Rep: OEB Doc: 12YP2 Rev: 0 ONTARIO ENERGY BOARD Volume: PRESENTATION OF SETTLEMENT PROPOSAL 10 DECEMBER 2003 BEFORE: P. SOMMERVILLE PRESIDING MEMBER A. BIRCHENOUGH MEMBER 1 RP-2003-0083 2 IN THE MATTER OF a hearing held on Wednesday, 10 December 2003 in Toronto, Ontario; IN THE MATTER OF the Ontario Energy Board Act, 1998, S.O. 1998, c.15 Schedule B; AND IN THE MATTER OF an Application by Eastern Ontario Power Inc. for an Electricity Distribution Licence to own and operate an electricity distribution system to interconnect generating stations in Gananoque, Kingston Mills, Brewers Mills, Washburn and Jones Falls and to provide distribution services in the Town of Gananoque and in portions of the Township of Leeds and The Thousand Islands and the City of Kingston. 3 RP-2003-0083 4 10 DECEMBER 2003 5 HEARING HELD AT TORONTO, ONTARIO 6 APPEARANCES 7 JENNIFER LEA Board Counsel LEE HARMER Board Staff ELAINE WONG Board Staff DUNCAN SKINNER Board Staff TIM CURTIS Eastern Ontario Power Inc. SCOTT HAWKES Eastern Ontario Power Inc. CHRISTINE LONG Town of Gananoque DAVID BROWN Granite Power Corp. 8 TABLE OF CONTENTS 9 APPEARANCES: [19] PRESENTATION OF SETTLEMENT PROPOSAL: [34] DECISION: [87] 10 EXHIBITS 11 12 UNDERTAKINGS 13 14 --- Upon commencing at 2:30 p.m. 15 MR. SOMMERVILLE: Good afternoon. Thank you. Please be seated. 16 We are convened today in the matter of an application for electricity distribution rates made by Eastern Ontario Power, which bears Board file number RP-2003-0062/EB-2003-0083, and an application for electricity distribution licence also made by Eastern Ontario Power bearing Board file number RP-2003-0083/EB-2003-0116. 17 The purpose of the hearing today is to receive and consider a settlement agreement arrived at between Eastern Ontario Power and the Town of Gananoque. 18 Can I have appearances, please? 19 APPEARANCES: 20 MR. CURTIS: Tim Curtis, Eastern Ontario Power. 21 MR. HAWKES: Scott Hawkes, Eastern Ontario Power. 22 MR. SOMMERVILLE: Are you counsel, Mr. Hawkes? 23 MR. HAWKES: I'm general counsel to the company, but not acting in particular as counsel today. 24 MR. SOMMERVILLE: Thank you. 25 MS. LONG: I'm Christine Long, counsel for the Town of Gananoque. 26 MR. SOMMERVILLE: Ms. Long. 27 MR. BROWN: David Brown, I'm counsel for Granite Power Corporation, the former owners of the distribution company. 28 MR. SOMMERVILLE: Thank you, Mr. Brown. 29 MS. LEA: Jennifer Lea, Board Counsel. 30 MR. SOMMERVILLE: Thank you, Ms. Lea. 31 Who is going to actually present the agreement for our consideration? The Board has a copy of the agreement. It was filed in the normal course, and we have reviewed it. 32 MS. LONG: Yes, Mr. Chairman, I'm happy to take you through the settlement documentation. 33 MR. SOMMERVILLE: Thank you very much. 34 PRESENTATION OF SETTLEMENT PROPOSAL: 35 MS. LONG: And I would refer you first to the settlement documentation that was filed on November 19th, along with an additional letter that was filed. Just for clarification, that was filed on November the 19th, but I understand there may have been some confusion, and so it was sent through again on December the 8th. And that would reflect the changes that are being made, in that Granite Power Corporation is no longer going to be a party to this settlement documentation. 36 MR. SOMMERVILLE: Thank you. The Board has that correspondence. 37 MS. LONG: Thank you. 38 I don't propose to make submissions on the actual settlement proposal but to take you through, to take the panel through, the high points and perhaps discuss a few issues. 39 Basically, in the first page, Mr. Chairman, we're stating here that the Town will be resolving all issues in the rate application and the licence application, and that the parties have come to an agreement that this is a good compromise for both parties. 40 If I can take you to page 3, which sets out the actual settlement terms: That EOP will make a one-time credit of $40 to the low-volume and designated customers as set out in the documentation; that a bill insert will be drafted, jointly approved by Eastern Ontario Power and the Town of Gananoque, addressing the three issues that are outlined in (a) through (c). A copy of that proposed bill insert is included as Exhibit B. 41 Paragraph 3, which states that the mayor will take the lead in making this announcement. 42 Paragraph 4, that the settlement proposal and all the information provided to the Town with respect to this shall be kept confidential until such time as the parties have agreed to disclosure. 43 (5), where the parties are requesting that the Board make an order, in granting the distribution licence, or a condition of the licence, stating that EOP shall be required to make the $40 payment. 44 (6), dealing with costs, EOP and the Town have dealt with that, and we're not asking the Board to make any determination with respect to that. 45 We're also acknowledging in paragraph 7 that John Campbell/Granite Power Corporation is not asking the Board to make an order for costs. 46 And number 8, and if I could speak to this condition, where the parties are asking the Board to make it a condition of the order granting EOP's distribution licence or a condition of the description licence itself that EOP is prohibited from seeking that amount paid for the rebate for ratepayers through the future use of a deferral or a regulatory asset account or any other means; the purpose of that, of course, being that the ratepayers don't in fact actually pay for this rebate themselves in some other way. 47 And then, finally, the final issue will be that the franchise agreement between the two parties is not affected by this, the settlement, at all. 48 At Exhibit A you will see some evidence that it has been filed by the parties provided by Eastern Ontario Power with respect to the cost of power and paid by Granite Power Distribution Corporation; and some further calculations with respect to the wholesale cost of power charge for both the residential class and the general service under 50 class. 49 I don't propose to go through those unless the Board has any questions with respect to them. 50 MR. SOMMERVILLE: Thank you. 51 MS. LONG: So that is the settlement proposal that EOP and the Town are putting forward to the Board today. 52 MR. SOMMERVILLE: The agreement refers to Exhibit B, which is, in the version that I have, a bill insert document. It's not our inclination to approve the bill insert portion, and we would not want to have an acceptance of the agreement construed to be an acceptance or an endorsement or any species of authorship by the Board of that Exhibit B. Does that cause difficulties for any party here? 53 MR. CURTIS: We actually prefer that, so there is no difficulty for us. 54 MS. LEA: You may wish to get a microphone for yourself, Mr. Curtis, if you tilt that up. 55 MR. CURTIS: There it is. Okay. 56 MS. LEA: They hide it so the wrong people don't speak. 57 MR. CURTIS: It's probably me. 58 No, we have no problem with that. In fact, that's preferable to EOP, that the Board not make a ruling on the bill insert itself. We think that should be the responsibility of the distributor. 59 MR. SOMMERVILLE: Okay. Ms. Long? 60 MS. LONG: It would be the preference of the Town of Gananoque to have the Board approve Exhibit B to have this finally completed. However, if what the Board is saying is that it agrees with the paragraph dealing with that in the settlement documentation, i.e., that the Town and EOP will jointly agree to a bill insert, then the Town has no problem with that. 61 MR. SOMMERVILLE: That is precisely our point of view at this stage. 62 Mr. Brown? 63 MR. BROWN: Your comments, Mr. Chair, really do anticipate and address the one concern that I was going to voice before you. As you have heard, my client has not signed on to the agreement. However, on November the 7th, my client sent a letter to the parties involved, as well as to Board Staff, saying that they wouldn't oppose the proposal. However, upon a review of Exhibit B, my client began to express some concern. 64 The good thing about this settlement is that it is a settlement, it is a compromise. And as the settlement agreement makes very clear on page 2 of the agreement, the last paragraph on page 2, it accurately reflects the discussions at the settlement conference; that is to say, people were advancing different legal arguments as to whether rebates under sections 79.1, 79.4 of the Act were or were not due, and the parties are not asking the Board to hear arguments, nor make findings on the legal question of compliance in view of the proposed settlement agreement. 65 From my client's perspective, that was fine. That's a compromise. That's a settlement, without any resolution of whether a rebate was due or owing, because there was dispute on that. The concern that my client had was that when one looks at Exhibit B, the language does strongly suggest that there was non-compliance and that the former owner should have paid. That is certainly inconsistent with the spirit and the intent of the agreement, and it was going to be my submission that the Board really shouldn't have anything to do with that. Whatever politicians want to do, they seem to be wanting the view of the Board, and in my respectful submission, that's not necessary for the approval of this settlement agreement. 66 So my submission to you is simply going to be that if the Board accepted the agreement, that the Board should make clear it is not rendering a judgment on whether or not as a matter of law the rebates were due; but the Board considers that in the public interest that this is a fair settlement, but also the Board is not expressing any view on Exhibit B and Exhibit B should not form part of the evidence that the Board says it relies upon in reaching its conclusion. 67 So those were the concerns I was going to articulate. 68 MR. SOMMERVILLE: Thank you, Mr. Brown. 69 Ms. Long, I'm going to give you an opportunity to reply. If you think you want to, we will give you that opportunity. 70 MS. LONG: Well, sure, I'm happy to clarify the record on this point. Exhibit B was meant to provide information to the customers of the Town of Gananoque, and that's what they're concerned with. They're concerned in providing information to the ratepayers on what costs of power they actually did pay and why they are, in fact, getting the rebate. 71 And one of the objectives, of course, of the OEB is to educate consumers and so that's why there is more detail in the bill insert that EOP and the Town initially submitted. 72 The Town is of the view that there's nothing improper with the exhibit, and that it accurately reflects why this credit is being issued. However, I do take your point. If it's something the Board's uncomfortable with, we will work with EOP - and I want to be clear on that - with EOP to come up with a bill insert that both parties can agree with. 73 MR. SOMMERVILLE: The Board will not include in its consideration and approval of the settlement agreement, will not include Exhibit B in that. We will leave that to the parties to work out in whichever fashion you want to give effect to paragraph 2 of the agreement. But we will not be specifically endorsing Exhibit B, going forward. 74 In fact, are there any other submissions with respect to the settlement agreement at this point? 75 MS. LEA: Yes, I have one question, sir, if I would be permitted to ask Ms. Long and Mr. Curtis. 76 Paragraph 4 indicates that the proposal shall remain strictly confidential, and I'm presuming that the information provided to the Town, some of that may be included in Exhibit A that you provided for the Board. 77 Is it the request of the parties to this agreement that at least for the time being the Board keep this agreement in confidence also, and that at the time that the announcement is made that's referred to in paragraph 4, that at that time it should be placed on the public file? It's just that it states that it's going to be kept confidential, but I haven't seen a request for confidentiality before the Board, and I'm wondering if you're going to seek to make one now. Because otherwise it would be filed on public file. I don't think, you know, in terms of a temporary hold on it, I don't think that's a problem. I'd just like know what your views are on it, if that's acceptable. 78 MS. LONG: Sure. The parties' intentions - and I don't want to speak for you here, Tim - is if the Board sees fit to approve this settlement proposal, then at that time the mayor will be making an announcement and then this information can be made public. I guess to that extent I'm in your hands as to how long you think it will be before you come to a decision on this. It could be a temporary hold as opposed to something longer, if that's satisfactory. 79 MS. LEA: I think I understand. So as I understand your submission, if the Board approves the agreement, then the need for confidentiality vanishes. 80 MS. LONG: That's right. 81 MR. SOMMERVILLE: Thank you, Ms. Long. 82 Is there anything further? 83 MR. CURTIS: Yes, EOP is in line with that. 84 MS. LEA: Thank you. 85 MR. SOMMERVILLE: One moment, please. 86 [The Board confers] 87 DECISION: 88 MR. SOMMERVILLE: As I have indicated, the Board has had an opportunity to review the settlement agreement. The Board will approve the settlement agreement which has been arrived at between the Town of Gananoque and Eastern Ontario Power. The Board does so on the basis on which the arrangement has been presented; that is, it is a resolution of the issues between these parties in both the rates application and the licence application. The Board has not been asked to, and makes no finding, with respect to any issues touching on the applicability of sections 79.1 and 79.4 of the Ontario Energy Board Act. 89 The Board has assessed the arrangement codified in the settlement agreement and regards it as a defensible and reasonable approach to the issues between the parties respecting the cost of power. But I repeat: The Board has not made any finding respecting the extent to which the agreement conforms to the requirements of the Act. 90 The Board will make the payment of the credit provided for in the agreement a condition of any order granting a licence to the applicant or any successor company. 91 It is a condition of the settlement agreement that Eastern Ontario Power not seek to recover any portion of the credit provided for in the agreement in any subsequent rate proceeding or like proceeding. This Panel is in a position where we cannot be seen or attempt to bind a future panel. 92 Mr. Curtis, in speaking for the applicant, Eastern Ontario Power, and I presume successor companies, are you prepared to make an undertaking today that your company will not seek to recover through rates or deferral account or through any other mechanism a recovery respecting the payment of the credit provided for in the settlement agreement? 93 MR. CURTIS: Yes, we will go on record as to making that undertaking, that we will not be seeking any recovery of these amounts through any other sort of means from the ratepayers of Gananoque. 94 MR. SOMMERVILLE: Thank you, Mr. Curtis. 95 In recognition of that undertaking, the Board will require, in the event that at some point you do make such application, that you provide a copy of the transcript containing your undertaking to the Board at the same time as you make that application so that there is no confusion about the nature of the undertaking that you've made here today. 96 Is there anything further respecting this matter? 97 MS. LONG: I have nothing further, Mr. Chair. 98 MR. SOMMERVILLE: I take it the issue of confidentiality is spent. 99 We'll stand adjourned. Thank you. 100 MS. LONG: Thank you. 101 --- Whereupon the hearing adjourned at 2:48 p.m.