From: "Tom Hackney" Subject: GSX Hearing Day 5 Date: February 28, 2003 GSX Hearing Day 5 At the risk of sounding over-optimistic, Day 5 seemed to strengthen the case against GSX considerably. It started off innocently enough. Bev Van Ruyven, Senior VP, Distribution for BC Hydro, was sworn in along with Bob Elton, Executive VP and Chief Financial Officer for Hydro. They were joined by Glen Smyrl and Graeme Simpson to make up Panel 3, to address questions of electricity load, subsea cables and VIGP. (Panel 3 was brought forward prematurely, so to speak, to allow Bill Andrews to cross-examine it in the morning due to scheduling constraints). First Van Ruyven reported on the Norske Canada load offsetting proposal. Little new was reported. We already knew it was in the 200 - 250 MW range, and consisted of gas and some wood waste. Not clear if this would increase the demand for gas much, or would mainly consist of efficiency and related savings. 58 MW is apparently already being counted on by BC Hydro as part of Power Smart programs. Then Bill Andrews commenced his cross of Panel 3 on behalf of GSXCCC. Primed by the excellent research and work by Steve Miller on Vancouver Island peak load and load forecasting, Andrews was able to show that BC Hydro had apparently published inconsistent information about its peak load patterns, apparently to make its forecasts look more accurate and avoid the impression that Hydro is over-estimating load. Andrews also demonstrated that, although BC Hydro has publicly claimed that the need for GSX is driven by VI projected population increases and projected economic increases, in fact there is not much historical correlation between load and population -- and the VI economy has actually been shrinking in the past few years. The actual peak load pattern for VI has been declining slightly in recent years (though I don't think anyone expects this trend to continue downward). In any event, there is scant justification for Hydro to project load demand to slope continuously upward from today's load. Williams also demonstrated that BC Hydro had not been fully open with GSXCCC as to the driving variables that it uses to forecast load, notwithstanding the Joint Review Panel's order that such information be disclosed, so that we can carefully examine Hydro's case that it needs more electricity. Andrews cornered panel 3 into claiming that load growth really didn't matter because the expected 2007 retirement of the HVDC cables is the real reason for needing GSX. Then Andrews demonstrated that in fact, absent an increase in VI load, there would be scant need for more supply on VI. Then Graeme Simpson interjected, saying that the real reason we "need" GSX is the need for generation to meet system-wide load requirements in BC. Andrews then pointed out that the GSX application relies entirely on the claim that GSX is needed to meet VI load, and gives no evidence of a system-wide need. After the Andrews cross, witness panel 2 was recalled for those intervenors who had not had their turn. Arthur Caldicott raised the question of when is the "point of no return" in terms of sunk costs for GSX/VIGP at which the cost of cancelling the projects would become prohibitively high. He compared GSX to the Mirabel Airport and the fast ferries. He established that the turbines that have been bought for VIGP can be used elsewhere (Kelly Lake?). At one point, Graeme Simpson seemed to indicate that in comparing GSX costs to the cable renewal alternative, sunk GSX costs would be included in the cost of cables comparison. Caldicott achieved a minor gem. He established that the latest National Energy Board short-term gas deliverability forecast shows declining deliverability of gas. Engbloom, in response, agreed that the NEB forecasts show a maturing WCSB resoure. He described the NEB forecasts as showing a "flattening" trend, in spite of various graphs showing consistent downward trends. Caldicott subtly showed this up, saying "I won't be argumentative." After lunch, Don Davies for GSX PL challenged the GSXCCC's evidence submitted by Dr. Mark Jaccard of Simon Fraser University's Energy and Materials Working Group. This evidence is Jaccard's first-run assessment of the cost-benefit of GSX versus a portfolio of small hydro, wood waste and small cogeneration (e.g. a hospital retooling its heating system to produce power as well as heat). This coupled with renewal of the subsea cables to VI could meet VI's electricity needs without significantly increasing greenhouse gas emissions. Also would avoid cost risk of fluctuating gas prices. In any event, the Panel has already ruled that "alternatives" to GSX means alternative means of bringing gas to VI. GSXCCC believes this is an incorrect interpretation of the Canadian Environmental Assessment Act It also goes against the express desired of many members of the public who expressed a wish to see an examination of a broad range of energy alternatives. Therefore, the expectation is that the Panel will rule the Jaccard material irrelevant. The decision will likely come on Monday and Tuesday, when we get our legal counsel there to argue our point. While disappointing and a blow to the general principles of sound and thorough reviews, this will not poke a very big hole in the GSXCCC case. We are already establishing a strong economic and risk case against -- and this is what the NEB Panel must consider anyway. Continuing the cross on panel 2, Dodie Miller asked about projected cost over-runs and established that the overall cost of GSX, VIGP and ICP comes to close to $1 billion ($940 m, actually). Don Skerik, doing cross on behalf of Mairi McLennan, asked a large number of questions, ranging from the fixed tolls (some $25.7 million per year initially for GSX Canada). He established that Hydro sees the Centra gas supply to ICP as being less secure that GSX would be because of contractual arrangements that ICP would be the first customer required to curtail load in the event of competing demand. Fluctuations in Centra and Sumas pressure could result in increased ability for GSX to deliver extra gas, hence there would sometimes be interruptiable supply for sale. The NEB asked questions, too: in particular asking whether there would be a price increase in GSX associated with a proposed condition to the pipeline specs. Panel member Williams showed interest in on-VI gas storage, asking if a mine under Nanaimo or the Horne Lake Caves north of Nanaimo could be used. Powerex said no, but it was established that Powerex and Hydro had not taken it on themselves to investigate possible storage. Williams also mentioned the Columbia downstream benefits (which he was at one time familiar with). He asked if this power was available and if the BC government preferred to sell it for export rather than using it for domestic load. The answer to both is yes, and I'm not sure if that helps or hurts the case for GSX. Certainly Hydro has argued that the downstream benefits are for the government to dispose of, and not relevant to the "need" for GSX. Reconvening on Monday at 9:30, the continuation of Panel 3 (VIGP, subsea cables replacement alternative). Should be an exciting cross by Tim Howard for DSF/SPEC, among others. Tom Hackney BC Chapter - Sierra Club of Canada and GSX Concerned Citizens Coalition (250) 381-4463; fax (250) 381-4407 thackney@island.net