-----Original Message-----
From: 	Walsh, Kristin  
Sent:	Monday, May 21, 2001 10:41 AM
To:	Allen, Phillip K.; Presto, Kevin; Milnthorp, Rob; Kitchen, Louise; Lavorato, John
Cc:	Davis, Mark Dana; Grigsby, Mike; Gaskill, Chris; Will, Lloyd; Tholan, Scott
Subject:	BC Hydro Interview 5/21/01

Sources have conducted the following "off-the-record" interview with a BC Hydro executive.  

Executive Summary
BC Hydro projected capacity 
BC Hydro/Liberal Government's export policy
BC Hydro expanded capacity projects

BC Hydro Capacity
The individual stated that BC Hydro is convinced it has sufficient capacity to supply British Colombia through 2005, even if faced with increasing demand from business expansion.  He stated that BC Hydro's long-term contracts to supply power to the grid in the Western US amounted to only 1% of BC Hydro's capacity.  Therefore, the company likely would continue to be active in the spot market through Powerex, the company's "main revenue generator."  For example, according to a company report, BC Hydro benefited from a revenue increase of $2.876 billion Canadian for the first 9 months of fiscal 2001, largely due to spot market trading.

BC Hydro Exports
BC Hydro feels the new Liberal government likely will "make a concerted effort to expand capacity" in British Colombia. Likewise, since the Liberal government will be "business-oriented," the BC Hydro official expects the government to promote increased exports of power to the US.  However, the individual cautioned that there would likely be a public relations battle on this point, as "people don't necessarily favor increasing capacity to produce energy for export."  This is due to broad-based environmental opposition to building more plants.  Therefore, in the long-term BC Hydro's new projects will favor "green alternatives" such as dam expansion and biomass, thermal and solar plants over gas-fired plants.

The spokesman stated that the Liberal Party intends to go forward with its campaign promise to remove BC Hydro's monopoly on power.  If and when this happens, relations between the company and the government are expected to "quickly sour."

BC Hydro Capacity Projects
BC Hydro is pursuing a number of new projects to expand/improve generation capacity, including:
Seven-Mile Dam -- BC Hydro will likely add a 213 MW turbine to the 3 units already in place
Revelstoke Dam -- BC Hydro is "looking very seriously" at adding a 500 MW unit to the 4 units already in place.  There is also the potential to add a 5th 500 MW unit, though this is not being considered at this time.
Site C Dam -- A plan for a 960 MW dam was shelved in the 1980s due to environmental concerns, but now appears to once again be a "viable option." Though BC Hydro reportedly has no definite plans to pursue this option at this time, the individual said that constructing the dam would be more valuable now than it was in the 1980s, and that resurrecting the plan would be a BC Hydro decision.
Burrard Thermal Plant - BC Hydro has invested $250 million to upgrade generation systems to reduce emissions.

Calpine has bought a 240 MW gas-fired co-generation plant called Campbell River on Vancouver Island.  This plant is "in the final stages of testing and is already generating."  Calpine plans to bring the plant online commercially "in the next few weeks."  BC Hydro will buy power from the plant for use on Vancouver Island. This is part of a plan to make Vancouver Island self-sufficient in electricity.  Another "key plank" in this plan is the Port Alberni plant, a 250 MW, independently-owned plant that is being sold to BC Hydro.  The plant reportedly will be online in two years and will supply Vancouver Island.