Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 26 - Evidence - April 2, 2015
OTTAWA, Thursday, April 2, 2015
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8:02 a.m. to study non-renewable and renewable energy development including energy storage, distribution, transmission, consumption and other emerging technologies in Canada's three northern territories.
Senator Richard Neufeld (Chair) in the chair.
[English]
The Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources.
My name is Richard Neufeld. I represent the province of British Columbia in the Senate, and I am chair of this committee.
I would like to welcome honourable senators, any members of the public with us in the room and viewers across the country who are watching on television. As a reminder to those watching, these committee hearings are open to the public and also available via the webcast at sen.parl.gc.ca. You may also find more information on the schedule of witnesses on the website, under "Senate Committees."
I would like now to ask senators around the table to introduce themselves, and I'll begin which introducing the deputy chair, Senator Massicotte, from Quebec.
Senator Massicotte: Good morning.
Senator Mitchell: Grant Mitchell from Alberta.
Senator Sibbeston: Nick Sibbeston from the Northwest Territories.
[Translation]
Senator Ringuette: Senator Pierrette Ringuette from New Brunswick.
Senator Rivard: Michel Rivard from Quebec.
[English]
Senator Black: Doug Black from Alberta.
Senator Patterson: Dennis Patterson, Nunavut.
Senator Seidman: Judith Seidman from Montreal, Quebec.
The Chair: I'd also like to introduce our staff. Sitting on my left is the clerk of the committee, Lynn Gordon, and, to my right, are our two Library of Parliament analysts, Marc LeBlanc and Sam Banks.
On March 4, 2014, the Senate authorized our committee to undertake a study on non-renewable and renewable energy development, including energy storage, distribution, transmission, consumption and other emerging technologies in Canada's three Northern territories.
Today I am pleased to welcome the following witnesses:
From the Government of Nunavut, Bernie MacIsaac, Assistant Deputy Minister, Department of Economic Development and Transportation; Arif Sayani, Senior Advisor, Energy Secretariat, Department of Economic Development and Transportation.
From the Nunavut Housing Corporation, Lori Kimball, President and CEO; and Stephen Hooey, Acting Chief Operating Officer.
Mr. MacIsaac, I would begin with your opening remarks for the Energy Secretariat, followed by Ms. Kimball, from the Nunavut Housing Corporation. Then we will open the floor to questions.
The floor is yours, sir.
Bernie MacIsaac, Assistant Deputy Minister, Department of Economic Development and Transportation, Government of Nunavut: Honourable senators, I am pleased to be here to address the Standing Senate Committee on Energy, the Environment and Natural Resources, and I thank you for your invitation. I have with me here today Arif Sayani, with the Nunavut Energy Secretariat.
I also bring greetings from Premier Peter Taptuna, who appeared before you as Minister of Energy in 2012.
I understand that this committee is undertaking a study on Northern energy issues and that you have spent time visiting all three Northern territories. I also understand that a few months ago my colleague Mr. Alain Barriault, the President and CEO of Qulliq Energy, was here to speak to you about energy issues in Nunavut. Mr. Barriault gave you an excellent overview of the energy challenges we face in Nunavut from a power supply perspective.
I believe there is a PowerPoint presentation, which you have on your iPads, so we're on slide 2 right now.
There is more that we would like to add to this energy discussion, however, primarily on the energy efficiency and conservation efforts in our territory. It is in this context that I will speak today about Nunavut's unique challenges and opportunities with respect to energy and focus on the work we are doing to reduce energy consumption and improve our energy prospects.
As many of you know, we are a young territory, nearly 2 million square kilometres in area, with a population of almost 37,000 people spread out over three time zones in 25 communities. There is great potential in Nunavut, first and foremost through our young population, in fact, the youngest in Canada, and, second, through the natural and cultural resources we have: mining, oil and gas, tourism and the up-and-coming creative media industries. However, our future success greatly relies on our ability to manage the security of our energy. What does this mean to us? It means that we are always thinking about two things when it comes to energy: affordability and reliability. If our energy is affordable, we can help to unlock our great potential, and, if our energy is reliable, we have the certainty to drive forward.
Slide 4: The path to addressing the affordability and reliability of our energy begins with this document. I'd like to introduce you to Ikummatiit, the Government of Nunavut's energy strategy, adopted in 2007 with a mandate until 2020. The mandate laid out in Ikummatiit, simply put, aims to reduce Nunavut's dependence on fossil fuels. Four major policy themes are laid out: energy conservation and efficiency, alternative energy, management practices, and the development of local energy resources.
You'll notice that our graphical presentation of Ikummatiit places it in the centre of the slide — and this is slide 5 — with all of Nunavut's energy stakeholders playing a part in this strategy:
Qulliq Energy, even though they operate diesel plants, are pursuing hydro and other renewable options and further working to improve the efficiency of their plants.
The Nunavut Housing Corporation, which is also here today to speak to you, constructs new housing units, manages existing housing stock and works with public-housing and government-housing tenants to decrease energy consumption.
The Government of Nunavut's Department of Community and Government Services, which owns and operates a large stock of government buildings throughout the territory, has implemented some impressive energy initiatives that I will speak to later.
On that diagram, you will see the Energy Secretariat, a division responsible for monitoring and coordinating the overall implementation of our energy strategy. These are only a few of the major energy stakeholders in our territory.
The truth is that everyone and every organization is a stakeholder. We cannot forget hamlets, businesses and individual residents; everybody uses energy, and everybody has a part to play.
But at this time I'll focus on the Government of Nunavut and our efforts in reducing energy consumption. The Government of Nunavut pays, directly or indirectly, almost 80 per cent of all Nunavut's energy costs, including invaluable subsidies to keep the cost of energy affordable. Consider our energy prices. In our capital of Iqaluit, residential customers are charged 60 cents per kilowatt hour, and this price is subsidized down to 30 cents per kilowatt hour but remains very high in comparison to the rest of Canada. In Ottawa, for example, residential electricity customers pay 14 cents per kilowatt hour, while our neighbours in Yellowknife pay 24 cents per kilowatt hour. Another way to frame this issue from our perspective is that energy, in all its forms, accounts for approximately 20 per cent of our entire government budget.
These facts allow us to highlight the urgency of the situation. Yet, the very nature of the issue is a great opportunity for us. Every effort we make to reduce our consumption and every additional kilowatt earned from a renewable source is a dollar saved that can go towards schools, hospitals and other priorities. The savings are there, in our costs. Indeed, we have already taken steps in this direction.
We're now on slide 6. Allow me to tell you about the Nunavut Energy Management Program. Earlier I mentioned that our Department of Community and Government Services is a major energy stakeholder. They own and operate a large stock of government buildings throughout the whole territory. Buildings are of course major users of energy in terms of electricity and heating fuel.
In response to our energy strategy, Community and Government Services implemented the Nunavut Energy Management Program. The first phase of the program was a pilot project in Iqaluit to provide energy retrofits to 40 government-owned buildings. These retrofits included upgrades to lighting systems, building envelopes, appliances and other mechanical systems. There was also a focus on renewable energy through the use of solar walls and solar domestic hot water heating systems.
The unique part of this program was that the energy retrofits were analyzed and then paid for through private sector financing. In essence, the government borrowed the money in order to provide the capital cost, and then used the savings to pay off the loan.
Completed in 2011, the program is exceeding its target goal of reducing energy use in these buildings by 20 per cent and saving the government over $1 million in annual costs. This program is a great example of how the public sector and the private sector can work together to make energy projects work. The push is now on to replicate the success of the program in other communities in Nunavut and to help local governments go through the same process.
We're now on slide 11. I would like to speak about some of the challenges we face in trying to reach our energy goals. One of our major challenges as a government and as a territory is capacity. For our discussions today, we mean the capacity to support energy projects, both monetary and otherwise.
Allow me an example to illustrate my point. In some southern provinces, homeowners interested in placing solar panels on their home and selling surplus energy back to the grid are able to do so through a net metering policy. The capacity to allow this exists through government policy, technical standards and a private sector that can perform the work to install these systems.
We are not quite there yet in Nunavut. We are working on it, but we are not there yet. Policies are being developed to allow for small-scale renewable systems, but even when in place, we have to make sure there is capacity to design and install these systems. We have no solar installers in Nunavut. We have no energy specialists who can design these systems and make sure they are appropriate for the Arctic environment. This may seem like sweating the small details, but it is key to understanding what we have to do. If we want to proceed with renewables, we have to make sure that the capacity exists.
In many ways what I'm pointing to is a lack of experience. As many of you know, the technology exists. Whether it is solar or wind, the technology is proven in cold climates, but in many cases it has not been demonstrated in Nunavut. For many of us, we have to see it to believe it. That is why we are very encouraged to see that the Canadian High Arctic Research Station, located in Cambridge Bay, will undertake research to advance alternative and renewable energy solutions for the North.
I would like to finish by talking about our energy opportunities. Thankfully, we are not in this alone. There are remote, off-grid communities in all of the territories and even in the northern regions of our southern provinces. Learning from them is one way in which we better understand our options. Through our involvement with the Energy and Mines Ministers' Conference, we are forming partnerships with other governments facing similar challenges. Through our involvement in the Council of the Federation's Canadian Energy Strategy, we are making sure that our Northern voices are heard and addressed.
Last week, Louie Azzolini, the executive director of the Arctic Energy Alliance, was here to speak to you. I mention this because we recently entered into a partnership with the Arctic Energy Alliance and have been working with them to provide specialized energy services in Nunavut.
The opportunities for these kinds of partnerships and collaborations are there and as you can see, we are actively pursuing them. Yet, on the energy front, the federal government remains our largest partner. The Canadian High Arctic Research Station is there to carry out research on renewables and there are federal programs that fund small- scale energy projects. For example, our communities have accessed federal funding through the ecoENERGY program. The Hamlet of Arviat, for instance, has used this funding to purchase a solar photovoltaic system for one of its arenas and will be installing it this summer.
We would like to see more funding made available for these types of projects. We would also like to see these federal departments that have extensive technical expertise reach out and help us build the capacity that we need.
Funding is essential in order for us to carry out the feasibility studies that are required to begin projects. I refer not only to small-scale renewable systems but to large-scale projects as well.
With help from the federal government, we can take a very large step forward together. We have demonstrated significant hydro potential in Iqaluit and believe that there is significant hydro potential throughout the territory, and a funding commitment there from our federal partners would change the energy picture overnight. Hydro is a tremendous resource and we have to find a way to make this happen. There is also great potential with a power transmission line from Manitoba to the Kivalliq region. Again, with help from our federal partners, this project could change Nunavut overnight.
Mr. Chair and committee members, I hope this short presentation has helped you to understand the challenges we face, but also the tremendous opportunities we have, if we are able to work together in creating a sustainable future for Nunavut and Canada. Thank you. Merci.
The Chair: Thank you.
We'll now go to Ms. Kimball, please.
Lori Kimball, President and CEO, Nunavut Housing Corporation: Thank you, Mr. Chair. Again, I'd like to thank honourable senators for inviting us today to speak with you. Again, with me is our acting Vice-President and Chief Operating Officer, Stephen Hooey. Hopefully you have a copy of the PowerPoint presentation that we've distributed. First I'd like to walk you through an overview of who we are and what we do.
Nunavut Housing Corporation is a public agency of the Government of Nunavut, and we provide approximately 70 per cent of all housing across the territory, again through 25 communities. We offer three core business areas. We provide support to home ownership. We provide staff housing for Government of Nunavut employees. And we provide social housing for quite a volume of Nunavummiut.
Our portfolio right now is over 5,123 public housing units and 1,400 staff housing units, and we also have over 248 units currently being funded through partnerships with the federal government that will be completed by the summer of 2016.
Nunavut is quite large. It's one-fifth of Canada's land mass. It spans 1,800 kilometres north to south and east to west. To put that into perspective, that's greater than the distance between Ottawa and Winnipeg, kind of squared.
As you know, Nunavut has the most significant housing crisis across Canada. A recent CMHC report showed that 39 per cent of housing is in core need. Our 2009-10 Nunavut Housing Needs Survey showed that over 35 per cent of our clients are subject to overcrowding. It's the worst overcrowding in Canada. I have visited a community where 22 people were living in a three-bedroom home, to put that into perspective. Right now we're showing a housing gap of over 3,200. We need another 3,200 housing units on top of 5,123 that we already have to meet the current demand.
One of our key mandates right now under the government is to develop more energy efficient and economical solutions because obviously the operating costs of the scope and scale of social and staff housing is quite significant for the Government of Nunavut.
Slide 2 provides an overview of the Public Housing Program. We currently have over 19,000 clients in our Social Housing Program and 80 per cent of these clients make less than $22,880 per year, so that's less than minimum wage. Clearly, these clients, these tenants, do not have the opportunity to go into other forms of housing. They're very much dependent on the Social Housing Program.
We have less than 1,000 tenants that earn more than $60,000 a year; and $60,000 might sound like a decent wage when you're in the South, but right now the cost of owning and operating a house in Nunavut ranges from $158,500 to $186,000 per year. This is the minimum income you would need to be able to afford home ownership in various communities.
Through our framework and strategy, one of our goals was to address certain misconceptions. One of the misconceptions is that in terms of utility costs, consumption is not reflective of overuse or abuse. Consumption is not actually one of the key issues. We'll talk more about that as we go through the next slides.
Slide 3 talks about utility costs. And to just to break those down, our number one utility cost is water and sewage. Most people would assume that, as we're in the Arctic, heating fuel would be our highest cost. It's actually our third- highest cost. Our water and sewage costs are actually more than double what we pay for heat.
Slide 4 addresses water costs and consumption. You'll see the red bar is showing the World Health Organization standards for water. You want a certain level of consumption of water to maintain health standards and that sort of thing. You'll see that we have only three communities currently that are on what's called a utilidor system, which is a pipe system to the homes. The remaining communities are on a trucked delivery system, and the majority of those are actually below WHO standards.
Again, our issue in terms of water is not related to consumption or overuse of water, so we don't want to promote using less water from a health and safety standpoint. The high cost of water is basically due to limited infrastructure. Obviously it's a lot more costly on a variable cost basis to deliver to every house by truck than through a utilidor system. Utilidor systems are costly to put in and install. But when you look at the growing population and demographics of Nunavut, it's a very young demographic, many are under 20 years old, which means those people are going to need housing. So more housing will be needed as we go. Putting in a utilidor system before you start building houses makes a lot of economic sense rather than trying to switch it after.
Slide 5 speaks to fuel heating costs and consumption. We conducted a review of the older units in our portfolio. We have portfolio units that go back to the 1960s. We looked at units built in the 1980s compared to those built in past years and how to look at consumption. We have actually made a difference in terms of energy consumption. What we found is that in our single family dwellings, we've reduced it by about 511 litres, which is a 13 per cent decrease in consumption. Duplexes dropped by 12 per cent, and multiplexes have dropped by 10 per cent. So we have made a pretty substantial difference. But when you look at our average heating cost, which is around $3,700, a 10 per cent reduction per year, it's not enough cost savings to pay for costly energy efficiency retrofits to those older units. Many of the older units would take several hundred thousand to do proper energy retrofits and if you're only saving $500 a year then it takes a long time to have a return on investment. Clearly the path forward is to make sure our new homes are much more energy efficient.
Slide 6 shows that one of the key functions of our organization is actually focusing on construction. Again through partnerships with the federal government, we've had some substantial federal investments in construction of new homes. We do try to take that money and look for creative, efficient designs appropriate to the geography and climate. Then in terms of determining where we're going to build, we've actually developed an allocation methodology that's based on the needs in each community relative to the stock that's already there. We look at proportional need to make sure the new housing is distributed appropriately across Nunavut.
Slide 7 demonstrates other things that we do for energy efficiency with the goal of making sure that all of our new housing exceeds the National Energy Code. We follow an R2000 standard. We exceed R2000 standard. We have triple glazed, low-E argon filled windows. We always make sure that we have appropriate efficiency appliances, water heaters and boiler systems, low-flow toilets and fibreglass oil tanks for better sustainability.
Slide 8 shows that we've recently built a couple of ten-plexes. We have found that the cost of construction drops dramatically the more dense we're able to make the units. So we did a review of how energy efficient our most recent ten-plex design was and they actually scored between 82 and 84. So our average score on those units came back at 83, which is really second from the top. Basically, the only way to do better is if we had passive systems like solar panels, wind systems. So we're getting a very good rating on our new homes.
Slide 9 outlines that we also provide home ownership programs to homeowners throughout Nunavut. We prioritize when we're distributing home ownership money. We prioritize first on health and safety concerns, but we also evaluate energy efficiency as part of our point rating system in determining allocation of home ownership funds. We also have a special Home Renovation Program that offers an additional $15,000 for renovations related to energy efficiency to try to encourage energy efficiency in the private market as well. We've also been working with the Arctic Energy Alliance to inform homeowners on options for upgrading their homes for energy efficiency.
Slide 10 speaks to our needs going forward. Basically, we need sustainable investment in housing, but also the corresponding investment in infrastructure. Better improved infrastructure will reduce the cost of providing energy and utilities to these homes. Again, our highest cost is the water and water distribution system. I think my colleagues mentioned that Qulliq Energy Corporation was here in the fall and spoke about their rate per kilowatt hour. But for us the biggest thing is the rate for water.
That's all I have today. I would like to thank the chair and members for allowing us to be here today.
The Chair: Thank you both very much for your presentations. We will now go to questions.
Senator Massicotte: I thank all of you for being here this morning. It's obviously a complicated subject, one that you know a lot more about than we do. We congratulate you on the efforts you're making and the success you've had so far. It's encouraging to see.
When we consider these issues and you consider the cost versus the number of people who live there, what are the issues that we should be considering? How should we measure these elements?
Mr. MacIsaac, is there a sovereignty issue argument? Is there an importance for the rest of Canada that we occupy certain territories? Could we be threatened by Russia or somebody else if we don't encourage people to occupy these territories?
Mr. MacIsaac: That's an interesting question. There are 25 communities scattered across the territory. Some of them are there or were put there for sovereignty reasons in the past. Each one of these communities requires a whole set of infrastructure. For example, in Nunavut, with 30,000 people, we have 25 airports, 25 power generation facilities, and 25 waste disposal sites, et cetera. It's a very expensive undertaking for us to build, retrofit, upgrade and maintain.
A lot of these communities were established in the traditional areas of people who were living there in the past. These areas are their homes, and these communities are their homes. In terms of threats to national security, I'm not sure how real that is or how serious that would be. We do have the Canadian Rangers living in these various communities. I'm not sure if that answers your question.
Senator Massicotte: Migration or moving has never been very popular in our country. We have often talked about it in the past. The history of mankind has seen immense migration, sometimes for economic reasons, including Western Canada and so on. Across the world, including Canada, there has been immense urbanization of people either because an area may be too expensive, or they move for work, education or socialization. In other words, should we be concerned and say, "Given your high cost of energy, some of these people may wish to move"? I'm sure you're probably seeing a lot of youth moving, to your detriment. Is that of concern to you?
Mr. MacIsaac: It's a concern to the territory in terms of the viability and sustainability of some communities. In the presentation, we talked about the demographic of Nunavut, which is very different from the demographic that you find throughout the rest of the country with its large segment of the population under 15 years old. The future of the territory is in its youth.
I will also mention that we are blessed with significant natural resources in Nunavut. It's a very large territory with significant potential for oil and gas, and mineral development. The pieces of the puzzle are there for the economic development of the territory, which would provide opportunities for the people within these communities. Recently, we opened up two mines and there are a number of them on the horizon. There are many programs in the territory for training people at these developments. The impetus or requirements to keep people in the territory are on the horizon. However, we'll still be stuck with the need for energy. We're never going to have a road network like you have in the rest of Canada. We're always going to be dependent on air travel for a lot of our travel between the various communities. With the requirement for air travel, we will require energy.
Every one of our communities relies on diesel energy. There are fuel requirements. Every community requires diesel for heating. For the most part, we're not going to get away from that, ever. However, we are working to make these communities more efficient. As time goes on, we hope that these economic opportunities will provide opportunities for the communities and the necessary economic factors that will allow people to stay. People in Nunavut are the same as everywhere else: If there are no opportunities, they will probably move to find them.
Senator Massicotte: In the big picture, some 70 per cent or 75 per cent of your housing is basically community housing owned by your territory. There's a significant housing cost of over $2,000 a month, much of which is provided by the community or the territory. I notice you subsidize energy from 50 cents to 30 cents. Probably the most economical way to save energy is not to consume it and you're making good progress there. When my kids were growing up and dad was paying, it was a lot easier for them. But when they went out on their own, they became super- efficient because it was their money. Would you not gain by having consumers of your energy pay the full cost and not be protected? You could somehow find a way to give that subsidy money to them or to someone who really needs it. Maybe they would find an immense incentive to save energy if they were knowledgeable of the true cost and had to pay it with indirect subsidies. Has that been given some thought with some results?
Ms. Kimball: Thank you for that question. Right now the only utility bill our social housing clients pay is 6 cents per kilowatt hour for the power consumed. We pay the full shot in terms of heating and water and that is one of our areas of concern. For water, we have already identified that we don't want them consuming less from a health and safety standpoint. From a power energy efficiency standpoint, we find that the 6 cents per kilowatt hour is not enough to actually influence action, so we are looking at other ways to provide incentives to our tenants to reduce power consumption.
For heating fuel, one of our challenges is that our units have become so energy efficient and air tight that clients are not necessarily comfortable or they have issues with the HRV system or the HVAC system, which is the air exchange system, and they turn them off. Then they end up with doors freezing or mould issues so they open the windows. One of our concerns is how to provide an incentive program to stop those actions. That's something we're looking at closely.
We've started a tenant engagement and awareness campaign and we're also looking at ways of incorporating that into the rent charge. We have to be very careful as most of our clients are on income support. If we were to have the clients pay, they would end up getting that through an income support payment, which then becomes taxable. We have to make sure that it makes sense for the overall cost to the government.
Senator Black: Thank you all for being here. I very much appreciate the opportunity that you're providing to us.
My starting point for my questions is that in my view, Nunavut is an extremely important and strategic part of Canada and our culture. My view is that Nunavut is in the position of being a welfare state, and that is not an acceptable position to be in or to have for Canada. I also think that it's not acceptable that whenever you have interactions with Canada you basically come as beggars. I don't that's the right place to be. That's where I come from in this conversation, that investment is necessary to ensure that the standards that are required to nominally equate the standards in Nunavut to elsewhere in Canada are raised, which means investment, so you're going to have to help me with this.
I think you indicated, sir, that 25 per cent of your current budget goes to energy costs. What is that number, 25 per cent, ballpark?
Mr. MacIsaac: It's 20 per cent.
Senator Black: Okay, sir.
Mr. MacIsaac: Somewhere around $300 million. I'm just doing the math.
Senator Black: That's $300 million a year for energy, exclusively fossil fuel energy, imported.
Mr. MacIsaac: For the most part, yes.
Senator Black: Let's talk about the importation or construction costs of hydro facilities, as you have suggested coming from Labrador or northern Quebec or Manitoba. Have you costed any of those opportunities?
Mr. MacIsaac: We currently have a project under way to examine the feasibility of running the transmission line from Manitoba up into the Kivalliq region, which is the central region of the territory.
Senator Black: I can tell you it's feasible but it's expensive. Anything is feasible. Do you have any idea of cost?
Mr. MacIsaac: There are a number of considerations there. The costs, I've heard numbers as high as $600 million to run that power line from Manitoba into Nunavut. However, there are a number of considerations there as well. That part of Nunavut has a significant number of potential mineral deposits and existing mines, et cetera. By running that kind of power line there, it could help reduce the energy costs associated with communities that would be in the vicinity of it. It could also change the economics and feasibility of a number of those mineral deposits, because now they have a more reliable and presumably cheaper source of energy.
Senator Black: Of course, great for Canada.
Mr. MacIsaac: Yes.
Senator Black: Let's say it's a billion dollars, which I think you're way low, but let's say it's a billion dollars to get from Manitoba to Nunavut. What happens when the power comes there, because you don't have any kind of grid within the territory, do you?
Mr. MacIsaac: No.
Senator Black: We get the power from Manitoba, it lands at a point. How do we get it to the rest of the territory and at what cost? That's what I want to know.
Mr. MacIsaac: It probably wouldn't be feasible to go beyond the Kivalliq region.
Senator Black: I see.
Mr. MacIsaac: Baffin Island by itself is kind of an isolated part. You might be able to go into the western reaches of the territory. There are opportunities maybe to tap into the grid that already exists in parts of the Northwest Territories. There are a number of options that way. I think your premise is right, in that this is not a cheap undertaking.
Senator Black: Investments are never cheap. It's the return we have to look at.
Mr. MacIsaac: True, but there are a lot of competing priorities within the territory for this type of investment. That is part of the question as well.
Senator Black: Of course. What I'm suggesting is that this may well be an obligation of the Government of Canada. You can't do it.
Mr. MacIsaac: I won't argue with you there, sir.
Senator Black: From my point of view, I'm very much on side with this. This circumstance needs to be corrected for the good of the nation. Thank you all for being here.
Senator Mitchell: Thanks to all of you. I think, Mr. MacIsaac, we met before when we were up there.
Mr. MacIsaac: Yes.
Senator Mitchell: It's nice to see you again.
I'm interested in much more specific questions. Ms. Kimball, I'm quite interested in the problem that you alluded to with respect to people opening the windows. Is it that these buildings are so well sealed that they become stuffy and people feel uncomfortable in them with this kind of insulation? How does that work?
Ms. Kimball: Thank you for that question. They are so well insulated that if they turn off the heat, the HVAC system or the HRV system, they do become quite stuffy. With some of those systems, tenants complain of noise. There are also challenges some of them have with air intakes. Tenants may not understand how they work and may place things in front of those, especially when you get overcrowding situations, you get a lot of people in a house, it's easy to start putting things in front of those and have them not function properly. Those are some of our concerns.
Different systems, newer technologies pose challenges as well because we have to look at the maintenance of those technologies and the skill sets that are available in the community for that maintenance. If you have all kinds of different technologies in one community and you have a small staff for maintaining it, it becomes more challenging, having to know all of those different systems. That's one of our challenges.
Senator Mitchell: That brings me to my next question, which is something we found when we visited, and that is the question of capacity and it applies in many different ways. You've mentioned one. However, it's impressive that you have high insulation standards and codes for building. Do you have the capacity in your public service not only to service it but to monitor it, to make sure the codes are being implemented as the building is done and that kind of thing? Is that a problem?
Ms. Kimball: That's going well now for our new construction, because the funding that we've been getting from the feds seems to tie in to the last round of funding so we haven't really had a gap in the funding, so we have managed to maintain the human resources we need to keep these things going. That's been working fairly well.
Senator Mitchell: Seventy per cent of the housing built is social. That leaves the rest of the housing as business, commercial, government. Would the standards for the other 30 per cent, for commercial be the same or is that different, too?
Ms. Kimball: Residential and commercial are two different animals, two different building codes. In terms of all the things we do for social housing and anything we build for staff housing, because we build both types of housing, we make sure it meets R2000 quality, so it's the same building designs that we're using.
In terms of private home ownership, they can do whatever they want, as long as they stay within code. One of the things the government as a whole is looking at, currently Nunavut does not have its own building codes, we're complying with Canadian standards, but Nunavut is in the process of developing its own building codes.
Senator Mitchell: What would be the advantage of that, specifically?
Ms. Kimball: I think it would be advantageous to have higher standards, especially for the private market.
Senator Sibbeston: Any time I see people from Nunavut, I'm reminded of the times in the 1980s when all the people in the area were part of the Northwest Territories and we in Yellowknife were the centre of government. We used to make trips into that area, never in the winter — it's too dark and cold — but in the spring, this time of the year, and the summers, it gets to be very nice. I always admired and enjoyed trips into that are because of the people who live in very harsh conditions.
Also, the very first thing you notice is that there are no trees. While we in the west have trees and building materials, where we can build a fire with wood, in the Eastern Arctic you didn't. It's one of the real differences. I do know the situation is very challenging. It's beautiful country and great people, but challenging because there is not very much that people can do. We in the west have wood and trees, we can build our own houses with logs, and there is oil and gas and mining maybe that are more advanced, and we have roads, which is not the case in the Eastern Arctic. I noted these differences, but still it's very nice country.
With respect to housing, ever since I was a young MLA in 1970, building houses for Inuit people in the Arctic has always been an issue because in those days it used to be that you would have a company come from the South into a little community and in the course of one or two or three months at the most, build houses, and there were always complaints about the houses being rushed and not being very good.
I would ask whether over the years there has been a change. Are houses being built with better materials, standards and workmanship? Are there Nunavut-based people who have the skills to do the work, to build the houses for people?
Ms. Kimball: Thank you. Stephen can jump in, but almost all of our contracts have been with Inuit firms. The vast majority of those competing are Inuit firms, so we are getting much more of the labour force in Nunavut participating. There is a lot of good economic activity. Construction is one of the major employers in Nunavut.
In terms of the quality, when we do our construction contracts now, we're doing ship, supply and erect, which is different than in the past. Before we would have the materials shipped up separately and then hire contractors to do the labour. This way it's a turnkey operation, but as part of the contract each phase of construction has to be inspected by our staff before payments are processed. So we have a much more rigorous system to ensure that the quality is going in as well as a finished product. We make sure that as it goes through it's having proper inspection points.
Senator Sibbeston: You're telling me that housing standards have improved. The issue of the air, you have to remember that the Inuit come from the land; they're used to living in igloos. It's a real change for them to come into a town and live in houses. In the early days people used to open windows and doors to make sure there was enough air in the place. I have always been amused by the fact that now we build houses that are so airtight that we drill a hole in the wall to bring in air. That's the way the system works. Definitely over time people will adapt, and I imagine you have second and third generations of people so people are getting used to living in houses.
Ms. Kimball: We are working on tenant awareness. We haven't been doing a great job over the years of engaging directly with the public to make them aware of how these housing systems work and how they can contribute to the energy efficiency of their home and make sure it's healthy air quality. That's where we are working on tenant engagement and various campaigns of awareness.
In terms of construction, it's our inspection stages. I think there is more rigour in terms of the verification that the codes and standards are being followed. Maybe even more so than changing the standards themselves, there is a lot more compliance confirmation.
Senator Patterson: I'd like to thank the Nunavummiut for coming here today and explaining the challenges.
I have a factual question for the Nunavut Housing Corporation. You have said that 70 per cent of all housing in the territories is social housing. If you took Iqaluit out of the equation where there is a high proportion of private home ownership, what would the percentage be?
Ms. Kimball: Unfortunately, I don't have that data with me, but I know that Iqaluit is substantially lower. I believe about 25 per cent of Iqaluit were in social housing. We're up to between 500 and 600 social housing units in Iqaluit out of the whole portfolio.
In 2009-10, when we did our needs survey, there were 1,880 private homes out of 9,400 units. A huge proportion, 60 per cent at the time, was social housing and a further 20 per cent was staff housing, so we had over 80 percent of direct ownership of homes in Nunavut. If you look at the private market, through our home ownership programs and previously our mortgage programs, we have touched the lives of most Nunavummiut in Nunavut.
Senator Patterson: The costs of utilities, $24,800 per year per unit, are quite daunting. I understand that CMHC used to contribute to the O&M costs but that this support is declining by policy. Would you be able to tell us how much rent and power subsidy or power contribution from tenants amounts to on average compared to that $24,800 operating cost?
Ms. Kimball: I don't have that number specifically. I can tell you rent is pretty minimal. I think we're around $14 million right now that we collect or at least assess in rent. I believe our utility cost for social housing is running around $90 million a year. That doesn't include the maintenance or administration. Rent is a very small recovery for us as this point.
Senator Patterson: You said that the 6 cents per kilowatt hour that tenants are required to contribute to the cost of power is not an incentive to conserve. Although you have explained that water and sewage is the largest utility cost per month, power is right behind in second place. You said that the corporation is reviewing this incentive and perhaps reviewing the rent scale as well.
At any rate, how would that change? Is it not the case that being a government-owned corporation that ultimately you would have the MLAs, the legislature needing to be involved in increasing rents or increasing the contribution towards electricity? This is a politically sensitive issue. Is it realistic to say that you might be able to impose more incentives for conservation on electricity?
Ms. Kimball: It's realistic following the process. So to your point, yes, changes to any of that would have to go through a legislative approval process. We're in conversation with Qulliq Energy, the energy corporation, about the kilowatt per hour rate change. That would require a rate revision and a whole legislative process.
Right now the way that 6 cents is administered is extremely administration intensive. We are trying to see how we can get rid of the administration and use systems we already have in place to make it more streamlined.
The average utility bill for a social housing client will range between $18 to $20 a month to maybe $30, $40 a month. That would be what the client would pay. At 6 cents per kilowatt hour, you don't have a lot of wiggle room on that size of a bill. The question is: How do we provide a stronger incentive? But again, 80 per cent of our clients make less than minimum wage, which means they're paying minimum rent, which also means, generally, they're on social assistance.
Right now that 6 cent per kilowatt hour, if they are on social assistance, is paid for through the social assistance program. It's a bit of a shell game between the energy corporation, ourselves and income support or the family services department. That's one of the things we want to look at, where we're creating a lot of administration for ourselves that isn't generating the impact we want to create. How do we reassess the program from its intention in the first place and see how we can get there more efficiently?
Senator Patterson: There is really no incentive for tenants to conserve electricity. They don't pay the bill. Do they see the bill?
Ms. Kimball: They actually will see their bill in terms of the 6 cents per kilowatt hour, and if they don't pay that bill, they will get cut off from the power corporation. There's a whole process where they will actually put in a load limiter, which will only allow them to use certain utilities in the home at a certain point. It becomes very challenging to do things, especially when you've got an overcrowded situation. So there is an impact on them if they don't pay their bill.
But I would say from an energy conservation point of view, to influence their bill to be lower, on an $18 bill, how much could you reduce that, $15 instead of $18 or $13 instead of $18? I'd question whether that's enough of an incentive.
Senator Seidman: Thank you very much for being with us. It's clear the challenges are great.
Mr. MacIsaac, you talked about the challenges, and one of them had to do with capacity. You referred to that specifically with renewables. My question is with regard to partnerships and the opportunities they could bring in terms of capacity, meaning experience, as you describe it.
Is there a proportionate increase in partnerships for you? If so, are these private-public partnerships? I know CHARS is involved, and I know you also said that the federal government is your largest partner. I might have a more specific question, but first I'd like to hear a bit from you about the kind of partnerships in more specific terms, if I may.
Mr. MacIsaac: I guess the partnerships kind of run the whole spectrum between public-private partnerships and private companies doing work on their own. There's even some interesting work going on now with some of the Inuit organizations that are looking to further develop some of their own land up there and they're looking at what opportunities there are for partnership or for energy efficiency that might come with that development.
There are also some interesting opportunities with respect to combining modern technology with traditional knowledge. For example, in Sanikiluaq, there's a partnership developing among the federal government in this case and the community and the Government of Nunavut for developing community freezers, believe it or not. They do have freezers in Nunavut, and these freezers are used for the storage and distribution of, for example, country food, such as wild game, et cetera, for use by folks in the community. That requires, for the summer months anyway, freezer facilities. There are new technologies that are being developed, pilot projects being undertaken, just to see if that can be spread across the territory.
So the partnership opportunities are across the board. There are mining companies now with a focus on cutting costs that are looking at what their energy options are. Are there joint venture options that might be available, for example, with the local energy corporation for developing hydro in a particular area that could benefit them and benefit communities at the same time? There are companies that are actually installing their own renewable energy systems to decrease their costs.
Just recently, there was a lodge opened up there, which developed all kinds of different renewable energy options, such as solar panels and various heating systems, et cetera, almost a real showcase.
So people really are trying. There's kind of a green component to all of this as well, where people are conscious of the cost to us, such as burning diesel all the time. There's also a real economic interest in looking at what these systems will do for you, and efficiency, insulation and all of that are part of that equation as well.
Senator Seidman: There's no question that we have heard witness testimony in this committee about some remarkable local projects and ways of creating sustainable and efficient energy in communities, remarkable examples.
I suppose I'm interested in knowing if there's a proportional increase now, an interest in developing these partnerships in the North. Because there's no question that with a population of 37,000, I think you said, that the kind of capacity you're looking for is a clear handicap.
Is there more interest in developing public-private partnerships? Has that increased? Is that starting to develop a more positive sense that there are some opportunities for developing the capacity you're looking for?
Mr. MacIsaac: I think so, but I think you've really hit the nail on the head in terms of what we need up there. As was pointed out in the presentation, there is no real local, home-grown expertise in these types of endeavours, if you like. We reach out to the federal government. We reach out to various alliances, et cetera, to help us. Individuals might take their own initiatives.
We just recently completed a partnership in Iqaluit, for example, where we conducted studies on private homeowners' houses to find out how efficient their houses were and maybe give them some advice in terms of how they could make things better. We had a workshop that was part of that, and the place was full. People are very interested in this type of thing.
One of our main goals is building some home-grown or local capacity to be able to install these systems or someone who is always thinking about what the issues are in Nunavut that can be adapted. When someone wants to do something, the ability is actually there to do it.
My colleague might be able to add something about this, but I'm sure a lot of experience has been that when you do this work, the ability to do the work comes from outside.
Senator Seidman: Mr. MacIsaac, you said in your presentation, "We would also like to see those federal departments that have extensive technical expertise reach out and help us build the capacity we need."
You're almost begging for this question in your presentation to us now, saying there is expertise but it's not in the community. How does one provide the kind of help that you're asking for?
Mr. MacIsaac: I gave you the example of the community freezers. That was a federal department that accomplished that. They have the interest and the expertise to understand the technical ramifications of those types of projects. They also understand what a project like that could mean for the territory.
I guess the point we were trying to make in our presentation is that there's a lot of that type of expertise, we believe, within the federal government that could be helpful here.
I'll give you another example. It's not necessarily energy-related. For example, we talked about the potential for these types of major developments within Nunavut, whether they are mineral or oil and gas, et cetera. As you can imagine, considering the fragility of the Arctic environment, impacts on that environment would be a major concern when examining these particular projects that are of interest for the environment but also of interest to the community in helping them understand what those particular impacts might be.
Here again, the federal government has whole buildings full of people who have that kind of expertise. We've developed relationships, over the years, with these various federal departments, and they do help us to try to understand these impacts. I'm talking about departments like Natural Resources Canada or Environment Canada, the Department of Fisheries and Oceans, et cetera. So it's the same kind of concept. Let's develop these relationships because they have the interest in technology, which would benefit a lot of the rest of Canada, and we're willing, I think, to kind of let Nunavut be, to some extent, a pilot for some of these technologies.
Senator Seidman: Ms. Kimball, do you have anything to add? I think your colleague has said you might have something to add.
Ms. Kimball: Yes, thank you. Obviously, CMHC is our main federal partner, and they have a lot of resources, as Mr. MacIsaac mentioned. One of our challenges is the recent decision to close down the only office of CMHC in Nunavut, so now our support is going to be one person in the Northwest Territories who has backup support in B.C., making it much harder for us to access that support through a resource that we desperately need. For our internal resources trying to navigate through CMHC, it was very helpful having that local person who knew the inner and outer workings of CMHC and who had lived in Nunavut for over 10 years and had that background and understanding of Nunavut and its complexity and challenges.
One of the other challenges in terms of partnerships is the financial implication for Nunavut in that there are lots of business cases that show an economic cost-benefit payback for projects, but having the cash to fund it is a dilemma for Nunavut. Having the debt cap imposed that Nunavut has doesn't allow us to finance these projects, even though they have a very real payback on investment and return on investment. Our debt cap really limits what we can do.
Senator Seidman: Why is your one officer from CMHC leaving?
Ms. Kimball: CMHC made the decision to rationalize offices. They're closing their only Nunavut office, with one person in it.
Senator Patterson: Senator Sibbeston will recall the HAP, Homeownership Assistance Program, of the N.W.T, in our area. It basically provided substantial incentives in the form of a cash contribution and designs and materials to encourage primarily social housing tenants to acquire their own units. Now you have 19,000 units in Nunavut, and there are 1,000 tenants who earn over $60,000 a year. Each one of these units costs $24,800 to maintain, and you're not collecting all of that in rent.
I'm wondering if there has been — and this is probably simplistic — consideration given to real incentives to get that small proportion of tenants who are not on welfare out of social housing and take away this black hole of maintenance costs that you're dealing with. You could give away units, one would think, give them their unit, if they have income. Is this a way of reducing some of the pressure that is being examined?
Ms. Kimball: That's an excellent question. As I mentioned, 80 per cent of our clients make less than minimum wage, and 24,880 is what that equates to. At this point, they wouldn't be able to afford the maintenance even if we did give them houses, and that is one of our challenges. We were very aggressive in the 1990s in terms of making homeowners with very low income, and we've seen a lot of challenges that that's created. We have a lot of people in homes where we hold a second mortgage or even where we don't have interest in the homes coming to us and asking if we will please take their home for free and allow them to live in it as a social housing client because they're actually living in worse conditions than they would be if they were in social housing because they can't maintain their water bill or their heating fuel costs. We definitely don't want to recreate issues of the past but, at the same time, Nunavut is different in its social housing challenge. In other areas of Canada, it's an issue of affordability. In Nunavut, it's an issue of existence. There simply isn't enough housing to house all Nunavummiut who live in Nunavut. It just doesn't exist. We're refocusing our programs to be more incented to construction of new homes. What we've had to look at is who in Nunavut isn't living in homes that could be privately owned that should be? One of the programs we have right now is staff housing, where we provide subsidies to staff. When you look at those incomes, that's the client group that we should be going after, private individuals who are working, who may be in private rentals or other options, giving them opportunities to translate into home ownership. We spend almost $45 million a year, right now, on our staff housing program. We've found that over one third of the people in staff housing have been there for more than three years. If we could take a third of those people and transition them into private homes — right now, the average subsidy for staff in staff housing is $18,000 a year. So it's in our interest. If we have someone there for three years, it makes sense to give them an incentive to move into home ownership and then take that funding and put it towards social housing. Again, as we improve the conditions in social housing, we're going to improve the opportunities for clients to be healthy and get education and deal with those things. When you have 22 people living in a home, the children in that home are very challenged to try to do homework and get ahead. So that affects the overall economic development of Nunavut.
When you look at costs, $24,800 sounds like a lot. We also found that 3.5 days in a hospital in Nunavut pays for someone to be in public housing for a year. So when you correlate health with overcrowding, you can make a very strong return-on-investment case to fund additional social housing early on, get rid of that overcrowding, let people be healthier and get educated, and then you have the economic development spinoffs paying back later.
Senator Patterson: I'd like to ask Mr. MacIsaac about hydro, which you addressed in your presentation. We have, say, $300 million a year spent on energy by the Government of Nunavut, roughly 25 per cent of the $1.4 billion budget, I believe it is. Then Iqaluit is about 20 per cent of the population of Nunavut and, I would assume, at least that proportion of energy costs, probably higher.
When you look at displacing expensive diesel fuel with hydro, wouldn't there be a case for offering a long-term power purchase deal to a private company to build and operate a hydro facility in return for a guaranteed market in the growing capital of Nunavut? Is that an option that should be considered in addition to, or as an alternative to, the Government of Nunavut asking to raise the debt cap and borrow the funds to build a Crown corporation-owned hydro facility?
Mr. MacIsaac: Thank you, sir. Good question. I suppose that could be an option but, currently, the legislative framework within the territory doesn't allow for that type of arrangement with respect to power. I know that work is under way to address that, among other things, including this net metering concept that we talked about earlier. I think the whole feasibility of that type of power generation — hydro power and, in the case of Iqaluit, tidal power — certainly has to be examined further, because the pieces of the puzzle are there.
For example, Frobisher Bay has some of the highest tides in the world and great opportunities for generating power. There are a number of potential hydro sites — and they're identified — around Iqaluit that could justify the needs of the city now and into the future. We've always run up against the capital cost of that building and that infrastructure, and the mechanisms didn't quite exist to allow for that, both legislatively and financially. With some of the examples that are currently under way, such as the construction of the new airport in Iqaluit and this work that is been done by QEC, adjusting the legislative framework, this could be a very real possibility in the future because it has been demonstrated to work.
The Chair: That ends the questions that I have from folks around the table. I'd like to ask a couple of questions and maybe get some answers.
In the housing part, when I look at one of the slides on heating and fuel costs consumption, you compared building standards from the 1980s. And 1980 to 1984 is one measure, and then the new measures.
I find very little difference in the saving that comes from that graph. It's 10 per cent. But maybe you can help me here a bit. Were the standards of building in 1980 almost as good as the standard of building that is taking place now? There is such a small saving. I'm just questioning the numbers, how they were arrived at.
Ms. Kimball: Thank you for that question. It's something we're studying right now. This is just a sample that we took from the data. We're trying to get more aggregate data from various communities. We were trying to get a flavour for what kind of savings we're seeing and, as you said, we are seeing between 10 and 13 per cent savings.
There is a minimum threshold that you're going to consume in terms of heating fuel when you're in the Arctic. We've seen a dramatic change this year in terms of consumption because, as everybody knows, it was one of the coldest winters on record in the Arctic this year. In Iqaluit, we had temperatures that people I work with, who have been there their whole lives, had never seen before. It was a huge impact, even though the units are very energy efficient and they're newer units. It's something we're still looking at.
The Chair: I find it strange. From the 1980s until this graph it says 2012, so it's not inclusive of this current time. It's back to 2012. For me, it's quite interesting because I don't think we had the same standards in the 1980s, at least where I live, for building standards, to be perfectly honest. I know the building standards were a lot less in the 1980s than they are today where I live. I live in the North too, but not as far north as you folks. Could you find out a little bit more for me, or let me know how that was arrived at? Saving only 511 litres is surprising.
When you speak about staff housing, are you talking about all the people who work for government? Is that the reference to staff housing?
Ms. Kimball: We have 4,000 positions for the Government of Nunavut. Right now we're only providing accommodations for 1,424 units. Our cost to operate those 1,400 units is roughly $48 million right now, which I think is the current budget per year.
The Chair: So that is staff that works for the Government of Nunavut?
Ms. Kimball: Yes, it is.
The Chair: What percentage of those people are actually from Nunavut as compared to coming from the South to have those positions? Are they all people from Nunavut?
Ms. Kimball: I'd say the majority are positions from the south. The priority for allocating housing is that first priority goes to health and safety-related workers, so your doctors, nurses, that sort of thing. Our second ranking for priority would be operations and management, and then our third priority ranking would be administrative.
When we look at the representative Inuit numbers, in terms of the Government of Nunavut employees and the ratio in administrative positions, the ratio in management and those health and safety positions, the ratio is almost exactly proportional to the ratio in our housing units. The program is functioning as it was intended to in terms of prioritizing those areas.
We're currently revisiting and revamping our strategy around staff housing. We have an internal group working on this issue, to refocus. We don't want people in staff housing for 10 years. Staff housing should be a transitional recruitment tool to get the resources we need into Nunavut and then we should have a strategy for retaining. Right now, staff housing is doing both recruitment and retention, and we want to refocus our home ownership and develop condominium and buy-back programs, other strategies, to get people out of staff housing and into other options that are much more cost-effective.
The Chair: What is the unemployment rate in Nunavut?
Ms. Kimball: I don't have those statistics. I know for the Government of Nunavut, we're sitting around 25 per cent vacancy in terms of government positions, but I don't know what the unemployment rate is in the territory.
The Chair: Does anybody know what the unemployment rate is in Iqaluit? Can anybody tell me?
Mr. MacIsaac: Iqaluit, I would suggest, is relatively low. I would suggest across the territory the unemployment rate is in double digits.
The Chair: What would you say it is in Iqaluit?
Mr. MacIsaac: Somewhat less than 10 per cent. I'm just wildly guessing. There's quite a bit of employment in Iqaluit.
The Chair: Are there programs in place to get the unemployment rate down in Iqaluit, to get them trained, to take some of these jobs that people from the South are coming to Iqaluit to occupy?
It seems to me that would be a fairly large undertaking, but something that should be done so that you educate the people who live there, who know about it. Retention then becomes, to me, a little bit easier than bringing somebody from Ottawa or Toronto to work in Iqaluit for a couple of years and then leave. So are you aware of those kinds of programs that are in place to actually train people from Iqaluit to fill those jobs?
Ms. Kimball: Absolutely. Our Nunavut Arctic College has been focusing on developing programs targeted at employment needs. We work closely with family services too, as well as apprenticeship programs. All of our construction contracts require contractors to hire local apprentices that make themselves known. We're working on getting a formalized registration process so contractors can proactively contact them in the communities. There has been privacy legislation barring that, which we're working around.
I know there are health care programs at Nunavut Arctic College trying to bring in and train that local expertise, and Nunavut has a priority-based hiring policy. So whenever any positions are being filled, the first group that's looked at is any qualified Inuit beneficiaries from the land claim. If there's no one qualified in that pile we'll go to anybody already living in the North and has been in the North for more than one year. As a last resort we go to the southern pile or people outside of Nunavut.
The Chair: Correct me if I'm wrong, but when we were in Rankin Inlet, that's where we heard about extending the hydro line from Manitoba; is that correct?
Mr. MacIsaac: Yes.
The Chair: You say some work is being done, and you gave a number of about $600 million to build a hydro line from the grid in Manitoba to Rankin. The cost of generating electricity in Rankin Inlet or across the system is somewhere around 60 cents on average. So has Manitoba told you anything about what they would charge you for the electricity? Have you done any of that kind of work? Do you know what you'd have to pay for it at the end of the line in Manitoba so that you can actually develop whether or not it makes sense to build a hydro line or whether the difference in the cost would actually pay for the capital investment?
Mr. MacIsaac: I just wanted to qualify that $600 million. Don't take that number as a hard number. Part of the work we're undertaking now with the Government of Manitoba, and two of the communities that would be along the alignment of that power line, is to undertake a feasibility study to arrive at those numbers you're talking about. Included within that study and that possibility are some of the major mineral developments that would be in the area and how they could possibly benefit. For example, some of these mines actually use more power than would be consumed in a community. That's all factored into it.
In terms of hard numbers, I couldn't give you any hard numbers.
The Chair: When did you start the study?
Mr. MacIsaac: We're just starting it now. There has been a lot of work carried out conceptually over the years, but this is now starting to get down to brass tacks and looking at the real numbers.
The Chair: Is it just starting?
Mr. MacIsaac: This actual feasibility study, yes. But this concept has been around for a long time, about connecting Manitoba to Nunavut, not only by way of power line but also by way of a road.
The Chair: I think renewable energy is great to look at in places where it actually makes sense. In the province I come from, we do lots of renewable energy but we have a grid also that's hooked into the North American grid. You folks don't. In some of the smaller, outlying communities, is work ongoing now that looks at the diesel generation you have? I'm sure you do, but just for my information, how old is that generation? Are you looking at right-size generation for the areas and continuing to actually use new and modern diesel generation plants?
My sense is in most cases you will have to continue with diesel generation. In fact Mr. MacIsaac said the same thing. I believe that is true also. It doesn't make sense to build windmills in a remote place because they need lots of maintenance.
Some of that stuff doesn't quite fit with what you're doing. Is there a move to see how you can actually reduce consumption a certain amount and still provide the electricity in some of these more remote places?
Mr. MacIsaac: I think so. From a purely mechanical perspective, as you know, these generators aren't cheap and require a significant investment. To get to your point, yes, some of them are pretty old. As they retire I'm sure the energy corporation is looking at the most efficient ways and the most efficient machinery that might be available with the view that they also have to be very reliable in a community that, as you can imagine, if one of these went down that could create some very significant and severe consequences for that particular community.
Yes, they would look at the technology that's available moving forward. And on consumption, yes, but there are issues related to that.
Iqaluit is one thing, where there is a significant pool of private housing and people have an interest in reducing and efficiency. You get into the communities and it's a whole different story where almost 100 per cent of the housing in a particular community is government-owned, to some degree.
It is a challenge and you're right, diesel will be with us forever in Nunavut, one way or the other. There are three major components to diesel: One is electricity generation, two is the heating and three is transportation as well.
The Chair: Yes. Renewable energy is great, but in all cases it has to be backed up with something else.
Mr. MacIsaac: That's true, too.
The Chair: If you have a grid that's fine, but in one location, even putting in some wind or something, you still need the diesel generation for the backup. I agree totally with you, that wind doesn't blow 24/7 and when it's not generating people aren't getting electricity and you have to get electricity. I'm sure you're doing that, but I just wanted to get it on the record for us that that's what you're looking at.
In some areas where you can augment a little bit with solar panels or something like that it's a different story, but the other issue that comes up with renewable energy is capacity to actually be able to operate it. You spoke to that and I appreciate that.
Do you look at other countries like Greenland as an example? We want to talk to some people from Greenland. Have you looked at some of the other countries to see what they do and how they put energy into their more remote communities?
Mr. MacIsaac: Probably not as much as we should have. You're right; a lot of the issues are the same in Greenland. They're certainly more advanced in things like hydro development and geothermal development. Hopefully we can learn something from them. Of all the potential in Nunavut, probably hydro has the most significant potential.
It's a huge territory, with 20 per cent of the land mass of the country, and probably some significant potential hydro sites there. If you look at Iceland or Greenland, they're coming up with innovative ways to export their electricity. They're not on power grids either, but they use their electricity to manufacture certain things. They give the manufacturer a subsidy and then export that particular product as a way of exporting their electricity. I know there was some thinking going on there, and I believe we talked to you the last time we were before this committee while you were in Iqaluit about that.
The Chair: Dennis has talked a lot, and so did you folks, about the hydro possibilities in Iqaluit, and I appreciate that. To me, that would be good, firm-based power if it is in fact there.
We're going to have testimony from some people in Greenland, but one thing I did notice in Greenland is they have a lot of hydroelectricity, but every one of those plants is totally backed up with diesel power. I don't know what that means. I don't know whether that means it can only generate power during the summer months and in the winter months they still need diesel or not, but we'll find that out. We'll certainly share that in the report, but we'll share that information with you so you can do with it whatever you want.
Mr. MacIsaac: I appreciate that.
The Chair: Thank you for coming. We appreciate it. I know the channels are great but I think we will all continue to work together and see what we can get done.
Thank you for being here and we now adjourn the meeting.
(The committee adjourned.)