VIGP Daily Hearing Summary For Monday, June 23
DAY 6
The day commenced with a presentation to the Commission Panel by the
Regional District of Alberni/Clayoquot ("RDAC"). The RDAC is in favour of
the Norske Canada proposal and the 230 kV AC lines rather than the VIGP/GSX
proposal.
Terasen Gas (Vancouver Island) Inc. ("TGVI") panel (David Bennett, Ian
Anderson, Michael Davies, Gareth Jones ):
TGVI put up a panel of witnesses for cross-examination of their evidence.
TGVI proposes a phased expansion program that includes upgrades to the TGVI
system through compression and looping and the construction of an on-island
natural gas storage facility. TGVI maintains that its plan will offer
flexibility to expand the natural gas transportation capacity to match
future demand growth requirements of both natural gas and electric customers
as they occur.
The TGVI panel commenced with an opening statement from Ian Anderson which
described the benefits of the TGVI alternative and the incremental approach
to expansion of the TGVI system. Mr. Anderson described how the TGVI
proposal has developed as a response to changes in the GSX proposal as it
was first put forth in 1998 when there was an RFP for GSX. Since that time
GSX costs have increased, the idea of rolled in tolls for GSX on TGVI's
system has been put forth by BC Hydro, there is vocal opposition to GSX and
uncertainly exists around the need for a 3rd or 4th gas plant on Vancouver
Island. If a third plant is built, TGVI would be required to construct a
second gas pipeline from Sechelt to Vancouver Island. Mr. Anderson stated
that TGVI is not opposed to the idea of an RFT in the near future. TGVI
disagrees with BC Hydro's toll assumption in its VIGP portfolios that roll
the cost of GSX into TGVI tolls, rather than adding the GSX toll on top of
the existing TGVI toll.
Mr. Andersen supported the use of the NPV analysis for purposes of the VIGP
application. The accuracy of the NPV test should not be a primary issue, as
it is a comparison test/analysis. When accuracy does become an issue is when
projects from various different proponents are being compared (this
discussion was a result of the Commission Chairs concern around the use of
NPV analysis in the VIGP application ). TGVI also believes that it can ship
gas at a much lower cost than GSX.
BCOAPA cross-examination of TGVI panel:
The BCOAPA queried the impact of TGVI's proposal on its own customers. TGVI
responded that having an increased number of gas fired generators would
cause an increase in the volume of gas on TGVI, which would result in tolls
reflecting added volume and this should tend to bring tolls down to TGVI's
core customers.
Mairi McLennen cross-examination of TGVI Panel:
Mairi had questions regarding the expansion of TGVI and its effect on BCH's
capacity constraint. TGVI responded that their proposal would address BCH's
capacity constraint within the timelines required. There were also questions
as to how TGVI would be funded. There was also a series of questions as to
how TGVI's proposal would affect its own customers.
Kathleen Johnny cross-examination of TGVI Panel:
Ms. Johnny had one question regarding the 1998 call for tenders when GSX was
being planned and whether or not the understanding at that time was that
there would be four to five gas plants on Vancouver Island.
Bob McKechnie cross-examination of TGVI Panel:
Mr. McKechnie had a few questions regarding the efficiency of electric vs.
gas heating furnaces and the feasibility of converting from electric to gas.

James Campbell cross-examination of TGVI Panel:
Mr. Campbell had a series of questions regarding the arrangements for the
shipping of gas for BC Hydro and Norske and also how the TGVI proposal
impacts the subsidy to TGVI from the BC Gov't.
NorskeCanada cross-examination of TGVI Panel:
Norske began with a series of questions regarding the inter-relationship
between Norske/VIGP/TGVI. These were followed by questions concerning the
tolling and rates, revenue/cost ratios, incremental tolls, the length of the
term of agreement for TGVI contracts ( 20 -25 years), and a question that
asked whether a toll could be negotiated within the timelines of the RFT (
i.e. by 1/1/04). TGVI believes that it could negotiate a rate, but that any
rate would be subject to BCUC approval and that such approval may not be
forthcoming prior to 1/1/04.
BC Hydro cross-examination of TGVI Panel:
BC Hydro began with further questions regarding long-term tolls and rates,
and the risk inherent in long-term agreements. The load forecasts of TGVI
were queried as was the heat content of gas supplied by TGVI and judgements
on changes in heat content over time. BC Hydro queried whether there would
be a need for expansion on TGVI if GSX does not proceed. TGVI answered that
there would be further expansion reflecting an assumption of optimal
operations. The allocation of expenses to core customers was queried as was
the impact of TGVI's proposal on Burrard Thermal operations. BC Hydro
finished up with questions regarding the LNG component of TGVI's proposal.
Commission Counsel cross-examination of TGVI panel:
Commission counsel began his cross with a series of questions regarding the
RFT process. TGVI responded that the RFT is about generation alternatives,
not a gas delivery alternative but that any RFT generation proposals would
include a gas transportation component. Answering a question from the
Commission counsel, TGVI agreed that BC Hydro should be required to submit a
VIGP alternative that uses TGVI. The Commission counsel also asked whether
BC Hydro should develop a model for evaluating the RFT results and if it
made the model public, would TGVI have any concerns regarding a bias in the
evaluation from BCH. TGVI agreed that such a process would add some
transparency. TGVI also said that it would have no concerns about the public
disclosure of information, although other companies may. There followed some
final questions regarding sunk costs and curtailment gas.
Commission Panel cross-examination of TGVI panel:
The Commission Chair commented that BC Hydro has tried to establish some
common parameters to compare projects through the use of its portfolios. The
Chair also asked if TGVI could take BC Hydro's portfolios and make
adjustments so that the comparison between BC Hydro and TGVI is on a common
cost basis. The Chair queried the use of sunk costs and asked if there were
any circumstances in which sunk costs are appropriately added to any
portfolios. TGVI stated that sunk costs should be included in BC Hydro's
portfolios; TGVI also agreed that common costs should be included in all
portfolios.
The cross-examination of the TGVI panel was completed and the panel excused.
Public presentations:
At 7 p.m. the hearing resumed with presentations by members of the public.
Each member was given ten minutes and then agreed to be available for any
following questions from intervenors, the applicant or panel members.
Mr. L Catley:
Mr. Catley is a representative of the Green Party and voiced opposition to
the VIGP. He was concerned about the fact that government directions were
being blindly followed by crown corporations such as BC Hydro without a
thorough review of whether it was a wise choice or not. He was very thankful
of the EAO and BCUC review process.
Mr. Ian Gartshore:
Mr. Gartshore was also against the VIGP project. The VIGP commits Vancouver
Island to a poor economic future due to its reliance on natural gas. He
encouraged BC Hydro to look at other alternative sources of power such as
tidal.
Ruth Chase:
Ms. Chase had concerns about ecological damage and the effect on future
generations. The dependence on fossil fuels must not continue, tidal power
should also be encouraged.
Mark McDonald:
Mr. McDonald is president of the Greater Nanaimo Chamber of Commerce and
voiced strong support for the VIGP project. He said that the Norske proposal
sounds promising but that it is not developed enough at this point. He
believes that Vancouver Island should be producing electricity on the
island, the choice of natural gas as a fuel source is a good one, BC Hydro
should not spend large amounts of money on experimental power sources such
as tidal and wind and that VIGP will create jobs and help the tax base of
Nanaimo.
The proceedings finished for the day at 8p.m.