1 1 RP-1999-0044 2 3 THE ONTARIO ENERGY BOARD 4 5 IN THE MATTER OF the Ontario Energy Board Act, 1998; 6 7 AND IN THE MATTER OF an Application by Ontario Hydro 8 Networks Company Inc., for an Order or Orders approving 9 year 2000 transmission cost allocation and rate design. 10 11 12 13 B E F O R E : 14 R.M. HIGGIN Presiding Member 15 PAUL VLAHOS Member 16 B. SMITH Member 17 18 19 Hearing held at: 20 2300 Yonge Street, 25th Floor, Hearing Room No. 2 21 Toronto, Ontario on Wednesday, February 16, 2000, 22 commencing at 0905 23 24 VOLUME 1 25 26 HEARING 27 28 Les Services StenoTran Services Inc. 613-521-0703 2 1 APPEARANCES 2 JENNIFER LEA/ Board Counsel, Board 3 HAROLD THIESSEN Technical Staff 4 DONALD ROGERS/ Ontario Hydro Networks 5 BRYAN BOYCE Company (OHNC) 6 DAVID BROWN Independent Power Producers 7 Society of Ontario (IPPSO); 8 Ontario Natural Gas 9 Association 10 JAMES FISHER/ Association of Major Power 11 KEN SNELSON Consumers in Ontario (AMPCO) 12 MICHAEL JANIGAN Vulnerable Energy Consumers 13 Coalition (VECC) 14 ROBERT WARREN Consumers Association of 15 Canada (CAC) 16 BRUCE CAMPBELL/ Ontario Power Generation 17 JOEL SINGER/ (OPG) 18 JOHN RATTRAY 19 LLOYD GREENSPOON NorthWatch 20 DAVID POCH Green Energy Coalition (GEC) 21 MARK MATTSON Energy Probe 22 PETER BUDD Transalta Energy 23 MURRAY KLIPPENSTEIN Pollution Probe 24 RICHARD STEPHENSON Power Workers Union 25 MARK RODGER Toronto Hydro Electric 26 System 27 PAUL DUMARESQ Ontario Association 28 SHARON WONG Imperial Oil Les Services StenoTran Services Inc. 613-521-0703 3 1 APPEARANCES 2 ERIK GOLDSILVER Electrical Contractors 3 Association of the Ontario; 4 Collingwood Public Utilities 5 Commission 6 ROGER WHITE Energy Cost Management Inc. 7 RICHARD KING Five Nations Energy Inc.; 8 Detroit Edison Co. 9 KENNETH LIDDON Suncor Energy Inc. 10 GEORGE VEGH/ Amoco Canada; Toromont 11 JEAN-PAUL Energy 12 DESROCHERS 13 KEITH RAWSON TransCanada Energy 14 PAUL VOGEL/ The Chiefs of Ontario 15 CAROL GODBY 16 KELLY FRIEDMAN/ Municipal Electrical 17 MAURICE TUCCI Association (MEA) 18 WENDY EARLE/ Brampton Hydro, Cambridge 19 JAMIE SIDLOFSKY and North Dumfries Hydro, 20 Guelph Hydro, Niagara Falls 21 Hydro, Oakville Hydro, 22 Richmond Hill Hydro, 23 Pickering Hydro and Waterloo 24 North Hydro 25 RICK COBURN INCO Limited; Ontario Mining 26 Association 27 TED COWAN Ontario Federation of 28 Agriculture Les Services StenoTran Services Inc. 613-521-0703 4 1 Toronto, Ontario 2 --- Upon commencing on Wednesday, February 16, 2000 3 at 0905 4 THE PRESIDING MEMBER: We seem to have a 5 number of microphone problems today -- in fact, this one 6 is speaking back to me as I sit here -- so we will just 7 have to try and work around those. 8 You can't hear this microphone. Can we just 9 try that one, Mr. Vlahos. 10 MEMBER VLAHOS: Is this better? Can you hear 11 me? No? 12 Can you hear from this one? 13 UNIDENTIFIED SPEAKER: Yes. 14 THE PRESIDING MEMBER: Okay. We will try and 15 switch it off and we will -- 16 --- Technical difficulties 17 THE PRESIDING MEMBER: So we will just speak 18 loudly so you can hear us. 19 Good morning and welcome to this proceeding of 20 the Ontario Energy Board. 21 My name is Roger Higgin. With me, today, are 22 Bob Smith and Paul Vlahos. 23 The Board is sitting today to hear evidence in 24 the matter of an application by Ontario Hydro Networks 25 Company Inc. under the Ontario Energy Board Act, 1998, 26 for a Board Order approving the cost allocation and rate 27 design for transmission services to be effective on the 28 date of the opening of the Ontario electricity market. Les Services StenoTran Services Inc. 613-521-0703 5 1 The Board's file number is RP-1999-0044. 2 The first order of business is to enter 3 appearances. So given that there is microphone 4 problems, I would ask you if you can find a microphone 5 and speak slowly so we and the reporter can get the 6 information down. 7 Can we start with the applicant. 8 MR. ROGERS: My name is Donald Rogers. I 9 represent the applicant. 10 THE PRESIDING MEMBER: Next, please. 11 MR. BROWN: Good morning, Dr. Higgin. 12 My name is David Brown. I'm appearing, today, 13 for IPPSO. I have also been asked, Dr. Higgin, to 14 advise you that Ontario Natural Gas Association, or 15 ONGA, want to enter an appearance but they do not intend 16 to cross-exam during this hearing. They will monitor 17 the hearing and file final argument at the end. 18 THE PRESIDING MEMBER: Thank you, Mr. Brown. 19 MR. FISHER: Good morning, Dr. Higgin. 20 My name is James Fisher. With me is Ken 21 Snelson. We are here on behalf of the Association of 22 Major Power Consumers in Ontario. 23 THE PRESIDING MEMBER: Good morning, Mr. 24 Fisher, Mr. Malcolm. 25 MR. JANIGAN: My name is Michael Janigan. I 26 appear on behalf of the Vulnerable Energy Consumers 27 Coalition. 28 THE PRESIDING MEMBER: Good morning, Mr. Les Services StenoTran Services Inc. 613-521-0703 6 1 Janigan. 2 MR. WARREN: Robert Warren, for the Consumers 3 Association of Canada. 4 THE PRESIDING MEMBER: Good morning, Mr. 5 Warren. 6 MS LEA: Jennifer Lea for Board technical 7 staff. 8 MR. CAMPBELL: My name is Bruce Campbell. I'm 9 appearing for Ontario Power Generation. Seated to my 10 right is Joel Singer, who is advising OPG. Also 11 appearing for OPG is John Rattray, who is sitting 12 directly behind me. 13 THE PRESIDING MEMBER: Good morning, Mr. 14 Campbell. 15 MR. GREENSPOON: Good morning. My name is 16 Lloyd Greenspoon. I appear on behalf of NorthWatch. 17 THE PRESIDING MEMBER: Good morning, Mr. 18 Greenspoon. 19 MR. POCH: Good morning, Mr. Chair and Panel. 20 David Poch, on behalf of the Green Energy 21 Coalition, the GEC. 22 THE PRESIDING MEMBER: Good morning, Mr. Poch. 23 MR. MATTSON: Good morning, Dr. Higgin. 24 Mark Mattson, counsel for Energy Probe. 25 THE PRESIDING MEMBER: Good morning, Mr. 26 Mattson. 27 MR. BUDD: Good morning, Mr. Chairman. Peter 28 Budd, on behalf TransAlta Energy. Les Services StenoTran Services Inc. 613-521-0703 7 1 THE PRESIDING MEMBER: Good morning, Mr. Budd. 2 MR. KLIPPENSTEIN: Good morning, Mr. Chairman 3 and Panel. 4 Murray Klippenstein, appearing for Pollution 5 Probe. 6 THE PRESIDING MEMBER: Good morning, Mr. 7 Klippenstein. 8 MR. STEPHENSON: Good morning, Mr. Chair. 9 My name is Richard Stephenson. I'm here on 10 behalf of Power Workers Union. 11 THE PRESIDING MEMBER: Good morning, Mr. 12 Stephenson. 13 MR. RODGER: Good morning. Mark Rodger, 14 counsel for Toronto Hydro Electric System Limited. 15 THE PRESIDING MEMBER: Good morning, Mr. 16 Rodger. 17 MR. DUMARESQ: Good morning, Paul Dumaresq, 18 for the Ontario Association. 19 THE PRESIDING MEMBER: Good morning, Mr. 20 Dumaresq. 21 MR. GOLDSILVER: Good morning, Mr. Chairman. 22 My name is Erik Goldsilver, counsel for 23 Electrical Contractors Association of Ontario. I am 24 also making an appearance on behalf of the Collingwood 25 Public Utilities Commission. 26 THE PRESIDING MEMBER: Good morning, Mr. 27 Goldsilver. 28 MR. WHITE: Good morning, Mr. Chair. I'm Les Services StenoTran Services Inc. 613-521-0703 8 1 Roger White, for the Energy Cost Management Inc. and I'm 2 here for a number of small- and medium-sized municipal 3 electrical utilities. 4 THE PRESIDING MEMBER: Good morning, Mr. 5 White. 6 MR. KING: Good morning, Mr. Chair. 7 Richard King, appearing on behalf Five Nations 8 Energy Inc., as well as the Detroit Edison Company. 9 THE PRESIDING MEMBER: Good morning, Mr. King. 10 MR. LIDDON: Good morning, Mr. Chair. 11 My name is Kenneth Liddon, from Suncor Energy. 12 THE PRESIDING MEMBER: Good morning, Mr. 13 Liddon. 14 MS WONG: Sharon Wong, from Imperial Oil. 15 THE PRESIDING MEMBER: Good morning, Ms Wong. 16 MR. VEGH: George Vegh, on behalf of Amoco 17 Canada. I'm here with Jean-Paul Desrochers, also of 18 Amoco Canada. I'm also here today for Toromont Energy. 19 THE PRESIDING MEMBER: Good morning, Mr. Vegh. 20 MR. RAWSON: Good morning, Mr. Chair. 21 Keith Rawson, for TransCanada Energy Ltd. 22 THE PRESIDING MEMBER: Good morning, Mr. 23 Rawson. 24 MR. VOGEL Good morning, Mr. Chair, Panel 25 Members. 26 My name is Paul Vogel. I appear on behalf of 27 the Chiefs of Ontario. I represent a group of 134 First 28 Nations and individual First Nations who are intervenors Les Services StenoTran Services Inc. 613-521-0703 9 1 in this matter. Here with me is Carol Godby. 2 THE PRESIDING MEMBER: Good morning, Mr. 3 Vogel. 4 MS FRIEDMAN: Good morning. 5 My name is Kelly Friedman, counsel for the 6 Municipal Electrical Association. I will be joined by 7 the Maurice Tucci. 8 THE PRESIDING MEMBER: Good morning, Ms 9 Friedman. 10 MS EARLE: Good morning, Mr. Chairman. 11 My name is Wendy Earle. Appearing with me is 12 Mr. Jamie Sidlofsky, on behalf of a coalition of 13 Utilities: Brampton Hydro; Cambridge and North Dumfries 14 Hydro; Guelph Hydro; Niagara Falls Hydro; Oakville 15 Hydro; Pickering Hydro; Richmond Hill Hydro and Waterloo 16 North Hydro. 17 THE PRESIDING MEMBER: That's a lot of hydros. 18 --- Laughter 19 MR. COBURN: Good morning, Dr. Higgin. 20 My name is Rick Coburn. I represent INCO and 21 the Ontario Mining Association. 22 THE PRESIDING MEMBER: Good morning, Mr. 23 Coburn. 24 Any other appearances? 25 Is there anybody here requesting late 26 intervention status? No. Thank you very much. 27 Well, then, that's the preliminaries. 28 MR. RODGER: Excuse me, Mr. Chairman, but I Les Services StenoTran Services Inc. 613-521-0703 10 1 think there was a request, on behalf of the Ontario 2 Natural Gas Association, to intervene, maybe, as I 3 understood it. 4 THE PRESIDING MEMBER: Yes, Mr. Brown -- 5 --- Technical difficulties 6 MR. BROWN: (technical difficulties) already 7 an intervenor and (technical difficulties) 8 THE PRESIDING MEMBER: They are registered and 9 Mr. Brown, he was entering an appearance for them. 10 Thank you. 11 Now, we will just discuss a few of the 12 logistics. 13 As to the sitting hours, the Board will 14 generally sit from nine a.m. to five p.m., Monday to 15 Friday. 16 MR. RODGER: I apologize, Mr. Chairman. We 17 are having very hard time hearing you from the back of 18 the room. 19 THE PRESIDING MEMBER: I'm trying to speak as 20 loud as I can -- I will try even harder -- but it's 21 difficult. 22 So, the Board will generally sit from nine 23 a.m. to five p.m., Monday to Friday, with the exception 24 that we will start at 9:30 on Monday and wrap up, all 25 things being equal, at two p.m. on Friday. 26 In addition, there are some times when the 27 Board has other matters and will not sit. 28 At the present, the following are the times Les Services StenoTran Services Inc. 613-521-0703 11 1 when we will not be sitting: Thursday, February the 2 29th, in the afternoon; Wednesday, March 1st, in the 3 morning; and, if we are not finished by then, Tuesday, 4 March 7th, in the afternoon; and Wednesday, March 8th, 5 again, in the afternoon. 6 I hope everybody heard that. I would like to 7 go on and try and provide the Board's response to the 8 ABR settlement. 9 With respect to the document entitled 10 Settlement Agreement that was filed with us yesterday, 11 based on the Board's review, the document did not 12 constitute a complete settlement of any of the issues on 13 the issues list or conform to the Board's requirements 14 for settlement agreements. Accordingly, all issues, 15 except those noted as argument only, will proceed to the 16 oral hearing stage. 17 I hope the documents provide some indication 18 of where there is a narrowing of the views of the 19 parties. This can be useful in improving the efficiency 20 of the hearing. I will talk to that in a moment. The 21 Board has some additional comments which may be helpful 22 to the parties. 23 With respect to issue 1.1, cost allocation 24 principles, the Board notes that in addition to some 25 parties exercising their rights to cross-examine the 26 statement that "OHNC expects that the Board will 27 consider the purposes of the Act". Although well 28 intentioned, it does not constitute an appropriate Les Services StenoTran Services Inc. 613-521-0703 12 1 agreement among the parties. 2 With respect to issue 1.2, cost allocation 3 methodology, there is incomplete agreement on pool 4 definition and the Green Energy Coalition has recited 5 regarding assets shared by Generation M Blue. 6 Issue No. 3, charge determinants, the 7 "agreement" on the line and transformation charge 8 determinant is conditioned by linking it to issue No. 5, 9 recognition of the transmission customer and by the 10 statement in appendix A, attachment A, item 2. 11 The Board cannot accept item 2 since the Board 12 cannot make such a commitment as is indicated there. 13 The Board, having heard all the evidence in this case, 14 may then make an appropriate comment in its decision in 15 this case. 16 Now, on issue No. 6, existing hydro contracts, 17 despite some parties agreeing, the matter is not settled 18 and should proceed to be heard along with the remaining 19 issues. 20 In sum, all issues except those listed as 21 argument only, will be heard in the oral stage. 22 However, as I mentioned earlier, the settlement 23 discussions will be useful in streamlining 24 cross-examination in the hearing. 25 In that respect, we will plan to proceed issue 26 by issue and request that in the interest of efficiency, 27 parties discuss for each issue. whether a lead party or 28 proponent can be identified, lead the examination of Les Services StenoTran Services Inc. 613-521-0703 13 1 OHNC's witnesses. This lead party will be followed by 2 like minded parties and then others will follow ending, 3 finally, with Board staff and redirect from the 4 applicant counsel. 5 Finally, a general word on costs. This 6 proceeding is under the Board's current eligibility and 7 cost of (inaudible) roles. We will be vigilant on 8 matters such as the need for counsel to attend every 9 day, implication, overlap and lack of efficiency. This 10 s not of account when it comes to the amounts of the 11 award. 12 That is the Board's opening remarks. Are 13 there any questions on that? Then we will move on to 14 any other preliminary matters. 15 Mr. Rogers, do you have any preliminary 16 matters? 17 MR. ROGERS: I have an opening statement to 18 make, sir. I would be happy to try and do it right now. 19 May I say something about the -- I will just shout 20 towards the back. I thought this microphone was 21 working. I'm sorry. 22 Can I say something about the order of the 23 others, Dr. Higgin. It had been my intention, having 24 listened to the parties debate the various issues during 25 the settlement conference, the attempt to deal with a 26 number of the issues which were inter-related at one 27 time together. 28 I understand the Board does not wish to do Les Services StenoTran Services Inc. 613-521-0703 14 1 that and, of course, we accept your ruling in that 2 respect, but I would like to call my first panel of 3 witnesses and lead some direct evidence from them on 4 three topics, really the first three issues on the list, 5 at the same time because we are in a renewed survey and 6 I think it would be -- I hope it will be of use to the 7 Board to have them give a brief description of those 8 three or four items which were highly contentious during 9 the settlement process at one time. 10 They will, of course, observe your requirement 11 that the examination -- cross-examination take place by 12 issue, but I would like to deal with three or four 13 topics at one time with my first panel, which will 14 consist only of two witnesses. 15 THE PRESIDING MEMBER: Well, we can proceed 16 that way. I think the Board feels that we will have a 17 clear record if we separate the issues somewhat in 18 cross-examination so we will ask the parties that will 19 then follow to start with dealing with cost allocation 20 first off as the first issue for cross-examination. 21 Moving on, when that has been completed, to make this as 22 clear as possible and then on to issue 2 and then on to 23 charge determinants. 24 That's the way we would prefer to proceed. It 25 might be a little slower, but it gets a better record. 26 If people jump around from issue to issue, the record -- 27 the transcript can become quite murky. We would rather 28 not have that. Les Services StenoTran Services Inc. 613-521-0703 15 1 Thank you, Mr. Rogers. 2 Ms Lea, you said you had a preliminary 3 MS LEA: Yes, I have two preliminary matters 4 merely of an administrative nature. First, the Board 5 Secretary's office and Board staff have examined the 6 affidavits of publication and servicing this matter and 7 the Board's direction for servicing publication appear 8 to have been complied with, so we can proceed. 9 Secondly, an exhibit list has been created. 10 Copies are on the window ledge. We will be assigning 11 exhibit numbers in this hearing to exhibits filed by 12 parties, including the applicant, and to undertakings 13 that may be given by the applicant. 14 The general filing category for exhibits is 15 "G" and the general filing category for undertakings is 16 "F". You can pick up your exhibit list if you wish and 17 that's how we will be numbering them. 18 Thank you. 19 THE PRESIDING MEMBER: I think we are going to 20 experience quite some difficulty with the microphone 21 system this morning, so the only thing I can suggest is 22 that we try and see how far we go. If that doesn't 23 work, we will just have to stand down until they fix it, 24 so we will try. 25 My understanding is that these on the other 26 side are supposed to be working, but we are not clear. 27 They may be some in the second row. I think that's in 28 doubt right now. Les Services StenoTran Services Inc. 613-521-0703 16 1 I think we will try and see if we can proceed. 2 If not, we will have to stand down and resume when the 3 microphones are fixed. 4 Okay, Mr. Rogers, would you like then to make 5 your opening statement and would you like to shout to 6 the back. 7 MR. ROGERS: Yes, I will. 8 MR. WARREN: Mr. Chairman, I'm sorry to 9 interrupt Mr. Rogers. I just wanted to note for the 10 record that the KC will be an actual participant in the 11 hearing, however, our perception is that with respect to 12 the OHNC evidence, the issues are easily clearly 13 defined. 14 Therefore, I will not, at least in the early 15 phase of the hearing, be attending on a regular basis to 16 cross-examine. I will be reading the transcript and 17 will come if I feel that there are issues that need to 18 be brought forward. 19 In the latter phase of the hearing, 20 particularly the intervenor evidence, I will be here on 21 a more regular basis. But I wanted to note that for the 22 record. 23 THE PRESIDING MEMBER: Okay. Thank you. 24 MR. WARREN: Thank you, sir. 25 THE PRESIDING MEMBER: Mr. Rogers. 26 MR. ROGERS: Mr. Chairman, Members of the 27 Board, this is an application for -- 28 THE PRESIDING MEMBER: I'm sorry. We are Les Services StenoTran Services Inc. 613-521-0703 17 1 being interrupted again, sir. 2 --- Pause 3 --- Technical difficulties 4 MR. WARREN: I apologize, Mr. Chair, 5 Mr. Rogers. It is impossible for us to hear. I hate to 6 interrupt the proceedings, but I would ask if there is 7 any chance we can step down and see if we can get the 8 microphone system working because I didn't hear anything 9 of my friend's submission and I think it will be very 10 difficult to carry on, with all due respect. 11 I don't think Mr. Rogers is very worried about 12 what I'm going to say. It is the other applicants that 13 he should be worried about. 14 --- Laughter 15 THE PRESIDING MEMBER: I think we will try 16 with Mr. Rogers' opening statement, and, then, I think 17 you are probably right, we should go with a recess to 18 see if we can get the microphones fixed before the 19 witnesses come up, because cross-examination won't go 20 very well I don't think. 21 Mr. White, you can fix microphones? No? 22 MR. WHITE: Not probably in the timeline that 23 we are looking at. Could we ask Mr. Rogers to stand and 24 maybe it will be easier in that respect. 25 MR. ROGERS: I was planning to do that. 26 THE PRESIDING MEMBER: Okay. 27 MR. ROGERS: The trouble is, when I stand I'm 28 too far from my notes to read them without my glasses. Les Services StenoTran Services Inc. 613-521-0703 18 1 --- Technical difficulties 2 MR. ROGERS: Mr. Chairman, Members of the 3 Board, I do have an opening statement to make. 4 This is an application for the Board's 5 approval of the proposed cost allocation and rate design 6 to be in effect when open access takes place in the 7 year 2000. 8 It is based on the Board's Transitional Rate 9 Order Decision of March 31, 1999, which set a revenue 10 requirement of $1.1 billion. The issue here is how that 11 large revenue requirement is going to be allocated and 12 recovered in rates from the various users of this 13 transmission system. 14 This is new ground for all of us. The issues 15 are complex and, to a large extent, they are 16 interlocking. We are going to have to be a little 17 patient with one another over the next few weeks in 18 order to get this evidence out and understood and proper 19 decisions made. 20 Preparatory to this hearing, the company, the 21 applicant in this case, has embarked on an extensive 22 consultation process with its customers and, with the 23 help of its consultants, NERA, has made a body of 24 proposals to this Board which it feels results in a fair 25 allocation of the cost burden which takes into account 26 the competing interests of its customers in a way that 27 is consistent with sound principles of cost allocation 28 and ratemaking. Les Services StenoTran Services Inc. 613-521-0703 19 1 The parties, all of the parties in this room, 2 have been through a long, long consultation process in 3 several phases. Just recently we have completed several 4 difficult days of settlement discussions. Mr. Chairman, 5 you have commented on the results of that this morning. 6 It was a difficult process. 7 The interests are so diverse and the issues 8 are so complex that it hasn't been possible to reach 9 agreement on a number of important issues. In part, 10 this is because of the fact that certain issues are 11 interrelated and it is difficult to reach agreement on 12 one without affecting the disposition of others by so 13 doing. 14 Some issues have been resolved partially by 15 settlement conference with some dissenters, but by and 16 large the issues were not possible to resolve. Many of 17 these issues are so difficult that it was simply 18 impossible to reach any agreement whatsoever. 19 We are about to begin an analysis of those 20 complex issues through this process in this forum, but 21 that will not be easy. It is important for us all, 22 including all present users of this system and all 23 future users of this system, that we collectively get 24 these first steps as right as we can. 25 I hope therefore that we will have a focused 26 and a civil discussion over the next few weeks about 27 these difficult complex issues where the views of all 28 will be respected and the result of which will be a good Les Services StenoTran Services Inc. 613-521-0703 20 1 sound first step based on good sound principles. 2 I propose to call in two witnesses, 3 Mr. Chairman, Members of the Board -- panels rather, to 4 deal with all of these issues. 5 It appears that from the past several days of 6 settlement discussions that some issues are closely 7 related and tied together, as I stated earlier. I have 8 decided, therefore, that it would be best to deal with 9 those issues with one panel, my first panel. 10 It was my belief that it would be best if 11 these issues, which are interrelated, could be 12 considered together as a part of the whole. 13 Accordingly, the first panel that I propose to 14 call, consisting of two witnesses -- who I'm hoping will 15 be introduced in a moment -- will deal with the 16 difficult but interrelated issues of: pool definition; 17 charge determinants; and net versus gross load billing, 18 a most difficult problem. 19 Now, one or two parties have not agreed to 20 accept the settlement proposal with respect to cost 21 allocation principles and methodology. The first panel 22 of witnesses will be available to answer questions on 23 those topics as well. 24 Once we are finished with that panel, I 25 propose to call a second panel, which will deal with all 26 the main issues which have not been settled. Chief 27 among those would be: export and wheeling through 28 transactions, treatment of existing Ontario Hydro Les Services StenoTran Services Inc. 613-521-0703 21 1 contracts, and treatment of new load connection 2 investments. 3 This panel will also answer questions 4 concerning the conditions of service which I know is of 5 interest to some of the parties. 6 Now, the applicant has not filed any evidence 7 specifically with respect to the issue of the First 8 Nations, as raised by their intervention and their 9 evidence. Accordingly, I will not present a panel 10 in-chief to deal with those issues. I would suggest 11 that any proper cross-examination questions which 12 address those issues should be put to the second panel. 13 It may be that I will call some reply evidence 14 on that issue once the First Nations have testified, but 15 I don't propose to call any evidence in-chief. 16 Now, before I call the first panel forward, 17 Mr. Chairman and Members of the Board, there is an 18 administrative matter which I would like to deal with. 19 As the Board knows and my friends know, the 20 Rules of Professional Conduct in Court Proceedings 21 contain a general prohibition against discussing 22 evidence with witnesses under cross-examination. 23 Generally speaking, while it is proper for a 24 lawyer to discuss with a witness in direct examination 25 any evidence yet to be given, he or she ought not to 26 discuss with the witness any evidence relating to any 27 issue in the proceeding while a witness is under 28 cross-examination. Les Services StenoTran Services Inc. 613-521-0703 22 1 Obviously, these rules are meant for court 2 proceedings and do not fit well with complex 3 administrative cases such as this one -- particularly 4 where we have panels of witnesses this is particularly 5 so -- whereas here it is necessary for the witnesses, as 6 experts, to brief counsel concerning the complex issues 7 on an ongoing basis, and I know you have all dealt with 8 this problem before in this forum. 9 Therefore, I ask my friends and I ask the 10 Board for an exemption to the general prohibition which 11 will allow me to discuss the evidence with the witnesses 12 while under cross-examination with respect to the 13 following: 14 One, evidence to be given by any future panel 15 on any future topic not yet discussed. 16 Two, compliance with undertakings given during 17 the hearing. 18 Three, the need of witnesses to draw to my 19 attention any misstatements or errors which require 20 correction for a clear and accurate record. 21 And, four, the ability to consult with the 22 witnesses following cross-examination with respect to 23 any re-examination which may be required on points 24 needing clarification. 25 Now, in this case, I can tell you, I think you 26 all know, I intend to call two main witnesses, 27 Mr. Curtis and Mr. Poray. These men were responsible 28 basically for supervising the entire cost allocation and Les Services StenoTran Services Inc. 613-521-0703 23 1 rate design before you, Mr. Chairman. I'm calling them 2 because they are the most knowledgeable people in my 3 client's organization to deal with these issues, but I 4 must be able to take instructions from them as we 5 proceed through this process in order that I can assist 6 the Board as best I can as counsel for the applicant. 7 So I ask you to permit me this leeway in 8 dealing with these people during their 9 cross-examination. 10 I also would ask for a general permission for 11 the witnesses on a panel to discuss the issues between 12 themselves both in the hearing, which is commonly done 13 and in fact your rules permit it, and outside the 14 hearing during the course of their cross-examination. 15 I don't intend to discuss evidence with the 16 witnesses that has been given in cross-examination, but 17 they should be permitted to discuss it amongst 18 themselves, the highly complex issues, the interrelated 19 issues, and it supports all of us that the evidence come 20 out right side up. 21 Now, I believe that this is actually 22 frequently done in these proceedings with panels of 23 witnesses, but I thought I should draw it to your 24 attention, to the attention of the Board, and ask for 25 your permission to permit that in this case. 26 Thank you very much. 27 --- Pause 28 THE CHAIRMAN: Just as a comment, the Board Les Services StenoTran Services Inc. 613-521-0703 24 1 normally (technical difficulties) concession to counsel. 2 The only concern we had -- and one you stated -- was 3 whether the witnesses would discuss matters or whether 4 they would consult with one another. There is a 5 difference, in our view. 6 MR. ROGERS: No; I think what I had in mind, 7 Mr. Chair -- if I understand your concern -- I don't 8 intend, and I will instruct my witnesses, that they are 9 not to discuss matters so as to alter one's view already 10 given, but I think it -- I think that's the point you 11 were driving at. That is not my intent and I will 12 instruct them not to do that. Really, what I want them 13 to be able to do is to consult one another because of 14 the complexity of these issues to make sure that you 15 have a complete record. 16 THE PRESIDING MEMBER: (technical difficulty) 17 MR. ROGERS: Yes, I understand. And I will 18 make sure they understand the distinction -- I think 19 they do now, as a matter of fact. 20 THE PRESIDING MEMBER: Right. And the Board 21 will just note that in other proceedings there have been 22 occasions where, because of the order of panels, where 23 there has been, sometime, some occasion of concern where 24 there was reply or rebuttal evidence by the following 25 panel which stood down from the recently presented 26 evidence and that is another concern. We have tried to 27 address that by having intervenor evidence follow the 28 evidence of the applicant in this proceeding. That may Les Services StenoTran Services Inc. 613-521-0703 25 1 have to be amended, depending on the availability 2 (technical difficulties). 3 MR. ROGERS: Just so I understand this, do 4 I -- is it my understanding that the Board's intention 5 is that while you will deal with it issue by issue, we 6 will call all of my client's evidence first, on all 7 issues, and then followed by the intervenors? 8 THE PRESIDING MEMBER: That's exactly. And 9 then I think we can tentatively reschedule the 10 intervenor evidence starting the week of the 28th of 11 February, I think. 12 MR. ROGERS: That was my opening statement. 13 Now, I can tell you, sir, that my witnesses 14 are relatively soft-spoken gentlemen and I think there 15 will be a real problem for the people at the back of the 16 room hearing. 17 THE PRESIDING MEMBER: I would agree. So I 18 think what we will do is, they are available, we will 19 just get them sworn in and then we will recess until we 20 are advised that the microphone system is fixed, or we 21 may have to go next door to the other hearing room, if 22 that's available. That is another potential option, but 23 it takes a while to set it up. 24 MR. ROGERS: I understand. 25 THE PRESIDING MEMBER: So, would you like to 26 just introduce the witnesses, and then we will have them 27 sworn and then we will recess. 28 MR. ROGERS: I would like to call Mr. David Les Services StenoTran Services Inc. 613-521-0703 26 1 Curtis and Mr. Andy Poray forward to be sworn. 2 SWORN: DAVID CURTIS 3 SWORN: ANDY PORAY 4 THE PRESIDING MEMBER: Thank you, gentlemen. 5 Rather than give your introduction now, we 6 will recess and we will keep everybody advised as to how 7 we can get back together either with the microphones 8 fixed or whether we can move next door. So, thank you 9 very much and we will keep you advised. 10 MR. JANIGAN: Mr. Chairman. 11 THE PRESIDING MEMBER: Yes, sir? 12 MR. JANIGAN: Just before we recess, I wonder 13 if it might be possible for all counsel to have a 14 conclave in the interim to sort out the matters 15 associated with cross-examination. For example -- 16 THE PRESIDING MEMBER: That would certainly be 17 helpful because if we could get something going, at 18 least on the two or three initial issues, that would be 19 good. 20 MR. JANIGAN: VECC, like CAC, is largely 21 supportive of the OHNC position and would probably its 22 cross-examination is more one of emphasis and putting 23 the other parties' positions (technical difficulties) in 24 a positive spin. I think that sort of cross-examination 25 would be best left until after. The opponents of the 26 OHNC have dealt with the matter so that if matters are 27 covered, it need not be covered by me in 28 cross-examination. Les Services StenoTran Services Inc. 613-521-0703 27 OHNC PANEL 1 1 THE PRESIDING MEMBER: So we would suggest 2 that, based on what you can understand from the 3 settlement discussions and settlement agreement, that 4 would be a guide, I think, as to where there might be 5 like-minded parties where somebody could agree to take a 6 lead in the cross-examination. So I would you may be 7 able to discuss that during this recess. 8 We will keep you advised where and when we are 9 going to resume. 10 Thank you. 11 --- Upon recessing at 0940 12 --- Upon resuming at 1035 13 MR. ROGERS: Sorry, Mr. Chair. We came as 14 quickly as we could when summoned. 15 THE PRESIDING MEMBER: I notice that you have 16 provided us with a copy of the order of panels and the 17 evidence that the witnesses will address, so we should 18 probably give this an exhibit while we are getting 19 ready. 20 MS LEA: We will call it Exhibit G1, please. 21 THE PRESIDING MEMBER: Thank you, Ms Lea. 22 EXHIBIT NO. G1.1: Order of Panels and 23 Evidence of Witnesses 24 THE PRESIDING MEMBER: Is there anything you 25 want to note or is it self-explanatory? 26 MR. ROGERS: I think it's self-explanatory, 27 sir. The witnesses will explain during this direct 28 testimony why we have done it this way and how this will Les Services StenoTran Services Inc. 613-521-0703 28 OHNC PANEL 1 1 be addressed by them. 2 THE PRESIDING MEMBER: Okay. Well, if 3 everybody is ready. 4 Mr. Mattson. 5 MR. MATTSON: Sorry, Mr. Chairman. I could 6 have probably raised this earlier, but I didn't realize 7 until the break the extent of the problem it creates for 8 my client's position here and that is with respect to 9 the order of cross-examination. 10 We have -- generally our position is, Mr. 11 Warren may have alluded earlier to in the day before he 12 left, there are a number of intervenors who have taken 13 the position that generally as a result of the process 14 over the last nine months, there is a sort of consensual 15 position that has come out of the evidence and that OHNC 16 is representing here in this hearing. 17 The problem with that is many of us have 18 different reasons for supporting different parts of the 19 evidence and to the extent that we try now to 20 differentiate between those who are in support and those 21 who are in opposition, it's very difficult to know what 22 principle of support the proponent is going to be 23 relying on at this time in terms of the position that 24 they are going to take before you. 25 In the past we have looked at order of 26 appearances. We have also looked to those who have the 27 most substantive cross and those people take the lead. 28 I feel that my client's position would in some way be Les Services StenoTran Services Inc. 613-521-0703 29 OHNC PANEL 1 1 prejudiced if we had to be silent in terms of 2 cross-examination because generally we support a 3 consensus position and then to have the hearing hear 4 from those who are directly opposed to that position and 5 then their evidence follows in two weeks. 6 In some ways we may never have the opportunity 7 to let you know where we are coming from through 8 evidence, through cross-examination of the proponent, 9 where we are coming through and what the principles are 10 we are relying on. 11 I think it's a problem that other people in 12 the room have. I don't think there is an agreement as 13 of yet as to what the order of cross-examination should 14 be. I thought I should raise that with you. 15 THE PRESIDING MEMBER: I think what we were 16 trying to say is that it seemed to us from looking at 17 the settlement proposal that there were certain 18 collections of people, I call them like-minded. I was 19 hopeful that some of those might get together and 20 identify somebody who would take the lead amongst that 21 group of like-minded parties. 22 I didn't intend to intend that the whole 23 cross-examination would be based on some agreed order. 24 I was really asking for people to get together and see 25 in the interest of efficiency whether one party would 26 take the lead, the others would then reduce their 27 cross-examination appropriately and that was the intent. 28 You should not interpret that as trying to Les Services StenoTran Services Inc. 613-521-0703 30 OHNC PANEL 1 1 diminish or in any way curtail parties' rights to 2 cross-examination. It's an efficiency issue as far as 3 we are concerned. 4 MR. BROWN: Dr. Higgin, if I could just 5 following up on that. With respect to trying to develop 6 a common method of cross-examination amongst groups, 7 certainly AMPCO and ourselves have agreed as to who will 8 take the lead on particular issues. 9 With respect, however, to the order of 10 cross-examination, as I apprehend the parties' positions 11 on some of the issues, they generally support the 12 applicant's proposal. They may have slightly different 13 reasons than the applicant is advancing, but at the end 14 of the day they support what the applicant is asking 15 this Board to do. 16 It would be my submission that parties who 17 find themselves in that position on any particular 18 issue, and it may differ from issue to issue, but on any 19 particular issue, should do their cross-examination 20 first inasmuch as they will be seeking to try and 21 buttress or bolster or make look good the applicant's 22 proposal. Once they are done, then the other parties in 23 the room will have the entire case in effect that the 24 applicant and its supporters are putting forth and then 25 cross-examination can proceed, followed by my friend's 26 re-examination on behalf of the applicant. 27 It would be my submission that that particular 28 method would make sure that the case in chief and its Les Services StenoTran Services Inc. 613-521-0703 31 OHNC PANEL 1 1 supporters go first and the critics go second, rather 2 than having a sandwiching effect where you have the 3 applicant in chief, then some cross-examination by 4 adverse parties and then the friends sort of come up to 5 come in to plug in the holes or whatever their strategy 6 might be. 7 I would respectfully suggest that on any 8 particular issue a party that at the end of the day is 9 going to take the position that they support the 10 applicant on that issue should cross-examine first and 11 then would be followed by those who do not support the 12 applicant's position. 13 THE PRESIDING MEMBER: I hear you. I think 14 that you may not find a consensus amongst the parties in 15 respect to that. It's not normally the Board's practice 16 to specifically do that except on motions where we do 17 indeed try to do that with motions. This is quite 18 different to a motion. 19 We will discuss it amongst ourselves, but just 20 the efficiency question of trying to get together in a 21 group or two or three parties, that's the thing that we 22 would like to see discussed. We will consider your 23 submission on that, but at the moment we think that may 24 not be appropriate to follow that route. We will 25 discuss it over the break. 26 Thank you. 27 Any more? Yes, Mr. White. 28 MR. WHITE: One thing I maybe could add to Les Services StenoTran Services Inc. 613-521-0703 32 OHNC PANEL 1 1 this particular consideration is some of the issues are 2 sufficiently complex that some of the parties may 3 support the proponent on certain aspects of one of the 4 items, but less so on other aspects. 5 I think it supports my reluctance to seek a 6 mandatory definition of the parties that are not 7 supporting. 8 THE PRESIDING MEMBER: Thank you. Any more on 9 that issue? Okay. 10 MR. ROGERS: I can only say that we have had a 11 hard determining who our friends are. 12 THE PRESIDING MEMBER: I didn't think you had 13 any friends. If you start on that premise, I think you 14 would be all right. 15 MR. ROGERS: Okay. 16 THE PRESIDING MEMBER: Thank you, Mr. Rogers. 17 MR. ROGERS: Thank you, sir. I would like now 18 to begin with some relatively brief direct examination 19 which I hope will be useful to the Board. This should 20 take perhaps 45 minutes or so. 21 What I thought I would do is have these 22 witnesses walk through and just summarize for the Board 23 some of the key elements of the issues that we are going 24 to be dealing with in this first panel. 25 EXAMINATION-IN-CHIEF 26 MR. ROGERS: Mr. Poray, could you please tell 27 us your name and professional affiliation. 28 MR. PORAY: Certainly. My name is Andrew Les Services StenoTran Services Inc. 613-521-0703 33 OHNC PANEL 1, in-ch (Rogers) 1 Poray. Currently I am the Manager of Pricing and 2 Product Development in the strategic planning group of 3 Ontario Hydro Network Company. 4 MR. ROGERS: Thank you. I understand that, 5 Mr. Poray, you hold a Bachelor of Science and a Ph.D. 6 degree in Electrical Engineering from the University of 7 Strathclyde in the United Kingdom. 8 MR. PORAY: That is correct. 9 MR. ROGERS: You currently are a member of the 10 Professional Engineers of Ontario and you are a member 11 of the Institute of Electrical and Electronic Engineers. 12 MR. PORAY: That is correct. 13 MR. ROGERS: Of particular interest to this 14 proceeding, I suppose, is the fact that you also 15 represent the transmission owners in Ontario on the IMO 16 Technical Panel. 17 MR. PORAY: That is correct. 18 MR. ROGERS: Now, your more detailed 19 curriculum vitae has been filed as part of the evidence 20 in this case for those who are interested. 21 MR. PORAY: Yes, it has. 22 MR. ROGERS: Mr. Poray, I understand that your 23 employment background is that you have been employed in 24 the electricity utility industry for almost 30 years. 25 During that time you have worked as a Professional 26 Engineer in the field of power system analysis and 27 transmission planning. 28 MR. PORAY: That is correct. Les Services StenoTran Services Inc. 613-521-0703 34 OHNC PANEL 1, in-ch (Rogers) 1 MR. ROGERS: More recently, I understand that 2 you have moved on to accept increasing responsibilities 3 dealing with transmission business strategy development 4 and during the past three years you have been heading a 5 unit responsible for cost allocation and rate design for 6 the development of transmission service tariffs. 7 MR. PORAY: That is correct. 8 MR. ROGERS: And that would be the unit that 9 was responsible for the production of the case before 10 the Board now? 11 MR. PORAY: Yes, it is. 12 MR. ROGERS: To assist the Members of the 13 Board and my friends, can you confirm for us, please, 14 that the evidence found in the application at Exhibit C, 15 Tab 3, for cost allocation principles, Exhibit C, Tab 4, 16 for pool definitions, Exhibit D, Tab 3, for transmission 17 customer definition, and Exhibit D, Tab 4, for charge 18 determinants, and as amended on November 24 and 19 December 2, 1999, were all prepared under your 20 supervision and direction? 21 MR. PORAY: I confirm that to be true. 22 MR. ROGERS: And that information is accurate 23 to the best of your present knowledge and belief? 24 MR. PORAY: Yes, it is. 25 MR. ROGERS: You accept that material as your 26 evidence in this case, Mr. Poray? 27 MR. PORAY: Yes, I do. 28 MR. ROGERS: Now, Mr. Curtis, can we turn to Les Services StenoTran Services Inc. 613-521-0703 35 OHNC PANEL 1, in-ch (Rogers) 1 you for a moment, please. 2 Could you please tell us your full name and 3 your professional affiliation? 4 MR. CURTIS: Yes. 5 My name is David Curtis and I am currently the 6 Manager of Transmission Regulation in the Regulatory and 7 Stakeholder Affairs division of Ontario Hydro Networks 8 Company. 9 MR. ROGERS: Thank you. 10 I understand, Mr. Curtis, that you hold a 11 masters degree in nuclear physics from the State 12 University of New York, and a degree in business 13 administration from McMaster University in Hamilton. 14 MR. CURTIS: Yes, I do. 15 MR. ROGERS: You, sir, have worked for Ontario 16 Hydro for over 20 years or worked for Ontario Hydro, I 17 suppose I should say, for over 20 years, and one of its 18 successor companies, Ontario Hydro Networks Company. 19 MR. CURTIS: Yes, I did. 20 MR. ROGERS: Over that time you have led units 21 and transmission system planning and strategic 22 development and you currently manage a unit responsible 23 for transmission regulation. 24 MR. CURTIS: Yes, that is correct. 25 MR. ROGERS: I understand, sir, that you were 26 responsible for the preparation of the evidence found in 27 the application at Exhibit D, Tab 5, that is net versus 28 gross load building, as amended on November 24 and Les Services StenoTran Services Inc. 613-521-0703 36 OHNC PANEL 1, in-ch (Rogers) 1 December 2, 1999. 2 MR. CURTIS: Yes, that is correct. 3 MR. ROGERS: Was this evidence prepared under 4 your supervision and control and, subject to a 5 correction which I believe you will make momentarily, 6 you believe to be accurate to the best of your knowledge 7 and belief? 8 MR. CURTIS: Yes, I do. 9 MR. ROGERS: You accept it as your evidence in 10 this proceeding? 11 MR. CURTIS: Yes, I do. 12 MR. ROGERS: Now, gentlemen, collectively, it 13 is my understanding that the application before the 14 Board was really the result of a team effort headed by 15 the two of you in sharing responsibility for the 16 preparation of this material. 17 MR. CURTIS: Yes, that is correct. 18 MR. PORAY: That is correct. 19 MR. ROGERS: And that each of you is 20 knowledgeable, perhaps in some areas more than others, 21 but you are both generally familiar with and can speak 22 to the issues in the application in general? 23 MR. CURTIS: Yes, that is correct. 24 MR. PORAY: That's correct. 25 MR. ROGERS: Thank you. 26 Now, Mr. Curtis, how would you describe 27 Ontario Hydro Networks Company's interest in these 28 proceedings? Les Services StenoTran Services Inc. 613-521-0703 37 OHNC PANEL 1, in-ch (Rogers) 1 MR. CURTIS: OHNC has a keen interest in terms 2 of these proceedings. This proceeding will set the 3 course for a transmission cost allocation and rate 4 design for Ontario. We want the results of this 5 proceeding to be a structure that works: one that works 6 for our customers, one that works for ourselves, and one 7 that works for the Board. 8 OHNC's revenue requirement for 2000 for 9 transmission services has already been approved by the 10 Ontario Energy Board in its March 31, 1999 decision, and 11 our transmission revenue is set for the year 2000. 12 Our financial and commercial interests have 13 already been addressed. 14 This application is in response to the Board's 15 direction to OHNC to file a new cost allocation and rate 16 design by October the 1st of 1999. Now, at one level, 17 these proceedings will set the rates customers will pay 18 Ontario Hydro Networks Company for the transmission 19 services in 2000 once open access has been proclaimed by 20 the government. 21 However, more fundamentally, we feel these 22 proceedings will define the principle and framework for 23 how OHNC's costs of transmission services will be 24 allocated to its customers. Our interest is that this 25 allocation be done in the most acceptable manner 26 possible for our customers, and we have endeavoured to 27 put forward in this application a framework that 28 addresses this objective. Les Services StenoTran Services Inc. 613-521-0703 38 OHNC PANEL 1, in-ch (Rogers) 1 MR. ROGERS: Thank you, Mr. Curtis. 2 Tell me, how did OHNC go about developing this 3 application? 4 MR. CURTIS: OHNC began the process of 5 development of this application by establishing its sets 6 of principles for cost allocation and rate design. 7 These principles were founded on traditional industry 8 ratemaking principles. 9 MR. ROGERS: Did you consult any of your 10 customers during the process of preparing this 11 application? 12 MR. CURTIS: Yes, indeed we did. OHNC 13 developed this application through considerable 14 investment and stakeholder consultation. We established 15 many avenues to provide stakeholders with opportunities 16 to communicate with us. We listened to our customers 17 and stakeholders input, we documented much of this 18 input, we analyzed the input and incorporated it into 19 the development of our proposal. 20 We also devoted extensive effort to assessment 21 of issues to further our understanding as well as, 22 hopefully, our stakeholders' understanding. 23 We also retained the services of an 24 experienced regulatory consultant, NERA, of 25 San Francisco, who assisted us in applying accepted 26 regulatory principles and precedence based on their 27 extensive experience in these matters. We developed 28 this application with the intent of providing fairness Les Services StenoTran Services Inc. 613-521-0703 39 OHNC PANEL 1, in-ch (Rogers) 1 and equity in cost allocation and rate design for OHNC's 2 customers. 3 MR. ROGERS: Thank you. 4 Could you comment, please, on the importance 5 of the Board rendering decisions on the issues, these 6 complex issues, before it in this proceeding? 7 MR. CURTIS: We feel that a decision is 8 required on all issues brought forward in this 9 application. We heard from stakeholders about their 10 concern that deferral or delay would result in 11 regulatory uncertainty that could impact customer 12 investment decisions and could cause problems for the 13 implementation of open access and the subsequent market 14 development. 15 MR. ROGERS: All right. Thank you. 16 Now, I would like to deal now with the 17 individual topics, Mr. Chairman and Members of the 18 Board. I am going to suggest when we finish that when 19 the cross-examinations begin that we might want to 20 reverse the issue No. 2, net versus gross load billing, 21 with charge determinants, No. 3. I think as you will 22 hear from the witnesses, the net versus gross load 23 billing is probably the most single difficult issue and 24 it would be my suggestion that that be put after the 25 cross-examination on charge determinants. But I will 26 leave that to your decision of course. 27 We have tried to group these issues together 28 on this Panel 1 for a couple of reasons, Mr. Chairman Les Services StenoTran Services Inc. 613-521-0703 40 OHNC PANEL 1, in-ch (Rogers) 1 and Members of the Board. 2 First, the applicant recognizes from the input 3 received from stakeholders that decisions on these 4 issues are key in the development of a cost allocation 5 and rate design for transmissions. They are very 6 important items. 7 But, in addition, and perhaps more important, 8 my client agrees with the view of most stakeholders that 9 these issues are very much interrelated. Thus we have 10 grouped them together with the hope that they can be 11 dealt with collectively in a more efficient and 12 effective manner. 13 Now, I would like to just ask the witnesses to 14 outline briefly for you, and I hope this will be helpful 15 for you and those here, the position of the applicant on 16 these separate issues. 17 First of all, definition of pools. 18 Mr. Poray, I would like to deal with you first 19 of all with the definition of pool definitions and then 20 charge determinants. 21 Can you tell me, what is the purpose of your 22 testimony, prefiled testimony, on these two issues? 23 MR. PORAY: The purpose of my direct evidence 24 is to describe the key elements of the pool definition 25 and charge determinants that I hope will provide for the 26 Board a clear focus and to set the context for this 27 Panel. 28 MR. ROGERS: First, tell me, if you would, why Les Services StenoTran Services Inc. 613-521-0703 41 OHNC PANEL 1, in-ch (Rogers) 1 the applicant proposes to unbundle its transmission 2 assets and costs into pools. 3 MR. PORAY: OHNC's purpose of unbundling its 4 transmission assets and costs into separate pools is 5 that these pools should reflect the functions that the 6 assets perform in providing transmission services to 7 transmission customers. 8 OHNC's proposal is that there should be three 9 pools, namely the network pool, the line connection pool 10 and the transformation connection pool. 11 In this respect, OHNC is supported by most of 12 its stakeholders. This pool categorization is 13 consistent with the initial set of market rules approved 14 by the Minister of Energy and Science and Technology. 15 This approach also follows the direction set 16 by the Ontario Energy Board in the transmission rate 17 order RP-1998-0001 in which OHNC was requested to 18 address the issue of a line connection pool. 19 MR. ROGERS: All right. Thank you very much. 20 You have told us that there are three pools. We have 21 the network pool, the line connection pool and the 22 transformation connection pool. Could you briefly 23 describe these pools to us, please. 24 MR. PORAY: Certainly. The transmission 25 network is the backbone of the transmission system that 26 is used by all transmission customers. As proposed by 27 OHNC, the transmission network pool consists of load 28 electrical facilities that are used for common benefit Les Services StenoTran Services Inc. 613-521-0703 42 OHNC PANEL 1, in-ch (Rogers) 1 of all transmission customers. For example, the pool 2 includes all of the 500 kilovolt circuits, all of the 3 230 kV and 115 kV circuits that are normally operated in 4 parallel with those 500 KV circuits. 5 The pool also includes all 115, 230 and 345 KV 6 interconnections and all major transformation and 7 switching stations. In general, the network facilities 8 include all those facilities that experience loop flows. 9 This is the largest pool and about $675 million has been 10 allocated to it in our proposal. 11 MR. ROGERS: Mr. Poray, if I can just stop you 12 there. My understanding, therefore, is that this 13 transmission network pool is the largest pool that you 14 have by far. 15 MR. PORAY: It is so. 16 MR. ROGERS: And it's designed to capture 17 those facilities which are used by all of your 18 customers, is it? 19 MR. PORAY: That is correct. 20 MR. ROGERS: All right. Thank you. Tell us 21 about the connection pools, would you? 22 MR. PORAY: Yes. The connection pools 23 comprise all other line and station assets that are 24 essentially radial in nature. In other words, they lead 25 away from the network facilities to the customer gate. 26 The connection pools consist of a 27 transformation connection pool and a line connection 28 pool. The transformation connection pool consists of Les Services StenoTran Services Inc. 613-521-0703 43 OHNC PANEL 1, in-ch (Rogers) 1 all of Ontario Hydro Network Companies owned 2 transformation facilities and these are facilities that 3 set down voltages from above 50,000 volts to below 4 50,000 volts. Approximately $300 million has been 5 allocated to the transformation connection pool. 6 The transmission line connection pool consists 7 of assets that are radial parts of the high voltage 8 transmission system. Typically, the transmission lines 9 categorized in this way emanate from the network 10 stations to connect customers to the transmission 11 network. 12 These facilities do not reinforce the backbone 13 transmission network that is commonly shared and 14 generally one that -- I'm sorry, these line connection 15 facilities would be ones that do not generally 16 experience loop flows. The flows are typically in one 17 direction or another from the network. Approximately 18 $190 million has been allocated to this pool. 19 MR. ROGERS: My understanding, Mr. Poray, is 20 that the customers who would be allocated costs for the 21 transformation connection pool and the line connection 22 pool will be a different group of customers with some 23 overlap obviously. 24 MR. PORAY: That is correct, yes. 25 MR. ROGERS: Could you describe to us which 26 customers would be associated with which pool? 27 MR. PORAY: Certainly. Perhaps before I 28 answer this question I could briefly describe the Les Services StenoTran Services Inc. 613-521-0703 44 OHNC PANEL 1, in-ch (Rogers) 1 concept of the delivery point which really forms the 2 basis of assigning customers to the different pools and, 3 therefore, is the determinant on who pays for what. 4 OHNC proposes that customers should be charged 5 for transmission services based on the per delivery 6 point basis. What I mean by delivery point is that 7 point on the transmission system from which electricity 8 is supplied to the customer. A customer may have one or 9 several delivery points. 10 The intent of using the delivery point 11 approach is that it clearly identifies the customer's 12 point of connection to the transmission system and, 13 therefore, identifies what assets the transmission 14 customer is linked to. 15 Having identified the customer delivery point, 16 the issue then is the allocation of those delivery 17 points to the various pools. 18 So, starting with the network pools, all 19 delivery points attract network service charges to 20 recover the costs associated with the network pools. 21 Therefore, all customers, all transmission customers, 22 would pay network fee charges. 23 All delivery points that utilize OHNC's 24 transformation connection assets will attract 25 transformation connection service charges to recover the 26 costs associated with the transformation connection pool 27 assets. 28 Now, if a customer or customers who own their Les Services StenoTran Services Inc. 613-521-0703 45 OHNC PANEL 1, in-ch (Rogers) 1 own transformation facilities or have fully paid for 2 OHNC's transformation facilities and do not use any 3 other OHNC transformation connection assets, these 4 customers would not have a delivery point assigned to 5 the transformation connection pool and, therefore, would 6 not be charged accordingly. 7 Finally, dealing with the line connection, all 8 delivery points that utilize OHNC's transmission lines 9 to connect customers to a network station will attract 10 line connection service charges to recover the costs 11 associated with the line connection assets. 12 Those customers who own their own transmission 13 line or have fully paid for OHNC's transmission line and 14 do not use any of the other OHNC transmission lines to 15 connect to a network station would not have a delivery 16 point included in the line connection pool and, 17 therefore, would not be charged accordingly. 18 MR. ROGERS: Thanks, Mr. Poray. Just one 19 question I have before completing this point is that you 20 are proposing three pools for allocation of costs 21 presently. 22 MR. PORAY: That is correct. 23 MR. ROGERS: Do I understand correctly that 24 when you first considered this matter and came before 25 the Board last year, I guess it was, the company was 26 proposing two pools. 27 MR. PORAY: That is correct and now in the 28 December 1998 filing, we proposed a network pool and a Les Services StenoTran Services Inc. 613-521-0703 46 OHNC PANEL 1, in-ch (Rogers) 1 transformation connection. 2 MR. ROGERS: Is this -- the development of 3 three pools that you now propose, I take it has resulted 4 from the consultation process with your customers. 5 MR. PORAY: That is correct. 6 MR. ROGERS: Do you feel now, given what you 7 have now been through, that this is the preferred 8 approach? 9 MR. PORAY: That is the preferred approach. 10 MR. ROGERS: Thank you very much. Does that 11 then summarize the applicant's direct evidence on pool 12 definitions? 13 MR. PORAY: Yes, it does. 14 MR. ROGERS: Could we now turn to the other 15 related topic of charge determinants, Mr. Poray. First 16 of all, can you describe to us what you mean by the term 17 "charge determinant"? 18 MR. PORAY: Certainly. The term "charge 19 determinant" refers to that parameter of variables, the 20 measure of which is used to calculate or effect the 21 charges payable by a transmission customer with respect 22 to the transmission service that that customer utilizes. 23 An example of the charge determinants could be 24 energy expressed in kilowatt hours or demand expressed 25 in kilowatts. 26 MR. ROGERS: Tell us, if you would, why the 27 charge determinant for the network pool is different 28 from the charge determinant for the connection pools in Les Services StenoTran Services Inc. 613-521-0703 47 OHNC PANEL 1, in-ch (Rogers) 1 your proposal? 2 MR. PORAY: The chief reason why the charge 3 determinants for network and connection pools are 4 different is because the functionality of the 5 transmission facilities in the respective pools is 6 different. 7 MR. ROGERS: What do you mean by that? 8 MR. PORAY: As I mentioned earlier on in my 9 evidence, the function of the assets assigned to the 10 network pool is to provide common carriage for all 11 transmission customers. These assets are not identified 12 with any specific transmission customers. 13 Consequences of peak demand imposed by all the 14 customers on the network is a blend of the customers' 15 individual demands rather than some total of their 16 individual peak demands. Hence, the use of the term 17 "coincidental with system peak" is appropriate when 18 considering network charge determinants. 19 This approach accounts for the diversity of 20 customers' peak demands that typically occur at 21 different times. The function of access assigned to the 22 connection pool on the other hand is linked directly to 23 specific customers connected to those transmission 24 facilities, or to the transmission system, sorry. 25 The peak demand imposed by these customers or 26 group of customers on the connection pool access is more 27 directly related to the actual peak of the customer or 28 the group of customers. In this case, diversity due to Les Services StenoTran Services Inc. 613-521-0703 48 OHNC PANEL 1, in-ch (Rogers) 1 the temporal effect is not pertinent since the customer 2 peak demand is imposed wholly on the connection 3 facility. 4 Hence, the use of the term "non-coincident 5 peak demand" is more appropriate than considering 6 connection pool charge determinants. 7 MR. ROGERS: All right. Thank you very much. 8 Could you tell us, please, a little bit about your 9 proposal for the network service charge determinant. 10 MR. PORAY: Certainly. Our proposal is for 11 the network service charge determinant to be based on 12 the customer's monthly demand, assessed in kilowatts, at 13 the delivery point. Specifically, the peak demand will 14 be determined to be the higher of the customer's 15 coincident peaks, that is the customer's demand in the 16 hours when the demand of all customers in Ontario is 17 highest for the month, and 85 per cent of the customer's 18 peak demand in any hour during the peak period. The 19 peak period is defined as 7:00 a.m. to 7:00 p.m. local 20 time on working days of each month. 21 The charges would be calculated on a per 22 delivery point basis so that for customers that are 23 connected to the transmission system of two or more 24 delivery points, the charges are calculated separately 25 for each delivery point. 26 For the purposes of billing and settlement, 27 these charges would be summed up for each transmission 28 customer for us to determine the total transmission Les Services StenoTran Services Inc. 613-521-0703 49 OHNC PANEL 1, in-ch (Rogers) 1 charges payable by that customer. 2 MR. ROGERS: If I may so, the proposal sounds 3 a little complex to me. Why did you choose this 4 approach as opposed to some other simpler charge 5 determinant? 6 MR. PORAY: Yes, our approach does appear 7 somewhat complex. As a matter of fact, it was not 8 OHNC's preferred proposal. However, we arrived at the 9 current proposal on the basis of the results of our 10 comprehensive assessment of the charge determinant 11 options and on the basis of the input we received from 12 stakeholders during our consultation last summer. 13 We feel that our proposal is a balanced 14 attempt to address the competing preferences of the 15 various stakeholders. For example, local distribution 16 companies indicated preference for non-coincident peak 17 demand of the charge determinant whilst the direct 18 customers indicated a preference for coincident peak 19 demands of the charge determinant. 20 Q. Why do you propose to use a blended charge 21 determinant for the network pool? 22 MR. PORAY: As I mentioned earlier on, OHNC 23 has attempted in its proposal to find a balance between 24 the competing requirements of the various stakeholders. 25 The simplest approach would have been to use the 26 customer's non-coincident peak demands. 27 In this case, one would take the individual 28 peaks of the customer's demands, sum them up to obtain Les Services StenoTran Services Inc. 613-521-0703 50 OHNC PANEL 1, in-ch (Rogers) 1 the total peak demands and that would then form the 2 charge determinant for rate calculation purposes. 3 Customers would be charged on the basis of 4 their individual peak demand. However, non-coincident 5 peak demand does not allow for treatment of diversity of 6 demand. Furthermore, the total sum of non-coincident 7 peak demands does not reflect the peak demands placed by 8 customers on the network's facilities. 9 Diversity can best be accounted for by using 10 the coincident peak demands method where customer's 11 demand at the time of or coincident with the system peak 12 demands reflect the demands the customers actually place 13 on the network. 14 OHNC's concern with this approach was that the 15 use of this billing determinant may allow for free 16 ridership and gaming by those customers who are 17 knowledgeable and are able to reduce their demand at the 18 time of system peaks. This would allow these customers 19 to escape paying their share of transmission charges and 20 result in other customers having to pick up those lost 21 charges. 22 Many customers who are not able to alter their 23 demands would thus be disadvantaged. OHNC's proposal 24 attempts to strike a mid point between these competing 25 situations and tries to mitigate the shifting of charges 26 between customers. 27 MR. ROGERS: Thank you very much. Tell us, if 28 you would, why you chose to use demand rather than Les Services StenoTran Services Inc. 613-521-0703 51 OHNC PANEL 1, in-ch (Rogers) 1 energy as the charge determinant. 2 MR. PORAY: The basis of transmission 3 facilities design and the rating of transmission 4 facilities are based on the demand rather than on 5 energy. This is because each transmission facility must 6 be capable of operating at any instant of time to meet 7 the peak demand imposed on that facility. 8 If energy represents the average demand over a 9 period of time, this is not an appropriate measure to 10 use because it does not reflect instantaneous demand 11 required of the transmission facility. 12 MR. ROGERS: Thank you. Just before we finish 13 with this topic, Mr. Foray, can you tell us would 14 customers be allowed to aggregate their delivery point 15 demands for transmission network charging purposes? 16 MR. PORAY: No. Ontario Hydro Networks 17 Company does not propose to allow customers with 18 multiple delivery points to aggregate their delivery 19 points for the purpose of the charge determinant. 20 MR. ROGERS: Why not? 21 MR. PORAY: The chief reason for not allowing 22 aggregation is that those customers with a large number 23 of delivery points, such as for example large local 24 distribution companies, may gain an unfair advantage 25 over those customers having fewer delivery points. 26 Customers with a large number of delivery 27 points could use delivery point aggregation and their 28 associated diversity of demand to allow them to reduce Les Services StenoTran Services Inc. 613-521-0703 52 OHNC PANEL 1, in-ch (Rogers) 1 their total demand and thus shift some portion of 2 charges to other customers who have little or no ability 3 to take advantage of diversity. 4 MR. ROGERS: Thank you. It sounds as though 5 your proposal, the company's proposal, in this respect 6 has tried to balance the interest of your various 7 competing customer groups 8 MR. PORAY: That is correct. 9 MR. ROGERS: Sometimes compromise doesn't come 10 up with the best solution. Do you feel that the 11 solution that you are proposing to the Board is sound? 12 MR. PORAY: I believe it is. 13 MR. ROGERS: Thank you. I think that 14 summarizes the Ontario Hydro Network Company direct 15 evidence on charge determinants for network services. 16 MR. PORAY: It does. 17 MR. ROGERS: Thank you, Mr. Poray. 18 I would like now to turn to Mr. Curtis for a 19 moment, Mr. Chairman, if I could. Mr. Curtis deals with 20 the question of net versus gross load billing. I know 21 most of the people in the room know what this is, but it 22 might be useful for you to briefly describe to me what 23 this issue involves. 24 MR. CURTIS: Certainly. The net versus gross 25 load issue addresses how existing load customers who 26 decide to install generation could serve all or part of 27 their existing load should continue to pay for the 28 existing transmission facilities that have been Les Services StenoTran Services Inc. 613-521-0703 53 OHNC PANEL 1, in-ch (Rogers) 1 installed to serve their original load. 2 If the load paid for "X" transmission services 3 based on the reading of the meter between it and the 4 transmission system, that customer is paying on a net 5 load basis. If the meter reading recording the output 6 of its installed generator is added back on to the meter 7 reading between it and the transmission system, that 8 customer is being billed on a gross load basis. 9 MR. ROGERS: How important is this net versus 10 gross load billing issue in this application? 11 MR. CURTIS: This has been the single most 12 contentious issue in OHNC's application. This issue is 13 the centre of attention by stakeholders and ourselves 14 throughout the stakeholder consultation process. This 15 issue occupied most of our effort in the assessment and 16 the analyses that we did. 17 The number of interrogatories we received on a 18 net versus gross load billing issue was almost as great 19 as the number of interrogatories we received on all 20 other issues combined. 21 It will require the wisdom of Solomon to 22 address this issue. 23 Stakeholders are extremely polarized. 24 Utilities, some of the groups representing 25 consumers, OPGI, and some of the groups representing 26 environmental concerns we have heard support the gross 27 billing side. 28 Industrial customers, owners of small Les Services StenoTran Services Inc. 613-521-0703 54 OHNC PANEL 1, in-ch (Rogers) 1 generation and their developers, other consumer groups 2 and other environmental groups we have heard support the 3 net billing side. 4 These groups have been adamant about 5 maintaining their positions, and repeated attempts to 6 find an acceptable compromise have failed. 7 Mr. Rogers, hence, we come to you. 8 MR. ROGERS: Are there any principles that can 9 help the Board to reach a decision on this issue, 10 Mr. Curtis? 11 MR. CURTIS: Yes, there are principles to 12 apply to this issue. Unfortunately, it has been our 13 experience that many of these principles are used with 14 equal effect from both sides. 15 For example, the net billing side have cited 16 the user-pay principle to assert that those existing 17 loads that choose to install generation should, in 18 future, only pay for the transmission services that they 19 continue to use. On the other hand, the gross billing 20 side have cited to us the user-pay principle with equal 21 verve to assert that existing loads that choose to 22 install generation should continue to pay for the 23 existing transmission infrastructure that was installed 24 to serve their original level of load and their costs 25 should not be shifted to other customers to pay. 26 Another example. The net billing side has 27 pointed to the Energy Competition Act and the direction 28 it provides the OEB to facilitate competition in Les Services StenoTran Services Inc. 613-521-0703 55 OHNC PANEL 1, in-ch (Rogers) 1 generation and the sale of electricity and to facilitate 2 a smooth transition to competition in Ontario. Why not 3 incent the installation of new generation through the 4 transmission tariff? 5 The other side of the argument is that 6 although the Act does charge the OEB with facilitating 7 competition and generation, nowhere does the Act state 8 that this should be done through the setting of 9 transmission rates. In fact, the Act goes on to 10 describe quite explicitly the OEB's role to encourage 11 competitiveness in the energy marketplace by overseeing 12 the mitigation of OPGI's market power. 13 Furthermore, the whole purpose of the Energy 14 Competition Act is to unbundle the commodity energy 15 component of the electricity industry from the monopoly 16 wires portion. How can this purpose be served by 17 rebundling the industry through transmission tariffs 18 being set to incent new generation installation? 19 As one can see, both sides have strong 20 arguments to drive their cases. 21 MR. ROGERS: Mr. Curtis, if this is such a 22 strongly contested issue and so highly polarized, and 23 each side has principles on which they can rely to 24 support their position, why can't the Ontario Energy 25 Board simply defer a decision until things settle down a 26 little bit? 27 MR. CURTIS: Well, no. We think this would 28 cause a problem. We have heard from stakeholders that Les Services StenoTran Services Inc. 613-521-0703 56 OHNC PANEL 1, in-ch (Rogers) 1 this issue requires a decision now. With open access 2 scheduled to be declared later this year, investors and 3 developers of new generation have told us they need to 4 know what the going forward decision will be on this 5 issue in order to make their investment decision. 6 Environmental and consumer groups want to know 7 to what degree the OEB will use transmission, cost 8 allocation and rate design to enable social and 9 environmental policies. Large industrial users need to 10 know the resolution of this issue to know to what degree 11 installing their own generation will help them 12 economically. And utilities need to know how this issue 13 is going to impact the transmission charges that they 14 have to pass on to their end users. 15 MR. ROGERS: Thank you very much. 16 Could you, then, briefly summarize for us the 17 applicant's proposal and rationale for deciding this 18 issue? What are you recommending to the Board as a 19 solution to this problem? 20 MR. CURTIS: OHNC's application divides the 21 net versus gross load issue into several sub-issues and 22 makes a proposal for each one of these sub-issues. 23 For the main sub-issues, OHNC proposes that 24 for existing load customers who install generation to 25 serve all or part of their existing load, they would be 26 billed for connection charges based on a gross load 27 basis. 28 Now, we found during our stakeholder Les Services StenoTran Services Inc. 613-521-0703 57 OHNC PANEL 1, in-ch (Rogers) 1 consultation process that there was broad stakeholder 2 support for this, based on the fact that transmission 3 connection facilities are installed to serve 4 identifiable customers and groups of customers, and 5 other customers can't use these facilities in most 6 cases. 7 For the network charges, we are recommending 8 that these be billed on a net billing basis with a 50 9 per cent network access rate for the amount of efficient 10 embedded generation that displaces existing load. Now, 11 we were unable to find any basis for a resolution on 12 this issue among the stakeholders. 13 This proposal attempts to mitigate the cost 14 shifting among customer groups. If the embedded 15 generation is under one megawatt we are recommending 16 that the existing load served would be billed on a net 17 load basis for both connection and network. This 18 proposal sets the balance between the administrative 19 burden and complexity on the one side, and the 20 transmission revenues foregone on the other side. 21 Finally, existing loads served by existing 22 embedded generation is net load billed for both 23 connection and network. The rationale for this proposal 24 is that the historical investment decision in the 25 existing embedded generation were made prior to the 26 declaration of the new market structure that we are 27 entering into. 28 MR. ROGERS: Thank you, Mr. Curtis. Les Services StenoTran Services Inc. 613-521-0703 58 OHNC PANEL 1, in-ch (Rogers) 1 Before concluding your evidence, I understand 2 that there is a correction that you would like to make 3 in the prefiled testimony that has recently come to your 4 attention. 5 MR. CURTIS: Yes, I would. 6 During my final preparation, it came to my 7 attention that the example illustrating net versus gross 8 load billing that is contained in Exhibit D, Tab 12, 9 Schedule 2, pages 31 and 37 to 39 is incorrect and may 10 lead to a misunderstanding of our net versus gross load 11 billing proposal for network services. 12 MS LEA: We need a moment to turn this up. 13 MR. ROGERS: Just let people turn this up. 14 MR. CURTIS: Do you want me to repeat the 15 reference? 16 THE PRESIDING MEMBER: Yes, please. 17 MR. CURTIS: Exhibit D, Tab 12, Schedule 2, 18 pages 31 and 37 through 39, and it is with reference to 19 the example for Customer C. 20 --- Pause 21 MR. ROGERS: Mr. Curtis, could you just tell 22 us what problem you think may exist? 23 MR. CURTIS: Certainly. 24 This example was meant to illustrate the 25 circumstances when embedded generation is installed that 26 exceeds the capacity of the existing load. Now, the 27 correction to OHNC's evidence is as follows. 28 In the event a load customer's meter with the Les Services StenoTran Services Inc. 613-521-0703 59 OHNC PANEL 1, in-ch (Rogers) 1 transmission system registers a net outflow back into 2 the transmission system, that reading will be deducted 3 from the reading on the efficient embedded generator and 4 the customer's meter reading with the transmission 5 system will be set to zero for the purposes of 6 calculating the network portion of the load customer's 7 bill. 8 MR. ROGERS: Sir, if you could just enlarge 9 upon that a little bit and explain to us the rationale 10 for that -- 11 MR. CURTIS: Certainly 12 MR. ROGERS: -- what it means, really, to 13 users? 14 MR. CURTIS: The way it was presented in that 15 example, in our exhibit, once we construe that if a 16 customer goes to instal imbedded generation that was 17 twice the magnitude of its existing load, then it would 18 fully escape paying network transmission charges. 19 Now, throughout the entire rest of the body of 20 our evidence, this would be inconsistent. We have 21 always talked in terms of existing embedded generation 22 being installed to serve up to the amount of existing 23 load, and so, to address this inconsistency, I have made 24 this part of my direct evidence. 25 MR. ROGERS: I can tell the Board that I will 26 arrange to file, as soon as possible, a corrected 27 version of the example. 28 All right. Thank you very much, Mr. Curtis. Les Services StenoTran Services Inc. 613-521-0703 60 OHNC PANEL 1, in-ch (Rogers) 1 Does that, then, summarize the position of 2 Ontario Hydro Networks Company's direct evidence on net 3 versus gross load billing? 4 MR. CURTIS: Yes, it does. 5 MR. ROGERS: One last question for each of 6 you, gentlemen. 7 I understand Mr. Poray, and you, too, Mr. 8 Curtis, that other than appearing before the Board in 9 RP-1998-001 transmission, which was the process that was 10 the precursor to this case, neither have you have 11 testified in any other regulatory proceeding? 12 MR. CURTIS: No, we haven't. 13 MR. PORAY: No, we haven't. 14 MR. ROGERS: I gather, therefore, that neither 15 of you has ever been in a formal hearing like this where 16 you were cross-examined by various parties? 17 MR. CURTIS: No. 18 MR. PORAY: No. 19 MR. ROGERS: Well, this will be a first. 20 --- Laughter 21 MR. ROGERS: And with that, I will turn them 22 over to my friends. 23 THE PRESIDING MEMBER: Have your baptism. 24 MR. ROGERS: Thank you very much, 25 Mr. Chairman. I hope that summary has been useful, and 26 the witnesses are now available for cross-examination. 27 THE PRESIDING MEMBER: Thank you. 28 Just to reiterate, we will proceed, first of Les Services StenoTran Services Inc. 613-521-0703 61 OHNC PANEL 1, in-ch (Rogers) 1 all, with the cross-examination, which may be quite 2 limited, on the cost allocation part of the evidence, 3 which is found in C. 4 So, having completed that, then we will move 5 on to the evidence in D. 6 So, could we start with that idea. 7 So, Mr. Brown, are you and Mr. Fisher going to 8 go ahead on -- 9 MR. BROWN: I have some questions in that 10 area, Dr. Higgin, so I will proceed. 11 I think after my friend's last questions to 12 the panel about their previous experience, I just want 13 to make sure that I proceed in an appropriate way, 14 otherwise I'm going to get my wrist slapped by my 15 friend. 16 MR. ROGERS: All I ask is civility. 17 MR. BROWN: No problem with that. And, 18 generally, my questions in this area are quite brief. 19 CROSS-EXAMINATION 20 MR. BROWN: Dr. Poray, if I could ask you to 21 turn, please, to Exhibit C, Tab 3, Schedule 1, which is 22 the section dealing with transmission cost allocations 23 and rate design principles. 24 MR. PORAY: Okay. 25 MR. BROWN: You have indicated there, sir, 26 that the principles that you have outlined under the 27 "Cost Allocation" and then, over on the next page, under 28 the "Revenue and Rate Structure", essentially, are based Les Services StenoTran Services Inc. 613-521-0703 62 OHNC PANEL 1, cr-ex (Brown) 1 on the principles found in Bonbright's "Principles of 2 Public Utility Rates". Correct? 3 MR. PORAY: That is correct. 4 MR. BROWN: Bonbright, of course, is a 5 well-recognized, if not the leading, text in that area? 6 MR. PORAY: Correct. 7 MR. BROWN: I provided your counsel with some 8 extracts from Bonbright. I don't know; has he passed 9 them on to you? 10 MR. PORAY: Yes, I have those in front of me. 11 MR. BROWN: And I have got copies here for 12 Members of the Board, and some additional copies for my 13 friends, which I will ask them to pass around. 14 MR. THIESSEN: Shall we give that an exhibit 15 number? 16 MR. BROWN: Certainly. 17 MR. THIESSEN: Make that Exhibit G1.2. 18 EXHIBIT NO. G1.2: Extracts of 19 "Principles of Public Utility Rates", 20 Second Edition, by James C. Bonbright, 21 Albert L. Danielsen and David R. 22 Kamerschen, with assistance of John B. 23 Legler 24 MR. BROWN: Mr. Poray, when we look at Section 25 2.0 of your evidence, in this area, which is on page 2 26 of 3, under the "Revenue and Rate Structure", you 27 outline, in bullet-point form, a number of different 28 principles that you brought to the exercise. Les Services StenoTran Services Inc. 613-521-0703 63 OHNC PANEL 1, cr-ex (Brown) 1 Am I correct, sir, that you have taken those 2 principles from the outline that starts at page 383 of 3 Bonbright, the various attributes of a rate design 4 exercise? 5 MR. PORAY: We have taken some of those 6 attributes and include them in here, that is correct. 7 MR. BROWN: That's correct. And that's really 8 the only point that I want to get to, is that your 9 evidence does not include all of the attributes that 10 Bonbright lists here, on pages 383 and 384. Correct? 11 MR. PORAY: That is correct. 12 MR. BROWN: Indeed, am I correct, Mr. Poray, 13 that the attributes that Bonbright has listed as Numbers 14 1, 7 and 8 are not expressly referred to in your 15 evidence? 16 MR. PORAY: That is correct. 17 MR. BROWN: You would agree with me, however, 18 that the attributes that Bonbright lists here, the 10 19 attributes that Bonbright lists here, are, to a 20 significant degree, interrelated and universal; that is, 21 they all must be taken into account in any particular 22 rate-making exercise? 23 MR. PORAY: We would agree with those 24 attributes, yes. 25 MR. BROWN: So, notwithstanding that 1, 7 and 26 8 are not expressly referred to in your evidence, I take 27 it you would agree with me that the Board, for the 28 purposes of the decision making that it has to undertake Les Services StenoTran Services Inc. 613-521-0703 64 OHNC PANEL 1, cr-ex (Brown) 1 in this proceeding should take those attributes into 2 account? 3 MR. PORAY: Well, in answering your question, 4 I would say that the attributes that we have chosen from 5 the list of the 10 attributes that appear in Bonbright, 6 we felt that these were the right attributes, in 7 relation to the cost allocation and rate design for 8 transmission for this filing. 9 MR. BROWN: Well, let me deal with the first 10 rate attribute, just by way of example, which is the: 11 "Effectiveness in yielding total revenue 12 requirements under the fair-return 13 standard without any socially undesirable 14 expansion of the rate base or socially 15 undesirable level of product quality and 16 safety." 17 Would you agree with me, sir, that one of the 18 principles that should be taken into account in this 19 proceeding is that the rate design should be such that 20 it is effective, without resulting in any socially 21 undesirable expansion of the rate base; that is, the 22 transmission system? 23 MR. PORAY: The way we interpreted that first 24 principle was that it dealt mainly with the revenue 25 requirement and not so much with the rate design; and 26 that is why we didn't include it in our list. 27 MR. CURTIS: Just to add to that, the revenue 28 requirement portion of it had already been heard, for Les Services StenoTran Services Inc. 613-521-0703 65 OHNC PANEL 1, cr-ex (Brown) 1 this application, back in December, starting in 2 December, 1999 -- 3 MR. BROWN: That is correct, Mr. Curtis. But 4 if you look back at page 382, of Bonbright, which 5 contains the section heading which starts this whole 6 thing out, you would agree with me, Mr. Poray, that the 7 attributes that are being discussed here, in Bonbright, 8 are the attributes of a sound rate structure? 9 MR. PORAY: That is correct. 10 MR. BROWN: So, would you then agree with me 11 that one should take into account all of the attributes 12 that Bonbright has listed on pages 383 and 384? 13 MR. PORAY: Well, as I said before, we felt 14 that of those 10 attributes that are listed in 15 Bonbright, the ones that we have selected for our rate 16 design were the appropriate ones. 17 MR. BROWN: Would you agree with me, sir, 18 that, as a general proposition, the rate design which is 19 adopted in this case should be one which would avoid any 20 unnecessary rate base expansion by the applicant? That 21 is, would you agree with me that the rate design which 22 emerges from this proceeding should be one which would 23 avoid any unnecessary expansion of the network 24 transmission system? 25 MR. PORAY: I think I would agree with that. 26 MR. BROWN: Thank you. Would you also agree 27 with me, sir, that later on in this extract, starting at 28 page 384, Bonbright takes those different attributes and Les Services StenoTran Services Inc. 613-521-0703 66 OHNC PANEL 1, cr-ex (Brown) 1 criteria and then breaks them down into what he calls 2 primary criteria, which started on page 384, and then on 3 page 387 talks about a secondary criterion? 4 MR. PORAY: Okay. 5 MR. BROWN: Do you agree, sir, with the 6 ranking or the grouping that Bonbright has done in those 7 sections as to which of the ten attributes are primary 8 and which of the ten are secondary? 9 MR. PORAY: I think in general I would agree 10 with that. 11 MR. BROWN: Thank you, sir. Those are my 12 questions. 13 THE PRESIDING MEMBER: Thank you, Mr. Brown. 14 THE PRESIDING MEMBER: Mr. Fisher. 15 CROSS-EXAMINATION 16 MR. FISHER: Good morning. There are a couple 17 of areas that I would like to explore into this issue in 18 relation to pool definition. The first has to do with 19 the concept of different pool definitions impact the 20 distribution of revenue received from various assets of 21 the pool. 22 We would like to make some inquiries first as 23 to the sources of capital for the assets of the pools. 24 Exhibit C, Tab 6, Schedule 2, has a long list of assets 25 that are allocated to various pools. In answer to 26 Amoco's Interrogatory E23, it was stated that customers 27 have paid for part of the cost of these assets. 28 From this response then, would it be correct Les Services StenoTran Services Inc. 613-521-0703 67 OHNC PANEL 1, cr-ex (Fisher) 1 to say that some of the assets that the customers 2 contributed to were line connections assets? 3 MR. PORAY: I believe that is so. Excuse me, 4 can I just get the interrogatory? 5 MR. FISHER: I'm sorry. Yes. 6 --- Pause 7 THE PRESIDING MEMBER: Can you just repeat for 8 everyone else the interrogatory evidence? It would be 9 Exhibit C, Tab 6, which we all have. 10 MR. FISHER: Yes. The interrogatory is Exhibit 11 E, Tab 2, Schedule 3, page 1 of 1. 12 THE PRESIDING MEMBER: Okay. Thank you. 13 MR. FISHER: Okay? Is it also correct that at 14 times both MEU customers and direct customers have been 15 required to pay capital contributions for line 16 connection assets? 17 MR. PORAY: I believe that is so. 18 MR. FISHER: MPLS or OHNC in interrogatory 19 E2.19 about the policies for deciding when a customer 20 contribution would be required, this question was to 21 determine if there were differences in policies between 22 MEUs and direct. 23 Frankly, my client was surprised that the 24 response to the same policy was applied. The impression 25 was that capital contributions were frequently required 26 from direct customers and not MEUs. 27 We note from interrogatory E2.22 that OHNC 28 distribution business has not been assigned any costs Les Services StenoTran Services Inc. 613-521-0703 68 OHNC PANEL 1, cr-ex (Fisher) 1 for transmission connections. 2 MR. PORAY: That is correct. 3 MR. FISHER: Doesn't this give OHNC 4 distribution an unfair advantage compared to MEUs and 5 direct customers who have paid for a part of their 6 connection facilities? 7 MR. PORAY: I don't believe so. I think as 8 the interrogatory explained, these costs were incurred 9 by Ontario Hydro. What this interrogatory is addressing 10 is the unbundling of those facilities between 11 transmission and distribution. So conceptually, Ontario 12 Hydro paid for all of those assets. 13 MR. FISHER: Isn't it still unfair that any 14 years that direct customers have paid in OHNC 15 distribution is not? 16 MR. CURTIS: I think what we are talking about 17 is on a going forward basis if there is a need for a 18 capital contribution for a line connection, the customer 19 would make that capital contribution and it wouldn't 20 matter whether the customer is the distribution side of 21 OHNC or a direct customer or an MEU. 22 MR. FISHER: But we are talking about past 23 costs here. 24 MR. CURTIS: I think the problem, the issue we 25 are wrestling with, is that in the past these were 26 bundled together within Ontario Hydro and the 27 investments were made by Ontario Hydro, so it's a little 28 difficult to talk about there being an unfair advantage Les Services StenoTran Services Inc. 613-521-0703 69 OHNC PANEL 1, cr-ex (Fisher) 1 that is being accorded to the distribution side of the 2 business following the unbundling. 3 MR. FISHER: Can you confirm that one of the 4 reasons why a capital contribution would be required 5 from a customer would be related to the level of risk 6 associated with the revenues from the new connection? 7 MR. PORAY: I believe in one of our 8 interrogatories we responded in such a way and I think 9 that might have been the case in the past. 10 MR. FISHER: Given that industrial plants can 11 and do close and given that generally in this prologue 12 may have varying gross rates that rarely goes down by a 13 large proportion, would you please confirm that in 14 general MEU loads were not considered as risky as 15 industrial loads? 16 MR. PORAY: We can confirm that. 17 MR. FISHER: Can you confirm that even though 18 the policy may have been the same for MEUs and direct, 19 the results of the policy were different? 20 MR. CURTIS: I'm not sure I understand what 21 that question is. 22 MR. FISHER: Well, I believe there is an 23 interrogatory asking us if the same policy was applied 24 to both and we were told yes, but the practice was that 25 there was more frequent -- more often the case that 26 direct customers were required to put up capital 27 contributions more often than many years. 28 MR. CURTIS: I think we can confirm that, yes. Les Services StenoTran Services Inc. 613-521-0703 70 OHNC PANEL 1, cr-ex (Fisher) 1 THE PRESIDING MEMBER: Can you repeat that? 2 MR. FISHER: Yes. He said yes. 3 THE PRESIDING MEMBER: You have to say yes, 4 not nod. 5 MR. ROGERS: I know it works very well. 6 MR. FISHER: Can you confirm that the results 7 of the policy was that directs were asked to pay for 8 capital contributions more frequently than were MEUs? 9 MR. PORAY: I think we would confirm that that 10 might have been the practice in the past. 11 MR. FISHER: Yes. We would have liked to have 12 had a qualified answer to this question as to the 13 question of connection costs that were paid for by MEUs 14 and direct customers, however interrogatory B220 and 221 15 said that information was not available. 16 So far then we have established that OHNC 17 distribution has not paid for any of these line 18 connections, MEUs have paid for part of their line 19 connections, direct customers have also paid for part of 20 their line connection costs and have on average paid a 21 larger proportion than MEUs. 22 MR. CURTIS: Can you say that first point that 23 you made that OHNC -- 24 MR. FISHER: OHNC distribution has not paid 25 for any of this line connection costs. 26 MR. CURTIS: I think the point we were trying 27 to make is that those investments were made by Ontario 28 Hydro and that we are talking about an unbundling. In Les Services StenoTran Services Inc. 613-521-0703 71 OHNC PANEL 1, cr-ex (Fisher) 1 that -- perhaps in that way of categorizing it, OHNC has 2 paid for its assets, part of its existing capital 3 structure. 4 MR. FISHER: Does OHNC's distribution of the 5 capital assets include any line distribution assets? 6 MR. CURTIS: Yes. 7 MR. PORAY: The OHNC distribution, yes, they 8 include distribution assets. 9 MR. FISHER: Thank you. 10 No. Line connection assets. Sorry. 11 MR. CURTIS: Transmission line connection? 12 MR. PORAY: No. 13 MR. FISHER: Could you please turn to 14 Exhibit D, Tab 4, Schedule 1, page 9, and if I could 15 take you to lines 25 to 28. 16 If I read this correctly, a customer would be 17 required to pay the full line connection charge unless 18 the customer fully owns or has fully paid for all the 19 lines that connect him to a network station. Is that 20 correct? 21 MR. PORAY: That is correct. 22 MR. FISHER: Is it true that under this rule 23 there is no reduction in the line connection charge for 24 customers who have paid a part of their line connection 25 costs? 26 MR. PORAY: The contribution that was made by 27 the customers would be netted out of the asset database, 28 so that contribution would not be recorded in the asset Les Services StenoTran Services Inc. 613-521-0703 72 OHNC PANEL 1, cr-ex (Fisher) 1 database. So the remaining costs of the line 2 connection, the facilities to which that customer is 3 connected, are just those costs that that customer 4 incurs. 5 MR. FISHER: Isn't it true that the customer 6 who has paid part of his line connection cost pays the 7 same rate as the customer who has not paid part of his 8 line connection cost? 9 MR. PORAY: Through the use of the connection 10 pool, that is correct. 11 MR. FISHER: So isn't it true that many direct 12 customers have paid part of their line connection costs 13 but few receive any credit for it in terms of reduced 14 line connection charges? 15 MR. PORAY: Well, I would go back to what I 16 mentioned before, that those costs that they incurred 17 are not included in the asset database. They have been 18 netted out. So the remaining costs are the costs that 19 are being charged to the line connection customers. 20 MR. FISHER: Right. 21 I would now like to turn to the situation with 22 respect to transformation connection charges. 23 Could we go back to that same reference, 24 Exhibit D, Tab 4, Schedule 1, page 9, and lines 25 to 25 28. 26 MR. PORAY: Okay. 27 MR. FISHER: Now, if I read this correctly, 28 there is a similar rule with respect to transformation Les Services StenoTran Services Inc. 613-521-0703 73 OHNC PANEL 1, cr-ex (Fisher) 1 connection. 2 The customer would be required to pay the full 3 transformation connection charge unless it fully owns or 4 has fully paid for all the transformation assets that it 5 uses. Is that correct? 6 MR. PORAY: That is correct. 7 MR. FISHER: As I understand it, there is a 8 separate transformation connection charge in the current 9 rate structure. Some customers own their own 10 transformation assets and do not pay the transformation 11 rate. Other customers use OHNC-owned transformation and 12 do pay the rate. Is that correct? 13 MR. PORAY: That is correct. 14 MR. FISHER: Would it be right to characterize 15 the proposed transformation connection rate as more or 16 less a continuation of current practice? 17 MR. PORAY: The existing pool of 18 transformation facilities are all of OHNC's 19 transformation assets. All the costs associated with 20 those assets are in the transformation connection pool. 21 MR. FISHER: I don't think that is an answer 22 to what I was asking. 23 Would it be right to characterize the proposed 24 connection rate as more or less a continuation of 25 current practice? 26 MR. PORAY: Yes. I would say okay. 27 MR. FISHER: There are some significant 28 features of this current practice with respect to Les Services StenoTran Services Inc. 613-521-0703 74 OHNC PANEL 1, cr-ex (Fisher) 1 transformation connection charges that have some 2 relevance to the possibility of setting up a line 3 connection pool. Can you confirm that giving the 4 customer the opportunity to provide its own 5 transformation helps to make the customer responsible 6 for the costs of its own supply? 7 MR. PORAY: The customer has that option, yes. 8 MR. FISHER: Can you confirm that a customer 9 can have the transformation facility built by the 10 contractor of its choice provided OHNC's connection 11 requirements are met, and that this gives the customer 12 the opportunity to manage the costs of the 13 transformation facility? 14 MR. PORAY: That is the intent in the future, 15 yes. 16 MR. FISHER: Can you confirm that once a 17 customer has fully paid for its own transformation 18 facilities the operation of the pool is such that the 19 customer is no longer required to contribute to the 20 costs of other customers' transformation facilities? 21 MR. PORAY: Provided it does not use any other 22 transformation facilities owned by OHNC. 23 MR. FISHER: Is there any reason why these 24 principles of customer ownership, customer's ability to 25 manage costs, and the resulting end of contribution 26 toward the costs of other customers' transformation 27 facilities would not be relevant in establishing a line 28 connection pool? Les Services StenoTran Services Inc. 613-521-0703 75 OHNC PANEL 1, cr-ex (Fisher) 1 MR. PORAY: I'm sorry? I don't quite 2 understand what you are asking. 3 MR. FISHER: Well, based on the principles of 4 the transformation connection pool, that if the 5 customer, based on the last three questions that I have 6 asked, can own its own facilities, can decide who is 7 going to build them providing that they meet the 8 requirements of OHNC's connection code, or whatever it 9 is, and that they have fully paid for these -- so that 10 is customer ownership, the ability to manage costs, and 11 the resulting end of contributions required to the 12 transformation connection pool -- is there any reason 13 why these three principles could not be applied to the 14 line connection pool? 15 MR. PORAY: They could be applied to the line 16 connection pool if all line connections terminated at 17 the network station. But in the evolution of the 18 transmission system, customer connections were made 19 either to the network stations or they were tapped into 20 the lines, so we don't have a clear picture or a clear 21 segregation. Therefore, customers who are tapped into 22 the lines do still utilize Ontario Hydro Networks 23 Company transmission lines and therefore are charged to 24 the line connection pool. 25 MR. FISHER: I would now like to turn to the 26 values associated with the assets. Can you tell us 27 whether the value of the asset that is included in the 28 cost allocation is the gross cost of the assets or Les Services StenoTran Services Inc. 613-521-0703 76 OHNC PANEL 1, cr-ex (Fisher) 1 whether it is net of customer contributions? 2 MR. PORAY: It is net of customer 3 contributions. 4 MR. FISHER: Can you confirm that the assets 5 included in the rate base are at net book value. 6 MR. PORAY: That is correct. 7 MR. FISHER: Can you confirm that in past 8 practice, when assets were transferred between MEUs and 9 Ontario Hydro, that they were transferred at net book 10 value? 11 MR. PORAY: I don't know that answer. 12 MR. FISHER: Could you find out? 13 MR. ROGERS: Could you just tell us why it is 14 relevant before we undertake to do the work, please? 15 We are continually getting back into the old 16 Ontario Hydro business, Mr. Chairman, and I wish to be 17 vigilant to head that off unless it really is relevant. 18 MR. FISHER: The relevance has to do with the 19 opportunity for customers to buy back the assets; and 20 so, we need to know what the value of those assets is 21 going to be. So if the past practice was the net book 22 value, then that should continue going forward. 23 MR. PORAY: I believe my interpretation of the 24 situation going forward is that assets can be sold, but 25 they wouldn't be of net book value; they would be at 26 market value. 27 MR. ROGERS: I think that is the problem, 28 Mr. Poray. If I know my friend. Les Services StenoTran Services Inc. 613-521-0703 77 OHNC PANEL 1, cr-ex (Fisher) 1 --- Laughter 2 MR. FISHER: Well, AMPCO is proposing they be 3 brought back at net book value. 4 Okay, let's -- another area I would like to 5 talk about is the OHNC definition for line connections. 6 First, will you accept, for purposes of these 7 questions, that the OHNC definition be referred to as 8 the broad definition and that the definition proposed on 9 page 9 of AMPCO's evidence is the narrow definition? 10 MR. PORAY: That is correct. 11 MR. FISHER: Thank you. 12 MS LEA: Mr. Fisher, I gather that you would 13 like an exhibit number for this bundle of papers? 14 MR. FISHER: Yes, please. 15 MR. ROGERS: I would just observe -- I don't 16 think it will be a problem, Mr. Chairman -- I don't 17 think the witnesses had been given this in advance, as 18 your Rules require. It looks fairly simple. It, 19 hopefully, won't be a problem. I just point that out to 20 you and ask that they be given a chance to look at it 21 and appreciate what it represents. 22 MR. FISHER: My apologies. 23 MS LEA: Thank you. 24 Let's give this, the papers entitled, "Line 25 Connection Examples", Exhibit Number G3. 26 EXHIBIT NO. G1.3: Documents entitled, 27 "Line Connection Examples" 28 THE PRESIDING MEMBER: We are just questioning Les Services StenoTran Services Inc. 613-521-0703 78 OHNC PANEL 1, cr-ex (Fisher) 1 on this exhibit numbering, whether it should be "1.", 2 because of the day. 3 MS LEA: Well, in the old Hydro hearings, we 4 had terifficly complicated numbering systems, and as the 5 rest of the exhibit list did not have such a numbering 6 system -- in other words, three or four numbers -- I 7 didn't start doing it. But if it would assist, in terms 8 of what day the undertaking or exhibit came onto the 9 record, then we easily renumber it, at this point. 10 THE PRESIDING MEMBER: I think that might 11 be -- it's been our normal practice. 12 MS LEA: Okay. Then, in that case, we need to 13 renumber the first three exhibits that we have given 14 numbers to already. 15 As this is the first day of the hearing, all 16 the exhibits that are filed today will have the first 17 indication "G1", and then the second number in the 18 series will indicate the number of the exhibit. So the 19 list of panels will be G1.1; the hand-out that IPPSO 20 gave us on the "Principles of Public Utility Rates" will 21 be G1.2; and the one that we have just gotten now, "Line 22 Connection Examples", will be G1.3. 23 Thank you. 24 MR. FISHER: Thank you. 25 Apologies for not getting these to you 26 yesterday. 27 MR. ROGERS: That is all right. 28 I think we are okay with this, Mr. Chairman. Les Services StenoTran Services Inc. 613-521-0703 79 OHNC PANEL 1, cr-ex (Fisher) 1 THE PRESIDING MEMBER: Perhaps you would like 2 to just explain for the record what you have put before 3 the witnesses, Mr. Fisher. 4 MR. FISHER: I will do that just following my 5 introductory remarks. 6 THE PRESIDING MEMBER: Okay. 7 MR. FISHER: At the technical conference held 8 at the Board on November 19th, 1999, OHNC agreed that 9 most of the 115 kV system was built for network but is 10 now classified as line connection. 11 We have some questions as to how this arises. 12 This diagram -- there's three examples here 13 that show various configurations. 14 The first is with no open switch between 15 Network Station A and Network Station B. The second 16 example is with an open switch on the 115 line between 17 Network Station A and Network Station B and the open 18 switch is between Load 2 and Load 3. The third example 19 is an open switch on the 115 line between Network 20 Station A and B and the open switch is between Load 1 21 and Load 2. 22 Is that sufficient, Mr. Chair? 23 THE PRESIDING MEMBER: That's fine. Thank 24 you. Yes. 25 MR. FISHER: Thank you. 26 Okay. Could I take you to Example (1), 27 please. 28 MR. PORAY: Certainly. Les Services StenoTran Services Inc. 613-521-0703 80 OHNC PANEL 1, cr-ex (Fisher) 1 MR. FISHER: This shows a 115 kV line between 2 two network stations, Network Station A and B. There 3 are no normally open switches between Network Station A 4 and B. 5 Would it be right to say that this situation 6 would be described as providing a parallel path between 7 the two stations? 8 MR. PORAY: That is correct. 9 MR. FISHER: Would it be correct to say that 10 if the line were operated this way, it would be 11 classified as a network line? 12 MR. PORAY: That is correct. 13 MR. FISHER: Is it true that many of the 115 14 kV lines in southern Ontario were operated this way 15 before there were many 230 kV and 500 kV lines as there 16 are today? 17 MR. PORAY: I'm sure they were. 18 MR. FISHER: Is this what OHNC meant at the 19 November 19, 1999, technical conference, where it was 20 said that most of the 115 kV system would have been 21 classified as network, according to your definition, at 22 the time it was built? 23 MR. PORAY: I believe that is the case. 24 MR. FISHER: Okay. Could you look at Example 25 (2), please. 26 This example shows the same system, except 27 that it is now operated with a switch normally open, as 28 shown. Les Services StenoTran Services Inc. 613-521-0703 81 OHNC PANEL 1, cr-ex (Fisher) 1 Do you agree that many 115 kV lines in 2 southern Ontario are now operated this way? 3 MR. PORAY: That is correct. 4 MR. FISHER: Would you agree that the reasons 5 this is necessary to accurately -- excuse me. 6 Would you agree that the reasons this is 7 necessary are accurately described in paragraph 2 of 8 AMPCO's response to Question 4 from the Board staff; and 9 that is, to generally say that the line is operated with 10 an open switch to achieve proper load sharing and, 11 possibly, to reduce fault levels? 12 MR. PORAY: That is generally the case. 13 MR. FISHER: Okay. Would you like to look at 14 AMPCO's response or me read it to your, or something 15 like that? 16 MR. ROGERS: Didn't you get the answer you 17 wanted? Why tempt success? 18 --- Laughter 19 MR. CURTIS: If you are citing those two 20 reasons, we would agree. 21 MR. FISHER: Yes. Thank you. 22 Can I confirm that, according to the 23 definition in the OHNC application, this configuration 24 is normally classified as radial supply? For instance, 25 Loads 1 and 2 are normally only supplied from Network 26 Station A and have only one path back to the network, 27 Load 3 is normally supplied from Network Station B and 28 also has only one path back to the network? Les Services StenoTran Services Inc. 613-521-0703 82 OHNC PANEL 1, cr-ex (Fisher) 1 MR. PORAY: That is correct. 2 MR. FISHER: Is this why many of the 115 kV 3 lines are now allocated to the line connection pool, as 4 OHNC indicated at the technical conference? 5 MR. PORAY: That is correct, and that 6 represents what we call the functionality that these 7 lines are radially away from the network stations. 8 MR. FISHER: Could you please turn to 9 paragraph 3 of the response to OEB's question No. 4. 10 This was a question from Board staff to AMPCO. 11 MR. PORAY: What is the exhibit number? 12 MR. FISHER: Give me a second. I apologize 13 for not knowing that. Fifty-eight. It's in OEB staff 14 to AMPCO. I think that would be E58. 15 MR. PORAY: Which question is it? 16 MR. FISHER: It's interrogatory No. 4 from 17 Board staff to AMPCO. Paragraph 3 says that when the 18 switch is changed from normally closed to normally open. 19 I will read the paragraph into the record. The question 20 is: 21 "Can you confirm that the description in 22 this paragraph is accurate?" 23 The paragraph reads: 24 "When the switches change from normally 25 closed to normally open, it does not 26 prevent the use of the line to supply 27 customers from more than one direction. 28 If there is a failure of the transmission Les Services StenoTran Services Inc. 613-521-0703 83 OHNC PANEL 1, cr-ex (Fisher) 1 line, it is possible to restore supply to 2 customers beyond the fault by supply from 3 the other direction. This is done by 4 isolating the fault and closing the 5 normally open switch to restore supply. 6 Normally closed operation will usually 7 provide higher reliability supply to the 8 customers supplied from the line than 9 normally open operation because supply 10 can be restored more quickly and with 11 fewer switching operations than with 12 normally open operation." 13 The question is can you confirm that this 14 paragraph is accurate? 15 MR. PORAY: I think in general, yes. 16 MR. FISHER: Thank you. I would like to 17 illustrate this point by referring to line connection 18 Example (2). Free of service for lines between network 19 station A and the yap to line -- excuse me, the tap to 20 Load 1 has a major failure and is going to be out of 21 service for an extended period of time. 22 With this failure, is it correct that 23 initially Loads 1 and 2 two will be interrupted and have 24 no supply? 25 MR. PORAY: That is correct. 26 MR. FISHER: Is it the normal practice to 27 restore supply by isolating the faulted section of the 28 line between network station A and the tap to Load 1 and Les Services StenoTran Services Inc. 613-521-0703 84 OHNC PANEL 1, cr-ex (Fisher) 1 then to close the normally open switch to restore supply 2 to Loads 1 and 2 from network station B? 3 MR. PORAY: Yes. That is correct. 4 MR. FISHER: Would you agree that Loads 1 and 5 2 continue to get benefits from the line between the 6 normally open switch and network station B even though 7 they are normally on radio supply from network station A 8 and the benefit is that they can be supplied from this 9 line if there is a failure as mentioned above? 10 MR. PORAY: That is true. 11 MR. FISHER: Thank you. Okay. I would like 12 to go back to -- 13 MR. CURTIS: I am wondering though, I think we 14 would like to state that it's within context that there 15 is a time period where those customers are without 16 service. Because it's a normally open switch, it does 17 take time in order to isolate the fault and reconnect so 18 that it can be supplied from another facility. 19 Although there are benefits, it's not 20 equivalent to a network supply where you have got 21 multiple ways of supplying single customers. 22 MR. FISHER: We understand that. 23 MR. CURTIS: Just as long as it was clear. 24 MR. FISHER: Okay. Could you go back to 25 Example (1), please. Would it be correct to say that 26 several 115 KV lines still operate with closed 27 connections as illustrated in this example? 28 MR. PORAY: When you say it was closed Les Services StenoTran Services Inc. 613-521-0703 85 OHNC PANEL 1, cr-ex (Fisher) 1 connections, do you mean with the switch normally 2 closed? 3 MR. FISHER: Yes. 4 MR. PORAY: I'm not aware of any facilities, 5 115 KV facilities, that have a switch that is normally 6 closed, that operate with a switch normally closed. 7 MR. FISHER: Are there are any 115 lines that 8 operate in parallel between network stations? 9 MR. PORAY: There are 115 KV lines that 10 operate in parallel with network stations. 11 MR. FISHER: As in this example, right? 12 MR. PORAY: As in this example. 13 MR. FISHER: Thank you. Is it true that there 14 are many 230 KV lines that also operate in the same way? 15 MR. PORAY: In parallel with the network? 16 Yes, there are. 17 MR. FISHER: Can you confirm that whether the 18 line is of 115 kilovolt or 230 KV, if the line between 19 the network stations A and B is operated normally 20 closed, the line is classified by OHNC as a network 21 line? 22 MR. PORAY: If it's operated in parallel with 23 the network, it is classified as a network line. 24 MR. FISHER: Thank you. Assume that Load 2 25 has paid for the full cost of the tap line from the main 26 line into its plant and that this tap connects to the 27 main line which is classified as a network line. Then, 28 according to your response in interrogatory E225, this Les Services StenoTran Services Inc. 613-521-0703 86 OHNC PANEL 1, cr-ex (Fisher) 1 customer would still be required to pay the line 2 connection full rate even though it uses no line 3 connection assets. Is that correct? 4 MR. PORAY: It would be required to pay the 5 line connection pool because it continues to use OHNC's 6 lines to connect to the network station A and network 7 station B. 8 MR. FISHER: It uses no OHNC line connection 9 assets. 10 MR. PORAY: It continues to use OHNC lines. 11 We said in our definition that if a customer has paid 12 for its line connection but continues to use OHNC lines 13 to connect to a network station, it would still pay a 14 line connection charge. 15 MR. FISHER: But it's not using any OHNC line 16 connection assets. 17 MR. PORAY: Well, it is not using OHNC radial 18 line connection assets. It still continues to use OHNC 19 lines. 20 MR. FISHER: Okay. Thank you. Would you go 21 back to Example (2), please. Assume that the line 22 section from network station A to the tap line to Load 1 23 needs rebuilding because it has reached its end of life. 24 Assume that the investment rules have required Loads 1 25 and 2 to make a capital contribution to the new 26 investment because they are the loads that are normally 27 supplied through this line. 28 Is it true that OHNC can decide on its own to Les Services StenoTran Services Inc. 613-521-0703 87 OHNC PANEL 1, cr-ex (Fisher) 1 move the open point? 2 MR. PORAY: I believe that the open point is 3 chosen on the basis of the operational requirement for 4 that particular facility between stations A and B, and 5 as you mentioned, it could be for short-circuit levels 6 or for other operational reasons. 7 MR. FISHER: Would that be a yes, then? 8 MR. CURTIS: I think the problem we are having 9 with the question is it sounds like it could be an 10 arbitrary decision taken by OHNC to move the switch 11 position. I think what we are stating here is that it 12 is done in a manner that -- 13 MR. FISHER: It's arbitrary? 14 MR. CURTIS: It's not arbitrary. It is to 15 make affective use of the operation of those lines. 16 MR. FISHER: We are not questioning whether it 17 is arbitrary or not. We don't doubt that. Thank you. 18 So, for example, if I could take you to Line 19 Connection Example (3). This is the same as Line 20 Connection Example (2) except that the normally open 21 switch is now between Load 2 and Network Station A. 22 MR. PORAY: Correct. 23 MR. FISHER: Would it be correct, then, that 24 the effect of the change from Example (2) to (3) is to 25 transfer the Load 2 from being normally supplied by 26 Network Station A to being normally supplied by 27 Network Station B? 28 MR. PORAY: Correct. Les Services StenoTran Services Inc. 613-521-0703 88 OHNC PANEL 1, cr-ex (Fisher) 1 MR. FISHER: Is it true that OHNC might choose 2 to do this to better balance loads on the 230 kV or 3 500 kV network? 4 --- Pause 5 MR. PORAY: I think that may be one of the 6 reasons why that switch would be opened, yes. 7 MR. FISHER: Thank you. 8 With this change in the position of the open 9 point, is it true that a decision to move the open point 10 would cause Load 2 to be no longer normally supplied 11 through the lines to Network Station A that it has been 12 required to pay for? 13 MR. PORAY: Load 2 would still continue to 14 attract a connection charge, because this would be 15 supplied by an OHNC transmission line to Network 16 Station B. 17 MR. FISHER: Now, is it true, then, that a 18 decision to move the open point would cause Load 2 to no 19 longer normally supplied through the lines in Network 20 Station A that it has been required to pay for? 21 MR. PORAY: I'm not quite sure I understand 22 what it is you are asking. When you say that it 23 normally had to pay, are you saying that Load 2 made a 24 contribution to the network line? 25 MR. FISHER: If I could just turn you back to 26 the initial assumption, that the line section from 27 Network A to the tap line of Load 1 needs rebuilding 28 because it has reached end of life, and assume that the Les Services StenoTran Services Inc. 613-521-0703 89 OHNC PANEL 1, cr-ex (Fisher) 1 investment rules have required Loads 1 and 2 to make a 2 capital contribution to the new investment because they 3 are the loads that are normally supplied to that line. 4 If the location of the open switch is changed, this 5 would cause Load 2 to be no longer normally supplied 6 through the line to Network Station A that it has been 7 required to pay for. 8 MR. CURTIS: I think one of the difficulties 9 we are having here is that the capital contribution that 10 you are talking about in your scenario that Load 11 Customer 1 and Load Customer 2 have made have been made 12 in a manner to hold the overall connection pool 13 harmless. That has been what their investment is. 14 MR. FISHER: Yes. 15 MR. CURTIS: So Load Customer 2 in your 16 Example (2), continues to receive connection services 17 from OHNC. 18 If you flip over to your Example (3) where the 19 open switch has been moved, Load Customer 2 still 20 continues to receive connection services from OHNC. I 21 guess the argument here is that they would be comparable 22 connection services that they are being provided in both 23 examples. 24 I guess what we are struggling with, I'm not 25 sure that we see the relevance of the capital 26 contribution that you have in your Example (2). 27 MR. FISHER: If the line to Network Station B 28 subsequently needs rebuilding, would Load 2 now be Les Services StenoTran Services Inc. 613-521-0703 90 OHNC PANEL 1, cr-ex (Fisher) 1 required to contribute to the cost of rebuilding that 2 line as well? 3 MR. PORAY: I believe so. 4 MR. FISHER: Thank you. 5 Those are my questions. 6 THE PRESIDING MEMBER: Thank you, Mr. Fisher. 7 I think we will look towards the lunch break 8 now. Why don't we say 1:45. That will be fine for the 9 resumption. 10 We will just get an idea of who is up next, 11 please. 12 Mr. Janigan, you will be following, and 13 Mr. Rodger and Mr. Coburn on this panel. Anyone else. 14 Ms Lea? 15 MS LEA: Yes. 16 THE PRESIDING MEMBER: And Ms Lea. 17 All right. So we will resume at a quarter to 18 two. Thank you. 19 --- Upon recessing at 1225 20 --- Upon resuming at 1345 21 THE PRESIDING MEMBER: Mr. Janigan. 22 MR. JANIGAN: Thank you, Mr. Chair. 23 CROSS-EXAMINATION 24 MR. JANIGAN: Good afternoon, panel. 25 I would like to start with the line assets and 26 ask how OHNC teams up with the list of what assets 27 should be functionalized as line assets. 28 MR. PORAY: Based on our definition of -- or Les Services StenoTran Services Inc. 613-521-0703 91 OHNC PANEL 1, cr-ex (Janigan) 1 the use of functionality of the asset, we first 2 determined what the network facilities were, which were 3 those lines and transformation and switching stations 4 which are used by all customers. But you cannot 5 specifically identify a single customer with those 6 facilities, so that formed the network pool of assets. 7 Then we did the same for transformation. 8 Then all the other assets that were left, 9 which were radial assets, in other words lines leading 10 away from a network station to a customer's gate, those 11 formed the basis of the line connection group. 12 MR. JANIGAN: Now, I understand that you ran 13 some scenarios to determine what a line's dedicated use 14 is for. Could you describe those to the Board? 15 Apparently, you ran some scenarios that would shut the 16 plant off or a group to see what a line did. 17 MR. PORAY: No. No, we didn't. 18 MR. JANIGAN: You didn't do any of that? 19 MR. PORAY: We didn't run some scenarios. 20 MR. JANIGAN: Okay. 21 Now, from your description in your direct 22 examination, I take it that radial line assets cannot 23 move power everywhere in the system. It only can move 24 power to the customers to whom the line is dedicated to. 25 MR. PORAY: That is so. 26 MR. JANIGAN: I was interested in the 27 scenarios that were put to you with respect to 28 Exhibit G1.3 by AMPCO. I wonder if you could take out Les Services StenoTran Services Inc. 613-521-0703 92 OHNC PANEL 1, cr-ex (Janigan) 1 that exhibit. 2 MR. PORAY: Yes. 3 --- Pause 4 MR. JANIGAN: Am I correct in saying that the 5 115 kV lines, most of them run on an open switch basis? 6 MR. PORAY: Most of the 115 kV lines that are 7 termed radial facilities would run with an open switch, 8 yes. 9 MR. JANIGAN: And they are classified as a 10 line connection, obviously. 11 MR. PORAY: They are indeed. 12 MR. JANIGAN: Now, if trouble occurred -- and 13 I am looking at Example No. (2) -- if trouble occurred 14 between Load 1 and Load 2, as I understood your answer 15 this morning, the switch would be closed and Load 2 16 would be serviced from Network Station B. Is that 17 correct? 18 MR. PORAY: After the fault was cleared by the 19 protection, that switch will be closed to supply the 20 load, yes. 21 MR. JANIGAN: And how often does this occur? 22 MR. PORAY: I don't have a handle on the 23 frequency of those occurrences. 24 MR. CURTIS: It is not a frequency. 25 MS LEA: So the line in this circumstance 26 would be primarily used as a line connection rather than 27 a network line. 28 MR. PORAY: That is correct. Les Services StenoTran Services Inc. 613-521-0703 93 OHNC PANEL 1, cr-ex (Janigan) 1 MR. JANIGAN: I take it even in the 2 circumstance where the Load 2 where the switch is 3 closed, Load 2 is in effect getting the line connection 4 to Network Station B through this scenario. 5 MR. PORAY: Yes, it is. 6 MR. JANIGAN: Now, I wonder if you could turn 7 up Exhibit E, Tab 2, Schedule 1. I wonder if I could 8 draw your attention to Appendix 2(1)(b). Okay? This is 9 a response from OHNC to AMPCO which, as I understand, 10 reflects the shift of the revenue requirement between 11 the network and the line connection pools that result 12 from AMPCO's narrow definition? 13 MR. PORAY: That is correct. 14 MR. JANIGAN: And AMPCO's narrow definition, 15 as we heard this morning, is contained on page 9 of 16 their evidence. 17 MR. PORAY: That is correct. 18 MR. JANIGAN: Now, based on this table, as we 19 understand it, there will be $138 million recovered from 20 the network pool as a result of the shift. 21 MR. PORAY: That is correct, $138 has been 22 shifted from the line connection to the network. 23 MR. JANIGAN: Would that be $138 or $138 24 million? 25 MR. PORAY: Yes. Sorry. 26 MR. JANIGAN: Will the shift of $138 million 27 associated with this shift be recovered in the same 28 manner as all network costs? Les Services StenoTran Services Inc. 613-521-0703 94 OHNC PANEL 1, cr-ex (Janigan) 1 MR. PORAY: Yes, it will. 2 MR. JANIGAN: Now, will network costs have a 3 different recovery mechanism than the way the line 4 assets will be recovered? 5 MR. PORAY: From the way they were recovered 6 in the line connection pool? 7 MR. JANIGAN: Yes. 8 MR. PORAY: Yes. The same charge determinant 9 and the same proposal would be used to recover the 10 narrow definition of the -- I'm sorry, the new network 11 pool assets costs. 12 MR. JANIGAN: Now, from a functionality 13 perspective, does OHNC believe that the line asset costs 14 being shifted, and that's the $138 million, will be able 15 to carry out exactly the same function to all customers 16 as network assets? 17 MR. PORAY: No. They would not. And that is 18 why our definition, by our definition of functionality 19 we didn't have those assets in our definition of the 20 network pool. 21 MR. JANIGAN: Does OHNC from a cost causality 22 or a fairness perspective agree with the narrow 23 definition? 24 MR. PORAY: No. OHNC would not agree with the 25 narrow definition. 26 MR. JANIGAN: Now, I just want to touch 27 briefly on an issue that was raised by my friend 28 regarding aid to contribute. Can you briefly explain Les Services StenoTran Services Inc. 613-521-0703 95 OHNC PANEL 1, cr-ex (Janigan) 1 how that works in the event that a network connection is 2 built by OHNC? 3 MR. CURTIS: For a network connection? 4 MR. JANIGAN: No. I'm sorry, for a line 5 connection. 6 MR. CURTIS: For a line connection, certainly. 7 For a line connection, there is an assessment done 8 initially in terms of determining what the overall cost 9 would be to make that installation. Then there is a 10 comparison -- an evaluation rather done in terms of the 11 expected revenue stream. It would come from that asset 12 as a connection facility. 13 That revenue stream is present valued and then 14 there is a comparison made between that present value 15 and the cost. If the cost is higher than the present 16 value of the future revenue stream, then that difference 17 is the amount that would have to be contributed by the 18 customer in terms of saving the pool harmless. 19 MR. JANIGAN: After that contribution is paid, 20 then presumably the customer then pays the rates 21 associated with the average rates. 22 MR. CURTIS: That's correct. 23 MR. JANIGAN: Thank you, panel. Those are all 24 my questions. 25 THE CHAIRPERSON: Thank you, Mr. Janigan. 26 Mr. Rodger. 27 CROSS-EXAMINATION 28 MR. RODGER: Thank you, Mr. Chairman. Les Services StenoTran Services Inc. 613-521-0703 96 OHNC PANEL 1, cr-ex (Rodger) 1 I just have a couple of questions returning to 2 the question of cost allocation rate design principles. 3 If I could take you, panel, again to Exhibit C, Tab 3, 4 Schedule 1, pages 2 and 3. 5 Here you indicate various principles which you 6 applied with respect to the application that is now 7 before the Board. I wanted to focus on the first three 8 for a moment. Firstly, the rate structure should be 9 fair. Secondly, the rate structure should minimize 10 negative cost impact on customers at the onset of open 11 access and, thirdly, there should be stability and 12 predictability of rates for all stakeholders. 13 Once again, I think these three principles are 14 all some what inter-related. If I could focus 15 specifically on number two, the minimizing cost impacts 16 on customers. I wanted to explore with you when you 17 applied this principle, what was the scope of costs, the 18 impacts that you considered. 19 By that I mean not costs of transmission 20 customers, but I mean customers in terms of end users of 21 the system, you and me as homeowners, our friends here 22 that operate farms and so on. 23 I thought that the way I might be able to 24 approach the question is to provide a context for the 25 question, to look at the final bill that these end use 26 customers will be receiving and paying in the new 27 market. 28 If you just bear with me, we have our current Les Services StenoTran Services Inc. 613-521-0703 97 OHNC PANEL 1, cr-ex (Rodger) 1 bills today and very, very simple. We have sometimes 2 what is referred to as electricity charge, sometimes an 3 energy charge and we pay our GST and that's it. In the 4 new market, of course, our bills are going to look very 5 different. 6 We are going to see a separate charge for your 7 transmission. We are going to see a separate charge for 8 the commodity which, of course, will be the lion's share 9 of the bill. We will see a separate charge for the 10 independent electricity market operator, a separate 11 charge for the CTC, the compensation transition charge, 12 and a separate charge for distribution. 13 I take it you are aware that on the 14 distribution charge particularly there will be quite a 15 few changes. For the first time, we will see a return 16 on equity, debt servicing charges, 43 per cent corporate 17 tax rate, et cetera. 18 My question is when you applied this second 19 principle, did you apply it in consideration of the 20 changes that will be going on elsewhere in the 21 customer's bill or did you apply this principle strictly 22 looking at the transmission rate in isolation from 23 everything else that is going on in the bill? 24 MR. PORAY: The focus of our impact assessment 25 was purely on the transmission rates, on the impact on 26 transmission customers. 27 MR. RODGER: Now, in the settlement agreement, 28 there was reference made to section 1 of the OEB Act. I Les Services StenoTran Services Inc. 613-521-0703 98 OHNC PANEL 1, cr-ex (Rodger) 1 won't take you through all those principles or 2 objectives that the Board shall have regard to, but do 3 you recall that one of the principles that the Board is 4 obliged to look at is consumer protection, consumer 5 price protection? Would you agree with that? 6 MR. CURTIS: Yes. That is one. 7 MR. RODGER: Do you believe that when this 8 Board in considering your application for transmission 9 rates and considering the specific principle we have 10 talked about here, do you think that the Board should 11 have regard to what's going on with the rest of the end 12 use customer's bill when it comes to judging the 13 propriety of the application that is before the Board 14 for transmission rates? 15 MR. ROGERS: I object to that question. I'm 16 sorry to interfere, but I anticipate this will come up 17 from time to time during the course of the hearing. We 18 may as well have it out right now. 19 Whether these witnesses think you should do or 20 not is not going to be of much assistance to you. The 21 Act says what it says. I heard what you said this 22 morning about the indirect reference to that section and 23 the so-called settlement agreement. 24 Whether or not these witnesses think you 25 should do that or not is not of much assistance and, 26 therefore, I object to the question. 27 THE CHAIRMAN: I don't want them to offend you 28 if they say the wrong thing. Les Services StenoTran Services Inc. 613-521-0703 99 OHNC PANEL 1, cr-ex (Rodger) 1 MR. RODGER: I suppose my issue, Mr. Chairman, 2 was really in the context of the principle that has been 3 laid out in the evidence that if one of the guiding 4 principles for rate design has no adverse cost impact on 5 open access -- I was trying to explore on whether they 6 based that on any kind of a benchmark or it is in 7 complete isolation. If it is in complete isolation, I 8 am not sure I see the linkage between determining 9 whether it could be a positive or adverse impact on open 10 access unless it's compared to other things. 11 THE PRESIDING MEMBER: I think the witnesses 12 did answer. They did their analysis looking at only the 13 impact from the transmission tariff. So that answer 14 seems to be the one they gave you. 15 If you are asking if they took interest in 16 some other things, than you can do that but they may 17 continue to simply to say that is their answer. 18 MR. RODGER: I will move along to one more 19 question. If you skip ahead a couple of -- two more 20 principles, on page three. You said in one principle 21 that says the rate structure should minimize impacts on 22 the economic operation of the electricity market and in 23 your little description, you talk about avoid sending 24 energy price signals to the marketplace that distort the 25 efficiency of energy price signals from the marketplace. 26 When you applied these principles, was one of 27 your considerations in terms of allocating costs -- did 28 you take note of the fact of the consideration that Les Services StenoTran Services Inc. 613-521-0703 100 OHNC PANEL 1, cr-ex (Rodger) 1 different types of end users have different abilities to 2 influence other parts of the bill and that helped to 3 drive certain of your cost allocation decisions? 4 I will give you a specific example. You have 5 LDCs like my client -- not a lot of opportunity to 6 change their load shape. You have end use customers -- 7 small residential end use customers -- not a lot they 8 can really do on the commodity side. You have large 9 industrials. If anybody can benefit from a competitive 10 commodity, you think that they would. 11 Does those kinds of factors -- did they come 12 into play in driving some of your conclusions on cost 13 allocation, the ability to influence different parts of 14 the bill? 15 MR. PORAY: I think our main focus -- in fact, 16 our only focus in looking at the impacts and following 17 the principles was from the perspective of transmission 18 customers. 19 In relation to how transmission charges would 20 be passed on to other customers through the local 21 distribution companies rates was outside the scope of 22 the work that we were doing here. In fact, it is part 23 of the distribution rate design and that is what we -- 24 we couldn't really comment on that. 25 In terms of that particular principle that you 26 referred to which is to minimize impact from the 27 economic operation of the electricity marketplace, what 28 we were focusing on there was that transmission charges Les Services StenoTran Services Inc. 613-521-0703 101 OHNC PANEL 1, cr-ex (Rodger) 1 were going to be transparent. In other words, they 2 would become unbundled so that the market participants 3 in the electricity marketplace would feed off stand 4 alone as transmission charges. There was no means of 5 hiding them or there were no ways that there would be 6 any ambiguity about them. 7 So that is what we were trying to do there, 8 was to make sure that what we are dealing with here was 9 the recovery of embedded costs and that everybody who is 10 a market participant knew that those transmission 11 charges were dealing with that. 12 MR. RODGER: Again, when you referenced your 13 definition of transmission customers, that is, as in the 14 application, LDCs and directs. 15 MR. PORAY: That is correct. 16 MR. RODGER: Those are my questions. Thank 17 you, sir. Thank you, panel. 18 THE PRESIDING MEMBER: We are ready. Are you? 19 MR. COBURN: Yes sir. Mr. Coburn. 20 THE PRESIDING MEMBER: Coburn. Sorry. Okay. 21 CROSS-EXAMINATION 22 MR. COBURN: Good afternoon Mr. Poray and Mr. 23 Curtis. My name is Rick Coburn. I am here on behalf of 24 INCO and the Ontario Mining Association. 25 MR. PORAY: Good afternoon. 26 MR. COBURN: Good afternoon. 27 MR. CURTIS: Good afternoon. 28 MR. COBURN: Your counsel took some pains to Les Services StenoTran Services Inc. 613-521-0703 102 OHNC PANEL 1, cr-ex (Coburn) 1 point out that this is your first cross-examination at 2 the Board and in the same spirit of disclosure, I will 3 tell you it is mine as well. 4 MR. RODGER: Be careful of this man. 5 --- Laughter 6 MR. CURTIS: What he means to say is don't 7 hurt my feelings. 8 Now, gentlemen, my questions are going to be 9 directed at INCO Interrogatory No. 2 which is found in 10 Exhibit E under Tab 26 and it is Schedule 2. 11 --- Pause 12 MR. PORAY: No. 6, was that? 13 MR. CURTIS: Tab 26, Schedule 2. It is a 14 relatively long interrogatory. It is prefaced with a 15 reference to Exhibit D and I am not going to ask you to 16 turn to that. I will just read you, I think, what the 17 relevant portion of the reference is. 18 It states that a delivery point is assigned to 19 the line connection pool if it is connected to the 20 network station by one or more OHNC owned lines. Then 21 in brackets, it goes on to say: 22 "For this assignment, it is assumed that 23 if a customer has fully contributed to 24 building of all lines, connections to the 25 network station, the corresponding 26 delivery point is not assigned to the 27 line connection pool, thus, the customer 28 would not pay line connection pool Les Services StenoTran Services Inc. 613-521-0703 103 OHNC PANEL 1, cr-ex (Coburn) 1 charges in this case." 2 I just want to confirm my understanding then 3 that the way that OHNC is treating this, if a customer 4 has paid 100 per cent of the line connection then that 5 delivery point is not included in the pool. It just 6 doesn't appear in the pool and there is no charge for 7 it. Is that a correct understanding? 8 MR. PORAY: If the customer has made 100 per 9 cent capital contribution to a line connection which 10 goes all the way from his gate to the network station, 11 than that delivery point would not be in the line 12 connection pool. 13 MR. CURTIS: Okay. And if the customer has 14 only made a partial contribution to the line or if the 15 line doesn't extend all the way to the network station, 16 then how is that contribution recognized? 17 MR. PORAY: The capital contribution made by 18 the customer is netted out from the asset database and 19 the remainder of the costs are then assigned to the 20 connection pool. 21 MR. COBURN: Now, INCO has provided a specific 22 example of the situation or a fact scenario in the 23 interrogatory and that is found under III. They have 24 requested some confirmation from you about capital 25 contributions towards lines that were built from 26 Coppercliff Junction to Coppercliff and from Fur 27 Junction to Coppercliff Junction and so forth. 28 You have responded to that and I think agreed Les Services StenoTran Services Inc. 613-521-0703 104 OHNC PANEL 1, cr-ex (Coburn) 1 with the facts that are contained in the question with 2 some amendments. I wonder if you could just take a 3 moment to educate me as to how the rules that you just 4 outlined for us would apply to this fact situation. In 5 other words, how would INCO be treated on these facts? 6 MR. CURTIS: Are you asking, first of all, 7 around the contribution that INCO made as far as these 8 assets are concerned? 9 MR. COBURN: Right. 10 MR. CURTIS: And we have answered yes, they 11 did make those contributions, subject to how we 12 responded in that interrogatory. 13 MR. COBURN: Right. And I guess what I'm 14 asking you is having confirmed that, now how is the 15 contribution going to be treated? In other words, have 16 you netted portions of these assets out of the pool or 17 what have you done in each of these cases A, B and C? 18 MR. PORAY: As I said before, that is the 19 capital contribution that was obtained from INCO would 20 have been netted out of the asset database financial 21 data. 22 MR. COBURN: Would that apply in each of cases 23 A, B and C or is C treated differently because they paid 24 the total cost of branch circuits from Fur Junction to 25 INCO Station? 26 MR. PORAY: I would think that the netting out 27 would be done the same in all cases. 28 MR. COBURN: Is there anything on OHNC's Les Services StenoTran Services Inc. 613-521-0703 105 OHNC PANEL 1, cr-ex (Coburn) 1 evidence that would enable us to confirm that? In other 2 words, is that data available in the prefiled evidence? 3 MR. CURTIS: No. It's considered to be 4 customer related information, I would imagine, and we 5 have excluded that -- well, we have aggregated that 6 information together so as to protect the customer. 7 However, just to make a point on that -- 8 MR. COBURN: Sure. 9 MR. CURTIS: INCO certainly could have access 10 to that information if they contact us directly. We 11 would certainly be willing to provide that to INCO. 12 MR. COBURN: Yes. That was going to be my 13 next question. 14 MR. CURTIS: OKAY. 15 MR. COBURN: So INCO can get that information. 16 MR. CURTIS: Yes. It can, yes. 17 MR. COBURN: Okay. Just a little further down 18 on the same page, do you see V, there's a question: 19 "Can and will you confirm that Ontario 20 Hydro subsequently connected other 21 customers to the lines to which INCO had 22 contributed when the Clarabelle station 23 was constructed and that this was done 24 without consulting INCO." 25 Then the response to that question over the 26 page, you said: 27 "OHNC has no formal records to confirm or 28 deny the question regarding consultation Les Services StenoTran Services Inc. 613-521-0703 106 OHNC PANEL 1, cr-ex (Coburn) 1 with INCO, however, it is correct that a 2 customer was connected to one of the 230 3 kV circuits." 4 I guess in light of the fact that you had no 5 formal records to confirm or deny, can you indicate or 6 can you provide us with any information as to whether it 7 would have been customary for Ontario Hydro to consult 8 with a customer in INCO's situation in these 9 circumstances? 10 MR. CURTIS: I would think it probably would 11 have been customary or would be customary. We have 12 customer representatives that deal with each one of our 13 transmission customers. In the course of conversations 14 or discussions with INCO, they probably would have been 15 part of the conversation. 16 MR. COBURN: Now, the remaining questions in 17 the interrogatory actually weren't answered and -- or at 18 least answered directly -- and perhaps you can just 19 confirm for me, with respect to vi., the question was: 20 Can and will you provide an estimate of the proportion 21 of the line connection facilities supplying the INCO 22 Copper Cliff and Frood stations that INCO has paid for? 23 Is the answer to that, in effect, the answer 24 that you gave to iii.? Or is there some other reason 25 why it wasn't responded to. 26 MR. CURTIS: Oh, in terms of the fact that 27 it's considered to be customer information, I would 28 think we could provide that information. Les Services StenoTran Services Inc. 613-521-0703 107 OHNC PANEL 1, cr-ex (Coburn) 1 MR. PORAY: If that information is available 2 in the asset database, then we would provide it to the 3 customer if the customer requested it. 4 MR. CURTIS: One of the complications, of 5 course, in this is that these assets were built a fair 6 number of years ago and I'm not sure that we would 7 necessarily have the original cost data which you would, 8 of course, have to have in order to develop this 9 proportionality that the interrogatory requests. 10 MR. COBURN: Okay. 11 MR. CURTIS: But subject to that, we would 12 certainly provide the information. 13 MR. COBURN: You would endeavour to provide 14 that information to INCO if they directed a request to 15 you? 16 MR. CURTIS: Yes. 17 MR. COBURN: I would also like to ask you a 18 question concerning INCO Interrogatory 3, which is 19 actually just flipping over the page on Schedule 3. 20 There's a bit of a preamble to this, although reference 21 back to Exhibit B is the same. The preamble states INCO 22 is interested in the treatment of customers who have 23 been required to change their line connection facilities 24 at the request of Ontario Hydro, and then they go on to 25 ask: Can you confirm that, in the mid sixties, Ontario 26 Hydro required INCO to reduce its load on the 115 kV -- 27 sorry; I'm reading wrong -- 25 Hz system, from 100 MW to 28 30 MW, by converting 70 MW of load to 60 Hz and Les Services StenoTran Services Inc. 613-521-0703 108 OHNC PANEL 1, cr-ex (Coburn) 1 transferring the load to the 60 Hz 230 kV system; as a 2 result INCO built and paid for the 230 kV station at 3 Copper Cliff offloaded to the existing 25 Hz station? 4 And the response to that is: We can confirm that in the 5 mid sixties increased 60 Hz load requirements at INCO 6 required INCO to build the 230 kV transformer station; 7 we believe the conversion and transfer of this load was 8 the result of a mutual agreement. 9 And that may be the case. But can you provide 10 us with any information as to what or who actually 11 prompted the conversion, in the first place? 12 MR. PORAY: Well, we certainly are not aware 13 of that mutual agreement. It is possible that records 14 may exist in our customer service side. 15 MR. COBURN: Is that something that you might 16 be able to go back and explore a bit further and provide 17 us with additional information on? 18 MR. CURTIS: I guess what I was going to 19 suggest is perhaps INCO might want to pursue this 20 through their customer rep that they have with OHNC. 21 That rep should have access to at least some of the 22 historical information. 23 One of the problems, of course, is that this 24 agreement, or this occurrence was back in the mid 25 sixties and I wouldn't want to guarantee that we would 26 have the information that would go back that far. 27 THE PRESIDING MEMBER: Mr. Coburn, I think you 28 have to be very aware of the two processes here; that Les Services StenoTran Services Inc. 613-521-0703 109 OHNC PANEL 1, cr-ex (Coburn) 1 is, you are asking specific confidential information 2 between OHNC and INCO and that information is not (a) 3 going to be very helpful to this proceeding and (b) it 4 couldn't be used in argument or any other purpose for 5 the purpose of this proceeding. So, we have to 6 distinguish, I think, things that you ask for that will 7 become part of the record of the proceeding and will be 8 used by us, and everyone else, from specific information 9 requests outside of the hearing that you may wish to 10 send to the applicant, and I think you need to keep 11 those two things in mind and keep them separate if you 12 could, in terms of your questions to the applicant. 13 MR. COBURN: Thank you, sir. And I appreciate 14 that direction. I guess I just wasn't clear from the 15 witness whether the response to this particular question 16 fell in the confidentiality category or not, but he's 17 nodding his head, so that's fine. 18 Sir, the last question I have for you is 19 actually in response to an OMA interrogatory and it's -- 20 I think it's actually the only interrogatory by OMA. 21 It's Exhibit E, Tab 28, Schedule 1. 22 I think the thrust of the question was -- if I 23 could just read you part of it: Please confirm that 24 Ontario Hydro's past policy required mining companies to 25 contribute a larger proportion of their connection costs 26 vis-…-vis other direct customers and MEUs. And then the 27 answer was by way of a confirmation: It is confirmed 28 that Ontario Hydro's past policy required mines and Les Services StenoTran Services Inc. 613-521-0703 110 OHNC PANEL 1, cr-ex (Coburn) 1 other extractive industries to contribute a larger 2 portion of their connection costs relative to other 3 customers due to the risk of continued long-term 4 operations. 5 For either of you, my first question was, the 6 policy that's being referred to in this response, was 7 that a policy that was reduced to writing? Or is it 8 something else other than a written policy? 9 MR. PORAY: Again, I think your best source 10 for that information would be your account executive 11 with Ontario Hydro Networks Company. 12 MR. COBURN: I'm not sure why that would be 13 the case here because it seems to me that the response 14 is really -- what you are responding to is a general 15 policy applied to the mining and extractive industries 16 across the board and I wonder if you could -- 17 MR. CURTIS: It wasn't put down as a written 18 policy directed exclusively to this group of customers. 19 MR. COBURN: Okay. So there is no written 20 policy? 21 MR. CURTIS: Not directing it towards these 22 specific group of customers. 23 There were policies around how we would 24 calculate connection rates, and it gets into this aspect 25 of the risk around the investment that's related to the 26 particular customer that we are talking about. And 27 there were some issues around extractive industries, as 28 well. Les Services StenoTran Services Inc. 613-521-0703 111 OHNC PANEL 1, cr-ex (Coburn) 1 MR. COBURN: Okay. So the writings you are 2 referring to, then, would again be on a 3 customer-by-customer basis, perhaps, rather than 4 generic? 5 MR. CURTIS: Because that's how it was 6 applied. Whenever a customer would come in, it would 7 have to be calculated or determined on a 8 customer-by-customer basis. 9 MR. ROGERS: Mr. Curtis, could I ask you to 10 remember to keep your voice up -- 11 MR. CURTIS: I'm sorry. 12 MR. ROGERS: -- so that the people at the back 13 can hear us as well. 14 MR. COBURN: Okay. And that was actually 15 going to be sort of my follow-up question, then, how the 16 company went about quantifying the risk. 17 You actually undertook a risk analysis or 18 assessment on a customer-by-customer basis? 19 MR. CURTIS: Yes. Typically, yes, we would. 20 MR. COBURN: Can I take from that, then, that 21 the larger portion of the connection charges that would 22 be levied, that wouldn't be a uniform portion that would 23 be engaged in some fashion to the particular customer? 24 MR. ROGERS: You are talking about in the 25 past, with Ontario Hydro, a different company? 26 MR. COBURN: Yes, I am. Their predecessor, 27 yes. 28 MR. CURTIS: The difficulty with that Les Services StenoTran Services Inc. 613-521-0703 112 OHNC PANEL 1, cr-ex (Coburn) 1 particular question is that the rates ended up being 2 calculated on a bundled basis and I think it would be 3 very difficult for me to be able to say that the 4 transmission portion of that was calculated differently 5 on a customer-by-customer basis that way. 6 MR. COBURN: I guess I'm just not clear. What 7 would have been the point of doing the risk assessment 8 on a customer-by-customer basis if the increased portion 9 of the charge wasn't going to vary? I'm just not making 10 a connection there, that's all. 11 MR. CURTIS: When Ontario Hydro went about 12 doing the calculation, there are a number of risks that 13 are associated that were analyzed. One of them would be 14 around supply, in terms of how much energy that -- or 15 commodity, if you will -- how much energy that 16 particular customer would be expected to take, as well 17 as the security around the specific transmission 18 investment. 19 So these analyses were done on a bundled 20 basis. They didn't look, for example, just exclusively 21 at the transmission line portion of it. 22 MR. COBURN: I think I understand. 23 Thanks. Those are my questions. 24 THE PRESIDING MEMBER: Thank you, Mr. Coburn. 25 Mr. Mattson, are you next? 26 MR. MATTSON: Thank you, Dr. Higgins. 27 CROSS-EXAMINATION 28 MR. MATTSON: Just one question, panel. Les Services StenoTran Services Inc. 613-521-0703 113 OHNC PANEL 1, cr-ex (Mattson) 1 Your evidence this morning is that the 2 proposal does not allow customers with multiple delivery 3 points to aggregate them for network charges. Is that 4 correct? 5 MR. PORAY: That is correct. 6 MR. MATTSON: Just clarify this for me. 7 This policy also will apply to OHSC's 8 distribution subsidiaries as well? 9 MR. PORAY: That is correct. 10 MR. MATTSON: Thank you. Those are all my 11 questions. 12 THE PRESIDING MEMBER: Thank you. 13 Mr. Poch. 14 MR. POCH: Thank you, Mr. Chairman. 15 CROSS-EXAMINATION 16 MR. POCH: Panel, first of all, on the general 17 principles, I take it your proposal started with the 18 principles, your proposal grows out of the principles 19 you have selected. 20 MR. CURTIS: Yes. 21 MR. POCH: We could turn them up at Tab 3, if 22 you like -- Exhibit C, Tab 3. 23 I noticed, for example, that under "Revenue 24 and Rate Structure", it is the fourth bullet, you have 25 chosen to include a principle that the rate structure 26 should minimize impacts on the economic operation of the 27 electricity marketplace. 28 Can we agree that that is an example of a Les Services StenoTran Services Inc. 613-521-0703 114 OHNC PANEL 1, cr-ex (Poch) 1 consideration which -- and I'm not criticizing your 2 inclusion of it. It looks at the necessarily tied 3 implications of what you do with transmission, but it is 4 not, strictly-speaking, if you had your blinkers on, a 5 transmission-specific consideration. You are looking at 6 how this is going to change the world of the commodity 7 that the transmission is carrying. 8 MR. PORAY: I think I would categorize this. 9 Because transmission is a component of the 10 charges that market participants will see in the 11 marketplace, we included this to ensure that the rates 12 that we are putting forward will not be sending the 13 wrong signals in terms of the marketplace. 14 MR. POCH: In terms of the commodity 15 marketplace? 16 MR. PORAY: Right. 17 MR. POCH: Yes. Okay. 18 So you have included, as it were, a social 19 consideration outside the narrow sphere of transmission 20 cost allocation. Again, I don't criticize you. It is 21 because you recognize that what you do with transmission 22 costing has a fairly direct impact in this related 23 sphere. Is that fair? 24 MR. PORAY: I think so, yes. 25 MR. POCH: All right. 26 Indeed, that concern is one that either 27 reflects or is reflected in the objectives that this 28 Board is instructed to have regard to in the opening Les Services StenoTran Services Inc. 613-521-0703 115 OHNC PANEL 1, cr-ex (Poch) 1 section of the Bids Act, and similarly in the opening 2 section of the Electricity Act, correct, that particular 3 one -- 4 MR. CURTIS: Yes, it is. 5 MR. POCH: -- concerned for the functioning 6 marketplace and competition and so on? 7 Which brings me to the question you, of 8 course, must be expecting of me, which is why, then, did 9 you not include as a principle some reflection of 10 section 1(6) of the Act, which speaks of facilitating 11 the move towards cleaner generation, for example? 12 Let me just pose it a little more tightly. 13 You would agree that what you do on transmission rates 14 has quite a direct impact on what is going to happen in 15 amongst sort of choices of fuels, for example? 16 MR. CURTIS: Yes. I think, though, that if 17 you look at what we have come up with as far as our 18 proposal is concerned, that there are certain features 19 of it that reflect the principle that you are talking 20 about with us, I -- 21 MR. POCH: Yes. I wouldn't suggest you 22 haven't had some regard to that concern. I'm just 23 trying to understand why some of these concerns get 24 elevated to first principles from which you start and 25 others were considerations not worthy of being elevated 26 to that of principle. Should we take anything from 27 that? 28 MR. CURTIS: I don't think you can take Les Services StenoTran Services Inc. 613-521-0703 116 OHNC PANEL 1, cr-ex (Poch) 1 anything from that because what ended up happening is 2 that we were listening to our stakeholders in terms of 3 trying to develop this proposal and groups such as the 4 one that you represent raised that, and we have tried to 5 incorporate that within the proposal that we have 6 brought forward to this Board. 7 MR. POCH: So the principles, as you have laid 8 them out here, were really your starting point as 9 opposed to your current position in terms of where you 10 find yourself now with your proposal. 11 MR. PORAY: I think we would still stick by 12 these principles. I don't think we would change them. 13 MR. POCH: Where you are now, then, in terms 14 of principles, is you still take the position that -- I 15 won't word it for you but let's call it section 1(6) -- 16 is not a consideration on par with these other 17 considerations, for example, the cost allocation should 18 consider how other jurisdictions have accomplished the 19 task? 20 MR. CURTIS: I think the problem that we were 21 encountering here is that we are dealing with the 22 transmission tariffs and the setting of transmission 23 tariffs. We didn't take it as an appropriate direction 24 for us to be going in to be encouraging specific types 25 of generation as laid out or stated in our principles. 26 We did make some accommodation as we had developed our 27 proposal because we were listening to our stakeholders, 28 and that seemed to be a view that was strongly expressed Les Services StenoTran Services Inc. 613-521-0703 117 OHNC PANEL 1, cr-ex (Poch) 1 to us, that we should reflect some aspects of it. 2 MR. POCH: I won't go further. We are going 3 to get into an argument. 4 I wanted to move on, then, to the question of 5 the choice of pools. I would ask you to turn up 6 Interrogatory Response E, Tab 5, No. 10. For those who 7 don't have to have it in front of them, this was an 8 interrogatory asking about identifying interconnection 9 costs, part of this question of whether there should be 10 a pool for EWT-related costs, if you will. 11 In your response you state, first of all, that 12 the data isn't available without a lot of work for those 13 categories; and, correct me if I'm wrong, that really 14 the core of your position is the second paragraph where 15 you say there is a difficulty in such categorization, 16 that the capability of interconnections depends on the 17 strength of the transmission network infrastructure from 18 which they emanate. It is not possible, and I will 19 paraphrase you, to draw nice little crisp lines where 20 something changes from interconnection to network, that 21 these are meshed, if you will. 22 MR. CURTIS: Exactly. 23 MR. POCH: All right. 24 First of all, can we agree that there are some 25 assets, though, that are clearly interconnection assets? 26 The wires across the river, the autotransformers, so 27 that you can speak the same voltage frequency and phase 28 to your neighbouring jurisdiction, these assets are Les Services StenoTran Services Inc. 613-521-0703 118 OHNC PANEL 1, cr-ex (Poch) 1 identifiable? 2 MR. PORAY: They are indeed, but they are just 3 part of the interconnection capability. 4 MR. POCH: These assets themselves are in the 5 hundreds of millions? Just order of magnitude. 6 MR. PORAY: I don't have that figure at my 7 fingertips because we haven't broken them down into -- 8 MR. POCH: I recall from the earlier case that 9 there were some specific assets that were put in place 10 as a result of recommendations from the MDC just in the 11 last year or so. These were significant assets, were 12 they not? 13 MR. PORAY: The phase shifters, yes. 14 MR. POCH: And these assets allow you both to 15 import and export across the ties with increased 16 capacity. Correct? 17 MR. PORAY: They do. 18 MR. POCH: All right. 19 MR. PORAY: But I should also elaborate this, 20 that the capability to deal with those phase shifters in 21 terms of managing the level of imports and exports is 22 also tied to what happens on the other interconnections 23 with New York as well, that there is an 24 interrelationship between them. 25 MR. POCH: All right. By that I take it you 26 mean -- you can't exercise complete control over what 27 its capacity is. It's a cooperative effort. 28 MR. PORAY: The capacity of the Les Services StenoTran Services Inc. 613-521-0703 119 OHNC PANEL 1, cr-ex (Poch) 1 interconnection, we constantly have a highly 2 interconnected system. It depends really what happens 3 in other parts of the system. You cannot clearly say 4 that this interconnection is 2,000 megawatts, for 5 instance, where something else is happening on another 6 interconnection that could potentially impact the 7 capability to import or export 2,000 megawatts. 8 MR. POCH: That has to do with the fact that, 9 for example, whether this interconnection is loaded with 10 circulating power or whether, I take it at the SO, 11 whether you have got the strength on your backbone to 12 get the power to the interconnection. 13 MR. PORAY: That is correct. 14 MR. POCH: All right. Thank you. I am going 15 to move on then. 16 I have a number of questions related to this 17 issue that comes up in Mr. Chernick's evidence which is 18 how you have shared assets that serve both generation 19 and load connection assets, serving both generation and 20 load. 21 I will say right off the bat this overlaps a 22 little bit with how you functionalize assets as either 23 network or connection, generation connection or load 24 connection. I understand that we are not wanting to get 25 into a debate about that as it's tied to this issue 26 eight of generation connection. I will try to stay out 27 of that. I apologize if they overlap. 28 With respect to assets then that are generator Les Services StenoTran Services Inc. 613-521-0703 120 OHNC PANEL 1, cr-ex (Poch) 1 connection assets, you noted in your evidence that there 2 was widespread support for isolating generator 3 connection costs and you have in fact done so. I take 4 it that you in fact need to do so in part because you 5 then go through this exercise of allocating to what 6 extent how they get shared with load and the portion 7 that is attributed to generation in the current proposal 8 goes into network. 9 MR. PORAY: That is correct. 10 MR. POCH: All right. First of all, if for 11 that reason alone I take it you are going to continue to 12 track these assets so if we in some subsequent hearing 13 get into discussion of whether there should be a charge 14 to generators for their connection, the data will be 15 there to support that discussion. 16 MR. PORAY: It will be indeed. 17 MR. POCH: Okay. Now, just to help me here, 18 can I get some terms from you. I take it that in 19 deciding which assets fall into this shared category, 20 indeed into the generation connection category, however 21 it is ultimately allocated, you had a choice to make 22 about where you put your balance. 23 MR. PORAY: Well, in terms of connection 24 assets, we would have followed exactly the same policy 25 in determining which were connection assets based on the 26 functionalities those assets play. 27 MR. POCH: Well, I was interested if you took 28 a parallel approach in functionalizing cost to Les Services StenoTran Services Inc. 613-521-0703 121 OHNC PANEL 1, cr-ex (Poch) 1 generation connection, if you used the same parallel set 2 of rules there. Can you advise me on that? 3 Let me give you an example which kind of 4 puzzled me. Maybe this will help us. I was looking at 5 Exhibit C, Tab 6, where you have provided a number of 6 tables, the connectivity database output. 7 If you look at the first page there, which is 8 Exhibit C, Tab 6, Schedule 2, page 1 of 57. This may in 9 fact not be a good example of a shared generation and 10 load situation, but I think it will still inform our 11 discussion. 12 I think it's about the eighth one down, 13 there's a pair of listing there for Bruce NGS (a) and 14 (b) switchyard. One has got TS which I take it is 15 transformer station. One is SS, which I take it is 16 switching station. 17 MR. PORAY: Switching station. 18 MR. POCH: Both of those have been put into 19 the network pool. When I went ahead to look at the 20 listing of shared assets -- well, they don't appear on 21 the list further down where you have a double 22 categorization. Nor do they appear in the Schedule 4 23 where you list how you split up shared load and 24 generation connection assets. 25 MR. PORAY: I think I can answer your question 26 here. Basically what those transmission facilities do 27 here are perform a network function. In terms of the 28 Bruce switchyard TS, there are transformers that set Les Services StenoTran Services Inc. 613-521-0703 122 OHNC PANEL 1, cr-ex (Poch) 1 down from I believe 500 down to the 230. There is 2 supply provided to Owen Sound through the 230 kV system, 3 so it does perform a network function. 4 In the case of the Bruce B switching station, 5 that is precisely what it's doing. It's switching the 6 500 kV lines, so it's performing a network function. 7 MR. POCH: All right. Were these facilities 8 not built in fact because of the existence of the Bruce 9 generating facilities there? Do they serve a 10 generation -- I understand in your proposal it doesn't 11 matter in the sense for the moment because you have 12 allocated it to network in any event. 13 If you didn't, would they have anything to do 14 with generation? Would some portion of them be 15 allocated to generation? We chose to have a separate 16 pool for that. 17 MR. PORAY: Well, I think this is the 18 difficulty in trying to resolve what are the generation 19 assets and what are the -- well, generation specific 20 assets. I think these assets were put in place as part 21 of the 500 kV system in cooperation in that area. 22 MR. POCH: Can I ask you this. Depending on 23 what set of rules we may or may not ever argue about for 24 generation, these could be in part or in whole allocated 25 to generation. If we had a rule that said generation 26 connection pool shall be all those assets but for that 27 generation wouldn't be there -- I assume you wouldn't 28 have any 500 kV up on the Bruce Peninsula. It's Les Services StenoTran Services Inc. 613-521-0703 123 OHNC PANEL 1, cr-ex (Poch) 1 dangerous and subverse up there, but in the extreme. 2 I don't want to debate the merits. I 3 understand this is truly the issue that has been 4 deferred. I don't want to debate the merits of that. 5 I'm just saying depending on a choice, this would get 6 functionalized differently. 7 MR. CURTIS: That's true. However, I think 8 the point that we are making here that maybe serves your 9 case is we will keep track of these assets as per their 10 description so that if and when this other issue is 11 reviewed that the information will be available. 12 MR. POCH: All right. In that particular 13 case, I take it those assets aren't part of any load 14 connection. None of those assets. 15 MR. PORAY: No. These are actual attachments. 16 MR. POCH: So they are not a good example, in 17 any event, of the shared. All right. I see Mr. 18 Campbell sitting on the edge of his chair here. He 19 doesn't want to let me get into the generation 20 connection issue. I have sympathy with that. 21 Let me just ask you one more -- 22 MR. ROGERS: It used to be that that's why 23 they had an issues list. Perhaps things have changed. 24 MR. POCH: Yes. Let me ask you one question 25 and just to facilitate the argument of that issue A. 26 Could you just give me some terminology so we can be on 27 the same wave length in argument of what the choices are 28 in terms of the narrow to the broadest functionalization Les Services StenoTran Services Inc. 613-521-0703 124 OHNC PANEL 1, cr-ex (Poch) 1 of costs to generation. If you don't mind. I think it 2 will assist the Board when we get to the argument phase. 3 Are there terms of art for this or is my 4 characterization as good as anyone's? 5 MR. PORAY: Well, I think it's a difficult 6 issue to resolve in terms of trying to identify what 7 portion of the assets is allocated to generation and 8 what portion is allocated in the highly interconnected 9 system. If you have a simple radial line connecting a 10 generator to the network, then that's fairly 11 straightforward, but where you have got a high degree of 12 meshing, it's very difficult. 13 Then, what criteria do you use to determine 14 how far into the system do you have to go or what 15 proportion of those assets should be allocated for that 16 use or for that use? 17 MR. POCH: I was very active in the question. 18 It's just are there different schools of thought on this 19 that have been reduced down to names of this approach 20 versus that approach. If not, I will just leave it 21 there. It was just to help us speak the same language 22 later. 23 MR. PORAY: I'm not aware of any. 24 MR. POCH: Fine. Let me go on to the more 25 specific concern that Mr. Chernick's evidence discusses 26 which is this question of the methodology you have 27 applied to those assets that do share both a generation 28 connection function and load connection function. Les Services StenoTran Services Inc. 613-521-0703 125 OHNC PANEL 1, cr-ex (Poch) 1 Your proposal, as I take it, is simply a pro 2 rata sharing. If it's a 100 megawatt load and a 3 thousand watt generator, the load would be allocated one 4 eleventh of the cost of maintaining those assets. 5 MR. PORAY: Correct. That's the way we have 6 done it. 7 MR. POCH: Now, Mr. Chernick suggests in his 8 evidence that this could give you some peculiar and 9 inequitable results. Let me give you an example and 10 make sure we all are on the same wave length. 11 You have two LDCs, both with 100 megawatts a 12 load, one shares the line with a 100 generator the other 13 with a 1,000 megawatt generator. Let's assume the lines 14 are built for the highest load, so in the one case it's 15 100 megawatt capacity line and the other it's 1,000 16 megawatt capacity line, I appreciate probably in a 17 heroic assumption that the costs are roughly 18 proportional to the size of the line. I appreciate 19 that's probably not true, just for simplification. 20 Let's say that the 1,000 megawatt line is $1 21 million and the 100 megawatt line is, therefore, 22 $100,000 of assets and then the carrying costs and what 23 have you go into the rates. 24 In that scenario then, it is my understanding 25 that the LDCs sharing the line with the 100 megawatt 26 generator would pay half of the $100,000 or costs of the 27 $100,000, they would be allocated $50,000 worth of 28 assets. Les Services StenoTran Services Inc. 613-521-0703 126 OHNC PANEL 1, cr-ex (Poch) 1 MR. PORAY: That is correct. 2 MR. POCH: And the other LDC sharing the line 3 with the 1,000 megawatt generator -- I've got a tenth, 4 it's probably an eleventh, but something on the order of 5 a tenth of a million dollars and that's $100,000. Is 6 that right? 7 MR. PORAY: Yes. Well, it's the ratio of a 8 hundred over eleven hundred times a million. 9 MR. POCH: Nine hundred and ninety thousand, 10 something like that. I'm sorry. Roughly twice as much, 11 is that fair, as the other LDC? 12 MR. PORAY: Roughly. 13 MR. POCH: All right. That's on the one hand. 14 On the other hand, if you have an existing line serving 15 a large LDC and then a small generator wants to locate 16 along that line, the small generator is going to have to 17 pick up a proportionate amount of the tab for that large 18 existing line, even though it of course is going to be 19 only using a part of that capacity against the maximum. 20 Is that right? 21 MR. PORAY: That's the way our proposal 22 defines the cost. 23 MR. POCH: Would you agree that, let's say in 24 that latter case, this is a less than ideal price signal 25 for the efficient location of generation? 26 MR. PORAY: I believe that you can't use the 27 recovery of the imbedded sum cost of the signal for 28 putting in new generation. Les Services StenoTran Services Inc. 613-521-0703 127 OHNC PANEL 1, cr-ex (Poch) 1 MR. POCH: It's inherently serving a different 2 purpose. 3 MR. PORAY: Right. 4 MR. POCH: At cross-purposes. Mr. Chernick 5 presented another formulae. I won't bore people with 6 the details. It's spelled out in his evidence. You 7 have had a chance to look at that formula, I take it. 8 MR. PORAY: Yes. 9 MR. POCH: And the critique, the concerns he 10 has raised about the proposal. 11 MR. PORAY: Yes. 12 MR. POCH: Do you have a general response to 13 the suggestion Mr. Chernick makes that the technical 14 fix -- would his fix go some way towards addressing this 15 problem? Does it introduce any other problems that you 16 are concerned with? 17 MR. PORAY: I think our main concern is that 18 based on our understanding or lack of understanding, 19 because in reading the submission and in the subsequent 20 interrogatories we were still unclear as to how the 21 methodology works, but assuming that we have some 22 understanding, we feel that it is more complex in the 23 sense that -- first of all, it uses the line capacity of 24 an element in assigning the cost. 25 The question there is which capacity do you 26 use because capacity can vary depending on whether it's 27 summer or whether it's winter. There is an element in 28 invariability there. Les Services StenoTran Services Inc. 613-521-0703 128 OHNC PANEL 1, cr-ex (Poch) 1 MR. POCH: Let me just interrupt you. Does 2 your approach not do a pro rata on the -- 3 MR. PORAY: Pro rata on the connected load or 4 connected generation, so we don't use the line capacity. 5 We just use the pro ration of the cost of that line to 6 the connected load and the connected generator. 7 MR. POCH: Which I take it can change from 8 time to time too. 9 MR. ROGERS: I gather, Mr. Chairman, that my 10 friend doesn't want to hear the rest of the answer. 11 MR. POCH: No. I just thought I would break 12 it up so we could follow it cleanly, but if you prefer 13 go right ahead and we can come back. 14 MR. PORAY: One aspect of the complexity is 15 that you have to take into account the line capacity 16 variability. The other is that there may in fact be 17 instances when the generators may not pay for the line 18 connection. 19 In one of the responses that Mr. Chernick 20 provided, he in fact said that for this particular 21 scenario, the generator would not pay even though it's 22 connected with the load whereas in our proposal it would 23 be allocated some cost. 24 MR. POCH: All right. Let's leave it at that 25 then. Thank you. 26 MR. PORAY: Thank you. 27 MR. POCH: Those are my questions on that 28 topic. Les Services StenoTran Services Inc. 613-521-0703 129 OHNC PANEL 1, cr-ex (Poch) 1 Thank you, Mr. Chairman. 2 THE PRESIDING MEMBER: Thank you, Mr. Poch. 3 CROSS-EXAMINATION 4 MR. GREENSPOON: Yes, thank you. Mr. 5 Chairman, I just have a couple of issues relating to the 6 grid itself. 7 Are you adopting these maps as an exhibit to 8 this hearing, Mr. Curtis? 9 MR. CURTIS: Yes, we are. 10 MR. GREENSPOON: What is the reason that they 11 are not to be reproduced? Is that a copyright issue or 12 is it a confidentiality, terrorism, I'm not sure. 13 MR. CURTIS: It's a copyright cost issue. 14 MR. GREENSPOON: Copyright cost issue. Okay. 15 I have an old map here. 16 MR. CURTIS: Yes. 17 MR. GREENSPOON: I discussed this with you a 18 bit, with my friend's permission, before the break. I 19 haven't copied this. I wasn't sure whether I could copy 20 this, Mr. Chairman. 21 This is a large map that most of us that most 22 of us have seen at the old HR hearings. It is grid, 23 retail, Northern Ontario. You are familiar with that 24 map. 25 MR. CURTIS: Yes, I am. 26 MR. GREENSPOON: This map shows -- my client 27 is a Northern Ontario based Coalition of Environmental 28 Group. Les Services StenoTran Services Inc. 613-521-0703 130 OHNC PANEL 1, cr-ex (Greenspoon) 1 MR. CURTIS: Yes. 2 MR. GREENSPOON: We are concerned with 3 Northern Ontario. 4 MR. CURTIS: Yes. 5 MR. GREENSPOON: I was asking you why so much 6 of the grid in Northern Ontario doesn't appear on your 7 map. 8 MR. CURTIS: You asked me about a specific 9 line and -- 10 MR. GREENSPOON: There's a 230 -- I think we 11 agreed it was a 230 kV line that runs from basically 12 parallel to the line that goes along Lake Superior, but 13 it in fact runs north of Lake Nipigon. 14 MR. CURTIS: Yes, and what I have been 15 informed of is that line has never been constructed, 16 that in fact this is what was part of the plans when 17 Ontario Hydro was considering the installation of Little 18 Jackfish. 19 MR. GREENSPOON: Right. 20 MR. CURTIS: Since Little Jackfish didn't go 21 ahead, that line didn't go ahead either. 22 MR. ROGERS: Do you know otherwise? Is there 23 a line there? 24 MR. GREENSPOON: It's interesting that neither 25 of us knew that when we discussed the question. 26 MR. CURTIS: That's correct. I'm going to 27 seek some further clarification just to make sure that 28 that's correct. Les Services StenoTran Services Inc. 613-521-0703 131 OHNC PANEL 1, cr-ex (Greenspoon) 1 MR. GREENSPOON: We also discussed the line 2 that goes along the eastern seaboard of Lake Superior 3 from Sault Ste. Marie to Wawa. 4 MR. CURTIS: Yes. 5 MR. GREENSPOON: That's also a 230 kV line and 6 we know that does exist. 7 MR. CURTIS: Yes. 8 MR. GREENSPOON: But that's not on your map 9 because that's owned by Great Lakes Power. 10 MR. CURTIS: Great Lakes Power, that's 11 correct. 12 MR. GREENSPOON: Would it be fair to say that 13 everything else is on that map, or do you know that? 14 MR. CURTIS: To the best of my knowledge, 15 everything else is on the map. 16 MR. PORAY: Perhaps I should just clarify that 17 maybe all the 115, 230 and 500 kV facilities that are 18 owned by OHNC are on that map. 19 MR. GREENSPOON: Right. In other words, 20 everything that is defined as transmission is on that 21 map. 22 MR. CURTIS: Except for those facilities that 23 would specifically identify a customer. We may, for 24 example, not have some specific transformer stations 25 identified because they were constructed to supply 26 specific customers. 27 MR. GREENSPOON: All right. How about this, 28 if I could put this to you. If I provided you with this Les Services StenoTran Services Inc. 613-521-0703 132 OHNC PANEL 1, cr-ex (Greenspoon) 1 map would you be able to take it back to your 2 corporation or somebody there and indicate to me what on 3 this map is built and what isn't? 4 In other words, I don't want to go through and 5 take the Board's time up on the specifics, but I see a 6 lot of lines here, other than the one that we talked 7 about that goes over Lake Nipigon. That is not on that 8 map, and I would like to know if that exists or not. 9 Is that something that you think you could do, 10 Mr. Rogers? 11 MR. ROGERS: Let me offer to do this. Can we 12 take it under advisement? If my friend will give me the 13 map, I will see that it gets in the hands of somebody 14 who knows more about maps than anybody in the room, and 15 if perhaps we could do this off line and not take the 16 Board's time. Maybe they could meet with my friend and 17 discuss it. 18 THE PRESIDING MEMBER: If you want us to stay 19 online, then is it going to be used as evidence in here 20 or not? That's the first question. 21 MR. GREENSPOON: I'm sorry, Mr. Chairman? 22 THE PRESIDING MEMBER: Do you want this 23 exhibit to be part of the record of the proceeding and 24 also be part of the record? That's the question. 25 MR. GREENSPOON: Yes, well what -- 26 THE PRESIDING MEMBER: If you are going to use 27 it for any purpose in this proceeding, that will have to 28 be the case, right. So we will give the map an exhibit Les Services StenoTran Services Inc. 613-521-0703 133 OHNC PANEL 1, cr-ex (Greenspoon) 1 number that will be an undertaking, as per Mr. Rogers, 2 on a best effort send it back and look at it and 3 identify whether some of the assets and facilities are 4 built or not and there will be a response. Okay? 5 MR. GREENSPOON: Thank you. 6 THE PRESIDING MEMBER: That is the way it 7 would have to proceed, right? 8 MR. GREENSPOON: I will give the map to my 9 friend, Ms Lea. 10 THE PRESIDING MEMBER: All right then. So we 11 will give it an exhibit and we will have an undertaking 12 with it, please. 13 MS LEA: I think what I would like to do, Mr. 14 Chairman, or what I suggest if the two large maps on the 15 wall that have been produced by Ontario Hydro in this 16 hearing should be given an exhibit number to begin with 17 so that the undertaking can reflect the comparison of 18 the two exhibits. Is that acceptable. 19 THE PRESIDING MEMBER: Well, I thought they 20 were already in. Are they not? 21 MS LEA: Have they been given any number in 22 the filing? No? Okay. Then let's call those two maps 23 together G1.4 and those will be identified as Ontario 24 Hydro Services Company Transmission System, both 25 northern and southern Ontario are on the wall, and the 26 map being submitted by the gentleman from NorthWatch -- 27 I'm sorry, I forgot your name. 28 MR. GREENSPOON: Greenspoon. Les Services StenoTran Services Inc. 613-521-0703 134 OHNC PANEL 1, cr-ex (Greenspoon) 1 MS LEA: Mr. Greenspoon, right. I will 2 remember very shortly everyone's name. We will call 3 that map Exhibit G-1.5, and as far as I'm concerned, you 4 can give it directly to Mr. Rogers and I will get it 5 back when you are done with it. Okay? 6 MR. ROGERS: Can you trust me with it? 7 MR. GREENSPOON: Mr. Boyce tells me he has 8 many copies of this map. 9 EXHIBIT G1.4: Map from Ontario Hydro 10 Services Company Transmission Systems 11 EXHIBIT G1.5: Map submitted by Mr. 12 Greenspoon of NorthWatch 13 MS LEA: Thank you very much. 14 THE PRESIDING MEMBER: And then we also need 15 an undertaking. 16 MS LEA: F1.1, a comparison of exhibits G1.4 17 and G1.5 on a best efforts basis. 18 UNDERTAKING F1.1: A comparison of 19 Exhibits G1.4 and G1.5 on a best efforts 20 basis 21 MR. GREENSPOON: And just to close this off, 22 Mr. Chairman, I have one question relating to this 23 interrogatory E18.5. You don't need to turn it up -- 24 I'm sorry, it's not 5, it's 4 -- and that is the 25 interrogatory that asks the question about the mileage 26 of the 500, 230 and 115K designs. We asked you what the 27 distance in kilometres of those lines is and if your 28 undertaking could include the answer to the question: If Les Services StenoTran Services Inc. 613-521-0703 135 OHNC PANEL 1, cr-ex (Greenspoon) 1 there is a difference between the two maps, is there a 2 change in the answer to that interrogatory? 3 In other words, does the kilometrage -- if 4 that is such a word -- 5 MR. ROGERS: I will undertake to do that. If 6 Mr. Greenspoon' maps turns out to reveal lines we didn't 7 know we had, then we will let him know how many miles 8 are involved. 9 THE PRESIDING MEMBER: Thank you. 10 MR. GREENSPOON: Those are all the questions I 11 have. Thank you, Mr. Chairman. 12 THE PRESIDING MEMBER: Did we get the 13 Undertaking action number, Ms Lea? 14 MS LEA: Yes, F1.1 -- we will put both 15 undertakings in the same one, if that is agreeable. 16 THE PRESIDING MEMBER: Thank you. 17 All right. Mr. Campbell, do you have some 18 questions? 19 MR. CAMPBELL: I think I am the first one to 20 be able to say on this round, I have no questions. 21 THE PRESIDING MEMBER: Okay. Anybody on 22 the -- Mr. White has moved up and then I will go to Mr. 23 Stephenson next. 24 Mr. White. 25 CROSS-EXAMINATION 26 MR. WHITE: Thank you. A question for the 27 panel. In the discussion with our friends from Ampco, 28 there was a question of whether assets moved from the Les Services StenoTran Services Inc. 613-521-0703 136 OHNC PANEL 1, cr-ex (White) 1 transmission pool to the connection, line connection 2 pool, and I think I heard that that is, in fact, what 3 had happened to the 115 kV lines over time -- or some of 4 them at least. 5 Are there situations where lines would move in 6 the other direction, where say networks stations or 7 future network stations might be built to the end of 8 existing lines and that they might in fact move into the 9 transmission pool? 10 MR. PORAY: When you talk about the 11 transmission, you mean the transmission line section? 12 MR. WHITE: No. From the line connection pool 13 to the network's pool, the core pool, the backbone of 14 the system. 15 MR. PORAY: And you are asking are there any 16 radio facilities, what we term line connections, 17 today -- 18 MR. WHITE: That might in fact move in the 19 other direction. Can you imagine a situation where 20 lines would move from one pool to another? 21 MR. PORAY: I can't imagine that right now. I 22 mean, based on the functionality of those assets, of 23 those assets being radio away from the network station, 24 you would need to in fact connect those lines back up to 25 another station to create the power of flow which would 26 bring them back into the network. 27 MR. WHITE: Or have some generation installed. 28 Would that -- Les Services StenoTran Services Inc. 613-521-0703 137 OHNC PANEL 1, cr-ex (White) 1 MR. PORAY: No, our radio line that has 2 generation connected to it would be a shared connection 3 facility. 4 MR. WHITE: So it would require a loop 5 facility somewhere to change that capacity. Is that 6 possible? 7 MR. PORAY: To change the category, not the 8 capacity. 9 MR. WHITE: Yes. Is that something that could 10 possibly happen? 11 MR. PORAY: As part of the future planning 12 process it may, I don't know. 13 MR. WHITE: Okay. Thank you. 14 Do loads move between what we would consider 15 the core networks lines and the connection lines pools? 16 MR. PORAY: What I am assuming you mean by 17 this is that the loads that are connected to the 18 delivery points, which are in the network pool, would 19 they move to a line connection pool? 20 MR. WHITE: Yes. 21 MR. PORAY: I don't think so. 22 MR. WHITE: If you were supplying an LDC -- to 23 use a specific maybe visual example, if we could go to 24 Ampco's G3 -- I'm sorry, G1.3, example 2. If we were to 25 look at that example and indicate that both load one and 26 some additional feeders were supplied out of network 27 station A to the same municipal utility or LDC, if those 28 loads were to move from the network station A through a Les Services StenoTran Services Inc. 613-521-0703 138 OHNC PANEL 1, cr-ex (White) 1 load transfer within the utility, the LDC to a Load 1 2 MEU delivery point. 3 Would that be a change in the pool that they 4 were supplied from? 5 MR. CURTIS: Can you run that example through 6 for us again? The load initially is connected in...? 7 MR. WHITE: Directly to the network station. 8 MR. CURTIS: At the network station A, and 9 then your proposal is that it gets switched into Load 1 10 MEU. 11 MR. WHITE: Right. It's a customer of the 12 same LDC that has delivery points at both locations. 13 MR. CURTIS: I think the issue is around the 14 actual physical connection. If it was physically 15 connected initially to network station A, it is unlikely 16 that the physical connection would be readjusted 17 to -- you are talking about having to make a new 18 investment at that point in terms of reconnecting it in 19 through the MEU, Load 1 MEU. I would think it would be 20 unlikely that that would happen. 21 MR. WHITE: It might even be at the end of a 22 line. I'm not suggesting that the actual delivery 23 points of the MEU would change. I'm just saying can the 24 load itself move from the end of a line supplied at one 25 delivery point to the end of a line supplied from a 26 different delivery point? 27 I know it is more specific and it is more 28 detailed well down into the system. Not the actual Les Services StenoTran Services Inc. 613-521-0703 139 OHNC PANEL 1, cr-ex (White) 1 connection or interface point, but what I'm trying to 2 understand is whether or not the way an LDC configures 3 its load or move its load around is going to affect 4 whether it is supplied from a connection facility or 5 from a network facility. 6 --- Pause 7 MR. PORAY: I think it is possible if that 8 utility had multiple delivery points, some of which were 9 served off a line connection pool and some of which were 10 served directly from a transformer station than by 11 switching its load if it -- it could be accommodated 12 within the distribution system and the transmission 13 system as well, then that might happen. 14 MR. WHITE: Thank you. 15 Are there cases in the province where you 16 would have a network station where you might have more 17 than one LDC supplied from the same network station. 18 Let's assume for a minute that OHSC distribution company 19 is an LDC. 20 MR. PORAY: Yes, there are quite a few. 21 MR. WHITE: As the network station approaches 22 its capacity limits, is it possible for the networks 23 company to seek facility relief by asking the LDC to 24 move load from a network station to a facility that 25 might be supplied on a radial or from the connection 26 pool? 27 MR. PORAY: I think it is possible. I mean, 28 in the new environment the transmission company will Les Services StenoTran Services Inc. 613-521-0703 140 OHNC PANEL 1, cr-ex (White) 1 have connection agreements with those customers that are 2 connected to the transmission system, and through those 3 connection agreements there will be arrangements that 4 presumably can be struck for mutual benefit. 5 MR. WHITE: Are you suggesting that the LDCs 6 would have to agree to that kind of a situation? 7 MR. PORAY: I think they would have to because 8 they impact on the transmission system, shifting load 9 between one point and another does impact on the 10 transmission system. 11 MR. WHITE: I understand that. 12 MR. PORAY: They would have to notify the IMO 13 as well, not only us. 14 MR. WHITE: Who would make the decision on 15 providing which one of the LDCs would provide relief to 16 the near capacity limits of, say, a network station. 17 Would that be a networks company decision? 18 MR. PORAY: No. I think it would be working 19 together with our customer. 20 MR. WHITE: If an agreement wasn't readily 21 forthcoming from the LDCs, who would ultimately make the 22 decision? 23 MR. PORAY: There has to be an agreement. 24 Otherwise, we can't reach a solution, which impacts not 25 only our system, but also impacts on the operation 26 directed by the IMO. 27 MR. WHITE: Okay. One more question, and that 28 should wrap it up. Les Services StenoTran Services Inc. 613-521-0703 141 OHNC PANEL 1, cr-ex (White) 1 If an LDC were to reach capacity limits at one 2 delivery point -- and again I'm talking an LDC with 3 multiple delivery points, okay -- how would the 4 incremental costs to the LDC be determined using your 5 proposal and -- it is sort of multiple parts -- what 6 considerations would be given to any other delivery 7 points that the LDC had? In other words, what technical 8 considerations might go forward, like voltage drop and 9 capital investment, that the LDC might have to make? 10 Have you thought about that enough that you 11 can come in on it? 12 MR. PORAY: I haven't, no. 13 MR. WHITE: Okay. Thank you. 14 THE PRESIDING MEMBER: I think we better take 15 the afternoon break. We will come back at 3:3O please. 16 Mr. Stephenson, at the resumption you will be 17 first. 18 --- Upon recessing at 1510 19 --- Upon resuming at 1530 20 THE PRESIDING MEMBER: Mr. Stephenson. 21 MR. STEPHENSON: Thank you. 22 CROSS-EXAMINATION 23 MR. STEPHENSON: Good afternoon, Mr. Curtis, 24 Mr. Poray. 25 MR. CURTIS: Good afternoon. 26 MR. PORAY: Good afternoon. 27 MR. STEPHENSON: I want to deal with the issue 28 of the so-called narrow definition of a line connection Les Services StenoTran Services Inc. 613-521-0703 142 OHNC PANEL 1, cr-ex (Greenspoon) 1 pool versus the broad definition of line connection 2 pool. 3 As I understand it, this was an issue that 4 came up at some point in time during the consultation 5 process in 1999, that you became aware of the existence 6 of the alternate proposal. Is that correct? 7 MR. CURTIS: That is correct. 8 MR. STEPHENSON: I also take it that in the 9 period of time preceding your finalization of the 10 application, which is an issue in this proceeding, you 11 analyzed the relative merits of the so-called narrow 12 definition of "line connection pool" versus your actual 13 proposal. Is that correct? 14 MR. CURTIS: It was actually after our 15 submission of October 1st that we did the analysis that 16 you see in our evidence -- actually, in response to the 17 AMPCO interrogatory on that. 18 MR. STEPHENSON: I am going to get to that in 19 just a moment, but -- 20 MR. CURTIS: I just wanted to make sure that 21 the idea came out during the consultation process during 22 the summer period. It was mentioned, but there didn't 23 seem to be any serious emphasis on it that warranted a 24 lot of analysis on our part at the time. 25 MR. STEPHENSON: In any event, the 26 quantitative analysis that we see, and I will take you 27 to it, which appears in an answer to an interrogatory, 28 that was undertaking for the first time after the Les Services StenoTran Services Inc. 613-521-0703 143 OHNC PANEL 1, cr-ex (Greenspoon) 1 application was filed. Is that correct? 2 MR. CURTIS: That's correct. 3 MR. STEPHENSON: However, I take it you 4 undertook, at least at some level, a qualitative 5 analysis of the relevant merits of the two proposals 6 prior to your filing. 7 MR. CURTIS: I don't think I would even say 8 that we did a qualitative analysis. 9 MR. STEPHENSON: Fair enough. 10 Let me take you, then, to -- it is the answer 11 to AMPCO Interrogatory No. 1. It is Exhibit E, Tab 2, 12 Schedule 1. 13 MR. CURTIS: Yes. 14 MR. STEPHENSON: Is that the analysis you 15 referred to just a moment ago, Mr. Curtis? 16 MR. CURTIS: Yes, it is. 17 MR. STEPHENSON: It is attached in a series of 18 appendices to that document. Is that correct? 19 MR. CURTIS: Yes, it is. 20 MR. STEPHENSON: If I can, I am going to focus 21 solely on the first appendix, which is Appendix E-2-1:A, 22 which as I understand it is essentially your qualitative 23 assessment of this issue. Is that correct? 24 MR. PORAY: Yes, it is. 25 MR. STEPHENSON: We could all read the 26 document, and I'm not going to take the time to do that 27 here. 28 The question I have for you, sir, is that as Les Services StenoTran Services Inc. 613-521-0703 144 OHNC PANEL 1, cr-ex (Greenspoon) 1 of today does that remain your accurate, shall we say, 2 summary of your assessment of the relative merits of the 3 so-called narrow definition of "line pool"? 4 MR. PORAY: I would categorize that all of the 5 answers to AMPCO Interrogatory E-2-1, all of the 6 appendices constitute the assessment that we feel is the 7 accurate response, yes. 8 MR. STEPHENSON: Okay. 9 I take it that none of your consideration or 10 discussion or anything that you have heard subsequent to 11 this, the preparation of this document on December the 12 20th, 1999, has changed your view as to the analysis 13 that is contained therein. Is that correct? 14 MR. PORAY: That's correct. 15 MR. STEPHENSON: All right. 16 Just looking at point No. 2.0 on page 2 of 4 17 in Appendix A there, as I understand it -- and I'm 18 speaking here at a very high level of generality -- so 19 far as I could see it you had two fundamental concerns 20 regarding the narrow definition. One was related to a 21 lack of consistency, lack of parity on fairness concern. 22 Is that fair? That was one of them? 23 MR. PORAY: That's fair. 24 MR. STEPHENSON: And the second one that I 25 noted was the potential for undue complexity. 26 Is that also one of the major concerns? I see 27 that on page 3, for example. 28 MR. PORAY: Yes. Les Services StenoTran Services Inc. 613-521-0703 145 OHNC PANEL 1, cr-ex (Greenspoon) 1 MR. STEPHENSON: Okay. A very small point 2 here: at the top of page 3 of 4, the first bullet 3 point -- perhaps you can assist me -- I think either I'm 4 reading it wrong or there's a typographical error -- 5 MR. PORAY: There's a typographical error. 6 That reference to Customer C3, which is at the end of 7 the first line, that should be Customer C4. 8 MR. STEPHENSON: And both of those references 9 to Customer C3 and 4, to assist me, reference the 10 schematic diagram which appears at Figure 2(a), a couple 11 of pages later. Is that correct? 12 MR. PORAY: That's correct. 13 MR. STEPHENSON: Those are my questions. 14 Thank you, Mr. Chair. 15 THE CHAIRPERSON: Thank you, Mr. Stephenson. 16 Mr. Vogel? 17 MR. VOGEL: Thank you, Mr. Chair. 18 CROSS-EXAMINATION 19 MR. VOGEL: Good afternoon, panel. I 20 represent the interest of First Nations at this hearing 21 and I have a few questions related to the cost 22 allocation options considered by OHNC, in connection 23 with the development of this application, and, 24 particularly, with respect to the establishment of the 25 transmission line connection pool. 26 The prefiled evidence -- OHNC's prefiled 27 evidence, at Exhibit C, Tab 4, Schedule 1, deals with 28 your consideration of the various options, and as I -- Les Services StenoTran Services Inc. 613-521-0703 146 OHNC PANEL 1, cr-ex (Vogel) 1 THE CHAIRPERSON: I'm sorry. You referred to 2 Exhibit D? 3 MR. VOGEL: C. Exhibit C, Tab 4, Schedule 1. 4 This is, as I read it, the discussion of the 5 options considered by OHNC, and the way I read it, you 6 rejected Option 1, a bundled transmission pool with the 7 revenue to be collected from all customers on the basis 8 of a uniform rate in preference of assigning assets and 9 costs to the three pools, one of which is the 10 transmission line connection pool, with the rates to be 11 charged on the basis of the assets within that pool, and 12 that's the pool that's of concern to the First Nations. 13 My questions relate to the principles 14 underlying the development of this proposal, with 15 respect to the line connection pool. 16 In one of your IR responses, it's your 17 response to OEB IR No. 9, and this is at Exhibit E, Tab 18 1, Schedule 9 -- 19 MR. CURTIS: Could you give us that reference 20 again, please? 21 MR. VOGEL: Exhibit E, Tab 1, Schedule 9. 22 In connection with that response, you produced 23 a copy of the 1997 white paper directions for change. 24 Now, as I understand it, that white paper 25 provides many of the basic principles which underlie the 26 restructuring of the electricity industry in Ontario. 27 Is that correct? 28 MR. CURTIS: Yes. Les Services StenoTran Services Inc. 613-521-0703 147 OHNC PANEL 1, cr-ex (Vogel) 1 MR. VOGEL: If we refer to that white paper, 2 at page 8, in the last bullet point that appears on page 3 8, one of those principles, as enunciated in the white 4 paper, is that program support for price equity, such as 5 the rural rate assistance, is to be continued to be 6 financed by all electricity customers. Is that correct? 7 MR. CURTIS: That's what it says, yes. 8 MR. VOGEL: All right. Looking at page 19 of 9 the white paper, the directions provided to this Board, 10 in the white paper, it appears the Ontario Energy Board 11 was specifically directed to ensure that transmission 12 would continue to be priced at a uniform rate for all 13 customer classes. Is that your understanding, as well? 14 MR. CURTIS: Yes, that's what the document 15 says. 16 MR. VOGEL: All right. And in your IR 17 Response No. 9, you have recognized OHNC's obligation to 18 mitigate impact on customer groups located in rural and 19 remote areas of the province. Is that correct, OHNC 20 recognizes that obligation? 21 MR. CURTIS: In terms of the way we framed the 22 interrogatory, we are acknowledging that within the 23 confines of the direction from the legislation that we 24 would do that, yes. 25 MR. VOGEL: Yes. My understanding of your 26 prefiled evidence, your evidence in chief, this morning, 27 is that this transmission -- the transmission line 28 connection facilities that are to be included in the Les Services StenoTran Services Inc. 613-521-0703 148 OHNC PANEL 1, cr-ex (Vogel) 1 pool are the radial high-voltage transmission line 2 facilities connecting a transformation connection to the 3 network. And I'm correct in that understanding. Is 4 that right? 5 MR. CURTIS: Yes. 6 MR. VOGEL: All right. I presume the 7 proposal, then -- 8 MR. ROGERS: Excuse me -- 9 MR. PORAY: I think it's correct to say 10 connecting transmission customers to a network station. 11 MR. VOGEL: All right. I presume that the -- 12 in establishing the line connection pool, what OHNC was 13 attempting to do was, in some manner, reflect the cost 14 causality principle; that is, those who benefit from 15 facilities should pay for them. Is that correct? 16 MR. PORAY: We were unbundling the costs and 17 assigning the costs to those functions which represent 18 the transmission services that will be offered to those 19 customers that need those services. 20 MR. VOGEL: Yes, and in creating this separate 21 pool for line connection, am I correct that that was 22 intended to reflect the principle of cost causality, as 23 is set out in your application, which is that those who 24 benefit from facilities should pay for them. That was 25 your purpose. Is that correct? 26 MR. PORAY: Yes. 27 MR. VOGEL: All right. And would you agree 28 with me that to the extent that the -- the effect of Les Services StenoTran Services Inc. 613-521-0703 149 OHNC PANEL 1, cr-ex (Vogel) 1 creating, as I read this, the effect of creating the 2 line connection pool is really to increase costs to 3 those customers within the pool, as compared to those 4 outside the pool. Am I correct in that understanding? 5 MR. PORAY: No, I don't think that's the 6 intent. The intent was to functionalize those assets 7 into groups that represent the functions that those 8 assets perform in the services that are offered to 9 transmission customers. Not everybody, not every 10 customer takes line connection service and not every 11 customer takes transformation connection service, so 12 what we were trying to do is, by segregating that, 13 ensuring that those who require those services will pay 14 for those services through the charges. 15 MR. VOGEL: Well, fair enough. So that am I 16 correct in my understanding that those within the pool, 17 those within the line connection pool, then, are bearing 18 charges, bearing costs not borne by those outside the 19 pool? 20 MR. PORAY: Those who do not -- that's 21 correct, yes. 22 MR. VOGEL: That's correct. All right. 23 And to the extent that that, then, results in 24 a move away from a uniform transmission rate and results 25 in increased rates for those particularly in remote 26 communities, like First Nations, you would agree with me 27 that is at least inconsistent with those policies in the 28 white paper? Les Services StenoTran Services Inc. 613-521-0703 150 OHNC PANEL 1, cr-ex (Vogel) 1 MR. PORAY: No, I would not agree with that 2 because by creating a line connection pool we have 3 created a uniform rate for that pool to all customers 4 who use those facilities in the province. 5 MR. VOGEL: You have created a uniform rate 6 within the pool. Is that correct? 7 MR. PORAY: For all customers who take line 8 connection, irrespective of where they are located in 9 the province. 10 MR. VOGEL: But you have not -- if we compare 11 those within the pool to those outside the pool, you 12 would agree with me, and you have agreed with me, that 13 those within the pool are paying costs, not that those 14 outside the pool aren't paying. So, in that sense, we 15 do not have a uniform rate. We don't have a postage 16 rate. Is that correct? 17 MR. PORAY: We do have a postage rate, and I 18 think what you are trying to say there is that -- or 19 what we have tried to capture is that those customers 20 who own their own line connection facilities or who do 21 not require line connection facilities shouldn't be made 22 to pay them. 23 MR. VOGEL: Yes. But to the extent that the 24 direction provided in the white paper was that there was 25 to be a uniform rate within the province, you will agree 26 with me that by creating a line connection pool and 27 imposing charges on those within the pool that are not 28 imposed on those outside the pool, we are moving away Les Services StenoTran Services Inc. 613-521-0703 151 OHNC PANEL 1, cr-ex (Vogel) 1 from the direction to a uniform rate. 2 MR. PORAY: No, not at all. We do have a 3 uniform rate across the province to transmission 4 customers who require the line connection service. For 5 those who are outside the pool, it means that they don't 6 require that serviced and therefore why should they be 7 charged for that service. 8 MR. VOGEL: All right. But I think the 9 difficulty that we are having here, Mr. Poray, is that 10 what I think you are purporting to advance is a uniform 11 rate within the pool and a uniform rate outside the pool 12 and those rates are not the same. Is that correct? 13 MR. PORAY: That's right because they reflect 14 different costs. 15 MR. VOGEL: In terms of again the 16 considerations, if you could turn to interrogatory no. 1 17 from the Chiefs of Ontario. 18 MR. CURTIS: Do you have a reference for that, 19 please? 20 MR. VOGEL: Yes which is Exhibit E, Tab 30, 21 Schedule 1, page 1. 22 MR. PORAY: Exhibit E, Tab 30 of which one? 23 MR. VOGEL: Schedule 1, page 1. 24 MR. PORAY: Okay. 25 MR. VOGEL: That interrogatory related to the 26 considerations underlying the pool. As I understand it 27 in establishing this proposal for the pool, OHNC has not 28 given any consideration at all to the fact that these Les Services StenoTran Services Inc. 613-521-0703 152 OHNC PANEL 1, cr-ex (Vogel) 1 connection facilities are by and large not within the 2 control of those using them, particularly in the case of 3 the remote community. 4 Is that correct? 5 MR. PORAY: The costs incurred in connection 6 with the line connection facilities we made for the 7 benefit of all those customers who are served from both 8 facilities. 9 MR. VOGEL: Let me just suggest this to you. 10 A First Nation community in northern Ontario didn't have 11 any control with respect to where the grid was 12 established relative to that community, did they? Did 13 they have any input into that decision? 14 MR. PORAY: Can you give me an example where 15 that community is connected to the transmission system? 16 MR. VOGEL: Well, let's postulate that there 17 is such a community. 18 MR. CURTIS: There isn't though. Let me put 19 it to you this way. There is no First Nation community 20 that is directly connected to the transmission system. 21 MR. VOGEL: Let me put it to you this way. A 22 remote community in northern Ontario, any community, did 23 any such community have any input into where the 24 existing grid was located relative to that community? 25 MR. CURTIS: Yes, they did. 26 MR. VOGEL: And what form did that input take? 27 MR. CURTIS: In terms of the actual 28 construction of the grid system, there would be an Les Services StenoTran Services Inc. 613-521-0703 153 OHNC PANEL 1, cr-ex (Vogel) 1 identification of the possible root that that 2 transmission line could follow. If they went over 3 territory that is First Nations territory, there would 4 have been an approach by Ontario Hydro in that to the 5 Ministry of Northern Affairs which oversees the 6 aboriginal affairs within Ontario and I guess across 7 Canada, and there would be negotiations that would have 8 been taking place through the federal jurisdiction in 9 terms of determining the appropriateness of running that 10 transmission line across First Nation territory. 11 And then there is a process that Ontario Hydro 12 went through in terms of getting rights to cross over 13 those territories and to construct the transmission 14 facilities. 15 MR. VOGEL: I don't think that was really my 16 question. I apologize if I have caused some confusion 17 for you. 18 Looking at the existing grid and looking at a 19 remote community and the potential for the creation of 20 connection facilities to the grid at this point in time. 21 Would you agree with me that that community has had 22 really no input into how the grid has developed 23 independent of the needs of that community? 24 MR. CURTIS: The grid isn't necessarily 25 developed in terms of what you are talking about in 26 terms of transmission facilities to be able to supply 27 the jurisdictions that you are talking about. 28 Typically the jurisdictions you are talking Les Services StenoTran Services Inc. 613-521-0703 154 OHNC PANEL 1, cr-ex (Vogel) 1 about are fed off distribution level voltages and so if 2 you -- I think in most instances it would be appropriate 3 to be connecting from a technical perspective, First 4 Nations communities directly to the transmission system. 5 It would have to be done through the distribution system 6 and so the distribution system, in turn, is connected to 7 the transmission system. 8 MR. VOGEL: I think what First Nations are 9 looking for is perhaps a different relationship with 10 that system that they have had previously, so I will 11 simply put this to you: Would you agree with me that 12 those remote communities have not had input or control 13 over how the system has developed up to this point in 14 time? 15 MR. PORAY: I think it is fair to say because 16 they are not transmission customers today, they have not 17 had input into the discussion. 18 MR. VOGEL: I have a couple of questions 19 concerning the evidence that is at Exhibit C, Tab 4, 20 Schedule 1, page 2. 21 MR. PORAY: Okay. 22 MR. VOGEL: It deals with the consultation 23 process and at page 2, there is some indication in that 24 connection with that consultation process, First Nations 25 supported a line connection pool. But reading the 26 analysis at page 4, it doesn't appear they supported 27 full cost causality. 28 What I understand from your response to IR Les Services StenoTran Services Inc. 613-521-0703 155 OHNC PANEL 1, cr-ex (Vogel) 1 number 5 was that in terms of the consultation which 2 took place with First Nations, they had two to three 3 weeks to consider OHNC's proposals. Is that correct? 4 MR. CURTIS: Yes, I think they had at least 5 that, yes. Probably longer than that. 6 MR. VOGEL: And did OHNC make available to 7 them independent expert advice to allow them to analyze 8 and address those proposals? 9 MR. CURTIS: No, it did not. 10 MR. VOGEL: And I further understand from your 11 IR response that OHNC itself has not done any assessment 12 either at that time or to date with respect to the 13 impact of these proposals on First Nations. Is that 14 correct? 15 MR. CURTIS: Specifically on First Nations? 16 MR. VOGEL: Yes. 17 MR. CURTIS: No. 18 MR. VOGEL: In terms of potential impact on 19 First Nations, if you could turn at the pre-filed 20 evidence of Chief Bressette, which is at Exhibit H, Tab 21 30. 22 MR. PORAY: Can you just repeat that, please? 23 MR. VOGEL: Yes. I have it as Exhibit H, Tab 24 30 and within that material it's at Tab 3, page 12. 25 MR. PORAY: Page 12? 26 MR. VOGEL: Yes, Tab 3, page 12. There is a 27 reference there to a December 1998 report, the Economic 28 Renewal Forum report, and summarized on that page Les Services StenoTran Services Inc. 613-521-0703 156 OHNC PANEL 1, cr-ex (Vogel) 1 reference I have given you, there are a number of 2 proposed grid extensions, proposal to take northern 3 communities off of diesel generation. It includes, you 4 will see, a 275-kilometre grid extension from Mossonee 5 to Atawapaskat to serve three First Nations communities 6 and there is also then reference to a possible extension 7 with Manitoba Hydro hooking in at Sudbury or Sault Ste. 8 Marie. 9 In connection with those projects, and also if 10 you turn to Tab 7 of that evidence, at page 4. 11 MR. PORAY: I'm sorry. I don't have these 12 numbered tabs. Can you tell me what the title is? 13 MR. VOGEL: This would be the evidence of 14 Franco Crupi. 15 MR. ROGERS: Could we just slow down a little 16 bit? I am not sure these witnesses will be clear with 17 this evidence, unless it is directly directed to cost 18 allocation. Can we just slow down so that we can find 19 it? 20 MR. VOGEL: Sure, yes. 21 MS LEA: Can we spell Mr. Crupi's name for the 22 record, please? 23 MR. VOGEL: That C-R-U-P-I. 24 MR. PORAY: And page, which page? 25 MR. VOGEL: He discusses on page 4 of that 26 evidence, the Dore Falls project and you will see in the 27 last paragraph on that page, he provides his opinion 28 that if First Nations have to pay connection charges, Les Services StenoTran Services Inc. 613-521-0703 157 OHNC PANEL 1, cr-ex (Vogel) 1 that that will adversely affect these sorts of projects, 2 but if they were given special consideration into the 3 integration of their projects, that would strengthen the 4 commercial success, encourage competition and promote 5 economic efficiency. 6 Would you agree with the analysis contained in 7 that evidence with respect to these projects that I have 8 referred you to that all of those projects would benefit 9 to the extent that First Nations were given special 10 treatment in terms of the integration of those projects, 11 and specifically with respect to exemption from their 12 line connection pool? 13 MR. ROGERS: Excuse me, Mr. Chairman, I am 14 going to interrupt there, if I might, just to object 15 really on the basis that this morning I asked questions 16 relating to the proposal of First Nations be differed to 17 the second panel -- and I am not sure that these 18 witnesses have even read this material yet so as to be 19 able to give a response. 20 Now perhaps they can, but my guess is that 21 they are not well enough informed to respond 22 appropriately. I wonder if my friend can defer that to 23 the second panel? 24 MR. VOGEL: I apologize if I have addressed 25 this to the wrong panel. My understanding was this 26 panel though was dealing with the principles underlying 27 these cost allocation proposals and presumably the 28 impact that those proposals have on present and Les Services StenoTran Services Inc. 613-521-0703 158 OHNC PANEL 1, cr-ex (Vogel) 1 potential customers. So that's why I have directed it 2 here. It seemed to be the appropriate place to do so, 3 but I am happy to ask the question elsewhere as well. 4 MR. ROGERS: My intent was that it falls under 5 issue 10, I believe, First Nations special transmission 6 rates, which I intended to be dealt with with the second 7 panel. 8 THE PRESIDING MEMBER: I understand what you 9 are saying. The question started from understanding 10 around the definition of the pools and the line 11 connections, then it is off now. 12 So I think we take your point that the 13 witnesses are not familiar enough with this evidence. 14 So could you try to confine the questions towards the 15 definition of the line connection pool by the applicant, 16 and what its implications may be, as you have said, for 17 existing and potentially new customers, if you could try 18 to. 19 MR. VOGEL: Yes, Mr. Chair. I think my 20 question relates to the impact of the proposals on First 21 Nations and if my friend is indicating that it is the 22 second panel who will deal with the impact of cost 23 allocation on First Nations, I am content myself to 24 reserve my questions for the second panel. 25 MR. ROGERS: Well, I don't want to defer the 26 inevitable, and if these witnesses can -- I think they 27 can probably help you with the impacts of the cost 28 allocation to the extent that anyone can. Les Services StenoTran Services Inc. 613-521-0703 159 OHNC PANEL 1, cr-ex (Vogel) 1 It was when you added the specifics about 2 whether this proposal would dessuade your clients from 3 embarking on this project of theirs that I thought -- 4 MR. VOGEL: I don't think that was my 5 question. 6 MR. ROGERS: Well then maybe I misunderstood 7 your question in which case I think there is a lot of 8 us -- my witnesses looked as though they agreed with me 9 in terms of -- 10 THE PRESIDING MEMBER: Could you restate it? 11 Could you try the question again? 12 MR. VOGEL: The views expressed in Mr. Crupi's 13 evidence was that the Dore Falls project and the other 14 types of projects that I referred you to, may be 15 adversely impacted by imposition of additional costs, 16 and I think my question was simply whether these 17 witnesses would agree that by exempting First Nations 18 from additional costs such as the line connection pool, 19 that that potential prejudice could be overcome. 20 MR. CURTIS: I think first of all the point 21 that I think we would like to make is that in the 22 evidence that you have brought forward, there is a 23 mixture of projects in terms of whether they would be 24 connected at the distribution level or the transmission 25 level. We have not looked at the impact of any of the 26 projects that would be connected in at the distribution 27 level and I think, as a proponent for transmission, 28 that's perfectly appropriate for us to be doing. Les Services StenoTran Services Inc. 613-521-0703 160 OHNC PANEL 1, cr-ex (Vogel) 1 In terms of your general question, I think we 2 can state generically for any generation project, if 3 they didn't have to pay for their transmission 4 connection facilities, they would be better off 5 economically. However, the proposal that we have 6 brought forward that has, I feel, quite widespread 7 support from our stakeholder community is that for any 8 new generation that is installed, they would pay for 9 their connection facilities. 10 MR. VOGEL: I don't propose to deal with that 11 issue here because I understand that is a separate issue 12 in this proceeding. 13 Just while I have you in this evidence, taking 14 you back to Chief Bressette's evidence -- and this is at 15 Tab A of that evidence, it is 3A in the material I have. 16 This is, as I understand Ontario Hydro's 17 policy with respect to aboriginal relationships. Are 18 you familiar with this? 19 MR. CURTIS: Could you give us that reference 20 to your material again? I am having trouble locating 21 it. 22 MR. VOGEL: It's at Tab 3A in this material, 23 as I have. 24 MR. CURTIS: Tab 3 we have entitled Written 25 Evidence of Ontario Regional Chief Thomas Bressette. 26 MR. VOGEL: That's right. Have you got a 27 sub-tab A? 28 MR. CURTIS: I don't believe so. Les Services StenoTran Services Inc. 613-521-0703 161 OHNC PANEL 1, cr-ex (Vogel) 1 MR. PORAY: Can you tell us what is in that 2 sub-tab? 3 MR. VOGEL: It's called Policy for Aboriginal 4 Relationships. 5 MR. PORAY: Oh, yes, we found it. 6 MR. VOGEL: Are you the panel that is familiar 7 with this policy or is that the next panel? 8 MR. PORAY: It is the same people in the next 9 panel. 10 --- Laughter 11 Lest I be accused of a slight of hand, but 12 there will be -- 13 --- Laughter 14 -- differently informed same two people in the 15 next panel. That's the only problem. 16 MR. VOGEL: Well, if I could ask you the 17 question while you have your Panel 1 hat on and then 18 maybe we will revisit it in Panel 2. 19 As I understand this policy, Ontario Hydro has 20 committed itself to recognize the distinct legal, 21 historical and cultural status of aboriginal people and 22 to reflect that in planning for the future. That's what 23 the policy says. 24 Is that presently OHNC's policy as well? 25 MR. CURTIS: Yes, it is. 26 MR. VOGEL: Over the page, the policy 27 continues that, as communities with an inherent right to 28 self government, First Nations are entitled to the Les Services StenoTran Services Inc. 613-521-0703 162 OHNC PANEL 1, cr-ex (Vogel) 1 consideration and respect due to government and they are 2 not to be treated simply as a special interest group. 3 Is that also OHNC's policy? 4 MR. CURTIS: Yes, it is. 5 MR. VOGEL: Given that, would you agree with 6 me that in addressing issues, the issues on this 7 application with respect to the future of transition 8 pricing, those policies might, then, justify special 9 treatment for First Nations? 10 MR. CURTIS: No. 11 MR. VOGEL: Why not? 12 MR. CURTIS: You are talking about in terms of 13 the actual pricing and the rates that come out of that. 14 MR. VOGEL: I'm talking about special 15 consideration for First Nations in light of this policy, 16 yes. 17 MR. CURTIS: I think if you are talking about 18 in terms of the way that we would approach and discuss 19 matters with First Nations, you are quite correct. But 20 that doesn't necessarily lead to the conclusion that 21 there would be separate rates or different rates that we 22 are using. 23 MR. VOGEL: I agree with you, not necessarily, 24 but that is a possible aspect of the special treatment 25 First Nations are entitled to under this policy. Is 26 that not correct? 27 MR. CURTIS: I don't think that is correct in 28 terms of what would necessarily come out, because these Les Services StenoTran Services Inc. 613-521-0703 163 OHNC PANEL 1, cr-ex (Vogel) 1 rates that you are talking about would have to be 2 approved of or agreed on by the rest of Ontario of 3 OHNC's -- well, I guess more explicitly I think it would 4 have to receive some OEB scrutiny because there would be 5 again the regulated rates serving customers. 6 MR. VOGEL: Certainly. And I agree with you. 7 MR. CURTIS: So I don't think that we could 8 say necessarily that the rates would be different. 9 MR. VOGEL: No. I agree with you. I don't 10 think we could necessarily say that and it would be 11 subject to OEB approval. 12 MR. CURTIS: Yes. 13 MR. VOGEL: Yes. 14 But subject to those qualification, you would 15 agree with me that the special treatment of First 16 Nations may be justified under this policy? 17 MR. CURTIS: Yes, subject to those 18 considerations. Yes. 19 MR. VOGEL: Thank you. 20 There has been an issue raised in the evidence 21 filed on behalf of the First Nations and in the IRs with 22 respect to the 25-cycle system. Are the costs of that 23 system included in the line connection pool? 24 MR. CURTIS: The transformation portions of it 25 would be within the transformation pool, but the line 26 portion of the 25 Hz would be in the line pool. 27 MR. ROGERS: Mr. Curtis, could I remind you to 28 keep your voice up, please. Les Services StenoTran Services Inc. 613-521-0703 164 OHNC PANEL 1, cr-ex (Vogel) 1 MR. CURTIS: Sorry. 2 The transformation portion of the assets in 3 the 25 Hz system would be included in the transformation 4 pool, and the 25 Hz lines would be included in the lines 5 pool. 6 MR. PORAY: May I just clarify that. The 7 25 Hz treatment is treated no differently to the 60 Hz 8 return facilities. 9 MR. VOGEL: If I could just ask you -- I don't 10 want to spend a great deal of time on this -- in 11 response to the Chiefs of Ontario IR No. 7, which is 12 Exhibit E, Tab 30, Schedule 7, page 1 -- 13 MR. PORAY: Exhibit E, Tab 30, Schedule 1? 14 MR. VOGEL: Schedule 7, page 1. 15 --- Pause 16 MR. PORAY: Okay. 17 MR. VOGEL: In response to Chiefs of Ontario 18 Interrogatory No. 7. 19 When I read that response, it appears really 20 that the 25-cycle system is an historical anomaly which 21 predates 1949. Am I correct in that understanding? 22 MR. CURTIS: Yes, that's basically it. 23 MR. VOGEL: At it currently serves five 24 industrial customers in the Hamilton-Niagara area and in 25 northern Ontario it serves a few generating stations and 26 mining customers. Is that correct? 27 MR. CURTIS: Yes, that's correct. 28 MR. VOGEL: As I understand it, that system is Les Services StenoTran Services Inc. 613-521-0703 165 OHNC PANEL 1, cr-ex (Vogel) 1 entirely separate from the 60-cycle system and is of no 2 benefit to the 60-cycle system. Is that right? 3 MR. CURTIS: It is separated from it, but it 4 operates in parallel with the rest of the transmission 5 system. 6 MR. VOGEL: Is it of any benefit to the rest 7 of the system? It operates separately. Is it of any 8 benefit to the rest of the system? 9 MR. PORAY: No. The 25 Hz system is connected 10 to the 60 Hz system. There are not two separate systems 11 in parallel, they are interconnected. 12 MR. VOGEL: Can you tell me this. Does any 13 First Nation receive any benefit from the 25-cycle 14 system? 15 MR. PORAY: Is any First Nation connected to 16 the transmission system? 17 MR. VOGEL: Do you know the answer to that 18 question? 19 MR. CURTIS: Yes, we do. There are no First 20 Nations that are connected to the transmission system. 21 MR. VOGEL: So is any First Nation receiving 22 any benefit from the 25-cycle system? 23 MR. CURTIS: In respect to the service that is 24 provided to the distribution systems that in turn supply 25 the First Nations, yes. 26 MR. VOGEL: Those are my questions. Thank 27 you, Mr. Chair. 28 THE PRESIDING MEMBER: Thank you, Mr. Vogel. Les Services StenoTran Services Inc. 613-521-0703 166 OHNC PANEL 1, cr-ex (Vogel) 1 Could you just give your name again. I'm 2 sorry. I must have missed it. I'm sorry. 3 MR. RAWSON: Yes. It is Keith Rawson for 4 TransCanada Energy. 5 THE PRESIDING MEMBER: Thank you, Mr. Rawson. 6 CROSS-EXAMINATION 7 MR. RAWSON: If I can just take you back to -- 8 I think it is Exhibit G1.3, the diagrams we have, 9 Example (2). Example (2) has a normally opened switch 10 just to the right of Load 2 Industrial on this page. 11 We see there that there is, for ease of 12 reference, a vertical line that goes up to the 13 horizontal 115 kV line, and that vertical line might be 14 commonly called a tap. Is that a fair characterization 15 of that vertical line? 16 MR. PORAY: It could be, yes. 17 MR. RAWSON: In your discussion with 18 Mr. Fisher earlier today, you mentioned that a customer 19 that connected all the way to, for example, Network 20 Station A rather than just having the tap, as shown in 21 that vertical line, and either paid for that or 22 constructed it themselves would avoid line connection 23 pool charges. Is that correct? 24 MR. PORAY: That is correct. 25 MR. RAWSON: Now, if that horizontal line, the 26 115 kV line, is adequate to supply that customer, but 27 the customer in any event built a line all the way back 28 to Network Station A, that would be a redundant Les Services StenoTran Services Inc. 613-521-0703 167 OHNC PANEL 1, cr-ex (Rawson) 1 facility, would it not? 2 MR. PORAY: It wouldn't be redundant because 3 it is serving other customers. 4 MR. RAWSON: I'm sorry? 5 MR. PORAY: It's serving the other customers 6 there. 7 MR. RAWSON: No. The line that would collect 8 Load 2 back to Station A, if they were to build a line 9 for themselves all the way back to Network Station A, 10 would that facility not be redundant with existing 11 facilities? 12 MR. PORAY: Which facility are you talking 13 about? 14 MR. RAWSON: The 115 kV line shown on the 15 picture. 16 MR. PORAY: No. Because it is still serving 17 Load No. 1. 18 MR. RAWSON: No. I'm not asking the question 19 as to whether the line that Load Industrial Customer 2 20 builds makes the 115 kV line redundant. I'm asking 21 whether the line that that customer builds for their own 22 use, would that not be a redundant facility? 23 MR. ROGERS: If the line the customer built 24 would be redundant? 25 MR. RAWSON: That's correct. 26 MR. CURTIS: I think what you are describing, 27 though, is that the customer has that choice and the 28 customer is the one that is going to decide whether it Les Services StenoTran Services Inc. 613-521-0703 168 OHNC PANEL 1, cr-ex (Rawson) 1 wants to connect in at Network Station A or connect to 2 the 115 kV line. I don't think I would presume to say 3 that the customer has made a choice of a redundant 4 facility in that case. 5 MR. RAWSON: Actually, I want to deal with the 6 choice issue separately. But if the facility gets 7 built, and the facility that exists there shown on the 8 picture, the 115 kV line, if the line to industrial 9 customer Load 2 gets built, despite the fact the 10 existing facility is in place, is that second facility 11 not redundant? That is the question. 12 MR. PORAY: I'm sorry. I'm having difficulty 13 understanding the question. Let me just take you 14 through what I think the process is. 15 Today you have Load Customer No. 2 connected 16 to the 115 kV line, as per the diagram. Now you are 17 proposing that Customer No. 2 should build a line to the 18 network station and disconnect from the 115 kV line? 19 MR. RAWSON: Yes, for example. 20 MR. PORAY: Okay. And what is your question 21 then? 22 MR. RAWSON: Is that facility that they have 23 just built redundant to the existing facility? Given 24 that the existing facility is adequate to serve them. 25 MR. PORAY: Yes. 26 MR. RAWSON: Thank you. 27 Are you gentlemen familiar with the term 28 transmission bypass, as has been used by OHNC I think in Les Services StenoTran Services Inc. 613-521-0703 169 OHNC PANEL 1, cr-ex (Rawson) 1 Transmission 2000 or other references? 2 MR. CURTIS: Yes. 3 MR. RAWSON: Could you please give us your 4 definition of "transmission bypass"? 5 MR. PORAY: As defined in the various 6 documents which we have provided to stakeholders over 7 the stakeholder consultation process, the bypass of the 8 transmission system charges could occur as a result of, 9 say, for instance, a customer putting in their own 10 generation and reducing their demand that they take from 11 the transmission system. 12 So, for instance, if Load Customer No. 2 were 13 to put in a generator on their side, they would reduce 14 their demand and therefore bypass some of the charges 15 that they would normally pay if they didn't have a 16 generator. 17 Bypass could also occur if a customer were to 18 build their own transmission line or transformation 19 facilities to bypass the existing OHNC facilities which 20 are used to supply that customer. 21 MR. RAWSON: Thank you. 22 Now, has OHNC expressed concern about 23 transmission bypass going forward? 24 MR. PORAY: OHNC has expressed concern. 25 MR. RAWSON: Yet, what you are saying, though, 26 is that for the past, if I understand it correctly, the 27 only time that a customer can avoid the line connection 28 charges in a situation such as this, is in fact by Les Services StenoTran Services Inc. 613-521-0703 170 OHNC PANEL 1, cr-ex (Rawson) 1 bypassing your transmission? 2 MR. CURTIS: You are talking about in the 3 past? 4 MR. RAWSON: No, I agree to that. I 5 understand. We understand that this is a transformation 6 from the past to the future. But as I understood the 7 conversation earlier today, if a customer happened to 8 have built to the network station, then they could avoid 9 the line connection charges. In the example I gave you, 10 that would be a redundant facility that would be in fact 11 transmission bypass. 12 MR. PORAY: It would be. 13 MR. RAWSON: By installing transmission bypass 14 previously, they would now avoid line connection 15 charges. But this is something you want to discourage 16 going forward. Is that correct? 17 MR. CURTIS: I don't think we are necessarily 18 in the mode of trying to discourage that because, as you 19 can see from our evidence, we are putting forward the 20 proposition that in terms of constructing connection 21 facilities the customer would have the choice, and if 22 the customer chooses, in the example that you are 23 talking about, to build their own connection facility, 24 then that is an option that would be open to them in 25 terms of the longer term proposal that we have put 26 forward to this and as part of our submission. 27 MR. RAWSON: You are saying the customer would 28 have the choice to build their own connection Les Services StenoTran Services Inc. 613-521-0703 171 OHNC PANEL 1, cr-ex (Rawson) 1 facility -- 2 MR. CURTIS: Yes. 3 MR. RAWSON: -- if they want it, all the way 4 to network stations even though some portion of that new 5 facility might be redundant to your existing 6 transmission? 7 MR. PORAY: I think in our proposal, when we 8 were looking at the options which are available to the 9 customer, we were thinking in terms of new customers 10 coming or existing customers adding additional load and 11 what options were available to them. In terms of an 12 existing customer building facilities just to bypass the 13 existing transmission system, we weren't thinking in 14 terms of those options available to that customer. 15 MR. RAWSON: As I understand it, I believe in 16 Transmission 2000, in fact, you have expressed some 17 concern that that would take place. 18 MR. CURTIS: Yes. 19 MR. PORAY: We are concerned about bypass, 20 yes. 21 MR. RAWSON: Okay. Thank you very much. 22 Those are all my questions. 23 THE PRESIDING MEMBER: Thank you. 24 Ms Friedman. 25 CROSS-EXAMINATION 26 MS FRIEDMAN: Hello, gentlemen. Day one is 27 almost over. 28 I just have very few questions dealing with Les Services StenoTran Services Inc. 613-521-0703 172 OHNC PANEL 1, cr-ex (Friedman) 1 the narrow definition versus the broad definition of 2 "line connection". 3 Under AMPCO's definition of "line connection", 4 the line connection pool would primarily include 5 facilities that are large or medium LDCs since they are 6 most likely not to be sharing facilities. Correct? 7 MR. PORAY: I'm sorry. Can you repeat the 8 question again? 9 MS FRIEDMAN: Sure. 10 Under AMPCO's definition of "line connection", 11 the narrow definition, the line connection pool would 12 primarily include facilities that serve large LDCs since 13 they are most likely not to be sharing line facilities. 14 Correct? 15 MR. PORAY: That is correct. 16 MS FRIEDMAN: Since all other shared lines are 17 included in the network pool, the network charge would 18 be greater using AMPCO's definition of "line connection" 19 as compared to yours. 20 MR. PORAY: That is correct. 21 MS FRIEDMAN: In effect, large utilities and 22 perhaps medium utilities as well would continue to be 23 paying for most of the transmission assets in the 24 province through the network charge. 25 MR. PORAY: That is correct. 26 MS FRIEDMAN: They would also pay for assets 27 that have been directly assigned to them through their 28 payments of the line connection pool charge. Is that Les Services StenoTran Services Inc. 613-521-0703 173 OHNC PANEL 1, cr-ex (Friedman) 1 correct? 2 MR. PORAY: That is correct, yes. 3 MS FRIEDMAN: Assume two LDCs share a line. 4 AMPCO would say that that line falls into the network 5 pool. Correct? 6 MR. PORAY: That is correct. 7 MS FRIEDMAN: If those LDCs merge, those 8 assets which were previously network assets would be now 9 identified as serving a single LDC and would now be in 10 the line connection pool. 11 MR. PORAY: That is correct. 12 MS FRIEDMAN: Therefore, we would see a switch 13 from a network from the network pool to the line 14 connection pool? 15 MR. PORAY: That is correct. 16 MS FRIEDMAN: Under your proposal, there would 17 not be a change in the categorization of that asset as a 18 result of the merger. 19 MR. PORAY: No, there would not. 20 MS FRIEDMAN: And that is because your 21 definition is based on the functionality of the assets 22 and the ownership of those assets is irrelevant. 23 MR. PORAY: That is correct. 24 MS FRIEDMAN: Thank you. Those are my 25 questions. 26 THE PRESIDING MEMBER: Thank you. 27 CROSS-EXAMINATION 28 MR. COWAN: Good afternoon, Board, and Les Services StenoTran Services Inc. 613-521-0703 174 OHNC PANEL 1, cr-ex (Cowan) 1 Mr. Curtis and Mr. Poray. 2 One moment, I seem to have lost my 3 instructions. 4 MR. ROGERS: It happens to me all the time. 5 Would you like mine? 6 --- Laughter 7 MR. COWAN: Somebody paid extra to give you 8 those, I suspect. 9 THE PRESIDING MEMBER: Could you just give 10 your name again, please, for the reporter. 11 MR. COWAN: It is Ted Cowan with the Ontario 12 Federation of Agriculture. 13 We have recovered them. 14 I will try not to do the impossible by 15 starting a question, "Do you agree with me..." 16 --- Laughter 17 MR. PORAY: Thank you, Mr. Cowan. 18 MR. COWAN: I would like to refer you to 19 C-6-2, Exhibit C-6-2, the list of assets. We really 20 won't need to go over it in any detail. 21 Can you substantiate, then, that the share of 22 assets used by LDCs minus OHNCD has fallen by the 23 numbers 3 to 6 per cent, which is the apparent reduction 24 in cost to LDCs shown in the allocation of costs in 25 D-4-4 Tables 2 to 18? 26 MR. CURTIS: I think you are going to have to 27 help us out a little bit with this. 28 MR. COWAN: The actual assets used by the LDCs Les Services StenoTran Services Inc. 613-521-0703 175 OHNC PANEL 1, cr-ex (Cowan) 1 not including OHNC direct, have they fallen by between 3 2 and 9 per cent in accordance with the decline in the 3 costs which fall, as shown in D-4-4, Tables 2 to 18, 4 which fall for that group of companies by about 3 and 5 9 per cent. 6 MR. PORAY: I'm sorry, I don't understand 7 "fall". In relation to what? 8 MR. COWAN: The share of costs for the one 9 group of companies has fallen between 3 and 9 per cent 10 as shown in D-4-4. So in C-6-2, has the share of assets 11 used by those companies fallen by between 3 and 9 per 12 cent, or has it fallen by more or less? 13 MR. PORAY: Are you saying is this compared to 14 the base case or -- 15 MR. COWAN: Compared to the base case, yes. 16 MR. PORAY: Okay. So we are now looking at -- 17 this at Exhibit D, Tab -- 18 MR. COWAN: Or in fact compared to reality. 19 The assets that they were using a year ago or when you 20 last did this exercise, has that share of assets that 21 those firms, the LDCs, use, has it fallen or risen? 22 It would appear to have fallen by between 3 23 and 9 per cent, because you have decided that the costs 24 they should be paying has fallen by 3 to 9 per cent. 25 MR. ROGERS: Do you understand the question, 26 gentlemen? 27 MR. CURTIS: No. 28 MR. PORAY: No. Les Services StenoTran Services Inc. 613-521-0703 176 OHNC PANEL 1, cr-ex (Cowan) 1 MR. COWAN: Ah. 2 MR. PORAY: Can you just show the reference in 3 D-4-4? 4 MR. COWAN: In D-4-4, in the cost assigned to 5 LDCs, not including OHNC direct -- 6 MR. PORAY: In which schedule? 7 MR. COWAN: In Tables 2 to 18, in each 8 instance it falls. It falls in the least instance by 9 3 per cent and in the greatest instance by 9 per cent 10 and in each case with a decimal point. So one would 11 assume that they are using less assets than they used to 12 use when the costs were last calculated and those assets 13 are listed in C-6-2, and I'm wondering, have they in 14 fact, are they in fact, using less assets or are they 15 using the same as they used to use or more than they 16 used to use. 17 MR. CURTIS: I think the problem we are having 18 is that Exhibit D, Tab 4, Schedule 4 is a comparison of 19 various scenarios with the power district concept, which 20 is -- 21 MR. COWAN: Which was the old way that costs 22 were allocated which presumably was once deemed to be 23 fair and that this new way is deemed to be fair, 24 presumably, and that somehow it follows the user-pay 25 principle and allocates costs more or less according to 26 those who use them. In every instance, the costs for 27 LDCs falls. I am wondering whether in any instance the 28 actual assets used by LDCs minus OHNC direct -- Les Services StenoTran Services Inc. 613-521-0703 177 OHNC PANEL 1, cr-ex (Cowan) 1 distribution, sorry, has fallen. 2 MR. PORAY: Okay. I think that maybe I can 3 clarify that the comparison that you are -- I'm sorry. 4 The comparison that you are referring to are 5 the comparisons in the various charge determinants that 6 we evaluated and the impacts on the various customer 7 groups, the direct, the LDCs and OHNC. That comparison 8 is shown in relation to the base case Option 1 which was 9 the power district. 10 In the costs or the charges and the revenues 11 from the various groups, we used exactly the same pools 12 for network, line connection and transformation 13 throughout all of this comparison. So our district 14 option has the same -- 15 MR. COWAN: So what it would seem to be is you 16 don't actually know what the users are using, but they 17 are just being charged for the pools. 18 MR. PORAY: Well, they are assigned to a pool. 19 MR. COWAN: I saw a nod of the head in the 20 affirmative. We don't actually know what the users are 21 using. They are just being charged. 22 MR. CURTIS: No, no, no. 23 MR. PORAY: No, no. No, we do know. 24 MR. CURTIS: We do know. 25 MR. ROGERS: We can't operate on sign language 26 in this forum, Mr. Cowan. It has to be words. 27 MR. PORAY: Remember, if you go back to what I 28 gave in my direct evidence this morning, I said we are Les Services StenoTran Services Inc. 613-521-0703 178 OHNC PANEL 1, cr-ex (Cowan) 1 going to be charging on the basis of delivery points, 2 and we determine which delivery points for OHNCD and for 3 all the LDCs who are in the line connection pool which 4 were in the transformation connection pool and all of 5 them are in the network. 6 In accordance with those delivery points, the 7 charges will be made accordingly. 8 MR. COWAN: A second question, if I may. Do 9 you know whether or not OHNC distribution's consumption 10 has grown proportionately with the proposed shifting 11 costs? 12 MR. PORAY: Grown proportionately in what? 13 The use of -- 14 MR. COWAN: OHNC direct, has the consumption 15 at OHNC distribution sales points, their meters, has 16 that grown in proportion with the proposed shift in 17 costs over time, or has it changed in some other 18 direction? 19 MR. CURTIS: I think in terms of this exhibit 20 that you were referring to, we are taking a snapshot 21 using the same basis for each one of the scenarios that 22 are constructed. So I'm not sure how -- 23 MR. COWAN: So we don't know whether or not it 24 was the rise in costs, whether it in any way parallels 25 with an increase in use? 26 MR. CURTIS: No, I'm not saying that. What 27 I'm saying is that the way these exhibits were developed 28 was based on using one common scenario and looking at Les Services StenoTran Services Inc. 613-521-0703 179 OHNC PANEL 1, cr-ex (Cowan) 1 different charge determinant options based on that one 2 scenario. So the question of has usage changed amongst 3 these various groups seems somewhat irrelevant in terms 4 of that particular assessment, but it is the same 5 snapshot. 6 MR. COWAN: It seems irrelevant until you 7 start paying it. 8 And the fourth question, then. Referring to 9 the maps provided by Mr. Greenspoon, which show the lost 10 transmission lines, if the 44 kV links, as they used to 11 be transmission lines are now categorized as 12 distribution lines -- 13 MR. CURTIS: That's correct. 14 MR. COWAN: -- and they serve OHNC direct, so 15 that transmission cost that it was is now a distribution 16 cost that will be, so in addition to the costs that are 17 being assigned in the Tables 2 to 18 in D-4-4, there is 18 the unseen cost of all the 44 kV lines which was also 19 being transferred once transmission costs, now being 20 called distribution costs, being transferred to OHNC 21 distribution so that a true before and after comparison 22 in D-4-4 would also show the costs to OHNC direct with 23 and without those 44 kV lines. 24 MR. PORAY: I think if I may just clarify 25 that, today, the OHND is charged just like other 26 municipal electrical utilities for the 44 kV line. So 27 there is no change. 28 MR. COWAN: Except that it now has all of them Les Services StenoTran Services Inc. 613-521-0703 180 OHNC PANEL 1, cr-ex (Cowan) 1 and there are distribution lines within OHNC 2 distribution, there are no longer transmission lines 3 which used to be shared by everybody. They shift in 4 cost allocation, then, in D-4-4. What I'm trying to get 5 clear is not only does it shift costs to OHNC 6 distribution without a support in the usage, it also, 7 because of the change in definition from 115 down to 50, 8 the 44, which used to be considered transmission, are 9 now distribution and that is now a -- what used to be a 10 transmission cost is now a distribution cost and is not 11 included as a change in the table. 12 MR. CURTIS: I guess just maybe to help 13 clarify that, we are going back to the proceedings that 14 took place in December. The assets were fully unbundled 15 at that point in time between transmission and 16 distribution, and there was a separate revenue 17 requirement that was awarded for transmission and 18 distribution at that point in time, and so those assets 19 that you are talking about were already identified as 20 distribution assets. 21 MR. COWAN: That's right. But they were 22 previously network assets. Now they are distribution 23 assets. They were previously paid by everyone and used 24 perhaps selectively. Now they are going to be paid for 25 probably by the users, but that same group of users will 26 also be playing an increased share of the 115, the 230s 27 and the 500s, and with that I have no more to say. That 28 is not a promise, though. Les Services StenoTran Services Inc. 613-521-0703 181 OHNC PANEL 1, cr-ex (Cowan) 1 MR. ROGERS: That is the end of the question 2 and I guess no answer is called for. So let's move on I 3 guess. 4 THE PRESIDING MEMBER: Who is next, then, 5 Ms Lea? We are almost finished. 6 MS LEA: I think it might be me. 7 THE PRESIDING MEMBER: It may be. We will 8 have to see. 9 MS LEA: Any other takers? 10 All right. Thank you. 11 MR. POCH: Mr. Chairman, I was just going to 12 perhaps -- I imagine Board staff has some questions and 13 that may take us to the end of the day. I am just 14 wondering if I could just ask the Board to reserve some 15 time at the end of the day or whenever it is convenient 16 to just deal with the issue of scheduling and the order 17 of the next panel, just so that we can make best use of 18 our time. 19 THE PRESIDING MEMBER: We have to wrap up 20 prompt by 5:00 today. We can't carry over, so Ms Lea 21 should take that into account and come back in the 22 morning if needed. Okay. We have some questions, 23 perhaps, from the Board. 24 MS LEA: Certainly, yes. 25 All right. Well, Mr. Poch, are you anxious to 26 go? Did you want to deal with it now? 27 MR. POCH: I don't mind staying here for a few 28 minutes. It is not a problem. Whatever is most Les Services StenoTran Services Inc. 613-521-0703 182 OHNC PANEL 1, cr-ex (Cowan) 1 convenient for the Board. 2 MS LEA: All right. Thank you. 3 CROSS-EXAMINATION 4 MS LEA: Good afternoon, gentlemen. 5 MR. PORAY: Good afternoon. 6 MS LEA: I have three issues that I would like 7 to discuss with you please, and the first relates to 8 pools that you have not decided to put forward to the 9 Board. 10 First, I understand that, at some point during 11 your discussions with stakeholders or in your own 12 deliberations, there was consideration of a meter pool. 13 And in response to various -- in various evidence and in 14 response to an interrogatory from Board staff you have 15 explained what were the reasons for rejecting that meter 16 pool. Could you briefly tell us what would go into a 17 meter pool and why you elected not to propose one to the 18 Board? 19 MR. PORAY: At this point in time, the 20 information that we have based on the asset data and the 21 financial information essentially lumps all of the 22 metering installation costs together and doesn't 23 separate the installation, which includes things like 24 instruments, transformers, communication facilities and 25 other such likes from the meters themselves. The 26 feedback that we got from customers and stakeholders 27 during the consultation process is that they would 28 prefer to be charged on a per-delivery-point basis which Les Services StenoTran Services Inc. 613-521-0703 183 OHNC PANEL 1, cr-ex (Lea) 1 would require us to actually identify what meters are at 2 what delivery points and the costs associated with that. 3 MS LEA: If a separate meter pool had been 4 created, given the difficulties that you have spoken 5 about about separating out those costs, would there be a 6 better cost causality match? In other words, if we had 7 that meter pool would we have better cost causality 8 being attributed to the various customers? 9 MR. PORAY: Certainly from a metering 10 perspective there would be better cost causality. 11 MS LEA: Do you know whether the chart 12 determinant for that would be by demand or by the meter, 13 the facility? 14 MR. PORAY: I think originally what we 15 proposed was by delivery point, so per customer. 16 MS LEA: I gather now that the costs that you 17 have mentioned are now included in the network pool. Is 18 that correct? 19 MR. PORAY: That is correct. 20 MS LEA: Another reason that I believe you 21 cited in a Board staff supplementary interrogatory to 22 you -- I don't think you need to turn it up but I will 23 give you the number for the record, it is Exhibit E, 24 Tab 1, Schedule 22A -- you indicated that a significant 25 increase in total transmission charges for small 26 customers compared to the transmission charges they 27 would pay otherwise, there would be an increase if the 28 metering pool costs were allocated on a uniform basis to Les Services StenoTran Services Inc. 613-521-0703 184 OHNC PANEL 1, cr-ex (Lea) 1 them. In other words if we had a metering pool, you 2 would have an increase in total transmission charges for 3 small customers. 4 MR. PORAY: I think what we were referring to 5 there in that part of our consultation process is that 6 we calculated that the average price for delivery point, 7 using the information that we have at this point in 8 time, would be something like $10,000 per delivery 9 point. For some customers who are -- transmission 10 customers who are small transmission customers, this 11 will be a significant charge in relation to their 12 transmission charges. 13 MS LEA: Was that a consideration in your 14 rejection of the creation of a mirror pool? 15 MR. PORAY: It was at this point in time, yes. 16 MS LEA: The other type of pool that I wanted 17 to ask you about was an interconnection pool. I think 18 that this was briefly raised by one of my friends 19 earlier also which was described in your evidence as a 20 pool for interconnection assets. What are 21 interconnection assets? 22 MR. PORAY: That's a very good question. I 23 think that's why we haven't been able to establish an 24 interconnection asset pool because it's very difficult 25 to determine which assets. How far into the network do 26 you have to go to actually identify what is used for the 27 interconnection and what is not. It's not simply just a 28 line across the border. Les Services StenoTran Services Inc. 613-521-0703 185 OHNC PANEL 1, cr-ex (Lea) 1 MS LEA: Can I ask you a very basic question. 2 When we talk about interconnection, are we talking about 3 connections across the border of Ontario? 4 MR. PORAY: Yes. We talk about the 5 interconnections across the border. Yes. 6 MS LEA: Okay. So an interconnection pool 7 would be those assets that we somehow determined were 8 related to that function. 9 MR. PORAY: Exactly. 10 MS LEA: Given that you were unable to 11 identify the assets, I guess you don't know what the net 12 book value of that pool might have been. 13 MR. PORAY: That is correct. 14 MS LEA: Were there any other concerns besides 15 the difficulty in identification of the assets that lead 16 you to reject the idea of an interconnection pool? 17 MR. PORAY: I don't think so, no. 18 MS LEA: Can you assist us, if one had been 19 developed how it would affect different classes of 20 customers? Do you know the answer to that? 21 MR. PORAY: Well, I think in that sense it 22 would probably lower the network pool because -- I am 23 assuming, and this is an assumption at this point -- 24 some of the assets that are in the network pool may find 25 their way into the interconnection pool, in which case 26 the pool charge, the network pool charge, would come 27 down. 28 MS LEA: And who would pay the costs of the Les Services StenoTran Services Inc. 613-521-0703 186 OHNC PANEL 1, cr-ex (Lea) 1 interconnection pool? 2 MR. PORAY: The network customers. 3 MS LEA: Okay. Thank you. I guess one of the 4 reasons I was asking you about these rejected pools is 5 just as a basic principle, I gather that if you can 6 increase the number of pools that you have, if you can 7 functionalize your assets with more particularity, you 8 would decrease the possibility of cross-subsidization in 9 general. Would you agree? 10 MR. PORAY: I would agree with that. 11 MS LEA: Given that you are proposing only 12 three pools, do you believe that you have come up with 13 the best compromise between the minimization of 14 cross-subsidization and complexity or difficulties on 15 the other hand that we have talked about? 16 MR. PORAY: I do believe we have come with the 17 best compromise, yes. 18 MS LEA: Okay. Now, I understand that 19 originally you had proposed to use only two pools and 20 later, that is when you came before the Board in the 21 last case, you were proposing two pools, but a third 22 pool was developed since that time, partly in response 23 to a Board direction. Is that right? 24 MR. PORAY: That is correct. 25 MS LEA: I would like to also ask you, if 26 there has been a change in the definition of the line 27 connection pool between the time that you filed your 28 transmission 2000 evidence and the time you filed your Les Services StenoTran Services Inc. 613-521-0703 187 OHNC PANEL 1, cr-ex (Lea) 1 updated evidence this past November, that's November of 2 1999. 3 MR. PORAY: I think you will find that in -- 4 I'm just trying to find the right -- 5 MS LEA: I may be able to assist you. There 6 were two things I was looking at. One was in the 7 transmission 2000 definition section and comparing that 8 to the definition section in your current evidence and 9 the other was the actual evidence in Exhibit D. What 10 would you like to start with? 11 MR. PORAY: Transmission 2000. 12 MS LEA: All right. If we look at 13 transmission 2000 then, I looked at pages 5 and 6. 14 MR. CURTIS: Could you help us with the 15 reference then for that, please? 16 MS LEA: Yes. I found that exhibit number. 17 It's Exhibit No. B, Tab 4, Schedule 2. That's the 18 transmission 2000 document. 19 MR. PORAY: Yes. 20 MS LEA: All right. Now, we need to look at 21 that in conjunction with Exhibit A, Tab 9, Schedule 1, 22 page 9, which is the definition section as of November 23 of last year. That's Exhibit A, Tab 9, Schedule 1. I 24 believe that we want to look at page 9 of that. Those 25 are the two documents that I wanted to start with. 26 MR. CURTIS: Could you tell us in the 27 transmission 2000 where you are referencing a 28 definition? Les Services StenoTran Services Inc. 613-521-0703 188 OHNC PANEL 1, cr-ex (Lea) 1 MS LEA: I'm looking at page 5 of the 2 transmission 2000 document. On page 5 you define 3 transmission network assets. 4 MR. CURTIS: Yes. 5 MS LEA: I don't think we need to read the 6 definition out. On page 6 you define line connection 7 assets. It is that latter definition that I wanted to 8 look at briefly. 9 If we look at your definition of line 10 connection assets at page 6 of the transmission 2000 11 document, it says: 12 "Line connection assets are the 13 transmission lines and intermediate 14 stations that connect the transformation 15 connection assets to the commonly shared 16 network assets." 17 Now, when I see the words "network assets" at 18 the end of that sentence, I understood that to be both 19 stations and transmission lines because network assets 20 appears to include at least those two categories of 21 assets. Am I understanding that correctly as of the 22 time of this document? 23 MR. PORAY: I think that's an error. Yes. 24 MS LEA: Okay. Perhaps we can now look at the 25 Exhibit A, Tab 1, Schedule 1, and find out whether there 26 is an error or a misapprehension on our part with regard 27 to that. The reason I say that is it appears that by 28 November of 1999 you were defining line connection Les Services StenoTran Services Inc. 613-521-0703 189 OHNC PANEL 1, cr-ex (Lea) 1 facilities in terms of their function so that there is a 2 functionalization approach. 3 If we look at Exhibit A, Tab 9, Schedule 1, 4 page 9, under the definition of line connection pool 5 charge, we now have the definition that I understand to 6 be your current proposal and that reads: 7 "A customer that is supplied from 8 delivery points that are connected to the 9 network station by an OHNC owned line 10 would incur line connection pool 11 charges." 12 The way I read that is to understand that some 13 transmission lines, what I would call transmission 14 lines, let's call them network lines, you do incur a 15 line connection pool charge for the use of those lines 16 if they connect you to a station. 17 MR. PORAY: That's correct. 18 MS LEA: Right. I did not understand that to 19 be what you were telling us in the transmission 2000 20 document. 21 MR. PORAY: That's correct. 22 MS LEA: So there's an inconsistency there. 23 MR. CURTIS: I think there's an error in the 24 transmission 2000 document. 25 MS LEA: Thank you. So that should not read 26 perhaps line connection -- in the line connection asset 27 definition, page 6, it shouldn't say "network asset", it 28 should say "network station". Les Services StenoTran Services Inc. 613-521-0703 190 OHNC PANEL 1, cr-ex (Lea) 1 MR. CURTIS: I think in fact the way it should 2 read are the transmission lines that connect back to 3 network stations. 4 MS LEA: Network stations. Okay. Let's now 5 look at Exhibit B, Tab 4, Schedule 1. That's Exhibit B, 6 Tab 4, Schedule 1. In looking at page 9, the updated 7 and the old versions. You will need to get both the 8 white and the blue pages out. 9 Now, if you look at the dates of filings, the 10 ones that I have here, I'm looking at my white page, I 11 think itself is an update, it reads "Filed 1999, 1001". 12 MR. CURTIS: I'm afraid we don't at the moment 13 have the white page. 14 MS LEA: Okay. I'm sorry. Someone will need 15 to get it for you. 16 --- Pause 17 MS LEA: Now, the change that I see here in 18 the definition of when you get a line connection charge 19 appears in the last paragraph of each of these pages. 20 It's at line 25 on the white page, which is the October 21 filing, and at line 24 on the blue page, which is the 22 November filing. 23 Let's look at the October filing to begin 24 with, the white page. The sentence beginning on line 24 25 reads: 26 "Similarly, a customer that is supplied 27 from delivery points that are connected 28 by OHNC owned line connection assets Les Services StenoTran Services Inc. 613-521-0703 191 OHNC PANEL 1, cr-ex (Lea) 1 would incur line connection pool 2 charges." 3 If we look at lines 23 and 24 of the updated 4 blue page, it reads: 5 "The customer that is supplied from 6 delivery points that are connected to a 7 network station by OHNC owned lines would 8 incur line connection pool charges." 9 Again, the way we read this is in that month, 10 between the original filing and the update, there was a 11 change such that certain lines that were previously only 12 network were now functionalized to also be line 13 connection pool assets. 14 In other words, in October delivery points 15 connected by line connection assets would incur line 16 connection pool charges. In November, delivery points 17 connected by OHNC lines would incur line connection pool 18 charges. Can you tell me if you see also an 19 inconsistency in those pages? 20 MR. PORAY: I think the functionalization 21 stayed the same. I don't think we changed that. 22 MS LEA: I'm wondering whether perhaps the 23 expression of this definition of functionalization was 24 imperfect perhaps in the October filing. 25 MR. CURTIS: I think what we made was a change 26 to help with the clarification in the understanding of 27 that definition. 28 MS LEA: Can I just deal with the Les Services StenoTran Services Inc. 613-521-0703 192 OHNC PANEL 1, cr-ex (Lea) 1 ramifications of what I saw as a change here by 2 referring, as so many people have done, to AMPCO's 3 helpful diagram at G1.3. I only need to look at Example 4 (1). 5 If we just look at Load 2 Industrial and we 6 forget about the MEUs for just a moment, under what we 7 took to be the old definition, Load 2 Industrial, and I 8 am going to refer to the transmission 2000 document 9 because that's the one I have the most understanding of, 10 if the industrial customer here had built and owned the 11 line which is vertical and leased to his plant, that was 12 not an OHNC line at all, under what I took to be the 13 definition of line connection assets in the transmission 14 2000 document, that Load 2 industrial customer would not 15 pay line connection charges because he had his own line 16 connected to network assets, that is the network line 17 which runs horizontally. 18 Now I understand you to be saying that he pays 19 a line connection charge because he has a network line 20 which connects into the network station, so he pays a 21 line connection charge. Have I described your 22 understanding of this also? 23 MR. CURTIS: The latter explanation that you 24 gave is what our application says. 25 MS LEA: Yes. So at any time did your 26 application involve my previous description? That's 27 what I took from the transmission 2000 document. 28 MR. PORAY: I think all the way along our Les Services StenoTran Services Inc. 613-521-0703 193 OHNC PANEL 1, cr-ex (Lea) 1 functionality or our understanding as to the 2 functionality of the assets is what is now represented 3 in our filing. I think we just made an error in the 4 transmission 2000 document. 5 MS LEA: And your description then in the 6 prefiled evidence, Exhibit B, Tab 4, Schedule 1, page 9 7 of the October filing, the use of the words "line 8 connection assets" at line 25 again confused us because 9 in reading your definition of line connection assets as 10 of October, it didn't include network lines. 11 MR. PORAY: I think what we are saying is that 12 we are trying to clarify that understanding by what we 13 prepared for the November filing. 14 MS LEA: Okay. Thank you. I think my 15 friends, particularly my friend from the NEA, assisted 16 us in understanding the impacts of this proposal and 17 also the impacts of the proposal by AMPCO. One moment, 18 please. 19 Now, can you tell me, are there any customers 20 and, if so, how many that won't have to pay these line 21 connection charges now that we understand your proposal. 22 Is there anyone who would escape line connection 23 charges? 24 MR. PORAY: I think those customers certainly 25 that are connected directly to the network station, they 26 will not pay for line connection. 27 MS LEA: And can you tell me how many 28 customers you have that are directly connected without Les Services StenoTran Services Inc. 613-521-0703 194 OHNC PANEL 1, cr-ex (Lea) 1 going through an OHNC line to a transformer station? 2 MR. CURTIS: I think we had to answer that in 3 one of the interrogatories. 4 MS LEA: Okay. 5 THE PRESIDING MEMBER: All we have to do is 6 remember which interrogatory it was. 7 MS LEA: Well, if you would like, we can stop 8 now and you can give me that answer tomorrow. We don't 9 want to take time. I see it's a few minutes to five and 10 so on. Would that be agreeable? 11 MR. CURTIS: Yes. All right. 12 MS LEA: Just remind me that that question is 13 outstanding tomorrow. 14 Thank you very much. I will defer to tomorrow 15 my further questions. 16 I had one questions of Mr. Rogers before I 17 yield the microphone and also perhaps to yourself, Dr. 18 Higgin. 19 What topic should we be prepared to 20 cross-examine after this first topic is over? I wasn't 21 sure if there was a meeting of the minds here. 22 Thank you. 23 MR. ROGERS: Of course, what will decide 24 that -- it had been my suggestion that we deal next with 25 issue No. 3, charge determinants, before we take on the 26 naughty problem of net versus gross load billing. 27 THE PRESIDING MEMBER: Yes. That was your 28 proposal. I think the Board had briefly discussed it Les Services StenoTran Services Inc. 613-521-0703 195 1 and we were agreeable to moving on. There is a linkage 2 between what was done and the charge determinant which 3 is quite clear. I think that's a good way. 4 Let us turn back to Mr. Poch's query. 5 Following Board counsel's questions, there will be a 6 few, perhaps none, we don't know yet, questions from the 7 Board on the first topic. We will then move on in 8 rotation again. 9 Again the plea is to try and get people who 10 maybe can get together in like-minded manner to ask 11 questions and we will move on with charge determinant 12 issue No. 3 for tomorrow. 13 I would think we probably would spend a lot of 14 the day, if not all of the day, on that. Whether we 15 will get to gross versus net tomorrow I think will be 16 the big question. It would be more likely that's going 17 to be Friday. 18 MR. POCH: Mr. Chairman, that's of course 19 where I was headed. At the moment I don't have any 20 questions on charge determinant. I might watch it from 21 afar. 22 I am wondering if I could just then invite 23 counsel to give Ms Lea before leaving today, if counsel 24 have any estimate of their time -- I'm going to 25 volunteer Jennifer -- could they advise Ms Lea so that 26 some of us who may not even need to be here tomorrow at 27 all could make an educated -- 28 THE PRESIDING MEMBER: It's not that Les Services StenoTran Services Inc. 613-521-0703 196 1 efficient, but I think we could make sure that you will 2 be notified if we get to that, but I think that that 3 will carry over until Friday. If you didn't come 4 tomorrow, you wouldn't lose your chance to -- 5 MR. POCH: Mr. Chairman -- 6 THE PRESIDING MEMBER: Perhaps we would have 7 to change the order a little bit. I think that's what I 8 would expect. 9 MR. POCH: I will try to work something out 10 with Board staff. The difficulty is if cross starts on 11 that, because the transcript isn't yet available and 12 there is no time to read it, we will be in the difficult 13 position of not using your time best. 14 We will try to work something out for you. 15 THE PRESIDING MEMBER: Save that, I think we 16 won't get too far past charge determinants tomorrow 17 would be my guess. 18 MR. VOGEL: Mr. Chair, I also have a question 19 with respect to -- I'm just not sure of where on the 20 panel list, issue 9 on the Board's issues list, that is 21 the treatment of connection charges for new generation. 22 Where is that being dealt with on OHNC's panel list? 23 THE PRESIDING MEMBER: We discussed that this 24 morning as part of the proposed settlement agreement. 25 It is my understanding that it had been agreed to go to 26 the argument only. That is my understanding. Am I 27 wrong about that? 28 MR. VOGEL: I understood that with respect to Les Services StenoTran Services Inc. 613-521-0703 197 1 issue 8. I didn't understand that with respect to issue 2 9. 3 THE PRESIDING MEMBER: If you read the 4 settlement agreement, under item No. 9, it said: 5 "All parties agreed that this should be 6 addressed as 'argument only' regarding 7 the process and timing of addressing the 8 issue as per the Board's issues list." 9 I took that conclusion this morning. 10 MR. VOGEL: But my understanding was that that 11 related to issue 8 which left me in a quandary about 12 issue 9. 13 THE PRESIDING MEMBER: I interpreted that to 14 be that issue 8 was already scheduled for argument only. 15 No. 9 was also going to be treated the same way. Am I 16 wrong, Mr. Rogers? 17 MR. ROGERS: I don't believe so. I think -- 18 THE PRESIDING MEMBER: It says something about 19 the parties agreed on settlement of this issue. 20 MS LEA: It's right in the settlement 21 document, page 3. 22 "All parties agreed that this should be 23 addressed as argument only." 24 MR. ROGERS: But that refers to number 8, I 25 think. 26 THE PRESIDING MEMBER: Yes, but it said first, 27 in the first sentence is says: The parties agreed on a 28 settlement and that it should be linked into 8. That's Les Services StenoTran Services Inc. 613-521-0703 198 1 how we interpret it. 2 MR. ROGERS: Our interpretation, sir, for what 3 it's worth, is that all the parties settled this issue, 4 but some parties' settlement was linked to number 8 and 5 that number 8 was to be argued at the end of the case. 6 THE PRESIDING MEMBER: Yes. So the two are 7 now linked as we thought and, therefore, they will both 8 be argued. 9 MR. ROGERS: That's fine. One thing that is 10 clear, it was agreed that it wouldn't be -- 11 THE PRESIDING MEMBER: I wasn't there, you 12 tell me. 13 MR. ROGERS: Well, I was there and I am not 14 sure what happened. I think that's correct. I think 15 everybody agrees that this was not an issue for 16 cross-examination during the hearing. 17 THE PRESIDING MEMBER: Well, if there is 18 anything I would like to clarify that because Mr. Vogel 19 is obviously not in agreement with that understanding. 20 MR. VOGEL: I'm just not clear on what the 21 status of issue 9 is. 22 MR. MATTSON: I think we never put your issue, 23 issue 10 which certainly does a bit of overlap with 24 issue 9. I think we left it as issue 10 for the First 25 Nations. They have had their opportunities, but all the 26 other parties are prepared to deal with it in argument. 27 So it seems from the cross-examination that you still 28 want to deal with that under issue 10. That's what you Les Services StenoTran Services Inc. 613-521-0703 199 1 are looking for. 2 MR. VOGEL: Yes, I think that's part of issue 3 10. So I am content to deal with it in argument. But I 4 needed some clarification I think. I want the status of 5 issue 9 -- 6 THE PRESIDING MEMBER: You are speaking about 7 that and since I wasn't there I gave you what I thought 8 was the Board's interpretation from the wording of the 9 settlement. 10 So can we ask you if you would discuss that 11 with Mr. Rogers and if necessary, Ms Lea, then we will 12 then have an understanding. I will put it on the record 13 tomorrow. Thank you. 14 MR. VOGEL: Thank you, Mr. Chair. 15 THE PRESIDING MEMBER: Mr. Campbell. 16 MR. CAMPBELL: Mr. Chairman, I wonder if I 17 could invite you to remind the party of Rule 1801 of the 18 Board's Rules of Practice and Procedures which states 19 that: 20 "Any party who intends to rely on a 21 document that has not been filed shall 22 file and serve the document on all 23 parties at least 24 hours in advance of 24 referring to it in the proceeding". (As 25 read). 26 It hasn't been a problem today when documents 27 have been produced for cross-examination, but if we get 28 into a situation where something comes up that for Les Services StenoTran Services Inc. 613-521-0703 200 1 instance another party might have wanted to ask a 2 question, we are going to get into one of these recycled 3 things. 4 I think it would be efficient to avoid that 5 and I just thought I would invite you to remind the 6 parties of that rule. 7 THE PRESIDING MEMBER: Okay, I will invite on 8 it. Ms Lea do you have anything to add? 9 MS LEA: No, I don't think so. Often, Mr. 10 Campbell, this is dealt with quite informally by people 11 bringing the documents to the hearing the previous day 12 as opposed to serving and faxing. 13 MR. CAMPBELL: I'm quite content. It is just 14 getting it in advance. 15 THE PRESIDING MEMBER: The issue became an 16 obstacle because the witnesses or other parties hadn't 17 got the documents. 18 MS LEA: That's right. 19 THE PRESIDING MEMBER: That's our main 20 concern. 21 MR. CAMPBELL: If the objective is achieved, 22 we are certainly happy. 23 THE PRESIDING MEMBER: Thank you. 24 Thank you, we will recess and we will see 25 everybody at 9 o'clock tomorrow morning. 26 Thank you. 27 --- Whereupon the hearing adjourned at 1705, to resume 28 on Wednesday, February 17, 2000 at 0900 Les Services StenoTran Services Inc. 613-521-0703 201 1 INDEX OF PROCEEDING 2 PAGE 3 Commenced at 0905 4 4 Preliminary matters 4 5 OHNC PANEL 1 6 SWORN: DAVID CURTIS 26 7 SWORN: ANDY PORAY 26 8 Recess at 0940 27 9 Resumed at 1035 27 10 Examination-in-Chief by Mr. Rogers 32 11 Cross-Examination by Mr. Brown 61 12 Cross-Examination by Mr. Fisher 66 13 Recess at 1225 90 14 Resuming at 1345 90 15 Cross-Examination by Mr. Janigan 90 16 Cross-Examination by Mr. Rodger 95 17 Cross-Examination by Mr. Coburn 101 18 Cross-Examination by Mr. Mattson 112 19 Cross-Examination by Mr. Poch 113 20 Cross-Examination by Mr. Greenspoon 129 21 Cross-Examination by Mr. White 135 22 Recessed at 1510 141 23 Resumed at 1530 141 24 Cross-Examination by Mr. Stephenson 141 25 Cross-Examination by Mr. Vogel 145 26 Cross-Examination by Mr. Rawson 166 27 Cross-Examination by Ms Friedman 171 28 Cross-Examination by Mr. Cowan 173 Les Services StenoTran Services Inc. 613-521-0703 202 1 INDEX OF PROCEEDING 2 PAGE 3 Cross-Examination by Ms Lea 182 4 Hearing adjourned at 1705 200 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Les Services StenoTran Services Inc. 613-521-0703 203 1 EXHIBITS 2 NO. PAGE 3 G1.1 Order of Panels and Evidence 27 4 of Witnesses 5 G1.2 Extracts of "Principles of 62 6 Public Utility Rates", Second 7 Edition, by James C. Bonbright, 8 Albert L. Danielsen and David 9 R. Kamerschen, with assistance 10 of John B. Legler 11 G1.3 Documents entitled, "Line 77 12 Connection Examples" 13 G1.4 Map from Ontario Hydro 134 14 Services Company Transmission 15 Systems 16 G1.5 Map submitted by Mr. Greenspoon 134 17 of NorthWatch 18 19 20 21 22 23 24 25 26 27 28 Les Services StenoTran Services Inc. 613-521-0703 204 1 UNDERTAKINGS 2 NO. PAGE 3 F1.1 A comparison of Exhibits G1.4 134 4 and G1.5 on a best efforts basis