Norske Canada Demand Management Proposal

September 2, 2004

By E-mail and Courier
British Columbia Utilities Commission
Box 250
600-900 Howe Street
Vancouver, B.C. V6Z 2N3

Attention: Robert J. Pellatt,
Commission Secretary

Dear Sirs/Mesdames:

Re: Project No. 3698376
British Columbia Transmission Corporation
2004 Transmission System Capital Plan

NorskeCanada herewith submits its proposal for Demand Management in response to BCTC’s Capital Plan submission. We believe that this proposal will allow the most cost effective, reliable and flexible solution to be implemented for the capacity issues to and on Vancouver Island.

Our proposal is based on Demand Management at our Elk Falls Mill (Campbell River) with an option for DM at our Crofton Mill. We understand that the Crofton location will help resolve a North-South backbone constraint until the new 230 kV transmission system is in service.

The Demand Management Service that we are proposing is more reliable than generation and can be contracted for “bridging” or for longer terms to meet the needs of on-going single-contingency conditions. Once installed, generation will not offer “real” choices for variable capacity and contract duration, as the pricing structure will be mainly based on the capital cost. As explained further in the proposal, this package is not bound by capital cost recovery and therefore offers true flexibility in variable capacity and contract duration; a great advantage to suit the users’ needs.

With this submission, we specifically request that the Commission direct BCTC and BC Hydro to engage in discussions to review the NorskeCanada proposal and report back, either endorsing the proposal or not, by November 1, 2004.

We are supportive of the 230 kV transmission option outlined in BCTC’s application, as reliability of service is an important issue for all Vancouver Island residents. We encourage as fast a review and approval as possible as we also believe this project is the most cost effective solution.

We wish to thank BCTC for their assistance to date in developing this proposal and for the time and effort they made in helping us formulate a useful Demand Management package. We believe this proposal addresses their criteria. We would welcome the opportunity to talk to other parties such as BC Hydro about alternative conditions or configurations for our Demand Management that may provide benefit to their systems or plants.

Thank you for the opportunity to submit this proposal and for the opportunity to be involved with BCTC’s Transmission System Capital Plan review.

Yours truly,

NORSKE SKOG CANADA LIMITED
Jess M. Beaman
Sr. Vice-President, Operations

Copy:
BCTC
Interested Parties

Norske Canada Demand Management Proposal