BCUC approves VITR, overhead through Tsawwassen
Key points:
EXECUTIVE SUMMARY
In this Decision the Commission has concluded that VITR is a more cost-effective project to meet the load requirements of Vancouver Island than either VIC or JdF. The appropriate analysis for comparing the costs of the three projects is to compare total direct and indirect costs. For the purposes of comparing the total direct and indirect costs, Sea Breeze and BCTC do not agree on two fundamental aspects of the projects: 1) the system benefits and incremental losses from using HVDC Light® technology to meet the needs of Vancouver Island customers, and 2) how JdF will be used, and therefore the costs of using JdF.
The Commission has concluded that the system benefits of HVDC Light® technology are limited to the reduced need for synchronous condensers on Vancouver Island and VAr compensation on the Lower Mainland and accepts BCTC’s calculation of incremental losses. Further, the Commission has concluded that additional firm transmission service must be purchased for the use of JdF in order to meet reliability planning criteria for Vancouver Island. A comparison of the total direct and indirect costs of the three projects turns on these three conclusions. The total direct and indirect costs of VIC and JdF have been found to be approximately $149 million and $126 million, respectively, more than the direct and indirect costs of VITR.
The project alternatives are compared on other project characteristics, including seismic risk, risks of delay, risks of financing, and environmental and health effects. These other project characteristics are not found to be determinative. However, a comparison of the total direct and indirect costs is found to be determinative. Therefore, the Commission has concluded that VITR is a more cost-effective project alternative than either VIC or JdF, and is in the public interest.
In this Decision the Commission has concluded that VITR should be modified, and that Option 1 should replace Option 2 as the route through South Delta. The route options through South Delta and the Gulf Islands are considered and ranked against financial, non-financial and socioeconomic criteria. Although the Commission has approved the least cost route option, the non-financial and socioeconomic criteria are significant considerations relevant to the selection of the preferred route option.
In this Decision non-financial and socioeconomic differences amongst route options are afforded little or no weight where the beneficiaries do not express a preference or the non-financial and socioeconomic differences are in dispute. For example, TRAHVOL does not express a preference for either Option 1 or 2 and views the use restrictions differently than BCTC does. Further, where there are significant financial differences amongst route options and less significant non-financial or socioeconomic differences amongst route options, then the financial differences are afforded considerable weight in this Decision. For example, the aesthetic benefits of undergrounding across the Gulf Islands need to be considered in the context of the significant costs for undergrounding. After considering financial, non-financial and socioeconomic criteria, the Commission has concluded that Option 1 in both South Delta and the Gulf Islands are the preferred route options.
In this Decision a cost control/incentive mechanism is found to be appropriate, in part, because a prudency review and a cost control/incentive mechanism serve different purposes for ratepayers. Further, a cost control/incentive mechanism designed to encourage good management is considered necessary, particularly given the recent management turnover at BCTC.
Posted by Arthur Caldicott on 07 Jul 2006