Natural Resources Committee on Oct. 30th, 2017

[The Chair, Liberal, James Maloney]

Good afternoon, everybody. Welcome back after the weekend.

Today we are dealing with our last witnesses and the end of our study on strategic electricity interties, a fact that Mr. Schmale was lamenting in a discussion on the bus on the way over here.

We have three sets of witnesses. In the first hour, we're joined by Mike Marsh and Tim Eckel, from SaskPower.

The format for today is that we're going to give you the floor for up to 10 minutes to make your presentation. Following that, you'll be asked questions by members from around the table.

I'm assuming you have some technology there that will allow you to get the interpretation, should you need it. You will have questions put to you in both official languages, I expect. Of course you're welcome to answer them in either official language, as well.

On that note, I will turn it over to the two of you. The floor is yours.

[Mike Marsh, President and Chief Executive Officer, SaskPower]

Good afternoon, Mr. Chair and committee members.

My name is Mike Marsh. I'm the president and CEO of SaskPower. I'm joined here in Regina today by Mr. Tim Eckel, vice-president of asset management, planning, and sustainability.

First of all, thank you for the opportunity to share SaskPower's views on interconnection infrastructure between provinces and building cross-jurisdictional co-operation for a cleaner, more reliable electrical system in Canada.

I have some opening remarks and will then be pleased to take your questions. To begin, I'll briefly introduce you to our company.

SaskPower is Saskatchewan's largest crown corporation and the primary supplier of electricity in Saskatchewan. We are a fully integrated power utility. We operate natural gas facilities, coal-fired stations, hydro stations, and wind power facilities. We also purchase electricity from independent power producers, as well as from Manitoba Hydro, to bring our total generating capacity to approximately 4,500 megawatts.

As we look to the future, we know that the way we do business today is not the way we will continue to do business. Our industry is changing, and we recognize that the electrical system in our province and our country must evolve to meet future challenges.

I've had the pleasure of serving as SaskPower's president and CEO since 2015. My history with SaskPower dates back 26 years, when I began working at the Boundary Dam power station in Estevan, Saskatchewan. I've seen many changes over the years, but I can truly say that this is a period of profound transformation. Our vision of a cleaner energy future will require fundamental shifts in the way we operate every aspect of our business, from generation to delivery.

For example, we hit a record system load of 3,747 megawatts in January. As well, we saw a number of summer records broken, including hitting 3,470 megawatts in August of this year. All indications are that demand will continue to grow in our province.

To meet this demand, SaskPower has invested approximately $1 billion a year since 2012 in our aging infrastructure. We are also meeting the challenge of reducing greenhouse gas emissions. SaskPower is a world leader in carbon capture and storage. Boundary Dam 3 produces the cleanest fossil fuel electricity in Canada—it's two to three times cleaner than natural gas—and our work here has the ability to dramatically reduce emissions both in Canada and around the world.

SaskPower is committed to managing our emissions, with a goal of having 50% renewable generating capacity by the year 2030. We'll meet this target by adding more wind power—our long-term goal is to increase wind power from about 5% today to as much as 30% by 2030—and installing about 60 megawatts of utility-scale solar by 2021 and potentially up to 300 megawatts of solar by the year 2030.

SaskPower will need reliable baseload electricity to support our wind and solar generation. It's for that reason that we support further research and study of interties between provinces, especially between Manitoba and Saskatchewan. Not only does Saskatchewan's economy need reliable electricity. It needs cost-effective electricity. Saskatchewan ratepayers expect and deserve fair pricing and will not tolerate subsidizing other provinces' electrical rates. I'm sure this is also true for the customers of Manitoba Hydro.

For this reason, we must ensure that appropriate supports are in place to study how to best optimize interconnections that benefit both our provinces. The intertie connections must be built on a relationship. It must be a true partnership between the two utilities and must ensure that one side does not lose its electrical independence. Saskatchewan's economy cannot afford to have instability or unreliability in its power supply.

For example, we have strongly encouraged that serious thought be given to moving electricity beyond our provincial borders. Currently, SaskPower can build its generation close to where it's needed, meaning higher efficiency of electricity movement with minimal line loss. As well, building transmission and distribution infrastructure costs billions of dollars, and that should not be unduly shouldered by SaskPower's customers.

Before we even begin building, we must also consider the tremendous administrative effort needed to secure approvals. Red tape can result in delays, and it can add years to the process and make planning extremely difficult. This uncertainty slows down our progress on delivering new generation that will reduce greenhouse gas emissions. We need support from all levels of government to move forward in a way that meets the public's expectation and the needs of the economy.

To close, we would like to reiterate our support for intertie development between provinces. The western regional electricity co-operation and strategic infrastructure study led by NRCan consists of electric utilities and system operators from British Columbia, Alberta, Saskatchewan, and Manitoba. Working together, the participants are collaboratively looking to identify promising electricity infrastructure projects in western Canada with the potential to achieve significant greenhouse gas reductions.

General Electric consulting has been contracted to perform a technical and economic study to assess potential projects that will increase the use of clean energy across western Canada and accelerate GHG emissions reductions. Saskatchewan feels this is an important initiative and that it is important to have the following related projects assessed: a new intertie between Saskatchewan and Manitoba; new internal transmission to aid in development of new renewable capacity; new hydroelectric capacity; coal conversion, to lower greenhouse gas emissions; bulk storage additions; and potentially a new intertie between Alberta and Saskatchewan as well.

Results are expected to start flowing in shortly, and we hope we will significantly strengthen capacity and cost-effectiveness between Saskatchewan and our western Canadian partners. SaskPower recognizes that having a well-developed east-west distribution system will make Canada's electrical system stronger, and we know that will benefit all Canadians. That said, we must work together to ensure that the decisions made are fair to all Canadians in a way that supports growth in both provinces in an environmentally sustainable way.

Mr. Chair, that concludes our presentation. We'd be pleased to take your questions now.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Bagnell, I believe you're going to start us off.

[Larry Bagnell, Liberal, Yukon, YT]

Thank you very much. In a way, that was music to my ears. I applaud your efforts to cut greenhouse gases.

I want to change the focus a bit for the sake of my personal agenda. You did a lot of east-west. I want to do some north-south to use your experience. We only have 37,000 people, so the situation is a bit different, but we have a lot of remote diesel communities. I want to get at your experience in connecting those to, as you said, make more efficient use of power to connect everyone across the nation.

We're a long way from having the grid at the moment. Roughly how much line loss is there if you were to add 1,000 kilometres to get to the north, either 1,000 kilometres or 1,000 miles? I know there's line loss. Is it enough to make it not worth the effort? That's what I'm trying to get at, a sort of rough idea.

[Mike Marsh]

I believe so, Larry. I'm going to let Tim answer that question. He probably has a little more technical knowledge on this than I have.

Tim.

[Tim Eckel, Vice-President, Asset Management, Planning and Sustainability, SaskPower]

If you look across the north part of Saskatchewan, we have an 1,100-kilometre transmission line that ties those northern communities and some small hydro sites to the mines and the people who live up there. We looked at bringing some power in from the Northwest Territories, and approximately 40% to 50% of that energy would be lost by the time it got to the south part of Saskatchewan, if you tried to feed it all the way.

[Larry Bagnell, Liberal, Yukon, YT]

How far was that?

[Tim Eckel]

It's 1,100 kilometres.

[Larry Bagnell, Liberal, Yukon, YT]

From the Northwest Territories...?

[Tim Eckel]

It would be from a couple of hundred kilometres into the Northwest Territories.

[Larry Bagnell, Liberal, Yukon, YT]

Okay.

[Tim Eckel]

This line is 138,000 volts. If you went to a higher voltage, you would have less loss and you could transport more power, but you're probably looking at about a 40% loss of energy.

[Larry Bagnell, Liberal, Yukon, YT]

That's for 1,100 kilometres.

[Tim Eckel]

Yes.

[Larry Bagnell, Liberal, Yukon, YT]

We have a number of communities on diesel, but they're not as big as the ones you're serving. There are only several hundred people in each community.

We do distances by time, actually. I don't know how you do it, but in our area, some of them are two hours away, and then another two hours, and then another two hours, to join these small communities. Have you found it economically efficient to join your small communities with the cost of the line? Was the cost of those lines subsidized so that you could get those rural communities off diesel?

[Mike Marsh]

The initial transmission line was built in the late 1980s into northern Saskatchewan to serve the mining load as well as to tap off into distribution substations to feed local communities in that area. To date, we only have one community that's left on diesel. It's a community by the name of Kinoosao. It's on Reindeer Lake and is very remote from any transmission or distribution line. The cost to serve that line is very high, because in a sense it would require a submarine cable to go under the lake and over to serve a community of just a few hundred people.

[Larry Bagnell, Liberal, Yukon, YT]

Our thoughts are that, perhaps with a subsidy, if we could join everyone in the north, which would be a bit expensive, but as you said, east-west too, it would be great for the nation. It's sort of like the railway, in a way. It would not only connect everyone so that they had power, but you also wouldn't have to overbuild power because if you had a shortage somewhere you could get it from somewhere else.

Are you basically supportive of the philosophy of joining the nation by transmission lines so that, as you said, you would only have to use diesel in very limited cases? That could probably be offset a bit by wind and solar.

[Mike Marsh]

We've been working for quite some time with Manitoba Hydro. Our relationship goes back many years. Certainly, we're looking at intertie capability along our border. I believe that today we have five interties with Manitoba Hydro. We're looking at potential expansion of some of those interties, depending on how we need to bring the power and where we need to bring the power into the province.

For remote communities, though, they are sufficiently far away from the grid that perhaps other options for renewable energy might be more viable for those. I know Manitoba Hydro also had a number of remote communities that are on diesel, but they are sufficiently far away from the grid. There is potential for wind and solar and some storage to be the renewable fuel of choice for those communities, and it may be able to be done less expensively than building a line to those communities. That's being explored today.

The major east-west intertie between Manitoba and Saskatchewan, for example, may allow us to bring in significantly more hydroelectricity than we do today. If the opportunity is available for SaskPower to take advantage of that capacity and energy that Manitoba Hydro is willing to contract with us on, then we would be very much into looking at what intertie would suffice. Whether that is for a small number of megawatts or a large number of megawatts, at this point in time, we're looking at all options.

The potential to move big amounts of electricity is certainly there. That would require a significant transmission investment. I think once you get up into the 500 or 1,000 megawatts of intertie capability, we're talking about $1 billion-plus investments to move energy from one province to another.

[Larry Bagnell, Liberal, Yukon, YT]

Just to end, I'll say that thanks to indigenous affairs, we have two communities from north of the Arctic Circle doing studies on wind, and one on wind and solar, so it's possible.

Thank you, Mr. Chair.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Falk.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair, and thank you to our presenters from SaskPower.

I'm from Manitoba so obviously I have some interest in the comments relating to Manitoba Hydro and your relationship with them.

I want to start off by asking another question. A recent presenter here at committee suggested that provinces should be left on their own with the development of power, be free from federal policy when it comes to interties, and instead be driven by incentives. I'm wondering what your opinion on that would be.

[Mike Marsh]

Traditionally, energy policy has been the purview of the provinces, as everyone knows, and that's why we have strong north-south interconnections from those “heavily blessed with hydro” provinces: British Columbia, Manitoba, Ontario, and Quebec.

Where there's an opportunity to provide energy security in Canada, I think that's where the federal government can really play a part. They can provide the incentive to encourage some east-west movement of energy—whether it's from B.C. into Alberta, from Manitoba into Saskatchewan, or even from Manitoba east into the Ontario area—to build that bridge, to move cleaner energy east and west, and to make sure that communities in Canada can benefit from the abundant supply that we have today.

[Ted Falk, Conservative, Provencher, MB]

Do you think that should be driven by a federal policy, or do you think rather that we should attach incentives to meeting carbon emissions, and things like that?

[Mike Marsh]

I think we would prefer to see incentives tied to carbon emissions.

As everyone knows, Alberta and Saskatchewan have the heavy lifting to do in moving off fossil fuels. Today we are 75% fossil fuels, and we need to move that down to 50% by 2030. Beyond 2030, we can only imagine a number that's going to get higher and higher in terms of renewable capacity, so finding a way to introduce hydro, in addition to wind and potentially solar, would be a very good mix for our province. We would certainly look at every available opportunity.

If the federal government can help with that movement of clean energy, we would be very happy to work with it on that.

[Ted Falk, Conservative, Provencher, MB]

You indicated to Mr. Bagnell that currently you have four or five interties with Manitoba and that you're looking to upgrade those interties. Are you thinking of an additional intertie or of upgrading existing interties?

You also talked about transmission, and you threw out the number of a billion dollars. Can you be a little more specific about what you're thinking?