January 23, 2004

The BC Utilities Commission has reviewed BC Hydro's Call for Tenders and pronounced it okay.

"The Commission Panel encourages BC Hydro to proceed with the CFT. ... Approval of the project(s) selected following the CFT process may require a further review of the CFT process and design."

Some key statements from the document: Largely, they appear happy with the CFT and don't perceive it as having a VIGP/GSX bias. Where concerns expressed by various parties are addressed by the Commission, they seem mainly to want to reserve the option to investigate those matters in the applications for electricity purchase agreements following from the CFT. (At which time, I predict they will decree that they are expediting the EPA reviews and aren't about to bog those reviews down by digging into the CFT process when what's done is done.)

On requests by Norske Canada and others for a more formal process to consider the CFT: "... the Commission does not consider that the further delay which would result from a more protracted process at this stage is justified or is necessary in the circumstances."

"The Commission Panel commends BC Hydro for providing many opportunities to potential bidders and other stakeholders to comment on and provide input to the CFT process."

On bias in favour of VIGP and GSX, the BCUC reiterates statements from the VIGP decision that "The Commission Panel encourages BC Hydro to seek approval for projects with an aggregate capacity on at least 150 MW ... If the Dependable Capacity does not exceed 115 MW, then the Commission Panel expects that BC Hydro will consider other resource additions, including VIGP/GSX, CBG, Resource Smart, contracted load reductions and new peak shaving initiatives ...."

On considering "other resource additions", the BCUC shows its bias in favour of on-island generation: "The Commission Panel encourages BC Hydro to accept a cost-effective portfolio with dependable capacity as low as 115 MW before considering 'other resource additions' than on-Island generation." Then quotes from its VIGP decision: "The Commission Panel concludes that not contracted demand reductions should be added to dependable supply...."

Transmission deferral credit: "BC Hydro should not expect that the transmission deferral credit will be accepted by the Commission Panel reviewing the project(s) selected by the CFT."

Staged addition of capacity resources (ie, Norske's proposal where additional generation capacity can be added as needed): "... the portfolio approach with no staging can reasonably be anticipated to be acceptable to the Commission Panel."

Sale of VIGP assets: "...VIGP sunk costs as proposed in the CFT will need to be justified in any application for approval...."

Gas and electricity prices (BC Hydro is using five scenarios of their choosing): "BC Hydro should not assume ... the Commission Panel will accept that equal weight should be assigned to the results for each of the five scenarios."

Gas transportation costs (bidders can select a "tolling" option in which BC Hydro assumes gas delivery and price risks. If selected, some think this means GSX will be factored into the tolling option. "... it is not clear to the Commission why a bidder should not be able to choose a tolling option for the gas commodity without transportation." and "BC Hydro will be responsible for demonstrating that the gas transportation cost represents the most cost effective solution."

Arthur Caldicott
GSX Concerned Citizens Coalition
Cobble Hill, BC
January 23, 2004