From: "Tom Hackney" Subject: GSX Hearing day 4 Date: February 27, 2003 GSX Hearing Day 4 Tim Howard did his cross-examination of Panel 2. He established that all the complicated agreements between BC Hydro and Centra gas amounted to a secure supply of gas to ICP, with the likelihood that that arrangement could be extended to work over the long term, i.e. in the event that GSX were refused. As with electricity, the critical issue with gas supply on the Centra system is the peak loads, not the average loads. So it's relatively easy (bearing in mind that on cold days everyone wants more gas and electricity) to make arrangements to meet those peaks, such as load curtailment, and building a $340 million pipeline is not the only solution. Mr. Wallace for Norske Canada made a short and very effective cross-examination, establishing that the toll rates for GSX (i.e. the price Powerex would pay to have gas transported on GSX) would be regulated by the NEB on a complaints basis, i.e. no action taken unless the toll-payer complains they're being over-charged. Then Wallace reiterated the point he made earlier: is it likely that Powerex, the wholly-owned subsidiary of BC Hydro would complain about any over-charging by (effectively) its parent company. He also pointed out, as others have, that the cost and hence toll rates of GSX have gone up a lot since filing. Finally, Wallace brought out the fact that GSX PL has negotiated no toll rates for Centra Gas to transport GSX gas to the gas plants on the Centra line. They have no idea of the possible toll rates. Jim Campbell asked about customer rates and the possibility of applying the downstream benefits from the Columbia River Treaty to meeting VI's electricity needs. Don Skerik cross-examined on Hydro's estimate of the cable renewal costs versus GSX. He also asked about the $3.00 US/MMBtu long-term gas price forecast versus the $4 US/MMBtu "upset" price, at which it would become more economic to consider non-gas forms of generation over gas. Shadybrook Farm cross conducted by Steve and Dodie Miller (alternating) addressed the marginal cost of generation and the dispatch sequence for bringing power on line when required (e.g. do they fire up Burrard Thermal or open the Gordon Schum sluice gates when we all start our toasters at the same time in the morning). The market function of Sumas was addressed, i.e. what does a free market mean for Powerex when it tries to buy gas at Sumas? Answer: don't worry, by the magic of the market place, when the price goes up, that will result in more gas being brought on market, by a variety of means, including: technology will be developed to make gas extraction cheaper, coal-bed methane will be developed, Arctic gas will be obtained. (Easy to make fun of, this theoretical proposition may well be accepted by the NEB as a justification for the claim that the supply of gas is assured). Also, wind power is somewhat equivalent to coalbed methane in terms of the degree of speculativeness. Also, are the outages on the 500kV line as serious as the consequence of possible outages on the GSX line? Friday, we expect Bill Andrews for GSXCCC will conduct a lead-off cross-examination of GSX PL Panel 3, concerned with VIGP, subsea cables and electricity load (i.e. the demand for electricity that would in turn call for gas). Tom Hackney BC Chapter - Sierra Club of Canada and GSX Concerned Citizens Coalition (250) 381-4463; fax (250) 381-4407 thackney@island.net