VIGP Daily Hearing Summary For Friday, June 27

DAY 10
The day commenced with the setting of the dates for written and oral
argument. Written argument will be due from BC Hydro on July 14, intervenor
argument will be due on July 21, BC Hydro reply argument will be due on July
25 and oral argument will be hear the morning of July 28.
TGVI cross-examination of BC Hydro panel No. 5:
The cross began with a series of questions to the panel focusing on TGVI's
proposal for upgrading its system and constructing an LNG plant. There then
followed questions regarding the operations of ICP and the possible outcome
of problems with its operations. BC Hydro responded that it did not
anticipate that BC Hydro would have the same problems as ICP as it will be
using a different turbine, one that is proven in the marketplace, rather
than ICP which was built with a new design of turbine that was relatively
untested. There continued many questions regarding Calpine's attempts to
resolve the ICP problems, the ability of VIGP to operate with dual fuels and
why distillate would not be installed at VIGP.
GSXCCC cross-examination of Panel No. 5:
Evidence from the GSX hearing was entered as an exhibit in order to question
the gas price forecasts used by BC Hydro. BC Hydro's expert witness, Mr.
Gordon Engbloom, fielded the majority of questions as they related to gas
price forecasts and the comparisons between gas prices and electricity
prices. The Pacific Northwest consumption of gas at existing plants was
probed and the burning of distillate at VIGP and its reflection in the EAO
application. There was also a series of questions on purchasing electricity
by BC Hydro in the market and questions regarding the land that has been
purchased by BC Hydro for the VIGP project.
BCOAPA cross-examination of Panel No. 5:
The BCOAPA queried the costs of VIGP ( P50 and P90). It also asked if there
was any natural gas price at which VIGP would not be BC Hydro's preferred
alternative. Dawn Farrell responded that on the assumption that electricity
prices would rise along with gas prices, the preferred alternative would
remain VIGP. The availability of VIGP was queried and the amount of routine
and major maintenance would be required and how much down time would be the
result.
Mr. James Campbell cross-examination of Panel No. 5:
Mr. Campbell again queried the volatility of gas prices and the impact of
that volatility on the financing for VIGP. There was also a discussion with
Mr. Engbloom on the mechanics of the gas market in Western Canada.
JIESC recross-examination of Panel No. 5:
The JIESC was granted permission to recross Panel No. 5 on the issue of the
basis differential between Sumas and the Henry Hub. There were also some
questions on the impact of foreign exchange rates on gas prices.
Commission Counsel cross-examination of Panel No. 5:
Commission counsel examined the panel on a number of differing topics. The
firm price of the turbine for VIGP, the extension of the contract to
purchase the turbine, the GE 7FA vs. the GE 7FB turbines, the irrevocable
date of decision regarding the purchase of the turbine, the completion date
of the project and the ability for that date to slip and the cost of VIGP
were all questioned. There was also a series of questions on the RFT
proposal. The dependable capacity of VIGP and the efficiency of the plant
were queried. The consultations with First Nations were reviewed followed by
questions on the dependable capacity of Burrard Thermal.
There were no questions for Panel No. 5 from either Commissioner.
JIESC Panel - Mr. Sheldon Fulton:
The JIESC put up for cross-examination their expert witness, Mr. Sheldon
Fulton to speak to the issues of gas price forecasts and the financial
analysis done by BC Hydro on VIGP.
Mr. Sheldon was qualified as an expert witness and his evidence entered.
GSXCCC cross-examination of Mr. Sheldon Fulton:
The GSXCCC queried the evidence of Mr. Fulton regarding the cost per kWh for
a plant operating as a peaker rather than a base load plant and acquiring
gas at the NYMEX current price for 2007. Mr. Fulton has indicated that this
price would be $.108/kWh. The GSXCCC also asked for Mr. Fultons' views on a
portfolio that relies on clean energy and how susceptible such a portfolio
would be to gas prices.
BCOAPA cross examination of Mr. Sheldon Fulton:
The BCOAPA queried the commodity price risk in the energy sector and the
possibility of VIGP becoming a stranded asset. Mr. Fulton also discussed the
markets in Ontario and Alberta and their experience with stranded assets.
BC Hydro cross-examination of Mr. Sheldon Fulton:
BC Hydro spent a good portion of the afternoon challenging Mr. Fulton's
evidence. Mr. Fultons' submission revolves around market prices and the
effect that those prices will have on the dispatchability of plants such as
VIGP. Mr. Fulton has not prepared a long-term supply and demand forecast but
has based his evidence on the forward prices as they exist today. Mr. Fulton
believes that VIGP only makes sense in the context of it being used as a
peaking plant with locational credits. There were several questions
regarding the heat rates used in planning. In addition, there were a series
of questions regarding the value of VIGP as it relates to and provides value
to the rest of BC Hydro's system. There followed a discussion of the gas
market mechanics in the Pacific Northwest and questions regarding the market
fundamentals in the region.
Commission Counsel cross-examination of Mr. Sheldon Fulton:
Commission counsel queried the suitability of the portfolio model for VIGP
and had questions regarding BC Hydro's portfolio analysis and his opinion of
it.
JIESC Panel excused.
Before the completion of the days proceedings BC Hydro filed its Call for
Tender Proposal. The Commission Panel also ruled on the additional
portfolios that BC Hydro will be required to run. The Commission ruled that
Portfolios #11, 12, 13 and 14 will be required and also that the NPV
analysis requested by NorskeCanada will also be performed.
The hearing resumed at 9 a.m. today at the Commission's hearing room in
Vancouver.