BCH_FBC Canal Plant Exemptions B-3 Exhibit George Isherwood FortisBC Inc. Director Regulatory Affairs 1290 Esplanade PO Box 130 Trail, BC V1R 4L4 Tel 250 368 0313 Fax 1 866 605 9431 George.Isherwood@fortisbc.com www.fortisbc.com September 16, 2005 Via Email Original via Courier Mr. R. J. Pellatt Commission Secretary British Columbia Utilities Commission Box 250 Sixth Floor, 900 Howe Street Vancouver BC V6Z 2N3 Dear Mr. Pellatt: Re: Canal Plant Agreement On September 15, 2005, FortisBC and BC Hydro held a workshop regarding their Applications to the Commission regarding the Canal Plant Agreement and related agreements. Please find enclosed a list of attendees as well as a copy of the presentation. Should you have any questions in this matter please contact the undersigned at 250 368 0313. Yours truly, (original signed by L. Humphrey for) George Isherwood Director Regulatory Affairs enclosed cc: Tony Morris Acting Chief Regulatory Office, BC Hydro Marcel Reghelini Director Regulatory Affairs, BCTC
Canal Plant Workshop Attendees September 15, 2005 Castlegar, BC 1 Robin Siddall 737 Elliot Street, Trail rgs07@shaw.ca 2 Alan Wait, Intervenor Box 2663, Grand Forks Ph 442 8341 3 Paddy Hatch, Line Contractors Association 12388 - 88th Ave, Surrey Ph 605 501 2232 4 Bob Rerie, BCUC 5 Elroy Switlishoff, Jetson Consulting 3569 14th Avenue, Castlegar, BC V1N 4J2 elroys@telus.net 250 365 8040 6 Paul Huszti, Retired TeckCominco Energy Co-ordinator 3557 Highway Drive, Trail BC V1R 2T9 Ph 250 368 3276 phuszti@telus.net 7 Jim Quail, Barrister & Solicitor, BC Public Interest Advocacy Centre 8 Raymond Masleck, Trail Daily Times Ph 250 364 1242 Ext 209 9 Dale West, Editor, Castlegar News Ph 250 365 9954 10 Peter Ostergaard, Assistant Deputy Minister of Electricity and Alternative Energy Division , Ministry of Energy, Mines and Petroleum Resources BCTC 11 Gerry Garnett 12 Stephen Tran TeckCominco 13 Bill Duncan 14 Richard Deane 15 Cal Johnson, Fasken, Matineau CPC 16 Bruce Duncan 17 Victor Jmaeff 18 Wally Penner 19 Llewellyn Matthews 20 David Bursey, Bull Housser & Tupper 21 Greg Lewis, Bull Housser & Tupper BC Hydro 22 Ken Spafford 23 Doug Robinson 24 Steve Eckert 25 Jeff Christian, Lawson Lundell FortisBC 26 Don Debienne 27 George Isherwood 28 Wally Koschik 29 Dan Egolf 30 Dean O’Leary, Farris 31 Lavern Humphrey 32 Russ Leslie, Nelson Hydro, IMEU 101 310 Ward Street, Nelson PH 250 352 8212 33 Norm Gabana 3850 Dogwood Trail V1R 2V5 Ph 368 3695
CANAL PLANT AGREEMENT WORKSHOP September 15, 2005 Castlegar, BC 1 CANAL PLANT AGREEMENT AGENDA 9:00 Introduction George Isherwood 9:15 Historical Context Cal Johnson 9:35 Overview of Agreements Wally Koschik 9:55 CPA Support Agreements Stephen Tran 10:05 Comparison of Old and New Agreements Ken Spafford 10:35 Break 10:55 Benefits - BC Hydro Perspective Ken Spafford 11:15 Benefits - FortisBC Perspective Wally Koschik 11:35 Reasons for the Exemption Cal Johnson 11:55 Discussion 2 1
Historic Context of the Canal Plant Agreement Cal Johnson 3 CANAL PLANT AGREEMENT CANAL PLANT AGREEMENT � Originally negotiated in early 1970s � Amended and restated, and extended to December 31, 2035, during recent negotiations � The term “Canal Plant Agreement” refers to both the original form, and the amended, restated and extended form, of the agreement 4 2
CANAL PLANT AGREEMENT Knowledge of the Legal and Historical Context of the Canal Plant Agreement Assists in Understanding: � The Canal Plant Agreement � The broader provincial and national interests related to the Canal Plant Agreement 5 HISTORIC FACTS CANADA-U.S. TREATY ARRANGEMENTS BOUNDARY WATERS TREATY (1909) � Foundation for resolution of water-related disputes between Canada and the U.S. � Created the International Joint Commission (IJC) to address issues related to water levels and flows across the Canada/U.S. boundary � IJC granted power to review and decide any diversion or use of water in one country that would affect the natural level or flow of boundary waters in the other country 6 3
HISTORIC FACTS INTERNATIONAL BOUNDARY WATERS TREATY ACT (1911) Statute of Canada � Gave effect in Canada to the Boundary Waters Treaty � 7 HISTORIC FACTS IJC ORDER RE KOOTENAY LAKE � Issued in 1938 � Authorized FortisBC (then West Kootenay Power) to operate the Corra Linn Dam to store water in Kootenay Lake � Use of Kootenay Lake for storage is subject to operating conditions that, amongst other things, specifies the maximum level of Kootenay Lake at various times of the year 8 4
HISTORIC FACTS COLUMBIA RIVER BASIN STUDIES � Canada and the U.S. request the IJC to conduct studies on how best to use the water potential of the Columbia River Basin (1944). The IJC establishes the International Columbia River Engineering Board (ICREB) to undertake the study � The ICREB issues its report which includes plans to construct large storage reservoirs to regulate the flows on the Columbia River (1959) � IJC recommends principles for determining the benefits from cooperative use of water storage and electrical generation within the Columbia River Basin and the allocation of benefits between the two countries (1959) � These recommendations are used by Canada and the U.S. in the subsequent negotiation of the Columbia River Treaty 9 HISTORIC FACTS COLUMBIA RIVER TREATY (1961) � The purpose of the Treaty is to maximize the power and flood control benefits that are possible through the construction and coordinated operation of storage projects on both sides of the Canada/U.S. boundary � Pursuant to Article XI of the Treaty, the improvements in water flows in one country brought about by the operation of storage constructed under the Treaty in the other country is not to be used for hydroelectric power purposes except, in Canada with the prior approval of the authority in Canada having jurisdiction (currently the Comptroller of Water Rights) � The Treaty contemplates the establishment of Canadian and U.S. entities which are to be responsible for the coordination and cooperation required under the Treaty 10 5
HISTORIC FACTS HYDROELECTRIC FACILITIES IN THE REGION IN 1961 � FortisBC (then WKP) owned the Lower Bonnington Dam (Plant No. 1) on the Kootenay River. FortisBC supplied power to the West Kootenay and South Okanagan regions of B.C. � WKP was a wholly owned subsidiary of The Consolidated Mining and Smelting Company of Canada Limited (Cominco) � Cominco owned the Upper Bonnington, South Slocan and Corra Linn Dams on the Kootenay River � Cominco also owned the Brilliant Dam on the Kootenay River and the Waneta Dam on the Pend d’Oreille River � B.C. Hydro had not yet been created. The B.C. Power Commission supplied electricity to some parts of the Province. B.C. Electric supplied other parts 11 HISTORIC FACTS EVENTS IN THE 1960s � Canada and B.C. entered into an agreement relating to the Columbia River Treaty (1963). The benefits of the Columbia River Treaty are assigned to B.C. and B.C. agrees to fulfill Canada’s Treaty obligations � B.C. Hydro is established (1964) � B.C. Electric amalgamated with the B.C. Power Commission � B.C. Hydro is for all purposes an agent of the Province � B.C. Hydro is named as the Canadian entity under the Columbia River Treaty and is to own and be responsible for operating the three Canadian Treaty dams (Duncan, Mica and Keenleyside) � In 1967 construction of the Duncan Dam is completed. It allows for the better regulation of water flows on the Kootenay River and the Columbia River 12 6
KOOTENAY CANAL PROJECT � British Columbia wished to obtain benefits associated with the better regulation of the water flows on the Kootenay River that were available as a result of the Treaty � British Columbia proposes that the Kootenay Canal Plant be constructed by B.C. Hydro on the Kootenay River � Economic operation of the Kootenay Canal Plant requires that part of the water that would have flowed through the Corra Linn, Upper Bonnington, Lower Bonnington and South Slocan plants of FortisBC and Teck Cominco be diverted and instead flow through the Kootenay Canal Plant � Construction of the Kootenay Canal Plant requires that B.C. Hydro obtain the use of land and water rights from FortisBC and Teck Cominco 13 AGREEMENTS LEADING TO THE CANAL PLANT AGREEMENT 1967 AGREEMENT � Between B.C. Hydro, FortisBC and Teck Cominco � Recognizes that the Duncan Dam will affect the flows of water at the dams of FortisBC and Teck Cominco on the Kootenay River � Provides that the benefits of the additional electrical energy generated at the FortisBC and Teck Cominco plants on the Kootenay River and made possible by the operation of the Duncan Dam be shared between the parties � The agreement terminates when the Libby Dam commences to affect the flow of water into Kootenay Lake 14 7
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