1861
    
 1                                                RP-1999-0001
 2    
 3                    THE ONTARIO ENERGY BOARD
 4    
 5    IN THE MATTER OF the Ontario Energy Board Act, 1998;
 6    
 7    AND IN THE MATTER OF an Application by The Consumers Gas
 8    Company Ltd., carrying on business as Enbridge Consumers
 9    Gas, for an order or orders approving or fixing rates
10    for the sale, distribution, transmission and storage of
11    gas for its 2000 fiscal year.
12    
13    
14    
15    
16    B E F O R E :
17    P. VLAHOS                               Presiding Member
18    S.K. HALLADAY                                     Member
19    
20    
21    Hearing held at:
22    2300 Yonge Street, 25th Floor, Hearing Room No. 1,
23    Toronto, Ontario on Wednesday, September 8, 1999,
24    commencing at 0900
25    
26                          RATES HEARING
27    
28                            VOLUME 11

                                                         1862
    
 1                           APPEARANCES
 2    JENNIFER LEA/       Counsel, Board Technical
 3    HIMA DESAI/         Staff
 4    JAMES WIGHTMAN
 5    J.H. FARRELL/       Enbridge Consumers Gas
 6    F. CASS/
 7    T. LADANYI/
 8    H. SOUDEK
 9    ROBERT WARREN       Consumers Association of
10                        Canada
11    TOM BRETT           Ontario Association of
12                        School Business Officials of
13                        the Metropolitan Toronto
14                        Separate School Board
15    IAN MONDROW         Heating, Ventilation and Air
16                        Conditioning Contractors Coalition
17                        Inc., HVAC Coalition
18    GEORGE VEGH         Coalition for Efficient
19                        Energy Distribution
20    MARK MATTSON/       Energy Probe
21    MICHAEL HILSON
22    MURRAY KLIPPENSTEIN Pollution Probe
23    DAVID POCH          Green Energy Coalition, GEC
24    MICHAEL JANIGAN     Vulnerable Energy Consumers
25                        Coalition
26    STAN RUTWIND        TransCanada PipeLines
27                        Limited
28    

                                                         1863
    
 1                      APPEARANCES (Cont'd)
 2    MICHAEL MORRISON    Ontario Association of
 3                        Physical Plant
 4                        Administrators
 5    JOEL SHEINFIELD     Enbridge Services Inc.
 6    MARK ANSHAN         Canadian Association of
 7                        Energy Service Companies
 8    MARK STAUFT         TransCanada Gas Services
 9    DAVID BROWN/        Coalition of Eastern Natural
10    RICHARD PERDUE      Gas Aggregators and Seller
11                        (CENGAS)
12    PETER THOMPSON      Industrial Gas Users
13                        Association (IGUA)
14    BETH SYMES          Alliance of Manufacturers &
15                        Exporters Canada
16    LYNDA ANDERSON      Union Gas Limited
17    GLEN MacDONALD      Ontario Hydro Services
18                        Company
19    
20    
21    
22    
23    
24    
25    
26    
27    
28    

                                                         1864
    
 1                                            Toronto, Ontario
 2    --- Upon resuming on Wednesday, September 8, 1999
 3        at 0900
 4              THE PRESIDING MEMBER:  Good morning, everyone.
 5              MR. WIGHTMAN:  Good morning.  We win by
 6    default.
 7              THE PRESIDING MEMBER:  It's called by default,
 8    is it?
 9              MR. FARRELL:  My apologies.
10              Mr. Chair, Ms Halladay and I are having some
11    photocopying problems.  We have a lot of responses to
12    undertakings as well as the document for Mr. Mondrow who
13    has now advised me that he is satisfied with the
14    information and that he wishes to ask some questions of
15    a contextual nature of Ms Reynolds.
16              I expected to see Mr. Mondrow here because I
17    had advised him that, subject to your direction, rather
18    than having Ms Reynolds be here all morning that we
19    might have him ask her questions first.  He told me he
20    would be 10 to 15 minutes and then she could go her way
21    and continue to work on her undertaking responses and we
22    would proceed with Mr. Stephens, but Mr. Mondrow isn't
23    here.
24              I will move to Plan B.
25              THE PRESIDING MEMBER:  Under Plan B maybe we
26    will just deal with any other preliminary matters.
27              MR. FARRELL:  I'm sorry, I lost track of the
28    time.  I was going to come down and ask Ms Lea to

                                                         1865
                                          Preliminary Matters
 1    postpone your entrance until we had our photocopy run
 2    done.  We started early and then we ran into some
 3    problems, as I mentioned.
 4              The document for Mr. Mondrow is relatively
 5    thick because we have added, for the Board's convenience
 6    as well as Mr. Mondrow's, copies of exhibits from
 7    previous hearings that Ms Reynolds refers to.  It's
 8    about half an inch thick.  It's taking some time to
 9    reproduce, as well as not all of our undertaking
10    responses, but a goodly number of them.
11              THE PRESIDING MEMBER:  Perhaps if there are
12    any other preliminary matters at this stage we can deal
13    with them and by that time see if Mr. Mondrow comes in.
14              MR. FARRELL:  Okay.  Could you tell me, Mr.
15    Chair, when we would be adjourning for the day?  Will we
16    be going until one o'clock?
17              THE PRESIDING MEMBER:  One o'clock, yes.  We
18    do have some other business, so it will be one o'clock.
19              MR. FARRELL:  I wasn't certain whether it was
20    one o'clock or earlier than one o'clock.
21              THE PRESIDING MEMBER:  One o'clock.
22              Ms Lea, do you have any other matters?
23              MS LEA:  I do have one matter that I wanted to
24    put on the record, but perhaps I can ask Mr. Farrell: 
25    Mr. Farrell, did you have an opportunity yet to locate,
26    and possibly it's a photocopying problem, the template,
27    the empty template of filings you provide to the E.R.O.?
28              MR. FARRELL:  We don't have it to hand out

                                                         1866
                                          Preliminary Matters
 1    yet, Mr. Ladanyi is telling me.  I hadn't appreciated
 2    that we were the ones to do that.  I thought you were
 3    going to obtain it from the E.R.O.
 4              MS LEA:  Yes.
 5              MR. FARRELL:  And file it.
 6              MS LEA:  Probably counsel are always the last
 7    one to know.  I think that a lot of people thought what
 8    your people thought, if I can put it that way.
 9              Okay.  Thank you very much.  Mr. Ladanyi, we
10    will take that whenever you have it ready.
11              In that connection, however, I wanted to put
12    some information on the record for the assistance of
13    parties that they may be interested in addressing in
14    their arguments.
15              Having spoken with E.R.O., I understand that
16    the filing of this information contained in the template
17    is actually involuntary filing in the sense that the
18    E.R.O. does have the ability, or did have under the old
19    Act, and I will talk historically for a moment, did have
20    the ability under the old Act to enter the premises of
21    any utility regulated by the Board and take this
22    information.
23              The practice developed that the utility would
24    file the information, but as far as I have been able to
25    ascertain, there has never been a direction or order of
26    the Board as to what should be filed, when it should be
27    filed, so that if parties choose to address this issue
28    in argument, it should be on the basis that, as I

                                                         1867
                                          Preliminary Matters
 1    understand it, there has been no direction of the Board
 2    in that regard.  The filings being made now, or not
 3    being made, whatever, are voluntary in nature.
 4              THE PRESIDING MEMBER:  Thank you, Ms Lea.
 5              Mr. Farrell, did you wish for us to stand down
 6    then?
 7              MR. FARRELL:  I have a couple of preliminary
 8    matters here, Mr. Chair.  If I can find one transcript
 9    reference, if you will bear with me.
10              THE PRESIDING MEMBER:  Yes.
11    --- Pause
12              MR. FARRELL:  Mr. Thompson has suggested that
13    he could take Mr. Stephens through his
14    examination-in-chief and then if we needed to stand down
15    to organize paper and come back, at least that would be
16    behind us.
17              I would then have time, hopefully, to digest
18    what Mr. Stephens was telling Mr. Thompson in chief and
19    if we have any questions, I might head into my
20    cross-examination rather than leaving them to the very
21    end and making it disjointed.
22              THE PRESIDING MEMBER:  Yes, that sounds
23    reasonable.
24              MR. FARRELL:  I have a preliminary matter at
25    this point, one transcript correction that I should
26    make.  It's easier for me to make it on the record than
27    to try to do it in writing, Mr. Chair.
28              It is in Volume 9 at page 1557.  If you look

                                                         1868
                                          Preliminary Matters
 1    at lines 19 to 22, I interjected a comment during
 2    Mr. Thompson's cross-examination.  I realized at the
 3    time I was speaking that what I was saying was probably
 4    wrong.  It was wrong.  It was my recollection that was
 5    wrong.
 6              I was suggesting there that the fees vary,
 7    depending on the type of customer.  This is in the
 8    context of the CIS costs.  It wasn't Mr. Kent who made
 9    the comment I was referring to.  I was referring to Mr.
10    McGill's statement to Mr. Thompson on the previous day,
11    transcript Volume 8, page 1381, where Mr. McGill was
12    talking about the ABC program and the dollar and five
13    cents per bill for a residential bill.
14              Mr. McGill went on to say that these are
15    somewhat higher for industrial and commercial.  I
16    apologize to you and to Mr. Thompson for the
17    interjection, but I thought I should set the record
18    straight.
19              In terms of the CIS cost per customer, it's
20    the same for all customers, ranging from a residential
21    customer to industrial, such as the members of IGUA.
22              There is one outstanding undertaking.  It
23    arose, I believe, from Mr. Janigan's cross-examination
24    where he was asking about consulting fees during the BPR
25    phase.
26              It's undertaking No. J8.1 in which Mr. Kent
27    undertook to advise whether there are confidentiality
28    provisions in the contract associated with the BPR work

                                                         1869
                                          Preliminary Matters
 1    from IBM, Anderson Consulting and
 2    Pricewaterhousecoopers, and whether they have an
 3    objection to filing the documents.
 4              I am advised by Mr. Kent that as a result of
 5    the passage of time since the BPR work was done, there
 6    have been numerous personnel changes at each of the
 7    consultants and also personnel changes within the
 8    company dealing with the SIM and CIS projects.
 9              We have not to date been able to determine
10    whether or not any of the three consulting organizations
11    would object to filing the reference documents.
12              We are prepared to continue trying to track
13    that down, but I'm now wondering whether we should
14    continue that work in the light of the time in the
15    hearing and the probative value, if you will, of filing
16    contracts for work that had been done some time ago.
17              I am looking for some direction from the
18    Board.
19              THE PRESIDING MEMBER:  Sorry.  Did you say
20    that was Mr. Janigan's undertaking?
21              MR. FARRELL:  Yes, it was, Mr. Chair.  I had
22    expected that he might be back today because he had
23    indicated at the end of last week that he had planned to
24    be here for Mr. Stephens' appearance.
25              I don't know whether I plan to speak with him,
26    assuming he was going to be here.  If he is not, then
27    maybe we can try to get hold of him on the telephone or
28    something like that.

                                                         1870
                                          Preliminary Matters
 1              THE PRESIDING MEMBER:  That would be a good
 2    idea, Mr. Farrell.  We will leave that until towards the
 3    end of the morning today and see whether Mr. Janigan
 4    does come in.  If he doesn't come in by the morning
 5    break, perhaps staff can attempt to call him and inform
 6    him of that.
 7              MR. FARRELL:  Why don't we file now, as it has
 8    just come into the room, our response to the revised
 9    prayer for relief in the HVAC coalition and affiliate
10    transaction motion.
11              MS LEA:  This is not an undertaking response,
12    Mr. Farrell.  Should it be filed just under the exhibits
13    heading?
14              MR. FARRELL:  Yes.
15              MS LEA:  Thanks.  K11.1, please.
16                   EXHIBIT NO. K11.1:  Response to Revised
17                   Prayer for Relief in HVAC Coalition and
18                   Affiliate Transaction Motion
19              MR. FARRELL:  This document, Mr. Chair,
20    consists of three pages of text, followed by four
21    appendices marked A, B, C, and D --  and E, sorry.  Then
22    the balance of the material are exhibits from previous
23    proceedings to which Ms Reynolds makes reference during
24    the course of the text in the first three pages.
25              We thought it would be convenient for the
26    Board and everyone to have it all in one spot.  It makes
27    it a little bulky, but at least it's all in one spot.
28    Bear with me.

                                                         1871
                                          Preliminary Matters
 1    --- Pause
 2              MR. FARRELL:  I'm just checking the status of
 3    another undertaking, Mr. Chair.  Bear with me.
 4    --- Pause
 5              MR. FARRELL:  That is all I have, at the
 6    moment.  So perhaps if Mr. Thompson wants to proceed
 7    with having Mr. Stephens sworn and then examined.
 8              MR. THOMPSON:  Yes, Mr. Chairman and
 9    Ms Halladay, I would like to introduce Mr. Jim Stephens
10    of Calgary.
11              Mr. Stephens' evidence is jointly sponsored by
12    IGUA; the CAC; and Mr. Janigan's client, the Vulnerable
13    Energy Consumers Coalition.
14    SWORN:  JIM G. STEPHENS
15              THE PRESIDING MEMBER:  Mr. Farrell, you were
16    noting some transcript corrections.
17              I notice, in the same Volume 9, on page 1761,
18    I am reported to say:
19                   "It's also late in the day and let's
20                   pray."
21              I'm sure I said "let's break".
22              I guess my mother would have been happy; she
23    always wanted me to be a man of the cloth.
24    --- Laughter
25              THE PRESIDING MEMBER:  I believe the day was a
26    type that we all needed to pray.
27    --- Laughter
28              THE PRESIDING MEMBER:  Mr. Thompson, go ahead,

                                                         1872
                                                     STEPHENS
 1    please.
 2              MR. THOMPSON:  Thank you, Mr. Chairman.
 3    EXAMINATION-IN-CHIEF
 4              MR. THOMPSON:  Mr. Stephens, your evidence has
 5    been filed in this proceeding as Exhibit L25.2 and the
 6    answers to interrogatories as Exhibit I25, Schedule 46. 
 7    Your resume was filed as Exhibit K2.1.
 8              Dealing first of all, sir, with Exhibit L25.2,
 9    your prefiled evidence, are there any corrections to be
10    made to this testimony?
11              MR. STEPHENS:  Yes.  I have three corrections.
12              On page 16, in the second sentence --
13              MR. THOMPSON:  Could you just slow down until
14    people get their hands on it.
15    --- Pause
16              MR. THOMPSON:  Yes, please.
17              MR. STEPHENS:  It currently reads:
18                   "And runs on the current IBM
19                   mainframe."  (As read)
20              That was corrected in Interrogatory 14.
21              It should read:
22                   "And runs on a Unix server for billing
23                   calculations."  (As read)
24              MR. THOMPSON:  Thank you.
25              The next one, please.
26              MR. STEPHENS:  On the same page, the last
27    sentence reads:
28                   "The printing solution should not be made

                                                         1873
                                   STEPHENS, in-ch (Thompson)
 1                   to work as -- could not be made to work
 2                   as designed."  (As read)
 3              It should be changed to "could not be made to
 4    work as planned".  That was addressed in Interrogatory
 5    11.
 6              On page 20, in the third sentence, it shows
 7    "Appendix 3".  It should read "Appendix 1".
 8              Those are all the corrections I have.
 9              MR. THOMPSON:  Subject to those corrections,
10    do you adopt -- well, let me ask this:  Was the evidence
11    in Exhibit L25.2, the information contained in Exhibit
12    K2.1, your resume, and the responses to interrogatories,
13    Exhibit I25, Schedule 46 -- were these materials
14    prepared by you?
15              MR. STEPHENS:  Yes, they were.
16              MR. THOMPSON:  Subject to the corrections
17    which you have made, do you adopt the contents of these
18    materials on oath in these proceedings?
19              MR. STEPHENS:  Yes, I do.
20              MR. THOMPSON:  Could I turn, then, briefly,
21    sir, to your qualifications.  In doing this, I am
22    referring to Exhibit K2.1.
23              The qualifications summary indicates that you
24    graduated with a B.Sc. in maths and physics, in 1967,
25    from the University of British Columbia.  Is that
26    correct?
27              MR. STEPHENS:  Yes.
28              MR. THOMPSON:  You then worked, briefly, as a

                                                         1874
                                   STEPHENS, in-ch (Thompson)
 1    systems analyst with Alcan Aluminum, in Kitimat?
 2              MR. STEPHENS:  Yes.
 3              MR. THOMPSON:  In 1968, you commenced a
 4    24-year career with IBM Canada?
 5              MR. STEPHENS:  Yes.
 6              MR. THOMPSON:  Can you describe the course of
 7    your career with IBM, with particular emphasis on the
 8    expertise that you acquired over the years in bidding
 9    versus competitors for technology project opportunities.
10              MR. STEPHENS:  Okay.  I will try and do that.
11              I, basically, while I was with IBM, was in
12    three different kinds of jobs.
13              The first was a very technical one.  That
14    basically gave me a background in application
15    development and what's called "computer operations".
16              From that, I went into marketing.  You do that
17    because you get a chance to make more money.  That's the
18    primary reason.
19              In marketing, I worked in four industries.  I
20    started, basically, in mining.  Then I went into the
21    retail area.  I spent one year in government.  Then I
22    went into oil and gas -- which was more than 15 years.
23              In that marketing position, we responded to
24    requests for proposals from clients.  Initially, that
25    was very much around hardware and software; which was
26    the primary business IBM was in.  The focus started to
27    shift towards services, so those requests for proposals
28    started to shift to, basically, "How do you solve these

                                                         1875
                                   STEPHENS, in-ch (Thompson)
 1    business problems we have?".
 2              MR. THOMPSON:  When did that shift occur,
 3    approximately?
 4              MR. STEPHENS:  Oh, that shift occurred,
 5    probably in a big way, about 1988.  IBM had to,
 6    basically, look at their business and restructure
 7    because the margins in hardware were going way down and
 8    services was on the upswing.  So, after some strategic
 9    planning, that was the direction the company took.  It
10    was obvious, in dealing with clients, that that was also
11    what they wanted because they started to shift from,
12    basically, trying to do everything themselves to using
13    more and more outside services to provide those
14    capabilities.
15              MR. THOMPSON:  In your resume, at page 4, and
16    really moving forward to page 3, you describe your
17    positions with IBM as:  a marketing representative, IBM
18    Calgary, Winnipeg and Vancouver, between 1975 and 1983;
19    then as an account executive, IBM Calgary, 1984 to 1989;
20    an industry executive, IBM Calgary, 1990 to 1992; and
21    then, on page 3, at the bottom of the page, you
22    summarize the career that you had with IBM.
23              Can you just give the Board some indication of
24    the number of projects over those years in which you
25    were involved in bidding to provide IT solutions to
26    customers.
27              MR. STEPHENS:  I'm not sure exactly how many,
28    but it would be in the dozens.  Really, I can give you

                                                         1876
                                   STEPHENS, in-ch (Thompson)
 1    one or two examples.
 2              I will start with an oil and gas company that
 3    was opening a new refinery.  They ran into an issue with
 4    the vendor that was trying to put in their system.  So
 5    they were about seven months away from opening it and it
 6    didn't look like they were going to make it, so they
 7    issued a request for proposal -- which we responded to. 
 8    It involved, basically, putting in the control systems
 9    for the plant that controlled the plant; provided an
10    operator interface; and provided the information in
11    order to better manage the plant.  It required
12    purchasing in inventory systems.  It required,
13    basically, financial systems; human resource systems; a
14    lab system; and a system that kept track of their
15    drawings for the refinery so that they could more
16    effectively maintain it.  Plus a maintenance system, I
17    guess.
18              That's one example.
19              Another example would have been in the point
20    of sale area.  We started this early.  That was kind of
21    my staff assignment at IBM, where we -- we had to come
22    up with a requirements definition for petroleum point of
23    sale.  That's in the retail arm.
24              From that I built the business case to say
25    that IBM should build a software solution for that. 
26    Once we had a general design with help from the lab
27    staff, we went ahead with detail design, constructed the
28    product, tested it and we released it to the

                                                         1877
                                   STEPHENS, in-ch (Thompson)
 1    marketplace.  That allowed us to respond to what I knew
 2    was coming, which was an RFP for point-of-sale systems
 3    in the retail business.
 4              MR. THOMPSON:  The resume indicates that from
 5    IBM you have moved to SHL Systemhouse Inc. in 1992.
 6              MR. STEPHENS:  That's correct.
 7              MR. THOMPSON:  What is the nature of that
 8    company's business?
 9              MR. STEPHENS:  When I joined them they were a
10    consulting and systems integration firm.  We had a staff
11    of about 50 in Calgary which I managed.  The direction
12    changed to basically being an outsourcing firm and using
13    the valuable resource we had inside the company to win
14    and implement outsourcing projects.
15              MR. THOMPSON:  The resume indicates at page 3
16    that you were involved in a major outsourcing contract
17    while with Systemhouse.  It notes that you sold a
18    $70 million outsourcing contract.
19              Could you just briefly describe that project.
20              MR. STEPHENS:  Right.
21              One of my older clients with IBM, and now a
22    client when I moved to SHL, ran into an issue where the
23    price of oil went down.  They had to reduce their IT
24    budget by $10 million, and they didn't know how to do
25    that.
26              So we started talking about outsourcing, and
27    even though they didn't like to do that they couldn't
28    see another alternative.  We basically proposed

                                                         1878
    
 1    outsourcing their operations, which included a mainframe
 2    network in some of the PC support areas.
 3              MR. THOMPSON:  That client was what company?
 4              MR. STEPHENS:  It is Amoco Canada.
 5              MR. THOMPSON:  And the size of the contract
 6    was a $70 million outsourcing contract?
 7              MR. STEPHENS:  Right.
 8              MR. THOMPSON:  I'm sorry?
 9              MR. STEPHENS:  Now, if I might go on.
10              In terms of that outsourcing, it is
11    interesting to see a couple of things that happened.
12              The first is, if you are inside an IT
13    organization inside a company you are basically staff. 
14    When you move to an outsourcer you become line.  Like,
15    that is now their business and you see quite a shift in
16    the mindset, so that was quite interesting.
17              In taking those people over, we took over
18    about a 100 people, and it started up SHL's data centre
19    in Calgary, which is now their premier data centre in
20    the world.  It worked out really well for both
21    companies.
22              MR. THOMPSON:  As a result of this experience
23    with these companies, did you acquire a knowledge and
24    expertise in the rules of thumb that bidders use to
25    develop their quotes on projects?
26              MR. STEPHENS:  Yes.  Like it started basically
27    from my days in marketing, so we kind of had rules of
28    thumb for each industry.

                                                         1879
    
 1              Retail used to spend from about three-quarters
 2    to 1.5 per cent of their revenues on computing.  Mining
 3    was usually around 1 per cent or lower.  Oil and gas
 4    went from three-quarters to 2 per cent and got knocked
 5    back to 1.5 per cent after the price of oil went down. 
 6    So we had those rules of thumb.
 7              When we had to bid an implementation project,
 8    you basically could figure about how much the software
 9    was.  You would use a rule of thumb to say:  Based on
10    experience, how long does it take to implement and what
11    is the multiplier of the software price that you use? 
12    In the early days those would be three times the
13    software price, and as you became more and more
14    effective they would be reduced towards what is called a
15    one-to-one ratio.
16              In enterprise resource planning systems, that
17    is about where the industry is today.
18              MR. THOMPSON:  From IBM you had moved,
19    according to your resume, to FinTech Services.  Could
20    you just briefly describe the business in which that
21    company was involved and your role in it.
22              MR. STEPHENS:  Actually, it was from SHL to
23    FinTech.
24              MR. THOMPSON:  Oh, I'm sorry.  From SHL.
25              MR. STEPHENS:  Another problem, I had decided
26    we would build a company to provide a packaged software
27    solution for oil and gas.  So we started down that road.
28              We looked at a number of what we called the

                                                         1880
    
 1    alliance partners that we would partner with, and we
 2    chose SAP, which stands for Software Application
 3    Programming.  They are the largest manufacturer of
 4    application packages in the world by quite a large
 5    margin.
 6              We looked at Oracle, which is number 2; we
 7    looked at JD Edwards which is about number 5; and we
 8    looked at one called Mincom, which is a package built
 9    for process-intensive industries and is the one that SCT
10    currently partners with on their asset financial
11    management.
12              From that we built a solution for oil and gas,
13    and SAP said:  Why don't you also look after selling our
14    product in Western Canada for smaller companies, those
15    below a quarter of a billion in revenue per year?  And
16    we became the remarketer of SAP in Western Canada.
17              MR. THOMPSON:  In your experience with that
18    organization, did you continue to engage in competitive
19    pricing against other bidders for the provision of IT
20    services?
21              MR. STEPHENS:  Yes, we did.
22              Again, we used these rules of thumb that we
23    had become accustomed to.  So we would figure out the
24    software price, we would use some multiplier for
25    services, we would have standard server configurations
26    for the number of users that we would need, and we would
27    know how much resource was needed from the company to
28    invest in making the implementation successful.

                                                         1881
    
 1              MR. THOMPSON:  Since 1997, you have carried on
 2    business under your own name, Stephens Consulting
 3    Limited.  Is that right?
 4              MR. STEPHENS:  Yes.
 5              MR. THOMPSON:  Are you the only employee of
 6    that; are you the business?
 7              MR. STEPHENS:  Primarily.  Sometimes my son
 8    works for me and I hire subcontractors from time to
 9    time.
10              MR. THOMPSON:  What further experience did you
11    gain in competitive pricing of IT solutions during your
12    tenure at Stephens Consulting.
13              MR. STEPHENS:  I got involved in what is
14    called the middle market, that is, these companies below
15    a quarter of a billion in revenue.
16              With IBM and SHL I primarily have been on the
17    billion and larger sized companies.  So I learned what
18    the software packages were in that marketplace, how they
19    were priced.
20              I got involved in an RP with the Canadian
21    Cancer Society in Alberta and basically built their IT
22    plan, the software they would use, what the business
23    needs were, and then we outsourced the whole thing so
24    that it would run well.
25              MR. THOMPSON:  The prefiled evidence indicates
26    that you prepared testimony for a proceeding in Manitoba
27    concerning an analysis of the Union-Enlogix's -- I'm
28    sorry -- the Centra Manitoba-Enlogix's proposal.

                                                         1882
    
 1              MR. STEPHENS:  Yes.
 2              MR. THOMPSON:  We understand that Centra
 3    Manitoba was sold before you were called to testify in
 4    that case.
 5              MR. STEPHENS:  That's true.
 6              MR. THOMPSON:  Have you ever testified as an
 7    expert before?
 8              MR. STEPHENS:  No.
 9              MR. THOMPSON:  Mr. Chairman, I am presenting
10    Mr. Stephens as one qualified to provide opinion
11    evidence on all aspects of the company's customer
12    information system, including its fair market value.
13              THE PRESIDING MEMBER:  Mr. Farrell, any
14    objections?
15              MR. FARRELL:  No.  Based upon the purpose for
16    qualifying an expert, that is to say to give opinions, I
17    accept Mr. Stephens ability to give opinion evidence.
18              THE PRESIDING MEMBER:  Mr. Thompson, the Board
19    will accept Mr. Stephens.
20              MR. THOMPSON:  Thank you, Mr. Chairman.
21              Mr. Stephens, what I would like to do next is
22    just briefly, if I could, have you highlight the work
23    that you have done for IGUA, CAC and the Vulnerable
24    Energy Consumers Coalition; and, with Mr. Farrell's
25    permission, I will lead to a degree by reference to your
26    prefiled evidence.
27              In terms of the objective of the retainer, you
28    appear to describe that at page 3 of your testimony.

                                                         1883
    
 1              MR. STEPHENS:  Yes.
 2              MR. THOMPSON:  Amongst other things, to
 3    determine the fair market value of ECG Consumers Gas'
 4    CIS-related costs.
 5              MR. STEPHENS:  Yes.
 6              MR. THOMPSON:  The approach that you adopted
 7    you describe at page 4.  Is that correct?
 8              MR. STEPHENS:  Yes.
 9              MR. THOMPSON:  In particular, you have tested
10    ECG's costs against three items which you list in the
11    bullet points in the middle of page 4.
12              MR. STEPHENS:  Yes, that's true.
13              MR. THOMPSON:  They are the CIS project costs
14    for BC Gas, Union Gas and industry rules of thumb; CIS
15    operating cost for BC Gas, Union Gas and industry rules
16    of thumb; and then the utility industry IT benchmark,
17    all of which are explained later in your report.
18              MR. STEPHENS:  Yes.
19              MR. THOMPSON:  The supporting reports and
20    information that you analyzed are described thereafter.
21              You indicate, at page 13 of the material, that
22    you analyzed ECG evidence, responses to interrogatories,
23    and then attended CIS solution demonstrations.
24              What I would like to do is just have you
25    describe in a little more detail what occurred on the
26    occasion of these demonstrations.
27              In your testimony, at page 13, you indicate
28    that you attended a demonstration of the Consumers Gas

                                                         1884
    
 1    CIS solution on Monday, August 9, 1999 and then on the
 2    following day a demonstration of the Enlogix SCT CIS
 3    solution.
 4              Is that correct?
 5              MR. STEPHENS:  Yes.
 6              MR. THOMPSON:  Before you tell us what
 7    occurred at the Consumers Gas demonstration, could you
 8    briefly describe to the Board the Consumers Gas CIS
 9    solution as it was before the first release that we have
10    heard a lot about in this case.
11              MR. STEPHENS:  First, I would like to thank
12    Mr. Kent and the co-operation I received when I visited
13    Enbridge Consumers Gas, and for the answers to the
14    questions.  They were very forthcoming and gave those
15    very directly and answered any questions I had.
16              Basically, the way the situation is, they have
17    a mainframe system, and I will call this a dumb terminal
18    over here.  Although it actually runs on the PC, it is
19    an emulated dumb terminal.  Today, this terminal
20    addresses information on this mainframe on a database
21    called Adabas.  It can read the information but it
22    cannot update it.
23              So when a customer support representative
24    receives a phone call, she can see the information on
25    the customer, or on their premise, but what she cannot
26    do is update it other than by writing it down on a card
27    or a piece of paper and having that card taken to a key
28    punch department.  That is then key punched and a batch

                                                         1885
    
 1    process overnight updates this information on the
 2    database in the mainframe.
 3              To that they add the measurements from the
 4    meters, and with that information they can now produce
 5    the monthly bill that they send out to their customer.
 6              So that is basically the process that is in
 7    place today.
 8              MR. THOMPSON:  How far back does this card
 9    type of system date?  This strikes me as being fairly
10    old.
11              What is the vintage of that kind of approach?
12              MR. STEPHENS:  It's a good thing I am older.
13              I would guess -- I am sure that the ECG is
14    quite aware of this.  Direct update was something they
15    sold in the 1970s and almost always was implemented by
16    the 1980s.
17              So by nearly 2000, I guess it is time.
18              MR. THOMPSON:  Moving forward to what you
19    describe in your testimony as the ECG custom CIS
20    solution, you describe it in your evidence at pages 16
21    and following.  At page 17 you list the series of
22    releases.
23              We understand that the first release has gone
24    satisfactorily.
25              Can you describe for us what the first release
26    accomplished?
27              MR. STEPHENS:  I will use my hands again.
28              We now have this terminal out here that is

                                                         1886
    
 1    really a PC now, so it behaves as a PC in what is called
 2    a client server environment.  The mainframe that is
 3    still there with its Adabas database, they have put a
 4    server that is now on line to this terminal, which is a
 5    Unix server, that fetches copies of this database,
 6    forwards that information to an Intel server which is in
 7    the customer services support department.  That
 8    information is then put on to this display.
 9              From a functional point of view, not much has
10    changed.  The only thing that has really happened is
11    that this technology that used to be just mainframe to
12    this terminal is now PC to a server, to another server,
13    to this mainframe server.
14              So they have changed the technology.  That is
15    called Release 1A.  It is in production with their
16    one-and-a-half million customers, and that is what I saw
17    when I saw the demonstration.
18              MR. THOMPSON:  In terms of the input of
19    information and the ability to update on line, are we
20    still on the card system?
21              MR. STEPHENS:  We are still on the card
22    system.
23              MR. THOMPSON:  Is there still in effect no
24    ability for the customer service rep to update on line?
25              MR. STEPHENS:  There is no capability to
26    update on line until the next release.
27              MR. THOMPSON:  The next release is scheduled
28    for November of 1999, and in your testimony you I think

                                                         1887
    
 1    described this as a critical release.
 2              Could you describe what that release is all
 3    about and the risks associated with that release in
 4    terms of the performance of this product.
 5              MR. STEPHENS:  We have these four layers of
 6    technology, still only able to look at it today.  In
 7    November the applications change, and there are new
 8    screens and the capability to now update this
 9    information.
10              So if somebody phones in with a request in
11    change of their billing or they are moving, that can now
12    be entered directly by the customer service
13    representative into this database that is now also
14    changed to IBM DB2.  It is a new database technology.
15              So they have changed the database technology. 
16    They now allow on-line update.
17              I guess the risks are -- first of all, there
18    is some more code to develop.  Secondly, when you go to
19    an update environment, it greatly increases the load on
20    all aspects of that system.  So it increases the load on
21    the PC, on the Intel server, on the Unix server, and on
22    the mainframe.
23              They will have to address basically the amount
24    of equipment and how they tuned it in order to make it
25    operate well.
26              MR. THOMPSON:  Could you briefly describe the
27    third and fourth releases that are referenced in your
28    testimony.  What do they involve and what risks are

                                                         1888
    
 1    associated with them?
 2              MR. STEPHENS:  The third release adds a
 3    journaling subsystem, which is a new application
 4    function.  It allows them to reduce float.
 5              The risks are, again, you are late in
 6    programming.  But there is no major risk in that -- that
 7    primarily will impact the batch capability, not the
 8    on-line capability.
 9              In August 2000 -- I think I can find two
10    things there; one from July and one from August.  They
11    are putting in a new credit management capability that
12    will improve the capability of the customer service
13    representative to answer questions and also to
14    automatically help manage credit.
15              It will enhance the billing system to provide
16    more options from a billing point of view.
17              Again, those are primarily batch oriented
18    things, so you could have a problem with programming.  I
19    don't consider the risks in the third and fourth ones to
20    be significant.
21              MS LEA:  Sorry, is that batch as in b-a-t-c-h?
22              MR. STEPHENS:  Batch, right.
23              So on line, I use my terminal to access
24    information.  Batch says I am not interactive with this
25    thing.  It just gets started at some time, let's say
26    10:00 in the evening, and it runs to completion.
27              They usually run overnight and banks run into
28    things called batch windows, where they can't finish the

                                                         1889
    
 1    batch before the next day wakes up.
 2              MR. THOMPSON:  What are some of the potential
 3    problems that can arise with the conversion of the
 4    database?  This is the release scheduled for November.
 5              MR. STEPHENS:  As long as you have tested
 6    everything correctly and it works, there is no problem. 
 7    If it doesn't work correctly, you basically have to back
 8    out to the old database, the old applications, and do
 9    some more testing and later try it again.
10              MR. THOMPSON:  So is that essentially a risk
11    of delay?
12              MR. STEPHENS:  It is a risk of delay
13    primarily.
14              MR. THOMPSON:  We have heard from Mr. Kent, I
15    think on a number of occasions, that he regards this new
16    CIS solution at ECG as operational.
17              Do you have any comment on that suggestion?
18              MR. STEPHENS:  Well, it is operational in that
19    it allows access on new technology, but it really
20    doesn't provide any new function.  So from where you
21    really want to be, I don't consider that to be a major
22    step forward.
23              The way they divide this project into phases
24    has been a very good idea because at least you see
25    progress.  You have reduced the risk of doing it all at
26    once in a big way.
27              MR. THOMPSON:  Do you have any comment on the
28    reasonableness of the company's assumption or the

                                                         1890
    
 1    assumption they ask the Board to make that the CIS
 2    system will be fully functional before September 30,
 3    2000?
 4              MR. STEPHENS:  Will it be?
 5              MR. THOMPSON:  Do you have any comment on
 6    whether that's a reasonable assumption to make or should
 7    we wait and see, in your opinion?
 8              MR. STEPHENS:  Well, I would say you would
 9    just look at past experience and have they been
10    successful in delivering on time?  If they have been,
11    you probably think that's going to happen again.  If
12    they haven't been, then I worry.
13              MR. THOMPSON:  Coming forward then to the
14    demonstration that you had at ECG, could you just
15    describe what preceded the demonstration and then the
16    demonstration and your observations.
17              MR. STEPHENS:  I met with Duncan Kent and
18    Bruce Campbell for about three hours in the morning,
19    followed by lunch.  During that time they described
20    these phases, where they were.  We talked about, you
21    know, some of the risks.  We talked about where they are
22    in terms of basically the people content within customer
23    support services.
24              I looked at people content.  We were trying to
25    drive at this CIS world article, trying to figure out
26    actually how we could get it to apples and apples.  I
27    later just asked Duncan "So you would be the real
28    information".  We now know what they have in their

                                                         1891
    
 1    customer support services area.
 2              Following that, I was joined by Andy Wingrove
 3    and Bruce Campbell and Andy Wingrove and I went over to
 4    the customer support area.  They showed me around the
 5    whole call centre.  They showed me where the credit
 6    functions were.  We talked about some of the technology.
 7              We talked about the number of people in call
 8    centres.  We talked about the number of calls they get
 9    per year and how many are inbound and outbound.  We then
10    went and had a demonstration by one of the customer
11    support representatives who is actually a trainer on the
12    system.
13              Incidentally, there are now 1,200 people
14    trained on this system.  About 800 of them are in
15    customer support services and the others are in
16    operations and management.
17              In addition to just support and customer
18    support services, it assists the operations area in
19    finding and getting information on work schedules and
20    what's scheduled.  Management can use it to try and find
21    information to help them better manage the business.
22              There are 1,200 people that have been trained. 
23    She demonstrated the system.  I was able to listen on
24    the phone while they were -- she took a couple of calls. 
25    After we had been through it, I asked her a couple of
26    questions.  One I asked her was "How did the system
27    perform?  What's the response time like?"
28              She said "It's slower than before".  You can

                                                         1892
    
 1    notice that.  Like when you go in and you see something,
 2    you say "This is either faster" or "a little bit slow".
 3              You would notice the difference between the
 4    transactions that had -- basically from a mainframe
 5    terminal, from a terminal to the mainframe versus the
 6    ones that were in the new technology that would go
 7    through this Intel server to the index server to the
 8    mainframe.
 9              That's a more complicated technology than
10    other implementations of CIS, but there's no reason it
11    can't work well.
12              A coloured capability in terms of highlighting
13    information on the screen isn't as good as it could be. 
14    We talked about why that was.  I know that the
15    Technology Department can work on fixing that, but they
16    haven't yet done that.
17              MR. THOMPSON:  Could you just describe -- in
18    your functionality summary, you described the response
19    time of the ECG solution as one to two seconds.  What is
20    it that you were watching that lead you to that
21    conclusion of one to two seconds?  What was it the CSR
22    was doing?
23              MR. STEPHENS:  Basically when a customer
24    phoned in, you look up a customer record.  To get that
25    record takes one to two seconds after the ID number is
26    keyed in.
27              MR. THOMPSON:  Is that what prompted your
28    question of the CSR rep as to this response time

                                                         1893
    
 1    compared to what it used to be?
 2              MR. STEPHENS:  Right, plus we could also see
 3    it because some of the transactions still went in
 4    through the old mainframe system for certain
 5    applications, not the CIS application, but when you look
 6    up certain information.  That was noticeably slower.
 7              MR. THOMPSON:  What was noticeably slower, the
 8    new or the old?
 9              MR. STEPHENS:  The new system versus the
10    mainframe system.
11              MR. THOMPSON:  Turning then, if I could, to
12    the Enlogix demonstration, you have described the
13    Enlogix solution in your testimony.  I don't intend to
14    go through that.
15              Could you just tell us about the demonstration
16    that you had with Enlogix, where Enlogix is located,
17    what preceded that demonstration.
18              MR. STEPHENS:  Yes.  I phoned up Enlogix and
19    basically phoned Union Gas to try and see their customer
20    system.  They put us in touch with Enlogix.
21              Since I actually wanted to talk to somebody
22    from Union, I ended up talking to a fellow named Bob
23    Bell who looks after the customer support area or works
24    in that area.
25              He was able to describe that they are
26    basically doing things in two phases.  They have got
27    280,000 what were Centra Gas Ontario customers on the
28    system today and it's working well, according to him. 

                                                         1894
    
 1    They will add, I think it is, 795,000 what were the old
 2    Union customers.  That happens in this November.  It's
 3    in my evidence somewhere.
 4              In November they add those months to it.  We
 5    talked about the number of calls they get, so the same
 6    sort of things I tried to learn at Enbridge Consumers
 7    Gas, how many calls do you handle, how many are
 8    outbound.  That was what I learned from them.
 9              Then I talked to the VP of Sales, the
10    President of Enlogix, the Technical Director and the
11    Vice-President of Customer Support at Enlogix.
12              MR. THOMPSON:  Is Enlogix structured as a
13    separate, stand alone outsourced business?
14              MR. STEPHENS:  Very much so.  They think that
15    way too.  They think like they own this business.  In
16    fact, they all seem to be quite entrepreneurial in their
17    thinking.  For instance, I know their business plan is
18    built on a customer base of 5,000.
19              MR. THOMPSON:  Five thousand?
20              MR. STEPHENS:  Five million.
21              MR. THOMPSON:  You forgot the three zeroes.
22              MR. STEPHENS:  On five million, of which they
23    expect to get about two and a half million from the
24    Westcoast Energy companies.  They know they have to win
25    another two and a half million in order for that company
26    to be successful.
27              Their organization has a marketing function. 
28    They have got technical support.  They outsource their

                                                         1895
    
 1    computing capability to ISM which is an IBM subsidiary. 
 2    They technically know exactly what they need in order to
 3    provide a certain user account with servers.
 4              They today have up to 170 people working on
 5    projects.  I think there are about 170.  Many of those
 6    are subcontractors, but it's very much the thought
 7    process of an entrepreneurial business.
 8              The President, whose name is Anthony Haines,
 9    is an accountant, but they came from building a business
10    out in B.C. for Westcoast Energy.  They are trying to do
11    the same thing there.
12              MR. THOMPSON:  Tell us then about the
13    demonstration of the Enlogix system.  This was a
14    demonstration at Enlogix, not at Union.  Is that
15    correct?
16              MR. STEPHENS:  Right.  Union Gas Centre is out
17    in Chatham.  My schedule wouldn't allow me, nor could
18    they get me there on time, so I went to Enlogix. 
19    Basically they demonstrated their capability.
20              Both demonstrations were kind of 15 to 20
21    minutes in length.  They weren't lengthy.  This is a
22    demonstration not on a production environment, but
23    basically on their test environment so they have test
24    customers that they can use.  It allows update
25    capabilities.  It has an update capability as well as
26    inquiry.
27              I saw a little bit of their work management
28    interface and the response time was good.  The screens

                                                         1896
    
 1    seemed to be a little friendlier when we looked at them.
 2              MR. THOMPSON:  Now, you say the response time
 3    was good.  In your report, you indicate "subsecond".
 4              What was the basis for that conclusion?
 5              MR. STEPHENS:  Oh, it just went like that. 
 6    (Gesturing)  You know, when I talked to Bob Bell, he
 7    confirmed that response time had been good for them.  I
 8    don't know, having not seen the production environment. 
 9    And even if I had, it's only on 280,000; so we don't
10    have exactly and apples-and-apples.  But, you know, the
11    SCT solution scales to customers that have more than one
12    million accounts in the U.S., and some of them with more
13    than two million.
14              So, from a scalability point of view, the SCT
15    solution has proven itself and, therefore, I assume that
16    that will stay.
17              MR. THOMPSON:  Is the SCT solution being used
18    by Union Energy, to your knowledge?
19              MR. STEPHENS:  That's the marketer?
20              MR. THOMPSON:  Yes.
21              MR. STEPHENS:  Yes.  They have a million
22    customers on that system.
23              MR. THOMPSON:  Could you just, then, summarize
24    for the Board your overall comparisons of the
25    functionality of the Enlogix solution versus the ECG
26    solution?
27              MR. STEPHENS:  Can I get people to refer to
28    page 18.

                                                         1897
    
 1              MR. THOMPSON:  This is of Exhibit L25.2?
 2              MR. STEPHENS:  It's of my evidence.
 3              MR. THOMPSON:  Yes.
 4              MR. STEPHENS:  I just tried to put together a
 5    page that would summarize this at a very high level.
 6              I guess I described for you, basically, from a
 7    general point of view, that they all, today, use
 8    relational databases to store the information; they are
 9    all on-line systems -- although the ECG one is not
10    update capable yet but will in November; and from a
11    billing point of view, they all provide billing
12    functions.
13              So, from a basic description which ECG has
14    used before, they store the information in a relational
15    database; they use terminals to allow on-line update;
16    and they provide billing through a billing
17    application -- mind you, on different technologies.
18              Where they start to differ is from a
19    technology point of view.
20              Basically, the BC Gas and Union Gas started
21    with an application package.  So, they went out to the
22    marketplace and said, you know, "Let's find a solution
23    that's already developed and modify it, customize it,
24    but let's not, you know, reinvent the wheel".
25              With the ECG solution, they basically have a
26    tool set from Price Waterhouse that requires them to
27    develop all the screen layouts and, you know, do a lot
28    of programming -- like, that's how you get into a lot of

                                                         1898
    
 1    expense -- versus the other approach.
 2              They are all client server, in some way of
 3    another.  I believe that the number of layers in the ECG
 4    solution just makes it a little bit more complicated.
 5              From a response time point of view, I have no
 6    idea what the BC Gas system does.  When I saw the
 7    Enlogix solution, and based on what I have heard from
 8    others, the response time is good on that one.  The ECG
 9    one, today, is a little sluggish and it's only doing
10    updates, so we did talk about when it -- or it only does
11    clearing.  When it starts to get into update is when you
12    are going to have to pay special attention to how big
13    the servers are and how these components work together,
14    in order to make it perform better.
15              MR. THOMPSON:  What does that mean that, when
16    you add that function, there's a possibility that
17    response time could be even slower?
18              MR. STEPHENS:  Yes, like if you have queries
19    you -- let me just take an example of -- like some
20    computer, let's say, can handle a million queries.  That
21    same computer can probably only handle, in update mode,
22    350.  So it just -- you know, you can think of this
23    thing:  I'm going out and finding the data when I'm
24    querying.  When I'm updating it, I go out and find it; I
25    lock it -- I have to lock this thing up on the database;
26    and I then enter my information here; I go back and
27    update that record; unlock it.  There's just more steps
28    involved in doing an update than in a query.

                                                         1899
    
 1              Then, from a functionality point of view, in
 2    talking to Greg Galluzzi at TMG and this position paper
 3    we were able to obtain, he talks about this deregulated
 4    business model in that position paper and, basically,
 5    those packages have been built for that kind of a model. 
 6    So they have included in them things for electronic
 7    commerce between the marketer and the local distribution
 8    company or between a meter company and the local
 9    distribution company so that it has an electronic
10    commerce capability and you can move records back and
11    forth for billing purposes or whatever.  That still has
12    to be put into the ECG solution.
13              From a billing point of view, they are built
14    for this flexible billing that, let's say, the North
15    American industry is going to expect as deregulation
16    happens --
17              MR. THOMPSON:  Who's built?  You said "they
18    are built".
19              MR. STEPHENS:  The software manufacturers. 
20    For BC Gas, that's Peace Software, a company out of New
21    Zealand; and for Union Gas, that's the Enlogix SCT
22    solution.
23              MR. THOMPSON:  Does the ECG solution have that
24    functionality yet?
25              MR. STEPHENS:  No, it doesn't.
26              Their billing engine was -- Mr. Kent would
27    know how old this thing is but it's basically been built
28    and around for a long time.  So it's not built using

                                                         1900
    
 1    tables.  When it was architected, you know, more than 10
 2    years ago, it would have not necessarily had that built
 3    in.  The new packages use tables and things, so they are
 4    much easier to, you know, put in kind of switches that
 5    control your billing; whereas when you change this older
 6    program, you actually have to go in and change the code.
 7              The Internet is -- electronic commerce will be
 8    becoming part of our world and while not running today
 9    at either BC Gas or Union Gas, there was an
10    interrogatory on that, the capability is in the product
11    from the suppliers.  I know Enlogix' plan is to offer
12    Internet payment within about six months and BC Gas
13    expects to put that in place.  What that really does is
14    if you look at customer support services and how much of
15    the budget is spent on postage, you can start -- in
16    fact, it's about 50 cents a month you pay to send this
17    bill out in the mail versus just sending it
18    electronically.  I know we are all starting to do our
19    banking on line or, you know, those kind of things.
20              The other thing is you can get into self
21    service.  So it's like by banking again, in that I go up
22    to an automatic teller machine, an ATM, and I can get my
23    money.  You can build kiosks in shopping centres that
24    will allow you to pay utility bills or you can, you
25    know, do that through your bank again.  So, gradually we
26    will get rid of this postage and replace it with
27    electronic Internet capability.
28              MR. THOMPSON:  Does the ECG solution have that

                                                         1901
    
 1    capability yet?
 2              MR. STEPHENS:  No, it doesn't.
 3              MR. THOMPSON:  Do you have any opinion on the
 4    cost that will likely be incurred to add that
 5    capability?
 6              MR. STEPHENS:  No, I don't.
 7              MR. THOMPSON:  So your overall conclusions, in
 8    terms of the comparative functionality of the Enlogix
 9    and ECG solutions were what?
10              MR. STEPHENS:  Well, basically, the ECG
11    solution doesn't -- it wasn't built with thinking about
12    where the industry was going.  Not only the utility
13    industry but the computing industry.  They may have
14    thought about it back in 1985 but it's really not built
15    into their general design, so it will have to be added. 
16    It's not nearly as functional, in my opinion.  And I
17    don't how you could sell it but maybe you can.
18              MR. THOMPSON:  Turning, finally, to your
19    conclusions, and then I just want to get your views on
20    this debate about the 30 million.
21              At page 20 of your report, you described the
22    projects costs and you have estimated an ECG replace if
23    in-house project costs for this solution that ECG
24    provides at something less than $60 million?
25              MR. STEPHENS:  Yes.
26              MR. THOMPSON:  What is your opinion as to the
27    fair market value of this $120 million product that is
28    to be transferred to the affiliate?

                                                         1902
    
 1              MR. STEPHENS:  Since you could buy something
 2    in the open market for less than half of that, that
 3    should be about the fair market value.  That is
 4    completely implemented, including the technology,
 5    including the people inside the company.
 6              MR. THOMPSON:  So half of the cost would be
 7    about the fair market value?
 8              MR. STEPHENS:  Right.
 9              MR. THOMPSON:  That would be about
10    $60 million?
11              MR. STEPHENS:  Right.
12              MR. THOMPSON:  Thank you.  Your conclusions,
13    in terms of the fair market value of the ECG solution,
14    are found at pages 28.  I am looking at page 28 of your
15    evidence where you indicate a fully featured CIS has a
16    market value of $6.00 to $8.00, and you suggest ECG's
17    solution is about 25 per cent less than that, $4.50 to
18    $6.00.  That is outside the demarcation point.
19              Inside the demarcation point you suggest that
20    the market value is $2.25 to $2.50, and should be
21    declining to $2.00 per customer per annum.
22              Were you here last week and listening to the
23    evidence adduced by the company with respect to their
24    CIS solution?
25              MR. STEPHENS:  Yes.
26              MR. THOMPSON:  Is there anything which you
27    heard last week which prompts you to modify the opinions
28    that you have expressed at page 28 of your testimony?

                                                         1903
    
 1              MR. STEPHENS:  No.
 2              MR. THOMPSON:  Finally, then, with respect to
 3    the company's request to close $30.25 million to rate
 4    base, can you provide the Board with your views based on
 5    your experience as a software solution provider and
 6    vendor on the company's contention that the items of
 7    costs making up this $30.25 million are not costs that a
 8    software manufacturer or vendor would incur as project
 9    costs.
10              MR. STEPHENS:  Yes.  I will describe the
11    application development cycle which you go through
12    either inside a company if you build it, or go through
13    at a software manufacturer if you manufacture it.
14              Basically, the first thing you do is define
15    the requirements.  You build a business case based on
16    those requirements and estimated costs -- you know, how
17    applicable it is or what the marketplace is.  You then
18    do a general design, and that general design is
19    basically through analysis.  You do a detailed design,
20    you construct, you test and then you implement.
21              That is the standard application development
22    methodology that has been used ever since I have been in
23    the business, which is quite a while.
24              So if I look at the $30 million that is
25    requested for rate base, if part of that BPR is truly
26    independent of the CIS application, then I think that is
27    legitimate that it be put into rate base along with its
28    interest during construction.

                                                         1904
    
 1              The systems analysis, the interest during
 2    construction, the SIM application strategy, et cetera,
 3    that is all part of what you have to do to build an
 4    application.  So I can't understand how that could be
 5    put into rate base and not associated with basically
 6    providing this solution from an affiliate.
 7              MR. THOMPSON:  If the BPR component is not
 8    truly independent of the CIS solution, is it reasonable
 9    to put any of that into rate base?
10              MR. STEPHENS:  If it is not independent, I
11    don't think so.  That would be basically part of your
12    defining requirements and thinking what your new
13    application is going to look like.  In BC Gas' case,
14    they have done some of that, and they included that in
15    their application for a rate increase, along with their
16    CIS application.
17              MR. THOMPSON:  You mean it was included as
18    part of the project costs and not separately as
19    non-project costs.
20              MR. STEPHENS:  Right.
21              MR. THOMPSON:  Thank you very much.  Those are
22    my questions.
23              THE PRESIDING MEMBER:  Thank you,
24    Mr. Thompson.
25              I would like to know who has questions for
26    Mr. Stephens.
27              Mr. Warren, you would?
28              MR. WARREN:  My witness, sir.

                                                         1905
                                                     STEPHENS
 1              THE PRESIDING MEMBER:  Just to make sure.
 2              Mr. Mondrow?
 3              MR. MONDROW:  Thank you, Mr. Chairman.  I have
 4    one brief area of questioning.
 5              THE PRESIDING MEMBER:  Mr. Brett?
 6              MR. BRETT:  No, sir.
 7              THE PRESIDING MEMBER:  Board staff?
 8              No.
 9              Perhaps, Mr. Farrell, we could ask Mr. Mondrow
10    to go with his question now.  Then you will have an
11    opportunity to have that, as well, to consider over the
12    break.
13              MR. FARRELL:  That is fine by us.
14              THE PRESIDING MEMBER:  Mr. Mondrow.
15              MR. MONDROW:
16    CROSS-EXAMINATION
17              MR. MONDROW:  Good morning, Mr. Stephens.
18              MR. STEPHENS:  Good morning.
19              MR. MONDROW:  Just one brief question
20    following up on your last area that you discussed with
21    Mr. Thompson.
22              You were here for the company's CIS evidence,
23    and you may recall some discussion with Mr. Kent about
24    what was referred to as the analysis phase; basically,
25    as I put it to Mr. Kent at the time, the work done by
26    the company to specify what, as a receiver of CIS
27    services, the company would need.
28              First of all, can I confirm with you that a

                                                         1906
                                    STEPHENS, cr-ex (Mondrow)
 1    software purchaser would in the normal course have to
 2    turn its corporate mind to what its needs would be if it
 3    went out to purchase a large system?
 4              That is a fair comment?
 5              MR. STEPHENS:  Right.
 6              MR. MONDROW:  Given your knowledge of this
 7    case, I wondered if you had any opinion on what that
 8    would have entailed in the normal course for a company
 9    the size of the utility going out to look at an
10    application system the size of a normal CIS.
11              How much time and/or cost should that activity
12    have reasonably entailed?
13              MR. STEPHENS:  How much cost in the analysis
14    phase?
15              MR. MONDROW:  For the company acquiring the
16    software.  What would have been normal for them to spend
17    in terms of time, or just a ballpark cost.
18              MR. STEPHENS:  To answer this, I would say
19    there are two ways of doing this.  If you are a large
20    company that has been used to spending a lot of time in
21    basically the process of defining the requirements,
22    issuing the request for proposal, and evaluating those
23    proposals in order to come up with your solution, then
24    you could spend, I would suggest, a couple of months
25    with several people inside the company doing that.
26              If you do it in what I will call a rapid
27    deployment way, I believe that can be done in less than
28    a month with one to two person months of time, because

                                                         1907
                                    STEPHENS, cr-ex (Mondrow)
 1    in the end what you are trying to do is you are trying
 2    to pick a business partner from this application.
 3              When you look at it in incredible detail --
 4    first of all, you will never understand it all, but you
 5    kind of put these up side by side, and you don't need to
 6    be super accurate on everything.
 7              MR. MONDROW:  Because the eventual provider
 8    will, as a matter of course, deal with those details.
 9              MR. STEPHENS:  Right.
10              MR. MONDROW:  Thank you very much.  Thank you,
11    sir.
12              THE PRESIDING MEMBER:  Thank you, Mr. Mondrow.
13              Mr. Farrell, shall we bring Ms Reynolds
14    forward now?
15              MR. FARRELL:  Mr. Mondrow is indicating that
16    that is acceptable.  So, yes.
17              THE PRESIDING MEMBER:  Mr. Stephens can be
18    excused until after the break, sir.
19    PREVIOUSLY SWORN:  HOLLY ANN ELIZABETH REYNOLDS
20              THE PRESIDING MEMBER:  Welcome back,
21    Ms Reynolds.
22              MS REYNOLDS:  Thank you.
23              MR. FARRELL:  Ms Reynolds has been sworn, but
24    I should probably ask her a few questions to introduce
25    what has been marked as Exhibit K11.1.
26    EXAMINATION-IN-CHIEF
27              MR. FARRELL:  Ms Reynolds, this document was
28    prepared by you or under your direction and control?

                                                         1908
                                    REYNOLDS, in-ch (Farrell)
 1              MS REYNOLDS:  Yes, it was.
 2              MR. FARRELL:  Is it accurate, to the best of
 3    your knowledge and belief?
 4              MS REYNOLDS:  To the best of my knowledge and
 5    belief.
 6              MR. FARRELL:  Thank you.
 7              THE PRESIDING MEMBER:  Thank you, Mr. Farrell.
 8              Mr. Mondrow.
 9              MR. MONDROW:  Thank you, Mr. Chairman.
10              First, let me apologize to the Board and the
11    other parties, and particularly to Ms Reynolds, for not
12    making it by 9:00 this morning.  I had attempted to, but
13    was very frustrated on the way down when I realized I
14    would be late and sitting in various rows of traffic.
15              So I do apologize for that and for keeping her
16    here a little longer than she would have liked.  I
17    appreciate her indulgence and that of the Board.
18    CROSS-EXAMINATION
19              MR. MONDROW:  Ms Reynolds, I asked for your
20    appearance this morning just so I could ask you a few
21    questions regarding what has now been labelled as
22    Exhibit K11.1 to set the context for this information
23    that has been provided in response to HVAC Coalition's
24    motion for the purposes of assessing its value and
25    dealing with it in argument.  So it will be just a few
26    brief questions.
27              If you could help me first by turning to
28    Appendix C of this filing, which is the multi-page

                                                         1909
                                    REYNOLDS, cr-ex (Mondrow)
 1    table, each page of which has a number at the bottom
 2    centre.
 3              If I could just ask you to confirm that the
 4    dollar figures in column 1 and column 2 are taken
 5    directly from the E.B.R.O. 497 exhibit, which is HVAC
 6    Coalition's Interrogatory Response 70, which you have
 7    also attached as an appendix to this exhibit.
 8              MS REYNOLDS:  That's correct.  Those numbers
 9    come directly from that exhibit.
10              MR. MONDROW:  I won't be offended at all,
11    Ms Reynolds, if you would face the Board, if you would
12    like to, when you respond, and turn your back to me.
13              The descriptions provided across columns 4 and
14    onwards in Appendix C, where do those come from?
15              MS REYNOLDS:  Those descriptions came directly
16    from HVAC 70 as well, other than where names have
17    changed and the names have been updated to include both
18    the HVAC 70 name and the new name of any of the
19    entities.
20    --- Pause
21              MR. MONDROW:  When I asked you about the
22    descriptions I was referring to the descriptions of the
23    services.  Those descriptions came from HVAC 70?
24              MS REYNOLDS:  I apologize.  I thought you were
25    talking about the affiliates across the top.
26              So you are talking about going down the
27    left-hand side of the page?
28              MR. MONDROW:  No.  If you look for example at

                                                         1910
                                    REYNOLDS, cr-ex (Mondrow)
 1    line item No. 1, "Corporate Affairs", starting in
 2    column 4 and proceeding across the page there are
 3    descriptions offered in response to our prayer for
 4    relief or revised prayer for relief of the nature of the
 5    particular services provided.  I was wondering where
 6    that information comes from.
 7              MS REYNOLDS:  That information would have come
 8    from the activity analysis that would have been
 9    completed by each of the departments which would have
10    composed, for example, corporate affairs.  So it would
11    have been the specific activities of those individual
12    departments that they anticipated providing for these
13    specific affiliates listed across the top.
14              MR. MONDROW:  Those descriptions, as
15    reproduced on this Appendix C, as well as the numbers,
16    then, are all from and current as of the E.B.R.O. 497
17    filing.  Is that correct?
18              MS REYNOLDS:  That's correct.  They were
19    presented to the Board in E.B.R.O. 497 as the fully
20    allocated cost of providing services to these
21    affiliates.
22              MR. MONDROW:  On the table that is Appendix C,
23    you have not, as I understand it, done an update either
24    of the numbers or of the descriptions of the services to
25    be provided since E.B.R.O. 497.
26              MS REYNOLDS:  The information that is produced
27    in Appendix C is the information that underlay the
28    E.B.R.O. 497 filing.  I then attempted to update to the

                                                         1911
                                    REYNOLDS, cr-ex (Mondrow)
 1    extent that I could in my three-page covering narrative.
 2              MR. MONDROW:  Right.
 3              If you could turn that up, then, just to
 4    confirm with you where the updated information is
 5    provided.
 6              As I understand it, if you look first at
 7    page 2 of the narrative, the large centre paragraph with
 8    the six bullets is an attempt to summarize any updates
 9    to the information provided?
10              MS REYNOLDS:  It is an update to the 1999
11    budget information to the best of my knowledge of the
12    changes.
13              MR. MONDROW:  Those are the changes that are,
14    at least to the best of your knowledge as you sit here
15    today, anticipated for the test year for fiscal 2000?
16              MS REYNOLDS:  All for the 1999 budget or for
17    the 1999 actual year and going forward.
18              For example, in the first bullet, 923726
19    Ontario Limited was wound up December 31st, 1998.  So
20    that would have been within the 1999 budget or the 1999
21    actual year.  So services that were budgeted for 1999
22    may not have occurred in the 1999 actual, and then going
23    forward into the 2000 test year.
24              MR. MONDROW:  Fair enough.
25              Then, if you look at the third page, the one
26    sentence at the top, you refer to the CIS transaction,
27    which of course there is lots of evidence on in this
28    proceeding, and that is also, in terms of what is

                                                         1912
                                    REYNOLDS, cr-ex (Mondrow)
 1    available today, an update to the E.B.R.O. 497 status.
 2              MS REYNOLDS:  That's correct.
 3              MR. MONDROW:  Okay.
 4              Then, flipping just back to page 2, at the
 5    bottom there is a paragraph that deals with fleet
 6    services.  I will come back to this forum in just a
 7    minute, but am I correct that the fleet services and the
 8    information provided here is information for the 1999
 9    approved budget?
10              MS REYNOLDS:  The information provided on
11    fleet services was pulled from the E.B.O. 179-14/15
12    evidence.  It was the first time that fleet services was
13    anticipated provided to an affiliate.  So in the past
14    there were no fleet services affiliate transaction.
15              Fleet services is kind of unique because it is
16    budgeted in a clearing account which then gets cleared
17    to other departmental O&M accounts where the services
18    are actually used in operations.  So it has never been
19    captured as a separate department in the cost study for
20    that reason.  That is why it was pulled out as a
21    separate paragraph here so that the Board and HVAC could
22    see the full picture for fleet services.
23              MR. MONDROW:  The information, in particular,
24    the dollar figures, then, in this paragraph with respect
25    to fleet services, is that information budgeted for the
26    test year transactions dealing with fleet services?
27              MS REYNOLDS:  It was part of the 1999
28    unbundled budget.  So it is what the company anticipates

                                                         1913
                                    REYNOLDS, cr-ex (Mondrow)
 1    going forward with through the PBR period.
 2              MR. MONDROW:  Okay.
 3              As I understand it, part of the problem that
 4    the company would have had responding to our initial
 5    interrogatories on affiliate transactions is that the
 6    budget for the test year and the activity analysis for
 7    the test year, which would include a more precise going
 8    forward estimate or budget for affiliate transactions
 9    has not yet been completed within the company.
10              MS REYNOLDS:  That's correct.  We had two
11    reasons for not responding to the initial
12    interrogatories.  Certainly one of them is that there is
13    no 2000 budget for affiliate transactions.  Departments
14    are just in the process of doing it at this point.
15              MR. MONDROW:  The other reason was the
16    relevancy reason?
17              MS REYNOLDS:  Through PBR the affiliate
18    transactions have no ratemaking implications.
19              MR. MONDROW:  Okay.
20              The budgeting process, then, as I understand
21    it, has shifted forward in time, that is, it comes later
22    in the annual cycle of the company given the advent of
23    PBR.  Is that correct?
24              MS REYNOLDS:  That's correct.  It is almost, I
25    believe, a full year later.
26              MR. MONDROW:  Why does the company shift,
27    then, or why did the company shift its budgeting process
28    later in the year?

                                                         1914
                                    REYNOLDS, cr-ex (Mondrow)
 1              MS REYNOLDS:  I'm not familiar with those
 2    decisions.
 3              MR. MONDROW:  Are you aware, Ms Reynolds, when
 4    the information for -- the budgeted information for
 5    fiscal 2000 will be available by any chance?
 6              MS REYNOLDS:  I'm not directly involved in the
 7    budgeting cycle so I can't answer that question.
 8              MR. MONDROW:  The information that you have
 9    provided is responsive in fact to our revised prayer for
10    relief which dealt with the affiliate transactions, as
11    you noted, in the first paragraph of this exhibit.
12              Can I ask you whether you know whether there
13    are any services other than transmission, distribution
14    and storage and other than ABC T, NGV or transactional
15    services that the utility provides to third parties,
16    that is, other than utility services?
17              MS REYNOLDS:  My area of responsibility is one
18    of affiliate transactions, monitoring affiliate
19    transactions and costing affiliate transactions.  I'm
20    not sure that I could speak confidently about what we
21    may provide to third parties because that's outside of
22    the realm of my responsibility.
23              MR. MONDROW:  Sorry.  I don't mean to take you
24    outside your area of expertise.  I had assumed that
25    given your responsibility for the activity analyses and
26    exclusions of costs not belonging to utility, you might
27    be aware of any other services other than those for
28    which information is provided here because they are

                                                         1915
                                    REYNOLDS, cr-ex (Mondrow)
 1    affiliate transactions.
 2              There may be some confusion over your use of
 3    the term "third party" and "non-affiliated companies".
 4              MS REYNOLDS:  The only thing that I'm really
 5    aware of is the way we perform meter reading services in
 6    some of our franchise areas.  Some of our meter reading
 7    is done jointly with the local electrical utility in
 8    those areas where we can provide cost savings to the
 9    ratepayer for those activities.
10              It's not a service that is provided to a third
11    party.  It's more along the lines of we contract jointly
12    with a meter reading service to provide those services
13    and then reduce the cost to the ratepayers.
14              Off the top of my head, that's about the only
15    thing that I can think of other than, of course, the
16    sale, distribution and storage of natural gas.
17              MR. MONDROW:  Okay.  Thank you.
18              Can you help me at all, Ms Reynolds, with what
19    will be filed with the Energy Returns Officer of the
20    Board with respect to affiliate transactions?  Are you
21    aware whether that filing format under the new affiliate
22    code has been devised and, if so, what it's going to
23    look like, whether it's going to resemble what we have
24    got or be something different?
25              MS REYNOLDS:  It's my expectation that what my
26    area has always filed with the Energy Returns Officer
27    will continue to be filed.  We file quarterly right now. 
28    What we file is all of the affiliate transactions that

                                                         1916
                                    REYNOLDS, cr-ex (Mondrow)
 1    have occurred in that quarter with individual
 2    affiliates.
 3              It's similar in nature to what was presented
 4    in appendix D, I believe, of this package.
 5              MR. MONDROW:  That's the one page kind of
 6    summary of services provided to or procured from and the
 7    associated dollar figures.
 8              MS REYNOLDS:  That's correct.  What we provide
 9    to the Energy Returns Officer, while not exactly the
10    same, is similar in format to this.
11              MR. MONDROW:  Okay.  Are you personally aware,
12    have you reviewed the requirements under the affiliate
13    code for providing additional information regarding
14    affiliate transactions, for example, the services
15    agreements, the form of price determination?
16              MS REYNOLDS:  Yes.  Certainly I have reviewed
17    the affiliate relationships code in my areas right now,
18    trying to ensure that we have first of all the
19    information in place, the services agreements and
20    pricing mechanisms.
21              To comply with the affiliates relationships
22    code, we are also assessing what kind of processes we
23    need in place to substantiate compliance with the
24    affiliate relationships code.
25              The code itself doesn't specify the reporting
26    requirements, so at this point we are trying to assess
27    what will probably best meet the needs of the Board.
28              MR. MONDROW:  Okay.  Thank you.

                                                         1917
                                    REYNOLDS, cr-ex (Mondrow)
 1              If I could just take you back to appendix C
 2    for a moment.  There's just a few questions on some of
 3    the way the information has been presented.
 4              First of all, could I confirm with you on a
 5    general basis that as in the E.B.R.O. 497 information,
 6    mostly interrogatory responses, the services that are
 7    explained and for which dollar figures are provided here
 8    are grouped under primary service and secondary support
 9    departments.
10              Each of those departments is given a line
11    item.  The first one will be corporate affairs.  Each of
12    those departments in fact encompasses a number of
13    activities.  Is that an accurate description?
14              MS REYNOLDS:  There would have been in most
15    cases more than one department that would make up, for
16    example, corporate affairs or corporate services.  There
17    may be areas such as storage operations and
18    administration where that's a single department,
19    technology and development.  Most of the areas encompass
20    more than one department.
21              MR. MONDROW:  Most of the items would then, of
22    course, encompass a number of several individual types
23    of activities.
24              MS REYNOLDS:  That's right.  Each department
25    would have specified the various activities that it will
26    be undertaking.
27              MR. MONDROW:  If you could turn to page 2 of
28    appendix C, I just want to focus on line item 13 for the

                                                         1918
                                    REYNOLDS, cr-ex (Mondrow)
 1    purpose of clarifying something.  Strategic planning and
 2    business development is the name of that grouping.
 3              In column three there is a percentage, 51.7
 4    per cent.  As I understand that percentage, that tells
 5    us of the total costs subject to allocation, both
 6    direct -- sorry, of the total overhead costs, subject to
 7    allocation, 51.7 per cent of those costs in the case of
 8    strategic planning and business development and the
 9    activities underlying that name are allocated to
10    non-utility activities.
11              MS REYNOLDS:  That's correct.  In the case of
12    strategic planning, part of what's causing its large
13    percentage is the fact that I think about half of that
14    allocation is being allocated to new business -- let me
15    get the exact name of it.
16    --- Pause
17              MS REYNOLDS:  It's other new business
18    non-utility.  What that is is basically our provision
19    for services that we haven't yet identified.  While it's
20    an allocation to non-utilities and the cost has been
21    removed from cost of service, there is no specific
22    affiliate or specific activity identified with those
23    dollars.
24              MR. MONDROW:  That particularly large
25    allocation, and I can note that's the largest one on the
26    page and that's why I picked it, leads me to ask what
27    criteria the company would use in determining whether a
28    function should reside within the utility or outside the

                                                         1919
                                    REYNOLDS, cr-ex (Mondrow)
 1    utility in another one of the corporate group.
 2              Is there some criteria or basis for making
 3    that determination?
 4              MS REYNOLDS:  I don't think we have any
 5    defined criteria.  I could probably say with certainty
 6    that there's probably nothing written down.  We view
 7    these services as shared services, services that we
 8    perform strictly for affiliates.
 9              Certainly they are services that we require
10    ourselves and where it makes sense to also share those
11    services with affiliates for efficiency reasons, we will
12    do so.  We probably would look to the primary use of the
13    department's assets or labour pool and look to where the
14    primary use is found, whether it's in the utility or
15    whether it's being provided to affiliates.
16              For strategic planning and business
17    development, I think it's being skewed because it is
18    such a small department to begin with.  The total budget
19    is $500,000.  I can't say for certain, but I would think
20    this department probably needs specific skill sets in
21    the department and it sees efficiencies in sharing those
22    skill sets with affiliates to a larger degree than many
23    other departments in the company.
24              MR. MONDROW:  Could I take you back to page 1
25    and just by way of example, if you could look at the
26    corporate affairs line, which is line 1.  As I read the
27    services descriptions that I asked you about previously
28    which run across starting at column four and right

                                                         1920
                                    REYNOLDS, cr-ex (Mondrow)
 1    across the columns, I notice a repeating reference to
 2    media relations or media functions.
 3              I gather that, for example, if you look in
 4    line -- sorry, I had it marked on my other copy.  If you
 5    look to column number five at line 1, you see in the
 6    last sentence of the description "Media relations
 7    assistance" and similarly in column six "Media relations
 8    assistance" and similarly in column eight, the third
 9    line up, it says "Media relations and environmental
10    management assistance".
11              Obviously media relations, as an example, is a
12    service that's provided by corporate affairs to a number
13    of affiliates.
14              MR. FARRELL:  Just for the record, it's
15    "Limited media relations assistance".
16              MR. MONDROW:  That's fine, limited media
17    relations assistance.  I'm just flagging that by way of
18    an example.
19              My question really is whether within the
20    company's current way of approaching this and carrying
21    out these activity analyses, whether it's possible, and
22    I am not asking you to do it today, but whether
23    methodologically it's possible to break out from the
24    total costs, subject to allocation for corporate
25    affairs, just those costs that support media relations
26    activities in order to give a different percentage,
27    different from the one provided in column three, which
28    would in future provide us with information on how much

                                                         1921
                                    REYNOLDS, cr-ex (Mondrow)
 1    of the media relations activity is in fact provided to
 2    affiliates, that is to isolate particular functions
 3    within the larger groupings.
 4              Is that something that can be done under the
 5    methodology currently used?
 6              MS REYNOLDS:  It certainly is available.  Each
 7    department determines the cost of each of its
 8    activities.  It is those individual activities that then
 9    get allocated to the various ancillary non-utility
10    activities.
11              We are getting into a large volume of
12    information.  To present this information in a readable
13    format would be essentially similar to filing all of the
14    activity analyses for all of the departments.
15              If there were specific services that you were
16    concerned about, like media relations, it's not
17    difficult to provide that on a one-off basis.  But I
18    think what you are asking for is for me to provide the
19    total cost of each of these activities listed, plus the
20    total costs allocated to each of the affiliates.  Is
21    that correct?
22              MR. MONDROW:  I guess I'm not asking you to
23    provide anything right now; I'm just trying to determine
24    whether -- if there were a specific list of services
25    that the E.R.O. or the Board or an intervenor were
26    particularly interested in -- that information would be
27    available.  Not in this case, but going forward.  I
28    gather your answer is, yes, it would be available; it's

                                                         1922
                                    REYNOLDS, cr-ex (Mondrow)
 1    a question of volume, if you want everything, but the
 2    information is available.
 3              MS REYNOLDS:  The information for the price of
 4    individual services will be available, going forward,
 5    and that could be presented to the E.R.O. if the E.R.O.
 6    decides that that is the best way to monitor.  Or even
 7    if compliance with the Affiliate Relationships Code is
 8    going to be monitored through the E.R.O. -- and I don't
 9    think that's determined yet -- that information would be
10    available in the services agreements that we have with
11    each of the affiliates.  They are being set out as --
12    each department will attach a schedule to the main
13    agreement that will detail the departmental level
14    services and the pricing of those services, so that
15    information, certainly, will be available, and then our
16    reporting will capture the actual magnitude of those
17    services.  Through the PBR period, the fully-allocated
18    costs of the services isn't relevant for rate-making
19    purposes so it won't be captured as part of the cost
20    allocation study.
21              MR. MONDROW:  I appreciate that.  And I gather
22    that were the Board persuaded this were relevant, at
23    all, to its function, the information on the total costs
24    underlying a particular activity -- for example, the
25    example I used, media relations -- would also be
26    available?  That is, you could find that relatively
27    easily and provide the number?
28              MS REYNOLDS:  I could provide that for the

                                                         1923
                                    REYNOLDS, cr-ex (Mondrow)
 1    1999 budget, going forward through PBR.  The way I
 2    determined -- the way the information is captured,
 3    currently, is through the cost allocation study, and
 4    that study is not going to be performed until such time
 5    as we rebase because the need to capture that
 6    information currently doesn't exist.
 7              So if the Board directed that the cost
 8    allocation study be performed through the PBR period, of
 9    course the company would comply with that direction.
10              But, at this point, the company doesn't see
11    what relevant additional information the study can
12    provide, given the magnitude and the cost of the study.
13              MR. MONDROW:  The total costs subject to
14    allocation are O&M costs?
15              MS REYNOLDS:  O&M plus depreciation.
16              MR. MONDROW:  Right.  And the O&M portion,
17    which is the lion's shares of those costs, as I
18    understand it, the costs subject to allocation?  In most
19    categories.
20              MS REYNOLDS:  I'm not sure what your
21    definition of "lion's share" is so --
22              MR. MONDROW:  Well, in most of the categories,
23    in most of the line items that you provided, it's mostly
24    O&M?
25              MS REYNOLDS:  I think I would be happy saying
26    that most of the costs are O&M, yes.
27              MR. MONDROW:  Okay.  And O&M costs, under PBR,
28    for rate-making purposes, are going to be grossed up by

                                                         1924
                                    REYNOLDS, cr-ex (Mondrow)
 1    the PBR factor, which has been discussed by other
 2    panels?
 3              MS REYNOLDS:  That's correct.
 4              MR. MONDROW:  And so, if we took the 1999 base
 5    amount of costs subject to allocation and grossed those
 6    up by the same factor, we would get a reasonably
 7    reflective picture of total costs subject to allocation
 8    in each of the three PBR years?
 9    --- Pause
10              MR. MONDROW:  I understand why you are
11    pausing:  You are not actually going to be allocating
12    those costs.  But my original question was:  If the
13    Board were persuaded that the total costs for a
14    particular activity subject to allocation were relevant,
15    we could take the total costs for that activity subject
16    to allocation in the base year and apply the PBR formula
17    factor to gross them up for any particular year, 2000,
18    2001?
19              MS REYNOLDS:  That's correct, and that's what
20    was performed to determine the allocations for the NGV
21    program and home gas appliance inspection.
22              MR. MONDROW:  Great.  Okay.
23              Just a couple of clarifying questions on fleet
24    services, to finish off.
25              So, if you could turn back to the second page
26    of the narrative that you provided at the front end of
27    this exhibit.  The narrative talks about fleet services
28    provided by the company -- that is, the utility

                                                         1925
                                    REYNOLDS, cr-ex (Mondrow)
 1    company -- to Enbridge Services and advises, in the last
 2    line, that the percentage of services allocated to
 3    Enbridge Services -- that is, the percentage of fleet
 4    services -- I gather, for the test year, is 19.4 per
 5    cent.  Is that for the test year?
 6              MS REYNOLDS:  That's for the 1999 unbundled
 7    budget.
 8              MR. MONDROW:  So it's before gross up for PBR?
 9              MS REYNOLDS:  I think the percentage would be
10    the same.
11              MR. MONDROW:  It should because you gross up
12    outside of it?
13              MS REYNOLDS:  Yes.
14              MR. MONDROW:  Okay.  It's not expressly stated
15    here but I gather that there are no other fleet services
16    provided to affiliates, or, indeed, any entities other
17    than Enbridge Services, by the utility company.  Is that
18    a fair conclusion?
19              MS REYNOLDS:  I think that's a fair
20    conclusion.  I know of no other affiliates that we
21    provide services to.  And I don't believe we provide
22    services to third parties,  As I stated before, I deal
23    with affiliate transactions so that's why I hesitate
24    there.
25              MR. MONDROW:  Okay.  And you have also
26    provided, in this package, exhibits -- from the
27    E.B.O. 179-14/15 proceeding, Exhibit B, Section 5.2, and
28    that's -- I will just get the appendix number.

                                                         1926
                                    REYNOLDS, cr-ex (Mondrow)
 1              MS REYNOLDS:  I don't think it has an appendix
 2    number.
 3              MR. MONDROW:  Oh, okay.  But it is attached?
 4              MS REYNOLDS:  Yes.
 5              MR. MONDROW:  Okay.  I had read that earlier,
 6    and as I understand it, fleet services -- the fleet
 7    services to be provided to Consumersfirst will consist
 8    of lease management, vehicle maintenance, and then
 9    there's a reference to volume purchasing, or volume
10    purchasing preferential pricing.
11              So, can you just confirm for me that the 1.207
12    million of the fleet services budget allocated to
13    Consumersfirst, in the unbundled budget, are the costs
14    associated with lease management and vehicle
15    maintenance?
16              MS REYNOLDS:  That's correct.
17              MR. MONDROW:  Okay.  Are there other fleet
18    services activities performed within the utility, other
19    than those two activities, that would form part of the
20    6.216 million figure that's given for fleet services in
21    this response?
22              MS REYNOLDS:  Not in the $6.2 million.  In our
23    fleet budget, we do budget for fuel costs, but because
24    those costs are borne directly by Enbridge Services
25    Inc., they have been taken out of the total fleet budget
26    to produce an apples-to-apples comparison.
27              MR. MONDROW:  Okay.  So the 6.216 million for
28    the total fleet budget would apply just to the same

                                                         1927
                                    REYNOLDS, cr-ex (Mondrow)
 1    services that are being provided to Consumers or, now,
 2    Enbridge Services?
 3              MS REYNOLDS:  That's correct.
 4              MR. MONDROW:  Okay.  And the 1.207 million,
 5    can you just confirm, is a number that's derived on a
 6    fully allocated cost basis?
 7              MS REYNOLDS:  That's correct.  At the point
 8    that the unbundled study was prepared and the shared
 9    services were identified, in that case, the services
10    were expected to be provided to Enbridge Services Inc.
11    on a fully-allocated basis, that was prior to the
12    introduction of the Affiliate Relationships Code.  Work
13    is under way now to assess the market price of that
14    transaction.  I expect, from discussions I have had with
15    the individuals involved in the pricing, our
16    fully-allocated costs is going to come pretty close to
17    the market price.
18              MR. MONDROW:  Okay.  You have anticipated my
19    last question.  Thank you very much, again, for coming
20    back to allow me to ask those questions and for
21    indulging my lateness.
22              Thank you sir.
23              THE PRESIDING MEMBER:  Thank you, Mr. Mondrow.
24              I guess we can excuse Ms Reynolds.
25              MS REYNOLDS:  Thank you.
26              THE PRESIDING MEMBER:  For good.
27              MS REYNOLDS:  I hope.
28              THE PRESIDING MEMBER:  For the summer.

                                                         1928
                                    REYNOLDS, cr-ex (Mondrow)
 1              Mr. Farrell, we will return at 11:15.  That
 2    will give you almost half an hour.
 3              MR. FARRELL:  Thank you very much.
 4    --- Upon recessing at 1048
 5    --- Upon resuming at 1119
 6    PREVIOUSLY SWORN:  JIM G. STEPHENS
 7              THE PRESIDING MEMBER:  Mr. Farrell.
 8              MR. FARRELL:  Yes, Mr. Chair, I thought I
 9    would just note that we have distributed the responses
10    to a number of undertakings.
11              For the record, I will read in the responses
12    that you should have as a package:  Exhibits J7.1, 2, 3,
13    5, 6 and 7; J8.2, 3, 4 and 5; J9.1, 2, 3, 4, 5, 6 and 7;
14    and J10.1.
15              By my count -- and I think this is accurate,
16    but at least it is close -- there are six outstanding
17    undertakings, including the one I mentioned to
18    Mr. Janigan earlier.  We haven't been able to reach him
19    yet, but we will try again after today's hearing is
20    concluded.
21              THE PRESIDING MEMBER:  I believe staff are in
22    the process of doing so as well.
23              I am just wondering, if we don't hear anything
24    by the end of business today, on what basis shall we
25    leave it?
26              MR. FARRELL:  We will most likely be back here
27    tomorrow with Mr. Stephens, Mr. Chair, because I don't
28    anticipate that I am going to come close to completing

                                                         1929
                                                     STEPHENS
 1    my cross-examination in roughly an hour and 40 minutes.
 2              THE PRESIDING MEMBER:  That's fine, then.
 3              MR. FARRELL:  What you also should have is a
 4    web profile for TMG.  It is entitled "Our Profile" in a
 5    box below a line at the top; and TMG's "Our Resources"
 6    from the Web site; a document entitled "Program Mercury"
 7    to which Mr. Stephens has referred in his written
 8    evidence, just excerpts for pages that I plan to ask
 9    Mr. Stephens some questions about; and a one-page
10    excerpt from the Market Design Task Force's February 4,
11    1999 report that deals with the unbundling timetable.
12              I gave these to Mr. Thompson and Mr. Stephens
13    at the break.  I realize that I have not honoured the
14    24-hour rule.  I don't think that is going to be a
15    problem in terms of my cross, at least not with the
16    Program Mercury information, because Mr. Stephens has
17    relied on it himself, and I assume that he is familiar
18    with it.
19              THE PRESIDING MEMBER:  Mr. Wightman, can you
20    help us with exhibit numbers?
21              MR. FARRELL:  We could mark it as a package,
22    as you wish, or mark it separately just for
23    identification purposes.
24              The next exhibit number is K11.2.
25                   EXHIBIT NO. K11.2:  Package of documents
26                   including Responses to undertakings:
27                   Exhibits J7.1, 2, 3, 5, 6 and 7; J8.2, 3,
28                   4 and 5; J9.1, 2, 3, 4, 5, 6 and 7; and

                                                         1930
                                                     STEPHENS
 1                   J10.1; web profile for TMG entitled "Our
 2                   Profile"; TMG's "Our Resources" from the
 3                   Web site; and a document entitled
 4                   "Program Mercury"
 5    CROSS-EXAMINATION
 6              MR. FARRELL:  Mr. Stephens, I want to first go
 7    to Exhibit K2.1, which is your detailed resume.
 8              I realize that you have been through this in
 9    detail with Mr. Thompson.  I don't intend to go through
10    it in the same detail, but I just want to underscore
11    certain points.
12              You spent 24 years with IBM?
13              MR. STEPHENS:  Yes.
14              MR. FARRELL:  That was mostly in sales?
15              MR. STEPHENS:  I would say there was about
16    nine years in sales, about six years in the technical
17    area, and the remainder would have been in management.
18              MR. FARRELL:  When you were in management, you
19    were overseeing in effect, among other things I take it,
20    sales functions?
21              MR. STEPHENS:  I had sales and systems
22    engineering, which is the majority of the staff, so
23    those people supported the applications and operations
24    side of our customer business.  And then we would
25    interface with other specialized groups, such as systems
26    integration, customer service.  So basically you
27    interfaced with all the resources in the company.
28              MR. FARRELL:  That is your management role

                                                         1931
                                    STEPHENS, cr-ex (Farrell)
 1    that you are referring to.
 2              MR. STEPHENS:  Right.
 3              MR. FARRELL:  As you told Mr. Thompson, you
 4    were with SHL Systemhouse for a little under two years?
 5              MR. STEPHENS:  Yes.
 6              MR. FARRELL:  Then you branched out into
 7    consulting?
 8              MR. STEPHENS:  Yes.
 9              THE PRESIDING MEMBER:  Perhaps you would like
10    to change seats, Mr. Stephens.
11              MR. FARRELL:  All right?
12              MR. STEPHENS:  I am ready.
13              MR. FARRELL:  We didn't rig it, by the way.
14              I think then I was taking you to the time when
15    you and a partner established FinTech Services?
16              MR. STEPHENS:  Yes.
17              MR. FARRELL:  You were there for three years.
18              MR. STEPHENS:  About two years, yes.
19              MR. FARRELL:  You described yourself as a
20    principal and managing consultant.
21              MR. STEPHENS:  Yes.
22              MR. FARRELL:  Then you have been on your own,
23    as you told Mr. Thompson, since 1997.
24              MR. STEPHENS:  Right.
25              MR. FARRELL:  Have you ever been involved in
26    designing a customer information system for a gas
27    utility?
28              MR. STEPHENS:  No.

                                                         1932
                                    STEPHENS, cr-ex (Farrell)
 1              MR. FARRELL:  Have you ever looked at the
 2    operation of a CIS for a utility from the operator's
 3    perspective?
 4              MR. STEPHENS:  By the operator, you mean?
 5              MR. FARRELL:  The utility.  Operating a CIS --
 6              MR. STEPHENS:  Within the information
 7    technology function, within the operations department or
 8    within customer support and services?
 9              MR. FARRELL:  The latter.
10              MR. STEPHENS:  No.
11              MR. FARRELL:  You mentioned to Mr. Thompson
12    that you had one prior assignment involving a CIS
13    project with a gas utility, and that was Centra
14    Manitoba.
15              MR. STEPHENS:  Yes.
16              MR. FARRELL:  And you prepared prefiled
17    evidence.
18              MR. STEPHENS:  Yes.
19              MR. FARRELL:  But you didn't testify because
20    the hearing imploded, so to speak.
21              MR. STEPHENS:  Correct.
22              MR. FARRELL:  In describing what you did for
23    Centra Manitoba -- this is on page 2 of Exhibit K2.1 --
24    you said that you:
25                   "...researched and analyzed the proposed
26                   implementation of a CIS (customer
27                   information system) and a gas utility. 
28                   Available industry alternatives were

                                                         1933
                                    STEPHENS, cr-ex (Farrell)
 1                   examined in order to establish a
 2                   reasonable range of system costs."
 3                   (As read)
 4              Is that a fair --
 5              MR. STEPHENS:  Yes.
 6              MR. FARRELL:  I read it as you wrote it, but
 7    that is how you saw your work?
 8              MR. STEPHENS:  Yes.
 9              MR. FARRELL:  I would just like to compare
10    that with your assignment here.
11              Could you turn up Exhibit I, Tab 25, Schedule
12    46, which is your responses to our interrogatories, in
13    particular, Appendix 1.
14              This is Mr. Thompson's letter to you, dated
15    July 7th.
16              MR. STEPHENS:  Yes.
17              MR. FARRELL:  On page 1, in the third
18    paragraph, Mr. Thompson says that they are working
19    together, the three intervenors:
20                   "...to obtain opinion evidence to assist
21                   in the evaluation of the reasonableness
22                   of the costs which Enbridge seeks to
23                   recover in regulated distribution rates
24                   for CIS."
25              MR. STEPHENS:  Yes.
26              MR. FARRELL:  Then on the next page, page 2,
27    in the third paragraph under the three numbered items,
28    he writes:

                                                         1934
                                    STEPHENS, cr-ex (Farrell)
 1                   "IGUA, CAC, and VECC do not accept $12M
 2                   for CIS charges from Enlogix to Union as
 3                   reasonable."
 4              Did you give any thought to that?  Did that
 5    play any role in your assessment of the alternatives?
 6              MR. STEPHENS:  Yes, it did, in the fact that
 7    as I had at Centra Gas Manitoba, they had an outsourcing
 8    fee.  That is from the demarcation point out.
 9              So even though there is evidence to say that
10    is reasonable in Mr. Diamond's evidence, I don't believe
11    it to be so.
12              MR. FARRELL:  We will come back to that then,
13    in a little more detail.
14              I was struck by a word that appears in the
15    second sentence of that paragraph, where Mr. Thompson
16    notes that in the work you conducted for CAC in Manitoba
17    you found that the proposed fees to be paid by Centra
18    Manitoba to Enlogix were excessive.
19              Is that a word that appears in your prefiled
20    evidence in the Manitoba case, the word "excessive"?
21              MR. STEPHENS:  I don't know the answer to that
22    right now.
23              MR. FARRELL:  I will leave that for the
24    moment.
25              Then he gets down to the meat of what he is
26    asking you to do, as we read it anyway, and it is the
27    second-last paragraph on the page:
28                   "The issue that we wish to have addressed

                                                         1935
                                    STEPHENS, cr-ex (Farrell)
 1                   is whether the scope and costs for CIS
 2                   which the Company proposes are excessive,
 3                   having regard to the reasonable CIS
 4                   requirements of a gas distribution
 5                   utility comparable to Enbridge Consumers
 6                   Gas."
 7              Did you take from that, Mr. Stephens, that you
 8    were on a hunt for excessive expenditures?
 9              MR. STEPHENS:  No.  I took that I was hunting
10    or looking to evaluate and establish a fair market value
11    for a comparable service.
12              MR. FARRELL:  To a comparable utility.
13              MR. STEPHENS:  True.
14              MR. FARRELL:  So you looked at two gas
15    distribution utilities that you say are comparable, BC
16    Gas and Union Gas?
17              MR. STEPHENS:  Yes.
18              MR. FARRELL:  I will turn back to each of
19    them.  I just want to get through some preliminaries
20    first.
21              Mr. Thompson's letter to you is dated July
22    7th, 1999.  Was that the date on which you were formally
23    retained?
24              MR. STEPHENS:  Yes.
25              MR. FARRELL:  So you started work on or about
26    July 7th or a day or two thereafter and you prepared
27    written evidence which is dated August 17th, 1999.
28              MR. STEPHENS:  Yes.

                                                         1936
                                    STEPHENS, cr-ex (Farrell)
 1              MR. FARRELL:  My recollection is that the
 2    written evidence was not filed or -- at least the
 3    schedules were filed first, at least we received them
 4    first, and then the text of your written evidence
 5    subsequently.
 6              MR. STEPHENS:  I submitted to Mr. Thompson on
 7    August 17th and he was arranging distribution.
 8              MR. FARRELL:  I see.  So Mr. Thompson had it
 9    on the 17th and he arranged distribution, which,
10    according to our records, took place on the 19th.
11              Did he distribute exactly what you had given
12    him?
13              MR. STEPHENS:  Yes.
14              MR. FARRELL:  No changes; exact wording?
15              MR. STEPHENS:  Exact wording, including the
16    small errors.
17              MR. FARRELL:  Okay.
18              Now, last Thursday Mr. Thompson mentioned that
19    Exhibit I, Schedule 12 -- excuse me -- Tab 12,
20    Schedule 48, which is IGUA Interrogatory No. 48, was
21    what led you to Mr. Galluzzi at TMG.  Is that correct?
22              MR. STEPHENS:  That's true.
23              MR. FARRELL:  I take it you were previously
24    unaware of either Mr. Galluzzi or TMG.
25              MR. STEPHENS:  That is not true.  I knew of
26    CISWorld from my work in Manitoba.  I was not aware that
27    Greg Galluzzi had that organization until I started to
28    look at it because there was significant data I thought

                                                         1937
                                    STEPHENS, cr-ex (Farrell)
 1    in the information that had been submitted.
 2              MR. FARRELL:  So did you then contact him?
 3              MR. STEPHENS:  Yes, I did.
 4              MR. FARRELL:  Did you visit his office?
 5              MR. STEPHENS:  No.
 6              MR. FARRELL:  Did you check TMG's Web site?
 7              MR. STEPHENS:  Yes.
 8              MR. FARRELL:  Can you confirm that the
 9    document for the component of Exhibit K11.2 that is
10    entitled "Our Profile" is taken from this Web site?
11              MR. STEPHENS:  That is what it looks like.  I
12    never saw that, but I'm sure that's true.
13              MR. FARRELL:  Okay.
14              When you were talking to him, did you inquire
15    about the size of his organization, the number of
16    consultants?
17              MR. STEPHENS:  Yes.
18              MR. FARRELL:  Does the document entitled "Our
19    Resources" -- it lists the following resources:  nine
20    people comprises his organization.
21              MR. STEPHENS:  I believe they are a little
22    larger than that now.
23              MR. FARRELL:  So he hasn't updated his Web
24    site.
25              MR. STEPHENS:  Probably not.
26              MR. FARRELL:  Now, did you inquire about TMG's
27    prior experience?
28              MR. STEPHENS:  We talked about, you know, the

                                                         1938
                                    STEPHENS, cr-ex (Farrell)
 1    clients he had and what he had done for his clients.  I
 2    was asking him questions about how they would price a
 3    CIS system for different utilities so we went into his
 4    rules of thumb.  Those are something I'm fairly familiar
 5    with from my previous experience, something like that
 6    but not utility-specific.
 7              MR. FARRELL:  In discussing his prior
 8    experience with other clients, did he indicate whether
 9    he performed services as a primary contractor or a
10    subcontractor?
11              MR. STEPHENS:  I understand that he does both.
12              MR. FARRELL:  But in terms of the clients that
13    he lists in Appendix 8 to your evidence, do you know
14    whether his services for those clients were as a
15    subcontractor or a primary contractor?
16              MR. STEPHENS:  I do not.
17              MR. FARRELL:  Could you just briefly explain
18    the difference between being a primary contractor and
19    being a subcontractor, based on your experience?
20              MR. STEPHENS:  Yes.
21              If you are a primary you are engaged directly
22    by the client and your bill goes directly to the client.
23              If you are a subcontractor, for instance, a
24    subcontractor of EDS, your bill goes to EDS and EDS
25    bills the client, and the client engagement is with EDS,
26    as an example.
27              MR. FARRELL:  If one is a subcontractor one
28    could have, with a small staff, a large number of

                                                         1939
                                    STEPHENS, cr-ex (Farrell)
 1    assignments depending upon the size of the subcontract?
 2              MR. STEPHENS:  Yes.
 3              MR. FARRELL:  Now, Appendix 8 to your written
 4    evidence is a document entitled "A Customer System
 5    Industry Perspective", "Position Paper", and it is dated
 6    August 9th, 1999.
 7              MR. STEPHENS:  Yes.
 8              MR. FARRELL:  What does the term "Position
 9    Paper" mean to you in this context?
10              MR. STEPHENS:  Well, Greg Galluzzi and I
11    talked about that and I had basically -- he indicated --
12    I was trying to understand the software industry around
13    customer information systems.  I was trying to
14    understand the outsourcing within that industry and I
15    was trying to understand rules of thumb that they used
16    in order to help customers estimate the cost of CIS
17    projects and the operating costs of those projects.  The
18    rest he has added on his own.
19              MR. FARRELL:  Okay.
20              So I just wondered whether it was meant to be
21    a position on something.  It seemed to be an unusual
22    title and I just wondered whether it had any particular
23    meaning either to him or to you.
24              MR. STEPHENS:  It has no particular meaning to
25    me other than it provides this information that I used.
26              MR. FARRELL:  Did you ask TMG to produce this
27    document as support for your written evidence?
28              MR. STEPHENS:  No.  I asked for this document

                                                         1940
                                    STEPHENS, cr-ex (Farrell)
 1    and I used it to help me prepare my evidence.  In fact,
 2    I had to rewrite the evidence significantly after I got
 3    this position paper.
 4              MR. FARRELL:  Is this something that
 5    Mr. Galluzzi prepared as an original work after you
 6    spoke to him or is it something he just took off his
 7    shelf?
 8              MR. STEPHENS:  My impression is that, based on
 9    his knowledge and experience, he did some of both.  I'm
10    sure he has this in some sort of form today
11    electronically and he was able to pull some of that
12    together and the rest is original.
13              MR. FARRELL:  When did you ask him for
14    something?  It is dated August the 9th.  I'm just
15    curious to know, from your records, when you asked him
16    to produce this, which may give us some indication of
17    how much was on the shelf and how much was --
18              MR. STEPHENS:  I would have to go back and
19    retrieve an e-mail, but I think it was in the order of
20    two weeks.
21              MR. FARRELL:  Could you undertake to confirm
22    that?
23              MR. STEPHENS:  Yes.
24              MS DESAI:  Undertaking J11.1.
25                   UNDERTAKING NO. J11.1:  Mr. Stephens to
26                   check and advise when he asked
27                   Mr. Galluzzi to produce the document
28                   entitled "A Customer System Industry

                                                         1941
                                    STEPHENS, cr-ex (Farrell)
 1                   Perspective", "Position Paper" dated
 2                   August 9, 1999
 3              MR. FARRELL:  As you said, you are relying on
 4    it for support in at least two instances, the
 5    deregulated business model and the rules of thumb.
 6              MR. STEPHENS:  Yes.
 7              MR. FARRELL:  Could you turn up page 1 of
 8    Appendix 8.
 9              MR. STEPHENS:  Yes.
10              MR. FARRELL:  I was struck by the first
11    paragraph under the bullet points, and it reads for the
12    record as follows:
13                   "This position paper contains
14                   confidential proprietary trade secret
15                   information of TMG Consulting Inc., and
16                   is not to be copied, reproduced, lent or
17                   disposed of, nor used for any purpose
18                   other than that specified herein without
19                   the express prior written permission of
20                   TMG Consulting, Inc."
21              Were you surprised to see that in a document
22    that was intended to be filed with a regulator?
23              MR. STEPHENS:  No.  If you look at other
24    companies that produce reports that we rely on, then
25    probably all of them have that kind of confidentiality
26    clause in there.
27              MR. FARRELL:  I see.  But I take it, and I
28    think you have mentioned it somewhere in your written

                                                         1942
                                    STEPHENS, cr-ex (Farrell)
 1    evidence, that you had Mr. Galluzzi's permission to file
 2    this document in this proceeding?
 3              MR. STEPHENS:  Yes.
 4              MR. FARRELL:  Then, in the next paragraph he
 5    says:
 6                   "This proposal is intended to provide
 7                   accurate information regarding TMG
 8                   Consulting's services."
 9              What does the word "proposal" mean to you in
10    this context?
11              MR. STEPHENS:  I guess it is a position paper.
12              MR. FARRELL:  This is why, Mr. Stephens, I
13    wondered whether this was off the shelf, whether this
14    was sort of Mr. Galluzzi's standard form, at least in
15    part a document that he would use in responding to an
16    RFP.  Do you know?
17              MR. STEPHENS:  I don't know the answer to that
18    now.
19              MR. FARRELL:  Can you find out?
20              MR. STEPHENS:  I can ask him.
21              MR. FARRELL:  Please.
22              MR. STEPHENS:  Do you think that is important?
23              MR. FARRELL:  Maybe we will just wait and see.
24              I have one other question on this page that
25    struck me as being surprising in a document to be filed
26    with a regulator and to be relied on.  It is at the very
27    bottom.
28              There's a footer in fact for each page of this

                                                         1943
                                    STEPHENS, cr-ex (Farrell)
 1    document.
 2                   "TMG disclaims all warranties as to the
 3                   accuracy, completeness or adequacy of
 4                   such information.  TMG shall have no
 5                   liability for errors, omissions or
 6                   inadequacies in the information contained
 7                   herein or for interpretations thereof. 
 8                   The reader assumes sole responsibility
 9                   for the selection of these materials to
10                   achieve its intended results."  (As read)
11              You were aware of that, of course.
12              MR. STEPHENS:  Yes.
13              MR. FARRELL:  That didn't bother you in terms
14    of you relying on the information that he has in his
15    report.
16              MR. STEPHENS:  No.
17              MR. FARRELL:  I think I would like you to ask
18    Mr. Galluzzi whether this was an original work or
19    something that he uses for responding to RFPs and
20    whether he puts a similar disclaimer on all of his
21    proposals.
22              MR. STEPHENS:  Whether this footnote is on all
23    his proposals?
24              MR. FARRELL:  Yes.
25              MR. STEPHENS:  Well, I told you that part of
26    it is original and part is, you know, out of material he
27    has, but that's what you would expect of any company
28    that does provide this kind of information.  If I had

                                                         1944
                                    STEPHENS, cr-ex (Farrell)
 1    had to have this all done originally, I couldn't have
 2    afforded it.
 3              MR. FARRELL:  Okay.  Well, I will accept your
 4    explanation that this is par for the course under the
 5    circumstances and I don't need a particular undertaking,
 6    but I still want you to check on the time it took him to
 7    prepare it.
 8              Now, I want to move now to the comparability
 9    of the three utilities, ECG or Enbridge, BC Gas and
10    Union and the comparability of their CIS solutions.  Am
11    I correct in saying that the CIS solution for one
12    utility can be comparable or used by another utility
13    only if it's scalable to fit the latter, assuming the
14    latter is of a larger size?
15              MR. STEPHENS:  That it has to be scalable to
16    meet that need?
17              MR. FARRELL:  Yes.
18              MR. STEPHENS:  That's a reasonable assumption.
19              MR. FARRELL:  Would you agree with me that at
20    least one meaning of scalability is maintaining an
21    acceptable response time as more load is added?
22              MR. STEPHENS:  Yes.
23              MR. FARRELL:  I want to discuss with you the
24    factors that one would take into account in determining
25    whether one CIS solution was scalable to meet the needs
26    of another utility.  One factor, you would agree, is the
27    database volume, the size of the database.
28              MR. STEPHENS:  Yes.

                                                         1945
                                    STEPHENS, cr-ex (Farrell)
 1              MR. FARRELL:  Would you agree that that's a
 2    function of the number of customers the utility has?
 3              MR. STEPHENS:  Yes.
 4              MR. FARRELL:  And it's also a function of the
 5    amount of data or the number of records that the utility
 6    needs for each customer.
 7              MR. STEPHENS:  It's the amount of information
 8    you store in that solution for each customer.
 9              MR. FARRELL:  So if you stored things like
10    meter reading history over 24 months as opposed to, say,
11    meter reading history over 12 months, you would need
12    more database or the database would be larger.
13              MR. STEPHENS:  Right, although that probably
14    wouldn't impact performance very much.
15              MR. FARRELL:  But the amount of records,
16    depending on how many there are, would impact
17    performance, I take it you would agree.
18              MR. STEPHENS:  Yes.
19              MR. FARRELL:  Would you also agree that the
20    amount of information that one has on a particular
21    screen, if there's a large amount of information
22    compared to a small amount of information on one
23    utility's screen versus another utility's screen, and
24    here I am talking about particular screens, that the one
25    that is more dense or has more data on it would have a
26    greater response time.
27              MR. STEPHENS:  You mean it would be slower?
28              MR. FARRELL:  It would be slower.  Sorry.

                                                         1946
                                    STEPHENS, cr-ex (Farrell)
 1              MR. STEPHENS:  Greater response time is
 2    usually faster.
 3              MR. FARRELL:  You're right.  This is slower,
 4    or more sluggish, as you used the term earlier
 5              MR. STEPHENS:  Yes.  I don't think I would
 6    agree with that because the transmission time -- if the
 7    information is available in a record, right, you have
 8    got the record right into basically -- into probably
 9    memory and how much information you put from that record
10    out on to the screen, that part of the response time is
11    very short.
12              MR. FARRELL:  Are you saying it would have no
13    effect?
14              MR. STEPHENS:  I said negligible.
15              MR. FARRELL:  We will just leave that for now. 
16    Now, a second factor I am advised that one would take
17    into account is the on-line transaction parameters -- by
18    that I mean for a particular customer service rep or a
19    CSR -- the type of inquiry that person receives and,
20    therefore, the type or amount of data that has to be
21    called up.
22              MR. STEPHENS:  That's true.
23              MR. FARRELL:  And as another factor, the
24    number of concurrent users.
25              MR. STEPHENS:  True.
26              MR. FARRELL:  So the more concurrent users
27    there are, the more impact there may be on response time
28    on any given system at any particular time.

                                                         1947
                                    STEPHENS, cr-ex (Farrell)
 1              MR. STEPHENS:  If you take the same system,
 2    you know, computer configuration and network
 3    configuration and you put more load through users on it,
 4    you will impact -- the more it will impact the response
 5    time.
 6              MR. FARRELL:  Is a fourth factor the batch
 7    processing volumes?  You were mentioning this earlier in
 8    relation to banks.  In other words, the time required to
 9    run bills through the system during off hours, that's
10    batch processing to a degree.
11              MR. STEPHENS:  Yes.
12              MR. FARRELL:  And is the volume to be batched
13    process a factor that affects scalability?
14              MR. STEPHENS:  Yes.
15              MR. FARRELL:  You mentioned batch windows in
16    relation to banks.  Are you aware that utilities have
17    batch windows as well?
18              MR. STEPHENS:  Yes.
19              MR. FARRELL:  Is a fifth factor that affects
20    scalability hardware capacities?  By that I mean
21    particularly the hardware capacity used in a scalability
22    test compared to the hardware capacity used in
23    production?  Is that a factor to be taken into account?
24              MR. STEPHENS:  Well, you would have to take
25    into account when you were doing a scalability test, you
26    know, that this load is on that environment.  If you
27    move to a production environment, that load would be
28    probably different.

                                                         1948
                                    STEPHENS, cr-ex (Farrell)
 1              MR. FARRELL:  Okay.  Thank you.  Mr. Kent says
 2    I'm satisfied with that answer.
 3              Now, you have used BC Gas as a gas
 4    distribution utility that is comparable to Enbridge
 5    Consumers Gas.
 6              MR. STEPHENS:  Yes.
 7              MR. FARRELL:  Does comparability include the
 8    number of customers served by each utility?
 9              MR. STEPHENS:  No, it doesn't.  It includes
10    basically the functional characteristics of it.
11              MR. FARRELL:  I'm not talking about the CIS,
12    Mr. Stephens.  You agreed with me earlier that you were
13    looking at gas distribution utilities that were
14    comparable and then you were assessing the comparability
15    of their CIS solutions.  I am now focusing on the gas
16    distribution utility.
17              MR. STEPHENS:  Okay.  The way the marketplace
18    generally thinks about these from the, I will call it,
19    systems point of view is, and I guess Mr. Diamond
20    addressed this, if you can give something that's in the
21    range of 1 to 1.7 was his example, then you probably
22    have reasonable comparability.
23              The other way to make it comparable is to say
24    now, if I have got one that is three quarters of a
25    million, which BC Gas is, then I could extend that scale
26    to three quarters to one and a half, so that's the way I
27    defined the scale.
28              MR. FARRELL:  Okay.  Well, we are not quite at

                                                         1949
                                    STEPHENS, cr-ex (Farrell)
 1    the scaling exercise yet, but I think you have given me
 2    the information that I wanted to have from you and that
 3    is that BC Gas has about a quarter of a million
 4    customers or slightly under.  I think the number you
 5    used in one of your appendices is 735,000 customers.
 6              MR. STEPHENS:  Yes.  I said three quarters of
 7    a million.
 8              MR. FARRELL:  And Enbridge is roughly twice
 9    that size, almost 1.5 million.
10              MR. STEPHENS:  Agreed.
11              MR. FARRELL:  Would you also take into account
12    billing cycles?
13              MR. STEPHENS:  Yes.
14              MR. FARRELL:  Okay.  Can you confirm for me
15    that BC Gas bills some of its customers monthly and
16    other customers every two months?
17              MR. STEPHENS:  Yes.
18              MR. FARRELL:  In this context, the every two
19    months, the customer base that is billed every two
20    months, would you consider that that puts less of a load
21    on the batch processing function?
22              MR. STEPHENS:  Yes.
23              MR. FARRELL:  And less of a load on the
24    on-line transaction function, assuming customers
25    complain mainly when they get their bill?
26              MR. STEPHENS:  With that assumption I would
27    agree, with the assumption that customers only complain
28    when they get their bill.

                                                         1950
                                    STEPHENS, cr-ex (Farrell)
 1              MR. FARRELL:  No.  Let me put it another way
 2    to see if I could get you to agree with me.  They tend
 3    to complain more once they have a bill in hand than
 4    otherwise.
 5              MR. STEPHENS:  I don't know the answer to
 6    that.  I never complained --
 7              MR. FARRELL:  We will sign you --
 8              MS STEPHENS:  -- my bills.
 9              MR. FARRELL:  Can you confirm for me that
10    Enbridge has a monthly billing cycle?
11              MR. STEPHENS:  Yes.
12              MR. FARRELL:  And no other?  No --
13              MR. STEPHENS:  Yes.
14              MR. FARRELL:  -- bimonthly?
15              MR. STEPHENS:  Yes.
16              MR. FARRELL:  Is the state of the deregulation
17    process, and the corresponding services offered by a
18    distributor, a factor that you would take into account,
19    in terms of comparing one utility to another?
20              MR. STEPHENS:  I didn't take that into
21    account.
22              MR. FARRELL:  I see.  But you did tell us that
23    you used TMG's deregulated business model?
24              MR. STEPHENS:  Well, that helped me put in the
25    context in my mind all the things that were needed, from
26    a systems perspective, as the industry deregulated.
27              I am aware that in Canada or, specifically, in
28    Ontario, they have not gone as far as we have in certain

                                                         1951
                                    STEPHENS, cr-ex (Farrell)
 1    states in the U.S.
 2              MR. FARRELL:  We will come to Ontario, in a
 3    moment.
 4              But did you do any research or talk to anyone
 5    to see whether the TMG deregulated business model fit
 6    the state of deregulation in British Columbia?
 7              MR. STEPHENS:  I did not.
 8              MR. FARRELL:  Do you know the state of
 9    deregulation or the type of market that BC Gas serves?
10              MR. STEPHENS:  I do not.
11              MR. FARRELL:  So you don't know, I take, what
12    needs to be done in B.C. to achieve the deregulated
13    business model that TMG provided you with?
14              MR. STEPHENS:  I don't understand exactly what
15    is needed in B.C. in order to adapt to that environment
16    with the Peace software.
17              I do know from Mr. Galluzzi that that software
18    has the capability to fit that business model, in his
19    report.
20              MR. FARRELL:  The Peace software, according to
21    Mr. Galluzzi, can fit the TMG business model.
22              What you can't help me with is whether the TMG
23    business model fits British Columbia?
24              MR. STEPHENS:  I don't know the answer to
25    that.
26              But it's pretty flexible, so I suspect it
27    will.
28              MR. FARRELL:  Now, coming to Ontario.  The

                                                         1952
                                    STEPHENS, cr-ex (Farrell)
 1    same questions:  Are you aware of the state of the
 2    deregulation process in Ontario and the corresponding
 3    types of service that distributors, such as Union or
 4    Enbridge, provide?
 5              MR. STEPHENS:  No, I am not.
 6              MR. FARRELL:  Do you know whether
 7    Mr. Galluzzi's deregulated business model would fit the
 8    current state of deregulation in Ontario?
 9              MR. STEPHENS:  I would say, based on the
10    flexibility built into that business model, it would
11    fit.  It probably is much farther along than -- in terms
12    of its thinking -- than they currently are in Ontario.
13              MR. FARRELL:  I see.  And that's based upon
14    your understanding of the state of the markets, natural
15    gas markets, in the U.S., or your advice from
16    Mr. Galluzzi?
17              MR. STEPHENS:  It's my understanding of the
18    flexibility built into that business model in order to
19    adapt to the deregulating energy industry.  North
20    American-wide.
21              MR. FARRELL:  As Mr. Galluzzi describes it?
22              MR. STEPHENS:  Yes.
23              MR. FARRELL:  Do you know whether he's
24    familiar with the Ontario marketplace?
25              MR. STEPHENS:  I don't think he is.
26              MR. FARRELL:  Have you heard the term
27    "unbundling of services" used?
28              MR. STEPHENS:  Yes.  Quite often, in this

                                                         1953
                                    STEPHENS, cr-ex (Farrell)
 1    room.
 2              MR. FARRELL:  But just to make sure we are
 3    clear, what I am referring to is not unbundling of
 4    businesses or the separation of businesses but, rather,
 5    the unbundling of the services provided by a
 6    distributor, such as Union or Enbridge?
 7              MR. STEPHENS:  You mean into T-service or full
 8    service?
 9              MR. FARRELL:  Among others, yes.
10              MR. STEPHENS:  And the question was?
11              MR. FARRELL:  Well, I just was trying to gauge
12    whether -- how aware you were of the Ontario
13    marketplace, both where it is today and where it may be
14    going, in order to take comfort that Mr. Galluzzi's
15    business model -- which, by my reading, doesn't seem to
16    contemplate unbundling of distributor services --
17    whether you are comfortable in telling me, and telling
18    this Board, that Mr. Galluzzi's business model is
19    applicable to Enbridge?  Or to Union, for that matter?
20              MR. STEPHENS:  Well, I can't say for sure, but
21    my guess is it would be.
22              MR. FARRELL:  Okay.  Now, did you -- I realize
23    that I just gave this to you before the break, but did
24    you have a chance to read the one-page excerpt from the
25    market design task force report?
26              MR. STEPHENS:  Yes.
27              MR. FARRELL:  Are you telling me, in
28    effect, -- page 8 is the excerpt that I have included;

                                                         1954
                                    STEPHENS, cr-ex (Farrell)
 1    there are six steps, if I can use that, in the
 2    unbundling timetable -- that Mr. Galluzzi's, or TMG's
 3    deregulated business model would suit all six of those
 4    steps?
 5              MR. STEPHENS:  Well, that's a level of detail
 6    that I haven't looked at.
 7              MR. FARRELL:  You can't say?
 8              MR. STEPHENS:  I can't say.
 9              MR. FARRELL:  I will leave it there for now.
10              Now, moving along to the comparability of the
11    CIS solutions, BC Gas versus Enbridge.
12              In order to say that the Peace CIS solution is
13    suitable to Enbridge, I take it you must be satisfied
14    that it's scalable to fit Enbridge's circumstances?
15              MR. STEPHENS:  Yes.
16              MR. FARRELL:  Now, could you turn to page 10
17    of your written evidence.  It's the second series of
18    bullet points from the top of the page, Mr. Stephens.
19              MR. STEPHENS:  Yes.
20              MR. FARRELL:  You have three bullet points
21    there, in talking about the Peace software CIS product;
22    and you say:
23                   "It has been proven through a
24                   26,000-customer pilot project in Prince
25                   George."  (As read)
26              What do you mean by "proven", in this context? 
27    It works for 26,000 customers?
28              MR. STEPHENS:  True.

                                                         1955
                                    STEPHENS, cr-ex (Farrell)
 1              MR. FARRELL:  And that's all you mean by the
 2    word "proven", in that first bullet?
 3              MR. STEPHENS:  That's all I mean.
 4              MR. FARRELL:  And then, the next bullet, you
 5    say:
 6                   "It has been demonstrated to be scalable
 7                   to over one million customers through a
 8                   bench mark project which was reviewed and
 9                   endorsed by the Gartner
10                   Group."  (As read)
11              MR. STEPHENS:  Yes.
12              MR. FARRELL:  We asked you an interrogatory on
13    this.  So if you can have your interrogatory responses,
14    Exhibit I, Tab 25, Schedule 46.  Turn to page 3.  It's
15    question 7.  Your response starts at the second-last
16    line on the page.
17              You mention that the Gartner Group review was
18    referred to on page 31 of the Program Mercury filing but
19    was not included in that filing.
20              Then you go on, in the next full paragraph, on
21    page 4, to talk about mitigating risk and what BC Gas
22    has indicated on page 33 of that filing that it was
23    going to do.  It mentions a scalable platform.
24              MR. STEPHENS:  Yes.
25              MR. FARRELL:  Would you agree with me that
26    scalability is a major concern of BC Gas?
27              MR. STEPHENS:  Yes, it was.  Because they
28    expect to go to more than one million customers.

                                                         1956
                                    STEPHENS, cr-ex (Farrell)
 1              MR. FARRELL:  Let's just check what BC Gas had
 2    to say about its concerns on scalability.
 3              Included in the package -- or one of the
 4    components of Exhibit K11.2 is a document that has
 5    certain excerpts from Program Mercury that has that on
 6    the cover page.
 7              Could you turn to page 27 that is included in
 8    that package.
 9              MR. STEPHENS:  I have it.
10              MR. FARRELL:  Starting with 5.4, Scalability
11    of the Proposed Solution, it reads -- and I am going to
12    ask for your comments in a moment:
13                   "One of the questions in using a limited
14                   pilot approach is whether the pilot
15                   adequately demonstrates the products that
16                   partner organizations can scale up to
17                   support the larger project and
18                   operational environment required for
19                   implementation throughout BC Gas."
20                   (As read)
21              Do you agree that that is one of the questions
22    that BC Gas should be looking at?
23              MR. STEPHENS:  Yes.
24              MR. FARRELL:  And the next sentence:
25                   "This scalability question is especially
26                   important for software applications not
27                   currently supporting another client with
28                   a customer base as large or larger than

                                                         1957
                                    STEPHENS, cr-ex (Farrell)
 1                   the projected BC Gas implementation." 
 2                   (As read)
 3              And that sentence could be equally applied if
 4    we were to substitute "Enbridge" for "BC Gas" in that
 5    sentence.
 6              MR. STEPHENS:  That is true.
 7              MR. FARRELL:  BC Gas then lists four bullet
 8    points that is a summary of their concerns or their
 9    views on scalability.
10              MR. STEPHENS:  Yes.
11              MR. FARRELL:  There is reference to the
12    scalability test on the next page, page 28, the
13    so-called Project MONZA.
14              MR. STEPHENS:  Yes.
15              MR. FARRELL:  Is that what you were referring
16    to?
17              MR. STEPHENS:  Yes.
18              MR. FARRELL:  The portion just past the middle
19    part of the page that is in italics, the last sentence,
20    do you see that, Mr. Stephens?
21              It says:
22                   "These results meet MONZA's goals for all
23                   customer populations up to and including
24                   1 million."  (As read)
25              MR. STEPHENS:  Yes.
26              MR. FARRELL:  "And also show that scalability
27                   of more than 1 million consumers is
28                   possible."  (As read)

                                                         1958
                                    STEPHENS, cr-ex (Farrell)
 1              MR. STEPHENS:  Yes.
 2              MR. FARRELL:  Did you have any concern about
 3    the use of the word "possible" in terms of your views on
 4    the scalability of the Peace CIS solution to fit
 5    Enbridge's circumstances?
 6              MR. STEPHENS:  No.
 7              MR. FARRELL:  If you go to page 33, this is a
 8    list of the key risks.  In the complete box, in the
 9    left-hand column it deals with scalability of the
10    customer care solutions, especially the energy CIS
11    product.
12              Do you see that?
13              MR. STEPHENS:  Yes.
14              MR. FARRELL:  And BC Gas lists five components
15    to the issue of scalability.
16              MR. STEPHENS:  Yes.
17              MR. FARRELL:  Do you disagree with any of
18    them?
19              MR. STEPHENS:  No.
20              MR. FARRELL:  They also list ten mitigating
21    actions.
22              MR. STEPHENS:  Yes.
23              MR. FARRELL:  One of those mitigating actions
24    is the one you refer to on page 4 of your interrogatory
25    response in relation to question 7.
26              MR. STEPHENS:  Actually, there are two of
27    them: the second and the third one.
28              MR. FARRELL:  Sorry.  So you mention two of

                                                         1959
                                    STEPHENS, cr-ex (Farrell)
 1    the ten.
 2              Did you take the time to consider whether the
 3    other eight mitigating actions are also actions that you
 4    would recommend take place in terms of scalability?
 5              MR. STEPHENS:  Not having studied it in
 6    detail, I don't know if I would add any.
 7              The reason I only put in two was to try and
 8    directly address your question in interrogatory 7.
 9              MR. FARRELL:  That's fair.  I am just trying
10    to get an assessment of what you had looked at or not
11    looked at, as the case may be, in the context of your
12    review of Project Mercury as contained in this
13    application.
14              When you mentioned that the Gartner Group
15    report was referenced in the Program Mercury application
16    but was not included in the rate application, did you
17    ask BC Gas for a copy of that report?
18              MR. STEPHENS:  No, I did not.
19              MR. FARRELL:  Were you not concerned to see
20    it?
21              MR. STEPHENS:  No.
22              MR. FARRELL:  Why is that?
23              MR. STEPHENS:  Well, BC Gas seems to be
24    satisfied that it is scalable.  They have gone through
25    basically what they are going to do to handle that risk. 
26    They have had the Gartner Group involved.  Gartner Group
27    has published something, and that is as far as I took
28    it.

                                                         1960
                                    STEPHENS, cr-ex (Farrell)
 1              MR. FARRELL:  I can understand that you might
 2    do that, Mr. Stephens, if you were being asked to look
 3    at the scalability of the Peace CIS solution to be BC
 4    Gas' needs, but I am surprised that you didn't want to
 5    see that report in order to determine whether the Peace
 6    CIS solution was scalable to Enbridge's needs.
 7              MR. STEPHENS:  Well, I got so much time that
 8    we are trying to establish something, and I am looking
 9    at a number of indicators, of which I used operating
10    costs, capital costs of the project.  And although it is
11    not identically comparable, I think it is comparable
12    enough to give me an idea.
13              Does it scale to 1.5 million?  We don't know
14    for sure.  We don't know for sure that the Enbridge
15    Consumers Gas one will scale to 1.5 million.
16              MR. FARRELL:  I just want to make sure I
17    understand what you just told me.
18              You used the word "indicator", and I took it
19    from your written evidence that you did four things: 
20    that you reviewed information in order to form an
21    opinion on fair market value; then you looked at three
22    indicators as a back-up or as a test, if you will, of
23    your fair market value opinion.
24              It was my understanding that your fair market
25    value opinion included an assessment of the value of the
26    Peace CIS solution.
27              MR. STEPHENS:  True.
28              MR. FARRELL:  So now again, did you not

                                                         1961
                                    STEPHENS, cr-ex (Farrell)
 1    concern yourself in assessing -- let me just stop there.
 2              In forming an opinion on fair market value in
 3    relation to the Peace CIS solution, did you do so on the
 4    basis that it would be comparable to the Enbridge CIS
 5    solution?
 6              MR. STEPHENS:  Yes.
 7              MR. FARRELL:  Doesn't it follow that you
 8    should have satisfied yourself that the Peace CIS
 9    solution is scalable to meet Enbridge's needs?
10              MR. STEPHENS:  Has Enbridge satisfied
11    themselves that they can scale their solution to 1.5
12    million?
13              I didn't have the report but --
14              MR. FARRELL:  You didn't ask for it.
15              MR. STEPHENS:  I did not ask for the report.
16              Do you have it?
17              MR. FARRELL:  No, I don't.
18              MR. STEPHENS:  Okay.
19              THE PRESIDING MEMBER:  Mr. Stephens, I would
20    ask you kindly to get closer to the microphone.
21              MR. STEPHENS:  Sorry.
22              MR. FARRELL:  Still with BC Gas and still with
23    the CIS solutions, you have compared their economics. 
24    Correct?
25              MR. STEPHENS:  Yes.
26              MR. FARRELL:  Using economics as a general
27    term.
28              So you have compared an in-house solution at

                                                         1962
                                    STEPHENS, cr-ex (Farrell)
 1    BC Gas to an outsourcing solution at Enbridge, albeit
 2    through an affiliate.
 3              MR. STEPHENS:  Yes.
 4              MR. FARRELL:  For the in-house solution you
 5    have told us that BC Gas intends to, or has applied to
 6    and presumably intends to, include the project costs in
 7    its rate base.
 8              MR. STEPHENS:  Yes.
 9              MR. FARRELL:  And you have told us that BC Gas
10    plans to have a ten-year amortization period.
11              MR. STEPHENS:  Yes.
12              MR. FARRELL:  I guess it would follow for that
13    ten-year period, BC Gas would recover in its rates the
14    capital costs and the capitalized costs of the project,
15    including overruns, if allowed.
16              MR. STEPHENS:  Yes.
17              MR. FARRELL:  On the Enbridge side -- and
18    leaving aside for a moment the BPR and analysis phase
19    costs, the same overheads, start-up costs and the IDC --
20    the costs are not being added to rate base but they
21    would in effect be transferred out by means of the
22    transfer to an affiliate.
23              MR. STEPHENS:  Yes.
24              MR. FARRELL:  After the transfer takes place
25    that is subject of a five-year contract as opposed to a
26    10-year contract?
27              MR. STEPHENS:  Yes.
28              MR. FARRELL:  Is a 10-year amortization period

                                                         1963
                                    STEPHENS, cr-ex (Farrell)
 1    for rate base purposes the economic equivalent of a
 2    10-year contract in your view?
 3              MR. STEPHENS:  A 10-year contract for rate
 4    base versus a 10-year outsourcing agreement?
 5              MR. FARRELL:  Yes.  Is a 10-year amortization
 6    period for rate base purposes the economic equivalent of
 7    a 10-year contract to provide CIS services?
 8              MR. STEPHENS:  No.
 9              MR. FARRELL:  Why is that?
10              MR. STEPHENS:  If I am starting an outsourcing
11    service, I will not necessarily recover all of my costs
12    associated with this asset within that time period.  In
13    fact, I'm sure, given the rates and the costs of your
14    project at ECG, that is true in this case as well.
15              MR. FARRELL:  I think I understand your
16    question -- excuse me -- your response to my question.
17              Are you saying --
18              THE PRESIDING MEMBER:  We don't, Mr. Farrell. 
19    Can you try again please.  Ask the question, and --
20              MR. FARRELL:  Yes.
21              I was coming back to this.  I just wanted to
22    understand what he told me.
23              My original question was whether a 10-year
24    amortization period for rate base purposes was the
25    economic equivalent of a 10-year contract in terms of
26    recovering the capital costs.
27              Mr. Stephens answer, and correct me if I'm
28    wrong, Mr. Stephens, was to the effect that if you were

                                                         1964
                                    STEPHENS, cr-ex (Farrell)
 1    starting an outsourcing service you might not
 2    necessarily try to get a contract that would recover
 3    your capital costs over the term of the contract.  Is
 4    that correct?
 5              MR. STEPHENS:  That's true.
 6              MR. FARRELL:  Now, coming back to this -- a
 7    10-year amortization period is, in effect, the economic
 8    equivalent of a 10-year contract -- what you are
 9    quibbling with is whether or not a service provider
10    would seek to get the 10-year contract.  Is that not so?
11              MR. STEPHENS:  I have only heard of one
12    10-year contract on an outsourcing basis, and that was
13    what they were trying at Centra Gas Manitoba.
14              MR. FARRELL:  Let me try it this way.
15              If you were the outsourced service provider --
16              MR. STEPHENS:  Yes.
17              MR. FARRELL:  -- would you like to have a
18    10-year contract over which you would recover all of
19    your capital costs?
20              MR. STEPHENS:  That would be nice.
21    --- Pause
22              MR. FARRELL:  And you have acknowledged that
23    Enbridge's contract, with its affiliate Newco's
24    contract, from the perspective we are dealing with just
25    now is a five-year contract once the software is
26    transferred?
27              MR. STEPHENS:  Yes.
28              MR. FARRELL:  Now, Mr. Stephens, do you think

                                                         1965
                                    STEPHENS, cr-ex (Farrell)
 1    that a service provider like Newco or Enlogix would
 2    price a five-year contract differently than it would
 3    price a 10-year contract?
 4              MR. STEPHENS:  Yes.
 5              MR. FARRELL:  What would you expect the
 6    difference to be?
 7              MR. STEPHENS:  I would expect the price over
 8    five years to be somewhat higher than over 10 years, but
 9    not appreciably.
10              MR. FARRELL:  "Appreciably" is kind of a value
11    judgment word.  Can you give me some quantum to go along
12    with it?
13              MR. STEPHENS:  Less than 5 per cent probably,
14    5, 10 per cent.
15              MR. FARRELL:  Okay.
16              Are you telling me that a service provider
17    with a five-year contract, as opposed to 10, would
18    adjust its prices by somewhere between 5 and 10 per cent
19    and that that quantum of adjustment would:  one, have
20    the provider recover its capital costs; and, two, make a
21    profit?
22              MR. STEPHENS:  Yes.  Not within five years
23    necessarily.
24              MR. FARRELL:  No.  I was asking within the
25    10-year period.
26              MR. STEPHENS:  Right.
27              MR. FARRELL:  And you told me that the price
28    would be higher in the five-year term than over a

                                                         1966
                                    STEPHENS, cr-ex (Farrell)
 1    10-year term, and then you told me that the prices, if
 2    they were renegotiated presumably for the second
 3    five-year period, they would be -- I don't think I took
 4    you that far.
 5              You said the five-year pricing would be higher
 6    than a 10-year pricing but not appreciably.
 7              MR. STEPHENS:  Yes.  That is because the
 8    market won't bear it.
 9              I have never seen an outsourcing agreement
10    where the price was higher than the in-house service,
11    that is one of the things, unless you are, you know,
12    impacting service levels significantly or doing
13    something totally new inside that agreement.
14              So for an equivalent service, when you
15    outsource there are many sites that you can point to
16    that would say the outsourcing costs should be lower
17    than the in-house costs.
18              MR. FARRELL:  Okay.  I guess we can -- counsel
19    will argue the point about whether a rate base or an
20    in-house solution compared to outsourcing is an
21    apples-to-oranges comparison.
22              Finally, on the BC Gas-Enbridge comparison,
23    Chapter 1, because we are going to come back to it in a
24    different context, would you just confirm for the record
25    that you did not see a demonstration of the BC Gas --
26              MR. STEPHENS:  I did not and I did not talk to
27    them.
28              MR. FARRELL:  I want to move on and do a

                                                         1967
                                    STEPHENS, cr-ex (Farrell)
 1    similar exercise in comparing Union Gas to Enbridge
 2    Consumers Gas first and then we will move to the
 3    Enbridge CIS solution and the Enlogix CIS solution.
 4              So Union is the second gas distribution
 5    utility that is comparable to Enbridge?
 6              MR. STEPHENS:  Yes.
 7              MR. FARRELL:  Again, just to go down the
 8    factors that we used with BC Gas, Union Gas has
 9    1.075 million customers compared to Enbridge's
10    1.47 million.  You can take these numbers subject to
11    check.
12              MR. STEPHENS:  Yes.
13              MR. FARRELL:  Okay.
14              So Enbridge is larger by about a third?
15              MR. STEPHENS:  A third-something.
16              MR. FARRELL:  Never trust my arithmetic.
17              MR. STEPHENS:  I think of them as about one
18    and one half.
19              MR. FARRELL:  Whatever.  I have your
20    confirmation of the numbers, then.
21              Do you know whether Union has a monthly
22    billing cycle?
23              MR. STEPHENS:  They do not for all of their
24    customers.  It is my understanding and I -- like, I
25    would have to get into more detail to fully understand
26    that.
27              MR. FARRELL:  Okay.
28              So that it might be something other than

                                                         1968
                                    STEPHENS, cr-ex (Farrell)
 1    monthly for some segment of their customer base and you
 2    don't know --
 3              MR. STEPHENS:  Yes.  I think there was some
 4    piece -- the old way was the old customers had something
 5    different than the Union set.
 6              MR. FARRELL:  You mean the Centra set?
 7              MR. STEPHENS:  Centra versus, yes, the old
 8    Union.
 9              MR. FARRELL:  To the extent there are
10    differences, the same things would apply, the same
11    factors would apply that we discussed in terms of
12    BC Gas' bi-monthly billing compared to monthly --
13              MR. STEPHENS:  Yes.
14              MR. FARRELL:  -- if there is a difference?
15              MR. STEPHENS:  Agreed.
16              MR. FARRELL:  We have already had a discussion
17    about the state of the deregulation process and the
18    corresponding distributor services.  Would you assume
19    that they would be the same for both since they are in
20    the same province?
21              MR. STEPHENS:  They would be pretty similar.
22              MR. FARRELL:  Now I want to, then, turn to the
23    CIS solution and deal first with scalability as we did
24    with BC Gas, so could you turn to page 11.
25              MR. STEPHENS:  Of my evidence?
26              MR. FARRELL:  Of your evidence, I'm sorry,
27    yes.
28              MR. STEPHENS:  I have it.

                                                         1969
                                    STEPHENS, cr-ex (Farrell)
 1              MR. FARRELL:  I am looking at the last three
 2    bullets on page 11, Mr. Stephens.
 3              MR. STEPHENS:  Yes.
 4              MR. FARRELL:  I think maybe you touched on
 5    this in your examination-in-chief.
 6              When you said "It has been proven that more
 7    than 1 million Canadian customers, including the
 8    unregulated retail business Union Energy Inc.", did you
 9    mean that it had been proven on the basis of Union
10    Energy Inc.?
11              MR. STEPHENS:  Yes.
12              MR. FARRELL:  Do you know whether the features
13    of the Enlogix functionality that would be necessary to
14    serve 1 million of Union Energy's customers would be the
15    same as would be necessary to serve 1 million of Union
16    Gas' customers?
17              MR. STEPHENS:  I do not, but I would assume it
18    would be less.
19              MR. FARRELL:  Union Energy less?
20              MR. STEPHENS:  Yes.
21              MR. FARRELL:  In the next bullet you say:
22                   "It is demonstrated to be scalable at
23                   large utilities in the U.S."  (As read)
24              I take it that there you are not speaking
25    about the Enlogix application product per se, but rather
26    the SCT or the Banner product?
27              MR. STEPHENS:  That's true.
28              MR. FARRELL:  Scalable to what?

                                                         1970
                                    STEPHENS, cr-ex (Farrell)
 1              MR. STEPHENS:  I think your evidence from
 2    Mr. Diamond had some utilities in that use SCT and --
 3              MR. FARRELL:  So it's a million or more, I
 4    take it.  I didn't know what large utilities meant, so I
 5    didn't know what size customer base you are --
 6              MR. STEPHENS:  It's more than two million.
 7              MR. FARRELL:  More than two million, okay. 
 8    The last bullet is the fact that it's referred to, you
 9    say reviewed, and we can quibble about the word
10    "reviewed", but it's referred to at pages 37 and 38 of
11    the TMG report, appendix 8.
12              MR. STEPHENS:  That is right.
13              MR. FARRELL:  And in referring to the
14    competitive business model shown in this paper, that's
15    the one we discussed previously.
16              MR. STEPHENS:  Yes.
17              MR. FARRELL:  Now, on page 12 of your
18    evidence, and again you touched on this in your
19    examination-in-chief with Mr. Thompson, you referred to
20    two phases, the first phase October 1998, 280,000
21    customers who were formerly Centra Gas customers.
22              MR. STEPHENS:  Yes.
23              MR. FARRELL:  And then the second phase has
24    yet to occur, but it's October 1999 that is the intended
25    date, and that's for the balance of the new Union's
26    customer base for 795,000 former Union only customers.
27              MR. STEPHENS:  Yes.
28              MR. FARRELL:  Okay.  Now, the first phase I'm

                                                         1971
                                    STEPHENS, cr-ex (Farrell)
 1    told can be described as -- I'm just mentioning this to
 2    you because I might use the term and I don't want you to
 3    misunderstand me -- is Banner 1.
 4              MR. STEPHENS:  Yes.
 5              MR. FARRELL:  Do you have that?
 6              MR. STEPHENS:  Yes.
 7              MR. FARRELL:  And the second phase is Banner
 8    2.
 9              MR. STEPHENS:  Yes
10              MR. FARRELL:  Do you have that?
11              MR. STEPHENS:  Yes.
12              MR. FARRELL:  The second phase is Banner 2 and
13    we just use those terms to --
14              MR. STEPHENS:  I don't think that's -- what do
15    you mean, part Banner 1?
16              MR. FARRELL:  I think it's just a trade name. 
17    We can use first or second.
18              MR. STEPHENS:  It's the release of Banner that
19    Enlogix/SCT has operational for Union.  My understanding
20    is that same release is going to be implemented in
21    October.
22              MR. FARRELL:  Are you saying that, sticking to
23    my terminology, Banner 2 or the second phase is a scaled
24    up version of the first phase, or is it something
25    different?
26              MR. STEPHENS:  My understanding is it's the
27    same software and they are putting more users on it.
28              MR. FARRELL:  Okay.  In other words, it's the

                                                         1972
                                    STEPHENS, cr-ex (Farrell)
 1    same software and your information is it's capable in
 2    its current state, I guess, of scaling itself up with no
 3    other help to accommodate an additional 795,000
 4    customers.
 5              MR. STEPHENS:  Yes.
 6              MR. FARRELL:  And it's the --
 7              MR. STEPHENS:  They may add some hardware, I
 8    don't know, but the software should support that.
 9              MR. FARRELL:  I'm told that this is a point on
10    which we disagree.
11              You are using it, whatever it is that's going
12    to accommodate the complete 1.075 million customer base
13    at Union, to use your terms, is the same software that
14    is now in production.
15              MR. STEPHENS:  That's my current
16    understanding.  The reason that came up is there was an
17    interrogatory on the Internet capability that was
18    implemented today.  I had to phone and they indicated it
19    would be the next version, whenever they implement it,
20    that would contain that Internet capability.
21              MR. FARRELL:  I guess I'm getting somewhat
22    confused by your terminology, Mr. Stephens.  You just
23    used the words "next version".
24              MR. STEPHENS:  Yes.
25              MR. FARRELL:  To me that's something different
26    than the version that is now in production.
27              MR. STEPHENS:  Right.
28              MR. FARRELL:  Okay.  So what are we talking

                                                         1973
                                    STEPHENS, cr-ex (Farrell)
 1    about here?  When we go to October 1999, if Union is on
 2    time or if Enlogix is on time, there are another 795,000
 3    customers added.
 4              MR. STEPHENS:  Yes.
 5              MR. FARRELL:  Correct?
 6              MR. STEPHENS:  Yes.
 7              MR. FARRELL:  And you then mention it is your
 8    understanding that it's the same software that is
 9    currently in production.
10              MR. STEPHENS:  That's my understanding.
11              MR. FARRELL:  And then you used the words
12    "next version" and referred specifically to Internet
13    capability.  That's where I'm getting confused.
14              MR. STEPHENS:  In interrogatory 16.
15              MR. FARRELL:  This is our interrogatories to
16    you.
17              MR. STEPHENS:  Yes.
18              MR. FARRELL:  Just a moment until I turn it
19    up.
20    --- Pause
21              MR. FARRELL:   Yes.  I have that now.  Page 7.
22              MR. STEPHENS:  You asked specifically what's
23    currently in production versus what is the capability of
24    the software.  I replied that the software in its latest
25    release from the software manufacturers has that
26    capability, but it's not currently implemented.  That's
27    Union Gas for the Enlogix/SCT software.  So that's a new
28    version of the software in order to get to that

                                                         1974
                                    STEPHENS, cr-ex (Farrell)
 1    capability.
 2              MR. FARRELL:  I think where we are at
 3    cross-purposes, Mr. Stephens, is that the question 16
 4    dealt with Internet access.  I'm not there yet.
 5              What I'm asking you about is when Union
 6    scales, if you will, from 280,000 customers currently in
 7    production to 1.075 million customers, is that the same
 8    software?  I think your understanding is yes, it is.
 9              MR. STEPHENS:  My understanding is it is.
10              MR. FARRELL:  I am advised, by the way, that
11    that's not correct, so in order to resolve this we may
12    have to call some rebuttal evidence, but we will just
13    leave it there because that is your understanding, but I
14    want to make sure that I am clear.
15              When you have used the Union/Enlogix solution
16    for comparative purposes, are you using the solution
17    that, if on schedule, will be in production in October
18    or November of this year?  In other words, the one that
19    is serving 1.075 or will be serving 1.075 million.
20              MR. STEPHENS:  Yes.
21              MR. FARRELL:  That's the one that you are
22    comparing.
23              MR. STEPHENS:  Yes.
24              MR. FARRELL:  Not the one that's currently in
25    production.
26              MR. STEPHENS:  Yes.
27              MR. FARRELL:  Okay.  Yes, we have no bananas. 
28    Okay.  I think I have your answer.

                                                         1975
                                    STEPHENS, cr-ex (Farrell)
 1              Now, turning back to your evidence, while we
 2    are still on this page, I wanted to ask you a question
 3    about the -- this is page 12 of your written evidence,
 4    on the last paragraph that appears above the 4.6 heading
 5    on page 12.
 6              You talk about a Board approved amount of $6.9
 7    million.  Then you say that the $12.244 million
 8    Enlogix's outsourcing charges to Union has not yet been
 9    approved by the Board.
10              MR. STEPHENS:  Yes.
11              MR. FARRELL:  Now, just focusing on the Board
12    approved amount of $6.9 million, are you familiar with
13    the Union/Enlogix contract which at the time it was
14    entered into was Union Gas, Union Energy, CIS division?
15              MR. STEPHENS:  Am I familiar with it?  I have
16    glanced at it.
17              MR. FARRELL:  Okay.  Are you familiar enough,
18    Mr. Stephens, to know that the $6.9 million amount is
19    the function of the fee schedule and the activity level
20    for 1999?
21              MR. STEPHENS:  I am not.
22              MR. FARRELL:  And so I guess you can't tell me
23    whether the $6.9 million reflects the extent to which
24    CIS would be used or forecast to be used during 1999,
25    including the scale-up from 280,000 customers to include
26    an additional 795,000 customers in October of 1999.
27              MR. STEPHENS:  I didn't quite get the intent
28    of that question.

                                                         1976
                                    STEPHENS, cr-ex (Farrell)
 1              MR. FARRELL:  Well, let me go at it another
 2    way.  Is it your understanding that the Board approved
 3    amount is an amount that would be established
 4    independently for each year?
 5              MR. STEPHENS:  Yes.
 6              MR. FARRELL:  Okay.  Would it be established
 7    by means of the fees specified in the contract applied
 8    to a forecast of activity level?
 9              MR. STEPHENS:  Yes.
10              MR. FARRELL:  So if the activity level was
11    greater for the year 2000 than it was for 1999, one
12    would expect the amount to increase.
13              MR. STEPHENS:  Yes.
14              MR. FARRELL:  Now, we will come back to the
15    detailed comparison, but just in terms of the basis for
16    the economics of a CIS solution, both Union and Enbridge
17    are outsourced, unlike the BC Gas case which has an
18    in-house solution.
19              MR. STEPHENS:  Yes.
20              MR. FARRELL:  Now, just bear with me while I
21    take out my notes that I took while you were being
22    examined by Mr. Thompson.
23    --- Pause
24              MR. FARRELL:  You described the Enbridge
25    demonstration?
26              MR. STEPHENS:  Yes.
27              MR. FARRELL:  And this may be covering some
28    ground, but since I'm relying only on my notes and not

                                                         1977
                                    STEPHENS, cr-ex (Farrell)
 1    what's in the transcript, please bear with me.  And I
 2    ask you and your colleague, Mr. Chair, to do likewise. 
 3    There may be a certain amount of repetition here but I
 4    want to make sure that the points that I want to
 5    establish are clearly on the record.
 6              Now, you mentioned that you met with Mr. Kent
 7    and Bruce Campbell --
 8              MR. STEPHENS:  Yes.
 9              MR. FARRELL:  -- on the morning of the 19th?
10              MR. STEPHENS:  I think it was the 9th.
11              MR. FARRELL:  Did I say the "19th"?  I'm
12    sorry.  I can't read my own writing.  It is the 9th,
13    yes.
14              MR. STEPHENS:  If you could write all this in
15    that time I wouldn't be surprised.
16              MR. FARRELL:  After you talked with them,
17    Mr. Wingrove joined the group and Mr. Wingrove and
18    Mr. Campbell took you to the call centre at Victoria
19    Park Centre -- or VPC, as it's fondly called?
20              MR. STEPHENS:  Yes.
21              MR. FARRELL:  And when you saw the
22    demonstration you were with a customer service rep, or
23    CSR?
24              MR. STEPHENS:  Yes.
25              MR. FARRELL:  And I think you mentioned you
26    were able to listen in to the calls that the CSR
27    received?
28              MR. STEPHENS:  Yes.

                                                         1978
                                    STEPHENS, cr-ex (Farrell)
 1              MR. FARRELL:  You could hear the enquiries the
 2    customer made?
 3              MR. STEPHENS:  Yes.
 4              MR. FARRELL:  And you saw how the CSR used the
 5    system to obtain the information needed to respond to
 6    the enquiries?
 7              MR. STEPHENS:  Yes.
 8              MR. FARRELL:  I think you mentioned that the
 9    CSR where it's accessing the full database, the database
10    for the entire 1.47 million customers?
11              MR. STEPHENS:  Yes.
12              MR. FARRELL:  And their individual records?
13              MR. STEPHENS:  That would be my assumption,
14    yes.
15              MR. FARRELL:  August 9th was a Monday.  I'm
16    told that you were advised that Monday is the busiest
17    day of the week in the call centre.  Do you recall that?
18              MR. STEPHENS:  No, I don't.
19              MR. FARRELL:  Do you have any reason to
20    disagree with that?
21              MR. STEPHENS:  No, but when you design a
22    system, you always design it for peak.  So if that was
23    the biggest day, that's what it should be designed for.
24              MR. FARRELL:  I'm not quibbling with that.
25              I think you mentioned to Mr. Thompson that you
26    observed the system operating in a production
27    environment?
28              MR. STEPHENS:  Well, production environment. 

                                                         1979
                                    STEPHENS, cr-ex (Farrell)
 1    It's production in terms of its query capability; it's
 2    not production in terms of where you want to get the
 3    product to or the solution to.
 4              MR. FARRELL:  I'm talking about you observed
 5    Phase IA --
 6              MR. STEPHENS:  Yes.
 7              MR. FARRELL:  -- in a production environment.
 8              MR. STEPHENS:  Agreed.
 9              MR. FARRELL:  There were, at the time, a
10    number of concurrent users?
11              MR. STEPHENS:  Yes.  Probably several hundred.
12              MR. FARRELL:  You say "probably".  Did you
13    ask?  Or is that just your estimation?
14              MR. STEPHENS:  Well, we would have had to go
15    somewhere else to ask the question.  But there are
16    enough people around on that floor to know there's a lot
17    of people using it.
18              MR. FARRELL:  Okay.  Thank you.
19              Now, so just a bit confused by the
20    demonstration that you saw -- and you say at Enlogix'. 
21    I take it you didn't -- as you explained to
22    Mr. Thompson, you didn't go to a Union Gas call centre?
23              MR. STEPHENS:  Agreed.
24              MR. FARRELL:  Because your schedule didn't
25    permit you to go to Chatham?
26              MR. STEPHENS:  Right.
27              MR. FARRELL:  Okay.  And you mentioned who you
28    saw at Enlogix.  Who was the first person you saw?  Was

                                                         1980
                                    STEPHENS, cr-ex (Farrell)
 1    it Mr. Haines?
 2              MR. STEPHENS:  No; the first person I saw was
 3    the vice-president of sales and marketing, because that
 4    was what -- his schedule was available then.
 5              MR. FARRELL:  What was his name?  Just for the
 6    record.
 7              MR. STEPHENS:  His name is Mr. Brian Farlay,
 8    F-A-R-L-A-Y.
 9              MR. FARRELL:  Did you tell him the purpose of
10    your visit?
11              MR. STEPHENS:  Yes.
12              MR. FARRELL:  What did you tell him it was?
13              MR. STEPHENS:  I told him I was doing work
14    with the consumers groups that I represent; that I was
15    trying to understand their business and their solution,
16    in order to establish a comparison between what they had
17    and what Enbridge Consumers Gas had; and I told him I
18    was in this process that we were involved in.
19              MR. FARRELL:  And then, later on, did you meet
20    Mr. Haines?
21              MR. STEPHENS:  Yes.
22              MR. FARRELL:  Did you tell him the same thing?
23              MR. STEPHENS:  Exactly -- well, about exactly.
24              MR. FARRELL:  Okay.  Now, I take it that --
25    well, you have already confirmed you weren't in Union's
26    call centre and, therefore, you weren't with the CSR.
27              Who were you with when you saw the
28    demonstration on a PC?

                                                         1981
                                    STEPHENS, cr-ex (Farrell)
 1              MR. STEPHENS:  I was with Colleen Sheith,
 2    S-H-E-I-T-H.  He is the director of technology.
 3              MR. FARRELL:  He's the one that operated the
 4    PC?
 5              MR. STEPHENS:  No; we visited a person that
 6    was in the application development area.
 7              MR. FARRELL:  People called, in the parlance
 8    of the trade, "developers"?
 9              MR. STEPHENS:  Yes.
10              MR. FARRELL:  And so, you weren't in a normal
11    production environment?
12              MR. STEPHENS:  Agreed.
13              MR. FARRELL:  And there were no concurrent
14    users?
15              MR. STEPHENS:  There were a number of
16    concurrent users, I don't know how many, but probably in
17    the order of -- like I'm guessing -- 50.  I don't know.
18              MR. FARRELL:  At Enlogix?
19              MR. STEPHENS:  And everybody is using this
20    system, right, in order to do their testing and
21    development.
22              MR. FARRELL:  So the database, for example,
23    would have been what?  The database used for testing and
24    development?
25              MR. STEPHENS:  The database would have been
26    used for testing -- they, in fact, have three
27    environments as I suspect you do at ECG; so they have
28    the production environment, they have a test environment

                                                         1982
                                    STEPHENS, cr-ex (Farrell)
 1    and they have a development environment.
 2              From a telecommunications point of view, the
 3    set-up was similar in that they went from that building
 4    down to their outsourcer where the servers were.
 5              MR. FARRELL:  I want to make sure I'm clear on
 6    this.
 7              The production environment, I take it, would
 8    be what would be occurring at Union's call centre and
 9    that the database would reflect the 280,000 customers?
10              MR. STEPHENS:  Yes.
11              MR. FARRELL:  And that's not what you saw?
12              MR. STEPHENS:  That's not what I saw.
13              MR. FARRELL:  Then you mentioned there were
14    two others, a test environment and a development
15    environment, and I wasn't too sure which environment you
16    observed.
17              Was it the development environment?  Or was it
18    the test environment?
19              MR. STEPHENS:  I don't know for sure.
20              MR. FARRELL:  Is that something you could find
21    out?
22              MR. STEPHENS:  I can find that out, if you
23    want.
24              MR. FARRELL:  Well, let me tell you where I'm
25    going with this, Mr. Stephens.
26              What I would like to know is what were the
27    parameters of what you observed.
28              Now, when we talked about these things, at the

                                                         1983
                                    STEPHENS, cr-ex (Farrell)
 1    beginning, we talked about the database volume, the
 2    on-line transaction parameters, the number of concurrent
 3    users and batch processing volumes and hardware
 4    capacities.
 5              I am trying to get an understanding of what it
 6    is that you saw at Enlogix that would allow me to draw a
 7    comparison between each of those factors as it pertains
 8    to the Enbridge system so that I could have an ability
 9    to compare it to what the basis was of the demonstration
10    that you saw at Enlogix.
11              Do you understanding what I'm asking you?
12              MR. STEPHENS:  Yes.
13              MR. FARRELL:  Do you have any of those
14    available now or would they have to be checked?  In
15    other words, the size of the customer database in the
16    environment in which you viewed it.
17              MR. STEPHENS:  I don't have that information.
18              MR. FARRELL:  Would you undertake to provide
19    it -- to the extent that it's made available to you --
20    at least to enquire after it?
21              MR. STEPHENS:  Sure.
22              MS DESAI:  J11.2.
23                   UNDERTAKING NO. J11.2:  Mr. Stephens to
24                   provide information on database volume,
25                   the on-line transaction parameters, the
26                   number of concurrent users, the batch
27                   processing volume capability, and the
28                   hardware capabilities

                                                         1984
                                    STEPHENS, cr-ex (Farrell)
 1              MR. STEPHENS:  Let me remind you, though, that
 2    this same software without its Canadianization is
 3    running in large utilities in the U.S.  Maybe that is
 4    the right place to go rather than this development --
 5              MR. FARRELL:  No.  I want to know precisely
 6    what you saw -- not precisely what you saw, but the
 7    basis underlying what you saw in the demonstration,
 8    Mr. Stephens, because you have made comparisons based on
 9    the demonstration, in particular response time.
10              In order to assess what it is that you have
11    based your conclusions on, I need to know what was
12    underlying the Enlogix demonstration vis-…-vis what was
13    underlying the Enbridge demonstration.
14              That is what I am trying to obtain from you.
15              MR. STEPHENS:  Let's suppose we get that, and
16    let's suppose there are 50 users and there are, let's
17    say, 400 Enbridge users, or ten times as many.  And
18    let's suppose that this test environment, or development
19    environment, whichever it ran on at Enlogix, is scaled
20    to meet the 50, and let's suppose the Enbridge Consumers
21    Gas is scaled to meet the 500.
22              We will get this information and what does
23    that imply?
24              MR. FARRELL:  Well, I don't know until I have
25    it.  If the assumptions are incorrect, then depending on
26    what the facts are, it may or may not support your
27    conclusions about functionality in general and about
28    response time in particular.

                                                         1985
                                    STEPHENS, cr-ex (Farrell)
 1              MR. THOMPSON:  We will make the inquiries of
 2    Enlogix and provide a response.
 3              THE PRESIDING MEMBER:  Mr. Farrell, for the
 4    record, would you attempt to repeat what you want.
 5              MR. FARRELL:  Yes, I will, Mr. Chair.  Thank
 6    you for the opportunity.
 7              There were five factors I discussed with
 8    Mr. Stephens near the outset:  database volume, which he
 9    agreed was number of customer -- well, I won't describe
10    it.
11              I want information on database volume, the
12    on-line transaction parameters, the number of concurrent
13    users, the batch processing volume capability, and the
14    hardware capabilities.  All of those things were
15    discussed in more detail earlier today with
16    Mr. Stephens.
17              THE PRESIDING MEMBER:  Just so long as it is
18    clear enough to the witness as to what Mr. Farrell is
19    after.
20              When we say parameters, is that something that
21    you understand, sir, that exists; that you can just ask
22    the questions and they will give you those?
23              MR. STEPHENS:  We will ask the questions.  We
24    will get the information.
25              But to how to accurately go from that to some
26    other volume -- I will call it volume -- is a major
27    exercise that probably requires a lot more data than
28    they are going to give me.

                                                         1986
                                    STEPHENS, cr-ex (Farrell)
 1              MR. THOMPSON:  I think what we will do is use
 2    our best efforts to make the inquiries of Enlogix and
 3    also try and answer the question; have Enlogix tell us
 4    whether there is any material difference in response
 5    time in the production environment.
 6              Perhaps that will help, Mr. Farrell.  That
 7    seems to be what he is driving it.  So we will ask them
 8    and see if we get the information.
 9              MR. FARRELL:  Just so we can be clear, when
10    you say "in a production environment", are you referring
11    to a 280,000 customer base or a 1.05 million customer
12    base?
13              MR. THOMPSON:  We will try and find out in
14    both.
15              MR. FARRELL:  Thank you.
16    --- Pause
17              MR. FARRELL:  My next set of questions --
18              THE PRESIDING MEMBER:  Mr. Farrell, if this is
19    a good time to break, we may want to use the next 10 or
20    15 minutes or so to prepare for the next --
21              MR. FARRELL:  I was just going to say,
22    Mr. Chair, that this would be a good place to break. 
23    Depending on Mr. Thompson's success in getting this
24    information, I was then going to take Mr. Stephens to
25    what he described as his impressions from the
26    demonstrations.
27              So it would be useful to either know we are
28    going to have the information or not before I ask the

                                                         1987
                                    STEPHENS, cr-ex (Farrell)
 1    next line of questions.
 2              THE PRESIDING MEMBER:  Why don't we adjourn
 3    for the day, then, until tomorrow morning at 9 o'clock.
 4              MR. FARRELL:  Thank you.
 5              THE PRESIDING MEMBER:  Are there any matters
 6    before we adjourn?
 7              No.
 8              Then we will see you tomorrow at 9 o'clock.
 9    --- Whereupon the hearing adjourned at 1245,
10        to resume on Thursday, September 9, 1999 at 0900
11    
12    
13    
14    
15    
16    
17    
18    
19    
20    
21    
22    
23    
24    
25    
26    
27    
28    

                                                         1988
    
 1                      INDEX OF PROCEEDINGS
 2                                                        PAGE
 3    
 4    Preliminary matters                                 1864
 5    
 6    SWORN:  JIM G. STEPHENS                             1871
 7    Examination-in-Chief by Mr. Thompson                1872
 8    Cross-Examination by Mr. Mondrow                    1905
 9    
10    PREVIOUSLY SWORN:  HOLLY ANN ELIZABETH REYNOLDS     1907
11    Examination-in-Chief by Mr. Farrell                 1907
12    Cross-Examination by Mr. Mondrow                    1908
13    
14    Upon recessing at 1048                              1928
15    Upon resuming at 1119                               1928
16    
17    PREVIOUSLY SWORN:  JIM G. STEPHENS                  1928
18    Cross-Examination by Mr. Farrell                    1930
19    
20    Hearing adjourned at 1245                           1987
21    
22    
23    
24    
25    
26    
27    
28    

                                                         1989
    
 1                     UNDERTAKINGS/OBJECTIONS
 2    
 3    NO.            DESCRIPTION                          PAGE
 4    
 5    J11.1     Mr. Stephens to check and advise          1940
 6              when he asked Mr. Galluzzi to produce
 7              the document entitled "A Customer
 8              System Industry Perspective",
 9              "Position Paper" dated August 9, 1999
10    
11    J11.2     Mr. Stephens to provide information       1983
12              on database volume, the on-line
13              transaction parameters, the number
14              of concurrent users, the batch
15              processing volume capability, and
16              the hardware capabilities
17    
18    
19    
20    
21    
22    
23    
24    
25    
26    
27    
28    

                                                         1990
    
 1                            EXHIBITS
 2    
 3    NO.            DESCRIPTION                          PAGE
 4    
 5    K11.1     Response to Revised Prayer for            1870
 6              Relief in HVAC Coalition and
 7              Affiliate Transaction Motion
 8    
 9    K11.2     Package of documents including            1929
10              Responses to undertakings: Exhibits
11              J7.1, 2, 3, 5, 6 and 7; J8.2, 3, 4
12              and 5; J9.1, 2, 3, 4, 5, 6 and 7; and
13              J10.1; web profile for TMG entitled
14              "Our Profile"; TMG's "Our Resources"
15              from the Web site; and a document
16              entitled "Program Mercury"
17    
18    
19    
20    
21    
22    
23    
24    
25    
26    
27    
28    

                                                         1991
    
 1                         ERRATA/ADDENDA
 2    
 3    REFERENCE           DESCRIPTION
 4    
 5    RP-1999-0001 - Volume 5
 6    08/26/99  P. 720    L. 25
 7              "he" S/B "you"
 8    
 9    Volume 6  P. 993    L. 25
10              "Stevens" S/B "Stephens"
11              P. 994    L. 4 and 9
12              "Stevens" S/B "Stephens"
13              P. 1013   L. 11
14              "and a value" S/B "and of value"
15    
16    Volume 7  P. 1055   L. 5
17              "THE PRESIDING MEMBER:" S/B "MR. FARRELL"
18              P. 1055   L.8
19              "Any other matters?" S/B
20              "THE PRESIDING MEMBER:  Any other matters?"
21              P. 1060   L. 6
22              "for" S/B "to"
23              P. 1063   L. 26
24              "Stevens'" S/B "Stephens'"
25              P. 1105   L. 5
26              "loyalty free" S/B "royalty free"
27    
28    

                                                         1992
    
 1                     ERRATA/ADDENDA (Cont'd)
 2    
 3    REFERENCE           DESCRIPTION
 4    
 5              P. 1120   L. 18
 6              "at 164 and 165" S/B
 7              "at Board Staff 164 and 165"
 8              P. 1135   L. 24
 9              "costs consequences" S/B "cost consequences"
10              P. 1141   L. 17
11              "balling rate" S/B "borrowing rate"
12              P. 1141   L. 26
13              "planned" S/B "plant"
14              P. 1142   L. 7
15              "the government's" S/B "the Company's"
16              P. 1147   L. 2
17              "ACIS" S/B "a CIS"
18              P. 1169   L. 5
19              "profit" S/B "work"
20              P. 1191   L. 19
21              "four instances" S/B "for instances"
22              P. 1216   L. 17
23              "billed" S/B "built"
24              P. 1218   L. 19
25              "Why not?" S/B "It's not."
26              P. 1218   L. 22
27              "MR. BRETT:" S/B deleted
28    

                                                         1993
    
 1                     ERRATA/ADDENDA (Cont'd)
 2    
 3    REFERENCE           DESCRIPTION
 4    
 5              P. 1218   L. 24
 6              "MR. FARRELL:" S/B "MR. BRETT:"
 7              P. 1247   L. 2
 8              "close" S/B "closed"
 9              P. 1270   L. 3
10              "Code" S/B "code"