Canadaʼs Electricity Industry"

Background and Challenges"

Presentation Outline!

  Introduction & Context

  State of Canada’s Electricity Industry
  Key Challenges
  Policy Implications

2
CEAʼs Corporate Utility Members!

City of Medicine Hat

Electric Utility

Manicouagan Power
Company Limited

Distribution
CEA Mission Statement

A safe, secure, reliable, sustainable and competitively priced supply of

electricity is essential to Canada’s prosperity. CEA is the voice of the
Canadian electricity industry, promoting electricity as the critical enabler
of the economy and Canadians’ expectations for an enhanced quality of
life.

Page 4
CEA Strategic Goals
  Infrastructure – Ability to build needed electricity infrastructure, to meet
growing demand and replace aging assets.

  Energy Efficiency – Ability to provide options to customers to assist them in

using electricity more efficiently, manage costs and minimize environmental
impacts.

  Technology – Ability to maximize and deploy leading-edge technologies.

  Regulation – Need for more coordinated, effective and efficient regulatory

regimes within and between governments, and more timely decisions.

  Environment – Need for holistic approach and greater regulatory coherence on

environmental issues.

  Security – Need to ensure the long-term security, reliability and stability of the
electricity system.
Page 5
The Great Divide: Canadaʼs Multi-Jurisdictional Environment!

Jurisdictional Division of Responsibility!

Provincial/Territorial Governments!
  resources management within
provincial boundaries
  intra-provincial trade and commerce
  intra-provincial environmental impacts
  generation and transmission of
electrical energy
  Conservation and demand response
policies
Federal Government"
  resource management on frontier lands
  nuclear safety
  inter-provincial and international trade
  trans-boundary environmental impacts
  environmental impacts where federal
lands, investment or powers apply
  Other policies of national interest"
Status of Market Restructuring!

Québec
Saskatchewan
•  Wholesale open access
•  Wholesale open
•  Functional separation
access
•  Wholesale competition for
•  Functional separation
domestic load >165 Twh

Alberta Manitoba
Newfoundland
•  Mandatory Power Pool •  Wholesale open access
PEI Energy policies
•  Wholesale & retail open access •  Functional separation
•  Open access under review
since 2001
Transmission Tariff
application pending Nova Scotia
Ontario regulatory decision •  Wholesale open
BC •  Industry unbundling in 1998 access
•  Wholesale & industrial Wholesale & retail open access •  Functional
open access since 2002 Separation
•  Independent transmission New Brunswick
entity •  Wholesale & large
industrial open
access

7
North American Electric Reliability Corporation
(NERC) Regions!

8
The State of Canada’s Electricity Industry

•  Demand and Supply

•  Trade and Economics
•  Transmission and Distribution
•  Environment and Climate Change

Page 9
Electricity Demand in Canada by Sector, 2008!

Total Electricity Demand in Canada, 2008 = 548.8 TWh

*Numbers may not sum to 100 percent due to rounding

Source: Statistics Canada, Energy Statistics Handbook, Q4:2009

10!
Electricity Demand in Canada by Sector, 1990 - 2008!
Total Electricity Demand in Canada, 2008 = 548.8 TWh

Source: Statistics Canada, Energy Statistics Handbook, Q4:2009

Electricity Generation in Canada by Fuel Type, 2009!
Total Electricity Generation in Canada, 2009 = 575.2 TWh

*Numbers may not sum to 100 percent due to rounding.

Source: Statistics Canada, Survey 2151, 2010
 Electricity Generation in Canada by Fuel Type, 1990 - 2009!

Total Electricity Generation in Canada, 2009 = 575.2 TWh

700 Wind Tidal Combustion Turbine
Internal Combustion Nuclear Conventional Steam
600 Hydro*

500
Genera&on  (TWh)  

400

300

200

100

0
*Prior
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002to 2008,
2003wind and 2005
2004 tidal generation
2006 2007are included in hydro.
2008 2009
Source: Statistics Canada, Survey 2151, 2010
 Electricity Generation in Canada by Province and Fuel Type, 2009!
Total Electricity Generation in Canada, 2009 = 575.2 TWh

250 Tidal Wind Combustion Turbine Internal Combustion Nuclear Conventional Steam Hydro

193.8
200

143.7
150
Generation (TWh)

100

62.2 59.6
33.8 38.4
50

18.4 13.1 11.6

0.1
0
BC AB SK MB ON QC NB NS PEI NFLD

-50

Source: Statistics Canada, Survey 2151, 2009

Electric Generating Capacity in Canada by Fuel Type, 2009*!

Total Electric Capacity in Canada, 2007 = 129 GW

Conventional
Steam
20.5%

Nuclear
10.3%

Combustion
Turbine
Wind
Hydro 2.7% 8.0%
58.0%
Tidal
<0.0%

Internal
Combustion
0.6%

*Numbers may not sum to 100 percent due to rounding.

Source: Statistics Canada, Electric Power Generating Stations, 2009
Canada-US Electricity Trade Volume, 1990 - 2009!

= 55.1 TWh in 2009

= 17.5 TWh in 2009

= 33.6 TWh in 2009

Source: National Energy Board, Electricity Exports and Imports

 Electric Power Generation, Transmission and Distribution Sector
Contribution to Canadaʼs GDP, 1990 – 2009

(billions of constant 2002 dollars)!

$30.0 2009 = $24.5 billion

$25.0
Billion $ CDN (2002 Constant)

$20.0

$15.0

$10.0

$5.0

$0.0

Source: Statistics Canada, Energy Statistics Handbook, 2008:Q4

Capital Investment in Canadaʼs Electric Power Sector, 1990 – 2009

(billions of constant 2002 dollars)!

Source: Statistics Canada, Survey 2820, 2010

 Average Residential Electricity Price in Canada, 1998 – 2009

(2009 cents/kWh)!
11.0
10.82

10.44
10.5 10.34
2008 Cents/kWh

10.0 9.94
9.85
9.77 9.79
9.67 9.66
9.58 9.58
9.5 9.40

9.0

8.5
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source: Hydro Quebec, Comparison of Electricity Prices in Major North American Cities, 1998 – 2009.
Notes: Based on 1,000 kWh monthly consumption
Average electricity price is an average of 11 major Canadian cities and may not represent an exact national average.
Prices have been adjusted from current cents/kWh to 2008 cents/kWh
 20!

Good Neighbors: North American Bulk Transmission Lines!

Total Length of High Voltage Transmission

Lines (>230 kV) in Canada = 74,640 km
Utility Investment in Canadaʼs Transmission & Distribution 

Cables & Lines, 1998 - 2007!

Source: Statistics Canada, Survey 2803, 2009

21!
Transmission Lines in Canada (>230 kV) 

Length by Voltage, 1990 - 2007!

Source: North American Electric Reliability Council (NERC)

22!
 Electric Sector Environmental Protection
Expenditures by type, 2008 !
Total electric sector environmental protection expenditures, 2008 = $1,288 million

Other Environment and

4% Monitoring
Environmenal
4%
Assessments and
Fees, fines and licenses Monitoring
2% 5%

Reclamation and
decommissioning
Pollution Prevention 10%
30%

Wildlife and habitat

protection
4%

Pollution abatement and Waste management and

control sewerage services
25% 16%

Source: Statistics Canada, Environmental Protection Expenditures in the Business Sector, 2008
 Environmental Protection Expenditures by the Electric
Power Sector, 1996 – 2008 !
Total electric sector environmental protection expenditures, 2008 = $1,288 million
$1,400

Operating
$1,200
Capital

$1,000
Millions  of  dollars  

$800

$600

$400

$200

$0
1996 1998 2000 2002 2004 2006 2008

Source: Statistics Canada, Environmental Protection Expenditures in the Business Sector, 2008
Greenhouse Gas (GHG) Emissions in Canada by Sector, 2008!
Total GHG Emissions in Canada, 2008 = 734 Megatonnes CO2 Equivalent

Fossil Fuel
Electricity & Heat Industries
Generation 9.2%
16.1%
Agriculture
8.5%

Industrial
Other Energy* Processes
18.8% 7.1%

Residential
5.8%

Commercial &
Institutional
Transportation 4.7%
26.9% Waste & Other
2.9%

Source: Environment Canada, National Inventory Report 1990 – 2008

*includes stationary sources such as mining, manufacturing, and construction, and fugitive sources.
Nitrogen Oxide (NOx) Emissions in Canada by Sector, 2007!
Total NOx Emissions in Canada, 2007 = 2,471 Kilotonnes
Upstream Petroleum
19.8%
Other Industrial
10.0%

Open & Natural Sources

8.4%

Electric Power
9.6%

Residential/Commercial
Fuel & Wood
3.0%
Mobile Sources
Incineration &
48.9%
Miscellaneous
0.1%
Source: Environment Canada, Criteria Air Contaminants Emissions Summaries
Sulphur Oxide (SOx) Emissions in Canada by Sector, 2007!
Total SOx Emissions in Canada, 2007 = 1,904 Kilotonnes

Source: Environment Canada, Criteria Air Contaminants Emissions Summaries

Top Challenges facing the Canadian Electricity Industry

1.  Infrastructure renewal and new build

2.  Technology shift and Supply Mix Planning
3.  Access to U.S. markets
4.  Employment and critical skills
5.  Capital formation and balance sheet issues
6.  Addressing Climate Change and Reducing GHG Emissions

Page 28
Context for Infrastructure Renewal and New Build

•  Canada needs to invest in electricity infrastructure’s renewal and

replacement in order to meet growing demand.
•  Canada needs a combination of generation sources that will ensure
security, reliability, affordability that will minimize environmental
impact.
•  The need to address climate change is driving infrastructure renewal
•  The demand for electricity is increasing and will require an increase
in base load generation

Page 29
Properties of Electricity: The Constants

1.  Reliability
2.  Cost- effectiveness
3.  Safety
4.  Sustainability (environmental, social and economic)

Page 30
Building the Next Generation of Infrastructure:
Capital Investment Requirements!

Total Canadian Electric Sector Investment Required by 2030 = $CAN 237.6 Billion

(Billions of 2007 CDN dollars)

Generation Transmission Distribution Total

2007 – 2015 40.3 15.2 32.8 88.3

2016 – 2030 93.7 17.6 38.0 149.3

Total to 2030 134.0 32.8 70.8 237.6

Source: International Energy Agency, World Energy Outlook 2008

2007 US-CAN exchange rate: Bank of Canada

31
Challenge: Infrastructure Renewal and New Build

•  Securing permission to renew, build and operate will require

streamlining of regulatory approvals processes
  Fisheries Act
  Canadian Environmental Assessment Act (CEAA)
  Species at Risk Act (SARA)

•  Investment in the electricity sector will require increases in electricity

prices
  As investment in the electric power sector increases, companies will need
to pass those costs through to customers
  Provincial regulatory authorities will monitor cost prudency

Page 32
Industry Progress towards Infrastructure Renewal

•  Memorandum of Understanding (MOU) with Department of Fisheries

(DFO)
•  2010 Review of CEAA
•  Active participation in five year review of SARA
•  Open lines of communication with Major Projects Management Office
(MPMO)

Page 33
Federal Programs Supporting Electricity 

Infrastructure Investment!
•  Major Projects Management Office – MPMO (2007)
  Streamline regulatory review of major resource projects
•  ecoENERGY for Renewable Power (2007)
  One cent per kWh for up to 10 years to renewable electricity projects
constructed between April 1, 2007 and March 31, 2011
•  ecoENERGY Technology Initiative (2008)
  Co-funding for Clean Coal and Carbon Capture and Storage (CCS) and
Cleaner Fossil Fuels
•  Clean Energy Fund (2009)
  $1B over 5 years for clean energy research, development and
demonstration projects – $150M for research; $650M for CCS; $200M for
other technologies
•  Green Infrastructure Fund (2009)
  $1B over 5 years for sustainable energy projects
  Yukon Energy’s Mayo B and Carmacks-Stewart line first to receive funding

34
ecoENERGY Technology Initiative Projects!

•  Heartland Area Redwater Project (ARC Resources)

•  Integrated Carbon Capture and Enhanced Oil Recovery
(Enhance Energy)
•  Fort Nelson Exploratory Project (Spectra Energy Transmission)
•  Pioneer Project (TransAlta)
•  CO2 Injection in Heavy Oil Reservoirs (Husky Energy Inc.)

Source: Natural Resources Canada, ecoENERGY Technology Initiative

35
 Active MPMO Electricity Sector Projects!

MPMO Project Name   Description   Proponent   Project Type   Location  

Bruce to Milton Transmission Reinforcement Project   500 kV line   Hydro One   Transmission   ON  

Labrador - Island Transmission Link   1,200 km line   Nalcor Energy   Transmission   NL  

Lower Churchill Hydro Project   2,00 MW   Nalcor Energy   Hydro   NL  

Pointe Du Bois Hydro-Electric Modernization Facilities   Decommission   Manitoba Hydro   Hydro   MB  

Darlington New Nuclear Power Plant   Up to 4,800 MW   OPG   Nuclear   ON  

Marten Ridge Wind Energy   80 MW   Premier Renewable Energy   Wind   BC  

Mount MacDonald Wind Power   250 MW   Rupert Peace Power   Wind   BC  

Naikun Wind Energy   320 MW (off-shore)   NaiKun Wind Development   Wind   BC  

Nicomen Wind Energy   70 MW   Premier Renewable Energy   Wind   BC  

Rupert Peace Power

Rocky Creekwind Power 500MW Wind BC
Corportation

Source: Major Projects Management Office, Project Tracker

36
 Selected World Residential Electricity Prices, 2009!

Italy
Hungary
Ireland
United Kingdom
Austria
Spain
Poland
France
Finland
Turkey
Switzerland
Canada
Mexico
United States

0 5 10 15 20 25 30 35
US cents/kWh

Source for Canada: Hydro Quebec, Comparison of Electricity Prices in Major North American Cities,
2009
Source for Rest of World: International Energy Agency, Key World Energy Statistics 2009
 Selected World Industrial Electricity Prices, 2009!

Italy
Ireland
Hungary
Portugal
United Kingdom
Turkey
Poland
Mexico
Finland
Switzerland
Spain
Canada
United States
France

0 5 10 15 20 25 30 35
US cents/kWh
Source for Canada: Hydro Quebec, Comparison of Electricity Prices in Major North American Cities,
2009
Source for Rest of World: International Energy Agency, Key World Energy Statistics 2009
Selected Commodity Price Indices (Monthly)!

Source: Statistics Canada, Surveys 2306, 2318, 2325

39
Challenge: Technology Shift

•  Technological shift and innovation will help Canada meet

environmental expectations

•  Development of the Smart Grid will enable increases in energy

efficiency and further integration of renewable energy technologies

•  Despite the current economic downturn, global competition for

electricity infrastructure resources may result in supply chain issues in
the long term

Page 40
 Key Emerging Technologies for Electricity Generation in Canada!
Resource Advantages Challenges
Wind Power No fuel cost, no emissions or waste, and commercially Obtaining access to grid, wind does not always
viable source of power blow, most wind farms operate at 25-35% capacity
Small Hydro Low capital costs, many potential sites in Canada, well Regulatory approval can be costly and time
established technology consuming, local opposition to new development
Biomass Uses landfill gas and waste products to create electricity, High start-up and operating costs, produces some
reduces greenhouse gas, high availability of sites emissions
Geothermal Reliable source of power, low fuel and operating costs, High capital costs, connecting to the grid can be
Energy clean and renewable source of energy difficult, few potential sites in Canada
Solar PV Fuel is free, suitable for areas where fossil fuels are Restrictive and unclear grid connection standards,
expensive or where there is no connection to the grid not cost competitive, sun does not always shine

Fuel Cells Fast start-up time, very low emissions, wide range of Technological breakthroughs are needed for fuel
applications cells to be commercially viable
Ocean Costs are expected to decline as technology develops, Potentially intrusive to marine life, investment is
Energy intermittent, but predictable source of green energy needed to promote research and development
Clean Coal Highly efficient, potential for reduced greenhouse gas High capital costs, lengthy start-up period
emissions
Demand Could be a least-cost option, postpones the development If the cost is high, consumers may not perceive
Management of new power plants, improves energy efficiency potential benefits, participation by industry is not
universal

Source: National Energy Board, Emerging Technologies in Electricity Generation, 2006

41
Canadian Electricity Statistics"
By the Global numbers… By the Domestic numbers…

5 Canada’s world ranking in 15 Per cent of Canada’s electricity

primary energy production produced from nuclear generation

7 Canada’s world ranking in 23 Per cent of Canada’s electricity

primary energy consumption produced from thermal generation

26 Per cent of Canada’s total 62 Per cent of Canada’s electricity

….exports that were energy …generated from hydropower
….related

2 Canada’s ranking in 598 Terawatt-hours of total ……

Hydroelectricity generation electricity generation
Page 42 Centre for Energy, 2008 Canada wide Statistics
Installed Wind Capacity in Canada as of December 2009!

Source: Canadian Wind Energy Association, 2010

43"
 Wind Generation Outlook (2005-2020)"
35,000 32,389 GWh

30,000
Giga-Watt Hours (Gwh)

25,000

20,000

15,000

10,000 4831 GWh

5,000

0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: NEB 2009 Outlook

Hydro Power Technical Potential by Province"
45,000
Note: Total Technical Potential in Canada : 163,173 MW
40,000
Mega- Watts (MW)

35,000
30,000
25,000
20,000
15,000
10,000
5,000
0

Source: Study of the Hydropower Potential in Canada,

report by ÉEM, March 2006.
Smart Grid: Benefits and Challenges!

•  Actively monitor and more efficiently control the two-way flow of

electricity
•  Allow variable generation sources to be reliably integrated in the
power system
•  Improve efficiency through time of use pricing, reducing
transmission congestion and power interruptions
•  Requires more comprehensive planning approaches to
electricity infrastructure development and system management
•  Adaptation of existing infrastructure to be interoperable with
new, advanced technologies

46
Global Competition for Electricity
Infrastructure Resources!

OECD Electric Sector Investment Required by 2030 = $CAN 6,134.4 Billion

(Billions of 2007 CDN dollars)

Generation Transmission Distribution Total

Canada 134.1 32.8 70.8 237.6

North America 1,628.3 385.4 828.7 2,842.4

OECD 3,706.9 731.6 1,696.0 6,134.4

Source: International Energy Agency, World Energy Outlook 2008

2007 US-CAN exchange rate: Bank of Canada

47
Challenge: Access to U.S. Markets

•  Grid interconnection and reliability is essential to maintaining the

important electricity trade relationship between the U.S. and Canada

•  A national U.S. Renewable Portfolio Standard (RPS) could have

potentially negative impacts on this trade relationship

•  Critical Infrastructure Protection (CIP) impacts

Page 48
Major Canada-U.S. Transmission Interconnections!
Canada-US Electricity Trade Revenue, 1990 – 2009!

California Energy Crisis

= $2.35 Bn in 2009

= $0.65 Bn in 2009

= $1.7 Bn in 2009

Source: National Energy Board, Electricity Exports and Imports

Note: Trade figures have been adjusted from current dollars to 2009 constant dollars
Exports & Imports Between Canada & US 2009!
Federal Government Direct Spending for Energy!

2009 US Stimulus Package = $45.5 billion

2009 Canadian Budget = $2.7 billion

Sources: Troutman Sanders LLP February 2009 Advisory, Support for Energy in the
Stimulus Package; Department of Finance, Canada’s Economic Action Plan, Budget 2009.

52
Security and Infrastructure Protection Program!

•  CEA Security and Infrastructure Protection (SIP) Committee acts

as an advocate for security issues and emergency preparedness
•  Coordination and guidance for protection of the industry’s critical
infrastructure against:
  All hazards
  Physical incidents and threats
  Cyber incidents and threats
•  Coordination with the NERC Critical Infrastructure Protection
(CIP) Committee to assure consistency with North American
partners

53
Challenge: Industry Employment and Critical Skills

•  Recruitment and retention of electricity sector workers will be essential

to renew, build and operate new electricity infrastructure in light of
future retirements

•  Recruitment and retention of engineering and scientific personnel, as

well as trades, crafts and specialty skills is of particular importance

Page 54
Average Age Profile of Non-Support Electricity Industry
Employees!

Source: Electricity Sector Council Employer Survey, 2008

55
Characteristics of Canada’s Electricity Sector Workforce

•  28.8 percent of the current electricity workforce is expected to retire by

2012.

•  More than 50 percent of workers in the generation (excluding

renewables), distribution, and integrated utility lines of business are
over 45 years of age.

•  The line of business expected to be most affected by future

retirements is transmission, which will see retirements increase by
more than a factor of nine by 2012.

•  In 2012, electricity sector workforce supply is projected to fall short of

demand by more than 3,000 workers (based on electricity demand
growth of 1.8 percent annually).
Page 56
Challenge: Capital Formation and Balance Sheet Issues

•  Tax treatment of assets and new electronic equipment will impact

investment in electricity infrastructure

•  Options may exist for patient capital that have not yet been explored

Page 57
Tax Treatment of Electricity Assets and new
Electronic Equipment

•  Capital Cost Allowance (CCA) rates for nuclear power, distributed

generation, renewable power interconnections, and transmission are
8 percent in Canada, compared to 12 percent in the US.

•  Enhanced CCA rates for carbon capture and sequestration (CCS) in

Canada would help to accelerate its commercial deployment.

•  CCA rates for Smart Meters and related infrastructure are 8 percent in
Canada, similar to distribution assets. Rates for IT, software and
electronics are in the 50 percent range.

Page 58
Challenge: Lowering Carbon Emissions of the
Canadian Economy

•  Canada has set objectives of 17 percent emissions reductions from 2005

levels and 90 percent non-emitting electricity generation by 2020

•  The 2010 proposed GHG framework will require all existing coal-fired
electricity generation, upon reaching end of economic life, to meet a GHG
emission standard equivalent to that achieved by an NGCC facility

•  Canada needs to engage in forecasting and long-term planning for

electricity sector infrastructure investment with an effective supply mix

•  Electrification of the transportation sector will increase electricity demand

Page 59
History of Climate Change Policy in Canada
•  Provincial Actions
  Alberta’s Specified Gas Emitters Regulation – April 2007
  B.C.’s Climate Action Plan – June 2008
  Nova Scotia Regulations for electricity sector GHG emissions – August
2009
  Ontario Green Energy Act – May 2009
  Quebec’s Bill 42 – June 2009
  Saskatchewan’s Bill 106 – introduced December 2009

•  Regional Actions
  Western Climate Initiative (BC, Manitoba, Ontario, Quebec,
Saskatchewan)

•  Copenhagen Accord – January 2010

Page 60
Federal Regulation of GHG emission regulation in
Canada

  Federal commitment to reduce national greenhouse gas emissions by 17

percent below 2005 levels by 2020, and by 60 to 70 percent by 2050.
  Federal government may require the electricity sector to reduce its
emissions by more than the national target.
  Goal of achieving 90% non-emitting electricity generation by 2020.
  Federal government intent was to arrive in Copenhagen (December 2009)
with domestic policies in place for all sectors.
  Prentice announced the federal governments intent to allign Canada’s
climate change policy with that of the U.S. In terms of both targets and form
(February 2010).
  Prentice proposed a GHG Framework for coal-fired electricity generation
based on a NGCC facility, the framework to be executed under the CEPA
(April 2010).
  The regulations are scheduled to come into effect on July 1st, 2015 and
are expected to reduce GHG’s by 15MT.
Page 61
U.S. And International GHG development in Canada
•  In December 2009, US EPA promulgated its endangerment finding with
respect to GHGs.

•  COP15 resulted in Copenhagen Accord, which required developed countries

to submit national emissions targets for 2020 by January 31, 2010.

•  US committed to reduce US GHG emissions by 4 percent below 1990 levels

by 2020 or 17 percent below 2005; pending legislation.

•  In December 2010, the EPA enacted its endangerment finding, which allows
the EPA to regulate GHG’s under the Clean Air Act.
  Commencing July 2011 new sources producing 100,000 tons of GHG or
more and existing facilities that increase emissions by 75,000 tons must
obtain a permit. The permit will demonstrate the use of best available
control technologies.

Page 62
 Projected Electricity Generation Mix in 2020!

Emitting

Non-Emitting

2020 projected generation1 90% non-emitting2

(75% non-emitting)

1 Based on the National Energy Board’s forecast Canada’s Energy Future (2007) and input from CEA member companies.
2 Generation mix if 90 percent of Canada’s generation in 2020 is non-emitting.

63
 Translating the Shortfall into Generation Options!

The following options illustrate the magnitude of the non-

emitting generation additions (by fuel type) that would be
required to replace 110 TWh of emitting generation.
15,000 MW of Nuclear Capacity1

21,000 MW of Hydroelectric Capacity2

21,000 MW of Clean Coal with CCS3

42,000 MW of Wind Capacity4

1 Based on an average capacity factor of 85% for nuclear

2 Based on an average capacity factor of 60% for hydro
3 Based on an average capacity factor of 60% for clean coal with CCS (including a 30% energy penalty)
4 Based on an average capacity factor of 30% for wind

64
Policy Implications

•  Infrastructure
•  Technology Shift
•  Access to US markets
•  Employment and Critical Skills
•  Addressing Climate Change and Reducing GHG emissions

Page 65
Policy Implications – Infrastructure

•  More effective policy/regulatory frameworks and processes

•  Industry alignment with provincial and federal regulatory authorities
to reconfigure transmission and distribution systems in order to
successfully implement new sources of energy
•  Build understanding of need for electricity infrastructure investment
•  Equitable rates of return
•  Ability to recover costs through rates
•  Public acceptance- the not in my backyard (NIMBY) phenomenon
has implicated many electricity developments

Page 66
Policy Implications – Technology Shift

•  Funding for developing technologies

•  Improved tax treatment
•  Promotion of distribution and end-use technologies (Smart Grid)
•  Greater understanding of technology options
•  Greater understanding of the supply mix and the suitability of
technologies to serve load

Page 67
Policy Implications – Access to U.S. Markets

•  Continued active involvement with the North American Electric

Reliability Council (NERC)
•  Consideration of U.S. climate change policies
•  Consideration of U.S. rates of return

Page 68
Policy Implications – Employment and Critical Skills

•  Raising awareness about careers in the electricity sector

•  Aboriginal engagement
•  Foreign credential recognition
•  Recognition of HR/training requirements as cross cutting issues
•  Continued support and funding of the Electricity Sector Council

Page 69
Policy Implications – Lowering Carbon Emissions in the
Canadian Economy

•  Align emissions reductions targets with capital stock turnover

•  Avoid stranding existing assets
•  Provide sufficient compliance mechanisms
•  Comparable effort

Page 70
Desired Outcomes and the Path Forward!

•  Robust Canadian electricity sector within interconnected North

American marketplace
•  Canada seen as destination of choice for electricity investment
•  Efficient, effective, coordinated regulatory environment
•  Fair, balanced, performance-based economic regulation
•  Coherent policy vision
•  Clean, affordable, reliable electricity for Canadians
•  The path towards 90% non-emitting technologies

71
For More Information...!

Priya Patel
Economic and Electricity Policy Analyst
Canadian Electricity Association
613-288-0248
patel@electricity.ca
www.electricity.ca

72