Small Hydro – Canada’s Clean Energy for the 20th and 21st Centuries

Mike Martelli

President Renewable Generation & Power Marketing

June 30, 2016

Canada

36 million people

10 million sq. km

10 provinces and 3 territories

Ontario, Quebec, British Columbia and Manitoba have a large amount of hydroelectric power.

About 60 per cent of electricity generated in Canada is hydropower (355 TWh in 2014)

78,000MW installed capacity

past 10 years added 5,000MW of hydro, and approx. 5,000 MW will be added over the next 10 years

Supports about 135,000 jobs and contributed $37 B to Canada’s economy in 2013

Over the next twenty years, hydropower project development will benefit Canada with over $125 billion in investments and a million jobs

French & English are official languages

El español no es una lengua oficial de Canadá

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Toronto, Ontario 43.650 N

Santiago, Chile 33.450 S

Ontario

About 37 per cent of Canadians live in

Ontario (13.6 million)

About 1 million square kilometers

Economic engine of Canada

Ontario Power Generation is owned by

the Province of Ontario

Ontario's installed generation capacity

totals 35,591 MW

More than 8,000 MW of hydro capacity

with a target of 9,300 MW by 2025

137 TWh demand in 2015

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Ontario Installed Capacity (35,591 MW) by fuel type in 2015

Electricity Pricing

Electricity prices in Ontario are set through a combination of a wholesale market, contract prices for most generators, and a regulated price for most OPG generation

This blended price is charged to all customers in the Province

Contracted prices are confidential and vary depending on the facility

Residential and small customers are charged a Regulated Price set every six months by the Ontario Energy Board (OEB) based on a forecast of the market, contract and regulated electricity costs including a true up to previous costs

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OPG - Who and Where We Are

99 per cent of generation free

of GHG and smog emissions

Approx. 17,000 MW generating

capacity

65 hydro, 3 thermal (including

2 biomass), 2 nuclear stations

2 leased nuclear stations +

co-own 2 gas-fired stations

About 9,200 regular employees

Over $44 billion in assets

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The Company We are Today

Our history includes more than 100 years of operation - prior to 1953 all our generation was hydropower

Commitment to public, environmental and employee safety

Values set out in a Code of Conduct – safety, integrity, excellence, people and citizenship

Building long-term mutually beneficial relationships with Indigenous communities

Enjoy strong relations with site communities

Focused on continuous improvement and development in project management and operational excellence

Environmental Management System registered to ISO 14001 standard

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Coal Closure to Fight Climate

Change

Successful closure of OPG’s coal stations represents North America’s largest single climate change initiative

Since 2005 OPG has closed over 7,500 MW of coal capacity

Year closed and original capacity• Lakeview 2005 1138 MW• Lambton 2013 1980 MW• Nanticoke 2013 3976 MW• Thunder Bay 2014 310 MW*• Atikokan 2012 215 MW*

* Converted to biomass

Impacted over 1,000 staff

Community impacts – suppliers, local employment, taxes

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Lakeview Stack Demolition – June 12, 2006

Hydro Operations

65 hydro stations

Produce clean, renewable, reliable low-cost power

Many are heritage assets – providing value for generations

Over 7,400 MW of capacity

Baseload and peaking roles

Produce over 30 TWh per year.

• More than one-third of OPG’s electricity production

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Kakabeka Falls GS (24.6 MW) began generating electricity in 1906

OPG’s Small Hydro Fleet

Of 65 Hydro stations, 35

are less than 20 MW

13 have operated for 100

years or more

27 operated for 80 years or

more

Over the past decade we

have constructed or re-

constructed 6 small

stations.

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Lac Seul GS 12.5 MW completed in 2009

Small Hydro Expansion

Lac Seul Obishikokaang Waasiganikewigamig (completed in 2009) partnership with Lac Seul First Nation

• 12.5 MW VA Tech (Andritz) horizontal “pit” type Kaplan turbine

Upper Mattagami and Hound Chute (completed in 2010).

• Litostroj vertical Kaplan turbines (also considered as saxo turbines)

• Wawaitin (15 MW), Lower Sturgeon (14 MW), Sandy Falls (5 MW), Hound Chute (8 MW)

Healy Falls (completed in 2010). • added a fourth unit to a 100 year old station. The

unit is a 6.4MW, compact axial horizontal, Kaplan type turbine. Manufactured by Andritz (VA Tech), the unit is also considered as a “S” type Kaplan turbine.

Peter Sutherland Sr. GS at New Post Creek partnership with Taykwa Tagamou Nation.

• Two 14 MW Andritz horizontal Francis type units (exposed scroll cases).

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Turbine installation at Sandy Falls (2010)

Role of Hydro In Ontario’s Grid

Small Hydro• Generally run-of-river that feeds the

distribution system

• Many plants, e.g. Healy Falls, Seymour, were built to provide power to specific areas and industries over in the early 1900s

• Most are not dispatched by the system operator – compliment the system with renewable electricity

• No or minimal flooding to build – best liked form of sustainable generation

Large Hydro• Sir Adam Beck is our largest station

2,100 MW and most flexible

• Dispatched directly by system operator – a sponge for the system

• Larger storage capability – including pumped generation in Niagara

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Seymour GS 5.7 MW 1909

Sir Adam Beck Complex 2,100 MW Beck 1 1921 Beck 2 1954

Approvals

An environmental assessment must be completed under the Environmental Protection and Environmental Acts

Consultation with the public and Indigenous communities is part of the EA Process

Once the EA approval is obtained, numerous permits fall within federal, provincial even in some cases municipal jurisdiction under the Planning Act

In addition to permits, the project would not be financially viable without a contract with the Independent Electricity System Operator (IESO). The Minister of Energy can direct the IESO to negotiate a contract for the output of the plant

Site release process for both Federal and Provincial lands with defined processes. Once a site is released relevant legislation must be complied with.

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Former CEO Tom Mitchell speaks to members of the Mattagami First Nation about a proposed project.

Respecting the Environment Fish

• Fish are protected by the Canadian Government, The Fisheries Act, and by Ontario Environmental Protection Act, Environmental Assessment Act, Water Resources Act and the Lakes and Rivers Improvement Act

• OPG works to ensure that fish and fish habitat is protected and that mitigation measures are part of EA commitments.

• Installed eel ladders at Saunders G.S.

• Indigenous Peoples are consulted to obtain traditional knowledge

• OPG typically hires independent third party subject matter experts to ensure the integrity of data and overall assessment

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OPG is the lead sponsor of a program to bring back the Atlantic Salmon in Lake Ontario

Communicating our plans

On new projects we consult with the

public and Indigenous communities

Share information and respond to

their questions and concerns in a

respectful and transparent manner.

Small communities are interested in

the local employment and economic

benefits that construction of hydro

facilities brings and we identify those

opportunities as part of the EA and

our communications

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Tour of Peter Sutherland GS Construction for Taykwa Tagamou Nation Members

Unique Relationship with

Indigenous People

OPG’s First Nations and Métis Relations Policy

Provides guidance in community engagement and outreach, capacity-building support, employment and business contracting opportunities

Two completed projects in partnership with First Nations

Lac Seul First Nation on the Lac Seul/Obishikokaang Waasiganikewigamig Generating Station in Ear Falls in northwestern Ontario - started generating electricity in 2009

Moose Cree First Nation on the Lower Mattagami River Hydroelectric Project (438 MW)

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OPG Board & Moose Cree First Nation Celebrate in service of 267 MW Smoky Falls/ Kâpâškilehtehk GS in 2014

OPG’s Relationships with Indigenous

Peoples

Redress past grievances

OPG takes a long-term approach in planning

Some of our generating stations are over a hundred years old and we go into projects with that time frame in mind.

We are in it for the long term. So are our partners

Communicate early and often with Aboriginal communities which may be affected by a project

OPG continues to consult with Aboriginal Communities after the EA is completed and the project moves on to construction and then into operations

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Moose Cree Chief Norm Hardisty Jr. with former OPG President Tom Mitchell commemorate the Amisk-oo-skow comprehensive agreement

Small Hydro First Nation

Partnerships Obishikokaang Waasiganikewigamig or Lac Seul GS (2009)

12.5 MW Station

Lac Seul First Nation has 25 per cent equity share

Completed in 2009, First Nation enjoy a steady revenue stream

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Mike Martelli & Chief Clifford Bull

Hydropower process at Lac Seul has enabled Lac Seul First Nation to invest in a Tim Horton’s Coffee Shop. Tabitha Jourdain and Chris Angeconeb(photo from North Ontario Business)

Taykwa Tagamou Nation (TTN) and

OPG have partnered to build Peter

Sutherland Sr. GS.

Two 14 MW unit, 28 MW station.

$300 million project expected to

employ 220 workers at peak.

2018 target completion.

Station named after a respected

community elder, the late Peter

Sutherland Sr.

Station will use a portion of the water

flowing down New Post Creek to

generate electricity by transporting

water approximately 600 meters to

the power house on the Abitibi River.18

Small Hydro First Nation

Partnerships

OPG’s Paul Burroughs and Mike Martelli at project ground breaking with TTN Chief Dwight Sutherland

Transmission & First Nations

Hydro One own and operate transmission lines.

Ontario Government recognizes Aboriginal participation in the energy sector is one of the keys to the economic development of Aboriginal communities.

The largest most recent transmission project in Ontario, the 180 km, $700 million expansion of the Bruce to Milton transmission corridor was completed in 2012.

• The Saugeen Ojibway First Nation was subsequently provided with a 30 per cent ownership in the completed line. The stake has a value of $72 million.

• Hydro One and the SON entered into the limited partnership on commercial terms and the venture will earn valuable revenue for SON’s community members.

The Pickle Lake transmission project in Northwestern Ontario is largely under First Nation ownership.

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Water Management

OPG shares the lakes and waterways with residents, Indigenous Communities, tourists and businesses.

Water management planning focuses on managing impacts related to water levels and flows.

Water Management Plans identify water flows and lake level compliance requirements for water power facilities and their associated control structures and the process used to develop these compliance levels.

Water use is also managed using permits e.g.Permit to Take Water under the Water Resources Act.

Limited experience with irrigation – it is more of a concern in areas in the U.S. like California.

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Water Management

Plans should deliver a net benefit to society, while protecting and enhancing the natural ecosystems.

Key to developing water management plans is public consultation.

• Advisory committees consisting of members of the public, input, comment and advise the Planning Team in developing the plans.

• With this input the Planning Team develops several objectives for that particular water system,

• While each plan is unique, waterpower is never first. Fish are the priority. (e.g. Nipigon River)

1. lake fishery (60%)

2. river fishery (25%)

3. water power (10%)

4. recreational users and owners (5%)

Water power is typically weighted lower except during emergency situations such as a blackout where it would come first

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Canadians Support Hydropower

Canadian Hydropower Association Survey• 44 % of Canadians

regard hydropower as preferred generation source (20% wind, 14% gas)

• 68% perceive hydropower as a clean, renewable, safe and reliable source of energy.

• 77% support the development of hydropower facilities. (only 1 per cent strongly oppose it)

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Ontarians Support Hydropower

Ontario’s electricity system was

built in the 20th century on a

foundation of hydropower.

In Ontario we call electricity

“hydro”.

Prior to the advent of thermal

and nuclear power in the

1950s and 1960s just about all

generation in Ontario was

hydropower.

Sir Adam Beck (1857 – 1925)

much revered founder of public

power in Ontario.

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OPG Builds Community Support Meetings with elected officials and

community members

Participation in community events (Fairs, Chamber of Commerce, Charity events, water festivals)

Regular outreach to water management plan stakeholders.

In 2015, provided community investment support (charitable, non-profit, and in-kind support) to 461 grassroots Hydro host community initiatives:

• environment; education

• secondary and post-secondary student awards

• community (health and safety, arts and culture, youth amateur sport, humanitarian and local causes)

• support of First Nations and Métis initiatives.

Measure level of support with independent market research

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Media Outreach:• Advertising – print, radio, TV• Employee communications• Social Media – Web, Twitter, Instagram,

Facebook • Virtual Town Halls• Media 24/7

Industry Associations – share common values

OPG staff make valuable contributions to:

Canadian Hydropower Association• Mike Martelli – Board of Directors

• Promotes the technical, economic, social, and environmental advantages of hydropower. Advocates for responsible development and use of hydropower to meet our present and future electricity needs in a sustainable manner.

Canadian Dam Association • Tony Bennett– President

• The CDA provides a forum for the exchange of ideas and experience in the field of dam safety, public safety and protection of the environment.

• Mission is "to be the recognized leader in advancing knowledge and practices related to dams, consistent with social and environmental values.”

Ontario Waterpower Association• Heather Ferguson – Board of Directors

• Mission: “be the collective voice advocating for the Ontario waterpower industry”

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Paramount Focus on Safety

“Safety first, nothing else in front of it”. J. Lyash, OPG President & CEO

Employee safety performance is consistently in top quartile of comparable Canadian utilities.

Stay Clear, Stay Safe water safety program raises awareness of the dangers of getting too close to OPG’s hydroelectric station and dams.

Rigorous dam safety program ensures our dams are safe.

Active world-wide in improving dam and public safety and sharing best practices. Pickering Nuclear Station

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Stay Clear, Stay Safe

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Manténgase alejado

Mantenerse a salvoClick black box to play

Questions

Gracias . ¿Tiene usted alguna

pregunta?

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Appendix 1:

Water Rights Treaties exist between the USA and Canada pertaining to rights and use of water from

bodies of water shared by the two countries (e.g. these apply to our Niagara and St. Lawrence facilities).

International Joint Commission consisting of representatives from both Canada and the U.S.A. The Boundary Waters Treaty, signed by Canada and the United States in 1909, guides the IJC.

Hydroelectric generating stations in the Province of Ontario are subject to the Electricity Act, 1998 (Ontario).

• 8 stations fall under federal government jurisdiction and are licensed with the Parks Canada Agency of the government of Canada.

• 37 - including those on the Niagara, St. Lawrence and Ottawa Rivers) are authorized by waterpower lease agreements with the Ontario Ministry of Natural Resources.

• 12 stations are owned outright by OPG (not subject to leases or licences).

Crown Leases (CL) – Ministry of Natural Resources and Forestry Typically provide rights to occupy land at dam sites and may include flooding rights; registered title; Variable length.

Licenses of Occupation (LO) – Ministry of Natural Resources and Forestry typically provides flooding rights for storage reservoirs; non-exclusive; not registered; Variable length, often coterminous with associated WPL.

First Nations claim they never gave up water rights in the same way they gave up land title. Aboriginal people have Aboriginal Rights to hunt fish and gather.

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Appendix 1:

OPG Pays for Water Use

Gross Revenue Charge (GRC)

• Based on amount of generation

Property component – paid by all

stations to Ontario.

Water Rental component – paid for

stations with a water power lease or

water power lease agreement

Total payment is about $325 million

OPG also annually pays about

$16 million in total to Canada,

Province of Quebec & St.

Lawrence Seaway

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Appendix 1: Water Rights

Both Ministry of Environment and Climate Change and Ministry of Natural Resources and Forestry (MNRF) have jurisdiction over Water rights. On the Niagara River it is the Niagara Parks Commission.

MOECC has jurisdiction over permits to take water- which manages the ‘taking’ of water; MNRF managers via Lakes and Rivers Improvement Act the dams and how water is held back and how projects impact levels and flow.

The Federal Department of Fisheries and Oceans manages fish and fish habitat- lakes rivers, streams etc.

Water Power Leases (WPL)/ Water Power Lease Agreements (WPLA) provide: rights to occupy land for the purposes of generating water power; registered title; variable length, generally with renewal terms up to a total of 100 years, longest is 999 years for plants on the Ottawa River.

New Water Power Leases (new sites) – initial term of 20 years, with opportunity to continue to extend the lease for 10 year increments in perpetuity, if the lease is maintained in good standing

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Appendix 2: Site Licenses

Need to determine whether the lands are privately owned or by the

Crown (either Provincial or Federal).

• Approvals are required from the Ministry of Natural Resources for site

releases on Crown Lands (85 per cent of the province). The current policy

is to consider only site releases for projects that have obtained a

procurement contract from the IESO for the power.

• The project is also required to undergo a provincial Environmental

Assessment (EAs) under the auspices of the Ministry of the Environment

and Climate Change. Class EAs have been established to reduce

requirements for relatively small and standardized projects.

A federal Environmental Assessment may be required where there is

an impact on fish and on a navigable waterway. Options exist for the

federal government to defer to a provincial assessment.

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Appendix 3: Municipal Ownership

In the past several municipalities in Ontario owned and operated their own hydro generation plants.

1999 restructuring of electricity industry prohibited distribution companies from owning generating stations.

Subsequently, distribution companies allowed to own some renewable projects.

Local distribution companies (mostly municipal owned) acquire virtually all of the electricity their customers consume from the wholesale market managed by the Independent Electricity System Operator.

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Chaudiere Falls GS owned Hydro Ottawa (City of Ottawa)

Appendix 4: Indigenous Relations with Canada

is Evolving Section 28 of Indian Act does not allow land to be owned or sold by First Nations.

The First Nations Land Management Act is a federal law enacted in 1999. It provides signatory First Nations the authority to make laws in relation to reserve lands, resources and the environment as well as economic development decisions.

Reserve Lands, Traditional Territories, Treaty, and Aboriginal Rights• Treaties between the Federal Crown and Aboriginal people created reserve lands. The Federal Crown

has set these lands aside for the benefit of Aboriginal people, i.e., reserve lands are communal property versus private property.

• Traditional territory is defined as lands that were continually occupied by Aboriginal peoples since before European settlement or effective control. These lands are where Aboriginal people hunted, gathered and fished, and where they may have had cultural sites. In the north, traditional territories are usually land owned by the Crown.

• Early 1600s Champlain founded Quebec City. Contact had taken place prior to 1600s (as early as 1100)

• Section 35 of the Constitution, 1982 recognizes and affirms Aboriginal Rghts. It is important to understand that Section 35 recognizes Aboriginal rights, but did not create them—Aboriginal rights have existed before Section 35 and the federal government cannot override Aboriginal rights.

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Appendix 4: Canada Treaties with Indigenous

Peoples

Indigenous Peoples have Treaty and Aboriginal Rights

Important elements: • Two Row Wampum

• Silver Covenant Chain

• Royal Proclamation 1763

• Constitution, 1982

Treaties include historic treaties made between 1701 and 1923 and modern-day treaties known as comprehensive land claim settlements. Crown and Aboriginal people to be solemn agreements that set out promises, obligations and benefits for both parties.

Royal Proclamation of 1763 recognizes Aboriginal peoples as owners of the lands Europeans were using and occupying. Relationship is Nation to Nation.

Aboriginal rights have been interpreted to include a range of cultural, social, political, and economic rights including the right to land, as well as to fish, to hunt, to practice one’s own culture, and to establish treaties. Rights have been defined over time through Supreme Court cases.

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