Rep: OEB Doc: 12KP6 Rev: 0 ONTARIO ENERGY BOARD Volume: ISSUES DAY 31 OCTOBER 2002 BEFORE: P. VLAHOS PRESIDING MEMBER AND VICE CHAIR F. LAUGHREN MEMBER AND CHAIR 1 RP-2002-0142/EB-2002-0420 ISSUES DAY 2 IN THE MATTER OF sections 70 and 74 of the Ontario Energy Board Act, 1998, S.O. 1998, c.15 (Sched. B); AND IN THE MATTER OF Transitional Generation Licence EG-0333, issued to Ontario Power Generation Inc.; AND IN THE MATTER OF an application by Ontario Power Generation Inc. to amend its licence obligations to provide a rebate to consumers under specified circumstances. 3 RP-2002-0142/EB-2002-0420 ISSUES DAY 4 31 OCTOBER 2002 5 HEARING HELD AT TORONTO, ONTARIO 6 APPEARANCES 7 PAT MORAN Board Counsel DAVID BROWN Board Staff LAURIE KLEIN Board Staff PATRICIA JACKSON OPGI MARK MATTSON Energy Probe TOM ADAMS Energy Probe STEVEN SHRYBMAN CUPE & CEP TED COWAN OFA ANDREW TAYLOR Coral Energy ANDREW LOKAN Power Workers Union ELISABETH DEMARCO IPSSO JUDY KWIK VECC MICHAEL JANIGAN VECC MALCOLM ROWAN CME BRUCE MACODRUM CME MARK RODGER AMPCO DAVID POCH GEC/CIELAP/OSEA ROBERT WARREN CAC 8 TABLE OF CONTENTS 9 APPEARANCES: [19] PROCEDURAL MATTERS: [39] PRELIMINARY MATTERS: [56] ISSUE 8: [82] SUBMISSIONS BY MS. DEMARCO: [84] SUBMISSIONS BY MR. POCH: [97] SUBMISSIONS BY MR. MATTSON: [100] RESPONSE SUBMISSIONS BY MS. JACKSON: [107] REPLY SUBMISSIONS BY MS. DeMARCO: [129] ISSUE 3 [143] SUBMISSIONS BY MR. RODGER: [144] PROCEDURAL MATTERS: [151] SUBMISSIONS BY MR. MATTSON: [199] SUBMISSIONS BY MS. DEMARCO: [203] SUBMISSIONS BY MR. LOKAN: [221] RESPONSE SUBMISSIONS BY MS. JACKSON: [232] REPLY SUBMISSIONS BY MS. DEMARCO: [255] REPLY SUBMISSIONS BY MR. RODGER: [261] REPLY SUBMISSIONS BY MR. MATTSON: [270] FURTHER RESPONSE SUBMISSIONS BY MS. JACKSON: [279] QUESTIONS FROM THE BOARD: [284] FURTHER REPLY SUBMISSIONS BY MR RODGER: [297] PROCEDURAL MATTERS: ISSUES 4, 5, 6, 7: [359] SUBMISSIONS BY MR. RODGER: [360] PROCEDURAL MATTERS: [405] SUBMISSIONS BY MR. MACODRUM: [420] SUBMISSIONS BY MR. POCH: [443] SUBMISSIONS BY MR. SHRYBMAN: [493] SUBMISSIONS BY MR. MATTSON: [523] SUBMISSIONS BY MR. COWAN: [560] SUBMISSIONS BY MR. TAYLOR: [576] SUBMISSIONS BY MR. LOKAN: [581] RESPONSE SUBMISSIONS BY MS. JACKSON: [608] REPLY SUBMISSIONS BY RODGER: [705] REPLY SUBMISSIONS BY MR. MACODRUM: [720] REPLY SUBMISSIONS BY MR. POCH: [729] REPLY SUBMISSIONS BY SHRYBMAN: [736] REPLY SUBMISSIONS BY MR. ADAMS: [749] REPLY SUBMISSIONS BY MR. COWAN: [756] CLARIFICATION BY MS. JACKSON: [776] CLARIFICATION BY MR. POCH: [781] 10 EXHIBITS 11 EXHIBIT NO 1: EXCERPT OF THIRD INTERIM REPORT OF THE MARKET DESIGN COMMITTEE FROM OCTOBER 8, 1998 [381] EXHIBIT NO. 2: DECISION OF THE COURT OF APPEAL FOR ONTARIO IN THE MATTER OF AN APPLICATION BY HYDRO ONE NETWORKS [478] EXHIBIT NO. 3: EXCERPT FROM BELANGER CASE [480] EXHIBIT NO. 4: EXCERPT FROM FRIENDS OF THE OLDMAN RIVER CASE [482] EXHIBIT NO. 5: EXCERPT FROM JOHNSON VERSUS FEDERATED MUTUAL INSURANCE CO. [484] EXHIBIT NO. 6: EXCERPT FROM REGINA VERSUS SLATER STEEL INDUSTRIES [486] 12 UNDERTAKINGS 13 14 --- Upon commencing at 9:35 a.m. 15 MR. VLAHOS: Please be seated. 16 Good morning, everyone. The Board is sitting today to hear submissions toward the determination of the issues to govern the upcoming proceeding on the OPG Bruce Decontrol. 17 Today with me is Mr. Floyd Laughren, chair of the OEB. My name is Paul Vlahos, vice-chair of the Board. 18 Could I have appearances, please, starting with the applicant. 19 APPEARANCES: 20 MS. JACKSON: Patricia Jackson appearing as counsel for OPG, Mr. Chair. 21 MR. POCH: David Poch appearing for Green Energy Coalition, Canadian Institute for Environmental Law and Policy and Ontario Sustainable Energy Association. 22 MR. RODGER: Good morning, Mr. Chairman. Mark Rodger, counsel for the Association of Major Power Consumers in Ontario. 23 MR. MacODRUM: Mr. Chairman, my name is Bruce MacOdrum, MacOdrum, and I am representing Canadian Manufacturers and Exporters. 24 MR. JANIGAN: Mr. Chair, Michael Janigan on behalf of the Vulnerable Energy Consumers Coalition. I'd like to also enter an appearance on behalf of Robert Warren for the Consumers Association of Canada. 25 MS. DeMARCO: Mr. Chair, Elisabeth DeMarco on behalf of the Independent Power Producers' Society of Ontario. 26 MR. LOKAN: Andrew Lokan on behalf of the Power Workers Union. 27 MR. VLAHOS: I'm sorry, I didn't get your last name, sir. 28 MR. LOKAN: Lokan, Lokan. 29 MR. MATTSON: Mark Mattson, counsel to Energy Probe. 30 MR. SHRYBMAN: Mr. Chairman, my name is Steven Shrybman, spelled S-h-r-y-b-m-a-n. I am counsel to CUPE and the Communication, Energy and Paperworkers Union of Canada. 31 MR. COWAN: Mr. Chairman, Ted Cowan, I'm with the Ontario Federation of Agriculture. 32 MR. TAYLOR: Mr. Chairman, my name is Andrew Taylor and I'm counsel to Coral Energy Canada Inc.. 33 MR. VLAHOS: Anyone else that wishes to enter an appearance? 34 MR. MORAN: Pat Moran for the Board. 35 MR. VLAHOS: Thank you, Mr. Moran. 36 Mr. Moran, we do have a proposed issues list, and I assume there will be no changes to that list since yesterday, have there? 37 MR. MORAN: That's correct, Mr. Chair. 38 MR. VLAHOS: Okay. Just a general plan how we're going to proceed today. 39 PROCEDURAL MATTERS: 40 MR. VLAHOS: We have had a look the proposed issues list, and it is our view that there are certain discrete issues that we can deal one to one, and those are specifically issues 8 to 10. There are certain other issues, issues 4 -- those are under the contested grouping -- 4, 5, 6, and 7. They do have, it appears to us, a common element of jurisdiction or interpretation of jurisdiction. And the plan is perhaps we can deal with them as a group later in the day, and I would ask that after an appropriate break, that parties can get together to confer and see how we can coordinate the submissions on that grouping. And that would also include an element or a part of the partially contested issue which is issue number 3. 41 In terms of process, we will ask the lead proponent of each of the issues to make the original submission. Other parties are welcome to add, clarify to that submission, not necessarily to repeat. The applicant will be last in terms of response. Right before the applicant, staff will have the opportunity to come in and, Mr. Moran, if you wish to comment on or clarify. And of course you have an opportunity to jump in at any time, and I'm sure you're going to use that wisely. 42 And then there will be a final or a response by the lead proponent. Any questions on that? 43 MS. JACKSON: Mr. Chair, I wonder if before we get to the contested issues if the Board would entertain an initial introduction from the applicant of the application which leads into the view that the applicant takes of what the appropriate issues are. And I must say as well, I think would be -- I hope would be a brief and helpful overview of how those issues fit into the application that the applicant has brought forward. 44 MR. VLAHOS: How long are you thinking of taking, Ms. Jackson? 45 MS. JACKSON: Five to six minutes. 46 MR. MacODRUM: Mr. Chair, I would object to that. I think the applicant, really with respect to these issues, is not in any different position than the rest of us who are proposing issues for you to consider, and I don't think they should have two bites at the cherry. Certainly they have the privilege to go last if they wish to, but I don't think they should get, you know, two turns at the matter. 47 MS. JACKSON: Mr. Chair, I'm not -- I confess I've lost the thread of what my friend is suggesting. If the applicant -- well, there are two reasons I make the suggestion I do. First of all, this is the applicant's application and I'd like to be able to take a brief period of time to indicate to the Board what the applicant believes is in issue in the application and how that leads to the issues. 48 Secondly, it would follow from that, put simply, after hearing from others who want to add to the list the applicant would reply, as my friend seems to be suggesting can happen in any event. So I'm not sure what the concern is. But I hope it would be helpful. I certainly think it is -- it's certainly an introduction that the applicant would like to give the Board of the applicant's application. 49 [The Board confers] 50 MR. VLAHOS: Ms. Jackson, the Board prefers to go with the plan that I've just outlined. You'll have an opportunity, of course, to cover those initial remarks when you have an opportunity to respond to the other submissions. 51 MS. JACKSON: Thank you, Mr. Chair. Then can I just understand, in light of my friend Mr. MacOdrum's comments, that the applicant will have an opportunity to speak last in reply, how that -- if that's the Board's understanding as well? 52 MR. VLAHOS: Well, there will be the submissions by the parties on the contested issues, and then the applicant will have an opportunity to respond to all the submissions, and then there may be -- there will be an opportunity for the lead proponent to simply respond to your comments and that will be the end of it. 53 MS. JACKSON: Thank you, Mr. Chair. 54 MR. VLAHOS: Now, before we proceed, Mr. Moran, any preliminary matters? 55 MR. MORAN: Just one minor one, Mr. Chair. 56 PRELIMINARY MATTERS: 57 MR. MORAN: You asked me earlier if there were any amendments to the issues list and I had forgotten there was an e-mail that we received late in the day from Energy Probe and they want to add, as a friendly amendment, to one phrase in issue 3, the following words. 58 If you look at the very last sentence there's a question: "If interdependent behaviour exists, what is the appropriate remedy?" Energy Probe is suggesting the addition of the phrase after the word "if", "the potential for". That's it. 59 MR. VLAHOS: Okay. Any other matters? 60 MS. JACKSON: I can advise the chair that that amendment does not change the position -- pardon me - the position of the applicant on the nature of that issue. I should perhaps just point out as well, Mr. Chair, that we have put on the podium and around the room two things. One is a page that sets out the issues without the extra printing that just -- are the issues that are uncontested which the applicant agrees with, just to make it clear. I may be the only person who found it a little difficult to move between the different printed typefaces in the list prepared by Board Staff. 61 MR. VLAHOS: Yes. 62 MS. JACKSON: The other thing is that it was apparent at the issues conference that a number of people had not had an opportunity to look at either the licence or the directive pursuant to which this application is brought. I understand that those were distributed amongst the parties by Board Staff in the interim, but just to facilitate things, we have put copies of the licence and the directive around the room, including on the podium. 63 MR. VLAHOS: Thank you, Ms. Jackson. 64 Perhaps, Mr. Brown, can we have just two copies of the issues list that Ms. Jackson has -- 65 MS. JACKSON: I believe there are two on the podium. 66 MR. VLAHOS: Are there? 67 MS. JACKSON: They are just a single -- 68 MR. VLAHOS: Yes, I just had to find it. Yes, we do have it. Thank you. 69 Just finally, it is -- I'm sorry, Mr. Shrybman. 70 MR. SHRYBMAN: Mr. Chair, Steven Shrybman. You've grouped an issue that we've placed on the issues list, I believe it's issue 7, with 3, 4, 5, and 6. In my view, it is quite distinct from the others before you. Now, I do believe that there is some common questions or issues that those four -- that that grouping share, and I'm happy to discuss how we would present our arguments with respect to our various proposals and see whether or not we're all on -- in a sense, we can encompass all of our concerns in one joint submission. But until I have that conversation I'm not convinced that that's possible. So you may hear from me later that I may need to deal with this issue as distinct from 3, 4, 5, and 6, and I would like the opportunity, in light of that, to reply to, or to respond to OPGI's reply to my arguments, which may be quite different than the ones you hear with respect to those other issues in that group you proposed. 71 MR. VLAHOS: Yes, we've noted that, Mr. Shrybman. The process is not meant to be that rigid that you will not have an opportunity to add after the lead proponent. 72 Just a note that it is -- I'm sorry, Mr. Janigan. 73 MR. JANIGAN: Sorry, Mr. Chair. I'd like to note that VECC will be withdrawing its sponsorship of issue number 9 and issue number 10 that is on the issues list. Our withdrawal comes about as a result of our review of the Minister's directive and our views with respect to the constraints that have been put upon the Board in terms of this proceeding and the review that must accompany this proceeding. And that in no way suggests that we do not believe that the review of a kind that will be suggested by other intervenors may be necessary, but just that we believe the Minister should be amending this directive to allow such a review take place. 74 I note with respect to proposed issue 10 or what should be the effective date of the adjustment to CRQ, it's certainly not our position that the Board can't determine an effective date. It's simply that we put this issue upon the issues list in order to have the Board look at other considerations apart from the date of the transfer of effective control, and we have since come to the belief that, in fact, the Board's authority in this matter is circumscribed by the terms of the directive. 75 So we're not suggesting you cannot determine an effective date, but we wish other considerations to go into the Board's determination of that date. We don't believe that they necessarily would be applicable. So with the Board's indulgence, we are withdrawing our sponsorship, and certainly other intervenors may be free to take up the cudgels as it were. 76 MR. VLAHOS: Can I ask other intervenors if they have any objection to withdrawing issues number 9 and 10? Having no response -- 77 MR. MacODRUM: Mr. Chair, I'm going to speak to the relevance of number 10 in connection with my comments in support of contested issue number 4. So in that sense I did intend to make reference to contested issue number 10. 78 MR. VLAHOS: That's fine, Mr. MacOdrum, but we're not going to deal with number 10 as a distinct issue -- or discrete issue, but you are welcome to refer to it as part of issue 4. Okay. 79 9 and 10 as they are currently worded, then, are withdrawn. 80 Any other comments? I just want to note that the Board will likely reserve its decision until early next week. Just in case people make their submissions and would like to go back to their offices, they are welcome to do so. 81 So with that can we go to the first issue, then, and that's issue number 8, and I see IPPSO's name as being the lead proponent. Ms. DeMarco. 82 ISSUE 8: 83 MS. DeMARCO: Thank you, Mr. Chair. 84 SUBMISSIONS BY MS. DEMARCO: 85 MS. DeMARCO: Issue number 8, as IPPSO has framed it indicates to what extent should this decontrol application serve as a model or template for other or future decontrol arrangements. In raising this issue, IPPSO certainly would like to confirm that it is not suggesting that something other than principles of administrative law would apply to both this hearing and the decision, but rather IPPSO is raising this issue based on a concern that the applicant's own evidence raises and relies heavily upon the unique nature of a nuclear facility. And secondly the licence itself, specifically part 4, section 4(b), paragraph 2, section C, raises concerns pertaining to future decontrol applications. 86 Starting first with the applicant's own evidence. I apologise, the issues are not ordered as I have ordered them in the introduction. 87 Section 2(c) on page 10 of OPG's application goes into great length on the unique nature of both the operations and safety requirements that are applicable to nuclear facilities. And to use OPG's own words in this regard, such requirements and safety concerns are, to quote, "in sharp contrast with what would be a Tier 2 facility and appropriate decontrol concerns applicable in that regard." 88 Similarly, later on page 12 of the applicant's application, OPG relies heavily on the distinct nature of a nuclear facility and the associated safety concerns and regulatory concerns to support information sharing that may not be applicable and supportable in the context of other decontrol applications. 89 As a result, based on the applicant's own evidence, IPPSO submits that certainly the issue regarding future application of this decision should be included in the issues list. 90 Now to move to the actual licence, and I'll refer you to -- the pages are not numbered very well in the copy that I have, I apologise. I believe it is page 15 of the Minister's directive, and it is reflected in the applicant's licence at what I have as page 20. 91 Specifically, part -- section -- part 4, section 4(b) indicates that: "A transfer of effective control of output shall be considered not to have occurred if the Board determines that:" 92 Sorry, moving to sub C: "If the Board determines that effective control has or has not been so transferred in such circumstances, such determination shall also apply for the purposes of the same determination at a later date under this part." 93 To the extent that the interpretation of this section can be used or applied broadly to suggest that concerns that might be applicable, considerations that might be applicable in this context, in the context of a nuclear facility, should also be applicable in other contexts. For example, in relation to decontrol of a fossil facility, IPPSO would like to raise the issue at the outset in this proceeding to absolutely ensure that such criteria are not applied in the same manner. 94 So, therefore, on the basis of both the applicant's own evidence and part 4, section 4(c), IPPSO would like the issues as phrased, namely, to what extent should this decontrol application serve as a model or template for other future decontrol arrangements, to be included in the issues list. 95 MR. VLAHOS: Thank you, Ms. DeMarco. 96 Anyone else who would like to add to this, or is in support of this issue being on the issues list? 97 SUBMISSIONS BY MR. POCH: 98 MR. POCH: Mr. Chairman, I would just say I didn't want my silence to be taken in any way disagreeing with Ms. DeMarco. I think clearly on the face of the language in both the applicant's evidence and directive, it is de facto potentially an issue for future decontrol applications, and the Board should direct its mind to -- in the course of this case -- to what extent is any decision it makes explicitly going to be stated as such or explicitly reserved and not applicable to future cases. So I think it would be appropriate to have as an issue. 99 MR. VLAHOS: Anyone else? Mr. Mattson. 100 SUBMISSIONS BY MR. MATTSON: 101 MR. MATTSON: Mr. Chairman, we agree with the arguments of my friend as to why or what she'd like to have determined in the hearing as to why this shouldn't serve as a model or template. But I think that's something that the Board can determine outright now and not have this as an issue at all. My understanding of the issue as brought forward by my friend is that they have a concern that it may be used in the future as a model or template for other future decontrol arrangements, and I just note for the Board's purposes you are not bound by stare decisis. Your decisions here in administrative law principles do apply, and that there is no request here that this serve as a template. 102 So if the Board can give my friend assurances at the outset that this is not going to serve as a model or template and rather issues as they come forward in the future will be determined on their own merits, then this need not be an issue in the hearing. And certainly we think that that's the more appropriate way to deal with this request. Thank you. 103 MR. VLAHOS: Thank you, Mr. Mattson. 104 Any other comments? 105 MR. MORAN: I have no comment. 106 Ms. Jackson. 107 RESPONSE SUBMISSIONS BY MS. JACKSON: 108 MS. JACKSON: Thank you, Mr. Chair. 109 It strikes me that there is an ambivalence in the submissions that entirely highlights why this not an appropriate issue. On the one hand, concern that some of the evidence that might suggest that this proceeding is in some fashion unique, and on the other hand, a concern that some part of the licence suggests that this proceeding will determine everything in the future. That ambivalence -- does it determine everything, does it determine nothing -- highlights why, as a matter of administrative law, I suggest this is not an appropriate issue to be on the list, nor is it going to be a useful one for the Board to have on the list. 110 Let me deal first of all with the concern expressed about section 4(d), because that is the legal element I suppose that's raised in the submissions. 111 Section 4(d) of the licence must be read in its terms. "If the Board determines that effective control has or has not been so transferred in such circumstances, such determination shall apply for the purposes of the same determination at a later date under this part." 112 MR. VLAHOS: Sorry to interrupt. You mentioned 4(d). I have 4(c). 113 MS. JACKSON: I'm sorry, I'm looking at -- 114 MR. VLAHOS: I hope we have the same licence. 115 MS. JACKSON: I happen to be looking at a version of the licence I see now wrongly calls it 4(d), because in fact there is no (c). The portion -- I think what I'm looking at is the version that has been misnumbered. 116 MR. POCH: This was the one that OPG drafted. 117 MS. JACKSON: This is the one that was signed. The one that was signed apparently has that typographical error. 118 MR. VLAHOS: I have an unsigned copy. So if there is no (c), can we just change your (d) to (c) so that we can -- 119 MS. JACKSON: That's right. When I see it, Mr. Chair, when I look at the directive it's 4(c); when it appears in the licence it's 4(d). But there is no 4(c) so it's clearly a typographical error. What I am looking at, though, is the licence that was signed by -- anyway, so it's 4(c), we're talking about the same thing. 120 MR. VLAHOS: Let's talk about 4(c). My copy is not a signed copy, and it is 4(c). 121 MS. JACKSON: 4(c), I will heretofore amend my copy of the signed licence 4(c). That provision, 4(c), deals with effectively this: As the Board knows, there will be circumstances in the future when OPG comes back to the Board with respect to reporting on its decontrol progress, at certain milestones over the 10-year period. In my submission, the clear purpose of that section, 4(c) of the licence, is to say when that happens. If the Board, for example, determines that the Bruce Power transaction is a transfer of effective decontrol -- of effective control, when the next -- when the review comes forward, the Board is not required to rehear whether there has been an effective transfer -- a transfer of effective control of the Bruce Power transaction. That transaction, for the purposes of that future review, will then be treated as decided in this case. And in my submission one wouldn't expect it to be otherwise, but the clarification was clearly thought to be necessary and avoids any argument that, in the future, the Board has to rehear this case by virtue of the fact that the result of this case has relevance in those future reviews. In my submission, that is the entire purview of section 4(c) of the licence. 122 So then, in my submission, we're back to the basic principles of administrative law. The Board is not bound by its previous decisions, and indeed it would be, in my respectful submission, wrong in law for the Board, in this hearing, to endeavour to decide a future hearing which has not yet come before it. 123 Whatever principles emerge from this case that are argued to be applicable in the future -- in future cases and found to be applicable will apply, and one doesn't have to make an issue to -- for that to be the evident reality of practising before this Board. 124 By way of illustration, one of the issues that everybody concedes that's alive in this hearing is: has interdependent behaviour been facilitated by this transaction? That will involve consideration by the Board of what is meant by "interdependent behaviour". And some aspects of the principles the Board uses to determine what is interdependent behaviour, one would expect in the absence of dramatic differences in some future hearing, would be in play in that future hearing. But the extent to which they get applied would depend upon the view of the Board in the future hearing as to whether the circumstances are sufficiently different, whether something requires re-examination, all issues that the Board has to address and must address in the future hearing and cannot and should not address in this hearing. 125 And to the extent that nuclear -- it is the case that the applicant has indicated that there are aspects of this transaction -- uniqueness of this facility that the Board should have in mind. This is a nuclear facility and, as the evidence indicates, that indicates -- that leads to certain aspects of this transaction which are particularly relevant to nuclear. That's not to say that everything that is decided in this case is irrelevant to fossil. It's equally not to say that everything that is decided in this case is absolutely applicable to fossil. Future decontrol hearings will involve any number of issues with respect to the nature of the -- the nature of the transaction, the nature of the facility, the timing of the transaction, the parties, and so on. 126 And what the implication of this decision is for that future hearing should, as a matter of law and of policy, in my submission, be left for that hearing. To leave this issue on the list is to invite legal error and unnecessary confusion. In my submission, it should not be an issue. 127 MR. VLAHOS: Thank you, Ms. Jackson. 128 Ms. DeMarco? 129 REPLY SUBMISSIONS BY MS. DeMARCO: 130 MS. DeMARCO: Again, if I can reiterate that certainly IPPSO is not suggesting that the Board be bound by the principle of stare decisis or anything other than principles of administrative law which would normally apply, but certainly the applicant seems to forego the understanding that the nature, the breadth, the scope of the Board's decision in deciding measures pertaining to, for example, information sharing, as they themselves raised as a concern, are very important and applicable to future decontrol applications. 131 Specifically on the issues of information sharing, on the issues of, for example, ancillary service agreements, the SRP in risk sharing mechanisms, participation on joint committees, participation in decision-making, the proposed ring-fencing measure, both the breadth and scope of the Board's decision in these matters should certainly involve consideration of, as the applicant suggests, the unique nature of the facility and the extent that those decisions should apply going forward, in light of the unique nature of the facility. 132 As a result, IPPSO submits that the issue that it has set out in relation to future application will assist the Board in determining both the breadth, scope, and potential applicability of its decision and, therefore, is entirely consistent with rule 37.01 of the Board's Rules of Practice and Procedure. 133 MR. VLAHOS: Thank you, Ms. DeMarco. 134 Mr. Moran, anything to add? 135 MR. MORAN: I have nothing to add to that, Mr. Chairman. 136 MR. VLAHOS: The Board has no questions on this issue. 137 Can we then proceed to issue number 3, and the portion of the -- this contested issue that, in the panel's view, has links to the other issues in terms of jurisdiction, is -- appears towards the end of that paragraph, specifically where it says "or market circumstances that facilitate like consequences for consumers." And that is sponsored by OFA. 138 Mr. Moran, am I right on this? I believe that's the part of it that may reasonably belong with the others. 139 MR. MORAN: My understanding is, and the parties may correct this or confirm this, it's the last sentence that would fit with -- the last item that would fit in with the other contested issues 4, 5, 6, and 7 as far as the underlying jurisdictional question is concerned. And I also understand that that would also apply to the provision that's added on by the OFA or market circumstances that facilitate like consequences for consumers, so those two last elements would be ones that, under your proposal -- under your approach to deal collectively with issues raising jurisdiction, that those would fall within that collective approach. 140 MR. VLAHOS: Yes, okay. I guess I had some questions about the very last sentence of that which says, as amended, "if the potential for independent behaviour exists, what is the appropriate remedy." You're suggesting that also has some shades or links with the jurisdictional issue? 141 MR. MORAN: Perhaps AMPCO and Energy Probe should address that question, Mr. Chair. 142 MR. VLAHOS: Okay. Mr. Rodger. 143 ISSUE 3 144 SUBMISSIONS BY MR. RODGER: 145 MR. RODGER: Mr. Chairman, if you'd like me to address this specific addition to 3 now -- but our view on this is that the concept of what constitutes interdependent behaviour, as I think my friend for OPG has alluded to in her last submission, is a central, critical definition for this proceeding. And if it is shown to exist, pursuant to the licence, then the transfer of effective control shall be deemed not to have occurred. 146 So we believe the -- we need the issue before the Board concerning the remedy because the Board could determine if interdependent behaviour does exist, that, therefore, no decontrol exists on this application and, therefore, there would be no order that effective control has been transferred. 147 Secondly, what the Board may see as a remedy is it may impose conditions on the order on OPG to satisfy the Board that it has in place the requisite protections so that interdependent behaviour either is nullified or otherwise controlled to the Board's satisfaction. And this could be -- the conditions in the order could be, for example, to enhance the ring-fencing arrangements that OPG has put forward. There may be a series of new public reporting requirements that may be involved. There may be other changes to the way that OPG proposes to do business with Bruce Power over the term of the lease which may be needed in order to provide the comfort that you require. 148 So it seems to me that that is the other side of the issue; that if we agree that interdependent behaviour is such a critical aspect of this hearing, then the Board must look to see how it can be remedied should the Board have any concerns in this regard whatsoever. And that's why we believe it's an appropriate issue before you. 149 MR. VLAHOS: Okay. So I take it, then, that's your submission on that issue. 150 MR. RODGER: Yes. 151 PROCEDURAL MATTERS: 152 MR. VLAHOS: Ms. Jackson, perhaps we can go with that element of the question. 153 MS. JACKSON: Mr. Chair, there is also the rephrasing of that sentence that imports another aspect. 154 MR. VLAHOS: That's fair. Before we get to the phrasing. I just want to clarify. This sentence, Mr. Rodger, as a result of this transaction, is this what I heard from you, or is it more generic than that? If the potential for interdependent behaviour exists as a result of this transaction, is this what I understand? 155 MR. RODGER: Yes, I'll let Energy Probe speak to the addition. I think what AMPCO's view is going to be at the hearing is it's going to put forward a very different interpretation of what interdependent behaviour means. If you look at the prefiled materials, OPG is really relying on kind of a competition law/merger context for defining that term. And we're saying, or we will say in evidence, this hearing is about the exact opposite. This is about a demerger. This is in the context of a monopoly going to a market, not a merger scenario that exists in a market already. So we're going to be putting forward a very different approach to how that should be interpreted. 156 So we believe that if the Board accepts the AMPCO definition, then interdependent behaviour will be seen to exist in this transaction, and then the issue becomes what then is the remedy. Is it no order? Is it putting around these safeguards? So that is the approach that we'll be taking, sir. 157 MR. VLAHOS: Okay. That's fine. I was just trying to determine whether we -- that last part of that issue is linked with the others and should be argued along with the others, and I hear not. 158 MR. RODGER: That's correct. 159 MR. VLAHOS: Okay. 160 Mr. Cowan, are you satisfied if the words "market circumstances that facilitate like consequences for consumers" that that may be linked to the other jurisdictional issues? 161 MR. COWAN: I believe they are certainly linked to the jurisdictional issues. With respect to the other aspects in italics in issue 3, I believe that OFA's insertion there is a broader definition that would attach in its sense of interdependent behaviour not just those things which were intentional, but also those things which were almost necessarily circumstantial within the new market, and within the sense that we do not yet know whether an addition to competition is linear. Does a 5 per cent increase in other ownership facilitate a 5 per cent increase in competition, or is it absolute? We don't know that. And I don't think the evidence addresses that because there is no evidence for it at this point. 162 So our reasons for our request, the consumers in the farm community are concerned that, with respect to rebates and competition control, that this -- 163 MR. VLAHOS: Mr. Cowan, I'm sorry to interrupt you. I did not mean that we can continue with the submission right now. I was just trying to determine whether you would like this issue to remain as part of 3 or would you like to link that with the other issues, 4, 5, 6, and 7, that have elements of jurisdiction. So what is your preference? 164 MR. COWAN: My preference is to keep it in 3. 165 MR. VLAHOS: All right. 166 MR. COWAN: My apologies for my obstruction. 167 MR. VLAHOS: That's fine. Okay. Mr. Mattson, do you have anything to say? 168 MS. JACKSON: I should say, Mr. Chair, that my objection to the portions of what my friend is proposing are jurisdiction. 169 MR. MATTSON: Yes. Thank you, Mr. Chairman. 170 Just to clarify first. Issue 3, it says in the partially contested issue -- contested wording is in bold italics. Just to clarify on that. In fact it is the non-bold italic issues that are in -- contested; is that correct? That's the way I'm reading it. 171 MR. MORAN: Mr. Chair, I think that all that happened when the fax went out that some of the formatting got lost and so where it says bold italics it should actually just be the italics. There isn't anything bolded. 172 MR. MATTSON: Thank you. So on -- with respect just to issue 3, if the potential for interdependent behaviour exists, what is the appropriate remedy. Our position on this is that this is not a jurisdictional issue, Mr. Chairman, and just let me say why. 173 The argument of the applicant is quite clearly, and my friend Ms. DeMarco really raised that in her submissions earlier as to why her issues 8 should be on the issues list, quite clearly is connected with nuclear technology and safety issues and the need for some interdependence. That is their argument. And in discussing interdependent behaviour they're asking you to make some concessions in that regard because of what they see the necessary link and need for behaviour -- behavioural interdependence and sharing of tools, et cetera. 174 If, then, this Board finds that there is a different indicia that will be considered for determining interdependent behaviour, and you still find that there is a sufficient non-interdependent behaviour here so as to allow their application, you should also clearly look at this argument as opening the potential for some need for more disclosure, greater transparency, as an appropriate remedy to accepting their application, on the one hand, but at the same time ensuring that it's transparent and clear to the public and to the market what's going on. 175 So when we say what is the appropriate remedy, it is really directly reactive to the application of OPG here for special circumstances going towards your determination of what interdependent behaviour means. So if you find there is a level of interdependence here but still sufficient to warrant acceptance of the application, certainly you may also feel that there are some necessary terms and conditions that you need to put in place to, while on the one hand recognising the nature for safety, on the other hand recognising the need for transparency and full disclosure. 176 So we think that the issue -- if the potential for interdependent behaviour exists, what is the appropriate remedy, it is not a jurisdictional issue, it is directly tied to the application that OPG has brought before you and will ultimately form part of your decision. Thank you. 177 MR. VLAHOS: Thank you, Mr. Mattson. 178 Ms. Jackson, we're still dealing now with the very last part of sentence 1, as well as the last sentence, whether those are linked to the jurisdictional issues and should be -- 179 MS. JACKSON: My objection to the reference to market circumstances and the potential for interdependent behaviour -- basically, I have three objections to section 3, and they are all jurisdiction -- the proposed rewording of question 3, they are all jurisdictional in nature. 180 MR. VLAHOS: So even the first part of question 3? 181 MS. JACKSON: Do you mean the list of arrangements? 182 MR. VLAHOS: Yes. 183 MS. JACKSON: I can tell you very shortly what my objection to that is. It is not jurisdictional in nature. It has to do with confusion. But everything from -- everything from the words "that facilitate interdependent behaviour between OPG and BP LP," everything after that is objected to on a jurisdictional basis. 184 MR. VLAHOS: Okay. Thank you for that. Give us a moment, please. 185 [The Board confers] 186 MR. VLAHOS: In the Board's view, the very last sentence, it remains as part of issue 3. The very last part of the first sentence which reads "or market circumstances that facilitate like consequences for consumers as posted by the OFA" that should be addressed as part of the other issues 4, 5, 6, and 7. So with that guidance, then, can the parties take some time to coordinate, discuss and coordinate their submissions, and perhaps I can get some guidance, Mr. Moran, how long the parties would need for this. It appears we're not running short of time today -- I hope not. 187 MR. MORAN: Mr. Chair, given what you've just indicated, and given how you propose to approach this, does that mean that you will now hear the individual submissions on the last sentence in paragraph 3 and the stuff in the brackets in issue 3? And then we move to the collective -- 188 MR. VLAHOS: That is correct. 189 MR. MORAN: Okay. 190 MR. VLAHOS: That is correct. Now, whether the parties are ready to proceed now with issue 3, we're okay with it, and then reserve the break before we proceed with the so-called jurisdictional issues. I would have to ask each -- Ms. DeMarco, whether you're ready to proceed on issue 3, as well as Energy Probe, Mr. Mattson. 191 MS. DeMARCO: I'd be happy to proceed. 192 MR. VLAHOS: And Mr. Rodger for AMPCO, are you ready to proceed now? 193 MS. DeMARCO: I apologize. I'd be happy to proceed right now. Just by way of clarification, do I understand correctly that the last sentence, reading "if interdependent behaviour exists, what is the appropriate remedy" is being dealt with not -- 194 MR. VLAHOS: It is dealt with as part of question 3, as part of issue 3. 195 MS. DeMARCO: Right. Not as a jurisdictional issue. 196 MR. VLAHOS: That's correct. 197 MR. RODGER: Mr. Chairman, I don't think I have anything further to add than my earlier submission on this point, the last part of issue 3. 198 MR. VLAHOS: I hope Ms. Jackson remembered all that. 199 SUBMISSIONS BY MR. MATTSON: 200 MR. MATTSON: Mr. Chairman, I would be the same with -- "if the potential for" is added there, just -- the only comment on that is I don't think it should happen afterwards, it should happen in advance of. So we really again, I think I made my argument, and it might help Ms. Jackson to show that is the intent of our argument. It may satisfy you with respect to the issue itself. 201 MR. VLAHOS: Well, you'll get an opportunity to respond in any event to what Ms. Jackson has to say. That puts us back to Ms. DeMarco on the first part of that sentence, that is, what's being contested is what's in the brackets, as I understand. So perhaps you can proceed from here, Ms. DeMarco. 202 MS. DeMARCO: Certainly. 203 SUBMISSIONS BY MS. DEMARCO: 204 MS. DeMARCO: This issue raised by IPPSO is grounded again in the licence, specifically part 4, section 4(b)(ii), which indicates that a transfer of effective control shall be determined not to have occurred if "there exists any ongoing arrangements which facilitate interdependent behaviour between OPGI or a subsidiary of OPGI and the transferee." 205 And I would like to emphasize the term "any" which is the genesis for the requested specificity and the list you see before you in the brackets. 206 The proposed IPPSO modifications are an attempt to achieve three -- three main ends. 207 The first is to add specificity and further elucidate the specific elements of the issue. Again, we're not talking about broad-brush Gestalt general interdependence, we're talking about any specific interdependence. 208 Secondly, it's meant to assist the Board in its consideration of the interdependence issue in all elements. 209 And thirdly, it's meant to assist the parties in participating both more effectively and efficiently on the interdependence issue. 210 Given that those are the objectives, and IPPSO submits those objectives will be achieved by adding the specific list. We also submit that the objectives set out in rule 37.01 for the Board in considering whether an issue should or should not be added to the list are met. 211 Moreover, given that OPG has adduced specific evidence on each of these elements relevant to interdependence, IPPSO submits that OPG's objection to the requested addition, the requested specificity, appears to be inconsistent with the evidence. 212 I'd like to refer you, if I could, to page 48 of OPG's application. 213 MS. JACKSON: If if it would assist my friend, I can tell you that OPG does not contest the fact that what is listed in the brackets are amongst the arrangements that have to be considered. 214 MS. DeMARCO: So certainly we're in agreement that certainly these have to be considered. But in shaping the issues, we'd like them specifically mentioned in the issue so that we may have individual consideration of interdependence in the context of each specific arrangement and not, as I said, a Gestalt or broad-brush determination on the balance of do we have interdependence. Again, this is grounded in the term "any" in the licence itself. 215 Paragraph 3 on page 48 which is in section 5 of the application, specifically indicates that OPG has carefully reviewed the details of this complex transaction to identify potential concerns that the Board may have. Features such as the structure of the risk-sharing arrangement included in the SRP mechanism and the sharing of certain services were highlighted as areas of possible concern. 216 It's noteworthy that OPG itself, therefore, chose to specifically, and not generally, identify interdependence issues, and as a result IPPSO submits that the Board should follow this lead and identify the specific issues related to interdependence consideration in the issue itself. 217 And as I've gone through much of the evidence to date, I won't take you through chapter and verse where the applicant specifically refers to each item on the list that IPPSO hopes to have included. But let it be noted that all throughout the evidence, specifically at page 39, 41, 36, 40, 44, 43, each of the elements that IPPSO hopes to have included as a specific item on this issue are set out in OPG's evidence. 218 MR. VLAHOS: Thank you, Ms. DeMarco. 219 Would anyone else from the intervenors like to comment on it before we turn to Mr. Moran and the applicant? 220 Mr. Lokan. 221 SUBMISSIONS BY MR. LOKAN: 222 MR. LOKAN: Yes, the Power Workers Union will be supporting OPGI's position on the statement of the issues. It may be more efficient for us to speak after Ms. Jackson. 223 MR. VLAHOS: Mr. Lokan, why couldn't you speak up now? 224 MR. LOKAN: Well, I'm happy to speak up now. 225 MR. VLAHOS: Go ahead, please. 226 MR. LOKAN: We'd simply make the point on this issue that Ms. DeMarco suggests that it might be helpful to the parties and the Board to specify these particular sub-issues. The only way that can be helpful is if those particular sub-issues are somehow more relevant or more important than other considerations, and the Board is not really in a position to determine that yet. We are at a very early stage in the proceedings. It would be better to keep things open-ended until a later stage. 227 MR. VLAHOS: Okay, thank you, Mr. Lokan. Anyone else? 228 Mr. Moran, anything to add from you? 229 MR. MORAN: No, Mr. Chairman. 230 MS. DeMARCO: I don't know if it's appropriate for me to respond or wait for Ms. Jackson to respond at this point. 231 MR. VLAHOS: We'll hear from Ms. Jackson first then Ms. DeMarco, and then you would have an opportunity to respond, as would Mr. Mattson and Mr. Rodger. Yes, Mr. Rodger. 232 RESPONSE SUBMISSIONS BY MS. JACKSON: 233 MS. JACKSON: Mr. Chair, the concern, and I would put it no higher than that is, this does not appear to be a helpful elucidation of the issues. The issue as described includes any ongoing arrangements, and there's no issue about the breadth of that term. In other words, any ongoing arrangements that anyone wants to have examined with a view to interdependent behaviour are up for examination. It is certainly the case that there is evidence on all of the specific kinds of arrangements that are in the brackets, and there's no issue that the Board can examine those arrangements with this issue in mind. 234 The question is what is added in terms of clarity by saying all -- in effect, all ongoing arrangements are up for examination on this issue and then having a subset. Does that mean only the subset is examined? In my submission, it simply makes the question ambiguous. And because of that ambiguity, it seems, to OPG, that it is not helpful. It is not a question of saying there's no objection to the view that, amongst the ongoing arrangements which the Board may choose to examine and on which the applicant has led evidence, are those in the brackets. 235 MR. VLAHOS: Thank you. 236 Any response to Mr. Mattson's submissions or Mr. Rodger's, Ms. Jackson? 237 MS. JACKSON: No. 238 Sorry, on the other part? 239 MR. VLAHOS: Yes. 240 MS. JACKSON: Well, with respect to that sentence, there really are two elements to it. 241 In the first instance, on the question of remedy, let me leave the addition of the words "the potential for" as a second submission. On the question of remedy, this application comes before the Board pursuant to the directive and the licence and seeks a determination that there has been effective decontrol of the Bruce facility. And in order to make that determination, with respect, the Board will address and will have to address the three named issues, and they include interdependent behaviour. 242 If the Board determines that interdependent behaviour is facilitated in the terms of the licence and the directive, it will have determined that effective -- that effective control has not been transferred. It follows from that that it would deny the application. 243 If it determines that interdependent behaviour has not been facilitated and the other tests are met, it will determine that effective control has been transferred. 244 So the only options open in respect of this issue, I suggest, are to allow the application or to disallow the application, or I guess it is as well possible, and that seems to have been the contemplation of this question, that the Board might say, as things currently stand, interdependent behaviour has been facilitated, but if X were done, that would not -- that that concern would be a remedy and effective control would pass. 245 But beyond that, in my submission, in terms of the licence and the directive, and I'm going to take the Board's admonition and deal more generally with those jurisdictional issues later, but I ask you to have those in mind when I come to this, given the licence and the directive, the issues before the Board -- the disposition left to the Board is to determine whether the tests have been met and effective control has passed, or the tests have not been met and effective control has not passed, or, as I say, I suppose the third possibility, that if some additional step were taken in respect of interdependent behaviour, effective control would have been transferred. 246 That's what's open to be -- those are the dispositions that are open to the Board by virtue of the licence and the directive, and the concern about this question is the apparent implication that there are other remedies available. And in my submission, and for reasons that I will develop more fully in my jurisdictional submissions, there are not. So that's the objection to that portion of the issue. 247 With respect to the addition of the words "the potential for interdependent behaviour," the concern is that that steps outside the terms of the test and is seriously not useful and not helpful. And so at this -- the objection there has, again, a jurisdictional element and a policy element. It is precisely because when parties enter into transactions such as those contemplated in the licence to decontrol that there is the potential for interdependent behaviour. In any transaction between parties the potential exists. It is precisely because the potential exists that the licence directs the Board to examine whether interdependent behaviour has, in fact, been facilitated. 248 So to say that the test ought to be whether the potential exists goes beyond the terms of the licence and the tests that the Board is given to apply and is seriously unworkable. Potential for interdependent behaviour always exists when two parties deal with one another, whether they're transferring assets or otherwise. That's not the issue and that's not a helpful question and that's not the test in the licence. The test in the licence is whether, in fact, interdependent behaviour has been facilitated. And that's the objection to the additional language. 249 MR. VLAHOS: Thank you, Ms. Jackson. 250 Now, before I turn to the three intervenors to respond to that, I just -- if I could ask a question. I wonder whether the first part, whether the distinction without a difference between yourself and Ms. DeMarco about what's in the parentheses. I guess on this -- I sense there is not really a position that goes as part of the evidence so -- 251 MS. JACKSON: Mr. Chair, that's why I say I would elevate that not to a level of objection but concern because I -- in my submission, if issues are to clarify proceedings, to say everything is in and then have a subset of everything is ambiguous, inherently ambiguous. But if the Board can live with that ambiguity, we can too. We just didn't think it was helpful. 252 I should add -- there was one other observation I wanted to make with respect to the submissions that had been made concerning interdependent behaviour and the potential for interdependent behaviour, and the submission was put to you that the case of the applicant in this circumstance is that because this is a nuclear transaction there is a need for some interdependent behaviour. That is not the position of the applicant. The position of the applicant is that, although this is a nuclear transaction, and although there are ongoing arrangements as a result, none of those ongoing arrangements facilitate interdependent behaviour. And I would like that position to be very clear with the Board from the outset. 253 MR. VLAHOS: Thank you, Ms. Jackson. 254 Ms. DeMarco. 255 REPLY SUBMISSIONS BY MS. DEMARCO: 256 MS. DeMARCO: You've certainly anticipated one of the questions that I wanted to put forward in elucidating the meeting of the applicant's use of the term "concern". And I understand this not to be on a terribly different page in this regard. We are, however, on a different page in terms of our assessment of whether or not this increases or decreases ambiguity in the issue. 257 certainly it's IPPSO's submission that by providing a specific framework for the discussion of this issue, and in light of Ms. -- of the applicant's submissions relating to any arrangement being on the table, we thought it would be certainly helpful to the Board and decrease ambiguity and increase efficiency in the proceedings should we have a specific framework to work from, and allow for interdependence consideration to take place in this context. 258 As a result, we would submit -- IPPSO would submit that the included list hones the issues, further scopes out the issues and will both assist the Board and participants in proceeding on these issues. 259 MR. VLAHOS: Thank you. 260 Mr. Rodger. 261 REPLY SUBMISSIONS BY MR. RODGER: 262 MR. RODGER: Thank you, Mr. Chairman. 263 I took my friend's comments from OPG as essentially agreeing that the AMPCO issue is relevant and appropriate for this hearing. 264 OPG is seeking an order about whether the transfer of effective control has occurred. That was an uncontested issue, number 1. By necessity then, you have to get into the definition of interdependent behaviour. 265 It's AMPCO's position that there's room for the Board to accept a definition, and the definition that perhaps has qualifications around it as to what OPG should do in order for you to be satisfied that the Board is meeting its licence requirements. 266 What my friend referred to as the third option, we would agree with. What we're saying is, there's no reason to try and limit what that option is at issues day, but it's clearly relevant for this Board. So I think the way that we have drafted this issue -- as I say, at the end of the day, I didn't hear any disagreement from OPG that it should be included as an issue for this hearing. 267 MS. JACKSON: Just to be clear, Mr. Chair, it's a potential remedy. That doesn't make it an issue and it doesn't make the scope of other potential remedies an issue. There are no other remedies. 268 MR. VLAHOS: Thank you. 269 Mr. Mattson. 270 REPLY SUBMISSIONS BY MR. MATTSON: 271 MR. MATTSON: Thank you, Mr. Chairman. 272 Ms. Jackson has confused me to no degree at this point. Are there three or are there two possible remedies; allow, disallow, or allow with conditions? If it is the third, my friend from AMPCO and ourselves have only tried to capture that for the Board in the issues list to ensure that not only -- as parties we've looked through the filings and we see there are issues with respect to interdependent behaviour. I have no doubt that my friend Ms. Jackson and OPG may argue that nuclear power is no different from other forms of generation and shouldn't in any way affect your decision on interdependent behaviour, but that's for argument at the hearing. We are certainly going to point to their evidence and show where they have done just that. 273 The question here for you to decide is whether or not there is the third option: Allow, disallow, or, if there is a potential for independent behaviour as we said, or you can see if there is interdependent behaviour based on the evidence, what is the appropriate remedy? Allow, disallow, or allow with, as my friend put it, allow with some conditions. That's what my friend, Ms. Jackson, has said. 274 So if that is her position, that there is a third, we don't need at this point to argue what those should be, whether they're going to be precedent-setting for future decisions, what the definition of interdependent behaviour is. Let's leave that for the hearing. Let's just leave it open that there are parties who see the terms of this application as leaving open that third possibility that would be an issue, and I think the Board will want to consider after hearing all the evidence. 275 So I thought she had agreed to the third option. Maybe at this point she'd like to retract that. 276 MR. VLAHOS: Ms. Jackson, I think there was an invitation by Mr. Mattson to retract the last -- 277 MR. MATTSON: Whether there is three options or just two. I mean if there is three -- 278 MR. VLAHOS: He's seeking clarification as to, are you agreeing that there's a third option which is to allow with condition? And that's to be clarified for Mr. Mattson and for us. 279 FURTHER RESPONSE SUBMISSIONS BY MS. JACKSON: 280 MS. JACKSON: Mr. Chair, I'm happy to clarify it for you. 281 In my submission, the Board could allow, could disallow -- or could disallow, but say with the following addition, effective decontrol would have passed. 282 MR. VLAHOS: Okay, thank you. 283 The Board may have some questions. Mr. Laughren. 284 QUESTIONS FROM THE BOARD: 285 MR. LAUGHREN: Ms. Jackson, I was puzzled by your last comment where you said the Board could allow, disallow, or disallow with conditions. Did you also mean allow with conditions? 286 MS. JACKSON: I'll tell you precisely what I have in mind. This comes up, for example, in situations where class action settlements come forward for approval and it's a yea or nay situation. It's approved or disapproved, and in a sense that's what you have here. Either effective control has passed or effective control has not passed. 287 There are circumstances, and they are limited, where a tribunal such as the court hearing that kind of application or the Board hearing this one may say, you haven't made the test, you haven't -- effective decontrol has not passed. But I can see a small correction and I'm telling you what it is so that you know if you make that small -- and I'm telling you if you make that -- if you can make that small correction and you make that small correction, the test would have been met. It allows a small level of maneuverability. So it's allow with conditions, not disallow with conditions. 288 MR. LAUGHREN: Okay. 289 MS. JACKSON: What I would not want to do is suggest there's a lot in this for -- it's only in the circumstances where you can see a quick and easy -- a quick and discernible fixation. But it's allow with conditions. 290 MR. VLAHOS: Okay. The Board has no other questions. 291 Mr. Moran may have some questions of clarification. 292 MR. MORAN: Mr. Chair, I just wanted to point out, and it may be that other parties might want to respond. 293 Section 19(2) of the Ontario Energy Board Act says that "the Board shall make any determination in a proceeding by order." I don't think that's controversial. They are seeking a determination and the Board will issue an order based on its determination. And then section 23(1) says "the Board may," in making an order, "may impose such conditions as it considers proper", and "an order may be general or particular in its application." 294 So in light of the submissions made by Ms. Jackson, it may be that she may want to comment on that. 295 MS. JACKSON: I agree with that and that's precisely why I say it's a remedy. It's a remedy provided by the Act and it's not an issue. And there are no other issues raised that require this to be on the list. 296 MR. VLAHOS: Mr. Rodger, one last time. 297 FURTHER REPLY SUBMISSIONS BY MR RODGER: 298 MR. RODGER: Yes, Mr. Chair. 299 The question today is what is a relevant issue before this Board for this proceeding. My friend from OPG has tried to characterize this that maybe there can be small corrections. I'm saying there is no basis to make that pre-judgement today. Maybe it's going to be a small correction, maybe it's going to be a large correction. But I agree with my friend, Mr. Moran, that you have the authority to do this. It's clearly a matter that should come before you for this hearing, and our final submission would be, today, don't prejudge it. It may be small; it may be large. Let's have the parties present evidence and you can decide at the end of the day. 300 MR. VLAHOS: Okay, thank you all. That completes the submission stage for issue number 3. We are going to take a break now. 301 PROCEDURAL MATTERS: 302 MR. VLAHOS: Could I get an indication as to whether a half hour or perhaps an hour would be -- an hour, you would prefer, as opposed to a half hour? 303 MR. MacODRUM: Mr. Chairman, could I suggest -- 304 MR. VLAHOS: Sorry, Mr. MacOdrum. Yes? 305 MR. MacODRUM: Mr. Chairman, and I say this with no disrespect to my friends, I think perhaps a shorter break rather than a longer. I think the proposed way you have suggested we proceed makes eminent sense with the lead person to each contested issue speaking to it and the rest of us chipping in, and I say that despite the fact that I had a brief and coherent argument that addressed both issues 4 and 5 but I'm quite prepared to bifurcate it and speak on item 4 just in support of what Mr. Rodger will say. 306 And I would suggest rather than -- I don't think we are going to achieve much by caucusing, and I would suggest that we just have the usual break and then return with proceeding to issue number 4 and you calling upon Mr. Rodger and get through the list as expeditiously as we can. 307 MR. VLAHOS: Mr. Poch? 308 MR. POCH: Mr. Chairman, I'm just concerned that each of these issues raises the underlying jurisdictional issue, and I don't -- my friend may welcome it, but I don't think we want to have the situation where OPG's responding in turn to each with the same argument again and we have to deal with it each time. I was going to suggest we deal with the common elements of -- first off, and then each -- the sponsor of each particular lead off on any added submissions that pertain to that particular one. I think in my case I'll have a common submission, I'll have nothing further to add. I think that might be the way to go. But I'm happy to discuss it with my friends and -- 309 MR. VLAHOS: That's consistent with the plan that I outlined this morning. It's just the question of whether the parties wish a half hour or an hour. 310 MS. JACKSON: Can I just make sure, Mr. Chair, that I understand the plan? It will be that everybody will -- that these issues will be grouped, everybody will make submissions, and the lead proponent on a particular issue will make those submissions and I will answer all of them; is that it? 311 MR. VLAHOS: Well, I just want to make sure I understood this. My plan was that the parties caucus and they come up with a plan where one person takes the lead on the jurisdictional issues, that is, that pertain to all four issues, and the other parties are welcome to add with any specific issues they may have in each one of the four. 312 MS. JACKSON: And then I would deal with -- 313 MR. VLAHOS: And then you would deal with them at one time. 314 MR. VLAHOS: Yes. 315 MS. JACKSON: Thank you. 316 MR. MacODRUM: I can tell you at the outset that I'm not prepared to accede the lead on item 5 which we are proposing, and I just would suggest that you proceed through the issues as you determined at the outset this morning. 317 MR. VLAHOS: Mr. MacOdrum, that's not -- that does not stop you from not having too much to say on any of those particular issues. You've got to consider the other parties as well as to what may work best. 318 MR. POCH: Mr. Chairman, half an hour I think would probably be sufficient. 319 MR. VLAHOS: It is, according to the clock on the wall, it is 10 minutes to 11. Let's resume at 11:30. 320 MR. JANIGAN: Mr. Chair, with the permission of the Chair, VECC would withdraw and follow the discussion with the transcript. 321 MS. DeMARCO: Likewise, Mr. Chair, with the permission of the Chair, IPPSO's two issues have been dealt with, will withdraw and follow the proceedings by transcript. 322 MR. VLAHOS: Thank you very much, both of you. 323 --- Recess taken at 10:50 a.m. 324 --- On resuming at 11:40 a.m. 325 MR. VLAHOS: Please be seated. 326 MR. POCH: Mr. Chairman, we have a proposal for you. 327 MR. VLAHOS: Good news. 328 MR. POCH: Yes. We think -- it was a little difficult discerning what we all agreed would be the underlying common issues, and what were specific, and I think the resolution should work to be a relatively efficient use of your time. 329 The proposal is we'll -- each of us will go in the sequence that flows naturally from the issues list. Each of us will speak to both common and our specific issue. We will try to avoid duplication on the common elements. We will all speak only once. We will not then tag on to each other's specific issues so we can achieve some time economy there. And then Ms. Jackson can reply to all of us, she'll be able to deal with the common issues as she decides to order it, in one piece and each specific, and we'll all try to exercise some self-restraint on reply to not repeat each other. And I think I can -- I know Ms. Jackson wanted to warn us all not to try to raise new issues in reply and I certainly won't. 330 MS. JACKSON: I did, Mr. Chair. We saw a little of that before the break, I'm sure unintentionally, but particularly given the scale of what we're about to engage in -- I'd just like to remind everybody that reply is not the circumstance in which you say there's one other thing that I've just thought about that supports my argument and here it is. It's limited to dealing with something that's new and what I've said that hasn't come up before. 331 And while I have the microphone, may I just make one other point which I neglected to make earlier. The day of the issues conference I wrongly attempted to correct the name of the other party to this transaction. I said it was Bruce Power LLP. I think I'm too fresh from the change of our law firm to an LLP law firm. Bruce Power, on the other hand, is Bruce Power LP. 332 MR. VLAHOS: Thank you. That will be acceptable to -- did I speak too quickly? 333 MR. COWAN: Very briefly. The proposal to proceed as we have leaves by seven words from number 3 in limbo, and if they can be tagged on at some point after others have proceeded, that will be most welcome. 334 MR. VLAHOS: Yes. We would assume that it would be tagged somewhere, Mr. Cowan. 335 MR. POCH: Mr. Chairman, we had assumed the order would be that Mr. Rodger would go ahead, then Mr. MacOdrum, then myself, then Mr. Shrybman, followed by other counsel. 336 MR. VLAHOS: Mr. Rodger, Mr. -- 337 MR. POCH: Mr. MacOdrum, myself, and then Mr. Shrybman. That's as far as I think we got in the sequencing. 338 MR. VLAHOS: All right. We'll add Mr. Cowan then after that. 339 Okay, that is acceptable to the Board. 340 MR. TAYLOR: Mr. Chair, Coral Energy would like to speak as well on that topic. 341 MR. VLAHOS: I'm sorry, I didn't hear. 342 MR. TAYLOR: Coral Energy would also like to speak, to be added to that list. 343 MR. VLAHOS: Which specific issue? 344 MR. TAYLOR: The jurisdictional matter. 345 MR. VLAHOS: Are we going by issues, I understand now? 346 MR. TAYLOR: Number 4. 347 MR. POCH: I think the notion was that since each of us are only going to speak once, we would just follow that sequence of counsel and we would each address the general or specific, as we felt was necessary, and not come round again. 348 MR. MacODRUM: The proposal is, Mr. Chair, so you understand it, is we're proposing to speak to all of the remaining contested issues. We each speak once on all of the remaining contested issues. 349 MR. VLAHOS: With someone taking the lead, right, for each issue. 350 MR. MATTSON: But Mr. Chairman, Energy Probe, we do want to speak, but we already have identified one of those parties as the lead. The first three -- there are three or four lead parties with different issues and they're going first. We'll be very brief to add or clarify. 351 MR. MORAN: Okay. Well, Mr. Chair, I think what's being proposed is that parties who are leading issues would speak in the order that's been suggested. There are other parties who aren't leading any issues but may be in support of those parties and they would want to add whatever they want to that bit before OPG replies. I think that's the proposal. And Mr. Taylor and Mr. Mattson would be in that category, so they would be at the end of the list presumably. 352 MR. LOKAN: Mr. Chair, Power Workers' Union would also like to speak to the issues, perhaps, at the end of the list of intervenors. 353 MR. VLAHOS: All right. If we go now with, for example, issue 4 as the first one, then I would look to Mr. Rodger to be followed by Mr. MacOdrum and then go through the list. 354 MR. POCH: No, sir, we're trying to avoid having to go through the list each time. If it's acceptable to the Board what we'd propose -- you'll hear from Mr. Rodger. He will give his comments specific to issue 4. He'll also give his comments on the general underlying jurisdictional question to the extent they haven't already been made by others. In Mr. Rodger's case, he may anticipate some of us or leave something or he may go first. That will be it from Mr. Rodger so you that you don't have to hear us -- you don't have to go through the whole list each time, the whole list of counsel. 355 MR. VLAHOS: Correct. But I would have to advise someone that has only specific issues with 4, for example, to add to this. 356 MR. MacODRUM: And then, Mr. Chairman, I propose to speak on issues 4 and 5 following Mr. Rodger. 357 MR. VLAHOS: Okay. I think we'll play okay. Let's begin. 358 We'll look at Mr. Rodger, then, to start off with issue 4. 359 ISSUES 4, 5, 6, 7: 360 SUBMISSIONS BY MR. RODGER: 361 MR. RODGER: Yes, thank you, Mr. Chairman. 362 For the record, AMPCO has contested number -- issue number 4. Is the adjustment to CRQ, which stands for contract required quantity, and Qh, hourly quantity, in accordance with part 3, paragraph 4 of OPG's licence appropriate? If not, how should the Board determine the CRQ and the adjustment to CRQ. 363 Mr. Chairman, in my submission I'm going to be referring to the March 24th, 1999 Order in Council and the Minister's directive which is attached, and secondly, an excerpt from the third interim report of the market design committee dated October 8th, 1998. And I've provided copies of that for you and for my friends. 364 And I'd like to address four themes concerning why AMPCO's issue number 4 is not only appropriate for this proceeding but it is crucial for the Board's consideration in order to satisfy the terms of the Minister's directive. And my four themes are: Firstly, the contested issue and section 1, OEB objectives. Two is relevancy of the contested issue to matters before the Board. Three is the requirements of the Minister's directive and, therefore, the requirements of OPG's licence. And fourthly, to provide the OEB with notice of an alternative approach to have the issue brought before you by way of a new application by AMPCO, which is premature at this date but I want to just describe to the Board another approach. 365 The first issue, the contested issue in section 1, OEB objectives, there is an essential context AMPCO believes which must be highlighted concerning the whole CRQ discussion and the Board's objectives under section 1 of the Act. There is a direct linkage between the CRQ calculation and the quantum of the rebate under the market power mitigation framework. The quantum of the rebate goes to ultimate electricity commodity prices which Ontario consumers will pay, and that goes to one of the central objectives of this Board under section 1, protecting the interests of consumers with respect to prices. So this is -- goes to one of the central themes of this hearing. 366 You can think of the application, Mr. Chairman, as a bit of a two-sided coin. On the one side we have the question about whether a transfer of Effective Control, capital E, capital C, has occurred. I said earlier that that encompasses whether interdependent behaviour exists. But the flip side of that coin goes to consumer price protection. How much rebate are Ontario consumers entitled to if average prices exceed the $38 of megawatt hour cap? 367 So the quantum of rebate and how that quantum is determined and the adjustment to CRQ, we believe, are integral questions for this Board to decide. And, in our view, there is no basis whatsoever for the Board to take the few -- to take the view that its section 1 objectives are somehow suppressed or irrelevant in the context of this application. 368 Now, secondly, the relevancy of the contested issue to matters before the Board. The issue, as we've described it, is specifically referenced by the applicant itself as one of four specific areas of relief which are sought from the Board in this proceeding. If you go to the OPG application, page 2, paragraph 4, the applicant states that "OPG hereby applies to the Board, pursuant to part 4, paragraph 4, of its licence, for an order confirming the appropriate adjustment of CRQ and Qh in accordance with part 3, paragraph 4 of its licence." 369 If OPG thought that an order from this Board was not needed, they wouldn't have requested it. So, in our view, in seeking the specific relief on this matter, it self-acknowledges that it's a proper and relevant matter as an issue before this Board. 370 It will be AMPCO's position and evidence at the hearing that this specific order on the CRQ adjustment should not be granted. It's not appropriate. The rationale for our position is that the proposed CRQ adjustment by OPG is in violation of the Minister's April 1st, 1999 directive and, therefore, is a violation of OPG's existing licence conditions. 371 It will be AMPCO's position that there are fundamental deficiencies in the current CRQ data file, and that there have been misrepresentations made concerning the implications of the CRQ data file. And I want to speak to some of those matters now, but the end result is that we believe that our issue 4 must be part of this hearing. 372 Now, first to talk about the CRQ deficiencies. There is currently a 16-month gap in the CRQ data. The real-life timing of events surrounding market opening was very different to what was modeled and predicted back in the days of the Market Design Committee. The market power mitigation agreement framework was being advanced on the assumption that the new electricity market was going to open on July 1st, 2000. We all know that that assumption is wrong and open access only occurred in May of 2002. 373 Now, pursuant to the market power mitigation agreement framework, the rebate extends out 48 months after market opening, and it's AMPCO's understanding that there are no CRQ volumes whatsoever from December 31st, 2004, until April 30th, 2006. AMPCO submits that there is a need for this Board to consider that and consider how the CRQ model is going to be rerun in order to fill the information gap that currently exists. Someone has to decide how to do this, and we believe this is the appropriate forum for that in the context of the application. 374 Next with respect to the CRQ misapplication or misrepresentation, it will be AMPCO's evidence that the adjustment to CRQ which OPG seeks is inappropriate because the CRQ concept in OPG's licence is being misapplied. And this misapplication contravenes the April 1st, 1999 directive from the Minister and, therefore, represents a breach of OPG's licence. To explain this I want to briefly recall the events surrounding the implementation of the market power mitigation framework, which will also be the subject of AMPCO's evidence at the hearing, to show how the link exists between that original framework concept and the application before you today. 375 The market power mitigation agreement framework negotiations occurred between the Market Design Committee executive, and I make that distinction between the executive of the Market Design Committee and the members of the Market Design Committee, and the former Ontario Hydro in the summer and fall of 1998. The approval of the Market Design Committee executive and Ontario Hydro framework for market power mitigation was presented to the Market Design Committee members, and the third interim report of the Market Design Committee was issued in October 1998. We then have the cabinet order in council, approved on March 24th, 1999, and the directive itself, I believe issued on April 1, 1999, and then a month later on May 1st, 1999 we have this Board issue OPG's transitional generation licence. 376 Now, the context for the Market Design Committee process around this issue. The Association of Major Power Consumers in Ontario had two members on that committee, Mr. David Goldsmith, representing the Ivaco Rolling Mills, and Sid Olivet from Dupont. I was counsel to both those gentlemen throughout the committee process. And it must be remembered by this Board that the decontrol proposal, of which part is this application before the Board, was always seen the inferior solution by the Market Design Committee. There was strong support amongst various MDC members for outright breakup and divestiture of Ontario Power Generation, but this issue was specifically taken off the table at the Market Design Committee. And thus you have the second-best solution of the market power mitigation agreement framework. 377 Now, AMPCO's evidence will be, at the hearing, that the framework that has led to the application today was only acceptable by the Market Design Committee because it was sold to the stakeholders on the basis that consumer price protection in the form of this rebate was going to apply to 90 per cent of OPG's domestic sales over the course of up to 4 years after market opening. 378 Now, it's also important to note that the actual data file on which the 90 per cent figure was based was not subject to review by the Market Design Committee, or any other public review. In fact, this proceeding is really the first opportunity the stakeholders have had to raise the issue in a public forum at all. 379 If you look to the Order in Council -- sorry, if you first look to the handout that I've provided the excerpt from the Market Design Committee and perhaps this should be given an exhibit number, Mr. Chairman. 380 MR. VLAHOS: I guess we're just going to call it Exhibit 1, Issues Day Exhibit 1. 381 EXHIBIT NO 1: EXCERPT OF THIRD INTERIM REPORT OF THE MARKET DESIGN COMMITTEE FROM OCTOBER 8, 1998 382 MR. RODGER: And Exhibit 1 is an excerpt from the Third Interim Report of the Market Design Committee, dated October 8, 1998. And if we see on page 2 of the handout, we have a letter from the Market Design Committee, dated October 8, 1998, to the Honourable Jim Wilson, and it's signed by Ron Daniels who chaired the Market Design Committee. 383 The first full paragraph talks about the work of the committee and then says, starting in the second sentence: "In addition to moving ahead to the next stage of the development of the market rules, we had to resolve a number of key issues that were left outstanding at the end of phase 2. The most important of these were finalisation of the framework for market power mitigation," and then it goes on, "the development of a pricing framework for transmission distribution and further consideration of default supply." 384 The next paragraph confirms what I mentioned earlier, that the MDC executive and senior Ontario Hydro officials reached agreement on a comprehensive market power mitigation program. That program was endorsed unanimously by the MDC members on October 2nd. 385 And then at the bottom of the page it says: "In summary, the key features of the agreement are," and the very first point on page 2 of the letter, and I'll read it: "For a period of 4 years after the opening of the market, 90 per cent of Ontario electric generation companies expect domestic energy sales will be subject to an average price cap that is slightly below the current price of generation." So you have this as an integral part of the framework of the deal that was put forward. 386 You then go to the Order in Council, March 24th, 1999, and if you look at the fifth paragraph of the cabinet order, it states: "And whereas the Market Design Committee established by the government to advise it on the development of a competitive market in electricity has provided detailed recommendations on the provisions which should be contained in the licence of Ontario Power Generation Inc. and others to address the issues which arise from the market share of Ontario Power Generation in the Ontario electricity industry." 387 So you have the deal from the MDC executive of Ontario Hydro, you have that deal described to the Market Design Committee members. It was approved. You have the Order in Council confirming these recommendations. And that leads right to the directive itself where the 90 per cent coverage theme is raised in one of the licences under the definition of Model Output Data, which should be capitalised. So that just shows the link. 388 Now, it was about one year after the Market Design Committee members endorsed this deal between the executives of Ontario Hydro, when AMPCO was able to obtain information which showed that the CRQ calculation and the consumer price protection coverage was, in fact, only about 70 per cent of Ontario -- OPG's domestic sales and not at 90 per cent, as represented in the Market Design Committee process and in the licence. And AMPCO's evidence will be that there should be at least another 14 terawatt hours added to CRQ. 389 In other words, the current information before the Board understates CRQ by about 14 terawatt hours. And while that may not sound like a lot, just to give you a quick calculation to put some context around this, if you look at the average price, the average commodity price on the IMO's web site since market opening, it's about 5.2 cents a kilowatt hour. With an additional 14 tarawatt hours, if you take the 5.2 cents average price, you deduct the 3.8 cents price cap, that gives you 1.4 cents a kilowatt hour or $14 a megawatt hour. If you take that $14 and multiply it by the 14 terawatt hour, you're looking at approximately $200 million of extra consumer price protection per year based on that average 5.2 cents, or some $800 million extra consumer price protection rebate over 48 months. 390 And, again, that links back directly, we submit, to section 1 objectives; ensuring that the consumer interest is encompassed and protected in terms of overall price protection. 391 So AMPCO's concern is that the whole thing that brought us here, the deal, the market power mitigation framework, was a second-rate solution to start with. It was sold on a particular basis and that's not what we have today, and that's why our issue is crucial to this hearing. 392 I'd then like to look to the directive itself, the April 1st, 1999, Minister's directive to the OEB. 393 In AMPCO's view, this directive provides all the authority you need to include the CRQ review as an issue in this proceeding. Section 1 of the directive requires the OEB to implement and maintain various licence conditions. By including the CRQ issue, this is essentially what AMPCO is asking that you do, to implement the licence conditions as contained in the directive as they were intended to be implemented. And at issue at this hearing appears to be a fundamental disagreement on what a particular licence condition means, i.e., the CRQ. 394 Then if you move on to section 2 of the directive, it says: "The licence conditions referred to in paragraph 1 are not to be subsequently amended, varied, removed, not renewed or stayed, except as expressly contemplated in the said licence conditions that are in this document." 395 Firstly, by putting this issue to you today, we're not seeking any change to the licence conditions. We want them to apply as they were represented to apply to decontrol and the consumer price protection rebate, so we think this is consistent with what the director -- the directive is asking you to do. OPG has made application for a review and determination from this Board dealing with whether the transaction constitutes decontrol and whether the CRQ adjustment is appropriate. The directive then goes on to say: "The foregoing shall not prevent the Board from taking or omitting to take any action arising in connection with any review, determination, request, advice, or recommendation referred to in said licence conditions or in this document." 396 We think, Mr. Chairman, that the authority for including this issue could not be clearer. AMPCO is asking that item 4 be included as an issue in order to make sure that a licence condition in the directive is being implemented and maintained properly. 397 Secondly, AMPCO is proposing no change or amendment to an existing licence condition. 398 And thirdly, in any event, the directive itself expressly does not prevent the Board from taking any action in connection with the review or determination, and OPG has asked you for a review and determination on this specific point. 399 Finally, Mr. Chairman, we wanted to provide the Board with notice of an alternate approach to bring the issue before you. We don't think it's needed, it hasn't been brought to date because it's premature in light of this issues day, but you'll read in that part 2 of the directive that -- it also states that, except as expressly contemplated in said licence agreements, and that being "the licence conditions referred to in paragraph 1 are not to be subsequently amended, varied," except in connection with the licence conditions. 400 Another approach AMPCO is considering is to bring a fresh application to the Board to amend OPG's licence, not to amend parts 3, 4, 5, and 6 of the licence, but to clarify the existing conditions to ensure that the Minister's directive is being implemented as it was intended to be implemented. And as I said, we feel at this time it's premature, but we did want to raise this argument so the Board was aware of it. Although, as I say, we don't feel we need to go that far in light of my earlier submissions. 401 In summary, we're seeking a decision today that the Board include our contested issue 4 in this proceeding. We hope that our application to amend OPG's licence for clarification will not be needed. And as I say, the issue really goes to the heart of the second series of questions around this application, and that is the amount of consumer price protection that Ontario consumers should receive. 402 Those are my submissions, Mr. Chairman. 403 MR. VLAHOS: Thank you, Mr. Rodger. 404 I would turn to the other parties now and see if there is anything that they wish to add to issue number 4. 405 PROCEDURAL MATTERS: 406 MR. MacODRUM: Mr. Chairman, do you not wish me to address both 4 and 5? That was what we were proposing, is to go through the roster -- 407 MR. VLAHOS: We got a bit lost, Mr. MacOdrum, as to exactly what would happen. Let's see how it plays best. Would you like to add anything now to what Mr. Rodger said? 408 MR. MacODRUM: Yes, I would like to speak to issue 4, but I would also like to speak to issue 5, and I think my remarks are interrelated to both of them. So if I could go ahead and speak to those issues, I would appreciate it. 409 MR. VLAHOS: Okay. Let's see if anybody else has anything to say on issue 4, and then perhaps we can leave you for last to touch on -- 410 MR. MacODRUM: I think the agreement that we reached, Mr. Chairman, was that Mr. Rodger would go first and I would go second, and then the other -- and in the order that Mr. Poch described to you. 411 MR. POCH: Mr. Chairman, I'm content to give you all my submissions at once. I think mine are of a general nature. I don't need to pipe in now. 412 MS. JACKSON: I'm quite content and I see some efficiency in replying to everybody at once on all the issues. 413 MR. VLAHOS: Well, that was the plan, yes, that we don't have to do it many times, Ms. Jackson. And I thought maybe I'd ask the parties if there are any other comments on 4, and then Mr. MacOdrum can be the last on issue 4 and continue with issue 5. Is that satisfactory, Mr. MacOdrum? We've got to make this thing work today. 414 MR. MacODRUM: I thought we did have a proposal before you that would work, Mr. Chairman. 415 MR. VLAHOS: Well, it changed a few times. 416 Now, does anybody else have any comments on issue 4 before I go to Mr. MacOdrum to perhaps join 4 and 5 if he likes to do so. 417 MR. MATTSON: Mr. Chairman, we have comments specifically on 4. We were just going to reserve them and make them with regard to all the jurisdictional issues at once. It's up to you at this point if you would like me to go forward. 418 MR. VLAHOS: That's fine. The parties will have an opportunity to address their own concerns when their turn comes. No takers? Mr. MacOdrum. 419 MR. MacODRUM: Thank you very much, Mr. Chair. 420 SUBMISSIONS BY MR. MACODRUM: 421 MR. MacODRUM: I first want to associate myself with what Mr. Rodger has made as an excellent submission to you, and I really think that it's most deserving of careful consideration, and particularly how he has taken you behind the rationale for the market power mitigation proposal. 422 The Canadian Manufacturers and Exporters agrees an expanded hearing beyond that proposed by the applicant is required, and specifically we support the inclusions of paragraphs 4 and 5 in the proposed issues list prepared by Board Staff. It's our view that a restricted view of the Board's responsibility in this proceeding, as proposed by the applicant, cannot be correct under the Ontario Energy Board Act. The applicant has applied to the Board pursuant to part 4 of its licence for an order, and let's look at that phrase. 423 The directive and the licence require an application to the Board to achieve the relief that is sought. Not the director of licencing, not the energy returns officer, but the Board. That's the first clue that this is not just an administrative proceeding, as the applicant proposes, but it's a quasi-judicial proceeding. 424 As Mr. Rodger noted, the second clue is that they are to apply for an order. The Board disposes of its quasi-judicial responsibilities by order. Subsection 19(2) of the Act says: "The Board shall make any determination in a proceeding by order." Subsection 21(2) of the Act says that: "Subject to contrary provisions of the Act, the Board shall only make orders after a hearing." Again, you're not just to do an administrative check to make sure the numbers add up; you're to hold a hearing. 425 And then, as has already been noted, section 23 of the Act says, in making an order, you may impose such conditions as the Board -- "the Board may impose such conditions as it considers proper." You are not limited to a yes or no response. 426 The applicant says this is not an ordinary application; this mandated by a directive from the government, your hands are tied, you cannot change the provisions in the licence derived from the directive. Well, they may be right. You cannot alter the specific wording of those paragraphs in the licence, but under subsection 74(1) of the Act, you can amend a licence if it is necessary to implement a directive under -- that has been issued under section 27 or 28 of the Act. And the subject directive has been issued under section -- it's stated to be under section 28 of the Act. 427 This then is a proceeding in which you do not have to restrict yourself to the narrow confines that the applicant would impose upon you. You can make an order with conditions. You can amend the licence, not to change the mandated paragraphs, but to permit them to be applied in a manner that is consistent with the objectives of the Act and with the changed circumstances that have occurred since the directive was issued. 428 This brings me to the proposed issue 5. The Board is required to be guided by the objectives set out in section 1 of the Act. When you make a determination and issue an order, you must be able to answer the question: What statutory objectives does this order satisfy? And it's my submission that objectives 1, 3, and 5, in section 1 of the Act are all particularly relevant to this proceeding. 429 My client's particular interest is objective number 3, to protect the interests of consumers with respect to prices. The effect of this application is to increase prices by reducing the rebate, and this is acknowledged in lines 5 to 7, page 9 of section 2, capital A of the application material. "The amount of energy covered by the rebate will be reduced." 430 Should it be reduced? And by how much? As I've argued, these are not mechanical questions that the applicant would have you believe they are. They are determinations that you must make guided by the objectives in section 1 of the Act. 431 That is why we also support issue number 4. We believe you can determine a different CRQ than the applicant proposes. 432 We have heard that the government was assured that at least one of the Pickering A units would be in service by market opening; it was not. We've heard that one of the Bruce B units was out of service during the period of peak demand this summer. The result of those actions is that prices have been higher than they otherwise would have been. And also the output, subject to the rebate, was lower than it could be. What's been going on? 433 If the Board is going to consider the applicant's proposal to further reduce the protection afforded to consumers, surely you must indicate -- must inquire into whether the applicant's recent past actions have had the result of frustrating the very protection for consumers that the directive was intended to provide. 434 It's my submission -- I think what you have to ask the applicant to address is, how does the reduction in the rebate at this time, as they are proposing, meet the objectives in section 1 of the Act, particularly objective 3? The objectives should lead evidence as to how its conduct has affected the amount of the rebate resulting from the directive. 435 It's my submission you can approve a smaller CRQ than proposed. You can permit a phasing to a more -- more slowly to the requested quantity. You could change the effective date of the CRQ calculation to a date other than proposed by the applicant. 436 In summary, it's my position that to make the determination -- to make a determination as this Board, you are required to carry out your responsibilities under the Act, and you must consider the issues, therefore, raised by issues 4 and 5. To accept the applicant's view of the scope of your responsibility in this proceeding is tantamount, in my submission, to declining the jurisdiction you are required by the Act to exercise. 437 And I note the applicant wants, and maybe even the original drafters of the directive may have hoped, and you yourselves might wish for -- given the heavy and busy responsibilities that you are caught up with -- to turn yourselves into a robot and process this application. But you're not robots. You have to make a thoughtful determination on all the relevant evidence to satisfy the objectives of the Act and to exercise the jurisdiction that the Act confers on you. 438 Thank you very much. 439 MR. VLAHOS: Thank you, Mr. MacOdrum. 440 Any other parties? This is very specific to number 5. You all get a chance now to speak on your own issue. Lots of people are not named here that will speak at the end. But anything for clarification before we move on? Having none, Mr. Poch, on number 6. 441 MR. POCH: Thank you. I won't touch the robot comment. 442 MR. VLAHOS: It is Halloween. 443 SUBMISSIONS BY MR. POCH: 444 MR. POCH: I should say that, just in my approach to this, I think issue 4 stands a bit separate from issues 5, 6, and 7. Five, 6, and 7 share, for me at least, some commonality in issue 4 because as Mr. Rodger has framed his argument for 4, he says you can address that and still be squarely within the directive, the confines of the directive. And what I'd like to address is whether you are at liberty to consider matters, consider a test, consider remedies, and considerations that are not within the narrow construction of the directive that I anticipate my friends for OPG will be urging. 445 OPG is before you asking you to exercise authority under the Act with respect to their licence to reflect the situation with Bruce Power. And we submit that in considering whether to exercise that authority and how to do so you must consider, that is, it is mandatory for you to be guided by, the objectives in section 1, and I specifically highlight objectives 1, 3, 4, 5, and 6. It is not simply consumer price protection, there is also concern about exercise of market power to, for example, keep new entrants out of the market, which would be part of the concern under objective 6, that is, facilitating cleaner energy generation. 446 Thus, in our submission, the issues list and the scope of evidence should be permitted to address those broad considerations. 447 We submit neither the Minister nor lieutenant-governor in council to the directive, nor the Board can choose to ignore or seek to surplant the Act's broad objectives. Now, but for item A2 in the directive, which is referred to as well in paragraph 7 of the licence, that is, thou shall not amend, we likely wouldn't be here today. Surely, the Board would be obliged to consider section 1 of the Act as it must do in all its activities. The question is, does the directive's apparently restrictive language change that? And my submissions are that, as a matter of law, any possible restriction, if there is one, is inoperative. 448 Before turning to the law on that question of the interpretation of the statute and the direction -- directive, let me refer to the decision of Mr. Justice Gouge in the stated case that arose out of the Hydro One application for approval for transmission in Eastern Ontario. I've placed before you, and I've given to my friends this morning, several cases. This should be on the top of the pile. I just have regard to the decision of Mr. Justice Gouge to make clear that you do have the authority to make a determination today, and in this proceeding, on the scope of your jurisdiction, and how to proceed indeed if there is a conflict between the directive and the Act. 449 And specifically, I refer you to page 10 of that -- of his reasons where he refers to the Matsqui Supreme Court of Canada decision. And I'll back up to paragraph 38, the second half: "The stated case poses the more limited question of whether the regulation is to be applied by the Board in hearing applications under section 92 of the Act, or whether, as asserted by the appellant, it is inconsistent with the Act and therefore not to be applied." 450 Now, here, as the Board is well aware, of course, it's a question of regulation versus the statute, and I'll come back to that. 451 And then halfway through paragraph 39: "The question posed is one which the Board could put to itself and equally one it could put to the divisional court by way of stated case," and then cites Matsqui. "It is now settled that while the decisions of administrative tribunals lack the force of res judicata, nevertheless tribunals may embark upon an examination of the boundaries of their jurisdictions." And it goes on. 452 So I'm not sure that that's particularly in dispute today, but let there be no mistake that the last word we have thus far from the courts makes clear you're entitled to address this question. 453 Turning to the question, then. Are your considerations in this case confined to a narrow interpretation of the directive and the licence terms that came therefrom? I'm going to refer you to a few cases. I will not be going into any great depth in these. All of these cases are basically dealing with a problem where a regulation made pursuant to a governing statute rubs against another section of the statute. And I'd refer to this regulation-making authority granted to the lieutenant-governor in council as a delegation of authority under the statute. And I would submit I'm arguing these cases somewhat by analogy. 454 Here we have a directive, but I think the parallel is clear. It is also a delegated authority to the Minister, in this case, also with approval of the lieutenant-governor in council, and it may or may not be more or less circumscribed than the regulation-making authority. But it is the same beast that we're dealing with. 455 The first case I'd like to refer you to is the Belanger case. It -- the Supreme Court of Canada decision from back in 1916, and I'd ask you just to note at page 276 of the case report, highlighted there, and I will read a portion I'd like to refer you to. 456 MR. VLAHOS: Mr. Poch, if you're going to read from this document, make sure that you go a little slower so that the court reporter can take every word of this. 457 MR. POCH: I'll do that. 458 Picking up part way through the section that's highlighted in the margin. 459 "If there is a conflict between one of the provisions of the Act and one of the regulations passed under section 49, the question devolving for decision upon the court having the duty of applying the regulation is, first, which is the governing enactment, the section, or the regulation. Lord Herschell in his judgment in the case just mentioned says (at page 360) that where such a conflict arises, the enactment itself would probably be treated as supplying the governing consideration and the regulation subordinate to it." And he goes on to find that that must be the case in this situation. 460 And if you turn to page 280 in that same case, I've highlighted, "no regulation though passed by the governor in council under section 49 can be allowed to override the explicit requirement of section 16 of the statute." And even "if no construction can be placed upon regulation number 48 which will bring it into harmony with that section, it cannot be regarded as having been made with any of the authority conferred by section 49." 461 So the court is saying, if you can't reconcile these, if you can't find a way to read the regulation or, in this case, the directive in a way that is consistent with the broader -- with the statute, then you -- it's the regulation that must yield, in this case, I would argue, the directive. 462 I've provided you with just the first page, it is the single page of the decision -- what is a lengthy decision in Friends of the Oldman River. It's a Supreme Court of Canada decision from 1992. I provided it to you just for the fact that on page 219 there is the statement from the court: "The basic principles of law are not in doubt. Just as subordinate legislation cannot conflict with its parent legislation ..." And it cites the Belanger case I just referred you to. I provide this just to -- as of 1992, the Supreme Court of Canada is saying that Belanger is still the law in Canada. 463 I've also provided you with a case from Alberta, Johnson versus Federated Mutual Insurance Co., and I refer you to page 134 of that case. And I'm reading from the bottom of page 134, before the last indented paragraph. 464 "Second, because regulations are subordinate and ancillary to legislation, the delegate must exercise his authority in keeping with the objects and purpose of the legislation matters which, as I have indicated, must be set out by the Legislature." 465 And I would say this is the situation here. We have objects set out in your governing act, the objectives, and so the delegate, in this case the Minister, in his directive must respect those. If he hasn't, his actions are inoperative and you can ignore them to the extent they're inoperative. 466 And then finally just closer to home, a 1970 decision, an Ontario decision in Regina versus Slater Steel Industries. And at page 764 of that decision, the court says: "These regulations, however, must be within the principles of the Act itself. If it were otherwise, the Legislature would serve no useful purpose in our democratic process." 467 It goes on to cite Halsbury's Laws of England: "The overriding principle in the interpretation of legislation made under powers conferred by a statute is that it should be construed in light of the enabling statute generally, and in particular, so as to be consistent with its substantive provisions, at any rate where it is not authorized to repeal or amend them, and otherwise in conformity with the terms of the enabling power." 468 So it allows that there could be an exception where the authority authorizing the regulation or directive in this case specifically said you could override certain provisions of the Act. But if you look at section 28, the authority the Minister relied on in this case to make his directive, I find no such exception to be the case. 469 So, in our submission, the law is clear. You must interpret the directive in a manner which does not conflict or reduce the effect of section 1. And a fortiori, if the Minister can't oust section 1, anything you've done in your earlier licensing decision cannot oust section 1. And, indeed, I would submit it's -- and indeed, I would submit the wording in section 7 of the licence does not purport to oust section 1. 470 And therefore, for the purposes of issues day, section 1 considerations are properly an issue in this case, and I'd go further -- and here I think I'm wandering into CUPE's> issue 7 -- but I would suggest that the potential denial of OPG's request for relief, due solely to considerations under section 1, is a possible outcome of this case and therefore a proper issue. 471 Now, others may choose to parse the language in section 2; I think it has been referred to earlier today, the second part of section 2 of the directive which modifies the constraint on you to amend. And you may find just on that language alone that the directive and the broader objectives of the Act don't conflict, that section 2 allows you to go there. What I'm saying is that the case law says you must so find, and if you can't bend the words that far, then you must find that it is the Act that stays and the direction that gives to the extent necessary. 472 Those are my submissions. Thank you, Mr. Chairman. Unless you have any questions. 473 MR. VLAHOS: Thank you, Mr. Poch. 474 We should mark those as exhibits. Maybe just Exhibit 2, that contains -- is it five, Mr. Poch? 475 MR. POCH: Yes, I believe I placed five cases in front of you. Would you like me to state them for the record, sir? 476 MR. VLAHOS: You might as well, yes. 477 MR. POCH: Certainly. The decision of the Court of Appeal for Ontario in the application -- in the Matter of an Application by Hydro One Networks would be number 2. 478 EXHIBIT NO. 2: DECISION OF THE COURT OF APPEAL FOR ONTARIO IN THE MATTER OF AN APPLICATION BY HYDRO ONE NETWORKS 479 MR. POCH: The Belanger case, number 3. 480 EXHIBIT NO. 3: EXCERPT FROM BELANGER CASE 481 MR. POCH: The Friends of the Oldman River case would be number 4. 482 EXHIBIT NO. 4: EXCERPT FROM FRIENDS OF THE OLDMAN RIVER CASE 483 MR. POCH: The Johnson case would be number 5. 484 EXHIBIT NO. 5: EXCERPT FROM JOHNSON VERSUS FEDERATED MUTUAL INSURANCE CO. 485 MR. POCH: And the Regina versus Slater Steel Industries would be number 6. 486 EXHIBIT NO. 6: EXCERPT FROM REGINA VERSUS SLATER STEEL INDUSTRIES 487 MR. VLAHOS: Thank you, Mr. Poch. 488 If there are no specific matters with respect to issue 6 following Mr. Poch's comments, we'll go to issue number 7. 489 MR. POCH: Mr. Chairman, just implicit in my opening comments. I recognize that the Board may wish to blend some of -- I think certainly my issue and Mr. MacOdrum's issue are very closely worded, and I certainly am not objecting to a wordsmithing to blend and avoid redundancy. 490 MR. VLAHOS: I appreciate that. Yes, thank you. 491 Mr. Shrybman, can we go to you? 492 MR. SHRYBMAN: Yes. 493 SUBMISSIONS BY MR. SHRYBMAN: 494 MR. SHRYBMAN: Thank you very much, Mr. Chairman and -- I should say Mr. Chairman. 495 Let me begin by indicating that I'm supportive of the proposals brought forward by other parties to suggest additions to the issues that OPGI has identified as being relevant to this proceeding. I think it's incumbent upon you to conduct the fullest inquiry and to enter this application. So I'm supportive of the other proposals before you. 496 We believe that ours is somewhat distinct from those, however. So in suggesting that you may decline the orders requested, regardless of the arrangements, contractual or otherwise, entered into between OPG and Bruce Power LP, we're going, I think, one step further than the other parties have suggested. And the purpose in phrasing or formulating the issue we have is to have you acknowledge your authority and responsibility to consider and hear evidence concerning the effect or consequences of the orders you are being requested to make. 497 I agree with Mr. Poch and others who've spoken to you about the -- your obligations under section 1 as those obligations come into play in administering the provisions of the licence issue to OPG. I believe that it's clear that you have the obligation to have regard to those, to the objectives of the Act, in carrying out the inquiry that you are being asked to undertake. 498 But beyond that, and quite apart from how you go about the process of determining the matters before you, we believe that you have an obligation to consider the consequences and effects of the order that you're being requested to make. And so for the sake of my argument, let me assume that you are persuaded that effective control has been ceded by OPGI with respect to the Bruce facility, and that you are persuaded that some adjustment to the contract required quantity might otherwise be in order. You must, nevertheless, have regard to the impact of making that order on consumers and on others in the market in accordance with section 1 of the Act. 499 So it may be that in conducting that inquiry you're persuaded that the only consequence of granting the orders requested will be to increase rates to consumers. There will not, after the order is issued, be any more competition in the market than there is the day before, nor will any other objective of the Act be achieved. But the only consequence will be increased rates to consumers in this province. 500 And so in the present context, they will be punished for, you know, events in the market that are entirely beyond their control. That would, in our submission, be a perverse outcome, given the objectives of the Act, and not one that's consistent with protecting the public interest which you clearly have an obligation to have regard to. 501 It might be said, I suppose, that any diminishment of the rebate will necessarily increase consumer prices where the price of power is higher than the threshold determined by the licence, and I suppose that's true. But a rebate might be justified in circumstances where you're persuaded that other objectives of the Act are being achieved, and that indeed, I think in addition to that determination, that somehow those objectives and the consequences of reducing the rates are proportional. In other words, it wouldn't be sufficient for you to be persuaded that competition is increased by some marginal amount. The achievement of that objective of the Act must be proportional to the consequences that consumers will bear as a result of the reduction of the rebate. 502 So that's, in essence, my submission. And I believe that you have authority for having regard to the -- to the consequences and effects of your order that arises not only under section 1 but also in consequence of your authority under section 19 to, on your own motion, amend the provisions of the licence, or, under section 74, to entertain an application by others for that purpose. 503 So this is not a matter of the Board's inherent authority from our perspective but rather its explicit obligations under the Act to consider in carrying out all of its functions the objectives of the statute itself. 504 And I adopt Mr. Poch's submissions with respect to the question of whether or not a regulation issued under the Act, if deemed to be inconsistent with the provisions of the Act, would take priority. In our view, it would not. And in that same vein, the same constraint would apply, in our view, to an issuance of the directive under section 28 of the Act. 505 If you -- I believe that, given the specific wording of the directive, there is a reading of the directive that's consistent with the inquiry that I'm suggesting you undertake. Because if you look at part A of the directive, paragraph 2, that that provision indicates that nothing -- let me perhaps read the entire paragraph. 506 "The licence conditions referred to in paragraph 1 are not to be subsequently amended --" 507 MR. VLAHOS: Please slow down. 508 MR. SHRYBMAN: "-- varied, removed, not renewed or stayed except as expressly contemplated in said licence conditions or in this document." It's the next sentence which I think is more important for purposes of my argument, and that reads: 509 "The foregoing shall not prevent the Board from taking or omitting to take any action arising in connection with any review, determination, request, advice, or recommendation referred to in said licence conditions or in this document." 510 So, in our submission, if you're persuaded that the consequences of issuing the order requested are not consonant with protecting the public interest, then you may, on the explicit wording of the directive, simply decline to make the order requested of you. You are empowered to omit to take any action arising in connection with this proceeding on that interpretation of this directive. 511 If you're not persuaded that you have that latitude, given the wording of the directive and its translation into the terms of the licence, in particular, by section 7 of part 2, I believe, of the licence, then, in our view, you have authority under section 19(4) of the Act on your own motion to -- to amend the licence so that you may take into account the consequences or effects of the order that you're being asked to make. 512 There is only one constraint in the statute on your authority to, on your own motion, make such amendments, and that is found, as you well know, in section 74(2), which indicates that despite subsection 19(4) you may not commence a proceeding on your own motion under this section to address an abuse or a possible abuse of market power unless you consider such a proceeding necessary to implement a directive under section 28. In our submission, that constraint doesn't apply in this case. We're not asking you to amend the licence because of an abuse of market power. Indeed, the market may be working without being manipulated by anyone. But nevertheless, the consequences of the market working is to visit extraordinary rate increases on consumers in this province to the benefit of generators and windfall profits that they're enjoying. 513 So it's not an abuse of market power we're concerned with, it's conceivably the operation of the market, even though it isn't being manipulated. It's simply responding to the rules of supply and demand. So the limitation on your authority, under section 19(4) established by this provision of the statute, doesn't apply, in our submission, and so we would invite you to have recourse to your authority to explicitly establish, if you feel that that is necessary, as a requirement of the licence, that no order be issued under part 4 of the licence unless the consequences and effect of that order are consistent with the objectives of the Act. 514 Finally, we believe your authority for including this issue as an issue that is relevant to this hearing arises from section 74 of the Act itself, which imposes no limitation whatsoever on the right of any person in this province to bring an application before you to amend the licence, if it considers the amendment to be necessary in the public interest. That participatory right that every resident of the province enjoys cannot be derogated from -- by a directive issued under section 28, or provisions of a licence issued by the Board, in our submission. 515 So to sum up, there is nothing in section 1 of the Act that precludes its application to not only the manner in which you carry out the inquiry under the provisions of this licence, but also to the consequences of an order that you might -- that you might issue in any proceeding before you. If you disagree with our submission in that regard, then we would invite you under section 19(4), on your own motion, to amend the licence so as to allow you to engage in that inquiry. If you are declining to do so, then to adjourn so that we can -- so that I can seek instructions as to whether or not to bring an application before you under section 74 of the Act. 516 So those are my submissions. Thank you very much. 517 MR. VLAHOS: Yes, thank you, Mr. Shrybman. 518 Now, I have four parties left; Mr. Lokan, Mr. Taylor, Mr. Mattson, and Mr. Cowan. 519 Mr. Mattson, would you like to go next? 520 MR. MATTSON: Yes, Mr. Chairman. 521 MR. VLAHOS: I'm also mindful of the time. It would be nice if we can get all the rest of the four in before we break, but I'm sure the applicant would appreciate some time to put their thoughts together. They have heard quite a few submissions this morning. So that's the plan; see how it plays out. 522 MR. MATTSON: Thank you, Mr. Chairman. I'll try to be as quick as possible. 523 SUBMISSIONS BY MR. MATTSON: 524 MR. MATTSON: First of all with respect to issue 4, I think there is a distinction between the two questions in the contested issue. I think the Board has to take into consideration that, in the narrow purpose of providing guidance about how the CRQ will be dealt with within the missing 16 months, something that, really, you should separate from reopening the issue of how it -- of what that number should be, there is a 16-month gap there. I really think the Board should consider that as something that needs to be dealt with respect to this application directly. 525 Everything else goes to jurisdiction, all my other comments on these issues. Part 2 of contested 4, and then contested issue 5, 6, and 7. All those issues, Mr. Chairman, I suggest to you, really don't need to be separate issues in this hearing. They go without saying that any party before you can argue section 1 issues. They don't need to be identified here. We don't know what the evidence that these parties are bringing forward are. We don't know the relevance. We don't know the weight to be given. 526 And furthermore, Mr. Chairman, this Board shouldn't be ruling at this time that somehow you're going to go into this hearing with one arm off. I'm actually surprised that OPG at this point would be objecting to these issues. There's no question that the parties can argue that your decision in accordance with this application has to be made in accordance with the section 1 objectives. The directive cannot make you, in any way, not consider the objectives of the Act and the power given to you through section 1. 527 The issue will be for the parties to decide for themselves the relevance and argue before you what the weight should be given to their evidence. They have to consider costs at the end of the day. If they become too lengthy in their submissions, they become frivolous or vexatious, they begin to argue somehow that this leads -- the whole Act needs to be thrown out because it's no longer consistent with objectives, you know, that the Board isn't able to understand or are not of assistance to it in determining this application. You have ways of controlling that in the process before you. 528 If you look at section 5, I've never been before you, Mr. Chairman -- and I know I've been here for over 10 years -- where someone argued the issue should be what the criteria to be applied by the Board in making a decision on application and how these relate the objectives of section 1 of the OEB Act. 529 MR. VLAHOS: Mr. Mattson, the court reporter has to get every word. 530 MR. MATTSON: Sorry. I'm just quoting number 5. That that would somehow be an issue to be decided on issues day, as to whether or not one can urge the Board to make a decision that relates -- and that decision should relate to the objectives of section 1 of the Act. I would say, of course. I would say that that -- every party can use section 1 to argue their argument at the end of the day, and I think they will, and we always do. And the fact that the directive tries, in some way, to control the substance of the arguments coming before you does not, in any way -- and I agree with Mr. Poch on this a hundred per cent -- does not, in any way, somehow push or subordinate your section 1 obligations to below the directive. 531 So I think it's premature for OPG to be arguing that these section 1 objectives should not be discussed at this hearing. I think the parties -- we still don't have an idea of the evidence that they wish to bring, so I can't argue relevance, I can't argue weight. I expect we will all be doing that at the end of the hearing. I think it would be premature of this Board to rule on relevance at this time on any evidence. As each of 5, 6, and 7 suggest, they are going to be based on the objectives of the Act. I think it's something that this Board should really be careful at this time not to prejudge or to tie your hands at this point. Let the evidence come forward. Use your powers with respect to relevance and weight at the end of the day. Hear the arguments. And let's have this hearing done in a timely and efficient manner. 532 Those would be -- those are the arguments at this time of Energy Probe, really, that these jurisdictional issues go to final argument on evidence that's before you where you can properly consider them at that time, and you don't need at this time to make them special issues or specific issues on the issues list in order for any party to make arguments with respect to section 1, or how it affects the evidence. 533 Thank you. 534 MR. VLAHOS: Thank you, Mr. Mattson. 535 Mr. Mattson, just a question of clarification. Let the evidence come forward, and all those issues could be argued at the end of the day during the hearing. Now, if a party were to ask you, well, how could I argue if I don't put any evidence in, what would be the response from your perspective? 536 MR. MATTSON: Well, obviously, Mr. Chairman, every party, as is the case in every hearing, has to assess the relevance of the evidence they want to bring before you. If it's not of assistance to the Board, you can't expect that their costs would be given. If they are arguing that somehow or other their evidence is going to assist you in the determination of this application and that their evidence is supported by the objectives of the Act and is relevant and you should give weight to it, then it should be heard. At this point, though, to argue that somehow those elements of section 1 of the Ontario Energy Board Act don't apply, we don't know what they don't apply to, but somehow they don't apply, and all you're doing here is like a licencing Board or a rule-making Board, is determining for OPG whether or not they've met the terms of licence or agreement. 537 That's not -- I would agree with all the other parties that's not fair. So it's really incumbent on OPG to tell this Board why, at this point, you should separate all the section 1 objectives and say, no, we're not going to consider whether this facilitates competition, whether it protects customers, whether this is -- encourages economic efficiency, whether this protects on the financial integrity of the organisation. You shouldn't consider any of that. We just want you really to be an arbiter of whether or not we met these terms and conditions. I don't think OPG has the right at this point to say that to you. 538 They forced the parties to bring forward these as issues. I think that's wrong. I think you can say clearly we don't need to have these as issues as a Board. We always are going to keep these in mind, and we're prepared to go forward with the application, keeping in mind our statutory obligations as set out by section 1. I think that's as far as we need to go at this time, and it's up to OPG to tell you why somehow section 1 should be eliminated from your decision-making, and I fail to see how they're going to do that. 539 MR. VLAHOS: Let me be more specific to my question. 540 MR. MATTSON: Sorry. 541 MR. VLAHOS: Mr. Rodger indicated that he intends to file evidence. So I guess if I were Mr. Rodger I'd be wondering now if the issue is not on the table how can I file evidence in order to build my argument. I think that's the quandary we're in. I hear your submission about any party has an opportunity to file their argument at the end of the day based on the evidence, and this question of whose evidence. Is it the evidence of the applicant or the evidence of their own if they choose to bring it forward, and how can they bring it forward if it's not on the issues list. That's the question that Mr. Rodger will have, I'm sure. 542 MR. MATTSON: That's why I separated Mr. Rodger's -- the first part of Mr. Rodger's evidence on CRQ. We agree that's a little bit different because we believe there's this gap in 16 months as a result of the delay in the marketing opening that the Board is going to have to deal with in this hearing. But the second part of it, the reopening of the issue of whether it's fair or proper or whether it meets the objectives of section 1 of the Act as does -- 543 MR. VLAHOS: Mr. Mattson, you'll have to slow it down a bit. The court reporter has difficulty following you. 544 MR. MATTSON: The second part of it in the contested issues of 5, 6, and 7 which relate to the role of this Board in protecting customers, encouraging and facilitating competition, or encouraging energy efficiency or protecting the financial integrity of -- sorry -- of the industry, those issues certainly are live; the parties are able to argue them. And when we see the evidence, it will be up to you to assess, A, relevance, at that time when you see the evidence; B, the weight you're going to give it in your decision at the end of the day. And obviously parties are going to have to assess that themselves before they bring it, for fear that somehow they may be somehow docked in costs at the end of the day for not being helpful. 545 This isn't an intervenor funding project act like we've had in the past where the Board rules how helpful it'll be in advance before they'll give them the money. Parties have to be mature in their decision, have to assess these legally themselves -- these issues themselves, and bring them forward. It's left to costs, and that's where we're at right now at the Ontario Energy Board. So they don't get that additional security before the hearing begins that you would assess the relevancy in whether or not you're going to fund it. 546 Here we're left with parties who have to consider that always before they bring evidence. And section 1 is, I believe, and I think it always should remain so, will always be the live issue before you when determining any application that any proponent brings and asks you to make a determination on their application. We can always argue section 1, that it's not meeting the objectives of the Act, and you should, therefore, deny or change or alter or amend it somehow. And that's really where our argument is right now. 547 MR. VLAHOS: You were helping me quite a bit at the beginning and you lost me again. You made a distinction as to what may constitute proper evidence, and you differentiated the issue of Mr. Rodger in terms of the CRQ, and, I guess, the arithmetic part of it. But then you say that the intervenors have to take a risk if the evidence is not relevant and they don't get costs, which automatically assumes that the evidence will come forward and be cross-examined by the parties, and that's where I get a bit lost. In order for somebody to come forward, to bring evidence, the issue has to be on the table. So either you say, well, that is not relevant, but you can argue about all those things you want to argue, it's just that it's not the kind of thing that, you know, evidence shall be welcome. That's why I'm a little lost and I need some help with you on that. 548 MR. MATTSON: Sorry, Mr. Chairman. I did indicate -- first, there will be an issue of relevance where OPG can, when they see the evidence, can argue and bring a motion before you to have the evidence not heard because it's not relevant. That's always open to anybody in this hearing. 549 Secondly, there's an issue of weight, how much weight you're going to attach to it. That's an issue of helpfulness during the course of the hearing. 550 MR. VLAHOS: So this is the evidence of the applicant now you're talking about. 551 MR. MATTSON: No, the evidence of the parties. I mean this is issues day where we're talking about whether or not OPG is arguing that these issues shouldn't be heard. Only here, because OPG says nothing can be heard beyond what we've asked for, and you should not consider this section 1 objectives. That's what you're being asked. You can read 5, 6, and 7. They're basically urging the Board to consider section 1 objectives when making your decision for the application before you. The way I started this was by saying, of course they're going to do that. Mr. Poch puts the law before you why that is so. You are a statutory Board whose section 1 objectives will always be used by this Board in making its decisions. OPG can't tie that one hand behind your back at this time; neither can really the government by issuing a directive that OPG is going to urge you to interpret as tying your hands behind your back. 552 But that doesn't mean you need to make these issues. You just need to say that these are objectives, and you are going to make your decision in accordance with the Act. That's my argument. 553 MR. VLAHOS: And therefore do we accept, as a panel, as a Board, do we accept evidence that goes into issues of jurisdiction to be cross-examined in the hearing? Do we accept or do not accept? 554 MR. MATTSON: I think at this point, Mr. Chairman, I have no indication that that is what is being brought, that someone is going to bring a professor to argue what the OEB should and shouldn't be considering. That may be the fear, that OPG thinks this is going to turn into a hearing about the OEB, but I don't see that at this time. And if someone did bring, for example, Professor Janisch from the University of Toronto to come and tell us what you're supposed to be doing, you know, then I think you might see an objection to it. But in terms of eliminating it on the issues list, as the issues are phrased today before you, I see nothing on OPG's -- for OPG to argue that these considerations should not be in the foremost in your mind when making the decision as to where to go on this application. 555 MR. VLAHOS: All right. Equally, I hear you say that the parties should not be concerned about those issues not being shown specifically on the issues list because at the end of the day they can always argue -- 556 MR. MATTSON: That's correct. 557 MR. VLAHOS: Okay, thank you for that. That's helpful. 558 Mr. Cowan. 559 MR. COWAN: Thank you, sir. 560 SUBMISSIONS BY MR. COWAN: 561 MR. COWAN: I'm told this is essentially a jurisdiction question, the addition they want to add in. I didn't see it so much as a jurisdiction question as a content question, as a tools-available question. Whenever a person is set out to do a job, -- 562 MR. VLAHOS: Mr. Cowan, you have to change to -- do you have the microphone in front of you. 563 MR. COWAN: When we set out to do a job we all want to be able to do it to the best, we all want all the tools available, and no one in the Federation of Agriculture would hope that any part of the Board would want to go about his work with less than the full tools available. 564 Our concern is that the directive and the licence alone could be read as limiting your perspective to conventional anti-competitive views of interdependent behaviour. Such questions as, was there collusion, who did they have coffee with on the morning of the 16th, we'll never know, and we're never going to bother asking, certainly not in the context of this hearing. 565 If that, though, is the case, the Board, in our view, would be unduly constrained, it would not have the tools it needs to do its work on behalf of the consumers. 566 We believe, the Federation of Agriculture, that the Board's interest and attention is required because of inherent market failings that will continue to reward generating participants until there is substantially more competition, and that the licence and the market power mitigation agreement themselves were written in a very linear sort of a way, with a sense that competition would increase 1 per cent with every 1 per cent of generating capacity decontrol. 567 None of that had anything to do with the price-setting rule; it doesn't change that. None of that gave consumers any power in the market; there are no consumers with market power. None of this has given consumers the ability to hoard power and thereby confound the salespeople. We can hoard toilet paper and ice cream but not power, or grain for that matter. Consumers do not have perfect knowledge, and the great deal of confusion that we see in the legislature, I think, is evidence enough without introducing anything further. 568 There is, and can be restricted supply. The entrance of new market participants have not increased supply which, in economic theory, they're supposed to do. In lieu of that, they have not decreased price, which, in economic theory, they're supposed to do. These things have not happened. If the physical things that the agreement was meant to make happen haven't happened, then possibly the physical rewards of the agreement shouldn't happen either. Consumers have limited ability to adjust their use of power so there is no technical flexibility available. 569 So, in that regard, there are a series of considerations which we would like to see included and which is covered under the wording that we provided earlier. 570 Our fundamental concern is that the OEB exercise its work on behalf of responsibility for consumers, and that consumer sovereignty is essential to competition. And there are no sovereign consumers here at this time. We are price-takers; we are wholly dependent. 571 Market laws and rules presumably attempt to strike a sound balance so that the market, a sound market, will attract both buyers and sellers. If you have any doubts in this matter, then I think you're obligated to work on behalf of the consumer, because that ultimately works for the seller as well. 572 That concludes my remarks on this. It is not jurisdiction. These are matters of fact which have to be available and which -- our concern would be, without the wording we ask for, would not be available for your consideration. 573 MR. VLAHOS: Thank you, Mr. Cowan. 574 Mr. Taylor. 575 MR. TAYLOR: Thank you, Mr. Chair. 576 SUBMISSIONS BY MR. TAYLOR: 577 MR. TAYLOR: Mr. Chair, I was going to argue that, based on a simple and straightforward interpretation of paragraph 2 of the minister's directive, that this Board has broad discretion. It's got broad jurisdiction to review the appropriateness of all of those matters set out in OPG's application, including the appropriateness of the adjustment of the CRQ. And that would be based on the second sentence of that paragraph, essentially acting as an exception to the first sentence and in fact offering broad discretion by the use of the words "any action," that the Board can take any action. However, because Mr. Rodger has already made this argument, I'm not going to make it again and use the Board's time. Thank you. 578 MR. VLAHOS: Thank you, Mr. Taylor. 579 Mr. Lokan. 580 MR. LOKAN: Thank you. 581 SUBMISSIONS BY MR. LOKAN: 582 MR. LOKAN: The Power Workers Union supports the position of OPGI on the statement of issues. 583 In our submission, the scope of this application is determined by the terms of the licence. It's brought pursuant to part 4, paragraph 4 of the licence, and asks some very specific questions that are largely factual in nature. 584 Under part 4, paragraph 4, OPGI may apply to the Board for, firstly, a determination of whether effective control has passed; confirmation of certain largely technical matters; and there's an exception that effective control is considered not to have occurred if certain conditions apply. 585 I say that these are largely factual and very specific questions. Of course some element of legal interpretation comes in to terms such as "interdependent behaviour," and you will hear submissions from the various parties on what meaning you should give to those terms. 586 In that context, of course it would be uncontroversial for you to look at the objects clause and say one party's definition of interdependent behaviour perhaps is to be preferred to another's. But that's within the scope of the questions that you're being asked. 587 The difficulty with the issues list that's being proposed by the other intervenors is that they're asking you to go well beyond the questions that are before you on the application, and essentially ignore the terms of the licence under which the application is brought. 588 In effect, some of the parties would like this to be a Royal Commission into the electricity industry in Ontario. What we would say is that the question of what flows from these -- the answer to these very specific questions, the largely factual questions, is not before the Board. The Board is not being asked to order that anything be done. The relief requested must be by way of order under section 19 of the Act, but the orders are in the nature of declaratory orders. You're asked to find that effective control has passed and find certain other matters. You're not being asked to amend, to rule on the validity of the licence, or address the broader context directly. 589 In that respect, we would see the task before you as being fundamentally different than in the stated case, Exhibit 2, the Ontario Energy Board case that went to the Court of Appeal. In that case, the Board was exercising a much broader jurisdiction under section 97 of the Act. It had a public interest jurisdiction. It had to apply the definition of public interest and was faced with two potentially competing definitions; one in the Act and one in the regulation. 590 In the passage already read to you by Mr. Poch, in paragraph 38, the court characterised the question as being, Do we apply the regulation or not. But the Board was being asked to do something, to grant leave or not grant leave to construct the transmission line. 591 By contrast, this proceeding is in the nature, we would say, of an advisory reference. Certain questions are put to you and you are being asked to answer them. Of course both legal arguments and relevant evidence can be led towards the answer to those questions, but if you were to decline to answer them, that in itself would be an error of jurisdiction, in our respectful submission. 592 We don't see in the issues as framed by the application any reason or need to get into matters such as start up of Pickering or the effect of any outages there may have been at Bruce B. None of those matters really will assist you in determining the answers to the specific questions, and for those reasons we would say that the issues as presented by OPGI are perfectly sufficient. 593 MR. VLAHOS: Thank you, Mr. Lokan. 594 [The Board confers] 595 MR. VLAHOS: Mr. Moran, is there anything that you want to bring up at this stage, or should we break? 596 MR. MORAN: No, Mr. Chair. 597 MR. VLAHOS: Okay. So, Ms. Jackson, when we return we'll look to you to respond to -- 598 MS. JACKSON: Thank you, Mr. Chair. 599 MR. VLAHOS: -- pretty lengthy submissions, length in total that is, not necessarily by each one of them. So it's a bit of a task. So I would be guided by what your wishes are in terms of a break, a luncheon break. 600 MS. JACKSON: Can we come back at 2:30? 601 MR. VLAHOS: That would be fine, yes. Let's adjourn until then. 602 --- Luncheon recess taken at 1:18 p.m. 603 --- On resuming at 2:38 p.m. 604 MR. VLAHOS: Please be seated. 605 Unless there are any other matters, Mr. Moran, then we'll proceed with Ms. Jackson. 606 Ms. Jackson. 607 MS. JACKSON: Mr. Chair, thank you. 608 RESPONSE SUBMISSIONS BY MS. JACKSON: 609 MS. JACKSON: Let me open by saying in reply to all of the submissions that have been made to you that it remains the view and the submission of OPG that the appropriate issues to be addressed in the hearing are those that were originally formulated by Board Staff and were the subject of some minor modifications by other intervenors to produce the one-page list that is before you. 610 The reason that I say that is that this is an application pursuant to part 4, paragraph 4, of OPG's licence. Now, let me say right away that the OPG, for one, does not think that the exercise of determining those issues is the exercise of a robot, and OPG, for one, never suggested, and doesn't now, that those issues would be determined other than after a hearing, although a hearing is not always required. We have always proceeded on the basis that a hearing would occur in this case, as indeed there is, and there's no suggestion otherwise. That it would be disposed of by the Board not by some other representative of the Board and that it would be done -- that that would happen by order. 611 But all of that has to come back to a consideration with respect of the powers that the Board is exercising. And shortly stated in this case, the Board is exercising powers set out in a directive under section 28 of the Act with mandatory terms. 612 Now, I propose to go through that in some detail because, in my submission, it is an analysis of that power that leads to the answer to the extras -- to the additional issues you're being asked to consider. But let me start by making an observation about the place of section 1 of the Act in this analysis. 613 The Board is a creature of statute. The Board has powers or jurisdiction or responsibilities under that statute. Some of those powers, that jurisdiction, those responsibilities -- and to me, in my submission, I'll use those terms interchangeably -- come directly by virtue of specific provisions in the statute; in other words, for example, the rate-making authority. Others come again though by virtue of the statute. The statute contemplates other ways in which the Board will have jurisdiction or responsibility in an area. A reference from a lieutenant governor in council, a regulation, and a directive; all of those are powers, and important powers, that the Board exercises under the statute. 614 Section 1 is not a source of power. It does not set out responsibilities or a jurisdiction of the Board to take independent actions. It is a set of objectives, objectives which the Board must have regard to in exercising its powers or responsibilities. But it does not provide a free-standing source of power. 615 Let me explain what I mean by that. Section 1 begins with the words: "The Board, in carrying out its responsibilities under this, or any other Act in relation to electricity, shall be guided by the following objectives." And so I say, for example, that the Board has certain responsibilities by virtue of the directive and the licence, and I'll come to what those are. In carrying those out, the Board should be guided by section 1. That doesn't mean, though, as has been suggested today, that section 1 gives the Board responsibilities beyond those contained in the directive, or that the directive is in conflict with section 1. 616 If I understood my friend Mr. Poch's submissions, it was directed to the view that you must make a determination of whether the directive is in conflict with section 1. I say, with respect, that is not the issue. Section 1 is something you will have regard to in discharging the powers under section 1. 617 The equivalent of that argument, in my submission, is to say that if the -- if the Board did not have a set of responsibilities as it does under the directive but concluded that something should be done because, in the words of section 1, it would protect the interests of consumers with respect to prices, the Board could act. Well, with respect, the Board cannot. The Board may conclude, for example, that if OPG were owned by somebody other than the government, that would in some way facilitate some of the objectives of section 1. That doesn't mean the Board has the power to cause that to happen. 618 If the Board decided that it would be a better protection of the consumers if the IMO were to change its rules under section 1, that doesn't mean the Board can do anything about it, with respect. And it certainly is not a basis upon which the Board can say, "although under the Act we are given certain responsibilities in the statute, or under a regulation, or in a directive, we think that these objectives can better be met by amending the statute, or amending the regulation, or amending the directive." That is not -- section 1 doesn't let you do that. 619 What it does do, in my submission, is say if you have a set of responsibilities before you, as you do in this case, in discharging those responsibilities you should have regard to those objectives. 620 And just by way of illustration, clearly, one of the issues before you in this case is whether the transaction that is the subject of this hearing facilitates interdependent behaviour. When you decide whether it does or it doesn't I have no doubt that you will have regard to the evidence, of which there will be considerable, to the expert opinion which is in evidence and there may be others, and to these objectives, as you should, as the statute directs. But that does not mean, nor could it sensibly mean, that the discharge of that responsibility to decide that issue is in conflict with section 1. 621 And I also say that when, as here, the directive and the licence give you three specific tests which the Board must apply to decide whether the application succeeds or does not succeed, that by virtue of this section you can amend those tests or, in the face of the language which I'll now take you to, you can add to them. 622 So I respectfully disagree that section 1 could ever be read as a free-standing basis of Board power. It is a set of objectives, and how the Board applies those in the exercise of particular responsibilities, of course, will depend on the nature of the responsibilities it's being asked to discharge. 623 Let me then come to the directive and the licence, because the language of both is important to the determination of these issues. 624 If I could ask you to turn first to the directive. Actually, I should first make reference to section 28 of the Act because, of course, we start with the question of responsibility under the Act. And section 28 -- pardon me for belaboring this -- says that: "In order to protect the abuse or possible abuse of market power in the electricity sector, the Minister may issue and the Board shall implement directives that have been approved by the lieutenant governor in council," et cetera, "in respect of -- including existing or proposed licence conditions." 625 So the directive that is before you and the licence are passed and come before you, pursuant to section 28 of the Act, which requires the Board to implement that directive and that licence. 626 Let me then take you to the directive. And starting with the preambles that begin "before the Minister's directive" which indicate precisely what I've just said, and that is that the directive is given to you pursuant to section 28 of the Act. 627 Let me pause for a minute and just make some -- one observation with respect to the relationship between the directive and the work of the Market Design Task Force. The Market Design Task Force, as was referred to this morning, met over a considerable period of time. It advised the Minister. The Minister took that advice, acted on it in large measure, but not entirely. Some aspects of the agreement that were sanctioned by the Market Design Task Force were not implemented. And what the Board has before it and must consider is what the Minister did. What the Minister did was in the directive. As I say, in some respects, I don't believe they are material to the present discussion, but in some respects that departed from the advice he received from the Market Design Task Force because that was only advice. 628 But let me only just observe -- because I would not want the Board left with the impression that something had been put over on the Market Design Task Force -- the Market Design Task Force not only unanimously endorsed the recommendation of this morning -- the Market Design Committee, I apologize; I'm getting my energy sectors mixed up. The Market Design Committee not only endorsed what you were taken to this morning, and that is that the CRQ was based on -- was calculated based on an expected, that is, a future, set of market conditions. The Market Design Committee unanimously endorsed the market mitigation framework agreement which specifically contained the model output data in the CRQ which is before you in the directive. 629 Now, it's not the case that everyone within that group saw the -- saw all of the data that's used to make up the model output data because some of that is confidential. But the modelling of it was described to them. Indeed, the model was done by their consultant and they endorsed it. 630 And it's clear at that stage and it's clear today that what they were looking at, and knew they were looking at, was a model for the future, and based on that model, fixing a benchmark called the CRQ. I'll come back to that. So we start with the directive and that's the salient source of the jurisdiction, not the report in the Market Design Committee. 631 Section 1 of the directive requires the Board, as it says at the outset, the Minister directs the Ontario Energy Board, under section 28, to implement and maintain licence conditions as licence conditions, the provisions contained in appendix A to this document. And appendix A, as you know, includes parts 3, 4, 5, and 6 of the current licence. It's not to maintain and implement other solutions or possible solutions to market conditions of the sort that have been floated in front of you this morning, and it's not to amend the licence, but to maintain it and to implement it in the terms of parts 3 to 6. 632 And that's made even clearer by the words of section 2. "The licence conditions referred to in paragraph 1 are not to be subsequently amended, varied, removed, not renewed or stayed, except as expressly contemplated in the said licence conditions or in this document." The salient contemplation there referred to is the prospect that the rebate will be recalculated in the manner that will happen if this Board finds that this transaction constitutes decontrol. That's the amendment that's contemplated in this document. As is expressly set forth in paragraph 2, there is no other more general power of amendment. 633 The suggestion was made to you this morning that the second sentence in some way is in conflict with the first sentence, or provides a power of amendment. In my submission, nothing could be more clearly untrue. It is often the case, and indeed there are various sections in the Act which give the power -- the Board the power to take the necessary steps that it must take to discharge its responsibilities. That's, in effect, what the second sentence here says. It doesn't say the Board can take actions to amend the licence or the licence conditions. That would be in distinct conflict with section 1. What it says is, "The foregoing shall not prevent the Board from taking or omitting to take any action arising in connection with any review, determination, request," et cetera, "referred to in the said licence conditions or in this document." 634 So if, in connection with a determination under this licence or this directive, the Board has to do certain things -- hold a hearing, require evidence, engage consultants, seek advice -- the Board may do that. Of course, one might conclude the Board could do that even without this sentence, but for greater certainty it's there. That, in my submission, cannot be read as saying that, in connection with the review or determination of an issue set in this licence which licence cannot be amended, the Board can amend the licence. It's an enabling provision to allow you to do what the directive requires you to do, and that is to determine whether, under the licence conditions, decontrol has happened in this case. 635 Let me then take you to part 3. There are two salient parts for this analysis that I'd like to take you to. The first is part 3 of the licence, which can be found on page 1 of appendix A of the directive, or page 7 of the licence. They are, of course, exactly the same. 636 First of all, it starts with very precise definitions and they include the definitions of the amounts by which the average price -- determining what an average price is over a settlement period. The average price that's been referred to here is $38, as you know. That of course is determined over a settlement period, 12-month intervals, commencing on market opening. So we're still in the first settlement period and we don't know, and no one will until the end of that settlement period, what the average price is. 637 If the average price exceeds $38 per megawatt hour over the 1-year period, ending in May of 2003, under this licence on the -- there will be a rebate on the contract required quantity, the CRQ. And the CRQ is defined in the licence on page 1. "Contract Required Quantity or CRQ, means the quantity of energy upon which any rebate is determined, in respect of a settlement period, as set forth in the model output data and as may be modified pursuant hereto." 638 and of course coming back to that, the way the modification occurs, again, is by a determination that decontrol has occurred. 639 "Subject to such adjustments, the CRQ will equal the sum of all hourly quantities for all hours in the settlement period." And let me just break that down and say we have the contract quantity for the 12-month year period. We have the hourly quantity for each hour within -- within the contract year, and we have the small Qh. And that's the Qh that, for purposes of determining whether the CRQ is adjusted, is the output assigned to each of the OPG facilities. 640 So, for example, there is a small Qh -- an element of output under this formula assigned to the Bruce Power station at the time the CRQ was calculated, with the result that if the Board determines that there has been effective -- a transfer of effective control, the Board will be asked to confirm that the small Qh associated with the Bruce Power facility is taken out of the CRQ for purposes of determining the rebate. 641 The CRQ, just carrying forward with that, is referred to in the model output data also defined in the licence, but it's, in my submission, important to note what that definition says and doesn't say about what it is. 642 The definition, which is at the top of page 9 of the licence, begins with a description of how it was derived. It reads: "The data filed with the Board," and as I've said that's the data that was modeled and filed at the time the licence and the directive were entered into. 643 "The model output data contains data, some of which is confidential, --" and as I mentioned, members of the Market Design Committee had access to some of this information. They didn't have access to all of it because some of it is confidential and competitively sensitive. " -- derived from a production cost model of the electricity market in Ontario." 644 So it's data at the time, based on a model at the time. " -- of the market in Ontario and neighbouring regions under the assumption that OPGI is assumed to bid its generation units in a manner that achieves an average sales price of $38/MWh." 645 So at the time, a model was created which predicted, under a series of assumptions that were known, including the assumption that: "OPG was assumed to bid its generation units in a manner that achieves an average sales price of $38/MWh." This is the important, -- then we move to what is, in effect, the definition. 646 "The resulting CRQ, Qh and qh data reflects 90 per cent of OPGI's predicted sales to Ontario consumers." There is no suggestion and it was never intended that this was what was -- what happened and would be adjusted for reality. It was at a time -- a prediction of the future on a series of assumptions which were the subject of discussion and which was put into the model. 647 I'll come back to that point when I discuss this suggestion that you can adjust the CRQ. But let me carry on for now just with the terms of the licence. 648 Having indicated in the definition section of the licence how the CRQ was determined and fixed at the time the licence and the directive were issued, the licence goes on in section 2 to the determination of a rebate. "OPGI shall pay a rebate to the IMO in respect of each settlement period in which the average price exceeds the price cap. The amount of the rebate shall be determined in accordance with the following formula." 649 And the formula, as the Board knows, is made up the extent to which the average price exceeds the price cap, times the CRQ. There are certain adjustments, as the Board knows, which may occur in respect of events which to date at least have not occurred, and which I don't think anyone is suggesting are in issue in this case. 650 So that leads to the following bottom line: The rebate is mandatory. The CRQ is set. And the way in which the rebate may change is if the CRQ changes. And that takes us to section 3 of the licence which I pause over simply to say, section 3 clearly contemplates that the price may, as it currently is, go over $38 per megawatt hour. It says: "OPG may engage in unilateral actions to attempt to maintain hourly prices at levels that result in the average price for a settlement period equalling the price cap, plus all adjustments provided for in part 3, section 2, above. In the event that unilateral actions between by OPG cause the average price to exceed such level, the sole remedy shall be for OPG to pay the rebate as provided for in paragraph 2 of part 3, above." 651 I pause to say that's the sole remedy. It's, of course, not the sole circumstance in which the rebate is payable. It's payable whether the result -- the over $38 result is as a result of anything done by OPG or not. But that section makes clear that it was contemplated that it would go over $38 and it provides the sole remedy. 652 Then we come to the section that is most pertinent to the proceeding today, section 4. "Reduction to the CRQ and the Qh upon decontrol." And it provides that: "In the event that OPG completes a transfer of effective control --" One issue: Is there a transfer of effective control. " -- as determined by the Board." As I said earlier, no issue; the Board has to determine that. "Each hourly quantity of energy used to calculate the rebate subsequent to the completion of the transfer shall be reduced by 110 per cent." 653 That tells you that if the Board determines that there has been a transfer of effective control, the result which mandatorily follows, in the words of section 4, these adjustments "shall be made," the rebate shall be reduced -- pardon me, the CRQ shall be reduced. That's mandatory. If you determine that there has been an effective decontrol, the small qh associated with this output is taken out of the CRQ. And since the transaction, in the words of this section, closed long before the settlement period, that's -- it comes out of the settlement period for the entire settlement period. 654 That takes us then to the question of effective control -- transfer of effective control as it is described in section 4 of the directive and the licence. 655 Part 4 has a number of aspects dealing with the transfer of effective control, as the Board knows, and the first two deal with -- pardon me, first three deal with the reviews which will be had or may be had over the ten-year period in which certain decontrol targets are set. The pertinent section here, and the section pursuant to which this application is brought, is section 4. 656 That sets out what I say, in the terms of the licence, is the mandatory set of tests to be applied by the Board in determining whether effective control has been transferred. 657 In the first place, effective control is itself a defined term, and that leads to the first issue. Effective control in respect of output means control over the timing, quantity, and bidding into the Ontario market of such output. That's the first issue on the issues list. Pursuant to the directive and the licence, the Board is required to make a determination of whether that has happened. Has there been a transfer of control over the timing, quantity, and bidding into the Ontario market? 658 The second test to be applied by the Board is that contained in section 4(b), which says that the transfer of effective control shall not have occurred if the Board determines two things: 1, that the transferee has or has obtained as a result of the transfer effective control of over 25 per cent or more of either Tier 2 or a combination of Tier 1 and Tier 2 capacity. 659 So the Board has a second criteria to determine whether effective control has been transferred, and that leads directly to issue number 2. 660 Lastly, the licence requires that the Board determine whether there are -- there exists, under section 4(b), any ongoing arrangements which facilitate interdependent behaviour between OPG or a subsidiary and the transferee, and that leads to issue 3. 661 I pause there, harkening back to my submissions of this morning, to say that that criteria focuses not on some freestanding potential for interdependent behaviour which is always with us whenever two parties deal with one another, but whether this transaction has facilitated interdependent behaviour as the Board determines what that is in this hearing. 662 So that gives you, in my submission, under the directive and the licence, three very specific criteria which the Board is required to use in determining if effective control has been transferred. They're defined, to some extent, in the licence. To some extent the phrase "interdependent behaviour", for example, will remain for further definition by this Board. But the Board, in my submission, with respect, cannot amend those criteria, nor can it add to them, because the licence and the directive say that if effective control, as defined by those criteria, is transferred, the CRQ must be adjusted. 663 And that's why, for example, when my friend from Energy Probe says, well, what possible objection can there be to the issue, what are the -- his number 5, what are the criteria to be applied by the Board in making a decision on the application, and how do these relate to the objectives under section 1. Well, the criteria are these three issues. And the Board, in deciding an issues list, in my respectful submission, tells the parties what the issues are. These are the criteria, these are the issues. 664 If the Board leaves on the issues list the proposition that there are other criteria that should be examined, and we've heard some examples today, is the market otherwise competitive, what's happening to output or input from various other generators, a host of other issues, what -- even if effective control has been transferred, or even if these tests have been met, what if we think that the market isn't competitive? What if we think the price isn't too low? 665 There clearly are other criteria that people would like to advance before the Board as a reason for disposing with this application other than in accordance with the licence and the directive. But in my submission, those criteria are not available, given the mandatory nature of this directive and licence, and it would be wrong and indeed entirely counterproductive to the creation of an issues list to put them on the issues list. 666 An issues list tells the parties what to lead evidence on and gives the parties and the Board a standard for relevance going forward. If you leave this on the issues list, the question isn't just what can parties argue, as the chair was asking just before lunch, the question is what can parties lead evidence on. If there are other criteria than these three, parties will lead evidence on them. They will lead evidence on what they say the criteria should be, and you've had a small window into the waft of evidence that would result from that. 667 So, in my submission, and let me just deal fully with item 5 right now, the Board does not have to have on its issues list a reference to section 1 to enable parties to argue that the Board should have regard to section 1 when it's deciding these three issues. That's the law, and that's also the practice. But it should not, and it would be a dangerous expansion at a time when resources are strained of the purview of this hearing to suggest there are other at-large criteria which people may not only argue for but lead evidence on. 668 I should just make reference as well, because it fits at this point, the suggestion that if these criteria are met, there's been a transfer of the timing, pricing and control of output into the market, no facilitation of interdependent behaviour and no 25 per cent threshold. Whether or not, in the words of the proposed question 3, there are market circumstances that facilitate like consequences is outside this directive, outside the criteria that the Board can and should apply for the determination of this issue. 669 All of this, of course, has been recognised by some who are before the Board. The Board has the letter from the CAC who has the same policy interest that others who are before you today have in examining issues that go beyond the scope of the licence and the directive, but who, in their letter to the Board yesterday say, "It is the CAC's view that a combination of the terms of OPG's licence, the Minister's directive, and the provisions of the Ontario Energy Board deprive the Board of the jurisdiction to embark upon that inquiry." We agree. And I think the CAC recognises that if the Board doesn't have the jurisdiction to engage in the inquiry, it is not a fruitful use of the Board's resources to endeavour to do so. 670 Now, let me also deal, and this really relates in part -- it's by way of introduction to issue number 4 -- with the fact that OPG is entitled, under section 4(a)(ii) of the licence, and does in fact in this hearing ask the Board to confirm what flows from a transfer of control -- I'm sorry, it's 4(b), which is the appropriate adjustment to the CRQs, the amount of output to which that applies, and the tier of output. 671 Now, it is not -- and what the application refers to is exactly that, a request as is permitted in the terms of the licence for confirmation of the adjustments that flow -- what adjustments flow from that determination as a result of the licence. 672 It is, in my submission, a perversion of saying that the question, what are the appropriate adjustments under the licence, is in any way related to the question in section 4 which is exactly the opposite -- which is, are adjustments under the licence appropriate. The limited question for the Board here is: If there's been a transfer of effective control, what is the implication for the CRQ? 673 That requires confirmation of the small qh associated with Bruce. In some cases, that might engage an allocation function if the transfer occurred in the middle of a settlement period. That's not the case here so, in my submission, there's not going to be any issue about the amount of small qh to be subtracted from the CRQ. 674 The tier of output, in my submission, again confirmation is sought because that's the standard against which decontrol is measured, but it's not contentious. 675 And the appropriate time period over which the adjustment is to take place -- pardon me, the amount of output. In this case there's no question that the entire Bruce Power output was transferred, so there's no contention as to the small qh that is to be removed. 676 Even -- and in those circumstances, the confirmation is sought not because the issue is contentious but because once the Board has made the determination the CRQ is adjusted pursuant to the licence, and that adjustment should be done by the Board not by OPG. 677 It would not -- I don't think it would be appropriate in the public sphere to take that -- to take that determination and then ask OPG to do the arithmetic and just advise people. That's why the Board's confirmation of the results is sought. But the nature of the results flows directly from the licence and is not otherwise controversial. 678 The argument with respect to issue number 4, with that background in mind, seems to assume for some reason that the CRQ, although it is specifically defined in the licence in the terms that I've indicated, can be adjusted. Well, in my submission, the licence is clear. The CRQ is set. It is only to be adjusted in accordance with the licence, and that is by the removal of the output of a unit which has been effectively decontrolled. 679 The CRQ was set in the licence. It was set before the licence was issued. In my submission, the CRQ is not flawed, as has been suggested. It was not -- it was never intended as a benchmark which would be the subject of constant readjustment, it was a number set after certain modelling had been done. Nor would it be useful or indeed feasible to be -- to contemplate readjusting it over time as market conditions change, as they do on a daily basis. 680 When the market -- when the price exceeds $38, there are two -- there is a remedy provided for in the licence. To the extent that it is thought that that occurs as a result of -- that the price is higher than it otherwise should be, the licence provides the sole remedy available in the licence; namely, the rebate. And beyond that, if it is thought that there are problems in the market that need to be addressed, it is clear, in my submission, that those are not to be addressed pursuant to the licence or the directive or by this Board. They will be -- they will be addressed, presumably either by the IMO's market rules or by the Minister in a further directive. To date, no such things have occurred, and certainly no change has been made to the directive that is here before the Board. 681 It is suggested that because there is no data to develop -- in terms of the CRQ for the period from the end of December 2004 to April of 2006 that this somehow represents a flaw in the CRQ which the Board should adjust -- should address. Well, with respect, even if there were no decontrol proceeding whatsoever, the government is going to have to deal with that lacuna data for purposes of setting the CRQ for rebate purposes for that period of time. And it doesn't affect the decontrol issue at all. The decontrol issue relates to the output from Bruce Power, the small qh associated with Bruce Power. If there's decontrol, that qh, small qh, is subtracted from the CRQ as it exists to date and as it will exist over time as it's developed. In other words, the decontrol issue does not affect the amount of the CRQ that will have to be set in that model for those months. 682 It isn't, in my submission, relevant to the Board's determination whether the CRQ now, in hindsight, appears to be what the Minister should or shouldn't have set. The Minister set the CRQ. 683 But let me just illustrate that there are slings and arrows, as it might be said, with respect to this issue. Over time much has changed; that is true. But it isn't all to the advantage, as appears to have been suggested, of OPG. OPG expected to be paying a rebate if the price went over $38 per megawatt hour on the output from Pickering A. If the price goes over $38 per megawatt hour OPG will be paying a rebate on the output from Pickering A. 684 Unfortunately, OPG has no output from Pickering A on which to earn associated revenues. OPG assumed that it would have the output of Pickering A at lower cost. In fact, by use of other alternate fuels and generation capacities the cost of producing the power on which OPG is paying its rebate is higher than was anticipated in that model with the output of Pickering A. But OPG is paying that rebate in any event because it's set in the licence. The way the model worked was set then -- without adjustment, rebates would be paid. If anything further needs to be done to adjust the market rules or the directive or the licence, that would be done outside the framework of the licence and the directive. 685 So coming back to, I guess, by way of conclusion -- in my submission, what has been put to you is the suggestion -- is the suggestion under various guises that you should disregard the mandatory language of the directive and what follows from it, which in my submission you cannot and should not. The power that you're exercising here comes from the directive and it's quite precise as to what can and cannot be done. It's -- I don't think, in the end, it was suggested that you can, of your own motion, amend the licence. But let me say, the section that you are taken to, section 74, is quite express that the Board cannot, on its own motion, amend a licence except to comply with a directive. And it certainly can't amend a licence in defiance of a directive. 686 So the Board, with respect, has to come back to what are its responsibilities and where does it get them. It gets them pursuant to the directive and the licence which is unusually specific about the purview of the exercise to be engaged in here. 687 The other issues raised by the intervenors may well be raised in other fora and for other purposes, but they are not an appropriate set of issues to be added to the list of this hearing which has a very specific objective and which, with respect, should keep to that objective. 688 May I just have a moment. 689 Let me just deal with a -- I'm sorry. I should perhaps, to be clear, say that with respect to issues 6 and 7, those derive from the view, in my submission, that section 1 of the Act gives you authority or responsibility to do -- to deal with this licence other than in accordance with the directive. I've given you my submissions as to why, with respect, section 1 is not a jurisdiction-granting or responsibility-granting section of the Act, and for those reasons one can't take refuge in that section to say that the Board can entertain this larger inquiry as set forth in sections 6 and 7. 690 A suggestion was made about the possibility that someone else might apply to amend this licence. I will leave for the day when such an application is made detailed arguments as to why that cannot occur. But shortly stated, when the Board is acting pursuant, as it is, to section 28 which says that the Board shall implement a directive, and when the directive says this shall be the licence terms, and when the directive says the licence terms cannot be amended except in accordance with the licence, in my submission, such an application could not be brought. Nonetheless, it hasn't been brought. This issue has been in the marketplace and in the media for a long time. No such application has been brought. If and when it is, we'll deal with it then. In my respectful submission, there's nothing for the Board to do on that front unless and until such an application is brought. 691 May I just finally say, because my CRQ submissions may have been less clear than they could be or should be and I'll just make one more pass at it. 692 Even if the Board doesn't hold a hearing, and regardless of whether the Board does hold a hearing, the government will have to provide CRQ data for the remaining 16 months, and the adjustment that will flow to that data will be automatic if there is decontrol, the output of Bruce Power comes out; if there isn't, it doesn't. The exercise that has to be done remains to be done and, in my submission, is not influenced by what will take place in this decontrol hearing. 693 Thank you. Subject to questions, those are my submissions. 694 MR. VLAHOS: Thank you, Ms. Jackson. 695 Before I turn to the parties, Mr. Laughren has a question. 696 MR. LAUGHREN: Ms. Jackson, there was one comment you made and I didn't understand the regulatory principle behind it. Perhaps you can help me. It had to do with your point that the Board had to rely on the three criteria for making a judgment, and you said -- I found it interesting enough that I wrote it down -- that to go beyond that would not be appropriate, and you said at a time when resources are strained. 697 MS. JACKSON: That's not the principle. The principle is that is -- the latter part of that was just a comment on reality. The principle that I was attempting to advance was -- is not at large, it is what is the -- what is the jurisdiction of the Board in this case. 698 MR. LAUGHREN: Right. 699 MS. JACKSON: And so I follow down the chain that says section 28 says you shall implement the directive. The directive says you shall make this determination. The licence says the determination is made according to these three criteria. The licence says if these criteria are met, there has been a transfer of effective control. The licence says if there's a transfer of effective control, the CRQ shall be adjusted. So I say all of that leads to a train that says the mandatory provisions of the Act have been transferred into a mandatory set of directions as to what this issue is and how it is to be disposed of. 700 I should be clear. I don't think that turns it into a robotic exercise or, as I've said, that it doesn't leave room for Board judgment on important issues like interdependent behaviour. But the principle as opposed to the practicality is that the Board has to -- is constrained by its statutory jurisdiction, and in the circumstances of this statute and following through the wording of this directive, those are the requirements. And then I simply observe that not only jurisdictionally is that what the Board is doing and -- the Board can't, as it were, hold a hearing or inquire at large. It must be discharging a responsibility given it under the Act, and that's the responsibility. 701 And then the practical observation -- the administrative law principle is that quasi-judicial bodies, administrative law bodies do not engage in hearings into issues outside of their jurisdiction. The practical observation I make is, and particularly when they have so much else on their plate to deal with. But that was merely a practical point. 702 MR. LAUGHREN: Thank you. 703 MR. VLAHOS: I'll go to Mr. Rodger. 704 MR. RODGER: Thank you, Mr. Chairman. 705 REPLY SUBMISSIONS BY RODGER: 706 MR. RODGER: Just in terms of my reply to my friend from OPG, specifically regarding issue number 4, I think the submissions of OPG underscore the need to have AMPCO's issue number 4 included in this hearing. And issue 4 needs to be there so that evidence can be led to determine exactly what was intended in terms of the Market Design Committee process, the Order in Council in the directive and therefore how the licence was to be applied. 707 I believe that the main theme you should take away from OPG's submissions is simply the illustration that there's a fundamental difference of opinion about how the directive and the licence are to be applied. But the fact that OPG may have a different view than AMPCO on this is no reason for the Board to exclude it as an issue for this matter. That's precisely why we should have it, so we can lead evidence on this at the hearing. 708 Now, in terms of the issues around discharging the duties with respect to section 1, we agree with my friend's comments that it flows from the directive, and that's what we're again insisting that is applied. But when it gets to the submissions on, for example, how the Market Design Committee unanimously adopted a position, again, that's something that we have to lead evidence on, because our position will be that there was a very specific context by which the market power mitigation framework was adopted. Today is not the time to decide that. That's what we have to produce evidence on. 709 And just on an evidentiary point. The issue around what data was presented, what information was presented, all go to the ultimate proceeding before this Board and with how the licence should be applied. 710 We agree that we're not seeking any amendment to the licence. As I said to my initial submissions, we want the licence to be applied pursuant to the directive. But we disagree on the interpretation. 711 One point I would respond to that my friend was saying, that somehow the definitions and the calculations pursuant to those definitions are somehow cast in stone. Again, there's a need to lead evidence on that. 712 If I could just review and refer you to -- you don't have this before you, but for the record, it's page 1.6 of the third interim report of the Market Design Committee, October 8th, 1998. I'll just read one paragraph, but I think it illustrates the theme. 713 Paragraph 1.2 is entitled "The Joint MDC Executive and Ontario Hydro Market Power Mitigation Proposal." Joint, not just the MDC, but the MDC and Ontario Hydro. And the paragraph reads: "The recommendations below" -- and these are the recommendations for which you have the summary for in my handout, Exhibit 1 -- "The recommendations below assume that the Ontario electricity market will open on July 1st, 2000. In the event the market opens before that, the effective date for any of these proposals that have time limitations occurs when the electricity market is declared to be open. In the event that the market opens after July 1st, 2000, but before July 1st, 2001, then the market opening date will be deemed to be July 1st, 2000. In the event the market opening is delayed beyond July 1st, 2001, these proposals that have time limitations should be adjusted accordingly." 714 So the information that went to the Market Design Committee, there was consensus, I would argue, that if the world unfolded in a very different fashion than what had been anticipated back in 1998, there would be adjustments. But we need to lead evidence on that, and that's why it should be an issue for the hearing. 715 I would just conclude, Mr. Chairman, there's been reference made to 74 -- section 74(1)(B), the public interest component of amending a licence. But to leave the Board with this question: That if you believe for this proceeding that there is a public interest mandate in the matters before you, the question I would put to the Board is: How can it be in the public interest; and to therefore discharge your duties, not to even consider an issue when what hangs in the balance is potentially hundreds of millions of dollars of electricity price protection for Ontario consumers. 716 I submit, Mr. Chairman, that the answer is obvious and that this critical matter should be before you as an issue in this hearing. Those are my submissions. 717 MR. VLAHOS: Thank you, Mr. Rodger. 718 Mr. MacOdrum. 719 MR. MacODRUM: Thank you, Mr. Chairman. 720 REPLY SUBMISSIONS BY MR. MACODRUM: 721 MR. MacODRUM: Today is not just Halloween. It's also the end of the first six months since market opening. I wish I could agree with much of what Mr. Mattson said, but given the position that the applicant has taken and counsel for the Power Workers has taken, I don't think we can rely that appropriate attention will be paid to section 1 of the Act. And I think that is the reason for contested issues number 5 and, without speaking for Mr. Poch, I suspect number 6. 722 Mr. Chairman, the test of whether Mr. Mattson is correct, that we don't need specific reference to the section 1 objectives, is whether, if I ask a witness from OPG about the impact of the reduction of the rebate on consumers, when I'm asked -- when I ask what they are proposing, how what they are proposing is consistent with objective 3 of the Act, I'm met with an objection from my friend Ms. Jackson that it's not relevant. And to avoid that risk is why we have asked for an explicit recognition, however you do it. If you do it to the preamble to the issues list, citing the importance of the objectives, or however, that reference be made to the objectives in section 1 of the Act. 723 Ms. Jackson set up a straw man and then, I agree, she effectively tore it down. She argued that section 1 was not enabling. I agree, it's not enabling. We're not arguing it is. Section 19(2), section 21(2), section 23, section 28, the language of the licence, are all enabling. But the objectives are relevant to the case, and the applicant can't tie you up except for your hand being free to sign the order and say disregard the objective, disregard what we are proposing here is going to happen in the real world of energy consumers. 724 Mr. Chair, I think that really is the question that I leave you with. How is this Board going to discharge its public interest objectives in this proceeding, which appears on its face by the terms of the directive of the licence, to be very cut and dried? How are you going to fulfil your objective of protecting consumers from the increases in electricity prices that have occurred in those first six months since market opening? 725 Thank you very much, Mr. Chair. 726 MR. VLAHOS: Thank you, Mr. MacOdrum. 727 Mr. Poch. 728 MR. POCH: Yes, Mr. Chairman. 729 REPLY SUBMISSIONS BY MR. POCH: 730 MR. POCH: Mr. MacOdrum just said much of what I was going to respond to the one point that OPG suggests, which is that they mischaracterize our argument as suggesting section 1 is a source of jurisdiction and enabling section 1. It is not. I agree with my friends and with counsel for OPG. It is not an enabling section, but as I pointed out, it reads: "The Board in carrying out its responsibilities under this Act shall be guided by the following objectives." 731 Well, everything my friend for OPG has said is suggesting you have a decision-making responsibility that flows from the Act via section 28, via the directive, via the licence. It's sourced in the Act. You're making a statutory power of decision -- you're exercising a statutory power of decision. The Act is clear. When you exercise any decision-making authority under the Act, you must do so guided by -- you shall do so guided by these objectives. That's all we're asking for you to make clear. And, I agree, that it doesn't matter whether it's stated as an issue in the case or simply you otherwise make clear to us your view on this, because our whole purpose here today is to get some guidance as to what's going to be admissible by way of evidence and argument and what isn't. 732 So I would just urge the Board to be clear in declining or agreeing to the relief requested or in using its other authorities under the Act. Is the Board prepared to hear evidence and argument about how such possibilities accord or do not with section 1 of the Act? Thank you. 733 MR. VLAHOS: Thank you, Mr. Poch. 734 Mr. Shrybman. 735 MR. SHRYBMAN: Thank you very much, Mr. Chairman. 736 REPLY SUBMISSIONS BY SHRYBMAN: 737 MR. SHRYBMAN: There are two issues I'd like to respond to. 738 The first, counsel for OPG has suggested that -- or her recollection is that no one suggested that you, on your own motion, amend the licence. Indeed, that's precisely what I have suggested. If you agree with her submissions that the directive itself and the terms of the licence which give it expression confine your ability to inquire into the issues we are urging upon you, if you come to that conclusion, then I have specifically asked you to, on your own motion, amend the licence so that you can take into account the effect or consequence of the order that you are being asked to make in terms of consumer interests, competition interests, and the other objectives of the Act. So I want to be very clear about that. 739 She indicated in referring you to section 74, I think incorrectly, with all respect to her, that your authority under 19(4) is limited to, on your own motion, dealing with issues that you consider necessary in order to implement a directive under section 28. That limitation is not set out in section 74, and I refer you to it in my submissions. If you look at section 74(2), there is a limitation imposed on your ability to invoke your jurisdiction under 19(4). But that limitation only pertained to matters having to do with the abuse or possible abuse of market power. Where that is the concern, then, indeed, your authority under 19(4), I agree, is limited to dealing with matters that are necessary to implement directives under section 78. But I very clearly indicated in submissions that I did not believe that what we're asking you to do is to invoke your authority to deal with the problem of abuse, or potential market abuse. We're asking you to invoke your authority to protect consumers, even where there may be no abuse of the market, or any abuse of the market rules. 740 So the constraint on your authority to invoke on your own motion under section 19(4) an amendment to this licence is much narrower than my friend suggests and of no relevance to the particular amendment that the licence that we're suggesting, which is simply to make explicit your authority to consider the consequences of the order which you're being asked to make. The amendment, as I indicated, would be something along the lines of, notwithstanding the other provisions of section 4 of part 4 of the licence, that an order may be declined where the consequence of that order will not achieve the objectives of the Act. 741 So that's that issue. 742 My friend goes on to suggest that, Well, in any event, you know, the constraint delineated by the directive and by the terms of the licence themselves preclude you from amending the licence. If that's the case, then I think you are obliged to determine that those constraints are ultra vires of the directive. As Mr. Poch indicated, the Minister cannot, by way of directive, emasculate the Board's capacity to consider the objectives of the Act in carrying out its functions under the Act, or to deny people in Ontario the right to bring applications to amend licences under section 4, or indeed for the Board, on its own motion, under 19(4) to amend licences where it considers that necessary in the public interest. 743 The second point, which I'll make much more briefly, is only to reinforce the importance of, I think, being quite clear in terms of what is in-bounds and what isn't. Whether the Board ultimately picks -- whether the Board ultimately orders costs to defray the expense of retaining consultants, or we pay those costs, it doesn't serve either of us for us to retain a consultant to look at the impacts of this order on consumers in Ontario and on competition in this market if you've determined that, indeed, the exercise is formulaic, as OPGI urges on you, and you have no authority to consider the consequences of the order you're being asked to make. 744 We will call evidence on that issue if you decide that it's one you can, in fact must, as we submit, consider. If you don't, I think the people -- not only do my clients, but I think the people in this province need to understand the limits of your authority. If you come to the conclusion that you have no authority to consider the consequences of your orders on consumers in this province, be clear about that and we won't go to the expense, or expect you to defray the costs of retaining experts to elucidate those consequences. 745 That's my response. Thank you very much. 746 MR. VLAHOS: Thank you. 747 I don't see Mr. Mattson. Mr. Adams, Mr. Mattson has left for the day? 748 MR. ADAMS: Unfortunately, Mr. Mattson couldn't be here. I wonder if I can just reply to one small point. Tom Adams for Energy Probe. 749 REPLY SUBMISSIONS BY MR. ADAMS: 750 MR. ADAMS: Counsel for OPG has suggested that the government will clear up the matter of the missing 16 months. That may or may not be the case. It's news to me that that is forthcoming. 751 If the Board, in its decision, is not -- is moved to eliminate the matter from the issues list, I would suggest that you flag that item in your decision so that it's cleanly punted to other authorities to deal with, so that the marketplace has some clarity around the point. 752 Thank you. 753 MR. VLAHOS: Thank you, Mr. Adams. 754 Mr. Cowan. 755 MR. COWAN: Yes, thank you, Mr. Vlahos. 756 REPLY SUBMISSIONS BY MR. COWAN: 757 MR. COWAN: The Federation appreciates the desire for simplicity in this on the part of Ontario Power Generation. I think there should be a first time for simplicity, but I don't think we've reached it yet. 758 If the market is not working, and we contend it is not working as it should simply because people don't have the information, they don't have the opportunities to change, then consumers are suffering. And they are suffering. I have greenhouse operators who get to buy power really only in the expensive periods, and they'll only get rebates on the inexpensive power which they don't consume. They won't be looking at an average price of 5.5 cents to this point; they're looking much more at an average price of 8 or 9 plus. And they don't get the rebates. 759 For those of our members who do get the rebates, dairy farmers, for example, who are using power year-round, we're looking at an increase in cost which is trimming their profit margins in the range of 15 per cent. These are people who make ordinary livings managing a herd of 100 cattle, 100 to 150 cattle, growing all the feed for them, and they are seeing a month and a half of the year's work gone. These people require your protection as consumers. 760 It was certainly contemplated in the Act; we certainly anticipated it would be there. We had not envisaged that it was -- such protection as they were afforded was, in fact, only available to them if somehow this agreement could be unlocked. We felt it was here at this Board. We still feel it's here at this Board. We strongly expect, we truly hope, you'll go ahead with the full range of considerations that we've asked for, which others have asked for. Without that, consumers in this province really are without the protection they had hoped for at all. 761 And that's our submission at this time. 762 MR. VLAHOS: Thank you, Mr. Cowan. 763 Mr. Taylor. Mr. Taylor has left us? 764 Mr. Lokan. 765 MR. LOKAN: Nothing to add. Nothing to add. 766 MR. VLAHOS: Thank you. 767 MS. JACKSON: Mr. Chair, may I make two brief comments. 768 MR. MacODRUM: Is this an opportunity of reply to reply? 769 MR. VLAHOS: One second, Ms. Jackson. 770 Mr. Moran, do you have anything at this stage to clarify or comment on? 771 MR. MORAN: No, I don't, sir. 772 MS. JACKSON: Okay. Ms. Jackson, what's your request? 773 MS. JACKSON: There were two points that were raised that suggest I may -- I was less than clear. I would like to just tell the Board what I meant. I'm not rearguing. 774 MR. VLAHOS: The Board will allow no rearguing. But clarification or misunderstandings, that would be allowed, and that would apply to all parties. 775 MS. JACKSON: Thank you. I just want to state the proposition, not argue it. 776 CLARIFICATION BY MS. JACKSON: 777 MS. JACKSON: In referring to the work of the Market Design Committee, I was not intending to suggest that the Board needed to make a determination on that. Quite frankly, there was some debate amongst us as to whether I should talk about it at all. There was the impression left that something had been put over on them on the public record, and we felt I should address that on the public record. 778 In my submission, and I intended to say this, it's not relevant. The question of what the Minister did with that advice is contained in the directive. And my arguments about CRQ and otherwise are based on the specific wording of what's in the directive and the licence. That was the first clarification. 779 The second was, with respect to my arguments concerning section 1, it was on the basis which I still understand to be my friend's submissions, but let me explain why I made the argument, if the effect -- if effective control is passed according to the tests set in the licence and you find that and then you are asked to do something else, you don't find that authority in the licence or the directives, you have to look elsewhere for it. I understood my friends to be saying section 1. If not section 1, it doesn't exist. And that's why I addressed the fact that the authority doesn't exist in section 1. 780 MR. POCH: Mr. Chairman, just to clarify that. 781 CLARIFICATION BY MR. POCH: 782 MR. POCH: Our position is, your statutory decision to act on OPG's request or to decline it must be informed, as all your statutory powers -- exercises of authority must by a view to the objectives in section 1. That's all. I have a hunch we're not that far apart, but it's a matter of emphasis and a matter of what evidence and argument can flow. 783 MR. VLAHOS: Anybody else who would like to clarify on the clarification? 784 MR. MacODRUM: Well, Mr. Chair, I just think Ms. Jackson's second remark was not a clarification and it was an abuse of your courtesy, I think. 785 MR. VLAHOS: Well, Mr. MacOdrum, we're trying -- from our perspective, we're trying to get the best information possible, the most clarity possible, so we can make an informed decision. 786 Any other matters? Mr. Moran, is there anything left? 787 MR. MORAN: I don't believe so. I think that's everything we were here to address, Mr. Chair. 788 MR. VLAHOS: Okay. 789 Just to reiterate. We will consider all those issues. We'll wait for the transcript. You can appreciate those are not easy issues, so it may take us a few days to reach a conclusion. And when so, it will be communicated by way of Mr. Brown. Would that be a procedural order? I guess a decision on the issues and a procedural order which will set out the time lines perhaps, hopefully as far as the hearing itself. 790 So with that, thank you very much, and we're adjourned. And thank you, Reporter. 791 --- Whereupon the Issues Day concluded at 3:53 p.m.