The Committee met at 7:00 p.m. in the Colonial Building.

MR. WALSH: Order, please!

Good evening ladies and gentlemen.

We have a brief formality that we will have to deal with before we get started and that will be the election of our Chairman and Vice-Chairman for the Committee. With that in mind, although I am conducting this very brief thirty seconds, I will turn the -

AN HON. MEMBER: (Inaudible).

MR. WALSH: No, the Chair is already held by Elizabeth Murphy, and I will let you do whatever has to be done.

MISS ELIZABETH MURPHY: Are there any nominations for Chairman?

SOME HON. MEMBERS: (Inaudible).

MISS MURPHY: All those in favour, aye. Contrary minded, nay. Carried.

MR. CHAIRMAN (WALSH): I would like to thank the gentlemen to my left for their confidence, except for Walter. That was last night, Walter, not tonight. I would like to open the floor now to nominations for Vice-Chairman.

AN HON. MEMBER: Mr. Woodford, Humber Valley.

MR. CHAIRMAN: Seconded by Mr. Langdon.

All in favour, aye. Carried.

I would like to welcome everybody here tonight. For the sake of the microphones, Jim Walsh, MHA Mount Scio - Bell Island. On the Government side of the Committee I would like to welcome Bill Ramsay, the Member for LaPoile; Oliver Langdon, the Member for Fortune - Hermitage; and Mr. Walter Noel, the Member for Pleasantville. I would also like to welcome the Member for Green Bay, Mr. Hewlett and the staff who are here with us tonight to assist us, but in particular the Minister of Mines and Energy and his support staff who are here with us tonight.

We are going to follow a fairly informal format. If we need to we will come back to being technical, of narrowing our questions down to ten minutes an individual. If I find that a Member wishes to relinquish his time so that someone else can carry on we can do that. I would also like to advise the support staff who have come with the Minister, that in actual fact the questions tonight are being asked to the Minister and at the Minister's prerogative he may call upon the support staff to give answers that may support the position that he is putting forward. I would remind Committee Members that in turn for the informality of it some questions could go directly to the witnesses. But I remind everyone that on occasion we may find it necessary to reaffirm the fact that the questions are really through the Minister to those individuals.

With that in mind again I would like to welcome you all here tonight, and that is my preliminary opening statement. I would like to turn to my Vice-Chair now for any comments he might like to make and if need be to begin the questioning.

MR. WOODFORD: No. The format as laid out by you, Mr. Chairman, seems to be in order. There is nothing else to say. The Committee Members know what their job is and I am sure most of those people appeared before different estimate committees before and Public Accounts also. So they are well aware of what is about to take place. So I would yield with regards to questioning to my colleague, the Member for Green Bay, seeing that he is the Opposition critic for Energy. So I yield to you, Alvin.

AN HON. MEMBER: Do you want me to (Inaudible)?

MR. CHAIRMAN: We will go to the Minister for an opening presentation. In discussions with the Vice-Chair today, as I would be making some preliminary statements as to how the format would run, I wanted to make sure that he had an opportunity to confer, and I guess I went too far by beginning with opening statements. But correct, Mr. Minister, we will go to you for your opening statement.

DR. GIBBONS: Thank you, Mr. Chairman. I would like to introduce my staff who are with me first. On my right, my Deputy Minister Gordon Gosse; to his right, Assistant Deputy Minister for the Mines side, Paul Dean; next to Paul, Mr. Kevin Whalen, Director of Administration; and my executive assistant, Susan Hollet. On my left, the Energy side. Cyril Abery, Chairman of Newfoundland and Labrador Hydro; David Mercer, President of Newfoundland and Labrador Hydro; and Martin Sheppard, Assistant Deputy Minister, Energy.

I would like to make a brief statement touching on the main activities of the Department, and I am going to say a few words about the geological survey work first, and then a little bit about the Mineral Resource Management Branch and Petroleum Resources and Energy Programmes Branch followed by Petroleum and Energy Economics; a little bit about each sector of the Department and then open it to questions if that is okay with you.

One of the main activities of the Department of Mines and Energy is in geological survey, and some of us who walked in tonight noticed on the wall downstairs a quote dating back to some gentleman named Moses Harvey who said, 'every decent country has a geological survey', or something to that effect, I think. Paul Dean may remember the words better than I do, but we are in a Chamber tonight that has such a quote on the wall downstairs as we entered. And our geological survey has been in existence for a century.

For the last two decades approximately we have been doing a lot of geological survey work in conjunction with the Federal Government through federal-provincial cost-shared programmes, and last year we were fortunate enough in October to sign a new four year programme that is going to see us increase our field surveys this year. This summer we expect about forty projects about half of which will have field components of geological mapping, geochemistry, and mineral deposit studies in various places throughout the Province, throughout Labrador and throughout the island part of the Province. We can have questions on the details of that later as you desire. I will not go into the detailed locations of any of these surveys at this time or the detailed breakdown on the amounts of money or the amounts of staff.

On the Mineral Resource Management side, this is the side that regulates the mining industry, monitors what is happening in the mines around the Province and the quarries around the Province. In this particular branch there is a Mineral Lands Division which is primarily responsible for the administration of the land tenure regulations relative to both the Mineral Act and the Quarry Materials Act, and issues expiration licenses, mining leases and permits and all of that. So if anyone wants to talk about anything dealing with mines and quarries we can talk about it relative to that section.

One other aspect of that section is its responsibility for what we call our Drill Core Storage Programme. There are six regional core buildings throughout the Province, and there is one section of funding in the budget this year to do some further work or upgrading on the building in Baie Verte. The Mines Division of that particular branch is responsible for monitoring the actual activity at the mining sites, and this would include both operations at the mining sites and close downs at the mining sites, and this is the section which is very involved with and was, for example, with the close down last year of Daniel's Harbour and right now with the situations at St. Lawrence and Baie Verte.

There is a Research and Analysis Division of that branch which is primarily responsible for collecting the statistics and analyzing the statistics. This would include both the statistics on mineral production as well as statistics on mineral exploration.

On the petroleum side I would like to talk first about the petroleum resources and energy programmes part of the department. This is the part which is primarily the technical side of the petroleum part of the department responsible for the implementation of the Atlantic Accord Implementation Act for Newfoundland and the Petroleum and Natural Gas Act for the Province for the onshore and any related subordinate legislation.

At this time the Assistant Deputy Minister, who is present, is the Chairperson for an interdepartmental study that is being carried out by us on the Terra Nova project as a possible second project offshore next to Hibernia. We have not yet finished that study but we are making progress on it.

Through this section we are monitoring offshore exploration activity, again in co-operation with the offshore board. To date there has been one well confirmed by British Petroleum for the offshore this year, and another one has been talked about in the media but it has not yet been formalized, so we expect at least two.

In terms of the land sale for offshore, the Offshore Board has put out a call. There are four parcels that are on sale with September 6 as the deadline for the call for bids. Three of these parcels are offshore Grand Banks and one is offshore west coast.

Relative to the onshore activity that I mentioned earlier, on February 15 we proclaimed a new set of regulations for onshore oil and gas activity, and sometime during this year we expect to put out a call for nomination of lands for onshore petroleum exploration. If there is any interest in that we would then have a subsequent call for bids for onshore lands.

Another thing relative to the offshore through this section and the offshore development fund we approved a community information monitoring programme for the Bull Arm area last November, $375,000 out of the offshore fund and we have now set up a Bull Arm area co-ordinating committee to observe the activities at Bull Arm with representatives from all the local communities and to co-ordinate any input. The other part of this branch that I mentioned, the renewable energy part, is also a significant activity and the Department continues to actively encourage energy efficiency as a means of combating rising energy cost.

The Department also continues to promote the development of extensive renewable energy resources such as waste wood, peat, wind, small scale hydro and we are looking for opportunities relative to that. Recently, we put in place an advisory committee to develop a strategic plan for conservation and renewable energy options for the future and that committee I understand is meeting on Thursday.

The Committee has been given a mandate to report to me by the end of June with its first preliminary report on the options in that area.

Now the final part of my Department that I want to talk about is on the petroleum and energy economics side, and here we have a group that is primarily concerned with formulation of policy and legislation with respect to the economic and financial and fiscal aspects of petroleum and energy, including all oil and gas exploration, development, production, transportation, processing et cetera, and recently, over the last few months this group has been very involved in a study of petroleum product prices.

Last year, as we all know there was quite a significant increase in prices throughout the fall after the Iraqi invasion of Kuwait, and as a result we had officials from this part of the Department do an analysis and after seeing that analysis, we felt that it would be important for my Department and the Consumer Affairs people of the Department of Justice to do a thorough analysis of the situation.

They have now reported to me and my colleague, Mr. Dicks, and we will be reporting to Cabinet very shortly on our findings on that particular issue. The other significant area of activity of this group is in relation to Hibernia, where they are having significant involvement in monitoring the development of Hibernia. Of course there has been much said about Hibernia since the signing last September 14th, I will not go into details now, but will be prepared to answer questions.

We are also monitoring the Come By Chance refinery operation and last year it set lots of records. Come By Chance experienced 350 days of operation, a total throughput of 31.5 million barrels, for an average of 90,000 barrels per day which was 86 per cent of capacity; it had an excellent year. During 1990 employment at the refinery peaked at 570 workers.

Re-evaluation of some maintenance projects in late November resulted in about 200 layoffs, but since that time the refinery has still been operating at that 86 or so per cent capacity level with the full slate of production workers. The final aspect of my Department for which I am responsible, not a direct part of the Department, represented tonight by the Chairman and President of Hydro and if there are any questions on Hydro, we can discuss that as well.

That covers my statement, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Minister. I would now go to Mr. Hewlett, the M.H.A. for Green Bay. I might add just for a moment, Mr. Hewlett, that when answering questions, for the sake of Hansard, it might be wise for whoever may be answering a question or asking, that they identify themselves at the start of their comments so that Hansard will be able to separate who is speaking and make it a little easier for them.

MR. HEWLETT: Thank you, Mr. Chairman.

In my capacity as Opposition critic, I am actually Energy critic, my friend from Menihek is Mines critic and I expect him shortly, but I would like to get a general overview of the Mines situation in the Province and I will ask the Minister just how many mines do we have operating right now, apart from Labrador City, Wabush, is that about it?

DR. GIBBONS: No. I have not counted lately but we certainly do not have very many these days, apart from Labrador City and Wabush. The Gypsum mine in Flat Bay should be back in operation after our winter shut down; I will have to check with Paul to see if it is back in operation, it should be as it is usually shut down during the winter.

Hopebrook Gold is continuing to operate; as we go around the coast, I am not sure if the Lower Cove Aggregate operation is back working yet from the winter shut down; Baie Verte, in the Baie Verte case, the wet process is going through a receivership sale at this time; there was a little clip in the Globe and Mail today that the two companies that were just recently in court in Ontario on this particular property have come to an agreement out of court and the process will continue now for the sale of that operation. After that sale is over, which should take about another five weeks, we would expect it to get back in operation fairly quickly this summer. Come further east and I think I have to come all the way to pyrophyllite at Manuels. That operation should be going right now through the winter.

MR. WOODFORD: Apart from Hope Brook then, I guess, that is about it in base metals at this stage of the game.

DR. GIBBONS: Hope Brook is the only metal mine on the island right now.

MR. HEWLETT: I know over the past number of years there has been considerable exploration in the Green Bay - Baie Verte area. Are there any reasonable prospects of a new mine in the area of base metals in that particular area? I know there was some talk for a while of mining the tailings at Rambler and there have been finds of gold in the general northeast coast area. But are there any reasonable prospects of a mine? I have not seen one in my neck of the woods since I was a teenager.

DR. GIBBONS: There has been quite a lot of mineral exploration over the last few years. We went through the very aggressive time of exploration, 1987-1989. (Inaudible) were a factor in helping raise money. A lot of gold properties were identified. There are about a half a dozen around the Province that are in the range of a half a million tons to about a million tons. None of them really are likely to become mines in the near future. There have been some proposals made on some of them but there is no likelihood in my mind that any of them are going to become mines immediately.

In central Newfoundland the Tally Pond-Duck Pond base metal prospect has been drilled considerably over the last couple of years. Noranda is still looking for a little extra tonnage and they have been going through the environmental review process. They are fairly close to the end. Is it sometime this summer that is should be over, Paul?

AN HON. MEMBER: (Inaudible).

DR. GIBBONS: By June. So that property is probably the closest one to becoming a new mine, but there has not been any decision made to proceed with it at this stage.

MR. HEWLETT: What is the mineral mix at the Tally Pond area?

DR. GIBBONS: The Tally Pond-Duck Pond is a Buchans-type deposit. You have base metals plus gold and silver. Copper, lead, zinc, gold and silver.

MR. HEWLETT: Is it fair to say that the main problem with the gold situation is the international market price?

DR. GIBBONS: Yes. Right now gold is - I think today it is $352. It dropped about $2 again yesterday. It has been decreasing gradually over the last several months when we wish it were going the other way. The price is not helping at all. The other thing that is a negative factor on gold and other mineral products is the Canadian dollar. At eighty-six cents plus that is not helping the situation at all. I would love to see the Canadian dollar go down to about eighty cents and help boost the industry.

MR. HEWLETT: What about countries like the Soviet Union? I have heard that gold products have shown up on the world market now bearing the symbol of the Tsar.

DR. GIBBONS: Russia has been selling some gold for foreign currency, yes, they have been doing that. But the key point with any gold property is whether or not it can be mined at a profit at today's price. Small deposits just do not have the economics in them to do that.

MR. HEWLETT: With regard to the offshore, you mentioned Terra Nova. What sort of time frames are we talking about with regard to that particular field where we have already started the Hibernia project and you are into five or six years of construction before anything is pumped? Do you anticipate anything with regard to Terra Nova in the short to medium term in terms of actual physical activity towards a development?

DR. GIBBONS: Not in terms of physical activity. As I said at the beginning in my introductory remarks we have been doing an assessment of the Terra Nova field ourselves with an inter-departmental committee looking at all aspects of that particular field. We have not quite finished our assessment. Within the next couple of months I hope that we do get it completed - probably before the summer break - and can basically decide on some policy positions for Government as to how we would like to see it proceed. The company will not be making a decision on it until they hear back from us.

MR. HEWLETT: With regard to policy decision, are you talking about production mode? Floating, fixed, that sort of thing, is that what you mean?

DR. GIBBONS: We have been reviewing that. That is one aspect of policy decision on the production mode, and financial matters and other things. But particularly the production mode. We have been having an assessment done of the different options for production, whether it is a floating system or a fixed system. What type of floating system, if a floater.

MR. HEWLETT: With regard to the Hibernia project, what is the current work force and sort of anticipated profile of the work force over the next several months? Certainly through the main summer construction season. What do you anticipate in terms of direct job activity on the site?

DR. GIBBONS: The latest number I have on Hibernia is - is this 637 in -?

AN HON. MEMBER: (Inaudible).

DR. GIBBONS: And Bull Arm? Yes, 637. These are the numbers as of the end of March. So we have not yet got the numbers as of today.

MR. HEWLETT: What would you, say, anticipate come mid-July or whatever?

DR. GIBBONS: These numbers will continue to grow and certainly by September we should be 800 or more than that, but I would say 800.

MR. HEWLETT: Will it continue to grow as the calendar year goes on or will it taper off as the winter season cuts in?

DR. GIBBONS: It will continue to grow and by next fall the number should be more like 1,600 at Bull Arm, it will double in the year, from September to September and by September of 1993, it should have doubled again and gone to about 3,000 at Bull Arm by that time; that is our present assessment of what the likely numbers will be.

MR. HEWLETT: You mentioned you have a monitoring committee with regard to the local situation in the immediate vicinity of the Hibernia development, I wonder could you make a brief comment on how things are going because I can appreciate, coming from a rural district with a depressed economy, to put it mildly, how galling it must be to local people to have to watch workers even from other parts of the Province roll by in a bus to a work site when you yourself are unemployed or are on welfare or whatever, how is the involvement of local people-

DR. GIBBONS: It has been doing very well as I understand it. I am not sure what the exact percentage is now, but at one time, about a couple of months ago, they were saying about 37 per cent were coming from within a half hour's drive of the Bull Arm site, so I would not think that number should change a lot, it should continue to grow locally.

In the early stage when the development started there was a lot of concern out there; people had the feeling that well, we are not going to get any jobs, but a lot of people in the local area have gotten jobs on the site.

MR. HEWLETT: When you mention 600 or 700 or something at Bull Arm, does that include engineering work and what not in the capital city or around and about the Province or are we talking about additional persons?

DR. GIBBONS: I can give you the breakdown right now. St. John's, there are 205 at headquarters functions whether HMDC or Nodeco or NOC in St. John's right now and 432 in Bull Arm, that is the March 31st, number.

MR. HEWLETT: 432 (inaudible).

DR. GIBBONS: That was March 31st at Bull Arm and that continued to grow and will continue to grow throughout the summer.

MR. HEWLETT: I will switch a bit, Mr. Chairman. With regard to hydro-electricity and the Lower Churchill Development, the Minister will recall that I have probably been somewhat sceptical of progress to date.

I recall serving under an administration that talked to Quebec for ten years and heaven knows they are good talkers; could the Minister indicate if he is reasonably optimistic that there is a possibility of some sort of an agreement with Quebec in this particular year?

DR. GIBBONS: I have always tried to avoid using the word optimistic because I do not want it to sound too positive. We have been making gradual progress since we started these discussions about a year and a half ago in October, 1989, and as I said in the last few days, up to now we have had twenty meetings and there is another one scheduled in the very near future.

I am hopeful that during 1991, we will reach an agreement in principle or a letter of intent stage, but you can never be sure; you can never be sure. From where I sit, from what discussions I have had, both sides are very serious, very serious; I have no reason to be sceptical about the intentions.

MR. HEWLETT: Okay; there were many times, I might indicate, that I felt the same, watching the progress of things, not being a Government official as such, but being an aide to the Premier, but one thing that has always been prevalent in any concept of Lower Churchill Development is significant federal presence in such a development, probably in the way of long guarantees and/or direct grant funding.

I gather your department has indicated in an environmental presentation that such federal involvement would be necessary in order to make that project go and bring some power to Newfoundland?

DR. GIBBONS: Well, we see right now that the Lower Churchill Development Corporation is the appropriate vehicle to use; it may not be the one that is used if we get a development, but it seems to be the appropriate vehicle to use, and that is fifty-one per cent provincial and forty-nine per cent federal, it is a Crown corporation, and that in a sense assumes a federal role. Now I do not want to really get into the discussion of what we might need in terms of loan guarantees or any other aspect of financing until we really get an agreement. I really do not want to discuss that publicly at this time. I prefer to leave that issue, but naturally we will have to borrow considerable, or whoever is doing it will, if it is LCDC, borrow considerable quantities of money for such a development.

MR. HEWLETT: You are talking $1 billion or $2 billion or so for a power line I presume?

DR. GIBBONS: A power line: $1.6 billion plus.

MR. HEWLETT: Given the current debt load of the Province, surely one could assume that grants and/or guarantees from the Federal Government would be required in order to carry off even such a transmission project, I would assume.

DR. GIBBONS: Well maybe, but as I said, I do not want to get into the details of discussing how the financing would be arranged. But it is a lot of money, and obviously we would have to look at the financing seriously once we get a letter of intent, if we get a letter of intent.

MR. HEWLETT: That is all for now, Mr. Chairman.

MR. CHAIRMAN: Mr. Ramsay.

MR. RAMSAY: Just to pick up on a couple of things you said. First you mentioned onshore exploration. I wondered, based on the geological information available to your department, in comparison to places where the geological information would suggest you would be successful in oil exploration onshore, I suppose, how likely are some of the areas, how do they look in comparison to what normally is the case?

DR. GIBBONS: There are some interesting onshore rocks on the west coast from the Bay St. George's area all the way up to the end of the peninsula. The last couple of years there has been some seismic exploration over there. If I remember the number correctly I believe there was a total of sixty-two kilometres of line seismic shot in the last two years, some of it up the coast and some of it south of Corner Brook. I cannot be sure that there will be a lot of activity in the next year, but we have already had some interest shown in the last few months by a company that has talked about further seismic work over there onshore. I would not see any drilling onshore in the very near future. You have to get a fair bit of seismic exploration first.

MR. RAMSAY: I do have one concerning Hopebrook gold which you mentioned. I do not know if it is public, I assume it is and was at the time, the Province's inter-tie in any way with Hopebrook gold; I wonder what the Province's involvement is insofar as the provision of hydro to Hopebrook and that sort of stuff. Is that -

DR. GIBBONS: I do not have the details on that, but I know that the line was installed a few years ago with support from the Province. Maybe, Mr. Chairman, you can -

MR. ABERY: Yes, we built a line -

MR. CHAIRMAN: Excuse me, Mr. Abery, just for the sake of Hansard would you identify yourself please.

MR. ABERY: Cyril Abery, Hydro. Yes, we built a line down basically from Stephenville, down to Burgeo and Hopebrook when they were developing the mine. At that time the Province did put some money into the financing of that line. But right now Hopebrook is just a normal commercial customer of Hydro and pays normal commercial rates for it's power requirements.

MR. RAMSAY: One other thing, Mr. Minister, I wanted to get into some of the details of the estimates document. In various component parts of the estimates there is a federal figure as far as federal revenue. Is that targeted specifically to certain expenditures or is it a global amount that the Province decides on what it should be spent?

DR. GIBBONS: These dollars that are marked as Federal are dollars that are coming in under the Mineral Development Agreement and they are being targeted at various projects that are being done under the Mineral Development Agreement, and throughout the estimates document, and particularly under the geological survey branch most of it, regional mapping, for example, shows $401,100 federal dollars revenue, that is money that we are receiving from them for geological mapping projects done.

MR. RAMSAY: Okay, so that $401,100 comes into the Provincial Treasury for specific regional mapping things, but the decision as to what is expended from the total is the Province's decision or is it a joint decision?

DR. GIBBONS: No, the agreement is run through a joint Federal/Provincial Management Committee and every year that committee meets regularly to look at possible projects to do, and usually by March of each year, would approve projects to be done the following field season, and these would be vetted through both surveys, the Geological Survey of Canada and our own geological survey and finally approved by the committee.

MR. RAMSAY: Mr. Minister, through the budget process: I just wondered how evaluations are done on say specific sub-head items in order to determine if savings can be generated in a given area. I do note a lot of areas where the expenditures have been well below the budgeted amounts in the past, this is probably due to restraint, but I just wonder how these are looked at then to determine if it might be necessary to require the same amount as was budgeted last year, in comparison to those areas where the increases have been put in I suppose, to cover what is anticipated as increased expenditure.

DR. GIBBONS: Most of what you see as increases this year under the geological survey are increases related to the Mineral Development Agreement, with the amounts really tied to the cost of carrying out a field project, whether that is an amount in professional services or supplies, purchase services or something like that, it is to carry out field projects, and that is where you will see an increase.

MR. RAMSAY: Mr. Minister, also, regarding something that the Opposition has brought up, concerning the purchase services and professional services I guess, insofar as more purchase services by departments, and I have gone through most of the purchase services here and I note that on most of them you have held the line and/or decreased them; very little seems to have been increased in purchase services, is there an explanation for managing to do that or -

DR. GIBBONS: Well, we are trying to live within the budget we were given, which was basically a frozen budget, and that is the circumstance, except for this Mineral Development Agreement where there were extra dollars because of the Mineral Development Agreement, otherwise, we are living within the budget and there may be some juggling between sections within a total amount, but keeping it within the total budget amount wherever we can.

MR. RAMSAY: Okay. On page 154 of the budget estimates, I note under the Policy Planning and Co-ordination of Petroleum Resources Management, 4.1.01, sub-head No.10, there was an allocation of $200,000 budgeted for grants of which only $20,000 was expended, is there an explanation of the reason for that?

DR. GIBBONS: That is this co-ordinating committee part, is it not?

MR. RAMSAY: Information Centre Programme, yes.

DR. GIBBONS: Yes, the Information Centre Programme that I mentioned earlier that is in the Bull Arm area; we did not get it in place in time for last year's budget so it was not spent last year.

MR. RAMSAY: So that was in the Budget, in case -

DR. GIBBONS: Yes, well we did not get it approved through the approval process last year under the offshore fund, but it had been budgeted last year under the offshore fund and we did finally approve it and I believe it was announced on November 27th, and put in place now for this budget year.

MR. RAMSAY: Okay. I just have one final one, and it concerns the transportation of petroleum products from the United States into the Province. Matters come up in discussions at home, just local discussions through the grape vine, that there are some retailers of petroleum products bringing in product from the U.S.; is that kind of thing allowed or is it the kind of thing that the Free Trade Agreement would allow to happen for products to be brought in, in that manner?

DR. GIBBONS: That is the first time that issue has been raised, but I do not see any problem with it coming in because, really, all of our petroleum product in Eastern Canada comes from foreign sources; all of it that is used in Newfoundland, New Brunswick, Nova Scotia, P. E. I., is all imported into the Atlantic Region, refined somewhere in the Atlantic Region and then distributed; now some of that refined product may be coming out of United States refineries, but it is all foreign product that we (inaudible).

MR. RAMSAY: So if an entrepreneur did take the initiative to go down to the Eastern Seaboard of the US and bring a tanker load of petroleum back he would not have any problem?

DR. GIBBONS: I do not think there is any problem with that. I mean, Hydro may be an example of a company that goes out in public tender. Don't we get most of our Bunker C from a company in the United States?

AN HON. MEMBER: It comes from Venezuela, Mr. Minister.

DR. GIBBONS: Most of it comes from Venezuela through an American company, through public tendering.

MR. RAMSAY: Well, that is all I have, Mr. Chairman. Thank you very much.

MR. CHAIRMAN: Thank you.

Mr. Snow or Mr. Hewlett?

MR. A. SNOW: Alec Snow, Menihek. (Inaudible) concerning Hydro. Has there been any thought given recently or this year with the expansion of Newfoundland Hydro and distribution of power in the Province?

DR. GIBBONS: In what sense do you mean "expansion"?

MR. A. SNOW: Well, to increase the amount of delivery of the supply of electrical energy to consumers.

DR. GIBBONS: We are providing all that we have a demand for.

MR. A. SNOW: There has been a lot of talk in the last couple of months around western Labrador that they have seen people from Newfoundland Hydro in there and suggesting that they may be considering expanding into Labrador City and supplying power to the residents in western Labrador, in Lab City.

DR. GIBBONS: Supplying power? - right now Lab City is supplied by the company, is what you are saying.

MR. A. SNOW: Yes. Carol Utility, I think.

DR. GIBBONS: By the company. I think there may have been some discussion from the company to Hydro? We can ask the Chairman of Hydro to speak to that.

MR. CYRIL ABERY: Yes, we have over the last number of years had a number of discussions with the Iron Ore Company of Canada. There has been no resolution of those discussions, and I guess we have been on and off talking to them maybe for ten years now. We continue to do so. There have been no decisions at present.

MR. A. SNOW: Do you anticipate a resolution to the negotiations that you are having?

MR. ABERY: I really could not speculate on it. As I say, we have been discussing with Iron Ore Company of Canada on and off for at least ten years. Whether or not at this time we have actually reached some sort of an agreement with them I do not know.

MR. A. SNOW: Are you negotiating now?

MR. ABERY: There are discussions with the Iron Ore Company of Canada.

DR. GIBBONS: The company is also talking to us about getting extra power I think for the mill up there, isn't it?

MR. ABERY: That is correct.

MR. A. SNOW: So you would be looking at purchasing the assets of the distribution of power in the town site, we will call it?

MR. ABERY: Yes. That has been one of the subjects that has been discussed over the last ten years, that and supplying the mill with more capacity.

MR. A. SNOW: You would supply more energy to the concentrator?

AN HON. MEMBER: (Inaudible).

DR. GIBBONS: Both Wabush Mines and the Iron Ore Company of Canada have been asking for more power.

MR. CHAIRMAN: Just for a brief moment. As Chairman I must say that we are starting to get into three-way conversations, and again for the sake of the people who will be sitting in the Hansard room with a tape - not seeing the faces but hearing the voices - as we go to the third person I would ask you again if you would, identify yourself or we will end up in a four-way conversation and we will have no idea who said what.

DR. GIBBONS: Excuse me, Mr. Chairman, that was my fault because I was the third person jumping in there.

SOME HON. MEMBERS: (Inaudible).

MR. CHAIRMAN: I did not mean to interrupt, but Mr. Abery or Mr. Snow please carry on. But again, try to identify yourself.

MR. A. SNOW: Did the Minister want to continue jumping in or did you finish?

DR. GIBBONS: No, you carry on if you have further questions for me on the topic.

MR. A. SNOW: You mentioned that there are ongoing negotiations and, I would assume, that the whole block of power would be negotiated. You are talking about the block of power to Iron Ore Company of Canada and what is consumed - mill site, we will call it - and the block of power consumed in the town site of Labrador City? Is that it?

DR. GIBBONS: I am not sure that negotiation is the right word. There have certainly been discussions.

MR. A. SNOW: I thought the word "negotiations" was mentioned by Mr. Abery, I believe.

MR. ABERY: Cyril Abery here. No, I believe I said discussions, but it is a thin line, I admit.

DR. GIBBONS: On and on for ten years.

MR. A. SNOW: Well, if indeed these discussions - brackets, negotiations - are ongoing now, could you tell me what the benefit would be for the taxpayers of this Province, for Newfoundland Hydro to purchase assets in distribution of power in Labrador City?

DR. GIBBONS: Cy, you want to -?

MR. ABERY: Cyril Abery. We would have to get Public Utility Board approval for any expansion that we made, so obviously any arrangement that we came to with the Iron Ore Company of Canada with regard to distribution of electricity in Labrador City would obviously have to be shown to be to the benefit of the consumers of the Province. Otherwise, I presume, the Public Utilities Board would not approve it. So any change in the distribution of electricity in Labrador City would require a public hearing when we would have to presumably justify any arrangement that might be made.

MR. A. SNOW: Alec Snow, Menihek. Prior to any deal being cooked up between the Government and the mining company, and having huge electrical rate increases in western Labrador, there would be public hearings held?

MR. ABERY: Yes. We are not allowed to change any rates without Public Utility Board approval for retail customers.

MR. A. SNOW: Could you tell me if, in the discussions or negotiations that are ongoing now, what the price range is you are talking about? In purchase of assets?

DR. GIBBONS: I do not have the answer to that, I would have to ask the Chairman of Hydro.

MR. ABERY: No, I could not answer that.

MR. A. SNOW: Is there a reason why or do you just -?

MR. ABERY: I don't know what the value of the assets are.

MR. A. SNOW: Okay. Thank you.

MR. CHAIRMAN: Thank you, Mr. Snow.

Mr. Langdon.

MR. LANGDON: Oliver Langdon, Fortune - Hermitage. A couple of questions. I understand that Noranda has scaled down its operations in the Province considerably and have moved whatever headquarters they have to the central area. I was wondering what prospects have they found out in the Harbour Breton - Pool's Cove area as to the possibility of lead, zinc, whatever.

DR. GIBBONS: Yes, Mr. Chairman, Noranda has done exploration in that region and they do have some prospects for these particular metals down there. I do not believe they plan very much in the way of exploration down there this year, but I would ask Paul Dean, my Assistant Deputy, who might be more up to date on that.

MR. PAUL DEAN: Mr. Langdon, Noranda has been active in that area I would say for at least the last five years. They have what we would call a prospect, a lead, zinc, silver prospect in the area that is known as Winter Hill. Somewhere near the head of Hermitage Bay. There has been some drilling and other exploration activities, sort of on-again, off-again, over the last five years.

The geology of the area is complexed and it is very difficult to look at continuation of geology from drill hole to drill hole. But nevertheless I think Noranda has been active in that area over the winter doing further geophysical surveys to further define drill targets.

MR. LANGDON: Will they continue to be doing that over the summer?

MR. DEAN: I am sorry, sir, I do not know.

MR. LANGDON: Okay. The other area of concern is the Seal Cove granite. I understand the granite industry in the Province is in its infancy and there are granite deposits in the Lumsden area, but one of the big deposits as I understand it is in the Seal Cove area. There was some work done on that last year. I was wondering if we could have an update on that area.

DR. GIBBONS: Yes, you are right. Seal Cove has probably one of the most interesting granite deposits in the Province and there are about a half dozen prospects for granite and other types of rock for building stone, dimension stone around the Province that we have been working on as a department now for several years, starting with our last Mineral Development Agreement and we have identified some good sites.

As you said, this industry is in its infancy and people are working on the rocks in a number of the areas in trying to create an industry out of it; it is hard to say how big it can grow, but certainly the Seal Cove area is one where it can possibly grow, if the person who is involved in it can find some markets and gradually develop the markets; again, I would ask Mr. Dean to probably talk about that in a little more detail.

MR. DEAN: Just to echo again what the Minister has said, we think this is a part of the mineral sector which is in its infancy but has some potential especially for small scale new developments in rural Newfoundland.

We would say from our assessment of the resource to date there are two deposits if you like that are perhaps a step or two ahead of others and that would be, certainly the Seal Cove pink granite and the anorthosite near Nain, and those two deposits are closer to being a proven resource if you like than any of the others, although we are encouraged by the preliminary results in a number of other localities also.

MR. LANGDON: If I may, the person who was doing the exploration there last summer, did it on a very small scale, and I would think that if the industry were to come to fruition, there is going to have to be some larger investments, other than what Mr. Kealey had from St. Alban's. I was wondering if there was any work on that or, what do you know of his probably entering into a partnership or whatever, to get extra funds to do more exploration this summer?

DR. GIBBONS: I am not aware of anything myself, Mr. Chairman; Paul, are you aware of anything?

MR. DEAN: No, I am not aware of anything in particular with respect to Mr. Kealey, although, I would note that there are several Italian companies who have become interested in granite and marble in the Province, and in addition, have had their initial interest through the Nain project, the Nain deposit, and they have expressed an interest to invest, should other deposits be proven in the Province.

DR. GIBBONS: The Nain project to which Paul was referring is the Labradorite in the Nain area.

MR. LANGDON: Just one more question; late fall, there was a tractor-trailer flat bed from Nelson Monuments in New Brunswick which came and got two of the large chunks of granite and took them back, and I was wondering if there has been any report made to your department on these two particular samples that were carried away.

DR. GIBBONS: I have not seen any; is there, Paul?

MR. DEAN: No, I am not aware that there is a report, although you are right, Nelson Monuments have been very co-operative with the department and with the people who have potential development sites in the Province, in that, they are the major supplier of monumental stone in the Province at the present time.

They have a processing plant in New Brunswick and they have offered to take samples of anyone who has an interest in deposit or prospect and bring them back to their plant in New Brunswick, cut and polished, but I have not seen any particular report on that particular granite deposit.

MR. CHAIRMAN: Sorry.

AN HON. MEMBER: I have a few things to say whenever it is convenient.

MR. CHAIRMAN: I will go to the Vice-Chairman now, then I will come back as we are trying to alternate as best we can from each side.

Rick Woodford.

MR. WOODFORD: I have a question for the Minister concerning the dimensional stone. Has anybody in the Province made application for the processing of any dimensional stone in the Province?

DR. GIBBONS: I do not know if they really have to make application for the processing -

MR. WOODFORD: Actual processing of the stone.

DR. GIBBONS: There are people who have tried to do some processing and again, under our previous Mineral Development Agreement, we helped fund some processing that was done that polished a number of samples that were used that year at the Earth Science Building at Memorial. Apart from that, Paul, is there anyone else who is doing any processing?

MR. DEAN: No, there is no one who is doing processing at the present time. We are aware in our Department of Mines and Energy of applications to ACOA for financial assistance and for processing projects and for feasibility studies in this area of dimensional stone. But I am not aware of any applications to the Province other than the ones that we are aware of through our relationship with the Atlantic Canada Opportunities Agency.

MR. WOODFORD: Well then, would it be fair to say that there have been officials from the Department of Mines who on different occasions have spoken to individuals who did make applications to ACOA or elsewhere for funding to do just that?

DR. GIBBONS: Oh yes. Normally there is consultation with officials from the Department on that particular subject for anyone who is interested. I think all the people who have had any interest in the sites that have been mentioned to date have had an interaction with the geo-scientists in our Department.

MR. WOODFORD: You mentioned Tally Pond, and some other areas, Baie Verte area. There is Noranda, and BP - I think they have some mining and exploration interest in the Province.

DR. GIBBONS: Yes.

MR. WOODFORD: Would it be fair to say that because some of those same companies hold the same claims, or claims to different tracts of land in the Province, that is why some of it is not developed?

DR. GIBBONS: No, I would not really say that. On our mineral rights map right now there must be about a hundred different owners of mineral rights. Now, some of the companies, the big companies, hold bigger blocks than any others and you have just mentioned the names of some of the companies which have been most active in terms of Noranda and British Petroleum, and they have been very active in the Province over the last few years. I would hope they stay active.

It was mentioned earlier that Noranda has recently closed an office in the Province. They have consolidated back to central Newfoundland, they have announced the closure of their St. John's office, and that they are going to be operating out of Grand Falls. In the earlier days of Noranda and Newfoundland they used to operate out of an office in Gander only and then they opened a second one in St. John's. But I would like to see companies like that stay operating here because they are the ones which tend to be able to raise the money and do the exploration.

MR. WOODFORD: On the hydro part of it. Did Newfoundland Hydro this year buy any power whatsoever from Deer Lake Power Company or Kruger? Did any excess power go into the grid at all?

DR. GIBBONS: I do not know the answer to that but, Mr. Chairman, I will ask the Chairman of Hydro.

MR. ABERY: I do not believe we have bought any substantive amount. On occasion, if the mill is down for some reason or they have surplus water, we have a contract with them where we would buy interruptible power. To my knowledge we have not bought any substantive amounts this year.

MR. WOODFORD: What about last year? Could you make some comparisons?

DR. GIBBONS: Yes, go ahead.

MR. ABERY: No normally we do not purchase much from the Deer Lake Power Company. We sell them power, basically. They basically take the power from the Deer Lake plant and they also buy I believe it is another twenty or thirty megawatts - I am not sure of the amount - from Newfoundland Hydro. But if there is a slow down at the mill or a strike or something of that nature at the mill and they were going to spill water, then they generate the electricity and we would take it into the grid. But on a normal year we would not really buy very much from them except under those circumstances.

MR. CHAIRMAN: Thank you, Mr. Woodford, Mr. Abery.

Mr. Noel.

MR. NOEL: I get some complaints from people about not getting a fair shot at work with the Hibernia project. I know this has been an ongoing kind of concern that you have been dealing with. Is there anything new on it?

DR. GIBBONS: I would say, Mr. Chairman, that in the early stages again I have had a fair bit of contact from people who were expressing concern that they could not get jobs, but again, more recently, I have not been receiving any concerns. I think it is again reflecting the fact that more and more people are being hired on the site. But I have not been getting much concern raised at all recently.

MR. NOEL: I am sorry, I was thinking primarily of companies that are trying to get (Inaudible).

DR. GIBBONS: Oh, companies, I thought you were talking about individuals looking for work.

AN HON. MEMBER: People versus companies.

DR. GIBBONS: People versus companies. Yes, well, with regard to companies there is a well-defined bid process and all bids that are - I think it is graded on $100,000, Gordon? - will go through that process. Companies would go through a pre-qualification. They would submit the details of their company and get pre-qualified. If they qualify then they would be asked to put in a proposal on a bid and eventually the winning bidder is determined. Again, in the early stages of this development there have not been a lot of small contracts. But as the development proceeds there are more and more contracts that people bid on. There will be more opportunities.

But you are right, I have had concerns expressed to me up to last week of companies saying they wished they could get more opportunities on Hibernia. In most cases I would encourage them to be a bit patient and keep trying, and make sure they keep themselves fully aware of all the opportunities that are going to be there. Stay in touch with HMDC, Nodeco, NOC, and any of the other companies that may be subcontracting work. Particularly with regard to Newfoundland companies. They are often looking for the smaller packages that are subcontracted down that they are capable of bidding on.

MR. NOEL: Some of them seem to feel that certain suppliers have particularly close relationships with the developers and feel that they can't sort of get inside that relationship. Is there anything that the Government can do to deal with that, or is it essentially a - how much influence can the Government have with the developer?

DR. GIBBONS: Well, in a sealed bid process, when the details of a particular project are laid out and you bid on it on the basis of a sealed bid, I do not think the particular comment really is particularly relevant, that, well, it's because someone knows somebody. I think right now here most of the companies that are here are working hard to become well known to the major companies that are putting out the bids and to know what is required of them so they can bid intelligently and bid a good price. I encourage Newfoundland companies to keep trying and there will obviously be some disappointments, but to keep trying.

But what you are saying has also been said to me at times, that people are concerned that some people know more about what is going on than others and seem to have an inside track. I do not know if really that is true. As I said there is a process and you go through that process and come out through after having participated in a sealed bid, and if you win, you win.

MR. NOEL: I guess I am thinking primarily in terms of consulting work and engineering work, that sort of thing, where you probably do not have the tendering process.

DR. GIBBONS: Well, there is a tendering process but a lot of the engineering is being done through the big companies. The big contract was won by NOC for the top side engineering. They are a big engineering consortium with several companies making up that consortium. As I understand it they are going to try to do most of the work within that consortium rather than subcontract it as it gives them more control.

Now there is still going to be some subcontracting of packages. For example, the water and sewer at the site was subcontracted to a company, I think won by a company from Clarenville. There are other small packages that are going to be subcontracted out. Over time maybe there will be others that are going to be subcontracted out. But there are major engineering components to all of the consortia that are involved.

MR. NOEL: What about the concern that a lot of work is being done outside the Province? People thought that engineers in particular, and designers for this sort of thing, they thought we would have had more done in the Province by local people. Does that seem to be a problem by you people?

DR. GIBBONS: Well, in the agreement that was negotiated there was a certain amount that was committed to be done in Newfoundland. That will be done in Newfoundland. I would hope that other companies in Newfoundland will win work besides what is committed to be done here. For example, the gravity base itself. Fifty per cent of all the engineering on the GBS is committed to be done in Newfoundland. The initial, early phases of that particular engineering, these phases are being done elsewhere right now, in Montreal and Paris, primarily.

But at a certain stage it will come to Newfoundland for completion. There is a particular agreement, a technology transfer agreement, where we as a government through the Department of Development are committing, I think, $11 million to get some particular engineering work done.

The accommodation module which my energy critic has often mentioned in the past, the engineering on that is committed to be done in Newfoundland, will be done in Newfoundland. I will wait and see if there are other aspects of engineering that Newfoundland companies can win. I hope they do win other aspects.

MR. NOEL: But you are pretty comfortable with the way it is operating now.

DR. GIBBONS: Well, I am satisfied that what we have negotiated is being done in Newfoundland and will be done in Newfoundland and we will certainly be watching it very closely to make sure it is done in Newfoundland. I would hope that we also get more than what is committed to us on paper. But it is the process I guess that people have been concerned about, that there have not been a lot of subcontracts called. But again, we are at the very early stage of this development, we are only six months into this development. There will be, I believe, more opportunities for subcontracts although I do believe the big engineering consortia will be doing most of the engineering work themselves, as part of these consortia. I think that is about right, isn't it Gordon?

MR. R. GORDON GOSSE: That is true, yes.

MR. NOEL: You are looking at the possibility of regulating fuel prices, are you? Is that fair to say, that you are looking at the possibility?

DR. GIBBONS: Well, yes. It is fair to say we have been looking at the options relative to petroleum product pricing. The options vary from leaving things as they are right now with the market driven system to going to a regulated system of some kind, or stopping somewhere in the middle. We had this committee in place that assessed all of this over the winter and the committee has now reported to me and my colleague, Minister Dicks, and we will be getting into the Cabinet process in the next few weeks, and we will take a position after that Cabinet review.

MR. NOEL: A few people in the Province have been looking into developing slate mines as a few people around the table I suppose are aware of. Do you think there is much potential in that particular area?

DR. GIBBONS: Well, we do have some excellent slate deposits, particularly in the Trinity North area. The Nut Coast Lake deposit is an excellent one and there is more slate in that region. On Random Island near Hickman's Harbour there is a good deposit. Over at Keels, Bonavista South district, there is some good slate. There are some other slate deposits scattered around the Province, but particularly those three are excellent deposits. There has been a lot of work done on them over the last few years, particularly Nut Cove. The market is excellent, there is an excellent international market for slate products. There has not been a lot of success yet in production of slate and marketing but again we hope that the companies that are involved do have more success in the future.

MR. NOEL: What is the problem? If the markets are there and we have good product, we do not have substantial enough companies trying to do it, does that seem to be the case?

DR. GIBBONS: I think that is an aspect of it. You need someone who is able to go in there and make the investment and start producing the product. We have had a number of small-scale operations and I think the scale is part of the problem.

MR. NOEL: What about the Bell Island mines? There is ongoing talk about using them for other purposes. Is that anything your Department has to do with?

DR. GIBBONS: Not particularly. We maintain a file on the Bell Island mine because it is a closed down mine and we are basically responsible for watching it right now as a property of Government, as a closed down mine. We have all the detailed drawings of the internal workings of it. The Department of Development is the one that promotes it as a possible oil storage site. I do not know exactly what if anything is going on at this time. There is no interest in it as a mine any more, although there are probably several hundred million tons of iron ore still resting in the ground below Bell Island. But they can not be economically removed, compared to the economics of taking ore out of the ground in Labrador West, or elsewhere where you have big open pit mines.

MR. NOEL: Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Noel, not only for your questions but your special interest in my district as well. I will go back to additional questions and just make note that things are moving along very smoothly. I cannot anticipate, based on how things are going at this present time, how long this session might go for, so I thought that we would flow along for another little while and we will probably pick 8:25 or 8:30 as an opportunity to take a seventh inning stretch and maybe get a coffee. In the interim, anyone who would like a coffee, of course, go ahead. We have scheduled three hours for this particular meeting and things are flowing well, so rather than interrupt at this point in time we will look at that as a potential time. I will confer with the Vice-Chairman and also with the Members who are here to see if we can carry on and clue up. If not, we will take a break and go on. Mr. Hewlett.

MR. HEWLETT: Thank you, Mr. Chairman. Under electrical energy, the last page of the Departmental Estimates is the Electrical Power Control Act 1977, grants and subsidies, $2.1 million. I wonder if the Minister could indicate what this figure means?

DR. GIBBONS: (Inaudible) subsidies that are payed to some companies under the Electrical Power Control Act and is paid out to Hydro. The companies, Kruger, Albright and Wilson, Abitibi-Price, Grand Falls, there is a certain amount paid to each one annually and they are tied to long-term contracts, and I do not recall the details of the long-term contracts. Would you Sy?

MR. HEWLETT: The Government pays Hydro -

DR. GIBBONS: A subsidy.

MR. HEWLETT: - to the shortfall or whatever -

DR. GIBBONS: Yes.

MR. HEWLETT: - to make up for the cheaper power that they are giving the company.

DR. GIBBONS: Yes, relative to some contracts that are in place with these particular companies.

MR. HEWLETT: The next subject down from that in the Estimates, PDD. Last year there was $10 million in the budget and this year we got a blank. I presume, Mr. Minister, this is the off loading of Government's subsidy to Newfoundland Hydro for the more rural uneconomic areas of the Province, which I would assume is being off loaded again by the Hydro Corporation onto the rate payers of the Province.

DR. GIBBONS: I prefer to use the word phase-out of the PDD subsidy, last year $10 million was left and this year there will be zero in the subsidy to PDD. PDD has now been phased out completely and has been merged with Hydro. It is now part of Hydro, there is no longer a PDD.

MR. HEWLETT: But this phase-out I presume is a significant part of the fact that power rates have risen approximately twenty-five per cent the first year of the decade of the nineties.

DR. GIBBONS: This reflects the four per cent increase of a year ago when Hydro went to the Public Utilities Board and asked for a review at that time to accommodate the phase out of the PDD subsidy. Hydro went in looking for rates over a three year period and the Public Utilities Board only gave them a rate increase for one year, and that was approximately four per cent at the retail level, I think it was eight per cent on the wholesale rate. But for the ordinary customer it reflected about a four per cent increase in the rate. Any other increases that have come in the past had nothing to do with the phase out of this subsidy.

MR. HEWLETT: So how would you characterize the fact that during the last year, Mr. Minister, power rates have essentially risen twenty-five per cent to the domestic consumer. I even got out my pocket calculator and did my own sums on my own power bill. Certainly since this administration has come into office power rates have risen twenty-five per cent. There has not been that much inflation during that particular period so would it be fair to characterize a majority of the rate increases as deriving themselves from policies of the Wells administration which tended to off load onto the consumer?

DR. GIBBONS: No, it would not be fair to assume that at all. I am not sure of the exact amount, whether it is twenty-five per cent or whatever.

We could go down through the amounts. Light and Power, 3 per cent last February?

MR. ABERY: I believe Newfoundland Light and Power, Mr. Minister, had about 4 per cent.

DR. GIBBONS: Four per cent last February? There was about a 4 per cent change for Hydro because of the phase-out of the subsidy. There was about a 4 per cent change in the rate stabilization fund. About 12 per cent. GST came in on January 1 at 7 per cent, and there is what you have seen since the Wells' Government took over. Only 4 per cent of that is related to the phase-out of the PDD subsidy. The rate stabilization fund is reflecting changing costs for petroleum products to be burned at Holyrood or other plants that use petroleum. It also reflects rainfall changes throughout the year and weather conditions throughout the year, in a sense, reflecting that. And whatever is in the rate change for Light and Power reflecting change in circumstances for that company.

MR. HEWLETT: So you are saying that policies of this Government are not the major factor in the actual increase to the consumer?

DR. GIBBONS: What I am saying is that the phase-out of the PDD subsidy as a result of last year's hearing before the Public Utilities Board resulted in a 4 per cent increase at the retail customer. I think that is correct, isn't it?

AN HON. MEMBER: That is correct.

MR. HEWLETT: Will there be further increases as Hydro absorbs this loss? Will they be back again to the Public Utilities Board?

DR. GIBBONS: Hydro last year when it went to the Public Utilities Board asked for an adjustment over a three year period to reflect the phase-out of this power subsidy. It was given a change for one year only and asked to go and do some studies on the cost of the rural distribution district and come back after these studies are completed before the PUB again. These studies are not yet complete, so I do not know exactly when Hydro will be going back to the PUB again. But sometime in the next year they will have to go back to the PUB again when these studies are completed. Maybe the Chairman of Hydro can speak to that.

MR. ABERY: Yes, we were asked by the Public Utility Board to review all the rural rate structure. We are in the process of doing that but we anticipate these studies will be complete by probably the end of this summer or early fall. We would anticipate later on this year making an application to the Public Utilities Board for a hearing probably early in 1992.

MR. HEWLETT: There is a threshold I think below which rural consumers get what you might call a break, but above which they pay a higher rate than usual. Would this be one of the aspects being studied? As to whether or not that threshold could be raised? Because it is not uncommon even in rural Newfoundland now to have electrified houses.

DR. GIBBONS: It is not one of the prime things being studied. It was a Government policy decision a year or so ago to raise that base from 600 kilowatt hours to 700 kilowatt hours. It is not quite as simple as saying: let's take it off completely. The amount that is there now covers what any ordinary residential home would need for light and other electrical needs without electric heat.

MR. HEWLETT: So the threshold as laid down right now does not cover the electrical (Inaudible).

DR. GIBBONS: It is not adequate to cover electrical heat. It is adequate for everything else. I know I do not have electric heat in my house and I rarely go over 500 kilowatt hours a month. Seven hundred is plenty for anyone who does not have electric heat. But there is an extra problem created in these diesel areas with electric heat. In many cases Hydro would have to go in and give a significant upgrade to the size of the diesel units available. It is much more efficient frankly to make heat from burning oil directly in a furnace in your own home than to take it off electricity in a diesel area. About three times more efficient.

MR. HEWLETT: Mr. Minister, I do not have electric heat in my home either. I must confess that I probably am like your average Canadian in that I have increased my consumption of electricity significantly. The amount has gone up 50 per cent since the Wells' Administration took office, but the percentage, I would reiterate again, in the base rate and the actual rate per kilowatt hour has worked out to a 25 per cent increase on my domestic power bill; I would just like to state that for the record.

One point, following on what Mr. Noel mentioned with regard to contracts; insofar as Hibernia is a Federal-Provincial development, I assume the local preference policy does not apply here. I know normally speaking the Federal Government does not, in Federal-Provincial projects allow Provincial preference policy to apply, so I presume it is the best bid per se, is the winner.

DR. GIBBONS: Well the local preference policy as defined by the Province gives a 15 per cent preference to anyone who is selling to the Province or provincial agency, but you are right, it does not apply to anything that is funded federally-provincially out of the offshore development fund or does not apply to anything that is being paid for privately by any private company, so it can't apply to Hibernia. However, in the Atlantic Accord, and in the agreements that we have negotiated, there is supposed to be a 'Best Efforts' undertaking, and what is the other phrase that is used? -'First consideration', best efforts and first consideration for a provision from Newfoundland.

MR. HEWLETT: But it is fair to say that companies who may be complaining to my colleague from Pleasantville, are competing in a slightly more competitive environment than they would if they were bidding on Provincial Government work exclusively?

DR. GIBBONS: Yes. Well, I think a lot of these concerns that our colleague expressed are - companies are competing with other Newfoundland companies; they are not necessarily outside companies.

MR. HEWLETT: Oh, I see. It is just that the volume of contracts are not there yet?

DR. GIBBONS: The volume is not there yet and therefore some companies have not received any work.

MR. HEWLETT: That is it for me right now, Mr. Chairman.

MR. CHAIRMAN: Mr. Ramsay.

MR. RAMSAY: With regards to the Hibernia project, Mr. Minister, I was going to ask what your department and the co-ordinating committee, I think it is called, you can correct me if I am wrong, are doing in co-operation with the consortium, as far as the stimulation of private sector development or the encouragement of same or the monitoring of the Newfoundland aspects of the Hibernia development, how is that process set up?

DR. GIBBONS: We all have to understand that the key agency to all monitoring for both the Provincial Government and the Federal Government relative to Hibernia is called: The Canada-Newfoundland Offshore Petroleum Board.

It is one of the items in the estimates which we are looking at tonight; we pay 50 per cent of the cost of operating the offshore petroleum board, that is where most of the work is being done to monitor Canada and Newfoundland benefits.

In addition to that, we do have a committee called: The Hibernia Monitoring Committee, provincially, that is overseeing what is done on the provincial side only in our line departments. Where there are responsibilities on the respective line departments, whether it is energy or development or employment and labour or education or anyone asked to monitor how these departments interact with the Hibernia project and we are all watching it I guess, and doing our jobs, and I am satisfied at this stage that everybody is doing his job appropriately.

MR. RAMSAY: I have heard an explanation and description of what constitutes Newfoundland content. I wonder if you could have it clarified for us - the description I have heard. Again, I just ask for clarification, if a car was purchased from Hickman Motors, that complete purchase price would not be considered a Newfoundland benefit, part of it would be considered Canadian if the vehicle was manufactured in Canada, the profit made on it by Hickman Motors would be considered a Newfoundland benefit, the salesman's commission would be considered a Newfoundland benefit, if there was a set of windshield wipers or something on it that was made around here, that would be considered Newfoundland, but, is there some process that is followed in that way that -

DR. GIBBONS: There is a well-defined process that is followed and they try to break out the percentage of that car which is attributable to Newfoundland. You said it, it is the markup and the dealer, which includes the commission for the agent primarily, and then you are going back to the manufacturing centre in central Canada or wherever it was manufactured for the rest of it. So they do break out the components of the products. For a lot of things you may only have the agent's commission in Newfoundland, as the Newfoundland content, if it is manufactured outside this Province.

MR. RAMSAY: But we are guaranteed a certain percentage of Newfoundland benefits in most of these areas of this development.

DR. GIBBONS: Hibernia in general, yes. Up to now - I cannot remember the exact number. Are we 55 per cent or 60 per cent Newfoundland content to date?

AN HON. MEMBER: To date, yes.

DR. GIBBONS: Yes, to date. And when we total them all up - because in some cases the contracts will be 100 per cent Newfoundland, in other case, like the cars or trucks they are buying, maybe 10 per cent Newfoundland. But add all these up, weight it appropriately, and we are around 55 per cent or so of Newfoundland content right now and about 80 per cent Canadian content. Frankly, we are doing very well at this stage.

MR. RAMSAY: There is one thing I mention insofar as the prospect of other areas garnering some work on Hibernia, and something I mentioned last year with regards to the proposed - and the term that is used is "fabrication facility" - that has been worked on for the last number of years in Port aux Basques as far as the proposal goes. It is just at the proposal stage, I understand. Maybe if you could give an analysis in your mind of what you think might be possible for a private contractor in that kind of area, insofar as the amount or type of work that could possibly be contracted out to other areas of the Province.

DR. GIBBONS: There is no question that there will be subcontracted work that will go to various sites around the Province. There is only one site that has committed work and that is Bull Arm. There is a huge amount committed to Bull Arm and some subcontracting of work that will eventually come to Bull Arm will have been fabricated elsewhere. Under the Offshore Development Fund we have committed about - I think it might be $36.5 million - for the Cow Head site in Marystown. To date we have not committed any funds for any other site. Cow Head is being targeted for some specific work, some mechanical fabrication work relative to the legs. But otherwise, other sites could get some subcontract work.

MR. RAMSAY: So you feel that some of the best efforts and some of the first considerations to Newfoundland could possibly - and even best efforts to Canada - be done here with the right expertise?

DR. GIBBONS: Yes. With the right expertise I think anything that is committed to Newfoundland or Canada could be done somewhere in Newfoundland if the right facilities are in place.

MR. RAMSAY: And the companies with the expertise.

DR. GIBBONS: But the key thing is that the companies have to have the expertise, they will have to get pre-qualified for any bidding that is done, and then they are going to have to win the bids after a thorough analysis of the bids. That considers not just price, it considers lots of matters. But price is going to be obviously a big factor.

MR. RAMSAY: The pre-qualification process has come up in some of my work. I wonder if you could advise what the dates as far as pre-qualification goes. Is there any idea as to how that pre-qualification process works? I understand that it is a period of time that has to be followed for any of these things as far as pre-qualification goes.

DR. GIBBONS: Yes, well, any time a contract comes out, every quarter there is a list of contracts. Then when contracts are identified companies get their information in and they get assessed to see if they are pre-qualified to bid on any particular contract. In going through that process there are a number of days assigned when the Offshore Board would review the pre-qualified list to determine whether or not they are satisfied that the names on the list include all those that in Newfoundland might have wanted to get on and whether or not they were given a chance. Just to make sure that everyone had a chance at it and was satisfied. So that time period is spelled out there.

MR. RAMSAY: Okay. So some of these have already happened, and I guess pre-qualifications have been cut off on some and some are going through the process right now.

DR. GIBBONS: Oh yes, and will be until this project is completed.

MR. RAMSAY: But each phase does have a cutoff point.

DR. GIBBONS: Yes, I think it is five days.

MR. GOSSE: Something like that.

DR. GIBBONS: You know, leading up to it they will be getting company information in, and then I think they give it to the offshore board for a five day period for the pre-qualification phase so that the board has time to interact with us in the Government departments to review, and if there is someone who is missing we can certainly make some comment on it at that time.

MR. RAMSAY: Is that from the major contractors perspective or is it right down through the line of certain aspects that the major contractor would have to qualify a sub-contractor? How does that work?

DR. GIBBONS: We have already seen sub-contractors having to pre-qualify. I will ask my deputy to speak on it.

MR. GOSSE: I think the sub-contractors would have to pre-qualify with the contractor.

MR. RAMSAY: So the contractor is responsible for the pre-qualification process of the sub-contractor.

MR. GOSSE: Yes.

MR. RAMSAY: I just have a couple more on Hydro -

DR. GIBBONS: The phrase that we use on it is that there has to be full and fair access to Newfoundland companies so that they get a shot at getting on the list.

MR. RAMSAY: But if they do not initiate the process with NOCU or HMDC or some of the other sub-contractors, they do not have a chance.

DR. GIBBONS: Well they have to get in there with their information.

MR. CHAIRMAN: I am going to suggest, Mr. Ramsay, that now you are about to move into yet another area.

MR. RAMSAY: It is 8:30.

MR. CHAIRMAN: You have had ten minutes, and we said we would try to get a quick break at 8:30 which I think we will do now. If you come back and there aren't any questions that are ready to be asked by another Member the Chair will certainly recognize you again and let you pick up on that new train of thought.

I suggest we take a ten minute break and for the purposes of time we will begin again at 8:40.

MR. CHAIRMAN: I would call our session back to order. We will move to Mr. Snow.

MR. A. SNOW: Thank you, Mr. Chairman. There were a couple of questions earlier concerning explorations. Can the Minister tell me of any programmes they may have available now which could influence more exploration in this Province? I live in western Labrador and north of me, there seems to be quite a bit of exploration going on in the adjoining province of Quebec, and people there for some reason have continued a lot of exploration in that region, albeit is just across the border in the province of Quebec. Can you tell me if the Government is considering any new programmes to influence more exploration in this Province?

DR. GIBBONS: No, Mr. Chairman, not particularly any new programmes. Most of the exploration that was occurring in the last five years or so was being pushed by the flow-through share incentive that was there as a Federal financing incentive, and that was cancelled. Since that time the level of exploration activity in this Province, as all across the country, has dropped considerably.

We were fortunate that we did not drop as fast as a lot of other sectors, mainly because of the success for gold exploration prospects around, for example, Baie Verte Peninsula, Notre Dame Bay and some other parts of the Province. But now it has caught up with us as well and this year we are projecting that in exploration in general, we will be down to what would have been a normally expected level if there had never been a flow-through regime. We expect about $13 million to $15 million to be spent and that is back to what we consider to be the normal level without that regime.

Now, when you compared it with Quebec, Quebec had its own provincial flow-through incentive on top of the Federal one; we never could afford to have that in this Province and we are not considering it now. I do not know if it still exists in Quebec but it did for a while. I will ask my Assistant Deputy if he is aware of that.

MR. DEAN: Yes. The regime in Quebec does exist. There is an extra incentive in the province of Quebec that is a tax incentive to investors in flow-through shares that is not available in the rest of the country. I just might add an extra comment: in spite of that effort by the Quebec Government, exploration is still down in Quebec proportionately to the rest of the country.

MR. A. SNOW: Do you know how much this cost the Province of Quebec?

DR. GIBBONS: No, I do not know, but I know it was an extra incentive in that province on top of the Federal incentive. During the flow-through share regime and when the Federal Finance Minister was cancelling it nationally a few years ago, the Quebec Minister was keeping it in Quebec to maintain the level, but as my Assistant Deputy just said, it has still dropped in Quebec comparative to how it has dropped in the rest of the country.

MR. A. SNOW: Previously, Mr. Abery of Newfoundland Hydro suggested I believe, that the electrical energy subsidy of $2,171,000 was paid to Kruger, Albright, Wilson and who else?

DR. GIBBONS: I said that actually.

MR. A. SNOW: Oh, you said it, did you?

DR. GIBBONS: Yes, I said it. It was paid to three customers, Kruger, Albright and Wilson, and Abitibi-Price, Grand Falls and is tied into contracts with these companies, which expire very shortly, do they not Cy? I will ask the Chairman of Hydro.

MR. ABERY: Yes, they expire I think around 1996, and those were contracts entered into before the Hydro Act was passed. When the Hydro Act was passed we started charging commercial rates to all our customers, but those were in existing contracts and the Government over the years, has made up the difference between our commercial rate and their previous agreement, as I understand it, and they are gradually phasing out and will disappear by I think, 1996.

MR. A. SNOW: Could you tell me how much each company gets?

DR. GIBBONS: I could tell you; I have the breakdown, that is no problem. The money comes to Hydro and is broken down in these amounts: Kruger is estimated here at $812,000; Albright and Wilson $432,000 and Abitibi-Price $926,000, totalling to $2.171.

MR. A. SNOW: Is that a fixed amount or could you tell me the formula or if there is a formula?

DR. GIBBONS: That is relative to the industrial rate. I would ask Dave Mercer, the President of Hydro, to talk about the details.

MR. MERCER: All amounts here are variable amounts. In the case of Albright and Wilson, they are now paying the same commercial rate as every other industrial customer with respect to the demand charge and the energy charge, but there were some special facilities installed in order to deliver a supply to them, and a portion of that cost is being born by the Government until their contract expires. In the case of the paper companies they are paying an increasing percentage of the cost of providing them with service so that each year as we establish the cost of providing our customers with service, they are assuming a larger and larger percentage, so the subsidy is decreasing each year. By the time it is scheduled to, their contracts expire about 1996, 1997, they will be paying the same amount as all other industrial customers.

MR. A. SNOW: It just seems strange to me that Albright and Wilson - they are not producing anything here now are they?

MR. MERCER: No, but the special facilities that I mentioned that were installed in order to deliver them power when they were operational have to be paid for by somebody, and it would be unfair to have these charges paid by, for example, the customers of Newfoundland Light and Power Company. So these fixed charges remain with the Government. While they are not producing anything here they are taking in the order of two megawatts of power from us which they are using for clean up operations around the site, and they have a contract that allows them to take five mega watts. They are not actually taking that, but they do have certain plans to reprocess mud out at Come By Chance and they need -

DR. GIBBONS: At Long Harbour.

MR. MERCER: - at Long Harbour and they do need certain power for pumps and the like.

DR. GIBBONS: Since the close down the Albright and Wilson contract has been renegotiated, I guess that is the right word, and instead of 130 mega watts as previously it is now five mega watts. They are going to be there for several years yet cleaning up the site at Long Harbour, so that contract stays in place. What is the termination of that contract for Albright and Wilson, Dave?

MR. MERCER: I am not sure that it has a specific termination date. I do not recall it, but it would be at least five years or maybe longer, and it is certainly renewable. But as I say, with respect to specific quantities so much per megawatt and so much per kilowatt hour they are paying the same as, for example, Abitibi-Price in Stephenville. They are not getting any subsidy on that clean up power, if you will. It is just that there are some residual facilities that were put in place that as part of our agreement Government is carrying the fixed charges for it.

MR. A. SNOW: It just seems strange that a company that was not creating any products or creating any employment in the Province was continuing to be subsidized by $500,000 a year. It seems rather strange.

DR. GIBBONS: I guess Hydro is really what (inaudible).

MR. ABERY: The money comes to Hydro. The facilities were put there by Hydro. Government was subsidising the ERCO operation. When ERCO closed down we signed a new contract with them for the power and energy they now need, and they are paying full commercial rates for that. But under their old contract that they had with the Government going back to 1968 there were some facilities that still had not been amortized and Government is paying that money to Newfoundland Hydro to allow us to amortize those whole assets which have been there for twenty to twenty-five years, and they will all be amortized in the next several years and that will be the end of it, so none of that money goes to Albright and Wilson.

DR. GIBBONS: And this was a liability that was in the old contract as a liability from Government to Hydro on this Albright and Wilson liability.

MR. A. SNOW: Previously we talked about some power in western Labrador. I wonder if you can tell me how much power IOC purchases?

DR. GIBBONS: I do not know the answer to that. I will have to ask Hydro again.

MR. ABERY: IOC receives 160 megawatts of capacity out of the Twin Falls block, and at Labrador City they purchase another 67.5 megawatts off Newfoundland Hydro, so in total they have 227.5 megawatts purchased from the Twin block and from Newfoundland Hydro.

MR. A. SNOW: Do they pay the same price for each block?

MR. ABERY: No, the Twin Falls block is based on the Twin Falls contract which existed prior to Churchill Falls. The rest of the power is in two, thirty-seven and a half megawatts blocks, and the price is not the same on those. I cannot tell you what the price is off hand but it is not the same for the first and second block, there are differences.

MR. A. SNOW: Would you be able to tell me what the price is?

MR. ABERY: I could not off the top of my head tell you. I am sorry I could not, but I could find out.

MR. CHAIRMAN: I appreciate where we are attempting to supply each other with information but again I would remind everyone, for the sake of Hansard, when we get into the third person please identify yourself for the sake of the tapes.

Mr. Snow.

MR. A. SNOW: How much extra power do they want?

DR. GIBBONS: I do not know the answer to that question either.

MR. A. SNOW: Would Mr. Abery, as he seems to be actively involved in these discussions?

MR. ABERY: I am not actively involved in the discussions.

MR. A. SNOW: Well, representing people who are actively involved.

MR. ABERY: The capacity that you can bring into Labrador City on the existing lines, I think, there is about another twenty or twenty-five megawatts that you can bring in over the existing facilities. I believe that the Iron Ore company of Canada is interested in acquiring that amount of power.

MR. A. SNOW: Is there some reason they want this power? Is it for an expansion of the mines or change in the method of production?

DR. GIBBONS: Again, I do not know. But the last time I was up there they did make a comment they wished they had more power. I really did not get into a discussion of the details of why. I know they have been going through some upgrading of facilities there and changing, maybe requiring more power. Maybe my Assistant Deputy may know something about that, do you Paul?

MR. DEAN: My understanding, Mr. Minister, is that during the peak demand in wintertime when there is a very strong demand for electrical power in the town that the company is unable to run its mills at capacity and they would like to run their mills at capacity during that time and, therefore, would like to have more power. That is my understanding of the situation.

MR. CHAIRMAN: You may continue if you wish, bearing in mind that we are moving into probably the last hour, and I want to certainly recognize Members on the Government side but I am going to allow the Opposition Members a little additional flexibility and freeway in case they want to pursue some questions or some particular directions.

MR. WOODFORD: (Inaudible).

MR. CHAIRMAN: What I will do by leave is probably go almost on a ratio of two to one if that is fine with my colleagues?

MR. WOODFORD: In the annual report of Newfoundland Hydro, released just recently, it stated there were some ongoing studies regarding the Cat Arm reservoir and the monitoring of fish and the ecology at the reservoir, began in 1980 and which should be finalized in 1991. One thing that strikes me there, and I did not realize it, it is in my district, I did not see it before, I am sort of alarmed by it, but how serious is it? -- it says there that the Department of Fisheries and Oceans issued an advisory that elevated levels of mercury had been found in certain fish species in Hydro's Reservoirs on the Island. What would that be in? I know there is no commercial fishery there or no native fishery as stated here, but what reservoirs would they be in? Would they be in the Cat Arm and Hinds Lake Reservoirs? Would they be in the trout, because primarily there is trout fishing there?

DR. GIBBONS: It is my understanding that fish in any hydro reservoirs normally have a slightly elevated mercury content. This is historical. You can see it anywhere there is a hydro development and ours are no different from that. There was an advisory put out last year and as stated in this report, people should be aware that there is some mercury there and they should, I guess, watch the quantities they are eating. There is no commercial fishery as I have said, but people often go in trout fishing or whatever, and no matter what type of fish, there seems to be a small elevation.

MR. WOODFORD: I realize that there are always levels of mercury, but when they say: elevated levels of mercury, it seems to me that there is something there now, that was not there in 1980, 1981, 1982, 1983 or, am I wrong?

DR. GIBBONS: Something that was not there before there was a hydro development. There seems to be what is called metalizing; metalizing of the mercury, which gets into the water and is absorbed into the fish as a result of, I guess, the flooding of a lot of terrain and a lot of vegetation and the mercury that may be contained in a lot of this vegetation and terrain is absorbed into the water and metallized.

I have seen numbers that are up to three, four or five times a normal level of mercury; that is not a problem if you are just going to have a meal of fish, but it could be a problem in a commercial fishery. We are well aware of in the past, places like Japan, where there was a problem of mercury in commercial fisheries, so that is why the advisory was issued, that really, people should be aware that in any hydro reservoir when they are fishing, there is going to be a little bit of an elevated level.

MR. WOODFORD: In the Cat Arm reservoir alone, the reason why it strikes me as a concern is that you sit on the road between Jackson's Arm and Cat Arm at the intersection, you would swear, except for seeing the boats come in, in this case you see the pick-ups come in with, instead of boat loads of fish you are looking at pick-up loads of fish, literally pick-up loads of trout coming out of Cat Arm and I mean the people down there and the Development Association for years have been trying to stop it.

They go in and they are just raping the reservoir and when I see something like this, people carrying out that much, they cannot be eating them; surely God, they must be selling them or something, but, when I see something like this, if they are, and if there is an elevated level, whatever the so called elevated level is, there should be some reason for concern. It is the first time I have heard of it and I am living in the area.

DR. GIBBONS: Yes, and this is why the advisory was issued last year by the Fisheries and Oceans and I think the Department of Health was also monitoring it with Hydro as I recall. I saw some numbers a year ago, I do not recall the numbers for the Cat Arm reservoir as such but, any fish that live and grow in hydro reservoirs normally have elevated mercury content.

MR. WOODFORD: What level would be a safe level for mercury?

DR. GIBBONS: I really do not know the answer to that. I guess if you are just having a meal of fish, any level that is in it is probably no problem, but if you are eating fish every day that has elevated mercury, you may end up with problems.

MR. WOODFORD: It seems as if Mr. Dean is biting at the bit, maybe he would like to say something.

DR. GIBBONS: Maybe, Paul has an answer.

MR. DEAN: I have no comment.

DR. GIBBONS: No. Hydro, any comments on it?

MR. MERCER: I do not recall the specific levels set out by Fisheries and Oceans, but it varies by the type of fish. If you are talking about trout, which type of trout or pike or what have you? But we have been and will continue to monitor the mercury levels in our reservoirs.

You asked about Cat Arm, I think that is one of the sensitive ones, but Bay d'Espoir, we have the same thing and in the Churchill reservoir; the pattern seems to be, as the Minister indicated, that immediately after the creation of a reservoir, there is a lot of flooding of land and that allows water access to mineralized areas where the mercury can leach out and it gets in the food chain and gets picked up by fish.

This is not unique to Newfoundland, it is not unique to any hydro development, it is very common and the objective of the monitoring is to trace the pattern and usually it rises for three or four years and then it begins to fall off.

When the Department of Fisheries put out an advisory, they were asking us to inform anglers or others, that mercury levels were in certain ranges which are identified, and that therefore consumption of these species should be confined to one or two meals of that fish per week. It is not a requirement that you not eat it, but you do not eat it every day. We have worked with the Department of Development and the Department of Health et cetera, to make sure that anybody interested in a commercial fishery, for example, in these areas is well informed that they should watch the mercury levels and have their particular fish tested at regular intervals to make sure they are not involved in promoting unsafe consumption.

MR. WOODFORD: Yes, well then what happens after this year when there is no other testing? Who takes over the responsibility then for something like that?

DR. GIBBONS: That is Hydro too.

MR. ABERY: Periodic testing goes on and is monitored by ourselves and our Environmental Department, the Department of Fisheries and the Department of Health. If there was any change, that would be noted. We have posted signs around our reservoirs advising people of that. But as Mr. Mercer said, the consumption of the fish is not a problem unless you ate very large quantities of it over a significant period of time.

MR. CHAIRMAN: Thank you, Mr. Abery. Mr. Woodford.

MR. WOODFORD: Because of the fact that that area now, because the roads have all been paved and accessibility is that much easier and better, it is fast becoming a very high tourism spot. There is a lot of interest being shown, a lot more than was shown before. You are well aware of what the roads were like down there. Now that they are paved there is a lot more interest in tourist development. People are going into the Cat Arm area to trout because it is a haven for trout fishermen. And like I said, I have been going back and forth there now for the last six or seven years and I have not seen a sign up, I have not seen a press release, and I have not even heard the comments about the mercury level down there. Would it be advisable, I wonder, to put up a sign or would that be an alarmist type thing to put up a sign saying there is an elevated mercury level in the fishing reservoir?

MR. CHAIRMAN: Mr. Minister, I appreciate the question, but I am not sure the answer can come from yourself or your committee. I would tend to think that if Fisheries and Oceans and the Department of Health felt the content of mercury was there, maybe through yourself you can address it, but I am not sure that it is a Mines and Energy question. I will defer it to the Minister if he wishes to deal with it.

DR. GIBBONS: As you said it is really a Fisheries and Oceans or a Health matter more than anything else. We are concerned because we are Hydro and people are fishing in our Hydro reservoirs. But as you said yourself, Mr. Woodford, we do not want to be alarmist about this. As Mr. Abery said and Mr. Mercer said, the levels are such that the mercury is not a hazard to people who have an occasional meal of fish from these reservoirs, but you should certainly not have fish every day or two times a day or whatever. I should not use occasions like that or frequencies like that, but certainly it is something that people should be aware of, that there is mercury in fish and we have to continue to monitor it regularly. Because of historical data that is known from both Newfoundland and elsewhere we know the approximate maximum levels that are likely to be attained and monitored regularly.

MR. WOODFORD: Still pertaining to Hydro. I wonder could yourself, Mr. Minister, or Mr. Abery or someone in Hydro give me a breakdown now of what is happening in the Roddickton area with regards to the Hydro station down there and the wood chips. I am getting some different, conflicting reports concerning the operation of the wood chip area.

DR. GIBBONS: Well, it opened about a year and a half ago. As I remember there was a snow storm the day we tried to go up there to open it officially about a year and a half ago in October. It had some teething problems initially like any new facility, but I believe that over the last few months it has been operating routinely and producing to capacity plus. I ask the representatives from Hydro to make a more knowledgeable comment on it.

MR. ABERY: Like any new plant it takes a while to get it operating. There are still elements that require fine tuning, but the plant is operating. It is operating at around five megawatts depending on what day it is and what have you and the load, and like any other plant it will gradually get rid of all the bugs that are in it and presumably it will operate as it was designed to.

DR. GIBBONS: I think five megawatts is the rate of capacity.

MR. ABERY: That is correct, Mr. Minister.

MR. WOODFORD: Are there any problems with regards to the wood suppliers namely the Northern Development Corporation.

DR. GIBBONS: I am not aware of any problems but maybe Mr. Abery can speak to that as well.

MR. ABERY: I have no knowledge of anybody having a problem. We called public tenders a couple of years ago and three or four different companies were awarded tenders for different types of wood product, sawdust, residue from sawmills and old tree chipping and what have you; to my knowledge they are supplying the plant as required with wood and to my knowledge we have had no particular difficulty.

MR. CHAIRMAN: Thank you, Mr. Woodford.

Mr. Noel.

MR. NOEL: (Inaudible) one way or another. Has Government ever assessed it?

DR. GIBBONS: Two years ago when we talked about the phase out of the PDD Subsidy we had some discussions with Light and Power about the PDD part. At that time we did an assessment of what was the most appropriate action to take, whether to have PDD merged into Hydro or whether we would merge PDD with Newfoundland Power or sell it to Newfoundland Power. The decision made at that time was that we would keep the PDD, rural distribution district, and merge it with Hydro. We have not done any assessment of any other aspect of the merger.

MR. CHAIRMAN: Thank you.

Mr. Langdon.

MR. LANGDON: The range of prices for fuel products in the Province especially in the remote areas is of some concern. I was interested in the Member for Menihek saying that in Labrador City, I think it was, the regular fee was 65.8 cents and all the communities on the Connaigre Peninsula that I represent are paying anywhere from 68 cents to 69 cents to 70 cents for unleaded gas per litre. I was wondering if the Department had any plans or had done anything to look at probably a way of coordinating the transportation so that the people in the rural areas of the Province might be able to save some dollars on the shipment of gas?

DR. GIBBONS: Of course, we are talking about private industry and one of the things in our assessment of the cost of petroleum products around the Province is we note the differences that exist and some of the differences are quite dramatic, depending upon how the supply is provided. We do not know exactly what position we are going to take as a government as we assess the options that are put before us. I do not really know what we will do at this time but we understand why the prices vary to a degree. When you go out to geographic areas that are remote like coastal Labrador, like your district on the Hermitage Peninsula, the extra transportation cost is going to add some amount to the cost at the pump. The size of the station is also going to add some cost to the price per litre as well because if you have a very small station selling a small amount there is probably a slightly higher margin there per litre.

We want to see the fairest price possible but at this time we expect it to continue to be a commercial private enterprise and not Government transporting it.

MR. LANGDON: Yes, I know but my question would be, is there any thought given to regulating the transportation of the petroleum products?

DR. GIBBONS: Well, we really have not talked about that aspect separate from the total picture of looking at petroleum product pricing and regulation. As I have said we will see what comes out of the Cabinet assessment of what is in the recommendations there from the Committee. In Nova Scotia right now there is a full scale regulation of everything regarding petroleum distribution. They licence the stations, they do not even allow self-serve service stations in Nova Scotia for example, and every move a gas station makes is regulated and also how the product gets distributed around. We have had an assessment done of all the options from full scale regulation to no regulation.

MR. LANGDON: One more question: earlier, we talked about doing some exploration for gold in certain parts of the Province and I was wondering what has been found in the Little River area in Bay d'Espoir, is that promising, have they found the amounts that are available or whatever?

DR. GIBBONS: There has been a lot of exploration in the Little River area in the last decade, but there has never been a significant deposit outline down there; there are still some mineral claims held by a number of companies, so the companies, I guess, must feel that the properties are interesting enough to maintain these claims and to keep working on these claims, but there has been no deposit identified as big enough to consider developing.

MR. CHAIRMAN: Mr. Snow.

MR. A. SNOW: Thank you, Mr. Chairman. Last year, we saw the imposition of a payroll tax on businesses operating in this Province and we see that the only resource based industry that is taxed with this particular tax is the mining industry. I wonder if you can tell me what the rationale is of taxing the mining industry, separate from any other resource based industry?

DR. GIBBONS: The rationale at the time, I think, was that the renewable resource industries were exempted; the fishing industry, the forestry industry and agriculture. The non-renewable were not exempted.

MR. A. SNOW: What is the rationale behind that?

DR. GIBBONS: I am not sure if it is an adequate rationale, but it is the rationale. The mining industry was not zero based at the time but the fishing industry, forestry and agriculture were zero based.

MR. A. SNOW: You still have not explained to me what the rationale was of excluding them.

DR. GIBBONS: As I said, some that were zero based and these are renewable industries, and the mining industry happens to be a non-renewable one and was not zero based. I do not know if that is the exact rationale or not, but it was not zero based.

MR. A. SNOW: Are you suggesting that the reason why it was taxed is because it is a non-renewable resource?

DR. GIBBONS: No. There were exemptions made, or some industries were identified and zero based. A lot of things besides mining are paying the tax.

MR. A. SNOW: Yes, but it is the only resource base industry of which I am aware (inaudible).

DR. GIBBONS: Yes, it is the only resource base; well, hydro -

MR. ABERY: Hydro pays it.

DR. GIBBONS: Hydro pays the tax.

MR. A. SNOW: So it had nothing to do whatsoever with being a non- renewable resource?

DR. GIBBONS: I have no answer for it.

MR. A. SNOW: You must have had input, surely to goodness you carry as much weight as the Minister of Forestry?

DR. GIBBONS: Yes, well I guess the Cabinet decision was made that certain industries would be zero based and the mining industry was not one of them.

MR. CHAIRMAN: Mr. Hewlett.

MR. HEWLETT: Mr. Minister, I was just looking through the salary details of your department, there is no listing for a press secretary or public relations officer and so on. Do I presume that your department does not have one or that you might share one with another department and it might be listed in some other format?

DR. GIBBONS: We do not have a press secretary. We share one of the Director's of Communication. I guess the salary estimates for that particular person is probably in the Executive Council vote.

MR. HEWLETT: Information Services section?

DR. GIBBONS: Yes, one of those. We share one of the individuals.

MR. HEWLETT: I was just wondering because at the time of the Budget, which was obviously a very difficult time for Government in terms of image, I will go back to what I mentioned some time ago, there was considerable positive chatter emanating from your ministry with regard to possibilities of agreement with Quebec. I was just wondering, seeing there was no personnel related to public relations in your department. This caught my attention because it was my position, as you realize as your critic at the time, that the level of press activity and what not was a public relations effort more so than an energy effort, obviously you disagree with me on that?

DR. GIBBONS: Of course I do. Because I think that most of the chatter that comes out of my department relative to these subjects comes out of interviews that I am commonly doing with the press or answers to questions from yourself or others in Question Period or at times when I am out as a guest speaker, talking on the issue of Hydro or Hibernia or mining or whatever else, and not deliberately targeted press activity. We have very, very little deliberately targeted press activity of any kind.

MR. HEWLETT: So you firmly believe that the talks you are having with Quebec are, for want of a better word, legitimate. This is not another race around the mulberry bush as such. I witnessed a ten year race. Forgive me if I come back to the point, but you feel that these are real substantive talks that have a reasonable possibility of reaching some sort of agreement in principle possibly by this year's end?

DR. GIBBONS: That is my belief.

MR. HEWLETT: Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Woodford.

MR. WOODFORD: Yes, sir.

MR. CHAIRMAN: I am trying to stay within the time limits. Time is on your side.

MR. WOODFORD: I wonder if the Minister or one of his officials in Hydro could explain why there was a decrease of some 22.7 per cent in revenues totalling some $9.3 million, especially to the industrial sector last year. Albright and Wilson was only 3.4 or 3.5. Where would such a substantial amount of savings come from, especially when it comes to the industrial sector?

DR. GIBBONS: I will ask someone from Hydro to take that.

MR. ABERY: I would believe it was the close down of the ERCO plant primarily. ERCO had been taking 130 megawatts in capacity from Hydro and now they are only taking 5 megawatts, so there was a very substantial decrease in industrial sales by Hydro because they were our largest customer.

MR. CHAIRMAN: I know by looking around the table those who are seeking information. I think this is coming from the annual report. Would you identify where it is coming from?

MR. WOODFORD: Page 12, Mr. Minister, under revenue the second part on the bottom. But I thought it said that Albright and Wilson used up ten per cent. That is why I asked the question, to be honest with you, I do not see it there now. I thought they just -

DR. GIBBONS: Albright and Wilson closed halfway through 1989, so that would make the big difference in 1990 where you basically had no usage - 2 megawatts instead of 130 - whereas in 1989 they used half of their capacity.

MR. WOODFORD: You mentioned earlier about the offshore and onshore in western Newfoundland, some seven parcels went under the offshore lease.

DR. GIBBONS: In the call for bids last year, seven of eight blocks were taken offshore western Newfoundland, and in the call for bids this year one of the four packages that is available is in the offshore and it is actually, I believe, the same area that was not taken last year but got renominated. So it is about halfway up the coast slightly out offshore from the other lots.

MR. WOODFORD: Do you expect to have much interest when you get the regulations in place for the onshore sector? Is anybody showing much interest?

DR. GIBBONS: We have had interest shown already. I do not want to name companies but we have had interest shown. So sometime this year, I do not know how soon, but fairly soon, probably within the next few weeks, we will put out a call for nominations of land in western Newfoundland to see what official response there will be from the industry. We have already informed the industry that our regulations are now in place and have been since February 15. So we are expecting some interest for the onshore lands in 1991.

MR. WOODFORD: Switching over to Hibernia, mentioned was made earlier by the Member for Pleasantville, I believe, or the Member for LaPoile concerning quality control. I am hearing a lot about that too, the quality control part of it. I am familiar with what happened in Norway and some of those places and other parts of Europe, and I have been told by people in the industry, or I should say Newfoundland companies, not necessarily people in the industry, people trying to get into the industry, that they do not stand much of a chance, to be perfectly honest about it, unless they do form a joint venture, and it would have to be with someone very, very reputable from not only outside the Province, but outside Canada. The quality control measures for Hibernia are very, very strict to say the least.

DR. GIBBONS: That is correct. Quality control and quality assurance are vital for this particular development. Companies that have experience with that naturally would be great partners for local companies that have no experience with it, and a lot of the local people have been showing a lot of interest in developing their own expertise in it. A joint venture partner is a natural way to get that technology transferred and get in on, I guess, the more interesting or some of the bigger contracts.

MR. WOODFORD: Yes, because even the book on quality control alone, the sort of pre-tendering document that you look at, is just mind boggling. I mean I read through one not long ago where a small company - and when I say small company I am talking, for instance, from the Lundrigan's group down. It is unreal to even go through what they have to put in place just to get to the point of submitting a tender.

DR. GIBBONS: That is when you are really talking about components for the GBS itself, and that is when quality control is vital. Right now in the construction phase at the Bull Arm site it is not quite the same because a lot of it is regular routine construction activity, and a lot of Newfoundland companies have a lot of experience in that type of work. But I could ask my deputy to speak to that particular question a little more. Gordon.

MR. GOSSE: I am not sure what else I can add to that. The Minister is quite right. The standards are slightly different for work being done on the site which is a lot of routine civil work and routine type of construction work, and the quality control standard just is not that high for that type or work, but it certainly is for any offshore facility or component of the production system.

MR. WOODFORD: Correct me if I am wrong, but I think fifty-one per cent of the work is supposed to be done in Newfoundland.

DR. GIBBONS: Not fifty-one per cent.

MR. GOSSE: I am not sure what that number relates to. Certain work was agreed to in the binding agreements that would be done here in the Province, but the number does not add up to fifty-one per cent. There is one number in the documents for Canada as a whole, the content will be from fifty-five to sixty per cent, and a portion of that will be a large portion in the Province.

DR. GIBBONS: Quite a large portion actually will be done in the Province because the GBS is being built in the Province and all the related labour - 10,000 person years of the direct employment of Hibernia out of about 17,000 - done right here.

MR. WOODFORD: Done in the Province and done by Newfoundlanders, where would -

DR. GIBBONS: Again, in terms of the employment most of that employment should be Newfoundlanders, but at this particular phase there are a fair number of people who are not Newfoundlanders who are working on the project in the Province. Because when you get into some of the technical areas - people have had to come in right now in the early stages to work with the Hibernia Management Company and the Nodeco group and the NOC group. Some of these are not Newfoundlanders, but when you get into the construction trades, and the work at Bull Arm primarily there you are going to be talking about Newfoundlanders. There is a requirement in the Atlantic Accord, of course, that Newfoundland residents have to be given first preference and resident is defined as in the election act, six months continuous living in Newfoundland. That is first preference on the jobs.

MR. WOODFORD: I do not know if you can answer this or not, but I will ask you anyway. Is there any truth to the rumour, which I think was brought up in the House earlier by someone, that if a worker in the building trades got a job there on the site - let's say, for instance that they are with Lundrigan's and they were on the job there for three months. Once they are finished that particular contract they just move out and go to the bottom of the list. I have been told by union people that this is true. Whether it is just rumour or truth or not I do not know.

DR. GIBBONS: I do not know why that would be true. That would have to be something that is being done internally in the unions because my understanding is that they work on the basis of seniority on the union list. If you are senior and you are on a job now I would think you would remain senior as you change from one project to another project on the site. But there might be something internally in a union where they cycle people through to give people employment. It is certainly nothing that I am familiar with and nothing that Government is involved with doing.

MR. WOODFORD: That is my understanding, that it is done within the unions, but it is happening.

DR. GIBBONS: They may be doing something in their particular union to cycle the work through their membership but I am not aware of it.

MR. WOODFORD: I was told by a union member that that is exactly what is happening. For instance if Lundrigan's has a contract for a year and the worker is there for a year, well he is safe enough, or for two years or whatever. But if it happens to be for three or six months and he happens to get laid off at the end of that contract he cannot stay there and work on.

DR. GIBBONS: That must be unique to some particular union because my understanding was that it would be seniority within the union, till they run out of union members, then they start taking other people who have applied who are non-union members. Basically on a priority basis.

MR. WOODFORD: Getting back to the statement made by Mr. Noel concerning the integration or the merging - or I suppose it is not a merging, it would be a sale of Newfoundland Hydro, so that they can either compete with Newfoundland Light or else.... I do not see it as one company but I see a lot of duplication. I always did. It is there now and always will be. What would it take, or is it realistic to even think, that there would be - say, Newfoundland Hydro could go on its own?

In saying that I would like to go back to the fact that the Newfoundland Government now does not pay a subsidy to Newfoundland Hydro. Right? They are more or less off on their own. Now, would the time be right - or am I wrong in saying that or suggesting it -for Newfoundland Hydro now to act as a retailer rather than a wholesaler?

DR. GIBBONS: Well, Newfoundland Hydro does act as a retailer in many circumstances.

MR. WOODFORD: Some cases, yes.

DR. GIBBONS: In some cases. I am not sure what percentage of the Province's customers are Newfoundland Hydro at this time, but we are not considering a merger or a sale or anything at this time. As I said earlier we assessed the question of the power distribution district a couple of years ago when we talked about the phase-out of the subsidy. We at that time assessed the amount of potential overlap there would be and there was not much at all.

MR. WOODFORD: So there is no consideration of that now whatsoever?

DR. GIBBONS: No, we are not considering it at this time. As I said, Hydro for some customers is the retailer right now, and Newfoundland Light and Power for some customers is the retailer. I think Light and Power may be 80 per cent retail base.

MR. WOODFORD: I saw it there in your report (Inaudible).

DR. GIBBONS: About 80 per cent maybe is Light and Power.

MR. WOODFORD: Those are all the questions I have, Mr. Chairman.

MR. CHAIRMAN: Mr. Noel.

MR. NOEL: Is Newfoundland Hydro free to go out and compete with Light and Power or does Light and Power have some sort of right to those customers?

DR. GIBBONS: Well, there is no overlapping really between the customers. There are certain customers who are on the grids for Light and Power and there are certain customers who are in areas served by Hydro, and they are not competing in these two. So there is really no overlap between them. They operate quite independently.

MR. NOEL: But Newfoundland Light and Power has no contractual kind of right to a particular community, does it? I mean, if at some point Newfoundland Hydro thought that it could provide electricity more cheaply to any given region than Newfoundland Light and Power is, would they be free to go in then and compete or would it make any economic sense to? Is it possible that would occur?

DR. GIBBONS: I do not think it would make any economic sense to start competing like that but I do not know. I will ask Hydro to make a comment on it.

MR. ABERY: You would not go in and put up another set of poles next door to Nfld. Lights set of poles and go around and try to get their customers to sign up. If you were going to do something like that you would acquire their assets. But there is no duplication. I mean, we are in certain rural areas, they are in other rural communities and urban communities. There is no community where we are both in. It is either Newfoundland Light or Newfoundland Hydro in a community and there is no duplication in any of those senses.

MR. NOEL: Have you had any indication that either company is more efficient, is capable of providing the service at cheaper rates? Is there any reason to believe that one of the companies is not as efficient as it could be, or that they are receiving a higher markup than they than they need to?

DR. GIBBONS: Personally I do not think there is any real difference because both of them are regulated by the Public Utilities Board, and both companies are in before the board either annually or close to annually and being assessed in terms of all costs. So I really do not think that there is anything to choose between the two companies in terms of ability to provide the service and at what cost to provide the service. Maybe the Chairman of Hydro would want to speak to that.

MR. ABERY: No, I think what you said is basically correct, Mr. Minister.

MR. NOEL: Thank you.

MR. CHAIRMAN: We have been running pretty well with ten minute time slots. Mr. Ramsay you had some questions.

MR. RAMSAY: Yes, I have a few of them. On the southwest coast my district probably has the most frequent power outages of any area in the Province due to weather conditions, as I understand it, with the weather being harsh enough that the power lines blow down or because of some damage to equipment. Where Hydro is the supplier, I guess, or the wholesale provider of this power through a grid system into the Port aux Basques area, I was just wondering if they are aware of this and is there anything that can be done. Either another line to supply electricity to that area that has the frequent outages, or an inter-tie into the grid that is down around the Hopebrook gold area to the back end of the system down in Rose Blanche. These two things are being discussed locally. I did not know if anyone here with Hydro has any comments or details on that, Mr. Minister.

DR. GIBBONS: Because of exactly the problem that you are talking about for your area, Hydro, in the last year or so did some up-grading of some lines in some other parts of the Province, and I am not aware if they have any plans in your area. I can ask the Chairman of Hydro to comment on it.

MR. ABERY: Mr. Chairman, I do not think we have any specific plans at present. The Port aux Basques area is serviced by Newfoundland Light and Power I believe. They would buy in bulk off us at a terminal.

AN HON. MEMBER: Doyles or someplace.

MR. ABERY: Yes, wherever. We would be responsible for getting the capacity and energy to that point. They would be responsible from there on. I do not have any direct knowledge of us doing anything other than keeping our particular lines in a good state of repair and reliability as best we can.

MR. RAMSAY: This inter-tie idea, I note that it is very close, less than seventy-five miles as I understand it. Seventy-five miles might not sound like a small amount, I suppose, for a high voltage transmission line, but I just wonder about the cost of that kind of inter-tie. You know, what does a mile of high voltage transmission line cost?

DR. GIBBONS: A million dollars?

MR. ABERY: If it was high voltage it would be millions of dollars for seventy-five miles. It would depend on what voltage the line was. As I recall, a line from Churchill Falls down to Goose Bay, which is a couple of hundred miles, I think that was $80 million if I recall, so seventy-five miles would be, you know, a third of that would probably be $25 million or something of that order of magnitude. It would be quite expensive, but it would depend on the size of the line and the terrain. That is very awkward terrain down there.

MR. RAMSAY: The other matter that I wanted to speak to was the energy dependency, the lowering of the cost. I asked this at last year's estimates and I am wondering about the efforts that are being made to lower our dependency on energy by the use of the new fluorescent type light bulbs, any kinds of activities in your department that are highlighted in that area to try to lower our cost of electricity.

DR. GIBBONS: Well, we are involved with demand side management plans and I guess we have had discussions with Light and Power and Newfoundland and Labrador Hydro from the group within the Department that are involved with alternate energy and conservation of energy and renewable energy. Maybe Hydro can talk a little bit more about the specifics of what they might be thinking about. But demand side management is one aspect of providing power for the future in a sense of reducing demand for new developments.

MR. RAMSAY: Thereby lowering the overall cost to consumers as well as Government.

DR. GIBBONS: Some of the provinces have committed huge amounts for that but we have not up to now. Maybe Cy has a comment here?

MR. ABERY: Yes, we have been undertaking joint studies with Newfoundland Light and Power and we will be reporting, and Newfoundland Light and Power will be reporting, to the Public Utilities Board at their next rate hearing on what programmes might be appropriate to bring in. So that work is ongoing.

MR. RAMSAY: Mr. Chairman, I just have one more and it concerns the matter I brought up previously about the Hibernia situation and local activity. I have been told, and this is something that came from the previous thing I raised as far as the Port aux Basques proposal, that some officials with industry, science and technology in Canada, the Federal Government, and Newfoundland offshore contractors, have expressed some doubts about the ability of the Bull Arm site to be able to handle congestion at the site. I know that the agreement requires that the work be done in Newfoundland but I wonder what contingencies are there that the company would have to follow in that kind of case.

DR. GIBBONS: Well, I am not aware of any problems with the site itself. We do expect that some work will be subcontracted around. I do not know if Gordon has anything that I am not aware of on that.

MR. GOSSE: I think the intention of the company is to try to do as much work as possible at the Bull Arm site and sort of increase the efficiency of the whole fabrication operation. But I guess if they get behind in their critical path I think they have the option of maybe moving some smaller component to possibly Cow Head, or the expanded Cow Head, facility. That is one possibility, I guess.

DR. GIBBONS: But at this time we do not -

MR. RAMSAY: Okay, my mistake. I was talking about Cow Head actually, insofar as the top sides... is that Cow Head, is that being done?

DR. GIBBONS: Cow Head will be bidding on some top side components. They will be bidding on some.

MR. RAMSAY: Okay. So it is not guaranteed that they are going to be done there?

DR. GIBBONS: No, no, there is nothing guaranteed to Cow Head at all. They will just be bidding on some top side components and they have to win the contracts for that, and I imagine they will only be able to win contracts for what they are capable of doing on that site.

MR. RAMSAY: Okay.

MR. CHAIRMAN: Thank you, Mr. Ramsay. Mr. Woodford had a follow up question.

MR. WOODFORD: Yes, let's get back to that question I asked pertaining to the 22.7 per cent decrease to industrial customers. I found the other, pertaining to Albright and Wilson, and that is page 3, under Energy Sales, 3.9 per cent in 1990, and it consumed 10 per cent of Hydro's annual energy output. I would take it that will come under industrial. Ten per cent taken from that will still leave 12.7 per cent. When you look at what they were using there, 135 megawatts, was it? Is what they were using? I mean, that is a substantial -

DR. GIBBONS: Well, their contract had a maximum, I guess, of 130 megawatts, wasn't it?

SOME HON. MEMBERS: (Inaudible).

MR. ABERY: Yes, the original contract with ERCO was for 130 megawatts and about 800 gigawatt hours a year. The last few years that they were there they were not taking 130 megawatts, I think they were taking about 100, and about 500 gigawatt hours. They did not stop operations at the end of a year. They stopped in something like August, I think, so there is about two years' statistics where they were in production for about half the year at, say, 100 megawatts and then half of the year, or five-twelfths of the year, at a much lower level, and then it finally evolved down to that. But there was nothing else that went on basically with our industrial customers that would have dramatically changed the numbers very much, so most of that impact would be ERCO.

MR. WOODFORD: But why would they say in one part that at maximum it consumed 10 per cent, then in another part under revenue, that industrial sales are down 22.7, who is responsible?

MR. ABERY: 10 per cent would have applied to all our sales, retail and industrial.

DR. GIBBONS: The total energy sales.

MR. ABERY: The total energy sales of retail and industrial combined but they were a much larger percentage of just industrial sales.

MR. WOODFORD: Is that right, what percentage would it be? Well it must be close to the twenty-two because anything else would be-

MR. ABERY: As I said, they finished off in the middle of a year, when they were at 100 megawatts. They probably would have been 40 per cent of our industrial sales or something of that nature, and if they had gone right to the end of December of some year and then stopped, you would have seen a 40 per cent drop in our industrial sales, but they stopped I believe in the middle of August as I recall, so you had about half of their impact in a year. So the amount that ERCO would have consumed of our total retail and industrial combined, they were roughly 10 per cent of our overall sales, but they were a much higher percentage of just our industrial sales. I think the reference on page 3, is to the total sales of Hydro, just energy sales generally. It was the gross sales altogether, it was 10 per cent, but just on industrial sales it was a much larger number and on page 13 I think you mentioned, there we were just talking about industrial sales.

MR. WOODFORD: Yes, that is why I wanted to get the difference. That sounds to me that it is almost a quarter of industrial sales and that to me is an awfully high figure.

MR. ABERY: Now if you did it on a total basis, they would have been even higher than that; we sell sixty-five megawatts to Abitibi, Stephenville; we sell thirty-four megawatts to Grand Falls; we sell thirty megawatts to Kruger; twenty-five megawatts to Come By Chance; ten or fifteen megawatts to Hopebrook and ERCO is 130 megawatts.

It was probably 40 per cent of our industrial load just for that one customer and when they went down from 130 to five, our industrial load went down in total by something like 40 per cent, but because they went out in half a year, it turned out to be 22 per cent.

MR. WOODFORD: So if Albright and Wilson had kept going out there, you would have been in real trouble in another couple of years if that is the case; the Province would have been in real trouble with regards to the supply of power, if you have to have something in place now by 1994, is it?

DR. GIBBONS: 1995, 1996. Originally, without Albright and Wilson closing, Hydro would have had to have made a decision two years ago on extra power, but because Albright and Wilson closed, they gained about two years in making that decision on what the next source would be.

AN HON. MEMBER: They gained another Hinds Lake.

DR. GIBBONS: Exactly, it was equivalent to giving us a Hinds Lake.

MR. WOODFORD: Yes, because there is nowhere else to get it now; I mean there is no other expansion, except for a few small projects.

DR. GIBBONS: As I said yesterday in the House of Assembly, we have Holyrood number four as an option and we have a number of small hydro sites on the Island as options and there is almost nothing else left indigenously, to develop.

MR. WOODFORD: Mr. Chairman, if there is nothing else left, why would you come up with that policy last year, I think it was last year's budget, with regards to the mini hydro sites?

DR. GIBBONS: Part of the reason for that policy last year, was to encourage private industry to develop some of these smaller ones that are really so small that they may not be of interest to Hydro, less than ten megawatts, to encourage the private sector to come out and invest some money to develop some eight/ten megawatt units and help us with our needs over the next decade.

We have not seen much interest from the private sector, or we did not when we only had a one megawatt ceiling on private developments, but with a ten megawatt ceiling we are seeing more interest and I am hopeful that some small hydros will be developed by the private sector to help us with our needs over the next ten years.

MR. WOODFORD: But you have none yet?

DR. GIBBONS: I do not want to specify but a couple of companies have gone to Hydro and identified rivers that they are interested in. I think there are four or five rivers that have been identified in the small hydro category. But none have become projects yet. It is just that these companies have identified them to Hydro and said: we are interested in assessing these. So they could become part of the mix.

MR. CHAIRMAN: Thank you, Mr. Woodford.

In consultation with the Vice-Chair during Mr. Ramsay's questions and the answers that were forthcoming, I will now ask: are we ready for the question?

On motion, subheads 1.1.01 through 5.3.02, carried.

On motion, Department of Mines and Energy, total heads, carried.

MR. CHAIRMAN: With that taken care of I would like to thank the Minister and his support staff, and Mr. Abery and his support staff, as well as the Clerk, the Page and Hansard, and thank the press for their attendance tonight as well. Thank you all again for being with us.

On motion, meeting adjourned.