PRESENTATION TO THE BC CONSTRUCTION ROUNDTABLE

February 19, 2009

Presented by: Bill Earis

Construction Management Generation Engineering What does BC Hydro do?

WE MAKE ELECTRICITY

90% Hydro = 10,200MW 10% Thermal = 1,090 MW

WE BUY ELECTRICITY • Independent Power Producers • Electricity markets •Customers

WE MOVE ELECTRICITY 74,000 km of Distribution and Transmission lines • Distribution (56,000 Km) • Transmission (18,000 Km)–managed and operated by BCTC AND …

2 What does BC Hydro do?

WE SELL ELECTRICITY •Residential •Commercial • Industrial • Market/Trade

Domestic Energy Sales (F2008) $M % GWh % $/MWh Residential 1,046 39% 16,261 31% 64 Light & Commercial 989 36% 17,913 34% 55 Large Industrial 584 22% 16,428 31% 36 Other Energy Sales 91 3% 1,838 4% 50 Total 2,710 52,440 52

3 BC Hydro – Quick Facts

• One of the largest electric utilities in • BC Hydro serves more than 1.7 million customers, 94% of BC’s population • Between 43,000 - 54,000 gigawatt hours (GWh) of electricity are produced annually • 99.96% Reliability Rate • British Columbian’s enjoy some of the lowest electricity rates in North America (third only to Manitoba and Quebec)

Procurement Needs: • Refurbishment of fleet, unit additions and system infrastructure • Anticipate investing $3 - $5b over next 5 yrs into capital investments • A significant increase from historic levels of $150M/yr* (figure from F07’s Generation Strategic Asset Plan)

4 BC Hydro – Core Values

9 Accountability – we take responsibility for our actions 9 Integrity – we are fair and honest, open and straightforward 9 Safety – we integrate safety into everything we do 9 Service – we seek solutions and build relationships 9 Teamwork – we work together and with others to achieve results

5 BC Hydro’s Current Asset Mix

BC Hydro’s Plant Assets are organized into three categories:

1. Large Facilities – Account for 80% of generation (e.g. GM Shrum, Bridge River, Mica) 2. Strategic Facilities – Account for 18% of generation and are part of a larger river system program (multi plants e.g. John Hart, Ruskin, Strathcona) 3. Available Energy – Account for 2% of generation (e.g. Aberfeldie, Elko, Shuswap)

6 How do we Mitigate Risk?

Add capacity & increase value through supply chain > Look for value added from suppliers APPRECIATE market conditions > Move away from lowest bid – ACTIVATE logic in favour of Total Strategic Sourcing lifecycle value ALLOCATE RISK Deploying risk sharing, Engage the market: risk transfer & incentives > Plan early and proactively to align interest engage the market at all APPLY stages - broader value ACT assessment To become a customer of Exercise more procurement choice methods : one size does not fit all AUTOMATE > Think more commercially & Simplify Commodity and strategically about Purchasing procurement packages, form and terms APPRECIATE – to position attractive packages

7 Proactive Engagement of Market

Who Are Program Define Requirements our Development Suppliers? What Can Evaluation We Both Select Partnering Criteria Do Better? Suppliers Do They Meet our Performance Performance Requirements? Management Recognition

How Are Continuous Relationship They Doing? Improvement Management & Collaboration

Spillway Design GMS Gate Services Station Program Services

8 Bulk Contracting Strategies Capital Equipment Benefits

Transformers

Exciters Standardization Governors & Unit Controls Secure Supply

Station Batteries Optimize Costs

Power Supplies

9 Current Issues

• Declining Equipment Condition • Reduced Capacity Margins • Increasing Seismic Standards & Safety Requirements • Increased Capital Spending • Work Management System • Increasing First Nations & Other Stakeholder Issues • Increased Competition for Skilled Workers

10 Procurement Risks

• Significant Fluctuations in certain Commodity Prices • Longer Lead Times • Tight Demand / Supply Balance • Availability of Skilled Labour, Construction, and PM Services • Constantly Evolving Supplier Landscape (i.e. consolidation)/ Small vendor pool supplying to a global market. • Global Competition to Secure Supply • Contractors are Placing Larger Premiums to Assume Risk/ Restrictive Lending practices may impact access to capital. • Aged Electrical Utility Network (fewer niche suppliers) • Sourcing as a Crown Corporation under Current Market Conditions • Balancing Project Procurement Priorities • BCH’s most critical asset is its Planned Outages, these are key drivers in establishing Project timelines and vendor deliverables (to site) BC Hydro NEEDS YOUR HELP!!!

With the HEAVY LIFTING!!!

12 The Seven Wonders

13 BC Hydro’s Seven Strategic Projects

1. Ruskin Dam & Powerhouse 2. Mica U5&6 & GIS 3. John Hart Replacement 4. Strathcona Dam 5. BridgeRiver2 U5/6

7. Spillway Gate Program 6. GM Shrum

Cheakamus Terzaghi Stave Falls Seton Hugh Keenleyside Duncan Dam Ruskin

14 1. Ruskin Dam & Powerhouse

Overview: • Strategic Plant: 3 Francis units (105 MW); Initial yr. of operation - 1930 • Concrete dam and powerhouse on the Stave River (Mission) Scope: • Rebuild top portion of dam and include new gate configurations • Refurbish existing powerhouse including 2 or 3 new generators/turbines • Large Civil (earthwork and cement/ structure) component • Geotechnical requirements are anticipated (slope stabilization, etc) • Direct Costs: Over $350M Construction Schedule: • Upon BCUC approval, construction is currently scheduled from 2010 to 2014

15 2. Mica Dam (U5&6) & Gas-Insulated

Overview: • Large Plant: 4 Francis units (1805 MW); Initial year of operation 1976 • Earth fill dam, underground powerhouse, 135km North of Revelstoke Scope • Units 5 & 6 project: Install 2 additional generators/turbines (x500MW) • Turbine pits existing, blasted into rock • Turbine/Generator tender issued • Concrete work in draft tubes & unit pits • Electrical/Mechanical installation and Balance of Plant • GIS Project: replace existing GIS (500kV) & expand system for U5/6 • Significant demand for electrical engineering requirements • GIS Tender Package is currently posted on BC Bid. • Loaded Costs: Over $300M (Turbine & GIS)

16 3. John Hart Replacement

Overview: • Strategic Plant: 6 Francis units (126MW); Initial year of operation 1947 • Located near Campbell River on Van. Island. Scope • Dam seismic upgrades and full replacement Powerhouse including new location and new generators/turbines (3x45MW units) • Fabrication and installation of new penstocks (HDPE or metal) • Upgrade or replacement of surge towers • Decommissioning of existing powerhouse • New powerhouse site determination (geotechnical and environmental engineering requirements) being finalized this month • Loaded Costs: Over $500M • Possible P3 candidate (Partnerships BC) as per Gov’t mandate with spend > $20M

17 4. Strathcona Dam

Overview: • Strategic Plant: 2 Francis units (64MW); Initial year of operation 1958 • Vancouver Island (near Campbell River); Powerhouse located below earth fill dam Scope • Dam seismic upgrades of intake tower and spillway upgrade; scope being redefined • Some subsurface (underwater) work including cutting of intake tower and isolator installation; Spillway anchoring work • Direct Costs: Approximately $121M (under review) Procurement Options: • Mechanical: Approx 30% of Direct Costs – Tender Packages TBD • Civil: Approx 60% of Direct Costs – Tender Packages TBD •Electrical: Approx 10% of Direct Costs – Tender Packages TBD

18 5. Bridge River 2 Units 5/6

Overview: • Large Plant: 8 Pelton units (466MW); Initial year of operation 1934/1948 • Water diverted via tunnels/penstocks from Carpenter Reservoir to two Powerhouses located on Seton Lake Reservoir • Turbines upgraded approximately 10 years ago Scope • Replace 2 generators (2x80MW); option to upgrade or replace remaining 6 generators • Direct Costs: Project costs under consideration Procurement Options: • Project currently in definition phase through 2009 • Project bid packages to be determined in definition phase

19 6. GM Shrum Capacity Increase and Plant Rehabilitation

Overview: • Large Plant, 10 Francis units=2730MW & initial yr. operation 1968/1980 • Earth fill Dam located on the Peace River, North of Fort St. John Scope: (7 projects) • turbine rehabilitation on units one to five • capacity upgrades to units six to eight • stator and transformer replacements • upgrades to station service, control building, cranes and fire systems, as well as dam safety projects • Loaded Cost: $800M-$1B

20 7. Spillway Gate Program

Overview: • Refurbish or replace existing spillway gates at 22 sites over 3 phases: Phase 1(completed-3sites); Phase 2 (in-progress-7 sites); Phase 3(future-12 sites) • Tenders recently closed for Phase 2 Scope – Phase 2 • 14 new vertical & radial gates and 17 new lifting devices for 6 sites, 1 site (Ruskin) completed no equipment upgrades • Large civil and electrical engineering components (gate installation and spillway preparation) • Bulk Gate/hoist tender issued for phase 2 & 3 scope and other projects • Direct cost: Approximately $300M (Phase 2 only)

21 Immediate Projects Source: Sept/08 971 PD projects, ISD F09-F27 = $6.043 Billion (approx) Focus on Projects in Identification phase & definition phase

PD Project Scope Break-down

>$6M <$6M Future or Future Tenders IDN/Imp IDN/Imp Deferred With Phase Contracts Phase Phase ISD No ISD issued

$ ('000s) 2,617,771 147,945 566,219 1,821,247 888,581

% total $ 43% 3% 9% 30% 15%

# projects 32 232 35 659 14 Strategic Projects IDN DEF Phase >$6M

Project Project JHT – Rehabilitation/Redevelopment Study >50M DDM – Spillway Gate Reliability Upgrade <50M MCA – Unit 5 <50M MCA – Digital Exciters & Digital Infrastructure <50M MCA – Add Unit 6 <50M SON – Spillway Gate Reliability Upgrade <50M RUS – Dam Safety Improvement <50M BRR – Staff Housing redevelopment <50M SCA – Seismic and Seepage <50M KCL – Dam Safety Slab Leakage <50M Improvements JHT – Dam Seismic Upgrade <50M BR1 – T1& T2 Transformer Replacement <50M FNG Capacity Upgrade <50M BR2 – Unit 5-8 TIV Replacement <50M GMS – Dam Improvements – Compaction <50M HLK – Concrete Dam Seismic Improvements <50M Grouting MCA – 500 KV GIS Transformer Replacement <50M WAH – T1 Transformer Replacement <50M HLK – Spillway Gate Reliability <50M LB1 – Turbine System Replacement <50M LAJ – Seismic Improvements <50M LB1 – Spillway Improvements <50M BGS – Asbestos Removal Program <50M GMS – Low Level Outlet and Sluice Gate <50M Improvements TRZ – Spillway Gate Reliability Upgrade <50M FNG Long Term Service Agreement <50M GMS – WAC Bennett Dam RipRap <50M EDM – DS Security Project – Gates & Fences <50M KCL – Dam & Canal Seismic Upgrades <50M LDR/SCA Powerhouse Cranes <50M LB1 – CQD LLOG 1 & 2 Gate Rebuild <50M Projects (Portfolio D) <$6M Top Projects $2M - $6M Project Project BGS - DS Security 10 ALU - Safety Items 1 Improvements 2 EDM - Flood Simulation and WAH - PIV System Replacement Mapping Model 11 BRG - DS Security 12 BGS - G6 Penthouse Asbestos 3 Improvements Removal 4 SEV - DS Security CMS - G1 & G2 Penstock Painting Improvements 13 Inside BRR – Town-site Recreation 14 EDM - Water Use Plan Full 5 Facilities Reviews 6 WAH - Penstock foundation 15 COM - Communications REV - PH roof 16 DDM - F10-F24 Tools and Work 7 Equip. 8 JOR - 12KV Pole Replacement BR2 - Recoat PEN1 Interior & ELL Communication Repl 17

9 HLK - Security Project Small Project Category Grouping <$6M per Project

19 Categories, 2 awarded & 2 programs exist / underway Stand alone projects excluded In Conclusion…

¾ We appreciate the role the BC Construction Roundtable have with our tender process.

¾ We need your input in our forward planning and want to hear from you!

¾ We wish you all success in future tenders! Thank You!!!

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