Rep: OEB Doc: 12QQJ Rev: 0 ONTARIO ENERGY BOARD Volume: 19 (REDACTED) 1 MAY 2003 BEFORE: R. BETTS PRESIDING MEMBER G. DOMINY MEMBER 1 RP-2002-0133 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 4 1 MAY 2003 5 HEARING HELD AT TORONTO, ONTARIO 6 APPEARANCES 7 PAT MORAN Board Counsel COLIN SCHUCH Board Staff TANIA PERSAD Enbridge FRED CASS Enbridge ELIZABETH STEWART Enbridge Inc. et al. ROBERT WARREN CAC ROBERT HOWE CWI & Accenture JOHN SPROAT CWLP DANIELLE YOUNG OPSBA 8 TABLE OF CONTENTS 9 [In-camera session commenced at 9:47 a.m.] [19] [In-camera session concluded at 11:23 a.m.] [20] PROCEDURAL MATTERS: [21] DECISION: [43] PROCEDURAL MATTERS: [89] 10 EXHIBITS 11 12 UNDERTAKINGS 13 14 --- Upon commencing at 9:45 a.m. 15 MR. BETTS: Thank you, everybody. Please be seated. 16 Welcome back, everybody. We are now sitting on -- I have to check -- day 19 of the hearing, again, to deal with some procedural matters involving the production of evidence. We will very shortly go into an in-camera session to allow us to fully discuss the issues surrounding that matter. 17 Before we do that, may I ask if there are any preliminary matters that can be dealt with in public session. And there appear to be none. 18 I believe with that, then, it would be appropriate to enter our in-camera discussion and begin our discussion related to those matters. 19 [In-camera session commenced at 9:47 a.m.] 20 [In-camera session concluded at 11:23 a.m.] 21 PROCEDURAL MATTERS: 22 MR. BETTS: We're back on the air. We are now in open session. We have concluded the in-camera session involving a motion to produce further evidence. 23 Are there any matters that the Board should consider in open session? We are prepared now to -- or shortly to break and consider a decision on this. It is our intent to render this decision today, and as quickly as possible. It will be our immediate task to move into that decision process. 24 Is there anything that the Board should consider prior to breaking? 25 Mr. Moran. 26 MR. MORAN: Mr. Chair, yesterday you sketched out a proposed approach to the confidentiality issue and indicated that parties would have an opportunity to make submissions on that procedure today. So I just want to bring that to your attention. 27 MR. BETTS: Thank you, and thank you for the reminder. 28 Are there any submissions with respect to that procedure? It basically outlined a timing process by which, if evidence is required to be produced, the timing scheme that it would be produced under. 29 I will take that, then, at least the acceptance of this group, and we have not received anything from any other parties. 30 Mr. Cass, sorry, did you have a comment. 31 MR. CASS: I was only going to express acceptance of what the Board had proposed, Mr. Chairman. The timing is tight, but we recognise the need to proceed as expeditiously as possible. 32 MR. BETTS: Thank you, and we appreciate that recognition. 33 Okay. With that we will very shortly, then, adjourn. It's our hope -- what I'd like to propose is that we will endeavour to return by 1:00. If we have not reached a decision, or if we are unable to render an oral decision at that time, someone will be here to indicate our progress and when we would be able to. 34 So let us aim at 1:00. If it does look like it's going beyond there, we certainly would be interested to take phone numbers of interested parties to contact them in advance of us returning here to render our decision. If that's the choice of any party, Mr. Moran would be happy to take those numbers and we can do that to give you at least a half hour's warning as to when we'll be returning. But it's my hope that we will be able to return at 1:00 with a decision. 35 Any comments? Mr. Warren? 36 MR. WARREN: Mr. Chairman, I wonder if I might be excused. I mean no disrespect to the Board or I do not intend in any way to derogate from the importance of the decision that you will be rendering if I ask permission to return to my office. I have to leave town tomorrow and I've been out of the office for a long time and a number of grumpy clients are stacking up in a hurry, and I'd like the opportunity to try and apply some palliative care either to them or to me. So if I might be excused, I will certainly -- give them Mr. Howe's number. Thanks, I appreciate that. What you hear in the background is the sound of an ambulance. 37 I will, however, turn on the system and listen to it live from my office. But if I might be excused, I'd appreciate it. Thank you, sir. 38 MR. BETTS: That's a very reasonable request. Actually, I'd encourage anybody else to do the same thing. You're all people that have a lot on your plates. These hearings are consuming a lot of our time. The Board will not be in any way offended if you're not here to hear us express those words. You'll all be able to read them in the transcripts, and I do respect the fact that everybody has another life to lead at the same time. So we will not be offended if, in fact, the room is empty, as long as our very important lady, the court reporter, is here. 39 So with that we will adjourn now and target at a 1:00 return. Thank you. 40 --- Luncheon recess taken at 11:30 a.m. 41 --- On resuming at 1:42 p.m. 42 MR. BETTS: Thank you, everybody. Please be seated. 43 DECISION: 44 MR. BETTS: Welcome back, everybody. The Board has reached a decision in the matter relating to the production of evidence. I appreciate the interest that the decision has, obviously; there's a significant number of people here. 45 Are there any preliminary matters before I read our decision, or read our oral decision? There appear to be none. 46 On April 15, 2003, the Board issued an order requiring a number of entities to produce documents relating to outsourcing. As part of that order, parties were required to meet and work to achieve agreement on what documents needed to be produced. Any matters remaining in dispute will be brought back to the Board on April 29, 2003, for resolution. 47 When the Board reconvened on April 29, 2003, the moving parties brought forward their unresolved production issues. The producing parties requested that these issues be dealt with in camera to allow all parties to be able to refer freely to the documents already produced in confidence. The Board agreed to this approach and on the basis that the issue of further production was primarily a procedural one, and that the issue of how these documents might be used in the main proceeding was still to be determined. 48 In the course of the in-camera session, the moving parties made reference to various documents already produced and they argued for additional production. The producing parties also made extensive reference to the documents already produced and argued that there had been sufficient production. 49 It appears to the Board that significant progress was made regarding production, with some areas of dispute remaining. 50 The moving parties have argued that additional production of documents relating to strategic planning, cost and pricing, and the reporting of results in relation to outsourcing is necessary. For example, the moving parties referred to a report to the EGDI board of directors that makes reference to O&M cost reductions, as part of a commitment set out in the EI strategic plan. In other documents produced there are references to strategic planning in relation to outsourcing. The moving parties also argued that production of the transactional documents that related to arrangements between CWLP and CWI Inc. is also necessary. 51 The producing parties argued that what they had already produced was sufficient compliance with the Board's order. EGDI also argued that a requirement to produce strategic planning documents would make it difficult for the company to carry on its business if strategic plans were to be constantly -- were to be constantly subject to review in hearings before the Board. 52 CWLP, supported by CWI, argued that the Board's production order did not require production of the transactional documents that relate to the customer care service provided by CWI. CWI also argued that production of these documents would be detrimental to CWI's competitive position in the marketplace. 53 The Board is of the view that, as a general principle, it is not necessary to review strategic planning documents that are in the hands of any of the producing parties. Much of what would be in such documents would be outside of the scope of the Board's jurisdiction in any event, given that many of the producing parties, other than EGDI, carry on other unregulated businesses. However, on the issue of outsourcing, the strategic planning in relation to outsourcing is directly relevant to the issues before the Board. 54 With respect to the transactional documents in the possession of CWLP, the Board is of the view that in order to understand if a market-based price is being charged for customer care, the Board needs to understand the structure, terms and conditions of the arrangements and the pricing information that will be set out in the transactional documents. CWI is justifiably concerned about public disclosure of such documents. 55 However, the Board, in its production order, is not requiring public disclosure. The production is confined to a limited number of specific individuals who have signed and are subject to the terms of an undertaking to maintain the confidentiality of any documents produced to them. The specifics of what needs to be kept confidential when the proceeding resumes will be dealt with in the procedure that will be addressed later in this decision. The Board will require CWLP to produce the transactional documents to the moving parties on the same confidential basis required by the Board's previous production order. To the extent that there are documents in the possession of the producing parties that were not produced as a result of the position taken by CWLP on the transactional documents, those documents should now also be produced. Parties should understand that the requirement to produce documents in accordance with the Board's previous order and this order is an ongoing obligation for the producing parties. 56 The Board is also of the view that it would be of assistance to the Board if EGDI can provide witnesses who will supplement the Board's understanding of what may be in the documents, to the extent that these documents are used in the proceeding. 57 Regarding the separate matter of the WAMS contract, there was argument with respect to the need for EGDI to produce the agreement it has with Accenture with respect to the WAMS project. Both EGDI and Accenture oppose the request by CAC for production of this agreement. 58 EGDI's O&M budget for the WAMS project has been identified as an unresolved policy issue in sections 7.44 and 7.45 of the ADR agreement, found in Exhibit N.1, tab 1, schedule 1. The approach to the WAMS issue as set out in those sections includes reference to section 7.1 of the ADR agreement. 59 Section 7.1 provides for an agreement to an O&M budget envelope of $270 million. It also provides for the possibility of an adjustment to that amount, to be recorded in the 2003 Operations and Maintenance Expenses Deferral Account, depending upon the outcome of the outsourcing efficiency gains issue. However, the ADR agreement does not contain any proposed mechanism for the possible adjustment to the O&M budget envelope in relation to the WAMS policy issue. 60 Having accepted the ADR agreement, the Board is of the view that it is not necessary to require production of the Accenture agreement for the purposes of this proceeding. The recovery of costs associated with the WAMS project may well be an issue in subsequent proceedings, and this has been acknowledged by the company, through its witnesses. However, this is a settled issue for the purposes of the current proceeding. The Board recognizes that the need to produce the Accenture agreement may be an issue in a subsequent proceeding. 61 Having dealt with the production issues, the Board must now establish a procedure to address the manner in which produced documents are to be used in this proceeding. On April 30, 2003, the Board set out a proposed procedure and invited interested parties to make submissions on the procedure today. The Board received no submissions. However, as a result of this order, the Board has made a minor adjustment to the proposed procedure. 62 To the extent that documents in this proceeding will be treated on a confidential basis, the Board wishes to ensure that only parties that have a need for access to the confidential information will have access. Any party, other than the moving or producing parties, who wishes to have access to the confidential documents and any part of the proceeding that is carried out in camera must apply in advance to the Board for permission. The Board will only grant access on a strict need-to-know basis. 63 The Board orders that: 64 1. The producing parties, as defined in the Board's previous production order, shall produce, no later than May 5, 2003: 65 a) those parts of documents addressing strategic planning in relation to outsourcing to the producing parties; 66 b) those documents that report on O&M savings during the term of the TPBR plan, in relation to the outsourced functions; and 67 c) the transactional documents relating to the customer care service provided by CWI, 68 that may be in their possession to the moving parties, in accordance with the confidentiality requirements set out in the Board's previous production order. 69 2. By May 7, 2003, the moving parties, as defined in the Board's previous production order, shall advise the producing parties and the Board as to which of the produced documents the moving parties intend to rely on for cross-examination. 70 3. By May 9, 2003, the producing parties shall serve on the moving parties and file submissions on the parts of the documents for which they wish the Board to treat confidentially, along with the reasons for making the request. The request for confidentiality must be made on the basis of the principle that, to the maximum extent possible, the documents will form part of the public record. 71 4. By May 14, 2003, the moving parties shall serve on the producing parties and file any submissions they may wish to make in response to the request for confidentiality. 72 5. Any party, other than a moving party or producing party, who wishes to have access to confidential information and any in-camera session in which the information shall be addressed shall apply, copy to all parties, to the Board for access, no later than May 14, 2003. Any such request shall set out the direct interest the applying party has in having access to the confidential information. 73 6. By May 16, 2003, the producing parties shall serve and file any reply submissions they may wish to make with respect to confidentiality or in response to any request for access to confidential information made pursuant to paragraph 5. 74 And that is the Board's decision with respect to this matter. 75 Are there any questions? 76 MR. CASS: Might I just have a moment, Mr. Chairman, please. 77 MR. BETTS: Go right ahead. 78 [Mr. Cass and client confer] 79 MR. CASS: Can I take a stab at a couple of questions, Mr. Chairman, at the risk of perhaps causing things to be less clear. 80 Specifically in relation to paragraph 1 of the order and what is to be produced, I think 1(a) is clear, but just out of an abundance of caution, if I can just ensure that we understand that correctly. So in relation to strategic planning documents, either by way of redaction or whatever is the appropriate way of doing it, any parts of documents that don't have to do with outsourcing would not be included in what is provided. 81 [The Board confers] 82 MR. BETTS: That's correct. 83 MR. CASS: And the other question is a little more difficult. 84 Under 1(b), I think the problem is, and this is speaking without -- well, I think the problem is that there will not be any documents that specifically report on O&M savings during the term of the TPBR plan in relation to outsourced functions. 85 [The Board confers] 86 MR. BETTS: Mr. Cass, the Board needs to understand those numbers, whatever they may be; and if they do not exist, then there is an expectation of the Board that they should be generated. Is that clear? 87 MR. CASS: Okay. Thank you, sir. 88 MR. BETTS: Any further questions? 89 PROCEDURAL MATTERS: 90 MR. BETTS: Then I believe that concludes this session of our hearing, and we will all now take a bit of a break. Well, some of us will; some of you will be gathering up information and working on the next phase of this, and communicating among yourselves as well. We are currently planned to reconvene on May 20th. The date for that -- the time for that session was set at 9:30. With your indulgence, the Board would like to set that at 10:00 rather than 9:30, just to allow us to get organised and ready to begin again. So please note that minor change. It will be 10 a.m. on Tuesday, May 20th, that we would be reconvening. 91 Mr. Moran, we talked earlier - I don't know whether you had the opportunity to approach any parties regarding methodology for transmitting the transcript information. 92 MR. MORAN: Yes, Mr. Chair, I had a chance to talk to a number of people about the options they had for getting electronic versions of the transcript containing the in-camera sessions. I haven't talked to everybody, but the ones that seem to be interested, I had a chance to talk to. 93 MR. BETTS: Is there anything to report at this point, or is it something we'll try to get in place for the next session? 94 MR. MORAN: I don't believe there's any problems with the approach that's been worked out with the court reporters. 95 MR. BETTS: Which, for the record, we're talking about sending out by courier an electronic version on a floppy disk? 96 MR. MORAN: That's right. People have the opportunity to get a version on disk, with or without the hard copy, and if it's without the hard copy, as I understand it, it's a bit faster than with the hard copy. But the people understand that. 97 MR. BETTS: Okay. That will provide the parties hopefully with something that will help them with their part of the process. We'll try that on. We are learning as we go through this process of confidential treatment of information. It's very new to the Board. Bear with us. We appreciate your assistance in dealing with these issues as we come to them. 98 To all the parties that have participated in the last three days, thank you very much. It's been a bit of a ground-breaker for the Board, certainly, and I believe for many of you in this forum to deal with these issues in this way. It has gone very, very well, in the Board's view. We felt that everybody has participated openly, honestly, and to the extent that they felt comfortable. So we're comfortable in proceeding and we hope all of you will be able to deal with our order in that same frame of mind. 99 Mr. Cass. 100 MR. CASS: I'm sorry, Mr. Chairman. At the risk of trying your patience, I just feel I should ask another question about 1(b) because we certainly don't want to go away with any misunderstanding. 101 MR. BETTS: I'm more than happy to do that. In fact, if you need more time to consider it, I would be happy to allow that as well. But let's deal with this question. 102 MR. CASS: 1(b), sir, refers to reporting on O&M savings in relation to outsourced functions. O&M savings, to me, implies utility O&M, what were the utility O&M savings in relation to those functions that were outsourced. Is that reading that correctly, or is that -- would that be a misinterpretation? 103 [The Board confers] 104 MR. BETTS: Mr. Cass, no, it would not be limited to EGDI. We are trying to interpret the settlement agreement, and our interpretation would suggest that it goes beyond that. And specifically on the -- one reference would be in, as it will turn out, the fifth paragraph of the decision with reference to O&M cost reductions that were identified and a specific document, and that, for example, goes beyond just the EGDI results. 105 MR. CASS: Thank you, sir. 106 MR. BETTS: And, Mr. Cass, I'm more than happy to allow you -- and I appreciate your questions; they are not -- they are not bothering me in any way. I'm very pleased that you are interested in fully understanding the Board's position; that was part of the problem in the last decision. So if you would like to take some time to review this and ask us more questions, I believe Mr. Dominy and I will be available. If you want to have us back in a half an hour or something like that, does that -- 107 MR. CASS: I think we do understand it now, sir. But I do appreciate your offering that opportunity. 108 MR. BETTS: Well, then, if it is now understood clearly, at least by those of you in the room here - we'll see if there's other confusion - I think we're at a point where we can now adjourn. So thank you once again and we will adjourn now and reconvene on May 20th. 109 --- Whereupon the hearing adjourned at 2:05 p.m.