State of the Canadian Electricity Industry 2022: Accelerating Net Zero

Accelerate Net Zero State of the Canadian Electricity Industry 2022

1 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Contents 03 05 11

Accelerate Net Zero

19

Theme 1 – More and Faster: Getting to a Net Zero Grid

Theme 3 - Regulating and Policymaking for Net Zero: Moving from Ambition to Transition 19

Context

20

Europe

05

Context

21

United States

06

Building to 2035

22

07

Building out: What we need

08

Path Forward

What can Canada learn from 2021?

– Outlook and implications for regulatory policy

09

Getting Moving

24

Notable regulatory and policy developments in 2021

26

Path Forward

Theme 2 - An Industry Ahead of the Curve: Looking Beyond the ESG Hype 11

Context

13

2022 and beyond: What is ahead for ESG

29

Theme 4 - Time to Accelerate Reconciliation with Indigenous Peoples 29

Context

14

The impetus for consolidating ESG frameworks

31

Indigenous peoples and the evolving legal jurisprudence

15

2022 ESG priorities for our industry

32

16

Path Forward

Building partnerships for Indigenous economic reconciliation

33

Path Forward

34

The Clock Is Ticking

3 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Accelerate Net Zero More. Faster. These words were spoken loud and clear by the Government of Canada with regard to the urgent need for action on climate change. In a year that saw the devastating effects of climate change on Canada’s coasts, a federal election focused heavily on varying climate commitments, and an international agreement at COP 26 in Glasgow, the Canadian electricity industry, expected to be the foundation upon which our decarbonized Canadian future will be built, is seeking to unpack the magnitude of expectations of these lofty, transformational goals.

Prior to the 2021 election, the Government of Canada unveiled its Net Zero Emissions Accountability Act. Since re-election, the Liberal government has indicated plans to work toward a Net Zero grid by 2035. The clock is ticking, with 2035 rapidly approaching. As such, Electricity Canada’s theme in 2022 is Accelerate, as the sector works with governments to deliver a workable plan. To meet GHG reduction expectations, such a plan ought to allow electricity service providers to electrify the economy and grow electricity generating by two to three times, all while continuing to decarbonize by phasing out non-renewable sources of energy.

Our industry has known for some time that it would have a significant role to play in Canada’s Net Zero future and Electricity Canada member companies unveiled a variety of Net Zero announcements ahead of the government’s 2021 Net Zero legislation. In some cases, companies offered targets that far exceed the government’s Net Zero by 2050 goals.

However, implementation of these commitments require much greater collaboration with and support of governments, regulators, Indigenous communities, and other civil society groups.

Local distribution companies are aggressively pursuing challenging targets. Hydro Ottawa President and CEO Bryce Conrad went so far as to note, “My goal is to be the first—the first municipally owned utility in Canada—to be Net Zero.”1 Electricity Canada members are responding by innovating and implementing aggressive environmental, social, governance practices to meet ambitious goals.

Overcoming ongoing challenges, which include regulatory burden while safeguarding customer affordability and affordability, will be critical to success. Opportunities—including Indigenous reconciliation, local engagement initiatives and the adoption of new technologies—will propel electricity companies to, and ahead of, their targets.

As part of our exploration of the Net Zero goal, we at Electricity Canada engaged Canadian electricity executives, government officials, and stakeholders in a series of Flux Capacitor podcast interviews on the challenges and opportunities inherent in meeting this goal. These interviews revealed key themes that are reflected in the chapters of this year’s State of the Canadian Electricity Industry.

Their voices and more will echo throughout our industry’s and country’s policy discussions as we look ahead to 2035.

The clock is ticking.

“There is no one technology, there is no one solution to the climate problem.

It's going to require every ounce of ingenuity we have as Canadians and across the world stage.”2 Ken Hartwick, Chief Executive Officer Ontario Power Generation

5 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 1:

More and Faster: Getting to a Net Zero Grid Context In November 2021, the leadership of much of the world gathered in Glasgow, Scotland for the 2021 United Nations Climate Change Conference, better known as Conference of Parties (COP) 26. This event was set to be a “big COP,” taking place in the midst of a global pandemic, five years after the landmark Paris agreement was signed, and featuring the return of the United States to the COP process. In the end, big steps forward were made collectively: whether they were big enough or not remains to be seen in the years ahead.

It was also a big event for the Government of Canada. Prime Minister Justin Trudeau’s Liberal government had been re-elected six weeks previously and a new cabinet was sworn in just a week before.

The Prime Minister opened his remarks with a call to action, reminding attendees about Lytton, British Columbia, which set a record for high temperatures on June 29, 2021 and then was destroyed by fire.

Mr. Trudeau said, “Canada is warming, on average, twice as quickly as the rest of the world. And in our north, it’s three times quicker. The science is clear: we must do more, and faster.”3 The federal government wants to do more, faster.

Canada’s electricity industry supports this endeavour. But Canada needs to carefully craft the path forward.

The country has made big commitments to decarbonize. These commitments will mean Canada needs two to three times the amount of electricity it produces now if the country is to decarbonize other sectors of the economy by 2050. In addition, the federal government has committed to a Net Zero grid by 2035.

Our industry is actively working with federal, provincial and territorial governments to chart our approach to Net Zero. Canada’s electricity system is poised to accelerate to meet the demands of decarbonization and the system will form the foundation of the decarbonization of Canada’s economy.

However, while the federal government has been good at crafting and announcing aspirational targets and commitments, the electricity industry has often been left waiting for details. Over a week in the spring of 2021, Canada had three different 2030 emissions reductions targets. At the tail end of 2020, the federal government announced that it was considering a Clean Electricity Standard (CES). A CES and commitment to a Net Zero electricity grid were planks of the government’s election platform in August 2021. These commitments must now be scaled to what is practical so that the industry can meet fast-growing demand for electricity, while maintaining reliable and affordable power to all Canadians.

6 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 1 More and Faster: Getting to a Net Zero Grid

Canadian Electricity Generation

By Source, 2020 MWh

6%

Hydro Nuclear

19%

Combustibles Wind 60% 15%

“Electric power generation, monthly generation by type of electricity”, Statistics Canada, February 7, 2022, https://www150.statcan.gc.ca/ t1/tbl1/en/tv.action?pid=2510001501.

Building to 2035 In previous years, Electricity Canada’s State of the Industry has looked at measures needed to build a grid to meet Canada’s economy-wide 2050 Net Zero commitment. With the new federal commitment to a Net Zero electricity system by 2035, this year’s focus will be on this challenging nearer term target.

Canada starts from a stronger position than most countries. We already have one of the cleanest electricity grids in the world. More than 80 percent of the power produced domestically is from non-emitting sources. Of that, approximately, sixty percentage points is from hydropower; nuclear is next with 15 percent percentage points; and wind represents most of the rest.4 This is a clean energy advantage matched by few other countries. In the United States, where two-thirds 5 of electricity is supplied by coal or natural gas, states such as New York and Massachusetts are leaning on clean Canadian power to decarbonize.

Minnesota and Manitoba have struck a deal to essentially use Manitoba’s hydro reservoirs as a giant battery for Minnesota’s surplus wind.

But a strong start does not take away from the challenges of the path ahead. Adding new capacity to replace existing fossil fuel power plants (less than 20 percent of energy) will be much more challenging given regional diversity and current transmission interconnections. In several eastern provinces, the Prairie provinces and various remote communities across Canada, fossil fuel generation plays an critical role in providing baseload electricity.

Thus, building a Net Zero electricity grid will be a national challenge with significantly different regional criticality. Fossil fuels still play a key role in some provincial grids, which are already comparatively clean. Though only a small faction of total electricity generation in that province, Ontario produces more electricity from emitting sources (13.2 TWh) than all of Atlantic Canada (12.7 TWh). Natural gas will remain important over the remainder of the decade, as Ontario’s nuclear fleet experiences retirements and refurbishments.

Based on current loads, Canada will need to replace more than 121 TWh per year of carbon-emitting electricity to reach a non-emitting grid. But building to replace current loads will not be anywhere near sufficient. As noted previously, decarbonization will mean actual electricity demand will grow dramatically in the coming years by a factor of two or three as other sectors are electrified.

7 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 1 More and Faster: Getting to a Net Zero Grid

Fossil Fuel Electricity Generation by Region, 2020 MWh All Prairies All Atlantic North Quebec BC Ontario

0.7 M 12.7 M 5.7 M

2.0 M 87 M 13.2 M

We measure demand differently than capacity. Demand is measured in watts over time (so, a terawatt/ hour). Capacity is measured in just energy (megawatts). When running at full tilt, a 1,000 MW plant produces a “megawatt hour” each hour.

Building out: What we need Currently, those 121 TWh are produced by just under 36,000 MW of generation capacity.6 Electricity generated by these facilities will have to be replaced by non-emitting ones, or have their emissions abated, to meet the 2035 target.

Beyond the absolute power produced, it matters when and where it is made. The electricity produced by emitting sources in Canada is often used to provide baseload generation and to meet peak demand when other sources are unavailable. They can be counted on to be available when needed, no matter what.

This flexibility to meet variable electricity demand is a key reliability consideration. This flexibility was highlighted most recently by Ontario’s Independent Electricity System Operator in a 2021 discussion paper on the role of natural gas electricity in the grid. This same report reveals that the location of gas plants—generally closer to cities, where demand is—reduces demands on transmission infrastructure.

8 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 1 More and Faster: Getting to a Net Zero Grid

Path Forward The ultimate path to a Net Zero grid will require an “all of the above” approach. This approach will mean Canada must: • Increase investments in clean energy generation sources, including renewables, small modular reactors (SMRs) and hydrogen; • Support companies working on grid-scale “longer duration” energy storage solutions; • Work with provincial/territorial governments to encourage interprovincial transmission; • Support distribution system upgrades, including new innovative smart grid applications; • Support further research, development and deployment of carbon capture and storage; and • Provide financial assistance, including rebates, for Behind the Meter customer energy solutions and energy conservation.

What would it take to support these measures? This is the fourth edition of our State of the Industry. In each, we at Electricity Canada have highlighted actions that our industry needs to take to build the grid to meet the needs of Net Zero. In 2020, we identified a list of actions to achieve Net Zero.

These actions have not changed. They include supporting the scaling up of new technologies; backing research, development and commercialization; and modernizing the regulatory rules in which the industry operates.

Since 2021, Canada has taken some steps forward on these actions. In the 2021 budget, the federal government announced a tax credit for the development of carbon capture, utilization and storage, which will also include provisions for hydrogen investments. The final details are to be announced this year. The Smart Renewables and Electrification Pathways Program, which is taking applications, will support the deployment of new technologies.

On the other hand, the federal government has yet to commit financial support for SMRs, which would help implement the SMR Road Map that was launched in late 2020.

9 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 1 More and Faster: Getting to a Net Zero Grid

Getting Moving More than anything, Canada must transition from planning to action. 2035 is only 13 years away; 2050 is just 28 years away. Over the last 5 years, Canada has added an average of a little more than 3,000 MW of new non-emitting generation each year.

Much of that is with variable renewables, which produce electricity less consistently than hydro or thermal generation.7 Capacity Increases – Renewables MWh

5,000 4,000 3,000 2,000 1,000 2018

2017

2016

0 2015

Solar

This policy direction will need to reflect the regional nature of Canada’s grid federalism—meaning, the country has 13 different electricity systems. The needs of each are unique, as are the opportunities to connect.

Our industry also needs to ensure customer affordability. Every action should be measured against how it affects the price that Canadians pay for electricity to ensure that the action does not inadvertently impact affordability.

2014

Wind

6,000

2013

Hydro

Canada’s electricity industry can no longer wait.

To meet 2035 climate targets, our industry needs clear, consistent policy direction from federal and provincial/territorial governments that would accommodate investments in new innovative infrastructure to meet the needs of Canadians.

“Installed plants, annual generating capacity by type of electricity generation”, Statistics Canada, February 8, 2019, https://www150. statcan.gc.ca/t1/tbl1/en/tv.action?pid=2510002201.

Decarbonizing Canada’s economy is a herculean task. Decarbonizing the electricity system by 2035 is doubly so. To have a chance of being successful, our industry will, as Prime Minister Trudeau said, need to do more and faster. That said, our industry is eager to get going.

“Companies with strong ESG scores have better financial performance.

And they attribute that to a diversity of perspectives being contributed to every business decision. Diversity is obviously a social matter, but it does give rise to better business decisions.” 8 Kate Chisholm, Q.C., Senior Vice President, Planning, Stakeholder Relations and Chief Sustainability Officer Capital Power Corporation

11 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 2:

An Industry Ahead of the Curve: Looking Beyond the ESG Hype What is ESG?

Context

ESG stands for Environmental, Social and Governance considerations that organizations are expected to annually measure, report and integrate into their decision-making structures.

Driven by the ongoing pandemic and public concerns around environmental and social justice issues, 2021 was another year of tremendous growth for ESG-related activity by governments, investors and companies. The meteoric rise of ESG considerations comes at a critical juncture in human history. The COVID-19 pandemic is still raging in waves; climate-induced severe weather events are wreaking havoc in many parts of the world; social injustices are coming to the forefront of public discourse; and Indigenous reconciliation remains a distant reality, especially in Canada.

There are no silver bullets to solve these mega-trends overnight and the work ahead is no less arduous than it is today. However, the heightened interest in ESG is an indication that the world is finally heeding these considerable challenges and looking for solutions, especially from the private sector. Some governments and industries have been at this task for decades, while others are starting fresh. Whatever the case may be, the time has arrived to accelerate the integration of ESG into organizational decision-making processes and use ESG considerations to drive continuous performance improvement for the betterment of the world.

The electricity industry’s journey on this path started in the late 1990s when Electricity Canada and its members launched the Environmental Commitment and Responsibility (ECR) program to improve performance on a range of issues, including climate change. As part of this initiative, Electricity Canada members also agreed to manage key environmental risks consistent with ISO 14001 Environmental Management System[1] Standard.9

12 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 2 An Industry Ahead of the Curve: Looking Beyond the ESG Hype

In 2009, the electricity industry raised the bar further by expanding the ECR program and launching Sustainable Electricity, a holistic sustainability initiative for Electricity Canada member companies to collectively address material ESG issues. This action was further augmented a few years later by the introduction of the Sustainable Electricity Company designation for those committing to the ISO 26000 standard on social responsibility.10 The industry integrated this standard as soon as it was released to the public by ISO, again an example of the industry getting ahead of the curve on the social aspects of ESG.

Sustainable Electricity Program Pillars Low Carbon Future • Reduction of direct/indirect emissions • Electrification • Energy efficiency and conservation Infrastructure Renewal and Modernization • Investments in new and existing electricity infrastructure Building Relationships • Early engagement and consultation with Indigenous communities • Local community engagement, development, and customer support Risk Management Systems • Environmental stewardship and mitigation of impacts (e.g., spills) • Employee, contractor, and public health and safety • Cyber security and resiliency Business Excellence • Investments in technology innovation • Regulatory innovation • Employee equity, diversity and inclusion • Talent recruitment and retention

Thus, Electricity Canada member companies have been integrating sustainability considerations in their decision-making processes, conducting materiality assessments, establishing baselines, and measuring and reporting their performance for decades. The industry’s collective efforts have paid off. Greenhouse gas emissions are at an all-time low; investments to refurbish and modernize the grid have increased; joint ventures and partnerships with Indigenous communities are developing at a steady pace; strategic and operational risks are being managed effectively using internationally recognized ISO management systems; and business excellence is being driven through investments in new technologies, processes, and agile and nimble employees. Looking ahead to 2022 and beyond, the electricity industry is in an enviable position to address ESG considerations—not only from the perspective of performance tracking and reporting, but also through the lens of integrated company decision-making.

13 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 2 An Industry Ahead of the Curve: Looking Beyond the ESG Hype

2022 and beyond: What is ahead for ESG After decades of taking voluntary action to address pressing societal issues, companies will be expected by governments, regulators, investors, and civil society to be more transparent on their annual performance related to material business issues, including direct and indirect greenhouse gas emissions (Scope 1, 2, and 3), and progress on equity, diversity and inclusion at the C-Suite and Board levels.

The stock exchanges and securities administrators are also using their powers to address ESG issues through targeted reporting guidance and disclosure requirements. There is also heightened scrutiny from the federal government on disclosure and governance-related issues, especially related to climate change and to equity, diversity and inclusion at the management and board levels of federally regulated companies.

The pressure to demonstrate meaningful and tangible action by organizations will likely rise rapidly in the years ahead and it will be relentless. With global mega-trends creating a sense of urgency and concern in the public domain, there is now a greater understanding and willingness to introduce new government regulations, link non-financial performance to access to capital, and introduce mandatory disclosure requirements by governments and securities administrators.

In fact, in the most recent mandate letters issued

by Prime Minister Justin Trudeau, he has directed both the Minister of Finance and the Minister of Environment and Climate Change to “move toward mandatory climate-related financial disclosures based on the Task Force on Climate-related Financial Disclosures and require federally regulated institutions, which include financial institutions, pension funds and government agencies, to issue climate-related disclosures and Net Zero plans”.11 As these pressures rise, companies will have to take stock: they will have to review whether they measure and report on relevant and material issues to stakeholders, and whether they have systems in place for good governance and integrated management decision-making.

The most pressing forces that will drive ESG in 2022 will be the investor community and governments. The rise of impact investing, which considers both financial and non-financial performance, over the last few years has shone a new light on the importance of ESG for many companies, as capital is increasingly tied to non-financial performance.

14 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 2 An Industry Ahead of the Curve: Looking Beyond the ESG Hype

The impetus for consolidating ESG frameworks 2022 will also be a defining year for consolidating ESG reporting standards. As sustainability becomes mainstream through the concept of ESG, the world community is now recognizing the need to consolidate a plethora of historical measurement and reporting standards that have been published by international entities, such as the Global Reporting Initiative, the Task Force on Climate-Related Financial Disclosures, and the Sustainability Accounting Standards Board— to name just three.

ESG Growing Pains • Numerous and inconsistent sustainability reporting standards leading to duplication of effort for companies • Lack of sector-specific guidance leading to reporting of non-material information by companies • Evolving application of investor criteria to access capital for major projects • Inconsistent performance assessment criteria by sustainability rating organizations • Limited guidance on how best to integrate ESG into company governance frameworks vis-à-vis guidance on measurement and reporting • ESG is used as a tool for “public relations” instead of driving tangible results and outcomes through integrated decision-making

More recently, driven by the call for high-quality, transparent and comparable data on ESG, the Internal Financial Reporting Standards Foundation Trustees announced the creation of the International Sustainability Standards Board, a new standard-setting board headquartered in Montreal, to address this gap and consolidate some of the existing reporting standards. 12 While this is a step in the right direction, there is still a high level of uncertainly regarding the pace of consolidation, as well as the effectiveness of this latest initiative, given various jurisdictional differences in guidance provided by governments, regulators and securities administrators. What happens in Europe and the United States will also have a significant impact on future ESG reporting around the world.

15 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 2 An Industry Ahead of the Curve: Looking Beyond the ESG Hype

2022 ESG priorities for the industry The ESG priorities for the electricity industry fall into two categories: 1.

2.

Focusing on the most material issues relevant to companies and their stakeholders; and Improving collective industry efforts on hard-to-measure key performance indicators.

On materiality, several issues stand out for the electricity industry. Working with the federal government on its commitment to a 100 percent clean electricity grid by 2035 and contributing to the electrification of other industries by 2050, such as transportation, is one of the biggest ongoing challenges for the industry. Since electricity infrastructure takes multiple years to build, the action our industry takes today will determine the longterm outcomes of tomorrow.

Meeting this commitment would require further scaling-up of variable forms of electricity generation, longer-duration storage options, new transmission interconnections within and between provinces, and significant upgrades to the current distribution networks to ensure customers get on-demand power that is, at a minimum, highly reliable and safe. Affordability of electricity is another variable that will have to be considered by governments and rate-regulators, as this rapid transition could adversely impact some Canadians, depending on the jurisdiction.

As the industry anchors its long-term agenda on mitigating and adapting to climate change, other issues—such as Indigenous engagement; technological innovation; customer experience; equity, diversity and inclusion; and cyber security—are all material to ensuring the industry thrives in the long-term.

With regard to key performance indicators, the industry continues to look for ways to improve its collective data collection, measurement and reporting systems, including more robust performance indicators on greenhouse gas emissions, Indigenous engagement and governance. In fact, the industry piloted several new Indigenous engagement indicators in 2021 for potential public release in the future. This internal work to continue in the years ahead, as the industry works collectively to improve its performance measurement and reporting processes and align with international standardization efforts.

A consolidation of key global reporting frameworks with industry-specific guidance would help immensely in publishing high-quality, comparable information for use by key stakeholders, including governments, non-governmental organizations, investors and the public.

16 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 2 An Industry Ahead of the Curve: Looking Beyond the ESG Hype

Path Forward Consolidate ESG frameworks: The international community must work together to standardize ESG frameworks. While there is now an effort to move in that direction, by virtue of the newly proposed International Sustainability Standards Board, there is still uncertainty around which framework would eventually be supported by governments, investors, and other stakeholders. As per the new mandate letters, the federal departments of finance and environment and climate change should work together to convene and build consensus among key stakeholders on an acceptable ESG reporting framework for Canadian businesses.

Make materiality the foundation of reporting: Not all issues are relevant to all companies and their stakeholders. Before companies undertake any type of measurement and external reporting of performance, they must conduct a materiality assessment to determine the priorities for them and their stakeholders. Reporting frameworks should support these assessments and ensure public ESG reports are anchored on materiality.

Support the adoption of ISO-standards: The federal government should facilitate the adoption of international standards related to ESG. The electricity industry is a leader in adopting ISO 14001-consistent standards to manage environmental impacts and in supporting the use of ISO 26000 to address issues related to social responsibility. These managed frameworks allow companies to not only report on ESG, but also integrate ESG into their decision-making and governance models.

Align government data collection processes: The federal government collects a significant amount of ESG-related data from companies; it should streamline and align mandatory climate change and ESG-related disclosure requirements to reduce duplication of efforts. This responsibility to align data collection processes should be given to the Canadian Centre for Energy Information, which is led by Statistics Canada.

“If you look at the economic regulatory system, it is not set up to be innovative.

However, there's a lot of good from the regulatory structure that we don't want to lose.

How do we create more of an opportunity for innovation to come from that? We need to provide an opportunity to change how processes, procedures, policies rules or regulations are applied such as through Innovation Sandboxes.”13 Tonja Leach, Executive Director, Quest

19 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 3:

Regulating and Policymaking for Net Zero: Moving from Ambition to Transition Context In November 2021, Canadians were reminded of the stakes involved with global climate change when record rainfalls caused historically devastating flooding and landslides in British Columbia.14 These record rainfalls came after a summer where the province experienced record temperatures and one of the worst fire seasons ever. These events certainly reaffirm the importance of national action to adapt to, and mitigate against, global climate change.

Last year also saw an important series of events in global energy markets that our industry and Canadians must pay attention to. Europe, Texas and California all experienced significant energy crises. These events are instructive in terms of identifying potential pitfalls on the road ahead that regulators and policymakers in Canada should work to avoid.

20 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 3 Regulating and Policymaking for Net Zero: Moving from Ambition to Transition

Europe As international leaders met in Glasgow, Scotland to plan for the phase out of hydrocarbons, economies around the world began to lift pandemic measures, resulting in a global surge in demand for oil and gas. U.S. benchmark crude oil prices rose to over $80 USD per barrel for the first time since 2014,15 and natural gas prices reached levels not seen since 2009. European natural gas benchmarks increased even more, hitting all-time highs of over $80 EUR per MMBTu.16 Since fossil fuels and petroleum products are inputs for everything from transportation to fertilizer, they contributed to a global rise in inflation.

The Eurozone saw inflation rise to a 25-year high of 4.9 percent17 in November, while Canadian inflation increased to 4.7 percent in October and November, an 18-year high.18 The power sector was also affected, especially in Europe, where weak production from the region’s significant wind power capacity left gas and coal storage levels in the region extremely low.

For example, in 2020, United Kingdom wind generation accounted for 24 percent19 of total electricity generation. In September 2021, the country was producing only 7 percent.20 These shortfalls required an increased reliance on gas and coal for energy generation, which happened to coincide with surging demand in Asia, which was experiencing a colder than usual winter.

The unfortunate result was a surge in European power prices to an all-time high of $87.6 EUR per MWh on average in day-ahead markets.21 This rise sent European politicians rushing to protect citizens and industries from high power costs. Fear also spread regarding the possibility of blackouts and energy shortages in the region, as it entered winter with extremely low fossil fuel inventories.22 Shutdowns of French nuclear power plants for repairs, combined with continued low wind output and cold weather across Europe, pushed power prices even higher. This situation is leaving most analysts predicting a challenging winter for the continent in 2022.23

21 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 3 Regulating and Policymaking for Net Zero: Moving from Ambition to Transition

United States While The Economist proclaimed the events in Europe “the first big energy shock of the green era,”24 parallels can also be drawn to events in energy markets in Texas and California earlier in 2021. In February, Texas experienced prolonged power outages when abnormally harsh winter conditions resulted in the shut-down of pipelines and gas power plants that were not winterized. Low output from the state’s significant 30,000 MW25 of wind capacity worsened the situation, as did the state’s limited connections with neighbouring grids, which restricted the state’s ability to import power.26 The result was catastrophic, leaving millions without power and water, and resulting in hundreds of deaths.27 In California, 2021 was again marked by concerns about the reliability of the electricity grid and the prospect of rolling blackouts, which had affected the state the summer before. The outages were caused by a combination of extreme heat and the state’s power grid being unable to fill power demands in the late afternoon. The state’s 14,060 MW 28 of solar generation capacity production slowed and drought over recent years reduced hydroelectric generation in the state.29 Moreover, California is phasing out its last nuclear power plant in the next five years; it generates approximately 10 percent of the state’s energy each year.30

These concerns culminated in the July 2021 emergency proclamation by the California governor that introduced measures intended to avert energy shortages in the state. Included in the measures is increased funding of $2 per kWh for a utility and grid operator-led program that pays customers to reduce consumption during periods of peak demand. The measures also provided $23 million in subsidies for the installation of customer smart meters and thermostats, and instructed San Diego Gas and Electric to construct four energy storage-based micro grids, with 40 MW/160 MWh of capacity, to address expected capacity shortfalls in the coming summers.

In addition, the state waived air emissions rules to enable large power users to use backup diesel generators during such periods.31 Finally, California initiated a significant power procurement that resulted in the recent regulatory approval of between two and three GW of new electricity supply and demand-side resources.32 All of these investments will come at significant cost to California customers, who already have the highest electricity costs on the continent. Moreover, the emergency measures are expected to stabilize the grid for only the next three years.33

22 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 3 Regulating and Policymaking for Net Zero: Moving from Ambition to Transition

What can Canada learn from 2021? – Outlook and implications for regulatory policy Taken together, the energy disturbances experienced in 2021 illustrate the challenges associated with the transition to Net Zero—in particular, the integration of high levels of intermittent power generation onto electricity grids, especially in settings where reliable fossil fuel generation is either scarce or costly. This situation should give policymakers and regulators a moment for pause, since fossil fuel scarcity and cost increases are essentially the intended effects of many climate policies. For example, in Canada, carbon prices are set to rise to $170 per tonne by 203034 and the federal government has committed to a carbon-free electricity system by 2035.35

Fortunately, Canada has an advantage relative to Europe, Texas and California. The country’s electricity generation fleet is 82 percent non-emitting and includes a significant amount of hydroelectric and nuclear generation.36 These carbon-free generation sources are available around the clock, which has ensured stability for the Canadian electricity grid, as intermittent generation has increased.

But the European, Texas and California examples provide three important lessons that policymakers and regulators must consider as Canada progresses to Net Zero.

23 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 3 Regulating and Policymaking for Net Zero: Moving from Ambition to Transition

01

Incentivize the development of firm electricity generation: The Canadian Energy Regulator’s most recent models projects a significant buildout of intermittent generation in most Net Zero scenarios. However, all of these scenarios also require different mixes of battery storage, natural gas-fired generation (with and without CCS), small modular nuclear reactors, hydropower, hydrogen-fired generation and biomass-fired generation with CCS. These mixes are required to balance increased buildouts of intermittent generation and fill supply gaps. The examples of Europe, Texas and California are all instructive of the importance in doing so.37

02

Expand the electricity grid: Canada needs to better connect jurisdictions to facilitate the sharing of firm power and allow intermittent resource regimes to complement each other across jurisdictions.

Better coordinating the planning, siting and allocation of costs and benefits will be critical in this regard.

Numerous grid-modelling studies released in recent years, including the CER’s Energy Future 2021 study, find transmission enhancement to be critical in enabling the country to meet its Net Zero goals.38 Specifically, increased intraregional and interregional transmission increases grid reliability and reduces cost pressures by optimizing the buildout of intermittent generation across regions.39

03

Modernize the electricity grid: While Canada will need to adapt the grid against extreme climate events that the country knows will become increasingly common, Canada must also make the grid more resilient by modernizing it. Sensors and systems will need to be increasingly deployed so the grid can adapt to sudden changes. For example, during outage events, automatically islanding areas that can operate independently of the grid for periods of time will be critical in increasing overall resiliency to extreme events and in keeping customers’ power on. Moreover, a smarter grid can identify and isolate failures before they cascade, and automatically initiate energy and demand management systems that reduce non-essential customer energy usage and avoid blackouts. Over time, these grid enhancements can also produce cost savings. For example, integrating energy storage at strategic locations in the grid can defer the need for costly electricity transmission and distribution upgrades in the future.

24 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 3 Regulating and Policymaking for Net Zero: Moving from Ambition to Transition

Notable regulatory and policy developments in 2021 Last year’s State of the Industry report made a series of recommendations that regulators, policymakers and governments in Canada have made positive movement on in the past year. (View last year’s calls to action in Chapter 3 of the 2021 State of the Industry report.) A summary of some of the important initiatives and regulatory modernization programs in place across the country follow, including key takeaways in terms of the broader sector.

New Brunswick: Bill 77, An Act to Amend the Electricity Act, received Royal Assent in New Brunswick. The bill will enable unregulated affiliates of NB Power to offer energy products and services in competitive markets. While other jurisdictions have also enabled utilities to participate in competitive markets via unregulated entities, it is nonetheless an important step forward for New Brunswick in terms of enabling the company to offer innovative products and services. The amendments also enable a regulatory approval path outside of the purview of the New Brunswick Energy and Utilities Board for NB Power’s Mactaquac Dam refurbishment

project. As the province’s largest hydroelectric generation facility, it is critical to New Brunswick’s clean energy portfolio and climate goals. While this change is important in enabling a regulatory path for the project, it highlights a problematic tendency for provincial and territorial commissions not to include environmental and other social outcomes in their project review process. In addition, the bill recognizes that it is appropriate for governments to have direct input in decisions around projects of this magnitude, because of the significant impacts on the province.

25 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 3 Regulating and Policymaking for Net Zero: Moving from Ambition to Transition

Ontario: The province made a number of important moves in 2021 to modernize regulations as part of the broader Ontario Energy Board (OEB) Modernization process. These moves include various measures aimed at spurring innovation and improving regulatory efficiency. For instance, the OEB Innovation Sandbox and Independent Electricity System Operator (IESO) Grid Innovation Fund held a joint, targeted call for submissions that together enable funding and regulatory approval pathways for innovative projects that traditional regulatory constructs are ill-suited to assess. Indeed, this is a step in the right direction; however, it will be important to learn from projects that emerge from the sandbox process and adjust regulatory constructs and legislation to ensure future iterations are possible. Also, efficiency measures such as performance standards for processing applications have been enacted as part of the regulatory modernization process to provide more certainty and reduce lag in regulatory approvals for electricity projects.

Alberta: The Electricity Statutes Amendment Act is moving through the Alberta legislative process.

Many of the bill’s details remain to be determined, but it has a number of promising elements. First, it enables a path to energy storage investments and ownership by transmission and distribution companies under certain circumstances where they might serve as alternatives to more traditional investments. Second, the bill enables self-generation and export by companies across the province.

And third, and perhaps most critically, it seeks to address the cost of grid services used by prosumers. This provision is important to avoid shifting costs arising from use of the grid for exporting power onto users that do not rely on it. Another noteworthy initiative is the Government of Alberta and Alberta Utilities Commission (AUC) Red Tape Reduction directive, which targets increased efficiency and reduced lag in regulatory processes.

The AUC reports a 48.2 percent reduction in regulatory requirements set out in AUC rules. Like the Ontario example above, these changes bring about cost efficiencies for regulators, intervenors and regulated parties. The changes will also be critical in enabling the pace of grid investment required to achieve climate objectives.

26 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 3 Regulating and Policymaking for Net Zero: Moving from Ambition to Transition

Path Forward Overarching recommendation 1. Establish a mechanism for federal, provincial and territorial electricity policy coordination: This recommendation is a holdover from 2020. As no progress was made on it in 2021, we once again recommend that current federal, provincial and territorial ministerial forums on energy (Energy and Mines Ministers Conference, or EMMC) and the environment (Canadian Council for Ministers of the Environment, or CCME) prioritize discussions on collaboration in support of national Net Zero objectives.

Moreover, Electricity Canada recommends that this policy coordination be prioritized as a standing item at all future First Ministers’ Conferences. Provinces and territories should do the same at all future Council of the Federation meetings.

Provincial and territorial governments and regulators 1. Create legislative and regulatory pathways for utility innovation: Utilities should be enabled to participate in competitive markets for energy services. Regulators should also adopt sandbox mechanisms to enable novel energy projects, which should include a policy modernization component that makes regular pathways for new types of projects or technologies that start through sandbox streams.

In addition, regulators and governments should consider implementing established mechanisms to create incentives for innovative investments. For instance, performance-based regulation principles provide utilities with outcomes-based earnings opportunities that are technology agnostic.

This approach can enable solutions such as energy storage-based non-wires alternatives (NWAs), which defer costly investments. An international example is New York State, which implemented such mechanisms in its Reforming the Energy Vision (REV) framework, begun in 2015.40 2. Value environmental outcomes: To be more agile, the mandates of regulators should be extended to include environmental and social considerations in their regular utility review processes.

This mandate extension can avoid the need for onerous legislation to enable regulatory approvals of projects critical to climate ambitions. It will also serve to better value firm clean energy projects. An excellent international example of progress on this front is recent legislation in the State of Maryland, which mandates that utility commissions consider the climate change effects of projects under review.41 Another innovative policy mechanism is carbon contracts for difference. It has been used by the German government to compensate companies and sectors for the difference between the market cost of a process and the cost of implementing a climate-friendly option.

The German government has targeted this mechanism for hydrogen deployment.

3. Streamline regulatory processes: Initiatives aimed at reducing regulatory lag and providing certainty in regulatory processes are critical. Efficiency will be critical as the grid expands and modernizes at a rapid pace. The initiatives in place in Alberta and Ontario are critical in this regard and should be replicated across the country.

Federal, provincial, and territorial governments 1. Support emerging baseload and dispatchable technologies: In addition to supporting research and development, the federal government should work with provinces to identify energy projects deemed to be of strategic importance to Canada’s energy transition and assist in socializing the costs. This move will be critically important, given that provinces and territories will be challenged both financially and politically to support these costs themselves, especially for investments made in support of national climate ambitions.

2. Support the siting, planning and cost/benefit allocation of grid expansion projects: In November, the United States passed the Infrastructure Investment and Jobs Act, which has a number of provisions, including a measure that requires the Department of Energy (DOE) to carry out periodic research aimed at designating National Interest Electric Transmission Corridors.42 DOE and Federal Energy Regulatory Commission are granted special regulatory and support authorities in relation to these projects, many of which are not replicable in Canada.

Nonetheless, the broad policy vehicle should be considered— that is, regular funding should be provided to relevant federal departments to identify national grid expansion projects that are in the national interest. In coordination with provinces and territories, the federal government should grant such projects expanded regulatory and financial support measures.

“Indigenous communities are also leaders in clean energy; and the work that they're doing to develop clean energy projects that are not connected to the grid have been exceptional and, frankly, are going to be opportunities that could be scaled up and shared, and sold and commodified.”43 Mollie Johnson, Assistant Deputy Minister, Low Carbon Energy

29 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 4:

Time to Accelerate Reconciliation with Indigenous Peoples Context After more than a century of systemic racism and discrimination against Indigenous peoples, Canada is at an inflection point. Twenty-twenty-one was a milestone year for two reasons. First, the federal government formally adopted an Act to implement the United Nations Declaration on the Rights of Indigenous Peoples,44 an interpretive tool that could redefine relations with Indigenous peoples. Second, 2021 was a year of reckoning and reflection for many Canadians, who were shocked and saddened by the discovery of mass graves of Indigenous children who went missing during the days of the Residential Schools system,45 a bleak part of Canadian history that lasted until the mid-1990s. These events also highlighted the need for Canadians, including businesses, to learn more about Indigenous peoples and work toward genuine reconciliation.

While Canada has a long reconciliation journey ahead, the relationship with Indigenous peoples is continuing to evolve—for the better. The recognition and affirmation of Indigenous rights and title under Section 35 of the Constitution Act, 1982 was a turning point in Canada’s relationship with Indigenous peoples, as it provided the initial impetus for reconciliation. In fact, since then, the courts have provided significant clarity on Indigenous rights and title, which has had a positive impact on Canadians’ understanding of Indigenous issues. Over the last two decades, there has been exponential growth in efforts to learn about Indigenous culture, values and traditions; their inherent and existing rights and title to land; and how industry can work with Indigenous peoples as partners across the country.

30 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 4 Time to Accelerate Reconciliation with Indigenous Peoples

Section 35 of the Constitution Act46 states: 01

02

The existing aboriginal and treaty rights of the aboriginal peoples of Canada are hereby recognized and affirmed.

In this Act, “aboriginal peoples of Canada” includes the Indian, Inuit and Métis peoples of Canada.

03

04

For greater certainty, in subsection (1) “treaty rights” includes rights that now exist by way of land claims agreements or may be so acquired.

Notwithstanding any other provision of this Act, the aboriginal and treaty rights referred to in subsection (1) are guaranteed equally to male and female persons.

This desire to learn more about Indigenous peoples and their culture has had a beneficial effect on our sector. Relative to the distant past, industry workers today are much more culturally competent; they understand the cornerstones of Indigenous rights and title; they appreciate the connection of Indigenous peoples to their land; and most importantly, they respect Indigenous worldviews, especially their Seven Generation approach to decision-making.

Learning and respecting these fundamentals have led to a range of mutually beneficial electricity industry initiatives, including meaningful early consultations with local Indigenous communities; joint business ventures and equity partnerships; access to employment, education and training opportunities; supply chain procurement and contracts; and intercultural competency training for management and staff. Many of these initiatives are also listed in the Electricity Canada’s compendium of member Indigenous engagement Initiatives, “Taking Action: Collaborating with Indigenous Communities.”

31 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 4 Time to Accelerate Reconciliation with Indigenous Peoples

Indigenous peoples and the evolving legal jurisprudence While the Indian Act remains the most wide-ranging federal statute governing Indigenous issues, Canada has a unique relationship with Indigenous peoples based on the rights recognized and affirmed under the Constitution Act of 1982. Although the Constitution did not define these rights (as per the specific provisions in the side bar), the subsequent legal jurisprudence has further clarified the scope of these Indigenous rights and title in Supreme Court cases such as R. v. Sparrow. 47 In another landmark case, in 2021, Yahey v British Columbia,48 the British Columbia Supreme Court recognized an infringement of treaty rights resulting from the cumulative effects of various energy projects previously approved by provincial regulatory authorities.

Electricity Sector Priorities on Indigenous Relations • • • • • • •

Project partnerships/joint ventures Education, training and employment Supply chain procurement Cultural awareness training for management and staff Community investments Meaningful and early consultation Clean and affordable energy solutions

While the electricity industry welcomes legal and regulatory clarity, it is equally important for the federal government to pursue genuine reconciliation with Indigenous peoples. The Royal Commission on Aboriginal Peoples (RCAP) and the Truth and Reconciliation Commission (TRC) have suggested several ways to pursue reconciliation since the 1990s. In 2015, the TRC called upon the federal government, on behalf of all Canadians, to develop with Indigenous peoples a Royal Proclamation of Reconciliation, which would also adopt and implement the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) as the framework for reconciliation.

After nearly six years since the TRC Calls to Action, the federal government finally adopted legislation to implement the UNDRIP. The legislation was similar to that adopted by the Government of British Columbia in 2019.

The electricity industry supports the overarching principles outlined in UNDRIP and recognizes that many of the implementation provisions within it must be directly negotiated between the federal government and Indigenous peoples. However, the federal government’s UNDRIP implementation legislation, passed in 2021, was not without its flaws.

One flaw is how the legislation would affect Canada's duty to consult Indigenous peoples, as established by jurisprudence with respect to Section 35 of the Constitution Act of 1982. The proposed legislation failed to provide appropriate “interpretive” guidance on many key issues, including how best to implement the provision on free, prior, informed consent, which could have detrimental effects on Canada’s reconciliation journey.

32 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 4 Time to Accelerate Reconciliation with Indigenous Peoples

Building partnerships for Indigenous economic reconciliation As Canada looks ahead to 2022 and beyond, the electricity industry will play a pivotal role in the advancement of Indigenous economic reconciliation in Canada. According to the report “Accelerating Transition” by Indigenous Clean Energy, there are nearly 2,500 Indigenous-affiliated clean energy projects in operation or being planned, including 197 medium-to-large renewable generation projects.49 These projects represent a pathway for economic reconciliation with Indigenous peoples. The Conference Board of Canada has also estimated that the electricity industry will need to invest $1.7 trillion by 2050 to ensure a resilient, low-carbon energy future.50 This unprecedented investment requirement represents a tremendous opportunity for Indigenous communities and the Electricity Canada’s member companies.

TC Energy’s Action Plan: Key Highlights • Work with Indigenous leaders to explore the development of an advisory council to provide advice to the leadership team and help guide reconciliation efforts.

• Deliver tailored training to the company’s Board of Directors that is focused on the history and cultures of Indigenous peoples.

• Set Indigenous contracting targets to enhance the participation of Indigenous businesses in the execution of projects and operational activities.

• Develop a framework to identify project equity opportunities with Indigenous groups.

Among the many actions by Electricity Canada members in 2021, TC Energy and Ontario Power Generation also launched their own public reconciliation action plans,51 specifying a set of tangible actions to advance cultural awareness among management and employees; project partnerships; employment; and supply chain opportunities.

While many Electricity Canada member companies have been taking these measures for years, these formal commitments provide a new and transparent approach to pursuing reconciliation with Indigenous peoples.

Advancing these partnerships and reconciliation efforts also requires sustained support from all levels of government. The federal government, for instance, must work to provide clear and unambiguous expectations around Indigenous consultation and engagement in major projects. The provincial governments and their energy regulators also have an important role to play in enabling interested companies to expand their operations to northern and remote areas despite the lack of critical mass in these regions. Supporting these economic opportunities is crucial, since access to clean, safe and reliable electricity is a precursor for clean water, better education, quality healthcare services, more economic development and employment and, ultimately, a better quality of life for many Indigenous communities.

33 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 4 Time to Accelerate Reconciliation with Indigenous Peoples

Path Forward Support business partnerships: Governments at all levels should enable business partnership arrangements between electricity companies and Indigenous communities through their policy and regulatory structures.

These partnerships would drive economic development, access to clean energy, employment and supply chain opportunities.

Provide funding support: The federal government should partner with electricity companies interested in building infrastructure in remote and northern communities to advance clean energy solutions and achieve Canada’s Net Zero by 2050 target.

Consult industry on the UNDRIP Action Plan process: The federal government should consider establishing industry-specific dialogues on issues that could have implications for industry engagement with Indigenous communities.

OPG’s Action Plan: Key Highlights • Grow economic impact for Indigenous communities and businesses to $1 billion over the next 10 years, through ongoing operations, projects and initiatives.

• Increase the representation of Indigenous employees across all levels and businesses of Ontario Power Generation.

• Work with the Indigenous Opportunities Network (ION) to grow the Indigenous skilled talent pool within Ontario Power Generation and the broader energy industry.

• Enhance employee knowledge and understanding of Indigenous issues through the development of an online Reconciliation Knowledge Hub.

34 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Theme 4 Time to Accelerate Reconciliation with Indigenous Peoples

The Clock Is Ticking Canada has pledged to reach ambitious climate change targets. The country has made commitments to achieve Net Zero carbon emissions by 2050 and have a Net Zero electricity grid by 2035. The businesses, organizations and people that make up Canada’s electricity industry will play an essential role in enabling our country to reach these ambitious yet necessary targets.

Accelerate performance Our industry will accelerate its understanding of its performance and therefore its progress in reaching the country’s ambitious climate change targets. This acceleration involves improving industry systems for data collection, measurement and reporting. These systems also will have more robust performance indicators on greenhouse gas emissions, Indigenous engagement and governance.

Accelerate innovation Our industry will accelerate its efforts to gain a clearer picture of changing customer expectations and how customers think about their energy future. Equipped with this knowledge, our industry can then educate consumers and motivate them to adopt new connected technologies, which are essential to create an intelligent, cost-efficient energy system.

Accelerate reconciliation Our industry will accelerate business partnerships with Indigenous communities, increase the speed of work with Indigenous and non-Indigenous governments to build clean energy infrastructure in remote communities, and advance cultural awareness among our industry’s executives, managers and employees. These actions will help move our country closer to its climate change targets and further down the path of reconciliation.

Accelerate collaboration Yet our industry cannot and should not act alone.

Federal, provincial and territorial governments and regulators need to provide the policy conditions necessary for Canada to meet its ambitious climate change goals. In particular, governments need to create the right investment climate, provide greater clarity on government policies and measures, support low-carbon investment solutions, and expand the mandate of provincial energy regulators to allow for greater expenditure and risk-taking related to technological innovation.

Our industry will continue to collaborate and partner with governments and regulators to achieve these specific goals. As governments, as an industry and as individual organizations within our industry, we have no time to waste in accelerating our performance, innovation, reconciliation and collaboration— the climate is changing, the planet is warming, the clock is ticking.

35 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

Endnotes 1

Bryce Conrad, “S03 Episode 050: Bryce Conrad and Hydro Ottawa, a Sustainable Electricity Company™”, Interview by Francis Bradley, The Flux Capacitor, December 15, 2021, https://thefluxcapacitor.ca/episodes/.

2

Ken Hartwick, “S03 Episode 034: Ken Hartwick and a Net Zero 2040 OPG”, Interview by Francis Bradley, The Flux Capacitor, May 6, 2021, https://thefluxcapacitor.ca/episodes/.

3

Justin Trudeau, “Prime Minister’s remarks delivering Canada’s national statement at the COP26 summit”, Prime Minister of Canada, November 1, 2021, https://pm.gc.ca/en/news/speeches/2021/11/01/prime-ministers-remarks-delivering-canadas-national-statement-cop26-summit.

4

“Electric power generation, monthly generation by type of electricity”, Statistics Canada, February 7, 2022, https://www150. statcan.gc.ca/t1/tbl1/en/tv.action?pid=2510001501.

5

”Electricity 101”, Canadian Electricity Association, July 12, 2021, https://knowledge.electricity.ca/publications/electricity-101/.

6

We measure demand differently than capacity. Demand is measured in watts over time (so, a terawatt/hour). Capacity is measured in just energy (megawatts). When running at full tilt, a 1,000 MW plant produces a “megawatt hour” each hour.

7

“Installed plants, annual generating capacity by type of electricity generation”, Statistics Canada, February 8, 2019, https:// www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=2510002201.

8

Kate Chisholm, “S03 Episode 035: Kate Chisholm and a Capital Power’s Net Zero Journey”, Interview by Francis Bradley, The Flux Capacitor, June 11, 2021, https://thefluxcapacitor.ca/episodes/.

9

“Hydro Quebec puts Environmental Management System into action”, International Water Power & Dam Construction, January 12, 1998, https://www.waterpowermagazine.com/news/newshydro-quebec-puts-environmental-management-system-into-action/.

10 “Become a Sustainable Electricity Company”, Canadian Electricity Association, https://electricity.ca/deliver/sustainability/ become-sustainable-electricity-company/.

11 Justin Trudeau, “Mandate Letters”, Prime Minister of Canada, December 16, 2021, https://pm.gc.ca/en/mandate-letters.

12 “International Sustainability Standards Board”, Internal Financial Reporting Standards (IFRS) Foundation, https://www.ifrs.org/ groups/international-sustainability-standards-board/.

13 Tonja Leach, “S03 Episode 043: Tonja Leach, QUEST, and the community engagement imperative to meet Net Zero 2050”, Interview by Francis Bradley, The Flux Capacitor, August 18, 2021, https://thefluxcapacitor.ca/episodes/.

14 Eva Uguen-Csenge and Bethany Lindsay, “For 3rd straight day, B.C. village smashes record for highest Canadian temperature at 49.6 C”, CBC News, June 29, 2021, https://www.cbc.ca/news/canada/british-columbia/bc-alberta-heat-wave-heat-dome-temperaturerecords-1.6084203.

15 “OIL (WTI) Commodity”, Markets Insider, https://markets.businessinsider.com/commodities/oil-price?type=wti.

16 “Dutch TTF Natural Gas Calendar (TTF=F)”, Yahoo Finance, https://finance.yahoo.com/quote/TTF%3DF/.

17 Silvia Amaro, “Euro zone inflation rate hits a record 4.9% for November”, CNBC, November 30, 2021, https://www.cnbc. com/2021/11/30/inflation-euro-zone-november-2021.html.

18 Julie Gordon and David Ljunggren, “Canada's annual inflation rate matches 18-year high, set to keep rising”, Reuters, November 17, 2021, https://www.reuters.com/world/americas/canadas-annual-inflation-rate-hits-47-oct-highest-since-feb-2003-2021-11-17/; “Canada’s annual inflation rate holds steady in November at 4.7%”, Global News, December 15, 2021, https://globalnews.ca/ news/8452356/canada-inflation-november-2021/.

36 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

19 “Energy Trends: UK renewables”, GOV.UK, https://www.gov.uk/government/statistics/energy-trends-section-6-renewables.

20 Sophie Mellor, “The U.K. went all in on wind power. Here’s what happens when it stops blowing”, Fortune, September 16, 2021, https://fortune.com/2021/09/16/the-u-k-went-all-in-on-wind-power-never-imaging-it-would-one-day-stop-blowing/.

21 Jorge Liboreiro and Alberto de Filippis, “Why Europe's energy prices are soaring and could get much worse”, Euronews, October 28, 2021, https://www.euronews.com/2021/10/28/why-europe-s-energy-prices-are-soaring-and-could-get-much-worse.

22 Aitor Hernández-Morales and America Hernandez, “Europe’s energy freakout”, Politico, November 19, 2021, https://www.politico. eu/article/europe-energy-crisis-pipeline-natural-gas-eu/.

23 Jesper Starn, “European Power Prices for Monday Rise to Record on Cold Snap”, Bloomberg, December 19, 2021, https://www. bloomberg.com/news/articles/2021-12-19/european-power-prices-for-monday-rise-to-record-on-cold-snap.

24 “The first big energy shock of the green era”, The Economist, October 16, 2021, https://www.economist.com/leaders/2021/10/16/ the-first-big-energy-shock-of-the-green-era.

25 “State Profile and Energy Estimates: Texas”, U.S. Energy Information Administration, April 15, 2021, https://www.eia.gov/state/ analysis.php?sid=TX. 26 Joshua W. Busby, Kyri Baker, Morgan D. Bazilian et al., “Cascading risks: Understanding the 2021 winter blackout in Texas”, Energy Research & Social Science, vol. 77, July 2021, https://www.sciencedirect.com/science/article/pii/S2214629621001997.

27 Jemima McEvoy, “Report Finds Hundreds More Died in Texas Winter Storm Than State Says”, Forbes, May 27, 2021, https:// www.forbes.com/sites/jemimamcevoy/2021/05/27/report-finds-hundreds-more-died-in-texas-winter-storm-than-statesays/?sh=7c1fbf3652cc.

28 “California Solar Energy Statistics and Data”, California Energy Commission, https://ww2.energy.ca.gov/almanac/renewables_data/ solar/index_cms.php.

29 Darrell Proctor, “California Will Add Gas-Fired Units to Increase Power Supply”, Power Magazine, August 20, 2021, https://www. powermag.com/california-will-add-gas-fired-units-to-increase-power-supply/.

30 Kavya Balaraman, “California's last nuclear plant is poised to shut down. What happens next?”, Utility Dive, March 23, 2021, https:// www.utilitydive.com/news/californias-last-nuclear-plant-is-poised-to-shut-down-what-happens-next/596970/.

31 Mark Chediak and Joe Ryan, “California Orders State of Emergency to Avert Blackouts”, Bloomberg, July 30, 2021, https://www. bloomberg.com/news/articles/2021-07-30/california-governor-orders-state-of-emergency-to-avert-blackouts.

32 Kavya Balaraman, “California OKs 'bridge' measures to bolster grid against potential extreme circumstances in 2022, 2023”, Utility Dive, December 6, 2021, https://www.utilitydive.com/news/california-oks-bridge-measures-to-bolster-grid-against-potential-extreme/610971/.

33 “2021 Comparison of Electricity Prices in Major North American Cities: Rates in effect April 1, 2021”, Hydro-Québec, 3rd quarter 2021, https://www.hydroquebec.com/data/documents-donnees/pdf/comparison-electricity-prices.pdf.

34 John Paul Tasker, “Ottawa to hike federal carbon tax to $170 a tonne by 2030”, CBC News, December 11, 2020, https://www.cbc. ca/news/politics/carbon-tax-hike-new-climate-plan-1.5837709.

35 “Clean Electricity: A Net-Zero Grid By 2035”, Liberal Party of Canada, 2021, https://liberal.ca/climate/clean-electricitya-net-zero-grid-by-2035/.

36 “Canada’s Energy Future: Key Findings”, Canada Energy Regulator, December 8, 2021, https://www.cer-rec.gc.ca/en/data-analysis/canada-energy-future/2021/key-findings.html.

37 State of the Canadian Electricity Industry 2022 Accelerate Net Zero

37 “Canada’s Energy Future: Key Findings”, Canada Energy Regulator.

38 “Canada’s Energy Future 2021”, Canada Energy Regulator, 2021: p, 10, https://www.cer-rec.gc.ca/en/data-analysis/canada-energy-future/2021/canada-energy-futures-2021.pdf.

39 “North American Renewable Integration Study”, NREL, 2021, https://www.nrel.gov/analysis/naris.html.; “Interconnections Seam Study”, NREL, https://www.nrel.gov/analysis/seams.html; “A 2030 United States Macro Grid: Unlocking Geographical Diversity to Accomplish Clean Energy Goals”, Breakthrough Energy, January 2021: 68, https://science.breakthroughenergy.org/key-findings/macro-grid; “Canadian National Electrification Assessment: Electrification Opportunities for Canada's Energy Future”, EPRI, September 2021: 64, https://www.epri.com/research/programs/109396/results/3002021160.

40 Herman K. Trabish, “New York's landmark Reforming the Energy Vision framework remains both vital and unfinished, analysts say”, Utility Dive, December 9, 2021, https://www.utilitydive.com/news/new-yorks-landmark-reforming-the-energy-visionframework-remains-both-vita/610015/.

41 Stephanie Eyocko, Alicia Brown and Dugan Marieb, “Utility of the future? We also need fundamental changes at state regulatory commissions”, Utilit y Dive, November 15, 2021, https://w w w.utilitydive.com/news/ utility-of-the-future-we-also-need-fundamental-changes-at-state-regulatory/609860/.

42 Boris Shkuta, Michael W. Brooks, et al., “Electricity Transmission Provisions in the Bipartisan Infrastructure Bill”, The National Law Review, vol. 11, no. 322, November 2021, https://www.natlawreview.com/article/electricity-transmissionprovisions-bipartisan-infrastructure-bill.

43 Mollie Johnson, “S03 Episode 036: Mollie Johnson and Natural Resources Canada’s Net Zero role”, Interview by Francis Bradley, The Flux Capacitor, June 28, 2021, https://thefluxcapacitor.ca/episodes/.

44 “Implementing the United Nations Declaration on the Rights of Indigenous Peoples Act”, Department of Justice, December 10, 2021, https://www.justice.gc.ca/eng/declaration/index.html.

45 Courtney Dickson and Bridgette Watson, “Remains of 215 children found buried at former B.C. residential school, First Nation says”, CBC News, May 29, 2021, https://www.cbc.ca/news/canada/british-columbia/tk-eml%C3%BAps-te-secw%C3%A9pe mc-215-children-former-kamloops-indian-residential-school-1.6043778.

46 THE CONSTITUTION ACTS, 1867 to 1982, Rights of the Aboriginal Peoples of Canada, s.35, https://laws-lois.justice.gc.ca/eng/ const/page-13.html.

47 R. v. Sparrow [1990] 1 SCR 1075, https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/609/index.do.

48 Yahey v. British Columbia [2021] BCSC 1287, https://www.bccourts.ca/jdb-txt/sc/21/12/2021BCSC1287.htm.

49 “Accelerating Transition: Economic Impacts of Indigenous Leadership in Catalyzing the Transition to a Clean Energy Future Across Canada”, Indigenous Clean Energy, June 2020: 20, https://icenet.work/articles/news/4054/accelerating-transition.

50 Len Coad, Robyn Gibbard, et al., “The Cost of a Cleaner Future: Examining the Economic Impacts of Reducing GHG Emissions”, The Conference Board of Canada, September 2017: 104, https://www.conferenceboard.ca/e-library/abstract.aspx?did=9021.

51 “Reconciliation Action Plan”, TC Energy, March 2021: 15, https://www.tcenergy.com/sustainability/indigenous/Journey-towards-reconciliation/; “Reconciliation Action Plan, Ontario Power Generation, October 2021: 33, https://www.opg.com/ building-strong-and-safe-communities/indigenous-relations/reconciliation-action-plan/.