I. INTRODUCTION

A. Overview Of Reply

1. Mercer’s Case In A Nutshell

1. This case is about discriminatory, unfair, and inequitable actions taken by the British Columbia Utilities Commission (“BCUC” or “Commission”) and BC Hydro to force Celgar to continue to subsidize other ratepayers, without compensation. The BCUC and BC Hydro require Celgar — unlike other British Columbia pulp mills — to use all of its below-load self-generated electricity to serve its own load. Celgar’s load displacement benefits other ratepayers, because it enables BC Hydro and FortisBC to avoid the high marginal costs of having to acquire the electricity they otherwise would need to purchase to supply Celgar, thereby lowering their average costs and rates.

2. BC Hydro contracted other pulp mills, like Canfor and Howe Sound, to provide load displacement, and paid them each tens of millions of dollars in exchange for committing to provide that valuable service. Canada explains that neither BC Hydro nor FortisBC wanted to pay Celgar for load displacement, so BC took from Celgar through regulatory action that which it paid others to provide.