A brief report on the progress of the VIGP review.

Tuesday, June 24, Day 7

On Tuesday, Dr. Matthew Bramley of Pembina Institute and Steve Miller of Cobble
Hill gave their expert evidence for GSXCCC, on financial liability for GHG
emissions and load forecasting respectively.

I believe they both did very well, presenting (respectively) convincing
evidence that BC Hydro should have factored in financial risk factors for
likely future greenhouse gas liability (i.e. VIGP could in the future have to
pay a penalty for emitting carbon dioxide); and BC Hydro has been over-
optimistic in their load forecasts for Vancouver Island, and their load
forecasting methodology is statistically unsound (the part we know about) and a
black box (the part we don't know about).

Both Miller and Bramley were able to parry questions in cross examination; both
were asked questions by the BCUC staff, which I take as an indication that they
were taken seriously.

In the last couple of days, interest has focused on the spark spread, i.e. the
difference between gas prices and electricity prices at a given moment. This is
important in determing the profitiabiluty of gas-fired generators, and some
parties, notably the consortium for the pulp mill interests seem to think BC
Hydro should not be building VIGP, based on thir price analysis. Not sure where
they want Hydro to get its power instead. A lot of attention also focused on BC
Hydro's cost-modeled portfolios, with many questions being asked about why
other alternatives were not looked at, such as green energy portfolios, etc.

Terasen cross-examined yesterday, going in detail over BC Hydro's costing
assumptions for the Terasen competing proposal.

The hearing will move to Vancouver on Monday, to the BCUC offices. The NOrske
panel of witnesses will come on on Wednesday the 3rd (or is it the 2nd?). A
large number of intervenors are putting forward witness panels, eg Hillsborough
(Qunisam Coal) and Vassilopoulos and Williamson (imported LNG). They will be
heard next week.

Tomorrow of Friday we will hear from the gas price and spark spread expert put
forward by the JIESC (pulp interest, I believe), Sheldon Fulton.

Bill Andrews will cross examine Gordon Engbloom of Confer Consulting (Hydro's
gas price person). This will happen on Thursday or Friday. Won't necessarily be
a grudge re-match carrying over from their encounter at the GSX hearing;
however, we have some important points to make about the uncertainty of long-
term gas prices and risk of higher prices.

Tom Hackney
GSXCCC