All right, well, good morning and welcome to our webinar this morning. Our guest speaker today is Michael Paul, Vice President of Government Relations for the Canadian Electrical Association. And with that also is Kyle Larkin, Vice President of IMPACT. Before I turn it over to Kyle, I'd like to let those know who are live with us today that you may submit questions down at the bottom via the chat box at the lower left side of your screen. This webinar will also be recorded, so you may watch it at another time at your convenience. With that, I'd like to turn it over to Kyle to do the introductions. Thanks, Mike. I won't add much more, but I'm very glad to have with us today Michael Powell, Vice President of Government Relations for the Canadian Electricity Association. You know, if there was a category of top-tier government relations professionals, lobbyists in Ottawa, Mike would certainly be in that category. You know, he's been in the lobbying game for well over a decade, working on a variety of files and has been at CEA now for at least two years. But I'll let him introduce himself, introduce quickly CEA, and get straight into the presentation. Thanks, Mike. Thank you, Kyle, and thank you, Mike. Just for a technical question on my end, questions, you guys will just refer them to me. I don't have to keep an eye on the chat. Perfect. My name is Mike Powell. I work with, as Kyle said, the Canadian Electricity Association. I'm coming to you live from Ottawa, which in Canada is the traditional land of the Algonquin and Anishinaabe people. We are, what I'm going to do today is go through, each year we do a state of the industry. This is our third crack at it. We have a theme for the year, and I'm going to do an abbreviated version of that that will really focus on a couple of key things, which I think affect you and your members and ultimately your customers, which is really where the bottom line is. But the whole document is up on our website, and I'll share a copy of that with Kyle and Mike afterwards so that you can take a look at it in greater detail. CEA is the Canadian Electricity Association. We are the voice of electricity in Canada, which really just means that we represent all of the big electricity utilities across Canada. We have 40 members, they're in every province and territory, and they include the big ones like BC Hydro, Ontario Power Generation, OPG, or sorry, Hydro-Québec. But also we get into municipal utilities like here in Ottawa, Hydro-Ottawa, or direct generators like the Transaltas and Evolutions of the World. We make power, so our members produce it. We move it across distances through transmission lines, and we distribute it. So we're actually the people that are responsible for the poles right up to your house and right up to the meter. And one thing that makes us pretty unique amongst some of the other trade associations is we have that direct relationship with the customer. So we're people that our members send you bills, and so we're pretty unique as an industry where we're also looking for ways in which you can use less of our product. One big thing that has happened in the last couple of years is a real shift. We've always been a very clean organization and a clean power grid in Canada, but much of our conversation at CEA has been more about sustainability, not just in terms of the environment, but in the places we operate. Every member of ours has to be a sustainable electricity company, so they have to meet certain thresholds, and more and more of our members are actually getting what's called a sustainable electricity company brand designation, which means they go one step further, and that is looking at how they relate not just in terms of being clean, but in terms of triple bottom line approach and EDI and all these sorts of things. Just about electricity in Canada, even before I joined CEA, I didn't realize the degree to which Canada's electricity grid is already very clean. More than 80% of Canada's electricity is non-emitting. You can see on the graph there, most of that is hydro, about 60%, about 15% is nuclear, and then the remainder is a mix of fossil and variable renewables like wind and solar. The big thing that has made our grid clean is that we've always been very fortunate to have a strong hydro base. We have a lot of water up here and people down here, and so that has allowed for a lot of stable, clean electricity, but we've also committed over the last 15 years to retiring our coal power plants. When you think about where our grid is now versus where it was in 2005, particularly as compared to other jurisdictions like the United States, we're starting off from a better spot and a lot of those low-hanging fruit emissions reductions in the power sector have largely already been done. Legacy coal will be retired by 2030, and in many of the jurisdictions where it's still present, like Alberta, that's actually being accelerated. The last coal plants in Alberta, I think, will all be retired in the next two years. They're more capital-intensive, and I think that's, again, when you think about equipment, what really matters, six of the top 10 projects in Renew Canada magazine, top infrastructure projects are electricity ones, three of the top five, and the other four in that list are actually basically electrification projects. They're primarily urban transit projects where it will be our electrons that will be making those trains run. So, what is our state of the industry? Well, each year we pick a theme. Last year was about transformation. This year is about renewal, and where our focus has been is reflecting on 2020 that had a, you know, obviously the pandemic dominated those things, but coming out of it, as we look into 2021, we're thinking more and more about what the next steps are. I think coming out of 2020, what there was, you know, between Canada and the United States and elsewhere, for the first time in a long while, there's a broad consensus around investment in decarbonization, but beyond that, there's also looking at the kinds of social relationships we have. So, Canada is thinking about its relationships with Indigenous people. Individual member companies are thinking about equity, diversity, and inclusion, and we're forcing ourselves, and I think everyone has to think about the kinds of way we do our business are changing rapidly, that the electricity system and business model that may have worked for 100 years up until just about now is going to change rapidly, and so we have to rethink how that is. In our state of the industry, you know, we talk about navigating the pandemic. We talk about some of the equity and diversity inclusion stuff. Those are really interesting stuff, but just for purposes of time, I'll go over them quickly and then dig into the net zero or decarbonization and regulatory pieces. Just on the pandemic, you know, my life for the last year, like many of you, has mostly been staring into Zoom screens like this. Our sector evolved pretty rapidly in early March last year for everyone that was in an office to no longer be in an office. A lot of, you know, shift to work from home and all of the associated things that come from it. The thing that makes our sector a little different, though, is that not everyone can work from home. Here's, you know, a few line workers up on top of Utility Pool. They would now be wearing a mask, and a lot went into that. So this is stock photos from before 2020, but the, you know, you can't fix a down line from Zoom. You can't run the grid via Zoom. There are people that have to go into control centers. Where our sector shifted very quickly was, you know, building on skill sets and relationships we've had with government and ourselves for keeping things working in trying times, usually because of, you know, natural disasters or storms. We spooled up and thought about ways in which we can make sure that things will continue to work. The first thing that you do when you talk to utility guys is about reliability, resiliency and safety. So that was from the outset, and what we did is we leveraged relationships with government. We had weekly calls. We were plugged into American Conversations that built a playbook about how we could move these things forward, and the issues that affected us were, by and large, issues that affected other critical infrastructure providers. So do you have access to tests? Do you have access to PPE? Now there's a conversation about vaccines. And also, like, getting people across the border, that sometimes things get pretty complicated pretty quickly. As an example, one of the issues that we had to focus on was how line workers like this that might have to go help, you know, restore an outage in northern Maine would be able to cross back and forth without needing to, you know, get a test or quarantine as needed on the way back, which just wasn't practical. The biggest takeaway was that despite all of this, there was no COVID-based outages in Canada or in the United States. The grid kept working, and, you know, members actually realized and focused on making sure that, you know, it's our power that is keeping oxygen machines on, so we have to make sure that the system works. The other one is just on equity, diversity, inclusion. The big one that's coming up is a conversation around reconciliation. I won't spend a lot of time on this. We could have a whole conversation on it. But Canada's relationship with its Indigenous peoples is changing. We've been paying a lot of attention to C-15, which is implementing the United Nations declarations on the rights of Indigenous people. Our members do a lot already, and we'll talk about this as an example, but we're seeing how a clean power can be part of the reconciliation conversation. Our members are working with Indigenous communities, we're engaged with them where we operate, and more and more you're seeing, you know, equity relationships be built with that. So let's get to climate. Canada's committed to net zero by 2015. I think it's worth for a second thinking about all those three words, because it's very easy to think about that as just the zero, so get greenhouse gas emissions, but it's really a three-legged stool. The key thing I think we have to focus on is the timelines, so the 2050. We don't have to eliminate all carbon emissions tomorrow, but we do need to get on with it so that we're able to move forward with it, and the net. There is a recognition, I think, that there still will be greenhouse gas emissions. Some things will require fossil fuels, and we'll have to build around that so we're able to do that. The zero is obviously just a balance of accounts. What is clear, though, is Canada's electricity sector is going to play a large part of getting there. At the tail end of 2020, actually, this is a photo from the announcement, the Minister of the Environment announced Canada's Enhanced Climate Plan, the Healthy Economy and Healthy Environment Plan, or maybe it's the other way around, internal to EnerCan, they are calling it the HEHE Plan. But one of the key takeaways that was buried in there about carbon taxes, and they probably announced $3 billion of new spending that day, was an acknowledgment that Canada's going to need to produce two to three times as much clean power by 2050 for us to meet our net zero goals. As a matter of perspective, Canada's energy mix right now, about 20% of that is electricity. The rest is from fossil fuels. So even if you triple that, you'll see, at best, 60% of Canada's energy needs coming from electricity, and the rest will be from somewhere else that will require it. But doubling or tripling electricity is a complicated problem. And so we have to think about, and where our focus right now is, is how do we electrify? The goal, I think, has to be about thinking about decarbonization, electrification as a tool for decarbonization, and really thinking about what it takes to get there. And no one has a plan. There is no secret plan to build all this out. As we'll talk about in a little bit, part of the conversation is going to be literally inventing new technologies that we think will work, but don't actually exist yet. But we have some principles that we think are important to consider, and where we are pushing right now, as government makes new announcements, and on budget week, we had three different climate targets that week, each getting a little more stringent. That we think should be part of a plan that we need to be working on now, so that we don't get lost in the weeds on this. The first is, make sure that it's affordable. At the end of the day, remember, our members send people bills, you all get them in the mail. People have to be able to pay for the energy that they use. And it's not just a question of, like, will electricity become too expensive, or not? It's, are we building all of this out in a way that is most effective and most efficient? And if we keep our eye off of price, then it's very easy to spend in ways that don't make sense, that add costs that we don't need to spend. The second is, reflect regions. Canada is a big country and has lots of different places. You'll remember the graph we showed at the beginning that showed Canada's different energy mix. Each province is a little different, and tends to have one predominant source of electricity. So, if you live in Quebec or British Columbia, or Manitoba, most of your power comes from hydro, from large jams, from the river resources you have. If you live in Ontario, most of your power comes from nuclear plants in the GTA, or broader southern Ontario area. But some is also from existing hydro, a lot is from wind. If you live in the prairies, apart from Manitoba, or in Atlantic Canada, maritimes, more of that is coming from fossil fuels. So, if we're 82% non-emitting right now, that last 18% is hard to replace, and tends to be located in just a few places. So everyone's solution is going to be a little different. Promote energy efficiency. The government and the budget announced a whole bunch of things, but the cheapest kilowatt hour for us is one we don't have to produce. And so, thinking about how we can build more efficient buildings, have more efficient vehicles, design processes that use less energy, will pay for itself in the long run. Every plant you don't build, every transmission line that you don't need to upgrade, is dollars saved. Think about national and international emissions trading. And this isn't just so much, that's where the net comes in, but this is really where there's opportunities for Canada. We have a whole lot of power, and it generally makes sense for us to move it south more than it makes sense for us to move it east-west. So there's opportunities for us to gain emissions as we benefit from the power that we sell into the United States, which largely replaces emitting sources like coal or natural gas as part of our balance. But think about how we have a market, so that we can figure out where these things are. Think about resiliency. We are a linear infrastructure organization. You probably, you see the poles outside of your house, on the highway you've driven past transmission lines. It's no surprise that when we see more extreme weather, whether it's from snowstorms or hurricanes or wildfires, that these have an impact on things. Building better from the outset will reduce our need for these sorts of replacements. The weather is not going to get easier before it gets better. And then finally, research development and commercialization. None of this is going to get by as we look for 2050 without new stuff. I just want to talk about safe bets and wildcards for a second. The Canadian Institute for Climate Choices, which is a government-funded think tank that was sort of a replacement for a body called the National Roundtable on the Environment and Economy that the Harper government handled, but it's sort of the thought leadership organization that the feds have banked on producing some information. And they released a report on pathways for Canada to net zero in the early part of this year. And it has some really interesting stuff. One is thinking about how we can use technologies that we have today and what benefits they can have. They call them safe bets. And the second is what we need to think about to solve problems in the future. They call those wildcards. Both have sort of different ways of thinking about them, but I think too often when we are talking with government or even among ourselves, we get hung up on the shiny things that might exist in the future rather than some of the ways that we can tick things off and move forward now. Sort of in the same way that it's fun to work on the pie in the sky stuff on your to-do list, but cleaning up your inbox is important you have to get to as well. For safe bets, when we think about our 2030 plans, these are the things that are going to get us there. So when Justin Trudeau says we're going to do 40 to 45% GHG reductions over 2005 by 2030, it's coming from these sorts of things. So the first bet that's clear here is that we're off to a good start. Our current system is why A, it exists. B, there is an opportunity to use additional capacity, particularly as you think about all of the power that we have that can be used, but we're not, as an example, overnight or that we're storing for a later day. The second is transmission. So the big lines that connect cities together. There's opportunities to decarbonize ourselves by connecting different parts of the country together that might not already have these sorts of connections. You may have heard about the Atlantic Loop, which has come up in the throne speech and the budget. This is a plan that would, though the details are iffy, basically connect Nova Scotia and to a lesser extent New Brunswick through transmission lines and other things to surplus power in Labrador and Northern Quebec. So the challenge to it is not technical. We can build power lines. The challenge is how do you do it affordably? And that is the question that the Atlantic provinces and the federal government and the Canada Infrastructure Bank are working to solve. Third is energy efficiency. We've talked about some of that, but not just fixing stuff we already have, but building efficiently from the beginning. And finally, zero emissions vehicles. I think we're all sick to talk of talking about Teslas and plug in hybrids and all those sorts of things. But the answer is that, you know, GHGs from personal vehicles are 10 to 12 percent of overall amounts. They also are a real opportunity for the electricity sector. We're happy to sell people power, but the ability to charge vehicles overnight when demand is lower and you are otherwise just not using power is a huge deal. And the opportunity from that is that it actually decreases the overall cost of your asset. If you live in Ontario and you think about Darlington Nuclear Plant, which and between that and Bruce and Pickering are 60 percent of Ontario's energy, they basically run at full steam all the time. And if you can use that power overnight that might otherwise be sold for next enough thing into the Americas or elsewhere, you can charge up vehicles and do those sorts of things. Wildcards are the next one. These are like, what are we going to invent that will get us to zero in the future? The first is grid scale storage. This is actually a real picture, but they're all real pictures, but this is of an actual project in St. John, which had one of the first grid scale Tesla power battery projects in the world, in tiny little St. John, New Brunswick. And what they're using it for is that it backstops some of the wind that they have, New Brunswick's a windy place. But these sorts of things that will allow us to make variable renewables, so you can only produce power from a wind turbine when the wind is blowing and you can't really store it, will allow us to time shift some of those things. So we're able to take advantage and even the flow of those things out. We're already seeing examples of that in remote communities where storage tied to, and relatively small places, storage tied to renewables, be it wind or solar, are reducing the amount of diesel that some indigenous and remote communities are using. And so that is a net benefit because it saves them money beyond being cleaner. Hydrogen. Canada has a hydrogen strategy that they just announced, but basically everyone is launching into hydrogen as the next big thing. The opportunity with this is that we can, again, take surplus power or build power plants or wind and solar plants just to produce hydrogen that we can then use to decarbonize other hard to electrify things. That could be long distance transportation like trucking or marine transports. It could also be high heat processes like cement making. This is something that we know how to make hydrogen. We don't really, the technology to use it in all sorts of things that we might otherwise do or to move it around is where we have to figure out how to do it affordably. Canada is actually already a leader in hydrogen, but building it, making it clean in a clean way that's not emitting and for other sources is harder. Small modular reactors, basically thinking of a nuclear power plant and making it more off, like the Billy Book case of nuclear power plants. So smaller, more portable, easier to operate and more cost effective. They could be a real opportunity in remote communities that you could see them replace the gas plants that we have here. And then CCUS, carbon capture utilization and storage. Basically, is there a way of turning that carbon that we're pumping into the atmosphere right now and instead turning into something useful? There's one of our members, Capital Power, which is based in Edmonton, though has plants all around North American world, is actually leading a pilot that will make carbon nanotubes, which basically you can use in cement and other things to make stronger concrete, but also store carbon for literally ever. The final thing that I want to talk to you about is regulations. And I actually Googled what, like for just a stock photo of people thinking about regulations, and this is what we got. And when we talk about regulations, I think everyone thinks about it as like it's hard to build things. We've all heard of C69 and environmental assessments and all those. Our sector has, when we want to build anything, goes through an extensive regulatory process at the federal and provincial levels to get there. That makes good sense from a, maybe it could be easier and whatever. The one that I want to draw your attention to, which makes a difference between really how projects happen or not, is economic regulation. For the utility sector, the way we work is we are obligated to, we have a monopoly in our service territory, generally speaking. We are obligated to provide electricity to anyone that needs it. And the way that works is that we basically get to add a rate of return, it varies from region to region, but it's in the single digit percentages, to our costs. And we have provincial regulators that in turn double check those costs to make sure that we're offering the best value for consumers. That's a provincial responsibility, it is directed by the provinces, and generally speaking, the focus is on making sure that it is as low cost as it actually is, can be. The challenge is that when we think about how we're evolving, and this is where we get into 4Ds, which I'll talk about in a second, that rule isn't catching up with how we are shifting for things. So when you see a government MP announce that there's a pilot project on smart grids, or we're rolling out EV chargers, or even that battery project that we talked about just a little while ago, it's difficult to turn those pilot projects into the kinds of projects that will be commercialized and widespread, because the way that provincial regulators and economic regulators measure things is only on cost. They're not necessarily considering other things like decarbonization and what that means. They're not looking at how we can build a more decentralized grid or digitalize. They're working with 1960s economic regulations in a world that is in 2021 and moving faster and forward. This is a hard problem. It's one that's going to require political will to change, and it's at the basis of how we as a sector are going to be able to build the kind of things that are needed to meet our economic goals of tomorrow. That's more or less it. The only thing I'll add is a summation, is that these are exciting times in our sector. Everyone wants to talk about electricity, triaging what the priorities are is a big deal. For you folks, if you take anything away from this, is that there's a lot of work for us to do as we go forward. A conservative estimate from a few years ago for a different target for 2050 that isn't 100% was that we would need to spend $1.7 trillion on infrastructure between now and 2050 to meet two targets ago. That means that it's going to be transmission lines that are being built. It's going to be wind turbines that are going up. It is going to be bucket trucks to service stuff in town. There is a need for people. There is a need for equipment. We are rethinking the kind of economy we have and the kind of sector we have. I'll pause there. I hope that there's questions. I'm happy to go back where things are. Back to you, Mike and or Kyle. Michael, the question for you is, what projects are you most excited for the next few years that companies will be building? I'm really interested in, so I listed the three biggest projects that are underway right now. Two are nuclear refurbishments, Darlington and Bruce. I think those are really exciting because they're a test of how we can solve big complicated problems and keep ourselves on budget and on time. In the case of Darlington, the first reactor has returned to service and it was on time and on budget. It basically never happens. The ones that really excite me beyond that are those energy storage projects and really looking at where transmission can make a difference. There's a transmission line that's working its way through Northern Ontario. It's owned, the Watay Power Line. It's primarily Indigenous owned by 20 some communities in Northern Ontario. Most of them are off road, so they're flying communities and historically they have been connected, relied exclusively on diesel. I actually had from another job a few years ago, the opportunity to visit one of them. One of the first things you see when you get off the plane is just a field of diesel tanks. The challenge is that when you run out of diesel and it's the middle of the summer or winter, you have to get diesel back there. You're flying it in. It's expensive. There's a cost and all that. The Watay line, which again, Indigenous owned, has been funded with some really clever thinking by the federal government and Ontario with Hydro One operating it, will put on the provincial grid these connections. These communities for the first time will have provincial lights or provincial power connections just as you and I would. To me, that's where the real opportunity is because that will change people's lives. It will make their cost of living better and it has all those carbon advantages as well. All right. Go ahead. Yeah, sure. I have a quick question for you, Michael, and it's really around those provinces that you can call the stragglers, be it Alberta with coal or Nova Scotia with natural gas. How do we get those provinces to advance and either build projects or connect to renewable energy? How do we get them on the renewable side of things to meet those net zero goals? So I wouldn't call them stragglers. I think that the advantage that places like Quebec have is that they have a pile of water that's physically above and Alberta and Saskatchewan just don't have that. And until 20 years ago, it made good sense to invest in coal or natural gas plants. Alberta and Saskatchewan are sitting on piles of natural gas. I think where they are investing in opportunities that will decarbonize, the power companies in Alberta are leaning in on renewables and they are leaning in on technologies like CCUS that will help offset these sorts of things. The challenge is how do you build a grid that remains reliable and affordable in the interim? And I think where we have to watch things is really remember, you go back to the net zero by 2050. The net and the 2050 are important. And in the case of Alberta and Saskatchewan, and to a lesser extent, Atlantic Canada, those are where those wildcards would be really important. So how do we get storage online? How do we make technology like SMRs or hydrogen work? And how do we do it in a way that we can build out accordingly? I think in the case of Atlantic Canada, the transmission connections are a little more clear. There is power in Labrador that they want to move to other places. Some of Muskrat Falls power is already committed to Nova Scotia through an undersea transmission line. And those are areas where the path forward will be a little clearer. And they have to be, because if you retire coal in Nova Scotia, they don't have the natural gas to run as a backup. And so that's where that is. Great. Michael. Thank you. Thank you, Kyle. Do you have anything else? No. My only last question for you, Mike, would be around, you know, AD is obviously an association with members on both sides of the border. What in your opinion is the opportunity for partnerships between the US and Canada, especially with the new administration in the US around, you know, electricity and cross-border transmission? So there are 37 different cross-border transmission lines that connect Canada and the United States. Every day, our, you know, electrons flow into the US. We are central to Massachusetts and New York City's plans to decarbonize primarily through the use of large-scale hydro. I think the real opportunity is to make sure we're taking best advantage of those. But think about how the kind of power that we have, which tends to be dispatchable, so you can store it, you can keep water behind the dam, and connect ourselves to places that have variable renewable opportunities and balance them out that way. So we use Canada as a battery. That's already happening in Manitoba and Minnesota, where a transmission line, which just opened last year, basically Manitoba gets power from Minnesota when the wind is blowing, and they just store it in their reservoirs, and then when the wind isn't blowing, Minnesota buys it back. So we can backstop those variable renewables using Canada's natural hydro advantages to move that sort of stuff forward. The second thing is reliability, and not just, like, if you have, you know, different plugs you can switch in, you know, the lights won't go out, but we're one big integrated grid. We send people where they are needed when there are outages. I talked about those line workers that, you know, move into the New England states from New Brunswick or Quebec when there's outages. It works the other way as well. We have a very elaborate mutual assistance system. When COVID happened and we started talking to our partners in the U.S., that's because we always do that. But the threats are going to change too, and some of that will be cyber, some of that will be making sure the way we design things are, you know, connected and we can move back and forth from that. But you're going to see more connections between Canada and the United States. You're going to see the U.S. use electricity that's built, produced here to power those things. And for every, you know, transmission, a piece of transmission infrastructure we build that's built in the United States, it has to connect to something in Canada as well. So there's all sorts of jobs opportunities here, and we're just beginning to scratch the surface on it. Thank you. Thank you. Appreciate it. Thank you all very much for this webinar. I appreciate you guys all being here. With that, I will close and remember this is being recorded, so we will have that for you later on in the day. Thank you all very much. Michael, thank you. Kyle, thank you. As always, have a great and safe day. Thanks, everybody. Cheers.

electricity industry

decarbonization

clean power production

affordability

regulations

grid-scale storage

economic growth