1. Reference: BC Hydro Evidence - Page 5, line 12

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1 1. Reference: BC Hydro Evidence - Page 5, line 12 C8-2 Preamble: The Evidence states: Transmission service is provided pursuant to a FERC Order 888-type tariff in British Columbia to ensure that BC Hydro's marketing subsidiary, Powerex, retains its FERC authorization to sell electricity in the United States at market-based rates, the fundamental purpose of which is to ensure that BC Hydro's ratepayers enjoy the maximum benefit of BC Hydro's generating and storage facilities Please confirm that Order 888-tariffs are to provide open and non-discriminatory access to transmission in BC. If such cannot be confirmed, please explain the purpose of the tariffs Please confirm that establishment of open access tariffs is to permit access to transmission by entities who may compete with BC Hydro or its affiliates. If such cannot be confirmed please explain Please confirm that establishment of open access tariffs may result in some loss of benefits to BC Hydro s ratepayers compared to a situation where no open access to BC s transmission network was provided and no entities had an opportunity to compete in BC with BC Hydro or its affiliates. If such cannot be confirmed please explain Please confirm that establishment of open access tariffs may result in some gains of trading benefits by BC Hydro s trading affiliate compared to a situation where no open access to transmission networks in other jurisdictions was provided and BC Hydro s affiliate had no opportunity to trade in those jurisdictions. If such cannot be confirmed please explain As FERC clarifies, corrects or modifies its Open Access tariff, please advise if the spirit and intent of the referenced statement would indicate that the clarifications, corrections and modifications should be adopted in B.C Please confirm that the open-access reciprocity inherent in the reference would be lost if B.C. elects to depart from the open access tariff or any clarifications, corrections or modifications of the tariff adopted in the U.S. If such cannot be confirmed, please explain. Page 1

2 2. Reference: BC Hydro Evidence - Page 5, line 16 Preamble: The Evidence states: Indeed, BCTC is obliged to provide services under a transmission tariff that maintains Powerex's U.S. market-based rate authorization Please indicate if, in BC Hydro s view, BCTC would be complying with its referenced obligation if BCTC elected to depart from a FERC endorsed open access tariff. Please provide reasons for BC Hydro s view Please indicate if, in BC Hydro s view, BCTC would be complying with its referenced obligation if BCTC elected to depart from clarifications, corrections and modifications of the Network Economy clauses such as the Idaho and MidAmerican dockets referred to on Page 16 of BC Hydro s evidence and the recent FERC Notice of Proposed Rulemaking dated May 19, 2006 which was attached to BCTC s response to AESO Please provide reasons for BC Hydro s view. Page 2

3 3. Reference: BC Hydro Evidence - Page 6, line 16 Preamble: The Evidence states: It was in part for the purpose of allowing such an allocation that the Transfer Pricing Agreement was created and entered into Please describe all purposes for which the Transfer Pricing Agreement ( TPA ) was created Please confirm that the TPA serves to separate transactions of BC Hydro, which are subject to regulatory oversight, from transactions of Powerex. If such cannot be confirmed, please explain Please describe how BC Hydro s transactions under the TPA, which are forecast to occur in an upcoming year, affect BC Hydro s forecast revenue requirement in the upcoming year Please describe how BC Hydro s transactions under the TPA affect BC Hydro s deferral accounts Please describe how Powerex s transactions under the TPA, which are forecast to occur in an upcoming year, affect BC Hydro s forecast revenue requirement in the upcoming year Please describe how Powerex s transactions under the TPA affect BC Hydro s deferral accounts. Page 3

4 4. Reference: BC Hydro Evidence - Page 6, line 6 Preamble: The Evidence states: From an operational perspective Powerex and certain of BC Hydro's generation staff work closely together with a view to maximizing, on an hour by hour basis, the value of BC Hydro's system storage and generating capability Please confirm that, if BC Hydro/Powerex determines that a Network Economy reservation is to be voluntarily relinquished which will cause BCTC to resell the relinquished capacity as Point-To-Point (PTP), that Powerex will be permitted to re-book the capacity as PTP and have an advantage in the competition for PTP services by having ahead-of-market knowledge of the pending relinquishment. If such cannot be confirmed, please explain In order to enable parties who, unlike Powerex, do not work closely together with BC Hydro s generation staff, to have an equal opportunity with Powerex to book non-firm PTP made available when a Network Economy reservation is voluntarily relinquished, would not some period of time (say 10 minutes) between: i. the posting of ATC changes due to Network Economy relinquishment; and ii. the ability to book non-firm PTP arising therefrom; be advisable or required to ensure open access to the ATC? If not, why not? Page 4

5 5. Reference: BC Hydro Evidence - Page 6, line 22 Preamble: The Evidence states: It is not necessary for the efficacy of the Transfer Pricing Agreement to distinguish those components of value on an hour-by-hour basis. Instead, it does what it is intended to do on an aggregate, end-of-year basis Please describe what, in this context, TPA is intended to do Please describe the methodology referred to as being done on an aggregate endof-year basis Please provide details of the aggregate end-of-year results for the last 2 years Please advise if aggregate, end-of-year transactions are the only use being made of the TPA. If there are other uses, please describe each use being made If the TPA has been amended to reflect transactions made on an aggregate endof-year basis, please provide the amendments. If the TPA has not been amended, please explain why not. Page 5

6 6. Reference BC Hydro Evidence Page 8, line 15 Preamble: The Evidence states: Moreover, both the Idaho and Mid-American cases BCTC relies on make it clear that it is the effect of Network Economy's priority while simultaneously exporting that is the concern Please confirm that in regard to the Idaho case, the following statement at Page 3 of FERC Docket IN indicates that improper use of native load priority is of concern whether or not there is simultaneous exports: It is axiomatic that the native load priority cannot be used to complete sales that are not necessary to serve native load. Transmission providers must take point-to-point service for their own off-system sales, which results in comparable treatment for both transmission provider and network customers Please confirm that in regard to the MidAmerican case, the following reference is made at Page 11 of FERC Docket PA indicates that improper use of native load priority is of concern whether or not there is simultaneous exports: First, it is fundamental that transmission customers are prohibited from using the native load priority to complete sales that are not necessary to serve native load Please confirm that in FERC s Notice of Proposed Rulemaking (Docket Nos. RM and RM dated May 19, 2006) at paragraph 428 indicates that proper use of native load priority is its focus whether or not there is simultaneous exports: While we reiterate that secondary network service may be used only to serve a network customer s designated network load, we do not intend to discourage market participants from identifying opportunities to profitably purchase for resale. We simply intend to ensure that all market participants compete on a comparable basis and use Point-topoint service to complete all segments of a purchase for resale offsystem If any of the above cannot be confirmed, please explain why. Page 6

7 7. Reference: BC Hydro Evidence, page 13, lines Preamble: The Evidence suggests the following reporting: non-firm schedules that were interrupted by a reduction in transmission capacity; non-firm schedules that were interrupted by higher priority PTP schedules; non-firm schedules that were interrupted by higher priority Network Economy schedules; non-firm schedules that were interrupted by higher priority Network Economy reservations; Network Economy schedules that were interrupted by a reduction in transmission capacity; and Network Economy schedules that were interrupted by higher priority PTP schedules Please confirm that BC Hydro s suggestions only focus on interrupted schedules of PTP service and do not include interrupted reservations of PTP service. If such cannot be confirmed please explain Please explain why BC Hydro s proposal does not include interrupted reservations of PTP services as well. Page 7

8 8. Reference: BC Hydro Evidence, page 13, line 20 Preamble: The Evidence states: Even with the overstated allocation of curtailments due to Network Economy reservations as a result of the previously mentioned flaws in BCTC s reporting, the data shows minimal interruptions to non-firm PTP reservations attributed to Network Economy reservations or schedules. For example, the data produced by BCTC for March 2006 to May 2006 show that there were curtailments of non-firm PTP reservations (Alberta to B.C.) attributed to Network Economy in only 45 of 2,208 hours. In only 3 of those hours were there any unused Network Economy reservations. In the same period for the U.S. to B.C. direction, in only 56 of 2,208 hours were PTP curtailments attributed to Network Economy, and in only 19 of those hours were there any unused Network Economy reservations Please advise of the source of the data for April and May since the referenced Information Responses by BCTC to BC Hydro only contains data for March Please provide BC Hydro s data and calculations which were made to determine the results referenced Please provide average Mid-C prices by week for the period referenced Please provide average export capacity from Alberta by week for the period Please provide BC Hydro s expectation of export activity from Alberta to Mid-C during any period with Mid-C prices and Alberta export capacity as they were in the referenced period Please confirm that the reference indicates a 99.9% hourly utilization for the AB to BC path ((2208-3)/2208 = 99.9%) and a 99.1% hourly utilization for the U.S. to B.C. direction (( )/2208 = 99.1%). If such cannot be confirmed, please explain Please provide percentage utilization for the two utilization measures proposed to be used by BCTC as utilization targets, at Page 16 of BCTC s Application Assuming BCTC s utilization target concept is adopted, what would be a reasonable target level in BC Hydro s opinion. Please explain the reasons for the level. Page 8

9 9. Reference 1: BC Hydro Evidence, page 14, lines Reference 2: BCTC Response to AESO Preamble: The Evidence in reference 1 states: BC Hydro believes that the proposed capacity test, described at paragraphs 48 to 54 of BCTC's application and in response to the Commission's IR 1.7.1, usefully serves the objective of ensuring, as BCTC states, "that energy delivered pursuant to Network Economy service is for delivery to Network Loads, rather than to third party sales". Thus, BC Hydro believes that application of the capacity test would ensure compliance with section 28.6 of BCTC's OATT (set out in full at paragraph 3 of BCTC's application). The capacity test as proposed by BCTC in its application is one of the portfolio of measures that BC Hydro proposes in section 4 below. Specifically BC Hydro believes that the proposed capacity test addresses entirely the "generation capacity" component of what BC Hydro believes ought to be the goal of the new tariff provisions. That is, the proposed capacity test would act to ensure that BC Hydro can not use the relative priority of Network Economy service to preferentially create generation capacity (that would not otherwise have been available) to facilitate a simultaneous export on the non-import tie. BCTC s response in reference 2 states The principle of the capacity test is that Network Customer may not use Network Economy at the same time it is making third party sales, unless it has adequate generation capacity to support exports independently of imports delivered using Network Economy Does BC Hydro agree with the principle as stated by BCTC? If not, why not? 9.2. Please confirm that one significant difference between the test BC Hydro supports and the revised test as outlined in BCTC s response to AESO is the consideration of simultaneous exports on the intertie being used for Network Economy imports (Intertie 2). If such cannot be confirmed, please explain Please confirm that the revised test (per AESO.BCTC-1.9.1) would require BC Hydro to have generating capacity to support exports on Intertie 2 whereas the test supported by BC Hydro would not. If such cannot be confirmed, please explain Please provide BC Hydro s reasons for proposing that there be no requirement for the Network Customer to have adequate generation capacity to support exports on Intertie 2 independently of imports delivered using Network Economy. Page 9

10 10. Reference: BCTC Response to AESO Revised Tariff Supplement BCTC 1 Section 4(b). Preamble: The reference regarding the revised Capacity Test states: Total Reserve Requirements means Contingency Reserve Requirements plus total spinning and nonspinning reserves for external Balancing Authorities; Please confirm that a difference between the Capacity Tests supported by BC Hydro at Page 14 of BC Hydro s evidence and the revised capacity test in the reference above is the consideration of reserve requirements which are over and above the Contingency Reserve Requirement. If such cannot be confirmed, please explain Please confirm that sales of operating reserves to external jurisdictions would be an example of a reserve for an external Balancing Authority. If such cannot be confirmed, please explain Please provide BC Hydro s reasons for proposing that there be no requirement for the Network Customer to have adequate generation capacity to support reserves for external Balancing Authorities independently of imports delivered using Network Economy. Page 10

11 11. Reference: BC Hydro Evidence, page 14, lines and page 15, lines 1-2 Preamble: The Evidence states: Rather than excluding generation units that in BCTC s view are not usually run to serve domestic load, the calculations of Excess Generation Capacity should include all generating units that are dispatchable by BC Hydro and are included in reserve calculations within the delivery hour X, regardless of their usual configuration Please list generation capacity that BC Hydro is proposing to include in Excess Generation Capacity calculations which would not be included in the capacity calculations proposed by BCTC Please provide a table with the Capacity Test calculations proposed by BC Hydro and show on the table BC Hydro s understanding of the calculations proposed by BCTC. Please explain the differences. Page 11

12 12. References: BC Hydro Evidence, page 15, line 13. Preamble: The Evidence states: BC Hydro fundamentally disagrees with the need for the proposed utilization test Please confirm that both firm PTP customers and non-firm PTP customers are charged the full tariff amount for PTP reservations regardless of utilization. If such cannot be confirmed, please explain Please confirm there is no incremental monetary charge to the Network Customer for either use or non-use of Network Economy reservations. If such cannot be confirmed, please explain Please confirm that unused firm PTP and non-firm PTP reservations are reposted for use by others. If such cannot be confirmed, please explain. Page 12

13 13. Reference: BC Hydro Evidence Page 16, line 1 Preamble: The Evidence states: There is, for example, no evidence from BCTC on the extent to which a 95% utilization target is something that BC Hydro can in fact control, given that its energy imports are subject to curtailments and interruptions in control areas outside of British Columbia and over which it has no control Please provide a listing of curtailments or interruptions of BC Hydro s imports as referenced, including MW amounts and time of interruption, over the most recent 12 month period. Page 13

14 14. Reference: BC Hydro Evidence Page 17, line 4. Preamble: The Evidence states: In particular, what the proposed economic test does is consider that certain BC Hydro imports that are allocated to the "trade account" under the Transfer Pricing Agreement (for reasons that have nothing to do with the day-to-day and hour-by-hour operational generation decisions of BC Hydro) are deemed not to be serving domestic load, despite BCTC's admission that they are in fact doing just that Please elaborate on such a decision to allocate BC Hydro imports to the trade account including: (i) why such a trade transaction would not be undertaken by Powerex; (ii) the timing of such a decision; and (iii) reasons why Please provide details including volumes, durations and dates of all trade account transactions by BC Hydro over the last 24 months. Page 14

15 15. Reference: BC Hydro Evidence Page 18, line 22. Preamble: The Evidence states: However, in the absence of simultaneous net exports, there can not be any doubt that when BC Hydro imports energy it is used to serve load - there simply is no other place for it to go. While it is true that serving load with imported energy allows BC Hydro to generate less, and therefore have more water available for either domestic or export purposes at a later time, it is simply not true that the import is "supporting a third party transaction". When such an import is made there is no corresponding export customer, export price or export transaction linked or identified with that import Please advise if Powerex arranges import transactions on the expectation that export opportunities are expected to subsequently develop? If not, why not? Please confirm that the TPA provides Powerex with an opportunity to effectively store energy imported in one period until Powerex exports the energy in another period. If such cannot be confirmed, please explain why the TPA does not provide the opportunity. Page 15

16 16. Reference: BC Hydro Evidence Page 19, line 12. Preamble: The Evidence states: Thus, a Powerex purchase in the U.S. at a price less than the Threshold Purchase Price could not lawfully be imported by BC Hydro under Network Economy service, while a Powerex purchase in the U.S. at a price greater than the Threshold Purchase Price could lawfully be imported by BC Hydro under Network Economy service (see BCTC's responses to BC Hydro's IRs and 1.2.1, respectively) Please provide details of the number of occurrences in the past 24 months, including amounts and prices, that Powerex purchased energy in the US for BC Hydro at prices less than the Threshold Purchase Price but greater than the Transfer Price Please provide details of the number of occurrences in the past 24 months, including amounts and prices, that Powerex purchased energy in the U.S. for BC Hydro at prices greater than the Threshold Purchase Price Please confirm that if Powerex purchased energy in the US for BC Hydro at prices less than the Threshold Purchase Price and less than the Transfer Price, BCTC s proposed Economic Test would permit use of Network Economy. If such cannot be confirmed, please explain Please provide a record of the Threshold Purchase Price and any volume limitations to purchases as specified by BC Hydro under the TPA over the past 24 months. Page 16

17 17. Reference: BC Hydro Evidence, page 21, line 12. Preamble: The Evidence states: Given that compliance with the economic test and the utilization test are not within BC Hydro s control and that Powerex s competitors are certain to benefit BC Hydro expects that it will sharply limit its use of Network Economy service if BCTC s proposal is accepted Please describe the nature and details of the types of transactions that BC Hydro is referring to when it states: BC Hydro expects it will sharply limit its use of Network Economy service. Page 17

18 18. Reference: BC Hydro Evidence Page 21, Line 18. Preamble: The Evidence states: Powerex will not engage in transactions where its margin is less than its incremental PTP charges; Please confirm that such would be the intention of all other entities using open access in B.C. If confirmation can not be given, please explain. Page 18

19 19. Reference: BC Hydro Evidence Page 22, Line 18. Preamble: The Evidence states BC Hydro is proposing: a tariff prohibition on the use by Powerex or BC Hydro of any transmission capacity on the export tie (Intertie 1) made available as a result of an interruption or curtailment of a third party's wheelthrough schedule arising as a result of BC Hydro's use of Network Economy on the import tie (Intertie 2); Please confirm that BC Hydro s proposed limitation on the Network Customer s use of export capacity as referenced is related to situations where a PTP customer has successfully acquired a PTP reservation and implemented an energy schedule for the reservation. If such cannot be confirmed, please explain Please confirm that BC Hydro s proposed limitation on use of export capacity by the Network Customer will in many cases leave the export capacity unused as PTP customers will be unable to use the export capacity when Network Economy imports use all available import capacity. If such cannot be confirmed, please explain Please confirm that BC Hydro s proposal would not create any limitation on the Network Customer if a PTP customer had successfully acquired a PTP reservation but had not implemented an energy schedule at the time the Network Customer used the Network Economy priority to reserve Network Economy and bump the PTP reservation. If such cannot be confirmed, please explain Please confirm that BC Hydro may reserve Network Economy ahead of the delivery period (hours ahead, days ahead or longer). If such cannot be confirmed, please explain Please confirm that under BC Hydro s proposal, BC Hydro would be permitted to make a Network Economy reservation for any purpose, including completing known or anticipated trade transactions. If such cannot be confirmed, please explain Please confirm that BC Hydro s proposal would not create any limitation on the Network Customer if Network Economy reservations filled the available import transmission capacity, such that PTP customers either refrained from placing reservations for PTP services or had reservations denied due to lack of available capacity. If such cannot be confirmed, please explain. Page 19

20 20. Reference: BC Hydro Evidence, page 23, lines Preamble: The Evidence states: BC Hydro proposes that BCTC curtails all unutilized Network Economy reservations at the end of the preschedule window prior to performing curtailments in the preschedule window. After the end of the preschedule curtailment process, Network Economy transmission capacity would then be immediately re-offered for purchase Please confirm that BC Hydro s scheduling proposal means that at 16:59:59 of the pre-schedule day, all Network Economy reservations, including hourly pre-schedule reservations for the next day that do not have energy schedules will be released for resale. If such cannot be confirmed, please explain Please provide examples illustrating curtailments of unutilized Monthly, Weekly, Daily and Hourly (preschedule) Network Economy Reservations as proposed by BC Hydro. Page 20

21 21. Reference: BC Hydro Evidence, page 23, lines Preamble: The Evidence states: BC Hydro believes that implementation of this proposal would eliminate the need entirely for artificial utilization targets because unused Network Economy reservations would no longer displace third party users of the system Please provide numerical examples which illustrate BC Hydro s scheduling proposals and also illustrate BC Hydro s understanding of BCTC s scheduling proposals. Page 21

22 22. Reference: BC Hydro Evidence, page 24, lines Preamble: The Evidence states: At paragraph 26 of its application BCTC states that such a proposal "would be an inefficient use of the transmission system, and could lead to higher energy prices in Alberta". In response BC Hydro says that efficiency of use, while an appropriate second order objective, should not be allowed to justify a transfer of the benefits of low cost imports between Alberta and British Columbia Presuming conditions are such that transmission users are seeking access to transmission, please confirm that BC Hydro agrees that leaving transmission capacity unused does not represent an efficient outcome. If such cannot be confirmed, please explain Presuming conditions are such that transmission users are seeking access to transmission, please confirm that BC Hydro agrees that leaving transmission capacity unused is contrary to open access to transmission. If such cannot be confirmed, please explain Presuming conditions are such that transmission users are seeking access to transmission, please confirm that if other jurisdictions using the Order 888 Tariffs permitted such inefficiencies, transmission capacity into BC could be left unused and ratepayers in BC would be adversely affected. If such cannot be confirmed, please explain. Page 22