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Allwest Reporting Ltd. #1200 - 1125 Howe Street Vancouver, B.C. V6Z 2K8
BRITISH COLUMBIA UTILITIES COMMISSION
IN THE MATTER OF THE UTILITIES COMMISSION ACT R.S.B.C. 1996, CHAPTER 473
and
RE:British Columbia Hydro and Power Authority Waneta 2017 Transaction Application
Project No. 158933
BEFORE:
D. M. Morton, Panel Chair
R. I. Mason, Commissioner
A. Fung QC, Commissioner
VOLUME 1
Community Input Session
Castlegar, B.C. January 13, 2018
B
APPEARANCES
P. MILLER
Commissioner Counsel
Ms. A. GRIEVE Area A Regional District of Kootenay Boundary Mr. M. CABIANCA
Self
Mr. N. GABANA
Self
Mr. B. ONYSCHUCK United Steelworkers Local 480 Trail BC
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JANUARY 13, 2018
CASTLEGAR, B.C.
(PROCEEDINGS COMMENCE AT 1:00 P.M.)
(PRESENTATION BY BCUC STAFF)
Proceeding Time 1:12 p.m. T2
THE CHAIRPERSON: I invite the people who have registered
to speak up. I am going to invite you up to the
podium. As Erica said, I ask that you please state
and spell your first name and last name so that when
it is transcribed we can make sure we are accurate.
The transcription will begin now, and I
know it said limited to five minutes, but we have a
fair amount of time this afternoon, and there is not a
lot of people that are going to speak, so I won't be
enforcing a five minute limit, just to let you know.
So, my first speaker is Ms. Ali Grieve, as
I understand it, from the Regional District of
Kootenay Boundary. Thank you.
SUBMISSIONS BY MS. GRIEVE:
MS. GRIEVE: Hello, my name is Ali Grieve, I am the
director for Area A of the Regional District Kootenay
Boundary, and I represent the area where the Waneta
Dam is situated.
Our regional district encompasses over 8000
square kilometres and is home to over 30,000 residents
who lives in five rural areas, and eight
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municipalities. The Waneta dam plays a roll in
supporting services to all these communities, and
their residents and businesses. On behalf to he
Regional District Board of Directors, I am speaking
here today to protect the services our local
government provides to the people we serve.
I am speaking to protect the funding that
makes those services possible, and in support of the
economic and social wellbeing of our region. That
wellbeing includes the continued positive presence of
Teck's Trail operations, a key employer, taxpayer, and
corporate citizen. It also includes access to
affordable, clean, and renewable power to our region.
Our Regional District understands that Teck
Resources is able to sell its private property how it
sees fit, according to legislation, and regulations
set out by the BCUC and the Province of B.C. Our
Regional District is more concerned with potential
impacts to its residents and protecting our natural
resources over and above who owns the dam. That is
why we have concerns about the BC Hydro plan to
purchase the remaining two-thirds ownership in the
Waneta Dam and generating station from Teck.
This sale could have a negative impact on
the service delivery for the Regional District of
Kootenay Boundary. This sale could result in an
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increase in electricity rates in our region. The sale
risks undermining one of Teck's historical reasons for
operating in Trail, which is proximity to affordable
power it owns and produces itself.
The Waneta Dam assessment is a key source
of funds for delivery of local government services.
We are uncertain how BC Hydro's interest will be
managed in regard to property taxation, and so we are
uncertain how a change in taxes will affect our
ability to fund and provide necessary services. Any
reduction in the Waneta Dam's assessment with the
resulting reduction in the ability of our Regional
District to requisition funds could impact current
services residents may require, and also into the
future.
Assessment changes could result in
significant residential tax increases. As part of the
industrial tax base for the region, the Waneta Dam
plays a significant role in Regional District service
delivery. The removal of the Waneta Dam from the tax
base with a consequent grant in lieu of taxation
received as an alternative, may impact the level and
or structure of revenues available to our Regional
District to deliver its services. Similarly, if the
sale of the remaining two-thirds of the Waneta Dam to
BC Hydro jeopardizes the long-term sustainability of
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Teck's Trail operations, there would be a significant
impact upon the regional tax base that supports
services delivered to communities within our Regional
District.
Examples of services directly or indirectly
funded by the Waneta assessment and/or current
participation of Teck related to ownership of the dam
include: a local noxious weed service helping to
protect our agricultural lands in the Beaver Valley
which is part of the Electoral Area A which I
represent; vital services such as fire protection,
recreation and transit; waste management, planning and
development and regional building inspection; funding
of education and capital financing for local
healthcare.
A secondary issue is the possible impact on
electricity rates in the FortisBC service area, which
encompasses part of the Regional District. FortisBC
buys power from the Waneta dam, and if this source is
no longer available, FortisBC may be forced to buy
electricty on the open market and/or to rely on less
sustainable sources of power.
Proceeding Time 1:18 p.m. T3
A change in where FortisBC gets its power
could lead to higher electricity rates for FortisBC
customers in our area.
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Teck is a key employer, a key taxpayer and
corporate citizen in our communities. The Waneta Dam
provides low cost clean and renewable power to Teck's
metallurgical operations. As a condition of the sale
Teck has requested a 20-year lease to use the two-
thirds interest in Waneta to produce power for its
industrial operations in Trail with an option to renew
that lease for another ten years. We ask what happens
when that time is up?
The regional district is keenly interested
to see Teck remain a vital part of our community for
well beyond the next few decades and is concerned that
no longer having affordable access to Waneta power in
the future could jeopardize that. The regional
district does not want to interfere in a private
firm's ability to conduct business as it sees fit.
However, the sale of any part of a publicly regulated
utility cannot be allowed to negatively impact a local
government's ability to provide services.
The regional district asks that the
following might be considered as conditions of sale:
That the assessment status of the Waneta dam, both now
and into the future be maintained to ensure the
sustainability of current and future local government
services; that the power rates for FortisBC customers
not be increased due to any requirement of Fortis Inc.
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or FortisBC to purchase or develop power sources
independent of the Waneta Dam; that local government,
and by extension, local residents, continue to
maintain some measure of control and influence over
our natural resources.
Our region has been pivotal in the
production of power from local waterways for the
benefit of British Columbia. We want to ensure we
continue to benefit from that resource at our local
level.
Thank you very much for listening to my
comments today on behalf of Regional District of
Kootenay Boundary.
THE CHAIRPERSON: Thank you, Ms. Grieve.
Mr. Mario Cabianca. Sorry if I got your
last name incorrect.
MR. CABINACA: Hello.
THE CHAIRPERSON: Hello.
SUBMISSIONS BY MR. CABIANCA:
MR. CABINACA: My name is Mario Cabianca, C-A-B-I-A-N-C-
A. I represent myself as an individual in Trail,
British Columbia. I have several points that I'd like
to bring to your attention. Although they may not be
under the UCBC scope, I would just like to make sure
that they're recorded for the public.
The first item is the location of this
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meeting. And this is supposed to be a community
discussion but it's happening in Castlegar, where the
resource that we're talking about is under Area A and
the company that is in the process of selling that is
in Trail, British Columbia. So having the meeting in
Castlegar, it just is incredulous.
Next item is, if BC Hydro is to purchase
this asset, I would ask the BCUC to discuss with BC
Hydro the possibility of transferring the ownership at
some future point via a sale or some type of
transaction to the Columbia Power Corporation. Both
are under the authority of the provincial government
and having the Columbia Power Corporation own this
asset I think would be a benefit for the local
community in which both are located, rather than being
managed by the BC Hydro corporation which is in
Vancouver.
Another point that I have is initially I
think a lot of people were under the assumption or
understanding that Teck was going to purchase power
for 20 years at $75 million a year. And now it's come
to light that this is going to be a leasing agreement
and that there is a possibility that this leasing
agreement could terminate sooner than 20 years. So,
when I see that, that looks like an exit plan.
Proceeding Time 1:23 p.m. T4
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The question then becomes, what happens
after that lease ends? Who's going to pay for the
clean-up of the Trail metallurgical site? If there is
an asset available, and Teck has no money for clean-
up, there's a possibility that an asset could be sold
to help pay for that clean-up, but once that asset is
sold there is -- you can't get blood from a stone.
So I would be opposed to seeing this asset
being sold to BC Hydro at this time, until there is
some way to ensure that there will always be funds to
clean up the Trail metallurgical site, whether it be a
bond of some type, or some other funding that is set
aside for future problems.
I think those were my three issues. Thank
you for your time.
THE CHAIRPERSON: Thank you, sir. Mr. Gabana?
SUBMISSIONS BY MR. GABANA:
MR. GABANA: Members of the Commission, staff. I guess
I should get the complaint out first. Where are the
cookies? I don't mind you economizing, but you know,
there's some standards that are not being met.
Anyway, getting to the sale of this
structure, which I personally am in favour of, but
during the process of the proceedings, from my past
experience I have found it very difficult to
participate, especially in written submissions. Yet
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the -- and particularly the cases with Fortis, where,
you know, they have full-time staff experts to fine-
tune the wording, and slice the opinions rather thin.
So, in this process, I think that rather
than be concerned about what's going to happen in
twenty years from now, which that will just make me
103, I intend and might be around to harass you. I
think I'd like to see the rationale for the purchase.
Why is it economically viable for Hydro to purchase
this structure?
And if you start looking at the tie-ins,
and looking at the Waneta expansion, the Waneta
expansion standing on its own is a very, very
difficult structure to amortize or to justify.
Because under the water flow agreements on the river,
there is a very limited window that water rights
presently doesn't cover. And we're talking a number
of less than three months here. How you justify $900
million for three months of power --. My arithmetic,
or my personal evaluation of money, cannot justify or
even rationalize the decision. But somehow, along the
way, and I don't know really adequate wording for it,
but the canal plant agreement got thrown into the
Waneta expansion.
Proceeding Time 1:28 p.m. T5
So that immediately injected a massive
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amount of money into the project with no water rights.
And if you investigate the dividends from Columbia
Power, Columbia Basin Trust, and Fortis – Fortis Inc.,
that is; we're not talking about local Fortis – you
start to see money in dividends passed out to the
three participants in the order of 15 million dollars.
And if you slice one of the participating members
down, you are seeing dividends of five percent. Well,
certainly five percent is a justifiable return
investment, but where did that money come from, and
how is that affecting the dam as, I think I'm right,
from the information that I have, and the few friends
-- and one is related to the royalty in England and is
sitting back here by me.
You know, we are running one unit now in
Waneta to keep it warm. And running all the rest of
the power through the Waneta expansion. So, how does
all that money -- how do you justify paying 1.2 for a
structure that has really limited access to water
rights? And the numbers.
So, I what I would recommend to the
commission, having had several years experience during
the hearing processes, it is certainly Fortis leans --
the local hearing process from our rates, that we
participate here, not the overall gamut of rates that
the Commission deals with. So, it would be -- they
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certainly prefer written submissions. And I guess it
is an effective economical way of managing business.
But I think from the point of view of getting at
costs, it is very, very difficult, at least for me and
the participation that I read from proceedings. And I
think if we just go to hindsight and look at this five
year plan that Fortis was tabeling, we've had
correspondence upon correspondence, upon
correspondence, and it just goes really on to the
point of – I guess I'll have a Trump-ism here –
stupidity in my opinion. I don’t know how you
possibly could be discussing a potential theoretical
plan for all this time, consuming all this.
So, I think we've got to be able to get at
the meat of all this. What are the economics? The
only thing that has an opinionin this particular
structure is numbers. We can evaluate what we're
getting for what we're paying if we can produce some
numbers. So, as a result of the Canal Plant
agreement, as you people know, there is a block amount
of power that Hydro controls the whole source, gets
the whole block of power, takes the losses in the
event of a shortfall, grabs the gain as a result of
excessive moisture, and slices off the rest and
anybody can take their power whenever they want.
Well, personally, I think the canal plant agreement is
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a fabulous structure. I think it is from an economic
point of view, and from a citizen's point of view,
because I view power as -- it is not a privilege
anymore, it is a responsibility. And there is no
question, and I think about that, it's got more so the
days of the company being able to decide how far
they're going to run a powerline to somebody's house
is over. And I think that is wonderful.
Proceeding Time 1:33 p.m. T6
So, what I would urge the Commission to try
and have -- not try to have, but have workshops. Get
Hydro to present the rationale for the purchase. If
you're going to buy something, you're going to spend
my money, I want to know what you're going to spend my
money on, and what I'm going to get for it. And to
date, I have not been able to extract any of those
numbers. You know, when I looked at the 1.2, if you
go back in time of -- Utilicorps, and Fortis
operation, the Commission had -- is on record of
rejecting a sale, because of the conditions -- well,
they did not reject the sale as such, Mr. Chairman.
You laid the condition out that Utilicorp wasn't going
to walk across the 49th Parallel with a whole bucket of
money, and I think that was a very commendable
decision.
So, how do we get at numbers? It's all
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right to have opinions of what -- you know, what we're
going to have philosophically, or what we need
philosophically but that's an opinion. And to me, an
opinion is acceptable, but it's yours. It's
indefensible. It is an indefensible position, because
there is nothing to support it. If you have one of
anything, you have nothing. Until you can produce two
of something, then I can start telling you what I'm
going to get for my money. You know, I'm going to pay
so much here, I'm going to pay so much here, I'm going
to have operating costs here, and I know once you have
too, you could produce whole gamut of things.
But presently, we do not have any of that
information. We don't know what are the historical
benefits of the canal plant agreement as a result of
this merger with throwing in the Waneta Dam.
And I think that's important. What is
being -- it would be interesting to see the record of
the surplus power that Hydro has benefited from as a
result of more money, more power, than they were
guaranteed on the canal plant agreement to each of the
participants. And I think that is very, very
important. And being a boilermaker, and not a
mathematician, I'm not able to offer guidance of how
to do that.
But there's certainly people in your
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organization, there's people exist, who know how to do
structure analysis of benefits. And that, I think, is
your real number-one job. What are we getting for
what we're paying?
And I just would love to see that process,
because we certainly have not seen, you know, the
hearings presently with Fortis, or -- they're very
good with numbers, they're very -- from my point of
view, the participations, they have been great. I can
phone up friends like Mr. King and other people, and
they are too willing to give me the information that
is not confidential.
In the particular case of the Waneta
expansion, we don't know what we're paying for --
selling that power for. It's a secret deal. Why
could it possibly be a secret deal of selling power
from the river that's there, and we, as Fortis
ratepayers, have no idea: Are they paying more for it?
Are they paying less for it? You know, are we getting
into the -- you know, the power rates become negative,
as you all know, some time in the spring when there's
a high water run-off.
Proceeding Time 1:38 p.m. T7
Actually the Americans have been known to
pay you to take power. You know, under very
restrictive hours as you know. And when I tell my
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friends that they think they should resurrect Esendale
and I should be the first one in. And I could
understand, you know, people wondering how do you pay
somebody to take power, but, you know, it's a fact and
-- anyway, I guess I could ramble on and go on, but I
just urge the Commission to have a workshop and have a
detailed presentation from Hydro on the rationale of
purchase and the analysis of benefits from the
existing agreement, primarily the Canal Plant
Agreement.
With that, if the Commissions has any
questions, I'd be delighted to try and help. Other
than that, I'm delighted you've moved a workshop out
of Vancouver to here where people can participate.
And I guess that's it, Mr. Chairman. I
hope you have better luck flying out of the area than
I've had in this last week.
THE CHAIRPERSON: Thank you.
MR. GABANA: So thank you very, very much for your time
and hope I've been able to contribute a little bit
towards the problem.
THE CHAIRPERSON: Thank you, sir. Is there a Mr.
Onyschuck, please? Sorry, Brian?
MR. ONYSCHUCK: Yes.
THE CHAIRPERSON: Mr. Brian Onyschuck? Yeah. Sorry.
MR. ONYSCHUCK: You mispronounce it.
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THE CHAIRPERSON: Sorry.
MR. ONYSCHUCK: It's okay. You wont' be the first -- or
the last.
THE CHAIRPERSON: Okay.
SUBMISSIONS BY MR. ONYSCHUCK:
MR. ONYSCHUCK: Good afternoon. Thank you for giving me
this opportunity to speak. My name is Brian
Onyschuck. I am the president of United Steelworkers
Local 480 in Trail. We represent approximately 1,000
production and maintenance workers at the Teck
smelter.
I think I would like to first bring you
back to the sale of the one-third of the dam back in
2009, when then our current president, Mr. Doug Jones,
had submitted an application to Ms. Erica Hamilton in
regards to that sale. At that time Mr. Jones wrote:
"Also concerning is the fact that BCH's
analysis of the Waneta transaction ignored
the broader public interest. The workers at
Trail Operations and the surrounding
communities depend critically on the
continued operation of the smelter. BCH
states that it is only acquiring Teck's
surplus power. The fact remains that it
will leave the operation in Trail with no
surplus or contingency supply when it's
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operating at capacity."
Mr. Jones went on to say:
"Finally, the issue will have a definite
effect on workers at Trail Operations,
where…"
back then,
"…four out of the last ten years the surplus
power has played a significant role in
keeping the operation positive in terms of
profit. It will undoubtedly have an equal
effect on the ratepayers in Trail and the
greater area in the coming years. Either
Teck or BCH, if they disagree with that,
should have no problem putting their
assurances in writing so they may be held
accountable down the road."
It's also notable to mention that Teck's
submission back on that one-third sale, in their
submission, "Concerns Raised by the City of Trail and
USW Local 480." The City of Trail and USW Local 480
expressed concern that the transaction may affect the
viability of Teck's industrial operations. A similar
concern is also expressed in some of the letters of
comment filed by interested parties.
The City of Trail says that:
"In the past Cominco, now Teck, made it
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known that access to low cost power was
necessary to be competitive and maintain
smelter operations in the community, both
operationally and as a factor of production.
Teck acknowledged that it has made such
statements in the past and access to low
cost power continues to be necessary for the
Trail industrial operations to be
economically viable.
It is for this reason…
they stated,
"…that the transaction has been structured in a manner to
provide the industrial operations with low-cost power
they require, as set out at page 3-6 of the filing.
Teck stated they would use two-thirds interest on the
Waneta assets to provide power for its industrial load
at the Trail smelter. The parties recognize that
Teck's industrial load may require less than the two-
thirds of the CPA entitlement associated with the
Waneta assets in some months, and greater than two-
thirds in other months. Accordingly, the operating
terms would contemplate a series of entitlement
adjustments until at least December 31, 2035, designed
to ensure that Teck would have sufficient energy to
serve industrial load in all months.
Proceeding Time 1:44 p.m. T8
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Now, we fastforward to 2017, and Teck is
stating that they don’t need to have that power in
their hands, and they have a 20-year lease agreement
to purchase that. Being an employee up at Teck
Cominco for over 35 years, since 1979, I have attended
numerous management presentations, and was always told
by the management in power at the time that the only
reason Teck operations is profitable and running was
because of the low power rates acquired from the
Waneta Dam. Trail operations had the lowest power
costs of over 25 other smelters worldwide, and that
was the biggest advantage over the smelters. In 1982,
Cominco stated in an application to the B.C. Utilities
Commission, that the economic disadvantage of
operating the smelter was offset by the advantage of
its low cost energy supply, that being the Waneta Dam.
What has changed? So they now have this
lease agreement that is going to have them pay 75
million per year, with an escalating clause of 2
percent per annum, for something they already owned.
And they have informed us they will also have ongoing
costs of 10 to 12 million annually, for maintenance
costs on top of that. These costs will now become
part of Teck Trail operations.
So, how profitable will Trail operations be
to Teck? Research tells us that Teck did not need to
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sell the dam for further debt reduction, which was one
of the reasons at the time of putting the sale
forward. Because they had a one billion repayment
earlier this year in 2017, their debt levels are
already within the range of management targets. The
reality is that Teck could take that money and bolster
their decision to proceed with the phase two expansion
of the Quebrada Blanca copper mine in Chile, expanding
that mine life for another 25 years. But we are
concerned about Trail, British Columbia, and the sale
of the dam here will leave Teck's Trail smelter
particularly vulnerable to reduced operations, sale,
or even closure. Any of these events could mean loss
in jobs and prosperity in Trail and the surrounding
areas. This is not good for the development of our
area.
If this sale is going to be allowed to go
through, we need better assurances than a 20-year
lease and an option for 10 more. This is our
lifeline, and we deserve better. This community is
worried. My members are worried. We have a lot of
young, newer members with the babyboomers, such as
myself heading out the door and to tell them in 20
years that they're not sure where their future lies,
is a scary proposition. And not only for the workers
of Trail, but all the jobs that are offset from the
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high-paying people up at Teck. And we ask that if the
sale is allowed to go through, that we get better
assurances that this smelter will continue to be
viable in this region for much longer than the 20-year
lease that is contemplated in the sale.
Thank you for your time today, I appreciate
the opportunity to speak.
THE CHAIRPERSON: Thank you, sir. Questions? No? Thank
you. Is there a Mr. O'Conner please?
MR. O'CONNER: I've decided I am just going to make a
written submission.
THE CHAIRPERSON: Okay, thank you. Having come to the
end of the list of people who had signed up initially,
would anyone who hadn't signed up like to take the
opportunity to say anything? Or would anyone that has
said something care to rebutt or comment on anything
that someone else has said?
Okay. Is there anyone else? Please go
ahead, sir.
MR. GABANA: Mr. Chairman, thinking of process that we're
into right now, the existing process of an application
is in blunt, quick terms, somebody puts out a sale, a
news release, "I want to buy a dam." Comes to you
people, all of a sudden we say, "Okay, round one of
questions." Well, it is sort of like taking the top
off of a barrel with a bunch of information in it. So
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everybody starts firing questions in, with really no
knowledge of the total process.
Proceeding Time 1:49 p.m. T9
So I would urge the Commission to rethink
its hearing process, and have a workshop before
questions, with a detailed presentation, analysis, of
what we're talking about. Does that make some sense?
What do you think, as a Commissioner, of that?
THE CHAIRPERSON: We will certainly consider your
suggestion, sir. We will take that into
consideration.
MR. GABANA: Yeah, because, you know, I see the process,
and you don't even really dig into what they're doing,
you know? And just a little example, you go back to
the Fortis hearings on hot taps. All of a sudden you
have this big demand for hot taps, pictures of a wire
down in front of a school in Kelowna, we're going to
be burning up all these future generations of the
world. Well, once the questions started, the whole
thing kind of -- hey, what are we talking about? What
is the frequency here? You know, what are we doing?
Is there a solution? You know, and it generated, I
think, a positive outcome.
But in this particular case, we're talking
about a multitude of things in here that I think
people -- you know, we should know about. Because I
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certainly appreciate the concerns of the sale, but how
do we get information whether we start the riots or
not?
Thank you very much.
THE CHAIRPERSON: Thank you.
MR. GABANA: I hope that makes a little bit of sense.
THE CHAIRPERSON: Thank you. It does, sir. Thanks.
I'd like to thank everyone for coming out
this afternoon. My apologies if our choice of
location could have been a little better, but I do
appreciate you taking the time that you did. And for
those of you that traveled from Trail, we appreciate
that also, thank you.
And if you have any further comments,
please feel free to submit them to the Commission
secretary in writing. By e-mail is fine. If you
would like to register as an intervener, you've had a
presentation on how that can be done, and if you have
any further questions about that, please contact us.
Feel free to contact us.
Otherwise, I'll adjourn our session today
and thank you again all very much. Appreciate it.
(PROCEEDINGS ADJOURNED AT 1:52 P.M.)
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January 15, 2018