2021/22 BUSINESS PLAN April 2021 TABLE OF CONTENTS

About NB Power ...... 1 Mandate ...... 1 Our Plan ...... 3 Strategic Excellence Areas ...... 5 Safety Excellence ...... 6 Customer Excellence ...... 7 Organizational Excellence ...... 8 Reliability Excellence ...... 9 Environmental Excellence ...... 11 Attachment A – Measure Definitions ...... 12 Attachment B – Financial Highlights ...... 13

NB Power’s 2021/22 Business Plan has been prepared by management and reviewed and approved by the Power Corporation Board of Directors. ABOUT NB POWER NB Power is the largest electric utility in Atlantic and is responsible for the generation, transmission and distribution of throughout New Brunswick. Our more than 2,500 employees across New Brunswick are dedicated to providing safe, reliable and economically sustainable service to our more than 400,000 direct and indirect customers in New Brunswick.

The Electricity Act gives NB Power the authority to sell electricity within the province, and to manage and operate NB Power’s resources and facilities for the supply, transmission and distribution of electricity within New Brunswick. The Act also establishes that, to the extent practicable, rates charged by NB Power shall be maintained as low as possible, and changes in rates shall be stable and predictable from year to year. Our rates are regulated by the New Brunswick Energy and Utilities Board.

As a provincial Crown Corporation, the Province of New Brunswick is the owner and sole shareholder of NB Power. NB Power reports to the Shareholder through the Minister of Natural Resources and Energy Development and the Shareholder’s expectations are expressed through legislation, policies and a mandate letter. NB Power’s most recent mandate letter from the Minister calls for focus on the following priorities.

Mandate COVID-19 Like most organizations, COVID-19 has had a significant impact on NB Power’s operations and its customers. As the supplier of an essential service to all New Brunswickers, NB Power continues to maintain an updated operational plan which meets Public Health, Safety and other applicable Government requirements. In addition to safeguarding the health of employees and the public, these plans ensure critical infrastructure and essential services are maintained as a top priority. This is managed at an operational level through internal emergency preparedness processes.

Climate Change The transition to a lower carbon economy is an essential priority for NB Power. Therefore, NB Power is focused on several initiatives developed to lower its carbon footprint while keeping rates affordable.

Net Metering and Embedded Generation NB Power remains committed to the net metering and embedded generation programs. This includes continued investments in testing options for customers through the Atlantic Projects. The embedded generation program is currently fully subscribed and under review by NB Power.

Reducing our Carbon Footprint Another important area of focus is reducing NB Power’s carbon footprint. This is achieved through internal reductions of energy usage, continued diversification and optimization of our generation through additional non-emitting sources and an equivalency agreement with the federal government. In addition, NB Power is exploring evolving and alternative non-emitting generation and technology options of the future such as small modular reactors.

1 of 13 Energy Efficiency NB Power also continues to mature service offerings aimed at reducing the demand for energy and provide savings to customers. These services are available for all classes of customers and for all fuel types used in the province.

First Nations NB Power believes in building long-term, mutually beneficial working relationships with our surrounding First Nations communities based on a foundation of respect, inclusion and responsiveness. Maintaining regular consultation with First Nations as a recognized Rights Holder in New Brunswick is a standard process within NB Power. This includes proactive consultation as part of major project planning and execution as well as to enable energy related development programs such as the Locally Owned Renewable Energy Projects that are Small Scale Program. In addition, NB Power looks to provide specific opportunities in First Nations employment and procurement.

Debt Reduction NB Power remains committed to meeting its mandate to achieve a capital structure of at least 20 per cent equity by 2027. This Business Plan has been developed to reflect that commitment through cost reductions, and rationalization and prioritization of capital investment requirements. These actions have been balanced with ensuring NB Power continues to deliver safe, reliable and affordable electricity and services to our customers.

Community Collaboration NB Power actively works with communities throughout the province to meet energy related needs and support economic development in the province. This includes partnering in the build of the first smart community and testing advanced smart grid solutions. This also includes working collaboratively to understand community unique needs, build capacity and advise or develop energy solutions.

New Business Development The energy industry continues to change at an accelerated rate. NB Power recognizes these changes come with opportunities that can support its vision of sustainable energy for future generations. NB Power provides regular updates to the Shareholder on these opportunities via face-to-face meetings and/or briefing notes to ensure alignment and support. An example of a new business development opportunity actively being explored would be small modular reactors.

New Brunswick Energy Marketing New Brunswick Energy Marketing continues to be active in the business of importing and exporting electricity and related products and services to keep rates low in New Brunswick. It remains focused on preserving existing customers while exploring opportunities to expand in other evolving energy related markets.

2 of 13 OUR PLAN The COVID-19 Pandemic has had a significant impact on NB Power, the Province of New Brunswick and countries around the world. As a critical service provider, NB Power plays an essential role as part of the province’s pandemic response. In support of our customers during this very challenging time, NB Power has been focused on • delivering critical customer services and meeting essential customer needs while adhering to all health and safety guidelines • offering flexible bill payment arrangements and rate relief in recognition of the toll the pandemic has had on the economy • ensuring safe and reliable infrastructure for our health care system, businesses and all our customers

NB Power’s commitment to support New Brunswick through this pandemic has led to the postponement and delay of other longer-term objectives. Although NB Power remains committed to supporting its customers to the end of this challenging crisis it also recognizes the need to resume focus on other mid to longer term priorities. COVID-19 has reinforced that planning in uncertain times adds significant complexity and requires NB Power to remain agile in order to ensure essential services to our customers in a financially responsible manner.

NB Power’s 2021/22 plan has been developed with three longer-term strategic objectives including focusing on reducing debt to improve the financial health of the organization, advancing the modernization of the grid and supporting the transition to a low-carbon economy. In doing so, NB Power must continue to put customers at the center of everything it does and ensure the utility is responsive to customers’ changing expectations.

In the development of this plan, NB Power has made every effort to reduce controllable costs, rationalize capital investment requirements and minimize upward rate pressure while targeting critical debt reduction opportunities.

NB Power will develop and implement strategies to meet financial targets recognizing increasing cost pressures due to climate change impacts (increasing storms, lower hydro flows, carbon pricing), rising fuel costs, pandemic related economic challenges and emerging advancements in the industry. NB Power’s target is to achieve a debt/equity ratio of 80/20 by 2027.

Also critical to New Brunswick’s energy future is a modern grid that is multi-directional and capable of accommodating connected renewable energy resources such as solar and wind. Improvements such as Advance Metering Infrastructure (AMI) and the Smart Grid Atlantic projects will provide increased options, real-time information for customers and help manage the impacts on local and regional power quality. NB Power also needs to prepare to adopt flexible strategies such as demand response and battery storage to offset variability instead of using fossil fueled power plants to steady the power grid.

AMI will enable two-way communication between customers’ meters and NB Power. This technology will provide customers with near real-time information on their energy use; empowering customers to understand how and when they are using electricity and allowing them to make behavioural changes to lower their overall usage. This technology will also enable customers to leverage Distributed Energy

3 of 13 Resources, generate and store their own energy and support our efforts to reduce and shift electricity demand. Smart meter installation will begin in winter 2022 and conclude in early 2024.

The Smart Grid Atlantic (SGA) project is a four-year federally funded research, development, and deployment initiative aimed at helping move to a smarter, cleaner grid. New Brunswick has three community projects that will help NB Power better understand how customers can best use energy in the future, reduce their energy bills, and help the region reduce emissions.

Mitigating the impacts of climate change is a key area of focus for all utilities. NB Power maintains a robust and diverse energy system that is 80 per cent non-emitting. Continuing to reduce New Brunswick’s carbon footprint, while maintaining an infrastructure which is able to withstand the impacts of severe weather and adopting emerging technologies will shape the future of energy in the Province.

Like the telecom industry, the energy sector is experiencing unprecedented disruption which increases the complexity to remain safe, cost efficient and responsive to customer needs. Anticipating and meeting customer expectations must be at the center of everything we do at NB Power. This includes leveraging new technologies, products and services to enhance our customers’ experience and increase value.

Effective risk management is a necessity and integral part of good business practices. NB Power manages its risks through systematic, proactive and integrated processes to identify, understand, manage and communicate risks that may impact NB Power’s ability to achieve its strategic objectives.

NB Power’s risks are managed through an Enterprise Risk Management (ERM) Program. Corporate strategy and goals serve as the foundation of all risk management activities and as part of the planning process the Board of Directors sets the overall risk appetite and tolerances for the Corporation. The ERM process employs a consistent methodology across the organization that results in a comprehensive view of risk that is regularly reported to management and the Board. By embedding risk management techniques in day-to-day operations, NB Power is better equipped to identify risks affecting its goals and to manage risks in ways that are consistent with the company strategy.

This Business Plan represents a one-year view of the key initiatives and targets needed to achieve the strategic objectives of NB Power and address identified risks. The five areas of strategic excellence provide a reporting framework that incorporates all aspects of our business including legislative requirements, regulations, our Shareholder expectations, and direction provided by our Board of Directors.

4 of 13 STRATEGIC EXCELLENCE AREAS Our areas of strategic excellence are Safety, Customer, Organizational, Reliability and Environmental (SCORE). Whether the efforts are in innovation or continuous improvement, within Nuclear, Generation, Transmission, Distribution, Customer Service or Corporate Services, all align to support progress in our excellence areas.

Enterprise key performance indicators have been established as part of this Plan to reflect key areas of focus and performance. In each of NB Power’s excellence areas, management is focused on determining the goals, initiatives, processes, measures and attributes required to pursue excellence based on relevant internal or (where applicable) external industry performance comparisons.

Key goals, measures and targets are set in each excellence area. NB Power will continue to measure and report performance against targets.

2021/22 Best Practice/ Key Performance Indicators Target Top Quartile Safety Excellence Total Recordable Incident Frequency 0 0.69 Customer Excellence Customer Satisfaction Score ≥705 ≥716 Organizational Excellence ($ millions) Operating Earnings $277 Unique to NBP Cash Available To Pay Down Debt $72 Unique to NBP Net Capital Expenditures $334 Unique to NBP Operations, Maintenance and Administration (OM&A) $521 Unique to NBP Reliability Excellence Nuclear Nuclear Equipment Reliability Index ≥80 (Rev. 4) 90 (Rev. 4) Nuclear Capacity Factor (%) 96.0 90.7 Reliability Excellence Operations Generation Equivalent Availability (%) 81.6 79.8 Bayside Capacity Factor (%) 34.6 TBD System Average Interruption Frequency Index (SAIFI) 2.15 1.79 System Average Duration Frequency (SAIDI) 5.40 2.69 Environmental Excellence % Generation Non Emitting 82.1 Unique to NBP In-Province Energy Reduction (GWh) 47 Unique to NBP

The following section will highlight each of the excellence areas, with details about the associated key initiatives planned for the 2021/22 fiscal year. Attachment A contains Measure Definitions.

5 of 13 Safety Excellence Keeping employees safe has taken on new meaning as a result of the pandemic. New distractions, new ways of working and the widespread impact of COVID-19 has affected employees both at work and at home. Our commitment to support the physical, mental, work and life aspects of health is more critical than ever. Our Total Health Strategy remains focused on reducing preventable illness, the risk for accidents and injury, containing health care costs and building resiliency in our workforce. Our relentless focus on safety extends to ensuring the wellbeing of our contractors and the public.

2021/22 Best Practice/ Targeta Top Quartile Total Recordable Incident Frequencya 0 0.69

2021/22 Strategic Initiatives • Strengthen our safety culture, prevent accidents and reduce safety risks. Focus will be on improving the investigation of high potential incidents to help prevent future occurrences and utilizing the results of a recent safety culture survey to develop targeted improvements including working directly in the field to remove barriers and better plan safety into all aspects of the work.

• Increase mental wellbeing by building employee resiliency. Many companies are facing significant increases in mental health and mental illness related challenges. NB Power will provide specific training and programs to employees to help improve coping skills.

• Enhance contractor safety through focused training, improved supervisory oversight and improved screening and validation of qualifications with vendors. This year changes have been made to Contractor Safety Management to more clearly outline oversight requirements. Time will be invested by divisions on improving accountability at all levels of supervision for contractor safety.

• Enhance physical and cyber security by implementing processes and tools to proactively identify and mitigate risks. This includes upgrades to tools used to identify issues or tampering with NB Power equipment.

a The target for Total Recordable Incident Frequency is a stretch goal recognizing NB Power’s aspirational vision and efforts to prevent all injuries and accidents.

6 of 13 Customer Excellence Customer Excellence means putting the customer experience at the center of everything we do. NB Power is committed to being “easy to do business with” and working with our customers to find the energy solutions that work best for them.

2021/22 Best Practice/ Target Top Quartile Customer Satisfaction Score ≥705 ≥716a

2021/22 Strategic Initiatives • Be trusted energy advisors. Helping all customer segments and communities meet their energy needs efficiently and sustainably. NB Power will work collaboratively with stakeholders across the province to understand their needs, build capacity and advise on, or develop, energy solutions for a greener, cleaner future.

• Progress the implementation of Advanced Metering Infrastructure (AMI/Smart Meters) needed to facilitate the installation of meters beginning in the winter of 2022 and enable the benefits for customers and grid management.

• Make it easier for customers to do business with us. This includes adding more self-serve options so customers can engage 24/7, improving proactive communications around the status of complex work orders, establishing customer-driven notification options and optimizing energy efficiency program delivery with new and simple offerings. • Partner in building smart communities and testing smart grid solutions via the Smart Grid Atlantic (SGA) project. The three community projects will help NB Power better understand how customers can best use energy in the future, reduce their energy bills, and help the region reduce emissions.

a Based on JD Power 2019 study

7 of 13 Organizational Excellence Organizational Excellence focuses on establishing the long-term financial health of NB Power. Debt reduction is the most critical focus area and will involve utilizing best practice information to complete internal improvements and utilizing new technologies to improve productivity, reduce costs and increase value for customers. This area also includes enabling initiatives which help the business achieve results in all areas.

2021/22 Best Practice/ ($ millions) Targeta Top Quartile Operating Earnings $277 Unique to NBP Cash Available To Pay Down Debt $72 Unique to NBP Net Capital Expenditures $334 Unique to NBP Operations, Maintenance and Administration (OM&A) $521 Unique to NBP

2021/22 Strategic Initiatives • Develop and implement strategies to increase NB Power’s ability to meet financial targets through improvements in investment governance, financial forecasting and determining new streams of revenue.

• Reduce costs by streamlining and grouping supply chain requirements, joint utility material purchasing and improved inventory management.

• Enhance decision making and reduce costs through the use of data and continuous improvement. This includes finding ways to maximize the value of assets and equipment maintenance programs and increasing efficiency in the field.

• Sustain efficiencies gained during the pandemic and implement additional tools and new ways of working in a more digital based environment.

• Execute workforce and succession planning activities to ensure required knowledge and skills are maintained to support high performance operations and meet business objectives.

Attachment B contains Business Plan 2021/22 Financial Highlights.

a Financial targets are based on meeting approved budgets established by the NB Power Board.

8 of 13 Reliability Excellence Nuclear Excellence Improving and sustaining the reliability of Nuclear Generating Station (PLNGS) continues to be a key area of focus. Significant capital and OM&A investment in our nuclear station reflects the unique and critical role that safe and reliable operation at PLNGS plays in providing value to our customers.

2021/22 Best Practice/ Target Top Quartile Nuclear Equipment Reliability Index ≥80 (Rev. 4) 90 (Rev. 4) Nuclear Capacity Factor (%) 96.0 98.0

2021/22 Strategic Initiatives • Implement 250 prevention action cards to reduce costs and help bridge the gap to top decile performance by engaging all Nuclear employees.

• Improve Equipment Reliability using an industry standard approach to preventive maintenance, ongoing investments in equipment improvements, upgrades and replacements through our capital program to allow transition to a 24-month outage cycle. Continue to reduce maintenance backlogs with a specific focus on deficient critical orders and leaks.

• Develop life cycle management plans for all critical equipment to the end of plant life. Integrate those activities in the station’s plant life capital plan and maintenance strategies.

• Execute the obsolescence and critical spares initiative to re-establish an accurate and robust critical spare parts inventory for improved safety and reliability.

9 of 13 Operations (Generation, Transmission and Distribution) Excellence NB Power operates and maintains a diverse generation, transmission and distribution infrastructure. In order to sustain high levels of performance NB Power needs to regularly and strategically invest in infrastructure.

2021/22 Best Practice/ Target Top Quartile Generation Equivalent Availability (%) 81.6 79.8 Bayside Capacity Factor (%) 34.6 TBD System Average Interruption Frequency Index (SAIFI) 2.15 1.79 System Average Duration Frequency (SAIDI) 5.40 2.69

2021/22 Strategic Initiatives • Execute planned equipment upgrades and maintenance outages within the Generation fleet to sustain high levels of reliability.

• Progress the modernization of the distribution system by upgrading infrastructure and needed operational technologies to provide the Energy Control Center with improved grid visibility and control, including better management of Distributed Energy Resources.

• Progress the transmission rebuild and vegetation management programs to improve reliability.

10 of 13 Environmental Excellence Environmental Excellence focuses on NB Power’s response to climate change. This includes efforts to strengthen infrastructure to sustain high levels of reliability, reducing our own carbon footprint through energy and emission reductions and pursuing new ways to economically and environmentally balance generation sources. It also reflects our commitment to realizing energy efficiencies through products, services and process improvements both internally and for our customers. Targets will include short, medium and long-term actions to ensure sustainable operations for future generations.

2021/22 Best Practice/ Target Top Quartile % Generation Non Emitting 82.1 Unique to NBP In-Province Energy Reduction (GWh) 47 Unique to NBP

2021/22 Strategic Initiatives • Progress the life achievement plan to operate Mactaquac to approximately 2068 by finalizing the scope of work and preparing for the regulatory process.

• Continue to work with; and support the New Brunswick Small Modular Reactor (SMR) vendors, in the development of their advanced SMR Technologies. This includes progressing pre-project activities that support the potential siting of SMR demonstration units at the Point Lepreau Nuclear Generating Station site.

• Work with Federal and Provincial governments to gain clarity and certainty on how NB Power will support New Brunswick’s carbon plan. Help New Brunswickers transition to a low carbon economy by providing accessible energy efficiency and energy management programs and services.

• Reduce our internal energy consumption through the optimization of generating stations and other facilities. Product offerings such as LED lighting (target of 100% within rented light fixtures by March 2022) and Eco‐Peak domestic hot water heaters, leveraging as a distributed energy resource.

• Progress the replacement of equipment containing greater than 50 ppm of Polychlorinated biphenyls (PCBs) as part of our strategy to meet Environment Canada Regulations by the compliance date of December 31, 2025. NB Power has set an internal target of December 31, 2024 to be compliant.

11 of 13 ATTACHMENT A – MEASURE DEFINITIONS

Key Performance Indicator Definition

Safety Excellence Total Recordable Incident Frequency Number of Fatalities + Number of Lost-Time Injuries + Number of Medical Aids + Loss of consciousness + Restricted work + First aid x 200,000/ Exposure Hours Customer Excellence Customer Satisfaction Score Residential Customer Satisfaction Index. North East Category. The index measures the following factors: power quality & reliability, price, billing & payment, corporate citizenship, communications, customer service. Organizational Excellence Operating Earnings Revenue less fuel and purchased power, OM&A, depreciation and amortization and taxes Cash Available to Pay Down Debt Amount of money available to pay down NB Power’s debt once other financial costs and obligations have been met Net Capital expenditures Amount of money spent on capital investments OM&A Total operations, maintenance and administration spending

Reliability Excellence Nuclear Equipment Reliability Index Index which uses a composite of 16 key Sub-Indicators that have a weighted value to add up to 100 as the highest score.

Each Sub-Indicator has a number value and color assignment that reflects overall station performance for the key aspects of the AP-913 equipment reliability process model. Nuclear Capacity Factor (%) The ratio of the energy which the power reactor unit has produced over a specific period divided by the energy it would have produced at its reference power capacity over that period Generation Equivalent Availability (%) The equivalent percentage of hours that a unit is available to generate at its maximum capability Bayside Capacity Factor (%) The ratio of the energy which the unit has produced over a specific period divided by the energy it would have produced at its reference power capacity over that period System Average Interruption Frequency Average Number of Interruptions in power (based on three-year Index (SAIFI) average 2018-20) System Average Interruption Duration Average number of hours customers were without power (based on Index (SAIDI) three-year average 2018-20) Environmental Excellence % Generation Non Emitting Total of all non-emitting generation and purchases as a percentage of In-province load In Province Energy Reduction (GWh ) In-Province Energy is the total energy consumed within New Brunswick (except Perth-Andover) in a given fiscal year. It is inclusive of losses.

12 of 13 ATTACHMENT B – FINANCIAL HIGHLIGHTS

Financial Highlights ($ millions) Budget Fiscal Year Ending March 31 2021/22 (1) In-province revenue 1,461 (2) Out-of-province revenue 297 (3) Fuel & purchased power expense 656 (4) Gross margin 1,102 (5) Miscellaneous revenue 75 (6) Operation, maintenance & administration 521 (7) Depreciation and amortization 330 (8) Taxes 50 (9) Operating earnings 277 (10) Finance charges & other income (238) (11) Mark-to-market of fair value through profit and loss investments 42 (12) Net earnings before adjustments in regulatory balances 80 (13) Net changes in regulatory balances (13) (14) Net earnings (loss) 68 (15) Capital expenditures (net) 334 (16) Net debt 4,802 (17) Change in net debt (77) (18) % Debt in capital structure 92%

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