AANR Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Aboriginal Affairs, Northern Development and Natural Resources

EVIDENCE

CONTENTS

Wednesday, October 29, 2003

¹

1535

The Chair (Mr. Raymond Bonin (Nickel Belt, Lib.))

Mr. George Anderson (Deputy Minister, Department of Natural Resources)

The Chair

Mr. Thomas Rusnov (Canadian Co-Chair, Electric System Working Group, Department of Natural Resources)

¹

1540

The Chair

Mr. William Elliott (Canadian Co-Chair, Security Working Group, Department of Natural Resources)

¹

1545

The Chair

Ms. Linda Keen (Canadian Co-Chair, Nuclear Working Group and member of the Task Force, Department of Natural Resources)

¹

1550

The Chair

Mr. George Anderson

The Chair

Mr. George Anderson

The Chair

Mr. David Chatters (Athabasca, Canadian Alliance)

Mr. George Anderson

Mr. Thomas Rusnov

¹

1555

Mr. David Chatters

Mr. Thomas Rusnov

Mr. David Chatters

Mr. Thomas Rusnov

The Chair

Mr. Thomas Rusnov

Mr. George Anderson

Mr. David Chatters

Mr. Thomas Rusnov

Mr. David Chatters

Mr. Thomas Rusnov

Mr. David Chatters

Mr. Thomas Rusnov

Mr. David Chatters

The Chair

Mr. Serge Cardin (Sherbrooke, BQ)

Mr. George Anderson

Mr. David Chatters

Mr. Serge Cardin

º

1600

Mr. George Anderson

Mr. Thomas Rusnov

º

1605

The Chair

Mr. Gary Schellenberger (Perth—Middlesex, PC)

Ms. Linda Keen

Mr. Gary Schellenberger

The Chair

Mr. John Godfrey (Don Valley West)

Mr. Thomas Rusnov

Mr. John Godfrey

º

1610

Mr. Thomas Rusnov

The Chair

Mr. Charles Hubbard (Miramichi, Lib.)

º

1615

Mr. George Anderson

The Chair

Mr. George Anderson

Mr. Charles Hubbard

Mr. George Anderson

Mr. Thomas Rusnov

Mr. Charles Hubbard

Mr. Thomas Rusnov

Mr. George Anderson

Ms. Linda Keen

º

1620

The Chair

Mr. George Anderson

The Chair

Mr. George Anderson

The Chair

Mr. George Anderson

The Chair

Mr. David Chatters

º

1625

Mr. George Anderson

Mr. David Chatters

Mr. George Anderson

Mr. David Chatters

The Chair

Mr. Serge Cardin

Ms. Linda Keen

º

1630

Mr. Serge Cardin

Mr. George Anderson

The Chair

Mr. John Godfrey

The Chair

Mr. John Godfrey

The Chair

Mr. John Godfrey

Mr. John Godfrey

Mr. William Elliott

Ms. Linda Keen

The Chair

Mr. Gary Schellenberger

º

1635

The Chair

Mr. David Chatters

Ms. Linda Keen

The Chair

Mr. John Godfrey

º

1640

Mr. John Godfrey

Mr. Thomas Rusnov

Mr. George Anderson

Mr. John Godfrey

Mr. George Anderson

Mr. Thomas Rusnov

º

1645

Mr. George Anderson

The Chair

Mr. John Godfrey

Mr. George Anderson

The Chair

Mr. Serge Cardin

M. George Anderson

Mr. Serge Cardin

The Chair

M. George Anderson

The Chair

Mr. Serge Cardin

The Chair

Mr. George Anderson

The Chair

---

CANADA

Standing Committee on Aboriginal Affairs, Northern Development and Natural Resources

---

NUMBER 090

l

2nd SESSION

l

37th PARLIAMENT

---

EVIDENCE

Wednesday, October 29, 2003

[Recorded by Electronic Apparatus]

¹  (1535)  

[English]

    The Chair (Mr. Raymond Bonin (Nickel Belt, Lib.)): Welcome, everyone.

[Translation]

    Good day, everyone.

[English]

    Pursuant to Standing Order 108(2), this is a briefing session on the Canadian energy policy, especially with regard to the distribution of electricity.

    I'm pleased to welcome today from the Department of Natural Resources, Mr. George Anderson, Deputy Minister; Nawal Kamel, Canadian co-ordinator, Joint Canada-U.S. Task Force on the Power Outage; Linda Keen, Canadian co-chair, Nuclear Working Group, and member of the task force; Thomas Rusnov, Canadian co-chair, Electric System Working Group; and William J.S. Elliott, Canadian co-chair, Security Working Group.

    Ms. Karetak-Lindell will be coming back. She has been asked to sit on a committee for 15 minutes so that they will have a quorum.

    I hope Mr. Godfrey will be here. He asked that the committee undertake this exercise, so I hope that he will show up soon.

    I invite you to make a presentation, and then we will open it up to questions.

    Mr. Anderson.

    Mr. George Anderson (Deputy Minister, Department of Natural Resources): Mr. Chair, it's a pleasure to be back with the committee today to provide you with an update on the work of the Joint Canada-U.S. Task Force on the Power Outage and of course to respond to any questions you may have.

    You've already introduced the other people at the table with me.

    Mr. Chairman, as you will recall, around 4 o'clock on August 14 a cascading power outage resulted in 50 million individuals losing power in Ontario and the northeastern United States. Both governments acted quickly, and within 24 hours Prime Minister Chrétien and President Bush had established a joint task force on the power outage headed by Natural Resources Minister Dhaliwal for Canada and Energy Secretary Spencer Abraham for the United States. The mandate of the task force is clear. It is to identify the reasons for the power outage and to make recommendations to reduce the possibility of future outages.

[Translation]

    In order to ensure completion of the work of the task force as quickly as possible, but without sacrificing accuracy, three expert working groups have been established under the joint management of Dr. Kamel of NRCan for Canada and Mr. Jimmy Glotfelty of the US Department of Energy.

    These three working groups, on the electric system, on nuclear power and on security respectively, have representatives from both my department and the US Department of Energy, along with provincial and state representatives, as well as representatives of industry.

    Mr. Chairman, a great deal of work has been undertaken by these groups since August 15. After sifting through vast amounts of computer data, the task force released a sequence of events on September 12. This timeline, which you all have copies of this afternoon, outlines in careful detail the significant physical and electrical events that occurred in a narrow window of time around the blackout. At that early stage, we did not seek to present or explain the linkages between the sequences of events, but rather to provide a picture of the events which would form the basis for the further detailed analysis to follow. I will let Mr. Rusnov provide you with further details about the report in a moment.

[English]

    Phase 1 has proceeded intensely since the release, with work proceeding on the further investigation and data analysis necessary to produce a thorough and professional interim report.

    Minister Dhaliwal and Secretary Abraham have personally met twice, both in Canada and the United States, to discuss the work of the task force. On October 17 they indicated that the interim report would be released in the next three weeks or so.

    While the report is not yet available, I can report to you, Mr. Chairman, that the task force members are working hard toward completing the interim report in that timeframe without sacrificing its thoroughness. Both Mr. Dhaliwal and Mr. Abraham were very clear that accuracy is the ultimate criterion, to make sure it's a correct and complete report. When released, the interim report will identify the sequence of events and provide the reasons for the events. So it will be a causal analysis. As Mr. Dhaliwal has indicated, the report will put out all the facts and be very transparent.

    In phase 2 the task force will develop recommendations aimed at preventing future outages, based on the findings of phase 1. Public forums will be held in both Canada and the United States to solicit comments from all stakeholders on the phase 1 findings and the recommendations of phase 2.

    Mr. Chairman, with your permission,

[Translation]

    I would now like to ask each of the co-chairs to provide a few brief remarks.

[English]

    The Chair: Mr. Rusnov.

    Mr. Thomas Rusnov (Canadian Co-Chair, Electric System Working Group, Department of Natural Resources): Thank you very much, Mr. Chairman.

    Mr. Chairman, as you know, I'm one of the three co-chairs of the Electric System Working Group. The other co-chairs are Ms. Alison Silverstein from the federal Energy Regulatory Commission and Mr. David Meyer from the U.S. Department of Energy.

    The electricity system has been called one of the greatest engineering achievements of the 20th century. The electricity infrastructure in North America represents approximately $1 trillion in asset value. It has over 540,000 miles of transmission lines, thousands of generators, $247 billion in annual revenues, 131 million customers, and over 3,200 utility organizations.

    We are now two-and-a-half months into the data collection and analysis of the blackout. We expect to have the interim report completed by early to mid-November and the final report with recommendations, as Mr. Anderson has stated, later this year.

    The investigative team will be able to answer the questions as to where, why, and how the blackout started, why it cascaded, and why the cascade stopped where it actually did. We can categorically say that Canadian utilities were not causal in any sense in either the start of the blackout or the propagation of the cascade. Eleven teams have been set up at NERC headquarters to study the various aspects of the blackout. Separate teams at other locations are doing computer modelling and simulations of this vastly complex network and the events of August 14. Well over 133 people in 53 different organizations are involved in this study, and this includes significant input from Canadian experts. We have identified a number of causes for this event. With all the analysis underway, the team is using a tool called root cause analysis in order to logically organize and test the relationship between all of the relevant factors and hone in on the specific causal factors for how and why it happened. We must ensure, as Mr. Anderson has stated, that we have all of the relevant facts and accurate data before we release any substantive information with regard to our findings. These will be included in the interim report of the task force.

    The blackout can be divided into two time periods: the period before 4:06 p.m. on August 14, when individual transmission lines and generators started to fail and continued to do so within Ohio, and the period at 4:06 and afterwards, during which the cascade commenced and spread across the northeastern area of Canada and the United States. It is certain that once a cascade of this nature starts, there is no operator intervention possible that can stop it. It will stop where it will by its own nature.

    For the interim report, we are focusing primarily on the period before the cascade so that we can work backwards through time and through the power system to identify what happened in all of those causal relationships, including technological, institutional, and human factors, all of which contributed to the event. We will also identify why the cascade stopped where it did. A detailed sequence-of-events record is virtually complete, containing most of the key transmission line and relay events and many of the generator trips involved. These data are critical for system modelling and analysis. The team has added non-physical events into the series, such as logs of telephone calls within and between control rooms, computer problems, and the events associated with the control systems.

    Also, rather than wait for the task force report, the investigative team has developed a list of what we call near-term actions to ensure reliable operations. NERC, or the North American Electric Reliability Council, has sent this to all of the independent system operators, utilities, and reliability coordinators in North America for review and assurance that their organizations are following the NERC and regional reliability council standards and established good utility practices. These are quick-action items that can be reviewed and implemented within 60 days. Their intent is to ensure they are looking after what they normally should be looking after.

¹  (1540)  

    Thank you very much, Mr. Chairman.

    The Chair: Does anyone else have a presentation? Mr. Elliott.

    Mr. William Elliott (Canadian Co-Chair, Security Working Group, Department of Natural Resources): Thank you, Mr. Chairman.

[Translation]

    Thank you for the opportunity to speak to you on the work of the Security Working Group of the Canada-US Joint Task Force on the Power Outage.

[English]

    I'm the assistant secretary to the cabinet, security and intelligence, at the Privy Council Office. I co-chair the Security Working Group with Robert Liscouski, assistant secretary, infrastructure protection and national cyber security, U.S. Department of Homeland Security.

    The cross-border nature of the event we are considering requires a cross-border response, and I am pleased to be able to say that the Canada-U.S. cooperation in the working group has been excellent.

    It is widely recognized that the increased reliance on information technology by critical infrastructure sectors, including the energy sector, has increased the vulnerability of these systems to disruption via cyber means.

¹  (1545)  

[Translation]

    We have seen examples of how these vulnerabilities have been exploited over the past number of years.

[English]

    For example, in January of this year, monitoring computers at an idle U.S. nuclear plant were disrupted by cyber means. Although not targeted directly at the nuclear facility or the electricity sector, a computer worm that was active on the Internet at the time, Slammer, managed to shut down the computers that monitor operations at the plant.

    It is this threat environment that drives the focus of the Security Working Group, whose key objective is to examine the role, if any, that a malicious cyber event may have played in the power outage of August 14. Included in this work are the physical aspects of the cyber infrastructure, such as the facilities that house the key computers and the computer hardware itself. Although we are not focusing on all physical security, we are prepared to look closely at any physical security breaches that come to our attention during the course of the task force work.

    In particular, the Security Working Group's work is very much dependent on the outcomes of other working groups's efforts. Our initial focus is on the cyber operations of those companies in the United States involved in the early stages of the power outage timeline as identified by the Electric System Working Group. Even with limiting our analysis, the amount of information we need to analyze is considerable. We therefore look to the outcome of the Electric System Working Group analysis to identify key events that may have caused or contributed to the outage. As the Electric System Working Group identifies specific cyber events of significance, either in the United States or Canada, the Security Working Group will examine these from a security perspective.

[Translation]

    The Security Working Group is working closely with the other Task Force Working Groups, members of the broader United States and Canadian intelligence, law enforcement and homeland security communities to determine if malicious cyber events may have caused, or contributed to, the power outage.

    In closing, I'd like to thank you again for the opportunity to appear before you today.

    The Chair: Go ahead, Ms. Keen.

[English]

    Ms. Linda Keen (Canadian Co-Chair, Nuclear Working Group and member of the Task Force, Department of Natural Resources): Bonjour, Mr. Chair, and good afternoon to all of you.

    As well as being the co-chair of the Nuclear Working Group, I have a day job. I am president and CEO of the Canadian Nuclear Safety Commission, which is the federal watchdog.

    My co-chair of the Nuclear Working Group is the chairman of the Nuclear Regulatory Commission. He is my counterpart in the United States. It certainly was of benefit to us as we reviewed the events that affected the nuclear plants because of the outage.

    The Nuclear Working Group was tasked with three jobs: review the sequence of events at each of the NPPs, nuclear power plants; determine if any of those events caused the outage or contributed to its spread; and evaluate any potential safety issues that arose out of this event as it hit the nuclear power plants.

    It's important to note that we did not address the non-nuclear power plants in Ontario. But we did talk to the two other nuclear power plants in Canada that are not in Ontario. The power plant at Lepreau in New Brunswick did suffer disturbances, but they were able to keep to full power.

[Translation]

    We also spoke with officials at the Gentilly Station, which comes under Hydro Quebec's jurisdiction. Power was not disrupted at this facility.

[English]

    In our investigations, the working group received the full cooperation of the nuclear industry across Canada, and my colleague in the United States would also say he received the full cooperation of the nuclear facilities in the United States.

    A review of the events has been compiled, and because of the nature of nuclear power plants, it has already been tabled before my tribunal as a significant event. So the actual events in terms of the reaction of the 11 reactors that were on power at that time are on the public record because of the regulated nature of the group.

    The working group has completed an analysis of the events at the nuclear power plants and has submitted it to a panel made up of experts from nuclear stations, Atomic Energy of Canada, universities, etc., to make sure we have the facts right and that we're able to submit this to be included in the overall report. As was mentioned by Mr. Anderson, our report will be released as part of the overall joint task force report, and it will, of course, be ready at that time.

    I would be pleased to answer any questions you may have with regard to the actual performance of the nuclear generators during that period of time.

    Thank you very much.

¹  (1550)  

    The Chair: Does that complete the presentations?

    Mr. George Anderson: Yes.

    The Chair: Thank you very much.

    Mr. George Anderson: With your permission, Mr. Chair, I would just observe that given the state of the work, we're not going to be able to take you very far into a causal analysis of all of these events. None of that is ready for discussion. So you'll have to bear with us on that.

    The Chair: We understand.

    When the committee asked that we go through this exercise, I directed the clerk to ensure that the witnesses would be people who are involved in this situation. I am satisfied and pleased with the quality of the witnesses. I thank all of you very much for having accepted to appear.

    We proceed very casually at this committee. When I allow five or seven minutes, it's for both the questions and the answers. I allow the members to manage their own time.

    In fairness to you, if a question is asked that you are not in a position to respond to, feel comfortable to say it's not a question you are able to address, or if you wish, you can offer to present a written response later on. We don't want to put anybody on the spot.

    We will start with a six-minute round. Therefore, the official opposition gets seven minutes. We'll have more than one round.

    Mr. Chatters.

    Mr. David Chatters (Athabasca, Canadian Alliance): I don't think we'll need more than one round, Mr. Chair, because we don't really seem to have a lot to work with here because of the stage of the report. When we see the report, I'm sure there'll be all kinds of questions and interest coming out of it. But at this point in time, there's not a lot to work with.

    It does strike me that the generation and distribution of electrical energy in this country is entirely a provincial responsibility. I recognize the federal involvement because of the cross-border nature of this problem. I think every province and utility in the country will certainly have an interest in the safety and anti-terrorist discussions that are going on and the security issues around the various facilities, including nuclear and non-nuclear. Because this blackout, as huge as it was, was confined in Canada to the Ontario grid, should there be great concern on the part of the Alberta, B.C., Quebec, or Nova Scotia people? Can the same kind of thing happen on those other grids?

    Mr. George Anderson: There have been transborder incidents.

    Mr. Rusnov, would you like to speak to that?

    Mr. Thomas Rusnov: I can speak to that. I would be the last person in the world to say we can guarantee that such an event won't happen again even after we take such actions. It is an enormously complex undertaking. When you see the report, I think you'll begin to understand exactly how complex this is and what the causal factors are, which, as the chairman has indicated, I can't discuss at this point in time. It can happen elsewhere, and it has happened elsewhere. There have been a number of widespread blackouts in the United States over the last 12 years. We've been fortunate in Ontario in that we haven't had one of this magnitude since November 9, 1965, although there have been localized events.

¹  (1555)  

    Mr. David Chatters: Have there been previous cross-border incidents between Canada and the U.S.?

    Mr. Thomas Rusnov: There was the one on November 9, 1965, and there was a western blackout in 1998, which took out northwestern Ontario plus parts of Minnesota and that general area of the United States.

    Mr. David Chatters: That doesn't strike me as western. You said it was a western blackout.

    Mr. Thomas Rusnov: Northwestern Ontario.

    The Chair: Mr. Chatters thinks of western as being Alberta.

    Some hon. members: Oh, oh!

    Mr. Thomas Rusnov: I am not particularly familiar with that type of event in Alberta.

    Mr. George Anderson: There was one in the 1990s that came up the west coast of the United States into British Columbia and spilled into Alberta, which was a fairly significant event.

    Mr. David Chatters: So in that sense the findings of your group will have significance for the others as well.

    Mr. Thomas Rusnov: We hope so. What this report and the outcome of it will do, hopefully, is stiffen up the reliability criteria and standards by which utilities and independent system operators manage the systems.

    Mr. David Chatters: You probably can't answer this, and we'll have to wait for the report. It struck me as significant that the Quebec grid was able to isolate itself from this blackout. Was that because the system was better prepared?

    Mr. Thomas Rusnov: Not necessarily. The system is different from the rest. In fact, the rest of North America west of the Rocky Mountains, south to Texas, and down to Florida is operated essentially as one machine. Every generator operates at 60 hertz. They all operate in synchronization, every generator on the system. Quebec cannot connect itself to the rest of North America in synchronization, so its connections with New York, New England, and New Brunswick are through what's called direct-current links. Alternating current is converted to direct current, and then it is converted back to alternating current at the other side of this interconnection. That facility actually isolates it from this kind of transient cascading event. It's just one of the characteristics of an AC-DC-AC conversion.

    Mr. David Chatters: Was that just good luck or good management?

    Mr. Thomas Rusnov: The reason it can't connect to the rest of North America is because of the tremendously long transmission lines between its load centre in Montreal and where the bulk of the generation is, which is up in James Bay. The transmission lines are hundreds of miles long. If I can use an analogy, it's like putting two balls on the end of a fairly thin pipe and they oscillate against each other. By doing the segregation, it can operate its own system but still engage in commercial transactions with the rest of its neighbours.

    Mr. David Chatters: That is interesting.

    That's all for now, Mr. Chairman. I may have something later on. We'll see where the discussion goes.

    The Chair: Thank you, Mr. Chatters.

[Translation]

    You have the floor for six minutes, Mr. Cardin.

    Mr. Serge Cardin (Sherbrooke, BQ): Thank you, Mr. Chairman.

    Good day, ladies and gentlemen. I'll wait a moment for the interpretation.

[English]

    Mr. George Anderson: While we're waiting, I'll just report to Mr. Chatters that a large delegation from NRCan was in your riding on Monday visiting the oil sands. We had an excellent visit.

    Mr. David Chatters: That's good to hear.

[Translation]

    Mr. Serge Cardin: We received a report on September 12. It's now October 29 and not much progress appears to have been made in the interim in terms of determining the exact cause of the power outage. You're still investigating this incident to ascertain the cause and evaluate the situation.

    On reading the report, I do have one concern. The North American Electric Reliability Council was created following the 1965 blackout. The report cites major improvements to the US power grid. I hope that this is in fact the case. However, another player is the US Federal Energy Regulatory Commission, which has a fairly important role to play in setting potential criteria and requirements for power grids and in setting prices as well.

    Since the outage primarily affected the United States, do we not run the risk of seeing energy transportation standards and regulations set that might have a major impact in both Ontario and Quebec? Quebec was not affected by the power outage. However, there could be significant cost implications, not only for Ontario, but indirectly, for Quebec as well, depending on what the US decides to do.

    Minister Dhaliwal has said that having a safe, reliable electrical power grid is a priority of the Government of Canada. However, it remains to be seen which standards will be automatically applied here: Canadian standards, Quebec standards—because this is a provincial area of jurisdiction—, or US standards.

º  (1600)  

    Mr. George Anderson: I'll go first and Mr. Rusnov can expand on my comments. You've identified a very important issue.

    To date, with the NERC, the system was self-regulated by industry. Obviously, there were some weaknesses in the system. In the United States, the energy legislation currently before Congress is expected to contain new rules giving the NERC or regional groups managing the electrical system in the US the mandate to set rules.

    However, the FERC will also be responsible for monitoring the activities of industry, which raises questions about public utilities in Canada, whether in Quebec, in Ontario or elsewhere. We're not ready yet to comment on this situation, but the question will be one of many on our agenda when we meet with the provinces following the release of phase one of the report.

    I don't know if Mr. Rusnov or Dr. Kamel wish to add anything to that.

[English]

    Mr. Thomas Rusnov: I can speak to the progress we have made during the last two-and-a-half months. It involved gathering literally millions of pieces of information on the status of the system--voltage levels, power flows, and the precise sequence of events for hundreds of events. Many of them were not causal and were not directly involved, but they were a consequence. In order to be able to identify the causal factors, we had to analyze all of them. So the actual data gathering has just recently been completed.

    We have also populated very detailed and extensive computer models with simulations both before and after each of the critical transmission lines failed and each of the critical generators failed in order to see what happened specifically and caused it. This is a very time-consuming exercise. Let me give you an illustration. The computer model that does this is called a power flow model. It represents approximately 45,000 buses, which is a switching station that a multiple number of transmission lines come into. There were thousands of transmission lines and tens of thousands of relays. For each of the relays that operated, we had to check the conditions under which it operated and why and at exactly what time. So the data gathering has been enormously complex. We've had tremendous assistance from all of the utilities involved in this. It's not a simple process.

    We are now in the process of writing the interim report, which really means that the data gathering and the analysis have been completed. There's no cleaning up to do. So we're near the end of the interim phase of fact-finding.

º  (1605)  

    The Chair: Thank you.

    Mr. Schellenberger.

    Mr. Gary Schellenberger (Perth—Middlesex, PC): Thank you.

    I must apologize for being late for the presentation.

    Coming from Ontario, I was affected on that particular day. It was the end of our caucus at that time, and I had a reception at our place. After people left to go home, they found out that the hydro was out. At the same time, it was very refreshing to realize that it wasn't due to a terrorist act. Having been involved in small business over the years, I do know that no matter how hard you try, things can go wrong. If the lessons learned in 1965 are applied in the context of what went on in 2003, I think it will be very promising. As the system went down, at least the transformer stations didn't blow up, as I think happened in earlier times.

    Because I missed a lot of the presentation, I would just say that I'll wait to see the report, and I'll probably have some more questions at that particular time.

    I'm not too far away from the Bruce nuclear plant. Is it totally on stream yet?

    Ms. Linda Keen: Mr. Chair, part of Bruce A has come up. Four is gradually powering up. We expect three to be on as they meet the safety requirements, but one and two are not as likely in the near future. But as you commented, that's certainly part of the plans of Bruce Power.

    Mr. Gary Schellenberger: Thank you.

    The Chair: Mr. Godfrey.

    Mr. John Godfrey (Don Valley West): Thank you for coming. I'm partly guilty for ruining your afternoon because I sent a letter to the chair asking that we have this conversation.

    I'm interested in everything you've had to say, but I want to focus on Mr. Rusnov's and Mr. Elliott's remarks.

    I want to go back to something Mr. Shellenberger just said, which was that after November 9, 1965, we appeared to have learned some lessons, and this offers us another learning opportunity. Without prejudice to the interim or the final report, it seems to me, Mr. Rusnov, if I'm not mistaken, that in 1965 roughly 25 million people were affected by the blackout.

    Mr. Thomas Rusnov: It was approximately that number. The load was perhaps a quarter of what it is now.

    Mr. John Godfrey: My impression is that one of the policy responses after 1965 was to enlarge the system. In other words, the idea was that if you shared the risk by having a larger distribution system, you would minimize the danger. An alternative view--and one could pick up on what Amory Lovins has been saying about this--is that in fact you increase the risk of more people being affected. When we enlarge the distribution system, it is supposed to act as a buffer. But because of human error, the complexity, and the cascade effect, once it starts, as I understand it, it is unstoppable. The only reason we didn't lose Quebec, Manitoba, and so on is that they were able to actually cut the system off or there were special characteristics in the Quebec generating system.

    I want to present two different policy choices for the future. I think the normal temptation is to assume economies of scale, and you're always trading off efficiency and redundancy and these efficiencies of scale versus a decentralized system, which is how you might describe the Quebec situation. Do we face two policy choices? One of them is to make it even bigger, so that the next time it goes down we get 100 million people or whatever, because we've applied the buffering principle, the ever larger system, always to be affected by a cascade. Bearing in mind that we haven't received the reports, is there an alternative philosophy out there that says this doesn't make sense and we actually need more redundancy, less efficiency of scale, and greater capacity for shutting off these systems so that fewer people are affected?

º  (1610)  

    Mr. Thomas Rusnov: That's a difficult question, Mr. Chairman. The interconnected system does operate now as one huge machine, as I indicated earlier. The eastern interconnection includes Ontario; Quebec; the maritime provinces; and all of the United States to the Rocky Mountains, except for Texas, and down south to Florida. It operates entirely in synchronization, so that when, say, a 900-megawatt generator at Bruce trips off for whatever reason, the entire power system automatically and instantaneously replaces that power. So there is no localized blackout. This happens without human intervention. What happens subsequent to that is that operators in Ontario will see this has happened, and they will readjust our power system in order to bring our own generation up to the demand level required. It is this particular aspect of it that has been most beneficial, to say nothing about the commercial aspects. Also, when we have sudden shocks to the system, such as a short-circuit on a major transmission line or any other facility, it's like having an enormous flywheel constantly spinning so that little glitches on it are not going to affect it.

    If Ontario were to separate itself from the rest of North America, for example, planning for the potential loss of that large generator would mean we would have to build many more generators than we actually do now. So the cost would certainly be significantly higher for Ontario. Another factor in this is that for the last couple of years Ontario has been short of operating capacity because of the laying up of nuclear units for rehabilitation. We have depended, in fact, on our neighbours to import power into Ontario to keep our lights on. During nighttime hours, when we have a surplus of energy, we export it to the U.S. When we have a deficit, we import it. If I go back to the 1980s, with a much more valuable dollar, Ontario was actually exporting around $300 million worth of energy to the U.S. That doesn't compare with Quebec's capacity to export. It has been significant in keeping our costs down. Overall, it does improve the reliability of the total power system, if everybody plays the game. That's what we're going to be dealing with in the interim report and the final report.

    The Chair: Mr. Hubbard.

    Mr. Charles Hubbard (Miramichi, Lib.): Thank you, Mr. Chair.

    We're pretty lucky that this happened in August. I know that air conditioning was in big demand during that month, but in the winter months, when health conditions would be an even greater problem, it would probably be much more significant.

    I'm not very well versed in this whole thing, so I have to plead my ignorance. Some of the things I've heard about the Chernobyl disaster are that there was poor maintenance, poor safety, the cutting of corners, and so forth. But it's my understanding that this particular problem was not caused by human error as a result of poor decisions, but rather in terms of switching and so forth. Is that a fact? It was a technical rather than a human problem.

º  (1615)  

    Mr. George Anderson: You're asking us to speak to what will be the conclusions. Nothing has been said yet on the causal analysis. There has been a good deal of speculation in the papers. But I don't think it would be appropriate for the witnesses to get into that today. They could speak in a more general way to some of the issues around the functioning of the system, but not to the findings about this particular incident.

    The Chair: It was a switch that was built by a human.

    Some hon. members: Oh, oh!

    Mr. George Anderson: You could ask about what kinds of weaknesses there may be in the system, quite aside from this particular incident.

    Mr. Charles Hubbard: That would be my second question. We hear a lot of discussion, especially in the province of Ontario and my own province of New Brunswick, about the cost of electricity. People say electricity should cost 12¢ a kilowatt, for example. We're only charging so much, and it's really not enough. I think most areas are concerned about maintenance. I would suspect that maintenance and capacity will be a big concern. We'd probably have to make a major investment in the industry in order to continue with what we're doing. You can shut down your nuclear plants, and you can cut back in many ways. I'll ask just a general question. Will this review look critically at maintenance and input costs and a demand for a lot of capital to make this thing work better in terms of our demands and what might help us avoid the problem we had back in August?

    Mr. George Anderson: All elements of the nexus will be studied.

    I don't know whether Mr. Rustov or Ms. Keen would like to comment further.

    Mr. Thomas Rusnov: Mr. Chairman, maintenance will clearly be a major issue that will be addressed in this. The report will discuss maintenance of facilities; maintenance of rights-of-way; maintenance of equipment and machines; operation of those facilities; the actual design, going back to when they were designed; to what criteria they were designed; and whether operations were managed according to the criteria. So all of those aspects are going to be dealt with.

    I don't think the report is going to go into those costs because the various entities will be responsible for their own costs. They'll have to analyze the report itself and see whether they have to invest in order to meet whatever the new criteria are. This report will not specify criteria. That will come in the future.

    Mr. Charles Hubbard: This is another point that is worthy of consideration. Many companies are involved. I would suspect that in both the United States and Canada, a company has to meet certain standards in order to get into that grid. So this would be another part of the report, hopefully, the standards we can look at in terms of one particular company. A few American companies are having big problems with regard to their finances. Would this be information we can expect to get, that there are some companies that just don't meet the standards we have here in Canada or most of the United States?

    Mr. Thomas Rusnov: Again, I think we're getting very close to the edge of what I cannot state.

    Mr. George Anderson: But I think it's fair to say those types of issues, such as the adequacy of and compliance with the current standards, are being examined. Without prejudging what the findings will be in that regard, those things are going to be reported upon.

    Ms. Linda Keen: With regard to nuclear facilities in Canada and the United States, both the Canadian Nuclear Safety Commission and our U.S. counterpart are very stringent regulators of the nuclear facilities. In Canada we have staff at these nuclear facilities. These facilities must appear before the tribunal, the Canadian Nuclear Safety Commission, for a licence. They issue yearly reports. They are committed to such things as maintenance, which you mentioned, safety standards, quality assurance, etc. The Canadian Nuclear Safety Commission has a responsibility to monitor that. Eleven nuclear companies in Ontario were online at that time. All nuclear companies are expected to meet these standards every day, whether or not they're in a blackout situation. In terms of this blackout task force, we're looking at the events of that day and the performance of the plants as to whether they did anything that contributed to the blackout or behaved in a safe manner.

    Because of the nature of the responsibilities of the Canadian Nuclear Safety Commission and our U.S. counterpart, we have made it clear to the chairs of the task force that we will react immediately in terms of a safety issue or an issue that could potentially be in a safety capacity. We won't wait for a report. There is a long tradition of examining events and making sure we learn from them for the entire nuclear fleet in Canada. You can be assured that we've examined those issues. If there are some safety issues, we will react immediately. We will not wait for the report.

º  (1620)  

    The Chair: I'm wondering if in your report you will be addressing the issue of natural gas. People have been on the Hill lobbying and warning us that during the next five years there will be major cost increases, and we can expect a lot of us to revert to electric heat and the use of electricity in a larger amount than for natural gas. It is a serious problem, and it is starting this winter.

    Mr. George Anderson: It's beyond the mandate of this study. As has been described, the study is very much focused on the events around the blackout, the management of the system, and the issues around the nature of the system, as opposed to longer-term policy issues of that type.

    The Chair: I can see a problem for Ontario because although we're a partner, we're a dependent partner. We don't have enough for our own needs. We're always buying. There are exchanges, but we're always purchasing services from others, and we very seldom contribute. If we have this phenomenon in the next five years, I think we'll have a serious problem in Ontario.

    Mr. George Anderson: This is a particular study. It's not the only thing that's being done in this area. We had a good discussion at the energy ministers meeting in Halifax in September around some electricity issues. A federal-provincial report had been prepared on interprovincial transmission issues. Energy ministers, federal and provincial, agreed to mandate a new working group on electricity issues to be operated at the assistant deputy minister level, and they will be looking at some of these broader questions, as well as some of the issues that will come out of this report.

    The Chair: Before we go to the second round, I will say we understand that the exercise we're going through is premature. But some of us around this table say a little extra prayer at night hoping we will prorogue on November 7. So we may not be here when you produce your report. We would appreciate it if you would provide copies to the clerk so that it could be distributed to us if our prayers are answered and we're not here.

    Mr. George Anderson: That will be done.

    The Chair: We'll now go to a four-minute round.

    Mr. Chatters.

    Mr. David Chatters: Thank you, Mr. Chairman.

    Clearly, it would be far more productive to have you back after we see the report.

    The direction in which some of the discussion seems to be going raises a question with me. I think Mr. Hubbard is correct in saying that maintenance is a major factor in this whole issue. I can't point fingers at either the Canadian or the U.S. industry as to who would be more to blame on that front. I've certainly been critical of Ms. Keen's organization in the past, considering that it was an American consultant who originally recommended the shutting down of the Ontario Hydro nuclear station.

    Is the mandate of the task force to discover what went wrong in the North American grid and how we can fix it? As Canadians and members of the Department of Natural Resources, are you there specifically to look at how we can protect the Canadian interests, or are you there looking at how we can protect the North American grid?

º  (1625)  

    Mr. George Anderson: Because of the nature of the grid, the two are extremely intertwined. If there are failures anywhere in the grid, that could have implications for us as Canadians.

    Mr. David Chatters: If you're looking at Canada's national interests specifically, then you'd be exploring ways to isolate the Canadian grid in the case of something happening. Is that not part of the picture, that you're looking at how to prevent it from happening in the North American sense?

    Mr. George Anderson: The first findings phase, as has been described by all of the witnesses, is quite narrowly focused on causal analysis. I think it's fair to say that here and there, as they've been doing that causal analysis, they may come across vulnerabilities associated with the operation of the current system. I think the recommendations will be very much within the framework that the grid exists and what can be done to improve it. That doesn't foreclose the possibility of a broader policy discussion elsewhere. There are lots of issues associated with trying to disentangle from the grid. There may be benefits, but there would certainly be costs.

    Mr. David Chatters: Thank you, Mr. Chair.

    The Chair: Monsieur Cardin.

[Translation]

    Mr. Serge Cardin: Thank you, Mr. Chairman.

    I don't know a great deal about electrical systems. Nevertheless, this paragraph notes that the province of Ontario was hit at 4:10 p.m. The 345 kV line north of Lake Erie carrying power to western Michigan and Northern Ontario then disconnected. Power was subsequently reconnected in Ontario.

    Given that most of Ontario's power is nuclear generated, is there any chance of seeing a return to nuclear generated electricity? Could the safety of nuclear power plants have been threatened?

    Ms. Linda Keen: Mr. Chairman, committee members should have no fears about the performance of nuclear power plants across Canada. These generators are subject to very stringent security and performance requirements.

[English]

    In fact, all of the nuclear facilities in Canada are built to shut down in a situation such as this. They react immediately to the situation, be it a surge or a lack of power to their facility, because they require power as well to operate. So they are built to do this.

    In the case of the facilities that were affected by the blackout in Ontario, the 11 facilities didn't perform exactly the same. In the fact-finding part of this report, we will speak in great detail about the performance. The facts are known in terms of the performance of the various facilities. All that performance did was change the speed with which they were able to come back and be available to be connected to the grid. There's availability, and there's when they were connected to the grid. They performed safely. With the safeguards that are built into the facility, there was no risk of it causing an accident at the facility.

º  (1630)  

[Translation]

    Mr. Serge Cardin: The United States reacted initially by blaming the power outage on Canada. They were very quick to do so.

    Do you feel you have the necessary flexibility, as well as adequate access to relevant data, to ensure that Canada assumes no more than its rightful share of the blame or responsibility for this massive blackout?

[English]

    Mr. George Anderson: Mr. Rusnov has already touched on that. The short answer is we're not worried about that. We have full access to the data.

    The Chair: Mr. Godfrey, I apologize, I should have gone to you after Mr. Chatters.

    Mr. John Godfrey: I'm deeply offended, and I intend to get more time out of this as a result.

    The Chair: I'm not accustomed to meetings where there's no stress or pressure.

    Mr. John Godfrey: There are no demonstrations. You call this a meeting?

    The Chair: I haven't thrown anybody out of the room yet.

    Mr. John Godfrey: What a dull afternoon.

    Some hon. members: Oh, oh!

    Mr. John Godfrey: This is for Mr. Elliott. I think Mr. Schellenberger's reaction that he was relieved to know it wasn't a terrorist attack raises the issue, which is also alluded to in your paper, that we're clearly vulnerable. One of the vulnerabilities is caused by the increasingly sophisticated information systems on which we rely. I would like to have a risk assessment as to how vulnerable we are to what President Bush would call evildoers, those who would look at the obvious lessons of this and say, “What mischief can I cause?” Can you give me a risk analysis, either physical or cyber? This is apart from the larger picture here. What steps are being contemplated to offset the evildoers?

    Mr. William Elliott: I would comment in several ways. First of all, with regard to critical infrastructure vulnerabilities broadly, this is of concern to both the Government of Canada and the Government of the United States. The entity responsible for critical infrastructure protection in Canada is the Office of Critical Infrastructure Protection and Emergency Preparedness, which is part of the Department of National Defence, and in the United States it's the Department of Homeland Security.

    With regard to cyber vulnerabilities, particularly in relation to electricity generation and distribution, we are still involved in the data-gathering and analysis activities of the working group. In fact, as I indicated in my opening remarks, Mr. Chairman, we're relying on and working very closely with Mr. Rusnov and his colleagues, as well as the other working group, who are principally charged with gathering data. We are looking at it from the perspective of vulnerabilities and potential remedial action.

    Ms. Linda Keen: Mr. Chairman, with regard to the physical security of nuclear facilities, the committee may note that a new set of nuclear security regulations were just released on Saturday, which is the culmination of a lot of work by the facilities and the Canadian Nuclear Safety Commission. We're putting into force what we actually had put in place right after September 11 in terms of enhanced security of the nuclear facilities. Of course, there isn't such a thing as no risk in the nuclear facilities. We are looking at international standards for the security of nuclear facilities in all of Canada, not just Ontario, but also Quebec and New Brunswick.

    The Chair: Mr. Schellenberger.

    Mr. Gary Schellenberger: Thank you.

    I'm going to apologize ahead of time. I have to go to another committee meeting, which I'm going to catch the tail end of.

    I just wanted to say that in the short time I have been here, I've appreciated the answers from the witnesses. I understand electricity a bit. Some friends of mine are involved in an electrical business. I know that it's very complex. Again, I must say that I await the report. I do feel that from this report, changes and improvements will be made, and we'll find out where the fault was. I look forward to the report. Thank you for the advice I've heard here today.

º  (1635)  

    The Chair: Mr. Chatters.

    Mr. David Chatters: Mr. Chair, I studied the new safety regulations. I applaud the industry for turning down the surface-to-air missile idea. That was good. I think the threat from that kind of terrorism is far less than the cyber threat, which somebody mentioned before. I think there's far more danger of somebody finding a way to override your safety shutdown systems than flying a 747 into the plant. So I think that was a good idea that most Canadians appreciated.

    Thank you, Mr. Chair.

    Ms. Linda Keen: I just want to say that although cyber security was not part of the security regulations, because we really were addressing the physical regulations, you can be assured that we look very seriously at this. The plants were built in a certain era in terms of this. This is not always good, but in this case it is actually protecting us from some of the issues we could be facing if a new plant was built, for example. We consistently review this. When there is an incident, either in Canada or the United States, we review this and make sure we've addressed this at a plant level as well. So although I spoke about physical security, you can be assured, Mr. Chairman, that we do look at the other areas as well.

    The Chair: Mr. Godfrey.

    Mr. John Godfrey: I have a couple of questions. Mr. Rusnov made reference to the fact that there have been other large-scale blackouts, and indeed there was one recently in Italy. Over the last 10 or 15 years, has there been a pattern of increasing blackouts in large distribution systems or is it just random with no discernable trend?

    The other question comes back to my issue of hubris. I know you're a right-handed engineer. I can see that. The reason you're wearing the iron ring is because the bridge fell down. So it's always worth remembering these things.

    Some hon. members: Oh, oh!

º  (1640)  

    Mr. John Godfrey: What worries me is that we have increasingly complex systems. There are more and more variables. They are of a technical variety, which relates to the previous conversation about cyber failure and all the rest of it. They are of a political variety because there are these people out there who would do us harm. There are more and more elements to the system. We can regulate on our side of the border. Again, without prejudice to what went wrong in Ohio or any other place, we know that changing a political regime can alter the structure of regulation. The whole energy sector can be affected by the political climate in terms of the degree of standards we would hope they would have, whether they're environmental, safety, or any other kind of regulation. We might point out that the standards aren't sufficient. But we can't do a whole lot to change the political complexion of the executive of the United States, which has a particular energy bent in a certain direction, which is described by some as uncritical. I'm wondering about the limits Canada can expect, first, from increasingly complex systems and, second, where there's a political jurisdiction that might increase the vulnerability for a lot of other reasons.

    That's a really loaded question. Perhaps you should let the deputy take care of it. But Mr. Rusnov looks like he'd like to go for it.

    Mr. Thomas Rusnov: I'll refer it to Mr. Anderson if he wants to reply.

    Mr. George Anderson: You're asking a policy question.

    Mr. John Godfrey: I'm asking a systems question.

    Mr. George Anderson: I'm not the systems expert, so I'll defer to Mr. Rusnov.

    I don't know what the answer is to your specific question about blackouts. But bear in mind that we used to have a lot of little blackouts, so there's a whole question about the aggregate number of incidents and the impact of these.

    Mr. Thomas Rusnov: I've been in this business for a lot of years. In fact, I joined Ontario Hydro about a month before the November 9, 1965, event. What is more remarkable than having the blackouts is that they are so rare and that on the whole the system has actually managed extremely well.

    Following November 9, 1965, the regional reliability councils were established, 10 of them across the United States, in order to deal with the findings that came out of November 9, 1965. They were geographic in scope. Those councils recognized that there had to be coordination among them because transmission lines and power flowed between them. So that's when the North American Electric Reliability Council was established. It was actually established by those 10 regional councils. NERC undertook to develop common reliability standards and criteria. It was a voluntary organization. But so were the regional reliability councils. They operate on the basis of moral suasion, peer pressure, meetings, discussions, negotiations, etc., and on the whole they've worked very well. Ontario, Quebec, and the Maritimes are members of the Northeast Power Coordinating Council. I used to be a member of their executive committee. They take this role extremely seriously.

    But all of the standards have been voluntary, and we've all had problems with that. For quite a long time there have been arguments from within the industry to make the standards and the criteria mandatory, and I think that's going to come to pass. The U.S. energy bill in fact includes provisions to make these standards mandatory and to have them enforced by a new organization, which will likely replace NERC or NERC will grow into it. It's called an electric reliability organization. That will be an international body, which will include Mexico, the United States, and Canada. According to what is written today, it will have an independent board of directors, because it will be international. FERC will certify this electric reliability organization and give it legitimacy. Subsequently, that organization will be mandated to come back to FERC within 180 days, six months, with a set of proposed new reliability standards. FERC will have the option of blessing them or referring them back to that organization for further work.

    We hope that's going to bring up the standards across North America. Some of the councils may already be there, and I believe they are, and some of them may not. How the systems are operated may be a little different in different places. What I would like to see, and what I'm quite confident we will be able to do, is the whole industry brought up to a level playing field in terms of how they plan, design and build, operate, maintain, rehabilitate, and replace their systems. The whole gamut is covered currently by reliability council standards, but they need to have teeth.

º  (1645)  

    Mr. George Anderson: If I may just pick up on that, Mr. Chair, when Secretary Abraham was here, both he and Mr. Dhaliwal spoke to this business of mandated standards and supporting the concept. Canadian utilities operate very comfortably within NERC and have been in fact leaders. The current chair of NERC is Richard Drouin, who is a Canadian. So from that point of view, NERC operates satisfactorily on a transborder basis, and we assume that whatever might succeed it would.

    To the extent that there's going to be a review of NERC by FERC in the United States, that raises the question of how we as Canadians would protect our interests if we felt that the way things were being done might not be consistent with Canadian interests, standards, etc. A lot of that will get dealt with just through the functioning of the industry part of the equation.

    We don't have a considered view, as I said earlier, but we in the federal government certainly recognize that we don't have the expertise, so whatever we come up with is going to have to involve in the deepest possible way the expertise we have in our provinces and utilities.

    The Chair: Are there any other questions?

    Mr. Godfrey.

    Mr. John Godfrey: Sorry to be such a pest.

    I'm not going to go into all of the aspects of the U.S. energy bill but rather just focus on the ones that affect electricity. I don't want to read too much into what Mr. Rusnov said. Is it generally the view that this is a pretty good bill from our point of view? Are there any problems on which we felt we've had to represent ourselves?

    Mr. George Anderson: I won't make a broad comment on the quality of foreign legislation. There are some areas that touch Canadian interests, and we've been making representations on those. There's the Alaska pipeline and the subsidies that might be provided to that line, and we've been taking the position that it should not be a subsidized line. There is talk of renewable portfolio standards being mandated for electrical utilities, and one of the issues there is the treatment of large hydro, including new large hydro. It now appears that it's being dropped from the bill. We haven't seen the current draft, nor have the Democrats. The latest we're hearing is that it's stalled for the time being, despite the strong push to get it through. But the renewable portfolio standards are an issue. As a government, we haven't been making representations on the nuclear side. But there are some interesting provisions there that could potentially be significant for AECL, so AECL has been paying a good deal of attention to that part of the bill. I may be forgetting one or two others, but it's those types of things. The bill is a very inchoate thing, and I wouldn't want to form a large judgment on it.

    The Chair: Monsieur Cardin.

[Translation]

    Mr. Serge Cardin: First off, Mr. Chairman, I'd like to thank the witnesses. However, I do have one brief negative comment to make.

    Earlier, while I was speaking, I was handed some documents. I now see that they are all in English only.

    M. George Anderson: We have copies of our opening statements available in French here in the room.

    Mr. Serge Cardin: Then I'd appreciate a copy. Thank you.

    The Chair: We have copies in French. You should have received the French versions.

    M. George Anderson: I'm sorry, but Mr. Rusnov's document isn't yet available in French, although it should be shortly. I believe there was a draft version.

[English]

    The Chair: The clerk will have that translated and will make sure everyone gets it.

[Translation]

    Mr. Serge Cardin: The French version of these documents is missing, or so it appears.

[English]

    The Chair: Do you have closing remarks?

    Mr. George Anderson: I appreciate the committee's interest in the issue. This trillion dollar machine, which Mr. Rusnov described, really is a remarkably complex thing. While it sounds as though the work that is being undertaken is taking a long time, given the complexity of the incident, it's actually moving a good deal faster than similar investigations of lesser incidents. I also firmly believe that there is a silver lining in this black cloud, which is that there is a focus on these issues that will lead to some significant improvements in the functioning of the system.

    The Chair: We really appreciate your coming to share information with us, knowing that the report wasn't out. It's a different type of information session, but it's very valuable. We look forward to your report. Thank you very much.

    To the members of the committee, you have been good boys and girls, so I'm calling a meeting on future business for Monday at 3:30, after the week of the Remembrance Day break. I hope we won't have to have that meeting. So what I just said is that I'm giving you no homework and a week off.

    Thank you. Merci beaucoup.

    The meeting is adjourned.