Reliability in British Columbia Lori Ann Boychuk BCUC Commissioner WECC Annual Meeting April 20, 2006 San Diego

BC’s Energy Plan “Energy for our Future: A Plan for BC” November, 2002 Electric Reliability and Partial Industry Restructuring Four cornerstones: Low electricity rates and public ownership of BC Hydro Secure, Reliable Supply More Private Sector Opportunities Environmental Responsibility and no nuclear power sources High reliability and energy security will be maintained through well- functioning natural gas markets and coordinated electricity planning (Policy Action #7). BC Transmission Corporation (BCTC) created as an independent entity to manage BC Hydro’s core transmission assets. BC Utilities Commission (BCUC) to have continued and expanded regulatory oversight of supply, transmission and distribution.

British Columbia’s Electrical System Industry structure: Generation: BC Hydro, FortisBC, IPPs Distribution: BC Hydro, FortisBC, municipal systems Transmission: BC Transmission Corp., FortisBC, independents Company ownership: BC Hydro - BC provincial government FortisBC - investor-owned IPPs - investor-owned BCTC - BC provincial government with separate board, management and regulation from BC Hydro

Regulatory Framework Provincial: BC Ministry of Energy, Mines and Petroleum Resources - sets policy framework BC Utilities Commission - Provincial Regulatory Agency with primary regulatory oversight for reliability under the Utilities Commission Act Set fair, just and reasonable utility rates Ensure safe, adequate and secure operations Review resource plans Review power purchase agreements Set standards for utilities and monitor performance Approve capital plans and CPCNs for B.C. facilities Federal: National Energy Board - Federal Regulatory Agency Issue export permits or licences Conduct market monitoring Issue permits or certificates for international power lines

Criteria & Reliability B.C. Reliability Framework BCUC -Regulatory Oversight BC Hydro Transmission System Management -BCTC -FortisBC Independent Generation & Other Utilities Generation Facility Management Distribution Facility Management NERC/WECC Reliability Planning Standards, Operating Criteria & Reliability Monitoring

Reliability Management in British Columbia: Current State BC has embraced and complied with reliability standards through WECC and predecessor organizations for over 30 years. Mechanism: Reliability Management System (RMS) and Reliability Criteria (RC) Agreements – voluntary contracts between WECC and regulated BC entities – approved by the BCUC. RC Agreement, elements: Reliability criteria Data submission requirements Sanction measures Compliance determination procedures Dispute resolution procedures BCUC statutory authority over reliability measures for public utilities Determine and set standards, including reliability standards Consider complaints, conduct inquiries and order improved service by BC entities

Reliability Management in British Columbia: Current State Industry reliability practices (NERC/WECC) endorsed by the BCUC, through decisions on capital plan applications, CPCN applications and complaints related to service quality. Implementation through regulated utilities, notably BCTC Interconnection agreements with generators Transmission service agreements Tariffs

ERO Recognition in Canada - what NERC is seeking NERC reliability standards made mandatory and enforceable Backstop for compliance and enforcement efforts of NERC and Regional Entities Assurance for collection of a fair allocation of NERC’s reasonable costs in carrying out its programs CAMPUT Key Topics Meeting Ottawa, March 29, 2006 Ontario Energy Board

ERO Recognition in Canadian Jurisdictions: British Columbia Mandatory Standards BCUC authority under UCA to determine and set standards, including reliability standards, for regulated utilities, i.e. BCTC, FortisBC. No statutory authority to “recognize” the ERO/RE or to delegate standard setting to another entity. Compliance and Enforcement BCUC responsibility and authority to impose sanctions. Penalty provisions under the UCA. No statutory authority to delegate responsibility to any other entity. Need to work with ERO and RE to build on existing successful relationships. ERO/RE Costs Continue the current WECC scheme; utilities include WECC-related costs in rates applications for BCUC consideration. No BCUC authority to approve ERO/RE budgets.

NERC Recognition in Canadian Jurisdictions: British Columbia NERC October 27, 2005 request to initiate discussions BC/NERC Meeting in Vancouver on January 10, 2006 NERC filed with BCUC “Notice of Filing” as the ERO April 4, 2006 Continue to participate with the Canadian Council of Energy Ministers federal/provincial working group and with the Bilateral Group. Ongoing dialogue required with NERC and WECC. BC Energy Plan review underway; opportunity to reinforce BC policies and practices that contribute to enhancing the overall reliability of interconnected power system operations.