, .B 1-60

GOOD MORNING MR. CHAIR, COMMISSIONERS. '

BCTC'S VANCOUVER ISLAND TRANSMISSIONREINFORCEMENT, OR VITR, PROJECT APPLICATION IS SETOUT IN EXHIBIT Bl~l, WITH AMENDMENTS IN EXHIBITS Bl-2,81-7, AND 81-30. 8CTC'S IR RESPONSES ON ITSAPPLICATION ARE AT EXHIBITS 81-6, 81-11, 81-12, 81-13,Bl-17, 81-18, 81-19, AND 81-31. BCTC'S REBUTTALEVIDENCE IS SET OUT AT EXHIBITS Bl-37, 81-40 AND C6-8.8CTC'S INTERVENOR EVIDENCE ON SEA BREEZE'S VICAPPLICATION IS SET OUT AT EXHIBIT 81-39. AND, FINALLY,ITS IR RESPONSES ON ITS INTERVENOR EVI,DENCEARE ATEXHIBITS Bl-44, 81-47 AND, I THINK THE FINALINSTALLMENT THAT WAS FILED YESTERDAY AFTERNOONIS AT 81-49. PURSUANT TO THE COMMISSION'S DIRECTION,8CTC WILL PROVIDE A LIST CROSS-REFERENCING ITSEVIDENCE AND IR RESPONSES WITH THE APPROPRIATEEXHIBIT NUM8ERS.

AS SET OUT IN EXHIBIT Bl-43, BCTC INTENDS TO PRESENT3 WITNESS PANELS IN SUPPORT OF ITS APPLICATION:

1. A PROJECT 'JUSTIFICATION AND ALTERNATIVESANALYSIS PANEL;

2. AN ENGINEERING AND COSTING PANEL; AND

3. A SEISMIC PANEL.

BCTC WILL ALSO BE PRESENTING 3 REBUTTAL PANELSFOLLOWING THE RELEVANT INTERVENOR EVIDENCE:

1. AN EMF PANEL;

2. A PROPERTY VALUE PANEL; AND

3. A FIRST NATIONS CONSULTATION PANEL.

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GIVEN ITS RESPONSIBILITES FOR FIRST NATIONS ISSUESUNDERTHE MASTER AGREEMENT BETWEEN BCTC AND BeHYDRO, BC HYDRO WILL BE LEADING THE FIRST NATIONSCONSULTATION PANEL.

FINALLY, BCTC WILL BE PRESENTING A PANEL TO SPEAKTO ITS INTERVENOR EVIDENCE ON SEA BREEZE'S VICAPPLICATION.

MR. CHAIR, COMMISSIONERS, I AM GOING TO DIRECT THEREMAINDER OF MY COMMENTS TO THOSE ISSUES THATBCTC BELIEVES SHOULD BE THE FOCUS OF THISPROCEEDING AND,' EITHER EXPRESSLY OR BYIMPLICATION, THOSE THAT BCTC BELIEVES SHOULD NOT.

THE FIRST ISSUE THAT I WOULD LIKE TO ADDRESS, ORNON-ISSUE AS THE CASE MAY BE, IS THE NEED FOR NEWTRANSMISSION CAPACITY TO VANCOUVER ISLAND. THISIS THE THIRD HEARING BEFORE THIS COMMISSIONCONCERNING VANCOUVER ISLAND AND THE· GULFISLANDS ELECTRICITY SUPPLY. WHILE THE NEED FORNEW SUPPLY WAS A MAJOR ISSUE IN THE FIRSTPROCEEDING ON BC HYDRO'S VANCOUVER ISLANDGENERATION PROJECT, IT WAS LESS OF AN ISSUE IN THESUBSEQUENT BC HYDRO CALL FOR TENDERSPROCEEDING AND, WITH RESPECT, BCTC BELIEVES THATIT SHOULD NOT BE AN ISSUE IN THIS PROCEEDING. THECOMMISSION HAS ALREADY DETERMINEDTHAT:

1. THERE IS A CAPACITY SHORTFALL ON VANCOUVERISLAND COMMENCING IN THE WINTER OF 2007/08 ANDA NEED TO MOVE EXPEDITIOUSLY TO REINFORCEELECTRIC SUPPLY TO VANCOUVER ISLAND;

2. IMPLICIT IN THE ABOVE FINDING IS THAT THE 2007ZERO-RATING OF THE HVDC SYSTEM IS REASONABLE;

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3. BC HYDRO'S 2004 LOAD FORECAST ACCURATELYPREDICTS WHAT WOULD HAPPEN AT DESIGN DAYTEMPERATURE; AND

4. THE COMMISSION DOES NOT CONSIDERCONTROLLED LOAD-SHEDDING AN APPROPRIATERESPONSE TO SINGLE CONTINGENCY EVENTS.

REFERENCES FOR THESE FINDINGS ARE FOUND INEXHIBIT B1-16 AND THE COMMISSION HAS DETERMINED ITWILL NOT REOPEN THESE FINDINGS IN THIS PROCEEDING.

BCTC ACCEPTS THAT THERE ARE STILL ISSUES THATPARTICIPANTS COULD EXPLORE ON THE NEED FOR THEPROJECT SUCH AS THOSE LISTED AT ITEMS 1.1 TO 1.3 OFTHE STAFF ISSUES LIST. HOWEVER, BCTC BELIEVES THATTHE EVIDENCE IS CLEAR THAT THERE IS A NEED TO PUT INPLACE RELIABLE LONG-TERM TRANSMISSION CAPACITYTO SUPPLY VANCOUVER ISLAND AND THE GULF ISLANDSAT THE EARLIEST POSSIBLE OPPORTUNITY AND, BASEDON THE OTHER EVIDENCE THAT HAS BEEN FILED IN THEVITR AND VIC PROCEEDINGS, AND THE MAJORITY OF THESUBMISSIONS AT THE TOWN HALL SESSIONS, IT APPEARSTHAT THIS VIEW IS GENERALLY ACCEPTED.ACCORDINGLY, 8CTC HOPES THAT THE ISSUE OF NEEDWILL NOT OCCUPY A GREAT DEAL OF TIME.

THE SECOND ISSUE I WILL ADDRESS IS WHAT IS THE BESTALTERNATIVE TO SATISFY THIS NEED. AS DISCUSSED INEXHIBIT B1-1 AT PAGES 94 TO 100, AND IN APPENDICES MAND Q, BCTC CONSIDERED A NUMBER OF ALTERNATIVESBEFORE IT DETERMINED THAT A 230 KV AC CIRCUIT WASTHE BEST ALTERNATIVE TO MEET THE NEED FOR NEWTRANSMISSION CAPACITY TO VANCOUVER ISLAND. INBCTC'S SUBMISSION, THE ONLY QUESTION THAT HASBEEN RAISED REGARDING THIS ANALYSIS IS THE USE OF

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AC VERSUS HVDC LIGHT TECHNOLOGY. THIS ISSUE HASNOW BEEN DIRECTLY JOINED THROUGH SEA BREEZE'SVIC APPLICATION. ACCORDINGLY, BCTC DOES NOTBELIEVE THAT IT SHOULD BE NECESSARY TO SPEND AGREAT DEAL OF TIME EXPLORING ALTERNATIVES TO THE,VITR PROJECT OTHER THAN THE COMPARISON THAT WILLTAKE PLACE BETWEEN THE VITR AND VIC PROJECTS.

FINALLY, ASSUMING THAT THE COMMISSION ACCEPTSBCTC'S CHOICE OF TECHNOLOGY, THE QUESTION ISWHERE SHOULD THIS TRANSMISSION LINE GO. APARTFROM THE VITR VERSUS VIC QUESTION, BCTC BELIEVESTHAT THIS IS WHERE THE REAL ISSUES ARISE IN THISHEARING.

THERE ARE TWO AREAS WHERE CONCERNS HAVE BEENEXPRESSED ABOUT THE LOCATION OF THE PROPOSEDFACILITIES. IN THE FIRST, THE TSAWWASSEN AREA, BCTCCONSIDERED A NUMBER OF ROUTING OPTIONS. THESEARE SET OUT AT PAGES 100 THROUGH 104 OF EXHIBIT B1-1 AND NUMEROUS IRS WERE PROVIDED ON THESEOPTIONS. EACH OF THESE OPTIONS HAVE VARIOUSCOSTS AND BENEFITS ASSOCIATED WITH THEM SUCH ASCOST, RELIABILITY, ENVIRONMENTAL EFFECTS,COMMUNITY IMPACTS, FIRST NATION IMPACTS,IMPLEMENTATION RISKS, AND REGULATORY RISKS. BASEDON A COMPARISON OF WHAT IT CONSIDERED TO BE THEMOST SIGNIFICANT CRITERIA, BCTC BELIEVES THATOPTION 2 REPRESENTS A PREFERRED SOLUTION.HOWEVER, IT ACKNOWLEDGES THAT THE ISSUESREGARDING WHAT ARE THE APPROPRIATE CRITERIA, THEMEASUREMENT OF THESE CRITERIA, AND HOW TOULTIMATELY BALANCE THESE CONSIDERATIONS IS ONEOF THE MOST SIGNIFICANT ISSUES IN THIS PROCEEDING.

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GENERAL QUESTIONS ON THESE ISSUES SHOULD BEADDRESSED TO BCTC'S FIRST PANEL. MORE DETAILEDQUESTIONS CONCERNING SPECIFIC SUBJECT AREASSUCH AS HOW CONSTRUCTION WILL TAKE PLACE, SEISMICISSUES, PROPERTY VALUE EFFECTS AND EMFS WILL BEADDRESSED BY SUBSEQUENT PANELS. BCTC BELIEVESTHAT THROUGH THE CONSULTATION, DIRECT EVIDENCEAND IR PROCESS, THE ISSUES ASSOCIATED WITH THEDIFFERENT ROUTING OPTIONS IN THE TSAWWASSENAREA ARE REASONABLY CLEAR. HOWEVER, ONEOVERARCHING ISSUE IS THE IMPACT OF PREVIOUSCOMMISSION DECISIONS ON THE ISSUES IN QUESTION,SUCH AS EMFS. BCTC BELIEVES THAT IT HAS COMPLIEDWITH THESE DECISIONS. IT HAS ALSO COMPLIED WITHSTANDARDS CONCERNING SAFE LEVELS OF EMFS. BASEDON BCTC'S REVIEW OF THESE ISSUES, BCTC HAS NOTSEEN ANY EVIDENCE THAT SUGGESTS THAT IT ISNECESSARY TO REVISIT THESE STANDARDS. HOWEVER,OTHER PARTIES WILL ARGUE STRENUOUSLY TO THECONTRARY AND THIS IS ONE OF THE ISSUES THAT THECOMMISSION WILL NEED TO ADDRESS.

IN THE SECOND AREA, THE SOUTHERN GULF ISLANDS,SOMEWHAT SIMILAR ISSUES ARISE. THIS ISSUE ISDISCUSSED AT PAGES 104 TO 108 OF EXHIBIT 81-1 AND, ASWITH THE TSAWWASSEN AREA, NUMEROUS IRS HAVEBEEN FILED ON ROUTING OPTIONS IN THIS AREA. AGAIN,GENERAL QUESTIONS ON BCTC'S PREFERRED ROUTE ANDITS OVERALL APPROACH TO THE ROUTING IN THESOUTHERN GULF ISLANDS SHOULD BE ADDRESSED TO ITSFIRST PANEL AND MORE DETAILED QUESTIONS ONINDIVIDUAL ISSUES SHOULD BE ADDRESSED TOSUBSEQUENT PANELS.

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I WOULD NOW LIKE TO ADDRESS SEA BREEZE'S VICPROPOSAL. SEA BREEZE HAS PUT FORWARD A LONG LISTOF SYSTEM BENEFITS THAT SEA BREEZE ASSERTS WILLACCRUE IF THE VIC PROJECT IS APPROVED RATHERTHANVITA (SEA BREEZE'S RESPONSE TO BCTC IR 1.10.1 (VIC).BASED ON THESE ASSERTED BENEFITS AND SEABREEZE'S COST ESTIMATES FOR THE VIC, AND VITRPROJECTS, SEA BREEZE SAYS THAT THE VIC PROJECTWILL COST IN THE ORDER OF $126 MILLION LESS THANVITR. SEA BREEZE HAS ALSO SET OUT ITS COMMENTS ONBCTC'S ASSESSMENT OF HVDC LIGHT TECHNOLOGY INSEA BREEZE'S RESPONSE TO BCUC IR 1.56.1 (VIC).

BCTC TAKES ISSUE WITH MANY PARTS OF SEA BREEZE'SANALYSIS AND HAS RESPONDED TO EACH OF THESEISSUES IN ITS INTERVENOR EVIDENCE ON THE VICPROJECT AT EXHIBIT B1-39. BASED ON BCTC'S ANALYSIS,EVEN USING SEA BREEZE'S COST ESTIMATE, BCTCEXPECTS THE VIC PROJECT WILL COST AT LEAST $90MILLION MORE THAN VITR. BEYOND THIS, BCTC HASSIGNIFICANT CONCERNS WITH WHETHER THE VICPROJECT COULD BE COMPLETED AND WHEN. WHILE THEFORMAT IN Bl-39 MAY BE A LITTLE UNWIELDY, IT HAS THEBENEFIT OF USEFULLY CATALOUGING THE DIFFERENCESBETWEEN SEA BREEZE AND BCTC'S ASSESSMENTS OFTHE VIC PROJECT.

I AM GOING TO QUICKLY REVIEW WHAT BCTC CONSIDERSTO BE THE REAL ISSUES BETWEEN IT AND SEA BREEZEWITH RESPECT TO THE VIC PROJECT BUT, BEFORE I DOTHIS, I WOULD LIKE TO ADDRESS THREE OF THE "SYSTEMBENEFITS" THAT SEA BREEZE ATTRIBUTES TO THE VICPROJECT THAT BCTC BELIEVES ARE NOT REAL ISSUES. ITAPPEARS THAT THESE AROSE AS A RESULT, OFMISUNDERSTANDINGS ON SEA BREEZE'S PART AND BCTC

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HOPES THAT THE HEARING IS NOT PROLONGED BYFURTHER EXPLORATION OF THESE ISSUES.

THE FIRST OF THESE ISSUES IS RELATED TO SEABREEZE'S ASSERTION THAT CUTPLANE D WILL NEED TOBE UPGRADED IF VITR PROCEEDS, BUT NOT VICPROCEEDS. SEA BREEZE ATTRIBUTES A $49 MILLIONSYSTEM BENEFIT FOR THIS OR, DEPENDING ON HOW YOULOOK AT IT, ADDED COST TO VITR. BCTC BELIEVES THATTHE RECORD IS CLEAR THAT CUTPLANE D DOES NOTNEED TO BE UPGRADED IF VITR PROCEEDS AND,THEREFORE, THERE IS NO SYSTEM BENEFIT THAT CAN BEATTRIBUTED TO THIS ISSUE. THIS IS ADDRESSED ON PAGE12AND APPENDIX A OF EXHIBIT 81-39.

THE SECOND ISSUE IS SEA BREEZE'S UNDERSTANDINGTHAT BCTC NEEDS TO KEEP THE EXISTING HVDC SYSTEMIN PLACE WITH THE VITR PROJECT. SEA BREEZEATTRIBUTES APPROXIMATELY $24 MILLION IN SYSTEMBENEFITS TO VIC FOR THIS. AGAIN, THIS IS NOT THE CASE.THIS ISSUE IS ADDRESSED ON PAGES 11 AND 12 OFEXHIBIT 81-39.

FINALLY, SEA BREEZE ATTRIBUTES A $30 MILLION SYSTEMBENEFIT TO VIC FOR AVOIDING WHAT IT SAYS IS A NEEDTO UPGRADE THE ARNOTT SUBSTATION FOR SEISMICPURPOSES WITH VITR. BCTC HAS BEEN CLEAR THAT ITHAS NO INTENTION OF UPGRADING THE ARNOTTSUBSTATION AND, THEREFORE, THIS AVOIDED COSTDOES NOT ARISE. THIS ISSUE IS DISCUSSED ON PAGES 8AND 9 OF EXHIBIT Bl-39.

AS INDICATED, BCTC BELIEVES THAT EXHIBIT Bl-39 ANDTHE OTHER MATERIALS REFERENCED IN IT PROVIDES AUSEFUL CATALOGUE OF THE ISSUES BETWEEN BCTC ANDSEA BREEZE. HOWEVER, ATTEMPTING TO PUT THESE IN A

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SLIGHTLY DIFFERENT FRAMEWORK, BCTC BELIEVES THATTHESE DIFFERENCES CAN GENERALLY BE CAPTUREDUNDER EIGHT HEADINGS ALONG WITH A NUMBER OFSUBISSUES. IT WAS NOT CLEAR WHICH OF THE SEABREEZE PANELS WOULD SPEAK TO EACH OF THESEISSUESSO I WILL LEAVE IT TO MY FRIENDSTO DETERMINEWHICH PANELS WILL ADDRESS WHICH ISSUES.'

1. COST (THIS ISSUE INCLUDES SEA BREEZE'S VIC COSTESTIMATE, SEA BREEZE'S ADJUSTMENTS TO THE VITRCOST ESTIMATE, AND THE RELATIVE SYSTEMBENEFITS/COSTS BETWEEN THE TWO PROJECTS);

2. OPERATIONAL ISSUES (USED THIS AS A BIT OF ACATCHALL, MY FRIENDS MIGHT HAVE A BEITERDESCRIPTION FOR IT. THESE ARE THOSE ITEMS FORWHICH SEA BREEZE GENERALLY CLAIMS IMPROVEDOPERATIONAL PERFORMANCE FOR VIC OVER VITRBUT DOES NOT ATTEMPT TO QUANTIFY A SPECIFICBENEFIT OR COST FOR THESE);

3. SAFETY (FROM BCTC'S ~ERSPECTIVE, THIS ISSUE ISPRIMARILY ASSOCIATED WITH SEA BREEZE'SPROPOSAL TO DIRECT BURY ITS TERRESTRIALCABLES IN MANY PLACES WITHOUT MECHANICALPROTECTION. THIS IS DISCUSSED ON PAGE 22 OFEXHIBIT 81-39);

4. RELIABiliTY (EFFECTIVELY THIS IS SIMPLY ACOMPARISON OF THE EXPECTED RELATIVERELIABILITY OF THE VIC AND VITR PROPOSALS);

5. IMPACT (THESE CONSIDER IMPACTS PRIMARILY FROMAN ENVIRONMENTAL AND SOCIO-ECONOMICPERSPECTIVE);

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6. TIMING (8CTC HAS INDICATED CONCERNS WITH THEPOTENTIAL TIMING OF THE VIC PROJECT. THE MOSTUSEFUL LIST OF BCTC'S CONCERNS FROM THISPERSPECTIVE ARE IN ITS RESPONSE TO SEA BREEZEIR 3.24.1 AND 3.24.2 (VIC) CONTAINED IN EXHIBIT 81-49.BCTC ALSO BELIEVES THAT THE SUBMARINE CABLESTHAT SEA BREEZE PROPOSES COULD RESULT INDELAYS IN THE PROJECT SCHEDULE. THIS ISSUE ISGENERALLY DISCUSSED IN BCTC'S RESPONSES TOTHE BCUC 3.187 SERIES IN EXHIBITS Bl-44 AND 81-47);

7. RISK (MANY OF THE ISSUES THAT I HAVE ALREADYIDENTIFIED CAN ALSO BE CONSIDERED AS RISKS. TOTHOSE I WOULD ADD ROUTING AND THE ABILITY TOCONCLUDE NECESSARY AGREEMENTS WITH BCHYDRO, BCTC, AB8, MUNICIPALITIES, LENDERS, ETC.);AND

8. COST OF FUTURE UPGRADES (THIS ISSUE ISDISCUSSED IN SECTION 6 OF EXHIBIT 81-39. THEREHAVE ALSO BEEN A NUMBER OF IR RESPONSES ONTHIS).

FINALLY, I WISH TO MAKE A FEW COMMENTS ON SEABREEZE'S JUAN DE FUCA OR JDF PROJECT. BCTC HASSET OUT ITS COMMENTS ON THE JDF PROJECT INSECTION 7 OF EXHIBIT Bl-39. WHERE REQUESTED, ANDWHERE IT HAS BEEN ABLE TO, BCTC HAS PROVIDEDFURTHER DETAIL IN ITS RESPONSES TO INFORMATIONREQUESTS IN EXHIBITS 81-44, Bl-47 AND, AS I INDICATED, ITHINK B1-49.

BCTC'S APPROACH TO MERCHANT TRANSMISSIONPROJECTS IS SET OUT IN ITS RESPONSES TO BCUC IR1.21.1,1.21.6 AND IRAHVOL 1.60.1. GIVEN THAT APPROACH,

, BCTC MONITORS MERCHANT TRANSMISSION PROPOSALS

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AND, IF SUFFICIENT EVIDENCE MATERIALIZES THAT THEYWILL PROCEED, BCTC WOULD CONSIDER THE POTENTIALIMPACT OF THESE ON ITS SYSTEM. QUITE FRANKLY, THEJDF PROJECT HAD NOT GOT TO THIS STAGE; IT ALSO HADNOT BEEN DESIGNATED AS A NITS RESOURCE UNDERBCTC'S NITS AGREEMENT WITH BC HYDRO; AND, UNTILSHORTLY BEFORE THE VIC APPLICATION WAS FILED, BCTCWAS NOT AWARE THAT SEA BREEZE WAS PROMOTINGTHE JDF PROJECT AS AN ALTERNATIVE TO VITR.

BCTC EXPECTS THAT ITS CROSS..EXAMINATION ON THEJDF PROJECT WILL FOCUS ON THE EVOLUTION OF THEJDF PROJECT, ITS CURRENT STATUS, ITS TIMING, ANDISSUES ARISING OUT OF 'THE WAYS THAT SEA BREEZESUGGESTS JDF COULD BE USED IN PLACE OF VITR SUCHAS THE RENEGOTIATION OF THE DSBs AND WHEELINGENERGY THROUGH BPA'S SYSTEM TO PORT ANGELES. ASINDICATED, THESE ISSUES ARE GENERALLY DISCUSSED INSECTION 7 OF EXHIBIT 81-39.

MR. CHAIR, COMMISSIONERS, THAT COMPLETES BCTC'SOPENING STATEMENT. AS INSTRUCTED, BCTC WILL LISTENCAREFULLY TO OTHER PARTIES OPENING STATEMENTSAND, ON WEDNESDAY OF THIS WEEK, WILL SUBMIT APROPOSED HEARING ISSUES LIST TO THE COMMISSIONALONG WITH ANY EXPLANATORY COMMENTS. THISHEARING ISSUES LIST WILL BE COMPARABLE TO THELISTS PREPARED FOR THE BC HYDRO REVENUEREQUIREMENTS PROCEEDING AND THE BCTC OATTPROCEEDING AS SET OUT IN EXHIBIT A-65.

THANK-YOU.