Debates of May 16, 2007 (day 8)

Thank you, Mr. Speaker. Mr. Speaker, I would like to ask another set of questions to the Minister of Human Resources with regard to Northstar losing the EAP contract they have had for seven years. Mr. Speaker, there are such differences in facts about this case between the government and Northstar. Northstar says they were never advised about this inverse ratio calculation. The government says they were, that it was included in the RFP. The government says there was only one name that was added inadvertently, but Northstar states that there are at least three people they know of who were included as part of the subcontractors. Mr. Speaker, we all met in the Legislature with these professionals and they all confirmed the position of Northstar. So this is a real predicament for us.

Mr. Speaker, in the larger picture, I understand that the way the pricing was done for this contract, the southern bidder went by bidding about a $2,000 less than Northstar. Northstar feels as soon as they went over the limit of money that the government had in mind, that they were out of the running. In the interest of the social network and the counselling infrastructure that this business has built over the years, it’s a real loss for us. Is the Minister not concerned about the impact of that in the whole scheme of things? Thank you, Mr. Speaker.

Thank you, Ms. Lee. The honourable Minister of Human Resources, Mr. Dent.

Return To Question 103-15(6): Awarding Of Contract For GNWT Employee Assistance Plan

Thank you, Mr. Speaker. Mr. Speaker, the Member said the government has taken a position that the proponents were all advised that an inverse ratio would be used. That’s not the case. This was not a situation where the RFP was identified that an inverse ratio would be provided. According to the BIP monitoring office, that is not an unusual process to use when a fixed price or a set price is used in an RFP. So when you advertise that you are looking for a fixed price, it’s quite common to use the inverse ratio.

According to Public Works, this methodology is not prejudicial to northern proponents because the cost of infrastructure is accounted for in the evaluation of the value of northern and local goods and services. In terms of the BIP preference, that was reviewed as well. The way in which that was calculated in this case for Northstar, and I am advised that there was a mathematical error found in the analysis, but it actually worked to the benefit of Northstar.

So I am afraid that while there is an assertion here being made that this is not fair and not right, the advice that we have gotten from Public Works is that it’s quite standard and that, in fact, it doesn’t prejudice northern contractors.

Thank you, Mr. Dent. Supplementary, Ms. Lee.

Supplementary To Question 103-15(6): Awarding Of Contract For GNWT Employee Assistance Plan

Well, I guess it’s a case of he said/she said now, because he’s going by what the department is telling him and I am telling you, Mr. Speaker, from the perspective of Northstar, the government has to recognize that it costs more to run a business here. The counsellors for Northstar are paid more. They have their offices here. This other business could run a counselling service over the phone and keep all their administrative structure down south giving them an advantage. Mr. Speaker, I would like to ask the Minister, is he not concerned about the fact of Northstar not having this contract and not having their presence in the community that we are seeing a complete destruction of a counselling service, social infrastructure in the North. Thank you, Mr. Speaker.

Thank you, Ms. Lee. Mr. Dent.

Further Return To Question 103-15(6): Awarding Of Contract For GNWT Employee Assistance Plan

Thank you, Mr. Speaker. Mr. Speaker, like all Members of government, I am a strong supporter of the business incentive policy, which is a policy that is set up to encourage northern businesses and to recognize the differential cost of doing business in the North. So this government does support northern business and we’ve set a policy in place to ensure that we do. In this case, the business incentive policy was applied and the results of the RFP are as they are. Yes, I would always prefer a northern business win a proposal, but our policy is set up to say that the government is prepared to take this much of a difference and provide that preference. Above that, it isn’t something the government can arbitrarily add money to a contract to follow through on.

Thank you, Mr. Dent. Time for question period has expired, but I will allow the Member a short supplementary, Ms. Lee.

Supplementary To Question 103-15(6): Awarding Of Contract For GNWT Employee Assistance Plan

Thank you, Mr. Speaker. I feel like we had this discussion before when we were talking about constructing the jail where there are lots of benefits to having business being done in the North than just going for cost-efficiency. There is a lot of economies of scale that are going to be lost because there are so many more benefits having these businesses operate out of here that multinational corporations cannot provide. I am losing my question here. Mr. Speaker, Northstar’s position is the cost of operating is so high here that even with the business incentive…Okay, let me just ask a question. Sorry.

The southern company that won the contract apparently used the subcontractors to qualify under BIP. They…

A question, Ms. Lee.

…thank you.

Thank you, Ms. Lee. Mr. Dent.

Further Return To Question 103-15(6): Awarding Of Contract For GNWT Employee Assistance Plan

Thank you, Mr. Speaker. The Member talked about the similarities between the jail contract and this one. I would like to point out that in the jail contract, the government-of-the-day removed BIP from consideration and didn’t protect northern businesses. In this case, the business incentive policy is applying to the evaluation of the contracts and, yes, the government agrees that northern businesses deserve that extra protection. But there is a limit to how much extra protection is allowed under the policy and the policy, I am advised by the BIP monitoring office and by Public Works, has been properly applied in this case. Thank you, Mr. Speaker.

Thank you, Mr. Dent. Final, short supplementary, Ms Lee.

Supplementary To Question 103-15(6): Awarding Of Contract For GNWT Employee Assistance Plan

Thank you, Mr. Speaker. But the point is, businesses like this can never play on an even playing field. It doesn’t take into consideration the cost of doing business for the northern businesses here.

Question, Ms. Lee.

Did the government look at the added benefit of keeping such a northern business here as a cost of rendering the contract? If there was some amount of money set aside, why didn’t they enter into a negotiated contract to keep the infrastructure in place instead of bringing up all…

Thank you, Ms. Lee. Mr. Dent.

Further Return To Question 103-15(6): Awarding Of Contract For GNWT Employee Assistance Plan

Thank you, Mr. Speaker. The government has a policy; it’s the business incentive policy. If Members feel that policy needs to be reviewed and the percentages allowed in that need to be changed, we can do that. But at this point, there is no way to arbitrarily go beyond that once you have gone out for an RFP. Governments often go out for RFPs to ensure that we are getting good value for money. In this case, there is not anything else that we could have done. Thank you, Mr. Speaker.

My question is for the Minister of Transportation:

Can I request a detailed cost to repair and service the Highway No. 3 access roads, specifically to the Charlo’s camp on a monthly basis?

Can I also request for copies of meeting minutes or documentations on the previous contractual discussion? Specifically the community/local private contractor’s complaints.

Mr. Speaker, I wish to table the following document entitled Biomass Heating System Project Report: North Slave Correctional Facility, Yellowknife, NT. Thank you, Mr. Speaker.

Thank you, Mrs. Groenewegen. Tabling of documents. In accordance with section 21(1) of the Retiring Allowances Act and section 11.1 of the Supplementary Retiring Allowance Act, I hereby table the Pension Administration Report - Legislative Assembly Retiring Allowances Act and Supplementary Retiring Allowances Act at March 31, 2006.

Thank you, Mr. Speaker. Mr. Speaker, I move, seconded by the honourable Member for Mackenzie Delta, that Bill 15, Liquor Act, be read for the second time.

Mr. Speaker, this bill provides for the regulation of liquor in the Northwest Territories. The Liquor Licensing Board is given authority to issue licences and permits, and is assigned responsibility for the regulation of licence holders and permit holders, and the operations of licensed premises and manufacturing facilities. The Liquor Commission is assigned responsibility for the importation into and distribution of liquor within the Northwest Territories, and the Minister is given the authority to designate and enter into agreements with vendors for the operation of liquor stores.

Communities may, by plebiscite, approve the establishment replacement, modification or cancellation of liquor restriction or prohibition systems. Communities may also, by plebiscite, authorize the Liquor Licensing Board to issue licences, or require the board to close licensed premises. A municipal council may make bylaws regulating certain aspects of the operation of licensed premises.

The bill establishes penalties for contraventions of the act and the regulations made under the act, and provides for an enforcement regime. The existing Liquor Act is repealed and transitional matters are provided for. Consequential amendments are made to the Financial Administration Act, the Motor Vehicles Act and the Revolving Funds Act. Thank you, Mr. Speaker.

Thank you, Mr. Roland. The motion is on the floor. The motion is in order. To the principle of the bill.

Question.

Question is being called. All those in favour? All those opposed? The motion is carried.

---Carried

I will call Committee of the Whole to order this afternoon. What is the wish of the committee? Mr. Lafferty.

Mahsi, Madam Chair. Madam Chair, the committee wishes to consider Bill 4, Northwest Territories Hydro Corporation Act; Bill 5, An Act to Amend the Child and Family Services Act; and Bill 16, An Act to Amend the Legislative Assembly and Executive Council Act. Mahsi, Madam Chair.

Thank you, Mr. Lafferty. Is committee agreed?

Agreed.

Agreed. Thank you. We will do that after a short break.

---SHORT RECESS

Good afternoon, Members. Welcome back to Committee of the Whole. We are now dealing with Bill 4, Northwest Territories Hydro Corporation Act. At this time, I would like to ask the Minister responsible to introduce the bill. Mr. Krutko.

I am pleased to introduce Bill 4, Northwest Territories Hydro Corporation Act. This bill is necessary to facilitate the participation of the Northwest Territories Power Corporation in a joint venture with the Akaitcho Energy Corporation and the Metis Energy Company to expand the Taltson Twin Gorges hydro facility to provide power to the diamond mines.

The passage of this act will not in any way commit the Government of the Northwest Territories or the NTPC to proceed with the Taltson hydro expansion project. The act only makes participation in the project possible. Many steps are still required before a final decision to proceed with the project can be made.

NWT Hydro Corporation is being created as a Crown corporation under NWT legislation. It will be a public agency subject to the Financial Administration Act and direction from the Executive Council. The Northwest Territories Power Corporation will remain a public agency.

The legislation would create an NWT Hydro Corporation that would be able to participate in the joint venture for the Taltson project. A separate Crown corporation is being used to protect the assets and regulated operations of NTPC from any risks that may be associated with the Taltson project.

The legislation to create NT Hydro has been kept as close to the Northwest Territories Power Corporation Act provisions as possible. Some highlights of the bill are:

NT Hydro is an NWT Crown corporation accountable to a Minister and to the Legislative Assembly;

Cabinet and the Legislative Assembly have the same control over NT Hydro activities as they do those of NTPC;

NT Hydro is clearly authorized to enter into joint ventures and partnerships;

NT Hydro will hold the common shares of NTPC while the GNWT will hold preferred shares. Cabinet can still demand dividends from both companies and NTPC's dividend will continue to be available for the Territorial Power Support Program;

NT Hydro cannot pledge NTPC assets nor incur any debt that may put NTPC at risk;

Any significant NT Hydro borrowing requires FMB approval; and

The sale of power from the Taltson project to the diamond mines is exempted from Public Utilities Board regulation.

I feel that this legislation proposes the minimum changes necessary to enable the Taltson hydro expansion project to proceed.

I would be pleased to answer any questions that Members may have.

Thank you, Mr. Krutko. At this time, I would like to ask Mrs. Groenewegen for her opening comments regarding Bill 4.

Thank you, Mr. Chairman. Mr. Chairman, the Standing Committee on Governance and Economic Development conducted public hearings on Bill 5, Northwest Territories Hydro Corporation Act, in Yellowknife on April 18 and 19, 2007; in Fort Smith on April 23, 2007; in Fort Resolution on April 24, 2007; in Hay River on Wednesday, April 25, 2007; and in Inuvik on April 26, 2007. The clause-by-clause review was conducted on May 10, 2007, in Yellowknife.

The committee would like to thank all the witnesses for their comments and the Minister and his staff for presenting the bill. The main purpose of the bill is to create a new Crown corporation, NWT Hydro, that has a clear mandate to continue the work and discussions the NWT Power Corporation has started with other partners towards the potential expansion of the Taltson hydro facility.

NWT Hydro will become the owner of NWT Energy Corporation (03) which will, in turn, own one-third of the shares of the Deze Energy Corporation, a joint venture between the NWT Energy Corporation, the Akaitcho Territory Government and the NWT Metis Nation. Deze Energy Corporation will be the proponent of the Taltson expansion project.

Many of the concerns the committee heard were related to the project itself rather than to the bill and appeared to stem from insufficient communications between Deze Energy Corporation and affected communities.

The committee was, therefore, pleased to hear from the Minister and his officials that Deze Energy Corporation will be stepping up its consultation and communication efforts. Committee also looks forward to regular briefings from the Minister on the status of the project.

Committee heard from a number of individuals with outstanding compensation issues dating back to the existing Taltson dam, in particular trappers who, as a group, have suffered financial hardship, property losses and, in some cases, loss of life due to the flooding.

Some trappers also expressed concern that despite water licence requirements, the NWT Power Corporation does not notify affected communities when changes in water levels will occur. These unexpected changes in water levels affect ice conditions and create unsafe conditions for people out on the land. Some presenters raised concerns about the potential environmental impacts of the project. Others pointed out that the project, if it proceeds, will significantly lower greenhouse gas emissions by reducing the amount of diesel fuel for electricity generation. It would also reduce environmental risks associated with hauling diesel fuel over long distances to the mine site.

The committee heard from representatives of the Yellowknives Tsastontine Society, Deninu Kue First Nation, the Salt River First Nation and North Slave Metis Alliance, who stated that they had yet to be consulted on the project. Many of the individuals who spoke at our hearings questioned how the project would benefit their communities.

The Minister indicated the advantages to the project include increased infrastructure, impact benefit agreements, employment and training opportunities, the potential for a low-cost energy grid and for the sale of surplus power. The project may also encourage more mining development and extended life for existing mines because of the access to reliable, clean hydro power.

In light of the concerns raised by community members, it should be made clear this bill is a first step only and in one way approves the Taltson expansion project. There are many conditions that need to be met before this project can proceed. Most importantly, it needs to have the buy-in of affected communities and aboriginal organizations and it needs to pass the environmental review process. The proponent needs to be able to demonstrate a strong business case, negotiate long-term purchase agreements with customers and secure project financing. We encourage Deze Energy Corporation to increase its efforts at consultation and open up dialogue with communities to assure affected people are informed and have opportunities to ask questions and raise concerns about the project should it proceed.

The committee raised a number of questions on the specific wording of the bill. Members requested clarification of whether the objectives of the bill would allow for the possibility of other hydro projects. The Minister and his officials confirmed that amendments would not be necessary for NWT Hydro or its subsidiaries to become involved in smaller, local community-based mini hydro projects, however, larger scale hydro projects would like to require amendments to add to the objects.

Members questioned what, if any, impact the new structure would have on the GNWT’s revenue from the NWT Power Corporation, which is used to finance, in part, the Territorial Power Support Program. The Minister stated the NWT Power Corporation must stay under its current legislation, but will become a subsidiary of the NWT Hydro Corporation. Legislation allows the GNWT the same dividend declaration powers on the preferred shares that it currently has with the common shares. This maintains the ability of the GNWT to demand dividends from NTPC to finance the Territorial Power Support Program, while recognizing the need for the parent company, NWT Hydro, to own the common shares of the subsidiary.

Members also asked the Minister why projects north of Taltson hydro expansion are exempted from the Public Utilities Act. The Minister replied the Taltson expansion is unique. For the foreseeable future, the expansion will only supply power to the diamond mines. The Public Utilities Board, PUB, process requires disclosure of business information, which would adversely affect the proponents’ bargaining power with the mines. The clause refers only to projects north of the facility, because the intent is that the PUB process should continue to apply to other customers.

Mayor Pollard of Hay River raised the concern that the wording ”north of the facility” could leave out industrial developments in other directions that should be on an equal footing with the diamond mines. During the clause-by-clause review of the bill, committee members supported a motion which amended Bill 4 to remove the words “north of the facility.” The Minister did not concur with the amendment.

This concludes the committee’s opening comments on Bill 4. Individual Members may have questions and comments as we proceed.

Following the clause-by-clause review, a motion was carried to report Bill 4, Northwest Territories Hydro Corporation Act, as ready for consideration by Committee of the Whole. Thank you, Mr. Chairman.

Thank you, Mrs. Groenewegen. At this time I would like to ask the Minister if he would like to bring in witnesses.

Yes, Mr. Chair.

Does committee agree?

Agreed.

Thank you. Sergeant-at-Arms, please escort the witnesses in. Thank you.

Thank you. Mr. Minister, can you introduce your witnesses, please?

Thank you, Mr. Chair. Mr. Chair, to my right I have Lew Voytilla, chairman of the Northwest Territories Power Corporation; to my left I have Mark Aitken, director of legislation, Department of Justice.

Thank you. Mr. Minister, at this time, I would like to ask Members if they have any comments. Mr. Ramsay.

Thank you, Mr. Chairman. I would like to welcome the Minister and his staff that are with us this afternoon to discuss Bill 4. I want to provide a few opening comments if I could.

First of all, I wanted to publicly thank those individuals in the communities we visited for coming out and providing us the input that they did on Bill 4. It was much welcomed. A couple of other things Madam Chair alluded to in committee’s remarks was an issue over compensation from the initial Taltson development still weighs heavy on the minds of many in that region. I think it’s something that needs to be taken care of by working with the federal government and those folks that are involved in that.

I do want to say that I will be supporting the bill. I feel it is necessary to move forward and get on with things and this is the enabling legislation to allow the expansion at Taltson. Mr. Chairman, I wanted to add a couple of things here. They are important for me. We look at the expansion at Taltson and the Minister has said it himself and others have said it, it’s strictly designed to supply power to industry. That’s the mining companies north of Yellowknife. There is something about that that doesn’t sit right with me. The Northwest Territories Power Corporation needs to have more of a social conscience, if you will, and needs to learn at getting the best power rates into our communities as we possibly can. By looking at an expansion at Taltson and not looking at providing lower cost power to communities in the South Slave, I think we are missing a key aspect of this.

I am happy to see the aboriginal component included in this, but from what we heard out on the road, Mr. Chairman, the consultation has just been somewhat abysmal really. I don’t know if we talked to anybody who had actually been to a consultation meeting or a briefing. Some people didn’t even know it was happening. It was news to them. In a small community like the Northwest Territories, specifically in the South Slave area, you would think people would know what was happening. So I am not sure if the Power Corporation has responsibility. I think they do have a responsibility in that area because they are a partner in that project at the end of the day, but they have to communicate with their partners that in order for this project to go anywhere, that consultation and the community involvement, the community buy-in, again if you can roll in a social component to this, I think that would be beneficial to be sure.

Again, it just pointed to the fact, again, Mr. Chairman, the Northwest Territories needs a comprehensive overall long-term vision on hydro development in the Northwest Territories. I know we are working towards one, but the sooner we can work out what we can do and how we are going to get it done, the better off we’ll be, Mr. Chairman. So with that, I would like to thank the Minister and his staff for being here. Mahsi