1. BC Hydro Power Smart Presentation Standing Senate Committee on Energy, the Environment and Natural Resources “Kyoto Implementation” Ted Ferguson BC Hydro June 14th, 2003

2. BC Hydro Profile v3rd largest electric utility in Canada v1.6 million customers v52,000 GWh in 2002  94% hydro  5% natural gas v~20% growth in demand expected over next 10 years vAnnual emissions 1~3 Mt (potential for 5Mt/yr during Kyoto) vSignificant trade with US

3. Our Long Term Goal To be the leading sustainable energy company in North America sustainability We manage three bottom lines: economic, social and environmental

4. Greenhouse Gas Emissions: 1990-2010 Emissions if no action taken Actual emissions Forecast Mt

5. BC HydroCanadaUSAAlberta T/GWh Greenhouse Gas Intensity 20022010

6. Climate Change Initiatives vPower Smart: helping our customers save vResource Smart: getting more energy out of existing facilities vCleaner energy: acquiring GHG-free or low GHG-intensity energy from private producers  All 3 initiatives defer the need for new thermal generation in BC and avoid GHG and local air emissions

7. Emission Reduction: Power Smart vInitiated in 1989 vTargeted all customers with info and incentives vSpent $350 million over 10 years vEnergy savings to date worth ~$1 billion vCurrent savings = 2,600 GWh per year  5% reduction in domestic consumption vGHG reductions = 1.2 million tonnes per year vRenewed in 2001 vPlan to spend $600 million over next 10 years vBy 2010, targeting additional:  3,500 GWh per year of energy savings  5% reduction in domestic consumption  1.3 million tonnes per year of GHG reductions vMost aggressive program in Canada

8. Customers: Power Smart vPower Smart renewed in 2001  The business climate today supports doing more rather than less Demand Side Management programs.  It is an important piece of the resource acquisition strategy for BC Hydro vWe have set aggressive targets  3,500 GWh per year of energy savings  35% of energy required to meet load growth in next 10 years  applications for incentives representing 500 GWh made by customers in response to competitive calls vPlan to invest $600 million over 10 years  It makes business sense  It delivers value to our customers

9. Highland Valley Copper Incentive Request  Amount Approved: $882,000  Estimated Energy Savings: 20 GWh  Estimated Install Cost: $2.9M Project Details  Extend 42 inch reclaim water pipeline Levelized Cost  0.65 cents per kWh Norske - Debarker Incentive Request  Amount Approved: $500,000  Estimated Energy Savings: 10 GWh  Estimated Install Cost: $1.3M Project Details  Woodroom mechanical barker installation Levelized Cost  0.72 cents per kWh Power Smart - Industrial Incentive Examples

10. Power Smart - Industrial Customers vLoad Displacement Example Weyerhaeuser Incentive Request  Amount Approved: $18M  Estimated Energy Savings: 155 GWh  Estimated Install Cost: $28M Project Details  hog fueled turbogenerator Levelized Cost  1.5 cents per kWh

11. Power Smart - Customers vLED traffic lights  90% energy savings  41 GWh per year from 3,500 traffic lights  BC Hydro pays 100% of replacement cost, with municipality repaying 50% over 5 years from savings  95% of intersections Province- wide are scheduled for replacement  City of Vancouver savings:  7 GWh per year  $250k electricity costs  $110k maintenance costs

12. Power Smart - Residential vVancouver Island Compact Fluorescent Light (CFL) program  In the Greater Victoria area, 55% (over 60,000) of residential households participated in the CFL program over a 2 month period  results: over 126,000 CFLs distributed

13. Power Smart Examples e.Points vearned by customers improving their energy efficiency by 5% or more vcan be redeemed for further Power Smart improvements, thereby generating additional savings

14. Suppliers: Current Energy Calls vWe expect to meet the voluntary 50% clean energy target  Demand growth net of Power Smart is estimated at 6500 GWh per year by 2012  Clean energy target is 3250 GWh per year by 2012 vWe expect to meet the target through a combination of:  980 GWh/year from 2001 Green call to Independent Power Producers  800 GWh/year from 2002 Customer Based Generation call  800 GWh/year from 2002 Green call to Independent Power Producers  1200 GWh/year through Resource Smart efficiency improvements at existing BC Hydro facilities

15. Adjustments to Bid Prices for Green Power: for ranking purposes only Bid Price ($ / MWh) Adjusted Bid Price ($ / MWh) (for bid comparison only) Premium paid to reflect positive environmental and social attributes of project. Also reflects BC Hydro’s commitment to satisfy 50% of load growth with Clean Energy with any surpluses being available to sell as a premium product in the domestic or export markets (Green Power Certificates). Green Adjustment to reflect differing values of acquired energy to BC Hydro from a planning perspective: dispatchable, firm or non-firm At IPP’s option, provides relief from liquidated damages associated with non-delivery due to natural resource variability (e.g. hydrology, wind). Natural Resource Variability Premium paid to reflect the net reduction in GHG emissions per unit of energy produced and sold to BC Hydro - an effective means of mitigating BC Hydro’s future GHG liabilities. GHG Offsets Three separate adjustments provided in the ‘Generator Interconnection Preliminary Study’ to reflect the point of delivery of the contracted energy relative to the load centres, and the associated: 1. Transmission capacity impacts / constraints, 2. Line losses, and 3. Impact of interconnection costs borne by BC Hydro. Location

16. Emissions Trading vBC Hydro expects to be a buyer in a Kyoto framework vTrading system needs to be liquid, and targets need to be set equitably vEfforts on conservation and green need to be incorporated in either the targets or emission credits. vIssues around double-counting in the electricity sector need to be resolved so as to provide the proper signal for more renewable energy and energy efficiency

17. Tradeable Energy Efficiency and Green Certificates vBC Hydro already selling Green Power Certificates  a national system of tradeable renewable energy certificates could be beneficial vEnergy efficiency certificates - representing I MWh of energy savings, could be traded to encourage efficiency.  already used in UK and Italy

18. For Further Information: ted.ferguson@bchydro.com 604-528-3116 www.bchydro.com