1343 1 MANITOBA CLEAN ENVIRONMENT COMMISSION 2 3 VERBATIM TRANSCRIPT 4 Volume 6 5 6 Including List of Participants 7 8 9 10 Hearing 11 12 Wuskwatim Generation and Transmission Project 13 14 Presiding: 15 Gerard Lecuyer, Chair 16 Kathi Kinew 17 Harvey Nepinak 18 Robert Mayer 19 Terry Sargeant 20 21 Wednesday, March 10, 2004 22 Radisson Hotel 23 288 Portage Avenue 24 Winnipeg, Manitoba 25 1344 1 LIST OF PARTICIPANTS 2 3 Clean Environment Commission: 4 Gerard Lecuyer Chairman 5 Terry Sargeant Member 6 Harvey Nepinak Member 7 Kathi Avery Kinew Member 8 Doug Abra Counsel to Commission 9 Rory Grewar Staff 10 CEC Advisors: 11 Mel Falk 12 Dave Farlinger 13 Jack Scriven 14 Jim Sandison 15 Jean McClellan 16 Brent McLean 17 Kyla Gibson 18 19 Nisichawayasihk Cree Nation: 20 Chief Jerry Primrose 21 Elvis Thomas 22 Campbell MacInnes 23 Valerie Matthews Lemieux 24 25 1345 1 LIST OF PARTICIPANTS 2 3 Manitoba Conservation: 4 Larry Strachan 5 6 Manitoba Hydro/NCN: 7 Ed Wojczynski 8 Ken Adams 9 Carolyn Wray 10 Ron Mazur 11 Lloyd Kuczek 12 Cam Osler 13 Stuart Davies 14 David Hicks 15 George Rempel 16 David Cormie 17 Alex Flemming 18 Marvin Shaffer 19 20 Community Association of South Indian Lake: 21 Leslie Dysart 22 Merrell-Ann Phare 23 24 CAC/MSOS: 25 Byron Williams 1346 1 2 LIST OF PARTICIPANTS 3 4 Canadian Nature Federation/Manitoba Wildlands: 5 Eamon Murphy 6 Gaile Whelan Enns 7 Brian Hart 8 9 Time to Respect Earth's Ecosystems/Resource Conservation Man: 10 Peter Miller 11 Ralph Torrie 12 13 Trapline 18: 14 Greg McIvor 15 16 Presenters: 17 Billy Moore - Private 18 Bill Turner - MIPUG 19 Caroline Bruyere - Private 20 Grand Chief Margaret Swan - Southern Chiefs 21 22 23 24 25 1347 1 INDEX OF EXHIBITS 2 3 Number Page 4 5 MIPUG-1000: Statement of Bill 6 Turner, chair, MIPUG to Clean 7 Environment Commission regarding the 8 Wuskwatim Generation and Transmission 9 Projects application 1536 10 11 TREE/RCM 1000: Article from Winnipeg 12 Free Press 1357 13 14 TREE-RCM 1001: Table titled 15 "Wuskwatim Advancement With 16 Medium Low Forecast" 1425 17 18 MH-NCN 1006: Corrected version of 19 Exhibit 3.1 from Kraftur 20 Engineering 1424 21 22 CASIL-1002: Motion Re Compensation 1634 23 24 MH/NCN 1007: Wuskwatim Licenses, 25 Permits and Authorizations 1635 1348 1 2 3 INDEX OF UNDERTAKINGS 4 5 UNDERTAKING NO. PAGE 6 MH-34: Provide corrected version of 7 Exhibit 3.1 1428 8 MH-35: Provide revision to tables 9 and numbers based on 25-year economic life 1562 10 MH-36: Provide adjustment to show 11 impact in terms of IRR with 25-year economic 12 lifetime 1563 13 MH-37: Provide adjustment in report 14 reflecting 30 and 40 percent wind 15 capacity factor 1568 16 17 18 19 20 21 22 23 24 25 1349 1 WEDNESDAY, MARCH 10, 2004 2 Upon commencing at 1:06 p.m. 3 4 THE CHAIRMAN: Ladies and gentlemen, it's one 5 o'clock. Duty calls. Before we begin, I'll ask Mr. 6 Grewar to make an announcement. 7 MR. GREWAR: Just an announcement regarding 8 the hearing schedule. The Commission has determined 9 that it will be necessary and useful to add some 10 additional days onto the proceeding beyond that which 11 has been advertised. That will begin next Thursday 12 and Friday, the 18th and 19th of the month. The 13 Commission will convene on Thursday the 18th at 10:00 14 and run until approximately 6:00. And then on Friday 15 the 19th, the Commission will convene again at 10:00 16 a.m. and run until about 4:30. So there will be two 17 additional days next week, a full five day week. The 18 location is here exactly as you see it now. 19 Also, the Commission has determined to add one 20 additional day in April, the 8th of April which is 21 the third day of the reconvening, originally 22 advertised for closing statements, which may or may 23 not be the case, depending on the progress we make in 24 the proceedings till that time. And that will also 25 be here and it will also be beginning at 10:00 a.m. 1350 1 and going until likely 5:00 or 6:00. 2 That is the extent of the announcements with 3 respect to scheduling. 4 THE CHAIRMAN: All right. 5 MR. BEDFORD: Mr. Chair, Doug Bedford, counsel 6 for Manitoba Hydro. 7 THE CHAIRMAN: Yes, Mr. Bedford. 8 MR. BEDFORD: I have some grammatical 9 corrections to make to previous days transcripts. 10 Mr. Grewar has advised me that the Commission's 11 preference is that I read these in on the record so 12 that the public will all be aware of where the errors 13 have occurred. I anticipate this will only take me a 14 few minutes. 15 Page 74, line 6, the number 540 should be 16 5,400 megawatts. Page 349, line 11, the word 17 "update" should be "uptake". Page 506, reference to 18 "socks", S-O-C-K-S, should be capital letters S-O-X. 19 And the reference to "knocks", K-N-O-C-K-S, should be 20 capital letters N-O-X. Page 581, line 2, the word 21 "consumed" should be "assumed". Page 638, line 10, 22 201 should be 2001. Page 649, line 13, the two words 23 "inner guide" should be one word with a capital at 24 the beginning "Energuide". That's E-n-e-r-g-u-i-d-e. 25 Page 669, line 18, the word "edition" should be 1351 1 "addition", a-d-d-i-t-i-o-n. Page 671, lines 20 and 2 21, the names "limestone, kettle and long spruce" 3 should all be capitalized. Page 690, line 11, the 4 word "not" has been omitted. The sentence 5 accordingly should read, "It would not be our plan to 6 cancel a contract once committed." An obvious 7 correction for a lawyer to make. Page 692, line 9, 8 the words "shortly-time" should read "short lead 9 time". And page 770 at line 21, the words "who were 10 forced" should be "to in effect." 11 Thank you, Mr. Chair. Those are the 12 corrections we have noted to date. I'd also like to 13 take this opportunity to note that Mr. Marvin Shaffer 14 who Mr. Wojczynski indicated yesterday would be 15 attending today as a further witness to respond in 16 particular to questions that Ms. Whelan Enns was 17 posing has joined us and I leave it to Mr. Wojczynski 18 to introduce Mr. Shaffer somewhat more formally. And 19 I know Mr. Grewar will wish to swear Mr. Shaffer in. 20 Thank you. 21 MR. GREWAR: Sir, could you state your name 22 for the record. 23 MR. SHAFFER: Marvin Shaffer. 24 MR. GREWAR: Mr. Shaffer, are you aware that 25 it is an offence in Manitoba to knowingly mislead 1352 1 this Commission? 2 MR. SHAFFER: Yes. 3 MR. GREWAR: Do you promise to tell only the 4 truth in proceedings before this Commission? 5 MR. SHAFFER: Yes. 6 MR. GREWAR: Thank you. 7 8 (MARVIN SHAFFER: SWORN) 9 10 MR. WOJCZYNSKI: Mr. Chair, I'd just like to 11 explain that Mr. Shaffer is a consultant who prepared 12 two of the reports submitted to this process. 13 Earlier in the process, we had submitted a benefit 14 cost, social benefit cost evaluation of Wuskwatim. 15 It was part of the original filing, the supplemental 16 filing. And then more recently in the rebuttle, 17 there was a wind Wuskwatim social benefit cost 18 comparison. And we brought Mr. Shaffer forward at 19 the, in effect, the request from Canadian Nature 20 Federation yesterday that if they could do a full 21 cross-examination of that. And we said that if they 22 wanted, we could bring Mr. Shaffer in. So he is 23 here. 24 We thought that TREE might also want to take 25 that opportunity. We have him on the stand now. We 1353 1 are not proposing to bring forward any additional 2 evidence. It's merely to assist in the 3 cross-examination of what we already have put on the 4 record. 5 THE CHAIRMAN: Thank you. 6 MR. WOJCZYNSKI: We have one undertaking. Is 7 this a good time? 8 THE CHAIRMAN: Yes. 9 MR. WOJCZYNSKI: Ms. Wray has one. 10 MS. WRAY: Yes. This was in response to Mr. 11 Miller's question yesterday in regard to the status 12 of our study on inverted rates which was ordered by 13 the Public Utilities Board. Manitoba Hydro is 14 proceeding with that study. We don't have any 15 interim results or status report at present other 16 than the fact that adjustments are being made to load 17 research data to stratify between low use and high 18 use residential customers. That will be helpful to 19 us in determining what the impacts might be on their 20 particular load profiles. We do anticipate to have 21 the study completed and submitted by the December 22 31st, 2004 date. 23 THE CHAIRMAN: Thank you, Mrs. Wray. 24 MR. MAYER: Can I just ask a follow-up 25 question on that? 1354 1 Ms. Wray, the high loads and low loads, is 2 that to make the differentiation between those of you 3 who get to use natural gas and those of us who are 4 required to use electricity to heat our homes? 5 MS. WRAY: Well, I think it would pick up the 6 difference between heating customers and customers 7 who are fortunate to have gas in their areas. That's 8 true, sir. 9 MR. MAYER: Thank you. 10 MR. WOJCZYNSKI: Mr. Chair, we had a second 11 undertaking I had forgotten about. Mr. Adams has 12 one. 13 THE CHAIRMAN: Mr. Adams. 14 MR. ADAMS: Responding to questions posed by 15 CAC/MSOS yesterday. The undertaking numbers in the 16 transcript are numbers 27 and 28. When I was asked 17 what percentage of the total cost of the Wuskwatim 18 project are involved in the subcontracting and direct 19 restricted tenders process for the Aboriginal 20 communities. It's a little difficult to come up with 21 an absolute number for that because it does depend 22 very much on how successful the negotiation process 23 is. But as best as we can estimate it, it could be 24 as high as about 7 per cent of the total value of the 25 project would be this direct negotiation or a 1355 1 restricted tendering and it could be as low as about 2 4 per cent. So somewhere between 4 and 7 per cent is 3 what we're trying to direct negotiate. 4 MR. MAYER: Is that 4 or 7 per cent of both 5 the combined generation and transmission? 6 MR. ADAMS: It would be, yes. 7 MR. ABRA: Mr. Chairman, I wonder if I might 8 just raise. Before we proceed further, just 9 following up on the comment that Mr. Wojczynski made 10 related to is it Dr. Shaffer or Mr. Shaffer? 11 MR. SHAFFER: Dr. Shaffer. 12 MR. ABRA: With Dr. Shaffer's attendance. Is 13 it intended to have him sit on the EIS panel? And 14 the reason I ask is of course Ms. Whelan Enns and Mr. 15 Murphy finished their cross-examinations yesterday. 16 My understanding was that they stood a number of 17 questions down to ask in the EIS portion of the 18 cross-examination. And then I expect their 19 contemplation is that Dr. Shaffer will be in 20 attendance at that time so they can ask him the 21 questions they wanted to ask him yesterday. 22 MR. WOJCZYNSKI: Actually, Mr. Abra, perhaps 23 my recollection isn't accurate but I'm pretty sure it 24 is on this one at least, that they had asked if the 25 social benefit cost reports could be cross-examined 1356 1 in the environmental portion and we had said no. But 2 what we could do is make Mr. Shaffer available 3 tomorrow, meaning today, Wednesday. And so then they 4 said yes to that. 5 MR. ABRA: I don't think they are here. 6 MR. WOJCZYNSKI: I see there are some CNF 7 representatives but I don't know about for the 8 cross-examination. We can't speak to that. I 9 thought it was pretty clear actually on the record. 10 Okay, they are agreeing. 11 THE CHAIRMAN: That I believe is correct. 12 MR. ABRA: That's fine. Then I'm sorry, I 13 shouldn't have interfered. 14 THE CHAIRMAN: We'll have to see later on in 15 the day if that can be accommodated or not. We'll 16 see how things go with Mr. Miller and Mr. Torrie to 17 whom I will now pass the work. 18 MR. MILLER: First I would like to put on the 19 record, if there is no objection, the article that I 20 was referring to from memory about a home, 21 electrically heated home with $300 a year bills. And 22 I have given Mr. Grewar a number of copies. And I 23 should correct a couple of failures of my memory. 24 One is it did include a heat recovery 25 ventilator in the design. And the second is that the 1357 1 owner I don't think was a designer of the Red River 2 Campus but an instructor of an architect who 3 instructed in the Red River program. 4 MR. WOJCZYNSKI: We're glad you have a few 5 memory lapses so that when we do, we don't feel too 6 bad. 7 MR. MILLER: You're in good company. 8 MR. GREWAR: Is it the Commission's will to 9 have that put in as an exhibit? It's an article from 10 the Winnipeg Free Press and I have copies for 11 distribution. 12 THE CHAIRMAN: Yes, please. 13 MR. GREWAR: It would be Exhibit TREE/RCM 14 1000. 15 (EXHIBIT TREE/RCM 1000: Article from Winnipeg 16 Free Press) 17 18 MR. MILLER: And I think from this point, 19 we'll let Mr. Torrie take over. Possibly I'll have a 20 question or two at the end but we'll begin at least 21 with Mr. Torrie. 22 MR. TORRIE: Thank you very much. I know 23 everybody is wondering how long is this guy going to 24 be. And I've got six lines of questioning. They, 25 except for perhaps one, don't go down into the 1358 1 minutiae to quite the extent as some of the previous 2 cross-examiners. So I'm hoping that I can do them 3 with about two to three hours of time, just so people 4 in the room are wondering whether this is going to be 5 a marathon or very short. It's somewhere in between. 6 The first line of questioning is probably the 7 longest. So I'll have a better idea after I'm 8 finished that just how wrong I am with my forecast. 9 And that first line of questioning has to do with the 10 calculations that go on around this business of the 11 internal rate of return associated with the Wuskwatim 12 project. 13 And I was going to use my laptop computer to 14 project some of the pages from the evidence but I'm 15 going to try and minimize the use of it given that it 16 blasts its light right into the face of the 17 witnesses. And I went over and sat there and it's 18 not very comfortable when that happens so I will be 19 using it occasionally. But I have prepared handouts 20 for most of the material that I was going to use that 21 way. 22 And the first handout is taken from the Annex 23 6, I believe it is, in Volume 1 of the NFAAT evidence 24 that was tabled or completed last April. And in 25 particular, it consists of three pages, table A.13, 1359 1 table A.17 and figure A.12 from that Annex. This is 2 the one that goes into I believe the title is 3 "Background to Wuskwatim Economic Evaluation." And 4 it's not Annex 6, it's Attachment 6. There is an 5 important difference. I learned the hard way. 6 So I want to very briefly make sure, because 7 I'm not an economist either, that I understand the 8 nature of the argument and the calculations 9 underlying that argument that are contained in this 10 attachment. And to do that, I just picked these 11 three, each of which is an example of a particular 12 type of table or figure that appears in that annex. 13 And starting with Table A.13, we see, on the 14 left-hand side of the dark black line in the middle 15 of the page, a series of columns describing the 16 economics and the cash flows, if you like, of a 17 scenario in which Wuskwatim is brought into service 18 in 2020 which I understand is the so-called domestic 19 need date, at least the domestic need date that is 20 associated with the 2002 load forecast. And then on 21 the right-hand side of the dark black line, an 22 identical set of columns that present the same 23 information only this time for the cash flows 24 associated with bringing Wuskwatim in service in 25 2009, which we know is probably now 2010. That's not 1360 1 very important for the questions that I wanted to ask 2 about this table. 3 The first two or three questions are just 4 questions of clarification. And the first one would 5 be essentially when we're talking about the internal 6 rate of return calculation on the economics of 7 advancing Wuskwatim, we're talking about the internal 8 rate of return made up -- that results by looking at 9 the difference between building it for the domestic 10 need date, the cost and associated revenues of 11 building it for the domestic need date versus the 12 cost and associated revenues of building it for in 13 the case of this table 2009; is that right? 14 MR. WOJCZYNSKI: Yes. 15 MR. TORRIE: And by definition, the internal 16 rate of return of advancing Wuskwatim will always be, 17 in your evidence, the difference between building it 18 for an in-service date of 2009 versus building it for 19 whatever the domestic need date might be. 20 MR. WOJCZYNSKI: Yes. 21 MR. TORRIE: And that domestic need date in 22 Table A.13 is the year 2020, right? 23 MR. WOJCZYNSKI: Around there. In this case, 24 it was 2020. 25 MR. TORRIE: Give or take. 1361 1 MR. WOJCZYNSKI: As you said, the exact dates 2 aren't that critical, but yes. 3 MR. TORRIE: And what we see then when we look 4 at the details of this type of calculation is, first 5 of all, the capital costs of building it for 2020, of 6 course they occur later, and the capital costs of 7 building it for an in-service date of 2009 occurring 8 much sooner. And essentially, the net capital costs 9 of building the station for 2009 need date instead of 10 for the domestic need date is the present value of 11 the difference between those two numbers. 12 MR. WOJCZYNSKI: Essentially. 13 MR. TORRIE: Essentially. And it's more 14 expensive to build it now rather than later because 15 of the present valuing exercise, right? That's the 16 main reason why there's a real present value cost of 17 building it now instead of when it's needed for 18 Manitobans? 19 MR. WOJCZYNSKI: Yes. 20 MR. TORRIE: And presumably, the further out 21 in the future the domestic need date is, the greater 22 would be the difference between the capital cost of 23 building it for a 2009 inservice date versus the 24 capital cost of building it for the domestic need 25 date? 1362 1 MR. WOJCZYNSKI: You and I understand we're 2 talking on an NPV basis. And so on an NPV basis, the 3 answer is yeah. I just don't want anybody to think 4 that means the capital cost, what you and I might 5 call the base capital costs are reduced. The base 6 capital cost will be higher in the future than less. 7 MR. TORRIE: Don't assume too much -- 8 MR. WOJCZYNSKI: On an NPV basis, yes. 9 MR. TORRIE: Don't assume too much about what 10 I understand. So yeah, in other words, the greater 11 that difference between building it for 2009 and 12 building it for the domestic need date, the greater 13 that interval of time, the larger number of years 14 that the net present value discounting has to do its 15 thing; in other words, to reduce the present value of 16 building it in the future. 17 MR. WOJCZYNSKI: Yes. 18 MR. TORRIE: Okay. So that's the essentials 19 of why it costs more to build it sooner rather than 20 later. Balanced against that is the expectation that 21 there will be, because you're building it before it's 22 needed domestically, there will be export revenues 23 between now and the domestic need date? 24 MR. WOJCZYNSKI: Yes. 25 MR. TORRIE: And if we, as you do in this 1363 1 chart, take a stream of projected export revenues and 2 you do this for various prices, this one is the low 3 price, there's also a high price one and one in the 4 middle with the price about which we may not speak, 5 but over a range of scenarios, you project a series 6 of export revenues from the dam really and then 7 present value those to the present. And that becomes 8 the other side of this equation if you like. That's 9 the revenue that is there to offset the extra cost of 10 building it sooner than it's needed in Manitoba. 11 MR. WOJCZYNSKI: Yes, with the small 12 additional comment that it's not strictly just 13 exports. We do a full scale system simulation of the 14 full system operation imports, thermal, water 15 rentals, exports, imports, everything and so it's the 16 net of everything. But the export price is the 17 single largest element. 18 MR. TORRIE: Yes. 19 MR. WOJCZYNSKI: So to that degree, yes. 20 MR. TORRIE: I understand that. And keeping 21 to the spirit of focusing on essentials, though, you 22 would agree that if you look at the export revenue in 23 this table, it completely dominates the revenue side 24 of the equation. 25 MR. WOJCZYNSKI: Yes. 1364 1 MR. TORRIE: And that really is the essence, 2 the essential essence of your case for building this 3 dam sooner than it's needed is that you can make 4 enough money in export revenues to cover the extra 5 cost of building it now rather than later? 6 MR. WOJCZYNSKI: That's the primary driver. 7 Although as I said on day one, there are a number of 8 elements but that's the initial driver for it. 9 MR. TORRIE: Okay. I'm sorry if I'm going 10 over stuff that you guys all know like the back of 11 your hands by now but I wanted to make sure that I 12 was on solid ground in my understanding of how this 13 works. 14 Now I'm just seeing how far in my notes I've 15 already got which I haven't been referring to. All 16 right. 17 And then finally in this series of questions 18 about this aspect, the internal rate of return of 19 advancing Wuskwatim is that rate of return at which 20 the present value of those incremental costs is 21 exactly balanced by the present value of those 22 projected revenues? 23 MR. WOJCZYNSKI: Yes. 24 MR. TORRIE: And that's the number that in 25 this table that I have provided today is 8.5 per 1365 1 cent. I think it goes up over 12 per cent if you 2 assume a higher export price and you figure that it's 3 somewhere around 10 per cent at the price about which 4 we cannot speak? 5 MR. WOJCZYNSKI: Yes. 10.3 was the exact 6 number. 7 MR. TORRIE: 10.3. 8 MR. WOJCZYNSKI: Around 10, around 10. 9 MR. TORRIE: Yes. And if you look at the 10 second page of this three page handout, Table A.17 11 from Attachment 6, we actually see an illustration of 12 the present value costs that go along with the 13 scenario we've been describing, right? 14 MR. WOJCZYNSKI: Yes. 15 MR. TORRIE: Okay. And a picture of that is 16 represented on the third page, Figure A.12 where one 17 can see particularly in the bottom figure that the 18 whole exercise of the present value calculation 19 results in the net cost coming to zero at that point 20 where, I don't know what the word is, at that point 21 where you have defined the advancement window, which 22 in this case is by around 2020? 23 MR. WOJCZYNSKI: Yes. 24 MR. TORRIE: Okay. And I know, and this is 25 where my not being an economist probably really 1366 1 starts to show, but if you look at that picture on 2 page 3 and you see the way that the net costs 3 gradually approach zero at the end of the period, 4 and if you were to calculate the internal rate of 5 return for each year, one would obviously get a 6 negative number for the early years where the costs 7 were still greater than the revenue. And then you 8 would pass through a break-even point at some stage 9 and it would, by the end of the period by definition, 10 reach your calculated value of 10.3 per cent? 11 MR. WOJCZYNSKI: Yes. A small qualifier, in 12 case people are forgetting our discussion of IRR the 13 other day, built into the IRR, and let's just -- this 14 case it's 8.5 per cent, there's a profit factor 15 that's inherent in the 8.5 cents. It's the 16 difference between that and the 5.34 per cent which 17 is the real cost of borrowing. So that, call it 3 18 per cent, 3 per cent profit is already being realized 19 earlier than one might intuitively think from this. 20 So there's profit being accrued early on in the 21 process long before you get to the crossover point. 22 But as long as that's understood, yes. 23 MR. TORRIE: Okay. And if we can just use the 24 projecter for a few minutes, I just want to warn Mr. 25 Adams especially that you're about to get it right in 1367 1 the face if you don't move and the folks behind you 2 as well. 3 This is Figure 5.5 from the same volume we've 4 been discussing, only this time it's from chapter -- 5 MR. WOJCZYNSKI: Chapter 5. 6 MR. TORRIE: Chapter 5, of course, Figure 5.5. 7 And what we see here is a pictorial representation of 8 the energy year by year that would be available for 9 export assuming the basic forecast with existing 10 resources. And that gradually declines. And we see 11 the additional energy from Wuskwatim coming in on the 12 advancement schedule for the in-service date of 2009. 13 14 And then later on, you also have Gull in this 15 particular picture. I'm not so much interested in 16 that right now. 17 And then across the top, this line which is 18 called the estimated on-peak export market. And my 19 understanding is that as long as you're producing 20 electricity that's below this line, then you 21 anticipate being able to sell it for a much higher 22 price than you would be if it's above this line. 23 Would that be a fair way of summarizing the 24 importance of that line to you? 25 MR. WOJCZYNSKI: Generally, although 1368 1 unfortunately, it's also more complicated because 2 this is a weighted average. And if you look at the 3 range of those, if you had a low flow period, you'd 4 have much more room on the tie line than this. And 5 if you have a high flow period, you would have much 6 less room. 7 Obviously we can't put all 86 or 100 flow 8 conditions on here so what we've put in here -- one 9 moment, let me just -- 10 MR. TORRIE: That's the median. 11 MR. WOJCZYNSKI: Yes, I was just trying to 12 remember if it was median or average, we use both. 13 This is the median flow condition meaning 50 14 percentile probability lower or 50 percentile higher. 15 And the other complication is that this is an annual 16 average. You get monthly flows which are different 17 than annual. So for instance, even if this annual 18 one showed the tie line being full and you had median 19 flows in the winter, you'd still have room on the tie 20 line, you can get some good export value. So these 21 graphs are meant to give understanding. 22 MR. TORRIE: Of the essentials? 23 MR. WOJCZYNSKI: Of the essentials but they 24 aren't sufficient to analyze or fully understand the 25 economics. That's why you need the full scale 1369 1 sequence evaluations. 2 MR. TORRIE: Right, great. But the essential 3 case here is that one of the great advantages of this 4 outlook is that you anticipate being able to sell the 5 output of Wuskwatim into the higher priced market? 6 MR. WOJCZYNSKI: Yes. 7 MR. TORRIE: Okay. And if we look at another 8 figure from that same chapter, this one is the 9 alternative that you looked at, at least briefly, of 10 advancing Conawapa instead of Wuskwatim. This is 11 Figure 5.7, correct? 12 MR. WOJCZYNSKI: Yes. 13 MR. TORRIE: In fact, you can see some of the 14 explanations starting. If one were to read the text 15 around this, it refers to the fact that you are 16 getting energy above this line as being one of the 17 major reasons why you would reject this option even 18 though it's cheaper per kilowatt hour, if I 19 understand your levelized cost numbers, because it 20 would put you in a position where you have power that 21 you could -- would have more difficulty let's say and 22 would less frequently be able to sell into the high 23 price market? 24 MR. WOJCZYNSKI: Yes, but with the little 25 qualifier that our analyses had indicated, and it's 1370 1 in the original -- it's in the filing material 2 already, that even this situation that we're looking 3 at here where a good bit of Conawapa would be above 4 the line, Conawapa is still an economic plant. So 5 our IRR analysis, and I don't remember the exact 6 number, but it was something just under 10, somewhere 7 between 9 and 10 in the upper portion of that range. 8 MR. TORRIE: The IRR? 9 MR. WOJCZYNSKI: Of Conawapa. 10 MR. TORRIE: Long term or advancing it to this 11 date? 12 MR. WOJCZYNSKI: That would have been a 13 long-term economics. 14 MR. TORRIE: Yes? 15 MR. WOJCZYNSKI: But that the IRR of putting 16 in Conawapa versus not putting it in was still 17 something approaching 10 per cent and still economic. 18 MR. TORRIE: By when? 19 MR. WOJCZYNSKI: Well, that was a long-term 20 economic. That was putting in Conawapa as per the 21 date in this chart. 22 MR. TORRIE: So when would you achieve that 23 rate of return that you just said would be quite 24 positive? 25 MR. WOJCZYNSKI: That was putting in Conawapa 1371 1 in 2015. 2 MR. TORRIE: And when would you achieve the 3 positive rate of return? 4 MR. WOJCZYNSKI: When you do the IRR, it's for 5 the whole period of time. It's not that we achieve 6 it by a particular date, it's for the having it 7 versus not having it. 8 MR. TORRIE: What's the endpoint of that 9 period of time? 10 MR. WOJCZYNSKI: As per the charts that we're 11 looking at here, it's the same study period more or 12 less. It might be a year or two different, 2037. 13 MR. TORRIE: 2037, okay. But I mean there's 14 also one more of these which is the one for Gull 15 which is a smaller plant than Conawapa but it 16 exhibits the same type of pattern in the sense that 17 if you were to advance Gull, it puts you in a 18 situation where you have quite a lot of power above 19 the estimated on-peak export market line, correct? 20 MR. WOJCZYNSKI: Yes. 21 MR. TORRIE: And you can actually see the 22 explanation starting up underneath that figure. And 23 it's the only -- it's the argument that's emphasized, 24 would you agree, in your evidence for why you would 25 reject this as well as Conawapa over Wuskwatim, is 1372 1 that it puts you over this line? 2 MR. WOJCZYNSKI: I have a little bit of 3 discomfort with the use of the word "reject". We 4 found, as per the presentation and as per our 5 discussion earlier, Conawapa and Gull are still 6 attractive projects. It's just that Wuskwatim is 7 more attractive at this time for a number of reasons. 8 So "reject" isn't quite the right word I would use. 9 If we didn't have a Wuskwatim, the Gull and Conawapa 10 would still be attractive to be pursuing. 11 MR. TORRIE: Everything is attractive 12 basically, right? 13 MR. WOJCZYNSKI: No. 14 MR. TORRIE: DSM is attractive, Gull is 15 attractive, Conawapa is attractive, Wuskwatim is 16 attractive? 17 MR. WOJCZYNSKI: Nuclear is not attractive, 18 coal is not attractive, photovoltaic is not 19 attractive, bad hydro is not attractive, bad wind is 20 not attractive. There are bad and good options. 21 MR. TORRIE: Okay. So the choices are not 22 about rejecting or accepting, it's about deciding 23 what to do first? 24 MR. WOJCZYNSKI: It's deciding what should be 25 in their portfolio at the front end and we modify the 1373 1 portfolios as we go along. So as we said, our 2 portfolio, we attempt to have an economically and 3 environmentally diverse portfolio so that's why we 4 have DSM supply-side measures, supply-side efficiency 5 measures, consumer measures, efficiency DSM, 6 PowerSmart and new Hydro. So we've got four legs to 7 our portfolio. 8 MR. TORRIE: Let me put it this way. Why not 9 build Conawapa first? 10 MR. WOJCZYNSKI: Because we have concluded 11 that Wuskwatim is more attractive at this time. 12 MR. TORRIE: Why? 13 MR. WOJCZYNSKI: Because (A) Wuskwatim is 14 something we can do earlier. (B), It has got, with 15 the current information, a somewhat higher rate of 16 return. It's a smaller project. So while we have 17 expertise in the company and expertise around, it's 18 always -- we haven't built a project for ten years so 19 it's easier to build up the bench strength and have a 20 large amount of expertise. And it's very 21 environmentally benign and doesn't preclude doing the 22 other options. 23 MR. TORRIE: Why is it the fact that it's 24 smaller an advantage? 25 MR. WOJCZYNSKI: Sorry? 1374 1 MR. TORRIE: Why is the fact that it's smaller 2 than the others an advantage? 3 MR. WOJCZYNSKI: There are a couple of 4 different features. One is that it is slightly -- it 5 is somewhat less risky than the others, say Gull or 6 Conawapa. 7 MR. TORRIE: What risk are you referring to? 8 MR. WOJCZYNSKI: We are referring to -- the 9 single biggest risk we are referring to is on the 10 export market. 11 MR. TORRIE: Can you elaborate? 12 MR. WOJCZYNSKI: And filling up the -- and 13 space on the tie lines. 14 MR. TORRIE: So it's related to those figures 15 we were just looking at, isn't it? 16 MR. WOJCZYNSKI: Yes, which was the purpose of 17 those figures, yes. 18 MR. TORRIE: Right. Okay. Now -- 19 MR. MAYER: Just while we're waiting, it seems 20 to me I recall you also mentioning one of the reasons 21 Wuskwatim could move ahead faster is you didn't have 22 to worry about the more complicated issue of 23 Bipole-III whereas you would with the other two? 24 MR. WOJCZYNSKI: Yes, that's right. I was 25 lumping that in with saying that we could do 1375 1 Wuskwatim earlier. And also we were saying from an 2 environmental point of view Wuskwatim was preferable 3 and from a risk point of view. But in all three of 4 those cases, the fact that Wuskwatim would have to 5 utilize the relatively small amount of AC 6 transmission and not require say a Bipole-III is a 7 factor in all three of those. That's absolutely 8 correct. 9 MR. TORRIE: Now, I do have, just in the 10 interest of not having to go back to the projecter, a 11 handout which is a representation of Figure 5.5 that 12 we had up a moment ago showing the energy available 13 for export under median flow conditions, the energy 14 from Wuskwatim when it's advanced to 2009, the 15 estimated on-peak export market line at that 10,500 16 GWh a year level and an arrow that points to the 17 domestic need date. 18 And we don't need to dwell on this figure. I 19 guess I'm just seeking -- I've left Gull out of the 20 representation here. Other than that, it was simply 21 an attempt to get something that wouldn't require the 22 projecter being up there that shows the basic 23 parameters that this figure illustrates. 24 And my question, just to get confirmation, is 25 that when we're talking about the economics of 1376 1 advancing Wuskwatim, we're talking about the 2 economics of the costs and revenues that occur up 3 until the domestic need date; is that right? I mean 4 we've already I think established it. 5 MR. WOJCZYNSKI: More or less. 6 MR. TORRIE: In what way is it not right? 7 MR. WOJCZYNSKI: We are trying to stay to the 8 fundamentals. 9 MR. TORRIE: Okay. That's fair. 10 MR. WOJCZYNSKI: You get residual values and 11 ongoing manifests. 12 MR. TORRIE: Does the residual value figure 13 into the internal rate of return of Wuskwatim 14 advancement? 15 MR. WOJCZYNSKI: Yes. It shows up in that 16 chart you had earlier. I didn't think you wanted to 17 go into that level of detail but I'm not sure that 18 it's critical to our discussion but we could 19 certainly explore it if you want. 20 MR. TORRIE: No. If you don't think it's 21 critical to our discussion. 22 MR. WOJCZYNSKI: No. 23 MR. TORRIE: Then who am I to disagree. What 24 I'd like to do then is show you another picture again 25 based on your evidence. I haven't introduced any new 1377 1 numbers. I've just drawn a picture of the medium low 2 forecast scenario version of Figure 5.5 if you like. 3 MR. WOJCZYNSKI: While that's being 4 distributed, the other element that is worth talking 5 about, and I briefly referred to it but for the sake 6 of simplicity didn't expand on it but I'm thinking 7 maybe I should have noted it a bit more strongly. We 8 had been undertaking extensive investigations and 9 studies into Wuskwatim including the environmental 10 studies we've got here including all the work that's 11 been done on the engineering and planning side and 12 the consultations and in this process itself. Those 13 are what we call sunk costs. And the sunk costs are 14 appreciable and the majority of those would have to 15 be repeated if we were to then restart with a later 16 Wuskwatim. So that is an important factor in those 17 cash flows that we talked about earlier. So that has 18 some significance as well. 19 MR. TORRIE: Thank you. And I should explain 20 and it's probably obvious to you. What I've done 21 here is I've moved the existing resources line from 22 Figure 5.5 up by changing the number from the basic 23 2002 forecast to the medium low forecast. And that 24 is the reason why the existing resources after 25 meeting the medium low load forecast are greater in 1378 1 this figure than in the previous one. 2 And I recognize you can't vouch for the 3 precise correctness of my representation but would 4 you agree that this -- I mean I know you've done this 5 type of calculation in your sensitivity analyses or 6 you must have, that that line represents 7 approximately what would happen to the existing 8 resources line under the medium low load forecast? 9 MR. WOJCZYNSKI: It looks roughly right and 10 subject to check, I'll accept that, yeah. 11 MR. TORRIE: And I've added Wuskwatim 12 unchanged from the previous graph, still coming on 13 line in 2009 on top of that. And the domestic need 14 date, and I think you're on the record at least in 15 the interrogatory responses on this, under the medium 16 low load forecast is the year 2035 roughly; is that 17 correct? 18 MR. WOJCZYNSKI: Roughly, yes. 19 MR. TORRIE: Okay. So when you say as you 20 have in response, or let me first of all confirm that 21 when you say that even with the medium low load 22 forecast, and that's all that's here by the way, I 23 haven't added any DSM, it's the medium low load 24 forecast and that's the only difference between this 25 and the previous chart. That when you assume that, 1379 1 that the internal rate of return of advancing 2 Wuskwatim really is hardly affected. It still comes 3 out close to 10 per cent, correct? 4 MR. WOJCZYNSKI: Just before we get into that, 5 I just want to double-check that, I believe you did 6 this but I will just double-check with you that in 7 this new figure, you still left in all the DSM that 8 we're already doing. 9 MR. TORRIE: All the DSM. 10 MR. WOJCZYNSKI: And supply side, that's all 11 still in there. 12 MR. TORRIE: That's all there. 13 MR. WOJCZYNSKI: And your question was there's 14 only a very small drop in the IRR in this scenario 15 for Wuskwatim, a drop of 0.3 per cent. 16 MR. TORRIE: And you're confirming that? 17 MR. WOJCZYNSKI: I am confirming that. 18 MR. TORRIE: But in this case, the domestic 19 need date and, therefore, the calculation of internal 20 rate of return of advancement goes out to the year 21 2035, correct? 22 MR. WOJCZYNSKI: The advancement period goes 23 out that far, yes. 24 MR. TORRIE: So when you say that the internal 25 rate of return, which under your basic forecast, the 1380 1 internal rate of return of advancement is 10 per cent 2 roughly and you achieve that by 2020, in the medium 3 low load forecast case, yeah, you still achieve 10 4 per cent but by 2035, right? 5 MR. WOJCZYNSKI: One might get the impression 6 that means that there are losses or that there aren't 7 profits long before that and that isn't the case. 8 The IRR is for the overall period of time. But as we 9 all know, when you are starting to use discount rates 10 around 10 per cent, what happens in the latter years 11 is not that important and it's more the earlier 12 years. So the present value technique, you know. So 13 what happens in those last few years is relatively 14 unimportant. 15 The main benefits and costs that count are 16 what happened in the earlier years. So it's not 17 particularly important whether it was 2035 or 2030 or 18 2025, it's the earlier years that are more important. 19 MR. TORRIE: Well, under this scenario, by the 20 year 2020, for example, would you have achieved a 21 positive rate of return? 22 MR. WOJCZYNSKI: I'm sorry, could you repeat 23 that? 24 MR. TORRIE: What you're basically saying then 25 is that, if I understand you, is that much sooner 1381 1 than 2035, you would already be approaching the 10 2 per cent rate of return? 3 MR. WOJCZYNSKI: What I'm saying is much 4 earlier than 2035 or 2033, we would be getting 5 profits out of Wuskwatim in a positive return. 6 MR. TORRIE: Do you know when that would 7 happen? 8 MR. WOJCZYNSKI: No. 9 MR. TORRIE: Would you agree with me it's 10 unlikely it would happen before the year 2020 given 11 that the output in this scenario of Wuskwatim until 12 the year 2020 is above that 10,500 GWh line? 13 MR. WOJCZYNSKI: I wouldn't necessarily agree 14 with you on that, no. 15 MR. TORRIE: Well, you did the sensitivity 16 study. You must have run these numbers? 17 MR. WOJCZYNSKI: Yes, but we don't do a 18 break-even analysis of when we start crossing over in 19 an IRR. That's not something that would be typically 20 done in this kind of a situation. 21 MR. TORRIE: But you're the one that just 22 introduced that as an argument. The point you are 23 making now is that in spite of the fact that the 24 internal rate of return gets calculated out to the 25 year 2035 instead of out to the year 2020, you would 1382 1 break even and make money much sooner than that. Now 2 is it important or not? 3 MR. WOJCZYNSKI: It is important but you're 4 the one who brought the issue up in the first place, 5 sir. You are the one who said it would take that 6 long and I was merely responding to your point. 7 MR. TORRIE: Right. And in responding to my 8 point, you said that you need to realize that you 9 would start making money much sooner than that and 10 I'm asking you how much sooner? 11 MR. WOJCZYNSKI: We would be making money 12 relatively soon after the inservice date but I can't 13 tell you exactly what that would be but we are 14 confident it would be much earlier than 2033. 15 MR. TORRIE: So you basically can't answer the 16 question? 17 MR. WOJCZYNSKI: If such a question had been 18 asked earlier, we could have tried to see if we could 19 answer that but not at this moment on the spot like 20 that, no. 21 MR. TORRIE: But would the answer not be 22 included right in the calculations you did in order 23 to come to the conclusion that the internal rate of 24 return of Wuskwatim advancement, even under a medium 25 low forecast scenario, would still be 10 per cent? 1383 1 MR. WOJCZYNSKI: Whenever you do a sequence 2 evaluation, you use an NPV. The NPV inherently is 3 the whole time period of the study. So it's a with 4 and without the whole time period. You don't do a 5 year by year evaluation where you calculate what's 6 happening in each year, taking some capital cost 7 contribution or something. You take an NPV of the 8 entire set of cash flow streams and you don't get a 9 year by year comparison of the kind that I think 10 you're thinking about. 11 MR. TORRIE: Okay. So the important thing is 12 where it ends up at the end of the period? 13 MR. WOJCZYNSKI: The overall economics from 14 the point of view of Manitoba is what's being looked 15 at here. 16 MR. TORRIE: And it ends up that's still 17 around 10 per cent? 18 MR. WOJCZYNSKI: It's around 10 per cent. 19 MR. TORRIE: And the end of the period is 20 2035? 21 MR. WOJCZYNSKI: Yes. 22 MR. TORRIE: So now you're saying it doesn't 23 really matter what happens sooner, it's what matters 24 over the whole period? 25 MR. WOJCZYNSKI: In the end, it's the whole 1384 1 period of time that matters. But what happens in 2 earlier years is important too, of course. 3 MR. TORRIE: But in doing this calculation, 4 you do have a year to year projection of export 5 revenues. We saw that in the earlier tables that we 6 were looking at, correct? 7 MR. WOJCZYNSKI: Yes. 8 MR. TORRIE: So let's just focus on the period 9 in this five times DSM you sometimes call it or 10 medium low forecast scenario and let's focus on the 11 period up until the year 2020. During which time at 12 least some, and in the early years, the majority of 13 the output of Wuskwatim is above the estimated 14 on-peak export market. 15 What did you assume with respect to the export 16 revenues for that power in doing your calculations of 17 the internal rate of return from this scenario? 18 MR. WOJCZYNSKI: The assumptions we used are 19 the ones we talked about earlier for export prices. 20 We would do a simulation with and without Wuskwatim 21 and applied those. And we had on-peak and off-peak 22 prices and long-term firm and it is the kind of 23 information we talked about earlier. 24 MR. TORRIE: Okay. So the prices that you 25 would have assumed for the power being sold above the 1385 1 line so to speak in this scenario would, in general, 2 with all of the caveats and the details that we're 3 trying to avoid, if we can, would in general be lower 4 than the prices that you get when you're selling into 5 the on-peak market, correct? 6 MR. WOJCZYNSKI: You have to remember that one 7 of the things we can do with having a dependable 8 supply like Wuskwatim is convert unfirm exports into 9 firm exports. So the thing you start looking at is 10 what happens under low flow conditions. So even 11 though a chart like this shows having -- and this is 12 at median conditions. You'll recall I started our 13 discussion by saying it's more complicated than just 14 looking at the median conditions. There's low flows, 15 there's median flows and there's high flows. 16 Under the low flows, meaning the drought, 17 you've got the additional dependable energy from 18 Wuskwatim is quite valuable to our system because it 19 allows us to make long-term firm exports earlier than 20 the simple chart would indicate. 21 MR. TORRIE: So are you telling me that when 22 you did the sensitivity analysis for the medium low 23 forecast case, you did a full simulation? 24 MR. WOJCZYNSKI: Yes, an absolute full 25 simulation. And that's what those tables represent. 1386 1 Those tables represent the results of those kind of 2 simulations. 3 MR. TORRIE: And would it be correct to say 4 though that one of the differences between that 5 simulation and the simulation under the basic 6 forecast, which was Figure 5.5 in your evidence, that 7 one of the differences between those simulations is 8 that the average price, especially in that period 9 between 2010 and 2020, would be lower in this 10 scenario than it was in the basic forecast scenario? 11 MR. WOJCZYNSKI: Overall, yes. 12 MR. TORRIE: And can you give me any sense of 13 how much lower? 14 MR. WOJCZYNSKI: No. 15 MR. TORRIE: Is that because it's secret or 16 because you wouldn't be able to? 17 MR. WOJCZYNSKI: It's because it's a detail 18 that we would have to go back and look at the work we 19 had done. And it's not that that's secret. You're 20 talking about the low here and I don't have -- that's 21 not the kind of information I would have at my 22 fingertips or readily available. And no one had 23 asked for it in the interrogatory process either. 24 MR. TORRIE: What would you expect would 25 happen -- what would be the rate impacts of not just 1387 1 this scenario but also the ones in your evidence for 2 Gull and Conawapa if you are in a situation where you 3 are producing significant amounts of power that are 4 greater than your annual capability to sell into the 5 on-peak export market? Would there be rate impacts 6 from getting into that area for Manitobans? 7 MR. WOJCZYNSKI: First of all, there's two 8 comments. One is that what we're looking at here is 9 a risk scenario. So this isn't our primary analysis, 10 this is the risk. So the medium low load forecast is 11 a risk scenario, it's not the base case. So this is 12 an already into, from the Wuskwatim economics point 13 of view, the risk we are assessing. So I wouldn't 14 expect it to do as well as our best forecast. 15 The second thing is, in terms of your 16 question, the rate, the financial analysis would not 17 look as positive under a medium low than it would a 18 base case. That's almost a corollary of the fact 19 that the economics aren't quite as good. 20 MR. TORRIE: I don't understand your answer in 21 terms of whether or not there would be rate impacts 22 which was my question. 23 MR. WOJCZYNSKI: I'm saying that there are 24 rate impacts positive with having Wuskwatim advanced 25 in the base case and there would be -- in the long 1388 1 run, there would be positive rate impacts with 2 Wuskwatim. Likely they wouldn't be as early if 3 you're under a medium low as if you're in another 4 case. But in terms of a long-term picture -- well, 5 in terms of your answer, I don't have the specifics 6 for that. 7 MR. TORRIE: And what do you think would 8 happen to the hurdle rate or the threshold value for 9 DSM in a scenario where you had significant amounts 10 of power above the annual capability to sell into the 11 on-peak export market? 12 MR. WOJCZYNSKI: If we had surplus, much 13 larger amounts of surplus, our marginal value would 14 be somewhat lower and that would apply to anything 15 we're doing, new supply, SSE, DSM or wind. 16 MR. TORRIE: But if I'm correct, and I was 17 going to come to this later but now might be an 18 appropriate time, this 6.15 cent per kilowatt hour 19 number which the DSM consultants were given to use as 20 a threshold for determining whether or not a 21 particular option is economic, if I understand where 22 that comes from, you simulate your system with an 23 increment of flat demand. You offset it with a 5/16 24 export sale and you look at the difference as a way 25 of determining the value that it takes to let's say 1389 1 shape the DSM for that export sale? 2 MR. WOJCZYNSKI: So what we did was we took a 3 sequence evaluation with and without the 5 by 16 and 4 we determined the difference in the overall sequence 5 benefits similar to the tables that we showed 6 earlier. 7 MR. TORRIE: The starting point then is 8 evaluation of the 5/16 export sale that offsets the 9 sequence in which you have an increment of flat 10 demand? 11 MR. WOJCZYNSKI: Yes. 12 MR. TORRIE: And presumably in any of these 13 scenarios, the Gull and Conawapa ones that we looked 14 at earlier or the low forecast risk scenario, as you 15 describe it, if you get into a situation where the 16 amount of power that you have available for export is 17 greater than the estimated on-peak or the limited 18 constrained on-peak export market, the value that you 19 would be starting with would presumably go down 20 starting within that calculation where you are coming 21 up with the value of DSM? 22 MR. WOJCZYNSKI: The more surplus we have in 23 our system and the less room in the tie line, yes, 24 the less value any incremental resource would have. 25 I should point out that we're at what we would call, 1390 1 there's something called a price volume curve into 2 the market. The more you sell into the market, the 3 price generally will be lower. But at the volumes 4 we're talking about here, there's a very flat or 5 relatively, yeah, flat price volume curve. So the 6 more you sell into the market, there is very little 7 impact on the price. 8 MR. TORRIE: Am I correct that in the 9 calculation of this 6.15 cent value that the 10 consultants were given to work with, there is an 11 implicit assumption that DSM has got a flat capacity 12 factor or a flat load duration curve? 13 MR. WOJCZYNSKI: We assumed a flat marginal, a 14 flat amount of load reduction. But in our system, 15 unlike the thermal systems, whether it's flat or 16 peaky isn't as big a difference because we use the 17 shaping capability of our system to reshape the 18 energy to make it more valuable. So that's accounted 19 for already in our analysis. 20 MR. TORRIE: Yes, but some DSM, especially in 21 the commercial and institutional sector, has almost 22 exactly the same shape as the 5/16 export market; is 23 that not true? 24 MR. WOJCZYNSKI: I can't speak for what the 25 individual DSM programs do. 1391 1 MR. TORRIE: Well, why do you think there's a 2 5/16 export market in the first place? Where does it 3 come from? 4 MR. WOJCZYNSKI: As I said, I know where that 5 comes from but that isn't necessarily correlated to 6 the individual DSM programs as the industrial sector. 7 So we can ask someone else to talk about the shape of 8 the individual programs, sir. 9 MR. TORRIE: I'm not talking about the 10 industrial sector, I'm talking about the commercial 11 building sector. 12 MR. WOJCZYNSKI: Or commercial. 13 MR. TORRIE: And isn't it true, or perhaps you 14 don't know, that the demand for electricity that 15 corresponds to the five day a week, 16 hour a day 16 period is largely dominated by the demand for 17 commercial and institutional facilities? 18 MR. WOJCZYNSKI: Yeah. And if the program had 19 the same shape as that particular load shape, then it 20 wouldn't actually have that same shape in terms of 21 being able to provide a reduction. 22 MR. TORRIE: But your consultants were only 23 given one number. No matter what the load shape of 24 the DSM that they were considering was, they were 25 just given one number to determine the economic -- 1392 1 whether it was economic or not? 2 MR. WOJCZYNSKI: The analysis that we're 3 talking about, you're talking about the DSM Potential 4 Study? 5 MR. TORRIE: Yes. 6 MR. WOJCZYNSKI: That analysis used an all in 7 energy price and because it was being used for 8 screening purposes, it didn't differentiate between 9 different load shapes. 10 MR. TORRIE: Excuse me just a minute. Because 11 it was being used for screening purposes, it didn't 12 differentiate between load shapes? Isn't that 13 exactly when in a screening process where you would 14 want to make sure that you were differentiating 15 between a DSM action that delivers 5/16 savings 16 versus a DSM action that delivers flat savings? 17 MR. WOJCZYNSKI: I was just going to go on to 18 explain that. 19 MR. TORRIE: Go ahead. 20 MR. WOJCZYNSKI: Thank you. So our system is 21 energy constrained not capacity constrained. It's 22 different than most other systems. So what's 23 important in our system is how much dependable energy 24 we have that is under drought and how much energy we 25 have on the average. The capacity element is 1393 1 relatively minor in the overall picture. 2 So in some cases, if you had a capacity factor 3 which was better or worse than using a straight 4 energy value could be a little bit positive or 5 negative in terms of the screening. But as I was 6 also going to go on to explain, when we go and do the 7 final adoption of DSM programs into our long-term 8 resource plan, there will be much more detailed 9 evaluations undertaken. And in those detailed 10 evaluations, there will be a lot of program design 11 work and a lot of more information including load 12 shapes and including capacity factors and seasonal 13 factors. And those would be incorporated into the 14 overall analysis. 15 And one of the intents of our analysis is that 16 we would look at a range of DSM program levels so 17 that we can use the latest information and detailed 18 evaluations to determine an appropriate level. 19 MR. TORRIE: Yes. But by the time you get to 20 program design, long ago, measures that might have 21 been included in the assessment of economic potential 22 had been left out of the cut because you had a number 23 that was charging something like a 5/16 DSM measure 24 with shaping costs that it will not incur? 25 MR. WOJCZYNSKI: As I said, we're energy 1394 1 constrained, and by far, the vast majority of any 2 impact benefits are included by using that energy 3 value. 4 MR. TORRIE: So it's your expert testimony 5 that in screening DSM options, it's appropriate to 6 use a single cost of saved electricity threshold in 7 this system? 8 MR. WOJCZYNSKI: My expert testimony is that 9 the energy value captures the large majority of the 10 benefit. 11 MR. TORRIE: And you don't think that there's 12 a significant differential benefit between DSM that 13 delivers savings in the 5/16 period versus DSM that 14 doesn't have that load shape? 15 MR. WOJCZYNSKI: There would be some 16 difference. 17 MR. TORRIE: But not significant? 18 MR. WOJCZYNSKI: Because we're not capacity 19 constrained, it would not be a large factor, no. The 20 shaping already treats DSM. As a matter of fact 21 through our analysis, we're giving the flat DSM. DSM 22 measures are the flat load shape. We're giving them 23 the benefit, in effect, of being able to move into 24 the on-peak. 25 So in effect, what we're doing is taking those 1395 1 DSM programs which are on-peak intensive which is I 2 think what you're concerned about and we're giving 3 them full value. And then those DSM measures which 4 are flat and are not on-peak intensive, we're giving 5 them the extra value from our system of being able to 6 put it into the on-peak. 7 So contrary to your supposition that we are 8 undervaluing the on-peak DSM measures, what we're 9 doing is providing additional value to the off-peak 10 DSM measures. 11 MR. TORRIE: Why would you do that? 12 MR. WOJCZYNSKI: Because that's the nature of 13 our system, sir. 14 MR. TORRIE: Did you also do the simulation 15 under different export price assumptions? Let me put 16 it this way. Let me rephrase that. Is the 6.15 cent 17 per kilowatt hour figure based on the exercise that 18 you described earlier start from the assumption that 19 that 5/16 sale that drives the analysis is occurring 20 at the expected export price? 21 MR. WOJCZYNSKI: Yes. 22 MR. TORRIE: And did you also run this for the 23 low and high scenarios? 24 MR. WOJCZYNSKI: We ran it for four export 25 price scenarios which is what we have said earlier is 1396 1 what we do. We use a reference case and three 2 others. 3 MR. TORRIE: Now, in the case of DSM -- 4 MR. WOJCZYNSKI: And that's how we evaluate 5 Wuskwatim and all our other resources. So we use 6 exactly the same techniques, exactly the same export 7 price forecasts, exactly the other same kind of 8 parameters and thus on an even-handed basis, compare 9 the DSM and the other kinds of supply SSE and 10 alternative energy like wind. 11 MR. TORRIE: And if you had used the high 12 export or when you used the high export price to do 13 the same calculation that led to the 6.15 cent per 14 kilowatt hour number, where did it come out? 15 MR. WOJCZYNSKI: We used the expected and got 16 the -- averaged it out into the 6.15 cent number. 17 MR. TORRIE: But did you also calculate what 18 the 6.15 number would be if you assumed the high 19 export price? 20 MR. WOJCZYNSKI: We did it using the four 21 scenarios and came up with an average for the sake of 22 the screening exercise. When we do the final program 23 evaluation, we would be looking just like we did in 24 our explanation for Wuskwatim, then we would look at 25 the individual levels. But in the end, having the 1397 1 four individual levels of export price doesn't give 2 you a different answer than having the problistic 3 weighted one because it's an average in the end. 4 And another way to put it is that if we'd have 5 used the high, we would have had something higher 6 than 6.15 and then we would also have had to have 7 used a low and it would be less than 6.15 and the 8 average would have been 6.15. 9 MR. TORRIE: Right. But you went to the 10 trouble in analysing Wuskwatim to show the numbers in 11 your evidence for both low and high export price ends 12 of the range. But in the DSM analysis, we just work 13 with averages; is that correct? 14 MR. WOJCZYNSKI: Looking at the alternatives, 15 this process is twofold. One is to look at the need 16 for Wuskwatim. In other words, is Wuskwatim economic 17 and profitable? That in itself is a major component. 18 The other major component is Wuskwatim compared to 19 the alternatives. 20 When comparing Wuskwatim to the alternatives, 21 as per the terms of reference for the CEC review of 22 this, that will be done at a screening level. 23 Naturally, when you're looking at the primary 24 alternative and looking at the need for part as 25 opposed to alternative part, then you have to go into 1398 1 more detail. That is what we did, sir. 2 MR. TORRIE: We're not quite connecting here. 3 Let me try a different approach to this same issue. 4 If it turns out that the export prices do follow the 5 high scenario, and some of the testimony I've heard 6 here in the last two days makes me think that that's 7 the general, at least informal sense in Manitoba 8 Hydro, would it not be true that if you had designed 9 your DSM programs based on looking for economic 10 measures according to that average price, that you 11 would have come up with a smaller number than if you 12 had designed them based on assuming the high export 13 price? 14 MR. WOJCZYNSKI: You're absolutely right. 15 MR. TORRIE: And this is one of the ways that 16 the high-priced scenario risk is different for DSM 17 than it is for supply. If the high export price 18 comes to pass for Wuskwatim, you'll make more money 19 than you would at the average. But if the high 20 export price comes to pass, you will have undershot 21 your DSM targets? 22 MR. WOJCZYNSKI: No, because what we're going 23 to be doing when we're at decision time, and we 24 review that decision periodically, is we do a 25 full-scale sequence evaluation. That's not what 1399 1 we're here for today. We are not, in this CEC 2 process, evaluating exactly how much DSM Manitoba 3 Hydro is going to undertake in the future. What 4 we're doing is a screening comparison. 5 The next stage in the process for looking at 6 DSM is, as we've explained earlier, is that we take 7 the screening results. Then Mr. Kuczek's area of the 8 company is going to develop various program packages 9 that are going to be high amounts and low amounts and 10 medium amounts of DSM and we're going to evaluate 11 those in an integrated resource planning kind of 12 approach where we look at various export rate levels 13 in more detail and we use all the latest information. 14 And then that's updated periodically. And if it 15 turns out over time that our export price forecast 16 increases, then we would update our amount of DSM 17 that we're looking at. 18 And anyways, you were mentioning that if we 19 went to the high forecast, then we'd have more DSM 20 screened in. At the same time, if you looked at the 21 low, you'd have less DSM. So at this time, using the 22 expected for the initial screening is appropriate, 23 and then as I said over time, we'll do more detailed 24 work on it. 25 You know the same can be said about supply 1400 1 measures. If we used only the high, we'd be looking 2 at a lot of other supply measures as well. 3 MR. TORRIE: Well, I think for those who are 4 keeping track, I have now completed two of my six 5 lines so I think we're not doing too badly. And the 6 remaining ones are probably shorter. 7 I'd like to ask you some questions about the 8 load forecasts. Is that you as well, Mr. Wojczynski? 9 MR. WOJCZYNSKI: No. The person responsible 10 for end-use, whether it's DSM or load forecast, 11 because they're interrelated, we do those together. 12 MR. TORRIE: I am sorry, so who should I be 13 directing these to? 14 MR. KUCZEK: That would be me. 15 MR. TORRIE: Mr. Kuczek, thank you. Correct 16 me if my impression is right but when I look at the 17 load forecast that Manitoba Hydro does, I see 18 basically three separate forecasts in that document. 19 One for the -- I mean I know there's some small 20 things like street lights and so on, but essentially, 21 most of the future projected demand is comprised of 22 the residential forecast and the general service 23 forecast, correct? 24 MR. KUCZEK: Yes. 25 MR. TORRIE: And the general service forecast 1401 1 in turn breaks down into a forecast of the top 2 customer demand and a forecast of what you call the 3 mass market demand? 4 MR. KUCZEK: Yes. 5 MR. TORRIE: Okay. So that's what I meant 6 when I said there's sort of three somewhat separate 7 exercises that are embodied in the load forecast; 8 would you agree? 9 MR. KUCZEK: Yes. 10 MR. TORRIE: Okay. Because I want to talk 11 about each of those three in turn. And I know that 12 there was a reference earlier in these proceedings. 13 Let's start with the residential forecast. There was 14 a reference earlier in these proceedings to end-use 15 modelling in the forecasting exercise. And am I 16 right that the end-use modelling that you do in your 17 forecasting exercise is actually restricted to the 18 residential forecast? 19 MR. KUCZEK: Yes. 20 MR. TORRIE: Now, why do you employ end-use 21 modelling in the residential forecast and not in 22 other parts of the forecast? Or maybe I could put it 23 more simply, why do you use end-use modelling in the 24 residential forecast? 25 MR. KUCZEK: We use it in the residential 1402 1 sector because we have the more detailed information. 2 Our database in that area is better right now. 3 MR. TORRIE: And why is your database better 4 in residential than it is in other sectors? 5 MR. KUCZEK: It's the result of the work we've 6 undertaken so far to acquire that database. 7 MR. TORRIE: Okay. And I feel like I'm in a 8 bit of a circle here. My question is why you use 9 end-use modelling in the residential sector and you 10 say, well, because we have the data and we have the 11 data because I guess we decided to have it and we're 12 back where we started. 13 Why did you decide to develop that kind of 14 capability there and not elsewhere? 15 MR. KUCZEK: We're considering developing in 16 the commercial side. At this point in time where 17 we're at with our load forecasting capability, it's 18 again an initiative that has continuously been 19 improved over the years, going back to 1970. And 20 today, we have a load forecast that uses end-use data 21 on the residential side and we haven't developed that 22 on the commercial side and we're looking at that. 23 MR. TORRIE: Okay. I have to ask this. I was 24 reading the Winnipeg Free Press and I'm not sure, 25 somebody was quoted as saying, 1403 1 "Well, for that to be true, every 2 forecaster in North America would have 3 to be wrong." 4 I'm not sure if it was someone on the panel that said 5 that. 6 MR. MAYER: Mr. Wojczynski said that. 7 MR. TORRIE: I have to ask this just as a bit 8 of a comic relief, Mr. Wojczynski. When did you 9 first get involved in the electric utility business? 10 I know you said you worked in the gas industry at one 11 time. 12 MR. WOJCZYNSKI: 1987. 13 MR. TORRIE: So maybe you don't remember this 14 or maybe you're too young to remember this, I never 15 thought I'd start saying that, but do you know that 16 there actually was a time, at least within my living 17 memory, when every forecaster in North America really 18 was wrong? 19 MR. WOJCZYNSKI: I'm very familiar with that. 20 MR. TORRIE: Okay. So you didn't mean to 21 imply when you said that every forecaster in North 22 America would have to be wrong for that to be true, 23 that that was something that could never happen? 24 MR. WOJCZYNSKI: Absolutely not. I was just 25 speaking of what was likely and unlikely. I also 1404 1 made a comment that was in the newspaper the day 2 earlier, I believe it was, that we can't not take 3 actions because of uncertainty. Life goes on and we 4 have to make decisions whether we're companies or 5 organizations. 6 MR. TORRIE: Yes, that's very nice. Why was 7 it that every forecaster was wrong in the 1970s? And 8 I'm asking that as sort of a technical question. I'm 9 not sure if Mr. Kuczek would like to address it or 10 both of you. But what was it in the mathematics of 11 forecasting that got so badly wrong at that time? 12 Let's provide a bit more of a framework if I may. 13 MR. WOJCZYNSKI: Can we ask you if you're 14 talking about energy price forecasting or are you 15 talking about load forecasting? 16 MR. TORRIE: I'm talking about electric load 17 forecasting. 18 MR. KUCZEK: What was the question? 19 MR. TORRIE: Let me back up and approach this 20 because this is actually getting away from comic 21 relief and into something a little bit more serious. 22 Setting aside the end-use modelling in the 23 residential sector, the forecast does employ the use 24 of econometrics, correct? 25 MR. KUCZEK: Correct. 1405 1 MR. TORRIE: And econometric forecasting 2 basically takes, as its inputs, things like forecasts 3 of GDP and forecasts of future population and 4 combines those with assumptions about the 5 relationship between those things, those two things 6 in particular, and the demand for electricity. 7 Is that sort of it, in a nutshell, the 8 essentials of it? 9 MR. KUCZEK: In general, yes. 10 MR. TORRIE: So for a forecast to go wrong in 11 the broadest terms, it has to be wrong in one or both 12 of those two ways. Either the inputs that the 13 forecasters are being given from the economic 14 forecasters on how much population growth there's 15 going to be or in how much GDP there's going to be, 16 either those have to be wrong or their assumptions 17 about the relationships between population and 18 economic growth and electricity have to be wrong. I 19 mean would you agree with that? That's sort of a 20 tautology. 21 MR. KUCZEK: You're asking a general question. 22 If you're basing your forecast on a formula and if 23 your formula is incorrect or the actual numbers that 24 you're using for coefficient, so are the independent 25 variables, clearly the result of that calculation is 1406 1 going to be wrong if the inputs are wrong. 2 MR. TORRIE: So which of those really was the 3 main reason why every forecaster in North America was 4 wrong in the 1970s? 5 MR. KUCZEK: I really can't speak for the 6 forecaster in the 1970s. 7 MR. TORRIE: I'm not asking you to speak for 8 them, I am asking you to talk about what they 9 produced. Looking back now with the advantage of 10 hindsight and the ability, which I presume you do all 11 the time, to analyze what makes good forecasts and 12 bad forecasts, why were the forecasts of the 1970s so 13 badly wrong? Were the economic growth projections 14 wrong or were the assumed relations between 15 electricity growth and economic growth wrong? Or do 16 you not know? It's fine if you don't know. I just 17 thought it would be interesting if you happen to 18 know? 19 MR. KUCZEK: You're asking me about something 20 that I really wasn't involved in back then. I do 21 believe that they used exponential relationships and 22 expected the load growth to continue to grow at that 23 rate. 24 MR. TORRIE: Let's go back to your forecasts. 25 MR. MAYER: That's right. We'd all like to 1407 1 know. 2 MR. TORRIE: I can give you my opinion but not 3 today. 4 MR. MAYER: This is opinion then, this isn't 5 fact. I thought the way you were asking the question 6 that this was a factual question that could be 7 answered either this or that. 8 MR. TORRIE: Oh, sure. 9 MR. MAYER: Can it? 10 MR. TORRIE: Yes. 11 MR. MAYER: Was his answer right? 12 MR. TORRIE: He didn't answer. He didn't 13 know. 14 MR. MAYER: Oh, okay. I thought I heard the 15 answer that it was the second of the two that you -- 16 MR. TORRIE: No, I don't think so. 17 MR. KUCZEK: I said I believe that -- well, 18 clearly I don't know for certain because I wasn't 19 involved and I don't know what the forecasts were and 20 I don't know what the equations were and I don't know 21 the methodologies used by all the forecasters back 22 then so I couldn't answer the question and be able to 23 give you an accurate answer. So the real answer is I 24 don't know. 25 I understand or I believe that they used 1408 1 exponential load forecasting formulas. But again, I 2 really don't know because I didn't see those 3 formulas. And we're talking about a lot of 4 forecasters so it's a rather difficult question to 5 answer. 6 MR. ADAMS: Unfortunately, I do remember and 7 fortunately I wasn't responsible for it. But I 8 think, from my recollection, and it is a little bit 9 clouded by hindsight, certainly in Manitoba and most 10 other Canadian utilities, load forecasting was a very 11 simplistic exercise. It basically took double log 12 paper, which is a mathematical term for those who 13 want to understand it, plotted the previous year's 14 history and continued up on previous year's history 15 and drew a straight line. And of course on a double 16 log paper, there's clearly going to be exponential. 17 It was not related in any way that I know of 18 to any sort of end-use analysis or any serious, what 19 do you call them, any scientific method, any sort of 20 analytical process. And you know what, it worked. 21 It worked for about ten years that I know of. And 22 then the world changed. The world changed in roughly 23 1973. And it was about that time Manitoba Hydro and 24 pretty well every other utility that I know of 25 started to introduce far more sophisticated 1409 1 econometric and other types of techniques which have 2 varying degrees of success since. And I am pretty 3 sure that what we do is fairly consistent with what 4 others in the business do today. 5 But going back and trying to analyze what 6 might have happened 35 years ago, I'm not too sure 7 it's particularly useful for going forward for the 8 next 20 years. 9 MR. TORRIE: I wish you hadn't said that last 10 sentence. I was really right with you up until that 11 point. I think it's always useful to try and learn 12 from history. 13 MR. ADAMS: Absolutely, and so do I. But I 14 think recent history is a lot more valuable than 15 ancient history. 16 MR. TORRIE: Well, I guess if you're thinking 17 that the world might change again, one would want to 18 look for the last time that it changed and see what 19 one might learn from that. 20 In any event, getting back to the Manitoba 21 Hydro forecast, Mr. Kuczek, and looking at the top 22 customer forecasts. Now, if I understand this, 23 there's sort of a short and a longer term period 24 involved in this one. And the short term period, you 25 have very intensive discussions with these customers 1410 1 in which you determine with them their plans for 2 expansion and contraction and so on. And for the 3 longer term period, as far as I can tell, you just 4 pull a number out of the air and add it onto the 5 forecast every year. I'm sure you're not going to 6 agree that that's a fair characterization but I 7 thought I'd give it a shot. 8 MR. KUCZEK: Do you mind repeating the 9 question? 10 MR. TORRIE: I was trying to summarize what I 11 gleaned from reading the top customer portion of the 12 forecast. And it looked to me like starting for the 13 2002 forecast, starting I believe in the year 2067 or 14 maybe it was 2078, the top customer forecast takes 15 whatever demand is already there from those customers 16 and adds 90 million kilowatt hours a year to it every 17 year, you know, until you hit the edge of the page 18 basically. 19 And for the period before that, on the other 20 hand, there is a much more customer communication 21 intensive exercise where you work with your existing 22 top customers to determine what you expect the demand 23 from that group will be over the next three or four 24 years or four or five years. 25 Is that a good description or an accurate 1411 1 description of the way the top customer forecast is 2 done? 3 MR. KUCZEK: Well, I'm not sure about the 4 longer term if I followed you there. 5 MR. TORRIE: Well, why don't you tell me how 6 do you come up with the longer term forecast for the 7 top customer category? 8 MR. KUCZEK: Well, I'll tell you how I see the 9 entire thing done, and it's similar to what you said, 10 but basically there's discussions that go on with 11 those customers to get an idea of what their future 12 plans are. And the future plans could include the 13 short term, longer term, whatever information we can 14 obtain from those customers. 15 To forecast into the forecasted period which 16 includes the 20 year period, we do extrapolate out 17 into that period what we believe is an appropriate 18 estimate of the forecast for that load growth given 19 all the information we have, the best information we 20 have on hand. And we don't use econometric models to 21 do that, no. 22 MR. TORRIE: Or any model? 23 MR. KUCZEK: We end up coming up with an 24 estimate of so many kilowatt hours a year and it's 25 less than the past. And again, that's based on the 1412 1 best information that we have available. 2 MR. TORRIE: But there's no particular models 3 employed in that exercise. It's expert judgment. 4 Would that be fair to say? 5 MR. KUCZEK: I would say that's a fair 6 statement. 7 MR. TORRIE: And in fact, in the 2002 load 8 forecast, it is 90 million kilowatt hours a year 9 starting in 2078; am I right? 10 MR. KUCZEK: I will assume your numbers are 11 correct. I am not familiar with the numbers of that 12 detail. 13 MR. TORRIE: Okay. So we had the end-use 14 model going on in the residential sector, we had the 15 expert judgment thing happening here with the top 16 customers. And then over in the final category, the 17 general service forecast, here we have an econometric 18 forecast, correct? 19 MR. KUCZEK: That's correct. 20 MR. TORRIE: And in the mass market forecasts, 21 the future demand for electricity is basically taking 22 population growth and Manitoba GDP growth as inputs, 23 correct? 24 MR. KUCZEK: It's taking what as input, I'm 25 sorry? 1413 1 MR. TORRIE: Manitoba GDP from the Manitoba 2 Hydro economic outlook. 3 MR. KUCZEK: Correct. 4 MR. TORRIE: And population also from the 5 Manitoba Hydro economic outlook. Are there any other 6 independent inputs to the geometric forecast? 7 MR. KUCZEK: I thought the general service 8 mass market, subject to being corrected here, it was 9 based on the GDP. And for the Manitoba service 10 territory, as we refer to it, in the '03/'04 11 forecast, we also used the real price of electricity. 12 And for the Winnipeg service territory, we use just 13 GDP. And that was a change from the '02/'03 14 forecast. 15 MR. TORRIE: Thank you. Now, I'm not sure if 16 there's much to be gained by going too much further 17 here. I wanted to make sure I understood. You've 18 already made it clear there's no end-use modelling 19 going on for the commercial and institutional 20 forecast exercise or for the non top customer portion 21 of the industrial market? 22 MR. KUCZEK: That's correct. 23 MR. TORRIE: And once you get the forecasts, 24 do you then try and see if you can represent it in an 25 end-use model as a way of seeing whether the whole 1414 1 thing makes any kind of sense in the real world or do 2 you just go with it? 3 MR. KUCZEK: There is judgment in that regard 4 used throughout the forecasting process including 5 looking at the independent variables and the 6 coefficients that you're using as well as some 7 statistical measures, the t-stance to give you some 8 indication of whether or not your variables that 9 you're using and coefficients are realistic. And of 10 course there's some judgment used as well. 11 MR. TORRIE: But no end-use modelling reality 12 check? 13 MR. KUCZEK: I am not sure I know what you 14 mean by that. 15 MR. TORRIE: Well, let's take commercial 16 buildings for example. Would you agree that the 17 electricity use in commercial buildings is typically 18 modelled on the basis of electricity use per square 19 metre of floor area? That's the sort of industry 20 modelling standard for that segment when it comes to 21 end-use modelling? 22 MR. KUCZEK: You were asking if there's an 23 industry standard to do that? 24 MR. TORRIE: No, not really an industry 25 standard. I was basically putting it to you that 1415 1 when end-use modelling is done, and perhaps Mr. 2 Fleming could contribute to this, when end-use 3 modelling is done of the commercial building sector, 4 the activity is usually tracked in terms of square 5 metres of floor area of different types of buildings. 6 And the electricity use is then modelled as 7 electricity use per square metre of floor area of 8 these different types of buildings for various 9 end-uses. That, in a nutshell, is the basic heart of 10 commercial building end-use modelling. 11 MR. KUCZEK: If you're using end-use 12 modelling, if you're using end-use forecasting 13 techniques in the commercial sector and if you have 14 that information, that would be an appropriate way to 15 do your forecasting. And as I mentioned earlier, 16 we're looking at moving towards using end-use 17 modelling for the commercial sector. 18 MR. TORRIE: So when you forecast electricity 19 demand in the mass market which includes those 20 commercial buildings, you are forecasting it on the 21 basis of inputs that include GDP and electricity 22 price, correct? 23 MR. KUCZEK: Yes. 24 MR. TORRIE: So the connection between that 25 way of looking at it in the end-use model would be 1416 1 how floor area is growing in relation to economic 2 output in the commercial and institutional segments 3 of the economy. Would you agree with that? 4 MR. KUCZEK: If you have the data, yes. 5 MR. TORRIE: Even if you don't have the data, 6 that's still going to be true, isn't it? 7 MR. KUCZEK: Can you repeat the question? I'm 8 sorry, I was being distracted back here. 9 MR. TORRIE: The connection between end-use 10 modelling and econometric modelling, at least the way 11 that you do it, would be understanding how floor area 12 grows in relation to economic output in the economy. 13 MR. KUCZEK: Yes, I believe there's a link. 14 MR. TORRIE: But right now, you don't have any 15 capability to do that at Manitoba Hydro, or am I 16 wrong? 17 MR. KUCZEK: To do the end-use modelling for 18 the commercial sector? 19 MR. TORRIE: To draw a connection between 20 economic growth in the commercial sector and growth 21 in actual physical activity as measured by floor 22 space of different building types. 23 MR. KUCZEK: Yeah. We do have problems with 24 data in terms of what the floor area growth is right 25 now in Manitoba. 1417 1 MR. TORRIE: Well, my understanding is that 2 never mind the floor area growth, you don't know what 3 the floor area is by building type either? 4 MR. KUCZEK: No, we don't have full data on 5 that. 6 MR. TORRIE: Okay. This I gather has just 7 never been a priority, understanding -- 8 MR. KUCZEK: As I mentioned earlier, we do 9 agree that that would be a good method for 10 forecasting the commercial sector, end-use 11 forecasting methods. And we're moving in that 12 direction and we have some data on it. We don't have 13 that much data that we would be confident in using 14 that method currently. 15 MR. TORRIE: I see. And I suppose similarly 16 in the industrial sector, outside of that top 17 customer category that we've discussed, one would be 18 interested in being able to track and understand 19 electricity use, at least at the two digit standard 20 industrial classification level, to be able to track 21 electricity use per dollar of output for different 22 industries over time and does Manitoba Hydro have the 23 ability to do that? 24 MR. KUCZEK: I'm sorry, you'll have to repeat 25 that question again. 1418 1 MR. TORRIE: Well again, just as we talked 2 about -- well, my question is whether or not you are 3 tracking economic output in Manitoba at the two digit 4 SIC level in the industrial sector and keeping track 5 of the relationship between output and electricity 6 demand at that level, are you doing that? 7 MR. KUCZEK: I believe we're not doing that. 8 We have the energy use in the two sectors. Just one 9 moment. I guess the one point that I should make is 10 we purchased Winnipeg Hydro in 2002 and so our 11 database with the City of Winnipeg load is, our 12 database is -- we don't have a good database on that 13 load. And so we're currently incorporating that into 14 our database right now. So it would be difficult for 15 us to do end-use forecasting on the commercial side 16 until we can achieve that. 17 MR. TORRIE: Weren't we talking about the 18 industrial sector or did I -- I might have phased 19 out. 20 MR. KUCZEK: Maybe I'm misunderstanding your 21 question. 22 MR. TORRIE: Okay. My question was whether or 23 not you had the capability at Manitoba Hydro to track 24 electricity use at the two digit standard industrial 25 classification level of the economy and compare that 1419 1 with output at the same level within the Manitoba 2 economy? 3 MR. KUCZEK: I believe the answer is no to 4 that. 5 MR. TORRIE: So we end up with a forecast then 6 which is based on assumed relationships between the 7 GDP of the province and electricity use but it's a 8 relationship that you have very little detailed 9 understanding of and very little detailed data with 10 respect to it. Would you agree with that? You don't 11 know the floor areas, you don't know the economic 12 output at the two digit level, you don't know the 13 relationship between electricity use per unit floor 14 area over time, you don't know the relationship of 15 electricity per industry and what's going on with 16 electricity productivity at the two digit level. And 17 yet still, you put out a forecast that has this high 18 level relationship between electricity and GDP and 19 expect everyone to, you know, bet a billion dollars 20 on it being right? 21 MR. KUCZEK: You are correct in the sense that 22 we don't know everything. What we do know is the 23 information that we have in hand. And as I mentioned 24 earlier, we have a load forecast methodology that's 25 been improved since the 1970s and it's continuously 1420 1 been improved on an annual basis. If you look at the 2 accuracy of our load forecast from the 1970s to the 3 current forecast, you'll see that it's been improved 4 considerably since then. 5 MR. TORRIE: Okay. 6 MR. ADAMS: Mr. Chairman, I take exception to 7 the comment that we're asking somebody to bet a 8 billion dollars on the assumption that we're right. 9 We do a tremendous amount of work to assess the 10 risks, the implications of being wrong, of being 11 better than we are estimating, of being worse than 12 we're estimating. 13 We asked the forecasters to do an evaluation 14 of the previous forecasts to the point where, at 15 least at the executive level in the company, we are 16 confident. We are not asking anybody to bet, we're 17 asking them to approve an investment that we are 18 confident will provide benefits to Manitobans. 19 MR. TORRIE: Now, I just have one on this load 20 forecast section, one question, I think it's just one 21 question left. And that has to do with the 22 generation of the medium low and the medium high and 23 particularly the medium low forecasts since we've 24 been discussing that one today. 25 I know that there are English descriptions in 1421 1 your forecasts and in your documents about how these 2 forecasts differ from the basic forecast. And you 3 talk about lower economic growth and lower population 4 growth and so on. But I'm wondering in terms of the 5 mathematics, especially of the mass market forecast, 6 what's the difference between the basic forecast and 7 the medium low forecast? Is it the inputs or is it 8 the assumed relationships between those inputs and 9 future electricity demand? 10 MR. KUCZEK: The inputs. 11 MR. TORRIE: So when you generate your medium 12 low forecast, it has embedded within it exactly the 13 same assumptions about the relationship between 14 economic growth and electricity demand that are 15 embedded within the basic forecast? 16 MR. KUCZEK: Yes. 17 MR. TORRIE: Okay. I think I've now done 18 three, maybe four of the six. And I don't know if 19 this is a time when you'd like to take your break or 20 if you'd like me to start in on another area? 21 THE CHAIRMAN: I think we can carry on for a 22 while. 23 MR. TORRIE: Okay. I want to ask some 24 questions about the demand-side management market 25 potential study. And I understand that, Mr. Fleming, 1422 1 this was a study that you played a central role in 2 it? 3 MR. FLEMING: We were the prime contractors on 4 the study. We had Marbac (ph) Resources from Ottawa 5 was directing us in a lot of the process. We've 6 worked with them in the past on similar projects. 7 And Kraftur Engineering for a specific industrial 8 experience as it was required in the industrial 9 forecast. 10 MR. TORRIE: And I had given you some advance 11 notice about one question I had in particular. 12 Turning to the industrial agricultural study first. 13 And I do have a handout that consists of an excerpt 14 from that study that I wanted to ask Mr. Fleming 15 about. 16 And what we have in this particular handout is 17 we have Exhibit 3.1 which is a table and Exhibit 3.4 18 which is a figure, both taken from the industrial 19 agricultural DSM market potential study. 20 And Mr. Fleming, the numbers in Exhibit 3.1, 21 as you know, are not correct. And perhaps I should 22 just allow you to enter into the record the corrected 23 numbers for this table. And I'm speaking 24 specifically about these columns that are labelled 25 GWh per million dollars of GDP for the various 1423 1 industries, but which clearly cannot be that. 2 MR. FLEMING: Certainly. And not only for the 3 advance warning, thanks, but also we did determine 4 just prior to the hearing session yesterday that 5 there was that problem. The graph is deemed correct 6 by Kraftur Engineering. The table itself apparently 7 was not the correct table and doesn't reflect the 8 same values as on the graph. So the values that are 9 depicted on the graph, Exhibit 3.4, are considered 10 correct. 11 MR. TORRIE: Would it be possible then to get 12 a corrected version of Exhibit 3.1? 13 MR. FLEMING: I did receive, from Kraftur 14 Engineering, a corrected version yesterday. I do 15 have that. 16 MR. TORRIE: May we have an undertaking for 17 that to be provided to the Commission, please? 18 THE CHAIRMAN: Mr. Fleming? 19 MR. FLEMING: I brought 20 copies. 20 MR. TORRIE: Oh, what a coincidence. 21 MR. FLEMING: I have copies of the 22 information. 23 MR. GREWAR: Are they available for 24 distribution now? 25 MR. FLEMING: Yes, they could be, would be. 1424 1 The exhibit includes the e-mail I received from 2 Kraftur Engineering at 2:24 yesterday morning, so 3 just prior to the start of these particular hearings. 4 In our review process of the industrial, came across 5 the error. 6 MR GREWAR: Mr. Chairman, if we could just 7 enter this as Hydro Exhibit MH-NCN 1006. 8 9 (EXHIBIT MH-NCN 1006: Corrected version of 10 Exhibit 3.1 from Kraftur Engineering) 11 12 MR. TORRIE: On the subject of exhibits, Mr. 13 Grewar, I'm not sure if it would be appropriate but 14 one of the tables I handed out today was not taken 15 directly from Hydro's evidence although it was based 16 solely on Hydro's evidence. And that was the one 17 titled "Wuskwatim Advancement With Medium Low 18 Forecast." And since it's been referred to in the 19 transcript, I wonder if it wouldn't be useful for it 20 to be entered as an exhibit as well. 21 MR. GREWAR: I think appropriate, Mr. 22 Chairman. We would enter it as TREE-RCM Exhibit 23 1001. 24 25 (EXHIBIT TREE-RCM 1001: Table titled 1425 1 "Wuskwatim Advancement With Medium Low 2 Forecast") 3 4 MR. TORRIE: Okay. So this is the first time 5 I've been able to look at these corrected numbers. 6 And I guess my question is if we look at Exhibit 3.4, 7 which is the figure that was on my handout, which you 8 say that they are now saying is correct, it was the 9 table that was wrong, right? 10 MR. FLEMING: Yes, that's my understanding, 11 yes. 12 MR. TORRIE: And what we have here is a graph 13 of electricity use per million dollars of GDP over 14 time for various industries. 15 MR. FLEMING: That's correct. 16 MR. TORRIE: Okay. And if I look at that 17 Exhibit 3.4, should I not be seeing the numbers that 18 are in the columns of the corrected table which you 19 just distributed for those same industries? 20 MR. FLEMING: I most certainly hope so. 21 MR. TORRIE: Well, I am afraid we're not quite 22 to the bottom of this yet then because when I look at 23 Exhibit 3.4, I see all the lines going up. And when 24 I look at the last three columns of your -- last four 25 columns of your corrected table, all the numbers are 1426 1 going down. 2 So there's no point wasting a lot of time on 3 this in a hearing process but could we try and get 4 once and for all this sorted out so that we actually 5 have the GWh per million dollars of GDP numbers that 6 are the correct numbers? I don't know now if they 7 are the ones in the corrected table or the ones in 8 Exhibit 3.4. Or do you know, Mr. Fleming, by just 9 looking at them which set is correct? 10 The reason, Mr. Chairman, this is important is 11 that Exhibit 3.4, which is the picture, shows the 12 electricity use per dollar of output going up in 13 every single industry in the province. And if that's 14 really what underlies the reference projection -- 15 MR. MAYER: Except for pulp and paper. 16 MR. TORRIE: Except for pulp and paper which 17 is even there a slight increase, but very slight. 18 And similarly for primary metals, it's quite a gentle 19 slope. And if this is in fact the basis on which the 20 reference projection in the industrial sector 21 analysis is based, then it's something that I would 22 have liked to have gone into in some detail. But I 23 don't know now if it's going up or down. 24 MR. FLEMING: Okay. I can qualitatively 25 clarify that if that helps. Just looking at this 1427 1 table from Kraftur Engineering and reading the text, 2 what's presented is the impact of efficiency on the 3 factor of GWh per 1,000 of GDP. What's happening 4 over time or this particular study indicates is that 5 there is an increase in energy intensity in industry 6 overall from 1990 to 2000. That increase in energy 7 intensity is tempered somewhat by an increase in 8 energy efficiency. 9 This is something that's documented at the 10 national level by a group called CIPEC, which is the 11 Canadian industrial reporting group for energy. So 12 qualitatively, from my understanding of this, is that 13 we should see an increase and I believe the numbers 14 that were quoted are in the order of about 36 per 15 cent increase in energy intensity but tempered by 11 16 per cent of energy efficiency improvements over a ten 17 year period. 18 MR. TORRIE: May I just interrupt you for a 19 moment. Before we get too much further into it, I 20 want to just be clear on what's what here before we 21 get into what it means. And I think what you're 22 telling me is that the new table which was just 23 entered as an exhibit is actually not a replacement 24 of the numbers in Exhibit 3.1. That the numbers in 25 Exhibit 3.1 were supposed to be GWh per million 1428 1 dollars of GDP for the reference case. And the 2 numbers in the table that you have just distributed 3 are GWh per million GDP after the effects of 4 efficiency have been taken into account. 5 MR. FLEMING: I would say only the effect of 6 efficiency just looking at the fact that they are all 7 going down and they are all going down by that same 8 small amount, you know, 1 per cent per year. 9 MR. TORRIE: So what we still do not have is 10 the GWh per million dollars of GDP by industry for 11 the reference case. The numbers in Exhibit 3.1 are 12 not correct. I think you realize that. 13 MR. FLEMING: I do. 14 MR. TORRIE: So could we have an undertaking 15 to get a correct version of Exhibit 3.1? 16 MR. FLEMING: Absolutely, yes. 17 18 (UNDERTAKING MH-34: Provide corrected version of 19 Exhibit 3.1) 20 21 MR. TORRIE: The other thing that's 22 represented in Exhibit 3.1 is the GDP growth by 23 industry. I think that's what it is. I mean can you 24 tell me what is that first column in Exhibit 3.1 per 25 cent MB per cent? 1429 1 MR. FLEMING: Oh, that's the per cent of 2 provincial GDP. 3 MR. TORRIE: Oh, that's the per cent of 4 provincial GDP. So where in the industrial 5 agricultural DSM study are the economic growth rates 6 themselves? I couldn't find them. 7 MR. FLEMING: I'm sorry, for just the 8 industrial? 9 MR. TORRIE: The output growth rates that are 10 assumed for each industry, where are they? 11 MR. FLEMING: Because this table summarizes 12 that spatial economic study done last year by a 13 consultant on behalf of the Federal Government, that 14 those values exist in that study but were not placed 15 in this report. 16 MR. TORRIE: But when you provide the 17 corrected version of Exhibit 3.1 with the correct GWh 18 per million dollars of GDP numbers in it for the 19 reference case, would I be correct that if I then 20 take your reference case electricity consumption by 21 industry and combine it with those corrected GWh per 22 million dollars of GDP numbers that you're going to 23 provide, I would at least be able to derive what must 24 have been the assumed economic growth rates by 25 industry in this analysis. Are you following that? 1430 1 MR. FLEMING: I am following that exactly, 2 yes. 3 MR. TORRIE: And would that be true? 4 MR. FLEMING: It should be true, yes. 5 MR. TORRIE: Okay. And these economic growth 6 rates were based on, was it some federal study? 7 Where did they come from? 8 MR. FLEMING: The reference to it is Main 9 Driver Study, Province of Manitoba, Centre for 10 Spatial Economics. May 19, 2002/3. 11 MR. TORRIE: And why would one go to -- this 12 study was done in Ottawa I believe, wasn't it? 13 MR. FLEMING: Yes. 14 MR. TORRIE: For something to do with the 15 National Greenhouse Program? 16 MR. FLEMING: Yes, that's correct. 17 MR. TORRIE: Why would one not use the 18 Manitoba Hydro economic outlook as the driver for 19 industrial growth in a study that is trying to 20 establish a reference case which is presumably in 21 agreement with Manitoba Hydro's 2002 forecast? I 22 don't understand why a separate source was chosen for 23 the economic growth scenario? 24 MR. FLEMING: We were looking at the three 25 levels of forecast that are provided, general service 1431 1 residential, and what we wanted to have are the -- 2 because a lot of these industries are -- in Manitoba, 3 we have a single industry in a particular sector. So 4 we don't have information about what is happening 5 overall in terms of energy intensities in those 6 sectors. We simply have this one facility that 7 produces this one good which is dominant in that 8 sector. So we have dominant industries in Manitoba 9 in pulp and paper and in primary metals. 10 So what we were attempting to do here is to 11 see if information that's available at the technology 12 end or the primary industry end could add some value 13 into what direction we may see the industry go 14 assuming that this single industry leader in Manitoba 15 was part of a pack of industries in Canada that were 16 moving towards certain processes that may be more 17 intensive for energy consumption. So that's really 18 the attempt in doing that. 19 MR. TORRIE: Okay. Well, I'm a little 20 constrained by the ongoing problem with the other 21 data in this table, but -- 22 MR. MAYER: If I may for moment. When you 23 talk about a single industry as you just have, are we 24 talking about Inco? 25 MR. FLEMING: No, no, not -- 1432 1 MR. MAYER: I mean a primary leader in 2 Manitoba, which you sell a lot of power to because 3 they smelt the nickel with electricity and refine it 4 with electricity and use electrolysis process 5 throughout, I mean when it comes to the primary 6 metals in Manitoba, the only two outfits that I know 7 of that could even really be considered in this would 8 be Flin Flon's process and the one at Thompson which 9 at one time it was described as the largest 10 integrated nickel complex in the free world. 11 So what else would you be talking about when 12 you're talking about primary metal production in 13 Manitoba? 14 MR. FLEMING: There are other companies 15 involved in metals. We have a list, I'd have to 16 refer to it, as to what companies were involved in 17 primary metals. As you've explained, the dominant 18 players in primary metals make up a very significant 19 portion of that GWh sales, make a very significant 20 portion of what will happen in Manitoba in the next 21 three years or in the next 15 years. And I can only 22 assume then that's why in the forecasting for 23 Manitoba Hydro's top customers, they do have that 24 annual interview with the customers to really 25 determine what's going on. 1433 1 We have done studies like this in British 2 Columbia where the dominant industry is pulp and 3 paper but you do have 12 players in that particular 4 industry. Manitoba doesn't roll out like that. We 5 have dominant players in each of these primary 6 industries. So it's very difficult. 7 It is an issue with the study from a macro 8 level. As you suggest, we have a very limited number 9 of industries that we're trying to form into a macro 10 model. And the decision was still to attempt to take 11 a look at that industry with respect to indicators of 12 energy intensity for that industry at a Canadian 13 level. 14 MR. TORRIE: Are you aware, Mr. Fleming, that 15 at least on a Canada-wide basis, the electricity per 16 dollar of value added has been in decline for the 17 last ten years or more on an aggregate industrial 18 basis? 19 MR. FLEMING: I have not looked at figures 20 lately. I could assume that statement would be -- I 21 think that statement could be true. I believe 22 there's more value add though so that the dollars per 23 value add is one number but the relationship of 24 electricity to that value add is a different issue. 25 If a company wishes to double their revenues 1434 1 and to do so or put up their revenues, I'm sorry, 10 2 per cent and to do so, they will double their 3 electricity consumption. I think what we have seen 4 are industries that are willing to have that increase 5 in intensity in order to have a value added product. 6 So they are doing much more at the primary industry 7 level. They are producing more product, more 8 finishing to the product. There are more 9 environmental controls. There are additional 10 electrical loads that are associated with it. 11 MR. TORRIE: Excuse me, Mr. Fleming. I am 12 just asking something much simpler than where you're 13 going which is, is it not true that value added in 14 Canadian industry is growing faster than electricity 15 consumption in Canadian industry or do you know? If 16 you don't know, that's fine. 17 MR. FLEMING: You know what, I don't, I 18 couldn't -- 19 MR. TORRIE: Okay. That's fine. 20 MR. FLEMING: -- say that for the industries 21 we're speaking of. 22 MR. TORRIE: But it's certainly the case that 23 if the numbers that are represented in Figure 3.4 of 24 your study turn out to be the true numbers, then 25 you've got electricity use in your reference case, 1435 1 electricity use per dollar of value added going up in 2 the industrial sector, actually quite significantly 3 going up in petroleum, going up in chemicals and not 4 going up so much in pulp and paper and primary 5 metals. 6 MR. FLEMING: As for the references that we're 7 using in this study, that's the information, yes. 8 MR. TORRIE: And where did these numbers come 9 from? Where did these projected reference energy 10 intensity numbers come from? 11 MR. FLEMING: The relationship between GDP and 12 intensities. 13 MR. TORRIE: Yes, but I'm talking about off 14 into the future. In Exhibit 3.4, we have 15 representation of electricity use per dollar value 16 added for these industries going out to the year 2018 17 and I don't know what the source is. That's all I'm 18 asking. Or what the analysis was that led to the 19 conclusion if this figure is correct, and even if 20 it's not, if it's the other numbers that are right, 21 either way, what was the analytical method that was 22 used to determine the electricity per dollar of value 23 added in these industries? 24 MR. FLEMING: It was based on the Canadian 25 CIPEC studies 1990 to 2000 assessment of the increase 1436 1 in industrial energy use relative to the GDP. 2 MR. TORRIE: So did you just project that same 3 trend forward to 2018 then? 4 MR. FLEMING: This document purported that the 5 relationship with increased energy efficiency at 6 about 1 per cent per year would continue. CIPEC 7 expected that to continue. And the relationships 8 with GDP and energy would continue. 9 MR. TORRIE: But doesn't some of that 1 per 10 cent include technologies that you would then later 11 analyze in your DSM assessment? This is your 12 reference case I'm talking about. There should be no 13 more DSM in this if it's a true reference case, 14 correct? 15 MR. FLEMING: If it's the reference case, the 16 1 per cent is inherent in the reference forecast 17 that's been produced. Yes, you're right. 18 MR. TORRIE: And if you look at the line for 19 the chemical industry, it changes in 2010. So 20 there's one assumption going out to 2010 and another 21 one going out to 2018. Can you explain why it 22 changes at that point, the slope changes? 23 MR. FLEMING: Yeah. The particular event with 24 respect to chemical, I can't explain. The fact that 25 there's a forecast, that there's a change in that 1437 1 trend that it levels off may be, from the perspective 2 of the industry analysis, the adoption of a certain 3 process or piece of equipment or a certain market 4 demand that perhaps becomes fulfilled and levels off. 5 MR. TORRIE: All right. Let's just put 6 ourselves out of our misery on this. But we are 7 going to get a corrected version of Exhibit 3.1, 8 right? And when we have that, at least we'll have 9 clarity on what these projected energy intensities 10 are in your reference case, correct? 11 MR. FLEMING: Yes. 12 THE CHAIRMAN: Thank you. I think maybe what 13 you're saying, this is time for coffee. 14 MR. TORRIE: I have one more very short one. 15 It really is a one-line question. And that is, Mr. 16 Fleming, do you think that the demand management 17 potential study identifies all of the economic 18 potential for electricity efficiency in Manitoba? 19 MR. FLEMING: The scope was energy efficiency 20 and in that context and how it was approached through 21 the end-use model and the end-use reference case we 22 put together, it would be representative of that. 23 The scope of the study did not include load shifting 24 customer based generation. Those types of things 25 were outside the scope. In terms of energy, the 1438 1 economic value I would say has been assessed but the 2 other elements have not. 3 MR. TORRIE: Thank you. 4 THE CHAIRMAN: Thank you. So we will adjourn 5 until about 25 after. 6 7 (PROCEEDINGS RECESSED AT 3:13 P.M. and 8 RECONVENED AT 3:32 P.M.) 9 10 THE CHAIRMAN: Mr. Torrie, are you ready? 11 MR. TORRIE: Yes, sir. 12 THE CHAIRMAN: All right. Let's carry on. 13 MR. TORRIE: Continuing with the questions 14 about the DSM market potential study, I wanted to ask 15 about the commercial and institutional study. And 16 first of all, I gather that, Mr. Fleming, one of the 17 things that you were trying to do in these studies 18 was develop reference projections that brought 19 your -- that you were trying to develop reference 20 projections that were in line with the 2002 load 21 forecast; is that correct? 22 MR. FLEMING: That's correct. We weren't 23 conducting a load forecast so we wanted to be looking 24 ahead in our models with reference to the existing 25 load forecast. 1439 1 MR. TORRIE: And so one of the things that one 2 finds, for example, in the commercial and 3 institutional building study is an attempt to make 4 the reference forecast of electricity demand come out 5 to a growth of about 1.6 per cent per year, correct? 6 MR. FLEMING: That's correct. 7 MR. TORRIE: And I guess that number was 8 picked because that's the rate of growth of the mass 9 market segment of the general service forecast in the 10 2002 load forecast? 11 MR. FLEMING: Yes. So the value is just for 12 the aggregate, you're right. 13 MR. TORRIE: And in order to tune the 14 commercial end-use model that is used as the basis 15 for the DSM assessment, there are a number of 16 variables available to the analyst which include the 17 activity level, which is floor area in this case, the 18 electricity and the electricity use per unit of floor 19 area, correct? 20 MR. FLEMING: That's correct. 21 MR. TORRIE: And my understanding of the 22 commercial and institutional reference projection is 23 that there was a high level of confidence at Manitoba 24 Hydro and within the consulting team in the 25 electricity utilization indices or the electricity 1440 1 per square metre of floor area numbers that were used 2 in the reference projection? 3 MR. FLEMING: No. We undertook to, in the 4 study, characterize the electricity use at the 5 various facility types. By that I mean we undertook 6 creating an end-use model for commercial sales. 7 Manitoba Hydro has the detailed sales information to 8 the various classes of customers. So we knew in 9 aggregate how much was sold to large schools. 10 Part of the exercise then was to determine, of 11 the electricity sold to large schools, what were the 12 energy services provided to those schools in terms of 13 the end-uses, the lighting, ventilation, electric 14 heating. So that was actually an undertaking of the 15 study, was to create those end-use parameters and 16 forecast, create really an end-use forecast for 17 Manitoba commercial. So we could forecast what the 18 lighting loads would be in 2017. 19 MR. TORRIE: Yes, okay. Thank you. But the 20 electricity use in the commercial building sector, 21 just like the electricity use in other parts of the 22 end-use modelling that went on can be essentially 23 summarized as being the product of an activity 24 variable and in the case of the commercial buildings, 25 it was floor area and an electricity per unit of 1441 1 floor area. 2 And I know there are fuel share and saturation 3 factor issues that come into play but in fact, those 4 are very very stable in the commercial study and it 5 really comes down to selecting the values of floor 6 area and electricity use per unit of floor area that 7 will generate electricity use that equals the sales 8 data that you were just referring to. 9 Does that more or less describe the 10 calibration exercise that the consultants undertook 11 in their reference projection? 12 MR. FLEMING: No. What was done is that we 13 determined the end-use intensities. 14 MR. TORRIE: How did you do that without 15 having any floor area numbers to work with? 16 MR. FLEMING: Because electrically, at least 17 from a technical standpoint, you can determine how 18 many watts per square foot would be required for 19 lighting, if you desire a certain light level in a 20 facility. If you have certain mechanical systems in 21 a facility, how many kilowatt hours would be required 22 per square foot in order to provide that level of 23 ventilation or that level of air-conditioning. 24 MR. TORRIE: Right? 25 MR. FLEMING: So in a commercial facility, you 1442 1 can take a very good, if you have the expertise, a 2 very good -- make a very good estimate of how that 3 electricity, the gross electricity sale to that 4 facility can be broken into lighting and space heat 5 and cooling. 6 So the study characterized for Manitoba 7 Hydro's customer classes, let's say again schools, 8 how much of the electricity sold to the school would 9 go to lighting? And then we would do that on a 10 kilowatt hour per square foot basis and electrical 11 intensity. And from that, we could actually 12 determine what square footage of schools were being 13 served by that electrical sale. 14 MR. TORRIE: Okay, exactly. So the method, 15 given the absence of an actual inventory of floor 16 area, was first to identify what the consultants 17 believed were the levels of electricity use per 18 square foot or per square metre and then combine that 19 with what Manitoba Hydro was telling the consultants 20 was the total sales to schools, and floor area then 21 becomes the derived number that drops out of that, 22 correct? 23 MR. FLEMING: That's correct. 24 MR. TORRIE: Okay. I have one more handout. 25 This is an excerpt from Exhibit 3.5 from the market 1443 1 potential study for the commercial sector. Will you 2 verify, Mr. Fleming, this is taken right out of the 3 report? 4 MR. FLEMING: It appears to be, yes, our 5 Exhibit 3.5. 6 MR. TORRIE: And what we're looking at are the 7 floor area growth rates that the consultant needed to 8 use in order to tune their reference projection to 9 the 1.6 per cent growth in the mass market segment of 10 the load forecast; is that correct? 11 MR. FLEMING: The process is two-step. In the 12 first step, we take the existing stock of buildings 13 that we have which are represented by the existing 14 sales of Manitoba Hydro to those customers. The next 15 thing we do is we take a look at how that stock will 16 change over the study period due to natural 17 efficiency impacts. When we do that, we can see 18 that, for example, lighting may decrease by 8 or 10 19 per cent naturally. That will be with or without 20 Manitoba Hydro's intervention in the market but 21 simply as a basis of phasing out of T-12 lighting. 22 So as an example, we've tuned in our end-use forecast 23 to be sensitive to natural conservation. 24 So when we get out to the year 2017, we arrive 25 at a certain number of sales, GWh sales to commercial 1444 1 or specifically let's say to schools. We compare 2 that to what the forecast sales would be, albeit to 3 this number which is just 1.6 per cent per annum 4 growth. And the difference between what our existing 5 stock is estimated to consume in 2017 and what the 6 forecast determines as an estimate of sales in 2017, 7 we end up with extra GWh or extra energy sales that 8 are not part of the existing stock. 9 The last part of it is to take those extra GWh 10 sales that aren't part of the stock that we currently 11 have in Manitoba and derive based on new construction 12 techniques. Which means if we have a new school 13 built to PowerSmart standards, we know the energy 14 intensity of that school. So when that school is 15 part of the growth rate of schools in 2017, we back 16 calculate then the square footage that would have had 17 to have been constructed in order to present that 18 amount of additional sales in 2017. 19 MR. TORRIE: And there we have it then. That 20 brings you to Exhibit 3.5, a set of growth rates for 21 floor area that are the result of that sequence of 22 calculations? 23 MR. FLEMING: Yes, that's correct. 24 MR. TORRIE: And so we have, for example, to 25 use the sector you've been discussing, schools in 1445 1 Manitoba growing at 1.9 per cent per year over the 15 2 years from 2003 to 2017/18, correct? 3 MR. FLEMING: Yes, that's correct. 4 MR. TORRIE: And in general, when one scans 5 these growth rates, we see that they are much much 6 higher than the population growth rate in the 7 province and are actually comparable and in some 8 cases higher than the economic growth rate that 9 underlies Manitoba Hydro's forecast, correct? 10 MR. FLEMING: I can't make comment on that 11 specifically. 12 MR. TORRIE: Well, do you think there's going 13 to be a growth rate of 1.9 per cent per year in the 14 floor area of schools in this province? Are you 15 opening new schools on a regular basis? 16 MR. FLEMING: The answer to that is yes. But 17 what we are doing in our forecast is for those sales 18 in 2017, providing an end-use breakdown. So those 19 sales are going to lighting or heating equipment to 20 the technologies we're looking at. 21 MR. TORRIE: This is floor area, not sales 22 that we're talking about. This is the floor area 23 projection. 24 MR. FLEMING: I understand that the end result 25 is a certain calculation of new floor area. But from 1446 1 our perspective, we have just taken the GWh value 2 which really resident in that value is space heating 3 and lighting and electric heat. And then we are now 4 saying, you know, given the intensity of, energy 5 intensity of a new school, this is how many square 6 feet that would be representative of. 7 So that calculated, as you say, the floor area 8 and the growth rate is, as is in that table, 1.9 per 9 cent. 10 MR. TORRIE: All right. Are you saying we 11 shouldn't really take these growth rates too 12 seriously? 13 MR. FLEMING: We are producing an estimate 14 similar to the load forecast. It's a DSM forecast. 15 And so we take advantage of the utilities load 16 forecast to actually create the DSM forecast which 17 inherently relies on the load forecast to determine 18 what the sales may be in 15 years. 19 Again, the studies objective is not to create 20 a load forecast but beneath the load forecast to 21 create an end-use or technology forecast. 22 MR. TORRIE: And what this chart reveals is 23 that in order to tune an end-use model to the growth 24 rate in the load forecast, it's necessary to assume 25 these kinds of growth rates for floor area in 1447 1 different types of buildings in the province? 2 MR. FLEMING: That's correct. 3 MR. TORRIE: All right. Thank you. I have a 4 few questions about -- I really don't want to take a 5 whole lot more of your time. I have a few questions 6 about PowerSmart. I'm going to truncate this, 7 though. Let me just quote from the opening section 8 of the PowerSmart plan. It says that the objective 9 of PowerSmart is to, 10 "Minimize the total cost of energy 11 services to customers as part of 12 Manitoba Hydro's corporate strategic 13 plan to become the energy and energy 14 services provider of choice." 15 And the active phrase in that sentence is to 16 minimize the total cost of energy services to 17 customers. And I'm not sure, who should I direct 18 questions to? 19 Mr. Kuczek, would you say that your PowerSmart 20 program is achieving that objective? 21 MR. KUCZEK: It's moving in that direction. 22 MR. TORRIE: That's a good answer. 23 MR. KUCZEK: The DSM program is a long-term 24 initiative, it's not a one-year initiative or an 25 instantaneous initiative. 1448 1 MR. TORRIE: What is the average share of the 2 cost of DSM measures in the PowerSmart program that's 3 put up by the utility as opposed to by the customer? 4 MR. KUCZEK: There's not a straightforward 5 answer to that. It depends on the program, the 6 specific program. I can give you an example. I 7 guess the new home program, we're paying 30 per cent. 8 The lighting program, it varies depending on the 9 lighting products or components within that lighting 10 program. 11 MR. TORRIE: And it seems to me that in 12 reviewing the responses to interrogatories, when the 13 question was put what is the main impediment to 14 greater take-up rates of DSM programs, whether it was 15 in the residential or the commercial or the 16 industrial sector, the answers always started off by 17 saying it's the cost to the customer that represents 18 the most or certainly one of the most important 19 barriers to higher uptake rates. Would you confirm 20 that? 21 MR. KUCZEK: I think we responded by saying 22 economics was the main driver. It doesn't mean it's 23 the only driver. We didn't specify specifically what 24 portion of the barriers that it would represent. On 25 the industrial side, I think we also added that the 1449 1 reliability or productivity I think, one of the two 2 anyways, was added as a main driver as well. 3 Reliability I believe. 4 MR. TORRIE: Right. And I guess the corollary 5 to that would be that the rate of uptake of these 6 programs increases as the cost to the customer goes 7 down? 8 MR. KUCZEK: Yes, but we have a long-term 9 strategy to transform the market so we take into 10 account not just what the uptake or participation 11 rates would be on the next-day basis but over the 12 long term and sustaining that uptake over the long 13 term. 14 MR. TORRIE: And let me ask you, perhaps it's 15 almost a philosophical question. But I honestly have 16 been looking for the answer to this for years and 17 I've never got it and maybe you have it because 18 you're working right in the centre of this. But why 19 is it that when it comes to increasing the supply of 20 electricity, we go out and put up 100 per cent of the 21 cost as utilities. But when it comes to investing in 22 the demand-side, we don't. I mean why, for example, 23 if you were to take the same approach to Wuskwatim as 24 you take to DSM, why don't you just put a coupon in 25 the Winnipeg Free Press offering a 30 per cent 1450 1 incentive to anybody that wants to go up there and 2 build the dam and see if somebody does it? 3 MR. ADAMS: Mr. Chairman, perhaps I will 4 respond to a rhetorical question. 5 MR. MAYER: Philosophical question. 6 MR. ADAMS: Philosophical. 7 MR. TORRIE: It's philosophical but it is far 8 from rhetorical. 9 MR. ADAMS: It is rhetorical and it's 10 philosophical. 11 MR. TORRIE: It's certainly not rhetorical, 12 Mr. Chairman. This is one of the most important 13 questions to how we are going to make the transition 14 to higher levels of investment in the demand side 15 that will be necessary for sustainable energy. It is 16 far from being rhetorical. It is certainly 17 philosophical. 18 THE CHAIRMAN: We agree that the question was 19 philosophical. 20 MR. ADAMS: And certainly Manitoba Hydro is 21 prepared to invest in DSM to the extent that is 22 economical for Manitoba Hydro and its customers. 23 MR. WOJCZYNSKI: Perhaps I could add to that 24 as well. Another way to express it, a simple way is 25 that a megawatt is not exactly the same as a megawatt 1451 1 because if you reduce consumer end-use, there's a 2 loss of revenue to the company and you have to look 3 at the combination of cost to the company, cost to 4 the consumer. And so they aren't exactly the same 5 and you have to approach them differently. We have 6 to approach them thoroughly, we have to do what is 7 overall best but they are not exactly the same and 8 you can't possibly approach them in exactly the same 9 way. 10 MR. TORRIE: Okay. I've got one last short 11 line of questioning and I want to come back to the 12 beginning of the NFAAT evidence and talk a little bit 13 about the screening exercise which is described in 14 Volume 1 of the NFAAT evidence, and in particular in 15 chapter -- 16 MR. MAYER: Before you go there, the 17 philosophical question you asked, did you say why 18 doesn't Manitoba Hydro go out and offer to pay 19 somebody 33 per cent to build the dam? That was the 20 question, wasn't it? 21 MR. TORRIE: Yes. 22 MR. MAYER: Do they get to keep and sell the 23 power, sir, in your hypothetical? 24 MR. TORRIE: They could. 25 MR. MAYER: In which case I would expect that 1452 1 they would have a lot of takers on that. 2 MR. TORRIE: Yeah, they might. 3 MR. MAYER: And some of us would be a little 4 concerned about losing yet another one of our Crown 5 corporations to privatization, sir. 6 MR. TORRIE: Yes. But the reason for posing 7 the question that way, because I myself am a 8 supporter of public power, always have been and 9 believe that we can do a lot more towards achieving 10 sustainable development with public investment than 11 we ever will with private investment, but our 12 electric utilities which were designed at a time when 13 the objective was to put a grid in place and build 14 power plants could be part of the solution or part of 15 the problem depending on whether they are able to 16 integrate demand-side investment into their 17 strategies. And if they can do that, then I would be 18 the first one to say that public investment will get 19 us much further down the road to sustainability than 20 private investment in this area. 21 MR. MAYER: Thank you. 22 MR. TORRIE: This screening exercise that's 23 described in Chapter 4 of the Volume 1 of the NFAAT 24 evidence. First of all, I know this is an ongoing 25 activity at Manitoba Hydro but when was this 1453 1 particular screening exercise conducted? 2 MR. WOJCZYNSKI: The screening exercise was 3 conducted in an iterative fashion over many years and 4 the final screening that was presented in the 5 submission, April 2003 submission, the final numbers 6 and the final efforts were over the 12 months leading 7 up to that. But it's an iterative process over many 8 years. We don't just do it spasmodically, we do it 9 on an ongoing basis. 10 MR. TORRIE: When you go through the various 11 criteria that are used in that screening exercise, 12 the levelized cost, the environmental impacts, is 13 there a single criteria anywhere in that chapter 14 where DSM does not come out at the top of the list? 15 MR. WOJCZYNSKI: It is as good as wind or new 16 hydro or supply-side efficiency improvements that's 17 been the continual theme that we've been putting 18 forward. And it is as good or better from an 19 environmental point of view. It may or may not be as 20 good from a financial point of view. 21 Depending on how much you do, it could result 22 from a rate point of view, it could result in no rate 23 increase, a rate decrease or a rate increase. And 24 for a participant who can't -- pardon me, for a 25 customer who can't participate for whatever reason, 1454 1 then that is significant to them. And whether we 2 have rate increases or not is a significant issue 3 that the corporation has to address. 4 MR. TORRIE: I'm sorry, when you're talking 5 about a customer who cannot participate, you mean 6 because the incentive is too low and they are too 7 poor to come up with their share of it? 8 MR. WOJCZYNSKI: There are many kinds of 9 reasons why a customer would find it difficult or 10 almost impossible to participate in as large a way as 11 others. And Mr. Kuczek can speak on that in more 12 depth if you wanted to go into that. 13 MR. TORRIE: No. I don't think that it would 14 be particularly fruitful at this hour of the day. 15 MR. WOJCZYNSKI: Depending on how much you do, 16 it may not be as good as the other from a rate point 17 of view. Also from an overall economic point of 18 view, if you do a lower, let's say a low or a medium 19 point of view doing DSM, it may be as economic as 20 others. But if you go to a very high point, you're 21 going to have to do more and more expensive DSM and 22 it becomes more expensive. So it all depends on the 23 level you're looking at. 24 We fully agree with you that doing DSM from an 25 environmental and other points of view is as good as 1455 1 or better as the other options we are pursuing and 2 that's why we are pursuing DSM. But if you go to too 3 high a level of DSM, that would no longer be true. 4 MR. TORRIE: But it's also true that you don't 5 really integrate it into your scenarios. For 6 example, the table that we started out with today 7 where we showed the costs and the revenues that are 8 used to determine the internal rate of return for 9 Wuskwatim, there could have been columns in that 10 table for variable levels of DSM as well; could there 11 not? 12 MR. WOJCZYNSKI: We look at the impact of DSM 13 on Wuskwatim as an alternative through assessing 14 different levels of load in the province and thus 15 determine what would be the impact on Wuskwatim. And 16 as long as we do all the DSM that's economic and we 17 determine that Wuskwatim is economic, then we have 18 done that comparison. 19 In terms of us doing a full-fledged analysis 20 of DSM where we extend it to looking at rates and we 21 do all the analyses that we've done here that we have 22 shown here in the Need For analysis for Wuskwatim, 23 that's what we will be doing in the next stage of the 24 DSM analysis when we integrate it into our resource 25 plan over the next year. 1456 1 And that's part and parcel of the commitment 2 work we do to DSM, just like we've been doing for 3 Wuskwatim. 4 MR. TORRIE: Thank you. So that's in some 5 ways a restatement of the basic approach which was 6 provided in response to our interrogatory number 7 32(b) in the NFAAT series where you said that, 8 "Manitoba Hydro does not approach its 9 economic analyses by estimating the 10 total value of the available market 11 and then assessing which projects can 12 be developed to achieve this value. 13 Instead, Manitoba Hydro's economic 14 analyses uses a more direct 15 project-specific approach conducted to 16 evaluate the value of a particular 17 investment within the market-place." 18 So that really summarizes the approach you 19 take to your economic analysis, correct? 20 MR. WOJCZYNSKI: On a project-by-project basis 21 that's what we do, yes. But when we compare 22 alternatives, that's a different exercise. 23 MR. TORRIE: Thank you, Mr. Chairman. My 24 friend Peter Miller may wish to ask a few additional 25 questions. I'm not sure. 1457 1 MR. MILLER: I just have one which I think is 2 fairly short. I believe in scoping the DSM studies, 3 you screened out technologies expected to become 4 commercially viable beyond 2007 and 8, technologies 5 that control or shift electrical demand such as 6 direct load control or thermal storage and 7 technologies that represent alternative sources of 8 supply. 9 I can understand the last one in the DSM 10 analysis but would the first two not lead to an 11 underestimate estimation of the potential as you get 12 farther out? You're not assuming that there will be 13 no new technologies beyond four years from now, are 14 you, or that they will become commercially viable? 15 You may be not confident in including them for a firm 16 projection but just as you do extrapolations on your 17 load forecasts beyond, you know, your interviews with 18 the top consumers, I wonder if that doesn't bias this 19 on the underestimation side? 20 MR. KUCZEK: You are correct in your 21 statement, sir. The process, as I mentioned before, 22 is that we started with the market potential study 23 and within that study there was a scope. The next 24 step is actually do the detailed program designs and 25 with the detailed program designs, the item that you 1458 1 referred to, the second item, technologies that 2 control and shift electrical demand were excluded. 3 That's tied to our energy management programs. And 4 what we're going to be doing is estimating the 5 potential there with our technical engineering staff 6 and so it will be included in our overall targets. 7 And so on the industrial side, we do expect 8 the number to actually be higher than what the market 9 potential study shows or indicates. And to give you 10 an idea of that number, it would probably be in the 11 range of 50 to 60 GWh is our best guess at this point 12 without completing the studies. 13 On your first point, the technologies that 14 were excluded, I think I mentioned the other day that 15 we excluded them for various reasons. And it was 16 associated with the risk of those technologies 17 actually being commercialized and the confidence that 18 we have. And a number of those actually come into 19 commercialization. And then you've got to take into 20 account also that if they do come into 21 commercialization, when they are going to come 22 into -- being commercialized and available on the 23 market and when would they possibly be incorporated 24 in the industry. And that would depend on what the 25 cost of the technologies would be relative to the 1459 1 other technologies that are available. So there's a 2 lot of risks associated with that. 3 I think I also mentioned if we were to assess 4 that, we should assess it separately and use a 5 different discount rate possibly for those 6 technologies. We don't think -- and our best 7 judgment that the overall impact within the study 8 period would be that significant because within the 9 study period that we're talking about, we're talking 10 about that 10 year period. And those technologies, 11 if there were a lot or if there were some and if they 12 were commercialized, we think most of the impact 13 would be towards the end of the study period. 14 And I guess I can add one more comment to 15 that. As we get more information and move forward, 16 we would adjust our targets going forward. 17 MR. TORRIE: Okay. Thank you. 18 MR. ADAMS: Mr. Chairman, I would like to add 19 a couple of comments. We had a very interesting 20 discussion revolving around the difficulty of 21 predicting customer's behaviour, the evolution of 22 technology and all the other things that go into load 23 forecasting. 24 I can only reiterate what I said at the 25 opening remarks is that from Manitoba Hydro's 1460 1 perspective, if DSM over and above what we estimate 2 to be achievable turns out to be economic, we will 3 pursue it. If new technologies come along and make 4 our current assessments and plans somewhat redundant, 5 we will change our plans and we will go after the 6 renewable stuff or the renewed stuff. 7 Our concern at this stage is not whether or 8 not we pursue DSM. That's a given. Our concern at 9 this stage is whether the amount of DSM that might be 10 available to us impairs in any way the viability of 11 the Wuskwatim project. And I certainly think that we 12 presented sufficient evidence to show that even under 13 the wildest optimistic assumptions of load growth and 14 DSM, Wuskwatim remains a very good economic and 15 otherwise beneficial project. 16 MR. MILLER: May I ask a question that relates 17 to that? 18 THE CHAIRMAN: Mr. Miller. 19 MR. MILLER: Okay. You've made right at the 20 beginning and just now repeated the commitment that 21 you're not just committed to doing what currently is 22 estimated as achievable but basically everything 23 that's economic. One question is how is the 24 economics of these alternatives affected by 25 Wuskwatim? You talk about the effects on the 1461 1 Wuskwatim economics, what are the effects on the DSM 2 economics? 3 MR. ADAMS: Within the range of reasonable 4 probabilities or possibilities, we don't believe 5 there is any significant impact. 6 MR. MILLER: Well, aren't they competing for, 7 say, inter-tie capacity and so on? 8 MR. ADAMS: To a very limited extent. But 9 again what we've tried to do is analyze the effect of 10 that. And within the range of things we've looked 11 at, the net effect is minimal. 12 MR. MILLER: On the DSM. 13 MR. WOJCZYNSKI: Perhaps I can go into the 14 details of that for a second. The way we have 15 confidence of that and use our expert judgment to 16 make these conclusions, and we've put this in our 17 evidence earlier, let's just use two sensitivities to 18 make the point. We looked at doubling the DSM. You 19 will recall Mr. Kuczek said the other day that we 20 expect that with all the latest information and with 21 Winnipeg Hydro in the picture now with the latest 22 evolution in technology, with the new study that 23 we've got, with everything else that we've talked 24 about, his guestimate is that we would likely 25 increase the DSM one and a half to two times, at most 1462 1 two times, compared to what we have already had. And 2 I believe that was in response to yourself, Mr. 3 Miller, yesterday. So you take that. 4 And we did sensitivities on Wuskwatim where we 5 doubled the DSM, kept everything else the same. And 6 the IRR of Wuskwatim only dropped 0.05 per cent. So 7 that clearly indicates, and I think anybody who is 8 familiar with this kind of economics and whatever 9 would concur that that indicates that the economics 10 of having gone to the double DSM were not 11 significantly affected. I mean you look at the 12 amount of quantities there. So doubling DSM didn't 13 affect the economics of Wuskwatim. And conversely, 14 if you put in Wuskwatim, it would not have hurt that 15 doubling of DSM. 16 So the next thing you can look at, we don't 17 think that more than doubling of DSM is a realistic 18 possibility but what if we were wrong. What if the 19 load forecast was a bit too high and what if you can 20 do somewhat more than two times DSM. What if we went 21 to the equivalent of at least five times DSM and we 22 did a sensitivity that said 0.3 per cent drop in the 23 IRR of Wuskwatim, that that would mean that that DSM 24 that was there to make up to five times, it also 25 would still have been economic using more or less the 1463 1 same parameters. So we can be confident that the 2 Wuskwatim going in would not adversely affect a 3 couple of multiples of DSM. 4 At some point if you went to 10 times or 20 5 times DSM, well yes, at some point you're going to 6 run out of tie line space and having Wuskwatim in 7 versus not having, it would make a difference but not 8 anywhere within the range of the DSM that we think is 9 at all realistic. 10 And particularly when you look at the load 11 growth projecting one and a half thousand GWh of load 12 growth in our baseload forecast between now and 2009 13 for instance, that's the size of Wuskwatim already. 14 So just to give some context to that. 15 So we are confident putting in Wuskwatim would 16 not adversely affect the economics of the range of 17 DSM that's reasonably possible. 18 MR. MILLER: Thank you. I think we're 19 through. 20 MR. BEDFORD: Mr. Chair, perhaps before Mr. 21 Miller and Mr. Torrie depart, they can give us all 22 some idea as to when we can expect the answers to the 23 interrogatories that several of us posed to them 24 almost a month ago. 25 MR. TORRIE: I'm hoping and anticipating 1464 1 having them finished this week. 2 THE CHAIRMAN: Thank you. 3 MR. GREWAR: Mr. Chairman, just before we 4 proceed, while I was out of the room there was a 5 document apparently brought forward. It's titled as 6 Exhibit 3.5 Commercial Sector Floor Space Growth 7 Rate. Is this a document already on record as part 8 of the filings? Okay. Thank you, sir. 9 THE CHAIRMAN: Thank you, Mr. Miller. Thank 10 you, Mr. Torrie. Can I ask the representatives of 11 the Trapline 18 to come forward. Mr. McIvor, could 12 you introduce yourself. 13 MR. MCIVOR: Sure. Good afternoon, 14 Commissioners, Panel. I'm not going to be as tough 15 as Ralph there but I'm going to ask a few questions 16 anyways. My name is Greg McIvor. I'm with Trapline 17 18. And I wasn't -- we didn't do a lot of the NFAAT 18 stuff. We weren't provided any resources for it but 19 I do want to take the opportunity to ask some 20 questions regarding The Need For An Alternatives To. 21 Just going back to the first day of the 22 opening, March 1st. I heard bits and pieces of Chief 23 Primrose's speech. I may not have been in the room 24 but there's some systems out in the lobby there that 25 while I was grabbing a coffee, I heard some of the 1465 1 comments. And some of the comments that he made have 2 some I think direct impacts on where NCN is now as a 3 community with regard to, for example, in the 4 verbatim they have on page 29, lines 15 to 18, you 5 know, that there's some comments attributed to how 6 the Churchill River Diversion flooded our lands. He 7 used that term, "our lands," and how much they have 8 suffered as a result of the Churchill River 9 Diversion. He had identified it as massive 10 flooding, you know, as a reason that the local 11 economy fell apart. 12 He also indicated that in 1977, NCN had signed 13 a Northern Flood Agreement. And since that time, 14 they have negotiated the Northern Flood Agreement up 15 until I guess '96 when they signed the Implementation 16 Agreement and received some I guess financial 17 compensation and some other items as part of signing 18 off on the Northern Flood Agreement. 19 But he described that process as very 20 frustrating, very slow. You know, that they were at 21 a point of frustration. They needed to do something. 22 And he went on to explain why, you know, they felt 23 this was the best part. 24 One of the things that I -- you know, like I 25 grew up in Northern Manitoba. I had been on Trapline 1466 1 there for 17 or Trapline 18 for well over 30 years 2 now. And we've seen some of the relatives in both 3 communities and some of the changes over the last 4 number of years. 5 The reason I go to this information is it just 6 leads into some of the questions I do have. 7 Upon signing the Implementation Agreement, you 8 know, he also referred to levels of education, 9 demographics of his community and he used the 10 percentage of about 60 per cent under the age of 30. 11 He also mentioned that a high percentage of his 12 community, you know, have an education capacity of 13 about a grade 9. 14 But, you know, looking at this process, the 15 Wuskwatim project as a means of self-sufficiency, I 16 think, you know, it's great that people can look, you 17 know, at that opportunity as, you know, becoming 18 self-sufficient. 19 You know, he indicated that this project is 20 safe. You know, that it's something that is good for 21 Northern Manitoba, good for his community. You know, 22 because Northern Manitoba apparently is his backyard. 23 We've been trying to tell him we're his neighbours 24 for a while already. 25 You know, he said, you know, the decisions are 1467 1 made independently to serve the interest of NCN 2 people. I am assuming that's the Chief and Council. 3 You know, page 33, line 7 to 11, he went on to 4 explain that, you know, that as an intervenor, we are 5 economic terrorists. Economic terrorism he used. I 6 mean I think, you know, the $20,000 we got for this 7 nine month process, I mean we can't even afford to be 8 a terrorist never mind an economic terrorist. 9 But one of the things that I wanted to 10 question you through this process was, and Mr. Mayer, 11 a couple other members, I think the Chairman had 12 asked some questions on I believe it was day two, 13 March 2nd, about an agreement, the Statement of -- 14 Summary of Understanding. You know, what is the, you 15 know, the status of that? Is it -- you know, is it a 16 document that's completed? Has it been fully 17 negotiated? 18 Because when you look back at -- and, Mr. 19 Adams, you have indicated you have been around for 40 20 years. You don't look at ancient history. Is that 21 after 20 or what is ancient history? Because the 22 Northern Flood Agreement was signed in '77. You 23 know, it's been 29 years, 27 years since it's been 24 signed. 25 And I think the issues that the Chief had 1468 1 identified and some of the things that he spoke about 2 very eloquently was the adverse effects. And I think 3 I could be wrong but under the Northern Flood 4 Agreement, Article 18, miscellaneous policy, Article 5 19, trapping and fishing, Article 21, the employment 6 task force, Article 22, remedial works, Article 23, 7 other matters, Article 24, arbitration, Schedule "B", 8 Community Development Planning, Community Development 9 Plan. You know, these are all part of some of the 10 issues I believe or I understand to believe that have 11 been signed off as part of the '96 Implementation 12 Agreement, the supplementary agreement I guess to the 13 Northern Flood Agreement. 14 THE CHAIRMAN: Mr. McIvor, I presume this is 15 still part of your preamble? 16 MR. MCIVOR: Yes, it is. 17 THE CHAIRMAN: But you did tell us you would 18 lead to some questions. 19 MR. MCIVOR: Yeah, yeah. No, I did that. I 20 am getting to the questions. 21 But one of the things I wanted to ask was, you 22 know, as part of this process, I mean you signed an 23 agreement because, you know, it was frustrating, it 24 was slow. Now you are looking at another agreement 25 that, you know, may contain the same issues. Maybe 1469 1 Mr. Adams, you can define for me what is "adverse 2 effects" to Manitoba Hydro? 3 MR. ADAMS: "Adverse effects" is a defined 4 term in the Agreement. I don't have the agreement in 5 front of me. 6 MR. MCIVOR: Okay. But if you had it in front 7 of you, what would it mean? You've been here for 40 8 years. 9 MR. ADAMS: If I had it in front of me, I'd 10 read it to you. I don't have it in front of me. 11 MR. MCIVOR: All right. Since you don't know 12 the definition of "adverse effects," you know, as a 13 result of not having the Agreement, I'm not sure 14 which Agreement. Is it the Northern Flood Agreement 15 or is it the new agreement, the Implementation 16 Agreement or the Wuskwatim Agreement? But anyway, we 17 will get to that. 18 You have identified one of the issues or I 19 think Councillor Thomas identified one of the issues 20 as the adverse effects compensation. It seems to be 21 a critical component of the Statement of 22 Understanding and in terms of finalizing the 23 Wuskwatim agreement. How would you define adverse 24 effects using -- as it relates to this Summary of 25 Understanding? 1470 1 MR. ADAMS: Again, adverse effects is defined 2 in the context of the Summary of Understandings. And 3 at the appropriate time, we and NCN will try to 4 negotiate a resolution of it. 5 MR. MCIVOR: Is that before you construct 6 Wuskwatim or before the inservice date? 7 MR. ADAMS: I have the SOU here. I don't have 8 the Implementation Agreement and it's the 9 Implementation Agreement that contains the 10 definition. But I think your question was when did 11 we agree on the compensation? 12 MR. MCIVOR: Well, I think what I asked was 13 what is your definition of "adverse effects" as it 14 relates to the compensation negotiations that are 15 part of your, you know, your Wuskwatim Agreement? 16 Are they contained in the Northern Flood? Are they 17 part of the implementation? Are they now transferred 18 over to the new Wuskwatim initiative? 19 MR. ADAMS: Okay. They are part of the 20 Implementation Agreement and they are carried over 21 into the new initiative. And "adverse effects" 22 means, 23 The direct or indirect negative 24 consequences of the project or the 25 operation thereof by Hydro, which 1471 1 consequences impact or change the 2 physical, chemical or biological 3 characteristics of the environment and 4 include, without limitation, risks or 5 injuries to the health, safety, 6 well-being, comfort or enjoyment of 7 Nelson House or Members, which again 8 defined terms, and impacts on 9 interests in and the exercise of 10 rights in relation to lands, pursuits, 11 activities, opportunities, lifestyles 12 and assets of Nelson House or Members. 13 MR. MCIVOR: I think that's Nelson House's 14 definition. 15 MR. ADAMS: Yes. 16 MR. MCIVOR: Because it refers to anything 17 that Manitoba Hydro may create. So what is Manitoba 18 Hydro's definition of "adverse effects"? 19 MR. ADAMS: This is our definition of "adverse 20 effects." This is an agreed definition of "adverse 21 effects" and between us and NCN. 22 MR. MCIVOR: Well, you just told the 23 Commission last week that you haven't agreed on what 24 adverse effects are and what the compensation is 25 going to be. 1472 1 MR. ADAMS: No. This is the definition of 2 "adverse effects." We are discussing with NCN what 3 the specific adverse effects of the Wuskwatim 4 agreement are and they will be defined, spelled out 5 and compensated for or at least compensation 6 arrangements made in an agreement with NCN before 7 they go to ratification with their membership and we 8 start construction. 9 MR. MCIVOR: Okay. So you are recommending 10 that NCN resolve the issues of compensation that 11 relate to adverse effects prior to going to their 12 membership for a ratification vote? Is that what you 13 just said? 14 MR. ADAMS: I am not recommending it. That's 15 the understanding we have with NCN. 16 MR. MCIVOR: Okay. Last week, when you were 17 asked, I think Councillor Thomas suggested that they 18 have till 2009 before the inservice date to sign the 19 agreement. 20 MR. ADAMS: No. 21 MR. MCIVOR: Am I not correct, Councillor 22 Thomas? 23 MR. THOMAS: No, I didn't say 2009. 24 MR. MCIVOR: You didn't? Okay. I'll have my 25 lawyers look at it but I'll check into it later. 1473 1 MS. AVERY KINEW: Can we have that clarified, 2 please? I do recall something to the effect that NCN 3 can pull out up to that time. 4 MR. THOMAS: The comment that I made with 5 regard to a particular date was the inservice date of 6 2010 where we would have an opportunity to pull out 7 if that's what the community wants us to do. 8 MS. AVERY KINEW: Thank you. 9 MR. MCIVOR: So you're going to sign a 10 partnership agreement but you still have the option 11 of pulling out before 2010? Is that what you're 12 telling me? 13 MR. THOMAS: That's correct. 14 MR. MCIVOR: Okay. All right. A couple more 15 questions, Mr. Adams. You have indicated you've been 16 with Manitoba Hydro for about 40 years. So were you 17 involved with the Grand Rapids Hydro project or was 18 that something that you just kind of -- 19 MR. ADAMS: Actually, what I said is I've been 20 in the hydro business for nearly 40 years. I haven't 21 been with Hydro for 40. I joined Hydro after the 22 Grand Rapids project was completed. 23 MR. MCIVOR: Were you involved in the Forebay 24 discussions there? 25 MR. ADAMS: No. 1474 1 MR. MCIVOR: Okay. I was just wondering 2 because I think there are some questions I have on, 3 you know, the CRD and just some, you know, questions 4 on Lake Winnipeg Regulation and that's why I was 5 asking if you were involved in the Forebay 6 discussions. 7 In the Northern Flood Agreement, there was 8 five principal communities. Four of them have signed 9 various implementation agreements over the last few 10 years. Is there anything in any of the new 11 implementation agreements that would subject Hydro 12 to -- say, for example, you give Peter "X" amount of 13 dollars based on a formula and Paul sitting over here 14 and he says, well, you gave Peter more than you gave 15 us. And you know, this clause says that you have to 16 match or, you know, bring that up. I am not sure if 17 that -- I understand there was something in each of 18 these agreements that lead each community to believe 19 that there are some commitments by Hydro to do that, 20 to assure the communities that they are not going to 21 get shafted, they are not going to get -- you know, 22 Nelson House is not going to get more than Norway 23 House or York Landing is not going to get more than 24 Split Lake or something like that. 25 MR. ADAMS: To the best of my knowledge, the 1475 1 implementation agreements are completely independent, 2 each negotiated with and signed with the appropriate 3 First Nation involved. And there really is no 4 leapfrogging or ratcheting effect inherent in them. 5 MR. MCIVOR: Okay. And the reason I ask is 6 that, you know, I guess you were all wondering why I 7 was asking the question I think, is because if Nelson 8 House is able to partner with Manitoba Hydro on 9 Wuskwatim and you have that type of a scenario in 10 these agreements, you know, that could mean that you 11 would be on the hook to build other dams in partner 12 with the other First Nations communities. 13 MR. ADAMS: We have been under no obligation 14 to partner with anybody through any sort of agreement 15 except the SOU we have with NCN to partner on other 16 dams. We are in discussions with other First Nations 17 for First Nations as we've talked about here before 18 and I am hopeful that we can come to an agreement 19 with them as well. But it's not an obligation, it's 20 a choice. 21 MR. MCIVOR: Okay. As part of these 22 agreements, any of the implementation agreements, do 23 you have commitments or agreements that go back to 24 '77 that are part of NFA that were made with, say for 25 example, Norway House Community Council, Cross Lake 1476 1 Community Council, Thicket Portage Community Council. 2 Do you have supplementary agreements to some of the 3 impacts of the Northern Flood Agreement with other 4 communities that may be impacted as a result of the 5 Wuskwatim project? 6 MR. ADAMS: I'm struggling with the question a 7 little bit there. There's five NFA communities. 8 MR. MCIVOR: Okay. Maybe I can clarify it for 9 you. You have five NFA communities. Norway House 10 and Cross Lake are on different sides of the fence, 11 okay. You have an agreement, an implementation 12 agreement or was it an agreement in principle with 13 Norway House, but a few months ago you signed an 14 agreement with Norway House Community Council as 15 well. 16 MR. ADAMS: Um-hum. 17 MR. MCIVOR: Cross Lake, you signed an 18 agreement or revised or renegotiated an agreement 19 with Cross Lake Community Council as well. Are there 20 any other or you must have other obligations as a 21 result of these various agreements that have been 22 implemented so far? 23 MR. ADAMS: Okay. We have obligations with 24 the five First Nations under the Northern Flood 25 Agreement, four of which have been supplemented with 1477 1 the implementation agreements. We also have 2 agreements with, and you'll forgive me if I can't 3 remember the number completely, but I think it's 4 about 13 other communities, other First Nations in 5 the north which essentially compensation agreements 6 for various projects over the years. 7 MR. MCIVOR: Is it possible to get a copy of 8 those 13 agreements available, whether it's for 9 anybody else or at least for myself anyway? I can't 10 speak for anybody else. 11 THE CHAIRMAN: Mr. Bedford? 12 MR. BEDFORD: Mr. Chair, we're way outside the 13 Wuskwatim projects with this question. I object to 14 it. 15 THE CHAIRMAN: Mr. McIvor, would you please 16 indicate how this is related to NFAAT with Wuskwatim? 17 MR. MCIVOR: When you look at the NFAAT, The 18 Needs For An Alternatives To, you heard Mr. Torrie 19 talking about DSMs and if you include this 20 information and that information, I mean if you don't 21 put all the pieces of the puzzle together, you know, 22 in terms of what are going to be some of the future 23 obligations of constructing Wuskwatim, there are 24 communities that have, you know, supplemental 25 agreements to the Northern Flood, maybe not as 1478 1 Northern Flood Agreement participants per se but 2 because they are adjacent to these communities or 3 within that region. 4 THE CHAIRMAN: Mr. Adams indicated there is 5 some "X" number of agreements and referred to the 6 ones specific to the communities you were asking 7 about. Now you're asking for whether a copy is 8 available of all these others? 9 MR. MCIVOR: Sure. 10 THE CHAIRMAN: Which were not related, I 11 understood, to the Wuskwatim. 12 MR. ADAMS: Yes, Mr. Chairman, they are not 13 related to Wuskwatim. I am certainly prepared to 14 make a list of these agreements available but I 15 really don't see what they -- I'm having trouble 16 relating them to Wuskwatim. 17 MR. MCIVOR: I don't just want the list, I 18 want the agreements. 19 MR. ADAMS: They are public documents. 20 MR. MCIVOR: Well, I searched your website and 21 also the Conservation or Aboriginal Affairs, I 22 couldn't find any agreements. But anyway, I hope I 23 can get those. 24 THE CHAIRMAN: Ms. Avery Kinew. 25 MS. AVERY KINEW: Mr. McIvor, are you looking 1479 1 for a definition of "adverse effects," whether it 2 changes in these agreements? 3 MR. MCIVOR: Yes, because he hasn't provided a 4 response, at least that I'm not comfortable. 5 MS. AVERY KINEW: Is that possible, Mr. Adams? 6 MR. ADAMS: Well, I have provided a response. 7 MS. AVERY KINEW: Is it the same definition in 8 every -- 9 MR. ADAMS: More or less. It will say Cross 10 Lake or Norway House rather than Nelson House but the 11 definition is pretty standard. Now that's a 12 definition of what constitutes an adverse effect, 13 it's not a description of the specific adverse effect 14 under each agreement. 15 MS. AVERY KINEW: What are you seeking, Mr. 16 McIvor? 17 MR. MCIVOR: What I was looking for is 18 basically something that would allow, you know, as an 19 Aboriginal person, as a First Nation person, as a 20 member of the Trapline 18 area which is adjacent to 21 the Nelson House Resource Management area where the 22 transmission line will, you know, go by by about one 23 kilometre, I guess one kilometre away. There's going 24 to be a lot of activity there. There's a dam going 25 to be built there that, you know, may or may not have 1480 1 an impact. 2 I'd like to know, you know, at this point, you 3 know, Manitoba Hydro, how do they define "adverse 4 effects." Because I think if you look at all the 5 five agreement holders, they have different 6 definitions of what adverse effects are. 7 MR. ADAMS: Maybe I can solve the problem. 8 THE CHAIRMAN: Mr. Adams. 9 MR. ADAMS: Adverse effects will vary from 10 location to location which is part of the reason why 11 the definition is quite broad. In the case of a 12 trapper or trapline, it may be an access issue, it 13 may be a productivity issue. So it is difficult to 14 define "adverse effects" for a specific event without 15 sitting down with the people who had been adversely 16 affected. 17 I can give you the copy of the definition of 18 "adverse effects" that we have in all of our 19 agreements but they are not going to change much from 20 this. What we need to do and I think we certainly 21 had some initial discussions and we'll continue to do 22 in the case of you and your fellow trappers is go 23 through the project with you, try to identify what 24 the adverse effects will be. If there are adverse 25 effects that you can identify, then we have a program 1481 1 for compensation. 2 MR. MCIVOR: Thanks for the offer. 3 MR. ADAMS: Having said that, you've got to be 4 able to demonstrate there are adverse effects. 5 THE CHAIRMAN: Mr. Mayer. 6 MR. MAYER: Before the Chair should be asked 7 to rule on Mr. Bedford's objection, and I trust we 8 haven't forgotten about the objection, I think 9 there's a couple of questions we need to know. Of 10 those 13 odd agreements, I am assuming one of the 11 ones you are referring to is Wabowden and I'm sure 12 Mr. McIvor will know how to get that, I believe you 13 have that agreement with Wabowden. I think I was 14 involved with that many years ago. And I would 15 readily admit that that's probably totally irrelevant 16 to any discussion respecting Wuskwatim. 17 But I am assuming you also have an agreement 18 with the Town of Churchill. And the Town of 19 Churchill, I believe its agreement, at least if it 20 deals at all with the regulation of the water down 21 the Lower Churchill River, might have some effect 22 upon your operation Notigi. And I would suggest that 23 in all probability, in fact I believe one of the 24 reasons that you have 34,000 CFS in your augmented 25 flow program going through the Churchill River 1482 1 Diversion in winter and 35,000 CFS in the summer, 2 1,000 CFS difference, as I understand it, is to 3 continue to have enough water in the Churchill River 4 so it doesn't freeze to the bottom. 5 So I'm wondering whether any of the 13 6 agreements would have a specific relationship to the 7 issues we are now dealing with understanding that the 8 augmented flow program is part of the baseline for 9 this hearing. 10 MR. ADAMS: Okay. All of the implementation 11 agreements with the downstream communities will have 12 consultation, and if appropriate, compensation 13 arrangements associated with Wuskwatim. And again, 14 the nexus is that there has to be an effect. 15 The Churchill Agreement is a little bit 16 different. Again, we don't see a nexus because we 17 are not going to change the way the Churchill River 18 Diversion is operated. But we are certainly going to 19 sit down and talk to the Mayor and Council of 20 Churchill. And I'm pretty sure I'm safe in saying we 21 already have had some just preliminary discussions. 22 And if there's an effect, we'll do whatever we need 23 to either mitigate it or, preferably mitigate it or 24 compensate it. It's hard to imagine what it might be 25 at Churchill. 1483 1 Similarly if the Wuskwatim project has an 2 identifiable impact on any other community or 3 individual, then we will work with that individual or 4 community to firstly minimize, mitigate and 5 ultimately compensate if appropriate. But we have, 6 as we've said from the beginning, we've designed the 7 project both in terms of structure and in operation 8 to absolutely minimize the impacts. 9 THE CHAIRMAN: Thank you. Okay, Mr. Bedford, 10 the point you made was raised. Mr. Adams has 11 answered. I don't know that we have any other issues 12 related to that. 13 MR. BEDFORD: If the line of questioning is 14 over on that subject, then we're finished with it. 15 THE CHAIRMAN: That's what I thought. Mr. 16 McIvor. 17 MR. MCIVOR: Okay. On March 2nd, there was 18 some questioning by Mr. Abra. And one of the 19 questions or some of the questions, and I think Mr. 20 Mayer or Mr. Lecuyer had made some comments as well, 21 and it relates to the Churchill River Diversion. You 22 know, mentioned that if you were up river or down 23 river, sometimes we don't know when but I understand 24 you've got a winter and a summer program that 25 dictates when we're down river or up river. You 1484 1 know, like I think the Missi Falls control structure, 2 when it's closed, reverses the water into or holds 3 the water in South Indian Lake which is then diverted 4 down the Churchill River system or the old Burntwood 5 River or whatever it's called now, the Churchill 6 River Diversion, through the Notigi Control 7 Structure. 8 One of your representatives had made some 9 comments regarding tests of the augmented flow 10 program, tests that were conducted over I'm not sure 11 how many years. It didn't really say but it was 12 referred to as 10,000 CFS, 15,000 and et cetera. It 13 went up. 14 And then there was also some discussion I 15 think that related to around 1978 maybe, '76, where 16 Manitoba Hydro went to the Minister for an increase 17 in the augmented flow program to something like 18 30,000, 35,000 CFS as part of the Churchill River 19 Diversion and the control project that you had. 20 Because I understand from your comments that in the 21 winter, you have problems with ice. I don't know if 22 it's the channels on the north end of Lake Winnipeg 23 or if it's at Jenpeg or maybe both where the ice 24 reduces the amount of water flowing through that 25 system, the Nelson River system to Lower Nelson. So 1485 1 the augmented flow program was incorporated to assist 2 the Lower Nelson projects. So that varied. 3 One of the questions I have is, you know, 4 going from 30,000 CFS, 35,000 CFS in your winter and 5 summer program, you've now gone to an elevation 6 method of regulating water flows. Is that higher or 7 lower than your summer and winter programs? 8 MR. CORMIE: In the interim licence, there is 9 a limitation on the maximum flow at Thompson equal to 10 30,000 cubic feet per second plus the long-term mean 11 flow in the Burntwood River at Thompson. Based upon 12 those flows, water levels were predicted at Thompson 13 at the sea plane base and at the pumphouse and 14 facilities were designed at Thompson to accommodate 15 those. But it was water levels that were the 16 concern, not necessarily what flow was necessary to 17 achieve those. 18 And in 1981, as part of the deviations that 19 were requested from the interim licence limit that 20 set the flow at Thompson were replaced with a stage 21 or a level constraint rather than a flow constraint. 22 So Manitoba Hydro was limited to water levels at 23 Thompson regardless of what the local inflow was 24 downstream of Notigi regardless of what the diversion 25 flow was. 1486 1 For example, during periods of high local 2 run-off during periods of heavy rain, it may be 3 necessary to reduce the flow at Notigi, reduce the 4 diversion flow to prevent water levels at Thompson 5 from going above the 619 limit at sea plane base or 6 the 623 limit at the pumphouse. So the concern is 7 the water level and not necessarily what flow is 8 going to produce that. 9 And we would regulate the Notigi flows to 10 prevent water levels exceeding the levels that were 11 acceptable in the City of Thompson. 12 THE CHAIRMAN: I assume, Mr. McIvor, you want 13 to relate this question to NFAAT issues. You're not 14 asking this in regards to the environmental impact? 15 MR. MCIVOR: No, it's NFAAT. That's what 16 we're here for. 17 THE CHAIRMAN: Carry on. 18 MR. MCIVOR: You indicated that you control 19 the flows into the Thompson area because you've got 20 to maintain a certain level. So what happens to 21 that -- I mean at 30,000 CFS or say we're using that 22 for an instance, and then your winter program I 23 understand is 35,000 CFS, I don't understand if 24 there's an extra 5,000 CFS and you are maintaining 25 the water levels at Thompson at 30,000 CFS, wouldn't 1487 1 there be some impact at Thompson because of the 2 increase? 3 MR. CORMIE: We're not trying to maintain 4 levels at Thompson, we're trying to keep water levels 5 exceeding those levels. We are authorized to divert 6 up to 34,000 in the winter and 35,000 in the summer 7 subject to the levels at Thompson not exceeding 619 8 in the summer at the sea plane base and 623 in the 9 winter at the pumphouse. And so we have to limit the 10 releases at Notigi for both those constraints, both 11 the flow limitations at Notigi and the level 12 constraints at Thompson. 13 MR. MCIVOR: Is there anything in between 14 Notigi and Thompson that may assist with regulation 15 control? 16 MR. CORMIE: We only have a control structure 17 at Notigi. 18 MR. MCIVOR: Okay, thanks. These licences, 19 there was some discussion on licensing. You have 20 identified an interim licence, and I am not sure what 21 that means or what that includes, but you've also 22 identified an interim flow licence. Can you describe 23 the difference between those two? 24 MR. CORMIE: There is only one licence. It's 25 the interim licence for the Churchill River 1488 1 Diversion. 2 MR. MCIVOR: Okay. And that's renewable 3 annually? 4 MR. CORMIE: No. That is the licence that 5 Manitoba Hydro received from the province in the 6 early 1970s for the Churchill River Diversion 7 project. 8 MR. MCIVOR: So you make an application for 9 interim flow licences then? 10 MR. CORMIE: Annually for the last 15 years -- 11 MR. MCIVOR: Eighteen years. 12 MR. CORMIE: -- we have been requesting 13 deviations from the interim licence. And those 14 deviations have been referred to as the augmented 15 flow program. 16 MR. MCIVOR: Okay. I think it was Ms. Wray 17 that indicated that they have not deviated away from 18 their licensing because they haven't changed anything 19 in 18 years. So is that suggesting then that the 20 regulation has been at 30 and 35 for summer and 21 winter programs for the last 18 years? 22 MR. CORMIE: The levels and flow limits that 23 are in today's augmented flow program, in the program 24 that have been exactly the same for 18 years, for the 25 last 15 years we have been applying for those changes 1489 1 annually. Prior to that, we were asking for those 2 limits to be changed on a seasonal basis. But they 3 have been identical for 18 years. 4 MR. MCIVOR: So what was the limit on the old 5 interim licence? 6 MR. CORMIE: Which limit are you referring to? 7 MR. MCIVOR: The one you had 18 years ago. 8 MR. CORMIE: But there are many limits. Which 9 limit are you referring to? 10 MR. MCIVOR: All of them I guess. You've had 11 it for 18 years. You know, you said you keep 12 applying annually. So 18 years ago, you had an old 13 interim licence that was mentioned. 14 MR. CORMIE: And we still have that interim 15 licence. 16 MR. MCIVOR: What is the level CFS on 17 Churchill River Diversion under that old interim 18 licence? 19 MR. CORMIE: Under the interim licence, 20 Manitoba Hydro is authorized to divert 30,000 cubic 21 feet per second both summer and winter. The 22 augmented flow program -- okay, under the augmented 23 flow program, the Minister gives Manitoba Hydro 24 permission to increase the diversion flow to 34,000 25 CFS during the winter and to 35,000 CFS during the 1490 1 summer. 2 MR. MCIVOR: Okay. I am not sure if it was 3 Mr. Cormie or Ms. Wray that indicated that the AFP 4 was redefined to incorporate an elevation limit 5 measurement as opposed to a CFS measurement. 6 MR. CORMIE: Yes, and I just spoke to that. 7 At Thompson where we were required to -- we were 8 allowed to have a flow, a maximum flow at Thompson 9 equal to 30,000 CFS, which was the authorized flow at 10 Notigi, plus whatever the long-term mean annual flow 11 was at the Burntwood River at Thompson. So just for 12 hypothetical purposes, let's assume that there was 13 3,000 cubic feet per second of local inflow 14 downstream of Notigi from the Rat and the Burntwood 15 drainage basins to Thompson, so you can imply from 16 that that we were authorized to have a maximum flow 17 at Thompson of 30,000 from the Diversion structure, 18 plus 3,000 cubic feet from local inflow or a 33,000 19 CFS flow limit at Thompson. Rather than concerning 20 ourselves what the flow limit was, the issue is what 21 water levels would be at Thompson. 22 So the licence was changed from having the 23 30,000 diversion flow plus the long-term mean annual 24 flow to one of limiting the water levels at the City 25 of Thompson to levels that could be safely passed at 1491 1 the city both in the summer and the winter. And 2 those were at the sea plane base and at the 3 pumphouse. 4 MR. MCIVOR: Thank you. You indicated that 5 you get ministerial direction in terms of your 6 interim licensing annually. You know, does the 7 Minister fly over that area with a chopper, a little 8 GPS and video camera to determine whether a licence 9 is appropriate? 10 THE CHAIRMAN: I heard Mr. Cormie say it was 11 in regards to the augmented flow. The licence, the 12 interim licence did not change. It was just the 13 application renewed annually in regards to the 14 augmented flow. 15 MR. MCIVOR: Okay. But they also suggested 16 there is different seasons of the augmented flow. So 17 I was just wondering, you know, is that just a 18 recommendation, a memo to the Minister saying we need 19 this licence, please approve it? What type of 20 documentation is provided to make those applications? 21 MR. CORMIE: Annually, Manitoba Hydro applies 22 to the Minister to deviate from the limits set in the 23 interim licence. That application is processed by 24 the Minister. 25 MR. MCIVOR: Okay, thanks. 1492 1 MR. CORMIE: And for 18 years, well, since we 2 began applying, he has granted us permission to 3 deviate from those limits that are set in the interim 4 licence. 5 MR. MCIVOR: And that's with approval of the 6 NCN South Indian Lake residents as well. They have 7 been consulted in that process as well for any 8 deviations? 9 MR. CORMIE: Yes. All affected parties are 10 advised that Manitoba Hydro is applying. 11 MR. MCIVOR: Okay. So this process is not 12 just a Manitoba Hydro/Minister type of relationship. 13 You consult with the affected First Nations' 14 communities? 15 MR. CORMIE: I'm not sure what consultations 16 the Province engage in. 17 MR. MCIVOR: Okay. I must have missed out the 18 part when they referred to ministerial direction. 19 But anyway, maybe when we get to down the road, we 20 can ask that question as to what participation does 21 the department have in issuing these licences. 22 So there has to be like an application form 23 then if the Department of Conservation is involved. 24 MR. CORMIE: We apply in written form annually 25 to the, and it's now the Minister of Water 1493 1 Stewardship. 2 MR. MCIVOR: So there's an application form? 3 MR. CORMIE: There is no form. We write a 4 letter. 5 MR. MCIVOR: Oh, okay. Thank you. Maybe I 6 can ask Mr. Adams again. You know, the first day you 7 had mentioned that you were very excited about this 8 opportunity on Wuskwatim and you discussed, and I 9 think Mr. Wojczynski had offered some support as well 10 in terms of this agreement with NCN. It was 11 indicated that the best way to pursue this was 12 through an agreement with -- what did you call that, 13 Bob, a NUG, non-utility? Something like that I 14 think. I can't remember the term. 15 THE CHAIRMAN: Generation. 16 MR. MCIVOR: Okay. So you have established 17 this little I guess power company through this 18 limited partnership with NCN which NCN hopes to own 19 33 per cent of. And I think you heard the councillor 20 earlier say that. 21 MR. ADAMS: Is that a question? 22 MR. MCIVOR: That's a question. You have 23 formed this corporation or company? 24 MR. ADAMS: Strictly speaking, it's not a 25 company, it's a limited partnership. But the 1494 1 subtleties of that aside, yes, we will form a joint 2 company which is essentially independent from both 3 NCN and Manitoba in which we will own two-thirds and 4 NCN will own one-third. 5 MR. MCIVOR: Okay. Currently Manitoba 6 Hydro -- 7 MR. ADAMS: Sorry. I am advised I misspoke 8 myself and said Manitoba instead of Manitoba Hydro. 9 It was highly unintentional. 10 MR. MCIVOR: With that arrangement, you know, 11 is it going to be similar to Manitoba Hydro? I 12 understand Manitoba Hydro doesn't pay any corporate 13 tax in the Province. 14 MR. ADAMS: As a Crown corporation, Manitoba 15 Hydro is not liable for income taxes. The 16 partnership like any other similar structure would be 17 a flow-through -- one of the reasons we go for a 18 limited partnership is that it's a flow-through type 19 of arrangement. Any profits would be taxed in the 20 hands of the limited partners rather than the 21 partnership. And since we don't pay any taxes, it 22 doesn't change anything for us. NCN will have to 23 speak for their own situation. 24 MR. MCIVOR: Maybe I can ask Councillor Thomas 25 then. Would NCN then be obligated to pay tax on that 1495 1 revenue? 2 MR. THOMAS: Those are some of the issues that 3 we're looking at. And right now, we've engaged the 4 services of tax lawyers to look into the acquisition 5 of an advance tax ruling on the issue and seeing what 6 will come out from that process. 7 MR. MCIVOR: Okay. Maybe I can ask again in a 8 little different structure. I understand that the 9 Wuskwatim project between Taskinigup Falls and 10 Wuskwatim Falls is built in the resource management 11 area of Nisichawayasihk Cree Nation. 12 Why would there be any discussion regarding 13 taxation if it's on NCN land territory, traditional 14 territory, whatever you want to call it? 15 MR. THOMAS: As you are probably aware by your 16 involvement with the political organizations that 17 you've worked with, we have had a system imposed on 18 First Nations people for quite a period of time, 19 from 1763 onward. But more specifically, I guess 20 maybe around 1867 with the imposition of the British 21 North American Act, we've had the creation of 22 treaties and the imposition of the Indian Act that 23 creates reserves and that determined what status we 24 have in terms of taxation issues. 25 The project site itself is not reserve land 1496 1 and tax exemptions, as they apply to us as First 2 Nations people, are generally restricted to those 3 things or economic, I guess, activities or 4 transactions or benefits that occur on reserve. 5 MR. MCIVOR: So the project site you're saying 6 is not on reserve? 7 MR. THOMAS: It hasn't been identified as 8 reserve land within the treaty making process that 9 occurred. It is, from our view, part of our 10 traditional territory but it's not legally recognized 11 as reserve land. 12 MR. MCIVOR: Okay. I understand that NCN, is 13 it a Schedule "A" or "B" Band under the Treaty Land 14 Entitlement Initiative? 15 MR. THOMAS: I can't remember. I think it's 16 "A". The Schedule "B" Bands can choose land under 17 the Treaty Land Entitlement, to select in areas that 18 are occupied by whomever. Schedule "A" deals with 19 issues that are on unoccupied Crown land I believe. 20 MR. MCIVOR: Is the Wuskwatim site considered 21 unoccupied Crown land at this point? 22 MR. THOMAS: I beg your pardon. I'm sorry, I 23 was distracted here. 24 MR. MCIVOR: Okay. Is the Wuskwatim project 25 site considered unoccupied Crown land at this point? 1497 1 MR. THOMAS: At this particular point, I 2 believe so. 3 MR. MCIVOR: My understanding of some of the 4 TLE processes, the NFA processes that First Nations 5 have an obligation or they have a right to protect 6 the interests of their members, to protect the 7 interests of their treaty rights, their Aboriginal 8 rights, why would NCN even consider discussing 9 taxation if there's an opportunity to take the site 10 because it's unoccupied and convert it to TLE 11 selections? 12 MR. THOMAS: Those are some of the issues that 13 we are dealing with and we looked at all kinds of 14 possibilities with regard to the selection of that 15 particular area under our Treaty Land Entitlement 16 options. But in terms of the issue of concern, I 17 don't want to speak for Hydro, but they do have some 18 concerns with regard to situating a project on a 19 particular reserve. 20 With regard to the taxation issue, we're in 21 the process of devising an appropriate structure for 22 dealing with the taxation. 23 MR. MCIVOR: Okay. Just on your comment there 24 about Hydro placing a project on reserve, I mean I 25 think that's a little oxymoron I think in terms of 1498 1 some of the devastation in First Nation communities 2 up north. 3 So as a representative for NCN, you are 4 suggesting and recommending that you pursue this 5 initiative to pay both federal and provincial tax as 6 part of your partnership with Manitoba Hydro? 7 MR. THOMAS: No. 8 THE CHAIRMAN: I didn't hear him say that. 9 MR. MCIVOR: So anybody working there pays 10 tax. Any First Nation member working there pays 11 taxes, income tax? 12 MR. MAYER: What's the possible relevance? 13 MR. THOMAS: Yes. 14 MR. MCIVOR: Okay. And the reason I asked 15 these questions -- 16 THE CHAIRMAN: Repeat the question, please. 17 MR. MCIVOR: This last question? 18 THE CHAIRMAN: Yes. 19 MR. MCIVOR: Okay. All I suggested, asked 20 Councillor Thomas was that all First Nation people 21 working on the site will then be -- will then have to 22 pay taxes, federal and provincial tax. 23 THE CHAIRMAN: We heard the answer, we hadn't 24 heard the question. I'm sorry. 25 MR. MCIVOR: Oh, okay. There you go. And the 1499 1 reason I ask these questions is I want to get into 2 some of the other areas regarding employment. You 3 know, there are some items regarding the proposed 4 employment, you know, with the Wuskwatim project. 5 You know, in your submission, your overview I 6 guess, you had the slide show and all that kind of 7 stuff, I think it starts on page 51 where you talk 8 about some of the employment opportunities and there 9 was some -- a lot of discussion as well from the 10 panel members in terms of employment and some of the 11 procurement initiatives. 12 Do you guys want to stop for dinner because 13 I've got a few more questions. 14 THE CHAIRMAN: How much time do you expect? 15 MR. MCIVOR: About another hour. 16 THE CHAIRMAN: Mr. Grewar, these questions, 17 can they continue this evening or do we have an 18 agenda that -- 19 MR. GREWAR: Well, there's a certain degree of 20 flexibility. We have some public presentations which 21 it will be necessary to get through this evening 22 because of people who have travelled from out of 23 town. If you wanted to go a little longer now and 24 then maybe pick up for a short time this evening, 25 but it would have to be a fairly limited time this 1500 1 evening that would be available. 2 THE CHAIRMAN: Ms. Matthews Lemieux, were you 3 intervening in that regard as well? 4 MS. MATTHEWS LEMIEUX: I just wanted to get a 5 clarification if I could. The reference that has 6 been made by Mr. McIvor is to the EIS portion. Are 7 we now moving into the EIS or is he finished with 8 NFAAT? 9 MR. MCIVOR: I don't know if it's EIS. I 10 think it has some bearing on the actual cost of the 11 project because some of the employment related 12 initiatives as part of the Wuskwatim project may 13 increase. I understand the project costs by about 10 14 per cent. You know, there's procurement contracts 15 that may increase the cost of the Wuskwatim project 16 by 15 per cent. 17 THE CHAIRMAN: So I gather from the response 18 that Mr. McIvor is proposing to ask questions on the 19 basis of NFAAT. 20 Mr. McIvor, is that a problem if this evening 21 your time is not available to continue with that, 22 would you prefer then that we continue with your 23 questions on Monday? 24 MR. MCIVOR: Sure. I got no problem with that 25 at all, you know, if that's what you'd prefer to do. 1501 1 THE CHAIRMAN: Mr. Grewar, how does that jive 2 with the schedule? 3 MR. GREWAR: That's fine, Mr. Chairman. The 4 NFAAT panel will be required on Monday because we do 5 have the displaced residents of South Indian Lake who 6 will be crossing as well so the panel will need to be 7 here. So if we need to accommodate Mr. McIvor on 8 Monday, that's possible. It's just a question of 9 whether you want to adjourn now or go longer this 10 evening or right now or if you want to -- 11 THE CHAIRMAN: Well, if Mr. McIvor tells me 12 that he's going to go for approximately another hour, 13 I would then propose that we adjourn. And if it's 14 convenient with you, that you carry on Monday 15 morning. 16 MR. MCIVOR: All right. Thank you, sir. 17 MR. MAYER: Before we go there, could we have 18 an obligation at seven o'clock to put the presenters 19 on, right? 20 THE CHAIRMAN: Mr. Grewar? 21 MR. GREWAR: Yes, that's correct. 22 MR. MAYER: And we have no idea how long they 23 will be. 24 MR. GREWAR: Approximately, I'm guessing, 25 about an hour. They've given us rough estimates of 1502 1 the time. 2 MR. MAYER: So we may have an hour for Mr. 3 McIvor then later tonight? 4 MR. GREWAR: That's true. But we also have 5 the cross-examination of Mr. Shaffer by the Canadian 6 Nature Federation will likely be actually only about 7 half an hour. So you make a good point, Mr. Mayer, 8 we may have an opportunity for Mr. McIvor this 9 evening. We are here till ten o'clock. 10 THE CHAIRMAN: Mr. McIvor, that will be later 11 in the evening. 12 MR. MCIVOR: I go to bed about 9:30. 13 THE CHAIRMAN: So I understand from your 14 response then that you prefer to carry on on Monday 15 morning? 16 MR. MCIVOR: Please, please, if you don't 17 mind. That will give you time to deal with your 18 public participants. I'm just trying to accommodate 19 you, gentlemen, ladies. 20 THE CHAIRMAN: Mr. Grewar, can we carry on 21 with Mr. McIvor's presentation at 7:00 and then still 22 have time to do the presentations? 23 MR. GREWAR: I believe so, Mr. Chairman, 24 although we will have to be mindful of the clock 25 because of some commitments we have made. So as long 1503 1 as there is an understanding that there will be no 2 more than an hour sort of set aside at which point we 3 would need to suspend the questioning at that point 4 I think to move on. That will be my only concern. 5 MR. MCIVOR: With that proviso, I'll 6 participate. 7 THE CHAIRMAN: So you are available to carry 8 on after dinner. 9 MR. MCIVOR: Yes. But if I don't get done, I 10 still want to do what Mr. Grewar is saying, come back 11 Monday morning. 12 THE CHAIRMAN: All right. We will adjourn at 13 this point in time and you can continue as we 14 reconvene at seven o'clock. 15 (PROCEEDINGS RECESSED AT 5:09 P.M. 16 AND RECONVENED AT 7:00 P.M.) 17 18 THE CHAIRMAN: Ladies and gentlemen, 19 we are ready to begin. Just before we do so, I 20 will give a rundown of the order of how we see the 21 evening unfolding. First, we will call three of 22 the individual presenters. Mr. Billy Moore will 23 come first, and then Mr. Bill Turner, and then 24 Ms. Carolyn Bruyere; and then Mr. Hart will follow 25 up with some of the questions that were not -- for 1504 1 which Mr. Shaffer will be available later on in 2 regards to social benefits relating to WIN, and 3 then Mr. McIvor will complete the questions of 4 this afternoon. 5 So, as you can see, this gives us 6 quite a few intervenors for this evening, and we 7 ask every one of them to be efficient in the way 8 they present so that we can cover as much ground 9 as possible this evening. Mr. Billy Moore, the 10 floor is yours. 11 MR. GREWAR: Sorry, Mr. Moore, it is 12 necessary for me to swear you in. You will be 13 making a presentation as opposed to cross. Could 14 you state your name for the record? 15 MR. MOORE: I am Billy Moore from 16 South Indian Lake. 17 MR. GREWAR: Mr. Moore, are you aware 18 that it is an offence in Manitoba to knowingly 19 mislead this Commission? 20 MR. MOORE: I am fully aware, and I 21 have seen a lot of it too. 22 MR. GREWAR: Okay. Do you promise to 23 tell only the truth in proceedings before this 24 Commission? 25 MR. MOORE: Thank you. 1505 1 MR. GREWAR: Thank you, Mr. Moore. 2 3 BILLY MOORE: SWORN 4 5 MR. MOORE: Mr. Chairman, there is two 6 parts to this presentation, one being the actual 7 presentation and the other one asking questions. 8 With your permission, I would like to begin by 9 asking questions, they will be very short, then I 10 will make the presentation. 11 THE CHAIRMAN: I understand that the 12 opportunity to ask questions will come at a later 13 time, but tonight you are to make your 14 presentation, unless you are asking rhetorical 15 questions for which you are not expecting any 16 answers this evening. 17 MR. MOORE: I expect answers, and if I 18 make my presentation first, they will support 19 their answers and not give them to me directly. 20 THE CHAIRMAN: Okay. I am not sure 21 whether I got an answer. 22 MR. MOORE: Do I have your permission 23 to ask questions? 24 THE CHAIRMAN: Mr. Grewar, is that 25 according to -- 1506 1 MR. GREWAR: Of whom would he be 2 asking questions? 3 THE CHAIRMAN: Yes, of whom would you 4 be asking questions? 5 MR. MOORE: Sorry? 6 THE CHAIRMAN: Who do you want to ask 7 questions to? 8 MR. MOORE: It will be to the Chief 9 and Council of NCN, and possibly to the Hydro. It 10 is pertinent and very imperative. 11 THE CHAIRMAN: Okay, there is two 12 options here, Mr. Moore. 13 MR. MOORE: I am listening. 14 THE CHAIRMAN: The panel representing 15 Manitoba Hydro and NCN is not up for answering 16 questions, they are not, as you can see, at the 17 mikes at this point in time. They are not even 18 required to be here at this point in time. 19 So, you can either ask your questions, 20 and then there would be undertakings to provide 21 you the answer when they are available to provide 22 the answers, or else you can stay on until they 23 will be back here at the later part in the 24 evening, if time is available for that, in the 25 latter part of the evening the panel will be up 1507 1 there. So maybe there will be an opportunity to 2 ask questions at that time. So maybe you make 3 your presentation now and ask questions later. 4 MR. MOORE: Thank you. I shall 5 proceed. 6 Okay, firstly, I stated my name and 7 where I am from, but I am also a member of NCN and 8 a member of the DRSIL, that is known as Displaced 9 Residents of South Indian Lake. Now, we are, in 10 the membership are somewhat perturbed about the 11 proposed project, the Wuskwatim project, because 12 we have seen the mess that the Hydro have made in 13 regards to South Indian Lake and it has not been 14 resolved to many of us. And I will -- 15 UNIDENTIFIED SPEAKER: Can I say 16 something? You are not speaking on behalf of the 17 residents of -- 18 THE CHAIRMAN: Sorry, this is an 19 interruption that is out of order. You will get 20 the opportunity to come up and speak. 21 MR. MOORE: I will clarify what he is 22 saying. I am not indeed representing a group, but 23 I am a member of a group. 24 THE CHAIRMAN: That is clarified. 25 UNIDENTIFIED SPEAKER: That is what we 1508 1 heard. 2 MR. MOORE: Okay, thanks. So 3 therefore we would like to see this first mess 4 resolved. And I personally -- is not against the 5 project of the Wuskwatim, but I would like to 6 recommend, however, that to be held off an 7 indefinite time until, especially the NCN members, 8 all members fully realize what is happening. 9 I have been around quite a bit and 10 know about these things to some extent. And we 11 have been seeking for the last 11 years 12 compensation, we haven't gotten a red penny. 13 However, we are not only seeking for money, we are 14 also seeking for fair treatment. And in all of 15 our meetings and hearings all over the place, we 16 have been running into a brick wall with the Hydro 17 every time we meet with them. 18 As the moderator mentioned about the 19 offence, saying something as far as Manitoba is 20 concerned, that may be offensive, and I told him 21 that I am fully -- I fully realize that. 22 Now, the mess that I am referring to 23 is the cost of the hydro. Many of us from South 24 Indian Lake have been forced to move away, 25 separated from our families, our traditional 1509 1 livelihood, our culture. We have been adversely 2 affected psychologically, sociologically, health, 3 and many other aspects of life. They have taken 4 away our livelihood. Which makes me to think 5 under the -- under Christopher Columbus, the 6 founder of this country, or so-called, somehow 7 ended up here, thinking in India, and called us 8 Indians. And today I am not an Indian. And many 9 of you know that, who the Indians are. 10 I further realize these days that we 11 cannot depend on trapping, fishing, hunting as 12 much as we used to. Therefore, it is imperative 13 with the young people that they do indeed get the 14 education and all kinds of degrees in order to be 15 able to make a living in the democratic society 16 that we live in. Many of the young people of my 17 race, being the native, do not realize how our 18 ancestors have lived. 19 Now because of the many changes that 20 have taken place in our lives and in our world, 21 and in our country, I can appreciate them -- 22 referring to young people -- in supporting this 23 particular project. But I am further perturbed 24 that perhaps they don't realize the consequences. 25 If they can refer and see the mess again at South 1510 1 Indian Lake that was made by the Hydro -- and we 2 are, we do have a claim against them. And do you 3 think you can get anything from them? We have not 4 been able to. It is very hard to meet with the 5 politicians, the people in the positions who are 6 responsible for these things. 7 I am, however, happy that I am an 8 individual that will not give up. If the Minister 9 of, any ministerial position in the legislature 10 don't want to see me after many phone calls, or 11 things like that, I go and wait for them at the 12 legislature steps and corner them when they come 13 out. And that is how I have been able to meet 14 with these people. 15 Again, just the other day I cornered 16 Premier Doer, and he is going to be arranging to 17 meet with us. But I think -- not think, I know 18 that the fact is that many of us are getting tired 19 within the DRSIL of running into a brick wall. We 20 are anxious these days that something would take 21 place in the form of compensation, whether it is 22 nay or yea, but, you know, satisfy us, quit 23 beating around the bush. 24 One thing here I will mention that 25 some of you will find it funny, but for me it is 1511 1 serious. I am reluctant to pay my Hydro bill, 2 because I know that the Hydro owes me a lot of 3 money under NFA, and because I have not been 4 able -- I have not been given a fair treatment in 5 this regard. They cut me off twice already, but I 6 quickly pick up the phone and I phone Robert 7 Brennan -- most of you know who he is -- I phone 8 Vic Schroeder, you know who he is, and I phoned 9 Sale, who I think he is no good for nothing in our 10 claim. But anyway, as a result, I have been able 11 to reconnect my power through Brennan, and I got 12 connected -- the first time they reconnected in 13 five hours, and the second time they reconnected 14 within 24 hours. But, again, these are the 15 things. 16 And then they ask me why I don't pay 17 my bill. I asked them, you know, you people have 18 influenced me for not paying your bills, meaning 19 the compensation that they haven't paid to us. 20 And I was here yesterday, and I will 21 take some things that were said, or notes that I 22 made, I made here. 23 I hear our leaders of NCN saying that 24 there are or will be benefits to the NCN members. 25 I have yet to realize what those benefits are. I 1512 1 have yet to realize who is going to be benefited, 2 whether it is going to be the individuals, the 3 members living on the reserve, the community of 4 Nelson House as a whole, the individuals and their 5 families, or only the hierarchy and their 6 families? That is how the democracy runs, and it 7 is not really good. 8 And there were times I have spoke to 9 the leaders of NCN, but they just shrug their 10 shoulders off, not literally say get lost, but 11 that is the understanding that I sense when I try 12 to approach them. I believe that they may not -- 13 and it is only an assumption, but being a 14 simplistic native without university 15 intellectualism like you people are with ties and 16 suits and what have you, I still, I will still say 17 what I have to say whether it hurts you or not or 18 offends you or not, but I want to make this thing 19 known, where we stand as the victims of so-called 20 progress, especially within the electricity 21 utility. We are indeed victims. 22 Now, I have mixed feelings regarding 23 the members of NCN. Some of them are jubilant of 24 the project, others are frowning about it, but let 25 me assure you, if I am not satisfied by the 1513 1 leaders of my band, I can assure them I will be 2 the leader in campaigning against the Wuskwatim 3 project without first -- they negotiate with Hydro 4 for compensation before even the construction 5 began. 6 And I am not alone in this. I spoke 7 to a lot of individuals, the members of NCN, how 8 they feel about it. Now, it perturbs me a great 9 deal, not only with native people but the 10 population of the world as a whole, we are always 11 fighting amongst ourselves, always disagreeing. I 12 realize that is part of life. But, unfortunately, 13 many of us too are very, very selfish. If I am 14 comfortable, if I am okay, to heck with others. 15 That is the scenario in life with people, and all 16 of you know that. Nobody in here will disagree 17 with that. 18 Counsel Valerie Matthews Lemieux, I 19 understand that she attempted to shut down the 20 questions regarding the referendum of the NCN 21 members in regards to the Wuskwatim project. I 22 would strongly recommend that we go ahead and not 23 beat around the bush, not talk to our friends or 24 families only, and leave the others, because the 25 others may vote nay, while our families vote yea, 1514 1 because we can share the wealth with them, those 2 of us that are in the hierarchy. This is the 3 situation in life. This is the situation that we 4 have to cope with. 5 In the time past, our ancestors, they 6 couldn't even sign their name, they used an X the 7 first time I believe when they had to sign the 8 cheques, signing with an individual in the north a 9 long time ago. He worked for the Hudson Bay 10 Company, who was a company well-known in the 11 north. He didn't get paid, but he cashed his 12 pension cheques at the Bay. And some of his 13 members told him, ask The Bay to pay you for 14 working for them. And he said, no, I will not. I 15 am thankful enough that they are cashing my 16 pension cheques. That is good enough for me. Let 17 me tell you, today that is not good enough for me. 18 For the last couple of days I have 19 been here, of this hearing, and I lost wages. I 20 can assure you when the time comes, if it is ever 21 going to come, I will include those wages in my 22 compensation. 23 Recreation is another thing that we 24 have lost at South Indian Lake, the beaches. And 25 talk about South Indian Lake, and talk about the 1515 1 beaches at South Indian Lake, they were fantastic. 2 This report, 51st report of the Manitoba Hydro, 3 this picture here looks fantastic. But guess 4 what? This picture was taken in the winter time, 5 so it fooled a lot of, many people, a lot of 6 people, thinking this little white line here is a 7 shore line. It definitely isn't. You take the 8 picture here in the summertime, you will see these 9 trees standing in the water, with fish getting 10 caught in there. Can anybody argue against that? 11 Is that progress? 12 You know, unfortunately, people in our 13 world, as I mentioned before, are selfish. They 14 will do things like this to benefit themselves, 15 never mind others -- or at the expense of others, 16 they will do things like that. I point this out 17 to Mr. Schroeder, Mr. Brennan, right in their 18 face, right in front of their face. I say why in 19 the world did you take a picture like that, why 20 didn't you take it in the summertime so the people 21 could have seen that these trees are under water? 22 There is no shoreline here. You go try and go 23 swimming there and you might float into the bush 24 and your shorts will come off from those branches. 25 To me, I don't think that is progress. That is 1516 1 disrupting the joy of us native people that we had 2 in the north. 3 I was at the Excel Energy Conference 4 in Denver, Colorado last year. It perturbed me -- 5 when I attempted to mingle with my leaders from 6 Nelson House, before the meeting that morning we 7 were all jubilant, joking around, laughing, 8 talking. After the meeting, I made a 9 presentation, and after the meeting when we came 10 out from that building, they avoided me. I walk 11 up to some of them, they turn their face away and 12 walked away. So I am wondering, do they care 13 about the members of DRSIL and members of Nelson 14 House, members of South Indian Lake as a whole, 15 for compensation, or is this -- or is this a 16 situation where a few, like everywhere else in the 17 world, are comfortable because of the income they 18 make and others are living in poverty? 19 I've struck out all of these years, 20 jumping from one job to the next. And before 21 this, when I was living at South Indian Lake, I 22 had my life. Now, when I left South Indian Lake 23 coming down south -- but fortunately I was 24 determined to make it in the society, to see what 25 makes life going around. I have been fortunate to 1517 1 live in both worlds, the reserve world and the 2 democratic society world. I have travelled all of 3 Northwestern America, I have travelled overseas, 4 lived overseas, and have had jobs here and there. 5 I have the ability to run a business, but like 6 anybody, I need capital. And because of the claim 7 I have with the Hydro, or against the Hydro, I 8 will have that capital whenever it comes. 9 So if my leaders of NCN care at all in 10 my plight, I would like to ask them that they do 11 something about lifting a finger, giving us a 12 hand, supporting our costs, and that we get 13 somewhere with this fight, with this claim for 14 compensation. And we would appreciate that very 15 much. 16 You know, I am not afraid to say 17 anything. I have dealt with business people in 18 all walks of life. I tell them in their face 19 exactly what I think about them and what should be 20 done the way I know it should be done. Like it 21 perturbs me with my leaders that they are not 22 involved in our cause, that is the DRSIL 23 membership. 24 Again, Mr. Dysart yesterday mentioned 25 in regards to the vote for no with the Wuskwatim 1518 1 project, a majority, or 80 percent I believe it 2 was mentioned, that South Indian Lake voted 3 against it. I don't even know if I voted on that 4 particular project. And they say the members will 5 benefit it. And where was my vote? Didn't it 6 count? Hey, let's be fair, that is what we are 7 looking for, fairness. Let's work together, let's 8 not fight. Let's not consider ourselves being on 9 a pedestal and let the little Joe down there do my 10 dirty work. Please, somebody, anybody, give us a 11 hand to attain our compensation that is due to us 12 according to NFA. Why not let justice flow? Who 13 in the Hydro or in the Government can interpret 14 this little phrase? Let's find out what justice 15 is and let's do it, give us a fair treatment. 16 Thank you. 17 THE CHAIRMAN: Thank you. Are there 18 questions? 19 If not, thank you, Mr. Moore, and you 20 will get an opportunity eventually to ask 21 questions to members of the panel during the 22 course of the unfolding of these hearings. 23 MR. MOORE: Thank you. 24 THE CHAIRMAN: I will call upon 25 Mr. Bill Turner. 1519 1 Mr. Grewar. 2 MR. GREWAR: Sir, could you state your 3 name for the record, please? 4 MR. TURNER: Bill Turner. 5 MR. GREWAR: Mr. Turner, are you aware 6 that is an offence in Manitoba to knowingly 7 mislead this Commission? 8 MR. TURNER: Yes, I do. 9 MR. GREWAR: Do you promise to tell 10 only the truth during proceedings before this 11 Commission? 12 MR. TURNER: Yes, I will. 13 MR. GREWAR: Thank you. 14 15 BILL TURNER: SWORN 16 17 MR. TURNER: Mr. Chairman and members 18 of the Commission, as I have stated, my name is 19 Bill Turner. I am the plant manager at Nexen 20 Chemicals Canada Limited Partnership in the 21 Brandon plant in Brandon, Manitoba. Since 22 November of 2000 I have been the chair of the 23 Manitoba Industrial Power Users Group, normally 24 called MIPUG. I would like to thank you for the 25 opportunity to address you today. 1520 1 MIPUG has been involved in electricity 2 and rate regulation issues in Manitoba since 1987. 3 MIPUG's primary focus has been to support a 4 strong, regulated Crown-owned utility in Manitoba, 5 offering rates that reflect the costs to provide 6 service to each customer class. We have 7 participated in every major hearing before the PUB 8 for Manitoba Hydro rates, as well as reviews of 9 other matters including new capital projects. The 10 Conawapa project was one of them. We have not 11 been active participants in this process as our 12 group has not traditionally appeared in Clean 13 Environment hearings, but given some of the issues 14 that are before the Commission today, we felt it 15 important to make a few comments to assist the 16 Commissioners. 17 At the onset, I want to note that 18 based on our brief review, MIPUG is supportive of 19 the proposed Wuskwatim development. The project 20 appears likely to provide long term benefits. The 21 risks appear to be manageable, and we expect they 22 will be managed by Hydro, under the watchful eye 23 of the PUB. Enhancing other supply options such 24 as demand-side management and non-utility 25 generation does not appear to be a reason to 1521 1 forego the opportunity that Wuskwatim can provide 2 to all domestic ratepayers. 3 Secondly, as it is Hydro's ratepayers 4 who are ultimately assuming most of the risks of 5 the project, MIPUG wants to ensure that all 6 ratepayers will in fact realize the benefits. 7 This can only be assured if strong rate regulation 8 is continued in Manitoba, and if Hydro and the 9 Provincial Government affirm their commitment to a 10 cost-based rate structure that emphasizes Manitoba 11 use of power as a first priority. Although it is 12 ratepayers that are taking the risks of the 13 project, increasing Government charges and levies 14 over time will undermine the extent to which 15 ratepayers ever see benefits from the risks they 16 bear. 17 I should note that as the Commission 18 makes its appearance in other locations, large 19 industrials local to the north who are also 20 members of MIPUG may take the opportunity to make 21 further comments on specific aspects of the 22 application. 23 Now, I will give you just a little bit 24 of background on MIPUG itself. MIPUG consists of 25 eight of the largest industrial companies in 1522 1 Manitoba. Current members include the following: 2 Nexon Chemicals, Inco Manitoba Division, Hudson 3 Bay Mining & Smelting, ERCO Worldwide, Enbridge 4 Inc., Tolko Manitoba Kraft Papers, Simplot Canada, 5 and Griffin Canada. 6 These companies have made substantial 7 long term investments in Manitoba and view 8 stability and predictability as key to their 9 operations. The group was formed in 1987 to 10 promote issues of common interest to energy 11 intensive industry in Manitoba. 12 Collectively, MIPUG members annually 13 purchase about 4 GWh of energy from Manitoba 14 Hydro, representing about 20 percent of the energy 15 sold to Manitoba Hydro's domestic customers, 16 directly employ upwards of 4,500 people, primarily 17 sell to the global market place. Over 90 percent 18 of the production of our members is exported out 19 of the Province. 20 Before I address today's application 21 specifically, it is important to note that for the 22 MIPUG members, global competition is a reality. 23 If we are to remain competitive, electricity rates 24 in Manitoba must help offset some of the 25 geographic and climatic disadvantages that we face 1523 1 here. This is particularly true from my own plant 2 at Brandon, where 60 percent of our marketing cost 3 is the cost of electricity. This amounts to 4 roughly $30 million a year. In times when our 5 industry is not operating at 100 percent capacity, 6 the plants with the lowest cost of production run 7 full load and the plants with the highest cost of 8 production are cut back. Our Brandon plant 9 competes with our external competitors and with 10 the other Nexen sodium chlorate plants across 11 Canada. We are now the second largest sodium 12 chlorate plant in North America. Currently we are 13 expanding, and once that expansion is complete, we 14 will be the largest plant in the world. 15 Manitoba's low and regulated electricity rates are 16 one of the major contributing factors to this 17 reality. 18 Other MIPUG members are in similar 19 situations, whether in mining, forestry, or other 20 industrial operations. Fair rates that reflect 21 Hydro's costs, and diligent attention to ensuring 22 these costs are as low as possible, while ensuring 23 a financially healthy utility, are an essential 24 part of ensuring that Manitoba industry continues 25 to survive and grow. This is critical in 1524 1 maintaining and enhancing the long term 2 investments, jobs, and other benefits that come 3 from having these operations in Manitoba. 4 As a final note, those participants 5 here today that have experience with PUB rate 6 setting will be well aware of a long-standing and 7 well-organized need to have all customers pay 8 rates that reflect the true costs to serve them. 9 Over a long period, industrial customers of 10 Manitoba have faced rates that are higher than the 11 cost to serve them. This amount, extra amounts 12 have been almost 25 million each and every year. 13 Much has been done to try and address this 14 imbalance, including a recent 2 percent rate 15 decrease to Hydro's larger customers, a move in 16 the right direction and an important signal to our 17 members that Manitoba remains committed to fair 18 rates. Without assurance that PUB rate regulation 19 will continue, including continued movement over 20 time towards rates that more closely reflect 21 Hydro's costs to provide service, we have a lot of 22 difficulty determining whether projects such as 23 Wuskwatim will ever result in benefits to Manitoba 24 ratepayers. The continuation of PUB rate setting 25 is central to our ability to support the project. 1525 1 Now, I would like to touch on the 2 Wuskwatim project itself. Against that backdrop, 3 it is no surprise that MIPUG is attentive to the 4 impact that projects such as Wuskwatim will have 5 on the long term level of Hydro rates. We 6 recognize that this is a small project in the 7 Hydro system, but the costs are not small, upwards 8 of a billion dollars. Even a small burden on 9 domestic ratepayers as a result of this project 10 would be a material concern to Manitoba industry, 11 where a small percentage increase can mean 12 hundreds of thousands, if not millions of dollars 13 in extra costs. 14 Although we have not done our detailed 15 technical analysis, there seems to be a reasonable 16 basis to conclude that the concerns MIPUG would 17 normally have in regards to the risks of the 18 project and the impact on the level of future 19 domestic rates have been adequately addressed by 20 Hydro. We note that Hydro has concluded the 21 project is likely to have a small and long term 22 positive impact on the level of domestic rates, 23 and we note that others seem to at least agree 24 that the project will not raise rates. Given the 25 risks, the project seems to provide a reasonable, 1526 1 but not overly robust level of return. 2 MIPUG members and all Manitobans can 3 likely see many additional benefits from Wuskwatim 4 outside of rates, so long as the rate impacts are 5 neutral or better. From MIPUG's perspective, the 6 other benefits of Wuskwatim, such as providing 7 local development, better training for Manitoba 8 workers, increased investment in Manitoba, and 9 increased tax revenues from workers, should not be 10 ignored. 11 On balance, given the information that 12 we have been able to review from Hydro and others 13 in this proceeding, MIPUG sees that there will 14 likely be benefits to proceeding with the project. 15 It is clear that this is not a windfall project. 16 Even the small risks must be managed. We are 17 confident that Hydro can and will manage these 18 risks. 19 Like any project of this type, the 20 risks that can be assessed in this hearing are 21 those that are known today, based on the 22 information available, and reflecting the best 23 plans that can be developed today for dealing with 24 all sorts of forecasts and expectations. In 25 reality, managing these risks and ensuring the 1527 1 best possible outcome is not a one-time exercise, 2 it is an ongoing process of adaptation and 3 reassessment, particularly during the construction 4 phases when most of the dollars will be spent. In 5 other words, although MIPUG sees no reason today 6 for the Commission to conclude that the risks are 7 too great to proceed, this does not mean ratepayer 8 interest can be assured without an ongoing level 9 of regulatory oversight throughout the project. 10 MIPUG sees that the primary role for such 11 oversight should fall to the PUB, to ensure that 12 ratepayers are not adversely impacted. 13 We ask that the Commission give the 14 matter careful consideration in its 15 recommendations, including reaffirmation of the 16 role of the PUB to regulate Hydro's rates and 17 assess its ongoing capital program. 18 A little bit about Manitoba Hydro's 19 future from MIPUG's perspective. Manitoba Hydro 20 has put in considerable effort to create a strong 21 utility and develop a domestic power that can 22 deliver high-quality and low-cost power to 23 Manitobans. It has made a different in the face 24 of Manitoba today, resulting in more jobs, greater 25 economic development, and increased local 1528 1 investment. 2 We have heard from Hydro that 3 Wuskwatim is only one piece of a long term 4 expansion plan in the north. This plan emphasizes 5 what MIPUG sees as a potential contradiction 6 within Hydro's ongoing mandate and vision. 7 On one hand, we see Manitoba Hydro as 8 a domestically-focused utility which first and 9 foremost serves and supports Manitobans, and 10 ensures growth and development in Manitoba for all 11 of the local benefits that it provides. 12 On the other hand, we have seen 13 Manitoba Hydro as an export dependent utility that 14 aggressively pursues opportunities to create and 15 free up power for export and to profit from these 16 sales. 17 We can all likely agree that there is 18 a need for balance between the two. 19 MIPUG's concerns with this divergence 20 go to the issues at hand in this hearing, but also 21 go well beyond the present hearing. Some 22 materials Hydro has produced in recent years 23 suggest a shift in this balance in a disconcerting 24 direction. In particular, Hydro has indicated 25 that it has a perceived danger that profitable 1529 1 export sales may have to be diverted to supplying 2 growing domestic industry, and that low domestic 3 rates are the problem. I don't imagine there are 4 many quarters in this province, outside of these 5 suggestions by Hydro, where growth in domestic 6 industry may be seen as a problem, as opposed to 7 an attractive and desirable opportunity. 8 As chair of MIPUG, there is one thing 9 that I can say with a great deal of certainty and 10 gravity, domestic rates that are higher than 11 necessary in a Hydro corporate culture that may 12 view growth in Manitoba as less attractive than 13 shipping power south of the border will most 14 certainly achieve reduced Manitoba load. However, 15 the associated consequences in terms of lost jobs, 16 investments, and in local development may not in 17 the end be what was intended. In contrast, 18 enhancing Hydro's past achievements by maintaining 19 electricity rates at the lowest level consistent 20 with a financially healthy utility is a key 21 component of the Manitoba advantage to maintain 22 and attracting investment into this Province. 23 In this proceeding the Commission is 24 being asked to recommend a licence for a project 25 that is not today required for domestic service. 1530 1 This project can be reasonably viewed as 2 potentially fitting into either of the Hydro 3 mandates that I noted earlier, either as an 4 opportune means, albeit slightly outside of 5 Hydro's core obligation to domestic supply, to 6 help keep domestic rates down, or in the 7 alternative as a chance for Hydro to pursue a 8 preference for marketing power for profit outside 9 of Manitoba. In the end, the difference is 10 subtle, but very important. 11 Today the Commission has the ability 12 to ensure that an approval of this project comes 13 with a clear affirmation. Number one, that Hydro 14 remains focused on a Manitoba-first priority, for 15 both use of power and customer care, and that the 16 benefits of export revenues be made available to 17 ratepayers first and foremost, to pay down 18 investment in the generation and transmission 19 plant used to create the exportable power, and to 20 aid in maintaining or enhancing the 21 competitiveness of domestic rates. The Commission 22 should carefully consider the benefits of ensuring 23 clarity on this point. 24 Three other specific matters have 25 arisen in our brief review that merit comment. 1531 1 On demand-side management, or DSM, 2 Manitoba industry is very supportive of properly 3 run DSM programs. Despite being less than 4 one-quarter of Hydro's domestic load, industry is 5 the largest source of existing DSM capacity 6 savings in the Province, and makes up nearly half 7 of the existing DSM energy savings. And this is 8 taken right from Manitoba Hydro's May 2003 9 PowerSmart review. This DSM is achieved at a very 10 low cost to Hydro, and as a result benefits accrue 11 to both the customer who participates through 12 lower Hydro bills, and all other ratepayers, 13 through selling the freed up power at higher 14 export prices. DSM in this fashion is a win-win 15 proposition and should be clearly pursued. 16 However, it is not sensible to 17 undertake DSM programs that increase the level of 18 rates that need to be charged to other ratepayers. 19 Some of the more aggressive DSM programs require 20 incentives and program costs that make the program 21 more costly than the benefits that they achieve, 22 resulting in higher domestic rates. Indeed that 23 kind of DSM can have dramatic impacts on the loads 24 in Manitoba, as the higher rates that will result 25 will have impacts on the amount of electricity 1532 1 used here to run industries, create jobs, and pay 2 taxes. Reducing Manitoba industrial activity is 3 not typically thought of as a part of a sensible 4 DSM project, but it is certainly a potential 5 impact of the more aggressive spending on DSM. 6 MIPUG supports continued pursuit of 7 win-win DSM opportunities, potentially including 8 negotiating an optional time-of-use tariff for 9 large industries if Hydro chooses to pursue that 10 option. However, more relevant to this hearing, 11 continued pursuit by Manitoba Hydro of appropriate 12 economic DSM opportunities does not seem to be a 13 reason to forego the development of Manitoba 14 resources such as Wuskwatim. 15 In regards to wind generation, MIPUG 16 is not persuaded that there is any justifiable 17 reason for Manitoba Hydro to be taking risks on 18 this technology. If private developers with 19 experience in this area can agree to a purchase 20 power contract with Hydro containing all necessary 21 commercial terms and protections for Hydro 22 ratepayers, then wind may be an interesting 23 resource to the Province. This would mean that 24 the wind plant operator takes the risks on price 25 and output, and Hydro largely passes through the 1533 1 equivalent export price it receives, with 2 appropriate adjustments for transmission loss and 3 firming. Otherwise, the material on wind does not 4 seem to indicate likely benefits for domestic 5 ratepayers compared to the risks it entails and it 6 should not be pursued further by Hydro at this 7 time. 8 More generally, the comments in 9 regards to wind should apply equally and without 10 prejudice to all potential non-utility generators. 11 As far back as the 1990 PUB hearing into Hydro's 12 capital plan, basically the Conawapa hearing, the 13 PUB found that non-utility generation is endorsed 14 by the board and Manitoba Hydro is encouraged to 15 pursue this supply option vigorously. For 16 industrial customers engaged in forestry 17 activities, in particular, there is significant 18 potential to generate renewable power using what 19 would otherwise be waste material. However, 20 unlike the prospective wind power developers that 21 have recently arrived in Manitoba, the large 22 industrials who have made a long term commitment 23 to Manitoba are not being offered a price for 24 their potential power that is representative of 25 export market prices. 1534 1 For power producers new to Manitoba, 2 Manitoba will offer them a price for their power 3 that is based on exports, which I understand to be 4 in the range of 5 to 6 cents per kilowatt and 5 potentially higher. However, for existing 6 industrials, the price Hydro will offer is 7 effectively 3 cents per kilowatt hour, as the 8 first power they produce will be effectively 9 netted off their power bill. 10 Absent a consistent approach to 11 non-utility generation, without distinction 12 between new generators and existing industrial 13 customers, it is clear that Hydro will not in the 14 future achieve the vigorous NUG supply that it has 15 failed to attract now for the last 14 years. 16 In summary, MIPUG takes very seriously 17 its responsibility as major customers of Hydro and 18 as business citizens of Manitoba. MIPUG is 19 strongly supportive of development and long term 20 investment in Manitoba, and sees the Wuskwatim 21 project as a beneficial component of the Hydro 22 system. The benefits from Wuskwatim appear to 23 arise for domestic ratepayers only to the extent 24 that strong rate regulation and cost based rates 25 continue in Manitoba. 1535 1 Exports are clearly a key component of 2 any Hydro based utility, and although they come 3 with some risks, there are ways to balance these 4 risks. For advancement of a small facility such 5 as Wuskwatim, these risks appear to be manageable 6 and well within Hydro's capabilities to address. 7 Exports can serve to lower cost to domestic 8 ratepayers, but domestic use of power must 9 continue to be Hydro's first priority. 10 Enhanced policies to encourage 11 development of NUGs and continued pursuit of 12 economically-sensible DSM would seem to be a valid 13 pursuit for the utility, but need not come at the 14 expense of development of the Wuskwatim project to 15 the benefit of domestic ratepayers. 16 Thank you for the opportunity to 17 discuss our views with you. We trust that our 18 participation in this hearing will assist the 19 Commission in carrying out its responsibilities 20 regarding this application. 21 If anybody is interested in learning 22 more about MIPUG, I do have some brochures here as 23 well. Thank you. 24 THE CHAIRMAN: Thank you, Mr. Turner. 25 Are there questions? I see none. Thank you, 1536 1 Mr. Turner. 2 I now call upon Miss Caroline Bruyere 3 and Margaret Swan. 4 MR. GREWAR: I need to enter as an 5 exhibit Mr. Turner's presentation on behalf of 6 MIPUG, it would be MIPUG, 1000. 7 8 (EXHIBIT MIPUG-1000: Statement of Bill 9 Turner, chair, MIPUG to Clean 10 Environment Commission regarding the 11 Wuskwatim Generation and Transmission 12 Projects application) 13 14 THE CHAIRMAN: Thank you, Mr. Grewar. 15 I will let you introduce yourselves, and first, 16 yes, introduce yourselves and then Mr. Grewar will 17 proceed to do the swearing in. 18 MS. BRUYERE: My name is Caroline 19 Bruyere. I'm an elder of Sagkeeng First Nations 20 and I'm hear as a grass roots person. 21 THE CHAIRMAN: Thank you. 22 GRAND CHIEF SWAN: And my name is 23 Margaret Swan. I'm the Grand Chief of the 24 Southern Chiefs Organization here in Manitoba 25 representing 36 First Nations in southern 1537 1 Manitoba. 2 THE CHAIRMAN: Thank you. Mr. Grewar. 3 MR. GREWAR: Having stated your names, 4 I would just ask you both are you aware that it is 5 an offence in Manitoba to knowingly mislead this 6 Commission? 7 GRAND CHIEF SWAN: Absolutely. I wish 8 the government was aware of that themselves. 9 Thank you. 10 MR. GREWAR: Do you promise to tell 11 only the truth in the proceedings before this 12 Commission? 13 GRAND CHIEF SWAN: I do. 14 THE CHAIRMAN: Ms. Bruyere? 15 MS. BRUYERE: Yes. 16 MR. GREWAR: Thank you. 17 MS. BRUYERE: I'm going to make a 18 statement and out of my statements there will be 19 questions that will arise from there. 20 21 (OJIBWAY SPOKEN) 22 23 GRAND CHIEF SWAN: I'm going to be 24 asking the questions. I hope that there will be 25 someone that can translate what Caroline just 1538 1 said, because I don't have the convenience of time 2 in which I can do that this evening. So firstly, 3 I want to start off by saying that our member 4 First Nations in southern Chief's organization 5 unequivocally support the Nisichawayasihk Cree 6 Nation sovereignty and nationhood in this project. 7 There was an article in yesterday's 8 paper which basically misconstrued why I was here, 9 so I wanted to make that very clear. The reason I 10 am here to speak today is to protect the interests 11 of First Nations in southern Manitoba. The 12 boundaries of those First Nations are within, 13 include southeastern Manitoba at Buffalo Point 14 First Nation across to southwestern Manitoba to 15 Canupawakpa Dakota Nation to central Manitoba at 16 Pine Creek First Nation, across to Poplar River 17 First Nation. So those are our boundaries, 18 according to Government, but I also want to point 19 out the fact that there are treaty one to treaty 20 five in this province we all know as Manitoba. 21 And some of my questions are going to be directly 22 related to our treaty and inherent rights, because 23 of the fact that in our eyes as First Nations 24 indigenous peoples hydro is a natural resource. 25 And according to those historic agreements the 1539 1 current Prime Minister talked about in the Throne 2 speech, those treaties, we were to share in the 3 wealth of our lands and resources. That is why we 4 are able to somewhat live in peace and harmony in 5 our lands. Unfortunately my understanding or the 6 harsh reality is those lands and resources have 7 literally been stolen from our people. That has 8 been our reality, and that is something as a 9 leader I need to make sure does not continue to 10 happen for First Nations in southern Manitoba. 11 So, I'm going to go ahead and go into my 12 questions. 13 THE CHAIRMAN: Can I intervene at this 14 point? Grand Chief Swan, the format at this point 15 is to make presentations, and I had to state that 16 awhile ago to Mr. Moore. The panel to reply is 17 not there to reply at this point in time. You are 18 there to make presentations and there are 19 opportunities to ask questions all along this 20 process. But if you may wish to put questions on 21 the record with the expectation that these will be 22 taken under advisement to be replied to at some 23 point later. 24 GRAND CHIEF SWAN: Is there going to 25 be a point during the course of this process 1540 1 whereby I can ask questions? I was informed 2 yesterday that today would be the day to ask 3 questions and that at a later date I could 4 present. Now has that changed or -- 5 THE CHAIRMAN: The registered 6 presenters are in the process of asking questions 7 in regards -- it is a two pronged process. One 8 which addresses first the needs for an alternative 9 means for electricity or energy, pardon me, and 10 the other which addresses the environmental 11 impacts of the project. And questions have been 12 posed so far on the needs for an alternative 13 sources of energy. But we have not completed yet 14 with the various groups that are registered. So 15 members of the public will get the opportunity 16 after that to ask their questions as well. But if 17 you wish to put questions on the record now you 18 may proceed to do so, but you may not get replies 19 to them at the moment. 20 GRAND CHIEF SWAN: When will I get 21 replies to my questions and will my questions be 22 answered for the record and in your transcripts? 23 You said I can't guarantee that -- 24 THE CHAIRMAN: The only thing that I'm 25 consulting about is that it is in regards of the 1541 1 exact point where these would be answered. All of 2 the questions that were taken under advisement at 3 this point in time were replied. But if you are 4 talking about a numerous number of questions, I 5 don't know that I can specifically state exactly 6 where in the record they will be. But I will ask 7 Mr. Bedford here to respond for Hydro in telling 8 us if they are prepared to take these questions 9 under advisement on the record and provide replies 10 at a later date, or Mr. Wojczynski, whoever -- or 11 Mr. Thomas -- 12 GRAND CHIEF SWAN: Excuse me, 13 Mr. Chairman, is that not the panel sitting there? 14 THE CHAIRMAN: They are not 15 necessarily all there. Some of them are there. 16 MR. MAYER: You are sitting where they 17 are supposed to sit. 18 GRAND CHIEF SWAN: Does it matter 19 where we sit? As the indigenous people of our 20 lands, we are always going by your systems. Our 21 systems are better than yours, so let's go with 22 what we choose to do for a change. 23 MR. MAYER: Mr. Chair, I want a chance 24 to respond to that. Your partner registered as 25 things were set out. You did not. The 1542 1 advertising has been out there for some time for 2 people to register so we can plan a process. Your 3 comment now about our procedures -- up until now 4 in this proceeding, Grand Chief, we have respected 5 each other's procedures and each other's 6 processes. These proceedings are started each 7 week with a prayer in accordance with Aboriginal 8 traditions. It will be closed tonight with a 9 prayer in accordance with Aboriginal traditions. 10 But twice today I saw people come here, and part 11 of our procedure is the oath in swearing you in. 12 And when Councillor Thomas took his oath with the 13 Hydro panel he held the eagle feather and told us 14 what it was about. You made a joke about it. I 15 am sorry, I don't like that comment. 16 GRAND CHIEF SWAN: I did not make a 17 joke about anything. What I'm saying here is you 18 talk about a process that you are following. My 19 understanding is that you keep changing things as 20 you go to suit your needs or whoever's needs, and 21 I take offence when you say I did not register. 22 Caroline Bruyere is an elder within our 23 organization, and just because I didn't 24 specifically put my name in does not mean that I 25 was not going to be here today. I just had not 1543 1 decided exactly how we would try and follow your 2 process. 3 As I stated earlier, I was in fact 4 informed by members who are in this room that 5 today would be the day to ask questions and that I 6 could register to present at a later date. The 7 other thing that I take offence to is that there 8 is such a short time frame to hear people like 9 myself, leaders and ordinary citizens, First 10 Nations citizens from our communities, and you 11 proceed to move things so fast. 12 THE CHAIRMAN: Can I intervene? We 13 will do every effort that we can to afford 14 everyone who wishes to make a presentation to do 15 so. But as you make your presentation, you are 16 open to question. That is the process. Now when 17 the panel is sitting they are there to be 18 questioned. And therefore in this particular 19 moment in the process, we wish to accommodate some 20 presenters who had indicated that tonight was an 21 appropriate time for them, and some did come from 22 out of town specifically to make their 23 presentation, even though we haven't finished with 24 the process of questioning the proponents in 25 regards to the first prong of the hearing which is 1544 1 on the needs for alternative sources of energy. 2 The panel has completed its review, its process of 3 questioning. Some of the registered presenters 4 are in the process of doing that, and then any 5 member of the public will then be afforded that 6 opportunity as well. So that is part of the 7 process. 8 GRAND CHIEF SWAN: So can we go on 9 to -- 10 THE CHAIRMAN: Mr. Thomas. 11 MR. THOMAS: I have instructed my 12 legal counsel to make a comment to you about the 13 issue at hand. 14 MS. MATTHEWS-LEMIEUX: On behalf of 15 the Nisichawayasihk Cree Nation, the Nation would 16 be prepared to have the questions stated for the 17 record as long as they are within the terms of 18 reference. 19 THE CHAIRMAN: Of the project? 20 MS. MATTHEWS-LEMIEUX: For the 21 project, yes. 22 THE CHAIRMAN: Do you wish to proceed 23 with the questions? 24 GRAND CHIEF SWAN: Yes, please. 25 THE CHAIRMAN: Mr. Bedford. 1545 1 MR. BEDFORD: I can confirm the same 2 on behalf of Manitoba Hydro. 3 THE CHAIRMAN: Thank you. Would you 4 proceed? 5 GRAND CHIEF SWAN: Thank you very 6 much. 7 MR. GREWAR: If I might interject -- 8 over here, I'm the Commission secretary. Ms. 9 Bruyere was speaking in Cree, I believe? 10 GRAND CHIEF SWAN: Ojibway. 11 MR. GREWAR: We have recorded it but 12 if there were questions contained in that it would 13 have to be translated before they could be put 14 forward. So those would be presumably provided 15 after they have gone through a translation 16 process. So there were questions contained in 17 that text? 18 GRAND CHIEF SWAN: No, there was not 19 questions contained in that text. I thought Mr. 20 Mayer there understood quite clearly what Caroline 21 was saying. Sorry, sir. 22 MR. GREWAR: My apologies, I thought 23 there were questions. I just wanted to make sure 24 there were two pieces. Thank you. 25 GRAND CHIEF SWAN: So number one, my 1546 1 first question is will any of the communities 2 within our boundaries be impacted by this project? 3 Can you tell me that, Mr. Thomas -- I'm just 4 kidding. 5 THE CHAIRMAN: I thought we had 6 agreed -- 7 GRAND CHIEF SWAN: No, no, I'm just 8 joking. I'm going to carry on to number 2. 9 Sorry, that is just a bit of our indigenous 10 humour. Sometimes you have to do that to survive 11 in this unfair world. 12 Number 2, has Manitoba Hydro studied 13 the impacts of hydro development in the south, 14 specifically in southern chiefs, our southern 15 First Nations communities? 16 Number 3, will Manitoba Hydro provide 17 our office and First Nations offices in southern 18 Manitoba with all Wuskwatim materials and 19 documents? Maybe on CD. We would like to know 20 where those power lines and all that stuff is 21 going up within our territory. 22 Will Manitoba Hydro serve notice to 23 southern communities that are involved in the east 24 side territory developments in the southeast 25 region? 1547 1 Number 5, does Manitoba Hydro support 2 First Nations on the east side who are seeking 3 protections for their lands? 4 Number 6, does Manitoba Hydro support 5 the future world heritage site on the east side in 6 northwestern Ontario? Some of the communities 7 involved in that are Pikangikum, that's in 8 Ontario, Little Grand, Pauingassi, Poplar River 9 and Bloodvein. We would like to know exactly how 10 many dams are there in our territory. And have 11 these dams caused damage, and if so, what kind of 12 damage? And also what has been done to compensate 13 for those damages and repair the harm that has 14 been done to our lands and resources. 15 Number 10, the plan to export Hydro to 16 the United States and wherever else, this is going 17 to bring in additional revenue somewhere down the 18 road. Does this mean hydro costs will go down for 19 all Manitobans? 20 Number 11, is Manitoba Hydro familiar 21 with the treaty agreements? In this province 22 there is treaty one to five. And if you are 23 familiar, my office would like to know exactly 24 where you stand with respect to those rights? 25 Anyway, that is the end of my 1548 1 questions. Again, I would just like in closing to 2 point to the fact that in Manitoba, in this 3 country, we are the original descendents of the 4 original land owners. We do have treaty and 5 inherent rights. Government to date has failed to 6 honour those rights. When my ancestors signed 7 those agreements in the 1800s, the plan was to 8 share the wealth of our lands and resources with 9 the settlers. And part of that plan was so that 10 we could live in peace and harmony without 11 fighting over these lands and resources. 12 Governments and citizens need to realize that in 13 fact we are owed royalties for the exportation of 14 our natural resources which we never gave up the 15 right to. 16 As a First Nations leader I would be 17 negligent if I didn't consistently, constantly 18 point to the fact that we have those historic 19 treaty agreements the Prime Minister of Canada 20 talked about in his Throne speech. So I'm going 21 to, in closing, ask Manitoba Hydro, other 22 representatives from Government that are here and 23 as well the First Nations citizens that are here 24 and our non-indigenous brothers and sisters, 25 please help us hold the Government of Canada 1549 1 accountable in honouring those historic 2 agreements. Megwetch. 3 Thank you for this opportunity. I 4 appreciate all of you taking the time to listen to 5 us. And again how do I say this properly -- 6 Nisichawayasihk Cree Nation, I look forward to 7 working with you and I commend you for doing the 8 work that you are doing and we respect your 9 sovereignty. Megwetch. 10 MS. BRUYERE: I would like to add a 11 few words to my closing statement. I had 12 mentioned that we have acquired diseases through 13 the misuse of our Natural Resources, our mother 14 earth. We have questionable reasons as to why we 15 have a lot of terminal illnesses, such as cancer 16 and intestinal diseases. And I would like to know 17 if there has been an assessment done as to the 18 reason of these diseases? Also there was not any 19 mercury, as to my reading of materials, prior to 20 industry getting on our rivers and lakes. And 21 where are these, where is this mercury coming 22 from? Is it from the equipment that is being 23 installed on our rivers to harness the flow of the 24 rivers by these dams, and what measures are going 25 to be taken to ratify the pollutants from getting 1550 1 into our rivers and streams and our lakes? 2 I hurt very much because of the lake 3 and the river that I grew up on. We have the Pine 4 Falls paper mill which is now a thermal chip mill. 5 And it is one of the biggest customers that Hydro 6 has, especially now that it is thermal chip mill. 7 And I always acknowledge the fact that we too, our 8 community, contributed to the pollution that is 9 there now because we were not knowledgeable in the 10 western industries and what they would do to our 11 river. We contributed to that by us too raping 12 our mother earth of the trees and selling them for 13 economic reasons. 14 But like I said before, we now have 15 people that have become educated, and can speak 16 very compatibly with the non-native people. So 17 having said that, I hope, and I ask the creator to 18 assist these people that have become educated and 19 are quite elegant in their knowledge of the 20 English language and its terminologies -- I have 21 heard enough of it over the last six days -- to 22 also do proper research and assessment as to the 23 short and long term effects of what is intended 24 here. 25 Also I spoke of informed consent. 1551 1 There were terminologies that were used here the 2 past six days that would fly over most people's 3 heads. And even more so to our elders. And since 4 you have been able to acquire such terminology, I 5 hope that you haven't forgotten your laymen terms 6 or your laymen English, and can bring it down to 7 the level of understanding for laymen people like 8 myself. And also to be able to truthfully 9 translate everything that you have in your 10 documents. I haven't seen anything in syllabics, 11 so that our elders who do not speak or read 12 English but do read syllabics can educate 13 themselves in this partnership. 14 Actually this partnership is another 15 thing that comes to mind that I should be 16 questioning. A lot of our natural resources, the 17 non-native society, the non-native industries seem 18 to think that these are free services. They are 19 not free. They are things that were entrusted to 20 us by the creator. This is not free. We know 21 that now because we go to the restaurants or to 22 the store, or to some corner store to go and buy 23 clean water so that we can have clean water to 24 drink. It has become a commodity. And that goes 25 for the air too. We are near there where we are 1552 1 going to have to buy oxygen. And the trees, they 2 are deemed a free commodity. The river, like I 3 said we are already at this stage where we are 4 buying this. 5 And I would hope that you take those 6 facts into consideration, and in your negotiations 7 remember that these were your creator given gifts 8 that now you are becoming a partner to to generate 9 energy so that you can have socioeconomics that 10 are befitting for the people up north. 11 And remember also this is not the 12 first time that there has been a rose handed to 13 our relatives up north. Yes, the rose is very 14 beautiful, very beautiful, but it has also thorns. 15 There is more thorns than there are roses on the 16 bush. 17 And this dam, I keep hearing that it 18 is going to be a big economic opportunity, it is 19 going to bring training dollars. I heard that the 20 people are going to be trained to build roads. 21 When I first heard it announced, I phoned 22 immediately to the Government. I told them that I 23 hope you are not going to give my brothers and 24 sisters dead end training. I said it is very 25 commendable that this money is announced. But I 1553 1 do not like to see my brothers and sisters with 2 dead end jobs. 3 Three weeks ago at the U of W, the 4 Minister said that the people are going to be 5 trained to build roads. I thought to myself, my 6 God, how many roads are they going to build up 7 north? Are they going to crisscross up north with 8 roads now to continue to keep them employed? And 9 those are the things that concern me very much. 10 Things that are long term. 11 We have people in our own community, 12 we have elders that I would deem to have PhDs. We 13 have archaeologists, we have anthropologists, we 14 have numerous scientists, we have people that can 15 look at the forest and know the activity of the 16 animals and the marine life. And also like I 17 said, we have archaeologists, right here from 18 Manitoba, and I have met them, and they are from 19 up north. If I can meet those people, surely you 20 people are aware of them because they are in your 21 communities. I have those type of people down 22 here, down south also. And like I said, their 23 knowledge is to the equivalent of PhDs because it 24 took them a lifetime, and the knowledge that was 25 handed down to them from generations. 1554 1 A lot of people today that are still 2 studying do not have the knowledge that some of 3 our elders have concerning our traditional 4 knowledge, because our traditional knowledge has 5 been handed down from generations to generations, 6 to generations for the past thousands of years. 7 And traditional knowledge is science, and science 8 encompasses all activity and everything that is 9 contained in the earth and the universe. Please, 10 take care of it. Please do not forget when you 11 are dealing with our free, natural resources, our 12 free services. You should have more than half of 13 the partnership because those are your natural 14 resources, and they are only going to give you a 15 third. Megwetch. 16 THE CHAIRMAN: Thank you very much, 17 Ms. Bruyere, Ms. Swan. We shall take a short 18 break. 19 (PROCEEDINGS RECESSED AT 8:20 P.M. AND 20 RECONVENED AT 8:43 P.M.) 21 22 THE CHAIRMAN: Ladies and gentlemen, 23 if we can get back to our seats, I will allow a 24 few seconds for that. 25 All right. Can we carry on? 1555 1 As already indicated before, we have 2 Mr. Hart, who will proceed to ask some questions 3 related to NFAAT, in particular to the social 4 benefits to wind energy, on behalf of Manitoba 5 Wildlands and Canadian Nature Federation. You may 6 proceed, Mr. Hart. 7 MR. HART: Thank you, Mr. Chairman. 8 Good evening Commissioners, panel members, Hydro, 9 NCN, ladies and gentlemen. My name is Brian Hart 10 and I am here as a consultant with Manitoba 11 Wildlands and Canadian Nature Federation. 12 I have been asked to provide a 13 specific follow-up with a bit of a discussion that 14 took place yesterday. And really this follow-up 15 is geared to one specific report entitled "The 16 Social Net Benefits of Wuskwatim Verses Wind 17 Development." It has been filed with the 18 Commission, I am not too sure what the particular 19 filings numbers are. 20 My questions are few and short and not 21 expected to take much time. Some of the questions 22 are technical in nature. It is not going to have 23 the flare and excitement that took place in the 24 last discussions, but important matters 25 nonetheless. 1556 1 In regards to this "Social Net 2 Benefits of Wuskwatim Versus Wind Development," as 3 prepared for Manitoba Hydro by Marvin Shaffer & 4 Associates Limited, February 27th, 2004, I 5 understand that Marvin Shaffer is here. 6 MR. SHAFFER: Yes. 7 MR. HART: Some of my questions I 8 guess will be directed to you, Mr. Shaffer, but 9 there are some questions which probably will need 10 some sort of response, I am thinking, from 11 Manitoba Hydro representatives there. 12 The first set of questions I have in 13 relation to this report is some of the assumptions 14 and estimates used to base what ends up being a 15 final result. So I was asked to look at this 16 report and to look at some of the numbers and some 17 of the assumptions and to provide a bit of a 18 question or comment on it. 19 So, when I did that, there are some 20 things that came up, which for me and for us 21 looking at this report and its final, just to make 22 sure that we are clear on some of these 23 assumptions and estimates, so there is no 24 misunderstanding, and the conclusions are properly 25 represented and understood for what they actually 1557 1 are. 2 So my first set of questions dealing 3 with some of the estimates used in coming up with 4 project capital expenditures, and its referenced 5 on page 4 of the report, in particular, footnote 6 number 3. When it comes to wind development, 7 there is an estimate -- there is an assumption 8 that is used that wind generator assets have a 9 20-year economic life. And I know that there are 10 other estimates used for this issue, for lifetime, 11 the economic lifetime of a wind generation 12 project. For instance, the recent, the proposed 13 and the recently licensed wind farm, 99 megawatt 14 in the St. Leon area, in their EIS refer to a 15 25-year economic life for their wind farm. In the 16 volume 2, appendix 10, Manitoba Hydro's, NCN's 17 needs for and alternatives to filing on page 8, 18 this is within the Pembina Institute report, they 19 use a 30-year life span, generally I think for 20 assessing the alternatives to the Wuskwatim 21 project. 22 So my question on this issue is pretty 23 straightforward and simple. Why does, why did you 24 use in your report a 20-year economic life as an 25 estimate in relation to wind generation? 1558 1 MR. SHAFFER: The capital cost 2 estimates for wind and the related turbine 3 replacement timing, the 20-year life of the 4 turbines, were based on information provided to me 5 from Manitoba Hydro based on consultant studies 6 that they had on wind energy and generic wind 7 projects. This was the estimate that was provided 8 through the consultants to me. These are the wind 9 energy consultants. 10 MR. WOJCZYNSKI: Ed Wojczynski, 11 Manitoba Hydro, the 20-year life is the kind of 12 information we have from the consultants and is 13 fairly typical in the field. You use as a good 14 example the St. Leon facility where a 25-year life 15 was I gather mentioned in the -- or discussed in 16 the EIS. That same facility, we are familiar 17 with, and the developers of that facility placed 18 the reliable life of that facility at 20 years, 19 and they themselves don't count on it being longer 20 than that. 21 If the facility happens to last longer 22 than that, they would like to have that happen, 23 but they don't count on that. 24 So even that facility, even though in 25 the EIS it has got the 25 years, and that's, I 1559 1 presume that is in part to cover off a longer life 2 that might occur with the facility, what they are 3 counting on is 20 years. 4 MR. HART: So, Mr. Wojczynski, from 5 your analysis, from your information, would 25 6 years be unreasonable as an estimate for economic 7 lifetime for wind generation? 8 MR. WOJCZYNSKI: 25 years might be a 9 possibility, 20 years probably seems more 10 reasonable. 11 MR. HART: Okay, thank you. 12 I am interested in the implications of 13 some of the numbers done. If we were to assume a 14 25-year economic lifetime, what would that do to 15 the project capital expenditures which are 16 illustrated and shown in table 1, table 2, under 17 the different discount rates? I am assuming -- 18 well, I am pretty sure, I am positive that if you 19 moved towards a 25-year economic life for wind 20 generation, for its assets, you would have the 21 wind capital expenditures decrease probably 22 significantly for both under each discount rate. 23 would you agree with that? 24 MR. SHAFFER: It wouldn't be 25 significant, not going from 20 to 25 years. It 1560 1 would reduce the capital cost estimate certainly. 2 The reason it wouldn't be that significant is 3 because when you are looking at expenditures that 4 are already 20 years out, and this is a discounted 5 cash flow analysis, and you discounted 8 percent 6 or 6 percent, that was the range we used in the 7 analysis, those costs are relatively small. So 8 the turbine repowering component of the capital 9 cost at a 6 percent discount rate were 44 million, 10 at an 8 percent discount rate were 29 million. 11 And you would reduce those somewhat, but you 12 wouldn't eliminate them, you would just be pushing 13 out that five years. It is because of the effect 14 of discounting that you don't have that great an 15 impact by moving from 20 to 25 years. 16 MR. WOJCZYNSKI: Further to what I was 17 saying earlier about the 20-year life, that is the 18 industry standard for wind generation. Both 19 consultants, independent consultants who work for 20 wind developers, the GEC and Helimax state that, 21 and manufacturers of wind turbine equipment also, 22 give that as their typical life. 23 MR. HART: Thanks for that. 24 Mr. Shaffer you're referring to some 25 numbers that are -- I am wondering, are they in 1561 1 this report that I have or are they separate from 2 it? 3 MR. SHAFFER: Those numbers I referred 4 to are separate from it. I had to build up from 5 the cash flows to discounted present values, and 6 to get the discounted present value of the capital 7 costs, I took the discounted cash flow of the 8 initial capital expenditures, the turbine 9 replacement, and then the salvage value at the end 10 of the planning period. 11 MR. HART: Okay. My question then is, 12 could you and/or Manitoba Hydro/NCN undertake, an 13 undertaking to provide Manitoba, you know, some 14 sort of revision to these tables and numbers based 15 on using a 25-year economic life? Just for the 16 sake that the only wind project in Manitoba uses a 17 25-year economic life in its EIS, so just for the 18 benefit of actually seeing what the numbers look 19 like on paper, I wonder if that is possible? 20 MR. WOJCZYNSKI: We could provide a 21 sensitivity to that, and we can just do that 22 simply. I might add, though, reinforce that EIS 23 said 25 years to protect the possibility of it 24 going that long, but that is not what the 25 developer is counting on. We know the developer 1562 1 is counting on 20 years, but we can do that as a 2 sensitivity. 3 4 (UNDERTAKING MH-35: Provide revision to tables 5 and numbers based on 25-year economic life) 6 7 MR. WOJCZYNSKI: The other point, if a 8 facility happened to be able to last longer, just 9 Hydro plants can last longer than their projected 10 life, the maintenance costs go higher towards the 11 tail end. That is the kind of information that 12 nobody has a good handle on, including the wind 13 developers, but we know the general trend. 14 MR. HART: Would it also be reasonable 15 to say that if you adjust the economic lifetime of 16 wind generation, extend it by five years from 20 17 to 25, that that would impact on the IRR results 18 that you guys have presented? 19 MR. SHAFFER: In the analysis that I 20 undertook and prepared for Manitoba Hydro, I 21 didn't calculate an IRR. So it would affect the 22 net present value of wind versus Hydro. You are 23 quite right, though, if we had done an IRR, it 24 would affect that. 25 MR. HART: I understand you haven't 1563 1 done an IRR anaysis in this report, so I guess my 2 question then goes to Manitoba Hydro. In its 3 economic analysis of alternatives with wind 4 generation, for instance, I am assuming then that 5 the financial analysis, when you use a 20-year 6 economic lifetime -- so I am asking then, as a 7 part 2 to this undertaking, if you can also 8 provide an adjustment to show what the impact, 9 what the results are in terms of IRR with a 10 25-year economic lifetime? 11 MR. WOJCZYNSKI: We could do a 12 sensitivity if the 25-year life happened to be 13 possible, what the impact would be. We would have 14 to do an approximate adjustment to get that. But 15 to get an approximate idea, we could do a 16 sensitivity on that. I am not sure how long it is 17 going to take, but we will undertake to do that. 18 19 (UNDERTAKING MH-36: Provide adjustment to show 20 impact in terms of IRR with 25-year economic 21 lifetime) 22 23 MR. HART: Okay, thank you. 24 Keeping with capital expenditures, 25 there has been a lot that has been discussed, you 1564 1 know, about the issue of capacity factor for wind 2 generation. I don't want to spend too much time 3 debating what it is or not, but I do understand 4 Manitoba Hydro uses as a best guess -- these are 5 the words that have been used -- of 35 percent 6 being the capacity factor for wind generation. 7 Now, I am also aware that 40 percent capacity 8 factor is not impossible. In fact, it might not 9 be unreasonable to think that in places in 10 Manitoba, maybe the St. Leon area, maybe other 11 places, 40 percent capacity factor may be 12 realistic. 13 MR. SHAFFER: I would have to say two 14 things. First of all, this comparison was 15 developing 450 megawatts of wind in addition to 16 the St. Leon capacity that has already been 17 planned for. So we are looking at sites other 18 than St. Leon, incremental wind generation to 19 compare that to Wuskwatim. In all the literature 20 I have read, 35 percent is, if anything, an 21 optimistic capacity factor, not a best guess. 22 MR. HART: That would conflict with 23 what Manitoba Hydro has on record, though. 24 Mr. Wojczynski, would you like to 25 comment on those comments? 1565 1 MR. WOJCZYNSKI: Mr. Shaffer is 2 absolutely right, the 450 is incremental to the 3 250. The assumption is that the best resource 4 will be developed first. It may very well be that 5 the St. Leon area is the best resource around. 6 As I was saying the other day, the 7 more wind you develop -- what you would expect to 8 have happen is the best resource will be developed 9 first. So the expectation is that even if you 10 could get something better than 35 percent 11 initially, the further, the more you develop, the 12 less likely it is you are going to be able to 13 achieve 35 percent or go above 35 percent. So we 14 are using generically 35 percent as our best over 15 guess. You are more than likely that your first 16 250 will be a bit higher than your second 400 -- 17 not your second 400, than the 450. 18 We are saying overall on the 700, 35 19 percent would be our best guess, but you are less 20 likely able to get that with the 450 than you are 21 with the 250. 22 MR. HART: Changing technology with 23 wind, with wind generation technology, is it 24 impacting the degree -- well, the actual capacity 25 factor on this issue? In other words, are new 1566 1 products, state of the art and state of the line 2 products coming out? Are we going to see an 3 increase -- is there a trend where there is going 4 to be an increase in the wind capacity factor 5 because of changes in technology? 6 MR. WOJCZYNSKI: We have already 7 encompassed that generically with the assumption 8 that the technology and capital costs are going to 9 be evolving over time, so we built that into our 10 analysis through having a reduction in capital 11 cost over time, which effectively encompass a 12 whole bunch of factors changing. 13 MR. HART: Would it also include 14 greater capture of wind and, therefore, an 15 increased wind capacity factor over time? 16 MR. WOJCZYNSKI: The decrease in 17 capital cost will encompass better technologies 18 and new technologies being adopted, and to a 19 lesser degree there may be, over time, the ability 20 for the same wind resource to have a more 21 efficient capture of the wind. But to a fair 22 degree, that would be captured by the lower, the 23 new technologies will be captured by the low 24 capital cost. A second factor, there may be some 25 improvement in the ability to utilize the same 1567 1 wind resource. 2 MR. HART: Okay. Thank you. I was 3 also wondering if Manitoba Hydro or Mr. Shaffer 4 could provide an undertaking to provide a revision 5 or adjustment to the numbers in this report using 6 a 40 percent capacity factor for wind 7 notwithstanding the comments and response that 8 you, the pessimistic response on going that high. 9 Just for our records, it would be interesting to 10 see what the numbers are. 11 MR. SHAFFER: These sensitivities can 12 be done, but the wind monitoring information for 13 Manitoba Hydro don't show sites that will achieve 14 that. You can run analyses with any assumptions 15 you want, but it doesn't necessarily bear on the 16 best information available to what is achievable. 17 MR. HART: I appreciate that, I do 18 appreciate that. Maybe for hypothetical reasons 19 or purposes, I am just saying it would be 20 beneficial to see it on paper, if we could have an 21 adjustment of the numbers. What would happen 22 essentially is that instead of having a 450 23 megawatt, you would have a 393 megawatt wind farm 24 requirement to match up with Wuskwatim is what 25 would happen. 1568 1 MR. SHAFFER: If you had a 30 percent 2 capacity factor, you would have that much more. 3 The range of the wind monitoring results is 4 somewhere between 30 and 37 percent, as I 5 understand it. So, I mean, we can do that, maybe 6 we should provide it for 30 and 40, if that would 7 be of assistance? 8 MR. HART: That would be helpful, yes. 9 MR. SHAFFER: Okay. 10 MR. WOJCZYNSKI: You have our 11 undertaking to do a sensitivity on that. 12 MR. HART: Thank you. 13 14 (UNDERTAKING MH-37: Provide adjustment in report 15 reflecting 30 and 40 percent wind capacity factor) 16 17 MR. HART: Just a quick question on 18 operating costs, dealing with O&M, and the 19 reference is on page 6. It says there that fixed 20 O&M is estimated at 16.6 million per year for wind 21 as compared to 2.3 million per year for Wuskwatim. 22 The report is very general. It doesn't provide a 23 lot of specifics. This is one of the areas that 24 for us it would be beneficial to have more 25 specifics on. 1569 1 I am wondering if maybe right now you 2 can break that down to provide a bit of detail as 3 to -- break down the 6.6 million per year and 4 where that money goes for wind, and also for, you 5 know, what assumptions are built into those 6 numbers? 7 MR. SHAFFER: I can't give you the 8 specifics right here, but it is based on the 9 engineering reports that we had on wind farm O&M 10 costs. Like you, I questioned them several times 11 as well. 12 MR. WOJCZYNSKI: That information is 13 straight out of the consultant's report that has 14 already been provided in the interrogatories. 15 MR. HART: Do you want to reference 16 the interrogatory or do you want me to swim 17 through it? 18 MR. SHAFFER: It is a report by 19 Helimax Energy, but -- 20 MR. WOJCZYNSKI: For starters, the one 21 on the capital cost reductions that we have 22 already utilized this in looking into future 23 technologies in CNF/NFAAT round 1, 384c. That was 24 the one talking about the capital cost reduction, 25 and that Wind Generation Manitoba is the one 1570 1 report, Analysis of Future Wind Energy Cost 2 Trends, and then Generic Wind Power Project 3 Construction O&M Budgets, so that is found in the 4 CNF interrogatory, 384c. 5 MR. HART: So it does break down the 6 16.6 million per year? 7 MR. WOJCZYNSKI: It provides on a 8 generic basis how the O&M numbers -- where they 9 come from, the contributors. 10 MR. HART: Okay. I want to get off 11 the capital and operating cost issue, but I want 12 to talk a bit about the employment side. The 13 report starts dealing with employment areas, or 14 issues and aspects, when it comes to looking at 15 social net benefits. There are some assumptions 16 made in the report. One of them is that 700 17 person years out of 2,200 person years employment 18 will go to Northern residents. 19 The questions I have are in relation 20 to the reality, the fact that the proposed 21 Wuskwatim projects will be unionized worksites, 22 construction sites, and therefore unions will have 23 quite a bit to say about the success of Aboriginal 24 Northern employment prospects. 25 I am just wondering offhand, would you 1571 1 generally agree with that statement? 2 MR. SHAFFER: There are a lot of 3 factors that will affect the level of northern 4 employment, including whatever union provisions or 5 constraints that may exist. This estimate was 6 provided through impact studies that Manitoba 7 Hydro have prepared on the Wuskwatim project, 8 Manitoba Hydro and NCN. There is a lot of effort 9 going in to achieve those levels of employment, as 10 you know. 11 MR. HART: Mr. Wojczynski, would you 12 agree with the statement that I made? 13 MR. ADAMS: The Wuskwatim project will 14 be done under a collective agreement with the 15 Allied Hydro Council. It will be 1967 -- so 37 16 years of continuous, to date, 37 years of 17 continuous or repetitive agreements with the same 18 group. The last three agreements have all had 19 extensive provisions in there for Aboriginal 20 employment, Northern employment and so forth. And 21 while there is room for improvement, I think our 22 record to date has been fairly successful. We 23 don't anticipate any difficulty whatsoever working 24 with the unions, working with us and supporting 25 the intent to maximize the meaningful employment 1572 1 of Aboriginal partners and other Aboriginals 2 living in the north. 3 MR. HART: What is the current status 4 of the negotiations? Now, this is between 5 Manitoba Hydro and the Allied Hydro Council -- I 6 don't believe they are completed, I understand 7 they are ongoing -- what is the current status of 8 this process to renegotiate the Burntwood/Nelson 9 Agreement I guess is what it is? 10 MR. ADAMS: We are in the process of 11 negotiations with the Allied Hydro Council. We 12 have agreement on many of the articles that would 13 be in the new agreement. There is still about a 14 dozen articles that are outstanding, and the 15 expectation is that -- where are we now, March -- 16 probably within a month we would be able to get 17 back with them and complete the agreement. 18 MR. HART: Mr. Adams, would you agree 19 that the unions will have much to say about the 20 success of Aboriginal Northern employment 21 prospects for Wuskwatim projects? 22 MR. ADAMS: No, I do not agree, in as 23 much as we will have a collective agreement with 24 the unions, and once that collective agreement is 25 in place, we will all abide by the terms and 1573 1 conditions of it. 2 MR. HART: Mr. Adams, you commented 3 about the successful track record, I think -- 4 maybe not those exact words -- that Manitoba Hydro 5 has when it comes to Aboriginal employment 6 outcomes, maybe from past constuction projects 7 such as the dams. Is that true? Did I hear you 8 right? Is that accurate? 9 MR. ADAMS: Yes. 10 MR. HART: Would you say that the 11 Limestone Generating Station, the construction of 12 that generated significant employment success, you 13 can say, for Aboriginal Northern -- 14 MR. ADAMS: Absolutely. 15 MR. HART: Both in terms of 16 recruitment, as well as retention? 17 MR. ADAMS: Recruitment, retention, 18 percentage of person years of work -- that is not 19 to suggest that there isn't room for improvement. 20 I can't remember the numbers off the top of my 21 head, but something like 35 percent of the hires 22 at Limestone were Aboriginal. 23 MR. HART: On the recruitment end -- 24 what about the retention end, do you have those 25 numbers? 1574 1 MR. ADAMS: We have those but I don't 2 have them handy. There have been thousands of 3 reports written on it. 4 MR. HART: I don't have any reports 5 right here, and I don't have any on record,or 6 filed, but I am -- just from the reports that I 7 have read, or some of the numbers that I have 8 seen -- not numbers, but comments, that there is 9 some question, you could say -- to say that, there 10 is some question on the record, Manitoba Hydro, 11 when it comes to retention, job retention in past 12 Hydro projects, in the construction of -- that's 13 just from my personal experience. I put the 14 question to you, and you haven't answered whether 15 or not job retention issues has been part of that 16 successful track record or not? 17 MR. ADAMS: I disagree. I did answer 18 it. I said I thought job retention was fairly 19 successful at Limestone. 20 MR. HART: What would be very 21 successful? I am trying to understand that. What 22 would you expect from any project site or any 23 project in Manitoba? 24 MR. ADAMS: Job turnover on any large 25 project is a significant factor. I would say the 1575 1 Aboriginal retention program was successful if it 2 was no different from the retention program from 3 all other workers on the job. 4 MR. HART: Okay. Thank you. Some of 5 these employment issues I am sure will come up in 6 the EIS. The reason I bring it up now is because 7 it is in a comparison with wind and Wuskwatim in 8 this report, but it does go off into other issues 9 with the Burntwood/Nelson Agreement, the 10 negotiation that is going on. So, I expect that 11 the issues will also come up in the EIS. 12 MR. MAYER: Just one moment, sir. 13 Mr. Hart, are you aware of the Limestone project? 14 MR. HART: In what way? 15 MR. MAYER: Firstly, the questions 16 were asked rather significantly a couple of days 17 ago about the agreements. But have you read the 18 material on the Limestone project and the job 19 rate? Are you aware that -- at least in its time, 20 and Hydro has conceded that there have been, or 21 that improvements can be expected anywhere, but in 22 that area it was considered the leading project, 23 at least in North America, if not the world, in 24 that job creation/job retention success. 25 Were you aware of that, sir? 1576 1 MR. HART: Well, I am aware that there 2 was a lot of ambition, and I think a lot of hope 3 and a lot of plans, I think, Mr. Mayer, I am aware 4 of that. I am also aware that, after talking with 5 various unions and the apprenticeship trades, 6 talking to them directly about the experience with 7 Limestone -- there are some positive experiences 8 that people say, well, in Limestone, that is the 9 first time that apprenticeship and trades really 10 took a foothold in the north. They say that. But 11 they also say, and I am not too sure if you're 12 aware, Mr. Mayer, that there was a lot of 13 Aboriginal people who were hired, and went to the 14 dam site to sit around and not really be part of 15 any meaningful work, to the point where turnover I 16 think took effect. Now, that is not explaining 17 the entire reasons for it, but, clearly, and you 18 being from the north, you must be aware that 19 turnover was a huge issue in the Limestone, 20 construction of the Limestone project. 21 MR. MAYER: I am aware of some of the 22 turnover. Thank you. 23 MR. ADAMS: If I may, Mr. Chairman. 24 THE CHAIRMAN: Proceed, Mr. Adams. 25 MR. ADAMS: Limestone was 12 or 14 1577 1 years ago, and while I will defend our record on 2 Limestone forever, as I said a couple of times, I 3 think there is room for improvement, and we have 4 been working very, very hard with Nisichawayasihk, 5 with the other First Nations with whom we are 6 dealing with on the potential for other projects, 7 and with the unions, to improve the situation for 8 Aboriginal employees. Most of all within our own 9 organization, 30 percent of all of our employees 10 in Northern Manitoba right now are Aboriginal, and 11 that number has been creeping up. A significant 12 number of the people, not in the broom pushing or 13 the catering positions, they are in trainee 14 positions, they are technicians, they are 15 operators, that's where we want them to get, and 16 we are putting an awful lot of effort into it. I 17 am fully confident between us, the Aboriginal 18 partners, and the unions, certainly at the 19 Wuskwatim project and any others we may pursue 20 later on, that we will have good success in 21 recruitment, training, retention, counselling, and 22 progression through the training programs and the 23 apprenticeship programs. 24 MS. AVERY KINEW: Mr. Adams, the 25 collective agreement that you are negotiating, 1578 1 would that apply to all the subcontractors? 2 MR. ADAMS: Yes. 3 MS. AVERY KINEW: It wouldn't be a 4 case where there would be a different union with a 5 subcontractor, or non-union -- 6 MR. ADAMS: All contractors on the 7 project have to adhere to the collective 8 agreement, and all unions working on the project, 9 all trade unions, have to be covered under the 10 umbrella agreement. 11 The only exception is that staff 12 working directly for Manitoba Hydro are either 13 exempt or they are covered by the IBEW, or the 14 AMC, which is a supervisory union. But everybody 15 -- and the contractor, or the management and 16 supervisory staff of contractors are exempt -- but 17 absent that, everybody on the project is covered 18 by the collective agreement. 19 MS. AVERY KINEW: Thank you. I don't 20 want to put any words in Mr. Hart's mouth, but I 21 was just wondering, the unions recognize 22 seniority, the Northern and Aboriginal people who 23 are being trained might be well-trained but not 24 have the job experience. Will they be hired? 25 MR. ADAMS: That will be covered in 1579 1 the collective agreement, and what we finish up 2 putting in is a preference clause for hiring 3 and -- I should qualify that when I say we will 4 put in, it is a negotiation between us and the 5 Allied Hydro Council, and they have been known to 6 have their own ideas, but we have always managed 7 to negotiate an agreement that is mutually 8 satisfactory. And part of the retention strategy 9 is to -- sort of first on/last off type of 10 provision, but the idea being the first on would 11 be the local Aboriginal community. 12 MS. AVERY KINEW: Okay. Thank you. 13 THE CHAIRMAN: Thank you. Yes, 14 Mr. Thomas? 15 MR. THOMAS: If I may interject a bit 16 on the retention issue. We have looked at the 17 Limestone situation, along with the other projects 18 that have occurred within our territory and 19 outside of our territory. We have looked to those 20 situations to see what we can learn from those 21 experiences. 22 We did notice that usually many of our 23 people were the last ones hired and yet were the 24 first ones let go when the first opportunity 25 arose. So, we have done a number of things to try 1580 1 and address that issue of concern. 2 As indicated by Mr. Adams, we are 3 trying to see what we can negotiate with regard to 4 preferences for the NCN people, and also with the 5 Northern Aboriginals and other Aboriginals, as the 6 case may be. So, we are looking at those issues, 7 and at the same time, we are looking to see what 8 sort of supports we can put in place. 9 We have earmarked some of our training 10 dollars towards a life skills component designed 11 to address the issue of retention. Plus we have 12 support staff identified to ensure that the 13 necessary supports are going to be there. Plus, 14 we are looking at a monitoring the situation to 15 ensure that what we are striving for here is being 16 done. 17 So, we have done quite a bit towards 18 this area, and I thought I would let you know 19 about that. Thank you. 20 MR. HART: Thank you, Councillor 21 Thomas. I just have a question for you. I 22 understand, correct me if I am wrong, but NCN is 23 not at the table in these discussions with Allied 24 Hydro Council in the collective bargaining 25 negotiations; is that true? 1581 1 MR. THOMAS: The agreement is between 2 Manitoba Hydro and also the unions. We are not 3 privy to that agreement, but we are aware of what 4 is going on, and we make our concerns known to 5 Hydro that certain conditions have to be included 6 in the agreement this time around in order to 7 ensure that our First Nations people are treated 8 properly. 9 Sometimes -- one of the areas of 10 concern was job qualifications. We wanted to make 11 sure that the contractors, or whoever would do the 12 hiring, wouldn't artificially inflate a job 13 requirement in order to prevent us from being able 14 to get some of those positions. But we are not a 15 party to that agreement. It is my -- my 16 understanding is that it is a governing document 17 with regard to doing mega projects in the north as 18 it relates to the construction of dams. And as a 19 result, we can't negotiate directly with the 20 Allied Hydro Council, but we do so through our 21 potential partners here. 22 MR. HART: And to date you are 23 satisfied with the results of the ongoing 24 negotiation process? I am assuming then that you 25 have been given, probably on a day-to-day, 1582 1 period-to-period basis, the ongoing results of 2 these negotiations. Are you satisfied with the 3 negotiations so far? 4 MR. THOMAS: Up to this point, we have 5 engaged in quite a number of discussions, some 6 heated and some not so heated. We have taken 7 positions. There has been some give and some take 8 here and there as we have moved along. But 9 overall, we have gone through a process where we 10 involve our people, plus the Chief and Council, 11 and my whole future development team, and Hydro. 12 At this point in time, we are pretty satisfied 13 with what we have been able to achieve. 14 MR. ADAMS: I might add that part of 15 the negotiation process with the Allied Hydro 16 Council is that we negotiate for all potential 17 projects that might start within a certain time 18 period. We don't want competing project 19 agreements from one plant to another one. So, it 20 is an umbrella agreement that covers any potential 21 construction in Northern Manitoba. And then if 22 and when we ever kick in a specific plant, we 23 develop what we call a secondary or subsidiary 24 agreement that has specific conditions to that 25 station. 1583 1 Part of the process that we are 2 working with, we do work with NCN in the case of 3 the Wuskwatim project, with TCN, War Lake, Fox, in 4 respect of the potential Gull project. We are not 5 going to sign any agreement that our partners are 6 not satisfied or else we don't have an agreement 7 with our partners. 8 MR. HART: Which now brings me to my 9 last set of questions on a different matter. On 10 page 13 of the report there is a statement where 11 it says: 12 "For the purpose of this study, no 13 difference in the net environmental 14 benefits is assumed between the two 15 projects." 16 This is between the Wuskwatim project versus wind 17 development in this hypothetical sense. 18 Now, Mr. Shaffer, I am just asking 19 you, this is your report, you wrote that as well 20 as everything else. Can you say -- could it be 21 concluded, after a thorough analysis of 22 environmental issues, that there was no difference 23 in net environmental benefits between these two 24 options? 25 MR. SHAFFER: What I am referring to 1584 1 there is whether, in a social benefit cost 2 analysis, there are externalities. In other 3 words, are there environmental benefits and costs 4 that haven't been captured in the expenditure 5 estimates for mitigation and compensation that are 6 already built into the capital or operating costs? 7 So, you know, we realize they are very 8 different projects. So what I did when I looked 9 at the environmental impacts of both projects, as 10 first reviewed, as you're aware, those things that 11 can be readily quantified, the emissions, for 12 example -- and all of the studies are consistent 13 in saying both Hydro and wind are both clean 14 projects, they don't have significant emissions, 15 even in a lifecycle context, when you are looking 16 at not just the direct operations, but also the 17 construction, and fuels, and all other aspects 18 that go into a project. 19 So what you are left with for Hydro 20 and for wind are the site specific impacts. In 21 the case of wind, I could refer to those things 22 related to noise, esthetics, bird and animal 23 fatalities, and the like. 24 In the case of Hydro, you have the 25 issues related to the facility, any impacts on 1585 1 water quality, if there is flooding, on fisheries 2 and other resources that can be affected. I base 3 that statement on the environmental review that 4 concluded that after mitigation and compensation, 5 particularly in light of the design of Wuskwatim, 6 and the analysis of the impacts it is likely to 7 have, that there weren't adverse effects of an 8 external nature that hadn't been covered in the 9 mitigation and compensation. So there were no 10 significant additional costs that had to be added 11 in to the net benefit cost from a social 12 perspective. 13 In the case of wind, it is less clear, 14 because the wind numbers were based on generic 15 studies. The extent to which they had built in 16 the required mitigation is unclear, but for the 17 purposes of this study, I assume they would be no 18 greater than what you would have for Wuskwatim. 19 MR. HART: Perhaps, maybe it is an 20 issue of economic evaluation methods, perhaps, but 21 I am wondering how you could have a very large 22 small dam -- I mean, it is a small dam, but it is 23 still a very large project -- being built in the 24 boreal forest, in addition to its associated 25 transmission lines, okay, and the amount of impact 1586 1 and fragmentation that has long term on the 2 environment. Comparing that to a similar project, 3 this project is wind generation in the south, it 4 is going to take place on already altered 5 landscape, significantly altered landscape, 6 probably on agricultural land, which doesn't 7 significantly reduce, at least potential, 8 theoretically, agricultural pursuits. It may 9 offset them marginally. But you are dealing with 10 land which has already been altered and developed. 11 So I am reading this statement, 12 "For the purpose of this study, no 13 difference in the net environmental 14 benefits is assumed." 15 I am thinking of just these two radical 16 differences, and what happens to the land and the 17 environment in the settings of both, okay. I find 18 it very difficult to see how we can conclude, or 19 you can conclude that there is no net difference 20 in environmental benefits. I would think -- I am 21 almost finished, it is a very long question I 22 guess -- I would think that wind generation would 23 offer a relative benefit in comparison to 24 Wuskwatim on what it does, or how it does not 25 impact the boreal forest. The problem that I know 1587 1 that we have, and you have, and Manitoba Hydro 2 has, is the economic evaluation of things, how we 3 value things and how we can measure economic 4 value. 5 You mentioned emissions being easy to 6 quantify, and perhaps that's why they have a lot 7 of prominence in the report. But I want to 8 understand, and maybe you can answer now, just 9 maybe to acknowledge that that kind of impact or 10 that kind of effect on the boreal forest is not 11 measured or reflected in this report in terms of 12 net social benefits. Maybe you could confirm that 13 or disagree with me on that? 14 MR. SHAFFER: I based my work and 15 those statements, in the case of emissions, on the 16 studies that are referenced, EIA study, European 17 Commission, a lot of studies are available on the 18 emission side. 19 On the site specific impacts, I based 20 that statement on the environmental studies and 21 the conclusion of the environmental review, that 22 basically concluded that after mitigation and 23 compensation, there are no significant adverse 24 effects. 25 You mentioned transmission -- both 1588 1 have associated transmission. In terms of 2 impacts, both will have site specific impacts. 3 Wind will have site specific impacts. We know 4 about it in a number of areas, they are very 5 controversial. They both have impacts. 6 The question is, have they been, in 7 the case of the benefit cost analysis, have they 8 been mitigated? Is there provision for 9 compensation of the adverse effects? And the 10 conclusion of the environmental review was that 11 they had. 12 The other thing I would point out is 13 that 450 megawatts is not a small project. That's 14 a very large project in its own right and it will 15 also have associated transmission, and land, bird, 16 owl, and other such effects. 17 MR. HART: Maybe, Mr. Wojczynski, do 18 you want to respond to whether or not Manitoba 19 Hydro has undertaken to measure the impact of what 20 the losses may be to the boreal forest, or the 21 fragmentation of it, in terms of any kind of 22 economic evaluation? There are methods out there 23 that deal with maybe alternative or 24 non-conventional ways of measuring economic 25 values. I am wondering if Manitoba Hydro has done 1589 1 anything in this area? 2 MR. WOJCZYNSKI: First of all, I 3 should supplement what Mr. Shaffer said, and the 4 transmission I think is a good example, and we are 5 focusing on that. If you look at 450-megawatt 6 wind project, it would actually require more 7 transmission than Wuskwatim would. Our best 8 information right now is that you would need 270 9 kilometres of 230 kV transmission for the wind 10 project, and you need 182 for Wuskwatim. If you 11 look at land use on a metre squared per gigawatt 12 hour basis, our best estimate right now is you 13 need 183 metres squared per gigawatt hour 14 production from the wind, it is very similar to 15 Wuskwatim, 176. So from a land use and 16 transmission point of view, you could just very 17 roughly say they are about the same. 18 There are going to be differing 19 impacts from each project. Wuskwatim is in the 20 boreal forest, yes, and EIS considers the impacts 21 of that, and they will be different than the 22 impacts from the wind turbines. 23 The wind turbines have different kinds 24 of impacts. The general information we have right 25 now is that they are bigger impacts on raptors, 1590 1 for example, and there is an upsurge in interest 2 in different parts of the world about the impact 3 of wind turbines on raptors that you don't see 4 with the hydro turbines. 5 As Mr. Shaffer has indicated, the wind 6 turbines are not small little backyard projects. 7 These are huge facilities in terms of their size. 8 The typical height might be -- the Golden Boy is 9 72 metres high, to give some people the scale, 10 whereas the top of a wind turbine, the modern 11 ones, we are talking in the order of 120 metres 12 high or more. So, they are higher than the top of 13 the Legislature. They have a visual effect. 14 You are talking about -- the wind 15 turbines are down south, so the implication being 16 because they are not in the boreal forest, well, 17 thus they have less impact. 18 It is very hard to compare the impacts 19 of different kinds of things. And I think you 20 would probably agree with me, but I will say it 21 anyways, it is very hard to do a multi-attribute 22 comparison analysis when you have different kinds 23 of impacts that are not exactly the same. No one 24 has developed a perfect technique for doing that. 25 But what we do know is that wind has significant 1591 1 impacts -- well, I shouldn't use the word 2 significant -- the opposite of significant -- wind 3 has small impacts and Wuskwatim has small impacts. 4 They are both relatively small and our judgment is 5 they are relatively equal. 6 Now, to come specifically to your 7 question, have we developed or utilized a precise 8 means to determine an economic estimate of the 9 impact of the lines going through the boreal 10 forest, aside from just land use kind of impact, 11 or avoiding the impacts that I know our 12 transmission lines are doing in the routing, but 13 there is still a line going through, have we 14 developed some sophisticated technique where we 15 can take that impact and put it on a common basis 16 where we can quantitatively compare it to the 17 raptors that might be killed from the wind 18 turbines, or the visual effects of the people 19 living in the area of wind turbines? No, we 20 haven't developed such a thing. But we have used 21 our judgment to make that kind of comparison. 22 I note, for example, in Denmark where 23 there is a lot of wind turbines in place, the law 24 now is that wind turbines have to be out away from 25 the land and have to be 5 kilometres offshore, 1592 1 because people don't want all these massive wind 2 farms around. People are interested to see the 3 first few wind farms. Once you get 300 turbines, 4 or in that order that we are talking about here, 5 now it starts being imposing. 6 So you have got a different kind of 7 impact. How do you trade those off? We just used 8 our judgment. 9 MR. HART: Thank you, Mr. Wojczynski. 10 I agree with you 100 percent, there are different 11 impacts for each of these two types of projects, 12 for sure. 13 Visual impacts, esthetic impacts are 14 very significant in both cases, I would suggest. 15 Nobody likes to see hydro transmission lines 16 anywhere, I suppose, if they had a choice. 17 MR. WOJCZYNSKI: There is more 18 transmission effectively going in for the wind 19 turbines than there would be for Wuskwatim. So 20 there are impacts in both cases. 21 MR. HART: Just to clarify one thing 22 on that, you mentioned 182 kilometres of 23 transmission lines for Wuskwatim. I am trying to 24 understand that number, because my numbers are 25 higher than that, based on the three segments, 1593 1 S-1, S-2, S-3. My math comes to over 182 2 kilometres. Did I get something wrong? Did I 3 misunderstand something? 4 MR. WOJCZYNSKI: The one possible, I 5 would have to go back to -- Ron? 6 MR. MAZUR: Mr. Chairman, Ron Mazur -- 7 just to clarify that, I think Mr. Wojczynski is 8 probably referring to the incremental right-of-way 9 miles, or right-of-way kilometres? 10 MR. WOJCZYNSKI: Yes. 11 MR. MAZUR: On one of the 12 right-of-ways there will be two lines, and that 13 will gibe with the numbers that you may have for 14 S-1, S-2, and S-3. 15 MR. HART: Do you have the distance 16 for each of these, because even with the double 17 quarter -- 18 MR. MAZUR: Then there is the line 19 from Herblet Lake to Rall's Island, which I guess 20 is incremental -- or it is not incremental because 21 it is being advanced. 22 MR. HART: It is part of the project, 23 though? 24 MR. MAZUR: If you wish to include it, 25 it will be built anyway, and I think that probably 1594 1 was what Mr. Wojczynski was thinking of. 2 MR. HART: But it is, in the EIS it is 3 S-3, there is three components to the 4 transmission. 5 MR. MAZUR: Yes, we are not saying 6 that it isn't. We are just saying that the 7 incremental transmission over and above that, I 8 think is what Mr. Wojczynski meant. He can 9 confirm that. 10 MR. HART: Could I just get 11 confirmation on the total kilometres of new 12 transmission lines as a result of the Wuskwatim 13 project? 14 MR. MAZUR: There is 45 kilometres 15 from Wuskwatim to Thompson, 2 times 137, I believe 16 is the numbers between Wuskwatim and Herblet Lake. 17 Then there is the line that is being advanced 18 between Herblet Lake and Rall's Island, which is 19 165 kilometres. 20 MR. HART: That is 337 kilometres in 21 new transmission lines? 22 MR. WOJCZYNSKI: Clearly, though, if 23 you are advancing a transmission line a few years, 24 that the environmental impact for that, the vast 25 majority of that isn't attributable to Wuskwatim, 1595 1 it is attributable to the fact that it is going to 2 be built anyways, so I don't think that, from a 3 lifecycle comparison point of view, that you can 4 really include that transmission that is being 5 advanced. 6 MR. HART: Thank you. 7 MR. MAZUR: Your calculator is 8 different from mine, I add up to 319 plus 165. 9 MR. HART: 45, 137, and 165? 10 MR. MAZUR: 45, 137, 137, plus the 11 165. 12 MR. HART: Okay. I only counted one 13 137. It is just a wider corridor, that's what 14 that is? 15 MR. MAZUR: That is correct. 16 MR. HART: Just in terms of length, 17 not width, it is 337 kilometres; would you agree 18 with that? 19 MR. MAZUR: Pardon me? 20 MR. HART: In terms of length but not 21 width, it is 337 kilometres? 22 MR. MAZUR: In terms of right-of-way 23 length, it is 45, plus 137, plus 165. 24 MR. HART: 337? 25 MR. MAZUR: Yes. 1596 1 MR. HART: Anyways -- it is late in 2 the evening. 3 MR. MAZUR: As Mr. Wojczynski said, if 4 you put all the 450 megawatts of wind in one 5 place, you will have in the order of 280 6 kilometres of 230 kV transmission line out of say 7 the St. Leon area. If you distribute it you will 8 have less transmission, but you certainly likely 9 will not have the higher capacity factor. 10 MR. HART: And you would have less 11 transmission, probably no transmission going 12 through the boreal forest; would you agree with 13 that? 14 MR. MAZUR: I am not familiar with all 15 the terrain. I guess we could defer that to the 16 EIS. 17 MR. HART: It is late in the evening, 18 I went longer than I -- 19 MR. WOJCZYNSKI: I want to clarify 20 that, though. We are talking about having -- the 21 wind generation would be in the south central 22 region, and there may be a parklands, there may be 23 areas of undisturbed forest type, but it is not 24 the northern boreal forest that I think you are 25 thinking of. 1597 1 MR. HART: I have one last question, 2 it brings back an old report, not this report but 3 an older one. This report came out in 1979. It 4 is commonly referred to as a the Tritshler Report. 5 Mr. Mayer just kind of shrugs, he knows all about 6 it. I don't have a long question, just a short 7 question. 8 This is actually the final report of 9 the 1979 inquiry into Manitoba Hydro, and the 10 Commissioner was George E. Tritshler, so it is 11 also known as the Tritshler report. 12 My question is general, and I am 13 hoping that there will be another undertaking by 14 Manitoba Hydro on this, in its response. 15 But in the late 1970s, there was a 16 concern that after the first wave of Hydro 17 expansion, of Northern Hydro expansion or 18 development, with the Lower Nelson, the Churchill 19 River Diversion, Lake Winnipeg, there were a lot 20 of issues with cost overruns, there were some 21 inefficiencies, there were some issues with 22 policies, dealing with Manitoba Hydro and how 23 Manitoba Hydro related with the Provincial 24 Government at the time, a bit of confusion, lines 25 of communication, lines of authority. There were 1598 1 some issues with, probably a lot of concern you 2 can say with Hydro development at that time. 3 Well, out of this inquiry came a 4 report and a number of recommendations came out. 5 I am thinking that Manitoba Hydro has probably 6 done lots of things over the years to respond to 7 some of these recommendations, and I know that a 8 lot of things have been done and a lot of changes 9 have made within Manitoba Hydro. 10 One of the recommendations within the 11 Tritshler report was that there shouldn't be any 12 further construction of dams based on speculation. 13 It was pretty strong opinion in the conclusion of 14 this report. 15 I know that times have changed, you 16 know, it is 25 years later, a lot has changed, 17 Manitoba Hydro has changed. But it is clear that 18 Manitoba Hydro today is building Wuskwatim on 19 speculation, in contrast, or contrary to what one 20 of the very significant recommendations was in 21 this report. 22 I am asking this question because we 23 are on the verge of going through a second wave of 24 northern hydro expansion in this Province. The 25 first one took place in the early '70s. There was 1599 1 Limestone, which was kind of in the middle of 2 these two expansions. Now we are looking at 3 Wuskwatim, but, clearly, we are in the beginning 4 of a -- at least an interest anyways of a second 5 wave of northern hydro expansion. 6 We still have the Tritshler report 7 that is sitting on people's shelves. One of its 8 recommendations was to not build these dams on 9 speculation. 10 Mr. Adams, you are probably in the 11 best position to comment on this, what seems to be 12 an inconsistency. Was the report wrong? Was the 13 Commissioner wrong? Was Tritshler wrong in this 14 area? Have things changed so much, and if things 15 have changed, what have those changes been to 16 justify building on speculation rather than having 17 a firm contract? I leave it for you. 18 MR. ADAMS: I remember the Tritshler 19 inquiry well -- not one of my favourite board 20 experiences. 21 In 25 years the electricity industry 22 has undergone a fundamental revolution, except in 23 Manitoba. In 1992, the U.S. passed the Energy 24 Policy Act which essentially destroyed the concept 25 of a vertically integrated utility with guaranteed 1600 1 territories. In the period since, or the 12 years 2 since, the U.S. electricity industry has changed 3 to the point to where it is completely 4 unrecognizable from anything that existed in 1979. 5 Also since 1979, we have had 25 years 6 of extensive, very successful experience in doing 7 export activities, both in Canada and in the U.S. 8 The operational base of our system has 9 increased from, in the early '70s, from roughly 10 2000 megawatts to 5000 megawatts now. And we are 11 talking about a small 4 percent addition to it, 12 whereas at times in the '70s we were doubling the 13 system on an ongoing basis. 14 There is competition for our product 15 these days. There is significant interest from 16 parties, from potential purchasers all over the 17 place. The Manitoba Hydro Act has been changed 18 twice. 19 The short answer is Mr. Tritshler, or 20 Justice Tritshler did a very thorough review 25 21 years ago. To the extent that those 22 recommendations were appropriate at the time, we 23 have implemented them. In the cases where these 24 recommendations have been passed by the progress 25 of time, we are moving on to a new world. 1601 1 MR. HART: I am finished. 2 THE CHAIRMAN: Thank you. Thank you, 3 Mr. Hart. We will go on to resume with the 4 questions from Mr. McIvor, Trapline 18. 5 THE CHAIRMAN: You may proceed. 6 MR. McIVOR: The first question is for 7 Mr. Thomas. Just kidding -- 8 MR. THOMAS: It is past your bedtime. 9 MR. McIVOR: I have been told it is 10 past my bedtime. 11 Anyway, I just wanted to acknowledge a 12 couple of the presenters, or at least one anyway, 13 and that is Grand Chief Margaret Swan. She had 14 some interesting comments and I can agree with 15 some of them, at least one in particular. 16 It seems to happen to me every time I 17 come up here, you guys bump me off or whatever. 18 Anyway, that's not a problem. That's all right. 19 It is a long process. 20 Anyway, just listening to some of the 21 discussion, and there were some questions that I 22 think Mr. Hart had asked. What I have done is, 23 just to try and make sure we all get home a little 24 bit earlier tonight, I did take out some questions 25 that I thought may be attributable to the 1602 1 environmental impact portion. 2 So, what I am going to do is go 3 through some of the questions that I do have right 4 now. They relate to the some of the issues that 5 have been been brought up earlier, like the 6 employment side of things. 7 There has been an awful lot of 8 commitments, I understand, made to pre-employment, 9 pre-training of NCN members. I understand there 10 is a number of commitments and I was wondering if 11 maybe Councillor Thomas can confirm some of these 12 numbers as they pertain to NCN? 13 In the case of, for example, the 14 contribution by or commitment made by the Western 15 Economic Development Department, I understand 16 there is a substantial commitment made by them 17 towards the pre-training, and what is it called, 18 the ATEC, the employment centre? 19 MR. THOMAS: Yes. 20 MR. McIVOR: I understand there is 21 approximately $5 million from WED or WD at this 22 point? 23 MR. THOMAS: I am having the numbers 24 checked while you are talking there, but, I do 25 believe that it is in that range, but I will 1603 1 confirm it once I get the actuals from Bruce in 2 the back here. 3 MR. McIVOR: Okay. Maybe Bruce can 4 look for a 2.5 million commitment from the 5 Province of Manitoba as well, 5 million from 6 Manitoba Hydro and 3.26 million from INAC? 7 THE CHAIRMAN: Mr. McIvor, are you 8 taking the figures from the information provided 9 already on record? 10 MR. McIVOR: Yes. 11 THE CHAIRMAN: Those are the answers 12 that you are supplying? 13 MR. McIVOR: Yes. If you want to do 14 an undertaking, I will accommodate that. 15 THE CHAIRMAN: No. I am saying that 16 the questions that you're asking are the answers 17 to your questions? 18 MR. McIVOR: No. What I am asking is, 19 have there been some commitments? One of the 20 things that is quite clear with these types of 21 commitments is that the Federal Government, the 22 Province, Manitoba Hydro have basically indicated 23 that Wuskwatim is going ahead. Okay, now, the 24 gentleman -- Mr. Shaffer, is it? 25 MR. SHAFFER: Yes. 1604 1 MR. McIVOR: -- has already indicated 2 that he has built in an allowance for adverse 3 effects, or compensation as part of his estimates. 4 But what kind of numbers has he been using to 5 determine that -- because I think both Councillor 6 Thomas and Mr. Adams indicated that they have not 7 arrived at any agreements, they are still 8 negotiating. 9 So, in terms of all this pre-project 10 training, is that something that is already 11 calculated into the Wuskwatim project? 12 MR. ADAMS: Maybe I can answer that, 13 Mr. Chairman. Yes. 14 MR. McIVOR: Thank you very much. 15 MR. ADAMS: The estimate that we have 16 for the Wuskwatim project includes all the costs 17 that we can legitimately attribute to the project, 18 including pre-project training, including our 19 estimate of compensation, which may or may not be 20 accurate. Our colleagues at NCN and anybody else 21 who may be affected by the project will probably 22 want to sit down and talk to us about it. But, we 23 have made a provision in the estimate for 24 compensation. 25 As Mr. Mayer said two or three days 1605 1 ago, we have done such a great job of designing 2 the project, we don't think there should be 3 significant compensation, but we will work on 4 that. 5 Manitoba Hydro has committed a 6 significant amount of money to the Wuskwatim 7 project, and I should mention the Gull project -- 8 neither of which have been committed to proceed -- 9 on the expectation and based on previous 10 experiences that if you didn't initiate the 11 training program sufficiently far ahead of the 12 project, then the opportunities for people on the 13 project will be significantly reduced. So, it is 14 a risk we are taking. If the project doesn't 15 proceed, to date we are out about $5 million, 16 which we will have to find a way of recouping. 17 If the project does proceed, the cost 18 is built into it and the expectation is that, as 19 the work force builds up, there will be a 20 significant number of suitably trained, local 21 northern people who can come and work on the job. 22 MR. McIVOR: You are basically going 23 on speculation then? 24 MR. ADAMS: Absolutely. 25 MR. McIVOR: Right on. Okay. 1606 1 The other issue in terms of 2 calculating what some of these costs are regarding 3 Wuskwatim -- since Mr. Shaffer is here today -- 4 the compensation, and I don't want to get into 5 your back room deals here, the compensation you're 6 referring to, is that limited up to 1996 as to the 7 signing of the implementation agreement, NFA 8 implementation agreement with NCN? 9 MR. ADAMS: I don't know what you mean 10 by "limited"? 11 MR. McIVOR: Well, you had in the 1977 12 Northern Flood Agreement adverse effects. You 13 indicated again that you have adverse effects 14 again in the Implementation Agreement. So, what 15 method are you using to calculate compensation, 16 because that will impact the project itself? 17 MR. ADAMS: The method we use for 18 compensation is to try and identify the specific 19 adverse effects, identify the individuals or the 20 communities or groups on whom those adverse 21 effects are being inflicted, and negotiate an 22 appropriate settlement. 23 MR. McIVOR: You read NCN's definition 24 of adverse effects, and you said you have a book 25 at the office that has Manitoba Hydro's 1607 1 definition? 2 MR. ADAMS: No. The definition of 3 adverse effects that I read was the one in the 4 agreement between us and NCN. Therefore, it is a 5 common agreement, a common understanding of the 6 definition of what will be included in a review of 7 adverse effects. 8 MR. McIVOR: But Manitoba Hydro still 9 has the veto on what adverse effects are? 10 MR. ADAMS: When you are trying to 11 negotiate something, you don't have a veto. 12 Mr. Wojczynski reminds me that in the 13 1996 agreement, if we can't come to a joint 14 conclusion, there is a dispute resolution 15 mechanism which automatically goes to arbitration. 16 MR. McIVOR: That was included in the 17 NFA as well? 18 MR. ADAMS: Yes, and is included in 19 the 1996 agreement. 20 MR. McIVOR: Okay. All right. In the 21 $5 million that was provided to NCN, I understand 22 Manitoba Hydro has made a commitment of at least 23 75 percent of those funds for NCN. You have 24 approximately $1.25 million designated for other 25 communities. Is one of those communities possibly 1608 1 Nelson House Northern Affairs community? 2 MR. ADAMS: The 1.75 isn't designated 3 for specific communities, it is designated for all 4 other Aboriginals in Northern Manitoba. So, 5 Nelson House community would be included in that 6 group, as would Wabowden and any other -- 7 MR. McIVOR: In the 1.25 million? 8 MR. ADAMS: Yes. We have also 9 allocated money from the Gull project on much the 10 same basis. So, there is also -- some 25 percent 11 of the money that is allocated to the Gull project 12 is also available in the same training pot for the 13 same communities. 14 MR. McIVOR: Okay. 15 THE CHAIRMAN: Mr. Thomas? 16 MR. THOMAS: The question that you 17 posed there, Mr. McIvor. The 75 percent that has 18 been allocated to NCN, which is identified as 3.75 19 million, does include our NCN members who reside 20 in the Northern Affairs community that you have 21 referred to. So, they are included in our 22 calculations. 23 With regard to the question that you 24 posed previously, the amount of funding that we 25 have been able to get for pre-project training 1609 1 includes a lump sum figure of 16,381,000 and I 2 believe that is over a five-year period. 3 Within that we have 11.25 million that 4 we refer to as the Ottawa model. That includes a 5 number of different entities that provide funds, 6 which also includes the Western Economic 7 Diversification that you mentioned. The specific 8 amount, I am not quite sure yet exactly what that 9 includes, but the total for the Ottawa model is 10 11.25. 11 From Hydro, we received an advance of 12 1,881,000. As well, we received from KCC a $1 13 million amount. Hydro has also agreed that if we 14 reached certain targets in our training efforts, 15 that they will provide an additional $2 million 16 towards our efforts. 17 From our discussions or negotiations 18 with the province, they agreed to move up a road 19 project that was scheduled for further on down the 20 road in order to accommodate our needs and also 21 for training purposes. 22 From them we received approximately 23 $250,000 towards training. 24 MR. McIVOR: Okay, thank you. Just 25 to -- just a little aside, I wanted to ask 1610 1 Mr. Mazur -- and I think Mr. Wojczynski had 2 confirmed that the build anyway portion of Snow 3 Lake, or to Rall's Island, Herblet Lake, was 4 something you were going to do anyway? Was that 5 the portion? Like, Mr. Adams just suggested that 6 if they don't go ahead with Wuskwatim, that they 7 would absorb the 5 million contribution in 8 training. 9 In this scenario, is the Herblet Lake 10 to Rall's Island part of the overall calculation 11 of the Wuskwatim project? 12 MR. MAZUR: The cost of that line is 13 included in Wuskwatim as an advancement cost from 14 the date that we planned to build it to the date 15 that Wuskwatim needs it. I think that was 18 16 months, if I recall correctly, in the -- 17 MR. McIVOR: Is it part of the 18 Wuskwatim project? 19 MR. MAZUR: It is the advancement 20 cost. 21 MR. McIVOR: It is attributable to the 22 capital cost -- 23 MR. MAZUR: The advancement of the 24 capital, in other words, the amount of money that 25 you need to advance the project, that line, by 18 1611 1 months is what is included in the Wuskwatim 2 capital. 3 MR. McIVOR: So, that line, NCN will 4 be paying a portion of that, one-third of that is 5 part of their partnership then? 6 MR. MAZUR: Of the advancement cost. 7 MR. McIVOR: But you're going to build 8 it anyway. 9 MR. MAZUR: The total transmission 10 cost of the project to Rall's Island, to Herblet 11 Lake line, the only cost of that line that is 12 included in the project is the cost to advance the 13 line by 18 months. 14 MR. THOMAS: That having been said 15 though, we are not paying for the cost of building 16 the transmission line. We are not owners, so we 17 are not making a contribution. 18 MR. MAZUR: Manitoba Hydro owns the 19 line. 20 MR. McIVOR: Sorry, Mr. Mayer, you 21 made some comments? 22 MR. MAYER: Councillor Thomas just 23 clarified the issue, and has done for about the 24 third time so far, NCN are not a partner in the 25 transmission project. 1612 1 MR. McIVOR: Okay, but they will be 2 compensated for that portion of it, so that will 3 be attributable to the capital project known as 4 Wuskwatim; is that right? Okay. 5 In terms of -- what are the total 6 anticipated costs of your labour portion? I think 7 there was some discussion about the fact that -- I 8 don't want to call it catering -- but, including 9 special preference, special consideration, 10 increases the Wuskwatim project by, I think it was 11 roughly 10 percent. 12 MR. ADAMS: I don't have a breakdown 13 with me of the labour costs versus the material 14 costs versus other sorts of costs. 15 The 5 to 10 percent that I mentioned 16 before is not incremental. The cost of the 17 project includes all the costs attributable to 18 doing the project the way we have in mind, and 19 that includes the training mechanisms, Aboriginal 20 employment mechanisms, the fact that we will need 21 on-the-job counselling for various types of 22 people, all those costs are built into the cost. 23 So, there is no incremental cost 24 associated with the project of over and above what 25 we have said. 1613 1 When I gave the 5 to 10 percent, what 2 I was trying to do is envision an environment 3 where we didn't do these sorts of things, but of 4 course we have been doing these sorts of things 5 one way or another for a long time. It is part of 6 the way of doing business and it is built into the 7 cost. 8 Similarly, the 4 to $7 million worth 9 of direct contracting I mentioned this morning is 10 in the cost. 11 MR. McIVOR: Okay. You had indicated 12 that the areas that would be made available to a 13 lot of the First Nations, including NCN members, 14 or employment opportunities, I guess, you were 15 talking about brush cutting, clearing the line, 16 working in the kitchens, cutting the access road. 17 So, according to your little graph -- I think it 18 is called stage 1, year 1 or 2. It's on page 51 19 of your booklet here. So, that's basically going 20 to be, you know, the higher percentage of 21 employment for Northern First Nations Aboriginal 22 people? 23 MR. ADAMS: Yes. 24 MR. McIVOR: So, what kind of training 25 would be involved in that? You have $16 million 1614 1 to invest in training. What types of activities 2 do you think would be included as part of that 3 training? Councillor Thomas mentioned life 4 skills. 5 MR. ADAMS: The training is intended 6 to cover all aspects of the work, including life 7 skills, including educational up-training if 8 necessary where it is required to get into a 9 community college or an apprenticeship program. 10 There are programs in place today with 11 some of the unions, particularly the teamsters and 12 operating engineers, to train people to operate 13 some of the equipment that will be needed in these 14 areas. 15 Catering, to the extent that there is 16 training needed in that, it will be available. 17 Life supports to go through the -- a 18 lot of apprenticeship programs, you obviously will 19 not be able to pursue them at Nelson House, you 20 will have to go somewhere else to do it. So, part 21 of the money will be allocated in ensuring that 22 people can go somewhere and live comfortably and 23 confidently while they are going through that 24 program. 25 But the training program is 1615 1 intended -- my personal preference is that the 2 vast majority of the people coming out of the 3 program have the high skill jobs. That's probably 4 not going to happen. There will still be a lot of 5 people coming out with the -- I don't want to call 6 them lesser skilled jobs, but they don't have 7 their journeyman tickets as electricians or 8 plumbers. But there will still be an awful lot of 9 people in a wide range of jobs. A big project 10 like this probably has about 120 separate 11 classifications of employees on it. 12 MR. McIVOR: Just another -- in terms 13 of employment and training, I worked at Inco for a 14 number of years, I was trained in various 15 capacities within the smelting operation. I am 16 sure Bob is familiar with that. 17 One of the classifications that I 18 received -- and it is an industry standard -- was 19 a furnace operator. I left Inco in 1993 because I 20 didn't want to go back in the mine, but where do 21 you go to become a furnace operator? Are these 22 types of situations that you talk about in terms 23 of trading -- you know, the in-service date that 24 you are looking at is 2009. Has there been any 25 thinking outside the box in terms of getting, 1616 1 whether it is NCN members or people adjacent 2 within Northern Manitoba, into a system -- like, I 3 mean, that's a few years from now, apprenticeship 4 programs are three or four years, five years. 5 Has there been anything put together 6 to look at those high-end jobs, those retention 7 type of issues? 8 I know Brian Hart had mentioned and 9 you made some comments on that -- and I think 10 there has to be some mechanism to address some of 11 those issues. Have you guys looked at 12 implementing that type of strategy, or is there a 13 strategy like that available? 14 MR. ADAMS: Yes and yes. 15 MR. McIVOR: Right. I am going to 16 leave that because I think -- 17 THE CHAIRMAN: Mr. Thomas wants to 18 respond. 19 MR. McIVOR: Okay. 20 MR. THOMAS: If I may respond to the 21 question that you put forward, Mr. McIvor. These 22 are areas of concern that we have identified as a 23 community, that we don't want to end up with just 24 menial jobs out of the situation, whether it is in 25 the generation project or transmission line 1617 1 project. We want to make sure that we are able to 2 access much more than just the menial positions. 3 So, the training dollars that we received have 4 been primarily earmarked to address the need for 5 trades in the project. So we focused our 6 attention to that. 7 One of the things that we also 8 consider in our long-term planning or visioning as 9 a community is that many of the jobs that will be 10 had through this project are jobs that can be 11 carried forward into the community as the 12 community develops. We are looking at training 13 electricians, plumbers, et cetera, to satisfy the 14 needs of the community. 15 In addition, we are looking at 16 business employment kind of training because we 17 see a future in business orientated kinds of 18 activity. 19 We don't want to unnecessarily 20 restrict ourselves only to NCN itself and within 21 our resource management area. We have to look to 22 the outside world as well in order to tap into the 23 business potential that exists out there. To not 24 go there would be something that, I think, we 25 would be remiss in overlooking. 1618 1 MR. McIVOR: Okay. Is part of this 2 employment initiative -- this strategy suggested 3 that you talked to many communities up in Northern 4 Manitoba, you have talked to your family and 5 cousins up in South Indian Lake about this big 6 project and the chance that they will come back to 7 Nelson House to work. You have got a camp there. 8 But you also -- I am just trying to understand -- 9 as part of this process, has there been any 10 commitments to look at housing stock? I 11 understand NCN, like any other First Nation 12 community, has a housing shortage, which is 13 further aggravated by the fact that there is no 14 community infrastructure in place to handle 15 additional housing, such a water and sewer and 16 health capacity? 17 MR. THOMAS: The question sounds like 18 an EIS question, Mr. McIvor. It may be better 19 answered there. Nonetheless, we do have the same 20 problems as many First Nations. We are struggling 21 to figure out how to better address the housing 22 shortage in the community. 23 We do have efforts that are currently 24 under way to address that. We have our own money 25 from the compensation agreement that we ratified, 1619 1 that we use to address housing shortages. 2 In addition, any of the proceeds that 3 we can earn from this project will also be used to 4 address the many needs that we encounter as a 5 people. So, yeah, we are looking at the issues. 6 MR. McIVOR: Maybe, Councillor Thomas, 7 the socio-economic effects on NCN, is that under 8 the -- could it be attributable to the cost of 9 Wuskwatim or is it -- you just suggested it might 10 be under EIS. So, I guess socio-economic 11 conditions in your community, is that -- you're 12 saying it is an EIS issue? 13 MR. THOMAS: I am just saying that 14 maybe the question could be better answered with 15 our EIS panel. 16 Now, if the socio-economic conditions 17 that exist in the reserve itself are attributable 18 to Wuskwatim, I can't say that Wuskwatim is the 19 only factor that has to be considered in terms of 20 any impacts on the socio-economic conditions of 21 our community. There are many other factors that 22 play a role in affecting us as a First Nation. 23 MR. McIVOR: Okay. With that being 24 said, you heard Mr. Mazur say that the advancement 25 of the Herblet Lake transmission line to Rall's 1620 1 Island is part of that project. 2 So, would it be safe to say that 3 construction of a number of housing units to 4 accommodate an influx of NCN members, back to NCN, 5 could be as well attributable to the Wuskwatim 6 project capital cost? Is that a fair assessment? 7 You're going to build them anyway, right? 8 MR. THOMAS: Yes. A lot of people I 9 guess are hearing that we are doing quite well as 10 a First Nation, and it may not necessarily be 11 because of transmission line activity, it could be 12 because of other things that we are doing as a 13 First Nation community that seems to be appealing 14 to some people to want to move back. 15 MR. McIVOR: My question was: Can the 16 cost of increased housing stock in NCN be 17 attributable to the capital cost of Wuskwatim, 18 given that the portion of Herblet Lake to Rall's 19 Island was going to be built anyway, but it is 20 still part of this project? 21 MR. THOMAS: It wouldn't be a capital 22 cost because it would be considered to be an 23 impact and so we would look at it from that 24 persepctive. 25 MR. McIVOR: An environmental impact 1621 1 or economic impact on the community -- or social 2 impact? 3 MR. THOMAS: I would say a 4 socio-economic impact. 5 MR. McIVOR: A, B, or C? Okay. So, 6 that is two out of three then. Thank you. 7 I am just trying to get an 8 understanding of the opportunities that may be 9 available for individuals that are interested in 10 working in Wuskwatim, whether it is brush cutting 11 or, you know, as a civil engineer, or whatever. I 12 mean, there is a preference process. 13 But say, getting into the other 14 component of, you know, your Northern preference, 15 which is the tendering process, you have indicated 16 that at every opportunity NCN would be given -- 17 was it first right of refusal -- or they would be 18 given preference over all contracts available as 19 part of Wuskwatim? 20 MR. ADAMS: I wouldn't categorize it 21 as a first right of refusal. That implies that it 22 is a unilateral decision. But we have identified 23 a significant number of what we call "satisfieds" 24 which we believe and NCN believes that they would 25 be capable of doing, and assuming we can negotiate 1622 1 a contract, then they will get the first 2 opportunity to work on that contract. 3 As I said this morning, if we can't -- 4 or yesterday -- if we cannot come to an agreement 5 amongst the two of us -- and I have no reason to 6 believe that most of the time that we won't be 7 able to come to an agreement -- then we will offer 8 those sorts of projects up for restricted 9 tendering, which is qualified contractors in the 10 northern region. 11 MR. McIVOR: So, there are some areas 12 that are set-asides, that until NCN makes a 13 submission, that submission may or may not be 14 accepted is what you're saying? As an individual 15 from Wabowden, if I wanted to say bid on a brush 16 clearing contract because I got all the brush saws 17 and the equipment, and I got some trained 18 personnel that may have not went through the ATEC 19 process, and I made a submission -- I guess what I 20 am asking is, would it be worth my while to make 21 that submission if -- because I don't know what 22 the set-aside items are, but it may cost a few 23 dollars to do the proposal and get somebody in to 24 make sure you can walk in with fine-tuned 25 equipment and bid on the contract. 1623 1 MR. ADAMS: I think the best approach 2 in that situation is talk to the project manager 3 and find out what our plans are in terms of 4 negotiating contracts and what they are for 5 bidding on them, and for those that they will bid 6 and when we will bid them. 7 On the transmission line, typically 8 what we try to do is work with the First Nation 9 whose "traditional territory" the line goes 10 through. It may or may not be NCN for the whole 11 of the transmission line. 12 MR. McIVOR: Okay. So, is that -- 13 your project manager, who is that? What is his 14 name or her name? 15 MR. ADAMS: The project manager will 16 be John Markowsky, who has been here but is not 17 here now. 18 MR. McIVOR: How come? I am here. I 19 got bumped today. I am just asking like, you 20 know, you indicated earlier, along with Councillor 21 Thomas, that you guys were negotiating this stuff? 22 MR. ADAMS: Absolutely, yeah. 23 MR. McIVOR: When you say we are 24 "negotiating," my understanding was that you were 25 involved in those negotiations as well along with 1624 1 Mr. Wojczynski? 2 MR. ADAMS: Personally, neither I nor 3 Mr. Wojczynski are directly involved in the 4 negotiations, but we do have people who -- that 5 that is their job. 6 MR. THOMAS: One of the things that we 7 have done is, we have looked at the possibility of 8 doing contracts for this project. But we looked 9 at -- we have to look at whether we have the 10 capacity to be able to deliver on what is required 11 and to make sure that we have the necessary skills 12 to be able to do what is needed. 13 So, although we would like to do as 14 many of the contracts as possible, I don't think 15 it is entirely possible for us to do them all. If 16 I tried to take them all, I think I would end up 17 falling flat on my face. And I certainly don't 18 want to do that, and I don't think the project 19 needs that kind of thing because it will result in 20 much additional cost, and we are not headed that 21 route. 22 There are some opportunities for 23 others who may be interested in talking to NCN to 24 see if they can perhaps assist us in the capacity 25 development aspect of things, and maybe consider 1625 1 joint venturing or partnering with a particular 2 contract or some of the contracts. 3 MR. McIVOR: Thank you, Councillor 4 Thomas. 5 In addition to that, to your comments, 6 how many companies have capacity right now to 7 participate in what you are about to endeavour in 8 at Nelson House and NCN? Do you have an 9 inventory -- 10 MR. THOMAS: In Nelson House itself, 11 we do have a company that has been around for 12 quite some time. It doesn't satisfy what is 13 required for some of the construction activity, so 14 we have looked to see if we could JV with another 15 company, that would enable us to be able to 16 satisfy what is required for a particular 17 contract. 18 Others, we are looking at "JVing" as 19 well with other companies that can satisfy a 20 particular niche in the project. So, we are 21 looking at those kind of options, plus we are in 22 discussions with many others who have a desire to 23 see if they can capture some of the potential 24 opportunities that are going to be coming up. 25 So, we have a number of different 1626 1 situations that we are looking at, but all this 2 stuff is still being negotiated and nothing has 3 been completely finalized at this point in time. 4 So, we are still -- it is still work in progress. 5 MR. McIVOR: So, the short answer is 6 no? 7 MR. THOMAS: To what? 8 MR. McIVOR: Whether you have 9 companies at NCN that can participate in these 10 future endeavours of Wuskwatim? Outside of 11 recognizing JVs, you're saying basically there is 12 no companies -- 13 MR. THOMAS: No. We don't have the 14 necessary infrastructure in place to be able to 15 handle all the opportunities that are there and 16 that's what I am telling you. So, we are looking 17 at ways to be able to satisfy the capacity and the 18 skills that are going to be required to be able to 19 deliver on the terms of any contract that is 20 available to us. 21 MR. McIVOR: Okay. So, these JVs that 22 you refer to are going to be similar, I would 23 assume, in nature to your partnership with 24 Manitoba Hydro and Wuskwatim, where there will be 25 a requirement for equity to establish a company or 1627 1 to create a company. Is that an issue with NCN or 2 is that something that is built into the project 3 costs? 4 MR. THOMAS: Would you just quickly 5 repeat the question, please? 6 MR. McIVOR: What I am referring to is 7 with the joint ventures that you have just 8 outlined, in whatever capacity it is or for 9 whatever portion of the set-asides that you may 10 negotiate, similar to the Manitoba Hydro project 11 or partnership that you are talking about, the 12 requirement for equity to joint venture, could 13 that be related to the project costs of Wuskwatim? 14 MR. THOMAS: It may or it may not, 15 depending on the circumstances and the parties 16 involved. We take the position sometimes that we 17 bring something to the table and the others must 18 bring something as well. So, we are faced with 19 those kind of situations and sometimes some equity 20 may be required and other times it may not. 21 MR. McIVOR: Okay. 22 MR. THOMAS: I should add, it is not 23 considered to be a cost of the project when we 24 encounter those kind of situations. 25 MR. McIVOR: Okay. Maybe you can 1628 1 clarify this then, given that situation. All 2 right, your -- 3 THE CHAIRMAN: Mr. McIvor, can I 4 intervene here just to remind you that you are to 5 deal with questions that have to do with NFAAT, 6 needs for and alternatives to. Most of the 7 questions that you have been addressing for the 8 last half hour have been dealing with the 9 socio-economic impacts. 10 MR. McIVOR: According to Manitoba 11 Hydro, one of the benefits of the partnership 12 is -- that's why it makes it an advantage or makes 13 it an opportunity for them is the socio-economic 14 stimulus that is going to be provided to NCN. 15 THE CHAIRMAN: Yes, but those are part 16 of the EIS. 17 MR. McIVOR: No, no, I think I will 18 have to disagree with you on that, because under 19 their preference policy for contracts, which we 20 were just discussing -- 21 THE CHAIRMAN: All that is related to 22 EIS. 23 MR. McIVOR: No, no, it is related to 24 the project cost, because it will increase the 25 cost to Manitoba Hydro in this project because 1629 1 they want to work with NCN and give them as many 2 employment opportunities -- and employment 3 contracts to work on site. 4 THE CHAIRMAN: They have answered all 5 those questions. I am wondering if we can get on 6 to more specifics related to the NFAAT. I think 7 all the questions you were asking have been 8 answered. 9 MR. McIVOR: Okay. Well, I will have 10 to agree with you, sir, I think you're right. 11 There is some opportunity under the environmental 12 impact portion, but I think maybe at that time, 13 you may allow me some latitude in terms of the 14 some of the questions, instead of saying, well, 15 you should have asked last time. I got a little 16 excited when you bumped me. 17 THE CHAIRMAN: We apologize for that. 18 As you can appreciate, there were some presenters 19 that were here from out of town and we tried to 20 accommodate them as well. We had made a 21 commitment to that effect earlier. 22 So, I apologize for that and, 23 hopefully, everyone who has pertinent questions to 24 ask will be accommodated. The process, as you 25 know, is a lengthy one and I appreciate your 1630 1 understanding as well. 2 MR. McIVOR: I don't mind cooperating 3 as well. 4 THE CHAIRMAN: Thank you. 5 MR. McIVOR: Thank you. That's it for 6 me. 7 THE CHAIRMAN: Thank you, Mr. McIvor. 8 Mr. Grewar? 9 MR. GREWAR: Yes, Mr. Chairman, we 10 have notice of a motion to be brought forward by 11 CASIL and they would like the motion read into the 12 record this evening, and perhaps with the proposal 13 that it be considered by the Commission, allowing 14 an opportunity for responses from the various 15 participants on Monday morning first thing. 16 THE CHAIRMAN: All right. Mr. Dysart? 17 Proceed, Mr. Dysart. 18 MR. DYSART: Thank you. I have been 19 instructed by Mr. Grewar that discussion on this 20 motion will take place Monday. So, in lieu of the 21 time, I will just read in the motion and leave it 22 at that. 23 THE CHAIRMAN: Thank you. 24 MR. DYSART: We are: 25 "Aware that the Clean Environment 1631 1 Commission does not have jurisdiction 2 to deliberate on the compliance, or 3 lack thereof, by the co-proponents 4 with the Northern Flood Agreement 5 Implementation Agreement between 6 Nisichawayasihk Cree Nation and 7 Manitoba Hydro. 8 Recalling that the Commission is 9 required to receive all necessary 10 information that may relate to or 11 indicate an impact on the financial 12 feasibility of the Wuskwatim projects. 13 Noting that the Commission has heard 14 testimony indicating that the process, 15 as set out in Article 8 of the 16 Northern Flood Agreement 17 Implementation Agreement between NCN 18 and Manitoba Hydro, for identifying, 19 quantifying and reaching final 20 agreement on the compensation that may 21 be required to be paid to NCN as a 22 result of the Wuskwatim projects has 23 not been concluded prior to the formal 24 commencement of the current 25 environmental review and licensing 1632 1 process. 2 We are concerned that the Commission 3 has not yet been presented with the 4 the required information regarding the 5 extent of financial obligations that 6 may be incurred by the Manitoba Hydro 7 in the form of compensation for 8 impacts to NCN as a result of the 9 Wuskwatim projects, and as a result is 10 not currently apprised of sufficient 11 information to be able to fully assess 12 the financial feasibility of the 13 Wuskwatim project. 14 CASIL hereby moves that: 15 The Commission: Immediately suspend 16 the current Wuskwatim hearings, 17 require Manitoba Hydro and NCN to 18 provide the Commission, within the 19 time period specified by the 20 Commission, full and sufficient 21 information from NCN and Manitoba 22 Hydro regarding the nature and amount, 23 if any, of compensation that will be 24 paid for impacts to NCN as a result of 25 the Wuskwatim projects; and then, 1633 1 after which time, the Commission 2 resume these hearings for full 3 consideration by the Commission and 4 the public of the information 5 provided. 6 Or, in the alternative, CASIL moves 7 that: The Commission: Continue with 8 the current Wuskwatim hearings as 9 scheduled, require Manitoba Hydro and 10 NCN provide to the Commission, within 11 a time period specified by the 12 Commission, full and sufficient 13 information from NCN and Manitoba 14 Hydro regarding the amount, if any, 15 compensation that will be paid for 16 impacts to NCN as a result of the 17 Wuskwatim projects, keep open the 18 current sitting of the Commission 19 regarding the Wuskwatim projects until 20 the Commission has received full and 21 sufficient evidence from NCN and 22 Manitoba Hydro regarding the amount, 23 if any, compensation that will be paid 24 for impacts to NCN as a result of the 25 Wuskwatim projects and then after 1634 1 which time the Commission continue 2 with these hearings for full 3 consideration by the Commission and 4 the public of the information 5 provided." 6 Respectfully submitted by the 7 Community Association of South Indian Lake 8 MR. GREWAR: Mr. Chairman, if we might 9 add that as Exhibit Number CASIL 1002. 10 11 (EXHIBIT CASIL-1002: Motion Re 12 Compensation) 13 14 THE CHAIRMAN: Thank you, Mr. Dysart. 15 As agreed prior to your presentation of the 16 motion, it is accepted on the record and we will 17 be dealt with as the first issue on Monday 18 morning. 19 MR. DYSART: Thank you, sir. 20 THE CHAIRMAN: Mr. Bedford? 21 MR. BEDFORD: I have one more 22 undertaking to enter, Mr. Chairman. 23 On page 312 of the transcript, it was 24 agreed that we would provide a list of permits and 25 licenses that was required under various pieces of 1635 1 Federal and Provincial legislation. The list was 2 prepared and I will give to Mr. Grewar to enter it 3 in. 4 THE CHAIRMAN: Thank you very much. 5 MR. GREWAR: Mr. Chairman, if we might 6 enter this exhibit as MH/NCN Exhibit 1007. It is 7 entitled Wuskwatim Licenses, Permits and 8 Authorizations. 9 THE CHAIRMAN: Thank you, Mr. Grewar. 10 11 (EXHIBIT MH/NCN 1007: Wuskwatim 12 Licenses, Permits and Authorizations) 13 14 THE CHAIRMAN: Are there other issues 15 dealing with process and procedures, Mr. Grewar? 16 MR. GREWAR: No, Mr. Chairman, except 17 to say we will be back at this location 9:00 a.m. 18 on Monday morning. 19 MR. WOJCZYNSKI: Can we leave 20 everything here? 21 MR. GREWAR: No, the hotel is booked, 22 so the set will be struck today and reset up 23 Sunday afternoon. 24 THE CHAIRMAN: That being the case, I 25 call upon -- yes, Mr. Thomas? 1636 1 MR. THOMAS: Just a clarification of 2 the procedures that are being followed here with 3 the Commission is, from what I just observed 4 happen, is that within keeping of the terms of 5 reference and the proceedings that are to be 6 followed? 7 THE CHAIRMAN: You will have the 8 opportunity to speak to that very effect when the 9 motion comes up on Monday. 10 MR. THOMAS: Okay, thank you. 11 THE CHAIRMAN: Thank you. I call upon 12 Elder Dysart to come and say the closing prayer. 13 It is not the closing, the adjournment. 14 ELDER DYSART: Thank you. First, as 15 an elder, I would like to say a few words about 16 what I have seen. 17 I know this is very important, for I 18 have certain years as an elder. I noticed there 19 were no slammed doors, no chairs moving around, 20 everybody was trying to be quiet and listened. 21 For there are people that are interested in the 22 people. I thank the Panel, I thank Hydro and I 23 thank Mr. Thomas for being here. I thank the 24 people at the back, the younger generation, I 25 thank them very much for listening. I hope and 1637 1 pray that this will continue on as a good meeting. 2 Let us pray in our language, for God 3 understands all languages. 4 5 (PRAYER) 6 7 (HEARING ADJOURNED AT 10:35 P.M.) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25