East KootEnay community rElations 2011 annual rEport

mEssagE from DaviD cobb

Aberfeldie Generating StationRedevelopment completed 2009

For 50 years, BC Hydro has provided reliable, clean electricity to power our economy and create jobs throughout British Columbia. While we have a proud history of building this impressive electrical system, we must also continue planning for its future.

Demand for electricity is growing, by as much as 40 per cent over the next 20 years—the equivalent of adding five cites the size of Vancouver to our grid. BC Hydro will meet two-thirds of future

electricity needs through conservation by 2020. For the remaining increased demand, BC Hydro will invest more than $6 billion to renew and replace aging generating, transmission and distribution equipment.

We have taken big steps on important projects such as the Smart Metering & Infrastructure Program that is part of the new global standard for electricity service, giving our customers more choices, faster restoration of outages, and reduced costs. Other examples include the Ruskin Dam upgrade, the Vancouver City Central Transmission project, the Northwest Transmission Line, additional generating capacity at our Mica Dam, and many more.

BC Hydro is also working with the Province to become one of the most efficient utilities in Canada or the United States. We are committed to keeping rates among the lowest in North America as we balance the need to invest in our infrastructure. We will help deliver on this promise by following through on the results of our own internal review and that of the Provincial Government. This will lead to a new Integrated Resource Plan in 2012 and a three-year Revenue Requirements Application later this year.

Part of moving forward is making sure that we hear from our communities. On behalf of all of us at BC Hydro, I would like to thank you and your constituents for taking the time to provide us with your feedback on topics such as the Columbia Valley Transmission project, integrated resource planning and reliability of electrical supply for communities like Field and Golden. Your insights and perspectives are invaluable.

David Cobb, President and CEO

rEviEW of bc HyDro HigHligHts In August, 2011 the BC Government announced the outcome of its review of BC Hydro which provided a fresh and independent look at our expenditures and the way we conduct our business. The goal was to reduce the impact of rate increases on our customers while continuing to invest in our province’s electricity infrastructure.

• Theproposedrateincreasewillbereducedfrom 32 per cent over three years to about 16 per cent over three years:

> 8 per cent (2011/12)

> 3.9 per cent (2012/13)

> 3.9 per cent (2013/14).

For the average residential customer, this means a bill increase of approximately $4.00 per month.

• BC Hydro will decrease expenditures by more than $800 million over three years in the areas of operating costs including a downsized workforce, deferred capital expenditures, updated trade income forecasts and changing the amortization period for energy conservation programs.

• BCHydro’scapitalinvestmentplantoimprove and replace aging facilities that were built primarily between 1950 and 1980 was endorsed, including our ongoing focus on conservation through Power Smart and implementation of new, updated meters throughout the province.

Aberfeldie Powerhouse, circa 1920–2007 Photograph by Oliver Brandt

2COMMUNITY RELATIONS 2011 ANNUAL REPORT—EAST KOOTENAY

PLANNINg fOR fUTURE ELECTRICITY NEEdS BC Hydro is consulting First Nations, the public and stakeholders as we establish our plan for meeting future growth in demand for electricity. BC Hydro recently completed its first phase of consultation gathering input into the development of its draft Integrated Resource Plan (IRP).

From March to April 2011, BC Hydro asked British Columbians to consider topics related to conservation, electricity generation and transmission , as well as the potential for electrification (switching from other fuel sources to electricity), and market opportunities to export power. You can read about these consultation topics and the input we received on BC Hydro’s website at bchydro.com/irp.

Input received through consultation is being considered along with technical, financial, environmental and economic development input as BC Hydro evaluates options and drafts the IRP. In a second round of consultation, BC Hydro will seek feedback on the draft plan. If you would like to participate in consultation on the IRP and be notified when dates and locations have been set, please visit our website to sign up for our mailing list bchydro.com/irp.

Artist rendering of the upgraded design for the proposed Site C Clean Energy Project.

CAPITAL PROjECTSThe following are some of the regional projects that BC Hydro is currently working on in the East Kootenay:

Columbia Valley Transmission Project

The Columbia Valley Transmission (CVT) Project will meet the growing electricity needs of the upper Columbia Valley now and well into the future. For businesses and residents, the project will provide the region with reliable electricity needed to meet increasing demand and support economic development.

Construction of the $154 million project consists of right-of-way clearing and access construction and a new 230 kV transmission line to the west of the Columbia River from Invermere to the new Kicking Horse Substation approximately three kilometres west of Golden. It also includes a new substation in Golden and a 69 kV transmission line from the new substation to the existing Golden Substation. The project will also include expansion of the existing substations in Invermere, Golden and Cranbrook.

SMART METER IMPLEMENTATION Like many other utilities around the world, BC Hydro is modernizing the electrical grid and metering systems.

Smart meters will ensure a more sustainable energy future for BC by:

• helping keep power rates among the lowest in North America;

• giving customers more choices to conserve and reduce electricity use; and

• instantly telling BC Hydro when there’s a power outage, so that power can be restored as quickly as possible.

Starting in July 2011, BC Hydro began upgrading homes and businesses with new smart meters. Customers will receive advance notification that smart meters are coming to their community. In most cases smart meter exchanges will take less than ten minutes. Customers will not need to be home so long as BC Hydro has safe, clear access to their meter.

For more information on smart meter exchanges in your community please visit bchydro.com/smartmeterinstall or contact your local Community Relations Manager.

SITE C ENvIRONMENTAL ASSESSMENTBC Hydro initiated the environmental assessment process for Site C in May 2011 with the filing of a project description report (PDR) to federal and provincial environmental assessment agencies. The PDR described key upgrades to the historic project design, including improved foundation stability, greater seismic protection, enhanced spillway safety, and additional generating capacity.

In August 2011, the PDR was accepted by the agencies, which formally starts the environmental assessment process. The specific process will be defined by the agencies this fall. The environmental assessment will be rigorous and independent, and will involve detailed effects assessments, including dozens of studies regarding land, water, wildlife and agriculture. There will be multiple opportunities for consultation and input by the public, First Nations, communities and stakeholders.

For more information about the Site C project go to bchydro.com/sitec.

3community rElations 2011 annual rEport—East KootEnay

The sod-turning event for the Battery Energy Storage Project was attended by (left to right) David Lebeter, BC Hydro Senior Vice-President Transmission & Distribution; Steve Lange, District Manager S&C Electric Canada Ltd.; Mayor Christina Benty; Jenny Klafki, External Relations Manager Lake Louise, Yoho & Kootenay Field Unit Parks Canada

Inside the new Athalmer Substation control building is David Lebeter (R), BC Hydro Senior Vice-President Transmission & Distribution and John Addie (L), BC Hydro Project Manager.

In addition to bringing a much needed reliable supply of electricity to the region, the planning of the project has brought over $8 million in economic benefit to the local economy as local companies and contractors have provided services on several aspects of the project to date including survey work and right-of-way clearing. Construction of the project could generate opportunities in construction work, supply of construction material, and indirectly to businesses within the surrounding communities.

Construction began in February 2011 and the project is expected to be in-service October 2012.

For more information about the project and contractor opportunities please contact toll free: 1 866 647 3334, Columbia Valley Transmission Project, email: stakeholderengagement@bchydro.com or visit our website at transmission.bchydro.com/projects/cvt/.

Battery Energy Storage Project

Increased power reliability for Golden and Field will be achieved with a state-of-the-art clean energy storage source. A battery bank unit will store clean energy produced by BC Hydro that can then be used to help meet electricity needs during high load periods or during a power outage.

The $15 million project is the first of its kind in Canada and was made possible thanks to $7.5 million in funding from Natural Resources Canada’s Clean Energy Fund.

In addition to improving reliability, the project will reduce the environmental impact and cost associated with using diesel generation to supplement power supply during peak hours and during prolonged outages.

The project involves building and installing two one-megawatt batteries: one battery will be installed close to Golden and the other battery will be installed close to Field. The battery near Golden will supplement the community’s power supply during peak periods. The battery in Field will store up to seven hours of reliable back up supply that could be used during an outage. The project also involves the installation of smart grid devices that will improve response times during power outages.

The batteries will be supplied by NGK Insulators Limited of Japan and the system will be engineered and installed by S&C Electric Company, a global leader in renewable energy integration.

On June 11, 2011 a sod-turning for the Golden and Field project took place in Golden.

This project will help provide more reliable service to customers in Golden and Field in the future and is scheduled for completion in spring 2012. For more information about the project, please visit bchydro.com/news/articles/press_releases/2011/battery_project_golden_field.html.

Athalmer Substation Expansion Project

The Athalmer Substation Expansion Project will replace aging equipment at the Athalmer Substation in Invermere in order to provide greater capacity to support the forecasted load growth in the Columbia Valley, ensuring improved performance and reliability. The project includes a new control room building and switchyard. In addition, the two existing transformers will be replaced with two larger capacity transformers, and the substation site will be expanded.

In June 2011, work was completed to transfer the system to the newly upgraded substation. The final stages of the project will see the replacement of the second transformer and removal of the old feeder building. The project is scheduled to be substantially complete and in-service in the fall 2011. The Athalmer Substation Expansion Project has an estimated capital cost of $15.3 million.

4community rElations 2011 annual rEport—East KootEnay

Radium Substation Voltage Conversion Project

This upgrade project will convert the Radium Substation from 12 kV to 25 kV which will double current capacity, enhance power quality and improve reliability to customers in Radium and surrounding area. The cost of the upgrade is approximately $6 million, and the substation upgrade is expected to be completed by October 2011.

Golden Substation Circuit Conversion Project

The $5 million project at the Golden Substation will see the conversion of Golden’s two 12 kilovolt distribution lines to two 25 kilovolt distribution lines and a new control building. This conversion will increase the capacity of the distribution lines that bring electricity to customers supplied by the Golden Substation. The new control building is required because the existing control building is too small to accommodate the equipment required for the conversion.

Golden Substation rendering. The $5 million upgrade project will see a capacity increase from 12 kilovolt distribution lines to two 25 kilovolt distribution lines. The project is scheduled to be complete in fall 2011.

rEliability pErformancEBC Hydro recognizes how important the reliable supply of electricity is to our customers. By continuing to invest in our electrical system, we expect to see enhanced levels of reliability for our customers.

In 2010, the BC Hydro average interruption duration per customer was 2.78 hours compared to 2009, which was 2.5 hours. The average number of interruptions per customer in 2010 was 1.89 compared to 2009, which was 1.77.

These statistics also include interruptions due to planned outages. Considerable maintenance and reliability improvement work is being done within the East Kootenay region and for safety reasons this work often requires a ‘planned outage’.

With the significant system improvements and capital project work currently underway, the following statistics may appear greater in comparison to previous years where fewer planned outages occurred. As we continue to improve, reinforce and maintain the electrical system over the next several years, planned outages will continue to be scheduled when needed and statistics will reflect this activity. Planned outages can dramatically affect the duration and number of power interruptions experienced by customers. Weather events can also affect reliability performance. .

BC HYDRO DISTRICT

AVERAGE CUSTOMER INTERRUPTION DURATIONS (HOURS)

AVERAGE NUMBER OF INTERRUPTIONS PER CUSTOMER

Canal Flats 2.00 4.06

Cranbrook 2.95 2.05

Elkford 2.33 5.12

Fernie 1.51 7.72

Golden 2.30 2.73

Invermere 1.22 2.44

Kimberley 3.21 1.61

Radium 1.28 3.36

Sparwood 3.12 1.56

BC HYDRO DISTRICT

AVERAGE CUSTOMER INTERRUPTION DURATIONS (HOURS)

AVERAGE NUMBER OF INTERRUPTIONS PER CUSTOMER

Canal Flats 1.40 5.68

Cranbrook 2.86 1.72

Elkford 1.40 3.40

Fernie 1.40 3.40

Golden 3.40 9.92

Invermere 1.40 5.68

Kimberley 2.86 1.72

Radium 1.40 5.68

Sparwood 1.40 3.40

The information below provides some comparisons for 2009 and 2010.

2009 2010

In August 2011, following the completion of the new control building and testing of electrical equipment, work was completed to transfer the system to the modified substation. Project work inside the station will be completed in October 2011.

5community rElations 2011 annual rEport—East KootEnay

MUNICIPALITY/DISTRICT SCHOOL TAXES GRANTS OTHER TAXES PAYMENTS

Canal Flats, Village of 16,463.16 8,165.83 0.00 24,628.99

Cranbook, City of 137,648.67 245,013.77 (0.03) 382,662.41

Elkford, District of 41,255.19 104,875.46 0.00 146,130.65

Fernie, City of 57,280.95 112,586.30 234.00 170,101.25

Golden, Town of 48,434.37 77,126.04 1,254.01 126,814.42

Invermere, District of 15,087.00 37,612.65 0.00 52,699.65

Kimberley, City of 55,026.01 47,043.76 0.00 102,069.77

Radium Hot Springs, Village of 14,907.93 24,701.96 0.00 39,609.89

Sparwood, District of 222,334.44 139,199.06 0.00 361,533.50

East Kootenay, Regional District of 0.00 28,993.00 0.00 28,993.00

grants-in-liEuBC Hydro pays net property tax and grant payments to local government. The grant program is a Provincial Government initiative and the amounts paid are dictated under the current legislation. Listed below are the grants paid to each community within the East Kootenay as at June 30, 2011.

BC Hydro is committed to sustainability for generations, and to support and strengthen the communities we serve. Through our donations and sponsorships we commit to organizations that are active in our key funding areas: Environmental Sustainability, Youth and Lifestyle and Community Leadership. Applications meeting our criteria are accepted online and the application and criteria can be found at bchydro.com/community/community_investment.html. Organizations are also welcome to contact Sally Masters for more information, at 250 489 6841 or sally.masters@bchydro.com.

Renata Kurschner, BC Hydro’s Director of Generation Resource Management speaking to the Association of Kootenay Boundary Local Government delegation about various BC Hydro activities and initiatives.

APPLICANT COMMUNITYDONATION/SPONSORSHIP

Elk Valley Wildsight—Beyond Recycling

East Kootenay $5,000

College of the Rockies Scholarships

East Kootenay communities

$9,000

Kimberley Search & Rescue Society

Kimberley and area

Sno-cat (in-kind)

Blue Lake Forest Education Society

East Kootenay $3,600

Wings Over the Rockies (Wild Voices for Kids)

Invermere & Columbia Valley

$3,000

Association of Kootenay Boundary Local Government

East Kootenay $5,000

Volunteer Kootenays East Kootenay $400

The East Kootenay region was supported with a donations and sponsorship budget of $56,000 for fiscal 2010/2011. Listed below are some of the organizations within the region that BC Hydro has supported this year.

community invEstmEnt anD outrEacH

6community rElations 2011 annual rEport—East KootEnay

As a result of these unique circumstances, BC Hydro was pleased to be part of a cost-sharing agreement with CBT and Teck that will significantly improve and extend public access to the reservoir. In addition to BC Hydro’s financial contributions, BC Hydro provided construction management for the project.

Construction of the boat launch began in May 2011 and was completed in July 2011. The facility, located on the northwest side of Kikomun Bridge, has a floating breakwater and dock, concrete ramp, outhouse, garbage receptacle and parking for up to 60 vehicles and trailers. The completed boat launch is managed through a partnership between The Ministry of Forests, Lands and Natural Resource Operations—Recreation Sites & Trails and the RDEK.

At the Koocanusa boat launch announcement on May 6, 2011 is (left to right) Rob Gay, RDEK Vice-Chair; Neil Muth, Columbia Basin Trust President & CEO; Bill Bennett, MLA; Diane Tammen, BC Hydro Community Relations Manager and Nic Milligan, Teck Resources Community & Government Affairs Manager.

The new Koocanusa boat launch opened in time for the July 1st weekend and has been getting lots of use ever since. The new facility is operated by the Regional District of East Kootenay.

community EvEnts

Vegetation Management

Distribution Strategic Asset Vegetation Management administers the ‘Regreening’ Program and works directly with municipalities and communities to help plant trees in urban areas. This partnership program helps restore and retain biomass within communities. While most that meet the regreening program criteria are for less than $10,000, funding for up to $20,000 is available for municipal/community projects.

In May 2011 the City of Cranbrook received $9,500 for the Gyro Park Project. Thirty trees were planted at the park as part of the regreening project. At the presentation was (Left to right) Allan Watson, City of Cranbrook Parks Foreman; Councillor Bob Whetham; Chris New, City of Cranbrook Leisure Development Manager; Sally Masters, BC Hydro Community Relations; Councillor Diana J. Scott; Councillor Denise Pallesen and Councillor Jim Wavrecan.

Koocanusa Boat Launch

Public access to the Koocanusa Reservoir has been improved with the addition of the Koocanusa boat launch. This was a collaborative project between BC Hydro, Columbia Basin Trust (CBT) and Teck Resources (Teck) with land being made available by the Ktunaxa Nation and the Province of BC.

While BC Hydro does not hold a water license on the Koocanusa Reservoir, it benefits from the operation of the U.S.-based Libby Dam at its downstream powerplants.

Local BC residents are affected by the U.S.-based Libby Dam, which is responsible for reservoir operations. The new boat launch will bring a similar benefit to Koocanusa Reservoir as to other reservoirs where BC Hydro is legally obligated to provide access.

7community rElations 2011 annual rEport—East KootEnay

The next generation of Power Line Technicians enjoy a bucket truck ride.

Diane Tammen, East Kootenay Community Relations Manager welcomes Mayor Benty and the Golden community to the Open House.

Boo the Bear (Dave Hamp, BC Hydro Senior Field Manager, Transmission & Distribution).

Golden Community Open House

As part of BC Hydro’s 50th Anniversary, BC Hydro held a Community Open House in Golden on June 11. It was a family event which included bucket-truck rides and bouncing castle, as well as information booths highlighting capital projects in the area including the Columbia Valley Transmission Project and the Clean Energy Fund/Battery Energy Storage Project in Golden/Field. Other important initiatives like Smart Metering and Safety were also highlighted.

Creston Valley Wildlife Management Area

This year, BC Hydro made its thirteenth annual contribution to Creston Valley Wildlife Management Area (CVWMA), an important local initiative in the Creston Valley. This year’s contribution was $389,602. The work undertaken by the CVWMA supports BC Hydro’s long-term environmental goals and aligns with the province’s Clean Energy Act which supports environmental stewardship in our province.

Seasonally, a camera is installed on an Osprey nest perched above the wetland of the Creston Valley Wildlife Management Area. From approximately May to August, live images from the camera are streamed from the CVWMA website. The camera gives a spectacular close-up look into the lives of a pair of Osprey and their young.

(Photo by Michael Farnsworth)

Operation Update Meetings

BC Hydro is committed to building new relationships and reinforcing those already established in the region. In May every year we host our annual Operation Update Meetings. This year these meetings took place in Creston, Cranbrook, and Baynes Lake. They are hosted by BC Hydro with representatives from the US Army Corps of Engineers and US Fish & Wildlife Service and include information and presentations regarding Columbia Basin reservoir levels, fish operations, and BC Hydro programs and local activities. Look for meeting information in local media and by invitation next spring—we hope you can attend.

bc HyDro community rElations

If you have questions or concerns, please contact:

Diane Tammen Manager, East Kootenay Community Relations250 489 6862 diane.tammen@bchydro.com

Sally MastersPublic Affairs Research Assistant250 489 6841sally.masters@bchydro.com

8community rElations 2011 annual rEport—East KootEnay

GDS11-229

To report a power outage call: 1 888 POWERON (1 888 769 3768) or *HYDRO (*49376) from your cell.

For 50 years, BC Hydro has been providing clean, reliable electricity to our customers. B.C. continues to grow and so has our need for power. Today, we are planning for the next 50 years by investing in new projects, upgrading existing facilities and working with customers to conserve energy through Power Smart.

Learn more at bchydro.com/regeneration