Canadian Occupational Projection System (COPS)

NAICS 2211; 2212; 2213

This industry comprises establishments primarily engaged in operating electric, gas and water utilities. These establishments generate, transmit, control and distribute electric power; distribute natural gas; treat and distribute water and operate sewer systems and sewage treatment facilities and related systems (such as steam and air conditioning systems). They generally operate through a permanent infrastructure of lines, pipes, treatment and processing facilities. Electric power generation, transmission and distribution are by far the largest of the three segments, accounting for 81% of production in 2021. The industry is mostly oriented toward the domestic market and is very sensitive to fluctuations in industrial production and construction activity. It employed 140,800 workers in 2021, with 78% in electric power generation, transmission and distribution, 9% in natural gas distribution, and 13% in water, sewage and other systems. Employment is mostly concentrated in Ontario (38%), Quebec (19%), Alberta (14%) and British Columbia (13%). The workforce is primarily composed of men (73%) and benefits from much higher wages than the national average, partly attributable to a high unionization rate. Key occupations (4-digit NOC) include:

• Electrical power line and cable workers (7244)
• Water and waste treatment plant operators (9243)
• Power engineers and power system operators (9241)
• Supervisors, petroleum, gas and chemical processing and utilities (9212)
• Utilities managers (0912)
• Power system electricians (7243)
• Construction millwrights and industrial mechanics (7311)
• Electrical and electronics engineers (2133)
• Electrical and electronics engineering technologists and technicians (2241)
• Waterworks and gas maintenance workers (7442)
• Gas fitters (7253)

After falling significantly in 2009 as a result of the economic downturn, output in electric, gas and water utilities quickly recovered in the following two years, supported by renewed growth in industrial production and construction activity. Output stagnated in 2012 and 2013, before increasing continuously until 2019, although the pace of growth was partly restrained by advances in energy efficiency and the decline in the electricity intensity of the Canadian economy (electricity intensity is defined as the quantity of electricity used per dollar of GDP). Business lockdowns and home confinement during the COVID-19 pandemic reduced the need for energy while extreme weather events (such as droughts and low rainfalls) disrupted electricity generation in some provinces, leading to significant declines in the industry’s output in 2020-2021. This lowered the average pace of growth in real GDP to a modest 0.5% annually for the entire period 2012-2021. Although productivity is high in the industry given its capital-intensive nature, it has also seen little improvement in the past few years, with weather conditions depressing output in hydroelectricity. This has left real GDP growth to be largely supported by employment growth over the last decade, with gains averaging 0.4% annually (compared to only 0.1% for productivity). That said, while real GDP increased steadily until 2019, employment and productivity rather showed large fluctuations, making the average pace of growth less meaningful for these two indicators.

Over the projection period, real GDP growth in the utilities industry is expected to accelerate significantly relative to the period 2012-2021, primarily driven by the recovery and expansion of the electricity segment. The industry is critical to the Canadian economy as it provides the basic infrastructure used to support economic growth in various other industries. In addition to benefit from continued growth in the industrial and commercial sectors of the economy, the industry will benefit from the acceleration anticipated in population growth due to higher immigration targets, increasing demand for water and energy infrastructure. But more importantly, the electricity segment will benefit from high levels of investment as the country moves toward decarbonization. Canada recently increased its 2030 greenhouse gas emissions reduction target to be 40% below 2005 levels, with the goal of achieving net-zero emissions by 2050. For example, this means much higher demand for electric vehicles and charging stations across the country. To support this transition, the construction of several renewable energy projects is expected to be undertaken over the next several years, including hydroelectric, solar and wind energy projects. Many provincially owned utilities companies plan on increasing capital spending in the near term and several other long-term projects are in the proposal stage. The goal of these investments is to modernize and improve the current infrastructure to meet the expected increased demand. Hydro-Quebec will lead the charge by increasing its capital spending by 35% over the next five years. Many solar and wind farms projects are expected to start in Alberta, representing billions in investment, while Ontario is planning to deploy small modular reactors (SMR) to generate low-carbon electricity.

The demand for renewable energy in the United States is also expected to remain strong and support future exports, primarily from Quebec, Ontario, British Columbia and Manitoba. For example, Hydro-Quebec recently signed a 25-year contract to supply power to New York City by 2025. The outlook is also positive for natural gas, supported by continued growth in natural resources and manufacturing, key users of natural gas, and by the fact that electricity producers in Alberta anticipate phasing out electricity generated with coal in 2023, switching instead to natural gas. Although the industrial use of natural gas in Canada could decline as the carbon tax increases, this will represent a shift from generating power from natural gas to electricity, not a displacement of demand. Overall, the strive towards economic electrification will keep the utilities industry growing, but the outlook is not immune to risks. The tight labour market and high inflation could delay construction schedules on some investment projects or make them more expensive than usual, weighing on profitability. In addition, extreme weather conditions, such as floods and droughts, are expected to become more common, which could weigh on the reliability of electricity output, especially in the provinces relying on hydroelectricity. That said, annual real GDP growth is projected to average 1.6% from 2022 to 2031 with gains in output evenly split between employment and productivity growth. Indeed, productivity growth is expected to pick-up to an average pace of 0.8% annually, as mega projects like Site C Clean Energy (British Columbia) come online and as output ramps up at the recently completed generating stations of Muskrat Falls (Newfoundland-Labrador) and Keeyask (Manitoba). Employment is therefore also projected to grow at annual rate of 0.8% over the period 2022-2031, twice the pace observed in the previous ten years, partly reflecting faster growth in output.

Real GDP and Employment Growth Rates in Electric, Gas and Water Utilities

Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.

Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.