Ms. Bisaro.

Thank you, Mr. Chair. I note the amount under this particular item is $4.2 million and it is intended for a line of credit for the Taltson Hydro Expansion Project. In total, this supplementary appropriation request is some $11 million and this is a very significant portion of that total amount of money. I am concerned with what we’re being asked to approve here in total.

Yesterday the Minister advised me that we have a cap of 3 percent increase on our operations expenditures in any one year, but the total amount of $11 million affects a 0.8 percent increase to our operations expenditures for this year of 2011-12, which is what we’re discussing here. So if we have a rate of 2.8 percent, which is what was in his statement yesterday, and we add another 0.8, I think it puts us over 3 percent. So I have difficulty with the answer I got yesterday, that we’re managing to stay under our 3 percent increase to our operations expenditures.

The other significant amount of money is the one that we just discussed related to devolution and resource revenue sharing. The other expenses are some in, some out. Overall, by the time we consider lapses in funding from the last fiscal year and some reduction in funding in various areas, we’re advised that it’s only about $5 million that we are actually being asked to approve here, in new funding anyway. But I again have a problem with the $4.2 million in that we’re being asked to approve it as an expenditure here, but then we’re advised, well, it’s already in our fiscal framework so we can credit it back. So it’s kind of not really an expense and I have great difficulty with that.

My question to the Minister is: why we are paying down this line of credit to the Hydro Corporation? Is it an expense? I guess I understand the principle of paying down the line of credit. It’s costing us thousands of dollars, I gather, in interest payments and I’m quite happy to not pay interest to somebody else. So I’d like to know not so much why we’re paying down the line of credit but why is it an expense here and then credited back. So, really, it doesn’t affect the bottom line. I’m having great difficulty with that.

Thank you, Ms. Bisaro. Mr. Kalgutkar.

Thanks to Mr. Kalgutkar. I almost understood that. That was great. However, what I kind of heard was we let somebody else set up a line of credit and borrow the money and then we pay it off, which I understand it’s a Crown corporation, but I have a bit of a problem with that. I would like to clarify, I do believe that when and if this project goes forward and there are revenues to the Taltson project, that the GNWT will be paid back for this money that we are paying out. Is that correct?

Thank you, Ms. Bisaro. Mr. Miltenberger.

Thank you, Mr. Chairman. Just two quick responses. Yes, all the money, the $17 million or so, when the project is complete and starts generating revenue, that money will be reimbursed to us. It’s not just a Crown corporation but it’s our Crown corporation of which we are the one and only shareholder. We are also, for the most part, their banker.

Thanks to the Minister. Yes, we’re a banker for lots of organizations and that’s what gets us into trouble. However, I want to just comment as

well. This large expense and along with the others that are being asked for in this supplementary appropriation are putting a fairly big strain, I believe, on our reserve fund, our supplementary reserve, which is about $10 million. If this appropriation goes through, it’s $5.2 million and it will reduce our reserve fund to slightly less than $4.8 million. We’re only two months into this fiscal year. We have 10 months of a fiscal year to go with a contingency of about $4.8 million, which I fear is going to be really problematic.

There is any number of events which could occur. We have a fire season approaching which could be quite catastrophic. Things are very dry. We really don’t know what’s coming up there. Traditionally we do not budget for our fire season for the costs that we actually incur. So we know pretty well there is going to be a supplementary appropriation coming up at some point in time after the fire season for us to pay for the cost of the fire season because it’s not in the budget. We know that’s coming.

We know that Norman Wells has a problem with their conversion, the loss of their gas, and they are probably going to need help with their conversion to some other source of fuel or source of heat. There’s that. We have a bridge which may or may not be costing us more money. That’s still uncertain. There are Members who will say that it’s going to cost us an extra $30 million or $40 million. I’m not one of them, but it is yet to be determined whether or not the bridge is going to cost us more money. Even with just those three items, we have a really small contingency to deal with and I am quite concerned that this early in the fiscal year we have such a small contingency.

I guess I’d like to ask the Minister, if push comes to shove and we end up with three or four different calls for funds that put us over our reserve and it’s $4.8 million and we need $10 million, what happens at that point?

We’ll be working, of course, closely as a government to try to make sure we control our expenditures. If that point occurs, then we will be working, of course, very closely with committee and Members to try to manage and identify what the particular cost pressures are and what steps have to be taken to try to resolve them. One of the reasons we have engaged in this passive restraint process over the last number of months is to try to as well make sure that we have the maximum amount of cushion available over the next year to give us some flexibility should some of these unanticipated or unbudgeted events occur that the Member listed in somewhat gruesome detail.

I didn’t want to be gruesome, but I think it’s better to be realistic than not. So I guess just to try and solidify, clarify in my head, if we end up having to spend $10 million and we only have

$4.8 million in our reserve fund, we will borrow to meet the financial or the funding commitments that we have to. Is that correct?

Thank you, Ms. Bisaro. Mr. Kalgutkar.

Thank you, Mr. Kalgutkar. Next on my list is Mr. Bromley.

Thank you, Mr. Chairman. I want to ask a couple of questions on this project, as well. The $4.2 million being proposed here for this payout brings a total, as I understand it, to about $17.4 million for the Taltson project. These, of course, are all public funds that are going towards an unregulated power project with a partner that has no funds to contribute. Although I believe they did bring some modest, or were instrumental in helping the government bring in some federal dollars, modest though they might have been.

Where are we at in terms of paying those dollars back? Is the project still going ahead and would, presumably, the dollars be paid back equivalent to the dollars that were received from the territorial government?

Thank you, Mr. Bromley. Mr. Miltenberger.

Thank you, Mr. Chairman. This project is currently on pause as we look at reconfiguring how best to move forward. A lot of the issues related to the one customer, the payback period, which was very, very accelerated by the standard for this type of project with this type of significant investment, the routing of the transmission line, how do we address some of the other broader, longer-term needs of the Northwest Territories with grid connections and the ability to look at putting whatever surplus power there may

be to use in communities, in buildings, other potential ventures.

There’s a number of these things that now that the Power Corporation has a different chair and different management, and as we have listened to the concerns around this table especially about some of those issues, we want to make sure for this type of investment that we’re on the right track. Those things are being considered.

The work that’s been done especially on the generation side is going to stand us in good stead. It’s engineering work, environmental work, all the other necessary environmental approvals were there. We just have to be sure on the business side and on what’s best in our long-term interest as Northerners.

I thank the Minister for those remarks. I think many of us are disappointed that this project did not work out better and are still hopeful that something can be pulled out of the fire. I am concerned with one of the justifications for this sort of ongoing funding. That is that our partner is worthy of this investment essentially because they are contributing to project knowledge about financial structuring such as the P3 public-private partnership model. Now, I would hope that the government would not need to go to a vested partner that has everything to gain and nothing to lose, for advice on how we structure P3 partnership model, particularly given the experience of this government to date. Can I get the Minister’s assurance that that was a typo?

What I can indicate to the Member is that over the last number of months we have been working diligently on a P3 policy for the government. That policy has been to committee. We’ve had extensive feedback. We’ve put more work into it. Now we have what we think is a workable P3 policy which we will be bringing forward that will provide clarity and a clear way forward if we’re going to engage in any type of P3 consideration, how we do it, and who we do it with, and the steps and checks and balances that must be there. Once again based in large part by the feedback from the committees and from the Members.

Just a couple more quick ones and then I want to follow the Minister’s comments up, which I appreciate, by asking for his assurance that he will be referencing the committee reports today and the Auditor General’s comments and principles on P3 partnerships, and making sure that those are well referenced in the model that we finally adopt, and that in fact we will not be going out to private partners and adopting their advice on a model to be followed by this government.

I can assure the Member that the P3 policy, once it’s in place, will be followed by the government. There’s built-in,

full engagement of the committees, as well. That policy has been developed based on the things we’ve learned through the last number of projects; the bridge and the Taltson project most recently. We believe we have pulled together a policy that reflects the lessons learned.

I guess I would call on all of the House to ensure that the Auditor General’s guidance is reflected in that policy before it’s approved.

Just my last question here. Given that $17.4 million has been spent and the development costs for the project were estimated to be $20 million, we’re now over 80 percent expended on the budget for developing the project. Although it’s on hold, I understand from the chairman of the Power Corporation that development, or perhaps the Hydro Corporation development, is still proceeding or explorations towards a restructuring and so on. Again, presumably that would engender new costs for essentially a new project. Can we expect that the Minister will be coming forward with another supp on these, and at what point on these projects do we say stop and desist and let’s give up if we’re beating a dead horse, sort of thing?

Again, I’m just sensitive to our financial situation pressing up against our debt limit and so on. Comments from the Minister would be appreciated. Thank you.

I wouldn’t describe this project as a dead horse. There is tremendous value here. There’s power going over the existing dam, there is a capacity to expand. We chose a path and a way forward that focused on unregulated one business partner process that did not come to realization. We know very clearly that there are other things in the long term that we want to consider that we’ve talked about, the grid, looking at putting other buildings on electricity, looking at other potential opportunities, Tamerlane, Avalon. We also know that when we did the work and they looked at the demand, it was based only on the use of electricity and not on the use of hydro for power. There has also been studies done, for example, I believe, in Maine, where they did an estimate if they got off their reliance on renewable resources like petroleum products and they did their own energy provision within their state, they would save $700 million a year and 40-some thousand jobs by having that energy provision in their jurisdiction.

We know that we should control our own source of energy. We also know clearly that the price of gas and oil has gone up. The price is well over $100 again -- It dipped a bit -- and all estimates are that we’re not going to go back to the days of maybe not even double-digit oil anymore. So all these factors make this project more and more attractive, in my mind, in terms of… And that doesn’t even touch on

the environmental considerations of greenhouse gases and our own carbon footprint, but managing and controlling our own source of energy. We just have to rethink the best way forward to realize those opportunities. Thank you.