Hon. Jean Lesage (Minister of Northern Affairs and National Resources):
Mr. Speaker, in the course of the budget address on March 14 the Minister of Finance outlined a proposal that the government considered would be helpful in meeting the power requirements of the maritime provinces. Since that statement there have been a number of developments, and I think it might be of interest to hon. members to know something further about the proposal and where it now stands.
I will not repeat the statement by the Minister of Finance which can be found at page 2220 of Hansard for March 14. The same day it was made I wrote to Premier Stanfield and Premier Flemming enclosing a copy of it. I indicated that if they thought it would be desirable to have a meeting, either with me or on the official level, I would be very glad to arrange it.
I received an immediate reply from both premiers suggesting that a meeting of officials should be held. That meeting took place in Ottawa on March 21. A number of questions were discussed relating both to matters of policy and to details of application of the proposal. Following the report by the officials of the provincial power commissions to their
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Power Development-Atlantic Area respective premiers, I received telegrams from each premier accepting the federal proposal subject to discussion of further details. In the light of the discussions at the meeting of officials and of the acceptance by the premiers of the federal proposal, a number of further decisions have now been taken.
Hon. members will recall that at the last session of parliament an amendment to the Northwest Territories Power Commission Act was passed changing the name of the commission to the Northern Canada Power Commission and empowering it to acquire, operate and maintain power plants not only in the two territories but also in the provinces "with the approval of the governor in council but subject to the laws of the province in which the powers . . . are exercised".
It had not been thought at that time that the operations of the commission would ever extend to any part of Canada other than the territories or the northern limits of certain of the provinces. However, the legal position is that the commission can, with the approval of the governor in council and subject to the laws of the province concerned, operate in any province. The representatives of both Nova Scotia and New Brunswick, but especially of the latter, raised considerations that gave urgency to the implementation of the federal proposal. In order to comply with the provincial desire that immediate action should be taken, the federal government has decided that the Northern Canada Power Commission should be designated as its agency to carry the proposals into effect. Order in council number 1957-476 was passed on April 4 for that purpose.
One of the matters of urgency is that the New Brunswick Electric Power Commission has prepared plans for the construction of a new plant of 50 megawatts capacity which the commission was intending to erect at Saint John. Tenders had actually been received when the statement of the Minister of Finance was made, although no contract for any part of the plant had been placed. The province of New Brunswick urged that this plant should be taken over under the federal proposal.
One question that was discussed at the meeting of officials was whether the construction of interconnection lines between the two provinces under the federal proposal might affect the urgency of the need for the plant or possibly might affect the determination of the most desirable location. It may be, for instance, that in order to serve an interconnected system covering the two provinces it would be more efficient to have a new plant in Cumberland county, Nova Scotia, to use coal from that area, rather than to have it in Saint John.
It has been decided that an immediate study should be undertaken to determine what new capacity may be required in the two provinces and, having regard to possible new interconnection lines, what would be the most effective and economic location. This study will be undertaken by the Montreal Engineering Company as consultants for the Northern Canada Power Commission. The study will be carried out in full consultation with the power commissions of the two provinces.
Pending the completion of this study, and in order that there may be no unnecessary delay in bringing a new power plant into operation at whatever location may be found most advantageous, the Northern Canada Power Commission has been authorized by the governor in council, under the order in council to which I have referred, to enter into the contract that the New Brunswick Electric Power Commission had planned to place for the turbo generator and other major equipment for the proposed 50,000 KW plant. It is expected that the contract will be placed within the next few days. As originally planned by the New Brunswick Electric Power Commission, and as the delivery requirements of the contract will specify, this plant will be on a schedule that would call for delivery of power from it in 1959.
The studies to which I have referred of the required new capacity and of new interconnection lines are extensive and are not expected to be completed before August 1 of this year. The costs will be quite substantial. In the normal course, engineering studies undertaken by the Northern Canada Power Commission are charged, in accordance with section 14 of the act, against any project that results from the study. In order that there may be no undue burden of cost to be met out of the price charged for power in the maritimes, the government has decided that these studies that are now under way should be met by funds to be appropriated by parliament for that purpose. The submission of a suitable item will be made in due course for consideration by this house.
With regard to the fuel to be used by the plants that will be established under the federal proposal, the basic objective of securing power at the lowest possible cost is, of course, to be kept constantly in mind. This consideration will frequently affect the location of the plants that are to be built. It is, of course, also the desire of the government to see maritime coal used to the greatest extent possible in the plants that may be established. The sharp increase in the price
of oil and in charges for ocean shipping over recent months have resulted in a situation in which, over virtually all the maritime provinces, it appears that it would be cheaper to use maritime coal for the production of power than to use oil.
There is some reason to think that this increase in the price of oil may not be as temporary as has sometimes been hoped or suggested. In the circumstances, the economic advantage of the use of maritime coal shows every likelihood of continuing.
In the immediate future the first plant to be built by the Northern Canada Power Commission seems likely to be at Saint John or in Cumberland county. If it is in Cumberland county it will be because of the prospects of securing maximum economies through the use of coal from that area. If the best location turns out to be Saint John, the object will be to enter into arrangements with maritime coal producers so that coal may be used for fuel on a basis that will produce power at as low a cost as if oil were used. I have every confidence that such arrangements can be made. As I said at the outset, the object of the government in this proposal is to secure power at the lowest possible cost and at the same time to use maritime coal as the fuel for that purpose.
Contracts for the construction of plants and transmission lines to be built under the federal proposal will be placed on the basis of tenders to be called in each case; the same will apply to equipment. Contracts will be placed in the normal fashion with the lowest tenderer in a position to provide the quality of equipment and construction capacity that is required within whatever delivery schedule may be necessary. Design of plant and equipment required by the Northern Canada Power Commission will normally be undertaken by it, through its consulting engineers, unless in any particular case a special arrangement is made. Such a special arrangement might apply, for instance, to projects like the Saint John plant, which are already in the course of design and which are to be taken over by the federal agency. Naturally, all questions relating to the capacity and character of facilities will be a matter for consultation with the provincial power commissions.
The plants will be operated by the Northern Canada Power Commission with the power sold at cost to the agency designated by the province. The same cost basis will apply to the rental of transmission lines. Rental of these lines will provide for maintenance to be undertaken by the lessee.
The financing of plants and transmission lines will be in accordance with the normal 82715-208i
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Power Development-Atlantic Area financing of construction undertaken by the Northern Canada Power Commission, that is at the federal borrowing rate plus a small additional charge that is normally made for the provision of finances to crown corporations. Amortization of the thermal plants will be over the 30-year period which is normal for such plants, and the steel tower high voltage interconnection lines will be over the 40-year period which is normal for them.
As has been indicated throughout, the principal purpose behind the proposal of the government is to supply power in the maritime provinces on the most efficient basis possible and at the lowest possible cost. There will, of course, have to be an agreement with the governments of the maritime provinces with regard to the proposal generally, and also with regard to the specific plants and interconnection lines. In accordance with the underlying purpose of the project, a provision of all agreements will be one requiring the provincial governments under their normal powers of regulation, or through the establishment of charges by their respective power commissions, to see that the benefits of reduced power costs are passed on to the consumers. The provincial power commissions, or in some cases private utilities, will be in a position to buy power from the Northern Canada Power Commission at a favourable rate, and they will be expected to see-I have no doubt they will be anxious to see-that the full benefit goes to the industrial or domestic users.
It is my belief, Mr. Speaker, that the proposal that has been put forward, and which has been so promptly accepted by the premiers of Nova Scotia and New Brunswick, will operate to the genuine advantage of the maritime provinces.