Rep: OEB Doc: 12KP7 Rev: 0 ONTARIO ENERGY BOARD Volume: ISSUES DAY 19 DECEMBER 2002 BEFORE: R. BETTS PRESIDING MEMBER G. DOMINY MEMBER 1 RP-2002-0133 ISSUES DAY 2 IN THE MATTER OF the Ontario Energy Board Act, 1998, S.O. 1998, c.15 (Schedule B); AND IN THE MATTER OF an application by Enbridge Gas Distribution Inc. for an order or orders approving or fixing just and reasonable rates and other charges for the sale, distribution, transmission and storage of gas commencing October 1, 2002. 3 RP-2002-0133 ISSUES DAY 4 19 DECEMBER 2002 5 HEARING HELD AT TORONTO, ONTARIO 6 APPEARANCES 7 PAT MORAN Board Counsel COLIN SCHUCH Board Staff SUZANNE TONG Board Staff DENNIS O'LEARY Enbridge FRED CASS Enbridge TANIA PERSAD Enbridge MARK MATTSON Energy Probe TOM ADAMS Energy Probe BILL KILLEEN Direct Energy IAN MONDROW Direct Energy GAIL MORRISON VECC MICHAEL JANIGAN VECC ELISABETH DEMARCO CEED BRUCE MACODRUM CME BRIAN DINGWALL HVAC MARTIN LUYMES HVAC MURRAY KLIPPENSTEIN Pollution Probe JACK GIBBONS Pollution Probe ROBERT WARREN CAC VINCE DEROSE IGUA JOHN BELL OPSBA JAY SHEPHERD OPSBA 8 TABLE OF CONTENTS 9 APPEARANCES: [23] PRELIMINARY MATTERS: [52] ISSUES 3.1, 12.7, 13.2 TO 13.3, 16.1 TO 16.3: [198] SUBMISSIONS BY MR. CASS: [199] ISSUE 3.1: [323] SUBMISSIONS BY MS. DEMARCO: [324] SUBMISSIONS BY MS. PERSAD: [353] REPLY SUBMISSIONS BY MS. DEMARCO: [375] QUESTIONS FROM THE BOARD: [382] RULING: [419] FURTHER SUBMISSIONS BY MS. DEMARCO: [423] SUBMISSIONS BY MR. SHEPHERD: [434] SUBMISSIONS BY MR. MACODRUM: [438] SUBMISSIONS BY MR. JANIGAN: [442] SUBMISSIONS BY MR. O'LEARY: [447] REPLY SUBMISSIONS BY MS. DEMARCO: [455] ISSUE 12.7: [464] SUBMISSIONS BY MR. BELL: [465] QUESTIONS FROM THE BOARD: [495] SUBMISSIONS BY MR. MATTSON: [509] SUBMISSIONS BY MR. JANIGAN: [518] SUBMISSIONS BY MR. O'LEARY: [532] REPLY SUBMISSIONS BY MR. BELL: [539] ISSUE 13.3: [549] SUBMISSIONS BY MR. MATTSON: [550] SUBMISSIONS BY MR. SHEPHERD: [559] SUBMISSIONS BY MR. JANIGAN: [566] SUBMISSIONS BY MR. HAYNAL: [573] SUBMISSIONS BY MR. O'LEARY: [579] ISSUES 16.1 TO 16.3: [592] SUBMISSIONS BY MR. DINGWALL: [593] SUBMISSIONS BY MR. SHEPHERD: [625] SUBMISSIONS BY MR. JANIGAN: [633] SUBMISSIONS BY MR. MONDROW: [639] SUBMISSIONS BY MR O'LEARY: [685] QUESTIONS FROM THE BOARD: [690] REPLY SUBMISSIONS BY MR. DINGWALL: [707] PRELIMINARY MATTERS: [736] DECISION: [756] 10 EXHIBITS 11 12 UNDERTAKINGS 13 14 --- Upon commencing at 10:07 a.m. 15 MR. BETTS: Thank you. Please be seated. 16 Good morning, everyone. The Board is sitting today in the matter of the application RP-2002-0133 submitted by Enbridge Gas Distribution Inc. for an order or orders approving or fixing rates for the sale, distribution, transmission and storage of gas in the fiscal year 2003. 17 An issues conference involving the company, intervenors and Board staff was held on December 17th, 2002, to clarify issues and identify proposed modifications and additions or deletions to the issues list. The purpose of today's proceeding is to hear submissions with respect to the proposed issues list formulated at that conference and, if possible, to fix the issues list. 18 My name is Bob Betts. I'm the presiding member in this hearing, and joining me on the panel is Mr. George Dominy. 19 This is my first opportunity to preside over an application of this magnitude and complexity, although my prior career allowed me to chair thousands of meetings, literally. My experience with the Statutory Powers and Procedures Act is limited but growing. 20 On that basis, I've asked Board counsel and Mr. Dominy to catch me if I should miss any significant procedural matters, and looking at the participants in the audience today, I trust if either of those two parties should miss those, you will certainly catch me if there are any that need to be adjusted. 21 Quite sincerely, it is my objective that at the end of this proceeding, all of the parties that are here today, and throughout the proceeding, will feel that they have had a fair hearing, and I trust and perhaps even expect that all of you will help me accomplish that objective. 22 First, may I have appearances for the applicant. 23 APPEARANCES: 24 MR. CASS: Thank you, Mr. Chairman. Fred Cass for Enbridge Gas Distribution and with me is Ms. Tania Persad, counsel for Enbridge Gas Distribution and also Mr. Dennis O'Leary from Aird & Berlis, my firm. Thank you, sir. 25 MR. BETTS: Thank you, Mr. Cass. 26 MR. BELL: Mr. John Bell and Mr. Jay Shepherd for the Ontario Public School Boards' Association and in fact for all publicly funded school board associations in Ontario. 27 MR. BETTS: Thank you, Mr. Bell. 28 MR. DEROSE: Good morning, Mr. Chairman. Vince DeRose for the Industrial Gas Users Association. 29 MR. BETTS: Thank you. 30 MR. WARREN: Robert Warren for the CAC 31 MR. BETTS: Mr. Warren. 32 MR. JANIGAN: Michael Janigan for the Vulnerable Energy Consumers Coalition and with me is Gail Morrison. 33 MR. BETTS: Thank you. 34 MR. MONDROW: Good morning, Mr. Chairman. Ian Mondrow for Direct Energy Marketing Ltd., and this morning in respect of issue 16.1 through 16.3 on the list, on behalf of Enbridge Services Inc., technically a sister company of Direct at this point. With me this morning is Mr. Bill Killeen. 35 Just to clarify, Enbridge Services is not a party of record and depending on the Board's disposition of those three issues, we'll deal with the required intervention for Enbridge Services. 36 MR. BETTS: Thank you. 37 MR. POCH: Good morning, Mr. Chairman. David Poch on behalf of the Green Energy Coalition and the Canadian Institute for Environmental Law and Policy, GEC and CLAP. 38 MR. BETTS: Mr. Poch. 39 MR. DINGWALL: Good morning, sir. Brian Dingwall, counsel for the HVAC Coalition, Heating, Ventilation, Air Conditioning Contractors Coalition Inc., and with me is the case manager, Mr. Martin Luymans. 40 MR. BETTS: Thank you. 41 MR. KLIPPENSTEIN: Good morning, Mr. Chairman and Mr. Dominy. Murray Klippenstein appearing for Pollution Probe. 42 MR. MATTSON: Good morning, Mr. Chairman. Mark Mattson, counsel for Energy Probe. 43 MS. DEMARCO: Good morning, Mr. Chair. Elisabeth DeMarco, counsel for the Coalition for Efficient Energy Distribution. 44 MR. BETTS: Ms. DeMarco, thank you. 45 MR. HAYNAL: Good morning. Tibor Haynal for TransCanada Pipelines. 46 MR. MACODRUM: Bruce MacOdrum, M-a-c-O-d-r-u-m, and I'm representing Canadian Manufacturers and Exporters. 47 MR. BETTS: Mr. MacOdrum. 48 And for Board staff. 49 MR. MORAN: Pat Moran, Mr. Chair, for the Board along with Susan Tong and Colin Schuch, Board staff. 50 MR. BETTS: Thank you, Mr. Moran. 51 With that we will start with preliminary matters, and perhaps I'll ask Mr. Moran to begin that for us. 52 PRELIMINARY MATTERS: 53 MR. MORAN: Yes, Mr. Chair. You have before you a proposed issues list. This was prepared by Board staff and discussed in the issues conference over the last -- a couple of days ago. There are extra copies. I think everybody has a copy of his, and I know you do. 54 The underlined issues are the ones that are contested currently. I understand that there will be a couple of people speaking to some developments on some of the contested issues in a minute. That's all I have to say. 55 MR. BETTS: Thank you. I will ask, does everybody have a copy of that that requires a copy of that? Any parties that do not have a copy? Okay, thank you. 56 How are we doing for volume, by the way? Can you hear us at the back of the room? Everybody seems to be fine. Thank you. 57 And Mr. Cass, preliminary matters? 58 MR. CASS: Yes. Thank you, Mr. Chairman. I will try to be brief. 59 Mr. Chairman, regrettably I have duties to attend to this afternoon at a family funeral. It's in the early afternoon in the west end of Toronto. If there were any way that matters could be addressed in a manner that would allow me to depart by, say, noon it would be very much appreciated by me. 60 One suggestion that I would like to offer is that in respect of the disputed issues, over which I think there are not many, that I would endeavour to, at the outset, present the position of Enbridge Gas Distribution on each area of disputed issues. So rather than going through the issues one by one and doing the round of all counsel, that I would kick it off, so to speak, by giving Enbridge Gas Distribution's position on disputed issues, and then the procedure could follow from there and I would hopefully be able to depart by noon. 61 To the extent that having heard the positions of other parties where additional commentary or submissions needed from Enbridge Gas Distribution, of course Ms. Persad and Mr. O'Leary are here. I don't know whether that could be made to work, but if there were any way to accommodate it, it would be very much appreciated. And perhaps it might even create an efficiency, I'm not sure. 62 MR. BETTS: We're always looking for those. Thank you. 63 Procedurally it's the norm that the party that is proposing that an issue be on the list that is being contested, for example, would have the opportunity to present their submission. At that point we would hear submissions opposing that, and finally they would have an opportunity to reply. Can we assume that the party -- using that procedure, that party would again have the last word? 64 MR. CASS: I don't see a difficulty with that, Mr. Chairman. 65 MR. BETTS: Then I will ask if there are any submissions with respect to that request from any of the participants, or in fact anybody willing to say that they agree with that request. First of all, any problems with that request? I see none. Then the Board is quite satisfied with that request and I do extend our condolences for the personal experience you are about to go through. I just went through one myself within the month and I appreciate what's going on in your mind now. 66 With that one, are there any other preliminary matters? I'm looking to the intervenors at this stage. 67 MR. POCH: Yes, Mr. Chairman. I think I have one, unless other counsel are going to beat me to the punch. Hearing no objection, there is a serious matter that has developed in the last couple of days, Mr. Chairman, with respect to the ADR process. As you'll be aware, on the proposed issues list, the last item in the DSM section, 9.6, is a -- with respect to the SSM and LRAM accounts for 2000 and 2001, this is a matter that, as a result of the ADR agreement in the previous rate case, went through a process and is coming back to the Board for disposition and about which there was a more limited ADR process a couple of weeks ago with respect to which discussions are continuing amongst a number of the parties and company, and we're still hopeful that at least some portion of us will be able to come up with if not a settlement of the issue, some significant narrowing of it so it can expedite the Board's processes. 68 On Tuesday the last event in that stream was a position tabled by one of the parties, an offer as it were; in fact it was styled as an offer. And at that moment, indeed, just to emphasise the situation, Board staff reminded everybody that it was in the context of an ADR negotiation and there was a concern about confidentiality that needed to be respected and there was some exchange about that. And then yesterday, in a letter to the Board, and I'm -- it's not clear to me how far in the Board's process it has gotten. I understand that some attempt has been made to intercept it so I won't reveal the contents of the letter, per se, so I hope the Board has not in fact seen it, but the concern is nevertheless here, a letter from the CME, dated December 18th. Mr. Rowan, in one of a series of letters that he's been writing the Board, this one goes to the extent of revealing confidentiality -- confidential discussions in the midst of that negotiation. 69 As you will appreciate, this is -- further, I should say, following that, so there will be no mistake about what was known to the CME at the time, we have all received a letter from the CME expressing its position on that offer, so there's no question the CME was fully aware that this was a negotiation situation, part of the ADR, and that confidentiality was at hand. 70 So we have a situation which is quite grave, in our view. It jeopardises that process. It's certainly complicated the negotiations, the ADR, on that particular matter. We still are hopeful that we'll be able to give the Board some further assistance arising out of those negotiations, but I must, first of all, advise the Board that we were hoping to have something perhaps as soon as today but obviously we won't. 71 But perhaps more importantly, we are -- this will be the last occasion we're in front of the Board before we launch into a new ADR which potentially has a great many issues on the table, and I think it's in everybody's interests, foremost the Board's, that that process be facilitated, be smooth, and really can only proceed effectively in an atmosphere of trust and respect for the process. 72 So I am asking the Board if the Board would consider first of all expressing joining in reiterating to all parties the importance of respecting the confidentiality process, and I would ask the Board to consider either at this time, or subsequently in this process, consider sanctions for this breech which is most egregious and unquestionably a conscious breech of that rule. 73 MR. BETTS: Thank you. Is there any party that wishes to speak to this particular submission? 74 MR. MACODRUM: Mr. Chairman, Bruce MacOdrum for CME. I'd like to comment on this -- 75 MR. WARREN: Just before Mr. MacOdrum does since he's -- 76 MR. BETTS: Excuse me for a second. 77 MR. MACODRUM: I'd like to respond to Mr. Poch's comments but if Mr. Warren has something to add to Mr. Poch's comments, I'd respond to those as well. 78 MR. WARREN: Excuse me for just one moment. 79 [The Board confers] 80 MR. BETTS: Perhaps I should redirect that question and say is there anyone that wishes to speak in support of Mr. Poch's perspective, and then we can look to those that appear to oppose it. 81 So Mr. Warren, was it your intent to support that? 82 MR. WARREN: I simply wanted to indicate to the Board that Mr. Poch does not stand alone in his expression of concern. We gather, Mr. Chairman, from information provided to us this morning, that the letter that been intercepted and not received by the Board, so the contents of the letter are, at this point, not an issue and we should respect the confidentiality of the contents. 83 The negotiations for -- our perspective is that the ADR process is integral to the effective decision-making process of the Board as a whole. And the parties who've participated responsibly in that process over the years have understood that it has significant benefit in settling issues, in shortening and therefore reducing the cost of the process, and in helping to refine the issues that are decided by the Board. That process cannot succeed unless the rules of confidentiality are respected and unless everybody is confident that those rules will be respected, because everybody has to go into the room, particularly the utility, to lay difficult positions on the table. They don't want everybody else to know what those positions are. 84 The Board has in its rules made explicit provision of that, and I quote from Rule 31.09: "All persons attending the ADR conference shall treat admissions, concessions, offers to settle and related discussions as confidential and shall not disclose them outside the conference except as may be agreed." 85 All I would ask the Board to do this morning is to reiterate two things: Number 1, its belief in the importance of the integrity of the ADR process, and to remind all parties of the absolute importance of respecting the provisions of Rule 31.09. As I say, the entire decision-making process of the Board and the confidence of the public in that decision-making process will be fundamentally damaged if the ADR process collapses. All parties must have confidence that that rule be respected, and I would ask the Board to simply reiterate either this morning or in the appropriate circumstance the importance of parties obeying that rule scrupulously. 86 Thank you, sir. 87 MR. BETTS: Thank you. Excuse me for one moment. 88 [The Board confers] 89 MR. BETTS: Just before I take any further submissions, I did want to confirm that in fact, at least these two members of the Board have not seen the subject letter. I'm not aware of who has, but I'm not aware of it being circulated, anyway. I would encourage anybody that does want to speak to this matter, not to provide any further items that might be considered confidential so that we don't make the problem any worse. 90 So may I have any further submissions on this. Yes. 91 MR. DEROSE: Mr. Chair, on behalf of IGUA, we would just indicate our support to Mr. Warren's position, and reiterate our position that the parties in an ADR process must be free to discuss matters without fear or concern that the matters that we raise will be brought into the open and certainly brought before the Board. We would simply reaffirm that position. We support Mr. Warren's comments. 92 MR. BETTS: Thank you. Yes, sir, I can see you back there. 93 MR. KLIPPENSTEIN: Mr. Chairman, Murray Klippenstein for Pollution Probe. I would adopt the comments of all the people who preceded me and would just note that all it takes is one person sitting in the room whom participants think won't maintain confidentiality to undermine the confidence in the whole room. As my friends have said, that is very damaging to the Board's process, so I would adopt the previous submissions of my friends. 94 MR. BETTS: Any further comments supporting? Mr. Janigan. 95 MR. JANIGAN: Yes, sir. Very briefly, VECC adopts the comments of the previous speakers with respect to the importance of preserving confidentiality associated with the ADR process, in particular the DSM consultative, in general terms. As Mr. Klippenstein indicated, it doesn't take much for a process like this to come off the rails, and it's important that participants observe the rules and play by the rules so that the result is one which is the most efficient and proves the best kind of result both for the Board and for public interest. 96 MR. BETTS: Thank you. 97 Any further submissions? Mr. Cass. 98 MR. CASS: Mr. Chairman, there's nothing that I can usefully add to what has been said, but just so that silence isn't taken as any lack of support for these important propositions, may I say that Enbridge Gas Distribution of course fully supports everything that has been said by others about the utmost importance of confidentiality around the ADR process. 99 MR. BETTS: Thank you, and I think it's safe to say that the Board panel will not assume that silence is taking any position. So I don't necessarily feel that you all have to stand in agreement with that, but certainly if you choose to I'm more than prepared to hear that. Any further submissions in support? 100 Thank you. Would anyone like to speak, let's say, against this particular item 101 MR. MACODRUM: Mr. Chairman, Bruce MacOdrum for CME. I just want to characterise my comments as being against because we, of course, are -- have very great concerns, too, about the integrity of the ADR process. 102 I should say that I was contacted yesterday by counsel for the applicant and he expressed to me his client's objections to a part of the letter. And after consultation with -- consultation with Mr. Rowan, I e-mailed to counsel for the applicant that Mr. Rowan -- well I can read you what I said: "As counsel for CME in the subsequent proceeding, I contacted Mr. Rowan to inform him of your client's objection and he advised me that he withdraws the paragraph that was identified by counsel for the applicant as offensive." I sent a copy of that e-mail to Mr. Pudge, to whom the letter was directed. So just for the record, and for the other parties who have expressed concerns, Mr. Rowan has withdrawn what was identified as the offending paragraph. 103 I should say that from discussions with Mr. Rowan, he assures me that what appears to be a breech of 31.9 of the Rules of Practice and Procedure was inadvertent. Mr. Rowan has had, and has expressed from time to time, grave concerns about how the ADR process with respect to this -- in this matter has been conducted, and it is difficult for me to see how one can express those concerns to the Board and fully also comply with the interpretation that some of my friends appear to be placing on 31.9. 104 Counsel for the applicant also drew my attention to 31.10 of the Rules of Practice and Procedure, and that's also an interesting question because if people take the position they seem to be taking, it seems to me that where there's a minority position, or less than unanimous position on any deliberation in an ADR process, it can never be reported out of the ADR process because an affected party wouldn't necessarily consent. So I think the rules have to be interpreted in the context of the ADR process, and as I say, Mr. Rowan has had concerns which he's expressed during the process about the way the process has been conducted by the applicant. But because there are concerns that he may have breached Rule 31.09, he has withdrawn the offending section of the letter and so informed the applicant and the Board, who were the only people we were aware of, as of last night, while we're taking objection to it. 105 MR. BETTS: Thank you. 106 Any further comments? 107 MR. POCH: Mr. Chairman, I would just respond by saying that of course any party who finds himself not agreeing with a partial proposed settlement in an ADR is clearly by the rules at liberty to litigate its matter before the Board and nothing precludes that. I can't see how it can, in any fashion, how that requires that party to disclose anything that went on inside the ADR, and apparently Mr. MacOdrum does not yet understand that, according to his submission just now, and I would ask the Board to stress to Mr. MacOdrum, as well as his client, that that is the case. 108 Thank you, Mr. Chairman. 109 MR. BETTS: Thank you. 110 Mr. Moran. 111 MR. MORAN: Thank you, Mr. Chair. Listening to Mr. MacOdrum, it sounds like his client has agreed that part of that letter is inappropriate to file with the Board. Mr. MacOdrum also indicated that he sent an e-mail to the Board secretary saying that that paragraph is withdrawn. I would suggest that in order to achieve the proper result, an e-mail is probably not sufficient and that perhaps the CME should be directed to withdraw the entire letter and then replace it with a letter that doesn't offend the confidentiality principle, if they wish to do that. 112 MR. BETTS: Thank you. 113 [The Board confers] 114 MR. BETTS: Thank you. If there are no further submissions, I believe the panel is prepared to make a statement on this. 115 First of all, we would support the view of -- 116 MR. MACODRUM: Mr. Chairman, if I can just respond to Board counsel's suggestion. We have withdrawn the offending paragraph. We have grave concerns about the way the ADR process has been conducted by the applicant, and I would hope that you would also have in mind as to how we are going to, on an ongoing basis, if this continues, to bring these kinds of concerns to the attention of the Board. 117 MR. BETTS: Thank you. We do support Mr. Moran's suggestion that not only the offending paragraph be withdrawn but the entire letter should be withdrawn and rewritten, if that is the desire of the initial sender, in a format that would satisfy all of the parties. That would be item number 1. 118 Item number 2 is that we are certainly prepared as a panel and representing the Board, to again confirm the importance of the ADR process to all of us and all of you, and within that process the very vital need to maintain confidentiality and the trust of all the parties. We will indeed confirm that as well. 119 With respect to the concerns about the ADR process, I would suggest, and it certainly is up to each of you how you want to address that issue to the Board, but I would suggest that concerns about the process be, wherever possible, kept generic rather than specific to a case or the items being discussed within that case, but the Board is always open to consider alternate procedures. That one seems to be working and it seems to have been proven successful, and I can only confirm again the Board's very definite support of the process and, in fact, need within our processes. 120 If there's nothing further then on that item, I don't believe we have anything else on that, I will ask if there are any other preliminary matters to be reviewed or considered. 121 Mr. Warren. 122 MR. WARREN: Mr. Chairman, can I ask the Board members to turn up the draft issues list, and in particular page 3. You will note that items 7.41 through 7.48 inclusive are underlined as having been designated as contested. 123 On behalf of the CAC and also the VECC and IGUA we have proposed in a letter to Mr. Cass, a copy of which went to all intervenors and to Mr. Schuch, that those contested issues be collapsed into four. And if I can read you the wording of the four issues, or the issues that we would propose would replace them. 124 We would propose that those issues be replaced with the following four. They are set out more or less correctly in the letter I sent to Mr. Cass yesterday. Mr. Cass has pointed out -- 125 MR. BETTS: We do, by the way, have a copy of that letter. But I'm more than happy for you to proceed and read it for us. 126 MR. WARREN: They are, as you'll see, the following four: Overall O&M levels for 2003. Number 2, a comparison of the budget process followed during the years 1999 to 2002 -- that's a typo, it says 2000 and should be 2002 -- inclusive, and 2003. Number 3, the expense reductions achieved during the years 1999, 2000, 2001, and 2002, with the criteria for deciding whether those expense reductions are sustainable. And 4, where and how were efficiency gains and the benefits of efficiency gains realised in each of the years 2000, 2001, and 2002. 127 Mr. Cass and I have had some informal discussions about whether or to what extent they remain contested and in light of what was decided earlier; perhaps I'll leave it to Mr. Cass to address those when he wishes. But we would ask that the draft issues list be amended by including -- substituting those four for 7.41 to 7.48 inclusive. Thank you, sir. 128 MR. BETTS: Can you give me the numbers again. I didn't hear those. They are being substituted for? 129 MR. WARREN: Substituted for all of 7.41 through 7.48 inclusive. 130 MR. BETTS: Thank you. And for clarification, 7.4 would remain as is. 131 MR. WARREN: 7.40 would remain as it is. 132 MR. BETTS: Thank you. 133 Are there any -- 134 [The Board confers] 135 MR. BETTS: Mr. Dominy understood, and we'll just make sure he was correct in his understanding, that in fact perhaps between yourself and staff we could determine exactly what numbers, if everybody agrees to this, what numbers these four items would take on, for clarity. Mr. Dominy was wondering whether they would be moved to the top of the Number 7 category or whether they would just continue as -- 136 MR. WARREN: Our suggestion would be that they go at the top of them because they are overarching issues, and the balance of the number 7's, if I can put it that way, are individual items so our suggestion is that these would become 7.1 through 7.4 inclusive. 137 MR. BETTS: And all the others therefore would drop down -- 138 MR. WARREN: Would be renumbered seriatim. 139 MR. BETTS: If everybody understands this suggestion, are there any comments at this stage, or can I assume that the proposal is acceptable. 140 MR. MATTSON: Mr. Chairman, my client wasn't a part of those discussions, and I just wondered if Mr. Warren could clarify. We were in support of those items, and I take it that the new formatting or wording of the four issues as they are now worded would include -- include -- there's nothing that you're leaving out, Mr. Warren, in that you feel it captures all the issues in 7.41 to 7.48, it's just better wording; is that it? 141 MR. BETTS: Mr. Warren. 142 MR. WARREN: First of all, Mr. Mattson, we didn't intend to exclude anybody from this. 143 MR. MATTSON: No, I understand that. 144 MR. WARREN: This was the suggestion that was discussed -- it was initially a proposal from Mr. Thompson who, for reasons which escape me, feels it's better to be in the hammock in the Bahamas drinking a morning pina colada. It's beyond me why he prefers that to being here. 145 Yes, Mr. Mattson, our view is that the four which we are suggesting capture all of the issues in 7.41 through 7.47. There's a different category for 7.48. It's our view that that's captured later in the number 14 cluster of issues. So to answer your question, Mr. Mattson, we feel that these four capture the issues which they are replacing. 146 MR. MATTSON: Thank you. 147 MR. BETTS: Any other questions or comments? 148 Mr. Cass. 149 MR. CASS: Yes, I do have a comment, Mr. Chairman. I don't think it's in the nature of any objection. Mr. Warren and I had discussed this. 150 As far as the four proposed questions are concerned, there is no comment or objection on the part of Enbridge Gas Distribution in relation to numbers 1, 3, and 4. The comment in relation to number 2 just has to do with the scope of what might be entailed in this issue. From discussions with Mr. Warren -- and he of course can clarify to the extent that I misstate things -- I understand that the primary objective of issue number 2 is to address whether the budget process for the test year O&M budget differs from a previous budget process. That seems to me to be a relevant inquiry insofar as it does tie in with the numbers flowing from the 2003 budget. 151 The concern I have is to the extent that someone might interpret issue number 2 to mean that it's necessary to go back through the period of the company's targeted performance-based regulation plan, and year by year by year start looking at budgets and numbers and doing comparisons and getting heavily into a lot of detail. 152 In the response to IGUA's interrogatory number 4 in this case, the company did make an effort to explain just how difficult it is, even for one department, to try to do that, and I would have a question as to what usefulness at all it would have to the Board to go back through that targeted PBR period and even what relevance. 153 Now, I understand that that is not the intent, but there is some notion of trying to look -- to do a comparison of the budget process now to before. So that's the only comment that I have, that the way that issue is worded, I'd be concerned if it was to be given that broad interpretation that I've described insofar as going back through the PBR plan in detail is concerned. 154 MR. BETTS: Thank you. Before I invite Mr. Warren's reply to that, I would just ask if there are any other comments or questions that Mr. Warren can deal with all at once in replying. 155 MR. SHEPHERD: Mr. Chairman. 156 MR. BETTS: Yes. Where did that voice come from? 157 MR. SHEPHERD: Hi. We just saw this for the first time just a minute ago, and I guess I have two questions. 158 With respect to the second of these new issues, am I correct in assuming that it is intended to include a review of whether budgeting is done with different purposes in PBR years and in rate-regulated years, and what we're getting at is whether the utility is looking for different types of efficiencies when the shareholders is benefitting as opposed to when it's rate-regulated. We've asked a number of interrogatories about that, and we think that the evidence may indicate that they are treating their expenditures differently in the different types of years, which wouldn't be appropriate. That's the first question. 159 The second question is, and it may be related, under number 4, am I right in assuming that is it intended to can ask the question, are affiliates earning the efficiency gains when they should be more appropriately earned by the utility for the benefit of ratepayers? 160 MR. BETTS: Thank you. Any other comments or questions for Mr. Warren? 161 Mr. Warren, I believe there were three there, if you could address those for the panel. 162 MR. CASS: Excuse me, Mr. Chairman. Just before Mr. Warren goes, I'm sorry to interrupt, if I might just speak up in response to what Mr. Shepherd said. 163 The second part of what he referred to would not be our interpretation of these questions. In relation to the second part of what he said, I think that would be -- just the scope of what he was referring to would be determined by the decision that the Board has just released as opposed to these specific questions. I think the Board itself has issued a decision that addresses what the scope of the inquiry should be on the type of thing that Mr. Shepherd is referring to. 164 MR. BETTS: Thank you. 165 Mr. Warren. 166 MR. WARREN: I'll deal with Mr. Shepherd first. Let me say that what any individual intervenor may perceive in the framing of an issue is up to the individual intervenor to decide and not for me to dictate. I can say that the -- our interpretation of the four items would not -- if I can put it this blandly, our interpretation of the four questions is such that it would not preclude the lines of inquiry as framed by Mr. Shepherd, and I think that's as high as I can put it. If Mr. Shepherd wants to interpret them in a certain way, he as well as any intervenor can do that. 167 Certainly with respect to the first question, the question of whether budgeting is done for a different purpose, certainly my client would probably be pursuing that. That's part of the comparison process. 168 With respect to the question of where efficiency gains are realised, Mr. Cass is correct in saying that that -- those cluster of questions may flow from some of the determinations made by the Board in the decision which was released yesterday. Certainly our view of the question is, number 4, is that it is broad enough to encompass it if you want to tuck it into that question. I feel very uncomfortable in saying to any intervenor, this is my view of how you are best limited, by the question they can make that decision for themselves. 169 With respect to Mr. Cass's observations about question number 2, I want to make two observations. First of all, in framing number 2, the three parties, and certainly I don't want to preclude them from saying anything, certainly Mr. DeRose who was here, because these were initially framed broadly by Mr. Thompson. I don't want to preclude him from saying anything, but certainly our intention is not to ask the Board to approve or disapprove of the budgeting process under PBR. I want to make that clear for the record. I'm not asking for any relief with respect to that budget process. 170 The second thing is that we acknowledge, Mr. Cass has said to me and we acknowledge, that there may be significant difficulty in providing clear lines of change within individual departments in budgeting through the PBR years. We acknowledge that that may be difficult. However, it may be the case that with respect, for example, to some of the more material O&M departments, materiality being defined by O&M departments that have significant budgets, it may be the case that we would like to pursue with respect to those material departments how the budgeting was done year to year through the PBR process solely for the purpose of understanding how they arrive at the 2003 number. And in particular whether how those budget changes were arrived at affects the question of sustainability or otherwise, which is an issue which has been put on the table by the applicant. 171 So I want to both try and assure Mr. Cass that we acknowledge that there may be real difficulty in providing the level of detail that might be sought under that question, and at the same time I don't want to leave the impression that we would not be asking for to the extent they can with respect to certain material O&M expenses to try and follow how the budgeting in those categories changed from year to year. 172 I don't know whether that addresses Mr. Cass's concern, but as I say, I don't want to preclude my friends from joining me in this request from saying anything. 173 MR. DEROSE: If I can, Mr. Chair. IGUA's position is consistent with what Mr. Warren has just set out. I would simply say that what we're looking to do is for the years 1999 to 2002, to set out how the departmental budgets which were -- our understanding is that the budget process for those years, is that each department would develop its own budget and then would be combined for the total O&M budget, so we want to be able to track both the overall O&M levels and at the departmental level for the years to understand why, in certain years, the budgets were, in our view, a much lower level than they are being estimated for 2003. It is for the purpose of comparison and to understand if the budgeting process changed, and if there were changes, what were those changes and why, and what the impact is on 2003. 174 And with respect to Mr. Cass's concern that there may be difficulty associated with providing such information, IGUA's position on that point is that simply because an issue is difficult doesn't mean it's not an issue for the purpose of the issues list. If the evidence is not -- cannot be provided at a later date, that's something that the Board can address at that time. Our position is this is an issue and it should remain on the issues list. 175 MR. BETTS: Very well. I think at this point I would like to stress that the reason I've allowed this dialogue to continue is I'm hoping to find a shortcut in finding that there is agreement to the suggested change to the list, which is to add these four items and remove those 7.41 through 7.48. If there has been a consensus, then we can make that change now. And I would like to, if there has not been a consensus, to identify if any of those are contested, in which case we will deal with those later as contested items. However, if they are all accepted, then I would like to have that acknowledged as well. 176 So I'm looking now to see if there are any of the participants here that would object to having any one or all of those four items replace the others that have been recommended and would therefore like to deal with that under the contested items. 177 Mr. Cass. 178 MR. CASS: Mr. Chairman, would it be possible to proceed in the following way: Would it be possible to put the issues on the issues list as framed with the record of the comments that have been made today. I think the parties have heard each other and understand each other's positions. I think as we go forward with these issues, having an understanding of each other's positions, we should be able to sort it out as to responding to questions that may arise and so on. But that the issues as on the issues list would simply be qualified by the record of today's comments from the parties in the event there is any need to come back to the Board and address it in the future by way of issues over particular questions. I don't think there will be, but perhaps that's just a way to get them on the issues list and move ahead. 179 MR. WARREN: That's fine with me, sir. That's a perfectly acceptable process to me. 180 MR. BETTS: Okay. Is there anyone that would object to that process? I see -- 181 MR. MATTSON: Mr. Chairman, we have no problem -- we're not objecting to the reframing of the four issues. My only concern is that Mr. Cass has difficulty with issue number 2 as it's reframed. I was sort of listening to his argument, but are you prepared then to accept issue 2 as it is with comments of -- your comments, basically, as to how far you see the issue going. 182 MR. CASS: Yes, exactly. Sorry, Mr. Chairman. 183 MR. BETTS: One minor rule I do have is that please address any comments to me and I'll redirect them, okay? 184 MR. MATTSON: Yes. 185 MR. BETTS: Mr. Cass, would you respond. 186 MR. CASS: Yes. Thank you, Mr. Chairman. I believe that's what I was struggling to say, Mr. Mattson, yes, that we would accept these issues on the issues list with the comments that have been made as reflected in the record of today's proceeding. 187 MR. MACODRUM: Mr. Chairman, I don't have any objection to Mr. Warren's suggested additions, but I don't want to suggest that Mr. Cass's illumination of those positions is -- restricts us during the course of the hearing to what we may argue as relevant to bring within this. We have to constantly go referring back to some comment that was made by some other party on issues day and that is the only boundary of relevance rather than the ordinary or implied meaning of the words as they appear on the issues list. 188 MR. BETTS: Thank you. 189 MR. MACODRUM: I don't understand -- quite frankly, I don't understand Mr. Cass's qualification. 190 MR. BETTS: I think the way the panel will look at these issues is on the face value of the wording of the issues themselves, and I think Mr. Warren was absolutely correct in saying that the interpretation of that wording still remains with the parties that are involved with this process. If there's difficulty beyond that, then perhaps the Board will have to straighten out those items of confusion. But at this point I believe what we're dealing with is the wording and those four items, appreciating that the record will indicate some parties' positions with respect to those. 191 So I will take it from the comments, and please correct me if I'm wrong, that parties are prepared to see those four issues replacing those that were mentioned by Mr. Warren. Thank you. The record then will show that. 192 I should have said at the outset, just so we have on the record the understanding that the issues, as I'm reading them, basically are formatted so that only those items that are underlined are contested, and everybody has that same understanding, I assume. Therefore, if the item isn't underlined, except for the title which I'm sure is not contested, that those items are accepted. 193 Okay. I think we now have at least an understanding of what has been accepted, and we are soon to be dealing with the items that are contested. 194 [The Board confers] 195 MR. BETTS: At this time we'd probably be looking towards a short break. But based on Mr. Cass's personal situation, I hope everyone will bear with us if we proceed and allow he to represent the views of his client and then he can get on his way. 196 Mr. Cass, if you would like to proceed. 197 MR. CASS: All right. Thank you very much, Mr. Chairman, for your indulgence, and thank you to everyone else. 198 ISSUES 3.1, 12.7, 13.2 TO 13.3, 16.1 TO 16.3: 199 SUBMISSIONS BY MR. CASS: 200 MR. CASS: I think with the discussion that preceded this, there are four areas that I would propose to make some submissions in respect of. 201 Just to start out, if I might identify those for the panel. 202 The first would be issues categorised as rate retroactivity, 13.2 and 13.3. 203 The next area would be some issues proposed in relation to what's been called access to monopoly services. Those are numbers 16.1, 16.2 and 16.3. 204 The next would be issue 3.1 on the issue list, but only the words "and beyond" that appear at the end of the issue there about transactional services. 205 And then the last would be issue 12.7 which concerns rate relief for publicly funded school boards. 206 If I may, then, sir, begin with rate retroactivity, as it's been called. If I may say at the outset that of course retroactivity is quite an appropriate word in the context of prospective rate-making because once one gets beyond the start of the test year, of course, one is no longer looking at something that is prospective. In my view we are not talking about legal retroactivity, so I just would like to emphasise that I will use the word retroactivity, but it's in the context of a prospective rate-making, it's not in the context of something that would be legal retroactivity. 207 As I said, the issues addressing this on the issues list are in the category of 13, 13.1, 13.2, and its 13.3, and it is only the latter two that are the subject of my submissions. Enbridge Gas Distribution fully accepts that in this proceeding it is appropriate for the parties to consider rate implementation, if I might make that distinction, from rate retroactivity. So there is no dispute on the part of Enbridge Gas Distribution to issues as to how the rate found to be appropriate by the Board, should be implemented. In 13.1, for example, proposals or options to minimise rate retroactivity, the company sees that as a perfectly appropriate issue because it does go to that implementation issue. 208 Might I also say, Mr. Chairman, that the company, of course, is not oblivious to the sensitivity of retroactivity at this particular point in the regulatory history of this province. The difficulty that the company sees here is where one goes with this sensitivity around retroactivity in the context of this particular case. This is where the company has difficulty, for example, with proposed issue 13.3. 209 Issue 13.3 invites us to address, and the Board to address, the company's proposal to recover the entire fiscal 2003 test year revenue deficiency on a retroactive basis. Well, Mr. Chairman, in my submission, a fiscal 2003 rate case, by definition, what it is all about is recovering rates for and effective over the fiscal 2003 year. The issue 13.3, in implying that there's an issue around that, if not explicitly, is implicitly saying there's an issue of punishment in this case. And let me just explain that. 210 The implicit or if not explicit meaning of 13.3, and I believe also 13.2, is at the end of this case, if the Board should determine that particular rates were appropriate or are appropriate for fiscal 2003, the Board may not allow recovery of those rates effective fiscal 2003 for some other reason. Even though these are the appropriate rates for that fiscal year, they cannot be effective and the adjustments to make them effective cannot be made for some reason. That is effectively a financial punishment, fine, penalty, whatever you want to call it, on the company. So that is where we, Enbridge Gas Distribution, parts company with the issues list. It's the implication there that what is at stake in this hearing is some form of financial punishment or penalty. 211 Now, I don't want to get too far into the background of this case because, in my submission, that's the very difficulty with going down this road. In essence though, this notion that there might be some penalty or punishment in my submission suggests that what this process will be about, if this issue goes on the issues list, is assigning some sort of blame for where the process stands in relation to prospective rate-making. The submission I make to the Board is that this case should have nothing to do with looking for blame or finding fault. To the extent that there's an issue in this case, and I will address the fact that this is something that's being considered elsewhere, but to the extent that there's any issue in this case, it should be about everybody addressing this issue of retroactivity in a way that remedies it and not going back over the past and trying to find a party to punish or to penalise. That, I suggest, would be nothing more than a knee-jerk reaction to this sensitivity that I've already referred to that is not an appropriate reaction in a particular rate case like this one. 212 Now, again, I don't want to go too far into the history, but of course it's clear on the record the application in this case was filed on September 4th of this year, and there is some implication that that should have importance on this retroactivity. The importance that I see is that yes, we are behind track on prospective rate-making and how do we get back on-track. A fact like that, though, in my submission has no importance to a financial penalty or punishment because you just have to go back one further step to realise that the rate order in the preceding case, RP-2001-0032, was only issued on July 25th, 2002. If I'm correct, and I don't purport to have this precise, but it was something like 22 business days after the rate order in the preceding case that the application was filed. I'm not going to go back and back into this history, Mr. Chairman. I just want to demonstrate that this is not a superficial issue of assigning blame because when an application was filed or anything like that. It's a broader issue than that. 213 But the point is that the company, in order to file a rates application that is in any way meaningful needs that decision and/or order from the preceding case. One can't even to begin to calculate the deficiency without knowing the rate flowing from the preceding case, not do speak to the myriad of other elements from a rates case that would flow from one decision into the next case. 214 So, Mr. Chairman, in my submission, it's not a simple issue of picking things like a filing date and assigning blame. And if I might, at the risk of -- at the real risk of getting into yesterday's decision, just make one other point in that vein. 215 Yesterday's decision talked about, and I'm not giving a reference for this, the decision talked about the filing of an application without complete evidence. In fact, if the Board were to turn up the response to Energy Probe interrogatory number 1 in this case, the Board would see that the reason the company has tried to get in an application as quickly as possible with as much evidence as possible is to get the process moving. So again the point is it's not just a simple issue of saying, well, when did the application go in, how complete was the evidence. There are a number of very difficult problems that play here, Mr. Chairman. 216 First, I've already alluded to one, and that is the fact that one rate application flows directly out of the preceding case. 217 Second, and it is clear on the record, the process has almost been a year behind for several years now. 218 Third, the process takes in the order of a year from application to decision, sometimes more. 219 Fourth, once you get beyond the beginning of the test year, once you have even -- you start to have some slippage from prospective rate-making, then the very obvious issue arises as you go into that test year, well, let's figure out how the actuals are comparing to what you forecasted in your prospective rate-making case. 220 So these are difficulties that need to be addressed to get back onto fully prospective rate-making, and the company understands that. But in my submission, one only needs to lay out those four difficulties to understand, and again in my submission, that's not an area for blame or criticism, that's an area for everyone to get together and say, how do we get this working on a prospective basis. And I believe yesterday's decision actually ultimately said that on retroactivity, that the company, Board staff, and the intervenors ought to get together to try to address this issue. 221 So in my submission, to start going back through the history of this to figure out why we are where we are now and assign blame for that is actually counterproductive. We are going to spend more time expanding this process when what really needs to be done is everybody to be looking together to find a way to get it back on track. And instead the suggestion that we take from these issues on retroactivity is we will spend our time going back and trying to point some blame and establish a punishment or a penalty for the company. 222 The other difficulty with that is if the blame was three years ago, even assuming there is some blame to be laid at anybody's door, what's it got to do with setting rates in this case. If the process has been running almost a year behind for several years, in my submission, that's got nothing to do with saying, well, now there's going to be a penalty in this case because it's a sensitive issue for everyone. That's got everything to do with saying, it's time that we all pulled together and looked at constructive ways of getting prospective rate-making back on track. 223 Now, I did allude to the fact that there is another proceeding where the issue is -- retroactivity issue is being considered and that of course everyone would know is the -- I shouldn't say considered, it's being brought forward. That's the 100-day review. I won't go into detail in the -- regarding the submissions made in the 100-day review, but if I may, I did just want to read a few comments because I think it does illustrate that this is an issue for another proceeding and it is an issue that's actually being addressed in another proceeding. 224 What I wanted to do is just briefly read from the comments made in the submission on behalf of Mr. Warren's client, and I will apologise in advance to Mr. Warren, I appreciate that his submissions were made in a different context and he's not making those submissions in this context, I'm just bringing them into this context for the benefit of this argument. 225 Before doing that, I might also say that similar submissions, or submissions in this context that I would also rely on are in IGUA's presentation for the 100-day review, at page 8. But if I could just quickly read a few sentences from the overview of CAC's consultation paper. I will skip some words here, I won't read all the words consecutively: "The government has ordered an immediate review of the Ontario Energy Board mandate. The timing of the ordering of the review suggests that one of the principle reasons is to respond to the adverse public reaction to retroactive rate adjustments to customer bills from consumers in the franchise area of Union. While such adjustments are regrettable, particularly when they are substantial, it is unfair to assume that the adjustments reflect anything more than the unique circumstances of one case or the retroactive adjustments are, in and of itself, systematic of some fundamental flaw in the mandate in operation of the Board." 226 And then just skipping down, Mr. Chairman: "CAC is concerned that the review may reflect no more than an attempt to find a scapegoat to deflect public criticism." 227 Now, again, those comments were clearly made in the context of the review, and CAC is not making those comments here today. But I suggest that an issue on the issues list that proposes in this case that some punishment or penalty ought to be extracted, and whether that's proposed explicitly or implicitly in the issues list, is really looking for a scapegoat because of the sensitivity that this issue has achieved. 228 So in sum, then, Mr. Chairman, in my submission, the appropriate issue here is how to get the process back on track. Also, there's an appropriate issue about rate implementation and that's in issue 13.1. As far as the retroactivity issue generally is concerned, it is being addressed by parties in another proceeding, and if there's anything to be done on a constructive and productive basis in this case, it's my submission that it is not to go back in history and try to attach some blame for the timing of this case. 229 Mr. Chairman, I'll then move on to the next category of issues, and I will be briefer on -- 230 MR. BETTS: Excuse me for just a second. We'll just make sure we know what we would like. 231 [The Board confers] 232 MR. DOMINY: Mr. Cass, I just want to get a clarification of what I think I heard you say. I think you were referring in 13.1 as a discussion of ways in which we could improve the process to minimise rate retroactivity. But you also referred to rate implementation which would be a rephrasing of 13.2, which is recovery of the retroactive portion of the distribution rate in this proceeding. 233 MR. CASS: Yes, thank you, Mr. Dominy. I'm sure I wasn't clear on that. Of course it does get us down the road a little bit of interpretation. But in relation to 13.1, I think the interpretation of the company was that proposals or options to minimise rate retroactivity would be things like in what ways can we implement this to moderate the perceived effects of rate retroactivity; what sort of adjustments, what sort of time frames those adjustments would be placed over, and so on. The issue may go beyond that, but we certainly believe that that sort of rate implementation was encapsulated in there and would be appropriate to consider. 234 13.2 and 13.3, the concern, I hope I stated it correctly, is that when one makes retroactive -- in 13.2, for example, retroactive recovery of distribution rates just on its own an issue, the implication, if not the explicit meaning of the issue is that there's a question about whether you will be allowed at all to have rates made effective as of October 1st, and that's where I'm contending that that's a punishment element, penalty, whatever one wants to call it. I'm submitting to the Board that that's not the direction this case should go on or needs to go in. 235 MR. DOMINY: Okay, I think I understand. 236 MR. CASS: I do apologise. I realize it wasn't totally clear. 237 MR. BETTS: For the record, again, my version of the issues list, it is showing 13.2 as part of it being normal font and part of it being bold font, and I take it from your presentation that you're recommending that the bold font be the issue. 238 MR. CASS: Yes, the implementation issue. Exactly, sir, yes. 239 MR. BETTS: Thank you. Any other questions? 240 Then please proceed. 241 MR. CASS: Thank you. 242 Then the next category of issues that I propose to make some submissions on are those that have been gathered under the heading of access to monopoly services. Those are the 16 series, if I can call it that, essentially at the end of the proposed issues list. 243 I won't read the issues. I think the heading itself helps to give some idea of the scope. These issues about access to monopoly services, in my submission, they have nothing in them that's particular to the test year 2003; they have nothing explicitly in them that have to do with rates. One could see rates perhaps as a tiny subset of 16.1, but it's not explicitly stated and it certainly goes beyond rates, well, far beyond rates. And there's nothing in them that's even particular to Enbridge, these issues about access to monopoly services. So, in essence, they're a generic group of issues that are not necessary for rate-making -- certainly not necessary, in my submission, for rate-making for the fiscal 2003 year. 244 In my submission, this case -- and I don't want to imply by this that I'm suggesting that a narrow perspective needs to be put on it -- but this case at its essence is about fixing or approving rates for the fiscal 2003 year. For an issue to make it on the issues list, in my submission, there has to be some semblance of a link to something that this Board ought to be doing in order to fix or approve rates for the fiscal 2003 year. 245 And I might point out that in this particular case we have a very extensive list of uncontested issues that are relevant to fixing of just and reasonable rates for the test year. So to the extent that there is a legitimate issue, if there is, about access to monopoly services, this process, the consideration and hearing of this case, in my submission, the last thing it needs is to have the additional generic issues grafted onto an issues list that already extensively and exhaustively covers the field of issues that are actually relevant to what the case is all about. 246 Furthermore, specifically in relation to 16.2 and 16.3, and again without reading the issues, if you do look at them you see quickly that they are issues about the bill. The bill, though, is not an Enbridge Gas Distribution bill, it's the bill of Enbridge Inc. Moreover, this Board itself has specifically found that the gas bill is not a utility service, and that finding was made in a decision on the HVAC affiliate code complaint, RP-1999-0058, at paragraph 4.7.12. The Board determined that the gas bill is not a utility service. 247 Not that it's even necessary, but as further evidence of that, ABC service is not a service that's regulated by the Board, and that's an example of the fact that the Board has not treated billing as a utility service. 248 So to the extent that there is any appropriate issue in terms of what's been raised under the heading of access to monopoly services, Enbridge Gas Distribution submits that this is not the proceeding for it. These are drafted as generic issues and the drafting of the issues list itself makes it apparent that there's no linkage between those issues and the fixing or approving of just and reasonable rates for fiscal 2003. 249 MR. BETTS: Thank you. No questions from the panel. Please proceed. 250 MR. CASS: Thank you, sir. Then next is a more narrow and discrete issue because it concerns only the words "and beyond" at the end of an otherwise uncontested issue, number 3.1. 251 [The Board confers] 252 MR. CASS: As the Board will be aware, Enbridge Gas Distribution does indeed propose for consideration in this case a new sharing methodology for transactional services in the test year. The uncontested portion of issue 3.1, I think you will see, is very broadly worded, no limitation in it at all in relation to the test year, and gives the parties a very wide scope to scrutinise the transactional services sharing proposal for fiscal 2003. 253 The point of contention is simply whether that wide scope of scrutiny should somehow be expanded to address the proposal, looking at the words of issue 4, "the 2003 test year and beyond." Enbridge Gas Distribution has a number of difficulties with this proposed expansion of the issue, sir. 254 First, it invites the Board to consider a proposal that has not been made. The company has not made a proposal for transactional services for the 2003 test year and beyond. One doesn't need to get any further than paragraph 1 of the prefiled evidence on this proposal to see that. I don't think anyone needs to turn it up. Just for the record, it's Exhibit A.2, tab 5, schedule 1, page 1. It says: "The purpose of the evidence is to describe the nature of the transactional service's business, explain the methodology, and present the company's new proposal with respect to the 2003 test year sharing methodology." There is not a proposal for 2003 and beyond. 255 Second, even aside from the specifics of the company's proposal, as I've already emphasised and I won't dwell on again, the scope of this case is just and reasonable rates for fiscal 2003. This case does not encompass a preapproval for additional years beyond that of a transactional services proposal. 256 And then the third point is that there is a concern on the part of Enbridge Gas Distribution that what's intended by these additional words proposed for the end of issue 3.1 is an attempt to bring into this case issues from the company's storage separation application that has not yet been filed. 257 In my submission, the relevant issues for that case, when filed, should be dealt with in that case. The fiscal 2003 transactional services sharing proposal stands alone from the storage application. Unfortunately the storage case has not yet been filed, but it will not be effective before the beginning of fiscal 2004. The transactional services sharing proposal is for fiscal 2003. That in itself should be enough to show that the transactional services sharing proposal is a proposal that stands alone from the storage application that hasn't been filed. 258 Now, Ms. DeMarco was good enough to hand to me before the commencement of the proceeding this morning a stakeholder consultation document in relation to the gas storage separation concept. This is a document that was given to stakeholders on April 16th, 2002. Of course, I don't want to -- I can't try to anticipate where she will be going in her argument with this document. But again this only reinforces the company's concern that the intent of trying to add the words "and beyond" to issue 3.1 is to import into this case issues about storage. There will be plenty of scope within the storage case to address storage issues there and, in my submission, they should not be imported into this case. 259 The other point I would make about this document, and it may well have nothing to do with Ms. De Marco's submissions, but just so that parties reading it will be aware, this was a proposal made to stakeholders but it no longer reflects what -- in its entirety, it certainly does not reflect what the company would be proposing to file. Just as an example, it refers to transferring assets to a new storage company on October 1, 2002. That is not going to happen and that is not going to be proposed. 260 I won't say anything more about that because, again, I really am -- I would be anticipating Ms. De Marco's submissions. However, for all the reasons I've given, it's the company's position that these words "and beyond" take an issue outside what is relevant to this particular case, that being rates for the 2003 test year. 261 [The Board confers] 262 MR. DOMINY: Mr. Cass, as I understand it, and I have not been involved with Consumers -- sorry, Enbridge Gas Distribution Inc.'s proposals. But as I understand it, you're saying we want to look at a new sharing methodology for transactional services, and are you explicitly trying to limit it to the 2003 test year, and you want a period there, is what you're recommending. I was wondering what would happen, because as I understand it, generally these sharing proposals had been approved in a particular rate year's case and then tended to be applied in subsequent rate years, whether you would object if the period was put after transactional services, period. Although they have been discussing a particular rate year, they've tended to be carried forward. 263 MR. CASS: Yes. Mr. Dominy, what I'm running through my mind here is, certainly these things do get carried forward, if there are no ongoing issues once established; however, there's nothing in what the company is proposing that suggests that this is to be a locked-in proposal, and so, in the company's mind, anybody that has an issue beyond the 2003 test year can bring that up in the appropriate proceeding. It's not locked in. Although, yes, where they are not issues, matters do tend to get carried forward from one case to the next; I agree with that. 264 MR. DOMINY: Okay, thank you. 265 MR. BETTS: Yes, go ahead. 266 MR. CASS: I should have said in relation to the stakeholder consultation document, and this was an error on my part because I was there, this document was provided and the consultation occurred on a confidential basis. I didn't point that out to the Board. So the company does have an objection to Ms. DeMarco using this document when she comes to her submissions, but perhaps we should let that take its course and I won't address that further now. 267 MR. BETTS: I think the panel has to understand whether you are objecting to it being presented on a confidential basis or not. 268 MR. CASS: Yes, the company does have an objection. But she hasn't even done it yet so I'm a little premature here. I'm just alerting the Board. We'll see where her submissions go and, of course, other counsel will be here on behalf of the company to address it, having heard her submissions. But I am a little premature here, certainly. 269 MR. BETTS: Okay, thank you. I think we're satisfied with item 3.1, if you'd like to continue. 270 MR. CASS: Thank you, sir. 271 I believe the final issue is the issue in relation to publicly funded school boards. Now, this would be issue 12.7. This is a short one so I will read it. "Rate Relief for Publicly Funded School Boards for the 2003 Test Year." 272 To begin with, Mr. Chairman, I would submit that whether an issue of this nature is even within the mandate of the Board is, at the very best, questionable. In my submission, it is not part of the mandate of this Board to inquire into, or even begin an inquiry into, the ability to pay or financial hardship of particular customer groups, and then proceed with rate-making on that basis. However laudable an objective it may be, however sympathetic one may be to the position of public school boards, in my submission, it's not the mandate of this Board to look at those financial hardship issues of any particular customer groups and then build up from that to a rate-making process. 273 But even aside from that issue, the proposed issue, Mr. Chairman, is expressly premised on the basis that these school boards seeking rate relief are publicly funded. What arises from that issue, then, is these publicly funded school boards believe that there should be rate relief because they are not adequately funded. So in order to address this proposed issue of whether the school Board should have this form of rate relief, this Board will be drawn into an issue of whether government funding to school boards is adequate. I don't think I even need to say it, it's so clear, this is a highly political issue. I would submit that it would be most inappropriate for this Board to be drawn into this political issue of the adequacy of public funding to school boards. 274 Might I just now, for purposes of contrast, make a little point of departure here. Because Enbridge Gas Distribution, in common belief with other parties, did agree to an issue about publicly funded school boards and that's issue 12.8. If you look at issue 12.8 in contrast to 12.7, it has to do with the appropriateness of the existing rate classes to serve publicly funded school boards, and then some particular issues. 275 This, I submit, in contrast to issue 12.6 -- 12.7, I'm sorry, allows one to see what is an appropriate area of inquiry for this Board to embark on. Certainly it's appropriate for a customer class to come and say, "We have concerns about the rate class that we're under, or we have issues, and we would like the Board to consider those issues." But then to go beyond that, Mr. Chairman, to go beyond this addressing the existing rate classes and particular aspects of those as they might apply to publicly funded school boards, and to generically address what's called rate relief for publicly funded school boards, in my submission, for all the reasons I've given, and again I emphasise for the reasons of not having the Board drawn into a political issue, I submit, is not an appropriate matter to go on the issues list. 276 [The Board confers] 277 MR. BETTS: The panel has no questions on that. 278 MR. CASS: Thank you, sir. 279 MR. BETTS: I believe that was all the items that you had to address. 280 MR. WARREN: Just before Mr. Cass leaves. In the category of the contested issues, we have some underscoring, underlining, in the outsourcing arrangements. Based on our discussion with Mr. Cass earlier, I'm assuming this but perhaps it should be made clear on the record, there are no contested elements within the 8 series of issues. 281 MR. BETTS: Sorry, the eight areas of -- 282 MR. WARREN: Sorry, the 8 series of issues, the outsourcing issues. You'll see that within that there are the words "and other implications" that are underscored, and I'm assuming, based on my discussions with Mr. Cass this morning, they are no longer contested. But before he left the room I just wanted to make sure that that was clear on the record. 283 MR. BETTS: I'm glad you brought that up. 284 Mr. Cass, is that understanding correct? 285 MR. CASS: Yes, Mr. Chairman. I'm sitting here shuffling my paper. Even with these brief submissions that I had this morning, I was not able to cope with the papers. I'm trying to find the -- oh, okay. The underlined wording in these outsourcing arrangements issues has to do with other implications. In light of the decision that's been rendered yesterday by the Board, the company is not asserting any objection to the underlined wording in these outsourcing arrangements issues. 286 MR. BETTS: Thank you both for that clarification. 287 Mr. Moran. 288 MR. MORAN: That was the issue that I was going to raise, so Mr. Warren has already raised it. 289 MR. BETTS: Thank you. 290 MR. MACODRUM: Mr. Chairman, if I might, before Mr. Cass leaves, since he spoke on the matter after Mr. Poch raised it. I'd just like to advise the Board that, in light of your ruling earlier today, I have spoken to Mr. Rowan and he has instructed me to indicate to the Board that he withdraws the whole of his letter that was addressed to the Board Secretary and dated December 18th, 2002. 291 MR. BETTS: Thank you. I appreciate your getting that on the record. 292 I believe at this point there's no point in rebutting the comments made by Mr. Cass. Everyone will have an opportunity to present their views to the panel as the afternoon proceeds. 293 So, looking at the time -- 294 MR. DEROSE: Mr. Chair, if I could just -- I have one request before we adjourn for lunch. 295 The remaining contested issues, I believe IGUA will be taking no position on, and with that in mind I would ask your permission to relieve myself from the afternoon. I have a plane to return to Ottawa, and I'm told that there's a National Energy Board matter which is waiting for me in the office. So, with your permission, I will not be here for the afternoon. 296 MR. BETTS: Thank you, and the record will indicate your non-position. 297 MR. POCH: Mr. Chairman, I think a number of us may be in a similar situation. I just want to make the general inquiry, would the Board have any questions arising out of what are listed as uncontested issue, in particular, in my case, the DSM. But if the Board has no questions arising out of those, I would also ask to be excused. 298 MR. BETTS: We do not have any questions with regard to the uncontested issues. And I can assume, Mr. Poch, that there are none of the contested ones that you are putting forward from -- 299 MR. POCH: That's correct, Mr. Chairman. I take no position on those matters. 300 MR. BETTS: Thank you. 301 Mr. Dominy has rightfully pointed out that there are more issues here that -- there may be one more issue that includes some bold print which is a proposed wording, and I'm looking specifically at 4.4, a proposed alternative wording for the gas supply and transportation costs. 302 I'm not certain who proposed this, but is there anyone in disagreement with replacing the normal font wording which says "gas cost consequences of gas supply and transportation activities" with the proposed wording which is "gas supply and transportation costs"? Anyone that would disagree with that? Then we will take that as a revision as well. 303 MR. MATTSON: Mr. Chairman, can I just add in before Mr. Cass -- on 9.6, issue 9.6, is Mr. Cass in a position to give the Board and the parties an indication of how he sees that issue unfolding with the qualification in brackets? 304 MR. BETTS: I'm not sure that that is really a question that's pertinent at this stage. 305 Mr. Cass, can you provide us with any assistance on that, or -- 306 MR. CASS: I'm afraid I can't, Mr. Chairman. To tell the truth, no, I'm sorry. 307 MR. POCH: Mr. Chairman, as one of the parties actively involved in that matter, I think it's clear that there is no settlement as of this moment and so clearly it remains on the list. If it seems unlikely there would be a complete settlement, in any event, so I doubt the Board would have to deal with, it would go to ADR and subsequently to the hearing if necessary. If there were any complete settlement or if there were any settlement, that will be conveyed to all parties. 308 MR. BETTS: Thank you. 309 MR. MATTSON: Thank you. 310 MR. CASS: Sorry, Mr. Chairman, having said I wouldn't say anything on this. Just in addition to what Mr. Poch said, I would suggest that the continuing status of this issue the way it stands would be addressed when it's known what the outcome of what Mr. Poch just referred to is. 311 MR. BETTS: I believe that would be everybody's understanding. Thank you. 312 Okay, I think we're getting clearer on what the issue list is. I'm going to ask at this point, it is a quarter to 12, do the parties that intend to speak to these issues think that they could speak -- that they could deal with this prior to a lunch break? I'm seeing a lot of shaking heads that say no way, so I'm quite satisfied to break now and allow everybody the opportunity, first of all, to feed themselves and secondly perhaps to digest, if I can use that word, some of the comments of Mr. Cass. 313 We will then recess at this point for lunch. Let's challenge ourselves to be back here at 1:00, which will allow one and a quarter hours, roughly, and we will proceed from there and endeavour to do that this afternoon. So with that we will stand adjourned. 314 --- Luncheon recess taken at 11:47 a.m. 315 --- On resuming at 1:00 p.m. 316 MR. BETTS: I will begin this part of the session by asking if there are any preliminary matters that arose through the break. There appear to be none. 317 As you all recall, we agreed that we would leave the contentious issues to this point in the hearing and we will deal with those at this point. What I'll be asking is that the party that is putting forward, or arguing in favour, as the issue as it stands on the issues list will be given the opportunity to submit their thoughts on that. I will then invite comments from any parties that are in support of that person's view, and then we will invite comments or submissions from parties that oppose that view. And we've already heard from the applicant once but we will then return and the applicant certainly will have an opportunity to present their viewpoint at this point as well. And we will return it to the proponent for their final reply to any comments. 318 Let me see if I can -- if that happens again, we better get the Board Secretary to see if they can determine what the problem is. We'll try and bear with this, if we can, and we'll see if -- I know what it is. Somebody is working on our alarm system upstairs and we can blame that electrician, let's assume that's the case 319 We'll move to item 3.1 under Transactional Services, and it would appear that there is general support for this, except for the two words "and beyond." 320 First of all, who's the party that would like to speak in favour of this issue, or the first party? 321 MS. DEMARCO: Mr. Chair, Lisa DeMarco, on behalf of CEED, and we will be speaking in favour of the inclusion of the wording as proposed on the issues list, so "and beyond" would in fact be included, in our submission. 322 MR. BETTS: Please proceed, then. 323 ISSUE 3.1: 324 SUBMISSIONS BY MS. DEMARCO: 325 MS. DEMARCO: I would just note that in Mr. Cass's submission, some question arose as to the confidentiality of the document that I will be referring to, and I'm just saying in advance so I don't get up in the middle of my submissions, so I'd like to drop off a few copies of a covering e-mail that accompanied the document in question. 326 MR. BETTS: You're circulating that document now, Ms. DeMarco? Ms. DeMarco, Mr. Cass did indicate his objection to that document being submitted on the basis of confidentiality. Are you going to speak to that? 327 MS. DEMARCO: This is precisely what it speaks to. 328 I apologise, Mr. Chair, for not having the appropriate number of copies. We just had the documents faxed down, but we'll certainly make additional copies for the parties. 329 MR. BETTS: Thank you. 330 MS. DEMARCO: Mr. Chair, Enbridge is contesting issue 3.1 which currently provides that EGDI's proposal for new sharing methodology for transactional services for the 2003 test year and beyond. And specifically the matter of contention is the words "and beyond." 331 Contrary to Mr. Cass's submission, this is not -- Enbridge's interpretation would not be a broad construction of the issue at hand but rather would constrain the Board's consideration of the newly proposed transactional services revenue sharing mechanism to only the 2003 test year. 332 Essentially, Mr. Chair, Enbridge is attempting to build a long road in segments and asking the Board to approve only the first segment without consideration of the big picture: Where the road is ultimately going, what is the current context, and what is the planned business and storage context in which that road will operate. 333 Essentially, Enbridge is asking the Board to decide upon this sharing mechanism without getting its arms around the broader context and issues. 334 CEED submits that Enbridge's constrained and artificially segmented approach to this issue should not be followed by the Board on the basis of three reasons. 335 The first reason is that, contrary to Mr. Cass's submission, Enbridge's own evidence indicates that the proposed sharing mechanism is not just a 2003 rate issue. Rather its own evidence indicates that the proposal is intended to fly, as Mr. Dominy questioned, forward and into the future. 336 Secondly, CEED submits that Enbridge's own evidence indicates that the proposed sharing mechanism is to apply both to the current or present utility structure and to the proposed structure of the utility in 2003 when the utility proposes to separate out its storage assets and move them into a separate company. 337 And thirdly, CEED submits that again, contrary to Mr. Cass's submissions, the proposed transactional services revenue sharing mechanism is not a stand-alone feature but rather it is intimately and inextricably related to the storage application that Enbridge has indicated it intends to file in the next few weeks. 338 Moving, then, to CEED's first submission, and that is that Enbridge's own evidence indicates that the proposed sharing mechanism will be applicable beyond the test year. Mr. Cass has drawn your attention to paragraph 1 of the evidence, which is located at tab A.2 -- sorry, section A.2, tab 5, schedule 1. But he did not, however, draw your attention to the relevant portions of that evidence which speak to the forward and future applicability of the sharing mechanism, of the proposed sharing mechanism. Specifically, starting at paragraph 12 on page 2 of 9, Enbridge indicates that "it intends to change the transactional services revenue forecast and sharing mechanism methodology to a mechanism that will reflect a more equitable sharing of transactional services revenues and to incent the company to maximise revenues to the benefit of ratepayers and shareholders." 339 Similarly, if I can refer you to paragraph 16 of the evidence, which is found on page 4 of 9, again we're at Exhibit A.2, tab 5, schedule 1, and my apologies, that commences on page 5 of 9. Here again Enbridge indicates that it is coming forward with -- 340 MR. BETTS: Apologies, continue. 341 MS. DEMARCO: I hope it doesn't reflect the quality of the submissions. Certainly, Enbridge Gas Distribution indicates that it is coming forward with a new approach to transactional services, not a single year proposal. There is no limitation to the current test year. And, again, tellingly, at paragraph 18, located on page 6 of 9, Enbridge indicates that -- second line down, "Enbridge Gas Distribution is proposing the elimination of the process whereby a transactional services net revenue target is set each year. Instead, Enbridge Gas Distribution is proposing that a TS net revenue credit to ratepayers be established and fixed," and I emphasise, "for the duration of the incentive regulation period, with the exception of a annual escalator." So clearly we are not talking about a change that is applicable singularly to the test year. 342 Despite this evidence indicating that the proposed TS sharing mechanism applies beyond the 2003 test year, Enbridge is asking the Board to constrain its consideration of this issue to only the test year. Essentially it's CEED's submissions that this is analogous to asking the Board to consider something like a change analogous to PBR by looking only at a single test year, or as another example, a change analogous to the changes that have recently occurred to Enbridge's system gas methodology, pricing methodology, by looking at only a single test year. 343 CEED submits that for the Board to make full and accurate consideration of this issue, we need clearly to look beyond the test year and look at the context in which this is being proposed. 344 Moving on, then, to our second submission, and that is again that Enbridge's own evidence indicates that the proposed sharing mechanism is to apply to both the current utility structure and proposed new structure where storage assets are held by a separate company. I'll refer you again to the evidence at Exhibit A.2, tab 5, starting at page 6 of 9. At paragraph 21, Enbridge specifically indicates that: "It is Enbridge Gas Distribution's intention to move its storage assets out of the utility and place them into a new regulated company, Enbridge Gas and Storage Inc. A separate application will be filed with the Board in support of this transfer. Under this arrangement Enbridge Gas Distribution would contract for storage, compression, and transmission services from Enbridge Gas Storage for a 20-year term at cost-based rates. The TS net revenues associated with the optimisation of these assets would be captured in the first basket." So clearly Enbridge's own evidence contemplates application of this mechanism in future proposed regulatory context, not strictly the current test year context. 345 The Board actually in the last day, in issuing the decision, has put its mind to the necessity of having full and accurate contemplation of these issues and disclosure of these issues when it's being called upon to make these decisions. And if I could call the Board to the attention -- to the attention of the recent decision in the Enbridge 2001-0032 case, and I apologise, I don't have copies of that at this point, I'd be happy to present them. But specifically in paragraph 6.2.4 of the Board's decision, which is located at page 193, the Board indicates in its decision: "It is also important that the application be complete and include all of the supporting evidence and documentation, including statements of underlying assumptions and analysis." 346 Moreover, at paragraph 6.2.4 of the decision, located at page 195, the Board again comments on the necessity of full and forthright disclosure in order for it to fulfil its mandate. It indicates: "ECG's general approach to disclosure in this proceeding has not been helpful. In order for the Board to fulfil its mandate, it must first understand the operations of the utility and the business model it is operating within. This can only be accomplished by the utility providing the Board with clear and concise explanations of its operations and business processes. Without full and complete disclosure, it is difficult for the Board to understand the business of the utility and to be light-handed in the Board's regulatory approach." 347 This is precisely the issue that we are faced with today in scoping out the breadth of issue 3.1. Specifically, absent the full and forthright disclosure of issues related to "and beyond," namely, the future intended structure of the storage assets in a new storage company, the Board's consideration of this issue will be extremely constrained and will not allow for the Board to fulfil its mandate. 348 As a result, CEED submits that full consideration of the proposed revenue-sharing mechanism must include consideration by the Board of both contexts that are outlined in the company's evidence; namely, the current regulatory context and the proposed separate utility storage structure as outlined in paragraph 21. 349 Just to give some ground to the nature of the effects that this scope might have, there are definite practical implications of how this is framed. Specifically, if the issue is limited or constrained, as Enbridge is submitting, then several issues of, as CEED submits, extreme relevance to the Board may not be considered. To this end I'd refer the panel to CEED interrogatory number 18 where CEED asks in relation to the evidence: "It's EGD's intention to move its storage assets from the utility to an affiliate. Please advise whether SMT revenues are likely to be further optimised, i.e., increased, by moving storage assets from the utility, and by how much." Extremely relevant issues to determine the efficacy, the appropriateness, the nature of the proposed sharing mechanism. But EGD's response in this regard is: "The requested information is not required for rate-making purposes for the 2003 test year." They would have the Board adopt a sharing mechanism, adopt a new methodology, without full consideration of its implications. 350 Finally, then, moving on to our third submission, and it's here that I would like to refer to the document in question so perhaps it would be best -- most efficient to chat about, or to make submissions on whether or not the document is, in fact, subject to privilege and/or within the ambit of the Board to consider at this point. 351 MR. BETTS: At this point I believe the applicant is the only party that has spoken with regard to this document and its confidential nature. Would you care to make a further submission at this point? 352 MR. O'LEARY: Mr. Chairman, I would defer to my colleague, Ms. Persad, to speak to that portion of the issue. 353 SUBMISSIONS BY MS. PERSAD: 354 MS. PERSAD: Thank you, Mr. Chairman. 355 We would like to make just a few brief submissions on whether or not the Board should accept the filing of this document, the nature of and the confidentiality of it. If the Board believes that it would like to hear from a witness to speak to this, because I cannot speak to the facts directly myself, Mr. Ladanyi is available to testify as to what was discussed at those meetings. But I will attempt to give a general overview of the position of the company on what was discussed at this meetings and what was the nature of them and why we object to the filing of the document. 356 MR. BETTS: And again, the question that we're dealing with now is whether -- if I understand the question, whether or not this was -- this did develop from the confidential discussion and whether you are prepared to accept its presentation to this party for consideration -- to this hearing for consideration. I'm not sure I'm looking right now for the details of the discussion itself. 357 MS. PERSAD: That's right. I am just speaking to the limited issue of whether this -- whether the company would consider this document to be filable in the public record at this time. 358 MR. BETTS: Thank you. Please proceed. 359 MS. PERSAD: So generally speaking, this document was distributed to a stakeholder interest group, in my understanding, as part of a series of meetings that was held by the company and funded by the company to discuss plans that the company had, in part, on the topic of incentive regulation but also on other topics, including storage and its plans for storage in the future. 360 The meetings took place over a number of months and it's my understanding there were a number of meetings -- perhaps seven, perhaps eight -- I don't have a precise number, but I don't think anything turns on that. And a number of things were discussed with stakeholders about the company's future plans. 361 At the kick-off meeting, I'll call it, that occurred in 2001, in August of 2001, there was a discussion amongst the parties about how the documents produced from those meetings ought to be treated and whether or not they would be distributed to a larger group than those that attended the meetings, I'll call them the working group for purposes of reference, and whether or not specifically they would -- those documents would be filed with the Board. I understand that minutes were taken and it was specifically discussed whether or not minutes would be distributed to the Board, to the Board staff, and be part of the public record. 362 Again, Mr. Ladanyi is here to testify if the Board would like to hear from him, that, indeed, it was discussed that the documents would be treated as confidential and distributed to only those parties attending the meetings themselves. 363 MR. BETTS: Perhaps I could just, for the record, ask Mr. Ladanyi whether that was in fact his recollection of the meeting. 364 MR. LADANYI: Yes, Mr. Betts. My recollection is exactly like that. That was quite an extensive discussion at the initial meeting on whether these meetings would be confidential. In fact, we even discussed whether Board staff should be present. There was certainly discussion whether documents produced, such as minutes, would be confidential. 365 I might also want to add that towards the conclusion of these meetings there was, in fact, a letter sent to us by Mr. Thompson on behalf of a number of stakeholders expressing their views on a number of issues. We thought in this interrogatory process that that letter would be useful in response to a certain interrogatory received from a certain party. We checked with Mr. Thompson and he indicated to us that that letter was confidential because it was produced as a part of these confidential negotiations or consultations, so we did not file this letter in response. 366 MR. BETTS: Okay. And it was your recollection that the consensus of the parties at this meeting was that the minutes would be kept confidential? 367 MR. LADANYI: Yes, it was, Mr. Betts. 368 MR. BETTS: Thank you. Please continue. 369 MS. PERSAD: Thank you, Mr. Chairman. 370 So in essence these meetings were -- they were very much akin to what the Board calls its ADR process. And it's important in those contexts, as was discussed this morning in relation to the DSM letter that was circulated by Mr. Rowan, that these -- that documents produced in such a process be kept confidential by the parties, in principle. Not on the basis of what the document contains but just on the principle that it is -- it would be a disincentive to the parties, including the company, to enter into these types of settlement or consultative negotiations or discussions without having that assurance that these documents would, indeed, be kept in confidence. 371 So it's really just on the principle that the company is objecting to the filing of this document on the public record. It was the company's understanding that these documents were produced on the basis that they would not be filed on the public record and, you know, in part because parties are at liberty to change their minds. And the company has not come forward with a formal proposal on these matters that has been filed on the public record and would not want to be precluded from changing its plans to eventually reflect a formal application to the Board. So it's -- you know, it would be very reluctant to accept a filing of some very preliminary proposals or discussions on the public record to then compare to what it may eventually file in the public record as its go-forward plans that are more certain in nature. 372 MR. BETTS: Thank you. 373 Are there any other parties that would like to make a further submission opposing the filing of this letter? 374 Then, Ms. DeMarco. 375 REPLY SUBMISSIONS BY MS. DEMARCO: 376 MS. DEMARCO: It's very important to make a distinction between the nature of the discussions and the minutes of those discussions that have gone on. Whether or not under some understanding or general understanding of privilege, which we certainly do not concede at this point, and this document in question, which is a broad proposal outline document of the storage application. There are a few things that are quite indicative of the fact that this document per se is definitely not subject to privilege and/or any form of confidentiality. 377 First, looking at the document itself, you will see no where on the document any indication that it is subject to confidentiality. Not on the front, not on the back, no where throughout the document. And then you now have a copy of the cover letter, or the cover e-mail that accompanied the broadly circulated consultation document. Not a negotiation position, not a settlement offer, nothing of this nature. Broadly circulated consultation document. And you'll see in the covering e-mail that Board staff was, in fact, copied on this consultation document; namely, second to last name would indicate that Board staff member, Colin Schuch received this broad Enbridge gas storage consultation document. The text of the covering e-mail also makes no reference whatsoever to confidentiality and/or privileged nature of the attached document, rather refers to it broadly as a stakeholder consultation document on Enbridge gas storage for tomorrow's meeting. Nothing more, nothing less. 378 The document is relevant in the instant submissions because it indicates clearly that the proposed transactional services revenue sharing mechanism is inextricably linked to the broader storage proposal. Unlike Mr. Cass would have you believe, the sharing mechanism as proposed is not a stand-alone mechanism, it is an integral part of the broader storage proposal that's forthcoming. 379 So to the extent that I might rely upon that, I'd like to continue with the submissions related to specifically the inextricable link between the document, consultation document, and the evidence on the sharing mechanism. 380 [The Board confers] 381 MR. BETTS: Can I just ask a couple of questions, perhaps one of each of you. 382 QUESTIONS FROM THE BOARD: 383 MR. BETTS: First of all, Ms. DeMarco, I guess I've heard clearly that you feel this document is critical to support your submission on this issue. 384 MS. DEMARCO: It's persuasive. I think the evidence further supports the issue, but certainly it's quite persuasive of the inextricable link between the actual sharing mechanism set forth in the proposal. 385 MR. BETTS: Then I would turn to the applicant and ask if, short of submitting this document, the applicant was prepared to admit that it did in fact establish an extricable link to storage, if that's all that's required from the document. 386 [The Applicant confers] 387 MS. PERSAD: Sorry for that caucus, Mr. Chairman. 388 MR. BETTS: That's quite all right. 389 MS. PERSAD: The applicant feels that there is not an inextricable link between what's being proposed in this fiscal 2003 application for transactional services and the eventual storage proposal of the company if, indeed, that does come forward. The document that Ms. DeMarco was wanting to produce here was dated April 16, 2002, and the company's plans have certainly changed since that time and I believe Mr. Grant indicated in our issues conference that -- well, he indicated, or we have indicated in other forums, with all the intervenors present, that the company's plans have changed such that the company would not be moving forward with any proposal to move storage out of the utility before October 1st, 2003, so that would be a fiscal 2004 issue not one related to rates made for fiscal 2003. So the company feels that there is not a link between the two and the Board ought not have that in its mind for setting rates for fiscal 2003. 390 MR. BETTS: Okay. I think we will certainly have to make a decision on this, and I would like to, if I can, just recess for, say, 15 minutes. We will consider this question. 391 Mr. Moran. 392 MR. MORAN: Mr. Chair, just before you recess, I'm just wondering if Mr. Ladanyi can confirm a couple of other things. He gave us some description of the meeting processes, with your permission. 393 MR. BETTS: Please. 394 MR. MORAN: Mr. Ladanyi, just as I understand it, the way this arose is there was a meeting with how to deal with documents coming out of a process that was going to look at a number of issues. 395 MR. LADANYI: Yes. 396 MR. MORAN: Including storage; right? 397 MR. LADANYI: Right. 398 MR. MORAN: I guess, as I understand it, early on the decision was made to exclude Board staff from that process? 399 MR. LADANYI: There was concern about Board staff being present. 400 MR. MORAN: Right. And part of that discussion also led to the decision that everybody would agree to keep everything confidential; right? 401 MR. LADANYI: Correct. 402 MR. MORAN: But Board staff weren't part of that meeting process where that was talked about; right? 403 MR. LADANYI: Specifically whether Board staff was in the room during that meeting I cannot definitely tell you. I believe that Mr. Maki might have been present but I'd have to check the minutes of the meeting. 404 MR. MORAN: When we look at the particular document that's under discussion, it was being distributed for a subsequent meeting; right? 405 MR. LADANYI: Right. 406 MR. MORAN: And at that point, I guess, a decision must have been made to include Mr. Schuch, because he's now on the distribution list. 407 MR. LADANYI: Yes. 408 MR. MORAN: That subsequent meeting was there a discussion of confidentiality? 409 MR. LADANYI: I believe my recollection is that Mr. Schuch made a commitment that he would not be informing Board members, the Board, of what was going on in these meetings. 410 MR. MORAN: Thank you. That's all I wanted to ask. 411 MR. MACODRUM: Mr. Chair, would it be helpful for Mr. Ladanyi just to confirm that these were not formal ADR proceedings or discussions that were in any way covered by the Board's rules. This arrangement of confidentiality was just an agreement among the parties, there was such an agreement, and that it -- I mean it's not something that need concern the Board at all. It was just an arrangement among the parties; is that not correct? 412 MR. LADANYI: May I reply? 413 MR. BETTS: Yes, please. 414 MR. LADANYI: Yes. That was an arrangement amongst the parties. On behalf of CEED, my recollection is that Mr. Mia was there on behalf of CEED at the initial meeting and not Ms. DeMarco. But she was present at some of the other meetings. 415 MR. BETTS: Okay, thank you, and I do appreciate the difference in those meeting structures. I think the Board would still, wherever possible, try to honour confidential arrangements between parties. But we will consider this question and we will return here at 10 minutes to the hour. 416 --- Recess taken at 1:42 p.m. 417 --- On resuming at 1:52 p.m. 418 MR. BETTS: Thank you. Please be seated. 419 RULING: 420 MR. BETTS: The panel has considered the question and, first of all, the Board would like to start off by saying that we do support very much the consultative process that goes on between applicants and stakeholders, and appreciate that if a confidential environment supports that process, that it is important for the Board to support it that, in fact, in this particular case we're not prepared to challenge that confidentiality. 421 The other item that has struck us is that there has been an indication from the applicant, and not challenged by others, that the plans presented at that meeting have changed, and from that point of view we are of the view that this document may not be of significant advantage. If in fact -- the opportunity will still exist for Ms. DeMarco and others to challenge the evidence as it comes forward in this case, and certainly there is still the opportunity for Ms. DeMarco to make her case on this particular question without the use of that document. So the panel is prepared to support the applicant's position and not accept the filing of that document. 422 Ms. DeMarco, would you please proceed. 423 FURTHER SUBMISSIONS BY MS. DEMARCO: 424 MS. DEMARCO: Continuing, then, specifically with the evidence at hand, that is, what is filed in Exhibit A.2, tab 5, schedule 1, page 9 of 9. There is again here evidence that there is a clear link between the sharing mechanism for transactional services revenue that is proposed and the future status, the future state of the separated storage company, utility in its future state as proposed. 425 To that end I would again refer you to paragraph 21 of the evidence that specifically refers to the contemplated separated storage utility. In the following paragraphs through to paragraph 27 which speak of future separation of storage baskets and revenue sharing baskets for the purpose of application of the sharing mechanism that's currently proposed. 426 To conclude, then, on the submissions in relation to the inclusion of the terms "and beyond" in the issue as phrased, CEED would submit that the company's evidence clearly indicates that the proposal is not limited strictly to the 2003 test year. 427 Number 2, the evidence indicates clearly that it's applicable in the future to a new storage separated-out utility, a future model for storage. 428 And number 3, the evidence itself indicates that there is a link, a necessary link between what the company's proposing in the new transactional services revenue-sharing model and the future contemplation of the structure of the utility. 429 As a result, we ask the Board to follow its own reasoning in the recent case and ensure that the Board can fulfill its mandate by understanding the operations of the utility and the business model that it's operating within, and, in the Board's own words, this can only be accomplished by the utility providing the Board with clear and concise explanations of its operations and business processes. 430 CEED is asking the Board to frame the issue in such a manner that the road doesn't get built in discrete segments with no full consideration of the purpose, direction, and over-reaching direction of that road. 431 As a result, CEED submits that the wording "and beyond" should be included in the issue. That concludes our submissions on this issue. 432 MR. BETTS: Thank you very much. 433 Are there any parties that would like to speak in support of that submission? Yes. 434 SUBMISSIONS BY MR. SHEPHERD: 435 MR. SHEPHERD: Thank you, Mr. Chairman. Jay Shepherd from school boards. I have a much simpler submission. 436 It would appear to our clients that any time a new methodology or procedure, such as a new method of depreciation, a new approach to outsourcing, a new way of doing cost allocation, anything like that is presented to this Board, the only way to properly test it is to test it in the context of its long-term implications. The alternative to that is that every year you press the reset button on every methodology and every procedure and look at it from the start all over again, reinvent the wheel every year, and that just doesn't make sense. Those are our submissions. 437 MR. BETTS: Thank you, Mr. Shepherd. Are there any other parties that wish -- 438 SUBMISSIONS BY MR. MACODRUM: 439 MR. MACODRUM: Mr. Chairman, I'd just like to associate CME with Ms. DeMarco's remarks and Mr. Shepherd's remarks. The applicant has already told us that they have other things in the, if I can use the expression, in the pipeline. They've told us of a storage case to come, a proceeding to come. They told us that they are going to be making filings early in the new year, for instance, a new incentive rate plan. We don't know whether in that incentive rate plan the very 2003 test year that you're looking at is going to be the basis of. I don't think you can proceed into this matter -- into this case with blinkers on. You have to look as to what the implications are for these things that are coming down the road, and I would just urge you therefore to accede Ms. DeMarco's request on behalf of her client. 440 MR. BETTS: Thank you. 441 Anyone else? 442 SUBMISSIONS BY MR. JANIGAN: 443 MR. JANIGAN: I'm not quite certain whether I'm in favour or against this particular matter, depending on what it precisely means. If it means that the potential future implications of the implementation of a new sharing methodology for the 2003 test year is considered by the Board in this proceeding, I think we have no objection to that, we may be, in fact, in favour of it. If the proposal is that we consider what methodology may be appropriate beyond the current test year, then we would be against it. We have yet to evaluate and take a firm position whether or not the new sharing methodology is appropriate for the 2003 test year, and we would certainly want an opportunity to review that in the context of the 2004 rates application before we committed to any implementation for future years. 444 So if it's a situation where it's simply, if I could paraphrase "beyond" meaning "and its potential future implications," then that would be find. But if it is meant to be an attempt to embed this methodology in any future test year without the appropriate review taking place, then we would oppose it. 445 MR. BETTS: Thank you. 446 Any further submissions? Would the applicant care to present their position -- or add further to Mr. Cass's earlier remarks. 447 SUBMISSIONS BY MR. O'LEARY: 448 MR. O'LEARY: Thank you, Mr. Chair. 449 I will attempt to avoid repeating what Mr. Cass said earlier quite eloquently, but in response to the very last comment, it is not our intent to seek an approval for an embedded methodology in this particular proceeding, and to the contrary, we're not suggesting that blinkers should be placed on the Board or any other party. It's simply a question of what is the correct proceeding for the determination of the issues, and our position is that in respect of this proceeding, we are looking for approval for 2003 and fiscal 2003 and Mr. Cass was quite clear that any issues relating to the separation of the storage assets which will be implemented no sooner than October 1st, 2003 which is the 2004 fiscal year is something that we respectfully submit should we raised in the context of that proceeding. 450 We are not attempting to seek preapproval for the methodology in that proceeding. That would be the appropriate place for Ms. DeMarco, Mr. Shepherd, and other intervenors that are interested in raising questions about the applicability of that methodology, if it is also included in that subsequent filing, that is the appropriate form for questions to be raised and not to start hypothetically considering whether such methodology is appropriate. 451 And if I might just briefly take the Board back to where Ms. DeMarco referred to the evidence, and I respectfully suggest that what the company has done in its filing, at Exhibit A.2, tab 5, schedule 1, is really consistent with what also occurred in the earlier consultative proceedings, which is simply a foreshadowing of what may occur in the future as opposed to ask for approval for something within the present application. 452 It draws me into asking myself, had the company not proceeded with any sort of consultative process, had the company not made any reference to what might happen in future, what would the response of parties have been in the absence of such informative information? Our respectful position is that it is appropriate to indicate what may occur in the future, but we are not asking for approval in respect of a fiscal 2004 and that's what is set out in paragraph 19 of the schedule 1, Exhibit A.2, tab 5. 453 So it's our respectful submission to distinguish between the approvals actually sought by the company in this proceeding and where it is simply, for information purposes, advising the Board and intervenors of what the future may show. Those are our submissions, and we, of course, stand by Mr. Cass's submission that we'd ask that those words be removed, "and beyond." 454 MR. BETTS: Thank you. Are there any parties that wish to speak further against those two words being left in that issue? Then, Ms. DeMarco, is there any reply you would like to make? 455 REPLY SUBMISSIONS BY MS. DEMARCO: 456 MS. DEMARCO: Just in response to the last point raised by Mr. O'Leary. I wonder if we could refer specifically to the wording used by he company as being quite indicative of what the intentions are. What we don't see here is some indication that Enbridge may or might come forward with a storage application. We see a clear indication that it is its intention to move its storage assets out of the utility. And again, the company has referred to Mr. Grant confirming that it will come forward in the next weeks with such intention. This is not a hypothetical, this is a reality. What we don't want to see here is an undisclosed road built in segments. We want to see the entire process, the mechanism considered in the context in which it should be considered; that is, the big picture. 457 MR. BETTS: Thank you. That will conclude the submissions on that issue and the Board will consider that as we conclude the discussion portion. 458 Staff, correct me if I'm wrong, that brings us -- which is the next issue that is under contention? Perhaps Mr. Moran can help me with that. 459 MR. MORAN: I think the school board's issue will be the next one. 460 MR. BETTS: Are we up to 12.7? 461 MR. MORAN: I think that's right, sir. 462 MR. BETTS: Okay. And if that is correct, and I'm going to take it as being correct, can the party that is promoting this position please identify themselves and make their submission. 463 MR. BELL: Thank you, Mr. Chair. 464 ISSUE 12.7: 465 SUBMISSIONS BY MR. BELL: 466 MR. BELL: Not surprisingly, this issue is being proposed by me on behalf of my clients, initially the Ontario Public School Boards' Association. It's John Bell. 467 You've accurately described the issue as 12.7 on page 5 of the proposed issues list, which reads succinctly: "Rate relief for publicly-funded school boards for the 2003 test year." 468 Now sirs, let me say at the outset what my submissions will be in essence are. We're not asking you in substance to give us relief in respect of this base year that you have not granted to other segments of society in other hearings historically, whether they be residential rate-users or tobacco farmers in southwestern Ontario. 469 If you don't agree with that submission, then our submission is you have the authority to deal with this matter in your hearing pursuant to the extraordinarily broad mandate that your legislation, and in particular section 36, gives you. Most notably, that mandate by a panel of this very Board, Mr. Betts, you presiding, the decision issued yesterday, if I can just refer you to page 175 of that -- and you need not bring it up, I'm only going to read a sentence at paragraph 5.11.82. In dealing with the push and pull between what Enbridge says is your limited authority and what the intervenors said was your wider authority in the context of that case, this panel said as follows -- that panel said as follows: "While historically the Board has referred to an order granted under section 36 as a 'rate order' there is nothing in this provision that limits the Board's jurisdiction to only setting rates." In my respectful submission, that's indicative, of the evolution of the mandate -- of the discussion of the mandate that this Board has. 470 We are simply saying to you, by that issue, that the applicable rates for publicly-funded school boards for the year in question are not just and reasonable. And we intend, after leading evidence, to try to persuade you in the case that the evidence is sufficient for you to exercise your discretion within the subsets of section 32 and substitute or fix other rates. That, I say respectfully, is not novel. 471 Now, sir, permit me a moment just to give you a background of who we are, and I might say, since we obtained intervenor status, we've grown. The original application for intervenor status as granted, was to the Ontario Public School Board Association. That is an association in excess of 50 members, most of whom are non-Catholic public school boards. But there were also some educational settings within children's hospital rehabilitation facilities. Like the Bloorview Hugh MacMillan Centre located in Toronto is a member Board and is subject to the organisation of my client's association. 472 Since that time, I am able to report to you today that my client in its efforts as intervenor in this proceeding are fully and actively supported by the other three associations that encompass all of the other publicly-funded school boards in Ontario, and they would be the Ontario Catholic Trustees Association, and I won't fracture the French, I will refer to the other two associations as the French public boards, of which there are six in the province, and the French Catholic boards, of which there are five in the province. 473 And so I sit here before you, Mr. Chair and Mr. Dominy, representing all publicly funded school boards in this province and all the 2 million primary and secondary children that attend those schools. 474 Now, why do I put it that way? Well, sir, when you examine our legislation, the Education Act and the related statutes and regulations thereunder, one thing is clear from the very beginning: That we are charged with that part of the public interest, education. And my associate member's objections flow from that legislation and through that legislation requiring it to maintain and protect that part of the public interest. And simply stated in this case, I'm here on behalf of my clients saying to this Board, this part of the public interest is in trouble. 475 And so I sit here before you today, Mr. Chair and Mr. Dominy, representing all publicly funded school boards in this province and all of the 2 million primary and secondary children that attend those schools. 476 Now, why do I put it that way? Well, sir, when you examine our legislation, the Education Act and the related statutes and regulations thereunder, one thing is clear from the very beginning, that we are charged with that part of the public interest, education. And my associate member's objections flow from that legislation and through that legislation requiring it to maintain and protect that part of the public interest. And simply stated in this case, I'm here on behalf of my clients saying to this Board, this part of the public interest is in trouble and it needs this tribunal, as the only place we can go, to exercise its discretion and to fulfil its obligation as a protector of the public interest. Not, Mr. Chair, to give me judgment today as we are seeking in 12.7, although if you'd like to I'd be happy, but merely to place the issue on the list for a hearing. 477 Now, just to take Mr. Cass's first submission, he urges you not to get involved in this because this has something that he describes as an ability-to-pay argument and you don't do those things. Well, sir, to that position I have two responses. 478 If you take Mr. Cass's position to its extreme, if every ratepayer of Enbridge's was in -- in Ontario was represented in this room and they were all saying, in substance, what we are saying, Mr. Cass would have you ignore that and just merely proceed as this is a rate case and we'll set rates. Well, yesterday you said no to that in another context, and in my respectful submission, when you have an issue that is of such significance to the province of Ontario as education is in the context of energy, your obligation vis-a-vis the public interest and your mandate within section 36 requires you, sir, at least to put it on the list and let us have our day to try and persuade you on the evidence that those rates are not just and reasonable and that you should be substituting other rates therefor. 479 The other main submission Mr. Cass made and would have you accept is don't fall down the slippery slope of underfunding public education in this province. That's a political issue. Well, with respect to Mr. Cass, I would have thought that's a social issue, and this Board and its -- the legislation that empowers this Board and directs this Board is what I call, sir, respectfully social policy legislation. 480 Just as an aside, Supreme Court of Canada in cases like Simpson Sears and O'Malley say that social policy legislation is to be given wide and liberal interpretation in its interpretation and in its application. So, sir, respectfully it's not a political issue. The question of whether schools have been underfunded is an issue that's passed. That answer was made two weeks ago, or last week. 481 The issue of whether or not my clients throughout this province are able to maintain their obligations under their legislation given the current level of energy rates is the issue that we say needs to be addressed by this tribunal. 482 Now, I must confess, sir, when I examined the rules of the Board in respect of proceedings like today, I didn't see a test to be applied to persuade you that I should stay on the list, so I've concluded with some assistance of your counsel that the test is relevance. That would seem to be the appropriate and probably the reason why it's unstated in the rules. 483 Well, sir, on that test, for you to decide whether to add an issue or not, you must just ask yourself, does it come within -- does it come within the subject matter of the application and is it consistent or is it part of our mandate to, if we were persuaded, grant the relief or grant the order sought. And, sir, in my respectful submission, when you read your mandate, as this Board has interpreted it, as the courts have interpreted it, and, as I say, a significant number of legal counsel in this room and otherwise have interpreted it, you have the authority to grant this type of relief to us. And I say respectfully, sir, when a party comes to you and seeks to have that type of relief that is within your mandate, it is not appropriate, as a matter of law, for you to say no to that issue at this stage. You may not agree with it, you may not like it, you may think it adds to the proceedings by a day or a day and a half, but respectfully, sir, that's why you're here, is to hear all of the relevant issues in this case. 484 If you were to do otherwise, it would be the same as a court refusing to hear an application for injunctive relief just because. Courts will hear those all the time and then they dismiss or allow, as the case may be. What they do is they give the parties the opportunity of having their "day in court." And that's all we're asking here, sir, at this stage. 485 If you were to take the view Mr. Cass urges on you, that dismiss it now out of hand and never give it a chance, I say respectfully, sir, you will not be giving the law in this area a chance to evolve. And it is probably correct that school boards publicly funded or otherwise have not come before you in this context, but that doesn't mean, sir, that it's not appropriate, correct, necessary, and that you have the full authority to allow it to be placed on the issues list and to allow us to lead evidence. And during that hearing, sir, it's fair game for you to push us and others to push us to a fair proof of what it is we're seeking. We accept that. We're only asking for the chance. 486 The law, sir, I'd just make reference to a case that we turned up in preparation for this, it's RP-1999-0031, it's an NRG case and there's two significant features of that case. 487 When you look at paragraph 3.1.11, and these are in respect of 2000 rates, in the context of what rates you are going to determine as just and reasonable for residential ratepayers, the panel said as follows: "In previous hearings, the Board had expressed concern that the rate 1 residential rates not increase more than the expected rate of inflation." 488 Sir, that's rate relief, I say respectfully. You may not phrase it as such, and maybe my words are not the appropriate ones chosen, but that grants a class of society, a group of society, relief. It does not pass on the entire cost of service in its proportionality to that class. 489 In the same decision, sir, at page 26, at paragraph 3.1.14 dealing with tobacco farmers, you will see in a graph set out in that -- on that page that tobacco farmers are fixed as a rate as accepted by this Board of less than 70 per cent of the utility's cost. And there are reasons set out for that. Those reasons are not the reasons we're going to bring you, and, with respect, that's irrelevant, but this Board identified circumstances and reasons where it would provide relief from the 1:1 ratio. 490 In this case, sir, and you can find it in the applicant's cost allocation study, Exhibit G.2, tab 1, schedule 1, at page 3, they are seeking rates for my client at 101 per cent of the cost of service. We want you an opportunity to persuade you that we should be closer to the tobacco farmers, and I don't say that pejoratively. 491 Absent any questions of the panel, I don't have any other submissions. 492 MR. BETTS: Thank you, Mr. Bell. 493 [The Board confers] 494 MR. BETTS: Yes, we do have a question, Mr. Bell. 495 QUESTIONS FROM THE BOARD: 496 MR. DOMINY: Mr. Bell, your question about the just and reasonable rate for the class to which you belong. Would that be captured by 12.8? 497 MR. BELL: Well, sir, forgive this answer. I don't mean to be flip or to try to duck it, but the reason we have two is because we wanted to make sure that there was no -- absolutely no doubt and no constraint on us to seek relief for this 2003 test year. Now, the panel may view otherwise. If you view that 12.7 is already subsumed in 12.8 -- and, sir, in any event, sir, if it is then it would not, for clarity, hurt the -- it would assist the panel, in my respectful submission, for clarity, to leave it separate. We've had a taste today -- I'm not going to admit the last time I was in front of the Ontario Energy Board. I don't look that old. I'll say it on the record that I'm about to become a grandfather, so this is all new to me in more ways than one. But we've had examples today, sir, where the written word requires clarification, and whenever you get more than two members of my profession in a room looking at words, you know you get a whole bunch of different interpretations. So our comfort level is 12.7 as is. Not my -- my mother not raising a stupid son, if you feel you'd like 12.7 out, only do so, sir, with the express provision that our ability to do -- to try and do and lead evidence and persuade you of what I've indicated is not foreclosed. 498 MR. DOMINY: I think my question related to the term "rate relief" because the way I interpret that word is that a special rate was required for school Board compared to the rates for the class they were in, or was it a question that the rates for the class they were in need to be examined to make sure they are appropriately fair. "Rate relief" sounds to me like some mechanism to offset the rate for that class. 499 MR. BELL: I'll try to answer it this way, sir. We're aware of the conventional way that -- 12.8 asks for a rate design to suit -- unique to school boards, or a rate designed unique to school boards. We're aware that, conventionally, those things take time to study. We haven't got time. So what 12.7 seeks is an immediate -- when I say "immediate" in the context of this application -- relief. I'm not going to presume at this stage of the hearing of suggesting to the panel how many ways you can order that and have it implemented; there are many ways. But does that answer your question, sir? 500 MR. DOMINY: I think I understand where you're coming from. Thank you. 501 MR. BELL: Thank you. 502 MR. BETTS: Thank you. Are there any other parties present that would speak in favour of keeping this issue on the list? 503 May I hear submissions from parties that would speak in favour of removing this issue from the list. 504 Mr. O'Leary. 505 MR. O'LEARY: Unless there's another party -- 506 MR. BETTS: Is there any other party? 507 MR. MATTSON: Do you want me to go first? 508 MR. BETTS: Yes, please. 509 SUBMISSIONS BY MR. MATTSON: 510 MR. MATTSON: Mark Mattson again, Mr. Chairman, for Energy Probe. 511 This clearly is an issue that, if permitted to remain on the issues list, will give this process a great deal of trouble, not only in this hearing but in the future, and my friend's arguments really are looking at this process in a backwards manner. 512 The public schools -- the publicly-funded school boards belong to a rate class currently, rate 6 and rate 100, and as such they will have their day before you in this public utility Board regulation where they're able to come forward and argue whether those rates are just and reasonable. And of course, in looking at that just and reasonableness, they look at all the other rate classes. And my friend, for example, has concerns with respect to tobacco farmers. It's not appropriate in this process to come forward and ask for subsidies such as the tobacco farmers have. This intervenor, and the public schools have been here before, can come before you and argue that those subsidies aren't appropriate because they're putting to great an onus on their client. What we have here is a process that tries to remain apolitical. It is quasi-judicial. It enforces standards and rules to try and arrive at fair and just rates. It is not a forum for arguments about -- I want to be careful how I phrase it, but it's not a forum for bringing arguments about political considerations or social considerations such that one party receives benefits over another. Certainly that's something the government can do; that's something the government should do. That's something that, for example, our tax system deals. That's something that publicly-funded government activities deal with. There's all kinds of alternatives for my friends to go and seek the relief they want. 513 But to move into this process, this quasi-judicial process that's based on a hundred years of rules and norms that are called public utility regulation, and now turn this into a forum for resolving considerations about public funds or who should get more favors than another, would truly, in my client's estimation put a real dagger into the heart of this process. This process is cleared established as a forum for fairness, transparency, setting fair rates. We can all argument about whether one class should be given a subsidy over another, and we can look for fairness in that respect, but we are not here to hear pleas from certain segments of society that they should be given favours because they represent a group of people that somehow or another deserve special attention. That's something that we should keep in the political forum, and that's the appropriate place for it. 514 So I think the Board has a long and very -- has a long and very successful record with respect to setting rates through public utility regulation. Certainly the Board has avoided political issues in the past, and I would highly recommend that the Board reject any attempt to try and turn this process into more of an -- into a situation where we're dealing with different parties looking for benefits such that those benefits will be put on other sectors of society. So, for example, if the public school Board had a rate relief, what then happens to welfare mothers? Why wouldn't they come hear as well and look for that relief? What about the handicapped? What about non-profits? What about -- all these other groups are represented out there and all could use the same argument. And if you have to then begin to allocate how to assess rates based on those factors, I think you're beginning to do the job of government and you've stepped and left the role of what you'd like to do which is set and enforce rates based on standards and clear principles. 515 Those are our arguments on this issue. I hope they help. 516 MR. BETTS: Thank you, Mr. Mattson. 517 Any further submissions on this? Mr. Janigan. 518 SUBMISSIONS BY MR. JANIGAN: 519 MR. JANIGAN: Let me first address some points that were raised earlier in submissions that are kind of loose ends, and I just wanted to touch upon them briefly. 520 Particularly with respect to Mr. Dominy's point on 12.7 and 12.8, my understanding of the effect of those two clauses is that 12.8 consists of a review of the rate classes that serve the public school boards, and the review was done in accordance with the standard kind of cost allocation and rate design review that the Board has applied for a number of years, in effect, looking at the principles set out in Bonbright and to see whether or not they have been fairly allocated or put in a rate class where there are fair allocations or whether a special rate class should be designed to reflect the appropriate cost allocations for a school Board. It's a very straightahead review that's taken place. 521 12.7, as I understand it, asks the Board to consider fashioning a special rate, or rate relief for the school boards which may be based on principles other than cost allocation and rate design. That is my understanding in speaking on 12.7 versus 12.8. 522 Let me also state that I disagree with the submissions of Mr. Cass that, in effect, the Board cannot look to the impact of their rates upon customers in fashioning their rates. The principle of avoiding rate shock is a very well-known principle in design of rates and, in effect, what the Board is looking to there is the actual impact upon customers in fashioning their rates which are just and reasonable. 523 Secondly, I believe it is also possible for the Board to design special rates, if it so chooses, that would fall within the category of just and reasonable but meet such purposes that they're designed to serve the public interest of the Board. If the Board so chooses, it may wish to set up things like lifeline programmes for lower income customers. It may wish to set up special rates for a different -- other categories of customers, daycare centers, hospitals, schools. I believe that's within its power to set those rates, if it so desires to set those rates. 524 But in my submission, the way in which the Board should consider that is not in the context of a rate proceeding, it's in the context of a generic proceeding to examine all these issues. As the panel may be aware, in the United States, commissions across the United States spend probably 10 to 15 per cent of their time dealing with these kinds of issues, in the design of lifeline services, who will qualify, who will administer it, whether or not you're going to get cooperation from the government, where the monies are going to come from in terms of the rates to support these kinds of programmes, what kind of uptake they're having, what kind of success. If you read their decisions, these are complex issues that require a lot of assistance and study both initially to set the framework and as well to administer the framework. It seems to me that if we're -- if the Board is desirous in going in this route, it should go about it in an appropriate way by way of a generic proceeding that considers these kinds of issues and decides whether or not it is time to look at things like lifeline rates. 525 I might say that, for the most part, when the boards and commissions have designed these without the assistance of -- specific direction from legislation, I believe they design these to meet system objectives, such as maintaining connectiveness to the system or elimination of bad debts, where there has been a system objective that's been pursued in addition to the social objective which would be obviously to maintain connectiveness to the system, to maintain -- to avoid customers falling off the system by reason of the ability to pay. 526 So we are not adverse to the Board at some point in time considering these kinds of questions, but we are adverse to them considering it in the context of only one customer. Rate relief or rate equity involves not only a consideration of the circumstances of one customer, it involves consideration of the circumstances of all the customer classes to determine the relative degrees of concern. 527 So we, unfortunately, cannot support the request to put 12.7 on this list. We may, in fact, support an attempt by the Board to examine these kinds of issues in the future, whether or not specific rates should be designed for -- to meet certain public interest or system principles. But at this time we do not support adding 12.7 to the list. 528 MR. BETTS: Thank you. 529 Are there any further submissions? 530 Mr. O'Leary, did you have anything to add to Mr. Cass's original comments? 531 MR. O'LEARY: Just several brief comments, Mr. Chair. 532 SUBMISSIONS BY MR. O'LEARY: 533 MR. O'LEARY: It was Mr. Bell's submission that if Mr. Cass's submissions were accepted by the Board that would effectively muzzle the publicly-funded schools, and it's our position that there is certainly adequate room within issue 12.8 for the Board to exercise its mandate and consider all of the relevant issues that would be raised in respect of the treatment of publicly-funded schools and rate design. And what that intervenor, we submit, really requesting the Board to embark upon, is the threshold test of whether or not it is adequately funded, and it raises a number of very interesting, politically interesting, but very difficult questions that it is -- our submission is that it's not within the mandate of this Board to consider and to ultimately rule upon, not least of which the first reason is that it's virtually impossible to make a determination. 534 We've recently been advised through the media that the government is now going to be funding schools to the extent of another $600 million, I believe. We're also aware that there may be an upcoming provincial election in the next six months or so. If a new government is elected, is that government going to provide additional funding? And then at that stage in his proceeding, if it is still continuing, will there be evidence as to what that government proposes to do? And will this Board be invited then to determine whether or not this intervenor has the ability to pay at this point? What is the level of adequate funding? It becomes very much a political question and, in a sense, it's one wing of the government asking another wing of the government help provide the funding that it says is required. 535 It's our submission that this is not the forum for a political determination to be made, and I share the views of those that have indicated that, in so many words, it might tend to open the flood gates, and it might invite other parties, who are similarly publicly funded federally, provincially and municipally, which would not exclude the hospitals; which would not exclude many municipal services from similarly attempting to add to the issues list their reasons why they aren't adequately funded and why there should be rate relief for that particular subclass of a rate class to be given special treatment. 536 So our position remains, Mr. Chair, that 12.7 should be excluded from the issues list. 537 MR. BETTS: Thank you. Does that conclude the submissions from parties wishing to see that item excluded? 538 Mr. Bell, reply. 539 REPLY SUBMISSIONS BY MR. BELL: 540 MR. BELL: Just briefly, sir. 541 Absent Enbridge, I'd like you to take note, sir, that I view it highly significant that there is only one other intervenor that objects to that issue on a list as a matter of principle, where that is expressed, and that's the Pollution Probe counsel -- I'm sorry, Energy Probe, who, again, categorises it as political, not the forum for arguments and political considerations. 542 I repeat, and with the greatest of respect, my friend's approach, in his submissions to you, are naive. He ignores the fact that there is no other forum for us to go to. The issue of the -- of rate relief and seeking a new rate for school boards is a social issue, sir, within the context of the public interest that we represent. 543 My friend, counsel to VECC, I understand his position to be, I don't object in principle, I'd like to see it in a more generic proceeding, but I don't want to see it here today because my client's not doing it. There may be good and sufficient reasons why his client chooses not to do it, or to add to that list and try and broaden it, and I'm certainly not going to question those. But there wasn't an objection given by my friend to the principle of this issue on your list. 544 We don't have a generic hearing, sir. This may well be something that this Board in the future will consider as expanding your section 36 authority even further. But we only have one proceeding. This is it. We're here. We're asking to have our day in court. 545 My friend's questions about, well, what do we have to do as this hearing unfolds if we have elections or if we have more money thrown at school boards. He's not accurate in his numbers and perhaps neglected to tell you that it's a phase-in over the next three school years, but that's another issue. But whether there's ongoing adequate funding, with respect, sir, is not going to be the type of evidence that you're going to want to hear from us. Given all of the money that Rozanski put in his report last week, you're going to want to know whether we can still pay our bills. That's not political, that's social. That's the real world. 546 I was admonished by my partner Shepherd not to become emotional in these proceedings because of the subject matter. As you will see, sir, as this proceeding unfolds, I honour that more in the breach than in the observance, and so for my emotional outburst, I apologise. But this subject is pretty dear to me and I certainly know it's dear to my clients. Thank you for your attention. 547 MR. BETTS: Thank you very much. We will move on to the next contentious issue, and by my notes it appears to be 13.3. I will read it for the record. It is "Enbridge Gas Distribution Inc.'s proposal to recover the entire fiscal 2003 test year revenue deficiency on a retroactive basis when final rates become effective." 548 Mr. Cass has spoken to that. Can I receive submissions from parties who support the inclusion of this issue on the list. 549 ISSUE 13.3: 550 SUBMISSIONS BY MR. MATTSON: 551 MR. MATTSON: Thank you, Mr. Chair. Just briefly, as I understand it, there isn't a lead party on this one. 552 Mr. Cass has, I think, incorrectly named -- categorised this issue as somehow having the potential to end up as a punishment or a fine to his company. I think that's an incorrect word. I think what we're looking at here clearly is an issue of fairness. That's the word that should be used. Fairness really is at the heart of this issue for ratepayers. Mr. Cass's comments about how this is a fairly high-profile issue currently as it does affect the other major LDC in the province. We know that, as well, that it has raised some concern in the press and even the government. And as the quasi-judicial public utility Board, whose one and major concern is fairness with respect to the ratepayers certainly I see this as a relevant issue and should be dealt with in the context of this hearing. 553 The only argument, really, that my friend, Mr. Cass, put forward that I thought might, in any way, detract from the relevancy argument because I think it's clearly relevant, is his contention that there is a current alternative process under way, the 100-day review. Let me just for a moment indicate my concern about that argument. 554 The issue as it's framed here, 13.3, in fact 13.2, but 13.3, before this Board will be dealt with in a fair manner according to set rules. It's a transparent Board, it's a public Board. There are interrogatories, opportunities for cross-examination. The Board issues reasons with decision. You have clear purposing guidelines as to who you're looking to protect and you have a long history with respect to helping you make those decisions. 555 This 100-day review, to even be called a comparable process, is so ridiculous. This is a -- this is a political review where the ruling -- where the ruling government of the day is calling for submissions. They're not transparent, they are not cross-examined, they are not put to a test of evidence, they're just looking for opinions and they're looking for opinions in order to deal with an issue that's come through the political process. Completely different. It's not even apples to oranges. It's like apples to rocks. This is a clear independent process that has clear rules that we're looking to get at with respect to the ratepayers. The 100-day review is simply -- it has its political purpose and I'm sure it will serve its role but it in no way is a conqueurable process or in any way should put this Board off the issue where you have the statutory responsibility to deal with this issue and consumers in no way should convince you that in some way you should better that discretion and surplant it with this 100-day review that the government is doing. 556 That's the only argument that I saw that Mr. Cass put forward that I thought might weigh in favour of their argument. Otherwise, I think Mr. Cass clearly made it through his submissions, made it clear that this was a really relevant issue that affects ratepayers and is an issue of fairness. And hopefully it's just speculation on his part, I don't see that anybody sees it as an issue of punishment or blaming. I think it really is an issue of fairness and I think the company should not jump to any conclusions on that basis and let it go forward to the hearing. Thank you. 557 MR. BETTS: Thank you, Mr. Mattson. Any further submissions? 558 MR. SHEPHERD: Thank you, Mr. Chairman. I think we should ask Mr. Mattson whether apples to rocks is copyrighted because we might all like to use it. 559 SUBMISSIONS BY MR. SHEPHERD: 560 MR. SHEPHERD: Mr. Chairman, 13.3 as I understand it is nothing more than the discussion of the effective date of any increase. It's nothing more or less than that. The applicant has come forward saying they would like an increase effective October 1st, and there are intervenors who wish to make the submission that a different date is appropriate. 561 It's a fact that because the process is running late, Enbridge will be seeking to recover, in their current application they will be seeking to recover something like 80 or $100 million from ratepayers on a retroactive basis. It is possible that you could spend the time to assign blame for that, and I'm not going to say that some of my colleagues wouldn't like to do that, but I don't think that's a particularly useful exercise. There is, however, one issue that's crystal clear: Someone is going to have to bare the pain of that 80 to $100 million. That's not a question, someone is going to bear some pain for that. It could be the ratepayers or it could be the shareholder, or it could be somewhere in between, some compromise. 562 This is not about who should bear it today, this is about whether intervenors should be able to come and make the point that it should be shared or it should be someone other than the ratepayers should bear that pain. That's all it's about. And it seems to me difficult to imagine that this Board could say that the effective date of a rate increase is not an issue in its case. 563 Those are our submissions. 564 MR. BETTS: Thank you, Mr. Shepherd. 565 Any further submissions? Mr. Janigan. 566 SUBMISSIONS BY MR. JANIGAN: 567 MR. JANIGAN: Yes, Mr. Chairman. I would once again stress that this is, of course, a proceeding intended to set up the issues list for the proceeding, it's not intended to determine those issues, and in the context of that, this particular issue should remain. 568 I have heard the submissions by Mr. Cass and I understand where he's coming from in his view that essentially this issue, framed as it is, has you shopping for a fall-guy for the problems associated with recovering efficiencies on a retroactive basis. 569 But I think the questions that have to be asked is, first of all, is this an issue that should be considered by the Board, and the answer is yes. 570 Secondly, is it an issue that the Board and stakeholders should publicly note has been addressed and considered in this proceeding, and I think the answer to that is also yes. 571 So for those two reasons I would suggest that 13.3 remains on the issues list. 572 MR. BETTS: Thank you. Any further submissions? Anything to add to Mr. Cass's original comments, Mr. O'Leary? Oh, I'm sorry, I didn't see the hand down there. 573 SUBMISSIONS BY MR. HAYNAL: 574 MR. HAYNAL: Mr. Chairman, when you asked whether there was any further submission, I interpreted that you wanted to know if anybody wants to keep that issue, 13.3, on the issues list. My client, which is TransCanada Pipelines, and I am Tibor Haynal, supports Enbridge's position that issue 13.3 should be removed from the list. 575 MR. BETTS: Okay. And is that your submission? You certainly can continue if you would like to, if you would like to add to that. 576 MR. HAYNAL: Well, I can't add too much to Mr. Cass's very good description this morning. Why should that issue be removed? TransCanada reads or interprets this issue the same way as Mr. Shepherd does. This is the issue of what should be the effective date of the fiscal year 2003 rates, and all I can add is that it is not unusual that a utility's rates are approved by either the OEB or NEB after the requested effective date which is usually the first day of the fiscal year of the utility. That's all I can say. 577 MR. BETTS: Thank you, Mr. Haynal. Any further submissions, then, suggesting that this should be removed? 578 MR. BETTS: Mr. O'Leary. 579 SUBMISSIONS BY MR. O'LEARY: 580 MR. O'LEARY: Just on behalf of the company, Mr. Chair, one or two brief points, and that is, if I understood Mr. Mattson's comments correctly when he spoke about his understanding of what the issue before the Board is and that is one of fairness, fairness of the implementation of rates, it's our submission that that issue can be dealt with in -- under both issues 13.1 and 13.2, and that the issue of fairness relates not only to a fairness to the ratepayers but also a fairness to the shareholder, and that any inquiry into where we are presently, any attempt to move down the road of finger-pointing, is not helpful in this proceeding and that the issue is one of fair implementation of rates. 581 There is the 100-day review, as Mr. Cass referred to. There were submissions made by numerous parties in respect of the process there. Issue 13.1 similarly invites parties to prepare and file proposals for improving the regulatory process, but we respectfully submit that an issue that, in any way, contemplates or suggests that there should be some sort of punitive or penal result to the timing of the filing and where we are today is inappropriate and we'd request that 13.3 be removed. 582 MR. BETTS: Thank you. 583 There really is not a party that is presenting this, and from that point of view I won't be expecting a reply from anybody. What we will, I think, do is simply acknowledge those submissions and consider those in making our final decision. 584 We will move then to the items in section 16. There are three of them. I believe they are all being promoted by one party, and perhaps -- is that Mr. Dingwall that will be presenting those? 585 MR. DINGWALL: That's correct, sir. 586 MR. MATTSON: With your permission, sir, we're not on that issue so I would like to take my leave. 587 MR. BETTS: Thank you. 588 MS. DEMARCO: Likewise, Mr. Chair; I would like to take my leave as well. 589 MR. BETTS: All right. 590 Mr. Dingwall, please proceed to present your case. 591 MR. DINGWALL: Thank you, sir. 592 ISSUES 16.1 TO 16.3: 593 SUBMISSIONS BY MR. DINGWALL: 594 MR. DINGWALL: Before getting into he three issues, I want to get a little into the background about the Coalition, about its history, very briefly, and about where we are today that we haven't been for the last couple of years and why we're here with these issues today. 595 The HVAC Coalition has been intervening in Ontario Energy Board proceedings for approximately 10 years. Both their previous counsel are on either side of me, now in other roles, of course. 596 The Coalition's focus has been as a competitive industry trying to keep a handle, keep an eye, monitor and come to a common ground with Enbridge where we've, in the past, had both our feet in the same industry, our fingers knocking on the same doors, various types of corporate interrelations. At this point in time, uniquely over the past 10 years, Enbridge does not have an affiliate in the business. Enbridge has sold its affiliate to a third party; the third party, however, uniquely, has inherited the billing relationship with the customer. From what I understand from interrogatory responses, I understand that that relationship is going to continue until December 31st, 2005. That relationship involves not only the billing of existing hot water heater contracts, service contracts, et cetera, but also the marketing to new customers of those very same products and additional products through the utility bill. It also involves collection of amounts from customers through the utility bill for those products and services. 597 At this point in time, they're not an affiliate of Enbridge, there is some question -- frankly I submit there's no question -- of whether, if the HVAC has a concern about an abuse of that relationship, there's no question of whether or not they can come to this forum under a complaint through the affiliate code because the purchaser of those assets, of that company, is not an affiliate. It's an arm's length company owned by third parties. In the past, when the Coalition has had issues with the interaction between the utility bill and the affiliate and the whole billing relationship, there has been recourse through the affiliate code to come forward and to seek redress of what have been perceived as transgressions. 598 Now, in looking at where we are today, this is a rates case. This is the first opportunity in a number of circumstances to address the base O&M costs for the foreseeable number of years coming up. In that context we've tried to frame these issues in a fashion that puts them in not only relevance but also takes into account the shifting sands of new legislation and regulation. And when I woke up yesterday things were quite different by the time I went to bed. I found that gas distribution access rule had been proclaimed. There was a new requirement for "the gas distributors shall provide gas distribution services in a non-discriminatory manner, with distribution services meaning services related to the delivery of gas to a consumer, including related safety functions such as emergency leak response, line location, inspection, provision of safety information." 599 That relates, to a certain extent, to 16.1. And this issue has been kind of a placeholder over the last couple of years. It comes up every once in a while as the rules change and as the sands shift and as O&M base rates cases come up again and as the interaction between the parties changes, through different affiliations, different contractual relationships, different shifts in the market structure. It becomes necessary again to have a look at where things are, possibly cover things off through interrogatories, see how the utility is contracting with subcontractors who are HVAC dealers, essentially, with the same professional qualifications, the same type of service people, how they are contracting with them, in a fashion that meets the requirement of objectivity and monopoly. And it's conceivable that this issue may fall off the table once we've completed the interrogatory process, as that was the focus of this issue. 600 The second two issues relate to what we have in the market with a competitor who is unregulated having what appears to be exclusive access to the utility bill for the ongoing billing and ongoing marketing of customers. And within that we've tried to frame 16.2 in a fashion which acknowledges the types of tests that come up in an O&M review period. We'd originally proposed that 16.2 and 16.3 be subsumed under the issues of affiliate outsourcing with respect to the CWLP relationship, and in asking the question of clarification on issues day, there was disagreement with the company on whether or not they would agree that these concerns be subsumed within that issue. I'd suggest that we look to have the relevance of that confirmed through this disputed issue which has been presented under other items. 601 So with respect to this particular issue, 16.2, the intention is to review "The implications to ratepayers and the competitive HVAC marketplace of HVAC and other ancillary services charges continuing being billed and collected through the utility gas distribution bill." 602 There is some probative requirement that this be reviewed in order to determine whether there is a benefit or a burden to the ratepayers, which is a legitimate test of the relationship, we would submit, under the outsourcing criteria as discussed in 00132, the decision that came out yesterday. And the need to also determine whether there is an impact in the way that the structure is set up through the relationship. 603 The CWLP contract was approved solely on an O&M cost base in the last proceeding. It was suggested within the decision framework that it was necessary to look at the prudential aspects of it: Whether this aspect was prudently entered into, what the terms and conditions are. And to that extent, we've asked a number of interrogatories, some of which have borne fruit in the near term. One interrogatory has determined that when a customer does not pay their whole bill, or it's a combined bill which has HVAC services and utility services on it, that the cost allocation is not first to the utility services which is the law in many jurisdictions. The cost allocation is more of a combination, and the formula wasn't specified within the interrogatory response. 604 That raises the question of whether or not there is a competitive subsidy through the billing and through the collection structure in the CWLP contract. We'd like to explore that further. We believe that could be to the detriment of the ratepayers. We believe that could be to the detriment of the competitive marketplace. 605 In addition, we've asked a number of interrogatories on what the collection procedures are. If both charges are on the same bill, and Enbridge is the only company that's -- pardon me, Enbridge Gas Distribution, just so we're clear -- is the only company that's making an effort to do the collection, what are the parameters of the collection? Is there, through the rendering of those efforts, an additional competitive subsidy? 606 These are all questions which need to be answered and which need to be answered in order to give an indication of whether this relationship has been prudently entered into, whether it's appropriate, and what impacts, if any, there are on the competitive marketplace. 607 The third question raised as an issue here is what are "the implications and appropriateness of having only one party have exclusive access to the gas distribution bill for the billing and collection of HVAC services." 608 It's the intention of the Coalition to call evidence showing a refusal on the part of one of the Enbridge companies, and it's not clear from the correspondence which one it is yet, to allow another party onto the bills to provide a similar type of service. It's also the intention of the Coalition to call evidence that there is a significant economic value to having that service on an exclusive basis, if even at all. 609 One of the other questions that comes about is how is that value reflected to the rate base. In another interrogatory response, I believe to Board staff, one requesting the fee structure, the only benefit that appears quantified is a reduction in the bill printing cost in the event that there are two companies on the bill; the printing cost is cut in half. It doesn't discuss what other cost savings there might be, what other cost savings there could be in the future to ratepayers in the event that other parties were permitted access to the bill. 610 So the question comes about as part of this prudential review, is it appropriate for there to be exclusive access to one party for the bill. 611 Now, those are the, I guess, substantive portions of what these issues are supposed to cover, and I've talked about the absence of jurisdiction outside of this room due to the lack of affiliation to the purchaser of the service company. In addition to that, it's submitted respectfully that this Board does have a mandate to oversee the competitive marketplace. Within the Board findings on the HVAC complaint at paragraph 4.7.1, it is stated that the code has two principle objectives. First, to ensure that in the long term the actions of a regulated monopoly do not frustrate the operation of a competitive market, and, secondly, to ensure utility ratepayers are not harmed. 612 That's the way in which we framed the issues in order to try to encompass that goal. Moving further to the next paragraph: "The Board believes that these two objectives are intertwined. The Board recognizes that in this case -- particular case ECG's customers who were transferred ESI are also ratepayers. Therefore, in the long run it is in the interests of utility ratepayers that competitive markets operate openly and freely without undue influence from monopoly utilities." 613 Now, in moving on a bit, there were some discussions yesterday with respect to the Enbridge 2002 case, which is RP-2001-0032, under chapter 5.11.75, remedies and jurisdiction. In the Board's view, in order to fulfil the statutory objective of facilitating competition in the sale to gas users -- from the sale of gas to users, the Board must take into account all stages in the distribution chain. Merely because neither section 2 nor subsection 36.1," and they're referring to the OEB Act, "specifically refer to energy services, competitive services, competitive businesses, competitive markets, competitive energy activities, or competitive wholesale services does not mean that the Board should not be aware of these activities and take them into account when overseeing the regulated activities of ECG." 614 With to respect the jurisdiction of the Board as well, within the HVAC complaint decision, after making the determination that the bill was not a "utility service" as utility services was defined in the Affiliate Relationship Code, in pondering what remedies ought to be put in place in respect of this individual -- the transgressions that occurred that brought about the complaint, at chapter 4.7.24, it was stated that "the Board will not require ECG to bill separately from ESI at this time," implying that it was the Board's perception of its own power at the time the decision was written that it could have, or it could order a separation of the billing for non-competitive functions versus regulated functions. 615 Additionally, the Board has gone further in the gas distribution access rule-making to order that the utilities must accommodate vendor-consolidated billing where a retailer will be billing the distribution charges. 616 So I make those points to point out or to suggest that, dispute Mr. Cass's statement earlier in the day that a utility -- or the billing is not a utility service, per se, the Board does have a perception and that it has the power to make orders that bind the utility with respect to issues relating to how customers are billed. 617 Now, with respect to -- with respect to yesterday's decision in the Enbridge Gas Distribution case, there was also some discussion about what concerns must come about over pricing of outsourced transactions. At paragraph 5.11.43, it was stated that the utility must establish not merely that the affiliate outsourcing arrangements are cost neutral to the utility. These arrangements must in fact be of benefit to the utility. In other words, it would make no business sense for a utility to enter into outsourcing arrangements with an affiliate or third party unless the costs incurred for the same quality of service would be less than those incurred directly by the utility performing the service. This is particularly true when, as discussed above, the outsourcing arrangements raise a number of concerns that do not directly relate to the cost of the product or service, such as loss of expertise and loss of independence." Independence was raised as an additional critique of the whole outsourcing process which occurred in the past proceeding. Paragraph 5.11.23: "The Board also shares the concerns expressed by many intervenors concerning the potential for lack of independent action on behalf of ECG. As discussed in greater detail below, the Board reminds the management of ECG that it has an obligation to act independently from its shareholders with a view to acting in the best interests of the utility and its ratepayers." 618 Additionally, and why we think we're in this hearing and not in some other proceeding, there was no prudential review done on the previous proceeding of the outsourced arrangements. At paragraph 5.11.2, the Board also notes that the proceeding did not involve the potential review of ECG's affiliate outsourcing arrangements. Indeed, such a review was not possible since the outsourcing fees are included in ECG's TPBR plan and ECG refused to disclose the fees in this proceeding." 619 Finally, at paragraph 5.11.20, within that same decision, it's stated that the Board is not satisfied that merely maintaining the service quality indicators of the TPBR plan is sufficient to demonstrate improved quality service sufficient to justify ECG's affiliate outsourcing arrangements." 620 So with respect to all these points, it's submitted that not only are these issues appropriate and necessary for this hearing, but this is the best place for them to be. These issues involve a comprehensive review of an affiliate outsourcing arrangement which has never taken place before because of the structure of the last hearing. These issues involve the competitive marketplace which is clearly in the purview of the Board. These issues involve the impact of these outsourcing arrangements to ratepayers. It's respectfully submitted that that is why they should be in this hearing. 621 Additionally, with the absence of applicability of the affiliate code through that whole structure, there is no other forum in which to raise a complaint in the event of a transgression. Thank you. 622 MR. BETTS: Thank you. 623 Are there any parties that wish to speak in favour of keeping all or any one of these three items on the list? 624 Yes, Mr. Shepherd. 625 SUBMISSIONS BY MR. SHEPHERD: 626 MR. SHEPHERD: Thank you, Mr. Chairman. I adopt the submissions of my friend, Mr. Dingwall, and that shortens my considerably. 627 With respect to 16.1, I'm at a loss to know why that's in dispute, because it seems to me this is about subcontractors performing utility services and I'm hard pressed to understand how this Board wouldn't find it relevant to look at that. In fact, in yesterday's decision that has been quoted so much already, at 5.11.87, the Board says "The Board agrees with intervenors that to interpret this provision" -- that is, 3602 -- "otherwise would lead to the absurd conclusion that the utility would be able to sell gas or transmit, distribute, or store gas in any manner that it chose, and the Board's only recourse would be to limit the cost recovery in rates." 628 My sense of yesterday's decision, in fact, was that the Board was saying quite clearly we're not just looking at rates, we're looking at how you run this utility. We'll look at all the aspects of how you run this utility and in fact whether it's being run properly. So with respect to 16.1, I'm at a loss to see how there can be a dispute about that. 629 With respect to 16.2 and 16.3, I'm not going to make a general submission, but I do want to make one specific submission. It's my understanding that the -- this is really about Enbridge Services Inc., which is now a subsidiary of Centrica, I believe. It's my understanding that the business of Enbridge Services Inc. Was originally owned by the utility, was sold to Enbridge services Inc. As a part of unbundling I believe to $550 million. I could be wrong on that number, but it was somewhere in that range. And then the company was subsequently, not long after, a couple of years or a few years after, sold by Enbridge to Centrica for a billion dollars. There was a substantial gain, I believe. It may be that that gain was that it was run so well by Enbridge as a non-utility asset that its value increased enormously, or that the market changed and it was much better. I'm not going to take a position on that. But it also may be that part of that billion dollars was because Enbridge Services, owned by Centrica, would have preferential access to the bill. This was the bill that was generated for ratepayers. I think it's legitimate to ask the question if there was some part of that billion dollars relating to that, should that part be shared with the ratepayers? 630 Those are my submissions. 631 MR. BETTS: Thank you, Mr. Shepherd. 632 Anything further? Mr. Jan. 633 SUBMISSIONS BY MR. JANIGAN: 634 MR. JANIGAN: Yes, Mr. Chairman. On behalf of the CAC and of VECC, I would like to indicate our support for the items set out in 16, 16.1, 16.2, 16.3. In general, I support the submissions that were made to you by Mr. Dingwall. I believe that there are important implications to ratepayers, and as well potential implications to the competitiveness of the marketplace which is a concern of the Board, and I agree with the relevant citations that he has brought forward in support of the ability of the Board to deal with these issues. I believe it's appropriate for these issues to go forward in the context of these rate case. As I said, both CAC and VECC support this position. 635 MR. BETTS: Thank you. Are there any other supporters of that position? 636 Thank you. Now may I now hear from those that oppose those items being left on the issue list. 637 MR. MONDROW: If I might start, Mr. Chairman. 638 MR. BETTS: Yes, Mr. Mondrow. 639 SUBMISSIONS BY MR. MONDROW: 640 MR. MONDROW: I work for Direct Energy, which is a registered intervenor in this case. Direct Energy is owned by Centrica, and as Mr. Shepherd indicated, Centrica also owns Enbridge Services Inc. And the business combination between Direct Energy and Enbridge Services Inc., or ESI, is ongoing. It is ESI that shares the Customer Works Limited Partnership bill with the distribution company, Enbridge Gas Distribution. I note that contrary to Mr. Cass's submissions earlier today, it's not -- it's my understanding that we're not talking about an Enbridge bill, we're talking about a Customer Works Limited Partnership bill which includes the gas distribution charges and the Enbridge Services Inc. Water heater and other goods and services charges. 641 My comments today are made on behalf of the business which constitutes Direct Energy and Enbridge Services Inc., and if the issue proceeds on the list, despite our submissions, we will formally resolve, for the record, as it were, the status of ESI in respect of this proceeding given it's legally a sister company and not part of the registered intervenor, Direct Energy. I just wanted to raise that. And subject to objection from anyone else in the room and concern, I intend to proceed with my submissions on the basis I've just described. 642 MR. BETTS: Are there any objections to that? 643 Please proceed. 644 MR. MONDROW: Thank you. First of all, I think that -- 645 MR. BETTS: Mr. Mondrow, pause for one moment. 646 [The Board confers] 647 MR. BETTS: Thank you. Please proceed. 648 MR. MONDROW: Thank you, sir. 649 I think my submissions are primarily going to be by way of clarification of the issues that are underlined under the access to monopoly services classification, and then with respect to a subset of what I believe -- what I now believe, having heard the submissions of Mr. Dingwall, are encompassing these issues, we will object to their inclusion. But with respect to many of the other points by Mr. Dingwall, we won't. So perhaps at the end of the day what we'll be suggesting is some sort of clarification or rewording in respect of the issue as framed. 650 First of all, in respect of the current 16.1 as worded, just to be clear, we do not object to the inclusion of that issue on the list for this proceeding. So I'm going to deal only with 16.2 and 16.3. 651 In dealing with each of those, it's my submission that a more accurate description of the issue, and I'm going to in a minute elaborate on why I think there's a distinction in the semantics here, would be as follows: For 16.2, "The implications to ratepayers and the competitive HVAC marketplace of HVAC and other ancillary services charges continuing being billed and collected through the," and then I would jump right to the word "bill." So it would read through the bill which includes which includes regulated utility charges. So I'd take out the words "utility gas distribution." 652 And similarly in respect of 16.3, I would amend the issue as stated to read as follows: "The implications and appropriateness of having only one party have exclusive access to the," and again I'd jump to the word "bill," which includes regulated utility charges "for the billing and collection of HVAC services." So I'd remove the words "gas distribution." 653 I'm going to explain now why I think that's important. I think that those changes clarify that the issue being addressed by HVAC Coalition by seeking to include these issues in the case, is the -- are the business decisions made by the gas distributor Enbridge Gas Distribution on issues that aren't directly in respect of utility services but that -- which decisions do impact on the HVAC services marketplace. I think that's fairly characterised the issue that HVAC Coalition seeks to raise. 654 My friend has already noted that in the RP-1999-0058 decision, at paragraph 4.7.12, the Board has clearly stated that, in its view, the gas bill is not a utility service. I think that's why this semantic precision is important. What we're talking about are decisions unrelated directly to the provision of utility services that, in the submission of HVAC Coalition, do or might impact on various ways either on the ratepayers or the competitive marketplace. So I don't think there's any debate, first off, that we're not talking about the Board's ability to oversee, with one exception that Mr. Shepherd has raised, the delivery of utility services. Mr. Shepherd addressed that in respect of 16.1, and for the same reasons I agree with Mr. Shepherd and I would not, for my client, my employer's part, speak to the exclusion of 16.1 on the list. 655 So having clarified that, I hope, a little bit, let me jump to the quick list of points that I got down based on Mr. Dingwall's submissions, and try to isolate what it is that we're challenging here. 656 I heard Mr. Dingwall say that one of the issues that his client wants to pursue is the benefit or burden to ratepayers of the customer works limited partnership arrangement, that is, the arrangement between the billing service provider and the distribution utility. In my submission, that issue is captured under issue number 8.3 on the list as it is currently worded and no longer disputed because the words "and other" in addition to cost implications are now included in the list. In fact, I think the benefit or burden issue is a cost issue in any event. 657 The next point that I got from my friend's submissions are the desire to review the allocation of the customer works limited partnership collections on behalf of its two clients, Enbridge services and the distributor. In my submission, that issue would also be fairly captured under 8.3. To the extent that that collection practice or allocation prejudices ratepayers as ratepayers, I don't dispute with HVAC Coalition that that's an issue that the Board should look at. 658 My friend then said something about, as my notes reflect, impacts on the competitive marketplace and that's the issue I'm going to come back to in a minute. I think that's the issue on which we have a debate with the submissions of the parties who want to include these issues as worded on the list for this case. 659 With respect to the issue of exclusive access to the bill, it seems to me there are two subissues there. One is the competitive impact, which I'm going to come back to, and the other is the cost implications. Again, I think cost implications in respect of the customer works partnership arrangement are dealt with under issue 8.3 already. I don't think you have to add an issue to the list to deal with those. 660 Mr. Dingwall also made a number of references to the outsourcing decision, and of course most of us on this side of the dias, and perhaps even on that side, have had only limited opportunity to really understand that decision, but my sense of the submissions made by Mr. Dingwall were that they all went to the cost implications, the prudency in respect of the cost-of-service impacts. Again, I think those are all dealt with under the existing 8.3. 661 Now, in respect of the issue that Mr. Shepherd raised about some part of the one billion dollars being shared with ratepayers due to the exclusivity arrangement in particular, it seems to me that's a utility rate base issue and I'm not taking a position on that today -- 662 [Sound System Difficulties] 663 MR. MONDROW: Sorry, maybe I am taking a position. I'm not taking a position on that today. To the extent that the Board decides that the purchase price that Centrica paid for Enbridge services and paid to the distributor has to be reviewed in respect of rate base adjustments. That's not what I understood Mr. Dingwall to be getting at and I think that should be dealt with distinctly in the Board's decision if he's persuaded by Mr. Shepherd's submissions on that. But I'm not going to deal with that. 664 What I am going to deal with, and therefore what will result in, I think, a fairly narrow basis for exception to 16.2 and 16.3 as worded, is whether the impacts of the billing relationship -- that is, the relationship between the distributor and Customer Works in light of Customer Works' other businesses, and in particular, the ESI billing -- whether the impacts of that for HVAC services is something that the Board should be reviewing in this case. That's the issue that I think my dispute boils down to, or the dispute between my employer and HVAC Coalition boils down to. 665 Let me step back again to where I left off before trying to clarify what the said points I now think are. I don't think there's any dispute that with respect to the competitive impact issue, there's no argument that the Board has to exercise oversight over some sort of utility service and the impact of the provision of that utility service on the competitive market for HVAC services. That's not the issue that's been raised, as I understand it. 666 And I think that all the cost implications in respect of the test year or otherwise are dealt with under issue 8.3 as currently worded. So you don't have to add anything to deal with those. 667 Now, HVAC Coalition makes the point -- and I must admit it's sympathetic not just to me because of my background but, I think, as a matter of principle -- that since ESI is no longer an affiliate, they really have no place to go for this and that's true. And so the question that they've raised is should this panel include in its considerations for this rate application what boils down to a new rule proposal regarding distributor operations -- not with respect to utility services but with respect to non-utility services, not non-utility but operations that are not in respect of utility services, and the impact of those on competition for HVAC services. 668 In my submission, the consideration of that question and whether essentially a new rule has to be put in place would entail addressing the following subquestions: 669 The first is whether the Board has jurisdiction to regulate utility business activities that don't relate to utility services, and in respect of the impact of those activities on the HVAC services, the competitive impact of those activities on the HVAC services marketplace. 670 My friend, in support of the contention that the Board does have that jurisdiction, has pointed to paragraph 4.7.1 of the RP-1999-0058 decision, where the Board says the code has two principal objectives. This is a reference to the affiliate code. "First, to ensure that in the long term the actions of a regulated monopoly do not frustrate the operation of a competitive market, and secondly to ensure that the utility ratepayers are not harmed." So what the Board said there, in my reading and in my respectful submission, is that the affiliate -- in respect of affiliate relationships, the Board has and exercised, in fact, in that case, jurisdiction to ensure that the long term the actions of the regulated monopoly vis-a-vis its affiliate do not frustrate the operation of the competitive market. My friend suggests that we should read that a little more broadly and read the Board to have decided that apart from the affiliate nexus there is a jurisdiction in respect of the more general competitive marketplace for HVAC services. 671 Now, in respect of that -- first of all, I think that's going to be the jurisdictional debate, and the Board has to decide whether this is the forum for that debate. What we're talking about today is not the substance of the debate but whether it should take place here or not. So I'm going to stop there on that point. 672 But I would note, continuing on in the 0058 decision, paragraph 4.7.3, where the Board distinguished between the issues that, in its view, were properly raised within a rates proceeding and those that couldn't be dealt with in a rates proceeding, and proceeded in the balance of this decision to deal with latter category of issues in sympathy to the argument, as I understand it, that these are issues that go beyond rates but that do deal with affiliate relationships and the impact on competition and fall within the Rule 44 -- the section 44 of the OEB Act rule-making purview of the Board as expressly stated, and that is the affiliate relationship. 673 So in 4.7.3, the Board said, "Ensuring that the regulated utility does not abuse its dominant position in financial matters, such as ensuring that ratepayers are charged just and reasonable rates and that utility operations do not financially cross-subsidise their competitive affiliates is properly the subject of the rate hearing process. However, the rate-hearing process may not adequately address the potential damage that can by done to competitors of the utility or affiliate as a result of cross-subsidisation. In addition, ensuring that the regulated utility does not abuse its dominant position with respect to non-monetary matters such as preferentially endorsing a competitive affiliate or misleading or confusing consumers is properly the subject of compliance with the code." 674 So in my submission, the Board there indicated that there are some competition topics. However the Board ultimately determines its jurisdiction in respect of those topics, that have financial implications that should be dealt with in a rates case, and in my submission those topics are dealt with under issue 8.3 already on the list. And then there are others that are not routinely dealt with in a rates case and it's the others that I think I differ with in respect of HVAC Coalition's position for the breadth of issues 16.2 and 16.3. 675 So the first question the Board has to address in deciding whether it's going to entertain what is essentially a proposal for a new rule or rules to that effect, is whether the Board has the jurisdiction, and the second question is if it does, if the Board decides it does have the jurisdiction, whether the business practice of billing utility charges on a bill which includes third party HVAC services charges, whether exclusively or otherwise, A, has a negative and, to borrow a term from competition law, undue impact on the competitive marketplace for HVAC services; and B, if it does have a negative and undue competitive impact, does that merit the intervention of this Board. I agree with Mr. Cass in the result that that matter, apart from the cost implications of this billing relationship for ratepayers, is not a matter for review in this case. And Mr. Cass, I think -- one of his points was that this case in particular is already a huge case, and so I would adopt that submission. But I'd add to that. 676 As a second point, I would note that there is a process for making rules and codes, assuming the Board has jurisdiction to govern these kinds of business issues that have competitive impacts but that don't relate to affiliate or utility services. But if the Board does have that jurisdiction, there is a process for addressing rules and codes and that process includes a notice and an opportunity to comment and, I would add parenthetically, that that process might be more well amenable to the types of potentially commercially sensitive information that will have to be brought up in order to address, first of all, whether there is exclusivity and secondly, why that might be, and third what the bounds of that might be. That's the subject of a commercial relationship and I would submit that a rule-making process, with opportunity to comment, might be a better forum for getting that information before the Board while respecting the commercial sensitivity connected with some of those issues. 677 So what I've tried to do is characterise what it is about these issues that we object to in respect of this proceeding. I've tried to break out, if the Board nonetheless proceeds to hear and consider submissions and evidence and argument in respect of services that are not utility services and that don't relate to cost implications for ratepayers but relate, rather, to the impact on the competitive marketplace, the types of issues that the Board is going to have to address. 678 In my submission, given the nature of those questions, given the extent of this case, and given the process issues, the proper forum is not this rates proceeding. Now, that leaves the question, well, what is the proper forum, and I've suggested that the Board is inclined to address this through rule-making. There a forum for that. The hole left in that argument is that HVAC Coalition can't initiate such a proceeding. HVAC Coalition can't initiate such a rule-making process -- 679 [Sound System Difficulties] 680 MR. MONDROW: -- or at least there's no guidance in the legislation in that respect. But that's not to say that their views and concerns can't be made known to the Board and the Board can't consider whether a rule is appropriate. But I don't think that debate is appropriate for a rates case. 681 Those are my submissions. Thank you very much. 682 MR. BETTS: Thank you. 683 Any further submissions supporting that perspective? 684 Mr. O'Leary. 685 SUBMISSIONS BY MR O'LEARY: 686 MR. O'LEARY: Mr. Chair, just briefly, without repeating what's been said by those that share our view, that all of the 16 series of questions should not be included on the issues list, but I believe that Mr. Mondrow perhaps stated it best of the intervenors, and that is that all of the salient rate impact cost-of-service questions are dealt with under the other issues, in particular the ones that are listed under the outsourcing arrangements that he referred to and therefore we continue to object to the inclusion of those questions -- those issues. 687 MR. BETTS: Thank you. 688 [The Board confers] 689 MR. BETTS: We do have a couple of questions. 690 QUESTIONS FROM THE BOARD: 691 MR. DOMINY: Mr. Cass -- I'm sorry, Mr. O'Leary. I just wondered whether Mr. Mondrow had suggested some alternate wording and whether you are, in fact, accepting that alternate wording. You say it's not necessary because it's covered under 8.3. But if it was inserted to clarify the scope of 8.3, would you accept his alternate wording for 16.2 and 16.3? 692 MR. O'LEARY: Perhaps, Mr. Chair, you could invite Mr. Mondrow to just clarify the exact changes of the wording he was proposing to Mr. Dominy. 693 MR. DOMINY: I wrote it down to say, in 16.2, you go all the way through to "collected through the bill which includes regulated utility charges." And in 16.3, it goes "exclusive access to the bill which includes regulated utility charges for the billing and collection of HVAC services," is my understanding of his proposed wording. 694 MR. BETTS: Mr. Mondrow, that was the wording you were proposing? 695 MR. MONDROW: That was the wording I was proposing, to isolate what I thought the issue was intended to be. 696 MR. BETTS: So I understand you're still opposed to the issue's inclusion. 697 MR. MONDROW: That's correct, sir, yes. 698 MR. DINGWALL: As a matter of process, sir, would you like my response now, or would you like to have questions? 699 MR. BETTS: Let us just hear the position of the company on this and then we'll allow you to reply to all of the comments. 700 MR. DOMINY: My purpose, Mr. Dingwall, was to understand what the company's position was. That's why I asked the question. 701 MR. O'LEARY: Our position remains that even with the suggested changes in the wording that any issues that need to be raised and should be raised in the context of this hearing are dealt with under 8.3, and therefore we continue to object to even the revised version. 702 MR. MONDROW: If I might, Mr. Chair, and just in response tangentially to Mr. Dominy's question, and just to make sure that I was clear because sometimes I'm not sure in retrospect. I suggested those wording changes to clarify the scope of the dispute, not by the way of an accommodation that would remove our objection. Mr. Dingwall asked me to clarify that. I want to underscore that the change was intended to clarify the scope of the dispute. I hope that helps out. I hope that was communicated clearly. 703 MR. BETTS: If I could just go back to you, Mr. Mondrow, and clear up, then, one other point. Did I understand that you were accepting 16.1? 704 MR. MONDROW: We're not opposing 16.1. 705 MR. BETTS: Thank you. 706 Mr. Dingwall. 707 REPLY SUBMISSIONS BY MR. DINGWALL: 708 MR. DINGWALL: Thank you, sir. 709 With respect to Mr. Mondrow's suggested phrasing, what seems to be begged is what is regulated. Is the total bill that's provided to a customer the subject of regulation? Is it only the regulated charges that are the subject of regulation? Frankly, the definitions in the various codes do not speak clearly to that point, nor does the decision in the HVAC complaint. That merely addresses whether or not the utility bill is a utility service for the purposes of the Affiliate Relationship Code based on the definition of utility service within the Affiliate Relationship Code. There is not a lot of cross-referencing to other codes. 710 So the question still remains in my mind, what is regulated in the context of a customer bill, the total bill relating to all charges that are provided or simply those charges that are regulated? So I'm not necessarily opposing Mr. Mondrow's suggested phrasing, but I believe that there is some question as to what the right answer is. I'm not married to the phrasing within the proposed issues as they relate to charges. I'm happy to have what the panel thinks are the most accurate reflection of what the situation is. 711 MR. BETTS: Thank you. Does that complete your reply, Mr. Dingwall? 712 MR. DINGWALL: Not entirely, sir. I think Mr. Mondrow's point was that these issues, apart from the issues relating to competition in the marketplace, should be subsumed in the previous issues, and it was on issues day that the company clarified their position that these issues would not be. If Mr. O'Leary is recanting the statement that was made on that day, then that's great, that provides him with some clarification. If that leaves us with the question of competition, then it's my submission that, in addition to the statements from RP-2001-0032, as well as statements of principle within the HVAC complaint decision, that the OEB does have a mandate to have competition and the implications of competition reviewed in whatever forum will work. And currently this is the only forum there is for this. 713 MR. BETTS: Thank you. 714 [The Board confers] 715 MR. BETTS: Are there any -- I see Mr. O'Leary, you're leaning towards the microphone. Is there any comment you wish to make? I may give Mr. Dingwall an opportunity to reply if he desires. 716 MR. O'LEARY: Well, Mr. Chair, I just thought since Mr. Dingwall had suggested there might have been some recanting in what the company had said several days ago, I just wanted to make it clear that it's our position that there has not been, that those matters that relate to the implications on rates and cost of service are dealt with in the balance of the issues, the lengthy issues list that's here, and that what the company is submitting is that the breadth of the issues as presented by Mr. Dingwall go beyond the parameters and the need for such issues to be raised in the context of this proceeding. I just wanted to clarify that for the record. 717 MR. BETTS: Thank you. 718 Mr. Dingwall, do you feel the urge to reply to that? 719 MR. DINGWALL: Very briefly. It seems, then, that if the context that will be understood for the purpose of future undertakings in evidence is that examining the ambit of phrasing in 16.2 and 16.3 is not within the company's purview of the previous issues in the issues list. And I reiterate that these issues should then be included. 720 MR. BETTS: Thank you. 721 That concludes our review and those submissions on the contentious items. 722 [The Board confers] 723 MR. BETTS: The panel will endeavour to issue its decision orally today on the issue list. That doesn't imply that you all have to be here to hear it. I hope that we can have the reporter here at the very least. But that will be our desire. I'm not sure how long it will take us. It's my hope it won't take us too long. But certainly all of you have raised some very interesting issues about the issues and they are worthy of our consideration. 724 So we will -- we will break at this point and perhaps what we can do is, if any parties are intending to stay, in fact, I could ask if anyone could indicate whether they would like to stay for the oral decision. 725 MR. BELL: We intend to stay, sir. 726 MR. BETTS: Okay. There certainly are some parties. What we'll try and do is perhaps we'll aim at 4:15 and we'll have a staff person here at this room that will advise you on how things are going and how long you might expect to wait. We'll have a better idea I think at that point. So perhaps if you want you could check back in this room at 4:15 and get an update on how we're doing. 727 MR. MONDROW: If I could just add through you the request that I understand that people who stay don't want to unduly stay, but if it's a fair estimate that we're talking about at least half an hour of deliberations, which seems appropriate to me, if you could just not accelerate too much in advance of that for any reason because I might try to make it back to the office and plug in through the Internet. I wouldn't want to miss it. So if it's a choice between missing it and staying here, I'm going to stay here. But if I have a half an hour window, I'll make that call. 728 MR. BETTS: We will not reconvene before 4:15. 729 MR. MONDROW: Thank you very much. 730 MR. BETTS: Then we will stand adjourned at this point. 731 --- Recess taken at 3:50 p.m. 732 --- On resuming at 5:20 p.m. 733 MR. BETTS: Thank you all. Please be seated. The numbers are getting scarcer every time we reconvene. We can see who the real diehards are here. 734 We're not on air. Okay, I think we're back in business electronically. 735 First of all, before I -- the panel has reached a decision, you'll all be pleased to hear. But before we get into that, I would just ask if there are any preliminary matters that have arisen. 736 PRELIMINARY MATTERS: 737 MR. O'LEARY: Mr. Chair, there is one preliminary matter and it deals with the timetable matter set out in procedural order number 1, and the suggestion that, given that we're now about to enter into the Christmas quiet season, that perhaps the Board might entertain some minor adjustments to the schedule. 738 MR. BETTS: What are those adjustments that you are suggesting? 739 MR. O'LEARY: The date -- 740 MR. BETTS: And if we can go slowly, this may be, if we can capture it on the transcripts, it may be a very effective way of communicating your suggested change. 741 MR. O'LEARY: I will attempt to do that. The first item would be that supplementary interrogatories which are under procedural order number 1, scheduled for Thursday, January 2, the suggestion is that we extend that to January 7th, 2003. That would be followed by -- the interrogatory responses would be moved from January 9th to January 16th. Then intervenors that are desirous of filing evidence would, instead of filing it on Monday, January 13th, 2003, would file it instead on January 21st, 2003. Then the interrogatories to the intervenors' evidence would, instead of being filed on Monday, January 20th, would be filed on January 28th, 2003. And the responses of intervenors to those interrogatories would be filed, instead of February 3rd, would be filed on Friday, February 8th, 2003, with the ardent hope that that will have no impact on proceeding with the settlement conference scheduled for February 11th, 2003. What did I say? Sorry, I'm told that actually Friday is February 7th. 742 MR. BETTS: So we'd revise that phrase which is responses to interrogatories from February 3rd to February 7th. 743 MR. O'LEARY: Correct. 744 MR. BETTS: Obviously we haven't got a large group of intervenors here to voice their concerns or their support of that. I wonder how we might proceed on this. 745 Mr. Moran, any suggestions? 746 MR. MORAN: Mr. Chair, since all the intervenors will be receiving transcripts, perhaps the best way to communicate with them will be through the transcript, and perhaps they can be directed to have comments in perhaps on Monday. That's my suggestion, anyways. 747 MR. BETTS: Okay. We do have some intervenors present. Does that seem like a reasonable way to manage it? 748 UNIDENTIFIED SPEAKER: Actually, Mr. Chair, we're with the company, so we're fully in favour. 749 MR. DINGWALL: I can't take on the full burden of responding for all the intervenors, but would make a suggestion that if there's a procedural order accompanying the issues list subsequent to today, and if that's to be produced in the next 24 hours, that's probably an effective communication tool as well. But generally, given the time that it's been taking for interrogatories to come back, to seems fair to push the deadlines out somewhat. 750 MR. BETTS: I appreciate your comments, Mr. Dingwall. It certainly seems from this list that it's certainly a fair change, it's certainly not pointed in anybody's favour or disfavour, I'd say. So it looks pretty reasonable. So what we will do -- excuse me for one moment. 751 [The Board confers] 752 MR. BETTS: We will show for the record that we will be asking the intervenors to reply with any comments that they may have regarding the proposed schedule to the Board by noon on Monday, December 23rd. At that point the Board will determine whether a change in schedule is required, and if so we will issue a procedural order that may very well be included in the procedural order regarding this decision today. 753 So thank you. Are there any other preliminary matters? Mr. Moran, any preliminary matters? 754 MR. MORAN: I don't believe so, Mr. Chairman. 755 MR. BETTS: Thank you. 756 DECISION: 757 MR. BETTS: Then we will proceed to the decision. 758 The Board has reached a decision on the issue list for RP-2002-0133. 759 The Board accepts the uncontested issues together with the modifications proposed to those issues and as agreed to by all parties present. 760 With respect to the issues that were contested, the Board has made the following determination: 761 With respect to issue number 3.1, based upon the company's assertion that the new sharing methodology for transactional services will only be applied to the 2003 test year, the Board will not require the inclusion of the words "and beyond" in the phrasing of issue 3.1. 762 With respect to issue 12.7, the Board finds that issue 12.8 sufficiently covers the matters that the Board will deal with related to the school boards' concerns in determining just and reasonable rates. Furthermore, 12.7 will not be included in the issue list because of its implications of cross-subsidisation between rate classes. 763 With respect to the heading for issues 13.1, 13.2, and 13.3, the Board is satisfied with the title "rate retroactivity." 764 With respect to issues 13.2 and 13.3, the Board has decided to strike issue 13.3 from the issue list but to modify issue 13.2 to read: "Recovery and implementation, including effective date, of the retroactive portion of distribution charges." 765 With respect to issue 16.1, the Board will modify issue 8.2 by adding to the statement of the issue the following phrase: "Including terms, conditions and monitoring of subcontractors performing utility services." 16.1 is removed from the issues list. 766 With respect to 16.2 and 16.3, to the extent that HVAC argued that the billing practices may have a negative effect on ratepayers, the Board feels that those concerns can be addressed within the scope of 8.3 and the Board will not include 16.2 and 16.3 on the issue list. 767 The Board will issue a procedural order, including the issue list, reflecting the Board's decision shortly. 768 And as we have previously stated, if there is a requirement to revise the schedule, the Board will hopefully include it in that same procedural order or one that will follow very closely to it. 769 I believe that concludes the -- today's issue day hearing. I want to thank, even in their absence, those people who participated. It was very effective. We had a large issue list to deal with. We have a very full schedule ahead of us as a group to deal with the many issues that appear on this issue list. So on behalf of myself and my fellow panel member, I'd like to thank all the participants and, on behalf of the Board, simply express our interest in pursuing this and the fact that we are looking forward to meeting again to have this matter dealt with. 770 Thank you all. 771 --- Whereupon the Issues Day adjourned at 5:30 p.m.