Natural Resources Committee on Oct. 2nd, 2017

[James Hinds]

You pay for the privilege, and the transmission system is open. The Hydro-Québec marketing arm deals with all the niceties involved in selling the power through whatever interconnection is the most viable at the lowest cost to the buyer, so that all works quite well.

The only challenge with it is that we need to take your DC power and change it on the way through the interties, but we have big investments in that at the interties that do that. So yes, that does increase the cost a little bit for Quebec to export its power, but by the same token, Quebec makes a fair amount of money. They've never told me how much they make, but I think Hydro-Québec does very well, thank you very much, selling power to all the rest of us.

[Some hon. members]

Oh, oh!

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Never enough.

Do you have any indication of how much it would cost to have a coast-to-coast unified system to sell hydroelectricity?

[James Hinds]

I do not have an idea on the cost of that. I think the way I would get it, if you would like an answer, is I'd call the TransCanada Energy Ltd. people and find out what their idea was back in 2005 when they costed it then. I think they tried to put together a consortium to do it, but they found the economic case didn't work. A whole bunch of things have changed since 2005, not the least important of which is climate change, so all of sudden the cost of carbon on the alternative fuels has increased relative to the cost of electricity, so maybe the economics are different.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Thank you, sir. That's quite interesting.

[The Chair, Liberal, James Maloney]

You have about three and a half minutes left, if you want to go ahead.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Thank you very much.

I'll open the floor to whoever wants to answer the next question.

Based on what we just heard in the last line of questioning, and looking at the current connections, the current provincial consumption, the production, as well as what we heard about interties and the complexity with that, where do each of you stand—if you all want to answer—on where we should be focusing our efforts, assuming we cannot build or upgrade everywhere at once?

[Prof. Marvin Shaffer]

Maybe I could start on that. I'm thinking of that in relation to an earlier question and in relation to the title of this strategic interties study. I think it may be too big to think about what it would take to connect the whole country all in one swoop, but there are tremendous opportunities regionally within the country.

I think Mr. Burpee spoke to this too, but wherever you see an emphasis on getting off of thermal and you shift into renewables in a neighbouring jurisdiction with hydro, and potentially surplus capacity in short-term energy, there will be tremendous advantages in ensuring that the capacity is there to enable efficient trade between the hydro resource—particularly the capacity in storage it can offer to back up the renewables—and the surplus energy it can provide to more rapidly displace thermal. I see, between B.C. and Alberta, important opportunities to strengthen the tie. I'm not sure that the twinning that Mr. Hinds spoke about is taking place. Someone mentioned earlier that they put in a tie from Montana to Alberta, but that actually reduced the transmission capability across from British Columbia, so there are significant limitations right now.

I think the same would be true between Manitoba and Saskatchewan, where you have the hydro potential and the hydro resource neighbouring a predominantly thermal system. We're not talking about the traditional synergies between thermal and hydro. We're talking about the new synergies when you're moving to renewables, a lot of wind that needs backup on an hourly and longer-term basis. I can't speak to eastern Canada as well, but I think there's a lot of work to be done to move to broader regions in the country and broader systems that are fully integrated and optimizing within those regions.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Does anyone else have anything?

[Jim Burpee]

I'll go back to what I said before, which is from Manitoba through to B.C. From an electricity-supply perspective, we're already one of the cleanest systems in terms of low carbon emissions, but if you look at 2030 and beyond, part of the country that really doesn't have a complete plan yet, other than closing some more coal units, of how to get even cleaner would be Alberta and Saskatchewan.

There's an opportunity for developments, whether from B.C. or from Manitoba or from both, to go into Saskatchewan and Alberta. I would say especially Alberta, because beyond just their current electricity system, they are also looking at how to further reduce the carbon intensity of the oil sands operations through the use of more electricity.

It's not just about replacing what exists. It could be about bringing even more electricity into that area to reduce the carbon intensity of the fuel they produce to make it more similar to other forms of oil and gas.

[The Chair, Liberal, James Maloney]

Thank you. I have to stop you there.

Mr. Cannings.

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

Thank you all for joining us here. I'm going to start with Mr. Shaffer.

Could you perhaps expand on what you think the timelines on any strategic intertie projects should be? When we think of the present surplus we have in British Columbia—that's an area that you know well, and I'm also from there—when should we be thinking of building these interties? Should we be waiting for a time when that surplus is less, or should we start thinking of building them between the provinces now?

[Prof. Marvin Shaffer]

With respect to British Columbia and its connection with Alberta, we should first be thinking about optimizing the transmission capacity that's in place, because it's constrained now in ways that possibly could be relieved without major capital investment and I think we should be starting the process to expand capacity in the near term for a variety of reasons.

We do have surplus in British Columbia right now, which could be used to displace thermal, and longer term it's that synergy between the hydro resource and the wind resource. It isn't as if you're saying we should move development to British Columbia. I think this could enhance development of renewals in Alberta as well. I think there could be gains on both sides, but you need the strong interconnection, and you need, as I said earlier, the institutional arrangements to make that possible. It's complex. You have a market system in Alberta. You have a centrally planned B.C. Hydro. It's not like just a bilateral utility deal here. It's much more complex. To answer your question, I think we have to start now, right away.

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

On another thing about timelines, looking to the future and crystal-ball gazing, you quickly mentioned how British Columbia sometimes needs power during low-water years.

I'm wondering how much study has been done, or how much modelling, with regard to climate change over the next 30, 50, or 100 years of reducing water flows, especially out of the Rockies as glaciers recede. I hear a lot of stories of reduced water flow.

[Prof. Marvin Shaffer]

I'm not an expert, by any means—and you may have some B.C. Hydro people coming to your committee—but there are concerns about the snowpack. There will be water, but it may not be stored in the same way it is now in the snowpack. That can cause some problems with your hydro capability in the future, out of the same facilities.

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

You quickly mentioned something that I wanted you to expand on, and that is about how something was limiting manufacturing. It was something about American trade in electricity.

[Prof. Marvin Shaffer]

If you look at Manitoba and British Columbia and the hydro surpluses they typically always have, even if it's just non-firm because of water conditions, they are moving predominantly north-south. That is creating significant energy surpluses, at least in the trade from those two provinces.

If I could say, for mindless economic reasons in the United States, there's this notion that there should be no trade imbalance between two countries, clearly if you have trade surpluses in energy, you're going to have less room for trade in other areas. That's why I think there's a strategic value in enhancing our capability to trade east-west, so that surpluses don't have to be sold just north-south.

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

I'll move on to Mr. Burpee.

You mentioned Muskrat Falls and how it will be working as we go ahead. We heard from a previous witness about the need for a storage agreement between Newfoundland and Quebec around that, to handle the fact that Muskrat Falls doesn't have storage in the usual sense. There would be this big peak in the spring.

Can you comment on that?

[Jim Burpee]

No, I can't. I'm not aware of the details of whether storage would impact the ability to flow.

It was my understanding that the surplus to Newfoundland's needs, beyond what's committed to Nova Scotia Power and Emera, would probably find its way into the U.S. market. I don't know if there's a time at which the supply at Muskrat Falls would exceed the capability of the maritime link, which I think is 500 megawatts.

I think there are still some, how should I put this, complexities of the issues between Newfoundland and Labrador and Quebec when it comes to management of an almost common resource of water where it starts. If you're in Newfoundland and Labrador, I think it will get resolved in 2041.

To one of your earlier questions, though, something that has not been mentioned yet but that I need to stress is that if we're really considering further enhancement of ties between provinces and where they'd likely be, it needs the early engagement of first nations and aboriginal communities. It involves their territories, whether it's development of hydro resources or the transmission itself. These are conversations with Canadians that really need to start now.

I don't think there's really an understanding. Everyone might endorse the idea of enhancing east-west trade, but when they think of the transmission towers near their backyards, they get upset. These conversations need to start now on how it ties into our long-term climate objectives, which, as I said at the beginning, is the overarching objective here.

[The Chair, Liberal, James Maloney]

Mr. Serré.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you, Mr. Chair.

Thank you to all the witnesses for your presentations. They were good, very insightful. Thank you so much for the work you're doing.

My first question is for Mr. Burpee.

You indicated that we should look at how to work better on the expansion of the agreements between Ontario and Quebec. Can you expand and give some examples of that?

[Jim Burpee]

On part of it, I can. My comments really are what I read in the media, what I've seen released, and agreements that get around. It's a complex time because not only is Ontario trying to sort out its future requirements—the long-term energy plan is due out I think this month maybe, Jim?—but they're also entering into or competing for supply into the U.S. for renewable resources and others.

There's a lot happening commercially, but it appears to me that there's an element of Quebec versus Ontario, where's one's trying to sell to the other. If you're doing a buy-sell relationship, you're not sure who's trying to get the better deal, as opposed to whether there is an opportunity to partner. Partnering, in my mind, means that if we're looking to Quebec for part of the answer to Ontario's long-term electricity requirements, it means a capital investment potentially from Ontario wind, and it means developing resources jointly.

I disagree a bit with the idea that we should only focus east-west. I still think that in the long term on climate objectives we can do quite well by working together and focusing on displacing carbon south, because in the grand scheme of things we want carbon reductions at the lowest cost.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you.

My next question is for Mr. Hinds. Thank you so much for the diagram. Also, just as a side note, your father would be really proud of the work that you're doing right now in electricity.

[Voices]

Oh, oh!

[Marc Serré, Liberal, Nickel Belt, ON]

He was very passionate and loved the electricity file. I just wanted to make sure that I passed that on to you.