether or not it's been constructed or whether or not it's been completed, but they were certainly involved in it. It had to do with distributed energy in Markham, Ontario.

     I'll turn you back to comments you made. I believe you were with Mr. Cory—whom we heard from the other day—and you said, “you're doing a lot of work. You're getting...projects done, and you are, I think, filling a need that has been shown to be necessary in order to get projects going here in Canada.”

     Which is it?

    The reference was to a specific project that we were being interviewed on, and it had to do with some work that was being done by the Royal York, by a private entity that was making it more green and adhering to it. It needed some help from the CIB and, in fact, it was given. I have not seen any larger projects being done, other than something like that.

    I won't belabour the point, but it's plural in terms of “projects”: “You're getting...projects done, and you are, I think, filling a need that has been shown to be necessary in order to get projects going here in Canada.” I guess, just to make the point with respect to the bank, it has 56 infrastructure projects, including 53 that have reached financial close, and 37 in active construction. I agree with Ms. Raitt, in her previous comments when she wasn't at committee, which are different from her comments today. However, I'll move on.

    My next question is for Mr. Farmer.

     We heard from Professor Winfield last time, who was questioning Ontario's ability to sell lower-carbon electricity to other markets, given the state of the system. I was wondering if you can comment on that question that was called by Professor Winfield.

    What we have to remember about this particular project, and about all of our tie lines, is that they are importing and exporting energy every hour, as opposed to at a peak when you may have a lot of generation online. There are many times during the course of the year when demand is much lower. Demand does vary a lot over the course of the year.

     We have a large nuclear baseload fleet, even with our refurbishment program, a large hydro fleet, and substantial wind and solar on the system, so there are many hours when we have available non-emitting energy that we can export to neighbouring jurisdictions.

     As we look forward in Ontario, we are investing. We do acknowledge that we will be using more gas in the near term as we meet the significant economic growth that we are seeing, particularly in southwestern Ontario. However, as we move forward, we will use the gas fleet more, but then we will reduce that usage, because we are investing very heavily in storage, in renewable energy and in nuclear to maintain our clean electricity system.

    I'm wondering if you could expand a bit—and I know you've touched on it—with respect to the benefits to Ontario ratepayers in terms of the infrastructure and what we're actually going to see on the ground if this project is completed.

    It's important to note that we value all of our interties with our neighbours. Our interties provide extremely valuable services to maintain the reliability of the electricity system. They can provide capacity, which means that when we are in tight times, we can import capacity from neighbouring jurisdictions. We do that quite a lot. They can provide energy. They can provide reliability services, like operating reserves. We get a lot of value. The more interties we have, and the more robust our interties are, the more we can rely on them to maintain the reliability of our system.

    We looked at each of those value streams when we were looking at this particular project, as we would with any intertie proposal, and came up with assessments of those values. If you require more information on those specific values, my colleague Barbara Ellard would have the details, and we can provide those.

    Thank you very much, Mr. Farmer.

    For our final round, we'll go to Mr. Strahl.

    Mr. Strahl, the floor is yours. You have five minutes, please.

     Thank you very much, Mr. Chair.

    I want to go back to the update to investors that Fortis made. ITC Holdings is another name here. When they bailed out of the Lake Erie connector project, they said, “Macroeconomic conditions relating to rising inflation, interest rates and foreign exchange impacted the viability of the project”. When I talked to Mr. Pawlowski, he said that the situation in terms of our interest rates, inflation and the macroeconomic conditions has not improved since July 2022. What is happening here is that a private sector investor has bailed out of a project because it can't make it work anymore. It financially doesn't work due to the economic conditions.

    We saw last week that Scotiabank said that Bank of Canada rate cuts could be delayed by high government spending. That was their CEO. Then we saw yesterday that the Bank of Canada did not reduce its prime lending rate, which means that Canadians did not get a break on their mortgages, lines of credit or loans, and neither did small businesses. These high economic pressures are continuing to fall on Canadian families, Canadian businesses and Canadian small businesses.

    Ms. Raitt, your CEO at CIBC said last week that the Canadian government risks reigniting inflation with spending measures aimed at fixing an acute housing crisis. As Mr. Muys mentioned, you were a minister in a government that balanced the budget, kept inflation under control and made record investments in infrastructure. Drawing both from your record in cabinet with a government that prioritized financial responsibility and from your new role with CIBC, how important are the broad financial policies that lead to a macroeconomic environment that encourages investment rather than having investors heading for the exits?

     It's extremely important, Mr. Strahl. The reality is that investors are waiting to hear from the budget on a number of items. When you see a continuous stream of announcements from the government indicating all the spending that's going to be happening, you wonder what is going to happen to the deficit and, second, whether there will be a tax increase. What I'm hearing—very much so—is that there is a concern about an increase of the corporate tax. There's a concern about levelling even more taxes on individuals here in the country, because the reality is that, on the other side of the ledger, if you continue to put out these massive deficits, it will catch the attention of the ratings agencies. Having that kind of interaction with a federal government's creditworthiness is extremely detrimental to the ability of the country to borrow at a low cost.

    As you know from looking at the numbers, when we have interest costs that.... I say “we”, but I'm no longer in the government. I'm sorry. However, when there are interest costs that exceed the line items of individual departments in the federal budget, you want to be very concerned, especially if it goes beyond what we spend, for example, on national defence. So, yes, bankers look at this. Investors look at this. Investors are also concerned with respect to whether or not there's any kind of certainty, I would say, from the government in terms of what is coming next with regard to the promises made about the deficit level.

    You mentioned the B.C. NDP government getting a downgrade and a warning. What is the impact on the rates that they have to pay? Does it impact taxpayers in any way when those kinds of warnings go out from ratings agencies or when warnings are continuing to go out from the banking sector about our economic environment?

    It certainly could. I don't know how much time there would be between the actual rating depression and what happens in terms of the cost of capital, the cost of the borrowing for the deficits of the B.C. government. However, at the end of the day, we all know that it's the taxpayers who end up paying. The interest payments that are made every year on the debt that a government accumulates are part of the overall budget of a province or of a federal government, and that budget is covered by taxpayers and taxpayers' payments into revenue.

     Thank you very much, Ms. Raitt.

    Thank you, Mr. Strahl.

    Next we have Ms. Koutrakis.

    The floor is yours for five minutes, please.

    Thank you, Mr. Chair.

    Welcome to all of our witnesses. Thank you for being here with us.

    Ms. Raitt, I'm really happy to hear that you are now connected.... I'm sorry that I don't know what your role is with CIBC, but I am a CIBC retiree, so thank you for your continued service to that great organization.

    In your past experience as a minister, and now your work in the private sector, how important is it, in your view, for due diligence to be done on projects?

    That is the key. Due diligence has to be done on projects. It has to be done at the pace of the project, and not necessarily at the pace of bureaucracy, which can be a difficult thing, to slow down a project. It has to be done. There's no question about it.

    I guess the government has made a choice that it is going to do its due diligence outside of the federal departments, and it is going to do it in a different way. That comes with the costs that you see, which have been illuminated through the process that you're currently studying. It's up to you, and it's up to taxpayers, to determine if that is an appropriate use of the taxpayers' dollars.

    Ms. Raitt, when you were in government, did P3 Canada use outside consultants to complete any of that due diligence before projects were approved and moved forward?

    My understanding is that there was always due diligence. What I can't tell you is whether or not there were outside contracts. I do know that, in the case of the federal government, because we were actually working with the provinces and municipalities and not specifically with individual companies, I think the due diligence—and I stand to be corrected—would have been of a much less intense measure than the due diligence that may be happening when you're giving money to private companies.

    Ms. Raitt, do you recall any projects that went through the due diligence phase and were cancelled? Do you recall if that ever happened during your time in government, or even in your experience now in the private sector?

    In the private sector, obviously, deals will fall through if the due diligence doesn't allow for the financing of the project to go ahead, for example, or if the project proponent doesn't want to continue. That's very normal in the private sector.

    I'm so sorry, but I can't recall about the P3, because it was actually administered by Minister Flaherty. I didn't have that.... I can't speak knowledgeably to it.

    Thank you.

    Mr. Farmer, can you talk about the environmental benefits that you found in your report on the Lake Erie connector project?

    We found in our assessment of the project that, as has been discussed quite a bit today, having a connection with the PJM footprint would provide economic and environmental benefit, particularly around emissions. That comes from Ontario being able to export, at times, emissions-free electricity and being able to import emissions-free electricity from PJM, which also has a fairly large renewable energy presence.

    Also, and this may not be as appreciated, we have gas generation in Ontario. It is an economic transaction between us. As gas generators get less efficient, they become more expensive, so a gas generator in Ontario that is dispatching and then exporting energy would be displacing higher-emitting energy in PJM.

    Mr. Farmer, would you say that you continue to support this project going forward, and if so, why?

    I want to be clear that we support continuing to explore this project. We did support the project when it was put forward by ITC. We did a lot of analysis and saw a benefit for ratepayers. We did enter into negotiations, and when we negotiate, we negotiate on behalf of Ontario's ratepayers, to get the best deal that we can.

    Conditions have changed. We very much value interties, and we look forward to working with the proponent to understand how changing conditions will affect the value of the line going forward. We have much more economic growth in Ontario than, perhaps, we would have anticipated in the past. We are committed to building nuclear and renewable energy in Ontario, which will enable us to export clean energy.

     I see the argument, but I think we have to get into assessing the details to fully understand what the benefits would be for ratepayers.

     Thank you, Ms. Koutrakis.

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

    Thank you, Mr. Chair.

    At the last meeting, I put forward a motion and I'd have preferred to have had the chance to discuss it, but the debate was adjourned. I was told that today there would be different circumstances under which it could perhaps be moved.

    I move the following:

    It should go without saying that we agree that the government should respond to a motion passed in the House of Commons. However, I would still like the committee to make the request and for us to vote on the motion quickly so that we can finish the business we have scheduled for today.

    Thank you, Mr. Barsalou‑Duval.

    Mr. Strahl, you have the floor.

    Thank you, Mr. Chair.

    As I said at the last meeting, and as we kind of agreed at the beginning of this meeting, we also have a motion on the record to deal with airport firefighting. Perhaps we can find a way at our business meeting that is occurring on Tuesday to merge the two. We can deal with it at that time.

     I would move a motion to adjourn this debate.

    We have a motion on the floor to adjourn debate.

    (Motion negatived)

    The Chair: The discussion continues on the resolution put forward by Monsieur Barsalou-Duval.

    Is there anybody else on the speakers list who would like to address this?

    Monsieur Barsalou-Duval.

    I don't understand Mr. Strahl's opposition, because his motion aims to have us study the issue, if I'm not mistaken.

    The motion I introduced simply asks for a response to a motion passed by the House. So I don't see any conflict between the two. We can very well pass this motion and give due consideration to Mr. Strahl's motion.

    Thank you, Mr. Barsalou‑Duval.

    Mr. Bachrach, the floor is yours.

    Thank you, Mr. Chair.

    I support this motion. This is really about process and better understanding how the government received the voice of the House.

    I have a question about the substantive parts of the motion. Specifically, I have a question about the reference to “major airports”. If I recall, when this was debated in the House, there were a lot of concerns raised about the ability of smaller airports to meet these requirements, given their budget constraints. Certainly, the communities I represent would be concerned about that.

     The word “major” suggests that this would apply only to certain airports. I wonder if Mr. Barsalou-Duval, or someone else, could share with the committee which airports would be included in that list.

    Thank you.

    Mr. Barsalou‑Duval, you have the floor.

    I thank my colleague for his question.

    In fact, I didn't move motion M‑96, which was passed in the House on December 13. However, it specifies that we're talking about large Canadian airports. In theory, small airports wouldn't therefore be covered by this.

    Thank you, Mr. Barsalou‑Duval.

    Mr. Strahl, you have the floor.

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

    That is why we proposed this motion:

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

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

    Thank you, Mr. Strahl.

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

    Thank you, Mr. Chair.

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

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

    Thank you, Mr. Barsalou‑Duval.

    We have Mr. Bachrach.

    Thank you, Mr. Chair.

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

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

     Thank you, Mr. Bachrach.

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

    (Motion agreed to: yeas 11; nays 0)

    The Chair: The motion carries.

    Thank you, Mr. Barsalou‑Duval.

    We can continue.

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

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

    Thank you very much.

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

    Thank you very much, Mr. Chair.

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

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

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

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

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

    It's a great point, a great question.

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

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

    Thank you very much, Mr. Pawlowski.

    Next we have Dr. Lewis.

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

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

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

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

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

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

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

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

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

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

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

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

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

    Okay, thank you.

    Mr. Farmer, the next question is for you.

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

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

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

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

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

    Thank you very much, Dr. Lewis.

    To conclude our line of questioning today, I'll turn the floor over to Ms. Murray.

    Ms. Murray, the floor is yours. You have five minutes.

    Thank you very much.

    It's been interesting talking about public benefits from infrastructure. Thank you for that.

    I have a question on that for Ms. Raitt.

    It's nice to see you, Lisa. It's been a few years. We were in Parliament together for a number of years.

    We have been discussing the public benefits of infrastructure. You expressed concern about government infrastructure investments and the potential for a downgrading of credit rating, and you mentioned a particular province, but you've also acknowledged that CIB investments have benefits, and you've particularly mentioned the Royal York project. Could you share some of the specific benefits of the Royal York project from a public interest perspective?

    I would say that there's a significant commercial benefit to the project. It's one where there was a conversion. I don't know if it has commenced or if it's completed yet, Ms. Murray, but the Royal York hotel in downtown Toronto was going to undergo modifications and changes to its structure in order to become net-zero—in fact, probably beyond net-zero. They felt that was a marketing gain for them. Of course, it was a gain for them in terms of reducing their carbon footprint, which goes into the overall goal of the government to be net-zero by 2050.

    Those were the benefits that the CIB explained when I conducted the interview with Mr. Cory.

     Great. Thank you for clarifying that.

    I do have a question for you, Mr. Pawlowski. It has to do with public benefits. As a British Columbian, I know that there has been a huge movement toward first nations involvement in public-private partnerships or major infrastructure projects. Canada has really facilitated that as well with, for example, the pipeline from Alberta to the west coast, the Trans Mountain pipeline. I know that there are conversations and that work is under way so that over 100 first nations, all the nations along the route, may have an opportunity to have an ownership stake.

    I'm interested in your company's policies, principles or objectives around first nations ownership, going beyond mitigating impacts on first nations but actually having them as co-owners in projects. Could you speak to us about your thoughts on that with this connector project and/or in general for your company?

    Yes. Thank you very much.

    When we look at our efforts with first nations—and, by the way, with almost any other stakeholder that's included in any of our projects—we definitely take a “stakeholder first” approach. We engage with first nations and others to make sure that we have the conversations, which we've just started, in order to figure out what the right opportunities are in terms of both potential investment and other levels of participation, including community benefits. We take that view on any of the projects my team works on.

    For example, in the United States we're working on a project that goes through the state of Oklahoma. We are very active in discussions, or much further in discussions, with the Cherokee Nation, for example, which is a native American tribe in Oklahoma. We take the view that it's important for us to engage early and often to understand both what the engagement looks like and what issues we may need to address on a specific project.

    It's very much an education of the stakeholder, such as a first nation, on what we're doing, but it's also to understand and value the feedback we're getting on what the important aspects are to the areas we're potentially impacting with our project.

    Thank you.

    Do I still have a minute, Chair?

    You have 30 seconds, Ms. Murray.

    Okay.

    Could you comment on the positives through the Lake Erie connector project of Canada learning from the United States' work on engagement and ownership by first nations, and vice versa?

    Yes. Again, I'll point to some of the other projects we've done. I believe there is a role for all stakeholders involved in these kinds of projects, but I think it's also important for all the stakeholders to truly understand the benefits that these kinds of projects bring. As we've heard, increased loads, and increased economic development as a result of those loads, create the opportunities for these types of projects to be a key resource for the Canadian taxpayer and for all the stakeholders involved, including first nations.

    Thank you very much, Ms. Murray.

    On behalf of the committee members, I want to thank all our witnesses for appearing before us today and giving us their time so generously.

    This meeting is adjourned.