2005 Annual Report - Message from the President and CEO

Message from the President and CEO

Traditionally, our customers have had high expectations for BC Hydro in terms of performance – environmentally, socially and economically. This fiscal year we set that bar higher ourselves by formalizing a new purpose and a series of long-term goals that will influence our business moving forward. Our new purpose, “Reliable power, at low cost, for generations,” not only resonates with employees, but also solidly confirms our commitment to our customers.

Broken down, we know our customers value reliability and we want to be able to deliver that value. To this end, we intend to ensure that we keep reliability at today’s levels: to preserve our heritage and target our investments so that our maintenance and capital will be spent more on the places in the province where reliability most needs to be. In terms of assuring low cost, we will be fiscally prudent in how we operate and strive to maintain some of the lowest electricity rates in North America to maintain our competitive advantage. But low cost cannot always translate to “least” cost, either in terms of operations, rates or even reliability. We have to balance cost with reliability and our impacts on society and the environment. For generations is the realization that BC Hydro cannot make short-term decisions that don’t consider the long-term effects on the environment, on communities, on BC Hydro’s assets and on the business, and reflects our desire to be successful over the long term. In essence, it is our commitment to sustainability.

Our 15 long-term goals, outlined in further detail within this report, will be nothing short of a challenge for BC Hydro to achieve, as in many cases the goals are building on an already proud record of success. Employees have asked, “How do we determine what our next steps will be?”

While each of our goals is equal in importance, I would like to examine three in more detail to explain our thinking behind them. Take, for example, our goal of having no net incremental impact on the environment. This is the first time I know of that a Canadian company has tried do that. First we have to know and understand the impact we have on the environment. The next challenge will be to not increase it, to set targets for impact reduction over the next few years and put strategies in place to measure successes.

To achieve these results, the measures will be kept simple – reducing the amount of paper we use or the number of trees saved as a result. Encouraging employees to take ownership of their own waste reduction projects. For an overall impact, we will measure our ecological footprint – a measure of our draw on the earth’s resources measured in hectares. Regardless of the means, the most important thing is that we make progress.

Reliability of supply, which will lead us towards electrical self-sufficiency, is our goal to ensure that BC Hydro will have sufficient generation capability in B.C. to meet its load obligations in any given year. Short-term market purchases will still be made when the economics are favourable. This goal will ensure reliability of supply in B.C. is not dependent on policies and strategies of other jurisdictions. We have laid out both short and long-term strategies in order to accomplish this goal, ranging from progressing on two energy calls to maintain resource adequacy within 10 years to implementing the Integrated Electricity Plan and related long-term actions to help assure future needs are met.

A key challenge for the reliability of supply is building understanding with external stakeholders, customers, First Nations, suppliers and the British Columbia Utilities Commission as to the definition of this, and the time and way in which we achieve this goal. We plan to do this in an integrated way, through planning, which includes broad engagement and representation of our plans through the regulatory process.

And our goal to reduce electricity intensity, or the amount of electricity consumed per unit/per capita by a customer, is of particular importance as it is a key driver of electrical demand and growth. With the introduction of new personal technologies this electricity intensity is forecast to increase year over year. BC Hydro has placed a renewed emphasis on energy efficiency with as much as 35 to 40 per cent of growth over the next 10 years planned to be met through demand-side management. To achieve this goal, our target is an overall 15 to 20 per cent reduction in personal energy use by implementing programs that encourage behavioural changes to help customers in making energy efficiency a way of life and a way of doing business.

Simply, the road ahead will be challenging, but not without reward, as our destination is clear. Our executive and our employees are committed to our new purpose of providing “Reliable power, at low cost, for generations” and it also marks a promise to deliver and surpass customer expectations.