Natural Resources Committee on Sept. 20th, 2017

[Mark Sidebottom]

David, do you want to take a...?

[The Chair, Liberal, James Maloney]

You have about a minute between the two of you.

[Mark Sidebottom]

Okay. I think I can go back to my first theme. I think we need to take a look at many tools in the tool box to get us there. It's important that whatever goes into the grid has a level of coordination. When I spoke of electricity being every moment of every day, the technical challenge is to match what a customer wants to do when the customer wants to do it with when the electricity is produced. So we can look at that as a solution, but it needs to be in a coordinated fashion.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Finally—and I have about 30 seconds—since you're from Nova Scotia, how big a role do you feel that tidal will play in the value proposition that will be offered by Nova Scotia?

[Mark Sidebottom]

I think it has some real possibilities. Again, it's about the investment required to understand how the cost will evolve through time. Today, it's expensive, but as with any number of technologies in the electricity sector, the prices are coming down. When the technology reaches that price point, as we all know, there's a remarkable resource, and that resource would still need to be re-timed. The tide runs twice a day, and customers use energy every day. It's a piece of the solution; it's not the complete solution, but we're certainly very interested in advancing it.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Thank you very much.

[The Chair, Liberal, James Maloney]

Mr. Falk.

[Ted Falk, Conservative, Provencher, MB]

Thank you to our witnesses, Mr. Sidebottom and Mr. Cormie, for presenting at committee here today.

Mr. Cormie, being from Manitoba, I represent the riding of Provencher, which is in the southeast corner of Manitoba, and it's the corner of Manitoba that your entire Minnesota transmission line will run through once it's been built. Just looking back at the construction of Bipole III, which is almost complete, I recognize that under the mandate of the previous government you were required to go around the west side of the lake when going around the east side would have made much more economic sense at the outset of the project. In the process of doing that, you actually built large poles and transgressed over some of the most pristine agricultural land in the province. I'm wondering what efforts are being made by Manitoba Hydro to not make that same mistake with the Minnesota transmission line.

[David Cormie]

I'm not that familiar with the environmental process that has been taken to route the line, but I do understand that the values that were put into the line routing study represented the values of the communities through which the line was routed, and the balance that was made reflected the local values in locating the line. I can just say that the study considered those local requirements.

I'm really not involved in the transmission line routing selection process, so it's hard for me to really be more specific than that.

[Ted Falk, Conservative, Provencher, MB]

Okay, and I appreciate that.

I also want to recognize that Manitoba Hydro, operating within the constraints of the mandate from the previous government, did its best to work with landowners within those constraints.

Further to that, when you're building interties and interconnections and transmission lines, outside of funding what are your major challenges?

[David Cormie]

There are potentially four regulatory processes that we have to go through because it's an international transmission line. You have the state process in Minnesota. You also have the federal process in the United States. We have to go through the provincial environmental licensing process in Manitoba, and we also need to get a National Energy Board licence to build the line and to export the power. So you can imagine that there are four regulatory processes that have to be undertaken. Doing that is very expensive; it takes a long time, and a lot of the processes aren't consistent.

For example, in the United States we're required to have three rights-of-way, three potential paths for the transmission line. In Manitoba, we're allowed to apply for only one. The three lines don't necessarily join at one, so there are inconsistencies in the routing process on the international line. That's a complexity that takes a long time to work through.

I've been working on the Manitoba-Minnesota project since 2007; that's 10 years. The world changes in 10 years, and we need to have committed proponents who are willing to invest their time and money and bet their future on this project, so the commercial relationships have to be very strong and they need to be committed, not just for a few years but through all the changes that we can expect in these projects.

[Ted Falk, Conservative, Provencher, MB]

From a cost-sharing perspective, when you build a line such as the Minnesota transmission line, which is primarily being built to service the Americans, do we have a cost-sharing arrangement with them? Are we responsible to foot the bill to the U.S. border entirely, or do they help us with that as well?

[David Cormie]

Remember, not only do these transmission lines allow us to export; they also allow us to import. The main value for this line is our ability to import and defer the need to build new generation resources some time in the future. We felt there was value in the line even if Manitoba Hydro had to bear the whole cost in both Canada and the United States. Through our power purchase agreement with Minnesota Power, their ratepayers were able to pay for 25% of the cost of the line, so it became a value proposition to have them as a partner.

We're much better off having them contribute to a line. All the electricity that will flow on that line is Manitoba Hydro electricity. Whether it's purchased power or electricity that we're exporting, the value is almost all to us. What we have with a partner in the United States is someone who's willing to fund a portion of a line that we would otherwise have to pay the full cost of.

[Ted Falk, Conservative, Provencher, MB]

Okay.

Judging by a chart provided to us earlier from the electricity resources branch by the director general, Niall O'Dea, it looks as though—and I think you mentioned this as well—we have capacity currently of about 2,000 megawatts going south and about 700 coming north. That's the capacity.

Are those capacities consistently used?

[David Cormie]

Yes.

Most of our surplus water supply is in the summertime, when Manitoba is experiencing light loads, so the transmission line is mainly used in the summertime when we have large surpluses available and limited reservoir storage capability to store the energy. Then in the wintertime, the import capability is there to increase our electricity supply to serve our loads in the wintertime. Both import and export capability are thus used consistently.

[Ted Falk, Conservative, Provencher, MB]

You touched on this briefly when you spoke about the possibility of providing power to Saskatchewan, but from your perspective, what do you see the federal government's role as being in interconnections?

[David Cormie]

I think right now Saskatchewan is looking at its options to achieve its emission reduction targets. It can look at the options that exist in the province or it can look to take advantage of the large surplus hydroelectricity supplies that are available in Manitoba.

Without more transmission capacity to Manitoba, our surpluses have no value to them. As I mentioned to a committee member earlier, there's no value to Manitoba Hydro to invest in more transmission to Saskatchewan. We have all the access we need to market our surplus power.

To make it a viable option for them, Saskatchewan will need help in financing that transmission interconnection.

[Ted Falk, Conservative, Provencher, MB]

Thank you.

[David Cormie]

It's not something that the Manitoba electricity ratepayers need to invest in. This would be an investment for the benefit of ratepayers in Saskatchewan, then, to help Canada achieve its policy goals.

[The Chair, Liberal, James Maloney]

I'm going to have to stop you there, Mr. Cormie.

Mr. Cannings, we go over to you.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

Mr. Cormie, I'll just let you continue to provide more detail on the possibility of Manitoba supplying Saskatchewan.

You mentioned that there's no financial reason for Manitoba Hydro to do it. For Saskatchewan, or perhaps the federal government and Saskatchewan, what are the costs involved in providing that intertie between Manitoba and Saskatchewan if, say, we were looking at quite a big project that would satisfy a lot of Saskatchewan's needs?

[David Cormie]

Right now there are five transmission lines that connect the provinces. They're generally at a 230,000-volt capability. To add one more line of that size to increase our export capability by 100 megawatts would cost a couple of hundred million dollars. A 500-kilovolt line that might allow us to transfer another 900 megawatts from Manitoba to Saskatchewan is probably in the order of a billion dollars.

A small project is $200 million, a big project is a billion dollars, and half of it is in Manitoba and half of it is in Saskatchewan. You need to have an investment of a half a billion dollars in Manitoba to help Saskatchewan gain access to the large volumes of surplus.

A 900-megawatt transmission line to Saskatchewan would only divert a small portion of the surplus energy that is now going into the United States. For us to divert all the surplus that's going into the United States and keep all those emission reduction benefits in Canada would require several large interconnections of a 500,000 voltage so the capacity is there to move Manitoba's surplus into Saskatchewan and divert it from the United States.

You're talking potentially billions of dollars of infrastructure investment. As I mentioned in my testimony, Saskatchewan has lots of renewable options on its own. It has a very strong wind resource, it has solar, and it has its own hydro, so the way to achieve their goal at least cost.... It may be just too expensive to invest in that transmission on its own. It would tend to invest in its local options, and it would then remain essentially isolated from the rest of the North American grid.

If it's thinking of investing in several thousand megawatts of wind and managing that wind variability, it will do that on its own. It doesn't have access to hydro storage or to the market to manage its surplus, so not only do these large transmission lines give it access to our surplus, but they help us manage the variability as it develops its own local renewable resources.

In the 1960s and 1970s our interconnections with the United States transformed Manitoba from essentially being an island that was isolated from the North American grid into one where we are a key participant in the North American electricity marketplace. The same kind of transformation would occur with Saskatchewan. It would not then just be dependent on its local options. There could be market solutions to a lot of the problems that it's facing. The funding by the federal government would help it achieve that integration into the North American grid.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

Mr. Sidebottom, to continue on that theme of interprovincial interties. Emera, your parent company, has been involved with interconnecting the island of Newfoundland with both Labrador and Nova Scotia. Can you provide more details on that—the timelines and the costs?

[Mark Sidebottom]

I can speak to the part Emera is involved with. We're part of the interconnection between ourselves and Newfoundland called the maritime link, that is a 500-megawatt underwater interconnection. The cost of that is $1.55 billion Canadian and we expect to energize that line at the end of this year, so effectively on time, on budget for that interconnection.

Nalcor has said that the Muskrat Falls is going to be coming on line in late 2019 through to 2020. At that point, there will also be the flow of renewable energy coming back from that generation facility at that point in time.

The interesting thing is that just the connection alone is going to be valuable. When you connect Nova Scotia to Newfoundland, all of a sudden there's a much more secure grid. We look forward to working very closely with Newfoundland in balancing our energy portfolio. Nova Scotia has nearly 600 megawatts of wind in a small energy grid that's just over 2,000 megawatts at peak in the winter. Being very close to islanded now—there is an interconnection to New Brunswick—I would say that is quite a learning experience on the system. We have reached what we believe is the threshold for our current system on the amount of intermittent wind we can have in Nova Scotia.

I think there was a question earlier from yourself, which was how much can you have on the grid? It's very grid-dependent, so it all depends on the number of interconnections, and how much are the resources you have in your jurisdiction, and that very much determines how far you can go. So in Nova Scotia we believe it's 600 megawatts of wind. That wind in the run of a week will go below 10% of its output twice a week, so you have to be ready for that. Then it will go to full load quite often as well. You have to have a solution for every moment of every day around that.

The intertie with Newfoundland is going to allow us to work very closely together to use their hydro systems and our wind systems collaboratively to bring value to customers in Newfoundland and Labrador and in Nova Scotia. That's going to be the first phase of value and that's before the generating station comes online.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Tan.