VIGP Hearing Daily Summary
To help keep employees informed about the BC Utilities Commission (BCUC)
hearing into our Vancouver Island Generation Project (VIGP), Wattsnew will
be running "daily summaries" of the hearing activities. The following is the
first installment.
DAY 1: Monday, June 16, 2003
The hearing commenced at 12:30 with Commission Chairperson Robert Hobbs
reading his opening statement. Chairperson Hobbs provided a background to
the VIGP project, the history of government policy and directions leading up
to VIGP. The Norske and Terasen proposals were mentioned along with GSX and
a quick review of the NEB/CEAA process. Chairperson Hobbs also set out the
parameters of the hearing in respect of its subject matter and stated that
the hearing would avoid areas that are covered by other proceedings and
would focus on the financial impacts of VIGP on BC Hydro's ratepayers.
Following his opening comments the Commission Counsel called for appearances
by the intervenors and the following responded. Not all of the intervenors
expected to be cross-examining all of the witness panels, however, most
intended to make a submission towards final argument.
Panel 1: (Bob Elton, Glenn Smyrl, Lach Russell, Gary Rodford). Panel 1 was
sworn in and Bob Elton opened by summarising his pre-filed testimony.
Cross-examination commenced with Norske Canada:
The focus of most of the cross was the idea that BC Hydro would accept a
CPCN conditioned on a tendering process. Bob Elton agreed that this was a
recent idea and that any process followed would be blessed by the BCUC. BC
Hydro's panel was clear however, that the Commission should not be setting
the benchmarks or thresholds that a successful bidder would need to meet.
Norske queried the tendering process, in particular the allocations of
risks. Other subject matters covered were the dependability of the plant and
its load factor. The timing of the tendering was reviewed and it was stated
by BC Hydro that March 15, 2004 is the date that Williams ( BC Hydro's
partner in GSX) may terminate the shipper precedent agreements. Norske also
had queries regarding the Terasen proposal and BC Hydro intended action in
that regard.
The JIESC cross-examined the panel:
The focus of the examination was concerns about the costs of electrical
power to the RS 1821 industrial members of the JIESC and whether or not VIGP
would result in the lowest cost electricity and whether it was the cheapest
alternative. The JIESC also focused on the availability of inexpensive
hydropower in the Pacific Northwest and BC Hydro's use of that power.
Terasen Gas (Vancouver Island) Inc, ("TGVI") cross-examination:
The subject matter for this cross consisted primarily of an examination of
the continued relationship between VIGP and GSX and queries in particular as
to when BC Hydro committed to GSX and was that prior to investigating other
proposals. BC Hydro agreed with TGVI that VIGP could proceed without GSX
provided that there was an alternative gas source and other conditions were
met.
Hillsborough Resources cross-examination:
A very brief series of questions regarding a proposal from Hillsborough to
build a plant at Campbell River.
CBT Energy cross-examination:
CBTE stated that it was attending the hearing to ensure that any regulatory
directions that are directed are consistent with the BC Energy Policy. There
were also discussions regarding HVDC cables lasting until 2007 and if the
cable life could be extended another two years then that would allow
construction of the 230 kV option. There were also a series of questions
regarding load curtailment as an option to address the capacity issue on
Vancouver Island and also the effect of a TOU rate and stepped rates on the
load forecast.
GSXCCC cross-examination:
Questions began regarding the issue of the firm commitment for tendering and
conditioning the CPCN for VIGP were raised. BC Hydro stated that it may not
tender if not directed to do so by the Commission. Questions were asked
about the HVDC line, the 230 kV line availability and its possible
availability in 2008 as opposed to 2010. BC Hydro responded that there was a
risk in getting the 230 kV line in place by 2008. Greenhouse gas
implications of the project were queried and the question was referred to
Panel 2. A series of questions was attempted regarding Williams achievement
of regulatory approvals in the USA and BC Hydro's opinion and interpretation
of the agreements. The Commission Panel Chairperson prevented the asking of
these questions as outside the scope of the hearing. However the Chairperson
did allow that BC Hydro undertake to establish the status of the regulatory
approvals obtained by Williams. Questions were also asked about the nature
of VIGP and whether it is a baseload plant or peaking plant.
Shadybrook Farms cross-examination:
The sale of VIGP was queried and BC Hydro reiterated that there were
currently no discussions ongoing regarding the sale of VIGP. Questions were
asked about VIEC and its limited liability status.
Mairi McLennan cross-examination:
The questions from Ms. Mclennan revolved around the justification for VIGP
and her belief that the use of the cables to supply Vancouver Island has not
been fully examined by BC Hydro. There were also a series of questions
regarding the cost and engineering studies of GSX and whether they would
need updating. The questioning ended with a focus on the Downstream Benefits
and why BC Hydro was not accessing/purchasing this energy for the benefit of
its ratepayers.
Vic Villeneuve cross-examination:
Mr. Villeneuve questioned the panel on the transmission alternative and his
view that this approach had not been properly examined by BC Hydro.
BCOAPA cross-examination:
BCOAPA questions reviewed the history of the BC Government's Energy Plan and
the directions received by BC Hydro from the Government. There were also
questions regarding the clean energy policy. BCOAPA also focused on the
issued of obtaining the CPCN and any delays in construction. The panel
reiterated that the approvals would be needed by January 1, 2004 as this is
the latest date when the decision to purchase the turbine for VIGP can be
made and still meet the 2006 in-service date. There was a final series of
questions regarding the payments from BC Hydro to First Nations in the GSX
process. These latter questions are the subject of an undertaking.
SPEC cross-examination:
SPEC reviewed the issue of the HVDC replacement and had a series of
questions regarding BC Hydro's relationship with Williams. SPEC also raised
the issue of wind-power in other jurisdictions and whether or not BC Hydro
has adequately reviewed its possible acquisitions of such power.
The first day completed at 9pm.
The second day will commence with the continuation of the cross-examination
of Panel 1. The remaining intervenor to cross-examine is James Campbell and
he will then be followed by questioning by the Commission staff lawyer. It
is expected that Panel 2 will be on the stand late in the morning.


VIGP Daily Hearing Summary For Tuesday, June 17
DAY 2
The hearing commenced with the entering of new evidence and the provision by
BC Hydro of undertakings from the previous day's hearings. Further cross
examinations of Panel 1 (Bob Elton, Gary Rodford, Glenn Smyrl and Lach
Russell) resumed.
James Campbell cross-examination:
Mr. Campbell focused on the cost of generating electricity using natural gas
as compared to the heritage energy BC Hydro has at its disposal already. The
Columbia River Downstream Benefits ("DSB") were also discussed and his
contention that if the DSB's were turned over to BC Hydro the cost of energy
to BC Hydro would be reduced. BC Hydro's panel disagreed with this view, as
the price of the DSB's would not necessarily be acquired at less cost than
current energy. BC Hydro stated that it did not believe it would be overly
exposed to natural gas fluctuations if VIGP were constructed.
Commission staff cross- examination:
The commission staff opened their examination with questions regarding the
cost effectiveness of VIGP and whether or not cost effectiveness equates
with least cost in the context of this hearing. BC Hydro agreed that it did.
There ensued further questions regarding the cost-of-service of VIGP to BC
Hydro ratepayers. The Commission panel requested that BC Hydro include in
its final argument a discussion as to why VIEC is of the view that the BCUC
has the ability to extend the CPCN to an IPP that may ultimately purchase
VIGP. Further questions followed regarding the sale of VIEC shares, sale of
the turbine and the sunk costs incurred to date on the project. The issue of
an EPA between BC Hydro and VIGP if sold to an IPP was discussed. BC Hydro
stated that any EPA would be reviewed by the Commission under section 71 of
the Utilities Commission Act. A series of questions was asked as to whether
or not BC Hydro had any policies in place that would prevent it from buying
electricity from coal generation sources. The panel was asked whether BC
Hydro believes that stepped rates may apply to residential customers. The
panel stated that it did not yet know if this would be the case.
Commission staff cross -examination concluded and the Commission Panel asked
questions of Panel 1:
Commissioner Nicholls:
Commissioner Nicholls asked some questions regarding the January 1, 2004
order date for the turbine and the urgency of that date considering the
supply shortfall of energy does not occur until 2007. In particular, was the
January 1 date an attempt to increase the Net Present Value of the supply
portfolios presented by BC Hydro in its Application and was there leeway in
the January 1 date to allow more time for the proposals from Norkse and
Terasen Gas ( Vancouver Island) Inc. ("TGVI") to be reviewed.
BC Hydro relied that this was not the case and that a delay of delivery of
the turbine would impair the ability to meet the 2007 in-service date.
Commissioner Hobbs:
Commissioner Hobbs requested that several issues be included in the written
submissions to the proceeding. These included the contractual issues
surrounding the termination date of March 15, 2004 with regard to Williams
and GSX, supply issues with regard to the HVDC line and rework issues in
connection with the engineering for VIGP. Commissioner Hobbs also had a long
series of questions regarding the Request for Tenders ("RFT") that BC Hydro
had discussed the previous day. Mr. Elton stated that the RFT process must
be fair and quick and that BC Hydro must make a decision within the next
couple of weeks as to making the RFT. If an RFT was initiated, BC Hydro
would expect to include the BCUC to ensure that the process met the
Commission's requirements of conditioning the CPCN for VIGP. The Commission
panel also queried whether the CPCN could be granted with the condition that
either Terasen or GSX would provide the gas supply. BC Hydro responded that
it would prefer the flexibility of dealing with either and determining the
best choice of gas supplier, either Terasen or GSX.
Commission Panel questions concluded and Panel 1 stood down.
Panel 2 was sworn in (Bev Van Ruyven, Ron Monk, Mary Hemmingson, Dennis
Nelson, Richard Marchant) to speak to the issues of Vancouver Island Supply
and Demand.
NorskeCanada cross-examination:
The first series of questions concerned the N-1 contingency criteria for
Vancouver Island and how an interruption of service would affect Norske's
island pulp mills. There was a discussion regarding the RFT. Ms. Hemmingson
gave a very detailed and concise response setting out the probable
parameters and characteristics of the RFT. In addition new calls would be
evaluated on an NPV basis, not a unit cost basis. Further questions ensued
touching on the use of an independent evaluator in the RFT and who the
evaluator may be ( i.e. BCUC or other third party).
Further questions were asked regarding the RFT proposal. In particular,
would the RFT include demand management programs and the options for
evaluating the projects in response to the call for tenders. BC Hydro
maintained that the NPV approach is the most complete methodology for
evaluating these proposals. Finally, Norske asked a series of questions
regarding its proposal to replace VIGP. Ms. Van Ruyven stated that BC Hydro
did not believe that Norske could complete its projects by 2007, based on
the current information. However, BC Hydro did agree that the Norske project
is based on proven technology and that there would appear to be no barriers
that would prevent the project from proceeding.
Shadybrook Farms cross-examination:
The bulk of the questions from Shadybrook farms concerned the temperature
adjustment methodology used by BC Hydro in its load forecasts and the
parameters that have been used in the load forecast.
JIESC cross-examination:
The JIESC had a series of questions concerning the availability of low cost
hydro electricity and the comparison with the cost of electricity from VIGP.
There was also a query as to whether or not the RFT would allow for a
transmission alternative. BC Hydro replied that a transmission interconnect
would probably be required in all of the proposals under the RFT.
CBT Energy cross-examination:
The examination began with another series of questions regarding the RFT and
the procurement of energy from IPPs by BC Hydro. BC Hydro stated that BC
Hydro is convinced that the VIGP is the least cost alternative for
in-service by 2007 and that the RFT is to ensure that VIGP is the least cost
alternative.
TGVI cross-examination:
There was a review of the forecasts for Vancouver Island load/demand balance
presented in the BCUC workshops in late April, 2003 and the effect of the
loss of a large load, such as a pulp mill, on the load/demand balance.
Several questions followed in connection with GSX and the cross-examination
concluded with questions regarding BC Hydro's stepped rates proposal and
whether this would be extended to residential customers. BC Hydro said it
was very unlikely.
BCOAPA cross-examination:
The BCOAPA questioned the IRP process that BC Hydro will be commencing in
fall 2003. Questions also were asked about the environmental review process.
The latter generated a discussion with the Commission panel as the
applicability of the questions to this particular proceeding. The Commission
panel requested that the questions be deferred until tomorrow morning and
after counsels for BC Hydro and intervenors have had the opportunity to
present arguments to the panel on the admissibility of the responses. BCOAPA
then had a series of questions regarding BC Hydro's goal of 50 per cent
clean power and how that was going to be met. Finally, GHG offsets were
discussed and the questions asked regarding BC Hydro's change in policy from
that of purchasing GHG offsets to one of meeting the GHG obligation through
its Power Smart, Resource Smart and CBG calls.
The hearing concluded at 5 p.m.
Wednesday morning the hearing will resume at 8:30 beginning with the
presentation of arguments by counsel regarding the scope of environmental
issues to this hearing. Panel 2 will then be stood down to allow for the
testimony of Mr. Timo Mackinen, appearing on behalf of GSXCCC. Following Mr.
Makinen's appearance, Panel 2 will resume.

VIGP Hearing Daily Summary For Wednesday, June 18
DAY 3
The hearing commenced with the Commission Panel ruling on BCOAPA's proposed
line of questioning regarding the environmental review process. The Panel
ruled that BCOAPA would not be allowed to cross-examine BC Hydro's Panel No.
2 on such matters.
GSXCCC expert witness - Mr. Timo Makinen:
BC Hydro Panel No. 2 was then stood down to allow for GSXCCC to put their
expert witness, Mr. Timo Makinen, on the stand to speak on the subject of
energy planning and forecasting. Mr. Makinen gave evidence that BC Gas
provided 6 - 8 Portfolio analysis' when it was doing its Southern Crossing
Project and that BC Hydro had not done as extensive an analysis in this
application. He further stated that BC Hydro should be including a broader
range of options in its application, however, he conceded that the inclusion
of demand-side management in the portfolios was a positive step.
Terasen Gas (Vancouver Island) Inc. ("TGVI") cross-examination of Mr.
Makinen:
TGVI was the only intervenor to cross-examine Mr. Makinen and asked a series
of questions concerning gas prices at Sumas, the availability of green
resources on Vancouver Island and BC Hydro's CBG call. Mr. Makinen agreed
with Terasen that CCGT's would remain as the marginal generation source in
North America and that they should be constructed close to load centres to
reduce transmission losses.
BC Hydro cross-examination of Mr. Makinen:
BC Hydro asked a brief series of questions also concerning its CBG call. Mr.
Makinen agreed with BC Hydro that the resources obtained from green calls
are included in the portfolios contained in BC Hydro's application. Other
topics of discussion included the idea of a shorter peak day period, the
trend towards warmer weather in southern BC and the IRP technique that
should be used by BC Hydro to evaluate third party proposals (thereby
reinforcing BC Hydro's view that NPV analysis of the portfolios is
appropriate).
Commission cross-examination of Mr. Makinen:
The Commission counsel asked some questions about BC Hydro's portfolios and
the use of a mainland CCGT as a proxy for future generation. Mr. Makinen
asserted that such future projects could be replaced by green projects and
CBG.
Mr. Makinen stood down and BC Hydro Panel No. 2 resumed.
Resumption of BCOAPA cross-examination:
In light of the Commission Panel's ruling of this morning, further questions
from BCOAPA centred on the responses to previous RFP's and green calls that
may have been at a lessor cost than VIGP.
SPEC cross-examination of Panel No. 2:
SPEC questioned whether BC Hydro had included all environmental costs of
VIGP in its Portfolio analysis, in particular, costs similar to those
incurred in the Northeastern USA in which utilities paid individuals to move
away from the sites of generating plants. There were also a series of
questions on wind-power. BC Hydro provided extensive information on the
wind-power studies that it has funded and the pilot projects that it has
been involved with. The cross-examination concluded with a discussion on
other alternative energy sources such as tidal power, small hydro and GHG
offsets.
Mr. Bob McKechnie cross-examination of Panel No. 2:
Mr. McKechnie led off with a series of questions concerning BC Hydro's
powersmart savings on Vancouver Island followed by questions regarding the
modeling of VIGP and the gas prices used in the models. The utilisation rate
of the Burrard Thermal Generating plant was also discussed.
Mr. James Campbell cross-examination of Panel No. 2:
Mr. Campbell's questions concerned green energy and in particular, why
biomass was considered a green energy source. There were also questions
regarding Powersmart and its financing and further discussions regarding
wind-power. Finally a series of questions was asked as to how BC Hydro will
be managing GHG's in light of any Kyoto Agreement requirements. The Columbia
River Downstream Benefits were also queried.
Mr. Vic Villeneuve cross-examination of Panel No. 2:
Load curtailment questions and the issue of load-shedding arrangements with
pulp-mills were topics discussed by Mr. Villeneuve.
GSXCCC cross-examination of Panel No. 2:
A large portion of the day was taken up by the cross-examination of Panel
No. 2 by GSXCCC. Kyoto compliant GHG's were an issue and the factoring in of
GHG risk into the portfolios. There was a series of questions regarding
Power Smart programs and their applicability to commercial and residential
customers. A series of questions regarding Christmas lights and load
reductions from the use of LED Christmas lights. There were also a series of
questions regarding the Vancouver Island capacity problem and the ability to
meet the shortfall. There then followed a very prolonged series of questions
on BC Hydro's load-forecasting methodology and, in particular, revisions
that BC Hydro made to some of its Information Request responses that had
previously been filed with GSXCCC and the Commission. Most of the questions
revolved around the weather normalization adjustments made to BC Hydro's
historical load forecasts.
Commission cross-examination of Panel No. 2:
The Commission counsel had a series of questions designed to fill in any
perceived gaps in BC Hydro's evidence. Subjects covered were load forecasts,
rate increases, inflation adjustments, elasticities in BC Hydro forecasts,
stepped rates, Eplus rates, the Conservation Potential Review, Power Smart,
and green energy.
The day ended with the conclusion of the Commission counsel
cross-examination. Tomorrow will begin with questions from the Commission
Panel to BC Hydro Panel No. 2.


VIGP Hearing Daily Summary For Thursday, June 19
DAY 4
The day commenced with the crossing of Panel No. 2 by the Commission Panel.
The Commission Chair had a lengthy series of questions touching on many
topics including BC Hydro's energy supply balance and BC Hydro's 50 per cent
clean commitment. In particular, the Chair requested that BC Hydro prepare a
table of the clean energy commitment for each of the portfolios in the
Application. The "average water" definition and the concept of critical
water were discussed. The proposed RFT was queried, specifically as to
whether or not it would be constrained to only Vancouver Island projects. BC
Hydro responded that it could potentially be for the entire service area,
but the logistics would probably restrict it to Vancouver Island due to the
short time frame for completing the RFT. It was also suggested that if the
genesis for the RFT is this hearing, then perhaps it should be narrowly
defined. The Vancouver Island load shape was reviewed, followed by a series
of questions regarding the linkage between gas prices and electricity
prices. Portfolio 3 was questioned and the premise put as to whether the
mainland proxy CCGT could be replaced with less "lumpy" resources such as
small green projects. Finally, a further series of questions regarding the
BC Hydro's load forecast completed the questioning from the Commission
Panel.
Panel No. 3 (Yakout Mansour, Jai Mumick, Murray Bennett: expert witness) -
Transmission from Mainland to Vancouver Island. Panel No. 3 was sworn in and
commenced with an opening statement from Yakout Mansour (see Transcript Page
774 - 778).
NorskeCanada cross-examination of Panel No. 3:
Norske opened its examination with questions focused on the need for VIGP
vs. new transmission to Vancouver Island. Mr. Mansour replied that the VIGP
is the first step in long range plan to upgrade the level of service on
Vancouver Island to that found on the Mainland and that over the long term,
transmission upgrades to the Island will be needed. A series of questions
followed focusing on the 230 kV AC cable project and, in particular, the
time it would take to install the new cables if the project proceeded. The
230 kV project will be the next transmission project to be undertaken to the
Island, although when this will occur is not certain. In particular, the
seismic risk issues must be resolved. Mr. Mansour stated that the BCTC would
like to have the 230 kV line in place by 2010. There were then some
questions regarding the cost of an HVDC "bridge" that would prolong the life
of the HVDC cables from 2007 to 2010 when the 230 kV line would be in place
( the bridge instead of the VIGP). Mr. Bennett, the expert witness on HVDC
lines, did not believe that a bridge would be desirable. There then followed
questions regarding the cost of repairing the HVDC to a reasonable degree of
reliability.
JIESC cross-examination of Panel No. 3:
The JIESC had a brief series of questions concerning the review of the
portfolios and the timing of the projects, and the cost effectiveness of the
transmission lines over the building of generation.
Hillsborough Resources cross-examination of Panel No. 3:
Hillsborough queried whether, in the 2002 CBG call, there was any review of
Vancouver Island proposals from a transmission perspective. Hillsborough
also asked whether a coal-fired generating plant on the Island would meet
the reliability criteria. BC Hydro replied that it had no experience with
coal plants and could not comment on the reliability issue.
CBT Energy cross-examination of Panel No. 3:
CBT favours a transmission option over VIGP and asked a series of questions
on BC Hydro's transmission planning. Mr. Mansour stated that the
transmission option was originally the favoured option for supply to
Vancouver Island, but that the window of opportunity to build the
transmission option had been lost and now the only viable alternative to
meet the capacity problem on the Island was VIGP. Over a thirty-year time
period, both generation and transmission will be built on the Island. Mr.
Mansour also stated that if the CPCN is not granted, then transmission would
certainly be required. There then followed a discussion on load-shedding
arrangements that BC Hydro has in place with industrial customers on
Vancouver Island. There was also an examination of the "bathtub" curve that
BC Hydro presented at the VIGP workshops in April and they location of the
HVDC cables on that graph. The Island Cogeneration Plant ("ICP") was the
next subject dealt with by CBTE and questions focused on the "debugging" of
the ICP when it was constructed and how that experience could be related to
the planned construction of VIGP. Finally, there was a brief series of
questions regarding the organisation of the BCTC.
Elk Valley Coal Corporation cross-examination of Panel No. 3:
EVCC had a short examination concerning the regulatory process for the
construction of a 230 kV AC line to Vancouver Island.
GSXCCC cross-examination of Panel No. 3:
The GSXCCC had questions regarding the BCTC and the proposed areas of
responsibility of the BCTC in the area of transmission planning for BC Hydro
and how it would relate to BC Hydro's IRP. There were then some questions
regarding the capacity rating of the HVDC lines, CIGRE reports, and forced
outage statistics. There were then some questions regarding the opinions of
some engineers that the life of the HVDC lines could be extended.
Vic Villeneuve cross-examination of Panel No. 3:
Mr. Villeneuve had a series of questions regarding the Thyrister valves on
the HVDC system, debugging of the VIGP plant, current repairs on the HVDC
lines, the availability of spare parts for the HVDC lines and the risks of
an HVDC project.
BCOAPA cross-examination of Panel No. 3:
BCOAPO had a series of questions regarding the schedule and timeline for
construction of the 230 kV cable project.
Mr. McKechnie cross-examination of Panel No. 3:
Mr. McKechnie had some queries regarding the advancing of the 230 kV project
to meet the capacity shortfall on Vancouver Island. There was also a
discussion regarding under-frequency load-shedding and its effects on the
system. There was a final series of questions on the seventh cable option.
Ms. Mary Rose cross-examination of Panel No. 3:
Ms. Rose had questions regarding the RTO and the effect of RTO membership on
Vancouver Island planning.
Mr. James Campbell cross-examination of Panel No. 3:
Mr. Campbell also queried the seventh cable option, natural gas supply to
Vancouver Island and a discussion of the methodology of determining when a
cable is ageing and requires replacement.
Commission counsel cross-examination of Panel No. 3:
Commission counsel opened its examination with questions regarding the
December 2001 loss of supply to Vancouver Island due to the loss of the
500kV line from Cheekye. BC Hydro stated that VIGP would have prevented the
loss of load on Vancouver Island. A discussion then followed with Mr.
Bennett, the expert witness, of "HVDC light" and its use in cable
installations in New Zealand and New York. Mr. Bennett did not believe that
HVDC light would be effective in serving Vancouver Island. BC Hydro stated
that it had looked at HVDC light in a cursory manner and that the economics
did not appear to be good and that it was an evolving technology. There was
then a discussion of a partial life extension vs. a full life extension. The
examination finished for the day with a series of questions regarding the
appropriateness of HVDC, seismic risks, and once again, the "bathtub curve".

Commission Counsel will continue examining Panel No. 3 tomorrow morning.

VIGP Daily Hearing Summary For Friday, June 20
DAY 5
The day commenced with the resumption of the Commission Counsel
cross-examination of Panel No. 3 (transmission to Vancouver Island).
The Commission counsel spent the entire morning questioning Panel No. 3 on a
range of issues including, the level of availability of the HVDC, capital
asset replacement programs, BC Hydro's probabilistic methodology used to
determine the availability of the transmission system, CIGRE availability
statistics, N-1 contingency, mitigation of seismic risk and the cost of
mitigation of that risk. Of particular interest, and the subject of a
lengthy series of questions, was BC Hydro's EENS ("Expected Energy Not
Served") Study. Panel No. 3 was asked if one possible option to meet the
capacity problem on Vancouver Island would be to accept low reliability for
one year (i.e. 2007) and greater reliability with the 230 kV cable installed
in 2008. Yakout Mansour replied that 2008 was only a good "guess" as to the
in-service date of the 230 kV cable and that there was a risk that the cable
would not be in place by 2008.
The panel was then asked to consider if the evidence at the hearing showed
that if the 230 kV was the least cost option, would the EENS study show that
the there was not a large enough liability concern to advance the VIGP ahead
of the cable option? The panel responded that if the public and BCUC
accepted the risk of a 230 kV line not being in place by 2008 due to
regulatory risk and could accept the risk of loss of load for several years,
then BC Hydro would accept the risk. However, it is a high risk.
Seismic risk was then queried and the use by BC Hydro of disaster scenarios
for planning purposes.
There then followed a very concise and detailed line of questions concerning
the 230 kV AC line construction schedule. Questions regarding the
feasibility of advancing the project by one year, the cost of the line,
would BC Hydro be doing most of the project design and engineering and how
great a monetary risk would exist if the 230 kV line schedule was advanced
so that the project started before regulatory approvals had been given. BC
Hydro continued to maintain that the earliest in-service date for the 230kV
line would be 2008 and that BC Hydro has been planning this transmission
line since 1995.
Commission Panel cross-examination of Panel No. 3:
The Commission Panel had a series of questions that again focused on the 230
kV line option. The Panel noted that all three portfolios are comparable on
an N-1 level and that the tool it considered as the best to evaluate the
portfolios was the EENS study. The EENS values are the same for Portfolios 1
& 2 until 2010. In answer to a question, Mr. Mansour stated that if there
was no regulatory risk the preference would be for the 230 kV cable project
over the VIGP. Technically, Mr. Mansour stated that the 230 kV line is
better as a first step than the VIGP. The primary concern to BC Hydro is the
regulatory risk and BC Hydro has been trying to solve the problem on
Vancouver Island since 1995 - it is urgent that something is done. Finally,
the Commission Panel asked that if there were instability problems on
Vancouver Island, would these affect any other jurisdictions through BC
Hydro's interconnections. Mr Mansour noted that instability problems on
Vancouver Island would likely not affect other jurisdictions, however, a
major loss of load on the Island could impact the system outside of BC.
Panel 3 completed its examination.
Panel 4 (Jai Mumick, Ron Monk, Dorell Carlson, Graeme Simpson, Rohan
Soulsby, Dr.Fred Pickel) - Resource Portfolios.
Panel 4 was sworn in and Dr. Pickels qualifications as an expert witness
regarding CCGT's, load curtailment were entered. In addition, at a later
point in the proceedings Dr. Pickel was also qualified as an expert on NPV
models and its uses in various differing types of analysis.
Norske cross-examination of Panel No. 4:
Norske queried whether the analysis of the RFT respondents would be done on
an NPV basis. BC Hydro confirmed that this was the case. Further questions
then followed regarding the use of distillate by Norske. BC Hydro has
earlier said that it believes the Norske proposal complements the VIGP and
Norske had questions regarding the relationship between the two.
At this point, the Commission Chair interrupted the proceedings to alert the
participants that he had concerns regarding the use of the NPV analysis as a
tool for determining the status of VIGP as the best project. His concern is
that the use of the NPV methodology may not be consistent with the standards
and parameters of capital finance and that the use of the NPV may not be
appropriate. He requested that BC Hydro and other intervenors address this
issue in the hearing.
Norske then resumed its cross-examination with further questions regarding
the use of distillate and its cost comparisons with natural gas, the
treatment of TGVI costs and sunk costs in the portfolios. There was also a
series of questions regarding the use of CCGT's as proxies in the portfolios
and questions regarding the gas price risk.
GSXCCC cross -examination of Panel No. 3:
GSXCCC completed the afternoon with questions regarding the NPV analysis
scenarios used and the criteria for analysis, comparisons of portfolios and
the quantification of qualitative differences between the portfolios and
questions regarding portfolio 4 ( run by BC Hydro as requested in a BCUC
information request). GSXCCC finished for the day with questions regarding
BC Hydro's financial liabilities with GHG emissions and the purchases of GHG
offsets.
Monday commenced at noon with a brief presentation by the Regional District
of Port Alberni, followed by the Terasen Gas (Vancouver Island) Inc. panel
which will speak to TGVI's evidence filed prior to the commencement of the
hearing. In the evening, individuals will be presenting their comments to
the Commission Panel. Panel No. 4 is expected to continue with its
cross-examination on Monday night.