07296
  1                   MANITOBA CLEAN ENVIRONMENT COMMISSION
  2          
  3                     VERBATIM TRANSCRIPT  
  4                        Volume 31
  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                Tuesday, June 8, 2004
 22                  Radisson Hotel
 23                  288 Portage Avenue
 24                   Winnipeg, Manitoba
 25       
07297
  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   
07298
  1                    LIST OF PARTICIPANTS
  2                
  3   Manitoba Conservation:
  4   Larry Strachan
  5   Trent Hreno
  6   
  7   Manitoba Hydro/NCN:
  8   Doug Bedford, Counsel
  9   Bob Adkins, Counsel
 10   Marvin Shaffer
 11   Ed Wojczynski
 12   Ken Adams
 13   Carolyn Wray
 14   Ron Mazur
 15   Lloyd Kuczek
 16   Cam Osler
 17   Stuart Davies
 18   David Hicks
 19   George Rempel
 20   David Cormie
 21   Alex Fleming
 22   Marvin Shaffer
 23   Blair McMahon
 24   
 25   
07299
  1                  LIST OF PARTICIPANTS
  2   
  3   CAC/MSOS
  4   Byron Williams
  5   Mona Pollitt-Smith
  6   
  7   O-Pinon-Na-Piwin Cree Nation
  8   Headman Chris Baker
  9   
 10   CASIL
 11   Leslie Dysart
 12   
 13   Association of Displaced Residents of South Indian Lake:
 14   Dennis Troniak
 15   Angus dysart
 16   Vern Anderson
 17   Carol Kobliski
 18   Nelson Hart
 19   
 20   Interpreters
 21   Jimmy D. Spence
 22   Charlie James Spence
 23   
 24   
 25   
07300
  1                             INDEX OF EXHIBITS
  2   
  3   EXHIBIT NO.                                       PAGE
  4   
  5   
  6   CAC/MSOS 1012:   Closing Argument 
  7                    - June 8, 2004 - Book of 
  8                    References                       7354
  9   
 10   CAC/MSOS 1013:   Speaking Notes:  
 11                    Overview: Uncertainty            7354
 12   
 13   CAC/MSOS 1014:   Written Commentary on
 14                    Environmental Impact
 15                    Statement - CAC/MSOS             7354
 16   
 17   TREE/RCM 1011:   Closing Statement from TREE
 18                    and RCM Regarding the 
 19                    Need for and Alternative to Wuskwatim     
 20                    Advancement                      7389
 21   
 22   MMF 1005:        Athabasca Chipewyan First Nation v. 
 23                    British Columbia (Hydro   
 24                    and Power Authority) 2001         7390
 25   
07301
  1                           INDEX OF EXHIBITS
  2   
  3   EXHIBIT NO.                                       PAGE
  4   
  5   MMF 1006:       Aboriginal Plant Use  
  6                   in Canada's Northwest Boreal Forest       
  7                   (excerpt) Robin J. Marles, Christina      
  8                   Clavelle, Leslie Monteleone, Natalie      
  9                   Tays, Donna Burns. Natural Resources      
 10                   Canada                            7390
 11   
 12   OPCN-1003:      O-Pipon-Na-Piwin Cree Nation       
 13                   closing remarks - Manitoba Clean
 14                   Environment Public Hearing -
 15                   Wuskwatim Generation and
 16                   Transmission Projects              7406
 17   
 18   CASIL 1015:     Closing remarks of CASIL           7457     
 19   
 20   
 21   
 22   
 23   
 24   
 25   
07302
  1   
  2                    INDEX OF UNDERTAKINGS
  3   UNDERTAKING NO.                                 PAGE
  4   
  5   CAC/MSOS-95:  Provide cite of Dr. 
  6   Higgins' and Mr. Harper's evidence re NUGs re 
  7   specific example of hospitals or other large
  8   commercial or industrial operations 
  9   producing steam                                  7330
 10   CAC/MSOS 96:  Advise of client's views 
 11   to an expanded role for the Clean Environment 
 12   Commission as the independent monitor for all 
 13   projects which affect the environment            7351
 14   CAC/MSOS 97:  Advise why it would be 
 15   different, on the environmental side, if the CEC were 
 16   put in a position and given the necessary resources 
 17   to monitor the economic advantages               7352
 18   CAC/MSOS 98:  Advise if the CAC/MSOS 
 19   clients happened to see conflict between applied 
 20   research and western research and traditional 
 21   knowledge during the course of the hearings, if they 
 22   discussed it at all                              7353
 23   
 24   
 25   
07303
  1   Tuesday, June 8, 2004 
  2   UPON COMMENCING AT 9:08 A.M.
  3   
  4               THE CHAIRMAN:  Ladies and gentlemen, we 
  5   shall begin.  Rory will just go over the schedule for 
  6   today first.
  7               MR. GREWAR:  Thank you, Mr. Chairman.  
  8   There's just been one change to the schedule.  The 
  9   Boreal Forest Network has rescheduled from this 
 10   morning at 10:00 a.m. till tomorrow at 11:00 a.m.  
 11   and that's meaning that we go with the Consumers 
 12   Association of Canada first, followed by Time to 
 13   Respect Earth's Ecosystem, Resource Conservation 
 14   Manitoba, both offering closing statements.  And 
 15   there will be a lunch break.  And then we have 
 16   O-Pipon-Na-Piwin Cree Nation, Community Association 
 17   of South Indian Lake and the Association of Displaced 
 18   Residents South Indian Lake for the afternoon and 
 19   that will conclude the day.
 20               THE CHAIRMAN:  So we begin with the 
 21   Consumers Association.  And I see that we have some 
 22   able presenters up front and take it from there.
 23               MR. WILLIAMS:  Good morning, Mr. Chair, 
 24   members of the panel.  As you probably remember, my 
 25   name is Byron Williams and with me is my colleague 
07304
  1   and soon to be learned friend Ms. Mona Pollitt-Smith 
  2   from our office.  Back in the back row as usual are 
  3   Ms. Gloria Desorcy from the Consumers Association and 
  4   Mr. Chuck Cruden from the Manitoba Society of Seniors 
  5   who keeps protesting that he is retired from that 
  6   function but I can't get rid of him. 
  7               Mr. Chairman, what we propose to do is I 
  8   will lead off, addressing what CAC/MSOS were funded 
  9   to do which is the addressing The Need For and 
 10   Alternative analysis from their perspective.  And 
 11   then Ms. Pollitt-Smith will bat clean up and provide 
 12   a brief overview of her arguments in terms of the 
 13   EIS.  
 14               There are two handouts that are with you 
 15   this morning and I can advise you that Ms. 
 16   Pollitt-Smith, along with myself, have prepared a 
 17   more comprehensive written argument in terms of the 
 18   EIS which is just being bound as we speak.  So that 
 19   will be filed with Mr. Grewar I expect at the 
 20   mid-morning break.  
 21               I've set my clock and I think that's 
 22   appropriate, Mr. Chairman, because I want to start by 
 23   taking you back in time.  I want to take you back in 
 24   time to an age of greater innocence.  I want to take 
 25   you back to the period between 1970 and 1975 when a 
07305
  1   group of idealistic representatives from the 
  2   province, from the Federal Government, from Academia 
  3   as well as an army of consultants prepared a report, 
  4   a summary report for the Lake Winnipeg, Churchill and 
  5   Nelson River study board, Canada and Manitoba, April 
  6   1975.  A report which, with the benefit of hindsight, 
  7   a Hydro witness has characterized at page 4591 of the 
  8   transcript as impressive and leading edge for its 
  9   time.  In some, a very impressive piece of work. 
 10               Unfortunately, as my colleague Ms. 
 11   Pollitt-Smith will discuss in her part of the 
 12   argument in the later stages of this submission, this 
 13   leading edge comprehensive work absolutely failed to 
 14   recognize the insidious impact of methylmercury 
 15   poisoning.  And it failed to foresee the devastating 
 16   impact that mercury poisoning would have on the 
 17   affected communities and upon the domestic and 
 18   commercial natural resources harvesting in that area. 
 19               Sadly, the environmental, psychological 
 20   and economic scars, a project such as the Churchill 
 21   River Diversion, are still with us today.  And they 
 22   have been acutely felt within this room as part of 
 23   the living, breathing reality of this hearing.  
 24               On behalf of my clients, I bring this to 
 25   your attention not as an attempt to refight old 
07306
  1   battles, or again, not as an attempt to taint Hydro 
  2   with the stigma of once mistaken/always wrong.  
  3   Rather, we started by walking back in time to 
  4   highlight the truism that the decision before you 
  5   with regard to both the Need For and Alternatives 
  6   analysis and the Environmental Impact Statement is 
  7   not an adjudicative issue subject to scientific 
  8   certainty, rather, and I'll refer you to tab 1 of the 
  9   Book of References that I provided you, as a Nova 
 10   Scotia Court of Appeal found citing with the approval 
 11   comments of the Federal Court of Appeal in the 
 12   Alberta Wilderness decision, 
 13                  "...given the nature of the task, we 
 14                  suspect that finality and certainty in 
 15                  environmental assessment can never be 
 16                  achieved."  
 17               Our clients share this view and they 
 18   believe that those observations are equally 
 19   applicable to the Need For and Alternative analysis.  
 20               And the importance of this point became 
 21   clear to me when I belatedly began to prepare my 
 22   closing arguments.  Because the first document I 
 23   turned to was Manitoba Hydro Exhibit 1000, this 
 24   pretty and rather daunting document that we went 
 25   through on the first day of the hearing.  And I have 
07307
  1   to confess to you that when I first read this 
  2   document, I wondered to myself, do we really need to 
  3   have a hearing?  For surely, the answers were all 
  4   here in the pretty tables, the lovely graphs.  No 
  5   doubt, statistics all calculated to the nth degree of 
  6   statistical certainty.  And I have no doubt that in a 
  7   few years, we'll be looking back at Hydro's work in 
  8   terms of Wuskwatim and observing that it was leading 
  9   edge for its time and it was a very impressive piece 
 10   of work. 
 11               That being as it may, Mr. Chairman, and 
 12   members of the panel, my client's first piece of 
 13   advice to you is that notwithstanding the pretty 
 14   documents, notwithstanding the 10 feet of supporting 
 15   materials, notwithstanding the armada of experts and 
 16   opinions that have been before you, we're asking you 
 17   to recognize what this process is all about.  It's an 
 18   exercise in judgment, not in certainty.  
 19               In the words of the Joint Ontario Panel, 
 20   and this is at tab 2 of my client's Book of 
 21   References in the second page, "this determination 
 22   involves value judgments."  I'm pointing to paragraph 
 23   94.  There is no absolute best, no absolute preferred 
 24   choice.  This is at the bottom of the second page, 
 25   paragraph 94.  
07308
  1                  "It is the task of this Board to rely 
  2                  on its judgment and experience, as 
  3                  well as the evidence and submissions, 
  4                  in making this decision.  In view of 
  5                  the purpose of the Act, public input 
  6                  may be a critical consideration in the 
  7                  approval decision." 
  8               My client's suggestion that the record 
  9   before you is fraught with uncertainty and that you 
 10   run the very real risk of being wrong is not an 
 11   invitation to a regulatory paralysis.  We're not 
 12   suggesting that you make no decision because you 
 13   might be wrong nor is it an invitation to regulatory 
 14   agnosticism.  Just because there's no absolute best 
 15   choice in terms of the Need For and Alternative 
 16   analysis does not mean that we should not endeavour 
 17   to identify a preferred alternative amongst an 
 18   adequate set of reasonable and suitable alternatives. 
 19               What it means is that in your act of 
 20   informed judgment, you must take into account a 
 21   variety of factors.  And as you seek to weigh and 
 22   assess the evidence and the masses of material before 
 23   you, my clients would ask you to keep in mind in 
 24   assessing this evidence the following five factors.  
 25               The first factor is to keep in mind the 
07309
  1   specific nature of the issue you're being asked to 
  2   address, for the fact is that some questions are more 
  3   amenable to certainty than others.  
  4               We can be more confident in our 
  5   prediction about the directional relationship between 
  6   interest rates and inflation over the next year than 
  7   we can about the outcome of the federal elections in 
  8   Canada and the United States and the consequential 
  9   impacts those will have on environmental premiums.  
 10   So the nature of the issue before you is something 
 11   important to keep in mind.  
 12               And a second factor to keep in mind, and 
 13   this is especially relevant both in the alternatives 
 14   analysis and in my friend, Ms. Pollitt-Smith's 
 15   cumulative effects analysis, is to keep in mind and 
 16   focus upon the process by which Hydro has arrived on 
 17   its recommendations on the specific issues. 
 18               Is it an approach that is accepted as 
 19   best practice or a standard practice?  And just as an 
 20   example, when you look on the Need For and 
 21   Alternatives side, we know that tools such as 
 22   levelized cost and internal rate of return are 
 23   standardized tests employed by utilities across 
 24   Canada.  
 25               By contrast, we know that portfolio 
07310
  1   analysis also is something that is recommended by 
  2   regulators and by tribunals across Canada but it's 
  3   something that Manitoba Hydro hasn't performed 
  4   appropriately in the context, The Need For and 
  5   Alternative analysis.  So it's important to keep in 
  6   mind the methodology by which Hydro has addressed the 
  7   issue. 
  8               The third factor that we'd ask you to 
  9   keep in mind is the nature and the tenor of the 
 10   debate that you heard during this hearing.  And in 
 11   this regard, my clients are fervent believers in the 
 12   principle of the competition of ideas.  They believe 
 13   that regulators achieve the best results when the 
 14   proponents' evidence is fully tested.  First of all, 
 15   through the objective testing of counsel for the 
 16   Commission, secondly, through vigorous challenge by 
 17   funded participants in terms of expert evidence and 
 18   cross-examination, and thirdly, by informed community 
 19   participation.  
 20               And we note with approval that my friend, 
 21   Mr. Bedford, seems to endorse these values as well.  
 22   And I refer you to the transcript, I believe it's 
 23   page 1914 or 1913 when he commented, 
 24                  "Now that all those who have been here 
 25                  for two weeks now can appreciate how 
07311
  1                  much richer discussion is, how much 
  2                  more useful expert testimony is and 
  3                  how much better informed Commissioners 
  4                  are when those who question have 
  5                  worked hard and have been able to 
  6                  prepare.  And conversely, those of us 
  7                  who have been here for the last two 
  8                  weeks can all appreciate how much less 
  9                  useful questioning is when there has 
 10                  been little or no preparation."  
 11               And my clients can only hope that Mr. 
 12   Bedford's client, Manitoba Hydro and the province 
 13   will endorse those principles and those thoughts the 
 14   next time that a regulatory process such as this 
 15   comes up for consideration.  
 16               In terms of the competition of ideas, my 
 17   clients are relatively confident on the Need For and 
 18   Alternatives side that through the work of this Clean 
 19   Environment Commission and the objective expert 
 20   evidence both of TREE and the CAC/MSOS witnesses, we 
 21   can have a fair degree of confidence that the issues 
 22   have been fully and fairly canvassed; and if not, 
 23   consensus reached, at least we have narrowed the 
 24   issues. 
 25               My clients regret to say that they cannot 
07312
  1   express the same degree of confidence in terms of the 
  2   EIS where though the CEC was thorough in its 
  3   objective testing of the case, it appears as if Hydro 
  4   and certain participants were flying at different 
  5   altitudes in terms of their argument.  And my clients 
  6   think that is a fundamental importance as you look in 
  7   terms of your recommendations and in terms of issues 
  8   like monitoring.  
  9               The fourth factor that my clients 
 10   consider to be of importance is what is the end 
 11   product of this competition of ideas?  And again, we 
 12   can point favourably to the Need For and Alternatives 
 13   side where agreement was not reached but the issues 
 14   were narrowed and some degree of consensus was 
 15   reached on issues such as the hurdle rate between CAC 
 16   and Hydro, issues such as the appropriate target for 
 17   DSM where CAC and TREE ultimately agreed, and even in 
 18   terms of the narrowing gap of load forecasts where 
 19   agreement was not reached between any of the Hydro, 
 20   TREE or CAC/MSOS but the issues were narrow.  
 21               By contrast in yesterday's rebuttal 
 22   evidence by Hydro/NCN, it demonstrated again the 
 23   unanswered questions on the EIS side such as what are 
 24   the best practices for cumulative effects analysis?  
 25   What does Dr. Duinker really think?  Those issues are 
07313
  1   still far from clear.  
  2               The final kind of key factor that I would 
  3   ask you to consider on behalf of my clients in 
  4   weighing the credibility of the expert evidence 
  5   before you is the experts themselves.  Were the 
  6   experts well informed?  Were they objective?  And I 
  7   have to admit to my own bias on this particular 
  8   aspect of the case because I am going to recommend to 
  9   you the opinions of Dr. Higgin and Mr. Harper for a 
 10   variety of reasons.  And the first is that they 
 11   demonstrated a thorough mastery of the record.  And 
 12   they displayed an objective fairness which was 
 13   enriched by their experience.  
 14               And I think it's important as you weigh 
 15   the evidence of these witnesses to review their 
 16   qualifications which are set out in the transcript at 
 17   pages 5449 through 5454.  Because with all respect to 
 18   the other witnesses, I don't think that two witnesses 
 19   alone brought such an element of diversity to this 
 20   hearing.  Experience in the Hydro industry, 
 21   experience in government both in the Department of 
 22   Energy and in the Renewable Energy and Conservation 
 23   Branch in Ontario, business experience both with 
 24   Hydro and in the natural gas industry, experience 
 25   representing and providing advice to consumers in 
07314
  1   terms of the work at ECS.  And Dr. Higgins also was a 
  2   regulator, sitting in a very similar position as 
  3   yourselves. 
  4               So when you weigh the evidence, please 
  5   consider the balanced perspective, the credibility of 
  6   Dr. Higgin and Mr. Harper because they know of what 
  7   they speak.  And they had no ideological axe to 
  8   grind.  
  9               Now when I was in between snapshots of 
 10   the hockey game last night as I was preparing this 
 11   argument, I asked myself am I talking too much like a 
 12   lawyer?  Am I putting too much emphasis on 
 13   credibility and on process?  And perhaps you're 
 14   asking the same question as well.  Does process 
 15   matter?  As long as we get the right answer, does it 
 16   really matter how we get there?  
 17               In my client's view in this hearing above 
 18   all, process matters. 
 19               The first reason it matters so 
 20   fundamentally in this hearing is because of history.  
 21   And I referred previously to the psychological scars 
 22   of many in Northern Manitoba.  The cumulative 
 23   psychological legacy of projects like the CRD.  And 
 24   it's important to remember that regardless of how 
 25   benign Wuskwatim may or may not be, it is built upon 
07315
  1   a messy, soiled experience in the Churchill River 
  2   Diversion.  And the starting point for many 
  3   individuals in those communities affected by 
  4   Wuskwatim is a distrust for big Hydro and for big 
  5   science.  
  6               So process matters because one of the key 
  7   objectives of this hearing must be to ensure those 
  8   for whom history matters, that the process is 
  9   thorough, balanced, and transparent. 
 10               We have to inspire public confidence.  
 11   It's too much to expect we can heal the wounds but 
 12   maybe we can assuage the fears and give the 
 13   communities up north a sense that the mistakes of the 
 14   past are less likely to be repeated. 
 15               Process also matters because of the 
 16   precedent being set by this hearing.  This panel more 
 17   than I, I'm sure, are familiar with the grand vision 
 18   for northern hydroelectric development, Notigi, Gull, 
 19   and the mother of all generating stations, Conawapa.  
 20   And your recommendations in terms of analytical 
 21   process as well as results are going to be critical 
 22   to Manitoba Hydro as it considers future endeavours 
 23   to its government regulators and to future members of 
 24   the Clean Environment Commission. 
 25               The third reason process really matters 
07316
  1   in this hearing is transparency.  In my client's 
  2   perspective, it's fundamentally important that we 
  3   make it clear why we are engaging in a particular 
  4   course of action.  And I want to use the example of 
  5   wind.  Because as we will discuss later, the record 
  6   of this hearing in my client's submission is clear.  
  7   Hydro-led wind development cannot be justified 
  8   economically at the current time when consideration 
  9   is given to the potential benefits versus the 
 10   potential risk.  
 11               This doesn't mean that there cannot be a 
 12   provincial initiative in that area.  There are many 
 13   social and environmental reasons why the province may 
 14   choose to embark on a wind initiative.  But the fact 
 15   that wind is not currently economically sound raises 
 16   important questions of who should pay.  Who should 
 17   bear the financial risk for wind development?  Should 
 18   it be private parties?  Should it be the government 
 19   which is engaging in these actions for policy 
 20   reasons, environmental reasons?  Or should it be 
 21   Hydro rate payers?  And I suspect you know my 
 22   client's perspective on that.  
 23               The final reason my clients wish to 
 24   emphasize that process matters relates to 
 25   accountability.  Process matters and your 
07317
  1   recommendations for follow-up matters so much in this 
  2   hearing in order that we can ensure the potential 
  3   economic benefits of Hydro development in terms of 
  4   Wuskwatim are realized by Manitobans and by Manitoba 
  5   rate payers and that the objectives in the 
  6   legislation of economy and efficiency are achieved.  
  7               My clients believe this is particularly 
  8   important because while they have come to the 
  9   conclusion that Wuskwatim is economically viable 
 10   based on the likely benefits versus the likely risks, 
 11   they have also concluded that the rewards from a 
 12   Hydro perspective are not as great as outlined in 
 13   this pretty document.  And they are concerned that 
 14   the risks, as originally enumerated by Hydro, are 
 15   somewhat understated, although that was revised 
 16   during the course of the hearing. 
 17               And they are also concerned that Manitoba 
 18   Hydro has failed to fully recognize and achieve the 
 19   full potential of demand-side management, both 
 20   economically and in terms of efficiency, in terms of 
 21   conservation.  
 22               Based on these conclusions and concerns, 
 23   my clients believe it's so important that there be 
 24   continued regulatory oversight by the Public 
 25   Utilities Board to ensure that the economic benefits 
07318
  1   of Wuskwatim are realized and that the great 
  2   potential for DSM is not squandered or lost or 
  3   overlooked in a mad rush to build another dam.  
  4               With these less than brief preliminary 
  5   remarks, I wish to turn to the Need For and 
  6   Alternative analysis and the conclusions of my 
  7   clients CAC/MSOS.  And I want to just comfort the 
  8   panel that I don't intend to offer you a mere rehash 
  9   of the direct evidence provided by Mr. Harper and Dr. 
 10   Higgin.  I do want to indicate that my clients fully 
 11   endorse the recommendations as set out in their 
 12   evidence at pages 5557 through 5563.  
 13               What I hope to do in the next half an 
 14   hour or so is elaborate on some of the items which -- 
 15   I started late, Mr. Chair.
 16               THE CHAIRMAN:  You've still got about 40 
 17   minutes.
 18               MR. WILLIAMS:  I'm giving my colleague, 
 19   Ms. Pollitt-Smith, the last ten.  What I hope to do 
 20   in the 30 minutes that I have allotted to myself is 
 21   to elaborate on top some of the matters which my 
 22   clients believe are particularly germane to the CEC's 
 23   recommendations.  And I don't want to sound too much 
 24   like Prime Minister Martin, as he currently is, but 
 25   one thing that my clients wish to make absolutely 
07319
  1   fundamentally perfectly clear relates to their 
  2   conclusion that the project is economically 
  3   acceptable.  Because that conclusion is based on 
  4   their understanding of the need for the project 
  5   which, as expressed by Mr. Harper at pages 5460 and 
  6   5557 of the transcript, is to take advantage of an 
  7   opportunity in the export market, thereby promoting 
  8   economy and lower rates for Manitoba consumers.  Put 
  9   another way by Mr. Harper at page 5596 of the 
 10   transcript, "The benefits to the rate payers are the 
 11   real drivers for this project."  
 12               And we would note that a similar point 
 13   seems to be made by Manitoba Hydro in the third tab 
 14   of Exhibit MH 1000 at page 3 where it points to the 
 15   economic benefits of increased exports.  And at page 
 16   4, it points out in the first bullet that significant 
 17   profits keep Manitoba rates low.  
 18               My clients wish to emphasize this point 
 19   in terms of the objective of the hearing.  Because in 
 20   their view, there are considerable financial, 
 21   business and market risks associated with this 
 22   project.  And they recognize that if the doomsayers 
 23   are right or if Manitoba Hydro fails to fully achieve 
 24   the benefits of this project, then that they, the 
 25   rate payers, not the province, are likely to be on 
07320
  1   the financial hook for the downside of this project.  
  2   From my client's perspective, they will bear the 
  3   primary risk in terms of the potential for increased 
  4   rates. 
  5               My clients believe that these risks are 
  6   acceptable provided that the potential benefits are 
  7   shared with rate payers.  And they recognize, and as 
  8   Hydro has demonstrated in this hearing, that the 
  9   potential benefits can be shared with rate payers in 
 10   a combination of ways, lower rates or rate increases 
 11   that are lower than what otherwise might be expected. 
 12   They might also be reflected in a lower debt/equity 
 13   ratio, thereby reducing a driver for increased rates.
 14               My clients note, though, that nowhere in 
 15   the record of this proceeding is there the suggestion 
 16   by Hydro/NCN that the profits from exports from 
 17   Wuskwatim will be used for dividends to the province. 
 18               So accepting the need from a rate payer's 
 19   perspective is contingent on the profits for export 
 20   opportunities being used for the purposes of economy 
 21   for keeping rates low. 
 22               On this point, my clients suspect that 
 23   TREE will argue, as Dr. Miller suggested at page 5655 
 24   of the transcript, that keeping rates low is 
 25   inconsistent with the objective of promoting 
07321
  1   efficiency.  They would point out, though, that in 
  2   the context of promoting efficiency, conservation and 
  3   the objective of leaving a smaller footprint, there 
  4   are other more effective ways to do it.  And that 
  5   point is made by Mr. Torrie in his response to CNF 
  6   interrogatory number 12.  When he pointed out that 
  7   depending on the relevant importance of energy 
  8   commodity prices to the total end-use service cost, 
  9   electricity and other energy commodity demand may not 
 10   be as sensitive to commodity price as a more narrowly 
 11   focused orientation might predict.  And he observed 
 12   that for general manufacturing and non-electrically 
 13   heated homes and buildings, electricity is a 
 14   relatively small cost.  Typically less than 2 per 
 15   cent of value added from general manufacturing and 
 16   often much less than 10 per cent of the cost of 
 17   owning and operating a non-electricity heated house 
 18   or commercial building.  And he pointed out that this 
 19   is one of the reasons why there is such a large 
 20   pent-up supply of economic DSM.  
 21               So with all respect to Dr. Miller, my 
 22   clients concur with Mr. Torrie that merely raising 
 23   rates is not a panacea to achieving the objective of 
 24   efficiency.  In their view, I think echoing the view 
 25   of Mr. Torrie, direct investment in DSM is a much 
07322
  1   more efficient way to go.  
  2               The clients also on this last brief 
  3   comment on the subject also wish to remind those who 
  4   advocate raising rates in the interest of efficiency. 
  5   That behind these raised rates, there are real people 
  6   on low or modest incomes who may be adversely 
  7   affected by a narrow, simplistic attempt to increase 
  8   efficiency by raising rates.  
  9               Moving from the Need For to the 
 10   Alternatives analysis, there are three threshold 
 11   questions which my clients believe must be addressed. 
 12   And they must be addressed before we move to 
 13   assessment of the viability and reasonableness of 
 14   Wuskwatim.  The first question is did Hydro fail to 
 15   adopt the correct approach in assessing the 
 16   reasonableness as compared to other alternatives of 
 17   Wuskwatim?  And if so, does that failure undermine 
 18   the validity of its proposal?  
 19               And I'll go through the next two 
 20   questions and then I'll come back to the first one.   
 21               Secondly, did Hydro overstate its load 
 22   forecast so as to fatally undermine its proposal?     
 23               And thirdly, did Hydro err in adopting a 
 24   partnership perspective in weighing the benefits of 
 25   Wuskwatim, particularly given the fact they used a 
07323
  1   Hydro perspective and methodology in assessing its 
  2   risks?  
  3               Back to the first question, did Hydro 
  4   adopt the wrong analysis or perform the wrong 
  5   analysis in weighing the reasonableness of Wuskwatim 
  6   against other alternatives and what are the 
  7   consequences of that?  I'll recommend for your 
  8   consideration Mr. Harper's discussion of this at 
  9   pages 5463 through 5465 of the transcript.  And my 
 10   clients believe his comments there are of great 
 11   importance not just for this hearing but for future 
 12   ones to come.  
 13               In essence what Mr. Harper says is that 
 14   he has no material concerns with how Hydro screened 
 15   the potential alternatives.  But he takes issue with 
 16   Hydro's attempt to justify its preference for 
 17   Wuskwatim and he does so by pointing out, first of 
 18   all, what they did.  And that's set out in the 
 19   transcript at pages 5463, 5464.  He notes that Hydro 
 20   argued, first of all, that Wuskwatim was economically 
 21   viable even after taking into account the risks 
 22   associated with the project.  Then Hydro went on to 
 23   say that continuing with Wuskwatim did not preclude 
 24   Hydro from exploring other alternatives.  And 
 25   thirdly, by suggesting that any negative financial 
07324
  1   impacts were manageable, and in the long term, there 
  2   were positive financial impacts and rate benefits to 
  3   customers. 
  4               Mr. Harper goes on to point out what he 
  5   considered Hydro failed to do.  What it failed to do 
  6   was to provide a comprehensive justification of the 
  7   Wuskwatim project from a portfolio perspective.  And 
  8   by portfolio perspective, he referenced using a short 
  9   listed alternatives to develop alternative portfolios 
 10   of options each of which would be suitable for 
 11   satisfying the identified need.  And then evaluating 
 12   them on a level fair playing field against a criteria 
 13   which had been set out initially including economic, 
 14   financial and other criteria.  
 15               Mr. Harper goes on to argue, there's a 
 16   number of cites for this but one is page 5514, that 
 17   Hydro has essentially failed to establish that 
 18   Wuskwatim is a preferred alternative.  
 19               In making this suggestion, conclusion, 
 20   Mr. Harper is supported by the evidence of Mr. Torrie 
 21   and it appears throughout Mr. Torrie's written and 
 22   direct evidence, and in particular pages 5697, 5698.  
 23   And Mr. Harper goes on to say that by failing to 
 24   perform a portfolio analysis, assuming that a 
 25   particular alternative, in this case Wuskwatim, is 
07325
  1   the preferred alternative, could bias results as one 
  2   looks at the economic and financial aspects as 
  3   opposed to when you have just short listed 
  4   alternatives and are looking at each of them on a 
  5   level playing field. 
  6               And he goes on to note at page 5467 that 
  7   the adoption of a more comprehensive approach in this 
  8   case, particularly with regard to what he sees as 
  9   preferred alternatives of DSM, SSE and non-utility 
 10   generation, would require more information than is 
 11   currently available on the future potential for 
 12   expanded DSM programs, NUGs or supply-side 
 13   enhancements.  
 14               In essence, he concludes that Hydro's 
 15   work on this, one of the most essential and basic 
 16   analytical questions, is incomplete and that it 
 17   cannot be completed given data limitations.  
 18               Now Hydro may argue and they may make 
 19   reference to the Terms of Reference and they may 
 20   suggest that they don't have to establish that 
 21   Wuskwatim is a preferred alternative, only that it 
 22   has been selected on reasonable grounds including 
 23   economic viability.  However, with respect to any 
 24   such argument by Manitoba Hydro, in my client's view, 
 25   such a proposition is inconsistent with existing 
07326
  1   environmental and regulatory practice in other 
  2   jurisdictions. 
  3               And we'd refer you to, in the Book of 
  4   References, tab 2 through 4 of those references.  And 
  5   I'll start with tab 2, a site from the Re West 
  6   Northumberland Landfill decision of the Ontario Joint 
  7   Board.  The Ontario Joint Board, I believe it's a 
  8   municipal board and the environmental assessment 
  9   board sitting together.  
 10               And in particular, I refer you to 
 11   paragraph 93(a) where the Board's conclusion was 
 12   that, 
 13                  "The undertaking must be the preferred 
 14                  alternative among an adequate set of 
 15                  reasonable and suitable alternatives, 
 16                  having regard to the purpose of the 
 17                  Act."  
 18               It's not enough to say that Wuskwatim is 
 19   economically viable.  It's critical to establish that 
 20   it's preferred among an adequate set of reasonable 
 21   and suitable alternatives. 
 22               Now, as you'll note in paragraph 94, and 
 23   I read this quote to you before, this process is a 
 24   process not of scientific certainly.  There's no 
 25   absolute best or preferred choice.  But it's 
07327
  1   important particularly for future hearings, for the 
  2   Wuskwatims or the Conawapas to come, that the process 
  3   is properly established now.  
  4               And for guidance as well, we'd refer you 
  5   to tab 4, the Resource Planning Guidelines of the 
  6   British Columbia Utilities Commission where you can 
  7   see a very similar approach is recommended and 
  8   followed.  And I won't go through it all which would 
  9   take me well into next year.  But at page 3 under 
 10   Resource Planning Guidelines, you can see the first 
 11   step is identification of the planning context and 
 12   the objectives of a resource plan.  Stage 5 and 6 are 
 13   development of multiple resource portfolios and 
 14   evaluation and selection of resource portfolios.  And 
 15   if you read the notes under those two sections, and I 
 16   won't drag you through them, you'll see why this is 
 17   so important.  Establishing portfolios and analysing 
 18   the trade-offs between portfolios and how they 
 19   perform under uncertainty will facilitate determining 
 20   which portfolio performs best relative to the stated 
 21   objectives.  So this is more than an academic issue 
 22   of process.   
 23               Now I would note that in the context and 
 24   the specific fact situation of this proceeding, Mr. 
 25   Harper notes, and that's at page 5465 and 5466 of the 
07328
  1   transcript, that, 
  2                  Hydro and NCN contend that in this 
  3                  particular case, the issue really 
  4                  doesn't arise since the export 
  5                  opportunity is large enough to 
  6                  accommodate and develop all of the 
  7                  short-listed options.  
  8   And he says that, 
  9                  If this is the case, then the approach 
 10                  is reasonable provided there are no 
 11                  limitations on either Hydro's 
 12                  financial or intellectual capital that 
 13                  will preclude pursuing all of these 
 14                  opportunities at the same point in 
 15                  time.  
 16               But I would note as well though that as 
 17   set out on page 5605 and 5606 of the transcript, Mr. 
 18   Harper makes his recommendation observation with some 
 19   trepidation.  
 20               So just to sum up on this section.  From 
 21   my client's perspective, the preferred alternatives 
 22   in this hearing are DSM, supply-side enhancements and 
 23   non-utility generation.  
 24               However, based on the sensitivity 
 25   analysis performed by Hydro and the risk benefit 
07329
  1   assessment, Wuskwatim appears to be an acceptable 
  2   alternative and there appears to be room within the 
  3   opportunity of the greater export opportunities for 
  4   DSM, SSE and Wuskwatim.  
  5               MR. MAYER:  I really hate to interrupt 
  6   but I heard Mr. Harper comment on the supply-side 
  7   enhancement in DSM.  I only heard the reference to 
  8   NUGs in relation to wind power which Dr. Higgin says 
  9   is not, at this point, financially viable and still 
 10   it can't compete with hydro power even with the 
 11   subsidies.
 12               MR. WILLIAMS:  And I'm just keeping track 
 13   of the time so I can see how long my response is to 
 14   Mr. Mayer.
 15               THE CHAIRMAN:  For his interruption, I'll 
 16   double the time that you lost.
 17               MR. WILLIAMS:  Feel free to interrupt 
 18   then.  I would note, I don't think in terms of if you 
 19   review Dr. Higgins' and Mr. Harper's direct evidence, 
 20   oral evidence, and I can certainly provide you the 
 21   cite, they spoke of non-utility generation in a 
 22   couple of instances.  And they used a specific 
 23   example of hospitals or other large commercial or 
 24   industrial operations producing steam.  And I can 
 25   certainly provide that cite to you, Mr. Mayer. 
07330
  1   (UNDERTAKING CAC/MSOS-95:  Provide cite of Dr. 
  2   Higgins' and Mr. Harper's evidence re NUGs re 
  3   specific example of hospitals or other large
  4   commercial or industrial operations producing steam)
  5   
  6               MR. WILLIAMS:  So in essence, while my 
  7   clients disagree with the process and we think it's 
  8   important that the Commission make a recommendation 
  9   for future proceedings, given the size of Wuskwatim 
 10   built in with what appears realistic in terms of DSM 
 11   and SSE, it appears that Hydro in this case can have 
 12   its cake and eat it too. 
 13               I want to turn to the second threshold 
 14   issue I raised which relates to whether the load 
 15   forecast is so flawed.  And when Hydro suggested it 
 16   could have its DSM cake and still build Wuskwatim, 
 17   that suggestion was strenuously challenged by Mr. 
 18   Torrie who suggested, in his written evidence, that 
 19   Hydro's load forecast was overstated to such a degree 
 20   that it was strongly arguable that Hydro could 
 21   achieve its export opportunities and fulfil them 
 22   without building Wuskwatim. 
 23               Now in terms of Mr. Torrie's comments, 
 24   and I'll be brief because time is running quickly, it 
 25   is important to note that there's some material 
07331
  1   validity to them and Mr. Harper acknowledged that.  
  2   Especially he shared some of Mr. Torrie's concerns in 
  3   terms of the commercial load forecast.  But as Mr. 
  4   Harper notes at pages 5581 and 5582 of the 
  5   transcript, at the end of the day, he had more 
  6   comfort in the numbers presented by Manitoba Hydro 
  7   than the numbers presented by Mr. Torrie.  And one of 
  8   the key reasons for that was that the reference 
  9   starting point that Mr. Torrie had, through no fault 
 10   of his own, was 1,000 gigawatt hours lower than the 
 11   reference starting point of Manitoba Hydro.  And that 
 12   allowed Mr. Harper to conclude that notwithstanding 
 13   the real and valid concerns that Mr. Torrie advanced, 
 14   he had some confidence that the final load forecast 
 15   was closer to the Hydro number than the Torrie 
 16   number. 
 17               And I have more on that subject but time 
 18   runs on. 
 19               The final threshold issue that my clients 
 20   wish to address is what perspectives should be taken 
 21   in assessing the economic viability of the project.  
 22   And Hydro of course argues that the benefits of the 
 23   project should be assessed from the perspective of 
 24   Hydro/NCN from the partnership's perspective, while 
 25   the risks should be assessed using Hydro's hurdle 
07332
  1   rate policy and their weighted cost of capital.       
  2               Again, as a starting point, I refer you 
  3   to Mr. Harper's evidence on this, pages 5467 through 
  4   5473.  And also as well to Mr. Bedford's polite but 
  5   unsuccessful cross-examination of Mr. Harper on this 
  6   point which is at pages 5600 to 5602. 
  7               Now while my clients understand why Hydro 
  8   would like to adopt a partnership perspective, both 
  9   because it yields a higher internal rate of return 
 10   and also because it avoids, to a certain degree, the 
 11   messiness of getting into the partnership agreement, 
 12   they think that perspective is fundamentally wrong.  
 13   And it's an important message to send to Hydro and to 
 14   the government that addressing the financial benefits 
 15   of the project from a partnership perspective while 
 16   addressing the risks from a Hydro perspective does 
 17   not make good common sense, is imprudent, is 
 18   inconsistent analytically and is not mandated by the 
 19   terms of reference.  
 20               And the most important element of that my 
 21   clients wish to emphasize is a point of common sense. 
 22   And I always think Mr. Adams, during the course of 
 23   this hearing, has demonstrated a lot of common sense. 
 24   So I refer you to his comments starting at page 914, 
 25   915 of the hearing when he conceded freely that the 
07333
  1   assessment of a generation opportunity and its 
  2   viability could be materially affected by the nature 
  3   of ownership.  That was in the context of wind, the 
  4   private versus public debate.  And while he wouldn't 
  5   agree with me that it would be crazy to evaluate the 
  6   economic viability of a project from the perspective 
  7   of a private sector company, he did agree with me 
  8   that it would be imprudent, in essence he agreed that 
  9   it would be imprudent to address the financial 
 10   viability of a project from a perspective other than 
 11   Manitoba Hydro.  It would be an imprudent business 
 12   practice.  And of course it would be because it 
 13   doesn't provide a true economic picture of the risks 
 14   and benefits experienced by Hydro. 
 15               And it doesn't make common sense because 
 16   in this case, as we've heard through the testimony of 
 17   Mr. Thomas and Mr. Wojczynski, the perspectives of 
 18   Hydro and NCN are somewhat different.  Mr. 
 19   Wojczynski, and I believe it's at page 109 of the 
 20   transcript, said that the primary driver for Hydro in 
 21   this project is profits.  
 22               Mr. Thomas, given the needs of his 
 23   community, focuses on three pillars, job 
 24   opportunities, contract opportunities for business 
 25   and the profits from Hydro.  And he refused to put a 
07334
  1   premium on one over the other.  And that's at page 
  2   908 of the transcript.  
  3               So in essence, you have different 
  4   perspectives for Hydro and for NCN. 
  5               And it doesn't make analytical sense to 
  6   use the partnership perspective for the benefits but 
  7   the Hydro perspective for the risks because, in 
  8   simple terms, that's an apples to oranges comparison.
  9               MR. MAYER:  With respect, Mr. Williams, 
 10   before you go much farther on that, if some of the 
 11   legal opinion is correct that Hydro would have a 
 12   great deal of difficulty in maintaining its limited 
 13   liability should the partnership fail because of its 
 14   active involvement in the project and in operating 
 15   it, isn't it at least prudent to take the risk as 
 16   Hydro's risk because the evidence appears to be 
 17   clear, that NCN would probably be successful in 
 18   maintaining its restricted liability in the event of 
 19   a partnership failure.  So isn't it prudent for Hydro 
 20   to assume that it will have to bear the risk should 
 21   something go wrong?  And at the same time, 
 22   understanding that if it is successful and the 
 23   profits are significant, that they have to understand 
 24   that those profits have to be shared, and therefore, 
 25   shared with its partner?  And therefore, isn't it 
07335
  1   again more prudent to assess, even from Hydro's point 
  2   of view, the profitability of the project, which is 
  3   its primary goal, based on the fact that it will have 
  4   to share some of those profits with its partner?
  5               MR. WILLIAMS:  Mr. Mayer, I think you're 
  6   making my point.  And I agree with you totally that 
  7   the risks faced by Manitoba Hydro that it should take 
  8   a hard look at its particular risks.  And the second 
  9   part of your argument was that it should recognize 
 10   that it has to share the profits.  And I agree 
 11   exactly.  So it should be looking at its benefits 
 12   versus its risks.  And your point, it should be 
 13   looking at the risks that its benefit -- excuse me.   
 14               Given that it's the primary risk taker, 
 15   the evaluation of whether that risk is worthwhile has 
 16   to be based upon the benefits that it will receive.  
 17   What point will be served by assessing its risk based 
 18   upon the benefits of the partnership?  Because the 
 19   benefits of the partnership are higher.  Hydro 
 20   Wuskwatim enjoys a -- or NCN enjoys a 
 21   disproportionate share of the benefits.  
 22               So, Mr. Mayer, if you want to evaluate 
 23   the risks you face, you should be weighing it against 
 24   your potential benefits, not the potential benefits 
 25   of someone else.
07336
  1               MR. MAYER:  I have your point.
  2               MR. WILLIAMS:  Now, in Mr. Bedford's 
  3   polite cross-examination of my witness, or my 
  4   client's witness, Mr. Harper, he tried to suggest, I 
  5   believe, that it was okay because while the economic 
  6   analysis was done from a partnership perspective, the 
  7   financial analysis was done from a Hydro perspective. 
  8   But I guess there's two problems with that.  The 
  9   first is, as Mr. Harper pointed out, risk analysis is 
 10   about comparing and the economic viability analysis 
 11   is about comparing one alternative against another.  
 12   And even to the extent that some financial risk is 
 13   considered in the financial evaluation, it's not a 
 14   comparison against other alternatives.  
 15               Moreover, as Ms. Wray pointed out at page 
 16   975 of the transcript, financial analysis does not 
 17   involve her rates.  And that's a key point.  
 18               So while Mr. Adam noted that it would be 
 19   imprudent to address the benefits of a project from 
 20   anyone else's perspective but Hydro's own, financial 
 21   analysis does not truly assess the risks and benefits 
 22   of the project versus other alternatives. 
 23               Mr. Chair, I'm giving myself about seven 
 24   more minutes on this point and then I'm going to turn 
 25   to my friend, Ms. Pollitt-Smith.  I think we can 
07337
  1   finish our arguments.  Is that appropriate?
  2               THE CHAIRMAN:  You're very close.
  3               MR. WILLIAMS:  If I take eight, will you 
  4   let me get away with it, sir? 
  5               We certainly don't intend to address all 
  6   the alternatives referenced in the Hydro analysis.  
  7   But in my client's perspective, there are two that 
  8   are worthy of note.  And the first, not surprisingly, 
  9   is DSM.  
 10               From my client's perspective, there are 
 11   some truth about DSM that are self-evident.  The 
 12   first is that there's material potential for greatly 
 13   enhanced DSM and a consequent positive contribution, 
 14   both to the objectives of efficiency and economy.  
 15   And it's notable that at page 5696 of the transcript, 
 16   Mr. Torrie seems to appear to agree with Dr. Higgin 
 17   in terms of the potential of DSM.  He appears to 
 18   agree that three times DSM is an achievable stretched 
 19   target.  So that's a figure that we would recommend 
 20   to the panel for its consideration.  
 21               I think Dr. Higgin and Mr. Torrie also 
 22   agree on another important conclusion, observation.  
 23   And that is that DSM is not receiving the priority 
 24   from Hydro that it deserves.  From my client's 
 25   perspective, in terms of the Need For and 
07338
  1   Alternatives analysis, the performance of Hydro's DSM 
  2   panel was a most disappointing aspect of that element 
  3   of the hearing, both in providing clarity to the 
  4   issues and in providing confidence that there is a 
  5   strong sense of direction within the corporation.  
  6   And we offer those comments with respect.  
  7               And we will refer you to the transcript 
  8   from the first week, Mr. Abra's attempt to garner 
  9   information on DSM or the transcript of the second 
 10   week, Mr. Torrie's attempt.  
 11               And whether the performance of that panel 
 12   is merely the function of inexperience or reflective 
 13   of Hydro's priorities, it's not clear.  What is clear 
 14   is that for a variety of reasons, and some of these 
 15   are set out at pages 1031 to 1033 of the transcript, 
 16   a DSM plan that is to be reviewed and updated 
 17   annually is now two to three years out of date.  And 
 18   there is a general rate application to my horror that 
 19   is starting next week and it doesn't appear that a 
 20   DSM plan will be ready and available for that either. 
 21               And this is ironic from my client's 
 22   perspective and also deeply distressing given the 
 23   vast potential that DSM offers and also the positive 
 24   social aspects it offers in terms of efficiency. 
 25               So from my client's perspective, it's 
07339
  1   important that clear direction or recommendations 
  2   flow from this Commission to the government, applying 
  3   pressure to Hydro to address DSM on an urgent basis 
  4   in order to address the lost opportunities that 
  5   exists. 
  6               I want to turn finally to wind, or almost 
  7   finally to wind.  And in my client's respectful view, 
  8   the arguments surrounding wind as an alternative of 
  9   Wuskwatim is notable for the disconnect between the 
 10   objective evidence and the rhetoric in this 
 11   proceeding.  And as a starting point, though, I think 
 12   we can probably all agree with Dr. Higgin that wind 
 13   is desirable for many environment and social reasons. 
 14               And if you look at the record carefully 
 15   at the expert evidence rather than the opinions, I 
 16   think you will find a surprising degree of consensus 
 17   on the economics of wind and on the best way to 
 18   promote wind generation.  
 19               And if you look to Mr. Wojczynski's wise 
 20   comments at page 1092 to 1100 of the transcript, I 
 21   think it's fair to say that Mr. Wojczynski and Dr. 
 22   Higgin would agree that there are a number of large 
 23   uncertainties relating to wind that make wind a much 
 24   riskier prospect than Wuskwatim.  They relate to 
 25   capital costs, to transmission costs, uncertainties 
07340
  1   relating to firming and shaping costs, the nature and 
  2   extent of the federal subsidy and the level of 
  3   output.  These are all uncertainties surrounding 
  4   wind.  
  5               And as Dr. Higgin and Mr. Harper 
  6   concluded, wind generation is a medium to high risk 
  7   venture requiring at least a 10 hurdle rate.  And if 
  8   you refer to Exhibit CAC/MSOS 1008, you'll see that 
  9   nowhere, even under the most optimistic of 
 10   assumptions does the internal rate of return for wind 
 11   come within the range of that 10 per cent minimum 
 12   level. 
 13               For those still harboring the view that 
 14   wind is financially, economically realistic is a 
 15   sum-up comment.  Ask them to point and look at the 
 16   comments of wind advocates such as Mr. Hornung who 
 17   notes at pages 4077, 4085 and 4088 that there is a 
 18   gap in terms of wind economics that is likely to 
 19   persist for another 10 to 20 years. 
 20               Mr. Chairman, in my right that I can turn 
 21   it over to my friend, Ms. Pollitt-Smith?  Okay.  My 
 22   clients, just in summary from CAC/MSOS's perspective, 
 23   they presented comprehensive evidence on May 12th 
 24   with a comprehensive series of recommendations which 
 25   they recommend for your consideration.  Rather than 
07341
  1   go through those recommendations today, we chose to 
  2   highlight some of the key points of the argument 
  3   which we wish the panel to consider and we'd leave 
  4   those to your consideration.  And I turn it now to my 
  5   friend, Ms. Pollitt-Smith.  
  6               MS. POLLITT-SMITH:  How much time do I 
  7   have?  
  8               THE CHAIRMAN:  Go ahead.
  9               MS. POLLITT-SMITH:  Okay.  I think I 
 10   should get some penalty time for all the questions 
 11   that were driving me nuts while I was sitting here 
 12   suffering. 
 13               What I am proposing to do is I've 
 14   prepared a written argument that will be available 
 15   hopefully at the break and this is more serving as 
 16   the coming attractions to the main show that you'll 
 17   be getting.  Oh, no.  It's longer than that, Mr. 
 18   Mayer, it's much longer.  This is what I'm going to 
 19   be presenting now.  It should take me about 10 
 20   minutes to go through or maybe a minute or so more 
 21   because I don't want to drive the court reporter 
 22   nuts.  So I shall commence.  But it is basically an 
 23   overview of my main written argument.  
 24               Ultimately, the questions concerning the 
 25   environmental impacts of this project may not be 
07342
  1   answered until the hydroelectric dam is built and 
  2   operations commence. 
  3               Despite the accumulation of data and  the 
  4   qualifications of those interpreting it, predicting 
  5   what will happen to the environment when it is 
  6   disrupted by development is inherently uncertain.  
  7   While the proponents have presented many volumes of 
  8   material and analysis which they feel demonstrates 
  9   that the project will have no significant adverse 
 10   effects on the region, there always remains an 
 11   element of uncertainty in the process, variables that 
 12   cannot be deciphered with complete accuracy or 
 13   consequences that remain unimagined until the 
 14   detrimental effects are felt. 
 15               While uncertainty is infused in the 
 16   process of prediction, the degree of uncertainty may 
 17   be bolstered by the methodologies employed in 
 18   conducting studies or analysing the information 
 19   obtained.  For this project, there is some question 
 20   concerning whether the cumulative effects methodology 
 21   was ultimately the best analytical framework.  
 22   Ultimately, the analysts employed to conduct the 
 23   assessment must use their best professional judgment, 
 24   but such judgment relies on subjective opinion.  
 25   While there is a certain amount of professional 
07343
  1   expertise and experience involved which would 
  2   mitigate uncertainty, it must be acknowledged that 
  3   experts often disagree on what's best sometimes. 
  4               These uncertainties may be mitigated 
  5   somewhat through a thorough and transparent review 
  6   process before the project is approved.  Any failings 
  7   in professional judgment may be corrected or at least 
  8   brought to light through a process where concerned 
  9   members of the public can produce evidence or 
 10   cross-examine the evidence provided by the proponent. 
 11   Where such a process exists and has been fairly 
 12   carried out, uncertainty may be tempered. 
 13               Should doubts remain concerning the 
 14   proponent's plans, the ultimate failsafe is the 
 15   implementation of extensive mitigation measures, 
 16   monitoring and adaptive management.  Such measures 
 17   may be imperative and of necessity applied with 
 18   greater rigour if the information provided by the 
 19   proponents is not thoroughly tested during the 
 20   hearing process and questions still remain as to its 
 21   adequacy.
 22               While we have heard from many 
 23   participants during the course of this hearing, two 
 24   views have predominated: the future promise of the 
 25   Wuskwatim project, and the cataclysmic impacts of big 
07344
  1   Hydro.  While the proponents have focused their 
  2   presentation of evidence on the examination of the 
  3   former, many participants have opted to push the 
  4   outer boundaries of the scope this hearing and 
  5   advocate the latter view.  These views may seem 
  6   diametrically opposed at first glance, however they 
  7   are only peripherally related and the consequences 
  8   has been a genuine lack of meaningful dialogue at 
  9   times.
 10               Both views are relevant and may offer 
 11   valid perspectives for the Commission's consideration 
 12   but the lack of substantial interrelation of these 
 13   themes has resulted in two very different and 
 14   oft-times one-sided conversations taking place.  
 15   While this has resulted in a good deal of information 
 16   being presented to the Commission, the value of much 
 17   of the information to this process is lost due to the 
 18   lack of critical engagement and assessment of the 
 19   information.  
 20               While the historical background of the 
 21   Hydro development in the region and its ongoing 
 22   detrimental impacts has served as a valid warning 
 23   concerning future development, it speaks only 
 24   tangentially about the specific environmental and 
 25   socioeconomic impacts that the project under review 
07345
  1   will have and fails to evaluate the information 
  2   presented in the EIS itself.  
  3               In the end, there has been no real case 
  4   for why this dam should not be built.  The 
  5   participants have adequately set the stage concerning 
  6   the impacts of past projects on the region and its 
  7   people but they have not established that this 
  8   project will breach a critical environmental or 
  9   socioeconomic threshold.  
 10               While public concerns may be perfectly 
 11   valid, there has been presented no evidentiary case 
 12   to substantiate the concerns that the project will 
 13   further exacerbate the effects of the CRD or 
 14   challenge the proponent's assertions that the project 
 15   will operate within the parameters of the already 
 16   existing regulated system and have no impacts on that 
 17   system.  
 18               The Terms of Reference set out that there 
 19   are essentially two areas where this Commission must 
 20   make recommendations.  The Commission must consider 
 21   whether or not to recommend the issuance of 
 22   environmental licence and the Commission must 
 23   consider whether to recommend any measures designed 
 24   to mitigate or any monitoring measures that should be 
 25   employed.  
07346
  1               In determining the question of whether an 
  2   Environment Act licence should be issued, it should 
  3   be noted that the EIS has stated and the proponents 
  4   have affirmed throughout the process that any adverse 
  5   effects from the project will be insignificant or 
  6   rendered negligible through the employment of planned 
  7   mitigation measures.
  8               Further, there has been little evidence 
  9   put on record by the participants that puts the 
 10   quality or content of the EIS itself or its 
 11   conclusions into question.  
 12               On the balance of information presented, 
 13   the proponents may need to be taken at their word.  
 14   Ultimately, as set out in the EIS, the Wuskwatim 
 15   Generation Station will be a small project.  It is 
 16   operating within a regulated system and will work 
 17   within the operational paramaters of that system.  
 18   There is on the record no clear evidence that it will 
 19   impact upon the system operations in a significantly 
 20   detrimental manner.  
 21               As to the question of any follow-up 
 22   mitigation or continuing research, it should be noted 
 23   that the information contained in the EIS has not had 
 24   to withstand the rigour of a thorough competition of 
 25   ideas, as was discussed by Mr. Williams in his 
07347
  1   closing statement.  
  2               If the EIS is to be accepted at face 
  3   value, it is imperative that there be further testing 
  4   and monitoring of its assumptions.  This is 
  5   especially important given the issues of trust and 
  6   credibility that have come up during the course of 
  7   this hearing. 
  8               There must be regular evaluation of the 
  9   performance of adaptive management measures as well 
 10   as regular evaluation of the success of mitigation 
 11   measures.  The proponents should not be left alone to 
 12   do this monitoring.  Some third party oversight 
 13   should be provided.  
 14               There has been plenty of discussion 
 15   concerning the model of Independent Monitoring being 
 16   utilized in the Northwest Territories.  This model 
 17   should be investigated to determine whether it could 
 18   be adapted to the resource development activities 
 19   that continue to blossom in Northern Manitoba's 
 20   boreal forest. 
 21               An independent monitoring agency would 
 22   serve many vital functions.  Such an agency could 
 23   review the design of monitoring programs and examine 
 24   the results of the environmental management systems 
 25   in place, testing their ability to respond to 
07348
  1   problems as they arise. 
  2               It could also serve as a watch dog, 
  3   preparing an annual report of the monitoring programs 
  4   in place and their results and ensure that 
  5   information concerning the project is made publicly 
  6   available.  In this regard, such an agency could be 
  7   tasked with holding regular forums to educate the 
  8   public about continuing developments concerning this 
  9   project and also elicit participation and input from 
 10   the public in order to enhance the development of 
 11   monitoring programs.  This may also go to addressing 
 12   the issues of trust and credibility that have come up 
 13   during this hearing. 
 14               Given the concerns expressed during the 
 15   hearing by participants regarding the Cumulative 
 16   Effects Assessment, this independent monitoring 
 17   agency could also be tasked with preparing periodic 
 18   reports on cumulative effects, essentially taking a 
 19   longer view of environmental effects monitoring and 
 20   reviewing the performance of project activities as 
 21   compared to the predictions made in the EIS. 
 22               Due to the persistent concerns regarding 
 23   the cumulative effects assessment, the cumulative 
 24   effects methodology relied upon by the proponents 
 25   should be rigorously tested and regularly reviewed.  
07349
  1   This could occur as part of the independent 
  2   monitoring program activities.  Regardless of who is 
  3   doing this monitoring, there should be some regular 
  4   reporting as to both the adequacy of the methodology 
  5   chosen as well as the incidence of cumulative 
  6   effects, the degree of mitigation required and the 
  7   success of mitigation measures implemented. 
  8               Further, Dr. Duinker, who has lately 
  9   become a star of this hearing, should be contacted 
 10   and a report based on his assessment of the 
 11   cumulative effects process in the EIS should be 
 12   requested.  It would be instructive for the 
 13   evaluation of this project and future project 
 14   planning to know what praise or criticisms he had 
 15   concerning the methodology chosen. 
 16               It should also be considered whether 
 17   large scale land use planning is appropriate for this 
 18   region as it is undoubtedly going to see further 
 19   resource development in the future.  Land use on a 
 20   broader scale than the resource management area may 
 21   need to be considered and other interests may need to 
 22   be invited to the discussion table.  Given the 
 23   difficulty in determining thresholds for VECs, 
 24   perhaps it is wise to start developing acceptable 
 25   thresholds for resource development and change in the 
07350
  1   northern boreal region before the die is 
  2   irretrievably cast and some unmitigable threshold 
  3   crossed.  Having a design incorporating the concerns 
  4   and advice of many stakeholders may help to control 
  5   the extent of environmental change in the area and 
  6   avoid any future problems. 
  7               As suggested by Dr. Shaeffer, the 
  8   benefits of this project should be more than just 
  9   economic given the environmental and social problems 
 10   occurring in the region due to past Hydro 
 11   developments.  There exists an opportunity to 
 12   contribute to science and to further the 
 13   understanding of the various VECs as well as other 
 14   important environmental issues.  Extensive applied 
 15   research as well as peer-reviewed research should be 
 16   performed.  Such research should be made publicly 
 17   available either by the proponents, through an easily 
 18   accessible medium, or by an independent monitoring 
 19   agency.  
 20               And as I said, the main attraction is 
 21   coming.  
 22               THE CHAIRMAN:  Does that complete your 
 23   presentation?  Mr. Mayer.
 24               MR. MAYER:  Just on the issue of the 
 25   independent monitoring, I recognize that the system 
07351
  1   set up in the NWT appears to be an energy type or at 
  2   least a resource type monitoring system.  How would 
  3   your client look upon an expanded role for the Clean 
  4   Environment Commission, with the added extra 
  5   resources that would obviously be necessary, as the 
  6   independent monitor for all projects which affect the 
  7   environment?
  8               MR. WILLIAMS:  We would have to undertake 
  9   an answer to that, Mr. Mayer.  I see looks of neither 
 10   puzzlement nor bemusement back there so I'm not sure 
 11   we have instructions.  
 12   
 13   (UNDERTAKING CAC/MSOS 96:  Advise of client's views 
 14   to an expanded role for the Clean Environment 
 15   Commission as the independent monitor for all 
 16   projects which affect the environment)
 17   
 18               MR. MAYER:  Just one quick follow-up 
 19   then.  When you're considering the answer which 
 20   you've just undertaken to give us on your client's 
 21   position in that regard, you do make, on the NFAAT 
 22   side, a very clear recommendation that the PUB should 
 23   monitor the economic advantages, et cetera.  And I'm 
 24   wondering why it would be different, on the 
 25   environmental side, if the CEC were put in a position 
07352
  1   and given the necessary resources to monitor such 
  2   follow-up.
  3               MS. POLLITT-SMITH:  I haven't addressed 
  4   my mind to it.
  5               MR. WILLIAMS:  We'll get instructions, 
  6   Mr. Mayer, and we'll reply in writing by the end of 
  7   the day.  
  8   
  9   (UNDERTAKING CAC/MSOS 97:  Advise why it would be 
 10   different, on the environmental side, if the CEC were 
 11   put in a position and given the necessary resources 
 12   to monitor the economic advantages)
 13   
 14               MR. WILLIAMS:  Thank you, Mr. Chairman 
 15   and members of the panel.  Oh, sorry.
 16               THE CHAIRMAN:  Ms. Avery Kinew.  
 17               MS. AVERY KINEW:  Thank you for your 
 18   thoughtful recommendations, presentation.  I'm just 
 19   wondering in your recommendations on the environment 
 20   about large scale land use planning and your 
 21   peer-reviewed applied research, where is traditional 
 22   knowledge, Treaty and Aboriginal rights?
 23               MS. POLLITT-SMITH:  Well, I can't speak 
 24   to exactly the model but I mean one would assume that 
 25   would be applied in terms of bringing certain 
07353
  1   stakeholders to the table in land use planning.  You 
  2   would be including interested parties such as -- 
  3               MS. AVERY KINEW:  More than stakeholders?
  4               MS. POLLITT-SMITH:  Yeah, people that are 
  5   like interested in the region.  Like it's just a 
  6   matter of finding people that have an interest at 
  7   stake there and bringing them to the table to I think 
  8   design a plan for how that region should progress 
  9   instead of willy-nilly putting operations in there 
 10   and then finding out what happens.
 11               MS. AVERY KINEW:  Did your clients happen 
 12   to see conflict between applied research and western 
 13   research and traditional knowledge during the course 
 14   of the hearings?  Did they discuss it at all?
 15               MS. POLLITT-SMITH:  I don't think that's 
 16   been addressed.  But we can provide an answer to 
 17   that.
 18               MS. AVERY KINEW:  Okay, thank you.
 19   
 20   (UNDERTAKING CAC/MSOS 98:  Advise if the CAC/MSOS 
 21   clients happened to see conflict between applied 
 22   research and western research and traditional 
 23   knowledge during the course of the hearings, if they 
 24   discussed it at all)
 25   
07354
  1               THE CHAIRMAN:  Thank you.  Mr. Grewar.
  2               MR. GREWAR:  Mr. Chairman, just a few 
  3   numbers to assign to keep the record straight.  We 
  4   will assign the closing argument of CAC/MSOS Book of 
  5   References as CAC/MSOS 1012.  
  6   
  7               (EXHIBIT CAC/MSOS 1012:  Closing Argument 
  8               - June 8, 2004 - Book of References)
  9   
 10               MR. GREWAR:  We'll refer to the 
 11   "Overview: Uncertainty" as just presented as CAC/MSOS 
 12   1013.  
 13   
 14               (EXHIBIT CAC/MSOS 1013:  Speaking Notes:  
 15               Overview: Uncertainty)
 16   
 17               MR. GREWAR:  And I think for continuity 
 18   sake, and for the record, we could perhaps assign an 
 19   exhibit number to what we know is coming, which is 
 20   the full document on the EIS as CAC/MSOS 1014.
 21   
 22               (EXHIBIT CAC/MSOS 1014:  Written          
 23               Commentary on Environmental Impact
 24               Statement - CAC/MSOS)
 25   
07355
  1               THE CHAIRMAN:  Okay.  
  2               MR. GREWAR:  And we have it now, Mr. 
  3   Chairman.  So we'll have that assigned and we'll 
  4   distribute that document.  
  5               THE CHAIRMAN:  We have one more closing 
  6   statement this morning.  Because the Boreal Forest is 
  7   not presenting until tomorrow, perhaps we can have 
  8   the luxury of a little longer break.  We can adjourn 
  9   for the break at reconvene at quarter to 11:00.  
 10   
 11               (PROCEEDINGS RECESSED AT 10:27 A.M. and
 12               RECONVENED AT 10:51 A.M.)
 13   
 14               THE CHAIRMAN:  Ladies and gentlemen, 
 15   getting ready to carry on with Dr. Miller.  Dr. 
 16   Miller, you may proceed. 
 17               MR. MILLER:  All right.  Thank you again 
 18   for the opportunity.  You have written documents 
 19   there and basically, because some of the points are 
 20   somewhat detailed, I wanted you to have a written 
 21   record of this.  There may be points where I skip the 
 22   text.  And one editing principle I had was if the 
 23   word "gigawatt hour" appears in the paragraph, I'll 
 24   probably skip it, but there's one exception which is 
 25   to that principle. 
07356
  1               So TREE and RCM are non-government 
  2   organizations committed to the advancement of a more 
  3   sustainable society in which our planet's natural 
  4   endowments of living and non-living systems and 
  5   resources are valued, respected and conserved.  
  6   Recognizing that this natural legacy is finite and 
  7   subject to degradation and depletion, we promote 
  8   eco-efficiency, improving the ratio of social 
  9   benefits to environmental harms and resource 
 10   depletion, as an essential pillar of a sustainable 
 11   society. 
 12               In our presentation on May 13th, we 
 13   argued that concern for the environment and long-run 
 14   sustainability generate a social imperative first for 
 15   energy conservation and efficiency measures, and 
 16   second, for least-impact generation options. 
 17               We also noted that Canada's standing, 
 18   relative to other OECD countries, in per capita 
 19   energy consumption, 27th out of 28th -- ranked from 
 20   lowest to highest, Mr. Mayer -- and energy 
 21   efficiency, 28 out of 29, ranked from least to most 
 22   energy used per dollar of GDP, indicates that we are 
 23   global energy hogs.  Canada's energy use is 50 per 
 24   cent higher than countries with similar climates, 
 25   such as Sweden.  These figures intensify the 
07357
  1   conservation imperative and pose the question, to 
  2   what extent is our socioeconomic climate well-adapted 
  3   to promote energy conservation? 
  4               High energy usage should provide a 
  5   powerful incentive and opportunity for energy 
  6   conservation.  But we concluded on the basis of our 
  7   experience in the 2002 Manitoba Hydro rate hearing 
  8   before the PUB that Manitoba's poor showing is not 
  9   simply owing to our physical climate and geography,  
 10   rather it is attributable in part to perverse 
 11   economic incentives, inadequate conservation 
 12   investments and regulations and policy failures.  
 13               To simplify somewhat, as a society, 
 14   instead of looking at our high usage and asking how 
 15   can we achieve the same social benefits more 
 16   efficiently with less energy consumption, we have 
 17   asked instead how can we keep rates low?  To do this, 
 18   we have been prepared to divert great sums of 
 19   Manitoba's wealth in the form of foregone taxes and 
 20   allocation of export earnings to subsidize domestic 
 21   energy rates.  Indeed, part of the Wuskwatim 
 22   justification is to be able to maintain that subsidy 
 23   in order to keep rates low.  Because low rates to 
 24   consumers have trumped and to some extent replaced 
 25   energy efficiency goals, it is no wonder that 
07358
  1   Canada's energy profile has continued to worsen 
  2   relative to other OECD countries. 
  3               Despite the above shortcomings in 
  4   application, we note more optimistically that in 
  5   Manitoba, the social imperative to conserve is 
  6   enshrined in the Manitoba Hydro Act and the 
  7   Sustainable Development Act, as we discuss in the 
  8   next section.  Thus TREE and RCM have intervened in 
  9   these hearings in response to the social imperative 
 10   and legal requirement to prioritize conservation and 
 11   least-impact generation alternatives.  Our 
 12   determination to intervene was strengthened by 
 13   consideration of Canada and Manitoba's poor showing 
 14   in global comparisons and failures in resource 
 15   pricing and energy policies to promote conservation. 
 16               I'll now discuss that legal framework.  
 17               In Section 2 of the Manitoba Hydro Act, 
 18   which provides a legal foundation for Manitoba Hydro, 
 19   it is stated, 
 20                  "The purposes and objects of this Act 
 21                  are to provide for the continuance of 
 22                  a supply of power adequate for the 
 23                  needs of the province, and to engage 
 24                  in and to promote economy and 
 25                  efficiency in the development, 
07359
  1                  generation, transmission, 
  2                  distribution, supply and end-use of 
  3                  power."  
  4               The Sustainable Development Act in 
  5   Section 2 indicates that, 
  6                  "The purpose of this Act is to create 
  7                  a framework through which sustainable 
  8                  development will be implemented in the 
  9                  provincial public sector and promoted 
 10                  in private industry and in society 
 11                  generally."  
 12               And the public sector includes, in the 
 13   definition following, Manitoba Hydro, the CEC and the 
 14   Public Utilities Board.  So all have a legislated 
 15   obligation to assess their activities by the 
 16   principles of sustainability. 
 17               Appended to the Sustainable Development 
 18   Act are principles and guidelines of sustainable 
 19   development, two schedules.  The one that may be most 
 20   relevant to our intervention is the guideline for the 
 21   efficient use of resources.  Which means, 
 22                  "Encouraging and facilitating 
 23                  development and application of systems 
 24                  for proper resource pricing, demand 
 25                  management and resource allocation 
07360
  1                  together with incentives to encourage 
  2                  efficient use of resources; and 
  3                  employing full-cost accounting to 
  4                  provide better information for 
  5                  decision makers." 
  6               There is a stewardship principle which 
  7   speaks of the long run and intergenerational equity.  
  8               And finally a principle of global 
  9   responsibility.  Manitobans should think globally 
 10   when acting locally.  
 11               Take these three principles together and 
 12   they lead to this implication, that Manitoba Hydro's 
 13   energy planning should be developed against a 
 14   backdrop of global long-run energy scenarios that 
 15   include analyses of resource availability, limits and 
 16   constraints, environmental loadings and impacts, and 
 17   socioeconomic consequences of alternative paths that 
 18   can be taken.  Planning should identify the preferred 
 19   sustainable futures to which the utility can 
 20   contribute.  Efficiency improvements will be a 
 21   primary component of any preferred path. 
 22               Because ever-rising trends in energy 
 23   consumption and production cause incremental harms 
 24   and face global limits, a sustainable scenario must 
 25   contemplate the levelling of and possible decline in 
07361
  1   available energy and thus in aggregate customer 
  2   consumption.  Therefore, we argued in our May 13th 
  3   testimony that it's not too soon for Manitoba Hydro 
  4   to sketch an end-game for the province once 
  5   hydroelectric potential on the Nelson is fully 
  6   installed.  3,700 megawatts of the existing Nelson 
  7   River capacity came on line in the short period from 
  8   1974 to 1990.  A similar building binge currently 
  9   contemplated by Manitoba Hydro and the provincial 
 10   government could come close to completing the job in 
 11   a comparably short time.  Long-range planning should 
 12   address that issue. 
 13               For these reasons, alternative resource 
 14   plans are to be assessed for their sustainability and 
 15   eco-efficiency.  That is achieving the greatest 
 16   long-run human benefits with the least degradation of 
 17   resources and the environment, both locally and 
 18   globally.  We also believe that conservation 
 19   alternatives hold the best prospects for long-run 
 20   economic stimulation and jobs and the improvement of 
 21   Manitobans' homes, institutions and businesses. 
 22               So those are the broad principles that 
 23   have guided our intervention.  Now I'd like to refer 
 24   more particularly to the body of evidence that we 
 25   have presented and this will be done in a bullet form 
07362
  1   combining our various points of evidence, some 
  2   observations on them and conclusions. 
  3               We asked Torrie Smith Associates to 
  4   provide an analysis of the Need For and Alternatives 
  5   To Wuskwatim to see if a case could be made for more 
  6   aggressive DSM programs and policies combined with 
  7   distributed generation, including non-utility 
  8   generation, which might provide a viable alternative 
  9   to the Wuskwatim advancement project and would better 
 10   satisfy the principles of sustainability.  We also 
 11   provided evidence from our 2002 intervention before 
 12   the Public Utilities Board. 
 13               What I've done is to try to summarize 
 14   various points under the headings of the NFAAT 
 15   analysis and sustainability, load forecasting, DSM 
 16   and non-utility generation analysis and programming, 
 17   alternatives to Wuskwatim and perverse incentives and 
 18   subsidies. 
 19               First, the NFAAT analysis.  Regardless of 
 20   possible future energy requirements of Manitobans, 
 21   Wuskwatim advancement is not needed at this time for 
 22   domestic power supply as indeed Manitoba Hydro 
 23   acknowledges.  
 24               The need for Wuskwatim advancement, as 
 25   defined in the filing, is to maintain, in the face of 
07363
  1   rising domestic consumption, sufficient electricity 
  2   surplus to domestic use to supply what they call the 
  3   estimated on-peak export market which is represented 
  4   as a line of 10,500 gigawatt hours.  There is my 
  5   exception.                  
  6               Thus an NFAAT analysis of Wuskwatim 
  7   advancement should examine, compare and evaluate in 
  8   some depth alternative portfolios containing 
  9   conservation and generation options capable of 
 10   meeting this need, some of which might include 
 11   Wuskwatim and some not. 
 12               Manitoba Hydro, in one of its responses, 
 13   gave a definition of "alternatives to" and it 
 14   involves a demonstration that the project is more 
 15   beneficial than other projects, either similar in 
 16   nature or significantly different but in all cases, 
 17   serving to meet the same need.  And we accept that.  
 18   But we claim that they haven't done that.  Hence, 
 19   they haven't done an NFAAT analysis by their own 
 20   definition. 
 21               What they have provided instead are 
 22   sensitivity analyses to show that Wuskwatim is still 
 23   viable under a range of assumptions but that's not a 
 24   substitute for an NFAAT analysis that shows it is the 
 25   preferred option or part of a preferred portfolio. 
07364
  1               In the most recent Manitoba Hydro 
  2   rebuttal of TREE/RCM's interrogatory responses, there 
  3   is considerable new information and analysis but 
  4   there is nothing new in the thinking or approach to 
  5   the NFAAT question.  No alternative strategies for 
  6   meeting the objective of Wuskwatim advancement are 
  7   identified or analyzed, except to the extent the 
  8   rebuttal does contain comments on the one alternative 
  9   that was put before the CEC, our illustrative 
 10   scenario. 
 11               The identification and comparative 
 12   analysis, including risk analysis of such 
 13   alternatives, should be an important element of 
 14   Manitoba Hydro's investment planning strategy as well 
 15   as the basis for the analysis of the Need For and 
 16   Alternatives To Wuskwatim advancement.  What is 
 17   needed is a proactive and thoughtful approach to the 
 18   market, focused on the horizon, driven by the 
 19   Principles of Sustainable Development and informed by 
 20   a deep understanding of the business and 
 21   technological possibilities on the demand side. 
 22               So those are a summary of points in the 
 23   evidence and I've interjected a comment here.  We 
 24   think that that critique is essentially correct, that 
 25   an NFAAT analysis has not been done and it is 
07365
  1   confirmed by the CAC/MSOS witness which presented a 
  2   description of the process in terms of an analysis of 
  3   alternative portfolios relying on a document which I 
  4   believe came from the B.C. Utilities Commission.  
  5               What we would like to add to that general 
  6   picture of what an NFAAT analysis is is a linkage to 
  7   the principles of sustainability.  We remind you of 
  8   the earlier part of the brief that these are legally 
  9   mandated principles for the operation of the utility 
 10   and so the NFAAT analysis should be well-grounded in 
 11   them. 
 12               This should include longer range energy 
 13   scenarios that address limits to global energy 
 14   supplies, limits to Manitoba's hydroelectric capacity 
 15   and transitions from increasing energy consumption 
 16   and production trends to a more sustainable 
 17   containment of consumption within long-run 
 18   sustainable supplies. 
 19               We realize that you can't attach precise 
 20   numbers to some of these longer range things but you 
 21   can certainly consider them and do order of magnitude 
 22   estimates and do some strategic planning in terms of 
 23   them.
 24               Moreover, Manitoba conceives that 
 25   Wuskwatim is the first in a series of dams to provide 
07366
  1   a succession of construction employment opportunities 
  2   which would rapidly use up the remaining sites with 
  3   hydroelectric potential on the Burntwood and Nelson 
  4   rivers.  Thus, it is not too soon to ask Hydro to 
  5   provide an end-game analysis for energy supply and 
  6   demand when the feasible and economic potential is 
  7   exhausted.  The continuous growth in energy 
  8   production and consumption is not a sustainable 
  9   trajectory. 
 10               Likewise, the CEC review of any 
 11   submission by Hydro should attend to the same 
 12   principles and guidelines. 
 13               While the export of power is contemplated 
 14   in the Manitoba Hydro Act, provision of power for 
 15   export must adhere to these same principles of 
 16   sustainability.  And we note that the case for export 
 17   would be stronger if power were to be sold into 
 18   jurisdictions likewise committed to sustainability 
 19   including adherence to the Kyoto protocol for 
 20   greenhouse gas reduction.  Otherwise, there is a 
 21   concern that the exported power might be incremental 
 22   to unsustainable fossil fuel generation rather than 
 23   displacing it, alleviating a potential crunch. 
 24               Likewise, the case for export would be 
 25   stronger if Manitoba Hydro increased export capacity 
07367
  1   was to be used to firm wind generation.  Otherwise, 
  2   there is a concern that the exported power might 
  3   displace wind generation in export markets rather 
  4   than supporting this relatively low impact 
  5   technology.  However, the operational design of 
  6   Wuskwatim precludes significant storage and thus 
  7   firming capacity at this site. 
  8               In addition, the case for providing 
  9   socioeconomic benefits to Manitoba through export 
 10   earnings would be stronger were the export earnings 
 11   not to be used to subsidize the wastage of energy in 
 12   Manitoba, which the current rate design and cost 
 13   allocation methods encourage.  
 14               For example, the largest customers pay 
 15   less than 2 cents a kilowatt hour for incremental 
 16   energy consumed as long as it does not add to demand 
 17   from their rate schedules.  This is far from the 
 18   marginal cost of new generation and transmission and 
 19   of export earnings foregone and less than a third of 
 20   the 6.15 cents a kilowatt hour which Manitoba Hydro 
 21   values DSM savings. 
 22               Do we want to increase subsidies when 
 23   they are of that magnitude or even maintain them at 
 24   that level? 
 25               The next topic is load forecasting.  
07368
  1   Manitoba Hydro adopts a forecasting approach to 
  2   planning which extrapolates the future on the basis 
  3   of high level econometric trends as opposed to a 
  4   scenario approach based on end-use analyses under 
  5   varying assumptions about changing relationships 
  6   between trends like population GP and end-use 
  7   variables like how much electricity is used in a 
  8   manufacturing plant or to light an office.  
  9               The very term "load forecasting" reflects 
 10   the passive approach to electricity demand, something 
 11   to be forecast, like the weather, that characterizes 
 12   the traditional utility business culture.  Ideally, 
 13   load forecasting should be based upon scenario 
 14   analyses as an end-use model.  
 15               The electricity market is in a very 
 16   dynamic state and once stable relations between 
 17   demographic and economic activity and electricity 
 18   demand are changing rapidly.  Business planning for 
 19   sustainable development requires thinking about 
 20   alternative futures, backcasting rather than 
 21   forecasting, as a central element of investment 
 22   planning strategies. 
 23               The latter approach is to be preferred 
 24   because it is less deterministic, provides a richer 
 25   understanding of the factors affecting energy 
07369
  1   consumption and can guide energy service 
  2   opportunities and DSM interventions. 
  3               When Manitoba Hydro produces variations 
  4   in the load forecast, medium low and medium high for 
  5   example, they do so by varying the underlying 
  6   demographic and economic inputs to the forecast.  
  7   They do not look at variations in the relationship 
  8   between those inputs and the demand for electricity, 
  9   even though these variations are of equal or greater 
 10   importance to the economic input variables in 
 11   determining the final demand for electricity. 
 12               A low, medium low forecast is based on 
 13   expectations of a flagging economy, not greater 
 14   efficiency.  
 15               A basic prerequisite for improved 
 16   electricity demand analysis at Manitoba Hydro is the 
 17   development of a fully calibrated end-use model of 
 18   energy demand in Manitoba.  It should be 
 19   comprehensive, including all sectors and all fuels 
 20   and electricity.  It should be designed to support 
 21   both strategic planning and scenario analysis and the 
 22   development of integrated customer-focused marketing 
 23   strategies. 
 24               The rebuttal contains, for the first time 
 25   from Manitoba Hydro, a detailed subsector breakdown 
07370
  1   of the 2002 load forecast.  While this is the first 
  2   step toward an end-use analysis of the load forecast 
  3   and to the development of alternative scenarios of 
  4   future electricity demand, Manitoba Hydro has not 
  5   taken those next steps.  Instead the subsector 
  6   disaggregation is used only for a defence of the 
  7   status quo, the same old approach to load forecasting 
  8   and the same old assumptions about indefinite growth. 
  9               There is nothing in Manitoba Hydro's 
 10   rebuttal that refutes our conclusion that the 2002 
 11   General Service Mass Market Forecast, which is all 
 12   the commercial and industrial customers minus what 
 13   they call the top customer group, the really heaviest 
 14   users, is relatively high given the economic forecast 
 15   that is driving it.  Manitoba Hydro would have 
 16   conceded this point if they had tried to do a 
 17   complete end-use calibration of this forecast.  They 
 18   would have found, as TSA did, that the load forecast 
 19   is high for the level of activity in the economic 
 20   forecast.  Unless commercial and institutional floor 
 21   area suddenly starts growing faster than output, 
 22   combined with a simultaneous reversal in the 
 23   long-term trend to higher electricity productivity in 
 24   general manufacturing, the level of electricity 
 25   demand in the 2002 basic forecast does not correspond 
07371
  1   to the demographic and economic growth assumptions 
  2   that are driving it. 
  3               One of the central reasons for presenting 
  4   the adjusted load forecast was to illustrate the 
  5   sensitivity of the final demand for electricity to 
  6   changes in the assumed relationships between economic 
  7   activity and electricity demand.  While Manitoba 
  8   Hydro's medium low forecast is driven by a fairly 
  9   strong negative economic projection, an equally low 
 10   future demand for electricity could come about 
 11   without assuming an economic slowdown but by making a 
 12   few modest, and we would argue, justifiable changes 
 13   in the activity and energy intensities of the 
 14   commercial and general manufacturing sectors.  
 15               The point is not whether the particular 
 16   assumptions made in our illustrative scenarios are 
 17   precisely correct, the point is that any attempt to 
 18   produce an end-use calibration of Manitoba Hydro's 
 19   load forecast will lead to the conclusion that the 
 20   2002 load forecast is relatively high for the level 
 21   of economic activity assumed.  This in turn leads to 
 22   the conclusion that the size of the projected export 
 23   gap that Manitoba Hydro has put forward as the 
 24   underlying justification for Wuskwatim advancement 
 25   has been overstated. 
07372
  1               Now I'll skip to my comment.  The load 
  2   forecast is the most contentious and technical point 
  3   of divergence between Manitoba Hydro and Torrie Smith 
  4   Associates.  Unfortunately, we have been unable to 
  5   resolve these difficulties.  Mr. Torrie notes that 
  6   Manitoba Hydro's second rebuttal brings to bear new 
  7   data subsequent to the integration of Winnipeg Hydro 
  8   and there are also dubious mathematical methods and 
  9   assumptions in the new material that are untested in 
 10   the CEC process and which we are not in a position to 
 11   thoroughly analyze.
 12               So I wish we could have a stronger 
 13   conclusion there but that's our current assessment of 
 14   where the situation lies. 
 15               On to DSM analysis and programming.  
 16   There are more technically feasible economic 
 17   opportunities than Manitoba Hydro has captured in its 
 18   analysis of DSM economic potential because, first, a 
 19   higher threshold price than 6.15 cents per kilowatt 
 20   hour for conservation measure is warranted because of 
 21   ancillary benefits of DSM.  And secondly, because 
 22   savings are cost -- additional savings are cost 
 23   effective even at the 6.15 cent threshold. 
 24               The gap between the economic DSM 
 25   potential and what Manitoba Hydro deems to be 
07373
  1   achievable reflects a large pent-up opportunity for 
  2   more aggressive state-of-the-art DSM programming that 
  3   could achieve several times the energy savings 
  4   projected in the current resource plan. 
  5               Contrary to the implication in Manitoba 
  6   Hydro's rebuttal to TREE/RCM interrogatories, the 
  7   TREE/RCM analysis takes full account of the impact on 
  8   DSM potential of adjustments to the business as usual 
  9   or reference projection.  Higher demand in the 
 10   reference projection also means higher DSM potential, 
 11   providing a dampening effect of load forecast 
 12   adjustments.  In other words, their model does adjust 
 13   the DSM estimates as the basic forecast goes up and 
 14   down. 
 15               State-of-the-art or third generation 
 16   demand-side management programming has the following 
 17   features and is elaborated in the indicated 
 18   interrogatory replies.  Manitoba Hydro's commitment 
 19   is compared to other North American utilities.  In 
 20   their rebuttal, Manitoba Hydro argues that recent and 
 21   projected increases in their DSM programming should 
 22   be compared with the commitments made by other 
 23   utilities in 2000 and earlier.  But clearly, 
 24   comparisons will be more meaningful when data for the 
 25   same years are compared as was done in our TREE/RCM 
07374
  1   NFAAT-9.  
  2               The spending on DSM in the leading North 
  3   American utilities has been steadily increasing but 
  4   the year 2000 was the most recent for which 
  5   comprehensive comparative statistics were available. 
  6               Skip the gigawatt hours.  
  7               The deployment of the maximum economic 
  8   potential for electricity efficiency improvement is a 
  9   fundamental prerequisite for any sustainable energy 
 10   future.  Yet Manitoba Hydro is seeking permits to 
 11   expand on the supply side without committing to 
 12   development of the full economic potential for DSM in 
 13   Manitoba and without offering any formal assurances 
 14   or convincing arguments that there could not be 
 15   another ebb in the utility's commitment to DSM after 
 16   the dam is under construction and more is known about 
 17   the timelines of other developments in the power 
 18   market.  Even the incremental updating of the Power 
 19   Smart plan is not scheduled for completion until 
 20   later this summer.
 21               At the same time, the announcement of 
 22   Efficiency Manitoba has introduced significant 
 23   uncertainty with respect to the future structure of 
 24   public investment, business organization and delivery 
 25   channels for DSM in Manitoba.  For example, 
07375
  1   Efficiency Manitoba has a mandate to deliver an 
  2   integrated program of resource conservation and 
  3   efficiency and there are strong arguments for folding 
  4   at least some aspects of the current Power Smart 
  5   program into this new approach.  While this may be a 
  6   desirable structure for public investment in 
  7   demand-side management, the transition from Hydro to 
  8   Efficiency Manitoba holds the potential to be 
  9   disruptive of DSM delivery capacity in the short 
 10   term.  
 11               In addition, long-term business planning 
 12   at Manitoba Hydro will be or should be profoundly 
 13   influenced by the definition of the relationship 
 14   between the utility and Efficiency Manitoba.  And 
 15   until that definition is made clear, it represents an 
 16   impediment to business planning for Manitoba Hydro. 
 17               One approach to the problem of Manitoba 
 18   Hydro's failure to specify the level of contribution 
 19   of DSM or to explore scenarios for maintaining export 
 20   capability with increased reliance on DSM would be 
 21   simply to wait for that analysis to be done.  If the 
 22   update Power Smart program is on schedule for 
 23   completion in August, which itself is a test of the 
 24   seriousness of Manitoba Hydro's commitment, then it 
 25   will soon be possible for the CEC to assess the 
07376
  1   quantitative role of DSM on the Need For and 
  2   Alternatives To Wuskwatim advancement.  The DSM 
  3   resource option could be protected from the 
  4   downgrading it has received in the past from Manitoba 
  5   Hydro by making Wuskwatim advancement conditional on 
  6   a binding commitment to specified DSM investment and 
  7   performance targets and timetables.  
  8               In addition to the analysis of potential 
  9   electricity savings and their costs, it is also 
 10   important to examine the social aspects of DSM 
 11   programming.  These include the employment 
 12   opportunities from energy retrofits, the changes in 
 13   quality of life from living in an energy efficient 
 14   home rather than one that is cold and draughty and 
 15   the barriers to assessing DSM programming for various 
 16   constituencies, including renters, Northern 
 17   Aboriginal communities and the poor.  At present, 
 18   there is, in practice, little or no Power Smart 
 19   programming appropriate for First Nation communities 
 20   and low income communities. 
 21               Recent Hydro-funded research initiatives 
 22   such as Healthy Housing in West Broadway are 
 23   important first steps to examine these issues but 
 24   these need to guide much more extensive and 
 25   appropriately tailored conservation opportunities for 
07377
  1   the poor.  While Manitoba Hydro has several energy 
  2   saving programs aimed at residential consumers in 
  3   general, many of these programs are not effectively 
  4   reaching community groups and low income earners in 
  5   First Nation communities or inner city 
  6   neighbourhoods.  
  7               I'll add some comments to these points. 
  8               In its two rebuttals, Hydro has given the 
  9   strongest defence of its programming that we have 
 10   seen far beyond the perfunctory treatment in the 2002 
 11   PUB hearing.  And that pleases us that there are so 
 12   many measures recently adopted or under consideration 
 13   and hope that the momentum will not again be lost as 
 14   it was in the early 1990s.  We are disappointed that, 
 15   after all these years, so few houses are constructed 
 16   to the cost effective R2000 standard and lament the 
 17   many lost opportunities in new construction.  
 18               Visible signs of a longer range corporate 
 19   and provincial commitment to DSM, and many of these 
 20   remarks apply to provincial policies, would be first 
 21   an investment in training for the building trades to 
 22   conduct retrofits comparable to the level of training 
 23   investment for Wuskwatim.  And two, an investment in 
 24   innovation design and demonstration for 
 25   cost-effective conservation measures comparable to 
07378
  1   the engineering investment in Wuskwatim.  We haven't 
  2   seen these signs yet. 
  3               There follows, in bullet form, a list of 
  4   actions that Hydro could take to improve the 
  5   acceptance and utilization of DSM programs.  I'll 
  6   just leave those for your attention.  They had been 
  7   reiterated a number of times in the evidence. 
  8               A related topic is non-utility 
  9   generation.  We were looking at DSM and wind.  Most 
 10   of our focus has been on the DSM issue but we tried 
 11   to attend to what was being said about the NUG, the 
 12   non-utility generation options including wind.  
 13               And given that 99 megawatt is right there 
 14   in the verge of being built and that the estimates 
 15   have been conservative and looking at the Minnesota 
 16   experience and the growth in wind developments in 
 17   other places, we don't think it's unreasonable to 
 18   contemplate five times that Sequoia development, 500 
 19   megawatts over the next decade.  We are not 
 20   predicting it but in planning future scenarios, it's 
 21   not an unreasonable scenario to include. 
 22               We note that the CAC/MSOS witnesses were 
 23   critical of the idea of Hydro investing its own 
 24   money, or our money, however you want to look at it, 
 25   in wind.  And presumably there are certain 
07379
  1   advantages, tax advantages or otherwise.  I mean if 
  2   we're not paying taxes in our utility, that's part of 
  3   the subsidy, then there wouldn't be the same tax 
  4   advantages I suppose.  So they recommended that Hydro 
  5   not undertake wind development themselves.  But they 
  6   did not recommend against adding wind to the Manitoba 
  7   system.  And in fact, encourage Hydro to develop a 
  8   wind development plan in corresponding detail to the 
  9   DSM planning process. 
 10               They also acknowledge that corporate 
 11   learning regarding wind generation would be valuable 
 12   and could be accommodated through a joint venture 
 13   arrangement with a private sector which would reduce 
 14   Hydro's risk exposure.  
 15               And we also heard the presentation from 
 16   MIPUG indicate they were looking somewhat jealously 
 17   at the arrangements that Sequoia had with the utility 
 18   to buy it at export-related prices whereas they only 
 19   get for their non-utility generation the tailblock 
 20   rate which, as we've already indicated, is heavily 
 21   subsidized at less than 2 cents.  So it's not 
 22   economic at that price.  But if they could be offered 
 23   a price closer to what the wind generation folks are 
 24   being offered, it might prove attractive. 
 25               This is a direct link between subsidies 
07380
  1   and non-utility generation, just as there's a link 
  2   between subsidies and DSM.  What's cost effective 
  3   from the standpoint of the customer depends on the 
  4   rates they are paying.  
  5               Next, alternatives to Wuskwatim.  In 
  6   various combinations with each other and with the 
  7   adjusted load forecast, a number of plausible 
  8   resource portfolios exist to supply the estimated 
  9   on-peak export market of 10,500 gigawatt hours.
 10               And this would be during the period of 
 11   Wuskwatim advancement and before because you can 
 12   launch your DSM initiatives much before the period is 
 13   when the dam would start generating. 
 14               So there are alternatives that have not 
 15   been identified and analyzed in Manitoba Hydro's 
 16   proposal. 
 17               These alternatives have a number of 
 18   advantages over the construction of Wuskwatim, the 
 19   value of which can only be properly assessed in an 
 20   integrated scenario analysis.  Of particular note in 
 21   comparison to Wuskwatim advancement is the ability of 
 22   the scenarios to deliver results beginning 
 23   immediately as compared with a lengthy construction 
 24   period for Wuskwatim, during which time it has only 
 25   negative cash flow for the utility.  Because of the 
07381
  1   present value of the DSM distributed generation based 
  2   alternatives, they compare favourably with Wuskwatim 
  3   advancement even at levels smaller than Wuskwatim's 
  4   output. 
  5               The TSA, Torrie Smith Associates, 
  6   scenarios are, as have been indicated a number of 
  7   times, illustrative and basically do demonstrate that 
  8   plausible alternatives exist.  But it's up to the 
  9   corporate resources of Hydro in its modelling to 
 10   develop these scenarios in full and provide the 
 11   comparative analyses. 
 12               I'll simply comment that the readjustment 
 13   of Mr. Torrie's baseline for its reference scenario, 
 14   this is in response to the most recent rebuttal for 
 15   Manitoba Hydro, may reduce somewhat the surpluses 
 16   achievable for export from the original estimations 
 17   that were made.  There is a need to re-estimate 
 18   these, which we are unable to do, and that our 
 19   undertakings 84 and 85 illustrate possible adjustment 
 20   downwards of the existing resources after subtracting 
 21   400 gigawatt hours from the baseline in their 
 22   original adjusted forecast.  And so that gives you a 
 23   partial somewhat adhoc analysis.  And basically at 
 24   this point, we were out of resources and that's as 
 25   far as we could take it. 
07382
  1               Finally, I want to address the topic of 
  2   perverse incentives and subsidies which has been 
  3   mentioned several times and which are the topics of 
  4   our interventions before the Public Utilities Board 
  5   in 2002 and currently.  And I'll simply make the 
  6   point that subsidy is counter -- subsidizing rates, 
  7   unless you do it in the right way, is counter to 
  8   conservation objectives.  It's part of that climate, 
  9   that social climate, that economic climate that is 
 10   hostile to conservation that may be a contributing 
 11   factor in explaining our level of energy usage and 
 12   wastage.  
 13               It is possible to stop subsidizing 
 14   wastage of energy while still trying to reduce 
 15   customer energy costs.  Two principal ways of doing 
 16   this are to redirect subsidies from rates to 
 17   conservation measures and from tailblock rates to 
 18   initial block rates and fixed charges.  It is thus 
 19   possible to do this in a revenue neutral way that 
 20   will lower the bills of conservers, raise the bills 
 21   of larger consumers, bring tailblock rates closer to 
 22   the marginal cost of energy and thus increase the 
 23   incentives and cost-effectiveness to consumers of 
 24   conservation measures.  
 25               So those are a series of observations 
07383
  1   drawing on the evidence, and in some cases, with 
  2   additional comment.  
  3               Finally, our recommendations.  First, 
  4   ensure that the principles and guidelines of 
  5   sustainability are integral to the Manitoba Hydro 
  6   mandate in all resource planning and operations.  
  7   These should guide the formulation of corporate and 
  8   program goals, strategic planning, investments and 
  9   performance measures.  As we indicated, this should 
 10   lead to an examination of long-range global energy 
 11   futures and Manitoba Hydro's role and 
 12   responsibilities in contributing to the more 
 13   sustainable of these. 
 14               In particular, Manitoba Hydro should 
 15   address the challenge of converting ever-rising 
 16   consumption and production trends to a course that 
 17   reflects the limits of renewable and non-renewable 
 18   energy supplies. 
 19               The NFAAT exercise, which Manitoba Hydro 
 20   failed to conduct for these hearings, should become 
 21   an integral part of resource planning, whether or not 
 22   it must be defended in a formal hearing. 
 23               Proper resource planning requires 
 24   appropriate models and databases with as much end-use 
 25   data for various energy sources as possible to 
07384
  1   integrate forecasting and scenario creation, 
  2   strategic planning, DSM programming and 
  3   sustainability review. 
  4               Manitoba Hydro should continue its recent 
  5   development of initiatives to create state-of-the-art 
  6   DSM programming with more ambitious targets that 
  7   reflect the urgency of getting rising consumption 
  8   trends under control and generate the accompanying 
  9   social and economic co-benefits. 
 10               Manitoba Hydro should also create a 
 11   detailed wind and NUG development plan with 
 12   appropriate policies and incentives attractive to 
 13   potential investors, as recommended by CAC/MSOS and 
 14   MIPUG. 
 15               As noted in earlier testimony, one 
 16   feature of the Wuskwatim project that RCM and TREE 
 17   applaud is the partnership with Nisichawayasihk Cree 
 18   Nation, past hydroelectric projects which benefitted 
 19   southern communities with energy, had 
 20   disproportionate negative impacts on northern 
 21   Aboriginal communities and ecosystems located near 
 22   projects, a partnership that exercises greater care 
 23   over local ecosystems and promises a share in the 
 24   dividends is certainly an improvement over the past. 
 25               At the same time, we note that 
07385
  1   partnership in dam building is a divisive issue 
  2   within and between Aboriginal communities.  We 
  3   believe that partnerships and training opportunities 
  4   built around community building and conservation 
  5   projects provide an alternative and less divisive 
  6   foundation for community development and improved 
  7   relations.  
  8               In any case, there is a need for more 
  9   effective targeted programming to benefit a variety 
 10   of customers who are unable to avail themselves of 
 11   current DSM programming. 
 12               Finally, it is important to stop 
 13   subsidizing the waste of energy in Manitoba.  Proper 
 14   resource pricing and incentives are an integral part 
 15   of sustainability strategies which have not yet 
 16   penetrated deeply into energy policy in Manitoba. 
 17               Now, these hearings are about Wuskwatim, 
 18   so I can't avoid saying something about that topic. 
 19               There is a lot of unfinished business 
 20   before Wuskwatim could proceed, even if it were 
 21   approved by this Commission.  There is need for 
 22   further collar data on the caribou range in areas 
 23   potentially affected by the dam and transmission 
 24   corridors.  There are needed consultations and 
 25   negotiations with a variety of affected communities 
07386
  1   including those centred at South Indian Lake and the 
  2   Manitoba Metis.  There is still a need for NCN to 
  3   decide if they wish to proceed and the federal and 
  4   provincial governments must complete their 
  5   constitutionally required consultations with affected 
  6   Aboriginal peoples.  
  7               Our evidence and arguments, and those 
  8   from the Consumers and Seniors as well, have also 
  9   indicated deficiencies in resource planning and the 
 10   absence of a proper NFAAT analysis.  Thus our 
 11   position is that while the unfinished business in 
 12   consultation and environmental assessment is being 
 13   completed, the unfinished business in resource 
 14   planning and NFAAT analysis should also be done and 
 15   reviewed by the CEC later this year.  The analysis 
 16   should incorporate as many of the elements of 
 17   recommendations 1 to 7 as possible and update the 
 18   planning of additional transmission and intertie 
 19   capacity, because that 10,500 gigawatt hour figure 
 20   was a defining limit to this process. 
 21               There are also appended a few other brief 
 22   comments from Mr. Torrie which we take to be more by 
 23   way of argument than evidence because he didn't do 
 24   recalculations and so on, but is addressing some of 
 25   the points in the rebuttal that he was unable to do 
07387
  1   on the stand when he was here.  
  2               So with that, I conclude my testimony or 
  3   argument.
  4               THE CHAIRMAN:  Thank you, Mr. Miller.  
  5   Mr. Mayer. 
  6               MR. MAYER:  Mr. Miller, firstly, thank 
  7   you for the presentation and thank you for proving 
  8   that you don't need a lawyer in order to properly 
  9   present a closing argument. 
 10               I am a little bit mystified, however, by 
 11   your comment on page 5 which says the operational 
 12   design of Wuskwatim precludes significant storage, 
 13   and thus firming capacity.  You're not recommending 
 14   the high head proposal, are you, that would in fact 
 15   provide the storage and firming capacity that you say 
 16   is missing?
 17               DR. MILLER:  No.  I think my concept of 
 18   eco-efficiency, the concept of eco-efficiency would 
 19   preclude that if you may gain additional 
 20   hydroelectric benefits but there would be a 
 21   significant environmental cost and it may not be 
 22   worth that cost.
 23               MR. MAYER:  But your discussion talks 
 24   about using hydroelectric power to firm and shape 
 25   wind energy and there's a lot of evidence before this 
07388
  1   Commission about that.  In your suggestion that you 
  2   need a storage facility in order to do that as 
  3   opposed to a run-of-the-river or even in this case a 
  4   modified run-of-the-river facility, have you 
  5   considered the possibility that Wuskwatim generation 
  6   displacing generation from facilities that have 
  7   storage capacities such as Grand Rapids and Kettle 
  8   Rapids, for example, which I believe not to mention 
  9   Lake Winnipeg Regulation, but have you considered 
 10   that in your whole process of using Hydro power to 
 11   firm and shape wind generation?
 12               DR. MILLER:  I would simply defer to 
 13   Hydro's experts on that and indeed I may get a 
 14   comment in their closing.
 15               MR. MAYER:  I have nothing further.
 16               THE CHAIRMAN:  Thank you, Mr. Miller.  We 
 17   thank you for a well-presented closing statement.  
 18   This concludes the final presentations for this 
 19   morning.  We see ourselves as a bit ahead of time 
 20   here but I guess that doesn't mean that lunch is 
 21   available.  So I guess we will reconvene at one 
 22   o'clock.  But before we leave, Mr. Grewar, you have 
 23   some filings to do?
 24               MR. GREWAR:  Yes, Mr. Chairman, one or 
 25   two.  First of all, for the record, the closing 
07389
  1   statement of TREE and RCM regarding the Need For and 
  2   Alternatives To Wuskwatim Advancement as TREE/RCM 
  3   1011.  That's TREE/RCM 1011.  
  4   
  5               (EXHIBIT TREE/RCM 1011:  Closing          
  6               Statement from TREE and RCM Regarding the 
  7               Need for and Alternative to Wuskwatim     
  8               Advancement)
  9   
 10               MR. GREWAR:  In addition, Mr. Chairman, 
 11   there were two documents that were supplied by the 
 12   Manitoba Metis Federation yesterday.  They were in 
 13   response to undertakings.  I did check the record, 
 14   though, and no undertaking numbers were assigned to 
 15   either one of these items.  These were items that 
 16   were requested and MMF agreed to provide them to the 
 17   panel.  One is the Athabasca Chipewyan First Nation 
 18   v. British Columbia Hydro and Power Authority.  It's 
 19   a citation.  It appears to be an Internet or an 
 20   electronic version of the document.  But this is the 
 21   decision of the Federal Court of Appeal.  And that 
 22   would be MMF 1005.  That was referred to during the 
 23   presentation on May 14th by the Manitoba Metis 
 24   Federation.  
 25   
07390
  1               (EXHIBIT MMF 1005:  Athabasca Chipewyan   
  2               First Nation v. British Columbia (Hydro   
  3               and Power Authority) 2001)
  4   
  5               MR. GREWAR:  And finally as MMF 1006 
  6   would be the excerpt from the Aboriginal Plant Use in 
  7   Canada's Northwest Boreal Forest.  This is the book 
  8   that was presented to the Commission.  And the 
  9   reference is a particular outline of the content of 
 10   the book and the table of contents and the specific 
 11   plants presumably that are discussed in the book.  
 12   And that would be MMF 1006.
 13   
 14               (EXHIBIT MMF 1006:  Aboriginal Plant Use  
 15               in Canada's Northwest Boreal Forest       
 16               (excerpt) Robin J. Marles, Christina      
 17               Clavelle, Leslie Monteleone, Natalie      
 18               Tays, Donna Burns. Natural Resources      
 19               Canada)
 20   
 21               THE CHAIRMAN:  Thank you.  That completes 
 22   your comments, Mr. Grewar?  
 23               MR. GREWAR:  Yes, Mr. Chairman.  Thank 
 24   you.
 25               THE CHAIRMAN:  Thank you.  Therefore, we 
07391
  1   will adjourn and be back to continue at one o'clock. 
  2   
  3               (PROCEEDINGS RECESSED AT 11:47 A.M.
  4                AND RECONVENED AT 1:00 P.M.)
  5   
  6               THE CHAIRMAN:  Ladies and gentlemen,
  7   if we all find our places we will be able to
  8   proceed with this afternoon's presentations.
  9               I call upon Mr. Baker.  You are going
 10   to be making the presentation -- or closing
 11   statement, I should say.
 12               MR. BAKER:  This is the
 13   O-Pipon-Na-Piwin closing remarks to the Clean
 14   Environment Commission with regards to the
 15   Wuskwatim Generation and Transmission projects.
 16   Good afternoon to Chairman Lecuyer, Commissioners,
 17   Ms. Kinew, Mr. Nepinak, Mr. Mayer and
 18   Mr. Sargeant.  It has been an interesting journey
 19   we have shared since these hearings began on
 20   March 2nd.
 21               First, let me recognize the
 22   Nisichawayasihk Cree sovereignty within their
 23   traditional lands, which are today known as their
 24   Resource Management Area.  While we respect the
 25   Nisichawayasihk Cree Nation's right of self
07392
  1   government, their sovereignty, their economic
  2   development ambitions, and their right to decide
  3   what is best for their future; no one's
  4   sovereignty should negatively impact on that of
  5   another.
  6               During these hearings we have taken
  7   the opportunity to inform the Commission and those
  8   interested in these proceedings of our
  9   relationship with the proponents.  We have also
 10   advised you of our concerns with the Environmental
 11   Impact Statement and provided you with a summary
 12   of our unique community history, socioeconomic
 13   situation, and the culture of the O-Pipon-Na-Piwin
 14   Cree Nation.
 15               The manner in which the Government and
 16   Manitoba Hydro have treated our Cree Nation
 17   community is certainly not one of the good news
 18   stories in Manitoba's history.  The bottom line is
 19   that we are fully committed to our objectives of
 20   having our Cree Nation Government recognized and
 21   our long outstanding reserve established, and we
 22   are certainly not moving away from South Indian
 23   Lake.
 24               We would truly like to redirect the
 25   considerable energy we currently expend seeking
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  1   our formal recognition to the social economic
  2   development of our community.  While we proceed
  3   through the final steps of this frustratingly slow
  4   process of recognition, we firmly believe that the
  5   respect for our Cree Nation community should not
  6   be a future event that will only start on some
  7   magical day when the Minister of Indian Affairs
  8   signs his Ministerial Order.
  9               We believe it is time to turn over a
 10   new leaf with Manitoba Hydro and develop a new
 11   relationship.  It is the only way.  After all,
 12   they are not leaving either, so we shall be
 13   neighbors forever.  The big challenge is how to go
 14   about accomplishing a more positive relationship?
 15               If Manitoba Hydro is sincere with its
 16   stated intentions to enter into relationships with
 17   Northern Cree Nations regarding future hydro
 18   development, it is only logical that this begin
 19   with the Cree Nation community that lives on the
 20   reservoir that supplies the water to drive their
 21   turbines.  If not, the whole approach lacks
 22   credibility, and will not become the priceless
 23   relationship they hope it to be.
 24               The concept of Cree Nation communities
 25   benefiting directly from the profits produced by
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  1   Hydro developments sure sounds a lot better than
  2   their past way of doing business.
  3   O-Pipon-Na-Piwin Cree Nation supports economic
  4   development.
  5               If Hydro's intentions with the
  6   Wuskwatim Power Development Agreement is to offer
  7   the people of South Indian Lake the opportunity to
  8   become business partners, their approach needs to
  9   be rethought, because that objective will not be
 10   realized through Manitoba Hydro/Nisichawayasihk
 11   Cree Nation partnership.
 12               What has been presented and described
 13   is a proposed partnership between Manitoba Hydro
 14   and the people of Nelson House.  To know in your
 15   hearts that our people in South Indian Lake will
 16   not realize any beneficial effects; but to mask
 17   this reality by including South Indian Lake in a
 18   Local Region, and then concluding that the
 19   beneficial effects will be felt evenly throughout
 20   the Local Region is wrong.  It simply adds to our
 21   people's mistrust.
 22               So how does the O-Pipon-Na-Piwin Cree
 23   turn over a new leaf and develop a new
 24   relationship with Manitoba Hydro?
 25               Well, first we believe that a new
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  1   relationship must be built on mutual respect.
  2               Second, we believe it must recognize
  3   the severe harm that the Churchill River Diversion
  4   caused to our lake, ecosystem, and people, and
  5   take positive action to heal and mitigate the
  6   damage.  The needs of our environment cannot
  7   simply be ignored.  That will not result in our
  8   people trusting Manitoba Hydro enough to develop a
  9   positive future relationship.
 10               Third, a new relationship must ensure
 11   that the future projects do not adversely affect
 12   our lives again.  This requires proper analysis;
 13   not a socioeconomic study that essentially ignores
 14   our community and our people's perspective and
 15   culture, by amalgamating us