SUSTAINABILITY REPORT 2014 SUSTAINABILITY REPORT 2014 2 HYDRO-QUÉBEC Hydro-Québec generates, transmits and distributes electricity. Its sole shareholder is the Québec government. While using mainly hydroelectric generation, it supports the development of other technologies—such as wind energy and biomass—through purchases from OUR APPROACH independent power producers. It also conducts R&D 4 Interview with Thierry Vandal, President and Chief Executive Officer in energy-related fields, including energy efficiency. 6 About this Report 7 Materiality Analysis The company has four divisions: 10 Value Chain 11 Regional Presence OUR ACTIONS HYDRO-QUÉBEC PRODUCTION 13 Governance 20 Climate Change, Biodiversity generates power for the Québec market and sells power on wholesale and Environmental Management markets. 27 Demand-Side Management HYDRO-QUÉBEC TRANSÉNERGIE 31 Energy Portfolio 47 Acceptability and Spinoffs operates the most extensive transmission system in North America for the from Projects and Operations 52 Responsibility for Electricity benefit of customers inside and outside Québec. Service 56 Technological Innovation HYDRO-QUÉBEC DISTRIBUTION 60 Health and Safety 64 Human Resources provides Quebecers with a reliable supply of electricity. To meet needs 66 Investing in the Community beyond the heritage pool, which Hydro-Québec Production is obligated Above Les Cèdres generating station, archive photos. OUR RESULTS to supply, it mainly uses a tendering process. The division also encourages 70 Our Performance at a Glance On the cover Les Cèdres generating station, a run-of-river plant, located on the Saint-Laurent (St. Lawrence River), 72 GRI Content Index: Core in its customers to make efficient use of electricity. Accordance in Montérégie. The newly refurbished facility opened its doors 76 Independent Assurance to the public for its 100th anniversary this year. It is the HYDRO-QUÉBEC ÉQUIPEMENT ET SERVICES PARTAGÉS second-oldest hydroelectric generating station in Québec. 78 Relations with Stakeholders 80 Materiality Analysis – Aspect and Société d’énergie de la Baie James (SEBJ), a subsidiary of Hydro- When it was built in 1914, it was the first generating station Definition and Boundaries designed to export part of its output to the United States. For 83 Major Facilities and Québec, design, build and refurbish generating and transmission facilities, a long time, it was the most powerful facility in Québec. About Generating Stations Serving 15 years ago, a bicycle path was added along several of its Off-Grid Systems mainly for Hydro-Québec Production and Hydro-Québec TransÉnergie. retaining structures, offering riders splendid panoramic views. SUSTAINABILITY REPORT 2014 3 Hydropower enables Hydro-Québec to contribute to the well-being of Quebecers on a OUR daily basis. We are also deeply concerned about ensuring the energy future of coming APPROACH generations, and consequently look after resources and the environment. Québec’s decision to develop hydropower is more relevant than ever at this time of distinct climate change. Hydropower is a clean, renewable energy source with known, well-controlled environmental impacts. It allows the province to position itself favorably in terms of greenhouse gas emissions relative to the rest of North America. Sustainability is vital to our industry. In addition to environmental protection, it encompasses issues of social progress and economic performance, and is at the root of all our decisions and projects. Transmission lines supported by guyed-V towers, near Grand-Brûlé substation in the Laurentides. SUSTAINABILITY REPORT 2014 4 INTERVIEW WITH Beyond its main commitments, At the same time, Hydro-Québec has continued to pursue THIERRY VANDAL, what concrete steps does Hydro-Québec the development of renewables. At the Romaine complex, PRESIDENT AND CHIEF take to implement sustainability? in Côte-Nord, we commissioned Romaine-2 generating station, adding 640 MW to our generating capacity while EXECUTIVE OFFICER First of all, our growth projects must fulfill our commitment boosting regional economic activity as well. In the regions to sustainability. They must be favorably received by the host nearby, seven wind farms went into operation. The acquisition communities while representing an excellent environmental of several hundred megawatts of firm capacity will also be and economic option. Hydro-Québec also works toward required to fill needs in coming winters. concrete, measurable targets laid out in its Sustainable Development Action Plan. The Action Plan, which comprises On our off-grid systems, an unfortunate incident occurred at 10 actions that support Québec’s Government Sustainable the thermal generating station at Cap-aux-Meules on Îles de Development Strategy, sets the company’s priorities in a la Madeleine. Hydro-Québec quickly assumed its responsibil- variety of areas, ranging from renewable energies, energy ities and took measures to contain the spill of diesel from the efficiency and environmental responsibility to support for pipeline and implement recovery procedures right away. We low-income customers. This report is an important component did everything possible to prevent environmental damage and in our process of reporting on concrete achievements in the worked closely with the municipality, the local associations area of sustainability. It meets stringent standards for reporting concerned and federal and provincial authorities to remedy and contains a large number of indicators for measuring the the situation. progress made. Moreover, the materiality of the report content As regards customer service, our advanced metering is assessed periodically with stakeholders. infrastructure rollout made steady progress, with more What stands out in 2014 in terms than 2.5 million next-generation meters—out of a total of sustainability? 3.8 million—installed as at December 31, 2014. This project should be completed by the end of 2016. Shale gas production continued to outpace demand, leading to a decline in North American natural gas prices. In Québec, From a sustainability standpoint, installing these remotely read electricity accounts for over 40% of the energy balance, and meters means that we can avoid several hundred tonnes of nearly 99% of the electricity generated and purchased by greenhouse gas emissions every year by taking many vehicles Hydro-Québec comes from renewable energy sources. As a used for meter reading off the road. result, the province can boast one of the lowest greenhouse This year, Hydro-Québec recorded the best result from gas emission rates per capita in North America. In 2014, the continuing operations in its history—$3.4 billion—enabling us company reached a new milestone in improving Québec’s to pay a record dividend of $2.5 billion to our shareholder, the energy efficiency: we met the target of 8 TWh set in our Québec government. This result, which represents 15% growth Energy Efficiency Plan a year earlier than expected, and even compared with 2013, is attributable to the solid performance surpassed it, for a cumulative total of 8.2 TWh compared with shown in all our lines of business during a year marked by cold 2003 consumption. weather that hit both Québec and outside markets early on, and to sound management of our operating expenses. SUSTAINABILITY REPORT 2014 5 What will be the main issues facing Finally, the fact that Hydro-Québec is a profitable company, on Hydro-Québec in 2015? the leading edge of technology, well regarded the world over by its peers, and that continues to grow, can be credited to the The recent start-up of Romaine-2 generating station and its innovation that goes on every day throughout the company. transmission facilities will give the company greater flexibility In a world where resources are limited, there can be no sustain- in meeting continued growth in capacity needs. able development without technological innovation. And in The commissioning of Romaine-1 in 2015 will be just as economic terms, it ensures productivity gains. The outstanding essential. Bringing the new power and energy to load centres performance posted once again this year is made possible by calls for a number of transmission facilities to be completed. the expertise, professionalism and determination of all our Notable among these major undertakings is the start of employees, who are steadfast in their daily efforts to create construction on the $1-billion Chamouchouane–Bout-de-l’Île value for Québec. project, designed to further strengthen the metropolitan loop and the system in south Lanaudière. Various other transmission line projects will need to be proposed and approved in the coming years, meaning that the issue of social acceptability will have to be addressed. Our teams maintain close relations with host communities all across Québec so that we can agree on variants or develop- ments that are supported by a majority of stakeholders. Throughout this exercise, Hydro-Québec must find a balance between the degree of acceptability required, costs and environmental impacts, as well as the economic and social spinoffs of the project. In another area, 2015 could yield the first results of technology agreements signed with different partners. For example, the joint venture we launched with the Japanese-based Sony will start work on designing large-scale energy storage systems for power grids. Prestolite E-Propulsion Systems, a joint venture between our subsidiary TM4 and a Chinese partner, Prestolite Electric (Beijing), will begin delivering