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					                     NSPI Application for Approval of Capital Work Order CI# 39029
                        Port Hawkesbury Biomass Project (NSUARB P-128.10)
                             NSPI Responses to Avon Information Requests

                                       NON-CONFIDENTIAL

1   Request IR-1:
2
3   Please provide an index to the Application and Appendices, identifying the Schedules and
4   Exhibits with reference to the pdf page number.
5
6   Response IR-1:
7
8   Please refer to Attachment 1.




    Date Filed: May 26, 2010                                          NSPI (Avon) IR-1 Page 1 of 1
Date Filed: May 26, 2010                                 Port Hawkesbury Biomass Avon IR-1 Attachment 1 Page 1 of 5


                           NSPI Application for Approval of Capital Work Order CI# 39029
                              Port Hawkesbury Biomass Project (NSUARB P-128.10)

                                                      INDEX

                                              Index to the Application

                                       Item                                   Application page
           2007 RFP                                                  9
           2010 RFP                                                  4, 7, 27, 28
           AMEC Engineering report. See also Appendix 2              22, 32
           Schedule B, and Appendix 9
           APA. See also Appendix 1                                  13
           Biomass fuel. See also Appendix 5, 16                     12, 15, 17, 20, 21
           Biomass index, future                                     16
           Biomass pricing formula                                   6, 15
           Boiler                                                    3, 8, 12, 17
           Co-generation                                             6
           Comparison projects. See also Appendices 7, 8, 12         32
           CPI                                                       15
           Costs and risk. See also Appendices 7, 8, 9, 15           11, 12, 13, 14, 16, 22, 25, 26, 30,
                                                                     31, 32, 33
           Diesel Index                                              15
           Disengagement/ termination                                14, 15
           Emissions                                                 8
           Energy output                                             14
           Engineer, Procure and Construct (EPC) Term Sheet,         12, 13, 22
           Binding. See also Appendix 2.
           Environmental Attribute Assignment Agreement              16
           (EAAA). See also Appendix 4.
           Environmental due diligence                               24, 25
           Fuel Adjustment Mechanism                                 12
           Interconnection                                           17, 32, 33
           IRP                                                       29, 30
           Joint Operating Committee                                 16
           Levelized cost. See also Appendix 8.                      30, 31
           Management, Operations and Maintenance Agreement          6, 12, 13, 14, 16, 20
           (MOMA). See also Appendix 3.
           NPPH mill and site                                        3, 6, 8, 35
           NSPI renewable portfolio                                  3, 4, 8, 9, 10
           Operations and Maintenance                                12

           Continued on next page.
Date Filed: May 26, 2010                                 Port Hawkesbury Biomass Avon IR-1 Attachment 1 Page 2 of 5


                           NSPI Application for Approval of Capital Work Order CI# 39029
                              Port Hawkesbury Biomass Project (NSUARB P-128.10)

                                                     INDEX

                                       Index to the Application (continued)

           Ownership structure                                       11, 12
           Performance security/damages                              14
           Permits                                                   14
           Process Flow Diagram                                      18
           Project justification                                     6, 7, 29, 30, 31
           RES requirements. See also Appendix 6, 17, 18.            5, 9, 10, 14, 35
           Revised Generation Interconnection Procedures             9
           Schedule. See also Appendix 13.                           34
           Services rate                                             14, 15
           Shaw Engineering review. See also Appendix 10, 11.        22, 33
           Steam                                                     8, 10, 11, 12, 17
           Steam generator                                           3, 11
           Transmission                                              33
           Wheeler Report                                            9
           Wind generation                                           5, 9, 10, 27, 29
Date Filed: May 26, 2010                                 Port Hawkesbury Biomass Avon IR-1 Attachment 1 Page 3 of 5


                           NSPI Application for Approval of Capital Work Order CI# 39029
                              Port Hawkesbury Biomass Project (NSUARB P-128.10)

                                                     INDEX

                                     Appendix 1 - Asset Purchase Agreement

           The Appendix 1 filed with the Application contains a comprehensive Table of Contents
           on PDF pages 2 to 4. The table below shows page numbers for Schedules and Exhibits.

                                Section                                   PDF page numbers
             Schedule A - Disclosure Schedule                  49-104
             Schedule B - Common Systems                       105-110
                    Attachment “A” to Schedule “B”              107-108
                    Attachment “B” to Schedule “B”              109-110
             Schedule C - Repairs and Maintenance               111
             EXHIBIT A - Allocation of Purchase price          112
             EXHIBIT B - Form of Opinion of Seller’s           113-120
             Counsel
             EXHIBIT C - Form of MO&M Agreement                121 (refers to Appendix 3 of the
                                                               Application)
             EXHIBIT D - Form of MO&M Guarantee;               122-139
             Parent Guarantee
             EXHIBIT E - Form of EPC Term Sheet                140 (refers to Appendix 2 of the
                                                               Application)
             EXHIBIT F - Form of EPC Guarantee; Parent         141-157
             Guarantee
             EXHIBIT G - Form of Steam, Fuel and Shared        158-173
             Services Agreement
                    EXHIBIT G - Exhibit A - Fuel               174-175
                         Specifications
                    EXHIBIT G - Exhibit B - Steam and          176
                         Condensate Provision and Price
                    EXHIBIT G - Exhibit C - Provision of       177
                         Fuel and Purchase Price
             EXHIBIT H - Form of Letter of Credit              178-181
             EXHIBIT I - Forms of Common Systems               182-211
             Easements Agreements
Date Filed: May 26, 2010                                 Port Hawkesbury Biomass Avon IR-1 Attachment 1 Page 4 of 5


                           NSPI Application for Approval of Capital Work Order CI# 39029
                              Port Hawkesbury Biomass Project (NSUARB P-128.10)

                                                     INDEX

                                      Appendix 2 - Binding EPC Term Sheet

                                         Section                                  PDF page numbers
           1. Project Description/Technology Description                         1
           2. NPPH’s scope of work - General                                     1
           3. Major Scope Items                                                  1-5
           4. Contract Price/Taxes/Milestone Payment Schedule/Cash Flow          5-7
           Cap
           5. Performance Guarantees/Project Completion/ Performance             7- 9
           Guarantee Liquidated Damages/Schedule
           Requirements/Commercial Operation/ Delay Liquidated
           Damages/ Cap on Delay Liquidated Damages
           6. Environmental Requirements                                         9
           7. Warranties                                                         9
           8. Access to Site/Site Security                                       10
           9. Default                                                            10-13
           10. Intellectual Property                                             14
           11. Applicable Permits                                                15
           12. Dispute Resolution                                                15-16
           13. Force Majeure                                                     16-17
           14. Change Orders                                                     18
           15. Notices                                                           19
           16. Choice of Law                                                     19
           17. NPPH Indemnity                                                    19-20
           18. NSPI Indemnity                                                    21
           19. Limitation of Liability                                           21-22
           20. Title and Risk of Loss                                            22
           21. Site Conditions                                                   22
           22. Project Security                                                  23
           23. Documentation                                                     23-24
           24. Deemed Approval                                                   24
           25. Insurance                                                         24-27
           26. Conditions Precedent                                              27
           SCHEDULE A - FORM OF PROGRESS REPORT                                  30
           SCHEDULE B – PROJECT SUMMARY                                          32-51
           SCHEDULE C – ORGANIZATION CHART                                       52
           SCHEDULE D – INDUSTRY CODES AND STANDARDS                             53-54
           SCHEDULE E – FORM OF LETTER OF CREDIT                                 55-58
                   SCHEDULE E, ANNEX 1 – FORM OF SIGHT DRAFT                     57
                   SCHEDULE E, ANNEX 2 – FORM OF CERTIFICATE                     58
Date Filed: May 26, 2010                                 Port Hawkesbury Biomass Avon IR-1 Attachment 1 Page 5 of 5


                           NSPI Application for Approval of Capital Work Order CI# 39029
                              Port Hawkesbury Biomass Project (NSUARB P-128.10)

                                                      INDEX

                    Appendix 3 – Management, Operations and Maintenance Agreement

           The Appendix 3 filed with the Application contains a comprehensive Table of Contents
           on PDF pages 2 to 8. The table below shows page numbers for Schedules and Exhibits.

                                Section                     CONFIDENTIAL          REDACTED version:
                                                            version: pdf page      pdf page numbers
                                                                 numbers
           Schedule 1 - Site and Facility                 73-95                  73-78
           Schedule 2 - Transition Phase Services         96-98                  79-81
           Schedule 3 - Operation Phase Services          99-103                 82-86
           Schedule 4 - Shared Services                   104-106                87-89
           Schedule 5 - Disengagement Services            107-134                90-117
               ANNEX 1 to Schedule 5 - Steam, Fuel        115-134                98-117
               and Shared Services Agreement
                  Exhibit A to ANNEX 1 - FUEL            131-132                114-115
                      SPECIFICATIONS
                  Exhibit B to ANNEX 1 - STEAM           133                    116
                   AND CONDENSATE PROVISION
                   AND PRICE
                 Exhibit C to ANNEX 1 –                  134                    117
                  PROVISION OF FUEL AND
                  PURCHASE PRICE
           Schedule 6 Measurement of Net Output           135-136                118-119
           Schedule 7 - Payment for Operation Phase       137-140                120-123
           Services
           Schedule 8 - Fuel Specifications               141-142                124-125
           Schedule 9 - Operator's Use of Purchased       143                    126
           Assets
           Schedule 10 - Operator's use of Steam from     144-145                127-128
           the Utility Plant
           Schedule 11 - Sample Calculations for Fuel     146-147                129-130
           Costs
           EXHIBITS
           Exhibit A - Monthly Report Form                148-150                131-133
           Exhibit B - Form of Parent Guarantee           151-168                134-151
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                            NON-CONFIDENTIAL

 1   Request IR-2:
 2
 3   Please identify material changes to the proposal from the proposed 60MW Biomass Project
 4   submitted in conjunction with Strait Bio-Gen Limited in P-172.
 5
 6   Response IR-2:
 7
 8   The material changes between the proposal in P-172 and the proposed 60MW Biomass Project
 9   include:
10
11                  P-172 sought approval for a Power Purchase Agreement based on a term sheet. With
12                   respect to the Port Hawkesbury Biomass Project, NSPI is seeking approval for a
13                   Capital Work Order Application for an NSPI owned facility.
14
15                  P-172 included fuel price escalation provisions based on a yet to be defined biomass
16                   index. In the Port Hawkesbury Biomass Project, the cost of fuel escalates in relation
17                   to indices published by Statistics Canada for CPI and diesel fuel.
18
19                  The commercial provisions of the Port Hawkesbury Biomass Project are set out in
20                   three main agreements describing the sale and purchase of NPPH assets by NSPI, the
21                   design and construction of the co-generation facility by NPPH in a fixed price
22                   contract and the terms under which the facility will be operated by NPPH. There
23                   were no such detailed agreements included as part of P-172.
24
25                  The annual Base Output Requirement is 388 GWh for the Port Hawkesbury Biomass
26                   Project. The expected output for the project in P-172 was 406 GWh.




     Date Filed: May 26, 2010                                                NSPI (Avon) IR-2 Page 1 of 2
                     NSPI Application for Approval of Capital Work Order CI# 39029
                        Port Hawkesbury Biomass Project (NSUARB P-128.10)
                             NSPI Responses to Avon Information Requests

                                          NON-CONFIDENTIAL

 1   Response IR-2: (cont’d)
 2
 3               Crown Consent allowing NPPH to use biomass from crown land for the Port
 4                Hawkesbury Biomass Project has been provided, whereas it was not provided for P-
 5                172.
 6
 7               P-172 included $25 million for network upgrades. The Port Hawkesbury Biomass
 8                Project does not.
 9
10               The Port Hawkesbury Biomass Project includes modifications to the P-172 design to
11                reflect utility standards.




     Date Filed: May 26, 2010                                         NSPI (Avon) IR-2 Page 2 of 2
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                            NON-CONFIDENTIAL

 1   Request IR-3:
 2
 3   In the Application, Page 9, NSPI lists “significant changes in the status of renewable energy
 4   development in Nova Scotia since the issuance of the Board’s decision regarding NSPI-P-172”.
 5   How has each of these bulleted points affected what has been proposed?
 6
 7   Response IR-3:
 8
 9   The bulleted points referred to in the question are provided below in italics:
10
11                  The Province has revised the RES Regulations to extend from 2010 to 2011 the
12                   requirement that NSPI procure 5 percent of its energy from non-NSPI renewable
13                   sources constructed after 2001.
14
15                   This change has provided additional time for the existing Independent Power
16                   Producer renewable energy projects to become operational, which in turn means
17                   NSPI is forecasting that it can meet its 2011 RES obligations. The Port Hawkesbury
18                   Biomass Project is not required to be operational for 2011 compliance.
19
20                  The Province has confirmed the 10 percent (post 2001) RES requirement for 2013
21                   and has announced its goal of having 25 percent (total) of the electricity sold in the
22                   Province, generated from renewable sources by 2015.
23
24                   This change increases the future need for renewable energy in Nova Scotia such that
25                   the Port Hawkesbury Biomass Project is required to meet future needs, and other
26                   projects will also be required.




     Date Filed: May 26, 2010                                                 NSPI (Avon) IR-3 Page 1 of 3
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                            NON-CONFIDENTIAL

 1   Response IR-3: (cont’d)
 2
 3                 The Board has approved a revised Generation Interconnection Procedure (GIP),
 4                  based on first-ready criteria.
 5
 6                  The revised Generator Interconnection Procedure allows projects to move forward on
 7                  a “first ready” basis which means this project (or any other) will be able to proceed
 8                  promptly through the System Operator queue.
 9
10                 The Province has issued its report on stakeholder consultation concerning a new
11                  renewable strategy for the Province (Wheeler Report).
12
13                  This development, together with the Province’s more recently released Renewable
14                  Electricity Plan1 reinforces the commitment to renewable energy and to biomass as a
15                  source of renewable energy.
16
17                 The outlook for projects contracted as a result of the 2007 renewable energy
18                  procurement process has improved. Of the seven projects selected by NSPI in its
19                  2007 solicitation, the Company expects six to be commissioned before the end of
20                  2010.
21
22                  This development means that NSPI is better positioned now to meet its 2011 RES
23                  requirements than it was in 2009 to meet its 2010 requirements. This is important
24                  because the Biomass Project is no longer required to be operational to help the
25                  Company meet its 2011 requirements.




     1
       NS Renewable Electricity Plan, April 2010
     http://www.gov.ns.ca/energy/renewables/renewable-electricity-plan/



     Date Filed: May 26, 2010                                               NSPI (Avon) IR-3 Page 2 of 3
                     NSPI Application for Approval of Capital Work Order CI# 39029
                        Port Hawkesbury Biomass Project (NSUARB P-128.10)
                             NSPI Responses to Avon Information Requests

                                        NON-CONFIDENTIAL

 1   Response IR-3: (cont’d)
 2
 3               Over the course of 2010, approximately 150 MW of wind capacity are expected to
 4                come into service on the NSPI system.
 5
 6                This is an important development because it will mean that there will be
 7                approximately 280 MW in total of wind on the Nova Scotia system. Before more
 8                variable generation is added to the system, NSPI and the Government of Nova Scotia
 9                should understand the effect of this wind on the system. The addition of firm or non-
10                intermittent renewable energy is a reasonable next step.




     Date Filed: May 26, 2010                                                NSPI (Avon) IR-3 Page 3 of 3
                        NSPI Application for Approval of Capital Work Order CI# 39029
                           Port Hawkesbury Biomass Project (NSUARB P-128.10)
                                NSPI Responses to Avon Information Requests

                                             NON-CONFIDENTIAL

 1   Request IR-4:
 2
 3   With respect to the Asset Purchase Agreement (APA):
 4
 5   a)      On what basis was the aggregate purchase price of $80 million arrived at?
 6
 7   b)      On what objective bases do the Board and Intervenors have to assess whether the sale
 8           of the assets is at fair market value?
 9
10   c)      Please provide copies of any documents, appraisals, depreciation studies etc., provided
11           to NSPI to evaluate the purchase price of all the assets.
12
13   Response IR-4:
14
15   a)      The $80 million purchase price was agreed through negotiations between NSPI and NPPH.
16
17   b-c)    The Board and Intervenors are able to assess the merits of the project based on its
18           comparison to other alternatives. The Shaw Report provides an assessment of the condition
19           of the purchased assets and the overall co-generation project feasibility. Shaw found that the
20           “NPPH/AMEC co-generation facility was of reasonable conceptual design and scope, but
21           had areas that needed to be modified to meet NSPI requirements.”1 As noted by Shaw,
22           modifications were made to the design based on their input, and “The resulting modified
23           design and scope meets NSPI requirements”.1 Please refer to Liberty IR-34.




     1
      NSPI Capital Work Order Application, Port Hawkesbury Biomass Project, NSUARB-NSPI – P-128.10, April 19, 2010,
     Appendix 10, p. 5.




     Date Filed: May 26, 2010                                                    NSPI (Avon) IR-4 Page 1 of 1
                        NSPI Application for Approval of Capital Work Order CI# 39029
                           Port Hawkesbury Biomass Project (NSUARB P-128.10)
                                NSPI Responses to Avon Information Requests

                                             NON-CONFIDENTIAL

 1   Request IR-5:
 2
 3   Appendix 1, APA, Clause 3.3 (p.17/211), states that the Purchase Price will be allocated among
 4   the Purchase Assets in accordance with Exhibit A (Appendix 1, p.112/211) and Appendix 15,
 5   p.2/3.
 6
 7   a)       How does NSPI reconcile the asset allocation in Exhibit A with the Capital Item
 8            Account entry?
 9
10   b)       What is the purpose of the allocation of the 1 Purchase Price in the manner shown in
11            Exhibit A?
12
13   c)       What, if any impact does this have upon customers of NSPI who are paying for this?
14
15   Response IR-5:
16
17   a)       The allocation of the purchased assets detailed in Exhibit A, Appendix 1 of the Application
18            reflect the specific asset components of the $80 million materials as detailed in the Capital
19            Item Account summary in Appendix 15 of the Application.
20
21   b)       The allocation of the Purchase Price is required to ensure the seller and buyer appropriately
22            allocate the assets for tax purposes.
23
24   c)       The impact of the project upon customers is reflected in the economic analysis provided in
25            the filing. There are no additional impacts created by allocating the assets in the manner
26            shown.




     Date Filed: May 26, 2010                                               NSPI (Avon) IR-5 Page 1 of 1
                      NSPI Application for Approval of Capital Work Order CI# 39029
                         Port Hawkesbury Biomass Project (NSUARB P-128.10)
                              NSPI Responses to Avon Information Requests

                                          NON-CONFIDENTIAL

 1   Request IR-6:
 2
 3   Appendix 1, APA, Clause 1.1.78 (p.13/211), refers to the 40 year useful service life expectancy
 4   of the purchased assets.
 5
 6   a)     When was the boiler placed in service by NPPH?
 7
 8   b)     What assurances does NSPI have with respect to the current state and useful life of the
 9          boiler?
10
11   c)     Who bears the risk and cost of premature failure?
12
13   Response IR-6:
14
15   a)     The NPPH boiler entered commercial operation in 1983.
16
17   b)     NSPI and Shaw Group personnel conducted physical due diligence in November, 2009 and
18          have concluded the assets are in acceptable condition. Please refer to Liberty IR-27, Liberty
19          IR-28, and NS IR-17. In addition, NSPI will conduct a thorough internal inspection prior to
20          the Asset Purchase Agreement (APA) closing.
21
22   c)     Subject to the conditions of the APA with respect to the Seller’s breach of the representations
23          and warranties, NPPH would be responsible for the first $5 million in the event of premature
24          failure or a requirement for component refurbishment/replacement. The APA also provides
25          that NSPI shall be satisfied with the condition of the purchased assets following the pre-APA
26          closing inspection. Subsequent to closing, the risk falls to NSPI, the party providing boiler
27          insurance, or NPPH depending upon the circumstances.
28
29



     Date Filed: May 26, 2010                                               NSPI (Avon) IR-6 Page 1 of 1
                     NSPI Application for Approval of Capital Work Order CI# 39029
                        Port Hawkesbury Biomass Project (NSUARB P-128.10)
                             NSPI Responses to Avon Information Requests

                                       NON-CONFIDENTIAL

1   Request IR-7:
2
3   Appendix 1, APA, Clause 4.21 Environmental Conditions and the Disclosure Schedule A (p.54,
4   55/211), please confirm that the remediation will be completed at the cost of NPPH.
5
6   Response IR-7:
7
8   Confirmed.




    Date Filed: May 26, 2010                                          NSPI (Avon) IR-7 Page 1 of 1
                      NSPI Application for Approval of Capital Work Order CI# 39029
                         Port Hawkesbury Biomass Project (NSUARB P-128.10)
                              NSPI Responses to Avon Information Requests

                                         NON-CONFIDENTIAL

 1   Request IR-8:
 2
 3   Application, Page 13 and Appendix 2, the Engineering, Procurement and Construction (EPC)
 4   Term Sheet provides for a $92.9 million fixed price contract.
 5
 6   a)     On what basis was that price negotiated?
 7
 8   b)     Were the fixed price components of the arrangement built up or derived from an end-
 9          price result that bettered the comparators?
10
11   c)     The contract price includes a $1.9 million allowance for capital spares (Appendix 2,
12          p.5/58). In the event that these are not required, will the contract price be reduced by
13          the relevant amount?
14
15   Response IR-8:
16
17   a)     The price was negotiated on the basis of best value for NSPI customers and compliance with
18          the 2013 Renewable Energy Standard.
19
20   b)     The components of the $92.9 million Engineering, Procurement and Construction Term
21          Sheet were built up based on the requirements of the project design. Please refer to Liberty
22          IR-41.
23
24   c)     No. The capital spares are procured as a component of good utility practice to minimize
25          unplanned production interruptions and maximize customer value. The spares are required as
26          good operating practice.
27




     Date Filed: May 26, 2010                                             NSPI (Avon) IR-8 Page 1 of 1
                        NSPI Application for Approval of Capital Work Order CI# 39029
                           Port Hawkesbury Biomass Project (NSUARB P-128.10)
                                NSPI Responses to Avon Information Requests

                                          NON-CONFIDENTIAL

 1   Request IR-9:
 2
 3   Application, Page 10, Line 6, states that Nova Scotia is expected to have approximately
 4   275MW of wind capacity on-line by the end of 2010.
 5
 6   a)    What does NSPI consider to be the firm capacity of the wind generation? Please explain
 7         the basis.
 8
 9   b)    What does NSPI forecast to be the expected energy output of the wind capacity? Please
10         explain the basis for the forecast.
11
12   Response IR-9:
13
14   a)    Wind generation is an intermittent resource and is not considered a firm energy source.
15         However, for the purpose of long term planning and reserve margin calculations,
16         transmission and back up generation cost adders are included and the firm capacity
17         contribution of wind is based on the average projected on-peak winter capacity factors
18         (approximately 40 percent of installed wind capacity). This will be re-evaluated as the
19         quantity of wind on the NSPI system increases and actual on peak wind capacity availability
20         is better understood.
21
22   b)    NSPI generally expects in the range of 3 GWh of energy annually from each MW of wind
23         capacity placed into service. The basis for this is project specific energy forecasts and wind
24         studies.




     Date Filed: May 26, 2010                                             NSPI (Avon) IR-9 Page 1 of 1
                      NSPI Application for Approval of Capital Work Order CI# 39029
                         Port Hawkesbury Biomass Project (NSUARB P-128.10)
                              NSPI Responses to Avon Information Requests

                                         NON-CONFIDENTIAL

1   Request IR-10:
2
3   Application, Page 8, Line 5, states that the NPPH boiler operates at approximately 30% of its
4   rated capacity. At what percentage will the boiler operate should this project proceed?
5
6   Response IR-10:
7
8   The project is configured to have the boiler operating at 100 percent of its nameplate steam
9   generating capacity, i.e. 60 kg/s.




    Date Filed: May 26, 2010                                          NSPI (Avon) IR-10 Page 1 of 1
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                          NON-CONFIDENTIAL

 1   Request IR-11:
 2
 3   Application, Page 14, Line 20, provides that NPPH is contracted to produce 388GWh of
 4   electricity annually for 40 years.
 5
 6   a)     Please explain the basis for this estimate.
 7
 8   b)     How does this generation output compare to the Strait Bio-Gen proposal? Please
 9          explain the basis for any difference.
10
11   Response IR-11:
12
13   The following response has been provided by NPPH.
14
15   a)     NPPH provided the steam turbine generator (STG) suppliers the average monthly predicted
16          steam balance (extractions flows required) based on historical production levels and steam
17          consumptions. Based on 100 percent operating rate of Power Boiler 3 (PB3) and the STG
18          (60 kg/sec to the STG) the suppliers provided a predicted output of 463 GWh per year (100
19          percent operating rate) at the generator terminals.     NPPH and NSPI agreed on a total
20          efficiency factor of 88 percent, resulting in an annual electricity production of 408 GWh.
21          Incremental station services load required due to the increased operating rate of the existing
22          plant and the operation of new equipment is estimated at 2.5 MW or about 20 GWh annually
23          at the total efficiency factor; hence 408 – 20 = 388 GWh annual output.
24
25   b)     This output is 18 GWh lower annually than the Strait Bio-Gen proposal of 406 GWh. This
26          project’s 388 GWh is the net output requirement that NSPI believes to be an achievable
27          output of the nominal 60 MW facility taking into account the process steam requirements of
28          NPPH, station service requirements, maintenance outages and availability of the unit.




     Date Filed: May 26, 2010                                             NSPI (Avon) IR-11 Page 1 of 1
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                          NON-CONFIDENTIAL

 1   Request IR-12:
 2
 3   a)    Please show the calculation to derive the capacity factor of the project.
 4
 5   b)    Are there constraints that limit the expected capacity factor? Please explain.
 6
 7   c)    Please provide the forecast output by month and split between on-peak and off peak
 8         periods within each month. What assumptions are used in this respect?
 9
10   Response IR-12:
11
12   a)    The project’s capacity factor as agreed between the parties is provided in Avon IR-11.
13         The capacity factor calculation methodology is illustrated as follows:
14
                                 Actual Annual Production (MWh)
            Capacity Factor =
                                 Best Possible Annual Production (MWh)
15
16         Sample Calculation for 60 MW nameplate rated unit:
17
18         Best Possible Annual Production (MWh) = 60 MW x 8760 hr/yr = 525,600 MWh
19
20         Actual Annual Production (MWh) = 388,000 MWh
21
                                          388,000
           Annual Capacity Factor =                   = 73%
                                          525,600
22
23   b)    The largest components that affect annual capacity factor are duration of planned and
24         unplanned outages, and deratings from operational issues/upsets such as these resulting from
25         fuel delivery or cooling water flow restrictions.




     Date Filed: May 26, 2010                                            NSPI (Avon) IR-12 Page 1 of 2
                           NSPI Application for Approval of Capital Work Order CI# 39029
                              Port Hawkesbury Biomass Project (NSUARB P-128.10)
                                   NSPI Responses to Avon Information Requests

                                                NON-CONFIDENTIAL

 1   Response IR-12: (cont’d)
 2
 3   c)         The Management, Operations and Maintenance Agreement is based on an annual energy
 4              production of 388 GWh. Following is the estimated monthly net green power output. The
 5              monthly amounts will vary according to future mill productions.
 6

                                       FORECAST MONTHLY OUTPUT OF BIOGEN 60 PROJECT
                            Jan   Feb     Mar   Apr   May   Jun    Jul   Aug   Sep    Oct   Nov   Dec    Total
     Days opr               31    28      31     30    31    30    31    31    20     31    30    31

 7   Net Output     MWhr   31000 28000 32000 32000 34000 35000 37000 37000 23000 35000 33000 31000      388,000

 8
 9              NSPI does not expect any significant on-peak/off-peak split periods. Note however, hourly
10              output will vary according to hourly mill steam load variations.




     Date Filed: May 26, 2010                                                   NSPI (Avon) IR-12 Page 2 of 2
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                           NON-CONFIDENTIAL

 1   Request IR-13:
 2
 3   a)    How does the expected capacity factor compare to base load units?
 4
 5   b)    Please provide a table listing each NSPI generating unit, its location, fuel and capacity
 6         factor, including the Nuttby Wind Farm and Point Tupper Wind Farm.
 7
 8   Response IR-13:
 9
10   a)    The project’s anticipated capacity factor will be in the low to mid 70 percent range, which
11         compared to an NSPI base load unit is approximately 10 percent lower. The lower capacity
12         factor is typical of a co-generation configuration as a portion of the steam flow from the
13         boiler is extracted from the power cycle and supplied to the mill rather than utilized for
14         electrical energy generation.
15
16         This differs from the capacity factors provided in Avon IR-11 because this calculation uses
17         the traditional definition of capacity factor, which divides the planned net output of the unit
18         by the potential nameplate output (388 GWh / 525.6 GWh).
19
20   b)    Please refer to Attachment 1.




     Date Filed: May 26, 2010                                            NSPI (Avon) IR-13 Page 1 of 1
Date Filed: May 26, 2010                                            Port Hawkesbury Biomass Avon IR-13 Attachment 1 Page 1 of 1




                                                Capacity Factors of NSPI Generating Units
                                                                                                              Capcity Factor (%)
                                                                                                               5 year Average
                    Unit                               Location                             Fuel                 (2005-2009)
    Lingan 1                                Cape Breton                      Coal/Petcoke/Heavy Fuel Oil                       81
    Lingan 2                                Cape Breton                      Coal/Petcoke/Heavy Fuel Oil                       81
    Lingan 3                                Cape Breton                      Coal/Petcoke/Heavy Fuel Oil                       81
    Lingan 4                                Cape Breton                      Coal/Petcoke/Heavy Fuel Oil                       83
    Point Tupper                            Cape Breton                      Coal/Petcoke/Heavy Fuel Oil                       86
    Point Aconi                             Cape Breton                      Coal/Petcoke/Limestone Sorbent                    88
    Trenton 5                               Pictou County                    Coal/Petcoke/Heavy Fuel Oil                       73
    Trenton 6                               Pictou County                    Coal/Petcoke/Heavy Fuel Oil                       86
    Tufts Cove 1                            Dartmouth                        Natural Gas /Heavy Fuel Oil                       34
    Tufts Cove 2                            Dartmouth                        Natural Gas /Heavy Fuel Oil                       47
    Tufts Cove 3                            Dartmouth                        Natural Gas /Heavy Fuel Oil                       45
    Tufts Cove 4                            Dartmouth                        Natural Gas                                       26
    Tufts Cove 5                            Dartmouth                        Natural Gas                                       32
    Combustion Turbines                     Dartmouth/Tusket/Cape Breton     Light Fuel Oil                                    0.3
    Hydro                                   Cape Breton/Western NS           Water                                             31
    NSPI Wind (Grand Etang/ Little Brook)   Cape Breton/ Digby County        Wind                                              19
    Nuttby                                  Colchester County                Wind                                             36 *
    Pt Tupper Wind                          Cape Breton                      Wind                                             32 *

    * Capacity factors for Pt Tupper Wind and Nuttby based on 2011 forecast production.
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                         NON-CONFIDENTIAL

 1   Request IR-14:
 2
 3   Management, Operations and Maintenance Agreement (MOMA), Appendix 3, Section 2.4
 4   Termination by Operator and Schedule 11A,
 5
 6   a)    Please elaborate upon the circumstances when NPPH may terminate the agreement if
 7         the actual cost of fuel exceeds the deemed cost.
 8
 9   b)    Please provide the back-up data to derive the deemed cost.
10
11   Response IR-14:
12
13   a)    The circumstances under which NPPH may terminate the Management, Operations and
14         Maintenance Agreement (MOMA) for reasons of fuel cost are set out in Sections 2.4.2 (i)
15         and 2.4.2 (ii). The parties agreed that biomass fuel costs are in part beyond the control of
16         NPPH. Therefore the parties agreed to a mechanism that would:
17
18               provide NSPI fuel cost certainty for at least eight years (i.e. that NPPH would bear
19                the risk of fuel cost escalation outside of the agreed escalators);
20               establish a method for determining the "deemed cost of fuel" using the fuel portion of
21                the Services Rate and an assumed output of 388 GWh;
22               establish a method and review approach for determining NPPH's actual cost of fuel
23                on the basis of actual output of the Facility and an assumed division of fuel costs
24                between the parties of 76 percent / 24 percent;
25               provide the right to NPPH to terminate the MOMA if the actual cost of fuel is 20
26                percent more than the deemed cost of fuel in any three year period or, the actual cost




     Date Filed: May 26, 2010                                              NSPI (Avon) IR-14 Page 1 of 2
                      NSPI Application for Approval of Capital Work Order CI# 39029
                         Port Hawkesbury Biomass Project (NSUARB P-128.10)
                              NSPI Responses to Avon Information Requests

                                         NON-CONFIDENTIAL

 1   Response IR-14: (cont’d)
 2
 3                of fuel exceeds the deemed cost in any five year period by $15,000,000 or more (the
 4                "termination triggers");
 5               if the termination triggers are reached, NPPH has the option to terminate the MOMA
 6                provided that the parties can avoid such termination if:
 7                       NSPI agrees to pay NPPH's actual cost of fuel for the production of electricity
 8                        going forward (after year eight);
 9                       the parties have agreed to a new biomass index which is approved by the
10                        UARB;
11                       the parties have agreed to a new Services Rate;
12                       if the MOMA is in fact terminated, the parties will move into the Steam, Fuel
13                        and Shared Services Agreement.
14
15   b)    Please refer to Multeese IR-14.




     Date Filed: May 26, 2010                                               NSPI (Avon) IR-14 Page 2 of 2
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                           NON-CONFIDENTIAL

 1   Request IR-15:
 2
 3   Appendix 3, Schedule 7, Payment for Operation Phase Services, breaks down the $/MWh rate
 4   between fuel and non-fuel service.
 5
 6   a)     What is included “non-fuel service”?
 7
 8   b)     Please explain the rationale for the split.
 9
10   c)     Please provide the derivation of the $/MWh fuel component of the services rate.
11
12   Response IR-15:
13
14   a)     Non-fuel service consists of management, operating and maintenance services including as
15          described in Schedule 3 of Appendix 3 of the Application (except for fuel procurement
16          services). Please refer also to Liberty IR-1.
17
18   b)     Fuel and non-fuel services escalate in different manners.
19
20   c)     Please refer to NS IR-11.




     Date Filed: May 26, 2010                                           NSPI (Avon) IR-15 Page 1 of 1
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                            NON-CONFIDENTIAL

 1   Request IR-16:
 2
 3   Appendix 3, Schedule 7, Clause C, addresses maximum and minimum energy requirements.
 4
 5   a)    Please confirm that NSPI is obliged to accept all the energy that this project can
 6         provide (“must take”)?
 7
 8   b)    Are there are any conditions under which NSPI can decline the energy?
 9
10   c)    Is energy supplied above or below the net output of 388,000MWh annually priced at the
11         same service rate?
12
13   d)    As energy is supplied on a must-take basis, how will that affect NSPI’s determination of
14         incremental (or decremental) energy cost for charging or crediting ELI customers for
15         differences from their base line usage?
16
17   e)    Will it affect the determination costs imputed to off-system sales? If so how?
18
19   Response IR-16:
20
21   a)    Please refer to Liberty IR-51.
22
23   b)    NSPI can curtail the unit as a result of a Force Majeure Event or to meet the requirements of
24         the Generator Interconnection Agreement.
25
26   c)    The Services Rate is a dollar per megawatt hour charge. NSPI will pay the Services Rate for
27         the megawatt hours produced as long as they do not exceed the Maximum Output Amount.
28         Please refer to Liberty IR-51.




     Date Filed: May 26, 2010                                           NSPI (Avon) IR-16 Page 1 of 2
                     NSPI Application for Approval of Capital Work Order CI# 39029
                        Port Hawkesbury Biomass Project (NSUARB P-128.10)
                             NSPI Responses to Avon Information Requests

                                        NON-CONFIDENTIAL

 1   Response IR-16: (cont’d)
 2
 3   d)    “Must run” and “must take” units are not dispatched at the discretion of the NSPI Scheduling
 4         and Dispatch team, and do not appear on the margin for ELI 2P-RTP purposes. Must run
 5         energy is at the bottom of the economic dispatch stack. As more energy of this type is added,
 6         the conventional units are moved up the economic dispatch stack and the marginal cost for
 7         the ELI 2P-RTP customers should generally be lower than it would be in the absence of such
 8         purchases or dispatch designations.
 9
10   e)    Yes, to the extent the marginal cost on the system changes, the cost of exports will also
11         change.




     Date Filed: May 26, 2010                                           NSPI (Avon) IR-16 Page 2 of 2
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                         NON-CONFIDENTIAL

 1   Request IR-17:
 2
 3   Appendix 3, MOMA, Section 2.4.2 (v) provides the parties may agree to use the Biomass Index
 4   Rate approved for use by the UARB in accordance with Schedule 7. What role, if any, does
 5   NSPI contemplate for interested parties in that approval process?
 6
 7   Response IR-17:
 8
 9   The UARB would establish the process for review of a future Biomass Index. As with other fuel-
10   related items, NSPI expects interested parties would have an opportunity to review and comment on
11   the Biomass Index.




     Date Filed: May 26, 2010                                          NSPI (Avon) IR-17 Page 1 of 1
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                             NON-CONFIDENTIAL

 1   Request IR-18:
 2
 3   Appendix 3, MOMA (p.9/169) recites that the facilities have an anticipated gross capacity of
 4   63.8MW, whereas the Steam, Fuel and Shared Services Agreement (Appendix 3, p.115/168)
 5   references a nominal 60MW co-generating facility. Please reconcile these figures.
 6
 7   Response IR-18:
 8
 9   The specific gross capacity of the steam turbine generator will be known when the selection of the
10   vendor and equipment are finalized. At the time of the application, the shortlisted steam turbine
11   generator had a gross capacity of 63.8 MW. This is referred to on page 9 of Appendix 3 of the
12   Application.   As the selection of the equipment has not been completed, the agreements and
13   Application generally refer to a nominal or generic 60 MW facility. It will not be until the vendor
14   and equipment are actually selected and an order is placed that the actual gross capacity of the steam
15   turbine generator will be determined.




     Date Filed: May 26, 2010                                              NSPI (Avon) IR-18 Page 1 of 1
                        NSPI Application for Approval of Capital Work Order CI# 39029
                           Port Hawkesbury Biomass Project (NSUARB P-128.10)
                                NSPI Responses to Avon Information Requests

                                            NON-CONFIDENTIAL

 1   Request IR-19:
 2
 3   Appendix 3, MOMA, Clause 8.9, states that the Steam, Fuel and Shared Services Agreement
 4   attached as Schedule 5 will apply after termination or expiry of the MOMA for any reason
 5   (168),
 6
 7   a)       Please confirm that following termination, it is then NSPI’s responsibility to generate,
 8            sell and deliver to NPPH steam and condensate at the price set out in Exhibit B
 9            (Appendix 3, p.133/168) and NPPH will provide fuel at a price set out in Exhibit C
10            (p.134/168)?
11
12   b)       On what basis were the pricing provisions calculated?
13
14   c)       Has NSPI calculated the impact upon ratepayers of the alternative of NSPI operating
15            the facility under the Steam, Fuel and Shared Services Agreement?
16
17   d)       Please provide back-up documents and calculations showing the impact upon
18            ratepayers if the MOMA is terminated, setting out the assumptions made.
19
20   Response IR-19:
21
22   Clause 8.9 of the Management, Operations and Maintenance Agreement (MOMA) states that:
23
24            The terms of the Steam, Fuel and Shared Services Agreement attached as part of
25            Schedule 5 will apply after the termination or expiry of this Agreement for any reason
26            and under any circumstances except for termination of this Agreement under Section
27            2.1 or an assignment of this Agreement by the Operator in a manner contrary to the
28            provisions of this Agreement.
29




     Date Filed: May 26, 2010                                              NSPI (Avon) IR-19 Page 1 of 2
                      NSPI Application for Approval of Capital Work Order CI# 39029
                         Port Hawkesbury Biomass Project (NSUARB P-128.10)
                              NSPI Responses to Avon Information Requests

                                            NON-CONFIDENTIAL

 1   Response IR-19: (cont’d)
 2
 3   Section 2.1 of the MOMA states that:
 4
 5          Either Party may terminate this Agreement by Notice to the other Party if:
 6
 7                 2.1.1 UARB Approval is not obtained by December 31, 2010;
 8                 2.1.2 the Asset Purchase Agreement is not signed and delivered and the
 9                 transactions contemplated by the Asset Purchase Agreement do not close by
10                 December 31, 2010; or
11                 2.1.3 The Operator has made the decision to cease operations at the Operator’s
12                 Mill but in such event the Operator will continue to provide Disengagement
13                 Services during the Disengagement Phase.
14
15   a)     Confirmed. If, however, the Engineering, Procurement and Construction (EPC) Contract has
16          been terminated, NSPI’s obligation to provide steam to NPPH, and the price charged for
17          steam will be as set forth in the EPC Contract.
18
19   b)     The pricing provisions were calculated based on anticipated costs to operate the facility.
20          Please see NS IR-1.
21
22   c-d)   The Steam Fuel and Shared Services Agreement comes into effect if the MOMA has been
23          terminated. Under the MOMA, NSPI has broad termination rights. One of the reasons NSPI
24          could terminate the MOMA would be if, in NSPI’s assessment, it could create more value for
25          customers if it operated the Facility. Under the MOMA, NPPH also has a right to terminate
26          if fuel costs exceed certain levels over time. This termination only occurs if the parties
27          cannot agree on a new services rate, if NSPI does not agree to pay the actual cost of fuel, or if
28          a biomass index has not been approved for use. Under these circumstances, NSPI would
29          evaluate the possibilities and pursue the option that presents the best value for customers.
30




     Date Filed: May 26, 2010                                               NSPI (Avon) IR-19 Page 2 of 2
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                          NON-CONFIDENTIAL

 1   Request IR-20:
 2
 3   MOMA, Appendix 3, Schedule 6, Measurement of Net Output (p.135/168), states that the
 4   interconnection of the utility plant to the system shall be the responsibility of the owner and
 5   shall be conducted pursuant to the GIA (Generator Interconnection and Operating
 6   Agreement).
 7
 8   a)     What costs are associated with the GIA?
 9
10   b)     Are these costs included in this Application?
11
12   c)     When carrying out the economic analysis, did NSPI include interconnection costs?
13
14   d)     If not included, please provide details of the calculation showing the levelized costs.
15
16   Response IR-20:
17
18   a)     NSPI anticipates the cost of interconnection to be approximately $1,000,000.
19
20   b)     Yes.
21
22   c-d)   Yes, interconnection costs were included in the levelized cost analysis.
23




     Date Filed: May 26, 2010                                              NSPI (Avon) IR-20 Page 1 of 1
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                         NON-CONFIDENTIAL

 1   Request IR-21:
 2
 3   Application, Section 5, Technical Overview, Lines 14-17, what is the total thermal output and
 4   what fraction of the steam produced by the boiler is extracted and supplied to the NPPH paper
 5   mill versus what is used for process generation?
 6
 7   Response IR-21:
 8
 9   The project design is based on the boiler producing 60 kg/s of steam which is all delivered to the
10   steam turbine/generator, and steam being extracted at two stages having a range of 0-6kg/s and
11   0-12kg/s after the steam energy has been reduced partially through the steam turbine producing
12   electricity. The quantity of extraction steam at each stage is determined by the process steam
13   requirements of the paper mill.




     Date Filed: May 26, 2010                                           NSPI (Avon) IR-21 Page 1 of 1
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                           NON-CONFIDENTIAL

 1   Request IR-22:
 2
 3   Please detail, with reference to the specific provisions in the MOMA or other agreements,
 4
 5   a)     What occurs in the event of a NPPH (temporary) shutdown i.e. who supplies fuel? Who
 6          operates the plant? Who provides services? Who pays?
 7
 8   b)     What is the impact on price to NSPI customers?
 9
10   Response IR-22:
11
12   a)     In the event of a temporary shutdown, the contractual terms of the MOMA continue to apply,
13          that is, there is no difference in who supplies fuel, operations, services or payment.
14
15   b)     There is no impact on price to NSPI customers.




     Date Filed: May 26, 2010                                               NSPI (Avon) IR-22 Page 1 of 1
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                         NON-CONFIDENTIAL

 1   Request IR-23:
 2
 3   Application, Section 8, Competitive Procurement Process, Page 27, Line 17, NSPI states that
 4   the levelized cost of this project is lower than the $122.22 levelized PPA price filed in 2009 in
 5   the Strait Bio-Gen Application (NSPI-P-172).
 6
 7   a)     Please confirm that the Strait Bio-Gen PPA was not approved.
 8
 9   b)     It escalated at an unknown and uncertain Biomass index.
10
11   Response IR-23:
12
13   a)     Confirmed.
14
15   b)     The PPA price included a number of escalators. The fuel portion of the price was tied to a
16          Biomass Index, not yet developed.




     Date Filed: May 26, 2010                                          NSPI (Avon) IR-23 Page 1 of 1
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                         NON-CONFIDENTIAL

 1   Request IR-24:
 2
 3   The Evidence in P-172 was that in late 2008 NSPI stated its intention to issue a transmission
 4   connected 50MW Biomass RFP.
 5
 6   a)    Did NSPI act upon its stated intention to issue a transmission-connected renewable
 7         generation project at any time until the RFP of April 5, 2010, which calls for a
 8         minimum capacity of 10MW per project?
 9
10   b)    What is the lead time from issuance of an RFP to the selection of a successful proposal?
11
12   c)    If NSPI had not issued an earlier RFP, why not?
13
14   Response IR-24:
15
16   a)    No. The timing of the April 5, 2010 RFP was a result of four considerations:
17
18         i)     There was a need for 2013 Renewable Energy Standard (RES) compliance.
19
20         ii)    There were ongoing efforts to determine which of the projects with PPAs from the
21                2007 RFP would advance, which, in turn determined the quantity of RES energy
22                required for 2013.
23
24         iii)   There was parallel development of the Port Hawkesbury project. Disclosure of this
25                development at the time of the RFP was important for bidders to understand the RES
26                compliance options available to NSPI.




     Date Filed: May 26, 2010                                           NSPI (Avon) IR-24 Page 1 of 2
                      NSPI Application for Approval of Capital Work Order CI# 39029
                         Port Hawkesbury Biomass Project (NSUARB P-128.10)
                              NSPI Responses to Avon Information Requests

                                         NON-CONFIDENTIAL

 1   Response IR-24: (cont’d)
 2
 3         iv)     There were ongoing consultations being conducted by Government including the
 4                 Wheeler process. These consultations had the potential to shape renewable energy
 5                 compliance options and the role of biomass fuel.
 6
 7   b)    The schedule indicated in the April 5, 2010 RFP is that the estimated date for notification is
 8         September 1, 2010.
 9
10   c)    Please refer to part (a).




     Date Filed: May 26, 2010                                            NSPI (Avon) IR-24 Page 2 of 2
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                         NON-CONFIDENTIAL

 1   Request IR-25:
 2
 3   Application, Page 27, Lines 19-22, notes that NSPI does not expect that this RFP will produce
 4   sufficient economic volumes to displace this Biomass Project.
 5
 6   a)     Please elaborate upon the basis for this statement.
 7
 8   b)     Does NSPI undertake to provide an update to the Board and Intervenors of the
 9          proposals submitted on July 15, 2010, in response to the outstanding RFP along with an
10          analysis comparing the proposals to this project?
11
12   c)     In the event of favourable solicitations, how will NSPI “revise its plans” for the Biomass
13          Project as referenced at Lines 21-22?
14
15   Response IR-25:
16
17   a)     The NewPage site provides a large scale co-generation opportunity with existing support
18          infrastructure and a long-term supply of biomass.      There is a small number of similar
19          facilities in Nova Scotia that do not already have Power Purchase Agreements in place with
20          NSPI. Please refer to Liberty IR-61.
21
22   b)     Yes.
23
24   c)     It is premature to speculate on how plans might be revised. Please refer to Liberty IR-61 and
25          CA-112.




     Date Filed: May 26, 2010                                            NSPI (Avon) IR-25 Page 1 of 1
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                         NON-CONFIDENTIAL

 1   Request IR-26:
 2
 3   Application, Pages 29-31, Economic Justification, compares this project to the 2009 IRP
 4   update base and high load cases and on a levelized cost basis.
 5
 6   a)     Did the company benchmark this project against successful renewable energy projects?
 7          If not, why not?
 8
 9   Response IR-26:
10
11   a)     Yes. Market data available to NSPI confirms that the Port Hawkesbury Biomass Project
12          provides customers with a low cost and reliable option to comply with the 2013 Renewable
13          Energy Standard (RES). NSPI is not aware of another renewable energy alternative that can
14          achieve RES compliance at comparable cost to customers. The analyses filed in support of
15          the Application include a price for wind that is consistent with successful renewable energy
16          projects. Please refer to Appendices 7 and 8 in the Application and Avon IR-30 Attachment
17          1.
18




     Date Filed: May 26, 2010                                           NSPI (Avon) IR-26 Page 1 of 1
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                         NON-CONFIDENTIAL

 1   Request IR-27:
 2
 3   a)    Does NSPI acknowledge that approval for this project is sought contrary to the Board’s
 4         direction on competitive solicitations?
 5
 6   b)    How does the process for approval for this untendered project accord with the
 7         requirements of the Fuel Manual? In your response, please cite the specific governing
 8         sections of the Fuel Manual and the accommodations requested or required by NSPI
 9         for approval.
10
11   Response IR-27:
12
13   a)    No. Please refer to Avon IR-25 and CA IR-112.
14
15   b)    NSPI’s application is for approval of a capital project to comply with the 2013 Renewable
16         Energy Standard. The information provided by the Company in the filing and the proceeding
17         initiated by the Board to review the Application are consistent with normal processes
18         regarding large capital applications filed by the Company.
19
20         The NSPI Fuel Manual provides the Board and stakeholder-vetted framework which governs
21         NSPI’s procurement and management of its fuel and purchased power portfolio. The Fuel
22         Manual does not address NSPI capital applications.




     Date Filed: May 26, 2010                                           NSPI (Avon) IR-27 Page 1 of 1
                            NSPI Application for Approval of Capital Work Order CI# 39029
                               Port Hawkesbury Biomass Project (NSUARB P-128.10)
                                    NSPI Responses to Avon Information Requests

                                                   NON-CONFIDENTIAL

 1   Request IR-28:
 2
 3   If this project is approved, what impact does it have upon the interconnection queue and other
 4   projects?
 5
 6   Response IR-28:
 7
 8   Please refer to the Interconnection Request Queue section of the NSPI Open Access Same-Time
 9   Information System website. 1
10
11   Since the project is configured as an energy only interconnection, there will be no affect on those in
12   the existing Interconnection Request Queue that have requested Network Service.




     1
         http://oasis.nspower.ca/en/home/default/revisedgenerationinterconnectionprocedures.aspx




     Date Filed: May 26, 2010                                                           NSPI (Avon) IR-28 Page 1 of 1
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                           NON-CONFIDENTIAL

 1   Request IR-29:
 2
 3   Appendix, Page 30 and Appendix 7, Strategist Modeling the Economic Effect of the Project on
 4   the IRP plans, shows a cumulative net present value benefit over the time period 2008 – 2032
 5   of $37.9 million and $41.1 million as compared to the 2009 IRP update high load Plan E.
 6
 7   a)    What impact upon the NPV does the addition of transmission upgrades or
 8         interconnection costs have upon the comparison?
 9
10   b)    In the IRP base load cases, were transmission cost assumptions developed and
11         incorporated within the analysis?
12
13   c)    Can NSPI provide a graphic representation of the rate impact of this project over the
14         project life versus the IRP Base Plan A?
15
16   Response IR-29:
17
18   a)    Please refer to Multeese IR-16j and Multeese IR-16k.
19
20   b)    Yes, in the IRP base load cases the transmission cost assumptions were included in the
21         analysis. Please refer to part (a).
22
23   c)    Please refer to Attachment 1.         The rate information provided is for illustrative and
24         comparative purposes only. Any future rate changes will be determined through a Rate
25         Application with specific Test Year data. The rate impact shown is relative to the forecasted
26         rate in 2010 for Base Case Plan A.




     Date Filed: May 26, 2010                                            NSPI (Avon) IR-29 Page 1 of 1
                                                                  Cumulative Rate Effect
                                                         Rate Impact Relative to Forecast 2010 Rate
                                                       Base Case Plan A - NPPH Biomass (Base Case)
                      70%
                                                                                                                                                        Date Filed: May 26, 2010




                      60%



                      50%



                      40%
                                                                                                                                 Plan A
                                                                                                                                 NPPH Biomass Project
                      30%




Cumulative % Change
                      20%



                      10%



                      0%
                            2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
                                                                                                                                                        Port Hawkesbury Biomass Avon IR-29 Attachment 1 Page 1 of 1
                      NSPI Application for Approval of Capital Work Order CI# 39029
                         Port Hawkesbury Biomass Project (NSUARB P-128.10)
                              NSPI Responses to Avon Information Requests

                                                 REDACTED

1   Request IR-30:
2
3   Please provide pricing for renewable projects for both successful and unsuccessful proponents
4   in response to NSPI’s Renewable Energy RFPs.
5
6   Response IR-30:
7
8   Please refer to Confidential Attachment 1.




    Date Filed: May 26, 2010                                          NSPI (Avon) IR-30 Page 1 of 1
Date Filed: May 26, 2010         REDACTED Port Hawkesbury Biomass Avon IR-30 Attachment 1 Page 1 of 1




                                              GENERATION
              DEVELOPER    PROJECT LOCATION      TYPE      MW   PRICE/MWh SUCCESSFUL/UNSUCCESSFUL
                      NSPI Application for Approval of Capital Work Order CI# 39029
                         Port Hawkesbury Biomass Project (NSUARB P-128.10)
                              NSPI Responses to Avon Information Requests

                                                 REDACTED

1   Request IR-31:
2
3   Please provide copies of records, notes of meetings, e-mails and other correspondence between
4   senior executives of NSPI and NPPH, along with records of negotiations.
5
6   Response IR-31:
7
8   Please refer to Confidential Attachment 1.




    Date Filed: May 26, 2010                                          NSPI (Avon) IR-31 Page 1 of 1
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                               REDACTED

 1   Request IR-32:
 2
 3   Since January 1, 2009, has NSPI had any discussions, expressions of interest or negotiations
 4   with any entities regarding renewable energy, either within or outside the RFP process? Please
 5   provide details of the size, nature and geographic location of any such proposal, the timing, the
 6   nature of the discussions and the current status.
 7
 8   Response IR-32:
 9
10   NSPI personnel field inquiries from renewable developers on an ongoing basis. Generally, these
11   developers are seeking clarity on the Renewable Energy Standard requirements in Nova Scotia and a
12   sense of the market opportunities available.    The majority of these inquiries are from wind
13   developers but some come from solar or tidal developers.       The discussions of relevance are
14   summarized below.
15
       Proposed Project Owner               Annual Biomass                       Comments
                                          Consumption (tonnes)




16
17   Please refer to Avon IR-30, CA IR-34, Liberty IR-59, and Liberty IR-61.




     Date Filed: May 26, 2010                                           NSPI (Avon) IR-32 Page 1 of 1
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                          NON-CONFIDENTIAL

 1   Request IR-33:
 2
 3   NSPI states that this project is desirable for the second RES compliance period and to
 4   diversify renewable energy. What alternatives to this Biomass project has NSPI considered?
 5   In responding, please provide a copy of any documentary analysis conducted of the
 6   alternatives.
 7
 8   Response IR-33:
 9
10   The alternatives considered and under consideration fall into two categories: wind projects which
11   represent intermittent power; and whatever firm renewable energy is proposed under the April 5,
12   2010 RFP. Other than these two categories of alternatives, NSPI is aware of no other low cost,
13   Renewable Energy Standard (RES) qualifying, alternatives that can provide the quantity of energy
14   necessary for 2013 RES compliance.
15
16   The 2008 Wind Integration Study conducted by Hatch for the Nova Scotia Department of Energy
17   projected the potential impacts of adding additional wind generation to the Nova Scotia power
18   system. Two of the recommendations of that study describe the need to assess actual impacts when
19   wind generation in fact comes on line:
20
21          (1) The generation patterns/variations of wind power plants have direct impacts on
22          system AGC service, load following requirement, unit scheduling and real time
23          dispatch. The expected generation patterns of the wind power plants were assessed
24          using the available wind data records for each of the zones. It is recommended that
25          the actual generation patterns of the wind power plants should be compared with
26          these assessed values when the system has some 200 MW or more of wind power
27          capacity. Based on the comparison, the future generation patterns of wind power
28          plants by zone and within zones should be appropriately predicted and the impact of
29          wind power plants on AGC and load following requirements should be assessed
30          based on the new predictions.




     Date Filed: May 26, 2010                                          NSPI (Avon) IR-33 Page 1 of 2
                      NSPI Application for Approval of Capital Work Order CI# 39029
                         Port Hawkesbury Biomass Project (NSUARB P-128.10)
                              NSPI Responses to Avon Information Requests

                                          NON-CONFIDENTIAL

 1   Response IR-33: (cont’d)
 2
 3          (12) Higher levels of wind power integration result in more frequent changes in
 4          loading, start-ups and shutdowns of steam turbine driven generating units. Thus these
 5          generating units would face more operational challenges as wind power capacity
 6          increases. NSPI should carry out technical/economic studies to investigate if any
 7          investments on these units are desirable to meet the operational challenges or improve
 8          their operational capability.
 9
10   As described in the application, NSPI has made commitments for over 275 MW of wind generation.
11   Much of this wind capacity (157 MW) is currently under construction. Accordingly, there has not
12   yet been opportunity to examine the actual performance and impact of this quantity of wind on the
13   power system. If all of the 2013 RES requirement were to be met with additional wind, a further
14   130 - 150 MW of wind commitments would be necessary, taking the system total to over 400 MW.
15   Accordingly, NSPI has decided to diversify this portfolio and add firm energy to achieve 2013 RES
16   compliance. This will allow an interval of time to understand the actual operating performance and
17   system impacts of the wind projects for which commitments are already in place.




     Date Filed: May 26, 2010                                            NSPI (Avon) IR-33 Page 2 of 2
                       NSPI Application for Approval of Capital Work Order CI# 39029
                          Port Hawkesbury Biomass Project (NSUARB P-128.10)
                               NSPI Responses to Avon Information Requests

                                               NON-CONFIDENTIAL

 1   Request IR-34:
 2
 3   NSPI states that the “project cost total (less AO and AFUDC) equals approximately $2,800 per
 4   kilowatt.” (Application, Page 32)
 5
 6   a)     Why are AO and AFUDC excluded?
 7
 8   b)     The total of $208.6 million less AO ($3.0 million) and AFUDC ($25.4 million) equals
 9          $180.2 million. Dividing this by 60MW gives a cost of $3,003 per kW. Please explain the
10          difference.
11
12   Response IR-34:
13
14   a)     Administrative Overhead and Allowance for Funds Used During Construction are excluded
15          from the $2,800 per kilowatt to make the number comparable to the list of greenfield projects
16          from other jurisdictions shown in Appendix 12 of the Application. Note 3 of Appendix 12
17          states: Costs do not include Owner’s costs such as interest during construction.
18
19   b)     The per kilowatt cost of $2,800 is the result of dividing $180.2 million by 63,800 kilowatts,
20          which is the capacity of the shortlisted turbine. NSPI expects actual output to be similar to
21          that of the shortlisted turbine.




     Date Filed: May 26, 2010                                             NSPI (Avon) IR-34 Page 1 of 1