Investments to renew and upgrade Hydro dams and infrastructure

VANCOUVER – BC Hydro today filed a Revenue Requirements Application (RRA) for fiscal years 2009 and 2010 with the British Columbia Utilities Commission (BCUC), which includes a $3.4 billion capital program to renew and upgrade Hydro dams and electricity infrastructure.

The two-year rate application will include a rate increase which, for the majority of BC Hydro residential customers, will amount to $5 or less per month for each year of the application. Even with this increase, BC Hydro residential customers will continue to enjoy among the lowest electricity rates in all of North America.

"British Columbia's population and economy are growing at the same time that our infrastructure is aging," said Bob Elton, BC Hydro President and CEO. "For many years we have relied on the power generated from our heritage hydro assets built in the 1950s, '60s and '70s. These generating facilities are aging, with many of the components and systems nearing the end of their life. In order to ensure these facilities continue to provide a stable supply of electricity for British Columbians for generations to come, we need to reinvest in them to extend their life, adding capacity where possible."

Over the next two years alone, BC Hydro is proceeding with signifi cant capital work to renew and upgrade hydroelectric infrastructure at several facilities, including:

• Peace Canyon Generating Station
• G.M. Shrum Generating Station, located at the W.A.C. Bennett Dam
• Mica Generating Station
• Aberfeldie Generating Station
• Coquitlam Dam
• Revelstoke Generating Station, where BC Hydro is adding a fifth 500-megawatt turbine

In addition, BC Hydro will be making investments in the province's transmission system, through BC Transmission Corporation, and in the province's distribution system, which delivers power to homes and businesses. BC Hydro will also invest in new clean, renewable electricity sources through long-term purchase agreements and will enhance Demand Side Management Programs to work towards BC's Energy Plan goal of meeting 50 per cent of future incremental resource needs through conservation by 2020.

The proposed general rate increase will be 6.56 per cent in the first year and an additional 8.21 per cent in the second year. The RRA requires the approval of the BCUC and will be subject to a public hearing in the summer of 2008. With the approval of the BCUC, rate changes become effective on an interim basis on April 1, 2008.

BC Hydro is also proposing to lower the deferral account rate rider from 2 per cent to 0.5 per cent, which effectively reduces the cumulative rate impact to 13 per cent over the two years. The rate rider, which will continue to be listed on customer bills as a separate line item, is intended to pay down non-controllable costs such as additional market energy purchases required as a result of low water inflows. These are costs that BC Hydro has deferred over the last several years in order to avoid sudden rate fluctuations.

"We recognize that even a modest rate increase has an impact on our customers. However, customers can partially or even fully offset this increase by making some changes to the way they use electricity," added Elton. "BC Hydro is committed to helping our customers do just that. We have and will continue to expand and increase our Power Smart programs, tools and incentives to help British Columbians achieve their conservation goals."

Later in February, BC Hydro will also file a Residential Inclining Block (RIB) rate application as referenced in the 2008 Speech from the Throne. The RIB will create a two-step rate structure intended to encourage conservation among residential customers. This rate structure, which is subject to approval by the BCUC, will be revenue neutral to BC Hydro.

Backgrounder: Renewing BC Hydro's Electricity Infrastructure

Many of BC Hydro's existing power-generating facilities were built in the 1950s, 1960s and 1970s. Some were originally built as far back as 1922. While there have been upgrades over the years, these facilities are in need of refurbishment and expansion if they are to continue providing British Columbia with electricity.

To address this aging infrastructure, BC Hydro is investing signifi cant expenditures to maintain the reliability and expand the capacity of its generating facilities. BC Hydro is also funding a number of projects on the transmission system (through BC Transmission Corporation), which moves electricity from these generating facilities to B.C.'s major load centres, and on the distribution system that provides customers with the power they need.

Over the next two years alone, BC Hydro plans to invest $3.4 billion in the province's generation, transmission and distribution systems, and other facilities. Signifi cant capital work is being planned or contemplated at several generating stations and dams, including the Mica and W.A.C. Bennett dams, which are among the largest in the world.

Generating electricity to meet growing demand

The following are some of the major projects either underway or set to begin to help ensure that BC Hydro can meet the electricity needs of British Columbians:

Revelstoke Generating Station (Unit 5) – $280-$350 million

• The Revelstoke Generating Station began operation in 1984 with four generating units installed and two unit bays left empty for future generating units. BC Hydro last year received regulatory approval to install a fifth generating unit in one of these empty bays to provide approximately 500 megawatts of additional capacity – the equivalent of serving 40,000 additional homes at peak demand. Scheduled completion: F2011-F2012.

Peace Canyon Generating Station (Stator Replacement, Rotor Modification, Turbine Overhaul) – $141 million

• Peace Canyon's generators were originally commissioned in 1979/80 and at the time were among the largest ever built. New stators (the stationary part of an electric generator) are being installed and existing rotors modified to address design deficiencies, reduce the risk of forced outages and make the plant safer for employees. In addition, each turbine is being overhauled following a quarter century of continuous service to ensure continued reliability for years to come. Scheduled completion: F2010.

Gordon M. Shrum Generating Station (Stator Replacement) – $75-$91 million

• Located at the W.A.C. Bennett Dam, G.M. Shrum was the largest underground powerhouse in the world when it began generating electricity in 1968. Now, three stators that are at increased risk of failure due to the condition of the equipment are being replaced and a fourth unit may be replaced if necessary. Scheduled completion: F2010 (for the first three units).

Mica Generating Station (Stator Replacement) – $97 million

• The Mi ca Dam, located about 150 km north of the Revelstoke Dam, was completed in 1973 with the powerhouse completed three years later. The stator and rotor poles on each of the four units are being replaced to reduce the risk of forced outages due to core bolt failure and ensure reliability of supply. The project was initiated in fis cal 2007, with one unit scheduled for completion each year. Scheduled completion: F2010.

Aberfeldie Generating Station (Redevelopment) – $95 million

• The original Aberfeldie station, a five megawatt generating facility, was constructed in 1922 and parts of it re-built in 1953. The wood stave penstock and major generating equipment have reached their end of life and are no longer serviceable. BC Hydro is replacing the old facility with a 24 megawatt facility. The Aberfeldie facility is 35 km east of Cranbrook. Scheduled completion: F2009.

Coquitlam Dam (Seismic Improvement Project) – $66 million

• The existing Coquitlam Dam was originally completed in 1913. A new dam downstream of the existing dam is being constructed to meet current seismic standards and to reduce the risks to the lo cal population in the event of an earthquake. Scheduled completion: F2009.

Moving electricity from to our dams to our cities

Interior to Lower Mainland Transmission Project – $600 million

• A new 240 km, 500 kV transmission line is to be built by BC Transmission Corp. between the Nicola Substation near Merritt and the Meridian Substation in Coquitlam. The new transmission line will parallel an existing transmission line originally built in the early 1970s. It is expected to cost approximately $600 million and be completed in 2014.

Vancouver Island Transmission Reinforcement Project – $287 million

• Two 138 kV overhead transmission lines and submarine cable circuits connecting southern Vancouver Island to the mainland were built in 1956 and 1958. These are now being replaced and upgraded with a new 67 km, 230 kV transmission line and related infrastructure. It is expected to cost approximately $287 million and be completed in 2008/09.

Distribution: getting power to our homes and businesses

Substations and feeders

• B.C.'s economy and population continues to grow and that means an increase in BC Hydro's customer base. Substations are where a system of transformers, circuit breakers, and control and protective devices are used to reduce the voltage of electricity so that it can be more easily distributed to homes and businesses. Six new substations or redevelopments are scheduled for the next two years, in addition to many other substation upgrades.
• Over the next two years, BC Hydro is fore casting the addition of 85 feeders (which move electricity from substations to distribution transformers) after 54 feeders were added in the last two years.

Storm Response and Preparation

In the wake of the 2006/07 storm season, one of the worst on record, BC Hydro initiated a new five-year, $265 million program to improve system resiliency and outage communications. Among the projects: increasing vegetation management, under-grounding or realigning some portions of circuits, strengthening cables and wires, and providing additional automation and redundancy.