B-2 Janet Fraser Chief Regulatory Officer Phone: 604-623-4046 - - PDF document

b 2
SMART_READER_LITE
LIVE PREVIEW

B-2 Janet Fraser Chief Regulatory Officer Phone: 604-623-4046 - - PDF document

BC H YDRO PPA - RS 3808, TS N O . 2 & 3 E XHIBIT B-2 Janet Fraser Chief Regulatory Officer Phone: 604-623-4046 Fax: 604-623-4407 bchydroregulatorygroup@bchydro.com June 17, 2013 Ms. Erica Hamilton Commission Secretary British Columbia


slide-1
SLIDE 1

British Columbia Hydro and Power Authority, 333 Dunsmuir Street, Vancouver BC V6B 5R3 www.bchydro.com Janet Fraser Chief Regulatory Officer Phone: 604-623-4046 Fax: 604-623-4407 bchydroregulatorygroup@bchydro.com

June 17, 2013

  • Ms. Erica Hamilton

Commission Secretary British Columbia Utilities Commission Sixth Floor – 900 Howe Street Vancouver, BC V6Z 2N3 Dear Ms. Hamilton: RE: Project No. 3698720 British Columbia Utilities Commission (BCUC) British Columbia Hydro and Power Authority (BC Hydro) Application for Approval of Rates between BC Hydro and FortisBC Inc. with regards to Rate Schedule 3808, Tariff Supplement No. 3 – Power Purchase and Associated Agreements, and Tariff Supplement No. 2 to Rate Schedule 3817 BC Hydro writes to provide, as Exhibit B-2, BC Hydro’s presentation from the Workshops held on June 11, 2013 in Vancouver and June 13, 2013 in Castlegar. For further information, please contact Gordon Doyle at 604-623-3815 or by email at bchydroregulatorygroup@bchydro.com. Yours sincerely, Janet Fraser Chief Regulatory Officer

jm/tn

Enclosure Copy to: BCUC Project No. 3698720 (BC Hydro PPA - RS 3808, TS No. 2 & 3) Registered Intervener Distribution List Workshops Registered Attendees

B-2

BC HYDRO PPA - RS 3808, TS NO. 2 & 3

EXHIBIT

slide-2
SLIDE 2

1

BC Hydro Application for Approval of Rates re: New PPA and Associated Agreements with FortisBC Inc.

WORKSHOP PRESENTATION

June 11, 2013 – Vancouver, B.C. June 13, 2013 – Castlegar, B.C.

slide-3
SLIDE 3

2

INTRODUCTION

  • Existing 1993 PPA between BC Hydro and FortisBC expires on Sept. 30,

2013

  • New PPA and associated agreements (dated May 21, 2013) replace the

expiring PPA

  • Agreements were filed by BC Hydro on May 24th for approval by BCUC
  • Revised General Wheeling Agreement expected to be filed on July 16
  • BC Hydro application is fully endorsed and supported by FortisBC
  • Two workshops are being held to provide an understanding of how the

new agreements were developed

  • Provide information to ratepayers, BCUC staff, interveners and other parties
  • Provides an opportunity for participants to ask clarifying questions
  • Discussions at the workshops will not be recorded or transcribed
slide-4
SLIDE 4

3

AGENDA

Topic Presenter Timing Introduction Gordon Doyle 9:00 Opening Comments Doug Little 9:05 Historical Context Doug Robinson 9:15 Post-1993 Developments Doug Little 9:30 The Agreements Doug Little / Doug Robinson 9:50 Impact on FortisBC Resources and Operational Practice Ron Zeilstra / Jamie King 10:30 Benefits for BC Hydro Doug Little 11:15 Regulatory Process Gordon Doyle 11:25

slide-5
SLIDE 5

4

OPENING COMMENTS

  • Integrated relationship between BC Hydro and FortisBC began in 1950s
  • Under various agreements, each party is customer and supplier of the other
  • New PPA and associated agreements reflect the culmination of several

years of discussions between BC Hydro and FortisBC

  • Basic service parameters are unchanged from past 20 years
  • BC Hydro will continue providing 200 MW of capacity to FortisBC
  • The parties negotiated the agreements as a “package” deal
  • New agreements modernize the terms and conditions of service being

provided by BC Hydro to FortisBC

  • Introduce improvements for current industry practice and circumstances
  • Enable improved system optimization and operation
  • Provide limited export rights to FortisBC while taking PPA energy
  • New PPA and associated agreements represent a mutually beneficial

arrangement for both utilities and their respective ratepayers

slide-6
SLIDE 6

5

HISTORICAL CONTEXT

Canal Plant Agreement (CPA)

  • Columbia River Treaty between Canada and U.S. ratified in 1964.
  • Required construction of 15.5 MAF of Treaty storage in Canada e.g., Mica dam
  • Provided the U.S. with an option to build Libby (which they exercised)
  • Directed Canadian storage be operated to maximize power and flood control

benefits in both countries

  • Established BC Hydro as the Canadian Entity for Treaty implementation
  • To address diversion of water flow by Kootenay Canal Plant (KCL), the CPA

was signed in August 1972 by BC Hydro, West Kootenay Power and Teck

  • CPA provides water to KCL and holds the other parties whole for their

historical, pre-Treaty average generation

  • CPA provides for the coordinated operation/optimization of the generating

resources and system integration of the Entitlement Parties and BC Hydro:

  • Parties receive defined amounts of energy and capacity entitlements that do not

vary with actual stream flows

  • BC Hydro sold electricity to FortisBC under the CPA during 1978-85
slide-7
SLIDE 7

Basin Diagram

6

M MICA CA [ [BC H C Hydro] 1805 M 1805 MW Purple S e Shading = = C Col

  • lumbia R

River T Trea eaty P Project Yellow S Sha hading = = C CPC / / C CBT J Joint V Venture P e Project Green s sha hading = = F For

  • rtis B

BC P Proj

  • ject

Blue S e Shadi ding = = T Teck / / B BCH P Project R REVEL EVELSTOKE [ E [BC H Hydro] 1980 M 1980 MW WHA HATSHA HAN [BC H Hydro]

D U N C A N R I V E R

U UPPE PPER A ARRO RROW 50 M 50 MW L LAKE KE

S O U T H S L O C A N R I V E R

DUN DUNCA CAN [ [BC H C Hydro] LO LOWER 0 M 0 MW A ARRO RROW L LAKE KE Keenl eenley eyside D de Dam

[CP CPC/ C/ CB CBT]

[BC H Hydro] Arrow L Lake kes H s Hyd ydro [CP CPC / C / CB CBT] S SOUT UTH LO LOWER UPPE PPER CO CORRA RRA 186 M 186 MW B BRIL ILLIA IANT S SLOCA CAN BONNI NNING NGTON L LIN INN G GROHMAN K KOOT OOTENAY

K O O T E N A Y R I V E R

L LAKE KE N NARRO RROWS 149 M 149 MW KOOTEN ENAY AY C CAN ANAL AL [ [BC H Hydro] 580 M 580 MW WAN ANET ETA SEVEN EVEN M MILE [ E [BC H Hydro]

K O O T E N A Y R I V E R P E N D D' O R E I L L E R I V E R S A L M O R I V E R

794 M 794 MW Expan ansion 335 M 335 MW

[CP CPC C / CB CBT]

C A C A N N A A D A D A

  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • - -
  • - -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • - -
  • - -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • -
  • - -
  • - -
  • -
  • -
  • -
  • -
  • -
  • -
  • U N

N I I T T E D E D S S T T A T A T E S E S B BOUN UNDA DARY RY

C O L U M B I A R I V E R

1055 M 1055 MW [Seattl ttle C City ty L Light] t] LIBBY [ [Army C Corps of

  • f E

Engine neers] 604 M 604 MW

PEND OREILLE R I V E R City of Nelson

493 M 493 MW [Teck / / B BC H Hydr dro]

  • ]

Total al.: 276 M 276 MW Exp I Incr.: 127 M 127 MW [For

  • rtisBC G

Gener enerating P ng Proj

  • jec

ects] 40- 40-56 M 56 MW 55 M 55 MW 45 M 45 MW 59 M 59 MW

slide-8
SLIDE 8

7

HISTORICAL CONTEXT

Canal Plant Agreement Generation and Interconnection to BC Hydro System

Kootenay Canal (BCH)

South Slocan Brilliant Terminal Station Nelway

(BCH)

Emerald Switching Station Warfield Terminal Station

To Bonneville Power To Bonneville Power FortisBC

Legend:

BC Hydro Teck Metals Ltd. Columbia Power Corp. affiliates

Selkirk

(BCH)

To Okanagan

FortisBC Kootenay River plants Arrow Lakes Brilliant Expansion

Waneta WAX

Generators are denoted with an oval. Transmission stations are denoted with a square.

Brilliant

To Creston

slide-9
SLIDE 9

8

HISTORICAL CONTEXT

BCUC Decisions (1986 and 1993)

  • In 1985, differences between BC Hydro and FortisBC regarding power

supply and wheeling rates were referred to the BCUC

  • Direction provided by the 1986 BCUC decision ultimately led to the PPA

and General Wheeling Agreement (GWA)

  • PPA required to help FortisBC meet is load obligations
  • GWA required for wheeling of FortisBC’s resources from South Slocan to remote

load centres (Princeton, Okanagan and Creston)

  • In its 1993 decision regarding BC Hydro’s RS 3808 application, the BCUC

concluded that there is a unique inter-utility relationship, with FortisBC being both a BC Hydro customer and an independent utility

  • Demand and energy charges for FortisBC purchases within the 200 MW demand

limit were aligned with BC Hydro’s RS 1821 charges applicable to other transmission service customers

  • For electricity above the 200 MW demand limit, prices would be negotiated

based on fair market arrangements reflecting BC Hydro’s opportunity cost

slide-10
SLIDE 10

9

HISTORICAL CONTEXT

1993 Power Purchase Agreement (PPA)

  • BC Hydro supplies FortisBC with 200 MW of capacity and associated energy
  • Energy charge: Equivalent to RS 1827 blended rate (currently $37.24/MWh)
  • Demand charge: Equivalent to RS 1827 rate ($6.353/kVA per month)
  • FortisBC provides an annual Nominated Demand 5 years in advance for

each point of delivery

  • FortisBC provides hourly preschedules of take-or-pay energy purchases

twice a week

  • Excess energy fills the gap after (a) scheduled PPA electricity is fully used,

and (b) other available resources are fully used

  • PPA electricity can only be used for FortisBC’s load requirements and

cannot be exported or stored

slide-11
SLIDE 11

10

POST-1993 DEVELOPMENTS

  • Columbia Basin Accord
  • Open Access Transmission
  • Regional Electricity Markets
  • Pacific Northwest
  • Alberta
  • Trends in FortisBC PPA Purchases
  • Short term variability
  • Long term variability
  • Use of PPA and GWA to serve load
  • BCUC Decisions re: Customers with Self-Generation Facilities
  • Inclining Block Rate Structures
slide-12
SLIDE 12

11

POST-1993 DEVELOPMENTS

Columbia Basin Accord

  • Main goal of Columbia Basin Accord was to provide benefits to the region

in recognition of costs borne by the region due to the Columbia River Treaty dams

  • Under the Columbia Basin Accord and the 1995 Columbia Basin Trust

(CBT) agreement, 3 core power projects were earmarked for development

  • The 3 core projects are owned by CBT and Columbia Power:
  • Arrow Lakes Generating Station – completed in 2002
  • Brilliant Expansion – completed in 2007
  • Waneta Expansion (WAX) – targeted for mid-2015 completion
slide-13
SLIDE 13

12

POST-1993 DEVELOPMENTS

Open Access Transmission

  • Open access to electricity transmission was non-existent when

the 1993 PPA signed

  • In August 1997, BC Hydro implemented a Wholesale

Transmission Tariff

  • Transmission service rules in B.C. and Pacific Northwest have

enabled FortisBC (and some of its customers) to access regional electricity markets

slide-14
SLIDE 14

13

POST-1993 DEVELOPMENTS

Regional Electricity Markets

  • Pacific Northwest
  • Liquid electricity market now well established
  • Generation is dominated by Columbia River run-off patterns and fish-related

water flows

  • Gas-fired generation typically sets the electricity price
  • Renewable energy generation has grown rapidly due to tax credits and RECs
  • Large amounts of wind energy and freshet hydroelectricity have resulted in
  • versupply situation and very low or negative power prices (e.g. Spring 2012)
  • Alberta
  • Power price set on hourly basis since deregulation in late 1990s
  • Import or export power is dispatched by AESO and settled at Alberta pool

prices

slide-15
SLIDE 15

14

POST-1993 DEVELOPMENTS

Trends in FortisBC PPA Purchases

  • FortisBC took unscheduled excess energy in 775 hours during F2013,

(with peak demand of 82 MW during those hours)

  • Lack of advance notice for excess energy requires BC Hydro to
  • perate conservatively and take measures to maintain the system load

resource balance

  • FortisBC’s annual PPA energy purchases have steadily declined since

F2007 (down to 338 GWh in F2013)

  • Large variability between FortisBC’s forecast vs. actual purchases has

created uncertainty for BC Hydro’s operations and system planning

  • FortisBC typically buys more energy during the fall and winter and less

during spring/summer when most PPA excess energy is purchased

slide-16
SLIDE 16

15

POST-1993 DEVELOPMENTS

Arbitrage Mitigation

  • The 1993 PPA restricted FortisBC from taking embedded cost

energy from BC Hydro during any hour when they were exporting power out of their service area

  • In its 2009 RS 3808 decision, the BCUC ruled that FortisBC

customers could not access PPA electricity when they were selling self-generated power which was not in excess of their load

  • The New PPA maintains the arbitrage principles contained in the

1993 PPA and recent BCUC decisions

slide-17
SLIDE 17

16

POST-1993 DEVELOPMENTS

Inclining Block Rate Structures

  • In its 2007 decision on BC Hydro’s Rate Design Application,

the BCUC determined that 2-step inclining block rate structures provide appropriate price signals given increased reliance on higher cost marginal supply

  • BC Hydro’s rates now have inclining block rate structures with

the price for the second block set at a proxy for BC Hydro’s LRMC of new supply

  • Inclining block rate structures are currently in place for over

90% of BC Hydro’s domestic load

slide-18
SLIDE 18

17

THE AGREEMENTS

 Power Purchase Agreement (PPA)  Energy Export Agreement (EEA)  Imbalance Agreement (IA)  Master Accounting Agreement (MAA)  General Wheeling Agreement (GWA)

slide-19
SLIDE 19

18

POWER PURCHASE AGREEMENT

  • Scheduled service at Rate Schedule 3808 to serve FortisBC’s load
  • PPA schedules provided by FortisBC in accordance with industry

scheduling practices

  • By 5:30 am of each weekday, FortisBC is required to submit a pre-

schedule for each hour of following day(s)

  • +/-25 MW real-time changes are permitted to pre-schedules
  • during freshet, only +25 MW real-time changes are permitted
  • scheduled energy is “take and pay” (excepting force majeure events)
  • RS3808 includes a Demand Charge (equivalent to demand charge for

transmission service rate customers), plus an energy charge with a 2-tier stepped rate as follows:

  • Tranche 1 – reflects blended embedded cost rate provided to

transmission service customers; and

  • Tranche 2 – reflects BC Hydro’s most recent LRMC of energy

(accepted by the BCUC for ratemaking purposes)

slide-20
SLIDE 20

19

POWER PURCHASE AGREEMENT

  • Points of delivery are the point of supply and point of interconnections, as

defined in GWA between FortisBC and BC Hydro

  • Contract Demand = 200 MW (maximum take by FortisBC)
  • FortisBC can export while taking PPA energy, on a limited basis in

accordance with the Energy Export Agreement

  • Arbitrage mitigation provisions are continued from the 1993 PPA
  • Energy Supply = 1,752 GWh/year energy (max), with Tranche 1 energy

maximum at 1,041 GWh/year

  • Annual Energy Nomination provided in advance of each Contract Year,

with “take or pay” for 75% of Annual Energy Nomination

slide-21
SLIDE 21

20

ENERGY EXPORT AGREEMENT

  • Allows FortisBC to export Eligible Energy, while taking PPA energy,

using WAX capacity

  • “Eligible Energy” will be:
  • from new resources available to FortisBC, but cannot include PPA

purchases or FortisBC entitlement energy available under the CPA

  • stored in FortisBC Eligible Exchange Accounts which will be subsets of

the applicable exchange accounts pursuant to the CPA

  • If FortisBC exports, sells, exchanges or otherwise transfers energy in

any hour where FortisBC is taking PPA energy in breach of the EEA, then for each MWh of electricity Fortis BC shall pay the higher of:

  • 150% of Mid-C market index, and
  • profits earned by FortisBC on transfer of energy in breach of the EEA
slide-22
SLIDE 22

21

IMBALANCE AGREEMENT

  • Imbalance Energy is a derived amount (calculated in accordance with

the MAA accounting procedures) that is the net amount of electricity that is considered to transfer from the BC Hydro system to the FortisBC system (including the Entitlement Parties), or vice-versa

  • Imbalance Energy is not characterized as a “service”, and is a “non-

planned” energy transfer which occurs as a result of an unexpected condition in a particular hour

  • FortisBC agrees to maintain a Capacity Buffer (in addition to its

applicable reserve requirements) of at least the greater of 15 MW or 10% of exports to respond to unexpected conditions

  • If an unexpected condition occurs, FortisBC shall use all reasonable

efforts to avoid, minimize and/or end any transfer of Imbalance Energy

slide-23
SLIDE 23

22

IMBALANCE AGREEMENT

  • As a disincentive to using Imbalance Energy, the Imbalance Energy

Charge for a transfer to the FortisBC system is the greater of (a) $1,000, (b) $50/MWh or (c) for each MWh, 150% of the highest of Mid-C or the California markets [or the Alberta market, if scheduled]

  • After first Contract Year, an additional limit is placed on transfers to the

FortisBC system, such that if:

  • more than 15 MWh in more than 5 hours, or
  • more than 2 MWh in more than 25 hours

then the Imbalance Charge is the greater of (a) $5,000, (b) $100/MWh,

  • r (c) for each MWh, 200% of the highest of Mid-C or the California

markets [or the Alberta market, if scheduled]

  • For energy transfers to BC Hydro’s system, FortisBC forfeits the energy

and, if it is a negatively-priced hour, pays BC Hydro 150% of absolute value of the applicable Mid-C energy price for each MWh transferred

slide-24
SLIDE 24

23

MASTER ACCOUNTING AGREEMENT

  • Accounting pursuant to MAA provides the amount of Imbalance Energy
  • Due to the unscheduled coordination transfers associated with the

CPA, detailed accounting procedures are needed to reconcile:

  • Physical flows between the BC Hydro and FortisBC systems; and
  • Contractual energy transactions and financial flows realized under

the PPA, EEA, IA and other non-CPA related agreements

  • FortisBC agrees to provide hourly (segregated where reasonably

required) energy and capacity information

  • Information is to be provided “after-the-fact”, except where otherwise

provided in other agreements

  • For each hour, the MAA will stack up all FortisBC loads and resources

and if a load/resource mismatch is calculated for a particular hour, then there is an Imbalance Energy transfer

slide-25
SLIDE 25

24

GENERAL WHEELING AGREEMENT

  • Changes to the GWA are required to align with New PPA
  • GWA has been in effect since 1986 and provides for transmission

service on BC Hydro’s system

  • GWA enables FortisBC to use its generation sources at South Slocan

to serve its remote load centres by wheeling electricity through BC Hydro’s transmission system

  • Transmission reserved on BC Hydro’s system to deliver scheduled

PPA energy must be matched with FortisBC’s GWA transmission nominations to ensure that transmission capacity is properly allocated and accounted for at each point of delivery

  • Target date for filing of amended GWA is July 16, 2013
slide-26
SLIDE 26

25

PPA COMPARSION

Summary Comparison Table (1993 PPA vs. New PPA)

1993 PPA New PPA Term 20 years 20 years; early termination in certain circumstances Contract Demand 200 MW maximum 200 MW maximum Points of Delivery Points of Interconnection and Supply per GWA Points of Interconnection and Supply per GWA Scheduled Energy “Take or pay” for prescheduled amounts “Take and pay” for Scheduled Energy Non-Scheduled Energy Permitted but FBC subject to excess charges Not permitted; imbalance energy covered by IA Energy Charges - Base Per RS 1827 Tranche 1 – per RS 1827 Tranche 2 – per BCH’s LRMC Energy Charges - Excess 1.15X base rate for Excess Energy Not applicable Demand Charges - Base Per RS 1827 for prescheduled & unscheduled Per RS 1827 based on Scheduled Energy Demand Charges - Excess Extra charge of 1.2X Excess Capacity amount Not applicable

slide-27
SLIDE 27

26

PPA COMPARISON

Summary Comparison Table (1993 PPA vs. New PPA)

1993 PPA New PPA Nominated Demand

  • by October 1 of each year
  • FBC provides Nominated

Demand for each POI for 5th ensuing year

  • Nominated Demand

limitations removed

  • transmission capacity issues

to be included in revised GWA Energy Nominations None but deliveries above Nominated Demand are deemed as Excess Energy

  • Annual Energy Nomination by

June 30 for following year

  • “Take or pay” for 75% of

Annual Energy Nomination Load Forecasts Forecasts for next 10 years exchanged by each June 30 By June 30, FortisBC to provide forecasts of load and PPA purchases for next 10 years Daily Prescheduling Hourly preschedule for each day submitted 2X per week Hourly preschedule submitted each day by 5:30 a.m. Preschedule Changes & Deliveries No preschedule changes but can take excess energy Real-time hourly changes for+/- 25 MW permitted Limitations by FortisBC No export while PPA energy is being delivered No exports or storage permitted

  • ther than as prescribed in EEA

Limitations by FortisBC Customers No sale of PPA energy when customer selling self-generated energy not in excess of load No sale of PPA energy when customer selling self-generated energy not in excess of GBL

slide-28
SLIDE 28

The New PPA as part of FortisBC’s Resources and Operational Practice

June 11 & 13, 2013 Ron Zeilstra & Jamie King

slide-29
SLIDE 29

FortisBC’s Resource Stack

28

~

FORTISBc-

2012 Long T..-m Res.ouru Pion (2012 R.,..,._...,. Pbn) June 30, 201 1 FcnisBCtnc.

slide-30
SLIDE 30

FortisBC 2016 Planned Resource Stack

29

Brilliant PPA, 24.1% Brillant PPA, 18.9%

2016 Peak Capacity 2016 Annual Energy

slide-31
SLIDE 31

Annual Peak Capacity

30

I !

Ill

rm:iEO"

~

S<g.~

(I) (I) -·

~

..., "'

(I)

"' co

a..

n

.,

...,

(I)

n

QJ

"'

....

Vi

*'

Vl

~

~

I

~

:r-ococo

  • · o n ...,

CIQ:E:r=

::::r

  • ·

(I) w QJ

..., 00 ::l

(1)0.-.

xo~

::l

~

c

  • CIQ

...,

QJ

a..

(I)

  • 2012

2013 2015 2016 2019 2020 2022 2023 2024 2025 2026

"1n"1"'7

2029 2030

  • 2032_

2033 2034 2035_ 2036 2039 2040

C ritical Capacity (MW)

N

~

· I

m:::::=

m::::::=

  • ===

=

~ 0'1

00

'

I I I I I I I I I I I

'

I I I I I I I 1-'

slide-32
SLIDE 32

Planned Annual Energy: 2012 Resource Plan

31 *2012 Resource Plan, Figure 1.2.6-A, p 8.

5,500 5,000 4,500

  • 4,000

.&:.

s

3,500

~ -

3,000

>

0.0

...

2,500

QJ

1:

Y.l

jij

2,000

:::s

1,500

1:

~ 1,000 500

..................... --... -----

FortisBC

  • Others

_..._ .. ----

BCH 3808 Renewal

  • ----------------------------·

Brilliant (incl. upgrade)

BCH 3808

  • ---Expected Forecast (50% DSM)
slide-33
SLIDE 33

32

Planned Annual Energy: New PPA

4,500 4,000

  • 3,500 _..-.--. ....

3,000 2,500

.s=

;:

2,000

(.!)

1,500 1,000 500 0 <:t

Ll) ID r-..

00

C1l

rl N

("(l <:t Ll)

ID r-.. 00

C1l

rl N

("(l <:t Ll)

ID r-.. 00

C1l

~ rl rl rl rl rl rl N

N N N N N N N N N

("(l ("(l ("(l ("(l ("(l ("(l ("(l ("(l ("(l ("(l

N N N N N N N N N N N N N N N N N N N N N N N N N N N

FortisBC Briliant (incl. upgrade) Others BCH 3808 Tranche 1 . BCH 3808 Tranche 2 Expected Load Forecast

slide-34
SLIDE 34

Forecast Planned Monthly PPA Use

33

slide-35
SLIDE 35

Minimizing Tranche 2 Take

34

  • ro

ro ro

~

q

~ ~

q q q q q

..... .....

.....

.....

..... .....

..... ..... ..... ..... .....

.....

I I I I I I I I I I I I

.....

>

u

c

_a

~

...

>-

c

tlD

Q.

u

Q)

ro

Q)

ro

Q.

ro

::J ::J ::J

Q)

z

  • .

u. ~

<(

~

  • .
  • .

<(

V'l

Planned PPA Take Cumulative Planned PPA Take Maximum Tranche 1 Amount

slide-36
SLIDE 36

New PPA is Cost Effective Capacity

(2010 $)

35

Simple Cycle Gas Turbine Combined Cycle

Gas Turbine

Pumped Storage Hydro

S imilkameen Hydroelectric Project with

Capacity NewPPA

39 243

180 60 200 $44,269 $8,481 $10,163 $329,445 $10,624 $12,708 $340,000 $13,668 $17,412 $283,117 $29,274 $38,003 N/A $6,286 $6,286

slide-37
SLIDE 37

New PPA is Cost Effective Energy

(Nominal Dollars)

36

slide-38
SLIDE 38

Preferred Resource Strategy

  • FortisBC’s preferred resource strategy in its 2012 RP is

a combined “Buy and Build” strategy.

  • Under the New PPA, FortisBC has the ability to reduce

its Contract Demand upon giving appropriate notice.

  • Over the long term, FortisBC’s ability to reduce the

Contract Demand also gives the company greater flexibility in seeking cost effective new or replacement resources to meet future load growth.

  • This will be considered in future resource plans.

37

slide-39
SLIDE 39

FortisBC Operations

38

slide-40
SLIDE 40

Planned versus Actual BC Hydro Purchases

39

1,<'00 1,000

800 ..r:.

s:

600

(!)

400 200 2008

2009

2010 2011

PPA Forecast Tranche 2

2012 2013 2014 201S 201G 2017

  • PPA Forecast Tra nche 1

~PActua

l Take
slide-41
SLIDE 41

Historic BCH RS 3808 versus Market Price

40

<.r>

"'

'{'>

<J" ,

V> V>

~./>

~

~

"-'

.j>.

a--

8

"'

c

Jan-OS Apr-05 Jul-05

OCt -0 5 Jan-06

Apr-06 Jul-06 Oct-06 Jan-07 /\pr-07 Jul-07 Oct 07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan 10 Apr-10

I

I

I

Jul 10

~2

:v;~

;)J

::J. -<

..__

.

"""\

Oct -10 .... -

~

9-

:X:

~!B

:> (")

:.u

Jan-11

·V> N

  • :t>

~

..__o

.=:~ ~

:J

Apr-11

<!(!)

QJ

.,

:::J

:;:-:t>

Cltl

:1>

~p

(!)

~

Jul-11

:c

~ -,

s:

?1

w

OQ

?; ..,.

ro

:1>

''" " "1

<

~

:c

w ~

  • ,

.-

,... ~

:c

(!)

Apr-12

.....

s::

~

~ "'

i"i"

Jul-12

  • ,

"""

("!) (!)

Oct-12

  • Jan-13

Apr 13

slide-42
SLIDE 42

RS 3808 versus Market Price

41

slide-43
SLIDE 43

Planned versus Actual BC Hydro Purchases

42

slide-44
SLIDE 44

Expected PPA Year 1 Nomination

43

Forecast Energy Requirement: 973 GWh Forecast PPA Nomination: 670 GWh

slide-45
SLIDE 45

PPA Nomination – 3 Year Outlook

44

1100 GWh 1000 GWh 965GWh 900 GWh <'41 GWh 800GWh

  • Locked-In Market

Purchase

700 GWh 201GWh PPAOption 600GWh 168GWh 500 GWh

  • PPA Minimum Take

400GWh 724GWh 300 GWh 603GWh

~

PPA Nomination

503GWh 200 GWh 100 GWh GWh 2013/2014 2014/2015 2015/2016

slide-46
SLIDE 46

FortisBC Operational Changes

  • Annual Energy Nomination and Minimum Take
  • Forecasting and Planning Changes
  • Two Tranches of Energy
  • System Load Resource Balance
  • Changes to Real-Time Flexibility
  • Scheduling Timelines
  • Hour Ahead Schedule Changes

45

slide-47
SLIDE 47

46

BENEFITS FOR BC HYDRO

  • 1. Improved Rate Structure for RS 3808

 Provides a Tranche 2 price signal based on BC Hydro’s cost of new supply for FortisBC’s long-term resource planning decisions  Aligns with the two-tiered rate structures applicable to BC Hydro’s other customers

  • 2. BC Hydro System Optimization

 Increased certainty and more efficient operation of BC Hydro’s system due to improved scheduling procedures and continued “take and pay” requirement for scheduled energy  Discouragement of over-nomination due to requirement that FortisBC must “take

  • r pay” at least 75% of its Annual Energy Nomination

 More efficient system optimization and operation due to improved exchange of information  More efficient balancing of FortisBC’s loads and resources due to energy scheduling procedures and Imbalance Agreement

slide-48
SLIDE 48

47

BENEFITS FOR BC HYDRO

  • 3. Arbitrage Opportunities are Mitigated

 Limited export rights are granted to FortisBC with respect to Eligible Energy and entitlement capacity available from the WAX project  Arbitrage opportunities for FortisBC self-generating customers continue to be mitigated in relation to BC Hydro’s RS 3808 embedded cost price

  • 4. Revenue Certainty

 New PPA provides improved revenue certainty/stability, including a requirement for FortisBC to take or pay for 75% of its Annual Energy Nomination  BC Hydro will have a long-term contract with one of its largest customers  Rate impacts to BC Hydro’s customers attributable to the New PPA are expected to be minimal

  • 5. Improved Contract Administration

 Contract administration is improved, including by providing clear accounting and audit rights, and a clear, modern dispute resolution process  Consequences of breaching various provisions have been clarified

slide-49
SLIDE 49

48

REGULATORY PROCESS

Initial Regulatory Timetable

ACTION DATES Registration of Interveners/Interested Parties June 7 RS 3808 Workshop – Vancouver June 11 RS 3808 Workshop – Castlegar June 13 BCUC and Intervener Information Requests

  • No. 1 to BC Hydro and FortisBC

June 26 General Wheeling Agreement filing July 16 BC Hydro and FortisBC file responses to BCUC and Intervener IRs No.1 July 22 Procedural Conference TBD

slide-50
SLIDE 50

49

QUESTIONS & ANSWERS