Natural Resources Committee on Sept. 25th, 2017

[William Amos, Liberal, Pontiac, QC]

Thank you to both of our witnesses. This has been a really interesting discussion. I've learned a lot today so far.

My first question goes to Mr. Hornung. You spoke about the importance of looking 10 to 15 years into the horizon around the development of interties. I'd like it if you could explain a little further what some of those future developments are and what some of the future shifts in the overall electricity market dictate or necessitate that kind of forward-looking.

I wonder if you could comment also on the advent of storage. We had a previous witness who came in and said that, in that kind of time frame, we're going to be looking at transformational changes in storage. How does that impact the recommendations that your organization would have around the investments into interties? What interties might be most strategic?

[Robert Hornung]

I think, obviously, if we consider decarbonization a key rationale and driver, most of our carbon emissions in the electricity sector today can be found in Alberta, Saskatchewan, New Brunswick, Nova Scotia, and Ontario. Interties that help to reduce those carbon emissions are going to be strategically important going forward. You're absolutely right that there is a range of pathways that we'll have to follow in terms of decarbonization.

When I'm talking about looking longer term, I'm thinking of it more in terms of specifically what the demand for electricity is going to be longer term. There have been decarbonization analyses done for the United Nations looking at Canada that said that electricity has to move from less than a quarter of our total energy, like oil and everything else today, to close to 50% by the time we get to 2050, a doubling. That's a lot of new electricity coming online.

We need to consider what resource availability is in different jurisdictions. There are some jurisdictions that have the potential to develop more than others. We need to think about that in determining where it strategically makes sense to go forward. We also have to look at costs, obviously, as well.

There is going to be a mix. Interties are not the sole solution by any stretch of the imagination. It's going to be a diverse strategy that will be required to be followed and go forward. I can't offer you an answer today that says it's going to be precisely these two interties and it's going to have to be this size.

I'm suggesting that we do need to be very thoughtful about it in that regard. The only thing I would say, I guess, is that any projection of renewable energy development that has occurred over the last 20 years has undershot significantly. Renewables have been developing much, much faster. When we're looking forward and going ahead, we just need to keep that in mind, that the trends that we're seeing both technologically and economically that are driving renewables forward are likely to accelerate the introduction of these technologies into the grid. We want to make sure that, when we're making infrastructure investments, we're sensitive to that.

[William Amos, Liberal, Pontiac, QC]

Looking more specifically at storage, though, how does that affect the conversation around interties?

[Robert Hornung]

I think it can affect it in the sense that storage provides another opportunity for managing variability. You can look to manage variability in wind through the use of batteries, through importing electricity from elsewhere, or through the charging of electric vehicles at nighttime. There's a whole range of different strategies to go forward.

We do need to be sensitive to what we see in terms of trends in storage. I guess the one comment I would make about the technologies and the technological improvements that we're seeing is that the technology is moving forward gangbusters. I think the bigger challenge we're going to face is infrastructure to support that technology, which is not just interties. It's building distributed generation or distribution systems to deal with all the people who are going to be putting solar panels on their roofs as well, storage at the home level, and things like that.

We also have to be sensitive to the fact that electricity markets have to evolve. The electricity systems we've designed and the rules that govern them were essentially created to deal with the electricity system we had 10 years ago. We have to start thinking about what the electricity system is going to look like 20 years from now and how the market needs to evolve to change that. Infrastructure is part of that. Market is part of that, but it's going to be more diverse and more decentralized, and we have to put in place an infrastructure that allows us to support that.

[William Amos, Liberal, Pontiac, QC]

I think it's well known that there has been significant community-level and quite partisan opposition to wind energy developments in Ontario.

I wonder if you could comment on some of the misinformation that has been perpetrated. I won't indicate by whom. I think there are many actors involved, but there has been significant misinformation, particularly about the impacts that this sector could have on job creation and the cost of electricity in the province of Ontario. Could you comment on that, please?

[Robert Hornung]

I'll start by saying, community opposition is actually a characteristic of virtually any development these days. It's not a wind-specific issue. Nonetheless, it's certainly true that there has been community opposition to wind energy development. Some of the issues that have come forward about which I would argue people have been misinformed are issues related to health and property values, where we think we stand behind very good science on that regard to demonstrate that wind energy is not having the impacts that are being talked about.

On the economic side, we see wind energy has become the scapegoat for rising electricity rates in Ontario. There are certainly a number of factors that have contributed to increased electricity rates, including new investment in infrastructure and new investment in all sorts of generation, including natural gas, which is significantly growing in Ontario going forward. Has wind contributed? Yes. Has wind been the major factor? No.

Wind is actually bringing significant economic development into communities going forward. It's not just through the investment that's coming in, but through job creation in the shorter term around construction and the longer term around operations, in terms of land lease payments for landowners, in terms of property taxes as a new property tax base for municipalities going forward. We've actually seen wind energy in many communities, not all, as being strongly supported. You have communities that are actually trying to secure new wind energy projects going forward.

[The Chair, Liberal, James Maloney]

Thank you. I'm going to have to stop you there, unfortunately.

Ms. Stubbs, over to you for five minutes, including questions and answers.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thank you, Chair. I appreciate that. That's kind of an inside joke. Sometimes I get hot under the collar when I'm told I'm running out of time.

I'd like to thank the witnesses for being here and spending their time with us today.

Mr. Cronkhite, I'll direct many of my questions to you today.

As a first-generation Albertan with family in Nova Scotia, Newfoundland, and New Brunswick, it's always nice to have familiar people here at the table. You mentioned in your presentation the Canadian energy strategy. As you know, we're undertaking this study under that umbrella. One of the 10 focus areas of the Canadian energy strategy is a recommendation about improving the timeliness and certainty of regulatory approval decision-making processes while maintaining rigorous protection of the environment and the public interest, which I think are two priorities that we all share regardless of the province or region we're from or the political party we might represent.

I have a general question for you on that front in terms of interprovincial transportation and transmission of energy, regulatory approval, and then more specifically, after, towards regional collaboration. As you might know, the federal government has undertaken four major regulatory reviews. There is a critical infrastructure project that's important to my province, and it's important to yours. We've seen recently what happens when there's a lack of clarity and certainty around regulatory requirements, and the rules get changed at the last minute. That can mean billions of dollars of investments and thousands of jobs being put at risk.

Has New Brunswick Power to your knowledge, or anybody in the province, been consulted during the course of the consultations on the four major regulatory reviews by the federal government that have been happening for the past two years—I understand they hope to be legislating on them in the next year—and if there are any specific ambitions, concerns, hopes, gaps, or opportunities that you wanted to address on that front?

[Keith Cronkhite]

Certainly, on the regulatory side and regulatory approvals, they are key to any project. Knowing the landscape under which you'd operate in order to achieve those approvals is essential from a timeliness point of view, but also from an investment point of view.

With respect to a number of the discussions, and certainly at the federal level, we have been consulted. We've had the opportunity to provide input. As the utility, we are very conscious of the environment. We're very conscious about our customers, and we're very conscious about the footprint we have within our province, that being foremost in the conversations with our customers.

Certainly, on the regulatory side, and changes to whether it be National Energy Board processes or environmental impact assessment processes, we recognize that better consultation, better conversations, better engagement, early engagement, these are absolutely fundamental to any project.

Getting the right facts out there and having the opportunity to do so is critical to the successful execution of moving projects forward in a meaningful way, but also from an investment point of view, to having a degree of certainty that the objective under which we move forward or try to achieve is achievable.

Today, there are many conversations occurring at different levels that provide a degree of uncertainty. It's important, on a go-forward basis, that we figure this out sooner rather than later, so that these strategic investments can occur.

As I mentioned in my discussion earlier, there are provincial interests that occur with respect to various projects, not only electricity projects. It's important that we recognize we're all Canadians and that we need to optimize our resources to the best of our abilities. Doing so through collaboration at various levels and ensuring that the process is understood is critical for our ability.

These infrastructure projects are significant and require significant investments from our customers, so we need to do that prudently.

[Shannon Stubbs, Conservative, Lakeland, AB]

I agree with you.

No matter what resources we're talking about, as you pointed out in your presentation, the diverse energy mix that Canada has is a strength. All of us recognize the prosperity and benefit to these investments, which may seem to have disproportionate impacts sometimes in one province or region, but in fact, are good for all of Canada. That goes for a variety of energy development and also for this subject today.

Are there any specific gaps, challenges, or adjustments you'd like to—

[The Chair, Liberal, James Maloney]

It pains me to do this, but you're at five minutes.

However, we do have about one minute left for that corner over there.

[Yvonne Jones, Liberal, Labrador, NL]

Because there is one minute left, it's obviously not much time to ask questions, but I appreciate your comments, and there are lots of questions I could ask.

My colleague Mr. Schmale brought up the rates of generation, and you made reference to them. Those rates might be more pertinent to Ontario, and I'm not sure if they're still adequately dated.

I would ask you to provide the clerk the rates of generation for each province across Canada. I think the information is important. If we're going to have it, we should have accurate information.

[The Chair, Liberal, James Maloney]

That takes us to the end of the meeting.

Gentlemen, thank you both very much. I echo Mr. Amos's comments. That was a very informative session.

The meeting is adjourned.