PRESENTATION TO THE BC CONSTRUCTION ROUNDTABLE

February 19, 2009

Presented by:Bill Earis

Construction ManagementGeneration Engineering

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90% Hydro = 10,200MW10% Thermal = 1,090 MW

74,000 km of Distribution and Transmission lines Distribution (56,000 Km) Transmission (18,000 Km)managed and

operated by BCTC

WE MAKE ELECTRICITYWE MAKE ELECTRICITY

WE MOVE ELECTRICITYWE MOVE ELECTRICITY

WE BUY ELECTRICITYWE BUY ELECTRICITY

Independent Power Producers Electricity markets Customers

What does BC Hydro do?What does BC Hydro do?

AND AND

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WE SELL ELECTRICITYWE SELL ELECTRICITY

What does BC Hydro do?What does BC Hydro do?

Residential Commercial Industrial Market/Trade

DomesticEnergySales(F2008) $M % GWh % $/MWh

Residential 1,046 39% 16,261 31% 64

Light&Commercial 989 36% 17,913 34% 55

LargeIndustrial 584 22% 16,428 31% 36

OtherEnergySales 91 3% 1,838 4% 50

Total 2,710 52,440 52

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BC Hydro Quick Facts

One of the largest electric utilities in Canada BC Hydro serves more than 1.7 million

customers, 94% of BCs population Between 43,000 - 54,000 gigawatt hours

(GWh) of electricity are produced annually 99.96% Reliability Rate British Columbians enjoy some of the

lowest electricity rates in North America (third only to Manitoba and Quebec)

Procurement Needs: Refurbishment of fleet, unit additions and system infrastructure Anticipate investing $3 - $5b over next 5 yrs into capital investments A significant increase from historic levels of $150M/yr* (figure from F07s Generation Strategic Asset Plan)

BC Hydro Core Values

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Accountability we take responsibility for our actionsIntegrity we are fair and honest, open and straightforwardSafety we integrate safety into everything we doService we seek solutions and build relationshipsTeamwork we work together and with others to achieve results

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BC Hydros Current Asset Mix

BC Hydros Plant Assets are organized into three categories:

1. Large Facilities Account for 80% of generation (e.g. GM Shrum, Bridge River, Mica)

2. Strategic Facilities Account for 18% of generation and are part of a larger river system program (multi plants e.g. John Hart, Ruskin, Strathcona)

3. Available Energy Account for 2% of generation (e.g. Aberfeldie, Elko, Shuswap)

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APPRECIATE market conditions ACTIVATE

Strategic Sourcing

ALLOCATE RISK Deploying risk sharing, risk transfer & incentives to align interest

ACTTo become a customer of choice

AUTOMATE& Simplify Commodity Purchasing

Add capacity & increase value through supply chain

> Look for value added from suppliers

> Move away from lowest bid logic in favour of Total lifecycle value

Engage the market: > Plan early and proactively

engage the market at all stages

Exercise more procurement methods : one size does not fit all

> Think more commercially and strategically about procurement packages, form and terms

How do we Mitigate Risk?

APPLY- broader value assessment

APPRECIATE to position attractive

packages

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Who Areour

Suppliers?What CanWe Both

Do Better?Do TheyMeet our

Requirements?

How AreThey Doing?

ProgramDevelopment

EvaluationCriteria

PerformanceManagement

ContinuousImprovement

Define Requirements

Select PartneringSuppliers

PerformanceRecognition

RelationshipManagement& Collaboration

SpillwayGateProgram

Design Services

GMSStation Services

Proactive Engagement of Market

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Bulk Contracting StrategiesCapital Equipment

Transformers

Exciters

Governors & Unit Controls

Station Batteries

Power Supplies

Benefits

Standardization

Secure Supply

Optimize Costs

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Declining Equipment Condition

Reduced Capacity Margins

Increasing Seismic Standards & Dam Safety Requirements

Increased Capital Spending

Work Management System

Increasing First Nations & Other Stakeholder Issues

Increased Competition for Skilled Workers

Current Issues

Procurement Risks

Significant Fluctuations in certain Commodity Prices Longer Lead Times Tight Demand / Supply Balance Availability of Skilled Labour, Construction, and PM Services Constantly Evolving Supplier Landscape (i.e. consolidation)/ Small

vendor pool supplying to a global market. Global Competition to Secure Supply Contractors are Placing Larger Premiums to Assume Risk/ Restrictive

Lending practices may impact access to capital. Aged Electrical Utility Network (fewer niche suppliers) Sourcing as a Crown Corporation under Current Market Conditions Balancing Project Procurement Priorities BCHs most critical asset is its Planned Outages, these are key drivers in

establishing Project timelines and vendor deliverables (to site)

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BC Hydro NEEDS YOUR HELP!!!

With the HEAVY LIFTING!!!

The Seven Wonders

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BC Hydros Seven Strategic Projects

1. Ruskin Dam & Powerhouse

2. Mica U5&6 & GIS3. John Hart Replacement

4. Strathcona Dam

5. BridgeRiver2 U5/6

6. GM Shrum7. Spillway Gate ProgramCheakamus Terzaghi Stave Falls Seton Hugh Keenleyside Duncan Dam Ruskin

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1. Ruskin Dam & Powerhouse

Overview: Strategic Plant: 3 Francis units (105 MW); Initial yr. of operation - 1930 Concrete dam and powerhouse on the Stave River (Mission)

Scope: Rebuild top portion of dam and include new gate configurations Refurbish existing powerhouse including 2 or 3 new generators/turbines Large Civil (earthwork and cement/ structure) component Geotechnical requirements are anticipated (slope stabilization, etc) Direct Costs: Over $350M

Construction Schedule: Upon BCUC approval, construction is currently scheduled from 2010 to 2014

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2. Mica Dam (U5&6) & Gas-Insulated Switchgear

Overview: Large Plant: 4 Francis units (1805 MW); Initial year of operation 1976 Earth fill dam, underground powerhouse, 135km North of Revelstoke

Scope Units 5 & 6 project: Install 2 additional generators/turbines (x500MW)

Turbine pits existing, blasted into rock Turbine/Generator tender issued Concrete work in draft tubes & unit pits Electrical/Mechanical installation and Balance of Plant

GIS Project: replace existing GIS (500kV) & expand system for U5/6 Significant demand for electrical engineering requirements GIS Tender Package is currently posted on BC Bid.

Loaded Costs: Over $300M (Turbine & GIS)

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3. John Hart Replacement

Overview: Strategic Plant: 6 Francis units (126MW); Initial year of operation 1947 Located near Campbell River on Van. Island.

Scope Dam seismic upgrades and full replacement Powerhouse including new location and

new generators/turbines (3x45MW units) Fabrication and installation of new penstocks (HDPE or metal) Upgrade or replacement of surge towers Decommissioning of existing powerhouse New powerhouse site determination (geotechnical and environmental engineering

requirements) being finalized this month Loaded Costs: Over $500M Possible P3 candidate (Partnerships BC) as per Govt mandate with spend > $20M

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4. Strathcona Dam

Overview: Strategic Plant: 2 Francis units (64MW); Initial year of operation 1958 Vancouver Island (near Campbell River); Powerhouse located below earth fill dam

Scope Dam seismic upgrades of intake tower and spillway upgrade; scope being redefined

Some subsurface (underwater) work including cutting of intake tower and isolator installation; Spillway anchoring work

Direct Costs: Approximately $121M (under review)

Procurement Options: Mechanical: Approx 30% of Direct Costs Tender Packages TBD Civil: Approx 60% of Direct Costs Tender Packages TBD Electrical: Approx 10% of Direct Costs Tender Packages TBD

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5. Bridge River 2 Units 5/6

Overview: Large Plant: 8 Pelton units (466MW); Initial year of operation 1934/1948 Water diverted via tunnels/penstocks from Carpenter Reservoir to two

Powerhouses located on Seton Lake Reservoir Turbines upgraded approximately 10 years ago

Scope Replace 2 generators (2x80MW); option to upgrade or replace remaining 6

generators Direct Costs: Project costs under consideration

Procurement Options: Project currently in definition phase through 2009 Project bid packages to be determined in definition phase

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6. GM Shrum Capacity Increase and Plant Rehabilitation

Overview: Large Plant, 10 Francis units=2730MW & initial yr. operation 1968/1980 Earth fill Dam located on the Peace River, North of Fort St. John

Scope: (7 projects) turbine rehabilitation on units one to five capacity upgrades to units six to eight stator and transformer replacements upgrades to station service, control building, cranes and fire systems, as well as

dam safety projects Loaded Cost: $800M-$1B

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7. Spillway Gate Program

Overview: Refurbish or replace existing spillway gates at 22 sites over 3 phases: Phase

1(completed-3sites); Phase 2 (in-progress-7 sites); Phase 3(future-12 sites) Tenders recently closed for Phase 2

Scope Phase 2 14 new vertical & radial gates and 17 new lifting devices for 6 sites, 1 site (Ruskin)

completed no equipment upgrades Large civil and electrical engineering components (gate installation and spillway

preparation) Bulk Gate/hoist tender issued for phase 2 & 3 scope and other projects Direct cost: Approximately $300M (Phase 2 only)

Immediate ProjectsSource: Sept/08 971 PD projects, ISD F09-F27 = $6.043 Billion (approx)Focus on Projects in Identification phase & definition phase

PD Project Scope Break-down

>$6MIDN/ImpPhase

Strategic Projects IDN DEF Phase >$6MProject Project

JHT Rehabilitation/Redevelopment Study >50M DDM Spillway Gate Reliability Upgrade

Projects (Portfolio D)

Small Project Category Grouping

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In Conclusion

We appreciate the role the BC Construction Roundtable have with our tender process.

We need your input in our forward planning and want to hear fromyou!

We wish you all success in future tenders!

Thank You!!!

What does BC Hydro do?What does BC Hydro do?BC Hydro Quick FactsBC Hydro Core ValuesBC Hydros Current Asset MixHow do we Mitigate Risk?Proactive Engagement of MarketBulk Contracting StrategiesCurrent IssuesProcurement RisksThe Seven WondersBC Hydros Seven Strategic Projects1. Ruskin Dam & Powerhouse2. Mica Dam (U5&6) & Gas-Insulated Switchgear 3. John Hart Replacement4. Strathcona Dam 5. Bridge River 2 Units 5/6 6. GM Shrum Capacity Increase and Plant Rehabilitation7. Spillway Gate ProgramImmediate ProjectsStrategic Projects IDN DEF Phase >$6MProjects (Portfolio D)