understanding canadian electricity generation and ... · understanding canadian electricity...

Understanding Canadian ElectricityGeneration and Transmission Sectors’Action and Awareness on Climate Change andthe Need to Adapt

December 2014

!!!!!!!!!!!!AUTHORS!!This!report!is!authored!by!Laura!Zizzo,!Travis!Allan!and!Joanna!Kyriazis.!!!ABOUT!ZIZZO!ALLAN!PROFESSIONAL!CORPORATION!

Zizzo!Allan!Professional!Corporation!is!a!boutique!law!firm!based!in!Toronto,!Canada!that!focuses!on!environment,!business,!energy!and!climate!change!law!and!policy.!!As!one!of!Canada’s!first!firms!focused!on!climate!law,!Zizzo!Allan!Professional!Corporation!is!a!leader!in!the!evolving!legal!and!advisory!landscape!surrounding!climate!change!at!the!national!and!international!levels.!!ACKNOWLEDGEMENTS!!The!authors!would!like!to!thank!Dr.!Blair!Feltmate,!Intact!Chair,!Climate!Change!Adaptation!Project!(University!of!Waterloo),!for!providing!very!helpful!guidance!and!input.!Special!thanks!to!Alexandra!Kocherga,!Jessica!Vaianisi,!Lucas!Ostrowski!for!research!and!writing!assistance!and!Hubie!Yu!for!research!and!design!support.!!!

!©!Copyright!2014!Zizzo!Allan!Professional!Corporation!!!!!!!!!!!!!

For$more$information,$contact:$!Laura!Zizzo!41A!Avenue!Road!Toronto,[email protected]!www.zizzoallan.com!

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Disclaimer:!Zizzo!Allan!Professional!Corporation!is!not!providing!legal!advice!to!readers!of!this!document.!This!report!is!provided!for!information!purposes!only.!Readers!of!this!document!should!consult!a!qualified!lawyer!for!advice!on!their!specific!situation.!!

Table of Contents !EXECUTIVE!SUMMARY…………………………………………………………….…………..……………………..! 1!!ABOUT!THIS!STUDY………………………………………………………………….……………..........................! 4!!SECTION!1!–!BACKGROUND:!DRIVERS!TO!ADAPT!!1.1 Climate!Change!Impacts!in!the!Electricity!Generation!and!Transmission!Sectors…..!6!1.2 Understanding!Risks……………………………...........................….................................................!10!

1.2.1!Economic!Risks………………………………………………….……………………….……………………………….!10!1.2.2!Management!and!Operational!Risks……………………….……………………….……………………….…!12!1.2.3!Disclosure!Obligations……………………….……………………….……………………….………………………13!

SECTION!2!–!SUMMARY!OF!INTERVIEW!RESULTS!!2.1! Current!Level!of!Awareness……………………………...........................…....................................#16#

2.1.1!Current!Level!of!Awareness……………………….……………………….……………………….…………….! 16!2.1.2!Understanding!Adaptation!versus!Mitigation……………………….……………………….……………!17!2.1.3!Internal!Responsibility!for!Climate!Change!Issues……………………….……………………….……..!17!2.1.4!Understanding!Historical!Extreme!Weather!Events!and!Potential!Impacts!of!Climate!!!!!!!!!!!!Change……………………….……………………….……………………….……………………….……………………!18!

2.2! Current!Levels!of!Action……………………………...........................…...........................................#19!2.2.1!Mitigation……………………….……………………….……………………….……………………….………………..!19!2.2.2!Adaptation……………………….……………………….……………………….……………………….………………!19!

2.3! Barriers!to!Developing!a!Climate!Change!Adaptation!Program………………...................#21! NEXT!STEPS…………………………………………………………………………...................................................! 26!

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!1!|!Executive!Summary!

Executive Summary In!2013,!a!record!number!of!severe!weather!events!caused!widespread!power!outages,!leaving!hundreds!of!thousands!of!Canadians!in!the!dark!and!costing!Canadian!insurance!companies!approximately!$3.2!billion!in!claims!to!policyholders.!These!events!illustrated!for!many!Canadians!how!climate!change!impacts!could!seriously!compromise!our!economy!and!way!of!life.!!

The!sectors!covered!in!this!report,!electricity!generation!and!transmission,!are!among!those!most!at!risk!of!being!disrupted!by!climate!changes.!Extreme!weather,!flooding!and!water!level!changes!all!have!the!potential!to!do!costly!damage!not!just!to!electricity!generation!and!transmission!assets,!but!to!the!broader!Canadian!economy!that!depends!on!them.!As!a!result,!developing!a!strategy!that!encourages!climate!change!adaptation!in!the!electricity!generation!and!transmission!sectors!is!a!vital!step!in!safeguarding!the!Canadian!economy.!

At!the!organizational!level,!there!are!many!drivers!that!could!spur!adaptive!action!in!the!electricity!generation!and!transmission!sectors,!including!economic!imperatives,!legal!liability!considerations!and!disclosure!risks.!ClimateIrelated!impacts!such!as!property!damage,!productivity!loss!and!personal!injury!can!present!steep!economic!costs,!and!those!who!are!responsible!for!the!safe!and!effective!management!of!our!electrical!systems!will!be!expected!to!exercise!reasonable!care!in!preparing!for!and!responding!to!these!hazards.!Moreover,!as!investors!become!increasingly!interested!in!companies’!exposure!to!climate!risks,!public!companies!may!be!required!to!disclose!more!information!regarding!how!their!business!operations!are!being!impacted!by!changing!weather!patterns!and!what!strategies!they!have!in!place!to!address!these!changes.!In!short,!we!find!that!there!may!be!material!financial,!public!relations!and!legal!liability!implications!if!electricity!generators!and!transmitters!continue!to!operate!without!considering!the!impacts!of!climate!change!on!the!continuity!of!operations.!

At!the!policy!level,!no!comprehensive!national!or!provincial!strategies!on!climate!change!adaptation!in!the!generation!and!transmission!sectors!were!identified.!However,!since!electricity!generators!and!transmitters!have!experience!planning!for,!coping!with!and!responding!to!both!environmental!hazards!and!regulatory!directives,!they!are!wellIpositioned!to!implement!adaptation!practices!that!are!practical,!meaningful!and!costIeffective.!

To!help!determine!the!best!approach!to!developing!adaptation!policy!and!practices,!this!study!summarizes!interviews!with!sector!representatives!at!the!executive!and!manager!levels!to!determine!the!current!status!of!climate!change!adaptation!in!their!sectors.!!HighIlevel!findings!on!the!state!of!awareness!of!climate!change!adaptation!in!the!sectors!include!the!following!interview!findings:1!!

• 50%!reported!that!their!companies!have!publicly!acknowledged!climate!change!is!occurring!• 25%!stated!that!their!companies!have!publicly!acknowledged!climate!change!could!impact!their!business!• 75%!reported!a!belief!that!senior!management!understands!the!difference!between!climate!change!adaptation!and!

climate!change!mitigation!efforts!• 0%&could!identify!a!senior!officer!within!their!companies!specifically!assigned!to!address!the!company’s!adaptation!

to!climate!change/extreme!weather!• 100%!could!point!to!extreme!weather!events!that!impacted!their!company’s!services!in!the!recent!past!• 75%&acknowledged!that!climate!change!and/or!extreme!weather!events!could!impact!their!operations!in!the!future!!

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!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1""These"percentages"and"the"percentages"expressed"below"to"summarize"findings"are"approximations"based"on"interview"responses."


Participants!also!discussed!the!adaptation!activities!their!companies!had!considered!or!engaged!in,!as!well!as!various!management!approaches!that!were!being!employed!to!address!climate!issues.!HighIlevel!findings!on!the!state!of!current!action!on!climate!adaptation!within!the!sector!include!the!following:!!

• 58%!indicated!that!their!companies!have!carried!out!mitigation!efforts!to!date!(focused!on!Greenhouse!Gas!Emissions!(“GHG”))!

• 42%!reported!their!companies!had!carried!out!adaptation!efforts!to!date,!with!the!majority!of!efforts!in!the!research!and!capacityIbuilding!stage!

• 8%&mentioned!a!specific!budget!dedicated!to!adaptation!efforts!• 0%&could!point!to!a!formalized!commitment!(e.g.!a!policy!or!other!mandate!approved!by!its!board!of!directors!or!

senior!management)!to!identify!vulnerabilities!in!company!operations!that!might!be!affected!by!climate!change!or!extreme!weather!

• 42%!reported!that!their!companies!had,!in!some!way,!integrated!climate!change!adaptation!into!corporate!planning!and!direction!

Lastly,!our!interviews!identified!key!barriers!to!incorporating!adaptation!and!resilience!tools!in!respondents’!business!process,!which!include:!!

• Lack!of!awareness!of!adaptation!strategies!and!specific!climate!impacts!forecasted!• Reliance!on!historical!or!anecdotal!data!to!predict!future!risk!• Insufficient!communication!and!informationIsharing!on!climate!risk!within!companies!and!the!industry!at!large!• Lack!of!climate!leadership!within!the!company,!including!at!the!board!of!directors!level!• Focus!on!mitigation!over!adaptation!• Lack!of!political!will!to!move!forward!on!climate!change!adaptation!in!the!region!• Lack!of!awareness!or!support!from!regulators!or!other!supervisory!bodies!• Concerns!over!financial!impact!on!customers!and!pressure!to!keep!electricity!rates!low!

In!many!Canadian!provinces!and!territories,!utilities!operate!in!a!heavily!regulated!environment.!Adaptive!capacity!will!therefore!depend!on!regulator!awareness!and!approval,!and!regulators!will!also!need!to!have!an!understanding!of!cost!management!in!light!of!climate!change!adaptation.!Smart!climate!change!adaptation!supports!regulatory!priorities!of!safety,!security!of!electricity!supply!and!cost!containment.!Our!interviews!indicated!that!regulator!involvement!appears!to!be!essential!for!the!efficient!and!effective!integration!of!climate!adaptation!in!the!electricity!generation!and!transmission!sectors.!

Consultation!with!sector!representatives!identified!means!to!assist!industry!and!policy!decisionImakers!to!move!forward!on!climate!adaptation!in!the!electricity!and!transmission!sectors,!as!follows:!!

1. Provide&educational&forums&for&senior:level&management&teams&and&boards&of&directors&that!enhance!understanding!of!the!potential!impacts!of!climate!change!and!the!importance!of!taking!action!by!focusing!on:!(i)!the!past!and!future!costs!of!climate!change!to!the!Canadian!economy;!(ii)!the!effect!that!proactive!adaptation!measures!will!have!on!companies’!return!on!investment;!and!(iii)!the!ramifications!that!climate!change!vulnerabilities!in!the!electricity!sector!have!in!other!sectors,!and!vice!versa&

2. Dispel&myths&of&high&adaptation&costs&by!emphasizing!cost!effective!means!of!deploying!adaptation,!such!as!implementing!adaptation!practices!into!new!infrastructure!design!and!scheduled!retrofits&

3. Gather&better&climate&data&and!provide!detailed,!regionIspecific!information!regarding!climate!risks,!impacts!and!projected!extremes,!as!well!as!clear,!industryIwide!baselines!for!levels!of!acceptable!risk&

4. Employ&predictive&modeling&to!forecast!future!extreme!weather!and!risk!scenarios&5. Develop&best&practices&for&adaptation&efforts&which!educate!utilities!on!what!they!must!prepare!for,!refine!the!

distinction!between!mitigation!and!adaptation!strategies!and!provide!a!climate!adaptation!plan!template!to!guide!their!efforts&

6. Improve&information:sharing&through!communication!and!linking!initiatives!such!as!multiIstakeholder!forums,!industry!or!technical!associations!and!standards!bodies!to!facilitate!exchange!of!climate!knowledge!and!adaptation!strategies!and!allow!for!the!pooling!of!research!and!planning!resources!

7. Prioritize&public&communication&and&consumer&awareness&through&public!disclosure!of!climate!risks,!the!benefits!of!adaptation!and!the!need!for!climate!adaptationIrelated!capital!expenditures!

8. Increase&political&will&to!take!adaptive!action!and!better!prepare!our!electricity!system!for!climate!change&


Electricity!plays!a!crucial!role!in!Canadian!society.!As!such,!a!coordinated!effort!must!be!undertaken!to!ensure!electricity!systems!remain!reliable!and!grid!resilience!is!protected!in!light!of!climate!change.!There!are!ample!opportunities!to!assist!the!Canadian!electricity!generation!and!transmission!sectors!in!improving!their!climate!preparedness,!building!resilience!and!ensuring!a!sustainable!electrical!future.

!4!|!About!This!Study!

About This Study Zizzo!Allan!Professional!Corporation!(“Zizzo!Allan”),!a!TorontoIbased!boutique!law!firm!focusing!on!energy!and!climate!change!law!and!policy,!directed!this!study!and!authored!the!report,!with!support!from!Dr.!Blair!Feltmate!and!Dr.!Jason!Thistlethwaite,!University!of!Waterloo,!and!the!oversight!of!an!External!Advisory!Committee.!This!research!was!funded!in!part!by!Natural!Resources!Canada!(“NRCan”).!NRCan!did!not!directly!oversee!this!project!and!report!contents!do!not!necessarily!reflect!the!views!of!NRCan.!Any!views,!errors!or!omissions!are!those!of!the!authors.!!

Purpose(

The!purpose!of!this!study!is!to!understand(and(assess(the(current(state(of(awareness(and(action(on(climate(adaptation(in(the(Canadian(electricity(generation(and(transmission(sectors.!The!underlying!research!was!analyzed!to!suggest!next!steps!to!encourage!the!sectors!to!operationalize!adaptation!to!climate!change.!

Scope(

The!provision!of!electricity!in!Canada!is!typically!divided!into!the!following!three!sectors:!generation,!transmission!and!distribution.!This!study!summarizes!interviews!conducted!with!several!senior!decision!makers!and!company!representatives!such!as!Vice!Presidents!of!Policy!and!Sustainability;!Directors!of!Environment,!Emergency!Planning,!Corporate!Development!and!Resource!Planning;!Managers!of!Enterprise!Risk,!Assets,!Health!and!Safety;!and!other!environmental!analysts!and!specialists.!Zizzo(Allan(interviewed(representatives(from(12(of(the(24(major(generation(and(transmission(companies(in(Canada,(representing(approximately(50%(and(71%(of(generation(and(transmission(capacity,(respectively.!Our!interviews!took!place!between!April!and!October!of!2014.!

Our!research!excluded!the!distribution!sector!to!avoid!overlap!with!an!NRCanIfunded!climate!change!adaptation!study!being!conducted!directly!with!distributors.!In!provinces!with!integrated!utilities,!covering!two!or!more!of!the!electrical!sectors,!our!interviews!focused!on!decisionImakers!who!had!responsibility!for!electricity!generation!and!transmission.!

Method(

Climate!change!adaptation!is!challenging!for!decision!makers!in!the!electricity!sector!because,!in!many!cases,!neither!the!effects!of!climate!change!nor!the!best!practices!for!electricity!generators!or!transmitters!are!well!understood!by!senior!management!in!this!sector.!At!this!early!stage,!in!consultation!with!our!external!advisory!committee,!we!concluded!that!a!series!of!highIlevel!interviews!across!Canada,!without!attribution,!would!be!the!most!helpful!approach!to!achieve!a!preliminary!understanding!of!the!current!state!of!climate!change!awareness!and!preparedness!in!the!covered!sectors.!This!approach!gave!interviewees!the!freedom!to!be!candid,!which!we!believe!helps!set!the!stage!for!the!most!helpful!discussion!of!how!and!where!to!prioritize!next!steps.!!

The!approach!engaged!in!this!survey!involved!the!following:!!!• A!set!of!interview!questions!were!developed!based!on!consultations!with!our!External!Advisory!Group2!• A!series!of!inIperson!and!telephone!interviews!ranging!from!30I40!minutes!each!were!conducted!between!April!

and!October!2014!• Responses!were!recorded!without!attribution!• Responses!were!synthesized!herein,!and!presented!in!a!webinar!to!Canadian!electricity!generation!and!transmission!

utilities!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!2"The"External"Advisory"Group"consisted"of"faculty"members"from"some"of"Canada’s"leading"institutions,"industry"leaders"and"representatives"from"the"Canadian"Electricity"Association."Periodic"project"meetings"with"members"of"the"External"Advisory"Group"helped"to"continually"verify"and"challenge"our"analysis,"and"ensure"best"research"practices"were"followed"throughout"the"project."

!5!|!About!This!Study!

!Our!structured!interviews!were!guided!by!the!following!questions:!!1. Has!your!company!publicly!acknowledged!that!climate!change!is!happening,!and!that!it!could!impact!your!business?!

To!the!best!of!your!knowledge,!has!your!CEO,!or!any!other!member!of!your!senior!management!team,!publically!discussed!climate!change!and!extreme!weather!events?!

2. Does!the!senior!management!of!your!organization!understand!the!difference!between!climate!change!adaptation!and!climate!change!mitigation!efforts?!

3. Does!your!company!have!direction!from!senior!management!or!the!board!related!to!climate!change!risks?!4. Does!your!company!have!a!formalized!commitment!(e.g.,!a!policy,!or!board!or!managementIapproved!mandate)!to!

identify!vulnerabilities!in!its!operations!that!might!be!affected!by!climate!change!or!extreme!weather?!If!yes,!why?!!If!no,!why!not?!

5. Is!there!a!senior!officer!within!your!company!with!an!assigned!task!to!address!adaptation!to!climate!change/extreme!weather?!

6. In!your!company’s!disclosure!documents!(i.e.!annual!report,!and/or!sustainability!report),!does!your!company!profile/discuss!climate!change/extreme!weather?!Why!or!why!not?!

7. Does!your!company!factor!climate!change!and!extreme!weather!events!into!the!design,!construction!and!maintenance!of!infrastructure?!Why!or!why!not?!

8. Has!your!company!considered!in!any!material!way,!the!potential!of!climate!change/extreme!weather!to!disrupt!its!supply!chain?!

9. Has!your!company!undertaken!any!form!of!exercise!to!prioritize!climate!change!and!extreme!weather!challenges!that!should!be!addressed!in!the!short!term?!Long!term?!If!so,!please!explain.!

10. Has!your!regulator!ever!raised!questions!with!your!company!in!reference!to!whether!climate!change!and!extreme!weather!is!being!addressed?!

11. Do!you!believe!your!regulator!would!authorize!a!rate!increase!to!operationalize!adaptation!to!climate!change?!12. Which!types!of!extreme!weather!events,!if!any,!have!impacted!your!services!in!the!past?!!

!The!findings!in!this!report!are!based!on!interviewees’!subjective!responses!to!the!above!questions.!Responses!were!interpreted,!categorized!and,!where!possible,!quantified!to!provide!a!useful!overview!of!the!current!state!of!action!and!awareness!on!climate!adaptation!in!the!industry.!!!

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!6!|!Background:!Drivers!to!Adapt!!

Background: Drivers to Adapt 1.1 Climate Change Impacts in the Electricity Generation and Transmission Sectors

Recent!reports!from!the!Intergovernmental!Panel!on!Climate!Change!(“IPCC”)!conclude!that!the!Earth’s!climate!system!has!warmed!at!a!rate!of!approximately!0.08I0.14°C!per!decade!since!1951!and!that!it!will!continue!to!warm.3!!The!reports!also!found!that!human!activities!are!mainly!responsible!for!the!change.4!!In!examining!the!projected!effects!of!a!warming!climate,!the!IPCC!has!also!drawn!a!clear!link!between!climate!change!and!the!strength!and!frequency!of!extreme!weather!events.5!

Figure&1:!Catastrophic!Insurable!Losses!in!Canada!(in!billion!of!dollars)!from!1983!to!2013!!

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Adapted'from'“Facts'of'the'Property'&'Casualty'Insurance'Industry'in'Canada'2014”'(2014),'online:'Insurance'Bureau'of'Canada'<http://assets.ibc.ca/Documents/Facts'Book/Facts_Book/2014/IBC_2014_Factbook_English.pdf>'at'17.'

! A!spate!of!extreme!weather!events6!in!Canada!has!focused!attention!to!the!impacts!of!climate!change.7!!Such!events!cost!Canadian!insurance!companies!$3.2!billion!in!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!3"Working(Group(I(Contribution(to(the(Fourth(Assessment(Report(of(the(Intergovernmental(Panel(on(Climate(Change:(The(Physical(Science(Basis"(27"September"2013),"online:"IPCC"<http://www.climatechange2013.org/"images/report/WG1AR5_ALL_FINAL.pdf>"at"4X5"[IPCC$Physical$Science$Basis]."4"Ibid"at"4"and"17;"Working(Group(II(Contribution(to(the(Fourth(Assessment(Report(of(the(Intergovernmental(Panel(on(Climate(Change:(Impacts,(Adaptation,(and(Vulnerability"(25"March"2014),"online:"IPCC"<https://ipccXwg2.gov/AR5/images/uploads/WGIIAR5XPartA_FINAL.pdf>"at"3"[IPCC$Impacts,$Adaptation$and$Vulnerability]."5"IPCC(Physical(Science(Basis,"supra,"note"3"at"121."6"Extreme(weather"(or"climate"extreme"and"climate"event)"has"been"defined"by"the"IPCC"as"“the"occurrence"of"a"value"of"a"weather"or"climate"variable"above"(or"below)"a"threshold"value"near"the"upper"(or"lower)"ends"of"the"range"of"observed"values"of"the"variable.”"A(Special(Report(of(Working(Groups(I(and(II(of(the(Intergovernmental(Panel(on(Climate(Change:(Managing(the(Risks(of(Extreme(Events(and(Disasters(to(Advance(Climate(Change(Adaptation((2012),"online:"IPCC"<https://www.ipcc.ch/pdf/specialXreports/srex/SREX_Full_Report.pdf>"at"557"[IPCC$Glossary$of$Terms]."7"Climate(change"is"“[a]"change"in"the"state"of"the"climate"that"can"be"identified"(e.g.,"by"using"statistical"tests)"by"changes"in"the"mean"and/or"the"variability"of"its"properties"and"that"persists"for"an"extended"period,"typically"decades"or"longer."Climate"change"may"be"due"to"natural"internal"processes"or"external"forcings,"or"to"persistent"anthropogenic"changes"in"the"composition"of"the"atmosphere"or"in"land"use.”"ibid"at"557."


payouts,!making!2013!a!recordIbreaking!year!(Figure!1).8!!Natural!Resources!Canada!reports!that!Canada!will!continue!to!experience!an!increase!in!extreme!weather!events!such!as!“heat!waves,!forest!fires,!stormIsurge!flooding,!coastal!erosion,!and!other!climateIrelated!hazards”!in!coming!years.9!!These!events!could!have!significant!social,!ecological!and!economic!consequences,!disrupting!essential!services!and!impacting!many!of!Canada’s!key!industries.!!!

According!to!the!IPCC,!the!electricity!sector!is!one!of!the!sectors!most!at!risk!of!being!disrupted!by!climatic!variation.10!Events!such!as!high!winds,!flooding,!excessive!ice!buildIup,!hail!and!extreme!heat!and!cold!could!influence!the!integrity!and!reliability!of!electricity!grids.11!Shifts!in!temperature,!wind!patterns!and!hydrology!could!also!affect!the!availability!of!energy!sources!and!lead!to!greater!uncertainty!in!supply!and!demand.12!A!summary!of!climate!change!indicators!and!their!associated!impacts!on!the!Canadian!electricity!sector!are!provided!in!Table!1!below:!!!Climate&indicator& Sector&impact&

Increased!average!temperature!

• Accelerated!deterioration!of!equipment!• Increased!operation!and!maintenance!needs!• Increased!permafrost!melting!and!infrastructure!damage!• Increased!line!losses!in!electricity!flow!• Reduced!flow!through!cooling!efficiency!in!thermal!stations!• Decreased!iceIroad!availability!(to!remote!localities)!• Higher!water!temperatures!(thus!limiting!generation!capacity!of!

thermal!stations)!• Increased!energy!demand!(summer!–!e.g.!to!power!air!

conditioning)!• Decreased!energy!demand!(winter)!• Longer!construction!season!

Changes!in!precipitation!patterns!

• Increased!rate!of!decay!or!corrosion!processes!• Dam!safety!compromised!• Lower!water!levels!• Unanticipated!storm!tracks!• Changes!in!running!water!discharge!to!drive!turbines!• Changes!in!timing,!rate!and!nature!of!precipitation!• Changes!in!slope!stability!

More!frequent!extreme!weather!events!(heat,!wind,!rain,!ice,!drought,!flood)!

• Infrastructure!failure!(e.g.!collapsing!lines!under!ice!loads)!• “Galloping”!lines!leading!to!transmission!failure!• Increased!maintenance!requirements!• Increased!peak!demand!

Forest!fire!hazards! • Higher!infrastructure!risk!• Potential!impact!on!reservoirs!and!flows!

Changes!in!number!of!freeze/thaw!cycles!

• Damage!to!concrete!(moisture!expansion/!contraction)!• Increased!need!for!infrastructure!maintenance!

Vegetation!and!ecosystem!shifts!

• Changes!in!line!and!rightIofIway!maintenance!schedules!and!tree!clearing!

!!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!8"Insurance"Bureau"of"Canada,"News"Release,"“Canada"inundated"by"severe"weather"in"2013:"Insurance"companies"pay"out"recordXbreaking"$3.2"billion"to"policyholders,”"(20"January"2014),"online:"IBC"<http://www.ibc.ca/on/"resources/mediaXcentre/mediaXreleases/canadaXinundatedXbyXsevereXweatherXinX2013XinsuranceXcompaniesXpayXoutXrecordXbreakingX$3X2XbillionXtoXpolicyholders>"[IBC]."9"Jessica"Boyle,"Maxine"Cunningham"&"Julie"Dekens,"“Climate"Change"Adaptation"and"Canadian"Infrastructure:"A"review"of"the"literature”"(November"2013),"online:"International"Institute"for"Sustainable"Development"<http://www.iisd.org/pdf/2013/adaptation_can_infrastructure.pdf>"at"6"[IISD]."10"IPCC(Impacts,(Adaptation(and(Vulnerability,"supra,"note"4"at"550."11"Ibid"at"662,"669."12"Ibid"at"558.""

According$to$the$IPCC,$the$electricity$sector$is$one$of$the$sectors$most$at$risk$of$being$disrupted$by$climatic$variation.$

Adapted'from'Paul'Cobb,'Adaptive'Capacity'in'the'Canadian'Electricity'Sector:'Report'to'the'Council'of'Energy'Ministers'Adaptation'Working'Group'(Alberta:'Pembina'Institute,'March'2010)'at'8.'

!

What2are2climate2adaptation2and2resilience?22

Climate2adaptation'refers'to'“adjustments'in'ecological,'social,'or'economic'systems'in'response'to'actual'or'expected'climatic'stimuli'and'their'effects'or'impacts.”'These'adjustments'could'include'changes'in'systems'and'processes'that'would'offset'potential'damages'or'capitalize'on'potential'opportunities'associated'with'climate'change.'In'the'electricity'sector,'adaptation'measures'could'include:'protecting'the'power'system'equipment'and'infrastructure'against'increased'climate'hazards;'developing'new'operation'system'strategies'to'avoid'service'disruptions'or'take'advantage'of'new'market'opportunities;'or'implementing'initiatives'that'address'indirect'impacts'such'as'shifts'in'demand'patterns.'

Climate2resilience'refers'to'the'“ability'of'a'system'and'its'counterparts'to'anticipate,'absorb,'accommodate'or'recover'from'the'effects'of'a'hazardous'event'in'a'timely'and'efficient'manner.”'For'infrastructure,'climate'resilience'means'having'“the'capacity'to'adapt'to'changing'conditions'without'catastrophic'loss'of'form'or'function.”!

!


In!2013,!a!number!of!severe!weather!events!caused!longerIthanIusual!power!outages!in!Canada.13!Summer!floods!in!Calgary!and!Toronto!and!ice!storms!in!Ontario!and!the!Maritimes!left!hundreds!of!thousands!of!Canadians!without!power.14!The!Canadian!Electricity!Association!(“CEA”)!described!2013!as!a!“very!challenging”!year!for!the!electricity!sector.!15!Although!the!frequency!of!interruptions!stayed!consistent!from!2012!to!2013!at!2.5!interruptions!per!customer!(Figure!2),!the!duration!of!outages!(excluding!extreme!weather!events)!increased!by!34.1%!from!2012!to!2013!(Figure!3).16!When!severe!weather!is!factored!in,!the!duration!of!outages!becomes!significantly!worse!(Figure!3).17!The!CEA!warns!that!the!increase!in!duration!of!outages!continues!to!diminish!the!sector’s!overall!performance.18!!

Figure&2:&System!Average!Interruption!Frequency!Index!(SAIFI)!remains!relatively!consistent!over!recent!years&

!

!

!

!

!

!

!'

'

''

Adapted'from'“Engaged'for'a'Sustainable'Future:'2014'Sustainable'Electricity'Annual'Report”'(2014),'online:'Canadian'Electricity'Association'<http://sustainableelectricity.ca/wp]content/uploads/2014/09/EngagedforaSustainableFuture2014'.pdf>'at'56.'System'Average'Interruption'Frequency'Index'(SAIFI)'is'commonly'used'as'a'reliability'indicator'by'electric'power'utilities.'SAIFI'measures'the'average'number'of'interruptions'per'customer'and'is'usually'measured'over'the'course'of'a'year.''

&&&&&&&&&&&!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!13"“Engaged"for"a"Sustainable"Future:"2014"Sustainable"Electricity"Annual"Report”"(2014),"online:"Canadian"Electricity"Association"<http://sustainableelectricity.ca/wpXcontent/uploads/2014/09/EngagedforaSustainable"Future2014.pdf>"at"55"[CEA]."14"Ibid(at"55;"Kathryn"Blaze"Carlson"&"Sean"Silcoff,"“Hundreds"of"thousands"still"in"the"dark"as"ice"storm"moves"east,”"The(Globe(and(Mail((22"December"2013),"online:"<http://www.theglobeandmail.com/news/"/national/thousandsXinXtheXdarkXasXiceXstormXhitsXontarioXquebecXmaritimes/article16082828/>."15"CEA,"supra,"note"13"at"55."16"Ibid"at"55."17"Ibid"at"56."18"Ibid"at"9."

2.0!2.1!

2.6!

2.5!

2.7!

2.0! 2.1!

2.5!

2.5!

2.5!

0.0!

0.5!

1.0!

1.5!

2.0!

2.5!

3.0!

2009! 2010! 2011! 2012! 2013!

Interrup

Jons&

(per&customer)&

CEA!Canadian!Composite! CEA!Canadian!Composite!(excluding!significant!events)!

When$severe$weather$is$factored$in,$the$duration$of$outages$becomes$significantly$worse.$


Figure&3:&Severe!weather!caused!an!increase!in!the!System!Average!Interruption!Duration!Index!(SAIDI)&

!

!

!

!

!

!

Adapted'from'“Engaged'for'a'Sustainable'Future:'2014'Sustainable'Electricity'Annual'Report”'(2014),'online:'Canadian'Electricity'Association'<http://sustainableelectricity.ca/wp]content/uploads/2014/09/EngagedforaSustainableFuture2014'.pdf>'at'56.'System'Average'Interruption'Duration'Index'(SAIDI)'is'commonly'used'as'a'reliability'indicator'by'electric'power'utilities.'SAIDI'is'the'average'outage'duration'measured'in'units'of'time'(often'minutes'or'hours)'and'is'usually'measured'over'the'course'of'a'year.'

The!Expert!Panel!on!Climate!Change!Adaptation,!established!in!December!2007!“to!help!the!Ontario!government,!municipalities!and!Ontarians!prepare!and!plan!for!the!impact!of!climate!change!in!areas!such!as!public!health,!environment,!infrastructure,!and!economy,”!19!has!also!recognized!the!importance!of!climate!adaptation!in!the!electricity!sector.!In!its!2009!report!to!the!Ontario!Minister!of!the!Environment,!the!Panel!stated:!

Adaptation2of2the2province’s2electricity2distribution2and2transmission2infrastructure2to2climate2change,2notably2more2frequent2and2severe2windstorms2and2precipitation2events,2especially2ice2storms,2must2be2a2priority.2Periodically2assessing2the2risks2in2the2light2of2climate2projections2followed2by2a2review2of2the2design2standards2for2new2transmission2and2distribution2systems2will2be2required2as2trends2become2clearer,2including2shifts2in2the2track2of2ice2storms.202

Electricity!plays!a!crucial!role!in!Canadian!society:!individuals,!services,!infrastructure!and!the!economy!all!rely!on!a!consistent!supply!of!power.!Past!largeIscale!power!outages!have!underscored!the!dramatic!effect!that!grid!failure!can!have!on!provincial!and!national!economies.!In!addition!to!disrupting!services!and!operations,!shortIterm!and!longIterm!interruptions!in!power!supply!can!increase!the!vulnerability!of!other!sectors!to!climate!and!other!risks.21!In!order!for!Canada!to!become!a!leader!in!resiliency,!the!electricity!generation!and!transmission!sectors!must!be!protected!and!strengthened,!as!they!represent!priority!sectors!in!the!assessment!and!management!of!climate!change!adaptation.!!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!19"The(Expert(Panel(on(Climate(Change(Adaptation(Report(to(The(Minister(of(The(Environment:(Adapting(to(Climate(Change(in(Ontario"(November"2009),"online:"<http://www.climateontario.ca/doc/publications/ExpertPanelXAdaptingInOntario.pdf>"at"1"[Expert$Panel$on$Climate$Change$Adaptation]."20"Ibid"at"38."21"Paul"Cobb,"Adaptive(Capacity(in(the(Canadian(Electricity(Sector:(Report(to(the(Council(of(Energy(Ministers(Adaptation(Working(Group"(Alberta:"Pembina"Institute,"March"2010)"at"7"[Pembina$Institute].!

4.2!

5.2!

6.2!

4.7!

9.5!

4.2! 4.3!

5.1!4.4!

5.9!

0.0!

1.0!

2.0!

3.0!

4.0!

5.0!

6.0!

7.0!

8.0!

9.0!

10.0!

2009! 2010! 2011! 2012! 2013!

DuraJ

on&

(hou

rs)&

CEA!Canadian!Composite! CEA!Canadian!Composite!(excluding!significant!events)!


1.2 Understanding Risks

The!Canadian!electricity!industry!generally!operates!using!one!of!three!models.!In!many!provinces!and!territories,!utilities!are!verticallyIintegrated!Crown!corporations!operating!as!regulated!monopolies.22!A!second!model!involves!a!Crown!corporation!as!a!large!generator!or!transmitter,!with!an!investorIowned!distributor.23!Finally,!Ontario!and!Alberta!operate!in!a!partially!deregulated!landscape.!Ontario!has!a!hybrid!system,!wherein!generation!and!transmission!companies!operate!in!a!deregulated!market!but!the!provincial!government,!through!the!Ontario!Energy!Board!(“OEB”),!regulates!the!rates!that!distributors!charge!customers!for!distribution!services.24!Meanwhile,!Alberta’s!generation!sector!is!competitive,!and!its!transmission!and!distribution!companies!are!rateIregulated.25!Due!to!this!diversity,!electricity!generation!and!transmission!companies!are!overseen!in!a!variety!of!ways,!sometimes!by!energy!regulators,!securities!regulators,!political!direction,!market!forces!or!a!combination!of!the!above.!!

In!this!complex!and!diverse!context,!companies!must!assess!and!manage!risks!with!the!added!uncertainty!of!climate!change!impacts.!To!highlight!how!the!electrical!generation!and!transmission!sectors!might!start!incorporating!climate!risks!in!decisionImaking,!this!section!will!discuss!potential!economic,!operational!and!managerial,!and!disclosure!risks.!As!climate!change!challenges!the!status!quo,!thinking!about!existing!risks!differently!in!light!of!potential!climate!impacts!is!a!key!aspect!of!prudent!planning!and!management.!

1.2.1& & Economic&Risks&

For!most!businesses,!particularly!those!with!large,!valuable,!physical!assets,!there!is!a!strong!economic!case!for!incorporating!climate!change!awareness,!resilience!and!adaptation!into!business!processes.!26!

Climate!change!can!result!in!significant!costs!by!way!of!property!and!infrastructure!damage,!productivity!loss!and!impacts!on!public!health.27!According!to!the!International!Institute!for!Sustainable!Development,!“between!1996!and!2006,!the!economic!costs!resulting!from!extreme!weather!events!in!Canada!were!greater!than!for!all!previous!recorded!years!combined.”28!In!many!cases,!particularly!where!expensive!and!vital!infrastructure!is!involved!(like!much!of!the!infrastructure!in!the!electricity!generation!and!transmission!sectors),!understanding!and!preparing!for!climate!change!impacts!is!a!business!imperative.!

!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!22"This"is"by"and"large"the"case"in"New"Brunswick,"Quebec,"Manitoba,"Saskatchewan,"British"Columbia"and"Nunavut."23"This"is"the"case"in"Newfoundland"and"Labrador,"Yukon,"the"Northwest"Territories."24"“Ontario’s"Electricity"Sector"—"An"Overview”,"online:"Hydro"Ottawa"<https://static.hydroottawa.com/documents/"publications/factbook/backgrounders/3XsectorXoverview.pdf>."25"Gerry"Angevine"&"Andrew"Boik,"“Alberta"Electricity"Transmission"Policy"for"the"Next"Generation”"(March"2009),"online:"Fraser"Institute"<http://www.fraserinstitute.org/researchXnews/display.aspx?id=12806>"at"4.""26"National"Roundtable"on"the"Environment"and"Prosperity,"“Facing"the"Elements:"Building"Business"Resilience"in"a"Changing"Climate"(Business"Primer)”"(2012),"online:"Government"of"Canada"Publications"<http://publications.gc.ca/"collections/collection_2012/trneeXnrtee/En133X40X5X2X2012Xeng.pdf>"at"11X15"[National2Roundtable]."27"“Risky"Business:"The"Economic"Risks"of"Climate"Change"in"the"United"States”"(June"2014),"online:"Risky"Business"Project"<http://riskybusiness.org/uploads/files/RiskyBusiness_Report_WEB_09_08_14.pdf>"at"2"[Risky$Business];"Jason"Thistlethwaite"&"Blair"Feltmate,"“Assessing"the"Viability"of"Overland"Flood"Insurance:"The"Canadian"Residential"Property"Market”"(September"2013),"online:"The"CoXoperators"<https://www.cooperators.ca/en/AboutX"Us/aboutXsustainability/extremeXweatherXandXinsurance.aspx>"at"19X21;"“Looking"for"Leadership:"The"Costs"of"Climate"Inaction”"(July"2014),"online:"Environmental"Commissioner"of"Ontario"<http://www.eco.on.ca/uploads/"ReportsXGHG/2014/GHG2014"Looking"for"Leadership.pdf>"at"19X21;"“The"Cost"of"Delaying"Action"to"Stem"Climate"Change”"(July"2014),"online:"Executive"Office"of"the"President"of"the"United"States"<http://www.whitehouse.gov/sites/default/files/docs/the_cost_of_delaying_action_to_stem_climate_change.pdf>"at"9X11.""28"IISD,"supra,"note"9"at"7."

Companies$must$assess$and$manage$risks$with$the$added$uncertainty$of$climate$change$impacts$

2013$saw$$3.2B$in$insured$losses$related$to$extreme$weather$events.$


Recent!storm!events!in!Canada!have!caused!serious!damage!to!property!and!infrastructure!and!have!triggered!adaptation!responses.29!Hurricane!Juan!swept!through!Nova!Scotia!in!2003,!its!140+!km/hr!winds!causing!widespread!damage!to!infrastructure!and!disruption!to!power!delivery!in!urban!areas.30!The!province!declared!a!state!of!emergency.31!Strong!wind!events!in!British!Columbia!during!2007!caused!similar!infrastructural!damage,!leaving!over!90,000!customers!without!power!for!days—an!increasingly!unacceptable!risk!for!utilities!companies.32!!

Extreme!weather!events!in!Canada!during!2013!were!particularly!intense,!leading!to!unprecedented!economic!losses.33!In!July!2013,!for!instance,!a!record!rainfall!caused!flash!flooding!in!Toronto!that!resulted!in!$940!million!in!insured!losses,!the!most!expensive!insured!natural!disaster!in!Ontario’s!history.34!A!December!2013!ice!storm!in!southern!Ontario!and!eastern!Canada!reached!$200!million!in!insured!losses,!mostly!from!homes!damaged!by!trees!that!fell!as!a!result!of!ice!buildIup.35!Finally,!the!largest!insured!Canadian!natural!disaster!ever!was!the!southern!Alberta!flood!of!June!2013.36!Insured!damage!for!that!storm!was!more!than!$1.74!billion.37!These!events!pushed!Canada’s!yearIend!severe!weather!insured!losses!to!$3.2!billion.38!Annual!climateIrelated!losses!could!continue!to!grow:!the!former!National!Roundtable!on!the!Environment!and!the!Economy!estimated!that!climate!change!would!cost!Canadians!$5Ibillion!annually!by!2020.39!!!!

Many!aspects!of!society,!including!critical!infrastructure,!are!highly!vulnerable!to!electric!power!disruptions.!In!a!survey!of!key!business!sectors!and!essential!service!providers!in!the!Toronto!region,!51%!of!companies!said!they!could!function!for!only!1!hour!or!less!with!minimal!impact!or!disruption!to!business!functions!if!their!electricity!supply!was!interrupted.40!The!survey!concluded!that!electric!power!disruptions!result!in!substantial!economic!impacts:!!for!instance,!the!companies!surveyed!indicated!that,!on!average,!one!short!duration!outage!(1I5!minutes!in!length)!can!result!in!$19,000!in!losses;!a!1Iday!power!outage!can!lead!to!$180,000!–!$316,000!in!losses;!and!a!3Iday!power!outage!can!result!in!$575,000!–!$1,996,000!in!losses.41!

As!Canadian!infrastructure!ages,!it!will!become!increasingly!vulnerable!to!climate!change.42!Smart!investments!in!infrastructure!when!installing!new!equipment!and!during!scheduled!refurbishments!are!needed!to!build!climate!resiliency!and!avoid!costly!upgrades,!retrofits,!damage!or!removal!from!service!ahead!of!schedule.43!Almost!$300!billion!will!be!invested!in!electricity!infrastructure!between!now!and!2030.44!Proactive!adaptation!initiatives!and!incremental!strategies!for!making!improvements!can!increase!the!resiliency!of!the!system!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!29"Pembina(Institute,"supra,"note"21"at"32."30"Ibid."31"Ibid."32"Ibid."33"IBC,"supra,"note"8."34"Ibid."35"Ibid."36"Ibid."37"Ibid."38Ibid."39"National(Roundtable,"supra,"note"26"at"11;"Andrew"Gage"&"Michael"Byers,"“Why"climate"litigation"could"soon"go"global,”"The"Globe"and"Mail"(09"October"2014),"online:"<http://www.theglobeandmail.com/globeXdebate/whyXclimateXlitigationXcouldXsoonXgoXglobal/article21002326/>"40"Civic"Action,"Survey(of(Electrical(Customers’(Tolerance(to(Power(Disruption(in(the(Toronto(Region:(Phase(1((Business(Customers)"(12"June"2012)"[unpublished]"at"slide"9"[Civic$Action]."41"Ibid"at"slide"29."42"Pembina(Institute,"supra,"note"21"at"21."43"Ibid."44"Len"Coad,"Todd"Crawford"and"Alicia"Macdonald,"“Shedding"Light"on"the"Economic"Impact"of"Investing"in"Electricity"Infrastructure”"(February"2012),"online:"The"Conference"Board"of"Canada"<http://www.electricity.ca/media/pdfs/Advocacy"Reports/EconomicImpact_SheddingLight_E.pdf>"at"2."

Smart$investments$in$infrastructure$when$installing$new$equipment$and$during$scheduled$refurbishments$are$needed$to$build$climate$resiliency$and$avoid$costly$upgrades,$retrofits,$damage$or$removal$from$service$ahead$of$schedule.$


and!help!to!avoid!more!severe!costs!in!the!future.45!Moreover,!identifying!climate!risks!and!incorporating!resilience!tools!into!business!practices!can!help!to!boost!investor!confidence,!improve!company!branding!and!even!increase!profitability,46!as!discussed!in!more!detail!below.47!!

1.2.2& & Management&and&Operational&Risks&&

Obligations!related!to!the!management!and!operation!of!electricity!generation!and!transmission!companies!are!set!by!government,!industry!and!customer!expectations,!as!well!as!through!broader!legal!obligations.!

In!Canada,!electrical!utility!ownership!varies!widely,!from!complete!government!ownership!and!oversight,!to!deregulated!entities!owned!and!managed!by!private!investors.!As!a!result,!diverse!participants!are!involved!in!policies!and!investments!regarding!the!safe!and!effective!management!of!our!electrical!systems,!and!a!variety!of!particular!risks!and!responsibilities!can!impact!decisionImaking.!!

Management!and!operation!in!the!electricity!generation!and!transmission!sectors!are!complex!and!governed!by!statutes,!regulatory!requirements!and!other!applicable!law.!These!instruments!can!create!obligations!and!potential!liability!related!to!climate!change,!even!without!making!explicit!reference!to!climate!change!or!climate!impacts.!For!instance,!decisionImakers!may!be!required!to!consider!best!available!information!(including!climate!science)!when!making!decisions.!!

Statutory!requirements!in!the!electricity!sectors!may!impose!relatively!specific!duties!on!utility!companies!such!as!ensuring!their!services!are!delivered!in!a!reasonably!safe!manner!or!that!their!infrastructure!meets!certain!standards!before!being!installed!or!used.48!For!example,!Newfoundland’s!Public2Utilities2Act!requires!a!public!utility!to!provide!electricity!in!a!manner!that!is!“reasonably!safe”!and!holds!the!public!utility!responsible!for!maintaining!“all!electric!lines,!fittings!and!apparatus!belonging!to!it!or!under!its!control”!in!a!proper!condition.”49!Similarly,!Alberta’s!Electric2Utilities2Act!provides!that!“[e]ach!owner!of!a!transmission!facility!must!operate!and!maintain!the!transmission!facility!in!a!manner!that!is!consistent!with!the!safe,!reliable!and!economic!operation!of!the!interconnected!electric!system.”50!

In!other!cases,!statutory!obligations!may!be!less!precise.!Under Ontario’s!Electricity2Act,!for!instance,!directors!of!the!Independent!Electricity!System!Operator!and!the!Ontario!Power!Authority!have!a!duty!to!“exercise!the!care,!diligence!and!skill!that!a!reasonably!prudent!person!would!exercise!in!comparable!circumstances.”51!The!exact!scope!of!statutory!duties!and!requirements!will!often!depend!on!what!is!considered!reasonable!in!the!circumstances.!As!climate!hazards!become!more!common,!it!is!conceivable!that!electrical!utilities!will!be!expected!to!act!diligently!and!exercise!reasonable!care!in!preparing!for!and!responding!to!these!hazards!to!ensure!that!their!statutory!duties!are!met.!!!!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!45"Pembina(Institute,"supra,"note"21"at"18;"Risky(Business,"supra,"note"27"at"3"“if"we"act"aggressively"to"both"adapt"to"the"changing"climate"and"to"mitigate"future"impacts"by"reducing"carbon"emissions—we"can"significantly"reduce"our"exposure"to"the"worst"economic"risks"from"climate"change.”;"National(Roundtable,"supra,"note"26"at"13."46"“NYC"Comptroller"Stringer"and"As"You"Sow"Reach"Agreement"with"ExxonMobil"on"Fracking"Disclosure”"(3"April"2014),"online:"New"York"City"Comptroller"<https://comptroller.nyc.gov/newsroom/nycXcomptrollerXstringerXandXasXyouXsowXreachXagreementXwithXexxonmobilXonXfrackingXdisclosure/>"[New$York$City$Comptroller];"“Climate"action"and"profitability:"CDP"S&P"500"Climate"Change"Report"2014”"(2014),"online:"CDP"<https://www.cdp.net/CDPResults/CDPXSP500XleadersXreportX2014.pdf>"at"4"[CDP$S&P$500$Climate$Change$Report$2014]."47"See"section"1.2.3"of"this"report.""48"Public(Utilities(Act,"RSNL"1990,"c"PX47"at"ss"37,"44."49"Ibid."50"Electric(Utilities(Act,"SA"2003,"c"EX5.1"at"s"39(1)."51"Electricity(Act,"1998"SO"1998,"c"15,"Sch"A"at"ss"9,"25.5."

As$climate$hazards$become$more$common,$it$is$conceivable$that$electrical$utilities$will$be$expected$to$act$diligently$and$exercise$reasonable$care$in$preparing$for$and$responding$to$these$hazards$to$ensure$that$their$statutory$duties$are$met.$$$$


The!role!of!regulators!in!defining!what!is!required!of!utility!companies!by!way!of!climate!adaptation!will!depend!on!the!regulatory!landscape!of!each!jurisdiction.!While!the!electricity!sector!is!still!far!from!having!clear!guidance!on!the!extent!of!utility!adaptation!obligations,!rate!cases!are!likely!to!consider!climate!change!impacts!over!the!coming!years.52!!

Courts!have!specifically!recognized!that!the!transmission!of!electricity!is!an!inherently!dangerous!activity!and!the!standard!to!ensure!public!safety!is!a!high!one.53!Additionally,!since!infrastructure!failures!have!the!potential!to!create!serious!harm!to!people!and!property,!potential!liability!related!to!negligence!or!nuisance!could!provide!additional!drivers!to!adapt.!Although!to!date!we!are!not!aware!of!any!lawsuits!against!Canadian!electricity!generation!or!transmission!companies!where!climate!change!considerations!have!been!explicitly!referenced,!in!other!sectors!lawsuits!aimed!at!those!who!have!not!properly!prepared!for!or!adapted!to!climate!impacts!are!emerging.54!!

There!is!ample!impetus!in!existing!and!emerging!law!to!ensure!due!diligence!is!built!into!management!and!operation!decisions!of!these!companies.!!

1.2.3& & Disclosure&Obligations&

Organizations!in!the!electricity!generation!and!transmission!sectors!may!have!obligations!to!disclose!information!and!risks!to!a!variety!of!stakeholders,!including:!

• Owners!and!investors!(private,!public,!shareholders)!• Oversight!bodies!and!regulators!• Among!peers!through!industry!associations55!or!other!forums!• To!customers!and!the!public!at!large!(e.g.!to!address!corporate!social!responsibility)!

Detail!about!specific!required!disclosures!is!beyond!the!scope!of!this!report;!however,!a!brief!discussion!of!investor!requests!and!guidance!from!securities!regulators!regarding!the!disclosure!of!material!risks!helps!to!understand!the!types!of!climateIrelated!risks!that!should!be!identified.!!!Investors!are!increasingly!demanding!information!on!companies’!exposure!to!climate!risks,!disclosure!of!which!can!support!more!informed!investment!decisions.56!As!understanding!of!potential!climate!impacts!increases,!analysts!and!investors!have!raised!concerns!that!longIterm!shareholder!value!should!be!considered!in!light!of!climate!change.57!Indeed,!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!52"For"instance,"Re(Toronto(HydroTElectric(System(Limited’s(Electricity(Distribution(Rate(Application"(29"August"2014),"EBX2014X0116,"online:"OEB"<http://www.rds.ontarioenergyboard.ca/webdrawer/webdrawer.dll/webdrawer/search/"rec&sm_udf10=EBX2014X0116&sortd1=rs_dateregistered&rows=200>."53"Copithorne(v(TransAlta(Utilities(Corp,"2005"ABQB"169"at"para"37,"13"CELR"(3d)"1;"Amos(v(New(Brunswick(Electric(Power(Commission,"[1977]"1"SCR"500"at"para"7."54"Zizzo"Allan"PC,"“Stormwater"Management"in"Ontario:"Legal"Issues"in"a"Changing"Climate,”"(29"April"2014),"online:"Credit"Valley"Conservation"Authority"<http://www.creditvalleyca.ca/wpXcontent/uploads/2014/05/"StormwaterXManagementXinXOntario_LegalXIssuesXinXaXChangingXClimate_2014.04.29.pdf>;"see(also"“Illinois"Farmers"Insurance"Company"and"Farmers"Insurance"Exchange"v"The"Metropolitan"Water"Reclamation"District"of"Greater"Chicago”"(16"April"2014),"Climate"Lawyers"Blog,"online:"<http://www.climatelawyers.com/file.axd?file="2014/5/20140416+Illinois+Farmers+Ins.+v.+Metro.+Water+Reclamation+Dist.+of+Greater+Chicago.pdf>.""55"“Sustainability"Performance"Overview,”"(2014)"online:"Sustainable"Electricity"<http://sustainableelectricity.ca/en/sustainabilityXperformance/>."56"New(York(City(Comptroller,"supra,"note"46."57"“Landmark"Agreement"with"Shareholders:"ExxonMobil"Agrees"to"Report"on"Climate"Change"&"Carbon"Asset"Risk”"(20"March"2014),"online:"Arjuna"Capital"<http://arjunaXcapital.com/sites/default/files/"Exxon"CAR"withdrawal"release"20140320"FINAL.pdf>."

Investors$are$increasingly$demanding$information$on$companies’$exposure$to$climate$risks,$disclosure$of$which$can$support$more$informed$investment$decisions.$


recent!reports!indicate!that!there!is!a!link!between!climate!action!and!financial!performance.58!The!Carbon!Disclosure!Project!(“CDP”),!an!organization!that!collects!and!analyzes!environmental!data!on!behalf!of!investors,!has!found!that!companies!who!integrated!climate!change!management!generate!superior!profitability,!with!more!stability!and!deliver!higher!dividends!to!shareholders!than!companies!who!do!not.59!Another!CDP!report!focused!on!Canadian!companies!concluded!that!companies!that!considered!and!disclosed!climate!change!readiness!deliver!returns!on!equity!that!are!significantly!higher!than!other!companies!surveyed.60!!Guidance!from!securities!regulators!regarding!the!materiality!of!environmental!risks!also!helps!to!identify!which!questions!companies!should!be!asking!and!what!types!of!information!public!companies!must!disclose.!It!also!provides!valuable!insight!for!organizations!that!may!not!have!securities!law!obligations!but!need!to!consider!these!risks!for!prudent!business!management.!!!

Under!securities!law,!reporting!issuers61!(sometimes!called!“public!companies”)!are!required!to!report!material!information!regarding!their!business!and!operations.62!Generally,!information!is!considered!material!if!it!might!impact!the!market!price!or!value!of!an!issuer’s!securities,!or!if!a!reasonable!investor’s!decision!to!buy,!sell!or!hold!securities!would!likely!be!influenced!or!changed!if!the!information!was!omitted!or!misstated.63!

On!its!own,!the!environmental!importance!of!climate!change!information!does!not!lead!to!disclosure!obligations!under!securities!law.!To!determine!whether!climate!change!information!must!be!disclosed,!the!information!in!question!must!be!assessed!against!a!materiality!standard.!In!recent!guidance!on!environmental!reporting!(Canadian2Securities2Association!Staff2Notice251K3332Environmental2Reporting2Guidance!(CSA!51I333)!and!National2Policy251K201!(51I201)),!Canadian!securities!regulators!have!provided!some!idea!of!the!types!of!environmental!and/or!climate!change!information!that!could!be!considered!“material”!for!the!purposes!of!disclosure.!These!include:!

• Environmental!and!governance!risks,!generally!64!!!• Risk!of!litigation!65!!• The!commencement!of,!or!developments!in,!material!legal!proceedings!or!regulatory!

matters66!• Physical!risks!(including,!for!instance,!property!damage!or!disruptions!to!operations!

from!changing!weather!patterns)67!• Risk!of!future!regulation!or!other!costs!associated!with!GHG68!!• Risk!to!reputation69!!!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!58CDP(S&P(500(Climate(Change(Report(2014,(supra,"note"46(at"4;"“CDP"Canada"200"Climate"Change"Report"2013:"Climate"performance"emerges"with"increased"corporate"transparency”"(2013),"online:"CDP"<https://www.cdp.net/"CDPResults/CDPXCanadaX200XClimateXChangeXReportX2013.pdf>"at"18"[CDP$Canada$200$Climate$Change$Report$2013]."59"CDP(S&P(500(Climate(Change(Report(2014,"supra,"note"46"at"4."60"CDP(Canada(200(Climate(Change(Report(2013,"supra,"note"58(at"18."61"A"reporting"issuer"is"generally"a"person"or"company"who"has"outstanding,"issues"or"proposes"to"issue,"a"security"and"who"has"filed"a"prospectus."Securities(Act,"RSO"1990,"c"s"5,"s"1(1)"[Securities$Act]."Reporting"issuers"should"not"be"confused"with"Crown"Corporations,"which"are"quasiXgovernmental"bodies"that"are"“wholly"owned"by"the"state"but"operate"at"arm’s"length"from"the"government.”"See(Kazi"Stastna,(“What"are"Crown"corporations"and"why"do"they"exist?”,"CBC(News((01"April"2012),"online:"<http://www.cbc.ca/news/canada/whatXareXcrownXcorporationsXandXwhyXdoXtheyXexistX1.1135699>."62"Securities(Act,"supra,"note"61"at"ss"56,"57,"75."63"Ibid(at"s"1(1);"Disclosure(Standards,"OSC"NP"51X201"(31"May"2013),"at"s"4.1"[NP(51T201 ] .(64"OSC(Staff(Notice(—(51T333(Environmental(Reporting(Guidance,"OSC"CSA"Notice"(27"October"2010),"at"s"2.2"[Notice$51U333]."65"Ibid(at(s"2.2."66"NP(51T201,"supra,"note"63(at"s."4.3."67"Notice(51T333,"supra,"note"64(at"s"2.2."68"Ibid(at"s"2.2."69"Ibid(at"s"2.2."


• Changes!in!the!value!or!composition!of!the!company’s!assets70!• Shifts!in!financial!circumstances,!such!as!cash!flow!reductions,!writeIoffs!or!writeI

downs71!!• Any!development!that!affects!the!company’s!resources,!technology,!products!or!

markets72!!

In!the!specific!context!of!climate!adaptation,!CSA!51I333!provides!that!issuers!should!consider!questions!such!as:73!

• How!is!the!issuer!likely!to!be!affected!by!physical!risks!of!environmental!matters,!such!as!the!impacts!of!industrial!contamination,!changing!weather!patterns!and!water!availability?!

• What!risk!management,!adaptation!and!mitigation!strategies!has!the!issuer!adopted,!or!is!the!issuer!planning!to!adopt!in!the!near!future?!What!are!the!expected!costs!of!those!strategies?!

CSA!51I333!also!states!that!issuers!should!disclose:74!

• What!has!been,!and!is!reasonably!likely!to!be,!the!impact!of!environmental!trends!or!uncertainties!on!revenues,!expenditures!and!cash!flows!!

• The!impact!environmental!trends!or!uncertainties!have!on!its!financial!condition!and!liquidity,!if!any!

If,!for!example,!a!change!in!water!flows!or!wind!conditions!affect!a!company’s!electricity!generation!that!results!in!returns!below!the!expected!rate,!this!would!be!the!type!of!physical!risk!and!revenue!impact!that!investors!might!consider!material.!Electrical!generation!and!transmission!companies!should!consider!how!climate!change!impacts!business!continuity,!and!disclose!this!information!to!stakeholders!as!appropriate!or!otherwise!legally!required.75!!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!70"NP(51T201,"supra,"note"63(at"s"4.3.""71"Ibid(at"s"4.3."72"Ibid."73"Notice(51T333,"supra,"note"64(at"s"2.2.""74"Ibid"at"s"2.2."75"National(Roundtable,"supra,"note"26"at"15X18."

Electrical$generation$and$transmission$companies$should$consider$how$climate$change$impacts$business$continuity,$and$disclose$this$information$to$stakeholders$as$appropriate$or$otherwise$legally$required.$

!16!|!Summary!of!Interview!Results!!

Summary of Interview Results The!informal!interviews!conducted!with!representatives!of!utilities!companies!discussed!in!this!section!were!designed!to!gain!an!understanding!of!the!state!of!awareness!of!climate!change!impacts!in!the!electricity!generation!and!transmission!sectors.!Our!questions!explored!whether!(and!if!so,!how)!companies!in!these!sectors!were!taking!action!to!address!business!risks!related!to!the!physical!impacts!of!climate!change.!We!also!asked!about!perceived!barriers!to!developing!an!integrated!climate!change!adaptation!program!faced!by!companies!in!the!electricity!generation!and!transmission!sectors.!!

2.1 Current Level of Awareness

&

2.1.1& & Public&Acknowledgement&and&Disclosure&of&Climate&Risks&&

While!most!study!participants!reported!that!their!companies!have!internally!linked!the!recent!rise!in!extreme!weather!events!to!climate!change,!only!about!50%!stated!that!their!companies!have!made!public!statements!that!climate!change!is!occurring.!Even!fewer!participants!(25%)!indicated!that!their!companies!have!disclosed!the!risks!to!their!operations!presented!by!climate!change!and!the!need!to!invest!in!adaptation!strategies!to!ensure!reliability!of!service.!One!participant!stated!that!his!company!has!made!no!acknowledgement,!internally!or!publicly,!of!climate!change,!and!that!company!leadership!is!not!concerned!that!climatic!variation!will!impact!the!company’s!business.!Most!participants!reported!that!their!companies!produced!some!type!of!environmental!or!sustainability!report,!which!was!generally!made!public!on!company!websites.!But!even!the!few!such!reports!that!discussed!the!issue!of!climate!change!did!so!primarily!from!a!mitigation!perspective.!According!to!the!interviewees,!climate!change!discussions!have!generally!not!yet!been!incorporated!into!the!companies’!annual!reports!(which!may!go!to!shareholders!(public!or!private),!regulators,!employees,!customers!and!other!stakeholders).!!!

When!asked!about!their!reluctance!to!make!public!statements!regarding!climate!change,!interviewees!consistently!answered!that!they!did!not!view!it!as!the!role!of!their!companies!(or!industry)!to!be!experts!in!climate!change!science.!That!is,!instead!of!pioneering!climate!

Key&findings&&

• 50%!of!the!interviewees!reported!that!their!companies!have!publicly!acknowledged!climate!change!is!occurring!

• 25%!of!the!interviewees!stated!that!their!companies!have!publicly!acknowledged!that!climate!change!could!impact!their!business!

• 75%!of!the!interviewees!believe!that!senior!management!understands!the!difference!between!climate!change!adaptation!and!climate!change!mitigation!

• 0%&of!the!interviewees!could!identify!a!senior!officer!within!their!companies!specifically!assigned!to!address!the!company’s!adaptation!to!climate!change/extreme!weather!

• 100%!of!the!interviewees!could!point!to!extreme!weather!events!that!impacted!their!company’s!services!in!the!recent!past!

• 75%&of!the&interviewees!acknowledged!that!climate!change!and/or!extreme!weather!events!could!impact!their!operations!in!the!future!


adaptation!efforts!in!the!face!of!uncertainty,!interviewees!are!waiting!for!more!clarity!around!the!science!of!climate!change!and!the!impacts!projected.!!

2.1.2& & Understanding&Adaptation&Versus&Mitigation&&

About!75%!of!participants!felt!that!senior!management!in!their!respective!companies!understood!the!distinction!between!adaptation!and!mitigation.!In!a!few!instances,!interviewees!indicated!that!employees!with!a!better!understanding!of!climate!change!adaptation!had!taken!it!upon!themselves!to!educate!senior!management.!A!number!of!participants!suggested!that!senior!officers!and!directors!may!not!have!had!the!same!level!of!understanding!as!those!employees!who!were!responsible!for!managing!assets!susceptible!to!damage!from!climate!change!impacts.!!!

During!the!course!of!our!interviews,!however,!about!42%!of!interviewees!blurred!the!lines!between!climate!change!mitigation!and!adaptation!strategies.!For!instance,!it!was!not!uncommon!to!have!to!steer!interviewees!back!to!the!issue!of!adaptation!when!they!began!explaining!efforts!to!reduce!GHG!emissions.!This!provides!clues!as!to!how!challenging!it!is!to!communicate!mitigation!and!adaptation,!as!both!pose!distinct!business!issues!to!be!managed.!In!this!vein,!several!interviewees!expressed!that!it!was!easier!to!communicate!with!senior!managers!about!how!mitigation!could!be!incorporated!into!the!company’s!business!strategies!than!it!was!to!deal!with!adaptation.!!

We!speculate!that!electricity!sector!participants!may!be!more!aware!of!mitigation!issues!because!of!public!discussion!concerning!GHGs!from!electricity!generation,!particularly!in!jurisdictions!that!rely!on!coalIfired!generation,!or!because!there!has!been!more!media!and!policy!attention!focused!on!reducing!GHGs!than!adapting!to!climate!change!generally.!For!instance,!one!participant!stated!her!company’s!main!focus!has!been!on!mitigation,!in!particular!understanding!regulations!related!to!coalIfired!generation,!as!well!as!the!threat!of!future!regulations.!In!this!participant’s!view,!the!focus!on!emissions!regulations!has!led!to!a!greater!prioritization!of!mitigation!over!adaptation.!!!!

Participants!in!jurisdictions!with!lower!emissions!profiles!(e.g.!hydro!powered)!or!the!transmission!sector!(which!does!not!directly!generate!electricity),!by!contrast,!may!have!felt!removed!from!climate!change!issues,!since!they!did!not!have!to!“worry”!about!their!impact!on!mitigation!in!the!same!way!as!their!fossil!fuelIbased!counterparts.!However,!as!discussed!below,!hydroIbased!generation!may!actually!face!greater!risks!from!climate!impacts,!suggesting!that!a!holistic!awareness!of!climate!change!impacts!is!highly!important.!

2.1.3& & Internal&Responsibility&for&Climate&Change&Issues&

None!of!the!interviewees!could!identify!a!department!or!officer!specifically!assigned!to!address!climate!change!adaptation.!Instead,!about!67%!of!participants!expressed!that!their!organizations!are!in!the!early!stages!of!developing!an!approach!to!understanding!and!managing!climate!risks.!For!the!most!part,!participants!indicated!that!individuals!responsible!for!climate!change!or!a!company’s!“climate!file”!were!from!the!environmental!and/or!sustainability!departments.!These!departments!do!not!typically!have!responsibility!for!business!continuity,!property!and!equipment!issues!or!service!delivery.!A!few!participants!noted!that!other!individual!units!such!as!investment!and!asset!management,!risk!management,!health!and!safety!and!generation!would!also!have!responsibility!for!climate!change!adaptation!planning!(Figure!4).!!

Most!of!the!participants!realized!that!climate!change!adaptation!requires!input!and!expertise!from!multiple!departments!and!is!likely!an!enterpriseIwide!risk.!Based!on!the!interviews,!many!companies!appear!to!be!moving!toward!a!more!collaborative,!integrated!approach!in!which!climate!change!adaptation!efforts!occur!in!various!parts!of!the!organization!with!executives!responsible!for!operations!or!planning!taking!leadership.!!!!

Mitigation2refers2to2actions2taken2to2reduce2the2sources2or2enhance2the2sinks2of2GHGs.222Adaptation2is2responding2to2actual2or2expected2climatic2changes2or2their2effects2in2a2way2that2moderates2harm2or2takes2advantage2of2potential2opportunities.2(Overlap:(mitigation2and2adaptation2are2not2mutually2exclusive.2Some2actions,2such2as2energy2efficiency2upgrades,2can2both2reduce2GHGs2(mitigation)2and2dependence2on2fossil2fuels,2an2important2step2to2building2resiliency2(adaptation).2

0% of the participants

reported a senior officer

specifically designated to

address climate change

adaptation 2Officers2under2whose2purview2climate2change2issues2might2fall:22• Manager2of2Corporate2Safety,2

Health2&2Environment2• VP2Policy2&2Sustainability2• Manager2of2Environment2&2

Strategic2Planning2• Sustainability2Officer2• Chief2Risk2Officer2• Manager2of2Asset2Management2


Figure&4:&Variety!of!departments!tasked!with!climate!adaptation!issues!&&&&&&

!

!

Even!in!the!absence!of!a!specific!department!or!officer!tasked!with!oversight!of!climate!change!adaptation,!a!few!participants!identified!climate!leaders!within!their!organizations.!In!about!33%!of!the!interviews,!respondents!indicated!that!the!leadership!in!their!companies!came!from!the!bottom!up,!where!lower!or!midIlevel!managers!were!engaged!in!climate!issues!and!sought!to!educate!and!motivate!upper!management.!In!about!25%!of!the!interviews,!respondents!indicated!that!senior!managers!charged!team!members!from!the!topIdown!with!consideration!of!climate!change!adaptation!and!mitigation!(Figure!5).!Based!on!our!interviews,!the!topIdown!model!of!climate!leadership!appeared!to!be!more!effective!in!breaking!issues!out!of!silos,!incorporating!climate!considerations!into!various!parts!of!the!business!and!moving!adaptation!initiatives!forward.!!

2.1.4& & Understanding&Historical&Extreme&Weather&Events&and&Potential&Impacts&of&&& & &&&&Climate&Change&

All!study!participants!could!point!to!extreme!weather!events!that!impacted!their!company’s!services!in!the!recent!past,!and!some!noted!a!perceived!increase!in!the!frequency!and!severity!of!such!events!over!the!past!few!years.!Examples!of!such!events!included!flooding!and!high!winds,!fires,!droughts,!ice!storms!and!extreme!heat!and!cold.!Many!of!these!events!resulted!in!significant!losses!from!damaged!property!and!disruptions!in!operations.!One!interviewee!reported!that!a!major!flood!event!recently!caused!substantial!damage!to!the!company’s!facilities.!Another!said!that!extreme!cold!weather!events!have!led!to!ice!buildup!that!impacted!generation!facilities!and!caused!assets!to!shut!down!for!multiple!days.!A!third!participant!stated!that!forest!fires!during!a!recent!summer!were!the!worst!on!record,!causing!a!generation!facility!to!be!shut!down!and!evacuated.!Although!most!interviewees!indicated!that!their!companies!had!connected!these!observations!with!climate!change,!a!few!did!not!make!this!connection.!

About!75%!of!participants!believed!their!organizations!and!leadership!were!aware!that!climate!change!and/or!extreme!weather!events!could!impact!their!operations!in!the!future.!A!few!participants,!however,!were!not!concerned!with!potential!climate!impacts!and!did!not!see!the!need!to!put!effort!into!adaptation.!These!participants!explained!that!their!current!systems!were!already!designed!to!withstand!extreme!events,!including!those!anticipated!due!to!climate!change.!!!!!!!

! !

Figure&5:&Climate!leadership&&

Emergency!response!

Project!design!&!construction!

Asset!planning!&!management!

Environment!&!sustainability!!

Reliability!

Risk!management!

Engineering!

Health!&!safety!!Climate!

Adaptation!

100% participants could point

to extreme weather

events that impacted

their businesses in the

recent past

!


2.2 Current Levels of Action

&

2.2.1& & Mitigation&

Although!the!main!focus!of!the!interviews!was!climate!adaptation,!a!majority!of!participants!indicated!that!their!companies’!climate!efforts!have!centered!on!mitigation.!Indeed,!58%!of!interviewees!responded!that!their!companies!have!engaged!in!climate!change!mitigation!efforts!to!date.!Interviewees!listed!the!following!mitigation!initiatives!engaged!by!their!companies:!

• Identifying!and!reducing!the!organization’s!GHGs!!• Increasing!internal!efficiencies!• Cutting!coal!use!• Investing!in!clean!energy!• Other!research!and!development!activities!

Two!participants!noted!that!their!companies’!mitigation!activities!were!developed!in!response!to!provincial!regulations.!They!added!that,!with!such!external!regulatory!pressure,!it!was!difficult!to!shift!their!attention!to!adaptation.!Only!17%!of!participants!reported!that!their!companies!prioritize!climate!adaptation!over!mitigation.!!

2.2.2& & Adaptation&&

Less!than!half!(42%)!of!the!interviewees!indicated!that!their!companies!have!carried!out!what!they!specifically!categorize!as!adaptation!efforts!to!date.!Of!those!who!have!carried!out!such!efforts,!about!70%!noted!that!they!are!still!in!the!preliminary!stages,!focusing!largely!on!research!and!development.!We!have!included!a!summary!of!actions!divided!into!three!categories:!(i)!preIplanning!and!information!gathering;!(ii)!planning!and!development;!and!(iii)!formal!plan!developed!to!summarize!responses!(Figure!6).!We!should!note!that,!because!there!are!many!aspects!to!climate!change!adaptation!and!resiliency!and!because!electrical!transmission!and!generation!are!so!complex,!many!of!the!organizations!we!interviewed!tended!to!fall!into!more!than!one!category!depending!on!the!facet!of!adaptation!being!discussed.!Note!also!that!these!categories!are!descriptive!rather!than!prescriptive.!They!are!based!on!the!results!of!our!interviews!and!designed!to!reflect!what!is!reported!to!be!happening!right!now!in!the!organizations!we!contacted.!They!do!not!provide!an!idealized!climate!change!adaptation!planning!framework,!which,!following!this!report,!is!a!project!we!believe!should!be!undertaken.!

For!companies!that!have!moved!forward!with!climate!adaptation,!participants!referenced!activities!such!as!publishing!a!report!on!climate!change!adaptation;!circulating!a!briefing!on!

Key&findings&

• 58%&of!the!interviewees!indicated!that!their!companies!have!carried!out!mitigation!efforts!to!date!

• 42%&of!the!interviewees!report!their!companies!had!carried!out!adaptation!efforts!to!date,!and!the!majority!of!such!efforts!are!still!in!the!research!and!capacityIbuilding!stage!

• 8%!of!the!interviewees!mentioned!a!specific!budget!dedicated!to!adaptation!efforts!

• 0%&of!the&interviewees!could!point!to!a!formalized!commitment!(e.g.!a!policy!or!other!mandate!approved!by!its!board!of!directors!or!senior!management)!to!identify!vulnerabilities!in!company!operations!that!might!be!affected!by!climate!change!or!extreme!weather!

• 42%!of!interviewees!thought!their!companies!had,!in!some!way,!integrated!climate!change!adaptation!into!corporate!planning!and!direction!


adaptation!to!senior!management!(i.e.!vice!president!level);!creating!an!internal!working!group!on!climate!change;!and!working!with!other!organizations!on!related!initiatives.!Only!one!participant!mentioned!that!his!or!her!company!was!conducting!a!climate!impact!assessment.!Even!in!that!case,!the!participant!stated!that!the!company!lacked!a!formal!climate!adaptation!policy!or!commitment.!Similarly,!only!one!of!the!interviewees!mentioned!a!specific!budget!dedicated!to!adaptation!efforts.!!

Figure&6:&Stages!of!climate!adaptation!plan!development!based!on!interviews!&

!None!of!the!participants!could!point!to!a!formalized!commitment!(e.g.!a!board!of!directors!or!management!approved!policy!or!mandate)!to!identify!vulnerabilities!in!company!operations!that!might!be!affected!by!climate!change!or!extreme!weather!in!a!systematic!or!comprehensive!fashion.!Participants!were!more!likely!to!relay!isolated!efforts!by!individual!divisions,!departments!or!employees.!Few!interviewees!discussed!what!amounted!to!a!comprehensive!or!integrated!climate!change!adaptation!strategy.!Examples!of!this!compartmental!approach!included!cases!where!increased!resilience!to!extreme!weather!had!been!incorporated!into!emergency!response!planning,!but!not!maintenance!of!infrastructure,!or!where!climate!change!had!been!considered!in!the!design!and!construction!of!generation!assets,!but!not!transmission!infrastructure.!!

Most!participants!acknowledged!that!their!organizations’!adaptation!efforts!were!focused!more!on!reacting!to!current!or!nearIterm!likely!impacts!and!events!rather!than!on!longer!term!planning.!For!instance,!some!participants!reported!having!business!continuity!programs,!emergency!response!procedures!or!risk!management!processes!in!place!and!linked!those!to!climate!change!readiness.!In!contrast,!only!about!42%!of!the!interviewees!indicated!that!their!companies!had!integrated!climate!change!adaptation!into!corporate!planning,!direction!or!decisionImaking!processes!by!way!of!scenarioIplanning!exercises!that!incorporate!updated!climate!change!data!or!future!predicted!risks.!!!

!

• !Climate!adaptaton!strategy!prepared!and!implemented!Formal!Plan!Developed!!

• !Conductng!climate!impact!assessment!• !Considering!potental!climate!impacts!in!constructon!and!design!• !Developing!emergency!response!plans!• !Conductng!research!and!design!actvites!!• !Investng!resources!into!making!current!systems!more!robust!

Planning!&!Development!

• !Briefing!senior!management!on!adaptaton!issues!• !Tasking!engineering!department!with"hardening!practces"!• !Creatng!internal!adaptaton!working!groups!• !Taking!part!in!external!informatonIsharing!actvites!• !Observing!weather!paverns!

PreIPlanning!&!Informaton!Gathering!

0% of the participants

reported a formalized

commitment to identify

vulnerabilities in their

operations that might be

affected by climate

change or extreme

weather


2.3 Barriers to Developing a Climate Change Adaptation Program

Participants!described!what!they!believed!to!be!the!major!barriers!to!the!development!of!a!climate!change!adaptation!program!in!their!companies.!Certain!of!the!barriers!discussed!were!companyIspecific,!while!others!arose!from!outside!socioIpolitical!pressures.!Secondary!research!supported!positions!participants!relayed!in!interviews,!addressed!briefly!below.!!

!

(i)& Lack&of&awareness&of&adaptation&strategies&and&specific&climate&impacts&forecasted&

The!greatest!barrier!to!moving!forward!with!adaptation,!as!identified!by!participants,!was!a!lack!of!information!concerning!how!the!climate!is!expected!to!change.!Participants!reported!that!decisionImakers!in!all!areas!and!at!all!levels!of!their!companies!lacked!experience!and!inIdepth!knowledge!of!projected!climate!variation!and!associated!risks.!They!argued!it!was!difficult!to!press!for!a!plan!to!adapt!to!a!changing!climate!without!greater!knowledge!of!potential!climate!impacts!and,!in!particular,!extreme!weather!events.!Interviewees!also!noted!that!regionIspecific!studies!on!climate!risk!would!be!most!helpful!in!motivating!and!informing!the!development!of!adaptation!initiatives.!!

Interviewees!asked!for!industryIwide!baselines!for!acceptable!levels!of!risk,!upon!which!they!could!base!their!adaptation!strategies.!Some!participants!believe!that!climate!change!indicators!continue!to!remain!well!within!normal!bounds!of!variation!and!current!safety!or!operational!margins.!Those!participants!are!confident!that!any!change!to!these!“normal”!ranges!would!likely!be!gradual!and!thus!captured!within!standard!operational!reviews!or!planned!infrastructure!renewals.!One!participant!indicated!that!national!consensus!on!these!baselines!would!be!ideal,!as!it!would!best!enable!companies!to!implement!action.!!

Several!studies!have!concluded!that!a!lack!of!awareness!of!risks!and!the!unavailability!of!adequate!information!were!barriers!to!implementing!adaptation!efforts.76!Natural!Resources!Canada’s!recently!updated!report!on!climate!change!impacts,!Canada2in2a2Changing2Climate,!found!that!“limited!awareness!in!the!natural!resource!sectors!of!the!potential!scope,!scale!and!business!relevance!of!climate!change!impacts”!was!partly!responsible!for!limited!adaptation!efforts.77!Once!climate!risk!awareness!increases,!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!76"Policy"Research"Initiative,"“Climate"Change"Adaptation"in"the"Canadian"Energy"Sector”"(January"2009),"online:"PRI"<"http://questcanada.org/sites/default/files/publications/PH4X48X2008E.pdf>"at"3X4"[PRI];"Pembina(Institute,"supra,"note"21"at"11."77"Donald"S"Lemen"et"al,"“Canada"in"a"Changing"Climate:"Sector"Perspectives"on"Impacts"and"Adaptation,"Chapter"3:"Natural"Resources”"(2014),"online:"Natural"Resources"Canada"<http://www.nrcan.gc.ca/sites/www.nrcan.gc.ca/"files/earthsciences/pdf/assess/2014/pdf/Chapter3XNaturalXResources_Eng.pdf>"at"93"[NRCan]."

Key&barriers&to&developing&a&climate&change&adaptation&program&

• Lack!of!awareness!of!adaptation!strategies!and!specific!climate!impacts!forecasted!

• Exclusive!reliance!on!historical!or!anecdotal!data!to!predict!future!risk!• Insufficient!communication!and!informationIsharing!on!climate!risk!within!

companies!and!in!the!industry!at!large!• Lack!of!climate!leadership!within!the!company,!including!at!the!board!of!

directors!level!• Focus!on!mitigation!over!adaptation!• Lack!of!political!will!to!move!forward!on!climate!change!adaptation!• Lack!of!awareness!or!support!from!regulators!or!other!supervisory!bodies!• Concerns!over!financial!impact!on!customers!and!pressure!to!keep!

electricity!rates!low!• !


adaptation!efforts!often!follow.78!RegionIspecific!studies!are!particularly!important!in!Canada,!since!climate!and!weather!vary!greatly!across!regions!and!from!one!season!to!another.79!!

(ii)& Exclusive&reliance&on&historical&or&anecdotal&data&to&predict&future&risk&&

Another!major!obstacle!described!by!participants!was!a!lack!of!predictive!modeling!technology!to!forecast!(and!then!inform!responses!to)!future!risks.!Although!good!climate!change!modeling!currently!exists,!interviewees!indicated!that!their!companies!were!generally!not!using!them.!Based!on!our!interviews,!most!companies!rely!on!historical!weather!information,!rather!than!forwardIlooking!projections!about!climate!change.!For!instance,!interviewees!still!cited!what!have!historically!been!considered!‘1!in!50’!or!‘1!in!100’!year!events!as!baselines!for!assessing!the!resiliency!of!their!systems.!Although!a!few!interviewees!reported!that!their!companies!were!looking!at!predictive!modeling,!they!indicated!that!the!models!were!being!used!to!inform!only!certain!aspects!of!the!business,!and!were!not!being!incorporated!into!the!companies’!broader!risk!management!strategies.!Moreover,!although!only!a!few!participants!have!begun!to!use!modeling!in!their!adaptation!strategy,!several!interviewees!indicated!that!they!considered!predictive!modeling!or!forecasting!to!be!an!important!part!of!climate!change!adaptation.!Many!would!like!guidance!on!what!forecasting!models!to!use!and!what!data!to!input!into!those!models.!One!interviewee!noted!that!discussions!on!best!practices!and!standards!for!incorporating!this!technology!into!adaptation!strategies!should!be!interIjurisdictional!(and!that!federal!guidance!on!these!issues!would!be!preferable).!!

Improving!resilience!or!emergency!response!measures!based!on!historical!information!may!be!of!limited!use!if!weather!systems!change!on!the!scale!predicted!by!the!IPCC!and!other!organizations,!as!historical!standards!may!not!adequately!account!for!more!severe!and!frequent!extreme!weather!events!in!the!future.80!At!best,!companies!are!making!assumptions!about!their!risk!level!and!preparedness!based!on!outdated!information,!such!as!the!frequency!of!catastrophic!flood!events;!at!worst,!their!reliance!on!historical!information!is!an!impediment!to!implementing!adequate!adaptation!measures.!Previous!studies!strongly!suggest!that!predictive!modeling!of!future!weather!conditions!provides!a!more!accurate!basis!for!the!design!of!adaptation!strategies,81!as!they!can!expose!risks!that!historical!data!would!fail!to!identify,!in!part!due!to!their!ability!to!account!for!continuously!evolving!circumstances.!!

(iii)& Insufficient&communication&and&information:sharing&on&climate&risk&within&companies&and&in&the&industry&at&large&

Interviewees!generally!reported!that!current!informationIsharing!on!climate!risk!and!adaptation!was!lacking,!both!in!their!companies!and!in!the!industry!at!large.!Although!several!companies!had!established!committees!focused!on!climate!change!adaption,!and!a!few!were!members!of!external!climateIfocused!organizations!(e.g.!Ouranos!Consortium!or!the!North!American!Electric!Reliability!Corporation),!participants!still!stressed!the!need!for!more!and!better!communication!and!dissemination!of!climate!change!information.!In!addition!to!interIcompany!research!networks,!interviewees!were!generally!of!the!opinion!that!regulators!or!government!of!all!levels!should!become!more!involved!in!articulating!best!practices!for!climate!change!adaptation!and!ensuring!adequate!data!is!available!on!predicted!climate!change!impacts.!

!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!78"Josie"Scioli,"“Resilient"City:"Preparing"for"Extreme"Weather"Events”"(Staff"Action"Report"for"Parks"and"Environment"Committee,"22"November"2012),"at"6;"PRI,"supra,"note"76"at"4."79"IISD,"supra,"note"9"at"6."80"Pembina(Institute,"supra,"note"21"at"45X46;"PRI,"supra,"note"76"at"10."81"PRI,"supra,"note"76(at"5,7."


Studies!have!shown!that!informationIsharing!about!climate!impacts!and!adaptation!strategies!is!an!effective!way!to!increase!awareness!of!climate!change!risks!and!promote!action!on!adaptation.82!Effective!information!exchange!allows!companies!to!share!the!costs!and!benefits!of!climate!change!research!and!develop!a!better!understanding!of!climate!risks!and!adaptation!measures!by!learning!from!each!other’s!experiences.!Another!report!stressed!the!importance!of!collecting!and!sharing!climate!change!data!with!both!government!and!industry!to!develop!best!practices!for!the!sector,83!from!which!participants!would!also!benefit.!!!

(iv)& Lack&of&climate&leadership&in&the&company,&including&at&the&board&of&directors&level&

Participants!expressed!that!strong!leadership!in!the!area!of!climate!change!was!necessary!for!their!companies!to!move!forward!on!adaptation!efforts.!We!observed!that!companies!that!seemed!to!be!doing!the!most!to!integrate!climate!risks!into!business!practices!tended!to!have!senior!leadership!interested!in!the!topic;!that!said,!few!interviewees!reported!that!the!desire!to!prioritize!and!understand!climate!change!impacts!actually!came!from!the!topIdown.!Companies!with!less!attention!paid!to!climate!risks!were!more!likely!to!report!that!senior!executives!had!less!knowledge!and!understanding!of!climate!change!risks.!For!these!latter!companies,!senior!decision!makers!were!also!less!educated!on!their!companies’!respective!adaptation!efforts!and!level!of!preparedness!than!midIlevel!managers!explicitly!responsible!for!environmental!matters.!!

Of!the!few!interviewees!who!identified!climate!leaders!within!their!companies!(whether!senior!decision!makers!or!midIlevel!managers),!many!noted!that!these!leaders!tended!to!be!isolated!in!particular!areas!of!the!business,!and!that!their!efforts!were!not!reflected!in!the!companies’!broader!business!strategies.!

Figure&7:&Barriers!to!adaptation!!(size2of2circle2indicates2how2frequent2issue2was2raised2during2interviews)2&

!

!

!

!

!

(v)&Focus&on&mitigation&over&adaptation!

Most!interviewees!stated!that!their!companies!prioritized!mitigation!over!adaptation!(only!two!stated!that!adaptation!was!the!priority).!In!other!words,!they!were!“dealing!with!climate!change!already”!through!mitigation!efforts!and!that!became!a!barrier!to!developing!a!climate!adaptation!strategy.!This!eitherIor!mentality!was!explained!by!a!lack!of!resources!and!mitigationIbased!regulatory!requirements.!In!short,!companies!were!already!focused!on!mitigation!for!regulatory!reasons!and!interviewees!felt!they!were!unable!to!divert!their!limited!resources!from!mitigation!to!adaptation!efforts.!One!interviewee!noted!that!climate!adaptation!was!not!a!top!priority!and!that!regulations!intended!to!reduce!GHGs,!such!as!reducing!emissions!from!coal,!were!more!urgent!in!the!shortIterm.!!!!

!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!82"Ibid(at"8;"see(also"Pembina(Institute,(supra,"note"21(at"62."83"PRI,"supra,"note"76(at"8X9."

Other!barriers!identified!• Low!support!from!

regulators!• Focus!on!mitigation!• Lack!of!political!will!in!

region!• Insufficient!

informationIsharing!

Lack!of!climate!leadership!

within!company!

No!guidance!on!adaptation!

strategies!and!specific!climate!

impacts!forecasted!

Reliance!on!historical!data!as!opposed!to!predictive!modeling!

Pressure!to!keep!rates!low!


These!findings!are!consistent!with!other!studies,!which!have!found!that!there!is!competition!for!resources!between!climate!change!adaptation!and!mitigation,84!and!that!mitigation!has!received!more!attention!within!the!industry!than!adaptation.85!!!!

(vi)& Lack&of&political&will&to&move&forward&on&climate&change&adaptation&in&the&region&

Participants!explained!that!their!inability!to!make!changes!internally!was,!in!part,!due!to!a!lack!of!political!will!to!move!forward!on!climate!change!adaptation!externally.!Interviewees!felt!that!knowledge!of!and!experience!with!adaptation!among!external!stakeholders!and!relevant!government!departments!remains!low.!They!also!noted!that!the!inconsistent!views!of!individuals!and!lobby!groups!surrounding!climate!change!made!it!difficult!to!achieve!consensus!and!move!forward!on!adaptation.!One!participant!stated!that!his!or!her!company!needs!more!confidence!from!the!scientific!community!and!more!direction!from!the!federal!government!before!adaptation!would!be!incorporated!into!planning!and!design.!!

(vii)& Lack&of&awareness&or&support&from&regulators&or&other&supervisory&bodies&

Interviewees!indicated!that!climate!change!adaptation!efforts!were!also!hindered!by!a!lack!of!awareness!and!support!from!regulators!or!other!supervisory!bodies.!Regulators!are!responsible!for!ensuring!that!customers!receive!reliable,!affordable,!and!safe!electricity.!As!climate!adaptation!is!at!play!with!respect!to!all!three!of!these!priorities,!a!number!of!participants!implied!regulator!willingness!to!discuss!resiliency!issues!could!prompt!companies!to!better!incorporate!climate!risks.!

For!those!interviewees!of!companies!operating!in!a!regulated!market,!most!reported!that!the!regulator!had!not!raised!the!issue!of!climate!change!with!the!company.!Certain!regulators!were!pushing!for!improved!reliability!standards,!but!had!not!framed!this!conversation!in!terms!of!climate!preparedness.!!

On!the!other!hand,!a!few!interviewees!reported!that!they!had!had!discussions!on!climate!change!with!their!regulators!or!supervisory!bodies.!In!some!cases,!the!conversation!was!initiated!by!the!rate!reviewer!(whether!regulator!or!internal!review!panel);!in!other!cases,!the!issues!were!raised!by!the!companies!themselves.!For!instance,!in!the!distribution!context,!the!Toronto!Hydro!rate!application!is!perceived!as!an!attempt!to!“educate”!the!OEB!on!climate!adaptation!and!may!open!up!discussions!on!climate!adaptation!for!other!entities!regulated!by!the!OEB,!including!transmission!and!generation!providers.86!Based!on!the!interviews,!we!expect!that!more!integrated!utilities!will!likely!engage!more!readily!with!the!regulator!and,!in!turn,!incorporate!climate!risks!into!planning!and!management.!

(viii)& Concerns&over&financial&impact&on&customers&and&pressure&to&keep&electricity&rates&low&

The!costs!and!benefits!of!climate!adaptation!in!the!electricity!generation!and!transmission!sectors!are!not!wellIunderstood.!As!such,!interviewees!were!concerned!about!the!financial!impact!adaptation!efforts!would!have!on!their!customers.!Most!participants!discussed!the!considerable!pressure!from!regulators!and!customers!to!keep!electricity!rates!low.!Many!rateIregulated!participants!reported!that!electricity!rates!are!already!perceived!to!be!high,!and!that!obtaining!approval!to!raise!rates!to!account!for!capital!expenditures!related!to!climate!change!would!be!challenging.!Indeed,!a!few!interviewees!noted!that!their!companies!had!committed!to!“leastIcost!reliable!service.”!They!expressed!concern!that!taking!adaptive!action!when!there!are!unclear!links!between!climate!adaptation!and!reliability!(due!to!information!gaps)!could!run!contrary!to!their!commitment!to!consumers.!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!84"PRI,"supra,"note"76(at"10."85"NRCan,"supra,"note"77"at"82."86"Although"Toronto"Hydro"is"an"electricity"distribution"company,"and"therefore"not"covered"in"the"scope"of"this"study,"the"rate"case"is"an"interesting"example"of"a"regulator"being"asked"to"consider"climate"adaptation"concerns."This"case"was"of"interest"to"the"interviewees."


However,!several!participants—mostly!the!integrated!utilities—believed!that!they!could!make!a!case!for!adaptationIbased!rate!increases.!They!indicated!that!the!regulator’s!willingness!to!approve!such!an!increase!would!depend!on!the!companies’!ability!to!provide:!(a)!a!riskIbased,!costIbenefit!analysis!demonstrating!the!potential!impacts!of!climate!change!and!the!benefits!of!investing!in!adaptation!measures;!(b)!clear!proof!that!climate!impacts!are!a!concern!in!the!nearIterm;!and!(c)!evidence!that!climate!preparedness!was!related!to!grid!resilience!and!would!thus!enhance!reliability.!One!interviewee!also!mentioned!that!an!extreme!weather!event!in!the!region!or!greater!press!on!climate!adaptation!could!also!help!to!facilitate!momentum.!Some!participants!indicated!that!they!hope!to!see!ministerial!directives!from!their!respective!energy!ministries!permitting!regulators!to!approve!rate!increases!based!on!climate!adaptation.!

In!addition!to!their!own!efforts,!some!participants!were!hopeful!that!interest!groups!and!politicians!would!become!involved!in!advocating!for!rates!that!would!allow!for!investment!in!climate!change!preparedness,!with!a!clear!articulation!of!how!such!preparedness!is!linked!to!electrical!sector!reliability!and!grid!stability.!

!26!|!Next!Steps!

Next Steps Based!on!our!interviews,!we!believe!that!there!is!very!limited!awareness!of!the!impacts!climate!change!is!predicted!to!have!on!the!Canadian!electricity!generation!and!transmission!businesses,!including!amongst!most!senior!executives.!It!is!clear!from!our!discussions!that!many!of!our!interview!participants!believe!that!their!organizations!have!significant!work!to!do!before!climate!change!can!be!adequately!integrated!in!their!business!planning!and!processes.!!

We!received!optimistic!projections!that,!thanks!to!the!technical!and!risk!management!experience!of!utility!operators!and!engineers,!the!generation!and!transmission!sectors!have!the!capacity!to!increase!resilience!and!develop!adaptation!plans.!Indeed,!given!the!sectors’!experience!planning!for,!coping!with!and!responding!to!both!environmental!hazards!and!regulatory!directives,!it!is!relatively!wellIpositioned!to!lead!on!climate!change!adaptation.!!

Drawing!on!the!findings!of!this!report,!the!following!is!a!list!of!recommendations!to!industry!and!policy!decisionImakers!to!assist!the!Canadian!electrical!generation!and!transmission!sectors!in!improving!their!climate!preparedness,!building!resilience!and!ensuring!a!sustainable!electrical!future.!!

1. Provide&educational&forums&for&senior:level&management&teams&and&boards&of&directors.&Strong!leadership!within!companies!is!necessary!to!move!forward!on!adaptive!action.!SeniorIlevel!decisionImakers!need!to!better!understand!the!potential!impacts!of!climate!change!and!the!importance!of!taking!action.!Educational!forums!could!focus!on!the!following:&

a) The!costs!of!climate!change!and!extreme!weather!in!the!Canadian!economy!to!date,!as!well!as!the!projected!costs!going!forward!in!the!absence!of!operationalizing!climate!adaptation&

b) The!effect!that!proactive!adaptation!measures!will!have!on!companies’!return!on!investment&c) The!ramifications!that!climate!change!vulnerabilities!in!the!electricity!sector!have!in!other!sectors,!and!vice!

versa&

2. Dispel&myths&of&high&adaptation&costs.&Examine!various!adaptation!approaches!and!identify!those!that!can!be!executed!with!a!positive!return!on!investment.!Encourage!decisionImakers!to!incorporate!adaptation!practices!into!new!infrastructure!design!and!during!scheduled!refurbishments!(which!require!considerably!lower!expenditures!as!compared!to!proactive!adaptation!retrofits).!!&

3. Gather&better&climate&data.&Conduct!and!provide!detailed,!regionIspecific!vulnerability!assessments!in!the!generation!and!transmission!sectors.!Provide!utilities!with!data!regarding!climate!risk!and!projected!impacts,!as!well!as!clear,!industryIwide!baselines!for!levels!of!acceptable!risk.!&

4. Employ&predictive&modeling.&Implement!predictive!modeling!technology!to!forecast!future!weather!conditions!and!analyze!various!risk!scenarios,!as!opposed!to!relying!on!historical!or!anecdotal!data.!Provide!utilities!with!guidance!regarding!which!forecasting!models!to!use!and!which!data!to!input!into!such!models.!!Alternatively,!utilities!may!wish!to!not!make!plans!around!a!single!model,!but!rather!to!utilize!an!ensemble!climate!model!projection!(i.e.!a!“model!of!models”,!or!integrated!model!approach).&

5. Develop&best&practices&for&adaptation&efforts.&Once!utilities!have!a!better!understanding!of!what!they!must!prepare!for,!provide!employee!education!and!resources!concerning!best!practices!related!to!adaptation.!A!first!step!may!be!to!consult!with!utilities!and!experts!to!understand!the!best!practices!for!climate!adaptation!plans!targeted!at!the!generation!and!transmission!sectors.!Companies!may!wish!to!collectively!contribute!to!the!development!of!a!generally!applicable!climate!adaptation!template!that!could!be!shared!amongst!participating!companies.!Educational!resources!could!also!assist!in!refining!decisionImakers’!understanding!of!the!distinction!between!climate!mitigation!and!adaptation.!A!greater!understanding!could!help!to!reinforce!the!importance!of!both!types!of!initiatives!and!reduce!competition!for!resources!between!the!two.!!!&

!27!|!Next!Steps!

6. Improve&information:sharing.&All!players!in!the!electricity!generation!and!transmission!sectors,!including!regulators,!employees,!management,!service!providers!and!consumers,!need!to!understand!the!linkages!between!climate!change!and!our!electricity!system.!Create!or!build!on!communication!and!linking!initiatives!such!as!multiIstakeholder!forums,!industry!or!technical!associations!and!standards!bodies!to!facilitate!information!exchange!and!allow!for!the!pooling!of!resources.!Increased!regional!and!national!coordination!of!research!and!adaptation!action!would!provide!industry!stakeholders!with!confidence!that!similar!or!comparable!approaches!are!being!used,!and!would!facilitate!planning!that!improves!network!resilisence!across!jurisdictional!boundaries.!Strong!industry!organizations!and!associations!can!also!facilitate!dissemination!of!new!experiences!and!knowledge!to!stakeholders.!&

7. Prioritize&public&communication&and&consumer&awareness.&Publicly!disclose!climate!risks,!communicate!how!extreme!weather!events!are!reflected!in!rates!and!system!outages,!and!make!the!business!case!for!evidenceIbased!investments!in!adaption!and!resiliency.!Better!communication!will!enhance!consumer!understanding!of!why!adaptive!action!is!beneficial.!Homeowners!may!even!be!motivated!to!take!steps!to!improve!their!own!resilience!to!climate!change!impacts.!Good!communication!will!also!help!explain!the!need!for!climate!adaptationIbased!capital!expenditures!to!regulators!and!shareholders.!Communications!should!clearly!articulate!the!difference!between!climate!mitigation!and!adaptation!initiatives.!It!should!make!the!case!that,!rather!than!being!mutually!exclusive,!both!mitigation!and!adaptation!should!be!treated!as!key!strategic!priorities.&

8. Increase&political&will.&Work!towards!clear!direction!and!political!commitment!to!foster!dialogue!and!action!on!proactive!adaptation.!Industry,!interest!groups!and!politicians!could!advocate!for!an!energy!rate!allocation!to!help!better!prepare!the!electricity!system!for!climate!change!and!extreme!weather!events.!&

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