VIGP Daily Hearing Summary For July 3 - Final
DAY 13
After a series of preliminary matters the day commenced with BC Hydro Panel
No. 7.
BC Hydro Panel No. 7 (Bob Elton, Dawn Farrel, Mary Hemmingsen) - Call for
Tender Process:
BC Hydro panel No. 7 was put up in order for intervenors to examine further
the Call for Tender ("CFT") proposal from BC Hydro. However, before the
subject of the CFT was reached the panel commenced with a discussion
regarding the costs of the TGVI proposal and GSX. These issues will be
addressed in written argument. The Commission Chair put forth a suggestion
for further negotiations between BC Hydro and TGVI with the goal of reaching
an agreement on a model to be used to cost the two competing proposals, TGVI
or GSX. A joint submission on the model would be made to the BCUC by July
14, 2003. Any outstanding inputs that the two parties could not agree on
would be described and the BCUC would make a ruling as to which input should
be used. BC Hydro and TGVI both agreed that they would enter into such
negotiations.
Norske Canada cross-examination of Panel No. 7:
Norske began their examination with a discussion regarding a schedule of the
costs of the CFT process that BC Hydro had presented as an exhibit. This led
to a discussion as to whether or not BC Hydro would sell the rights to take
over VIGP for costs less than those incurred to date, what the bid process
would be for VIGP if the project was to be sold, and would BC Hydro accept a
BCUC direction that assets not be sold for less than the amounts expended.
BC Hydro stated that the CFT comparison has to be made on incremental costs
and that BC Hydro must find the lowest cost alternative for its ratepayers.
Norske queried whether or not consultations between BC Hydro and bidders
would be made part of the CFT process. BC Hydro confirmed that this would be
the case.
Terasen Gas (Vancouver Island) Inc. ("TGVI") cross-examination of Panel No.
7:
TGVI agreed to provide an electronic copy of its cost of service model. TGVI
asked a series of questions regarding the cost of the CFT process. The
question was asked as to whether or not BC Hydro would bid into the CFT
process. BC Hydro answered that BC Hydro would not bid into the process with
VIGP, but that the costs incurred to date on VIGP would be used as a
reference price. The timing of the CFT process was scrutinised as was
capacity that BC Hydro holds on BC gas pipelines and whether or not that
capacity would be made available for bidders. BC Hydro stated that the
capacity was for ICP and would not be made available.
GSXCCC cross-examination of Panel No. 7:
GSXCCC begin its cross with a question that asked how BC Hydro would put
VIGP on the market if it still did not have a CPCN and how would that
project be described to potential investors. BC Hydro replied that the more
certainty there is in VIGP the better the deal that BC Hydro could negotiate
for its ratepayers and as a result, BC Hydro would hope that the BCUC had
issued by that time a CPCN for the project. The point was made that only BC
Hydro would require a CPCN, an IPP would not. However, IPP's would be
expected to have any EPA approved by the Commission under section 71 of the
Utilities Commission Act. GSXCCC also queried the fairness of the CFT
process. It was explained that the CFT will require interim reports from the
reviewer and that if the process was not fair, in the reviewers opinion,
this would be revealed before the end of the process. The reviewer would be
involved in the designing of the criteria for the CFT.
The GSXCCC asked questions regarding a limitation on the IRR for bidders to
the CFT. BC Hydro's view is that some sort of a threshold IRR would be
probable. BC Hydro also stated that any demand side management proposals
that were bid into the CFT would not be limited to Power Smart terms. BC
Hydro also stated that Resource Smart projects would not be bid into the
CFT.
BCOAPA cross-examination of Panel No. 7:
The BCOAPA opened with questions regarding the option on the VIGP land that
BC Hydro has exercised. There were also questions regarding Powerex capacity
contracted on the GSX, near-commercial processes that may be considered and
whether wind would be able to meet BC Hydro's capacity requirement. BC Hydro
answered that it would not.
Commission Counsel had no questions for Panel No. 7.
Maxim Power Corporation ("Maxim") Panel:
Maxim is an IPP that is in the business of co-generation projects. Its
evidence in this hearing is that there should be a greater emphasis on
co-generation by BC Hydro.
GSXCCC cross-examination of Maxim Panel:
GSXCCC opened with some queries regarding the history of Maxim and questions
as to what Maxim considers to be co-generation. Maxim uses various differing
fuel sources including land-fill gas, anaerobic gas, and natural gas. The
availability factor of their plants is 92 to 94 per cent. Maxim estimates
that the co-generation capacity on Vancouver Island is about 60 MW. Maxim
also does not believe that CCGT's should be used as a proxy for mainland
generation, as BC Hydro has done in its portfolios, but that co-generation
facilities should be used instead.
BCOAPA cross-examination of Maxim Panel:
In response to a BCOAPA question, Maxim agreed that its power would be BC
Clean.
BC Hydro cross-examination of Maxim Panel:
BC Hydro queried the gas price risk in the Maxim proposal. Maxim agreed that
the CFT is an opportunity for it and that it expected to be bidding into the
CFT process. Maxim agreed however, that most of its opportunities are on the
lower mainland and that there is very little co-generation on Vancouver
Island. BC Hydro asked a series of questions regarding the analysis of
greenhouse co-generation operations that Maxim had filed as part of its
evidence. Maxim agreed that its co-generation studies would be available to
BC Hydro to review.
Commission Counsel cross-examination of Maxim Panel:
Commission counsel queried the co-generation facility in France that Maxim
has been involved with and also had some questions regarding the
co-generation analysis that had been previously provided.
Green Island Energy ("GIE") Panel:
GIE is an IPP that is proposing to take over existing facilities at the
closed down pulp mill in Gold River and use biomass in the existing boilers
to generate electricity for sale to the market. In an opening statement, GIE
stated that it supports the provincial energy policy and believes that its
project is 20 per cent cheaper than VIGP. Phase 1 and 2 of its project is
fully funded and the facilities needed, including transmission lines, are
already in place and the plant is connected to the grid. In addition, the
fuel supply for phases 1 and 2 is secured. GIE anticipates that it will bid
into the CFT process and that it believes an independent overseer should be
involved, i.e. the BCUC or some third party with no perceived conflict of
interest.
GSXCCC cross-examination of GIE panel:
GSXCCC began with questions concerning the size and capacity of the GIE
facility. The maximum generating capacity would be 105 MW in two phases. GIE
also stated that the fuel supply is biomass from a catchment area that
covers the west coast of North America, no natural gas would be used in the
plant, although there would be some Bunker C oil used as backup. GIE also
expects that it will receive GHG offsets for its project.
BCOAPA cross-examination of GIE panel:
The BCOAPA questioned whether the Gold River project was BC Clean and GIE
answered in the affirmative. GIE also stated that it would expect to retain
the GHG credits.
BC Hydro cross-examination of GIE panel:
BC Hydro's questions were designed to elicit further information about the
Gold River facility. GIE stated that is could have both phases in place and
operating by 2004 and that GIE is in a position to respond to the CFT
immediately. The plants hog fuel requirements are in the MOU phase and that
20 year agreements would be possible to match the EPA that BC Hydro would
sign with an IPP. The plant would use only 1% of the available biomass in
the west coast biomass market. Most of the biomass would be forestry
industry residue, urban wood and log sorting waste. Most of its permits are
in place and they are based on wood fuel. The first phase does not require
an EAO approval as it is only 45 MW. In phase 2, GIE may apply for an
exemption from the EAO process. In addition, a preliminary interconnect
study with BC Hydro has been completed. GIE confirmed that there are no
First Nations issues with its facility and that there are no electrical
constraints between Gold River and BC Hydro's substation in Campbell River.
Commission Counsel cross-examination of GIE Panel:
Commission counsel only had a couple of questions for the panel. First, GIE
was asked if it would proceed with its Phase 1 even if BC Hydro did not sign
an EPA with it. GIE stated that it would and expects that it would sell its
energy into the wholesale market. It would also proceed with Phase 2 on the
same basis.
The Commission Chair had no questions and the GIE panel was excused. The
Chair announced that all undertakings and further letters of comment were
due to be filed no later than Thursday, July 10, 2003.
Thus, the evidentiary phase of the VIGP hearing concluded after 13 days of
public hearings, ten of those in Nanaimo, including two night sittings and
the balance in Vancouver.