--- Upon commencing at 9:35 a.m.  
         THE PRESIDING MEMBER:  Good morning.  Please be 
seated.  Good morning.  Welcome to the inaugural hearing in 
our brand new boardrooms.  I understand that we haven't 
decided what to name the hearing rooms yet and perhaps 
we'll take further submissions on that at the end of the 
case. 
         The Board is sitting today to hear an application 
by the Consumers Gas Company Ltd., carrying on business as 
Enbridge Consumers Gas, pursuant to section 36 of the 
Ontario Energy Board Act, for an order or orders approving 
or fixing a just and reasonable rates for the sale, 
distribution, transmission and storage of gas for the 
applicant's 2001 fiscal year commencing October 1st, 2001. 
The Board has assigned file No. RP-2000-0040 to this 
proceeding. 
         My name is Sheila Halladay.  With me today are 
Floyd Laughren and Cathy Spoel.  May I have the 
appearances, please. 
         MR. FARRELL:  Jerry Farrell for Enbridge Consumers 
Gas. 
         THE PRESIDING MEMBER:  Good morning, Mr. Farrell. 
         MR. BRETT:  Tom Brett for the Ontario Association 
of School Business Officials. 
         THE PRESIDING MEMBER:  Good morning, Mr. Brett. 
         MR. THOMPSON:  Peter Thompson for the Industrial 
Gas Users Association. 
         THE PRESIDING MEMBER:  Good morning, Mr. Thompson. 
         MR. POCH:  David Poch for the Green Energy 
Coalition. 
         THE PRESIDING MEMBER:  Good morning, Mr. Poch. 
         MR. JANNIGAN:  Michael Janigan for the Vulnerable 
Energy Consumers Coalition. 
         THE PRESIDING MEMBER:  Mr. Janigan. 
         MR. MONDROW:  Good morning, Madam Chair.  Ian 
Mondrow, counsel for HVAC Coalition. 
         THE PRESIDING MEMBER:  Good morning, Mr. Mondrow. 
         MR. KLIPPENSTEIN:  Good morning, Madam Chair and 
Member of the Panel.  My name is Murray Klippenstein 
appearing for Pollution Probe. 
         THE PRESIDING MEMBER:  Good morning, Mr. 
Klippenstein. 
         MR. HAMILTON:  Good morning.  Jim Hamilton for the 
Ontario Energy Savings Corp. 
         THE PRESIDING MEMBER:  Good morning, Mr. Hamilton. 
         MR. MACDONALD:  Glen MacDonald, Hydro One 
Networks. 
         THE PRESIDING MEMBER:  Good morning, Mr. 
MacDonald. 
         MS. ANDERSON:  Linda Anderson, monitoring for 
Union Gas Limited. 
         THE PRESIDING MEMBER:  Good morning, Ms. Anderson. 
         MS. DEMARCO:  Good morning, Madam Chair.  
Elisabeth Demarco on behalf of the Coalition for Efficient 
Energy Distribution. 
         MS. YOUNG:  Good morning.  Valerie Young for A.E. 
Sharp and for the Ontario Association of Fiscal Plant 
Administrators. 
         THE PRESIDING MEMBER:  Good morning, Ms. Young. 
         MR. HAYNAL:  Good morning.  I'm Tibor Haynal for 
TransCanada Pipelines. 
         THE PRESIDING MEMBER:  Good morning, Mr. Haynal. 
         MR. STACEY:  Good morning.  My name is Jason 
Stacey and I'm here on behalf of Scythe Energies Canadian 
Development Limited.  I just plan to monitor the 
proceeding. 
         THE PRESIDING MEMBER:  Thank you.  Good morning, 
Mr. Stacey. 
         MR. THOMPSON:  Ms. Girvan is sitting there and 
she's asked me to indicate to the Board that Robert Warren 
has another commitment today, but on his behalf could I 
enter an appearance for Mr. Warren on behalf of the CAC. 
         THE PRESIDING MEMBER:  Certainly, Mr. Thompson.  
Welcome, Ms. Girvan.  Any other appearances? 
         MR. MORAN:  Pat Moran, Board counsel. 
         THE PRESIDING MEMBER:  And last but not least, 
Board counsel.  Thank you.
         Before we begin, are there any preliminary 
matters?  Okay. 
         Mr. Farrell, I understand we have a settlement 
proposal?  
         MR. FARRELL:  Yes, Madam Chair, a complete 
settlement proposal. 
         THE PRESIDING MEMBER:  We'd like to proceed with 
the settlement proposal first and then proceed with the 
implementation of the settlement proposal.  And the Board 
would like to review the settlement proposal on an issue by 
issue basis.  We understand that the company have witnesses 
that are available to speak to questions that the Panel 
might raise in connection with the settlement proposal?


         MR. FARRELL:  That's correct. 
         THE PRESIDING MEMBER:  Mr. Farrell, would it be 
appropriate to swear in those witnesses now so that they're 
on the record and then we can ask whatever questions we 
want of them as we go through the proposal. 
         MR. FARRELL:  Yes indeed, Madam Chair. 


         THE PRESIDING MEMBER:  Thank you very much.  We'll 
swear in the witnesses. 



         THOMAS JOSEPH LADANYI, 
         DONALD ROBERT SMALL, 
         STEVEN DOUGLAS NOBLE,
 FRANK BRENNAN, 
         PASCALE DUGUAY; Sworn. 
         THE PRESIDING MEMBER:  Looks like we need an extra 
seat. 
         MS. DUGUAY:  I'll sit here. 
         THE PRESIDING MEMBER:  That's fine Ms. Duguay.  
         MR. FARRELL:  Perhaps I should indicate, Madam 
Chair, for the record, the names and positions held by the 
witnesses.  Sitting closest to the Board is Steve Noble.  
Mr. Noble is Manager Finance Regulatory.  Sitting to Mr. 
Noble's right is Tom Ladanyi.  He is manager regulatory 
proceedings.  Sitting to Mr. Ladanyi's right is Frank 
Brennan.  He is Director Gas Supply Services.  Sitting to 
Mr. Brennan's right is Don Small.  He is manager gas costs 
and budgets.  And sitting at the end of the line is Pascale 
Duguay and she is manager rate research and design.  Their 
CVs are contained in Exhibit A, tab 6, schedule 1. 
         THE PRESIDING MEMBER:  Thank you, Mr. Farrell.
         I know that it may sound tedious particularly to 
the parties and the intervenors who have had extensive 
discussion of all of the issues in coming to your complete 
settlement proposal, but for the sake of the Panel and the 
Board, we'd like to go through it in some detail and we 
have some questions we'd like to ask.  I suggest that 
intervenors, if you have comments or clarifications you 
would like to make, if we could do it on an issue by issue 
basis, rather than at the end of the company's presentation 
of the issues. 
         Mr. Farrell, Issue 1.1?  
         MR. FARRELL:  Did you wish me to try to summarise 
this for you, Madam Chair, or do you want to just ...  
         THE PRESIDING MEMBER:  Yes, please, why don't you 
just summarise your understanding of what the issue is and 
how it's been resolved.  Then of course if the intervenors 
disagree with your summary, they'll have an opportunity to 
speak up, and then if the Panel have any questions, we can 
ask them. 
         MR. FARRELL:  Well, essentially the issue turned 
on what throughput forecast to use for rate-making purposes 
in the test year.  In the course of discussing the issue, 
there was some concern expressed about the company's 
forecasting methodology for average uses.  That is 
indicated -- now I'm on page 8 in the second bullet point.  
And the parties came to an agreement on the volumes or the 
throughput that should be used in the test year.  They also 
agreed that there would be a reduction for the 
consequential effect of the gas savings in the DSM plan. 
         And then if you turn the page to page 9, you can 
see the settlement proposal expresses the concern of the 
other parties about the forecasts on an ongoing basis, and 
so the other parties expressed the right on a without 
prejudice basis to examine normalized average uses in the 
next rate case just to ensure that the methodology was 
working in the manner in which the company is confident 
that it is. 
         And the last bullet in this particular issue on 
page 9 again expresses intervenor concerns.  And so there 
was a similar reservation to re-examine it, but on whole, 
we agreed to file the evidence as described in the last 
bullet on page 9 under this issue in order to provide an 
evidentiary basis for intervenors to test the methodology 
in the next rate case if it comes to that or at least to 
have a basis for discussing the issue initially in a 
settlement context and then in a hearing is to be one on 
this issue. 
         THE PRESIDING MEMBER:  Thank you, Mr. Farrell.  I 
just have a couple of questions.  This is a new methodology 
that Enbridge implemented for this test year.  Is that 
correct? 
         MR. NOBLE:  Yes, it is.  
         THE PRESIDING MEMBER:  Based on the RP-99-0001 
decision that suggested that you look into? 
         MR. NOBLE:  That's right. 
         THE PRESIDING MEMBER:  Does this methodology take 
into account gas savings for DSM?  
         MR. NOBLE:  Yes, it does. 
         THE PRESIDING MEMBER:  And so is the negotiated 
change to your methodology -- is the negotiated change to 
your forecast based on the settlement proposal a double 
counting of the savings for DSM?  
         MR. NOBLE:  No, the only change resulting from the 
settlement proposal with respect to DSM became incremental 
to the changes that are already incorporated for the DSM 
savings within the throughput forecast. 
         THE PRESIDING MEMBER:  So because there was a 
change in the DSM, therefore this change in the forecast 
was a consequential change that was consistent with your 
model? 
         MR. NOBLE:  That's correct, yes. 
         THE PRESIDING MEMBER:  I understand you're going 
to have statistical information to support this model in 
the future rates cases.  Will this information be 
prospective or will it be retrospective as well?  In other 
words, based on this new model, will you be able to go back 
and look at previous years and see how this model would 
have -- the forecast that would have resulted from this 
model and be able to compare it with the actuals or is it 
just for this test year and on a prospective going forward 
basis? 
         MR. NOBLE:  No, we will be able to take a look 
back at how the model has performed but you have to 
remember that the model is designed for prediction future 
throughput forecast.  It's not designed to explain past 
variances. 
         THE PRESIDING MEMBER:  No, I understand that.  
         MR. NOBLE:  We can compare input variables, 
actual, so if we went back and tried to explain the 2001 
year in next year's rates case, we could go back and 
explain the 2001 input variables and we can also look at 
the actual variables that were experienced in 2001. 
         THE PRESIDING MEMBER:  But ... 
         MR. NOBLE:  But it's not going to explain 
everything that happened. 
         THE PRESIDING MEMBER:  No, I understand that a 
forecast is a forecast and the variables of a forecast and 
the reason you look at actuals is merely -- is not to 
confirm the basis of the forecast being an accurate 
forecast.  But presumably over a long period of time your 
forecast variables should fluctuate up and down from your 
median of the actuals based on your forecast.  Is that a 
fair assumption to make? 
         MR. NOBLE:  I think that's a fair assumption, yes. 
         THE PRESIDING MEMBER:  Okay.  Thank you.  No other 
questions?  Thank you, Mr. Farrell. 
         Issue 2.1?  
         MR. FARRELL:  This issue stemmed from the coming 
on-stream of the Alliance and Vector Pipelines and the 
issue was then broadened to incorporate the linked 
pipeline, but the real focus was on Alliance and Vector.  
And the settlement was intended to postpone, if you will, 
litigation as to whether or not the gas cost consequences 
of ECG's service agreements with Alliance and Vector should 
be fully recovered for rate-making purposes and the parties 
agreed on a formulaic approach to it and what the 
settlement proposal refers to as a notional deferral 
account.  In other words, we're not -- this is not a 
deferral account that would have any effect for the 2001 
test year, but rather would capture actual costs arising 
from ECG's use of Alliance and Vector and compare those 
costs to the costs that would have arisen had a 
corresponding quantity of service been purchased from 
TransCanada.  And that's what the formula is intended to 
depict so that in the next rates case there would be an 
evidentiary basis to compare the cost consequences of using 
Alliance and Vector as compared to the cost consequences of 
having used TransCanada instead.  Plus ECG would provide 
data on its actual delivered cost of gas on the Alliance-
Vector combination which we considered to be a single 
delivery path from Western Canada as well as data on the 
use of what I call the stand alone Vector which is from 
Chicago to Dawn.  And that was the basis for the settlement 
as you'll see at the bottom of page 12.
         There's a bullet at the bottom of page 12 -- an 
indented bullet I should say to be clear -- and three 
indented bullets at the top of page 13 which set out the 
conditions on which the parties reached agreement and 
essentially that any party can challenge the cost 
consequence of the new transportation path.  The challenge 
is not intended to be limited to just the comparison of 
Alliance and Vector with TransCanada.  It could -- for 
example, there could be a challenge based upon the cost of 
market area prices which you'll see as the reservation at 
the bottom -- or the condition at the bottom of page 12. 
         So, in essence, this was a settlement that was 
reached that has the effect of postponing litigation on 
this topic to the next case to provide an evidentiary basis 
where parties can examine the cost consequences of a full -
- actually it won't be a full year's use because Alliance 
and Vector didn't come on-stream until December 1st but 
look back at the cost consequences that arose and can't be 
settled in the context of the next case, then there would 
be an evidentiary basis upon which parties could make 
comparisons and recommend disallowances or otherwise based 
upon what this notional deferral account ends up showing 
when we have actual data. 
         MR. LAUGHREN:  Mr. Farrell, I'm still somewhat 
puzzled by the term "notional deferral account" and to what 
extent it's a tracking account versus a deferral account 
because I'm thinking of the disposition of the account and 
whether or not that could happen, so I'm puzzled by that 
term.  What's the difference between a "notional deferral 
account" and simply a "deferral account"?  I just don't 
understand it. 
         MR. FARRELL:  Okay.  Well, I think we at least, in 
my mind as the author of that term -- and if I make a 
mistake in what I'm explaining, I'll ask Mr. Noble or Mr. 
Ladanyi to correct me because they're more expert in terms 
of deferral accounts certainly than I am, but if we had a 
deferral account that was what I'll call a real deferral 
account operating in the test year, the data would be 
recorded in the same fashion.  There's no difference in how 
the record was kept.  However as I understand it, instead 
of coming forward and asking the Board to clear the account 
in the normal way, there would usually be a one-time charge 
to ratepayers.  That amount would then be brought forward, 
and the details underpinning the amount for examination in 
the next case, and if parties wished to challenge the cost 
consequences on a prospective basis for the Alliance and 
Vector service for fiscal 2002, they could do that.  They 
could also challenge the cost consequences that arose in 
2001, and if they were successful such that there was an 
amount to be disallowed pertaining to 2001, it wouldn't be 
cleared in the normal way.  It would actually be cleared by 
means of a credit to the revenue requirement for fiscal 
2002.  And in that sense, it's unlike the operation of a 
normal deferral account as I understand. 
         MR. LADANYI:  There's one additional thing that we 
should take into account.  In the account we have a 
traditional path transportation cost which in fact we're 
not incurring.  That is a calculation only, so we couldn't 
really have a real deferral account on that basis.  We need 
to have a notional deferral account because we have a new 
path transportation cost which is the Alliance and Vector 
but we also are calculating a traditional path for the same 
volumes.  So that would not really work in an actual normal 
course of events in a deferral account.  So therefore, 
that's another reason why it's a notional deferral account. 
         MR. FARRELL:  We are trying to track the cost 
differential between the two paths.  One path would be, 
hypothetical if you will, it would be a similar  -- if 
there are a hundred units moving through Alliance and 
Vector we'll have the actual cost for those hundred units.  
Then we would calculate the costs for a hundred units 
moving through TransCanada at whatever TransCanada's tolls, 
fuel ratio and so on are.  So then you arrive at a cost 
comparison with a differential that then could be used as a 
basis for saying Alliance and Vector is too expensive, for 
example, the Board shouldn't allow it.  That's the intent 
is to provide an evidentiary basis for a more thorough 
examination in a future case. 
         THE PRESIDING MEMBER:  So, Mr. Farrell, the reason 
it's a deferral account rather than a tracking account is 
because there may be retrospective cost consequences for 
the 2002 fiscal year based on 2001 data.  Is that correct?  
         MR. FARRELL:  That's correct, and I think if we 
had thought of the word "tracking", we would have probably 
used it instead of "deferral". 
         THE PRESIDING MEMBER:  So there is -- 
         MR. FARRELL:  There could be rate-making 
consequences that are retrospective, yes.  The short answer 
to your question is yes. 
         THE PRESIDING MEMBER:  Okay.  So there may be 
retroactivity.  That was my question.  My other question 
and this may just be a question of -- this is a question of 
clarification.  It deals with the differences of the paths 
and delivery at Dawn or at Parkway.  I appreciate that the 
gas flows in different directions at different times of the 
year, but are we comparing apples to apples, I guess?  And 
could you help me walk through that as to -- and it may 
just be based on Enbridge's method of costing.  I know that 
Union are telling us all the time that Dawn is a hub and 
everything is priced at Dawn and everything should be 
priced at Dawn, but I was just curious why it goes back and 
forth between Dawn and Parkway. 
         MR. BRENNAN:  Yes, maybe I can help you with that.  
The Alliance volumes will be moving from Northern Alberta 
and British Columbia -- well, Alberta, I guess, down 
through the Alliance Pipeline to Chicago and then will move 
on the Vector Pipeline to Dawn.  Once the volumes reach 
Dawn, for example, in the summer they'll be injected right 
into storage in all likelihood.  In the winter they'll be 
moving up to Parkway to the market. 
         Now if you go the traditional route -- and so 
because those volumes are only moving in the winter from 
Dawn to Parkway, that's why we prorate it, if you like, the 
Union rate, just for the five months on the Alliance route.  
Now, on the TransCanada route, the volumes are moving from 
Empress, let's say, through the TransCanada route into what 
we call the central delivery area which is our market.  And 
then during the winter, they'll go directly to the market.  
During the summer, those volumes, a good portion of those 
volumes will be moved on Union system back into storage.  
So that's why we included for the summer month some fuel to 
move those volumes back into storage during the summertime. 
         THE PRESIDING MEMBER:  But is delivery point for 
comparative purposes in both cases Parkway?  
         MR. FARRELL:  At the end of the day. 
         MR. BRENNAN:  Yes.  
         THE PRESIDING MEMBER:  At the end of the day, it's 
Parkway, not Dawn? 
         MR. FARRELL:  That's correct.  
         THE PRESIDING MEMBER:  Questions?  Thank you. 
         2.2.  
         MR. FARRELL:  I'm just sitting here wondering how 
I can summarize this. 
         THE PRESIDING MEMBER:  So were we, Mr. Farrell. 
         MR. FARRELL:  The issue arose because some parties 
wished to have a more regular adjustment of the utilities 
sales service price, the unit rate for system gas, if you 
will, than would arise from the trigger methodology where 
when you go over a certain amount per customer, then the 
company has to decide whether or not to apply and advise 
the Board and then it goes over another amount and then we 
apply.  So it started off, debate, if you will, or the 
discussion started off with can we have something that's 
more regular.  And a number of options were discussed 
during the course of the settlement conference and the 
parties reached agreement on the components of the issue, 
and they're the seven components that are enumerated at the 
bottom of page 13.  And they also agreed upon the eight 
principles that are enumerated at the top of page 14 that 
would involve the clearing of the PGVA and adjusting what's 
called the utility price.  That term was chosen to get away 
from the term reference price which seemed to be identified 
with the old method. 
         So these eight principles then in effect drove the 
discussion of the seven components.  And just proceeding 
through, starting on page 14, it was the -- overall it 
would be calculations made on a quarterly basis and using 
the methodology that's described under utility price.  And 
then the utility price would be adjusted and the PGVA would 
be cleared on an ongoing basis on a quarterly as a means of 
smoothing, if you will, price changes throughout the course 
of the year on a quarterly basis. 
         There was some concern expressed that the price 
adjustments may be variable up, down or whatever, and so 
the proposal was designed to create a smoothing effect.  
And if you need more details, I'll have to ask Ms. Duguay 
to give them to you.  But consistent with the idea of a 
quarterly adjustment was recommending a regulatory 
framework that would shorten the time that the Board needed 
to process it and also give fair notice to everyone who was 
involved.  Hence, the idea of an ongoing intervenors' list 
without the need to have a procedural order issued. 
         So the intent here was to lessen the regulatory 
burden from the Board's perspective as well as the 
company's perspective and the perspective of intervenors.  
There was also discussion of trying to derive on a cost 
allocation basis the fully allocated cost of providing or 
of managing, if you will, system gas, and that led to the 
two bullet points under Cost Allocation you see on page 17.  
The charges that are now in place for direct purchase 
administration for system gas I think are incremental, and 
so parties wanted to know what the actual costs would be on 
a fully allocated basis, so we've agreed to do the studies 
that you see described there. 
         And then there was also concern that the 
marketplace generally, both consumers who are interested 
and marketer as well, would have ready access via the 
Internet to what the charges were at any given point in 
time so they could if they were entertaining an offer from 
a marketer, they have a means of accessing the cost of the 
alternative, which system gas.  So that's the background, 
if you will, for the bullet points under pricing 
information.  It was to ensure that there is accurate and 
up-to-date price information on the cost of system gas by 
means of either going on-line or otherwise. 
         And then as the second last bullet on page 17 
indicates, our web site would then provide a link to other 
web sites that have information on competitive gas 
services, so an interested customer could say, okay, this 
is what system gas costs.  Now, I can go to -- we used the 
example, energyshop.com, and see how that compares to 
offerings by marketers in the marketplace. 
         And the last piece of the - I was going to say 
puzzle.  That's probably not a good word to use - is the 
implementation schedule and we thought it could be 
implemented on October 1st such that the first quarterly 
adjustment would be January 1, 2002.  Further details are 
available from the witnesses. 
         THE PRESIDING MEMBER:  Thank you, Mr. Farrell. 
         MS. SPOEL:  I have a couple of questions.  The 
first one is sort of a procedural one.  I notice that the 
parties who participated in discussion of the issue 
included the Ontario Energy Savings Corporation but they're 
not listed as agreeing, not agreeing or taking no position 
on the issue.  I don't know if that's an oversight on the 
drafting. 
         MR. FARRELL:  It is an oversight. 
         MR. HAMILTON:  I can confirm that is an oversight.  
OESC supports the settlement proposal. 
         MS. SPOEL:  Thank you.  The second concern that I 
have is the question of the ability to reduce -- I guess to 
reduce the regulatory burden for the Board in particular 
and also the parties in reviewing these adjustments on a 
regular basis.  And I wondered in your second bullet under 
Utility Price, you refer to the 21-day strip as being 
referenced from various sources such as the Natural Gas 
Market Reporter and whether that was sufficiently clear to 
allow these applications to be made and the Board to 
process them without getting into an issue as to what the 
sources of information should be.  A phrase like "such as" 
is a little loose perhaps. 
         MR. FARRELL:  Perhaps I'd ask Mr. Small if he can 
explain the sources they use.  The second bullet refers to 
a basket of pricing periods and pricing points and pricing 
indices.  It's a model that ECG has developed and Mr. Small 
can explain to you how it works. 
         MR. SMALL:  Essentially what happens is on a daily 
basis we get a copy or a sheet that tells us what the 
various prices are at the various delivery points, whether 
it's an NYMEX price.  We can also get a Dawn price, Chicago 
prices and AECO prices as well.  We'll have those prices 
for each individual day.  We load those prices into a 
database, and then what we'll do is we'll take a 21-day 
average of these various prices for a given month and apply 
that average unit price to the various supplies that we 
have in our portfolio.  For example, if we have a -- we're 
buying gas at Empress, for example, we'll know what the 
forward looking price is for Empress supplies based upon 
that 21-day average of forecast prices and we would apply 
that price to the forecasted level of Empress supplies we 
were expecting to buy in those future months. 
         MS. SPOEL:  So the reason you have to be somewhat 
less than specific is you're not actually sure from time to 
time what your source is and you weight it according to the 
source and so you use a variety of data points and sources 
for data?  
         MR. SMALL:  It's a combination of things because 
our portfolio going forward is going to be a mixture of 
contracts that we've already entered into that have 
specific pricing or editions within those contracts.  And 
there could be supplies that we know that we're going to 
have to buy, but we have yet to contract for them, but we 
know the receipt point that we're going to be buying those 
supplies. 
         MS. SPOEL:  Yes, I guess the issue I had wasn't so 
much with the variety of prices and so on but more the 
source of the data that you're going to use, the extent to 
which you can specify the sources of data or whether a 
phrase such as "such as" is sufficiently precise to make 
this a fairly straightforward exercise for all concerned? 
         MR. BRENNAN:  I think your question really is as I 
understand it, are we going to use this particular source 
for all of our information or are we going to use other 
sources as well. 
         MS. SPOEL:  Right.  And if you are using other 
sources as well, is it possible to specify what they are so 
that we have a list as opposed to just a general 
description. 
         MR. BRENNAN:  Right.  And if this is the one we're 
going to use, then get rid of the "such as." 
         MS. SPOEL:  Exactly. 
         MR. FARRELL:  My understanding is that the sources 
that are used reflect the pricing provisions in the 
company's contract, so on any day we have a contract that 
is referenced to NYMEX, NYMEX goes into the hopper.  If 
it's AECO-C, AECO-C goes in, and so these change over time, 
in particular since there's only one long-term contract 
left, that it could really change from month to month 
depending on the pricing provisions of the contract.  So as 
specific as we could get is - and I tried to indicate this 
here - the sources reflect the company's contracts and 
nothing else.  It's not sort of arbitrary of I'll take this 
one today and another one tomorrow. 
         MS. SPOEL:  Thank you. 
         MR. HAMILTON:  Can I just ask a question of 
clarification because this is an important point for us.  I 
just want to understand.  I think I do understand, but to 
the extent that you need a reference point for a NYMEX 
price, you will extract that from natural gas, whatever the 
identified source is, Natural Gas Market Reporter?  You 
won't go somewhere else to get a NYMEX price or somewhere 
else to get a Chicago price or somewhere else to get a Dawn 
price.  Do I understand that correctly? 
         MR. SMALL:  Well, on a daily basis you're going to 
have NYMEX prices for a future month reported. 
         MR. HAMILTON:  As reported in Natural Gas Market 
Reporter or as reported by NYMEX or what? 
         MR. SMALL:  What happens with respect to NYMEX is 
we get download information from Reuters, so we have the 
future NYMEX prices available to us from Reuters.  We 
download that information into our database so we have what 
the prospective prices are for NYMEX for those future 
periods.  So each day we compile that information and then 
when NYMEX closes for a particular month, we then have the 
price for the month, for the actual month.  But we're 
talking about future periods. 
         MR. HAMILTON:  I guess, Don, I'm still troubled by 
this because the purpose of moving to this new methodology 
is to make it more transparent and less controversial and 
more automated.  And I would have thought that a desirable 
feature of that would be that the parties would know the 
source of the information you're going to rely on so they 
can independently verify it without having to ask you where 
you got it from.  That's what I thought it was about in the 
first place, so if I've missed something, please tell me. 
         MR. SMALL:  I don't think you have.  I think 
pricing information, for various receipt points such as 
NYMEX prices, are available to everyone.  Everybody would 
be using the same -- if we were talking about what NYMEX 
was trading for August, for example, what the price for 
August was for NYMEX, everybody would have the same price 
for what NYMEX was traded for for today. 
         MR. HAMILTON:  But in your report to the Board, 
quarterly, recommending or not recommending a change, would 
you identify -- will you be identifying in that report the 
source that you're relying upon so that people don't have 
to come down here and ask you questions.  I mean, that's 
the whole purpose of doing this is so that parties would in 
effect only appear on a complaint basis if they felt that 
the formula had been inappropriately applied.  So that's 
really the key to the whole thing from our perspective. 
         MR. FARRELL:  If I could maybe just help here.  Is 
there one source? 
         MR. SMALL:  Well, we currently get on a daily 
basis from a financial institution -- they provide us with 
the prices that were traded for a particular day of what 
actual prices were traded for those various receipt points 
for the future period.  It's those prices that we load in.  
So it's the same source every day.  NYMEX, for example, we 
download from Reuters, but we're always talking about what 
the future price traded for that receipt point is, so ... 
         MR. THOMPSON:  What are all the sources?  Why 
don't we just list them and put them in the bullet point?  
         MR. FARRELL:  They may be the sources today but if 
another contract has another source then ... 
         THE PRESIDING MEMBER:  Excuse me, Mr. Poch, I 
don't think you have a microphone so the court reporter 
isn't able -- 
         MR. FARRELL:  Why don't we just let the witnesses 
confer. 
         MR. POCH:  I was just going to suggest the answer 
that my friend made which is simply that if on each 
occasion that this forecast is made if it's reported what 
particular sources were used at that time, everyone will 
have received that. 
         MR. BRENNAN:  Essentially we use the same -- as 
Mr. Small indicated, there is a sheet that we get every day 
from a financial institution, and we use that source each 
and every day.  That gets loaded into the model and those 
prices that are in there would be reflected from any other 
source presumably, whether it's NYMEX, AECO, the prices 
would be comparable to any other source that would be 
buying that same information at that same time. 
         MR. THOMPSON:  What's the financial institution?  
Is there something secret about it?  
         MR. SMALL:  It's not a big secret. 
         MR. THOMPSON:  A little one?  ECG Finance.  
[Laughter] 
         MR. SMALL:  The difficulty I'm having is I know 
that there's a disclaimer on the bottom of the sheet that 
we receive and I just can't remember offhand if it's a 
disclaimer just saying that this information is provided 
for the use of the customer and they use it at their own 
discretion or if it's a further disclaimer asking us not to 
divulge who that institution is. 
         MR. HAMILTON:  Excuse me, but again the whole 
purpose of this exercise is to eliminate the black box.  
That's the whole purpose of it.  So I really am disturbed 
to hear there's some financial institution that's got a 
disclaimer that may or may not allow me to access it or may 
or may not allow you to tell me about it.  I mean, why 
can't we just agree that there's a document that contains 
reference prices and to the extent that you need to extract 
a particular reference price for a particular calculation, 
you will extract it from that document and only that 
document.  I mean, at the end of the day, the NYMEX price 
is the NYMEX price, and I don't really care where you got 
it from.  I just want to know where it came from. 
         MR. BRENNAN:  I agree.  I have no problem with 
that at all. 
         MR. THOMPSON:  Why don't you check the document 
and see if you can disclose the financial institution.  If 
you can, just put it on the record, so we can all go and 
get it. 
         THE PRESIDING MEMBER:  I think that the issue is 
really transparency of the source of the price.  And I 
understand that you get it from a financial institution 
because it's altogether and it's nice to download into your 
system and that the sources may change.  But it seems to me 
as though either the source of the financial institution 
providing that information should be available so the Board 
and the intervenors cross-check or presumably the source of 
the information from the financial institution is also 
available so the financial institution would say we obtain 
this price from this source or from this source. 
         I mean, ultimately the sources have got to be 
public for the pricing information that you're basing it 
on.  And I guess what we would like is some sort of 
assurances that that information is transparent, is 
available so that the Board and the intervenors can double-
check your figures so there can be our due diligence.  And 
in fact if any of the intervenors at some point in time in 
the future want to challenge the validity of using one 
source for pricing versus another source for pricing, they 
at least know where that source is available. 
         Would that be a problem? 
         MR. LADANYI:  No, we'll check at the break to see 
how we can improve the wording in this section and we'll 
get back to you and we'll check about the disclosure and 
about the transparency of this information.  I presume 
we'll be here longer than the break. 
         THE PRESIDING MEMBER:  We're up to Item 2.2, Mr. 
Ladanyi.  That's correct.  Okay.  I appreciate that.  Thank 
you. 
         I just had a question and I meant to ask it for 
the previous one and it's throughout the document, and it 
refers to reports for the next rates case.  And I guess I'm 
-- sometimes it was the next rates case.  Sometimes it was 
the next rates case if the information is available or 
maybe the next rates case or -- can you help me on the 
timing issue of this report?  Presumably it won't be 
available for October 1st?
         MR. FARRELL:  Some of them may be.  It depends in 
part on how long the task that's been deferred, if I can I 
can use that term, would take.  For example, and we'll come 
to one of them yet, but I would think for the data on an 
actual and perhaps estimated basis for the Alliance-Vector 
notional deferral account would be contained in the 
application for fiscal 2002. 
         Some of the other items are phrased in a way 
that's vague because we're not clear yet whether we can 
accomplish -- in working with the other parties whether we 
can accomplish the objective in time to make that.  The aim 
is to try to be able to do all these things and incorporate 
them in some fashion in fiscal 2002 rates case.  Some of 
them may not physically be able to be accomplished at that 
time. 
         MR. LADANYI:  Our plan is to file the 2002 rates 
case hopefully in August which might be too soon for some 
of these activities to be accomplished.  We'll put our best 
efforts to try to do as much as we can and to accomplish as 
many of these things as we can, but there will be obviously 
calendar month limitations that we may not be able to do 
everything. 
         THE PRESIDING MEMBER:  I understand that.  Thank 
you, Mr. Ladanyi. 
         And I just want to clarify one more point, Mr. 
Farrell.  As I understand it, this proposal goes into 
effect for fiscal 2002.  So the proposal is as of October 
1st that the existing mechanisms -- PGVA will be totally 
cleared and that it is on a going forward basis starting 
October 1, 2001, for the 2002 financial year.  However the 
first adjustment on the quarterly base would be January 
1st, 2002.  Is that correct? 
         MR. FARRELL:  That's correct. 
         THE PRESIDING MEMBER:  Thank you.  Just one 
moment, please.  
         MS. SPOEL:  I have one other question in this 
section and that's related to the last bullet point on page 
18 which is the question of customer communication and 
education activities during the test year.  I understand 
there already is a customer communication plan deferral 
account which this year has a positive balance or negative 
depending on which side -- who you are. 
         In any event, I wondered if you had any idea of 
what sort of budget you're likely to be looking at?  What 
sort of size of item is this likely to be to communicate 
these regular adjustments in prices to your various 
customers?  It's open-ended. 
         MR. NOBLE:  I'm not aware of any discussions to 
this point in time as to exactly what communication will be 
required, so I don't think at this point in time that we've 
developed a budget for doing that education.  
         MS. SPOEL:  Do you have any sort of a plan as to 
what sorts of education or communicational activities time 
are likely to be required for this sort of thing given your 
past experience in communicating with your customers on 
various changes in pricing methodology? 
         MR. NOBLE:  I don't think we've specifically 
identified. 
         MS. DUGUAY:  Yes, I would agree with that.  
There's no definite plan for the time being to address the 
customer education and communication issue, but definitely 
it would be either through a bill insert, for example, such 
as is the method that we use to communicate rate changes to 
our customers.  It could be dealt through a direct mail 
piece which is typically more efficient in capturing the 
attention of the customers to read the information.  
However, if the company were to go through a direct mail 
piece, it's more expensive than a bill insert.  But there's 
no -- we have not had the time to pin down the exact 
communication plan to explain to customers the quarterly 
rate adjustment mechanism at this stage. 
         MS. SPOEL:  Typically, what does a bill insert 
cost and what does a direct mail -- not precise numbers 
obviously but some sort of ballpark figure? 
         MS. DUGUAY:  On top of my head, a direct mail 
piece is approximately $600,000 whereas a bill insert costs 
approximately $40,000.  So there is a big difference in 
prices. 
         THE PRESIDING MEMBER:  You can appreciate the 
Panel's concern.  I guess, first of all, we can imagine how 
the negotiations went and we want customer communication 
and we'll set up a deferral account.  It seems as though 
whenever there's a bit of a bump in the road, we've got a 
number of deferral accounts that have been set up for 
various purposes.  I guess the Board is concerned, number 
one, with the proliferation of deferral accounts, and 
number two, with the lack of specificity in their proposals 
for caps as far as what those deferral accounts are going 
to entail.  I guess we looked at this, and you're right, it 
can go all the way from direct mail to bill insert to, gee, 
a couple of paragraphs in the next rate change that you're 
probably going to have effective October 1st when you're 
implementing this new proposal for cost of gas increases. 
         So I guess that is a concern -- a general concern.  
Concern is too strong a word.  I think we decided concern 
was too strong a word.  That's a general comment that the 
Panel has. 
         MR. NOBLE:  The comment I would like to make on 
the establishment of these new deferral accounts is that 
it's just that.  It's the establishment of the account and 
authorization to put the dollars into the account.  The 
clearing of these accounts will be discussed in the next 
rates case at which time the onus will be on the company to 
demonstrate the prudence of the costs incurred. 
         THE PRESIDING MEMBER:  No, we're fully aware of 
that. 
         MS. BOWLBY:  But it's not a blank cheque to go out 
and spend any amount of dollars in these deferral accounts.  
We recognize the concern of parties and we'll have to 
justify the benefit of what's been undertaken. 
         THE PRESIDING MEMBER:  Right.  Thank you. 
         You obviously spent a great deal of time and 
effort on this proposal and we certainly appreciate that. 
         MR. THOMPSON:  Just before you leave this one, I 
would like to comment that this is the first time in my 
lifetime that I can remember that we ever got a consensus 
on this system gas pricing topic with all of the varied 
interest groups involved in it.  So I just endorse your 
comment that this section of it, whatever its shortcomings, 
is quite something in the industry, a pretty constructive 
step I would say. 
         THE PRESIDING MEMBER:  Thank you, Mr. Thompson.  
That's high praise coming from Mr. Thompson in his entire 
lifetime. 
         MR. FARRELL:  I'm speechless. 
[Laughter] 
         THE PRESIDING MEMBER:  Moving right along to Issue 
2.3. 
         MR. FARRELL:  This issue reflected a concern by 
other parties when the issue arose that the risk management 
program should be examined in the current environment of 
volatile prices and at the time seemingly never ending 
price increases.  And so that is the origin of the issue 
and the way the issue was settled was to form what we 
called in the settlement proposal a working group to 
examine the principles that underpin the existing risk 
management program that had been in place for some time.  
It was meant to be a representative working group and they 
would work together to see whether the principles need to 
be adjusted in the context of today's environment and the 
environment that is likely to pertain as the working group 
sees it for the foreseeable future.  And if there is then 
consensus that a change is necessary or desirable or both, 
then the working group will try to reach another consensus, 
and that is, to formulate a new set of principles.  If it 
reaches that stage, then the company has agreed to retain a 
consultant to examine how the policies and practices that 
comprise the program should be revised in order to reflect 
the new set of principles.  So it's a let's take stock type 
of issue where we take a look at the principles on which 
the current plan is founded and see whether or not in 
today's environment how things look going forward, if any 
changes necessary, and if there's a consensus for change, 
then we move on from there.  So this was meant to be a 
totally prospective look at whether the risk management 
program is suitable in today's environment. 
         MS. SPOEL:  Mr. Farrell, I'm not sure how best to 
deal with this issue but I guess concern again might be too 
strong a word, but I have a question about the method of 
funding participation of intervenors or stakeholders in 
this process.  And I recognize of course since it's not a 
proceeding of the Board that there's no ability to award 
costs for participation, but we're also a little bit 
concerned that if the Board isn't involved at all, that 
setting it up as a cost eligibility sort of thing is 
difficult for us to manage not being there and not having 
any input into whether people's participation has been 
responsible and so on and so forth. 
         One of the things that we thought might work or 
might help would be to have some involvement as one of the 
stakeholders of having a representative of Board Staff 
participate in this.  I don't know if that's something that 
you anticipate is going to happen or had thought of or have 
strong feelings about. 
         MR. FARRELL:  We assumed that there would be 
representation from Board Staff. 
         MS. SPOEL:  Because of course if it comes to us 
with the costs in the form of a deferral account, we do 
have some discretion as to whether or not to clear that 
deferral account, but not having been there, it's not like 
we had a hearing and being able to say, oh, yes, everybody 
did their bit and we're going to award all the costs. 
         Would there be any objection to us getting input 
from the Board Staff into whether or not the clearing of 
those aspects of the deferral account are appropriate? 
         MR. FARRELL:  Well, let me answer your question in 
a bit of roundabout way and that is that when we talked in 
the settlement conference about who would be funded, if you 
will, to participate, there was ready agreement that a 
party that would be eligible for recovering costs would be 
-- we would pay their costs and that we would record them 
in the deferral account and a party who wouldn't be 
eligible for costs is nonetheless welcome to participate in 
the working group but at their own cost.  So we hadn't put 
any limit on the content, if you will, of the words 
stakeholder community.  So certainly from our perspective 
there would be no objection to having a Board Staff member.  
I don't think there would be any objection from our part of 
the Board Staff representative advising the Board of his or 
her view of the participation of the other members. 
         MS. SPOEL:  And, Mr. Farrell, would the parties 
participating in the process who would be funded, would 
they be funded by the company as the process went along, 
with the risk being the company's risk that you may not get 
the amounts cleared out of the deferral account or would 
the funding be contingent upon the Board's implicit 
approval through clearance of that deferral account?  I 
guess you can't put it in the deferral account if you 
haven't paid it out, can you?  
         MR. FARRELL:  We could try I guess but I don't 
think it would work. 
         MS. SPOEL:   The risk is I guess the company's 
risk that you will fund, let's say, Mr. Thompson or his 
client and I can't imagine this happening, but that we 
would say, well, we think you overfunded or you had too 
many meetings or we just think it's too much money.  We're 
not going to clear the whole thing. 
         MR. FARRELL:  We're prepared to take that risk. 
         MR. MONDROW:  Madam Chair, if I could just 
interject for a minute.  Listening to the discussion and 
the questions of Ms. Spoel, HVAC Coalition is not a 
participant on this issue and does not foresee being 
involved in this particular working group, but on a more 
general principle of having a Board Staff member 
participate in a working group-like process and then going 
back to the Board and providing comments as they may feel 
appropriate in respect of a party's participation for the 
purposes of costs or any other purposes is a bit of a 
concern on a general basis.  So I would just caution the 
Board that if any statements or modifications are to be 
made in this respect from our perspective it's crucial that 
any such feedback process be open, parties be given an 
opportunity to respond, et cetera.  I know the Board is 
sensitive to that, but I just wanted to have it on the 
record in the same place as the discussion, in the event 
that this model applies down the road to some other process 
in which my clients are particularly interested. 
         MS. SPOEL:  I understand your concern, Mr. 
Mondrow, and I guess it puts the Board in a bit of a 
difficult position where you have -- the company has spent 
the money to fund the intervenors who would normally be the 
people who would say we don't think this if deferral 
account should be cleared.  Now, I would assume that if 
your client had received money, you would feel a bit 
awkward coming along and saying the company shouldn't be 
reimbursed by the Board for the money that's -- in effect 
the money that's been spent to reimburse your client or 
other intervenors in the process should actually be 
absorbed by the company rather than the rate payers.  As 
Board members, we don't have any -- I wonder if there is a 
concern - I'm not suggesting in any way that there will be 
- but as a matter of general principle if there is a 
concern, we're being asked to authorize a potentially open-
ended expenditure which will be only in the interests 
perhaps of those parties who participated who weren't 
getting funding to question.  And that's the only reason I 
raise this and I do agree with you that there are some -- 
that's why I raised it as an issue, does anyone have a 
problem with this, and obviously you do.  It's not the most 
satisfactory approach. 
         THE PRESIDING MEMBER:  Mr. Janigan, you look like 
you want to say something.  He's got his hand up. 
         MR. JANIGAN:  Yes, Madam Chair, it might be 
helpful.  This process is analogous to what has existed in 
the determination of the DSM plans of the company over the 
past six or seven years.  Intervenors have been funded in a 
similar fashion to assist in the formulation of the DSM 
plans and to participate in the DSM, a consultative, and 
that process seems to have worked well and in the long run 
has probably saved a lot of hearing expense as a result.  
So it does have some analogies in what already takes place. 
         THE PRESIDING MEMBER:  Thank you, Mr. Janigan.  
The Board is not concerned with the participation of 
intervenors in the process.  Indeed we want to encourage 
it.  And as you know there's a general concern at the Board 
for intervenor funding in between rates cases.  Rates cases 
are clear and easy to deal with and we've dealt with it 
before and cost eligibilities and the Board has some 
control over it.  I guess we are also concerned about the 
availability of participation of all the stakeholders in 
what I would call consultation processes between rates 
cases or generic proceedings.  As you know, we've had 
concerns before whether it's a generic proceeding so that 
we can award intervenor funding or whether it's a 
consultative in which case we can't and the rules of the 
Board and our jurisdiction is under the Act to award costs.  
And I look upon this as a very positive attempt to set up 
some sort of mechanism within the course of a rates 
proceeding to set up an account that will provide funding 
for intervenor participation in processes that are 
occurring -- what would be outside the normal rates case.  
And you're absolutely right, if this were within a rates 
case instead of part of the interrogatory process or the 
ADR process or whatever, there would be funding. 
         With respect to the deferral accounts, the 
position was taken previously with respect to the customer 
communication deferral account, it's absolutely correct, 
that's at the risk of the company, and it will be cleared 
depending upon whether we determine that the cost of the 
communication of the change of the costs of gas price pass-
through is reasonable.  But in this particular case it 
would appear -- or there's a couple of concerns.  One is 
the fact that it appears open-ended.  Secondly, it was the 
risk of the company as far as funding and they've said that 
the risk is on them.  Third is the risk that the company 
could say, well, wait a minute, we're at risk for this 
funding and it's getting out of hand and so we're going to 
stop the funding and use it a trigger or a hammer or 
whatever.  And it's because it's a new concept, we're just 
sort of concerned as to how it will all, you know, play 
out. 
         And I guess in tossing ideas among the Panel 
members, we had been discussing things such as putting 
forward a proposal with a budget and timelines, for 
example, for this consultation process and submitting that 
to the Board just so that we could have a general idea as 
far as what you're talking about, whether it's envisaged 
that this consultation process will take years and cost 
hundreds of thousands of dollars or over a short period of 
time or whatever.  And I guess that was another idea that 
we were tossing around to deal with this. 
         MR. THOMPSON:  I'd throw my two bits in here, but 
you seem to be concerned about discipline in the management 
of this activity.  And I would suggest you should let it go 
for at least a trial run because it has some self-
disciplining features.  First of all, the company 
acknowledges that it will be at risk which is one aspect of 
it.  The second is the parties are agreed that it's not 
full funding.  It's like it's partial funding for a certain 
period.  That has a certain self-disciplining effect 
because some will be there who aren't being funded so they 
will be the squawkers when it comes forward for clearing, 
so you don't need a mole in there to make sure that they're 
all abusing it.  So it has this feature that does have 
self-disciplining measures. 
         But your point about budgeting these activities is 
well taken but at this point I think it's a bit impossible 
to budget anything because we haven't even started the 
activity.  So I would encourage you to let it go on a trial 
run basis without burdening it with too many conditions 
that may in effect stifle the initiative. 
         THE PRESIDING MEMBER:  Thank you, Mr. Thompson.  
Your points are well taken.  I wasn't by any stretch of the 
imagination saying that we were going to try to scupper the 
initiative by handcuffing the parties.  I guess what we 
were trying to do is raise for all the parties concerns 
about it.  And you're right, you're absolutely right 
there's nothing to indicate that the parties will abuse the 
process at all.  It was just raising an issue. 
         Anything else?  
         Okay.  I think we're up to 2.4. 
         MR. FARRELL:  This issue was discussed really in 
the context of Issue 2.1 because the link pipeline was part 
of 2.1 even though the focus was on Alliance and Vector.  
So the single bullet point on page 20 is just a simple 
statement of what happened.  People said, okay, we don't 
need to get into this this year.  We'll agree to continue 
with the 50/50 sharing ratio but that's without prejudice 
to any right we may have to examine the issue of customer 
responsibility for under-utilization in the next case.  So 
in my view this was part of the 2.1 package. 
         THE PRESIDING MEMBER:  Thank you, Mr. Farrell. 
         2.5.  
         MR. FARRELL:  2.5 is part of the 2.2 package in 
the sense that this is what's being replaced, subject to 
your approval, with the regime that's described under Issue 
2.2.  So this merely notes that the existing methodology 
will continue until September 30, 2001, when it will be 
replaced if you approve it with the new methodology that's 
described under 2.2. 
         THE PRESIDING MEMBER:  No questions. 
         2.6 and 2.7.  
         MR. FARRELL:  Yes, I should say something that's 
not evident from the way I wrote it, but I think that 
certainly the parties are interested in this you'll agree 
with, and that is that the use of the new pricing 
methodology for gas that's purchased from an end-user as 
part of a curtailment is meant to be prospective, 
notwithstanding the text of the issue which would otherwise 
lead you to believe maybe we're going to go back in time to 
the curtailments that took place during the test year.  
It's intended - although the words are not specific in this 
regard - that the new pricing regime would come into force 
prospectively such that the curtailments that have already 
occurred during the current test year, the pricing of them 
which was the subject of the discussion on Issues Day when 
an adjustment was made, that would be just left the way it 
is and that this new pricing regime would be applied 
prospectively going forward. 
         THE PRESIDING MEMBER:  Mr. Thompson, that's your 
understanding of it as well?  
         MR. THOMPSON:  Yes, I can confirm that. 
         THE PRESIDING MEMBER:  Okay.  Thank you.  
         MR. FARRELL:  Which if I might just add, going 
back to which rate case will these things be examined in, 
if you look at the last bullet point on page 21, that last 
sentence was written by me to reflect my misunderstanding 
about the effective date of this.  So obviously if the new 
pricing methodology is going into force prospectively, 
curtailments wouldn't occur until next winter that any 
examination of the differential based upon what's happened 
as a result of the new pricing wouldn't be in the next 
case.  It would be in the one subsequent. 
         THE PRESIDING MEMBER:  Afterwards.  Thank you. 
         Moving to Issue 3, Cost of Capital?  
         MR. FARRELL:  This issue turned on the company's 
proposal to adjust the Board's formula in the manner 
described, that is, by using a spread of 34 basis points 
based upon historical data.  That modification or 
adjustment of the Board's formulaic approach was not 
acceptable to the other parties, and in the light of the 
settlement overall, there was agreement that we would apply 
the Board's formula as at the beginning of the test period 
in recognition that the cost of capital was something that 
applied throughout the period.  So the 9.54 per cent is 
derived from the use of the Board's methodology without 
adjustment based upon data available in September of 2000. 
         THE PRESIDING MEMBER:  Thank you. 
         MR. FARRELL:  Just to say immediately proceeding 
the beginning of the test run. 
         THE PRESIDING MEMBER:  Mr. Laughren? 
         MR. LAUGHREN:  Yes, I had a question on the turgid 
prose in the second bullet which claims that:  'The rates 
of return on common equity are too low to sustain a viable 
national natural gas industry in Canada.'  And I wonder to 
what extent you feel that the 9.54 puts in question the 
financial integrity of Enbridge at the 9.54 level?  
         MR. FARRELL:  I'm not sure I can answer your 
question without getting instructions, Mr. Laughren.  As I 
understand what you're saying is do we consider 9.54 per 
cent to be insufficient to sustain EGC's operations? 
         MR. LAUGHREN:  Which is a very serious concern for 
both the company and the regulator. 
         MR. FARRELL:  I think my answer has to be yes 
because we accepted this.  I think the concern that's 
expressed, perhaps not elegantly, in the second bullet, is 
the use in today's environment of a formula that was 
created a few years ago.  And I think that there are at 
least among the utility crowd in Canada, including 
pipelines, there's a concern that the formulaic approach 
and the input needs to be re-examined in the light of 
today's markets and I think that that's what the second 
bullet point was really trying to express. 
         MR. LAUGHREN:  No, I appreciate that and I notice 
that it does ask for a review of the Board's Guidelines.  
How urgent is that in your view, the need for that review?  
         MR. FARRELL:  I think that Enbridge considers it 
to be urgent.  I was going to say something facetious like 
could we start this afternoon when we're finished with 
this, but I think that there -- may I just have a moment, 
please. 
[Mr. Farrell confers]  
         MR. FARRELL:  Ms. Hare is advising me that the 
company is involved in examining this itself and is 
considering whether or not to come forward and request the 
Board to implement a review of its rate of return on equity 
guidelines, but that would be done separate and apart from 
a particular rate case.  There's also, if you care for 
something anecdotal, talk within the industry as to whether 
or not pipelines, for example, are going to ask the 
National Energy Board to revisit it's formulaic approach.  
So when I mentioned earlier among the utility crowd or the 
regulated crowd there seems to be a lot of discussion as to 
the best means to achieve this, whether it should be a 
single pipeline that applies or whether it should be a 
pipeline group through an association or otherwise, and I 
think similarly there's discussion among the distribution 
utilities as well but nothing concrete at this point. 
         MR. LAUGHREN:  So your concern would be with the 
level of the rate of return as opposed to the formulaic 
approach to it that the Board uses.  Is that right?  
         MR. FARRELL:  I think it's the level of the rate 
of return that falls out of applying the formula in today's 
-- having regard to the conditions as we see it in 
financial markets today. 
         MR. LAUGHREN:  Thank you.  
         THE PRESIDING MEMBER:  Thank you, Mr. Laughren. 
         Issue 4, Rate Base.  
         MR. FARRELL:  4.1 really reflects the fact that 
there was a discussion that focused as the issue would 
indicate on customer conditions.  And during the course of 
the settlement conference, we provided actual data which 
you see reflected in the first bullet and an examination of 
that in the context of the settlement conference led to the 
other parties accepting this forecast and that was the 
basis on which the issue was settled. 
         The capital budget which is the next rate base 
issue, capital budget for the test year.  The first bullet 
reflects what we proposed be the amount of the budget.  We 
again provided data on actual expenditures through the 
first six months of the test year, and then there were 
concerns expressed about, for lack of a better term, the 
company's track record in terms of capital budgets and the 
discussions on that led to a consensus that we would reduce 
the capital budget by $10-million to take into account 
those concerns. 
         4.3, this was an issue as I recall it that was 
really tied to the 5 series of issues, affiliate 
outsourcing and asset usage and so as you can see the 
intervenors accepted the proposed rate base after reduction 
for the consequential effect of reducing the capital budget 
by ten million, and subject to, as you can see, using the 
non-utility rate base elimination approach in the context 
of Issue 5.1.  So as I mentioned earlier, this was really 
discussed as part of the 5 series rather than as a rate 
base issue on its own. 
         THE PRESIDING MEMBER:  Thank you.  Thank you very 
much. 
         Issue 5.  
         MR. FARRELL:  These issues were discussed as a 
package, as the text of the first bullet reflects, and so 
the second bullet tried to tell the Board how we had 
disagreed before we talked through the issue and to 
indicate that notwithstanding the initial disagreement 
which sounded like diametrically opposed, that as we worked 
through the issue, we worked through a compromise and the 
two bullet points at the top of page 27 are really 
indicating how the revenue requirement as applied for would 
be adjusted and why in terms of text. 
         And then the second bullet on page 27 is again 
another work project and that we agreed as part of the 
settlement to retain an independent consultant to assess 
and report on the basis for allocating rate base asset 
values to affiliates and the accuracy of the allocated 
values for fiscal 2002.  I won't just read it to you.  You 
can read it yourself.  So there's was a settlement in 
dollar terms, if you will, for the test year and a 
consensus that we would go forward with the study to try to 
assist the parties themselves as well as the Board in 
examining this issue in the context of the next case. 
         5.2 was -- 
         THE PRESIDING MEMBER:  Excuse me, can I just ask 
one question quickly,  and that's in the middle of the 
first bullet on page 27 of 55.  The company says although 
the non-utility rate base elimination approach has been 
used to calculate the amount of the adjustment, ECG is not 
prepared to make a commitment to this approach beyond the 
test year because at this point ECG is in the midst of a 
transition process of reviewing the future use of utility-
owned assets.  And I guess I was curious as to whether 
there is a timeline for your transition approach?  In other 
words, we know you're in a transition.  You've been in a 
transition for a while and I guess do you have -- on a 
prospective basis, can you give the Board any hint as far 
as when you think that this transition will be completed? 
         MR. FARRELL:  Ms. Hare is advising me that the 
transition will be complete when we come forward with our 
comprehensive PBR proposal for fiscal 2003. 
         THE PRESIDING MEMBER:  Thank you. 
         Next one.  
         MR. FARRELL:  I don't know how much I could add to 
what you see really in the four bullet points at the top of 
page 28.  This was again part of an overall settlement 
involving the three 5 series issues.  The concern of the 
other parties I think you can see expressed in the last 
complete line and the stub line, if you will, of the second 
bullet on the page, and that is, that there was some 
concern that perhaps additional assets should be 
transferred by the utility to the affiliates.  And then 
again you see the concern of the other parties about 
transfer pricing expressed in the last bullet.  But the 
settlement in effect is just simply saying we're worried.  
We're reserving our right to take a look at this whole 
thing at the conclusion of the targeted PBR plan. 
         THE PRESIDING MEMBER:  Thank you. 
         And 5.3.  
         MR. FARRELL:  This again is part of the overall 
settlement.  It stems from the form and content of the 
outsourcing of planned deferral account.  It explains the 
makeup of that deferral account, at least in the company's 
books.  It explains in the second bullet the disagreement 
among the parties as to how the amounts recorded in the 
OPDA should be cleared.  And the second bullet goes on to 
indicate that the net result is that there will be a credit 
amount of 5.5-million rather than a debit amount.  And the 
allocation of the credit amount - that's what I was just 
looking for - would be allocated to the various rate case 
classes on the same basis that rate base assets are 
allocated to the various classes. 
         THE PRESIDING MEMBER:  Thank you.  We have no 
questions on this issue. 
         Mr. Farrell, you have been conducting the lion's 
share of the work here this morning, and we're wondering if 
now might be an appropriate time for a break. 
         MR. FARRELL:  Yes, thank you. 
         THE PRESIDING MEMBER:  And it will give the 
witnesses time to check as far as the sources for gas costs 
are concerned.  So according to the clock on the wall, it's 
approximately eleven o'clock.  I think a fifteen-minute 
break would be appropriate, so we'll reconvene at a quarter 
after eleven. 
--- Recess taken at 11:00 a.m. 
--- On resuming at 11:23 a.m.
         THE PRESIDING MEMBER:  Please be seated.
         Mr. Farrell, we're up to 6.1, I think.
         MR. FARRELL:  Yes.  This issue didn't really 
require very much time to resolve.  There were two aspects 
of it.  Were the specific results of the SQIs in the bridge 
year accepted, and the answer was yes; and are there any 
proposed changes in the SQIs for the test year, and the 
answer was no.
         Then 6.2 was basically a verification exercise.  
Were the adjustments to the PBR O&M base for the true-up of 
customer growth and inflation done correctly, and you can 
see it's through the -- the numbers are provided or the
values are provided near the bottom of page 30, first 
bullet.  And then the second -- the first -- the second 
bullet of the issue, the first bullet at the top of page 31 
deals with the prospect of adjustment of base, and that as 
well was acceptable to the other parties.
         6.3 deals with customer growth and inflation 
factors for the test year.  They're explained in the 
bullet.  As you see in the third bullet under 6.3, there 
was an adjustment made to the proposed inflation factor to 
give effect to what the other parties considered to be 
perhaps the trend as reflected in the March 2001 consensus 
forecast of the Ontario consumer pricing index. That led to 
a minor adjustment as a result of a minor decrease in the 
proposed inflation factor.
         Symmetry and materiality for Z-factor, item 6.4, 
was an issue that took more time to discuss.  A part of it, 
as you can see, centred around the Z-factor for rate 
hearing expenses which essentially is the Board's costs as 
they are billed to the company by the Ministry of Energy, 
Science and Technology.  So there's a bit of an explanation 
as to how the number was derived and why it was increased.
         The second bullet in the establishment of another 
variance account reflected the concern of the other parties 
that if there were either a refund or an additional cost 
during the year, that we would capture that so that what
ratepayers were responsible for was the "Board's actual 
costs" as billed by the Ministry to the company.  It was 
intended that this Z-factor capture no more or no less than 
that.  The fact that the bill we receive may at a point in 
time in a case be a forecast of what we're expecting as 
opposed to an actual, it was considered that the forecast 
would be captured in the Z-factor, whatever the bill turned 
out to be, and any subsequent adjustments to the bill would 
be captured in the deferral account so that ratepayers were 
paying no more and no less than the Board's actual 
expenses, is how I define term.
         There was also a concern about an apparent 
asymmetry in our budgeting process for Z-factors, that the 
budget letter directed management to be alert for costs but 
not for savings, as we've indicated in the third bullet 
here. We've corrected that asymmetry on a go-forward basis.
         In the light of the settlements of the rate 
hearing expenses and a correction of the perceived 
asymmetry, the other parties decided that they didn't need 
to deal with materiality criteria for Z-factor items for 
this particular case.  And then the last bullet, there 
really is an expression of what I was articulating before, 
and that is the no more, no less principle.
         6.5 was an issue that stemmed from an examination 
of the company's financial statements prior to the  
interrogatory process.  The interrogatory was answered to 
the satisfaction of the parties who were concerned about 
this issue and so it was -- this was a quick settlement, if 
you will.  It was a factual issue; the facts were as 
expressed and so therefore the issue was settled.
         THE PRESIDING MEMBER:  Thank you, Mr. Farrell.
         MR. FARRELL:  Transactional Services is the next 
one, 7.1.  This, again, was an exercise in which we 
provided updated evidence initially at the end of January.  
But in the course of the settlement conference, we provided
actual data for the first six months of the test year.  As 
you can see, they're laid out in the various bullet points.  
On the basis of an examination of the actual data, that 
formed the basis for the consensus in terms of the forecast
gross margin, and the resultant net revenue.  You'll see in 
the second last bullet.  And the last bullet is simply a 
confirmation of the application of the existing sharing 
ratios to this particular deferral account.
         THE PRESIDING MEMBER:  Thank you.
         Item 8.
         MR. FARRELL:  The eight series of issues deal with 
demand side management.  The first issue, issue 8.1, has to 
do with the DSM budget.  The first bullet point indicates 
what we had included as a Z-factor because that's how the 
DSM budget was treated, and the forecast of gas savings.  
Then again we provided the updated evidence at the end of 
January which increased the budget and increased the 
forecast gas savings.
         As you can see, there were -- parties with a 
ratepayer focus were concerned about the three things that 
are expressed in here, the gas savings, the consequential 
impact on rates, and the extent to which we needed 
incentives to further control costs.
         So this issue then led to a response by ECG to 
decrease the budget by half a million dollars and to 
address intervenor concerns about overruns in the budget 
that are captured in the variance account that we agreed 
that we would perform an incremental cost benefit analysis 
on an ongoing basis, and that that analysis would be used 
when the Board was examining how to allocate and clear the 
balance recorded in the Demand-Side Management Variance 
Account-Operating.
         And then the last bullet I think reflects really 
generally on this particular issue the spirit of  
cooperation that prevailed throughout the settlement 
conference, and that's to work within the DSM context of 
devising ways and means of determining an O&M budgets.  
That concern, I think, was reflected in how late we were in 
this process relevant to the beginning of the current test 
year.  And with the settlement and our planned filing in 
August, hopefully we'll get back on track.  But 
nevertheless they feel this is a worthwhile exercise and 
they're going to pursue it in the context of a DSM 
Consultative.
         The next issue, 8.2 --
         THE PRESIDING MEMBER:  Excuse me.  Just before you 
go on, 8.1, Mr. Mondrow, I guess for concern to HVAC's 
reservation in the settlement of 8.1, do you still have 
that reservation?
         MR. MONDROW:  This is a caveat that reappears 
later in the agreement, Madam Chair and Panel Members, 
under issue 11.1 at pages 42 to 43.
         THE PRESIDING MEMBER:  Right.
         MR. MONDROW:  And the point of both caveats was 
really a reservation of rights, although the language is an 
attempt to recognise that HVAC Coalition has asked the 
Board to deal with -- this refers to the energy saver kit 
issued that HVAC Coalition has brought to the Board's 
attention, which has a separate docket number, but HVAC 
Coalition has asked the Board to deal with it within the
RP-1999-0058 proceeding.
         The point of these two caveats in the context of 
this case is simply to reserve rights in the event that the 
Board gives indication in either of the other two 
proceedings, either in the code of conduct proceedings 
prior to finalisation of the rate order in this case, 
realising that that's increasingly less likely given the 
comprehensive settlement and the speed with which the
Board will no doubt deal with this now; and recognising 
that once the rate order is issued, the relief that's been 
requested in respect of cost disallowance or that might be 
requested in the other proceedings will have to be dealt 
with in some other fashion.
         So this was really just leaving the door open but 
without an intention to hold up the issuing of an order in 
this case.  When that happens, we'll have to, if it's 
appropriate, pursue relief through some other avenue.
         THE PRESIDING MEMBER:  Okay.  Thank you for 
clarifying that, Mr. Mondrow.
         MR. MONDROW:  Thank you.
         THE PRESIDING MEMBER:  Mr. Farrell.
         MR. FARRELL:  I didn't mean to skip over that.
         THE PRESIDING MEMBER:  No, sorry.  It was just the 
first time we had the HVAC reservation.  I just wanted to 
make sure we captured that.
         MR. FARRELL:  Issue 8.2 deals with the disposition 
of the 1999 shared savings mechanism variance account.  
This, you may recall, was established in the context of 
E.B.R.O. 497-01, and there's a lag in the disposition of 
the account.  So at first it might have seemed that 1999 
was a bit old to be dealing with, but that's the 
explanation of it.
         So this explains how the process that was 
established to deal with monitoring and reporting 
requirements for the annual plan has worked and explains 
how the amount to be cleared was derived, and then explains 
it would be allocated and cleared in accordance with the 
EBRO 497-017 settlement proposal which, as I recall it, 
basically has the funds cleared to the account of 
ratepayers in the same proportion as the funds were spent 
by rate class.
         The next bullet was -- the next issue, rather, was 
linked to issue 8.2, and this was the disposition of the 
amount recorded in the lost revenue adjustment mechanism or 
LRAM.  There was a minor credit balance, but the parties, I 
think, were concerned to synchronise LRAM and SSM so that 
they would be cleared at the same time, which means lagging 
LRAM from the norm to date.  So we've accepted their 
proposal that we do synchronise the two, and so the 2000
LRAM and the 2000 SSM variance account will be cleared 
together next year.
         8.4 was the volume target or the pivot point for 
the 2001 shared savings mechanism.  This issue was really 
discussed in tandem with 8.1.  What's the budget?  What are 
the resultant gas savings?  And the forecast of gas savings 
was increased by 10 million cubic metres, and the net 
benefit that results from the DSM plan is indicated in the 
last bullet on page 37.
         MR. POCH:  Madam Chair, if I could just interject 
on that.  There is just some doubt about the accuracy of 
the 103 million for two reasons.  One, there may be a 
mechanical area that we've uncovered and we're working with 
the company on resolving.  But the important thing from the 
Board's perspective is there's agreement on the 70.2 and 
that the company is working to pin down what the number 
that flows out of that is; and then whatever number is 
arrived at, this consistent methodology will be used at the 
end of the day for the SSM so that it won't result in any 
skew.
         I should just advise the Board that this number is 
based on I think it's 1998 or 1999 avoided costs before the 
recent gas price increases.  So the Board can take some 
comfort that the 103 million is a bit of a fictional number
and in fact the benefits enjoyed by customers is probably 
twice that.
         THE PRESIDING MEMBER:  Mr. Poch, we were quite 
impressed with having the societal costs to down to two 
decimal points.
         MR. POCH:  We dropped the other -- the extra two 
in this issue.
         THE PRESIDING MEMBER:  Thank you.
         MR. FARRELL:  Again, the last bullet under this 
this issue, and it's at the top of page 38, reflects a 
cooperative work environment, if you will, in terms of 
trying to come up with a way of setting the volume target 
or the pivot point in advance of a test year for the same 
reason as I mentioned with the budget, that there was 
concern of where we were in the cycle.  The work will
proceed even though we are hopefully going to be back on 
cycle with the next case.
         The 9.1 and 9.2 issues, 9.1 was, as you might 
expect, a pretentious issue, and it -- but again I think it 
reflected in the context of the overall process a 
willingness of all parties to see whether we could reach a
comprehensive settlement that incorporated everything, and 
you can imagine there was a bit of horse trading involved.  
So the end result was that we agreed to withdraw the 
proposed CIS Z-factor in the test year in light of  
settlements of other issues that are indicated in the first 
complete bullet at the top of page 39, and that we did so 
subject to the condition that the cost consequences
associated with customer care and the resultant benefits 
would be examined in the context of our CPPR application, 
which I mentioned earlier we're targeting for fiscal 2003, 
and that we reserve the right to come back to the CIS issue 
in the context of the next rate case if that's what the 
decision may be, regardless of the fact that we may not 
have reached the CPPR at the time.  So for the purposes of 
this case, the CIS Z-factor is withdrawn.  That's the  
bottom line.
         MS. SPOEL:  Can I just clarify, Mr. Farrell, that 
when you refer in that last bullet to "right to seek 
recovery of the cost consequences of CIS service for Fiscal 
2002" that you're talking about not recovering  
retroactively in fiscal 2002 but you're looking at the 
costs actually being incurred in fiscal 2002?
         MR. FARRELL:  Yes, that would be -- it would be 
the forecast for fiscal 2002.  Fiscal 2001, no.
         MS. SPOEL:  It's gone.
         MR. FARRELL:  Yes.
         MS. SPOEL:  Okay.
         THE PRESIDING MEMBER:  Thank you.
         MR. FARRELL:  And 9.2 is essentially -- was linked 
to the settlement of the earlier issue on the OPDA.  So 
this gives the Board a bit of procedural history in the 
first bullet.  And the second bullet actually, when you go 
to page 40, that top bullet on the page indicates that the 
other parties didn't accept our rationale for the CIS 
component of the outsourcing plan deferral account.  And we 
were prepared, as the next bullet indicates, in light of 
other settlements to simply remove the 5.7 million and that 
is the companion to the earlier issue with dealt with the 
OPDA specifically.
         THE PRESIDING MEMBER:  Mr. Farrell, with respect 
to issue 10, the Board has deleted that from the issues 
list and therefore it won't be necessary for you to speak 
to issue 10.
         MR. FARRELL:  I wasn't planning to.
         THE PRESIDING MEMBER:  Thank you.
         MR. FARRELL:  But I thank you for not making me.
         The deferral accounts are the 11 series of issues, 
and I don't really know whether I can do a better job of 
summarising it than the text already gives.  My 
recollection is that there is nothing really controversial 
in them.  Some of them are linked to other settlements.  
For example, if you look at page 42, near the middle of the 
page, talking about synchronising the 2000 LRAM and the 
2000 SSMVA, that flowed from an earlier settlement.
         And then again here this time I will mention the 
first, in the bottom bullet on the bottom of page 42 or the 
last bullet on page 42 is another HVAC reservation of 
right.  As I understood Mr. Mondrow's comments, they apply 
here in the same sense as he voiced them in the earlier 
issue.
         MR. MONDROW:  That's correct, Madam Chair.
         MR. FARRELL:  So the bottom line, as it were, in 
terms of the amount that would be cleared is expressed in 
summary form on the first complete bullet at the top of 
page 43, and then the detail of the deferral accounts is
actually -- is provided in appendix B, which is the very 
last page, page 55 of the settlement document.
         THE PRESIDING MEMBER:  Okay.
         MR. FARRELL:  11.2 was an issue that dealt with 
the Y2K deferral account, and it was singled out, if you 
will.  I think when the issues list was prepared, because 
of the way the Board made the decision on this account in 
the last rates case RP-1999-0001, and the first bullet 
explains the proposal and the second -- the company's 
proposal, and the second bullet gave a bit of procedural
history of it.  And then the first bullet at the top of 
page 44 explains the basis of the settlement in terms of an 
amount and explains why that was reached; namely, that the 
Y2K transition was successfully completed and that a 
portion of the balance recorded in the 2000 Y2K referral 
account could be seen as attributable to affiliates to whom 
functions were outsourced.  So there was an adjustment made 
on an agreed upon basis to take that into account.
         11.3 established deferral accounts for the test 
year, or continued, in effect.  There were three new ones 
to which you alluded earlier.  They are highlighted, if you 
will, at the middle of page 45 and are meant to capture
costs for what I call the ongoing work plan that stems from 
the settlement of certain of these issues.
         The next item has no issue number because it 
wasn't on the Board's issue lists, and now I'm at the 
bottom of page 45.  This came out early in the settlement 
conference when there was no -- no one, I think, imagined 
that it would be at the point at which we arrived at the 
end of the settlement conference.  So there was a concern 
that if there was going to be significant litigation, we 
may be starting the 2002 test year with no deferral 
accounts.  So the parties agreed that we would almost 
gratuitously add this issue to the issues list, and we 
reached agreement on the deferral accounts that would be
established for 2002.  Because at the time this agreement 
was reached, subject to other agreements, we weren't as 
close to a complete settlement as turned out to be the 
case.  So this was a caution.  This was kind of a belt-and-
suspenders approach to making sure we had deferral accounts 
in the event we had a hearing that was litigated and a 
decision that was not in time for us to proceed on a go-
forward basis, although we, I guess, could have done this 
by way of asking the Board for accounting orders.  We 
thought this was a better approach to achieve this result 
for fiscal 2002.
         THE PRESIDING MEMBER:  Mr. Farrell, in light of 
the fact that it wasn't on the issues list and the Board 
has concerns about creating deferral accounts on a just-in-
case basis, and in light of the fact that we don't have 
specific descriptions, as I understand it, for the 2002 
deferral account, and in light of the fact that it looks 
like there will be an application in August for fiscal 
2002, do the parties have any strong objections to 
eliminating the request or the agreement to establish 2002 
deferral accounts until we deal with the 2002 rate 
application?
         MR. NOBLE:  A.   I have no concern with the 2002 
accounts.  I understand the concern you've raised, and if 
you want to put off the establishment of those accounts 
until the next rate proceeding, we would be willing to go 
along with that.
         THE PRESIDING MEMBER:  Okay.  Thank you.
         MR. THOMPSON:  You didn't give Jerry a chance to 
answer.
         MR. FARRELL:  I subscribe to Mr. Noble's answer.
         THE PRESIDING MEMBER:  Moving right along.
         MR. FARRELL:  12.1 in the event turned out to be a 
non-issue.  This was a concern because part of the 
unbundling issue pertains to upstream transportation which 
provided the link to issue 2.1 in terms of Alliance-Vector
and the link.  But in light of where we were in reaching 
the settlement and where the Board was in terms of having 
scheduled an oral consultation for the proposed gas 
distribution access rule, we simply, as a group, saw no 
need to proceed with this issue.  So it was settled on the 
basis that we wouldn't call witnesses and that we would 
undertake to obtain meaningful input from interested
parties in the course of developing our plans for an 
unbundling of rates and services application per se, and we 
intend to live up to that commitment.
         THE PRESIDING MEMBER:  Thank you.
         MS. SPOEL:  I take it when you refer to 
"meaningful input," you mean it to be some sort of -- this 
is a proceeding at this stage or some sort of funding, that 
kind of meaningful input?
         MR. FARRELL:  No, it's not funding and it's not a 
proceeding.  What we're trying to indicate here is that we 
will be consulting with interested parties in the course of 
developing our unbundling proposals.
         THE PRESIDING MEMBER:  Thank you.  We trust the 
interested parties will provide meaningful input.
         MR. THOMPSON:  As ever.
         THE PRESIDING MEMBER:  As ever.  Thank you.
         Cost allocation.
         MR. FARRELL:  There's just the one cost allocation 
issue.  This was in terms of the fully allocated cost study 
for the test year, including the appropriateness of 
customer rate classifications.  When we came to discuss 
this issue in the course of the settlement conference, it 
became quickly evident that it really was not an issue.  So 
it was settled on the basis that the status quo was fine 
for this purpose.
         THE PRESIDING MEMBER:  Thank you.
         MR. FARRELL:  Rate Design, Rate 300, this is issue 
14.1, our proposal to bring the revenue to cost issue up to 
1.1 by designing the rate.  The bullet points are intended 
to provide some factual background so the Board Members
could understand how the rate to cost ratio was moved up to 
1.1 and sort of an -- the third bullet deals with an 
anomalous type of presentation in Exhibit G3, tab 2, 
schedule 1, that showed a revenue to cost ratio 3.05:1 and 
provides an explanation as to why that fell out of that 
exhibit in this particular year, and our agreement to add 
another column to that exhibit on a go-forward basis to
indicate the effect on the revenue to cost ratio that is 
derived from curtailment delivered supply.  And that's what 
...
         MS. SPOEL:  Can I just ask Mr. Farrell a question 
just to clarify for my own interest.
         When you talk about the curtailment delivered 
supply customers being eliminated, I take it those are 
customers who would otherwise be -- who might otherwise be 
curtailed under rate 145 or rate 170 and decide they want 
to take gas in any event, at which point they take it at 
rate 300, which is a higher rate?
         MR. FARRELL:  I'll let Ms. Duguay explain it.
         MS. DUGUAY:  A.  Yes, you're correct that those 
customers would take service all year round pursuant to 
rate 145 or rate 170.
         On the day that an interruptable customer is being 
ordered to curtail, if they are T-service customers, they 
need still to deliver their mean daily volumes to the 
company.  So to the extent that the customer could get some
incremental supplies over and above their mean daily  
volume, we would charge them for the point-to-point 
transportation on our distribution system, given that they 
would have delivered at Citygate or at the incept of our 
franchise area.  So we would charge them a rate 300 for 
that specific service.
         MS. SPOEL:  And what you're doing is you're 
eliminating those customers from the rest of the rate 300 
class from the point of view of bringing it up to unity.
         MS. DUGUAY:  A.  Well, we couldn't bill them, for 
example, under rate 145 in terms of the distribution 
charges only because that's what the service is, because 
it's a bundle rate.
         MS. SPOEL:  Right.
         MS. DUGUAY:  A.  So rate 300 is an unbundled rate 
which essentially recovers the cost of moving the gas on 
ECG's distribution system only.
         MS. SPOEL:  Right.  Thank you.
         THE PRESIDING MEMBER:  At first blush, an increase 
of 50 percent seems high or maybe difficult.  Have the 
customers been apprised that this is the proposal and --
         MS. DUGUAY:  A.  I believe that customers -- well, 
the evidence is part of the public record.  There has been 
some exchanges and so on.  I think the issue to increase 
the revenue to cost ratio to 1 is an issue of equity 
amongst other customer rate classes to the extent that the 
revenue to cost ratio would be deficient for rate 300 
customers.  That means that other customers are paying
for the costs that are being allocated to that rate class.
         THE PRESIDING MEMBER:  I don't think we're arguing 
over the principle --
         MS. DUGUAY:  A.  Right.
         THE PRESIDING MEMBER: -- of one to one.  I guess 
we're questioning, just asking for clarification on the 
potential rate shock issue of a 50 percent increase to 
these customers.
         MS. DUGUAY:  Well, I guess that --.
         THE PRESIDING MEMBER:  Mr. Thompson, I understand 
that would be your group.
         MR. THOMPSON:  It's not my constituency, but there 
may be the isolated customer.  But my recollection is that 
at the settlement conference, there were representatives of 
these customers who endorsed this.  And Mr. Hamilton can
perhaps add to this, but one of the rationales is that this 
would seem to be a good first step towards unbundling.  But 
definitely the customers are aware of it and they were 
certainly a number of representatives that endorsed it 
during the settlement conference.
         THE PRESIDING MEMBER:  I thank you for clarifying 
that.
         Mr. Farrell, 14.2.
         MR. FARRELL:  14.2 is really an issue that 
reflects a legal requirement at the federal level to apply 
pressure factors to volumes read from metres that don't 
correct for pressure.  So this was an easy settlement in 
the sense that the actual -- the consequential effect, as 
the last sentence in the bullet notes, on all customers is 
de minimus.
         14.3 was also an issue that didn't require a lot 
of time to reach.  It just involved, really, an exchange of 
information of the parties that were concerned about how 
the distribution revenue deficiency was allocated, or at
least the methodology for allocation was acceptable, and 
then that resulted in the settlement.
         Now, page 51 has two issues that weren't on the 
Board's issues list. The first is rate 125, and we 
discussed this initially in the context of whether the 
company would apply to the Board separate and apart from 
the rate case to amend rate 125 by removing the requirement 
for a minimum annual load factor of 90 percent which, I 
should add, doesn't change the minimum bill provision.  It
just means that if you're above the minimum bill provision 
and you're, say, twice that amount, the requirement to take 
a 90 percent load factor would be onerous, and particularly 
in the context of what I believe are called merchant power 
plants now as opposed to cogeneration plants which wouldn't 
be operating on a must-run or a high-level factor basis 
necessarily depending on how the plant may be dispatched 
when the market opens.
         At any rate, the decision by consensus was to try 
to have this approved in the context of this settlement, 
and so we added this for the Board's consideration.
         The last issue has to do with rider A and what 
I'll call, perhaps, a mechanical defect in the way the 
transportation service credit for Ontario ABC T-service 
works.  The two bullet points explain the rationale, and if 
you require some further information, I'd ask Ms. Duguay to 
provide it to you.  In other words, ask her, not me.
         THE PRESIDING MEMBER:  Ms. Duguay, do you have 
anything to add?
         MS. DUGUAY:  No, I don't.
         THE PRESIDING MEMBER:  That's simple.  Okay, no 
further questions.
         Mr. Small.
         MR. SMALL:  Yes.  At the break, I had a chance to 
double-check a couple of things, and I'd just like to start 
by saying that each day we receive from a third party the 
previous day's bid and ask price for a future month's 
contract at various receive points.  This type of 
information is available from various financial 
institutions and industry players, such as CIBC, Morgan 
Stanley, and ENRON.  We ourselves have chosen ENRON, and 
the reason we chose them is because they provide this 
information for all the receipt points that we're looking 
for, i.e., AECO, Chicago and Dawn.
         The information itself is confidential.  We didn't 
think they had a problem with us stating that it was them 
who provided us with the information. Whether or not that 
information is available to everyone, I'm assuming it is,
but it would be subject to ENRON, for example, if they 
chose to preclude someone from receiving that information 
from them.
         MR. FARRELL:  It's a service you provide, isn't 
it?
         MR. SMALL:  Well, it's --
         MR. FARRELL:  It's free.
         MR. SMALL:  It's free.
         THE PRESIDING MEMBER:  I'm sorry, I missed that 
exchange.
         MR. FARRELL:  I asked Mr. Small whether it was a 
service that ECG bought and Mr. Small advised me that no, 
it was free, ENRON provides it without charge.  So I think 
what he's saying is that anybody can get the information we
get from ENRON unless ENRON chooses not to give it to a 
particular individual or person.  I can see no reason why 
that would be the case.  But it's ENRON's compilation of 
data, not ours.
         MR. HAMILTON:  For purposes of clarity, can we 
just have the agreement, our issue is simply that we want 
to be able to verify, independently verify the reporting 
that is filed with the Board without having to have a 
hearing and without having to come down here and ask them 
where they got the numbers from.
         So to the extent -- I don't really care what the 
source is.  If it's ENRON, then just say so.  I mean, all 
we want to be able to do is to replace the present 
methodology with effectively a formula approach that has 
been agreed to and be able to verify independently that the 
arithmetic is correct so that we don't -- so that the Board 
can feel comfortable that the intervenors have had an 
opportunity to review it and that they either agree with it 
by their absence or they -- if they don't agree with it, 
they will have an opportunity to request a review.  That's 
the whole purpose of moving to this more mechanistic 
approach, is to reduce the regulatory burden, to increase 
transparency, and to have a formalised regular assessment.
         I mean, effectively what they do now, what the 
company does now is every month they make -- they conduct a 
review of the PGVA balance, and if that review yields a 
certain result, they make a recommendation to the Board to 
deal with it.  All we're suggesting here is that they do it 
on a regular, quarterly basis, file a report.  And assuming 
that they have followed the formula correctly, there would 
be no need for anything other than an approval of their 
recommendation.  So we're just trying to make it easier so 
--
         THE PRESIDING MEMBER:  Just one moment, please.
[The Board confers]
         THE PRESIDING MEMBER:  For the sake of this 
proceeding, I think we can assume that Enbridge gets their 
information from ENRON, and that that would be the 
information that they would be relying on for the purposes 
of this reporting.
         Sorry?  Is that not correct?
         MR. FARRELL:  Well, there's one other step that I 
think Mr. Small wants to explain and that's what we do with 
the data we get from ENRON, because it's not -- well, I'll 
let him explain.
         THE PRESIDING MEMBER:  Okay.
         MR. SMALL:  Yes, it's more of a clarification.  
Yes, ENRON is providing us with those forward prices at the 
various receipt points.  But when we're coming forward and 
trying to come up with what our utility price is, we would
take those forecasted prices and apply them to our current 
gas supplies.  So that the extent a particular contract, 
the pricing provisions in that contract would be -- for 
example, would be AECO plus something, we would take the
forecasted AECO price plus whatever that increment amount 
is in that contract to come up with a price for that 
contract.
         So while I understand what Mr. Hamilton is saying, 
that they want to be able to see the price that we're 
using, you're not necessarily going to be able to replicate 
what our price is because you now have forward pricing 
information, because what our utility price is going to be 
something different.
         MR. HAMILTON:  I understand that, Don.  But I'm 
simply saying can we not agree -- I just don't understand 
why this is controversial.  Can we not agree that we will 
identify the source?  I mean, I understand that you make
adjustments to that; I understand your contract makes 
changes; I understand all that.  But you've got "such as 
Natural Gas Market Reporter."  Take out "such as" or just 
put in "ENRON," period, just so that when we -- if there is 
a dispute, at least we won't be arguing about where the 
numbers came from.
         THE PRESIDING MEMBER:  Mr. Hamilton, it's not just 
the intervenor's concern, it's the Board's concern that, in 
fact, we've got to be able to justify the information as 
well.  So I think that for the purposes of this settlement,
Enbridge is on the record as saying that the source of 
their information is ENRON.  To the extent that they cannot 
assure the parties that that information is public, then 
we'll have to determine, in the course of implementing this
settlement proposal, as to whether that information is 
readily available.  Not just for the intervenors but for 
the sake of the Board as well.
         If by chance there is a problem in the Board or 
the intervenors having access to that information because 
of the confidentiality claimed by ENRON, then at that point 
in time, the intervenors and the Board will be free to come
forward and say, "That source is not open and transparent 
enough for a proper testing of the evidence or the material 
that the company is providing to us."
         MR. HAMILTON:  Thank you, Madam Chair.  We're on 
the same page.
         THE PRESIDING MEMBER:  Is that satisfactory?
         MR. BRENNAN:  Yes, I think it is.  I just want to 
point out that it's just not ENRON.  Mr. Small mentioned 
that ENRON was used for certain points, and earlier on he 
mentioned that we do use riders for my NYMEX.  So there is 
more than just one source that we do use.
         THE PRESIDING MEMBER:  Is there any problem with 
the company disclosing the source of the information that 
they use?
         MR. BRENNAN:  No, I don't think so.  And if it 
does change, then we'll notify if that source does change.
         THE PRESIDING MEMBER:  Because you can appreciate 
the concerns of the Board over secret information that 
you're using, right?
         MR. BRENNAN:  Absolutely.  Absolutely.
         THE PRESIDING MEMBER:  Okay.  So we'll leave it at 
the fact that the company will agree to disclose the source 
of the information that they use in calculating the utility 
price, I guess, as it's now called; and that if there is
any problem with any of the parties obtaining that 
information in order to verify it, the Board will review 
whether that is the appropriate source to use. Is that 
satisfactory?
         MR. HAMILTON:  Yes, it is.
         THE PRESIDING MEMBER:  Okay, thank you.
         Is there anything else with respect to the 
settlement proposal?  Great.
         MR. FARRELL:  Oh, I have a question.
         THE PRESIDING MEMBER:  Certainly.
         MR. FARRELL:  My turn.  Just for the sake of 
completeness, would you like us to file a correction to 
page 18 that would add Ontario Energy Savings Cooperation 
to the parties that agree?  Or are you content on rely on
Mr. Hamilton's confirmation.  I don't know whether you 
intend to reproduce the settlement documents in your 
decision or not.  If you were going to do that, then we 
would provide to file the change so it's complete.
         THE PRESIDING MEMBER:  We will be reproducing the 
settlement proposal in our decision.  So if you want to 
provide the Board with an amended page for the purposes of 
the decision, we'd appreciate that.
         MR. FARRELL:  We'll do that.
         THE PRESIDING MEMBER:  Okay, thank you.
         All right.  I see by the clock on the wall that it 
is after noon.  First of all, I'd like to thank the Panel 
for your help in answering our questions.  We appreciate 
that.  You are now excused.  I'd like to, in particular, 
thank Mr. Farrell for the thorough review of all of the 
issues that he did, and he certainly made the witness' life 
a lot easier, I think.
         I think now would be an appropriate time for the 
luncheon break, and what we propose to do is to go through 
the proposed implementation of the proposal this afternoon.
         One moment, please.
[The Board confers]
         MR. FARRELL:  Madam Chair.
         THE PRESIDING MEMBER:  Yes, Mr. Farrell.
         MR. FARRELL:  Mr. Thompson just mentioned to me a 
good idea, which is --
         THE PRESIDING MEMBER:  Don't sound so surprised.
         MR. FARRELL:  My godson says, "I have a good  
idea."
         I think it would be fruitful, before you break for 
lunch, to have Ms. Duguay take us through the proposed 
implementation.  She's got three – a three-page handout, 
two of which are a schematic that sort of illustrate the
differences between the two methods.  I thought if she 
could do that, then people could take that away along with 
the evidence over the luncheon break and see whether her 
explanation furthered the cause of understanding the two 
options that we laid out for the Board and parties, and the 
reasons why we selected one of them.
         THE PRESIDING MEMBER:  That actually is a very 
good idea.
         MR. MONDROW:  Madam Chair, while that's being 
handed out, I wonder if we might just ask the Board if 
other than review of what's now been filed as Exhibit N2, 
tab 4, schedule 1, this implementation question, there are 
any other matters that the Board intends to canvass today.  
The reason for the question is my client's not directly 
interested in this issue and so I wouldn't then stick 
around and come back after lunch.
         THE PRESIDING MEMBER:  That's fair enough, Mr. 
Mondrow.
         Subject to any other issues arising in the course 
of the proceeding this afternoon that would not preclude 
the Board from reviewing it, it's our intention to only 
deal with the implementation this afternoon.
         MR. MONDROW:  Thank you, Madam Chair.  I'll just 
check with the other parties and I'll make my own judgment 
on that.  Thank you.
         THE PRESIDING MEMBER:  Okay, thank you.
         MR. POCH:  Madam Chair, I should just say I'm in 
the same position, and with the Board's permission, I'll 
leave at the lunch break.
         I would just remind the Board that in issuing any 
directive to the parties on the implementation, if the 
Board could indicate when it wished to receive cost 
submissions or -- that's always a concern of ours.
         THE PRESIDING MEMBER:  I knew that you were going 
to head in that direction, Mr. Poch.
         MR. POCH:  We're very predictable on that one.
         THE PRESIDING MEMBER:  Yes, thank you.  We're 
aware of the potential cost claims of the intervenors in 
this proceeding.
         MS. DEMARCO:  Madam Chair, may I just say that 
CEED is in the same position as both HVAC and GEC on this 
issue.
         THE PRESIDING MEMBER:  Okay.  Thank you, Ms. 
Demarco.
         Is there anyone else who would like to join the 
list of people who would like to leave?  Fair enough.
         Ms. Duguay.
         MS. DUGUAY:  The first thing I'd like to clarify 
is whether all the people were served with the copy of the 
three-page document --
         MR. MORAN:  Madam Chair, I'm just wondering if we 
can get copies.
         THE PRESIDING MEMBER:  Excuse me.  Could you 
provide, Mr. Ladanyi, copies to Board Staff, please.
         MR. LADANYI:  We're running short of copies.
         MR. SCHUCH:  Shall we share one?
         MS. DUGUAY:  Okay.  So the company indicated at 
Exhibit N2, tab 2, both schedules 8 and 9, that the total 
revenue deficiency underpinning the settlement proposal 
amounted to $23.9-million.  At Exhibit N2, tab 4, schedule 
1, the company outlined the composition of the total 
revenue deficiency of $23.9-million.
         As seen at Exhibit N2, tab 4, schedule 1, on page 
2 what you can see is that the gas supply commodity 
deficiency underpinning settlement proposal amounts to 
$15.6-million, whereas the gas supply load balancing  
efficiency is $20.8-million, and that there is a 
distribution sufficiency of $12.5-million to amount to the 
net revenue deficiency of $23.9-million.
         In that same exhibit, ECG has proposed two options 
to the Board to deal with this revenue deficiency.  The 
company also indicated its intention to discontinue, 
effective July 1, 2001, the applicability of rider G, which 
is the interim gas cost adjustment that was approved as 
part of the interim rate order in March of 2001 in order 
that the discontinuance of rider G would be there to 
essentially mitigate the estimated year-end PGVA balance, 
which is a credit.
         The company also indicated in that evidence that 
while it has proposed or identified two options to deal 
with the 2001 revenue deficiency, that the discontinuance 
of rider G is common to both proposals, in other words, is
independent of the treatment that the Board will deem to be 
appropriate to deal with the 2001 revenue deficiency.
         So in order to assist the Board and the  
intervenors, I thought it would be useful to put a 
schematic, which is essentially this three-page document 
that was circulated earlier on this morning, to attempt to 
gain further clarity as to what the differences are with 
regard to option 1 versus option 2.
         So what I would like to do now is attempt to walk 
you through the first page of the handout which essentially 
depicts option 1, which is -- has been identified at 
Exhibit N2, tab 4, schedule 1 as being the rate rider 
option.
         What you see at the top of the document are time 
lines outlining, essentially, the company's fiscal year.  
You can see in October, for example, that the Board 
rendered an interim order under docket EB-2000-0234 rates.  
There was a second interim rate order as of January 1, 
2001, with a third set of rates which was effective March 
1, under docket number EB-2001-0033 rates.
         Essentially, under option 1 or the rate rider 
option, the company is proposing to finalise its 
distribution rates which would be implemented in the first 
billing cycle of July, and the company as well would deal 
with the sufficiency portion of the -- I'm sorry, the 
retroactive portion of the distribution sufficiency.  By 
that I mean the sufficiency applicable to the period 
October 1 till June 30th through a rate rider which would 
be disposed to customers in the month of July, as well as 
starting in the first billing cycle of July to essentially 
decrease the delivery charge which is the component in
which we would effect the distribution sufficiency.
         So with regard to fiscal 2001, essentially that 
proposal would strictly deal the distribution sufficiency.  
The other elements being the deficiency attributable to gas 
supply commodity and gas supply load balancing would not be
dealt with in fiscal 2001, but rather deferred to when the 
company would be clearing the balance in the 2001 PGVA.
         You see that on this schematic.  If you look, for 
example, on the top of the sheet where you see "Fiscal 2002 
December," there's a box at the bottom of the page which 
states that the gas supply and gas supply load balancing
deficiencies would be collected through the clearing of the 
2001 PGVA.
         I think it may be worthwhile, just as a 
suggestion, if there are any questions, rather than me 
covering option 2, if people can jump in and if I wasn't 
clear on the schematic or on the option, to ask questions.  
Or do we want to do that after lunch?
         MR. THOMPSON:  Why don't I jump in because I think 
it can be seen, what you're trying to do, if you turn up 
N2, tab 2, schedule 8.  This, as I understand it, is the 
cost allocation -- sorry, the revenue recovery proposed as
a result of the settlement agreement.  Have I got that?
         MS. DUGUAY:  That's correct, yes.
         MR. THOMPSON:  All right.  If we look at columns 
5, 6, and 7, at the bottom of column 5 there is a 
sufficiency total number of 10 million 845, where in your 
evidence it's at number, I think, of 12 million and some 
odd.  But that's the sufficiency you're talking about?
         MS. DUGUAY:  Yes.  And the discrepancy is 
attributable to the fact that that exhibit does not include 
the variation in unbilled revenues.  So when including 
that, it goes up to $12.5-million.
         MR. THOMPSON:  Okay.  And what you're proposing to 
do is, in effect, on July the 1st, by rate rider either pay 
back or collect from these various rate classes the 
sufficiency or, in the case of my clients, a mild 
efficiency, to bring the recovery of those amounts from 
October 1, 2000 to July 1, 2001 up to date.  Is that it?
         MS. DUGUAY:  That is close.  It's not quite 
correct.
         MR. THOMPSON:  Okay.
         MS. DUGUAY:  Because that amount is an annual 
amount.
         MR. THOMPSON:  So it's part of this amount.
         MS. DUGUAY:  Exactly.  So the bulk of the amount, 
you're right, would be dealt with through a rate rider, in 
this specific case rider E, as a lump sum adjustment on the 
customer's bill in July.  And as of that date as well, the
company would decrease, depending on which rate classes 
we're talking about, but for residential customers, would 
decrease the delivery charge to also pass on the 
sufficiency in distribution for the period, the ongoing 
period from July 1 till the end of the fiscal year.
         MR. THOMPSON:  So coming back to your box --
         MS. DUGUAY:  Yes.
         MR. THOMPSON:  -- the final distribution rates 
build from July 1 to September 30 is, in effect,  
implementing that column for the period July 1, 2001, 
September 30, 2001.  And the next box, rider E, is in 
effect implementing that column to take it back to 
September 30 -- sorry, October 1.
         MS. DUGUAY:  That's exactly right.
         MR. THOMPSON:  Okay.  And then what you're 
proposing is, in effect, to not collect the amounts in 
column 6 and 7 at this time because the expectation is 
there's going to be enough accumulations in the PGVA to, in 
effect, offset them.
         MS. DUGUAY:  That's correct.
         MR. THOMPSON:  And so that's why you have this 
third box, I think, gas supply and load balancing the same 
as March -- in other words, you're not changing those rates 
but you'll collect the gas supply load balancing 
deficiencies, and that box is a reference to columns 6 and 
7, at the same time that you expect the clear out of PGVA 
credits.
         MS. DUGUAY:  That's correct, yes.
         MR. THOMPSON:  And I guess the risk there is they 
may not be credits, they may be debits.  But the 
expectation is that this will be smoother for everybody 
rather than hammering them now with everything and then 
having to give them back money later on.
         MS. DUGUAY:  That's the gist of the proposal.  I 
think from a customer standpoint as well, given that in 
July of fiscal 2001 we would deal strictly with 
distribution costs and we would -- essentially, when we 
clear the 2001 PGVA, we would deal them at once with all 
gas supply related costs stemming from -- costs or refunds 
stemming from fiscal 2001.  So from that perspective, I
am of the opinion that this approach would be customer-
friendly.
         MR. BRETT:  Can I just ask, you're assuming, then, 
that going forward there will be -- the cost of gas will be 
-- the actual cost of gas, Consumer's actual cost of gas 
will be less than the forecast cost for the balance of the
year?  So there will be credits accumulating in the PGVA to 
offset these gas supply debits; is that it?
         MS. DUGUAY:  That's correct, yes.
         THE PRESIDING MEMBER:  Mr. Janigan.
         MR. JANIGAN:  I've got just a couple of questions.  
Why is rider E being done on the basis of a volumetric 
charge rather than a one-time adjustment?
         MS. DUGUAY:  It would essentially be a one-time 
adjustment.  Basically, what the company would do is to 
look at the distribution sufficiency accumulated over the 
October 1 till the end of June period, and take that amount 
by rate class and essentially take the forecast volume to 
be consumed in July and determine a unit rate which would 
be picked up through the billing system, and we'd 
essentially refund that amount to the various customer rate 
classes and charge them depending on which classes the 
customers are.
         MR. JANIGAN:  Is that the customary way that 
adjustments are made in terms of --
         MS. DUGUAY:  No.  Typically, except for last year, 
we would deal with the revenue deficiency or the 
sufficiency in a matter consistent with option 2, which is 
described on the document.
         If I understand your question, you're asking me 
why we couldn't deal with the distribution sufficiency as a 
one-time adjustment as we typically have done in the past.  
My understanding is that given that we would defer, under
option 1, the recovery of the deficiencies associated with 
load balancing and commodity, the company would have to 
essentially back bill one component of its rates back to 
October 1 of 2000.
         My understanding of it is that we've never done 
that before.  When we back bill, we back bill the rates as 
a whole, meaning all components to the beginning of the 
fiscal year; whereas in this specific question, I  
understand that I am being asked why we couldn't back bill 
the delivery charge only back to October 1.  This would be 
doable.  It has never been done.  I understand from our 
billing people that it would require some efforts to modify 
the billing system to do that, and I do not believe that 
that could be done on time to effect final rates in the 
first billing cycle of July.
         MR. JANIGAN:  I have another question dealing with 
the balance in the PGVA account.  I understand that, 
according to schedule 1 of your evidence, paragraph 2, that 
there's an estimated credit amount of 22.3 million --
         MS. DUGUAY:  Yes.
         MR. JANIGAN:  -- as of May 18th, 2001, with an 
estimated year-end PGVA credit balance of 90.9 million.  
Why couldn't the PGVA be cleared now to eliminate the total 
net distribution deficiency instead of waiting till the end
of the year?
         MS. DUGUAY:  I guess it would be possible to clear 
the PGVA now rather than wait until the end of the year.  
However, that would mean that there would be two clearings 
of the PGVA, because this is an estimated balance subject 
to price fluctuations taking place between now and the end 
of the fiscal year.  And the company intends, as it 
stipulated in its evidence when we created rider G, which 
is the interim gas cost adjustment rider, that there would 
be a true-up at fiscal year-end to actually look at the 
composition of the PGVA.  So that I'm thinking from a 
customer's perspective, that would mean two PGVA clearings
rather than one, which I'm not sure would be desirable from 
a customer's standpoint.
         MR. JANIGAN:  Is that different than what has been 
proposed in section 2.2 of the settlement agreement, 
dealing with periodic clearances of the PGVA?  In other 
words, would a clearance now not be similar to what has 
been proposed in there?
         MS. DUGUAY:  I would have to agree to that.  
However, I think in terms of issue 2.2, my understanding is 
that that would be, in effect, at the outset of fiscal 
2002.
         MR. JANIGAN:  And I understand you've done a 
calculation of the carrying costs associated with the 
clearance of the distribution deficiency at the end of the 
year.
         MS. DUGUAY:  Yes, I did.  And the calculation 
indicates that the carrying costs associated with option 2, 
presuming that the 2001 PGVA would be disposed in January 
of 2002, would amount to an additional charge of 50 cents
for a typical residential customer.
         MR. JANIGAN:  So if the PGVA was cleared now, that 
would be – that would eliminate --
         MS. DUGUAY:  The 50 cents.
         MR. JANIGAN:  -- the 50 cents.  Okay, those are 
all my questions.
         THE PRESIDING MEMBER:  Thank you, Mr. Janigan.
         Ms. Demarco.
         MS. DEMARCO:  I have a series of concerns or 
questions of how this might impact the evaluation of the 
new system gas pricing mechanism as against the eight 
objectives set out, particularly if we go in with a balance 
that needs to be administered through an additional rate 
rider partway into that year, and how to separate the costs 
of customer information and customer education associated 
with that particular rate rider and the new mechanism.  I 
wonder if you could just give some clarification as to how 
the evaluation of the new pricing mechanism will be 
effected by this particular proposal?
         MS. DUGUAY:  Just to answer that question, my 
understanding is that the two are independent in the sense 
that issue 2.2 would deal with starting to clear 
potentially on a quarterly basis, provided that the 
threshold would be pierced, the 2002 PGVA; whereas this 
proposal essentially deals with the disposition of the 2001 
PGVA.  So I don't think that there is a link in between
the two.
         MS. DEMARCO:  So there would be no accumulation of 
the two amounts in order to determine whether or not the 
threshold had or had not been pierced?
         MS. DUGUAY:  That's right.
         MS. DEMARCO:  And in terms of any customer 
education costs associated in terms of the new rider in 
particular?
         MS. DUGUAY:  Rider, you're talking about rider G -
- rider E, dealing with the distribution sufficiency?
         MS. DEMARCO:  Yes, rider E as set out in option 1 
of your proposal.
         MS. DUGUAY:  Well, I think when the company will -
- after the Board has rendered its order, will effect the 
order.  And as we typically do, we need to communicate to 
customers typically through a bill insert to let them know 
that new rates have been approved by the OEB.  And we would 
at that time indicate to customers, if the Board approves 
option 1, that the delivery charge would go down effective 
July 1, 2001 and that the lump sum adjustment that the 
customers would see on their bill would deal with the 
retroactivity associated with the distribution sufficiency.  
So that would be contained and communicated with the 
customers.
         MR. THOMPSON:  That doesn't go into the deferral 
account.  It goes in the --
         MR. FARRELL:  It's a different deferral account.  
It's the customer communication so it wouldn't be in the 
PGVA.
         MR. THOMPSON:  Right.
         THE PRESIDING MEMBER:  Ms. Demarco, any other 
questions?
         MS. DEMARCO:  I think I'm fine with that now.
         THE PRESIDING MEMBER:  Okay, thank you.
         Any other questions from any of the other 
intervenors?
         Ms. Duguay, perhaps you can help me because I'm a 
little slow at this but --
         MS. DUGUAY:  I'll certainly try.
         THE PRESIDING MEMBER:  -- your proposal for option 
1 is to collect the -- or to refund the sufficiency of 
distribution costs from October to July 1st by way of a 
one-time payment?
         MS. DUGUAY:  That's correct.
         THE PRESIDING MEMBER:  Okay.  And then on a going-
forward basis, the base rates would be changed.
         MS. DUGUAY:  Yes.
         THE PRESIDING MEMBER:  They would then be lowered, 
presumably, for --
         MR. DUGUAY:  For residential customers.
         THE PRESIDING MEMBER:  -- residential customers.
         MS. DUGUAY:  That's correct.
         THE PRESIDING MEMBER:  To reflect the anticipated 
sufficiency for the period July 1st to October 1st.
         MS. DUGUAY:  Yes.
         THE PRESIDING MEMBER:  For the distribution 
component only.
         MS. DUGUAY:  Yes, to reflect the final rates, yes.
         THE PRESIDING MEMBER:  Right.  So the proposal for 
rate rider E is that there's two components of it; one 
would be a one-time payment --
         MS. DUGUAY:  Yes.
         THE PRESIDING MEMBER:  -- and the second would be 
on an ongoing basis, lower rates.
         MS. DUGUAY:  That's correct.  That's exactly 
right.
         THE PRESIDING MEMBER:  Okay.  To follow up on Mr. 
Janigan's point dealing with the retroactive portion of the 
sufficiency, so to speak, and whether that should be -- it 
is a one-time payment but you're going to base it on the 
volumes in July.
         MS. DUGUAY:  That is correct.  But the unit rate 
would factor – the way that the rider will be calculated is 
to look at how much, by rate class, should we refund for 
the period October 1 to the end of June.
         THE PRESIDING MEMBER:  Right.
         MS. DUGUAY:  And that amount is fixed.
         THE PRESIDING MEMBER:  I understand that.
         MS. DUGUAY:  And in terms of determining the unit 
rates, we will take this amount, divide that by forecast 
consumption for the month of July, and essentially pass it 
through to customers on that basis.
         THE PRESIDING MEMBER:  So it would be based on 
forecast consumption.
         For example, I do not have gas air conditioning.  
I do have gas heating, and I look at my consumption in July 
and think it's low.  And therefore -- but I've had gas 
consumption for heating and hot water throughout the 
winter, so therefore I've been contributing to this 
sufficiency.
         MS. DUGUAY:  That's correct.
         THE PRESIDING MEMBER:  But if I have no use in 
July, if it's based on a payment in July, will I get my 
rebate?
         MS. DUGUAY:  Yes, you will.
         THE PRESIDING MEMBER:  Oh, good.  Can you explain 
that?
         MS. DUGUAY:  We're going to look at the 
accumulation of the distribution sufficiency month by month 
from October 1 till the end of June.  In your example, 
we're going to take into consideration that your volumes 
would have been higher during the winter months; therefore, 
you would have either a greater or smaller responsibility 
for this sufficiency.  And we will use your forecast 
consumption in July.  So to the extent that your July 
volumes are lower, what that will do is give you a greater 
unit rate.
         THE PRESIDING MEMBER:  Right.
         MS. DUGUAY:  But we will respect the rate class 
and the monthly accumulation of the distribution 
sufficiency.
         So I guess in terms of the rate rider what could 
happen -- or the variance would be with respect to your 
actual consumption for the month of July versus the 
forecast consumption, which will be based on the Board-
approved 2001 volumes underpending the test year.  So I'd 
like to think that the actual would be close to the 
forecast.  But because we don't have the actual to base the
rider on, there is no other alternative other than to use 
the forecast for that month.  But I wouldn't think that the 
variances would be significant.
         MR. POCH:  Madam Chair, I have a question on the 
same lines.  My client is not interested in this, but it 
concerns me that Ms. Duguay seems to be addressing the 
inequity between classes by this forecasting methodology, 
looking at the year-to-date or the annual forecast.  But I 
just -- I think I share your concern about the equity issue 
within the class; that is, people with gas-heated pools are 
going to get the lion's share of this refund, and people 
who heat with gas in the winter aren't going to get any.  
And I just didn't hear an answer to that concern.  Maybe I 
missed it.
         MS. DUGUAY:  I think that at the rate class it 
would be an average.  So I would agree that there would be 
or there could be intraclass inequities.
         MR. THOMPSON:  Why can't you just give them seven 
bucks?
         THE PRESIDING MEMBER:  That's where we were 
heading.  Why is it done as a rate rider and not just as a 
rebate?
         MR. THOMPSON:  Is there some reason why you have 
to figure out what they would have got and then somehow 
plot to give it back on the July consumption, which could 
be zero for some people.  If I can ever get my wife to
turn off the thermostat.  Is there some administrative 
reason why you just can't figure out what the customers are 
owed and pay it to them?
         MS. DUGUAY:  Well, I think that the seven dollars 
is also based on the rate class average, which is the same 
basis of calculation as we expect to do with rider E.  So I 
don't think that that solves the intraclass cross-subsidy
issue.  Whether the company would be prepared to deal with 
that through an amount rather than the unit rate applied to 
consumption, I'd like to give it some thought over lunch 
maybe and come back to the Board.
         THE PRESIDING MEMBER:  Certainly.
         Before we break for lunch, then, are there any 
other questions from intervenors?
         MR. HAMILTON:  I have one for Ms. Duguay arising 
out of the question asked by Ms. Halladay.  I thought I 
heard you say that rider E had two components, one which 
would adjust from October to July and then it would be
ongoing beyond July to October, and I don't understand why 
-- if that's what you said, I don't understand why it would 
continue.  Because I thought your proposal was to implement 
the final distribution rates on July 1 which would already
incorporate, on a unit-rate basis, the effect of the 
ongoing sufficiency.
         MS. DUGUAY:  I don't believe I've said that, and 
rider E would essentially be in effect for the month of 
July and would cease to exist from that date.  And starting 
July 1 we would drop the delivery charge for residential 
and general service.
         MR. HAMILTON:  Well, then, I misunderstood your 
answer earlier.  I thought you said it would continue.
         MS. DUGUAY:  No.  If I did, I misspoke myself.
         THE PRESIDING MEMBER:  The rider -- as I 
understand it, just so that we're all on the same page, so 
to speak, the proposal is that there will be rider E to 
rebate the sufficiency based on volumes consumed in July, 
projected forecast volumes in July, to collect -- to rebate 
the sufficiency for the period October 1 to July 1st.
         MS. DUGUAY:  That's correct.
         THE PRESIDING MEMBER:  And thereafter to rebate 
the forecasted sufficiency from July 1 to October 1, there 
would be a decrease in rates, in overall rates.
         MS. DUGUAY:  Yes.
         MR. THOMPSON:  Just on Mr. Janigan's 50 cents, I'm 
going to get my 7.50 out of this, that is the carrying 
cost, as I understand it, on the deficiency, the 20 million 
and the whatever million, going forward; is that right?
         MS. DUGUAY:  That's right.
         MR. THOMPSON:  But in offsetting that, do we not 
have credits?  We get interest on the credits of the PGVA, 
do we not?
         MS. DUGUAY:  You do.
         MR. THOMPSON:  So on the theory that they're both 
gone awash, I'm going to accumulate a carrying cost of 50 
cents, but I'm also going to accumulate savings of 50 
cents.  You've got 90 million in the bank as of when?  
Sorry. You've got 22 million now and you expect to have 90.  
There may not be a complete wash, but there's a carrying 
cost credit under your proposal.
         MS. DUGUAY:  That's right, because the carrying 
cost accrues whether the PGVA is a debit or a credit, and 
it goes -- well, that's a credit.  The carrying cost goes 
to the benefit of the customer and vice versa.
         But in terms of the 50 cents I was mentioning, in 
my view, those carrying costs are incremental to option 1 
because other -- in comparison, for example, to option 2, 
where the company would back bill customers back to
October 1 for the distribution sufficiency offset by the 
gas cost deficiencies, that there would not be any carrying 
cost incurred in the PGVA.  But I'd like to caution that 
the 50 cents is strictly from the company's perspective.
         Just to illustrate that, we know that for a 
typical residential customer, the deficiency associated 
with commodity and load balancing amounts to $20.  So to 
the extent that the company, based on the Board's approval, 
would essentially defer the recovery of that $20 from July 
till January, that customer could put that $20 in the bank 
and have it accrue interest, and the 50 cents would have to 
be netted against that amount.  So obviously I don't have – 
I only have one side of the equation, but I'd like to make 
the point clear that the full picture is really the 
summation of the two sides of the equation.
         MR. THOMPSON:  Simplistically, the way I look at 
it, it's as if, and this may be obtuse, you're dumping the 
gas supply load balancing and the other deficiency into the 
PGVA.
         MS. DUGUAY:  That's right.
         MR. THOMPSON:  To avoid rate confusion, I guess is 
the way I see it.  That may be too simplistic.
         MS. DUGUAY:  To avoid, based on the current PGVA 
forecast, essentially remitting from one hand and charging 
customers on the other hand over a fairly short time 
interval.
         THE PRESIDING MEMBER:  Any other questions?
         Perhaps, Ms. Duguay, you could look into the 
option of one-time --
         MS. DUGUAY:  Lump sum.
         THE PRESIDING MEMBER:  -- lump sum payment in 
place of one month rider E just to present the full range 
of options.
         Since this is not a matter that was settled among 
the parties, I'd anticipate that after lunch the 
intervenors may want to make submissions on which of the 
options they propose that the Board should accept.
         Now may be an appropriate time for the luncheon 
break, so we'll adjourn until 2:00.
--- Luncheon recess taken at 1:47 p.m.
--- On resuming at 2:10 p.m. 
         THE PRESIDING MEMBER:  Please be seated. 
         Before we commence this afternoon's proceedings, 
the Panel has considered option one and option two over the 
break.  We would like to put forward the following 
proposition to the company to let us know if it is 
practically doable.  We have evidence in the settlement 
proceeding determining the sufficiency with respect to the 
distribution component of the rate for the fiscal Year 
2001.  We propose that rates be adjusted effective July 1st 
to be implemented in the first billing cycle of July to 
reflect that sufficiency on an annualized basis. 
With respect to sufficiency that is attributable to 
rates for the period October 1st to July 1st, we propose 
that there be a one-time credit to reflect the historical 
consumption. 
         I'm told that that is to collect the sufficiency 
from October 1st, 2000 to July 1st, 2001. 
         And the question that the Panel has to the company 
is is that doable?
[The witnesses confer] 
         MS. DUGUAY:  Sorry, for the delay.  Essentially I 
guess the short answer to the question is I'm not sure 
whether the company could implement that proposal.  And the 
reason I'm saying that is that under that option, we would 
essentially effect the change in the delivery charge 
effective July 1.  At the same time based in prior year's 
rate order, the company will be clearing their 2000 
deferral account for non-gas supply deferral account as 
well as three 2000 gas supply deferral accounts.  And that 
clearing is based on historical consumption for fiscal 
2000, so essentially on that proposal there would be three 
things happening, a decrease in the delivery charge 
effective July 1 which is not an issue; the clearing of the 
2000 deferral account with the exception of the 2000 PGVA 
because it was cleared last year in November which uses one 
set of volume.  And under my understanding of the Board's 
proposal, we would be clearing the retroactive portion of 
the distribution sufficiency based on historical 2001 
volume for the period October 1 till the end of June.  We 
couldn't have the actual for June but we could forecast 
that. 
         So there's essentially two clearings with two sets 
of volume taking place at the same time.  I would need an 
assessment from the company as to whether this would be 
doable in time to effect the first billing cycle of July.  
However, as a counter-proposal, if we were to clear the 
retroactive portion of the distribution sufficiency based 
on 2000 historical volumes, I can assure the Board that 
this would be doable.  So it's the same proposal but 
different sets of volume. 
         THE PRESIDING MEMBER:  Sorry, I'm lost.  And I 
guess I got lost, first of all, with the different clearing 
mechanisms.  As I understand it, we know what the 
sufficiency is based on the settlement proposal, so we've 
got a number there that includes, as I understand it, 
includes clearing all the deferral accounts except for the 
PGVA. 
         MS. DUGUAY:  That's correct. 
         THE PRESIDING MEMBER:  Okay.  So we know what that 
number is. 
         MS. DUGUAY:  Yes. 
         THE PRESIDING MEMBER:  We know then we can 
implement on an annualized basis based on the forecasted 
volumes as we would have done if we had been in our proper 
cycle.  We would have said October 1st we're anticipating 
this sufficiency.  We forecast these volumes, and 
therefore, these are the rates.  Is that correct?  We've 
got those numbers.  We know what the negotiated sufficiency 
is. 
         MS. DUGUAY:  Yes. 
         THE PRESIDING MEMBER:  We know what the negotiated 
forecast is.  Therefore we should be able to determine the 
rates based on those.  Isn't that correct?  
         MS. DUGUAY:  That's correct.  
         THE PRESIDING MEMBER:  Okay.  So effective July 
1st, we could then have those rates that we would have had 
for the entire year if we had done it back in October?  
         MS. DUGUAY:  I think I'm with you. 
         THE PRESIDING MEMBER:  Okay.  So that's on a going 
forward basis we can do that.  Then we have to worry about 
the sufficiency that's being collected from October 1st to 
July 1st because we've been overcharging slightly what we 
would otherwise have had.  And the question is can you not 
take that sufficiency and allocate it among customers based 
on historical consumption over that period?  
         MR. FARRELL:  If I can just, I think, make the 
point I think Ms. Duguay was making is that when she talked 
about the two different sets of volumes, if we were back 
almost a year ago, give or take, we would have cleared the 
2000 deferral accounts based upon historical consumption in 
the Year 2000.  We're clearing them now effective July 1st.  
So that's one set of data that's going to happen now 
because we didn't have a case last fall.  But I think she's 
saying to you is to do it your way we would have to have a 
second clearance based upon 2001 historical data so you 
have clearances of deferral accounts based upon different 
consumption data, so there are two. 
         MS. DUGUAY:  Yes.  
         THE PRESIDING MEMBER:  Okay.  Then help me.  But 
the clearance of those deferral accounts has been 
negotiated.  You know those numbers.  Assuming the Board 
was to accept the numbers that you have negotiated, we know 
what the clearance of those deferral accounts -- the net 
effect of clearing those deferral accounts, right?  It's 
been negotiated.  So it doesn't matter what you would have 
done to clear those accounts last year because we've 
negotiated the number for this year.  And it's been 
reflected in the calculation of the distribution 
sufficiency. 
         Ms. Spoel's got a question. 
         MS. SPOEL:  I just want to see if I understand 
what the issue is.  Let's just take my gas bill as an 
example, a typical residential gas bill.  Is the problem 
that I might have consumed -- that you're on the same bill 
for the same customer in the same month, you're having to 
show two different historical volumes, one for fiscal 2000 
and one for the first nine months of 2001 and apply one 
factor to one to clear off the 2000 deferral accounts and 
another factor to another volume in another line to clear 
off the second?  Is that what the problem is, that it's two 
different volumes for the same customer? 
         MS. DUGUAY:  Yes, that's correct from a 
programming perspective. 
         MS. SPOEL:  And is that a problem? 
         MS. DUGUAY:  That's what I would need an 
assessment to determine. 
         MR. FARRELL:  It might be a timing -- 
         MS. SPOEL:   If it was done one in July and one in 
August, for example, it might not present the same problem, 
just for example, because it's on the same bill at the same 
time?  
         MR. LADANYI:  They might actually solve the 
problem if one of them is in August and one is in July.  In 
fact it might be logical so that we would not have to 
forecast the June volumes at all, that we would in fact 
effect what is dependent on the 2001 volumes effective 
August 1st.  That might resolve the problem completely so 
that so that the deferral accounts would be cleared 
effective June 1st based on 2000 volumes -- July 1st 
rather, and all the costs related to the sufficiency for 
2001 would in fact be cleared August 1st, not July 1st.  
That might resolve this difficulty.  But I'd like to 
discuss it with Ms. Duguay. 
         MS. DUGUAY:  I'm sorry, I'm not a billing expert 
so I cannot on the spot tell you without consulting the 
experts to say whether that would be feasible in that 
timeframe. 
         MR. FARRELL:  Would you like to give us some time 
to do that?  I think it's not a question of we don't want 
to do.  It's a question can both be done to be implemented 
in July as opposed to one in July and one in August.  It's 
just a question of what needs to be done programming and 
such. 
         THE PRESIDING MEMBER:  Just a moment.  Mr. 
Hamilton, you had a ... 
         MR. HAMILTON:  Yes, I just offer another 
alternative which I think would achieve what I perceive to 
be the Board's objective, and that is, clear both based on 
the same volumes, and if you have to pick a volume, the 
most precise and accurate would be the 2001 historical 
volumes and just clear them both on the same basis.  I 
can't see how that would prejudice anyone and I think it 
would achieve the objective the Board appears to have. 
         THE PRESIDING MEMBER:  Thank you for that thought, 
Mr. Hamilton.  Before we proceed on, I guess the next thing 
is do the intervenors have any substantial problem with the 
philosophy that we're trying to espouse and deal with the 
whole issue of the timing of the implementation as far as 
what is feasible by the company? 
         Ms. Girvan. 
         MS. GIRVAN:  Yes, I guess I'd just like to say 
that I do agree with the Board that what we should be 
looking to do is refund the sufficiency based on individual 
historical volumes.  And that's, I think, the principle, 
and how we do that, whether we do it August 1st or July 
1st, that's certainly what I think is fair to the 
customers. 
         THE PRESIDING MEMBER:  Thank you.  Mr. Brett? 
         MR. BRETT:  I just have a quick question.  In your 
proposal, are you speaking just to the delivery 
sufficiency, not of the gas cost elements of this?  
         THE PRESIDING MEMBER:  That's correct.  It would 
be option one, a variation of option one. 
         Any other comments? 
         Mr. Farrell, how long do you think it would take 
for you to give us an idea of the timing aspects of it? 
         Ms. Duguay.  
         MS. DUGUAY:  I will contact the programming gurus 
and I will try to have an answer within an hour, but that's 
on a tentative basis. 
         THE PRESIDING MEMBER:  Certainly.  Just one 
moment, please. 
[The Board confers]  
         THE PRESIDING MEMBER:  Thank you. 
         Yes, Ms. Duguay, we would appreciate that and if 
you could come back to Board Staff with respect to what 
timing is doable, if it's possible to do it all effective 
July 1st or if it's possible to do it effective as Mr. 
Ladanyi suggested July 1st and the credit August 1st, if 
it's only possible to do the whole thing August 1st, 
whatever the timing is doable to be able to do that. 
         My next question is if the Board were inclined to 
make an order, how long would it take the company to 
prepare a draft order and would that be available by next 
Friday, the 8th?  
         MR. FARRELL:  If you were to make the order when? 
         THE PRESIDING MEMBER:  Today. 
         MS. DUGUAY:  I believe that would be doable. 
         THE PRESIDING MEMBER:  Thank you. 
         Are there any other questions? 
         So what we are suggesting is that the company get 
back to Board Staff as far as the timing of the 
implementation is concerned.  And based on when you get 
back to Board Staff, as far as the doable timing, we hope 
to reconvene -- I think we need to wait until you get back 
to us to be able to determine when we're going to reconvene 
later today. 
         Mr. Janigan. 
         MR. JANIGAN:  Madam Chair, I think the company has 
indicated that the July 1st, August 1st scenario is doable.  
If that's the case, VECC I know is on-side with that 
proposal.  If it can be done July 1st, July 1st of course 
is fine too but certainly if that's the case, I think we 
would indicate at this point in time our agreement with 
that idea to obviate the necessity to attend again to 
indicate our agreement.  I'd like to put that on the record 
right now. 
         THE PRESIDING MEMBER:  Thank you, Mr. Janigan. 
         Are there any other intervenors that would like to 
be on the record?  
         MR. HAMILTON:  Yes, OESC.  As I understand the 
events of the last few minutes, I just want to confirm that 
the company has effectively accepted the objectives of the 
Board's proposal.  The only outstanding issue is timing.  
Is that a fair summary?  
         MR. FARRELL:  Yes. 
         MR. HAMILTON:  Thank you.  Then I'm in support of 
that. 
         MS. GIRVAN:  CAC also supports that. 
         THE PRESIDING MEMBER:  Thank you, Ms. Girvan.  
         MR. THOMPSON:  Yes, IGUA. 
         THE PRESIDING MEMBER:  Mr. Thompson, you think 
you're going to get your seven-dollar rebate. 
         Mr. Brett. 
         MR. BRETT:  Yes, we support that. 
         THE PRESIDING MEMBER:  All right.  So as I 
understand it, the intervenors support the implementation 
process.  The question is the timing, and the company will 
get back to Board Staff as far as what timing is doable on 
the understanding that obviously all the parties would like 
it to be accomplished as quickly as can be done reasonably. 
         Ms. Girvan.  
         MS. GIRVAN:  I have one point of clarification 
just so that I'm entirely clear on this.  When we're 
talking about historical volumes, it's individual customer 
historical volumes versus rate class historical volumes?  I 
just want to be clear that that's the objective that I 
think is the right way to go and I wanted to be clear on 
that. 
         THE PRESIDING MEMBER:  That's correct, Ms. Girvan.  
Thank you. 
         And that's your understanding, Ms. Duguay? 
         MS. DUGUAY:  Yes. 
         THE PRESIDING MEMBER:  All right.  So based on the 
company getting back to Board Staff we will -- just one 
moment. 
[The Board confers]  
         THE PRESIDING MEMBER:  Excuse us.  Hopefully 
you'll be able to get back to Board Staff within the hour, 
and based on that we would like to reconvene at 4:30.  And 
if you're later than an hour, then obviously we may have to 
readjust our time then. 
         Ms. Duguay.  
         MS. DUGUAY:  That's fine.  Do you mean 4:30 or 
3:30?  
         THE PRESIDING MEMBER:  Well, you'll get back to us 
by 3:30. 
         MS. DUGUAY:  Yes. 
         THE PRESIDING MEMBER:  And if so, we'll reconvene 
at 4:30, okay.  If you don't get back to us until a quarter 
to five, then we're not going to reconvene at 4:30.  We 
will aim to reconvene at 4:30 on the understanding that you 
are going to take whatever steps are necessary to get back 
to us as soon as possible on the doability of the options.  
Is that fair?  
         MR. FARRELL:  That's fair. 
         Before you adjourn -- 
         THE PRESIDING MEMBER:  Sorry. 
         MR. FARRELL:  I just wanted to confirm that in 
terms of the settlement proposal and what would be attached 
to your decision or order, I thought it would be useful 
just to indicate that we thought we would remove the "such 
as" reference so it's just based upon the discussion that 
we would add - that's one page.  It's actually page 14 - 
that we would add OESC to page 18, the oversight.  That we 
would then, because we have the opportunity to do this, 
indicate in Issue 2.7 on page 21 that it was "prospectively 
applicable".  This is the pricing for curtailed gas.  And 
that we would physically remove the continuance or 
establishment of deferral on various accounts for fiscal 
2002.  And from the document and from the disk that we'll 
give you along with this. 
         THE PRESIDING MEMBER:  That's fine.  Thank you 
very much.  Any other comments before we adjourn? 
         Mr. Thompson?  
         MR. THOMPSON:  Yes, I just want to get some 
direction.  I assume the intervenors who have expressed 
their support don't have to come back when you reconvene?  
         THE PRESIDING MEMBER:  Only if you'd like to 
attend, Mr. Thompson. 
         MR. THOMPSON:  It's not that I don't want to 
attend, but leaving it till 4:30 poses some difficulties 
for me and perhaps others.  I just wanted to get some 
direction as to deadlines for cross-claims.  Were you 
planning to cover that today?  
         THE PRESIDING MEMBER:  We are.  As a matter of 
fact, we'll cover that at 4:30. 
         MR. THOMPSON:  Oh, I see. 
         THE PRESIDING MEMBER:  However, as you know Board 
Staff would be more than happy to tell you about the timing 
of the cross-claims if you so wish. 
         MR. THOMPSON:  That's fine.  Hopefully you don't 
have to think about that one too long. 
         THE PRESIDING MEMBER:  It's only how long will I 
give you to get your cross-claims in, Mr. Thompson. 
         Thank you very much.  On that basis, we stand 
adjourned hopefully until 4:30.  Thank you. 
--- Recess taken 2:35 p.m.


--- On resuming at 4:30 p.m.
         THE PRESIDING MEMBER:  Please be seated.
         MR. FARRELL:  Excuse me, Madam Chair.
         THE PRESIDING MEMBER:  Yes.
         MR. FARRELL:  One other thing I should put on the 
record and this is another little error I found in the 
settlement proposal when I was making the changes that I 
said I would.  If you would look at page 11 -- this is not
substantive.  It's just a couple of things were out of 
sync.
         Where we have the formula for this notional 
deferral account, it was for the period during the test 
year in which Alliance and Vector were in service, which 
was 304 days or ten months.  And if you look at the values 
for NPDC and TPDC, you'll see that the total of the seven 
and the five is 12 months.  So we stuck two more months in.  
So it should read -- where it reads "seven months" in each 
of those items, it should read "six"; and where it reads
"five," it should read "four" to total the ten.  And I'll 
make that change as well.
         THE PRESIDING MEMBER:  Okay.  Thank you.
         MR. FARRELL:  I apologise for that.
         THE PRESIDING MEMBER:  No problem.
         Mr. Farrell, if, in going through the proposed 
settlement document, you find other changes, please feel 
free to discuss them with Board Staff and implement them as 
you see fit.  We'd rather have a correct document than 
worry about changes to correct what really is the intention 
of the settlement.
         MR. FARRELL:  I will do that.  I decided I would 
probably re-read it in the morning with, if I can say this, 
a fresh pair of eyes.
         THE PRESIDING MEMBER:  That would probably be a 
good idea.
         We might, before we come up with the final 
decision, circulate it one last time among all the parties 
and the intervenors just to make sure that they're on side 
with the changes that have been made.
         MR. FARRELL:  We thought that in making these 
revisions, we'd do it as we normally do, that the revised 
pages would be filed with a letter explaining where they 
would go so everyone's book would be complete.
         THE PRESIDING MEMBER:  That's fine.  Thank you.  
You just might circulate them among everyone so that we 
don't end up with revisions that someone ends up not 
agreeing with, for whatever reason.
         MR. FARRELL:  Oh, I understand.
         THE PRESIDING MEMBER:  That's my only concern.
         MR. FARRELL:  Okay.  We'll circulate it to the 
group that were party to that and make sure they're 
comfortable with it, and then we will formally file it.
         THE PRESIDING MEMBER:  Yes, I'd appreciate it.  
Thank you.
         MR. FARRELL:  Certainly.
         THE PRESIDING MEMBER:  Okay.  Any other comments?
         MR. FARRELL:  No.
         THE PRESIDING MEMBER:  Thank you.
BOARD DECISION:



         THE PRESIDING MEMBER:  First, we would like to 
compliment Enbridge and all of the parties in coming to a 
complete settlement of all of the issues.  We understand 
that this is a first, and it could not have been  
accomplished without the goodwill and the desire to reach a 
settlement exhibited by all of the parties.
         In addition, we appreciate the efforts of the 
Board Staff and also, in particular, Garrel Morrison 
[phon], the facilitator, who assisted the parties.  We hope 
that this renewed spirit of cooperation will continue.
         The Board is also aware that a great deal of time 
and effort was spent in drafting this settlement document 
itself.  The Board appreciates the new approach and found 
the document certainly to be readable and, subject to some
clarifications, understandable.  We would particularly like 
to thank Mr. Farrell for patiently taking us through the 
settlement proposal on an issue-by-issue basis this 
morning.  The Board appreciated the summary and it 
certainly helped us in being able to better understand the 
settlement proposal and to issue this order expeditiously.
         Based on the evidence, the Board finds that the 
cost consequences for rate-making purposes of the 
settlement proposal form an acceptable basis for fixing 
just and reasonable rates.  With respect to implementation, 
the Board directs the company to implement option 1, as set 
out in Exhibit N2, tab 4, schedule 1, with the following 
modifications:
1)	New distribution rates will be effective July 
1, 2001 to reflect an annualised overall 
distribution revenue sufficiency in the amount 
of 12.5 million for the 2001 test year; and 
2)	A one-time adjustment based on individual 
historical consumption to reflect the 
retroactive overall revenue sufficiency for the 
period October 1,2000 to June 30, 2001 to be 
implemented in the first billing cycle in 
August 2001.
         The Board directs the company to prepare and file 
a draft rate order accompanied by supporting documentation, 
including customer notice, since reflecting this decision 
by June 8, 2001.
         The intervenors have five business days from the 
filing of the draft order to file any written comments with 
the Board.  Intervenors eligible for cost awards shall file 
claims for an award of costs by Friday, June 15, 2001.
         As the parties are aware, in this proceeding the 
Board has attempted to improve the hearing process by 
implementing changes.  For example, there was a two-stage 
interrogatory process with Board Staff preparing 
interrogatories prior to the Board issuing the issues list.  
In addition, the Board has attempted to provide a more 
focused issues list.  We would appreciate any comments the
parties might have on the hearing process by Friday, June 
15, 2001.
         The Board will issue written reasons for this 
decision in due course.
         Any comments?
         MR. FARRELL:  No, thank you, Madam Chair.
         THE PRESIDING MEMBER:  Thank you very much.  We 
are adjourned.
--- Whereupon the hearing adjourned at 4.35 
p.m.
Preliminary Matters	1

Presentation of Settlement	6
Agreement by Mr. Farrell
Board Decision	109