BRITISH COLUMBIA HYDRO AND POWER AUTHORITY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2016 AND 2015
British Columbia Hydro and Power Authority
NOTE 21: COMMITMENTS AND CONTINGENCIES
Energy Commitments
BC Hydro (excluding Powerex) has long-term energy and capacity purchase contracts to meet a portion of
its expected future domestic electricity requirements. The expected obligations to purchase energy under
these contracts have a total value of approximately $56,336 million of which approximately $157 million
relates to the purchase of natural gas and natural gas transportation contracts. The remaining commitments
are at predetermined prices. Included in the total value of the long-term energy purchase agreements is
$455 million accounted for as obligations under capital leases. The total BC Hydro combined payments are
estimated to be approximately $1,472 million for less than one year, $6,592 million between one and five
years, and $48,272 million for more than five years and up to 55 years.
Powerex has energy purchase commitments with an estimated minimum payment obligation of $1,971
million extending to 2034. The total Powerex energy purchase commitments are estimated to be
approximately $446 million for less than one year, $834 million between one and five years, and $691
million for more than five years. Powerex has energy sales commitments of $602 million extending to 2026
with estimated amounts of $381 million for less than one year, $208 million between one and five years,
and $13 million for more than five years.
Lease and Service Agreements
The Company has entered into various agreements to lease facilities or assets classified as operating leases,
or support operations. The agreements cover periods of up to 70 years, and the aggregate minimum
payments are approximately $755 million. Payments are $127 million for less than 1 year, $182 million
between one and five years, and $446 million for more than five years.
Contingencies and Guarantees
a) Facilities and Rights of Way: the Company is subject to existing and pending legal claims relating
to alleged infringement and damages in the operation and use of facilities owned by the Company.
These claims may be resolved unfavourably with respect to the Company and may have a
significant adverse effect on the Company’s financial position. For existing claims in respect of
which settlement negotiations have advanced to the extent that potential settlement amounts can
reasonably be predicted, management has recorded a liability for the potential costs of those
settlements. For pending claims, management believes that any loss exposure that may ultimately
be incurred may differ materially from management’s current estimates. Management has not
disclosed the ranges of expected outcomes due to the potentially adverse effect on the negotiation
process for these claims.
b) Due to the size, complexity and nature of the Company’s operations, various other legal matters are
pending. It is not possible at this time to predict with any certainty the outcome of such litigation.
Management believes that any settlements related to these matters will not have a material effect on
the Company’s consolidated financial position or results of operations.
c) The Company and its subsidiaries have outstanding letters of credit totaling $1,065 million (2015 -
$822 million), of which there is US $ 30 million (2015 – US $44 million).