May 14,
2015
RESOURCE
COMMITTEE
Pursuant to Standing Order 68, Dwight Ball, MHA for Humber Valley, substitutes
for Christopher Mitchelmore, MHA for The Straits White Bay North.
The
Committee met at 9:00 a.m. in the Assembly Chamber.
CHAIR (Cross):
I see the light is on. Good morning
everyone.
Welcome.
There
are a couple of quick chores first, I suppose.
Mr. Ball is replacing Mr. Mitchelmore in this session.
We have
minutes from the Department of Environment and Conservation and the Office of
Climate Change that need a mover.
Mr.
McGrath moves; Mr. Hunter seconds.
All
those in favour, 'aye'.
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, minutes adopted as circulated.
CHAIR:
Before we get to the introductions, just a couple of quick comments so everyone
is aware.
Estimates are governed by Standing Orders 65-77, and the proceedings that we
will do, we will introduce the Committee and then we will introduce the
department. We will give the
minister the opportunity to have fifteen minutes to open.
The first speaker thereafter, representing the Official Opposition, gets
fifteen minutes, and every intervening speaker after that gets ten minutes.
We will
use the clock just to try to keep us in order and keep everybody timely.
We will also endeavour to break for between five and ten minutes at 10:30
o'clock.
We will
start now with introductions of the Committee.
We will start with Mr. Ball.
MR. BALL:
Good morning.
Dwight
Ball, MHA, Humber Valley.
MR. MILES:
Peter Miles, Opposition Office.
MR. SLADE:
Sam Slade, MHA for Carbonear Harbour Grace.
MS MICHAEL:
Lorraine Michael, MHA, Signal Hill
Quidi Vidi.
MR. MORGAN:
Ivan Morgan, Researcher.
MS PERRY:
Tracey Perry
CHAIR:
Mr. Hunter's light is on.
MR. HUNTER:
Thank you, sir.
Ray
Hunter, MHA, Grand Falls-Windsor Green Bay South.
MR. MCGRATH:
Nick McGrath, MHA for Labrador West.
MS PERRY:
Tracey Perry, MHA, Fortune Bay Cape La Hune.
CHAIR:
Minister Dalley.
MR. DALLEY:
Derrick Dalley, Minister of Natural Resources and MHA for The Isles of Notre
Dame.
MR. BOWN:
Charles Bown, Deputy Minister, Department of Natural Resources.
MS ENGLISH:
Tracy English, Associate Deputy Minister, Department of Natural Resources.
MR. LIVERMAN:
Dave Liverman, ADM, Mines, Natural Resources.
MR. IVIMEY:
Philip Ivimey, Departmental Controller, Department of Natural Resources.
MS QUINTON:
Diana Quinton, Director of Communications.
MR. FROUDE:
Ian Froude, Minister Dalley's Executive Assistant.
MR. SMITH:
Alex Smith, Director, Mineral Development, Mines Branch, Natural Resources.
CHAIR:
Okay. One quick reminder for
members who are asking the questions, you ask the minister, and if the minister
deflects, in a supplemental way you can continue the conversation with the
person he deflects to. The minister
always has the right to come back to the question.
Minister Dalley.
MR. DALLEY:
I think I will just pass, in terms of some overview.
Most people are familiar with the department and you will see some
changes there.
Quickly, I guess you will see probably some things stand out a little more, some
variances, particularly around the Employee Benefits.
It is an issue of rightsizing some budgets that we are certainly
committing to do next year.
Outside
of that, some slight variances in salaries are due to increases.
Other than that, I think we will just go through the line items and I am
sure I will get to answer the questions that need to be answered.
CHAIR:
Okay, so we will call the line item.
CLERK (Ms Hammond):
Subhead 1.1.01.
CHAIR:
Mr. Ball.
MR. BALL:
What did you call, 1.1.01?
CHAIR:
Yes, we just started.
MR. BALL:
Okay, thank you.
I will
start, as the minister said, with some line items, which is the usual practice
now by this group in this room. I
do not know what books you guys are using by the looks of it there are some
Excel sheets or something but it is 1.1.01 and the Transportation and
Communications. Last year, there
was
CHAIR:
Just as a correction, Mr. Ball, we are not just sticking to 1.1.01.
MR. BALL:
Yes, we will move through. Thank
you.
CHAIR:
We will move through inclusive as you go.
MR. BALL:
Thank you, Mr. Chair.
It was
$78,000 last year. We see $78,000
in the budget this year, but it was actually revised and spent $93,500.
MR. DALLEY:
Yes.
MR. BALL:
So just an update on that.
MR. DALLEY:
The increases there are basically two missions: one was to China, which
was added there; as well as the trip to Washington, DC.
In China, it was regarding mining activity and meetings with respect to
potential investors for the Province.
In the Washington trip, it was with respect to energy and meeting with
New England governors and the Department of Energy for the US.
MR. BALL:
Okay.
Moving
along, in 1.2.01, under Supplies we saw about an extra $10,000 from the budget.
It was $6,300 last year and it was $16,900 spent this year.
MR. DALLEY:
Sorry, which?
MR. BALL:
If you go to 1.2.01 under Supplies.
MR. DALLEY:
Okay. There are a couple of
adjustments on the revised. The
actual number is $11,619. One
thousand dollars of that is in error. That
belongs in mining it belongs in one of the mining sections.
Outside of that, the increase is basically increases in magazine
periodical subscriptions and so on.
MR. BALL:
So you say it is $11,000, not
MR. DALLEY:
It is $11,619.
MR. BALL:
Not the $10,600.
MR. DALLEY:
The $1,190 is an error and the others are through subscription increases.
MR. BALL:
Okay, so under Purchased Services, it was $8,800 and it went to $25,500.
MR. DALLEY:
The difference there is when we changed the departments and Forestry and
Agrifoods went to the Department of Fisheries, we rightsized the budget, but
this is an item that got missed. So
there is $16,700 that actually should have been taken out of that line item and
go to Forestry and Agrifoods. That
is the difference in the number.
MR. BALL:
Okay. When we move off the line
items that is one of the questions I want to ask, about how that transition
happened, what was the impact with staff, and the extra costs with that too.
If we
continue on with 1.2.02, if you look at the Salaries line here, it went from
$927,000 in your budget and it actually went back to $847,000, so I guess some
$80,000 or so, and back to $950,000 this year.
I am just wondering if all those hirings have been made.
There was obviously less money spent last year.
Is that because of vacant positions, or is there a particular date of
hire that affected that?
MR. DALLEY:
Primarily, there are two things.
One was a vacancy during the year.
It was an Accounting Clerk II. We
have plans to fill that position.
It has not been filled at this point.
The other is lower than anticipated overtime expenditures.
So that is why we see the reduction.
As for
the increase, that is primarily due to collective agreement, salary steps, and
so on.
MR. BALL:
Okay.
Maybe
just for because it keeps coming up through all of this.
There does not seem to be any consistency when you look in the difference
in Salaries, it is not always reflected in a very similar fashion to Employee
Benefits. How does that tie in?
Is there a percentage because, in some cases, we see here where you get
bigger increases in Salaries, yet a less increase in Employee Benefits; and, in
some other cases, we have seen Employee Benefits that would go up and not as big
a change in Salaries. Is there
MR. DALLEY:
No direct correlation.
The Employee Benefits is primarily around seminars, conferences,
training, and so on. It depends on
what is happening from year to year.
It depends on how many people we send.
I think what you will see here, primarily in Employee Benefits, that
there has been an increase. That is
not because we are sending more people; in fact, in a lot of cases, we have sent
less because of discretionary travel and so on.
We
still attended what we needed to do, but we are seeing an increase in the costs
for some of these. The discussion
that I have had is that we need to have a closer look at some of our budgets
around what we are seeing in increases that we can rightsize budgets.
That is primarily the issue around Employee Benefits.
MR. BALL:
Okay.
In that
same category, 1.2.01, Purchased Services is $66,000 and there was an increase
in the budget at $84,000.
MR. DALLEY:
What happens here it is
actually in Phil's shop. The
allocation here was filled through finance controllers' responsible for Fishery,
Natural Resources, and Forestry.
Any training budget and work that he does, the funding for that is parked here
in this budget. What you see here,
that is primarily what that budget is, and the increase is the fact that there
was significant training done this year around the Organizational Development
Initiative. Basically that work
that Phil does with all three departments is paid for out of this item right
here.
MR. BALL:
So for the three departments
it is done out of this one initiative?
MR. DALLEY:
The budget to do the
Organizational Development Initiative, the training, is parked here in this line
item.
MR. BALL:
Okay.
Is there any reason that would stay in Natural Resources when it is
really work that is done in another department?
MR. DALLEY:
I can ask Phil if he would
provide the answer.
MR. IVIMEY:
The Administrative Support
budget here houses the divisions for Information Management and my division,
which is Finance and General Operations.
A communal theme you will see across government is some of the Financial
and General Operations Divisions are a shared service for multiple departments.
I
myself, the Finance and General Operations Division, we are shared service for
the Department of Natural Resources, Fisheries and Aquaculture, and Forestry and
Agrifoods, so you will see me that the Estimates meetings for Fisheries and
Aquaculture, and Forestry and Agrifoods as well.
The
administrative budget that relates to finance, general operations, landlines,
the administration of phones, telephones, day-to-day kind of operations type
support that is housed within my division, within the Department of Natural
Resources.
A
component of that is a training initiative which is managed through the Human
Resources Secretariat which provides training support for employees in each
three of those divisions, so that training budget is also housed under this one
communal area. All three of those
departments drawn down on this budget that is in this division.
MR. BALL:
Okay.
Moving
down to 1.2.03, and that is the $90,000 there in Property, Furnishing and
Equipment, I was just wondering what that purchase was.
MR. DALLEY:
That purchase was a transfer
from the Geological Survey for the purpose of replacing vehicles, and there was
three vehicles replaced in the Mines Branch.
MR. BALL:
That was not budgeted for
last year at all?
MR. DALLEY:
It was not budgeted, and I
guess savings in the Geological Survey were transferred over and three vehicles
were replaced in the Mines Branch.
MR. BALL:
Okay.
If you
go back to I picked up on this yesterday last year's Estimates there was
like $625,000 that showed up in the 2014-2015 budget, but I do not really see
where it shows up here. I do not
know if that is something that has been transferred out because of Forestry and
Agrifoods or if someone has an answer for that.
MR. DALLEY:
I will ask Phil if he could
answer that.
MR. IVIMEY:
Yes, that relates to a restatement for Forestry and Agrifoods.
MR. BALL:
Okay, that is what I thought
when I saw it, but I was not sure.
In the
department now I think if you total up the number of employees, it would be
somewhere around 179 employees. How
many of them are temporary versus permanent, and how many vacant positions would
we have in the department now?
MR. DALLEY:
I do not have the number
right here in front of us, but I will certainly get it to you.
MR. BALL:
Okay.
Do you
want to move on to Mineral Resource?
I do not have any more questions with Executive and Support Services.
I do not know if you want to give Lorraine an opportunity before we move
onto the Mineral Resource Management.
CHAIR:
Okay.
Ms
Michael.
MS MICHAEL:
Thank you, Mr. Chair.
Yes, I
think that is a good way to do it.
I just have one question under 1.2.02, Administrative Support.
I am just curious about 02, Revenue Provincial.
What is that line referring to?
MR. DALLEY:
Is that the $10,000?
MS MICHAEL:
Yes.
MR. DALLEY:
That is basically
miscellaneous in and out in terms of sometimes we may pay a bill and there is
credit or there may be a travel advance for someone and they do not travel,
there is a cancellation, the money comes back.
So that is basically just an accounting measure to deal with the small
ins and outs.
MS MICHAEL:
Okay, thank you very much.
I think
I know the answer to this one, but I will just put it on the record anyway.
Going right back to 1.2.01, Executive Support, under Salaries, it is
going up by $75,700. I am assuming
that is not a new position; it would be more benefits and increases.
MR. DALLEY:
Sorry
MS MICHAEL:
Subhead 1.2.01.
MR. DALLEY:
Under Salaries?
MS MICHAEL:
Under Salaries, yes.
MR. DALLEY:
The basic change there from
last year to this year was the reclassification of executive level positions and
it is a kind of back payment that was owed.
Then the subsequent increases are basically to the collective agreement,
salary steps, and so on.
MS MICHAEL:
Right.
That is what I figured, but I thought we would get it on the record.
Thank
you very much. That is all that I
have under that section.
CHAIR:
Subhead 1.1.01 to 1.2.03
inclusive.
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Contrary?
Carried.
On
motion, subheads 1.1.01 through 1.2.03 carried.
CHAIR:
We will come back to
(inaudible).
MR. BALL:
Yes.
I will just start up on 2.1.01; this is in the Mineral Resource
Management area. Again we see
Salaries down a couple hundred thousand dollars, some $4 million down to $3.82
million.
MR. DALLEY:
Which subhead?
MR. BALL:
That will be in the Mineral
Resource Management under 2.1.01, Geological Survey.
MR. DALLEY:
I am showing 4.1.01.
Is that an error on ours?
OFFICIAL:
Yes, that is an error.
MR. DALLEY:
Okay, I am sorry.
MR. BALL:
I think what you will see is
some of the numbers based on the Forestry and Agrifoods being part of last
year's Estimates, the numbers have changed slightly.
MR. DALLEY:
Okay.
Sorry,
your question again?
MR. BALL:
The question would be on the
Salaries, the $4 million down to $3.8 million.
MR. DALLEY:
Basically vacancies during
the year.
MR. BALL:
Okay.
Yet Employee Benefits are up so I am assuming that is professional
development or something like that?
MR. DALLEY:
Again it is a line item here
that needs to be corrected. There
is an error there. The actual
revised number was $27,500.
MR. BALL:
Okay.
MR. DALLEY:
That has to do with
expenditures associated with seminars, conferences, membership fees, and so on.
As I said, we are seeing an increase in some of these conferences and the
costs. We have had a discussion
about rightsizing the budget and, as you can see, there is an adjustment made
for next year.
MR. BALL:
Transportation and
Communications is down considerably.
Was there something that was planned that was not done, or was it through
another department?
MR. DALLEY:
Well a number of factors;
one was discretionary travel that was implemented.
Probably more significant here was that there was less helicopter usage.
As you can appreciate it is very costly for helicopter time, but we used
less time this year.
MR. BALL:
The helicopter usage, how
much would that have been in that is a considerable reduction.
Is that the
MR. DALLEY:
We would have had twenty to
thirty hours less with respect to actual helicopter time as well as less travel.
MR. BALL:
With twenty or thirty hours
less helicopter time that would not be I mean you are looking at a difference
here of a couple of hundred thousand dollars.
MR. DALLEY:
That is not all helicopter
time. I would agree to that.
Primarily it was less travel.
We cut back on the field time this year.
It went from eleven field trips last year to nine this year.
The cost associated with that is primarily the reason for the reduction.
MR. BALL:
Okay.
The Professional Services go from $19,000 up to $49,000, and you actually
maintain that budget this year. Is
this a new directive within the department?
Will it continue year over year?
This is under Professional Services.
MR. DALLEY:
Again so I can fix a number
here and apologize, the actual number should read $27,000, and an increase,
realignment here around Professional Services.
There are a number of things that come out of here.
For example, in China we had geologist interpretive services which were a
cost that is showing here on this line item, and then the next year as well,
with respect to field work and hoping to do more field work and studying what
happens.
Either
we get more field work done and sometimes when we are not in the field there
is an opportunity to get more of the work done so that the geologists are
actually getting their work done from what they have extracted in the field.
That is basically what comes out of here.
MR. BALL:
When was the trip to China?
MR. DALLEY:
When was it?
MR. BALL:
Yes.
MR. DALLEY:
Last fall.
MR. BALL:
That trip was obviously
something not budgeted for at the time.
It was not budgeted for last year, I am guessing, from the conversation
that we had this morning. The
decision to go to China was made, obviously, after the Budget last year.
MR. DALLEY:
The department budgeted for
the trip to China because of the relevance, obviously, with what we are doing
and the interest in Chinese investment.
What we see in the increase is primarily around my travel and my
involvement with the trip.
MR. BALL:
In Grants and Subsidies
there, line item 10 under 2.1.01, we see an increase.
It is only $2,500, but it has been $5,000 for a long time.
Where do they go? What is
this for?
MR. DALLEY:
It is grants provided to the
Canadian Institute of Mining, Metallurgy and Petroleum to cover a portion of
their annual review of activities; to support the Geological Association of
Canada, Newfoundland and Labrador section, in support of its annual meeting and
field trip; and the Canadian I am going to say Quaternary Association in
support of its national biennial meeting in St. John's.
MR. BALL:
Okay.
Move on
to 2.1.02, which is Mineral Resource Management and we get into the Mineral
Lands piece. In 2.1.02,
Transportation and Communications, we see an increase over the budget last year
of $127,900 to $160,000. That is
now brought back to $127,900. So
the increase last year of around $23,000 or so, it is $33,000 I guess almost.
MR. DALLEY:
Yes, the increase there is
primarily due to higher than anticipated helicopter costs for field projects.
We had hired another inspector this year to be able to do more
inspections on the exploration side and ended up with more core sample work as
well. As a result of the additional
inspector we have had increased helicopter time.
MR. BALL:
Okay.
Moving
down to Purchased Services we see a big decrease in this year's budget.
Last year $657,000 was spent and this year it is down to $77,000.
Just a question on that; why the difference and what is it you purchased
last year that you do not need to purchase?
MR. DALLEY:
The difference here if you
recall last year in the budget as well, we highlighted there was $610,000.
If you look down further in Revenue you can see that.
MR. BALL:
Yes.
MR. DALLEY:
The $610,000 was an
agreement with the federal government with respect to the Mealy Mountain
National Park. Within Mealy
Mountain National Park there was a company that held mineral rights, licences
and an agreement. In order to do
the park there was an agreement with the federal government that they would pay
this company an amount of money with respect to their investment around the
mineral exploration.
MR. BALL:
So it is just basically
buying out the investment or replacing the investment that they had.
MR. DALLEY:
It is in and out.
It was no cost to us. It was
an agreement with the federal government.
We would pay and the federal government will reimburse us.
If you look down in Revenue you can see where we budgeted that amount of
money to go out. As well, in the
coming year then, we have that as revenue coming in.
That is basically the exchange of $610,000.
MR. BALL:
Is that company public
information now?
MR. LIVERMAN:
The fact is that the company, which holds mineral rights in the Mealy Mountains,
is public, but there has been no public announcement of any compensation at this
point.
MR. BALL:
Okay.
Just moving along to 2.1.03, I guess the big difference here, except for
we have seen some changes in Professional Services from $730,000 down to
$507,000 which was actually spent, and then down to $240,000.
These are the Professional Services.
There seems to be a substantial decrease for this year, so just an answer
on that one, I guess.
MR. DALLEY:
Yes, this line item here is
with respect to the inspections around dams and work that we have highlighted
that we want to get done on the dams around stability.
Three dams in particular were highlighted for repair and inspection.
Gullbridge was the highest priority, and the first phase of work has been
completed. This particular dam
meets the recommendations to ensure stability, but it is certainly on our list
that we would want to do some long-term work, particularly around the integrity
of the dam. It is work that we can
defer, without compromising any safety.
Then there are the other two dam sites around Whalesback and Rambler.
There is still work ongoing there, but it is lower priority.
Basically with these dams, some of the work has been deferred.
We feel with the inspections and looking at the conditions of those dams,
it is a lower priority and less risk of failure.
We will continue to keep an eye on these as well.
Through our inspections if there are any changes, obviously we will bring
forward the work that needs to be done.
For now, the inspections are done and we are satisfied with the
integrity; but certainly, on our list in long term, that we will need to keep it
in view.
CHAIR:
Okay.
In the
event of time, we will move to Ms Michael.
MS MICHAEL:
Thank you.
Let's
continue then in that section.
Looking at Purchased Services there was a budget of $1.2 million approximately.
Then only $36,000 was spent and this year $146,500 is estimated.
Could we have an explanation of that line, Minister, please?
MR. DALLEY:
Yes.
What we have here again, that is related to the dams.
There are two aspects of that.
One is the Professional Services around the inspection, the engineering
plans, and work that we would use both internally and externally; and then the
Purchased Services would be the line item where we would actually go out and
hire to get work done.
The
work did not get done this year, but again, particularly around Gullbridge, we
are satisfied with the integrity where it is right now. So that is basically
that line item. Although we
budgeted, the work never got done.
Due to some delays and then weather and so on, it never got done.
Our position is that we will continue to inspect and monitor; but, for
now, based on the work that has been done on Gullbridge already, we are
satisfied with the risk assessment.
MS MICHAEL:
Okay.
Coming
down then to the Grants and Subsidies, which is subsection 10, what makes up
that line?
MR. DALLEY:
That is basically the
Mineral Incentives Program. There
is funding within this program for prospectors and funding for junior
exploration companies. That is
primarily what that fund is for.
Again, the rightsize of the budget here is $1.75 million.
MS MICHAEL:
It is $1.75 million.
MR. DALLEY:
The revised is $1.75 million
versus $1.90 million.
MS MICHAEL:
Oh, so the revised was down
to
MR. DALLEY:
The revised was down just a
little.
MS MICHAEL:
Yes, $1.75 million
MR. DALLEY:
Yes.
MS MICHAEL:
Okay, got it.
Minister, I am going to ask this question and I hope it will not be an
embarrassing one. I am not asking
it to embarrass you, but there seems to be a number of places in the budgetary
documents where there have been numbers that you are correcting almost
continually here. Can we get an
explanation of that?
MR. DALLEY:
I will give you one, but
maybe I can ask Phil since he is the guy who puts the numbers and puts it
together. I can give you an answer;
he will probably give you the right one.
MS MICHAEL:
Okay.
MR. DALLEY:
Go ahead, Phil, please.
MR. IVIMEY:
What you see in the
Estimates document in terms of the revised numbers, those numbers are usually
prepared around January, February
MS MICHAEL:
Okay.
MR. IVIMEY:
That is time when we do our final projected expenditures for the year.
I mean, there is still another two, three months of actual processing
after that. That is our best guess
at that time of what our final expenditures will come in at, but by the time we
actually come to print and now the fiscal year is over, we are past March 31, so
we know what our final actual expenditures are.
In some
cases, there are small differences.
In some cases, some things may or may not have happened depending on
circumstances. It is better to
report on what the actual expenditures are as opposed to try to explain a number
that is really inaccurate.
MS MICHAEL:
Right.
Well, thank you for that.
Actually, knowing that explanation, I appreciate the fact that you are giving us
the information right up to date; that is helpful to know that is what we are
getting. Thank you.
Since
you talk about the Grants and Subsidies, where are things right now, if I may
ask this question, in the Province with regard to exploration?
Do you still see the same activity
MR. DALLEY:
Same challenges.
By way of comment, I attend national meetings and it is right across the
country. Due to the commodity
prices and the challenges in the mining industry, we are certainly seeing that
played out in exploration as well.
It is down from other years.
Obviously it is a concern in the industry, but I am always amazed at the players
in the industry; they are so optimistic.
Having gone through I guess these ups and downs many, many times, they
are clearly a very dedicated, committed group of people that have their eye on
what is happening and keenly interested in continuing to do some work.
What we are finding, particularly the larger companies have tightened up
and there is less money available.
In our
case as well, you will see a slight reduction here.
What we have done is maintained, particularly the funding for
prospectors. We have a strong
prospector group in the Province and they have done some great work.
That is the grassroots. If
we are going to continue to find discoveries, it starts with the prospectors.
MS MICHAEL:
Thank you.
Related
to that this question goes back a few years, but we are curious about it in
2009 there was a company, Tenajon Resources, that announced they had found a
deposit and I hope I am pronouncing this mineral correctly molybdenum that
was located about 2,000 kilometres north of Grey River on the South Coast.
What ever became of that?
They made an announcement, but they have never done anything with it?
MR. DALLEY:
I could ask David Liverman.
MR. LIVERMAN:
I believe they still hold
the mineral rights to the property, but commodity prices have not helped.
We see a lot of companies announcing discoveries, but there is a big
difference between a discovery and a potential mine.
I think since 2009 they did some further drilling, but the results, as
far as I know, have not resulted in anything which looks like a future
development.
MS MICHAEL:
Okay, thank you.
MR. DALLEY:
If I might add, part of the
process as well in terms of the work that they are doing and to be able to get
to some sort of an announcement is obviously to create some interest and to
attract a more significant investor.
When you go to these shows and if you have something to be able to put
out there, you have something that is more attractive, that will attract more
interest and in hopes of attracting a larger investor so you can move to the
next stage. It is part of the
process in the business as well.
MS MICHAEL:
Right, thank you.
If we
could just go back to 2.1.01. It is
still under Mineral Resource Management, 2.1.01.
Looking at 01, Purchased Services, the budget was $398,000 and the
revision was $450,000.
MR. DALLEY:
The primary increase there,
as I referenced a little bit earlier, is that we have seen an increase because
we did two less field studies, what happened is our geologists were able to get
back into their offices and do some work, and it required more lab work.
We do
some internal lab work, but depending on the type of work that needs to be done,
depending on the mineral and so on, we have to use outside labs.
So the increase here is basically to be able to get more work done
sending our core samples out to other labs.
MS MICHAEL:
Okay.
Thank you very much.
I am
finished that section if you want to get a vote on it before we move ahead.
CHAIR:
Mr. Ball, do you have
anything further?
MR. BALL:
Yes, I
have some general questions now around mining (inaudible) or do you want to I
guess we have to ask them now because we are going to accept this.
One of the questions I have is that when you look at the budget of Mining
Tax and Royalties, last year you will see around $95 million or so.
This year that is up considerably to just under $145 million.
The
question would be: How much of that is through Voisey's, so just a breakdown on
the Mining Tax and Royalties that we have seen in this year's budget.
It has gone up considerably.
I know a significant piece of that would be for Voisey's for sure, but just a
breakdown on where that would come from.
MR. DALLEY:
We do not have that
information because all of that is collected through Finance.
MR. BALL:
Through Finance, okay.
MR. DALLEY:
That would not come to us.
We make it, but they get to collect it.
MR. BALL:
Yes, they get the fun part,
right?
For
more general questions, I guess a concern in Lab West would be around MFC.
I am just wondering if we can get an update on where things are with MFC,
and if there have been any discussions at all with Wabush Mines, or anything
that the department has been able to do to facilitate those two groups getting
together.
MR. DALLEY:
We have been very open with
the people of Wabush, the union, the municipal leadership there, and publicly
that we are prepared to do whatever we can to help facilitate the situation in
Wabush. I think all of us in this
House would agree to that. It is a
very tough situation for the people of Wabush.
They are faced with a tough situation.
The
market prices are at near rock bottom.
It is tough. With respect to
the commodity price itself the issues at the mine are well documented as well.
What we have here is that MFC has indicated an interest.
We have had some discussion directly with MFC.
None of late, but they know that we are there to help and support.
Some of
the issues with respect to what Cliffs are doing with their commitment, the
concerns that we have expressed and continue to work with the Town of Wabush
with respect to issues around the cleanup of the site and the responsibility of
the site, that is a priority as well, and ensuring that the funding is in place
and to be able to do that. Any
company that comes in clearly would have to bring that commitment as well.
We have
had discussions with both companies.
There are some differences as to how this will work.
MFC we are hoping that Cliffs would turn this over.
Cliffs have not indicated any intention of doing that to us in our
discussions. We have encouraged
them to work together and see if there is an opportunity, but to date we do not
see that. We do not see that
happening. Other than offering
whatever support we can and encourage them to work together, that is where it
is.
MR. BALL:
So given the responsibility
of Cliffs to actually clean the site up I think there was, what, $50 million
or something that was set aside for that cleanup period.
I mean there must be a period where if you actually if you remove
yourself from an active mine, there has to be a time frame in place when you go
in and you take care of your responsibilities in this case.
I know
they have put numbers out there that said they would not be requiring $50
million and so on, but just an update on where Cliffs would be with the
remediation of this site and their responsibility to that area.
MR. DALLEY:
The requirement under the
rehab and closure plans would be within five years.
They would submit a plan that would go through a rigorous assessment
internally that we would accept, and then obviously the dollar value attached to
that. The plan would be done in
stages. The one issue, I guess the
biggest concern, the immediate concern is around dust in the region.
We have
had some discussions with Cliffs and have certainly conveyed what their
responsibility is. They still have
a responsibility for the dust. So
we are monitoring that very closely as an immediate concern from the region.
Outside of that, the plan around rehab and closure we have accepted
their plan and it will go through various stages.
That
has come up as well with MFC in terms of why you are allowing to do different
things, but it is a private mine, a private owner, and they have a right to do
these things. MFC or any company
that would come forward, as you know, will be required to clearly show us a
commitment as well with respect to rehab and closure.
Those
are some of the challenges, I think, that we are seeing from early discussions.
Basically, it is a five-year plan and different phases.
The immediate concern would be the dust, and we have been working and
indicated to Cliffs of what their responsibility is around that.
MR. BALL:
Are they actually still
paying for their mining licence too on top of this?
Didn't they agree to pay for two years?
MR. DALLEY:
They would have to pay, yes.
MR. BALL:
Not for the remediation or
the cleanup, but don't you also pay to maintain an active mine status as well?
They have paid that, haven't they, for a period of two years or
something?
MR. DALLEY:
Dave, I do not know if you
could probably explain what the requirement is.
MR. LIVERMAN:
Yes, there is a lease
associated with any active mine and there is a rental that is payable on an
annual basis. Cliffs remains in
good standing with the government in terms of paying the (inaudible).
MR. BALL:
That is a couple of million
dollars a year or something?
MR. LIVERMAN:
Actually for the past year
it is based on area. It is $80 a
hectare. It is a fairly small
amount actually.
MR. BALL:
So they have made a two-year
commitment to that?
MR. LIVERMAN:
It is just due annually.
If they were deficient in their payments, then the lease potentially
could be cancelled.
MR. BALL:
I guess in that area there
is also lots of concern around what the Iron Ore Company of Canada will do and
what Rio Tinto will do. Have there
been any ongoing discussions right now or anything new to report on what to
expect from IOC over and above the recent layoffs that we have heard?
MR. DALLEY:
I know we are straying from
some line items here, but particularly around that, it is a very important issue
with respect to what is happening in Labrador and the challenges with respect to
Wabush shutting down, Bloom Lake shutting down, and the significant impact in
the Labrador region. So I
appreciate the question. I recently
met with IOC and we have had discussions back and forth.
Obviously they are feeling the impacts of the low commodity price as well, the
iron ore prices. I think it has
been public that they are intent on trying to find efficiencies within their
company. They have changed out some
management. They are working with
the unions on various proposals, I guess, to try and mitigate the impact of the
price of iron ore. They are also
looking at some layoffs.
In my
recent meeting with them, there is no direct indication of more layoffs;
however, it was clear that they are concerned about prices and where they are as
a company, and looking to continue their efforts to be able to ride this out
with respect to their commodity prices.
MR. BALL:
Okay.
Is
there anything new that would be budget related to the Julienne Lake development
that would impact the current budget or future budgets that we know of today?
MR. DALLEY:
Well, we are hoping to have
an impact on future budgets, if things all go well, but we are not at that stage
yet. As you know, the Julienne Lake
Alliance group, we have been working with them with respect to potential
development in the future. That
negotiation is ongoing and is certainly not concluded.
MR. BALL:
Okay.
The
third line going into Lab West, is that something now that is put on hold
indefinitely or is there (inaudible)
MR. DALLEY:
Basically, the Alderon line?
MR. BALL:
Well
MR. DALLEY:
Primarily, for lack of a
better word?
MR. BALL:
Certainly I have never referred to it as the Alderon line, but
MR. DALLEY:
Everybody else has.
MR. BALL:
Everyone does, I know.
It has taken on a brand of its own, a life of its own, but we know what
we are talking about
MR. DALLEY:
Sure.
MR. BALL:
when we talk about the
third line going into Labrador for reliability and
MR. DALLEY:
It is on hold.
The line and the prospectivity the opportunities for development in
Labrador West region, if we get there, if we see a change in prices, I think we
are going to see a lot of activity in the region and obviously a commitment to
supply the power to the region.
Given where we are and given the challenges for Alderon in particular, right now
that is on hold. Obviously it is
still committed, but we are at a time when that is not going to proceed right
now.
CHAIR:
Could we go to Ms Michael
now if she has
MS MICHAEL:
Yes, I do have another
question related to Labrador West, if I may.
This may be one that is the Department of Finance.
If so, tell me and I will ask them on Monday.
It has to do with the royalty dispute between IOC and the government and
the arbitration panel was set up.
Is that arbitration going has the panel started the arbitration process?
MR. DALLEY:
It is a Finance issue and we
are not directly involved.
MS MICHAEL:
Okay.
I think
I have one more Mr. Ball has asked a couple of the questions that relate to
some questions I was going to ask.
Last year we learned that there is a $700,000 outside contractor conducting an
audit on possible transfer pricing conducted by Vale.
Was that audit done?
MR. DALLEY:
I would suspect that is
Finance as well related to the mining tax.
MS MICHAEL:
Okay.
I think
that would be fine, Mr. Chair, in terms of general questions around
CHAIR:
Mr. Ball.
MR. BALL:
(Inaudible) trying to create
a partnership with Coastal Gold. I
know that this would have an impact of course on the mining royalties, and
obviously it would generate some interest in that area.
Is there anything new on Sulliden I think Sulliden was the name of the
mining company. I am just wondering
what would happen there with your department, what is the involvement with the
department and the impact that it could have I guess (inaudible)
MR. DALLEY:
Maybe if I could ask Dave
for an update on Hope Brook.
MR. LIVERMAN:
Coastal Gold have been
working the property for some time, but had been challenged, like many
exploration companies, in raising the funds to take the project to the next
level. So there was an announcement
around about the time of PDAC in March that Sulliden were taking over Coastal
Gold and would inject a significant amount of capital into the project.
I think what that will mean is we will see further drilling, exploration,
and work towards determining whether there is an economic mine in the area.
We are looking forward to seeing the results of that partnership.
MR. BALL:
I guess somewhat, not
related to Hope Brook, but obviously this is going to be a big year, a defining
year at least for Duck Pond with the closure.
What do we see happening with that site once Duck Pond how will the
remediation occur? I know there was
some discussion about removing the plant altogether at Duck Pond.
Is that still what we anticipate happening there at that site?
MR. DALLEY:
We have had lots of
discussion with Teck Resources. I
met with them at PDAC as well. I
will say they have been an outstanding company for the region, as you know, and
they take great pride in their reputation.
They have been very clear to us about their commitment to do whatever
they need to do.
We have
their closure plans, but they are also working through, particularly around the
mill, as to what may happen with that.
They are open to and, I understand, having some discussions with other
companies that have an interest in the region.
As you know, there is quite a bit of activity in the Buchans region and
great reason for optimism. The mill
itself, there is obviously some interest in the mill and the company is working
through with other companies around that.
One
thing that the company has been very clear to us with respect to their
responsibilities is that whoever is engaged, whoever they partner with, Teck
will require great certainty that this company is able to fulfill any obligation
with respect to rehab and closure, environment, and so on so that their
footprint and their reputation is maintained.
MR. BALL:
I agree, Minister.
There is no doubt that Teck Resources have certainly set a high standard
not only for their own company, but it just raises the bar for the mining
industry. It has been good to see.
The
reactivation of the fluorspar mine in St. Lawrence has been in the news lately,
so just an update on that and what the commitment would be from the department.
I know some of this would be finance related, but what is the movement on
St. Lawrence?
MR. DALLEY:
As you know, there was an
announcement and interest a company had made an announcement that government
has partnered with respect to some infrastructure with the mine and it is
basically funding through BTCRD. A
small amount of that money has been drawn down, but for the most part it is not.
The money is still in place from a government commitment, but the company
itself partnered with Golden Gate out of the US.
It is from a company with a strong balance sheet.
Since that time, there has been tremendous work in St. Lawrence around
further exploration and discovery.
They
are excited about where they are and we anticipate, hopefully, something by late
summer, early fall, a further announcement as to where they are.
Obviously there is a lot of work and stages and so on that they have to
go through, but I know from a company perspective they like what they are seeing
and they like what their discoveries have been.
I understand that the markets are good as well.
So they are very optimistic as a company, and obviously we will support
them in any way we can.
MR. BALL:
I do not know if this has
spurred any questions for Lorraine or not, but that is kind of it for me for the
general questions and the finance questions.
CHAIR:
Okay.
Shall
2.1.01 to 2.1.03 carry?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Contrary?
Carried.
On
motion, subheads 2.1.01 through 2.1.03 carried.
CHAIR:
Subhead 3.1.01.
MR. BALL:
I guess I will go right back
to Salaries in 3.1.01. There are a
couple hundred thousand dollars less in Salaries this year.
Is this really due to vacant positions?
MR. DALLEY:
Vacancies.
MR. BALL:
Okay.
Transportation and Communications was down by $42,000 and the budget last year
was $72,000. What didn't you do
last year that you planned on doing, I guess?
MR. DALLEY:
It was basically
discretionary travel. We reduced
travel. With these kinds of
budgets, we went through an exercise a couple of years ago through a core
mandate where we looked at our budgets in the past two or three years and saw
some reductions, so that is why we basically maintained the same budget.
MR. BALL:
Okay.
Professional Services, however, was budgeted to be at $925,000 last year and you
spent $425,000. It is essentially
back to $425,000 this year. What
kind of services last year did you budget for that you did not use?
What are the types of services that you see included, even in the
$400,000?
MR. DALLEY:
The primary item that we
budgeted for last year was the electricity review.
We budgeted $700,000 for that electricity review.
The actual contract that was awarded to Power Advisory was $284,826.
It came way under budget.
That is the reason for the significant difference in terms of budgeted and
revised.
As well
in this item, we have been working on the net metering, as we have committed to
do. Through the process of, not
only internal work and working with Newfoundland Power and Newfoundland and
Labrador Hydro, we hired a company, Navigant.
The contract was approximately $50,000 to do some external work for us
around net metering, particularly around jurisdictional scans and looking at the
shift that we will look at from an isolated system to an interconnected system.
Navigant has been doing work on that.
MR. BALL:
Yes.
MR. DALLEY:
Sorry
MR. BALL:
No, that is fine.
MR. DALLEY:
They would have the work
done, actually, on the net metering.
The report is in and made public.
Just by
way of I am sure you will ask the question.
We have done some internal work on that.
What we have done with that report, though, and where we are moving
forward is to reach out to some of the key stakeholders.
We have done that. The only
one we are awaiting feedback on now is from the PUB.
As soon as we get feedback there we will go through the process and make
this public.
MR. BALL:
Okay.
Moving
down there to line item 10, under 3.1.01, Grants and Subsidies, we see the $3
million there this year again. I
understand, based on the comments last year, that was kind of with the
good-faith court case with CF(L)Co and Hydro Quebec, I believe.
Is that still the case?
MR. DALLEY:
Yes.
What shows up here in this amount of money is we budgeted last year
$600,000 for the good-faith case.
The actual cost last year was a little bit less, around $400,000.
So that is the reason for the slight reduction.
Also
here in this item is the $400,000 diesel subsidy grant for Coastal Labrador, as
well as the amount of funding for the Northern Strategic Plan which is roughly
$2.1 million. That again is for the
rate subsidies.
MR. BALL:
Okay.
Going
back to the good-faith case again, just an update on that.
Last year I think one of the comments made was that we would expect a
decision or an anticipated decision to be made this year, but that has not been
done. What is the schedule now?
MR. DALLEY:
The decision was out and we
lost the decision.
MR. BALL:
So you appealed?
MR. DALLEY:
.Appealed, yes.
MR. BALL:
Yes, that is what I thought.
What is
the schedule like to your best knowledge on the appeal process now?
MR. DALLEY:
I will ask Charles if he
would answer it.
MR. BOWN:
It is expected that the
appeal will be heard this year within 2015.
MR. BALL:
Okay.
If we
move to 3.1.02 this is in the Petroleum Development side.
Supplies we have seen go from $112,000, and we spent $136,000, back to
$12,000 this year. This would be
3.1.02, Petroleum Development.
If you
want to you can just add those two lines together because you will see the same
thing with Professional Services.
So for the sake of time, maybe we can just
MR. DALLEY:
Yes, I can answer that whole
item, that whole section. Basically
what you are seeing here is a base budget of somewhere around $500,000 and we
had added a million dollars for geoscience.
What we added and what we spent and if you can see the new budget, we
had taken the million dollars out of the budget item for this year.
The million dollars you will see that all of that between it all should
add up to around a million dollars.
The
difference in what we budgeted as where we spent our money moved it around in
different places, but the 2015-2016 estimate you will see the reduction of that
amount as well.
MR. BALL:
Okay.
The
Grants and Subsidies have gone down.
The $500,000 has been the consistent number for some time.
The decrease this year I mean obviously you spent $500,000 last year in
those Grants and Subsidies. What is
the impact we see there?
MR. DALLEY:
The amount of money that is
there is to pay for the Hydraulic Fracturing Review Panel. So we are clear, we
are not paying the panel members, it is for the cost of the panel to do their
work.
MR. BALL:
Is that still on schedule
for October?
MR. DALLEY:
Yes.
MR. BALL:
The next line would be
3.1.03, which is the C-NLOPB. I
just wonder how the formula works because our provincial portion here would be
there is a subsidy here, by the looks of things, of $6.6 million.
How do we work that formula of what the feds pay to what we pay into the
whole ?
MR. DALLEY:
It is 50/50 and 50 per cent
of our share. Industry pays 75 per
cent. So we actually pay 25 per
cent of our 50 per cent, which is 12.5 per cent overall.
MR. BALL:
Yes.
Do we have any vacant positions on the C-NLOPB now?
MR. DALLEY:
In terms of the board?
MR. BALL:
Yes.
MR. DALLEY:
There may be one.
I know there were two. I
think one has been back and I am not sure if the other one has been filled.
MR. BALL:
That is fine.
Subhead
3.1.04, I guess the question around the royalty auditors I am sure
everyone is expecting this question in the room this morning.
So just an update on where we are with the complement of auditors and the
progress that has been made.
MR. DALLEY: As
you know, historically we had contracted out some of the auditing work.
The Auditor General highlighted some concerns with that and felt we
probably should do it internally.
We obviously accepted the Auditor General's recommendation.
Internally, we have twelve audit positions.
I will say it is a real challenge.
They are hard to recruit.
When you get them, it is hard to keep them.
So a fair bit of turnover, but we have a complement right now of ten, and
actively recruiting two others.
MR. BALL: That
status?
MR. DALLEY:
With respect to actually where we are with our audits, we are on schedule with
our audits. We have not fallen
behind on any of our audits. In
fact, this past year, we were able to get more done than we had anticipated.
We are very pleased with that, as a result of being able to get to our
full complement as well.
The turnover is a concern.
We'll continue to work through that.
The other issue that we are very pleased about is that we are bringing in
a new royalty management system,
an electronic system.
We have one of our own auditors who is being trained.
They have been training for some time.
We are about ready to put that in place.
By all accounts that is going to be very positive in the process because
it is going to speed up the process.
We are
encouraged by that. That is a very
positive initiative to be able to move forward with the audits.
We did get more work done this year than we anticipated.
Again to highlight the importance that we are in-house and we continue to
recruit, but there are some challenges.
CHAIR:
Okay, so time now.
Ms
Michael.
MS MICHAEL:
Yes, if I could just follow
up on that. Minister, I remember
maybe two or three years ago the department actually did give us a written
report of where things stood, sort of a calendar of the royalties, what is due
when, et cetera. We have not had
that kind of a thing in a couple of years.
Would it be possible to get that kind of a written report of where things
stand?
MR. DALLEY:
That should not be a
problem. We can certainly share
with you as to what we anticipate our schedule to be and so on.
MS MICHAEL:
That would be helpful.
Thank you very much.
I think
then that covers everything under 3.1.04, except if we could look right at the
bottom under Revenue Provincial.
I know you gave an answer to this in another heading, but
MR. DALLEY:
Is that the $81,000?
MS MICHAEL:
The $81,000 and then the
revised was $128,000.
MR. DALLEY:
That is revenue from the
registration fees for the OTC conference in Houston.
MS MICHAEL:
Okay.
Great, thank you.
MR. DALLEY:
If you notice, OTC takes
place every year.
MS MICHAEL:
Yes.
MR. DALLEY:
We have a booth and a
process that is followed here. In
2015-2016, we are not showing any revenue there.
It is actually going to show up in Petroleum Development.
So it moved from Royalties and Benefits to Petroleum Development.
We still anticipate that kind of revenue for next year.
MS MICHAEL:
Okay.
If we come right back up under 01 Salaries oh no I am sorry, I was
looking at Employee Benefits. I
thought I was looking at Employee Benefits.
It was Transportation and Communications, but you have explained that
already. I think that is all I have
on that page.
Coming
over to 3.1.05 which is appropriations provided for the investment in Nalcor
Energy, and/or its subsidiaries etcetera, I understand the $176 million.
I know we have asked this before and I do not know if you have a clearer
answer on it this year or not. The
$760 million is passed over as spent, obviously.
I know it does not go in a lump sum.
Do you have a breakdown of how much of that goes to Muskrat Falls and how
much of it goes to other expenses of Nalcor?
MR. DALLEY:
This amount does not go to
any operating expenses for Nalcor.
It is direct equity investments into oil and gas as well as Muskrat Falls.
Of the $760 million, $189 million is earmarked for oil and gas, and $571
million for the Lower Churchill Project.
MS MICHAEL:
Thank you very much.
I want
to ask a related question. I guess
as I read this you will think, well, I am asking a question that Nalcor should
answer. My question is going to be
a question to you with regard to accountability to the government from Nalcor.
In
Nalcor's annual report, section 1.3, which is called Variable Interest Entities,
you have a very interesting little paragraph: Nalcor consolidates the results
of variable interest entities (VIEs) in which it holds a financial interest and
is the primary beneficiary. Nalcor
has determined that it is the primary beneficiary of the LIL Construction
Project Trust (Project Trust) and as a result has included the financial
statements of the Project Trust in these consolidated financial statements.
Nalcor has determined that it is not the primary beneficiary of the
Muskrat Falls/Labrador Transmission Assets (MF/LTA) Funding Trust or the
Labrador-Island Link (LIL) Funding Trust and therefore the operations of these
trusts are not reflected in these annual audited, consolidated financial
statements.
Could
we have a plain language explanation of what that means, please?
If you want my copy to read, but maybe
MR. DALLEY:
You can.
I am not going to give it to you today.
That is
a financial audited statement.
Those comments I think, rather than risk having a shot at that, we will get
you some clear language as to what that means.
Again, it is an accounting financial audited statement that highlights
the ways in which the money is in and out and accountability and so on.
I will get you an answer.
MS MICHAEL:
I guess then just to further
the question, if the reporting around those trusts is not in the Nalcor report,
because they do not see themselves as the primary beneficiary of those two
trusts, then where does one go for the accountability around these trusts to get
that information?
MR. DALLEY:
We will get you that
information.
MS MICHAEL:
Okay.
Thank you very much.
All of
my next questions are broader, general questions.
I do not know, Dwight, if you have some more particular ones first before
I ask those.
MR. BALL:
Yes, I have a couple of
questions.
When I
finished we were talking about the royalty auditors.
We understand ten of the twelve auditors are now in place.
Most of the schedule the status has been updated and a new system will
be coming in place to help support this again.
So I am
just wondering, based on the auditing that we have seen have we been able to
recover extra royalties or some extra revenue as a result of the work they have
been doing?
MR. DALLEY:
Yes, we have.
I think it is important because I know sometimes the statements made are
that we are losing money. In fact,
we are not losing money. Through
the auditing process so far we have gained a little less than $50 million.
OFFICIAL:
Sixty million dollars.
MR. DALLEY:
Somewhere around $60
million.
MR. BALL:
That is good.
Back to
one of the line items that was around Professional Services.
Last year we had $2.9 million.
It was in the Royalties and Benefits section there, 3.1.04.
Last year, there was a provision made in the budget for $2.9 million and
we spent $252,000. Obviously, if
you add those two together you would come up with nearly close to where the $2.5
million is for this year for Professional Services.
MR. DALLEY:
Yes, that is basically where
we allocate for potential arbitrations with the oil companies over royalty
payments. We allocated funding
there last year and expenditures were much less than anticipated.
As
well, any of the commercial negotiations that would have involved whether it is
internally or sometimes using external supports in negotiations, was obviously
less than expected as well.
Primarily, it is the arbitrations.
MR. BALL:
Arbitration.
Okay, good. It is always
good when you do not have to arbitrate.
Back to
the Nalcor transfers for this year, $760 million.
Of course we know $531 million last year went to Muskrat in 2013-2014;
this year, $571 million I guess.
That leaves $189 million to oil and gas.
I am just wondering if we can get a breakdown on what will be transferred
to the Hebron Project this year we know what is going to Muskrat, but to
Hebron Project and I guess to some degree too what we will anticipate to the
Hibernia extension.
MR. DALLEY:
I guess we have not, for
some commercial reasons, identified specific amounts; but, for the purpose of
your question, roughly over $200 million will go to oil and gas equity this year
and roughly half will go into Hebron.
It is about half.
MR. BALL:
Last year when we were
having this discussion, we were talking about Hebron being somewhere around $360
million
MR. DALLEY:
Yes.
MR. BALL:
and we had already had one
hundred and whatever it was, $180 million or something, that had been paid.
I think the line of questioning and the response was going around that
Nalcor would be self-sufficient in making the equity payments, so I am just
wondering is still on track, still on schedule.
MR. DALLEY:
Yes.
MR. BALL:
Okay.
MR. DALLEY:
It is still on track.
As you know, as I said somewhere around $205 million this year will go
into equity in oil and gas; $189 million will be from the Province; and Nalcor
will provide the rest of the equity
MR. BALL:
Okay.
MR. DALLEY:
half into Hebron, but we
are still on target and on track for 2017 to be self- sufficient with respect to
the rest of the equity payments.
MR. BALL:
And $14 billion in the
project
MR. DALLEY:
Yes.
MR. BALL:
which includes operating
and Capex, right?
MR. DALLEY:
Yes.
MR. BALL:
This is just a question now
in the general sense. Premier
Marshall mentioned an updated energy plan.
I am just wondering where that is, with the update of the Energy Plan of
2007.
MR. DALLEY:
I guess we will roll that
out when you roll out your economic plan.
MR. BALL:
That is more of a political
question right now, Minister. Our
economic plan will
MR. DALLEY:
And a political answer.
MR. BALL:
The Energy Plan is obviously
government spend; it is not party spend.
So right now I guess there is government money that will be coming I
would not expect that a political party would be rolling out an energy plan that
is paid for by government, I hope.
MR. DALLEY:
Of course not.
Not to
be too cute here, but the Energy Plan is what it is.
We just released an update on it.
The Energy Plan is built for a long-term plan to take us right out to
2041. There are 107 recommendations
there. We have outlined this week
as to where we are with those recommendations.
We have come a long ways.
There
is obviously a requirement as you go through from 2007, the work that has been
accomplished; but obviously, going forward, in a change in what we have seen and
the work that has been accomplished, you can be rest assured there will be a new
energy plan. I am sure you will
have an energy plan as well. That
will be forthcoming for sure.
MR. BALL:
That is good.
The
equity that we get from our oil your oil equity right now who is doing the
marketing for our oil? I know it is
done by a company. Who would be the
company that we are using now to market the oil that we get for part of our
equity share?
MR. DALLEY:
I will ask Charles to
answer.
MR. BOWN:
That depends on which of the fields that we are in because in some of the
arrangements actually they have offtake agreements already in place.
So that marketing really is set ahead of time.
Nalcor would market some of its own, but in the majority of the cases
they would particulate with the other owners in terms of how they market their
product as well.
MR. BALL:
Okay.
So Nalcor would market some of its own oil?
MR. BOWN:
Yes.
MR. BALL:
Okay.
Where would they have that refined?
MR. BOWN:
You just sell it to a broker.
MR. BALL:
Okay.
On May
11, in a Ministerial Statement, the minister made comments about Round Pond,
Island Pond, and Portland Creek as being partnerships for new hydro projects or
potential hydro projects. I am just
wondering if there was any work done on this recently because most of the
engineering on those three projects right now are old and done quite a while
ago.
In
consideration of this, is there any work being done or have been done lately
that would be more current?
MR. DALLEY:
To my knowledge, there is no
immediate work being done around that.
I think it is all a part of a long-term plan and vision that as we
develop from an isolated to an interconnected system, as we build a structure,
the outlook for an opportunity for us to develop further energy resources looks
good. That is where, as I
referenced in my statement, the opportunity and the prospects for the future
look good, and these are certainly some areas that have been identified through
previous work that could certainly hold some economic potential for the
Province.
MR. BALL:
I guess just a couple final
questions around the court cases involving Nalcor, just an update on those.
I know some of those will be more active this year than previous years, I
would imagine, so just an update on those court cases.
MR. DALLEY:
As was referenced in terms
of the good-faith case, we expect that to go this year.
The other case that has been in the news a little bit lately and
certainly to clarify it, because there has been some reference that it is about
water rights, the court case that is in the news is not about water rights; it
is an action between Hydro-Quebec and CF(L)Co with respect to the 1969 power
contract and the renewal that is due in 2016.
That is
an action that has been taken, it is in the courts, but it is with respect to
the interpretation and implementation of the contract and basically how power
will flow on a monthly basis into Quebec.
MR. BALL:
In the Budget 2015 there was
a chart that showed Nalcor's investments and the payback to the Province.
I am just wondering in that chart was there any inclusion of the sale of
surplus power. Because it was
really not clear. We just said that
by 2025, the money that was paid to Nalcor, without interest, would be paid
back. That is probably a Finance
question, to make it easier for you
MR. DALLEY:
It is a Finance question and
I will say I think it was, but I certainly would like to reserve the right to be
corrected on it.
MR. BALL:
Yes.
Getting
to the end of this now, the Muskrat Falls Oversight Committee, where was the
money allocated in this budget or is that through Finance again?
MR. DALLEY:
Through Finance.
MR. BALL:
Okay, that is pretty much it
for me. I think I got it all.
CHAIR:
Ms Michael, I guess your ten
minutes will take us to break, unless we are getting close to the end and we do
not need a break.
MS MICHAEL:
Could we just take a real
short break now, maybe five minutes, and then I will ask the questions that I
have? Is that possible?
MR. DALLEY:
Not to be difficult, Mr.
Chair, but we are all busy and if we are gone through the line items I am
basically being courteous here to deal with some of their issues that are
outside of the line items and I do not mind doing that to a certain point no
disrespect, but
MS MICHAEL:
Okay, I will continue.
MR. DALLEY:
No disrespect, but it is a
busy day for everybody so if you had a few questions, I do not mind taking a few
and trying to help out with some of the answers.
If it does not come here, it will come in the House, I understand that;
but, in the interest of time, if it is okay.
MS MICHAEL:
I will continue, Mr. Chair.
CHAIR:
Ms Michael.
MS MICHAEL:
It may sound like a general
question, but it is a line item question.
At the
Nalcor AGM, the CEO Ed Martin said in talking about the potential of cost
overruns with regard to the Muskrat Falls plant site that the proof is in the
pudding and this summer will tell the tale.
Minister, my question is I think it is for your department, if it is
Finance you can tell me if there are looming costs overruns on the project,
who is planning for that, and where does it show up in budget?
If it
turns out this summer because this is going to be a telling summer coming up
with regard to Muskrat Falls. If it
turns out there are major cost overruns who plans for that and where does it
show up?
MR. DALLEY:
It would be Finance that is
responsible purely from that, but obviously it would show up in subsequent years
for us as well. The item here is
showing up as from our department, but it is a Finance measure in terms of
budgeting, how they plan their budget, and where that money will come from
basically.
MS MICHAEL:
Would that be the same with
regard to the interest that will accrue on the $6.8 billion money that has been
borrowed?
MR. DALLEY:
Yes.
MS MICHAEL:
That would also be Finance
that would be covering that and showing that whenever it has to show up.
MR. DALLEY:
Yes.
MS MICHAEL:
Okay.
Thank you.
I guess
related to that though, you would know, I assume, the estimate of the amount of
interest that will be paid on the $6.8 billion, or do you?
MR. DALLEY:
We would know it.
I do not have the number here in front of me, but we would be aware of
what that is I think.
I can
get Charles to tell you.
MS MICHAEL:
Okay.
MR. BOWN:
This number was released as well in the RFIs to the PUB.
It is approximately a billion dollars in AFUDC, allowance for funds used
during construction, and IDC as well.
MS MICHAEL:
Okay.
I was hearing somewhere around $1.2 billion.
MR. BOWN:
Yes. I would round it off, probably
$1.1 billion.
MS MICHAEL:
Right.
Okay, thank you very much.
Just to
come back to the question that was asked of you on the Energy Plan.
If there are any plans inside of Nalcor for new wind development, are you
aware?
MR. DALLEY:
Plans inside of Nalcor for
new wind development?
MS MICHAEL:
Nalcor, for new wind
development.
MR. DALLEY:
Immediate plans, no.
Contrary to statements that it is not worth the paper it is written on,
this document is very thorough and detailed.
We have followed it; we have had tremendous success with it.
Built
within Nalcor obviously is our vision and a plan as to where we could
actually take our energy resources once we build the system and a structure.
Beyond the Muskrat Falls development and the Maritime Link which connects
us with North America, that will provide us with unlimited opportunities; one, a
belief that we can do it, and we can build more if we need to.
More importantly as well, it will give us that link where we can develop
our resources for export.
There are opportunities, both within Nalcor and the
Province, but I believe there is going to be tremendous opportunity as well for
private sector to develop energy resources for export.
In fact, it has been very public about Beothuk Energy and offshore wind
development. We have been working
with them for over a year around their potential development, what that could
mean and how that would look, but understanding that it is not just develop and
go.
There is a lot of work that has to be done around
financials, around analysis, around how it connects to the grid, and potential
impact on ratepayers. There are all
kinds of issues that have to be addressed with any potential.
I think suffice to say the groundwork is being done, and once we become
connected there are going to be tremendous opportunities in our future for
energy development.
I think if I recall I know the preliminary work that has
been done highlights that we could have potential for 5,000 megawatts of wind in
a long-term development. Obviously
costs, technology all kinds of aspects to consider.
Once we have put that infrastructure in place, once we are connected, I
think we have even a brighter future with respect to developing our energy
resources.
MS MICHAEL:
Thank you, Minister. I appreciate
your answer.
Related and this will be my last question can you give
us an update on the Ramea wind project?
MR. DALLEY: I
can. I will take a stab at this.
We can get you more details.
We are moved into Phase two.
Basically, there has been success.
It is a fairly successful project around the wind, the hydrogen, and
diesel. The whole goal of this is
to looking at and it is a challenge across the country.
I know when I went to the energy ministers' meeting it was a good topic
of discussion.
We all have these isolated communities.
It is very costly to provide power.
We have coastal Labrador. I
think we have twenty-one sites around the Province and trying to find ways of
how we could do this better and
more affordable.
We have
done studies on coastal Labrador and the pilot project in Ramea.
We are having success. I am
not sure if it is cheaper, but we are having success that it can work.
We have moved to Phase 2 now of how we can find a way, with some storage
cells, to be able to store some of that power when it is not needed.
It is all a part of the backup system and how we can do that.
That is the phase that we are at now with respect to the pilot.
So far
things are on track. I know they
have saved thousands of dollars and thousands of litres of fuel that they have
not had to use because of the positive impact that we are seeing.
How that can be extrapolated into other communities or on a larger scale
is all a part of the pilot and a part of the studies that are ongoing.
MS MICHAEL:
Okay.
Thank you very much.
Thank
you, Mr. Chair.
CHAIR:
Mr. Ball has concluded.
Shall
items 3.1.01 to 3.1.05 carry?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, subheads 3.1.01 through 3.1.05 carried.
CLERK:
The total.
CHAIR:
Shall the total carry?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Contrary.
Carried.
On
motion, Department of Natural Resources, total heads, carried.
CHAIR:
Shall I report the Estimates
of the Department of Natural Resources carried without amendment?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Contrary.
Carried.
On
motion, Estimates of the Department of Natural Resources carried without
amendment.
CHAIR:
I would like to thank
everyone for their questions, their answers, and taking the time to comply with
this activity this morning.
The
next meeting of this Committee is Wednesday, May 20, at 5:30 in the evening.
I need
a motion for adjournment.
MR. HUNTER:
Motion.
CHAIR:
Mr. Hunter; seconded by Ms
Perry.
The
Committee adjourns.
On motion, the Committee adjourned.