###CaseId: RP-1999-0017 ###Title: OEB Transcript of RP-1999-0017; Vol. H1:00 ###Section: Transcript Header ###Author: Higgin, Dominy (OEB) ###PubDate: 01/18/00 ###LFileId: VOLH100 ###[ 1 RP-1999-0017 IN THE MATTER OF the Ontario Energy Board Act, 1998, S.O. 998, c.15 (Sched. B); AND IN THE MATTER OF an Application by Union Gas Limited for an order or orders approving or fixing just and reasonable rates and other charges for the sale, distribution, transmission and storage of gas in accordance with a performance based rate mechanism commencing January 1, 2000; AND IN THE MATTER OF an Application by Union gas Limited for an order approving the unbundling or certain rates charged for the sale, distribution, transmission and storage of gas. ISSUES DAY B E F O R E : R.M. HIGGIN Presiding Member G.A. DOMINY Member and Vice-Chair Hearing held at: 2300 Yonge Street, 25th Floor, Hearing Room No. 1, Toronto, Ontario on Tuesday, January 18, 2000, commencing at 0900 2 APPEARANCES MICHAEL LYLE Board Counsel MICHAEL PENNY Union Gas Limited ROBERT WARREN Consumers Association of Canada PETER THOMPSON/ Industrial Gas Users Association GUY PRATTE (Not in attendance) ALICK RYDER/ City of Kitchener DWAYNE QUINN MURRAY KLIPPENSTEIN Pollution Probe DAVID BROWN CENGAS MICHAEL PETERSON/ NOVA Chemicals (Canada) JAMES LEE DAVID POCH Green Energy Coalition PETER BUDD/ Major Energy Consumers and Producers (MECAP) and Trigen Energy ERIK GOLDSILVER Wholesale Gas Service Purchasers Group (Not in attendance) MARK MATTSON Energy Probe GEORGE VEGH Coalition for Efficient Energy Distribution (CEED) PETER SCULLY ECNG and AMO DAVID WAQU Comsatec Inc. BARBARA BODNAR Enbridge Consumers Gas TIBOR HAYNAL TransCanada Pipelines JACK FULLERTON on behalf of himself JOYCE POON Econalysis, a representative of VECC 3 Toronto, Ontario --- Upon commencing on Tuesday, January 18, 2000 at 0900 THE PRESIDING MEMBER: Good morning and welcome to the proceeding of the Ontario Energy Board. My name is Roger Higgin and with me today is George Dominy, the Vice-Chair of the Board. As we all know, the purpose is to finalize the issues left as we have set out in the Procedural Order No. 1 for the RP-1999-0017 proceeding for rates for Union Gas, in order that we can then get on with the completion of the filing of the evidence and the interrogatory process. We will also today talk about the forward schedule and any procedural matters that are related to that. Just to let you all know, we have a time constraint. I think it has been indicated to you. We must complete by one o'clock at the latest. If we can't, we will have to set a continuous for later in the week. So we hope we can achieve that and be out of here by one o'clock. So the first order of business, as always, is to start with the appearances and if we can go slowly, find a microphone and make sure that we and the reporters can note the information down. Let's start with the Applicant, please. MR. PENNY: Good morning, Dr. Higgin. My name is Michael Penny and I am counsel to 4 Union Gas, the Applicant. THE PRESIDING MEMBER: Good morning, Mr. Penny. MR. WARREN: Robert Warren for the Consumers Association of Canada, Dr. Higgin. I have been asked as well to enter an appearance on behalf of the eminent Mr. Thompson and his partner Guy Pratte of the Industrial Gas Users Association. Thank you. THE PRESIDING MEMBER: Thank you. MR. RYDER: I am Alick Ryder for the City of Kitchener. THE PRESIDING MEMBER: Good morning, Mr. Ryder. MR. QUINN: Dwayne Quinn, City of Kitchener. MR. KLIPPENSTEIN: Murray Klippenstein appearing for Pollution Probe. MR. BROWN: David Brown for CENGAS. THE PRESIDING MEMBER: Thank you, Mr. Brown. MR. PETERSON: Michael Peterson appearing on behalf of NOVA Chemicals (Canada). THE PRESIDING MEMBER: Good morning, Mr. Peterson. MR. POCH: Good morning, Mr. Chairman. David Poch on behalf of the Green Energy Coalition. MR. BUDD: Good morning, Mr. Chair. Peter Budd, and I am here on behalf of the Major Energy Consumers and Producers, otherwise known as 5 MECAP. I have been asked to register an appearance for my colleague Erik Goldsilver who is away today, but representing the Wholesale Gas Service Purchasers Group. I should also add that late in the day yesterday I was asked by Duke Energy to speak to the Board at some point about adding them to the MECAP group and as well Trigen Energy. Thank you. THE PRESIDING MEMBER: Thank you. Mr. Mattson. MR. MATTSON: Good morning, Mr. Higgin, Mr. Dominy. I am Mark Mattson, counsel to Energy Probe. MR. VEGH: Good morning. George Vegh, counsel for CEED. MR. LYLE: Good morning, Mr. Chair. Mike Lyle, counsel for Board staff. THE PRESIDING MEMBER: Thank you. Next please, could you come up to a microphone and announce your presence please. MR. SCULLY: Good morning, Mr. Chairman. Peter Scully for ECNG and AMO. MR. WAQU: Good morning, Mr. Chair. David WAQU for Comsatec. MS BODNAR: Good morning. Barbara Bodnar, Enbridge Consumers Gas. THE PRESIDING MEMBER: Good morning, Ms Bodnar. MR. HAYNAL: Good morning, Mr. Chairman. I am Tibor Haynal for TransCanada PipeLines. For the benefit 6 of the reporter I will spell my first name, T-i-b-o-r and the last name is H-a-y-n-a-l. THE PRESIDING MEMBER: Thank you, Mr. Haynal. MR. FULLERTON: Good cold morning, Mr. Chairman. My name is Jack Fullerton and I simply represent myself and other interested people who may be interested from a layman's standpoint upon what is going on. THE PRESIDING MEMBER: Thank you, Mr. Fullerton. MS POON: Hi. My name is Joyce Poon. I am here on behalf of Econalysis, a representative of VECC. Thank you. THE PRESIDING MEMBER: Thank you. MR. LEE: Good morning. James Lee on behalf of NOVA Chemicals. THE PRESIDING MEMBER: Would you just repeat that. MR. LEE: James Lee on behalf of NOVA Chemicals. THE PRESIDING MEMBER: NOVA Chemicals. Thank you. I think we have got those and, hopefully, we are -- is there anybody now who would like to talk about late interventions? Do you need to do that? I mean we have a letter from Duke. Right? MR. BUDD: I don't think I need to speak to the strict legal matter of later intervention, but just 7 to advise the Board that Duke has asked if they could join our group for the purpose of the intervention. THE PRESIDING MEMBER: We will deal with that by responding to the letter. MR. BUDD: Thank you. THE PRESIDING MEMBER: Mr. Scully, do you have anything on that? MR. SCULLY: I think perhaps I have to make an application for later intervention. We have participated in all of the meetings and discussions with Union Gas, but technically I think we might have missed the original date back in March. THE PRESIDING MEMBER: All right. I am just checking my list. I don't remember that you were on the list that I had. We will take it then that you are entering a request for a late intervention and talk to the Applicant. Are there any objections to Mr. Scully entering as a late intervenor? MR. PENNY: Mr. Chairman, the normal practice is I think to bring a motion and an affidavit in support, but in this case Mr. Scully is right. He has been involved. We know him and his client and we don't think it is necessary. THE PRESIDING MEMBER: Which is the procedure we had the other day and it's the same thing again. Thank you. Anyone else? Mr. Fullerton, can I speak to you for a minute, sir. Did you actually enter an intervention? 8 My colleague is telling me -- yes, I see it here. That's very good. Thank you All right. No more. Then we will move on to the next issue, which is to ask Mr. Penny on behalf of the Applicant to introduce the draft issues list as it came out of yesterday's issues conference. MR. PENNY: I am happy to do that, Mr. Chairman. You should have before you a four-page document. The first three pages, subject to a couple of points I will make in a moment, represent I think the draft issues list that was essentially agreed to by the parties and the last page, which is headed "Contested Issues List" of course represents six discrete items which I believe were identified as issues that required argument before you today. There is an omission on that page. We agreed, I should say, Mr. Chairman, yesterday that someone from the intervenor group would take the lead on each of these and that's the reason for the name. It doesn't mean that they are necessarily the only person taking that position, but that they were the ones that either raised it or agreed to take the lead on that. The final one, No. 6, the proponent of that issue was inadvertently left out. That's Mr. Budd's client, MECAP. THE PRESIDING MEMBER: Thank you. MR. PENNY: Then with respect to the agreed issues list, I have just two points to make. It was 9 agreed yesterday that there would be added to the rates portion, which is page 3, section 3, a category under proposed rates that would deal with customer bill impacts and that was just inadvertently omitted. So that should be 3.1.5. We will produce it in another typed version of this, but that would be customer bill impacts. I understand, just for clarification, I won't jump the gun and try and speak to the merits of this at this point in time, but I understand there was some discussion yesterday with respect to 2.4 on the second page that deals with the off ramp and whether that should be singular or plural. So that is an issue that perhaps requires being addressed fairly briefly. It doesn't appear on the contested issues list, but I understand that some intervenors' position was they don't want to be limited in proposing perhaps other off ramps. The reason it's in the singular is because our application is for there just to be one. We accept I think the proposition that if parties have additional off ramps that they want to propose that they are entitled to do that in this hearing, although I would want to speak to the issue of when that is properly disclosed in terms of the overall process because our concern would be that we not find out about this in final argument for the first time, but subject to that we certainly -- in terms of the matter of -- that's a process issue. 10 In terms of the substance, we accept that there would be scope for the consideration of other off ramps. THE PRESIDING MEMBER: Does that mean that you would be willing to put a small "s" in brackets after? MR. PENNY: Yes, we would, subject to the process issue, which I would like to speak to at an appropriate time. THE PRESIDING MEMBER: That would be during the hearing you would speak to that or do you want to do that now? MR. PENNY: Well, I would like to do it today, and I think there is a similar problem in another area which we will get to later, so perhaps I could address it then. THE PRESIDING MEMBER: Okay we will make a note and then you would like to do that. Thank you. Are there any more issues regarding the draft issues list that you have filed? Is that it? MR. PENNY: That concludes my introduction of the list, Mr. Chairman. THE PRESIDING MEMBER: I don't know whether we need to give this an exhibit now rather than wait until we -- I'm in your hands. MR. LYLE: Traditionally, Mr. Chair, would give it Exhibit 1 to the issues day. THE PRESIDING MEMBER: Thank you. MR. PENNY: Mr. Chair, I guess my suggestion 11 just as a process matter would be since it may change, what really matters is that the final one, the fact that we had a draft at one stage that was subject to dispute is, in a sense, neither here nor there. THE PRESIDING MEMBER: Might I defer it. When the Board finalizes the list of issues, then that will become the official list. It's okay if we still refer to it as Exhibit 1 as the draft issues list. That's fine. EXHIBIT NO. 1: Draft Issues List THE PRESIDING MEMBER: Could I just then address you, Mr. Lyle, since you and the staff know were involved in the issues conference whether there is anything else that you would note relative to the draft issues list as a starting point for today, if there are any other matters. MR. LYLE: Yes. Thank you, Mr. Chair. It was Board staff's understanding that there had been an additional issued agreed to to be added to the list. That was to be titled "Concurrent Implementation of Unbundling and PBR". THE PRESIDING MEMBER: Where would that appear, under the unbundling or the other two? I guess you would like it on both, I suppose. MR. LYLE: It's really a stand alone issue, Mr. Chair. THE PRESIDING MEMBER: Yes. Okay. So, Mr. Penny, do you have a response to that? 12 MR. PENNY: Yes, I do. It was not my recollection that that was agreed to. Our recollection, I should say, Union's collective recollection was that the discussion surrounded the addition in both unbundling and PBR of the overview and rationale issues which would encompass that. As well, there's already --that's point 1.1 and 2.1. Then under 1.4.6 there was already under "Other Issues" an implementation timing issue. It was, I think, our thought that --we did add to the original draft those overview and rationale categories. It was our understanding that that in combination with 1.4.6 was going to encompass that issue of the concurrent timing. THE PRESIDING MEMBER: There isn't a corresponding --under the PBR there isn't an implementation timing issue with it really because you are making an application for rates commencing January 1, 2000. If the application is approved, the timing is implicit. MR. LYLE: Mr. Chair, I understand Mr. Penny's points, but I would have thought that there still needs to be an issue that ties together implementation of unbundling and PBR, but I'm happy to hear from other parties if they want to speak to that. THE PRESIDING MEMBER: Yes. We will hear some submissions then. Go ahead, Mr. Ryder. MR. RYDER: We take the same position that 13 unbundling should proceed first and the PBR should be introduced after experience has been gained with respect to the unbundled rates and the appropriateness of those rates. It's a fundamental issue for us and for others. I thought it should be square and centre, have its own status on the issues list rather than to be implied from a series of other issues that don't clearly address whether PBR should be commenced in the year 2000 with the unbundled rates. THE PRESIDING MEMBER: Okay. MR. WARREN: Mr. Chairman, the client for whom I appear in this proceeding takes a similar view to my friend, Mr. Ryder, for two reasons. Number one, we think that the issue of the substantively needs to be discussed and linked in a linked way as Mr. Lyle has said. Secondly, from a process point of view, it is in our view much preferable if the issue is listed specifically rather than in the middle of the hearing, there being arguments about what is implicit and then we start to talk about how many angels can dance on the head of a pin and then it all gets lost. For those two reasons, we support Mr. Lyle's suggestion that there can be a separate issue called that. Thank you, sir. THE PRESIDING MEMBER: Thank you. Anyone else like to add to that? Mr. Budd? MR. BUDD: Yes. Thank you, Mr. Chair. MECAP 14 and the wholesale group also agree with that. We thought we had that understanding yesterday and I might have expected to see that, so we would endorse the comments made by my friends earlier. THE PRESIDING MEMBER: Anyone else like to add? Mr. Vegh. MR. VEGH: I have nothing to add to what has been said except that my client supports that position as well. THE PRESIDING MEMBER: All right. Mr. Penny, back to you then. We have heard the submission. MR. PENNY: I really have nothing to add to what I said originally. It's our view that --we accept that that is on the table. It just seems to us entirely unnecessary to identify that rate issue since it flowed naturally from both the rationale and from the existing headings, but I have really nothing further to add. THE PRESIDING MEMBER: All right. Well, the Board will take that under advisement as we proceed. It's a matter really to the implementation and timing matter. We have one question from the Board which I will address to Mr. Penny. I guess it relates to the background that ended up with its 1999 financial information being included in the one time adjustment base rate. That is now shown at 2.2.1.6. I guess the question that we would have if the discussion around that issue was what use will the 1999 financial 15 information be put to in order to deal with the broad topic of one time adjustments to base rates? What is the contemplated use of 1999 financial information? MR. PENNY: The history of that I think can be stated briefly. It was at one stage not on the list at all. It became apparent some time ago. It became apparent through discussions between Union and stakeholders that that was going to be an issue that the stakeholders were interested in. In the draft that was before the parties yesterday, it was just added at the bottom of the PBR list as a free standing issue. I believe it was at the Consumers Association's behest that it was wanted to be tied to the one time adjustment to base rates on the basis that the application in this case by Union and Union's evidence contemplates using 1999 Board approved rates as the starting point, subject to certain adjustments. Perhaps Mr. Warren can speak to this, but as I understand it, the Consumers Association, and I believe other parties, want to be able to argue for additional adjustments beyond those contemplated by Union based on 1999 actuals. So that was the reason why that ended up where it did and we agreed to that. THE PRESIDING MEMBER: Fine. I think the other issue then that the Board would like to understand as arising from that is the question of what level of detail or disaggregation of 1999 financial information 16 is appropriate. Have you as the applicant got in mind, when you agreed to that issue to be added, what level of detail or disaggregation of 1999 data you are contemplating? A full bridge year filing would be a fairly major undertaking. Maybe you are looking at a more curtailed or condensed set of financial information. We should have that understanding now so that we don't end up with to-ing and fro-ing on the interrogatories and so on, so we really would like, if you don't have it off the top of your head, if you could discuss that with your client perhaps at the break so that we have a clear understanding of what level of financial information will be provided. MR. PENNY: Dr. Higgin, that subject was discussed yesterday. I can give you a summary of that discussion. The first issue that arose around this was that this being a public hearing and the filing being public, it's necessary for the 1999 financial results to receive the Union's board approval, et cetera, before it can be released publicly because of the impact on financial markets, et cetera. That process was explained and described to the parties briefly yesterday in terms of the timing of that which would be expected somewhere in the latter part of February or early March. The scope of that disclosure -- I think you put your finger on it -- was described as being not a full bridge-year type of package, but that there would 17 be a financial information package, perhaps consisting of a series of schedules which would provide the basic information. THE PRESIDING MEMBER: I think as a minimum we would like to ensure that the five regulatory schedules would be the starting point. MR. PENNY: That's exactly the kind of thing. THE PRESIDING MEMBER: Then the question is: Below that, for example on the O&M line, whether there should be a one line or the gross amount in dollars or whether it should be broken out. Those are some issues that we need, I think, to understand. So maybe you would like again, just as I said, to think about that and, say, give us some idea so that when the Board -- it will be on the record for all of the participants as to the kind of information that they will get and the depth of questioning that is expected with respect to it. MR. PENNY: Yes. We will consider that at the break perhaps and I will do my best to advise you in more detail. THE PRESIDING MEMBER: If you could go back to, say, the blue pages in 499, look at the revenue schedule, the top on that follows and then down through the expense schedule. If you could give us some idea by cross-referencing to the high level of schedules in 499. That would give us a good idea. It would make everybody have a good understanding of what will be provided. I 18 think that would be a suggestion. Okay. Thank you. MR. PENNY: Thank you, Dr. Higgin. THE PRESIDING MEMBER: Are there any other matters related to the Agreed Issues at this time? MR. POCH: Yes, Mr. Chairman, one matter I should bring to your attention. THE PRESIDING MEMBER: Mr. Poch, yes. MR. POCH: This may have import for the broader list. I note that the earlier comments by my friend, Mr. Penny, with respect to off-ramp(s) and the disputed issue No. 4 that CAC will speak to, the question of whether the list is inclusive or specific and exclusive. We had some discussion with resect to Issue 2.5.5 which it now reads as DSM. The detailed subheadings have been dropped off specifically with the agreement of Union so that it is to be seen as a broader heading. But I thought I should bring to the Board's attention, and for the attention of anybody who wasn't here yesterday, that that would include, in addition to the question of the design of the particular mechanism, the SSM mechanism and LM mechanisms that Union proposes, alternatives to that; whether there should be a passthrough of DSM costs, the target level, the length of the reset frequency or the reset of the target frequency, in other words the duration of the particular 19 set of targets and the corresponding account clearance frequency and review process; as well as the monitoring and evaluation requirements and a look at the impact evaluations to date and the adequacy thereof. It is a quite a range of topics. There are, indeed, others. I wanted the Board to be aware there is a nest in there although we have reasonable confidence that we will be able to settle a lot of it, but also to alert other parties who weren't part of the discussion yesterday. So that I can then maybe take a back seat on whatever discussions we have about whether the rest of the list is broad or narrow, as long as it is understood that that one is agreed to broader. THE PRESIDING MEMBER: Okay, we understand what you have said. So in terms of the sub-issues, you have listed a few of them and there may be some more as well. MR. POCH: Yes. And we are content they don't need to be broken out now. Hopefully we will settle a lot and we can better define what is in issue to bring before the Board later. I just didn't want anybody to be led astray meanwhile. THE PRESIDING MEMBER: Okay. Thank you. MR. POCH: Thank you. THE PRESIDING MEMBER: Anyone else on the Agreed Issues List? If not, then we will turn to the last page of 20 the draft and we will start off in the order here for the sake of simplicity. As was agreed, of course the lead proponent to start submissions and then followed by others that are in support of the position of adding the issue to the list and then those who would be opposed including, I assume, the Applicant, and then there will be an opportunity for the proponent to reply, having heard all of the submissions and the Applicant's position. So please be brief and that is what we would like to do then, is start with the unbundling and City of Kitchener would be the first to go. Can we go to you, Mr. Ryder, then, and start this one? MR. RYDER: Yes. The first issue is a service issue, and Mr. Quinn, who is the director of the Kitchener utilities and is conversant with the technicalities of this service will deal with this. THE PRESIDING MEMBER: Okay, then. Okay, Mr. -- MR. QUINN: Thank you, Mr. Chair. As Alick pointed out, this is not a rates issue in our mind, it is a service issue. I tried to be explicit yesterday in that we are not asking for point-to-point distribution rate. My preference in terming this issue is delivery points and redelivery points. This is an issue that came up through the 21 process of our negotiations with Union on our unbundled contract and we had spent some time with Union to propose the opportunity for different delivery and redelivery points in our unbundled contract. These points in the contract included no cost to Union for the service. In other words, the very example is, when the gas is flowing west to east that we want the opportunity to deliver east to west, a notional east to west delivery inside of our contract. That process, as the Board may remember, was EBR 99-0011 and through that process there was an order from the Board that asked us to accept Union's interim contract, which excluded that delivery and redelivery point, and have that contract in place for a term not greater than one year. The terms expires at the end of April so we were deferred to this process to have the hearing on this issue. We brought it up yesterday and it has now arrived on the Contested Issues List. We believe that this is the time and the place to hear this issue. Thank you. THE PRESIDING MEMBER: Thank you. Would anyone else like to speak to this issue? Mr. Mattson? MR. MATTSON: Just in a very general way, Dr. Higgin. We support the rights of the City of Kingston to have these issues heard -- Kitchener, I'm sorry -- to 22 have these issues heard in this hearing as this is a fairly precedent-setting hearing with respect to the issue of unbundling the proposals coming forth from the Applicant, is quite broad and seeks to bring many new aspects to Union Gas' rates. The City of Kitchener is a very large client and we support their right to probe these issues and in fact to have issues that are of specific concern to them heard in this hearing. I also note that, according to the Applicant's proposal, this may be the last chance the City of Kitchener has to raise these issues in a broad rate-setting hearing with all the rights and protections that are offered to them in this rate hearing and therefore we think this is the appropriate time to have this heard. THE PRESIDING MEMBER: Thank you. Anyone else in support of Kitchener's position? Anybody who is opposed? Are you in support or opposed? MR. SCULLY: I am in support. THE PRESIDING MEMBER: Okay. MR. SCULLY: Very often we have discovered that the rate becomes a non-rate because of terms and conditions of application, the service conditions that are imposed. I think it would be very helpful for all parties and the Board to have the point raised by Kitchener considered in these proceedings and it would 23 serve to focus perhaps more attention on terms and conditions that will apply to all of the new proposed unbundled rates. THE PRESIDING MEMBER: Thank you, Mr. Scully. Anyone else? Anybody opposed other than, of course, the Applicant. Mr. Penny, would you like to make a submission, then, on this matter? MR. PENNY: Yes, thank you, Mr. Chairman. As described yesterday, the issue was point-to-point rates. As described today, the issue is delivery/redelivery. Whatever that may be it is a form, in our submission, of distance-based rate which has traditionally been rejected by the Board as being discriminatory as a result of resulting from accidents of geography. The issue that has been raised appears, to us, to be, in addition, a specific contractual issue between Kitchener and Union and is, therefore, in our submission, not appropriately dealt with in the context of the general rates case. Further, the application before you is really focusing on two fundamental issues. It's focusing on the unbundling of upstream transportation and storage and it is focusing on a performance-based regulation, or incentive-based regulation, mechanism -- and the issue that Kitchener is raising does not arise out of either 24 of those issues and is, therefore, entirely collateral to the application. And, finally, I would submit to you that what Kitchener is really saying is that they want a special rate for special services and, in that sense, it is, in my experience and in my submission, the universal experience before this Board that parties, such as bypass candidates, who want special services or at special rates bring an application for such rates. It doesn't get tagged onto an existing proceeding as just an issue. This is a case where Kitchener is asking for something special just for them and they should have -- if they want that, they should be in the position where they are the applicant and they bear the burden of proof and they have to convince the Board that it's in the public interest that they should get that. And by tagging it on as simply an issue, in our case -- which is not what our case is about -- they, in effect, end run the process by which they should truly be, and properly be, the applicant. So, for that reason, in my submission, this is not appropriately an issue for this hearing, at this time. THE PRESIDING MEMBER: Thank you, Mr. Penny. Mr. Quinn, would you like to reply? And, just in starting, to clarify, I think as you did, and review whether the wording, as proposed, is exactly what you 25 think it is. Would you do that, as well, please, for the Board? I think you seem to be talking about Dawn-Trafalgar rights, delivery rights on Dawn-Trafalgar -- that seems to me, from your description, to be what we are addressing here -- as opposed to the traditional distribution rights. MR. QUINN: Yes. Thank you for an opportunity to clarify. Some statements have been made here which I think do need to be clarified. If the record is checked from yesterday -- and I'm not familiar with what records are kept -- that was clearly stated and maybe not misunderstood. From Mr. Penny's offerings here, this morning, I understand that they still don't quite understand. We are asking for the opportunity for multiple delivery points, or redelivery points, in the contract -- and those delivery points can be the entrance or exit to Union's franchise area, so it doesn't necessarily include the Dawn-Trafalgar -- it is not conclusive of the Dawn-Trafalgar system. The points of Bluewater St. Clair were brought up in 1999-0011. We do believe that this a broad issue and an issue for all; it is not a City of Kitchener issue. The Board has previously ruled that the limitation of delivery points will inhibit the market development. 26 In this case, Union is suggesting that we would come back to them, or any other person would come back to them, for a special service. The reality is that's a monopoly service and Union, through this process, will achieve the opportunity to charge whatever they believe the market will bear for that service, yet the requester does not have alternatives of other delivery companies to go to because it impacts only the Union franchise area and the ability to redeliver, or to accept deliveries. In their sole discretion, they can decide to accept that or reject it. In other words, the applicant would have to pay -- or, in this case, the requester would have to pay whatever Union decided that it wanted to charge. Given that they are a monopoly and they still are responsible and have some public accountability, I believe this issue should be heard and understood, such that the market, and an unbundled service, can be developed in a way that all share in the benefits and not only the applicant. --- Pause MR. QUINN: Yes. Mr. Ryder has just asked me to re-emphasize that the application was made through 1999-0011, through our case, and the Board asked us to defer that issue to this process, in the expectation that it would be heard at this time. If this issue is dropped, at this time, we are without recourse for adjudication of the issue. 27 Thank you. THE PRESIDING MEMBER: Thank you, Mr. Quinn. The Board will reserve on that, having heard the submissions. Could we move on to the City of Kitchener Point 2, which is the post-hearing process leading to the final rate order? I assume, Mr. Ryder, you will -- MR. RYDER: I'm going to speak to this one. This issue addresses the procedure that the Board decides to adopt between the Board's issuance of its reasons for decision and the final order. The Board's current rules of procedure do not address this point and the Board's practice on this issue, in past cases, has not been uniform and we would like to argue that even if best practices could be improved upon -- let me take you to -- the last case was EBO 499 and the procedure you followed was that: you issued your decision; Union filed its draft order and voluminous working papers -- and these continued a change in the cost allocated to our rate, the T3 rate, and there was a change in the rate design for us, and for other parties, as reflected in the cost ratios -- the parties were given an opportunity to come to the Board's offices and review the working papers and then given an opportunity to comment. I'm not sure if there were private meetings between Board staff, in EBO 499. There had been in -- 28 that was part of the post-hearing process in prior cases. I don't know whether it continued last year. But what we say is that, even though last year's procedure was an improvement over past years, the further improvement -- we would like to argue, at least, for further improvement, in two respects: First, that the material delivered by Union, to the Board, should be available, readily available, to all parties. For example, it's not terribly useful to have it only available in the Registrar's, or in the offices of the Board for out-of-town intervenors. And then, secondly, there should be an opportunity to comment, as there was last time, and if the draft order is a significant departure from your reasons for decision, then an opportunity to ask for a hearing -- you can decide whether there is a hearing. And, thirdly, we would like an assurance that there will be no more private meetings between Board staff and Union because the intervenors, we say, have a right to participate in all proceedings before the Board and that private meetings between Board staff and Union are inconsistent with that. So we would like an opportunity to address those points. As I say, it's not addressed specifically in your rules, so you may find submissions on that point of some use to you. Thank you. THE PRESIDING MEMBER: Thank you. 29 Just by way of providing some background for parties, I could ask Mr. Lyle just to talk about the matter of a settlement with Kitchener, regarding this procedure, and he will then outline the terms and we can then hear further submissions from other parties. MR. LYLE: Thank you, Mr. Chair. With my friend Mr. Ryder and Mr. Penny's permission, I will outline the terms of Minutes of Settlement that were entered with the Board, with Union and the City of Kitchener. The first term of this was that the Board agreed that, in subsequent natural gas rate hearings, under the current, as it was then, Ontario Energy Board Act, the rate schedule and all supporting documents to the applicant's draft order would be filed with the Board following the final -- which were filed with the Board, following the final decision, would be available for review and copying, at the Board's offices, at the time the draft rate order is delivered to the Board. The second term of that agreement was that the Board would also set out a timetable giving the parties an opportunity to file submissions with the Board on the question of whether the documents filed by Union reflected the Board's decision, and then would afford the applicant, Union, an opportunity to respond to those submissions. The agreement went on to specify that if the Board was to undertake a review of its rules of practice 30 and procedure subsequent to Bill 35, the Board would incorporate a procedural change, as set out above. I can advise my friend that Board staff are still intent on reviewing the rules of practice and procedure at some point in time in the future and, certainly, Board staff have no objection to continuing on with the terms of the prior agreement, as it relates to this proceeding. We would have some concern, given the technical detailed nature of the material which is filed by Union, in restricting Board staff from having any discussions with Union. That's something that's necessary to Board staff in order to fully understand the material that's provided by Union. Those are my comments, Mr. Chair. THE PRESIDING MEMBER: Thank you, Mr. Lyle. That's by way of background. I would like to hear some further submissions then from other parties who would like to support Mr. Ryder's request which is somewhat enhanced and goes beyond the terms of that agreement between Kitchener and the Board. Would anyone else like to speak to the matter? Mr. Mattson. MR. MATTSON: Again, Dr. Higgin, I don't see why Mr. Ryder of the City of Kitchener should not be able to make argument on this. I understand that they are not bringing evidence on it. It is something that I think could rightfully form part of the record of this 31 hearing and certainly is relevant to the setting of rates and the setting of the rate as it affects this client and has a history. Certainly we support the city's right to make that argument in this hearing and have it on the record. I think I am right, Mr. Ryder, that you are not bringing evidence on this point. Is that correct? MR. RYDER: No. I may ask in interrogatories about these private meetings because they, I must say, Mr. Chairman, they consider me terribly -- I think they are illegal. They are contrary to the general principles of administrative law and they would have to be justified and explained and we have to see what kind of protections there are, but it's a big concern for us that there be private meetings between Board staff and the Applicant. THE PRESIDING MEMBER: I will give you a chance to reply in a minute. MR. RYDER: I am not giving evidence. MR. PENNY: I am sorry, I interrupted you, Mr. Ryder. Could you clarify, I understood the point that you were making to be that you might well want to call evidence on this issue. MR. RYDER: I would certainly want to get interrogatories as to the nature and scope of these meetings. THE PRESIDING MEMBER: Mr. Ryder is in essence saying that if the issue is on the list then he would 32 proceed by asking interrogatories and beyond that I guess it depends on what he then gets from his interrogatory. Is there anyone else that is supporting this? Mr. Fullerton, will you get a microphone please, sir. MR. FULLERTON: I would like to speak very briefly in support of the contention about secret meetings. Any conducting of public business should be done publicly. I would suggest that the procedure to be followed would simply be to notify the parties that a meeting is going on. I think that's the concern. There has to be a perception by the general public that there isn't behind closed dealings which have an impact on them and anything that clarifies that and opens it up for a public viewpoint I would support. I know I have fairly good support in my area because that has been my lifetime goal. My past experience has been in the field of journalism. THE PRESIDING MEMBER: Thank you very much, Mr. Fullerton. Is there anyone else who wishes to support? Mr. Peterson. MR. PETERSON: Mr. Chair, I don't see anything sinister in the meetings with Union Gas and Board staff, but I suggest that probably for everybody's benefit the best process would be to throw the meetings open to the public. They would be of such stultifying boredom that after 25 minutes I am sure that there would only be 33 Union and Kitchener and maybe Board staff left and that would resolve the issue if it were made available to the public. I am sure we are talking about accounting issues of complexity that really are probably not particularly interesting. THE PRESIDING MEMBER: Thank you, Mr. Peterson. Mr. Penny. MR. PENNY: Yes, Mr. Chairman. Thank you. Three points. One, the disclosure of the settlement agreement with respect to Mr. Ryder's prior application on this issue is instructive. Mr. Ryder agreed to those provisions and settled litigation on the basis of those provisions. He is now seeking to get something entirely different from that agreement. So all together, apart from other process issues which I am about to address in my submission, it is entirely inappropriate that he be doing that. Now, with respect to the substantive issue of the process, that, in my submission, is a generic issue that has nothing to do with Union's particular application in this case. Presumably, Kitchener's concern applies to all proceedings before this Board, gas or electric, and it deals with, as I think he said, he has characterized it as an absence of provisions in the Board's rules of procedure. Accordingly, in my submission, this 34 application is not this application. Union's application for unbundling of upstream transportation and storage and for performance base regulation is not an appropriate forum in which this issue should be raised. The Board has a process that, as agreed, enables parties to review and comment on the draft rate order before it is made final. If this application is allowed, that opportunity will be afforded to everyone pursuant to the Board's procedure. In the future there will not be a need for such a process because annual adjustments will either be purely formulaic, or it will be the subject of the proposed customer review process under the PBR. So, in my submission, this issue does not belong on the issues list because it's unnecessary and because it involves a matter of generic process which has nothing to do with the specific matters that have been raised before the Board. So in essence, Mr. Chairman, we simply say Mr. Ryder may have some valid concerns and we have no objection to him pursuing those concerns. It's just not in our case. This is not the time or place for it, Mr. Chairman. Thank you. THE PRESIDING MEMBER: Mr. Ryder. MR. RYDER: Sir, the procedure that you follow in reaching your final order is clearly an issue in this case. It is nonsense to suggest that it is to be decided elsewhere. 35 The terms of settlement were just that. They were terms to settle the case. They did not presume to be the last word on the topic and they did not preclude the issue from being addressed by the Board. Furthermore, in support of that settlement, we received the assurance from your counsel that we would wouldn't have to come to the Board's offices to inspect the record, that a copy will be delivered to us. So it was easier for us to accept, but it is still inadequate and still unfair because I think all parties should have full access to the working papers and draft order, so that they can in their offices determine whether or not they do indeed carry out the Board's decision. So, as an issue in this case I say the best place to address it would be before you, so that all parties could see the implications of this post-decision proceeding and decide whether it affects them or not. Thank you. THE PRESIDING MEMBER: Thank you, Mr. Ryder. We will reserve on that one and move on to Issue No. 3 which is, as I understand, raised by CEED and Mr. Vegh. MR. VEGH: Thank you, Dr. Higgin. There are a couple of documents I will be referring to. I have handed them to Board staff. Perhaps they could hand them up to the panel. I will address these documents in the course of my submissions. 36 There are two letters from the Board. One is dated April 1st and one is dated December 6th. As I say, I will refer to them in my submissions. I will also be referring to the evidence in the application. I don't know if you have a copy of the application with you. I will get to that as well. MR. LYLE: Mr. Chair, perhaps the April 1, 1999 letter can be made Exhibit 2 and the December 6 letter Exhibit 3. EXHIBIT NO. 2: Letter to Market Design Task Force Members from Ontario Energy Board, signed by Paul B. Pudge, dated April 1, 1999 EXHIBIT NO. 3: Letter to All Interested Parties from Ontario Energy Board, signed by Anne Powell, dated December 6, 1999 MR. VEGH: In this proceeding, Mr. Chair and Mr. Dominy, CEED consists of Sunoco, CanEnerco, Dynergy Canada and TransCanada Gas Services. All of these companies have been acting in this market for several years now and they have participated in proceedings particularly when issues of unbundling are addressed. The reason for limiting their participation to unbundling issues is that the common goal of CEED members, in a sense the core mandate of the association, is for rates and services to be unbundled so that they can then be rebundled and offered in a commercial market and on commercial terms. From their perspective, 37 unbundling is a prerequisite to the development of a truly competitive market. Now, offering services of competitive terms includes the ability to bill for those services directly. The view of the CEED members is that for this market to go forward it is necessary to address unbundling of billing and, if necessary, to address that in this proceeding. In particular, in this proceeding my clients propose to recommend that the Board approve a wholesale billing rate. Now, this is not the time or place to address what's in that rate, but generally the position that will be put forward is similar to that which TransCanada Gas Services put forward in the Enbridge unbundling case, where this issue was at least on the issues list. Again, I won't address that evidence, but it was a substantial and serious piece of evidence and it was treated by the parties in that case as a substantial and serious piece. My clients want the opportunity to advance this kind of position in this proceeding. Therefore, billing should be on the issues list. In fact, the unbundling of billing in the evidence is really conspicuous by its absence. This is a proposal for its five year PBR plan, an extensive unbundling proposal and the one thing that's just passed over is the unbundling of billing. I would like to address --that issue is 38 covered in the application. It's just a couple of pages of evidence, starting at Exhibit B, Tab 1, page 85. The evidence states that --there is an acknowledgement that there are significant rates issues for unbundling, but instead of having these issues addressed in this case, Union wants to start with what it calls an internal and an external process. The internal process is described starting at the bottom of page 85 under the heading "Internal Processes". It says Union is evaluating the existing billing function to isolate all processes and related costs. That's obviously a cost allocation issue. That's an issue that the Board should be addressing in this proceeding. It's not an internal issue to Union. It goes on to state, again under the heading of "Internal Processes" that Union then needs to examine how the billing function will change to facilitate the transition to retail energy marketers having the ability to bill end use customers directly and to minimize stranded costs. Well, the issue of what is a stranded cost in the context of wholesale billing is an issue that has to be addressed by this Board. We submit this case is the appropriate place to get evidence on that and to address this. The evidence then goes on to refer to an external process. What's being referred to there is the development of the distribution system access code. 39 It's in that context that I have handed up and I would like to refer to the letter dated December 6, Exhibit 3. This is a letter from Anne Powell on the development of the gas utility access rule. Anne Powell, of course, is the Director of Licensing. This letter opposes a table of contents two pages in called "The Gas Utility Access Rule". You will see that billing is referred to here. It's in section 6. C and D talk about billing options, billing requirements. It's true that some billing options are addressed and billing issues are addressed in the access code, but rates issues surrounding billing will not be addressed by this code. That's made clear in the covering letter from the Director of Licensing. The third paragraph of that letter, three sentences in, talks about unbundling. The rule would also, in the third paragraph, third sentence in: "The Rule would also establish principles and policy direction regarding unbundling of utility services. Individual service matters and costs, charges and fees for services would be the subject of each utility's rates proceeding." So the contemplation is that issues of unbundling billing for rates purposes will be addressed in this case. So this external process has some overlap with this case, but it's not meant to be a bottleneck to unbundling rates issues for billing to be addressed in 40 this case. It shouldn't be a bottleneck because there have already been extensive delays on addressing unbundling of billing. The evidence in this case was originally put forward in May and in May the parties were told that Union was going to come forward with an unbundling process for billing. It has been eight months later and still all we get in this evidence is a vague promise that in some future proceedings, unbundling of billing will be addressed. This was originally brought forward in May. It's now some eight months later. We can't wait another eight months for a filing of a proposal of unbundling of billing. The thing to keep in mind is that the new reality is that the Board simply cannot assure that it's going to have the resources to dedicate to another hearing, to a separate hearing on unbundling of billing. We see how the Board's heavy agenda has pushed things back and prevented things from being addressed in the manner which the parties may have anticipated. I would like to give a couple of examples of that. These examples are not meant to be critical, but they are just setting out what's realistic and what's a realistic time frame. The first example has to do with the market design task force. That task force filed its report in February of last year. It has been almost a year since that task force report was filed. In April the Board 41 responded to that report in the document that has been marked as Exhibit 2. In that response, I won't read the response to you, but that response states that the Board was instructing staff to compare distribution system access codes. That was last April. The working group for that code will have its first meeting this week. That's nine to ten months after the Board's direction. That's the first example. In August we were in front of the Board on the Enbridge unbundling case. The Board deferred the unbundling aspect of that case to a --well, it deferred it. That was back in August. It's now some five months later. We still don't have a procedural order to deal with the Enbridge unbundling proposal. Again, the point is not to be critical, but to emphasize that the Board's agenda and schedule is very heavy and there is no guarantee that the Board can gear up for a separate proceeding to deal with unbundling of billing. There is right now a window of opportunity to address this in this case. My clients are not satisfied with a vague proposal that it will be addressed some time in the future. My submission is that this should be added to the issues list, that we have the opportunity to address unbundling of billing in this case and that we get on with it. Thank you. 42 THE PRESIDING MEMBER: Thank you, Mr. Vegh. Anyone else like to speak in support? Mr. Brown. MR. BROWN: If I could on behalf of CENGAS, Dr. Higgin. CENGAS strongly supports the submissions made by Mr. Vegh on behalf of his client. I would like to deal with three points, first to perhaps add a bit more to Mr. Vegh's submissions with respect to the expectations of the market, that unbundling would be proceeding. Mr. Vegh referred to the market design task force report that was released on February 4, 1999, and the timetable that was outlined in that report was that there would be a wholesale billing and collection service unbundled as of January 1, 2000, and there would then be a further expanding of the menu of unbundled components, including retail billing and collection not later than April 1, 2000. I think those dates that the industry as a whole was striving back in February of 1999 to achieve sort of graphically indicates just how slow the process has become. I join with Mr. Vegh. It's not pointing fingers at anyone, but the reality is on the gas side of the ledger, the process of unbundling has crawled to a snail's pace. It's critical, in the submission of my clients, that the process be revived and that you have both downstream and upstream components to the unbundling process. You really can't separate the two. The second point deals with the alleged overlap with the gas distribution access code. Mr. Vegh 43 I think quite fairly points out that there are numerous issues with respect to cost, particularly the avoided costs of service. Now, that would be related to any unbundling. That can only take place in the context of a rate case. They really cannot be dealt with by a task force and Ms Powell in her letter alluded to that and recognized that reality. There are several costs issues that are going to be faced, that people will be faced, with the issue of unbundling. The first will be what categories of cost should be included in avoided costs. The second will be what is the proper amount of those costs. The third will be the issue of proper cost allocation. All of those have to be dealt with in a rates hearing given that the applicant in this case had suggested to the market early last year that there would be a proposal on the table for the unbundling of billing. In my submission, there is no prejudice whatsoever to the applicant to deal with these nitty-gritty rate and cost allocation issues in this particular proceeding. The final point is with respect to what should be put on the issues list. What you see before you on the contested issues list is a very summary description of the issue. In CENGAS's submission, the issues list in the Enbridge case, the 1999-00-01 case, could provide some guidance. My recollection is that issue No. 7 dealt with 44 the unbundling of services. There were really four components set out in that issues list which I think would apply equally to the unbundling of billing, the first being the scope of the unbundling of billing. The second would be cost allocation and rate design for the unbundling of billing. The third would be terms and conditions of unbundled billing. The fourth would be an implementation timetable. In my submission, those four components should be included on the issues list with respect to the unbundling of billing in this particular procedure. Not only should the Intervenors, in my submission, be entitled to ask interrogatory questions on this particular issue, but it may well be that the Applicant should bring forth evidence on this point to supplement the evidence that is already filed. As I say, in my submission, that would not cause any prejudice to the Applicant. The Applicant has raised the expectations of the marketplace over the course of the last 12 months that there would be some unbundling proposal with respect to billing and if the Applicant has already embarked upon an internal process of some sort of cost review, the results of that can be made public through the evidence. There should, therefore, be a full hearing on the evidence with respect to this issue because, as my friend Mr. Vegh has indicated: If we don't do it now 45 when are we going to do it? You are going to be faced with a catch-22 if, as a result of the access code, there is some call for a generic hearing with respect to unbundling. The various utilities will quite rightly say that they each have their own different cost structure and therefore things should be dealt with individually. With a PBR proposal on the table, as Mr. Vegh has indicated, who knows when people will be coming back, with respect to this Applicant, before the Board to deal with the nitty-gritty of costs. So for those reasons we support the proposition and I have given you the language which we submit should form the issue on this matter of the unbundling of billing. THE PRESIDING MEMBER: Thank you, Mr. Brown. Anyone else in support? Mr. Mattson? MR. MATTSON: Dr. Higgin, as I think the record will show, my client Energy Probe has been in favour for a long time and at many hearings we have been pushing for the utilities to unbundle the billing service. This year Union, following the Enbridge rates case, also has brought forward a fairly substantial unbundling proposal and, as my friend Mr. Vegh indicated, quite conspicuous by its absence is that issue of unbundling of billing services. My friends from Union may suggest that their proposal only deals with transportation and storage 46 issues for the purposes of unbundling, however I think it should be clear and I think the Board will agree that Union Gas has made a conscious decision, however, not to include the unbundling of the billing function. That is something that is also a decision. It may be a decision not to bring it forward, but certainly it should be on the issues and the Intervenors should be able to find out from the proponent why they did not bring it forward, why they did not see a need to bring it forward, and my friends should be allowed in this proceeding to bring forward evidence if they so wish. I am unsure to the extent that the Board can order Union Gas, as Mr. Brown suggests, to bring forward evidence on the issue, but maybe if it is included on the Issues List Union will see fit to bring evidence as opposed to being left in the unenviable position of having just the evidence of the Intervenors on the record. But certainly we support it. With respect to the argument that there is another process under way that should somehow supplant the rights or the opportunity to have this issue heard fully in this public forum, I would suggest, Mr. Chairman, that certainly from the public interest Intervenor's point of view, that we are absolutely at the max with respect to resources of having people on these task force consultative groups, also with the ability to be in these hearings and, in my client's point of view, we also have representatives on the IMO 47 and working on electricity issue. We can't be at all the consultative processes. We just don't have the people or the resources or the experience to be there, and when it comes down to simply issues of licensing, certainly the vested interest in those who are seeking licenses have the ability to have experts, experienced people at those meetings, whereas public interest groups really have to try to prioritize and they can only have people at certain proceedings and it is very difficult to have expert and experienced people at licensing processes, even though we wish we could and we wish we had that ability. So we are here at this hearing. We think this is a very important issue. It certainly reflects on public interest issues. The unbundling of the billing services has been a long time -- an issue that has been a long time coming. Union has certainly brought forward their large and broad unbundling proposal and we think it should be dealt with in a comprehensive manner before you and if the parties wish to bring evidence and argue the issue in this rate case we certainly support that right and, therefore, we are in support of CEED's position here today. Thank you. THE PRESIDING MEMBER: Thank you, Mr. Mattson. Anyone else in support of adding? No? Then we will have your submission, please, 48 Mr. Penny, on behalf of the Applicant. MR. PENNY: Yes, thank you, Mr. Chairman. Union's application is very clear. It seeks an order approving the unbundling of upstream transportation and storage. It does not seek an order at the present time approving unbundling of billing or other customer care functions. That has been explicit since the time the application was filed, I believe in March, and it has been explicit throughout the detailed and lengthy consultation process that was engaged in over the course of the past year. Union is working on the subject of billing unbundling. The evidence makes it clear that it is Union's intention to do that and to move forward with that. But there is only so much that you can do at once and so the process which was adopted and which is currently being pursued, as the evidence makes clear and which has been clear to everyone from the outset, including Mr. Vegh's clients, was to proceed with upstream transportation and storage first with a view to proceeding with unbundling of billing as the next step in a separate application. With respect to Mr. Vegh, it is not up to the Intervenors, or for the Board, for that matter, to tell any Applicant what it should be applying for. That is up to the Applicant. In this case the Applicant is Union and it has 49 applied for an order approving the unbundling of upstream transportation and storage. The consultation process for this application began over a year ago. The application was filed last March. Detailed proposals have been circulated and discussed with parties for at least six months. Union's evidence is based solely on the unbundling of transportation and storage. If Mr. Vegh's client wants to unbundle Union's billing function on a different timetable, again their remedy is not to add something to the issues list that is not the subject of an application before the Board currently but, as any party may do, including the Board, bring its own application on its own motion. The issue, therefore, of unbundling, in my submission, should not go on the Issues List because it is not the subject of any application before the Board. Now, the parties have the right, because it is in the evidence and it is subject to -- it would fall under the category of the rationale for the proposal to investigate and ask questions about Union's decision not to do this at the present time and its underlying intention to do it as the next step. But, with great respect, the action requiring Union to put unbundling of billing on the issues list isn't before you by virtue of the application. As the evidence makes clear, Union will get to that as the next step, but it has its hands full with the current agenda. 50 The point of the evidence at pages 85 to 86 that Mr. Vegh referred to is not that we are not -- that Union isn't going to move forward with unbundling of billing, but that this work that is referred to that Mr. Vegh read to you has to be done before that application can be made. This is a complex issue with many, many consequences which have to be worked out. The issues that are subject, for example, to the direct access code, while they would not be, as Mr. Vegh fairly says, would not be a complete answer because there will obviously be utility-specific applications, but the principles and policy issues, in my submission, are a necessary first step, in any event, to the -- given that process is now under way, to the utility-specific issues. We have to know, for example, what the rules are going to be for customer mobility before we can design an unbundled billing system. So it's true that there are utility-specific issues, Mr. Vegh and Mr. Brown, in my submission, put the cart before the horse. The issues of principle and policy should be dealt with first. Now, Mr. Brown says perhaps Union should put forward evidence. Well, there is no question that in order for the Board to deal with this issue there would have to be a great deal of evidence. Again, the point of the evidence, at pages 85 and 86, is that this work is being done but that it 51 isn't finished. So, for those two reasons, in my submission, this is not an appropriate issue to be added to the list. It's not in the application before you. And Union has committed, publicly, in its evidence, to the process which it intends to follow -- which has been available and known to Mr. Vegh and his clients for over a year. THE PRESIDING MEMBER: Thank you, Mr. Penny. Could you just address -- if you turn up the table of contents for the proposed draft gas utility access rule. Can I understand your position, relative to paragraph 6, settlement and prudential requirements, as to, we will call it, the "cart and horse" issue, with respect to how does Union see what you just said, in terms of your plan, and how do they fit or not fit with 6, which is settlement and prudential requirements for the gas access rules? MR. PENNY: If I can have your indulgence, for a moment. --- Pause MR. PENNY: Mr. Chairman, when I raised that issue, I was principally thinking of Parts 3 and 7 of that list -- and I will come to 6, in a moment. But it's Union's position that now this process is under way, we need to have the issue of the standard service offer, the mobility of customers transferring, et cetera, transfers between retailers, and such things -- 52 it makes the most sense to have those issues settled. Similarly, with respect to issues relating to customer access to information and, more importantly, the use of customer data, and so on, that those issues should be resolved prior to the unbundling of billing. With respect to 6, we take the same position; that is, that the issues that have now been put in issue under the direct access code that deal with settlement, billing options, billing requirements, prudential requirements, the metering data, are more appropriately resolved and to come to a landing on, in a generic sense, before a specific application to Union is done. THE PRESIDING MEMBER: Thank you, Mr. Penny. Mr. Dominy just has a question. MEMBER DOMINY: Mr. Penny, I was reading page 87 of your evidence; and it says: "However, the ability to implement and operationalize these new unbundled services is dependent on the systems and process design work related to unbundling the billing function." I wondered what the time lines you are anticipating are. --- Pause MR. PENNY: I'm advised, Mr. Dominy, that there is no specific time line, currently; that Union is working on these issues simultaneously with -- in a parallel process. It's anticipating issues that will be 53 raised through the direct access code consultations and that that work is ongoing now, and has been. The time line, I'm advised, of the direct access code is to have that process done by around June. MEMBER DOMINY: And the time line, in your application, is to have these processes in place by September 1. I think that's what it says here. "Union is currently projecting to have these systems and processes in place and operational by September 1, 2000." (As read) MR. PENNY: Yes. THE PRESIDING MEMBER: Thank you. That's it, Mr. Penny? I'm just giving you a chance in case you had anything to add. No? MR. PENNY: No. Thank you, Mr. Chairman. THE PRESIDING MEMBER: Thank you. Mr. Vegh, would you like to reply, please? MR. VEGH: Thank you. Perhaps just picking up on Mr. Dominy's last observation of September 1 now being the date. If we are looking at September 1, then I don't know when they are going to have a hearing, if it's not going to be a hearing as part of this process. That date -- and if you look at an earlier version of this, that date, one said April 1, 2000. And maybe just to respond to a few points that Mr. Penny said. 54 First, he emphasizes that this is an application relating to upstream transportation and storage. This is an application for just and reasonable rates, and the parties are not limited to rate proposals that are put forward by the applicant. Questions of cost allocation and rate design and what are the costs that go into a reasonable rate and what is rate structure is a proper issue in any rates application. Second, Mr. Penny emphasized the fact that this process was well known to everyone. This process was meant to result in a proposal from Union, not unbundling of billing, by October and, as I have said, implementation by April. So, to the extent that the evidence referred to an agreement or to an existing process, that was a context in which this agreement and process were always understood, and that April date has now moved to September -- but, again, without any assurances on the process. In terms of the overlap between the distribution system access code, Mr. Penny referred, specifically, to customer mobility. Well, there are customer mobility overlap issues with this proposal, as well. You will see that this proposal contains recommendations on settlement of ABC contracts, when a customer leaves; there's return to system policies. There's a lot of overlap between ###Next: 1 ###] <<<>>> ###CaseId: RP-1999-0017 ###Title: OEB Transcript of RP-1999-0017; Vol. H1:01 ###Section: Preliminary Activities ###Author: Higgin, Dominy (OEB) ###PubDate: 01/18/00 ###LFileId: VOLH101 ###[ ###Prev: 1 [ Page: 55] 55 what's being proposed in this application and what's being addressed in the distribution utility access rule. That overlap -- I don't want to repeat what I have said, but that overlap shouldn't be relied on as a bottleneck to deal with this one particular issue. Finally, in terms of the questions you were asking with respect to the process and the timing and, frankly, the lack of satisfactory answers, unless this is on the issues list, we are not going to able to get evidence on that. So I don't want that to be taken that I would be satisfied with being able to ask some interrogatories on timing to have this on the issues list. I don't have any more specific reply, unless there are some questions from the Panel. --- Pause THE PRESIDING MEMBER: We are okay with that. Thank you, Mr. Vegh. We will reserve on that one. Looking at the time, we should take a 15-minute break and come back at quarter to 11, if that is adequate, and then we will move on, then, to the PBR portion of the application and CAC, starting with Issue 4 on the one-time adjustment. So we will resume at quarter to 11. Thank you. --- Upon recessing at 1026 --- Upon resuming at 1048 THE PRESIDING MEMBER: Thank you. Please be [ Page: 56] 56 seated. Before we carry on with the contested issues, I don't know whether you have had a chance to consult with your client, Mr. Penny, and have you any clarification of your proposal for the 1999 financial information? MR. PENNY: Yes, Mr. Chairman, we did consult about that. At this stage what's foreseen is the five traditional regulatory schedules that would accompany the final rate order, together with schedules showing actuals versus Board approved for O&M variance comparable to what has been filed in the past, a schedule explaining rate base variance and schedules explaining revenue variances and margin variances. THE PRESIDING MEMBER: So these would be variance reports, if you like, schedules. Now, the timing, just in terms of -- you have seen the proposed schedule for the filing of evidence, interrogatories and so on. Can you give us a better feel for when -- you know, my concern would be to have to go around a second round of interrogatories after you file that you material. You mentioned the end of February or early March. Have you any views on that? MR. PENNY: As I explained to you this morning, Mr. Chairman, to release that information is in part dependent on important internal corporate controls and that Board meeting, as I understand it, is not taking place until mid-February. So we foresee the [ Page: 57] 57 availability of this package in the mid to latter part of February. We would contemplate a supplementary interrogatory process dealing with that information, which we can handle in the course of -- I think that's the same period of time during which we would be looking at intervenor evidence, but we can handle both. THE PRESIDING MEMBER: I will just ask the Board staff to review the schedule and make sure that we can accommodate that and also there might be some concern if the intervenors want to see some of that before they file evidence. That's the other issue. So we will have to address that as part of the schedule and so on. I will leave that. Can we move on then, back to the list and now to the performance based regulation, the proposal part of the application and Issue No. 4 and I understand, Mr. Warren, you are the proponent on this. MR. WARREN: I am one of them, Mr. Chairman. I just happen to be the one pushed up over the top of the trench first. THE PRESIDING MEMBER: All right. MR. PENNY: And I should say and have said, Mr. Chairman, that on a show of hands yesterday I think everyone supports Mr. Warren on this one. So I hope we don't have to hear the same thing over again times the number of intervenors. MR. WARREN: Mr. Chairman, the issue which is [ Page: 58] 58 defined as set out in the contested issues list is the addition to the one time adjustments category, that is to issue 2.2.1 of another category which is "Other Adjustments". But really the issue is a broader one than that and the issue, in my submission, is what is the rate base? What is the base going into a five year PBR regime? There has been no determination in any proceeding, in our respectful submission, of what that rate base is. You will recall, Mr. Chairman, that with respect to Enbridge Consumers Gas that before their PBR regime was considered by the Board there was a separate proceeding which considered in part what the rate base ought to be. There are a number of alternatives to what the rate base may be. The one that is proposed by the Applicant is the 1999 OEB approved rate base. The issue though, in our respectful submission, is that the intervenors and indeed the Board should be able to decide in this case what the rate base ought to be and the way the issue has been framed is in the issue of their adjustments. You will recall, Mr. Chairman, that in the last case, the last of the 499 cases or the E.B.R.O. cases, 499, that was substantially, if not entirely, resolved by an ADR agreement. I think it instructive, Mr. Chairman, to review briefly that ADR agreement which [ Page: 59] 59 appears as Appendix B to the Board's decision. On page 33 of the appendix in the discussion of the O&M portion of the ADR settlement, the following observation appears: "The parties also wish to record their position that this O&M settlement for 1999 rates is without prejudice to...." and then it lists three items. The first of those items says: "Any position parties may wish to take on the establishment of the bench mark O&M, including the appropriate productivity factor in relation to possible introduction of performance based rates." So, in my respectful submission, that reflects a common understanding that there would going into a PBR regime be a fresh look at what the base ought to be for that PBR regime. Now, what is being proposed in this case by the Applicant is re five categories of adjustment. I accept from that the 1999 financial information category, which is really not a category of adjustment, but it is a source of information which might lead to further adjustments. So the Applicant is proposing that there be five categories of adjustment. So we are then in the position, and when I say "we" I include the Board, of being limited in our consideration to adjustments which the Applicant feels [ Page: 60] 60 are appropriate. We do not know whether there might be other adjustments that might be appropriate and there is no way we could know that. One of the concerns in establishing any PBR regime is what Dr. Johannes Bauer refers to as the problem of information asymmetry, which reduced to its crude essence is they have the information, we don't. And that's reflected in a suggestion that there be only a limited list of categories of adjustments, all of which have been proposed by the Applicant. In order for there to be confidence in the Board in all stakeholders, that the PBR base going in for this five-year period is based on the most recent financial information and has a fair distribution of savings. There has to be an examination of, an open-ended examination, in my respectful submission, of what the rate base is and what the appropriate adjustments are. Now, the irony, I suppose, of agreeing to add the 1999 financial information to the list, but saying you can only consider five categories is that they are contradictions because arising from that 1999 factual information there may be additional categories of adjustment which should be considered. In my respectful submission, in order to allow a fair consideration for all parties of what the base for PBR ought to be, there should be a category of other adjustments which would allow, among other things, the [ Page: 61] 61 necessary submissions to arise out of whatever that 1999 financial information provides us with. Those are my submissions, sir. THE PRESIDING MEMBER: Thank you, Mr. Warren. Would anyone else like to speak briefly in support of Mr. Warren's position? MR. PETERSON: Certainly, Mr. Chair, there was a show of hands yesterday and I think there is overwhelming support for the proposal put forward by Mr. Warren. The Board is looking at the end of the day at its fundamental jurisdiction in section 36(2). It is looking at fixing just and reasonable rates. What Union is proposing is to in effect set an arbitrary starting point for a five year PBR and I think the thrust of Mr. Warren's position, and I take it that when he is talking about rate base what he is talking about is the basic rate, the starting rate for the five year PBR and his position is supported by our client, which is that there should be the widest possible examination of that base. It should not be restricted to the E.B.R.O. 499 and only a certain number of adjustments. The number of adjustments should be in effect whatever parties think is relevant and want to bring before the Board. The Board should have a complete examination of all adjustments to E.B.R.O. 499. The information that the Board itself has canvassed from Union speaks exactly to that point, what are the 1999 actuals, what are the appropriate [ Page: 62] 62 adjustments to E.B.R.O. 499. I think it's implicit in both Mr. Warren's submission and the Board's own questions that any of those items where there are adjustments to E.B.R.O. 499 should be canvassed and should be addressed by the Board in setting what the base for the five year PBR is. I don't know whether other parties have mentioned this, but there, as I understand it, have been some significant changes in Union's staffing levels. The impact on O&M expenses should clearly be something that the Board should look at before they set a base for the five year PBR. That's just one example. I suggest that the full range of items that would normally go into a determination of rates should be considered by the Board. Therefore, the change that Mr. Warren was suggesting to the issues list is strongly supported by our client. THE PRESIDING MEMBER: Anyone else? MR. RYDER: Mr. Chair, if I may. We support the position of Mr. Warren and Mr. Peterson. We would note that from the deliberations in the conference yesterday we understand that it's permissible for us to address the changes which we say should apply to the base 1999 T3U9 rates and it would seem only logical that that should be applicable to any other costs that should affect the base position going into PBR. THE PRESIDING MEMBER: Thank you, Mr. Ryder. MR. MATTSON: Mr. Chairman, just to buttress [ Page: 63] 63 one point my friend, Mr. Warren, made about the O&M settlement wording that came out of the ADR agreement last year. You should also note, Mr. Chairman, that last year at issues day, page 45, the Board specifically asked the parties that, in light of the Board's tight schedule as a result of the new Energy Act coming forward and the electricity issues before the Board, that the ADR was a key to reducing issues. The Board on the record asked the parties to prioritize the issues for this year versus next year's rate hearing. I think it's clear from the wording in the ADR settlement that certainly in respect of the O&M settlement that the parties wanted to ensure that those O&M numbers were not used as a bench mark for the PBR process if there was to be one. I just thought it was worth noting. THE PRESIDING MEMBER: Thank you, Mr. Mattson. Mr. Penny, would you like to be opposed? MR. PENNY: Thank you, Mr. Chairman. MR. WARREN: Don't feel you have to. MR. PENNY: Seeing as I have just been given the chance, I will take it. Mr. Chairman, the issue for Union in regard to the parties' desire to add a catch-all to this issue is one, in my submission, of fundamental fairness and clarity. It's well known, and the application contemplates, that Union's proposal was to use 1999 as [ Page: 64] 64 the starting point for base rates at the outset of PBR. The 1999 application alluded to that and the process of consultation which has been going on now for over a year was also clear in that respect. Mr. Warren is absolutely right to say that the parties reserve their rights with respect to O&M. We are not taking any different position at all. Indeed, the reason that 1999 financial information was on the list is because we accepted the parties' reserve to their rights in that regard. Of course, as Mr. Warren himself has said, Union is itself proposing what it regards as necessary adjustments to the 1999 rates. However, Union has identified the adjustments that it proposes to those base rates and has dealt with them in its evidence. This hearing, Mr. Chairman, is unlike most in that it has been preceded by a very expensive and indeed unprecedented consultation process which commenced in October of last year --sorry, the year before, 1998. Very detailed proposals outlining the form and structure of Union's PBR proposals, which are fully reflected in the evidence --in other words, they are not different. The evidence before you today in this application is not in substance different from the proposals that were made and made available to parties more than six months ago. Those were circulated. They were discussed with parties for an extensive period of time. [ Page: 65] 65 Various parties, including the Consumers Association, have retained and had the benefit of the advice of their own experts in that process, some of whom were in attendance at the stakeholder consultations. For example, Dr. Bauer has participated in those discussions, was fully aware of Union's proposal and, indeed, attended at meetings with Mr. Birmingham and Mr. Warren and Ms Garvin to discuss those. There had even been in that process an informal interrogatory process where Union in writing answered a variety of informational questions the parties had about the proposal. In addition, the parties have now had the detailed evidence which is, as I have said, the same as the proposal in substance that was made during the consultation process now for over a month. In my submission, in that context it is not reasonable, and indeed fairness requires in my submission, the expectation that parties should be able to identify by this point what "other adjustments" they think are potentially on the table. If this, in my submission, is not a fishing expedition given the history of this matter and the time parties have had to consider and analyze it, they should say what it is they want to add for consideration. If it is a fishing expedition, then it ought not to be allowed for it would then unreasonably expand the potential scope of the hearing and impose unfairness on [ Page: 66] 66 the applicant. In my submission, it's a fundamental matter of fairness because the applicant is entitled to know at this stage in a process that has now gone on for well over a year to know what other adjustments are contemplated and not have to guess during the evidentiary portion of the hearing or find out what parties' positions on this are for the first time in intervenor argument. Given the length of time the parties have had to study this and think about it, it's just not credible, in my submission, for them to argue that they don't know what other adjustments, if any, they might want to propose in this hearing. Mr. Warren's submission to you was that the parties don't know whether there are other adjustments which could be approved, nor could we he says. Well, I take issue with that statement in the context of this particular proceeding and the process that has taken place. There has been ample disclosure over a lengthy period of time for parties to identify what it is they think that they ought --what else it is they think that ought to be dealt with. Mr. Warren in addition referred to an irony to that list of issues and indicated that they are contradictory. I, with respect, disagree with Mr. Warren on that. They are not contradictory at all. [ Page: 67] 67 What the inclusion of the 1999 financial information means is that anything that a party wishes to propose as an adjustment to the Board approved 1999 rates that flows from 1999 actuals is now an issue, so they are entitled to do that. That's the purpose for the inclusion of that proviso on the issues list. There is nothing contradictory about that, with great respect. There is, however, a reason why the scope of what other issues, or other adjustments I should say, should be constrained. That is this fairness issue that I have indicated to you. At this stage in this process to just have other issues with no further definition on what they may be, in my submission, is not appropriate and it's not fair for the applicant. Mr. Peterson referred to an arbitrary starting point for PBR. Again with great respect, Union does not regard rates which have been approved as just and reasonable as arbitrary. This is not an arbitrary starting point. It is Board approved rates that are the starting point. Then we are proposing an issues list which says, and identifies for the benefit of everyone, the Board, the applicant and the intervenors, what other issues need to be dealt with in that context. In my submission, to create a category of other adjustments is to add a vague catch-all which will just foster a fishing expedition. The Intervenors have the wit and wherewithal to identify those issues now and to propose them in a concrete form so that we know what [ Page: 68] 68 we are dealing with. So it's for that reason, in my submission, that Union opposes the addition of an "Other Adjustments" category and requests that if there are other issues that they be identified. THE PRESIDING MEMBER: Thank you, Mr. Penny. Mr. Warren. MR. WARREN: Mr. Chairman, with great respect, Mr. Penny and I do not have the same understanding at all of the discussions that took place over the last year and-a-half. I say, with respect, that there was absolutely no disclosure of financial information and that it was asked for in informal discussions and we were told, no, we will not give you -- we will not answer interrogatories on financial issues, that those issues were reserved for this hearing. So to say that there has been ample opportunity to identify the issues, that would be categories of adjustment, is, I say with the greatest of respect, simply not true. I do not believe that the CAC is the only party that experiences some frustration in that process when asking for categories of information and the CAC, I would suspect, is not the only party that reserved its right to take issue with the adjustments when there was financial information disclosed. So I say to with respect to Mr. Penny that if [ Page: 69] 69 that is the fundamental proposition of his argument, which I take it to be, it is ill-founded. The second point, Mr. Chairman, is with respect to the issue of -- is with respect to the issue of fairness, which I simply don't understand. Fairness, crudely defined, is: Do I know the case I have to meet and do I have an opportunity to meet it? Now, once the interrogatory process is completed, once the information is out there, once the cross-examination is completed, then I am obligated -- I take it my obligation as counsel is, I cannot raise in argument issues of adjustment that I haven't put to Mr. Penny's witnesses in cross-examination. So Mr. Penny will know long before he gets to argument the adjustments which I will be taking the position -- I and other counsel will be taking the position -- could be made. So he has an opportunity to respond. He has an opportunity to lead what evidence he wants, even if it is supplementary evidence, on these adjustments. So he is not denied any right to respond to these. The real issue of fairness, in my respectful submission, which my friend ignores in his argument is: What is fair to all of the stakeholders going into a five-year PBR? You can't start with a list of information which is circumscribed by the Applicant himself saying: [ Page: 70] 70 You can only consider this and no more and we have all of the information and we won't give it to you. That is the fairness issue. I say finally, Mr. Chairman, that whatever result you make -- and I say the appropriate result is to add the "Other Adjustments" category -- whatever adjustment you make, even if you dismiss my arguments and those of my friends on this issue, you should amend the Agreed Upon Issues List to make it clear that Issue 2.2.1.6, 1999 financial information, includes -- and I submit that you should add this to the wording -- "and adjustments that may arise from that 1999 financial information". That, I take it, is as far as Mr. Penny is prepared to go and that should be explicit. But it should be broader than that, Mr. Chairman. Those are my submissions in response. THE PRESIDING MEMBER: Thank you, Mr. Warren. MR. PENNY: Mr. Chairman, may I be permitted, if you will, a surreply on just one narrow new issue that Mr. Warren raised in his -- THE PRESIDING MEMBER: Okay. Then Mr. Warren can respond. MR. PENNY: -- and Mr. Warren can respond. That has to do with Mr. Warren's proposition that if you were to add this -- this would be an alternative submission, that if you were to add this that we would know long before argument what those other [ Page: 71] 71 adjustments would be. If that were the inclination of the Board, it would be my submission that the issue of other adjustments should, at the very latest, be raised at the time that Intervenors file argument. In other words, before there is any cross-examination of Union witnesses. File evidence. I'm sorry if I misspoke myself, I meant file evidence. THE PRESIDING MEMBER: Mr. Warren? MR. WARREN: I don't have any difficulty with process requirements that require Intervenors to identify, as soon as they reasonably can be expected to, what other adjustments so that my friend has an opportunity to respond to them. I don't have any difficulty with the Board insisting on that. That is basic procedural fairness. But we can't even engage in that process unless it is open to us to propose other adjustments based on the evidence. That is all we are asking for, Mr. Chairman. THE PRESIDING MEMBER: Thank you very much. --- Pause THE PRESIDING MEMBER: Okay, thank you. We will move on, then, to the next issue, which is the system expansion in the context of PBR. The identified lead-off on this would be Pollution Probe, Mr. Klippenstein. [ Page: 72] 72 Thank you. MR. KLIPPENSTEIN: Thank you, Mr. Chairman. This issue actually requires a typographical correction, I believe, in 5(ii) where it states "parameters of input values for NPV". It should, I believe, state "parameters and input values for NPV", which I believe is not a controversial change. The question of system expansion is quite different in Pollution Probe's submission when viewed in a context of PBR as compared to the status quo regulatory system now. Over the years, in the past in many hearings, Pollution Probe has put argument forward on the issue of system expansion, partly to favour system expansion on environmental grounds because a switch from oil and electricity to natural gas can have very substantial pollution benefits, but also Pollution Probe has sometimes argued caution with respect to system expansion because Pollution Probe has argued that it should only be cost effective system expansion from the point of view of protection of customers and ratepayers. Under the status quo regulatory regime, Union and other gas companies had a built-in incentive to expand the system because it led to increased rate base which provided the companies an opportunity to increase earnings. Furthermore, there was no particular incentive to overcharge for expansion because such increased [ Page: 73] 73 profits would simply be used to subsidize others in the system. So these were some of the characteristics which we have faced now. Things are very, very different under PBR, in my respectful submission. Union will no longer have the same incentive to increase rate base and this, in my submission, dramatically affects the dynamics of potential system expansion. In addition, Union may now have -- and Union will now have an incentive to charge a very substantial hook-up fee in some form or another and thereby earn excess profits and those excess profits would now accrue to Union's shareholders rather than flowing to the benefit of other ratepayers in the past. These are quite significant factors because natural gas remains very price competitive in comparison to electricity and oil and therefore the possibility for price gouging is very substantial. When I talk about price gouging and excess profits -- I hope Mr. Penny doesn't take this personally, I'm just saying what I think is absolutely uncontroversial in the context of a monopoly position -- in order to deal with these potential issues, in my submission, a rule must be established which sets boundaries such as a profitability index or PI of 1. In addition, those PI boundaries must be specified -- and this refers to the parameters and input values -- they must be specified with some degree of [ Page: 74] 74 exactitude because, otherwise, it will be very easy to do an end run around PIs simply by changing the time horizon from 15 or 20 years to three or five and this would dramatically change the earning value for Union. So, those, in my submission, are important issues, both from an environmental point of view and from a ratepayer price protection point of view, and it all occurs because the price cap, under Union's proposal, doesn't apply to new hook-ups, or system expansion, and so, whether it's a small hook-up or a very large number of new customers, they won't be protected by the price cap. The issue, in fact, arises from Union's evidence itself. There is a heading called "Distribution System Expansion" and, at Exhibit B, Tab 2, page 71, Union's evidence refers to the price cap and then says; quote: "This could mean that Union will not invest capital in the future in the same fashion as it has in the past if such investment would cause significant near-term cost increases or is not economic on a standalone basis." (As read) End quote. So, that's the question of the incentive for investment which I alluded to. The evidence then continues; quote: ###Next: 2 ###] ###Pages: 55-75 <<<>>> ###CaseId: RP-1999-0017 ###Title: OEB Transcript of RP-1999-0017; Vol. H1:01A ###Section: ###Author: Higgin, Dominy (OEB) ###PubDate: 01/18/00 ###LFileId: VOLH101A ###[ ###Prev: 2 [ Page: 75] 75 "Other tools, such as customer contributions and negotiated rates and other charges, will be used to improve the economics of such projects." (As read) End quote. So, this is a reference to the concern about increased charges to new hook-ups, whether it's through customer contributions or negotiated rates or other charges, which will, Pollution Probe fears, either result in excess profits or result in price -- high prices, preventing environmentally beneficial expansions. So, for those reasons, Pollution Probe requests that the issue be added to the issues list. THE PRESIDING MEMBER: Thank you, Mr. Klippenstein. Would someone else like to speak in support? Mr. Mattson? MR. MATTSON: Yes, Dr. Higgin. I must recognize -- I would like to recognize before the Board the diligent and good work of Pollution Probe and Mr. Gibbons in raising this issue because I think, from the submissions from my friend Mr. Klippenstein, you can see the importance of this issue. We were all involved deeply and a lot of time and resources were put into the EBO 188 procedures that, I think, took, in total, over a year -- I think we had [ Page: 76] 76 two different stages. Prior to that, there was a lot of discussions at the Board, with respect to setting a PI Index of one. And I know my friends at Pollution Probe and my client Energy Probe are on different -- had different positions at EBO 188, but certainly in light of the changes with respect to this comprehensive PBR plan, those positions, again, are now aligned. The issue did not arise in the Enbridge Consumers Gas hearing, as that was not a comprehensive PBR and, therefore, these issues, as they related to capital, were not affected. However, in light of the comprehensive PBR plan, there are certainly different incentives at play and this issue should be revisited in the context of this case. It's for those reasons that we support the inclusion of this issue on the issues list. Thank you. THE PRESIDING MEMBER: Thank you, Mr. Mattson. Anyone else in support? No. Okay. Mr. Penny, would you like to reply? MR. PENNY: Yes, Mr. Chairman. Thank you. Just one or two points, very briefly. Fundamentally, in Union's submission, it is neither necessary nor appropriate to add this as an issue, at this time. I have basically three points here. Mr. Mattson just alluded to EBO 188. The subject of system expansion was fully canvassed in that [ Page: 77] 77 process and those constraints continue to apply. So, while there may, indeed, be some underlying change in economic incentive, irrespective of the incentives that may change, the constraints that are established under EBO 188 continue to apply and so, when Mr. Klippenstein raises the dark monster of price gouging and large hook-up fees and so on, in my submission, the rules which govern these activities have been established and will continue. The Board's initiative to develop a gas utility access code is under way, as we have heard earlier, and the consultation process in that proceeding is about to begin. The draft table of contents for the access code explicitly deals with these issues of system expansion, under the heading "Distribution Connection", which contains the following subheadings: System planning information; system load profile and demand; facilities planning process; system design standards; economic feasibility criteria; cost recovery; and customer contribution principles. In my submission, the issue that Pollution Probe has raised is not unique to Union Gas but is relevant to all utilities and there is in place a process to deal with system expansion in the new regulatory environment that will address the matter on an industry-wide basis. Finally, the PBR proposal, if approved, does not, as the implication seems to be, close the door on [ Page: 78] 78 any Board review of system extension practices. The evidence is clear, the issues list is clear, that there are extensive monitoring and evaluation processes in place and that there are extensive customer consultation processes in place, and one thing is clear from past history and that is that if customers are unhappy with the treatment that they feel they are receiving with respect to expansion projects and charges for expansion projects, those are made plain in the issues raised with both the utility and with the Board and if, therefore, customers under the PBR system, rather than there being a closed door, indeed, there is a more open door because if customers are unhappy with Union's approach to system expansion, they have the customer review process and, ultimately, recourse to the Board in order to deal with. So, in my submission, it is neither necessary, in the context of the application, nor appropriate, by virtue of the customer -- of the access code proceedings for system expansion to be dealt with now, as a free-standing issue under Union's application. Thank you. THE PRESIDING MEMBER: Thank you, Mr. Penny. --- Pause THE PRESIDING MEMBER: Thank you. Sorry for that. Would you reply, please, Mr. Klippenstein? MR. KLIPPENSTEIN: Yes. Thank you, Mr. Chairman. [ Page: 79] 79 With respect to my friend's three points, first, with respect to EBO 188, in my submission, it's very significant that 188 specifically did not set a maximum PI -- which is, in a sense, the issue we now face -- and it didn't do so because any additional revenue would accrue to the benefit of the ratepayers. So, in my submission, Mr. Penny's first point may miss the mark. Secondly, with respect to the utility access code process, Pollution Probe would have two concerns; one being that the process is not necessarily fully open because it doesn't include any interrogatory process, as I understand it. But, secondly, and more fundamentally is a timing issue. We don't know when the utility access code will be available or finalized and some of the scheduling problems with these parallel procedures have been alluded to before. If it was available by the time of the ADR in this process I think the issue might resolve itself, but if it isn't, and we can't assume that it would be, if it isn't the issue looms very large because some of the fundamental factors would not have been set. So that's a very real problem in that case with a five-year horizon. Thirdly, with respect to existing monitoring mechanisms in the PBR proposal and process, I think it is fair to say those tend to deal with specifics rather [ Page: 80] 80 than with the ground rules and what we are setting now is the ground rules and that's exactly where the problem lies. So those would be my submissions. Thank you for your attention. THE PRESIDING MEMBER: Thank you. We will now move on to the issues which relate to Rate 100 Redesign. I think Mr. Budd you are the lead proponent on this. Would you like to start, please. MR. BUDD: Yes. Thank you, Dr. Higgin. First, I would like to begin by suggesting that the heading Rate 100 Redesign really would reflect to you a redebate of Rate 100 and that's not what is being proposed. The Board has dealt with an examination of Rate 100 in the past. What we are talking about is a new high volume, high load factor rate and so the proposal would be to change that heading to a high volume, high load factor rate. I would like to touch briefly on six areas. First, customer support for this. Secondly, process that is under way. Thirdly, the precedent for such a high volume, high load factor rate. Fourthly, the market circumstances which would give rise to the appropriateness of that. Fifthly, the political or legislative underpinnings which the Board is aware of and, finally, then timing. I shall be brief, ever cognizant of your need to move this along today. Ultimately, introducing the topic at this time [ Page: 81] 81 is relevant and MECAP's submission on topic and not new to Union or the historic company Centra on which the issue is most relevant. Let me begin with the fact that this is a matter which is customer driven and, indeed, we recognize the utility itself is not initiating this. We query why the utility is not in fact interested in this and not willing to discuss this, when there is clearly some form of market demand there which is asking for it to be put on the list of issues for the hearing. We would have expected that with customers requiring this at least it would form a discussion point. Secondly, there is a process that is already under way in respect of this. As Mr. Penny has alluded to on numerous occasions this morning, this application has been going on for some time and the customers have been talking amongst themselves for some time about the opportunity to bring this forward. There have been numerous telephone conversations. There is even currently I understand a meeting scheduled with Union about it. I am advised that Union in fact had undertaken some form of study to deal with this which is on a shelf somewhere and we have asked Union to dust that off and help us with that. Ultimately, we expect that including this issue on the list will assist us with understanding that study better and hopefully the Board drive toward a new [ Page: 82] 82 rate which should increase utilization of Union's system. Thirdly, and perhaps more importantly, there are some precedents. The Board has already approved such a high volume, high load factor rate in the Consumers Gas case, so this is a matter which is familiar to the Board and to Union and Enbridge Consumers. In fact, I am advised that Enbridge Consumers estimated that the introduction of this kind of high volume, high load factor rate could increase gas usage in their franchise area by up to 25 per cent in five years. In addition to that, my clients tell me that Union's southern zones, this is the traditional Union Gas area, has a combination of rates which apparently satisfy the customer service needs, so it is really more in the north that this is a needed area of exploration and that is why my client is asking for it to be put on the list. On market circumstances, we are advised that there are new and more efficient industrial processes and larger gas powered generation that is coming to Ontario and so a new rate may well be appropriate for those kinds of customers. As the Board is well aware, with its new mandate in electricity the era of energy convergence is clearly here and energy rates surely should be reflecting cost causality from time to time of classes of customers with similar usage characteristics. [ Page: 83] 83 So I would like to emphasize this is not any kind of cover for simply an electricity generation rate. It is a high volume, high load factor rate to which all customers could apply for service. Next is the political and legislative circumstances which we submit also fit a new high volume, high load factor rate. The Board can certainly take administrative notice of movement toward meeting environmental objectives and sending correct signals to customers and developers. Just a couple of examples of that in terms of the electricity sector. Natural gas fired electricity generation, it's common knowledge certainly reduces pollution from some of the current generation the province has. I believe the GEC and others support the MECAP position on this in this hearing. Not only that, but as a policy matter of which the Board is at least aware, new gas generation would help mitigate historic Ontario Hydro market power. It is fairly clear that the government at least wants to encourage new electricity generation and more efficient industrial processes and that's essentially what this rate would serve. And maybe this is more timely and more urgent than otherwise anticipated, to the extent there is a supply/demand issue in Ontario creeping upon us in respect of electricity, the Board will recall the IMO issue in a public appeal last summer to Ontario [ Page: 84] 84 consumers to reduce power consumption. We feel that this issue may well fit in ultimately with the need for a proper gas rate to help get there. Finally, on the issue of timing, MECAP asks itself if this issue were not dealt with in this proceeding when would be the next time that this issue would have another opportunity to be considered by the Board, the market participants and the utility. In our submission, the rates issues in this case clearly lend themselves to hearing this issue. It is not all news to Union. It's at the rate place. It's at the right time. It's fundamental to the Board's jurisdiction and mandate to deal with these issues and it is coming right at the time of unbundling proposals which would seem to make sense. In our submission, to not consider this issue would be to discriminate effectively against one class of customers due to location when that rate is available elsewhere in the province. In summary, Mr. Chairman, Mr. Dominy, MECAP has carefully considered this issue and wants to work constructively with Union and other intervenors and customers to develop this rate. We have a desire to complete the discussions, to ask interrogatories if necessary, submit evidence as well, but hopefully to settle the issue and so we submit that it's worth taking that extra bit of time now to deal with this. It is worth that investment now, rather than waiting five [ Page: 85] 85 years, well after the market has opened and the electricity sector and other northern development initiatives may have proceeded. Thank you. THE PRESIDING MEMBER: Thank you very much. Perhaps you could just clarify for me how you --is this the issue that was added to the list either in the original form or in the new wording that you have proposed as a new high volume load factor rate? How would you be proceeding with this matter in this proceeding? In other words, you are asking Union to file evidence on such a proposal, modification of an unbundled Rate 100, or are you going to lead evidence to set out what you think are the parameters for this rate? How do we proceed? Have you got any thoughts on that? MR. BUDD: Essentially, Mr. Chairman, what we had anticipated even doing prior to today was to have had the meeting and to have worked all of that out in detail, but let me tell you what the expectation is of the meeting which is coming shortly. We have indicated to Union that we would like them to run some numbers of what such a new rate would look like. We would like to propose a series of what the volume would like and what the load factor would look like and for them to come back to us for their northern zone and just tell us how that rate would shape up as well as to their knowledge, because they are the utility there, tell us whether types of specific terms and conditions would apply in the north that may be [ Page: 86] 86 different from their rates and conditions in the south. We have got some ideas. The customers and the members of MECAP would like to sit down with Union and have that discussion. We are anticipating that because Union apparently has undertaken some sort of study, again which we have not seen, that some of that information may be available. To more fully answer your question, we would expect them to be able to submit that as supplementary evidence, assuming we could reach agreement on it. If they were to oppose it, I would expect that you would see MECAP lead evidence on that. THE PRESIDING MEMBER: Thank you very much. Yes, Mr. Poch, are you up next? MR. POCH: Yes, Mr. Chairman. I just wanted to voice support for inclusion of this issue in that it's not a new surprise to Union because these rates exist or comparable rates exist elsewhere. I would anticipate it doesn't present a great evidentiary problem for them to either answer interrogatories or present evidence. GEC supports this for reasons my friend has already listed, but primarily because it would be applicable to cogeneration. It would have salutary effects for the environment and for the electricity market. Thank you, Mr. Chair. THE PRESIDING MEMBER: Thank you. Mr. Waqu‚. [ Page: 87] 87 MR. WAQU: Yes. Thank you, Mr. Chair. Comsatec's concern originally was with the Rate 100 eligibility rule. Therefore, I brought it up yesterday along with Mr. Budd's proposal. I don't know how exactly our issue would fit with a new high volume, high load profile rate issue if that name is changed. I imagine it can in some way go along with it. Our issue with the eligibility rule is we believe it is unfair to a large end user with a load factor slightly below 70 per cent. To give you a brief example, an end user at 69 per cent load factor pays a premium of 65 per cent over that of a customer Rate 100 at 70 per cent load factor. We believe that the Rate 100 currently --its eligibility rule is not just and reasonable. I don't believe that we would need an additional issue. I believe we can still work alongside Mr. Budd and I support his issue. THE PRESIDING MEMBER: Thank you. Right now you are reasoning as a first point that Rate 100 you have concerns about, specifically the eligibility criteria for that as the rate is currently approved and designed. You have articulated that. Indeed, since Rate 100 is an existing rate, then you have I think a perfect right to explore that aspect under the existing structure without having to get into the question of whether or not there needs to be an alternative or new rate developed. I think you have a perfect right to [ Page: 88] 88 inquire into matters related to Rate 100 as it is an established rate. I don't want to say whether or not how you should want to proceed with that. That is certainly on the table. As far as the other issue, that is more likely, as Mr. Budd has characterized it, a new rate proposal which may differ in its fundamentals from Rate 100 whereas you are asking for a particular change to Rate 100 as far as the eligibility. I say the two are separate. Yours is indeed an existing matter as I would see it. MR. WAQU: Thank you, Mr. Chair. If you are willing to accept Comsatec's issue to be put on to the issues list separately, I will agree with that. THE PRESIDING MEMBER: I was going to come to that. The issue is: Is it inclusive or is it something that has to be brought as a separate issue? As you know, last time we went through this with TCP, TransCanada Power, they argued for changes to Rate 100 that were bundled. I don't think the Board was too keen on opening up Rate 100 once again for further consideration. I would say that certainly your issue is something that is part of the existing rate design of 100 and, therefore, we will consider it as being separate to the proposal that Mr. Budd is developing for a new rate which has some fundamental differences. We [ Page: 89] 89 will consider that issue as a separate issue. The fact is that we have got two issues to consider. One is whether there should be a change to Rate 100, which is your issue. Then there is the proposal that Mr. Budd has just made for, we will call it, an alternative or a new rate for the northern service area. We will address it that way. Thank you. Mr. Klippenstein. MR. KLIPPENSTEIN: Yes. Pollution Probe would support Mr. Budd's proposal because it offers the possibility of reducing gas delivery costs for new natural gas fired plants with some public health and environmental benefits and also because it would be more cost based. For those reasons, Pollution Probe would support this issue on the list. THE PRESIDING MEMBER: Thank you. Anyone else? Mr. Penny. MR. PENNY: Thank you, Mr. Chairman. I think you have anticipated the nature of my submissions. Dealing with the Comsatec issue just very briefly right off the bat, in my submission, we have been around the mulberry bush on this before. There's not even an attempt at an argument about the change of circumstances. Every rate has a certain, by definition, arbitrariness to it in the sense of whether the cut-off is at 70 or 65 or 72 per cent. There is no news there. [ Page: 90] 90 In my submission, it does not warrant inclusion on the issues list. With respect to Mr. Budd's submission, the words that come to mind are "a rose by any other name" for this, in my submission, really is the same issue that has surfaced now three times before this Board. It's described as a new rate, but as I will show I hope in a moment, the issue that the Rate 100 members have raised, and indeed Mr. Budd's clients have raised previously, is exactly the issue of wanting, whether you call it a new rate or a subcategory of Rate 100 or some revised Rate 100, it all amounts to the same thing. There are no changed circumstances, in my submission, that warrant a revisitation of this issue. The question really for you is how often can an issue be brought forward in the absence of a change of circumstances, particularly given the size and complexity of this hearing and the Board's regulatory load that it faces at this time. This is especially true, in my submission, having regard to the nature and scope of the issues in this hearing and the additional regulatory load that the Board faces in terms of what it must deal with in terms of the new legislation. Let me briefly outline the history of this issue. Mr. Budd alluded to this briefly, it being an issue near and dear to Centra's heart. In E.B.R.O. 467, I was acting for Centra in the rate hearing. It was [ Page: 91] 91 Centra that made a proposal at the behest of some of its customers. I pause here to note that, of course, what we are dealing with is the northern and eastern area under Union's new rates. At that point Centra proposed a rate which was, in effect, a special cogeneration rate, a rate that would have applied to a small number of entities, and indeed to a number of Mr. Budd's clients. Centra's reasons for bringing that rate forward were essentially the same as the reasons that are being advanced by Mr. Budd. The Board declines to approve a special rate for cogeneration customers on several grounds, but among them was the conclusion that under generally accepted rate-making principles rate classes ought to be established without consideration for the end use for the gas or the specific cost-related needs of the customers and, in a sense, as has been put before you today. But the Board encouraged Centra to explore other alternatives that were not based on specific cost-related needs of customers, which Centra did, and in a subsequent proceeding proposed Rate 100, the one that is applicable to most of Mr. Budd's clients. In E.B.R.O. 493, TransCanada, one of Mr. Budd's clients, came forward again to suggest, as it is doing today, that that rate was not appropriate for these kinds of plans. Evidence was led on that point [ Page: 92] 92 and cross-examination took place. In E.B.R.O. 493/494 the Board said: "The Board finds no new evidence which warrants a reconsideration of the rate design for Rate 100. Accordingly, all large volume high-load factor customers, including power generation stations, will continue to receive service under the current Rate 100 in the test year." (As read) Mr. Budd's clients, then represented by Mr. Vegh, raised it again in the last case, E.B.R.O. 499. The Board indicated to Mr. Vegh at that time, as you have done this morning, sir, that it would permit consideration of Rate 100 in only the limited sense, that is the costs underlying Rate 100 and the generic just and reasonableness of that rate. But again in 499 there was evidence in cross-examination on the issue of Rate 100 and again the Board found that: "There is no change in circumstances and no special circumstances existing that would require the further unbundling of Rate 100. The Board agrees with Union that TCP..." (As read) One of Mr. Budd's clients: "...is seeking either a new service rate for metering and billing only or a [ Page: 93] 93 customer specific rate within Rate 100." (As read) Which is, in sum and substance, what they are seeking this morning. Back to the quote: "Therefore, the Board accepts the current design of Rate 100 as appropriate for the test year." (As read) In my submission, in the absence of some clear change in circumstances of a very material nature, the redesign of Rate 100 or, even if you put it Mr. Budd's way, the creation of a -- the old chestnut of the creation of a new high-volume high-load factor rate simply ought not to be permitted onto the Issues List. You have to admire their persistence, but they have had three kicks at the can. These operations, I point out, are still here in Ontario carrying on business. In my submission, it is wasteful of costly regulatory and hearing time to let this go on for a fourth try. The only changed circumstance that Mr. Budd has really put any substance to, in my submission, is the fact that Consumers or Enbridge has created a high-volume high-load factor rate class. The only point I want to make about that, Mr. Chairman is -- well, two points. First of all, that does not represent a change in circumstances of a material nature of the kind that I [ Page: 94] 94 have described but, more importantly, that rate does not apply to any existing Consumers customer and therefore it does not -- no one is availing themselves of that rate, that is something they are doing for future purposes, and there is, by virtue of that fact, no impact on current Consumers customers and that would not be the case of course in Union's case. Mr. Budd is making this application on behalf of clients who are currently Union Gas customers and the institution of such a rate would have very significant implications for the rates of other customers. So in my submission, Mr. Chairman, this issue has been canvassed in full. It is a rose by any other name. It has been the subject of substantial regulatory consideration in very recent times. There are no changed circumstances and so it is not appropriate to add it to the list at this time. Thank you. THE PRESIDING MEMBER: Thank you, Mr. Penny. MR. PENNY: I'm sorry, Mr. Chairman. There was one additional point that Mr. Byng has just reminded me of and that is the suggestion, again implicit in Mr. Budd's argument, that the door is about to close. The door, I repeat again, is not closing on anyone. We are not going into a five-year black hole here. That is clearly not the intent or purpose of the PBR application. The ability for customers to come forward with ###Next: 3 ###] ###Pages: 75-95 <<<>>> ###CaseId: RP-1999-0017 ###Title: OEB Transcript of RP-1999-0017; Vol. H1:01B ###Section: ###Author: Higgin, Dominy (OEB) ###PubDate: 01/18/00 ###LFileId: VOLH101B ###[ ###Prev: 3 [ Page: 95] 95 changed circumstances remains there at all times. Thank you, sir. THE PRESIDING MEMBER: Thank you. One moment. --- Pause THE PRESIDING MEMBER: Thank you. Mr. Budd, would you like to reply, please? MR. BUDD: Thank you, Mr. Chairman. With respect to Mr. Penny's submissions, there are changed circumstances and this Board -- if any tribunal is aware of this in Canada -- is well aware of the changed circumstances in the energy sector in the province. There is new legislation, there is new thrust toward efficiency, there are new objectives for the first time set forward. We could argue about that for some considerable time. But, most importantly, this Board in regulating this market and this utility monopoly is able to recognize that there are new market circumstances coming and there will be substantial new loads that are forecast to come onto the system. You have seen that evidence inside the Consumers case in that regard, and we expect that there will be as well in this utility's franchise area. So it is not accurate, in our respectful view, to say there are no changed circumstances. In our submission, Mr. Penny has missed the point. This is not the same case every year brought [ Page: 96] 96 forward. This is a recognition -- and I guess I could analogize it to this -- that as airplane manufacturers keep building bigger, more efficient airplanes, runways at airports had to change to accommodate them. New facilities will be coming to the province. Those are changed facilities. There are changed rate circumstances. All MECAP is asking for is the opportunity to explore utilities preparedness for that prior to entering into the five-year PBR. Now, Mr. Penny has mentioned as well that that is not an issue because anybody can bring any application at any time. Well, that is yet to be seen. We have never embarked on that so I am going to suggest to you that may well be a changed era and changed circumstances as well. Mr. Penny indicates that there will be some form of large migration with other customer impacts. We have no evidence of that. A rate similar to Enbridge's approved Rate 125 would be attractive indeed to new customers and it would not necessarily create any kind of large migration from the current Rate 100 customers. So, with respect, we won't know that -- MR. PENNY: With great respect to Mr. Budd, Mr. Chairman, I said nothing about the migration of customers. I was referring to rate impacts and rate impacts only. MR. BUDD: Well, that's what I'm referring to [ Page: 97] 97 so maybe now we are talking the same language. Then finally on that point, since the new rate would be based on the marginal costs of Union, I am advised that no other ratepayers should b affected. So again, we need the opportunity to explore how the rate would be designed and how it would work. We don't have that opportunity to even ask interrogatories and explore the issue if it is banished from the list. Thank you. THE PRESIDING MEMBER: Thank you, Mr. Budd. Anyone else? --- Pause THE PRESIDING MEMBER: So there we are, we are at the end of the Contested List. I note here that there were a couple of things that needed to be addressed, one of which certainly was, Mr. Penny, you said you would address the question of the off ramp or off ramp(s). I have a note to that effect and I think maybe there is something else. MR. PENNY: Thank you for reminding me, Mr. Chairman. THE PRESIDING MEMBER: One minute. Mr. Waqu‚ is behind you. MR. WAQU: I'm sorry. I was wondering if I could have a chance to reply to Mr. Penny. THE PRESIDING MEMBER: I guess because you are only focusing on Rate 100 -- okay? -- in that context, [ Page: 98] 98 then, maybe we will allow that. Thank you. Okay? MR. PENNY: That's fair, Mr. Chairman. MR. WAQU: Thank you. I guess in reply to Mr. Penny, when he expressed that Union had set a bench mark at 70 per cent further eligibility, for Rate 100, it is our submission that there should be a smoother transition for a customer that goes from a Rate 20 to a Rate 100, that a Rate 100 is unfair to a high-volume customer whose daily delivery is over 100 10(3)m(3) per day. That customer -- it is unfair to that customer, to the extent of $122,000 a year. And that customer, we are, assuming is at 69 per cent load factor, 1 per cent lower than the eligibility rule. This is a large customer with, still, a high load factor and there is no -- there is no transitional rate between 20 and 100, for this customer. I guess I'm trying to keep this simple but I'm -- I'm saying that that eligibility rule is unfair to a large group of customers in northern Ontario. Thank you. THE PRESIDING MEMBER: Thank you, Mr. Waqu‚. Mr. Penny, did you want, then, to move on and talk about 2.4, the off-ramps, plural? MR. PENNY: Mr. Chairman, I apologize for that. It slipped my mind. I had said that it was similar to another issue that would come up later, and the only point I wanted to make on that -- this is very brief -- is that [ Page: 99] 99 to the extent that the addition of the bracketed "s", and therefore the pluralization of "off-ramp", opens the door to the proposal of additional -- by intervenors -- of additional categories, that we have a similar concern to that which I expressed concerning the other adjustments issue, which is the process by which Union discovers what those are and has the opportunity to know what those are during the evidentiary portion of the hearing so that they can be addressed. So, that was the only point I wanted to make about that; that we don't want to find out about it in argument. Thank you, sir. THE PRESIDING MEMBER: Thank you. We will consider that point on the other one, as well. Very well. So the Board, especially because of our time constraint, will reserve on the issues left and we will do this by a procedural order as soon as possible -- probably, I hope, no later than the end of this week -- which sets out the approved issues list, and we may have one or two comments or thing, some guidance, in that procedural order, regarding that. So, the other issue that we wanted to check with people today, whether there were, at this point, any issues emerging on this forward schedule and the timing, as it's set out in Procedural Order No. 1, and whether there are, at this point, any issues coming up [ Page: 100] 100 on things that we maybe need to deal with and refer specifically to the dates that are set out in that Procedural Order No. 1 -- of course, the first dates were yesterday and today; and then we move on. The interrogatories are to be filed at Union on or before Monday, January 31st, 2000; and Union will respond the end of February -- I think there's a 29th, it's a leap year this year, so it's the 28th; and then the filing for intervenor evidence as is set out here. As we noted earlier, then, I had a little concern about the timing, with respect to Union's 1999 financial information and how that would be dealt with. Mr. Penny has proposed that a mini interrogatory process will go on and we will have to determine -- based on when he has more information about the timing -- as to when that will be and when it will fit in with the rest of the schedule. So that's just an outline. Does anybody have any initial concerns that can be dealt with now? Or are we going to carry on as per the schedule? No. Very good. So, we will remind everybody, then, that that is the schedule, and we ask that you adhere to it. And we will have another procedural order with the issues list no later than the end of this week; hopefully, if we can do it on Thursday, that will be our target. Since there are no other matters, we will now [ Page: 101] 101 adjourn this portion of the hearing and we will get back together whenever and when we set the date for the hearing proper. Thank you very much. --- Whereupon the hearing adjourned at 1206 [ Page: 102] 102 INDEX OF PROCEEDING PAGE Upon commencing at 0900 3 Upon recessing at 1026 55 Upon resuming at 1048 55 Adjourned at 1206 101 [ Page: 103] 103 ~ EXHIBITS NO. DESCRIPTION PAGE 1 Draft Issues List 11 2 Letter to Market Design Task 36 Force Members from Ontario Energy Board, signed by Paul B. Pudge, dated April 1, 1999 3 Letter to All Interested Parties 36 from Ontario Energy Board, signed by Anne Powell, dated December 6, 1999 ###] ###Pages: 95-103