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Not long after taking over the provincial utility in 2020, Brochu signed its largest-ever export deal, which will keep the lights on in New York City for the next two decades. And that’s not Brochu’s only power move

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Karene Isabelle/The Globe and Mail

It’s a bright autumn morning in New York. A storm has just passed, and the locals are walking their apartment dogs and picking up breakfast amid the whooshing of street sweepers.

We’re across from Queensbridge, the largest public housing complex in North America, and Bishop Mitchell G. Taylor, a chisel-faced pastor who wears tinted eyeglasses and a silver cross around his neck, is delivering a rapid-fire rundown of his flock: Some 16,000 or so people live in the complex’s 3,100 apartments, roughly half of them employed. Two-thirds of households are headed by single women. NBA stars Ron Artest and Lamar Odom grew up here. So did rappers Nas and Havoc.

Queensbridge sits on the flank of the East River, in the shadow of the Ravenswood oil-and-gas-fired plant, the largest of several aging generating stations that power New York City. The housing development’s six-storey brown-brick dwellings and the area’s industrial buildings aren’t much to look at. But it’s what you can’t see that’s the problem.

The air spewing from Ravenswood’s red-and-white stacks has contributed to breathing problems for scores of residents since the 1960s, says Taylor, himself included, earning the area the nickname Asthma Alley. “Manhattan gets the power, and we get the pollution,” he says. “For us, anything that reduces pollutants in our population is a good thing.”

Salvation is coming, starting with the Champlain Hudson Power Express (CHPE), a 545-kilometre transmission line that will carry Canadian hydropower from Quebec’s far north to New York City (Taylor calls it “Chippie” for short). It’s one of the biggest renewable-energy projects in New York since the state tapped Niagara Falls more than half a century ago. And it’s happening in no small part thanks to Hydro-Québec CEO Sophie Brochu, who built a wide band of stakeholder approval for what will be the utility’s biggest-ever export contract—a 25-year pact could generate more than $20 billion in revenue for the provincial Crown corporation.

Brochu, who was named CEO in 2020, came at New York with a fresh set of eyes. And she quickly got busy getting the deal done. Many of her predecessors had adopted a take-what-we-can-get view of New York, obsessing instead over New England, where the utility has historically done the bulk of its spot-market electricity sales. In New York, however, Brochu found political leaders and communities hungry for change. “Sophie was special in her ability to engage, listen and be truly passionate about seeing this project to fruition,” says Bilal Khan, a senior managing director at private equity giant Blackstone, the project’s main promoter. “Not to say prior leadership wasn’t. It’s that Sophie took it to a different level.”

In New York, Brochu is providing a model for how Canada can be a leader in exporting clean energy. But more than two years into a five-year term, the deal is only part of her leadership record. Brochu is rewriting the book on the Crown corp’s relations with Indigeneous communities. She’s pushing back on decades of supply-and-demand dogma that says the best way to meet future power demand is always to build more generating stations. And she’s plotting a five-year strategy that some leading environmental policy experts say is far ahead of other Canadian utilities.

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In many ways, Quebec has a head start in the coming energy transition. More than 90% of its electricity mix comes from hydroelectric dams and from the partly owned Churchill Falls project in Labrador. With an installed generation capacity of 37,231 megawatts from 61 hydroelectric stations and 24 thermal generating stations, its grid stretches over 261,578 kilometres. Brochu delivered record earnings of $3.5 billion for Hydro-Québec last year as the utility sold an unprecedented volume of power within the province and increased exports.

A big chunk of Quebec’s power is going south. In part, that’s because Americans will pay well for it. But it’s also because the provinces just don’t collaborate well on energy. Ontario’s reliance on nuclear power means it has its own priorities. Hydro-Québec has swapped power with New Brunswick for 50 years, but other talks with Atlantic provinces have yielded few results.

And so Canada’s dysfunction is America’s gain. Blackstone says CHPE will create US$23 billion in new economic output, another US$23 billion in carbon dioxide reduction benefits and $1.4 billion in new tax revenue. A pair of high-voltage cables, each no wider than an adult hand, will provide 1,250 megawatts to New York, enough to supply more than a million homes, or about 20% of the city’s needs.

New York authorities officially selected CHPE as a winning project in September 2021, and annual delivery of 10.4 terawatt hours of electricity to America’s biggest city was approved this past spring. The project is now fully permitted, and construction on the first section is cleared to begin. Brochu placed her full trust in Hydro-Québec’s negotiators, but when they were locked in disagreement with state counterparts over a point in the contract, the CEO stepped in. “We had lost sight of the objective,” she says. “I just widened” the lens.

Brochu is an energy economist by training. Before joining Hydro-Québec, she ran Montreal-based natural-gas distributor Énergir. Friends and associates describe her as a dynamic leader with a seemingly bottomless well of emotional intelligence, a measured thinker with a long-term view who can rally people behind her. She describes herself as “much more intuitive than analytical” and says the difference between success or failure for Hydro-Québec almost always hinges on what she calls “la capacité d’avoir un supplément d’âme.” Roughly translated, it means bringing an extra measure of humanity to a problem or project.

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That became clear during the New York negotiations. Brochu visited elected officials and residents at low-income housing developments, swapped views with local environmental-justice leaders and participated in roundtable discussions. She did media interviews and podcasts with the goal of making sense of Hydro-Québec’s purpose.

The concept of its hydroelectricity being used as a natural battery to power the northeast, and supplementing intermittent generation sources like wind and solar, isn’t new. Hydro-Québec has been talking about it for years, calling for closer collaboration between the region’s states and provinces. But a long-term power contract with Massachusetts has been stymied because new transmission lines flowing from la belle province require the approval of border states. In a referendum last year, Maine voters rejected a plan put forward by Hydro-Québec and its commercial partner, Avangrid, that would carry hydropower to Massachusetts through Maine. The project is now in legal limbo. New York offered a more direct path.

The stars were already aligning for the CHPE project when Premier François Legault’s government named Brochu Hydro-Québec’s CEO in April 2020. Governments in Washington, D.C., Albany and NYC were all receptive. The state had just passed a law mandating 70% of its electricity come from renewable sources by 2030 and recognized existing hydropower (as distinct from yet-to-be-built production) as eligible for its credit system.

Perhaps the biggest catalyst was when the state closed the Indian Point nuclear plant, says Dan Zarrilli, chief climate adviser to former New York City Mayor Bill de Blasio. That instantly took the city grid from roughly two-thirds fossil fuel–based to about 90%, which sharpened the focus on alternatives. CHPE and Canadian hydropower are a “big part of digging ourselves out of that hole,” Zarilli says.

For the Mohawk Council of Kahnawake, the project is a game-changer. Hydro-Québec will share ownership of the power line on this side of the border with the Indigenous group, who claim the territory as their own. (The connection to the project runs even deeper because many Kahnawake Mohawks helped build New York’s skyscapers in the 1920s and ‘30s; they were known as “skywalkers.”) The Mohawk will contribute to the costs of the project in return for a variety of economic spin-offs over 40 years—the first time the utility has agreed to share the returns from its export transmission infrastructure.

Kahnawake Chief Kahsennenhawe Sky-Deer credits Brochu for a change in mindset. “I honestly feel she was very sincere and passionate about wanting to change the status quo and thinking outside the box,” Sky-Deer says.

Brochu has shifted Indigenous relations in other ways. Last year, the Legault government announced it would proceed with a $600-million wind-power project called Apuiat, located near Port-Cartier and owned 50-50 by renewable-energy producer Boralex and Innu communities. Hydro-Québec has, in a reversal of roles, agreed to purchase power from Apuiat, becoming the First Nations’ customer. Brochu also struck a deal with the Inuit of Nunavik, whose Tarquti Energy will become Hydro-Québec’s exclusive partner for renewables projects in their communities.

In New York, meanwhile, Blackstone and Hydro-Québec are committing $117 million to improve the environmental health of Lake Champlain and the Hudson and Harlem Rivers, including restoring oyster reefs around New York. They’ll spend another $40 million to retrain workers and $9 million on community initiatives. They’ve also done less formal outreach, such as inviting Queensbridge-area kids to Quebec to see its installations there.

“Where does it stop? It never does,” Brochu says as she explains Hydro-Québec’s business-with-a-conscience approach, which mirrors her own sensibility. “When you get there, it has to be with a philosophy of saying, ‘This all has to make sense.’ There are things that will be very structured. Beyond that, you just become a partner of the place.”

Hydro-Québec is deeply entwined with Quebec’s modern history, the product of a radical coming-of-age that culminated when Premier Jean Lesage nationalized private electricity distributors in the 1960s. As the utility put its faith in a hydroelectric future, it also became a symbol of francophone power. It’s been a money machine and source of pride for the province ever since.

Many of the same themes are at play today. Demand for power is still growing fast, as Quebeckers continue their energy-intensive habits and companies search for clean electricity. The province wants to use hydropower to spur investment and close the wealth gap with Ontario. It must also wean itself off oil and gas. Wrenching choices need to be made about how much energy to provide, to whom and at what price. And there’s a related decision: how and when to build new generating capacity.

Brochu has some well-formulated thoughts on these questions—and they break with orthodoxy in Quebec, which is best described as: “Need power? Just build more dams.”

Hydro-Québec already offers the cheapest rates in North America for power from its decades-old legacy dams. Montrealers, for example, pay just $76 a month for 1,000 kilowatt hours of electricity, roughly half what Torontonians pay and close to five times lower than rates in New York and Boston. Industry benefits from low rates and clean-power bragging rights, and Brochu says the Crown corp should be properly paid for it. “I don’t want to become the Dollarama” of utilities, Brochu says. “We need to support our businesses. But at a time when our costs are rising, and the value of their green product is rising, our rates have to rise.”

When Brochu was first approached about the Hydro-Québec job five years ago, she turned it down—she wanted to complete execution of a new plan at Énergir. Then COVID-19 happened just as Hydro-Québec CEO Eric Martel left for Bombardier. As a director on the board of Bank of Montreal, Brochu could see the scale of the looming crisis. So when Hydro-Québec knocked again, she couldn’t refuse. “When the call came, I said this is probably the only place I can contribute, because this is my zone of talent,” Brochu says. “I don’t have many. I have this one.”

She’s the first woman to lead Hydro-Québec in 78 years, a fact she alludes to when we head into the chief executive suite at its Montreal headquarters. “Have you seen the wall of white men?” she says, pointing at a row of framed photos of past CEOs, 13 in all. Brochu’s isn’t there yet. “It’s way too soon.”

Born into a family of entrepreneurs from the Beauce region, Brochu is the kind of person who will ask 10 questions about how you’re doing before volunteering anything about herself. She’s a team-builder who prefers comfy sweaters to formalwear, and has a penchant for analogies related to growing vegetables, one of her passions. Talk to her staff and you get the sense they feel she’s a once-in-a-generation leader. They use words like “lucky” and “privileged” to describe how they feel about working with her. It’s gushy stuff, but it’s genuine.

As much of Quebec languished in lockdown, Brochu rolled out emergency measures. She also launched a new battery storage subsidiary and signed a deal with renewable power producer Innergex.

Most importantly, Brochu has plotted a new five-year plan to prepare for a future other utility CEOs have barely acknowledged. Its basic conclusion: Quebec will need over 100 terawatt hours of additional clean power to achieve neutrality by 2050. That’s more than half of all of Hydro-Québec’s current annual generating capacity. To get there, it proposes to significantly step up energy efficiency efforts, modernize existing equipment to crank out more output, and develop more wind power. The plan also pledges to explore whether building more hydro capacity makes sense and how that could be done.

The math has changed on building new power facilities. Future production costs, from things like wind and solar, and even new hydroelectric projects, are pointing three or four times higher. That’s why Brochu is pushing hard on energy efficiency (a new unit called Hilo, helps homes and businesses cut their usage)—because getting the most out of Quebec’s existing power makes more economic sense than building anything new.

New projects could also get messy. The Innu of Labrador are suing the utility for $4 billion in damages from when their traditional territories were flooded to build reservoirs decades ago. “Hydro-Québec refuses to acknowledge the power they have comes from destroying our land,” say Etienne Rich, Grand Chief of the Innu Nation. “This is not ethical.”

Brochu understands the anger coming from First Nations. But she adds that certain issues can only be resolved by the Quebec government. In the meantime, she insists Hydro-Québec will build relationships with Indigenous leaders.

Bruce Lourie says Brochu’s five-year blueprint is “very forward-looking and very smart.” He’s president of the Ivey Foundation, a non-profit that supports Canada’s net-zero transition. “Nobody else in the country is thinking even close to that, in terms of recognizing the extent of the challenge we’re going to be facing with electrification,” he says. Meeting Canada’s climate targets means using way more renewables to power our everyday activities. It’s a massive investment that will require more power generation and bigger grids to carry it. And Lourie says that when you look at utilities across the country, only Hydro-Québec has really begun to think about it.

History plays a role there. Half the power Quebec uses already comes from renewable sources like hydro and wind. But it has yet to figure out how to wean itself off oil, three-quarters of which is used for transport. Brochu wants to speed up deployment of heat pumps and other high-performance energy solutions. She also wants to dramatically expand the province’s electric-vehicle charging system but insists government has to build out public transit, as well.

To help make her plan a reality, she reorganized the utility’s internal operations, combining three main operations that had long been separated: production, transmission and distribution. Brochu says this will encourage collaboration among employees.

She’s also bringing government more deeply into the tent. The province is the utility’s sole shareholder and has a seat on Hydro-Québec’s board. But Brochu is sharing information with her political masters in a way that hasn’t been seen in years, according to Hydro-Québec’s chair, Jacynthe Côté—even if it triggers significant discord. And it has. But Côté insists Brochu’s detailed airing of the facts is helping. “She’s opening the books to a level I don’t think was made before,” Côté says. “Assuming that when people share the same information, there’s a good chance they’re going to reach similar conclusions.”

Still, observers like Pierre-Olivier Pineau of HEC Montréal believe Brochu’s long-term vision will collide with the Legault government’s short-term imperatives. He says that the government wants to use the utility to do business and bring green industries to Quebec. Brochu, however, believes Quebec’s buffet of cheap electricity is over. “They have to prepare the population to pay differently for electricity, and probably pay more,” says Pineau. “That will be a problem with the government. Questions about rates and prices become very political very fast.”

All of Quebec is now watching as Legault begins his second mandate. Brochu isn’t going anywhere—not yet, anyway. She hinted she’d resign if the government implemented a growth agenda that ignored the complex realities of energy decarbonization. But the day the premier named his new cabinet and created a new superminister of the economy who will oversee the utility, Brochu sent an email to staff saying she’d stick around. She won’t be joining the “wall of white men” quite yet.

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