I, Brian Merwin, hereby declare as follows:

1. I offer this supplemental testimony to respond to facts and arguments alleged in Canada’s Counter-Memorial Submission.

I. CELGAR’S ARBITRAGE PROJECT AND THE SALE OF CELGAR’S SELF-GENERATED

ELECTRICITY

2. In the first paragraph of its Counter-Memorial, Canada misrepresents Celgar’s Arbitrage Project. Citing to a 2008 memo I presented to Mercer’s Board, Canada makes the following false statement: “{Mercer} believed that its Celgar pulp mill was in a ‘unique’ position to purchase more electricity from FortisBC, its local utility, at low-cost regulated rates and then sell it as if it were its own ‘self-generated’ electricity to BC Hydro or an imaginary U.S. buyer.”1 This false characterization of Celgar’s plans to sell its self-generated electricity and accusations of “gaming” the system appear throughout Canada’s Counter-Memorial.2

3. The Arbitrage Project that I was exploring for Celgar in 2007 and 2008 in no way contemplated selling FortisBC’s energy to BC Hydro (or other third parties) as if it were Celgar’s own self-generated electricity. The Arbitrage Project did examine the possible sale of Celgar’s own self-generated electricity to third parties, while simultaneously purchasing electricity from Celgar’s utility (Fortis BC) to meet the pulp mill’s electricity needs. Canada’s suggestion that Celgar had orchestrated a scheme to sell FortisBC’s electricity as its own is not only false,3 it also betrays a fundamental misunderstanding and misrepresentation of the modern electricity market and distribution system.