###CaseId: RP-1999-0044 ###Title: OEB Transcript of RP-1999-0044; Vol. 17:00 ###Section: Transcript Header ###Author: Vlahos, Smith (OEB) ###PubDate: 11/10/00 ###LFileId: VOL1700 ###[ 3217 RP-1999-0044 THE ONTARIO ENERGY BOARD IN THE MATTER OF the Ontario Energy Board Act, 1998; AND IN THE MATTER OF an Application by Ontario Hydro Networks Company Inc., for an Order or Orders approving year 2000 transmission cost allocation and rate design. AND IN THE MATTER OF a Motion brought by Toronto Hydro Electric System Limited. B E F O R E : P. VLAHOS Presiding Member B. SMITH Member Hearing held at: 2300 Yonge Street, 25th Floor, Hearing Room No. 1 Toronto, Ontario on Friday, November 10, 2000, commencing at 0905 HEARING VOLUME 17 Les Services StenoTran Services Inc. 613-521-0703 3218 APPEARANCES JENNIFER LEA Counsel to Board Staff DONALD ROGERS Hydro One MARK RODGER Toronto Hydro Electric System Limited PETER THOMPSON/ Hydro Ottawa Limited JANE SCOTT Les Services StenoTran Services Inc. 613-521-0703 3219 Toronto, Ontario --- Upon commencing on Friday, November 10, 2000 at 0905 PRELIMINARY MATTERS THE PRESIDING MEMBER: Good morning, everyone. The Board is sitting today pursuant to a Procedural Order No. 4 in the RP-1999-0044 case. That case related to the cost and rate design matters with respect to Hydro One transmission. For the purposes of the transcript, my name is Paul Vlahos. With me today is Mr. Brock Smith. Could I have appearances, please? MR. ROGERS: Yes, sir. My name is Donald Rogers and I appear on behalf of Hydro One. THE PRESIDING MEMBER: Thank you, Mr. Rogers. MR. RODGER: Good morning. Mark Rodger, appearing as counsel to Toronto Hydro Electric System Limited. THE PRESIDING MEMBER: Thank you, Mr. Rodger. MR. THOMPSON: Peter Thompson for Hydro Ottawa Limited. With me is Jane Scott, the Manager of Regulatory Affairs for Hydro Ottawa Limited. THE PRESIDING MEMBER: Thank you, Mr. Thompson. MS LEA: Jennifer Lea for Board Staff. THE PRESIDING MEMBER: Ms Lea. Anyone else? There being no response, Mr. Rogers, I just Les Services StenoTran Services Inc. 613-521-0703 3220 Preliminary Matters want to confirm that the prefiled evidence which constitutes the agreement has been indeed sent to all the intervenors of record? MR. ROGERS: Yes, I can confirm that, sir. THE PRESIDING MEMBER: You can confirm that, okay. Other than that, Ms Lea, is there anything else? I have to ask you whether we are properly constituted. MS LEA: No. The original service and publication from the original hearing would apply, and as long as all the intervenors of record have received this information I think we are fine. Thank you. THE PRESIDING MEMBER: Okay. Thank you. In terms of going forward, I understand that Board Staff has some questions of Hydro One witnesses. Do Board Staff have any questions on the evidence filed by Ottawa? MS LEA: No, I don't think so. I think I might have a question for counsel, to ask counsel to clarify something, but I don't think I have any questions of evidence on the Ottawa witnesses. THE PRESIDING MEMBER: Okay. Then, Mr. Thompson, do you have any view as to whether -- I guess we have to have your witness adopt the evidence. Is that satisfactory? Les Services StenoTran Services Inc. 613-521-0703 3221 Preliminary Matters MR. THOMPSON: I suspect we would have to have it adopted under oath and that would be it, but we could do that after counsel is finished with the Hydro One panel, if that is satisfactory. THE PRESIDING MEMBER: All right. Would you have any questions of the Hydro One panel? MR. THOMPSON: No, I don't believe so. THE PRESIDING MEMBER: Mr. Rodger? MR. RODGER: Yes. I have no questions, Mr. Vlahos. We do have two witnesses on behalf of Toronto Hydro available in case the Board has any questions. We don't intend to have any evidence in-chief, but these are Mr. David Richmond and Mr. Rick Zebrowsky. We have copies of their CVs at the front, but we would have no questions. THE PRESIDING MEMBER: All right, thank you. Perhaps we can leave it on the basis that we can start with the Hydro One panel. If there are any questions that Board Staff wish to ask of the other participants, or the Board, then we will have that ability. Thank you. Mr. Rogers, shall we then proceed with having your panel come forward? MR. ROGERS: Yes, sir. Thank you very much. I have two witnesses here this morning and Les Services StenoTran Services Inc. 613-521-0703 3222 Preliminary Matters they are Mr. David Curtis, whom I think is familiar to the Board, who was a witness in the main part of this case, and with him is Mr. Joseph Toneguzzo who is testifying for the first time this morning and will have to be sworn. Mr. Curtis will still be under oath, I think, from the original proceedings, but he is quite willing to take the oath again, of course. THE PRESIDING MEMBER: Ms Lea, that is satisfactory? MS LEA: I think if Mr. Curtis remembers he is under oath from the last time, then we are satisfied, thank you. MR. CURTIS: I remember. The other two gentlemen who are sitting here, are these the witnesses for the other parties? MR. ROGERS: They are interlopers to my panel. MS LEA: You have a class with you this morning. MR. ROGERS: This is a typical Toronto Hydro plot here. These gentlemen are Toronto Hydro witnesses who come with Mr. Rodger and I think Mr. Rodger suggested they sit there in case the Board had any questions. But it may just confuse things and perhaps they could stand down until my panel is finished and then if the Board did have any questions, these gentlemen are available. MR. RODGER: That's fine, Mr. Chairman. Les Services StenoTran Services Inc. 613-521-0703 3223 Preliminary Matters THE PRESIDING MEMBER: All right, that's fine, then. Let's proceed that way. MR. ROGERS: Mr. Toneguzzo, can you come forward, please. PREVIOUSLY SWORN: DAVID CURTIS SWORN: JOSEPH TONEGUZZO MR. ROGERS: Mr. Vlahos and Mr. Smith, it was my intention to lead these witnesses briefly through the prefiled testimony, if that would be of assistance to the Board, just to explain, in summary form, the proposal. EXAMINATION-IN-CHIEF MR. ROGERS: First of all, Mr. Toneguzzo, let me just outline briefly for the Board your qualifications and experience. I understand, sir, that you are a graduate of the University of Waterloo, Electrical Engineering, in 1979? MR. TONEGUZZO: That is correct. MR. ROGERS: And from 1979 to the present you have worked in a variety of positions with, formerly Ontario Hydro and now at the Hydro One organization? MR. TONEGUZZO: Yes. MR. ROGERS: Your experience excludes a period of time early on as a Protection and Control Engineer with Ontario Hydro? MR. TONEGUZZO: Yes. MR. ROGERS: You then, in 1985 to 1988, were Les Services StenoTran Services Inc. 613-521-0703 3224 Hydro One Panel, in-ch (Rogers) involved as a Planning Engineer for the utility? MR. TONEGUZZO: Correct. MR. ROGERS: In 1988 to 1991 you worked, I see, as a Transmission Planning Engineer for Ontario Hydro? MR. TONEGUZZO: That's correct. MR. ROGERS: Then from 1991 to 1996 you were a Section Head/Supervising Engineer, Customer Delivery Planning Grid System Strategies and Plans Division? MR. TONEGUZZO: Yes. MR. ROGERS: You also have experience as a manager of the major -- of major load accounts with the corporation? MR. TONEGUZZO: That's correct. In the customer service division. MR. ROGERS: All right. And I wonder if you can tell us now your present position please with Hydro One? MR. TONEGUZZO: My present position is Manager of Strategy Development in the Network Management Division. MR. ROGERS: Thank you very much. Now, I understand, sir, that you and Mr. Curtis have been involved in the considerations which have led to the proposal presently before the Board? MR. TONEGUZZO: Yes, that is correct. MR. ROGERS: I wonder if you can help us just Les Services StenoTran Services Inc. 613-521-0703 3225 Hydro One Panel, in-ch (Rogers) summarize the history here and what is being proposed. First of all, could you describe for us, please, the function performed by low voltage switch gear within the Hydro One system, the history of ownership of that equipment and the past and current approaches associated with crediting customers for ownership? MR. TONEGUZZO: Certainly. First I will speak to -- to the function. Low voltage switch gear is electrical equipment that is typically located in our transformer stations or the transformer stations owned by Hydro One. The facilities are primarily composed of breakers, instruments, transformers, protection and metering devices. Collectively this equipment performs the specific function of subdividing electricity and switching it at low voltage for the safe and reliable delivery of electricity to the various customer supply areas in the vicinity of the transformer station. Typical voltage is emanating or typical voltages used at Hydro One facilities are 44 kv, 27.6 kv and 13.8 kv. The equipment typically performs a function similar to that of a distribution panel in your home, only, of course, on a much larger scale. Hydro One owns 344 step-down transformation facilities across the province. The cost of the low voltage -- low voltage switch gear is contained in every one of those transformer stations. The cost of the low Les Services StenoTran Services Inc. 613-521-0703 3226 Hydro One Panel, in-ch (Rogers) voltage switch gear is included in the transformation connection rate proposed before the Board. More than 90 per cent of the Hydro One owned transformation and low voltage switch gear facilities are outdoor equipment. So it is somewhat different than the equipment owned by Ottawa Hydro and Toronto Hydro, which is primarily indoor. MR. ROGERS: Now, what significance does that have as to whether it is outdoor or indoor? MR. TONEGUZZO: The primary difference there is cost. Indoor facilities are typically what -- what we term metal-clad facilities and they are considerably more expensive than the average Hydro One facility -- MR. ROGERS: All right. Thank you. MR. TONEGUZZO: -- which is outdoor. MR. ROGERS: Carry on, please. MR. TONEGUZZO: The feeder breakers are the most expensive and the most critical piece of this equipment. And because of the nature of the Hydro One system being a significant -- significantly rural in many cases, on average across the province there are only five feeder breaker positions on a per transformer station basis. Again, there is a difference there between the utilities of Toronto Hydro and Ottawa Hydro where a significantly larger number of breakers exist. MR. ROGERS: Thank you. MR. TONEGUZZO: Next I will speak to the history. Between 1929 and today three utilities -- Les Services StenoTran Services Inc. 613-521-0703 3227 Hydro One Panel, in-ch (Rogers) Ottawa Hydro, Toronto Hydro and Gloucester Hydro -- decided to own, operate and maintain their own low voltage switch gear facilities. Our understanding of the reasoning for this is that ownership provides these utilities with the planning and operational flexibility they desire in serving their customers effectively. In 1966, Ontario Hydro was approached by these utilities and an evaluation was conducted and agreement was reached that due to the fact that these utilities owned, operated and maintained the low voltage switch gear facilities, that the three utilities were in effect self-providing a service that was covered in the rate structure that was available at the time or that was in place at the time. As a result, Hydro calculated a credit based on the average cost of this service for 115 transformation assets in service at the time. The credit was escalated from time to time to account for changes in the cost of this service. Next I will speak to the credit. MR. ROGERS: Just before you do that, you have told us about the history here, Mr. Toneguzzo. You, of course, weren't around in 1966, at least not around Ontario Hydro. MR. TONEGUZZO: No. MR. ROGERS: So you are telling us what your understanding is as to the process that took place at that time? MR. TONEGUZZO: Based on my knowledge of the Les Services StenoTran Services Inc. 613-521-0703 3228 Hydro One Panel, in-ch (Rogers) history, correct. MR. ROGERS: Very good. Thank you very much. Tell us a little bit about the credit, would you please. MR. TONEGUZZO: Under the former Ontario Hydro rate structure, these utilities received a credit against the cost of power. The credit currently totals about 5.2 million per year, that is for all three distribution utilities and has historically been paid through the revenue pool by all Ontario Hydro customers. In the current transitional market structure, the low voltage switch gear credit has continued to be applied to the bundled electricity bills of these three utilities. This credit continues to be paid through the revenue pool by all customers and not by Hydro One Networks. MR. ROGERS: All right. Thank you. Now, tell me why were not these costs associated with this low voltage switch gear credit not included in the original transmission tariff submission of Hydro One as it now is? MR. TONEGUZZO: The primary purpose is that Hydro One does not own, operate or maintain these specific low voltage facilities. MR. ROGERS: The primary purpose you said, you mean the primary reason? MR. TONEGUZZO: The primary reason, yes -- MR. ROGERS: All right. Thank you. Les Services StenoTran Services Inc. 613-521-0703 3229 Hydro One Panel, in-ch (Rogers) MR. TONEGUZZO: -- why it wasn't included is it does not own, operate or maintain these specific low voltage switch gear assets. And as a result, does not incur the associated costs. MR. ROGERS: Are there any other reasons for not including it in the original submission? MR. TONEGUZZO: Yes, there are four principally. First the fact that the higher level decisions needed to be made with respect to the structure and composition of transmission tariffs in the province. In other words, we had to deal with the broad cost base of transmission initially. And it was believed that that needed to be thought through first. Also the concept of viewing the function performed by the low voltage switch gear assets as a service that could be specifically priced was not assessed at the time of the original submission. And it needed to be understood in the context of the Ontario electricity market structure and the associated tariffs at the higher level. There was also the uncertainty around the acceptability by the effected customers, stakeholders and, of course, the OEB to the concept of viewing the function performed by the low voltage switch gear as a service. Lastly the magnitude of the impact related to the low voltage switch gear is relatively small compared to the magnitude of the overall transmission system Les Services StenoTran Services Inc. 613-521-0703 3230 Hydro One Panel, in-ch (Rogers) tariff. MR. ROGERS: All right. Thank you very much. Now, we are going to come, I think, to the reasons for -- behind the recommendation, what you are making to this Board. But can you just outline for us, please, why Hydro One believes that these utilities which own their own low voltage switch gear assets are entitled to a credit? MR. TONEGUZZO: We believe that the utilities have invested in assets that do provide a distinct service which is included in the current transformation tariff that is being applied to all transmission system customers utilizing the asset pool, the transmission asset pool. The self-provision of this service by Ottawa Hydro, Toronto Hydro and Gloucester Hydro reduces the cost for Hydro One customers utilizing the transformation assets pool. The primary reason for this is that the specific assets that these utilities chose to own are above the average pool cost. So in effect they have reduced the cost for all customers in the province using the transmission system asset base. Customers of Ottawa Hydro, Toronto Hydro and Gloucester Hydro pay for the service provided by the low voltage switch gear, which they own, operate and maintain, through the local distribution tariffs. Providing a credit to these utilities for ownership ensures that the customers do not also pay for the Les Services StenoTran Services Inc. 613-521-0703 3231 Hydro One Panel, in-ch (Rogers) provision of this service to other transmission business customers without receiving any benefit. MR. ROGERS: All right, sir. Thank you very much. I would like to turn to you now, Mr. Curtis, if I could and ask you please to explain to the Board briefly how Hydro One Networks developed its recommendation on continuing compensation for low voltage switch gear once we have open access? MR. CURTIS: Certainly. First, Hydro One Networks used principles and these principles were consistent with the ones that we have used throughout this submission on transmission cost allocation and rate design for the purposes of assessing the candidate options for compensation. Now, these principles were two. The first one is reflect cost causality. That is attribute costs of providing services to those customers who received those services. And the second principle was maintain consistency with the Board's approval to this point on the transmission tariffs. Then Networks, together with Toronto Hydro and Ottawa Hydro, examined the following compensation options. The first one was average cost base. This would involve estimating Hydro One Networks' average cost of providing low voltage switch gear service, proportioning the transformation connection rate and then calculating the corresponding compensation amount. Les Services StenoTran Services Inc. 613-521-0703 3232 Hydro One Panel, in-ch (Rogers) The second option was maintaining the status quo, whereby Toronto Hydro, Ottawa Hydro and Gloucester Hydro would continue to receive the current compensation level once the market is opened. The next option we examined was acquisition, where Hydro One networks buys the low voltage switch gear equipment currently owned by Toronto Hydro, Ottawa Hydro and Gloucester Hydro; or alternatively, Toronto Hydro, Ottawa Hydro and Gloucester Hydro would buy Hydro One transformation assets at those same stations where the low voltage switch gear is located. And the final option was an avoided cost space option, whereby Toronto Hydro, Ottawa Hydro and Gloucester Hydro would be compensated based on the avoided cost of their low voltage switch gear equipment. MR. ROGERS: All right, thank you. Now, having examined all four options, which of them do you recommend to this Board as the fairest resolution to this problem? MR. CURTIS: Networks recommends that the low voltage switch gear compensation be determined on the average cost based method. This method is consistent with the OEB approved basis for transmission cost allocation and rate design for determining transmission tariffs, in that it reflects average costing and maintains the integrity of the pool for the transformation connection asset. This method also reflects cost causality, Les Services StenoTran Services Inc. 613-521-0703 3233 Hydro One Panel, in-ch (Rogers) where the cost of providing low voltage switch gear service is, to the greatest extent practicable, attributed to those customers who directly receive those services. MR. ROGERS: All right, so you have decided then that the fairest way to do this would be on the basis of average costs. How do you propose that your recommendation be applied in practice? MR. CURTIS: Networks has estimated that the average cost of providing low voltage switch gear services is $57.8 million, or 19 per cent of the transformation connection pool's revenue requirement. Networks proposes that this percentage of the pool's revenue requirement be applied to Networks' transformation pool rates. Applying the results of this calculation to the forecast load supplied through the low voltage switch gear assets owned by the three utilities would become the annual compensation amount. As in our evidence, the amount for each of these three utilities would be: for Toronto Hydro, $7.2 million; Ottawa Hydro, $1.2 million; and Gloucester Hydro, $80,000. The total would be $9.44 million. MR. ROGERS: Excuse me, Mr. Curtis. Ottawa Hydro -- I think you may have misspoken. Did you say $1.2 million? MR. CURTIS: I am sorry -- $2.1 million -- $2.2 million, sorry, I have the figures reversed. MR. ROGERS: I thought so. Les Services StenoTran Services Inc. 613-521-0703 3234 Hydro One Panel, in-ch (Rogers) MR. CURTIS: Sorry. MR. ROGERS: That is all right. Can you carry on then please, now that you have corrected that? MR. CURTIS: The total compensation therefore would be $9.44 million. MR. ROGERS: All right, thank you. Now, just talk for a moment just about implementation if we could. If the Board accepts the recommendation which is being made to it, how does Networks propose to implement that compensation scheme? First of all, before we get to that, in making this analysis and recommendation to the Board, have you relied on certain principles in guiding you as to how this should be implemented? MR. CURTIS: Yes, we did. Networks adopted the same two principles we used for the compensation option, namely, reflecting cost causality and maintaining consistency with the Board's approval to this point on transmission tariff. Then we added the principle of considering the ease of implementation. MR. ROGERS: All right, thank you. Now, just outline for us very briefly if you would the options of implementation that were considered. MR. CURTIS: Certainly. Networks considered two possible options for affecting this compensation. The first one we called the regular payments from Networks option. Under this option, there would be one transmission transformation tariff charged by the Les Services StenoTran Services Inc. 613-521-0703 3235 Hydro One Panel, in-ch (Rogers) IMO to all customers in Ontario taking that service. When the IMO pays Networks, then Networks would make the same period payments to Toronto Hydro, Ottawa Hydro and Gloucester Hydro for the low voltage switch gear credit. MR. ROGERS: And this turns out to be the option that you are going to recommend to the Board, isn't it? MR. CURTIS: Yes, it is. MR. ROGERS: All right. Could you just tell us briefly what other option was considered? MR. CURTIS: The second option we examined we called the second transformation connection rate option. Under this option, there would be one transmission transformation tariff for all customers who own their own low voltage switch gear, and the second tariff charged to remaining customers taking transformation services who own their own low voltage switch gear. The difference between the two tariffs is that the first tariff would recover Hydro One Networks' costs, all of their costs, for providing its low voltage switch gear services, and the second tariff has no low voltage switch gear component. MR. ROGERS: Now as I understand it, you are recommending the first of those two options to this Board, that is, the monthly payment whereby the IMO will remit the money to Hydro One, and Hydro One will pass it through to these formerly three, now two, utilities. MR. CURTIS: That is correct. Les Services StenoTran Services Inc. 613-521-0703 3236 Hydro One Panel, in-ch (Rogers) MR. ROGERS: Why is that the preferred option in your view? MR. CURTIS: First, both options that we considered followed the principles of reflecting cost causality and maintaining consistency with the Board's approval to this point on transmission tariffs. Both options are based on average costing concepts and maintaining the pool. Where the two options differ is in terms of the ease of implementation. The regular payments option is simpler and more practical. There is only one tariff. The regular payments option is consistent with the historical treatment of the low voltage switch gear credit, whereby utilities received a credit each month on their bundled bill. And finally, the IMO has expressed preference for the regular payments from Networks option, based on the ease of implementation at this stage of market development. MR. ROGERS: Thank you very much. Now, we are going to be through here, but I would like you to tell us please what implementation of your proposals would mean to the transmission customers of Ontario. MR. CURTIS: Certainly. Implementing Networks' recommendation would mean the transformation connection service rate would increase from $1.43 per kilowatt per month to $1.48 per kilowatt per month, to recover an annual low voltage switch gear payment of Les Services StenoTran Services Inc. 613-521-0703 3237 Hydro One Panel, in-ch (Rogers) $9.44 million. The new rate would apply to all transformation connection service customers in Ontario. It results in Toronto Hydro and Ottawa Hydro and Gloucester Hydro contributing about $2.76 million collectively to the cost of servicing this credit, and the remaining transformation connection service customers contributing the balance of $6.68 million. MR. ROGERS: That you, Mr. Curtis. Finally, tell us, I assume you think this is the fairest resolution to this situation? MR. CURTIS: Yes, we do. MR. ROGERS: Could you tell us why you think so? MR. CURTIS: Hydro One considers this agreement is fair to all its transformation customers in Ontario, because it continues a historically accepted method of compensation. It provides a modest increase in the compensation from historic levels that reflects current costs, and that is partially funded by the beneficiaries. Thirdly, it maintains a uniform transmission tariff across Ontario. And finally, it provides equitable compensation to Toronto Hydro, Ottawa Hydro and Gloucester Hydro for the low voltage switch gear component of the transformation tariff. MR. ROGERS: Thank you very much. Now, gentlemen, those are my questions for this morning, save this. I understand that each of you worked on the Les Services StenoTran Services Inc. 613-521-0703 3238 Hydro One Panel, in-ch (Rogers) prefiled testimony in this case, and each of you accepts responsibility for it? MR. CURTIS: Yes. MR. TONEGUZZO: Yes. MR. ROGERS: As far as you know, it is accurate and expresses your opinions in this matter? MR. CURTIS: Yes, it does. MR. TONEGUZZO: Yes, it does. MR. ROGERS: Thank you, sir. Those are the questions that I have. I do have a curriculum vitae for Mr. Toneguzzo, who has not testified before the Board before. I have given copies to my friend, and perhaps it should be marked as an exhibit. EXAMINATION MS LEA: Yes, I think we should mark it as an exhibit. Unfortunately, I don't have the old exhibit list from the main Toronto Hydro case, unless you happen to know where you are at on exhibit filing. MR. ROGERS: I didn't know where we were at any time during the hearing on filings. --- Laughter THE PRESIDING MEMBER: We are just going to add it to the list and we are going to find in our original files? MS LEA: Okay, I think that is probably -- so we will call it Exhibit A until it is further identified, if that is acceptable. Thank you. EXHIBIT NO. G17.1: Curriculum Vitae of Les Services StenoTran Services Inc. 613-521-0703 3239 Hydro One Panel, ex (Lea) Joseph Toneguzzo MR. ROGERS: Thank you very much. Those are the questions I have, Mr. Chairman. THE PRESIDING MEMBER: Thank you, Mr. Rogers. Are there any other people that have come later than 9:00 that wish to make an appearance? There has been no response. Ms Lea, over to you. MS LEA: Thank you. Gentlemen, I have a very few questions. The first couple are merely a clarification. I believe you have told us already that the $5.2 million compensation, historical compensation, was not included in the transition revenue requirement, so I presume then that the $1.43 per kilowatt hour tariff that presently exists does not include that cost. Is that right? MR. CURTIS: That is correct. MS LEA: So the entire increase of five cents is due to the inclusion of the $9.4 million, that entire amount? MR. CURTIS: That is correct. MS LEA: Okay, thank you. The second thing that I didn't understand completely from your testimony this morning was a reference, I believe it was by Mr. Toneguzzo, to the fact that these assets, these switch gear assets, are above the average cost of the pool. Did I understand then that these, probably because they Les Services StenoTran Services Inc. 613-521-0703 3240 Hydro One Panel, ex (Lea) are inside, are above the average cost of low voltage switch gear assets? MR. CURTIS: The average costs of Hydro One owned low voltage switch gear assets, that is correct. MS LEA: Is that something then that we have to take into account and calculate in the compensations? Because we have talked about the average cost in the compensation. Can you speak to that? Either of you, whoever. MR CURTIS: No, we don't because what is proposed, what we are bringing forward in terms of our proposal, is essentially a paying back to the three utilities that portion of the transformation connection rate that recovers low voltage switch gear for Hydro One owned equipment. MS LEA: So you are paying them what it would cost you to do it, as opposed to what it may cost them to perform this function? MR. CURTIS: No, what we are paying them is the current transformation connection rate recovers for the low voltage switch gear assets that Hydro One Networks owns. The three utilities own their own low voltage switch gear. So if they are not essentially refunded, that portion of the charge that we are applying to them for low voltage switch gear, then they are having to pay us for the other low voltage switch gear as well as recovering from their own customers the costs of -- Les Services StenoTran Services Inc. 613-521-0703 3241 Hydro One Panel, ex (Lea) associated with their low-voltage switch gear. MS LEA: I think I understand that principle. I just wanted to understand that it is based on the average cost of Networks' switch gear -- MR. CURTIS: That is correct. MS LEA: -- not the switch gear owned by these other utilities. That is fine. MR. CURTIS: That is the option that we are proposing. That is correct. MR. ROGERS: I think that is one of the compromises that was reached -- MR. CURTIS: Yes. MR. ROGERS: -- Ms Lea, in these discussions. MS LEA: Thank you. Turning then to what should be in the rate order, can you just describe briefly what you propose to put on the rate order that you are asking this Board to approve please with respect to this issue? MR. CURTIS: Certainly. What we are asking for approval is that our rates that we would be charging for transformation connection services would change from the current proposal of $1.43 per kilowatt per month to $1.48 per kilowatt per month. And then we would include a note on that rate to indicate that we were also recovering for this compensation for the low voltage switch gear for the three utilities. MS LEA: Does the actual amount of the compensation that you are paying, listed either monthly Les Services StenoTran Services Inc. 613-521-0703 3242 Hydro One Panel, ex (Lea) or in some other fashion, need to be actually listed on the rate order in your view? MR. CURTIS: That -- no, we didn't feel that was required. MS LEA: Okay. Is there any consideration by Hydro One Networks as to how it would deal with any changes to this compensation in the future? Have you considered that? Is it something you would have to come back to the Board for? How would that be approached? MR. CURTIS: Yes, if there were -- if there -- the proposal that we are bringing forward is that this would be a fixed annual compensation amount until we came back before the Board at a future rate proceeding. MS LEA: Thank you. One moment. Thank you very much, gentlemen. That clarifies what I need just now. Thank you. THE PRESIDING MEMBER: Thank you, Ms Lea. The Board has no questions, Mr. Rogers. MR. ROGERS: Very good, sir. THE PRESIDING MEMBER: You don't have any redirect, I take it? MR. ROGERS: No, I do not. Thank you very much. THE PRESIDING MEMBER: Mr. Thompson, do you have any questions for this panel? MR. THOMPSON: No thanks. THE PRESIDING MEMBER: Okay. Mr. Rodger? MR. RODGER: No questions, sir. Les Services StenoTran Services Inc. 613-521-0703 3243 Hydro One Panel, ex (Lea) THE PRESIDING MEMBER: Thank you, gentlemen. Thank you very much for being here today. You are excused now. Okay. Go back to Mr. Thompson. Mr. Thompson, how would you like to proceed? MR. THOMPSON: Well, what I would suggest, Mr. Chairman, is we just swear Ms Scott, go through her qualifications and we will adopt the evidence under oath. THE PRESIDING MEMBER: That will be fine, sir. Thank you. SWORN: JANE SCOTT EXAMINATION-IN-CHIEF MR. THOMPSON: I understand that you are Jane Scott? MS SCOTT: Yes, I am. MR. THOMPSON: And you are the Manager of Regulatory Affairs for Ottawa Hydro Limited? MS SCOTT: For Hydro Ottawa Limited. MR. THOMPSON: For Hydro Ottawa Limited. Good start. MS SCOTT: Yes. MR. THOMPSON: And that is the successor to Ottawa Hydro, Gloucester Hydro and other utilities in the Ottawa area? MS SCOTT: That is correct. MR. THOMPSON: All right. Could you just outline for the Board your educational qualifications Les Services StenoTran Services Inc. 613-521-0703 3244 Hydro Ottawa Panel, in-ch (Thompson) and your work experience leading to your current position? MS SCOTT: Yes. I received my engineering degree from Queen's University in 1979 and an MBA from the University of Toronto in 1985. For the last ten years, before taking this position, I was the Planning Engineer at Ottawa Hydro. Before that I was at Toronto Hydro in various positions for four years. A year with the Municipal Electric Association and started my career at Atomic Energy of Canada as a Design Engineer. MR. THOMPSON: And your duties as Manager of Regulatory Affairs with Hydro Ottawa Limited, could you briefly describe those please? MS SCOTT: I am responsible for all aspects related to the interactions with the Ontario Energy Board including rates. MR. THOMPSON: Now, there has been prefiled in these proceedings a document entitled "The Prefiled Evidence of Ottawa Hydro." I don't know if that has got an exhibit number yet or not but can we treat it the same way as we did the other? MS LEA: Certainly. I don't see it as having an exhibit number at present. But there is certainly space for it to be written in and we will do that. EXHIBIT NO. G17.2: A document entitled "The Prefiled Evidence of Ottawa Hydro" MR. THOMPSON: I understand, Ms Scott, that this prefiled evidence was prepared primarily under the Les Services StenoTran Services Inc. 613-521-0703 3245 Hydro Ottawa Panel, in-ch (Thompson) direction and guidance of Carl Kropp. Is that correct? MS SCOTT: That is correct. MR. THOMPSON: And Mr. Kropp was then the General Manager of Ottawa Hydro? MS SCOTT: Yes. MR. THOMPSON: And I understand that Mr. Kropp retired August -- or sorry -- October the 31st? MS SCOTT: That is correct. MR. THOMPSON: And during your tenure at Ottawa Hydro, did you work closely with Mr. Kropp? MS SCOTT: I did, yes. MR. THOMPSON: And although this material wasn't prepared under your direction, have you familiarized yourself with the material and the background to the material? MS SCOTT: Yes, I have. MR. THOMPSON: And are you in a position to adopt its contents under oath for the purposes of these proceedings? MS SCOTT: Yes, I am. MR. THOMPSON: Thank you, Mr. Vlahos. Those are all the questions I have. THE PRESIDING MEMBER: Thank you, Mr. Thompson. Ms Lea, I take it you have no questions? MS LEA: No, thank you. THE PRESIDING MEMBER: All right. Thank you. We may have a question, Mr. Thompson, is this Les Services StenoTran Services Inc. 613-521-0703 3246 Hydro Ottawa Panel, in-ch (Thompson) the proper time. I believe it is the request that Mr. Thompson -- well, the prefiled evidence contains some requests by way of orders and I have some questions for Mr. Thompson. Ms Lea is aware of my questions so perhaps I will let her start. MS LEA: I think I actually spoke to Mr. Thompson just before we began about that also. MR. THOMPSON: Well, I would be happy to deal with them now or in argument. Whatever you prefer, sir. THE PRESIDING MEMBER: I am not sure I was contemplating it in argument. It seems to have been no. Ms Lea is not going to make any submissions so if that is okay with counsel I -- MS LEA: Perhaps we can just clarify then -- thank you, Mr. Vlahos -- these questions. Mr. Thompson or Ms Scott, whoever wants to answer it. At page 5 of the evidence there is a proposed order listed and there are three parts to that proposed order. The first is provisions which authorize the Toronto Lawn Boy Utilities to provide low voltage switch gear services to Hydro One the equipment they own and operate at Hydro One transformer stations. I had presumed, Mr. Thompson, that if the Board approved the increase in the tariff to 1.48, they have implicitly accepted that Toronto and Ottawa will be providing their own low voltage switch gear services. That is kind of the premises of it. I didn't know that we needed to put that in the order. Is that acceptable Les Services StenoTran Services Inc. 613-521-0703 3247 Hydro Ottawa Panel, in-ch (Thompson) to you? MR. THOMPSON: Yes, that is acceptable. MS LEA: Thank you. The second section is what I was asking the Hydro witnesses about, which I also raised with counsel and witnesses before the hearing. Provisions specifying the amount to be recovered. As I understand Hydro Networks -- Hydro One Networks' proposal, they intend to put a note on the rate order but not actually make a statement as to the amount that they will be paying you on the rate order. So in terms of, again it is kind of implicit if we increase it to 1.48 that it is 9.44 million that is being given back if I can put it that way by Hydro One Networks. Is that acceptable the way they propose to deal with that to you, Mr. Thompson? MR. THOMPSON: Yes. I don't have any problem with that. I was distinguishing between the order coming out of the proceedings and the rate schedule and I think Mr. -- the Hydro One witness, Mr. Curtis is talking about a note on the rate schedule. All I was suggesting is to control the amount and Hydro One's need to come in to change the amount, I was suggesting that there simply be a paragraph in the order coming out of these proceedings that specified that amount. But other way it is implicit they have to come in to change it. That is the only point I was trying to drive at. MS LEA: Yes, I think we established that also Les Services StenoTran Services Inc. 613-521-0703 3248 Hydro Ottawa Panel, in-ch (Thompson) through my last question that they have to come in to change. I gather it would then be acceptable if the Board if it is able to make an oral decision, that is when the bench simply mentions the basis for its increase to the rate schedule? MR. THOMPSON: That is satisfactory, yes. MS LEA: Thank you. THE PRESIDING MEMBER: Thank you, Ms Lea. I am not sure I followed that very last point. To the extent that the specific credit that would be mentioned somewhere in the say, preamble of the order, wouldn't that suffice? MS LEA: Yes, I think so. THE PRESIDING MEMBER: All right. Thank you. Okay. Ms Scott, thank you very much for being here today. Okay. If you just give us a minute, please. --- Pause DECISION THE PRESIDING MEMBER: The Board is able to render its decision now. The Board had an opportunity to review the prefiled evidence that was submitted in this proceeding. The Board is satisfied with the process that has been followed. In order for us to get here today parties had been notified. No other third parties have come forward. So in terms of process the Board is satisfied as to what has been done. The Board has reviewed the prefiled evidence Les Services StenoTran Services Inc. 613-521-0703 3249 Decision and the agreement. The Board finds the agreement is reasonable, therefore the Board accepts the cost consequences that flow from this agreement. The Board will reflect this decision in the rate order that will have to come out, which will I guess amalgamate or combine the rate order that arises from the first set of proceedings, as well as these proceedings. The order will take note of the discussion today as to what precisely the order will contain. So that rate order will be issued in due course. That is the Board's finding. Are there any questions on that? MR. ROGERS: No, sir, thank you very much. THE PRESIDING MEMBER: Ms Lea, anything? MS LEA: Your witnesses mentioned, Mr. Rogers, that they would like a note added to the rate schedule. We have a draft rate schedule in our hands, so we don't need the numbers, but if there is some wording of that note it would be appreciated if you could just send that over to us, so we get it right. MR. ROGERS: We will indeed. It will be a short note. MS LEA: Thank you. THE PRESIDING MEMBER: Thank you very much to everyone for being here today. We are now adjourned. --- Whereupon the hearing adjourned at 0946 Les Services StenoTran Services Inc. 613-521-0703 3250 INDEX OF PROCEEDING PAGE Upon commencing at 0905 3219 Preliminary Matters 3219 HYDRO ONE PANEL PREVIOUSLY SWORN: DAVID CURTIS 3223 SWORN: JOSEPH TONEGUZZO 3223 Examination-in-chief by Mr. Rogers 3223 Examination by Ms Lea 3238 SWORN: JANE SCOTT 3243 Examination-in-chief by Mr. Thompson 3243 DECISION 3248 Upon adjourning at 0946 3249 Les Services StenoTran Services Inc. 613-521-0703 3251 EXHIBITS NO. DESCRIPTION PAGE G17.1 Curriculum Vitae of Joseph 3238 Toneguzzo G17.2 A document entitled "The 3244 Pre-Filed Evidence of Ottawa Hydro" Les Services StenoTran Services Inc. ###Next: 1 ###] <<<>>>