BRITISH COLUMBIA UTILITIES COMMISSION€¦ · g. simpson b.c. hydro and power authority m. mccordic avista energy canada limited r.j. gathercole b.c. old age pensioners' organization,

Allwest Reporting Ltd. 302-814 Richards Street

Vancouver, B.C

BRITISH COLUMBIA UTILITIES COMMISSION

IN THE MATTER OF THE UTILITIES COMMISSION ACT S.B.C. 1996, CHAPTER 473

and

A Submission by Terasen Gas (Vancouver Island) Inc. for Review of a Resource Plan dated June 18, 2004

and

An Application dated August 4, 2004 for a Certificate of Public Convenience and Necessity for a Liquefied Natural Gas Storage Project

BEFORE:

L. Boychuk, Chairman

P. Vivian, Commissioner

N. Nicholls, Commissioner

VOLUME 1

PRE-HEARING CONFERENCE

Vancouver, B.C. September 13 , 2004

APPEARANCES G.A. FULTON COMMISSION COUNSEL R. EZEKIEL TERESEN GAS (VANCOUVER ISLAND) INC. K. GUSTAFSON VANCOUVER ISLAND GAS JOINT VENTURE J. KLEEFELD, G. SIMPSON

B.C. HYDRO AND POWER AUTHORITY

M. MCCORDIC

AVISTA ENERGY CANADA LIMITED

R.J. GATHERCOLE

B.C. OLD AGE PENSIONERS' ORGANIZATION, COUNSEL OF SENIOR CITIZENS' ORGANIZATIONS, SENIOR CITIZEN'S ASSOCIATION OF BRITISH COLUMBIA, FEDERATED ANTI-POVERTY GROUPS OF B.C., AND END LEGISLATED POVERTY.

D. FITZGERALD NORSKE CANADA M. D'ANTONI BRITISH COLUMBIA MINISTRY OF ENERGY

AND MINES. J. CAMPBELL ON HIS OWN BEHALF MR. FARQUHARSON ON HIS OWN BEHALF

Terasen Gas (Vancouver Island) Inc Pre-Hearing Conference, September 13, 2004 Page: 1

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Allwest Reporting Ltd., Vancouver, B.C.

CAARS

VANCOUVER, B.C.

September 13, 2004

(PROCEEDINGS COMMENCED AT 1:03 P.M.)

THE CHAIRPERSON: Please be seated. Good afternoon.

Welcome to the British Columbia Utility Commission's

Pre-Hearing Conference related to Terasen Gas

(Vancouver Island) Resource Plan filing dated June

18th, 2004, and its application dated August the 4th for

a Certificate of Public Convenience and Necessity for

a Liquefied Natural Gas Storage Project on Vancouver

Island.

My name is Lori Boychuk and I am Chair of

the Commission Panel appointed to consider these

matters. With me are Commissioner Nadine Nicholls and

Commissioner Peter Vivian.

Commission counsel is Gordon Fulton.

Commission Staff are also in attendance, including

Brian Williston, Eileen Cheng -- I don't see Bob

Brownell, is he here? Okay, and Philip Nakoneshny.

Hal Bemister is the Hearing Officer, and

there are court reporters present to record the

proceeding and to produce a transcript.

As a matter of background, on June 21st,

2004, Terasen Gas (Vancouver Island) or TGVI filed

with the Commission its Resource Plan Report dated


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June 18th, 2004. This report covers TGVI's Vancouver

Island and Sunshine Coast service areas.

TGVI states that the Resource Plan was

prepared with a view to satisfying the Commission's

Resource Planning Guidelines issued last December

2003. The Guidelines suggest that Resource Planning

is intended to support the selection of resources that

will ensure the cost-effective delivery of secure and

reliable energy services for ratepayers over the long

run. TGVI's Resource Plan concluded that Liquefied

Natural Gas or LNG Storage is the preferred resource

addition to meet forecasted load growth.

On August 4th, 2004, TGVI filed with the

Commission an application for a Certificate of Public

Convenience and Necessity, or a CPCN, to construct and

operate a new LNG storage facility at a location

referred to as Mount Hayes in the Cowichan Valley

Regional District, approximately six kilometers

northwest of Ladysmith.

The proposed project consists of an LNG

storage facility, as well as two pipelines to connect

the storage facility to the TGVI transmission system.

In its cover letter to the Resource Plan,

TGVI had stated that it intended to file with the

Commission its CPCN Application to seek approval of

the LNG facility which was recommended in the Resource


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Plan. TGVI requested that the Commission review its

Resource Plan and the CPCN application concurrently,

or jointly, as part of the required regulatory review

and approval process.

By letter to TGVI dated June 30th, 2004, the

Commission indicated that it would like to hear from

interested parties before making a decision on TGVI's

procedural request. A written process was established

for that purpose.

Comments were received from the Vancouver

Island Gas Joint Venture, from British Columbia Hydro

and Power Authority, and from the Ministry of Energy

and Mines, all by the established deadline of July

19th, 2004. TGVI responded to the comments by the July

30th deadline.

The Commission considered the comments and

the response received, and determined that the

Resource Plan and CPCN application should be heard

concurrently, in a combined regulatory review process.

It was contemplated that an oral hearing for the

Resource Plan would precede, as appropriate, an oral

hearing for the CPCN Application.

For greater certainty, the Commission

stated in its Order No. G-79-04, dated August 18th,

2004, that it anticipated that one evidentiary record

would be established to support respective decisions


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on the Resource Plan and the CPCN Application.

Proceeding Time 1:08 p.m. T2

The Commission's Order No. G-79-04, among

other things, established this Pre-Hearing Conference,

which was timed to follow the September 8 deadline for

interventions.

With that background, today's Pre-Hearing

Conference has two main purposes.

The first is to consider the draft List of

Issues that was prepared and circulated by the

Commission late last week and to seek input and

comments on the issues identified on that list and

those that may be raised in TGVI's Resource Plan and

in its CPCN Application.

The intent today is not to discuss the

merits or the substance of the issues raised by TGVI's

Application. That will be the purpose of the oral

proceeding which we will establish following today's

proceeding. Rather, the focus is simply to ensure

that matters of concern are identified.

We have circulated the draft List of Issues

with the expectation that you would be in a better

position this afternoon to indicate to the Panel

whether there is an issue which, in your view, should

not be on the list or that, conversely, should be

added -- an issue which should be captured on the


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list.

The nature of the issues raised may, of

course, have a bearing on your views as to the

appropriate procedural steps and the location, timing

and duration of the oral hearing or hearings, which

takes me to the second purpose of the pre-hearing

conference, which is to seek your views on the draft

Regulatory Agendas, which were also distributed late

last week, and to discuss procedural matters

associated with the proposed regulatory review

process.

In this light there are a number of

procedural matters for which the Panel would invite

your input. As outlined in the Public Notice for the

Pre-Hearing Conference and the Agenda, these include

the following: One being the steps and the timetable,

and this would include whether a workshop should be

conducted by TGVI and, if so, where and when it should

be held; and the location and dates for the oral

proceeding, including whether there should be a break

between the hearing of the Resource Plan and the CPCN

Application.

The Commission would ask TGVI, if it is

able, to provide some indication at this time of the

general nature of the evidence and/or a list of

witness panels that it intends to present for both the


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Resource Plan and the CPCN Application, as well as its

estimated number of hearing days.

The Commission would also ask intervenors,

if they are able at this time, to identify whether

they intend to present evidence, the nature of that

evidence, and their views as well on the estimated

number of hearing days for this proceeding.

Copies of the draft List of Issues and

Regulatory Agendas are available at the back of the

room, if you do not already have them.

With that background and explanation of the

purposes and scope of the Pre-Hearing Conference, we

will shortly commence this proceeding -- I was going

to say by asking parties to register an appearance,

but I understand from Commission counsel that we have

an order of appearances at this stage.

MR. FULTON: Yes, we do, Madam Chair. And I will speak

to that list that I've circulated once you ask me to.

THE CHAIRPERSON: Okay, thank you.

Then once we hear from Mr. Fulton and sort

out the order of appearances, we will then have two

rounds of comments related to the agenda: the first

will be to hear your views on the draft list of issues

and then, possibly with a break in between, to hear

your views on the draft Regulatory Agenda and other

procedural matters.


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For the comment process I am suggesting

that we will begin with TGVI, followed by participants

who have indicated that they wish to make comments,

and TGVI will then have an opportunity to respond to

comments made by the participants.

At the conclusion of the Pre-Hearing

Conference today, the Commission Panel will consider

the comments made and will finalize a List of Issues

and issue a Regulatory Agenda for the oral proceeding

to consider TGVI's Resource Plan and CPCN Application.

So Mr. Fulton, I will then call on you.

MR. FULTON: Thank you, Madam Chair. As I indicated I

have circulated an order of appearances. I can update

that order as follows: Numbers two and three, British

Columbia Hydro and Power Authority and Vancouver

Island Gas Joint Venture, will change positions on the

list.

THE CHAIRPERSON: Thank you.

MR. FULTON: There is no one here from Norske Canada

Limited, Calpine Island Co-generation Limited

Partnership, or WestPac Terminals. Oh. I see Mr.

Fitzgerald is here from Norske, so there is someone

here from Norske now. Then there's no one here, to my

knowledge from Calpine or WestPac, nor is there anyone

here from the Ministry item number eight.

Okay. We do have people from the Ministry,


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then.

THE CHAIRPERSON: Okay.

MR. FULTON: So that's good. Is there anyone here from

GSX? I did ask that previously. No one here from

GSX. And then the remaining numbers 10, 11 and 12 do

have people here.

And I would ask at this time if there is

anyone else who intends to appear at these proceedings

who wishes to be identified for the order of

appearances.

There being none, Madam Chair, the final

comment that I have in terms of the order of

appearances, it does not include the Cowichan Valley

Regional District because the Cowichan Valley Regional

District just entered an appearance as an interested

party only, and there is no one here from the Regional

District.


THE CHAIRPERSON: Mr. Fulton, was that clarified with

them, that they intended to be an interested party, or

did they have --

MR. FULTON: That's what their letter says, and there's

no one here from them.


MR. FULTON: So with that, Madam Chair, I'll turn the

mike over to Terasen Gas (Vancouver Island) Inc.


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MR. EZEKIEL: Madam Chair, Commissioners, thank you.

My name is Ron Ezekiel and I'm counsel for Terasen Gas

(Vancouver Island).

Madam Chair, if I could just clarify your

request. You had indicated you wanted two rounds of

comments, the first dealing with the issues alone and

then a second round dealing with the agendas. Is that

correct?

THE CHAIRPERSON: Does that work for you, two parts?

MR. EZEKIEL: Absolutely. Thank you.


MR. EZEKIEL: Our comments on the issue list are rather

short. The issue list as presented by the Commission

seems to be in order and addresses all of the salient

points from the application. Perhaps the sole caveat

would be a clarification with respect to the last

item, that is, number eight under the CPCN application

issues.

This references the rate impacts of the

proposed CPCN application, and we would wish to make

it clear that the issues in this hearing are issues

surrounding the best facility to address these needs,

and we see some complexities with approaching a full-

blown rate design application as part of this hearing.

Those numbers and data and studies have not

been conducted and obviously cannot be conducted until


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the full cost of the facilities are known, and would

entail a great deal more work that would necessitate a

delay to the proposed agenda and timeline. And given

the nature of this hearing, we had in the application

put in a level of information around rate impacts of

the proposed portfolios that necessarily involved a

great deal of assumptions, and were intended to give a

high level approach as to some of the rate impacts

that might occur as a result of this, but nowhere near

the level of detail that would be involved in a rate

design type of proceeding. That type of proceeding

would obviously be required but we foresee that

further down the road, once the costs in question are

known, and we're better able to address the allocation

of those costs among ratepayers.

And with that, those are really all of our

submissions on the issues list. Thank you.

THE CHAIRPERSON: Okay, thank you, Mr. Ezekiel. You may

have an opportunity, perhaps, if other parties raise

that, to respond as well.

Then if we have the order correct, call on

the Vancouver Island Gas Joint Venture. Mr.

Gustafson.

MR. GUSTAFSON: Thank you, Madam Chair. I don't have

extensive comments on the issues list. In our view,

the list is reasonably extensive now. However, I


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thought it might be useful for the panel to appreciate

the specific concerns that the Joint Venture has with

respect to both the resource plan and the CPCN

application. And our concern, broadly speaking, and I

think it touches on both of the applications, has to

do with the adequacy of the study given to date to

demand-side management options, which would include

potentially the option for the Joint Venture to assign

a significant portion of its firm gas contract demand

to B.C. Hydro and have the Joint Venture provide, in

effect, a peaking facility by switching to alternate

fuels. That seems to be an alternative that has some

merit financially, and it's something that we want to

examine in the course of this particular proceeding,

and don't believe that sufficient work has been done

to date. And also we would want to question Terasen

as to their views on whether that assignment is

feasible or not, and whether they would oppose or not

such an assignment.

With respect to item number eight, as well,

we have a comment there. And that is --

THE CHAIRPERSON: Maybe just before you go any further,

then, when you're talking -- you suggest that you'll

be talking to Terasen, or you'll be questioning

Terasen about these options. Do you see this as

something that will be happening during the course of


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the proceeding, or are you talking about doing this

off-line?

MR. GUSTAFSON: Both, actually, depending on our degree

of success in persuading Terasen that this is a

worthwhile endeavour to explore in more detail, and

depending on whether they are opposed or not. If they

are opposed to considering that kind of assignment on

terms and conditions that would be acceptable to B.C.

Hydro and the Joint Venture, then it will no doubt

become an issue in the course of this proceeding for

the Panel to consider as to whether it's reasonable to

take that sort of position and potentially block an

assignment and thus necessitate continuing on with the

LNG facility in whole or in part.

Proceeding Time 1:20 p.m.

T4

THE CHAIRPERSON: Thank you, please proceed.

MR. GUSTAFSON: The only other issue I wanted to comment

on at this time was with respect to the rate impacts

of what is being proposed. And I think, certainly

from a customer's perspective, it's very difficult to

know to what extent one should be concerned with a

proposal unless one knows what it's likely to cost at

the end of the day, and it's quite startling to have

Terasen stand up and say they don't know what the

costs are, therefore they can't provide any guidance


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as to what the impacts are going to be on the rates.

Surely at this stage, when they're applying for an

application for approval of a -- or for the issuance

of a Certificate of Public Convenience and Necessity,

they must have a reasonable certainty as to what the

costs of the project are, or we ought not to be here.

So we will certainly be pushing hard for disclosure of

the costs and the rate implications and how those

increased rates are going to be allocated to the

different classes of customers.

COMMISSIONER VIVIAN: Mr. Gustafson, as I understand it

there's a contractual dispute between the Joint

Venture and Terasen concerning the curtailment rights

under the contract, is that correct?

MR. GUSTAFSON: Correct.

COMMISSIONER VIVIAN: And what is your view as to whether

those issues will be settled here or outside in

another forum?

MR. GUSTAFSON: Well, in our view, at the end of the day,

that dispute is one that ultimately, if we can't reach

an accommodation with Terasen, would have to be solved

or resolved in the courts. It's within the court's

jurisdiction to make a determination on that.

COMMISSIONER VIVIAN: And just one final piece of

information there. I'm not familiar with the

contract. Is there provision for arbitration in the


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contract as a condition precedent to going to the

courts?

MR. GUSTAFSON: I believe one of the contracts contains,

and it might be the Peaking Gas Management Agreement,

contains an arbitration provision. The Transportation

Service Agreement I do not believe contains such a

provision. I could be corrected on that and I'll try

to see if I can get an answer.

THE CHAIRPERSON: Mr. Gustafson, I just have one question

for you then. In your August 24th letter of

intervention, you've raised a number -- outlined a

number of issues that you propose be considered. And

one of them was item (f) and it was the implications

of the facilities on the option for the Joint Venture

to move to cost-based tolls. Could you just elaborate

on that, explain that one to me?

MR. GUSTAFSON: Well, it gets back to the question of

what the rate implications might be for the Joint

Venture if it's proposed to allocate a significant

portion of the costs of the new facility to tolls that

the Joint Venture might ultimately, whether in the

short run, become exposed to if it decides not to

extend its current transportation service agreement.

Or indeed in the longer term, come 2011, if we did

extend to that point, we're still going to be

interested in knowing what the implications are for


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the tolls that we'll be paying.


MR. FULTON: Madam Chair, I just want to pick up the

point on the Peaking Gas Management Agreement and the

Joint Venture Transportation Services Agreement. I

did have a discussion with Mr. Gustafson about those

two documents this morning, and he has indicated that

he will make available clean copies of those documents

for exhibits in the proceedings, inasmuch as they are

likely to be referenced from time to time.

THE CHAIRPERSON: Okay, thank you. British Columbia

Hydro and Power Authority.

MR. KLEEFELD: Good afternoon, Madam Chair,

Commissioners. My name is John Kleefeld. For the

record I'll spell it. It's K-L-E-E-F-E-L-D. And by

the way, with me here is Graham Simpson from B.C.

Hydro, who has a long history of involvement in gas

supply issues.

In terms of the issues list, I have very

few comments. It seems quite comprehensive. I would

endorse Mr. Gustafson's notes there about the

assignment issue which presumably can come under item

number 7 on the Resource Plan and on the rate impacts.

More generally, my comments relate to the

uncertainty that prevails at the moment, and that

uncertainty is going to be going forward for a few


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months. And the Commission is going to have to make

its decision with a lot of information unknown. And

this may actually play more into my comments on the

regulatory schedule, but I'll just sort of preface

that right now.

Some of the unknowns at the moment are the

Vancouver Island call for tenders process, which is

expected to be complete by around the end of October.

Presumably, I mean, if there is a contract awarded out

of that or contracts awarded out of that, that would

happen mid to late November, we expect.

Similarly, the load forecast normally comes

-- B.C. Hydro's load forecast normally comes out in

December. The hope is to get it out mid to late

November this year.

These and a number of other things in the

application itself play into a great deal of

uncertainty and raise some questions about timing,

which I think maybe I should wait to the second leg of

the comment period to get into.

COMMISSIONER NICHOLLS: Mr. Kleefeld, we were just

wondering how much this proceeding should be delayed

by B.C. Hydro's load forecast when Terasen has

submitted their high, medium and lows.

MR. KLEEFELD: Well, I have looked at TGVI's forecast,

and if you want to get into this I will. If you look


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at page 66 of the CPCN application, which is the

design day base forecast scenario, if you look at --

and I know that there is a lot of talk in the

application about the need to get this in for the 2007

date, but if you actually look at the total of lines

2006-2007 there, if you were to total them out to the

right, horizontally in other words, you would have

180.5 terajoules per day in 2006 and you would have

191.0 tJs per day in 2007. And that's a step change

of 10.5 terajoules per day from one year to the next.


And one might well ask the question,

whether given such a relatively small difference, the

requirement that's being put forth here to spend $100

million could be deferred through some of the options

that have been already suggested in the intervenor

comments, such as curtailment, assignment of capacity

rights, that sort of thing.

So that's what I'm getting at here. Now

actually your question was about B.C. Hydro's load

forecast. At this point, I haven't seen the numbers,

so I don't know, you know, what kind of difference

that could make. We don't know what the outcome of

the CFT process is. For example, might there be a

dual fuel plant? I believe this application is

assuming a single fuel plant. If there were a dual


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fuel plant, there could be a lot of switching

potential. So I think you have to marry both what's

going to come out of the CFT process and the load

forecast to try to get a better picture of all this.

COMMISSIONER NICHOLLS: But if we waited for your load

forecast, would we then need to wait until it had been

reviewed by a Panel or intervenors had commented on

it, too? Because merely submitting another utility's

forecast may be not be helpful to this Panel.

MR. KLEEFELD: Well, it will be filed with the

Commission in any event, and it may also be filed in

this proceeding by B.C. Hydro as evidence. I don't

know whether that will take place or not. I guess

what I'm trying to do is say that it's the combination

of all of these things that seems to create a bit of

uncertainty and I guess the question is, do we need to

proceed with this aggressive a schedule?

COMMISSIONER NICHOLLS: Thank you, Mr. Kleefeld.

MR. KLEEFELD: Thank you.

THE CHAIRPERSON: Thank you. Avista Energy Canada,

Limited.

MS. McCORDIC: Hello. Mary McCordic from Avista Energy

Canada. I am here -- am I too close? I'm here

working with Norske and Vancouver Island Gas Joint

Venture, and I would echo Karl's comments and support

what Karl had to say. Nothing new to add.


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THE CHAIRPERSON: Okay, thank you, Ms. McCordic. B.C.

Old Age Pensioners' Organization et al. Mr.

Gathercole.

MR. GATHERCOLE: Thank you, Madam Chair. I represent the

B.C. Old Age Pensioners' Organization, Council of

Senior Citizens Organization, Senior Citizens

Association of British Columbia, Federated Anti-

Poverty Groups, and End Legislated Poverty.

I really have no comments really to make on

the issues list. It seems certainly comprehensive

enough to include the issues of concern to my clients.

I would echo what Mr. Gustafson said, however, about

concern about being able to properly assess the

potential rate impacts. And I think that is something

that would be of concern to my clients. And we also

would like to explore the demand-side options as well

as the supply-side options. Now part of that clearly

is within the resource planning, but with respect to

the CPCN.

The only other comment I would make, Madam

Chair, is if this pre-hearing conference goes beyond

2:30, it will be necessary for me to leave because my

organization's annual general meeting is scheduled for

3:00 and if that happens, I apologize in advance.


Now, I skipped Norske Canada. I wasn't


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sure if anybody was appearing on Norske's behalf.

MR. FITZGERALD: That's fine, Madam Chair. I'm joining

actually with the Vancouver Island Gas Joint Venture,

and I'd like to concur with what Mr. Gustafson said.

THE CHAIRPERSON: Okay, and your name is, sir?

MR. FITZGERALD: It's Dennis Fitzgerald.

THE CHAIRPERSON: Thank you, Mr. Fitzgerald. And I also

skipped the Ministry of Energy and Mines, Oil and Gas

Division. I'll give you an opportunity to approach

the mike at this time.

I'll get the hang of this eventually.

MR. D'ANTONI: Michael D'Antoni, with the British

Columbia Ministry of Energy and Mines. I'll just

spell out my last name, if you want. It's D-

apostrophe-A-N-T-O-N-I. We've reviewed the

Commission's list of issues and we find the list of

issues to be exhaustive and cover the issues that the

Ministry is interested in.

THE CHAIRPERSON: Okay. Thank you, Mr. D'Antoni. Mr.

Campbell?

MR. CAMPBELL: Thank you and good afternoon. My name

is James Campbell, I live in Sidney, on Vancouver

Island. One of the items that I wondered if we could

consider is, I wondered if there is any subsidies that

is forthcoming for this project, either from the

federal government, the provincial government or B.C.


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Hydro. I think that it would be important to know

whether that was the case.

I also think that there certainly is going

to be some expenditures and that's going to reflect on

rates and so I would support some additional

information as to how this will affect the actual

Terasen Gas customers but also if we're going to have

natural gas used for generating electricity on the

Island, that will impact the electricity customers,

B.C. Hydro customers. Thank you.


THE CHAIRPERSON: Okay, thank you. Mr. Farquharson.

MR. FARQUHARSON: Good afternoon, Madam Chair,

Councillors. As we're moving on fairly quickly, I

think I'd like to give just a little bit of background

so you understand why I'm here, because I'm not

representing any particular body. But I have quite a

history in involvement in the supply of gas to

Vancouver Island. I worked for the B.C. Hydro Gas

Division in the hearings from 1979 till '83 before

this, leading up to hearings before this Commission.

I worked with MacKay and his review of the proposed

gas line through the Coquitlam watershed, which was

part of the existing infrastructure. And I also

worked for B.C. Hydro on their Georgia Strait Crossing

Project.


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My concern is really getting down to the

fundamentals. As I understand the role of this

Commission, it is to make sure that the people of

British Columbia, and specifically Vancouver Island,

get the lowest cost of service with the greatest

reliability possible, and, I would add, with the least

environmental impact.

You have an application by Terasen which

increasingly is focused on reinforcing their existing

system. The existing system has some issues, such as

going through the Coquitlam watershed, going through

the mountain country between Squamish and Sechelt;

marine crossing issues; and then traversing all the

rivers down the east side of Vancouver Island as you

slowly loop their system.

However, there is in existence another

project, the Georgia Strait Crossing Project, which is

approved. It has a different suite of benefits, it

has a different suite of costs, and it has a different

suite of environmental impacts. And I'd like to

suggest to you that it's not enough to accept

Terasen's view of the merits of their project and

their resource plan relative to GSX, but I think the

Commission itself should undertake that review. Now,

I appreciate the GSX was done under NEB legislation,

but there is no reason why surely there should not be


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some cooperation. It is an approved project.

I'm not here to specifically bang the drum

for GSX or for B.C. Hydro or for Williams. I am here

to argue that you as a commission should do your job

by making sure we get the right line. And I think

there's arguments in favour of GSX, and those will be

the arguments that I would like to try to expose in

this hearing.

So I think we want more on the reliability

of the resource plan. We need to look at some of the

environmental aspects, because if you approve the

resource plan that's proposed, it will set in process

a whole different suite of environmental impacts. I

don't see the word "environment" mentioned in the

issues that you're looking at.

So those are my issues, Madam Chair.

THE CHAIRPERSON: Thank you. Was there anyone else in

the room who wished to make comments before I give

TGVI an opportunity, Mr. Ezekiel, an opportunity to

respond? Mr. Ezekiel, please.

MR. EZEKIEL: Thank you, Madam Chair. Just a brief

response to perhaps address the concern a number of

intervenors have raised around the impact on rates of

the potential facility. It is not that we do not know

the cost of the facility, the costing of the facility

is in the application and discussed in detail.


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My issue and concern when I spoke about

this at the beginning was around the allocation of

those costs and the revenue requirement associated

with those costs to TGVI's customers. And that is a

different investigation, one that is associated with

the rate design hearing. And again, the issues

associated with rate design are complex and will

require more study in establishing a proper allocation

of those costs among the customers.

We are prepared to -- we fully accept that

that is an application that needs to happen. But the

purpose of this application is to determine what the

best resource addition is to address some needs that

have been identified. And it would be too easy to get

waylaid into a bunch of discussion around not -- I

don't want to take part in those costs, or those costs

should be shifted somewhere else. If there is a need

that justifies the addition of a resource to this

system, it is incumbent on these proceedings to

establish what that resource should be, what the best

resource is. And if that's the adequate and proper

resource to add to the system to address the

identified needs, it is a later question to determine

how those costs are best allocated amongst those that

should pay for them. Thank you.

THE CHAIRPERSON: Maybe just one question, Mr. Ezekiel.


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In terms of the allocation of the cost, would that

have any bearing on which is the best outcome, or are

you saying that it's two totally different matters?

MR. EZEKIEL: Well, it depends on how you judge what the

best outcome is. If the best outcome entails

addressing cost shifts and who should be the best, who

is the most adequate customer available to pay for

those costs, then those are issues that are rate

design issues. But the revenue requirement, whether

it's an LNG facility or some other facility, is based

on the capital costs and operating maintenance costs

of those facilities. And that is irrelevant as to

what the facility is. Once you establish what the

revenue requirement is, then it's a question of how

should those costs be borne by the utility and its

customers?

So I see those issues as separate, unless

you want to get into the politics and kind of social

issues around rate design, which is who should pay for

those costs.

THE CHAIRPERSON: We have another question for you, Mr.

Ezekiel, before you sit down. Commissioner Vivian.

COMMISSIONER VIVIAN: Yes, Mr. Ezekiel. Under the issues

for the LNG CPCN, issue number 1 is LNG site

selection. And in my reading of the application, and

to some extent the resource planning as well, site


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selection is really presented in your application as a

fait accompli, in other words the Ladysmith site.

I'd be very much interested in your views

as to whether or not this panel ought to be looking at

the other sites that were considered by Terasen. And

if the answer to that is that we should be at least

marginally involved in looking at those issues, I

guess we would have to go to our IR process to get the

information on those other sites and their pros and

cons as seen by Terasen. So do you see the Panel here

looking at those other sites, and balancing them

against the site that you've selected?


MR. EZEKIEL: Well, I certainly think that's within the

scope of the Panel, if the Panel wants to engage in

that enquiry. The reason that the application is

presented in the fashion it is is because of the

stakeholder process, where we've identified a number

of sites, gone out and had a stakeholder consultation

process around the various sites, and there was a

clear winner. And so that's why it's presented in the

fashion it is. If the Panel would like more

information about the other options, and why they were

not selected, we could provide that.

COMMISSIONER VIVIAN: Thank you.

THE CHAIRPERSON: Okay, thank you, Mr. Ezekiel. That


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would conclude then, I guess, the comment process

dealing with the list of issues, and we can now begin

with a second round of comments to deal with the draft

proposed regulatory agendas that the Commission issued

late last week. And again, I could ask TGVI, Mr.

Ezekiel, to present any comments or concerns or

questions he has with respect to that, or those draft

regulatory agendas, when he is ready to proceed.

MR. EZEKIEL: Thank you, Madam Chair, again. A number

of items to address on the agenda issues.

First, the Commission was kind enough to

propose two agenda options. And TGVI's preference is

for Option A. It effectively results in a hearing

date scheduled for November 8th, a week ahead of the

Option B schedule. We are concerned with the timings

of this application, and time is of the essence.

There is mention in the application of a

need to put this contract out for tender in January,

and we'd like to provide the time-frame permitted to

have the hearing in November and give some time,

obviously, for the Commission to consider the hearing

and have a result for that hearing that we can move

ahead in January. Delaying the hearing to the middle

of November and then looking at maybe two weeks of

hearing time pushes the time available for

consideration of the evidentiary record up against the


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Christmas holidays, and we'd like to leave as much

time as possible so that doesn't happen.

I should also mention that in the third

week of November or so is also generally the time

where the annual reports from Terasen Gas and a couple

of days of conferences on that are held, and so we'll

be having to, with the Option B schedule, manage those

two processes together.

You also mentioned a -- asked for some

information or response in respect to the possibility

of a break between the resource plan hearing and the

CPCN hearing. TGVI's position is that the matters are

related and easily flow one into the other. Again,

for the timing issues, our preference is our

preference is for there not to be a break between the

two hearings. One evidentiary record. And to re-

establish, re-mobilize everybody back for a second set

of hearings would, I think, result in some delay that

we're anxious to avoid.

THE CHAIRPERSON: Is it your preference, Mr. Ezekiel,

that the hearing would take place, then, in one

location? It's suggested in the draft regulatory

agenda that the hearing would be conducted on

Vancouver Island, likely somewhere in the Nanaimo

area. Would it be your preference that the hearing

take place all in one location, or break it and return


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to Vancouver at some point?

MR. EZEKIEL: Yes. In terms of location, we would like

to see the hearing take place in one place. Given the

intervenor list, we'd also ask the Commission to

consider holding the hearing here. There are limited

intervenors from the Island, and the cost estimates

that are being looked into to have 10, 12 days of

hearings on the Island are about $10,000 a day, which

would run about $120,000 for ten days of hearings, and

we think that money could be better spent by having a

hearing here, to the extent the facilities are

available here at the Commission, at the Commission's

offices or here, and even using those funds,

obviously, to pay for the travel costs and boarding

costs of the registered intervenors that are coming

over to appear. So, we'd be -- we'd ask you to

consider that as well.

You also asked for a location of the

workshop, and whether there should be a workshop.

THE CHAIRPERSON: Mm-hmm.

MR. EZEKIEL: We think the workshop is helpful and we'd

be in favour of having a workshop again here for the

same reasons that we're saying the hearing should be

here, the majority of the intervenors are located

here, or represented here, and we'd be anxious for

that.


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One final point, and that is there was --

or perhaps two final points. You had asked for an

indication of the potential evidentiary portion of the

hearing. We are looking at possibly four panels,

evidentiary panels, possibly three, but I think more

likely four. And the four panels would address the

following issues: Panel one would address policy;

Panel two would deal with resource planning; Panel

three would address project justification, and the

CPCN application; and Panel 4 would be a project

technical panel.


THE CHAIRPERSON: Thank you, that is helpful.

MR. EZEKIEL: Given the nature of the proceedings, we'd

also anticipate the proceedings taking approximately,

as I said, two weeks and 10 to 12 days of hearing

time. That's not just for the TGVI portion but what

we'd expect the entire hearing to entail.

And perhaps if I could, just one last

point. There was some interest expressed for a tour

of the existing LNG facility at Tilbury as a potential

help to intervenors and to the Commission and the

panel and staff. We're looking at available dates for

that, and we're trying to establish a date that would

work for everyone. We're proposing at this point a

possible date of Friday, October 8th, and we'd be --


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THE CHAIRPERSON: Apparently we've got --

MR. EZEKIEL: I can see that's not going to work.

THE CHAIRPERSON: We've got two of your panel is going to

be on another hearing on that date, we assume.

MR. EZEKIEL: Understood. Perhaps what we could do is

liaise with the intervenors and Commission and the

panel following to arrive at some date that works for

everybody, for a tour of that facility. It would be

approximately a half day in length.

THE CHAIRPERSON: Okay, thank you, Mr. Ezekiel. I'd be

interested in hearing what other parties have to say

about that proposal.

MR. EZEKIEL: Thank you.

THE CHAIRPERSON: And I have one or two more questions

for you, pardon me. But with respect to the workshop,

you said it would be helpful, and I'd like to go back

to that and have you comment on, you know, make a

submission to this panel as to why it would be

helpful. As I understand it, the Commission panel

typically does not attend workshops. So if you wanted

to cast your comments in that light so that we can

understand why it would be beneficial to the process.

And the second point of that comment was I

note that you selected or you would prefer option A

with the workshop, which according to that schedule

would take place on Friday, October 15th, which I


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suspect is before the date that you would be,

according to your comments earlier, be aware of the

results of the Vancouver Island CFT process. So I

just would like you to maybe address how this workshop

would be helpful, and what type of information would

be presented at that time, and whether that date still

works for you, October the 15th.

MR. EZEKIEL: Sure. We generally find the workshops

helpful as a means to interact with the intervenors

and better understand their issues. Commission has

the benefit of Commission Staff and all the great work

that they do. Intervenors, some intervenors at least,

don't have the benefit of that many people. And the

application is lengthy. There is the resource plan

and obviously the application as well. There's a

great deal of numbers involved and the opportunity to

interact in a presentation format, oral presentation

format as opposed to just written paper we find of

benefit in trying to move the process along and better

hear what are the -- and better establish what are the

real concerns behind the intervenors' appearances.

With respect to the timing of the workshop,

the current CFT process, as I understand, calls for a

decision on the CFT on October 8th. There is, I guess,

a potential for that to be delayed, but the October

15th date provides a week's possible delay, and of


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course we'd be anxious to move the process along as

quickly as possible.



THE CHAIRPERSON: Mr. Gustafson.

MR. GUSTAFSON: Thank you, Madam Chair. As I think has

already been indicated, there are quite a number of

variables that we see as affecting the issues to be

considered by the Commission, and the more certainty

that can be achieved with respect to those issues, the

CFT process, the question of the assignment, the rate

impacts and so on, the better off we will all be in

terms of moving efficiently through this particular

process.

So in that context we find that both of the

proposed regulatory agendas are fairly aggressive.

The lesser or the least aggressive of the two in

relative terms is Option B, so if put to a choice

between A and B, we would choose B. But ideally we

would like to see the process delayed until some of

these other questions can be answered.

Specifically --

THE CHAIRPERSON: Mr. Gustafson, when would that be?

MR. GUSTAFSON: Well, it in a large part depends on how

quickly the answers come to pass. But our expectation

would be that if the process were deferred by a month


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or so, that we would be well on our way to having

those questions answered.

With respect to the specific dates in

Option B, and I won't comment on the specific dates in

Option A unless you wish me to, it will be a challenge

for us to engage consultants and to obtain

instructions and so on in order to meet the September

27th date for the filing of information requests.

However, I do have a proposal around that. It also

occurs to me that it would potentially be appropriate

to allow for another round of IRs following the

workshop. Presumably the workshop is intended to

increase and enhance our understanding of the issues,

and flowing out of that we may well have different

questions than we might have posed before the workshop

takes place.


And so if there was at least another

opportunity for a round of IRs following the workshop,

that would take some of the pressure off the initial

deadline and give us some comfort that we would have

the opportunity to get our questions posed and

answered before the hearing actually commenced, so --

THE CHAIRPERSON: And the way Option B is framed, does

that provide you with that opportunity? There's

another round of IRs to -- oh, I guess there isn't.


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Yeah, IRs, intervenors and TGVI. I thought that's

what I had read before. So that provides you with an

opportunity to ask questions, albeit it that it's

after the intervenors have had to file evidence.

There's another --

MR. GUSTAFSON: That's fine, Madam Chair. I think I read

that the same way you may have just done, and I took

that as IRs to us following the filing of our

evidence. And if there's an opportunity there, then

that would be satisfactory.

On the question of whether there ought to

be a break, I think again it's our preference in terms

of trying to come to a complete understanding of the

issues, to try to arrange for a break between the two

processes so that we can organize our thinking and our

approach to the second phase of the process.

THE CHAIRPERSON: Mr. Gustafson, Mr. Ezekiel has

suggested four panels, as you probably heard, and the

latter one being policy, the second being the resource

plan, the third being project justification for the

CPCN, and the latter being a project technical panel.

Would you see a break then after the second panel?

And I'll ask TGVI after when they're back on their

feet, whether that makes sense in terms of a Phase

1/Phase 2. Or do you have concerns of the way they're

proposing to structure their evidence?


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MR. GUSTAFSON: The list of panels that were proposed

made sense to me. Exactly how the breakdown would

come on policy as between the resource plan and CPCN,

I'm not sure how they would divide that up or whether

it's really possible to divide that particular one up,

so. It may be that we could have a bit of a

compromise, I guess, and have some of the evidence

that clearly is so interlinked that it would be

difficult to separate it out, to have that proceed

initially whether it dealt with the CPCN or the

resource plan, and then try to break out the other

issues, the separate technical issues with respect to

the LNG facility and the justification for that to

follow a break. So perhaps what you've suggested

makes some sense.


MR. GUSTAFSON: As to the location of the hearing, I

think what Mr. Ezekiel has proposed makes a good deal

of practical sense to us. I suspect that most of the

players will be based here in Vancouver, and if it's

possible to fund those intervenors who will be

travelling from Vancouver Island to come and attend

here, it will likely minimize the inconvenience and

reduce the overall costs of the process.

And on the question of whether the Joint

Venture would adduce evidence, my expectation at this


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point is probably yes, and it would be evidence of a

policy nature. I doubt that the Joint Venture is

going to adduce much evidence of a direct nature in

relation to the technical aspects of the process,

though we may want to have our panel deal with the

question of justification of the LNG facility. Again

that's going to be in the context of what other

options are out there and are realistic, potentially

that the Joint Venture could make available.

I hope that I've addressed your questions,

but I'm happy to answer any others that you might

have.

THE CHAIRPERSON: In your comments, I gather then that

you consider that a workshop would be of assistance to

your clients?

MR. GUSTAFSON: Yes, I think so.

THE CHAIRPERSON: And Mr. Ezekiel had suggested 10 to 12

days of hearing time. Would that be roughly the

estimate that you would be considering as well, or do

you have any other thoughts on that?

MR. GUSTAFSON: I really don't have any other thoughts at

this point. That sounds like probably a realistic

estimate.

THE CHAIRPERSON: And then finally, did you have any

comments or concerns or questions about a proposed

Tilbury Plant tour?


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MR. GUSTAFSON: No. In fact we probably would not avail

ourselves of that, and some of the members of the

Joint Venture have already had a tour of that

facility, so we would like not participate in that.

THE CHAIRPERSON: Would you have any concerns if the

Panel --

MR. GUSTAFSON: None whatsoever, Madam Chair.

THE CHAIRPERSON: Okay, thank you. We have no further

questions. Thank you, Mr. Gustafson. Mr. Kleefeld.

MR. KLEEFELD: Thank you, Madam Chair. With respect to

the workshop, these workshops are generally useful to

intervenors, especially those who don't know a lot

about the issues. We don't take a position, as B.C.

Hydro, one way or the other on it.

With respect to where the hearing should be

held, we don't have a position on that either.

Vancouver Island or any other location is fine, and a

single location does make some sense, I think.

With respect to a break between the

resource plan and the CPCN application, maybe. And

that might be a compromise position when we get to the

timing question. I think generally speaking it's

better to have the hearing all together, but there

might be some rationale for a break between them. We

can come back to that.

With respect to the timetable, I want to


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make just two suggestions here. First of all on the

timing of the IRs, information requests, I noticed on

the list that on either of the options, IRs go out to

the Commission first, and then a week later they go

out to TGVI from intervenors, and there's no step in

between where TGVI responds to the Commission IRs

first. And generally speaking in these hearings, it's

helpful, I think, if the responses to the Commission's

requests get filed first before the intervenors issue

their questions. So that is one suggestion I would

make in that regard on whatever schedule you adopt.

In terms of the actual timing of the

hearing, my suggestion would be January to deal with

the issues I alluded to earlier, as well as what Mr.

Gustafson mentioned. Again, December would be a

possibility but then there's the problem of holidays

and that sort of thing, and I know the Commission has

its own very busy schedule too, and of course that's a

consideration. So that would be my suggestion.

Again coming back to the idea of the break

between the two, perhaps that's a compromise there,

the resource planning portion being heard first, the

CPCN portion being heard later.

Will B.C. Hydro present evidence? Frankly

at this stage I don't know. If it is, if B.C. Hydro

does, it'll probably be technical. And I think I


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should just explain our position there, going back to

what I was talking about earlier. At this point, B.C.

Hydro doesn't -- it neither opposes nor is in favour

of the LNG storage facility. B.C. Hydro just wants

the least-cost solution for Vancouver Island

customers. And it just kind of again reinforces what

I was saying, there are a lot of unknowns at this

point.


And picking up also, Commissioner Nicholls,

on a comment you made earlier, I made a note on this,

about normally another utility's load forecast is just

filed, and it's not part of another utility's

proceeding. I think what we have to be cognizant of

here is if we're dealing with a very unique regional

supply situation on Vancouver Island. There is always

conversions of gas and electricity, but it's even more

so on Vancouver Island. And I guess what I'm

suggesting is some thought be given to how these

different utilities and how these different energy

solutions interact with one another.

Number of hearing days. Having been

consistently overly optimistic in the past, I'm going

to estimate 15 as opposed to 10 to 12.

Number of panels and structure, I agree

with TGVI's format. The only other addition I would


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make is that if the Commission Panel does want to get

into some of the financial issues that have been

raised, it seems to me that there is a gap in the

Panel format here, or at least maybe it would come

under the policy area, I'm not sure, where the

financial impacts would exactly go.

As to the Tilbury tour, Mr. Simpson tells

me he doesn't need to see an LNG storage facility, but

I'm kind of interested in seeing it. Anyway. We

don't have a position on that one.

Any other questions?

THE CHAIRPERSON: You mentioned that your evidence might

be technical in nature. Can you explain that to me?

MR. KLEEFELD: Well, I think this is where we get into

some of the assumptions that are made in the CPCN

application, and even in the resource plan itself.

For example, I'll just give you one example at page 23

of the CPCN application, there's an assumption that

TGVI -- I'm reading from my notes here -- would meet

the normal day without curtailment. And that's a

fairly significant assumption.

There's also a discussion on page 27 about

large must-take volumes. Mr. Simpson tells me that

that kind of information hasn't been conveyed to his

knowledge to TGVI in the stakeholder discussions. So

that's the kind of thing I'm talking about: options


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for curtailment, options around this assignment issue

that Mr. Gustafson alluded to; a look at the

difference, the net present value difference between

some of the options. Just for example on the LNG

scenario without VIGP, even if you were to accept all

of the assumptions that TGVI has made, the net present

value difference between the options they are looking

at is only $4 million, which in a large application is

-- I'm looking at page 32 of the CPCN application --

is a pretty small figure to base a major application

on. I don't -- I'm not trying to make a position

statement on these at this point, I'm just trying to

identify some of the technical areas that I think need

investigation.

THE CHAIRPERSON: Okay. I don't think I have any further

questions for you, thank you very much.

MR. KLEEFELD: Thank you.

MR. FULTON: Before Mr. Kleefeld leaves the mike, Madam

Chair, I think it would be helpful for him to answer

the question that you asked Mr. Gustafson, and that is

if the decision is made that ultimately that in

addition to Mr. Simpson, Mr. Kleefeld doesn't wish to

attend the Tilbury viewing, does he have any objection

to the Commission Panel with those intervenors who

wish to attend, attending the viewing?

THE CHAIRPERSON: Yes, please answer my question as


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rephrased by Mr. Fulton.

MR. KLEEFELD: None at all.

THE CHAIRPERSON: Thank you. None at all. Just for

clarity, we'd like to ask every intervenor who takes

the stand, if you will, that same question, and if I

neglect to ask it precisely to you.

Ms. McCordic for Avista, did you have any

comments that you'd like to make?

MS. McCORDIC: No.

THE CHAIRPERSON: Mr. D'Antoni?

MR. D'ANTONI: The Ministry would just like to state

that we don't have a preference between the two

agendas. We don't expect to submit any evidence in

the proceedings; don't necessarily have a preference

for location, just whichever is most convenient for

the intervenors; and the Ministry also would like to

participate in the tour of the Tilbury facility.

THE CHAIRPERSON: Okay. And you have no concerns with

the Panel attending that tour as well?

MR. D'ANTONI: No.


Mr. Gustafson. Oh, I'm sorry. Yes.

What's that?

MR. GATHERCOLE: I think I'm the next one up.

THE CHAIRPERSON: Yes. I'm conscious of the time, you've

got 20 minutes.


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MR. GATHERCOLE: Okay, well, I'll be fine. With respect to

the timing, Madam Chair -- first of all let me say, we

won't be calling evidence. With respect to the

timing, I can understand some of the concerns

expressed by those who came before me about getting as

much information as possible given all the other

things that are going on. But unfortunately, at this

stage of the game, it seems to me we're talking a

number of trade-offs here. I'm aware of the fact that

there'll be major filings by Fortis and by PNG in

November. We also have the BCTC Oak proceeding, which

is being heard in January. I also expect a revenue

requirement proceeding from BCTC and, of course, we

have ICBC as well.

We're a small organization, we're

struggling as it is. So it would be my submission

that the timing generally as set out in the schedule

is probably the one that makes the most sense

certainly from our point of view, and I would expect

from the Commission's point of view, given all the

matters it's going to have before it.

We'd strongly support Option B, rather than

Option A, for two reasons. One, again, is because of

our internal schedule, in terms of things that have to

happen, it would make it a lot easier to have that,


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you know, one extra week.

The other thing is, and I'll come back to,

you know, the workshop idea, on Option A that only

leaves three days from the responses to the IRs to the

workshop, which just, in my experience, would not give

the intervenors enough time to properly prepare and

meet the advantages of the workshop that counsel for

TGVI indicated.

I don't believe a break between the

resource planning and the CPCN is necessary. It might

make it clearer and might give a little bit more time

for preparation of the second, but it seems to me that

the panels that have been set out make sense, and

probably it's better to just have the one proceeding.

With respect to the workshop, I find the

workshops can be helpful, but it seems to me it might

be tied in with a second pre-hearing conference,

because, you know, I'm conscious of the -- what I

understand to be the policy of the Commission with

respect to discovery, and making sure that the

discovery process is complete before we go to the oral

hearing. If that's the case, one of the things that

is helpful is to have an opportunity to come before

the Commission in a second pre-hearing conference and

to make submissions with respect to the adequacy of

the information responses.


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If, on the other hand, there is a broader

scope for cross-examination, traditionally what has

happened, Madam Chair and Commissioners, in my

experience is when you get information responses that

you don't consider to be adequate, rather than come

before the Commission and say, "Would you please order

them to give us a more complete answer," the practice

has been essentially to follow up in cross-

examination. If that opportunity isn't there then, in

my submission, we would need an opportunity to have --

to bring inadequate responses before the Panel and ask

to have a proper answer.

Now given the fact that we've got a second

round that would be after that period of time, which

is somewhat new, I don't know quite how that would fit

in, but I would ask the Panel to at least give some

consideration to that.

I think it is also helpful if possible, and

we've done it both ways, where we've just had the

Commission's IRs before intervenor IRs, and we've had

other hearings where we had the responses to the

Commission IRs before intervenor IRs. I prefer the

latter, because I think it helps. While having the

Commission IRs helps in determining which IRs that you

want to ask, having the responses to Commission IRs

enables intervenors to follow up on some specific


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aspects that may be raised in the responses to the

Commission IRs, and I think that could help the

process and help tie down the issues.

With respect to location, obviously being

located in Vancouver, we would prefer Vancouver, but I

think it is important that it be in one place for the

entire proceeding.

With respect to Tilbury, while I've never

toured an LNG plant, I don't think I would have the

time to take advantage of touring, and I certainly

would have absolutely no objection to the Commission

Panel touring Tilbury.

I think I've responded to all of the

issues, Madam Chair, but if the Panel has any further

questions.

THE CHAIRPERSON: Mr. Gathercole, is it possible that you

may file evidence in the proceeding?

MR. GATHERCOLE: No, we won't file evidence.

THE CHAIRPERSON: No. Okay.

I do not believe we have any further

questions for you, Mr. Gathercole, thank you.

MR. GATHERCOLE: Thank you.

THE CHAIRPERSON: Mr. Campbell?

MR. CAMPBELL: Thank you. I would first of all like to

address the idea of the workshops and the hearings

being in Vancouver. I've now attended several NEB


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hearings, pre-hearing conferences, there was only one

in Vancouver and there was twelve located in the Gulf

Islands and on Vancouver Island, and they all were

well-attended. As a matter of fact, it was the first

time that I had ever seen the public come to the

Public Utilities Commission. The real public. And I

think that it's important, and incumbent, on this

Commission to seriously consider the value of allowing

people on Vancouver Island to have their say. This is

going to affect Vancouver Island for many, many years

to come, as many as maybe 50 years. Who knows?

So I would really urge you to think that

very seriously. And I wondered if -- I thought Mr.

Gathercole's suggestion of a second pre-hearing

conference, and I wondered if that could be worked in

with the workshop, allowing, again, the public on

Vancouver Island to come to the workshop and to the

pre-hearing conference. It may spark some interest in

this whole proceeding, and it certainly -- I know it's

been a hotbed in the hearings that I mentioned

already. There were many people attended from the

Duncan area, Cobble Hill, Nanaimo, the Islands, and I

think, as I say, it's so important, what you have to

finally decide, that it certainly would be a good idea

to have more of the public input, if you possibly can.



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MR. CAMPBELL: I realize that there is a cost to it,

but I do think that the hearing should be on the

Island and it should be at one location and if it

can't be held in Ladysmith, then I would assume that

there are probably more resources available in

Nanaimo. And I have no objection to the panel going

to Tilbury. I probably won't attend that and I don't

expect to send in any evidence. Any questions?

THE CHAIRPERSON: Yes, Mr. Campbell. I'm interested in

your idea of having the Commission have the hearing,

or part of it, as I understand it, on Vancouver

Island. When you talk about the proceedings that

you've attended, I think you said the NEB, the

National Energy Board.

MR. CAMPBELL: That's correct.

THE CHAIRPERSON: What were those? Because there were 12

sessions. Were they just a portion of the hearing?

What occurred?

MR. CAMPBELL: There were actually 13 pre-hearing

conferences and as I say one started in Vancouver but

the rest were held on the Gulf Islands and up and down

Vancouver Island.

THE CHAIRPERSON: And the point of that was to give --

MR. CAMPBELL: Well, just to hear the public and

certainly there was good response from the public and

for the first time, if I may say this, that there were


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more people dressed as I am, casually, than with the

men with the suits. So maybe they don't want the

competition, I don't know, but I thought it was

valuable. I thought that many people took the time, a

great deal of time as a matter of fact to try and

understand the issues, and I think that if the Utility

Commission wants to help to educate the public this is

a good way to do it.

THE CHAIRPERSON: Did the public at those sessions, did

they simply have an opportunity to make comments or

provide their views or were they also given an

opportunity to ask questions of the applicants, do you

recall?

MR. CAMPBELL: Yes, there was an opportunity to ask

questions, yes. Many of the people chose to be

interested parties because they couldn't devote the

time to become intervenors, but as I say there were

also those who were very dedicated and for the first

time became intervenors and were able to ask direct

questions of the panels.

THE CHAIRPERSON: Mr. Campbell, then, if the Commission

were to consider something like that, having, I'll

call it maybe a portion of a hearing or well part of

it or at least have an opportunity for the public in

the area to be involved and then continue with the

hearing in Vancouver, let's say, where all the other


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parties have expressed an interest, would that be

satisfactory to you?

MR. CAMPBELL: Well, I'd be prefer it all to be held on

Vancouver Island for the reasons that I've outlined,

but I wonder if we get to -- if you consider having

the pre-hearing, second pre-hearing conference and the

workshop around the 15th of October, you may find that

you have then sparked some additional interest in this

proceeding and that may even change your agenda. I

like the idea of Mr. Kleefeld's of going to January

for the actual hearing. I think that makes a lot of

sense. I think we're going at this too fast.

THE CHAIRPERSON: Thank you. We'll, of course, give

Terasen Gas (Vancouver Island) an opportunity to

comment on your suggestions.

MR. CAMPBELL: Okay.

THE CHAIRPERSON: I'd like to hear form them as well.

MR. CAMPBELL: Sure.


MR. CAMPBELL: Thanks.

THE CHAIRPERSON: And Mr. Farquharson.

MR. FARQUHARSON: Madam Chairman, the Commissioners, if I

could just follow on with Mr. Campbell's comments.

The NEB did do an extensive hearing through the Gulf

Islands and on Vancouver Island and then the NEB, in

its wisdom, did approve GSX. So you will see that --


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in that it had merits. So you will see now that we

have Terasen moving forward with an ultimate scheme

and they say they've got a better scheme. Well, how

are we going to know which is the better one?

There does need to be some more public

involvement to let people see what Terasen are

proposing. For example, there are some fundamental

differences. GSX, there's no LNG at Ladysmith for

one, which sort of changes the nature of the project.

So I believe that one way or another these

two schemes have to be compared in the public eye and

I do believe that you should be the party to do that

and to make this final determination as to which is

the better scheme in terms of the regional needs of

Vancouver Island.

And so public consultation, yes, better on

this. And I would like to ask you whether you are

prepared to respond to me formally to say that you

will compare these two projects. I would appreciate

notice of that.

With regard to the other issues, I believe

with Mr. Campbell also that the hearing should go into

January. With regard to the visits to the LNG, I have

actually seen that LNG plant and I have no objections

to the Commission going there. Thank you.

THE CHAIRPERSON: Thank you. Mr. Farquharson, do you


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intend to be actively involved in the proceeding?

Would you be attending the hearings and conducting

cross-examination?

MR. FARQUHARSON: I have been a bit disadvantaged in that

I only just came back into Vancouver quickly enough to

be able to file my intervention.


MR. FARQUHARSON: And I haven't been able, actually, to

get the documents from Terasen. I'm going to see them

this afternoon. I would intend only to be interested

in the resource plan side of it because I have some

interest in any proposed looping of and compressor

stations between Anmore and Comox and all the way down

to Victoria. That is the area that I am interested

in.


MR. FARQUHARSON: Thank you.

THE CHAIRPERSON: Thank you. Was there anyone else in

the room who wished to comment on the regulatory

agenda or any other procedural matter?

Mr. Ezekiel, when you're ready.

MR. EZEKIEL: Thank you, Madam Chair. Excuse me. Just a

few points to address some of the items that came up.

First off, there was a question around the financial

information and whether or not the panels as proposed

might constitute a gap there. We'd see the financial


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information addressed by the project justification

panel and there would be -- that would be staffed with

someone able to address those issues.


T13

With respect to, again, the break between

the resource plan, oral hearing and the CPCN hearing

and timing in general, our concern is not so much

whether there is a break but really about the timing

of when the proceedings conclude. The timing that is

in the application seeking an order for January is

such because we expect there to be a 30-month

construction period for this facility, and we had

hoped to let the engineering procurement construction

contract in January providing 30 months of

construction, which would bring us to the summer of

2007. That would provide some time, four months

approximately, for the facility to be -- for storage

at the facility, in time for peak demands at that

winter season.

Those projections and the justification is

based on requirements from B.C. Hydro on gas

requirements, and so it's not that we're plugging an

express agenda merely because we have some desire to

get this through. We're trying to deal with project

management issues around getting the facility in place


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and in service in time for those peak demands.

Lastly, just in terms of location -- I'm

sorry, let me just address the timing issue again. I

think a number of intervenors had expressed a

preference for Option B. Again it's a week

difference, and mindful of the hearing timing, I think

we could still see our way to achieving the results

under Option B, assuming the Commission was prepared

to consider things in December.

If we did move to Option B, I would

suggest, however, a slight change to the schedule. In

order, given the extra time around the workshop in

Option B, I would suggest that the dates for the

workshop and the timing of the intervenor evidence be

swapped. In that fashion the intervenor evidence can

be filed ahead of the workshop and in an effort to

better address the intervenor evidence we could

respond to the intervenor evidence at the workshop in

order to have a better flow of proceedings.

If that were the case, perhaps even the

intervenor evidence could be moved up to October 20th.

That would provide eight days following the IR

responses for the intervenor evidence to go in, and

provide us a couple of days before the workshop in

order to address that evidence.

COMMISSIONER VIVIAN: Just a question there. If we


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followed that suggestion, my understanding is that

workshops do not form part of the record, so that as

you provided evidence or explanations or

clarifications to intervenors, we on the Panel would

not have the benefit of that discussion unless it was

subsequently reintroduced in the hearing. Is that a

problem?

MR. FULTON: Perhaps I can be of some assistance here,

Commissioner Vivian. What the practice has been in

the past is it is correct that the Commission Panels

do not attend the workshops, but the documents that

are circulated by the utility at the workshops are

marked as an exhibit in the proceedings, so that if

the Commission panel has questions arising out of

those documents, those questions could be asked in the

ordinary course of the proceedings of the relevant

panel.

COMMISSIONER VIVIAN: Thank you.

MR. EZEKIEL: Thank you, Mr. Fulton.

And finally just in respect of the location

issue, again given the nature of the intervenors that

have registered, our preference is certainly to have

the hearing here. However, given the concerns raised

by the last few intervenors, it may be appropriate to

have the workshop on the Island, and we'd certainly be

prepared to do that.


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THE CHAIRPERSON: What about the option or the idea that

I raised with Mr. Campbell in terms of having a

portion of the hearing take place on the Island, as

well perhaps in addition to the workshop?

MR. EZEKIEL: Well, again it's a question of both timing

and cost. We don't take a position with respect to

that. If the Commission considers that to be the best

way to obtain input on the issue of a portion of the

hearings on the Island, that's acceptable.

THE CHAIRPERSON: What I was thinking of is perhaps just

having -- Terasen having a number of witnesses

available to answer questions that interested parties

might have, and then have submissions as Mr. Campbell

has suggested some of the parties had done in other

proceedings before another tribunal. Does that make

any sense to you, aside from the cost concerns, or

would you prefer something else?

MR. EZEKIEL: Well, I think we're in the Commission's

hands on that.

THE CHAIRPERSON: Okay. You mentioned switching the

workshop with the intervenors filing evidence. And if

you wouldn't mind, what I would like to do is just ask

the two intervenors, you suggested they may file

evidence if they have any comments on that. Okay, so

this time I would be asking Mr. Gustafson to come

forward if you have any concerns about that option.


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MR. GUSTAFSON: Thank you, Madam Chair, and I appreciate

the opportunity to address that particular suggestion.

That does cause us some concern from two perspectives.

One, it will advance the time which we have to prepare

and file our evidence relative to the date on which we

are going to be receiving the responses to our initial

round of IRs. And secondly, we would hope that coming

out of the workshop we would be able to refine our

evidence to better deal with the issues as a result of

the way in which we understand them, based on the

workshop. So we would normally look for those two

things to help us in the preparation of our evidence.

THE CHAIRPERSON: Okay, thank you. Mr. Kleefeld, did you

have any comments on that proposal?

MR. KLEEFELD: I agree with Mr. Gustafson.


THE CHAIRPERSON: Okay, thank you. All right, Mr.

Ezekiel, if you want to respond to that.

MR. EZEKIEL: Nothing further, Madam Chair.

THE CHAIRPERSON: Okay. And just one thing, then. In

terms of the Tilbury Plant tour, the possible Tilbury

Plant tour, you had mentioned that -- I haven't heard

anybody making any objections to the Panel

participating in such a tour, if we were able to make

that work.

MR. EZEKIEL: We certainly don't object to the Panel


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attending.

THE CHAIRPERSON: Okay, thank you. And what I could

perhaps do to assist you when you're dealing with this

off-line, if I can find my notes to myself, is give

you the dates that we had discussed as a Panel that

might perhaps work.

I'll just throw this out to you for

consideration amongst the parties: The 27th or 28th of

September, the week of October the 20th, I guess it

would be probably the 20th. I'm just going to check my

schedule. October 20th, perhaps. And then the week of

the 25th to the 29th of October. Now, there again, I'm

not sure how all that will fit into a regulatory

agenda, but those are the dates, and I think the only

dates, that would work for the Panel.

MR. EZEKIEL: Well, we'll certainly try to make one of

those dates work, we're somewhat hampered by a

vacation schedule of the plant manager, who would

certainly want to be there for the tours.



THE CHAIRPERSON: Just a moment, please.

Sorry about that, thank you. I just wanted

to converse with the Panel on one point that I think

is fairly important that has come out of the

proceeding, and I'd like to give the parties an


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opportunity to sort of have one last say, if you will,

on the question. And it basically resolves around the

issues that Mr. Gustafson and Mr. Kleefeld raised

about the uncertainties, if I can term it that, in

terms of the proceeding and the need to wait to have

this proceeding. So I would appreciate if, maybe just

a way of dealing with this as a matter of fairness is

give you an opportunity, Mr. Ezekiel, to explain to us

why we don't need that information, or why that level

of uncertainty that the two parties have raised, why

we don't need that to set this regulatory agenda down,

based on Option B, and then I'd like to given them an

opportunity just to comment one more time, and give

you an opportunity to respond.

MR. EZEKIEL: Thank you, Madam Chairman. In short, the

reasoning that I would put forward as justification to

proceed with the regulatory agenda as set is that

there are always uncertainties in time. At any given

time, when you're sitting down, trying to make a

decision on adding a resource, there will always be

questions outstanding as to whether or not it is the

best resource. And the idea is to make the decision

the best decision you can with the information

available.

We've identified a need that, based on B.C.

Hydro gas requirements, that we need to address this


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by 2000 -- end of 2007, and this timeline is the

timeline that allows us to do that. And we'd be very

concerned with delaying this into January, because it

does impact on our ability to have this facility in

service by that deadline. Thank you.


MR. EZEKIEL: Madam Chair, if I could, just before I

sit down, one last point. And you've proposed some

dates for the Tilbury facility tour. I was just

hoping other intervenors who are interested in

attending, after these proceedings are concluded might

come and advise us whether any of those dates work for

them.

THE CHAIRPERSON: That's a good idea, Mr. Ezekiel, I'd

appreciate if they would do that.

Mr. Gustafson, did you want to have another

opportunity to make your point on that point?

MR. GUSTAFSON: Thank you, Madam Chair, I'll be very

brief. Mr. Ezekiel is certainly correct, there are

always uncertainties. However, in my experience,

there are rarely uncertainties of the magnitude of

those that we are now looking at, that go

fundamentally to the need to proceed or not with the

project. They strike right to the very heart of the

issues that we'll be examining. Just, for example, if

the Joint Venture is able to assign substantially all


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of its contract demand to B.C. Hydro and thus become

an interruptible customer, is there a need to add this

kind of capacity to the system at all? Or can it be

managed in some less expensive way, to get to the

desired result of having facilities that are required

for reliable service to the Island and on the Island,

at the lowest possible cost? And I just frankly don't

know how that question can be addressed without

knowing the answer to the assignment question, for

example.

THE CHAIRPERSON: And can you give us a sense of when

that might be resolved?

MR. GUSTAFSON: Well, in terms of discussions,

discussions are already underway between B.C. Hydro

and the Joint Venture as to the feasibility of such an

assignment. And so they are examining that, and I

would expect that we would have an answer to that part

of it very quickly. The unknown, from our

perspective, is whether such an assignment would be

acceptable to TGVI, and on what basis, if any, they

might object to it. We do know that they have

objected to a small assignment of 4 tJs per day over

the course of the summer, and so that is the substance

of some litigation that will be going forward in the

courts. So, we now have the larger question, and we

would expect that their objections would continue with


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respect to the larger assignment as well. So, if we

don't get some acceptance on Terasen's part, we might

well be in the courts again on that issue, sooner

rather than later.

And if I may, Madam Chair, just to address

the proposal that Mr. Campbell had suggested, and for

the clarity of the record, our position with respect

to where the hearing should be held was based just on

our assessment of the balance of convenience of the

parties. And we certainly have no objection if

there's going to be interest in participation from

public at large on the Island, to having the hearings

held on the Island, or at some phases of the hearing

perhaps in a public fashion on the Island, to

encourage and invite public participation and make it

convenient for them to attend.

And so we're happy to participate wherever

the Commission decides that the conveniences are best

satisfied.


T15

THE CHAIRPERSON: Thank you, Mr. Gustafson. Mr.

Kleefeld?

MR. KLEEFELD: Madam Chair, just a couple of points.

First of all, I adopt what Mr. Gustafson just said

about the magnitude of the uncertainties. I would


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also add the potential for some of those to be

resolved fairly quickly.

Third, on TGVI's own application, it would

appear that fuel switching could tide us over beyond

2007, and if the result of the Vancouver Island CFT is

a plant that can do fuel switching, then even more so.

So those are my submissions in that regard.

THE CHAIRPERSON: Thank you. Mr. Ezekiel, I'd like to

give you the last word.

MR. EZEKIEL: Thank you, Madam Chair. I would finally

just note that although there are a number of

uncertainties, a number of the uncertainties are

actually controlled by the parties. The JV has a

contract. Whether or not they renew that is an issue.

The issue about the assignment, the

assignment of capacity has been agreed to. The

question is around tolling. And those are commercial

disputes that may or may not be resolved quickly.

There will always be some issues at stake.

Given the timing, we're trying to address

identified need, and frankly I'm just not sure that

all of those issues will suddenly fall into place at

some point that we can have a regulatory proceeding

without some issues hanging over our head. Thank

you.

THE CHAIRPERSON: Thank you. Mr. Fulton, is there any


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other matters that I should address before we adjourn

the proceeding?

MR. FULTON: No, Madam Chair, thank you.

THE CHAIRPERSON: Thank you. I'd like to thank everyone

for attending today. Your input has been very welcome

and I'm sure will be very helpful in assisting the

panel to finalize a list of issues for this proceeding

and issue a regulatory agenda, which we hope to do

fairly shortly. Thank you.

(PROCEEDINGS ADJOURNED AT 2:42 P.M.)

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