Natural Resources Committee on May 23rd, 2024

[The Chair, Liberal, George Chahal]

I call this meeting to order.

Welcome to meeting number 99 of the House of Commons Standing Committee on Natural Resources. Pursuant to Standing Order 108(2) and the motion adopted by the committee on Tuesday, November 29, 2022, the committee is resuming its study of Canada's electricity grid and network.

Since today's meeting is taking place in a hybrid format, I would like to make a few comments for the benefit of all.

Before we begin, I would like to ask members and others participating in person to consult the cards on the table for guidelines to prevent audio feedback incidents. Please take note of the following preventative measures in place to protect the health and safety of all participants, including the interpreters. Only use an approved black earpiece. The former grey earpieces must no longer be used. Keep your earpiece away from all microphones at all times. When you are not using your earpiece, place it down on the sticker placed on the table for this purpose.

Thank you all for your co-operation.

Here are some Zoom reminders. Please wait until I recognize you by name before speaking. All comments should be addressed through the chair. Additionally, taking screenshots or photos of your screen is not permitted.

In accordance with the committee's routine motion concerning connection tests for witnesses, I am informing the committee that all witnesses have completed the required connection tests in advance of this meeting.

I would now like to welcome our witnesses for the study today.

First, from ATCO, we have Dale Friesen, senior vice-president of corporate affairs and chief government affairs officer. From the Canadian Gas Association, we have Timothy Egan, president and chief executive officer. From the Canadian Nuclear Association, we have John Gorman, president and chief executive officer. From the Canadian Renewable Energy Association, we have Vittoria Bellissimo, president and chief executive officer, by video conference. From Electricity Canada, we have Francis Bradley, president and chief executive officer. Finally, from Electro-Federation Canada, we have Carol McGlogan, president and chief executive officer, and Frederick Morency, vice-president of sustainability, strategic initiatives and innovation.

Up to five minutes will be given to each of you for opening remarks. After that, we will proceed with rounds of questions. I will be using yellow and red cards. Yellow is a 30-second warning, and red means that time is up. If you're mid-sentence, I'll let you complete your sentence.

We will begin with Mr. Friesen from ATCO.

You have five minutes for your opening statement.

[Dale Friesen, Senior Vice-President, Corporate Affairs, and Chief Government Affairs Officer, ATCO]

Good afternoon, esteemed members of Parliament and fellow panellists. Thank you for the invitation to speak with you today.

For more than 75 years, ATCO has delivered electricity to hundreds of communities and millions of people in Canada and around the world. Today, we operate electric utilities in Alberta, the Yukon and the Northwest Territories, as well as Puerto Rico. We own more than 700 megawatts of power generation—approximately 500 megawatts of which is derived from wind and solar projects—with a development portfolio of more than 1.5 gigawatts in future renewable projects.

In sum, we have a uniquely holistic view of the electricity sector in Canada, from wind turbines and solar panels to transmission and distribution lines, all the way to meters at our customers' homes. It is in this perspective that I would like to frame my remarks this afternoon.

The first priority for us is affordability and reliability. I want to begin by stressing the importance of maintaining reliability and affordability as the grid evolves. In each jurisdiction we serve, these topics are front and centre in the minds of our customers. In Alberta, volatile electricity prices and the cost of new distribution and transmission infrastructure are of paramount concern. These issues are anticipated to grow as gas-fired generation retires and renewable capacity is added to the grid, which will require new transmission infrastructure.

Meanwhile, in our Yukon service territory, the rapid uptake of distributed energy resources, which we are a part of and support, has resulted in unintended consequences for power quality. Specifically, last spring, we recorded six events when fluctuations in solar output, paired with inadequate system inertia, resulted in sudden load increases that put grid stability at risk. These are challenges we are working on with the provincial and territorial governments and system operators to address, but they highlight the sometimes unintended consequences for customers associated with a rapidly decarbonizing grid.

Over 90% of the renewable projects that were added in Canada last year were in Alberta.

Our second priority is accelerating climate adaptation. While we're focused on maintaining affordability and reliability, we're collectively facing an increasing number of climate-related events. The vast and remote nature of our service territories in Alberta, the Northwest Territories and the Yukon requires enhanced planning to maintain system integrity in the face of a changing climate.

In recent years, we've seen an increase in both the frequency and duration of outages in our system, due in part to damage from weather-related events. We're investing in climate adaptation and resilience, such as improving the materials and standards we use for our distribution and transmission poles, and selectively undergrounding wires where possible. Another very helpful thing was the wrapping of the base of power poles up to about three metres. It has provided a lot more resistance against wildfires. These things can make a difference.

However, these climate adaptation measures often require significant upfront investments and can lead to higher electricity rates. Finding a sustainable balance between resilience and affordability will be crucial for all electric utilities in Canada and needs to be considered by policy-makers as an additional pressure facing our systems.

Our third and last priority is policy certainty. The reliability and resiliency challenges are complicated by challenges with policy and regulation. We remain concerned that the proposed clean electricity regulations may result in big impacts to reliability and affordability and potentially to public safety for customers. The latest considerations regarding the CER framework appear to provide some flexibility. However, without clear numbers, it's impossible to determine what their cumulative impacts will be at this time.

We're awaiting progress on federal permitting reform. To reach our net-zero goals by 2050, we'll require dramatic acceleration, provincially and federally, in the permitting and construction of electricity infrastructure. Expediting permitting for net-zero generation is important, but expediting permitting for transmission lines is equally critical, including interties and connections to remote indigenous communities. In Canada, it can take up to a decade or more to build a high-voltage line, and many of these projects will be built simultaneously.

Thank you.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Friesen.

We will now move to Mr. Timothy Egan from the Canadian Gas Association for five minutes.

[Timothy Egan, President and Chief Executive Officer, Canadian Gas Association]

Thank you, Chair.

A previous minister of natural resources speaking to my board of directors a few years ago said, “Wouldn't it be great if we had a national electricity link coast to coast?” I said to him, “Minister, we have one in the TransCanada mainline.”

The mainline, of course, is one of several extraordinary pipeline networks across the continent. The TC Energy system, of which it is a part, and the Enbridge system are two massive infrastructure networks owned by Canadian pipeline companies linking millions of North Americans to the energy they need for a range of services. There are numerous other systems as well.

My response wasn't the one the minister wanted, and I dare say it's because he, like many Canadians, too often engages in an electricity conversation as though electricity alone can meet all of Canada's energy demands and electricity isn't dependent on the broader energy system. Of course, this isn't true. Electricity is a technology, not an energy source, and it uses a variety of energy sources. We need electrons to run a bunch of things, but that's because they enable other technologies, and we need energy sources to make electrons.

I'm going to talk for a few moments today about one of those sources, natural gas, and how essential it is to the electricity system and indeed to the well-being of the country as a whole.

Canada's natural gas infrastructure is extensive, with over 600,000 kilometres of pipeline delivering energy to two-thirds of Canadians and storage facilities across the country within that system, altogether meeting nearly 40% of Canada's energy needs—more than double the contribution of electricity. This extensive infrastructure and storage capacity allows the delivery of large volumes of energy reliably, especially during peak demand periods or emergencies, and this includes electric energy. Already a key part of the power generation mix in many provinces, natural gas-fired electricity has increased by an average of 4% every year since 2018, at a time when we are contemplating serious constraints in the power system.

The reliability of the gas system and why that matters to the electric system are underscored by events like the polar vortex of January this year, when natural gas delivered the equivalent energy of 110,000 megawatts of power, or nearly 10 times the record electric peak in Alberta. Approximately 50% of that came from natural gas in storage—a battery of unparalleled scale. In other words, demand went through the roof, and the natural gas tap was turned on to ensure reliable energy for heating needs and reliable electricity. Without it, the electrical system would have failed.

I mention the draw on storage during Alberta's cold snap. That storage strength exists there and across the country. The Dawn Hub in Ontario is one of the largest integrated storage facilities in North America. It's a massive battery of over 285 billion cubic feet of natural gas, or the equivalent of roughly one-tenth of the total gas used in the country in a year. There's no comparable battery storage, and the hub provides unmatched flexibility and reliability for our energy system. That is critical, especially in winter, when estimates suggest that the heating load met by natural gas would require the equivalent of as many as 90 nuclear plants.

In Ontario, the Independent Electric System Operator understands the value of natural gas. The organization anticipates a shortfall of electricity by the late 2020s and has identified natural gas and renewable energy sources that are backed by natural gas as essential to meeting the need.

From an affordability perspective, natural gas is unparalleled. In 2023, the delivered cost of electricity was more than three times that of natural gas, and that's even with carbon taxes. Also, electricity prices are rising. In British Columbia, there's an announced annual increase of 6.4%. In Nova Scotia it's 6.5%, and in Newfoundland it's 10.5%.

Energy affordability affects the overall cost of living, not just because of the price of energy for direct use—as electricity, as fuel for transportation or as energy for heating—but also because the cost of energy affects the cost of absolutely everything else we need. The growing threat to affordable energy, something Canadians have always taken for granted, is leading to a growing reality of energy poverty, something we should never have to contemplate in a country so rich with energy resources.

Natural gas is the most cost-effective energy source available to Canadians. The average cost of delivering energy through natural gas infrastructure is roughly $68 per megawatt hour compared to over $560 per megawatt hour for electricity. This cost-effectiveness makes natural gas a vital component of our energy strategy, helping to keep energy costs affordable.

Finally, natural gas is an acceptable energy source that aligns with Canadians' interests and concerns. Its environmental footprint is small and steadily being reduced, as the industry continually innovates and invests in emission-management techniques, efficiency improvements and new fuels like hydrogen and RNG. Its infrastructure is unobtrusive, as it is overwhelmingly underground. Its safety record is exemplary. Millions rely on it and don't want to stop using it.

To conclude, I speak to remind you all of the great asset we have in our natural gas resource and our natural gas infrastructure. We are foundational to the overall energy system, and those who call for our elimination do so without reflection on the enormous risk this represents to the well-being of Canadians and even to the very electrical system that advocates seek to expand.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Egan.

We'll now go to the Canadian Nuclear Association.

Mr. John Gorman, you have five minutes.

[John Gorman, President and Chief Executive Officer, Canadian Nuclear Association]

Thank you for the opportunity to appear before this committee.

Electricity is fundamental to the well-being of Canada and Canadians, and the role it plays in our lives and our economy is set to grow dramatically over the coming years and decades. Ensuring the reliability and sustainability of the grid through this growth in demand is of paramount importance. However, the strength and reliability of the grid are tied directly to the strength and reliability of the electricity that gives it power. For approximately 15% of the nation's electricity grid and 60% of the grid here in Ontario, that strength is nuclear.

I am here today on behalf of the Canadian nuclear industry, representing over 80,000 Canadians employed in exploring and mining uranium, generating electricity, advancing nuclear medicine and promoting Canada's leadership worldwide in science and technological innovation.

Canada's nuclear technologies, which include large conventional reactors like the CANDU—one of our country's proudest technological achievements and exports—and newer small modular reactors, or SMRs, will play an increasingly important role in ensuring a reliable and affordable power supply, as increasing electrification puts pressure on both large and small grids, including in remote communities. Looking into the future, industry studies suggest that the electrification of the Canadian economy by 2050, while meeting net-zero emissions goals, will require at a very minimum an additional 100 gigawatts of clean baseload electricity generation. That does not include the significant amount of renewables that need to be brought on to help this transition.

Provincial and territorial governments are actively considering how a suite of technologies could be allocated to meet this massive demand load. Nuclear is increasingly being considered as the best solution. Following the memorandum of understanding between the provinces of Ontario, New Brunswick, Saskatchewan and Alberta, SMR projects in each province have established a critical first-mover advantage, opening opportunities to develop a pan-Canadian new nuclear technology supply chain.

Current, large CANDU nuclear electricity generating plants in Ontario and New Brunswick have been demonstrating for generations how important nuclear energy is in meeting the energy needs of industry and of Canadians. Canada's largest infrastructure project, a $26-billion refurbishment initiative undertaken by Ontario Power Generation and Bruce Power, is on time and on budget. Our nuclear fleet is the envy of many countries around the world that are struggling to find a path to net zero. As a tier 1 nuclear nation with a proven record with its CANDU reactors, Canada has the experience, knowledge and resources to develop new nuclear technologies such as SMRs, and indeed we are doing so.

In addition to accelerating the clean energy transition, SMR development in Canada addresses needs beyond electricity. SMRs can be used to create non-emitting fuels like hydrogen for transportation, industry and export.

The Government of Canada has shown clear support for the Canadian nuclear industry through a range of policy and financial commitments. However, for Canada to succeed in its ambitious decarbonization and electrification goals, much more needs to be done. Moving forward, in order to ensure a strong nuclear energy sector, the Canadian Nuclear Association recommends the following key points to build on the success to date and meet climate and energy security goals that will facilitate regional, provincial and local grid stability.

First, on regulatory alignment, we recommend that the government continue to develop an efficient regulatory regime in Canada that recognizes the need for a significant acceleration of the development and deployment of clean energy infrastructure, including nuclear, large and small.

Second, on the nuclear supply chain, we recommend taking a continental approach, recognizing that working with the United States is to our mutual benefit. This includes key issues such as uranium and nuclear fuel access, especially for SMR development.

Finally, regarding financing, we recommend continued investment in both large and small reactor technologies. We recommend that the investment tax credit, ITC, design for nuclear technologies and supply chains be undertaken in a timely fashion to match efforts undertaken by the United States, and that Bill C-59 include an SMR definition to ensure the timely deployment of technologies.

Members of the committee, we are a country built on our abundant natural resources and skilled, passionate workforce. Our path to success in the energy transition rests not outside our borders but here at home with the sectors we are proud to call our own.

Thank you.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Gorman.

We will now go to the Canadian Renewable Energy Association and Vittoria Bellissimo, by video conference.

[Vittoria Bellissimo, President and Chief Executive Officer, Canadian Renewable Energy Association]

Good afternoon, Chair. Thank you to you and this committee for inviting me to testify on behalf of the Canadian Renewable Energy Association, CanREA, as part of this committee's study of Canada's electricity grid and network.

I would like to start by acknowledging that I'm joining you today from the traditional territories of the peoples of Treaty 7, including the Blackfoot Confederacy, consisting of the Siksika, the Piikani and the Kainai; the Tsuut'ina and Stoney Nakoda first nations; and the Métis nation, who call this region home.

CanREA is the voice for the wind energy, solar energy and energy storage solutions that will power Canada's energy future. Our 300-plus members are uniquely positioned to deliver clean, low-cost, reliable, flexible and scalable solutions for Canada's energy needs, which are set to grow faster than ever.

Canadians consumed approximately 640 terawatt hours of electricity in 2022—over 60% hydro; 17.5% fossil fuels; 13% nuclear; and notably, 5.7% wind, 1.5% biofuels and 1.1% solar PV. Environment and Climate Change Canada estimates that reaching net zero will require a doubling or tripling of Canada's generation capacity by 2050 as Canadians switch from fossil fuels to clean electricity to meet their everyday energy needs. This growth in generation will require significant investment in renewable energy and energy storage.

Meeting Canada's climate targets is not the only reason to invest in new renewable energy and energy storage. Staying competitive in a rapidly digitizing global economy depends on Canada generating more electricity. The International Energy Agency notes that electricity consumption from data centres, artificial intelligence and the cryptocurrency sector could more than double by 2026, going from a global consumption of 460 terawatt hours in 2022 to more than 1,000 terawatt hours in 2026. With companies opening 20-plus megawatt facilities across Canada, the demand for power for computing here is rising.

CanREA members are ready to meet the growing demand resulting from Canada's climate goals and the needs of the future economy. They have proven that they can build new large-scale generation projects in two to five years and do so at a cost that keeps electricity affordable for Canadians. Competing technologies may require a decade, if not more.

Investments are happening now, with Ontario announcing last week the procurement of 1,784 megawatts of energy storage from 10 projects, which will be online by 2028. In total, Ontario will have up to 2,916 megawatts of energy storage capacity over 26 facilities before 2030. This story will be repeated across Canada as provincial utilities and system operators launch calls for new electricity from renewables and for energy storage.

Renewable electricity and energy storage projects can be further accelerated by the clean technology investment tax credit, ITC, and the forthcoming clean electricity ITC. The relatively straightforward design and refundability of the ITCs will put the country in a competitive position relative to the U.S. and other jurisdictions that are looking to decarbonize their electricity systems. As companies looking to invest in renewable energy have stated, the fact that the clean technology ITC, once passed, will be available until 2034 gives them confidence that Canada will remain competitive in the long term.

That said, CanREA members, including capital providers, have made it clear that without these ITCs, they will look to invest in the U.S., the EU or other markets where a path to profitability is clearer. In a world where demand is growing significantly, projects and capital will go to the jurisdictions of lowest risk and highest return. As such, I urge all parliamentarians to pass Bill C-59 as soon as possible. I also encourage the government to introduce the enabling legislation for the clean electricity ITC before the House rises for the summer.

We are particularly optimistic about the opportunities that the clean technology investment tax credit will create. This measure will allow companies investing in a variety of low-carbon technologies to recoup between 20% and 30% of their project capital costs as a refundable tax credit. When the enabling legislation for this investment tax credit is passed, it will rapidly accelerate the deployment across Canada of such technologies as battery energy storage systems, wind, and solar by strengthening the economics of renewable energy projects and attracting capital to the sector. This is about acceleration, international competitiveness and keeping electricity affordable for Canadian ratepayers.

Thank you for your time and consideration. I look forward to your questions.

[The Chair, Liberal, George Chahal]

Thank you, Ms. Bellissimo.

We will now go to Electricity Canada and Mr. Francis Bradley.

You have five minutes.

[Francis Bradley, President and Chief Executive Officer, Electricity Canada]

Thank you very much, Mr. Chair.

I'm the president and CEO of Electricity Canada. We were previously known as the Canadian Electricity Association. We are the national voice of Canada's electricity sector. Our members are the companies that produce, transport and distribute electricity in all provinces and territories.

Our industry impacts all social, environmental and economic facets of life. Whether it is keeping the lights on, driving down emissions in other sectors or powering one of the largest economies in the world, Canadian electricity is foundational to it all.

Since 2005, our sector has cut emissions by more than half, making Canada's electricity grid over 84% non-emitting—among the cleanest in the world. We will continue to see emissions reductions as our members adopt and integrate new technologies.

Canada, like elsewhere in the world, is experiencing a rapid increase in electricity demand. This is driven by several factors, including the rise of new technologies like electric vehicles and artificial intelligence, as well as broader efforts to decarbonize the economy. We expect demand to double or triple by 2050. To meet this demand, we'll have to expand the system at a pace we haven't seen in decades. This must be done in a country with multiple electricity grids made up of different resource mixes, market structures and regulatory environments. Because of this regional variance, there will be no silver-bullet technology or one-size-fits-all approach to growth.

The investment tax credit regime is foundational to promoting clean energy competitiveness while supporting rate affordability. The indigenous loan guarantees and the SREP programs will help address important gaps.

Nonetheless, our industry faces significant challenges. Doubling or tripling the size of the grid while reducing emissions too quickly may jeopardize affordability and reliability. We must ensure that an emphasis on reducing further emissions faster does not compromise our ability to maintain the integrity of the electricity system in each region. We must also remain competitive in the global marketplace. Although the CCUS and clean technology ITCs are close, we aren't there yet. Meanwhile, the U.S. has been seeing record clean energy investments since the implementation of the Inflation Reduction Act. We need investment certainty if Canada is to keep pace. Finally, we need to build faster. Current permitting and approval timelines do not reflect the urgency needed to meet demand.

To address these challenges and support an affordable, reliable and clean industry, we have three key recommendations.

First, federal regulations like the CERs must be designed to ensure that affordability and reliability can be maintained. Each province's starting point is different, so it's important that national ambitions don't unintentionally leave provinces behind. Besides, as I said at the beginning, the electricity system is going to grow substantially in the coming decades. It's important that the system remain as flexible as possible so that we can meet this growing demand no matter what. The technologies that are meant to help us get there have yet to arrive in Canada at the scale that will be required. This makes it difficult to be certain on timelines for the phase-in of reliable replacement power.

Second, to support bringing these technologies to market, the federal government should continue investing in the system. At the same time, more is needed to ensure that communities and households are prepared to receive and manage the massive increase in load. Intraprovincial transmission and distribution will be crucial to supporting the growth of electric vehicles, demand-side efficiency and the connection of rural communities to clean electricity.

Finally, our federal regulatory environment needs to be adapted to ensure that these timelines and targets can be achieved. Work is needed to reduce duplication and promote clarity, transparency and accountability within federal processes.

To conclude, I want to stress that significant growth in demand will come regardless of our climate objectives. As an industry, we must be ready to meet this growth and to build for the future.

Thank you for the opportunity to speak to you today.

We have provided a detailed submission for the committee's consideration.

Thank you, Mr. Chair.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Bradley.

We'll now go to Electro-Federation Canada.

Carol McGlogan, you have five minutes.

[Carol McGlogan, President and Chief Executive Officier, Electro-Federation Canada]

Good afternoon, Mr. Chair. Thank you very much to you and the esteemed members of the committee for having me and Mr. Morency here this afternoon.

The study you find yourselves currently undertaking will have big implications for the country and how we chart the path to net zero. We are grateful for your thoughtful deliberations to date and are excited to bring our insights to your conversation.

Electro-Federation Canada is an industry organization with 260 members that represents a thriving industry of electrical manufacturers, wholesale distributors, sales agents and field service providers who design, develop, distribute and install electrical and automation products that support energy efficiency and contribute to a net-zero future. Our electrical and automation industry members are the technology makers, innovation experts and supply chain partners for a net-zero economy. We're powering a changing world.

EFC members contribute over $15 billion to the Canadian economy annually and support 109,000 jobs directly and indirectly in more than 1,400 facilities nationwide. Though we have long been active in advancing these initiatives, it is only in the last few years that we've trained a more intense focus on working with departments and Parliament here in Ottawa.

Last year, in conjunction with The Pembina Institute, we published an industry white paper entitled “Decarbonizing Canada via ‘Electrification’”, which provided a road map of where we believe strategic investments and policies need to be made in order to achieve the ambitious targets laid out before us. Specific to this study, we made recommendations on investing in distribution system upgrades and further emphasizing developing regional electricity interties. We also conducted two Hill Day exercises in February 2023 and 2024 respectively, where we met with parliamentarians of all stripes to discuss and raise these issues and recommendations. We have been encouraged by the reception we've received to date.

We note the brief that Mr. Manvir Sandhu submitted to the committee as part of this study. We are aligned with its four recommendations regarding the development of a national electricity strategy, increasing interprovincial transmission capacity, modernizing and upgrading requisite infrastructure and increasing decentralized energy capacity countrywide. In addition, we state that, as all these substantive investments are being made, it is important to support the four recommendations with an industrial strategy that helps secure a global supply of energy transition solutions and promotes local manufacturing and supply chain building with investment tax credits to meet Canada's timelines for achieving a greener, electrified Canada.

To put the supply issue in context, the demand for switchgear and transformers is no longer driven by building starts alone. Solar, batteries and storage in data centres are all competing for this technology. A study done by Scotiabank on the U.S. states that the demand for switchgear and transformers will increase by five times annually to meet the demand in the U.S. in the next 15 to 18 years.

We know that a new mix of energy is required, and this impacts demand for components. For example, a 1,000-megawatt nuclear or gas plant will require 55 to 70 transformers, whereas the comparable amount of output from wind or solar with 1,000 megawatt hours of on-site battery energy storage will require 900 to 1,250 transformers. At the same time, a large hyperscale data centre needs 1,400 to 1,700 transformers per site. All of this is creating a tremendous demand for electrical equipment and electrical power generation.

One of our four Canadian transformer manufacturers is committed to the grid and is saving their capacity for utilities. However, they may have to face a business decision, as the data centre market is moving quicker and is willing to pay more for equivalent products. This competitive activity was also highlighted in the Scotiabank report. Today's lead time for transformers is over two years, and the lead time for switchgear has gone from 20 weeks to over one year. It is important to secure a Canadian supply for our energy security.

We know that net zero is important for our environment and the next generation of Canadians. At the same time, the push to net zero is good for the economy. Because of Canada's hard work in decarbonizing our grid, we have become an attractive destination for investment by companies that have made low-carbon commitments and see the economic value of a lower-emitting energy system. We are also seeing this investment create new jobs.

This is a win-win—a win for the environment and a win for the economy. We are in a global race, and our members can unlock capacity, secure supply chains and provide technical assistance to get this job done efficiently for Canada. We're here to help, and we want to make a positive difference.

Thank you for your time. We eagerly welcome your questions about our work and initiatives.

[The Chair, Liberal, George Chahal]

Thank you for your opening remarks.

We will now proceed to our first round of questions.

We'll start with Mrs. Stubbs for six minutes.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thanks, Chair.

Witnesses, thank you for being here today and for your candid and comprehensive dose of reality. You have painted a very accurate picture of the absolutely inextricable link between your operations, your expertise and the everyday essential needs of every Canadian in every community across this country. I note your concern about affordability and Canadians being able to afford reliable, stable, predictable sources of power.

Mr. Friesen, I invite you to comment on what I understand to be a growing gap between supply and demand for the equipment and materials needed to grow the grid. Also, do you have any comments on supply chain issues with the materials needed to build it out and meet expansion goals?

[Dale Friesen]

I just want to give a shout-out to Carol for her great comments on some of the supply chain issues and for noting a few examples that we would use.

I had the privilege, before the COP in Dubai last December, to speak at the Edison Electric Institute and Gulf Cooperation Council summit. It was really fascinating to hear the supply chain challenges being faced around the world. Those that you've heard from Carol and Francis are real.

One number really grabbed me: The entire capacity of the world's production of transmission lines would be consumed for two years with just a 3,000-kilometre order for a transmission line globally. That would take up a two-year supply globally. That was shocking.

When you drive into your neighbourhood tonight, you should look at those little transformers that hang on the power poles, which Carol was talking about. They used to be almost off-the-shelf, but they're now items with up to a two-year lead. Many of the suppliers are saying, “You either go single source or we don't want to talk to you.” That impacts price, and it impacts delivery and timing. Our stats show that in the States, they're estimating between 60% and 80% of these existing transformers will need to be replaced as a matter of course between now and 2050.

These are challenges that everybody in the business is facing. I would add to that some of the labour challenges, which people in this room are well aware of. They're coming in parallel.

Working with government, industry and schools is very important as we go forward to try to ensure that we can meet those demands.

[Shannon Stubbs, Conservative, Lakeland, AB]

Mr. Friesen, Mr. Bradley and Mr. Egan, all of you in different ways have commented on the reality of the different grids, the regional and provincial differences. The Prime Minister says that our strength is diversity. That is very true of resources and electricity, although he seems to forget about that. I wonder if you might talk about the regional differences in the grid.

Also, there's the discussion on interties. In 2017, MP Falk and I were members of this committee, and a report was issued that recommended engagement with the provinces and territories to identify and address regulatory barriers to facilitate interties—interprovincial and Canada-U.S. ones—and to modernize electric systems and markets.

I would invite each of you to expand further on the issues with the diversity of grids between regions and provinces, the status of interties and the policy barriers that exist to expanding the grid and establishing interties. I'm wondering what your competing views on that might be.

[Francis Bradley]

I can begin, if you like.

In terms of the diversity of the grids, it is both a strength and a challenge because there are such massive differences. It's a result, quite simply, as all members are well aware, of the different resource endowments in different areas of the country. There are some areas in this country where there is a lot of falling water, and other parts of this country happen to be very flat and don't have a lot of falling water. That results, of course, in some pretty significant challenges with respect to the clean electricity regulations, which impact different areas in different parts of this country in very different ways.

Would greater interconnection and more interties address this? That partly would when we look at different regions and the ability to lean on them. However, it's much as I said earlier with respect to technologies. Even the greater interconnection between grids is not a silver bullet to addressing the challenges we have in the different jurisdictions.

[Shannon Stubbs, Conservative, Lakeland, AB]

Would you say that in general there's been significant progress on interties since 2017?

[Francis Bradley]

No.

[Shannon Stubbs, Conservative, Lakeland, AB]

The government hasn't done anything significant on the recommendations.

[Francis Bradley]

I wouldn't say there's been significant progress.

[Shannon Stubbs, Conservative, Lakeland, AB]

I would invite you to expand on the importance of baseload power and the importance of natural gas and, if you want, to share any thoughts on the net zero by 2035 conditionality of the CERs. To all of you, what do you anticipate would happen to emissions in the electricity sector without the CERs?

[The Chair, Liberal, George Chahal]

You'll have to save those answers for the next round, as the time is up.

Thank you, Mrs. Stubbs.

We'll now go to Ms. Dabrusin for six minutes.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

Thank you.

I will start with Mr. Gorman from the Canadian Nuclear Association.

I come from a province that switched off coal for cleaner electricity, and nuclear was an important part of that transition. When we're talking about clean power and baseload power, I've seen in my home province the importance of nuclear.

I'm wondering if you believe that nuclear, along with other renewables, can be an affordable and reliable source of energy for our country?

[John Gorman]

I'll first reflect on the remarkable decarbonization of Ontario's electricity grids.

When we closed down coal-fired plants, nuclear was responsible for replacing 89% of the electricity created by them with clean, non-emitting baseload power. It's a real asset to this country.

Regarding the affordability of nuclear, I would point out that in the Ontario context, nuclear is the second-lowest cost electricity in the province next to water power—hydroelectricity. The $26-billion refurbishment of the plants in Ontario, which has been under way now for five years and has another five years or so to go, is ahead of schedule and on budget. It will be delivering cost-competitive electricity, which we have in this province, well into the 2060s. It's a really important cornerstone for providing the clean baseload power that you speak of.

On the baseload question, Ms. Dabrusin, I referenced in my remarks that we are going to require an extra 100 gigawatts of new baseload, non-emitting power. As a nation, we have to ask ourselves where that power is going to come from. We've been blessed with water power for many decades. However, now, with a need for doubling or tripling the amount of electricity we have, ensuring that it's completely emissions-free and getting baseload power, we don't have the luxury of access to water power going forward. Nuclear is going to play a really important part there.