2009 02 18 exhibit b 15 bc hydro bioenergy call€¦ · c. bcuc project no. 3698514 registered...

BChydroJoanna SofieldChief Regulatory OfficerPhone: (604) 623-4046Fax: (604)623-4407bchydroreg [email protected]

February 18, 2009

Ms. Erica M. HamiltonCommission SecretaryBritish Columbia Utilities CommissionSixth Floor - 900 Howe StreetVancouver, BC V6Z 2N3

Dear Ms. Hamilton:

RE: Project No. 3698514British Columbia Utilities Commission (BCUC)British Columbia Hydro and Power Authority (BC Hydro)2008 Long-Term Acquisition Plan (2008 LTAP)

BC Hydro is in receipt of a letter from BCOAPO's counsel of February 17, 2009 (Exhibit C6-6) requesting that the Bioenergy Call Phase I Request for Proposals (RFP) report (theReport) be filed in the 2008 LTAP proceeding. BC Hydro does not oppose this request, andaccordingly enclosed as Exhibit B-15 is a copy of the Report.

BC Hydro notes that the Report was submitted to provide support for the filing pursuant tosubsection 71(1) of the Utilities Commission Act of four Bioenergy Call Phase I RFP - relatedElectricity Purchase Agreements (EPAs). BC Hydro reserves the right to make submissionsduring the course of the 2008 LTAP proceeding as to whether it considers issues arising outof the Report are more appropriately dealt with in the section 71 (1) process. Any questionsconcerning the Report should be directed to BC Hydro witness Panel 4, in the 2008 LTAPproceeding.

For further information, please contact the undersigned.

Yours sincerely,

Joanna SofieldChief Regulatory Officer

Enclosure

c. BCUC Project No. 3698514 Registered Intervenor Distribution List.

British Columbia Hydro and Power Authority, 333 Dunsmuir Street, Vancouver BC V6B 5R3www.bchydro.com

B-15

markhuds

BCH LTAP 2008

Report on Bioenergy Call Phase I

Request for Proposals

February 17, 2009

BC Hydro Report on the Bioenergy Call Phase I Request for Proposals

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Table of Contents 1. BACKGROUND AND ORDER REQUESTED..........................................................1

1.1 The Report and Order Sought...........................................................................1 1.2 Call Highlights ...................................................................................................2 1.3 Context ..............................................................................................................2

1.3.1 2007 Energy Plan ......................................................................................3 1.3.2 B.C. Bioenergy Strategy ............................................................................5 1.3.3 Special Direction No. 10 ............................................................................5

1.4 Proposed Regulatory Review Process..............................................................6 2. RFP IMPLEMENTATION AND EVALUATION.........................................................8

2.1 RFP Process .....................................................................................................8 2.2 RFP Overview ...................................................................................................9 2.3 Proposal Submissions.....................................................................................10 2.4 Risk Assessment.............................................................................................10 2.5 Variations Review............................................................................................11 2.6 Quantitative Evaluation ...................................................................................12 2.7 Negotiation and EPA Variations ......................................................................13 2.8 Final Portfolio Selection...................................................................................14

3. FIRST NATIONS AND STAKEHOLDER ENGAGEMENT.....................................16 3.1 Dialogue and Information Sessions.................................................................16 3.2 First Nations Engagement on Phase I RFP.....................................................18

4. NEED FOR BIOENERGY CALL.............................................................................19 4.1 Products Being Acquired.................................................................................19

4.1.1 Firm Energy .............................................................................................20 4.1.2 Dependable Capacity ..............................................................................21 4.1.3 Non-Firm Energy .....................................................................................21 4.1.4 Environmental Attributes .........................................................................22

4.2 Attrition Risk ....................................................................................................23 4.3 Demand/Supply Balance.................................................................................23

4.3.1 Energy Load/Resource Gap ....................................................................23 4.3.2 Contingency Resource Plan ....................................................................25

5. COST-EFFECTIVENESS........................................................................................26 5.1 Competitive Process .......................................................................................26 5.2 Comparisons to Other Processes ...................................................................28

5.2.1 Jurisdictional Comparison .......................................................................28 5.2.2 Comparison to F2006 Call Prices............................................................30 5.2.3 Comparison with LTAP Portfolio Analysis ...............................................31 5.2.4 Comparison with New Generic CCGTs ...................................................31


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List of Tables

Table 2-1 Summary of Awarded EPAs........................................................................14

Table 2-2 Price Comparisons ......................................................................................15

Table 3-1 Summary of Phase I RFP Stakeholder Engagement ..................................17

Table 3-2 First Nation-Specific Engagement ...............................................................18

Table 4-1: Time of Delivery Factors ................................................................................20

Table 4-2 Energy Load/Resource Gap Before 2008 LTAP Actions (GWh) .................24

Table 4-3 Energy Load/Resource Gap with DSM from the

2008 LTAP and DSM from the Evidentiary Update.....................................24

Table 4-4 Energy Load/Resource Gap including Phase I RFP volumes .....................25

Table 5-1 Comparison to Other Bioenergy Power Acquisition Processes...................29

Table 5-2 Payment Prices for SCE’s Biomass Program..............................................29

Table 5-3 Comparison of Key Terms for Phase I RFP and F2006 Call.......................30

Table 5-4 ABP Comparison: Phase I RFP vs. F2006 Call Large Projects ..................30

Table 5-5 Estimated ABPs for Projects in the 2008 LTAP Clean Call Block ...............31

Table 5-6 ABP Comparison of Levelized Energy Cost from a CCGT..........................32

List of Figures

Figure 2-1 Phase I RFP Evaluation Process ..............................................................8

Appendices

Appendix A: Phase I RFP

Appendix B: Phase I RFP Specimen EPA

Appendix C:

Appendix C1: 2007 Energy Plan

Appendix C2: B.C. Clean or Renewable Electricity Definitions

Appendix C3: B.C. Bioenergy Strategy

Appendix C4: Special Direction 10


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1. BACKGROUND AND ORDER REQUESTED

1.1 The Report and Order Sought

This document (the Report) has been prepared to explain British Columbia Hydro and Power

Authority’s (BC Hydro) rationale for awarding four Electricity Purchase Agreements (EPAs)

pursuant to the Bioenergy Phase I Request for Proposals (referred to as the Phase I RFP).

On February 17, 2009, the four EPAs were filed with the British Columbia Utilities

Commission (BCUC) for acceptance for filing as energy supply contracts pursuant to

section 71 of the Utilities Commission Act1 (UCA).

BC Hydro believes in the importance of transparency while at the same time treating as

confidential information the disclosure of which could reasonably be expected to result in

significant harm or prejudice to the proponent’s competitive position or undue material

financial loss or gain to a person:

Price Disclosure – The BCUC, in its F2006 Call Decision,2 found that levelized bid

prices “represent a very useful disclosure of pricing, without jeopardizing the

confidentiality of individual contracts”. Nevertheless, in Table 2-2 of this Report

BC Hydro has provided not only levelized plant gate prices and levelized Adjusted Bid

Prices (ABP) for the four awarded EPAs and for all 20 submissions, but also the

offered bid prices in dollars per megawatt hour ($/MWh) for the four awarded EPAs

and all 20 submissions. This information is provided without attribution and thus the

public form of EPA filing redacts the first year firm energy price. .

Public Form of EPAs - BC Hydro is filing both confidential and public versions of the

four awarded EPAs. In the public version of the four EPAs, commercially sensitive

information such as proponent fuel plans and certain technical details concerning

proponent plants is redacted.

The remainder of the Report is comprised of the following:

Chapter 1 provides the context of the Phase I RFP by reviewing and describing how

the Phase I RFP aligns with the British Columbia (B.C.) Government’s 2007 Energy

1 R.S.B.C. 1996, c.473. 2 In the Matter of British Columbia Hydro and Power Authority: F2006 Call for Tenders Electricity

Purchase Agreements, Reasons for Decision, Appendix B to BCUC Order No. E-7-06, September 21, 2006, page 20.


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Plan: A Vision for Clean Energy Leadership (2007 Energy Plan) and B.C. Bioenergy

Strategy, and Special Direction No. 103 (SD 10) to the BCUC.

Chapter 2 provides a summary of the Phase I RFP implementation, including an

overview of the evaluation of proposals, selection of optimal portfolios and the Phase I

RFP award.

Chapter 3 includes a brief overview of the First Nations, stakeholder and proponent

engagement process.

Chapter 4 sets out the justification for the volume of energy awarded in the Phase I

RFP.

Chapter 5 demonstrates the cost-effectiveness of the Phase I RFP awards.

The appendices to the Report are:

Appendix A is a copy of the Phase I RFP.

Appendix B is a copy of the Phase I RFP Specimen EPA.

Appendix C is comprised of the following: Appendix C1 is a copy of the 2007 Energy

Plan; Appendix C2 is a copy of the Clean or Renewable Electricity Definitions;

Appendix C3 is a copy of the B.C. Bioenergy Strategy; and Appendix C4 is a copy of

SD 10.

1.2 Call Highlights

The Phase I RFP was issued on February 6, 2008. In early June, BC Hydro received

20 proposals from registered proponents for about 4,100 gigawatt hours per year (GWh/year) of firm energy. Discussions and negotiations with selected proponents were conducted from

August to November of 2008. Following a final review and evaluation of the proposals

received, BC Hydro announced on December 8, 2008 that it had selected four proposals for

EPA awards. The four biomass projects account for 579 GWh/year of firm energy and

60 megawatts (MW) of dependable capacity.

1.3 Context

The Phase I RFP awards are consistent with the 2007 Energy Plan, the B.C. Bioenergy

Strategy and SD 10.

3 B.C. Reg. 245/2006.


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1.3.1 2007 Energy Plan

The 2007 Energy Plan was released by the Province on February 27, 2007. A copy of the

2007 Energy Plan is attached as Appendix C1 to this Report. Pursuant to Policy Action

No. 31 of the 2007 Energy Plan, the B.C. Government instructed BC Hydro to issue an

expression of interest, followed by a call for proposals, for electricity from sawmill residues,

logging debris and beetle-killed timber. In March 2007 BC Hydro issued a Request for

Expressions of Interest (RFEOI) to assess and identify potential bioenergy projects and

proponents for using residual wood, including sawmill residue, logging debris and beetle-

killed timber for power production. In addition, the RFEOI was used to gain input into how

BC Hydro might effectively design a call for these bioenergy projects. Section 3.1 of the

Report contains a description of how the RFEOI information received from respondents was

incorporated into the Phase I RFP.

The terms of the call were to be developed by BC Hydro in consultation with the B.C. Ministry

of Energy, Mines and Petroleum Resources (MEMPR) and the B.C. Ministry of Forests and

Range (MFR), with input from the forest and energy sectors. Chapter 3 of the Report

describes the various steps taken by BC Hydro to obtain First Nations and stakeholder input

into the Phase I RFP, including the First Nations and stakeholder information session held

jointly with British Columbia Transmission Corporation (BCTC) on February 20, 2008, and the

two proponent information sessions held on March 26, 2008 and May 28, 2008.

Other 2007 Energy Plan Policy Actions relevant to the Phase I RFP are:

Policy Action No.10 – ensure self-sufficiency to meet electricity needs by 2016. Refer

to sections 4.3 and 5 of the Report for BC Hydro’s demand/supply balance, including

the two changes to the reliability criteria BC Hydro uses to evaluate when generation

resources are required to maintain reliable supply of electricity and to ensure that

there are adequate resources to meet its electricity supply obligations which result

from SD 10, namely: (1) the 2,500 GWh/year non-firm market allowance has been

removed from the energy load/resource balance after 2015; and (2) the 400 MW

market reliance has been removed from the capacity load/resource balance after

2015. SD 10 is described below under section 1.3.3.

Policy Action Nos. 18 and 19 – all new electricity generation projects will have zero

net greenhouse gas (GHG) emissions by their in-service dates (ISDs), and all existing

thermal generation power plants will have zero net GHG emissions by 2016,

respectively. The B.C. Government has legislated these two Policy Action items


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pursuant to the Greenhouse Gas Reduction (Emissions Standards) Statutes

Amendment Act, 20084 (Emissions Standards Act). Refer to section 5.2.4 of the

Report, where the four EPAs are compared to generic 50 MW and MW combined

cycle gas turbines (CCGTs) with 100 per cent of GHG emissions offset from their

ISDs.

Policy Action No. 20 – require zero GHG emissions from any coal thermal electricity

facilities. As part of its 2008 Long-Term Acquisition Plan (LTAP), BC Hydro examined

the current status of coal-fired generation with carbon capture and sequestration

(CCS) and concluded that coal-fired generation with CCS is not a commercial

technology at this time.5 Consequently the four Phase I RFP EPAs are not compared

to coal-fired generation with CCS in Chapter 5 of the Report, which examines the

cost-effectiveness of the four EPAs.

Policy Action No. 21 – ensure clean or renewable electricity generation continues to

account for at least 90 per cent of total generation. Bioenergy is clean or renewable

electricity under the B.C. Government’s Clean or Renewable Electricity Definitions, a

copy of which can be found at Appendix C2 to this Report. Refer to section 4.1.4 of

the Report for a description of the Environmental Attributes being acquired via the

Phase I RFP.

Policy Action No. 22 – replace the firm energy supply from Burrard Thermal

Generating Station (Burrard) with other resources. BC Hydro may choose to retain

Burrard for capacity purposes after 2014. As part of its LTAP, BC Hydro plans to rely

on Burrard for planning purposes for 900 MW of dependable capacity and

3,000 GWh/year of firm energy. This is reflected in the load/resource balances set out

in section 4.3 of the Report.

Policy Action No. 30 provides that the B.C. Government will introduce a Bioenergy

Strategy. Refer to section 1.3.2 below.

4 S.B.C. 2008, c. 20. Given Royal Assent on May 29, 2008; the relevant part (section 2) in force by

regulation. 5 In a report entitled “Clean Coal Power Generation by CO2 Sequestration”, Powertech Labs Inc.

concluded that the state of key components of CCS technology is such that it cannot be considered in commercial application of coal-fired generation. Although pilot plants are being considered and pursued, the viability of these technologies on a commercial application scale may not be known until 2017 or later. There are also legal, regulatory and public acceptance issues that likely need to be addressed before CCS technology can be considered on a commercial scale in B.C.


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1.3.2 B.C. Bioenergy Strategy

On January 31, 2008, the Province introduced the B.C. Bioenergy Strategy. A copy of the

B.C. Bioenergy Strategy is attached as Appendix C3 to this Report.

The B.C. Government states that the B.C. Bioenergy Strategy will help the Province achieve

electricity self-sufficiency, and that bioenergy is “absolutely critical to achieving B.C.’s climate

action goals and economic objectives”6. The B.C. Bioenergy Strategy directed BC Hydro to

issue a two-part Bioenergy Call for Power. On February 6, 2008, BC Hydro issued a RFP for

Phase I of the Bioenergy Call. Following up on the March 2007 RFEOI, the RFP invited

proposals for the supply of energy generated from forest-based biomass by projects located

in B.C. Further, projects targeted in the Phase I RFP were those that were immediately viable

and did not require new tenures from MFR. In further support of the B.C. Bioenergy Strategy,

BC Hydro continues to develop Phase II of the Bioenergy Call.

1.3.3 Special Direction No. 10

SD 10 to the BCUC provides greater clarity with respect to the sources of wood biomass that

will be permissible for the bioenergy acquisition process and provides direction to the BCUC

with respect to its review of EPAs that BC Hydro will enter into as a result of the bioenergy

acquisition process. A copy of SD 10 is provided at Appendix C4 to this Report. Section 1 of

SD 10 defines “wood biomass” as: (a) wood residue within the meaning of the B.C. Forest

Act;7 (b) wood debris from logging, construction or demolition operations; (c) organic residues

from pulp and paper production processes; and (d) timber, within the meaning of the Forest

Act, infested by the mountain pine beetle. A project that will generate electricity from such

wood biomass is eligible to bid into BC Hydro’s bioenergy acquisition processes. Refer to

section 14 of the Phase I RFP (attached as Appendix A) for fuel type eligibility.

Section 4 of SD 10 provides that the BCUC may not find a biomass EPA “is not in the public

interest solely by reason” of price, and “must be primarily guided by the following factors,

which are of material value to [BC Hydro’s] ratepayers”:

The acquisition of energy by BC Hydro under a biomass EPA will reduce the risk to

BC Hydro of future costs associated with the production of GHG emissions. Bioenergy

6 B.C. Government, “The Bioenergy Strategy – Highlights”. The B.C. Government’s News Release of

January 31, 2008 entitled “New Bioenergy Strategy Advances Innovation” also states that the BC Bioenergy Strategy “will help the Province achieve targets for electricity self-sufficiency and … zero net greenhouse gas emissions from energy generation projects”; refer to www.energyplan.gov.bc.ca/bioenergy/.

7 R.S.B.C. 1996, c.157.


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is considered by the Province of B.C. to be carbon neutral when used to generate

energy. As explained in the “Backgrounder” to the B.C. Bioenergy Strategy,8 “biomass

releases no more carbon into the atmosphere than it absorbs during its lifetime”. Thus

the Phase I RFP EPAs do not expose BC Hydro and its customers to financial risks

associated with GHG regulations when compared to natural gas-fired electricity

generation such as a CCGT (refer to section 5.2.4 of the Report).

The energy acquired by BC Hydro under a biomass EPA will contribute to

diversification of BC Hydro’s electricity supply portfolio. Biomass currently provides

about 825 GWh/year of energy and accounts for a very small portion (under

1.5 per cent) of BC Hydro’s overall electricity supply. Once the four EPAs from the

Phase I RFP come on-stream, biomass will provide over 1,400 GWh/year of energy

and represent about 2.5 per cent of BC Hydro’s total supply portfolio.

A biomass EPA will assist BC Hydro to meet its requirements for electrical capacity.

The four Phase I RFP EPAs will provide BC Hydro with a large component of

dependable capacity for planning purposes. The capacity value of each of the EPAs is

discussed at section 4.1.2 of the Report.

1.4 Proposed Regulatory Review Process

BC Hydro engaged in a dialogue with intervenors, both on a bilateral basis and in a workshop

conducted on December 10, 2008. To date, this dialogue has not disclosed an issue that

BC Hydro believes will require an oral public hearing process to resolve. BC Hydro submits

that any required regulatory review process should be conducted in writing pursuant to the

following schedule:

Section 71 filing of Awarded EPAs February 17, 2009 BCUC Information Requests (IRs) to BC Hydro March 13, 2009 Intervenor IRs to BC Hydro March 20, 2009 BC Hydro responses to BCUC and Intervenor IRs April 17, 2009 Intervenor Submissions May 1, 2009 BC Hydro Submissions May 12, 2009

8 Supra, note 6.


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This schedule has been devised to take into account the 2008 LTAP oral public hearing and

the regulatory condition in the four EPAs, which provides in section 3.1 that either the

proponent or BC Hydro may terminate the EPA if within 150 days after the Effective Date the

EPA has not been accepted by the BCUC for filing as an energy supply contract without

condition under section 71 of the UCA. The Effective Dates for three of the EPAs is

January 27, 2009 with the 150-day limit expiring on June 26, 2009. The other EPA has an

Effective Date of February 4, 2009 such that the 150-day expiry date is July 4, 2009.


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2. RFP IMPLEMENTATION AND EVALUATION

2.1 RFP Process

The acquisition process for Phase I of the Bioenergy Call employed a RFP process that

allowed proponents to propose variations to BC Hydro’s preferred EPA terms and conditions.

In addition, the process allowed for direct negotiation of price and terms between BC Hydro

and a proponent, as opposed to the Call for Tenders process employed in the F2006 Call,

which offered limited flexibility and no opportunity for price discussions or negotiation of other

material terms and conditions. The RFP for Phase I was issued on February 6, 2008.

The evaluation criteria were clearly laid out in section 20 of the Phase I RFP. A process for

handling and evaluating submissions was established prior to bid submission. Figure 2-1

below outlines the evaluation process.

Figure 2-1 Phase I RFP Evaluation Process

The RFP evaluation process began with the receipt of proposals in June 2008 and ended

with the approval of recommended EPA awards in November 2008.

Proposal Receipt

Conformity Review

Quantitative Assessment

Short Listing (was not required)

Discussions/ Negotiations

Final Evaluation

Variations Review

Risk Assessment


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2.2 RFP Overview

Certain key preferred EPA terms and conditions for the Phase I RFP are summarized below.

Product

BC Hydro defines “firm energy” as a volume of energy, with a contractually assured delivery,

which a proponent must commit to delivering over a specified period. Proponents were

permitted to make a commitment to either hourly or seasonally firm energy deliveries.

Seasonally firm energy refers to the volume of energy that a proponent commits to deliver to

BC Hydro in a season (i.e., in specified three-month periods). Hourly firm energy refers to the

volume of energy that a proponent commits to deliver in each hour. Refer to sections 4.1.,

4.1.1 and 4.1.2 of the Report for further details.

Commercial Operation Date (COD) and Term

Proponents were permitted to select a Guaranteed COD no later than November 1, 2012,

and an EPA term ranging from five to 20 years commencing from the COD. The COD and

term length reflect the fact that excess wood fibre originating from the mountain pine beetle

epidemic is available now but will decline significantly through the end of the next decade.

The 20-year term is also consistent with the expected life of a thermal-based generation

facility.

Liquidated Damages (LDs)

After the first anniversary of COD, LDs are payable to BC Hydro (either on an hourly or

seasonal basis) for delivery shortfalls in firm energy. The amount of LDs is the greater of

market price less the firm energy price (adjusted for deliveries to the Lower Mainland (LM)

and $5.00 (adjusted annually for Consumer Price Index (CPI) from January 1, 2008) for each

MWh of delivery shortfall.

New or Incremental Output

For sites with existing generation, all new supply must be incremental to the historical levels

of self-generation at the facility. For this purpose, a “generator base line” (GBL) was

established for each proposal having a site with existing generation.

Fuel Risk

Consistent with BC Hydro’s position of assigning risk to those parties best able to manage a

risk, proponents were expected to assume all fuel cost risk over the contract term.


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Auxiliary Fuel

To ensure the output purchased from BC Hydro was generated from forest-based biomass,

the annual consumption of auxiliary fuel (including fossil fuels) at a site was capped at

historical usage levels. Proponents were required to ensure that the use of auxiliary fuel did

not exceed a baseline level approved by BC Hydro during the RFP process.

2.3 Proposal Submissions

A total of 16 proponents with 39 separate projects totalling approximately 6,000 GWh/year

registered on March 7, 2008. The proposals for the Phase I RFP were due on June 10, 2008.

BC Hydro received 20 project proposals from 13 different proponents representing

approximately 4,100 GWh/year of firm energy. Following the receipt of proposals, an initial

conformity review was conducted with the assistance of outside legal counsel. No proposals

were disqualified based on the conformity review results.

2.4 Risk Assessment

The purpose of the Risk Assessment was to assess the development and delivery risks

associated with each proposal. Each team reviewed only those areas of the proposal relevant

to their assessment and none of the teams had access to the commercial elements of the

proposals, which contained bid price information and other commercial terms. The review

was completed by the teams by early July 2008.

Four independent teams were tasked with looking at different areas of each proposal, as

briefly described below:

1. Finance

The Finance team evaluated the financial strength of proponents and their partners and the

availability of capital required to develop the projects. This team also assessed whether there

was a risk of the project not being developed due to a lack of debt or equity financing.

2. First Nations

The First Nations team assessed the engagement activities of the proponents with First

Nations, and assessed whether there would be any development risk, particularly related to

permitting.


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3. Technical & Permitting

This team assessed all technical aspects of project development, including obtaining the

necessary permits and approvals. It also evaluated the feasibility of the construction schedule

and the operational plans proposed by proponents.

4. Fuel Plan

A forestry consultant was retained by BC Hydro to work with BC Hydro and MFR to develop

the fuel plan requirements for proposals and to complete the necessary fuel plan reviews.

The fuel plan was used to assess the strength of proponent planning in respect to probable

fuel availability and the related impacts on project development and energy delivery risk. As

well, analysis was completed to understand to what degree a project would increase

utilization of existing wood residuals and the plans to minimize or mitigate adverse impacts on

existing productive uses of forest-based biomass.

2.5 Variations Review

The Variations Review team undertook a review of the proposed variations to the Specimen

EPA by each proponent. In addition, this team assessed each proposal to ensure that the

eligibility criteria of the RFP were met.

The Specimen EPA issued on May 7, 2008 represented BC Hydro’s preferred terms and

conditions (see Appendix B to this Report). The Specimen EPA was based on an

independent power producer (IPP) project (as opposed to a customer project) proposed by a

single corporation offering hourly firm energy with a direct interconnection to the BCTC-

operated transmission system. Some proponents were able to offer additional value to

BC Hydro or had unique situations not contemplated in the Specimen EPA. To accommodate

such situations, BC Hydro indicated it would consider two types of variations to the Specimen

EPA:

Essential Variations - modifications to the Specimen EPA necessary to enable the

proponent to design, build and operate its project in compliance with the EPA. Essential

variations were to be included in the offered Firm Energy Price (FEP).

Value Variations – modifications, generally value enhancements, to the Specimen EPA

that BC Hydro could choose to incorporate or not into the EPA. Value variations could be

priced with a modification to the offered FEP.


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In submitting variations, proponents were requested to submit a redlined version of the

Specimen EPA, with a brief commentary indicating: (i) whether variations were essential

variations or value variations, and (ii) the reasons for the variations. In the event that the

variation(s) could not be captured by marking up the Specimen EPA, the proponent had the

option of submitting a separate document describing the proposed variations in place of or in

addition to the redlined Specimen EPA. Proponents were strongly encouraged to submit

proposals that conformed to the preferred terms and conditions, and to limit variations to

matters of significant importance.

2.6 Quantitative Evaluation

The Phase I RFP permitted proponents to select a number of different options when

submitting their proposals and, as a result, a process was required to fairly compare one

proposal against another. To compare proposals with different characteristics, an Adjusted

Firm Energy Price (AFEP) was calculated for each proposal. The first step in computing the

AFEP is to levelize the offered FEPs, which takes into account the pricing attributes chosen

by the proponent. The second step is to adjust the levelized FEPs for project location relative

to the LM, and for product attributes.

Step 1: Levelizing the FEPs

To compute the levelized FEP, BC Hydro divides the present value (PV) of the firm energy

purchases for each proposal, based on the proponent’s selected options, by the PV of firm

energy flow to be delivered over the term of the EPA. The nominal discount rate used for the

PV calculation was 8 per cent, including a 2.1 per cent inflation component.

Step 2: Price Adjustments

The levelized FEP is adjusted to account for differences in product attributes, and in project

location relative to the LM. Adjustments include Hourly Firm, interconnection Network

Upgrade (NU) costs borne by BC Hydro, Cost of Incremental Firm Transmission (CIFT) and

energy losses.

Hourly Firm: An adjuster (expressed in $/MWh) was deducted from the FEP for proponents

that committed to deliver hourly firm energy. The magnitude of the adjuster depended on the

proponent’s profile of on-peak hourly firm energy. For a project with a “flat” hourly firm energy

profile, the adjuster was approximately $4/MWh.

Interconnection NUs: The NU adjustment was based on an estimate of the costs borne by

BC Hydro for interconnecting projects to the grid. The estimated NU costs were provided by


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BCTC in its interconnection studies on a stand-alone basis for each project. The applicable

NU amounts were converted into a $/MWh adjustment and then added to the levelized bid

price.

CIFT: The CIFT adjustment was based on BCTC’s “Bulk Transmission System

Cost of Incremental Firm Transmission” dated March 29, 2006 and posted on its website. To

calculate the CIFT adjustment for each project, the Stage 2009 - Scenario 29 cost

($k/MW-year) for each region was used as the CIFT cost for that region and converted into a

$/MWh adjustment that was then added to the levelized bid price of that project, as

applicable.

Losses: BC Hydro requested BCTC to conduct studies to determine the losses associated

with delivering the energy from each project location to the LM. These losses were converted

into a $/MWh adjustment that was then added to the levelized bid price.

The result of the above adjustments is a levelized AFEP for a common product (i.e.,

seasonally firm energy) delivered to the LM.

2.7 Negotiation and EPA Variations

Based on the results of the Risk Assessment, the Variations Review and the Quantitative

Assessment, nine proponents with ten projects representing approximately 2,000 GWh/year

were selected for initial meetings and discussions. The projects selected were the ten lowest

priced proposals submitted into the Phase I RFP.

The initial meetings with the selected proponents began in early August 2008. These

proponents were afforded an opportunity to respond to concerns identified in the evaluation

and to provide further information to address these concerns.

Upon receipt of further information from the nine selected proponents, another evaluation of

the updated information was undertaken. For those proponents with significant project

development or delivery risk, a subsequent review of the new material was done by the

relevant Risk Assessment teams. At this point, a decision was made to eliminate three

proponents with four proposals based on: (i) for two proposals, the inability to demonstrate

that they had sufficient fuel available to deliver their proposed firm energy, combined with a

9 The CIFT provides a general indication of the long term unit cost of bulk transmission system

reinforcements. Stage 2009 refers to the facilities that are expected to be in service in 2009 and later while Scenario 2 refers to the second scenario in the 2004 Network Integration Transmission Services Facilities Study used in the calculation of CIFT.


14

high bid price; (ii) one proposal involved an unacceptable fuel risk cost sharing with

BC Hydro, combined with a high bid price; and (iii) the remaining proposal had an

unacceptably high bid price. This left six proponents and six projects for further consideration.

Further meetings with six proponents with six project proposals, representing approximately

750 GWh/year of energy, were scheduled. Negotiations resulted in satisfactory resolution of

remaining concerns, and in several cases reduced prices, provided access to capacity rights,

and improved contractual terms from BC Hydro’s perspective. Following a final review of all

20 proposals, updated through these negotiations, BC Hydro selected four proponents with

four projects for EPA awards.

2.8 Final Portfolio Selection

Based on the outcome of the meetings described above, four projects were selected to

receive EPAs as outlined in Table 2-1 below.

Table 2-1 Summary of Awarded EPAs

Proponent Project Location EPA Term

(years)

Firm Energy

(GWh/year)

Dependable Capacity

(MW)

Zellstoff Celgar Limited Partnership (Celgar)

Celgar Green Energy Project Castlegar 10 238 26

Domtar Pulp & Paper Products Inc. (Domtar)

Kamloops Green Energy Project Kamloops 8* 201 18

PG Interior Waste to Energy Ltd. (PG Interior)

PGWE 2008 Prince George 15 70 8

Canfor Pulp Limited Partnership (Canfor)

PGP Bio Energy Project

Prince George 8* 70 8

Total 579 60

* EPAs provide for possible term extensions and/or put/call options on firm energy volumes.

The decision to offer EPAs to only four proponents was based on the final EPA terms and

conditions, including the contract term and prices offered by the proponents. As shown in

Table 2-2, the four awarded EPAs comprised the lowest cost proposals both in levelized price

terms and offered FEPs.


15

Table 2-2 Price Comparisons

Proposal

Offered Firm Energy Price at

Plant Gate ($/MWh)

Levelized Plant Gate

Price ($/MWh)

Levelized Adjusted Bid Price* ($/MWh)

SUBMISSIONS (Initial Prices for 20 Proponents): A 107 100 111 B 107 109 118 C 112 111 119 D 116 115 126 E 105 109 128 F 110 109 128 G 135 134 136 H 137 127 139 I 138 151 149 J 144 147 162 K 158 171 178 L 169 185 192 M 150 183 193 N 201 187 205 O 175 193 208 P 179 200 214 Q 182 203 217 R 195 230 252 S 194 217 328 T 300 365 395

AWARDED EPAs (Final Prices for 4 Successful Proponents): B 97 98 107 A 107 100 111 E 95 100 114 J 102 105 114

*Note: ABPs represent the proponents offered bid price for firm energy, levelized and

adjusted for escalation to January 2008 dollars, including an estimate of all

transmission losses and interconnection costs amortized over the term of the

contract, and delivered to the LM.


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3. FIRST NATIONS AND STAKEHOLDER ENGAGEMENT

3.1 Dialogue and Information Sessions

The Phase I RFP has been informed through both First Nations and stakeholder engagement

that occurred as part of the 2007 RFEOI, and then subsequently during the design and

implementation stages of the Phase I RFP during 2007/08.

RFEOI

BC Hydro issued the Bioenergy RFEOI in March 2007 to assess and identify potential

bioenergy projects and proponents. BC Hydro received over 80 submissions to the RFEOI,

and BC Hydro and MFR conducted interviews with most respondents. From these interviews,

BC Hydro gained insight into how to best design an effective acquisitions process for

bioenergy, and how MFR might determine wood biofuel requirements. It was apparent from

the RFEOI that some proponents were prepared to begin developing their bioenergy projects

immediately while others required access to wood and additional time to prepare a proposal.

Phase I RFP

The insights gained from the RFEOI resulted in the MEMPR and MFR releasing the

B.C. Bioenergy Strategy in January 2008, described in section 1.3.2 of this Report. BC Hydro

subsequently began development of the Bioenergy Call and undertook stakeholder

engagement specific to the design of the Phase I RFP. Stakeholders, including forestry

companies and industry associations, First Nations and IPPs, were engaged in the

development of the RFP, including potential RFP timing and the design of the RFP terms and

conditions.

Table 3-1 provides a summary of the stakeholder engagement conducted during the Phase I

RFP process.


17

Table 3-1 Summary of Phase I RFP Stakeholder Engagement

Description Outcome Information Session August 22, 2007

BC Hydro met with representatives from MFR, MEMPR, IPPs with existing contracts for bioenergy projects and the Council of Forest Industries to discuss the Bioenergy Call. The objective of the session was to discuss the mechanisms that BC Hydro could consider to help address the potential impact of the Bioenergy Call on existing users of residual wood products in B.C.

23 people registered for this session. Attendees stated that they gained a greater understanding of how BC Hydro designs calls. Feedback from this session informed the development of potential mechanisms to mitigate the Bioenergy Call’s impact on existing industry.

Stakeholder Information Session February 20, 2008

Upon issuing the Phase I RFP on February 6, 2008, BC Hydro, MEMPR, MFR and BCTC invited potential developers, First Nations, customers and other stakeholders to an information session to assist potential proponents in their decision on whether to participate in the Phase I RFP. Within this session MEMPR discussed the recently released BC Bioenergy Strategy and MFR gave an update on its forest inventory.

123 people registered for this session. Stakeholders stated that they found that the session offered a valuable update on BC Hydro, MEMPR and MFR activities.

Proponent Information Session March 26, 2008

The objectives of the session were to review and receive feedback from proponents on the terms and conditions of the Phase I RFP and explain how proposals would be evaluated. The Phase I RFP EPA Term Sheet was issued on February 29, 2008. As many of the proponents are sensitive to revealing project details when asking questions in a group, the session was structured to include one-on-one discussions between proponents and a team member.

50 people registered for this session Feedback from this session was considered in refining the terms and conditions of the Phase I RFP. Some of the feedback from proponents included: - Some proponents wanted to keep

some if not all of their Environmental Attributes.

- Some proponents felt that hourly firm energy was problematic; monthly firm was preferred.

- Some proponents felt that BC Hydro should share the fuel risk.

Proponent Workshop May 28, 2008

Proponents registered in the Phase I RFP were invited to participate in a workshop. Attendance at the session was strongly encouraged, but was not mandatory. The workshop was designed to provide guidance on proposal contents and requirements and to review key terms of the Specimen EPA, which was issued on May 7, 2008. Example applications of EPA formulae and post-proposal activities were also reviewed for the proponents’ benefit.

45 people registered for this session


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3.2 First Nations Engagement on Phase I RFP

First Nations were included in all of BC Hydro’s engagement activities listed above. In

addition to these activities, BC Hydro also engaged a key organization which includes several

First Nations from across the province, the First Nations Forestry Council (FNFC). The FNFC

was contacted to find opportunities to better communicate with the First Nations communities

that were affected by the pine beetle epidemic and to identify parties that might be interested

in opportunities that develop from the Bioenergy Call.

Table 3-2 provides a summary of the First Nations specific engagement conducted during the

Phase I RFP process.

Table 3-2 First Nation-Specific Engagement

Date Description April 2007 BC Hydro presented to the FNFC Board. The presentation covered the

direction from the 2007 Energy Plan, an overview of the Bioenergy Call to date, the RFEOI process, and a draft timeline for the Bioenergy Call.

May 2007 BC Hydro met with the FNFC director to discuss further opportunities to engage and work with communities.

May 15, 2007 BC Hydro presented at a Bioenergy Strategy Workshop for First Nations hosted by MEMPR. The presentation was about potential opportunities for First Nation participation in the Bioenergy Call.

December 2007 BC Hydro attended a FNFC Board meeting with MFR in December 2007. MFR presented at this meeting and BC Hydro provided support with questions pertaining to the Bioenergy Call.


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4. NEED FOR BIOENERGY CALL

4.1 Products Being Acquired

BC Hydro is acquiring three products through the Bioenergy Call: (i) firm energy, discussed in

section 4.1.1; (ii) dependable capacity, discussed in section 4.1.2; and (iii) Environmental

Attributes, described in section 4.1.4. BC Hydro will also receive a small amount of non-firm

energy as set out in section 4.1.3 of the Report.

The generating facilities and associated operations that underlie the four EPAs have different

business models that resulted in somewhat different EPA terms and conditions. For the

awarded contracts, the first distinction is that two EPAs are for the delivery of seasonally firm

energy while the other two are for hourly firm energy. The seasons for the seasonally firm

EPAs are February to April; May to July; August to October; and November to January.

The second distinction is that three of the plants have on-site industrial loads which are

partially or fully served by self-generation. In the case of these three plants, there is a GBL

which represents the amount of electricity supplied by the generator that had historically been

used to partially or fully meet the energy demand of the industrial load. Electricity supplied

from the generator above that GBL is sold under the EPA, while electricity supplied from the

generator below the GBL is not sold under the EPA, and is applied to partially or fully meet

the industrial load’s energy demand. The requirement for establishing a GBL avoids

arbitrage, that is, to ensure energy currently generated by a proponent to serve its own load

is not being sold to BC Hydro under the EPA while the same energy quantity is repurchased

from BC Hydro at the lower electricity tariff rate.

In this section, the energy values are being described in average MW for the seasonally firm

EPAs and in MWh/hour (the MWh that must be delivered each hour) for the hourly firm EPAs.

The results of this description are then used in the firm energy, dependable capacity and non-

firm energy sections that follow.

Hourly Firm EPAs

The two hourly firm EPAs each provide 8.0 MWh/hour to BC Hydro during the term of the

EPA. With respect to the planned maintenance for associated generators, the

EPA does not permit planned outages for the period November through March, unless

BC Hydro provides consent. Outside of the restricted period, a planned outage requires


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90-day notice from the proponent. BC Hydro can request to reschedule a planned outage

with not less than 30 days notice prior to start of an outage.

Seasonally Firm EPAs

For the two seasonally firm EPAs, one EPA provides an average of 23 MW while the other

provides an average of 27 MW. The proponent is required to provide 90 days notice for a

planned outage. As in the hourly firm EPAs, BC Hydro can request to reschedule a planned

outage with 30 days notice prior to the start of the outage.

Given that the firm energy delivery obligation is seasonal, the seasonally firm EPAs contain

an additional right to ensure BC Hydro will have access to the capacity during the winter peak

season. Under this Capacity Right, BC Hydro has the right to call on firm energy delivery on

an hourly basis during the on-peak hours for a total of 14 days from November through

February. During the period when the Capacity Right is exercised, energy delivery shortfalls

are subject to hourly LDs. Such LD provisions allow BC Hydro to treat both seasonally firm

EPAs as providing dependable capacity for planning purposes.

4.1.1 Firm Energy

BC Hydro pays for the firm energy that is received at the price in the EPA for that year

multiplied by the Time of Delivery Factor. The three by twelve (three time periods per month

by 12 months) Time of Delivery Factor is common to all four EPAs.

Table 4-1: Time of Delivery Factors

Month Super-Peak

(%) Peak (%)

Off-Peak (%)

January 141 122 105 February 124 113 101 March 124 112 99 April 104 95 85 May 90 82 70 June 87 81 69 July 105 96 79 August 110 101 86 September 116 107 91 October 127 112 93 November 129 112 99 December 142 120 104


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4.1.2 Dependable Capacity

BC Hydro considers the full contracted capacity of the two hourly firm EPAs to be dependable

capacity for planning purposes, giving a combined 18 MW of dependable capacity. At

present, the two seasonally firm EPAs provide up to 44 MW of dependable capacity for

planning purposes, however, the reliance on associated capacity may increase once

BC Hydro has some operational experience with the EPAs.

BC Hydro’s ability to count on the capacity supplied from the four EPAs comes from the

following conditions:

The generating units generally have a relatively high availability and the owners have

a certain amount of control over the fuel feedstock;

In all EPAs, BC Hydro pays for the firm energy that is received at the price in the EPA

for that year multiplied by the Time of Delivery Factor. This Time of Delivery Factor

provides the proponent with a strong signal as to the relative value BC Hydro places

on the energy in the different time periods of the year;

For the two hourly firm EPAs, the proponent’s commitment is on an hourly basis.

Thus, the contracted capacity is treated as dependable capacity for planning

purposes;

For the two seasonal EPAs, BC Hydro expects that there will be a high likelihood that

the capacity will be available on a relatively continuous basis. In addition to this high

likelihood, BC Hydro has the Capacity Rights described in section 4.1. In the event

BC Hydro exercises its Capacity Right and the proponent cannot deliver the minimum

required capacity, the proponent is subject to hourly LDs calculated as the greater of:

(i) $5.00/MWh (adjusted annually for CPI from January 1, 2008), and (ii) market price

less the FEP adjusted to the LM and for Hourly Firm Credit for each MWh of delivery

shortfall.

4.1.3 Non-Firm Energy

With respect to the four EPAs, non-firm energy delivered that is in addition to the firm energy

deliveries is estimated to be approximately 3 per cent of the total energy delivery. Payment

for any non-firm energy delivered is based on one of two non-firm energy pricing options or a

combination of these options as elected by the proponents in their proposals. For non-firm


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energy pricing, as shown in Appendix B, option A is based on BC Hydro’s projection of the

market electricity prices while option B reflects the actual market energy prices at the time of

energy delivery.

4.1.4 Environmental Attributes

Definition

The term “Environmental Attributes” is broadly defined in Appendix 1 of the Specimen EPA to

include all rights and benefits of any kind associated with, or arising from, a project’s

“greenness” including any green marketing attributes; offsets, credits or other instruments or

rights arising from the actual or assumed displacement by the project of off-site emissions, as

well as any credits, allowances or other tradeable rights arising from on-site emission

reductions. Excluded from the definition of Environmental Attributes are: (1) one half of any

Environmental Attributes directly resulting from or relating to incremental costs incurred by

the proponent after COD; (2) benefits or proceeds from environmental incentive programs

offered by the Federal Government, B.C. Government or other government authorities; and

(3) benefits or proceeds from social programs, including programs relating to northern or rural

development, employment or skills training, or First Nations, that do not require a transfer of

the Environmental Attributes.

Transfer of Environmental Attributes

BC Hydro is acquiring the “Environmental Attributes” associated with three of the four

awarded EPAs. Under these EPAs, the Environmental Attributes are being transferred to

BC Hydro with no additional payment. The transfer of the Environmental Attributes is

consistent with the treatment of Environmental Attributes in other jurisdictions. With the

exception of jurisdictions issuing standard offer-like acquisition processes under U.S. Public

Utilities Regulatory Policies Act of 1978, for those jurisdictions for which information could be

obtained the Environmental Attributes are transferred to the purchasing utility.

Environmental Attributes acquired through the Phase I RFP may be marketed to buyers in

B.C., the Western Economic Co-ordinating Council region and other markets for the benefit of

BC Hydro’s ratepayers.

The fourth proponent retains the Environmental Attributes. The proponent proposed this by

way of a value variation (not an essential variation) in its original contract proposal, as

allowed by the terms of RFP. In the final evaluation, the lower bid price was of more value to

BC Hydro than the value offered by the Environmental Attributes over the term of the EPA.


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4.2 Attrition Risk

Three of the proponent projects that have been awarded EPAs are associated with existing

operating facilities and thus have lower development risk compared to greenfield

developments. Accordingly, a composite attrition factor of 10 per cent is being used for the

Phase I RFP.

4.3 Demand/Supply Balance

The 2008 LTAP demonstrates that BC Hydro needs additional energy and capacity to meet

forecasted load growth throughout the planning horizon (F2012 to F2028). The 2008 LTAP

proposes meeting future need primarily through Demand Side Management (DSM) along with

some additional physical supply from the Bioenergy Calls and the Clean Power Call. The

2008 LTAP Evidentiary Update (Evidentiary Update), filed on December 22, 2008,10

includes a new 2008 load forecast and revised estimates of committed IPP supply. The

Evidentiary Update increases the energy load/resource gap between F2012 and F2015 and

decreases the gap thereafter. With respect to capacity, the Evidentiary Update does not

significantly change BC Hydro’s requirements relative to the 2008 LTAP filing.

4.3.1 Energy Load/Resource Gap

Table 4-2 shows how the Evidentiary Update changes the energy load/resource gap

published in the 2008 LTAP as originally filed in June 2008. The Evidentiary Update

continues to show that substantial resource additions are required with a resource gap of

3,500 GWh in F2012 growing to 10,600 GWh in F2017. The supply resources used to

calculate these gaps include 42,600 GWh/year of hydroelectric firm energy and

2,500 GWh/year of non-firm/ market reliance until 2016. The Phase I RFP makes its most

significant contribution to the load/resource balance during the first five years of the planning

horizon. For planning purposes, the Phase I RFP volumes are 498 GWh in F2012, reaching a

peak of 521 GWh/year between F2013 and F2016 before declining to less than 100 GWh

after F2021. These values are after the 10 per cent attrition allowance described in

section 4.2 has been applied.

10 As Exhibit B-10 in the 2008 LTAP proceeding.


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Table 4-2 Energy Load/Resource Gap Before 2008 LTAP Actions (GWh)

F2012 F2014 F2017 F2020 F2023 F2026 From the 2008 LTAP (June 2008) -3,000 -5,700 -11,500 -14,000 -17,000 -19,800 From the Evidentiary Update (December 2008)

-3,500 -6,400 -10,600 -13,400 -15,400 -18,200

Using the energy load/resource gap from the Evidentiary Update, Table 4-3 shows the gap

with the implementation of the original DSM Option A proposal set out in the 2008 LTAP and

the proposed reduced DSM Option A energy savings set out in the Evidentiary Update, but

prior to the implementation of any other 2008 LTAP action items, including the Phase I RFP.

Pursuant to subsections 44.1(2)(b) and (f) of the UCA, BC Hydro must first pursue all

cost-effective DSM before looking to supply side sources. Even with the original DSM

Option A in the stack, Table 4-3 shows that the Phase I RFP energy is needed to close the

energy deficit during the first few years of the planning horizon. As shown in Table 4-3, the

supply gap is 500 GWh in F2012, 2,900 GWh in F2017, and 6,700 GWh in F2026 using the

reduced DSM from the Evidentiary Update.

Table 4-3 Energy Load/Resource Gap with DSM from the 2008 LTAP and DSM from the Evidentiary Update

F2012 F2014 F2017 F2020 F2023 F2026

Option A DSM Mid 3,300 5,300 8,200 10,900 12,400 13,800

Gap with DSM in Original LTAP -200 -1,100 -2,400 -2,400 -3,000 -4,400

Adjusted DSM used in Evidentiary Update 3,000 4,700 7,600 9,600 10,400 11,500

Gap with DSM in Evidentiary Update -500 -1,700 -2,900 -3,800 -5,100 -6,700

Table 4-4 shows the energy gap after the reduced DSM Option A energy savings and Phase I

RFP volumes. The table demonstrates a clear need for Phase I RFP energy because

substantial energy gaps remain even with Phase I RFP volumes contributing to the

load/resource balance. Additional resources will be required as described in the Evidentiary

Update and BC Hydro’s plans for additional acquisitions such as the Clean Power Call and

Phase II of the Bioenergy Call.


25

Table 4-4 Energy Load/Resource Gap including Phase I RFP volumes

F2012 F2014 F2017 F2020 F2023 F2026 Gap with DSM in Evidentiary Update -500 -1,700 -2,900 -3,800 -5,100 -6,700

Phase I RFP energy volumes 500 500 400 300 100 0

Gap with updated DSM and Phase I RFP energy

0 -1,200 -2,500 -3,500 -5,000 -6,700

4.3.2 Contingency Resource Plan

Both the hourly firm and the seasonally firm EPAs with additional Capacity Rights provide

BC Hydro with a dependable source of firm capacity. This capacity contributes to BC Hydro’s

Contingency Resource Plans in having additional capacity available should it be required.


26

5. COST-EFFECTIVENESS

As identified in previous sections of this Report: (1) BC Hydro has a requirement for firm

supply throughout its planning horizon; and (2) the B.C. Government has placed significant

importance, at a policy level, on a biomass electricity acquisition process.

As a result, the cost-effectiveness analysis is based on a criterion that any alternative must

be a new source of firm electricity supply to BC Hydro, and focuses on the competitiveness

and cost-effectiveness of the Phase I RFP, a process established to give effect to B.C.

Government policy.

No comparisons are made with electricity that may be available in external power markets

such as Mid-C. To the extent non-physically firm electricity from these sources can be used to

provide firm electricity to BC Hydro, such electricity is already included in the load/resource

balances (2,500 GWh/year of non-firm/market allowance). Post-2015, the BCUC is precluded

from permitting BC Hydro to rely on such electricity sources pursuant to SD 10. Use of the

Canadian Entitlement to the Downstream Benefits is assumed to be either (i) allocated to

other uses (a BC Hydro contingency resource or Powerex Corp. trade); or (ii) unavailable as

a firm capacity source to meet BC Hydro’s domestic requirements pursuant to SD 10.

5.1 Competitive Process

BC Hydro relies on the competitive Phase I RFP process as the primary support for its

position that the four EPAs are cost-effective. The BCUC previously found that an important

determination of cost-effectiveness is whether or not the particular power acquisition process

awards were the outcome of a competitive process that yielded a cost-effective result. In its

Decision on the Call for Tenders for Capacity on Vancouver Island,11 the BCUC stated:

… once a competitive market-based process has been undertaken and firm

commitments from bidders have been obtained, a competitive process should, in most

circumstances, be accepted as persuasive evidence of the cost-effectiveness of the

resultant successful bid.

BC Hydro notes that the volume of Phase I RFP awards – at 579 GWh/year – is lower than

the original target of 1,000 GWh/year and represents an acquisition of less than 15 per cent

of the energy that was presented in proposals received. Specifically, BC Hydro notes the

following facts to support its view that the Phase I RFP was a competitive, fair and

transparent process: 11 BCUC Order No. E-1-05, page 13.


27

1. Participation – This was at a high level. As described in section 2.3 of this Report,

16 proponents with 29 projects totalling approximately 6,000 GWh/year registered for the

Phase I RFP in March 2008, and BC Hydro received 20 project proposals from 13 different

proponents representing approximately 4,100 GWh/year of firm energy in June 2008. Many of

the participants were well-established industrial firms in B.C. and/or well established and

qualified IPPs.

2. RFP Terms and Conditions Review – In designing the Phase I RFP, BC Hydro sought

First Nations, government agency, proponent and other stakeholder input to ensure the terms

would not unduly discourage participation while at the same time providing adequate

assurance to BC Hydro and its ratepayers regarding delivery commitments. BC Hydro

submits that potential proponents and other stakeholders had ample opportunity to comment

not only on the proposed process but also on the draft documentation. Refer to section 3.1

and Table 3-1 of the Report.

3. RFP Process – The RFP offered contract term and COD flexibility (both initial COD

and the opportunity for phased COD) and hourly and seasonally firm energy options. In

addition to the options set out in the RFP documents, proponents were allowed to propose

variations to the Specimen EPA included in their contract price (an Essential Variation) or as

an option that BC Hydro could chose to incorporate if it had value (a Value Variation).

BC Hydro utilized the discretion inherent in a RFP process to negotiate price as well as both

Essential Variations and Value Variations with proponents. In addition, BC Hydro could and

did propose variations to the proposals that increased their value to BC Hydro and

ratepayers.

4. Least Cost – The four EPAs awarded were the least cost of the proposals resulting

from the Phase I RFP.

5. Consistency with Expectations – The cost of the electricity acquired from the Phase I

RFP is in line with BC Hydro’s expectations. The 2008 LTAP Resource Options Update

(ROU) focused on updating the cost and potential availability of three forms of

biomass - woodwaste, municipal solid waste and biogas generated from municipal landfills.

Only the woodwaste category is relevant for Phase I RFP comparison purposes. In the ROU,

BC Hydro looked at three sources of woodwaste, namely sawmill, roadside and standing

timber woodwaste. The Unit Energy Cost (UEC) for the woodwaste resources at a 6 per cent

discount rate and adjusted for line losses, CIFT and a capacity credit is as follows:

Sawmill woodwaste – $105/MWh


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Roadside woodwaste – $135/MWh

Standing timber – $161/MWh.

The levelized ABPs of the four EPAs (ranging from $107/MWh to $114/MWh, as set out in

Table 2-2) are slightly higher than the UEC for the sawmill woodwaste project and are

considerably lower than the UECs for the roadside woodwaste and standing timber

resources.

5.2 Comparisons to Other Processes

In addition to its reliance on the competitiveness and transparency of the acquisition process,

BC Hydro compared the four EPAs with the following:

The bioenergy power acquisition processes of other jurisdictions (section 5.2.1);

The results of the F2006 Call (section 5.2.2);

The Clean Call Block in Chapter 5 of the 2008 LTAP (section 5.2.3);

The UEC data from the 2008 LTAP ROU for 50 MW and 250 MW CCGTs

(section 5.2.4).

BC Hydro submits that these comparisons further indicate that the four EPA awards are

cost-effective.

5.2.1 Jurisdictional Comparison

Many jurisdictions in the U.S. and Canada carry out acquisition processes for green or

renewable power, which typically include biomass as an eligible source of energy. However,

BC Hydro is aware of only a few utilities in North America that have issued biomass-only calls

to acquire power in recent years.

Table 5-1 below summarizes the two biomass-only acquisition processes that have been

conducted in North America in the past five years.


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Table 5-1 Comparison to Other Bioenergy Power Acquisition Processes

Jurisdiction Buyer Date Results

California Southern California Edison (SCE)

May 2007 (250 MW)

This is a standard offer for biomass plants sized below 20 MW which was open until December 31, 2008. The offered price ranged from US$93 to US$103 per MWh (equivalent to Cdn. $100 to $111 per MWh) depending on the contract term and year of operation.

Wisconsin-Illinois-Minnesota-Iowa

Dairyland Power Corporation

April 2007 (20 MW)

In June 2008, Dairyland Power Corporation executed a power purchase agreement with a subsidiary of DTE Energy Services to purchase the full 40 MW expected electrical output of a proposed new biomass power plant located in Cassville, Wisconsin. The facility is scheduled to come online June 2010 and will burn woodwaste. No pricing information is publicly available for this biomass contract.

As noted above, SCE introduced a biomass program in May 2007 in the form of a standard

offer for biomass projects of 20 MW or less. This program was designed to help smaller

biomass facilities contribute to California’s renewable energy targets and to help support the

California Governor’s goal to promote energy production from biomass fuel sources. Under

the biomass program, SCE offered to buy energy from biomass facilities at fixed prices for a

term of 10, 15 or 20 years. Table 5-2 below outlines the contractual payment prices for

biomass generating facilities coming on-line in 2008.

Table 5-2 Payment Prices for SCE’s Biomass Program

Contract Term Payment Price ($US/MWh)

Payment Price ($Cdn./MWh)

10 years 92.71 99.715 years 93.83 100.920 years 95.72 102.9

The prices offered in the SCE biomass program ($Cdn. $100 - 103/MWh) are similar to

levelized plant gate price range of $98 to $105/MWh for the four projects awarded EPAs in

the Phase I RFP.


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5.2.2 Comparison to F2006 Call Prices

In comparing the results of the Phase I RFP to the F2006 Call, there are several differences

in call terms reflected in the awarded EPAs, as outlined in Table 5-3.

Table 5-3 Comparison of Key Terms for Phase I RFP and F2006 Call

F2006 Call Large Project Stream

Bioenergy Call Phase I RFP

Firmness of energy Monthly or Hourly Seasonally or Hourly

Non-firm energy pricing $8/MWh discount to firm energy price Based on Mid-C prices

Time of delivery adjustment

2 x 12 table (moderate spread between winter and freshet)

3 x 12 table (larger spread between winter and freshet)

Freshet restriction 33% maximum over 4 months 25% maximum over 3 months

Delivery Shortfall LDs

Mark-to-market $100/MWh market cap (limited to 200% of Performance Security)

Mark-to-market $5/MWh floor; no cap (limited to 200% of Performance Security)

The average ABP for the Large Project stream of the F2006 Call was identified as being

$87.5/MWh (in January 2006 dollars). This price reflects a monthly firm, non-green energy

product delivered to LM given that the $3.00/MWh green credit for those projects transferring

their Environmental Attributes to BC Hydro was deducted from the bid price. Thus, to

compare the ABP for the Bioenergy Call with the F2006 Call awards, the bid prices need to

be adjusted for CPI escalation to 2008 dollars and reversal of the $3.00/MWh green credit, as

shown below in Table 5-4:

Table 5-4 ABP Comparison: Phase I RFP vs. F2006 Call Large Projects

($/MWh) Average ABP Marginal ABP F2006 Call – Large Projects (2006$) 87.5 99.5+ Environmental Attributes (2006$) 3.0 3.0+ CPI Escalator to 2008$ 3.8 4.4F2006 Call (comparable) 94.3 106.9Bioenergy Call – Phase I RFP 110.5 114.3

The comparative Phase I RFP prices are viewed as being relatively conservative given that

the Capacity Rights associated with the seasonally firm EPAs have additional value to

BC Hydro which is not reflected in Table 5-4. Overall, the average ABP for the Phase I RFP is

comparable to the results of the F2006 Call.


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5.2.3 Comparison with LTAP Portfolio Analysis

Section 5.6.4 of the 2008 LTAP contained a portfolio analysis of a portfolio of projects, called

the Clean Call Block, that was used as a proxy for what might be bid into the Clean Power

Call. This Clean Call Block, as modified to reflect the Evidentiary Update, includes six

resource bundles. The analysis in the 2008 LTAP is based on the resources that are in the

ROU. These resources include planning level cost and capability estimates based on the

“mid” case with a cost uncertainty range of +40 / -10 per cent.

This Clean Call Block portfolio of resources was analyzed based on the location, delivery

profile and firmness of the projects as might be done by an IPP in developing a bid for a

BC Hydro acquisition process. Based on this analysis, the six resource bundles had an

estimated levelized ABP range of $60/MWh to $135/MWh, with the volume weighted ABP

being $99/MWh.

Table 5-5 Estimated ABPs for Projects in the 2008 LTAP Clean Call Block

Project

In-Service Date per Base Resource Plan (January 1)

Firm Energy (adjusted for freshet cap) (GWh/year)

Installed Capacity (MW)

Levelized Firm Energy ABP ($/MWh)

Municipal Solid Waste 2014 408 51 91

CI Small Hydro Bundle 1 2016 73 35 135

LM Small Hydro Bundle 1 2013 89 32 60



Peace Wind Bundle 1 2016 492 117 116 1,855 501 99

The ABPs for the Phase I RFP projects are about 10 per cent higher than the ABPs for the

proxy projects in the Clean Call Block (“mid” case).

5.2.4 Comparison with New Generic CCGTs

The ROU contains UECs for a 50 MW and a 250 MW greenfield CCGT, both situated in the

Kelly Lake/Nicola region in the B.C. Interior. The Kelly Lake/Nicola region was chosen as the

most realistic site, and likely the first choice, for the development of a CCGT in B.C. The

average energy for the 50 MW CCGT and the 250 MW CCGT would be 391 GWh/year and


32

1,977 GWh/year respectively.12 The analysis in the 2008 LTAP is based on the resources that

are in the ROU. These resources include planning level cost and capability estimates based

on a cost uncertainty range of +40 / -10 per cent.

If BC Hydro were to acquire electricity from CCGTs sited in Kelly Lake, it would have to be

supplied by IPPs to meet the requirements of Policy Action No. 13 of the 2002 Energy Plan.

The two CCGTs would provide firm energy and dependable capacity, similar to the products

that were acquired from the Phase I RFP.

The adjusted UECs for such CCGTs at a 6 per cent real discount rate, delivered to the LM,

based on the most probable 2008 LTAP GHG offset cost scenario – Natsource LLP’s Linked

Markets GHG scenario – are provided in Table 5-6 below. The base costs are derived from

data provided by AMEC Americas Limited in the ROU. The cost has been provided for each

of the natural gas price forecasts in the 2008 LTAP, with the corresponding probability

weighting for each of the forecasts identified in the title. GHG emissions were required to be

fully offset as soon as the CCGT was in-service pursuant to Policy Action No. 18 of the

2007 Energy Plan and the Emissions Standards Act.

Table 5-6 ABP Comparison of Levelized Energy Cost from a CCGT13

2008 $/MWh 50 MW Generic CCGT 250 MW Generic CCGT

Natural Gas Price Forecast (likelihood)

Low (3%)

Mid (44%)

High (53%)

Low (3%)

Mid (44%)

High (53%)

Base Unit Levelized Cost 91 101 135 66 76 108CIFT + Losses to LM 6 6 6 5 5 5GHG offset cost 8 8 8 8 8 8Total LM Cost 105 115 149 79 89 121

The Phase I RFP, on a probability basis, would be lower cost than the 50 MW CCGT. Only in

the case of the low gas price scenario (3 per cent likelihood of occurring) would that CCGT be

lower cost than the Phase I RFP. In the case of the 250 MW CCGT, the ABP for the Phase I

RFP generally falls between the cost of the CCGT based on the mid and high gas scenarios.

Given the above cost analysis, the variable cost uncertainties of the CCGTs (fuel and GHG),

as well as the contracting uncertainties related to allocating the risks that exist with CCGTs, 12 In years where all four EPAs awarded under the Phase I RFP are in effect, the annual energy of

the four contracts is approximately 579 GWh/year, somewhat larger than the 50 MW CCGT and significantly smaller than the 250 MW CCGT.

13 Data is derived from Appendix F11 to the 2008 LTAP application (Exhibit B-1-1 in that proceeding).


33

the products purchased pursuant to the Phase I RFP appear more cost-effective. Additionally,

the Phase I RFP awards provide value-added Environmental Attributes which are not

available from CCGT resources.

Appendix A

BC Hydro Bioenergy Call for Power – Phase I

Request for Proposals

BC Hydro Bioenergy Call for Power – Request for Proposals

BC HYDRO

BIOENERGY CALL FOR POWER – PHASE I

REQUEST FOR PROPOSALS Issue Date: February 6, 2008

1. INVITATION

BC Hydro invites proposals for the supply of electrical energy generated from Forest-based Biomass by Projects located in British Columbia.

Projects may be “greenfield” generation Projects or Projects undertaken by Customers to utilize Forest-based Biomass in the generation of electrical energy. See section 14 for further eligibility details.

BC Hydro targets approximately 1,000 GWh/year of firm energy to be procured under this Call, Phase I. This target is subject to revision during the RFP process.

This RFP is not a call for tenders. This RFP and/or the submission of a Proposal and/or the exercise by BC Hydro of any discretion in the conduct of the RFP process, including the review and evaluation of Proposals, and/or selection of successful Proposals, creates no contractual or other legal relationship, liability or obligation whatsoever between or among BC Hydro and any other person, whether or not such person submits a Proposal, except only the obligation of Proponents to be bound by the general terms and conditions set out in section 22 pursuant to the compliance commitment set out in a Registration Form and/or a Proposal. Except as aforesaid, no such contractual or other legal relationship, liability or obligation whatsoever arises between BC Hydro and any Proponent unless and until a definitive EPA is fully executed and delivered.

2. INTERPRETATION

2.1 Definitions: Certain capitalized words and phrases used in this RFP are set out in Appendix 1.

2.2 Currency: References to dollars or $ means Canadian currency, unless otherwise stated.

3. RFP CONTENTS

The RFP includes the following appendices:

• Appendix 1 Definitions

• Appendix 2 Registration Form

• Appendix 3 Form of Proposal Letter

• Appendix 4 Project Description Requirements

• Appendix 5 Fuel Plan Requirements

Issued February 6, 2008 - 1 -

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• Appendix 6 BC Hydro Code of Conduct

BC Hydro may amend the RFP, including Appendices, from time to time by the issue of Addenda.

4. BACKGROUND

On January 31, 2008, the Government of British Columbia released its Bioenergy Strategy (details of which can be found at www.energyplan.gov.bc.ca/bioenergy). This RFP is the first of a two-phase Bioenergy Call for Power referenced in the strategy, focusing on existing biomass inventory in the forest industry.

5. COMMUNICATIONS

All pre-Proposal submission communications with BC Hydro regarding this RFP should be directed to the RFP Administrator as follows:

BC Hydro 10th Floor, 333 Dunsmuir Street Vancouver, BC V6B 5R3 Attention: RFP Administrator email: [email protected] fax: 604.623.4335

Other than with respect to matters relating to interconnection, Proponents should not contact directly other BC Hydro directors, officers, employees or advisors concerning matters related in any way to this RFP, except as directed or authorized through the RFP Administrator.

Communications from Proponents should originate from their contact person specified upon registration. Contact persons can be changed by notice to the RFP Administrator. Proponents should communicate in writing (which may include e-mail).

BC Hydro will notify Proponents with whom BC Hydro decides to conduct negotiations following Proposal submission of the communications protocol applicable to that phase of the RFP process.

BC Hydro will not be responsible for any instructions or information given to any Proponent except as made or authorized through the RFP Administrator.

6. REGISTRATION

Persons who intend to submit a proposal are required to register their interest using the Registration Form set out in Appendix 2.

The Registration Form includes a commitment to be bound by the general terms and conditions set out in section 22.


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http://www.energyplan.gov.bc.ca/bioenergy

mailto:[email protected]


The Registration Form also includes a consent to disclosure of Project-related information, including interconnection and transmission study data and results, between BC Hydro and BCTC. This consent is required to facilitate interconnection and transmission studies and proper evaluation of Proposals.

Finally, the Registration Form requires summary information regarding the Proponent and its Project.

Complete all the information called for by the Registration Form. The Registration Form should be signed by an authorized signing officer of the registrant.

The Registration Form should be accompanied by a registration fee in the amount of $10,000, which is non-refundable. The fee may be paid by cheque payable to “British Columbia Hydro and Power Authority” or “BC Hydro”.

Registration Forms, together with the registration fee, should be delivered to the RFP Administrator at the address indicated in section 5 on or before March 7, 2008. Registration by the foregoing date is not mandatory, and BC Hydro may accept late registration.

Upon receipt of a properly completed and signed Registration Form and the required fee, the RFP Administrator will confirm registration to each registrant.

Registration does not oblige a Proponent to submit a Proposal. However, registration will assist BC Hydro in communicating with Proponents throughout the RFP process.

Persons who fail to register and pay the required fee may not have access to the RFP Website, Addenda, Q&As, FAQs or other information and may not otherwise receive further communications from BC Hydro concerning the RFP process.

BC Hydro will not consider Proposals submitted by unregistered persons.

Proponents who decide not to submit a Proposal are requested to so notify the RFP Administrator to cancel the registration.

7. RFP SCHEDULE

BC Hydro intends to conduct the RFP process on the following schedule:

EVENT/ACTIVITY SCHEDULED DATE(S)

Issue of EPA Term Sheet February 29, 2008

Proponents Submit Application to BC Hydro (for Distribution System-connected Projects) for a Preliminary Interconnection Study (section 12).

February 29, 2008

Registration March 7, 2008

Submission of Customer GBL data March 7, 2008


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Proponents Submit Application to BCTC (for Transmission System-connected Projects) for a Feasibility Interconnection Study (section 12).

March 7, 2008

Proponent Information Session March 26, 2008

Filing of Preliminary Interconnection Study agreements with BC Hydro for Distribution System-connected Projects (4:00 p.m. PPT)

March 31, 2008

Filing of Feasibility Interconnection Study agreements with BCTC for Transmission System-connected Projects (4:00 p.m. PPT)

April 7, 2008

Notice to Customers of GBL May 2, 2008

Issue of Specimen EPA May 2, 2008

Proposal submission (4:00 p.m. PPT) June 3, 2008

Release of Feasibility Interconnection Study or Preliminary Interconnection Study, as applicable

June 20, 2008

Proponents notified of short list (optional) June 27, 2008

Negotiation, Final Evaluation, EPA signing Phase July 2, 2008 – October 15, 2008

8. RFP WEBSITE

BC Hydro will establish a website to which Proponents will have access during the conduct of the RFP.

The RFP Website will provide access to the RFP, including Appendices, Addenda, the EPA Term Sheet and Specimen EPA, as well as other important communications from BC Hydro to all Proponents.

The RFP Website will also provide access to Q&As, FAQs and other information of interest to Proponents.

9. ADDENDA

BC Hydro may amend and/or supplement the RFP, including particularly the RFP Schedule and the Appendices, at any time by issue to all Proponents of an Addendum. Addenda will be sequentially numbered and posted to the RFP Website.

Proponents should check the RFP Website frequently. Proponents will be expected to confirm receipt of all Addenda in their Proposal Letter.


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10. Q&As, FAQs AND SUPPLEMENTARY INFORMATION

Proponents may submit questions regarding the RFP process and related matters to the RFP Administrator. Questions should be in writing (including e-mail). Questions raising issues of potential general interest to all Proponents and answers will be posted to the RFP Website, without express attribution to the Proponent submitting the question, as a Q&A series. BC Hydro reserves the right to edit questions for clarity and application to Proponents generally.

BC Hydro may post FAQs to the RFP Website, and other information of interest to Proponents.

Proponents should check the RFP Website frequently for Q&As, FAQs and other information of interest.

11. PROPONENT INFORMATION SESSION

BC Hydro will convene a Proponent information session on the date indicated in the RFP Schedule. Further details of the session time, place and agenda will be notified to Proponents by Addenda.

Attendance at the session is strongly encouraged, but is not mandatory.

BC Hydro does not undertake to publish a transcript or report of the Proponent information session, or to distribute to Proponents any presentation or other materials made available to attendees at the session.

12. INTERCONNECTION MATTERS

For the purposes of this RFP, the interconnection process will follow the interconnection procedure for CEAP as described in OATT Attachment P, filed June 8, 2007 by BCTC with the BCUC (in compliance with Directive #20 of the BCUC’s Decision accompanying Commission Order G-58-05 concerning BCTC’s OATT application).

A signed Feasibility Interconnection Study agreement with BCTC (for Transmission-System connected Projects) or a signed Preliminary Interconnection Study agreement with BC Hydro (for Distribution System-connected Projects), together with the required study fee deposit, must be filed with BCTC or BC Hydro, as applicable, on or before 4:00 p.m., PPT, on or before the applicable date shown in the RFP Schedule. Any signed interconnection study agreements that have been entered into pursuant to this RFP and that are filed before the applicable deadline will be deemed to have been received on the deadline.

In order to ensure that a signed interconnection agreement is filed by the applicable deadline, Proponents should complete and file an interconnection application with BCTC or BC Hydro, as applicable, on or before the date indicated in the RFP Schedule. The cost of the interconnection study, and any subsequent studies necessary to maintain the Project’s position in the interconnection queue, will be borne by the Proponent.

All Projects participating in the call will be studied on a stand-alone basis, using the same base case (i.e. having the same queue position). Prior studies will not be accepted. Proponents submitting Proposals involving existing generators, including Proponents with existing


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interconnection agreements for existing generation, will still be required to file a signed interconnection study agreement for the new incremental generation by the applicable deadline.

Each completed interconnection study will be provided to the Proponent on or before the date shown in the RFP Schedule. The study, together with such other information developed or available to BC Hydro, should demonstrate that the interconnection facilities for the Project are anticipated to be completed by not later than 90 days prior to the Guaranteed COD (to be defined in the EPA).

BC Hydro will be responsible for interconnection and transmission costs on the transmission or distribution side of the POI, as applicable, for the Project. BC Hydro’s cost responsibility will be based on the Project as described in the completed interconnection study. The Proponent will be responsible for any additional interconnection and/or transmission costs arising from any changes made to the Project, including Project size. POI and schedule, described in the completed interconnection study.

A successful Proponent will be required to post security after EPA signing referenced to the estimated interconnection costs as provided in the completed interconnection study.

Each Proponent must withdraw its prior application accepted by BCTC, if any, for interconnecting the associated Project to the BCTC transmission system pursuant to BCTC’s Standard Generator Interconnection Procedures as described in the OATT.

BCTC, in consultation with BC Hydro, will convene a Proponents’ interconnection information session prior to the date on which interconnection study applications must be filed. Proponents will be advised of the time and place of the session.

BC Hydro will have access to interconnection study applications and data under the consent referenced in section 6.

13. CUSTOMER GBL

Customers intending to submit a Proposal involving incremental self-generation servicing their industrial load must have their existing generation base line (“GBL”) determined by BC Hydro to confirm eligibility. Customers must provide data required by BC Hydro to determine the Customer’s GBL for the applicable industrial facility or facilities.

BC Hydro will notify Customer Proponents of BC Hydro’s data requirements, which Customers should submit to the RFP Administrator, all by the dates indicated on the RFP Schedule.

14. ELIGIBLE PROJECTS

BC Hydro will consider Projects that meet the following eligibility requirements:

• Fuel Type: Forest-based Biomass, including mill solid wood residues (hog fuel, sawdust, chips and/or chunks), pulp mill residues (hog fuel and black liquor), roadside and landing residues, and biomass derived from standing timber, without access to new timber harvesting tenure.


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• Location: Projects to be located in British Columbia, excluding Fort Nelson and other areas of the Province from which BC Hydro would be required to transmit energy through another out-of-province jurisdiction to the Lower Mainland.

• Technology: Projects must use “proven” generation technologies. Nuclear technology is not eligible. “Proven” technologies are generation technologies, which are readily available in commercial markets and in commercial use (not demonstration use only), as evidenced by at least three generation plants (which need not be owned or operated by the Proponent) generating electrical energy for a period of not less than three years, to a standard of reliability generally required by good utility practice and the terms of the EPA.

• Clean: Entire output from the Project must qualify as “clean energy” in accordance with guidelines to be published by the British Columbia Ministry of Energy, Mines and Petroleum Resources. The guidelines will be available at the following website: www.em.gov.bc.ca/AlternativeEnergy.

• Project Type:

• New (i.e. “greenfield”) generation Projects, or incremental generation from new generating units at existing generation plants currently synchronized with the System, which are not servicing directly a Customer industrial load (i.e. IPP Projects), or

• New self-generation, or incremental self-generation, in any event excess of the Customer’s GBL at a Customer’s facility to serve the Customer’s industrial load at the facility (i.e. load displacement) and/or effect net energy export to the System (i.e. Customer Projects), but excluding generation projects, where the current output is under contract through a load displacement or demand side management agreement with BC Hdyro.

• Metering: Project output must be capable of being metered separately or alternate measures must be available to accurately determine delivered energy for billing purposes.

• Point of Interconnection: Project must have a point of interconnection on the System. Projects with indirect interconnections (including through a private transmission line, transmission service within British Columbia through a utility, other than BC Hydro or BCTC, or a BC Hydro customer interconnection) are eligible.

• Interconnection Study Agreement: An executed Feasibility Interconnection Study agreement or Preliminary Interconnection Study agreement must be filed, together with the required deposit by the date set out in the RFP Schedule. See section 12 for further details.

• Existing Contracts: None of the capacity or energy from the Project under an existing contract to BC Hydro is eligible, unless the contract can be lawfully terminated by the Proponent shortly after the call is issued. None of the capacity or energy from the Project under a contract to any other party is eligible, except for contracts that can be lawfully terminated by the Proponent prior to the Guaranteed COD (to be defined in the EPA).


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http://www.em.gov.bc.ca/AlternativeEnergy


15. EPA TERMS AND CONDITIONS

BC Hydro will provide to all Proponents an EPA Term Sheet setting out in summary form key terms and conditions of the proposed Specimen EPA. The term sheet will be reviewed at the Proponents’ information session.

Following the session, BC Hydro will provide to all Proponents a Specimen EPA by the time indicated in the RFP Schedule.

See the RFP Schedule for expected delivery dates for the EPA Term Sheet and Specimen EPA.

The Specimen EPA represents BC Hydro’s preferred terms and conditions. Proponents are strongly encouraged to submit Proposals that conform to the preferred terms and conditions. Proponents are further cautioned that the RFP Schedule contemplates scope and time-disciplined negotiations which will require that priority be given to consideration of variations, if any, that enhance the cost effectiveness to BC Hydro of Proposals, or otherwise respond to the evaluation criteria outlined in this RFP.

Proponents may submit as part of their Proposals proposed variations to optimize cost effectiveness for BC Hydro. Variations should be submitted in the form of a redlined version of the Specimen EPA, and a brief commentary describing the reasons and benefits of proposed variations to BC Hydro’s preferred terms and conditions. Proponents may download a Word version of the Specimen EPA from the RFP Website after the document is posted.

16. PROPOSAL REQUIREMENTS

Proposals must be delivered to the RFP Administrator at the address indicated in section 5 on or before 4:00 p.m. PPT on the scheduled date for Proposal submission as shown on the latest RFP Schedule. Check the RFP Website for the currently scheduled date. BC Hydro’s time/date stamp recording Proposal receipt will be conclusive.

Late submitted Proposals will not be considered and will be returned to the Proponent unopened.

Proposals should be submitted in a sealed package marked “BC Hydro Bioenergy Call for Power – Phase I, Proposal of [insert name of Proponent]”, and bear a return address.

Proposals should include:

• A Proposal Letter in the form of Appendix 3, in one original signed by an authorized signatory of the Proponent,

• A Project Description containing information concerning the Proponent and the Project as required by Appendix 4, in six hard copies and one soft copy (on a CD-ROM),

• A Fuel Plan containing the information required by Appendix 5, in six hard copies and one soft copy (on a CD-ROM),


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• Variations Proposal (optional), containing a redlined version of the Specimen EPA, and a brief commentary describing the reasons and benefits of proposed variations to BC Hydro’s preferred terms and conditions, in six hard copies and one soft copy (on a CD-ROM),

• A Feasibility Interconnection Study agreement or a Preliminary Interconnection Study agreement, as applicable, and the corresponding study if then available.

In preparing the Project Description and the Fuel Plan, Registered Proponents are strongly encouraged to follow the instructions in Appendices 4 and 5 respectively, including section numbering and titling. Proponents should be responsive to the information requirements set out in the Appendices. These documents should be submitted in 8" x 11 ½ " – 3 ring binders.

Proposal Letters submitted by general partnerships, joint ventures, consortia, or otherwise by multiple parties should be signed by a person or persons authorized to bind all partners, consortium members, joint venturers or multiple parties, as the case may be, each of whom will be jointly and severally, and not severally only, liable under any EPA entered into pursuant to this RFP.

Proposals will not be opened publicly. Proposal documents (excluding any proprietary intellectual property embodied therein) become the property of BC Hydro, and will not be returned to Proponents, except in the case of late submitted Proposals.

A Proponent may withdraw its Proposal by written notice to the RFP Administrator at any time before a final form EPA is fully signed and delivered by both parties. A Proposal, once withdrawn, cannot be resubmitted in the same or an amended form.

BC Hydro, in its sole and unfettered discretion, may waive any and all failures of a Proponent or a Proposal to comply with the terms of this RFP. Proponents should note that non-compliance may considered in BC Hydro’s evaluation of Proposals.

17. PRESENTATIONS

BC Hydro may invite in person Project presentations from one or more, but not necessarily all or any, Proponents, and may do so before and/or after short listing.

18. SHORT LIST

Following a preliminary evaluation of Proposals, BC Hydro reserves the right to short list Proponents for participation in the negotiation phase, if any, of the RFP process. Shortlisting will be based on a preliminary evaluation of Proposals using criteria as indicated in section 20. BC Hydro will notify all Proponents on the short list.

BC Hydro reserves the right to amend or dissolve the short list, with notice thereof given to the Proponents.

19. NEGOTIATION, FINAL EVALUATION, EPA SIGNING PHASE


BC Hydro, in its sole and unfettered discretion, may reject any or all Proposals, accept one or more Proposals, conduct negotiations with one or more Proponents, or decline to conduct

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negotiations with any or all Proponents. BC Hydro further reserves the right to terminate negotiations with any Proponent at any time. Negotiations with more than one Proponent may be conducted concurrently, in whole or in part, but will not necessarily be concluded at the same time.

Negotiations will be conducted at BC Hydro’s offices in Vancouver, B.C., unless BC Hydro determines otherwise.

Negotiations, if any, are expected to be disciplined as to scope and time. BC Hydro reserves the right to limit negotiations to price, matters arising from a Proponent’s variations proposal, if any, and such other matters as BC Hydro may determine.

All Proposals, whether or not negotiated, are subject to BC Hydro’s final evaluation, approval by BC Hydro’s executive management and/or board of directors and signing of a final form EPA. Conclusion of negotiations and approvals will not necessarily occur concurrently as to all successful Proposals.

No legal obligations or liabilities whatsoever will be created or arise between BC Hydro and any Proponent unless and until a final EPA is fully signed and delivered, except only under the compliance commitment set out in the Registration Form and/or the Proposal Letter. Without limiting the foregoing, except as expressly and specifically permitted in the RFP, no Proponent shall have any claim for any compensation of any kind whatsoever, as a result of participating in this RFP, and by submitting a Proposal each Proponent shall be deemed to have agreed that it has no claim.

20. EVALUATION CRITERIA

BC Hydro shall determine in its sole and unfettered discretion the Proposal or Proposals, if any, whether or not negotiated, that are cost-effective, respond adequately to BC Hydro’s evaluation criteria to the extent applied by BC Hydro, and are eligible for award of an EPA.

In making this determination, for purposes of short listing and for purposes of final approvals, BC Hydro will consider information contained in, or derived from the Proposals, or otherwise available to BC Hydro, including the levelized price of each Proposal, as proposed, or if applicable as negotiated, and may further consider some or all of the following criteria (which are not necessarily set out in order of relative importance), with such weighting as BC Hydro may determine in its sole and unfettered discretion:

• BC Hydro’s assessment of probable fuel availability,

• Increased utilization of existing wood residuals,

• The desirability of minimizing adverse impacts on existing productive uses of Forest-based Biomass,

• Interconnection, transmission and generation impacts and costs, both on a stand-alone and portfolio basis,

• Status of First Nations engagement activities,


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• Risk Assessment, including Project development and energy delivery certainty,

• The extent of the Proponent’s, or a Proposal’s, compliance with the RFP terms,

• Variations from BC Hydro’s preferred EPA terms and conditions,

• BC Hydro load/resource balance at the time of evaluation,

• Environmental impacts or benefits,

• Potential for beneficial impacts of generation technology and/or regional diversity,

• Cost effectiveness of comparable, non-RFP alternate resources,

• The Proponent’s opportunity cost relative to the Project,

• The profile of hourly firm energy, and

• Other public interest criteria that BC Hydro considers have not otherwise been appropriately addressed in the evaluation.

21. REGULATORY AND LEGAL MATTERS

EPAs awarded under this RFP are “energy supply contracts” under the Utilities Commission Act (British Columbia). Accordingly, subject to a valid exemption, if any, obtained by a Proponent, they must be filed with the BCUC under section 71 of that Act. The BCUC may accept the EPAs for filing without convening a public hearing, or the BCUC may convene a hearing. If the BCUC determines, after a hearing, that an EPA is not in the public interest, the BCUC may make an order declaring the EPA to be unenforceable, in whole or in part, or may make any other order it considers advisable in the circumstances.

The foregoing is a very brief and general summary of section 71 of the Act. Proponents should seek their own legal and other professional advice on all legal and regulatory issues associated with the RFP and any EPAs awarded under it.

22. GENERAL TERMS AND CONDITIONS

22.1 Privilege: BC Hydro may award an EPA to the Proponent(s) that in BC Hydro’s sole and unfettered opinion, offers the resource that best serves the interests of BC Hydro and its ratepayers. The Proposal(s) having the lowest price(s) or lowest cost to BC Hydro will not necessarily be successful. BC Hydro may award no EPAs, or may terminate the procurement process at any time. BC Hydro is not obliged to provide to Proponents reasons for the award of agreements or the rejection of any Proposal, or for termination of the procurement process.

22.2 Negotiation: BC Hydro may, but is not obliged to, negotiate prices and/or any or all other terms and conditions of the EPA with one or more, but not necessarily all or any Proponents, and may do so concurrently and/or sequentially. BC Hydro may negotiate different prices, terms and conditions with different Proponents, and is not bound to disclose or offer such prices, terms and conditions to any other Proponent.


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22.3 Further Enquiries: BC Hydro may, but is not obliged to, require that a Proponent provide further information concerning, or clarification of, its Proposal. BC Hydro may make enquiries of, and rely upon, information obtained from third parties and/or public records relative to the evaluation of any Proposal. BC Hydro may, but is not obliged to, meet with one or more Proponents for the purpose of seeking such information or clarification or conducting negotiations.

22.4 Code of Conduct: Each Proponent, by submitting a Proposal, represents and warrants that it has complied, and will comply, with the Code of Conduct Guidelines Applicable to BC Hydro Contracts, attached as Appendix 6.

22.5 Costs: Each Proponent is responsible for all costs incurred by it in connection with this RFP, including the preparation and, if applicable, negotiation, of any Proposal, and the settlement and execution and delivery of any agreement arising therefrom, whether or not one or more, or no, Proposals are accepted and whether or not this RFP is terminated at any time before acceptance of any Proposals.

22.6 Liability Exclusion: BC Hydro, its directors, officers, employees, advisors and consultants incur no liability whatsoever to any Proponent under or in any manner arising out of, or related to, this RFP, including without limitation the exercise by BC Hydro of any discretion under or in relation to this RFP, save and except only liability assumed by BC Hydro under any fully executed and delivered agreement awarded under this RFP.

22.7 No Implied Terms: No terms or conditions whatsoever may be implied in this RFP.

22.8 Confidentiality: BC Hydro shall endeavor to keep confidential information provided by Proponents in Proposals or otherwise in writing under or in relation to the RFP, other than information that is, or becomes, in the public domain as a result of disclosures not made by BC Hydro, which are not permitted hereunder. Notwithstanding the foregoing, BC Hydro may disclose information provided by a Proponent (i) to the Government of British Columbia, (ii) to BC Hydro’s directors, officers, employees, advisors and consultants on a “need to know” basis, (iii) as BC Hydro may consider necessary or desirable in connection with any regulatory proceeding or matter, (iv) as required to enforce any agreement with a Proponent arising from the RFP, or (v) as required by law. Proponents acknowledge that BC Hydro is subject to the Freedom of Information and Protection of Privacy Act (British Columbia), and accordingly, non disclosure of information given to BC Hydro cannot be guaranteed in all circumstances.

22.9 No Collusion: Each Proponent, by submitting a Proposal, represents and warrants that its Proposal has been prepared without collusion with any other Proponent, and in particular the price(s), if any, and other elements of its Proposal have been arrived at independently of, and without discussion with, any other Proponent, and the Proponents will refrain from any such collusion or discussion during the entirety of the RFP process (including, without limitation, while BC Hydro is negotiating with any Proponent as contemplated at section 19).

22.10 No Lobbying: Each Proponent will direct all communications to BC Hydro relative to the RFP strictly to the person, and in accordance with the communication instructions, set out in section 5. The Proponent will not engage, and will cause its Affiliates not to engage, in lobbying, or otherwise communicating directly to, any other director, officer, employee or agent of BC Hydro, any consultant or advisor to BC Hydro, or any member of the Government of British


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Columbia for the purpose of influencing the terms, or outcome, of the RFP. The foregoing does not preclude the Proponent or its Affiliates from normal course communications with BC Hydro and/or the Government of British Columbia as required to further Project permitting and other Project planning and development.

22.11 Publication: BC Hydro, in its discretion, may publicize any results of the RFP process, including data regarding bid prices and/or descriptions of unique contract terms, provided that BC Hydro will not attribute results to specific Proponents.

22.12 Unavailable Service-Providers: BC Hydro has retained the following service-providers in relation to this RFP. Accordingly, in order to avoid any perceived or actual conflict of interest, Proponents will not retain any such service-provider in relation to this RFP, and if any such service-provider is retained by a Proponent on an unrelated matter, the Proponent consents to such service-provider continuing to provide service to BC Hydro, including if applicable legal advice and representation, relative to the RFP, any agreement arising therefrom, and any related dispute or matter. Unavailable service-providers are:

• Borden Ladner Gervais LLP • Industrial Forestry Service Ltd.


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APPENDIX 1

DEFINITIONS

All references to section numbers are to sections of the RFP document, and not the EPA, unless otherwise expressly stated.

1. “Addendum” means an addendum to the RFP issued by BC Hydro pursuant to section 9.

2. “Affiliate” means, with respect to any Proponent, any person directly or indirectly Controlled by, Controlling, or under common Control with, the Proponent.

3. “BC Hydro” means British Columbia Hydro and Power Authority.

4. “BCTC” means British Columbia Transmission Corporation.

5. “BCUC” means British Columbia Utilities Commission.

6. “Call” means BC Hydro’s Bioenergy Call for Power – Phase I.

7. “CEAP” means Competitive Energy Acquisition Process.

8. “Control” of any person means (i) with respect to any corporation or other person having voting shares or the equivalent, the ownership or power to vote, directly or indirectly, shares, or the equivalent, representing 50% or more of the power to vote in the election of directors, managers or persons performing similar functions, or (ii) ownership of 50% or more of the equity or beneficial interest in that person, or (iii) the ability to direct the business and affairs of any person by acting as a general partner, manager or otherwise.

9. “Customer” means a customer of BC Hydro, or of any other public electric utility, taking industrial or commercial electricity service.

10. “Distribution System” means the distribution, protection, control and communication facilities in British Columbia that are or may be used in connection with, or that otherwise relate to, the transmission of electrical energy at 35 kV or less, and includes all additions and modifications thereto and repairs or replacements thereof.

11. “EPA” means an electricity purchase agreement entered into between a Proponent and BC Hydro pursuant to this RFP.

12. “EPA Term Sheet” means a term sheet setting out in summary form key terms and conditions of the proposed Specimen EPA, as described at section 15.

13. “Feasibility Interconnection Study” means a study in response to an application required to accommodate the interconnection of a Project to the Transmission System.

14. “FAQ” means frequently asked questions.

15. “Forest-based Biomass” has the meaning given in the first bullet of section 14.


Appendix A

Page 14 of 36


16. “Fuel Plan” means the information required by Appendix 5 to this RFP.

17. “GBL” means generator base line, as referenced in section 13.

18. “GWh” means gigawatt-hour.

19. “Lower Mainland” means the Greater Vancouver Regional District.

20. “OATT” means BCTC’s Open Access Transmission Tariff, as filed with and accepted by the BCUC.

21. “POI” means point of interconnection.

22. “PPT” means Pacific Prevailing Time, which means Pacific Daylight Time or Pacific Standard Time, as applicable.

23. “Preliminary Interconnection Study” means a study prepared by BC Hydro in response to an application required to accommodate the interconnection of a Project to the Distribution System, prepared by BC Hydro, Distribution.

24. “Project” means an electrical generation facility and/or operational methods meeting the eligibility requirements of this RFP.

25. “Project Description” means the description of the Proponent and the Project, as described in Appendix 4 to this RFP.

26. “Proponent” means a person registered under the RFP for the purpose of submitting a Proposal, as described in section 6.

27. “Proposal” means a proposal submitted by a Proponent pursuant to the RFP, and all documents stated in the RFP to form part of a complete Proposal.

28. “Proposal Letter” means the letter substantially in the form attached as Appendix 3 to this RFP, to be submitted by a Proponent as part of its Proposal.

29. “Q&A” means question and answer.

30. “Registration Form” means the form attached as Appendix 2 to this RFP.

31. “RFP” means the “Bioenergy Call for Power – Phase I” issued by BC Hydro on February 6, 2008, and includes the Appendices described in section 3 and all Addenda issued from time to time.

32. “RFP Administrator” means the person appointed by BC Hydro described in section 5.

33. “RFP Schedule” means the schedule by which BC Hydro intends to conduct the RFP process, as described in section 7.

34. “RFP Website” means the website that BC Hydro will establish and to which Proponents will have access during the conduct of the RFP, as described in section 8.


Appendix A

Page 15 of 36


35. “Specimen EPA” means the proposed form of EPA that BC Hydro intends to provide to Proponents, as described in section 15.

36. “System” means the Transmission System and/or the Distribution System, as applicable.

37. “Transmission System” means the transmission, substation, protection, control and communication facilities (i) owned by BC Hydro or BCTC, and (ii) operated by BCTC in British Columbia, and includes all additions and modifications thereto and repairs or replacements thereof.


Appendix A

Page 16 of 36


APPENDIX 2

REGISTRATION FORM

[This appendix to be issued will be a registration form to be submitted by each Proponent that includes (a) the Proponent’s commitment to be bound by the general terms and conditions set out in section 23, (b) the Proponent’s consent to the disclosure of Project-related information, and (c) a requirement for the submission of summary information regarding the Proponent and its Project. See section 6 of the RFP.]

APPENDIX 3

FORM OF PROPOSAL LETTER

[This appendix to be issued will be a form of letter to be submitted as part of a Proponent’s Proposal that will contain pricing and other commercial information relevant to the Proposal.]

APPENDIX 4

PROJECT DESCRIPTION REQUIREMENTS

[This appendix to be issued will set out instructions for the preparation of each Proponent’s Project Description, to be submitted as part of the Proposal. The Project Description should contain detailed information concerning the Proponent and the Project]

APPENDIX 5

FUEL PLAN REQUIREMENTS

[This appendix to be issued will describe information to be provided by the Proponent concerning fuel types, volumes, and other fuel planning data.]


Appendix A

Page 17 of 36


APPENDIX 6

BC HYDRO CODE OF CONDUCT

Please see attached.


Appendix A

Page 18 of 36

Director and Employee Code of Conduct 9

In its ongoing efforts to ensure that

BC Hydro and its subsidiaries behave

and are perceived to behave as

ethical corporations, BC Hydro has

adopted a Code of Conduct that

provides guidelines for the behaviour

of its Directors, Officers and

Employees and for BC Hydro’s

expectations of the behaviour of its

suppliers, consultants, contractors

and business associates.

Unless it is inappropriate to do so,

the guidelines set out below are to

be included in every tender call,

request for proposals and contract

with BC Hydro and its subsidiaries.

A supplier, consultant, contractor or

business associate may be required

to give assurances that it conducts

itself in accordance with the

standards set in these guidelines

before it will be considered qualified

to enter into a business relationship

with BC Hydro.

A supplier, consultant, contractor or

business associate with which

BC Hydro has a contract will be

expected to comply with the

standards set in these guidelines.

Failure to do so, may be treated by

BC Hydro as a reason for terminating

the contract. In some cases, other

terms of a specific contract may

impose a higher standard. In these

cases, the contract terms with the

higher standards apply.

Guidelines

In these guidelines:

“BC Hydro” means BC Hydro and

Power Authority or any of its

subsidiaries that has entered into the

Contract described in these guidelines;

“Contractor” means the contractor,

consultant, supplier or business

associate who has a contract with

BC Hydro in which these guidelines

are included as a term of the contract.

*1.The Contractor shall act at all

times with integrity and honesty

a) in its dealings with BC Hydro, and

b) in its dealings with a third

person if, in those circum-

stances, the Contractor is

acting as a representative of

or on behalf of BC Hydro.

2. If the conduct of business with a

competitor of BC Hydro during

the term of the Contract would

require the Contractor to act con-

trary to the best interests of

BC Hydro, the Contractor shall

not conduct such business unless

the Contractor has the prior

written permission of BC Hydro.

3. Before the Contract is entered into

and from time to time as circum-

stances require, the Contractor shall

disclose in writing to BC Hydro to

the best of the Contractor’s

knowledge:

a) any business relationship that

the Contractor or any of its

owners or officers has with a

Director or Employee of

BC Hydro,

b) the name of any Director or

Employee of BC Hydro who is

a relative of the Contractor or

any of its owners or officers,

and

c) the name of any Director or

Employee of BC Hydro with

whom the Contractor or any

of its owners or officers is

connected by frequent or

close association.

4. The Contractor shall read

BC Hydro’s Code of Conduct that

is available from Hydro’s contract

representative or available at

BC Hydro’s web site at

www.bchydro.com and shall

take all reasonable steps to avoid

placing a Director or Employee of

BC Hydro in a conflict of interest

as contemplated by the Code.

Code of Conduct guidelines applicable to BC Hydro contractsAttachment 1 to Director and Employee Code of Conduct

* See next page.

Appendix A

Page 19 of 36

10 Director and Employee Code of Conduct

*5.The Contractor shall keep confi-

dential all information provided

to it by BC Hydro or developed

during performance of the

Contract and shall not use that

information for any purpose

unrelated to performance of its

obligations under the Contract.

6. If the Contractor is given access

to any BC Hydro property in

order to perform the Contract,

the Contractor shall use that

property solely for purposes of

performance of the Contract.

7. The Contractor shall not attempt

to secure preferential treatment

with BC Hydro by offering enter-

tainment, gifts or benefits to

BC Hydro Directors or Employees.

Reasonable exchanges common

to business relationships are

acceptable.

8. Unless the Contractor has the

express permission of BC Hydro,

the Contractor shall not offer

employment to a BC Hydro

employee during the term of the

Contract.

9. The Contractor shall provide its

employees, including any employees

of BC Hydro with whom the

Contractor has a close working

relationship, with a safe and

healthy workplace that is harass-

ment and discrimination free.

10. The Contractor shall ensure that

when it is participating in any

public discussions or taking a

position of leadership in other

organizations that it does not

represent itself as a spokesperson

of BC Hydro unless the Contractor

has been retained specifically to

act in that capacity.

Contractors who wish further infor-

mation or advice on the application

of these guidelines to particular

circumstances are encouraged to

speak to BC Hydro’s contract

representative.

ClarificationIssued August 2000

This discussion provides clarifica-

tion of the intention of Item 3 of

the Code of Conduct Guidelines

applicable to BC Hydro Contracts

which refer to “owners” of a

Contractor. The following may be

used to determine whether a

disclosure is required for a particular

owner of the Contractor.

If the Contractor is a corporation

with more than two shareholders, a

disclosure will only be required for a

shareholder who is:

1. an individual who beneficially

owns, directly or indirectly, more

than 20 per cent of the voting

rights attached to all outstanding

voting shares of the Contractor,

or

2. an individual who together with

his or her associate** beneficially




voting shares of the Contractor.

If a Contractor is a partnership with

more than two partners, a disclosure

will only be required for a partner

who is:

1. an individual who beneficially


than 20 per cent interest in the

partnership, or

2. an individual who together with

his or her associate** beneficially


than 20 per cent interest in the

partnership.

**“associate” means

1. a spouse*** of the

shareholder or partner,

2. a son or daughter

• of the shareholder or

partner, or

• of the spouse of the

shareholder or partner,

if the son or daughter is under

19 years of age or is living in

the family residence of the

shareholder or partner, or

3. a relative of the shareholder or

partner who is living in the

family residence of the share-

holder or partner.

***“spouse” means a person to

whom the shareholder or partner

is married or with whom the

shareholder or partner is living in

a marriage-like relationship,

including a person of the same

gender, but does not include a

person from whom the share-

holder or partner is separated or

living apart and with whom the

shareholder or partner has

entered into an agreement to live

apart or who is the subject of an

order of a court recognizing the

separation.

* See Clarification issued September 2005 in this attachment to the Code (overleaf) on “Conflicts of Interest”, “Integrity and Honesty”,and “Confidentiality” (items 1 and 5 above).

Appendix A

Page 20 of 36

ClarificationIssued September 2005

This discussion to provides clarifi-

cation of items 1 and 5 of the

Code of Conduct Guidelines

applicable to BC Hydro Contracts

with respect to Conflicts of

Interest; Integrity and Honesty;

and Confidentiality.

Item 1

Item 1 states: The Contractor shall

act at all times with integrity and

honesty

a) in its dealings with BC Hydro,

and

b) in its dealings with a third person

if, in those circumstances, the

Contractor is acting as a repre-

sentative of BC Hydro.

Although this obligation has a

broader scope than this discussion,

this document is intended to address

specifically the issue of conflicts of

interest that may arise in the course

of a Contractor providing services to

BC Hydro or otherwise acting for or

on behalf of BC Hydro. In such cir-

cumstances BC Hydro expects that a

Contractor acting with integrity and

honesty will conduct itself as

follows:

1. At all times during the term of a

contract, the Contractor will

avoid any potential conflicts of

interest between its interests and

those of BC Hydro.

2. Before a contract is entered into,

the Contractor will make a

written disclosure of any potential

conflicts of interest that might

arise during the term of the

contract.

3. If a potential or actual conflict of

interest arises during the term of

an existing contract, the

Contractor will make a written

disclosure of the circumstances at

the earliest possible opportunity

to the BC Hydro representative

responsible for the contract.

4. After making the required written

disclosure, the Contractor will

take any steps reasonably

required by BC Hydro to ensure

that BC Hydro’s interests are pro-

tected, including refraining from

any activity or ceasing any activity

tht has given rise to the conflict

of interest. For these purposes,

BC Hydro’s interests include non-

economic considerations such as

reputation.

These expectations are consistent

with those required of the employ-

ees and directors of BC Hydro as set

out in its Code of Conduct for

Employees and Directors.

Potential conflicts of interest are

more likely to occur if the Contractor

has been engaged to perform the

following types of activities:

1. To administer or manage other

BC Hydro contracts. For example,

if the Contractor is engaged to

administer or manage the con-

tract of another BC Hydro

contractor that is a competitor of

the Contractor, the Contractor

has a conflict of interest if it has

access to the other contractor’s

proprietory information or

methods for carrying out the con-

tract or if the Contractor has the

opportunity to treat the other

contractor in an inequitable or

unfair manner.

2. To carry out purchasing func-

tions including preparing all or

part of the tender documents or

RFPs, conducting the tendering or

RFP process, recommending

award of contracts. For example,

if the Contractor has been

engaged to prepare the scope of

work or services for a contract

upon which it, or any related

business (see interpretation at the

end of this discussion), intends

toor is considering submitting a

bid or proposal, the Contractor

has a conflict of interest.


Appendix A

Page 21 of 36

3. To develop or manage a budget.

For example, if the Contractor

has been engaged to develop or

manage a budget for BC Hydro

operations and the Contractor's

current business relationship or

future business relationship with

BC Hydro is or could be affected

by that budget, the Contractor

has a conflict of interest.

4. To provide services to or manage

a special project. For example, if

the Contractor has been engaged

to evaluate BC Hydro's needs in

respect of a certain issue e.g.

adequacy of equipment; business

organization, and the Contractor

is in the business of supplying or

refurbishing equipment or provid-

ing business management

services, the Contractor has a

conflict of interest.

5. To conduct negotiations on

behalf of BC Hydro. For example,

If the Contractor has the oppor-

tunity in these negotiations to

benefit itself- other than as con-

templated in the contract with

BC Hydro - the Contractor has a

conflict of interest.

6. To speak for BC Hydro.

The Contractor has an actual conflict

of interest if the Contractor, while

performing these activities, has the

opportunity to further its own inter-

ests. The Contractor has an apparent

conflict of interest when a reason-

ably well informed person could

perceive that the Contractor's ability

to perform these activities was or

may be affected by the Contractor's

interests.

For purposes of this discussion, a

Contractor's interests include the

interests of the Contractor's direc-

tors, officers, employees and of a

related business.

For purposes of this discussion,

“related business” includes, but is

not limited to:

1. an affiliate, as defined in the

Business Corporations Act SBC

2002, as amended from time to

time, of the Contractor;

2. an owner as described in the

Clarification Statement issued

August 2000 in respect of the

Code of Conduct Guidelines

applicable to BC Hydro Contracts;

and

3. any other entity in which the

Contractor has an ownership or

financial interest.

Item 5

Item 5 of the Guidelines, although

dealing specifically with confidential

information, is often related to Item

1 discussed above.

Item 5 states: The Contractor shall

keep confidential all information

provided to it by BC Hydro or devel-

oped during performance of the

Contract and shall not use that

information for any purpose unre-

lated to performance of its

obligations under the Contract.

A Contractor acting with integrity

and honesty will take special care

to ensure that any confidential

information it has been provided by

BC Hydro or that it has developed

for BC Hydro will not be used for its

own purposes. For example, this

information should not be used by

the Contractor to prepare any

bids or proposals in response to a

BC Hydro tender or proposal call or

to take advantage of any business

opportunities disclosed in the infor-

mation or to acquire a competitive

advantage over other businesses or

to harm BC Hydro.

For further advice on issues relating

to conflicts of interest or confiden-

tiality of information please contact

your BC Hydro representative

responsible for the contract or

BC Hydro's Code of Conduct

Advisor.


Appendix A

Page 22 of 36


The purpose of this Clarification

Statement is to establish some

general rules for and to clarify the

Corporation’s intention in respect of

two matters: the nature of a private

interest that may create a conflict of

interest and the prohibition against

receiving a benefit from a BC Hydro

business relationship.

For further advice please contact your

Manager or the Code of Conduct

Advisor.

Private interests resultingin conflicts of interest

Under the Code, a Director or

Employee is to avoid all conflicts of

interest and where there is an actual

or potential conflict of interest or

perception of a conflict of interest

must make full disclosure and must

not participate in the matter giving

rise to the conflict. The conflict of

interest provisions are not intended

to treat all private interests, as defined

in the Code, in the same manner.

Potential conflicts of interest arising

out of private interests which are

trivial are generally of less concern

to the Corporation. A trivial interest

is an interest of such minimal value

or so remote from influence by a

Director or Employee that it would

not reasonably be considered to

constitute a risk of conflict of interest.

The following are examples of

interests that would ordinarily be

considered so remote as not to

constitute a risk of conflict of interest:

• Publicly traded corporation –

Ownership of shares in a widely

publicly traded corporation where:

(a) the Director or Employee does

not hold, directly or indirectly,

sufficient shares to have effec-

tive control of the corporation,

and

(b) the Director or Employee or an

associate of them (“associate”

is defined in the Code) is not a

director, officer, employee,

consultant or advisor of that

corporation.

• RRSP – Ownership of shares of a

corporation by means of a

Registered Retirement Savings

Plan, or similar financial product

e.g. RESP, that is not self-

administered.

• Mutual Funds – Ownership of

units in a mutual fund which is

managed by an independent fund

manager where the Director or

Employee or an associate of them

is not a director, officer, employee,

consultant or advisor of that fund.

If a Director or Employee has a

“trivial” private interest, the Director

or Employee should disclose the

interest as required under the Code.

In this situation, the Director or

Employee is not required to abstain

from voting or taking other actions

that may impact the outcome of the

matter that involves such interest

unless the Board of Directors, in the

case of a Director, or the Manager,

in the case of an Employee, deter-

mines otherwise, or in all of the

circumstances the Director or

Employee could, despite the trivial

nature of the interest, be perceived

to be in a conflict of interest.

Benefits from BC Hydrobusiness relationships

The prohibition against receiving a

benefit from a BC Hydro business

relationship is not intended to be

absolute. The Code expressly qualifies

the prohibition by stating that it does

not apply to a benefit that the

Corporation intends its Directors or

Employees to enjoy. This Clarification

Statement describes other qualifica-

tions on the prohibition:

Clarification of “Conflicts of Interests”and “Benefits”- Issued July 2002

Appendix A

Page 23 of 36


1. It is only intended to apply to a

pecuniary or economic benefit or

to a benefit to which a pecuniary

or economic value may be

attributed.

2. It is not intended to prohibit a

benefit which is trivial. A benefit

will ordinarily be considered trivial

if it is of minimal value or if it is

remote from the business relation-

ship. The following situations are

two examples of when a benefit

would be considered remote from

a business relationship:

(a) If the Director or Employee

owns units in a mutual fund

that holds shares in a company

with which the Corporation

does business, an increase in

the value of the units of the

mutual fund would, in the

absence of exceptional

circumstances, be considered

a benefit that is remote from

the Corporation’s business

relationship.

(b) If a Director or Employee owns

shares in a publicly traded

company and a subsidiary of

that company does business

with the Corporation, the

benefit received by the sub-

sidiary from that business

would, in the absence of

exceptional circumstances, be

considered a benefit that is

remote from the Corporation’s

business relationship.

3. It is generally not intended to

prohibit a benefit received from a

business relationship in which the

Director or Employee, in any

official or unofficial capacity, did

not participate or did not have the

opportunity to influence. However,

in certain circumstances receipt of

such benefits could nonetheless

result in the perception of a

conflict of interest. Usually, the

most effective way to avoid this

perception is to refuse the benefit.

For additional advice on perception

of a conflict and its avoidance,

contact the Code of Conduct

Advisor.

4. It is not intended to apply to a

benefit received from a business

relationship which the Director or

Employee, in an official or

unofficial capacity, had the

opportunity to influence if:

(a) at the earliest opportunity, the

Director or Employee makes

full disclosure of the particular

circumstances to the Board of

Directors, in the case of the

Director, and to a Manager, in

the case of an Employee,

(b) the Director or Employee

abstains from voting or taking

any other actions that could

impact the outcome of the

business relationship, and

(c) the Board of Directors, in the

case of the Director, or a

Manager, in the case of an

Employee, approves the benefit

received.

Whenever in doubt about the

application of this prohibition, full

disclosure of the circumstances is the

most effective way to prevent an

inadvertent breach of the Code of

Conduct.

Appendix A

Page 24 of 36

Clarification of Code of Conduct Guidelines applicable to BC Hydro Contracts September 2005

- 1 -

CODE OF CONDUCT GUIDELINES APPLICABLE TO BC HYDRO CONTRACTSATTACHMENT 1 TO DIRECTOR AND EMPLOYEE CODE OF CONDUCT

Further ClarificationIssued September 2005

This document is issued to provide clarification of items 1 and 5 of the Code of ConductGuidelines applicable to BC Hydro Contracts with respect to Conflicts of Interest; Integrity andHonesty; and Confidentiality.

Item 1Item 1 states: The Contractor shall act at all times with integrity and honesty

a) in its dealings with BC Hydro, and

b) in its dealings with a third person if, in those circumstances, the Contractor isacting as a representative of BC Hydro.

Although this obligation has a broader scope than this discussion, this document is intended toaddress specifically the issue of conflicts of interest that may arise in the course of a Contractorproviding services to BC Hydro or otherwise acting for or on behalf of BC Hydro. In suchcircumstances BC Hydro expects that a Contractor acting with integrity and honesty will conductitself as follows:

1. At all times during the term of a contract, the Contractor will avoid any potential conflictsof interest between its interests and those of BC Hydro.

2. Before a contract is entered into, the Contractor will make a written disclosure of anypotential conflicts of interest that might arise during the term of the contract.

3. If a potential or actual conflict of interest arises during the term of an existing contract,the Contractor will make a written disclosure of the circumstances at the earliestpossible opportunity to the BC Hydro representative responsible for the contract.

4. After making the required written disclosure, the Contractor will take any stepsreasonably required by BC Hydro to ensure that BC Hydro’s interests are protected,including refraining from any activity or ceasing any activity that has given rise to theconflict of interest. For these purposes, BC Hydro’s interests include non-economicconsiderations such as reputation.

These expectations are consistent with those required of the employees and directors of BCHydro as set out in its Code of Conduct for Employees and Directors.

Potential conflicts of interest are more likely to occur if the Contractor has been engaged toperform the following types of activities:

1. To administer or manage other BC Hydro contracts. For example, if the Contractor isengaged to administer or manage the contract of another BC Hydro contractor that is acompetitor of the Contractor, the Contractor has a conflict of interest if it has access tothe other contractor’s proprietary information or methods for carrying out the contract or

Appendix A

Page 25 of 36


- 2 -

if the Contractor has the opportunity to treat the other contractor in an inequitable orunfair manner.

2. To carry out purchasing functions including preparing all or part of the tender documentsor RFPs, conducting the tendering or RFP process, recommending award of contracts.For example, if the Contractor has been engaged to prepare the scope of work orservices for a contract upon which it, or any related business (see interpretation at theend of this discussion), intends to or is considering submitting a bid or proposal, theContractor has a conflict of interest.

3. To develop or manage a budget. For example, if the Contractor has been engaged todevelop or manage a budget for BC Hydro operations and the Contractor’s currentbusiness relationship or future business relationship with BC Hydro is or could beaffected by that budget, the Contractor has a conflict of interest.

4. To provide services to or manage a special project. For example, if the Contractor hasbeen engaged to evaluate BC Hydro’s needs in respect of a certain issue e.g. adequacyof equipment; business organization, and the Contractor is in the business of supplyingor refurbishing equipment or providing business management services, the Contractorhas a conflict of interest.

5. To conduct negotiations on behalf of BC Hydro. For example, if the Contractor has theopportunity in these negotiations to benefit itself – other than as contemplated in thecontract with BC Hydro – the Contractor has a conflict of interest.

6. To speak for BC Hydro.

The Contractor has an actual conflict of interest if the Contractor, while performing theseactivities, has the opportunity to further its own interests. The Contractor has an apparentconflict of interest when a reasonably well informed person could perceive that the Contractor’sability to perform these activities was or may be affected by the Contractor’s interests.

For purposes of this discussion, a Contractor’s interests include the interests of the Contractor’sdirectors, officers, employees and of a related business.

For purposes of this discussion, “related business” includes, but is not limited to:

1. an affiliate, as defined in the Business Corporations Act SBC 2002, as amended fromtime to time, of the Contractor;

2. an owner as described in the Clarification Statement issued August 2000 in respect ofthe Code of Conduct Guidelines applicable to BC Hydro Contracts; and

3. any other entity in which the Contractor has an ownership or financial interest.

Item 5

Item 5 of the Guidelines, although dealing specifically with confidential information, is oftenrelated to Item 1 discussed above.

Appendix A

Page 26 of 36


- 3 -

Item 5 states: The Contractor shall keep confidential all information provided to it by BC Hydroor developed during performance of the Contract and shall not use that information for anypurpose unrelated to performance of its obligations under the Contract.

A Contractor acting with integrity and honesty will take special care to ensure that anyconfidential information it has been provided by BC Hydro or that it has developed for BC Hydrowill not be used for its own purposes. For example, this information should not be used by theContractor to prepare any bids or proposals in response to a BC Hydro tender or proposal callor to take advantage of any business opportunities disclosed in the information or to acquire acompetitive advantage over other businesses or to harm BC Hydro.

For further advice on issues relating to conflicts of interest or confidentiality of informationplease contact your BC Hydro representative responsible for the contract or BC Hydro’s Code ofConduct Advisor.

Appendix A

Page 27 of 36

Code of ConductDirector and Employee

A00-034 cover2 2/9/06 1:49 PM Page 2

Appendix A

Page 28 of 36

A00-034

C O D E O F C O N D U C T C O N T A C T S

YOUR LINE MANAGER

POLICY QUESTIONS . . . . . . . . . . . . .623•4466 (74466)

CODE OF CONDUCT ADVISOR . . . . .623•4419 (74419)

E-MAIL . . . . . . . . . . . . . . . . . . . . . . [email protected]

ROLE OF CODE OF CONDUCT ADVISOR: provides independent and confidential advice

on the interpretation and application of the Code of Conduct and its related guidelines.

First printed February 2000. Reprinted March 2004 with additional policies and clarifications.

Reprinted February 2006 with further clarifications.

Printed with vegetable-based inks on paper made with 100% post-consumer waste. Please recycle.

A00-034 cover 2/9/06 11:41 AM Page 1

Appendix A

Page 29 of 36


Director and Employee

Code of ConductIntroduction

The Director and Employee Code of

Conduct provides general guidance

on the standards of conduct

expected of Directors, Employees

and Contractors of BC Hydro,

including guidelines on conflict of

interests. The guidelines applicable

to Contractors are attached to this

Code as Attachment 1. Within the

Corporation there are other policies

or procedures which complement or

support the general Code of Conduct

and reference is made to them

throughout this Code.

See page 7 for Definitions of Terms

used in the Code of Conduct and

related documents.

BC Hydro, recognizing the need for

a neutral and independent resource

to provide a clear interpretation of

its standards of business conduct

and guidelines for conflict of interest,

has established a Code of Conduct

Advisor. The Code of Conduct

Advisor, an independent contractor

appointed by the Board:

1. reports through the Office of the

Chair;

2. reviews, updates or establishes

appropriate policy, guidelines,

procedures and processes for

BC Hydro’s code of business

conduct and conflict of interest

guidelines; and

3. provides independent expert

advice, receives disclosures and if

appropriate, issues written

opinions or directives to Directors,

Employees and Contractors on

code of conduct and conflict of

interest matters that they may

encounter when fulfilling their

respective responsibilities.

The fundamental relationship

between Director and/or Employee

and BC Hydro must be one of trust;

essential to trust is a commitment to

honesty and integrity.

Compliance with law

BC Hydro’s Directors and Employees

shall comply with all applicable

provisions of laws and regulations of

the countries in which BC Hydro

operates. Directors and Employees

shall contact BC Hydro’s legal counsel

if they have any questions regarding

applicable laws.

No one in BC Hydro shall commit or

condone an illegal act or instruct

another Employee, partner or

Contractor to do so.

Employees are expected to be suffi-

ciently familiar with any legislation

that applies to their work, to recog-

nize potential liabilities and to know

when to seek legal advice. If in

doubt, ask for clarification from

BC Hydro’s legal counsel.

No Director or Employee shall create

or condone the creation of a false

record. No Director or Employee shall

destroy or condone the destruction

of a record, except in accordance

with BC Hydro policies.

Directors and Employees must not

engage in or give the appearance of

being engaged in any illegal or

improper conduct that is in violation

of this Code.

Conflicts of interest*

Directors and Employees will perform

their duties conscientiously and will

not put themselves in a position in

which their private interests and those

of BC Hydro might be or perceived

to be in conflict.

A Director or Employee has an actual

conflict of interest when the Director

or Employee is performing a duty or

function of the position and in the

performance of that duty or function

has the opportunity to further his or

her private interests.

* Refer to Appendix A for further clarification on Conflicts of Interest, Benefits and Outside Collaborative Activities.

Appendix A

Page 30 of 36

There is an apparent conflict of

interest when a reasonably well-

informed person could perceive that

a Director’s or Employee’s ability to

perform a duty or function of the

position was or will be affected by

the Director’s or Employee’s private

interests.

Every Director and Employee must

avoid any situation in which there is

an actual or apparent conflict of

interest that could interfere or could

be perceived to interfere with the

Employee’s or Director’s judgment in

making decisions in BC Hydro’s best

interests.

BC Hydro depends on the integrity

of all Directors or Employees who

have knowledge of a decision or

activity of BC Hydro that involves or

might involve a conflict of interest to

disclose the circumstances.

Assurance that no conflict of interest

or other breach of this Code exists

may be required, in writing, from

time to time.

Every Director and Employee shall

disclose all circumstances that consti-

tute an actual or apparent conflict of

interest. Disclosure shall be made, in

the case of Directors, to the Chair,

and in the case of Employees, to

their manager.

Some conflicts are quite clear, but

others are less obvious. BC Hydro

recognizes that its Directors and

Employees have perfectly legitimate

outside interests; however, there may

also be situations which could be

perceived as a conflict of interest no

matter how innocent the intentions

of the Employee or Director.

The following are examples of

circumstances where a Director’s or

Employee’s private interests would

be in conflict with the interests of

BC Hydro:

1. an Employee who is responsible

for awarding a BC Hydro printing

contract is a partner in a printing

firm that has tendered for that

contract;

2. a Director discloses confidential

information about future real

estate acquisitions of BC Hydro to

a close personal friend with

whom the Director has had

business dealings in the past;

3. the teenage son of an Employee

who is negotiating a contract

with an environmental consultant

is offered and accepts a free week

long trip on a northern BC river

from the environmental

consultant;

4. a Director who is aware of a

significant contract being

negotiated between a public

company and BC Hydro purchases

shares in the public company

before the contract is announced

publicly.

Directors or Employees who find

themselves in a conflict of interest

must disclose the conflict and abstain

from voting or other actions that

impact the outcome of the activity or

business transaction. Full disclosure

enables Directors and Employees to

resolve unclear situations and gives

an opportunity to dispose of or appro-

priately address conflicting interests

before any difficulty can arise.

Where necessary, an Employee or

Director may refer an individual

situation to BC Hydro’s Code of

Conduct Advisor, who may recom-

mend actions needed to eliminate or

address a conflict of interest.

The following provides a more

detailed discussion of circumstances

where a conflict of interest could

arise and how BC Hydro expects its

Directors and Employees to behave.

Outside business interests

In this discussion, “business activity”

refers to ownership, participation in

decision-making as a member of a

board of directors, or engagement

as an advisor or consultant or as an

active member of staff in any

position.

Employees should declare their

outside business activities at the time

of engagement and are required to

limit outside business activities to

avoid any conflicts of interest or

other breaches of the provisions of

the Code. Notwithstanding any

outside business activities, Employees

are required to act in the best

interests of BC Hydro.

No Employee or Director should hold

a substantial private interest, directly

or indirectly, through a relative, friend

or associate, or hold or accept a

position as an officer or director, in

an entity where by virtue of his or

her position in BC Hydro the Director

or Employee could in any way benefit

the entity by influencing the decisions

of BC Hydro.


Appendix A

Page 31 of 36

Confidential information

A Director or Employee should at all

times maintain the confidentiality of

all confidential information and all

records of BC Hydro and must not

make use of or reveal such informa-

tion or records except in the course

of performance of their duties or

unless the documents or information

become a matter of general public

knowledge.

Similarly, Directors or Employees may

not use confidential information

obtained through their association

or employment with BC Hydro to

further their private interests or the

private interests of their friends or

relatives.

A Director or Employee using

BC Hydro’s computer data base or

electronic mail system will be

expected to comply with any internal

policies and procedures that guide

the storage, use and transmission of

information through this medium.

Investment activity

Directors or Employees may not,

directly or indirectly, through friends,

relatives or associates, acquire or

dispose of any interest, including

publicly traded shares, in any entity

when in possession of confidential

information obtained in the perform-

ance of their duties with BC Hydro

which could affect the value of such

interest.

Each province has its own legislation

on “insider trading”, which means

buying or selling securities on the

basis of “inside” knowledge not

available to the public. Penalties are

severe for violations and Directors or

Employees who trade in, or are con-

templating trading in securities,

should familiarize themselves with

the relevant legislation.

Outside employment*

BC Hydro Employees may hold

outside jobs or engage in modest

self-employment activities on their

own time, using their own resources,

and in a manner not adversely

affecting their performance or objec-

tivity for BC Hydro.

However, no BC Hydro Employee,

may accept work with a competitor,

or with any entity that could lead to

a conflict of interest or situation

prejudicial to BC Hydro’s interests.

Non-profit and professionalassociations

BC Hydro encourages its Employees

to contribute to their communities

through involvement with charitable,

community service and professional

organizations. However, Employees

should only use BC Hydro time or

resources for such activities with the

prior agreement of management.

From time to time, individual Directors

and Employees reach positions of

leadership in non-profit associations

where they may be viewed as spokes-

persons for those groups. In such

situations, the individuals should

ensure that they are seen as speak-

ing for their organization or as

individuals, and not as an Employee

or spokesperson of BC Hydro.

Entertainment, gifts andbenefits

In this discussion, “gifts or benefits”

includes cash, preferred loans,

securities or secret commissions.

It is essential to efficient business

practices that all those who do

business with BC Hydro, as

contractors or customers, have

access to BC Hydro on equal terms.

Directors and Employees and their

associates should not accept enter-

tainment, gifts or benefits which

grant or appear to grant preferential

treatment to a potential or actual

contractor of BC Hydro. Any entity

offering such inducement must cease

this practice; a business relationship

with BC Hydro will be conditional on

compliance with this Code.

Similarly, no Director or Employee may

offer entertainment, gifts or benefits

in order to secure preferential treat-

ment for BC Hydro.

Gifts, entertainment and benefits

may only be accepted or offered by

a Director or Employee in the normal

exchanges common to business

relationships. The following criteria

will guide your judgment:

1. the gift, entertainment or benefit

would be considered by the busi-

ness community to be within the

bounds of propriety taking into

account all the circumstances of

the occasion;

2. the exchange does not nor is it

expected to create an obligation;


* Refer to Appendix B for further clarification on Outside Employment.

Appendix A

Page 32 of 36

3. it occurs infrequently; and

4. it could be justified on a

BC Hydro expense statement if

the Employee or Director offers

rather than receives it.

Inappropriate gifts that are received

by a Director or Employee should be

returned to the donor and may be

accompanied by a copy of this Code.

Perishable gifts can be donated to a

charity and the donor notified. The

Code of Conduct Advisor will be

advised of the circumstances of an

inappropriate gift.

In some cultures or business settings,

the return of a gift or refusal of a

favour, benefit or entertainment

would be offensive; in these cases, a

Director or an Employee should refer

the circumstances to the Chair for

guidance.

Full and immediate disclosure to

BC Hydro management of borderline

cases will always be taken as good-

faith compliance with this Code.

Business relations withcontractors

BC Hydro will deal fairly and openly

with all its Contractors and will

facilitate access to its business by all

entities, provided conditions of

quality, reliability and competitive-

ness are met.

No Director or Employee may benefit

directly or indirectly from BC Hydro’s

business relationships unless the

benefit is an ancillary benefit that

BC Hydro intends its Directors or

Employees to enjoy.

Professional development

BC Hydro encourages and supports

the professional development of its

Employees. Where staff are members

of a recognized profession, they are

expected:

1. to keep abreast of professional

developments in their field;

2. to perform their duties in accor-

dance with the recognized

standards of that profession; and

3. to abide by any code of ethics

adopted by their professional

association.

Environment and safety

Environmental protection is a funda-

mental BC Hydro value; every

Director and Employee has a role in

ensuring BC Hydro’s operations

comply with environmental legisla-

tion and standards.

Safety must be everyone’s concern.

BC Hydro is committed to providing

all Employees a safe, healthful and

harassment-free workplace and to

ensuring safe and respectful work

practices and conditions.

Management and Directors have

both a legal and a moral responsibil-

ity for safety and the protection of

the environment, and every manager

has a specific obligation in this

respect.

Every Employee has a personal

responsibility to take all prudent pre-

cautions in every activity, not just to

ensure personal safety, but also to

avoid creating any danger to others

or demonstrating behaviour which

can be reasonably construed as

discrimination or harassment.

Use of Corporationproperty

BC Hydro assets must not be

misappropriated for personal use by

Directors or Employees.

Directors and Employees are

entrusted with the care, management

and cost-effective use of BC Hydro’s

property, including the use of

BC Hydro’s name, and should not

make significant use of these

resources for their own personal

benefit or purposes.

Directors and Employees should

ensure that all BC Hydro property

assigned to them is maintained in

good condition and should be able

to account for such property.

Directors and Employees may not

dispose of BC Hydro property except

in accordance with the guidelines

established by the Investment

Recovery Manager or other

designated Employee.

Patents and discoveries

Employees are often engaged in

various forms of research or problem

solving for BC Hydro. The product of

their efforts produced within the

scope of their employment belongs

to BC Hydro, whether the product

was concluded while actually at

work or not.

Such products include computer pro-

grams, technical processes,

inventions, research methods, reports

or articles and any other form of

innovation or development. Patents,

rights or copyright, as appropriate,

must be assigned by Employees to

BC Hydro.


Appendix A

Page 33 of 36

Political participation

Directors and Employees are encour-

aged to participate fully as private

citizens in the democratic process at

any level, including campaigning in

elections and running for or holding

public office.

However, Directors and Employees

engaging in the political process

should do so on their own time and

must take care to separate their per-

sonal activities from their association

with BC Hydro.

Responsibility

BC Hydro is determined to behave,

and to be perceived, as an ethical

corporation. Each Director and

Employee must adhere to the

standards described in this Code of

Conduct, and to the standards set

out in applicable policies, guidelines

or legislation.

An Employee’s failure to adhere to

these standards could lead to disci-

plinary action and the policies and

procedures currently in place at

BC Hydro respecting disciplinary

action will apply.

A Director’s failure to adhere to these

standards could result in a recommen-

dation for removal from office.

To demonstrate our determination

and commitment, BC Hydro asks

each Director and Employee to review

the Code periodically throughout

the year. Take the opportunity to

discuss with the Code of Conduct

Advisor or senior management any

circumstances that may have arisen

which could be an actual or potential

violation of these ethical standards

of conduct.

Directors of BC Hydro and its sub-

sidiaries, members of BC Hydro’s

Corporate Management Committee,

officers appointed by subsidiary

boards of directors and any other

officer of BC Hydro as required by

BC Hydro’s Board of Directors are

required to sign a Form of Declaration

annually and file it with the Corporate

Secretary, see Attachment 5.

Directors are also required to comply

with the Protocol for Directors, see

Attachment 2.

Integrity, honesty, and trust are

essential elements of our business

success. Any Director or Employee

who knows or suspects that this

Code of Conduct has been or is

likely to be breached has a responsi-

bility to report it.

A Director or Employee who requires

advice on a particular Code of

Conduct matter or suspects improper

activities should seek clarification

from the appropriate official, either

the Code of Conduct Advisor or the

appropriate manager.

Where to seek clarification

For Directors, you should refer such

matters to the Code of Conduct

Advisor.

For Employees, your immediate

manager will provide guidance on

any item in this Code of Conduct.

You may then be directed to the

sources of information, including rel-

evant corporate policy, or be referred

to one of the authorities mentioned

below.

If the issue is one which you feel

unable to discuss with your

immediate manager, you should

refer to the next level of manage-

ment or to a member of BC Hydro’s

senior management, or to the Code

of Conduct Advisor.

The privacy of a Director or Employee

who discloses a breach or potential

breach under this Code of Conduct

will be respected by management of

BC Hydro as much as is possible in

the circumstances. Management of

BC Hydro is responsible for ensuring

that any individual who, in good

faith, has made a disclosure of a

breach or potential breach of this

Code of Conduct does not suffer

any adverse consequences as a

result.

All disclosures to the Code of

Conduct Advisor will be kept strictly

confidential unless, in the sole

opinion of the Advisor, the matter

disclosed constitutes an actual or

potential threat of serious harm to

BC Hydro, its Employees or to the

general public. In that event, the

Advisor will act in accordance with

any disclosure procedure issued by

the Advisor. See Procedure for

Disclosures to Code of Conduct

Advisor (Attachment 3A), as well as

Procedure for Confidential Reporting

of Financial Concerns (Attachment 3B).

Exemptions from Coderequirements

An Employee or a Director may

request an exemption from a require-

ment of this Code in accordance with

the published administrative

procedures. See Exemption Procedures

for Employees (Attachment 4A),

Directors (Attachment 4B), and

Policy Guidelines (Attachment 4C).


Appendix A

Page 34 of 36


In extraordinary circumstances and

where it is clearly in the best interests

of BC Hydro to do so, the President

and CEO of BC Hydro or its sub-

sidiaries, as the case may be, may

grant to an Employee an exemption

from the requirements of this Code

to allow the continuation of circum-

stances that would otherwise be

considered an actual or apparent

conflict of interest under this Code

or that would be considered a breach

of this Code. Conditions may be

attached to an exemption.

In extraordinary circumstances and

where it is clearly in the best interests

of BC Hydro to do so, the Chair of

the Board of Directors of BC Hydro

may exempt a Director of its Board

or the Board of Directors of any of

its subsidiaries from a requirement of

this Code following full and detailed

disclosure by the Director of all

material and relevant circumstances

respecting the matter. Conditions

may be attached to an exemption.

If a Director or Employee is exempted

from a requirement of this Code for

the continuation of circumstances

that would otherwise be considered

an actual or apparent conflict of

interest, the Director or Employee

must refrain from participating in

any way in any decision-making

respecting the subject matter of the

conflict of interest except to the

extent specifically authorized in the

decision granting the exemption.

Note: The provisions of this Code of

Conduct are in addition to, and not

in substitution for, any obligation to

BC Hydro imposed upon a Director or

Employee by common law, equity or

statute. Compliance with the Code

shall not relieve a Director or

Employee from any such obligations.

Appendix A

Page 35 of 36


Throughout this Code and in any

related or referenced documents,

“associate” means

1. a spouse of the Director or

Employee,

2. a son or daughter of a Director or

Employee or of the spouse of a

Director or Employee if the son or

daughter is under 19 years of age

or is living in the family residence

of the Director or Employee,

3. a relative of the Director or

Employee who is living in the

family residence of the Director

or Employee,

4. a corporation of which the

Director or Employee beneficially




voting securities of the

corporation,

5. a corporation of which a person

referred to in paragraph 1 or 2

beneficially owns, directly or

indirectly, more than 20 per cent

of the voting rights attached to

all outstanding voting securities

of the corporation, or

6. a trust or estate in which the

Director or Employee has a sub-

stantial beneficial interest or for

which the Director or Employee

serves as trustee;

“BC Hydro” means the British

Columbia Hydro and Power Authority

and includes its subsidiaries and

related corporations, if any, as the

case may be;

“confidential information” includes

business, operating and marketplace

information about BC Hydro, personal

information about Employees and

customers of BC Hydro, information

about the business interests of

customers, suppliers or other third

parties with whom BC Hydro

business relationships and informa-

tion provided by legal counsel;

“contractor” includes a supplier or

consultant of BC Hydro and a

BC Hydro business associate such as

its partner or joint-venturer;

“friend” includes an individual with

whom the Director or Employee is

connected by frequent or close asso-

ciation;

“private interest” means a

pecuniary or economic interest or

advantage and includes any real or

tangible benefit that personally

benefits the Director or Employee or

his or her associate but does not

include an interest arising from the

performance of the Director’s or

Employee’s official duty or function

that applies to the general public,

affects an individual as one of a

broad class of the public, or concerns

the Director’s or Employee’s

remuneration and benefits received

in that capacity;

“relative” means a relative by blood,

adoption or marriage;

“substantial private interest”

means a private interest that is

substantial enough in the particular

circumstances to benefit materially

from a decision of BC Hydro;

“spouse” means a person the

Director or Employee is married to or

with whom the Director or Employee

is living in a marriage-like relationship,

including a person of the same

gender, but does not include a person

from whom the Director or Employee

is separated or living apart and with

whom the Director or Employee has

entered into an agreement to live

apart or who is the subject of an

order of a court recognizing the

separation.

Definitions

Appendix A

Page 36 of 36

Appendix B

Specimen Electricity Purchase Agreement

Bioenergy Call for Power – Phase I

BC Hydro Bioenergy Call for Power (Phase I) – Specimen EPA

Issued May 7, 2008

SPECIMEN ELECTRICITY PURCHASE AGREEMENT

BIOENERGY CALL FOR POWER – PHASE I

Notes to Proponents:

1. The base Specimen EPA applies to Projects with the following characteristics:

• Project is an IPP Project;

• Product is hourly “Firm Energy” profile;

• Project has a direct interconnection to the Transmission System; and

• Seller is a single corporation rather than a joint venture, limited partnership or other entity.

2. The terms and conditions applicable to other Projects (including Customer Projects) are summarized in the Specimen EPA Adaptations Schedule issued with Addendum 8. BC Hydro will provide relevant Proponent(s) with definitive text revisions for any adaptations referenced in the Schedule that are required to suit a particular Project that is short-listed following Proposal submission for discussion with the relevant Proponent.

Appendix B

Page 1 of 85


Issued May 7, 2008 i

TABLE OF CONTENTS Page No.

1. INTERPRETATION.......................................................................................................1 1.1 Definitions ...................................................................................................................... 1 1.2 Appendices ..................................................................................................................... 1 1.3 Headings ......................................................................................................................... 2 1.4 Plurality and Gender....................................................................................................... 2 1.5 Governing Law............................................................................................................... 2 1.6 Industry Terms................................................................................................................ 2 1.7 Statutory References....................................................................................................... 2 1.8 Currency ......................................................................................................................... 2 1.9 Reference Indices ........................................................................................................... 2 1.10 Conversions .................................................................................................................... 2 1.11 Acknowledgment............................................................................................................ 3 1.12 Additional Interpretive Rules ......................................................................................... 3

2. TERM..............................................................................................................................3 2.1 Term ............................................................................................................................... 3

3. REGULATORY REVIEW .............................................................................................3 3.1 Regulatory Review Termination .................................................................................... 3 3.2 Regulatory Filing............................................................................................................ 4 3.3 EPA Support................................................................................................................... 4 3.4 Exemption....................................................................................................................... 4 3.5 Termination .................................................................................................................... 4 3.6 Effect of Termination ..................................................................................................... 4

4. DEVELOPMENT ...........................................................................................................5 4.1 Development and Construction of the Seller’s Plant...................................................... 5 4.2 Permits............................................................................................................................ 5 4.3 Development Reports ..................................................................................................... 5 4.4 Buyer Cost Responsibilities ........................................................................................... 5 4.5 Changes to Seller’s Plant before COD ........................................................................... 5

5. COMMERCIAL OPERATION DATE...........................................................................6 5.1 Guaranteed COD ............................................................................................................ 6 5.2 Requirements for COD................................................................................................... 6 5.3 Buyer Right to Observe .................................................................................................. 7 5.4 COD Disputes................................................................................................................. 7 5.5 Early COD...................................................................................................................... 7 5.6 No Liability for Delay .................................................................................................... 7 5.7 Early Network Upgrades ................................................................................................ 7 5.8 Postponement of Guaranteed COD ................................................................................ 7

6. OPERATION OF SELLER’S PLANT ...........................................................................7 6.1 Owner and Operator ....................................................................................................... 7 6.2 Standard of Operation..................................................................................................... 8 6.3 Planned Outages ............................................................................................................. 8 6.4 Records ........................................................................................................................... 9

Appendix B

Page 2 of 85


Issued May 7, 2008 ii

6.5 Reports to the Buyer....................................................................................................... 9 6.6 Changes to Seller’s Plant.............................................................................................. 11 6.7 Exemption from Utility Regulation.............................................................................. 11 6.8 Disclosure of Information by Transmission Authority................................................. 12

7. PURCHASE AND SALE OBLIGATIONS..................................................................12 7.1 Pre-COD Energy .......................................................................................................... 12 7.2 Post-COD Sale of Energy............................................................................................. 12 7.3 Post-COD Purchase of Energy ..................................................................................... 12 7.4 Exclusivity.................................................................................................................... 12 7.5 Custody, Control and Risk of Energy........................................................................... 13 7.6 Price and Payment Obligation ...................................................................................... 13 7.7 Limitations on Delivery and Acceptance Obligations.................................................. 13 7.8 Deemed Deliveries ....................................................................................................... 14 7.9 Modification to Hourly Firm Energy Amount ............................................................. 14

8. ENVIRONMENTAL ATTRIBUTES...........................................................................15 8.1 Transfer of Environmental Attributes........................................................................... 15 8.2 Exclusivity.................................................................................................................... 15 8.3 Representations and Warranties ................................................................................... 15 8.4 EcoLogoM Certification ................................................................................................ 15 8.5 Alternate Certification .................................................................................................. 15

9. METERING ..................................................................................................................16 9.1 Installation of Metering Equipment.............................................................................. 16 9.2 Operation of Metering Equipment................................................................................ 16 9.3 Duplicate Metering Equipment .................................................................................... 17

10. STATEMENTS AND PAYMENT...............................................................................17 10.1 Statements..................................................................................................................... 17 10.2 Payment ........................................................................................................................ 17 10.3 Taxes ............................................................................................................................ 18 10.4 Billing Guideline .......................................................................................................... 18 10.5 Set-off ........................................................................................................................... 18

11. INSURANCE/DAMAGE AND DESTRUCTION.......................................................18 11.1 Insurance ...................................................................................................................... 18 11.2 Damage or Destruction of the Seller’s Plant ................................................................ 19

12. FORCE MAJEURE.......................................................................................................20 12.1 Invoking Force Majeure and Notice............................................................................. 20 12.2 Exclusions .................................................................................................................... 20

13. LIQUIDATED DAMAGES..........................................................................................21 13.1 COD Delay ................................................................................................................... 21 13.2 Delivery Shortfalls........................................................................................................ 21 13.3 Hourly Firm Credit Table ............................................................................................. 22 13.4 Exclusive Remedies for Buyer ..................................................................................... 23 13.5 Exclusive Remedies for Seller...................................................................................... 23 13.6 Limits of Liability......................................................................................................... 23

Appendix B

Page 3 of 85


Issued May 7, 2008 iii

13.7 Consequential Damages ............................................................................................... 23

14. PERFORMANCE AND INTERCONNECTION SECURITY ....................................24 14.1 Delivery ........................................................................................................................ 24 14.2 Return ........................................................................................................................... 24 14.3 Enforcement ................................................................................................................. 25 14.4 Form ............................................................................................................................. 25 14.5 Replenishment .............................................................................................................. 25 14.6 Right to Withhold Payment .......................................................................................... 26 14.7 Letter of Credit Failure................................................................................................. 26

15. SUSPENSION...............................................................................................................26 15.1 Buyer Suspension ......................................................................................................... 26 15.2 Seller Suspension.......................................................................................................... 26 15.3 Resuming Deliveries .................................................................................................... 26

16. TERMINATION ...........................................................................................................26 16.1 Termination by the Buyer............................................................................................. 26 16.2 Termination by the Seller ............................................................................................. 27 16.3 Effect of Termination ................................................................................................... 28 16.4 Payment on Termination by the Buyer......................................................................... 29 16.5 Payment on Termination by the Seller ......................................................................... 29 16.6 Calculation of Gains, Economic Losses and Costs ...................................................... 29 16.7 Interconnection Costs Payable on Termination............................................................ 30 16.8 Termination Payment Date........................................................................................... 31 16.9 Exclusive Remedies...................................................................................................... 31

17. ASSIGNMENT .............................................................................................................32 17.1 Assignment ................................................................................................................... 32 17.2 Preconditions to Assignment ........................................................................................ 32 17.3 Assignment to Facility Lender ..................................................................................... 33 17.4 No Implied Consent to Exercise of Rights ................................................................... 33 17.5 Costs ............................................................................................................................. 33 17.6 No Assignment Before COD........................................................................................ 33

18. INSPECTION AND AUDIT.........................................................................................33 18.1 General Inspection and Audit Rights............................................................................ 33 18.2 Inspection and Audit Rights Regarding Environmental Attributes .............................. 34 18.3 Consents Regarding Clean or Renewable Electricity................................................... 34

19. REPRESENTATIONS AND WARRANTIES.............................................................34 19.1 By Seller ....................................................................................................................... 34 19.2 By Buyer....................................................................................................................... 35

20. INDEMNITIES .............................................................................................................36 20.1 Seller Indemnity ........................................................................................................... 36 20.2 Buyer Indemnity........................................................................................................... 36 20.3 Indemnification Conditions .......................................................................................... 36 20.4 Third Party Beneficiary Conditions.............................................................................. 36

Appendix B

Page 4 of 85


Issued May 7, 2008 iv

21. CONFIDENTIALITY...................................................................................................37 21.1 RFP Confidentiality Agreement ................................................................................... 37 21.2 Additional Confidentiality Obligation.......................................................................... 37 21.3 Freedom of Information and Protection of Privacy Act ............................................... 38 21.4 Exemption from Disclosure.......................................................................................... 38

22. GENERAL PROVISIONS............................................................................................38 22.1 Electric Service to the Seller ........................................................................................ 38 22.2 Independence................................................................................................................ 38 22.3 Enurement..................................................................................................................... 38 22.4 Notices.......................................................................................................................... 39 22.5 Entire Agreement and Amendment .............................................................................. 39 22.6 No Waiver .................................................................................................................... 39 22.7 Dispute Resolution ....................................................................................................... 39 22.8 Commodity Contract/Forward Contract ....................................................................... 40 22.9 Further Assurances ....................................................................................................... 40 22.10 Severability .................................................................................................................. 40 22.11 Counterparts................................................................................................................. 40

APPENDIX 1 DEFINITIONS ............................................................................................................ 1 APPENDIX 2 ENERGY PROFILE.................................................................................................... 1 APPENDIX 3 ENERGY PRICE – HOURLY FIRM ......................................................................... 1 APPENDIX 4 SELLER’S PLANT DESCRIPTION .......................................................................... 1 APPENDIX 5 FUEL PLAN................................................................................................................ 1 APPENDIX 6 COD CERTIFICATE ................................................................................................... 1 APPENDIX 7 SAMPLE FORM PERFORMANCE SECURITY / INTERCONNECTION ............. 1 SECURITY LETTER OF CREDIT ..................................................................................................... 1 APPENDIX 8 SAMPLE FORM LENDER CONSENT AGREEMENT ........................................... 1 APPENDIX 9 SAMPLE FORM DEVELOPMENT PROGRESS REPORT ..................................... 1 APPENDIX 10 ADDRESSES FOR DELIVERY OF NOTICES ......................................................... 1 APPENDIX 11 RFP CONFIDENTIALITY AGREEMENT................................................................ 1

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Issued May 7, 2008 1

BC HYDRO

ELECTRICITY PURCHASE AGREEMENT

THIS ELECTRICITY PURCHASE AGREEMENT (“EPA”) is made as of [Note to Proponents: Date of Signing by Buyer], 2008 (the “Effective Date”)

BETWEEN:

___________________ a corporation incorporated under the laws of ___________________ with its head office at

(“Seller”)

AND:

BRITISH COLUMBIA HYDRO AND POWER AUTHORITY, a corporation continued under the Hydro and Power Authority Act, R.S.B.C. 1996, c. 212, with its head office at 333 Dunsmuir Street, Vancouver, BC V6B 5R3

(“Buyer”).

WHEREAS:

A. The Buyer issued a Bioenergy Call for Power (Phase I) - Request for Proposals on February 6, 2008 for the supply of electrical energy to the Buyer generated from Forest-based Biomass by projects located in British Columbia.

B. A Proposal in respect of the Project was submitted in response to the RFP.

C. The Seller desires to sell to the Buyer, and the Buyer desires to purchase from the Seller, Eligible Energy from the Seller’s Plant on the terms and conditions set forth in this EPA.

1. INTERPRETATION

1.1 Definitions - Appendix 1 sets out or references the definitions applicable to certain words and phrases used in this EPA.

1.2 Appendices - Attached to and forming part of this EPA are the following Appendices:

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Appendix 1 - Definitions Appendix 2 - Energy Profile Appendix 3 - Energy Price Appendix 4 - Seller’s Plant Description Appendix 5 - Fuel Plan Appendix 6 - COD Certificate Appendix 7 - Sample Form Performance Security / Interconnection

Security Letter of Credit Appendix 8 - Sample Form Lender Consent Agreement Appendix 9 - Sample Form Development Progress Report Appendix 10 - Addresses for Delivery of Notices Appendix 11 - RFP Confidentiality Agreement

1.3 Headings - The division of this EPA into Articles, sections, subsections, paragraphs and Appendices and the insertion of headings are for convenience of reference only and do not affect the interpretation of this EPA.

1.4 Plurality and Gender - Words in the singular include the plural and vice versa, and words importing gender include the masculine, feminine and neuter genders, in each case as the context requires.

1.5 Governing Law - This EPA is made under, and shall be interpreted in accordance with, the laws of the Province of British Columbia. Subject to section 22.7, any suit, action or proceeding (a “Proceeding”) arising out of, or relating to, this EPA may be brought in the courts of the Province of British Columbia at Vancouver. Those courts have non-exclusive jurisdiction in respect of any Proceeding. The Parties hereby irrevocably attorn to the jurisdiction of such courts in respect of any Proceeding.

1.6 Industry Terms - Technical or industry specific words or phrases not otherwise defined in this EPA have the well known meaning given to those terms as of the date of this EPA in the industry or trade in which they are applied or used.

1.7 Statutory References - Reference to a statute means, unless otherwise stated, the statute and regulations, if any, under that statute, in force from time to time, and any statute or regulation passed and in force which has the effect of supplementing or superseding that statute or those regulations.

1.8 Currency - References to dollars or $ means Canadian dollars, unless otherwise stated. References to US$ or US dollars means United States dollars.

1.9 Reference Indices - Except as otherwise provided in Appendix 3, if any index, tariff or price quotation referred to in this EPA ceases to be published, or if the basis therefor is changed materially, there shall be substituted an available replacement index, tariff or price quotation that most nearly, of those then publicly available, approximates the intent and purpose of the index, tariff or price quotation that has so ceased or changed. This EPA shall be amended as necessary to accommodate such replacement index, tariff or price quotation, all as determined by written agreement between the Parties, or failing agreement, by arbitration under section 22.7.

1.10 Conversions - If a value used in a calculation in this EPA must be converted to another unit of measurement for purposes of consistency or to achieve a meaningful answer, the value shall be converted to that different unit for purposes of the calculation.

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1.11 Acknowledgment - The Seller hereby acknowledges, represents, warrants and agrees that it has obtained its own independent legal, financial, tax, technical and other advice on all issues relating to this EPA and all transactions contemplated under this EPA. This EPA shall be interpreted as would an agreement that has been negotiated and drafted by, and entered into between, commercially sophisticated parties dealing at arms length.

1.12 Additional Interpretive Rules - For the purposes of this EPA, except as otherwise expressly stated:

(a) “this EPA” means this EPA as it may from time to time be supplemented or amended and in effect, and includes the Appendices attached to this EPA;

(b) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this EPA as a whole and not to any particular section, subsection or other subdivision;

(c) the word “including” or “includes” is not limiting whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto;

(d) the words “year” and “month” refer to a calendar year and a calendar month;

(e) any consent, approval or waiver contemplated by this EPA must be in writing and signed by the Party against whom its enforcement is sought, and may be given, withheld, delayed or conditioned in the unfettered discretion of the Party of whom it is requested;

(f) all rights and remedies of either Party under this EPA are cumulative and not exclusive of any other remedies to which either Party may be lawfully entitled, and either Party may pursue any and all of its remedies concurrently, consecutively and alternatively;

(g) where a dollar amount in this EPA is to be adjusted for CPI from January 1, 2008 to any date after 2008, such dollar amount is to be multiplied by CPIJanuary 1, N / CPIJanuary 1, 2008, where N is the year in which that date falls; and

(h) any notice required or permitted to be given, or other thing required or permitted to be done, under this EPA on or before a day that is not a Business Day, shall be deemed to be given or done when required or permitted hereunder if given or done on or before the next following Business Day.

2. TERM

2.1 Term - The term (“Term”) of this EPA commences on the Effective Date and continues until the _________ anniversary of COD, subject to extension for the period specified pursuant to subsection 11.2(c), unless it is terminated earlier as authorized under this EPA.

3. REGULATORY REVIEW

3.1 Regulatory Review Termination - Subject to section 3.4, either Party may terminate this EPA if, within 150 days after the Effective Date, the EPA has not been accepted for filing by the BCUC as an

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Energy Supply Contract either without conditions or subject to conditions that do not (i) require as a condition of acceptance for filing a material alteration to any material term or condition of this EPA, or (ii) otherwise have an adverse effect on the Party seeking to terminate this EPA (“BCUC Acceptance”).

3.2 Regulatory Filing - Subject to section 3.4, the Buyer, on behalf of itself and the Seller, shall file the EPA with the BCUC within a reasonable time after the Effective Date.

3.3 EPA Support - Subject to section 3.4, the Buyer shall take all steps reasonably required to secure BCUC Acceptance. The Seller shall provide any assistance reasonably requested by the Buyer to secure BCUC Acceptance. The Parties shall not take, and shall cause their Affiliates not to take, any action inconsistent with the performance by the Parties of their obligations under this section 3.3. If a Party fails to comply with this section (the “Breaching Party”) and, as a result, the EPA is terminated under section 3.1, the Breaching Party shall pay the non-Breaching Party as liquidated damages, by not later than 5 Business Days after the date of termination, an amount equal to $2.50 / MWh multiplied by the Annual Firm Energy Amount. The Breaching Party’s liability for a breach of this section 3.3 is limited to the amount set out in this section.

3.4 Exemption - Sections 3.1, 3.2 and 3.3 are of no effect if an Exemption exists before termination of the EPA under section 3.1. Nothing in this EPA obliges either Party to seek an Exemption, and the Parties acknowledge that they have entered into this EPA in the expectation that no Exemption will exist.

3.5 Termination - A Party entitled to terminate under section 3.1 must do so by giving notice to terminate to the other Party at any time after the right to terminate arises pursuant to section 3.1 and prior to the earlier of:

(a) the date of issuance of the BCUC Acceptance;

(b) the date of issuance of an Exemption; and

(c) the date that is 180 days after the Effective Date.

3.6 Effect of Termination - If this EPA is terminated by either Party in accordance with sections 3.l and 3.5, the following provisions shall apply:

(a) on or before the 30th day following the date of termination the Buyer shall return the Performance Security to the Seller after deducting any amount to which the Buyer is entitled but which has not been paid pursuant to section 3.3 of this EPA;

(b) if the Buyer has terminated the EPA based on the BCUC’s acceptance of the EPA on terms and conditions that do not constitute BCUC Acceptance, the Buyer shall reimburse the Seller for any Interconnection Study Fees that the Seller incurred in the period between the Effective Date and the date of termination; and

(c) except as set out in section 16.3, the Parties shall have no further liabilities or obligations under, or in relation to, this EPA.

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4. DEVELOPMENT

4.1 Development and Construction of the Seller’s Plant - The Seller shall:

(a) design, engineer, construct and commission the Seller’s Plant, and interconnect the Seller’s Plant to the Transmission System in compliance with the Project Standards and all other terms and conditions of this EPA; and

(b) commence the work described in subsection 4.1(a) by the date that is the later of (i) 30 days after BCUC Acceptance or Exemption (as applicable), and (ii) if a right to terminate arises under section 3.1, 30 days after that right to terminate has expired, and shall thereafter diligently and continuously carry out such Project activities.

Without limiting the foregoing, all equipment and material installed in the Seller’s Plant shall conform to the codes, standards and rules applicable to power plants in British Columbia. The Seller shall ensure that the Seller’s Plant is designed, engineered and constructed to operate in accordance with the requirements of this EPA for the full Term of this EPA.

4.2 Permits - The Seller shall promptly obtain, comply with and maintain in full force and effect, all Permits. The Seller shall on request promptly provide to the Buyer copies of all Material Permits.

4.3 Development Reports - On each January 1, April 1, July 1 and October 1 after the Effective Date and continuing until COD, the Seller shall deliver to the Buyer a report in the form specified in Appendix 9 describing the progress of development of the Project.

4.4 Buyer Cost Responsibilities - Except as otherwise expressly provided in this EPA, the Buyer shall be responsible for paying all costs incurred by the Transmission Authority for the design, engineering, procurement, construction and commissioning of the Interconnection Network Upgrades, all as described in the Final Interconnection Study Report.

4.5 Changes to Seller’s Plant before COD - The Seller shall not make any material change to the Seller’s Plant, including any change in the Plant Capacity or the POI, before COD without the prior consent of the Buyer, such consent not to be unreasonably withheld, delayed or conditioned. The Parties acknowledge that the Buyer may require, as a condition of any consent, that:

(a) any change in Plant Capacity does not exceed the greater of (i) 10% of the Plant Capacity, and (ii) one MW;

(b) the Seller obtain, and deliver to the Buyer, a study report prepared by the Transmission Authority confirming that the change is technically feasible and containing an estimate of the incremental cost, if any, of completing Interconnection Network Upgrades;

(c) the Seller provide a legally binding written commitment to pay to the Buyer the amount of all incremental costs incurred, or to be incurred, by the Buyer as a result of the change, including any incremental Network Upgrade Costs; and

(d) the Seller increase the amount of the Interconnection Security or provide alternate security reasonably acceptable to the Buyer by an amount equal to the sum of the estimate referenced in subparagraph (b) above plus the Buyer’s reasonable estimate of any other incremental costs referenced in subparagraph (c) above.

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5. COMMERCIAL OPERATION DATE

5.1 Guaranteed COD - The Seller shall ensure that the Seller’s Plant achieves COD by the Guaranteed COD plus Force Majeure Days.

5.2 Requirements for COD - Subject to section 5.5, COD shall occur at 24:00 PPT on the day on which all of the following conditions have been satisfied:

(a) the Seller has obtained all Material Permits and all such Material Permits are in full force and effect;

(b) the Seller’s Plant has generated Energy in compliance with all Material Permits for 72 continuous hours in an amount in each hour of not less than 90% of the Plant Capacity multiplied by 1 hour;

(c) the Seller is not:

(i) Bankrupt or Insolvent;

(ii) in default of any payment obligation or requirement to post security under this EPA;

(iii) in material default of any of its other covenants, representations, warranties or obligations under this EPA (other than those defaults in respect of which the Seller has paid all LDs owing under this EPA); or

(iv) in material default under any Material Permit, including any tenure agreement for the site on which the Seller’s Plant is located or the Interconnection Agreement; and

(d) the Seller has delivered to the Buyer:

(i) a Declaration of Compatibility-Generator (Operating), or such other document(s) of similar effect as may be substituted therefor, in respect the Plant Capacity issued by the Transmission Authority to the Seller under the Interconnection Agreement;

(ii) copies of all Material Permits in a form sufficient to demonstrate the Seller’s compliance with subsection 5.2(a);

(iii) data from the Metering Equipment sufficient to demonstrate compliance by the Seller with subsection 5.2(b); and

(iv) proof of registration by the Seller with Measurements Canada as an energy seller with respect to the Seller’s Plant;

provided that, except as hereinafter provided, within 30 days after the last of the requirements set out above is satisfied the Seller delivers to the Buyer: (I) a COD Certificate; (II) the Long Term Operating Plan; and (III) the Annual Operating Plan for the period from COD to December 31 next following COD or if COD occurs after September 30, for the period from COD to December 31 in the year following

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COD. If the COD Certificate, Long Term Operating Plan and Annual Operating Plan are not delivered by that date, COD shall occur at 24:00 PPT on the day of delivery to the Buyer of the last of the foregoing documents. For greater certainty, the Parties acknowledge that, notwithstanding satisfaction of all the conditions set out in subparagraphs (a) to (d) above, the Seller may defer delivery of the documents described in (I), (II) and (III) above until, and COD shall not occur earlier than, the date determined under section 5.5.

5.3 Buyer Right to Observe - The Seller shall provide not less than 10 days’ prior notice to the Buyer of the commencement of any proposed testing under subsection 5.2(b) and the Buyer may attend and observe each test under that subsection. If the Seller has given notice to the Buyer in accordance with this section, the Seller shall not be required to give a notice to the Buyer of any further tests which are commenced within 72 hours of the prior test under subsection 5.2(b). The Seller shall provide a new notice in accordance with this section 5.3 in respect of any test that commences more than 72 hours after the end of an unsuccessful test under subsection 5.2(b).

5.4 COD Disputes - The Buyer may, by notice to the Seller within 10 Business Days after the date of delivery to the Buyer of a COD Certificate, contest the COD Certificate on the grounds that the Seller has not satisfied the requirements for COD in section 5.2. Pending the final resolution of any dispute relating to whether the requirements for COD have been satisfied, the Seller shall not be required to remit any COD Delay LDs, provided that upon final determination of the matter, if the determination is made that COD has not been achieved, the Seller shall forthwith remit COD Delay LDs in accordance with section 13.1 calculated from the Guaranteed COD plus Force Majeure Days, together with applicable interest in accordance with subsection 10.2(b). If the Buyer does not deliver a notice to the Seller contesting the COD Certificate within the time specified in this section, COD shall be deemed to have occurred as provided in section 5.2.

5.5 Early COD - Except with the Buyer’s prior consent, not to be unreasonably withheld, delayed or conditioned, and subject to section 5.7, COD may occur not earlier than 180 days prior to the Guaranteed COD.

5.6 No Liability for Delay - The Buyer shall have no liability for delays in completion of any Network Upgrades, or other work undertaken by the Transmission Authority on the Seller’s Plant’s side of the POI, howsoever arising.

5.7 Early Network Upgrades - Rescheduling completion of any Interconnection Network Upgrades prior to the Estimated Interconnection Facilities Completion Date shall require the prior consent of each of the Transmission Authority, the Buyer and the Seller. The Buyer acknowledges that the Buyer may require as a condition of any consent, any or all of the conditions set out in subsection 4.5(b), 4.5(c) or 4.5(d).

5.8 Postponement of Guaranteed COD - If the Estimated Interconnection Facilities Completion Date is later than 90 days prior to the Guaranteed COD, and unless otherwise agreed by the Parties in writing, the Guaranteed COD shall be postponed to the Estimated Interconnection Facilities Completion Date plus 90 days.

6. OPERATION OF SELLER’S PLANT

6.1 Owner and Operator - The Seller shall own the Seller’s Plant and shall ensure that the Seller’s Plant is operated by qualified and experienced individuals.

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6.2 Standard of Operation -

(a) The Seller shall cause the Seller’s Plant to be operated and maintained in compliance with the Project Standards.

(b) Without limiting section 7.2 but subject to subsection 7.7(a), when the Seller is delivering Energy to the Buyer, the Seller shall make commercially reasonable efforts to operate the Seller’s Plant in a manner that ensures delivery of Energy at the POI at a uniform rate within each hour.

(c) The Seller shall, except with the Buyer’s prior consent, such consent not to be unreasonably withheld, delayed or conditioned, comply in all material respects with the Fuel Plan. The Buyer, in determining whether to grant any such consent, shall review and consider in good faith the Seller’s reasonable requirements for any variation from the Fuel Plan.

6.3 Planned Outages - The Seller shall:

(a) ensure that no Planned Outage occurs during the Peak Demand Months except:

(i) in periods where there is no Firm Energy specified for delivery to the Buyer; or

(ii) with the consent of the Buyer, which consent shall not be unreasonably withheld, delayed or conditioned if the Seller is required to conduct a Planned Outage during Peak Demand Months by reason of Law, Permits or contracts and if, in the case of a contractual requirement, the Seller has used commercially reasonable efforts to avoid inclusion of such requirement in the contract;

(b) give the Buyer not less than 90 days’ prior notice of any Planned Outage, or such shorter period to which the Buyer may consent, such consent not to be withheld, delayed or conditioned, and such notice shall state the start date and hour and the end date and hour for the Planned Outage;

(c) in accordance with the Buyer’s written instructions, use the Buyer’s web-based application or other system for communicating Planned Outages to the Buyer;

(d) make commercially reasonable efforts to coordinate all Planned Outages with the Buyer’s requirements as notified to the Seller; and

(e) make commercially reasonable efforts to coordinate all Planned Outages with the Transmission Authority’s maintenance schedule where such schedule is publicly available or otherwise notified to the Seller.

Where the Seller is authorized under this section to conduct a Planned Outage or Planned Outages during Peak Demand Months, the total number of days of all such Planned Outages in the aggregate in any November to March period shall not exceed seven.

Not less than 45 days before a Planned Outage is scheduled to commence, the Buyer may request the Seller to reschedule that Planned Outage. Within 14 days after receipt of such a request, the Seller shall provide the Buyer with an estimate, together with reasonable supporting detail, of the costs, if any, the

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Seller expects to incur, acting reasonably, as a result of rescheduling the Planned Outage in accordance with the Buyer’s request. Within 7 days after receipt of such cost estimate, the Buyer shall notify the Seller if the Buyer requires the Seller to reschedule the Planned Outage, and upon receipt of such notice from the Buyer, the Seller shall adjust the schedule for the Planned Outage as required by the Buyer, provided that the rescheduling is consistent with Good Utility Practice and does not have a materially adverse effect on the operation of the Seller’s Plant or on any facility that is a thermal host for the Seller’s Plant. The Buyer shall reimburse the Seller for all costs reasonably incurred by the Seller as a result of such rescheduling, but not exceeding the estimate delivered by the Seller to the Buyer under this section.

For payment and all other purposes of this EPA, all Planned Outages shall be deemed to start at the beginning of the hour in which that Outage actually commences and to end at the start of the hour immediately following the hour in which that Outage actually terminates.

6.4 Records - The Seller shall prepare and maintain all Records or duplicates of such Records, at the Seller’s Plant, or following the expiry of the Term or the earlier termination of this EPA, at such other location as may be agreed in writing between the Parties, for a period of not less than 7 years from the date on which each such Record is created.

6.5 Reports to the Buyer - The Seller shall deliver the following to the Buyer:

(a) Fuel Plan -

(i) Not less than 60 days prior to each anniversary of COD that is evenly divisible by five (in each case the “Five-Year Anniversary”), the Seller shall deliver to the Buyer a Fuel Plan for the succeeding five-year period containing information of the type and detail set out in the then existing Fuel Plan, any proposed variations from the then existing Fuel Plan, and such other planning data relating to the Fuel as the Buyer may reasonably request. Subject to the Buyer’s prior consent, which shall not be unreasonably withheld, delayed or conditioned, such replacement Fuel Plan shall replace the then existing Fuel Plan effective as of the Five-Year Anniversary immediately following the filing of the replacement Fuel Plan with the Buyer.

(ii) The Seller may revise the Fuel Plan at any time with the Buyer’s prior consent, such consent not to be unreasonably withheld, delayed or conditioned. The Seller shall give prompt and due consideration to any revisions to the Fuel Plan that the Buyer may reasonably request.

(b) Annual Fuel Report - Not less than 60 days following the end of each Contract Year, the Seller shall deliver to the Buyer a report setting out with reference to the Fuel Plan:

(i) a description of the source and volume of Fuel consumed in that Contract Year, together with such additional information relating to the Fuel as the Buyer may reasonably require;

(ii) a report on all material variances in that Contract Year between the Fuel Plan and the Seller’s actual procurement and consumption of Fuel;

(iii) the total Forest-based Biomass, Auxiliary Fuel and Start-up Fuel (all expressed in GJs) used to generate Eligible Energy in that Contract Year; and

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(iv) the Auxiliary Fuel Overage and the Auxiliary Fuel Energy Overage (determined by utilizing the average heat rate applicable to the conversion of Fuel to Eligible Energy) for that Contract Year.

(c) Long Term Operating Plan - By the date specified in section 5.2, the Seller shall provide to the Buyer an operating plan for the Seller’s Plant for a five-year period commencing at COD and ending on December 31 of the year in which the fifth anniversary of COD occurs, including the long-term major maintenance schedule. On or before September 30 in each year during the Term after the year in which COD occurs, the Seller shall provide the Buyer with an updated plan for the five-year period commencing on the next succeeding January 1 or to the end of the Term, whichever is less. The Seller shall promptly provide the Buyer with copies of any amendments or modifications to the Long Term Operating Plan. The Long Term Operating Plan shall be consistent with Good Utility Practice and is intended to assist the Buyer in planning activities and is not a guarantee of the timing of Planned Outages;

(d) Annual Operating Plan - On or before September 30 in each year during the Term, the Seller shall provide to the Buyer an operating plan for the Seller’s Plant for the 14-month period commencing on the next succeeding November 1, including any necessary update in respect of the then current Annual Operating Plan, which plan may be included in the Long Term Operating Plan. The plan shall include a schedule of Planned Outages for that 14-month period which shall comply with the provisions of section 6.3 and be consistent with Good Utility Practice. The Seller may, on not less than 90 days’ prior notice to the Buyer, amend the Annual Operating Plan, subject to the provisions of section 6.3. The Annual Operating Plan shall be consistent with Good Utility Practice and is intended to assist the Buyer in planning activities and is not a guarantee of the timing of Planned Outages;

(e) Notice of Outages - Other than for a Planned Outage for which notice has been given pursuant to section 6.3, the Seller shall promptly notify the Buyer of any Outage, or any anticipated Outage, of the Seller’s Plant. Any notice under this subsection shall include a statement of the cause of the Outage, the proposed corrective action and the Seller’s estimate of the expected duration of the Outage, and the Seller shall promptly communicate such information to the Buyer in such manner as the Buyer may instruct the Seller from time to time. The Seller shall, except with the Buyer’s consent, such consent not to be unreasonably withheld, delayed or conditioned, use best efforts to promptly remove or mitigate any Forced Outage. The Seller shall deliver to the Buyer concurrently with delivery of the statement described in subsection 10.1(a), a report of all Outages during the month for which the statement described in subsection 10.1(a) is issued, including a statement of the cause of each Outage;

(f) Interconnection Agreement Defaults - The Seller shall give promptly to the Buyer a copy of any notice of a breach of, or default under, the Interconnection Agreement, whether given or received by the Seller;

(g) Notice of Buyer Termination Event - The Seller shall notify the Buyer promptly of any Buyer Termination Event, or any material risk that a Buyer Termination Event or any default by the Seller under any agreement with a Facility Lender may occur;

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(h) Energy Schedules - After COD on each Thursday by 12:00 PPT, the Seller shall deliver to the Buyer a schedule of the expected deliveries of Eligible Energy in each hour of each day for the next succeeding week commencing at 00:00 PPT on Monday, provided that such schedules are provided for planning purposes only and do not constitute a guarantee by the Seller that Energy shall be delivered in accordance with the schedules and do not limit the amount of Energy the Seller may deliver during the periods covered by the schedules. The Seller shall deliver a revised schedule to the Buyer forthwith upon becoming aware of any expected material change in a filed Energy schedule;

(i) Reporting on Clean or Renewable Electricity - The Seller shall within 10 Business Days after a request from the Buyer, provide to the Buyer all information the Buyer requires to verify qualification of the output from the Seller’s Plant as Clean or Renewable Electricity.

(j) Reporting on Environmental Certification – The Seller shall within 10 Business Days after a request from the Buyer, provide to the Buyer:

(i) all information the Buyer requires to verify the quantity of Energy generated by the Seller’s Plant, qualification of the Seller’s Plant and all or part of the Energy for the Environmental Certification, the status of the Environmental Certification (if any), and the existence, nature and quantity of Environmental Attributes;

(ii) any information required for the purposes of any Environmental Attribute or energy tracking system as directed by the Buyer; and

(iii) any other information the Buyer requires to enable the Buyer or its Affiliates to obtain or realize the full benefit of the Environmental Attributes, including sales of the Environmental Attributes to third parties.

(k) Reporting on Environmental Impacts – The Seller shall deliver to the Buyer not later than February 28 in each year after COD, or in accordance with any other periodic reporting requirement prescribed by Laws or terms and conditions of Permits, environmental impact reports that comply with this subsection, and any reasonable written guidelines issued by the Buyer from time to time relative to the form and content of such reports. Environmental impact reports shall provide annual data concerning the impact of the operation of the Seller’s Plant on the environment, including GHG emissions, and the air and water quality, land use, biota and habitat impacts. Data relative to GHG emissions may include Fuel use by Fuel type, heat rate, and energy content of fuel and other relevant data.

6.6 Changes to Seller’s Plant - The Seller shall not make any material change to the Seller’s Plant after COD without the prior consent of the Buyer, such consent not to be unreasonably withheld, delayed or conditioned. The Seller acknowledges that the Buyer may require, as a condition of any consent, any or all of the conditions set out in subsection 4.5(b), 4.5(c) or 4.5(d), provided that notwithstanding the foregoing, the Seller shall not make any change on the Plant Capacity of the POI without the consent of the Buyer.

6.7 Exemption from Utility Regulation - The Seller shall not take any action that would cause the Seller to cease to be exempt, or omit to take any action necessary for the Seller to continue to be exempt, from regulation as a “public utility”, as defined in the UCA, with respect to the Seller’s Plant, the sale of

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Energy and the performance by the Seller of its obligations under this EPA if such designation as a “public utility” could reasonably be expected to have an adverse effect on the Buyer or its interests under this EPA.

6.8 Disclosure of Information by Transmission Authority - The Seller consents to the Transmission Authority disclosing to the Buyer on its request:

(a) all information with respect to Network Upgrades, including any information provided by the Seller to the Transmission Authority that relates to, or affects, Network Upgrades including any interconnection request, study and report, and any subsequent requests, studies and reports, that contain information relevant to Network Upgrades;

(b) all metering data collected by, or provided to, the Transmission Authority with respect to the Seller’s Plant;

(c) copies of any notice of a breach of, or default under, the Interconnection Agreement given or received by the Transmission Authority and particulars of any such breach or default; and

(d) any other information provided by the Seller to the Transmission Authority or by the Transmission Authority to the Seller that is relevant to the administration of this EPA.

The Seller shall promptly on request by the Buyer provide to the Buyer written confirmation of the foregoing consent for delivery by the Buyer to the Transmission Authority.

7. PURCHASE AND SALE OBLIGATIONS

7.1 Pre-COD Energy - The Buyer shall make commercially reasonable efforts, excluding any acceleration of the Estimated Interconnection Facilities Completion Date, to accept delivery at the POI of all Pre-COD Energy. Prior to the earlier of COD and the Guaranteed COD the Seller may, on prior notice to the Buyer, sell any Energy to any Person other than the Buyer, and in that case such Energy shall not be delivered, or be deemed to be delivered, to the Buyer.

7.2 Post-COD Sale of Energy - Subject to subsection 7.7(a) in each hour during the Term after COD, the Seller shall sell and deliver to the Buyer at the POI, the Hourly Firm Energy Amount for the applicable hour.

7.3 Post-COD Purchase of Energy - Subject to subsection 7.7(b) in each hour during the Term after COD, the Buyer shall purchase, and shall accept delivery from the Seller at the POI of, all Eligible Energy.

7.4 Exclusivity - The Seller shall not at any time during the Term commit, sell or deliver any Energy to any Person, other than the Buyer under this EPA, except:

(a) Pre-COD Energy sold to third Persons in accordance with section 7.1;

(b) during any period in which the Buyer is in breach of its obligations under section 7.3; and

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(c) during any period in which the Buyer is not accepting deliveries of Eligible Energy from the Seller due to Force Majeure invoked by the Buyer.

7.5 Custody, Control and Risk of Energy - Custody, control, risk of, and title to all Pre-COD Energy delivered to the Buyer and all Eligible Energy passes from the Seller to the Buyer at the POI. The Seller shall ensure that all Eligible Energy delivered to the Buyer under this EPA is free and clear of all liens, claims, charges and encumbrances. The Seller shall be responsible for all transmission losses and costs, if any, relating to the transmission of Eligible Energy from the Seller’s Plant to the POI.

7.6 Price and Payment Obligation - The Buyer shall pay for all Test Energy in respect of which the Seller has not given a notice under section 7.1 and all Eligible Energy in accordance with Appendix 3.

7.7 Limitations on Delivery and Acceptance Obligations -

(a) Limitations on Delivery Obligations - The obligations of the Seller under section 7.2 are subject to:

(i) Force Majeure invoked by the Seller in accordance with Article 12;

(ii) any Transmission System Outage for reasons that are not attributable to the Seller or the Seller’s Plant;

(iii) disconnection of the Seller’s Plant from the Transmission System by the Transmission Authority for reasons that are not attributable to the Seller or the Seller’s Plant;

(iv) the right of the Seller to suspend its performance under this EPA in accordance with Article 15; and

(v) Authorized Planned Outages.

(b) Limitations on Acceptance Obligations - The obligations of the Buyer under sections 7.1 and 7.3 are subject to:

(i) Force Majeure invoked by the Buyer in accordance with Article 12;

(ii) any Transmission System Outage for reasons not attributable to the Buyer;

(iii) disconnection of the Seller’s Plant from the Transmission System for reasons not attributable to the Buyer; and

(iv) the right of the Buyer to suspend the Seller’s performance under the EPA in accordance with Article 15.

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7.8 Deemed Deliveries -

(a) If in any hour after COD the Seller is unable to deliver Eligible Energy at the POI at any time during that hour solely as a result of a Transmission System Outage not caused by (i) the Seller or the Seller’s Plant or (ii) events beyond the control of the Buyer or the Transmission Authority (a “Delivery Interruption Outage”), then notwithstanding that the Buyer is excused under subsection 7.7(b) from its obligations to purchase under section 7.3, the Eligible Energy that could have been generated and delivered to the POI in each hour as Eligible Energy but for the occurrence of the Delivery Interruption Outage shall be deemed to be Eligible Energy.

(b) Deemed Eligible Energy shall be determined based on the best available information, including the Seller’s Energy schedule for each hour during the Delivery Interruption Outage and readings of the Metering Equipment before and after the occurrence of the Delivery Interruption Outage.

(c) There shall be no deemed Eligible Energy during any period specified as a Planned Outage in a notice delivered by the Seller under section 6.3.

(d) For greater certainty, the provisions of this section 7.8 shall not apply during any period when either Party is excused, in accordance with Article 12, from its obligation to deliver, or to accept delivery of, Eligible Energy as a result of Force Majeure.

7.9 Modification to Hourly Firm Energy Amount - At any time prior to the first anniversary of COD, the Seller may, by exercising the election described in subsection 7.9(b), elect to increase or decrease the Hourly Firm Energy Amount, subject to the following:

(a) any such increase or decrease in the Hourly Firm Energy Amount must not result in:

(i) the Peak Hourly Firm Energy Amount, Super Peak Hourly Firm Energy Amount or Off-Peak Hourly Firm Energy Amount in any month increasing or decreasing by more than 10%;

(ii) the total of the Hourly Firm Energy Amounts for the period from May 1 to July 31, inclusive, exceeding one-quarter of the Annual Firm Energy Amount; or

(iii) any Hourly Firm Energy Amount exceeding the Plant Capacity multiplied by one hour;

(b) the Seller may only exercise its election to increase or decrease the Hourly Firm Energy Amount by delivering to the Buyer prior to the first anniversary of COD a Firm Energy Table that has been revised only to incorporate the proposed increase or decrease in the Hourly Firm Energy Amount in a manner that complies with subsection 7.9(a). The revised Firm Energy Table shall be deemed to replace the then existing Firm Energy Table effective on the first day of the month immediately following the delivery of such revised Firm Energy Table to the Buyer;

(c) concurrently with the delivery of a revised Firm Energy Table pursuant to subsection 7.9(b), the Seller shall amend or replace the Performance Security to adjust the amount thereof to reflect any change, if any, to the Annual Firm Energy Amount that arises as a

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result of the Seller’s election to increase or decrease the Hourly Firm Energy Amount pursuant to this section; and

(d) the Seller may elect to increase or decrease the Hourly Firm Energy Amount only once.

8. ENVIRONMENTAL ATTRIBUTES

8.1 Transfer of Environmental Attributes - The Seller hereby transfers, assigns and sets over to the Buyer all right, title and interest in and to the Environmental Attributes. The Buyer shall not be required to make any payment for the Environmental Attributes. The Seller, upon the reasonable request of the Buyer, shall do, sign and deliver to the Buyer, or cause to be done or signed and delivered to the Buyer, all further acts, deeds, things, documents and assurances required to give effect to this section.

8.2 Exclusivity - The Seller shall not at any time during the Term commit, sell or deliver any Environmental Attributes to any Person, other than the Buyer. The Seller shall not use or apply any Environmental Attributes for any purpose whatsoever. The Seller shall ensure that all marketing materials produced by or for the Seller, all public or other statements by the Seller and all other communications by the Seller in any form whatsoever, contain no false or misleading statements concerning the ownership of the Energy or Environmental Attributes or the destination, end user or recipient of the Energy or Environmental Attributes. The Seller acknowledges and agrees that the exclusive rights conferred by this section are of fundamental importance, and that, without prejudice to any right to claim damages, compensation or an accounting of profits, the granting of an interim, interlocutory and permanent injunction is an appropriate remedy to restrain any breach or threatened breach by the Seller of the obligation set out in this section.

8.3 Representations and Warranties - The Seller represents and warrants to the Buyer and acknowledges that the Buyer is relying on those representations and warranties in entering into this EPA, that the Seller is the legal and beneficial owner of the Environmental Attributes free and clear of all liens, claims, charges and encumbrances of any kind whatsoever and no other Person has any agreement or right of any kind whatsoever to purchase or otherwise to acquire or to claim or otherwise make any use whatsoever of the Environmental Attributes.

8.4 EcoLogoM Certification - If required by the Buyer, the Seller shall promptly obtain EcoLogoM Certification for the Seller’s Plant and all the Eligible Energy (other than that attributable to the use of Auxiliary Fuel to the extent permitted under the EPA) and shall maintain the EcoLogoM Certification for such period during the remainder of the Term as the Buyer may require. The Seller shall notify the Buyer forthwith if the Seller fails to obtain EcoLogoM Certification as required hereunder or if, at any time during the period of Term specified by the Buyer, the Seller does not have EcoLogoM Certification. If the Buyer requires the Seller to obtain EcoLogoM Certification, the Buyer shall be responsible for all certification, audit and licensing fees required to obtain the Environmental Certification, unless the Seller requires the Environmental Certification to comply with subparagraph (e) of the definition of the Project Standards, in which case the Seller shall pay such costs.

8.5 Alternate Certification - The Seller shall, at the Buyer’s request and at the Buyer’s cost, use commercially reasonable efforts to apply for, and diligently pursue and maintain, any certification, licensing or approval offered by any Governmental Authority or independent certification agency evidencing that the Seller’s Plant and the Eligible Energy has Environmental Attributes as an addition or an alternative to the EcoLogoM Certification. Any failure by the Seller to use commercially reasonable

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efforts pursuant to this section is a “material default” for the purposes of this EPA, and the Buyer may terminate the EPA under subsection 16.1(d).

9. METERING

9.1 Installation of Metering Equipment - The Seller shall ensure that revenue metering equipment (the “Metering Equipment”) is leased from the Buyer, and installed, operated and maintained in accordance with the requirements of the Transmission Authority and the requirements of this section. The Seller shall ensure that the Seller’s Plant is equipped with electronic meters and SCADA capability. The Metering Equipment shall be installed at a location approved by the Buyer, acting reasonably, which location shall be such that the Metering Equipment can measure the Energy generated by the Seller’s Plant independent of any other generation equipment or facilities. The Seller shall ensure that the Metering Equipment is:

(a) capable of being remotely interrogated;

(b) sufficient to accurately meter the quantity of Test Energy and Eligible Energy;

(c) calibrated to measure the quantity of Test Energy and Eligible Energy delivered to the POI, after adjusting for any line losses from the Seller’s Plant to the POI; and

(d) in compliance with all requirements set out in the Electricity and Gas Inspection Act (Canada) and associated regulations.

9.2 Operation of Metering Equipment - The Metering Equipment shall be used for purposes of calculating the amount of Test Energy and Eligible Energy. In the event of any failure of the Metering Equipment, the Parties shall, until such time as the Metering Equipment has been repaired or replaced, rely upon information provided by any back-up meter installed pursuant to section 9.3, or, in the absence of such back-up meter, the Seller’s metering equipment, if any, for purposes of calculating payments due under this EPA. If there is any dispute regarding the accuracy of the Metering Equipment, either Party may give notice to the other Party of the dispute, in which case the Buyer and the Seller shall proceed to rectify the matter in accordance with the Electricity and Gas Inspection Act (Canada). The Seller shall allow the Buyer to access the Seller’s Plant at any time during normal business hours on reasonable advance notice for purposes of inspecting the Metering Equipment. The Seller shall, on the Buyer’s request, cause the Metering Equipment to be inspected, tested and adjusted provided that, except as set out below, the Buyer shall not make such a request more than once in each year during the Term. The Seller shall give the Buyer reasonable prior notice of all inspections, tests and calibrations of the Metering Equipment and shall permit a representative of the Buyer to witness and verify such inspections, tests and calibration. If either Party has reason to believe that the Metering Equipment is inaccurate, the Seller shall cause the Metering Equipment to be tested forthwith upon becoming aware of the potential inaccuracy. The Seller shall provide the Buyer with copies of all meter calibration test results and all other results of any test of the Metering Equipment. If any test of the Metering Equipment discloses an inaccuracy outside the inaccuracies permitted under the Electricity and Gas Inspection Act (Canada), any payments or adjustments made or calculated under this EPA that would have been affected by the inaccuracy shall, so far as practicable, be recalculated to correct for the inaccuracy. For purposes of such correction, if the inaccuracy is traceable to a specific event or occurrence at a reasonably ascertainable time, then the adjustment shall extend back to that time; otherwise, it shall be assumed that the error has existed for a period equal to one half of the time elapsed since COD or one half of the time since the last meter test, whichever is more recent, but in any event shall not extend back more than 36 months. Any

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amounts which are determined to be payable or subject to refund as a result of such re-computations shall be paid to the Party entitled to such amounts within 30 days after the paying Party is notified of the re-computation.

9.3 Duplicate Metering Equipment - The Buyer may at any time at the Buyer’s sole cost, on not less than 30 days’ prior notice to the Seller, install a duplicate revenue meter at the Seller’s Plant at a location to be agreed upon by the Buyer and the Seller, acting reasonably, and the Seller shall allow the Buyer to access the Seller’s Plant for such purpose and for the purpose of inspecting and maintaining such equipment. The Seller shall make transformers, transformer connections and telephone access available to the Buyer, as required, if the Buyer elects to install a duplicate revenue meter. Any duplicate revenue meter and metering equipment installed by the Buyer shall remain the property of the Buyer, and the Seller shall not tamper with, remove or move such meter or equipment.

10. STATEMENTS AND PAYMENT

10.1 Statements -

(a) In each month after the month in which Pre-COD Energy is first delivered to the Buyer, the Seller shall, by the 15th day of the month, deliver to the Buyer a statement prepared by the Seller for the preceding month. The statement must comply with any billing guideline issued by the Buyer pursuant to section 10.4 and must indicate, among other things, (i) the amount of Test Energy and /or Eligible Energy, (ii) the price payable for the Test Energy and / or Eligible Energy, (iii) any LDs payable by the Seller to the Buyer, (iv) any Auxiliary Fuel Overage Credit, (v) any Avoided Costs, and (vi) any Final Amounts owing by either Party to the other Party, and set out in reasonable detail the manner by which the statement and the amounts shown thereon were computed. To the extent not previously delivered pursuant to the requirements of this EPA, the statement must be accompanied by sufficient data to enable the Buyer, acting reasonably, to satisfy itself as to the accuracy of the statement.

(b) Either Party may give notice to the other Party of an error, omission or disputed amount on a statement within 36 months after the statement was first issued together with reasonable detail to support its claim. After expiry of that 36 month period, except in the case of wilful misstatement or concealment, amounts on a previously issued statement shall be considered accurate and amounts which were omitted shall be considered to be nil, other than amounts disputed in accordance with this subsection within the 36 month period, which shall be resolved in accordance with this EPA.

10.2 Payment -

(a) Within 30 days after receipt of a statement delivered pursuant to subsection 10.1(a) and subject to sections 10.5 and 14.6, the Buyer shall pay to the Seller the amount set out in the statement, except to the extent the Buyer in good faith disputes all or part of the statement by notice to the Seller in compliance with subsection 10.1(b). If the Buyer disputes any portion of a statement, the Buyer must nevertheless pay the undisputed net amount payable by the Buyer pursuant to the statement.

(b) Any amount required to be paid in accordance with this EPA, but not paid by either Party when due, shall accrue interest at an annual rate equal to the Prime Rate plus 2%,

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compounded monthly. Any disputed amount that is found to be payable shall be deemed to have been due within 30 days after the date of receipt of the statement which included or should have included the disputed amount.

10.3 Taxes - All dollar amounts in this EPA do not include any value added, consumption, commodity or similar taxes applicable to the purchase by the Buyer of the Test Energy or the Eligible Energy, including GST and PST, which, if applicable, shall be borne by the Buyer and added to each statement.

10.4 Billing Guideline - The Seller shall comply with any reasonable written billing guideline (including any requirements with respect to the form of statements pursuant to section 10.1) issued by the Buyer, provided that any such billing guideline shall not vary the express terms of this EPA. If there is any conflict between a billing guideline and this EPA, this EPA shall govern.

10.5 Set-off - If the Buyer and the Seller each owe the other an amount under this EPA in the same month, then such amounts with respect to each Party shall be aggregated and the Parties may discharge their obligations to pay through netting, in which case the Party, if any, owing the greater aggregate amount shall pay to the other Party the difference between the amounts owed, provided that:

(a) this section 10.5 applies only to:

(i) any purchase price for Test Energy and/or Eligible Energy owing by the Buyer to the Seller;

(ii) any LDs owing by the Seller to the Buyer;

(iii) any Termination Payment or Final Amount owing by either Party to the other Party; and

(iv) any amount owing by the Seller to the Buyer in respect of any Auxiliary Fuel Overage Credit; and

(b) no LD, Termination Payment or Final Amount shall be added to or deducted from the price owing by the Buyer to the Seller for Eligible Energy unless the LD, Termination Payment or Final Amount remains unpaid 15 days after the Party owed the LD, Termination Payment or Final Amount gives notice to the other Party.

Except as otherwise expressly provided herein, each Party reserves all rights, counterclaims and other remedies and defences which such Party has or may be entitled to arising from or related to this EPA.

11. INSURANCE/DAMAGE AND DESTRUCTION

11.1 Insurance - The Seller shall, by the date specified in section 4.1 for the commencement of the Project activities necessary to construct the Seller’s Plant, obtain, maintain and pay for (i) policies of commercial general liability insurance with a per occurrence limit of liability not less than $___________ applicable to the Project separate from all other projects and operations of the Seller, and (ii) property insurance and Construction Insurance with limits of liability and deductibles consistent with those a prudent owner of a facility similar to the Seller’s Plant would maintain and those the Facility Lender requires. All commercial general liability policies must include the Buyer, its directors, officers, employees and agents as additional insureds and must contain a cross liability and severability of interest

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clause. All policies of insurance must be placed with insurers that have a minimum rating of A- (or equivalent) by A.M. Best Company and are licensed to transact business in the Province of British Columbia and must be endorsed to provide to the Buyer 30 days’ prior written notice of cancellation, non-renewal or any material amendment that results in a reduction in coverage. The Seller shall give the Buyer a copy of the insurance certificate(s) for the insurance required to be maintained by the Seller under this section not more than 30 days after the effective date of coverage and immediately upon renewal thereafter. The Seller shall be responsible for the full amount of all deductibles under all insurance policies required to be maintained by the Seller under this section.

[Note to Proponents: The insurance policy limit of liability set out in section 11.1 of the EPA shall be based on the Plant Capacity as follows:

Greater than 10 MW to 25 MW - $ 3,000,000

Greater than 25 MW to 50 MW - $ 5,000,000

Greater than 50 MW to 100 MW - $10,000,000

Greater than 100 MW - $20,000,000]

11.2 Damage or Destruction of the Seller’s Plant -

(a) Major Damage - If the Seller’s Plant suffers Major Damage caused by Force Majeure in respect of which the Seller has invoked Force Majeure in accordance with Article 12, then the Seller may at its option exercisable by notice to the Buyer within 120 days after the occurrence thereof, either (i) proceed to diligently and expeditiously to repair the Major Damage and restore the Seller’s Plant to at least the condition in which it was in immediately prior to the Major Damage and resume deliveries of Energy hereunder, or (ii) terminate this EPA, and in that event, the provisions of section 16.3 and subsection 16.5(c) apply. If the Seller fails to give notice exercising its option within such 120 day period, it shall be deemed to have exercised the option described in (i) above. Nothing in this section limits the rights of either Party to terminate this EPA under any other section of this EPA.

(b) Non-Major Damage - If the Seller’s Plant is damaged or destroyed, in whole or in part, by any cause or peril, then, except in the case of Major Damage caused by Force Majeure in respect of which the Seller has invoked Force Majeure in accordance with Article 12, the Seller shall within 30 days after the date of the damage or destruction provide notice to the Buyer setting out the date by which the Seller, acting reasonably, can resume delivering Energy to the Buyer which date shall be not more than 365 days after the date of occurrence of the damage or destruction. The Seller shall diligently and expeditiously repair the Seller’s Plant and restore the same to at least the condition in which it was in immediately prior to the damage or destruction and shall complete such work not later than the date specified in the notice delivered by the Seller to the Buyer under this section.

(c) Extension of Term - Provided the Seller complies with its obligations under this section 11.2, the Term shall be extended by the number of days from the date of the event of damage or destruction to the date on which the Seller resumes delivering Energy to the Buyer.

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12. FORCE MAJEURE

12.1 Invoking Force Majeure and Notice -

(a) Neither Party shall be in breach or default as to any obligation under this EPA if that Party is unable to perform that obligation due to an event or circumstance of Force Majeure, of which notice is given as required in this section 12.1. Subject to any limitations expressly set out in this EPA, the time for performance of such obligation shall be extended by the number of days that Party is unable to perform such obligation as a result of the event or circumstance of Force Majeure of which notice is so given.

(b) If there is a Force Majeure preventing a Party from performing an obligation under this EPA, that Party shall promptly notify the other Party of the Force Majeure. The notice must identify the nature of the Force Majeure, its expected duration and the particular obligations affected by the Force Majeure. The affected Party shall provide reports to the other Party with respect to the Force Majeure at such intervals as the other Party may reasonably request while the Force Majeure continues. A Party shall be deemed to have invoked Force Majeure from the later of:

(i) the date when that Party gives notice of the Force Majeure in accordance with this subsection 12.1(b); and

(ii) if such date is not a Business Day, the next following Business Day;

provided that if such notice is given by 17:00 PPT on the first Business Day following the later of:

(iii) the day on which the Force Majeure occurs; and

(iv) the day when the Party knew, or reasonably ought to have known, of the occurrence of the Force Majeure;

the Party shall be deemed to have invoked Force Majeure from the date on which the event of Force Majeure occurred. The Party invoking Force Majeure shall promptly respond to any inquiry from the other Party regarding the efforts being undertaken to remove the Force Majeure. The Party invoking Force Majeure shall give prompt notice of the end of the Force Majeure.

12.2 Exclusions - A Party may not invoke Force Majeure:

(a) for any economic hardship, or for lack of money, credit or markets;

(b) if the Force Majeure is the result of a breach by the Party seeking to invoke Force Majeure of a Permit or of any applicable Laws;

(c) for a mechanical breakdown, unless the Party seeking to invoke Force Majeure can demonstrate by clear and convincing evidence that the mechanical breakdown was caused by a latent defect in the design or manufacture of the equipment which could not reasonably have been identified by normal inspection or testing of the equipment;

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(d) if the Force Majeure was caused by a breach of, or default under, this EPA or a wilful or negligent act or omission by the Party seeking to invoke Force Majeure;

(e) for any acts or omissions of third parties, including any Affiliate of the Seller, or any vendor, supplier, contractor or customer of a Party, but excluding Governmental Authorities, unless such acts or omissions are themselves excused by reason of Force Majeure as defined in this EPA;

(f) for any disconnection of the Seller’s Plant from the Transmission System, or any Transmission System Outage; or

(g) based on the cost or unavailability of Fuel for any reason, including natural causes, unless transport of the Fuel to the Seller’s Plant is prevented by an event or circumstance that constitutes Force Majeure as defined in this EPA).

13. LIQUIDATED DAMAGES

13.1 COD Delay - If the Seller’s Plant fails to achieve COD by the Guaranteed COD plus Force Majeure Days, the Seller shall pay COD Delay LDs to the Buyer calculated in the same manner as for LDs under section 13.2 until the Buyer’s right to terminate the EPA arises under subsection 16.1(b), whether or not such right is exercised. The Seller shall pay any COD Delay LDs owing by the Seller to the Buyer in respect of the immediately preceding month on the 30th day after the last day of that month.

13.2 Delivery Shortfalls - If in any hour after the first anniversary of COD, the Delivered Eligible Energy (as defined in this section 13.2) in that hour is less than the Hourly Firm Energy Amount for that hour, the Seller shall pay LDs to the Buyer calculated as follows:

LD Amount = LD Factor x (Designated HFE Amount – Delivered Eligible Energy) * (1-L)

where:

(a) “Designated HFE Amount” means (i) the Hourly Firm Energy Amount for the relevant hour set out in Appendix 2 minus (ii) an amount equal to the Hourly Firm Energy Amount for the relevant hour set out in Appendix 2, divided by 60 minutes multiplied by the number of minutes in the hour for which the Seller is excused under subsection 7.7(a) from the obligation to deliver Energy;

(b) “Delivered Eligible Energy” means in each hour the amount of Eligible Energy determined pursuant to subsection (a) of the definition of “Eligible Energy” for that hour, but excluding any Energy delivered after the start time and prior to the end time for an Authorized Planned Outage as set out in the notice with respect to the Authorized Planned Outage under section 6.3;

(c) “L” or “Losses” has the meaning given in Appendix 3;

(d) “LD Factor” = the greater of: (i) A and (ii) Mid-C Price – [(EFEP x TDF)/(1-L) - HFC x (CPIJan 1, N/CPIJan 1, 2008)]

where:

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“A” = $5.0000/MWh x (CPIJan 1, N/CPIJan 1, 2008);

“N” = the year for which “A” is being calculated;

“EFEP” or “Escalated Firm Energy Price” has the meaning given in Appendix 3;

“TDF” or “Time of Delivery” has the meaning given in Appendix 3;

“HFC” or “Hourly Firm Credit” means the applicable $/MWh from the Hourly Firm Credit Table set forth in section 13.3; and

“Mid-C Price” means:

(i) For Off-Peak Hours, the Dow Jones Mid-C Daily Firm Off-Peak Index;

(ii) For Peak Hours, the Dow Jones Mid-C Daily Firm On-Peak Index multiplied by the quotient of the Peak TDF for the relevant month divided by the On-Peak TDF for the same month; and

(iii) For Super-Peak Hours, the Dow Jones Mid-C Daily Firm On-Peak Index multiplied by the quotient of the Super-Peak TDF for the relevant month divided by the On-Peak TDF for the same month.

where:

each of “Peak TDF”, “Super-Peak TDF” and “On-Peak TDF” has the meaning given in Appendix 3; and

each of the Dow Jones Mid-C Daily Firm On-Peak Index and Dow Jones Mid-C Daily Firm Off-Peak Index shall be expressed in US$ / MWh and converted to Canadian dollars using the Bank of Canada Daily “noon rate” for the day in which the delivery shortfall occurred.

Any LDs owing by the Seller to the Buyer pursuant to this section 13.2 shall be payable on the 15th day of the month following the month in which the delivery shortfall occurred.

13.3 Hourly Firm Credit Table - The “Hourly Firm Credit Table” is as follows, where each value is shown in $/MWh:

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

Super-Peak 20.0 13.3 4.0 2.1 0.0 0.0 2.0 4.0 4.1 4.0 8.3 20.0

Peak 20.0 13.3 4.0 2.1 0.0 0.0 2.0 4.0 4.1 4.0 8.3 20.0

Off-Peak 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

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13.4 Exclusive Remedies for Buyer - Except in the case of Deliberate Breach, payment by the Seller of the LDs in this Article 13 is the exclusive remedy to which the Buyer is entitled for:

(a) the Seller’s failure to achieve COD by the Guaranteed COD;

(b) the Seller’s failure to deliver the Hourly Firm Energy Amount; and

(c) any other failure to comply with section 7.2 or the last sentence of subsection 6.2(b);

provided that the foregoing does not limit or otherwise affect any right to receive interest on LDs, any right to terminate the EPA, or any right to receive a Termination Payment, in each case as expressly set out in this EPA, or the exercise of any other right or remedy expressly set out in this EPA, including any rights under section 10.5, or Article 14, or any right to apply any invoice adjustments in accordance with Appendix 3.

13.5 Exclusive Remedies for Seller - The Seller’s exclusive remedy for the Buyer’s failure to take or pay for Eligible Energy is the right to recover the price payable by the Buyer for Eligible Energy pursuant to Appendix 3 and any interest on any such amount owing by the Buyer to the Seller, provided that the foregoing does not limit or otherwise affect any right to terminate the EPA, any rights under section 10.5, or any right to receive a Termination Payment expressly set out in this EPA.

13.6 Limits of Liability - Except in the case of Deliberate Breach, in each year the Seller’s liability for damages for all breaches of, or defaults under, this EPA in that year is limited to an amount equal to 200% of the required amount of the Performance Security for the relevant year, provided that the foregoing does not apply to:

(a) any invoice credit owing by the Seller under Appendix 3;

(b) any liability under section 20.1;

(c) interest on any amount owing under this EPA;

(d) any payment commitment of the Seller for incremental costs pursuant to section 4.5, 5.7 or 6.6;

(e) any right to receive a Termination Payment expressly set out in this EPA; and

(f) any other provision in this EPA that is expressly excluded from the limit of liability in this section.

13.7 Consequential Damages - Neither Party shall be liable to the other Party for any special, incidental, exemplary, punitive or consequential damages arising out of a Party’s performance or non-performance under this EPA, whether based on or claimed under contract, tort, strict liability or any other theory at law or in equity.

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14. PERFORMANCE AND INTERCONNECTION SECURITY

14.1 Delivery -

(a) The Parties acknowledge that the Seller has delivered the Performance Security to the Buyer concurrently with execution and delivery of this EPA. The Seller shall maintain the Performance Security until the time provided in subsection 14.2(a), and shall amend or replace the Performance Security to ensure that the Performance Security at all times complies with (i) the requirements set forth in the definition of Performance Security in Appendix 1, and (ii) the requirement set forth in subsection 7.9(c).

(b) The Seller shall deliver the Interconnection Security to the Buyer by not later than the date on which the Seller enters into the Early Engagement and Procurement Agreement, if any, or the Interconnection Agreement, whichever first occurs. The Seller shall maintain such Interconnection Security until the time provided in section 14.2(b), and shall amend or replace the Interconnection Security to ensure that the Interconnection Security complies at all times with the requirements of any conditional consent given under sections 4.5, 5.7 and 6.6.

(c) The Performance Security and the Interconnection Security do not limit the Seller’s liability in respect of any breach of, or default under, this EPA.

14.2 Return -

(a) The Buyer shall return or release the Performance Security to the Seller, without deduction, other than prior deductions, if any, properly made hereunder on the earlier of:

(i) in the case of termination of this EPA under section 3.1, by the date specified in subsection 3.6(a); or

(ii) 30 Business Days after the later of (I) termination of this EPA under subsection 11.2(a), section 16.1 or section 16.2, and (II) discharge of all obligations and liabilities of the Seller to the Buyer under this EPA.

(b) The Buyer shall return or release the Interconnection Security to the Seller, without deduction, other than prior deductions, if any, properly made hereunder on the earlier of:

(i) the fifth anniversary of COD;

(ii) the end of any 12-month period in which the Seller has delivered an amount of Firm Energy not less than 95% of the Annual Firm Energy Amount for that 12-month period, provided that for the purposes of this subsection 14.2(b)(ii), “Firm Energy” in any applicable period shall be deemed to include:

(I) deemed Eligible Energy pursuant to section 7.8 that would have constituted Firm Energy if actually delivered; and

(II) all other amounts of Firm Energy could have been generated and delivered to the Buyer during that period but for (A) Force Majeure in respect of which either Party has invoked Force Majeure in accordance

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with section 12.1, (B) Authorized Planned Outages or (C) other events specified in this EPA that expressly excuse the Seller from its obligations to deliver Firm Energy to the Buyer, in each case calculated in the same manner as deemed Eligible Energy in section 7.8; and

(iii) 30 Business Days after the later of (I) termination of this EPA under subsection 11.2(a), section 16.1 or section 16.2, and (II) discharge of all obligations and liabilities of the Seller to the Buyer under subsection 14.3(b).

14.3 Enforcement -

(a) In the case of Performance Security, if:

(i) the Seller fails to pay any Final Amount owing by the Seller to the Buyer; or

(ii) the Seller fails to pay any LDs owing by the Seller to the Buyer; or

(iii) the Seller fails to pay any Termination Payment owing by the Seller to the Buyer,

and, in each case, the Seller fails to cure such failure to pay within 15 days after notice from the Buyer to the Seller, then the Buyer may enforce the Performance Security and apply the proceeds thereof on account of amounts owing to the Buyer in respect of any or all of the foregoing.

(b) In the case of Interconnection Security, if the Seller fails to pay any amounts owing by the Seller under commitments given pursuant to section 4.5, 5.7 or 6.6, or under section 16.7, and, in each case, the Seller fails to cure such failure to pay within 15 days after notice from the Buyer to the Seller, then the Buyer may enforce the Interconnection Security and apply the proceeds thereof on account of the amounts owing to the Buyer in respect of any or all of the foregoing.

14.4 Form - The Seller shall maintain each of the Performance Security and the Interconnection Security in the form of a letter of credit that is:

(a) issued or advised by a branch in Vancouver, Canada of a financial institution having a credit rating not less than Standard & Poor’s A-, Moody’s A3 or Dominion Bond Rating Service A (low) and if such credit rating agencies publish differing credit ratings for the same financial institution, the lowest credit rating of any of the credit rating agencies shall apply for purposes of this section;

(b) in the form set out in Appendix 7, or in such other form to which the Buyer may consent; and

(c) for a term of not less than one year and providing that it is renewed automatically, unless the issuing or confirming financial institution advises otherwise by the date specified in Appendix 7.

14.5 Replenishment - If the Buyer draws on the Performance Security, as permitted hereunder, then the Seller shall within 3 Business Days after such draw provide additional security in the form specified

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in section 14.4 sufficient to replenish or maintain the aggregate amount of the Performance Security at the amount required hereunder.

14.6 Right to Withhold Payment - If the Seller has failed to maintain the Performance Security or the Interconnection Security in the amount required hereunder (subject, in the case of the Performance Security, to the cure period specified in section 14.5), the Buyer shall be entitled to withhold payment of any amount owing by the Buyer to the Seller under this EPA until 5 days after the date when the Seller has delivered the required amount of Performance Security or the Interconnection Security (as the case may be) to the Buyer. Any amounts withheld by the Buyer in accordance with this section 14.6 shall not bear interest.

14.7 Letter of Credit Failure - The Buyer shall be entitled to enforce the Performance Security or the Interconnection Security in the event of a Letter of Credit Failure and the Buyer shall be entitled to hold the proceeds of such enforcement until such time as the Seller delivers replacement Performance Security or Interconnection Security (as the case may be) in the amount and in the form required under this EPA. Upon receipt of such replacement security, the Buyer shall return the proceeds of enforcement of the original Performance Security or Interconnection Security (as the case may be) to the Seller without interest after deducting any amounts the Buyer is entitled to deduct under this EPA. The Seller shall notify the Buyer promptly of any Letter of Credit Failure.

15. SUSPENSION

15.1 Buyer Suspension - If a Buyer Termination Event occurs and is continuing, the Buyer may, upon notice to the Seller, suspend performance and payment by the Buyer under this EPA, provided that:

(a) such suspension may not continue for longer than 90 days;

(b) the suspension shall not affect the Buyer’s obligation to make any payment owing to the Seller in respect of performance by the Seller of its obligations under this EPA prior to the date of suspension by the Buyer; and

(c) the suspension of performance shall not limit any rights the Buyer may have under the EPA to terminate the EPA as a result of the occurrence of the Buyer Termination Event.

15.2 Seller Suspension - If a Seller Termination Event occurs and is continuing, the Seller may, upon notice to the Buyer, suspend performance by the Seller under this EPA, provided that the suspension shall not affect the Seller’s obligation to pay any amount owing by the Seller to the Buyer in respect of performance of, or failure to perform, the Seller’s obligations under this EPA prior to the date of suspension by the Seller.

15.3 Resuming Deliveries - The non-defaulting Party’s right to suspend performance pursuant to this Article 15 shall cease when the defaulting Party has demonstrated to the satisfaction of the non-defaulting Party, acting reasonably, that the defaulting Party has cured the cause for the suspension.

16. TERMINATION

16.1 Termination by the Buyer - In addition to any other right to terminate this EPA expressly set out in any other provision of this EPA, the Buyer may terminate this EPA, by notice to the Seller if:

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(a) the Seller has failed to obtain all Material Permits on or before the date that is the earlier of:

(i) Guaranteed COD; and

(ii) the third anniversary of the Effective Date;

provided that the Buyer may terminate the EPA under this provision only if the Buyer delivers a termination notice before the date on which the Seller has secured all Material Permits, and if the Seller has not already delivered a notice of termination under subsection 16.2(a);

(b) COD does not occur by Guaranteed COD plus 365 days plus all Force Majeure Days (not exceeding 180 Force Majeure Days), provided that if the Seller can demonstrate on or before such date by clear and convincing evidence acceptable to the Buyer, acting reasonably, that construction of the Seller’s Plant is 80% complete by such date, the Buyer may terminate the EPA under this provision, by notice to the Seller, only if the Seller fails to achieve COD within a further 180 days plus any further Force Majeure Days (not exceeding 180 Force Majeure Days) after such date, and provided further that the Buyer shall be entitled to terminate the EPA under this provision only if the Buyer delivers a termination notice before COD;

(c) either Party has received a notice from the other Party invoking Force Majeure and the Force Majeure has not been terminated by the date that is 730 days after the date of notice invoking Force Majeure, provided that the Buyer may terminate the EPA under this provision only if the Buyer delivers a termination notice before the end of the Force Majeure;

(d) a Transmission System Outage that is directly caused by a Force Majeure has persisted continuously for 730 or more days after the commencement of Force Majeure, provided that the Buyer may terminate the EPA under this provision only if the Buyer delivers a termination notice before the end of such Transmission Service Outage; or

(e) a Buyer Termination Event occurs.

Any termination pursuant to this section 16.1 shall be effective immediately upon delivery of the notice of termination to the Seller.

16.2 Termination by the Seller - In addition to any other right to terminate this EPA expressly set out in any other provision of this EPA, the Seller may terminate this EPA by notice to the Buyer if:

(a) the Seller, after using commercially reasonable efforts, has failed to obtain all Material Permits on terms satisfactory to the Seller, acting reasonably, on or before the date that is the earlier of:

(i) 180 days before the Guaranteed COD; and

(ii) the second anniversary of the Effective Date;

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provided that if the Seller has not given notice of termination pursuant to this subsection 16.2(a) by the date that is 15 days after the Seller’s right to terminate arises under this subsection 16.2(a), the Seller shall be deemed to have elected not to terminate this EPA and may not thereafter terminate this EPA under this subsection 16.2(a);

(b) either Party has received a notice from the other Party invoking Force Majeure and the Force Majeure has not been terminated by the date that is 730 days after the date of notice invoking Force Majeure, provided that the Seller shall be entitled to terminate the EPA under this provision only if the Seller delivers a termination notice before the end of the Force Majeure;

(c) a Transmission System Outage that is directly caused by a Force Majeure has persisted continuously for 730 or more days after the commencement of Force Majeure, provided that the Seller may terminate the EPA under this provision only if the Seller delivers a termination notice before the end of such Transmission System Outage; or

(d) a Seller Termination Event occurs.

Any termination pursuant to this section 16.2 shall be effective immediately upon delivery of the notice of termination to the Buyer.

16.3 Effect of Termination - Upon expiry of the Term or if this EPA is terminated pursuant to section 3.1, subsection 11.2(a) or this Article 16:

(a) the Parties may pursue and enforce any rights and remedies permitted by law or equity in respect of any prior breach or breaches of the EPA, and may enforce any liabilities and obligations that have accrued under this EPA prior to the expiry of the Term or the date of termination, including any claims by the Buyer for amounts that would have been payable by the Seller under commitments given pursuant to any of section 4.5, 5.7 or 6.6 but for the expiry or termination of the EPA, subject to any express restrictions on remedies and limitations or exclusions of liability set out in this EPA; and

(b) (i) with respect to a termination under section 3.1 only, both Parties shall remain bound by (I) Article 20, Article 21 and sections 22.7 and 22.8, and (II) sections 3.3 (if applicable), 3.6, 14.2 and 14.3, in respect of the satisfaction of residual obligations specified to arise on termination only;

(ii) upon expiry of the Term or upon any termination other than a termination under section 3.1:

(A) both Parties shall remain bound by: (I) Article 10 in respect of any final billing and resolution of disputed amounts only, (II) Article 14 and Article 16, in respect of the satisfaction of residual obligations specified to arise on termination only; (III) Article 20, Article 21 and sections 22.7 and 22.8; and (IV) Article 8 with respect only to Environmental Attributes associated with Eligible Energy delivered prior to termination of the EPA; and

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(B) the Seller shall remain bound by: (I) section 6.4; and (II) for a period of 36 months following expiry of the Term or termination of this EPA, Article 18, with respect to Records only,

and, in all such cases, both Parties shall remain bound by any other provisions necessary for the interpretation and enforcement of the foregoing provisions.

16.4 Payment on Termination by the Buyer -

(a) If the Buyer terminates this EPA under section 16.1, except for a termination pursuant to subsection 16.1(c) or 16.1(d), the Seller shall pay to the Buyer an amount equal to the lesser of:

(i) the then applicable amount of the Performance Security; and

(ii) an amount equal to the positive amount, if any, by which the Buyer’s Economic Losses and Costs exceed the aggregate of the Buyer’s Gains.

(b) If the Buyer terminates this EPA under subsection 16.1(c) or 16.1(d), no Termination Payment is payable by the Seller to the Buyer, except as set out in section 16.7.

16.5 Payment on Termination by the Seller -

(a) If the Seller terminates this EPA under subsection 16.2(a), the Seller shall pay to the Buyer an amount equal to $2.50/MWh multiplied by the Annual Firm Energy Amount and any amount payable under section 16.7.

(b) If the Seller terminates this EPA under subsection 16.2(b) or 16.2(c), no Termination Payment is payable by the Buyer to the Seller, except as set out in section 16.7.

(c) If the Seller terminates this EPA under subsection 11.2(a), no Termination Payment is payable by the Seller to the Buyer, except as set out in section 16.7.

(d) If the Seller terminates this EPA under subsection 16.2(d) prior to COD, the Buyer shall pay to the Seller an amount equal to:

(i) 115% of the Development Costs; less

(ii) the Net Realizable Value of the Project Assets, where “Net Realizable Value” means the amount that the Seller receives, or could reasonably be expected to receive, after the exercise of commercially reasonable efforts, from a disposition of the Project Assets, net of transaction costs, as of the date of termination.

(e) If the Seller terminates this EPA under subsection 16.2(d) after COD, the Buyer shall pay to the Seller an amount equal to the positive amount, if any, by which the Seller’s Economic Losses and Costs exceed the Seller’s aggregate Gains.

16.6 Calculation of Gains, Economic Losses and Costs - For the purposes of calculating the Gains, Economic Losses and Costs of a Party that is terminating this EPA (the “Terminating Party”) pursuant to subsection 16.4(a)(ii) or 16.5(e), the following conditions shall apply:

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(a) The Terminating Party’s Gains, Economic Losses and Costs shall be determined by comparing the value of the remaining Term, contract quantities and price payable under this EPA had it not been terminated to the relevant market prices for equivalent quantities for the remaining Term either quoted by a bona fide arm’s length third party or which are reasonably expected to be available in the market under a replacement contract for this EPA. Market prices shall be adjusted for differences between the product subject to the market prices and a product (inclusive of Environmental Attributes) equivalent to that specified under this EPA available from a generator meeting the eligibility requirements set forth in section 14 of the RFP, including with respect to quantity, place of delivery and length of term and each element of those eligibility requirements.

(b) The Terminating Party shall not be required to enter into a replacement transaction in order to determine the amount payable by the other Party.

(c) The Terminating Party shall determine the amount of any Termination Payment owed by the other Party, and shall notify the other Party of such amount and provide reasonable particulars with respect to its determination within 120 days after the effective date of termination of this EPA, failing which the Terminating Party shall not be entitled to any Termination Payment under such section.

(d) If the Terminating Party’s aggregate Gains exceed its aggregate Economic Losses and Costs, if any, resulting from the termination of this EPA, the amount of the Termination Payment shall be zero.

(e) The Terminating Party’s Gains, Economic Losses and Costs shall be discounted to the date of termination of the EPA using the Present Value Rate applicable at the date of termination of the EPA.

(f) In this Article 16:

(i) “Costs” means brokerage fees, commissions and other similar transaction costs and expenses reasonably incurred or that would reasonably be expected to be incurred by the Terminating Party in entering into new arrangements which replace this EPA, and legal fees, if any, incurred in connection with enforcing the Terminating Party’s rights under this EPA;

(ii) “Economic Losses” means an amount equal to the present value of the economic loss (exclusive of Costs), if any, to the Terminating Party resulting from the termination of this EPA, determined in a commercially reasonable manner; and

(iii) “Gains” means an amount equal to the present value of the economic benefit (exclusive of Costs), if any, to the Terminating Party resulting from the termination of this EPA, determined in a commercially reasonable manner.

16.7 Interconnection Costs Payable on Termination - If this EPA is terminated under section 11.2, 16.1 or 16.2, but excluding any termination under subsection 16.2(d), the Seller shall pay to the Buyer within 30 days after delivery by the Buyer of an invoice, the sum of the following amounts:

(a) if notice of termination is given before the 5th anniversary of COD, an amount equal to:

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INU Costs * [1 – (X/60)]

where:

“INU Costs” means all costs incurred or committed by the Transmission Authority and/or the Buyer for design, engineering, construction and commissioning of Interconnection Network Upgrades.

X means the number of months (pro-rated for any portion of a month) from COD to the date on which notice of termination of this EPA is given; and

(b) all incremental costs payable by the Seller pursuant to any commitment given pursuant to section 4.5, 5.7 or 6.6, less any such costs paid by the Seller.

16.8 Termination Payment Date - A Party required to make a Termination Payment to the other Party shall, except in the case of a Termination Payment payable pursuant to subsection 16.4(a), 16.5(d) or 16.5(e), pay the Termination Payment within 30 Business Days after the effective date of termination of this EPA. The Seller shall pay any Termination Payment owing by the Seller pursuant to subsection 16.4(a), or the Buyer shall pay any Termination Payment owing by the Buyer pursuant to subsection 16.5(d) or (e), in either case within 30 Business Days after the date of delivery of an invoice by the payee. At the time for payment of the Termination Payment, each Party shall pay to the other Party all additional amounts payable by it pursuant to this EPA, but all such amounts shall be netted and aggregated with any Termination Payment.

16.9 Exclusive Remedies -

(a) Termination under Section 3.1 - Subject to section 16.3, the payments and actions contemplated by sections 3.3 and 3.6 are the exclusive remedies to which the Parties are entitled for termination of this EPA pursuant to section 3.1.

(b) Termination under Section 16.1 - Except in the case of Deliberate Breach or as otherwise expressly set out in this EPA, and subject to section 16.3:

(i) payment by the Seller of the Termination Payment and any payment payable under section 16.7 is the exclusive remedy to which the Buyer is entitled for termination of this EPA pursuant to subsection 16.1(a), (b) or (e); and

(ii) payment by the Seller of any amount payable pursuant to section 16.7 is the exclusive remedy to which the Buyer is entitled for termination of this EPA pursuant to subsection 16.1(c) or 16.1(d).

(c) Termination under Subsection 16.2(a) – Subject to section 16.3, payment by the Seller of the Termination Payment and any amount payable under section 16.7 is the exclusive remedy to which the Buyer is entitled for termination of this EPA pursuant to subsection 16.2(a).

(d) Termination under Section 11.2, or Subsection 16.2(b) or 16.2(c) – Subject to section 16.3, payment by the Seller of any amount payable under section 16.7 is the exclusive remedy to which the Buyer is entitled for termination of this EPA pursuant to section 11.2, or subsection 16.2(b) or 16.2(c).

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(e) Termination Subsection 16.2(d) – Subject to section 16.3, payment by the Buyer of the Termination Payment is the exclusive remedy to which the Seller is entitled for termination of this EPA pursuant to subsection 16.2(d).

17. ASSIGNMENT

17.1 Assignment - A Party may not assign or dispose of this EPA or any direct or indirect interest in this EPA, in whole or in part, for all or part of the Term, except:

(a) with the consent of the other Party, such consent not to be unreasonably withheld, delayed or conditioned; or

(b) to an Affiliate, on notice to, but without the consent of, the other Party, provided that the assignor shall remain liable for the obligations of the assignee under this EPA, unless otherwise agreed in writing by the other Party.

Notice of intent to assign, and where applicable a request for consent to assign, must be given by the assignor to the other Party not less than 30 days before the date of assignment, and, except in the case of assignment to a Facility Lender, must be accompanied by a proposed form of assignment and assumption agreement, and, in the case of an assignment pursuant to subsection 17.1(a), other than to a Facility Lender, evidence of the capability of the assignee as required by subsection 17.2(b). Consent to an assignment to a Facility Lender shall not be given, or be deemed to be given, until full execution and delivery of the agreement contemplated by section 17.3. Any sale or other disposition of the Seller’s Plant that results in the Seller holding less than a 50% interest in the Seller’s Plant, any sale or other disposition of all or any interest of the Seller in this EPA or revenue derived from this EPA, and any mortgage, pledge, charge or grant of a security interest in all or any part of the Seller’s ownership interest in the Project Assets and any change of Control, merger, amalgamation or reorganization of the Seller is deemed to be an assignment of this EPA by the Seller for the purpose of this Article 17, including section 17.2, provided that where Control is transferred to an Affiliate or where the Seller merges or amalgamates with an Affiliate or enters into a reorganization with an Affiliate, subsection 17.1(b) shall apply.

17.2 Preconditions to Assignment - Without limiting subsection 17.1(a), any assignment pursuant to section 17.1 (other than an assignment to a Facility Lender) is subject to:

(a) the assignee entering into and becoming bound by this EPA, assuming all the obligations and liabilities of the assignor under the EPA arising both before and after the assignment of the EPA, providing any Performance Security, Interconnection Security, or other security then required under any conditional consent given under section 4.5, 5.7 or 6.6, as applicable at the time of assignment and providing the representations and warranties set out in section 19.1 effective as at the time of assignment; and

(b) except for an assignment under subsection 17.1(b), the assignee demonstrating to the reasonable satisfaction of the other Party its capability (financial, technical and otherwise) to fulfil the obligations of the assignor under this EPA or, in the case of a change of Control, merger, amalgamation or reorganization of the Seller, the parties to that transaction demonstrating to the reasonable satisfaction of the Buyer, the continued ability of the Seller to perform its obligations under this EPA and, in the case only of an assignment of 100% of the assignor’s interest in the Project Assets, the Seller’s Plant, or

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this EPA or revenue derived from this EPA, upon such demonstration and concurrently with the agreement providing for the assumption of liabilities and obligations and the provision of Performance Security and Interconnection Security and any other security required under subsection 17.2(a), the assignor shall be released from all future obligations and liabilities under the EPA and the Performance Security and Interconnection Security and any other security provided by it shall be returned or released.

17.3 Assignment to Facility Lender - If the Seller seeks consent to assign this EPA to a Facility Lender, the Seller acknowledges that the Buyer is entitled to require, as a condition of the Buyer’s consent to such assignment, that the Seller and the Facility Lender enter into an agreement with the Buyer substantially in the form attached as Appendix 8.

17.4 No Implied Consent to Exercise of Rights - No consent to any assignment given by the Buyer under this Article 17 implies or constitutes a consent to the exercise by the assignee, or any Affiliate of the assignee, whether or not a Facility Lender, of any right if the exercise of that right, at the time it was acquired, would require the consent of the Buyer under this Article 17, and the exercise of any such right shall require the further consent of the Buyer.

17.5 Costs - The assignor shall reimburse the other Party for all costs reasonably incurred in connection with an assignment.

17.6 No Assignment Before COD - Notwithstanding subsection 17.1(a), the Seller shall not assign (including any event or action that is deemed under section 17.1 to be an assignment) or otherwise dispose of any interest in this EPA prior to COD, except: (i) to an Affiliate as permitted under subsection 17.1(b); (ii) to a Facility Lender as permitted under subsection 17.1(a) and section 17.3; or (iii) with the prior consent of the Buyer.

18. INSPECTION AND AUDIT

18.1 General Inspection and Audit Rights - For the sole purpose of verifying:

(a) compliance with this EPA, including verifying (i) the Seller’s compliance with the Fuel Plan, and (ii) that Eligible Energy, excluding Energy generated from Auxiliary Fuel to the extent the use of which is permitted hereunder, qualifies as Clean or Renewable Electricity;

(b) the accuracy of invoices and other statements or calculations delivered by the Seller to the Buyer under this EPA;

(c) the Seller’s right to rely on any relief claimed by the Seller under this EPA; and

(d) the Development Costs;

on reasonable prior notice to the Seller, the Seller shall provide the Buyer and the Buyer’s representatives and advisors with prompt access during normal business hours to the Seller’s Plant and to all Records and the Seller shall promptly provide copies of any Records to the Buyer on request by the Buyer at any time. The Buyer and the Buyer’s representatives and advisors may take copies of any Records. The Buyer shall exercise any access under this Article 18 at the Buyer’s cost and in a manner that minimizes disruption to

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the operation of the Seller’s Plant. Any review, inspection or audit by the Buyer of the Seller’s Plant, its design, construction, operation, maintenance, repair, records or other activities of the Seller may not be relied upon by the Seller, or others, as confirming or approving those matters.

18.2 Inspection and Audit Rights Regarding Environmental Attributes - The Buyer, any Affiliate of the Buyer and any third Person who has entered into a contract with the Buyer or any Affiliate of the Buyer to purchase Environmental Attributes may at any time conduct or have a third Person with the necessary expertise conduct, at the Buyer’s expense, an audit of the Project Assets and Records to verify compliance with the requirements for the Environmental Certification. The Seller shall promptly provide any consents required to enable the Buyer, any Affiliate of the Buyer or any third Person who has entered into a contract with the Buyer to purchase Environmental Attributes to:

(a) make enquiries with Governmental Authorities concerning the status of compliance by the Seller and the Seller’s Plant with applicable Laws and Permits;

(b) make enquiries of TerraChoice Environmental Marketing or any other third Person regarding the status of the Environmental Certification; and

(c) obtain copies of all audits, reviews or inspections conducted by the Seller, TerraChoice Environmental Marketing or any other third Person in connection with the application by the Seller to obtain and maintain the Environmental Certification.

18.3 Consents Regarding Clean or Renewable Electricity - The Seller shall promptly provide to the Buyer any consents required to enable the Buyer to make enquiries with, and obtain information from, any Governmental Authorities concerning the qualification of the output from the Seller’s Plant as Clean or Renewable Electricity.

19. REPRESENTATIONS AND WARRANTIES

19.1 By Seller - The Seller represents and warrants to the Buyer, and acknowledges that the Buyer is relying on those representations and warranties in entering into this EPA, as follows:

(a) Corporate Status - The Seller is duly incorporated, organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, is registered or otherwise lawfully authorized to carry on business in British Columbia, and has full power, capacity and authority to own its assets and to carry on its business as now conducted and to enter into and to perform its obligations under this EPA;

(b) Bankruptcy - No actions are threatened, or have been taken or authorized by the Seller or any other Person to initiate proceedings for, or in respect of, the bankruptcy, insolvency, liquidation, dissolution or winding-up of the Seller or to appoint a receiver, liquidator, trustee or assignee in bankruptcy in respect of the Seller;

(c) Assets - No appropriation, expropriation or seizure of all or any portion of the Seller’s Plant, or any of its material properties or assets, is pending or threatened;

(d) No Conflict - Neither the signing of this EPA, nor the carrying out of the Seller’s obligations under this EPA shall (i) constitute or cause a breach of, default under, or violation of, the constating documents or bylaws of the Seller, any permit, franchise,

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lease, license, approval or agreement to which the Seller is a party, or any other covenant or obligation binding on the Seller or affecting any of its properties, (ii) cause a lien or encumbrance to attach to the Seller’s Plant, other than a security interest granted in respect of financing the design, construction or operation of the Seller’s Plant, or (iii) result in the acceleration, or the right to accelerate, any obligation under, or the termination of, or the right to terminate, any permit, franchise, lease, license, approval or agreement related to the Seller’s Plant;

(e) Binding Obligation - This EPA constitutes a valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms;

(f) Authorization, Execution and Delivery - This EPA has been duly authorized, executed and delivered by the Seller;

(g) Proposal Documents - All material information in the Proposal Documents is true and correct in all material respects and there is no material information omitted from the Proposal Documents which makes the information in the Proposal Documents misleading or inaccurate in any material respect; and

(h) Exemption From Regulation - The Seller is exempt from regulation as a “public utility”, as defined in the UCA, with respect to the Seller’s Plant, the sale of Energy and the performance by the Seller of its obligations under this EPA.

19.2 By Buyer - The Buyer represents and warrants to the Seller, and acknowledges that the Seller is relying on those representations and warranties in entering into this EPA, as follows:

(a) Corporate Status - The Buyer is a corporation continued under the Hydro and Power Authority Act, R.S.B.C. 1996, c. 212, is validly existing and is in good standing under the laws of British Columbia, is lawfully authorized to carry on business in British Columbia, and has full power, capacity and authority to own its assets and to carry on its business as now conducted and to enter into and to perform its obligations under this EPA;

(b) Bankruptcy - No actions are threatened, or have been taken or authorized by the Buyer or any other Person to initiate proceedings for, or in respect of, the bankruptcy, insolvency, liquidation, dissolution or winding-up of the Buyer or to appoint a receiver, liquidator, trustee or assignee in bankruptcy in respect of the Buyer;

(c) Assets - There is no appropriation, expropriation or seizure of any of the material assets of the Buyer pending or threatened;

(d) No Conflict - Neither the signing of this EPA nor the carrying out of the Buyer’s obligations under this EPA shall constitute or cause a breach of, default under, or violation of, the Hydro and Power Authority Act (British Columbia), any permit, franchise, lease, license, approval or agreement to which the Buyer is a party, or any other covenant or obligation binding on the Buyer or affecting any of its properties;

(e) Binding Obligation - This EPA constitutes a valid and binding obligation of the Buyer enforceable against the Buyer in accordance with its terms; and

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(f) Authorization, Execution and Delivery - This EPA has been duly authorized, executed and delivered by the Buyer.

20. INDEMNITIES

20.1 Seller Indemnity - The Seller shall indemnify, defend and hold harmless the Buyer and its Affiliates, and their respective directors, officers, employees, agents, representatives, successors and permitted assigns (the “Buyer Indemnified Parties”) from and against all claims, demands, actions, causes of action, suits, orders and proceedings made or brought against any of the Buyer Indemnified Parties:

(a) with respect to any emissions from the Seller’s Plant; or

(b) for personal injury, including death, to third Persons and for damage to property of third Persons, to the extent caused or contributed to by the wilful act or omission or negligence of the Seller, any contractor or subcontractor or supplier to the Seller or any director, officer, employee or agent of the Seller or any other Person for whom the Seller is responsible at law where such wilful act or omission or negligence is in connection with the Project or the performance of, or the failure to perform, any of the Seller’s obligations under this EPA.

20.2 Buyer Indemnity - The Buyer shall indemnify, defend and hold harmless the Seller and its Affiliates, and their respective directors, officers, employees, agents, representatives, successors and permitted assigns (the “Seller Indemnified Parties”) from and against all claims, demands, actions, causes of action, suits, orders and proceedings made or brought against any of the Seller Indemnified Parties for personal injury, including death, to third Persons and for damage to property of third Persons, to the extent caused or contributed to by the wilful act or omission or negligence of the Buyer, any contractor or subcontractor or supplier to the Buyer or any director, officer, employee or agent of the Buyer or any other person for whom the Buyer is responsible at law while the Buyer or any such Person is at the Seller’s Plant.

20.3 Indemnification Conditions - The right of a Party (“Indemnitee”) to be indemnified by the other Party (“Indemnitor”) under any indemnity contained in this EPA in respect of a claim by a third Person is subject to the conditions that:

(a) the Indemnitee gives the Indemnitor prompt notice of such claim, the right to select and instruct counsel, and all reasonable cooperation and assistance, including the availability of documents and witnesses within the control of the Indemnitee, in the defence or settlement of the claim; and

(b) the Indemnitee does not compromise or settle the claim without the prior consent of the Indemnitor.

20.4 Third Party Beneficiary Conditions - The Parties acknowledge that the Buyer holds the benefit of section 20.1 for itself, and on behalf of the Buyer Indemnified Parties, which are not party to this EPA, and the Seller holds the benefit of section 20.1 for itself, and on behalf of the Seller Indemnified Parties, which are not party to this EPA. The Parties further acknowledge that each of the Buyer Indemnified Parties and the Seller Indemnified Parties may enforce those sections respectively for their own benefit by

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action taken directly against the Seller or the Buyer respectively, and/or such actions may be taken by the Buyer or the Seller against the other for the benefit of their respective indemnified parties.

21. CONFIDENTIALITY

21.1 RFP Confidentiality Agreement - The RFP Confidentiality Agreement continues in full force and effect, and section 2.5 thereof is amended to provide that the obligations of the Parties thereunder shall expire two years following the Effective Date.

21.2 Additional Confidentiality Obligation - Without limiting the effect of the RFP Confidentiality Agreement, during the Term and for two years thereafter (i) the Buyer shall treat as confidential, and shall not disclose to any third person, Seller Confidential Information, and (ii) the Seller shall treat as confidential, and shall not disclose to any third person, Buyer Confidential Information, provided however that the foregoing obligations, and nothing in this EPA, prevents or restricts:

(a) disclosures that are expressly authorized under any section of this EPA, or as otherwise set out in this EPA;

(b) disclosures that are necessary to enable either Party to fulfill its obligations under this EPA, including under section 3.3;

(c) in the case of the Buyer, disclosure of Seller Confidential Information:

(i) to any ministers, deputy ministers or servants or employees of the Province of British Columbia; and

(ii) to its directors, officers, employees and Affiliates, consultants and advisors;

provided that each of the foregoing to whom Seller Confidential Information is disclosed is advised of the confidential nature thereof;

(d) in the case of the Buyer, disclosure of Seller Confidential Information in any regulatory proceeding, whether in respect of this EPA or in respect of other matters, to the extent that the Buyer considers disclosure necessary or desirable to support its position in any such proceeding, provided that, to the extent reasonably practicable, the Buyer gives reasonable notice to the Seller before making the disclosure, and, to the extent requested by the Seller, requests the relevant tribunal to treat all or any part of the disclosure as confidential or to limit its further disclosure;

(e) in the case of the Buyer, disclosure to any Person or any Governmental Authority of any Seller Confidential Information with respect to:

(i) the Seller’s Plant that the Buyer is required to disclose to verify qualification of the output of the Seller’s Plant as Clean or Renewable Electricity or to provide confirmation to any such Person or Governmental Authority that the output from the Seller’s Plant qualifies as Clean or Renewable Electricity; or

(ii) the Energy and/or the Seller’s Plant that the Buyer is required to disclose to enable the Buyer to obtain or realize the full benefit to the Buyer of the

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Environmental Attributes, including sales of Environmental Attributes to third parties;

(f) in the case of the Seller, disclosure of the Buyer Confidential Information to its directors, officers, employees and Affiliates, consultants and advisors, provided that each of the foregoing to whom Buyer Confidential Information is disclosed is advised of the confidential nature thereof;

(g) without limiting the Buyer’s disclosure rights under subsection 21.2(d) above, disclosures required to be made by a Party by an order of a court or tribunal or under any law, regulatory requirement or requirement of any stock exchange that is binding upon it, provided that (i) to the extent reasonably practicable, the Party making such disclosure gives reasonable notice to the other Party before making the disclosure, and (ii) limits the disclosure to that required by the applicable order, law, or regulatory or stock exchange requirement;

(h) disclosures in any legal proceedings for the enforcement of the EPA or other agreement entered into by the Seller pursuant to the RFP process; or

(i) disclosures of the Seller Confidential Information or the Buyer Confidential Information (as the case may be) by agreement or consent of both Parties.

21.3 Freedom of Information and Protection of Privacy Act - The Seller acknowledges that the Buyer is subject to the Freedom of Information and Protection of Privacy Act (British Columbia) and agrees that the Buyer’s non-disclosure obligations under this EPA are subject to the provisions of that legislation, as amended from time to time.

21.4 Exemption from Disclosure - The Parties confirm that Seller Confidential Information constitutes commercial and financial information of the Seller, which has been supplied, or may be supplied, in confidence and the disclosure of which could reasonably be expected to harm significantly the competitive position and/or interfere significantly with the negotiating position of the Seller. Accordingly, the Parties confirm their intention that, subject to section 21.2, all Seller Confidential Information disclosed by the Seller to the Buyer shall be deemed to be confidential and exempt from disclosure to third persons in accordance with section 21 of the Freedom of Information and Protection of Privacy Act (British Columbia), as amended from time to time.

22. GENERAL PROVISIONS

22.1 Electric Service to the Seller - If at any time the Buyer makes electric service available to the Seller’s Plant, then that service shall be provided under and in accordance with the Buyer’s electric tariff applicable at the relevant time, and not under this EPA.

22.2 Independence - The Parties are independent contractors and nothing in this EPA or its performance creates a partnership, joint venture or agency relationship between the Parties.

22.3 Enurement - This EPA enures to the benefit of the Parties, their successors and their permitted assigns.

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22.4 Notices - Any notice, consent, waiver, declaration, request for approval or other request, statement or bill (a “notice”) that either Party may be required or may desire to give to the other Party under this EPA must be in writing addressed to the other Party at the address stated in subsection 22.4(c) or (d) and:

(a) may be delivered by hand or by a courier service during normal business hours on a Business Day, in which case the notice shall be deemed to have been delivered on that Business Day;

(b) notices, other than notices under section 3.5, 7.9 or any of Articles 12, 14, 15, 16 or 17, may be sent by email or fax during normal business hours on a Business Day, in which case provided that the Party delivering the notice obtains a confirmation of delivery, the notice shall be deemed to have been delivered on that Business Day;

(c) subject to subsection 22.4(e), the address of the Buyer for notices is as set out in Appendix 10;

(d) subject to subsection 22.4(e), the address of the Seller for notices is as set out in Appendix 10 and the Buyer may, but is not required to (except as otherwise provided in a Lender Consent Agreement, if any) provide a copy of any such notice to the Facility Lender; and

(e) either Party may change its address or fax number for notices under this EPA by notice to the other Party.

22.5 Entire Agreement and Amendment - This EPA contains the entire agreement between the Parties with respect to the purchase and sale of Energy and supersedes all previous communications, understandings and agreements between the Parties with respect to the subject matter hereof including, without limitation, the RFP issued by the Buyer on 6 February 2008 and all Addenda, questions and answers and any other communications of any kind whatsoever by the Buyer in connection therewith or relating thereto. There are no representations, warranties, terms, conditions, undertakings or collateral agreements express, implied or statutory between the Parties other than as expressly set out in this EPA. This EPA may not be amended, except by an agreement in writing signed by both Parties.

22.6 No Waiver - Other than in respect of the specific matter or circumstance for which a waiver is given, and except as otherwise specified in this EPA, no failure by a Party to enforce, or require a strict observance and performance of, any of the terms of this EPA shall constitute a waiver of those terms or affect or impair those terms or the right of a Party at any time to enforce those terms or to take advantage of any remedy that Party may have in respect of any other matter or circumstance.

22.7 Dispute Resolution - If any dispute arises under or in relation to this EPA, that dispute shall be referred to and finally resolved by arbitration by a single arbitrator. The arbitration shall be administered by the British Columbia International Commercial Arbitration Centre (“BCICAC”) pursuant to its rules. The place of arbitration shall be Vancouver, British Columbia. If at the time a dispute arises the BCICAC does not exist, the dispute shall be finally settled by arbitration by a single arbitrator who, failing agreement of the parties, shall be appointed under the Commercial Arbitration Act (British Columbia) or under the International Commercial Arbitration Act (British Columbia), as applicable, and the arbitrator shall conduct the arbitration in accordance with such rules as the Parties may agree in writing, or failing agreement, such rules as may be determined or adopted by the arbitrator. The decision of the arbitrator shall be final and binding on the Parties. The arbitrator shall have, and the parties shall execute and

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deliver all such documents, deeds and assurances as may be necessary to ensure that the arbitrator has, jurisdiction and power to make interim, partial or final awards ordering specific performance, injunctions and any other equitable remedy. The Parties are entitled to seek interim measures of protection, including relief by way of a mandatory injunction, from a court of competent jurisdiction pending commencement or completion of any arbitration. The Parties also may seek from a court of competent jurisdiction any equitable relief or remedy that the arbitrator does not have the jurisdiction to grant. All performance required under this EPA by the Parties and payments required under this EPA shall continue during the dispute resolution proceedings contemplated by this section 22.7, provided that this section may not be interpreted or applied to delay or restrict the exercise of any right to suspend performance under or terminate this EPA pursuant to the express terms hereof. Any payments or reimbursements required by an arbitration award shall be due as of the date determined in accordance with section 10.2 or, where section 10.2 is not applicable, as of the date determined in the award, and, without duplication with subsection 10.2(b), shall bear interest at an annual rate equal to the Prime Rate plus 3% compounded monthly, from the date such payment was due until the amount is paid. To the fullest extent permitted by law, the Parties shall maintain in confidence the fact that an arbitration has been commenced, all documents and information exchanged during the course of the arbitration proceeding, and the arbitrators’ award, provided that each of the Parties shall be entitled to disclose such matters to its own officers, directors, shareholders and employees, its professional advisors and other representatives, and may make such disclosures in the course of any Proceedings required to pursue any legal right arising out of or in connection with the arbitration and may make such disclosures as are required by law or for regulatory purposes. Nothing in this EPA precludes either Party from bringing a Proceeding in any jurisdiction to enforce an arbitration award or any judgment enforcing an arbitration award, nor shall the bringing of such Proceedings in any one or more jurisdictions preclude the bringing of enforcement Proceedings in any other jurisdiction. In connection with any court proceedings, each Party waives its respective rights to any jury trial.

22.8 Commodity Contract/Forward Contract - The Parties agree and intend that this EPA constitutes a commodity contract for the purposes of subsection (h) of the definition of “eligible financial contract” in section 65.1(8) of the Bankruptcy and Insolvency Act (Canada) and in section 11.1(1) of the Companies’ Creditors Arrangement Act (Canada) and that this EPA and the transactions contemplated under this EPA constitute a “forward contract” within the meaning of section 556 of the United States Bankruptcy Code and that the Parties are “forward contract merchants” within the meaning of the United States Bankruptcy Code.

22.9 Further Assurances - Each Party shall, upon the reasonable request of the other Party, do, sign or cause to be done or signed all further acts, deeds, things, documents and assurances required for the performance of this EPA.

22.10 Severability - Any provision of this EPA, which is illegal or unenforceable shall be ineffective to the extent of the illegality or unenforceability without invalidating the remaining provisions of this EPA.

22.11 Counterparts - This EPA may be executed in counterparts, each of which is deemed to be an original document and all of which are deemed one and the same document.

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IN WITNESS WHEREOF each Party by its duly authorized representative(s) has signed this EPA as of the Effective Date.

For [SELLER]

Authorized Representative

Print Name and Office

Date

For BRITISH COLUMBIA HYDRO AND POWER AUTHORITY:

Authorized Representative

Print Name and Office

Date

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Issued May 7, 2008 Appendix 1-1

APPENDIX 1

DEFINITIONS

References in an Appendix to a section or subsection mean a section or subsection of the EPA, and not an Appendix, unless otherwise stated. The following words and expressions wherever used in this EPA have the following meaning:

1. “Affiliate” means, with respect to the Seller, any Person directly or indirectly Controlled by, Controlling, or under common Control with, the Seller and with respect to the Buyer, any Person directly or indirectly Controlled by the Buyer and, if at any time the Buyer is not Controlled, directly or indirectly, by the Province of British Columbia, shall include any Person directly or indirectly Controlling, or under common Control with, the Buyer.

2. “Annual Firm Energy Amount” means in any continuous 12-month period after COD, the aggregate of all Hourly Firm Energy Amounts the Seller is required to deliver in that period as set out in Appendix 2.

3. “Annual Operating Plan” means each plan delivered by the Seller to the Buyer under subsection 6.5(d) and all amendments to such plan in accordance with subsection 6.5(d).

4. “Authorized Planned Outage” means a Planned Outage that is scheduled in accordance with Good Utility Practice, complies with the requirements of section 6.3 and includes only the duration of the Planned Outage set out in the notice of the Planned Outage delivered by the Seller under section 6.3.

5. “Auxiliary Fuel” means any combustible fuel other than Forest-based Biomass.

6. “Auxiliary Fuel Annual Baseline” has the meaning given in Appendix 3.

7. “Auxiliary Fuel Energy Overage” has the meaning given in Appendix 3.

8. “Auxiliary Fuel Overage” has the meaning given in Appendix 3.

9. “Auxiliary Fuel Overage Credit” has the meaning given in Appendix 3.

10. “Avoided Costs” has the meaning given in Appendix 3.

11. “Bankrupt or Insolvent” means, with respect to a Person:

(a) the Person has started proceedings to be adjudicated a voluntary bankrupt or consented to the filing of a bankruptcy proceeding against it; or

(b) the Person has filed a petition or similar proceeding seeking reorganization, arrangement or similar relief under any bankruptcy or insolvency law; or

(c) a receiver, liquidator, trustee or assignee in bankruptcy has been appointed for the Person or the Person has consented to the appointment of a receiver, liquidator, trustee or assignee in bankruptcy; or

(d) the Person has voluntarily suspended the transaction of its usual business; or

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(e) a court has issued an order declaring the Person bankrupt or insolvent.

12. “BCICAC” has the meaning given in section 22.7.

13. “BCUC” means the British Columbia Utilities Commission or any successor thereto.

14. “BCUC Acceptance” has the meaning given in subsection 3.1(a).

15. “Breaching Party” has the meaning given in section 3.3.

16. “Business Day” means any calendar day which is not a Saturday, Sunday or other day recognized as a statutory holiday in British Columbia.

17. “Buyer” means British Columbia Hydro and Power Authority and its successors and permitted assigns.

18. “Buyer Confidential Information” means technical or commercial information disclosed by the Buyer to the Seller that the Buyer directs, and clearly marks, as confidential, including this EPA, but excluding information that (i) is or becomes in the public domain, other than as a result of a breach of this EPA by the Seller, or (ii) is known to the Seller before disclosure to it by the Buyer, or becomes known to the Seller, thereafter by way of disclosure to the Seller by any other person who is not under an obligation of confidentiality with respect thereto.

19. “Buyer Indemnified Party” has the meaning given in section 20.1.

20. “Buyer Termination Event” means any one of the following:

(a) the Seller is Bankrupt or Insolvent;

(b) a Letter of Credit Failure has occurred and the Seller has failed to cure that failure within 5 Business Days after the Letter of Credit Failure occurred;

(c) the Seller has not, by the date that is the earlier of:

(i) 60 days after the Effective Date; and

(ii) November 3, 2008;

executed and delivered, or caused to be executed and delivered, to the Transmission Authority a Combined Study Agreement for the Seller’s Plant together with the applicable fee, in the form and amount prescribed by the Transmission Authority;

(d) an amount due and payable by the Seller to the Buyer under this EPA remains unpaid for 15 days after its due date and such default has not been cured within 15 days after the Buyer has given notice of the default to the Seller;

(e) the Seller has failed to complete any step in the process for interconnecting the Seller’s Plant to the Transmission System in accordance with the requirements and time limits specified by the Transmission Authority, and such failure results in the Seller’s Plant losing its position in the queue for the Competitive Electricity Acquisition Process as described in the OATT Attachment P, filed June 8, 2007 by the Transmission Authority with the BCUC (in compliance with Directive #20 of the BCUC’s decision

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accompanying Commission Order G-58-05 concerning the Transmission Authority’s OATT application); or

(f) the Seller is in material default of any of its covenants, representations and warranties or other obligations under this EPA (other than as set out above), unless within 30 days after the date of notice by the Buyer to the Seller of the default, the Seller has cured the default or, if the default cannot be cured within that 30 day period, the Seller demonstrates to the reasonable satisfaction of the Buyer that the Seller is working diligently and expeditiously to cure the default and the default is cured within a further reasonable period of time. A “material default” includes any of the following:

(i) any Deliberate Breach by the Seller of its obligations under section 7.2;

(ii) any failure by the Seller to comply with (I) subsection 4.1(a) or 6.2(a) in respect of subsection (e) or (f) of the “Project Standards” definition, (II) section 7.4, or (III) section 8.5, and

(iii) any purported assignment of this EPA without the consent of the Buyer if such consent is required under Article 17.

A “material default” does not include any failure to deliver the Hourly Firm Energy Amount in respect of which the Seller has paid any LDs owing under section 13.2, other than a failure resulting from a Deliberate Breach.

21. “Clean or Renewable Electricity” means electricity that meets the requirements for clean or renewable electricity set out in the draft guidelines issued by the British Columbia Ministry of Energy, Mines and Petroleum Resources, as may be made final and including any amendments thereto from time to time.

22. “COD” or “Commercial Operation Date” means the time when the Seller’s Plant achieves COD pursuant to section 5.2.

23. “COD Certificate” means a certificate in the form set out in Appendix 4, completed and accompanied by attachments reasonably satisfactory to the Buyer and signed by a senior officer of the Seller.

24. “COD Delay LDs” means the LDs specified in section 13.1.

25. “Combined Study Agreement” means an agreement, in prescribed form, between the Seller and the Transmission Authority wherein the Seller contracts with the Transmission Authority for an interconnection system impact study and interconnection facilities study.

26. “Construction Insurance” means all insurance customarily maintained by prudent owners in connection with the construction of a facility similar to the Seller’s Plant, including course of construction insurance.

27. “Contract Year” means the full year period initially measured from COD to the first anniversary of COD, and to and from successive anniversaries thereafter until the termination or expiry of this EPA, provided that a Contract Year shall also mean the partial year following any such anniversary during which this EPA is terminated.

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28. “Control” of any Person means:

(a) with respect to any corporation or other Person having voting shares or the equivalent, the ownership or power to vote, directly or indirectly, shares, or the equivalent, representing 50% or more of the power to vote in the election of directors, managers or persons performing similar functions;

(b) ownership of 50% or more of the equity or beneficial interest in that Person; or

(c) the ability to direct the business and affairs of any Person by acting as a general partner, manager or otherwise.

29. “CPI” has the meaning given in Appendix 3.

30. “Deliberate Breach” means:

(a) any failure by the Seller to achieve COD by Guaranteed COD plus 365 days plus all Force Majeure Days (not exceeding 180 Force Majeure Days) resulting from any wilful or grossly negligent act or omission of the Seller;

(b) any breach of or default under any provision of this EPA by the Seller resulting from any wilful or grossly negligent act or omission by the Seller;

(c) a Buyer Termination Event constituting a repudiation of the EPA by the Seller; or

(d) any sale or transfer by the Seller of Energy to any Person, other than the Buyer, except where such sale or transfer is expressly permitted under this EPA.

31. “Delivery Interruption Outage” has the meaning given in subsection 7.8(a).

32. “Development Costs” means all costs reasonably incurred or committed by the Seller after the date of issuance of the RFP for the Project and all costs reasonably incurred, or that are reasonably likely to be incurred by the Seller, after taking reasonable mitigation measures, to terminate all contractual commitments with respect to the Project and to otherwise cease development of the Project, but excluding any lost profits, loss of opportunity costs or damages and all other special, incidental, indirect or consequential losses.

33. “Early Engagement and Procurement Agreement” means any agreement between the Seller and the Transmission Authority regarding the acceleration of interconnection activities in respect of the Project.

34. “EcoLogoM Certification” means certification pursuant to Environment Canada’s Environmental ChoiceM program confirming that the Seller’s Plant and all or part of the Energy complies with the “Guideline on Renewable Low-Impact Electricity”, as amended from time to time and is therefore entitled to the EcoLogoM designation.

35. “Effective Date” means the date set out on page one hereof.

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36. “Eligible Energy” means in each hour after COD:

(a) the amount of Metered Energy delivered by the Seller at the POI in that hour, but excluding any portion of the Metered Energy that at any time exceeds the Plant Capacity; and

(b) Energy that is deemed to be “Eligible Energy” in that hour pursuant to section 7.8.

37. “Energy” means electric energy expressed in MWh generated by the Seller’s Plant, excluding Station Service.

38. “Environmental Attributes” means:

(a) all attributes associated with, or that may be derived from, the Energy and/or the Seller’s Plant having decreased environmental impacts relative to certain other generation facilities or technologies, including any existing or future credit, allowance, “green” tag, ticket, certificate or other “green” marketing attribute or proprietary or contractual right, whether or not tradeable;

(b) any credit, reduction right, off-set, allowance, allocated pollution right, certificate or other unit of any kind whatsoever, whether or not tradeable, and any other proprietary or contractual right, whether or not tradeable, resulting from, or otherwise related to the actual or assumed reduction, displacement or offset of emissions at any location other than the Seller’s Plant as a result of the generation, purchase or sale of the Energy;

(c) On-Site Emission Reduction Rights; and

(d) all revenues, entitlements, benefits and other proceeds arising from or related to the foregoing.

39. “Environmental Certification” means:

(a) EcoLogoM Certification; or

(b) any alternate certification the Buyer requires the Seller to obtain under section 8.5.

40. “Energy Supply Contract” means an energy supply contract under section 71 of the UCA.

41. “EPA” means this Electricity Purchase Agreement, including all Appendices attached hereto, all as amended, supplemented or otherwise modified from time to time.

42. “Estimated Interconnection Facilities Completion Date” means the estimated date for completing the Interconnection Network Upgrades, as set forth in the Final Interconnection Study Report.

43. “Exemption” means a lawful exemption from the requirement under section 71 of the UCA that this EPA be filed thereunder as an Energy Supply Contract.

44. “Facility Lender” means any lender(s) providing any debt financing for the Project and any successors or assigns thereto.

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45. “Final Amount” means an amount owing by either Party to the other Party pursuant to this EPA, including as a result of a breach of this EPA, where such amount is (i) undisputed by the Party owing such amount; or (ii) has been finally determined by an arbitration award pursuant to section 22.7 or by a court order and all rights of appeal in respect of such award or order have been exhausted or have expired.

46. “Final Interconnection Study Report” means the final report issued to the Seller by the Transmission Authority in respect of the Project consisting of a system impact study report and a facilities study report.

47. “Firm Energy” means, in each hour after COD, all Eligible Energy in that hour not exceeding the Hourly Firm Energy Amount for that hour, but excluding any Eligible Energy delivered after the start time and prior to the end time for an Authorized Planned Outage as set out in the notice with respect to the Authorized Planned Outage under section 6.3 and all such excluded Eligible Energy shall be considered Non-Firm Energy.

48. “Firm Energy Table” means the table in Appendix 2 that sets out the Hourly Firm Energy Amount, or as revise under section 7.8.

49. “Five-Year Anniversary” has the meaning given in subsection 6.5(a).

50. “Force Majeure” means, subject to the exclusions in section 12.2, any event or circumstance not within the control of the Party invoking Force Majeure and, to the extent not within that Party’s control, includes:

(a) acts of God, including wind, ice and other storms, lightning, floods, earthquakes, volcanic eruptions and landslides;

(b) strikes, lockouts and other industrial disturbances, provided that settlement of strikes, lockouts and other labour disturbances shall be wholly within the discretion of the Party involved;

(c) epidemics, war (whether or not declared), blockades, acts of public enemies, acts of sabotage, civil insurrection, riots and civil disobedience;

(d) acts or omissions of Governmental Authorities, including delays in regulatory process and orders of a regulatory authority or court of competent jurisdiction;

(e) explosions and fires; and

(f) notwithstanding subsection 12.2(f), an inability of the Seller to achieve COD solely as a result of a delay by the Transmission Authority in completion of Network Upgrades or other work to be undertaken by the Transmission Authority on the Seller’s side of POI, if and to the extent such delay is not attributable to the Seller or the Seller’s Plant;

but does not include:

(g) any refusal, failure or delay of any Governmental Authority in granting any Material Permit to the Seller, whether or not on terms and conditions that permit the Seller to perform its obligations under this EPA, except where such failure or delay is a result of an event described in paragraph (a), (b), (c) or (e) above.

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51. “Force Majeure Days” means the number of days the Seller is delayed in achieving COD as a result of Force Majeure invoked by the Seller in accordance with Article 12.

52. “Forced Outage” means a partial or total interruption in the delivery of, or ability to deliver, Energy that is not a result of an Authorized Planned Outage or a Force Majeure.

53. “Forest-based Biomass” means mill solid wood residues (hog fuel, sawdust, chips and/or chunks), pulp mill residues (hog fuel and black liquor), roadside and landing residues, and biomass derived from standing timber, without access to new timber harvesting tenure.

54. “Fuel” means Forest-based Biomass, and any Auxiliary Fuel, used to generate Energy at the Seller’s Plant.

55. “Fuel Plan” means the Seller’s five-year plan for the supply and consumption of Fuel, as specified in Appendix 6, and each subsequent plan approved by the Buyer in accordance with this EPA.

56. “GHG” or “Greenhouse Gas(es)” means: (i) one or more of the following gases: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride; and (ii) any other gas that is identified as having significant global warming potential and is added, at any time before the expiry of the Term, to Schedule 1 to the Canadian Environmental Protection Act, 1999, or to the Greenhouse Gas Reductions Act (British Columbia), or to any other regulation(s) governing the emission of the gases noted in (i) from the Seller’s Plant.

57. “GJ” means gigajoule.

58. “Good Utility Practice” means any of the practices, methods and acts engaged in or approved by a significant portion of the electric utility industry in the WECC region during the relevant time period, or any of the practices, methods and acts which, in the exercise of reasonable judgement in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expedition. Good Utility Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to be acceptable practices, methods or acts generally accepted in the WECC region.

59. “Governmental Authorities” means any federal, provincial, local or foreign governments or any of their boards or agencies, or any regulatory authority, other than the Buyer and entities controlled by the Buyer.

60. “GST” means the goods and services tax imposed under the Excise Tax Act (Canada) as that Act may be amended or replaced from time to time.

61. “Guaranteed COD” means , or as revised pursuant to section 5.8.

62. “Hourly Firm Energy Amount” means for each hour after COD, the amount of Energy the Seller is required to deliver in that hour as set out in Appendix 2.

63. “Indemnitee” has the meaning given in section 20.3.

64. “Indemnitor” has the meaning given in section 20.3.

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65. “Initial Interconnection Study Report” means the initial report issued to the Seller by the Transmission Authority in respect of a Project consisting of a feasibility study report.

66. “Interconnection Agreement” means the agreement between the Seller and the Transmission Authority relative to the Project, based on the Transmission Authority’s Standard Generator Interconnection Agreement, as amended or replaced from time to time.

67. “Interconnection Network Upgrades” means those additions, modifications and upgrades to the Transmission System identified in the Initial Interconnection Study Report (and as further refined in subsequent interconnection studies), as determined by the Transmission Authority (for Transmission System impacts related to the interconnection of the Project).

68. “Interconnection Security” means a letter of credit in the form specified in section 14.4 in an amount equal to the costs that the Transmission Authority estimates are required to design, construct and commission the Interconnection Network Upgrades, as set out in the Final Interconnection Study Report, as such letter of credit is amended or replaced from time to time.

69. “Interconnection Study Fees” means fees paid by the Seller in respect of the Final Interconnection Study Report.

70. “kV” means kilovolts.

71. “Laws” means any and all statutes, laws (including common law), ordinances, rules, regulations, codes, orders, bylaws, policies, directions, standards, guidelines, protocols and other lawful requirements of any Governmental Authority in effect from time to time.

72. “LDs” means liquidated damages payable by the Seller to the Buyer under Article 13.

73. “Lender Consent Agreement” means an agreement referred to in section 17.3.

74. “Letter of Credit Failure” means:

(a) the Seller fails to renew or replace the Performance Security or Interconnection Security by no later than 30 days prior to the expiry thereof;

(b) the Seller fails to amend or replace the Performance Security or Interconnection Security as required under section 14.1 by no later than 30 days prior to the requirement to amend or replace such Performance Security or Interconnection Security arises;

(c) the issuer of the Performance Security or Interconnection Security:

(i) fails to maintain a credit rating of at least the minimum rating specified in subsection 14.4(a);

(ii) fails to comply with or perform its obligations under the Performance Security or Interconnection Security; or

(iii) disaffirms, disclaims, repudiates, terminates, rejects, in whole or in part, or challenges the validity of, the Performance Security or Interconnection Security; or

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(d) the Performance Security or Interconnection Security ceases to be in full force and effect for purposes of this EPA (whether or not in accordance with its terms) prior to the date specified in Article 14 for return of the Performance Security or Interconnection Security (as applicable) to the Seller.

75. “Long Term Operating Plan” means the plan referred to in subsection 6.5(c) as amended by the Seller from time to time.

76. “Major Damage” means damage having a reasonably estimated repair and/or restoration costs exceeding the present value (using the Present Value Rate effective as of the date on which the damage occurs) of the projected revenues under this EPA from the projected Energy deliveries from the Seller’s Plant for the remainder of the Term, less a present value amount (using the aforesaid Present Value Rate) representing the projected operating and maintenance costs for the Seller’s Plant, including Fuel costs.

77. “Material Permits” means the following if and as required for the Seller’s Plant:

(a) environmental assessment certificate;

(b) any forest license or other right to harvest timber;

(c) air emissions permit;

(d) any permit, license or approval required with respect to the discharge of any type of waste from the Seller’s Plant;

(e) water license;

(f) zoning appropriate for the Seller’s Plant;

(g) any subdivision approval required to create separate legal title to the site on which the Seller’s Plant is or shall be located;

(h) any permits or approval required with respect to the storage of the Fuel at the Seller’s Plant; and

(i) any lease, license of occupation, certificate of title, or similar agreement or instrument required with respect to the Seller’s Plant, including all access roads to the Seller’s Plant;

on terms and conditions that permit the Seller to comply with its obligations under this EPA.

78. “Material Permits Expiry Date” means the date that is 15 days after the Seller’s right to terminate the EPA arises under subsection 16.2(a).

79. “Metered Energy” means Energy recorded by the Metering Equipment.

80. “Metering Equipment” means the metering equipment described in section 9.1.

81. “MW” means megawatt.

82. “MWh” means megawatt-hour.

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83. “Network Upgrades” means the Interconnection Network Upgrades and the Transmission Network Upgrades.

84. “Non-Firm Energy” means in each hour after COD all Eligible Energy in that hour in excess of the Hourly Firm Energy Amount for that hour, and all Eligible Energy deemed to be Non-Firm Energy pursuant to the definition of “Firm Energy” in this Appendix 1, expressed in MWh.

85. “OATT” means the Transmission Authority’s Open Access Transmission Tariff, as filed with and accepted by the BCUC, as amended and refiled from time to time.

86. “Off-Peak Hourly Firm Energy Amount” means in any month after COD, the amount of Energy the Seller is required to deliver in each Off-Peak Hour in that month as set out in Appendix 2.

87. “Off-Peak Hours” has the meaning given in Appendix 3.

88. “On-Peak Hours” has the meaning given in Appendix 3.

89. “On-Site Emission Reduction Rights” means any credit, reduction right, off-set, allowance, allocated pollution right, certificate or other unit of any kind whatsoever whether or not tradeable resulting from or otherwise related to the reduction, removal, or sequestration of emissions at or from the Seller’s Plant.

90. “Outage” means:

(a) in the case of the Seller’s Plant, a partial or total interruption in the delivery of, or ability to deliver, Energy; and

(b) in the case of the Transmission System, a partial or total interruption in the transmission of, or ability to transmit, Energy from the Seller’s Plant.

91. “Party” means (i) the Buyer and its successors and permitted assigns; or (ii) the Seller and its successors and permitted assigns, and “Parties” means both the Buyer and the Seller and their respective successors and permitted assigns.

92. “Peak Demand Months” means January, February, March, November and December.

93. “Peak Hourly Firm Energy Amount” means in any month after COD, the amount of Energy the Seller is required to deliver in each Peak Hour in that month as set out in Appendix 2.

94. “Peak Hours” has the meaning given in Appendix 3.

95. “Performance Security” means a letter of credit in the form specified in section 14.4 in an amount at any particular time equal to:

(a) prior to the Material Permits Expiry Date, $2.50 / MWh multiplied by the Annual Firm Energy Amount;

(b) from and after the Material Permit Expiry Date, and prior to the first anniversary of COD, $8.00 / MWh multiplied by the Annual Firm Energy Amount;

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(c) from and after the first anniversary of COD, and prior to the first Performance Security Anniversary, $6.00 / MWh (adjusted for CPI from January 1, 2008 to the first anniversary of COD) multiplied by the Annual Firm Energy Amount; and

(d) from and after each Performance Security Anniversary, and prior to the next occurring Performance Security Anniversary:

(i) if the annual average of the Firm Energy delivered to the Buyer between the first anniversary of COD and the just attained Performance Security Anniversary is less than 95% of the Annual Firm Energy Amount, $6.00 / MWh (adjusted for CPI from January 1, 2008 to the just attainted Performance Security Anniversary) multiplied by the Annual Firm Energy Amount; or

(ii) if the annual average of the Firm Energy delivered to the Buyer between the first anniversary of COD and the just attained Performance Security Anniversary is 95% or greater than the Annual Firm Energy Amount, $4.00 / MWh (adjusted for CPI from January 1, 2008 to the just attainted Performance Security Anniversary) multiplied by the Annual Firm Energy Amount;

provided that for the purposes of this subsection (d), Firm Energy delivered to the Buyer in any period described in subsection (i) or (ii) above shall include:

(iii) deemed Eligible Energy pursuant to section 7.8 that would have constituted Firm Energy if actually delivered to the Buyer in that Period; and

(iv) all other amounts of Firm Energy could have been generated and delivered to the Buyer during that period but for (I) Force Majeure in respect of which either Party has claimed Force Majeure in accordance with section 12.1, (II) Authorized Planned Outages or (III) other events specified in this EPA that expressly excuse the Seller from its obligations to deliver Firm Energy to the Buyer, in each case calculated in the same manner as deemed Eligible Energy in section 7.8.

96. “Performance Security Anniversary” means each anniversary following the first anniversary of COD that is evenly divisible by five.

97. “Permits” means permits, certificates, licences, and other approvals required for the design, construction, ownership, operation and maintenance of the Seller’s Plant and the delivery of Eligible Energy at the POI, including all Material Permits.

98. “Person” means an individual, body corporate, firm, partnership, joint venture, trust, legal representative or other legal entity.

99. “Planned Outage” means an Outage for purposes of scheduled inspection, repair and/or maintenance in the Seller’s Plant.

100. “Plant Capacity” means the electrical capacity of the Seller’s Plant expressed in MW, determined as the nameplate capacity if expressed in MW, or as the nameplate capacity if expressed in MVA multiplied by a power factor of 0.95, as set out in Appendix 5, as amended in accordance with section 4.5 or 6.6.

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101. “POI” or “Point of Interconnection” means the point at which the Seller’s Plant interconnects with the Transmission System as more particularly defined in the Interconnection Agreement.

102. “PPT” means Pacific Prevailing Time, being Pacific Daylight Time or Pacific Standard Time, as applicable.

103. “Pre-COD Energy” means the amount of Metered Energy delivered by the Seller at the POI before COD including Test Energy, but excluding:

(a) any portion of the Metered Energy that at any time exceeds the Plant Capacity; and

(b) that portion of the Metered Energy that is sold to third parties in accordance with section 7.1.

104. “Present Value Rate” means the annual yield on a Government of Canada Bond having a maturity date that most closely matches the date on which the Term would have expired but for the termination of the EPA, plus 3%.

105. “Prime Rate” means the floating prime interest rate announced from time to time by the main branch of Bank of Montreal in Vancouver, British Columbia, or any successor thereto, expressed as an annual rate, as the reference rate it shall use to determine rates of interest payable on Canadian dollar commercial loans made in Canada.

106. “Proceeding” has the meaning given in section 1.5.

107. “Project” means the financing, design, engineering, procurement, construction, commissioning, operation and maintenance of the Seller’s Plant.

108. “Project Assets” means the Seller’s Plant and all rights, property, assets, equipment, materials and contracts required to design, engineer, procure, construct, commission, operate and maintain the Seller’s Plant, whether real or personal and whether tangible or intangible, including equipment and other warranties, Permits, supply and other contracts, the goodwill in and right to use the name by which the Seller’s Plant is commonly known, the books, records and accounts with respect to the Seller’s Plant, and all land tenure and land tenure agreements with respect to the Seller’s Plant.

109. “Project Standards” mean:

(a) all applicable Laws;

(b) the terms and conditions of all Permits, including land tenure agreements, issued in connection with the Seller’s Plant;

(c) Good Utility Practice;

(d) the Seller’s Plant Description;

(e) the requirement that Energy, excluding Energy generated from Auxiliary Fuel, must qualify as Clean or Renewable Electricity;

(f) the requirement that Auxiliary Fuel, excluding Start-up Fuel and determined in GJ, used in any year must not exceed the Auxiliary Fuel Annual Baseline for that year;

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(g) the terms and conditions of this EPA and the Interconnection Agreement; and

(h) the Code of Conduct Guidelines Applicable to BC Hydro Contracts in effect as of the date specified for submission of Proposals under the RFP.

110. “Proposal” means the Proposal submitted by the Seller pursuant to the RFP.

111. “Proposal Documents” means the Proposal and all documents and information provided by the Seller to the Buyer in connection with such Proposal, whether concurrently with or after the date of submission of the Proposal to the Buyer.

112. “PST” means British Columbia provincial social service or sales .

113. “Records” means all records and logs required to properly administer this EPA, including:

(a) Energy generation records and operating logs;

(b) a log book of all Outages and other reductions in Energy output (specifying the date, time, duration and reasons for each Outage and each reduction in Energy output);

(c) meter readings,

(d) maintenance reports;

(e) invoice support records;

(f) documents concerning compliance with Permits and applicable Laws;

(g) records related to Development Costs;

(h) all information the Buyer requires to verify qualification of the output from the Seller’s Plant as Clean or Renewable Electricity; and

(i) records of the total Energy generated in each Contract Year from each of Auxiliary Fuel, Start-up Fuel and Forest-based Biomass, and records of any Auxiliary Fuel Overage, Auxiliary Fuel Energy Overage and Auxiliary Fuel Overage Credit in any Contract Year;

all consistent with Good Utility Practice.

114. “RFP ” means the “Bioenergy Call for Power – Phase I – Request for Proposals” issued by the Buyer on 6 February 2008, together with all Addenda thereto, and all other documents and forms referenced therein as forming part of the RFP.

115. “RFP Confidentiality Agreement” means the confidentiality agreement entered into between the Seller and the Buyer as part of the RFP process, a copy of which is attached as Appendix 11 to this EPA.

116. “Seller” means the Party so identified on page one of this EPA, and its successors and permitted assigns.

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117. “Seller Confidential Information” means technical or commercial information disclosed by the Seller to the Buyer that the Seller treats, and clearly marks, as confidential prior to its disclosure to the Buyer, but excluding:

(a) this EPA; and

(b) information that (i) is or becomes in the public domain, other than as a result of a breach of this EPA by the Buyer, or (ii) is known to the Buyer before disclosure to it by the Seller, or becomes known to the Buyer thereafter by way of disclosure to the Buyer by any other person who is not under an obligation of confidentiality with respect thereto.

118. “Seller Indemnified Party” has the meaning given in section 20.2.

119. “Seller Termination Event” means:

(a) the Buyer is Bankrupt or Insolvent;

(b) except where an amount has been disputed in the manner specified in subsection 10.2, an amount due and payable by the Buyer to the Seller under this EPA remains unpaid for 15 days after its due date and such default has not been cured within 15 days after the Seller has given notice of the default to the Buyer; or

(c) the Buyer is in material default of any of its covenants, representations and warranties or other obligations under this EPA (other than as set out above), and such default has not been cured within 30 days after the Seller has given notice of the default to the Buyer or, if the default cannot be cured within that 30 day period, the Buyer fails to demonstrate to the reasonable satisfaction of the Seller that the Buyer is working diligently and expeditiously to cure the default or the default is not cured within a further reasonable period of time.

120. “Seller’s Plant” means the Seller’s plant described in Appendix 5 and all facilities and equipment required to construct, operate and maintain the plant described in Appendix 5 and to interconnect that plant to the Transmission System, including changes to which the Buyer’s consent is given under this EPA.

121. “Seller’s Plant Description” means the specifications in Appendix 5, as revised from time to time with the prior consent of the Buyer.

122. “Start-up Fuel” means that quantity of Auxiliary Fuel, expressed in GJ, that is used in a “black start” or “cold start” of generation facilities, from the time when Fuel is first combusted until the time when generation is stabilized.

123. “Station Service” means Energy required to service the Seller’s Plant, including Energy required for fuel preparation.

124. “Super-Peak Hourly Firm Energy Amount” means in any month after COD, the amount of Energy the Seller is required to deliver in each Super-Peak Hour in that month as set out in Appendix 2.

125. “Super-Peak Hours” has the meaning given in Appendix 3.

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126. “Term” has the meaning given in section 2.1.

127. “Termination Payment” means the amount payable by the Seller to the Buyer or the amount payable by the Buyer to the Seller pursuant to section 16.4 or 16.5, as the case may be.

128. “Test Energy” means Metered Energy delivered at the POI (i) during any successful test pursuant to subsection 5.2(b), and (ii) if COD is achieved at 24:00 PPT on the day on which such test is concluded, during the period after the test and before the COD, but excluding all Metered Energy that at any time exceeds the Plant Capacity.

129. “Transmission Authority” means the British Columbia Transmission Corporation or any successor thereto.

130. “Transmission Network Upgrades” means those additions, modifications and upgrades that are integrated with and support the Transmission System for the general benefit of all users of the Transmission System identified in the Network Integration Transmission Service study, initiated by the Buyer as determined by the Transmission Authority.

131. “Transmission System” means the transmission, substation, protection, control and communication facilities (i) owned by the Buyer or by the Transmission Authority, and (ii) operated by the Transmission Authority in British Columbia, and includes all additions and modifications thereto and repairs or replacements thereof.

132. “Transmission System Outage” means any Outage, suspension, constraint or curtailment in the operation of the Transmission System preventing or limiting physical deliveries of Eligible Energy at the POI.

133. “UCA” means the Utilities Commission Act (British Columbia).

134. “WECC” means the Western Electricity Coordinating Council or any successor organization of which the Buyer is a member.

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APPENDIX 2

ENERGY PROFILE

[Note to Proponents: The table will be as set out in the Commercial Proposal]

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APPENDIX 3

ENERGY PRICE – HOURLY FIRM

1. Definitions and Interpretation

1.1 Definitions - In this Appendix 3 or elsewhere in the EPA, the following words and phrases have the following meanings:

(a) “Auxiliary Fuel Annual Baseline” means 3% of the total Fuel, excluding Start-up Fuel, and determined in GJ, used to generate Eligible Energy in a Contract Year.

(b) “Auxiliary Fuel Energy Overage” means Eligible Energy generated in any Contract Year from any Auxiliary Fuel Overage for that Contract Year.

(c) “Auxiliary Fuel Overage” means that portion, if any, of Auxiliary Fuel, excluding Start-up Fuel, and determined in GJ per Contract Year, that is used in any Contract Year to generate Eligible Energy and that exceeds the Auxiliary Fuel Annual Baseline for that Contract Year.

(d) “Auxiliary Fuel Overage Credit” means, with respect to any Contract Year, the amount (in dollars) equal to:

(i) the Auxiliary Fuel Energy Overage for that Contract Year, if any; multiplied by

(ii) the EFEP for that Contract Year (or “EFEPCY”) calculated as follows:

EFEPCY = {(P1 * M) + [P2 * (12 - M)]} / 12

where:

P1 = EFEP in the period of the Contract Year preceding January 1 in that Contract Year;

P2 = EFEP in the period of the Contract Year following January 1 in that Contract Year;

M = the number of months or portion thereof of the Contract Year preceding January 1 in that Contract Year.

(e) “Avoided Costs” means, where the Seller is deemed to have generated Eligible Energy in any month pursuant to section 7.8:

(i) the dollar amount equal to (A) the average heat rate applicable to the conversion of Fuel to Energy in that month (in GJ / MWh), multiplied by (B) the average unit cost of the Fuel in that month (in $ / GJ), multiplied by (C) the amount of such deemed Eligible Energy; plus

(ii) the dollar amount of any other costs the Seller avoided, or could have avoided through commercially reasonable efforts, as a result of not generating Eligible Energy equal to such deemed Eligible Energy.

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(f) “CPI” means the Consumer Price Index for British Columbia, All Items (Not Seasonally Adjusted) as published by Statistics Canada, adjusted or replaced in accordance with subsection 1.2(f) of this Appendix.

(g) “EFEP”, or “Escalated Firm Energy Price”, has the meaning given in section 3.1 of this Appendix.

(h) “NFEPA Table” means the table set forth at Part II of Schedule A to this Appendix.

(i) “NFEPB”, or “Option B Non-Firm Energy Price”, means, in any month:

(i) for Non-Firm Energy delivered during Off-Peak Hours in that month, the lesser of:

(A) the average Dow Jones Mid-C Daily Non-Firm Off-Peak Index for the month and converted to Canadian dollars using the monthly average Bank of Canada Daily “noon rate” for the month; and

(B) US$250/MWh escalating at CPI from January 1, 2008;

(ii) for Non-Firm Energy delivered during Peak Hours in that month, the lesser of:

(A) the average Dow Jones Mid-C Daily Non-Firm On-Peak Index for the month and converted to Canadian dollars using the monthly average Bank of Canada Daily “noon rate” for the month multiplied by the quotient of the Peak TDF for the month divided by the On-Peak TDF for the month; and


(iii) for Non-Firm Energy delivered during Super Peak Hours in that month, the lesser of:

(A) the average Dow Jones Mid-C Daily Non-Firm On-Peak Index for the month and converted to Canadian dollars using the monthly average Bank of Canada Daily “noon rate” for the month multiplied by the quotient of the Super Peak TDF for the month divided by the On-Peak TDF for the month; and


provided that if, in any month, the applicable average Dow Jones Index is less than zero, the NFEPB in that month shall be deemed to be zero.

(j) “Off-Peak Hours” means all hours other than Super Peak Hours and Peak Hours.

(k) “On-Peak Hours” means all Peak Hours and Super Peak Hours.

(l) “Peak Hours” means the hours commencing at 06:00 PPT and ending at 16:00 PPT, and commencing at 20:00 PPT and ending at 22:00 PPT, Monday through Saturday inclusive, but excluding British Columbia statutory holidays.

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(m) “Super-Peak Hours” means the hours commencing at 16:00 PPT and ending at 20:00 PPT Monday through Saturday inclusive, but excluding British Columbia statutory holidays.

(n) “Time of Delivery Table” means the table set forth in Part I of Schedule A to this Appendix.

1.2 Interpretation - All payments shall be calculated applying the following principles:

(a) all payment calculations shall be rounded to the nearest cent;

(b) all prices shall be expressed in $/MWh rounded to four decimal places;

(c) Eligible Energy shall be expressed in MWh rounded to two decimal places;

(d) any escalators or percentages shall be expressed as a percentage and shall be rounded to one decimal place (i.e., 0.0%);

(e) each of the average Dow Jones Mid-C Daily Non-Firm On-Peak Index and average Dow Jones Mid-C Daily Non-Firm Off-Peak Index shall be expressed in US$/MWh; and

(f) if Statistics Canada (or the then recognized statistical branch of the Canadian Government):

(i) computes, at any time after the Effective Date, the CPI on a basis different to that employed at the Effective Date, then the CPI shall be converted using the appropriate formula recommended by Statistics Canada (or the then recognized statistical branch of the Canadian Government);

(ii) at any time ceases to publish or provide the CPI, then the provisions of section 1.9 shall apply;

(iii) has not published the CPI for a relevant period at the time the Seller is required to provide the Buyer with an invoice, the Seller shall prepare the invoice based on the CPI in effect at the time the invoice is issued and when the CPI for the relevant period is published, the Seller shall recalculate the invoice amounts in the next succeeding invoice and shall include a credit or debit, without interest, in the next succeeding invoice based on the results of the recalculation; or

(iv) recalculates the CPI within 36 months after an invoice affected by that CPI calculation has been issued, then the Seller shall recalculate the invoice amounts for the relevant period in the next succeeding invoice and shall include a credit or debit, without interest, in the next succeeding invoice based on the results of the recalculation.

2. Pre-COD Energy

2.1 No price is payable by the Buyer for Energy, if any, delivered to the Buyer before COD, except as set out in section 2.2 of this Appendix.

2.2 The price payable by the Buyer for Test Energy in respect of which the Seller has not given a notice under section 7.1 is $50.00/MWh. If the Seller’s Plant does not satisfy the requirements of

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section 5.2 of the EPA, no price is payable by the Buyer for any Energy generated during the test period specified in subsection 5.2(b) of the EPA.

3. Post-COD Energy

3.1 Firm Energy - The price payable by the Buyer, for each MWh of Firm Energy in each hour of the month during any year “N” of the Term is the “EFEPN” (or “Escalated Firm Energy Price” for year N) multiplied by the applicable TDF, calculated as follows:

“EFEPN” = EFEP0, adjusted pursuant to section 3.2 of this Appendix;

where:

“EFEP0” = FEP + (CIS * ISA / $1,000,000) expressed in $/MWh;

“TDF” (or “Time of Delivery Factor”) means, for each hour, the applicable % from the Time of Delivery Table in Part I of Schedule A of this Appendix, and provided further that:

(i) “Off-Peak TDF” means the applicable % from the Time of Delivery Table for all Off-Peak Hours of the month;

(ii) “Peak TDF” means the applicable % from the Time of Delivery Table for all Peak Hours of the month;

(iii) “Super-Peak TDF” means the applicable % from the Time of Delivery Table for all Super-Peak Hours of the month; and

(iv) “On-Peak TDF” means the applicable % from the Time of Delivery Table for all On-Peak Hours of the month;

“FEP” (or “Firm Energy Price”) = $________/MWh; [Note to Proponents: This amount will be the amount submitted in the Commercial Proposal.]

“CIS” (or “Cost of Interconnection Security”) = $_________/MWh; [Note to Proponents: This amount will be the amount submitted in the Commercial Proposal.]

“ISA” (or “Interconnection Security Amount”) = $__________. [Note to Proponents: This amount will be the amount of the cost estimate of Interconnection Network Upgrades to be set out in the Final Interconnection Study Report, less any incremental Network Upgrade costs.]

3.2 CPI Adjustment for EFEP – EFEP shall be adjusted effective as of January 1 in each year “N” after the Effective Date in accordance with the following applicable formulae:

EFEPN (or EFEP for year N) = EFEPY * {[FEPPPOST * (CPIJan 1, N / CPIY – 1)] + 1}

where:

EFEPY (or EFEP at date Y) = EFEP0 * {[FEPPPRE * (CPIY / CPIJan 1, 2008 – 1)] + 1}

EFEP0 = FEP + (CIS * ISA / $1,000,000)

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“Y” = first day of the month in which the earlier of COD and Guaranteed COD occurs;

“N” = all years after the year in which date Y occurs;

“FEPPPRE” (or “Firm Energy Price Percentage Pre-COD”) = ________%, being the % of EFEP that is subject to escalation from January 1, 2008 to date Y; [Note to Proponents: This amount will be the amount submitted in the Commercial Proposal.]

“FEPPPOST” (or “Firm Energy Price Percentage Post-COD”) = ________%, being the % of the EFEP that is subject to escalation from date Y; [Note to Proponents: This amount will be the amount submitted in the Commercial Proposal.]

“CPIJan 1, N” = CPI applicable on January 1 of year N;

“CPIY” = CPI applicable on date Y.

3.3 Non-Firm Energy - The price payable by the Buyer, for each MWh of Non-Firm Energy in each hour of the month during any year of the Term shall be calculated as follows:

(1 - L) * [(NFEPPA * ENFEPA * TDF) + (NFEPPB * NFEPB)], expressed in $/MWh.

where:

“L” (or “Losses”) = ________%, being an estimate of the % of Eligible Energy purchased at the POI that is physically lost in the Transmission System; [Note to Proponents: This amount will be derived from a special study performed by the Transmission Authority on behalf of BC Hydro, and will reflect the physical losses of delivery from the Seller’s Plant to the Lower Mainland. This amount, calculated on a standalone basis and used in the evaluation of the Proposals, will not be available before Proposal submission.]

“NFEPPA” (or “Option A Non-Firm Energy Price Percentage”) = ______%, being the % of Non-Firm Energy that is paid the Option A Non-Firm Energy Price; [Note to Proponents: This amount will be the amount submitted in the Commercial Proposal.]

“ENFEPA” (or “Option A Escalated Non-Firm Energy Price”) means, for each year of the Term, the NFEPA, as adjusted pursuant to section 3.4 of this Appendix;

“NFEPA” means the price from the NFEPA Table in Part II, Schedule A of this Appendix for the applicable year, expressed in $/MWh;

“TDF” has the meaning given in section 3.1 of this Appendix;

“NFEPPB” (or “Option B Non-Firm Energy Price Percentage”) = ______%, being the % of Non-Firm Energy that is paid the NFEPB; [Note to Proponents: This amount will be the amount submitted in the Commercial Proposal.]

“NFEPB” has the meaning given in section 1.1 of this Appendix.

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3.4 CPI Adjustment for NFEPA - NFEPA shall be adjusted effective as of January 1 in each year after the Effective Date in accordance with the following applicable formula:

(ENFEPA)N = (NFEPA)N * CPIJan 1, N / CPIJan 1, 2008

where:

(NFEPA)N = NFEPA for year N from the NFEPA Table in Part II, Schedule A of this Appendix;

N = all years after 2008;

CPIJan 1, N = the CPI applicable on January 1 of year N.

3.5 Auxiliary Fuel Overage Credit - The Seller shall pay to the Buyer the Auxiliary Fuel Overage Credit arising in any Contract Year not later than the 15th day of the second month following the end of such Contract Year. The Seller may satisfy any Auxiliary Fuel Overage Credit that arises in any Contract Year by showing such Auxiliary Fuel Overage Credit as a credit owing to the Buyer in the statement delivered to the Buyer pursuant to Section 10.1 in the second month following the end of such Contract Year.

3.6 Avoided Costs - There shall be deducted from the price payable for deemed Eligible Energy under section 7.8 in each month an amount equal to Avoided Costs in respect of such deemed Eligible Energy. On each monthly statement delivered to the Buyer pursuant to section 10.1 of the EPA, which includes an amount for such deemed Eligible Energy, the Seller shall show as a credit owing to the Buyer the Avoided Costs for the month to which that statement relates.

4. No Further Payment

4.1 The amounts payable by the Buyer as specified in this Appendix 3 are the full and complete payment and consideration payable by the Buyer for all Eligible Energy under this EPA.

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SCHEDULE A

Tables

Part I – Time of Delivery Table

The Time of Delivery Table is as set forth in this Part I. The On-Peak column represents a time-weighted average of Super-Peak TDF and Peak TDF.

Month Time of Delivery Factor (TDF)

Super-Peak Peak Off-Peak On-Peak

January 141% 122% 105% 127%

February 124% 113% 101% 116%

March 124% 112% 99% 115%

April 104% 95% 85% 97%

May 90% 82% 70% 84%

June 87% 81% 69% 83%

July 105% 96% 79% 98%

August 110% 101% 86% 103%

September 116% 107% 91% 109%

October 127% 112% 93% 116%

November 129% 112% 99% 116%

December 142% 120% 104%

126%

Part II – NFEPA Table

The NFEPA Table is as set out in this Part II. All amounts are expressed in $/MWh, and are to be escalated at CPI from January 1, 2008.

NTH YEAR OF THE DECADE

Decade 0 1 2 3 4 5 6 7 8 9

200N n/a n/a n/a n/a n/a n/a n/a n/a 49.6 49.9

201N 43.5 40.2 43.0 45.4 48.5 48.5 45.6 47.8 49.7 53.6

202N 59.1 59.2 59.5 60.2 60.3 61.7 62.6 63.8 64.6 65.6

203N 66.6 67.6 68.6 69.3 70.0 70.7 71.4 72.1 72.8 73.6

Appendix B

Page 69 of 85



APPENDIX 4

SELLER’S PLANT DESCRIPTION

[Note to Proponents: To be inserted based on Seller’s Plant Description submitted in Seller’s Proposal.]

Appendix B

Page 70 of 85



APPENDIX 5

FUEL PLAN

[Note to Proponents: To be inserted, based on Fuel Plan submitted in the Seller’s Proposal.]

Appendix B

Page 71 of 85



APPENDIX 6 COD CERTIFICATE

___________________ PROJECT

TO: British Columbia Hydro and Power Authority (the “Buyer”)

RE: Electricity Purchase Agreement (“EPA”) made as of ●, 2008 between the Buyer and ●(the “Seller”) for ___________________ Project

I, [name of senior officer], in my capacity as [title of senior officer] of the Seller, and not in my personal capacity, certify on behalf of the Seller that:

1. Defined Terms - Words and phrases having initial capitalized letters in this Certificate have the meanings given in the EPA.

2. COD Requirements - The Seller has satisfied the requirements for COD as set out in section 5.2 of the EPA. Attached to this Certificate is all evidence required to demonstrate that the Seller has satisfied all such requirements.

3. No Material Default - No event which constitutes a Buyer Termination Event under subsection (a) or (e) of the definition of “Buyer Termination Event” in Appendix 1 to the EPA has occurred. The Seller has obtained all Material Permits and is not in material default under any Material Permit (and all Material Permits are in full force and effect), any tenure agreement for the site on which the Seller’s Plant is located or the Interconnection Agreement.

Dated this _____ day of _________________, 2_ ___.

________________________________________

[name of senior officer]

[title of senior officer]

[Note to Seller: Attach to the COD Certificate in tabbed format all documents and evidence required under section 5.2 of the EPA. Where documents have previously been provided to the Buyer, so indicate and attach a copy of the letter transmitting such documents to the Buyer.]

Appendix B

Page 72 of 85



APPENDIX 7

SAMPLE FORM PERFORMANCE SECURITY / INTERCONNECTION SECURITY LETTER OF CREDIT

[Issuing Financial Institution Name & Address] Date of Issue: [Date]

Irrevocable Standby Letter of Credit

[Number]

Applicant: Beneficiary:

[Seller Name and Address] British Columbia Hydro and Power Authority

At the request and for the account of the Applicant, we hereby establish in favour of the Beneficiary our irrevocable standby Letter Of Credit No. ([Number]) (hereinafter called the “Letter of Credit”) for an amount not exceeding [Currency and Amount both in letters and numbers].

We, [Financial Institution Name and Address] hereby unconditionally and irrevocably undertake and bind ourselves, and our successors and assigns, to pay you immediately, the sum, which you claim upon receipt of the following documents:

(1) your signed written demand specifying the amount claimed (not exceeding [Dollar Amount]), and certifying that such amount is due to you by the Applicant under the terms of an Electricity Purchase Agreement between you and the Applicant made as of [Date]; and

(2) this original Letter of Credit must be presented with your demand for payment for endorsement purposes.

Partial drawings are allowed. The amount of this Letter of Credit shall be automatically reduced by the amount of any drawing paid hereunder.

This Letter of Credit takes effect from the date of issue set forth above, and shall remain valid until [Date]. However, it is a condition of this Letter of Credit that it shall be automatically extended without notice for a further one year period from the present or any future expiry date unless at least ninety (90) days prior to such expiry date we notify you in writing by courier or registered mail at your address above that we elect not to consider this Letter of Credit to be extended for any additional period.

This Letter of Credit is subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce (Publication No. 500). This Letter of Credit is governed by the laws applicable in the Province of British Columbia. The parties hereby irrevocably attorn to the non-exclusive jurisdiction of the courts of British Columbia. The number of this Letter of Credit must be

Appendix B

Page 73 of 85



quoted on all documents required hereby. Notwithstanding Article 18 of said publication, if this Letter of Credit expires during an interruption of business as described in Article 18, we agree to effect payment if this Letter of Credit is drawn within 15 days after resumption of normal business.

_____________________________ ______________________________

Authorized Signing Officer Authorized Signing Officer

[Financial Institution Name] [Financial Institution Name]

Appendix B

Page 74 of 85



APPENDIX 8

SAMPLE FORM LENDER CONSENT AGREEMENT

(See section 17.3)

THIS AGREEMENT is made as of _______________ ____, 20 ,

AMONG:

BRITISH COLUMBIA HYDRO AND POWER AUTHORITY, a corporation continued under the Hydro and Power Authority Act, R.S.B.C. 1996, c. 212, having its head office at 333 Dunsmuir Street, Vancouver, British Columbia, V6B 5R3,

(the “Buyer”)

AND:

[COMPANY], a company under the laws of _______________having an address at _______________________________________________________,

(the “Company”)

AND:

[LENDER], a __________________ under the laws of _______________having an address at ______________________________________________________,

(the “Lender”).

WHEREAS:

A. The Buyer and the Company entered into an Electricity Purchase Agreement made as of _____________________ (as amended from time to time, the “EPA”);

B. The Company has obtained certain credit facilities (the “Credit”) from the Lender for the purposes of financing the design, construction, operation and maintenance of the Seller’s Plant (as defined in the EPA);

C. To secure the due payment of all principal, interest (including interest on overdue interest), premium (if any) and other amounts payable in respect of the Credit and the due performance of all other obligations of the Company under the Credit, the Company has granted certain security to and in favour of the Lender, including an assignment of the right, title and interest of the Company under the EPA and security on the Seller’s Plant (collectively, the “Lender Security”); and

D. The Lender has requested the Buyer to enter into this Agreement confirming certain matters.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and of the sum of $10 and other good and valuable consideration now paid by each of the Company and the Lender

Appendix B

Page 75 of 85



to the Buyer (the receipt and sufficiency of which are hereby acknowledged by the Buyer), the parties covenant and agree that:

1. Additional Definitions: In this Agreement, including the recitals:

(a) “Assumption Notice” means a notice given by the Lender to the Buyer pursuant to subsection 6.1(a) of this Agreement;

(b) “Default or Termination Notice” means a notice given to the Company by the Buyer under the EPA that, with or without the lapse of time, entitles, or shall entitle, the Buyer to terminate the EPA, subject to rights, if any, of the Company to cure the default or other circumstance in respect of which the notice is given;

(c) “Receiver” means a receiver, manager or receiver-manager appointed or designated by, or on the initiative of, the Lender; and

(d) words and phrases defined in the EPA, and not otherwise defined herein, when used herein have the meanings given in the EPA.

2. EPA Amendments: The Buyer and the Company acknowledge and agree that the EPA is in full force and effect, and that the EPA, as originally executed, has been amended only by the documents attached hereto as Schedule A.

3. Buyer Confirmations Concerning the EPA: The Buyer confirms to the Lender that:

(a) the EPA has been duly authorized, executed and delivered by the Buyer;

(b) the Buyer has not received any notice of assignment by the Company of all or any part of their right, title and interest in and to the EPA, except to the Lender;

(c) the Buyer has not given any Default or Termination Notice;

(d) the Buyer is not aware of any default or other circumstance that would entitle the Buyer to give a Default or Termination Notice, provided however that the Buyer has not undertaken any investigation or due diligence in respect of this confirmation; and

(e) the Buyer shall not enter into any agreement with the Company to materially amend the EPA, or enter into any agreement with the Company to terminate the EPA, without giving the Lender not less than 30 days’ prior written notice.

4. Assignment of EPA to Lender:

4.1 Buyer Acknowledgement: The Buyer acknowledges receipt of notice of, and consents to, the assignment by the Company to the Lender of all the right, title and interest of the Company in and to the EPA made pursuant to and in accordance with the Lender Security.

4.2 Lender Acknowledgement: The Lender acknowledges that:

(a) it has received a copy of the EPA; and

Appendix B

Page 76 of 85



(b) the assignment by the Company to the Lender of the EPA pursuant to the Lender Security is subject in all respects to the terms and conditions of the EPA and this Agreement.

4.3 Confidentiality: The Lender covenants and agrees with the Buyer to be bound by the provisions of Article 21 of the EPA regarding confidentiality, as if an original signatory thereto.

4.4 Company Representation: The Company represents and warrants to the Buyer that the Lender is the only person, other than the Buyer, to whom it has granted a security interest in the EPA or the Seller’s Plant.

5. EPA Notices: The Buyer covenants and agrees with the Lender that, except as hereinafter otherwise permitted, the Buyer:

(a) shall give the Lender a copy of any Default or Termination Notice concurrently with, or promptly after, any such notice is given to the Company;

(b) shall not exercise any right it may have to terminate the EPA or any right pursuant to Article 15 of the EPA until the later of: (i) the date that is 45 days after the date on which the Buyer delivered to the Lender a copy of the Default or Termination Notice entitling the Buyer to terminate or exercise any right pursuant to Article 15 of the EPA; and (ii) the date on which the Buyer is entitled to terminate or exercise any right pursuant to Article 15 of the EPA;

(c) shall not, provided that there is no other Buyer Termination Event under the EPA, terminate the EPA based on the Bankruptcy or Insolvency of the Seller if the Lender is promptly and diligently prosecuting to completion enforcement proceedings under the Lender Security until 30 days after the expiry of any court ordered period restricting the termination of the EPA; and

(d) shall not exercise any right it may have under section 10.5 of the EPA to deduct any amounts owing by the Seller to the Buyer under the EPA from amounts owing by the Buyer to the Seller under the EPA until the date that is 15 days after the date the Buyer provides the Lender with a copy of the notice delivered by the Buyer to the Seller under section 10.5 of the EPA.

Nothing in this Agreement prevents or restricts: (i) the exercise by the Buyer of any other right or remedy that it may be entitled to exercise under or in relation to the EPA; or (ii) the right of the Lender to cure, or cause the cure of, any default of the Company under the EPA that would be curable by the Company, whether or not an Assumption Notice is given.

6. Realization by Lender:

6.1 Assumption Notice and/or Sale: If the Company has defaulted under the Credit or the Lender Security and the Lender has elected to take possession of the Seller’s Plant, either by a Receiver or in any other way, pursuant to the Security, the Lender shall either:

(a) give the Buyer written notice (an “Assumption Notice”) stating that the Lender is assuming the EPA, whereupon:

(i) the Lender shall be entitled to all the rights and benefits, and shall have assumed, and shall perform and discharge, all the obligations and liabilities, of the

Appendix B

Page 77 of 85



Company under the EPA, and the Lender shall be a party to, and bound by, the EPA as if an original signatory thereto in the place and stead of the Company;

(ii) notwithstanding subparagraph (i), the Lender shall not be liable to the Buyer for defaults of the Company occurring before the Assumption Notice is given, except to the extent that such defaults continue thereafter; provided however that the Buyer may at any time before or after such notice is given exercise any rights of set-off in respect of any such prior default under or in relation to the EPA which the Buyer would otherwise be entitled to exercise; or

(b) give written notice to the Buyer that the Lender wishes to cause the Company to assign all of the Company’s right, title and interest in and to the EPA and the Seller’s Plant to a third person or persons, subject however to the Company and the assignee complying with all provisions of the EPA relative to such assignment.

The Buyer agrees that if the Lender enters the Seller’s Plant for the purpose of viewing or examining the state of repair, condition or operation thereof such shall not constitute taking possession thereof.

6.2 Lender Liability and Release: The Lender assumes no liability to the Buyer under the EPA unless and until the Lender gives an Assumption Notice. Thereafter, if the Lender completes an assignment to a third person or persons pursuant to and in accordance with the applicable provisions of the EPA, the Lender shall be released from all liability and obligations of the Company to the Buyer under the EPA accruing from and after completion of that assignment.

6.3 Company not Released: Nothing in this Agreement, and neither the giving of an Assumption Notice, nor any assignment pursuant to subsection 6.1(b) of this Agreement releases the Company from its obligations and liabilities to the Buyer under and in relation to the EPA.

6.4 Receiver Included: References in this section 6 to the Lender include a Receiver.

7. Notices: Any notice required or permitted to be given under this Agreement must be in writing and may be given by personal delivery, or by transmittal by facsimile, addressed to the respective parties as follows:

(a) Buyer at:

British Columbia Hydro and Power Authority ____________________________________ ____________________________________ Attention: _______________________ Facsimile No.: _______________________

(b) [Company] at:

____________________________________ ____________________________________ Attention: _______________________ Facsimile No.: _______________________

Appendix B

Page 78 of 85



(c) [Lender] at:

____________________________________ ____________________________________ Attention: _______________________ Facsimile No.: _______________________

Notices given by facsimile shall be deemed to be received on the Business Day next following the date of transmission.

8. Choice of Law: This Agreement is governed by British Columbia law, and the laws of Canada applicable therein.

9. Jurisdiction: Each party to this Agreement attorns irrevocably and unconditionally to the courts of the Province of British Columbia, and to courts to which appeals therefrom may be taken, in connection with any action, suit or proceeding commenced under or in relation to this Agreement. Notwithstanding the foregoing, the Lender acknowledges that upon an Assumption Notice being given, the Lender shall become party to, and bound by, the agreements to arbitrate contained in section 22.7 of the EPA.

10. Termination: This Agreement, and all rights and liabilities among the parties hereunder shall terminate upon the full and final discharge of all of the Lender Security. The Lender shall give the Buyer prompt notice of the full and final discharge of all of the Lender Security.

11. Amendment: This Agreement may be amended only by an instrument in writing signed by each of the parties hereto.

12. Enurement: This Agreement enures to the benefit of, and is binding upon, the parties hereto, and their respective successors and permitted assigns.

13. Counterparts: This Agreement may be executed by facsimile and in any number of counterparts, each of which is deemed an original, and all of which together constitute one and the same document.

14. Effective Date: This Agreement is not binding upon any party unless and until executed and delivered by all parties, whereupon this Agreement shall take effect as of the day first above written.

IN WITNESS WHEREOF each of the parties have duly executed this Agreement as of the day and year first above written.

BRITISH COLUMBIA HYDRO AND POWER AUTHORITY

By: (Signature)

Name:

Title:

[COMPANY]

By:__________________________________ (Signature)

Name:

Title:

Appendix B

Page 79 of 85



[LENDER]

By: (Signature)

Name:

Title:

Appendix B

Page 80 of 85



APPENDIX 9

SAMPLE FORM DEVELOPMENT PROGRESS REPORT

BC Hydro Quarterly Development Report For the quarter ending: ______________ Report Number: _______ Project Name: _______________________________________________ Tasks: Percentage of Completion Comments

5% 25% 50% 75% 100%

Permitting:

[Note to Proponents: This section shall be expanded in the EPA to contain a list of Permits relevant to the Seller’s Project based on the information in the Proponent’s Project Submission.]

Zoning Approval

Subdivision Approval

Leave to Construct

Other Permits

Financing:

Construction

Project Equity

Long Term Financing

Project Design:

Preliminary

Final

Interconnection:

Studies (Please describe the status of each

interconnection study)

Construction

Major Equipment:

Ordering

Delivery

Installation

Appendix B

Page 81 of 85



Construction:

Road

Powerhouse

Other

Key Project Tasks: Target Actual

Permitting Complete

Financing Complete

Interconnection Agreement Signed

Major Equipment Ordered

Commence Construction

Begin Commissioning COD: Current Estimate: _________________________ Prepared by: __________________________________ Submitted by: __________________________________

Appendix B

Page 82 of 85



APPENDIX 10

ADDRESSES FOR DELIVERY OF NOTICES

[Notes to Proponents: To be revised as necessary to reflect appropriate delivery addresses.] Subject to subsection 22.4(e), the address for each of the Parties for notices is as follows: Buyer: BC Hydro Seller: All Notices (Except as set out below) To: Manager, Contract Management Address:

333 Dunsmuir Street, 10th floor Vancouver B.C. V6B 5R3 Attention: (name to be inserted in EPA)

Fax:

Email:

To: Address:

Fax: Email:

Development Reports To: Manager, Contract Management Address:

333 Dunsmuir Street, 10th floor Vancouver B.C. V6B 5R3 Attention:

Fax:

Email:

N/A

Planned Outages, Operating Plans, Notice of Outages, Energy Schedules To: Resource Coordinator, Plant Operations Group,

Generation Address:

6911 Southpoint Drive, E15 Burnaby , B. C. V3N 4X8 Attention:

Fax:

Email:

Copy to: Contract Management, as per all Notices address

To: Address:

Fax: Email:

Appendix B

Page 83 of 85



Buyer: BC Hydro Seller: Invoices and Statements To: IPP Invoicing Address:

333 Dunsmuir Street, 16th floor Vancouver, B.C. V6B 5R3 Attention:

Fax:

Email:

To: Address:

Fax: Email:

Performance Security and Interconnection Security To: Distribution Line of Business, Finance Address:

6911 Southpoint Drive, E16 Burnaby, B.C. V3N 4X8 Attention:

Copy to: Contract Management, as per all Notices address

To: Address:

Fax: Email:

Insurance To: Manager, Contract Management Address:

333 Dunsmuir Street, 10th floor Vancouver B.C. V6B 5R3 Attention:

Fax:

Email:

To: Address:

Fax: Email:

If the Seller is a joint venture, general partnership or limited partnership, a notice given in accordance with the foregoing provisions is deemed to have been given to the Seller and to each joint venturer and/or partner as applicable.

Appendix B

Page 84 of 85



APPENDIX 11

RFP CONFIDENTIALITY AGREEMENT

[Note to Proponents: To be attached.]

Appendix B

Page 85 of 85

Appendix C1

2007 Energy Plan

The B

C Ene

rgy Pl

anA

Visi

on fo

r Cle

an E

nerg

y Le

ader

ship

Appendix C1

Page 1 of 90

Mes

sage

s fr

om th

e Pr

emie

r and

the

Min

iste

r 1

– 2

The

BC E

nerg

y Pl

an H

ighl

ight

s 3

– 4

Ener

gy C

onse

rvat

ion

and

Effici

ency

5

– 8

Elec

tric

ity

9 –

16

Alt

erna

tive

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rgy

17 –

21

Elec

tric

ity

Choi

ces

22 –

26

Skill

s, T

rain

ing

and

Labo

ur

27 –

28

Oil

and

Gas

29

– 3

7

Conc

lusi

on

38

App

endi

x A

: Th

e BC

Ene

rgy

Plan

: Sum

mar

y of

Pol

icy

Actio

ns

39

TA

BL

E O

F C

ON

TE

NT

S

Appendix C1

Page 2 of 90

�The

BC E

nerg

y Pl

an: A

Vis

ion

for C

lean

Ene

rgy

Lead

ersh

ip is

Brit

ish C

olum

bia’s

pla

n to

mak

e ou

r pr

ovin

ce e

nerg

y se

lf-su

ffici

ent w

hile

taki

ng re

spon

sibili

ty

for o

ur n

atur

al e

nviro

nmen

t and

clim

ate.

The

wor

ld

has t

urne

d its

att

entio

n to

the

criti

cal i

ssue

of g

loba

l w

arm

ing.

Thi

s pla

n se

ts a

mbi

tious

targ

ets.

We

will

pur

sue

them

rele

ntle

ssly

as w

e bu

ild a

brig

hter

futu

re fo

r B.C

.

The

BC E

nerg

y Pl

an se

ts o

ut a

stra

tegy

for r

educ

ing

our g

reen

hous

e ga

s em

issio

ns a

nd c

omm

its to

un

prec

eden

ted

inve

stm

ents

in a

ltern

ativ

e te

chno

logy

ba

sed

on th

e w

ork

that

was

und

erta

ken

by th

e Al

tern

ativ

e En

ergy

Task

For

ce. M

ost i

mpo

rtan

tly, t

his

plan

out

lines

the

step

s tha

t all

of u

s – in

clud

ing

indu

stry

, en

viro

nmen

tal a

genc

ies,

com

mun

ities

and

citi

zens

–

mus

t tak

e to

reac

h th

ese

goal

s for

con

serv

atio

n,

ener

gy e

ffici

ency

and

cle

an e

nerg

y so

we

can

arre

st th

e gr

owth

of g

reen

hous

e ga

ses a

nd re

duce

hum

an im

pact

s on

the

clim

ate.

As st

ewar

ds o

f thi

s pro

vinc

e, w

e ha

ve a

resp

onsib

ility

to

man

age

our n

atur

al re

sour

ces i

n a

way

that

ens

ures

th

ey b

oth

mee

t our

nee

ds to

day

and

the

need

s of o

ur

child

ren

and

gran

dchi

ldre

n. W

e w

ill a

ll ha

ve to

thin

k an

d ac

t diff

eren

tly a

s we

deve

lop

inno

vativ

e an

d su

stai

nabl

e so

lutio

ns to

secu

re a

cle

an a

nd re

liabl

e en

ergy

supp

ly fo

r al

l Brit

ish C

olum

bian

s.

Our

pla

n w

ill m

ake

B.C.

ene

rgy

self-

suffi

cien

t by

2016

. To

do

this,

we

mus

t max

imiz

e ou

r con

serv

atio

n eff

orts

. Co

nser

vatio

n w

ill re

duce

pre

ssur

e on

our

ene

rgy

supp

ly a

nd re

sult

in re

al sa

ving

s for

thos

e w

ho u

se le

ss

ener

gy. I

ndiv

idua

l act

ions

that

redu

ce o

ur o

wn

ever

yday

en

ergy

con

sum

ptio

n w

ill m

ake

the

diffe

renc

e be

twee

n su

cces

s and

failu

re. F

or in

dust

ry, c

onse

rvat

ion

can

lead

to

an

effec

tive,

pro

duct

ive

and

signi

fican

t com

petit

ive

adva

ntag

e. F

or c

omm

uniti

es, i

t can

lead

to h

ealth

ier

neig

hbou

rhoo

ds a

nd li

fest

yles

for a

ll of

us.

We

are

look

ing

at h

ow w

e ca

n us

e cl

ean

alte

rnat

ive

ener

gy so

urce

s, in

clud

ing

bioe

nerg

y, ge

othe

rmal

, fue

l ce

lls, w

ater

-pow

ered

ele

ctric

ity, s

olar

and

win

d to

mee

t ou

r pro

vinc

e’s e

nerg

y ne

eds.

With

eac

h of

thes

e ne

w

optio

ns c

omes

the

oppo

rtun

ity fo

r new

job

crea

tion

in

area

s suc

h as

rese

arch

, dev

elop

men

t, an

d pr

oduc

tion

of in

nova

tive

ener

gy a

nd c

onse

rvat

ion

solu

tions

. The

co

mbi

natio

n of

rene

wab

le a

ltern

ativ

e en

ergy

sour

ces

and

cons

erva

tion

will

allo

w u

s to

purs

ue o

ur p

oten

tial

to b

ecom

e a

net e

xpor

ter o

f cle

an, r

enew

able

ene

rgy

to

our P

acifi

c ne

ighb

ours

.

Just

as t

he g

over

nmen

t’s e

nerg

y vi

sion

of 4

0 ye

ars a

go

led

to m

assiv

e be

nefit

s for

our

pro

vinc

e, so

will

our

de

cisio

ns to

day.

The

BC E

nerg

y Pl

an w

ill e

nsur

e a

secu

re,

relia

ble,

and

affo

rdab

le e

nerg

y su

pply

for a

ll Br

itish

Co

lum

bian

s for

yea

rs to

com

e.

Prem

ier G

ordo

n Ca

mpb

ell

ME

SS

Ag

E F

rO

M T

hE

Pr

EM

iEr

Appendix C1

Page 3 of 90

�

The

BC E

nerg

y Pl

an: A

Vis

ion

for C

lean

Ene

rgy

Lead

ersh

ip is

a m

ade-

in-B

.C. s

olut

ion

to th

e co

mm

on

glob

al c

halle

nge

of e

nsur

ing

a se

cure

, rel

iabl

e su

pply

of

affo

rdab

le e

nerg

y in

an

envi

ronm

enta

lly re

spon

sible

w

ay. I

n th

e ne

xt d

ecad

e go

vern

men

t will

bal

ance

th

e op

port

uniti

es a

nd in

crea

sed

pros

perit

y av

aila

ble

from

our

nat

ural

reso

urce

s whi

le le

adin

g th

e w

orld

in

sust

aina

ble

envi

ronm

enta

l man

agem

ent.

This

ener

gy p

lan

puts

us i

n a

lead

ersh

ip ro

le th

at w

ill

see

the

prov

ince

mov

e to

elim

inat

ing

or o

ffset

ting

gree

nhou

se g

as e

miss

ions

for a

ll ne

w p

roje

cts i

n th

e gr

owin

g el

ectri

city

sect

or, e

nd fl

arin

g fro

m o

il an

d ga

s pr

oduc

ing

wel

ls, a

nd p

ut in

pla

ce a

pla

n to

mak

e B.

C.

elec

trici

ty se

lf-su

ffici

ent b

y 20

16.

In d

evel

opin

g th

is pl

an, t

he g

over

nmen

t met

with

ke

y st

akeh

olde

rs, e

nviro

nmen

tal n

on-g

over

nmen

t or

gani

zatio

ns, F

irst N

atio

ns, i

ndus

try

repr

esen

tativ

es a

nd

othe

rs. I

n al

l, m

ore

than

100

mee

tings

wer

e he

ld w

ith

a w

ide

rang

e of

par

ties t

o ga

ther

idea

s and

feed

back

on

new

pol

icy

actio

ns a

nd st

rate

gies

now

con

tain

ed in

Th

e BC

Ene

rgy

Plan

.

By b

uild

ing

on th

e st

rong

succ

esse

s of E

nerg

y Pl

an 2

002,

th

is en

ergy

pla

n w

ill p

rovi

de se

cure

, affo

rdab

le e

nerg

y fo

r Brit

ish C

olum

bia.

Toda

y, w

e re

affirm

our

com

mitm

ent

to p

ublic

ow

ners

hip

of o

ur B

C H

ydro

ass

ets w

hile

br

oade

ning

our

supp

ly o

f ava

ilabl

e en

ergy

.

We

look

tow

ards

Brit

ish C

olum

bia’s

lead

ing

edge

in

dust

ries t

o he

lp d

evel

op n

ew, g

reen

er g

ener

atio

n te

chno

logi

es w

ith th

e su

ppor

t of t

he n

ew In

nova

tive

Clea

n En

ergy

Fun

d. W

e’re

pla

nnin

g fo

r tom

orro

w, t

oday

. O

ur e

nerg

y in

dust

ry c

reat

es jo

bs fo

r Brit

ish C

olum

bian

s, su

ppor

ts im

port

ant s

ervi

ces f

or o

ur fa

mili

es, a

nd w

ill

play

an

impo

rtan

t rol

e in

the

deca

de o

f eco

nom

ic

grow

th a

nd e

nviro

nmen

tal s

usta

inab

ility

that

lies

ahe

ad.

The

Min

istry

of E

nerg

y, M

ines

and

Pet

role

um R

esou

rces

is

resp

ondi

ng to

cha

lleng

es a

nd o

ppor

tuni

ties b

y de

liver

ing

inno

vativ

e, su

stai

nabl

e w

ays t

o de

velo

p

Briti

sh C

olum

bia’s

ene

rgy

reso

urce

s.

Hon

oura

ble

Rich

ard

Neu

feld

M

inist

er o

f Ene

rgy,

Min

es a

nd P

etro

leum

Res

ourc

es

ME

SS

Ag

E F

rO

M T

hE

MiN

iST

Er

Appendix C1

Page 4 of 90

�In 2

002,

the

Gov

ernm

ent o

f Brit

ish C

olum

bia

laun

ched

an

am

bitio

us p

lan

to in

vigo

rate

the

prov

ince

’s en

ergy

se

ctor

. Ene

rgy

for O

ur F

utur

e: A

Pla

n fo

r BC

was

bui

lt ar

ound

four

cor

ners

tone

s: lo

w e

lect

ricity

rate

s and

pu

blic

ow

ners

hip

of B

C H

ydro

; sec

ure,

relia

ble

supp

ly;

mor

e pr

ivat

e se

ctor

opp

ortu

nitie

s; an

d en

viro

nmen

tal

resp

onsib

ility

with

no

nucl

ear p

ower

sour

ces.

Toda

y, ou

r ch

alle

nges

incl

ude

a gr

owin

g en

ergy

dem

and,

hig

her

pric

es, c

limat

e ch

ange

and

the

need

for e

nviro

nmen

tal

sust

aina

bilit

y. Th

e BC

Ene

rgy

Plan

: A V

isio

n fo

r Cle

an

Ener

gy L

eade

rshi

p bu

ilds o

n th

e su

cces

ses o

f the

go

vern

men

t’s 2

002

plan

and

mov

es fo

rwar

d w

ith n

ew

polic

ies t

o m

eet t

he c

halle

nges

and

opp

ortu

nitie

s ahe

ad.

Envi

ronm

enta

l Lea

ders

hip

The

BC E

nerg

y Pl

an p

uts B

ritish

Col

umbi

a at

the

fore

front

of

env

ironm

enta

l and

eco

nom

ic le

ader

ship

by

focu

sing

on o

ur k

ey n

atur

al st

reng

ths a

nd o

ur c

ompe

titiv

e ad

vant

ages

of c

lean

and

rene

wab

le so

urce

s of e

nerg

y. Th

e pl

an fu

rthe

r stre

ngth

ens o

ur e

nviro

nmen

tal l

eade

rshi

p th

roug

h th

e fo

llow

ing

key

polic

y ac

tions

:

• Ze

ro g

reen

hous

e ga

s em

issi

ons

from

coa

l fire

d el

ectr

icit

y ge

nera

tion.

• A

ll ne

w e

lect

rici

ty g

ener

atio

n pr

ojec

ts w

ill

have

zer

o ne

t gre

enho

use

gas

emis

sion

s.

• Ze

ro n

et g

reen

hous

e ga

s em

issi

ons

from

exi

stin

g th

erm

al g

ener

atio

n po

wer

pla

nts

by 2

016.

• En

sure

cle

an o

r ren

ewab

le e

lect

rici

ty g

ener

atio

n co

ntin

ues

to a

ccou

nt fo

r at l

east

90

per c

ent o

f to

tal g

ener

atio

n.

• N

o nu

clea

r pow

er.

• Be

st c

oalb

ed g

as p

ract

ices

in

Nor

th A

mer

ica.

• El

imin

ate

all r

outin

e fla

ring

at

oil

and

gas

prod

ucin

g w

ells

and

pro

duct

ion

faci

litie

s by

201

6 w

ith a

n in

teri

m g

oal t

o re

duce

flar

ing

by h

alf (

50 p

er c

ent)

by

2011

.

A S

tron

g Co

mm

itm

ent t

o En

ergy

Co

nser

vati

on a

nd E

ffici

ency

Cons

erva

tion

is in

tegr

al to

mee

ting

Briti

sh C

olum

bia’s

fu

ture

ene

rgy

need

s. Th

e BC

Ene

rgy

Plan

sets

am

bitio

us

cons

erva

tion

targ

ets t

o re

duce

the

grow

th in

ele

ctric

ity

used

with

in th

e pr

ovin

ce. B

ritish

Col

umbi

a w

ill:

• Se

t an

ambi

tious

targ

et, t

o ac

quire

50

per c

ent o

f BC

Hyd

ro’s

incr

emen

tal r

esou

rce

need

s th

roug

h co

nser

vatio

n by

202

0.

• Im

plem

ent e

nerg

y effi

cien

t bui

ldin

g

stan

dard

s by

201

0.

Curre

nt p

er h

ouse

hold

ele

ctric

ity c

onsu

mpt

ion

for

BC H

ydro

cus

tom

ers i

s abo

ut 1

0,00

0 Kw

h pe

r yea

r. Ac

hiev

ing

this

cons

erva

tion

targ

et w

ill se

e el

ectr

icity

use

pe

r hou

seho

ld d

eclin

e to

app

roxi

mat

ely

9,00

0 Kw

h pe

r ye

ar b

y 20

20.

Th

E B

C E

NE

rg

y P

LA

N h

igh

Lig

hT

S

Briti

sh C

olum

bia’

s cur

rent

ele

ctric

ity su

pply

re

sour

ces a

re 9

0 pe

r cen

t cle

an a

nd

new

ele

ctric

ity g

ener

atio

n pl

ants

will

hav

e

zero

net

gre

enho

use

gas e

mis

sion

s.

Appendix C1

Page 5 of 90

�

Ener

gy S

ecur

ity

The

Gov

ernm

ent o

f Brit

ish C

olum

bia

is ta

king

act

ion

to e

nsur

e th

at th

e en

ergy

nee

ds o

f Brit

ish C

olum

bian

s co

ntin

ue to

be

met

now

and

into

the

futu

re. A

s par

t of

ensu

ring

our e

nerg

y se

curit

y, Th

e BC

Ene

rgy

Plan

sets

th

e fo

llow

ing

key

polic

y ac

tions

:

• M

aint

ain

publ

ic o

wne

rshi

p of

BC

Hyd

ro a

nd th

e

BC T

rans

mis

sion

Cor

pora

tion.

• M

aint

ain

our c

ompe

titiv

e el

ectr

icity

rate

adv

anta

ge.

• A

chie

ve e

lect

rici

ty s

elf-

suffi

cien

cy b

y 20

16.

• M

ake

smal

l pow

er p

art o

f the

sol

utio

n th

roug

h a

set p

urch

ase

pric

e fo

r ele

ctri

city

gen

erat

ed fr

om

proj

ects

up

to 1

0 m

egaw

atts

.

• Ex

plor

e va

lue-

adde

d op

port

uniti

es in

the

oil a

nd

gas

indu

stry

by

exam

inin

g th

e vi

abili

ty o

f a n

ew

petr

oleu

m re

finer

y an

d pe

troc

hem

ical

indu

stry

.

• Be

am

ong

the

mos

t com

petit

ive

oil a

nd g

as

juri

sdic

tions

in N

orth

Am

eric

a.

• BC

Hyd

ro a

nd th

e Pr

ovin

ce w

ill e

nter

into

initi

al

disc

ussi

ons

with

Fir

st N

atio

ns, t

he P

rovi

nce

of A

lber

ta a

nd c

omm

uniti

es to

dis

cuss

Site

C

to e

nsur

e th

at c

omm

unic

atio

ns re

gard

ing

the

pote

ntia

l pro

ject

and

the

proc

esse

s be

ing

follo

wed

are

wel

l kno

wn.

inve

stin

g in

inno

vati

onBr

itish

Col

umbi

a ha

s a p

rove

n tr

ack

reco

rd in

brin

ging

id

eas a

nd in

nova

tion

to th

e en

ergy

sect

or. F

rom

our

le

ader

ship

and

exp

erie

nce

in h

arne

ssin

g ou

r hyd

ro

reso

urce

s to

prod

uce

elec

tric

ity, t

o ou

r gro

undb

reak

ing

wor

k in

hyd

roge

n an

d fu

el c

ell t

echn

olog

y, Br

itish

Co

lum

bia

has a

lway

s met

its f

utur

e en

ergy

cha

lleng

es

by d

evel

opin

g ne

w, i

mpr

oved

and

sust

aina

ble

solu

tions

. To

supp

ort f

utur

e in

nova

tion

and

to h

elp

brid

ge th

e ga

p ex

perie

nced

in b

ringi

ng in

nova

tions

thro

ugh

the

pre-

com

mer

cial

stag

e to

mar

ket,

gove

rnm

ent w

ill:

• Es

tabl

ish

an In

nova

tive

Cle

an E

nerg

y Fu

nd

of $

25 m

illio

n.

• Im

plem

ent t

he B

C Bi

oene

rgy

Stra

tegy

to ta

ke

full

adva

ntag

e of

B.C

.’s a

bund

ant s

ourc

es o

f re

new

able

ene

rgy.

• G

ener

ate

elec

tric

ity

from

mou

ntai

n pi

ne b

eetle

w

ood

by tu

rnin

g w

ood

was

te in

to e

nerg

y.

Appendix C1

Page 6 of 90

�

EN

Er

gy

CO

NS

Er

vA

TiO

N A

Nd

EF

FiC

iEN

Cy

Am

biti

ous

Ener

gy C

onse

rvat

ion

and

Effici

ency

Tar

gets

The

mor

e en

ergy

that

is c

onse

rved

, the

few

er n

ew

sour

ces o

f sup

ply

we

will

requ

ire in

the

futu

re. T

hat i

s w

hy B

ritish

Col

umbi

a is

sett

ing

new

con

serv

atio

n ta

rget

s to

redu

ce g

row

th in

ele

ctric

ity d

eman

d.

Ineffi

cien

t use

of e

nerg

y le

ads t

o hi

gher

cos

ts a

nd m

any

envi

ronm

enta

l and

secu

rity

of su

pply

pro

blem

s.

Cons

erva

tion

Tar

get

The

BC E

nerg

y Pl

an se

ts a

n am

bitio

us c

onse

rvat

ion

targ

et, t

o ac

quire

50

per c

ent o

f BC

Hyd

ro’s

incr

emen

tal r

esou

rce

need

s thr

ough

con

serv

atio

n by

202

0. T

his w

ill re

quire

bui

ldin

g on

the

“cul

ture

of

con

serv

atio

n” th

at B

ritish

Col

umbi

ans h

ave

embr

aced

in re

cent

yea

rs.

The

plan

con

firm

s act

ion

on th

e pa

rt o

f go

vern

men

t to

com

plem

ent t

hese

con

serv

atio

n ta

rget

s by

wor

king

clo

sely

with

BC

Hyd

ro a

nd

othe

r util

ities

to re

sear

ch, d

evel

op, a

nd im

plem

ent

best

pra

ctic

es in

con

serv

atio

n an

d en

ergy

effi

cien

cy a

nd to

incr

ease

pub

lic a

war

enes

s. In

ad

ditio

n, th

e pl

an su

ppor

ts u

tiliti

es in

Brit

ish

Colu

mbi

a an

d th

e BC

Util

ities

Com

miss

ion

purs

uing

all

cost

effe

ctiv

e an

d co

mpe

titiv

e de

man

d sid

e m

anag

emen

t pro

gram

s. U

tiliti

es

are

also

enc

oura

ged

to e

xplo

re a

nd d

evel

op ra

te

desig

ns to

enc

oura

ge e

ffici

ency

, con

serv

atio

n an

d th

e de

velo

pmen

t of r

enew

able

ene

rgy.

Futu

re e

nerg

y effi

cien

cy a

nd c

onse

rvat

ion

initi

ativ

es

will

incl

ude:

• C o

ntin

uing

to re

mov

e ba

rrie

rs th

at p

reve

nt c

usto

mer

s fro

m re

duci

ng th

eir c

onsu

mpt

ion.

• Bu

ildin

g up

on e

ff ort

s to

educ

ate

cust

omer

s abo

ut

the

choi

ces t

hey

can

mak

e to

day

with

resp

ect t

o th

e am

ount

of e

lect

ricity

they

con

sum

e.

• Ex

plor

ing

new

rate

stru

ctur

es to

iden

tify

oppo

rtun

ities

to

use

rate

s as a

mec

hani

sm to

mot

ivat

e cu

stom

ers

eith

er to

use

less

ele

ctric

ity o

r use

less

at s

peci

fic ti

mes

.

• Em

plo y

ing

new

rate

stru

ctur

es to

hel

p cu

stom

ers

impl

emen

t new

ene

rgy

effici

ent p

rodu

cts a

nd

tech

nolo

gies

and

pro

vide

them

with

use

ful

info

rmat

ion

abou

t the

ir el

ectr

icity

con

sum

ptio

n to

al

low

them

to m

ake

info

rmed

cho

ices

.

• A d

vanc

ing

ongo

ing

effor

ts to

dev

elop

ene

rgy-

effici

ent

prod

ucts

and

pra

ctic

es th

roug

h re

gula

tions

, cod

es a

nd

stan

dard

s.

PO

LiC

y A

CT

iON

S

CO

MM

iTM

EN

T T

O C

ON

SE

rv

AT

iON

• Se

t an

ambi

tiou

s co

nser

vati

on ta

rget

, to

acq

uire

50

per c

ent o

f BC

hyd

ro’s

in

crem

enta

l res

ourc

e ne

eds

thro

ugh

cons

erva

tion

by

2020

.

• En

sure

a c

oord

inat

ed a

ppro

ach

to

cons

erva

tion

and

effi

cien

cy is

act

ivel

y pu

rsue

d in

Bri

tish

Col

umbi

a.

• En

cour

age

utili

ties

to p

ursu

e co

st e

ffec

tive

an

d co

mpe

titi

ve d

eman

d si

de m

anag

emen

t op

port

unit

ies.

• Ex

plor

e w

ith

B.C.

uti

litie

s ne

w ra

te

stru

ctur

es th

at e

ncou

rage

ene

rgy

effici

ency

an

d co

nser

vati

on.

The

aver

age

hous

ehol

d us

es a

bout

10,

000

kilo

wat

t-ho

urs o

f ele

ctric

ity p

er y

ear.

Appendix C1

Page 7 of 90

�

impl

emen

t Ene

rgy

Effici

ency

Sta

ndar

ds

for B

uild

ings

by

2010

Briti

sh C

olum

bia

impl

emen

ted

Ener

gy E

ffici

ent B

uild

ings

: A

Plan

for B

C in

200

5 to

add

ress

spec

ific

barr

iers

to e

nerg

y effi

cien

cy in

our

bui

ldin

g st

ock

thro

ugh

a nu

mbe

r of

volu

ntar

y po

licy

and

mar

ket m

easu

res.

This

plan

has

se

en a

var

iety

of s

ucce

sses

incl

udin

g sm

art m

eter

ing

pilo

t pro

ject

s, en

ergy

per

form

ance

mea

sure

men

t and

la

belli

ng, a

nd in

crea

sed

use

of E

nerg

y St

ar a

pplia

nces

. In

200

5, B

.C. r

ecei

ved

a tw

o ye

ar, $

11 m

illio

n fe

dera

l co

ntrib

utio

n fro

m th

e Cl

imat

e Ch

ange

Opp

ortu

nitie

s En

velo

pe to

supp

ort i

mpl

emen

tatio

n of

this

plan

.

Wor

king

toge

ther

indu

stry

, loca

l gov

ernm

ents

, oth

er

stak

ehol

ders

and

the

prov

inci

al g

over

nmen

t will

de

term

ine

and

impl

emen

t cos

t effe

ctiv

e en

ergy

effi

cien

cy

stan

dard

s for

new

bui

ldin

gs b

y 20

10. R

egul

ated

stan

dard

s fo

r bui

ldin

gs a

re a

cen

tral c

ompo

nent

of e

nerg

y effi

cien

cy

prog

ram

s in

lead

ing

juris

dict

ions

thro

ugho

ut th

e w

orld

.

The

BC E

nerg

y Pl

an s

uppo

rts

redu

cing

con

sum

ptio

n by

rais

ing

awar

enes

s an

d en

hanc

ing

the

effor

ts o

f ut

ilitie

s, lo

cal g

over

nmen

ts a

nd b

uild

ing

indu

stry

pa

rtne

rs in

Brit

ish

Colu

mbi

a to

war

d co

nser

vatio

n an

d en

ergy

effi

cien

cy.

Agg

ress

ive

Publ

ic S

ecto

r Bui

ldin

g Pl

an

The

desig

n an

d re

trofi

t of b

uild

ings

and

thei

r su

rroun

ding

land

scap

es o

ffer u

s an

impo

rtan

t mea

ns to

ac

hiev

e ou

r goa

l of m

akin

g th

e go

vern

men

t of B

ritish

Co

lum

bia

carb

on n

eutr

al b

y 20

10, a

nd p

rom

otin

g Pa

cific

G

reen

uni

vers

ities

, col

lege

s, ho

spita

ls, sc

hool

s, pr

isons

, fe

rrie

s, po

rts a

nd a

irpor

ts.

Briti

sh C

olum

bia

com

mun

ities

are

alre

ady

reco

gnize

d le

ader

s in

inno

vativ

e de

sign

prac

tices

. We

know

how

to

build

smar

ter,

fast

er a

nd sm

alle

r. We

know

how

to in

crea

se

dens

ities

, red

uce

build

ing

cost

s and

cre

ate

new

pos

itive

be

nefit

s for

our

env

ironm

ent.

We

know

how

to im

prov

e ai

r qua

lity,

redu

ce e

nerg

y co

nsum

ptio

n an

d m

ake

wise

us

e of

oth

er re

sour

ces,

and

how

to m

ake

our l

ands

cape

s an

d bu

ildin

gs h

ealth

y pl

aces

for l

ivin

g, w

orki

ng a

nd

lear

ning

. We

know

how

to m

ake

it aff

orda

ble.

Gov

ernm

ent w

ill s

et th

e fo

llow

ing

ambi

tious

goa

ls

for a

ll pu

blic

ly fu

nded

bui

ldin

gs a

nd la

ndsc

apes

and

as

k th

e Cl

imat

e Ac

tion

Team

to d

eter

min

e th

e m

ost

cred

ible

, agg

ress

ive

and

econ

omic

ally

via

ble

optio

ns

for a

chie

ving

them

:

• R e

quire

inte

grat

ed e

nviro

nmen

tal d

esig

n to

ach

ieve

th

e hi

ghes

t sta

ndar

ds fo

r gre

enho

use

gas e

miss

ion

redu

ctio

ns, w

ater

con

serv

atio

n an

d ot

her b

uild

ing

perfo

rman

ce re

sults

such

as a

cer

tified

stan

dard

.

• Su

pply

gre

en, h

ealth

y w

orks

pace

s for

all

publ

ic

serv

ice

empl

oyee

s.

• C a

ptur

e th

e pr

oduc

tivity

ben

efits

for

peop

le w

ho li

ve a

nd w

ork

in p

ublic

ly

fund

ed b

uild

ings

such

as r

educ

ed

illne

sses

, les

s abs

ente

eism

, and

a

bett

er le

arni

ng e

nviro

nmen

t.

• Ai

m n

ot o

nly

f or t

he lo

wes

t im

pact

, but

also

for r

esto

ratio

n of

the

ecol

ogic

al fe

atur

es o

f the

su

rroun

ding

land

scap

es.

Gig

awat

t = 1

,000

,000

kilo

wat

ts

Kilo

wat

t = a

mou

nt o

f pow

er to

ligh

t ten

10

0-w

att i

ncan

desc

ent l

ight

bul

bs.

Appendix C1

Page 8 of 90

�Com

mun

ity

Act

ion

on E

nerg

y Effi

cien

cyBr

itish

Col

umbi

a is

wor

king

in p

artn

ersh

ip w

ith lo

cal

gove

rnm

ents

to e

ncou

rage

ene

rgy

cons

erva

tion

at

the

com

mun

ity le

vel t

hrou

gh th

e Co

mm

unity

Act

ion

on E

nerg

y Effi

cien

cy P

rogr

am. T

he p

rogr

am p

rom

otes

en

ergy

effi

cien

cy a

nd c

omm

unity

ene

rgy

plan

ning

pr

ojec

ts, p

rovi

ding

dire

ct p

olic

y an

d te

chni

cal s

uppo

rt to

lo

cal g

over

nmen

ts th

roug

h a

part

ners

hip

with

the

Fras

er

Basin

Cou

ncil.

A to

tal o

f 29

com

mun

ities

are

par

ticip

atin

g in

the

prog

ram

and

this

plan

cal

ls fo

r an

incr

ease

in th

e le

vel o

f par

ticip

atio

n an

d ex

pans

ion

of th

e pr

ogra

m to

in

clud

e tr

ansp

orta

tion

actio

ns. T

he C

omm

unity

Act

ion

on E

nerg

y Effi

cien

cy P

rogr

am is

a c

olla

bora

tion

amon

g th

e pr

ovin

cial

min

istrie

s of E

nerg

y, M

ines

and

Pet

role

um

Reso

urce

s, En

viro

nmen

t, an

d Co

mm

unity

Ser

vice

s, N

atur

al R

esou

rces

Can

ada,

the

Fras

er B

asin

Cou

ncil,

Com

mun

ity E

nerg

y As

soci

atio

n, B

C H

ydro

, For

tisBC

, Te

rase

n G

as, a

nd th

e U

nion

of B

C M

unic

ipal

ities

.

Lead

ing

the

Way

to a

Fut

ure

wit

h g

reen

B

uild

ings

and

gre

en C

itie

sBr

itish

Col

umbi

a ha

s tak

en a

lead

ersh

ip ro

le in

the

deve

lopm

ent o

f gre

en b

uild

ings

. Thr

ough

the

Gre

en

Build

ings

BC

Prog

ram

, the

pro

vinc

e is

wor

king

to re

duce

th

e en

viro

nmen

tal i

mpa

ct o

f gov

ernm

ent b

uild

ings

by

incr

easin

g en

ergy

and

wat

er e

ffici

ency

and

redu

cing

gr

eenh

ouse

gas

em

issio

ns. T

hrou

gh th

is pr

ogra

m, a

nd

the

Ener

gy E

ffici

ent B

uild

ings

Str

ateg

y th

at e

stab

lishe

s en

ergy

effi

cien

cy ta

rget

s for

all

type

s of b

uild

ings

, the

pr

ovin

ce is

invi

ting

busin

esse

s, lo

cal g

over

nmen

ts a

nd

all B

ritish

Col

umbi

ans t

o do

thei

r par

t to

incr

ease

ene

rgy

effici

ency

and

redu

ce g

reen

hous

e ga

s em

issio

ns.

The

Gre

en C

ities

Pro

ject

sets

a n

umbe

r of s

trat

egie

s to

mak

e ou

r com

mun

ities

gre

ener

, hea

lthie

r and

mor

e vi

bran

t pla

ces t

o liv

e. B

ritish

Col

umbi

a co

mm

uniti

es a

re

alre

ady

reco

gniz

ed le

ader

s in

inno

vativ

e su

stai

nabi

lity

prac

tices

, and

the

Gre

en C

ities

Pro

ject

will

pro

vide

them

w

ith a

dditi

onal

reso

urce

s to

impr

ove

air q

ualit

y, re

duce

en

ergy

con

sum

ptio

n an

d en

cour

age

Briti

sh C

olum

bian

s to

get

out

and

enj

oy th

e ou

tdoo

rs. W

ith th

e G

reen

Citi

es

Proj

ect,

the

prov

inci

al g

over

nmen

t will

:

• P r

ovid

e $1

0 m

illio

n a

year

ove

r fou

r yea

rs fo

r the

ne

w L

ocal

Mot

ion

Fund

, whi

ch w

ill c

ost s

hare

cap

ital

proj

ects

on

a 50

/50

basis

with

mun

icip

al g

over

nmen

ts

to b

uild

bik

e pa

ths,

wal

kway

s, gr

eenw

ays a

nd im

prov

e ac

cess

ibili

ty fo

r peo

ple

with

disa

bilit

ies.

• Es

tabl

ish a

ne w

Gre

en C

ity A

war

ds p

rogr

am to

en

cour

age

the

deve

lopm

ent a

nd e

xcha

nge

of

best

pra

ctic

es b

y co

mm

uniti

es, w

ith th

e aw

ards

pr

esen

ted

annu

ally

at t

he U

nion

of B

ritish

Col

umbi

a M

unic

ipal

ities

con

v ent

ion.

• S e

t new

fina

ncia

l inc

entiv

es to

hel

p lo

cal g

over

nmen

ts

shift

to h

ybrid

veh

icle

flee

ts a

nd h

elp

retr

ofit d

iese

l ve

hicl

es.

• C o

mm

it to

mak

ing

new

inve

stm

ents

in e

xpan

ded

rapi

d tr

ansit

, sup

port

for f

uel c

ell v

ehic

les a

nd

othe

r inn

ovat

ions

.

EN

Er

gy

CO

NS

Er

vA

TiO

N A

Nd

EF

FiC

iEN

Cy

Appendix C1

Page 9 of 90

�

indu

stri

al E

nerg

y Effi

cien

cy P

rogr

am

Gov

ernm

ent w

ill e

stab

lish

an In

dust

rial E

nerg

y Effi

cien

cy

Prog

ram

for B

ritish

Col

umbi

a to

add

ress

cha

lleng

es a

nd

issue

s fac

ed b

y th

e B.

C. in

dust

rial s

ecto

r and

supp

ort t

he

Cana

da w

ide

indu

stria

l ene

rgy

effici

ency

initi

ativ

es. T

he

prog

ram

will

enc

oura

ge in

dust

ry d

riven

inve

stm

ents

in

ene

rgy

effici

ent t

echn

olog

ies a

nd p

roce

sses

; red

uce

emiss

ions

and

gre

enho

use

gase

s; pr

omot

e se

lf ge

nera

tion

of p

ower

; and

redu

ce fu

ndin

g ba

rrier

s tha

t disc

oura

ge

ener

gy e

ffici

ency

in th

e in

dust

rial s

ecto

r. So

me

spec

ific

stra

tegi

es in

clud

e de

velo

ping

a re

sults

bas

ed p

ilot

prog

ram

with

indu

stry

to im

prov

e en

ergy

effi

cien

cy

and

redu

ce o

vera

ll po

wer

con

sum

ptio

n an

d pr

omot

e

the

gene

ratio

n of

rene

wab

le e

nerg

y w

ithin

the

in

dust

rial s

ecto

r.

The

2010

Oly

mpi

c an

d Pa

raly

mpi

cs g

ames

: Su

stai

nabi

lity

in A

ctio

n In

201

0 Va

ncou

ver a

nd W

hist

ler w

ill h

ost t

he W

inte

r O

lym

pic

and

Para

lym

pic

Gam

es. T

he 2

010

Oly

mpi

c G

ames

are

the

first

that

hav

e be

en o

rgan

ized

bas

ed

on th

e pr

inci

ples

of s

usta

inab

ility

.

All n

ew b

uild

ings

for t

he O

lym

pics

will

be

desig

ned

and

built

to c

onse

rve

both

wat

er a

nd m

ater

ials,

m

inim

ize

was

te, m

axim

ize

air q

ualit

y, pr

otec

t su

rroun

ding

are

as a

nd c

ontin

ue to

pro

vide

en

viro

nmen

tal a

nd c

omm

unity

ben

efits

ove

r the

ir lif

etim

es. E

xist

ing

venu

es w

ill b

e up

grad

ed to

sh

owca

se e

nerg

y co

nser

vatio

n an

d effi

cien

cy a

nd

dem

onst

rate

the

use

of a

ltern

ativ

e he

atin

g/co

olin

g te

chno

logi

es. W

here

ver p

ossib

le, r

enew

able

ene

rgy

sour

ces s

uch

as w

ind,

sola

r, m

icro

hyd

ro, a

nd

geot

herm

al e

nerg

y w

ill b

e us

ed to

pow

er a

nd h

eat

all G

ames

faci

litie

s.

Tran

spor

tatio

n fo

r the

201

0 G

ames

will

be

base

d on

pub

lic tr

ansit

. Thi

s sys

tem

– w

hich

will

tie

even

t tic

kets

to tr

ansit

use

– w

ill h

elp

redu

ce tr

affic

cong

estio

n, m

inim

ize

loca

l air

pollu

tion

and

limit

gree

nhou

se g

as e

miss

ions

.

PO

LiC

y A

CT

iON

S

Bu

iLd

iNg

ST

AN

dA

rd

S,

CO

MM

uN

iTy

AC

TiO

N A

Nd

iN

du

ST

riA

L E

FF

iCiE

NC

y

• Im

plem

ent E

nerg

y Effi

cien

cy S

tand

ards

for

Build

ings

by

2010

.

• U

nder

take

a p

ilot p

roje

ct fo

r ene

rgy

perf

orm

ance

la

belli

ng o

f hom

es a

nd b

uild

ings

in c

oord

inat

ion

with

loca

l and

fede

ral g

over

nmen

ts, F

irst N

atio

ns

and

indu

stry

ass

ocia

tions

.

• N

ew p

rovi

ncia

l pub

lic se

ctor

bui

ldin

gs w

ill b

e re

quire

d to

inte

grat

e en

viro

nmen

tal d

esig

n to

ac

hiev

e th

e hi

ghes

t sta

ndar

ds fo

r gre

enho

use

gas e

mis

sion

redu

ctio

ns, w

ater

con

serv

atio

n an

d ot

her b

uild

ing

perf

orm

ance

resu

lts su

ch a

s a

cert

ified

stan

dard

.

• D

evel

op a

n In

dust

rial E

nerg

y Effi

cien

cy P

rogr

am

for B

ritis

h Co

lum

bia

to a

ddre

ss sp

ecifi

c ch

alle

nges

fa

ced

by B

ritis

h Co

lum

bia’s

indu

stria

l sec

tor.

• In

crea

se th

e pa

rtic

ipat

ion

of lo

cal g

over

nmen

ts

in th

e Co

mm

unity

Act

ion

on E

nerg

y Effi

cien

cy

Prog

ram

and

exp

and

the

Firs

t Nat

ions

and

Re

mot

e Co

mm

unity

Cle

an E

nerg

y Pr

ogra

m.

Appendix C1

Page 10 of 90

�Elec

tric

ity

Secu

rity

El

ectr

icity

, whi

le o

ften

take

n fo

r gra

nted

, is t

he li

febl

ood

of o

ur m

oder

n ec

onom

y an

d ke

y to

our

ent

ire w

ay o

f lif

e. F

ortu

nate

ly, B

ritish

Col

umbi

a ha

s bee

n bl

esse

d w

ith

an a

bund

ant s

uppl

y of

cle

an, a

fford

able

and

rene

wab

le

elec

tric

ity. B

ut to

day,

as B

ritish

Col

umbi

a’s p

opul

atio

n ha

s gr

own,

so to

o ha

s our

dem

and

for e

lect

ricity

. We

are

now

de

pend

ent o

n ot

her j

urisd

ictio

ns fo

r up

to 1

0 pe

r cen

t of

our

ele

ctric

ity su

pply

. BC

Hyd

ro e

stim

ates

dem

and

for e

lect

ricity

to g

row

by

up to

45

per c

ent o

ver t

he

next

20

year

s.

We

mus

t add

ress

this

ever

incr

easin

g de

man

d to

m

aint

ain

our s

ecur

e su

pply

of e

lect

ricity

and

the

com

petit

ive

adva

ntag

e in

ele

ctric

ity ra

tes t

hat a

ll Br

itish

Col

umbi

ans h

ave

enjo

yed

for t

he la

st 2

0 ye

ars.

Ther

e ar

e no

sim

ple

solu

tions

or a

nsw

ers.

We

have

an

oblig

atio

n to

futu

re g

ener

atio

ns to

cha

rt

a co

urse

that

will

ens

ure

a se

cure

, env

ironm

enta

lly

and

soci

ally

resp

onsib

le e

lect

ricity

supp

ly.

To c

lose

this

elec

tric

ity g

ap, a

nd fo

r our

pro

vinc

e to

bec

ome

elec

tric

ity se

lf-su

ffici

ent,

will

requ

ire

an in

nova

tive

elec

tric

ity in

dust

ry a

nd th

e re

al c

omm

itmen

t of a

ll Br

itish

Col

umbi

ans t

o co

nser

vatio

n an

d en

ergy

effi

cien

cy.

The

New

rel

atio

nshi

p an

d El

ectr

icit

yTh

e G

over

nmen

t of B

ritish

Col

umbi

a is

wor

king

with

Firs

t N

atio

ns to

rest

ore,

revi

taliz

e an

d st

reng

then

Firs

t Nat

ions

co

mm

uniti

es. T

he g

oal i

s to

build

stro

ng a

nd h

ealth

y re

latio

nshi

ps w

ith F

irst N

atio

ns p

eopl

e gu

ided

by

the

prin

cipl

es o

f tru

st a

nd c

olla

bora

tion.

Firs

t Nat

ions

shar

e m

any

of th

e co

ncer

ns o

f oth

er B

ritish

Col

umbi

ans i

n ho

w th

e de

velo

pmen

t of e

nerg

y re

sour

ces m

ay im

pact

as

wel

l as b

enefi

t the

ir co

mm

uniti

es. I

n ad

ditio

n, F

irst

Nat

ions

hav

e co

ncer

ns w

ith re

gard

to th

e re

cogn

ition

an

d re

spec

t of A

borig

inal

righ

ts a

nd ti

tle.

By fo

cusin

g on

bui

ldin

g pa

rtne

rshi

ps b

etw

een

Firs

t N

atio

ns, i

ndus

try

and

gove

rnm

ent,

tang

ible

soci

al a

nd

econ

omic

ben

efits

will

flow

to F

irst N

atio

ns c

omm

uniti

es

acro

ss th

e pr

ovin

ce a

nd a

ssist

in e

limin

atin

g th

e ga

p be

twee

n Fi

rst N

atio

ns p

eopl

e an

d ot

her B

ritish

Co

lum

bian

s.

Gov

ernm

ent i

s wor

king

eve

ry d

ay to

ens

ure

that

en

ergy

reso

urce

man

agem

ent i

nclu

des F

irst N

atio

ns’

inte

rest

s, kn

owle

dge

and

valu

es. B

y co

ntin

uing

to

enga

ge F

irst N

atio

ns in

ene

rgy

rela

ted

issue

s, w

e ha

ve

the

oppo

rtun

ity to

shar

e in

form

atio

n an

d lo

ok fo

r op

port

uniti

es to

faci

litat

e Fi

rst N

atio

ns’ e

mpl

oym

ent a

nd

part

icip

atio

n in

the

elec

tric

ity se

ctor

s to

ensu

re th

at F

irst

Nat

ions

peo

ple

bene

fit fr

om th

e co

ntin

ued

grow

th a

nd

deve

lopm

ent o

f Brit

ish C

olum

bia’s

reso

urce

s. Th

e BC

En

ergy

Pla

n pr

ovid

es B

ritish

Col

umbi

a w

ith a

blu

eprin

t fo

r fac

ing

the

man

y en

ergy

cha

lleng

es a

nd o

ppor

tuni

ties

that

lay

ahea

d. It

pro

vide

s an

oppo

rtun

ity to

bui

ld o

n Fi

rst N

atio

ns su

cces

s sto

ries s

uch

as:

• Fi

rst N

atio

ns in

volv

emen

t in

inde

pend

ent p

ower

pr

ojec

ts, s

uch

as th

e Sq

uam

ish F

irst N

atio

n’s

part

icip

atio

n in

the

Furr

y Cr

eek

and

Ashl

u hy

dro

proj

ects

.

EL

EC

Tr

iCiT

y

PO

LiC

y A

CT

iON

S

SE

LF

-Su

FF

iCiE

NC

y B

y 2

01

6

• En

sure

sel

f-su

ffici

ency

to m

eet e

lect

rici

ty

need

s, in

clud

ing

“ins

uran

ce.”

• Es

tabl

ish

a st

andi

ng o

ffer f

or c

lean

el

ectr

icit

y pr

ojec

ts u

p to

10

meg

awat

ts.

• Th

e BC

Tra

nsm

issi

on C

orpo

ratio

n is

to

ensu

re th

at B

ritis

h Co

lum

bia’

s tr

ansm

issi

on

tech

nolo

gy a

nd in

fras

truc

ture

rem

ains

at

the

lead

ing

edge

and

has

the

capa

city

to

deliv

er p

ower

effi

cien

tly a

nd re

liabl

y to

m

eet g

row

ing

dem

and.

• En

sure

ade

quat

e tr

ansm

issi

on s

yste

m

capa

city

by

deve

lopi

ng a

nd im

plem

entin

g a

tran

smis

sion

con

gest

ion

relie

f pol

icy.

• En

sure

that

the

prov

ince

rem

ains

co

nsis

tent

with

Nor

th A

mer

ican

tr

ansm

issi

on re

liabi

lity

stan

dard

s.

Briti

sh C

olum

bia

bene

fits f

rom

th

e pu

blic

ow

ners

hip

of B

C H

ydro

and

th

e BC

Tra

nsm

issi

on C

orpo

ratio

n.

Appendix C1

Page 11 of 90

�0

BC

hy

dr

O’S

NE

T M

ET

Er

iNg

P

rO

gr

AM

: P

EO

PL

E P

rO

du

CiN

g P

OW

Er

BC H

ydro

’s N

et M

eter

ing

Prog

ram

was

es

tabl

ished

as a

resu

lt of

Ene

rgy

Plan

200

2.

It is

desig

ned

for c

usto

mer

s with

smal

l ge

nera

ting

faci

litie

s, w

ho m

ay so

met

imes

ge

nera

te m

ore

elec

trici

ty th

an th

ey re

quire

fo

r the

ir ow

n us

e. A

net

met

erin

g cu

stom

er’s

elec

trici

ty m

eter

will

run

back

war

ds w

hen

they

pro

duce

mor

e el

ectri

city

than

they

co

nsum

e an

d ru

n fo

rwar

d w

hen

they

pr

oduc

e le

ss th

an th

ey c

onsu

me.

The

cust

omer

is o

nly

bille

d fo

r the

ir “n

et c

onsu

mpt

ion”

; the

tota

l am

ount

of

elec

tric

ity u

sed

min

us th

e to

tal p

rodu

ced.

Net

met

erin

g al

low

s cus

tom

ers t

o lo

wer

thei

r env

ironm

enta

l im

pact

and

ta

ke re

spon

sibili

ty fo

r the

ir ow

n po

wer

pr

oduc

tion.

It h

elps

to m

ove

the

prov

ince

to

war

ds e

lect

ricity

self-

suffi

cien

cy a

nd

expa

nds c

lean

ele

ctric

ity g

ener

atio

n,

mak

ing

B.C.

’s el

ectr

icity

supp

ly m

ore

envi

ronm

enta

lly su

stai

nabl

e.

• Al

mos

t $4

mill

ion

will

flow

to a

ppro

xim

atel

y 10

Fi

rst N

atio

ns c

omm

uniti

es a

cros

s Brit

ish C

olum

bia

to

supp

ort t

he im

plem

enta

tion

of C

omm

unity

Ene

rgy

Actio

n Pl

ans a

s par

t of t

he F

irst N

atio

n an

d Re

mot

e Co

mm

unity

Cle

an E

nerg

y Pr

ogra

m.

• Th

e Ch

ina

Cree

k in

depe

nden

t pow

er p

roje

ct

was

dev

elop

ed b

y th

e H

upac

asat

h Fi

rst N

atio

n

on V

anco

uver

Isla

nd.

Ach

ieve

Ele

ctri

city

Sel

f-Su

ffici

ency

by

2016

Achi

evin

g el

ectr

icity

self-

suffi

cien

cy is

fund

amen

tal t

o ou

r fut

ure

ener

gy se

curit

y an

d w

ill a

llow

our

pro

vinc

e to

ach

ieve

a re

liabl

e, c

lean

and

affo

rdab

le su

pply

of

ele

ctric

ity. I

t also

repr

esen

ts a

last

ing

lega

cy fo

r fu

ture

gen

erat

ions

of B

ritish

Col

umbi

ans.

That

’s w

hy

gove

rnm

ent h

as c

omm

itted

that

Brit

ish C

olum

bia

will

be

elec

tric

ity se

lf-su

ffici

ent w

ithin

the

deca

de a

head

.

Thro

ugh

The

BC E

nerg

y Pl

an, g

over

nmen

t will

set

polic

ies t

o gu

ide

BC H

ydro

in p

rodu

cing

and

acq

uirin

g en

ough

ele

ctric

ity in

adv

ance

of f

utur

e ne

ed. H

owev

er,

elec

tric

ity g

ener

atio

n an

d tr

ansm

issio

n in

frast

ruct

ure

requ

ire lo

ng le

ad ti

mes

. Thi

s mea

ns th

at o

ver t

he n

ext

two

deca

des,

BC H

ydro

mus

t acq

uire

an

addi

tiona

l su

pply

of “

insu

ranc

e po

wer

” bey

ond

the

proj

ecte

d in

crea

ses i

n de

man

d to

min

imiz

e th

e ris

k an

d im

plic

atio

ns o

f hav

ing

to re

ly o

n el

ectr

icity

impo

rts.

Smal

l Pow

er S

tand

ing

Off

erAc

hiev

ing

elec

tric

ity se

lf-su

ffici

ency

in B

ritish

Col

umbi

a w

ill re

quire

a ra

nge

of n

ew p

ower

sour

ces t

o be

bro

ught

on

line

. To

help

mak

e th

is ha

ppen

, thi

s pol

icy

will

dire

ct

BC H

ydro

to e

stab

lish

a St

andi

ng O

ffer P

rogr

am w

ith

no q

uota

to e

ncou

rage

smal

l and

cle

an e

lect

ricity

pr

oduc

ers.

Und

er th

e St

andi

ng O

ffer P

rogr

am, B

C H

ydro

w

ill p

urch

ase

dire

ctly

from

supp

liers

at a

set p

rice.

Elig

ible

pro

ject

s mus

t be

less

than

10

meg

awat

ts in

size

an

d be

cle

an e

lect

ricity

or h

igh

effici

ency

ele

ctric

ity

coge

nera

tion.

The

pric

e off

ered

in th

e st

andi

ng o

ffer

cont

ract

wou

ld b

e ba

sed

on th

e pr

ices

pai

d in

the

mos

t re

cent

BC

Hyd

ro e

nerg

y ca

ll. Th

is w

ill p

rovi

de sm

all

elec

tric

ity su

pplie

rs w

ith m

ore

cert

aint

y, br

ing

smal

l po

wer

pro

ject

s int

o th

e sy

stem

mor

e qu

ickl

y, an

d he

lp

achi

eve

gove

rnm

ent’s

goa

l of m

aint

aini

ng a

secu

re

elec

tric

ity su

pply

. As w

ell,

BC H

ydro

will

offe

r the

sam

e pr

ice

to th

ose

in B

C H

ydro

’s N

et M

eter

ing

Prog

ram

who

ha

ve a

surp

lus o

f gen

erat

ion

at th

e en

d of

the

year

.

Ensu

ring

a r

elia

ble

Tr

ansm

issi

on N

etw

ork

An im

port

ant p

art o

f mee

ting

the

goal

of s

elf-s

uffici

ency

is

ensu

ring

a re

liabl

e tra

nsm

issio

n in

frast

ruct

ure

is in

pla

ce

as a

dditi

onal

pow

er is

bro

ught

on

line.

Tran

smiss

ion

is a

criti

cal p

art o

f the

solu

tion

as o

ften

new

cle

an so

urce

s of

ele

ctric

ity a

re lo

cate

d aw

ay fr

om w

here

the

dem

and

is. In

add

ition

, tra

nsm

issio

n in

vest

men

t is r

equi

red

to

supp

ort e

cono

mic

gro

wth

in th

e pr

ovin

ce a

nd m

ust b

e pl

anne

d an

d st

arte

d in

ant

icip

atio

n of

futu

re e

lect

ricity

ne

eds g

iven

the

long

lead

tim

es re

quire

d fo

r tra

nsm

issio

n de

velo

pmen

t. N

ew a

nd u

pgra

ded

trans

miss

ion

infra

stru

ctur

e w

ill b

e re

quire

d to

avo

id c

onge

stio

n an

d to

effi

cien

tly m

ove

the

elec

trici

ty a

cros

s the

ent

ire p

ower

gr

id. B

ecau

se o

ur tr

ansm

issio

n sy

stem

is p

art o

f a m

uch

larg

er, in

terc

onne

cted

grid

, we

need

to w

ork

with

oth

er

juris

dict

ions

to m

axim

ize th

e be

nefit

of i

nter

conn

ectio

n,

rem

ain

cons

isten

t with

evo

lvin

g N

orth

Am

eric

an re

liabi

lity

stan

dard

s, an

d en

sure

Brit

ish C

olum

bia’s

infra

stru

ctur

e re

mai

ns c

apab

le o

f mee

ting

cust

omer

nee

ds.

Appendix C1

Page 12 of 90

��In o

rder

for B

ritish

Col

umbi

a to

ens

ure

the

deve

lopm

ent

of a

secu

re a

nd re

liabl

e su

pply

of e

lect

ricity

, The

BC

Ener

gy P

lan

prov

ides

pol

icy

dire

ctio

n to

the

BC T

rans

-m

issio

n Co

rpor

atio

n to

ens

ure

that

our

tran

smiss

ion

tech

nolo

gy a

nd in

frast

ruct

ure

rem

ains

at t

he le

adin

g ed

ge a

nd h

as th

e ca

paci

ty to

del

iver

pow

er e

ffici

ently

an

d re

liabl

y to

mee

t gro

win

g de

man

d. T

his w

ill in

clud

e en

surin

g th

ere

is ad

equa

te tr

ansm

issio

n ca

paci

ty, o

ngo-

ing

inve

stm

ents

in te

chno

logy

and

infra

stru

ctur

e an

d re

mai

ning

con

siste

nt w

ith e

volv

ing

Nor

th A

mer

ican

re

liabi

lity

stan

dard

s.

BC

Tran

smis

sion

Cor

pora

tion

inno

vati

on

and

Tech

nolo

gyAs

the

man

ager

of a

com

plex

and

hig

h-va

lue

trans

mis-

sion

grid

, BC

Tran

smiss

ion

Corp

orat

ion

is in

trodu

cing

te

chno

logy

inno

vatio

ns th

at p

rovi

de im

prov

emen

ts to

the

perfo

rman

ce o

f the

syst

em a

nd a

llow

for a

gre

ater

util

iza-

tion

of e

xist

ing

asse

ts, e

nsur

ing

B.C.

con

tinue

s to

bene

fit

from

one

of t

he m

ost a

dvan

ced

ener

gy n

etw

orks

in th

e w

orld

. BC

Tran

smiss

ion

Corp

orat

ion’

s inn

ovat

ion

prog

ram

fo

cuse

s on

incr

easin

g th

e po

wer

tran

sfer

cap

abili

ty o

f ex

istin

g as

sets

, ext

endi

ng th

e lif

e of

ass

ets a

nd im

prov

ing

syst

em re

liabi

lity

and

secu

rity.

Initi

ativ

es in

clud

e:

• Sy

stem

Con

trol

Cen

tre

Mod

erni

zatio

n Pr

ojec

t: Th

is pr

ojec

t is c

onso

lidat

ing

syst

em o

pera

tions

into

a

new

con

trol

cen

ter a

nd b

acku

p sit

e an

d up

grad

ing

oper

atin

g te

chno

logi

es w

ith a

mod

ern

man

agem

ent

syst

em th

at in

clud

es e

nhan

cem

ents

to e

xist

ing

appl

icat

ions

to e

nsur

e th

e el

ectr

ic g

rid is

ope

ratin

g re

liabl

y an

d effi

cien

tly. T

he b

acku

p sit

e w

ill ta

ke o

ver

com

plet

e op

erat

ion

of th

e el

ectr

ic g

rid if

the

mai

n sit

e is

unav

aila

ble.

• Re

al-T

ime

Phas

ors:

Briti

sh C

olum

bia

is am

ong

the

first

N

orth

Am

eric

an ju

risdi

ctio

ns to

inco

rpor

ate

phas

or

mea

sure

men

t int

o co

ntro

l cen

tre o

pera

tions

. Pha

sors

ar

e hi

ghly

acc

urat

e vo

ltage

, cur

rent

and

pha

se a

ngle

“s

naps

hots

” of t

he re

al-t

ime

stat

e of

the

tran

smiss

ion

syst

em th

at e

nabl

e sy

stem

ope

rato

rs to

mon

itor s

yste

m

cond

ition

s and

iden

tify

any

impe

ndin

g pr

oble

ms.

• Re

al-T

ime

Ratin

g: T

his i

s a te

mpe

ratu

re m

onito

ring

syst

em w

hich

ena

bles

the

oper

atio

n of

two

500

kilo

volt

subm

arin

e ca

ble

circ

uits

at m

axim

um c

apac

ity w

ithou

t ov

erlo

adin

g. T

he re

sulti

ng in

crea

se in

cap

acity

is

estim

ated

to b

e up

to 1

0 pe

r cen

t, sa

ving

mill

ions

of

dol

lars

.

• El

ectro

nic

Tem

pera

ture

Mon

itor U

pgra

des f

or S

tatio

n Tr

ansf

orm

ers:

In th

is pr

ogra

m, e

xist

ing

mec

hani

cal

tem

pera

ture

mon

itors

will

be

repl

aced

with

new

er,

mor

e ac

cura

te e

lect

roni

c m

onito

rs o

n st

atio

n tr

ansf

orm

ers t

hat a

llow

tran

sfor

mer

s to

oper

ate

to

max

imum

cap

acity

with

out o

verh

eatin

g. In

add

ition

to

impr

ovin

g pe

rform

ance

, BC

Tran

smiss

ion

Corp

orat

ion

will

real

ize

redu

ced

mai

nten

ance

cos

ts a

s the

mon

itors

ar

e “s

elf-c

heck

ing.

”

• Li

fe E

xten

sion

of T

rans

miss

ion

Tow

ers:

BC T

rans

miss

ion

Corp

orat

ion

mai

ntai

ns o

ver 2

2,00

0 st

eel l

attic

e to

wer

s and

is a

pply

ing

a sp

ecia

l com

posit

e co

rrosio

n pr

otec

tion

coat

ing

to so

me

exist

ing

stee

l tow

ers t

o ex

tend

thei

r life

by

abou

t 25

year

s.

EL

EC

Tr

iCiT

y

Appendix C1

Page 13 of 90

��

Publ

ic O

wne

rshi

pPu

blic

Ow

ners

hip

of B

C h

ydro

and

the

B

C Tr

ansm

issi

on C

orpo

rati

onBC

Hyd

ro a

nd th

e BC

Tra

nsm

issio

n Co

rpor

atio

n ar

e pu

blic

ly-o

wne

d cr

own

corp

orat

ions

and

will

rem

ain

that

w

ay n

ow a

nd in

to th

e fu

ture

. BC

Hyd

ro is

resp

onsib

le fo

r ge

nera

ting,

pur

chas

ing

and

dist

ribut

ing

elec

tric

ity. T

he

BC T

rans

miss

ion

Corp

orat

ion

oper

ates

, mai

ntai

ns, a

nd

plan

s BC

Hyd

ro’s

tran

smiss

ion

asse

ts a

nd is

resp

onsib

le

for p

rovi

ding

fair,

ope

n ac

cess

to th

e po

wer

grid

for a

ll cu

stom

ers.

Both

cro

wns

are

subj

ect t

o th

e re

view

and

ap

prov

als o

f the

inde

pend

ent r

egul

ator

, the

BC

Util

ities

Co

mm

issio

n.

BC H

ydro

ow

ns th

e he

ritag

e as

sets

, whi

ch in

clud

e hi

stor

ic e

lect

ricity

faci

litie

s suc

h as

thos

e on

the

Peac

e an

d Co

lum

bia

Rive

rs th

at p

rovi

de a

secu

re, r

elia

ble

supp

ly o

f low

-cos

t pow

er fo

r Brit

ish C

olum

bian

s. Th

ese

herit

age

asse

ts re

quire

mai

nten

ance

and

upg

rade

s ov

er ti

me

to e

nsur

e th

ey c

ontin

ue to

ope

rate

relia

bly

and

effici

ently

. Pot

entia

l im

prov

emen

ts to

thes

e as

sets

, su

ch a

s cap

acity

add

ition

s at t

he M

ica

and

Reve

lstok

e ge

nera

ting

stat

ions

, can

mak

e im

port

ant c

ontr

ibut

ions

fo

r the

ben

efit o

f Brit

ish C

olum

bian

s.

Confi

rmin

g th

e h

erit

age

Cont

ract

in

Per

petu

ity

Und

er th

e 20

02 E

nerg

y Pl

an, a

legi

slate

d he

ritag

e co

ntra

ct w

as e

stab

lishe

d fo

r an

initi

al te

rm o

f 10

year

s to

ensu

re B

C H

ydro

cus

tom

ers b

enefi

t fro

m it

s exi

stin

g lo

w-

cost

reso

urce

s. W

ith T

he B

C En

ergy

Pla

n, g

over

nmen

t co

nfirm

s the

her

itage

con

trac

t in

perp

etui

ty to

ens

ure

rate

paye

rs w

ill c

ontin

ue to

rece

ive

the

bene

fits o

f thi

s lo

w-c

ost e

lect

ricity

for g

ener

atio

ns to

com

e.

Bri

tish

Col

umbi

a’s

Lead

ersh

ip

in C

lean

Ene

rgy

The

BC E

nerg

y Pl

an w

ill c

ontin

ue to

ens

ure

Briti

sh

Colu

mbi

a ha

s an

envi

ronm

enta

lly a

nd so

cial

ly

resp

onsib

le e

lect

ricity

supp

ly w

ith a

focu

s on

cons

erva

tion

and

ener

gy e

ffici

ency

.

Briti

sh C

olum

bia

is al

read

y a

wor

ld le

ader

in th

e us

e of

cle

an a

nd re

new

able

ele

ctric

ity, d

ue in

par

t to

the

fore

sight

of p

revi

ous g

ener

atio

ns w

ho b

uilt

our p

rovi

nce’s

hy

droe

lect

ric d

ams.

Thes

e da

ms -

now

Brit

ish C

olum

bian

s’ ‘h

erita

ge a

sset

s’ - t

oday

hel

p us

to e

njoy

90

per c

ent c

lean

el

ectri

city

, one

of t

he h

ighe

st le

vels

in N

orth

Am

eric

a.

All

New

Ele

ctri

city

gen

erat

ion

Proj

ects

Will

h

ave

Zero

Net

gre

enho

use

gas

Em

issi

ons

The

B.C.

gov

ernm

ent i

s a le

ader

in N

orth

Am

eric

a w

hen

it co

mes

to e

nviro

nmen

tal s

tand

ards

. Whi

le

Briti

sh C

olum

bia

is a

prov

ince

rich

in e

nerg

y re

sour

ces s

uch

as h

ydro

ele

ctric

ity, n

atur

al g

as

and

coal

, the

use

of t

hese

reso

urce

s nee

ds to

be

bal

ance

d th

roug

h eff

ectiv

e us

e, p

rese

rvin

g ou

r env

ironm

enta

l sta

ndar

ds, w

hile

uph

oldi

ng

our q

ualit

y of

life

for g

ener

atio

ns to

com

e. T

he

gove

rnm

ent h

as m

ade

a co

mm

itmen

t tha

t all

new

el

ectr

icity

gen

erat

ion

proj

ects

dev

elop

ed in

Brit

ish

Colu

mbi

a an

d co

nnec

ted

to th

e gr

id w

ill h

ave

zero

ne

t gre

enho

use

gas e

miss

ions

. In

addi

tion,

any

ne

w e

lect

ricity

gen

erat

ed fr

om c

oal m

ust m

eet

the

mor

e st

ringe

nt st

anda

rd o

f zer

o gr

eenh

ouse

ga

s em

issio

ns.

PO

LiC

y A

CT

iON

S

Pu

BL

iC O

WN

Er

Sh

iP

• Co

ntin

ue p

ublic

ow

ners

hip

of B

C H

ydro

and

its

her

itage

ass

ets,

and

the

BC T

rans

mis

sion

Co

rpor

atio

n.

• Es

tabl

ish

the

exis

ting

heri

tage

con

trac

t in

perp

etui

ty.

• In

vest

in u

pgra

ding

and

mai

ntai

ning

th

e he

rita

ge a

sset

pow

er p

lant

s an

d th

e tr

ansm

issi

on li

nes

to re

tain

the

ongo

ing

com

petit

ive

adva

ntag

e th

ese

asse

ts p

rovi

de

to th

e pr

ovin

ce.

Appendix C1

Page 14 of 90

��Zero

Net

gre

enho

use

gas

Em

issi

ons

from

Ex

isti

ng T

herm

al g

ener

atio

n Po

wer

Pla

nts

by 2

016

Sett

ing

a re

quire

men

t for

zer

o ne

t em

issio

ns o

ver t

his

time

perio

d en

cour

ages

pow

er p

rodu

cers

to in

vest

in

new

or u

pgra

ded

tech

nolo

gy. F

or e

xist

ing

plan

ts th

e go

vern

men

t will

set p

olic

y ar

ound

reac

hing

zer

o ne

t em

issio

ns th

roug

h ca

rbon

offs

ets f

rom

oth

er

activ

ities

in B

ritish

Col

umbi

a. It

cle

arly

sign

als t

he

gove

rnm

ent’s

inte

ntio

n to

con

tinue

to h

ave

one

of th

e lo

wes

t gre

enho

use

gas e

miss

ion

elec

tric

ity

sect

ors i

n th

e w

orld

.

Ensu

re C

lean

or r

enew

able

Ele

ctri

city

g

ener

atio

n Co

ntin

ues

to A

ccou

nt F

or a

t Lea

st

90 p

er c

ent o

f Tot

al g

ener

atio

nCu

rrent

ly in

B.C

., 90

per c

ent o

f ele

ctric

ity is

from

cle

an

or re

new

able

reso

urce

s. Th

e BC

Ene

rgy

Plan

com

mits

to

mai

ntai

ning

this

high

stan

dard

whi

ch p

lace

s us a

mon

g th

e to

p ju

risdi

ctio

ns in

the

wor

ld. C

lean

or r

enew

able

re

sour

ces i

nclu

de so

urce

s of e

nerg

y th

at a

re c

onst

antly

re

new

ed b

y na

tura

l pro

cess

es, s

uch

as w

ater

pow

er,

sola

r ene

rgy,

win

d en

ergy

, tid

al e

nerg

y, ge

othe

rmal

en

ergy

, woo

d re

sidue

ene

rgy,

and

ener

gy fr

om o

rgan

ic

mun

icip

al w

aste

.

Zer

o g

reen

hous

e g

as E

mis

sion

s fr

om C

oal

The

gove

rnm

ent i

s com

mitt

ed to

ens

urin

g th

at B

ritish

Co

lum

bia’s

ele

ctric

ity se

ctor

rem

ains

one

of t

he c

lean

est

in th

e w

orld

and

will

allo

w c

oal a

s a re

sour

ce fo

r ele

ctric

ity

gene

ratio

n w

hen

it ca

n re

ach

zero

gre

enho

use

gas e

miss

ions

. Cle

an-c

oal t

echn

olog

y w

ith

carb

on se

ques

tratio

n is

expe

cted

to b

ecom

e co

mm

erci

ally

ava

ilabl

e in

the

next

dec

ade.

Th

eref

ore,

the

prov

ince

will

requ

ire z

ero

gree

nhou

se g

as e

miss

ions

from

any

coa

l th

erm

al e

lect

ricity

faci

litie

s whi

ch c

an b

e m

et th

roug

h ca

ptur

e an

d se

ques

tratio

n te

chno

logy

. Brit

ish C

olum

bia

is th

e fir

st

Cana

dian

juris

dict

ion

to c

omm

it to

us

ing

only

cle

an c

oal t

echn

olog

y fo

r any

el

ectri

city

gen

erat

ed fr

om c

oal.

PO

LiC

y A

CT

iON

S

rE

du

CiN

g g

rE

EN

hO

uS

E g

AS

EM

iSS

iON

S F

rO

M E

LE

CT

riC

iTy

• A

ll ne

w e

lect

rici

ty g

ener

atio

n pr

ojec

ts w

ill

have

zer

o ne

t gre

enho

use

gas

emis

sion

s.

• Ze

ro n

et g

reen

hous

e ga

s em

issi

ons

from

ex

istin

g th

erm

al g

ener

atio

n po

wer

pla

nts

by 2

016.

• Re

quire

zer

o gr

eenh

ouse

gas

em

issi

ons

from

any

coa

l the

rmal

ele

ctri

city

faci

litie

s.

• En

sure

cle

an o

r ren

ewab

le e

lect

ricity

ge

nera

tion

cont

inue

s to

acco

unt f

or a

t lea

st

90 p

er c

ent o

f tot

al g

ener

atio

n.

• G

over

nmen

t sup

port

s BC

Hyd

ro’s

prop

osal

to

repl

ace

the

firm

ene

rgy

supp

ly fr

om th

e Bu

rrar

d Th

erm

al p

lant

with

oth

er re

sour

ces.

BC

Hyd

ro m

ay c

hoos

e to

reta

in B

urra

rd fo

r ca

paci

ty p

urpo

ses a

fter

201

4.

• N

o nu

clea

r pow

er.

EL

EC

Tr

iCiT

y

Appendix C1

Page 15 of 90

��

CA

rB

ON

OF

FS

ET

S A

Nd

h

OW

Th

Ey

rE

du

CE

EM

iSS

iON

S

A ca

rbon

offs

et is

an

actio

n ta

ken

dire

ctly

, ou

tsid

e of

nor

mal

ope

ratio

ns, w

hich

resu

lts

in re

duce

d gr

eenh

ouse

gas

em

issio

ns o

r re

mov

al o

f gre

enho

use

gase

s fro

m th

e at

mos

pher

e. H

ere’s

how

it w

orks

: if a

pr

ojec

t add

s gre

enho

use

gase

s to

the

atm

osph

ere,

it c

an e

ffect

ivel

y su

btra

ct

them

by

purc

hasin

g ca

rbon

offs

ets w

hich

ar

e re

duct

ions

from

ano

ther

act

ivity

. G

over

nmen

t reg

ulat

ions

to re

duce

gr

eenh

ouse

gas

es, i

nclu

ding

offs

ets,

dem

onst

rate

lead

ersh

ip o

n cl

imat

e

chan

ge a

nd su

ppor

t a m

ove

to c

lean

an

d re

new

able

ene

rgy.

Bur

rard

The

rmal

gen

erat

ing

Stat

ion

A de

cisio

n re

gard

ing

the

Burr

ard

Ther

mal

Nat

ural

Gas

G

ener

atin

g St

atio

n is

anot

her a

ctio

n th

at is

rela

ted

to

envi

ronm

enta

lly re

spon

sible

ele

ctric

ity g

ener

atio

n in

Br

itish

Col

umbi

a.

Even

thou

gh it

cou

ld g

ener

ate

elec

tric

ity fr

om B

urra

rd

Ther

mal

, BC

Hyd

ro im

port

s pow

er p

rimar

ily b

ecau

se

the

plan

t is o

utda

ted,

ineffi

cien

t and

cos

tly to

run.

H

owev

er, B

urra

rd T

herm

al st

ill p

rovi

des s

igni

fican

t be

nefit

s to

BC H

ydro

as i

t act

s as a

“bat

tery

” clo

se to

th

e Lo

wer

Mai

nlan

d, a

nd p

rovi

des e

xtra

cap

acity

or

“relia

bilit

y in

sura

nce”

for t

he p

rovi

nce’s

ele

ctric

ity su

pply

. It

also

pro

vide

s tra

nsm

issio

n sy

stem

ben

efits

that

wou

ld

othe

rwise

hav

e to

be

supp

lied

thro

ugh

the

addi

tion

of

new

equ

ipm

ent a

t Low

er M

ainl

and

sub-

stat

ions

.

By 2

014,

BC

Hyd

ro p

lans

to h

ave

firm

ele

ctric

ity to

re

plac

e w

hat w

ould

hav

e be

en p

rodu

ced

at th

e pl

ant.

Gov

ernm

ent s

uppo

rts

BC H

ydro

’s pr

opos

al to

repl

ace

the

firm

ene

rgy

supp

ly fr

om B

urra

rd T

herm

al w

ith o

ther

re

sour

ces

by 2

014.

How

ever

, BC

Hyd

ro m

ay c

hoos

e to

re

tain

the

plan

t for

“rel

iabi

lity

insu

ranc

e” s

houl

d

the

need

aris

e.

No

Nuc

lear

Pow

er

As fi

rst o

utlin

ed in

Ene

rgy

Plan

20

02, g

over

nmen

t will

not

allo

w

prod

uctio

n of

nuc

lear

pow

er in

Br

itish

Col

umbi

a.

Ben

efits

to B

riti

sh C

olum

bian

sCl

ean

or re

new

able

ele

ctric

ity c

omes

from

sour

ces

that

repl

enish

ove

r a re

ason

able

tim

e or

hav

e m

inim

al

envi

ronm

enta

l im

pact

s. To

day,

dem

and

for e

cono

mic

ally

vi

able

, cle

an, r

enew

able

and

alte

rnat

ive

ener

gy is

gr

owin

g al

ong

with

the

wor

ld’s

popu

latio

n an

d ec

onom

ies.

Cons

umer

s are

look

ing

for p

ower

that

is

not o

nly

affor

dabl

e bu

t cre

ates

min

imal

env

ironm

enta

l im

pact

s. Fo

rtun

atel

y, Br

itish

Col

umbi

a ha

s abu

ndan

t hy

droe

lect

ric re

sour

ces,

and

plen

ty o

f oth

er p

oten

tial

ener

gy so

urce

s.

Mai

ntai

n ou

r Ele

ctri

city

Com

peti

tive

A

dvan

tage

Briti

sh C

olum

bian

s req

uire

a se

cure

, rel

iabl

e su

pply

of

com

petit

ivel

y pr

iced

ele

ctric

ity n

ow a

nd in

the

futu

re.

Com

petit

ivel

y pr

iced

pow

er is

also

an

ince

ntiv

e fo

r in

vest

ors t

o lo

cate

in B

ritish

Col

umbi

a. It

pro

vide

s an

adva

ntag

e ov

er o

ther

juris

dict

ions

and

hel

ps su

stai

n ec

onom

ic g

row

th. W

e ar

e fo

rtun

ate

that

hist

oric

in

vest

men

ts in

hyd

roel

ectr

ic a

sset

s pro

vide

ele

ctric

ity

that

is re

adily

ava

ilabl

e, re

liabl

e, c

lean

and

inex

pens

ive.

By

ens

urin

g pu

blic

ow

ners

hip

of B

C H

ydro

, the

her

itage

as

sets

and

the

BC T

rans

miss

ion

Corp

orat

ion

and

confi

rmin

g th

e he

ritag

e co

ntra

ct in

per

petu

ity, w

e w

ill e

nsur

e th

at ra

tepa

yers

con

tinue

to re

ceiv

e th

e be

nefit

s of t

his l

ow c

ost g

ener

atio

n. D

ue

to lo

ad g

row

th a

nd a

ging

infra

stru

ctur

e, n

ew

inve

stm

ents

will

be

requ

ired.

Inve

stm

ents

in

mai

nten

ance

and

in so

me

case

s exp

ansio

ns

can

be a

cos

t effe

ctiv

e w

ay to

mee

t gro

wth

an

d re

duce

futu

re ra

te in

crea

ses.

Appendix C1

Page 16 of 90

��Briti

sh C

olum

bia

mus

t loo

k fo

r new

, inn

ovat

ive

way

s to

stay

com

petit

ive.

New

tech

nolo

gies

mus

t be

iden

tified

an

d nu

rtur

ed, f

rom

bot

h ne

w a

nd e

xist

ing

indu

strie

s. By

div

ersif

ying

and

stre

ngth

enin

g ou

r ene

rgy

sect

or

thro

ugh

the

deve

lopm

ent o

f new

and

alte

rnat

ive

ener

gy

sour

ces,

we

can

help

ens

ure

the

prov

ince

’s ec

onom

y re

mai

ns v

ibra

nt fo

r yea

rs to

com

e.

Ensu

re E

lect

rici

ty is

Sec

ured

at

Com

peti

tive

Pri

ces

One

pra

ctic

al w

ay to

kee

p ra

tes d

own

is to

ens

ure

utili

ties h

ave

effec

tive

proc

esse

s for

secu

ring

com

petit

ivel

y pr

iced

pow

er. A

s par

t of T

he B

C En

ergy

Pla

n, g

over

nmen

t will

wor

k w

ith B

C H

ydro

an

d pa

rtie

s inv

olve

d to

con

tinue

to im

prov

e th

e Ca

ll fo

r Ten

der p

roce

ss fo

r acq

uirin

g ne

w g

ener

atio

n.

Fair

trea

tmen

t of b

oth

buye

rs a

nd se

llers

of

elec

tric

ity w

ill fa

cilit

ate

a ro

bust

and

com

petit

ive

proc

urem

ent p

roce

ss. G

over

nmen

t and

BC

Hyd

ro

will

also

look

for w

ays t

o fu

rthe

r rec

ogni

ze th

e va

lue

of in

term

itten

t res

ourc

es, s

uch

as ru

n-of

- riv

er a

nd

win

d, in

the

acqu

isitio

n pr

oces

s – w

hich

mea

ns

that

BC

Hyd

ro w

ill e

xam

ine

way

s to

valu

e se

para

te

proj

ects

toge

ther

to in

crea

se th

e am

ount

of fi

rm

ener

gy c

alcu

late

d fro

m th

e re

sour

ces.

rate

s Ke

pt L

ow T

hrou

gh P

ower

ex

Trad

ing

of E

lect

rici

tyPr

ofits

from

ele

ctric

ity tr

ade

also

con

trib

ute

to k

eepi

ng

our e

lect

ricity

rate

s com

petit

ive.

BC

Hyd

ro, t

hrou

gh

its su

bsid

iary

, Pow

erex

, buy

s and

sells

ele

ctric

ity w

hen

it is

adva

ntag

eous

to B

ritish

Col

umbi

a’s ra

tepa

yers

. G

over

nmen

t will

con

tinue

to su

ppor

t cap

italiz

ing

on

elec

tric

ity tr

adin

g op

port

uniti

es a

nd w

ill c

ontin

ue to

al

loca

te tr

ade

reve

nue

to B

C H

ydro

rate

paye

rs to

kee

p el

ectr

icity

rate

s low

for a

ll Br

itish

Col

umbi

ans.

BC u

tilit

ies

Com

mis

sion

s’ r

ole

in S

ocia

l and

En

viro

nmen

tal C

osts

and

Ben

efits

The

BC E

nerg

y Pl

an c

larifi

es th

at so

cial

, eco

nom

ic

and

envi

ronm

enta

l cos

ts a

re im

port

ant f

or e

nsur

ing

a su

itabl

e el

ectr

icity

supp

ly in

Brit

ish C

olum

bia.

G

over

nmen

t will

revi

ew th

e BC

Util

ities

Com

miss

ions

’ ro

le in

con

sider

ing

soci

al, e

nviro

nmen

tal a

nd e

cono

mic

co

sts a

nd b

enefi

ts, a

nd w

ill d

eter

min

e ho

w b

est t

o en

sure

thes

e ar

e ap

prop

riate

ly c

onsid

ered

with

in th

e re

gula

tory

fram

ewor

k.

Gov

ernm

ent w

ill e

stab

lish

a $2

5 m

illio

n In

nova

tive

Clea

n En

ergy

Fun

d.

EL

EC

Tr

iCiT

y

PO

LiC

y A

CT

iON

S

BE

NE

FiT

S T

OB

riT

iSh

CO

Lu

MB

iAN

S

• Re

view

BC

Util

ities

Com

mis

sion

s’ ro

le in

co

nsid

erin

g so

cial

and

env

ironm

enta

l cos

ts

and

bene

fits.

• En

sure

the

proc

urem

ent o

f ele

ctri

city

ap

prop

riat

ely

reco

gniz

es th

e va

lue

of

aggr

egat

ed in

term

itten

t res

ourc

es.

• W

ork

with

BC

Hyd

ro a

nd p

artie

s in

volv

ed

to c

ontin

ue to

impr

ove

the

proc

urem

ent

proc

ess

for e

lect

rici

ty.

• Pu

rsue

Gov

ernm

ent a

nd B

C H

ydro

’s pl

anne

d Re

mot

e Co

mm

unity

Ele

ctrifi

catio

n Pr

ogra

m

to e

xpan

d or

take

ove

r ele

ctric

ity se

rvic

e to

re

mot

e co

mm

uniti

es in

Brit

ish

Colu

mbi

a.

• En

sure

BC

Hyd

ro c

onsi

ders

alte

rnat

ive

elec

tric

ity

sour

ces

and

ener

gy e

ffici

ency

m

easu

res

in it

s en

ergy

pla

nnin

g fo

r rem

ote

com

mun

ities

.

Appendix C1

Page 17 of 90

��

0

Bost

on, M

A

San

Fran

cisc

o, C

A

New

Yor

k, N

Y

Hou

ston

, TX

Det

roit,

MI

Mia

mi, F

L

Char

lott

etow

n, P

E

Hal

ifax,

NS

Toro

nto,

ON

Regi

na, S

K

Edm

onto

n, A

B

Mon

cton

, NB

Ott

awa,

ON

Nas

hvill

e, T

N

St.Jo

hn’s,

NL

Chic

ago,

IL

Seat

tle, W

A

Port

land

, OR

Mon

treal

, QC

Vanc

ouve

r, BC

Win

nipe

g, M

B

23.8

2

21.1

19.2

3

18.8

4

13.0

4

12.4

1

12.1

5

11.2

1

11.1

4

10.4

3

10.2

2

10.1

4

10.0

9

9.95

9.88

9.17

8.2

7.85

6.6

6.41

6.3

42

68

1012

1416

1820

2224

26

Br

iNg

iNg

CL

EA

N P

OW

Er

TO

AT

LiN

Elec

tric

ity in

the

rem

ote

com

mun

ity o

f At

lin in

nor

thw

este

rn B

ritish

Col

umbi

a is

curre

ntly

supp

lied

by d

iese

l gen

erat

ors.

The

Firs

t Nat

ions

and

Rem

ote

Com

mun

ity

Clea

n En

ergy

Pro

gram

is b

ringi

ng c

lean

po

wer

to A

tlin.

The

Taku

Lan

d Co

rpor

atio

n, so

lely

ow

ned

by th

e Ta

ku R

iver

Tlin

git F

irst N

atio

n w

ill

cons

truc

t a tw

o m

egaw

att r

un-o

f-riv

er

hydr

oele

ctric

pro

ject

on

Pine

Cre

ek,

gene

ratin

g lo

cal e

cono

mic

ben

efits

and

pr

ovid

ing

clea

n po

wer

for A

tlin.

The

Taku

La

nd C

orpo

ratio

n ha

s ent

ered

into

a 2

5 ye

ar E

lect

ricity

Pur

chas

e Ag

reem

ent w

ith

BC H

ydro

to su

pply

ele

ctric

ity fr

om th

e pr

ojec

t to

Atlin

’s gr

id. O

ver t

he c

ours

e of

th

e ag

reem

ent,

this

will

redu

ce g

reen

hous

e ga

s em

issio

ns b

y up

to 1

50,0

00 to

nnes

as

the

tow

n’s d

iese

l gen

erat

ors s

tand

by.

The

prov

ince

is c

ontr

ibut

ing

$1.4

mill

ion

to th

is $1

0 m

illio

n pr

ojec

t. Th

is is

the

first

pay

men

t fro

m a

$3.

9 m

illio

n fe

dera

l co

ntrib

utio

n to

Brit

ish C

olum

bia’s

Firs

t N

atio

ns a

nd R

emot

e Co

mm

unity

Cle

an

Ener

gy P

rogr

am. C

riter

ia fo

r fed

eral

fund

ing

incl

uded

dem

onst

ratin

g gr

eenh

ouse

gas

em

issio

ns re

duct

ions

, cos

t-eff

ectiv

enes

s, an

d pa

rtne

rshi

ps w

ith c

omm

uniti

es

and

indu

stry

.

Bri

ng C

lean

Pow

er to

Com

mun

itie

sBr

itish

Col

umbi

a’s e

lect

ricity

indu

stry

supp

orts

thou

sand

s of

wel

l-pay

ing

jobs

, hel

ps d

rive

the

econ

omy

and

prov

ides

reve

nues

to su

stai

n pu

blic

serv

ices

. Brit

ish

Colu

mbi

a’s e

lect

ricity

indu

stry

alre

ady

fost

ers e

cono

mic

de

velo

pmen

t by

impl

emen

ting

cost

effe

ctiv

e an

d re

liabl

e en

ergy

solu

tions

in c

omm

uniti

es a

roun

d th

e pr

ovin

ce. H

owev

er, B

ritish

Col

umbi

a co

vers

alm

ost o

ne

mill

ion

squa

re k

ilom

etre

s and

ele

ctrifi

catio

n do

es n

ot

exte

nd to

all

part

s of o

ur v

ast p

rovi

nce.

Gov

ernm

ent a

nd B

C H

ydro

hav

e es

tabl

ished

Firs

t Nat

ion

and

rem

ote

com

mun

ity e

nerg

y pr

ogra

ms t

o im

plem

ent

alte

rnat

ive

ener

gy, e

nerg

y effi

cien

cy, c

onse

rvat

ion

and

skill

s tra

inin

g so

lutio

ns in

a n

umbe

r of c

omm

uniti

es.

The

prog

ram

focu

ses o

n ex

pand

ing

elec

trifi

catio

n se

rvic

es to

as m

any

as 5

0 re

mot

e an

d Fi

rst N

atio

ns

com

mun

ities

in B

ritish

Col

umbi

a, e

nabl

ing

them

to sh

are

in th

e be

nefit

s of a

stab

le a

nd se

cure

supp

ly o

f ele

ctric

ity.

Gov

ernm

ent w

ill p

ut th

e po

licy

fram

ewor

k in

pla

ce a

nd

BC H

ydro

will

impl

emen

t the

pro

gram

ove

r the

nex

t 10

yea

rs. T

he In

nova

tive

Clea

n En

ergy

Fun

d ca

n al

so

supp

ort t

echn

olog

ical

adv

ance

men

ts to

add

ress

the

issue

of p

rovi

ding

a c

lean

and

secu

re su

pply

of e

lect

ricity

to

rem

ote

com

mun

ities

.

2006

Ave

rage

res

iden

tial

Ele

ctri

city

Pri

cePr

ice

(Can

adia

n ce

nts p

er k

ilow

att h

our)

Sour

ce:

Hyd

ro Q

uebe

c co

mpa

rison

of E

lect

ricity

Pric

es in

Maj

or N

orth

Am

eric

an C

ities

, Apr

il 20

06

Appendix C1

Page 18 of 90

��inno

vati

ve C

lean

Ene

rgy

Fund

Br

itish

Col

umbi

a’s in

crea

sing

ener

gy re

quire

men

ts a

nd o

ur

ambi

tious

gre

enho

use

gas e

miss

ion

redu

ctio

n an

d cl

ean

ener

gy ta

rget

s req

uire

gre

ater

inve

stm

ent a

nd in

nova

tion

in th

e ar

ea o

f alte

rnat

ive

ener

gy b

y bo

th th

e pu

blic

and

pr

ivat

e se

ctor

.

To le

ad th

is eff

ort,

the

gove

rnm

ent w

ill e

stab

lish

an

Inno

vativ

e Cl

ean

Ener

gy F

und

of $

25 m

illio

n to

hel

p pr

omisi

ng c

lean

pow

er te

chno

logy

pro

ject

s suc

ceed

. Th

e fu

nd w

ill b

e es

tabl

ished

thro

ugh

a sm

all c

harg

e on

ene

rgy

utili

ties.

The

Min

ister

of E

nerg

y, M

ines

and

Pe

trole

um R

esou

rces

will

con

sult

with

the

ener

gy

utili

ties o

n th

e im

plem

enta

tion

of th

is ch

arge

.

Prop

onen

ts o

f pro

ject

s tha

t will

be

supp

orte

d th

roug

h th

e fu

nd w

ill b

e en

cour

aged

to se

ek

addi

tiona

l con

tribu

tions

from

oth

er so

urce

s. G

over

nmen

t’s n

ew In

nova

tive

Clea

n En

ergy

Fun

d w

ill h

elp

mak

e Br

itish

Col

umbi

a a

wor

ld le

ader

in

alte

rnat

ive

ener

gy a

nd p

ower

tech

nolo

gy. It

will

solv

e so

me

of B

.C.’s

pres

sing

ener

gy c

halle

nges

, pro

tect

ou

r env

ironm

ent,

help

gro

w th

e ec

onom

y, po

sitio

n th

e pr

ovin

ce a

s the

pla

ce in

tern

atio

nal c

usto

mer

s tu

rn to

for k

ey e

nerg

y an

d en

viro

nmen

tal s

olut

ions

, an

d as

sist B

.C. b

ased

com

pani

es to

show

case

thei

r pr

oduc

ts to

wor

ld w

ide

mar

kets

.

Follo

win

g th

e ad

vice

of t

he P

rem

ier’s

Tech

nolo

gy

Coun

cil a

nd th

e Al

tern

ativ

e En

ergy

and

Pow

er

Tech

nolo

gy Ta

sk F

orce

, the

fund

will

focu

s stri

ctly

on

proj

ects

that

:

• Ad

dres

s spe

cific

Brit

ish C

olum

bia

ener

gy a

nd

envi

ronm

enta

l pro

blem

s tha

t hav

e be

en id

entifi

ed

by g

over

nmen

t.

• Sh

owca

se B

.C. t

echn

olog

ies t

hat h

ave

a st

rong

pot

entia

l fo

r int

erna

tiona

l mar

ket d

eman

d in

oth

er ju

risdi

ctio

ns

beca

use

they

solv

e pr

oble

ms t

hat e

xist

bot

h in

B.C

. and

ot

her j

urisd

ictio

ns.

• Su

ppor

t pre

-com

mer

cial

ene

rgy

tech

nolo

gy th

at is

ne

w, o

r com

mer

cial

tech

nolo

gies

not

cur

rent

ly u

sed

in

Brit

ish C

olum

bia.

• D

emon

stra

te c

omm

erci

al su

cces

s for

new

ene

rgy

tech

nolo

gies

.

Som

e pr

oble

ms t

hat t

he fu

nd c

ould

focu

s on

incl

ude:

• D

evel

opin

g re

liabl

e po

wer

solu

tions

for r

emot

e co

mm

uniti

es-p

artic

ular

ly h

elpi

ng F

irst N

atio

ns

com

mun

ities

redu

ce th

eir r

elia

nce

on d

iese

l ge

nera

tion

for e

lect

ricity

.

• Ad

vanc

e co

nser

vatio

n te

chno

logi

es to

com

mer

cial

ap

plic

atio

n.

• Fi

ndin

g w

ays t

o co

nver

t veh

icle

s to

clea

ner

alte

rnat

ive

fuel

s.

• In

crea

sing

the

effici

ency

of p

ower

tran

smiss

ion

th

roug

h fu

ture

grid

tech

nolo

gies

.

• Ex

pand

ing

the

oppo

rtun

ities

to g

ener

ate

pow

er u

sing

alte

rnat

ive

fuel

s (e.

g.m

ount

ain

pine

bee

tle w

ood)

.

AL

TE

rN

AT

ivE

EN

Er

gy

Gov

ernm

ent w

ill w

ork

with

oth

er a

genc

ies t

o m

axim

ize

oppo

rtun

ities

to d

evel

op, d

eplo

y an

d ex

port

Brit

ish

Colu

mbi

a cl

ean

and

alte

rnat

ive

ener

gy te

chno

logi

es.

PO

LiC

y A

CT

iON

S

iNv

ES

TiN

g i

N i

NN

Ov

AT

iON

• Es

tabl

ish

the

Inno

vati

ve C

lean

Ene

rgy

Fund

to s

uppo

rt th

e de

velo

pmen

t of c

lean

po

wer

and

ene

rgy

effici

ency

tech

nolo

gies

in

the

elec

tric

ity,

alte

rnat

ive

ener

gy,

tran

spor

tatio

n an

d oi

l and

gas

sec

tors

.

• Im

plem

ent a

pro

vinc

ial B

ioen

ergy

Str

ateg

y w

hich

will

bui

ld u

pon

Briti

sh C

olum

bia’

s na

tura

l bio

ener

gy re

sour

ce a

dvan

tage

s.

• Is

sue

an e

xpre

ssio

n of

inte

rest

follo

wed

by

a c

all f

or p

ropo

sals

for e

lect

rici

ty fr

om

saw

mill

resi

dues

, log

ging

deb

ris

and

beet

le-k

illed

tim

ber t

o he

lp m

itiga

te

impa

cts

from

the

prov

inci

al m

ount

ain

pi

ne b

eetle

infe

stat

ion.

Appendix C1

Page 19 of 90

��

The

Bri

tish

Col

umbi

a B

ioen

ergy

St

rate

gy: g

row

ing

Our

Nat

ural

En

ergy

Adv

anta

geCu

rrent

ly, B

ritish

Col

umbi

a is

lead

ing

Cana

da in

the

use

of b

iom

ass f

or e

nerg

y. Th

e pr

ovin

ce h

as 5

0 pe

r cen

t of

Cana

da’s

biom

ass e

lect

ricity

gen

erat

ing

capa

city

. In

2005

, Br

itish

Col

umbi

a’s fo

rest

indu

stry

self-

gene

rate

d th

e eq

uiva

lent

of $

150

mill

ion

in e

lect

ricity

and

roug

hly

$1

.5 b

illio

n in

the

form

of h

eat e

nerg

y. Th

e us

e of

bi

omas

s has

disp

lace

d so

me

natu

ral g

as c

onsu

mpt

ion

in th

e pu

lp a

nd p

aper

sect

or. T

he B

ritish

Col

umbi

a w

ood

pelle

t ind

ustr

y al

so e

njoy

s a o

ne-s

ixth

shar

e of

th

e gr

owin

g Eu

rope

an U

nion

mar

ket f

or b

ioen

ergy

fe

edst

ock.

The

pro

vinc

e w

ill sh

ortly

rele

ase

a bi

oene

rgy

stra

tegy

that

will

bui

ld u

pon

Briti

sh C

olum

bia’s

nat

ural

bi

oene

rgy

reso

urce

adv

anta

ges,

indu

stry

cap

abili

ties a

nd

acad

emic

stre

ngth

to e

stab

lish

Briti

sh C

olum

bia

as

a w

orld

lead

er in

bio

ener

gy d

evel

opm

ent.

Briti

sh C

olum

bia’s

pla

n is

to le

ad th

e bi

oeco

nom

y in

W

este

rn C

anad

a w

ith a

stro

ng a

nd su

stai

nabl

e bi

oene

rgy

sect

or. T

his v

ision

is b

uilt

on tw

o gu

idin

g pr

inci

ples

:

• Co

mpe

titiv

e, d

iver

sified

fore

st a

nd a

gric

ultu

re se

ctor

s.

• St

reng

then

ing

regi

ons a

nd c

omm

uniti

es.

The

prov

inci

al B

ioen

ergy

Str

ateg

y is

aim

ed a

t:

• En

hanc

ing

Briti

sh C

olum

bia’s

abi

lity

to b

ecom

e el

ectr

icity

self-

suffi

cien

t.•

Fost

erin

g th

e de

velo

pmen

t of a

sust

aina

ble

bi

oene

rgy

sect

or.

• Cr

eatin

g ne

w jo

bs.

• Su

ppor

ting

impr

ovem

ents

in a

ir qu

ality

.•

Prom

otin

g op

port

uniti

es to

cre

ate

pow

er fr

om

mou

ntai

n pi

ne b

eetle

-impa

cted

tim

ber.

• Po

sitio

ning

Brit

ish C

olum

bia

for w

orld

lead

ersh

ip in

th

e de

velo

pmen

t and

com

mer

cial

ado

ptio

n of

woo

d en

ergy

tech

nolo

gy.

• Ad

vanc

ing

inno

vativ

e so

lutio

ns to

agr

icul

tura

l and

ot

her w

aste

man

agem

ent c

halle

nges

.•

Enco

urag

ing

dive

rsifi

catio

n in

the

fore

stry

and

ag

ricul

ture

indu

strie

s.•

Prod

ucin

g liq

uid

biof

uels

to m

eet R

enew

able

Fue

l St

anda

rds a

nd d

ispla

ce c

onve

ntio

nal f

ossil

fuel

s.

gen

erat

ing

Elec

tric

ity

from

Mou

ntai

n Pi

ne

Bee

tle

Woo

d: T

urni

ng W

ood

Was

te in

to E

nerg

y Br

itish

Col

umbi

a is

expe

rienc

ing

an u

npre

cede

nted

m

ount

ain

pine

bee

tle in

fest

atio

n th

at h

as a

ffect

ed se

vera

l m

illio

n he

ctar

es o

f tre

es th

roug

hout

the

prov

ince

. Thi

s in

fest

atio

n is

havi

ng a

sign

ifica

nt im

pact

on

fore

stry

-bas

ed

com

mun

ities

and

indu

strie

s, an

d he

ight

ens f

ores

t fire

ris

k. T

here

is a

gre

at o

ppor

tuni

ty to

con

vert

the

affec

ted

timbe

r to

bioe

nerg

y, su

ch a

s woo

d pe

llets

and

woo

d-fir

ed

elec

trici

ty g

ener

atio

n an

d co

gene

ratio

n.

Thro

ugh

The

BC E

nerg

y Pl

an, B

C H

ydro

will

issu

e a

call

for p

ropo

sals

for e

lect

ricity

from

saw

mill

resid

ues,

logg

ing

debr

is an

d be

etle

-kill

ed ti

mbe

r to

help

miti

gate

impa

cts

from

the

prov

inci

al m

ount

ain

pine

bee

tle in

fest

atio

n.

MO

uN

TA

iN P

iNE

BE

ET

LE

iNF

ES

TA

TiO

N:

Tu

rN

iNg

W

OO

d W

AS

TE

iN

TO

E

NE

rg

y

Briti

sh C

olum

bia

is ex

perie

ncin

g an

un

prec

eden

ted

mou

ntai

n pi

ne b

eetle

in

fest

atio

n th

at h

as a

ffect

ed se

vera

l mill

ion

hect

ares

of t

rees

thro

ugho

ut th

e pr

ovin

ce.

This

infe

stat

ion

is ha

ving

a si

gnifi

cant

ec

onom

ic im

pact

on

B.C.

’s fo

rest

ry in

dust

ry

and

the

man

y co

mm

uniti

es it

hel

ps to

su

ppor

t and

sust

ain.

The

fore

st fi

re ri

sk to

th

ese

com

mun

ities

has

also

rise

n as

a re

sult

of th

eir p

roxi

mity

to la

rge

stan

ds o

f “be

etle

-ki

lled”

woo

d.

B.C.

has

dev

elop

ed a

bio

ener

gy st

rate

gy to

pr

omot

e ne

w so

urce

s of s

usta

inab

le a

nd

rene

wab

le e

nerg

y in

ord

er to

take

adv

anta

ge

of th

e va

st a

mou

nts o

f pin

e be

etle

-infe

sted

tim

ber a

nd o

ther

bio

mas

s res

ourc

es. I

n th

e fu

ture

, bio

ener

gy w

ill h

elp

mee

t our

el

ectr

icity

nee

ds, s

uppl

emen

t con

vent

iona

l na

tura

l gas

and

pet

role

um su

pplie

s, m

axim

ize

job

and

econ

omic

opp

ortu

nitie

s, an

d pr

otec

t our

hea

lth a

nd e

nviro

nmen

t.

The

prod

uctio

n of

woo

d pe

llets

is a

lread

y a

mat

ure

indu

stry

in B

ritish

Col

umbi

a. In

dust

ry

has p

rodu

ced

over

500

,000

tonn

es o

f pel

lets

an

d ex

port

ed a

bout

90

per c

ent o

f thi

s pr

oduc

t ove

rsea

s in

2005

, prim

arily

to th

e Eu

rope

an th

erm

al p

ower

indu

stry

. Thr

ough

Th

e BC

Ene

rgy

Plan

, BC

Hyd

ro w

ill is

sue

a ca

ll fo

r pro

posa

ls fo

r fur

ther

ele

ctric

ity g

ener

atio

n fro

m w

ood

resid

ue a

nd m

ount

ain

pine

be

etle

-infe

sted

tim

ber.

Appendix C1

Page 20 of 90

��

gO

vE

rN

ME

NT

TO

uS

E h

yB

rid

vE

hiC

LE

S O

NL

y

The

prov

inci

al g

over

nmen

t is c

ontin

uing

th

e eff

ort t

o re

duce

gre

enho

use

gas

emiss

ions

and

ove

rall

ener

gy c

onsu

mpt

ion.

As p

art o

f thi

s effo

rt, g

over

nmen

t has

mor

e th

an tr

iple

d th

e siz

e of

its h

ybrid

flee

t sin

ce

2005

to b

ecom

e on

e of

the

lead

ers i

n pu

blic

sect

or u

se o

f hyb

rid c

ars.

Hyb

rids e

mit

muc

h le

ss p

ollu

tion

than

co

nven

tiona

l gas

and

die

sel p

ower

ed

vehi

cles

and

thus

hel

p to

redu

ce

gree

nhou

se g

ases

in o

ur e

nviro

nmen

t. Th

ey c

an a

lso b

e m

ore

cost

-effe

ctiv

e as

fuel

sa

ving

s offs

et th

e hi

gher

initi

al c

ost.

As o

f 200

7, a

ll ne

w c

ars p

urch

ased

or

leas

ed b

y th

e B.

C. g

over

nmen

t are

to b

e hy

brid

veh

icle

s. Th

e pr

ovin

ce a

lso h

as

new

fina

ncia

l inc

entiv

es to

hel

p lo

cal

gove

rnm

ents

shift

to h

ybrid

veh

icle

flee

ts

and

help

retr

ofit d

iese

l veh

icle

s.

Add

ress

ing

gre

enho

use

gas

Em

issi

ons

from

Tra

nspo

rtat

ion

The

BC E

nerg

y Pl

an: A

Vis

ion

for C

lean

Ene

rgy

Lead

ersh

ip ta

kes a

firs

t ste

p to

inco

rpor

ate

trans

port

atio

n iss

ues i

nto

prov

inci

al e

nerg

y po

licy.

Tran

spor

tatio

n is

a m

ajor

con

tribu

tor t

o cl

imat

e ch

ange

and

air

qual

ity

prob

lem

s. It

pres

ents

oth

er is

sues

such

as t

raffi

c co

nges

tion

that

slow

s the

mov

emen

t of g

oods

and

pe

ople

. The

fuel

we

use

to tr

avel

aro

und

the

prov

ince

ac

coun

ts fo

r abo

ut 4

0 pe

r cen

t of B

ritish

Col

umbi

a’s

gree

nhou

se g

as e

miss

ions

. Eve

ry ti

me

we

driv

e or

take

a

vehi

cle

that

runs

on

foss

il fu

els,

we

add

to th

e pr

oble

m,

whe

ther

it’s

a tra

in, b

oat,

plan

e or

aut

omob

ile. C

ars a

nd

truck

s are

the

bigg

est s

ourc

e of

gre

enho

use

gas e

miss

ions

an

d co

ntrib

ute

to re

duce

d ai

r qua

lity

in u

rban

are

as.

The

gove

rnm

ent i

s com

mitt

ed to

redu

cing

gre

enho

use

gas e

miss

ions

from

the

trans

port

atio

n se

ctor

and

has

co

mm

itted

to a

dopt

ing

Calif

orni

a’s ta

ilpip

e em

issio

n st

anda

rds f

rom

gre

enho

use

gas e

miss

ions

and

cha

mpi

on

the

natio

nal a

dopt

ion

of th

ese

stan

dard

s.

Briti

sh C

olum

bian

s wan

t a ra

nge

of e

nerg

y op

tions

for u

se

at h

ome,

on

the

road

and

in d

ay-to

-day

life

. Mos

t peo

ple

use

gaso

line

or d

iese

l to

keep

thei

r veh

icle

s mov

ing,

but

th

ere

are

othe

r opt

ions

that

impr

ove

our a

ir qu

ality

and

re

duce

gre

enho

use

gas e

miss

ions

.

Nat

ural

gas

bur

ns c

lean

er th

an e

ither

gas

olin

e or

pr

opan

e, re

sulti

ng in

less

air

pollu

tion.

Fue

l cel

l veh

icle

s ar

e pr

opel

led

by e

lect

ric m

otor

s pow

ered

by

fuel

cel

ls,

devi

ces t

hat p

rodu

ce e

lect

ricity

from

hyd

roge

n w

ithou

t co

mbu

stio

n.

Cars

that

run

on b

lend

s of r

enew

able

bio

fuel

s lik

e et

hano

l an

d bi

odie

sel e

mit

low

er le

vels

of g

reen

hous

e ga

ses a

nd

air p

ollu

tant

s. El

ectri

city

can

pro

vide

an

alte

rnat

ive

to

gaso

line

vehi

cles

whe

n us

ed in

hyb

rids a

nd e

lect

ric c

ars.

By w

orki

ng w

ith b

usin

esse

s, ed

ucat

iona

l ins

titut

ions

, non

-pr

ofit o

rgan

izatio

ns a

nd g

over

nmen

ts, n

ew a

nd e

mer

ging

tra

nspo

rtat

ion

tech

nolo

gies

can

be

depl

oyed

mor

e ra

pidl

y at

hom

e an

d ar

ound

the

wor

ld. B

ritish

Col

umbi

a w

ill fo

cus o

n re

sear

ch a

nd d

evel

opm

ent,

dem

onst

ratio

n pr

ojec

ts, a

nd m

arke

ting

stra

tegi

es to

pro

mot

e Br

itish

Co

lum

bia’s

tech

nolo

gies

to th

e w

orld

.

impl

emen

ting

a F

ive

Per C

ent r

enew

able

Fue

l St

anda

rd fo

r die

sel a

nd g

asol

ine

The

BC E

nerg

y Pl

an d

emon

stra

tes B

ritish

Col

umbi

a’s

com

mitm

ent t

o en

viro

nmen

tal s

usta

inab

ility

and

ec

onom

ic g

row

th b

y ta

king

a le

ad ro

le in

pro

mot

ing

inno

vatio

n in

the

trans

port

atio

n se

ctor

to re

duce

gr

eenh

ouse

gas

em

issio

ns, im

prov

e ai

r qua

lity

and

help

im

prov

e Br

itish

Col

umbi

ans’

heal

th a

nd q

ualit

y of

life

in

the

futu

re. T

he p

lan

will

impl

emen

t a fi

ve p

er c

ent

aver

age

rene

wab

le fu

el st

anda

rd fo

r die

sel b

y 20

10 to

hel

p re

duce

em

issio

ns a

nd a

dvan

ce th

e do

mes

tic re

new

able

fu

el in

dust

ry. I

t will

furt

her s

uppo

rt th

e fe

dera

l act

ion

of in

crea

sing

the

etha

nol c

onte

nt o

f gas

olin

e to

five

pe

r cen

t by

2010

. The

pla

n w

ill a

lso se

e th

e ad

optio

n of

qu

ality

par

amet

ers f

or a

ll re

new

able

fuel

s and

fuel

ble

nds

that

are

app

ropr

iate

for C

anad

ian

wea

ther

con

ditio

ns in

co

oper

atio

n w

ith N

orth

Am

eric

an ju

risdi

ctio

ns. T

hese

re

new

able

fuel

stan

dard

s are

a m

ajor

com

pone

nt a

nd fi

rst

step

tow

ards

gov

ernm

ent’s

goa

l of r

educ

ing

the

carb

on

inte

nsity

of a

ll pa

ssen

ger v

ehic

les b

y 10

per

cen

t by

2020

.

AL

TE

rN

AT

ivE

EN

Er

gy

Appendix C1

Page 21 of 90

�0

A C

omm

itm

ent t

o Ex

tend

Bri

tish

Col

umbi

a’s

gro

und-

brea

king

hyd

roge

n h

ighw

ayBr

itish

Col

umbi

a is

a w

orld

lead

er in

tran

spor

tatio

n ap

plic

atio

ns o

f the

Hyd

roge

n H

ighw

ay, in

clud

ing

the

desig

n, c

onst

ruct

ion

and

safe

ope

ratio

n of

adv

ance

d hy

drog

en v

ehic

le fu

ellin

g st

atio

n te

chno

logy

. The

H

ydro

gen

Hig

hway

is a

larg

e sc

ale,

coo

rdin

ated

de

mon

stra

tion

and

depl

oym

ent p

rogr

am fo

r hyd

roge

n an

d fu

el c

ell t

echn

olog

ies.

Vanc

ouve

r’s P

ower

tech

Lab

s est

ablis

hed

the

wor

ld’s

first

fast

-fill,

high

pre

ssur

e hy

drog

en fu

ellin

g st

atio

n. T

he

stat

ion

anch

ors t

he H

ydro

gen

Hig

hway

, whi

ch ru

ns fr

om

Vict

oria

thro

ugh

Surre

y to

Van

couv

er, N

orth

Van

couv

er,

Squa

mish

, and

Whi

stle

r. Ad

ditio

nal h

ydro

gen

fuel

ling

stat

ions

are

now

in o

pera

tion

in V

icto

ria a

nd a

t the

U

nive

rsity

of B

ritish

Col

umbi

a.

The

goal

is to

dem

onst

rate

and

dep

loy

vario

us

tech

nolo

gies

and

to o

ne d

ay se

e hy

drog

en fi

lling

stat

ions

arou

nd th

e pr

ovin

ce, s

ervi

ng d

river

s of c

onsu

mer

and

co

mm

erci

al c

ars,

truck

s, an

d bu

ses.

The

unify

ing

visio

n of

the

prov

ince

’s hy

drog

en a

nd fu

el c

ell

stra

tegy

is to

pro

mot

e fu

el c

ells

and

hydr

ogen

tech

nolo

gies

as

a m

eans

of m

ovin

g to

war

ds a

sust

aina

ble

ener

gy fu

ture

, in

crea

sing

ener

gy e

ffici

ency

and

redu

cing

air

pollu

tant

s an

d gr

eenh

ouse

gas

es. T

he H

ydro

gen

Hig

hway

is ta

rget

ed

for f

ull i

mpl

emen

tatio

n by

201

0. C

anad

ian

hydr

ogen

and

fu

el c

ell c

ompa

nies

hav

e in

vest

ed o

ver $

1 bi

llion

over

th

e la

st fi

ve y

ears

, mos

t of t

hat i

n B.

C. A

fede

ral-p

rovi

ncia

l pa

rtne

rshi

p w

ill be

inve

stin

g $8

9 m

illion

for f

uellin

g st

atio

ns

and

the

wor

ld’s

first

flee

t of 2

0 fu

el c

ell b

uses

.

Briti

sh C

olum

bia

will

con

tinue

to b

e a

lead

er in

the

new

hy

drog

en e

cono

my

by ta

king

act

ions

such

as a

fuel

cel

l bu

s flee

t dep

loym

ent,

deve

lopi

ng a

regu

lato

ry fr

amew

ork

for m

icro

-hyd

roge

n ap

plic

atio

ns, c

olla

bora

ting

with

ne

ighb

ourin

g ju

risdi

ctio

ns o

n hy

drog

en, a

nd, in

the

long

te

rm, e

stab

lishi

ng a

regu

lato

ry fr

amew

ork

for h

ydro

gen

prod

uctio

n, v

ehic

les a

nd fu

ellin

g st

atio

ns.

Gov

ernm

ent w

ill im

plem

ent a

five

per

cent

ave

rage

rene

wab

le fu

el

stan

dard

for d

iese

l by

2010

to h

elp

redu

ce e

mis

sion

s and

adv

ance

the

dom

estic

rene

wab

le fu

el in

dust

ry.

• Im

plem

ent a

five

per

cen

t ave

rage

rene

wab

le

fuel

sta

ndar

d fo

r die

sel b

y 20

10 to

hel

p re

duce

em

issi

ons

and

adva

nce

the

dom

estic

rene

wab

le

fuel

indu

stry

.

• Su

ppor

t the

fede

ral a

ctio

n of

incr

easi

ng th

e et

hano

l con

tent

of g

asol

ine

to fi

ve p

er c

ent

by 2

010

and

adop

t qua

lity

para

met

ers

for

all r

enew

able

fuel

s an

d fu

el b

lend

s th

at a

re

appr

opri

ate

for C

anad

ian

wea

ther

con

ditio

ns in

co

oper

atio

n w

ith N

orth

Am

eric

an ju

risd

ictio

ns.

• D

evel

op a

lead

ing

hydr

ogen

eco

nom

y by

co

ntin

uing

to s

uppo

rt th

e H

ydro

gen

and

Fuel

Ce

ll St

rate

gy fo

r Bri

tish

Colu

mbi

a.

• Es

tabl

ish

a ne

w, h

arm

oniz

ed re

gula

tory

fr

amew

ork

by 2

010

for h

ydro

gen

by w

orki

ng w

ith

gove

rnm

ents

, ind

ustr

y an

d hy

drog

en a

llian

ces.

Ad

dr

ES

SiN

g g

rE

EN

hO

uS

E g

AS

EM

iSS

iON

S F

rO

M T

rA

NS

PO

rT

AT

iON

A

Nd

iN

Cr

EA

SiN

g i

NN

Ov

AT

iON

PO

LiC

y A

CT

iON

S

B.C.

gre

enho

use

gas

Em

issi

ons

by S

ecto

r (B

ased

on

2004

dat

a)So

urce

: Min

istry

of E

nviro

nmen

t

Resi

dent

ial a

nd

Com

mer

cial

11

%

Oth

er In

dust

ry

16%

Agr

icul

ture

4%

Was

te

9%El

ectr

icity

3%

Foss

il Fu

el

Prod

uctio

n 18

%Tr

ansp

ort

39%

Cars

and

truc

ks a

re th

e bi

gges

t sou

rce

of

gree

nhou

se g

as e

mis

sion

s and

redu

ce th

e qu

ality

of a

ir in

urb

an a

reas

.

Appendix C1

Page 22 of 90

��

LO

CA

LM

OT

iON

Fu

Nd

:

rE

du

CiN

g A

ir

PO

LL

uT

iON

iN

yO

ur

CO

MM

uN

iTy

Th

e pr

ovin

ce h

as c

omm

itted

$40

mill

ion

over

four

yea

rs to

hel

p bu

ild c

yclin

g an

d pe

dest

rian

path

way

s, im

prov

e sa

fety

and

ac

cess

ibili

ty, a

nd su

ppor

t chi

ldre

n’s a

ctiv

ity

prog

ram

s in

play

grou

nds.

This

fund

will

hel

p lo

cal g

over

nmen

t shi

ft to

hyb

rid v

ehic

le fl

eets

and

hel

p re

trofi

t di

esel

veh

icle

s whi

ch w

ill h

elp

redu

ce

air p

ollu

tion

and

ensu

re v

ibra

nt a

nd

envi

ronm

enta

lly su

stai

nabl

e co

mm

uniti

es.

This

inve

stm

ent w

ill a

lso in

clud

e ex

pans

ion

of ra

pid

tran

sit a

nd su

ppor

t fue

l cel

l ve

hicl

es.

Prom

ote

Ener

gy E

ffici

ency

and

A

lter

nati

ve E

nerg

yIt

is im

port

ant f

or B

ritish

Col

umbi

ans t

o un

ders

tand

th

e ap

prop

riate

use

s of d

iffer

ent f

orm

s of e

nerg

y an

d ut

ilize

the

right

fuel

, for

the

right

act

ivity

at t

he ri

ght

time.

The

re is

the

pote

ntia

l to

prom

ote

ener

gy e

ffici

ency

an

d al

tern

ativ

e en

ergy

supp

lem

ente

d by

nat

ural

gas

. Co

mbi

natio

ns o

f alte

rnat

ive

ener

gy so

urce

s with

nat

ural

ga

s inc

lude

sola

r the

rmal

and

geo

ther

mal

. Wor

king

w

ith m

unic

ipal

ities

, util

ities

and

oth

er st

akeh

olde

rs th

e pr

ovin

cial

gov

ernm

ent w

ill p

rom

ote

ener

gy e

ffici

ency

an

d al

tern

ativ

e en

ergy

syst

ems,

such

as s

olar

ther

mal

an

d ge

othe

rmal

thro

ugho

ut th

e pr

ovin

ce.

Envi

ronm

enta

l Lea

ders

hip

in A

ctio

nTh

e BC

Ene

rgy

Plan

: A V

isio

n fo

r Cle

an E

nerg

y Le

ader

ship

com

plem

ents

oth

er re

late

d cr

oss-

gove

rnm

ent i

nitia

tives

that

incl

ude

supp

ortin

g tr

ansp

orta

tion

dem

and

man

agem

ent,

redu

cing

tr

affic

cong

estio

n an

d be

tter

inte

grat

ing

land

use

and

tr

ansp

orta

tion

plan

ning

. The

se p

lans

incl

ude

actio

ns

acro

ss a

bro

ad ra

nge

of a

ctiv

ities

. Som

e ke

y in

itiat

ives

an

d re

cent

ann

ounc

emen

ts in

clud

e:

• Ex

tend

ing

the

tax

brea

k on

hyb

rid v

ehic

le p

urch

ases

be

yond

the

curre

nt M

arch

200

8 de

adlin

e.

• G

over

nmen

t to

purc

hase

hyb

rid v

ehic

les e

xclu

sivel

y.

• Re

duci

ng d

iese

l em

issio

ns th

roug

h ne

w fi

nanc

ial

ince

ntiv

es to

hel

p m

unic

ipal

ities

shift

to h

ybrid

veh

icle

fle

ets a

nd re

trofit

die

sel v

ehic

les w

ith c

lean

er te

chno

logi

es.

• G

reen

Por

ts:

• W

orki

ng w

ith p

orts

and

the

ship

ping

sect

or to

redu

ce

emiss

ions

from

thei

r act

iviti

es a

nd m

arin

e ve

ssel

s.

• Th

e Po

rt o

f Van

couv

er h

as e

stab

lishe

d id

le re

duct

ion

zone

s and

has

redu

ced

truck

em

issio

ns w

ith it

s con

tain

er

rese

rvat

ion

syst

em w

hich

has

redu

ced

aver

age

wai

t tim

es fr

om tw

o ho

urs t

o ap

prox

imat

ely

20 m

inut

es.

• Th

e po

rt is

also

eva

luat

ing

port-

side

elec

trific

atio

n w

hich

w

ould

see

vess

els u

sing

shor

e-sid

e el

ectri

cal p

ower

w

hile

ber

thed

rath

er th

an d

iese

l pow

er.

• Im

prov

ing

upon

the

mon

itorin

g an

d re

port

ing

of a

ir qu

ality

info

rmat

ion.

• H

ighw

ay In

frast

ruct

ure

and

Rapi

d Tr

ansit

Infra

stru

ctur

e fu

ndin

g in

clud

ing

the

Gat

eway

Pro

gram

, the

Bor

der

Infra

stru

ctur

e Pr

ogra

m, h

igh

occu

panc

y ve

hicl

e la

nes,

cons

truct

ion

of th

e Ra

pid

Tran

sit C

anad

a Li

ne li

nkin

g Ri

chm

ond,

the

Vanc

ouve

r Int

erna

tiona

l Airp

ort a

nd

Vanc

ouve

r, an

d th

e Ra

pid

Tran

sit E

verg

reen

Lin

e lin

king

Bu

rnab

y to

Coq

uitla

m.

• Ex

pand

ing

the

AirC

are

on th

e Ro

ad P

rogr

am to

the

Low

er

Fras

er V

alle

y an

d ot

her c

omm

uniti

es.

• Im

plem

entin

g th

e Lo

calM

otio

n Pr

ogra

m fo

r cap

ital

proj

ects

to im

prov

e ph

ysic

al fi

tnes

s and

safe

ty, r

educ

e ai

r pol

lutio

n an

d m

eet t

he d

iver

se n

eeds

of B

ritish

Co

lum

bian

s.

Veh

icle

s tha

t run

on

elec

tric

ity, h

ydro

gen

and

blen

ds o

f re

new

able

bio

fuel

s lik

e et

hano

l and

bio

dies

el e

mit

low

er le

vels

of

gre

enho

use

gase

s and

air

pollu

tant

s. A

LT

Er

NA

Tiv

E E

NE

rg

y

Appendix C1

Page 23 of 90

��

EL

EC

Tr

iCiT

y C

hO

iCE

S

A C

hoic

e of

Ele

ctri

city

Opt

ions

Th

e ra

nge

of su

pply

opt

ions

, bot

h la

rge

and

smal

l, fo

r Br

itish

Col

umbi

a in

clud

e:

Bio

ener

gy: B

ioen

ergy

is d

eriv

ed fr

om o

rgan

ic b

iom

ass

sour

ces s

uch

as w

ood

resid

ue, a

gric

ultu

ral w

aste

, m

unic

ipal

solid

was

te a

nd o

ther

bio

mas

s and

may

be

cons

ider

ed a

car

bon-

neut

ral f

orm

of e

nerg

y, be

caus

e th

e ca

rbon

dio

xide

rele

ased

by

the

biom

ass w

hen

conv

erte

d to

ene

rgy

is eq

uiva

lent

to th

e am

ount

abs

orbe

d du

ring

its li

fetim

e.

A nu

mbe

r of b

ioen

ergy

faci

litie

s ope

rate

in B

ritish

Co

lum

bia

toda

y. M

any

of th

ese

are

“cog

ener

atio

n” p

lant

s th

at c

reat

e bo

th e

lect

ricity

and

hea

t for

on-

site

use

and

in so

me

case

s, se

ll su

rplu

s ele

ctric

ity to

BC

Hyd

ro.

Relia

bilit

y1 : FIR

MEs

timat

ed C

ost5 : $

75 –

$91

Coal

The

rmal

Pow

er: T

he B

C En

ergy

Pla

n es

tabl

ishes

a z

ero

emiss

ion

stan

dard

for g

reen

hous

e ga

s em

issio

ns fr

om c

oal-fi

red

plan

ts. T

his w

ill re

quire

pr

opon

ents

of n

ew c

oal f

acili

ties t

o em

ploy

cle

an c

oal

tech

nolo

gy w

ith c

arbo

n ca

ptur

e an

d se

ques

trat

ion

to

ensu

re th

ere

are

no g

reen

hous

e ga

s em

issio

ns.

Relia

bilit

y1 : FIR

MEs

timat

ed C

ost5

6 : $67

– $8

2

geo

ther

mal

: Geo

ther

mal

pow

er is

ele

ctric

ity

gene

rate

d fro

m th

e ea

rth.

Geo

ther

mal

pow

er p

rodu

ctio

n in

volv

es ta

ppin

g in

to p

ocke

ts o

f sup

erhe

ated

wat

er a

nd

stea

m d

eep

unde

rgro

und,

brin

ging

them

to th

e su

rface

an

d us

ing

the

heat

to p

rodu

ce st

eam

to d

rive

a tu

rbin

e an

d pr

oduc

e el

ectri

city

. Brit

ish C

olum

bia

has p

oten

tial

high

tem

pera

ture

(the

wat

er is

hea

ted

to m

ore

than

200

de

gree

s Cel

sius)

geo

ther

mal

reso

urce

s in

the

coas

tal

mou

ntai

ns a

nd lo

wer

tem

pera

ture

reso

urce

s in

the

inte

rior,

in n

orth

east

Brit

ish C

olum

bia

and

in a

bel

t dow

n th

e Ro

cky

Mou

ntai

ns. G

eoth

erm

al e

nerg

y’s tw

o m

ain

adva

ntag

es a

re it

s con

siste

nt su

pply

, and

the

fact

that

it is

a

clea

n, re

new

able

sour

ce o

f ene

rgy.

Relia

bilit

y1 : FIR

MEs

timat

ed C

ost2 : $

44 -

$60

hyd

roge

n an

d Fu

el C

ell T

echn

olog

y:

Briti

sh C

olum

bia

com

pani

es a

re re

cogn

ized

glo

bally

for

bein

g le

ader

s in

hydr

ogen

and

fuel

cel

l tec

hnol

ogy

for

mob

ile, s

tatio

nary

and

mic

ro a

pplic

atio

ns. F

or e

xam

ple,

BC

Tra

nsit’

s fue

l cel

l bus

es a

re p

lann

ed fo

r dep

loym

ent i

n W

hist

ler i

n 20

09.

Relia

bilit

y1 : FIR

MEs

timat

ed C

ost2 : n

/a

1 Re

liabi

lity

refe

rs to

ene

rgy

that

can

be

depe

nded

on

to b

e av

aila

ble

whe

neve

r req

uire

d2

Sour

ce: B

C H

ydro

’s 20

06 IE

P Vo

lum

e 1

of 2

pag

e 5-

63

Base

d on

a 5

00 M

W su

per c

iritc

al p

ulve

rized

coa

l com

bust

ion

unit.

The

BC

Ener

gy P

lan

requ

ires c

oal p

ower

to m

eet z

ero

GH

G e

miss

ions

4 Ba

sed

on a

250

MW

com

bine

d cy

cle

gas t

urbi

ne p

lant

. The

BC

Ener

gy P

lan

requ

ires c

oal

pow

er to

mee

t zer

o G

HG

em

issio

ns5

Sour

ce: B

C H

ydro

’s F2

006

Ope

n Ca

ll fo

r Pow

er R

epor

t6 T

hese

cos

ts d

o no

t refl

ect t

he c

osts

of z

ero

GH

G e

miss

ions

for c

oal t

herm

al p

ower

gO

vEr

NM

ENT

’S C

OM

MiT

MEN

T TO

Th

E EN

vir

ON

MEN

T –

Th

E EN

vir

ON

MEN

TAL

AS

SES

SM

ENT

Pr

OC

ESS

The

envi

ronm

enta

l ass

essm

ent p

roce

ss in

Br

itish

Col

umbi

a is

an in

tegr

ated

revi

ew

proc

ess f

or m

ajor

pro

ject

s tha

t loo

ks a

t po

tent

ial e

nviro

nmen

tal, c

omm

unity

an

d Fi

rst N

atio

n, h

ealth

and

safe

ty, a

nd

soci

oeco

nom

ic im

pact

s. Th

roug

h th

e en

viro

nmen

tal a

sses

smen

t pro

cess

, the

po

tent

ial e

ffect

s of a

pro

ject

are

iden

tified

an

d ev

alua

ted

early

, res

ultin

g in

impr

oved

pr

ojec

t des

ign

and

help

ing

to a

void

cos

tly

mist

akes

for p

ropo

nent

s, go

vern

men

ts,

loca

l com

mun

ities

and

the

envi

ronm

ent.

An a

sses

smen

t is b

egun

whe

n a

prop

osed

pr

ojec

t tha

t mee

ts c

erta

in c

riter

ia u

nder

th

e En

viro

nmen

tal A

sses

smen

t Act

mak

es

an a

pplic

atio

n fo

r an

envi

ronm

enta

l as

sess

men

t cer

tifica

te. E

ach

asse

ssm

ent

will

usu

ally

incl

ude

an o

ppor

tuni

ty fo

r al

l int

eres

ted

part

ies t

o id

entif

y iss

ues

and

prov

ide

inpu

t; te

chni

cal s

tudi

es

of th

e re

leva

nt e

nviro

nmen

tal, s

ocia

l, ec

onom

ic, h

erita

ge a

nd/o

r hea

lth e

ffect

s of

the

prop

osed

pro

ject

; ide

ntifi

catio

n of

w

ays t

o pr

even

t or m

inim

ize

unde

sirab

le

effec

ts a

nd e

nhan

ce d

esira

ble

effec

ts;

and

cons

ider

atio

n of

the

inpu

t of a

ll in

tere

sted

par

ties i

n co

mpi

ling

the

asse

ssm

ent fi

ndin

gs a

nd m

akin

g de

cisio

ns

abou

t pro

ject

acc

epta

bilit

y. Th

e re

view

is

conc

lude

d w

hen

a de

cisio

n is

mad

e to

issu

e or

not

issu

e an

env

ironm

enta

l as

sess

men

t cer

tifica

te. I

ndus

tria

l, min

ing,

en

ergy

, wat

er m

anag

emen

t, w

aste

disp

osal

, fo

od p

roce

ssin

g, tr

ansp

orta

tion

and

tour

ist

dest

inat

ion

reso

rt p

roje

cts a

re g

ener

ally

su

bjec

t to

an e

nviro

nmen

tal a

sses

smen

t.

Appendix C1

Page 24 of 90

��

Wh

AT

iS

Th

E d

iFF

Er

EN

CE

BE

TW

EE

N F

irM

A

Nd

iN

TE

rM

iTT

EN

T E

LE

CT

riC

iTy

?

Firm

ele

ctric

ity re

fers

to e

lect

ricity

that

is

avai

labl

e at

all

times

eve

n in

adv

erse

co

nditi

ons.

The

mai

n so

urce

s of r

elia

ble

elec

tric

ity in

Brit

ish C

olum

bia

incl

ude

larg

e hy

droe

lect

ric d

ams,

and

natu

ral g

as. T

his

diffe

rs fr

om in

term

itten

t ele

ctric

ity, w

hich

is

limite

d or

is n

ot a

vaila

ble

at a

ll tim

es. A

n ex

ampl

e of

inte

rmitt

ent e

lect

ricity

wou

ld

be w

ind

whi

ch o

nly

prod

uces

pow

er w

hen

the

win

d is

blow

ing.

Larg

e h

ydro

elec

tric

dam

s: Th

e ch

ief a

dvan

tage

of

a hy

dro

syst

em is

that

it p

rovi

des a

relia

ble

supp

ly w

ith

both

dep

enda

ble

capa

city

and

ene

rgy,

and

a re

new

able

an

d cl

ean

sour

ce o

f ene

rgy.

Hyd

ropo

wer

pro

duce

s es

sent

ially

no

carb

on d

ioxi

de.

Site

C is

one

of m

any

reso

urce

opt

ions

that

can

he

lp m

eet B

C H

ydro

’s cu

stom

ers’

elec

tric

ity n

eeds

. N

o pr

efer

red

optio

n ha

s bee

n se

lect

ed a

t thi

s tim

e;

how

ever

; it i

s rec

ogni

zed

that

the

Prov

ince

will

nee

d to

ex

amin

e op

port

uniti

es fo

r som

e la

rge

proj

ects

to m

eet

grow

ing

dem

and.

As p

art o

f The

BC

Ener

gy P

lan,

BC

Hyd

ro a

nd th

e Pr

ov-

ince

will

ent

er in

to in

itial

disc

ussio

ns w

ith F

irst N

atio

ns,

the

Prov

ince

of A

lber

ta a

nd c

omm

uniti

es to

disc

uss

Site

C to

ens

ure

that

com

mun

icat

ions

rega

rdin

g th

e po

tent

ial p

roje

ct a

nd th

e pr

oces

ses b

eing

follo

wed

are

w

ell k

now

n. T

he p

urpo

se o

f thi

s ste

p is

to e

ngag

e th

e va

rious

par

ties u

p fro

nt to

obt

ain

inpu

t for

the

prop

osed

en

gage

men

t pro

cess

. The

dec

ision

-mak

ing

proc

ess

on S

ite C

incl

udes

pub

lic c

onsu

ltatio

n, e

nviro

nmen

tal

impa

ct a

sses

smen

ts, o

btai

ning

a C

ertifi

cate

of P

ublic

Co

nven

ienc

e an

d N

eces

sity,

obta

inin

g an

Env

ironm

enta

l As

sess

men

t Cer

tifica

te a

nd n

eces

sary

env

ironm

enta

l ap

prov

als,

and

appr

oval

by

Cabi

net.

Relia

bilit

y1 : FIR

MEs

timat

ed C

ost2 : $

43 -

$62

Nat

ural

gas

: Nat

ural

gas

is c

onve

rted

into

ele

ctric

ity

thro

ugh

the

use

of g

as fi

red

turb

ines

in m

ediu

m to

la

rge

gene

ratin

g st

atio

ns; p

artic

ular

ly h

igh

effici

enci

es

can

be a

chie

ved

thro

ugh

com

bini

ng g

as tu

rbin

es w

ith

stea

m tu

rbin

es in

the

com

bine

d cy

cle

and

thro

ugh

reci

proc

atin

g en

gine

s and

min

i and

mac

ro tu

rbin

es.

Com

bine

d cy

cle

pow

er g

ener

atio

n us

ing

natu

ral g

as

is th

e cl

eane

st so

urce

of p

ower

ava

ilabl

e us

ing

foss

il fu

els.

Nat

ural

gas

pro

vide

s a re

liabl

e su

pply

with

bot

h de

pend

able

cap

acity

and

firm

ene

rgy.

Relia

bilit

y1 : FIR

MEs

timat

ed C

ost2

6 : $48

- $1

00

Smal

l hyd

ro: T

his i

nclu

des r

un-o

f-riv

er a

nd m

icro

H

ydro

. The

se g

ener

ate

elec

tric

ity w

ithou

t alte

ring

seas

onal

flow

cha

ract

erist

ics.

Wat

er is

div

erte

d fro

m

a na

tura

l wat

erco

urse

thro

ugh

an in

take

cha

nnel

an

d pi

pelin

e to

a p

ower

hous

e w

here

a tu

rbin

e an

d ge

nera

tor c

onve

rt th

e ki

netic

ene

rgy

in th

e m

ovin

g w

ater

to e

lect

rical

ene

rgy.

Twen

ty-n

ine

elec

tric

ity p

urch

ase

agre

emen

ts w

ere

awar

ded

to sm

all w

ater

pow

er p

rodu

cers

by

BC H

ydro

in

200

6. T

hese

pro

ject

s will

gen

erat

e ap

prox

imat

ely

2,85

1 gi

gaw

att h

ours

of e

lect

ricity

ann

ually

(equ

ival

ent

to e

lect

ricity

con

sum

ed b

y 28

5,00

0 ho

mes

in B

ritish

Co

lum

bia)

. The

re a

re a

lso 3

2 ex

istin

g sm

all h

ydro

pr

ojec

ts in

Brit

ish C

olum

bia

that

gen

erat

e 3,

500

giga

wat

t hou

rs (e

quiv

alen

t to

elec

tric

ity c

onsu

med

by

350,

000

hom

es in

Brit

ish C

olum

bia)

.

Relia

bilit

y1 : IN

TERM

ITTE

NT

Estim

ated

Cos

t3 : $60

– $

95

EL

EC

Tr

iCiT

y C

hO

iCE

S

Appendix C1

Page 25 of 90

��

Sola

r: W

ith fi

nanc

ial s

uppo

rt fr

om th

e M

inist

ry o

f En

ergy

, Min

es a

nd P

etro

leum

Res

ourc

es, t

he “S

olar

for

Scho

ols”

prog

ram

has

bro

ught

cle

an so

lar p

hoto

volta

ic

elec

tric

ity to

scho

ols i

n Ve

rnon

, For

t Nel

son,

and

G

reat

er V

icto

ria.

The

BC S

usta

inab

le E

nerg

y As

soci

atio

n is

lead

ing

a pr

ojec

t whi

ch ta

rget

s ins

talli

ng so

lar w

ater

hea

ters

on

100

,000

roof

tops

acr

oss B

ritish

Col

umbi

a.

Relia

bilit

y1 : IN

TERM

ITTE

NT

Estim

ated

Cos

t2 : $70

0 - $

1700

Tida

l Ene

rgy:

A sm

all d

emon

stra

tion

proj

ect h

as

been

inst

alle

d at

Rac

e Ro

cks l

ocat

ed w

est-

sout

hwes

t of

Vic

toria

. The

Les

ter B

. Pea

rson

Col

lege

of t

he P

acifi

c,

the

prov

inci

al a

nd fe

dera

l gov

ernm

ent,

and

indu

stry

ha

ve p

artn

ered

to in

stal

l and

test

a ti

dal e

nerg

y de

mon

stra

tion

turb

ine

at R

ace

Rock

s. Th

e pr

ojec

t will

ge

nera

te a

bout

77,

000

kilo

wat

t hou

rs o

n an

ann

ual b

asis

(equ

ival

ent t

o el

ectr

icity

con

sum

ed b

y ap

prox

imat

ely

eigh

t hom

es).

Relia

bilit

y1 : IN

TERM

ITTE

NT

Estim

ated

Cos

t2 : $10

0 - $

360

Win

d: B

ritish

Col

umbi

a ha

s abu

ndan

t, w

idel

y di

strib

uted

win

d en

ergy

reso

urce

s in

thre

e ar

eas:

the

Peac

e re

gion

in th

e N

orth

east

; Nor

ther

n Va

ncou

ver I

sland

; an

d th

e N

orth

Coa

st. W

ind

is a

clea

n an

d re

new

able

sour

ce th

at d

oes n

ot p

rodu

ce a

ir or

wat

er p

ollu

tion,

gre

enho

use

gase

s, so

lid o

r to

xic

was

tes.

Thre

e w

ind

gene

ratio

n pr

ojec

ts h

ave

been

offe

red

pow

er p

urch

ase

cont

ract

s in

BC H

ydro

’s 20

06 O

pen

Call

for P

ower

. The

se th

ree

proj

ects

will

hav

e a

com

bine

d an

nual

out

put o

f 979

gig

awat

t hou

rs o

f ele

ctric

ity

(equ

ival

ent t

o el

ectr

icity

con

sum

ed b

y 97

,900

hom

es).

Relia

bilit

y1 : IN

TERM

ITTE

NT

Estim

ated

Cos

t5 : $71

– $

74

1 Re

liabi

lity

refe

rs to

ene

rgy

that

can

be

depe

nded

on

to b

e av

aila

ble

whe

neve

r req

uire

d2

Sour

ce: B

C H

ydro

’s 20

06 IE

P Vo

lum

e 1

of 2

pag

e 5-

63

Base

d on

a 5

00 M

W su

per c

iritc

al p

ulve

rized

coa

l com

bust

ion

unit.

The

BC

Ener

gy P

lan

requ

ires c

oal p

ower

to m

eet z

ero

GH

G e

miss

ions

4 Ba

sed

on a

250

MW

com

bine

d cy

cle

gas t

urbi

ne p

lant

.5

Sour

ce: B

C H

ydro

’s F2

006

Ope

n Ca

ll fo

r Pow

er R

epor

t6

Thes

e co

sts d

o no

t refl

ect t

he c

osts

of z

ero

net G

HG

em

issio

ns fo

r nat

ural

gas

Appendix C1

Page 26 of 90

��Tabl

e 1:

Sum

mar

y of

res

ourc

e O

ptio

ns

Des

crip

tion

Esti

mat

ed C

ost 1

$ /m

egaw

att h

our

Relia

ble2

Gre

enho

use

gas

emis

sion

s3

tonn

es p

er g

igaw

att h

our

Ener

gy c

onse

rvat

ion/

effi

cien

cy��

– �

�Ye

s0

Larg

e hy

droe

lect

ric

�� –

��

Yes

0

Nat

ural

gas

�� –

�00

�Ye

s0

– ��

0�

�

Coal

��

– �

��

0 Ye

s0

– ��

��

Biom

ass

�� –

��0

Yes

0 –

�00

�

Geo

ther

mal

�� –

�0

Yes

0 –

�0

Win

d��

– �

��0D

epen

ds o

n th

e av

aila

bilit

y

and

spee

d of

win

d0

Run-

of-r

iver

sm

all h

ydro

�0 –

��0

Dep

ends

on

the

flow

of w

ater

, w

hich

var

ies

thro

ugho

ut th

e ye

ar0

Oce

an (w

ave

and

tida

l)�0

0 –

��0

�Fu

ture

sup

ply

optio

n w

hich

has

gre

at

pote

ntia

l for

Brit

ish

Colu

mbi

a0

Sola

r�0

0 –

��00

�D

epen

ds o

n lo

catio

n, c

loud

cov

er,

seas

on, a

nd ti

me

of d

ay0

1 So

urce

: BC

Hyd

ro’s

2006

Inte

grat

ed E

lect

ricity

Pla

n Vo

lum

e 1

of 2

, pag

e 5-

62

Relia

bilit

y re

fers

to e

nerg

y th

at c

an b

e de

pend

ed o

n to

be

avai

labl

e w

hene

ver r

equi

red

3 So

urce

: BC

Hyd

ro’s

2006

Inte

grat

ed E

lect

ricity

Pla

n, V

olum

e 2

of 2

, App

endi

x F

page

5-1

4 an

d Ta

ble

10-2

4 Ba

sed

on a

250

MW

com

bine

d cy

cle

gas t

urbi

ne p

lant

5 Ba

sed

on a

500

MW

supe

rcrit

ical

pul

veriz

ed c

oal c

ombu

stio

n un

it6

GH

G a

re 0

for w

ood

resid

ue a

nd la

ndfil

l gas

. GH

G is

500

tonn

es p

er g

igaw

att h

our f

or m

unic

ipal

solid

was

te7

Sour

ce: B

C H

ydro

’s 20

04 In

tegr

ated

Ele

ctric

ity P

lan,

pag

e 69

8

The

BC E

nerg

y Pl

an re

quire

s nat

ural

gas

pla

nts t

o off

set t

o ze

ro n

et g

reen

hous

e ga

s em

issio

ns. T

hese

cos

ts d

o no

t refl

ect t

he c

osts

of z

ero

net G

HG

em

issio

ns9

The

BC E

nerg

y Pl

an re

quire

s zer

o gr

eenh

ouse

gas

em

issio

ns fr

om a

ny c

oal t

herm

al e

lect

ricity

faci

litie

s

The

cost

s do

not i

nclu

de th

e co

sts o

f req

uirin

g ze

ro e

miss

ions

from

coa

l the

rmal

pow

er10

So

urce

: BC

Hyd

ro’s

F200

6 O

pen

Call

for P

ower

Rep

ort

rA

CE

rO

CK

S T

idA

L E

NE

rg

y P

rO

jE

CT

Anno

unce

d in

ear

ly 2

005,

this

dem

onst

ratio

n pr

ojec

t bet

wee

n th

e pr

ovin

cial

and

fede

ral g

over

nmen

ts,

indu

stry

, and

Pea

rson

Col

lege

is p

rodu

cing

ze

ro e

miss

ion

tidal

pow

er a

t the

Rac

e Ro

cks

Mar

ine

Rese

rve

on so

uthe

rn V

anco

uver

Isl

and.

Usin

g a

curre

nt-d

riven

turb

ine

subm

erge

d be

low

the

ocea

n su

rface

, the

pr

ojec

t is p

rodu

cing

abo

ut 7

7,00

0 ki

low

att

hour

s of e

lect

ricity

per

yea

r, en

ough

to

mee

t the

nee

ds o

f app

roxi

mat

ely

eigh

t ho

useh

olds

. The

kno

wle

dge

gain

ed a

bout

tid

al e

nerg

y w

ill h

elp

our p

rovi

nce

rem

ain

at th

e fo

refro

nt o

f cle

an e

nerg

y ge

nera

tion

tech

nolo

gy.

EL

EC

Tr

iCiT

y C

hO

iCE

S

Appendix C1

Page 27 of 90

��

The

maj

ority

of B

.C.’s

ele

ctric

ity re

quire

men

ts o

ver t

he n

ext 1

0 ye

ars c

an b

e ac

hiev

ed th

roug

h in

crea

sed

cons

erva

tion

by a

ll Br

itish

Col

umbi

ans a

nd

new

ele

ctric

ity fr

om in

depe

nden

t pow

er p

rodu

cers

.

Sh

Ar

iNg

SO

Lu

TiO

NS

O

N E

LE

CT

riC

iTy

The

BC E

nerg

y Pl

an h

as a

goa

l tha

t mos

t of

B.C

.’s el

ectr

icity

requ

irem

ents

ove

r the

ne

xt 1

0 ye

ars

can

be a

chie

ved

thro

ugh

incr

ease

d co

nser

vatio

n an

d en

ergy

effi

cien

cy b

y al

l Brit

ish C

olum

bian

s, co

uple

d w

ith g

ener

atio

n by

inde

pend

ent

pow

er p

rodu

cers

. How

ever

, the

se n

ew

proj

ects

take

tim

e to

pla

n an

d im

plem

ent.

In a

dditi

on, m

any

of th

ese

sour

ces

prov

ide

limite

d am

ount

s of

firm

sup

ply.

The

prov

ince

will

also

nee

d to

con

sider

opt

ions

fo

r new

, lar

ge s

cale

sou

rces

to m

eet

fore

cast

ed d

eman

d gr

owth

in th

e ne

xt

10 to

20

year

s. La

rge

scal

e op

tions

cou

ld

incl

ude

Site

C, l

arge

bio

mas

s fa

cilit

ies,

clea

n co

al o

r nat

ural

gas

pla

nts.

As w

ith a

ll la

rge

scal

e un

dert

akin

gs, t

hese

kin

ds o

f pro

ject

s w

ill re

quire

yea

rs o

f lea

d tim

e to

allo

w fo

r ca

refu

l pla

nnin

g, a

naly

sis, c

onsu

ltatio

n

and

cons

truc

tion.

Perh

aps

the

bigg

est c

halle

nge

faci

ng

Briti

sh C

olum

bian

s is

simpl

y to

beg

in

choo

sing

our e

lect

ricity

futu

re to

geth

er.

Dem

and

for e

lect

ricity

is p

roje

cted

to

grow

by

up to

45

per c

ent o

ver t

he n

ext

20 y

ears

. To

mee

t thi

s pr

ojec

ted

grow

th

we

will

nee

d to

con

serv

e m

ore,

and

ob

tain

mor

e el

ectr

icity

from

sm

all p

ower

pr

oduc

ers

and

larg

e pr

ojec

ts. G

iven

the

criti

cal i

mpo

rtan

ce o

f pub

lic p

artic

ipat

ion

and

stak

ehol

der i

nvol

vem

ent i

n ad

dres

sing

the

chal

leng

es a

nd c

hoic

es o

f mee

ting

our

futu

re e

lect

ricity

nee

ds, g

over

nmen

t and

BC

Hyd

ro w

ill s

eek

and

shar

e so

lutio

ns.

Bri

tish

Col

umbi

a’s

Stre

ngth

in

Ele

ctri

city

div

ersi

ty

Briti

sh C

olum

bia

is tru

ly fo

rtun

ate

to h

ave

a w

ide

varie

ty

of fu

ture

supp

ly o

ptio

ns a

vaila

ble

to m

eet o

ur g

row

ing

dem

and

for e

nerg

y. A

cost

effe

ctiv

e w

ay to

mee

t tha

t de

man

d is

to c

onse

rve

ener

gy a

nd b

e m

ore

ener

gy

effici

ent.

How

ever

, Brit

ish C

olum

bia

will

still

nee

d to

brin

g ne

w p

ower

on

line

to m

eet d

eman

d gr

owth

in th

e ye

ars

ahea

d. In

ord

er to

ens

ure

we

have

this

criti

cal r

esou

rce

avai

labl

e to

Brit

ish C

olum

bian

s whe

n th

ey n

eed

it,

gove

rnm

ent w

ill b

e lo

okin

g to

secu

re a

rang

e of

mad

e-in

-B.

C. p

ower

to se

rve

Briti

sh C

olum

bian

s in

the

year

s ahe

ad.

Gov

ernm

ent’s

goa

l is t

o en

cour

age

a di

vers

e m

ix o

f re

sour

ces t

hat r

epre

sent

a v

arie

ty o

f tec

hnol

ogie

s. So

me

reso

urce

tech

nolo

gies

, suc

h as

larg

e an

d sm

all h

ydro

, th

erm

al p

ower

, win

d an

d ge

othe

rmal

pro

vide

wel

l-es

tabl

ished

, com

mer

cial

ly a

vaila

ble

sour

ces o

f ele

ctric

ity.

Oth

er e

mer

ging

tech

nolo

gies

that

are

not

yet

wid

ely

used

incl

ude

larg

e oc

ean

wav

e an

d tid

al p

ower

, sol

ar,

hydr

ogen

and

adv

ance

d co

al te

chno

logi

es.

2004

Tot

al E

lect

rici

ty P

rodu

ctio

n by

Sou

rce

(% o

f tot

al)

Bri

tish

Col

umbi

a0.

092

.80.

01.

06.

00.

20.

010

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�00

TOTA

LO

ther

Re

new

able

sH

ydro

Elec

tric

Nuc

lear

Was

te a

ndBi

omas

sN

atur

alG

asD

iese

l Oil

Coal

Appendix C1

Page 28 of 90

��Taki

ng A

ctio

n to

Mee

t the

d

eman

d fo

r Wor

kers

The

ener

gy se

ctor

has

bee

n a

maj

or c

ontri

buto

r to

Briti

sh

Colu

mbi

a’s re

cord

eco

nom

ic p

erfo

rman

ce si

nce

2001

. Th

e BC

Ene

rgy

Plan

focu

ses o

n fo

ur u

nder

-repr

esen

ted

grou

ps th

at o

ffer e

xcel

lent

em

ploy

men

t pot

entia

l: Ab

orig

inal

peo

ple,

imm

igra

nts,

wom

en a

nd y

outh

.

At th

e sa

me

time,

the

ener

gy se

ctor

mus

t ove

rcom

e a

varie

ty o

f ski

lls tr

aini

ng a

nd la

bour

cha

lleng

es to

ens

ure

futu

re g

row

th.

Thes

e ch

alle

nges

incl

ude:

• An

agi

ng w

orkf

orce

that

upo

n re

tirem

ent w

ill le

ave

a ga

p in

exp

erie

nce

and

expe

rtise

.

• Co

mpe

titio

n fo

r tal

ent f

rom

oth

er ju

risdi

ctio

ns.

• Sk

ills s

hort

ages

am

ong

pres

ent a

nd fu

ture

wor

kers

.

• La

bour

mar

ket i

nfor

mat

ion

gaps

due

to a

lack

of i

n-de

pth

stud

y.

• Th

e ne

ed to

coo

rdin

ate

imm

igra

tion

effor

ts w

ith th

e fe

dera

l gov

ernm

ent.

• Th

e ne

ed fo

r gre

ater

invo

lvem

ent o

f und

er-re

pres

ente

d en

ergy

sect

or w

orke

rs su

ch a

s Abo

rigin

al p

eopl

e,

imm

igra

nts,

wom

en, a

nd y

outh

.

• A

high

ly m

obile

wor

kfor

ce th

at m

oves

with

the

oppo

rtun

ities

.

• Th

e ne

ed to

impr

ove

prod

uctiv

ity a

nd e

nhan

ce

com

petit

iven

ess.

Inno

vativ

e, p

ract

ical

and

tim

ely

skill

s tra

inin

g, a

nd la

bour

m

anag

emen

t is r

equi

red

to e

nsur

e th

e en

ergy

sect

or

cont

inue

s to

thriv

e. A

s par

t of T

he B

C En

ergy

Pla

n,

gove

rnm

ent w

ill w

ork

colla

bora

tivel

y w

ith in

dust

ry,

com

mun

ities

, Abo

rigin

al p

eopl

e, e

duca

tion

faci

litie

s, th

e fe

dera

l gov

ernm

ent a

nd o

ther

s to

defin

e th

e pr

ojec

ted

dem

and

for w

orke

rs a

nd ta

ke a

ctiv

e m

easu

res t

o m

eet

thos

e de

man

ds.

Att

ract

hig

hly

Skill

ed W

orke

rsD

emog

raph

ics s

how

that

thos

e bo

rn a

t the

hei

ght o

f th

e ba

by b

oom

are

retir

ed o

r nea

ring

retir

emen

t, le

avin

g be

hind

a g

row

ing

gap

in sk

ills a

nd e

xper

tise.

Sin

ce th

is ph

enom

enon

is ta

king

pla

ce in

mos

t wes

tern

nat

ions

, at

trac

ting

and

reta

inin

g sk

illed

staff

is h

ighl

y co

mpe

titiv

e.

To e

nsur

e co

ntin

ued

ener

gy se

ctor

gro

wth

, we

need

to

attr

act w

orke

rs fr

om o

utsid

e th

e pr

ovin

ce, p

artic

ular

ly

for t

he e

lect

ricity

, oil

and

gas,

and

heav

y co

nstr

uctio

n in

dust

ries w

here

the

shor

tage

is m

ost k

eenl

y fe

lt. A

t thi

s tim

e, a

sign

ifica

nt in

crea

se in

ann

ual n

et m

igra

tion

of

wor

kers

from

oth

er p

rovi

nces

and

from

out

side

Cana

da

is ne

eded

to c

ompl

emen

t the

exi

stin

g w

orkf

orce

.

Gov

ernm

ent a

nd it

s par

tner

s are

dev

elop

ing

targ

eted

pl

ans t

o at

trac

t the

nec

essa

ry w

orke

rs. T

hese

pla

ns w

ill

incl

ude

mar

ketin

g an

d pr

omot

ing

ener

gy se

ctor

jobs

as

a ca

reer

cho

ice.

SK

iLL

S,

Tr

AiN

iNg

AN

d L

AB

Ou

r

Rapi

d ex

pans

ion

of o

ur e

nerg

y se

ctor

mea

ns

a gr

owin

g nu

mbe

r of p

erm

anen

t, w

ell-p

ayin

g em

ploy

men

t opp

ortu

nitie

s are

ava

ilabl

e.

Appendix C1

Page 29 of 90

��

dev

elop

a r

obus

t Tal

ent P

ool o

f Wor

kers

It is

vita

l to

prov

ide

the

initi

al tr

aini

ng to

bui

ld a

jo

b-re

ady

tale

nt p

ool i

n Br

itish

Col

umbi

a, a

s wel

l as

the

ongo

ing

trai

ning

em

ploy

ees n

eed

to a

dapt

to

chan

ging

ene

rgy

sect

or te

chno

logi

es, p

rodu

cts a

nd

requ

irem

ents

. We

can

ensu

re a

thriv

ing

pool

of t

alen

t in

Briti

sh C

olum

bia

by re

trai

ning

skill

ed e

mpl

oyee

s who

ar

e w

ithou

t wor

k du

e to

dow

ntur

ns in

oth

er in

dust

ries.

D

ispla

ced

wor

kers

from

oth

er se

ctor

s and

juris

dict

ions

m

ay re

quire

som

e re

trai

ning

and

new

em

ploy

ees m

ay

need

con

sider

able

skill

s dev

elop

men

t.

Anot

her w

ay to

hel

p en

sure

ther

e ar

e en

ough

skill

ed

ener

gy se

ctor

wor

kers

in th

e ye

ars a

head

is to

edu

cate

an

d in

form

you

ng p

eopl

e to

day.

By le

ttin

g hi

gh sc

hool

st

uden

ts k

now

abo

ut th

e op

port

uniti

es, t

hey

can

cons

ider

thei

r opt

ions

and

mak

e th

e ap

prop

riate

trai

ning

an

d ca

reer

cho

ices

. Gov

ernm

ent w

ill w

ork

to e

nhan

ce

info

rmat

ion

rela

ting

to e

nerg

y se

ctor

act

iviti

es in

Brit

ish

Colu

mbi

a’s sc

hool

cur

ricul

um in

the

year

s ahe

ad.

reta

in S

kille

d W

orke

rs

Arou

nd th

e w

orld

, ene

rgy

faci

lity

cons

truc

tion

and

oper

atio

ns a

re b

oom

ing,

cre

atin

g fie

rce,

glo

bal

com

petit

ion

for s

kille

d w

orke

rs. W

hile

Brit

ish C

olum

bia

has m

uch

to o

ffer,

it is

criti

cal t

hat o

ur ju

risdi

ctio

n pr

esen

ts a

supe

rior o

ppor

tuni

ty to

thes

e hi

ghly

skill

ed

and

mob

ile w

orke

rs. T

hat i

s why

we

need

to e

nsur

e ou

r wor

kpla

ces a

re sa

fe, f

air a

nd h

ealth

y an

d ou

r co

mm

uniti

es c

ontin

ue to

offe

r an

unpa

ralle

led

lifes

tyle

w

ith h

igh

qual

ity h

ealth

car

e an

d ed

ucat

ion,

affo

rdab

le

hous

ing,

and

read

ily a

vaila

ble

recr

eatio

n op

port

uniti

es in

ou

tsta

ndin

g na

tura

l set

tings

.

info

rm B

riti

sh C

olum

bian

s To

be

effec

tive

in fi

lling

ene

rgy

sect

or jo

bs w

ith

skill

ed w

orke

rs, B

ritish

Col

umbi

ans n

eed

to b

e in

form

ed a

nd e

duca

ted

abou

t the

out

stan

ding

op

port

uniti

es a

vaila

ble.

As p

art o

f The

BC

Ener

gy P

lan,

a c

ompr

ehen

sive

publ

ic

awar

enes

s and

edu

catio

n ca

mpa

ign

base

d on

soun

d la

bour

mar

ket a

naly

sis w

ill re

ach

out t

o po

tent

ial e

nerg

y se

ctor

wor

kers

. Thi

s pr

oces

s will

reco

gniz

e an

d ad

dres

s bot

h th

e po

tent

ial c

halle

nges

such

as s

hift

wor

k an

d re

mot

e lo

catio

ns a

s wel

l as t

he o

ppor

tuni

ties,

such

as

obt

aini

ng h

ighl

y m

arke

tabl

e sk

ills a

nd e

arni

ng

exce

llent

com

pens

atio

n.

Appendix C1

Page 30 of 90

��Be

Am

ong

the

Mos

t Com

peti

tive

O

il an

d g

as ju

risd

icti

ons

in N

orth

A

mer

ica

Sinc

e 20

01, B

ritish

Col

umbi

a’s o

il an

d ga

s sec

tor h

as g

row

n to

bec

ome

a m

ajor

forc

e in

our

pro

vinc

ial e

cono

my,

empl

oyin

g te

ns o

f tho

usan

ds o

f Brit

ish C

olum

bian

s an

d he

lpin

g to

fuel

the

prov

ince

’s st

rong

eco

nom

ic

perfo

rman

ce. In

fact

, inve

stm

ent i

n th

e oi

l and

gas

se

ctor

was

$4.

6 bi

llion

in 2

005.

The

oil

and

gas i

ndus

try

cont

ribut

es a

ppro

xim

atel

y $1

.95

billi

on a

nnua

lly o

r sev

en

per c

ent o

f the

pro

vinc

e’s a

nnua

l rev

enue

s.

The

BC E

nerg

y Pl

an is

des

igne

d to

take

B.C

.’s oi

l an

d ga

s sec

tor t

o th

e ne

xt le

vel t

o en

hanc

e a

sust

aina

ble,

thriv

ing

and

vibr

ant o

il an

d ga

s sec

tor

in B

ritish

Col

umbi

a. W

ith a

hea

lthy,

com

petit

ive

oil

and

gas s

ecto

r com

es th

e op

port

unity

to c

reat

e jo

bs a

nd b

uild

vib

rant

com

mun

ities

with

incr

ease

d in

frast

ruct

ure

and

serv

ices

, suc

h as

scho

ols a

nd

hosp

itals.

Of p

artic

ular

impo

rtan

ce is

an

expa

ndin

g Br

itish

Col

umbi

a-ba

sed

serv

ice

sect

or.

Ther

e is

a liv

ely

deba

te a

bout

the

peak

of t

he

wor

ld’s

oil a

nd g

as p

rodu

ctio

n an

d th

e im

pact

s on

econ

omie

s, bu

sines

ses a

nd c

onsu

mer

s. A

num

ber o

f co

untri

es, s

uch

as th

e U

K, N

orw

ay a

nd th

e U

SA, a

re

expe

rienc

ing

decl

inin

g fo

ssil

fuel

pro

duct

ion

from

co

nven

tiona

l sou

rces

. Ene

rgy

pric

es, e

spec

ially

oil

pric

es h

ave

incr

ease

d an

d ar

e m

ore

vola

tile

than

in

the

past

. As a

resu

lt, th

e w

ay e

nerg

y is

prod

uced

an

d co

nsum

ed w

ill c

hang

e, p

artic

ular

ly in

de

velo

ped

coun

tries

.

The

plan

is a

imed

at e

nhan

cing

the

deve

lopm

ent o

f co

nven

tiona

l res

ourc

es a

nd st

imul

atin

g ac

tivity

in re

lativ

ely

unde

velo

ped

area

s suc

h as

the

inte

rior b

asin

s – p

artic

ular

ly

the

Nec

hako

Bas

in. It

will

also

fost

er th

e de

velo

pmen

t of

unco

nven

tiona

l res

ourc

es su

ch a

s as t

ight

gas

, sha

le g

as,

and

coal

bed

gas.

The

plan

will

furt

her e

ffort

s to

wor

k w

ith

the

fede

ral g

over

nmen

t, co

mm

uniti

es a

nd F

irst N

atio

ns to

ad

vanc

e off

shor

e op

port

uniti

es.

The

chal

leng

e fo

r Brit

ish C

olum

bia

in th

e fu

ture

will

be

to c

ontin

ue to

find

the

right

bal

ance

of e

cono

mic

, en

viro

nmen

tal a

nd so

cial

prio

ritie

s to

allo

w th

e oi

l and

ga

s sec

tor t

o su

ccee

d, w

hile

pro

tect

ing

our e

nviro

nmen

t an

d im

prov

ing

our q

ualit

y of

life

.

The

New

rel

atio

nshi

p an

d O

il an

d g

asW

orki

ng to

geth

er w

ith lo

cal c

omm

uniti

es a

nd F

irst

Nat

ions

, the

pro

vinc

ial g

over

nmen

t will

con

tinue

to

shar

e in

the

man

y be

nefit

s and

opp

ortu

nitie

s cre

ated

th

roug

h th

e de

velo

pmen

t of B

ritish

Col

umbi

a’s o

il an

d ga

s res

ourc

es.

Gov

ernm

ent i

s wor

king

to e

nsur

e th

at o

il an

d ga

s re

sour

ce m

anag

emen

t inc

lude

s Firs

t Nat

ions

’ inte

rest

s, kn

owle

dge

and

valu

es. G

over

nmen

t has

rece

ntly

co

nclu

ded

cons

ulta

tion

agre

emen

ts fo

r oil

and

gas

reso

urce

dev

elop

men

t with

Firs

t Nat

ions

in N

orth

east

Br

itish

Col

umbi

a. T

hese

agr

eem

ents

incr

ease

cla

rity

in

the

proc

ess a

nd w

ill g

o a

long

way

to e

nhan

cing

our

en

gage

men

t with

thes

e Fi

rst N

atio

ns.

Gov

ernm

ent w

ill c

ontin

ue to

pur

sue

oppo

rtun

ities

to

shar

e in

form

atio

n an

d lo

ok fo

r opp

ortu

nitie

s to

faci

litat

e Fi

rst N

atio

ns’ e

mpl

oym

ent a

nd p

artic

ipat

ion

in th

e oi

l and

gas

indu

stry

to e

nsur

e th

at A

borig

inal

peo

ple

bene

fit fr

om th

e co

ntin

ued

grow

th a

nd d

evel

opm

ent o

f Br

itish

Col

umbi

a’s re

sour

ces.

OiL

AN

d g

AS

PO

LiC

y A

CT

iON

S

EN

vir

ON

ME

NTA

LLy

rE

SP

ON

SiB

LE

OiL

AN

d g

AS

dE

vE

LOP

ME

NT

• El

imin

ate

all r

outin

e fla

ring

at o

il an

d ga

s pr

oduc

ing

wel

ls a

nd p

rodu

ctio

n fa

cilit

ies b

y 20

16 w

ith a

n in

terim

goa

l to

redu

ce fl

arin

g by

ha

lf (5

0 pe

r cen

t) b

y 20

11.

• Es

tabl

ish

polic

ies a

nd m

easu

res t

o re

duce

air

emis

sion

s in

coor

dina

tion

with

the

Min

istr

y of

En

viro

nmen

t.•

Best

coa

lbed

gas

pra

ctic

es in

Nor

th A

mer

ica.

Co

mpa

nies

will

not

be

allo

wed

to su

rfac

e di

scha

rge

prod

uced

wat

er. A

ny re

-inje

cted

pr

oduc

ed w

ater

mus

t be

inje

cted

wel

l bel

ow a

ny

dom

estic

wat

er a

quife

r.•

Enha

nce

the

Oil

and

Gas

Env

ironm

enta

l St

ewar

dshi

p Pr

ogra

m, e

nsur

ing

soun

d en

viro

nmen

tal,

land

and

reso

urce

man

agem

ent.

Appendix C1

Page 31 of 90

�0

Whi

le st

rivin

g to

be

amon

g th

e m

ost c

ompe

titiv

e oi

l an

d ga

s jur

isdic

tions

in N

orth

Am

eric

a, th

e pr

ovin

ce

will

focu

s on

mai

ntai

ning

and

enh

anci

ng it

s str

ong

com

petit

ive

envi

ronm

ent f

or th

e oi

l and

gas

indu

stry

. Th

is en

com

pass

es th

e fo

llow

ing

com

pone

nts:

• A

com

petit

ive

inve

stm

ent c

limat

e.•

An a

bund

ant r

esou

rce

endo

wm

ent.

• En

viro

nmen

tal r

espo

nsib

ility

.•

Soci

al re

spon

sibili

ty.

Lead

ing

in E

nvir

onm

enta

lly a

nd

Soci

ally

res

pons

ible

Oil

and

gas

d

evel

opm

ent

The

BC E

nerg

y Pl

an e

mph

asiz

es c

onse

rvat

ion,

en

ergy

effi

cien

cy, a

nd th

e en

viro

nmen

tal a

nd so

cial

ly

resp

onsib

le m

anag

emen

t of t

he p

rovi

nce’s

ene

rgy

reso

urce

s. It

outli

nes g

over

nmen

t’s e

ffort

s to

mee

t thi

s ob

ject

ive

by w

orki

ng c

olla

bora

tivel

y w

ith in

volv

ed a

nd

inte

rest

ed p

artie

s, in

clud

ing

affec

ted

com

mun

ities

, la

ndow

ners

, env

ironm

enta

l gro

ups,

Firs

t Nat

ions

, the

re

gula

tor (

the

Oil

and

Gas

Com

miss

ion)

, ind

ustr

y gr

oups

an

d ot

hers

. Pol

icy

actio

ns w

ill su

ppor

t way

s to

addr

ess

air e

miss

ions

, im

pact

s on

land

and

wild

life

habi

tat,

and

wat

er q

ualit

y.

The

oil a

nd g

as se

ctor

in B

ritish

Col

umbi

a ac

coun

ts

for a

ppro

xim

atel

y 18

per

cen

t of g

reen

hous

e ga

s air

emiss

ions

in th

e pr

ovin

ce. T

he m

ain

sour

ces o

f air

emiss

ions

from

the

oil a

nd g

as se

ctor

are

flar

ing,

fugi

tive

gase

s, ga

s pro

cess

ing

and

com

pres

sor s

tatio

ns. W

hile

th

ese

air e

miss

ions

hav

e lo

ng b

een

part

of t

he o

il an

d ga

s sec

tor,

they

hav

e al

so b

een

a so

urce

of m

ajor

co

ncer

n fo

r oil

and

gas c

omm

uniti

es.

Elim

inat

e Fl

arin

g fr

om O

il an

d g

as P

rodu

cing

W

ells

and

Pro

duct

ion

Faci

litie

s By

201

6 Th

roug

h Th

e BC

Ene

rgy

Plan

, gov

ernm

ent h

as c

omm

itted

to

elim

inat

e al

l rou

tine

flarin

g at

oil

and

gas p

rodu

cing

w

ells

and

prod

uctio

n fa

cilit

ies b

y 20

16 w

ith a

n in

terim

go

al to

redu

ce fl

arin

g by

hal

f (50

per

cen

t) by

201

1. In

ad

ditio

n, g

over

nmen

t will

ado

pt p

olic

ies t

o re

duce

nat

ural

ga

s flar

ing

and

vent

ing

at te

st si

tes a

nd p

ipel

ines

, and

en

cour

age

com

pres

sor s

tatio

n effi

cien

cy to

cut

bac

k em

issio

ns. G

over

nmen

t will

also

exp

lore

opp

ortu

nitie

s an

d ne

w te

chno

logi

es fo

r saf

e, u

nder

grou

nd d

ispos

al o

f ca

rbon

dio

xide

or s

eque

stra

tion

from

oil

and

gas f

acili

ties.

Sequ

estra

tion

is co

nsid

ered

a c

ost e

ffect

ive

miti

gatio

n st

rate

gy in

redu

cing

car

bon

diox

ide

emiss

ions

.

Enha

nce

Carb

on d

ioxi

de S

eque

stra

tion

in

Bri

tish

Col

umbi

aBr

itish

Col

umbi

a is

a m

embe

r of t

he P

lain

s CO

2 Re

duct

ion

(PCO

R) P

artn

ersh

ip c

ompo

sed

of n

early

50

priv

ate

and

publ

ic se

ctor

gro

ups f

rom

nin

e st

ates

and

thre

e Ca

nadi

an

prov

ince

s tha

t is a

sses

sing

the

tech

nica

l and

eco

nom

ic

feas

ibilit

y of

cap

turin

g an

d st

orin

g ca

rbon

dio

xide

em

issio

ns

from

stat

iona

ry so

urce

s in

wes

tern

sedi

men

tary

bas

ins.

B.C.

is a

lso a

mem

ber o

f the

Wes

t Coa

st R

egio

nal C

arbo

n Se

ques

tratio

n Pa

rtne

rshi

p, m

ade

up o

f wes

t coa

st st

ate

and

prov

inci

al g

over

nmen

t min

istrie

s and

age

ncie

s. Th

is pa

rtne

rshi

p ha

s bee

n fo

rmed

to p

ursu

e ca

rbon

se

ques

tratio

n op

port

uniti

es a

nd te

chno

logi

es.

To fa

cilit

ate

and

fost

er in

nova

tion

in se

ques

tratio

n,

gove

rnm

ent w

ill d

evel

op m

arke

t orie

nted

requ

irem

ents

w

ith a

gra

duat

ed sc

hedu

le. In

con

sulta

tion

with

st

akeh

olde

rs, a

tim

etab

le w

ill b

e de

velo

ped

alon

g w

ith

incr

easin

g re

quire

men

ts fo

r seq

uest

ratio

n.

The

BC E

nerg

y Pl

an a

dopt

s a tr

iple

bot

tom

line

app

roac

h to

com

petit

iven

ess,

with

an

att

ract

ive

inve

stm

ent c

limat

e, e

nviro

nmen

tally

sust

aina

ble

deve

lopm

ent o

f B.

C.’s

abun

dant

reso

urce

s, an

d by

ben

efitin

g co

mm

uniti

es a

nd F

irst N

atio

ns.

Br

iTiS

h C

OL

uM

BiA

C

OM

PA

NiE

S r

EC

Og

NiZ

Ed

A

S W

Or

Ld

EN

Er

gy

T

EC

hN

OLO

gy

iN

NO

vA

TO

rS

The

lead

ersh

ip o

f Brit

ish C

olum

bian

co

mpa

nies

can

be

seen

in a

ll ar

eas o

f th

e en

ergy

sect

or th

roug

h in

nova

tive,

in

dust

ry le

adin

g te

chno

logi

es.

Prod

uctio

n of

a n

ew g

ener

atio

n of

ch

emic

al in

ject

ion

pum

p fo

r use

in th

e oi

l and

gas

indu

stry

is b

egin

ning

. The

pu

mps

, dev

elop

ed a

nd b

uilt

in B

ritish

Co

lum

bia,

are

the

first

sola

r pow

ered

pr

ecisi

on in

ject

ion

pum

ps a

vaila

ble

to

the

indu

stry

. The

y w

ill re

duce

em

issio

ns

by re

plac

ing

trad

ition

al g

as p

ower

ed

inje

ctio

n sy

stem

s for

pip

elin

es.

Oth

er so

lar t

echn

olog

ies d

evel

oped

in

Briti

sh C

olum

bia

prov

ide

mod

ular

pow

er

supp

lies i

n re

mot

e lo

catio

ns a

ll ov

er th

e gl

obe

for m

arin

e sig

nals,

avi

atio

n lig

hts

and

road

sign

s.

Road

s in

B.C.

and

aro

und

the

wor

ld

are

host

ing

dem

onst

ratio

ns o

f fue

l cel

l ve

hicl

es b

uilt

with

Brit

ish C

olum

bia

tech

nolo

gy. T

hank

s to

the

first

hig

h pr

essu

re h

ydro

gen

fuel

ling

stat

ion

in th

e w

orld

, com

patib

le fu

el c

ell v

ehic

les i

n B.

C. c

an c

arry

mor

e fu

el a

nd tr

avel

fart

her

than

eve

r bef

ore.

The

Inno

vativ

e Cl

ean

Ener

gy F

und

will

he

lp to

bui

ld B

.C.’s

tech

nolo

gy c

lust

er

and

keep

us a

t the

fore

front

of e

nerg

y te

chno

logy

dev

elop

men

t.

Appendix C1

Page 32 of 90

��Envi

ronm

enta

l Ste

war

dshi

p Pr

ogra

mIn

200

4, th

e M

inist

ry o

f Ene

rgy,

Min

es a

nd P

etro

leum

Re

sour

ces i

nitia

ted

the

Oil

and

Gas

Env

ironm

enta

l St

ewar

dshi

p Pr

ogra

m h

avin

g tw

o co

mpo

nent

s: th

e En

viro

nmen

tal P

olic

y Pr

ogra

m a

nd th

e En

viro

nmen

tal

Reso

urce

Info

rmat

ion

Proj

ect.

The

Envi

ronm

enta

l Po

licy

Prog

ram

iden

tifies

and

miti

gate

s env

ironm

enta

l iss

ues i

n th

e pe

trol

eum

sect

or fo

cusin

g on

pol

icy

deve

lopm

ent i

n ar

eas s

uch

as e

nviro

nmen

tal w

aste

m

anag

emen

t, ha

bita

t enh

ance

men

t, pl

anni

ng

initi

ativ

es, w

ildlif

e st

udie

s for

oil

and

gas p

riorit

y ar

eas a

nd g

over

nmen

t bes

t man

agem

ent p

ract

ices

. So

me

key

prog

ram

ach

ieve

men

ts in

clud

e th

e co

mpl

etio

n of

gui

delin

es fo

r reg

ulat

ory

disp

ersio

n m

odel

ing,

rese

arch

lead

ing

to th

e de

velo

pmen

t of

soil

qual

ity g

uide

lines

for s

olub

le b

ariu

m, a

key

to

nort

hern

gra

sses

and

thei

r res

tora

tive

prop

ertie

s fo

r rem

edia

ted

wel

l site

s, an

d m

oose

and

car

ibou

in

vent

orie

s in

Nor

thea

st B

ritish

Col

umbi

a.

The

Envi

ronm

enta

l Res

ourc

e In

form

atio

n Pr

ojec

t is

dedi

cate

d to

incr

easin

g op

port

uniti

es fo

r oil

and

gas d

evel

opm

ent,

thro

ugh

the

colle

ctio

n of

ne

cess

ary

envi

ronm

enta

l bas

elin

e in

form

atio

n.

Thes

e pr

ojec

ts a

re d

eliv

ered

in p

artn

ersh

ip w

ith

othe

r age

ncie

s, in

dust

ry, c

omm

uniti

es a

nd

Firs

t Nat

ions

.

The

BC E

nerg

y Pl

an e

nhan

ces t

he im

port

ant O

il an

d G

as E

nviro

nmen

tal S

tew

ards

hip

Prog

ram

. Thi

s w

ill im

prov

e ex

istin

g eff

orts

to m

anag

e w

aste

and

pr

eser

ve h

abita

t, an

d w

ill e

stab

lish

base

line

data

as

wel

l as d

evel

opm

ent a

nd ri

sk m

itiga

tion

plan

s fo

r env

ironm

enta

lly se

nsiti

ve a

reas

. Bar

riers

nee

d to

be

iden

tified

and

step

s tak

en fo

r rem

edia

tion,

pr

ogre

ssiv

e re

clam

atio

n, a

nd w

aste

man

agem

ent.

Bes

t Coa

lbed

gas

Pra

ctic

es in

N

orth

Am

eric

aG

over

nmen

t will

con

tinue

to e

ncou

rage

coa

lbed

gas

de

velo

pmen

t with

the

inte

nt o

f dem

onst

ratin

g th

at

Briti

sh C

olum

bia

is a

lead

ing

soci

ally

and

env

ironm

enta

lly

resp

onsib

le c

oalb

ed g

as d

evel

opin

g ju

risdi

ctio

n.

Coal

bed

gas,

also

kno

wn

as c

oalb

ed m

etha

ne, i

s nat

ural

ga

s fou

nd in

coa

l sea

ms.

It is

one

of th

e cl

eane

st b

urni

ng

of a

ll fo

ssil

fuel

s. Pr

opon

ents

wan

ting

to d

evel

op c

oalb

ed

gas m

ust a

dopt

the

follo

win

g be

st p

ract

ices

:

• Fu

lly e

ngag

e lo

cal c

omm

uniti

es a

nd F

irst N

atio

ns in

al

l sta

ges o

f dev

elop

men

t.•

Use

the

mos

t adv

ance

d te

chno

logy

and

pra

ctic

es th

at

are

com

mer

cial

ly v

iabl

e to

min

imiz

e la

nd a

nd a

esth

etic

di

stur

banc

es.

• Co

mpa

nies

will

not

be

allo

wed

to su

rface

disc

harg

e pr

oduc

ed w

ater

. Any

re-in

ject

ed p

rodu

ced

wat

er m

ust

be in

ject

ed w

ell b

elow

any

dom

estic

wat

er a

quife

r.•

Mee

t any

oth

er c

ondi

tions

the

Oil

and

Gas

Co

mm

issio

n m

ay a

pply

.•

Dem

onst

rate

the

com

pany

’s pr

evio

us e

xper

ienc

e w

ith

coal

bed

gas d

evel

opm

ent,

and

info

rmat

ion

mus

t be

mad

e pu

blic

ly a

vaila

ble

as to

how

the

com

pany

pla

ns

to m

eet a

nd b

e ac

coun

tabl

e fo

r the

se b

est p

ract

ices

.

Ensu

ring

Off

shor

e O

il an

d g

as r

esou

rces

ar

e d

evel

oped

in a

Sci

enti

fical

ly S

ound

and

En

viro

nmen

tally

res

pons

ible

Way

Th

e BC

Ene

rgy

Plan

incl

udes

act

ions

rela

ted

to

the

prov

ince

’s off

shor

e oi

l and

gas

reso

urce

s. Si

nce

1972

, Can

ada

and

Briti

sh C

olum

bia

have

eac

h ha

d a

mor

ator

ium

in p

lace

on

offsh

ore

oil a

nd g

as e

xplo

ratio

n an

d de

velo

pmen

t. W

ith a

dvan

ced

tech

nolo

gy a

nd

OiL

AN

d g

AS

Gov

ernm

ent w

ill w

ork

to im

prov

e oi

l and

ga

s ten

ure

polic

ies a

s wel

l as d

evel

op

new

gui

delin

es to

det

erm

ine

area

s tha

t re

quire

spec

ial c

onsi

dera

tion

prio

r to

te

nure

app

rova

l.

PO

LiC

y A

CT

iON

S

OF

FS

hO

rE

OiL

AN

d g

AS

dE

vE

LO

PM

EN

T•

Cont

inue

to w

ork

to li

ft th

e fe

dera

l m

orat

oriu

m o

n off

shor

e ex

plor

atio

n an

d de

velo

pmen

t and

reite

rate

the

inte

ntio

n to

sim

ulta

neou

sly

lift t

he p

rovi

ncia

l m

orat

oriu

m.

• W

ork

with

the

fede

ral g

over

nmen

t to

ensu

re th

at o

ffsh

ore

oil a

nd g

as re

sour

ces

are

deve

lope

d in

a s

cien

tifica

lly s

ound

and

en

viro

nmen

tally

resp

onsi

ble

way

.

• Pa

rtic

ipat

e in

mar

ine

and

envi

ronm

enta

l pl

anni

ng to

effe

ctiv

ely

man

age

mar

ine

area

s an

d off

shor

e oi

l and

gas

bas

ins.

• D

evel

op a

nd im

plem

ent a

com

preh

ensi

ve

com

mun

ity

enga

gem

ent p

rogr

am to

es

tabl

ish

a fr

amew

ork

for a

ben

efits

sh

arin

g ag

reem

ent r

esul

ting

from

off

shor

e oi

l and

gas

dev

elop

men

t for

com

mun

ities

, in

clud

ing

Firs

t Nat

ions

.

Appendix C1

Page 33 of 90

��

To�n

oBa

sin

Wino

naBa

sin

Quee

nCh

arlot

teBa

sin

Whit

ehor

seTro

ugh

Bows

erBa

sin

Nech

ako

BasinQu

esne

lTro

ugh

Wes

tern

Cana

daBa

sin

Fern

ieBa

sin

Rock

y Mtn

Trenc

h

Geor

gia Ba

sin

TUYA

RIVE

RCO

ALFI

ELD

KLAP

PAN

and

GROU

NDHO

GCO

ALFI

ELDS

TELK

WACO

ALFI

ELDPE

ACE R

IVER

COAL

FIEL

D

GRAH

AM IS

LAND

COAL

FIEL

DS

SUQU

ASH

COAL

FIELD

COM

OXCO

ALFI

ELD

HAT C

REEK

COAL

FIEL

D

PRIN

CETO

NCO

ALFI

ELD

NANA

IMO

C

OALF

IELD

MER

RITT

COAL

FIEL

D

EAST

KOOT

ENAY

C

OALF

IELD

S

BOW

RON

RIVE

RCO

ALFI

ELD

COAL

RIVE

RCO

ALFI

ELD

Queen

Charlotte

Islands

Vancouver

Island

U.S.A

.

Gas

Pip

elin

e

COAL

FIEL

DS

(Coa

lbed

Gas

Pot

entia

l)

Maj

or G

as P

lant

Allia

nce

Pipe

line

Sedi

men

tary

Bas

ins

Oil

Pipe

line

Oil

Re�n

ery

Lege

nd

Stew

art

Deas

e Lak

e

Prin

ce Ru

pert

Smith

ers

Port

McN

eill

Nana

imo

Cour

tena

y

Vanc

ouve

r

Kam

loop

s

Prin

ceto

n

Will

iam

s Lak

e

Cran

broo

kSpar

wood

Fern

ie

Prin

ce Ge

orgeFo

rt St

.Joh

n

Tum

bler

Ridg

e

Vict

oria

BC

OiL

AN

d g

AS

uN

diS

CO

vE

rE

d r

ES

Ou

rC

E E

ST

iMA

TE

S

Briti

sh C

olum

bia’

s oil

and

gas i

ndus

try

supp

orts

th

ousa

nds o

f wel

l-pay

ing

jobs

, hel

ps d

rive

the

econ

omy

and

prov

ides

reve

nues

to su

stai

n pu

blic

serv

ices

.

Conv

enti

onal

G

as

98.0

Tcf

O

il 17

.6 B

bbl

unc

onve

ntio

nal g

as

Coa

lbed

gas

84

.0 T

cf

Tig

ht g

as

300

Tcf

S

hale

gas

25

0 T

cf

Off

shor

e G

as

41.8

Tcf

Off

shor

e O

il 9.

8 B

bbl

Gas

Hyd

rate

s 11

3-84

7 T

cf

Tcf –

Tril

lion

cubi

c fe

etB

bbl –

Bill

ion

Barre

ls

posit

ive

expe

rienc

es in

oth

er ju

risdi

ctio

ns, a

co

mpe

lling

cas

e ex

ists f

or a

sses

sing

Briti

sh

Colu

mbi

a’s o

ffsho

re re

sour

ce p

oten

tial.

Gov

ernm

ent w

ill w

ork

with

coa

stal

com

mun

ities

, Fi

rst N

atio

ns, t

he fe

dera

l gov

ernm

ent,

envi

ronm

enta

l org

aniz

atio

ns, a

nd o

ther

s to

asce

rtai

n th

e be

nefit

s and

add

ress

the

conc

erns

as

soci

ated

with

offs

hore

oil

and

gas d

evel

opm

ent.

Mai

ntai

ning

B.C

.’s

Com

peti

tive

Adv

anta

ge a

s an

O

il an

d g

as ju

r isd

icti

onBr

itish

Col

umbi

a’s o

il an

d ga

s ind

ustr

y is

thriv

ing

than

ks to

hig

h re

sour

ce p

oten

tial,

indu

stry

and

se

rvic

e se

ctor

exp

ertis

e, a

nd a

com

petit

ive

inve

stm

ent c

limat

e th

at in

clud

es a

stre

amlin

ed

regu

lato

ry e

nviro

nmen

t. To

att

ract

add

ition

al

inve

stm

ent i

n Br

itish

Col

umbi

a’s o

il an

d ga

s in

dust

ry, w

e ne

ed to

com

pete

agg

ress

ivel

y w

ith

othe

r jur

isdic

tions

that

may

offe

r low

er ta

xes o

r ot

her i

nves

tmen

t inc

entiv

es.

Anot

her k

ey w

ay to

be

mor

e co

mpe

titiv

e is

by

spur

ring

activ

ity in

und

erde

velo

ped

area

s whi

le

heig

hten

ing

activ

ity in

the

nort

heas

t, w

here

our

na

tura

l gas

indu

stry

thriv

es. T

he p

rovi

nce

will

w

ork

with

indu

stry

to d

evel

op n

ew p

olic

ies a

nd

tech

nolo

gies

for e

nhan

ced

reso

urce

reco

very

m

akin

g, it

mor

e co

st-e

ffect

ive

to d

evel

op B

ritish

Co

lum

bia’s

reso

urce

s.

By in

crea

sing

our c

ompe

titiv

enes

s, Br

itish

Co

lum

bian

s can

con

tinue

to b

enefi

t fro

m w

ell-

payi

ng jo

bs, h

igh

qual

ity so

cial

infra

stru

ctur

e an

d a

thriv

ing

econ

omy.

Appendix C1

Page 34 of 90

��Bri

tish

Col

umbi

a’s

Enor

mou

s

Nat

ural

gas

Pot

enti

alTh

e oi

l and

gas

sect

or w

ill c

ontin

ue to

pla

y an

impo

rtan

t ro

le in

Brit

ish C

olum

bia’s

futu

re e

nerg

y se

curit

y. O

ur

prov

ince

has

eno

rmou

s nat

ural

gas

reso

urce

pot

entia

l an

d op

port

uniti

es fo

r sig

nific

ant g

row

th. T

he B

C En

ergy

Pl

an fa

cilit

ates

the

deve

lopm

ent o

f B.C

.’s re

sour

ces.

Briti

sh C

olum

bia

has n

umer

ous s

edim

enta

ry b

asin

s, w

hich

co

ntai

n pe

trole

um a

nd n

atur

al g

as re

sour

ces.

In n

orth

-ea

ster

n Br

itish

Col

umbi

a, th

e W

este

rn C

anad

a Se

dim

enta

ry B

asin

is th

e fo

cus o

f our

thriv

ing

natu

ral

gas i

ndus

try.

The

pote

ntia

l res

ourc

es in

the

cent

ral a

nd

nort

hern

inte

rior o

f the

pro

vinc

e, th

e N

echa

ko a

nd B

owse

r Ba

sins a

nd W

hite

hors

e Tr

ough

, hav

e go

ne u

ntap

ped.

The

dela

yed

eval

uatio

n an

d po

tent

ial d

evel

opm

ent o

f th

ese

area

s is l

arge

ly d

ue to

geo

logi

cal a

nd p

hysic

al

obst

ruct

ions

that

mak

e it

diffi

cult

to e

xplo

re in

the

area

. Vo

lcan

ic ro

cks t

hat o

verla

y th

e se

dim

enta

ry p

acka

ge

com

bine

d w

ith c

ompl

ex b

asin

stru

ctur

es, h

ave

hind

ered

de

velo

pmen

t.

The

BC E

nerg

y Pl

an is

aim

ed a

t enh

anci

ng th

e de

velo

pmen

t of c

onve

ntio

nal r

esou

rces

and

stim

ulat

ing

activ

ity in

und

evel

oped

are

as su

ch a

s the

inte

rior b

asin

s –

part

icul

arly

the

Nec

hako

Bas

in. I

t will

also

fost

er th

e de

velo

pmen

t of u

ncon

vent

iona

l res

ourc

es a

nd ta

ke a

m

ore

strin

gent

app

roac

h on

coa

lbed

gas

to m

eet h

ighe

r en

viro

nmen

tal s

tand

ards

.

Att

ract

ing

inve

stm

ent a

nd d

evel

opin

g

our O

il an

d g

as r

esou

rces

The

BC E

nerg

y Pl

an p

rom

otes

com

petit

iven

ess b

y se

ttin

g ou

t a n

umbe

r of i

mpo

rtan

t reg

ulat

ory

and

fisca

l m

easu

res i

nclu

ding

: mon

itorin

g Br

itish

Col

umbi

a’s

com

petit

ive

rank

ing,

con

sider

ing

a N

et P

rofit

Roy

alty

Pr

ogra

m, p

rom

otin

g a

B.C.

serv

ice

sect

or, h

arm

oniz

ing

and

stre

amlin

ing

regu

latio

ns, a

nd d

evel

opin

g a

Petr

oleu

m R

egist

ry to

exa

min

e ro

yalty

and

tenu

re

ince

ntiv

es, a

nd u

nder

taki

ng g

eosc

ienc

e pr

ogra

ms.

Esta

blis

hmen

t of a

Pet

role

um r

egis

try

The

esta

blish

men

t of a

pet

role

um re

gist

ry th

at

func

tions

as a

cen

tral

dat

abas

e w

ill im

prov

e th

e qu

ality

and

man

agem

ent o

f key

vol

umet

ric, r

oyal

ty

and

infra

stru

ctur

e in

form

atio

n as

soci

ated

with

Br

itish

Col

umbi

a’s o

il an

d ga

s ind

ustr

y an

d pr

omot

e co

mpe

titio

n w

hile

pro

vidi

ng tr

ansp

aren

cy a

roun

d oi

l an

d ga

s act

ivity

.

As e

nerg

y, m

inin

g an

d pe

trol

eum

reso

urce

de

velo

pmen

t inc

reas

es in

nor

thea

st B

.C.,

so to

o do

es th

e ne

ed fo

r inp

ut fr

om lo

cal

gove

rnm

ents

, Firs

t Nat

ions

, com

mun

ity

grou

ps, l

ando

wne

rs a

nd o

ther

key

st

akeh

olde

rs. I

n 20

06, t

he N

orth

east

Ene

rgy

and

Min

es A

dviso

ry C

omm

ittee

(NEE

MAC

) w

as c

reat

ed to

pro

vide

an

incl

usiv

e fo

rum

fo

r rep

rese

ntat

ive

orga

niza

tions

to b

uild

re

latio

nshi

ps w

ith e

ach

othe

r, in

dust

ry a

nd

gove

rnm

ent t

o pr

ovid

e in

put o

n M

inist

ry

polic

y, an

d re

com

men

d in

nova

tive

solu

tions

to

stak

ehol

der c

once

rns.

Sinc

e its

cre

atio

n, N

EEM

AC h

as id

entifi

ed

and

expl

ored

prio

rity

conc

erns

, and

is

begi

nnin

g to

find

bal

ance

d so

lutio

ns re

late

d to

env

ironm

enta

l, su

rface

dist

urba

nce,

ac

cess

and

land

owne

r rig

hts i

ssue

s. Th

e M

inist

ry is

com

mitt

ed to

impl

emen

ting

reco

mm

enda

tions

that

repr

esen

t the

br

oad

inte

rest

s of c

omm

unity

, ind

ustr

y an

d go

vern

men

t and

exp

ects

that

the

com

mitt

ee

will

con

tinue

to p

rovi

de a

dvic

e on

ene

rgy,

min

ing

and

petr

oleu

m d

evel

opm

ent i

ssue

s in

supp

ort o

f The

BC

Ener

gy P

lan.

NE

EM

AC

: S

uC

CE

SS

Th

rO

ug

h C

OM

Mu

NiC

AT

iON

OiL

AN

d g

AS

Appendix C1

Page 35 of 90

��

incr

easi

ng A

cces

sIn

add

ition

to re

gula

tory

and

fisc

al m

echa

nism

s, th

e pl

an

addr

esse

s the

nee

d fo

r im

prov

ing

acce

ss to

reso

urce

s. Pi

pelin

es a

nd ro

ad in

frast

ruct

ure

are

criti

cal f

acto

rs in

de

velo

pmen

t and

com

petit

iven

ess.

The

BC E

nerg

y Pl

an c

alls

for n

ew in

vest

men

t in

publ

ic ro

ads a

nd o

ther

in

frast

ruct

ure.

It w

ill se

e go

vern

men

t est

ablis

h a

clea

r, st

ruct

ured

infra

stru

ctur

e ro

yalty

pro

gram

, com

bini

ng

road

and

pip

elin

e in

itiat

ives

and

incr

easin

g de

velo

pmen

t in

und

er-e

xplo

red

area

s tha

t hav

e lit

tle o

r no

exist

ing

infra

stru

ctur

e.

dev

elop

ing

Conv

enti

onal

and

u

ncon

vent

iona

l Oil

and

gas

res

ourc

esTo

supp

ort i

nves

tmen

t in

expl

orat

ion,

The

BC

Ener

gy

Plan

cal

ls fo

r par

tner

ship

s in

rese

arch

and

dev

elop

men

t to

est

ablis

h re

liabl

e re

gion

al d

ata,

as w

ell a

s roy

alty

and

te

nure

ince

ntiv

es. T

he g

oal i

s to

attr

act i

nves

tmen

t, cr

eate

wel

l-pay

ing

jobs

, boo

st th

e re

gion

al e

cono

my

and

prod

uce

econ

omic

ben

efits

for a

ll Br

itish

Col

umbi

ans.

We

can

be m

ore

com

petit

ive

by sp

urrin

g ac

tivity

in

unde

rdev

elop

ed a

reas

whi

le h

eigh

teni

ng a

ctiv

ity in

the

nort

heas

t whe

re o

ur n

atur

al g

as in

dust

ry th

rives

. The

pl

an a

dvoc

ates

wor

king

with

indu

stry

to d

evel

op n

ew

polic

ies a

nd te

chno

logy

to e

nhan

ce re

sour

ce re

cove

ry,

incl

udin

g oi

l in

Briti

sh C

olum

bia.

impr

ove

regu

lati

ons

and

rese

arch

Th

e pr

ovin

ce re

mai

ns c

omm

itted

to c

ontin

uous

im

prov

emen

t in

the

regu

lato

ry re

gim

e an

d en

viro

nmen

tal m

anag

emen

t of c

onve

ntio

nal a

nd

unco

nven

tiona

l oil

and

gas r

esou

rces

. The

opp

ortu

nitie

s fo

r enh

anci

ng e

xplo

ratio

n an

d pr

oduc

tion

of ti

ght

gas,

shal

e ga

s, an

d co

albe

d ga

s will

also

be

asse

ssed

an

d su

ppor

ted

by g

eosc

ienc

e re

sear

ch a

nd p

rogr

ams.

The

BC E

nerg

y Pl

an c

alls

for c

olla

bora

tion

with

oth

er

gove

rnm

ent m

inist

ries,

agen

cies

, ind

ustr

y, co

mm

uniti

es

and

Firs

t Nat

ions

to d

evel

op th

e oi

l and

gas

reso

urce

s in

Briti

sh C

olum

bia.

Focu

s on

inno

vati

on a

nd T

echn

olog

y d

evel

opm

ent

The

BC E

nerg

y Pl

an a

lso c

alls

for s

uppo

rtin

g th

e de

velo

pmen

t of n

ew o

il an

d ga

s tec

hnol

ogie

s. Th

is pl

an

will

lead

Brit

ish C

olum

bia

to b

ecom

e an

inte

rnat

iona

lly

reco

gniz

ed c

entr

e fo

r tec

hnol

ogic

al a

dvan

cem

ents

an

d co

mm

erci

aliz

atio

n, p

artic

ular

ly in

env

ironm

enta

l m

anag

emen

t, fla

ring,

car

bon

sequ

estr

atio

n an

d hy

drog

eolo

gy. T

he se

rvic

e se

ctor

has

not

ed it

can

pla

y an

impo

rtan

t rol

e in

dev

elop

ing

and

com

mer

cial

izin

g ne

w te

chno

logi

es; h

owev

er, t

he is

sue

for c

ompa

nies

is

acce

ssin

g th

e ne

cess

ary

fund

s.

An o

ppor

tuni

ty to

incr

ease

com

petit

iven

ess e

xist

s in

Briti

sh C

olum

bia’

s In

terio

r Bas

ins –

nam

ely

the

Nec

hako

, Bow

ser a

nd W

hite

hors

e Ba

sins

–

whe

re co

nsid

erab

le re

sour

ce p

oten

tial i

s kno

wn

to e

xist

.T

hE

hu

B O

F B

.C.’

S O

iL

AN

d g

AS

SE

CT

Or

Oil

and

gas i

s ben

efitin

g al

l Brit

ish

Colu

mbi

ans -

not

just

thos

e liv

ing

in m

ajor

ce

ntre

s. N

owhe

re is

this

mor

e ap

pare

nt

than

in b

oom

ing

Fort

St.

John

, whi

ch h

as

rapi

dly

beco

me

the

oil a

nd g

as h

ub o

f th

e pr

ovin

ce. S

ince

200

1, m

ore

than

1,4

00

peop

le h

ave

mov

ed to

the

com

mun

ity, a

n in

crea

se o

f 6.3

per

cen

t and

two

per c

ent

fast

er g

row

th th

an th

e pr

ovin

cial

ave

rage

. Co

nstr

uctio

n pe

rmits

are

way

up

- fro

m

$48.

7 m

illio

n in

200

4, to

$50

.6 m

illio

n in

20

05, t

o ov

er $

123

mill

ion

in 2

006.

In th

e pa

st fi

ve y

ears

, ove

r 1,0

00 n

ew c

ompa

nies

ha

ve b

een

inco

rpor

ated

in F

ort S

t. Jo

hn, a

s yo

ung

fam

ilies

, exp

erie

nced

pro

fess

iona

ls,

skill

ed tr

ades

-peo

ple

and

man

y ot

hers

m

ove

here

from

acr

oss t

he c

ount

ry.

Appendix C1

Page 36 of 90

��

Tech

nolo

gy T

rans

fer i

ncen

tive

Pro

gram

A

new

Oil

and

Gas

Tech

nolo

gy T

rans

fer I

ncen

tive

Prog

ram

will

be

cons

ider

ed to

enc

oura

ge th

e re

sear

ch, d

evel

opm

ent a

nd u

se o

f inn

ovat

ive

tech

nolo

gies

to in

crea

se re

cove

ries f

rom

exi

stin

g re

serv

es a

nd e

ncou

rage

resp

onsib

le d

evel

opm

ent

of n

ew o

il an

d ga

s res

erve

s. Th

e pr

ogra

m c

ould

re

cove

r pro

gram

cos

ts o

ver t

ime

thro

ugh

incr

ease

d ro

yalti

es g

ener

ated

by

expa

nded

dev

elop

men

t an

d pr

oduc

tion

of B

ritish

Col

umbi

a’s p

etro

leum

re

sour

ces.

Scie

ntifi

c re

sear

ch a

nd E

xper

imen

tal

dev

elop

men

t Th

e BC

Ene

rgy

Plan

supp

orts

the

Briti

sh C

olum

bia

Scie

ntifi

c Re

sear

ch a

nd E

xper

imen

tal D

evel

opm

ent

Prog

ram

, whi

ch p

rovi

des fi

nanc

ial s

uppo

rt fo

r res

earc

h an

d de

velo

pmen

t lea

ding

to n

ew o

r im

prov

ed

prod

ucts

and

pro

cess

es. T

hrou

gh c

redi

ts o

r ref

unds

, th

e ex

pand

ed p

rogr

am c

ould

cov

er p

roje

ct c

osts

di

rect

ly re

late

d to

com

mer

cial

ly a

pplic

able

rese

arch

, an

d de

velo

pmen

t or d

emon

stra

tion

of n

ew o

r im

prov

ed te

chno

logi

es c

ondu

cted

in B

ritish

Col

umbi

a th

at fa

cilit

ate

expa

nded

oil

and

gas p

rodu

ctio

n.

rese

arch

and

dev

elop

men

t Th

e BC

Ene

rgy

Plan

cal

ls fo

r usin

g ne

w o

r exi

stin

g re

sear

ch a

nd d

evel

opm

ent p

rogr

ams f

or th

e oi

l and

ga

s sec

tor.

Gov

ernm

ent w

ill d

evel

op a

pro

gram

ta

rget

ing

area

s in

whi

ch B

ritish

Col

umbi

a ha

s an

adva

ntag

e su

ch a

s wel

l com

plet

ion

tech

nolo

gy

and

hydr

ogeo

logy

.

A pr

ogra

m to

enc

oura

ge o

il an

d ga

s inn

ovat

ion

and

rese

arch

in B

ritish

Col

umbi

a’s p

ost-s

econ

dary

inst

itutio

ns

will

be

expl

ored

. The

se o

ppor

tuni

ties w

ill b

e ex

plor

ed

in p

artn

ersh

ip w

ith th

e Pe

trole

um Te

chno

logy

Alli

ance

Ca

nada

and

as p

art o

f the

Apr

il 20

06 M

emor

andu

m o

f U

nder

stan

ding

bet

wee

n Br

itish

Col

umbi

a an

d Al

bert

a on

Ene

rgy

Rese

arch

, Tec

hnol

ogy

Dev

elop

men

t and

In

nova

tion.

Toge

ther

with

the

Oil

and

Gas

Cen

tre o

f Exc

elle

nce

in F

ort

St. J

ohn,

an

oil a

nd g

as te

chno

logy

incu

bato

r, a

site

whi

ch

prov

ides

inno

vato

rs w

ith sp

ace

to b

uild

pro

toty

pes a

nd

carr

y ou

t tes

ting

as w

ell a

s pro

vidi

ng b

usin

ess i

nfra

stru

ctur

e an

d as

sista

nce

acce

ssin

g ad

ditio

nal s

uppo

rt w

ill be

es

tabl

ished

, allo

win

g en

trepr

eneu

rs to

dev

elop

and

test

ne

w in

nova

tions

and

com

mer

cial

ize n

ew, in

nova

tive

tech

nolo

gies

and

pro

cess

es.

Nec

hako

init

iati

ve

The

BC E

nerg

y Pl

an c

alls

for g

over

nmen

t to

part

ner w

ith

indu

stry

, the

fede

ral g

over

nmen

t, an

d G

eosc

ienc

e BC

to

und

erta

ke c

ompr

ehen

sive

rese

arch

in th

e N

echa

ko

Basin

and

est

ablis

h ne

w d

ata

of th

e re

sour

ce p

oten

tial.

It w

ill in

clud

e ac

tive

enga

gem

ent o

f com

mun

ities

and

the

deve

lopm

ent a

nd im

plem

enta

tion

of a

com

preh

ensiv

e pr

e-te

nure

eng

agem

ent i

nitia

tive

for F

irst N

atio

ns in

the

regi

on. S

peci

fic te

nure

s and

roya

lties

will

be

expl

ored

to

enc

oura

ge in

vest

men

t, as

wel

l as a

com

preh

ensiv

e En

viro

nmen

tal I

nfor

mat

ion

Prog

ram

to id

entif

y ba

selin

e in

form

atio

n ne

eds i

n th

e ar

ea th

roug

h co

nsul

tatio

ns

with

gov

ernm

ent,

indu

stry

, com

mun

ities

and

Firs

t N

atio

ns.

OiL

AN

d g

AS

PO

LiC

y A

CT

iON

S

BE

AM

ON

g T

hE

MO

ST

CO

MP

ET

iTiv

E

OiL

AN

d g

AS

ju

riS

diC

TiO

NS

iN

NO

rT

h A

ME

riC

A

• Pu

rsue

regu

lato

ry a

nd fi

scal

com

petit

ive-

ness

in s

uppo

rt o

f bei

ng a

mon

g th

e m

ost

com

petit

ive

oil a

nd g

as ju

risd

ictio

ns in

N

orth

Am

eric

a.

• En

hanc

e in

fras

truc

ture

to s

uppo

rt th

e de

velo

pmen

t of o

il an

d ga

s in

Bri

tish

Colu

mbi

a an

d ad

dres

s im

pedi

men

ts

to e

cono

mic

dev

elop

men

t suc

h as

tr

ansp

orta

tion

and

labo

ur s

hort

ages

.

• En

cour

age

the

deve

lopm

ent o

f co

nven

tiona

l and

unc

onve

ntio

nal

reso

urce

s.

• Su

ppor

t the

gro

wth

of B

ritis

h Co

lum

bia’

s

oil a

nd g

as s

ervi

ce s

ecto

r.

• Pr

omot

e ex

plor

atio

n an

d de

velo

pmen

t of

the

Inte

rior

bas

ins

with

a p

rior

ity

focu

s on

th

e N

echa

ko B

asin

.

• En

cour

age

the

deve

lopm

ent o

f new

te

chno

logi

es.

• A

dd v

alue

to B

ritis

h Co

lum

bia’

s oi

l and

gas

in

dust

ry b

y as

sess

ing

and

prom

otin

g th

e de

velo

pmen

t of a

dditi

onal

gas

pro

cess

ing

faci

litie

s in

the

prov

ince

.

Appendix C1

Page 37 of 90

��

valu

e-A

dded

Opp

ortu

niti

esTo

impr

ove

com

petit

iven

ess,

The

BC E

nerg

y Pl

an

calls

for a

revi

ew o

f val

ue-a

dded

opp

ortu

nitie

s in

Brit

ish C

olum

bia.

Thi

s will

incl

ude

a th

orou

gh

asse

ssm

ent o

f the

pot

entia

l for

pro

cess

ing

faci

litie

s and

pe

trol

eum

refin

erie

s as w

ell a

s pet

roch

emic

al in

dust

ry

oppo

rtun

ities

. The

Min

istry

of E

nerg

y, M

ines

and

Pe

trol

eum

Res

ourc

es w

ill c

ondu

ct a

n an

alys

is to

iden

tify

and

addr

ess b

arrie

rs a

nd e

xplo

re in

cent

ives

requ

ired

to e

ncou

rage

inve

stm

ent i

n ga

s pro

cess

ing

in B

ritish

Co

lum

bia.

A w

orki

ng g

roup

of i

ndus

try

and

gove

rnm

ent

will

dev

elop

bus

ines

s cas

es a

nd re

port

to th

e M

inist

er b

y Ja

nuar

y 20

08 w

ith re

com

men

datio

ns o

n th

e vi

abili

ty o

f a

new

pet

role

um re

finer

y an

d pe

troc

hem

ical

indu

stry

and

m

easu

res,

if an

y, to

enc

oura

ge in

vest

men

t.

Oil

and

gas

Ser

vice

Sec

tor

Briti

sh C

olum

bia’s

oil

and

gas s

ervi

ce se

ctor

can

also

hel

p es

tabl

ish o

ur p

rovi

nce

as o

ne o

f the

mos

t com

petit

ive

juris

dict

ions

in N

orth

Am

eric

a. T

he se

rvic

e se

ctor

has

gr

own

over

the

past

four

yea

rs a

nd w

ith in

crea

sed

activ

ity, a

dditi

onal

sum

mer

dril

ling,

and

the

secu

rity

of

supp

ly, o

ppor

tuni

ties f

or lo

cal c

ompa

nies

will

con

tinue

. G

over

nmen

t can

hel

p m

axim

ize

the

bene

fits d

eriv

ed

from

the

serv

ice

sect

or b

y:

• P r

omot

ing

Briti

sh C

olum

bia’s

serv

ice

sect

or to

the

oil

and

gas i

ndus

try

thro

ugh

part

icip

atio

n at

trad

e sh

ows

and

prov

idin

g in

form

atio

n to

the

busin

ess c

omm

unity

.

• Id

entif

ying

ar e

as w

here

Brit

ish C

olum

bian

com

pani

es

can

play

a la

rger

role

, exp

and

into

oth

er p

r ovi

nces

, and

th

roug

h pr

ocur

emen

t str

ateg

ies.

The

gove

rnm

ent a

lso su

ppor

ts th

e O

il an

d G

as C

entr

e of

Exc

elle

nce

at th

e Fo

rt S

t. Jo

hn N

orth

ern

Ligh

ts

Colle

ge c

ampu

s, w

hich

will

pro

vide

oil

and

gas,

rela

ted

voca

tiona

l, tr

ades

, car

eer a

nd te

chni

cal p

rogr

ams.

impr

ovin

g O

il an

d g

as T

enur

es

Gov

ernm

ent w

ill w

ork

to im

prov

e oi

l and

gas

tenu

re

issua

nce

polic

ies a

s wel

l as d

evel

op n

ew g

uide

lines

to

det

erm

ine

area

s tha

t req

uire

spec

ial c

onsid

erat

ion

prio

r to

tenu

re a

ppro

val b

y th

e en

d of

200

7. T

his w

ill

prov

ide

clea

r par

amet

ers f

or in

dust

ry re

gard

ing

area

s w

here

spec

ial o

r enh

ance

d m

anag

emen

t pra

ctic

es

are

requ

ired.

The

se m

easu

res w

ill st

rike

the

impo

rtan

t ba

lanc

e be

twee

n pr

ovid

ing

indu

stry

with

cla

rity

and

acce

ss to

reso

urce

s and

the

desir

e of

loca

l gov

ernm

ent,

com

mun

ities

, lan

dow

ners

, sta

keho

lder

s and

Firs

t Nat

ions

fo

r inp

ut in

to th

e oi

l and

gas

dev

elop

men

t pro

cess

.

Crea

te O

ppor

tuni

ties

fo

r Com

mun

itie

s an

d Fi

rst N

atio

nsB

enefi

ts fo

r Bri

tish

Col

umbi

ans

from

the

O

il an

d g

as S

ecto

rTh

e oi

l and

gas

sect

or o

ffers

eno

rmou

s ben

efits

to a

ll Br

itish

Col

umbi

ans t

hrou

gh e

nhan

ced

ener

gy se

curit

y, te

ns o

f tho

usan

ds o

f goo

d, w

ell-p

ayin

g jo

bs a

nd ta

x re

venu

es u

sed

to h

elp

fund

our

hos

pita

ls an

d sc

hool

s. H

owev

er, t

he d

ay-t

o-da

y im

pact

of t

he se

ctor

has

larg

ely

been

felt

on c

omm

uniti

es a

nd F

irst N

atio

ns in

Brit

ish

Colu

mbi

a’s n

orth

east

. Com

mun

ity o

rgan

izat

ions

, Firs

t N

atio

ns, a

nd la

ndow

ners

hav

e co

mm

unic

ated

a d

esire

fo

r gre

ater

inpu

t int

o th

e pa

ce a

nd sc

ope

of o

il an

d ga

s de

velo

pmen

t in

Briti

sh C

olum

bia.

By in

crea

sing

our

oil

and

gas i

ndus

try’s

com

petit

iven

ess,

Briti

sh

Colu

mbi

ans c

an co

ntin

ue to

ben

efit f

rom

wel

l-pay

ing

jobs

, hig

h qu

ality

so

cial

infra

stru

ctur

e an

d a

thriv

ing

econ

omy.

Appendix C1

Page 38 of 90

��Thro

ugh

The

BC E

nerg

y Pl

an, g

over

nmen

t int

ends

to

dev

elop

stro

nger

rela

tions

hips

with

thos

e aff

ecte

d by

oil

and

gas d

evel

opm

ent,

incl

udin

g co

mm

uniti

es

and

Firs

t Nat

ions

. The

aim

is to

wor

k co

oper

ativ

ely

to

max

imiz

e be

nefit

s and

min

imiz

e im

pact

s. Th

e pl

an

supp

orts

impr

oved

wor

king

rela

tions

hips

am

ong

indu

stry

, loc

al c

omm

uniti

es a

nd la

ndow

ners

by

incr

ease

d an

d im

prov

ed c

omm

unic

atio

n to

cl

arify

and

sim

plify

pro

cess

es, e

nhan

cing

disp

ute

reso

lutio

n m

etho

ds, a

nd o

fferin

g m

ore

supp

ort a

nd

info

rmat

ion.

The

gove

rnm

ent w

ill a

lso c

ontin

ue to

impr

ove

com

mun

icat

ions

with

loca

l gov

ernm

ents

and

ag

enci

es. S

peci

fical

ly, T

he B

C En

ergy

Pla

n ca

lls

for e

ffort

s to

prov

ide

info

rmat

ion

abou

t inc

reas

ed

loca

l oil

and

gas a

ctiv

ities

to lo

cal g

over

nmen

ts,

educ

atio

n an

d he

alth

serv

ice

prov

ider

s to

impr

ove

thei

r abi

lity

to m

ake

timel

y de

cisio

ns

on in

frast

ruct

ure,

such

as s

choo

ls, h

ousin

g, a

nd

heal

th a

nd re

crea

tiona

l fac

ilitie

s. By

pro

vidi

ng lo

cal

com

mun

ities

and

serv

ice

prov

ider

s with

regu

lar

repo

rts o

f tre

nds a

nd in

dust

ry a

ctiv

ities

, the

y ca

n m

ore

effec

tivel

y pl

an fo

r gro

wth

in re

quire

d se

rvic

es

and

infra

stru

ctur

e.

Bui

ldin

g B

ette

r rel

atio

nshi

ps

wit

h La

ndow

ners

The

BC E

nerg

y Pl

an: A

Vis

ion

for C

lean

Ene

rgy

Lead

ersh

ip a

lso su

ppor

ts im

prov

ed w

orki

ng

rela

tions

hips

bet

wee

n in

dust

ry, l

ocal

com

mun

ities

an

d la

ndow

ners

and

Firs

t Nat

ions

. Lan

dow

ners

will

be

not

ified

in a

mor

e tim

ely

way

of s

ales

of o

il an

d ga

s rig

hts o

n pr

ivat

e la

nd. P

lain

lang

uage

info

rmat

ion

mat

eria

ls, in

clud

ing

stan

dard

ized

leas

e ag

reem

ents

w

ill b

e m

ade

avai

labl

e to

hel

p la

ndow

ners

dea

l with

su

bsur

face

tenu

res a

nd a

ctiv

ity. T

here

will

be

a re

view

of

the

disp

ute

reso

lutio

n pr

oces

s bet

wee

n la

ndow

ners

an

d in

dust

ry b

y th

e en

d of

200

7. T

he e

xist

ing

setb

ack

requ

irem

ents

, the

allo

wed

dist

ance

of a

wel

l site

from

a

resid

ence

, sch

ool o

r oth

er p

ublic

pla

ce, w

ill a

lso b

e ex

amin

ed. T

hese

mea

sure

s see

k to

strik

e th

e im

port

ant

bala

nce

betw

een

prov

idin

g in

dust

ry w

ith c

larit

y an

d ac

cess

to re

sour

ces a

nd th

e de

sire

of lo

cal g

over

nmen

t, co

mm

uniti

es, l

ando

wne

rs, s

take

hold

ers a

nd F

irst N

atio

ns

for i

nput

into

oil

and

gas d

evel

opm

ent.

Wor

king

in P

artn

ersh

ip w

ith

Firs

t Nat

ions

an

d Co

mm

unit

ies

Gov

ernm

ent w

ill w

ork

with

Firs

t Nat

ions

com

mun

ities

to

iden

tify

oppo

rtun

ities

to b

enefi

t fro

m o

il an

d ga

s de

velo

pmen

t. By

dev

elop

ing

a gr

eate

r abi

lity

to

part

icip

ate

in a

nd b

enefi

t fro

m o

il an

d ga

s dev

elop

men

t, Fi

rst N

atio

ns c

an p

lay

a m

uch

mor

e ac

tive

role

in th

e in

dust

ry. T

he B

C En

ergy

Pla

n al

so su

ppor

ts in

crea

sing

Firs

t Nat

ions

role

in th

e de

velo

pmen

t of c

ross

-cul

tura

l tr

aini

ng in

itiat

ives

for a

genc

ies a

nd in

dust

ry.

Toge

ther

with

the

Oil

and

Gas

Cen

tre

of E

xcel

lenc

e in

For

t St.

John

, an

oil

and

gas t

echn

olog

y in

cuba

tor w

ill b

e es

tabl

ishe

d, a

llow

ing

entr

epre

neur

s to

deve

lop

and

test

new

inno

vatio

ns.

OiL

AN

d g

AS

PO

LiC

y A

CT

iON

S

WO

rK

iNg

WiT

h C

OM

Mu

NiT

iES

AN

d F

irS

T N

AT

iON

S

• Pr

ovid

e in

form

atio

n ab

out l

ocal

oil

and

gas

activ

ities

to lo

cal g

over

nmen

ts, F

irst N

atio

ns,

educ

atio

n an

d he

alth

serv

ice

prov

ider

s to

info

rm a

nd su

ppor

t the

dev

elop

men

t of

nece

ssar

y so

cial

infr

astr

uctu

re.

• W

ork

with

Fir

st N

atio

ns to

iden

tify

oppo

rtun

ities

to p

artic

ipat

e in

and

ben

efit

from

oil

and

gas

deve

lopm

ent.

• Su

ppor

t Fir

st N

atio

ns in

pro

vidi

ng c

ross

-cu

ltura

l tra

inin

g to

age

ncie

s an

d in

dust

ry.

• Im

prov

e w

orki

ng re

latio

nshi

ps a

mon

g in

dust

ry a

nd lo

cal c

omm

uniti

es a

nd

land

owne

rs b

y cl

arify

ing

and

sim

plify

ing

proc

esse

s, e

nhan

cing

dis

pute

reso

lutio

n m

etho

ds, a

nd o

fferi

ng m

ore

supp

ort a

nd

info

rmat

ion.

• Ex

amin

e oi

l and

gas

tenu

re p

olic

ies

and

deve

lop

guid

elin

es to

det

erm

ine

area

s th

at re

quire

spe

cial

con

side

ratio

n pr

ior t

o te

nure

app

rova

l.

Appendix C1

Page 39 of 90

��

Conc

lusi

onTh

e BC

Ene

rgy

Plan

: A V

isio

n fo

r Cle

an E

nerg

y Le

ader

ship

set

s th

e st

anda

rd fo

r pro

activ

ely

addr

essi

ng

the

oppo

rtun

ities

and

cha

lleng

es th

at li

e ah

ead

in

mee

ting

the

ener

gy n

eeds

for a

ll th

e ci

tizen

s of

the

prov

ince

, now

and

in th

e fu

ture

. App

endi

x A

pro

vide

s a

deta

iled

listin

g of

the

polic

y ac

tions

of t

he p

lan.

The

BC E

nerg

y Pl

an w

ill a

ttra

ct n

ew in

vest

men

ts, h

elp

deve

lop

and

com

mer

cial

ize

new

tech

nolo

gy, b

uild

pa

rtne

rshi

ps w

ith F

irst N

atio

ns, a

nd e

nsur

es a

str

ong

envi

ronm

enta

l foc

us.

Briti

sh C

olum

bia

has

a pr

oud

hist

ory

of in

nova

tion

that

ha

s re

sulte

d in

90

per c

ent o

f our

pow

er g

ener

atio

n co

min

g fro

m c

lean

sou

rces

. Thi

s pl

an b

uild

s on

that

foun

datio

n an

d en

sure

s B.

C. w

ill b

e at

the

fore

front

of e

nviro

nmen

tal a

nd

econ

omic

lead

ersh

ip fo

r yea

rs to

com

e.

CO

NC

Lu

SiO

NAppendix C1

Page 40 of 90

��

ENEr

gy

CO

NSE

rvAT

iON

A

Nd

EFF

iCiE

NC

y1.

Se

t an

ambi

tious

con

serv

atio

n ta

rget

, to

acqu

ire

50 p

er c

ent o

f BC

Hyd

ro’s

incr

emen

tal r

esou

rce

need

s thr

ough

con

serv

atio

n by

202

0.2.

En

sure

a c

oord

inat

ed a

ppro

ach

to c

onse

rvat

ion

and

effici

ency

is a

ctiv

ely

purs

ued

in B

ritish

Col

umbi

a.3.

En

cour

age

utili

ties t

o pu

rsue

cos

t effe

ctiv

e an

d co

mpe

titiv

e de

man

d sid

e m

anag

emen

t op

port

uniti

es.

4.

Expl

ore

with

B.C

. util

ities

new

rate

stru

ctur

es th

at

enco

urag

e en

ergy

effi

cien

cy a

nd c

onse

rvat

ion.

5.

Impl

emen

t Ene

rgy

Effici

ency

Sta

ndar

ds fo

r Bu

ildin

gs b

y 20

10.

6.

Und

erta

ke a

pilo

t pro

ject

for e

nerg

y pe

rform

ance

la

belin

g of

hom

es a

nd b

uild

ings

in c

oord

inat

ion

with

loca

l and

fede

ral g

over

nmen

ts, F

irst N

atio

ns,

and

indu

stry

ass

ocia

tions

.7.

N

e w p

rovi

ncia

l pub

lic se

ctor

bui

ldin

gs w

ill b

e re

quire

d to

inte

grat

e en

viro

nmen

tal d

esig

n to

ac

hiev

e th

e hi

ghes

t sta

ndar

ds fo

r gre

enho

use

gas e

miss

ion

redu

ctio

ns, w

ater

con

serv

atio

n an

d ot

her b

uild

ing

perfo

rman

ce re

sults

such

as a

ce

rtifi

ed st

anda

rd.

8.

Dev

elop

an

Indu

stria

l Ene

rgy

Effici

ency

Pro

gram

fo

r Brit

ish C

olum

bia

to a

ddre

ss sp

ecifi

c ch

alle

nges

fa

ced

by B

ritish

Col

umbi

a’s in

dust

rial s

ecto

r.9.

I n

crea

se th

e pa

r tic

ipat

ion

of lo

cal g

over

nmen

ts

in th

e C o

mm

unity

Act

ion

on E

ner g

y Effi

cien

c y

Prog

ram

and

exp

and

the

F irs

t Nat

ions

and

Re

mot

e Co

mm

unit y

Cle

an E

nerg

y P r

ogra

m.

ELEC

TriC

iTy

10.

Ensu

re se

lf-su

ffici

ency

to m

eet e

lect

ricity

nee

ds,

incl

udin

g “in

sura

nce”

by

2016

.11

. Es

tabl

ish a

stan

ding

off e

r for

cle

an e

lec t

ricit y

pr

ojec

ts u

p to

10

meg

a wat

ts.

12.

The

BC T

rans

miss

ion

C orp

orat

ion

is t o

ens

ure

that

Br

itish

Col

umbi

a ’s tr

ansm

issio

n t e

chno

logy

and

in

frast

ruct

ure

rem

ains

at t

he le

adin

g ed

ge a

nd

has t

he c

apac

ity to

del

iver

pow

er e

ffici

ently

and

re

liabl

y to

mee

t gro

win

g de

man

d.13

. En

sur e

ade

quat

e tr

ansm

issio

n sy

stem

cap

acity

b y

dev

elop

ing

and

impl

emen

ting

a tr

ansm

issio

n co

nges

tion

relie

f pol

icy.

14.

Ensu

r e th

at th

e pr

o vin

ce re

mai

ns c

onsis

t ent

with

N

orth

Am

eric

an tr

ansm

issio

n re

liabi

lity

stan

dard

s .15

. Co

ntin

ue p

ublic

ow

ners

hip

of B

C H

ydro

and

its

her

itage

ass

ets,

and

the

BC T

rans

miss

ion

Corp

orat

ion.

16.

Esta

blish

the

exist

ing

herit

age

cont

ract

in p

erpe

tuity

.17

. In

vest

in u

pgra

ding

and

mai

ntai

ning

the

herit

age

asse

t pow

er p

lant

s and

the

tran

smiss

ion

lines

to

reta

in th

e on

goin

g co

mpe

titiv

e ad

vant

age

thes

e as

sets

pro

vide

to th

e pr

ovin

ce.

18.

All n

e w e

lect

r icity

gen

erat

ion

proj

ects

will

ha v

e z e

ro n

et g

reen

hous

e ga

s em

issio

ns.

19.

Z ero

net

gre

enho

use

gas e

miss

ions

from

exi

stin

g th

erm

al g

ener

atio

n po

wer

pla

nts b

y 20

16.

20.

Requ

ire z

ero

gree

nhou

se g

as e

miss

ions

from

any

co

al th

erm

al e

lect

ricity

faci

litie

s. 21

. En

sure

cle

an o

r ren

ewab

le e

lect

ricity

gen

erat

ion

cont

inue

s to

acco

unt f

or a

t lea

st 9

0 pe

r cen

t of

tota

l gen

erat

ion.

22.

Gov

ernm

ent s

uppo

rts B

C H

ydro

’s pr

opos

al to

repl

ace

the

firm

ene

rgy

supp

ly fr

om th

e Bu

rrard

The

rmal

pl

ant w

ith o

ther

reso

urce

s. BC

Hyd

ro m

ay c

hoos

e to

re

tain

Bur

rard

for c

apac

ity p

urpo

ses a

fter 2

014.

23.

No

nucl

ear p

ower

.24

. Re

view

BC

Util

ities

Com

miss

ions

’ role

in c

onsid

erin

g so

cial

and

env

ironm

enta

l cos

ts a

nd b

enefi

ts.

25.

Ensu

re th

e pr

ocur

emen

t of e

lect

ricity

ap

prop

riate

ly re

cogn

izes

the

valu

e of

agg

rega

ted

inte

rmitt

ent r

esou

rces

.26

. W

ork

with

BC

Hyd

ro a

nd p

artie

s inv

olve

d to

con

tinue

to

impr

ove

the

proc

urem

ent p

roce

ss fo

r ele

ctric

ity.

27.

Purs

ue G

over

nmen

t and

BC

Hyd

ro’s

plan

ned

Rem

ote

Com

mun

ity E

lect

rifica

tion

Prog

ram

to

expa

nd o

r tak

e ov

er e

lect

ricity

serv

ice

to re

mot

e co

mm

uniti

es in

Brit

ish C

olum

bia.

28.

Ensu

r e B

C H

y dro

con

sider

s alt e

rnat

ive

elec

tric

ity

sour

ces a

nd e

nerg

y effi

cien

c y m

easu

res i

n its

en

ergy

pla

nnin

g fo

r rem

ote

com

mun

ities

.

ALT

ErN

ATiv

E EN

Erg

y29

. Es

tabl

ish

the

Inno

vativ

e Cl

ean

Ener

gy F

und

to

supp

ort t

he d

evel

opm

ent o

f cle

an p

ower

and

en

ergy

effi

cien

cy te

chno

logi

es in

the

elec

tric

ity,

alte

rnat

ive

ener

gy, t

rans

port

atio

n an

d oi

l and

ga

s se

ctor

s.

30.

I mpl

emen

t a p

rovi

ncia

l Bio

ener

gy S

trat

egy

whi

ch w

ill b

uild

upo

n Br

itish

Col

umbi

a’s n

atur

al

bioe

nerg

y re

sour

ce a

dvan

tage

s.31

. Iss

ue a

n ex

pres

sion

of in

ter e

st fo

llow

ed b

y a

call

for p

r opo

sals

for e

lec t

ricit y

from

saw

mill

resid

ues ,

logg

ing

debr

is an

d be

etle

-kill

ed ti

mbe

r to

help

m

itiga

t e im

pact

s fro

m th

e pr

ovin

cial

mou

ntai

n pi

ne b

eetle

infe

stat

ion.

32.

I mpl

emen

t a fi

ve p

er c

ent a

vera

ge r e

new

able

fu

el st

anda

r d fo

r die

sel b

y 20

10 to

hel

p r e

duce

em

issio

ns a

nd a

dvan

ce th

e do

mes

tic re

new

able

fu

el in

dust

ry.

33.

Supp

ort t

he f e

dera

l act

ion

of in

crea

sing

the

etha

nol c

onte

nt o

f gas

olin

e t o

five

per

cen

t b y

201

0 an

d ad

opt q

ualit

y pa

ram

eter

s for

al

l ren

ewab

le fu

els a

nd fu

el b

lend

s tha

t are

ap

prop

riate

for C

anad

ian

wea

ther

con

ditio

ns in

co

oper

atio

n w

ith N

orth

Am

eric

an ju

risdi

ctio

ns.

34.

Dev

elop

a le

adin

g hy

drog

en e

cono

my

by

cont

inui

ng to

supp

ort t

he H

ydro

gen

and

Fuel

Cel

l St

rate

gy fo

r Brit

ish C

olum

bia.

35.

Esta

blish

a n

e w, h

arm

oniz

ed r e

gula

tor y

fra

mew

ork

b y 2

010

for h

ydr o

gen

by w

ork i

ng w

ith

gov e

rnm

ents

, ind

ustr

y an

d hy

drog

en a

llian

ces.

OiL

AN

d g

AS

36.

Elim

inat

e al

l rou

tine

flarin

g at

oil

and

gas

prod

ucin

g w

ells

and

prod

uctio

n fa

cilit

ies b

y 20

16

with

an

inte

rim g

oal t

o re

duce

flar

ing

by h

alf

(50

per c

ent)

by 2

011.

37.

Esta

blish

pol

icie

s and

mea

sur e

s to

r edu

ce a

ir em

issio

ns in

coo

rdin

atio

n w

ith th

e M

inist

ry o

f En

viro

nmen

t.38

. B e

st c

oalb

ed g

as p

ract

ices

in N

orth

Am

eric

a.

C om

pani

es w

ill n

ot b

e al

low

ed to

sur fa

ce

disc

harg

e pr

oduc

ed w

ater

. Any

re-in

ject

ed

prod

uced

wat

er m

ust b

e in

ject

ed w

ell b

elow

any

do

mes

tic w

ater

aqu

ifer.

39.

Enha

nce

the

Oil

and

Gas

Env

ir onm

enta

l St

e war

dshi

p P r

ogra

m, e

nsur

ing

soun

d en

viro

nmen

tal ,

land

and

reso

urce

man

agem

ent.

40.

C ont

inue

to w

ork

t o li

ft th

e f e

dera

l mor

ator

ium

on

offs

hor e

exp

lora

tion

and

dev e

lopm

ent a

nd

reit e

rate

the

int e

ntio

n to

sim

ulta

neou

sly li

ft th

e pr

ovin

cial

mor

ator

ium

.41

. W

ork

with

the

fede

ral g

over

nmen

t to

ensu

re th

at

offsh

ore

oil a

nd g

as re

sour

ces a

re d

evel

oped

in

a sc

ient

ifica

lly so

und

and

envi

ronm

enta

lly

resp

onsib

le w

ay.

42.

P art

icip

ate

in m

arin

e an

d en

viro

nmen

tal p

lann

ing

to e

ffect

ivel

y m

anag

e m

arin

e ar

eas a

nd o

ffsho

re

oil a

nd g

as b

asin

s. 43

. D

evel

op a

nd im

plem

ent a

com

preh

ensiv

e co

mm

unity

eng

agem

ent p

r ogr

am t o

est

ablis

h a

fram

ewor

k f o

r a b

enefi

ts sh

arin

g ag

reem

ent

r esu

lting

from

off s

hore

oil

and

gas d

e vel

opm

ent

f or c

omm

uniti

es, i

nclu

ding

Firs

t Nat

ions

.44

. P u

rsue

regu

lat o

ry a

nd fi

scal

com

petit

iven

ess i

n su

ppor

t of b

eing

am

ong

the

mos

t com

petit

ive

oil

and

gas j

urisd

ictio

ns in

Nor

th A

mer

ica.

45.

Enha

nce

infra

stru

c tur

e t o

supp

ort t

he

deve

lopm

ent o

f oil

and

gas i

n Br

itish

Col

umbi

a an

d ad

dres

s im

pedi

men

ts to

eco

nom

ic

deve

lopm

ent s

uch

as tr

ansp

orta

tion

and

labo

ur

shor

tage

s.46

. En

cour

age

the

deve

lopm

ent o

f con

vent

iona

l and

un

con v

entio

nal r

esou

rces

.47

. Su

ppor

t the

gr o

wth

of B

r itish

Col

umbi

a ’s o

il an

d ga

s ser

vice

sect

or.

48.

Prom

ote

expl

orat

ion

and

deve

lopm

ent o

f th

e In

terio

r bas

ins w

ith a

prio

rity

focu

s on

the

Nec

hako

Bas

in.

49.

Enco

urag

e th

e de

velo

pmen

t of n

e w t e

chno

logi

es.

50.

A dd

valu

e to

Br it

ish C

olum

bia ’s

oil

and

gas

indu

str y

by

asse

ssin

g an

d pr

omot

ing

the

dev e

lopm

ent o

f add

ition

al g

as p

roce

ssin

g fa

cilit

ies i

n th

e pr

ovin

ce.

51.

P ro v

ide

info

r mat

ion

abou

t loc

al o

il an

d ga

s ac

tiviti

es t o

loca

l gov

ernm

ents

, edu

catio

n an

d he

alth

serv

ice

prov

ider

s to

info

r m a

nd

supp

ort t

he d

e vel

opm

ent o

f nec

essa

r y so

cial

in

frast

ruct

ure.

52.

Wor

k w

ith F

irst N

atio

ns to

iden

tify

oppo

r tun

ities

to

par

ticip

ate

in a

nd b

enefi

t fr o

m o

il an

d ga

s de

v elo

pmen

t. 53

. Su

ppor

t Firs

t Nat

ions

in p

r ovi

ding

cr o

ss-c

ultu

ral

trai

ning

t o a

genc

ies a

nd in

dust

ry.

54.

I mpr

o ve

wor

king

rela

tions

hips

am

ong

indu

stry

an

d lo

cal c

omm

uniti

es a

nd la

ndow

ners

by

clar

ifyin

g an

d sim

plify

ing

proc

esse

s, en

hanc

ing

disp

ute

reso

lutio

n m

etho

ds, a

nd o

fferin

g m

ore

supp

ort a

nd in

form

atio

n.55

. Ex

amin

e oi

l and

gas

t enu

re p

olic

ies a

nd d

e vel

op

guid

elin

es t o

det

erm

ine

area

s tha

t req

uire

spec

ial

cons

ider

atio

n pr

ior t

o t e

nure

app

r ova

l .

AP

PE

Nd

iX A

The

BC

Ener

gy P

lan:

Sum

mar

y of

Pol

icy

Act

ions

Appendix C1

Page 41 of 90

Ener

gy in

Act

ion

Po

wE

rs

mA

rt

BC H

ydro

offe

rs a

var

iety

of

ince

ntiv

es to

ado

pt e

nerg

y sa

ving

te

chno

logi

es. I

ncen

tives

suc

h as

reba

tes

on e

ffici

ent l

ight

ing

or w

indo

ws

enco

urag

es B

ritis

h Co

lum

bian

s to

impr

ove

the

ener

gy

effici

ency

of t

heir

hom

es a

nd

busi

ness

es.

Pr

ov

inc

iAl

sA

lE

s t

Ax

E

xE

mP

tio

ns

Tax

brea

ks a

re o

ffere

d fo

r a w

ide

var ie

ty o

f ene

rgy

effici

ent i

tem

s, m

akin

g it

easi

er to

con

serv

e en

ergy

. Ta

x co

nces

sion

s ar

e in

pla

ce fo

r al

tern

ativ

e fu

el a

nd h

ybrid

veh

icle

s as

wel

l as

som

e al

tern

ativ

e fu

els.

Bicy

cles

and

som

e bi

cycl

e pa

rts

are

exem

pt fr

om p

rovi

ncia

l sal

es ta

x,

as a

re a

var

iety

of m

ater

ials

, suc

h as

Ene

rgy

Star

® qu

alifi

ed w

indo

ws,

that

can

mak

e ho

mes

mor

e en

ergy

effi

cien

t.

nE

t m

Et

Er

ing

The

Net

Met

erin

g pr

ogra

m

offer

ed b

y BC

Hyd

ro fo

r cus

tom

ers

with

sm

all g

ener

atin

g fa

cilit

ies,

allo

ws

cust

omer

s to

low

er th

eir

envi

ronm

enta

l im

pact

and

take

re

spon

sibi

lity

for t

heir

own

pow

er

prod

uctio

n. T

he c

usto

mer

is o

nly

bille

d fo

r the

ir “n

et c

onsu

mpt

ion”

; th

e to

tal a

mou

nt o

f ele

ctric

ity

used

min

us th

e to

tal p

rodu

ced.

N

et M

eter

ing

help

s to

mov

e th

e pr

ovin

ce to

war

ds e

lect

ricity

sel

f su

ffici

ency

and

exp

ands

cle

an

elec

tric

ity g

ener

atio

n.

Po

wE

rin

g t

hE

Ec

on

om

yTh

e O

il an

d G

as se

ctor

inve

sted

$4

.6 b

illio

n in

B.C

. in

2005

and

co

ntrib

uted

mor

e to

the

prov

inci

al

trea

sury

than

any

oth

er re

sour

ce in

20

05/0

6. In

200

6 1,

416

oil a

nd g

as

wel

ls w

ere

drill

ed in

the

prov

ince

and

be

twee

n 20

02 a

nd 2

005,

sum

mer

dr

illin

g in

crea

sed

242

per c

ent.

Fr

idg

E B

uy

-BA

ck

P

ro

gr

Am

This

pro

gram

offe

rs c

usto

mer

s $3

0 in

cas

h an

d no

-cos

t pic

kup

and

disp

osal

of a

n ol

d, in

effici

ent s

econ

d fr

idge

. If a

ll se

cond

ope

ratin

g fr

idge

s in

B.C

. wer

e re

cycl

ed, w

e w

ould

sav

e en

ough

ene

rgy

to

pow

er a

ll th

e ho

mes

in th

e ci

ty o

f Ch

illiw

ack

for a

n en

tire

year

.

lig

ht

ing

rE

BA

tE

sTh

is p

rogr

am o

ffers

inst

ant r

ebat

e co

upon

s fo

r the

reta

il pu

rcha

se

of E

nerg

y St

ar®

light

fixt

ures

an

d En

ergy

Sta

r® C

FLs

(Com

pact

Fl

uore

scen

t Lig

hts)

.

win

do

ws

rE

BA

tE

The

Win

dow

s Re

bate

Pro

gram

offe

rs

reba

tes

for t

he in

stal

latio

n of

Ene

rgy

Star

® w

indo

ws

in n

ew, r

enov

ated

or

upg

rade

d si

ngle

-fam

ily

hom

es, d

uple

xes,

tow

nhou

ses

or

apar

tmen

ts.

Pr

od

uc

t i

nc

En

tiv

E P

ro

gr

Am

The

Prod

uct I

ncen

tive

Prog

ram

pr

ovid

es fi

nanc

ial i

ncen

tives

to

org

aniz

atio

ns w

hich

repl

ace

ineffi

cien

t pro

duct

s w

ith e

nerg

y effi

cien

t tec

hnol

ogie

s or

add

on

prod

ucts

to e

xist

ing

syst

ems

to

mak

e th

em m

ore

effici

ent.

hig

h-P

Er

Fo

rm

An

cE

Bu

ild

ing

Pr

og

rA

m

Fo

r l

Ar

gE

co

mm

Er

ciA

l B

uil

din

gs

Fina

ncia

l inc

entiv

es, r

esou

rces

, and

te

chni

cal a

ssis

tanc

e ar

e av

aila

ble

to h

elp

qual

ified

pro

ject

s id

entif

y en

ergy

sav

ing

stra

tegi

es e

arly

in th

e de

sign

pro

cess

; eva

luat

e al

tern

ativ

e de

sign

opt

ions

and

mak

e a

busi

ness

ca

se fo

r the

hig

h-pe

rfor

man

ce

desi

gn; a

nd, o

ffset

the

incr

emen

tal

cost

s, if

any,

of t

he e

nerg

y-effi

cien

t m

easu

res

in th

e hi

gh-p

erfo

rman

ce

desi

gn.

hig

h-P

Er

Fo

rm

An

cE

Bu

ild

ing

Pr

og

rA

m

Fo

r s

mA

ll t

o m

Ed

ium

c

om

mE

rc

iAl

Bu

ild

ing

sIn

cent

ives

and

tool

s ar

e off

ered

to

help

ow

ners

and

thei

r des

ign

team

s cr

eate

and

inst

all m

ore

effec

tive

and

ener

gy-e

ffici

ent l

ight

ing

in n

ew

com

mer

cial

dev

elop

men

t pro

ject

s.

nE

w h

om

E P

ro

gr

Am

Build

ers

and

deve

lope

rs a

re

enco

urag

ed to

bui

ld e

nerg

y effi

cien

t hom

es b

y off

erin

g fin

anci

al

ince

ntiv

es a

nd P

ower

Sm

art

bran

ding

for h

omes

that

ach

ieve

en

ergy

effi

cien

t rat

ings

.

An

Aly

zE

my

ho

mE

BC H

ydro

offe

rs a

n on

line

tool

th

at p

rovi

des

a fr

ee, p

erso

naliz

ed

brea

kdow

n of

a c

usto

mer

’s ho

me

ener

gy u

se a

nd re

com

men

datio

ns

on w

here

impr

ovem

ents

can

be

mad

e to

low

er c

onsu

mpt

ion.

co

ns

Er

vA

tio

n r

Es

EA

rc

h

init

iAt

ivE

A 1

2-m

onth

stu

dy in

six

co

mm

uniti

es th

at e

xam

ines

how

ad

just

ing

the

pric

e of

ele

ctric

ity a

t di

ffere

nt ti

mes

of d

ay in

fluen

ces

ener

gy u

se b

y re

side

ntia

l cus

tom

ers,

and

how

indi

vidu

al B

ritis

h Co

lum

bian

s ca

n m

ake

a di

ffere

nce

in c

onse

rvin

g po

wer

in th

eir h

omes

an

d he

lp m

eet t

he g

row

ing

dem

and

for e

lect

ricity

in B

.C.

th

E g

rE

En

Bu

ild

ing

s P

ro

gr

Am

Prov

ides

tool

s an

d re

sour

ces

to

supp

ort s

choo

l dis

tric

ts, u

nive

rsiti

es,

colle

ges,

and

heal

th a

utho

ritie

s to

im

prov

e th

e en

ergy

effi

cien

cy o

f th

eir b

uild

ings

acr

oss

the

prov

ince

.

At

tr

Ac

tin

g w

or

kE

rs

The

Min

istr

y of

Ene

rgy,

Min

es a

nd

Petr

oleu

m R

esou

rces

hos

ts jo

b fa

irs a

cros

s B.

C. to

att

ract

wor

kers

to

the

high

ly lu

crat

ive

oil a

nd

gas

sect

or. J

ob fa

irs w

ere

held

in

14 c

omm

uniti

es in

200

5 an

d 16

co

mm

uniti

es in

200

6 at

trac

ting

thou

sand

s of

peo

ple

and

resu

lting

in

hun

dred

s of

job

offer

s. Ce

ntre

of

Exc

elle

nce

Gov

ernm

ent i

s pa

rtne

ring

with

indu

stry

and

the

Nor

ther

n Li

ghts

Col

lege

in F

ort S

t. Jo

hn to

bui

ld a

cen

tre

for o

il an

d ga

s ex

celle

nce,

mor

e th

an d

oubl

ing

the

num

ber o

f stu

dent

s tr

aini

ng fo

r job

s in

the

oil a

nd g

as in

dust

ry.

cE

nt

rE

oF

Ex

cE

llE

nc

EG

over

nmen

t is

part

nerin

g w

ith

indu

stry

and

the

Nor

ther

n Li

ghts

Co

llege

in F

ort S

t. Jo

hn to

bui

ld a

ce

ntre

for o

il an

d ga

s ex

celle

nce,

m

ore

than

dou

blin

g th

e nu

mbe

r of

stud

ents

trai

ning

for j

obs

in th

e oi

l an

d ga

s in

dust

ry.

10

0,0

00

so

lA

r r

oo

Fs

F

or

B.c

.Th

e M

inis

ters

of E

nviro

nmen

t, an

d En

ergy

, Min

es a

nd P

etro

leum

Re

sour

ces

are

spon

sorin

g th

e de

velo

pmen

t of a

pla

n th

at w

ill s

ee

the

agg r

essi

ve a

dopt

ion

of s

olar

te

chno

logy

in B

.C. T

he g

oal o

f the

pr

ojec

t is

to s

ee th

e in

stal

latio

n of

so

lar r

oofs

and

wal

ls fo

r hot

wat

er

heat

ing

and

phot

ovol

taic

ele

ctric

ity

gene

ratio

n on

100

,000

bui

ldin

gs

arou

nd B

.C.

PA

rt

nE

rin

g F

or

su

cc

Es

sSi

nce

2003

, the

Pro

vinc

e of

B.C

. ha

s pa

rtne

red

in th

e co

nstr

uctio

n of

$15

8 m

illio

n in

new

oil

and

gas

road

and

pip

elin

e in

fras

truc

tur e

. Th

e Si

erra

Yoy

o D

esan

Roa

d pu

blic

pr

ivat

e pa

rtne

rshi

p im

prov

ed th

e ro

ad a

llow

ing

year

roun

d dr

illin

g ac

tivity

in th

e G

reat

er S

ierr

a na

tura

l gas

pla

y. T

he p

roje

ct w

as

reco

gniz

ed w

ith th

e G

old

Awar

d fo

r In

nova

tion

and

Exce

llenc

e fr

om th

e Ca

nadi

an C

ounc

il fo

r Pub

lic P

rivat

e Pa

rtne

rshi

ps in

200

4.

En

Er

gy

EF

Fic

iEn

t B

uil

din

gs

: A

Pl

An

Fo

r B

cTh

is s

trat

egy

will

low

er e

nerg

y co

sts

for n

ew a

nd e

xist

ing

build

ings

by

$12

7 m

illio

n in

201

0 an

d $4

74 m

illio

n in

202

0, a

nd re

duce

gr

eenh

ouse

gas

em

issi

ons

by 2

.3

mill

ion

tonn

es in

202

0. T

he P

rovi

nce

is im

plem

entin

g te

n po

licy

and

mar

ket m

easu

res

in p

artn

ersh

ip

with

the

build

ing

indu

stry

, ene

rgy

cons

umer

gro

ups,

utili

ties,

non-

gove

rnm

enta

l org

aniz

atio

ns, a

nd

the

fede

ral g

over

nmen

t.

Appendix C1

Page 42 of 90

For m

ore

info

rmat

ion

on

The

BC E

nerg

y Pl

an:

A V

isio

n fo

r Cle

an E

nerg

y Le

ader

ship

, con

tact

:

Min

istr

y of

Ene

rgy,

Min

es a

nd P

etro

leum

Res

ourc

es

1810

Bla

nsha

rd S

tree

t

PO B

ox 9

318

Stn

Prov

Gov

t

Vict

oria

, BC

V8W

9N

3

250.

952.

0241

ww

w.e

nerg

ypla

n.go

v.bc

.ca

Appendix C1

Page 43 of 90

1. Set an ambitious conservation target, to acquire 50 per cent of BC Hydro s incrementalresource needs through conservation by 2020.

Government has set a goal to reduce the growth in electricity demand so that, by 2020, 10,000GWh of currently forecast needs will be met through demand reduction measures. This mayinclude energy effciency, conservation , and other demand side solutions like load displacement,fuel switching (e.g. solar hot water heating) and small distributed generation (e.g. net metering.To put this goal in context, it represents about 20 per cent of the 52 000 GWh of electricity BCHydro required in 2006 to meet the needs of British Columbians.

This conservation target will be accomplished through BC Hydro aggressively pursuing and thenexceeding its existing target to meet one-third of its forecast increase in requirements throughdemand reduction. In addition , new government policies and programs will support BC Hydroand other electricity and natural gas utilities in further reducing demand growth. This may involveclarifying the criteria the British Columbia Utilities Commission uses in its oversight of utility ratesand other utility efforts designed to promote conservation.

2. Ensure a coordinated approach to conservation and effciency is actively pursued in BritishColumbia.

British Columbia s energy utilities, the Province, the federal government, the private sector, industryassociations, non-profit organizations, local governments and First Nations are delivering a widerange of energy effciency and conservation initiatives, including:

Community Action on Energy Effciencyhttp://www.bcclimateexchange.ca/i ndex.ph p ?p=caee

Energy Savings Planhttp://www.saveenergynow.ca/Built Green BChttp://www.ch babc.org/ content.ph p ?id=504

BOMA Green Buildings Foundationhttp://www.g reen bu i Idi ngsfou ndation.org/Canada Green Building Councilhttp://www.g reen bu i Idi ngsfou ndation.org/First Nation and Remote Community Clean Energy Programhttp://www.empr.gov.bc.ca/AlternativeEnergy/AICEnergy_Home.htmBC Hydro s Power Smarthttp://www.bchydro.com/powersmart/Terasen Gashttp://www.terasengas.com/Promotions/Current+Promotions/RewardingRebates.htmFortisBC's PowerSense programhttp://www.fortisbc.com/energy_effciency/energy_effciency-programs.htm I

Appendix C1

Page 44 of 90

Green Buildings BC

http://www.greenbuildingsbc.com/Lighthouse Sustainable Building Centrehttp://www.sustainablebuildingcentre.com/new _ici m u rb construction i n itiative

ecoEnergy Effciency Initiative (Natural Resources Canada Offce of EnergyEffciency)http://www.ecoenergy.gc.ca/

There is currently limited coordination of these numerous initiatives. If BC is to achieve its energy

effciency/clean energy goals, these programs and initiatives must work together in a coordinatedand complementary manner. For example, some programs, such as targeting household spaceand water heating, may not be justified on the basis of either electricity savings or gas savingsalone. However, a coordinated effort may be cost-effective.

The Ministry of Energy, Mines and Petroleum Resources will take the lead in working with keyplayers to ensure that initiatives are coordinated, and that opportunities for joint initiatives are notmissed.

3. Encourage utilties to pursue cost effective and competitive demand side managementopportunities.

Energy effciency is a critical piece of all BC utility resource plans. Through demand side

management (DSM) actions, energy utilities playa vital role in promoting energy conservationwith investments in energy effcient technologies and building designs along with capacitybuilding measures with communities, trade allies, industry associations and consumer

organizations.

Under the 2002 Energy Plan , the Utilities Commission Act was amended to ensure that utilities

specifically considered demand reduction measures as a part of long term resource plans.Under this Energy Plan, utilities in BC are to pursue all cost-effective investments in demand sidemanagement. Cost-effective demand-side investments are those that are equal to or lower in

cost than supply side resources. Utilities are also encouraged to develop a diversified portfolioof programs to ensure all ratepayers can benefit from these programs. In particular, programdevelopment should consider how to make DSM programs accessible to residential ratepayers

across all income levels.

The Ministry of Energy, Mines and Petroleum Resources will monitor utilities' progress on energy

effciency and assess whether there are barriers to the implementation of reasonable and cost-effective programs. If required, the Ministry may consider and propose as needed regulatorymeasures. (e.g. directions to the Commission under the Utilities Commission Act) As well, the

Ministry will assess whether additional measures are needed to ensure appropriate incentives are

in place to encourage investor owned utilities to identify and pursue cost-effective DSM programs

and to facilitate and promote better cooperation and coordination among energy utilitiesregulated by the BCUC.

Appendix C1

Page 45 of 90

4. Explore with B.C. utilties new rate structures that encourage energy effciency andconservation.

A key demand side management tool is pricing structures to either discourage consumptionoverall, or shift demand to less costly periods. The 2002 Energy Plan directed BC Hydro to develop

stepped rates for industrial customers to ensure rates reflected the marginal cost of new supplyand to encourage energy effciency. These stepped rates came into effect on April 1 , 2006.

The BC Energy Plan , all utilities are encouraged to explore, develop and propose to the

Commission additional innovative rate designs that encourage effciency, conservation and thedevelopment of clean or renewable energy. These include stepped rates for other rate classesinterruptible/curtailable rates, critical period rates, clean electricity supply rates, tariffs focused

on promoting energy effcient new construction and others. A part of this work should includeconsideration of the benefits of'smart ' or advanced metering technology, which offer potential for

much greater consumption information and control being available to the consumer.

The Ministry of Energy, Mines and Petroleum Resources will monitor and assess progress on thedevelopment and implementation of price structures and advanced metering to encourageenergy effciency and conservation, and may propose additional regulatory measures (e.g. Special

Directions) if required.

5. Implement Energy Effciency Standards for Buildings by 2010.

Government will work with industry, local governments and other stakeholders to prepare and

implement cost-effective energy effciency standards for buildings. Provincial energy effciency

building standards are needed to achieve energy effciency and conservation targets and tosupport the goal of self suffciency, including commitments under BC Hydro s current IntegratedElectricity Plan. Regulated standards for buildings are a central component of energy effciencyprograms in leading jurisdictions throughout the world. Performance-based standards can

effectively build upon the uptake of energy effciency measures currently applied voluntarily bydevelopers and supported by partnerships between government and industry associations.

The Ministry of Energy, Mines and Petroleum Resources will work closely with the BuildingsPolicy Branch of the provincial Offce of Housing and Construction Standards to developrecommendations by the end of 2007 on specific energy effciency standards for houses and

buildings and the mechanisms for implementation. These may include incentives, voluntarytargets and/or regulated requirements. With active participation of industry, utilities and otherstakeholders, the goal is to introduce building standards no later than 2010, provided they arecost-effective to administer and implement.

Appendix C1

Page 46 of 90

6. Undertake a pilot project for energy performance labellng of homes and buildings incoordination with local and federal governments, First Nations, and industry associations.

Energy performance labelling supports increased energy effciency by making the effciency ofbuildings observable, in much the same way that the Energy Star and EnerGuide labels provide

information for consumers on appliance energy use. Labelling also supports other policies and

programs, such as energy-effcient mortgages, promotion of energy effciency by realtors andproperty inspectors, and new utility incentives to promote energy effciency upgrades of housesand buildings.

The Ministry of Energy, Mines and Petroleum Resources will work with utility, federal and local

government and industry partners, to implement an expanded "Energy Savings Plan" pilot project

that would evaluate the potential for widespread energy performance labelling of homes andbuildings.

7. New provincial public sector buildings wil be required to integrate environmental design toachieve the highest standards for greenhouse gas emission reductions, water conservationand other building performance results such as a certified standard.

Buildings have many environmental impacts, including energy demand, water consumptionwaste water production , the embodied energy of building materials, solid waste production

and in some cases, disposal of toxic materials. Buildings have impacts beyond their physicalboundaries - orientation and height can impact on neighboring buildings by shading key solar

resources, occupants' impact on transportation systems, and greenfield construction can impacton food production.

The Climate Action Team will define a number of " indicators of integrated environmental

design" (e.g., greenhouse gas, energy, water, building materials and transportation footprint).The indicators will be calculated on a regular basis by conducting audits of all existing, publicly

funded buildings of a minimum size, and for all new construction projects. These includeprovincial government, school district, health authority, BC Housing, crown corporation and local

government buildings with funding from the Province.

After completing the audits, prior to 2010, the Climate Action Team will establish targets for new

integrated environmental design standards that will apply to all buildings that receive new fundsfrom the Province, supporting the goal of the government of B.C. being carbon neutral by 2010.

Reporting will be completed annually, including audits of all new buildings and "recommissioning

on a regular basis (e.g., every five years). Industry driven certification systems will be considered as

a means of evaluating environmental performance.

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For energy use, a carbon neutral target may require an aggressive deployment of advancedbuilding designs that includes, but is not limited to:

maximization of advantageous passive solar energy gains and daylighting,incorporation of high-performance windows,maximization of heat recovery from exhaust ventilation air, grey water and cooling equipmentuse of the highest effciency heating and cooling equipment and passive ventilation systems,andintegration of smart building controls that promote energy and water conservation.

In addition , any greenhouse gas emissions created from the use of purchased energy suppliescould be offset through leadership on transportation systems connected with buildings -supporting low- or zero-carbon employee transportation choices and/or locating buildings nearamenities and workplace destinations to minimize the need for work-related vehicle travel.

The Province is already a leader in North America on low carbon building designs. For example,

the BC Cancer Research Agency uses 50 per cent less energy than the model energy code forbuildings. Taylor Park Elementary School in Burnaby uses 41.5 per cent less energy and 50 per cent

of the site is landscaped with native vegetation requiring little or no irrigation. The 48 600 square

foot Nicola Valley Institute ofTechnology in Merritt uses 35 per cent less energy with an effcientenvelope, solar control , thermal mass and natural ventilation. A comprehensive post occupancyevaluatioh was conducted after this building had been occupied, involving interviews with thebuilding designers and operators , a site visit, analysis of energy and water consumption data, and asatisfaction survey.

8. Develop an Industrial Energy Effciency Program for British Columbia to address specificchallenges faced by British Columbia s industrial sector.

Government will establish an Industrial Energy Effciency Program for British Columbia to address

challenges and issues faced by the BC industrial sector and support the Canada wide industrialenergy effciency initiatives led by the Council of Energy Ministers. The program will encourageindustry driven investments in energy effcient technologies and processes; reduce emissionsand greenhouse gases; promote self generation of power; and reduce funding barriers thatprohibit energy effciency in the industrial sector. Some specific strategies include developing aresults-based pilot program with industry to improve energy effciency and reduce overall power

consumption and promote the generation of renewable energy within the industrial sector.

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9. Increase the participation of local governments in the Community Action on EnergyEffciency Program and expand the First Nations and Remote Community Clean EnergyProgram.

The Community Action on Energy Effciency (CAEE) program provides financial and researchsupport to BC local governments to advance the energy conservation and effciency through localgovernment policies and public outreach.

In 2007, a total of 29 communities in all regions of the province are participating. Each communityhas signed on to one or more of the Provincial targets for new and existing (public and privatesector) buildings outlined in "Energy Effciency Buildings: A Plan for Be; including residential,

commercial , institutional and industrial buildings.

Phase 1 of CAEE was a jointly managed pilot project with Natural Resources Canada in 2004 and

2005 that engaged two local governments and a remote community. Support was providedtowards human resources to advance energy effciency objectives, including "one-stop-shopinformation services.

Under Phase 2 of CAEE (early 2006) 15 communities were provided with $10 000 to implementenergy effciency policies. The Fraser Basin Council has provided policy research support to local

governments that want to pioneer innovative energy effciency initiatives through land use

planning, development controls and educational/voluntary measures. In addition, Phase 2 ofCAEE also provides funding for the "Energy Savings Plan ; an education , labelling and incentive

initiative that targets consumers and industry with the support of participating local governments.

Under Phase 3 of CAEE, announced on October 25 , 2006, a total of $450,500 was directed tosupport new energy effciency and community energy planning projects in sixteen communitiesthroughout British Columbia. Each community will develop an energy effciency program uniqueto its own needs and policies. These programs could address a range of leadership, voluntary andpolicy measures such as:

Establishing energy commitments in the offcial community planCompleting integrated energy, air quality and greenhouse gas action plansConsidering energy effciency guidelines for building developers,Providing information to community residents, and

Introducing green building policies.

The Province is also providing technical support to a number of CAEE communities through theGreen Buildings Be initiative.

The First Nation and Remote Community Clean Energy Program was announced by MEMPR on

November 23, 2006 in the northern community of Atlin, near the Yukon border. The program

included pilot projects with ten communities to implement alternative and renewable energysupplies and energy effciency measures. These include hydropower, wind, solar photovoltaics,energy effciency and conservation measures.

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Many remote communities rely on expensive diesel electricity supplies. In partnership with Hydro s Remote Community Electrification program, efforts have been made to improve thereliability and affordability of electricity systems, while maximizing energy conservation, effciencyand clean electricity supply options. The federal government contributed $3.863 million to

support the program, along with significant financial support from communities and developmentpartners.

The BC Energy Plan includes an expansion to additional local governments and remote and FirstNation communities, with an aim to have 50 local governments and additional First Nations and

remote communities in BC participating in CAEE by 2010, and 50 per cent of local governments

and remote communities by 2016 (about 90 local governments and 30 remote communities).

The following communities are participating in CAEE and the First Nation and Remote CommunityClean Energy Program:

City of Abbotsford

Atlin - Taku RiverTlingit First Nation

Klemtu - Kitasoo-Xaixais First Nation

Municipality of Bowen Island

City of Burnaby

City of Campbell River

Kyuquot/Checklesaht First Nation

City of Merritt

Regional District of Nanaimo

City of New Westminster

Regional District of Central Kootenay

Capital Regional District

City of North Vancouver

Town of Oliver

District of Central Saanich

City of Dawson Creek

City of Port Moody

City of Quesnel

Douglas First Nation

City of Fort St John

District of Saanich

Hartley Bay - Gitga at First Nation

District of Houston

Salt Spring Island Trust

Town of Smithers

Hupacasath First Nation

City of Kamloops

District of Squamish

City of Surrey

Village of Kaslo

City of Kelowna

Treaty 8 Tribal Association

City of Vancouver

KitamaatViliage - Haisla First Nation

District of Vanderhoof

City of Victoria

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10. Ensure self-suffciency to meet electricity needs, including insurance

The Province wants to ensure that British Columbia has the reliable made- in-BC supply it needs

to meet the growing demand for electricity, and that new resource acquisition is planned in a

way that recognizes the long lead time and implementation risks associated with new powerprojects, and the challenges of forecasting future needs. In particular, for BC Hydro, the Province

wants to ensure that BC Hydro has enough BC-based power at all times, even in low water years

to meet its customers' electricity needs. Therefore, after implementing all cost-effective energyconservation opportunities, BC Hydro will acquire suffcient BC -based resources by 2016 so

that BC Hydro can meet its customers' needs even under critical water conditions. By 2026 , BC

Hydro will acquire 3,000 gigawatt hours of supply on top of their firm energy requirements (theenergy required to meet customer needs under critical water conditions) and capacity resourcesneeded to effectively integrate this energy in a cost-effective manner. The Province recognises the

ongoing importance of trade for maximising the value of BC Hydro s heritage resources and for

optimising its system , and this activity will continue. The British Columbia Utilities Commission willcontinue to have responsibility for regulating BC Hydro, within the context of the self-suffciencyrequirement.

11. Establish a standing offer for clean electricity projects up to 10 megawatts.

The Province wants to facilitate the development of distributed clean electricity generatingprojects in British Columbia to support its goal of self-suffciency and help promote B.innovation. The Province is concerned about the size of the administrative burden for small

project proponents to bid on BC Hydro calls. For this reason, this policy directs BC Hydro to

develop a program, in consultation with stakeholders, to purchase, continuously or in regular offerwindows, electricity from projects with a capacity of 10 MW or less. The Standing Offer will allowsmall projects to sell power to BC Hydro at a fixed price and with standard contract terms andconditions. A Standing Offer Program would be in addition to planned Calls for Power from larger

projects. The Program design will be subject to the review and approval of the BCUC.

The Province has established the following general principles to guide the design of the Program:

Simplify the process, contract terms and conditions for small power projects in Be;Competitive pricing for these projects relative to other supply sources; andEnsure cost-effectiveness, transparency, and fairness of the Program.

Some specific design guidelines are as follows:

Except for local safety and security reasons, there should be no quota initially for the StandingOffer program.The product should be contractually non-firm energy.Proponents should not be required to pay a deposit for the Standing Offer program, althoughBC Hydro may establish other eligibility and security requirements, subject to approval from

the BCUC. BC Hydro may also limit the maximum length of time a proponent has betweenreceiving a contract and commercial operating date (COD).

Transmission or distribution connected projects of 10 MW or less, and either clean , renewable

or co-generation with an overall effciency (heat andelectricity production) in excess of 80 percent will be eligible for the program.BC Hydro will absorb transmission / distribution network upgrade costs for individual projectssubject to a cap established in consultation with stakeholders and approval from the BCUCafter which project proponents may be required to pay for additional network upgrade costs.

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The price should be transparent, simple, and based on the most recent call results and

updated regularly, but not more than annually.BC Hydro will retain any rights and incentives associated with the green attributes, as well

as any credits associated with greenhouse gas emissions (GHG). The clean or alternativeelectricity acquired will contribute to maintaining the Province s standard of having 90 percent of BCs electricity generated being clean or renewable.

In addition , to ensure even treatment of new supply acquired through BC Hydro s net meteringprogram and the Standing Offer approach , Government will issue a direction to the Commissionthat BC Hydro makes appropriate changes to its net metering program. This will ensure the price

paid for net annual surpluses of generation ' purchased' by BC Hydro is generally consistent with

the prices paid in the Standing Offer program.

12. The BC Transmission Corporation is to ensure that British Columbia s transmissiontechnology and infrastructure remains at the leading edge and has the capacity to deliverpower effciently and reliably to meet growing demand.

The BCTransmission Corporation s investments in advanced control and monitoring technologiesincrease the capacity of existing assets by enabling more precise operation of the transmissionsystem. By taking a broader and more progressive approach to transmission planning, BCTC will

also be able to ensure that new transmission infrastructure will be in place to reliably meet theprovince s future electricity needs.

Since its inception , BCTC has planned system upgrades and new transmission projects in response

to a customer s request. Transmission projects, however, require longer lead and constructiontimes than generation or load build. The experience of other jurisdictions with this type planning approach is that transmission capacity is often not in place when it is needed.

To prevent this situation from occurring in British Columbia, BCTC will move beyond this contract

driven approach to an approach that builds infrastructure in advance of need. The BCTransmission

Corporation will study and propose, where appropriate, system upgrades or expansions basedin part, on its own assessment of future market needs. Three types of transmission projects will

benefit from this approach:

a planned system upgrade for a Network Customer already identified in the BCTC Capital

Plan that can be beneficially advanced in time;

a system upgrade required for a customer that can beneficially be made larger than theimmediate requirement; and

a project that BCTC identifies as having future benefits, but which has not been triggeredby a customer request.

BCTC will identify this third type of project through an annual project review designed to identifypossible projects that would be viable as a BCTC led investment.

BCTC will only proceed with an upgrade or expansion project after completion of a strongbusiness case that identifies the costs and benefits of the proposed project, completion ofthorough stakeholder and First Nation consultations, and receiving all necessary regulatory

approvals.

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13. Ensure adequate transmission system capacity by developing and implementing atransmission congestion relief policy.

The congestion-relief policy will support the priorities of energy security and self-suffciencyby ensuring full and adequate transmission infrastructure is available at all times, and across all

regions, of BCs electricity grid.

By implementing a congestion-relief planning regime, and by designating specifically-definedinfrastructure projects as congestion-alleviating, Government will ensure that BCs transmission

system is developed in a timely manner, is able to support optimum energy security and

economic growth , and BC Hydro achieves electricity self-suffciency. Specifically-definedinfrastructure projects will ensure a transmission system robust enough to support the most

effcient use of generation resources from a province-wide perspective.

Government will work with BCTC to create and implement the congestion- relief policy. This

policy will guide transmission system planning on the basis of cost-effectively removing existingsystem congestion and constraints, and maintaining that state. This will be accomplished

through specifically-defined transmission infrastructure upgrades or expansions, planned from

the perspective of meeting and maintaining an un-congested system. This stands in contrast

to the current regime of project planning based on specific customer-driven requirements, oropportunities identified through BCTCs current Expansion Policy. The policy will define the

specific approach to identifying congestion-relieving priority projects.

Other jurisdictions have employed similar policies designed to get congestion out of a system.

For example, Alberta has policies requiring zero congestion and transmission solutions. The

United States has passed legislation (as part of the Energy Policy Act), to permitthe Federal Energy

Regulatory Commission to solve persistent and damaging congestion.

14. Ensure that the province remains consistent with North American transmissionreliabilty standards.

Government will commit to ensure that industry developed reliability standards are introduced in

British Columbia, cost-effectively and in a manner that respects BCs regulatory sovereignty.

The analysis of recent large-scale electricity blackouts has confirmed the value of common andmandatory reliability standards for the electricity industry. New North American standards areemerging from the North American Electric Reliability Council , an industry body made up oftechnical experts from Canada and the United States. British Columbia will follow the industrypractice of making these common standards mandatory for users, owners, and operators of the

bulk power transmission system in Be. Consultations with industry will be undertaken to discuss

the options for BC to implement these standards.

The BC Utilities Commission will determine, set and enforce reliability standards in the province

and can approve variances if it determines that a variance is appropriate. This approach is

consistent with steps taken by other Canadian jurisdictions.

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15. Continue public ownership of BC Hydro and its heritage assets, and the BC TransmissionCorporation.

The BC Energy Plan upholds and confirms the 2002 Energy Plan s fundamental principle of publicownership of BC Hydro, its heritage assets, and the BCTe.

Under the 2002 Energy Plan , the government passed the BC Hydro Public Power Legacy and Heritage

Contract Actto ensure continued public ownership of BC Hydro and its heritage assets, including

BC Hydro s generation , distribution and transmission systems. While BC Hydro retains ownership

of the transmission system , the Transmission Corporation Act dealt with the transfer of transmissionoperation , management and planning responsibility to BCTe. The Transmission Corporation Act

included the stipulation that BCTC must be 100 per cent owned by government and cannot besold.

These protections remain in place to continue to ensure public ownership of these corporationsand assets.

16. Establish the existing heritage contract in perpetuity.

The 2002 EnergyPlan recognized that BC Hydro s heritage assets represent valuable provincial

assets yielding a substantial return for BC Hydro ratepayers in the form of low cost electricitygeneration. Energy Plan 2002 included policy actions to secure that benefit.

The BC Hydro Public Power Legacy and Heritage Contract Act provided enabling legislation toallow Government to require a "Heritage Contract" ensuring the electricity generated by the

heritage assets continues to be available to BC Hydro ratepayers based on cost of service. The

Heritage Contract ensures BC Hydro ratepayers receive heritage power that are based on costs ofgeneration , not market prices. The Heritage Contract was implemented by the Heritage Contract

Special Direction #2.

The Heritage Contract includes a provision stating the Contract may be terminated with 5 yearsnotice if notice is given any time after April 1 , 2009. While no offcial ' end date to the Heritage

Contract exists, the language of the contract implies the potential for termination and thus createsuncertainty. Government will re-affrm and strengthen its commitment to the Heritage Contractthough amendments addressing this uncertainty.

17. Invest in upgrading and maintaining the heritage asset power plants and transmission linesto retain the ongoing competitive advantage these assets provide to the province.

Thanks to the valuable investment made in heritage assets by previous generations ofBritish Columbians, BC Hydro ratepayers today reap substantial benefits from this low cost, reliable,flexible electricity system.

As with Energy Plan 2002, BC Hydro will continue to pursue effciency improvements andupgrades to its existing assets under its ' Resource Smart ' program. In addition , BC Transmission

Corporation will continue to plan for enhancements required to support the transmission system.

The British Columbia Utilities Commission will continue to oversee the resource plans of these

utilities and approve the projects it deems to be cost effective and in the public interest.

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18. All new electricity generation projects wil have zero net greenhouse gas emissions.

Currently, electricity accounts for only a small portion (around 3 per cent in 2004) of the provinceoverall GHG emissions. This Energy Plan maintains the low greenhouse gas intensity of the

electricity sector.

In The BC Energy Plan , government commits that all new natural gas or oil fired electricity

generation projects developed in BC and connected to the integrated grid will have zero net GHG

emissions. This means that the proponents of these generation projects would have to invest in

other initiatives that would completely offset the GHG emissions generated by these projects,

unless the technology was available to eliminate or capture and store the emissions from theplant.

The cost of this measure will depend on the province s offset policy, which will be developed

over the next several months. The Ministry of Environment, in consultation with MEMPR, will be

responsible for leading the development of the offset policy, as well as all necessary regulatoryand legislative changes. The policy may include the option of contributing to the Innovative CleanEnergy Fund as an alternative to investing in offset projects.

19. Zero net greenhouse gas emissions from existing thermal generation power plants by 2016.

To ensure consistent treatment between new and existing generation projects, while allowing

time to plan for this change, The BC Energy Plan commits that by 2016, all existing natural gas and

oil fired electicity generating facilities in the integrated grid will need to completely offset theirGHG emissions.

20. Require zero greenhouse gas emissions from any coal thermal electricity facilties.

The BC Energy Plan stipulates that coal-fired generation must meet a zero emission standard,through a combination of"clean coal" fired generation technology, carbon sequestration andoffsets for any residual GHG emissions. Through technology that allows the carbon dioxide to becaptured from the plant and "stored' ; coal fired generation can have 'near zero' GHG emissions.

There is considerable investment, both nationally and internationally, in the development of this

technology, which many believe will be commercially available in the next decade.

21. Ensure clean or renewable electricity generation continues to account for at least 90 percent of total generation.

Currently in BC, about 90 per cent of electricity is from clean or renewable resources. Under TheBC Energy Plan , Government commits to maintain this high standard - which places us amongthe top jurisdictions in the world. Government will issue guidelines to define what sources qualifyas clean or renewable, and will provide additional policy guidance and directions, as needed, toensure BC continues to meet this standard.

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22. Government supports BC Hydro s proposal to replace the firm energy supply from theBurrard Thermal plant with other resources. BC Hydro may retain Burrard for capacitypurposes after 2014.

As a part of it I ntegrated Electricity Plan , BC Hydro has a plan to replace the firm energy from

Burrard Thermal by 2014. The proposed approach by BC Hydro is consistent with Governmentdesire to see Burrard Thermal phased out. The government recognizes that the value of thecapacity and voltage support provided by Burrard Thermal may warrant continuing to keepBurrard Thermal available if needed for peaks in demand (for example, resulting from cold winterweather, Christmas lighting, to deal with other resources being unexpectedly unavailable, etc.).

These may continue to be appropriate longerterm roles for Burrard if that Burrard Thermal

continues to be a cost effective voltage support and capacity resource.

23. No nuclear power.

British Columbia s 2002 Energy Plan had environmental responsibility and no nuclear powersources as one its cornerstones. The BC Energy Plan continues the Province s commitment thatnuclear power is not a part of BCs energy future. The financial and environmental problems

experienced in other jurisdictions that have invested in nuclear power continue to make it a risky

proposition. The government rejects nuclear power as a strategy to meet British Columbia s futureenergy needs.

24. Review BC Utilties Commission s role in considering social and environmental costs andbenefits.

The BC Energy Plan explicitly recognizes that low costs means more than least financial costs.

Environmental , social and economic development objectives of the province are also values thatneed to be considered in determining whether utilities ' plans and programs serve the public

interest. Some stakeholders argue that the BC Utilities Commission does not take full consideration

of this broader perspective when regulating utilities. Others argue that environmental , social and

environmental policy properly rests with the province, and not the regulator.

A policy action ofThe BC Energy Plan is to review the BC Utilities Commission s role in considering

social, environmental and economic costs and benefits as a part of its regulatory framework.

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25. Ensure the procurement of electricity appropriately recognizes the value of aggregatedintermittent resources.

BC Hydro, with stakeholder input, will develop an approach to allow for the recognition of anyadditional value associated with intermittent clean or renewable energy projects includingportfolio benefits, for the purposes of evaluating these generators ' capacity and firm energyoutput in its energy calls and acquisition processes. Intermittent resources are those for which thefuel' supply to the generator (e.g. the wind or the water flow) is not always available and cannot

ordered' when needed.

BC has substantial potential to develop green resources such as wind and small-hydro, and doingso is an objective ofThe BC Energy Plan. The intermittent, seasonal and non-dispatchable natureof these resources tends to make their output less valuable compared to the output from coalnatural gas, or biomass-fired plants that can generate on a consistent basis or can be dispatchedor displaced based on short-term demand and market conditions. Wind and run of river small-hydro generators also provide a less valuable product individually than do large hydro facilitieswith storage, since these large hydro facilities combine flexibility benefits with the "firmnessattributes of thermal generation resources. Finally, there are challenges to manage and integrateintermittent resources into the electricity delivery system that can require study (and related costs)and potentially additional infrastructure costs.

However, when the combined output from a portfolio of clean or renewable resources isconsidered, there may be advantages associated with the diversification of these resources thatcould increase the value of their combined output relative to when their outputs are consideredindividually. For example, the overall firmness (predictability) of a diverse portfolio of intermittentresources may be higher than the firmness of individual resources within the portfolio, especially ifthe output of the resource portfolio is composed of different types of resources and/or resourcesfrom different regions. When intermittent generators are viewed in this aggregated way, theirvalue may be higher. Any net increase in value should be reflected in the choices made byBC Hydro when determining which resources are required to meet its needs, and in determininghow to value these resources.

This policy is in no way intended to give preference to intermittent resources or establish a pre-defined target for intermittent energy. It is simply intended to ensure a level playing field amongdifferent resource types in order to reduce the overall cost to ratepayers of meeting growingdemands and standards for clean or renewable electricity.

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26. Work with BC Hydro and parties involved to continue to improve the procurement processfor electricity.

BC Hydro s energy procurement plays a critical role in the reaching Government's self-suffciencyobjective, as well as meeting the Government s objects for competitive rates, clean or renewableelectricity, the development of a vibrant and competitive IPP sector and other fiscal and provincialpolicy objectives. As such , it is important that all parties - IPPs, BC Hydro, BC Hydro s customerswho pay the costs through their rates, and the BC Utilities Commission - are satisfied thatthe approach used by BC Hydro, and the terms and conditions in BC Hydro s power purchasecontracts, meet the objectives set out in this policy.

BC Hydro s efforts to design call processes must take into account the diversity of potentialresource types available in British Columbia (small, large, firm intermittent, conventional andalternative) and the multiple issues that are related to or can affect policy objectives. These includepenalties for non-performance, risk allocation , pricing, contract length and renewability provisions.

In addition , not all projects will necessarily fit into a call for power type process. BC Hydro needs

the flexibility to utilize different procurement approaches so that it is able to acquire new supply inthe most appropriate manner. However, given a call process is a transparent, competitive process

the prices, terms and conditions of these call processes serve as a useful guide to BC Hydro inits acquisition of resources through the standing offer and net metering, bilaterally negotiatedcontracts, request for proposals and other processes.

Under the current regulatory process, the Commission is able to evaluate BC Hydro s procurementapproach before the fact under its general authority, and it can reject BC Hydro s tender results

and/or contract terms after the fact in approving contracts under Section 71 of the Utilities

Commission Act.

To ensure the procurement processes are consistent with provincial energy policy, the Ministry ofEnergy, Mines and Petroleum Resources (MEMPR) will continue to participate in the discussionsregarding the design of BC Hydro s procurement processes, and will be able to respond morepromptly to any policy issues that arise. In addition , MEMPR will consider if regulatory or otherchanges are advisable.

MEMPR' s engagement will add certainty and stability to BC Hydro s call processes by ensuring

they are consistent with energy policy objectives. The goal is to establish a transparent and well-understood regulatory regime for reviewing BC Hydro s procurement processes, both before andafter the fact.

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27. Pursue BC Hydro s planned Remote Community Electrification Program to expand or takeover electricity service to remote communities in British Columbia.

There are approximately 50 permanent remote communities in BC that are self-reliant or reliant

on a third party for electric power; the vast majority of these are First Nations communities.

For many of these communities, electricity service is characterized by sub-standard reliability,

provided by ageing assets that are poorly maintained and highly ineffcient, and creates significantenvironmental risks related to diesel emissions and fuel handling.

Over the next 10 years, BC Hydro will pursue its remote community electrification program (RCE)

to expand its service to remote communities that meet specific criteria and that are seeking

service from BC Hydro. Service to these communities will be provided under BC Hydro s Zone 2

tariff. (The Zone 2 tariff is used to service BC Hydro s existing Non-Integrated Areas.) Costs will be

recovered from currently-responsible agencies - such as the Department of Indian and NorthernAffairs - and BC Hydro ratepayers.

28. Ensure BC Hydro considers alternative electricity sources and energy effciency measures inits energy planning for remot communities.

Remote communities and Non-Integrated Areas tend to rely on diesel generation for electricity

supply with high operating costs. Given the environmental and economic issues associatedwith this type of generation, the business and social case for pursing clean electricity andenergy effciency solutions in remote communities is much stronger than in other areas of theProvince. These solutions should not be overlooked when considering service options for remote

communities.

BC Hydro will work with the Ministry of Energy, Mines and Petroleum Resources (MEMPR) to

develop community energy plans (CEP) prior to extending service to remote communities underits Remote Community Electrification program. In addition, BC Hydro will develop communityenergy plans when it is considering renewal or replacement of diesel generators in Non- IntegratedAreas, or in other circumstances where unique opportunities are evident. CEPs will consider all

cost-effective solutions to meet the electricity needs of the remote community, including energyeffciency, alternative energy solutions and integration with the main grid. In addition, the CEPs will

seek to integrate with plans for skills training and local economic development opportunities.

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29. Establish the Innovative Clean Energy Fund to support development of clean power andenergy efficiency technologies in the electricity, alternative energy, transportation, andoil and gas sectors.

Government support for the advancement of energy technologies through the pre-commercialdevelopment stage can playa critical role in their early and successful uptake by the marketplace.British Columbia will take a leadership role in advancing innovation in its energy technology sectors,both conventional and emergent, through the establishment of an Innovative Clean Energy Fund.

The Fund will be administered by the Ministry of Energy, Mines and Petroleum Resourceswith theinput and advice of an industry-government advisory body.

Projects supported by the Fund will:

• Address specific British Columbia energy and environmental problems that have beenidentified by government

• Showcase BCtechnologies that have a strong potential for international market demand inother jurisdictions because they solve problems that exist both in BCand other jurisdictions

• Support pre-commercial energy technology that is new, or commercial technologies notcurrently used in British Columbia

• Demonstrate commercial success for new energy technologies.

The development process of new technology evolves through many different phases, and thetype of support needed in each phase varies significantly. For example, emerging technologiesin the basic research, development and demonstration phases (e.g.,fuel cells and wave / tidalenergy) may need partnerships among industry, academia and government to help fund thenecessary work to carry them to commercialization. Other examples include technologiesthat are already commercial but require more widespread adoption (e.g.,wind energy). Thesetechnologies may require other types of assistance,such asthe dissemination of information andtechnology transfer, or government taking leadership in applying the technologies in governmentoperations. Lastly, those technologies with developed markets (e.g.,fossil fuels and hydropower)may require sustained private sector investment in order to support local manufacturing andmaintain employment levels.

Examplesof energy resources,technologies and systemsthat may be considered under the Fund include:

• Renewable resources (e.g.,biomass; ocean/hydro, solar,wind, geothermal)• Improvements in the development and use of non-renewable resources (i.e.,conventional and

unconventional oil and natural gas)• Energy carriers and storage (e.g.,hydrogen, fuel cells)• Gasification• Carbon capture and sequestration• Emissions management• Energy systems integration• Power measurement and management• Energy efficiency and conservation• Transportation (e.g.,engine, vehicle and alternative fuel technologies)• Fuels (e.g.,biodiesel and ethanol)• Waste energy capture and utilization

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30. Implement a provincial Bioenergy Strategy which will build upon British Columbia'snatural bioenergy resource advantages.

British Columbia is blessed with significant biomass resources such as woody debris, agricultural cropresidues, animal manure and organic municipal wastes that can be used to produce heat, electricity,liquid fuels and other forms of energy. These resources are renewable, well-distributed throughoutthe province, and suitable for either large-scale or smaller, community-based energy productionopportunities. Wood pellet production, wood-fired electricity generation and cogeneration arealready well established in British Columbia, with wood gasification, liquid biofuel production andother bioenergy/biorefining technology also well positioned to playa significant role in BritishColumbia's energy future.

The provincial Bioenergy Strategy, which builds upon The BCEnergy Plan and other provincialinitiatives, will help advance British Columbia's bioenergy development opportunities in the near-mid- and long-term, while also promoting diversity and competitiveness in the province's forestry andagriculture sectors, and strengthening regions and communities throughout the province.

31. Issue an expression of interest followed by a call for proposals for electricity from sawmillresidues, logging debris and beetle-killed timber to help mitigate impacts from theprovincial mountain pine beetle infestation.

British Columbia has an abundance of underutilized wood residues, in the form of sawmillresidues, logging debris and a growing supply of timber killed by the Mountain Pine Beetle (MPB)that will become less usable for conventional forest products over time. While British Columbiacurrently leads the nation in wood energy production and consumption, with about 50 per centof Canada's biomass electricity generating capacity, it is estimated that about 1.2 million bone-drytonnes (BDt) of mill residues per year are incinerated in beehive burners in the province with noenergy recovery and adverse impacts on local air quality. There are about seven million BDt peryear of logging residues in the Central Interior, and recent estimates indicate that the MountainPine Beetle infestation has already killed over one-third of the merchantable pine volume in theprovince. It is further estimated that 80 per cent of the merchantable pine will be dead by 2013,with the bulk of that damage (75 per cent) occurring before 2010. Estimates of non- recoverablelossesvary between 200 and 500 million cubic meters, which equates to roughly 400 million to1 billion BDt. These resources, and abundant wood residues in other regions throughout theprovince, present a significant opportunity for increased bioenergy production in British Columbia.

In order to encourage greater development ahd use of"home-grown;'wood-fired electricityin the province, and to help address the MPB emergency and capture value from the affectedtimber, the government will instruct BCHydro to issue an expression of interest followed by a callfor proposals for electricity generated from wood residue and MPBtimber. The terms of the callwill be developed by BCHydro in consultation with the Ministry of Energy, Mines and PetroleumResources and the Ministry of Forests and Range,with input from the forest and energy sectors.

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32. Implement a five per cent average renewable fuel standard for diesel by 2010 to helpreduce emissions and advance the domestic renewable fuel industry.

In Spring 2006, the federal government announced its intention to proceed with a two percentnational average renewable fuel standard (RFS)in Canada's diesel fuel no later than 2012. BritishColumbia will move beyond the federal RFSby adopting a five per cent biodiesel requirement inprovincial diesel fuel supplies by 2010.

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34. Develop a leading hydrogen economy by continuing to support the Hydrogen and FuelCell Strategy for British Columbia.

British Columbia is a leader in hydrogen and fuel cell technologies - with the largest clusterof companies in Canada. The sector employs around 1,200 people il) British Columbia. In2003, Premier Gordon Campbell announced "Our goal is to develop the hydrogen and fuelcell sector to make British Columbia the world's leading hydrogen economy by 2020". Theprimary vehicle to achieve this goal is the British Columbia Hydrogen and Fuel Cell Strategy. TheStrategy is an industry initiative, which seeks to accelerate the demonstration, deployment andcommercialization of hydrogen and fuel cell technologies. The unifying vision of the strategy isthe Hydrogen Highway initiative. In March 2005, British Columbia provided a $2 million grant toindustry, which is administered by Hydrogen and Fuel Cells Canada. More than $110 million ininvestment activity in hydrogen and fuel cells in British Columbia has been announced since theaward of this grant, including more than $30 million in federal funding. .

35. Establish a new, harmonized regulatory framework by 2010 for hydrogen by working withgovernments, industry and hydrogen alliances.

Hydrogen technology has the potential to offer tremendous economic and environmentalbenefits for British Columbia. British Columbian companies have established a global marketpresence and Canadian hydrogen demonstration projects are being watched by internationalobservers and consortiums. The "Hydrogen Highway"will be showcased during the upcoming2010 Olympic and Paralympic Winter Games.

British Columbia is recognized as a North American expert in hydrogen regulatory frameworks.Regulatory reform leadership is needed to remove trade barriers and offer industry transparency.A new, harmonized regulatory framework will be developed to promote the emerging hydrogeneconomy and enable British Columbia's industry to maintain its competitive edge in the globalmarket. Key actions to establish a regulatory framework for hydrogen include:

• Determine how existing and future regulations apply for hydrogen products;• Determine appropriate codes and standards;• Link legislative areas across different jurisdictions; and• Hold stakeholder workshops.

The Province will work with Canadian jurisdictions and international participants (e.g., InternationalStandards Organization, International Electro-Technical Commission and the UN / Global TechnicalRegulations) towards a harmonized framework.

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Electricity Labour Strategy

There is fierce competition for talent among the utility companies in British Columbia. Keyjobsthat are mission critical and hard to recruit include: power line technicians, finance managers,electrical engineers, front line supervisors, operator technicians. The electricity sector is notablyimpacted by the number of retiring long-serving employees with early retirement optionsimbedded in their pension plans. This coupled with the decline in university programs dedicatedto power/electricity have caused a vacuum of new graduates with the necessary skills for thesehighly specialized roles. British Columbia (and the Territories) will be facing the largest skilledlabour shortage within the next three to eight years.

Actions:

The Ministry will support the BCWorking Group of the Electricity Sector Council to developan education program targeted at Grades 10-12 that highlights career choices available in theelectricity sector.

The Ministry will designate a labour liaison to work with industry and the Crowns to implementpolicy actions in the Labour Strategy.

Crowns and industry will keep government apprised of large project proposals that havesignificant labour impacts and implications on the ability to deliver on related business lines.

The Ministrywill monitor compensation issues,as they arise with the Crowns, and facilitatediscussion with the Public Sector Employers'Council (PSEC)as necessary.

The Ministry will work with the Provincial Nominee Program (PNP)to have Economic Developmentfacilitate an international recruitment mission to attract to critical roles identified, such as:

• Electrical Engineers• Power Line Technicians• Technicians/Technologists• Front Line Supervisors• Back Office Professionals

The Ministry will work with Crowns and industry to identify initiatives designed to increase labouravailability in the sector, Le:

• Indian and Northern Affairs Canada's Aboriginal Workforce Participation Initiative (AWPI)• HRDSCInnovation Fund• Service Canada Labour Market Partnership Agreement (LMPA)

Government will advocate on behalf of Crowns and industry for a dedicated power engineeringoption at UBCand other institutions offering electrical engineering programs.

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Government will consider in-house training, such asthose programs offered at BCHydro, foraccreditation and certification through recognized education institutions.

Government will work with Crowns and industry to monitor apprenticeship completion rates inthe electricity related programs.

Crowns and industry will adopt a best practice of supply chain management, encouragingsmall employers and contractors to deliver apprenticeship training by through shared resourcedevelopment.

The Ministry will review the Red Seal program for potential barriers to labour accessibility.

Alternative and Renewable Energy Labour Strategy

This emerging energy sector provides anopportunity for British Columbia to be proactive indeveloping human resources in time to meet the upcoming demand. Requisite requirementsfor most of the occupations include some degree of electrical/mechanical. and/or engineeringcompetence. Occupations associated with these sectors include: business developmentspecialists,engineers, designers, installers, operators and mechanics.

Actions:

Government will support renewable and alternative energy and energy efficiency associations inpromoting careers in new and developing industries through government information campaigns,trade missions, etc.

Government will work in partnership with industry associations to promote the BCadvant.age: likeBC'spotential for Hydrogen, Ocean Renewable and Bioenergy.

The Ministry will build on the dialogue that began in April, 2006 with Albertato enact the MOUon Energy Research,Technology Development and Innovation to promote efficiencies in"researchand development and look for economies.

The Ministry will host information sessionsfor the renewable and alternative industry reps in BCto meet with the Electricity Sector Council of Canada (the Sector Council responsible for theirrepresentation nationally).

The Ministry will work with the Ministry of Economic Development to determine a criticaloccupational shortages list, particularly in the areasof energy efficierit building design tradespeople.

The Ministry will continue to sponsor an annual sustainable energy forum to share informationbetween energy industry and stakeholders regarding current and future initiatives.

Government will work with industry and associations to identify suitable occupations for cross-over of Mountain Pine Beetle affected workers.

Government, in partnership with the Aboriginal Workforce Participation Initiative, other Aboriginalgroups and IPPs,will work to identify potential sources of labour in Aboriginal communities.

The Ministry as needed will review dated legislation such as the Boiler Act, in light of technologicaladvances, to allow for more effective deployment of human resources.

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Government will work with industry to identify trades training requirements for alternative sectors,, leading to ITAdesignations and RedSeals,where appropriate, for example:

• Work with the Wood Pellet Manufacturing Association to develop training curriculum.• Work with industry associations to develop new energy efficiency and conservation training,

for example, Thermal Energy Comfort Association of Be,CanadianHome Builders Associationof Be, to address consumer complaints regarding service standards.

• The Ministry will bring key parties together, including associations, employers, entrepreneursand workers as required, to promote alternative and renewable energy sector networks acrossBe.

To stimulate job creation and skills training opportunities, government will examine the viability ofa clean electricity procurement policy and continue to implement energy efficiency targets in itsbuilding stock.

The Ministry will create an inventory of training available in BCfor renewable and alternativeenergy occupations.

Government will partner with Malaspina College to support the creation of a Green Building andRenewable EnergyTechnologist program.

The Ministry will work with AVEDand Douglas College to expand the Building EnvironmentSystems program.

Government will offer co-operative education placements for students who take programs relatedto energy, i.e.alternative, renewable or energy efficiency/power engineering.

Government will encourage energy education in public primary and secondary schools in energysupply/demand and efficiency and support the Ministry of Education in its curriculum review ofthe K-12programs encapsulating energy and recommend additional sources of material.

The Ministry will engage university educators in BCto advance awareness of the variety ofrenewable/alternative energy and energy efficiency/conservation curriculum readily available fornew teachers.

. .The Ministry will look for strategic opportunities to fund projects or programs that meet mutualinterests and provide for economy of scale thbugh the Collaboration in Energy Research,Technology Development and Innovation MOU with Alberta, that ultimately lead to job creation inrenewable energy and energy efficiency technology in Be.

Government will partner with industry to target key strategic value positions (e.g.power engineersand other highly qualified personnel) that could shift at retirement into the renewable/alternativeenergy and energy efficiency/conservation sector.

The Ministry will actively seek leveraged funding opportunities for three new university chairs inPower Engineering, Ocean Renewable Energy Researchand Development, Advanced BioenergyTechnologies.

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Oil and Gas Labour Strategy

This sector has seen unprecedented growth in the number of oil and gas workers employed inBritish Columbia. Accurate labour market information specific to BChas proved problematichowever, a recently completed survey of the major exploration and production companiesbased in Alberta, with operations in Be, suggests that the occupations most in demand for thistype of work include: operators, engineers, geosciences professionals, speciality business serviceprofessionals, technicians and technologists. Due to the high volume of service sector workassociated with oil and gas production, many trades jobs are also in demand.

Actions:

Establish the Centre of Excellence asa province-wide advisory body to provide strategicdirection for oil and gas education, training and research and act as a hub for coordinating crossjurisdictional discussions on innovative industry models and responses to specific short and long-term labour market demands.

The Province will continue to support and develop joint solutions with the government of Albertain an effort to harmonize policies and regulations to ease cross-migration burdens and assist increating a more agile workforce.

The Province will support the devolution of the LMDA from the federal government to theprovincial government and advocate for a sector study to be undertaken annually on behalf of theoil and gas sector in Be.

The Province will partner with industry, educational partners and the sector council to developand deliver promotional materials for educators and citizens of BCto increase awareness ofopportunities in the energy sector.

The Provincewill partner with the Aboriginal Workforce Participation Initiative (AWPI)and itspartners to ensure that labour market information flows between the sector and constituents inAboriginal communities. In addition, the Province will identify gaps in labour market support forAboriginal people and work with the AWPIto form partnerships to address solutions.

The Ministry will work in partnership with other ministries and organizations to explore options forutilizing labour pools impacted by Mountain Pine Beetle infestation.

The Province, in partnership with other governments, sector councils arid industry will develop aforeign worker recruitment strategy for the oil and gas sector in Be.

To create more awareness of career opportunities in the oil and gas sector and to encouragemore British Columbians to pursue a career in the oil and gas industry, the Ministry will work inpartnership to ensure a comprehensive marketing and promotional campaign is developed toadvertise the long term career benefits, transferability of skills and current opportunities in the oiland gas sector for the general public. The Ministry will continue to sponsor regional job fairs inpartnership with industry.

The Province will work to harmonize efforts between Alberta and BCto ensure industryunderstands talent pool composition in order to maximize effectiveness.

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The Province will work with the various education partners to develop a targeted campaign thatcaters to K-12 in the BCschool system. Information guides for career counsellors in the schools,colleges and universities will be produced in tandem.

Work with partners to encourage expatriates and skilled workers to locate in Be.

The Province will partne~with the Aboriginal Workforce Participation Initiative and its partners to. assistemployers to accessthe potential workforce in Aboriginal communities.

Funding agreements will be sought between ministries to development communication tools toallow workers to accessemployers/employment opportunities.

Establish the Centre of Excellence to provide province-wide planning and coordination for oil andgas education, training and research.

Increaseapprenticeship and trades training in general, and expand programs to address specificskills shortages asthey are identified.

Better inform entry-Ievef recruits about the industry's viable, long-term career paths including thehigh level of transferability of skills to other industry by building on existing web-based curriculummaps and information that show the skills required for each job, where to acquire those skills andthe resources available.

Develop and implement a workforce literacy initiative focussed on resource extraction andprocessing sectors to improve basic literacy skills on the job.

Partner with industry, associations and service providers to promote initiatives and programs thatprovide a safework environment for oil and gas workers.

Bring together industry and education and training providers to share researchand training(including business development and management skills).

Government will work to strengthen arrangements among industry, educators and Aboriginalorganizations for increased investment in skills development and employment accessforAboriginal people.

The Province will establish working relationships with the Aboriginal Workforce ParticipationInitiative and the Aboriginal Human ResourcesDevelopment Agencies in order to identifytraining and development needs and to assistmedium to large sector employers to prepare theirworkplace for Aboriginal workers.

Partner with the ITA,Northern Lights College and Aboriginal groups to seekeffective deploymentof mobilized training on reserve and in remote areas.

To maximize the availableAboriginal workforce, utilize benchmark labour market information tocreate culturally appropriate training ladders for upgrading and skills development.

Develop targeted programs for women that increase their participation in training anddevelopment in the sector.

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Develop a'Women In Trades'initiative, with a focus on engaging young women in high school.

Develop and implement a mentoring program focussed on,women who have been out of thelabour force for more than five years,

The Province will explore the social, physical and cultural infrastructure requirements that keepemployees in regions and will form partnerships to affect improvements.

Government will partner to ensure ongoing improvement efforts to provide a safeworkenvironment for all oil and gas workers.

The Province will seek out local service providers to establish holistic support mechanism for newrecruits in the communities, including Aboriginal workers, new immigrants, youth and women.

The Province, in partnership with the organizations like the BCHousing Commission and localgovernments, will continue to work to develop integrated solutions to the housing challenges inN.E. Be.

The Province will work in partnership with local service providers and stakeholder groups topromote diversity and create welcoming communities.

Government will partner with industry to ensure training is available using up to date equipmentthat utilizes leading edge technology.

The Ministry will offer support to the Province in its research and development of skills training taxcredits and flexible retirement policies with an emphasis ~:Jnolder worker retention.

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36. Eliminate all routine flaring at oil and gas producing wells and production facilities by 2016.with an interim goal to reduce flaring by half (50 per cent) by 2011.

Reducing flaring is an issue for many jurisdictions and the World Bank is leading a Global GasFlaring Reduction Partnership.

The province has set a goal of reducing routine flaring at producing wells and production facilitiesby 50 per cent in five years and eliminating all routine associated gas flaring in 10 years. Routineassociated gas flaring is considered gas that meets an economic threshold for conservation.Operators will be required to perform an economic analysis of all sources of continuous solution .gas flaring and subsequently tie in any gas that shows a net present value greater than zero.

Currently, the Province does not receive a royalty for gas that is flared, consequently incentivesdesigned to reduce flaring will be considered.

Reduce routine flaring at producing wells and production facilities.

The primary purpose of flaring is to act as a safety device to protect vessels or pipes from over-pressuring due to unplanned upsets and maintenance. This acts just like the spout on a tea-kettlewhen it starts whistling as the water in it starts boiling. A small amount of gas is continuouslyburned, like a pilot light, so that in the event of over-pressure, it is always ready to flare gas.

In British Columbia, the total amount of flared gas for 2004 was approximately 250 million cubicmetres (m3) broken down by the following categories:

Source Amount of Gas Flared, million m3

Gas Plant 35.0

Well Testing 72.4

Under-balanced Drilling 89.0

Associated Gas 37.9.

Gas Gathering 14.0

Total 248.3

Of the associated gas,about two thirds is continuous (Le.not upset or emergency) flaring.Although well test flaring is necessary,there is some work that can be done to help standardizeallowed flare volumes and durations which may result in some improvements. There may belimited opportunities to reduce flaring during under-balanced drilling. Flaring at gas plants occursas a result of process upsets, emergencies and plant maintenance. In Alberta, the regulator hasimplemented some requirements for planned shut downs and identification of causes of recurringupset flaring. There may also be scope to reduce flaring at gas plants in British Columbia, workingwith operators and the federal regulator, the National Energy Board,which regulates many of thegas plants in British Columbia.

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Reduce the flaring and venting of natural gas at test sites, well sites and on pipelines,and eliminate the growth of fugitive gases.

The Ministry will work with industry to develop policies and strategies to reduce the f1adng ofnatural gas at test sites, well sites and on pipelines, and eliminate the growth of fugitive gases andventing. Similar tools as those to reduce routine flaring will be pursued.

37. Establish policies and measures to reduce air emissions in coordination with the Ministry ofEnvironment.

Fossil fuel industries in British Columbia account for approximately 18 per cent of greenhousegas air emissions in the province. Environment Canada data suggests that the main sourcesof air emissions from the oil and gas sector are: flaring, fugitive gases, gas processing andcompressor stations. In the late 1990\ the amount of gas flared declined as a result of newpractices. With increased drilling activity, the amount of gas flared has stabilized. There are alsolimited unexploited cogeneration opportunities at compressor stations to capture waste heat andgenerate electricity or use the heat in other applications. Actions to reduce flaring, fugitive gases,increase compressor station efficiency and acid gas reinjection and sequestration are expected toreduce emissions to below 2000 levels.

Development of policies and measures to augment anticipated federal government policies willbe part of this initiative.

Develop policy guidelines and identify regions in British Columbia which are suitablefor the underground disposal of acid gas.

Disposal of acid gas to underground formations is sometimes a cost effective alternative to sulphurrecovery and reduces flaring and emissions.

The Ministry will develop a policy for acid gas disposal based on the underground storagelegislation, which has provisions for assigning long-term responsibility through tenuring andlicensing arrangements. Currently, acid gas (primarily hydrogen sulphide and carbon dioxide) isbeing disposed of in depleted gas reservoirs without clearly assigning long term responsibilitythrough tenuring and licensing arrangements.

The Ministry will conduct an assessment of suitable regions in BC for acid gas injection and identifyopportunities to facilitate industry activities. Legislation and regulations from other jurisdictionswill be reviewed and an appropriate framework will be proposed by 2008/09 or sooner.

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Explore opportunities and new technologies to develop underground disposal ofcarbon dioxide (sequestration or carbon capture and storage).

Geological carbon sequestration involves disposing of carbon dioxide safely and permanently incarefully selected underground locations. There are opportunities to dispose of carbon dioxideinto depleted gas reservoirs or specific formations with salirie water, or to use the carbon dioxideto enhance oil recovery.

Currently there are more than 50 sites in western Canada for reinjection and permanent storage.For example, the Weyburn project takes carbon dioxide from the USand transports it for use inenhanced oil recovery in Saskatchewan. There may be opportunities for enhanced oil and gasrecovery in Be, albeit somewhat limited.

The Ministry will explore with industry the opportunity to dispose of carbon dioxide from majorfacilities such as processing plants. Geological and hydrogeological mapping and monitoring willbe conducted in key areasof interest for acid gas injection through 2009/2010.

Working with International Partners on Carbon Capture

British Columbia is a member of the PlainsCO2 Reduction (PCOR)Partnership composed ofnearly 50 private and public sector groups from nine states and three Canadian provinces that isassessingthe technical and economic feasibility of capturing and storing carbon dioxide emissionsfrom stationary sources. The province is also a member of the West Coast Carbon SequestrationPartnership, consisting of west coast state and provincial government ministries and agencies thatwere formed to pljrsue carbon sequestration opportunities and technologies on the west coast.

As part ofThe BCEnergy Plan the provincial government supports involvement in thesepartnerships and calls for the development of market oriented requirements with a graduatedschedule to foster innovation in sequestration. In consultation with stakeholders, a timetable willbe developed along with increasing requirements for sequestration.

Pleasevisit: http://www.em.gov.bc.ca/subwebs/oilandgas/petroleum geology/carbon.htm formore information.

Create policy to help improve compressor station efficiency and reduce emissions.

The Ministry will develop policies to reduce emissions at compressor stations, improve theirefficiency and where possible, capture otherwise wasted heat and transform it into useableenergy. In addition, results-based regulations will encourage innovation, new technologies andbest practices that are key to an expanding and sustainable oil and gas industry.

The Ministry will work with industry and regulators to pursue the possibility of acceleratedintroduction of more efficient compressor in Be. One of the tools to be explored is linking theMotor FuelTax levied on compressor stations to their efficiency.

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38. Best coalbed gas practices in North America. Companies will not be allowed to surfacedischarge produced water. Any re-injected produced water must be injected well below anydomestic water aquifer.

BCwill require proponents to follow Best Practices in all stages of coalbed gas development,including:• Fully engaging communities and First Nations;• Using the most advanced technology and practices that are commercially viable;• No surface discharge of CBGproduced water; and• Any re-injected coalbed gas produced water must be well below aquifers.

As a result, the Code of Practice for the Discharge of Produced Water from Coalbed GasOperationswill be reviewed and updated where appropriate.

For more information on the Code of Practices:http://www.env.gov.bc.ca/epd!coalbed· code/pdfs/coalbed reg.pdf

Conduct scientific and geological research and provide results to potential investors,communities and First Nations to further the exploration and development ofcoal bed gas.

The Ministry in coordination with the Ministry of Environment will undertake a program to gatherscientific and geological data in areasof interest for CBGdevelopment. Specifically, numerousissues relating to groundwater have arisen in CBGdevelopments in other jurisdictions and havebecome a public concern in Be. The existing surface water sampling program will be expandedto include work on groundwater and to conduct hydrogeological studies in coal basins. Researchfindings will be shared with industry, well owners and local communities including FirstNations.Baseline surface hydrology and subsurface hydrogeological studies and monitoring will beconducted in key areasof interest for CBGdevelopm~nt, when and where appropriate, includingHudson Hope,Telkwa and other sites,through 2009/2010.

Study and monitoring results will be made available publicly to all interested parties includinglocal communities, First Nations, well owners and industry through 2009/10.

For additional information on coalbed gas see:http://www.em.gov.bc.ca/dl/Coalbedgas/CoalbedGas Doc web.pdf

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39. Enhance the Oil and Gas Environmental Stewardship Program, ensuring soundenvironmental, land and resource management.

A comprehensive review of the oil and gas environmental stewardship program will enhanceprograms including waste management, habitat enhancement, baseline data collection,planning initiatives such as land use planning and general development plans, programs forenvironmentally sensitive areas,infrastructure corridors, and remediation and progressivereclamation.

In 2004, the Ministry initiated the Oil and GasEnvironmental Stewardship Program having twocomponents: the Environmental Policy Program and the Environmental Resource InformationProject.The Environmental Policy Program identifies and mitigates environmental issues inthe petroleum sector focusing on policy development in areassuch asenvironmental wastemanagement, habitat enhancement, planning initiatives, wildlife studies for oil and gas priorityareasand government best management practices. Some key program achievements include thecompletion of guidelines for regulatory dispersion modeling, research leading to the developmentof soil quality guidelines for soluble barium, a key to northern grassesand their restorativeproperties for remediated well sites, and moose"and caribou inventories in Northeast BritishColumbia.

The Environmental Resource Information Project is dedicated to increasing opportunities for oiland gas development, through the collection of necessary environmental baseline information.These projects are delivered in partnership with other agencies, industry, communities and FirstNations.

40. Continue to work to lift the federal moratorium on offshore exploration and developmentand reiterate the intention to simultaneously lift the provincial moratorium.

In response to provincial requests to lift the federal moratorium, Natural Resource Canada (NRCan)launched a three-part review in 2003. The science component concluded therewas no scientificreason to maintain the moratorium (a similar conclusion was reached by the Province's SciencePanel in 2002). To date, Canada has not formally responded to the review reports.

The Province re-affirms its commitment to offshore oil and gas exploration and development, itsrequest to Canada to lift the federal moratorium and reiterates that the provincial moratorium willbe lifted at the same time.

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41. Work with the federal government to ensure that offshore oil and gas resources aredeveloped in a scientifically sound and environmentally responsible way.

While many coastal residents have expressed concern about the prospect of offshore oil and gasactivity, some are supportive, provided development is undertaken in an environmentally soundmanner, and their communities share in the benefits. A number of First Nations have indicatedthey might consider offshore activity if they have a role in the management and regulation ofactivity.

The major tenure holders have stated that before investing in exploration activities, key issuesmust be addressed: clarification of the fiscal and regulatory regime, identification of "go"and "nogo" areas,confirmation of existing tenures, and resolution of First Nation issues.

As a result, the Ministry has focused on the following key areas:

• Engaging First Nations, coastal communities and other key stakeholders who have an interestin how offshore oil and gas development might affect them;

• Developing options for BC'sposition on management/regulatory and fiscal regimes; and• Co-ordinating a federal-provincial approach to science.

Considerable progress has been achieved. The Ministry has provided some coastal communities,First Nations and stakeholders with funding for educational activities, and involved First Nationand local government leaders in offshore fact finding tours. The Ministry has also entered into anMOU with the Union of BCMunicipalities (UBCM)that establishes an Offshore Oil and GasWorkingGroup.

The BC Energy Plan reflects government's support for the lifting of the offshore explorationmoratorium if it can be done in an environmentally safe and scientifically sound manner. If themoratorium were lifted, before any exploration took place, a framework would be developedthrough public consultation which would guide all offshore oil and gas activities. Specific issuesthat would need to be addressed include:

• Comprehensive assessment of offshore developments;• Adoption of best practices, including "zero discharge"to the marine waters; and• Negotiation of a collective First Nations representation for all management or regulatory

processes.

42. Participate in marine and environmental planning to effectively manage marine areas andoffshore oil and gas basins.

British Columbia will continue to participate in oceans strategy and marine planning initiativesincluding Oceans Strategy, Marine Planning, Marine Protected Areas Strategy and National MarineConservation Area planning to promote environmental management and economic developmentobjectives in marine areasand offshore oil and gas basins.

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43. Develop and implement a comprehensive community engagement program to establisha framework for a benefits sharing agreement resulting from offshore oil and gasdevelopment for communities, including First Nations.

Offshore, as a"greenfield" project, represents a unique opportunity to demonstrate the province'scommitment to coastal communities, the New Relationship and economic opportunities for FirstNations. An early commitment to benefit sharing provides coastal communities and coastal FirstNations with a clear interest in future exploration and development, while representation of FirstNations in the regulatory processes would be a step in addressing concerns about environmentalrisks.

44. Pursue regulatory and fiscal competitiveness in support of being among the mostcompetitive oil and gas jurisdiction in North America.

To be the most competitive jurisdiction in North America, new policies and reportingaccountabilities will be created, building on the Oil'and Gas Development Strategies (OGDS).TheMinistry will identify and implement opportunities to reduce costs and increase efficiencies.

Monitor British Columbia's competitive ranking as an oil and gas jurisdiction andpublish results.

Everythree years the Progress Board or another independent agency will publish a report on thecompetitiveness ofthe oil and gas sector in Be. The Progress Board has developed the "North Star"index for the province. A similar index with performance indicators for the oil and gas sector willbe created. A first report is expected by the end of 2008/09.

• The BCProgress Board issues an annual benchmarking report comparing British Columbiawith other provinces on measures of economy, innovation, education, environment, healthand society. Twenty additional performance indicators shed further light on Be's economicand social performance, along with recommendations to reach the Progress Board's2010North Star leadership benchmarks.

Further information on the BCProgress board can be found at: http://www.bcprogressboard.com/index.php

Implement a net profit royalty program to stimulate development of natural gas andoil resources.

The Ministry is currently developing a net profit royalty program to stimulate development ofnatural gas and oil resources by sharing the capital risk of successful developments, recognizingthe long-lead times associated with these developments, while maintaining the province's royaltyshare.The net profit royalty program will be an important tool for government to create incentivesfor industry activity in under-explored areas of the province such asthe Nechako Basin.

• In 2007/08, a net profit royalty program will be available for approved proposals. Projects thatqualify for the net profit program are not eligible for any other royalty credit programs. Royaltyrates begin at a nominal rate at the beginning of the undertaking and escalate during theproject ending at a rate significantly higher than the current rate. The average royalty rate overthe life of the project is similar to other programs.

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Efficient regulations and cross-ministry harmonization.

The Best PracticesWorking Group-an industry and inter-agency working group-is a keyinterface to identify and implement initiatives to reduce costs and improve efficiencies. TheMinistry and the Best PracticesWorking Group will create an annual work plan for initiatives aimedat reducing government and industry costs and improving efficiencies.

Work with industry, the federal government and other provinces to improveregulatory efficiency and reduce federal/provincial overlap.

The Province will work with industry, other provinces and the federal government to improveregulatory efficiency and reduce overlap. There are already harmonization agreements with thefederal government, for example under the Environmental Assessment Act and Species at RiskActthat could serve as a model.

Pursue the development of a Petroleum Registry in coordination with the Ministry ofSmall Business and Revenue.

The Ministry will evaluate and develop a business case for setting up a BC-specific registry,including negotiating with stakeholders, industry, the Ministry of Small Businessand Revenue, theOil and Gas Commission and other users on the appropriate cost allocation.

A Petroleum Registry that functions as a central database will improve the quality andmanagement of key volumetric, royalty and infrastructure information associated with BritishColumbia's oil and gas industry. A Registry would make regulatory compliance easier,reducecosts, reduce the amount of paper generated, and provide userswith online access to information.It makes it possible for data to be uploaded directly from industry systems and allows stakeholdersto submit and edit their data online. This data can be used for a variety of purposes and would belinked with well spacing since it provides information on pools, fields and pipelines. The registrywould provide one reporting format to be integrated with other agencies, allowing for quickerdelivery of detailed information ..

• In Alberta, the Petroleum Registry has provided the following benefits to industry, theregulator and the Department of Energy:

o A more accurate royalty administration system;o Fewer amendments, reworks, and reconciliation;o Better, more reliable, more accessible information,;o Standardization and improved effectiveness of input, reporting, and analytic

processes.

More information can be found at: http://www.petroleumregistr.y.gov.ab.ca/

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45. Enhance infrastructure to support the development of oil and gas in British Columbiaand address impediments to economic development such as transportation and labourshortages.

Under the OGDS 1[[and IV,the Ministry contributes, through a royalty credit-based fundingarrangement, to the construction of more and better resource roads, and on a more limited basis,to small-scale natural gas pipelines. The Ministry will identify new infrastructure opportunities forboth resource and public road infrastructure. The Province would continue to partner in theseinfrastructure opportunities through innovative business arrangements such as public privatepartnerships (P3s)and differential royalty arrangements.

There are areas in northeast British Columbia that have not been explored and developed(sometimes referred to as"white spaces''). Industry has noted two primary impediments: lack ofgeoscience knowledge and lack of access.

The Ministry will develop actions to address these impediments, such as building on the PipelinePilot Program to encourage companies to drill in new or under-drilled areasso as to ensure goodstewardship of evaluate the full resource potential.

Northeast British Columbia offers a number of under-explored and under-drilled areas that maybe capable of producing oil or gas. However, these potential operating areas lack the necessaryinfrastructure, in the form of pipelines and processing facilities, to economically extract andtransport product to market.

A number of oil and gas producers and pipeline mid-streamers operating in BChave indicatedthat limited or non-existent pipeline infrastructure is a key barrier to their investment in under-developed oil and gas areas in northeast Be.

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Develop a multi-year infrastructure-based royalty program that introduces anintegrated approach to the development of resource roads, pipelines and processingfacilities. This approach to oil and gas infrastructure will further stimulatedevelopment in emerging and under-explored areas of northeast British Columbia.

The existing royalty credit program for resource roads was launched in 2004 and has sincebeen renewed, through new instalments of road-based royalty credits, in each successive yearthereafter. The pipeline royalty credit program was implemented on a pilot basis late in 2005 andyield successful results through 2006.

A multi-year infrastructure royalty program, that integrates roads, pipelines and facilities as aninfrastructure bundle, will be developed so asto offer oil and gas partners longer term partnershiparrangements with the Province, an improved operating chance on measures of risk and returnand therefore, even greater confidence to push out the Province'soil and gas frontier. Thisintegrated (resource roads, pipelines and facilities) infrastructure program will revolve a finitepool of infrastructure-based royalty credits through the best candidate oil and gas infrastructureprojects. Royalty credits would be advanced into a completed project as it meets requirementsto receive the Province's contribution, ascredits are subsequently recovered by the Province,through new oil and gas royalties these same royalty credits would be re-advanced to supportnew infrastructure partnerships. On this basisthe Province would invest and re-invest, through acapped butrevolving infrastructure fund, in high quality oil and gas infrastructure projects.

A pipeline and facilities royalty credit could incent entry into under-developed areas,both bylarge companies who traditionally have been reluctant to absorb the full risk of pioneering under-developed areas,and by small producers whose capital resources are typically insufficient tofinance large-scale resource development. There may also be casesto stimulate developmentin under-developed areasthrough partnerships involving producers, pipeline operators (mid-streamers) and the Province'through the royalty credit that is transferable, on a one-time basis,between a mid-stream operator and an oil and gas producer.

Invest in resource-based and public road infrastructure and explore newinfrastructure opportunities in northeast British Columbia.

Over the past three years, significant new investment in oil and gas infrastructure has proven tobe an important lever in further developing the Province's oil and gas resource and establishinga competitive presence in North American natural gas markets. Building and maintaining highgrade, all-season resource roads has demonstrably lengthened the drilling season, opened upnew areas to development, and aligned operating costs in Be with other competing jurisdictions.Increased investment in high-grade resource roads, with connections to connecting publicroads and highways has also created saferworking and living places for industry, contractors andcommunities.

The Province will continue to invest in the public road infrastructure throughout northeast Be. TheMinistry will explore new infrastructure opportunities for public road infrastructure, and continueto partner in the construction of producer built roads, pipeline and facilities infrastructure.

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46. Encourage the development of conventional and unconventional resources.

The northeast region of the Province (194,000 square kilornetres) has been a focus of petroleumexploration and development since 1952. About 17,000wells have been drilled to date.

The table below shows the estimated undiscovered resource potential for all of the province, intrillion cubic feet (Tef) for natural gas,and billion barrels of oil (Bbbl) and the known reserves fornortheast Be. BC is primarily a gas producing jurisdiction with raw gas production of about 1.1Tef.in 2005, has produced about 17.5Tef,with remaining reserves of 12.9Tcf.

Natural Tight Shale Coalbed OilGas Gas Gas Gas, BbblTcf Tcf Tcf Tcf

RESOURCE POTENTIAL 98.0 17.6• Conventional

• Unconventional 300 250 84

• Offshore 41.8 9.8

RESERVES• Northeast BCReserves 12.9 0.131

(Dec 31,2005)

• Northeast BCProduced 17.5 0.67(up to Dec 31, 2005)

Declining conventional resources in North America has lead to a shift in some of the focus ofoil and gas producers to unconventional gas-tight gas, shale gas and coal bed gas (CBG).TheWestern Canada Sedimentary Basin is rich with these emerging resources. The distribution ofthese unconventional resources, and the total amounts of economically producible or marketableresources are critical to attracting investment, planning for sustainable development andcommunity involvement.

Tight gas is likely to hold the highest potential for remaining technically recoverable natural gasresources in the northeast. Tight gas is now being specifically targeted in pervasive, regionalresource play developments, like those focused on the Greater Sierra near Fort Nelson and atCutbank Ridge, west of Dawson Creek. In 2003 the Ministry of Energy and Mines released anExploration Assessment ofTight Gas Plays in northeast BCand determined that the in-place tightgas resource base could be about 300 Tef.

About 25 per cent of Be's 2005 production is estimated to come from tight gas formations.Further research is needed to identify areas of potential growth. Shale gas isjust starting to beevaluated and developed in British Columbia.

With commercial success of several shale gas plays in the United States, British Columbia's shalesare now being recognized as potential reservoirs estimated to have the capacity to hold about250 Tef gas-in-place. Though recoverable volumes will be considerably less,shale gas remains asignificant untapped resource. Recent studies by the Ministry on Devonian and Triassicformationsin northeast British Columbia, show shale gas potential throughout very large areas.

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. Undertake assessments and support geoscience evaluations to further thedevelopment of shale and tight gas. '

While the amount of in-place shale and tight gas in BC is substantial, there are a number of. obstacles that may impede development such as technology gaps to extract natural gas,the

need for more geoscience, and a lack of knowledge amongst communities, landowners and FirstNations on the impacts of developing these unconventional resources.

The Ministry will work with the Petroleum Technology Alliance of Canada (PTAC)and otheragencies to address specific technical and community issuesto identify areas of potential growth.

Develop policies and new technologies for Enhanced Resource Recovery.

Even with the increased price of crude oil, British Columbia has seen little interest from industryin increasing oil production from existing facilities or exploring and developing oil reserves.TheMinistry will identify barriers to enhanced resource recovery.

By partnering with PTACand other agencies, the Ministry will work with industry to supportand develop policies to promote enhanced resource recovery (ERR).In addition, results-basedregulations will be introduced in 2008 encouraging industry to implement new leadingedge technologies. Results-based regulations will eliminate prescriptive methods that createdisincentives to technical development. Through new compliance tools, the Oil and GasCommission will be able to regulate industry without limiting the introduction of innovation, newtechnologies and best practices that are key to an expanding and sustainable oil and gas industry.

Enhance marketing efforts with major oil and gas companies in conjunction with theMinistry of Economic Development to increase knowledge of and investment in BritishColumbia's oil and gas sector.

While there is substantial investment in the oil and gas sector, many oil and gas companies do nothave holdings and are not active in Be. To encourage investment, the Ministry will work with theMinistry of Economic Development's market representatives in Calgary, Houston, Asia Pacific andLondon and federal counterparts (e.g. Canadian consulates) to promote Be's potential resourcesand the advantages of investing in Be.

A comprehensive marketing plan will be implemented to encourage investment from companiesthat do not currently have holdings in Be.

47. Support the growth of British Columbia's oil and gas service sector.

The British Columbia based service sector has grown over the past four years and exhibits the

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potential for further growth. In 2003, the Minister of Energy,Mines and Petroleum Resourcesestablished a Service Sector Strategy Committee with representation from the Northern Societyof Oilfield Contractors and Service Firms,the Northeast Aboriginal BusinessCentre, the CanadianAssociation of Petroleum Producers and member firms, Treaty 8, the Fort Nelson Chamber ofCommerce, the 'Oil and GasCommission and the Ministry.

Increased activity in the traditional wil:1terdrilling season, together with the emergence summerdrilling, hascreated a more stable, secure, near to year-round operating platform for oil and gasproducers enabling them to make multi-year commitments to the service industry and promotelocal companies.

The Ministry will participate in trade shows and work with the Service Sector Committee tointroduce and market BCservice sector companies to the oil and gas industry. Companies willboth sponsor and p~rticipate in these marketing initiatives. The Ministry will continue to activelysupport the development of the Oil and GasCentre of Excellence.

Continue to promote awareness of British Columbia-based service sector companiesin the interest of the BC sector securing a representative market share of oil and gasactivity in the province.

The Ministry will undertake a study in 2007 that updates previous analysis that describes themarket share of BCservice sector companies. This study will establish a benchmark and identifyspecific business segments where BCcompanies can playa larger role. Thereafter, this study willbe updated every two years with new data, benchmarks and trend analysis.

In addition, the Ministry and the Service Sector Committee will work to promote BCservice sectorcompanies through informing, educating and connecting the business community to expandingand emerging oil and gas both within and outside British Columbia.

Continue to support initiatives that enhance the competitiveness of British Columbia'soil and gas service sector and support the drive toward companies in the servicesector capturing representative market share of activity within the province.

The Ministry of Small Businessand Revenue is developing a small business strategy and intends toimplement this strategy starting in 2007. The Ministry of Energy,Mines and Petroleum Resourceswill work with the Ministries of Small Businessand Revenue and Finance to improve small businesscompetitiveness and specifically pursue a greater share of the oil and gas service sector for BCbased businesses.

~ '

48. Promote exploration and development of the Interior basins with a priority focus on theNechako Basin.

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The Whitehorse, Bowser and Nechako Basinsof north central and interior British Columbia remainlargely unexplored asa result of insufficient infrastructure and lack of geological information.

In relation to the Whitehorse and Bowser Basins,the Nechako is less remote; has more favourablegeography and infrastructure; more is known about the potential for oil and gas;and is thegeographic area most affected by the Mountain Pine Beetle.

While recognizing the potential for oil and gas development throughout the other Interior Basinsin the longer term, theNechako Basin has the most immediate potential to engage industry, FirstNations and the local communities.

The Nechako Initiative aspiresto provide multiple benefits including:

• Expansion of B.Csoil and gas activities;• Economic diversification and job creation in areasseverely affected by the Mountain Pine

Beetle; and• Innovative economic opportunities for First Nations and local communities.

Strategic components of the Initiative include:

• Geoscience information collection and analysis;• Fostering First Nations relationships and opportunities;• Community and stakeholder engagement;• .Environmental management;• Industry promotion;• Infrastructure development; and• Policy considerations such as tenure and royalties.

GeoScience BChas received $5 million from the Province specifically targeted for the NechakoBasin. Collaborative programs will leverage additional funds and enhance the knowledge base tostimulate industry investment.

The "New Relationship" has created an opportunity for the Ministry to work with First Nations earlyin the planning process. Oil and gas exploration is a new industry to local communities and thereis a need to communicate basic information about the industry well in advance of any proposeddevelopment, for First Nations to meaningfully engage in the process. An early, broad-basedcapacity development plan is needed to enable effective First Nations engagement by both theMinistry and industry.

Undertake geoscience activity in the Nechako Basin to establish new data of the

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resource potential for oil and gas development.

The Ministry, in collaboration with the federal government, other agencies, and industry, willexpand its geoscience work to stimulate industry exploration and development of oil and gasresources in the Nechako Basin.

The Nechako Basin is a 70,000 square kilometre area in the central interior of the province. Theboundaries of the Nechako Basinare generally considered to be the Skeena Arch in the north,Highway 97 to the east, and the Chilcotin and Camelsfoot Rangesto the south.

The Nechako Basin has promising geologic formations including up to 4,000 meters ofsedimentary rocks in smaller sub-basins and the presence of rocks that suggest the potential for oiland gas. There are minor hydrocarbon shows.

To date the area is largely unexplored. Seismic testing was undertaken in the 1980s and onlytwelve exploration wells have been drilled over the past 75 years with no resulting discoveries.

In conjunction with work being conducted elsewhere in the Interior Basins,geoscience work isbeing conducted in the Nechako Basin including:

• A review of known data and interpretation of subsurface data;• A pilot project to re-process old seismic data; and• Completion of a second field season of geoscience work including source bed analysis of

subsurface rocks;a regional heat flow study and a detailed description of subsurface samples.The results will refine the search for hydrocarbons.

The Ministry will continue to develop partnerships, including the federal government, toundertake an extensive Seismic program in the Nechako Basinto provide industry with data onthe potential resource.

More information on GeoScience BCcan be found at:

http://www.geosciencebc.com/

Develop tenures and royalties specific to the Nechako Basin to encouragedevelopment and investment.

The traditional means of awarding tenure may not be appropriate for exploration anddevelopment in the Interior Basins. More innovative tenure mechanisms and royalty regimesappropriate for these unexplored basins may be considered.

Develop and implement a comprehensive First Nations pre-tenure engagement

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program in the Nechako Basin to develop First Nations capacity and knowledge of theoil and gas industry.

Focussing on FirstNation's rights and interests, the Ministry will undertake a comprehensiveinformation sharing program with local First Nations to gather their interests and exchangeinformation on the oil and gas industry and the area'spotential for development.

Develop and implement a comprehensive First Nations engagement process in theNechako Basin to develop options for implementing the New Relationship.

The Ministry will undertake a comprehensive engagement process that includes informationsharing and pre-tenure consultation with First Nations in the Nec~ako Basinarea. This processwill establish a forum to share information on the oil and gas industry and the areaspotentialfor development, while exploring First Nations interests in this region. This process will includedeveloping a potential benefit sharing model that includes economic opportunities.

Develop and implement a comprehensive community engagement program in theNechako Basin to establish a framework for a benefits sharing agreement.

The Ministrywill initiate a community engagement program on oil and gas development in theNechako Basin. Also, the Ministry will develop, in cooperation with local communities, a benefitssharing framework and an environmental stewardship program.

Develop a comprehensive Environmental Information Program to identify baselineinformation needs in the Nechako Basin through consultations with government,industry, communities and First Nations.

The need for an environmental information program will be assessedby 2007/08. Data gapanalysiswill be completed by 2008/09 including a searchable,web accessible database.

49. Encourage the development of new technologies.

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British Columbia has the opportunity for technological advancements and commercialization,particularly in environmental management, flaring, carbon sequestration and hydrogeology. Theservice sector has noted that it can play an important role in developing and commercializing newtechnologies, however, access to funds is an issue. Royalty credits is one option that is currentlynot available to the service sector and under this objective, the Ministry will assessthe possibilityof providing a company with transferability of royalty credits as a funding mechanism.

Establish a technology transfer incentive program.

The province will establish a technology transfer incentive program similar to the SaskatchewanPetroleum Research Incentive model but focusing on differenttechnologies. This program,possibly funded by royalty credits, will encourage the research, development and use ofinnovative technologies to increase recoveries from existing reserves and encourage responsibledevelopment of new oil and gas reserves. The program should be designed to fully recoverprogram costs, over time, through increased royalties generated by expanded development andproduction of Be's petroleum resources. An additional objective is to transfer the technologydeveloped so there is a greater awareness and use of new technology in Be, particularlytechnology that leads to the reduction of environmental impacts of oil and gas production.

The BCScientific Researchand Experimental Development Program provides financial supportto corporations for research and development that leads to new or improved products andprocesses.The Ministry, in consultation with the Ministry of Small Business and Revenue, willexplore the expansion of the program to cover an individual's project costs directly relatedto commercially applicable research, development or demonstration for new or improvedtechnologies conducted in British Columbia that facilitate expanded oil and gas productionthrough credits or refunds. Work will also proceed in collaboration with PTAC.

Explore and establish other research and development programs for the oil and gasindustry.

The Province will develop a program targeting specific areas where BC has demonstratedstrengths.

The Province will work with the Fort St. John Centre of Excellence and other partners to establishan oil and gas technology incubator, encouraging entrepreneurs to develop and commercializenew and innovative technologies and processes.Workshops, information provision and expansionof existing events (e.g.,tradeshows and oil and gas conferences) will be held to assist innovators.

The Province will develop a program to encourage oil and gas innovation and research in BritishColumbia's post-secondary institutions.

The Province will promote investment in research and development opportunities with the PTACand the new MOU between BCand Alberta on Energy Research,Technology Development andInnovation.

50. Add value to British Columbia's oil and gas industry by assessing and promoting thedevelopment of additional gas processing facilities in the province.

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The goal is to develop a strategy promoting gas processing facilities in British Columbia. Witha number of proposals for new pipelines carrying crude to the coast, landing condensate, andliquefied natural gas regassification terminals, there may be an opportunity to create an integrated.petroleum refining and petrochemical industry, providing jobs and investment on the north coast.

Conduct an analysis into the potential for processing facilities to be located in BritishColumbia.

The Ministry will identify and analyze constraints, in the form of scale or nature of oil and gasprocessing facilities, that limit development and enhanced stewardship of Be's oil and gasresource.

Determine the viability of establishing a new petroleum refinery and petrochemicalindustry in British Columbia.

British Columbia is a small crude oil producer in Canada. With approximately 17 million barrels ofcrude oil production per year (2.8 billion Iitres), BC provides 1.8 per cent of total Canadian crude oilproduction. About half of Be's crude oil production is processed at the two refineries-Chevron inNorth Burnaby and Husky in Prince George, and the rest is processed in Alberta. Small quantitiesare exported to the US.

There are numerous proposals for condensate and crude oil pipelines, and importing liquefiednatural gas for regasification. The Province will establish an industry/government workinggroup to develop business casesand promote opportunities for new refining and petrochemicalinvestment in Be. The working group will report to the Minister within six months withrecommendations on the viability of a new petroleum refinery and petrochemical industry andmeasures, if any, to encourage investment.

51. Provide information about local oil and gas activities to local governments, educationand health service providers to inform and support the development of necessary socialinfrastructure.

Provide local communities and service providers with regular reports of trends and industryactivities so that they can more effectively plan for growth in·required services and infrastructure.

Work with local communities, ministries and industry to address housing demands.

Ministry of Energy, Mines and Petroleum Resources,in partnership with the Ministry of Forestand Range'sHousing Policy Branch, will actively work with and assist communities wishing toimplement recommendations of the 2006 Housing Report.

52. Work with First Nations to identify opportunities to participate in and benefit from oil andgas development.

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Access to land to explore and develop oil and gas resources is a fundamental requirement asnoted by the ProgressBoard and the Competition Council. First Nations have been increasinglyconcerned about the incremental approach to resource development, particularly gas wellauthorizations used by the Oil and GasCommission. They want to participate in the new wealthbeing generated by industry within their assertedTraditional Territories.

The "New Relationship" is an opportunity for First Nations to participate in, and benefit from, thedevelopment of resources surrounding their communities.

Increase First Nations capacity to participate in, and benefit from oil and gasdevelopment. .

The Ministry and the Oil and GasCommission will continue to facilitate and assist in developingFirst Nations' capacity to engage in the oil and gas sector and work to improve relationshipsbetween industry, First Nations, the Oil and GasCommission and the Ministry.

The Ministry will also facilitate and support opportunities for First Nations training, education (seealsoThe BCEnergy Plan Labour Strategy) and private-First Nations' partnerships.

53. Support First Nations in providing cross-cultural training to agencies and industry.

The Ministry will work with First Nations to develop and provide cross-cultural training to agenciesand industry.

54. Improve working relationships among industry and local communities and landowners byclarifying and simplifying processes, enhancing dispute resolution methods, and offeringmore support and information.

In oil and gas development on private land, landowners negotiate land leaseswith industry. Theacts governing oil and gas,minerals, coal and geothermal resources all have provisions for entry onprivate land by the subsurface resource titleholder. These provisions provide rights to the surfacelandowners beyond those which would be afforded by Common Law.

Improve landowner notification and awareness of sales of oil and gas rights on privateland.

The Ministry, in partnership with its established consultation mechanisms, will develop a processto better inform landowners in advance of salesof oil and gas rights on private land.

The Ministry has established several consultation mechanism (Le.,the Northeast Energy MinesAdvisory Committee, the Provincial Forum, etc.) to provide advice on oil and gas policy issues.These processes involve participants from First Nations, local government, rural landowners,business and community groups, ranchers, agriculture and wildlife interests among others.

Enhanced web design and information improving landowner's accessto online information aboutexisting and proposed oil and gas tenures to better inform landowners of sales of oil and gas rightson private land will be in place in 2007/08.

Improve private landowners' knowledge of subsurface resource titles and lease

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arrangements for land used for oil and gas development.

The Ministry will develop an educational package to assist landowners in dealing with subsurfaceresource titles The Ministry will consult with stakeholders, local landowners, organizations andindustry to re-assessthe current guidelines and methodologies to determine lease payments tolandowners for land used for oil and gas development. Other actions include: development ofstandardized lease arrangements including an amount (up to $5,000) as assistance to developa lease arrangement with an oil and gas company, and a publicly accessible registry of leasearrangements to improve transparency.

Assess and improve the process of dispute resolution between landowners and the .industry.

The Ministry, in partnership with industry, the Oil and GasCommission and the Mediation andArbitration Board will assessprocesses to resolve disputes between landowners and the industry.Depending on the results of this assessment, landowner organizations will be engaged to developnew processes.

Review current setback regulations.

The Ministry will engage with local communities, landowners, First Nations, industry and theOil and GasCommission in reviewing requirements for setback distances between wells andoccupied building structures based upon scientific studies, public health and safety, and economicand social considerations.

55. Examine oil and gas tenure policies and develop guidelines to determine areas that requirespecial consideration prior to tenure approval.

Develop clear and consistent guidelines to determine areas which are off-limits for oiland gas tenures or where special management practices are required.

The Ministry will work with local governments, communities, landowners, stakeholders and FirstNations to develop guidelines to determine which areas require special consideration for oil andgas tenures.

Notice of special areaswill be posted on line and identified on the Petroleum Titles Online maps.

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Appendix C2

B.C. Clean or Renewable Electricity Definitions

1

British ColumBia’s Clean or renewaBle eleCtriCity DefinitionsElectricity generated in British Columbia may be reported as Clean or Renewable Electricity if:

1. The facility is in compliance with all applicable Federal and Provincial environmental regulations;

and

2. The facility satisfies one of the following requirements:

a. The electricity is generated in a facility that uses a Clean or Renewable Electricity Resource or Technology as defined in this document.

b. The electricity is generated in a facility that fulfills one of the following requirements:

• It can be demonstrated that the facility meets the certification criteria for “electricity -- renewable low-impact” as defined by Environment Canada’s Environmental ChoiceTm Program; or

• The facility maintains Environmental ChoiceTm Program certification.

c. Electricity is generated using a process, resource, or technology that is not recognized as Clean or Renewable in this document, but receives recognition from the minister of Energy, mines and Petroleum Resources as Clean or Renewable Electricity.

Appendix C2

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2

British ColumBia’s Clean or renewaBle eleCtriCity resourCesResources and technological applications that may qualify as a source for Clean or Renewable Electricity production are listed below:

Biogas energy - means electricity generated from a system that captures biogas for combustion or conversion to electricity. Biogas means the gaseous products (primarily methane and carbon dioxide) produced from organic waste material. Facilities producing biogas include landfill sites, sewage treatment plants, and anaerobic digestion organic waste processing facilities.

Biomass energy - means electricity generated from the combustion or gasification of organic materials. Biomass includes, but is not limited to:

• Clean wood biomass, meaning • wood residue within the meaning of the Forest Act, • wood debris from logging, construction, or demolition operations, • organic residues from pulp and paper production processes, and • timber, within the meaning of the Forest Act infested by the mountain pine beetle; • Liquid fuels derived from biomass including bio-oil, ethanol, methanol, and bio-diesel; • dedicated energy crops; and • Clean organically sourced material separated from municipal solid waste (mSW) and processed to serve as a combustion fuel.

Clean biomass does not include organic material that has been treated with inorganic substances such as paints, coal-tar creosote, pentachlorophenol or chromated copper arsenate, to change, protect, or supplement the physical properties of the materials.

If a facility co-fires fuels, or uses a mix of fuels that includes fossil fuels, only the proportion of the total electric output that can be attributed to the use of a clean or renewable fuel source qualifies as clean or renewable electricity. The proportion of the total electric output that qualifies as clean or renewable electricity must be calculated based on the proportion that clean or renewable energy constitutes of the total energy input used by the renewable energy system to generate electricity, or if practicable, separate metering.

energy reCovery generation (erg) - means electricity produced from the recovery of waste energy from an industrial process that would otherwise have been vented or emitted into the atmosphere. ERG represents a net environmental improvement relative to existing energy production because it uses the waste of other processes to generate electricity. Therefore, all output from an ERG facility is considered Clean or Renewable Electricity.

geothermal energy - means electricity produced using the natural heat of the earth and all substances that derive an added value from it, including steam, water and water vapour heated by the natural heat of the earth and all substances dissolved in the steam, water or water vapour obtained from a well. This does not include hydrocarbons or water that has a temperature less than 80°C at the point where it reaches the surface.

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3

hyDroCarBon energy - means electricity produced from a facility combusting or converting fossil fuel using a closed-loop process whereby all greenhouse gas emissions from the operation of the facility are either deemed to be zero, negligible, or subject to long-term sequestration from the immediate receiving environment. Such a system requires approval of the minister of Energy, mines and Petroleum Resources for classification as Clean or Renewable Electricity.

hyDro energy - means electricity generated from a system or technology that converts either the potential or kinetic energy of water.

hyDrogen - usually recognized as an energy carrier, hydrogen can also be used as a primary fuel source for internal combustion engines. Hydrogen produced from either a clean or renewable resource, or captured as a waste by-product of an industrial process, and then converted into electricity, is considered Clean or Renewable.

muniCipal soliD waste (msw) - incineration of mSW to produce energy has both positive and negative environmental impacts. The release of carbon dioxide and other emissions is a negative impact, but reducing the amount of materials in landfills has benefits. Therefore, the combustion of mSW for electricity generation may be considered Clean or Renewable Electricity. a mSW incineration system requires approval of the minister of Energy, mines and Petroleum Resources for classification as Clean or Renewable Electricity.

mSW can also be converted to synthetic gas, which in turn is used to generate electricity. The electricity produced using such a process may be considered Clean or Renewable Electricity. a mSW-synthetic gas-generation system requires the approval of the minister of Energy, mines and Petroleum Resources for classification as Clean or Renewable Electricity.

solar energy - means electricity generated by converting the radiant light or heat energy of the sun through the use of photovoltaic and concentrating solar thermal technologies.

tiDal energy - means electricity produced by harnessing the natural rise and fall of the tides in the ocean.

wave energy - means electricity produced by harnessing the natural rise and fall of waves in the ocean.

winD energy - means electricity produced from a system of airfoils or blades that spin a drive shaft to capture the kinetic energy of the wind.

other potential Clean or renewaBle eleCtriCity sourCes - can include a project where the proponent or electricity distributor can demonstrate to the satisfaction of the minister of Energy, mines and Petroleum Resources that a project or application of technology otherwise excluded by this guideline, or not qualifying for certification under the Environmental ChoiceTm

Program, should be recognized as producing Clean or Renewable Electricity.

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Appendix C3

B.C. Bioenergy Strategy

BC Bioenergy StrategyGrowing Our Natural Energy Advantage

Appendix C3

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Table of Contents

INTRODUCTION 2

HIgHlIgHTs 4

1 | IDeNTIfy OUR NaTURal ResOURCe POTeNTIal 6

2 | DeVelOP BIOeNeRgy PROjeCTs 8

3 | sTReNgTHeN B.C.’s BIOeNeRgy NeTwORk 10

4 | BUIlD BIOeNeRgy PaRTNeRsHIPs 14

CONClUsION 15

BIOeNeRgy TeCHNOlOgy DeVelOPmeNT TImelINe 16

BaCkgROUND 18

1

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I N T R O D U C T I O N

2

Human activity has changed our world. It has led to numerous advances – from instant power to airline travel to the farthest reaches of the globe. For a long time, these advances carried with them the unseen cost of rising greenhouse gas emissions, which has led to the monumental challenges of global warming and climate change.

The Province is addressing these challenges head on. The BC Bioenergy Strategy will help turn existing challenges into new opportunities – for both forestry and agriculture.

The BC Bioenergy Strategy sets us on a path to diversify rural economies and turn adversity into opportunity by recovering maximum value from all our forests and creating new economic opportunities for mountain pine beetle damaged timber through conversion into bioenergy.

Bioenergy provides new opportunities for agriculture. It will be developed from B.C.’s landfills, crop residues and agricultural wastes.

Bioenergy is a positive, practical approach that will involve all regions and all British Columbians in preparing for a low-carbon future. The bioenergy we generate from our abundant resources in B.C. can help meet greenhouse gas reduction targets at home and in other jurisdictions, creating enduring economic benefits.

This strategy builds upon a solid foundation of expertise, innovation and experience. Many B.C. forest companies already convert wood residues into electricity and heat used in their mills, and some supply surplus amounts into the power grid. Established community energy projects and landfill methane-capture systems demonstrate the success and commitment to bioenergy that exists in B.C. right now.

“The Province is addressing these challenges head on. The BC Bioenergy Strategy will help turn existing challenges into new opportunities – for both forestry and agriculture.”

Honourable Gordon Campbell Premier of British Columbia

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3

Honourable Richard Neufeld Minister of Energy, Mines and

Petroleum Resources

Honourable Rich Coleman Minister of Forests and Range

Honourable Pat Bell Minister of Agriculture and Lands

With the support of government, industry and partners in the Western Climate Initiative, this strategy will help launch British Columbia as a carbon-neutral energy powerhouse in North America.

The BC Bioenergy Strategy will help B.C. achieve its targets for zero net greenhouse gas emissions from energy generation, improved air quality, electricity self-sufficiency and increased use of biofuels.

Bioenergy holds the promise of innovation, investment and job creation. All are within our grasp if we’re willing to look to the future and embrace the changes that are upon us.

Honourable Gordon Campbell Premier of British Columbia

Honourable Richard Neufeld Minister of Energy, Mines and Petroleum Resources

Honourable Rich Coleman Minister of Forests and Range

Honourable Pat Bell Minister of Agriculture and Lands

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H I G H L I G H T S

4

The BC Bioenergy Strategy will help British Columbia and other places in North America reduce greenhouse gas emissions and strengthen our long-term competitiveness and electricity self-sufficiency. Bioenergy is absolutely critical to achieving B.C.’s climate goals and economic objectives. It turns the challenges of the mountain pine beetle infestation into new opportunities and looks to future bioenergy technologies. This strategy directly supports the commitments made in the BC Energy Plan and is a key contributor to helping our partners in the Western Climate Initiative achieve their emission reduction goals.

Building Opportunities for Rural British Columbia British Columbia’s bioenergy assets include top researchers, innovative companies, committed partners, forward-thinking communities, and half of the entire country’s biomass electricity-generating capacity.

Establish $25 million in funding for a provincial Bioenergy Network for greater investment and innovation in B.C. bioenergy projects and technologies.

Establish funding to advance provincial biodiesel production with up to $10 million over three years.

Issue a two-part Bioenergy Call for Power, focusing on existing biomass inventory in the forest industry.

Benefits for British Columbians We will aim for B.C. biofuel production to meet

50 per cent or more of the province’s renewable fuel requirements by 2020, which supports the reduction of greenhouse gas emissions from transportation.

We will develop at least 10 community energy projects that convert local biomass into energy by 2020.

We will establish one of Canada’s most comprehensive provincial biomass inventories that creates waste to energy opportunities.

Bioenergy is energy derived from organic biomass sources – such as trees, agricultural crops, food processing and agricultural wastes and manure. Biomass can be generated from logging, agriculture and aquaculture, vegetation clearing and forest fire hazard areas. When used for energy, biomass such as organic waste, wood residues and agricultural fibre is considered clean or carbon neutral because it releases no more carbon into the atmosphere than it absorbed during its lifetime. When used to replace non-renewable sources of energy, bioenergy reduces the amount of greenhouse gases released into the atmosphere.

BIOENERGY CYCLE

CLEANER, GREENER

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5

Developing Our Bioenergy ResourcesBritish Columbia is world-renowned for its plentiful natural resources and strong environmental values. Through the BC Bioenergy Strategy, British Columbia will take its proven track record one step further. We will develop the province’s bioenergy resources to enhance both the environmental and economic benefits for the people who live here. Next steps include:

Collaborate with the Western Climate Initiative and the Pacific NorthWest Economic Region.

Create First Nations bioenergy opportunities.

Require methane capture from our largest landfills.

Utilize waste wood from phased-out beehive burners to produce clean energy.

Provide energy providers with information to develop new opportunities.

Support wood gasification research, development and commercialization.

Appendix C3

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6

34%Mountain Pine Beetle

Damaged Timber

10%Sustainable Agriculture

3%Municipal Solid Waste

53%Sustainable Forestry

Sustainable ForestryThis includes forest residues from logging practices, road clearing and other forestry activities. Site preparation, early tree removal and tree stand establishment could increase forest residues and be a source of biomass.

Mountain Pine Beetle Damaged TimberThe increased annual allowable cut to remove beetle-killed timber and non- recoverable pine are temporary sources of biomass, which will be available for approximately 20 years.

Sustainable AgricultureCrop residues that are not utilized, which could include stalks, husks, straw and other post-harvest fibre, are available as a biomass source. Crops grown for biodiesel and ethanol production may include grain and canola. In future, livestock manure and dedicated crop growth are potential agricultural sources for biomass.

Municipal Solid Waste Municipal landfills contain biomass that can become a source of fuel through landfill gas collection or direct combustion.

B.C.’s Biomass Resources

1 | I D E N T I F Y O U R N AT U R A L R E S O U R C E P OT E N T I A L

British Columbia has 50 per cent of the biomass electricity-generating capacity of the entire country within our province.

WHAT IS BIOMASS?Biomass is renewable organic matter like crops, trees, wood chips, aquatic plants, manure and municipal waste. British Columbians produce biomass from daily activities. Biomass can take the form of organic garbage, yard and garden waste, sewage, and wood from demolition and construction sites.

The province’s main sources of biomass come from forest and agricultural activities. Food processing, aquaculture and other industries also produce large amounts of biomass.

Biomass can be used to produce heat and electricity, liquid and gaseous fuels (such as ethanol from grain and cellulose, biodiesel from oilseed and waste greases and biogas from anaerobic digestion), solid fuels (pellets and briquettes), and various other products.

British Columbia is committed to developing our abundant natural resources in an environmentally responsible manner. Through the implementation of the BC Bioenergy Strategy, Government will create new economic opportunities for forestry, agriculture, municipalities and First Nations communities. It will establish British Columbia as the hub of a global supply network of bioenergy resources, technologies and services.

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7

Canada has approximately seven per cent of the world’s land mass, and 10 per cent of its forests. Unused biomass from Canada’s forestry and farming operations that is not otherwise required for soil health or ecosystem restoration could provide as much as 27 per cent of our national energy needs.

Biomass Supply EstimatesThe Ministry of Forests and Range has begun work on wood Biofuel Supply Estimates. These supply estimates, highlight the bioenergy potential of different regions and can assist independent power producers and other energy developers in evaluating bioenergy opportunities from wood.

The Ministry of Agriculture and Lands is also developing an inventory mapping system to chart the volume, availability and geographic distribution of agricultural and agri-food by-products, starting with the Fraser Valley.

NExT STEPS

A comprehensive inventory of the province’s biomass resources will:

Total the approximate volume y

of biomass available.

Consolidate information and y

make it available in a user-friendly, easily accessed, online format.

Provide energy producers with y

information to develop new bioenergy opportunities.

7

Information and tools to understand the quantities, types, ownership and location of B.C.’s biomass resources can establish bioenergy development potential.

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2 | D E V E LO P B I O E N E R G Y P R O J E C T S

8

Government and its partners will collaborate to develop B.C. bioenergy projects utilizing energy from wood waste, agriculture, renewable fuels and municipal waste.

Energy from Wood WasteThe opportunities to use both wood waste and mountain pine beetle damaged timber are endless. The City of Revelstoke is a leader in bioenergy. Wood waste from a local sawmill fuels a biomass boiler that enables the municipality to recover heat in the form of low pressure steam for drying lumber at the sawmill and providing hot water to a community energy system for buildings in the downtown core. The Revelstoke community energy project, in operation since 2005, increases energy efficiency, reduces wood waste from sawmills and improves local air quality.

Energy from AgricultureBioenergy presents exciting economic prospects for B.C.’s agriculture sector. The development of biofuels from grains, oilseeds, waste fats and greases may better exploit unused crop residues and agricultural by-products. At the same time, bioenergy has the potential to address animal manure and other waste management challenges.

As technology advances, biofuels will be produced from an even broader range of sources, such as algae, straw and plants that thrive in less fertile regions. These opportunities will help balance the development of bioenergy from agriculture with global food requirements.

The Fraser Valley, North Okanagan, Cariboo, Northeast B.C. and Northwest B.C. have an abundance of livestock facilities which could produce a continuous supply of feedstock for anaerobic digestion. Anaerobic digestion uses bacteria to convert organic waste into a biogas composed primarily of methane and carbon dioxide.

Government is funding an Anaerobic Digestion Feasibility Study to explore long-term bioenergy opportunities in rural regions throughout B.C.

Energy from Renewable FuelsGovernment has set out to establish a low carbon fuel standard for British Columbia and is committed to implementing a five per cent average renewable fuel standard for diesel and to increasing the ethanol content of gasoline to five per cent by 2010. Farmers in the Peace Region stand to benefit from rising demand for grain used in ethanol production. A study completed in April 2007 for the B.C. Grain Producers Association shows potential for a 22-million-litre-per-year biodiesel production facility in the area using 56,000 tonnes of canola.

BIOENERGY CALL FOR POWERBC Hydro will issue a two-part Bioenergy Call for Power early in 2008. This call will follow up on the March 2007 Request for Expressions of Interest for power production to convert underutilized wood into electricity.

The Bioenergy Call for Power will provide communities that are dependent on forestry and agriculture with new opportunities to partner with industry, First Nations and government to maximize economic benefits and improve air quality.

For further information visit www.bchydro.com/2007 /bioenergy

BIODIESEL PRODUCTION The Province will provide up to $10 million in funding over three years to encourage the development of biodiesel production in B.C. This will help diversify rural economies, improve competitiveness for B.C. biodiesel producers and provide new clean energy opportunities.

Appendix C3

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9

NExT STEPS

The Province will develop legislation to phase in requirements for methane ycapture at landfills, the source of about nine per cent of B.C.’s greenhouse gas emissions. This methane could be used for clean energy.

The Province will collaborate to streamline the regulatory and permitting yenvironment and address the current waste management challenge posed by agricultural residues such as animal manure.

The Province will develop regulatory measures to eliminate beehive burners, ywhich will help divert those wood residues to higher value, lower pollutant bioenergy production.

The Province will promote wood pellet production and facilitate market ydevelopment opportunities within the province and around the world.

The Province will improve access to wood fibre feedstocks for the generation yof heat and power in collaboration with the forest and energy industries, utilities and provincial government partners.

The Province will review the y Safety Standards Act Power Engineers, Boiler, Pressure Vessel and Refrigeration Safety Regulation to accelerate adoption of bioenergy technology in the forest industry.

The Province will work with the bioenergy industry and others to develop ynew fine particulate standards for industrial boilers to improve air quality.

Energy from Municipal WasteTurning municipal waste into green energy offers endless potential. The Hartland Landfill near Victoria captures landfill gases through a series of underground pipes. The gas is collected, then cooled, compressed and transported to a gener-ating facility where it creates enough electricity for about 1,400 homes.

A similar system at Vancouver’s Delta landfill can generate up to 50 gigawatt hours of power and provides heat to local greenhouses. The SEEGEN project, owned by the Greater Vancouver Regional District, incinerates waste to produce up to 125 gigawatt hours of power and low pressure steam for use in a nearby paper recycling plant.

BIOfleeT is an initiative to expand the development and use of biodiesel in Western Canada. This project will continue to build market confidence in biodiesel to increase the purchase and use of clean, renewable fuel and will also reduce greenhouse gas emissions generated by vehicle fleets. British Columbia will consume more than 500 million litres of biofuel annually by 2010.

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3 | S T R E N G T H E N B. C .’S B I O E N E R G Y N E T W O R k

10

Building on the Existing Bioenergy and Biorefining NetworkThe purpose of the Network is to achieve greenhouse gas emission reductions, improve air quality and capitalize on B.C.’s bioenergy potential through the development of projects which could include:

New bioenergy technology and production capacity to better utilize beetle damaged timber and other woodwaste in sawmills and pulp mills.

Agricultural biogas production from animal and food processing wastes.

Next-generation biofuels such as ethanol from woodwaste and biodiesel from algae.

Projects to convert municipal waste and landfill gas to electricity and other fuels.

The Network strengthens the development of world-class bioenergy research and technology expertise in British Columbia. This will include the creation of at least one academic leadership chair in bioenergy.

British Columbia’s current bioenergy network already includes:

Over 800 megawatts of biomass electricity capacity is installed in British Columbia, primarily within the forest sector – enough for 640,000 households.

The British Columbia wood pellet industry enjoys a 16 per cent share of the growing European Union market for bioenergy feedstock. In 2007, British Columbia produced over 900,000 tonnes of wood pellets, of which 90 per cent was exported for thermal power production overseas.

British Columbia’s pulp and paper mills meet over 33 per cent of their electricity needs through cogeneration of electricity and steam on site.

British Columbia has a strong bioenergy and biorefining network of academic and industry talent, as well as a number of active projects.

BC BIOENERGY NETWORk

To support B.C.’s clean energy goals, capture value from beetle damaged timber and help rural agriculture and forest communities diversify and remain competitive, Government will establish funding for a $25 million Bioenergy Network. It will set the course to reduce greenhouse gas emissions, while increasing home-grown renewable energy production and strengthening the forest and agriculture industries.

This commitment will build on the existing foundation of bioenergy production sites, research centres and technology development projects, leading the way to greater investment in innovation and affirming B.C.’s role as a world leader and global partner for sustainable bioenergy solutions.

Appendix C3

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11

Existing Bioenergy Facilities

Appendix C3

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STRENGTHEN B.C.’S BIOENERGY NET WORk

12

Building Bioenergy CapacityWhen it comes to using renewable fuels, British Columbians are among the most receptive consumers, and the demand for biodiesel and ethanol is growing. Municipalities including Vancouver, Richmond, Whistler, Delta, Burnaby and North Vancouver are using biodiesel in their fleet vehicles, and so are BC Transit and other commercial fleets. There is significant potential to expand the production and use of biofuels in the Peace River Region and other areas of the province. Community energy projects increase energy self-sufficiency, address waste management issues, diversify local industries and create new jobs. Projects underway include:

Highlighting biomass and bioproduct development potential in Quesnel through an inventory of available wood fibre.

A biomass energy system to heat schools in Nakusp.

An engineering assessment and business model for a biomass heat-and-power community energy system in Port Hardy.

A biomass gasification community energy project at Dockside Green in Victoria.

British Columbia is expanding its bioenergy capacity through government funding for bioenergy programs, including:

Up to $10 million in funding over three years for biodiesel production.

A biodiesel production feasibility study to encourage the development of oilseed crushing and biodiesel facilities in the Peace Region.

A feasibility study conducted by the BC BioProducts Association on building an anaerobic digestion and gas processing facility in the Fraser Valley.

The Anaerobic Digester Calculator Project, an electronic tool to assess the environmental benefit and economic viability of constructing anaerobic digestion facilities in specific locations.

Ethanol BC, a program to support value-added uses for wood residue, has funded:

Research and development of softwood residue-to-ethanol technology by Lignol Innovations.

Advances in wood gasification technology by Nexterra.

Fuel pellet design, engineering and emission performance assessments testing wood, agricultural fibre and other feedstocks.

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WOOD PELLETS are produced from wood residue collected from sawmills and wood product manu-facturers. Heat and pressure are used to turn wood residue into pellets without chemical additives, binders or glue.

NExT STEPS

The Province will establish the Bioenergy Network to:

Support wood gasification research, development and commercialization in ycollaboration with the University of Northern British Columbia, University of British Columbia, Forest Products Innovation, the National Research Council, the forestry and energy sectors, industry and other partners.

Advance biorefining for multiple, value-added product streams, such as ybiochemicals, in conjunction with bioenergy production in new facilities and/or at existing industrial operations by working with the BC Bioproducts Association, First Nations, agricultural and forest sectors.

Encourage the development of pilot and demonstration projects with yindustries and communities in key biomass resource areas.

Support research into socially and environmentally responsible dedicated yenergy crop production and enhance enzymatic and other biotechnology solutions for biomass-to-energy conversion.

Advance the development of biofuels, such as cellulosic ethanol and yrenewable diesel from algae and other resources, through the Green Energy and Environmentally Friendly Chemical Technologies Project and other initiatives.

13

The Province is promoting a Product Commercialization Roadmap that will enhance the export success of British Columbia’s bioproducts by guiding companies through business planning, financial analysis and processes for product and market development.

WITHIN OUR POWER

British Columbia has an abundance of underutilized wood in the form of sawmill residues and logging debris, and a growing supply of timber killed by the mountain pine beetle.

British Columbia currently leads the nation in wood energy production and consumption. However, it is estimated that about 1.2 million bone-dry tonnes of mill residues per year – an amount that could produce approximately 1,900 gigawatt hours of electricity – are incinerated in beehive burners in the province with no energy recovery and impacts on air quality. These resources and wood residues in other regions present an opportunity for bioenergy in British Columbia.

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4 | B U I L D B I O E N E R G Y PA R T N E R S H I P S

Nationally and internationally, many view British Columbia as the hub of a growing bioenergy and biorefining network. The Western Climate Initiative allows B.C. to foster economic opportunities through the development of new technologies and innovation. B.C. and western states have engaged in electricity trading for the past 30 years, and the Government has signed a joint statement with Sweden that strengthens a partnership of information exchange and best practices for the development and use of bioenergy and biorefining technologies. The BC Bioenergy Strategy affirms B.C.’s commitment in an agreement with Manitoba to reduce greenhouse gas emissions by broadening renewable energy portfolios to include biomass power.

The expertise gained through the BC Bioenergy Strategy offers other jurisdictions the potential to benefit, while creating new economic opportunities for British Columbians. With our plentiful biomass resources, industry and academic leadership, and the Government commitment to bioenergy, British Columbia will continue to:

Develop, deploy and export British Columbia’s clean and alternative energy technologies.

Maximize bioenergy market opportunities.

Advance bioenergy research, collaborate in project development and build upon shared interests with other jurisdictions in Canada and around the world.

NExT STEPS

The Province will advance joint interests and share information on best ypractices in bioenergy research and development with the Western Climate Initiative and the Pacific NorthWest Economic Region.

Under the British Columbia/Alberta Memorandum of Understanding on yEnergy Research, Technology Development and Innovation, the Government will develop a joint framework for bioenergy research, technology demonstration and deployment.

The Province will create First Nations bioenergy opportunities and invite yrepresentatives to speak about biomass community energy systems.

The Province will release an information guide on pursuing biomass energy yopportunities and technologies in British Columbia for First Nations, small communities, local government and industry.

B.C. is viewed around the world as a bioenergy hot spot, and its increasing profile in the global economy highlights the importance of strong relationships with other jurisdictions with shared interests in bioenergy development.

CROSS-GOVERNMENT COLLABORATION

The Province will work with federal agencies such as Sustainable Development Technology Canada, Natural Resources Canada, and the Western Diversification Office to:

Promote bioenergy research and y

project development, support the efficient use of biomass, address current waste challenges and diversify community economies.

Streamline and coordinate the y

development of bioenergy policies and programs to advance the Province’s goals for energy, the economy and the environment.

14

Appendix C3

Page 15 of 20

With our strengths in bioenergy, British Columbia will pursue our alternative energy advantage. Bioenergy is critical in meeting that objective. The know-how, researchers and partner communities here today are committed to making this happen. The enhanced BC Bioenergy Network, funding to advance biodiesel production and the two-part Bioenergy Call for Power, will take B.C. the next step in realizing our full natural resource potential.

The BC Bioenergy Strategy will benefit communities by helping make cleaner, greener energy available for use in our homes and vehicles. It will benefit our economy by tapping into the potential of B.C.’s biomass resources, unleashing the energy of materials that previously went to waste and promoting the development of new industries and markets. In turn, it will benefit our environment by helping meet our growing energy demands with clean, renewable and environmentally responsible energy resources.

CO N C LU S I O N

15

Appendix C3

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16

wOOD TO eleCTRICITy By COmBUsTION aND

sTeam TURBINes

Technology available– economics drive the decision

wOOD TO syNgas fOR wOOD DRIeRs

Recently implemented in B.C.–driven by high natural gas prices

wOOD TO syNgas fOR PUlP mIll lIme kIlNs

Further research and development required to maintain clean syngas stream

wOOD TO sOlID fUel PelleTs


BIOmass TO CleaN syNgas TO POweR INTeRNal COmBUsTION

eNgINe fOR UP TO 10mw eleCTRICITy geNeRaTION

To be piloted– high probability of success

BIOmass TO HIgH gRaDe syNgas fOR lIqUID fUel PRODUCTION

Needs research and development, large-scale pilots and further research and development on catalysts to adapt current

technology for coal conversion

wOOD TO CleaN syNgas TO POweR TURBINe fOR

eleCTRICITy geNeRaTION

Needs pilot trials and research and development

BIOENERGY TECHNOLOGY DEVELOPMENT TIMELINET

ECH

NO

LOG

IES

IN U

SE

IN B

.C.

TEC

HN

OLO

GIE

S E

xP

ECT

ED T

O B

E IN

US

E

NOW 2010 - 2015

* SYNGAS is synthetic gas produced through the thermal gasification of biomass.

Appendix C3

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17

CellUlOse TO eTHaNOl

Needs large-scale pilots and further research and development on enzymes

agRICUlTURal wasTe/maNURe TO POweR


BIORefININg: BIOmass TO eNeRgy, BIOCHemICals aND

OTHeR PRODUCTs

Needs extensive research and development

aNaeROBIC DIgesTION aND algae faRmINg fOR BIO-OIl

Needs pilot scale trials and research and development

17

TEC

HN

OLO

GIE

S E

xP

ECT

ED T

O B

E IN

US

E

2015 - 2020

eNeRgy CROPs lIke gRaIN aND OIlseeDs TO ReNewaBle fUels


Appendix C3

Page 18 of 20

The BC Bioenergy Strategy supports these BC Energy Plan Policy Actions: Ensure self-sufficiency to meet electricity

needs, including “insurance” by 2016.

Establish a standing offer for clean electricity projects up to 10 megawatts.

All new electricity generation projects will have zero net greenhouse gas emissions.

Zero net greenhouse gas emissions from existing thermal generation power plants by 2016.

Ensure clean or renewable electricity generation continues to account for at least 90 per cent of total generation.

Government supports BC Hydro’s proposal to replace the firm energy supply from the Burrard Thermal plant with other resources. BC Hydro may choose to retain Burrard for capacity purposes after 2014.

Pursue Government and BC Hydro’s planned Remote Community Electrification Program to expand or take over electricity service to remote communities in British Columbia.

Ensure BC Hydro considers alternative electricity sources and energy efficiency measures in its energy planning for remote communities.

Establish the Innovative Clean Energy Fund to support the development of clean power and energy efficiency technologies in the electricity, alternative energy, transportation and oil and gas sectors.

Implement a provincial Bioenergy Strategy which will build upon British Columbia’s natural bioenergy resource advantages.

Issue an expression of interest followed by a call for proposals for electricity from sawmill residues, logging debris and beetle-killed timber to help mitigate impacts from the provincial mountain pine beetle infestation.

Implement a five per cent average renewable fuel standard for diesel by 2010 to help reduce emissions and advance the domestic renewable fuel industry.

Support the federal action of increasing the ethanol content of gasoline to five per cent by 2010 and adopt quality parameters for all renewable fuels and fuel blends that are appropriate for Canadian weather conditions in cooperation with North American jurisdictions.

Develop a leading hydrogen economy by continuing to support the Hydrogen and Fuel Cell Strategy for British Columbia.

Establish a new, harmonized regulatory framework by 2010 for hydrogen by working with governments, industry and hydrogen alliances.

18

B AC kG R O U N D

Four key drivers spurred the development of the BC Bioenergy Strategy:

1 environment – bioenergy can lower greenhouse gas and other air emissions and encourage the shutdown of beehive burners, organic garbage conversion, methane capture from landfills and better agricultural waste management.

2 mountain Pine Beetle Infestation – bioenergy can help capture value from a deteriorating resource and help the forest sector, as well as impacted communities, remain competitive.

3 electricity self-sufficiency – bioenergy can help B.C. meet its future energy demands and become energy self-sufficient with made-in-B.C. energy resources from the forest and agricultural sectors.

4 long-term Competitiveness – bioenergy can create new bioeconomic opportunities for forestry, agriculture, municipalities and First Nation communities and establish British Columbia as a global supplier of bioenergy resources, technologies and services.

Appendix C3

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For more information on the BC Bioenergy Strategy contact:

Ministry of Energy, Mines and Petroleum Resources

1810 Blanshard Street

PO Box 9318 Stn Prov Govt

Victoria, BC V8W 9N3

Tel: 250.952.0156

www.energyplan.gov.bc.ca/bioenergy

Appendix C3

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Appendix C4

Special Direction No. 10

Appendix C4

Page 1 of 4

Appendix C4

Page 2 of 4

Appendix C4

Page 3 of 4

Appendix C4

Page 4 of 4

CONFIDENTIAL

BC Hydro and Canfor Pulp Limited Partnership EPA

CONFIDENTIAL

BC Hydro and Domtar Pulp and Paper Products Inc. EPA

CONFIDENTIAL

BC Hydro and PG Interior Waste to Energy Ltd. EPA

CONFIDENTIAL

BC Hydro and Zellstoff Celgar Limited Partnership EPA