1 1 RP-1999-0043 2 3 IN THE MATTER OF the Municipal Franchises Act, 4 R.S.O. 1990, c.M.55 as amended, section 9 and 10 5 thereof; 6 7 AND IN THE MATTER OF an Application by Union Gas Limited 8 for an Order approving the terms and conditions upon 9 which and the period for which Union is granted rights 10 to construct and operate works for the distribution of 11 gas and to extend or add to the works in the Corporation 12 of the City of Sudbury; 13 14 AND IN THE MATTER OF an Application by Union Gas Limited 15 for an Order renewing the term of the right to operate 16 works for the distribution of gas to the City of Sudbury 17 or the inhabitants of the City of Sudbury; 18 19 AND IN THE MATTER OF an Application by Union Gas Limited 20 for an Order directing and declaring that the assent of 21 the electors of the Municipality is not necessary for 22 the proposed franchise by-law under the circumstances; 23 24 AND IN THE MATTER OF an Application by Union Gas Limited 25 for such further Orders as may be necessary to continue 26 the right to construct, operate and extend the works in 27 the Municipality, until a final Order is made in this 28 Application. 2 1 B E F O R E : 2 S.K. HALLADAY Presiding Member 3 G.A. DOMINY Member and Vice Chair 4 C. SPOEL Member 5 6 7 Hearing held at: 8 2300 Yonge Street, 25th Floor, Hearing Room No. 1, 9 Toronto, Ontario on Thursday, October 28, 1999, 10 commencing at 0930 11 12 13 MOTION 14 15 VOLUME 1 16 17 18 19 20 21 22 23 24 25 26 27 28 3 1 APPEARANCES 2 JENNIFER LEA/ Board Technical Staff 3 NEIL McKAY/ 4 WILFRED TEPER 5 6 GLENN LESLIE/ Union Gas Limited 7 SHARON WONG/ 8 MARCEL REGHELINI 9 10 JOHN ROOK/ The Corporation of the City of 11 MAHMUD JAMAL Sudbury 12 13 RONALD SWIDDLE The Regional Municipality of Sudbury 14 15 MIRIAM HEINZ Enbridge Consumers Gas 16 17 18 19 20 21 22 23 24 25 26 27 28 4 1 Toronto, Ontario 2 --- Upon commencing on Thursday, October 28, 1999 3 at 0932 4 THE PRESIDING MEMBER: Good morning. 5 We are sitting today to consider a motion 6 brought by the Corporation of the City of Sudbury to 7 adjourn the proceedings in an application dated June 28, 8 1999, filed by Union Gas Limited with the Board under 9 sections 9 and 10 of the Municipal Franchises Act, as 10 amended, to which application the Board has assigned 11 File No. RP-1999-0043. 12 My name is Sheila Halladay. With me today are 13 George Dominy and Cathy Spoel. May I have appearances 14 please. 15 MR. LESLIE: Good morning. My name is Glenn 16 Leslie. I appear for Union Gas. I have with me my 17 partner, Sharon Wong and Mr. Marcel Reghelini from 18 Union's regulatory department. 19 THE PRESIDING MEMBER: Good morning, 20 Mr. Leslie. 21 MR. ROOK: Good morning. My name is John 22 Rook. I appear for the Corporation of the City of 23 Sudbury. With me is Mr. Mahmud Jamal. 24 THE PRESIDING MEMBER: Good morning, Mr. Rook 25 and Mr. Jamal. 26 MR. SWIDDLE: Good morning. My name is Ron 27 Swiddle, S-w-i-d-d-l-e. I am here for the Intervenor, 28 the Regional Municipality of Sudbury. 5 1 THE PRESIDING MEMBER: Good morning, 2 Mr. Swiddle. 3 MS HEINZ: Good morning. I am Miriam Heinz 4 from Enbridge Consumers Gas. We will be observing only. 5 THE PRESIDING MEMBER: Thank you, Ms Heinz. 6 MS LEA: Jennifer Lea appearing for Board 7 staff. 8 THE PRESIDING MEMBER: Thank you, Ms Lea. 9 THE PRESIDING MEMBER: Are there any 10 preliminary matters? 11 MS LEA: I have one brief one of an 12 administrative nature. Board staff has prepared an 13 exhibit list for the proceeding and the motion is 14 included as part of that exhibit list. If anyone 15 doesn't have a copy and wishes one, they are on the 16 windowsill, on the ledge over there. Thank you. 17 Anything made an exhibit today can be added to 18 that list. 19 THE PRESIDING MEMBER: Thank you, Ms Lea. 20 Mr. Rook, I believe it is your motion. 21 SUBMISSIONS 22 MR. ROOK: Thank you, Madam Chair. 23 Before I begin, I just would note that I have 24 passed up to you some excerpts from the Public Utilities 25 Act and the Municipal Franchises Act which I may refer 26 to in the course of my submission or you may have 27 questions in the course of my submissions with reference 28 to those provisions in those two legislative enactments. 6 ROOK, Submission 1 This is, as you know, an application or a 2 motion by Sudbury for an adjournment of Union's 3 application of June 28 of this year. It is a motion 4 that is brought on terms, in the sense that while we 5 seek a postponement or an adjournment of the hearing of 6 the application, we are nonetheless prepared to consent 7 to an interim extension of the current franchise 8 agreement, that is the one that is found at tab 2, I 9 believe, of the motion materials filed on behalf of 10 Sudbury, an extension on the same terms and conditions 11 as is contained in the current franchise agreement. 12 Now, in terms of the length of the extension 13 to which we are prepared to consent, we are prepared to 14 do that either on the basis of agreement with Union, 15 which has not to this point been forthcoming, or for a 16 period of six to eight months or as otherwise ordered by 17 the Board. 18 It would be my suggestion, and I will develop 19 this in the course of my submission, that if you accede 20 to the request of Sudbury, that you fix the extension 21 date to June 30, 2000, subject to further consideration 22 and review by the Board as circumstances warrant. 23 Now, as you know, the application by Sudbury 24 is opposed by Union, hence this hearing this morning. 25 I will be submitting in the course of my 26 submission essentially as follows: The Board should, in 27 my respectful submission, grant the adjournment sought, 28 provided it is satisfied that the public interest will 7 ROOK, Submission 1 be protected during the period of the adjournment and by 2 that I mean will the citizens of Sudbury be protected in 3 the sense that gas will continue to be provided under 4 the terms of the existing Franchise Agreement during the 5 period of the adjournment. 6 Given my client's willingness to consent to 7 the extension, it would be my submission that that test, 8 if you believe it to be appropriate, will be fully 9 satisfied. 10 Second, it will be my submission that an 11 adjournment in this case is appropriate for a number of 12 reasons that I will allude to, and those relate to the 13 resolution of issues between my client and Union, some 14 of which are before the courts in this province. 15 It is not so much the fact that these matters 16 are before the courts, as the resolution of those 17 disputes in the courts will affect the nature and extent 18 of any hearing on the merits that you may be asked to 19 have. Indeed, I would go so far as to say that 20 depending on the outcome of litigation elsewhere, it may 21 not be necessary to have a hearing at all of the type 22 that is at least at this point in time contemplated by 23 the parties. 24 So, with that introduction, let me just turn 25 briefly to some of the facts that I wish to highlight, 26 all of which are contained in my motion material and I 27 may actually allude to some of the excerpts from the 28 motion material in the course of my submissions. 8 ROOK, Submission 1 Briefly, the background of this matter is as 2 follows. Sudbury entered into a Franchise Agreement 3 with the predecessor of Union in 1956. In that 4 agreement in paragraph 18 of the Franchise Agreement, 5 which is found in the record at page 38, I believe it's 6 Tab No. 1, there is reference to the fact that during 7 the currency of the agreement, or at its end, my client, 8 Sudbury, would be entitled to purchase or acquire the 9 works which were the subject matter of the agreement. 10 That particular agreement, of course, was 11 superseded by a second agreement that was executed in 12 1979 and approved by the Board, as my friend Mr. Leslie 13 in his material points out. And that agreement also 14 contains certain rights on the part of Sudbury, that is 15 contractual rights, to acquire the works in issue in 16 this proceeding. 17 What is significant, however, in my respectful 18 submission, is at the time that the current Franchise 19 Agreement was under discussion in 1979, Sudbury's 20 electrical utility, Sudbury Hydro, expressed an interest 21 in acquiring the works and carrying on the franchise 22 heretofore carried on by Union or its predecessor. 23 You will see in the material reference to the 24 fact that the resolution was passed. The matter was 25 considered by the Council to the Corporation of the City 26 of Sudbury and, ultimately, it was decided to extend the 27 franchise for another 20 years. 28 During the course of those proceedings, and 9 ROOK, Submission 1 this is relevant to the current context, Union's counsel 2 represented to the City Council that the city need not 3 be concerned about granting the franchise to it, as 4 opposed to Sudbury Hydro, because during the course of 5 the 20 years Sudbury, should it deem it appropriate to 6 do so, would be entitled to acquire the works pursuant 7 to section 62 of the Public Utilities Act. 8 That, of course, did not happen until or about 9 the spring of this year when, as you know from the 10 material, my client passed a by-law on June 22, which is 11 found in the material at Tab No. 6, pages 70 and 71 of 12 the material, passed a by-law in which it indicated a 13 desire to invoke its rights under section 62 of the 14 Public Utilities Act. 15 Thereupon, Union, in its wisdom launched an 16 application in the courts, I believe, on June the 25th, 17 or three days before it made its application to this 18 Board for an extension of the franchise after December 19 the 11th, and in the application that my friend 20 launched, he sought to have the by-law quashed on 21 various grounds that are contained in the Notice of 22 Application. 23 Now, it's interesting to note, in view of the 24 criticism that's levelled against my client and me in my 25 friend's affidavit material, that that motion was made 26 returnable on July the 21st of this year. But, as is 27 the practice in these matters, subsequent to the service 28 of the application, my friend and I had discussions 10 ROOK, Submission 1 about what the real date would be, and it was agreed 2 that it would be mid October, subject to the discretion 3 of the Court -- which was sought and obtained. 4 I say that simply because much is made of the 5 fact that our application was initially returnable on 6 November the 8th. That was simply done, in accordance 7 with the usual practice, anticipating that we would have 8 to get a special appointment. You can't commence a 9 motion or an application in the air. And, while no date 10 has been fixed, to my knowledge, it's certainly 11 contemplated that it will be held in January. 12 In any event, subsequent to that having 13 occurred, the Province -- let me just step back before I 14 get to the Province's actions. 15 Where we were, at that point, was that an 16 application had been filed to this Board in a proceeding 17 for a determination of the rights of the parties under 18 section 62 which would have occurred in or about mid 19 October. So we were in the position, speaking from the 20 perspective of Sudbury, where we had passed a validly 21 enacted by-law. 22 If the Court agreed with our submission, 23 contrary to what Union says, we then would have been in 24 a position, subject to any appeal, to have proceeded 25 with the arbitration proceedings contemplated in 26 section 62 of the Public Utilities Act. And that is 27 what my client has been focused on, from the outset. 28 In any event, as you know, from the 11 ROOK, Submission 1 material -- and it also gained wide publicity in the 2 media -- in early August, the Province issued a letter 3 to my client, with a copy to the president of Union Gas, 4 in which it, in effect, said that it was going to repeal 5 section 62, retroactive to March the 11th, I believe. 6 The significance of the date, Members of the 7 Board, is that Kingston had also taken action similar to 8 those of my client, and I believe the operative date, in 9 Kingston's case, when it passed its by-law, or 10 resolution, is March the 11th. So that if the 11 legislature acts in accordance with the letter that we 12 were sent, presumably section 62 will be repealed in due 13 course. 14 That, of course, potentially, made the 15 application in the Court redundant -- I say 16 "potentially" because the Province has not yet acted; 17 the legislature has not yet received a bill; and it's a 18 matter of some speculation as to whether that will 19 happen and if it does, when it will happen. 20 That notwithstanding, that application has 21 been adjourned on consent sine die, which means without 22 any definite date for those who are not lawyers, in the 23 room. 24 Now, given the material that's before you, 25 this morning, it would be my submission that it's a 26 reasonable inference to draw that Union does not contest 27 the fact that it represented, in 1979, that we could 28 rely on section 62. I also submit to you that it's a 12 ROOK, Submission 1 reasonable inference that Union lobbied the Government 2 of Ontario to repeal the Act. 3 At all events, following the receipt of the 4 letter, my client wrote to Union and said: In light 5 of -- and I'm glossing on this, using my own words -- in 6 light of the actions of the Province, with respect to 7 section 62 of the Public Utilities Act, we also have a 8 contractual right to acquire the works under 9 paragraph 22 of the currently in force Franchise 10 Agreement. That letter was sent in late August or early 11 September. 12 It's important to recognize that, in late 13 August, after receipt of the letter, the City passed a 14 resolution authorizing the acquisition of the works 15 under paragraph 22 of the Franchise Agreement. 16 Subsequent to that, my friend Mr. Leslie wrote 17 to my client and indicated that, in Union's view, 18 paragraph 22 was not available for the purposes 19 contended; namely, to acquire these works. 20 Union took the position, through its counsel, 21 that that was a matter for the Board to decide -- and 22 you will find that at Tab 18, on page 24, of the motion 23 record; that is, Mr. Leslie's -- I'm sorry. I have got 24 the wrong tab. The letter to Union is dated 25 September 18th. That's at Tab 18. And if you look at 26 Tab 18, page 124, you will see that Mr. Polano, the 27 affiant, is writing to Mr. Bourgeault, and he says, in 28 the last paragraph: 13 ROOK, Submission 1 "We are aware that Union Gas has applied 2 to the Ontario Energy Board for an order 3 under section 10 of the Municipal 4 Franchises Act renewing the term of the 5 right to operate works --" 6 And then, continuing, in the next sentence: 7 "If Union Gas wishes to serve as operator 8 of the gas distribution system which the 9 City will be acquiring ownership of 10 pursuant to paragraph 22, we think it 11 should discuss with the City the terms of 12 the operating agreement --" 13 Et cetera. 14 So that is when my client asserted its right, 15 formally, to acquire the works under section 22, or 16 paragraph 22 of the Agreement. 17 And then, the letter to which I referred to, a 18 moment ago, Mr. Leslie, with his usual eloquence, on 19 September the 9th, writes back, and puts in issue, in 20 the last paragraph on the first page, my client's right 21 to proceed on that basis. 22 Subsequent to the receipt of that letter, upon 23 receipt of instructions from the City, an application 24 was brought in the courts for an interpretation of 25 paragraph 22 of the contract -- and it's important to 26 recognize that what is sought in the courts is an 27 interpretation of the contract which, we submit, is an 28 issue of law for the courts to determine, in their 14 ROOK, Submission 1 wisdom. And we are emboldened to suggest not only is it 2 a matter for the courts, it is not a matter, with great 3 respect, for this Board exercising its jurisdiction 4 under the Municipal Franchises Act or, indeed, the 5 Ontario Energy Board Act. 6 In any event, that matter is the matter that's 7 currently before the Court. The section 62 application 8 having been adjourned sine die. 9 And that, essentially, brings us to this 10 morning. We asked Union to consent to the request for 11 an adjournment earlier this month and, as you know, it 12 has refused to do so. 13 So, simply put, our submission is as follows: 14 We submit that Sudbury has the right to 15 acquire the works under section 62 of the Public 16 Utilities Act. And while you have heard what I have had 17 to say about the status of that application, it has not, 18 as of this moment, been finally determined whether 19 section 62 will be repealed by the legislature and if it 20 is, whether it will be retroactive. 21 If, in fact, section 62 remains on the books, 22 or is amended in such a way that my client's rights to 23 acquire are not affected retroactively, then my client 24 will proceed to acquire the works, as it's entitled to 25 do, under section 62. 26 I submit that were that to take place, 27 obviously, that would have a material impact on the 28 nature and extent of what you would be asked to do, in 15 ROOK, Submission 1 respect of Sudbury. 2 Second, assuming for the moment that the 3 Legislature proceeds as the two ministers said in their 4 letter of August 6th, we submit that we have a right to 5 acquire under paragraph 22 of the agreement, and that is 6 the matter that is currently before the Court for 7 determination. 8 If the Court rules in favour of Sudbury, then 9 for all practical purposes my client will be entitled to 10 proceed to acquire the works, irrespective of what 11 decision this Board might make with respect to the 12 operation of the works. 13 In that event, I submit that the nature and 14 extent of the hearing that you might be asked to hold on 15 the merits would be materially affected. Indeed, I 16 would go so far as to say that there may not be a 17 hearing, or at least a contested hearing, because the 18 parties, having heard what the rights are, may take 19 different positions than they have taken to this point. 20 Alternatively, if my client is unsuccessful in 21 the courts, again the nature and extent of the hearing 22 that you would be asked to consider could be materially 23 altered. Indeed, it could go so far as to say that my 24 client might say that if we are not permitted to acquire 25 the works, if we are not permitted to integrate those 26 with Sudbury Hydro, if we are not permitted to 27 co-venture with some other market participant, we may 28 not be in a position where we would want to contest 16 ROOK, Submission 1 Union's request for a 15-year extension. 2 Who can say? I simply point out that these 3 are imponderables at the moment that will affect, indeed 4 must affect, the nature and extent of what it is you 5 will be asked to decide. 6 At all events, it is going to have an impact, 7 whichever the decision goes, on the scope of the hearing 8 that you are going to have to hold. 9 Now, while this is being developed, I submit 10 with respect, that there is no prejudice should the 11 order sought be granted on terms. I made that 12 submission at the outset and I think I have probably 13 fully developed it. 14 On the other hand, should you deny the request 15 for the adjournment, in my respectful submission my 16 client's rights will be irrevocably prejudiced. They 17 will be prejudiced because you will effectively make the 18 application to the Court redundant by assuming a 19 jurisdiction that we have asked the Court to find on. 20 Secondly, you will effectively put us in a 21 position of proceeding with a hearing in a hothouse 22 environment between now and December of this year in 23 respect of the details that would have to be addressed 24 in order to competently respond to the application of 25 Union. 26 You have my client's evidence on that in the 27 Affidavit of Mr. Polano. I am not going to take you 28 through it, other than to point out to you that if you 17 ROOK, Submission 1 accept his evidence, and I submit you should, it would 2 be extremely difficult for my client to comply with your 3 procedural order, test the evidence of Union, either by 4 retaining experts to deal with it or developing its own 5 evidence in the time available to us. 6 As to my friend's complaint that we have had 7 months, let alone years, to do it, I submit that when 8 you have regard to all of the circumstances my client 9 cannot be criticized for proceeding as it did, relying 10 not only on Union's representations but the availability 11 of section 62 and paragraph 22 of the Franchise 12 Agreement. 13 So I submit there is no prejudice to the 14 public. There is prejudice to my client if you reject 15 our request for an adjournment. 16 So, in substance, I am asking for an 17 adjournment on the terms that I outlined at the outset. 18 If there is some technical issue as to the 19 scope of your jurisdiction under section 10, 20 subsection (4) of the Municipal Franchises Act, that is 21 to say if my friend opposite, having heard your views, 22 refuses to consent to your fixing an interim order, it 23 would be a small matter for my client to write a letter 24 to you requesting an extension and thereby constituting 25 an application for the purposes of section 10. But I 26 submit that should not be necessary, but that is, 27 frankly, in the hands of my friend. 28 Those are my submissions. 18 ROOK, Submission 1 MR. LESLIE: If I may, on that issue there is 2 no dispute. You have already done that in the case of 3 the City of Kingston and you clearly have the authority 4 to do it. 5 MR. ROOK: Well, then that is not an issue. 6 But those are my submissions, subject to any 7 questions you may have. 8 THE PRESIDING MEMBER: Thank you, Mr. Rook. 9 Mr. Swiddle, are you speaking in support of 10 this motion? 11 MR. SWIDDLE: Yes, I am. 12 THE PRESIDING MEMBER: Would you like to go 13 now, please. 14 SUBMISSIONS 15 MR. SWIDDLE: My comments will be fairly 16 brief. 17 The Regional Municipality of Sudbury finds 18 itself in a similar position in terms of an agreement 19 with what is now Union Gas for approximately the same 20 time period, except that the Region's agreement expires 21 sometime in the future so that the matters are not quite 22 as urgent for the Region's point of view. 23 However, the Region has a parallel clause in 24 its agreement and is watching these proceedings with 25 interest. 26 The Region agrees with the adjournment as it 27 feels that it would be appropriate to obtain the Court's 28 ruling which would affect the matters before the Board 19 SWIDDLE, Submissions 1 and may eliminate them entirely. 2 As well, the proceedings before the 3 legislature may change the matters as they come forward 4 or eliminate them entirely as well. So the Region 5 thinks the adjournment is not only appropriate but 6 crucial under the circumstances. 7 Those are all my submissions. 8 THE PRESIDING MEMBER: Thank you, Mr. Swiddle. 9 I assume no one else is here to speak in 10 favour of the motion, so, Mr. Leslie, it is your turn. 11 SUBMISSIONS 12 MR. LESLIE: Thank you. 13 To be candid, Ms Wong has prepared an outline 14 of the remarks I intend to make to the Board, and with 15 your permission I will give you a copy of that. I will 16 also give it to the reporter and others present so that 17 you can follow along my oral submissions. 18 --- Pause 19 THE PRESIDING MEMBER: Ms Lea, do you want an 20 exhibit number for this document? 21 MR. LESLIE: I really didn't intend it to 22 achieve that status. It was more so that the Board 23 could follow what I was saying and also to assist me in 24 trying to be coherent this morning. 25 THE PRESIDING MEMBER: That's fine. 26 What we have done is set out, as best we can, 27 what we understand to be the reasons or the rationale 28 that Sudbury is advancing for an adjournment -- and this 20 LESLIE, Submissions 1 is taken from pages 21 to 25 of their Motion Record -- 2 and to comment on those reasons. 3 The first reason given is that the question 4 for the Board to resolve in connection with Union's 5 application for renewal of its franchise is not clear. 6 As we understand Sudbury's position, they are 7 saying that it is not clear because if Union is correct 8 in its position with respect to paragraph 22 of the 9 Franchise Agreement, then the Board will have to decide 10 at some point whether Union should be granted not only 11 the right to operate the gas distribution system in 12 Sudbury, but also whether or not Union should have the 13 right to own that system. 14 That is Sudbury's interpretation of our 15 position, or at least what they say about our position. 16 That is taken from page 21 of their material, 17 paragraph 39. 18 I think this lies at the heart of what is 19 going on this morning. That is simply not correct. 20 To put it very simply, Union's position is 21 that the Board will have to deal with the right to 22 operate the franchise with the renewal of the franchise 23 issue regardless. 24 If Sudbury is correct in their interpretation 25 of paragraph 22 of the Franchise Agreement, all that 26 does is determine whether they have any right to acquire 27 the property. It does not dispose of the issue as to 28 who should be operating the system. 21 LESLIE, Submissions 1 I think a fair reading of the Franchise 2 Agreement makes it perfectly clear, to any reasonable 3 person, that Sudbury's right to acquire only arises if 4 Union's right to operate terminates either by the 5 termination of the Franchise Agreement or a decision by 6 this Board not to renew the Franchise Agreement. That 7 is the only circumstance in which Sudbury acquires the 8 right to buy Union's property. 9 But take Sudbury's position, because that is 10 what you have to do when you have decided this 11 adjournment issue. Their position is that they have a 12 right to acquire under paragraph 22, regardless of who 13 operates the system. But even on their position, you 14 have to decide who should operate the system, and that 15 is what our application is all about. So that question 16 has to be decided by you. Only you can decide; a court 17 can't. A court has no jurisdiction to deal with that 18 and Sudbury doesn't take the position that they do. You 19 have to deal with that issue on any view of paragraph 22 20 of the Franchise Agreement. We are suggesting that it 21 is important that you deal with it as quickly as 22 possible, and in accordance with the timetable that you 23 have established. 24 That is really a summary of what appears on 25 pages 1 through 4, I guess, of the written outline. 26 The point is that regardless of what the court 27 decides, you, the Board, who have exclusive jurisdiction 28 in this area, have to deal with the issue under 22 LESLIE, Submissions 1 section 10 of the Municipal Franchises Act, that is, who 2 gets the right to operate the system. 3 Now, as I say, Union submits that on any 4 reasonable reading of paragraphs 21 and 22 of that 5 Franchise Agreement, Sudbury's right to buy the property 6 only arises if the franchise terminates, and that is for 7 the Board to decide. But, even on their view of the 8 thing, the court doesn't decide who operates the system; 9 you do. That decision has to be made regardless of what 10 the court decides. 11 With respect to the evidence necessary to deal 12 with that issue, Sudbury has taken the position that it 13 is not clear what evidence it should be leading. If the 14 Board accepts my submission that the question before it 15 is what the public convenience and necessity require 16 insofar as the renewal of the right to operate is 17 concerned, then I would have thought it is pretty clear 18 what the evidence should deal with. 19 Union has made its position known in plain 20 terms. If the Board renews Union's franchise, then 21 Union will have the right to continue owning the system, 22 in our view, and in light of that position Sudbury 23 should have absolutely no difficulty determining what 24 evidence it should be leading regarding the issue of 25 operating the system. 26 On page 5 of the outline we have made the 27 submission that, regardless of what the court decides, 28 the Board will still need to deal with Union's 23 LESLIE, Submissions 1 application for renewal of the franchise. And I have 2 said that, and I apologize, this is somewhat redundant, 3 but it tracks the submissions in the Notice of Motion. 4 Mr. Rook has told you that the nature and 5 extent of your decision may change depending on what the 6 court decides. That would only be true, in my 7 submission, if Sudbury concedes that they will not 8 oppose a renewal if their application to the court is 9 unsuccessful. Because even if their application were 10 successful, and I will give that rather low odds, but 11 even if it were successful, there would still be a need 12 for the Board to decide who operates the system. 13 Similarly, if Union succeeds on the 14 application there will be a need to decide what flows 15 from that in terms of who operates the system. That 16 question will remain regardless of what the outcome of 17 the court application is. 18 That leads to the next submission which is 19 paragraph (d) in the outline. Mr. Rook, in my 20 submission, is not correct in suggesting that Union's 21 application to this Board duplicates in any way the 22 application which Sudbury has now brought to the court. 23 They deal with different issues. Sudbury is asking the 24 court to interpret the Franchise Agreement, specifically 25 paragraph 22, and to determine whether or not that 26 paragraph gives Sudbury a right to acquire Union's 27 property regardless of what the Board does. 28 Union will take the position, as I have said, 24 LESLIE, Submissions 1 that that paragraph only operates if there is a 2 termination of the right to operate the franchise. If 3 you read paragraphs 21 and 22 together, I don't think 4 you could come to any other conclusion. 5 That is all to say that they are very 6 different issues. One deals with what the public 7 interest requires in connection with the operation of 8 the system, the other deals with property rights. No 9 one takes the position that this Board has the 10 jurisdiction to deal with the property rights. No one 11 is going to ask the Board to deal with that. 12 Mr. Rook has given you a history of Sudbury's 13 appreciation of section 62 of the Public Utilities Act, 14 which deals with expropriation of utility property. 15 With respect to what went on in 1979, I don't know what 16 inference you can draw. I do know that the contract 17 between the parties specifically deals with the 18 acquisition of the property, and to me, at least, that 19 is inconsistent with Sudbury relying on an ability to 20 expropriate under section 62, but, in any event, if they 21 did intend to expropriate under section 62, they took 22 their time about it. 23 Mr. Rook relies on allegations as to what was 24 said in 1979 by an unnamed solicitor. It is now 1999 25 and they didn't see fit to act on section 62 until June 26 of this year. We made our position known, Union made 27 its position known, with respect to what section 62 did 28 or didn't do immediately. They have known since June 25 LESLIE, Submissions 1 that we disputed that section 62 conferred any right on 2 them to expropriate Union Gas' assets in Sudbury. We 3 took an entirely different position with respect to what 4 that section was there for. The provincial government 5 has now agreed with that position and indicated, in 6 order to remove any doubt, it was going to repeal the 7 section. 8 I submit that the theoretical possibility that 9 that section will not be repealed, in view of the 10 government's announcements in letters to Sudbury and 11 Kingston, is not sufficient cause for you to delay a 12 proceeding which has extreme importance, not only for 13 Union but for other utilities and other franchises. 14 But even if you were persuaded that there is 15 some chance that it won't be repealed, and that is a 16 ground for an adjournment, and I will make that comment 17 with respect to Mr. Rook's position with respect to his 18 application as well, those issues could have been 19 resolved in six to eight months. If we have to litigate 20 section 62, we are talking three to four years. You 21 have a court application, you have possibility of appeal 22 to the Court of Appeal in Ontario and you have a 23 possibility of leave to appeal to the Supreme Court of 24 Canada being requested, and you have a possibility of 25 leave being granted -- a strong possibility because it 26 is a unique issue. That is at least three years. 27 Then you have to arbitrate price; you have the 28 possibility of judicial review of the arbitration. That 26 LESLIE, Submissions 1 adds potentially another year. 2 So an adjournment for six to eight months is 3 not going to resolve Mr. Rook's problems, not insofar as 4 his application with respect to paragraph 22 is 5 concerned and not with respect to section 62 of the 6 Public Utilities Act, which I think you can effectively 7 treat as a dead letter and I don't think Mr. Rook 8 seriously contends otherwise. 9 With respect to Union's position in all of 10 this, and I submit to you, Mr. Rook defined the public 11 interest at the outset as being the ratepayers of 12 Sudbury and no more than that, in my submission, the 13 public interest, and this is clear in the jurisprudence, 14 includes the interests of Union, of its shareholders, of 15 other ratepayers in the province, of other utilities in 16 the province. It is at least a provincial interest 17 that's in play. 18 If the Board postpones dealing with the 19 application on the renewal of the franchise, you are 20 effectively being asked to do that for a period of at 21 least two to three years, the issues Mr. Rook has 22 raised, as I say, will not be resolved by the 23 application. There will be an appeal, unless Sudbury is 24 prepared to take the position now that they won't appeal 25 that adverse result and then you might get done in six 26 to eight months. 27 During that three-year period Union will be 28 living in a state of complete uncertainty. Its 27 LESLIE, Submissions 1 shareholders and investors will be living in a state of 2 complete uncertainty. The ratepayers in Sudbury will be 3 living a state of complete uncertainty. 4 As long as there is a risk that the franchise 5 will terminate on short notice, investment decisions are 6 affected. Expansion decisions are affected. As the 7 Board knows, expansion is based on a portfolio approach. 8 Until these issues are dealt with and the Board gets 9 some guidance on how the renewal questions will be dealt 10 with, it's not possible for the people who have to make 11 these decisions to act with any certainty. 12 And those observations are known not only to 13 Union, but also to Consumers and they affect franchises 14 throughout the province. They affect ratepayers 15 throughout the province. 16 In the past, as the Board knows, these 17 agreements have been renewed fairly routinely. This is 18 a case of first instance. Planning assumptions have 19 been made on that basis. It is important to now know 20 what basis should be used going forward and this case 21 raises those issues and they need to be dealt with and 22 they need to be dealt with not in three years' time, but 23 certainly much more quickly than that, and that was 24 implicit in the Board's procedural order which required 25 a hearing in December. 26 With respect to Sudbury's -- and as I can 27 understand it, Mr. Rook's position has two legs. One is 28 that there is this application before the court that 28 LESLIE, Submissions 1 should be decided before we go any further and the other 2 is they are not ready, and that's because they were 3 focused on section 62 up until very recently in Mr. 4 Rook's submission. 5 As I have said, Sudbury has known what our 6 position on section 62 was since June and they could 7 have known it earlier if they'd asked us. 8 They have known since August that that 9 proceeding was almost certainly going to be adjourned. 10 The only reason it wasn't adjourned until September was 11 because there was some delay in getting instructions to 12 agree to the adjournment on Sudbury's part. 13 They themselves passed a by-law on August 11, 14 acknowledging that they were now going to go onto 15 paragraph 22, in effect saying section 62 is gone, we 16 have got to live with that, and we will now turn our 17 attention to paragraph 22. That was their by-law passed 18 on August 11. 19 And apart from all that, I mean realistically, 20 Sudbury has known for at least a year and a half that 21 they were going to be fighting this fight, and whatever 22 they did, what they should have done, ostensibly, was to 23 look at their business case from all realistic 24 perspectives. 25 It is not good enough for them to say, "Oh 26 well, we thought section 62 applied and we proceeded on 27 that basis up until October of this year." One, that's 28 not realistic. 29 LESLIE, Submissions 1 And, two, Sudbury had every means of knowing 2 what Union's position would be. It knew since June what 3 it's position would be and they should have developed a 4 business case that dealt with the possibility that 5 section 62 wasn't going to apply. 6 It is really a question of how much they would 7 have to pay for the assets in the end and they should 8 have developed more than one scenario. If they are 9 telling us that they only did it on the basis of section 10 62, then that's their problem. 11 Sudbury should have thought about these issues 12 before it passed the resolutions, which Mr. Rook has 13 referred to this morning, in June and August, 14 authorizing the acquisition of Union's property. Surely 15 to God they should have been thinking when they did that 16 how much is it going to cost us in developing that 17 business case. 18 Mr. Rook, if I understand his position, is 19 telling you that they are not ready, that they didn't do 20 that. 21 Now, apart from anything else, that runs 22 contrary to what Sudbury has been saying publicly. Ms 23 Wong has referred in her affidavit to advertisements 24 which Sudbury has paid for in the local newspapers which 25 set out what their position is with respect to the 26 outcome of this application if their position is upheld. 27 They have told their taxpayers that it won't 28 cost them any money, there won't be any increase in 30 LESLIE, Submissions 1 taxes, there won't be any increase in rates. That has 2 all been made public. Now they come to the Board and 3 say, "Oh, we are not ready. We haven't filed them." 4 Similarly, they have got a web site and they 5 make the same claims on their web site. But when they 6 are asked to put in evidence and deal with this issue by 7 December of this year, they say, "Oh, we're not ready. 8 We haven't thought about these things." 9 In my submission, the chronology of events and 10 the time that Sudbury has had to deal with these issues 11 make it clear that if they are not ready they should be. 12 I can tell you that Union Gas was put to some 13 effort to get its evidence together and in on time, but 14 it did so and there is a lot at risk here and recognize 15 that. But it is important to deal with these issues 16 expeditiously and we are not talking six to eight 17 months. We are talking two to three years minimum and 18 it simply won't wait that long. It needs to be dealt 19 with. There is no reason why it can't be dealt with. 20 As I have tried to emphasize, the issue you 21 are being asked to deal with will have to be dealt with 22 in any event, regardless of the outcome of the 23 application that Sudbury has now made on October 18 to 24 the court, and they could have made that application a 25 long time ago. They have known what their position was 26 since August. But, in any event, you will have to deal 27 with the issue of public interest in the operation of 28 the system regardless of the outcome. 31 LESLIE, Submissions 1 There is a great deal at stake and a great 2 deal of uncertainty surrounded by delay and, in my 3 submission, there shouldn't be any further delay. 4 Thank you. 5 THE PRESIDING MEMBER: Thank you, Mr. Leslie. 6 I think Ms Spoel has a couple of questions. 7 MEMBER SPOEL: Mr. Leslie, it seemed to me 8 that you were suggesting that the Board could deal with 9 the question of Union -- or operating the system in 10 isolation from the ownership of the system. 11 MR. LESLIE: I think you have to in some way. 12 MEMBER SPOEL: The question I have is: Are 13 there any cases where Union operates a system that it 14 does not own? 15 MR. LESLIE: No, not that I'm aware of. 16 MEMBER SPOEL: The other thing I wanted to 17 clarify was -- 18 MR. LESLIE: May I just make an observation on 19 that to be clear and clear to my client. They own it. 20 I mean, all that's up for grabs here is whether they are 21 going to continue to own it. Nobody is going to decide 22 whether they currently own it. 23 MEMBER SPOEL: I understand that. I just 24 wanted to know whether there was any such case. 25 The other thing I wanted to clarify was I 26 think you suggested, I may be wrong on this, that 27 paragraph 21 and 22 of the Franchise Agreement only come 28 into play if Union no longer has a franchise to operate 32 LESLIE 1 the system. 2 MR. LESLIE: That's right. 3 Well, no, I'm sorry. What I said was read 4 together paragraphs 21 and 22 make it perfectly clear, 5 in my submission, that Sudbury's right to acquire the 6 ownership of the property only arises if Union no longer 7 has the right to operate the system, and that right is 8 for the Board to decide in the end under section 10 9 MEMBER SPOEL: Right. 10 What you are suggesting to us today is that we 11 should proceed with the hearing to determine whether 12 Union has the right to continue to operate the system 13 and if we decide that Union does have the right to 14 continue to operate the system then Sudbury no longer 15 has the ability to rely on section 22? 16 MR. LESLIE: That will be -- if I may sort it 17 out as I think Mr. Rook would have it, and I would agree 18 with him, if you decide that Union has the right to 19 continue operating the system, my submission to the 20 court on Mr. Rook's application will be that given the 21 clear words of paragraphs 21 and 22 that means Sudbury 22 has no right to acquire the system. 23 Conversely, if you decide that Union has no 24 right to operate the system, then I think it's quite 25 clear that Sudbury has the right to acquire the 26 property. 27 MEMBER SPOEL: So you are suggesting that our 28 decision on operation could, in effect, pre-empt the 33 LESLIE 1 right of Sudbury to acquire ownership of the system? 2 MR. LESLIE: Only subject to the Court 3 agreeing with me, yes. But I mean I don't -- 4 MEMBER SPOEL: That's your interpretation of 5 the facts? 6 MR. LESLIE: My submission as to what those 7 two paragraphs mean. 8 I think it's pretty clear, frankly. 9 MEMBER SPOEL: I thought that's what your 10 submission was. I just wanted to clarify it. 11 THE PRESIDING MEMBER: Ms Lea, do you have 12 some questions? 13 MS LEA: Thank you. 14 Board staff is not taking a position on the 15 motion. 16 I have a couple of questions, though, for 17 Mr. Leslie and Mr. Rook, if they would be so kind as to 18 speak to them. 19 Mr. Leslie, did I understand you to say that, 20 under section 10(4) of the Municipal Franchises Act, 21 it's your view that the written request of the applicant 22 referred to there is not necessarily the applicant under 23 10(1) but can be an applicant on a motion, for example? 24 MR. LESLIE: Did I say that? 25 MS LEA: Well, I understood you to say that 26 the Board could proceed to renew -- if the Board chose 27 to adjourn, the Board could proceed to make an interim 28 order, relying on Mr. Rook's written request. 34 LESLIE 1 I don't think it's a big issue because I think 2 the Board can do it under 21(7) of the Ontario Energy 3 Board Act anyway. 4 MR. LESLIE: Frankly, I haven't parsed it that 5 fine. 6 MS LEA: Okay. We have done it before. 7 MR. LESLIE: Certainly, the Board has done it 8 in Kingston and -- 9 MS LEA: Yes. 10 MR. LESLIE: -- we don't dispute their ability 11 or their jurisdiction to do it. 12 MS LEA: Okay. So you are not disputing our 13 ability to do that. 14 So, Mr. Leslie, if the Board did not grant 15 Mr. Rook's request, would Union be prepared to proceed, 16 under section 9, in December, presuming that Sudbury 17 continues to not be willing to pass or give first and 18 second reading to a by-law? 19 MR. LESLIE: Just give me a minute? 20 MS LEA: Thank you. 21 MR. LESLIE: This is section 9 in the 22 Municipal -- 23 MS LEA: Section 9 in the Municipal Franchises 24 Act, yes. 25 That section suggests that no by-law granting 26 certain rights shall be submitted to the electors for 27 their assent without the Ontario Energy Board's 28 approval. The Board can also dispense with the assent 35 LESLIE 1 of the electors. 2 I didn't know whether it was your view that a 3 prerequisite to proceeding under that section would 4 include a by-law having received first and second 5 reading from the municipality or not. 6 MR. LESLIE: Frankly, I haven't thought about 7 it for the purposes of my appearance this morning -- and 8 I'm not sure what your question is. 9 Maybe you could summarize it with -- 10 MS LEA: Okay. I was just wondering, if the 11 Board decided that it did not choose to grant the 12 adjournment, could you proceed on section 10 on the date 13 stated -- 14 MR. LESLIE: Oh, yes. 15 MS LEA: Pardon me. And how about on 16 section 9? 17 MR. LESLIE: Well, my understanding is that, 18 as a result of some correspondence that went on between 19 the Board and Union, Union has effectively agreed that 20 section 10 is the operative section. 21 MS LEA: Okay. That's helpful. That's fine. 22 I just wanted to get that clear. 23 As I take your position today, then, it is 24 your view that we could proceed with the application, as 25 filed -- that is, with the model Franchise Agreement in 26 your application -- under the section 10 application; 27 that the Board could impose that agreement under 28 section 10? 36 LESLIE 1 MR. LESLIE: Yes. 2 MS LEA: Thank you for clarifying your 3 position. That's helpful. 4 Mr. Rook, I had one question for you. 5 You have indicated that if the Board grants 6 the adjournment, you consider six months to be a good 7 term for an interim extension. 8 Would Sudbury be willing to consent to a 9 longer interim order, for example, 12 months, if the 10 Board believes that that was a good time frame? 11 MR. ROOK: The short answer is: yes. But the 12 reason that I suggested six months, or so, was in order 13 that the Board could be assured that my client, at 14 least -- I can't speak for Union -- was proceeding with 15 these other matters expeditiously. And if it was not, 16 it would have the opportunity to revisit the terms of 17 the adjournment. 18 In other words, it's a polite way of putting 19 the parties in a position of having to proceed 20 expeditiously. 21 MS LEA: Thank you, sir. That's helpful. 22 Thank you, Madam Chair. 23 THE PRESIDING MEMBER: Thank you, Ms Lea. 24 Mr. Rook, do you have anything in reply? 25 REPLY SUBMISSIONS 26 MR. ROOK: Thank you, Madam Chair. 27 Briefly, I have four points that I want to 28 make. 37 ROOK, Reply Submissions 1 First, picking up on the question from the 2 Board, in my submission, Mr. Leslie has made it clear 3 that if the application before this Board were to 4 proceed in December, you would necessarily be 5 considering the question as to whether an order granting 6 an extension or a renewal of the franchise, by all 7 practical purposes, postpone my client's right to 8 acquire. 9 In other words, taking his submission at its 10 face value, if you were to issue an order in the terms 11 that Union seeks, then my client's right to proceed to 12 acquire would, necessarily, be postponed for 15 years 13 should you grant the right to renew or extend for 15 14 years, as is sought in the application and he's 15 essentially putting the argument to you that he will be 16 putting to the Court as to how paragraph 22 of the 17 Franchise Agreement should be interpreted and it's my 18 submission that that's the very prejudice that my client 19 is faced with should the Board extend. 20 With respect to the issue of timing, this is 21 an aspect of what an old law professor of mine used to 22 call "the horrible consequences argument"; that is, if 23 you exercise your discretion, as suggested, all manner 24 of worthy things will occur, namely, time for appeals, 25 et cetera. 26 In my respectful submission, the complete 27 answer to that is as I have suggested to Ms Lea: should 28 the Board have a concern, at any point during the 38 ROOK, Reply Submissions 1 adjourned period, the Board is fully entitled to revisit 2 and reconsider the situation. That's why I suggested 3 six months. 4 My friend says that Sudbury will be the 5 appellant in any subsequent proceedings. We think we 6 have a good, arguable case, but I don't have the moral 7 certainty and authority that Mr. Leslie appears to have. 8 With respect to our readiness to proceed, this 9 is not as simple as wandering into an automobile dealer 10 and seeking to purchase an automobile, where the price 11 is known. 12 In order to determine what the price is, and 13 what value should be put on the assets, there's only one 14 party that knows, or has most of the information that 15 one would expect to know, in order to make that 16 determination; and that is, Union, of course. 17 It's interesting that in one of the -- in the 18 very first Franchise Agreement -- it doesn't appear in 19 the current Franchise Agreement, but in the very first 20 Franchise Agreement, where the right to acquire is 21 clearly set out, Union's predecessor expressly undertook 22 to provide its books and records, et cetera, to Sudbury, 23 in order to determine what the price should be. 24 There isn't any offer on the table to that 25 effect, at the moment. 26 Indeed, in the actual application, they give 27 you sort of a look in the window, as it were, to say, 28 "Oh, well, don't worry about it, Sudbury, it's much too 39 ROOK, Reply Submissions 1 expensive for you poor folks up north to afford anyway". 2 So it's just not a simple matter of sending a 3 letter saying, "Enclosed, please find our cheque for.... 4 Please send the shares." 5 Obviously, the litigation process, the 6 arbitration, is what would deal with those kinds of 7 issues. 8 So that, essentially, is what I have to say by 9 way of reply. 10 Thanks very much for your attention. 11 THE PRESIDING MEMBER: Thank you, Mr. Rook. 12 Mr. Dominy? 13 MEMBER DOMINY: Mr. Rook, I had one question. 14 You raised the question of valuation of the 15 assets, or acquisition price, or whatever you want to 16 call it, and you tied this in with the question that's 17 before the Court -- or at least it appeared to me. But 18 isn't the Court question something quite different? The 19 Court question is, "What is the interpretation of that 20 specific clause in the contract?" Valuation is 21 independent of that. 22 MR. ROOK: That's fair. But if I link them 23 directly, that was not what I intended. 24 What I was intending to suggest is, assuming 25 that there is the right to acquire that Sudbury asserts, 26 then, as a consequence of the determination of that 27 right, the terms of the valuation would flow from 28 that -- or not the terms of the valuation, the actual 40 ROOK/LESLIE 1 valuation would flow from that. 2 But you remind me of another point that I 3 wanted to make, which I forgot to make; and that is, the 4 Board has never been faced with the circumstance in 5 which there was a bifurcation between the ownership of 6 the assets in question and the decision as to who to 7 operate the assets. 8 If you accept my friend's submission, you will 9 effectively be proceeding on the basis that the 10 ownership and operation will be with one party for at 11 least the term of the extension. 12 If, on the other hand, the Court were to rule 13 that my client was entitled to acquire the works, then 14 the Board would be faced with an issue that it has never 15 previously considered, which is: Is it in the public 16 interest to have one owner and another operator? 17 If the owner is Sudbury all kinds of different 18 considerations might apply as to whether the operator 19 should be Union or Sudbury or some other entity, whether 20 it be a co-venture with Sudbury or some other party not 21 yet identified. 22 So that is an issue that will impinge on the 23 nature and the scope of the hearing. 24 THE PRESIDING MEMBER: I just have a couple of 25 questions of clarification. 26 The first deals with jurisdiction, just to 27 make sure we are all clear on the jurisdictional issue. 28 Is there any dispute that if the Board decides 41 ROOK/LESLIE 1 to grant this adjournment, and therefore grants an 2 interim extension of the Franchise Agreement, that the 3 Board has, on the existing terms -- on the terms of the 4 existing Franchise Agreement, that the Board has that 5 jurisdiction either under subsection 10(4) of the 6 Municipal Franchises Act or under section 21(7) of the 7 Ontario Energy Board Act? 8 MR. LESLIE: No there is not, Madam Chair. 9 THE PRESIDING MEMBER: Mr. Rook? 10 MR. ROOK: No. 11 THE PRESIDING MEMBER: Thank you. 12 My next question. Mr. Leslie, I am a bit 13 confused as to what would the prejudice be to Union 14 other than the uncertainty of having a short period for 15 an interim Franchise Agreement if the Board were to 16 grant the adjournment and give a short interim Franchise 17 Agreement? 18 I know, because I have signed a number of 19 orders, that there have been a number of cases recently 20 where Union has agreed to a short period of interim 21 Franchise Agreement and I was wondering if you could 22 elaborate on the prejudice in this particular case? 23 MR. LESLIE: Well, Madam Chair, first let me 24 say that a short adjournment is really only consistent 25 with Mr. Rook's second rationale, which is they are not 26 ready and they need more time. It is not, in my view, 27 going to deal with the problems that arise in connection 28 with the Court application. As I have said, that is 42 ROOK/LESLIE 1 going to be a long adjournment. 2 The prejudice is, this case raises, I think 3 for the first time squarely, the questions around the 4 basis on which franchises will be renewed or not renewed 5 in the face of opposition from the municipality. Until 6 those issues are dealt with in some fashion, and 7 guidance is given by the Board as to how they will be 8 dealt with, there is a significant amount of uncertainty 9 surrounding the operation of these franchises and the 10 investment in them, the decisions to go forward with new 11 investments either within existing franchises or in new 12 areas. 13 There is, I might say, some considerable 14 degree of uncertainty for shareholders in companies 15 which are making these investments. It is simply not, 16 in my submission, acceptable to wait for six or eight 17 months until Sudbury gets its act together in those 18 circumstances. 19 These are questions that should be dealt with 20 as quickly as possible and the Board acknowledged that, 21 I think, in its Procedural Order. 22 MR. ROOK: May I speak to that briefly, 23 Madam Chair? 24 THE PRESIDING MEMBER: Please. 25 MR. ROOK: I think you should bear in mind in 26 deliberating on this issue that Sudbury is one of the 27 few municipalities in Ontario that has a paragraph 22 28 which contains a right to acquire. For example, 43 ROOK/LESLIE 1 Kingston does not, and I know of no other municipality 2 other than isolated cases in Northern Ontario of which 3 Sudbury and the Region of Sudbury are two. Timmins a 4 third and there may be a few others. 5 MR. LESLIE: I'm told there are 56. I don't 6 have any evidence of that, but Mr. Rook doesn't either. 7 I think 56 is the number. 8 MR. ROOK: Well, be that as it may, but that 9 is not my information. But if I am wrong in that, so 10 be it. 11 What you have to deal with is one application. 12 We all know, whatever the outcome is, that this is a 13 matter of first impressions and the other situations 14 will we resolved either on the interests of the parties 15 or, depending on how this one is ultimately addressed, 16 by the courts and by this Board. That is all the more 17 reason why you should show some deference, in my 18 respectful submission, in granting the request. 19 THE PRESIDING MEMBER: Thank you, Mr. Rook. 20 Mr. Leslie, I just have one more point of 21 clarification as far as your argument is concerned. 22 I appreciate that it is your position that 23 this Board has no jurisdiction to deal with ownership of 24 the assets. Is that correct? 25 MR. LESLIE: That is correct, yes. 26 THE PRESIDING MEMBER: But this Board has 27 exclusive jurisdiction to deal with the operation of 28 those assets? 44 ROOK/LESLIE 1 MR. LESLIE: Yes. 2 THE PRESIDING MEMBER: Is your position that 3 in determining the operation who has the right to 4 operate the assets, that ownership of those assets is 5 not relevant? 6 MR. LESLIE: No, I don't take that position. 7 It may be a relevant consideration. The Board may, in 8 the end, have to condition whatever it does taking that 9 into consideration, which I think it can do under 10(4) 10 as well. 11 THE PRESIDING MEMBER: Right. 12 MR. LESLIE: It depends how the Board views 13 it, but if the Board in the end decides that the 14 critical factor in which way to go on the franchise 15 renewal question -- and I will submit when I get my 16 opportunity that that shouldn't be the case -- but if 17 that is the critical factor then I think the Board can 18 accommodate that by making the franchise terms such that 19 if the ownership changes the question gets revisited. 20 THE PRESIDING MEMBER: Are we not -- 21 MR. LESLIE: We are prepared to take that 22 chance, by the way. 23 THE PRESIDING MEMBER: Are we not in a bit of 24 a circular argument, and I am wondering how we can get 25 out of this. 26 If your position is that Sudbury's rights to 27 acquire the assets only arise if they do not have the 28 right to operate the assets, the Board determines who 45 ROOK/LESLIE 1 has the right to operate the assets independent of the 2 ownership of the assets, if in fact we renew the 3 Franchise Agreement would that not, according to your 4 argument, indirectly lead to the fact that therefore 5 Sudbury does not have the right under the Franchise 6 Agreement to acquire those assets? 7 MR. LESLIE: No. If the Board -- Sudbury's 8 right to acquire I thought, until I saw Mr. Rook's 9 application, clearly only arose if the Board decided 10 that the franchise should end or if it ended for some 11 other reason. In that eventuality the franchise 12 provides that Sudbury can then either acquire the assets 13 themselves or direct that they be sold to someone else. 14 All of this would be subject, I might mentioned, to the 15 Board's jurisdiction to approve such a sale under 16 section 43 of the Act. 17 What I'm saying to you is -- and I think this 18 may be the nub of what you are worried about -- if, in 19 your consideration of who should get the right to 20 operate the franchise, you come to the position that it 21 should be Union but that depends critically on whether 22 Union continues to be the owner, then I think you can 23 condition your order in a way that accommodates that 24 eventuality, that is to say that the grant of the 25 franchise could be dependent on continuing ownership. 26 But if you did that, and Mr. Rook's 27 application proceeded, the Court would still have to 28 decide whether Sudbury has an absolutely independent 46 ROOK/LESLIE 1 right to acquire Union's property regardless of your 2 order renewing the franchise. That is his position. 3 His position is that they have a right to 4 acquire the property regardless of what you do with 5 respect to the franchise. 6 Our position is that their right to acquire 7 the property depends entirely on the franchise having 8 terminated. 9 But if you were to decide, for example, that 10 the franchise should continue because Union has done a 11 good job and for all the reasons we have set out in our 12 evidence, but if the ownership of the assets, the 13 underlying assets changes you would make a different 14 decision, then I think you can accommodate that in your 15 decision and let Mr. Rook go to court and let the Court 16 decide where the ownership lies. 17 THE PRESIDING MEMBER: Thank you. 18 --- Pause 19 THE PRESIDING MEMBER: Thank you. 20 The Board would like some time to consider is 21 decision on this matter, but we believe that we can 22 render an oral decision today. So we would like to 23 reconvene at 1:30. 24 MR. LESLIE: Madam Chair, I hesitate to do 25 this, but I have a rather important commitment at two 26 o'clock, would it be acceptable to the Board if Ms Wong 27 attended at 1:30 in my stead? 28 THE PRESIDING MEMBER: Certainly. 47 ROOK/LESLIE 1 MR. LESLIE: Thank you. 2 THE PRESIDING MEMBER: Mr. Rook? 3 MR. ROOK: That's fine, Madam Chair. 4 THE PRESIDING MEMBER: Thank you. 5 Then the Board will adjourn until 1:30 this 6 afternoon. 7 --- Upon recessing at 1047 8 --- Upon resuming at 1341 9 DECISION 10 THE PRESIDING MEMBER: The Board has carefully 11 considered the submissions of the parties. 12 The sole issue before the Board today is to 13 determine whether to grant the City of Sudbury's motion 14 to adjourn Union Gas Limited's application under 15 sections 9 and 10 of the Municipal Franchises Act with 16 respect to the renewal of the Franchise Agreement for 17 the City of Sudbury. 18 The City of Sudbury raised a number of grounds 19 for requesting this adjournment: first, is the 20 uncertainty of the parties' positions, given that an 21 application is pending before the Ontario Superior Court 22 of Justice, to interpret paragraph 22 of the existing 23 Franchise Agreement with respect to the City of 24 Sudbury's rights to acquire ownership of the assets, and 25 the government has stated its intention to retroactively 26 repeal section 62 of the Public Utilities Act; secondly, 27 that for various reasons Sudbury is not prepared to 28 proceed with this matter within the time frame set out 48 DECISION 1 in Procedural Order No. 1. 2 In making its determination, the Board's 3 overriding concern is the protection of the public 4 interest. The Board accepts Mr. Leslie's argument that 5 the Board's concern in protecting the public interest is 6 broader than merely protecting the interests of the 7 ratepayers of Sudbury but includes stakeholders 8 throughout the Province. 9 The Board must also consider any prejudice to 10 the parties in granting an adjournment. 11 Both Union and the City agreed that the right 12 of Sudbury to acquire the assets of the utility is a 13 matter that is properly before the Court. However, it 14 is in the Board's jurisdiction to determine who is the 15 most appropriate person to operate the system. 16 The Board finds that the resolution of the 17 first issue, namely, who owns the distribution system 18 assets, is relevant and material in determining the 19 second issue before the board, namely, who should be 20 granted the right to operate the system. 21 While the Board appreciates that the final 22 resolution of this matter could take years, the Board 23 feels that it would be assisted in dealing with Union's 24 application to renew the Franchise Agreement presently 25 before the Board if it has the benefit of the Court's 26 interpretation, at least in the first instance, of 27 paragraph 22 of the Franchise Agreement. 28 The Board is concerned that the rights of the 49 DECISION 1 City of Sudbury might be unduly prejudiced if the Board 2 were to proceed to hear this application prior to the 3 Court's initial determination. The Board acknowledges 4 that the uncertainty caused by granting an adjournment 5 may cause some prejudice to Union, nevertheless the 6 Board has determined that, on balance, an adjournment is 7 appropriate in this case. 8 The City of Sudbury has consented to an 9 extension of the Franchise Agreement on the same terms 10 and conditions for a period of six to eight months or as 11 otherwise ordered by the Board. 12 The Board will issue an order extending the 13 Franchise Agreement until June 30, 2000. The Board will 14 issue an order adjourning this matter without setting a 15 fixed date and amending the time limits set out in 16 Procedural Order No. 1 as a result of this decision. 17 The Board expects the parties to proceed 18 expeditiously before the Court. The Board expects the 19 parties to keep Board staff fully advised in a timely 20 manner as to the status of the case before the Court so 21 that Union's application may be dealt with 22 expeditiously. 23 MS WONG: Thank you, Madam Chair. 24 MR. BROOK: Thank you. 25 THE PRESIDING MEMBER: Anything else? 26 We are adjourned. Thank you 27 --- Whereupon the hearing adjourned at 1345 p.m. 28 50 DECISION 1 INDEX 2 PAGE 3 Hearing commenced at 0930 3 4 Submissions by Mr. Rook on behalf of 5 5 The Corporation of the City of Sudbury 6 Submissions by Mr. Swiddle on behalf of 18 7 The Regional Municipality of Sudbury 8 Submissions by Mr. Leslie on behalf of 19 9 Union Gas Limited 10 Questions by the Board 31 11 Question by Board staff 33 12 Reply submissions by Mr. Rook on behalf of 36 13 The Corporation of the City of Sudbury 14 Questions by the Board 39 15 Upon recessing at 1047 47 16 Upon resuming at 1341 47 17 Board Decision 47 18 Hearing adjourned at 1345 49