Rep: OEB Doc: 128Rg Rev: 0 ONTARIO ENERGY BOARD Volume: 5 April 08, 2002 BEFORE: P. VLAHOS VICE CHAIR AND PRESIDING MEMBER S. ZERKER MEMBER F. PETERS MEMBER A. BIRCHENOUGH MEMBER 1 HEARING RP-2000-0023 2 IN THE MATTER OF the Ontario Energy Board Act, S.O. 1998, c. 15, Schedule B; 3 AND IN THE MATTER OF an Application by Hydro One Networks Inc., for an order or orders approving or fixing just and reasonable rates. 4 APPEARANCES 5 JENNIFER LEA Board Counsel MARTIN DAVIES Board Staff DON ROGERS HYDRO ONE NETWORKS INC. JIM MALENFANT HYDRO ONE NETWORKS INC. JIM FISHER AMPCO KEN SNELSON AMPCO JOHN McGEE FOCA COLIN McLORG TORONTO HYDRO ELECTRIC SYSTEM IAN MONDROW ECAO MICHAEL JANIGAN VECC YANNICK VENNES VECC ANDREW TAYLOR POWER BUDD COALITION JAMES SIDLOFSKY BLG COALITION TED COWAN ONTARIO FEDERATION OF AGRICULTURE ROGER WHITE ECMI 6 TABLE OF CONTENTS 7 PRELIMINARY MATTERS: [18] HYDRO ONE NETWORKS - PANEL 5 [39] EXAMINATION BY MR. ROGERS: [42] CROSS-EXAMINATION BY MS. LEA: [106] QUESTIONS FROM THE BOARD: [124] HYDRO ONE NETWORKS - PANEL 6 [143] EXAMINATION BY MR. ROGERS: [145] CROSS-EXAMINATION BY MR. MONDROW: [190] CROSS-EXAMINATION BY MS. LEA: [333] QUESTIONS FROM THE BOARD: [479] FURTHER CROSS-EXAMINATION BY MR. MONDROW: [530] RE-EXAMINATION BY MR. ROGERS: [543] HYDRO ONE NETWORKS - PANEL 7 [562] EXAMINATION BY MR. ROGERS: [564] CROSS-EXAMINATION BY MR. MCGEE: [616] QUESTIONS FROM THE BOARD: [635] POWER BUDD COALITION - PANEL 1 [737] EXAMINATION BY MR. TAYLOR: [739] CROSS-EXAMINATION BY MR. WHITE: [792] CROSS-EXAMINATION BY MS. LEA: [803] CROSS-EXAMINATION BY MR. ROGERS: [846] QUESTIONS FROM THE BOARD: [1167] RE-EXAMINATION BY TAYLOR: [1278] HYDRO ONE NETWORKS - PANEL 8 - REPLY EVIDENCE [1286] EXAMINATION BY MR. ROGERS: [1288] 8 EXHIBITS 9 EXHIBIT NO. I.5.1: EXCERPT FROM RETAIL SETTLEMENT CODE [90] EXHIBIT NO. I.5.2: PACKAGE OF LETTERS OF CONCERN [201] 10 UNDERTAKINGS 11 UNDERTAKING NO. H.5.1: TO PROVIDE INFORMATION WITH RESPECT TO CUSTOMER INFORMATION [506] UNDERTAKING NO. H.5.2: TO PROVIDE LETTER FROM ELLIOTT LAKE [525] UNDERTAKING NO. H.5.3: TO PROVIDE UPDATE ON MISCELLANEOUS CHARGES [722] 12 --- Upon commencing at 10:00 a.m. 13 MR. VLAHOS: Please be seated. 14 Good morning, everyone. 15 I have to repeat this. We're not on. Good morning, everyone. 16 Ms. Lea, Mr. Rogers, any preliminary matters? 17 MR. ROGERS: I have one, Mr. Chairman. 18 PRELIMINARY MATTERS: 19 MR. ROGERS: I have given to Board staff copies of an answer to Undertaking H.3.3. There are copies at the back of the room. If that can be accepted as Exhibit H.3.3, I think, Ms. Lea. 20 MS. LEA: Yes, thank you. 21 MR. VLAHOS: Okay. Anything else? 22 MR. ROGERS: That's all for me at the moment. At some point today I'd like to discuss the argument order, but perhaps that could be left to the close of business. My proposal, just so you know and so my friends know, sir, is that, with the Board's approval, assuming we finish today, and I do believe we will, it would be my proposal to give oral argument - as I understand, the Board would prefer that in this case - on Wednesday. If I can have a day to prepare, that would be sufficient for my purposes. 23 MR. VLAHOS: Mr. Rogers, how long would you need Wednesday? 24 MR. ROGERS: Oh, I would think two hours at the outside, sir. 25 MR. VLAHOS: Okay. 26 The Board has to rise by 12 on Wednesday, so perhaps we should start at 9:00. 27 MR. ROGERS: I promise you I'll finish well before then. 28 MR. VLAHOS: That's all predicated on us finishing the testimony today. 29 MR. ROGERS: Yes. 30 MR. VLAHOS: Okay. 31 Ms. Lea, anything from you? 32 Okay. 33 MR. MONDROW: I have one matter I'd like to raise. Just in reviewing the transcript -- I'm back today to ask some questions about the service-quality issue. But in reviewing the transcripts for the last number of days, I've noted that I'm listed in the appearances as counsel for HVAC. I've spoken with the court reporter and that's an understandable historical slip, but in this proceeding, for the record, and for other parties reading it, I'm counsel for ECAO, Electrical Contractors' Association of Ontario. 34 MR. VLAHOS: Thank you, Mr. Mondrow. 35 Okay. Where do we go next, Mr. Rogers? 36 MR. ROGERS: Well, Mr. Chairman, I have back today Mr. Horton, who is here to answer questions about time-of-use -- the time-of-use mitigation rate and to clear up some confusion that occurred in the last day, and I've asked Dr. Poray to join him on this panel to help with the explanation about this rate. And then Mr. Horton is also available to answer questions about the letters of concern, pursuant to issue number 6. And he can also deal with rate implementation. I'm going to ask him to describe for you some of the problems that the company has with rate implementation just to explain the timing to you. 37 I would suggest that we first start with the time-of-use issues and get that sorted out. 38 MR. VLAHOS: Okay. 39 HYDRO ONE NETWORKS - PANEL 5 40 A.HORTON; Previously Sworn 41 A.PORAY; Previously Sworn 42 EXAMINATION BY MR. ROGERS: 43 MR. ROGERS: Mr. Horton, first of all, when you testified last Tuesday, I believe it was, you were asked who the special -- who the time-of-use rate mitigation rates would apply to. Can you tell us -- I think that there's some confusion about that on the record as to whether it was simply T customers or whether it was simply other customers as well. 44 MR. HORTON: I'm actually going to defer to Dr. Poray to go into detail about those. 45 MR. ROGERS: All right. What rates are affected by this proposed time-of-use mitigation rate proposal? 46 DR. PORAY: There are ten time-of-use customers for whom we are proposing mitigation measures on the time of use. The ten are made up of five T-class customers, four general three-phase customers, and one three-phase farm customer. That should make up ten in total. 47 MR. ROGERS: So that would be a T-class, G3, and F3? 48 DR. PORAY: That is correct. 49 MR. ROGERS: Dr. Poray, I wonder if you could help us by comparing the existing rates with the proposed rates for these customers. 50 DR. PORAY: Certainly. 51 MR. ROGERS: Where can we find the existing rates in the evidence? 52 DR. PORAY: I'm referring to an interim decision and order dated January the 11th, 2002, which applies to bundled rates effective as of March 1st, 2002. 53 In that order, there is a section which deals with industrial-commercial general-service three-phase, and transmission G3 and IT, and this is applicable to general-service class three-phase customers and transmissions not located in the urban density zone. 54 There's a table there which pertains to industrial-commercial and farm optional time-of-use rates. And for the three-phase customers, there is a monthly charge of $35 per month for the T-class, $16.35 for the farm class, with rural rate protection, and $40.10 for the farm class without rural rate application. 55 MR. ROGERS: All right, thank you. Those are the rates that apply today, then, are they? 56 DR. PORAY: Those are the rates that apply today. 57 MR. ROGERS: Where would I find the proposed rates to compare them to? 58 DR. PORAY: Okay. I will turn to Exhibit E, tab 6, schedule 10. 59 MR. ROGERS: These are yellow sheets that were filed, I think, during the course of the hearing. 60 DR. PORAY: That's correct. The filing date was 2002-04-04. 61 And this schedule identifies the transitional time-of-use mitigation rate effective on or after the date of market opening, until February the 28th, 2003. And they are specified in there for three sets of customers; the three-phase farm, F3; the industrial-commercial general-service, G3; and the industrial-commercial subtransmission T. And for each there is a monthly service charge and a volumetric charge. 62 MR. ROGERS: Finally, to complete the cycle here, can you show us in that exhibit the rates that would apply if the company's time-of-use proposals are not accepted by the Board? And I think that's found at -- 63 DR. PORAY: If we go to Exhibit E, tab 6, schedule 3, and it would be page -- let's deal with the farm class. Page 4, at the top of the page, there will be the farm three-phase F3. 64 MR. ROGERS: That's effective March of 2003. 65 DR. PORAY: I'm sorry, I would have to go back therefore to page -- 66 MR. ROGERS: Schedule 2, page 1, Dr. Poray, I think would help. 67 DR. PORAY: Yes, that is correct. There's a list of specific schedules that indicates the different rates that are -- that we're seeking approval for, and the schedule that would apply if the mitigation measure was not to be approved would be found under Exhibit E, tab 6, schedule 2, and these are the rates that would come into effect until February 28th, 2003. 68 MR. ROGERS: All right. So that exhibit, then, contains the proposed mitigation rates as well as the rates that would apply if the Board decided not to permit the mitigation proposal. 69 DR. PORAY: That is correct. 70 MR. ROGERS: Thank you. I hope that helps when the Board has a chance to look at that exhibit. 71 Now, Mr. Horton, when you were here last day, you were asked about the proposals of the company and the notch effect that might apply with respect to certain customers who may be on the threshold or on the cusp and miss out on the rate simply because they didn't quite qualify. I think you filed an answer to that as H.1.1, and I'd like to ask you to explain this to us, please. 72 Just let people turn up H.1.1, which is a graph and an explanation. 73 MR. HORTON: What the graph is depicting is the estimated bill impacts to these ten customers as well as the remaining time-of-use customers. The series of questions that were brought up last week regarding this notch effect, and concern about customers potentially barely missing the cut in terms of this rate mitigation plan, came up and it was asked a couple of times. So this was put forth to try and give the Board some comfort that that notch effect would, in fact, not come into play with the existing time-of-use customers. 74 Again, our criteria for attempting to devise a way in which to qualify customers for -- qualify those customers who would have significant impacts was those customers who had a 2:1 off-peak-to-peak ratio. So what you see in this graph is that there are estimated impacts for those ten customers that range from an absolute low of approximately 35 per cent of overall bill impact, up to a high of approximately 110 per cent. 75 Just for a point of clarification, I believe in reviewing the transcripts from last Tuesday, I had suggested 20 to 111 per cent. That was more of a generalisation. The specific numbers that you see in the graph here is that the lowest customer was at the 35 per cent overall bill impact. 76 If you take the remaining customers, those would not have taken advantage or have vigorously adopted different business processes in order to benefit from time-of-use rates. The estimated bill impacts, and these are identified in the lower part of the graph, range from a low of an actual negative number, and these would be customers who would simply -- who in fact had peak usage in the peak times, up to 15 per cent. 77 So again to address the Board's concern, I believe an example was raised, what if a customer had a 20 per cent impact and another customer had a 19 per cent impact and that notch effect, really, referred to the equitability for that customer at 19 per cent. What you can see from this is that there is a 20 per cent differential between the lowest of the ten customers for whom we are seeking mitigation and the highest of the other customers that are impacted by time-of-use being eliminated. 78 MR. ROGERS: Thank you. 79 While we're on this now, Mr. Horton, you were asked as well last day about these customers and the rate -- the clearing of the deferral account in two years and what their expectation was. Can you just tell us, have these customers all been notified that the time-of-use rates will cease as of market opening? 80 MR. HORTON: Yes. 81 MR. ROGERS: So they're aware that -- these ten customers, at least, have been notified that their bills are going to change substantially unless some mitigation plan is implemented. 82 MR. HORTON: In fact, the communication that has gone out to all 57 customers is simply that time-of-use rates cease on market opening and that that would -- and explains basically the overall impacts, in general, to them. It does not refer to the mitigation plan that's in front of this Board right now, and it doesn't go into further detail on that. 83 MR. ROGERS: But I suppose any mitigation that might be approved by the Board would be good news at least to the ten customers that would be the beneficiaries of it. 84 MR. HORTON: Absolutely. 85 MR. ROGERS: Now, while we're on this issue of this notch effect and this time-of-use mitigation rate, can I ask you, gentlemen - and perhaps, Dr. Poray, this is best answered by you - could you address the Board's concern raised last day about the possibility of interval metering as being a partial solution to the problem, and the application of the Retail Settlement Code to this situation. 86 DR. PORAY: Certainly. 87 The question which was asked was why, given that section 3.6 of the Retail Settlement Code provides for unique settlement costs to be calculated for time-of-use meters, could this not be a solution for these customers? Has Hydro One investigated this option, and if so, why was it rejected? 88 MS. LEA: I wanted to interject and say I have copies of the relevant portion of the Retail Settlement Code. If it's acceptable, can I mark it as an exhibit, please, so that people can refer to it. That will be Exhibit I.5.1. And I'll pass copies around. Thank you very much. 89 I'm sorry to interrupt you, Dr. Poray. Just give me a moment so that I can mark the exhibit. So the title of the exhibit is "Excerpt from Retail Settlement Code." 90 EXHIBIT NO. I.5.1: EXCERPT FROM RETAIL SETTLEMENT CODE 91 MS. LEA: Sorry, Dr. Poray, please go ahead. 92 DR. PORAY: Not at all. 93 The referred section of the Retail Settlement Code is specifically related to calculating the cost for the competitive electricity services over a billing period; in other words, equation 3.6 deals with calculating the pass-through costs for the commodity or energy for time-of-use customers. It's meant specifically for customers who did not have interval meters. 94 This section will not apply to the ten time-of-use customers whose bill impacts are above 20 per cent because each one of these customers has an interval meter and therefore will be subject to a spot price pass-through for the commodity cost. 95 The problem which Networks has encountered with the said time-of-use customers is that the commodity is not the issue. The bill impact is created as a result of the unbundled distribution and other regulated charges; for example, there are some customers who shifted such significant portion of their demand to the off-peak period that even if the commodity charge were reduced to zero, they would still see an impact on their bill. Therefore, Networks could not have used a provision of section 5.6 to address the issue of time-of-use customer bill impacts. 96 MS. LEA: I think it's section 3.6. 97 DR. PORAY: I'm sorry, section 3.6. 98 MR. ROGERS: Does that complete your explanation, Dr. Poray? 99 DR. PORAY: Yes, it does. 100 MR. ROGERS: Thank you very much. 101 I think those are the questions that I have, and these witnesses are available to answer any questions that others may have. 102 MR. VLAHOS: Thank you, Mr. Rogers. 103 Ms. Lea, do -- does any other party wish to cross-examine this panel? 104 Ms. Lea. 105 MS. LEA: Thank you. 106 CROSS-EXAMINATION BY MS. LEA: 107 MS. LEA: Dr. Poray, I wanted to clarify a couple of things. 108 With respect to the Retail Settlement Code, section 3.6, you're indicating that this section is not intended for those customers with interval meters. Did I hear you say that? 109 DR. PORAY: That is correct. In fact, if I may -- 110 MS. LEA: I see it in the second line. Non-interval metered customers. 111 DR. PORAY: That's right. 112 MS. LEA: So all of these customers have interval meters. 113 DR. PORAY: That is our understanding, yes. 114 MS. LEA: And the second difficulty that you've had with this proposal is that it is not merely the commodity portion of the bill but the commodity-driven distribution portion of the bill which is creating a large rate impact for these customers. 115 DR. PORAY: Yes, it is. Yes. 116 MS. LEA: It's the distribution portion. 117 DR. PORAY: That is correct. 118 MS. LEA: Sorry, pardon me. It's complicated. 119 Okay, thank you very much. 120 MR. VLAHOS: Ms. Lea, those are all the questions? 121 MS. LEA: Those are all the questions with respect to time of use. I have questions, as the applicant knows, with respect to quality of service. 122 MR. ROGERS: I would ask that we complete this time-of-use portion, and then Dr. Poray can be released and Mr. Horton can answer questions about the letters of concern. 123 MR. VLAHOS: Dr. Zerker has some questions. 124 QUESTIONS FROM THE BOARD: 125 MS. ZERKER: I understand that you have notified your customers in this category. Have they some -- are you planning to notify them about the adjustments that they'll have to make subsequently in their payments? 126 MR. HORTON: The communication that we've provided to the 57 time-of-use customers is general in that it describes the rate changes and the fact that, as a result of those rates changing, that there will be impacts to the bill. It doesn't provide an individual breakdown for each of the 57 and describe what the estimated impacts are for each of them. 127 MS. ZERKER: No. I'm really referring to the ten customers for whom there will be a deferral. Are you planning to notify them or let them understand the deferral implications some time down the road? 128 MR. HORTON: It would be -- it would be premature, I think, to -- you know, even from an internal perspective, we haven't determined what we would propose in terms of how to handle the deferral account. So in terms of the staging of this proposed mitigation rate, our communication would be -- our communication to those ten would be to communicate the mitigation rate, if the Board does, in fact, approve it; then to inform them of the deferral account and inform them that we would keep them apprised of what our proposal will ultimately be to deal with that deferral account in the future. 129 MS. ZERKER: In other words, the company has no specific plan of the adjustments down the road. 130 MR. HORTON: Not a specific plan at this stage, no. 131 MS. ZERKER: Thank you. 132 MR. VLAHOS: Those are the Board's questions, Mr. Rogers. 133 MR. ROGERS: Thank you very much. 134 Can I ask that Dr. Poray be released? 135 MR. VLAHOS: Thank you, Doctor. 136 DR. PORAY: Thank you very much. 137 MR. VLAHOS: This is it for Dr. Poray? 138 MR. ROGERS: Well, if all goes according to plan it is, but one never knows. 139 MR. VLAHOS: He's still going to be in town, is he? 140 MR. ROGERS: Yes, he is. He'll be available if necessary. 141 MR. VLAHOS: Thank you, Dr. Poray. You're excused for now. 142 MR. ROGERS: Once we give Dr. Poray a chance to collect his books and vacate the stage, I'll be asking Mr. Horton to deal with the letters of concern. And when that's through, just so the Board understands the evidence this morning, I have also proposed -- once the letters of concern issue, number 6, is out of the way, to ask Dr. -- I'm sorry, Mr. Horton, to explain some of the implementation issues that I think the Board was interested in. 143 HYDRO ONE NETWORKS - PANEL 6 144 A.HORTON; Previously Sworn 145 EXAMINATION BY MR. ROGERS: 146 MR. ROGERS: Now, you have, and I've asked you to review, the letters of concern received by the Board in response to issue number 6 on the issues list? 147 MR. HORTON: Yes, I have. 148 MR. ROGERS: I think that Board staff and perhaps members of the Board as well may have questions about individual letters. But I wonder, as an overview, could you give the Board some sense of the breakdown of these letters for us, please. 149 MR. HORTON: Yes. 150 The service-quality issues or issue refers to approximately 40 letters that were received by the Board from customers from January 2001 to present. In analysing these, we broke them down into several categories. Approximately 23 of the letters are related to what we would call isolated incidents or individual customer inquiries; these would cover items such as customers who were seeking clarification on rates or elements of their bill. Two letters pertain specifically to Hydro One Networks' late payment policy. Twelve letters are related to rates, rate increases, rate classifications, rate billing questions, and of those 12, two are specific to classification concerns. And an additional three letters refer to general issues or concerns. We would include -- for instance, there was a letter regarding deregulation and the market opening that was general in nature but was -- but was forwarded to the Board in order to express an opinion around those items. 151 We have found that there are some trends in these letters that parallel trends that we see in our tracking of what we call customer inquiries, which would include questions or, in general, escalated concerns or complaints; so things that weren't resolved at the front line, for instance, in the call centre and went into a group that we have specifically to resolve escalated issues, and again there are parallels in the trends. 152 Some of these trends is that there is some confusion specifically around blended rates. And when I talk about blended rates, it's the implementation process when there is a rate increase and how we calculate that on the bill. So these would be pro-rated or transitional bills at the time of a rate increase. 153 The late payment concerns are centered predominantly on the timing of interest and when it's charged. There are several incidents where the customers believe that their meter read or their bill is inaccurate. 154 But the majority of the issues revolve around billing; rates, rate increases, as I mentioned, as opposed to things like power outages or power quality. There are few of those in there. But the vast majority of those seem to go to rates, rate increases, and classifications. 155 MR. ROGERS: Mr. Horton, can I just stop you there. 156 MR. HORTON: Yes. 157 MR. ROGERS: How many customers, approximately, does Networks have at the present time? 158 MR. HORTON: Approximately 1.1 to 1.2 million. 159 MR. ROGERS: I know that you have experience in other utilities; I think you were involved in the telephone industry for a period of time, were you not? 160 MR. HORTON: Yes, for about eight years. 161 MR. ROGERS: Can you tell us, the level of letters of concern, there are about 40 letters, I think, written to the Board. And I know you monitor concerns that are raised with the company, both outside the hearing process and as part of your duties; is that correct? 162 MR. HORTON: Yes. 163 MR. ROGERS: Can you give us some sense of the level of disquiet of Networks' customers, bearing in mind there are approximately 1.1 or 1.2 million of them, as compared with your experience in the telephone industry, for example. 164 MR. HORTON: In terms of our -- 165 MS. LEA: Mr. Horton, could you speak into the mike, please. 166 MR. HORTON: Sure. 167 MS. LEA: I know it's tempting to look that way. 168 MR. HORTON: In terms of the escalated concerns that we receive, we receive, pretty consistently, about 1,500 complaints or inquiries per year, and that's been -- if we look at 2000/2001 -- or 2000/2001, that number changed by about 40. I think there were 40 more escalated concerns in 2001. So that's 1,500 of those types of complaints, of which about 900 are written correspondence, on average, where we have a specific customer inquiry group that handles these concerns and tracks them in detail. 169 In terms of comparison with respect to the customer base, that represents about .1 -- a little over .1 per cent of the customer base having an escalated complaint. 170 My experience in the telecom industry was that we used to have a target of approximately 1 per cent of the customer base issuing similar type -- we didn't call them escalated concerns or escalated complaints. So if I were to compare from two different industries, the numbers would certainly look manageable and quite favourable. 171 We have not, at this time, undertaken to do benchmarking specifically within the -- within the electricity industry itself; however, based on my experience, I would -- you know, my feeling is that those numbers are relatively low for the customer base that we do have and the type of essential service that we're in. 172 MR. ROGERS: Thank you. And of the 1,500 or so concerns raised by your 1.1 million customers a year, is the breakdown of those complaints or concerns in line with the breakdown you've just described, of the 40 letters that the Board has received? 173 MR. HORTON: Yes. It very much -- very much parallels. There are -- the majority are around billing, particularly in the last year, rates and rate increases and how rates are applied to the bills. The issues around late payment charges are relatively the same, and the breakdown, when we look at the few power outages or service quality issues, generally parallels the overall series of concerns that we receive. 174 MR. ROGERS: Thank you, Mr. Horton. 175 Now, just before you conclude and answer questions, can you tell us what initiatives the company has under way to address some of the trends that you've identified for us. 176 MR. HORTON: Earlier in the year we significantly revamped our bill format in order to make it more understandable, to try and explain things in more direct or specific language, and our tracking -- our customer satisfaction tracking to date has actually shown that there are improvements in understanding -- in customers understanding the bill. We've also started to see not a significantly significant trend, but a trend downwards in some of those inquiries from the September time frame. 177 We've implemented, specifically around market opening and rate increases that are currently in process, a more detailed customer communication strategy. Part of that includes increased focus group activity to try and go out to a representative - not "representative" in terms of sample size, just to clarify, but "representative" in terms of different types of rate classes, different types of customers - and tried to provide examples of how we are thinking of communicating with them, get their feedback and attempt to provide the most simple, straightforward communications that we possibly can. 178 So our communication strategy has certainly been expanded, and particularly in the last year, as a result of the fact that we do get a large balance of these types of concerns around billing and rates and other things that hopefully can be explained more proactively. 179 And in addition, later this month we are planning to file our conditions-of-service document with the Board and publish that to our customers in somewhat simplified form, but also publish it on the Internet so that all of the details around how we service their accounts, our policies and procedures, are available to all customers at all times. 180 MR. ROGERS: All right, thank you very much, Mr. Horton. He is now available to answer questions. 181 I'll just point out as well, I know Mr. Mondrow is here this morning, and I haven't had a chance to talk to him about this, but I think Mr. Mondrow may wish to ask some questions. But I notice that this is a settled issue, where the settlement agreement accepted by the Board says that "The parties have agreed that they do not seek to cross-examine on this issue and will address this matter only by way of final argument." So I think I just raise that for my friend. 182 MR. MONDROW: I gather that's a request for a brief explanation, and I'm happy to oblige, Mr. Chair, if it's appropriate, at this time. 183 I spoke with Mr. Rogers at the outset of the hearing. Subsequent to the ADR session, I had a chance, with the assistance of Board staff, to review the letters in the Board's file. As the Board will know, these letters are not on the public record in the sense they have not been circulated to the parties and have not been included in the pre-filed evidence. 184 Following that review, and just prior to the start of the hearing, I alerted Mr. Rogers, just orally, to my concern that there are a couple of letters that raise issues that ECAO is concerned about. And rather than putting them on the record and simply arguing them without giving the company a chance to address the letters and perhaps provide some context by way of clarification, I had hoped to put those couple of letters and the corresponding issues to Mr. Horton and allow him to explain to us the status of the issues and in the context he feels appropriate. 185 And as it has been the somewhat unusual practice in this proceeding, but given the somewhat unusual nature of it, really all I intend to do was not try to corner the witness, but simply put to him the concerns and ask him whether he would wish to clarify or provide the status of those in order to have a clarified record for the purposes of argument. That's what I would like to do. 186 I should also note that the two letters in particular that I am concerned with were sent to Mr. Rogers on Friday afternoon with a covering letter explaining, in particular, the passages that I wanted to ask about. I have copies here as well which I would, with the Board's permission to proceed, simply get an exhibit number for so that the panel and the other parties will have copies of those particular documents in front of them as I ask the witness to comment on them. 187 MR. ROGERS: Sir, I don't quarrel -- if the Board is inclined to grant Mr. Mondrow leave to ask questions, I'm content with that. I just want to remind parties that we have settled this issue. I don't want this to be expanded too much; it would be unfortunate, I think, if it was. On that understanding, I don't object to Mr. Mondrow asking some questions of clarification around these letters. 188 MR. VLAHOS: Okay. 189 Mr. Mondrow. 190 CROSS-EXAMINATION BY MR. MONDROW: 191 MR. MONDROW: I have a paper-clipped -- sorry, a stapled package. I've also given Mr. Rogers a few copies, one for the witness and one for himself, and I have a few extra copies here for the parties if they like. 192 If I can just briefly tell the Board what's in this package. It contains the two letters of concern that I found in review of the Board's file that I'd like to ask Mr. Horton if he has anything to do with that. 193 In respect to the second of such letters, and I'll respond to this in a bit more detail -- 194 MR. VLAHOS: I'm sorry, I may have to ask you to move one place. 195 MR. MONDROW: This is the troubled microphone? 196 MR. VLAHOS: I believe it is. Can you try the one to the left? 197 MR. MONDROW: Absolutely, sir. Just bear with me. Perhaps I'll try this one so that Mr. Horton can see me. Is that fine? 198 MR. VLAHOS: That's fine. 199 MR. MONDROW: Maybe if I can restart and just get an exhibit number for this package that the Board has before it, and then I can explain what's in it and Mr. Horton can address it as he feels appropriate. 200 MS. LEA: I.5.2. Package of letters of concern. 201 EXHIBIT NO. I.5.2: PACKAGE OF LETTERS OF CONCERN 202 MR. VLAHOS: Mr. Mondrow, also perhaps you can help the Board by indicating whether those issues that have been raised here in this document have been already addressed by the Board, perhaps on an interim basis. I do recall the name, and it was dealt with in some interim decision and order. Can you help us with that? 203 MR. MONDROW: Yes, I do intend to do that. What I intend to do is ask the company what the status of this issue is before I embark on some element of argument. 204 MR. VLAHOS: Okay, thank you for that. 205 MR. MONDROW: Mr. Horton, if I could just -- the package that your counsel got on Friday is somewhat different from the package here, and I just want to tell you what additional documents are in here. And I've numbered the pages in the top right corner, for ease of reference, in handwritten numbers with circles around them, and I'll use those numbers to walk you through this. 206 The first three pages are a copy of a letter from the Town of Deseronto which is in the Board's file. And then at pages 4 through 7 is a copy of another letter. The identity of the writer was redacted, but I believe from reading it, and you'll be able to help me with this, it's a letter from an electrical service contractor, and I believe that is Kirby Consulting, because that name wasn't removed from everywhere. 207 On page 8 there is a letter from the Board back to Mr. Kirby acknowledging receipt of the letter and saying that it's been forwarded to the director of licensing, and I'll ask about that in a minute. 208 At page 9 there's a letter from Shawn Conway, MPP, to Minister Wilson. This was also in the Board's file, and it raises in more general terms the concern I want to ask you about. And I'll take you to that and give you an opportunity to comment on that too if you wish. 209 And then at page 10 there appears to be another letter from the complainant, as it were, just referencing the letter from Shawn Conway that was forwarded with it. And then at pages 11 through 14, it's just an excerpt from the Board's Distribution System Code in respect of this topic of alternative bids for connection services, which is really the concern that I want to ask you about. 210 So I included that here so that you'll have all the materials that are relevant to my questions in front of you. I'm not going to take you through all of them in detail, but that's what's in the package if you want to refer back and forth. 211 MR. ROGERS: My concern is that I wasn't aware of these other documents until now. I haven't read them; I don't think Mr. Horton has looked at them. I'll ask for time for him to look at them. What was sent to me was the letter from Deseronto and the excerpt from the Kirby matter. That's what I thought my friend was going to address. 212 MR. MONDROW: Perhaps if I can go further. If Mr. Rogers would allow the witness to respond, and if there's a question that's objectionable, perhaps Mr. Rogers can advise me and I'll attempt -- 213 MR. ROGERS: Just that he hasn't had a chance to read the documents. 214 MR. MONDROW: I appreciate that. 215 MR. VLAHOS: Ms. Lea? 216 MS. LEA: All the documents, with the exception of the excerpt from the Distribution System Code, are included in the package of letters that Hydro One has had for some month and a half, two months now. 217 MR. ROGERS: Well, if that's the case, then I don't object. As long as Mr. Horton has had a chance to look at them, then I don't object. Have you, sir? 218 MR. HORTON: Yes, I'm fine with everything in the package. 219 MR. ROGERS: I'll withdraw that. 220 MR. MONDROW: I appreciate Mr. Rogers's concerns. These are all on the record. These are simply Distribution System Code excerpts. 221 If I can just spend a minute or two with you, Mr. Horton, on the Town of Deseronto letter. I note that this is a letter dated April 12, 2001, and in the opening paragraph the town recites the sale of the Deseronto PUC to Hydro One Networks as of March 22nd, 2001, and then it goes on to raise -- the town goes on to raise some concerns presumably on behalf of the people that were previously its PUC's ratepayers. 222 The concern I want to ask you about appears at page 2 of the letter, and small number 2 in the top right corner, under the second heading. This heading refers to, in this proceeding, Exhibit E, tab 6, schedule 4, which is the schedule of miscellaneous charges. And you might just want to open that up because there's actually a specific reference to some of those charges by number. 223 Before I -- Exhibit E, tab 6, schedule 4. 224 MR. HORTON: Yes, I have that in front of me. 225 MR. MONDROW: Thank you. 226 Now, if you can just help me to put this comment in context. Deseronto refers, in the first sentence under that heading, to items 1 to 11 on the exhibit that I just asked you to look at. Those are all services, as I understand it, that Hydro One Networks provides to its customers in respect of those customers' own facilities. These aren't rate-regulated services in that sense, these are services to customers in respect of their own facilities; is that right? 227 MR. HORTON: My understanding of these service charges, these are charges that apply to individual customer requests or individual customer situations that are not covered within the rate base. 228 MR. MONDROW: Okay. And Deseronto's concern, in the first sentence, is: "Currently residents in the town of Deseronto do not pay any charge for services shown as items 1 to 11." My hypothesis about this is the town is mistaken and it's simply a question of not having the need for these services, and perhaps that's why no one has been charged for them because the services haven't been rendered. It's never been an issue. Can you help me with that? Is that understanding correct? 229 MR. HORTON: Yes, we've, as you're likely aware, through 2001, gone through the process of harmonising those acquired utilities into our general policies and practices with a number of exceptions. My understanding of these miscellaneous charges in the town of Deseronto, prior to their PUC being acquired by Hydro One, is that those were not charged. Those would have presumably been included in their rate base that they charged to customers. 230 As a result of amalgamating the various utilities, we obviously then apply -- once we start billing the customers, apply our own policies and procedures to the acquired customers. So it is either a matter of the -- of those not being charged yet where there is significantly low connection work that happens during, you know, the late fall to the time frame that we're in now, and it really starts picking up through this time period and the summer. So I imagine that those number of charges you'll start to see now. Or it is a matter that it has been charged on a sporadic bill here or there in a situation and they're just not aware of it. 231 MR. MONDROW: I gather, though, that they will be -- the residents who request these connection services will be charged for them as any other ratepayers in the province or customers in the province on a going-forward basis. 232 MR. HORTON: Just as a point of clarification. Yes, any other -- they will be charged the same as any other Hydro One Networks customer, distribution customer. 233 MR. MONDROW: Okay. That was the concern with that letter, so thank you very much for that. 234 If I could take you to the next letter, which starts at page 4, in the top right corner of Exhibit I.5.2. 235 Now, by way of background for you, Mr. Horton, this letter flags two concerns that I'm going to ask you about, and whether you want to clarify the letter or clarify the concerns raised. But before we do that, in the first paragraph, the letter says: "We are writing at this time to file a formal complaint against Hydro One Networks Inc., pursuant to section 75 of the OEB Act (order for securing compliance)." Can you tell me what the status of this letter is? Is it, in fact, in a proceeding elsewhere and being dealt with? 236 MR. HORTON: It's not in a proceeding. It is being dealt with -- I mentioned the customer inquiry process that we have where we have a specific group that attempts to resolve issues, and it's being handled through that group. The status is such that on February 26th, I believe it was, we issued a subsequent agreement to Mr. Kirby that I think is our -- represents our first attempt to try and resolve a number of his issues. I shouldn't say our first attempt. Our first final attempt. 237 MR. MONDROW: Okay, thank you. Just to clarify, I'm not here as counsel for Mr. Kirby. He may or may not be a member of our association. But I was really more concerned with two of the general concerns, and let me just take you to those, then, and ask whether you can help me with those. 238 If you start on the second page of the letter, which is page 5 of the package, point number 2, Mr. Kirby lists five basic concerns, and the second of them, point number 2, he lists as follows: "We have not been given any clear description of the work for which we may obtain an alternative bid as required under paragraph 3.3.2 of the Code," and here he refers to the Distribution System Code. 239 If I could ask you to turn forward in the package to the excerpts from the Code that I believe are relevant, and that would be at page 12 of the package. I'm interested here in your process in respect of alternative bids. In the context of this person's complaint, and you'll see when I take you back to the letter in a minute, he says really that there was utter confusion on his part, and I want to find out how you carry this out for customers. 240 Section 3.3.3 of the Distribution System Code, "Alternative Bids," says: "A distributor shall inform the customer requesting a connection that the customer has the choice to obtain alternative bids for the connection and expansion facilities from qualified contractors if the offer meets the following conditions:" and then there are two conditions: "Capital contribution required and construction work not involving the existing circuits." 241 So my question is, Mr. Horton, do you know how, in respect of process, Hydro One Networks informs the customer? Is there something that's given to them in writing? 242 MR. HORTON: There is generally a connection agreement document that's provided to the customer, and that document should reference items that are contestable and items that are not. 243 MR. MONDROW: Okay. And then section 3.3.2 under this section of the Code says: "If a customer is interested in obtaining an alternative bid, the distributor shall, in a non-discriminatory, in a fair and reasonable manner, inform the customer of the work that the customer may obtain through an alternative bid." Just stopping there, I gather this is done in the context of this contract that's forwarded? 244 MR. HORTON: Again, that's what should be in the contract, yes. 245 MR. MONDROW: Okay. The second point: "Inform the customer that the customer may choose among the contractors that have been prequalified by the distributor to perform the work eligible for an alternative bid." And then in section 3.3.3: "The distributors are required to develop criteria for this prequalification and a list of the contractors." 246 Is there -- does Hydro One Networks have a document that provides the criteria, and does it have a list of prequalified contractors? 247 MR. HORTON: I'm actually not aware of whether or not we have a list of prequalified contractors. 248 MR. VLAHOS: We can't hear you. 249 MR. ROGERS: Keep your voice up, Mr. Horton. I can't hear you and I don't think anyone else can. What was the answer? I don't think anybody heard you. 250 MR. HORTON: I'm not aware of whether or not we keep an active list of qualified contractors at this time. 251 MR. MONDROW: You're aware of the particular circumstances of Mr. Kirby's concerns. Has he been provided with the information that the Distribution System Code requires you to provide in respect of prequalified contractors? 252 MR. HORTON: I believe that he has at this stage. 253 MR. MONDROW: If we could go back to Mr. Kirby's letter, then, Mr. Horton. 254 The second concern that he raises, if you look at page 5 of the package, which is page 2 of the letter - I'm sorry, the fifth concern but the second one I want to ask you about - he says: "A fifth concern has arisen as a result of all of our discussions and correspondence over the past month. We have reason to suspect that the contract we are being asked to sign is not with the regulated company Hydro One Networks Inc. but rather with an affiliated, unregulated construction company." And if you turn over to page 6 of the package, page 3 of the letter, at the bottom of that page, the last sentence, Mr. Kirby writes: "We have no idea what is going on here, but we are definitely not going to pay several thousands of dollars to a company that only identifies itself in a contract with the 'Hydro One logo' while receiving assurances from the licensed corporation, Hydro One Networks Inc., that everything will be okay." 255 Now, allowing for some hyperbole on Mr. Kirby's part, I want to ask you about this other company. I gather that Hydro One Networks has an affiliate to deal with the contracts that provides inter alia these types of connection services. 256 MR. HORTON: Networks uses Hydro One Networks services to perform the work that Mr. Kirby is referring to. However, Networks Services is part of the regulated utility so I wouldn't necessarily classify it as an affiliate. 257 MR. MONDROW: So it's not a separate company? 258 MR. HORTON: It's a separate subsidiary, but all of the -- all of the costs flow to the regulated utility. 259 MR. MONDROW: And did I hear you correctly that Hydro One Networks services -- sorry, Hydro One Networks Inc., the regulated utility, uses Hydro One Networks services, the subsidiary, in providing these services, these miscellaneous services, to customers, of the distributor? Is that what you said? 260 MR. HORTON: That's correct. 261 MR. MONDROW: And does Hydro One Networks services also provide its services directly to customers in the marketplace, other than through the distribution utility? 262 MR. HORTON: I'm not aware of whether they do or do not. 263 MR. VLAHOS: Mr. Horton, I can't hear you at all. 264 MR. HORTON: Sorry. I'm not aware of whether they do or do not. 265 MR. VLAHOS: Pull the microphone down a bit there. Okay. 266 MR. MONDROW: Was Hydro One Networks services one of the prequalified contractors that Mr. Kirby was alerted to in respect of obtaining these services elsewhere? Do you know that? 267 MR. HORTON: To clarify the question, are you asking whether Networks services provided a quote outside of Networks' connection quote? 268 MR. MONDROW: I guess to simplify, I'm asking if Networks services is out in the marketplace competing with other contractors. 269 MR. ROGERS: Excuse me, Mr. Vlahos, I wonder if I could ask Mr. Hubert to join the panel. I think he might be able to give a little better information in this area. 270 MR. MONDROW: That would be helpful. 271 MR. ROGERS: He's here and I think he can answer the questions probably with a little more authority than Mr. Horton. 272 MR. VLAHOS: Certainly. 273 A.HUBERT; Previously Sworn 274 MR. ROGERS: Mr. Hubert, you're involved, as you described to us earlier, in the operations side of the business. 275 MR. HUBERT: Yes, I am. 276 MR. ROGERS: All right. 277 MR. MONDROW: Would you like me to repose the question? 278 MR. ROGERS: Yes, I'm not certain where you want to start, but -- 279 MR. MONDROW: Sure. 280 Mr. Hubert, perhaps we can start, then, back with the Distribution System Code and the requirement that the distributor criteria for prequalified contractors to provide these contestable services, and provide customers with a list of these prequalified contractors. Do you know if, A, there's a criteria document and, B, if there's a list? 281 MR. HUBERT: Generally, in this area we are allowing people to -- contractors to work on some of these -- this type of work, yes. I do not think we have completed all our work for prequalification and issuing a list as part of our implementation plan. We have been concentrating over this period on the discounted cash flow model for capital contributions and for immediate requirements of the Code. As a last piece, the qualifying of contractors is still in the works. 282 MR. MONDROW: Do you have any idea when that will be available? 283 MR. HUBERT: I cannot tell you right now. Imminently. 284 MR. MONDROW: Before the next case? 285 MR. HUBERT: I would certainly expect so, yes. 286 MR. MONDROW: And when it is available -- well, that's fine, thank you. 287 And can you tell me, then -- can you answer questions about Hydro One Networks services. Is it in business of providing these electrical and maintenance and construction services in the marketplace? 288 MR. HUBERT: To put your question into context, I think I'd have to explain the basic flow. 289 A connection, for example, when a customer connects to our system, under the requirements of the Distribution System Code, that customer is entitled to what is called a basic connection, and the cost of that basic connection is covered through rates. Typically, for a residential customer, that includes 30 meters of secondary transform area and the layout and all the associated costs that are covered through rates. 290 In the case of a customer where there is an additional expansion required, additional facilities required, capital contribution, that work is contestable and may be provided by alternative contractors. As recoverable work, external recoverable work, our own utility does offer to provide those services, but that is at the option of the customer. 291 MR. MONDROW: And the contracted party for provision of those services would be Hydro One Networks services? 292 MR. HUBERT: Hydro One Networks Services is part of the regulated utility and that would be the group that would do this work, if the customer chooses to do it. 293 MR. MONDROW: It's a company. It's a company that would -- 294 MR. HUBERT: It's a subsidiary, yes. It's a company. 295 MR. MONDROW: Okay. 296 And there seemed, in my reading of Mr. Kirby's letter, to be some confusion about who he was dealing with. What steps are taken to clarify that? 297 MR. HUBERT: As Mr. Horton mentioned, we are now issuing the conditions-of-service document that is required by all distributors, and that explicitly states what is contestable work, what is not contestable work. And when a customer requires work to be done, he or she has the option of choosing the contestable work supplier. 298 MR. MONDROW: Does Hydro One Networks services do the uncontestable work as well? 299 MR. HUBERT: The uncontestable work, yes, that is part of the regulated -- is part of the regulated utility and as such it does not do the uncontestable work. 300 MR. MONDROW: And so can I repose my question, which is what steps are taken to identify for the customer who they're dealing with, that is, Hydro One Networks services or Hydro One Networks Inc., the distributor? 301 MR. HUBERT: From the customer's perspective, he or she is dealing with the regulated utility, and through the connection agreement, that customer has an option of choosing to have certain services provided by the regulated utility or by competitive contractors. So the customer knows that he or she is dealing with the regulated utility. 302 MR. MONDROW: Mr. Kirby recites in his letter two or three versions of a contract with various prices. Would this be a contract issued by Hydro One Networks services? 303 MR. HORTON: I think I can clarify some of the questions. That would be a contract issued by Hydro One Networks. 304 MR. MONDROW: Which one? 305 MR. HORTON: Hydro One Networks. 306 MR. MONDROW: The distributor, Inc.? 307 MR. HORTON: Yes. All of the contracts with Mr. Kirby are Hydro One Networks' contracts. 308 The core of the issue that we're dealing with with Mr. Kirby is the -- is the compliance of our connection policy with the letter of what's in the distribution code. We have -- I think Mr. Hubert alluded to the fact that we are in the process of imminently rolling out and implementing that to its completion. The contracts that Mr. Kirby received, particularly in August when this process and some of the concerns really came to a head, would have been representative of the old contracts that we would use. 309 As a result of Mr. Kirby's concern, as well as a similar one that we had in the fall around the discounted cash flow model and the contracts specifically detailing, you know, contestable and uncontestable work and meeting the distribution code, we used his situation as well as this other one as a pilot for the new connection process that we are in the process of implementing in order to be fully within the letter of the distribution code; so that the agreement that he received on February 26th of 2002 was a cost recovery, a connection cost-recovery agreement, which is the standard agreement that is, again, to the letter of the distribution code. The one that he received before simply was not. 310 In that agreement, it goes into great detail about the policies, the procedures. It also breaks down the contestable components, the non-contestable. It also speaks to some of his concerns about the breakdown of that work and cost. That is -- that document, that agreement, that policy, as Mr. Hubert indicated, is something that we're imminently about to roll out. 311 MS. LEA: About to rule out or roll out? 312 MR. HORTON: Roll out. 313 MS. LEA: Thank you. 314 MR. MONDROW: Pending, by the way, that roll-out on policies and procedures, Mr. Hubert, how do you deal with contractors who come forward to do this work on behalf of the customers? Do you have to prequalify them? Is there a process of some sort? 315 MR. HUBERT: I cannot speak to the detail of how the prequalification would occur. But we would be absolutely compliant with the Distribution System Code in this area. 316 MR. MONDROW: There would be some prequalification to the utility's satisfaction before the contractor would be allowed to do the work? 317 MR. HUBERT: That is correct. 318 MR. MONDROW: Let me just ask you one concluding question. 319 If you can turn to page 9 of Exhibit I.5.2. This is the letter from Shawn Conway to Minister Wilson. Mr. Conway synopsises, in the second paragraph, the basic points of argument that ECAO would be inclined to pursue, subject to your comments here today. Let me put it to you and ask you whether you want to comment on it. 320 "Currently in Ontario, independent mine contractors are telling me that they are losing many contract bids because Hydro One Networks Inc. is actively underbidding them in the part of the market that is open to competition." 321 I'll just leave that statement to you to comment on, if you wish. I would be arguing that if you're doing that, that's not fair to some of them. If you want to defend yourself, now is the time to do that. 322 MR. HUBERT: I'm not sure what is meant by "actively underbidding them." But our practice, when we cost our work as a regulating facility, is not to cross-subsidies, and to ensure that the cost of the work is fully allocated and charged to the job. So as such I do not see what -- I'm having trouble understanding the "actively underbidding" portion of the work here -- the wording, excuse me. 323 MR. MONDROW: Are you aware of that concern in the marketplace that Mr. Conway is relating? 324 MR. HUBERT: That concern has come to my attention through our discussions in the issues conference, for example. Yes, it has. 325 MR. MONDROW: And the issues in respect of corporate structure and cost allocation for this work as well as other work, we've agreed, will be dealt with in the next case and hopefully all the details resolved at that point. 326 MR. HUBERT: That's correct. As part of the settlement agreement, I think this issue was settled with your party based on the agreement that we would provide all of that information as part of the next proceeding. 327 MR. MONDROW: Thank you very much. 328 MR. HUBERT: At that time, I can give you the assurance that I can right now. 329 MR. MONDROW: Thank you, gentlemen. 330 Thank you, Mr. Rogers, for your indulgence. 331 MR. VLAHOS: Thank you, Mr. Mondrow. 332 Ms. Lea. 333 CROSS-EXAMINATION BY MS. LEA: 334 MS. LEA: Thank you. 335 Gentlemen, I was not planning to ask anything about the letter regarding Mr. Kirby, but there was one point that I did not understand that I'm now confused about. 336 Mr. Horton, I think, you -- I understand now that the services company is not an affiliate, it's a subsidiary of the regulated utility. 337 MR. HUBERT: The -- Networks services is a separate subsidiary of Hydro One. So we have the holding company, which is Hydro One Inc.. Hydro One Inc. has both regulated and unregulated businesses. Hydro One Networks and Hydro One Networks services both are sister companies, if you wish, and they are both part of the regulated utility. All the costs and revenues are treated within the confines of the regulated utility, and any differentiation within those -- that group of two companies is done merely for breakdown between transmission and distribution, which are, of course, regulated separately. So I hope that helps. 338 MS. LEA: I think it does. The phrase which I failed to understand, I think Mr. Horton said, was all the costs flow to the regulated utility. And, Mr. Hubert, you've given some explanation since that time of the costs. Is there anything further that I need to know to understand where the costs in these contracts come from, I guess. 339 MR. HUBERT: The costs, all the costs in these contracts are the costs of providing the work as a regulated utility, and the only area that may be open to discussion is the cost of contestable work which forms a portion of our external or recoverable revenues, but that is all deducted from our rate revenues. So if we can refer to some of the filings we've had earlier, I'd have to look at them, but the -- 340 MS. LEA: I just need a general understanding. 341 MR. HUBERT: Similar to miscellaneous charges. When we have revenues that are derived from outside the rate revenue, those are deducted from the rates of the revenue requirement. 342 MS. LEA: And it's services that sets the costs, then, but it's part of the regulated utility. 343 MR. HUBERT: It is -- the costs are set entirely within the regulated utility as one company with one policy. 344 MS. LEA: Thank you, that's very helpful. Thank you. 345 So I don't know whether Mr. Hubert needs to remain for my other questions. Probably not, but wherever he likes to sit. 346 MR. ROGERS: I think I'll ask him to stay, Mr. Chairman, because he does -- Mr. Hubert, as you can see, has some knowledge about the operations of the enterprise that Mr. Horton isn't privy to. It may be helpful 347 MR. VLAHOS: We may have some questions, too. 348 MS. LEA: Good, thank you. 349 Mr. Horton and Mr. Hubert, then, on Friday I provided the applicant with a list of the letters that I was going to ask you individual questions about. I gather that you have that list and had an opportunity to look at those letters? 350 MR. HORTON: Yes. 351 MS. LEA: And just for the record, the letters of concern have been available as part of the public record, although not copied to parties as they never have been in the past, for some months now. 352 Now, the majority of the letters on file, Mr. Horton, as you explained, deal with individual difficulties with billing and metering and so on and so forth. And thank you for your explanation with respect to the communications process. I did not understand what you meant by the term "escalated complaint." 353 MR. HORTON: An escalated complaint, the term "escalation" simply refers to a complaint, a concern, or inquiry that is not resolved on the front line of the customer service organisation itself. For the distribution customers, this would be within the call centre. 354 There is a process where a customer contacts the call centre. There's a process that they will run through where a call centre agent and then a supervisor attempts to resolve the issue for them. If that can't be resolved, that will then be an escalated complaint that will go into the customer inquiry group. The customer inquiry group also handles any of the written correspondence that we receive from customers, because it simply considers that if the customer takes the time to sit down and write a letter of comment, that that qualifies it as an escalated complaint. 355 MS. LEA: Okay, thank you. 356 So the number of 1,500 is related to the escalated complaints, not, certainly, the number of calls you get in your call centre. 357 MR. HORTON: No. We receive about 1.7 million calls -- 358 MS. LEA: I'm sorry? 359 MR. HORTON: We receive 1.7 million calls per year, on a variety of issues and comments. 360 MS. LEA: Thank you. 361 You've described your customer dispute resolution process, to an extent. What happens if the next level up from the call centre, the customer inquiry group, cannot resolve a complaint with a customer? 362 MR. HORTON: Then the escalation process of that complaint really flows through to myself. There is a manager of that group who reports to me, and typically what will happen is if there is an issue that can't be resolved, it will go to that manager, they will get involved, and ultimately if they can't resolve it, I will enter. I imagine it would go beyond me if I couldn't resolve it. 363 MS. LEA: Thank you. 364 I would like to then deal with three specific issues that were raised by individuals in the package of letters that have come to the Board. I have to apologise to my friend. The Board panel has copies and the applicant has copies of these letters. As you know, we don't have the administrative services at present at the Board, and I succeeded in photocopying one of the letters. When I had fouled up the second photocopy machine through my own actions, I gave up and consequently I only have one letter with copies for other parties. I think my cross-examination will make clear what the issues are. If anybody wants to look at the others, they're here, I have them, come and have a look. If anybody wants the copies of the first one, here it is. 365 So I'd like to begin, then, with a letter which was from what we've been calling the staff file, that particular package, and it's dated December 6th, 2001. This letter describes the situation where a tenant called Hydro One and stated that he was moving out, and the account was switched to the landlord without any notice to the landlord and a dispute arose out of that situation. 366 Now, I understand that this is standard policy for Hydro One and also for other utilities. The clarification I wanted was as follows: Under what circumstances will Hydro One switch a service to one person on the basis of a phone call from another person? 367 MR. HORTON: My understanding is that this situation, the landlord/tenant situation, is the only instance where we would make a switch of that type. In the case of tenant-occupied properties, if we're advised by the tenant that they are no longer going to be in the residence and responsible for usage, then we typically finalise their account, send them a final bill because they are closing their account with us, and then put the account in the name of the landlord, the actual owner of the connection, so to speak. And then we will send out a standard form letter to that landlord letting them know that their tenant has cancelled their account and we have shifted responsibility back to them. 368 MS. LEA: I understood from this -- from this letter that no standard form letter went to this landlord and I had presumed, therefore, that you didn't send one in general. You're telling me now that your practice is to send a standard form letter to the landlord? 369 MR. HORTON: Yes. 370 MS. LEA: Within what time frame? 371 MR. HORTON: The standard letter is issued immediately. What happens is this will occur, again, within the call centre. The process that the call centre agent follows is to change the account back to the landlord, to put a note in our customer information system as to who called, and to make a notification that they are issuing a standard letter. 372 The process to then get that letter drafted, it's just -- it's, again, a template where you just put the customer's address in. I can't say that I exactly know the process, but my guess would be it would be sent out within 24 to 48 hours, just to work through the call centre. 373 MS. LEA: Thank you very much. 374 In the letter that appears at the back of the package here, dated August 23rd, to this particular complainant, there is no mention -- as far as I can see, I'm looking at it right now, there's no mention of a standard letter. You may not have any knowledge of this particular matter. I had received the impression from this package that no letter had been sent. Can you assist me either with whether this was an exception to the rule, or whether there is anything else we should know. I take it when you tell me you send them. I didn't get the impression from the package. 375 MR. HORTON: Definitely there is -- the perception of this particular customer is that they didn't receive a letter. Again, our records show that the agent is required to go in and put a note in the system that says that they've sent this letter, and our records indicate that they did send the letter. 376 MS. LEA: So some error may have occurred on either your part or the part of the customer. 377 MR. HORTON: Yes. But this particular complaint is an extremely rare one. I've never seen anything like this. 378 MS. LEA: Okay, thank you very much. 379 The second issue deals with two letters of concern from -- the names on them are Axmith, A-x-m-i-t-h, and Wylie, W-y-l-i-e, from the letters-of-concern package. 380 Now, these customers are complaining about the criteria classification of customers at year-round residential or seasonal. I understand from the evidence that year-round-residential customers may have a lower service charge than the seasonal customers as rate protection applies to year-round customers. 381 Now, in your response to these two customers, you indicate that the criteria for distinguishing these two classes are approved by the Board as part of the rate schedule; is that correct? 382 MR. HORTON: Could you give me the reference to a specific letter where you see that? 383 MS. LEA: Yes, I can. One moment. If you can have a look at the package which was to Marian and Gary Axmith, in that package, the third document from the back is a letter from Hydro One -- actually, go to the second letter in the package, a letter April 10 -- no, pardon me, it is the Hydro One letter, okay. So it's the Hydro One letter with no date on it. It's the third document from the back. 384 MR. HORTON: Okay, I have that, thank you. 385 MS. LEA: All right. It indicates at the end of the first paragraph, the last sentence is: "The criteria for each of the RP," and I presume that means rate protection, "subsidised rates are set out in the Hydro One's rate order approved by the Ontario Energy Board." And I think -- 386 MR. VLAHOS: Ms. Lea, you may also want to look at the second page of that letter. 387 MS. LEA: Yes. 388 MR. VLAHOS: The penultimate paragraph, beginning "It is notable." 389 MS. LEA: I believe that it states in the correspondence - thank you, Mr. Vlahos - that you can't change these criteria because they are part of a rate schedule, and that the criteria for rate protection is something that has to be approved by the Board. Do I understand that to be your position? 390 Yes, here we go. Bottom paragraph of the first page, last -- top of that paragraph, the bottom paragraph, first page: "In our conversation, you raised some valid concerns, and to address these issues, we are in the process of amending our current RP form to the extent that we can as we cannot deviate from the criteria established by the OEB." 391 MR. HORTON: I believe each of these references, and I'd certainly admit that in terms of the language used, this could have been considerably more clear, I believe what this is referring to when I referred to this was this customer's request or comments around qualifying for rural rate protection. And I believe what the letter was trying to convey was that, at present, we were -- we are not in a position where we would be adding customers to rural rate protection. I believe that is supposed to be phased out within, I think it's three years at this time. 392 MS. LEA: Okay. I think it might assist you to look at the interrogatory, Exhibit G, tab 1, number 45, which is Board staff interrogatory number 45. I don't know whether you want to turn it up or not. But I can tell you, in the interrogatory, the company indicates that it will be reviewing the criteria in its next rate submission. I was wondering -- yes, the question read: "Regarding the criteria outlined on this page for customer classification as residential year-round, please advise as to whether or not, in Hydro One's view, there is any need for modifications to these criteria." I'm reading from the interrogatory Exhibit G, tab 1, schedule 45. 393 The answer indicates, in the last sentence of the second paragraph of that interrogatory, "In this respect, Networks will include a review of the criteria for all customers' classifications when it next makes a cost-of-service submission to the OEB." 394 Do you have any knowledge with respect to that particular intention on the part of the company, or Mr. Hubert, if anyone has any knowledge. 395 MR. HORTON: I don't think at this stage either one of us are in a position to comment on what that might look like or what the position is. 396 MS. LEA: Not what it looks like. Just to confirm that the intent is as stated in this interrogatory. 397 MR. ROGERS: Yes, it was -- Dr. Poray is the responding witness, and I can confirm that that still is the intent. 398 MS. LEA: Okay, thank you. All right. 399 Mr. Horton, I don't envy you at all, having your letters reviewed on public record. I'd hate to have any letter brought forward that I wrote and asked, "What did you mean by this?" 400 Let's turn to the next issue of an individual, and that is the letter dated June 19, 2000, from a Mr. -- I think from a Mr. Lorimer. 401 Now, this is a residential customer and this customer is one of the group of customers who were persuaded by a campaign undertaken by the old Ontario Hydro to "go electric." I don't know whether you have been in the company long enough to remember it. I was a mere child at the time. 402 My question is: Should these customers, these residential customers who made a choice in terms of their physical plan for their houses or their businesses, based on Ontario Hydro's persuasion, should they be given a break in their rates? I was wondering whether you had a similar moral obligation to these customers as you indicated you have for some time-of-use customers who made physical plant decisions based on persuasion from the old utility. 403 MR. HORTON: I'm glad that you prefaced the comment with the age reference, because in fact these incentives were provided to the customers starting in approximately 1960, which was in fact eight years before I was born, just for the public record. And these were phased out in the early 1980s. 404 MS. LEA: In the early 1980s. That's why I remember them, then. 405 MR. HORTON: So they were actually -- they were phased out in the 1980s. These were electric houses. I would say, in temporal terms, there is certainly a difference between these and the time-of-use customers because of the fact that we are talking about incentives that were provided or suggested by the former Ontario Hydro in 1960. 406 MS. LEA: 1960 through to the early '80s, sir. 407 MR. HORTON: Correct. 408 In addition, if these were -- the time-of-use rate mitigation plan is attempted to be a two-year transition plan to phase customers out. And if, in the early '20s [sic] these rates ceased at that point, I assume these customers have had a 20-year transitional phase at this stage. 409 MS. LEA: All right. So I understand that you're saying that since these rates were phased -- since this promotional campaign was phased out no later than the early 1980s, you have no plans at this time to alter all electrical rates. 410 MR. HORTON: No. 411 MS. LEA: Thank you. 412 The final category of letters I wanted to deal with deals with complaints to outages and response times to emergencies. And I wonder if we can begin by looking at one letter from the Tecumseh -- from the fire chief of Tecumseh Fire and Rescue which was contained in what was labeled public file C1-2. In this letter, the fire chief for Tecumseh Fire and Rescue indicates that there was a considerable delay in Hydro One crews reaching the scene of a fire. Can you provide any additional information about this incident? 413 MR. HORTON: Yes. When this incident came to our attention through our previously mentioned customer inquiry process, it obviously caused considerable concern for us so we immediately undertook to investigate what had happened. 414 I might, just by way of clarification, mention that we receive approximately 1,500 emergency calls per year from fire departments and services, and this, to my knowledge, over the course of the last ten months or so, is the only one that has come to my attention of this nature and this type of a delay. So it certainly was an anomaly. 415 There were a number of incidents that compounded a prompt -- a typically prompt response to this emergency call. The first delay was that the fire department had called a general service number for the call centre. All fire departments are provided with a specific 800 number to call into, and what that does is that bumps them to the front of our cue so those calls are answered immediately. In this case, the dispatcher called the general service cue so, A, they would have received a general service agent, and also would have potentially had a delay on the phone. 416 I don't mention this in trying to say that the fire department did anything wrong. It just added, a small portion, to the delay. 417 In that particular area, at the time in question, we had a crew who was dispatched to respond to the call and their -- their truck broke down. So there is a process in place to then call in a secondary crew and our operating center followed that process and did that. 418 The second -- so there would have been a delay period as a result of that, but certainly not the ten-hour delay or so that occurred. 419 As that secondary crew who was called from another emergency call proceeded to the Tecumseh call, the dispatcher at Tecumseh indicated to our operating centre that the call was no longer necessary, that our crews did not have to show up. So they were called off of that dispatch and then a number of hours later we received another call from the fire department asking where we were. So there was some obvious communication issues. 420 We did have a follow-up meeting with the fire chief and I believe some of the council members in Tecumseh to walk through the issue, and there were a number of action items that came out of that to ensure that the issue doesn't arise again. 421 MS. LEA: Do you have any data on Hydro One's response -- timed response to fire scenes and similar types of emergencies compared to other utilities? 422 MR. HORTON: Compared to other utilities, I don't have specific information. I do know that our response time is, on average, between 30 minutes and 90 minutes, and that 91 per cent of the time that is between 30 minutes and 60 minutes. So 91 per cent of all of those 1,500 calls, we respond within 30 minutes to an hour. 423 MS. LEA: Thank you. 424 I had a similar question about the letter that was written by a Mr. Brown. This is in the letters of concern file. And this, I think, was written by Mr. Brown and also Local Union 636, where they indicated in their letter that it is their belief that Hydro One is slower to respond to emergency incidents than the local utility. Can you assist me any further in terms of comparability of Hydro One's performance with that of other utilities? And I recognise there's a problem with similarity. 425 MR. HORTON: I don't have any specific statistics around other utilities' performance in terms of responding to emergencies. I know that we have our standards and obligations and that we do meet those consistently. 426 MS. LEA: Can I ask you, then -- 427 MR. HORTON: No, sorry. 428 MS. LEA: Go ahead. 429 MR. HORTON: When I reviewed that particular letter, there are a couple of things that come into play. One is that I believe this was the union of one of the acquired utilities -- 430 MS. LEA: Yes, I understood that. I wasn't so much interested in anything to do with that individual letter so much as to understand that, when the Board is attempting to set proper service quality standards for Hydro One, how it is to go about that without any comparative data. So I'm asking you whether -- can you think of a way that Hydro One could acquire data that compares its performance to that of other utilities that are similar, and that may impart the challenge and assist the Board in understanding what a reasonable level is. 431 MR. HUBERT: If I may help here for a moment. 432 MS. LEA: Yes. 433 MR. HUBERT: I think Ms. Lea hit the nail on the head with the comparability issue, in light of our wide geographical expanse. And with 115,000 kilometres of line, it is difficult to find utilities in Ontario to compare ourselves to. 434 But in terms of setting response times, it is Exhibit F, tab 4, schedule 1, under PBR, that states the service quality indicators that we abide by as part of the distribution rates handbook. And one of the customer service indicators is one we spoke about earlier in the case of the fire department, which is the emergency response time where we are obliged, as a rural utility, to be on the scene within 120 minutes, more than 80 per cent of the time. And Mr. Horton, I think, already explained that we exceed that. 435 We have taken this a step further in terms of dealing with non-emergency response as well to trouble calls, and our practice is to be on the scene within -- to have our Networks services response staff on the scene 110 minutes or less after they receive the request, also 80 per cent of the time. 436 So I guess if I may help, the standard we've set ourselves is about the same as it is for an emergency response. 437 MS. LEA: Okay. So if you wanted to provide data that would compare those targets with the targets of similar utilities, you would probably have to go outside the province to get that data and find a utility with a similarly dispersed customer base and length of line? 438 MR. HUBERT: We may have to do that, yes. 439 MS. LEA: All right, thank you. 440 The next letter that I wanted to deal with quickly is the one filed by Placer Dome. At page 2 of their letter, they indicate that there's been a large increase in the frequency in length of outages. Do you have any data to offer to us to indicate whether or not their experience is typical? 441 MR. HORTON: We do. Their experience is atypical. They refer to two of their facilities, one being a 44 kV feeder at their Campbell mine and the other at their Mussel White mine. This particular customer and these particular services, we would also tend to classify as quite unique. 442 When Placer Dome originally, for instance, applied to put their Mussel White connection in, we actually issued a letter to the customer because of the fact that this is a line in remote northern Ontario that is over 400 kilometres of single line which suggests, obviously, that there is not any redundancy on that line. And we actually issued them a letter indicating that they should anticipate a larger number of outages as a result of the unique geographical region that we were putting this line in. 443 So their experience certainly has been -- has not been typical of what you would see in a more populated area of the province. 444 MS. LEA: They seem to be complaining about an increased number, an increased duration of outages. Do you have any information as to whether or not that's an accurate observation, and the reason for it? 445 MR. HORTON: In terms of the -- in terms of the specific reasons as to why, we've done a considerable amount of work with the customer to try and examine why they might be having an increase, or experiencing an increase -- 446 MS. LEA: So you're working with the customer in this regard? 447 MR. HORTON: Yes. 448 MS. LEA: Okay, thank you. 449 The last letter I wanted to look at was the package filed by PenWest Utilities. In paragraph 3 of the covering letter, they make certain suggestions as to tracking and targets that the utility could set, and I think that Mr. Hubert and yourself, Mr. Horton, have assisted me with respect to that. They are suggesting that tracking should include time for actual repairs and reenergisation and total outage time, as well as the targets that you have already talked about, which is arrival time. 450 Can you make any comment as to whether that type of tracking, that is, time for repairs, reenergisation, and total outage time, is something that you feel is appropriate to track? 451 MR. HUBERT: First of all, I may say, we do track information regarding all outages. 452 MS. LEA: You do track. 453 MR. HUBERT: Not only the time of the trouble call but also the arrival on scene, and also the time of restoration. And that is the basis for our derivation of these SAIDI, SAIFI, and CAIDI certificates which we do -- 454 MS. LEA: You're going to have to spell those for the court reporter. 455 MR. HUBERT: I'll spell those. My apologies to the court reporter. We, as part of our service quality indicators, report SAIDI, S-A-I-D-I, SAIFI, S-A-I-F-I, and CAIDI, C-A-I-D-I, which are three reliability measures required by the distribution rates handbook. And in order to report those, we need to have the granule detail associated with each outage so we do track those. 456 MS. LEA: Okay, thank you. 457 And in the package there's a newspaper editorial of July 2001 that indicates, at least in the perception of that writer and the customers there, that these problems that PenWest describes are still continuing. Can you tell me what the present status is of your discussions with this particular customer? Are you attempting to resolve these issues with them? 458 MR. HORTON: Yes. We have -- we absolutely, are working with them to resolve them. In the course of last year, we replaced 38 poles on one of the circuits that had the most serious problems in terms of number of outages. 459 In addition, we have worked with PenWest, because of the performance on some of these feeders, to allow them, for an interim period, to phone outages directly into our distribution operating centre. This helps with faster response in getting information back and forth. 460 One of their big areas of concern, or significant areas of concern, was also their own labour force being able to respond to certain types of issues as opposed to waiting for a Hydro One crew to arrive, and we have made an agreement with them that indicates, in an instant where there is an outage that qualifies as potentially publicly hazardous, that their line crews can go in, as long as they are qualified, and work on our assets in order to remove the public hazard. And that process has been -- of trying to resolve these issues has been amenable to both parties. 461 MS. LEA: Thank you very much. Thank you, gentlemen, for your answers. 462 Thank you, Mr. Chair, those are my questions. 463 MR. VLAHOS: Thank you, Ms. Lea. 464 Mr. McGee. 465 MR. MCGEE: Yes. We at the ECAO agreed to handle this issue, but I would ask a issue of clarification, I think to Ms. Lea or Mr. Rogers, as to exactly what the scope of this issue 6 is. 466 In the issues conference, I think it had been decided that we'd talk about the service quality, meaning power outages and response time to outages, and that it would be confined to the letters in the Board file at that time. It's quite evident that there's a broad other range of issues that's been addressed here, both by ECAO and by the Board. Are we permitted to address that complete breadth of issues in the final argument, is the question I have, I think, for Ms. Lea or Mr. Rogers. 467 MR. ROGERS: Well, as you know, sir, it's not my decision. But I can tell you the intent of -- 468 MR. VLAHOS: We're not there either so ... 469 MR. ROGERS: -- the settlement agreement is that -- going back to the issues list. This was debated on issues day, and I think it was my understanding that the Board's issue list recited number 6, service quality, and then the Board very clearly set out, "restricted to letters of comment received by the Board as outlined in Decision and Procedural Order No. 6." 470 So my understanding is that the Board, quite properly, in my submission, intended to restrict the ambit of these questions to the letters of concern that were raised, and that's -- Mr. Mondrow was able to seize upon one of the letters of concern to address a specific issue, but it did arise out of a letter and that's why I didn't object. That's the ambit, as I see it. 471 MR. VLAHOS: If I could just ask you a question, Mr. Rogers. The line of questioning by Mr. Mondrow, perhaps mistakenly so, but I thought that the quality-of-service issue dealt with customer service issues. I could be wrong on this. Mr. Mondrow approached this from a competitor's point of view. So is there an issue there? Now, Mr. Mondrow is not -- he is here, I'm sorry. 472 MR. MONDROW: I understand your question, I think, sir, and I understand Mr. Rogers' response to FOCA as well. 473 Our intentions in respect to final argument for this case and, in particular, in light of the ADR agreement on the broader affiliate structural relationship issues that we secured through that process to be dealt with in the next case, is to focus comments on this aspect of customers who are entitled to information in respect of connection work that's contestable, and how that process has been or is being or will be applied to ensure that those customers get that opportunity. I think Mr. Hubert has helped me out with that, and we'll probably focus on his comments and assurances. 474 From my perspective, that's the scope of this issue, that it's really that customer service aspect, as raised by that letter. And the broader issues about costing and affiliate structuring are not, in my view, for argument in this case; they are for review in the next case, pursuant to the agreement. 475 MR. VLAHOS: Mr. Mondrow, can you help me specifically with where the agreement talks about the deferral of that issue. 476 MR. MONDROW: Sure. It would be under revenue requirement, issue 1, and settlement, under the miscellaneous charges, which I think was issue 4, referred back to the revenue requirement text. 477 MR. ROGERS: I can help. It's found at page 4, Mr. Vlahos, of the settlement proposal, and there's a list of a number of items that the company has agreed that it will provide in the context of its next rate case dealing with this issue. 478 MR. MONDROW: It's actually pages 4 to 5, sir, just to elaborate. And the list of reasons for the settlement is the first list of five points on page 4, and the list of issues and evidence to be filed to address those issues is the second list which spills on to page 5 and also has five points. And that's where we see those affiliate structural and relationship and costing issues dealt with. 479 QUESTIONS FROM THE BOARD: 480 MR. VLAHOS: Okay. While I'm still on that issue, can I ask one more question, Mr. Rogers, and perhaps one of the witnesses can answer this. We talked about services versus Networks, and we talked about it's an affiliate relationship. I wasn't exactly sure about the status in terms of being a subsidiary -- services a subsidiary of Networks. Are both sister companies of Hydro One? Which one is it, Mr. Hubert? 481 MR. HUBERT: Hydro One Networks is a subsidiary of Hydro One Inc., and similarly, Hydro One Networks services is a subsidiary of Hydro One Inc.. So in that context I would describe them, Mr. Vlahos, as sister companies, and I would draw a box around both of them together and classify them as the regulated utility. 482 MR. ROGERS: That is to say, sir, that both the Networks company and the services company, the costs incurred by each form part of the regulated costs that this Board administers. I think that's right, Mr. Hubert. 483 MR. HUBERT: That's exactly what I meant to say. Thank you. 484 MR. VLAHOS: And services provides services for both transmission and distribution. 485 MR. HUBERT: That's correct. 486 MR. VLAHOS: So there is -- so there's a cost-allocation process that the company is going through to ascertain what costs are going to distribution and what are going to transmission. 487 MR. HUBERT: Actually, I'd go a little further. It is not merely cost allocation. But when Networks services staff do work on transmission or distribution assets, they actually charge directly the work through the work order to the appropriate account, whether it's transmission or distribution. 488 MR. VLAHOS: All right. I was thinking more of the fixed costs, overheads, et cetera. 489 MR. HUBERT: That is correct, yes. Fixed corporate costs associated with transmission, distribution, are done by way of allocation. 490 MR. VLAHOS: And since I'm on a roll here, I'm going to ask my last two questions, and then I'll let my colleagues come in. 491 Mr. Horton, you may want to check the transcript. I believe when the discussion was about "Go electric," you talked about 1920s. I'm not sure what this number is that's come in. It may have been picked up by the reporter as '20s, so you may want to check the transcript on this. 492 MR. ROGERS: He did say the '20s. That's what I heard too. I think he meant the '60s. We'll check and let you know. You weren't here in 1920, I don't think, were you, Mr. Horton. 493 MR. HORTON: No. 494 MR. VLAHOS: Those are the questions that I have. 495 Dr. Zerker. 496 MS. ZERKER: I'd like to go back to I think it's the Axmith letter. Mr. Horton, I looked up -- the letter really raises the issue of the categories involved in establishing a residential versus a second residence billing classification, and I got the impression from the letter that this may enter into an issue of confidentiality. I wondered what your response would be to that. Because there is -- supposing someone has a second residence and determines that this is going to be their first resident. They have to give you information about their income tax, provide to you information about their driver's license, what's on their driver's license, and so on; is that correct? And is that a matter of confidentiality? 497 MR. HORTON: It's correct that they do have to provide what might be considered confidential information, and the company certainly treats it as such. 498 MS. ZERKER: But does the company have the legal authority to ask questions of that -- on that order? I might ask Mr. Rogers that. 499 MR. ROGERS: Dr. Zerker, I can't answer your question. It's the first time it's been raised with me. I'm sure Networks' internal legal counsel -- that that would have been addressed by Networks' internal legal counsel, and I just can't -- I'm not clear enough with the problem to answer your question, I'm sorry. 500 MS. ZERKER: Are -- 501 MR. HORTON: There are -- I'm not sure around the rules governing whether we can ask; however, there is an indication in the letter from Marty Brocharding [phoen] stating that "Section 16.2 of our license requires us not to disclose any customer information to the third party without the consent of the customer in writing." 502 MR. ROGERS: May I suggest, if it is of concern to you, Dr. Zerker, can I give you an undertaking to look at that and give you an answer. 503 MS. ZERKER: I'd appreciate that, because I think it was raised in that letter and I think it has merit; at least that we should clarify whether or not this is the kind of information that the company is entitled to ask. 504 MR. ROGERS: I understand your concern and I'll inquire and let you know. 505 MS. LEA: Let's give that an undertaking number. H.5.1, please. So it's information with respect to customer information. 506 UNDERTAKING NO. H.5.1: TO PROVIDE INFORMATION WITH RESPECT TO CUSTOMER INFORMATION 507 MR. VLAHOS: Those are the Board's questions, Mr. Rogers. Do you have any redirect? 508 MR. ROGERS: Just a moment, sir, if I could. 509 MR. MONDROW: Mr. Chair, I wonder if I could make a comment first about the material on record which I believe you might find of assistance, in the ADR agreement, on that issue; and secondly, clarification of Hydro One Networks services, as I understand it. 510 Mr. Rogers might want to hear that before he decides on any redirect. 511 MR. ROGERS: I can't do two things at once. Maybe we can hear this first and then I'd like to take a little instruction as to whether I have any re-examination. 512 MR. VLAHOS: No problem. But could I go first, Mr. Rogers, as to one other issue. Can someone give me the status of the city of Elliott Lake as part of the evidence, and what is happening to that tab? 513 MR. ROGERS: Yes, we can. I'll ask the witnesses to help you with that. 514 MR. HORTON: The issue that Elliott Lake raised has been resolved with the customer at this stage. It resulted in an analysis of their concern on the company's part and, in fact, we are in the process of changing their rates accordingly. Their concern is valid and we recognise that and are making the appropriate changes. 515 MR. VLAHOS: Okay. 516 The last piece of communication in the prefiled evidence regarding Elliott Lake is January 28th, 2002. Is there anything subsequent to that? 517 MR. ROGERS: Yes, there is. 518 MR. VLAHOS: Okay. 519 MR. ROGERS: There is, sir. There's a letter from Elliott Lake to the Board, dated February 26th, 2002, in which they say: "Please be advised that it appears that the City of Elliott Lake and Hydro One have been able to come to an agreement on this issue and therefore this will not be an issue requiring the Board's consideration." It's signed by the chief administrative officer. We can certainly provide another copy. 520 MR. VLAHOS: Perhaps, if you don't mind, just file that later on. We're a bit deficient in a lot of filings in the last couple of weeks. 521 MR. ROGERS: Would you like to give it an exhibit number now in this case so it won't be lost? 522 MS. LEA: Certainly. So you're thinking that it should have an exhibit number as opposed to an undertaking number, then? 523 MR. ROGERS: It doesn't matter. 524 MS. LEA: Can we make it an undertaking, Mr. Rogers. It's a little easier for me. H.5.2, please. Letter from Elliott Lake. 525 UNDERTAKING NO. H.5.2: TO PROVIDE LETTER FROM ELLIOTT LAKE 526 MR. ROGERS: Yes. And I will file a copy of that letter. 527 MR. VLAHOS: Thank you. 528 Mr. Mondrow. 529 MR. MONDROW: Thank you, sir. 530 FURTHER CROSS-EXAMINATION BY MR. MONDROW: 531 MR. MONDROW: Two points. The first is that, as I understood your questions of Mr. Hubert in respect of Hydro One Networks services, you raised the question of allocation overheads, for example, and I just wanted to point out to the panel that we did try to deal with this issue, to some extent, in the ADR agreement. 532 On page 4 of the agreement, at point 2, the parties recite Networks' advice in respect of allocating costs to the miscellaneous charges which are charges for services provided both to the utility and to third parties by Hydro One Networks services, allocating those costs on a fully loaded or fully allocated basis. I just wanted to indicate that there was that acknowledgement in the agreement. 533 And there is some evidence on the record, and you'll find that at Exhibit E, tab 4, schedule 2, and that's recited in point 3 on that page 4 of the ADR agreement as well. That schedule provides some cost information and, I believe, includes a column in respect of overheads. So there is some basic information on the record on that issue, if that is of assistance. 534 MR. VLAHOS: The only reason I raised this issue is because I heard that some of the directly attributed costs are allocated in a specific way, and I guess my question is, there are some other costs as well. 535 MR. MONDROW: Right. 536 MR. VLAHOS: But I appreciate that. 537 MR. MONDROW: The record reflects some of that, and I believe that the rest of that issue is deferred. 538 The second point is just to complete the picture, as I understand it, on Hydro One Networks services and its relationship to the utility. I believe that, and Mr. Hubert might clarify that as well, Hydro One Networks services, in addition to providing services to the utility, provides services to third parties; the most notable recent example is the TransAlta Co-Generation Intraconnection, and that's part of the Hydro One Networks services business as well. In the description of he structure to you, I don't think he mentioned that component. 539 MR. HUBERT: I think, first of all, Mr. Mondrow's example is correct. It is a transmission example that he raises here. But nonetheless, if I may refer the Board to Exhibit C, tab 2, schedule 2, page 2 of 4, this is in the derivation of the revenue requirement, and the recoverable work, as I call it, is exactly that type of work, to third parties, and includes the contestable type of work that we offer to some of our customers at their choice. 540 That work brings in revenues -- by the way, the revenues associated with that work are shown on line 16 in that schedule. The cost of providing that work is included in the total cost of the regulated utility and is shown here in line 11 as part of the operating maintenance and distribution expenses. 541 So I would like to clarify and, I guess, emphasise that the costs and the revenues associated with this work are both included in our revenue requirement calculation. 542 MR. ROGERS: I have one question, if I could, in re-examination, Mr. Vlahos. And I think, Mr. Hubert, this is probably best answered by you. 543 RE-EXAMINATION BY MR. ROGERS: 544 MR. ROGERS: This has to do with the implementation of the Distribution System Code. You talked about the -- either you or your colleague, Mr. Horton, talked about the discounted cash flow component of that being taking on work, and so on. My question is this: In situations where the Distribution System Code was not fully implemented, have customers who paid contributions in aid of construction received rebates in line with the Code to reflect the delay in implementation of the Code? 545 MR. HUBERT: Yes. Mr. Horton actually can explain a little about that. But the Code is being implemented with us this month, fully rolled out, and Mr. Horton can talk about the rebates that have taken place already. 546 MR. ROGERS: Just tell us briefly, have rebates been made, Mr. Horton, to customers who suffered because of the delay? 547 MR. HORTON: Yes. Approximately half of the total number of rebates that we will be providing have been given to date -- 548 MR. VLAHOS: Mr. Horton, please face the microphone. 549 MR. HORTON: We are going back to November of 2000 in providing rebates. Approximately half of those have been provided to date, and the rebate programme is expected to be finalised as of June of this year. 550 MR. ROGERS: Thank you. That completes my re-examination, Mr. Vlahos. 551 MR. VLAHOS: Thank you. 552 MR. ROGERS: The next order of business will be, unless the Board has some more questions, I have some questions of Mr. Horton, I have some questions of Mr. Horton concerning the implementation of rates. 553 MR. VLAHOS: Let's do that after we come back from the lunch break. 554 It is ten minutes after 12. Can we resume at 1:15? 555 MR. ROGERS: Very good. 556 MR. VLAHOS: Thank you. 557 --- Luncheon recess taken at 12:10 p.m. 558 --- On resuming at 1:20 p.m. 559 MR. VLAHOS: Please be seated. 560 Are we missing a witness, Mr. Rogers? No? 561 MR. ROGERS: No, we're not. I think Mr. Horton is going to deal with the implementation of rates issue. 562 HYDRO ONE NETWORKS - PANEL 7 563 A.HORTON; Previously Sworn 564 EXAMINATION BY MR. ROGERS: 565 MR. ROGERS: Now, I've asked Mr. Horton to answer any questions Board staff may have about implementation, practical implementation issues. But before he does that, if you do have any questions, I would like to ask him this question: 566 Mr. Horton, can you tell us, what is the process that Hydro One Networks will follow in order to implement rate changes after the appropriate approval process has been followed? In other words, once this Board decides this case, some of the issues in the case, what is the process that the applicant must go through to translate those findings into rates? 567 MR. HORTON: It's a bit detail-oriented so I'll take a few minutes in terms of our -- 568 MR. ROGERS: Keep your voice up so we can all hear you. 569 MR. HORTON: -- in terms of our typical rate implementation process, and that is that once we receive -- once the approval process is completed and interim or final rates are available, we go through a process where my department, the Networks Customer Relations Department, provides a detailed rate spread sheet, by rate class, to our service provider for input into our billing system, which I'll refer to as CSS. It's basically our customer billing system which drives all of the rates and ultimately bill production. 570 Once we provide a rates spreadsheet which actually breaks down rates by classification, our service provider then translates this to a tariff level which is how we ultimately translate in the CSS, in the billing system, to specific charge codes. 571 In terms of a simple, what you would call -- classify as a simple rate increase, an example of this would be the June 1st, 2001, cost-of-power increase which just entailed an adder to the energy portion of the bill; that is a simpler instance. More complex rate increases would be qualified as rate increases that impact multiple portions of the bill such as the monthly service charge as well as the volumetric charges. The process for a complex rate change is generally two to three weeks in terms of creating these tariff tables out of a rates spreadsheet. 572 Concurrently, our service provider loads a price mapping tool, and this is basically a tool to which they marry the tariffs once they're completed, and allows them to do testing within the CSS environment, a non-production environment. The testing of this takes about one to two weeks. This is where you're basically matching tariffs to the system and ensuring that the code itself in the billing system is not, in any way, jeopardised. 573 At the same time, concurrently, we create bill messages. These are the messages that ultimately get printed on the bill specific to different customer classifications or types, and that process takes about two days. 574 Once these processes are completed, the most labour-intensive and time-intensive process for implementing rate change takes place, and that's really our production testing. This takes approximately four weeks in total and it involves testing to ensure that every rate accurately flows through billing reconciliation and rate applications within the system for all monthly, bi-monthly, and quarterly-billed customers. 575 Because of the fact that we have different bill dates, because we do bill monthly by monthly and quarterly, we accomplish this by flipping different bill dates within the system and testing. The testing also ensures that all of the flow-throughs to various GL accounts are accurate as well. 576 Once that testing is completed, then we populate the code into the actual production system, and at that point we implement the new rates on the bills. 577 So that whole process takes about 45 to 60 days in total, to do a rate increase and a rate change that doesn't involve a strictly significant structural type of change within the system. 578 MR. ROGERS: Mr. Horton, 45 to 60 days may seem a long time to this Board, bearing in mind some of the other utilities that appear before it regularly. Why does it take so long to do this process for Networks? 579 MR. HORTON: There's a number of reasons, some of them being system-related and most of them being related to customer sensitivity and a concern about ensuring that we get things correct. 580 Walking through the process, you can probably pick up that a significant amount of time and effort is placed in testing the system. Because of the fact that the billing system that we have is a so-called hard-coded system, so when you're going in and making the change you're actually making changes to the source code of the billing system, care obviously has to be taken to ensure that you're not corrupting another part of the system and causing problems that, if you don't test carefully and vigorously, you don't find out about until bills actually hit the customer base. So we do, as a result of that system being hard-coded, ensure that we test numerous scenarios before we actually implement a new rate. 581 In addition, some other -- the impacts of a potential mistake could be significant. We have 32 major rate classes plus, with our newly acquired MEUs, we have an additional 15 rate classes in that customer group, all billed out of the same system, the CSS system. Most utilities would have four or five rate classes. So in total we have 47 including the acquired utilities. And with respect to the MEUs, we then have 85 separate sets of actual rates to go against those 15 rate classes, and those are again in the same system. 582 The mapping to tariffs of each of those rate classes with any sort of a change is a fairly complex piece of work. If you take those 47 rate classes, you take the various rates and the tariffs, we actually have, within that system, over 2,000 different tarrifs that get applied to different customer bills in different scenarios. And that testing is further complicated or requires more of a labourious effort because of the fact that we do have multiple billing -- multiple billing types, monthly, bi-monthly, quarterly, and we have to test all of the scenarios. 583 Back in 19 -- in the 1998 time frame, when we were making some changes to the system, there was an issue where approximately 40,000 bills went out with an incorrect rate to seasonal customers, and the concern that this caused, the difficulties that this caused, from a customer perspective, were not in any way insignificant. And I believe, you know, that certainly is one of the reasons that we're very diligent about testing every possible scenario before we will put a bill into production. 584 If you even think -- I mentioned bill messages in there. Something as seemingly insignificant as a simple bill message to introduce a rate change, if you get the incorrect -- if you get a bill message incorrect and it goes out to the wrong set of customers, what that can mean in terms of customer concern, confusion, calls into the call centre and ultimately cost are, again, not trivial. 585 MR. ROGERS: Thank you very much. 586 Now, one last question I'd like to ask you, or series of questions, and this has to do with the low-voltage system. 587 At the moment, as I understand it, there are no rates in place for low-voltage customers at the moment. 588 MR. HORTON: There are no rates in production, that's correct. 589 MR. ROGERS: All right. And there's no rates available for market opening at the moment. 590 MR. HORTON: Correct. 591 MR. ROGERS: The company has made a proposal which, as you know, has created some controversy here, so there's some uncertainty as to what the outcome will be. Assuming, first of all, that the company's proposals are accepted by the Board, how long after the decision is rendered would the company be able to do the testing and be in a position to bill for low-voltage rates in accordance with your proposal? 592 MR. HORTON: In accordance with the proposal, the implementation time frame would be -- would pretty much follow the process that I just outlined to you, approximately 60 days in total, and that is if there are not significant changes to the structure of the rates essentially as they've been applied for by Networks. 593 MR. ROGERS: What happens if the -- I'm sorry, Mr. Horton. 594 MR. HORTON: Sorry, go ahead. 595 MR. ROGERS: So it's going to be 45 to 60 days through the regular cycle to implement the low-voltage rates if the company's proposals are substantially accepted by the Board. 596 MR. HORTON: Correct. 597 MR. ROGERS: Now, suppose that they are not. Suppose the Board decides that the company's proposals need to be varied substantially to reflect various concerns. What would be -- what kind of timing, then, should we be expecting? 598 MR. HORTON: Not knowing what the changes might be, if I were to paint a scenario of what a -- 599 MS. LEA: Could you face the microphone, please. 600 MR. HORTON: Sorry, what a substantial change might be. A significant change to the overall rate structure, the methodology of applying the rates could take anywhere up to six months in total to apply. You know, if we're talking about a very substantial change to the rate structure, we would be in a position where we would have to go back and do a -- start with a redesign and then ensure that our systems could bill the rates and then ultimately implement them. And I have talked to the various service providers that would be involved in that and they've indicated that it would be somewhere up to, but not beyond, six months to implement them. 601 MR. ROGERS: Suppose the change was that the Board decided that it was most appropriate to charge these low-voltage costs that we've been discussing only to those who are actual users of the system. Is that the kind of change that you had in mind when you talked about the six-month time frame? 602 MR. HORTON: Yes. If that were a scenario where -- any scenario that involves a significant rate structure change could take up to that amount of time -- 603 MR. ROGERS: I -- 604 MR. HORTON: -- because you have the design components prior to going into implementation and doing the testing process. 605 MR. ROGERS: All right, thank you very much, Mr. Horton. Those are my questions. 606 He's available to answer any questions, sir. 607 MR. VLAHOS: Thank you, Mr. Rogers. 608 I will turn to staff to see if they have any questions. 609 MS. LEA: I have none, thank you. 610 MR. VLAHOS: So it's all up to me, Ms. Lea? 611 MS. LEA: That's one way to look at it, yes, I'm afraid so. If there's anything you think I should be asking. 612 MR. VLAHOS: No. I do want to recap a couple of things. If staff feel they have to come in at any point, feel free. 613 MS. LEA: Thank you. 614 MR. VLAHOS: Mr. McGee, you would like to say thing. 615 MR. MCGEE: Yes, I do have a question. 616 CROSS-EXAMINATION BY MR. MCGEE: 617 MR. MCGEE: This is regarding the reconciliation process. The class that I represent, the meters are typically read once per year, in the fall, and there's a reconciliation bill at that time, which I think makes the phones in your call centre ring quite voluminously. But going forward, it's evident that all the customers on the standard service supplier are going to be getting a reconciliation bill as well, and I'd like to know just precisely how you're going to handle that. The reconciliation bill, will it be based on the rate in effect at the time that the reconciliation bill is issued, or will it be averaged over the prior year? 618 MR. HORTON: Just if I can ask you to clarify. When you say that all customers will require an actual reconciliation bill, are you talking of all customers that you represent or all customers, period? 619 MR. MCGEE: Well, it's -- well, certainly all the ones that I represent, and have for many years in the past and continue to do so, and perhaps I'll just confine that question to the particular group. But the basic question is what energy rate are you going to use to calculate the reconciliation bill with; the rate at the time of the bill was issued, or would it be the average rate over the prior year? 620 Now, of course, for many years the energy rate hasn't changed. But now we're in an environment where it's changing rapidly, many times, and just -- you know, if you have a specific plan as to how to handle that. 621 MR. ROGERS: Mr. Horton, you may not be aware, but Mr. McGee represents the Cottagers' Associtions. 622 MR. MCGEE: Yes, the R4 class. We've been dealing with this reconciliation bill for decades. 623 MR. HORTON: Right. 624 In terms of seasonal customer billing, the commodity portion of the bill will be billed on a rolled up average, standard supply, monthly commodity charge. However, the principles of the billing system right now won't change so the reconciliation, that would continue to be estimated on historical usage. And then the entire bill would be reconciled at the end of the year and that would include the commodity. 625 MR. MCGEE: Okay. So what you're saying is that it's based on the average commodity -- the commodity price over the year. 626 MR. HORTON: Right. 627 MR. MCGEE: And the average monopoly, volumetric component as well, because the volumetric component -- the monopoly charge is changing rapidly as well -- changing rapidly as well as the commodity component. 628 MR. HORTON: It would include, because it is volume-driven, other than the service charges, the distribution charge or the volumetric charge would apply the same way that it has historically in terms of the bulk estimated, and then reconciled once a year based on an actual meter read where we determine actual usage. 629 MR. MCGEE: And the volumetric component, in effect, at the time that the meter is read. 630 MR. HORTON: Right. 631 MR. MCGEE: Okay. 632 MR. VLAHOS: Have you finished, Mr. McGee? 633 MR. MCGEE: Yes. 634 MR. VLAHOS: Thank you. 635 QUESTIONS FROM THE BOARD: 636 MR. VLAHOS: Mr. Horton, there are three or four areas, and they aren't in specific order, but let me just try to get some of the easier stuff out of the way. 637 I think there was some discussion during the course of the proceeding regarding the retail -- I'm looking at this document, and this may assist you. It's the document, Exhibit I.1.1. This is the -- I think you called it the list of approvals requested. 638 MR. HORTON: Okay, I have that in front of me, thanks. 639 MR. VLAHOS: It's a page and a half document. If you look at the second page, under the heading "Networks Six Finalisation of," and there are four bullet points. 640 Okay. If you look at the last bullet point, I believe there was some discussion during this proceeding that the retail transmission service rates, wholesale market service rates, standard supply service rates, those are -- there's a parallel process before the Board right now and therefore there should not be an expectation that the Board will finalise anything with respect to those rates in this proceeding. Dr. Poray, I think he was the one who -- he was as a witness when this thing came up. 641 MR. ROGERS: I was going to -- 642 MR. VLAHOS: Can you just confirm that that is the case, Mr. Horton? 643 MR. HORTON: I think I'd prefer to defer to Dr. Poray to answer that. 644 MR. ROGERS: I'd ask Dr. Poray to come forward and answer for himself. 645 A.PORAY; Previously Sworn 646 MR. ROGERS: Dr. Poray may not be able to answer the question. If he can't, I think I can. 647 Were you paying attention back there, Dr. Poray? 648 DR. PORAY: Yes. We're talking about Exhibit I.1.1. 649 MR. VLAHOS: Correct. 650 DR. PORAY: Okay. On the flip-side, page 2. 651 MR. VLAHOS: Correct. Last bullet point. 652 DR. PORAY: Okay. And your question was, sir? 653 MR. VLAHOS: The question was that there is a parallel process before the Board right now dealing with the finalisation of those rates; therefore, is it still the company's expectation that there should be a final -- a final rates for retail transmission, wholesale market service, and standard supply service rates, in this decision? 654 First, let me ask, are you aware that there is a parallel process? 655 DR. PORAY: Yes, I am aware. 656 MR. VLAHOS: Okay. And in that process, those things have been -- those rates have been finalised. Wouldn't that be reasonable? 657 DR. PORAY: That would be my expectation, yes. 658 MR. VLAHOS: All right, thank you. That's what I understood from the evidence some two or three days ago, and I just wanted to confirm. 659 Okay. And the second bullet point, under "Networks Six Finalisation of," again on the same page, were you asking the Board to confirm the interim rates, pursuant to the Board's decision on January 11th, 2002. 660 And I was just wondering -- perhaps, Mr. Rogers, that's a question for you. Legally, do we have to also confirm any of the other rates that were approved on an interim basis going back to the beginning of this application. And what I'm thinking about is March 1st, 2001 rates and June 1st, 2001 rates. I don't know whether it's necessary, but would it hurt if we do? 661 MR. ROGERS: No, it would not hurt if you do, sir. I think the company would like you to do it, to confirm those rates that received interim approval on a final basis. 662 MR. VLAHOS: So there was no specific reason why that request was left out. 663 MR. ROGERS: No. 664 MR. VLAHOS: No. Okay. 665 Gentlemen, is there an issue that we have to worry about, any links between the rates we're going to approve now here and, I'm thinking specifically about the other -- the specific service charges and miscellaneous charges, the links of those with the 86 or so acquiring use? Is there any timing thing that we have to worry about? 666 MR. ROGERS: Can you answer that, Dr. Poray? 667 DR. PORAY: I'm not aware of anything that we should be worried about in that respect. They're separate. 668 MR. ROGERS: Mr. Horton, do you want to add to that? 669 MR. VLAHOS: I'm sorry, the answer was no? 670 MR. ROGERS: No. 671 MR. VLAHOS: Okay. And the last area is going back to the implementation time lines of the Board's decision. We have certain rates that are approved on an interim basis, and those were attached to Procedural Order No. 9. So in the absence of a Board decision dealing with this proceeding, then, those rates shall apply; that's your understanding? 672 MR. HORTON: That's correct. 673 MR. VLAHOS: Okay. So those rates are the retail rates, and they also have some loss factors associated with them, which is a process that I discussed early, the parallel process. The only thing that is missing there is to bring those rates -- I'm sorry, those rates also would reflect a transition cost, the additional revenue requirement you asked in this proceeding, the 8 point something million. So those rates would reflect the $8 million transition cost. 674 MR. HORTON: Are you referring to the market -- 675 MR. VLAHOS: The market -- 676 MR. HORTON: Market-ready costs. 677 MR. VLAHOS: Sorry, the market-ready costs? The only thing that is missing from those rates, then, is the reflection of the low-voltage rates. 678 DR. PORAY: That's correct. 679 MR. VLAHOS: Okay. And you're saying that, in the best of circumstances, you'll be able to implement those low-voltage rates in 45 to 60 days. 680 MR. HORTON: That's -- 681 MR. VLAHOS: Under a certain scenario. 682 MR. HORTON: Yes. 683 MR. VLAHOS: Okay. Under a different scenario, it may take up to six months. 684 MR. HORTON: Correct. 685 MR. VLAHOS: And during that time, there will be a deferral account in operation to capture the deferred revenue, if you like. 686 MR. HORTON: That would be my understanding, yes. 687 MR. VLAHOS: And if you look at page 1 of that Exhibit I.1.1, the one-before-last bullet point, starting "Implementation of a deferral account." Do you see that clause there? 688 MR. HORTON: Yes. 689 MR. VLAHOS: I'm just not sure what you mean by implementation. Anybody can help me here. "Implementation of a deferral account." There is a deferral account in place already that has been approved. Is the company seeking a resolution or disposition of that deferral account? I'm just not sure. 690 MR. ROGERS: Just one -- no, we're not. Let me just take some advice and I'll tell you what's meant by that. 691 MR. VLAHOS: Okay 692 MR. ROGERS: I think, Mr. Vlahos, that that deferral account was approved in an -- in a decision dealing with interim approval and that is why it is listed here. If the company's proposal is accepted, then we're asking that that deferral account be finally approved for clearing at the next case. The status at the moment is a little uncertain because it was with an interim -- it was with an order, I think, granting interim approvals. That's why it was added to the list. 693 MR. VLAHOS: Okay. It was grey in my mind as to exactly what the proposal was. So if, for example, rates have not been implemented until six days or six months, then whatever is captured in the deferral account, the company will wait for the next opportunity which will be when? 694 MR. ROGERS: Well, if the company's proposal is granted here or followed by the Board, then the deferral account will collect these -- no, wait a minute, I'm sorry. The deferral account will track these costs until such time as the Board's decision comes out. If the company's proposal is accepted, then ... 695 MR. VLAHOS: Mr. Rogers, if I can just jump in here. I hate to interrupt your train of thought. 696 It seems to me there are two options here; there may be more. Those are the two basic options. One is that whatever is captured in the deferral account has to wait for disposition at the next opportunity, and I have no idea when that will be. The other one is for the Board to calculate a rate rider to take care of the balance in that deferral account, and the problem of course being that we don't know how to calculate the rate rider until we know what time the LV rates will be in place. That's the difficulty that I'm having. 697 MR. ROGERS: Yes. 698 First of all, I'm going to ask Mr. Horton to deal with this question of a rate rider. Can you help us as to whether that is feasible, and what the timing would be. 699 MR. HORTON: Could you provide some clarification on a rate rider and how it would work. 700 MR. ROGERS: Sir, can I just take a moment. If you'd just give me a second, I can clear this up. 701 MR. VLAHOS: Certainly. 702 MR. ROGERS: Sir, if I can try to help, I think I understand this now. 703 The proposal is that the low-voltage costs from the time of market opening until the time that the Board was able to render a decision would be collected in a deferral account. Once the Board's decision came out, if it approved the company's proposal effective of the date of the order, let us say, then rates would be put into effect as soon as possible to start to collect those revenues. The amounts collected in the deferral account would be brought forward at the next rate case in 2003 or 2004 rates to be cleared by the Board. 704 I'm instructed that the rate rider that you've mentioned, and I'm not entirely clear how this would work, for example, there are some logistical problems for this company to implement that. I'm not sure if Mr. Horton is familiar with that nomenclature to know exactly what a rate rider is, so he and I have that in common. 705 MR. VLAHOS: That's fine. I think I understand now what the company can live with, waiting for disposition of the balance of the account the next time. So we don't have to worry about rate riders or even one-time adjustments. 706 MR. ROGERS: Yes, sir. 707 MR. VLAHOS: All right. 708 That's all I have, Mr. Rogers. I just want to, I guess, put on the record that the Board or Board staff do reserve the right to ask any questions in terms of those implementation issues. You have to appreciate that some of the those things are not easy. We haven't really thought through all of the implications, complications, so really the -- I don't think the parties have to worry about those things; they don't have to have that information for argument. But it's something that the Board has to worry about in implementation. 709 MR. ROGERS: I understand. I assure the Board that the company will cooperate in providing another witness or any other information you need. I just wanted to deal with this today to give you some idea of timing involved. 710 MR. VLAHOS: That's fine. I don't mean that the proceedings are at a close. It's a question of even due deliberations. We, as a staff, may want some information about that, and I guess that option is open to staff and the Board to follow. 711 MR. ROGERS: Yes, it is. 712 MR. VLAHOS: Okay. 713 Ms. Lea? 714 MS. LEA: I believe Mr. Davies asked you earlier about the apparent absence of a miscellaneous charge section to the yellow, most up-to-date rate schedule. 715 MR. ROGERS: Yes. 716 MS. LEA: As I anticipate you may be closing your case shortly, I just didn't want your case to be closed without some idea of whether additional evidence was to be expected in that regard. 717 MR. ROGERS: Well, yes. 718 Mr. Chair, this was raised over the lunch hour. That information is now in the record, but I think the simplest way to do this is we would be quite happy to give an undertaking to file it -- just so that you have it. And if you want to give it an undertaking number, it will be in one place. 719 MS. LEA: That would be helpful, thank you. H.5.3. Miscellaneous charges for -- what's the yellow rate schedule? Is it the most up-to-date one? Yes? 720 MR. ROGERS: Yes. 721 MS. LEA: All right. Call it "Update on Miscellaneous Charges." H.5.3. 722 UNDERTAKING NO. H.5.3: TO PROVIDE UPDATE ON MISCELLANEOUS CHARGES 723 MR. ROGERS: Yes. 724 MS. LEA: Thank you. 725 MR. ROGERS: By the way, while we're on this, Mr. Chairman, I do have copies now of the letter from Elliott Lake. Copies have been given to Board staff in answer to that undertaking this morning, H.5.1. 726 MR. VLAHOS: Thank you for that, Mr. Rogers. 727 MR. ROGERS: That is the evidence that the applicant intends to call in chief. Thank you. 728 MR. VLAHOS: Okay. 729 Ms. Lea, are we going to -- are we going to have Mr. Taylor now? 730 MS. LEA: Yes, I believe that, in fact, if the applicant's case in chief is now closed, the witnesses can be excused, subject to any reply evidence the applicant wishes to call. And I believe Mr. Taylor would like Mr. Aiken to take the stand. 731 MR. TAYLOR: Yes, thank you. 732 MR. VLAHOS: Thank you, panel. 733 DR. PORAY: Thank you. 734 MR. VLAHOS: Mr. Taylor. 735 MR. TAYLOR: Can we swear Mr. Aiken in, please. 736 MR. VLAHOS: Mr. Aiken. Can you please come forward. 737 POWER BUDD COALITION - PANEL 1 738 R.AIKEN; Sworn 739 EXAMINATION BY MR. TAYLOR: 740 MR. TAYLOR: Now, some evidence has been filed on behalf of Mr. Aiken, and appended to that evidence is Mr. Aiken's resume. I believe it's been given an exhibit number on the second day of the hearing. 741 MS. LEA: Yes. The evidence of Mr. Aiken is in the J series. I'm just getting the number here. J.2.1, I gather. 742 MR. VLAHOS: Yes, it is. And Mr. Aiken's CV is included in that package. 743 MS. LEA: Thank you. 744 MR. TAYLOR: Thank you. 745 MR. VLAHOS: Mr. Taylor, I'm wondering if it would be easier for you to come forward a bit. 746 MR. TAYLOR: Would you prefer it? I'm not going to be very long, actually. 747 MR. VLAHOS: That's fine. Go ahead. 748 MR. TAYLOR: Thanks, Mr. Chair. 749 Sir, can you please state your name for the record. 750 MR. AIKEN: Randall Aiken. 751 MR. TAYLOR: Mr. Aiken, I'd like you to briefly describe your qualifications and experience. 752 MR. AIKEN: For roughly the past ten years I've been a regulatory consultant on the natural gas and the electric side of the energy industry, doing regulatory filings, cost-of-service applications, PBR, cost-allocation, rate design, financial forecasts, economic forecasts, for a number of clients. Previous to that I was in Union Gas, in the economic forecasting department. 753 MR. TAYLOR: And what are your qualifications here? 754 MR. AIKEN: I have a master's degree in economics and an undergraduate degree in mathematics. 755 MR. TAYLOR: And have you testified before this Board before as an expert on rates? 756 MR. AIKEN: Yes. I've testified approximately 12 times, I believe, in the last ten or so years. 757 MR. TAYLOR: Does the Board accept Mr. Aiken as an expert on rates? 758 MR. VLAHOS: Yes, the Board does, Mr. Taylor. 759 MR. TAYLOR: Thank you, Mr. Chair. 760 Mr. Aiken, can you please tell us what your relationship is with the Power Budd Coalition. 761 MR. AIKEN: Yes. I was asked by the Power Budd Coalition to review Hydro's evidence with respect to the low-voltage rates and the cost allocation. 762 MR. TAYLOR: And did you do that, sir? 763 MR. AIKEN: Yes, I did. 764 MR. TAYLOR: And did you prepare evidence based on that? 765 MR. AIKEN: Yes. The evidence that's filed in this proceeding was prepared by myself. 766 MR. TAYLOR: And what were the sources of information on which you based your evidence? 767 MR. AIKEN: The information was pulled from the Hydro evidence along with their interrogatory responses. The last section of the evidence deals with the impact on the members of the Power Budd Coalition. Some of the members there were provided by those utilities. 768 MR. TAYLOR: Okay. Are there any corrections that you would like to make to your evidence at this time? 769 MR. AIKEN: Yes. At the -- page 8 of the evidence, and let me preface this by saying that this is based on the interrogatory response to Hydro One relating with Oshawa PUC. 770 On page 8 of the evidence, there's a table that shows the five members of the Power Budd Coalition. The number that's changing is on the Oshawa PUC Networks Inc. line. In the third column, the LV average, monthly billing demand in 1999, currently shows zero. That should be 1.5. And in the following column, the zero is replaced by 9,954. And then as a consequence of that change, the next paragraph, starting on line 9, should read as follows: 771 "As the above table indicates, St. Catharines Hydro Inc. is not connected to the LV system. However, under the Networks proposal, it would pay a substantial amount for services it does not receive. These costs would then be recovered from the ratepayers of this utility, again for services not received." 772 And one final change related to that is on the last paragraph of page 9. Line 3 -- sorry, line 2 says: "... and Enersource Mississauga Hydro would pay approximately $0.9 million more." We can add in there that Oshawa PUC would pay approximately $380,000 more. 773 MS. LEA: Say that number again, please. 774 MR. AIKEN: Oshawa PUC would pay approximately $380,000 more. 775 MR. TAYLOR: Thank you. 776 Would you please take us through your evidence. 777 MR. AIKEN: If you want to follow along with me, I'll start basically on page 1. 778 What I've tried to do, on the cost-allocation side, is summarise the information provided by Hydro One in terms of the allocation of the cost for the shared LV facilities. And I want to emphasise it's the shared lines only that this evidence deals with. 779 The two approaches are shown at the bottom of page 2 in that table. Again, this is a summary of the information provided by Hydro One in their evidence. And it shows the allocation of the non-coincident peaks for all LDCs and directs for Hydro One's -- for users-only, that's the Power Budd proposal. 780 What I've done, then, is I've gone through each of the components of the cost for the low-voltage lines, and the first one is the LV lines themselves shown on page 3, the summary table there showing the Networks retail component, in the second column; the LDCs and the directs in the third column; the middle line that says Networks' proposal is pulled out of their evidence. The Coalition proposal is based on interrogatory responses. So in that case, you can say, for example, that the Coalition proposal is an increase from 60.6 to 69.2 in the allocation to Networks retail, and a corresponding reduction from 21.8 to 13.2 for the LDCs and directs. 781 The following section is the same analysis for distribution lines, again pulled from Hydro's evidence and their interrogatory response. Similarly, for distribution stations, the table at the bottom of page 4, and the miscellaneous costs at the top of page 5. 782 The bottom of page 5 provides a summary of those four previous cost categories, again showing the Hydro One Networks allocation and the Coalition allocation. And the difference there, in the bold numbers, is Hydro One Networks' allocation works out to be 38.6 million, the Coalition proposal is 25.7 million, which I believe is a difference of 12.9. 783 On the evidence related to rate design, what we've done -- what I've done there is take the -- the $12.9 million difference in the allocation methodologies, shown that as related to the shared line cost. And again this information is taken from Networks' proposal. 784 And at the top of page 7, we've presented three options. The third one is the preferred route of the Coalition, that being excluding transmission-connected-only LDCs recovers the $19.5 million from -- in shared line costs from those customers that are only connected to it and based on their use of it. Networks has the 55.3 cents. 785 The first option is similar to Hydro One's proposal in that the rate -- or the revenue would be recovered from all LDCs and directs including those not connected to the low-voltage system, and the middle option is connecting at the same amount of revenue but based only on the transmission companies that are connected to the low-voltage system but based on their high-voltage use, along with the truly embedded customers. 786 The third section of the evidence where I had the corrections earlier is the analysis of the impact on the Coalition members. And I'll just walk you through one example, and that is -- I'll take the first line, Hydro Ottawa, where the whole average monthly billing demand in 1999 is 1,140.3 megawatts. Based on Hydro One's proposal at 17 cents a kilowatt, that's a 2.3 million annual charge. Their low-voltage average monthly billing demand charge in 1999 was 34.2 megawatts, and under our proposal, at 55.3 cents per kilowatt, that results in a cost of approximately $226,000. 787 And that's my evidence. 788 MR. TAYLOR: Thank you. That's my evidence. 789 MR. VLAHOS: Thank you, Mr. Taylor. 790 Can I get an indication of who wishes to cross-examine from the intervenors? Mr. White. Anyone else? Okay. 791 Mr. White. 792 CROSS-EXAMINATION BY MR. WHITE: 793 MR. WHITE: Mr. Aiken, in doing your review, did you become aware that Hydro proposes to apply the LV rates to voltages ranging between 4,000 volts and 44,000 volts? 794 MR. AIKEN: Yes. It's my understanding that the low-voltage rates apply to anything under 50 kV. 795 MR. WHITE: In producing a good pricing mechanism, would you suggest that that wide variety in voltages all share a common rate, going forward? 796 MR. AIKEN: I haven't looked specifically at that, but I would suggest that when a detailed cost-allocation study was done, that would be one of the issues, I would think, that would need to be addressed. 797 MR. WHITE: If the Coalition's proposal was accepted, have you considered what mitigation strategy should be put in place? 798 MR. AIKEN: I think there's a number of mitigation strategies that could be put in place to -- if we're moving from a 17-cent charge to a 55-cent charge. And a simple example would be a phasing-in over a number of years, or a partial movement towards the 55-cent rate now and then dealing with this, the remainder of the movement, the next time Hydro One is before the Board. 799 MR. WHITE: Thank you very much. 800 MR. VLAHOS: Thank you, Mr. White. 801 Ms. Lea. 802 MS. LEA: Thank you. I have a couple of questions. 803 CROSS-EXAMINATION BY MS. LEA: 804 MS. LEA: Mr. Aiken, in trying to understand what would have to be done if the Board were to implement this proposal, I see that you've provided us in your evidence with some cost allocation with respect to your proposal. I gather there's also the question of charge determinants which is not included in your evidence; is that correct? 805 MR. AIKEN: That's correct. My evidence makes the concession that we would use the same charge determinants as Hydro One has proposed. 806 MS. LEA: Okay. If the Board were inclined to accept your proposal, I presume that it does not have all the information on the record now in order to create a rate schedule; it would need to ask the applicant to create a rate schedule to implement the proposal as you have proposed it. 807 MR. AIKEN: I'm not sure that's true because I believe that Hydro One's evidence indicates a rate of 56 cents for the users only -- user-only pool, in their evidence. 808 MS. LEA: Okay, one moment. 809 Have you had an opportunity to look at the evidence, the new exhibit, actually, that was filed by Mr. Snelson, the AMPCO witness, in answer to a question of mine? 810 MR. AIKEN: Is this Exhibit I.4.2? 811 MS. LEA: Sounds right. Yes, that's correct. Have you had an opportunity to look at that? 812 MR. AIKEN: Yes, I have. 813 MS. LEA: Is there anything in that exhibit that you feel you need to comment on or that you feel you disagree with? The proposal seems similar to me. 814 MR. AIKEN: Yes. My comment -- I'll relay you to a Board -- an interrogatory response to -- coming from the Vulnerable Energy Consumers Coalition. 815 MS. LEA: An interrogatory by Hydro One or by yourself, sir. 816 MR. AIKEN: By VECC to the Power Budd Coalition. 817 MS. LEA: Okay. 818 MR. AIKEN: And it's question 1 -- 819 MS. LEA: I'm just going to get the exhibit number of that, sir. Thank you. So -- 820 MR. AIKEN: In part B of that -- 821 MR. VLAHOS: Mr. Aiken, one second. 822 MS. LEA: I don't seem to have an exhibit number for this and I'm sure there is one for it. 823 Did Hydro One actually assign a category exhibit number to responses to interrogatories? I don't have the new binders in front of me. I can find the interrogatory, but if there is an exhibit number, I'd like to quote it. And perhaps -- I know it's an interrogatory answered by the Power Budd Coalition that was asked by VECC 824 MR. VLAHOS: Ms. Lea, I have Exhibit G, tab 5. Tab 5 would be, I guess, questions or interrogatories, by VECC. 825 MS. LEA: I think that might be VECC to Hydro One. That's the difficulty. It's the interrogatories to other intervenors by intervenors that I'm having trouble coming up with. It may be that Hydro One did not assign an exhibit number, and that's fine, but I just wanted to quote it if it existed. 826 MR. ROGERS: G 16 are answers to interrogatories from the Vulnerable Energy Consumers Coalition to Power Budd. 827 MS. LEA: Thank you so much. G, 16. 828 MR. ROGERS: Yes. 829 MS. LEA: All right. 830 MR. ROGERS: I'm sorry, from the Vulnerable Energy Consumers Coalition to Power Budd. 831 MS. LEA: Power Budd's evidence, questions from VECC. Right. G, 16, and it would be number -- 832 MR. AIKEN: It's question 1. 833 MS. LEA: It's question 1. Okay, and they only ask the one. That's very helpful, thank you. So G, 16, schedule 1. All right. I think we now have it before us. 834 MR. AIKEN: As part of the answer to part B of that question, on the second page in particular, you'll note that the sixth line down, I believe, the fifth line, I've come up with an estimate of essentially 1.12 cents per kilowatt-hour as the impact of moving from -- moving to the 55.3 cent per kilowatt charge. 835 MS. LEA: Was that for the R1 rate class again? 836 MR. AIKEN: Yes. It's the residential. 837 MS. LEA: Okay. 838 MR. AIKEN: So this estimate, which was done on a different basis than Mr. Snelson's number, but the theory behind them, I think, is virtually the same and the results are virtually the same. His number was 1.04. 839 MS. LEA: Okay, thank you very much. 840 My last question is the same as one I asked Mr. Snelson as well. Given that in the next proceeding Hydro One proposes to provide a cost-allocation study as well as incorporation of information on acquired MEUs, would not the Board be better able to make a decision on this issue once it has all the most complete information before it? Should it not wait for that information? 841 MR. AIKEN: I believe my answer would be very similar to Mr. Snelson's in that it's more appropriate to make a move in the right direction if you believe that the direction you're moving and the end-state you're moving to is going to exist when the new cost-allocation study is done. So basically my -- I think my answer is the same. 842 MS. LEA: Thank you. Thank you, those are my questions, sir. 843 MR. VLAHOS: Thank you, Ms. Lea. 844 Mr. Rogers. 845 MR. ROGERS: Thank you. 846 CROSS-EXAMINATION BY MR. ROGERS: 847 MR. ROGERS: Good afternoon, Mr. Aiken. 848 MR. AIKEN: Good afternoon. 849 MR. ROGERS: You weren't here on Friday, I believe, were you? 850 MR. AIKEN: No. 851 MR. ROGERS: But you read the transcript of my questions of Mr. Snelson? 852 MR. AIKEN: Yes. 853 MR. ROGERS: Could you help me, please, sir. What is the difference between your proposal and that of Mr. Snelson? 854 MR. AIKEN: I don't believe there's any significant difference. 855 MR. ROGERS: Is there any subtle difference? 856 MR. AIKEN: I can't recall whether his proposal was using the charge determinants on an actual basis or on a 1999 historical basis. 857 MR. ROGERS: So that would be the only difference, so far as you know. 858 MR. AIKEN: As far as I know. 859 MR. ROGERS: I think you've said that using the 1999 charge determinants is appropriate for this case. 860 MR. AIKEN: It's not the preferred option but it's acceptable. 861 MR. ROGERS: So you're not proposing anything different in this case. 862 MR. AIKEN: No. 863 MR. ROGERS: And you point out that is the advantage of being a fixed charge in the eyes of the customer. 864 MR. AIKEN: That's correct. 865 MR. ROGERS: Can you help me as to why the rate impact that you calculated of $12.9 million, and going to your evidence here at page 5, it's not really the rate impact, but the revenue impact of your proposal is $12.8 million being shifted, according to this table. 866 MR. AIKEN: That's correct. 867 MR. ROGERS: And as I understood Mr. Snelson's evidence in Exhibit I.4.2, he calculated an amount of $13.5 million. 868 MR. AIKEN: That's correct. 869 MR. ROGERS: Are those comparable figures? 870 MR. AIKEN: I believe they are. I think that the difference is because Mr. Snelson's evidence appears to use an overall percentage change whereas my numbers, which are in effect Hydro One's numbers, were based on the individual cost components. 871 MR. VLAHOS: Mr. Rogers, I have to apologise, the Board has to break for a little while. Can we resume at a quarter to three? It is twenty after two on the clock on the wall. 872 MR. ROGERS: Very good, sir. Just for your comfort, I don't expect to be very long with this witness. 873 MR. VLAHOS: We still need to break. Thank you. 874 --- Recess taken at 2:20 p.m. 875 --- On resuming at 2:45 p.m. 876 MS. LEA: Sir, I'll just go inform Hydro One, if I can. 877 MR. VLAHOS: They're here. 878 MS. LEA: Okay, great. 879 MR. VLAHOS: You just about missed your chance, Mr. Rogers. 880 MR. ROGERS: Mr. Aiken, we were just exploring the differences between you and Mr. Snelson before the break, and I gather there are none, as far as you're aware, other than the fact, I think, that you, as you put it, accept that the charge determinant should be based on 1999 demand. 881 MR. AIKEN: Yes. I can't recall what Mr. Snelson's evidence was in that regard. 882 MR. ROGERS: I'll come back to that in a minute. Can we just go back to basics here. You consider yourself to be a user-pay proponent. 883 MR. AIKEN: Yes 884 MR. ROGERS: And you read the transcript of Mr. Snelson about this issue on Friday. 885 MR. AIKEN: Yes. 886 MR. ROGERS: You would agree with him, I assume, that this low-voltage system was, in part, constructed as a least-cost solution to transmission requirements. 887 MR. AIKEN: I believe that's correct, yes. 888 MR. ROGERS: I know your background is mostly in natural gas, isn't it? 889 MR. AIKEN: Yes. 890 MR. ROGERS: And you have come to electricity relatively recently. 891 MR. AIKEN: Yes, in the last five years. 892 MR. ROGERS: But many of the principles still apply. 893 MR. AIKEN: Correct. 894 MR. ROGERS: All right. 895 Now, you've got this system now that was constructed, in part at least, to the tune of $38.6 million, to provide a transmission function. And the issue that we have to grapple with here is how most fairly to recover the cost of those facilities; correct? 896 MR. AIKEN: Correct. 897 MR. ROGERS: And you'd agree with Mr. Snelson, I'm sure, that when these transmission facilities -- I'm sorry, these low-voltage facilities were constructed, all customers benefited from the lower costs. 898 MR. AIKEN: Yes. 899 MR. ROGERS: Those lower costs associated with the low-voltage transmission system continued to benefit all customers consuming electricity in the province of Ontario? 900 MR. AIKEN: I don't believe that would necessarily be true after the market opens. 901 MR. ROGERS: That's why I have trouble with this concept of user-pay as you and Mr. Snelson define it. Let's examine that for a minute. 902 At the moment, today, as we sit here, all customers, first of all, are paying for these low-voltage costs, all municipalities whether hooked up physically or not. 903 MR. AIKEN: That's correct. 904 MR. ROGERS: And today, at least, all of those customers are benefitting from lower cost of those low-voltage facilities in place of more expensive transmission facilities. 905 MR. AIKEN: Yes. 906 MR. ROGERS: And I suggest to you that in a few months' time, come May the 1st, the physical properties of the system are identical; right? 907 MR. AIKEN: The physical properties are the same but the regulatory environment will be different. 908 MR. ROGERS: That's true. But going back to our basic proposition that the customers presently paying for low-voltage facilities are all benefitting from it today, I say to you it's clear that those same customers will continue to benefit come May 1st and going forward after market opening. 909 MR. AIKEN: Well, I believe the distinction is that come May 1st, we have a competitive market, and I think what you're effectively saying is that any competitive advantage should be ignored by those utilities who don't use the low-voltage system -- 910 MR. ROGERS: No -- 911 MR. AIKEN: -- on a going-forward basis. 912 MR. ROGERS: -- that's not what I'm saying. What I'm saying is this: Look, I understand that user-pay has a certain amount of superficial appeal. I acknowledge that. But all I'm asking you to consider is this: The fact of the matter is that the physical properties of this system that we now have will be the same May 2nd as they are May 1st. 913 MR. AIKEN: That's correct. 914 MR. ROGERS: And on April 29th or 30th, at least, all customers will have the benefit of these lower costs, low-voltage facilities; right? 915 MR. AIKEN: That's correct. 916 MR. ROGERS: On May the 2nd, they're going to still continue to have those same physical facilities serving their needs. 917 MR. AIKEN: Yes. 918 MR. ROGERS: So the benefits that they enjoyed before May 1st will continue to be enjoyed by them after May 1st. 919 MR. AIKEN: Yes. 920 MR. ROGERS: The only difference is that somebody has changed the definition of transmission customer. 921 MR. AIKEN: That's correct. But the government has changed the low voltage from a transmission to a distribution function. 922 MR. ROGERS: Okay, I agree with you there. 923 Now, from a fairness standpoint, you would agree that it's fair and in accordance with rate-making principles used in the gas business for years that customers who enjoy a benefit of a physical facility should help to pay for the cost of it. 924 MR. AIKEN: Yes. 925 MR. ROGERS: And indeed today that's what we have. All customers who are benefitting from a low-voltage system are contributing to its cost; right? 926 MR. AIKEN: Yes. 927 MR. ROGERS: And I'm just saying to you, isn't it also true that there's a fairness issue here because, after market opening, based upon your proposal, those customers who are enjoying the benefits of the system will no longer be asked to pay for part of it. 928 MR. AIKEN: That's correct. 929 MR. ROGERS: Now, don't you think that's unfair? 930 MR. AIKEN: No. 931 MR. ROGERS: Why not? 932 MR. AIKEN: I believe the current situation is unfair. 933 MR. ROGERS: Well, you tell me why you think it's unfair that customers who are benefitting from the low-voltage facilities are helping to pay for them. 934 MR. AIKEN: Because when the market opens, we're moving into a different environment, and the Board has generally set rates based on cost allocation and cost of service on a going-forward basis; in other words, if a system is built for a specific customer or number of customers and those customers change over time, you either lose customers or you add customers, the rates that are applicable on a going-forward basis are applicable to the customers on the system as you go forward, not on the customers who were there before, or any benefits they may have received previously. 935 MR. ROGERS: Customers -- the reason for that is you want to charge customers who continue to benefit from the system; right? 936 MR. AIKEN: No. You want to charge customers, on a going-forward basis, that are using the system. 937 MR. ROGERS: Well, so you say. I'm just saying to you there is another way to look at this, and that fairness really requires that the customers who gave rise to these assets being constructed and who have enjoyed and will continue to enjoy the benefits of lower cost facilities on the system in the transmission rates that they're going to be asked to pay, should help to pay the cost of those facilities. 938 MR. AIKEN: No, I would disagree. 939 MR. ROGERS: You do? 940 MR. AIKEN: Yes. 941 MR. ROGERS: How did you get here today? Did you drive or did you come by transit? 942 MR. AIKEN: I drove. 943 MR. ROGERS: Have you ever used the TTC? 944 MR. AIKEN: Not for many years, but I have in the past. 945 MR. ROGERS: You're probably the wrong one to ask this question. Let's just try to divorce ourselves from this case and your client in this case and so on. You are a user-pay proponent; therefore, I assume that you would tell this Board that only those people who actually ride the subway system should pay for it; is that right? 946 MR. AIKEN: No. 947 MR. ROGERS: Well, who else should pay for it? 948 MR. AIKEN: I think there are a number of other benefits that come about as a part of social policy as to who would pay for transit. 949 MR. ROGERS: I agree. So you think it's appropriate that the public coffers should support the subway system because it benefits others than those who simply use it. 950 MR. AIKEN: As a matter of social policy, yes. 951 MR. ROGERS: I agree with you, because it saves money on highways and so on; right? 952 MR. AIKEN: Yes. 953 MR. ROGERS: So that people who don't use the system should contribute to it because they benefit from its existence; right? 954 MR. AIKEN: Sure. 955 MR. ROGERS: And it's exactly the same proposition with these low-voltage facilities, isn't it, sir? 956 MR. AIKEN: No. 957 MR. ROGERS: How is it different? 958 MR. AIKEN: I don't believe that the social policy or any social policy impacts have been identified that impacts on the low-voltage system in what's to be a competitive market. 959 MR. ROGERS: Well, I'm just saying that if it's fair that non-users of the subway system should contribute to its cost because they benefit from it, it's also fair that non-users of the low-voltage system should pay for it because they benefit from it. Wouldn't you agree that that's a fair proposition? 960 MR. AIKEN: No. 961 MR. ROGERS: All right. You can't give me any other explanation as to why you don't agree, other than what you said? 962 MR. AIKEN: I can give you an example that will tie the gas and electric industries together. It's been the usual practice to allocate costs on the gas distribution side to residential customers, for example, who actually use gas. I don't see the fact that they're using gas as -- sorry, the fact that they are using gas is a benefit to other people in the province through lower, for example, emissions. Now, I don't think Union Gas or Enbridge should be allocating cost to non-gas electric residential customers. 963 MR. ROGERS: Well, you appreciate that the people -- the entities, the local distribution companies who, it is proposed, should bear the cost of these low-voltage lines, do use electricity. You know that, obviously. 964 MR. AIKEN: Yes. 965 MR. ROGERS: And you do agree in the gas business there are lots of costs that are pooled. 966 MR. AIKEN: Yes, but I'm not aware of any pool that includes non-customers. 967 MR. ROGERS: Well -- you're not? 968 MR. AIKEN: No. 969 MR. ROGERS: Non-customer, no. But non-users? Aren't there situations where a gas line collects costs from customers down that line even though -- even though customers, let's say, not actually physically served by that piece of pipe are contributing to it? That happens all the time. 970 MR. AIKEN: Yes, but those are gas users. 971 MR. ROGERS: Yes. And isn't -- Ottawa Hydro uses electricity. 972 MR. AIKEN: Yes. 973 MR. ROGERS: And they're paying right now for those low-voltage charges in the rates, aren't they? 974 MR. AIKEN: I believe not at 17 cents, but there is a component in there, yes. 975 MR. ROGERS: How much are they paying now? 976 MR. AIKEN: I believe that Hydro's evidence indicates 12.7 cents. 977 MR. ROGERS: Right. And how much is that a year? About $2 million? 978 MR. AIKEN: A little bit less than that, probably, yes. 979 MR. ROGERS: So right now Ottawa Hydro is paying about $2 million or so for these low-voltage facilities. 980 MR. AIKEN: That's correct. 981 MR. ROGERS: So if we went to your table, for example, on page 8 of your evidence. 982 MR. AIKEN: Yes, I have that. 983 MR. ROGERS: I guess you're trying to show the big impact that this proposal my client makes will have on your client, and you show at 17 cents a kilowatt, in the second column there, that Ottawa Hydro will be paying $2.3 million; right? 984 MR. AIKEN: That's right. 985 MR. ROGERS: But at the moment they're paying about $2 million. 986 MR. AIKEN: Well, they're paying approximately two-thirds of that. 987 MR. ROGERS: The point is they're paying a handsome sum right now; right? 988 MR. AIKEN: Yes. 989 MR. ROGERS: And the unbundling process, if that's all you did, would leave them with that nearly $2-million cost. 990 MR. AIKEN: Yes. 991 MR. ROGERS: Let's go back to our TTC analogy for one more example I'd like to have you explain to me. Maybe this is a little closer to your concern. 992 You don't ride the system any more, but I can tell you that it's composed of a subway and then some feeder lines, bus lines, that bring people to the subway system; do you understand? 993 MR. AIKEN: Yes. 994 MR. ROGERS: It's kind of like the buses could maybe be equated to the low-voltage transmission system that we're talking about. Now, is it your proposition that it would be fair, in fact, the only fair way to do it would be that everybody -- only those people who actually use the bus lines should pay for the bus lines. 995 MR. AIKEN: Can you restate that question. 996 MR. ROGERS: Yes. Assume that somebody wants to get down to the Ontario Energy Board. They have to get on a bus to get to the subway system on Yonge Street; right? 997 MR. AIKEN: Yes. Then they ride down Yonge Street to Eglinton. Do you understand? 998 MR. AIKEN: Mm-hmm. 999 MR. ROGERS: They pay one fee at the moment, and right now it's around $2; do you understand? 1000 MR. AIKEN: I'll take your word for it. 1001 MR. ROGERS: Now, you would say, as a user-pay proponent, that the person who gets on the bus first should pay more than the person who lives on the subway line who can just go down into the subway to come down to the Ontario Energy Board. 1002 MR. AIKEN: No, I don't think I'm saying that at all. 1003 MR. ROGERS: I thought your proposition was that only those people who use the bus line should pay for it. 1004 MR. AIKEN: No. 1005 MR. ROGERS: Oh, it isn't. Do you think everybody should share that? 1006 MR. AIKEN: I said that -- 1007 MR. ROGERS: I think what you said, sir, was that on the pooled rate, those who use the system pay for it, or words to that effect. 1008 MR. AIKEN: That's correct, yes. 1009 MR. ROGERS: And I agree with that. But I'm saying to you that if I'm lucky enough to happen to live near the subway system and I don't need a bus line, don't you think it's fair that I should pay for part of the bus service because it benefits the system as a whole, even though I don't ride buses? 1010 MR. AIKEN: I'm not sure of the point you're trying to make. 1011 MR. ROGERS: I think it's pretty clear. 1012 MR. AIKEN: I don't understand it. 1013 MR. ROGERS: You don't understand it? 1014 MR. AIKEN: No. 1015 MR. ROGERS: Well, I'll try one more time and I'll leave it. 1016 Just tell me what you would do. If you were setting the tarrifs for the TTC, would you say that we should have a charge for all those people who use the buses and then a separate charge that they would have to pay once they go into the subway system, or it should be -- should it be one charge for all? 1017 MR. AIKEN: I think the circumstances that you're trying to compare are totally different. First of all, we'd mentioned earlier, the TTC is subject to social policy and its subsidisation from taxpayers. I don't believe those same circumstances exist in the electric utility industry. 1018 MR. ROGERS: Well, I'm just trying to -- I want to understand -- I want to understand your theory behind this user-pay. Forget the tax subsidy for the subway system. Let's just assume it's paid for by only those people who actually ride buses and ride the subway; do you understand? 1019 MR. AIKEN: All right. 1020 MR. ROGERS: Now, if you were setting those rates, would you say that the people who ride the bus should have two rates; one for the bus and then when they get off at the subway, one for the subway? 1021 MR. AIKEN: I could see that as being a possibility, yes. If you did a cost-allocation study and you found that the cost related to the operation of the bus system relative to that of operating the subway system was different, in a user-pay process, yes, there could be different rates for a different part of the system. 1022 MR. ROGERS: All right. A user-pay proponent like you would have no choice. That's what you would do. Those who use the buses pay for them and nobody else. 1023 MR. AIKEN: Well, you have to remember that you do have the option of subsidising one area with the other. 1024 MR. ROGERS: You think that's a subsidy, do you? 1025 MR. AIKEN: It would be if you're under-recovering costs, say, for the subway and over-collecting revenues for the bus lines. 1026 MR. ROGERS: All right. But I'm not talking right now about that, I'm talking about who should pay. And I just want to be clear. A user-pay proponent such as yourself - and Mr. Snelson is not here today, but he can speak for himself and did very well on Friday - you would say that the people who should pay for the feeder system, the bus feeder system, should only be those people who use the bus line, and nobody else. The users. 1027 MR. AIKEN: Well, I believe the premise to your question was that there was no subsidy and that the system was paying for itself. So if the users don't pay and there's no subsidy, what's the other alternative in your example? 1028 MR. ROGERS: Well, I'm just asking you, just so we're clear and the Board knows how you think about these things, you would say that the bus users, being the only ones who use the bus system, should be the only ones who pay for it. 1029 MR. AIKEN: Under your scenario where it pays for itself without a subsidy, yes. 1030 MR. ROGERS: I see. And that would be even if the riders of the subway system at large benefited from the fact that there was a bus line out there, because rather than building an underground subway out to every little bus stop, we had cheaper surface transport through buses so all of us who use the subway system could have lower rates; do you understand? 1031 MR. AIKEN: Yes. 1032 MR. ROGERS: But you would still say, too bad, user-pay. 1033 MR. AIKEN: Yes, I would still advocate user-pay. 1034 MR. ROGERS: You heard, for example, this morning a question that was put to my witness -- oh, you weren't here. 1035 MR. AIKEN: I wasn't here this morning. 1036 MR. ROGERS: Sorry. It had to do with -- I think it was one of Mr. White's clients, PenWest. There was some talk about quality of service. And Mr. Horton, one of the witnesses from Hydro Networks, said that because of some problems with the line that fed this PenWest small group of utilities, that my clients added 6.5 kilometres of upgraded line, as I understand it, to improve quality. Do you understand the scenario? 1037 MR. AIKEN: Yes. 1038 MR. ROGERS: Now, a user-pay proponent would say, well, that's their problem; they pay for it, nobody else. 1039 MR. AIKEN: Yes. 1040 MR. ROGERS: I see. And similarly, if you had a mine up at the periphery of the system, and we heard about one of those this morning, I think it was Placer Dome, and they had problems with quality of service because their line kept going out, it was a single-phase, single-wire line, over a long distance, through difficult terrain, and they had outages all the time, the user-pay proponent would say, too bad, that's their problem, they pay for it, they alone. 1041 MR. AIKEN: Yes. And when I say "pay for it," I mean through the analysis of an economic or a financial test that shows the -- 1042 MR. ROGERS: I'm not talking about -- 1043 MR. AIKEN: -- the aid to construction that would be required if the increase in revenue doesn't match the increase in cost. 1044 MR. ROGERS: And the maintenance costs for that line should be their responsibility alone as well. 1045 MR. AIKEN: No, the maintenance costs are part of the financial test that you do. You do a net present value of any incremental revenues, compare that to the incremental operation costs and capital costs. 1046 MR. ROGERS: But you'd do this without any reference to the pool rate. You just look to see how much would it cost us to put in a line to Placer Dome, how much will it cost to maintain that line, how much will it cost us to upgrade it as they require us so that their quality of service is acceptable to them, and every penny of that should be recovered simply from them because they're the only ones that are using that line. 1047 MR. AIKEN: Now, as I said, you would calculate the aid to construction which may not be for the full amount. 1048 MR. ROGERS: Well, how could a user-pay person support anything but the full amount? 1049 MR. AIKEN: Because the user-pay principle also includes a stream of revenue from that customer in the future. So they're paying for their costs, for a portion of their costs through their revenue stream in the future. 1050 MR. ROGERS: That's the portion of the costs. As a user-pay proponent, you should say that they should recover all of their costs through the revenue. 1051 MR. AIKEN: No. I'm saying that they recover all of their costs through the revenue and through an aid to construction. 1052 MR. ROGERS: Right. But the aid to construct comes from them; right? 1053 MR. AIKEN: That's right. 1054 MR. ROGERS: And then the revenue from the rates comes from them. 1055 MR. AIKEN: That's right. 1056 MR. ROGERS: And you're saying that the combination of those two is -- 1057 MR. VLAHOS: Mr. Rogers, you have to slow down for the court reporter, please. 1058 MR. ROGERS: Sorry. 1059 You're saying that the combination of those two should be the responsibility of Placer Dome and Placer Dome alone. 1060 MR. AIKEN: If it's a dedicated line, yes. 1061 MR. ROGERS: And if there were five customers that were using that line and only five customers, all of those costs should be borne by those five customers alone. 1062 MR. AIKEN: No. When you get into the situation where a line is being served -- is being used to serve more than one customer, there's a point where you have to decide whether it's a dedicated line or whether it's a shared line. And I think that's a matter of -- it's a policy issue that would have to be dealt with. 1063 MR. ROGERS: Right. But once you have a shared line that is shared among a recognised, small group of customers, user-pay would say that that small group should be, alone, responsible for all of the costs. 1064 MR. AIKEN: In general, I would agree with that, yes. 1065 MR. ROGERS: I wonder, sir, if you could let us know, please, how much is presently being paid by each of your clients as shown on page 8 of your exhibit today. And if you'd like to take an undertaking, that would be fine. How much is each of these utilities paying now for low-voltage charges? Would you do that for me? 1066 MR. AIKEN: I'm not sure that information would be available to those customers. It's my understanding that the low-voltage charges are rolled into the current rates charges by OPG. 1067 MR. ROGERS: You knew about Ottawa Hydro. How did you know about them? 1068 MR. AIKEN: Well, this is what they would pay going forward. It's not what they are paying now. 1069 MR. ROGERS: Well, I asked you what they were paying now, and I think you said it was around two-thirds. 1070 MR. AIKEN: Well, that's based on Hydro One's evidence of a 12.7-cent charge, or estimate, I believe, that's in the evidence so far. 1071 MR. ROGERS: You don't have any other information other than that? 1072 MR. AIKEN: No. 1073 MR. ROGERS: Would you accept that as a reasonable proxy from what they're paying now? 1074 MR. AIKEN: I can't comment on that because these utilities may have some dedicated line that they're paying for and I'm not aware of it. 1075 MR. ROGERS: So it could be more, it could be more. Hydro Ottawa could be paying more than my client proposes to collect. 1076 MR. AIKEN: Yes, they could be paying more. But remember these numbers here are only for the shared lines cost. 1077 MR. ROGERS: Thank you. 1078 Now, one other aspect I'd like to explore with you, please, and that is the question of how you decide what the charge will be. Now, let's suppose that the Board accepts your proposition that it should be based on user-pay. If we look at your table on page 8, the last two columns show an average monthly billing demand in 1999 megawatts, and then the cost at 0.553 cents per kilowatt. Do you see that? 1079 MR. AIKEN: Yes, although it's 55.3 cents, not .553 cents. 1080 MR. ROGERS: Thank you. I might have the wrong -- what I want to get at is this issue about -- no, I apologise. It's page 7, the table before. You and Mr. Snelson propose that only those who are physically connected to the low-voltage system should pay its cost; correct? 1081 MR. AIKEN: Yes. 1082 MR. ROGERS: And you've heard evidence that a number of these local distribution companies are hooked up physically both to the transmission system and to the low-voltage system; correct? 1083 MR. AIKEN: Yes. 1084 MR. ROGERS: That's because somebody at Ontario Hydro, in the old days, thought that was the least-cost solution to get that power to that municipality; correct? 1085 MR. AIKEN: I assume that could be one of the considerations, yes. 1086 MR. ROGERS: All right. Now, your proposal is that my client should only be allowed to charge those customers who are physically connected to the system, and only for that demand that actually is served by the low-voltage facility. 1087 MR. AIKEN: Yes. 1088 MR. ROGERS: Now, I appreciate that you've accepted that 1999 billing demands should be used for the charge determinant here, and that results in the fixed cost. 1089 MR. AIKEN: Correct. We've accepted that as a transitional measure, yes. 1090 MR. ROGERS: But going forward, if it wasn't a fixed cost, such a system would allow for gaming by the local distribution company, wouldn't it? 1091 MR. AIKEN: I'm not aware of what operating circumstances would allow them to do that or would not allow them to do that. 1092 MR. ROGERS: So you have not taken that into account for your proposal. 1093 MR. AIKEN: No. 1094 MR. ROGERS: Do you know what gaming means? 1095 MR. AIKEN: Yes. 1096 MR. ROGERS: You probably know better than I, but I'm instructed that a utility would have some control whether it took its power from the low-voltage connection or from the transmission connection; do you accept that? 1097 MR. AIKEN: I would accept that that's a possibility, yes. 1098 MR. ROGERS: All right. And so the utility, just taking your table here, could reduce its cost by diverting demand away from the low-voltage connection to the transmission connection. 1099 MR. AIKEN: And vice versa, yes. 1100 MR. ROGERS: Notwithstanding the fact that that low-voltage connection was provided by that utility for that LDC's sole benefit. 1101 MR. AIKEN: I thought your premise was that the low-voltage system was to the benefit of everybody. 1102 MR. ROGERS: No, this connection to the one utility, I'm talking about. 1103 MR. AIKEN: Connection to the one utility only? 1104 MR. ROGERS: No, Mr. Aiken. I'm talking about a utility. Perhaps let's take one of yours. I think your client qualifies. Ottawa has both; they're hooked up to the transmission system and to the distribution system, aren't they? 1105 MR. AIKEN: Yes. 1106 MR. ROGERS: Now, I'm suggesting to you that the cost incurred in hooking them up to the low-voltage system was for their benefit. 1107 MR. AIKEN: Yes. 1108 MR. ROGERS: They're a user; right? 1109 MR. AIKEN: Yes. 1110 MR. ROGERS: But if they, by their own means, deflect consumption away from the low-voltage connection to the transmission connection such that they lower their power bill, they can avoid some of the cost of that low-voltage asset provided for them, can't they? 1111 MR. AIKEN: Yes. 1112 MR. ROGERS: That's called gaming, isn't it? 1113 MR. AIKEN: Yes. 1114 MR. ROGERS: And that creates risk for the utility, obviously. 1115 MR. AIKEN: Yes. 1116 MR. ROGERS: And can result in stranded assets that the remaining customers have to pay for. 1117 MR. AIKEN: I think that's a separate issue, as to how you would deal with any such stranded assets. 1118 MR. ROGERS: All right. In any event, we've established that we've got a gaming problem here, based on Mr. Snelson's proposal, if he didn't use the 1999 billing demands. 1119 MR. AIKEN: Yes. 1120 MR. ROGERS: Thank you. And this is something that we'll have to be concerned about going forward if your user-pay proposal is accepted after - after - this initial period when I concede that you accept the 1999 billing demand. 1121 MR. AIKEN: Are you saying if we were to go forward in the future and we use actual billing demand rather than historical? 1122 MR. ROGERS: Right. 1123 MR. AIKEN: Yes, that would be part of the forecast risk that the utility would be dealing with, yes. 1124 MR. ROGERS: All right, thank you. 1125 Now, dealing -- just back with your customers, if I wanted the Board to be aware of what the impact of my client's proposal was on your clients as compared to what you've shown here at page 8, you've shown that Ottawa Hydro, for example, under the heading "Cost," at $0.17 per kilowatt-hour, that Ottawa Hydro will have a bill of about $2.3 million; right? 1126 MR. AIKEN: Yes. 1127 MR. ROGERS: Now, two points I wanted to make there. Number 1, that will not be an incremental increase for them, will it, over what they're paying now, because they're already paying something around 2 million or less. 1128 MR. AIKEN: That's my understanding, yes. 1129 MR. ROGERS: Or possibly even more. You don't know for sure; right? 1130 MR. AIKEN: Well, based on the evidence in this hearing, I believe the rate provided by Hydro One is 12.7 cents, which roughly would be a third of 17 cents. 1131 MR. ROGERS: So if that figure is roughly correct, what that means is that the impact of this proposal that my client is making on your clients would be much, much reduced from what you've shown on this table. 1132 MR. AIKEN: No, because this table shows that the difference between the Hydro One proposal, which is 17 cents, and the Coalition proposal, it does not show the impact from any embedded rates currently paid by utilities. 1133 MR. ROGERS: Thank you, that's really the point I'm trying to make. So if it did show that, it would show a relatively modest increase of maybe a third, at most, based on the 12 cents. 1134 MR. AIKEN: No, because if we were looking at the 12 cents and saying that was, for example, 1.6 million, the Power Budd cost proposal is 200,000, so, yes, a differential is smaller. 1135 MR. ROGERS: All right, thank you. 1136 I notice, by the way, that one of your companies you've given advice to was the Middlesex Power Distribution Corporation. 1137 MR. AIKEN: That's correct. 1138 MR. ROGERS: According to your qualifications, you prepared evidence on rate unbundling for them; is that right? 1139 MR. AIKEN: Yes. 1140 MR. ROGERS: And did you apply strictly the user-pay principle when you unbundled their rates for them? 1141 MR. AIKEN: No, because they did not do a cost-allocation study specific to their merger of the three utilities. 1142 MR. ROGERS: I see. Are you recommending to them that they have a user-pay cost allocation for the next filing before this Board? 1143 MR. AIKEN: I'm not recommending anything because I believe that's a direction from the Board to all utilities. 1144 MR. ROGERS: I see. But if they asked you, you'd recommend that it should be based on user-pay, their rates, would you? 1145 MR. AIKEN: Yes, their cost-allocation study would be, yes. 1146 MR. ROGERS: Okay. I see you also have consulted for Five Nations Energy Inc. 1147 MR. AIKEN: Yes. 1148 MR. ROGERS: Have you recommended for them that user-pay is the way to go? 1149 MR. AIKEN: They're not at a stage where I would recommend user-pay. 1150 MR. ROGERS: But if they ask you, you'll be advocating to them that they should be promoting user-pay? 1151 MR. AIKEN: Yes, I would recommend a cost-allocation study based on cost causality and rate design based on user-pay. 1152 MR. ROGERS: Now, cost causality and user-pay can be different, can't they? 1153 MR. AIKEN: That's correct. 1154 MR. ROGERS: Yes. Cost causality is really what we should be looking at, isn't it, in cost allocation. 1155 MR. AIKEN: Yes. 1156 MR. ROGERS: Thank you. 1157 One last question. Your counsel has reserved the right to argue that if the Board doesn't accept my client's proposal here, that perhaps the shareholders of Networks should absorb the revenue shift. I'm not sure he's going to argue that, but he's reserved that right. 1158 Now, if the Board accedes to Networks' proposal, it will impose costs on Ottawa Hydro, and so on; right? 1159 MR. AIKEN: Yes. 1160 MR. ROGERS: Do you know, will Ottawa Hydro, will their shareholder absorb the increase in cost because of the low-voltage charge, or will they pass it on to their customers? 1161 MR. AIKEN: I'm not aware of what their intention is at this time. 1162 MR. ROGERS: The proper rate-making treatment, in the absence of something else, is that the customer should pay if those assets are used; right? 1163 MR. AIKEN: Yes. 1164 MR. ROGERS: Thank you, sir, those are my questions. Thank you very much. 1165 MR. VLAHOS: Thank you, Mr. Rogers. 1166 Dr. Zerker. 1167 QUESTIONS FROM THE BOARD: 1168 MS. ZERKER: Mr. Aiken, I just need to clarify a couple of things. 1169 When you opened your remarks, or the evidence, you said that this is dealing with shared lines. Do you mean that your clients have a dual system, when you're talking about shared lines? 1170 MR. AIKEN: Yes, I'm speaking about the shared lines as defined by Hydro One in their evidence as compared to a specific line, I believe their term is, which -- the cost of which can be identified separately by utility. This is the shared pool. 1171 MS. ZERKER: Oh, I see. And of your five clients that you've listed on page 8, one of them doesn't fit into that category? 1172 MR. AIKEN: That's right. It's my understanding that St. Catharines Hydro is connected to the high-voltage transmission system only. 1173 MS. ZERKER: So the high-voltage transmission system. 1174 MR. AIKEN: Yes. 1175 MS. ZERKER: What is the distinction between the use of the term that I've heard, "dual system," and shared lines? I just want to get my understanding clear on this. 1176 MR. AIKEN: I'm not sure of the reference to dual system. But my definition of a dual system is a utility that's connected to both the high-voltage system and the low-voltage system. 1177 MS. ZERKER: That's what I assumed, too. And the shared line means instead that a single line could actually deliver two different voltages? 1178 MR. AIKEN: No. A shared line would be a line that would deliver power to more than one utility. 1179 MS. ZERKER: Oh, okay, I've got it now. All right, thank you very much. 1180 MR. VLAHOS: Mr. Aiken, just a couple of questions. 1181 You keep referring to these shared lines, LV lines. 1182 MR. AIKEN: Yes. 1183 MR. VLAHOS: And I don't know if you have the evidence by the company before you or not. Do you? 1184 MR. AIKEN: Yes, I do. 1185 MR. VLAHOS: Okay. Can you just turn to -- turn up Exhibit E, tab 3, schedule 1, page 32 of 38. 1186 MR. AIKEN: Sorry. That was tab 3? 1187 MR. VLAHOS: Tab 3, schedule 1, page 32 of 38. 1188 MR. AIKEN: Page 32. 1189 MR. VLAHOS: Is that table 3-6? 1190 MR. AIKEN: Yes, I have that. 1191 MR. VLAHOS: Can you read that table for me. It says "shared lines," under "cost function." Every row that follows from that, does that pertain to the title "shared lines," which would include the distribution stations? 1192 MR. AIKEN: I don't believe so. I believe that the shared lines -- the first shared lines row that has nothing in it, the rest of the row would refer to the second shared lines that has the 17-cent charge across it. 1193 MR. VLAHOS: So I could delete that first shared lines, the bolded part. 1194 MR. AIKEN: Yes. My understanding is, for example, the next one says "LV line," and that's a summary for the specific lines, so there what we've been talking about is the shared lines line only. 1195 MR. VLAHOS: So your testimony now deals only with the line called shared lines? 1196 MR. AIKEN: That's correct. 1197 MR. VLAHOS: Only? 1198 MR. AIKEN: Yes. 1199 MR. VLAHOS: So when I read -- for example, if I go to your evidence, on page 3, and I look at distribution lines, which is line 18 of that page. 1200 MR. AIKEN: Yes. 1201 MR. VLAHOS: Okay. Does this relate to the shared lines? Does it relate to distribution line on that table which is about halfway down the table? 1202 MR. AIKEN: The distribution line in my evidence relates to the shared line shown in table 3-6. 1203 MR. VLAHOS: Okay. So it is not -- your whole evidence, what you said, the distribution lines still goes to the very top line. 1204 MR. AIKEN: Yes. If I remember correctly, the distribution lines have costs that are allocated to the shared lines function and to the specific line functions, which you would find on table 3-6, under distribution line, about halfway down the table, "specific line." There are costs allocated to shared lines and specific lines. My evidence deals with the shared lines portion only. 1205 MR. VLAHOS: Okay. And if the Board were inclined to adopt your proposal, Mr. Aiken, if you look at that table 3-6, what needs to be changed? 1206 MR. AIKEN: Under the monthly rate, under the shared line row, the first 17-cent number would be removed because the rate would not be applicable to all LDCs; the second 17-cent charge would become 55.3, and by "embedded LDCs" I would include in there the LDCs that are totally connected to the low-voltage system, i.e., not connected to the high-voltage; plus the low-voltage of the "dual customer" that are connected to both; and then the embedded directs would also be 55.3. 1207 MR. VLAHOS: Okay. So if that were the rate schedule to apply, then, there would be a number of smaller customers that would take service under the LV rates; right? 1208 MR. AIKEN: A smaller number of customers, of LDCs. 1209 MR. VLAHOS: Of LDCs, yes. 1210 MR. AIKEN: Yes. 1211 MR. VLAHOS: And everything else being equal, then the total -- from the revenue requirement perspective for Hydro One, they would be indifferent, or do they have to change their own receipt rates? 1212 MR. AIKEN: No. There's a shift from the allocation of costs, the 12.9 million that's referred to back at the bottom of page 5 of my evidence. 1213 MR. VLAHOS: Right. 1214 MR. AIKEN: That 12.9 would be shifted to Networks retail. 1215 MR. VLAHOS: Okay. And can you just explain to us, how does that work? Say you start with, according to the company's proposal, everyone pays, all LDCs pay, and at the same time retail customers pay a portion of those LV costs because Hydro One is a distribution company as well as a provider of low-voltage transmission. 1216 MR. AIKEN: Yes. 1217 MR. VLAHOS: And now you take -- now you say that some LDCs don't have to pay because they have absolutely no connection to the low-voltage. So would I then take the revenue foregone from not charging those not-directly-connected LDCs to recover them from the balance of the LDCs? Are you with me? 1218 MR. AIKEN: No. 1219 MR. VLAHOS: You're not. 1220 MR. AIKEN: Sorry. What our proposal is is that this 12.9 million is a shift in cost to Networks retail, so now that there is a lower level of cost to be recovered from the remaining LDCs. In addition to that, the LDCs that would pay that lower remaining cost is a smaller subset because they would not include the customers who are not connected to the low-voltage system. 1221 MR. VLAHOS: Okay. 1222 MR. AIKEN: It's really a two-step process. There's a reallocation of cost and then there's a recovery of the lower amount that's required from the low-voltage users. 1223 MR. VLAHOS: So this shift, really, this shift, based on the company's proposal and your proposal, is more than $12.9 million. There are two shifts here; one is that only the directly-connected -- I'm sorry, let me rephrase that. The LDCs, they are only connected to the transmission company, not the distribution; they are forgiven from paying anything, okay? So that leaves an amount of money that has to be collected from someone. 1224 MR. AIKEN: Yes. 1225 MR. VLAHOS: Okay. And that amount of money has to be collected from two sources; one is distribution retail and -- or all other LDCs that either wholly or partially are connected to the LV system. 1226 MR. AIKEN: That's correct. 1227 MR. VLAHOS: Okay. 1228 MR. AIKEN: If you look at page -- 1229 MR. VLAHOS: I'm sorry, let me just -- 1230 MR. AIKEN: Sorry. 1231 MR. VLAHOS: And the total cost, then, that are being shifted, it's more than 12.9. 1232 MR. AIKEN: Yes. The first -- 1233 MR. VLAHOS: What are those costs? 1234 MR. AIKEN: The first shift is the 12.9 -- 1235 MR. VLAHOS: To the retail. 1236 MR. AIKEN: The second shift, if you look at the table at the top of page 7 -- 1237 MR. VLAHOS: Of your evidence? 1238 MR. AIKEN: Of my evidence, yes. Our proposal is shown in the total right-hand -- in the right-hand column, the 55.3 cents. That entails a further shift within the group of customers who are -- the non- Networks retail customers LDCs, and that shift is instead of paying -- everybody paying 17 cents, the users pay 55.3 cents. 1239 MR. VLAHOS: Do we have a total absolutely, an amount, an estimate, in the evidence? The company's evidence -- 1240 MR. AIKEN: Of the total shift? 1241 MR. VLAHOS: Well, you talk about the 12.9. How can I translate the 55.3 cents versus 17 cents that would apply to the subset of the LDCs? Is there a dollar figure that we have in evidence? 1242 MR. AIKEN: No, there's not, but I could undertake to provide one for you. 1243 MR. VLAHOS: Nobody has asked that question, to your knowledge, in the interrogatories? 1244 MR. AIKEN: Not to my knowledge, no. 1245 MR. VLAHOS: You could have used the evidence by Hydro One to estimate that amount. It's all here. 1246 MR. AIKEN: Well, the way I would estimate the amount is I would take the 55.3 cents, subtract off the proposed 17 cents -- 1247 MR. VLAHOS: Right 1248 MR. AIKEN: -- and multiply that by the 29.39 megawatts represented by those customers, times 12, and that would be the increase to those customers, or the shift to those customers. 1249 MR. VLAHOS: Okay. That's just a calculation again. You gave us the formula; we can do the calculation. 1250 Mr. Rogers -- 1251 MR. ROGERS: This question has been answered, I think. 1252 MR. VLAHOS: Yes, I thought so. 1253 MR. ROGERS: I think that the company provided it in response to an undertaking, and I'll get you the number in a moment. It's Exhibit H, tab 3, schedule 1, page 1. And the totals are, 9.5 million were transmission-connected and 16.8 million for the dual-connected, and I think you sum the two to get the total impact; it's $26.3 million. 1254 MS. LEA: Sorry to interrupt you. You've got a $12.9 million shift out of the pool altogether to retail. 1255 MR. AIKEN: Yes. 1256 MS. LEA: And I'm sorry, Mr. Rogers, what H.3.1 is telling us is cost shifted within the pool? Because it said revenues would forego. You're not talking about shifts within the pool. It's shifted off someone and not collected from anyone else. 1257 MR. ROGERS: I'll call some reply evidence on this so it's clear, from Dr. Poray. Rather than me trying to explain it, I'll have Dr. Poray do it. 1258 MS. LEA: Thank you. 1259 MR. VLAHOS: Lastly, Mr. Aiken, you spoke of some kind of phasing-in or mitigation measure, that it would not be inappropriate -- those are my words, not yours. 1260 MR. AIKEN: I'd agree with your words. 1261 MR. VLAHOS: Okay. I guess the question is, mitigation means that I owe X but I pay something less than X today. Who is going to pay the difference? I will still be on the hook for that, or somebody else? 1262 MR. AIKEN: I think you could have scenarios both ways. The mitigation measures I was looking at, and maybe it's similar to the response to Board staff interrogatory, your question number 1, and an option there is -- now, I'll quote here, it says: "The Board could also decide on a combination of the above alternatives," which I'll come back to in a minute, "such that the overall revenue requirement of the cost of 19.5 million associated with the LV system are recovered through different charges to the different groups of LDCs." And the combination of the above alternatives is our preferred end state, the 55.3-cent charge, shown on page 8 of the evidence, I believe it was -- sorry, shown on the top of page 7, with a -- that being one of the alternatives; the other being the 10.3-cent charge to everybody, including the non-customers of the low-voltage system. Or it could be a weighted average. You could -- instead of going from 17 to 55 cents, you might say that half of that in! crease was reasonable as part of transition method, and then back out what the rate would have to be to the non-connected LDCs so that Hydro One would recover the 19.5 million 1263 I have done an example where, if half of the increase from the 17 to the 55.3 cents was implemented now rather than putting in the full increase, that would mean roughly a 36-cent charge in place of the 55.3 cents based on actual use of the -- the 1999 use of the low-voltage system. And that would mean that the non-connected customers would pay roughly 4 to 4.5 cents based on 1999 actual billing demands. So it's a phase-in with an increase to one group of customers and a decrease to another. 1264 MR. VLAHOS: For example, if you look at a two-year phase-in, just to make the arithmetic easy, the cost -- the retail rates have to recover instead of $12.9 million, which is your evidence, half that amount. 1265 MR. AIKEN: No. The 12.9 is the first pot of cash that is moved to Hydro, to Networks retail. That is independent of the shift within the remaining customers who will be paying the low-voltage charge. My rate mitigation is for the non-retail LDCs. 1266 MR. VLAHOS: But isn't the $12.9 million, doesn't it arise out of the fact that Hydro One distribution is also a customer of LV? 1267 MR. AIKEN: Yes, that -- they're allocated a greater share of the cost when you take out the customers who don't use the system, under the cost-allocation methodology. 1268 MR. VLAHOS: Okay. So if mitigation would apply to another LDCs, why not Hydro One distribution? That's why I have a bit of a problem understanding that. 1269 MR. AIKEN: You could do that, yes. My rate mitigation measures were strictly within the other group of utilities. 1270 MR. VLAHOS: I understand. 1271 MR. AIKEN: Yes. 1272 MR. VLAHOS: I understand. You look at it as two different pools, if you like. 1273 MR. AIKEN: That's right. 1274 MR. VLAHOS: And you say that 12.9, well, that doesn't have to be mitigated, not necessarily. But if the Board wants to consider mitigation, it should be in the other pool; that's the shift of the $26.3 million. 1275 MR. AIKEN: Yes, you could consider mitigation in both pools. I would agree with that. 1276 MR. VLAHOS: Okay. These are the Board's questions. 1277 Mr. Taylor, any redirect? 1278 RE-EXAMINATION BY TAYLOR: 1279 MR. TAYLOR: Mr. Aiken, would you care to elaborate on any of the answers you gave to Mr. Rogers? 1280 MR. AIKEN: I'll make the simple answer no. 1281 MR. TAYLOR: Thank you. No further questions. 1282 MR. VLAHOS: Okay. Thank you very much, Mr. Aiken. You're excused. 1283 Mr. Rogers, you said something about reply evidence. 1284 MR. ROGERS: I wasn't intending to call any reply evidence, but I think there is some confusion about a pretty important set of numbers and so I would propose to ask Dr. Poray come and explain his calculation for you, and hopefully we can reconcile all these different numbers. 1285 MR. VLAHOS: That will be great, yes, thank you. 1286 HYDRO ONE NETWORKS - PANEL 8 - REPLY EVIDENCE 1287 A.PORAY; Previously Sworn 1288 EXAMINATION BY MR. ROGERS: 1289 MR. ROGERS: Dr. Poray, you've heard the exchange, and there is some confusion here which hopefully you can help us sort out. 1290 What I'd like to know is how do we reconcile the estimate that Mr. Snelson gave us and that Mr. Aiken gave us and that you give us? I think we're talking about slightly different ways to slice the pie here, but I'd like to try and reconcile them. 1291 Now, first of all, perhaps we can start with your exhibit, which is Exhibit H, tab 3, schedule 1, page 1. This was an answer to an undertaking given to, I think, Ms. Lea. 1292 MR. VLAHOS: Mine says schedule 3, though. I'm sorry. Would you cite that reference again? 1293 MR. ROGERS: Yes. It's Exhibit H, tab 3, schedule 1. Well, there's a 3 as well. 1294 MS. LEA: There is a schedule 3 but this is not the one we're talking about. 1295 MR. VLAHOS: That's not the one, all right. 1296 MS. LEA: It's a short undertaking. 1297 MR. ROGERS: I'm sorry, we don't have any extra copies. 1298 MS. LEA: It's okay. Some are being provided. I'll have to get it back, I'm afraid, sir. 1299 MR. VLAHOS: Okay. I'm sorry, yes, we do have that. Yes. 1300 MR. ROGERS: Now, let's just deal with your answer, first of all, Dr. Poray. Can you explain to us what those numbers represent. 1301 DR. PORAY: I'll try and do my best. 1302 First of all, can I maybe put this at a level that will -- that will establish a total for the shared lines, shared line cost. And if I may direct you to Exhibit E, tab 2, schedule 2, page 22, and specifically line 11 on that page. Exhibit E, tab 2, schedule 2, page 22, and specifically line 11. Okay? 1303 You will see at the end of that line a figure of $37.9 million. That is the total cost of the shared lines. Now, this is not allocated, this is just the total cost of the shared lines. And this is the cost made up of LV lines and distribution lines which perform a shared-line function. So all of those costs added together come to 37.9 million. 1304 If you go across to the previous page, page 21, you'll see a table 8 there, and the third column is the shared line column. At the bottom of that column you will see a figure of 32.3 million. So of that 37.9 million, 32.3 million is being allocated to all of the LDCs and the directs under Hydro One's proposal, which means that 5.6 million, which is the difference between 37.9 and 32.3, is picked up by Networks distribution and that is part of the costs that's allocated and found in the 762.2 million, which forms the basis of the distribution rates. So that $5.6 million for the shared LV lines is already taken into account in Networks' distribution costs. 1305 If we now go -- so this is the proposal. Networks' proposal is to allocate the $32.3 million of the $37.9 million to all LDCs and embedded large users. 1306 MR. VLAHOS: Dr. Poray, just so I can follow, the difference between the 37.9 and the 38.6 is what? 1307 DR. PORAY: No, 32.3. 1308 MR. VLAHOS: No, I know. But the figure that has been kicked around is 38.6. 1309 DR. PORAY: Certainly. 1310 MR. VLAHOS: The difference is what? Is it miscellaneous -- 1311 DR. PORAY: No. If I can take you to table 8 again. The 38.6 is the total of shared lines, specific lines, HDVS and shared DS and specific LDVS which applies to non- Networks entities. That $38.6 million, you will remember when we went through the diagram on page 7 of Exhibit E, tab 1, schedule 1, which showed how we broke down the costs, starting at 800.8 million, and then we ended up with two boxes at the bottom; on the left-hand side it said 38.6 and on the -- in the middle of that diagram it said 762.2 million. The 38.6 million is the total of all LV costs that are to be allocated to all LDCs and embedded directs. And of that 38.6, 32.3 is just the shared line. The other are the station costs and the specific line costs. 1312 MR. DAVIES: Excuse me just one minute. Can I just ask for a clarification of what you said before. Is it the case that some of the 38.6 million is included in the 762 million retail revenue requirement, or are those totally separate? 1313 DR. PORAY: They're totally separate. 1314 MR. DAVIES: Okay. So the 762 is retail, the 38.6 is LD, and those are totally separate recovery amounts. 1315 DR. PORAY: That is correct. 1316 MR. DAVIES: Okay. 1317 DR. PORAY: Okay. So we know from this that $32.3 million is associated with shared LV lines. That is the only number that's changing in terms of the 17-cent rate and the 56-cent rate. All the other LV rates which pertain to specific lines and shared stations, they don't change. 1318 If we now go to Exhibit H, tab 3, schedule 1, page 1, what we have shown there is the amount of dollars that would not be recovered if the transmission-connected LDCs were not to be charged the 17 cents. 1319 The first -- the first paragraph pertains to only those transmission LDCs that are connected at the transmission system and they have no other connections, and I said that there were 33 of those. If you take the associated megawatts at the transmission delivery points and multiply it by 17 cents, you will come to the number of 9.5 million a year. 1320 The second paragraph deals with the dually-connected LDCs. These are the LDCs that are connected by both the transmission and the distribution voltages, and accounting for the transmission-connected delivery points and the associated megawatts, multiplying those by 17 cents, we get the $16.8 million. 1321 So if we were to move away from Networks' proposal and not charge any of the T -- of the transmission-connected LDCs, the total amount that would not be collected would be $26.3 million, the sum of those two numbers. 1322 MR. VLAHOS: Sorry, the sum of them. 1323 DR. PORAY: Yes. 1324 So now what we have to do is reallocate that $26.3 million. 1325 MS. LEA: Sorry, Dr. Poray, I don't want to confuse the issue. Is the 13 -- the 12.9 in here yet or not, or -- 1326 DR. PORAY: I'll get to that. 1327 MS. LEA: Great, thank you. Go ahead. 1328 DR. PORAY: I'm sorry to be doing this. But if we go back to the main part of the evidence, again at Exhibit E, tab 2, schedule 2, page 22, at the bottom of the page there is a table there called table 9, and that table reallocates the dollars that we spoke about to just the users pool. So what we now have to do is to reallocate that $26.3 million to the embedded LDCs, to the embedded directs, and to Networks retail. 1329 Now, the $26.3 million, if you were to use the percentage factors there, would be allocated in the following way: Networks would pick up an additional $12.8 million, or 12.9, which I believe was equivalent to Mr. Snelson of about 13.5; the embedded LDCs would pick up $11.3 million; and the embedded directs would pick up $2.2 million. And if you sum up those three numbers together, you should have $26.3 million. 1330 MS. ZERKER: I'm sorry, I don't understand. Pick up -- by your concept of picking up, are you adding? 1331 DR. PORAY: Yes, you're adding to the existing allocated amounts under the 17 cents; you're not going towards the user-pay pool. It means that both -- all three constituents, if you like, of that pool, which is the embedded LDCs, the embedded directs, and Networks retail, have to be allocated or they pick up additional costs. 1332 MR. VLAHOS: And back to my question of Mr. Aiken of the mitigation measure, and I used the example of, say, two years, then the Board would have an option, for example, to say the retail still picks up its portion of 12.9 but the other two, there is over a two-year recovery period. Do you follow what I'm saying? 1333 DR. PORAY: I guess you're talking about the mitigation plan. 1334 MR. VLAHOS: Yes. 1335 DR. PORAY: Yes. I mean, you could institute a mitigation plan 1336 MR. ROGERS: It's a little more complicated. 1337 MR. VLAHOS: I believe that does help. 1338 MR. ROGERS: I -- 1339 MR. VLAHOS: I wish I asked that question two days ago. 1340 MR. ROGERS: I asked it a number of weeks ago and I forgot the answer until he just reminded me of it. 1341 Yes, Dr. Zerker. 1342 MS. ZERKER: You were referring to table 9, but the table -- the numbers you vocalised don't fit table 9 so I wonder, are you -- are you just using a percentage of something that I don't quite understand? 1343 DR. PORAY: The title of table 9 is "Monthly Non-Coincident Peaks of User-Only Pool." What that table shows are really the megawatts associated with the embedded entities, and as a result of those megawatts, you establish what are the allocating factors, which are in the last column. 1344 MS. ZERKER: All right. 1345 DR. PORAY: So, in other words, the embedded LDCs now pick up 42.5 per cent of the costs, directs pick up 9 per cent, Networks picks up 48.5. If you wanted to compare that, if you go back to table 3 on page 14 of the same exhibit, and that shows, again, the non-monthly coincidental peaks, but this time we're including all the LDCs, what you'll see in here is all the LDCs pick up the bulk of the shared line cost of 82.6 per cent. So when you remove the transmission-connected LDCs which have the biggest megawatts associated with them, the embedded LDCs and Hydro One Networks pick up about half of the shared line costs. 1346 Dr. Zerker, if you wanted to do the actual arithmetic, you could take the number of 37.9, on line 11, on page 22, and just multiply it through by the percentages in table 9, and you would get the total numbers. 1347 MS. ZERKER: That's good, thank you. 1348 MR. VLAHOS: Thank you, Dr. Poray, that really helps. 1349 MR. ROGERS: That being the case, then I have no more evidence to call. 1350 MR. VLAHOS: Okay. 1351 Ms. Lea, I guess that concludes the evidentiary portion of the hearing? 1352 MS. LEA: It does. 1353 Mr. Rogers, I have noted there are three outstanding undertakings, and my calculations are that they are as follows: H.3.2, which is the breakdown of the cost represented in the little box, low-voltage analysis, so that's H.3.2. And then H.5.1 and H.5.3 which are from today. 1354 MR. ROGERS: I believe that H.3.2 has been filed, but I'll check. 1355 MS. LEA: It has? I looked. It may well be that my filing system is out of order, but I don't have it for the public file. So if it has been filed, I need it again, and I'm sorry. 1356 MR. ROGERS: There are some at the back of the room. It has been filed. We'll get you a copy. 1357 MS. LEA: Thank you very much. That leaves the two outstanding from today, then. 1358 MR. ROGERS: I'll try to get them as soon as possible. 1359 MS. LEA: If you can file them by the time of argument in chief, then the parties can respond to them if necessary. Whether it matters as to time or not, I don't know. 1360 MR. VLAHOS: Okay. With that, Mr. Rogers, I guess argument is left for discussion. You have suggested some days ago to come on Wednesday, and we said 9:00 would be fine. But the Board cannot sit beyond 12, and you indicated it will not be more than a couple hours. 1361 MR. ROGERS: I promise I won't take that long, and I'll even speak slowly. 1362 MR. VLAHOS: I didn't hear the last comment so I won't respond to it. I'll let it go. 1363 The intervenors were given five business days, as I understand, or was -- was it business days? 1364 MS. LEA: Yes, I think so. That would be April 17th. 1365 MR. VLAHOS: The 17th. And the company will have five business days, which will take us to April 24th. 1366 MR. ROGERS: That's satisfactory, thank you. 1367 MS. LEA: And I gather the intervenor and reply argument are going to be in writing? 1368 MR. VLAHOS: I assumed that all along, yes. 1369 MS. LEA: Thank you. 1370 MR. VLAHOS: It's just your in-chief that will be oral. The reply argument and the intervenors' argument will be written. 1371 MR. ROGERS: Yes, that's satisfactory, thank you. 1372 MR. VLAHOS: Okay. If there's nothing else, thank you very much. This completes the evidentiary portion of the hearing. And thank you all, and the reporter for her stamina. Thank you. 1373 You're excused, Dr. Poray. 1374 DR. PORAY: Thank you very much. 1375 --- Whereupon the hearing adjourned at 4:00 p.m.