Energizing Life Today and Tomorrow: Hydro One’s Journey from Tradition to Transformation

May 17, 2024

The Empire Club of Canada Presents

Energizing Life Today, and Tomorrow: Hydro One’s Journey from Tradition to Transformation

Chairman: Sal Rabbani, President, Board of Directors, Empire Club of Canada

Moderator
Michael Fox, President, Indigenous Community Engagement

Distinguished Guest Speakers
Jerome Julier, Executive Vice President & Chief Financial Officer, AECON
David Lebeter, President & CEO, Hydro One
Scott Andison, Chief Executive Officer, Ontario Home Builders' Association

Head Table Guests
Brock Baldassi, President, Decora Powder Coatings Ltd.
Chris Benedetti, Managing Partner, Sussex Strategy Group
Fiona Blondin, Vice President of Indigenous Strategies, Cormorant Utility Services
David Dal Bello, Global Co-Head Power Utilities & Infrastructure, RBC Capital Markets, RBC
Giancarlo Drennan, Vice President, Ontario Group Lead, Sussex Strategy Group
Stovel Ferguson, Partner – TS&T, PwC
Gabe Hernandez, Vice President - International T&D, Burns & McDonnell
Timothy Hodgson, Chair of the Board of Directors, Hydro One
Kelly Jackson, Past President, Empire Club of Canada
Vinita Jajware-Beatty, Chief Operating Officer, Enkompass Power & Energy Corp.
Rick Leetham, President, Safeline Utility Services Inc.
Victoria Mancinelli, Director of Public Relations, Communications, Marketing, Strategic Partnerships, LiUNA
Robert McNeil, P.ENG President, Composite Power Group Inc.
Chuck Mossman, Vice President, Southern Ontario Utilities Region, Black & McDonald
Ajit Someshwar, Founder and Chairman, CSI Group of Companies, Co-founder and past Chair, Canada India Foundation
Steve Sousa, Chief Commercial Officer, Valard Construction LP

Introduction
It is a great honour for me to be here at the Empire Club of Canada today, which is arguably the most famous, and historically relevant speaker’s podium to have ever existed in Canada. It has offered its podium to such international luminaries as Winston Churchill, Ronald Reagan, Audrey Hepburn, the Dalai Lama, Indira Gandhi, and closer to home, from Pierre Trudeau to Justin Trudeau; literally generations of our great nation's leaders, alongside with those of the world's top international diplomats, heads of state, and business, and thought leaders.

It is a real honour, and distinct privilege to be invited to speak to the Empire Club of Canada, which has been welcoming international diplomats, leaders in business, and in science, and in politics. When they stand at that podium, they speak not only to the entire country, but they can speak to the entire world.

Welcome Address by Sal Rabbani, President, Board of Directors, Empire Club of Canada
Hello, everyone. Welcome to the Empire Club of Canada, the country's go-to forum for conversations that matter, for 120 years now.

To formally begin this afternoon, I want to acknowledge that we are gathering today on the traditional, and treaty lands of the Mississaugas of the Credit, and the homelands of the Anishinaabeg, the Haudenosaunee, and the Wendat Peoples. Their stewardship of this land, their profound cultural heritage, and continued connection to these territories are central parts of Toronto's identity. We encourage everyone to learn more about the Traditional Territory on which you work, and live. This is an essential first step to Reconciliation, and each, and every one of us has a role to play.

Today, we have the pleasure of welcoming Hydro One's President and CEO, David Lebeter, in his inaugural address to the Empire Club of Canada. Welcome, David. It's great to have you.

The Empire Club of Canada is a not-for-profit organization, and we'd like to recognize our sponsors who generously support the club, and make these events possible, and complementary for our online viewers to attend. Thank you to our Lead Event Sponsor, AECON. Thank you to our VIP Reception Sponsors, Black & McDonald, Burns &McDonnell, Composite Power Group, Cormorant Utility Services, LiUNA, Pricewaterhouse Coopers, RBC Capital Markets, Safe Line Utility Services Inc, Valard, and Waste Connections of Canada. And thank you to our Supporting Sponsors, BGIS, CIBC, Deloitte, National Bank, OEC, and TD. Lastly, thank you to our Season Sponsors AWS, Bruce Power, and Hydro One.

As Ontario's largest electricity transmission and distribution service provider, Hydro One has a critical role in enabling a clean energy future for Ontario. We have important ambitions here in our province. The provincial government indicated that 400 billion of investment was needed to support the electricity grid, between now and 2050. This means that our electricity sector will undergo a profound, and rapid transformation over the next few years. Now, if you've spoken with David recently, you might have noticed that there's one word that he uses a lot, and I think it's important to highlight it, as it frames not only an approach, and the business model for Hydro One, but also a very important commitment; and that word is partnerships. David speaks a lot about partnerships with Indigenous communities based on trust, respect, and understanding, with the common objective to learn, amplify impact, and advance Ontario's energy sector. So, today, we will hear about Hydro One's industry-leading 50/50 equity partnerships with First Nations for their transmission line projects. Strategic partnerships that create win-win situations, and that de-risk projects and investments, partnerships that unlock opportunities for innovation, development, for economic empowerment, and economic Reconciliation for generations to come. Indigenous leadership, expertise, and partnerships are crucial to move our energy sector forward. And if we want to build a prosperous, clean province, and country for all of us, it's really important.

Of course, this is just one of Hydro One's strategy, and vision, one part. I'm looking forward to hearing more from David, and we'll accept questions from the audience for, for the speaker; you can, for those of you in the room, you can undertake to scan that QR code found in the program booklet. I want to thank you all for being a part of the Empire Club community. Please engage in the discussion, ask questions, put your ideas forward.

I would now like to take this opportunity to invite my dear friend, Jerome Julier, Executive Vice President, and Chief Financial Officer at AECON, to offer the welcoming, welcoming remarks.

Opening Remarks by Jerome Julier, Executive Vice President & Chief Financial Officer, AECON
Hi everyone. Thank you for the introduction, Sal. Sal is a long-time friend, we went to university together—huge amount of respect for the Empire Club. AECON's proud to be Lead Sponsor for the event today; very much looking forward to the discussion that David is going to bring forward. There's a lot to talk about. It's my honour to introduce David today, President and CEO of Hydro One. Hydro One speaks—and everyone's program booklet will have it on the front—to energizing life every day; I think it says today, and tomorrow. We at AECON see this as effectively just delivering electricity for everyday life, you know, meet evolving customer needs, community leads, and global expectations for what Ontario and Canada has to offer.

We all know what these expectations are: absolutely massive demand from economic and population growth, infrastructure and industrial electrification, industrial reshoring of activities coming back home to North America, AI-driven power demands, and growth in EV's. Electricity demand is on trend to effectively double by 2050, and we need to be ahead of the game to figure that out. This going to result in a lot of ongoing investments—Sal just mentioned 400 billion dollars across sectors, to build the capacity we need to meet these demands for future generations. For our kids, our future kids, their kids, and all the people are going to come to Canada as new Canadians. It's important, and it's certainly welcomed by all the teams at AECON, and as we build the critical infrastructure that's going to help meet that demand. David's going to delve into it. Partnerships are critical to deliver the infrastructure, through projects of increasing scale and complexity, involving a lot of stakeholders and communities; very multifaceted. And that's something that, you know, needs to be addressed through partnership. It's the only way to get it done.

The industry experiences this growth, our partnerships are going to continue to grow and evolve to meet the challenge. In particular, Hydro One, just to use an example, and AECON today, are partnered on the Chatham to Lakeshore Transmission Line. It's a 49-kilometre project that is going to help meet growing electricity needs in Southwestern Ontario, helping to deliver, you know, clean Ontario energy to where it needs to get. Aligning our shared communities to collaborate, and partner with our Indigenous, you know, communities, a significant portion of that work is included in procurement, and purchases from Indigenous sub-contractors and businesses. We're very proud of that; it's critical to AECON, and to our communities at large. So, while we proudly deliver some of the most complex infrastructure projects in North America, with the strategic focus on energy transition, we very much continue looking to continue the work with Hydro One. I would say that we want to deliver clean, affordable energy across Ontario. Now, today's keynote address, we're going to hear a lot of these important topics directly from David, who, with Hydro One, sits at the focal point of it all. At the helm of Hydro One since the beginning of last year, Chief Operating Officer for the few years prior to that, he's got deep experience, and I'm really looking forward to hear what he has to say on it. It's my pleasure, now, to welcome David to the stage, for his inaugural address at the Empire Club. Thank you.

David Lebeter, President & CEO, Hydro One
Thank you, Jerome. And thank you for that very warm Empire Club welcome, I expect nothing less. Such a privilege to be here today. More importantly, thanks for coming out to today. Your time is valuable, and I know that. So, it means a lot that you're here to listen to me talk about something that matters deeply to me, matters to Hydro One, and to our province. Now, before I do that, I have to say, back when I was starting out in the workforce, clearing brush, working in whatever conditions Mother Nature threw at us, I never imagined that someday, I'd be speaking to leaders at the Empire Club. I wish I could go back and tell that skinny kid how grateful I am to be here right now—I was skinny, at one time. That's why today, in honour of being here at this great Canadian institution—are you ready for it?—I wore my very best formal jeans. Come on. Truth be told, I also wanted to wear a plaid jacket—and I'm told that in, in Ontario, those are called the "Thunder Bay dinner jacket;" somebody else has one, there we go—but my wife said that was going a little bit too far, so, well, maybe next time, I'll do it; today, I didn't do that.

But here's the thing: my story isn't unique. I bet, if I surveyed people in this room, many of you would tell me you started at an entry-level job in your workplace, and you worked your way up to the top. I bet you have stories of back-breaking summer jobs that paid for school. And that's what's so cool about Canadians; we're scrappy, we're not afraid to roll up our sleeves, or rip them off, and let's just get the job done. I've seen it when I was that skinny kid in the West Coast in the 60's and 70's, just after Expo '67—don't try to guess my age—there was energy in this country that was, pardon the dad joke, electrifying. We believed we could do anything, and we did. We carved roads out of the bedrock, we built bridges across raging rivers, we connected this country with electrical wires, from coast to coast to coast. Canadians worked together to transform Canada for decades to come. And guess what? We're doing it again, because we are adapting, because our world is changing faster than any of us anticipated. This year, global sales of electric vehicles were up 20 percent over last year, one in every five vehicles sold in the world this year will be electric. No one saw that coming. People are switching from oil and gas to electric heat pumps. No one saw that coming. AI data centres are using two percent of the global electricity—that's equal to Canada's national electric electricity consumption—and AI is just getting started. Again, no one saw it coming.

I'm reminded of an old black-and-white picture, taken on 5th Avenue in New York City, in the 1900's; it was all horses and buggies. They took a picture in the same spot about a decade later, and it was all cars. Can you imagine what a wild moment that was? One day, you're almost being run over by a horse, and the next day, it's a Ford Model T coming down the road at you. To me, that's a reminder that, sometimes, massive change comes at you very fast. And I believe that's where we are now. I believe we're an electrification inflection point—Jerome used that word. about an inflection point—the tools we have are getting quieter, faster, smarter, and cleaner than ever before. And as history shows, it's gonna happen faster than we think. It's already starting. All of this is good news for the planet, for my daughter, my grandkids, and their children, and many future generations. Because electrification is better in a warming world. But it also means we have to support the growth with new infrastructure, an expanding distribution system, new transmission wires, new electricity generation, and new tech. And guess what? We can do it. As I said, we've seen it done before, and we can do it again. And the best part is, we're going to move forward in new ways, and smarter ways. Because if you want to build something different, you have to be something different. And that's really what I want to talk about today. I want to paint a picture of the future of the electricity sector in Ontario for you, and I'm going to talk about three things. Where we were. Where we are, and where we're going, as Hydro One, as a province, and as a country, then I'll tell you where you come in—yes, you have a part to play in this.

First, let's talk about where we were. In 1873, the first electric light was switched on in Canada. We adopted electricity fast after that. In 1881, hydroelectric power became the first form of commercial electricity in Canada, and in 1882, the lights were turned on in the federal parliament buildings. In 1906, the Hydroelectric Power Commission was created by the Ontario legislature. For 50 years after that, the grid expanded fast. It sparked industry, it created jobs, it attracted immigrants, it led to a housing boom, and we grew up as a nation powered by electricity. Moving from that first electric light in Winnipeg to the whole country being lit up took just a few decades. And Hydro One was there almost from the beginning. By the early 1970's, all of Ontario's power systems had been merged, and we had one big, powerful grid.

So. Where are we now? That brings me to my second point, where the Ontario, Ontario energy sector is today. Now, I'm not going to talk about, about electricity generation. Hydro One's business is in energy transmission and distribution. And our partners in the generation sector—some of you whom are here today—have a different part of that business. As a very basic explanation, I tell my friends to think of it like a car. We're the Formula One car that gets you from start to finish, and they're the engine under the hood. The energy sector is an exciting place to be right now, and Hydro One is the centre of it all. For my part, I have to say it is the privilege of my life to lead a company that plays such an important role in powering Ontario's economy forward into the future. We operate more than 90 percent of Ontario's transmission system, and we serve 1.5 million customers in our province. Through Hydro One remote communities, we serve 24 communities in Ontario's Far North. Our unregulated aux company provides business-to-business energy solutions, and we co-own EV Charging Network, a growing company that provides reliable charging solutions for EV owners. But Hydro One is so much more than that. Electricity continues to be the backbone of our country, and our economy. And it's changing right before our eyes.

When I started out in the industry, very few people were talking about promoting clean energy. Today, it's a business imperative. Countries around the world are working together on decarbonization. Governments, Ontario included, are investing in research and development in new, cleaner technologies, to create economic growth and jobs. Governments are also bringing manufacturing and mining of raw materials within their own border, and they are creating new incentives for industry, too. For example, Canada's 2024 federal budget included a new Investment Tax Credit to support the EV supply chain manufacturing sector. It also created the Indigenous Loan Guarantee Program—let's have a round of applause for that particular program, I think it's fantastic [Applause]. Closer to home, Ontario is launching a new, Ontario-made, Manufacturing Investment Tax Credit. But let's be clear: it's not just about government making things happen. This is in response to market demand. We have lots of experts from Canada's financial institutions in the room today, and you know the market's demand carbon disclosures, sustainability, clean and renewable energy, on top of profits. All of that is being driven by people. By customers who want options, not just homeowners, but by industries that are looking to decarbonize, looking to electrify operations, or, as we've seen recently, set up shop in Ontario. They want battery storage options for peak periods, and reliability. Homeowners are plugging in their vehicles in their garages, entrepreneurs, and again, visionary-types, want to connect their own generation and storage solutions, and send electrons back onto the grid. The point is, industrial, commercial, and residential customers care more about clean energy now than ever before. And demand is up, because of fuel-switching in industries, homes, and transportation. It's up thanks to population growth, and immigration, and because of agriculture, and because of data centres that run AI, cryptocurrency, and cloud services. The grid we built was a great achievement, the pulsing heartbeat of North America. But we need to revitalize and expand it to handle all that new demand, and Hydro One is doing that as we speak, and we need to keep on this path.

Before we talk about my third point, which is, where are we going, we needed to back into the past for just a moment. All that electricity, all the electricity expansion we saw in Ontario in the early 20th century was about giving access to electricity for municipalities, industry, and farmers. Yes, the expansion was ambitious, and it was very impressive, but two things can be true at the same time. It also reflected a colonial mindset. Indigenous people and communities were not consulted. Often, their communities were not connected to the grid, hydro lines and generating stations were built through Traditional Territory, burial grounds were flooded, and Indigenous communities were displaced. There was no partnership, or benefits for Indigenous peoples and communities. Let's just let that sink in for a minute: there was no partnerships or benefits for Indigenous peoples or communities.

But back to my third point. Yes, as we move forward, we need to be ambitious. But this time, as Hydro One builds a better future, we're going to be ambitious together. We're not going to repeat the sins of the past. We're moving forward in partnership with Indigenous people—[Applause]—thank you. As we expand, hydrogen is offering equity to First Nations for new transmission lines. We are building relationships before we build infrastructure. Take Hydro One's Waasigan partnership as an example. We're building a new transmission line from Atikokan, Thunder Bay, Dryden—I got that in the wrong order, but it doesn't matter—this green-fuelled line goes through Traditional Territories of nine First Nations, and I'll be really frank: it didn't start out on the right foot. Now, we're working together to develop—now, we're working together with these nations, as we plan, develop, and engage. And I'm proud to say, Hydro One launched our 50/50 Equity Partnership Model with this project. Those nine First Nations will have 50 percent equity ownership in the line. They get to share in the benefits, and the ownership of that line. And then model applies to every future transmission line over 100 million dollars. This will also help infrastructure get built better, and faster, as we share in the benefits. I hope history will see this as meaningful Reconciliation. We aren't approaching these relationships like we have all the answers, because you know what? We don't. We are asking for, for the input of our partners on how projects should be developed, and how they should be maintained. And beyond our 50/50 Equity Partnership Model with First Nations, we are working with communities to address their fundamental needs, and their desires, before proposing programs and partnerships. Moving forward, Indigenous partners will continue to be integral to sustainable growth, and their participation will help us meet the needs of Ontario now, and for future generations. In fact, all our partnerships are changing the Hydro One develops, builds, and owns infrastructure in our province for the better.

For example, Hydro One is pitching in to solve the problem of extending high speed Internet to rural areas in Ontario. We've gone above industry norms, by allowing telecom operators and Internet service providers to replace our poles, and work independently on our infrastructure, provided they made our safety and quality standards. We're doing this work because we are a team player when it comes to Ontario's economy, and the quality of life. Another way Hydro One is taking a more active role in the future of Ontario's economic development is by getting involved earlier. When the Stellantis and Volkswagen battery plants were being negotiated, we didn't wait for signed customer service agreements. We know that Ontario needs significant new transmission infrastructure to support these facilities, and the jobs that come with them. So, we got started right away. We ordered equipment early, to avoid supply chain delays. That's our way of helping Ontario be open for business. The business of the future.

And I think every utility has to do that; every person in this room has to do this. Like I said, I started my career clearing, clearing brush. And you know, what? I'm still doing that, in a way. I'm still making sure that nothing gets in the way of the future. And I think each of us is in the brush-clearing business. Each of us has to focus on solutions that move the economy, and our quality of life, the health and well-being of our planet, forward. Now, look, I'm in the most important part of an amazing career, a career that I'm very proud of, and the work ahead of me is the most exciting work I've ever done. So, I'm rolling up my sleeves. Every day I get to go into the office, I'm clearing the way for the world that our kids, and grandkids, and their children will inherit. But folks, what a world it will be. Imagine it. The affordable homes that the next generation needs, powered by clean energy. We're working with the Home Builders Association right now, to get those homes built, and connected to the grid faster. And in those homes, imagine all the EV's, silently charging up at night, connected to secure, and a stable source of power to get people to work, and to school in the morning. Imagine all the businesses, and dorm rooms, and labs, where AI will be powered up, helping real people solve real problems in real time. Think of the breakthroughs in medicine and research, a revitalized and expanded reliable grid will make all that happen. New indices will be coming here to tap into our talented workforce; we're already seeing that. I believe we can clear the way for a quieter, faster, smarter, more productive, cleaner, and better future. We can usher in a change our country hasn't seen in more than 100 years—but only if we work together.

So, here's where you come in. It's going to take all of us in this room today to make this happen. Everyone at Hydro One working to build the network of transmission, and distribution lines, getting electricity into people's homes, vehicles, and businesses, supported by municipal, provincial, and federal governments; in partnership with Indigenous people, the finance sector, the distribution and generation sectors, agriculture, mining, forestry, manufacturing, and research. It's going to take all of us working together to clear the way. And if we can do that? I believe what we will build together will be amazing. It will last for decades to come. So. Let's get 'er done. Thank you.

Sal Rabbani
Thank you. Thank you very much, David. I'd now like to take this opportunity to invite Michael Fox, the President of the Indigenous Community Engagement, to the stage for our discussion.

Michael Fox, President, Indigenous Community Engagement
Excellent test, test, test—does it work? All right. I just finished coming back from across the country, and I just wanted to say thank you for, for asking me to, to have a chat with you and, and, and sort of co-host this. But I always say, first things first—and the first thing's, here, is the First Peoples. And I just wanted to acknowledge all the Indigenous leaders, and business leaders that are in the room. Can you put your hand up, so I know where you are, or who you are? Thank you. [Applause] There was a time where there was none. And I always say, we were talking, [indiscernible] and I were talking about how things have evolved, and being progressive. And I was just in Vancouver, at a CIM conference, there, I was at the conference in Calgary this week, as well. And, and I was just calculating with my staff, I think it's seven, over seven billion dollars last year in Indigenous spend, across the country. And I stopped, like, my staff; I wanted the numbers, you know, for this. And so, I think you're right about the, you know, change, you know, things are, things of the past, things we're dealing with the present, and in the future, is one of partnerships I think, as, as you say. So, maybe I'll start with the first question related to Indigenous. And so, given the, the increase in interest by First Nations, and Métis groups to get involved in the energy sector, what is Hydro One doing for Indigenous Reconciliation? I know you mentioned some of that, but what is the future vision beyond the financial model, for, for Indigenous Reconciliation?

David Lebeter
Indigenous Reconciliation is a, is a huge topic, and I don't begin to want to try to define what it is. What I'd like to say at Hydro One is, we want to change the history, and create a different future going forward. One where I'm going to use that word again, that Sal said I use all the time, is partnerships. Certainly, the 50/50 Equity Model is an example, all of that. But we're also going into communities where we don't have any projects, and we want to understand what are their needs, what are their aspirations. You know, I said we, we, serve 24 remote communities through our Hydro One Remotes. Those are all Indigenous communities. They have aspirations. And it's not up to us to tell them what those aspirations are, but it's certainly up to us if we can help them achieve those aspirations. We're working really hard to increase our Indigenous employment. We get a target of 3.5 percent, and I think we're over four percent now—if we're not, we're getting very close to it. We're working hard to create really satisfying careers that allow people to give back to their communities, and create opportunities. We're targeting five percent of all of our procurement spend is with Indigenous businesses. And we're, we're taking a little bit of a different approach. It's not up to us to define what an Indigenous-owned business is. We're leaving that to the Nations to tell us, "This is an Indigenous business;" therefore, we're happy to do business with them. So, we're moving forward on many fronts. And I know when I talk, I was at the First Nations Major Project Coalition two weeks ago, and there were some great ideas, and what we might think about doing in the future. So, lots of conversation. It's a dialogue that doesn't end. We got a lot of history to make up for—more importantly, we've got a fantastic future to build, and we're not going to do it on our own, and we're not going to do it the way it's done in the past.

Michael Fox
Thank you. Excellent. So, for the audience, as well, I think there's a scan, or something; you can actually ask questions and, and we can we can take them up. So, I'm going to ask about three more questions, or four more questions. There's been much talk about green transition. What does that mean to you in Hydro One?

David Lebeter
A green transition for us is about how do we keep this engine that is Ontario, and this fantastic life that we have...

Michael Fox
M'hm (affirmative).

David Lebeter
...moving forward and getting better, while burning less carbon-emitting fuels. I'm going to be a little bit controversial; maybe not. I don't think carbon fuels are ever going to go away, certainly not in my lifespan. But we have a tremendous opportunity. If we can, if we can take them out of the home, for home heating, for example, I talked about heat pumps, if we can electrify as much transportation as we can—there's certain sectors of our economy that are easier than others to electrify—if we can do that, we're going to make a significant dent. Right here in Ontario, the steel mills are switching to green steel; they're going to electric arc furnaces, and moving off coking coal. We're supporting those projects with transmission infrastructure, and build. There's just so many, where there's an opportunity to get off of a carbon-based fuel, there's a good business case for it, we're going to be there to support that transition. And really, our role is, let's make it happen as quickly as possible—so, we want to get out of the way, so you can build your projects, and run your business—and we want to be as efficient, and low-cost as possible, so we're not adding burden to your business, again, so you can go run your business, and help transition this province, and make it a great place that it is.

Michael Fox
So, the third question here from, from EV's to electrifying steel making, it's clear that the electricity ban is on the rise. How is Hydro One preparing for this?

David Lebeter
We've got an amazing planning team that works in a, in a close cooperation with the Independent Electric System Operator—and I see Lesley Gallinger, and Chuck Farmer are here—and they're really our partners. We look across the entire province, there's 24 regions, we link in, both of our organizations link in with the government: where do you have investment coming, and what type of investment? How big is the load; when do you need that load? And then we build plans, and we start building that infrastructure. So, right now, we're working on nine transmission lines, five in the south, three in the northeast, and then the Waasigan Transmission—that probably doesn't add up to, oh, it does add up to nine—I got my math right, what do you know? And you know, the, the Waasigan Transmission Line, it's an amazing project, it's almost 400 kilometres long. That is really going to unlock the potential of that corner, of the northwest corner of the province, for mineral exploration, mineral processing, completing that entire supply chain network within the province of Ontario. So, it's looking forward, where is the demand going to be? Let's get the system ready, so when that demand comes, it can plug right in. And I think we're getting better—there's still room we can all do to get better at that.

Michael Fox
So, this one's a, it says, earlier this year, the government-appointed Electrification Energy Transmission Panel released the Clean Energy Opportunity, which says, "The transformation towards a clean energy economy, the risk-return balance between proactive build-out of energy infrastructure, and reactive planning has shifted." Do you agree? And how does Hydro One need, what does Hydro One need to do to be proactive, and invest in the system, to address the recommendations?

David Lebeter
Sure. I said I wasn't going to talk about generation—but I can talk about it now, I'm not on the, behind the podium anymore. Ontario, if you don't realize it, Ontario is a very special place. You know, we're building, re-building, and building a new nuclear fleet; it's a renaissance in nuclear going on in this province. We already have a strong base of renewables, and the IESO is increasing the renewable penetration, they're also increasing and creating battery storage. So, all the right ingredients: you've got nuclear generation, hydroelectric, renewables, and batteries. And I challenge you to find another place in the world that is undergoing that kind of an investment profile right now, in terms of getting ready for the future. And why that's important is when businesses are looking to locate, they want clean energy. It doesn't do you any good if you're making an electric vehicle with coal, if your energy is coming from coal, it defeats. So, one, they want to find a place that has clean energy, they need some place that has stable energy, they want a stable government, stable regulatory regime. And as I said in my speech, they want to know the supply chain sits within that same jurisdiction, so they don't get caught in the same way that we saw Europe get caught with natural gas supply, when Russia invaded the Ukraine.

Now, we have competitors across the border, the states across the border would love to get the same investments that we've been getting. And many of them, we saw the hollowing-out of the industrial part of the of the United States, when they exported all their jobs and manufacturing offshore. But those sites are still there, and they have energy infrastructure bringing power to them. So, that's what we're competing with. So, if I'm looking at making an investment as an, I want to build something, I'm going to look at where do I have the best supply chain, the most skilled labour force, the cleanest energy, and I'm going to look at costs. And then, I'm going to look at how quickly can they service me. So, if we don't build our infrastructure a little bit earlier than we have been in the past, anticipating where these loads are going to come—and we have a pretty good idea, between ourselves, the Independent Electric System Operator, and the government, we have a pretty good idea where these investments are going to need to be made. If we build that, it's a little, bit of "Build it, and they will come," because if you're not ready when they show up, and they want to put in 1000 megawatts, or 500 megawatts of load, and someone down across the border says, "Hang on, I got a site here you can use," then you lose that investment. And when these massive investments are made, they're gone forever. So, I do think we need to be a little bit more proactive. The system we've had for the last 50 years was not experiencing the kind of growth we're seeing now. So, we have to adjust.

Michael Fox
So, I worked, I worked in water power before, in Northern Ontario, and, and it was pretty progressive back then, in terms of the enabling mechanisms for

David Lebeter
M'hm (affirmative).

Michael Fox
...to get into, for First Nations and Métis groups to get into a generation of, of all types. And that included the, the Ontario Finance Authority Aboriginal Loan Guarantee, which enabled a lot of equity ownership. Now, now there's a renewal. So, I'm going to say this one question, here. The Ministry of Energy and the IESO has made it clear, the upcoming procurement for non-emitting resources will place an emphasis on Northern Ontario, and the economic participation of Indigenous communities. The design of the next procurement, scheduled for later this year, LT2, up to 2000 megawatts, specifies that the connectability will be assessed at the time of commercial operations, five to eight years from now. How is Hydro One preparing for the required concurrent build-out of transmission-enabled new generation, such as water power, which is sort of a fixed, and known location?

David Lebeter
Well, the Waasigan, as I mentioned, the Waasigan Transmission Line runs right through from Thunder Bay to Atikokan, through to Dryden. And that's going to open up that whole stretch. That's a transmission line that can both deliver electricity to supply load...

Michael Fox
M'hm (affirmative).

David Lebeter
...it can also take generation, whether it's hydroelectric or wind, and then bring it back, and get it down into the south, or wherever it's needed in the province. That's just one example. I know that the province, and some of the First Nations up, up in the North, north of where this transmission line is going, they're looking—how do we electrify their, how do they electrify their communities? That becomes another path. And they start looking at what's the best route, best route to get there. Do you go by where there is hydroelectric potential? Again, that comes down to talking to the people that live in the area, talking to the people that have aspirations, and forming those partnerships, and working through the details.

QUESTION & ANSWER

Michael Fox
Right. So, I'm going to go to the audience questions now—now I feel like I'm at a campfire, and we're going to talk—here we go. The first one....

David Lebeter
Right. You're doing a great job.

Michael Fox
Yeah, okay. All right. The first question is: "Are you worried about the regulatory overreach as it relates to the energy policy in Ontario, and the possibility that it would deter industry investment in Ontario over the long run?"

David Lebeter
I think the regulators in this province are amazing—and I, I say this when I go to marketing tours—we have a predictable regime in Ontario. Now, does that mean that there's not going to be challenges and bumps? No, it doesn't. There will be. But it is a predictable regime. It's well-structured. In fact, what you see, we saw in New Brunswick is copying part—Nova Scotia, I should say, has been copying part of what we have in Ontario; Alberta, about six months ago, started to adopt parts of the regulatory regime that we have in Ontario. So, the Independent Electric System Operator, the Ontario Energy Board, they look around at all the regulators around the world, and they try to take the best practices and bring them back here. So, no. I'm not concerned about our regulatory regime. I think it's great, it's predictable, it's stable, and it's, more importantly, there's really good people running it.

Michael Fox
The next one is: "Technology, and using it to our advantage within the grid, is going to be critical. How is Hydro One deploying new methods, and technology, to make sure we optimize the current grid, and build efficiency?"

David Lebeter
I'm gonna use that word partnerships. We don't have all the answers—there's a lot of really smart people out there doing innovation, and bringing ideas forward. The OEB has a sandbox, which is where you can take new ideas and, and trial them in real time. We're working with them on that, we've got a few trials going on there. Whenever we do procurement, we always reach out, and say, "What is new? What is different? How can we adjust how we're approaching our business to get better?" Our transmission lines, for example, you may be surprised to know, Hydro One doesn't actually build transmission lines. What we do is we go to the street and we contract out to the people that actually build these transmission lines all over the world, and we say, "What innovation can you bring back? What is it that we're not doing that we should do? What's new out there that we should try?" So, we're always looking to do it better, and incorporate new technology, knowing that the world is going to be digital, knowing the world is going to have more control, the electrons are going to be moving in different directions, and knowing there's going to be more market participants.

Michael Fox
I like this rapid-fire thing. It's, it's good.

David Lebeter
You want to slow down, or?

Michael Fox
No, no. It's good. Right to the point. It's how I like it.

David Lebeter
This audience is never shy about giving good questions.

Michael Fox
Do you believe that the, that only bigger is better? Is there a place for medium-sized, municipal-owned distributors?

David Lebeter
That's a hot potato. So, let me answer that by saying, I don't believe there should only be one distributor in the province. I do believe there is a minimum threshold and size that you're going to have to achieve, in order to make the investments that we're going to need, and in order to keep overhead costs at a reasonable level. You talk about spending that 400 billion dollars, I think it was Jerome mentioned that, that came out the Pathways to Decarbonization that was published by the Independent Electric System Operator, that didn't include distribution. That was 400 billion on transmission and generation alone—the numbers I read are anywhere from doubling or tripling to the investment that has to go into the distribution side. So, that is going to be really difficult for municipalities that have been used to getting a dividend or payment from their local distribution company. It's going to be difficult for them to raise the equity, and the financing, to build that kind, to make that kind of investment. So, I think there is a role for larger—I'm not going to say where that where that cutoff is. But I think that some of them are just too small going forward that, in order to participate in the transition.

Michael Fox
You mentioned that fossil fuels will never be, will never not be needed, at least in your lifetime. How does the future fit in your view, specifically, with hydro and natural gas?

David Lebeter
You guys keep putting me on the spot, here. Chatham House rules, right? We're going to need a lot of sources of generation, so for example, right now in Ontario, you're seeing our gas turbines be running more frequently. They need to run more frequently, why? Because we're refurbishing the nuclear fleet. It takes time to build the infrastructure. Natural gas is a lot less emitting than coal, so we're gonna probably have that with us for a long time. But what I expect to see is that its use is going to diminish over time, as we build up more battery storage, as we build up more renewables, as the new nuclear fleet comes online, you're going to see less dependence on it. It's wonderful—like hydroelectric, it can scale up very quickly, and it can come down. So, it's probably always going to have a role there, but it's going to be a lot less than it is today.

Michael Fox
So, what partnerships are you fostering with the labour unions to address the development of a diverse, and skilled workforce? What more is needed?

David Lebeter
We're really fortunate we have a lot of unions we deal with. The, you know, the main ones have been LiUNA, Power Workers Society, [indiscernible] and CUSW, and each one of them understands the importance of diversity—not because it's the cool thing to do, but because by diversity, you bring new ideas, different thought processes, and you create a richer and better future for everybody. So, they've been very open to partnering with us, in terms of bringing in apprenticeships, setting up targets, setting up special programs to train disadvantaged groups, new immigrants, other, other groups that might not have had access to these careers in the past. And we're going to continue to push down that path.

Michael Fox
How is Hydro One supporting the growth in the mining industry in Northern Ontario?

David Lebeter
Well, we'll go back to, you know, the Waasigan Transmission Line. We're building three transmission lines in Northeast Ontario, that's to support Algoma's electrification of their arc blast furnaces. We've been looking at, with the IESO, but how do we strengthen the lines going up to the North-we know there's lots of investment going into Timmins, and the area around there, we've got lots of investment in the Northwest, gold mining. We've had discussions with the different miners, what do they need? What's their time frame? We'll work with them to try to make those a reality. We want them to be, we, we do not want them to be held up because they can't get the power, and we don't want them to have to bring in diesel generators, which is what some of them are doing say to move their projects forward.

Michael Fox
So, you mentioned transformation. What role does Hydro One customer play in this transformation?

David Lebeter
Yeah, the Hydro One customer is going to play the role that they want to play—and let me just expand on that for a minute. So, what we're seeing in the industrial sector, industries that have an option to get off of a carbon-based fuel are making that transition, and they're making it because their customers are demanding it of them. It gives them a competitive advantage in the market, so that's why they're doing it. So, those are very active customers. You're seeing other customers who want to be able to manage their load—so avoid that peak period when the peak demand is up, so they can reduce their overall costs—they're investing in battery solutions. We're seeing residential consumers, who have electric vehicles, investing in putting those electric chargers into their home. In the future, you're going to see a world where those electric vehicles can become a battery source for the entire grid. So, when there's surplus generation, and the distribution grid's not running at capacity, we can use that to charge those dispersed batteries—I think there's about eight million vehicles in Ontario, so imagine at some point in the future, there'll be seven or eight million electric vehicles. That's a massive battery. And you can put that back on the grid if you choose. So, that's a choice the consumer can make. Do they want to participate in the energy transition, either through demand-side management, or storage, or by buying more energy efficient devices, or not. I think you're going to see more incentives encouraging residential customers to switch over.

Michael Fox
How much of the future of the energy mix in Ontario will rely on just electricity? Are you concerned with, with recent OEB decisions that hinder expansion for infrastructure writ large, for instance, natural gas?

David Lebeter
As I said, natural gas is going to be with us for a long time. It's a, it's a it's a good fuel; it has a role to play. Right now—I could maybe ask the room, but I know a couple of people in this room would be able to answer the question very accurately—you know, the amount of energy that gets consumed in Ontario, only 16 percent of it comes from electricity. It's a very small slice. So, even if we triple it, we're still below 50 percent. There's a tremendous opportunity there, in how we can decarbonize the economy. And it shows, there's still going to be some of those other residual fuels, and the hard-to-decarbonize sectors are still going to be with us.

Michael Fox
What would you like to see, or what—would you like to see a tax credit for transmission investment within the provinces, given the amount of, of need? Do you have the ear of government on that?

David Lebeter
Somebody must have been with me in Ottawa about a month ago—that was the one of the purposes of the trip. If you want to—we've got to stop thinking about just tying provinces together. We need stronger inner ties between the provinces, but we need stronger connections within the provinces. So, for example, the connection that runs east-west, across Ontario. If the government, the federal government, wants to decarbonize the economy, why wouldn't they provide tax credits for that, as well? Because that is part of the solution, it's a big part of the solution. Most of our inner ties go north-south in this province, in this country; most of the energy goes down to the US. We have tremendous resources. We got the hydroelectric resource in Québec, we got a fantastic nuclear resource we're building out in Ontario, Manitoba's got hydro. Why wouldn't we tie those together, and work off the advantages of each other?

Michael Fox
Excellent. Well that that's it. I think we're, we're on time, and on point, and hopefully on budget.

David Lebeter
A year early, and under budget. Thank you, Michael.

Sal Rabbani
Thank you, Michael, and David, I'd now like to welcome Scott Andison, the CEO of the Ontario Home Builders' Association, to offer the appreciation remarks. Scott.

Note of Appreciation by Scott Andison, Chief Executive Officer, Ontario Home Builders' Association
Wow, this room looks even bigger from up here. Good afternoon, everyone. I am very pleased to be here today, on behalf of the Ontario Home Builders' Association, representing over 4000 companies in the residential construction industry. I'd also like to extend my appreciation to both Hydro One and the Empire Club for inviting me to participate today, on this crucial conversation about the future of Ontario's growth and development. As it's been said, we're in the midst of a very remarkable period of change, with profound transformations rippling across industries. As the provincial government embarks on an ambitious economic development agenda, the demand for housing surges in tandem with the need, with the need for reliable energy infrastructure. This is a reminder that the challenges and the opportunities that we face are intertwined, and that our responses must be equally dynamic, and collaborative. OHBA members bear the vital responsibility of building the housing supply, and provide the choices that Ontarians need. And this task is not just about meeting numbers; it's about creating homes and communities where families can thrive.

I grew up in a small, rural town in Northern Ontario. When I was about four years old, I had the unique opportunity to actually watch my dad build the home that we would ultimately live in, and where my parents would live for the next 45 years. I remember watching my father clearing the land with a chainsaw, and seeing various contractors coming in with a variety of machinery, to create the space where our home would ultimately live, or ultimately stand. Back then, one of the biggest challenges that my dad had were finding which friends and neighbours were available to help him build the foundation, and frame the walls, and to maybe decide what brand of beer should be on the, on the job site. And the issues of getting the right approvals and permits, and getting our home connected to the electricity grid, were such a minor consideration in the overall task of building a family home. Fast forward to now—which is more decades than I'm willing to admit—the home construction industry has become one of the most highly-regulated industries in the province. It requires every player in the home building industry and space to think and act differently, and to deliver and meet the emerging demands for new homes. And we are facing shortages in the housing supply at levels that we have not seen since the post-World War II era, and at the time of families building their own homes, is no longer the mainstream solution.

We know that as an industry, we have the talent, the desire, and the resolve, to meet the province's target of 1.5 million new homes by 2031. But it's going to take a unified effort by all of the parties, municipalities, First Nations, provincial partners, stakeholders, and the industries, to make the substantial impacts needed to accelerate development and construction across the province. We need an environment that dismantles barriers, reduces red tape, and implements measures that will allow us to deliver the homes that Ontarians need, and at a price that they can afford.

Most recently, we were encouraged to see the provincial government signaling their commitment to working with municipalities to streamline housing approvals. But this is just one piece of the puzzle. And that's where the combined efforts of stakeholders, and partners like Hydro One come in. Hydro One plays a vital role in the delivery on this housing supply, energizing communities across Ontario. The initiatives focused on modernizing systems and streamlining processes that we heard about today, demonstrates Hydro One's desire and commitment to accelerating connections, and so that we can deliver the keys faster to eager new homeowners. The home building industry and the energy sector both have invested significant effort and resources to modernizing our thinking, and our approach. And that's why I'm encouraged by what we heard today from David, about the opportunities for the home construction industry to better align with a modern Hydro One. This is also so that we can deliver more new homes faster, and meet the needs of a growing Ontario. And we also know that no single entity can address these complex issues that we face alone. Whether it's navigating regulatory hurdles, harnessing new technologies, or ensuring access to essential services like energy, collaboration is the key to delivering on this potential. Our province's future growth hinges on our ability to meet the housing and energy needs for current, and future Ontarians. And the continued challenges ahead will demand a collective response. Thank you again, David, for sharing with us how a modern Hydro One will continue to be a key player in supporting the viability of Ontario's future. And thank you for the opportunity to speak with you today.

Concluding Remarks by Sal Rabbani
Thank you, Scott, and thanks again to all our sponsors for their support, and everyone joining us in person or online. As a club of record, all Empire Club of Canada events are available to watch and listen to on demand on our website. A recording of this event will be available shortly, and everyone registered will receive an e-mail with the link.

On Thursday, May 23rd, join us for a behind-the-scenes glimpse of the Paris 2024 Olympic Games, with David Shoemaker, CEO of the Canadian Olympic Committee. On Thursday, May 30th, join us, and the Honourable Prabmeet Sarkaria, the Minister of Transportation for the Government of Ontario, to learn about his vision for a better faster, better, and safer transportation future in Ontario.

Thank you for all your participation, your support. Have a good afternoon. This meeting is now adjourned.