Rep: OEB Doc: 12YPJ Rev: 0 ONTARIO ENERGY BOARD Volume: 3 18 JUNE 2004 BEFORE: R. BETTS PRESIDING MEMBER P. NOWINA MEMBER P. SOMMERVILLE MEMBER 1 RP-2003-0203 2 IN THE MATTER OF a hearing held on Friday, 18 June 2004, 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 Enbridge Gas Distribution Inc. for an Order or Orders approving or fixing just and reasonable rates and other charges for the sale, distribution, transmission and storage of gas commencing October 1, 2004. 3 RP-2003-0203 4 18 JUNE 2004 5 HEARING HELD AT TORONTO, ONTARIO 6 APPEARANCES 7 JENNIFER LEA Board Counsel COLIN SCHUCH Board Staff JAMES WIGHTMAN Board Staff FRED CASS Enbridge Gas Distribution Inc. DENNIS O'LEARY Enbridge Gas Distribution Inc. TOM LADANYI Enbridge Gas Distribution Inc. MICHAEL CADOTTE Union Gas Limited ROBERT WARREN CAC & CCC MICHAEL JANIGAN VECC ROGER HIGGIN VECC PETER THOMPSON IGUA JAY SHEPHERD School Energy Coalition DAVID POCH Green Energy Coalition MELANIE AITKEN Direct Energy Marketing Limited ELISABETH DeMARCO CEED, OESC, Superior Energy Management, TransAlta Energy Corporation MALCOLM ROWAN CME CAROL STREET CME MURRAY KLIPPENSTEIN Pollution Probe BRIAN DINGWALL Energy Probe VALERIE YOUNG OAPPA, Casco, Maple Lodge Farms, Markham District Energy MURRAY ROSS TransCanada PipeLines 8 TABLE OF CONTENTS 9 PRELIMINARY MATTERS: [20] PRESENTATION OF ENVISION SETTLEMENT PROPOSAL: [28] SUBMISSIONS BY MR. O'LEARY: [29] QUESTIONS FROM THE BOARD: [46] ENBRIDGE GAS DISTRIBUTION MOTION: [61] SUBMISSIONS BY MR. CASS: [62] SUBMISSIONS BY MR. SHEPHERD: [171] SUBMISSIONS BY MR. KLIPPENSTEIN: [237] SUBMISSIONS BY MR. POCH: [247] PRELIMINARY MATTERS: [263] ENBRIDGE GAS DISTRIBUTION MOTION: [276] SUBMISSIONS BY MR. THOMPSON: [277] SUBMISSIONS BY MR. WARREN: [369] SUBMISSIONS BY MR. JANIGAN: [406] SUBMISSIONS BY MR. DINGWALL: [449] SUBMISSIONS BY MS. STREET: [467] REPLY SUBMISSIONS BY MR. CASS: [483] PROCEDURAL MATTERS: [551] 10 EXHIBITS 11 EXHIBIT NO. K.3.1: ENBRIDGE GAS DISTRIBUTION MATERIALS FOR PURPOSES OF THE MOTION [73] EXHIBIT NO. K.3.2: FELLOWES MCNEIL V. KANSA GENERAL INSURANCE COMPANY CASE LAW [281] EXHIBIT NO. K.3.3: MACDONALD ESTATE V. MARTIN, DECISION OF THE SUPREME COURT OF CANADA [424] 12 UNDERTAKINGS 13 14 --- Upon commencing at 9:30 a.m. 15 MR. BETTS: Thank you, everybody. Please be seated. 16 Good morning, everybody, and welcome back to the hearing of application RP-2003-0203. Yesterday we completed the evidentiary examination of issue 5.2, risk management. Today has been set aside to deal with two matters. First will be the presentation of the June 17th settlement of issue 17.1 relating to EnVision, followed by parties providing submissions to the Board Panel on the applicant's motion filed on June 11th respecting the change in their fiscal year. 17 Before we begin, are there any preliminary matters, Mr. Cass? 18 MR. CASS: None that I'm aware of, sir. 19 MR. BETTS: Ms. Lea? Thank you. 20 PRELIMINARY MATTERS: 21 MR. POCH: Thank you, Mr. Chairman. Mr. Chairman, from an admittedly quick skim of the transcript from Wednesday in delivering the Board's position on the agreement, the settlement agreement, I don't believe the Board dealt with my little procedural question which was whether or not the Board wanted Mr. Neme to attend. Perhaps I can just put that again to the Board and in due course, whenever it's convenient to you, I could hear. 22 MR. BETTS: Thank you, Mr. Poch. I do recall you asking for that as well. We'll see if we can deal with that for you. 23 MR. POCH: Thank you. 24 MR. BETTS: Are there any other procedural matters? 25 It was intended, at least mentioned by Mr. O'Leary yesterday that there would be an application by the applicant with respect to the proposed settlement of issue 7.1. Is that still the plan? 26 MR. O'LEARY: It is, Mr. Chairman. I would be pleased to proceed right now. 27 MR. BETTS: We'll begin with that, then, and I will ask for any comments and the Board will take the opportunity to ask questions if they have any, so please proceed. 28 PRESENTATION OF ENVISION SETTLEMENT PROPOSAL: 29 SUBMISSIONS BY MR. O'LEARY: 30 MR. O'LEARY: I'm presuming that the panel has had a chance now to review the proposed wording. In fact, it's a proposed amendment to the settlement which the Board confirmed earlier in the week, and it's an amendment to issue 7.1, which is rate base. As I indicated earlier, it's really a change in number to now include the capital portion relating to the EnVision project, so that you will see in respect of issue 7.1, the new capital budget inclusive of EnVision is now 247.1 million. That is the only change to issue 7.1 in the settlement proposal. 31 Obviously there is now a significant change to issue 8.1 as it appeared in the earlier settlement proposal in that there is now a complete settlement. And I don't propose to take you through every aspect of it, but if I may just highlight several components of the proposed settlement in respect of this issue. 32 The EnVision project is accepted, it is a complete settlement by all parties as proposed by the company. There are several conditions which are identified on page 2, and perhaps I will highlight the significant ones. 33 The parties and the company have agreed that the company will retain an independent consultant for the purposes of completing an independent assessment of the project, and specifically that's identified in paragraph 1 where it states: 34 "The company will retain an independent consultant to assess the overall project costs to determine whether the fee levels and fee structure with Accenture are appropriate relative to the services and value being provided." 35 You will then see a concern expressed in paragraph 2 by intervenors regarding the language in the services agreement with Accenture dealing with the possible use by Accenture of work product created for EGD to provide services to third parties, and the intellectual property rights and work property EGD will obtain from Accenture, a clarification in writing of its interpretation of clause 8.2 of the agreement." 36 In fact, you will see appended to the document which was distributed yesterday a letter from Accenture dated June 17th, 2004. That is the ultimate result of a good deal of discussions between the company, intervenors, and Accenture, and that is the response that all parties are satisfied with and is therefore appropriately appended to issue 8.1. 37 I should draw to your attention also in paragraph 2 that the settlement proposal reads: 38 "In addition, EGD confirms that Enbridge Inc., other than EGD, will not profit directly or indirectly from the Accenture joint ownership of the work product. Given the joint ownership of the work product by Accenture and EGD, other Enbridge-owned utilities will not be precluded from using it." 39 The third paragraph identified a concern expressed by intervenors, although they recognize that there is a penalty incentive mechanism applied on an annual basis, the only remedy of three months of critical missing service amendments is termination of the services agreement. In order to address this concern, the company agreed to commit that in addition to any other remedies under the services agreement, in the event that Accenture misses the critical service measures for two consecutive months, Accenture will be put on notice by the company that EGD will require a 5 percent discount of the annual fees in addition to the right to terminate if the unacceptable performance continues for a third month. 40 And finally, paragraph 4 recognizes that acceptance of the costs and benefits for the test year will not prejudice the ability of parties to challenge the costs and benefits/projections of the EnVision project in future proceedings. 41 Those are the highlights of the proposed settlement, sir, and if there are any questions, we'd be happy to respond to that them. 42 MR. BETTS: Thank you. Is there any comment that any party would like to add to Mr. O'Leary's review of that? 43 Thank you. Any questions that would assist the Board from Board Staff? 44 MS. LEA: No thank you, sir. 45 MR. BETTS: Ms. Nowina. 46 QUESTIONS FROM THE BOARD: 47 MS. NOWINA: I have one question on the first paragraph regarding the independent consultant's report. It mentions that they will look at the fee structure, et cetera, but I'm interested in the assessment of the benefits realization plan that's further down in the paragraph. So would that assessment of the benefits realization plan look at the costs and benefits of the project as now projected by the company? 48 MR. O'LEARY: Yes. 49 MS. NOWINA: Okay. I'd be interested in seeing that. 50 MR. BETTS: I have a couple minor ones as well. First of all, I perhaps should know this, but could you give me a little more detail about the attached letter from Accenture. It just has the heading "Accenture" and it has a person's name attached to, David M. Rouls. Could you tell me who Mr. Rouls is? 51 MR. O'LEARY: We're scratching our head here a little bit, Mr. Chair. Certainly Mr. Rouls is the key contact; we understand him to be one of the principals with Accenture. But his precise title or ownership interest, we're not aware of. We could make inquiries and get back to you later today. 52 MR. BETTS: I don't think that's necessary, as long as you can attest to the fact that he's in a position to make this commitment for -- 53 MR. O'LEARY: Certainly that is our understanding, and that of all that have been dealing with him. 54 MR. BETTS: Thank you. And the other point is if the Board Panel does, in fact, agree with the settlement on 7.1 and 8.1, there is a proposal that the new pages be inserted into the settlement proposal. If, in fact, the Board does agree with these changes, it would be the Board's preference, I believe, to see the document reproduced with a new title that would say, "Final Settlement Proposal," and the date which would match the date of the final settlement proposal, which would be the 17th. Do you see any problem with that? 55 MR. O'LEARY: None, sir. That's what we would recommend as well. 56 MR. BETTS: The Board Panel has no further matters on this, and we'll consider this matter as promptly as we can and advise all parties as soon as possible. 57 MR. O'LEARY: Thank you, sir. 58 MR. BETTS: We will now move to the second matter, which is receiving submissions on the motion filed by the company on June 11th respecting issues surrounding the proposed change in fiscal year-end dates: The Panel's plan would be first of all to receive submissions in-chief from the moving party. We will then look to intervenors. The preference would be to receive submissions in support of the motion first, submissions that might be categorized as qualified support of the motion perhaps second, and any submissions that are opposing the motion to follow that. Recognising that Board Counsel will not take a position in this, we will ask for any questions they might have which might assist the Board and we will then return to the moving party for reply submissions. 59 Based on that, I would invite the moving party to make their submissions in chief. 60 MR. CASS: Thank you, Mr. Chair. 61 ENBRIDGE GAS DISTRIBUTION MOTION: 62 SUBMISSIONS BY MR. CASS: 63 MR. CASS: As the Board is aware, the proposal by the company that has given rise to this motion is a proposal to change the company's year-end for regulatory purposes. As reflected in the settlement proposal under issue 13.1, the company's request for a change in year-end for regulatory purposes has given rise to an intervenor position that there should be an adjustment to rates in the order of $30 million. 64 Insofar as this motion is concerned, the company's position fundamentally is that the issue raised by intervenors about a $30 million adjustment to rates should be decided only on the basis of a full and complete record. In connection with this position about a full and complete record, the company has offered alternative solutions by way of the motion. I will begin my submissions by attempting to provide some explanation of the alternative solutions put forward by the company. 65 One of the options or alternatives put forward by the company, as the Board is aware, is that the change of year-end issues be removed from the issues list for this proceeding so that the company can, later this year, submit a new application for a test period that would run from January 1st to December 31st, 2005. In other words, there would be a new application with simply a 12-month test period consistent with past Board practices of typically approaching revenue requirement, return on equity and so on, on a 12-month basis. 66 If this were to happen, the company's expectation is that it would have the potential to be a very focused proceeding later this year, focused on issues about the year-end and, one would hope, a minimum of other issues. In the context of this new focused application, it would be the company's submission that all parties would then be in the best position to each put their best foot forward, so to speak, on the year-end issue and there would be, one would expect, the best possible record for a decision by the Board. That's one reason for the proposal about withdrawal of the issues from the issues list. 67 There is another reason, and it is alluded to in the affidavit of Ms. Hare that was filed in support of the motion. In the company's submission, the difficulty with the proposition brought forward by intervenors in this case about the so-called overearnings adjustment arises from the fact that the Board approves ROE, return on equity, on the basis of 12 months. However, gas distribution is a seasonal business. In the case of a seasonal business, I submit to the Board that a real risk of distortion arises when one tries to apply an ROE approved for a 12-month period to some period other than 12 months. Again, the reason for that is the seasonality of the business. The ROE approved for 12 months captures 12 months of seasonality and is set on that basis. An ROE for anything other than 12 months captures different seasonality. 68 So in this case, the company submits that, given the proposition brought forward by intervenors, there is a risk distortion as a result of attempting to apply a 12-month ROE to a 15-month period, which is the proposition that one will see under issue 13.1 in the settlement proposal. 69 The company applied on the basis of a 12-month test year, and I will address this in a little more detail later; the company did not apply on the basis of a 15-month test year. 70 I should perhaps digress at this point to mention that I was going to say that unfortunately I didn't include the application, the company's application in this case in the brief that I have provided to the Board and to other counsel; however, I haven't even identified that brief yet, so perhaps I should just digress at this point to mention that I did submit a brief, I think a copy was passed up to each Board Member, and this is the Enbridge Gas Distribution materials for the purposes of the motion. I don't know whether the Board would wish that that be given an exhibit number. 71 MR. BETTS: Yes. 72 MS. LEA: Thank you. K.3.1, please. Members of the Panel have the brief already? Thank you. Do you have one extra copy? If not, that's fine. 73 EXHIBIT NO. K.3.1: ENBRIDGE GAS DISTRIBUTION MATERIALS FOR PURPOSES OF THE MOTION 74 MR. BETTS: Thank you. Please proceed. 75 MR. CASS: I'm sorry for that digression, Mr. Chair. The circumstance of wishing to point out to the Board that I had neglected to include the application in the brief reminded me that I had not even identified the brief. 76 I will come back to talk about the application in a little more detail. But the point that I'm making here in my submissions is that in no way was the application framed on the basis of a 15-month test period. It was framed on the basis of a 12-month test year, with rates to be set on a cost-of-service basis, and then a bridge period of three months, referred to in the application as the stub period, to carry over to the start of a new fiscal period. And the bridge period was not combined with the 12 months on a cost-of-service or a test-year basis. The proposal was that it be treated separately with a rate-indexing mechanism. 77 So what the company proposes is to reapply in order to present the change of year-end in the context of an application for a 12-month test period so a 12-month return on equity can be assessed in the context of a 12-month period. And I should point out what may be obvious, which is that this application has not been filed, nor has it even been formulated, so I can't pretend to sit here today and say that answers to all questions that might arise in connection with this application have been sorted out. It's one that's been neither filed nor prepared. 78 However, I can say that the underlying objective is to submit an application wherein the change of year-end and any related ROE issues can be assessed in the context of a 12-month test year. 79 Now, the other alternative that the company has presented in its motion is to complete the record in this proceeding so that the intervenors' issue about the so-called overearnings adjustment can be addressed in this case. 80 Now, in this context, Ms. Hare testified at transcript 655 that in the case of an issue that occurs in every rate case, the company has experience in knowing what needs to be prefiled, but in the case of something like the year-end issue, the company had no experience with what needed to be filed. And the way the issue evolved was quite different from how the company saw it when the evidence was filed. I will, a little later in my submissions, talk some more about the evolution of issues, but that explanation from Ms. Hare about the company's filing of evidence on the year-end issue, as I said, is at transcript 655. 81 Ms. Hare also testified that there really is no evidence on the record in this case now, except for the material that's been brought forward in connection with the motion, about deriving the so-called $30 million overearnings adjustment from the company's proposal to change its year-end. 82 Now, for this purpose, I have attempted to provide the Board with some extracts of the evidence at tabs 1 to 6 of Exhibit K.3.1. I don't intend to take the Board through these in detail at this point. I provide it for the Board's own review so that the Board can satisfy itself about the state of the record in connection with the issue raised by intervenors about what's been called an overearnings adjustment. 83 I should also say that I am not attempting to suggest that in Exhibit K.3.1 is every single reference from the evidence to a change in year-end. As an example, I would mention that the change in year-end has -- would have flow-through implications for specific subjects like DSM, and there would no doubt have been interrogatories on specific subjects about the implications of change in year-end for those subjects. 84 What I have endeavoured to present in Exhibit 3.1 is, if not a complete set, at least a representative set of the evidence that was provided on the general implications of the change in year-end. What I would submit to the Board is that in this evidence, there really is not a record to deal with the so-called overearnings adjustment issue presented under issue 13.1 in the settlement proposal. Indeed, I think the motion itself, and in particular the cross-examination two days ago in relation to the motion, is very interesting in bringing out what evidence there is or is not on the record in connection with the so-called overearnings adjustment. 85 During his cross-examination, Mr. Shepherd spent a considerable amount of time on what I would call the merits of the overearnings adjustment issue rather than the motion aspects of the issue. In particular, I would refer the Board to the transcript from paragraphs 94 to 166 where Mr. Shepherd asked a considerable number of questions, bringing out evidence on the intervenors' position with respect to this suggested overearnings adjustment. Ms. Hare, in fact, eventually pointed out to Mr. Shepherd that his questions did seem to be going to the merits of the issue more than the motion. That was at transcript paragraph 155. Mr. Shepherd did not deny this but said that he wanted to ensure that the Board had what it needed to understand what the issue is. That's at transcript 156. 86 While I ask, rhetorically, why did Mr. Shepherd need to bring out the evidence so the Board could understand the issue, if the evidence was on the record, the Board could simply have been shown the evidence. The reason Mr. Shepherd had to do this is because there is not evidence on the record about how the intervenors get to their $30 million overearnings adjustment. And just as there is no evidence on the record about how intervenors get to their position, there is no evidence from the company with its position in response. 87 So, in fact, Mr. Shepherd used the cross-examination in connection with the motion to bring out evidence on the intervenors' position with respect to this so-called overearnings adjustment and he did so even to the extent of filing a visual aid, which was marked as Exhibit K.1.3, that's never been on the record before. So on the very motion where the intervenors are opposing the company's efforts to ensure there's a complete record on the issue, intervenors have used the motion to get on the record evidence of their position that does not otherwise exist on the record. 88 So these submissions, Mr. Chair, are all in support of the alternative position offered by the company, which is that if the Board sees fit to proceed with the issue in this case, the evidence attached as exhibits to Ms. Hare's affidavit should be filed subject to whatever directions are appropriate in connection with the filing of that evidence so that the record can be completed. 89 And in this regard, I'll also just observe, as the Board is aware, that the company has again offered different solutions to how the year-end issue could be addressed within the context of this proceeding. One is to move the issue to the end of the hearing and deal with whatever procedural steps need to be taken in the meantime, and the other alternative is to move the issue to a separate phase of the hearing so that procedural steps can be completed in the meantime. 90 With those submissions about the nature of the company's motion, Mr. Chair, I'd like to move on to the submissions that I said I would be making about the evolution of issues in rate cases. I'm going to talk a little bit about procedure in rate cases, but I want to make it absolutely clear that I am in no way criticizing procedure or process; I'm just attempting to highlight in these submissions how it can happen, in some circumstances, that issues evolve at a rather late, if I can use that word, stage of the proceedings. 91 As the Board is aware, rate cases are initiated when the company files a formal application, which, in this case as in others, tends to be fairly briefly, but also files in a set of binders of prefiled evidence, which, in this case as in others, tend to be very extensive. The application and the prefiled evidence together, at least in the company's submission, describe for everyone the company's position going into a case. Then, of course, there is an interrogatory process where intervenors can bring out more information about the company's position or more relevant information for any purpose, relevant to the case of course. 92 In this case, as seems to have become typical in rate cases, there were more than 1,000 interrogatories from intervenors. As is rightfully in the case, these interrogatories can and do explore a wide variety of different points of view, positions, angles, and so on. In respect of these 1,000-plus interrogatories, the company does not necessarily know what angles or positions or points of view the intervenors posing the interrogatories are ultimately going to pursue. In fact, even where the company thinks it might understand the angle or the point of view, it can often be wrong because it is anticipating. Furthermore, the company does not necessarily know whether questions are merely exploratory or are actually intended to bring out evidence in connection with a firm position that will be advanced at the hearing. So for these reasons and others, I submit to the Board that it simply doesn't make sense in the context of the process for the company, when it receives and responds to intervenors, to try to anticipate every possible position that might be pursued at the hearing and to make a determination of what evidence is needed to complete the record on every possible angle or position that might come out of an interrogatory. 93 Following the interrogatory process on the company's evidence, the next step, of course, is the delivery of intervenor evidence, if any. And of course, to the extent that there is intervenor evidence on an issue, it can be very helpful to the company in ascertaining the position of the intervenor. However, I would say in relation to the number of issues in a rate case, in this case, as in others, intervenor evidence on particular issues tends to be the exception rather than the rule. So in the absence of intervenor evidence on a particular issue, again, this step in the process is not one which is going to help the company understand the positions that intervenors will ultimately seek to advance at the hearing. 94 So the point of all this in relation to rate cases generally is just to explain that it can very well be the case that an issue may not evolve to the point where the company fully understands it until a point in the proceeding which is not that far in advance of the settlement conference or, indeed, in advance of the hearing. 95 My submission to the Board is that, in appropriate circumstances, arguments that evidence from the company is "late" should be assessed in view of the way in which issues do evolve in the regulatory process. 96 Having made those general comments, then, I would like to address some more specific comments about the evolution of issues in this case. 97 As Ms. Hare referred to several times in her testimony, in this case, the company took the extra step of having a series of consultations with stakeholders in addition to the disclosure of information that occurs as part of the regulatory process. At transcript -- this was referred to, I think, several times in the cross-examination, but at transcript 652, for example, Ms. Hare said: "We had several meetings with intervenors and this was not raised as an issue." 98 At the outset of the case, of course, the company submitted its prefiled evidence on the year-end proposal. I've attempted to capture that at tab 1 of Exhibit 3.1 . Again, without taking the Board through it in detail, I would submit to the Board that there's nothing in the company's prefiled evidence to suggest -- first of all, to talk about any so-called overearnings adjustment in favour of ratepayers, or even to suggest that the company anticipated in any way the position that was ultimately advanced by intervenors in the settlement proposal. 99 Then there were a series of interrogatories on the company's evidence. Ms. Hare gave evidence when she was cross-examined about the interrogatories and the types of subject matters they covered. She mentioned, for example, that there were interrogatories on the escalator, the indexing mechanism that the company had requested. At tabs 2 to 6 of the brief, I've endeavoured to provide copies of the interrogatories that raised general implications of the company's year-end proposal, and again, in my submission, there's no evidence there that goes to the intervenors' position that there ought to be a $30 million overearnings adjustment by reason of an ROE calculation for a 15-month period. 100 Now, Ms. Hare did talk during cross-examination about interrogatories from School Energy Coalition. These were Interrogatories 125 and then a later Interrogatory 158. And these interrogatories did, indeed, raise the issue of a cost-of-service presentation on a 15-month basis. And it's at this point that I want to come back and speak a little bit about the company's application and again to apologize that I didn't include it in Exhibit 3.1. 101 The application had two discrete and severable elements. For the 12 months from October 1st of this year to September 30th of 2005, there was a cost-of-service application that was separately and discretely set out in paragraphs 2 and 3 of the application. For the following three months, to bridge over the creation of a new fiscal period, there was an entirely separate proposal in paragraph 4 of the application and also set out in paragraph 3 of Ms. Hare's affidavit. This was not cost-of-service application for the three months; it was an indexing mechanism based on prorated distribution revenues from the preceding 12-month test year. 102 First, I digress a little bit here to point out to the Board that given the way the application was framed with these two separate parts, which could just as easily have been two separate applications the way they were framed, it is in no way necessary, in my submission, for the Board to deal with the three-month period, the so-called stub period, in this case. It's not a necessity that it be addressed here because there is a complete and discrete application for the usual 12-month test period that the Board can deal with and effectively has dealt with, in part, by way of the settlement proposal. 103 However, what I wanted to come back to in this discussion of the application was the request that was made in the School Energy Coalition interrogatories. What I wish to bring out here is that, really, there are at least two important steps in getting from where the company was in its application to where the intervenors are in their position under issue 13.1. 104 The first important step is this: Again, I apologize for being so repetitive, but the company did not present an application on the basis of a 15-month cost-of-service test year, so for School Energy Coalition to ask for 15-months cost-of-service information, it's essentially saying to the company, well, recast your application to something different than it was and give us that information as to what it would have looked like if it had been a 15-month cost-of-service application. 105 And I remind the Board here of the evidence of Ms. Hare that the company, in fact, does budgets, it does its models on the basis of 12 months, not on the basis of 15 months. So the first step here is to approach the case on a different way than the company's application, and to approach it on the basis of a 15-month test year. 106 So in interrogatory from Schools number 158, which is at tab 5 of Exhibit K.3.1, the Board can see how the company dealt with that. It's three pages from the back of tab 5. The company's response was that it: 107 "... cannot provide the information as requested by the interrogatory by the filing date for interrogatory responses nor does it support the concept of a 15-month revenue requirement and sufficiency/deficiency calculation." 108 The second part of that sentence is really saying, I think, what I'm saying, which is that the company's application was not on the basis of a 15-month cost-of-service application. 109 In the concluding paragraph of the response, the company said that it would look for ways of providing additional information or attempt to enhance or clarify its view of the filed evidence ..." 110 So that's the first step, is to recast the case as being one for a 15-month test period rather than -- cost-of-service test period rather than a 12-month cost-of- service test period with an indexing mechanism to bridge. And even beyond that, to get to where the intervenors are at 13.1, there's another step, because even if there had been an application for a 15-month cost-of-service test period, it's the company's submission that what one would need to assess ROE in that context is a 15-month ROE, not a 12-month ROE. But, in fact, as the Board can see from issue 13.1, what the intervenors want to do as the second step of where they're going with the issue is apply the Board's ROE approved on a 12-month basis to this new 15-month cost-of-service test year created by recasting what the company applied for. 111 Now, in my submission, School Energy Coalition Interrogatory No. 158 gets to the first of these two steps, the recasting of the application on a 15-month cost-of-service basis, but it doesn't even get to the second step. And in fact if one were to look at the question, the second sentence in the parenthetical reference, there is a suggestion of the sort of things the intervenor expected to see presented, and they include projected customer adds, volumes, monthly rate base, and so on for the three-month stub period. There's no express reference to ROE. Now, I don't say that that means that that wasn't necessarily where School Energy Coalition was going. I'm merely suggesting to the Board that looking at this interrogatory from the way that it was received by the company, it appears to take the first step that I've described but no explicit step in the direction of the second step. 112 Now, Ms. Hare gave evidence about what happened when the company received this interrogatory. I'm sorry, I don't recall precisely, but I think the due date for the interrogatory would have been April 16th. Ms. Hare requested a meeting with School Energy Coalition, and that meeting occurred on April 22nd. At that meeting there was a discussion of the School Energy Coalition's position, and Ms. Hare also gave evidence about what flowed from that; her contact of an expert immediately after that, the fact that the expert was going to take a week and come back to her, and so on. So without going through, in detail, all of the evidence that was provided in the cross-examination, I believe the evidence is very clear as to how and why this issue evolved at a very late time in relation to the start of the settlement conference on, I believe, May 17th for intervenors and May 18th for the entire group. 113 Now, subsequent to the meeting with School Energy Coalition on April 22nd, the company received evidence from the Industrial Gas Users Association, and that's at tab 7 of Exhibit K.3.1. As the Board can see from the front of this evidence, it is dated May 5th, 2004. 114 Now, without getting into a lot of discussion about the evidence, I do wish to point out that, although this is described as evidence, it is, in some places, as much a positioning statement as it is hard evidence. And examples of that I could refer the Board to are on page 10 of the evidence at tab 7, under deferral account issues, which sets out a position at the request for the manufactured gas plants variance account ought to be rejected, and so on; and similarly on page 11, under commodity trading risks and costs, at paragraph 23. It's as much a positioning statement as it is evidence. 115 Now, as counsel for the company, I have to admit that receiving a positioning statement from intervenors can be helpful in light of the way that I've described how issues evolve in a rate case. As counsel trying to be prepared for a hearing, a positioning statement does give some warning of where intervenors are likely to be going at the hearing, even if perhaps it might push the bounds of evidence a little bit. 116 So in IGUA's document, we see that it starts at paragraph 2 by stating that the following are IGUA's "major concerns with respect to matters in issue in these proceedings ..." And then one reads the rest of the evidence, Mr. Chair, I could be wrong, but I'm not -- I don't believe there's any reference to a year-end issue. Certainly I don't believe there is any reference to a so-called overearnings adjustment or the figure of $30 million. 117 So, again, this just goes to how issues evolve in a rate case. Yes, there was a meeting with School Energy Coalition on April 22nd, but there was also evidence and position statements from IGUA not long before the start of the settlement conference. And IGUA, of course, as the Board is aware, ultimately ended up being one of the parties that took a primary role in cross-examination for the motion before the Board, and yet there is, in my submission, nothing in IGUA's document that would have alerted the company to the position that was ultimately going to be taken on issue 13.1. 118 At this point, Mr. Chair, I wish to move on to a subject that is essentially going to mean that I will be anticipating arguments from Mr. Thompson. I know that that's not normally what should be done in argument in chief. In this particular instance, I think out of fairness, I should do it because on these points I have brought one case, one court case, which is at tab 8 of Exhibit K.3.1, and I believe in fairness that I ought to address my arguments on these points and the case so that Mr. Thompson and others will hear those and be able to respond to them. 119 The points I'm referring to here are the allegations that were brought forward on cross-examination to the effect that Mr. John Todd, the deponent of the expert evidence proffered by the company, is, in some manner, disqualified, I think was the word used by Mr. Thompson. 120 In my submission, the position that was being put forward on cross-examination about Mr. Todd approaches an expert witness on the subject of conflict as if the -- as if it was approached like one would treat a lawyer, and in my submission, that is not the correct way to approach any issue of conflict or alleged conflict in relation to an expert witness. 121 So there were a few different angles on this issue that seemed to be pursued during cross-examination. One suggestion was that there might be some reason for concern because, in a future proceeding, the company might find itself in the position of cross-examining Mr. Todd. This was in relation to issue 5.4 in this proceeding, which has been deferred. It's the issue about the direct-purchase administration charge and system-gas fee. 122 Now, there are a number of points to be made in response to this suggestion that there is any need for concern about Mr. Todd's role in this regard. First, as Ms. Hare testified, on the particular issue that has been deferred, that is, the issue of a system-gas -- the costs of providing system gas, it is not correct to assume that Mr. Todd has taken a position adverse to the company. That testimony is at transcript 602. The particular study done by Mr. Todd through his firm Elenchus Research Associates is filed at Exhibit A3, tab 5, schedule 4. If the Board were to look at the study, the Board would see right on the title page of the study that it was prepared for Enbridge Gas Distribution as well as two other parties. In the background of the study, it's pointed out that it was the company, Enbridge Gas Distribution, that was directed to file a study in two different formats. At the background of the study, it's pointed out that the terms of reference of the study were agreed to by Enbridge Gas Distribution and participating intervenors as part of the 2004 rate case settlement process. Also, the background section goes on to point out that Elenchus was retained by Enbridge Gas Distribution and the participating marketers. I could go on, Mr. Chair. I'll leave it to the Board to look at the study itself, if it feels that that is necessary. 123 But the next section of the study is called "Overview of the Approach and Results," and it points out that where Enbridge Gas Distribution and the marketers had different views on assumptions, Elenchus addressed this dilemma by developing cost estimates for all activities relevant to the positions of either party. 124 So in short, as Ms. Hare testified, Elenchus did not take a position adverse to the company. It did a cost analysis without taking any position about whose assumptions were right. It was the company that was directed to file the study. The company was directly involved in retaining Elenchus, and Elenchus provided its report to both the company and the marketers. 125 So that's the response to the first part, to the suggestion that there was some concern with this report done by Mr. Todd. 126 Second, I would suggest to the Board that the fact that an expert witness gives evidence in support of one party in one proceeding but may, not will but may be cross-examined by that party in some other proceeding, is not in the least bit exceptional or problematic. I would hazard a guess that this is far from unique. 127 Third, even if Mr. Thompson's assertions are correct, I suggest to the Board that they do not lead to the conclusion that the Board should have any concerns about Mr. Todd testifying for the company on the year-end issue. In fact, Mr. Thompson's points should have the opposite effect. The company, as Ms. Hare stated when she was cross-examined, went to Mr. Todd for an independent view from an expert on the year-end point raised by intervenors. If the Board believes that Mr. Todd may be cross-examined by the company in some other proceeding where the company may be adverse to Mr. Todd, this should, if anything, give the Board added comfort that the company truly has gone to an expert who is independent. 128 Now, another angle pursued in cross-examination is that Mr. Todd of Elenchus Research Associates was, according to his curriculum vitae, a founder of Econanalysis Consulting Services, which is a consultant to VECC. Now, again, there are a number of answers to this implication during cross-examination of the suggestion of some sort of impropriety. 129 First, when this was brought forward on cross-examination, Ms. Hare testified that there is a separation in place to deal with these sorts of issues that may arise between Elenchus and Ecoanalysis. That was at transcript 633. 130 Second, if there really was any serious concern about some impropriety, Mr. Todd was available to come to the witness stand and to address this concern, and as I did on the day of the cross-examination, I submit to the Board that simple fairness would suggest that any such suggestions be put directly to Mr. Todd, particularly when he was here in the room, fully available to deal with them. 131 Third, as we will see when we come to the case that I provided, the only possible area of concern, in my submission, and even that one did not end up being a concern in the case that I brought, is whether there would be a flow of confidential information as between these entities referred to by Mr. Thompson that would cause anybody concern. Now, counsel for VECC himself was careful to bring out in his examination that there is no flow of confidential information. That was at transcript 705 to 709. 132 Fourth, again, I observe that if one were to accept Mr. Thompson's proposition that Enbridge has taken expert advice from someone who is associated with an adverse party, and we don't accept that proposition, of course, but the logical result is to strengthen the Board's view that Enbridge has done what it said it did, and that was go to an independent expert for advice. 133 Against that background, if I may quickly take the Board to the case, which is at tab 8 of Exhibit K.3.1. This is a decision of Justice White of what was then the High Court of Justice. Now, what happened in this case was the plaintiff's lawyer had contacted two doctors, Dr. Posnick and Dr. Gruss and had given them information for the purpose of seeking expert evidence from the doctors. 134 So at page 310 of the decision, at paragraph 12 on page 310, the Board can see a description of the issue that was before the court. Paragraph 12 starts out: 135 "Now, an issue before me, therefore, is whether, by virtue of plaintiff's counsel having contacted Dr. Posnick and Dr. Gruss, with a view to seeking to have them give an opinion on the standard of care," and then skipping on down a few words, "and in the course of so doing giving them, among other things, all of the relevant data..." and so on. I won't read all of the words. The Board, of course, can read them. But skipping down a little further: 136 "They are not disqualified as witnesses, expert witnesses, that is, on behalf of the defendants at the trial of this action." 137 So the plaintiffs had consulted these experts and sought to argue that these experts were disqualified from testifying on behalf of the defendant. 138 Now, the result of the decision is found at -- on this issue is found at page 316, paragraph 22. Again, I don't propose to read extensively, but if I could just read a little bit from paragraph 22 on page 316: 139 "There is no property in a lay witness, and there is no property in an expert witness; and it would only be if some confidential, privileged information were sought to be adduced in the trial that the privilege would be at risk..." 140 So the court is saying there is no property in a witness. The only concern arises if there is confidential information that is, in fact, solicitor-client privileged information that may be brought out through the means of one party calling an expert that had been consulted by the other party. 141 Over on page 317, at paragraph 27, I think the decision is made even more clear: 142 "It is my ruling that just because plaintiff's counsel has consulted an expert and has provided that expert with data, including confidential data, such expert is not debarred from giving testimony in the action for the defendant." 143 Well, I would submit to the Board that this case doesn't go that far because, as I already said, counsel for VECC was careful to bring out that there has been no flow of confidential information. In the Cousineau case, at tab 8 of the brief, there had, in fact, been confidential information provided by the plaintiff's and that still did not prevent the defendants from calling the witnesses. 144 Now, I ask rhetorically, why does the court come to this conclusion? The answer to that can be found in the court's quotation from another decision which was a decision of the English Court of Appeal called Harmony Shipping and Davis. The Harmony Shipping case is cited at the bottom of page 312 of this case, and then is quoted from at page 313. 145 If I might quickly take the Board to page 313 and bring out the reasoning upon which these decisions turned. The quote from the Harmony Shipping case is very lengthy, again I won't read it all but I'll read some extracts. It starts out: 146 "So far as witnesses are concerned, the law is as plain as can be. There is no property in a witness. The reason is because the court has a right to every man's evidence. Its primary duty is to ascertain the truth. Neither one side nor the other can debar the court from ascertaining the truth either by seeing a witness beforehand or by purchasing his evidence or by making communication to him." And so on. 147 And then the court goes on at the bottom of the page, 313, to indicate these principles also apply in the case of expert witnesses. So at the bottom of page 313: 148 "The question in this case is whether or not that principle applies to expert witnesses. They may have been told the substance of a party's case. They may have been given a great deal of confidential information, on it they may have given advice to the party. Does the rule apply to such a case?" The court goes on to talk about solicitor-client privilege and the need to protect privilege, but then says: 149 "Subject to that qualification, an expert witness falls into the same position as witness of fact." 150 The reason I take the Board to this rationale for the principle about expert witnesses is because, in essence, I submit, this is what the motion is really all about. The company is saying to the Board the company should have an opportunity to present the best possible evidence, and the Board should be satisfied that it's deciding the issue on the best possible evidence and complete record. This is the very type of rationale that lies behind the proposition in the case I've just shown you as to why there is no property in a witness. It's so that the decision-maker can be sure that it has the evidence that it needs to make the right decision. 151 So again, I apologize for anticipating arguments that I'm expecting to hear in opposition to the motion, but again, given the reliance on that particular case, I thought that it was appropriate to do if in argument in chief. 152 Those are my submissions, Mr. Chair. Thank you. 153 MR. BETTS: Thank you, Mr. Cass. 154 Our intention today, as everybody may recall, is to break at 2:00, to conclude our day's activities at 2:00. I'm hoping that we can maybe have one break in that process. Is everybody okay if we keep going perhaps for another half hour or so? 155 Then let us proceed. I did indicate my preference would be to hear any submissions in support of the motion first, followed by conditional support, and then followed by opposition. Have the parties had an opportunity to conclude which group they're in, and then also any order they would like to proceed in. 156 MR. SHEPHERD: Mr. Chairman, it's our understanding that there's nobody in support of company's motion. I can be corrected, but -- oh, I'm sorry. 157 MR. KLIPPENSTEIN: Mr. Chair, Pollution Probe is in partial or qualified support on procedural grounds, and so I would at the appropriate time request just a few minutes to make a few comments. 158 MR. BETTS: I didn't hear the end of that. 159 MR. KLIPPENSTEIN: I would request a few minutes to make a few comments in qualified support. 160 MR. BETTS: Thank you. 161 MR. POCH: Mr. Chairman, we're in a position where we want to give the Board our views on what kind of conditions ought to be put in place in the two eventualities, so while we're not -- we don't need to argue our position on the core or what to order in the motion, so you can treat us as somewhat neutral, although the company may not consider some of our conditions as neutral. 162 MR. BETTS: And would those two parties that have just spoken, does it seem suitable that you proceed first, then, or at this stage? 163 MR. POCH: Whatever would be most helpful to the Board, although I sense that in terms of the Board's understanding of the two sides of the issue, you may well want to hear from those more directly adverse first. It's up to you, sir. 164 MR. BETTS: I may want to hear from whom? 165 MR. POCH: From parties more directly affected on the core matter than we are. It's up to you, sir. Whatever would be most helpful to you. 166 MR. BETTS: Then I think on that basis, Mr. Klippenstein, you agree with that? Okay. I'll defer to the submitting parties. 167 Who would like to proceed first? 168 MR. SHEPHERD: Mr. Chairman, I think we've agreed that I will go first followed by Mr. Thompson. I don't know whether an order after that has been agreed as yet. 169 MR. BETTS: Let's start on that basis. 170 Mr. Shepherd, please proceed. 171 SUBMISSIONS BY MR. SHEPHERD: 172 MR. SHEPHERD: Thank you, Mr. Chairman. Let me start at the end. The School Energy Coalition urges the Board to do three things. First of all, deny the request to withdraw the issue at this late date. Instead, require that these issues, 13.1 and 13.2, be considered in this hearing. 173 Second, deny the request to late-file the evidence of Mr. Todd and Mr. Gruending. 174 And third, allow the request to late-file the additional answer to Schools Interrogatory No. 158. We will also submit that in the alternative, if the Board disagrees with us and determines that it cannot decide the issue on the record, and we'll be talking about that in a second, that it's our view that this Board should, in those circumstances, allow the company to withdraw the issues on two conditions. 175 Number one, that the company cannot file again for this relief relative to the 2005 calendar year, but are free to file for it as part of their 2006 rate case. 176 And second, in addition to whatever further evidence they choose to file in that subsequent proceeding, the company be required, when they request this relief again, to file proper cost-of-service information for the three-month orphaned quarter, the 12-month approved test year, and the 15-month period over which they are applying for rates. 177 Mr. Chairman, I'd like to deal with the various components of these positions in turn. I should note at the outset that I'm intending to refer in a number places to transcript references. It's not -- I don't think it's necessary to turn up any of those references. If the actual words are important, I'll quote them. But otherwise it's really just to give you a roadmap to check that my assertions are correct. 178 MR. BETTS: Thank you. 179 MR. SHEPHERD: So let's start with what the issues are on this motion. It seems to us there are three issues. First is the substantive issue, it's the context of the motion, really, but it's -- everything revolves around this issue, and it's actually -- it has a lot of subtleties to it as a regulatory matter, but the actual issue itself is not very complicated. The company already admits, and you can see this, for example, at transcript paragraph 99, that it is seeking more than 11 percent annualized ROE for the 15 months that are the subject of this application. The company's position is that the high ROE is justified and it wants approval to recover if from the ratepayers. Those things are not in dispute. 180 The ratepayers say that it represents $30 million of overearnings that they will never get back. Mr. Culbert puts the company's position on that very clearly at transcript 154 where he says, "The ratepayers aren't entitled to receive any of that red block back." This is a very simple issue in that respect. And indeed, after all the cross-examination on Wednesday, and by the time we're finished today with all this argument, I don't think anybody will have any doubt about what the components of this issue are. 181 I note in passing, Mr. Chairman, that there is a bit of confusion surrounding the figure of 30 million. That's Mr. Culbert's figure, of course, and that represents the amount of the alleged overearnings. He said categorically several times during his cross-examination, at 105, at 166, at 383, that the $30 million number is right. Then in redirect at 843 to 847, he suddenly decided that it might not be right. Now, we think he's wrong on that, but we didn't have the opportunity to cross-examine him on that and so we'd like to flag for the Board the fact that this statement was not subjected to cross-examination, and if, as we request, this matter goes before the Board in this hearing, we will, when he comes up as a witness on the substantive issue, be seeking to cross-examine him on that issue. 182 In any case, the point, Mr. Chairman, is that the substantive issue that forms the context of this motion is a straightforward issue in which the basic facts are already admitted and it's about what view you take of those facts. 183 Then the second issue is the procedural one. Our view is that the motion which says, Well, let's have option withdraw and refile first, and leave the delayed file second, which is the company's prerogative to frame the motion as they wish, but it proposes the procedural question a bit backwards. What's really happening here is the Board is being asked to balance two procedural concepts, or maybe decide between them, but I think it's more like balancing. 184 Those are, first, the need for the Board to have the fullest possible record before it in any issue. And second, the need for the Board to control its own process and prevent abuses such as the late filing of evidence. So perhaps I can put that another way. The question that's being put to the Board in this motion is the following: Can a party, any party, not just the company but any of us, when it sees that it has a weaker-than-expected case on a particular issue, use the complete record argument to lead evidence at the eleventh hour in order to buttress its case. 185 Now, we then have an alternative procedural issue, this is the third issue that has to be addressed today, and that is if the Board decides that whatever process abuse may have arisen it wants -- it still wants more evidence on this issue, should the company be allowed to come back later, either in this proceeding or in a later proceeding, with an application for exactly the same relief that it is seeking to withdraw today. And I would characterize that as a more practical issue of dealing with balance of convenience rather than fundamental procedural policies. However, I think it's clear that first you have to ask yourself the question, Do we have enough evidence right now? Nothing happens until you answer that question. If you do have enough evidence right now, all the rest of this doesn't matter. 186 So let's talk about the question of completing the record. The company argues that there are three pieces of evidence that are necessary for the Board to consider this, so in order to determine whether they are right, we have to look at those three pieces of evidence. So let's start with the evidence of Mr. Todd. 187 No disrespect to Mr. Todd, but he's clearly not an expert in ROE, given what we saw in cross-examination and, indeed, if you read his evidence. He's clearly not an expert in ROE. In fact, nobody appears to be suggesting that. Ms. Hare says at transcript 569 that he is an expert in regulatory matters. Frankly, Mr. Chairman, I think that on something like this, the Members of the Board Panel are experts of the regulatory matters and they don't need Mr. Todd's help to figure out an issue like this. It would be different if Mr. Todd were leading evidence, factual evidence, on how this issue has been dealt with elsewhere or things like that. He's not. If you read his evidence, it looks pretty close to being argument. I think he's been talking to Mr. Fournier perhaps. Sorry, Peter. 188 Frankly, I can't find anything in Mr. Todd's material that tells the Board something they don't already know. Therefore, I can't see how it's necessary to have this in the evidence in order to complete the record. It doesn't help you. 189 So then let's look at Mr. Gruending's evidence. Mr. Gruending is a CA who works for Enbridge Inc., the company that asked for the year-end change in the first place. Now, there doesn't appear to me at least to be anything much in Mr. Gruending's evidence that's not already in the company's prefiled material as supplemented by the various additional filings and interrogatories. He provides no data, he provides no external information and no support or corroboration for any of the declarative statements he makes on behalf of his employer. Therefore, unless we see him as somehow an independent expert that's giving you some information on the financial markets that we can rely on because of his independence, which I think would be a stretch, I don't see how his evidence is useful to the Board and completes the record in any way. 190 That leads us to the third piece of evidence, Exhibit E. Now, this was prepared by Mr. Culbert, who's already a witness in this matter, and it's additional data that was requested by intervenors in the first place. In our experience, it generally isn't necessary for the company to seek leave to file a further and better answer by an existing witness to an existing interrogatory that admittedly, by their own statements, wasn't fully answered in the first place. 191 Therefore, we do see value in this and the need for admitting it, but we don't see that as particularly controversial, and frankly, if that where the only thing that they were seeking to lead, I don't think we'd have a motion. They would just file it, as indeed they have filed things over the last couple of weeks on other matters that were additional information that needed to be filed. 192 Now, Mr. Chairman, there may well be quite a lot of other things that could be filed to improve the record on this issue. We asked for 15-month cost-of-service information in February. And I guess you could say that about most issues in this hearing, that if you thought about it now, you could think, You know, we could use this or we could use this or we could use this. But that's not the issue, could there be more? Could we have a fuller record? Of course we could. We always could. The question is, do we have enough now? Does this Board have enough to assess this issue and make a determination? That's the question. And it seems to us that of the three pieces of information that the company wants to file, two of them are not useful and don't advance the Board's ability to deal with this issue. The third is absolutely necessary because it gives you the numbers, but in any case your leave is not required to file it, and I don't think it's controversial in any case. 193 So that's the completing the record question. As you can see, our answer is, except for Exhibit E, we don't need anything else. Once we have that, we have enough to deal with this issue. 194 So let me turn to the question of the Board's control of its process, and there's some delicate things in here and I'll -- it's difficult to walk a fine line here. I'll try my best. 195 Mr. Janigan asked, at transcript 651, why the company didn't see this issue coming, and we also -- the School Energy Coalition also asked questions about whether the way the evidence came in on this was part of a strategy to obscure the ROE result or the issue. Ms. Hare's told both Mr. Janigan and myself that this is not what the company was doing, and frankly I have to say I believe her. It's true, the whole thing looks suspicious. Every time they turn around they're finding another way not to tell us the ROE number. Bluntly, if this evidence had been prepared by some of the Calgary financial people at Enbridge Inc. I'd probably be more cynical about it, but in fact what we see here is material prepared by Mr. Culbert and his staff that it looks to me like they simply didn't twig to the issue until April. 196 Therefore, the one possible ground of abuse which is that the company played games with the regulatory process, I think, is probably not made out. But just because they didn't do this on purpose doesn't mean that their late filing is excusable. Ms. Hare says she doesn't recall this issue being raised at the February 6th Technical Conference, nor does she recall it being raised by Mr. Fournier at the Issues Conference, but she does admit in transcript 233 that the company was asked on February 20th to file 15-month cost-of-service information, that's School Interrogatory 125, and three-month cost-of-service information, that's School Energy interrogatory 129, and the company declined to do so. 197 In fact, we wouldn't be here if they had answered those interrogatories in the first place. We'd be done. But the reason, they said, well, they didn't have the information, they say, that's at transcript 243 to 247, which, by the way, is the same information they do have today now that they realize that they'd better file it. 198 Now, the company was again asked on April 16th in School Energy Interrogatory 158, to file that information and they again declined. You'll see that at transcript 280. And although they are filing some of that information today in Exhibit E, they are still resisting giving a full answer even though they now admit that they have the information that they need to do it, and you'll see that at transcript 253 and 257. 199 I should note in passing that they've apparently provided some of the information that they've denied to the intervenors and to the Board to Mr. Todd. So if you look at page 3 of Mr. Todd's draft evidence, you will see that he says the company's revenues in the orphaned quarter are 28.8 percent of annual revenues. I don't see that data anywhere else in the record. But it's certainly part of what was requested in Interrogatories 125, 129 and 158, and should have been provided in the first place. 200 And finally, it cannot go unnoticed that the company continues to dance around the issue of whether they are even asking for 15 months of rates, and Mr. Cass said it again this morning. They continue to pretend that they've asked for 12 months of rates and then another three months, but somehow that doesn't add up to 15 months. I tried several times to get Ms. Hare to admit that it's a 15-month application, and you see that all over the transcript of my cross-examination of her on Wednesday, but to my shame I failed. However, Mr. Thompson, who is apparently a smoother cross-examiner than I am, finally did get that admission at transcript 460 to 467. 201 The point, though, is that the company seems quite paranoid about admitting the obvious, and this has been reflected in their unwillingness to provide evidence on this issue that was quite obviously required and was asked for a long time ago. 202 So then against that backdrop, we tried to put this in practical terms. What would happen if, after ADR, the School Energy Coalition suddenly realized that we were going to lose on the issue of, say, deferred taxes. And I hasten to add, Mr. Chairman, that I'm using that hypothetical without any implication that our case is other than 100 percent bullet-proof on that. 203 But let's say that somehow we missed some crucial component of the issue; we just missed it, simple as that. It happens. Can we come to the Board right before the oral hearing and say, Please, Mr. Chairman, can we have time to hire an expert on this so we can buttress our case. Actually, that's not what happened. It's even worse than that. We would be coming to the Board asking for permission to bring in that late witness and say, Oh, by the way, we were told about this seven weeks ago but we only decided to do something about it last week. 204 And if I ever came before this Board asking for something like that, I would hope that the Board would remind me forcefully of my responsibility to the process and would give me a good whack; and, unless there was some very compelling reason to the contrary, I would hope you would decline my request to do that. 205 Now, Mr. Chairman, the Schools don't really like the record on this issue. As you can see, we asked for information that we didn't get. However, we don't think that the gaps in the record are fatal. We can see where additional information would be good, but we don't think that not having it is fatal. It's our view that once you understand what the nature of the issue is, and I think that's pretty clear now, then all you really need is the numbers to deal with it. Well, Exhibit E gives you the numbers. Once we finish cross-examining the company's panel on this, my guess is there's going to be nothing left to the imagination. 206 However, if the Board does determine that it needs more of an evidentiary record to decide this issue, it appears to us there are three ways the issue can be heard. 207 One is that we deal with it at the end of this hearing in two or three weeks. So I asked Ms. Hare some questions about that at transcript 343 to 360, and I think it's fair to say, she didn't say this outright, but my impression after that exchange was that I think we're all agreed that it's unlikely that this issue can be considered in this hearing, without a break, if the Todd and Gruending evidence is to be filed. I think that's unlikely; I can't see how that can be done. 208 So the second possibility is that this issue be considered in a later hearing, in the fall, say, or in a later phase of this hearing; that is, the withdraw-and-refile argument or the second-phase argument. Ms. Hare said, at transcript 362, when asked whether those two things were different, she said, "I think there isn't much difference, yes." And indeed, it's pretty clear that they are basically the same thing. Whether it's a new proceeding or this proceeding in a new phase, it amounts to the same thing. 209 Now, in either case, what they would propose is that they would provide 12-month cost-of-service information for calendar 2005 because, in effect, they want the opportunity to repackage the issue so that it doesn't look so much like a $30 million red block that the ratepayers never get back. Well, there's four problems with this. 210 First, the companies and the intervenors have just entered into a comprehensive agreement to settle most issues relating to the period to September 30th, 2005, and that agreement had just been approved by the Board. If the company files a cost-of-service application for January 1st to December 31st, 2005, there's a potential inconsistency with that agreement. 211 For example, we just agreed that for the test year the company would set rates based on O&M of 286.5 million. If the company files a cost-of-service application based on 300 million of O&M in calendar 2005, rates for the first nine months of that year could be set based on that number rather than on 286.5 million. In our view, that would be a breach of the settlement agreement. The settlement agreement is an order of this Board, but it's also a binding and enforceable contract. And in our view, the company would be in breach of that contract if they sought to have rates based on something inconsistent with that contract. 212 Sorry, am I going too fast? I'm excited. Mr. Poch thinks that's sad. 213 Ms. Hare was equivocal on this issue of whether rates would be changed. At transcript 328, again at transcript 338, she was clear that the rates set in this docket will continue until September 30th, 2005; but then in answering questions of Ms. Lea at transcript 794, she said that the rates could change effective January 1st, based on the new application. And as I said, if that were to arise, they would be in breach of contract. So that's the first problem with this sort of second-phase or withdraw-and-refile approach. 214 The second problem is the classic multiplicity of proceedings. Generally, it's not in this Board's interest, it's not this Board's practice, to support a multiplicity of proceedings before the Board. It's better and more efficient generally to try to consolidate issues into a smaller number of proceedings wherever possible. 215 The third problem related to the first two is the cost-benefit balance. One has to wonder whether it's justified to have two full cost-of-service proceedings to cover a single 15-month period. It would seem to us that the cost of this additional proceeding would outweigh the potential benefits. 216 And finally, the fourth problem is the Board's own busy schedule. If this Board Panel did agree to defer this to the fall, for example, one has to ask, Who is going to be doing the electricity regulatory proceedings and the various generic processes that are upcoming? It's not as if the Board Members and Staff are sitting around doing nothing all the time. This is a busy time. So we have to ask, Is it more important to deal with the critical issues of the electricity sector or to have an extra gas rate hearing because the company prefers to have a different year-end. 217 It appears clear to us that these are four good reasons not to allow an additional proceeding as a result of this year-end change, and I hope the Board will agree with that. 218 So what's the third option? Well, the third alternative is to consider this issue in the next rate case. Since the company is changing their year-end for financial reporting in 2004 and taxation in 2007 - and you'll see that admitted in transcript 305 to 310 - there doesn't appear to be any good reason why the regulatory change has to be in 2005 rather than 2006. It won't match anyway. And there are good reasons why if we don't deal with this now as I believe we should, we should deal with it then rather than in a separate proceeding. 219 First, the company gets what they're asking for in this motion; a decision on a record as complete as they want to make it. They can bring in ten experts. Fine. They have lots of time. And everybody else has lots of time to consider their arguments, produce evidence, et cetera. So the only real risk to punting it to 2006 is that the company will try to repackage the issue to avoid having to deal with it head on. And forgive me if I'm a bit cynical, but they appear to be unwilling to meet it head on and they may need some guidance in that respect. 220 After this motion, I suppose one might wonder if they still think they can avoid the debate over who gets that $30 million red block. But just to be on the safe side, I urge the Board, if it goes in this direction, to place conditions to make sure that we don't end up in the same position again next year, two conditions in particular. 221 First, direct the company that however they file that next rate case, it has to be on proper cost-of-service information for the period. No more burying the issue in convoluted data presentation; no more pretending that 15 months is really 12 months. Just tell the Board the facts. 222 And second, direct the company not to come back on this issue for any period before October 1st, 2005 because this proceeding is setting rates until then. 223 Mr. Chairman, I think -- those are all alternative arguments, of course, because I think by now we're all pretty clear on what the issue is. Assuming that the Board directs that the further answer to Schools 158 is filed, which is Exhibit E to Ms. Hare's affidavit, we believe the Board already has sufficient information on which to decide this issue and the cross-examination of the Board's -- of the company's witnesses on this will fill in any gaps that we might be missing. Therefore, we believe the Board should deny the motion of the applicant, except with respect to the filing of Exhibit E. 224 In the event that the Board disagrees on that conclusion, we're asking the Board to defer this not to a separate proceeding but to 2006 with conditions to make it clear that this has to be dealt with head on. 225 Mr. Chairman, one other comment. I would like to make submissions on costs relating to this matter, but with your indulgence, I think it's more appropriate to reserve that until after the debate on the substance has been completed, perhaps after the motion has been decided. 226 MR. BETTS: We will agree with that. 227 MR. SHEPHERD: Those are my submissions, Mr. Chairman. 228 MR. BETTS: Thank you. 229 Mr. Thompson, are we still doing okay out there, everybody? How about our court reporter? As parties have the opportunity to read, obviously they can pick up their pace, so I'll just ask everybody to keep that in mind. 230 Mr. Thompson, please proceed. 231 MR. THOMPSON: Would it be convenient to take the break now, Mr. Chairman? It would be helpful to me. 232 MR. BETTS: It probably would. It will just make the second half of the day a little bit longer. But I certainly wouldn't object. 233 MS. LEA: We could hear from Mr. Klippenstein, perhaps, who said that he was sort of half and half. 234 MR. POCH: If it helps, I could also proceed now. 235 MR. BETTS: Let's do that, then, and then we'll break a little closer to 11:30 and that will split the day up a little for us. 236 Mr. Klippenstein, please proceed. 237 SUBMISSIONS BY MR. KLIPPENSTEIN: 238 MR. KLIPPENSTEIN: Thank you, Mr. Chair. Mr. Thompson, having kindly moved aside, I now have a full view which is a very nice luxury. 239 Pollution Probe partially or in a qualified way supports the motion. We don't have any submissions on the merits or the substance of the motion, in other words, whether the evidence should be allowed in or those sorts of issues. What I do submit is that there are good reasons for the Board to take the procedural parts seriously, in other words, to use one of the procedures suggested to hear the issues and deal with them relatively soon, if that's what the Board wishes to do. 240 One reason Pollution Probe supports the ability of the Board to hear this now is the basic principle that important matters should be dealt with on the basis of very good evidence. The second reason is that the general procedures concern Pollution Probe in their own matter because issue 10.1 regarding DSM in the partial settlement also has an issue in which Pollution Probe will probably say that it would be best solved by having a slightly deferred phase or review of the issue, and so it tangentially affects Pollution Probe as well. 241 I would suggest that if the Board thinks the issue raised by the company or the other parties now should be dealt with, the Board does have the power and the tools available to it to do so, and that another phase of this hearing would be a good candidate for that. That's because the parties that are concerned with this issue have already been given all the appropriate notices; they're all here in this room; the issues have been canvassed. People know where they stand roughly and there can be communication in this very room as to procedural matters for things like setting dates with a maximum convenience to the parties and the Board for sorting out who does what. And all of that in a way that is fair and boundaried, which is much simpler than if a whole new application was considered, because that can open up issues of notice and scheduling. The Board is fortunate that since this is happening or has come up in an existing well-developed hearing, it can be dealt with. So that's an opportunity if the Board otherwise thinks this should be dealt with. 242 Secondly, I would submit that it is a good thing for the Board to be able to deal with issues, and sometimes important issues that come up during the course of a hearing. Sometimes that's in the form of a problem that pops up, but sometimes it's in the form of an opportunity that arises. And my submission is that if the Board can sort of leap over the procedural stuff that we lawyers love to talk about and can deal with scheduling and those kinds of things in this hearing room with the notices, it's good regulation to be able to do that, so that if this is an important issue that's come up, it would be good for the Board to be able to deal with it sooner rather than later. And that can be done if not at the end of this hearing, then in a separate phase of this hearing that can be scheduled relatively soon with convenience. And I think that's one of the options that the company mentioned. 243 Those are my submissions. 244 MR. BETTS: Thank you. 245 Mr. Poch. 246 MR. POCH: Thank you, Mr. Chairman. 247 SUBMISSIONS BY MR. POCH: 248 MR. POCH: First, let me say what GEC's interest in this matter is. We first and foremost want a clear process for dealing with the stub period because it affects our particular area of interest in DSM. And I'm cognizant of the comments made by the company a few days ago that they will treat that separately, but the concern we have, and I'll come to it in a minute, is that there be continuity in DSM, and particularly in the incentive regime for DMS. If you interrupt the incentive regime for three months, for example, is one possible outcome, and start it up again, you have both lost momentum, which is a loss to society, but you'll also have all of the concerns about gaming that occur whenever you have a discontinuity in incentive regime about loading and results at the end or the beginning or what have you. And we'd really like to avoid that kind of a debate and factual problem. 249 So that's one of our concerns. We are concerned more generally with a matter of procedural fairness, including that the Board take particular care to ensure that the ADR agreement that it has accepted is honoured. 250 So that leads us to suggest some considerations for you in either eventuality, whether that is -- if the evidence in issue is in or if it's out for the moment. If it's in, Mr. Chairman, on the basis of procedural fairness, I think the parties most directly affected ought to be given the opportunity to consider whether they want to bring expert evidence in response. If the Board feels they need the expert evidence being offered by the company now, then certainly the parties directly affected should have the similar opportunity and they should be given the time to reflect on that and to prepare and so on if they choose to exercise that option at that point, which would suggest that the matter is off to the fall, it sounds like. 251 Our concern is if it's in this hearing, then the DSM stub issue be dealt with explicitly and we have the opportunity to examine on that issue. I should say, Mr. Chairman, we have no objection to dealing with that in the fall if the main year-end issue is dealt with at that time. That's not a concern to us. 252 If the company is allowed to withdraw the issue, we would suggest that conditions be applied. First, I think this is critical, that the Board should condition any withdrawal with the caveat that the company shall not simply stay out for 15 months. If the company simply stays out for 15 months, then they'll have had their way without any hearing on the core -- on the substance of the issue, and that would be most inappropriate. 253 Now, I note the company is not suggesting they would do that, but I would think that the Board would want to make it very clear that that's not to occur and the Board shouldn't have to be in a position of having to call them in and have a forced and rushed process. 254 I think I've already indicated, of course, that the Board should be careful to insist that if the company -- if this issue is out and the company proposes to bring it back before the Board in the context of another application, that the existing 12-month ADR settlement should be honoured rigorously. If there's going to be an overlapping, as the company is proposing in one of its scenarios, that the first, presumably it would be the first, nine months that would be covered by the current ADR settlement should be protected and not -- no rate change should be allowed, no changes should be allowed for that period. 255 And back to the DSM matter. For the reasons I've already indicated, we want to ensure that the stub period of DSM is dealt with properly, so I would also ask that a condition be placed that whenever the company applies for rates or ROE adjustment to deal with the year-end, it bring forward the relevant DSM aspects so we can deal with it properly. 256 Thank you, Mr. Chairman. Those are my submissions. 257 MR. BETTS: Thank you, Mr. Poch. 258 I think we will break now. I do want to make certain, are there any parties that are going to have to leave before we conclude all of the submissions? The Panel hasn't taken the opportunity to ask any parties questions at this point, so we are holding some of those back and therefore a question could be addressed to any one of you. So is there a possibility that we might lose somebody before 2:00? 259 MR. WARREN: I am going to get lost, Mr. Chairman, after I finish my submissions. That ordinarily is the subject of no sadness to anybody. But if you do want to ask me any questions, Mr. Chairman, I'm happy to answer them after I've -- I think the understanding is that I'll follow Mr. Thompson, but with your permission, I'll disappear thereafter, so if you'd like to ask me questions then. 260 MR. BETTS: We can accommodate that. That's fine, then. Let us break now. We'll take a 20-minute break, and feel free to, if you haven't concluded your refreshments by them, bring them back with you. Well, let's aim to be back at 20 minutes to the hour. Thank you. 261 --- Recess taken at 11:15 a.m. 262 --- On resuming at 11:43 a.m. 263 PRELIMINARY MATTERS: 264 MR. BETTS: Thank you, everybody. Please be seated. 265 During the break, were there any preliminary matters or procedural matters that popped up? 266 Just before we go on to the next submission, I have a question for Mr. Poch. With respect to the direction you're requiring on Mr. Neme, could you remind the Panel exactly what the issue is. 267 MR. POCH: Mr. Neme is the author of evidence filed by GEC on DSM in this matter. You will recall that in the -- that beyond the settlement agreement, as it were, Pollution Probe has raised -- made a request and wants to have heard discussion about an additional market transformation incentive for large boilers. 268 Mr. Neme's evidence does touch on the benefits of market transformation and incentives, therefore, and does mention the importance of that particular end use, although it does not go so far as to recommend an incentive for that at this time. 269 I've asked my friends for the company and Mr. Klippenstein and they have both indicated they do not require Mr. Neme to take the stand to elaborate on what he's said. We certainly don't. And I just before -- I just wanted to see if the Board felt it was helpful to have him attend or not so I could indicate to him whether he needed to be here. 270 MR. BETTS: Thank you for that. 271 Can I just ask if any of the parties present would like to add anything to that remark? 272 The Panel then agrees that it will not be necessary to have Mr. Neme attend. 273 MR. POCH: Thank you very much, Mr. Chairman. 274 MR. BETTS: Thank you. 275 Now, I'm sorry, I lost track a little bit. It's Mr. Thompson that's up? Thank you very much. Please proceed, Mr. Thompson. 276 ENBRIDGE GAS DISTRIBUTION MOTION: 277 SUBMISSIONS BY MR. THOMPSON: 278 MR. THOMPSON: Yes, thank you, Mr. Chairman, Members of the Board. 279 Just by way of introduction, the documents that you'll need to have in front of you to follow my submissions are, first of all, Exhibit K.1.4, which was the documents brief pertaining to the cross-examination of Ms. Hare, Mr. Cass's documents brief, K.3.1, submitted this morning, and I did put on the dias there a copy of a case, Fellowes McNeil and Kansa General Insurance Company, which I will be referring to. And should we be marking this or just... 280 MS. LEA: Well, it's not evidence, but let's mark it for identification as it has been filed. So K.3.2, please, and that will be the Fellowes McNeil and Kansa case, and I will give that to the reporter. 281 EXHIBIT NO. K.3.2: FELLOWES MCNEIL V. KANSA GENERAL INSURANCE COMPANY CASE LAW 282 MR. BETTS: Thank you. Please proceed. 283 MR. THOMPSON: Thank you. 284 Let me begin, Mr. Chairman and Members of the Board, by indicating that I have arranged my submissions under six topic headings, and I'll just give you these quickly. The first is guiding principles, the second is nature of the motion, the third is nature of intervenors' claim, the fourth is timing and precedent implications, the fifth is no removal of issues, and then the sixth is directions with respect to evidence, if any. 285 I should indicate that this matter is regarded by my client to be extremely important and it's not without its complexities, and I expect I will probably be 45 minutes and perhaps as long as an hour in making these submissions, so please let me begin with the first topic, guiding principles. 286 MR. BETTS: I'm just going to interrupt there and just make sure. That could lead us to quarter to one. That leaves 45 minutes for everybody else. An hour and 15 minutes, sorry, for everybody else. 287 Who else will be wanting to make submissions on this? 288 MR. WARREN: I will be no longer than ten minutes, sir. 289 MR. BETTS: That's Mr. Warren. 290 And who else? Anybody else? 291 MR. JANIGAN: I may likely be only 10 or 15 minutes. 292 MR. BETTS: Okay. Anybody else? Ms. Street? 293 MS. STREET: I expect to be very brief, Mr. Chair, five to ten minutes at the most. 294 MR. BETTS: Anybody else? 295 MR. DINGWALL: If we can hold the others to their time limits, that would leave me with half an hour to 40 minutes which should be sufficient. 296 MR. BETTS: It doesn't allow for any time for reply or Board comments, so -- and I do want to deal with this today, everybody, and we do have to terminate it at -- terminate today's activities at 2:00. I'm going to ask everybody to not simply speak quickly because that's going to put the pressure on the court reporter, but let us really compress what we have to say. Let's not be repetitive. Let's try and look at your submissions and make sure you're covering only the most salient points and everything that needs to be done. 297 Mr. Thompson. 298 MR. THOMPSON: Thank you, Mr. Chairman. 299 Dealing first, then, with guiding principles, IGUA submits that when deciding the request for relief contained in Enbridge's notice of motion, you should be guided, first and foremost, by a fairness principle, and a fairness principle in this particular case has a number of facets. In our submission, you should be guided by procedural and substantive fairness considerations. 300 In the context of the framework that the Board established under its prior Procedural Orders for this case, I accept as reasonable Mr. Cass's statement in argument that the Board should decide issues on a full and complete record, but I would qualify it with this statement: A full and complete record containing relevant and admissible evidence and a full and complete record in the context of the procedural framework the Board established for issues which this case raised. 301 I caution you at the outset that this completion of the record issue cannot be assessed fairly before the cross-examination of company witnesses has been completed. As is often the case, issues are raised directly or indirectly through interrogatory questions and responses and the full parameters of those issues are not fully before the Board until the cross-examination of company witnesses has been completed. And there are many company witnesses that have facts and information that's relevant to the issues 13.1 and 13.2. 302 When I say procedural fairness in the context of the procedural framework that the Board established in this case, I think it's important to go back and consider that and you'll find all of the procedural orders, I believe, in Exhibit A1, tab 3, but remember the company's application was dated in December of 2003, Procedural Order No. 1 setting the schedule was dated in February of 2004, and that substantive level, the procedural framework which the Board established in this case and establishes in all of its cases, envisages that the evidentiary record on which the parties intend to rely to support their divergent positions with respect to matters at issue will be filed before the settlement conference discussions begin. 303 You will recall in your initial procedural orders that there was a date set for motions which was May the 14th, to deal with evidentiary matters and on that particular date, there was also a motion that you heard, as I recall it, dealing with issue 5.5. That's relevant because we know that by April the 22nd, the company had retained or had contacted Mr. Todd's firm with respect to this so-called intervenors' claim issue. But it did nothing to meet that May 14th deadline that was part of the initial framework. 304 And I submit that the procedural framework which the Board establishes is premised on a fairness concept and that is this: That no one can emerge from the settlement conference process with a request to postpone the consideration of claims arising from unsettled issues on the issues list so that they can file further evidence to bolster their position with respect to a matter which did not settle. 305 I submit that to grant such requests for postponement and to allow further evidence to be adduced by anyone with respect to claims that are the subject matter of the settlement conference totally undermines the integrity of the ADR process. And so I say to you as a corollary of the overall fairness concept, you should, as a guiding principle when considering the issues raised on this motion, preserve the integrity of the ADR process. 306 In addition, I submit the Board should be guided by fairness concepts which are expressed in its own Rouls of Practice & Procedure. In that context, there are two rules in my submission that have relevance to the relief that Enbridge seeks in this motion because they disclose fairness concepts that, in my submission, ought to be applied. 307 The first one is Rule 20 dealing with withdrawal of an application or an appeal and that's found at tab 1 of Exhibit K.1.4 and I did direct Ms. Hare to this rule in cross-examination at transcript 420 and following. 308 In my submission, the concept reflected in the rule ought to be applied whether or not we're dealing with a request to withdraw an entire application or issues within the ambit of a larger application. The fairness concept that finds expression in rule 20.05 is that a request to withdraw part of an application, remember here we're talking about the company's request to withdraw paragraph 4 of its application where they propose to change year-end and then they requested rate relief for a stub period. The total request for relief was for a period of 15 months. That claim in the application gave rise to issues 13.1 and 13.2. 309 The rule expresses as a fairness concept that if the Board has reasons to believe that a withdrawal may adversely affect the interest of any party or may be contrary to public interest, the Board, in effect, may refuse to withdraw the issue and continue to hear the issue. That's a concept that I suggest you should apply when considering this motion. 310 The other aspect of the Rouls that, in my submission, sheds light on the fairness criteria which the Board should apply are the provisions of Rouls 31.09 and 31.10. The theme, the fairness theme reflected in these two rules is that positions, offers to settle, and related discussions during a settlement conference are confidential and inadmissible. And my submission to you is that a corollary of that principle of fairness is that those participating in discussions in the ADR settlement process cannot subsequently present prefiled evidence which purports to respond and/or rebut the positions and related discussions that occurred during the settlement conference. 311 For example, I could not take an expert to the settlement conference to buttress IGUA's position with respect to deferred taxes, hear what everybody else had to say, and then emerge from the process with a motion to postpone the Board's consideration of that issue because I wished to adduce evidence from that expert, who was there to help me with the issue, to rebut the positions that were espoused during the course of the conference. That would be laughed out of court if we tried that, but that's exactly what's happening here with the evidence of Mr. Todd. 312 Mr. Todd first emerged as a supporter of the company's position in the midst of the settlement conference. He was not a witness before that, we were not notified that he was a witness. The company did nothing by May the 14th to alert parties to that fact. Had they done so, the issue which they say side-swiped them would have been clearly out and on the record. Instead, they chose to take him to the hearing in the hopes that this issue would settle and, unfortunately for them, it didn't. 313 So these are the fairness concepts that I suggest you should have in the back of your mind when you're considering the relief sought on the motion. 314 Let me then turn to the second topic, which is the nature of Enbridge's motion. You can look at it -- I don't have it in front of me -- but it has really two aspects to it, the first two paragraphs A and B are for issues removal and withdrawal of the paragraph of the application that gives rise to the issues. And then the second aspect of it is an alternative request for directions pertaining to the filing of additional evidence. 315 The issues that the company seeks to remove from the list gave rise to a significant claim by intervenors for a revenue requirement reduction estimated in the amount of about $30 million. So what the company is trying to do is, in effect, remove an intervenors' claim from the ambit of these proceedings, and I submit the motion for removal and withdrawal is nothing more than an eleventh-hour strategic ploy by EGD to seek to remove this claim from the ambit of this case so they can resurrect it later in a new structure which they think best serves their interests. 316 We're not dealing with a motion to remove issues and withdraw an application in the sense that we'll never see them again. It's simply a request to postpone, and it's to postpone so that we can beef up our strategy for presenting this issue as well as the evidence supporting our resistance to the intervenors' claim. As I say, if the shoe was on the other foot, intervenors would not get to first base with such a proposal. 317 So my position, and I'll deal with this in a little more detail on behalf of my client, is that the removal and withdrawal aspects of the motion are without merit and should be rejected. 318 The second aspect of the motion is for directions for further -- with respect to the filing of additional evidence on -- it's only on issue 13.1. And on that aspect of the matter, I urge you to apply the fairness criteria that I've outlined. It's important, I submit, to remember that the further evidence aspect as the issues which the company seeks to remove, decided within the ambit of this proceeding, and that is important, to preserve the integrity of the process framework that was established by the Board's prior Procedural Orders. It prevents Enbridge from embarking on a new application, a new structure, and breach of its settlement agreement. And it has the other advantage, in my submission, of leaving this issue, the intervenors' claim for a $30 million overearnings adjustment, in the same case where the company is seeking a deferred taxes recovery of $30.4 million. Those two items should, in my submission, go forward in the ambit of this case in which they arose. 319 In terms of the directions that the company is seeking with respect to further evidence, it's important to recognize that those directions deal with the filing, I take it, of two specific pieces of evidence. One is the evidence of the corporate witness, Mr. Gruending, and I hope I pronounced his name correctly, and the other is the evidence of Mr. Todd. 320 I take the view that Exhibit 158 updated is in the record. The company can always update its responses to interrogatories, and certainly I don't know that anyone has any objection to that. As I say, even if they did, it's in the record. 321 It's important to note that the company is not proposing to file any further evidence or is not seeking directions with respect to the filing of evidence other than the evidence of Todd and Gruending. And when applying the guiding principles that I mentioned in responding to the request for guidelines, I submit you should confine your guidelines to the two specific pieces of evidence that the company addresses. For the reasons which I'll give under my topic 4, it's my submission that the proposed evidence from Todd is inadmissible for a number of reasons, and it's my submission that the proposed evidence from Gruending is inadmissible because it's irrelevant. And let me just develop those points in a little more detail by turning to my third topic, the intervenors' claim. 322 It's important to understand the facts that are relevant to the intervenors' claim for the overearnings adjustment when you consider the extent to which any further prefiled evidence is needed to enable the claim to be considered and decided by the Board on its merits in the context of a complete record. The fact that intervenors have not chosen to lead evidence with respect to the issue doesn't support the conclusion that there will be no evidence before the Board with respect to the claim. The company witnesses are subject to cross-examination, and as the cross-examination on the motion reveals, there's really no substantive issue about quantum. There may be some fine-tuning of the number based on the changes in circumstances that have resulted from the settlement agreement, but at the end of the day, the number for the overearnings adjustment will be the number. It's not going to be a disputed topic. And so it's important to put, then, this in context. 323 The application put forward by Enbridge was for rates in a 15-month period commencing October 1, 2004 and ending December 31, 2005. Whether it was done in two pieces, one piece, three pieces, in my submission, it really doesn't matter. They were seeking, and are seeking, in this application rates for October 1, 2005 to December 31, 2005, and it was their request for an inflationary increase for the period of October 1, 2005 to December 31, 2005 that woke up the sleeping giants. There were a number of questions asked of them. Put this 15-month claim in a cost-of-service context, and they stonewalled on that; you can see that from the responses to interrogatories. There are obviously concerns about overrecoveries in that stub period in the context of their request for a rate increase. 324 When Union changed its fiscal year, my recollection is it didn't request any stub period rate increase, and to my knowledge, this issue that has arisen in this case has never been addressed squarely on its merits by this Board in a prior case. 325 But it's that request that they made for a little inflationary add-on to their rates in the period October 1, 2005 to December 31, 2005 that caused everyone to ask, How should rates for 15 months be determined in the context of the cost-of-service rate-of-return regulatory model that's being applied in this case. And a number of questions were asked about this. 326 And the issue turns on the rate-of-return regulation applies that the Board applies, where the equity risk premium method that the Board applies to regulate Enbridge's equity returns is determined by a formula. Costs of capital, including equity return, fall within the costs that are presented in a cost-of-service application. So had the company answered these questions with the 15-month cost-of-service or the three-month cost-of-service properly, it would have become more apparent what was of concern to people. They were trying to get at this overrecovery concept. 327 Now the Board's rate of return method of regulation operable in the circumstances of this particular case to limit the return that the company earns in this 15-month period, the transition, to a new test period to the return that the methodology produces, the methodology being the Board's guidelines. 328 It really doesn't turn on how the company recovers return in rates, the seasonality is an issue that company witnesses can address and they're in a far better position to address it than non-company witnesses. What gives rise to the issue is that the recovery in this stub period in combination with the allowed return for 12 months ending September 30, 2005, produces an annualized return that exceeds the Board approved, and that's where the overearnings amount is derived. It's not rocket science. And so the issue is really an issue of argument with respect to the applicability, the manner of how the applicability of the Board's return guidelines applies in the circumstances of this particular case. 329 So I submit to you that we don't need any further prefiled evidence to identify the amount of the alleged overearnings adjustment, that will -- it's in the estimated amount of now 30 million and will be precisely nailed down when the company witnesses testify. The question really turns on a question of entitlement and one of the company witnesses said as much at transcript 154. It's not an issue of quantum, but an issue of entitlement. 330 And I submit that whether the intervenors are or are not entitled to the adjustment is a matter of argument not a matter of evidence. 331 The other aspect of the matter, how should the overearnings adjustment if it's granted be reflected in the 15-month rates that the company is seeking, one of the options is, of course, spread it out over the 15 months. Another might be to use part of it to offset any amount that's allowed for deferred taxes. Again, these options don't need any further evidence to be presented to the Board, they're primarily a matter of argument. And we do not need evidence from Mr. Todd to enable the company to rely on Bonbright or the Bluefield case or the Federal Power Commission and Hope case. I submit with cross-examination of the company witnesses, all evidence, factual evidence relevant to issues 13.1 and 13.2 that the Board needs to reasonably quantify the amount in issue will be before the Board and the rest is argument. 332 We very much doubt that the Board, having just decided -- reviewed its rate of return guidelines and the principles that underpin its rate of return guidelines and that decision, the substantive part of it is found at tab 2 of my document, re Ms. Hare's affidavit. I very much doubt you need another parade of expert witnesses to explain how those guidelines ought to be applied. You've already ruled that the equity risk premium prevails and that comparable earnings is not a test to which any weight should be ascribed. 333 Finally, with respect this complete or incomplete record issue, I submit that in fairness, it's not for Enbridge Gas Distribution, after seeking rates for 15 months on the basis of a simple inflation increment for the last three months which, in turn, raised issues with respect to rate setting for 15 months, to say at the end of the ADR processes, Well, the issues that our application raised are not supported by a complete record. I submit that if you look at Rule 11.01, it's for the Board to determine, after witnesses have been cross-examined, where there's a dispute as to the completeness of the record, whether the record is or is not sufficiently complete for the matter to be decided. And my submission is with the benefit of that cross-examination, you will, I submit, conclude it is complete. 334 Let me move then to my fourth topic, timing considerations and precedent implications. As I noted at the outset, the procedural framework established by the Board contemplated that all prefiled evidence would be delivered before the settlement conference commenced and that motions dealing with evidence and issues would be similarly so dealt with. EGD was aware of this yet did nothing with respect to its concerns with respect to the intervenor claim arising under issues 13.1 and 13.2. Whether they knew at the outset or not about matters pertaining to this claim, I submit, really doesn't matter. They certainly knew by April the 22nd the nature of the adjustment that was in issue and immediately called Mr. Todd's firm. So between April 22nd and May 14th, there was about three weeks they did nothing. 335 The settlement conference commenced on May 18th. Intervenors met the day before, May 17th. The company did nothing. They had ample opportunity to do something, but instead they chose to bring Mr. Todd to the ADR to support their position as an advocate and then not having succeeded with that strategy, they've now embarked on this procedural manoeuvre to attempt to eliminate their exposer to this claim in this case and in seeking to adduce the evidence from Mr. Todd, I submit they are abusing the ADR process. 336 So the effort to adduce the evidence of Mr. Todd is not only untimely but more importantly, an abuse of the ADR process, in my submission. The precedent implications of allowing this motion, I submit, will be very broad. Anyone could then do it if the company gets away with it. 337 This brings me to my fifth topic then which is the substantive submission that there should, under no circumstances, be a removal of these issues from the issues list. I submit that under the guiding principles of fairness, which I've outlined, and having regard to the fact that the issue is not so much one of quantum but of entitlement, these issues should remain on the issues list. Other aspects of fairness which I've mentioned include the untimely presentation of its motion to remove the issues from the issues list and that the withdrawal of the issue from the four corners of this case would adversely affect intervenors' claims because they want to restructure it in some sort of new context. And in addition, it would remove the potential for the overearnings claim as an offset to any deferred taxes that the Board may allow the company to recover. 338 I submit that to allow what the company seeks would adversely affect the public interest because it would countenance Enbridge's abuse of the ADR process and, therefore, I strongly urge you to refrain from removing the issues from the list. 339 Turning, then, to the last topic on my list, directions with respect to further evidence. Again, I repeat the directions, as far as I'm concerned, are being sought with respect to two specific pieces of evidence and no other. In other words, they're not seeking leave to file, for example, the evidence of Kathy McShane, who is the company's traditional rate-of-return witness. We now have John Todd in this role, apparently. 340 Turning firstly to the evidence of the corporate witness, I ask you to read that evidence, and essentially what the witness is saying is that the capital markets will adjust in some fashion Enbridge Inc.'s reporting of 15 months of earnings from EGD when it reports its fiscal 2005 information. And I ask rhetorically, what relevance does that evidence, what relevance does how the capital markets are going to react to Enbridge Inc.'s reporting of 15 months of earnings from Enbridge Gas Distribution have to do with a determination of Enbridge Gas Distribution's rate of return under the Board's guidelines, and the manner in which the Board applies that allowed rate of return in the particular circumstances of this 15-month case. It has absolutely nothing to do with it and I submit it's, therefore, irrelevant. 341 And so I submit to you, in the directions that are sought with respect to that piece of evidence, you should rule it as inadmissible because it's irrelevant. 342 Moving, then, to the evidence of Mr. Todd. Mr. Cass tried to anticipate my arguments; he didn't anticipate all of them. The most important one he missed is that the evidence of Todd is inadmissible because he first emerged as a participant in the ADR process. He wasn't a witness before that; he emerged as a participant in the ADR process as a supporter for Enbridge's position. And his evidence responds to what -- obviously what took place. That's the first time he surfaced. And it obviously is advocacy intended to rebut positions and discussions that occurred during the process of the ADR. So it's linkage to the ADR discussions, in my submission, renders it inadmissible under the fairness concept that I directed you to that I submit is encompassed in the provisions of Rouls 31.9 and 31.10. 343 That's not the only problem with Mr. Todd's evidence, as far as my client is concerned. Mr. Cass did address these points, and let me just give you my client's position on the actual or apparent or potential conflict of interest. 344 My client, IGUA, as the Board's Mr. Sommerville may be aware, is increasingly concerned about the conflicting positions in which the opportunistic Mr. Todd finds himself, and we voiced this concern in the Union case when he surfaced there as a witness for Coral, testifying essentially in conflict with the evidence that he had previously given with respect to the elimination of the delivery-commitment credit. 345 In this case, the evidence contained in his study puts him in a potentially adverse position to Enbridge. It was acknowledged in cross-examination of Ms. Hare that the company may potentially be cross-examining Mr. Todd on that evidence that was sponsored with respect to the marketers issue. That, I believe, is at transcript 611 and 612. 346 It's not for me to investigate Mr. Todd's conflicts of interest by having him testify before you; it's for the company to investigate them. Ms. Hare acknowledged that the company has concerns about conflicts of interest but then went on to say that that they didn't investigate them in this particular case. So as it stands, where you have a witness that's potentially going to be cross-examined by the company with an issue that is raised in this case and yet unresolved, I submit you have an appearance of conflict. Whether there's actual conflict or not doesn't matter. It's an appearance test. 347 The other aspect with the conflict topic is the interest that he has in Econalysis. He was described as a founder in the material. It is not for me to determine what that means. And again, it's not whether any confidential information is flowing or is not flowing; it's really a smell test that is applied. And I submit that in combination, his interest in Econalysis, which is an advisor to VECC which is supporting the intervenors' claim for an overearnings adjustment, and his appearance for the company creates an appearance of conflict. 348 The case that I've provided to you, I'll just draw your attention to it quickly. I didn't initially intend to refer to it, but since Mr. Cass has a case, I need to balance up the equities by having a case myself. And so -- this case -- what this illustrates is that really every case turns on its own facts, and this is a case again involving a lawyer acting as an expert witness. 349 What happened in this case was that the lawyer that was being called -- that one party wanted to call as an expert witness had actually met with the plaintiff and, in addition, was meeting with the plaintiff at a time where he was the representative of the party opposite in interest. So he was in an advocate's position at the time that he met with the plaintiff, and the purpose of his testimony was to give evidence, expert evidence, about the standard of conduct that the party opposite in interest had exhibited as a lawyer. I may have the plaintiff and defendant mixed up, but anyway they were parties opposite in interest. 350 And I just want to draw your attention to page 3 of the decision. In terms of process, what was before the court was a motion to preclude this witness from testifying, in other words, render the testimony inadmissible. And at the end of the day, the court said yes, the testimony from this witness was inadmissible. 351 At the bottom of the page, the court describes the case law and refers to the Ikarian Refer case. There are apparently seven principles applicable to experts in this case. I just want to refer to the first one which says: 352 "Expert evidence presented to the court should be, and should seem to be, the independent product of experts uninfluenced as to the form or content by the exigencies of litigation." 353 And I submit to you Mr. Todd, emerging first as a participant in support of EGD in the ADR process, is now leading evidence that cannot possibly be construed to be anything else than influenced by the exigencies of litigation. It's really an endorsement, I submit, based on endorsement of the proposition that the linkage to the ADR process of this further evidence from a person who was not a witness, had not prefiled evidence before it went into that process, is an abuse of that process. 354 Accordingly, for all of these reasons, I urge you to refrain from removing the issues from the list and allowing the company to withdraw paragraph 4 of its application. I urge you to find that directions with respect to the further evidence that the company seeks to adduce should be that the evidence from the corporate witness is inadmissible because it's irrelevant, and that the evidence of Mr. Todd is inadmissible because to allow it in would create an abuse of the ADR process and undermine the integrity of that process. 355 Those are my submissions and I see I beat my estimate by 15 minutes. So on Mr. Todd's words I'm looking for a Christmas bonus. 356 MR. BETTS: Thank you, Mr. Thompson. 357 Mr. Sommerville did want to ask a question of you at this time. 358 MR. SOMMERVILLE: Just in terms of clarification, Mr. Thompson, you referred in the final portion of your remarks to the corporate witness and I think you meant Mr. Gruending. 359 MR. THOMPSON: Yes, the EI witness, yes. 360 MR. SOMMERVILLE: My apologies for the pronunciation. 361 With respect to appendix E of the motion record which is the supplementary response by Mr. Culbert. What is your position? 362 MR. THOMPSON: My position is that if that's not in the record, it should be, because I take the view that a witness who's answered can always update his response. 363 MR. SOMMERVILLE: So that corporate witness, that evidence you do endorse its inclusion in the record? 364 MR. THOMPSON: Yes, well as I say, it's in and even if it wasn't, we could cross-examine that witness, he is on the witness -- one of the corporate witnesses that would be called and one of many that's familiar with these -- the facts relevant to the intervenors' claim. 365 MR. SOMMERVILLE: Thank you. 366 MR. BETTS: And thank you for being helpful with time, Mr. Thompson. 367 Mr. Warren. 368 MR. WARREN: Thank you, Mr. Chairman, I can be very brief. 369 SUBMISSIONS BY MR. WARREN: 370 MR. WARREN: I adopt Mr. Thompson's submissions in the matter and his analysis of the issues. They were delivered with characteristic thoroughness and force. I only wanted to make three submissions on behalf of the clients that I represent. 371 In our respectful submission, Mr. Chairman, the difficulty for the Board in dealing with this motion is that it has to balance three conflicting or potentially conflicting matters. The first is the integrity of the hearing process. The second is the issue of fairness and the third, perhaps most rudimentary of them, is simple common sense. Let me deal with them in order. 372 With respect to the integrity of the hearing process, there are, it seems to me to be three issues. The first subissue my friend Mr. Thompson has articulated at length and I think effectively, and that is the integrity of the ADR process. If any party is allowed to use the term commonly used in civil litigation to try and cooper up its position, then learn what the other side thinks in the ADR process, to cooper it up with evidence after the fact undermines that ADR process. It undermines the willingness of the parties to be open and candid about their positions. And as the Board knows, the ADR process is an integral part of its decision-making process and I think everyone would agree that it is an important and effective part of the decision-making process. 373 What is proposed now by my friends drives a stake through the heart of that because no one hereinafter will be willing to be as open and candid if there is the risk that Mr. Todd may pop up or someone like him, cooper up evidence and take a new position. And as my friend Mr. Thompson pointed out, if the intervenors tried to do it it would be unacceptable; it is no more unacceptable coming from the applicant. So I think it is important that the Board try as best it can to preserve the integrity of the process. 374 My second submission with respect to the integrity of the hearing process is really a question of the proper characterization of an expert witness. I'd ask you, if you would, please, Mr. Chairman, to turn up in the motion record filed by my friends the appended evidence of Mr. Todd in draft form. I want to take you to two components, two portions of the evidence. 375 The first, if you have it in front of you, members of the Panel, appears at page 4 in the first full paragraph beginning at line 3, sorry, beginning at line 5, and I quote: 376 "Put differently, does the fact that EGDI is proposing to change its fiscal year entitle ratepayers to a Christmas bonus?" 377 Now I note the mocking and derisive tone of that observation which is entirely inconsistent with someone pretending to be an independent expert. 378 The second, Mr. Chairman, and Members of the Panel, if you turn over to page 8, the second full paragraph beginning at page 13: 379 "The flaw in the argument of these intervenors, however, is that it would be inconsistent with the principles of a fair rate of return on equity to apply the 9.69 figure." 380 That is the tone of an advocate, and I might say from that vocabulary, a partisan advocate. It is not expert evidence, in my respectful submission. This Panel and all Members and all parties should be entitled to look to an expert to provide his or her rigorously and scrupulously independent views on the issues before it. 381 You, Mr. Sommerville, Mr. Betts, Ms. Nowina should be able to look to that expert and ask questions of that expert and expect that you will get an independent rigorous thorough analysis even if the answers given hurt the interests of the party who's called him. With this kind of rhetorical overkill, can you expect this of Mr. Todd? In my respectful submission, you cannot. 382 Now, the third -- and I should say, Mr. Chairman, I want to put my observations on the independence of this witness in a broader tendency. Ian Scott, himself a brilliant advocate, used to jokingly say when he was out of town on cases, on circuit as it then was, he used to say that an expert is a guy from Toronto with a Ph.D. And the joke was that the courts were increasingly concerned about calling just anybody who's essentially taking the same position as the person calling them and gussying them up as an expert. 383 If you will permit me a personal kind of analog, my 11-year-old daughter is fond of dressing up my Airedale terrier in dresses. It's still an Airedale terrier any way you cut it. And the risk that the Board has and the reason the Board has to be rigorous about this is that you have to distinguish the advocate, the witness who's simply repeating, albeit in gussied up terms, what the applicant is saying and calling that person an expert. On that ground alone -- and that is an issue of the integrity of the Board's process. And in my respectful submission, Mr. Chairman, that issue is addressed by the request that you admit Mr. Todd's evidence. 384 The third issue on the integrity of the process that I want to raise, and I do this with considerable reluctance, but I feel obliged to in the interests of everyone in the room, and that is the issue of conflict of interest. I agree with what Mr. Cass says, that there is no evidence of an actual conflict of interest in the sense that Mr. Todd is possessed of confidential information which would be used against the interests of someone else he represents. That is classically the definition of a conflict of interest. 385 But when I return, Mr. Chairman, to the two observations I quoted from his evidence: 386 "Put differently, does the fact that EGDI is proposing to change its fiscal year entitle ratepayers to a Christmas bonus?" 387 Well, some of those ratepayers are being represented by another of Mr. Todd's companies. When he says, "the flaw in the argument of these intervenors," who are these intervenors? They include people who are represented by another of Mr. Todd's companies. 388 Now, I want to frame this as baldly as I can put it. You, Members of the Panel, may decide that these kinds of issues of conflict of interest are matters to be resolved privately among the parties to the proceeding, among their counsel, that the Board can say, Look, that's not our affair. The alternative view, and the one I would urge on you is this: That you have control over your process and that you are, in a sense, responsible or expressing to the public the view that these processes conform to basic notions of fairness and integrity and decency. And using those considerations, can the Board, and I say the Board can legitimately say, We're not going to accept evidence from one person which would appear to -- who would appear to be directly or indirectly representing both sides of an issue 389 Now, I want to underscore as strongly and as clearly as I can that in making these submissions, I mean absolutely no respect for my friend Mr. Janigan and the people who advise him. I have the highest respect for them; I have the highest respect for their integrity in representing their client's positions. They are put in the unfortunate position, however, of casting doubt on the question of the rigor of the defence of those positions, because Mr. Todd, in one guise or another, is representing the opposite side of the very same issue. 390 I say with the greatest of deference, Mr. Chairman, that you can say that's unacceptable and that's a stand-alone reason with that evidence should not be received. 391 Now, the two other issues, Mr. Chairman, I raise were the issues of fairness, and that is, have the parties got all of the evidence and have they had a chance to respond to it. I agree with Mr. Thompson that you have all of the relevant evidence you need. You don't need another expert. And contrary to what my friend Mr. Cass suggests, you don't need more prefiled evidence in order to complete the record. You've got effective cross-examination. I anticipate that Mr. Shepherd, Mr. Thompson, Mr. Janigan and others can cross-examine the witnesses, the corporate witnesses, and elicit all of the relevant evidence; and in reply, Mr. Cass, extraordinarily able counsel, can get out all of his evidence as well. What else is another expert going to add to the mix? Which leads me to the conclusion on my third point, common sense. 392 This is not civil litigation; I state the obvious. Now, in civil litigation, as you know, Mr. Chairman, the courts have to decide a list between the parties. And if I make a mistake and I don't lead the right evidence, or I lead incomplete evidence, or the person on the other side catches me offguard with a way of analyzing the issue, I'm stuck with it. I can't say to the court, Oops, I pooched it. Can you give me another opportunity to cooper up my case? But that's not your role. Your role is to decide just and reasonable rates. You are ultimately accountable to the public, to the legislature, regardless of what the folks in this room say to you. 393 So the question is: You have to decide this issue sooner or later from a common-sense perspective. You can't put it off. It has to be decided sooner or later if Enbridge wants to persist in changing its year-end. The question is: Can it be decided now? Is the issue ripe for resolution now? And there are two considerations. It's ripe because it's here before you, it has been raised, and it's ripe because you have all of the relevant evidence necessary to decide it. 394 So from a common-sense perspective, in my respectful submission, the appropriate thing for the Board to do is not to kite it off to some indeterminate future, when essentially you'd get the same evidence gussied up like my Airedale terrier, or can you decide it now on the record that you have before you. 395 In our respectful submission, Mr. Chairman, the evidence -- the issue is ripe for determination; it can be decided on the record without prejudice to anybody. Every counsel leaves the room and says, You know, I should have thought of that; there's one more bit of evidence I could have added. And that's what Mr. Cass wants to do. He wants to layer on another way of looking at it in more evidence, but it isn't necessary. You have everything that you need. 396 In my respectful submission, you should deny the request for relief and allow this matter to go forward on the evidence as it presents itself. 397 Thank you very much, Mr. Chairman. 398 MR. BETTS: Thank you, Mr. Warren. You did indicate that you did have to leave. I will just see if there are any questions of you. 399 [The Board confers] 400 MR. SOMMERVILLE: No, thank you. 401 MR. BETTS: The Panel has no questions for you. Thank you for your submission. 402 MR. WARREN: Thank you, sir. 403 MR. BETTS: And who's next? 404 MR. JANIGAN: I believe I am, Mr. Chair. 405 MR. BETTS: Mr. Janigan, please proceed. 406 SUBMISSIONS BY MR. JANIGAN: 407 MR. JANIGAN: Thank you very much. I will try to be brief because my friends have covered many of the points that I was to raise in the context of this motion by the company. 408 In brief, we also believe that the company should not be permitted to withdraw the issues under consideration in this proceeding, nor should they be allowed to, in the event that they are not permitted to withdraw, introduce the evidence of Mr. Todd and the corporate witness. 409 I think, in essence, our position in this has developed as a corollary of the fairness principle that Mr. Thompson alluded to, and I think as well, that while there is no specific rule of practice and procedure that governs the withdrawal of a particular issue with an application, the application of Rule 20 in general is helpful in stating the kinds of considerations that are in play. In particular, I refer to Rule 20.05, that if the Board has -- and this particular rule, of course, pertains to the withdrawal of an entire application, but we believe it has pertinence to this particular issue. 410 "If the Board has reason to believe that a withdrawal or discontinuance may adversely affect the interests of any party, or may be contrary to the public interest, the Board may hold or continue the hearing or may issue a decision or an order based upon the proceedings to date." 411 We have the public interest test that's inherent in that consideration. We would suggest that there are a number of elements of the public interest that would be offended in the event that you grant the relief sought in this motion. 412 The first, and I think it's been covered fairly extensively by my friends, is the lateness of this application. We are sitting in a hearing, hearing the application to withdrawal part of the application or submit additional evidence. It is indeed late. 413 The timing is also one which the Board should regard with some caution. As Mr. Thompson has alluded to in the rules with respect or the guidelines with respect to settlement discussions under the issue of timing, it's noted that it is usually expected that all evidence will be filed by the time the ADR has taken place. 414 In this case, we have had circumstances where discussions have taken place both within -- both outside and in the ADR which has led, in the frank admission of the company, to its realization that it needed more evidence or that it thought it needed more evidence to, in fact, prove its case. 415 We would suggest that this issue and the determination of this issue and the necessity for a particular evidentiary record of this issue was reasonably foreseeable by the company. The company has indicated that it believes it has two discrete applications before the Board; one for a 12-month period and one for a three-month period. 416 Surely, in the event that it thought that it had the remarkable instance of a three-month application before you, that it would have thought that the regulatory treatment of that particular three-month period might be an issue that the Board may wish to hear evidence upon, but that it may wish to -- it may have to embellish in some fashion. The cross-examination of Ms. Hare on Wednesday indicated that one of the reasons that they proceeded in this fashion was that Union had been able to change their fiscal year without any particular adjustment, but that when the Union experience was examined, it was felt that it was not helpful in any event so it wasn't cited in the context of this evidence. 417 So we would suggest that it should have been reasonably foreseeable by the company to anticipate that there would be discussion and the issue of the regulatory treatment of the stub period would have arisen. 418 Thirdly, in our submission, the record is complete anyway. So whether we continue to examine this issue in the context of this proceeding or whether we are considering whether or not we continue to examine this issue or the necessity for more evidence has arisen, in our respectful submission, the record is complete. All of the costing info is there. All that is left to do is to determine the rate of return for the stub period. So in our respectful submission, the evidence that is proposed to be admitted to bolster this in the event that the Board turns down the request for withdrawal is superfluous. 419 Secondly, we would also note that the evidence that is proposed to be introduced from Mr. Todd is primarily directed to his view of the appropriate regulatory treatment of the stub period. It introduces no new facts, it introduces no new evidence that would be necessary for the Board to rule on this matter. It, in fact, simply bolsters the company's view of the circumstances of this case. So in our view the evidence is superfluous, the record is complete, we can proceed to hear this matter without the necessity for the new evidence. I, of course, exclude the evidence under appendix E which I believe is simply an update and can be filed in the context of any normal proceeding. 420 Finally, while I am in support of the request for relief by way of the refusal to admit the evidence of Mr. Todd, I might note that my refusal is based upon my view of the evidence and what it would add to this proceeding. I make no comment on other aspects of why Mr. Todd's evidence should be excluded except for that circumstance in which a conflict is alluded to that Mr. Todd's connections with the consultants that advise the Vulnerable Energy Consumers' Coalition might be sufficient to cause the Board to disqualify him as a witness. 421 I have a case which I believe is the leading case in this area called MacDonald Estate versus Martin, which I believe sets out the standard by which courts and tribunals must look to in determining whether or not a witness should be disqualified on the basis of conflict. 422 MS. LEA: Why don't we just mark that for identification, please. It will be K.3.3 and the case is MacDonald Estate and Martin. Does the reporter have a copy? 423 MR. BETTS: Thank you. 424 EXHIBIT NO. K.3.3: MACDONALD ESTATE V. MARTIN, DECISION OF THE SUPREME COURT OF CANADA 425 MR. JANIGAN: And this is a decision of the Supreme Court of Canada which has been cited on numerous occasions since delivery of the judgment and in British Columbia has been subject to a line of cases where in the standard that is proposed herein is on all fours with that of the consultant. In the fashion of all good law students, I would refer you to the headnote rather than the judgment which I think contains the nub of what I wish to deal with. That is on the top of page 2. 426 This deals with the test that's associated with whether or not a conflict exists. On the second line it starts: 427 "Two questions must be answered: 1), Did the lawyer receive confidential information attributable to a solicitor and client relationship relevant to the matter at hand? And 2), is there a risk that it will be used to the prejudice of the client?" 428 Now obviously in this circumstance it was whether or not a solicitor should be excluded as a result of confidential information he had received from a client against whom he was acting. 429 A number of observations can be obtained from this particular judgment, the first is that in fact, the concern in the context of conflict resides with a client. Is the client at risk, is the confidential information that has been given to the solicitor or, in the case of the British Columbia decisions, the expert consultants, is that information likely to be used in an adverse way against the client? 430 Now, as the counsel for the client, I, of course, have been interested in whether or not Mr. Todd's relationship with ECS could in any way imperil the interests of VECC in the future and I have, in fact, made inquiries and I am satisfied that, in fact, the arrangements between Mr. Todd and ECS do not pose a conflict and, in fact, mirror the provisions of the Board's Affiliate Relationships Code. In my view, ECS acts completely independently from Mr. Todd in all regulatory matters and in this case does so under my direction. 431 So as far as the client in this case, as far as I can speak for the client, is concerned, we are satisfied that there is no confidential information that Mr. Todd is in possession of that is in use in an adverse way against us in this case, and we are satisfied in terms of any future information that may be possessed by myself or my consultants will not be used by Mr. Todd or who will not have access to that information and use it in an adverse way. 432 So in my respectful submission, the test and this is a well-established test for conflict, has been met within this current circumstance, that while I am solicitous and grateful for the advice of my counsel in looking after my behalf, we would respectfully note that we have been in the best position to judge whether any conflict exists and we are satisfied that none does exist. 433 So in terms of whether or not you adjudicate that Mr. Todd's involvement in this case as a witness may be germane to the issue, we would respectfully submit one of those considerations should not be the fact that he has any conflict as a result of his involvement or his founding of the Econalysis firm that advises both myself and my client. 434 I believe that concludes my submission, Mr. Chair. I may be in the same position as Mr. Warren and I may wish to leave to catch a flight fairly soon. If there are any questions that arise from my submissions, perhaps is it possible for me to take them now? 435 MR. BETTS: We have no questions, Mr. Janigan. 436 Let me just confer with my fellow panel members. 437 [The Board confers] 438 MR. BETTS: I think in fairness I would like to add that the panel has no questions of the earlier presenters either, so if those same desires arise to catch a flight or do whatever has to be done, the Board will understand that and we won't ask you to stick around until the end. 439 Who is next? 440 MR. DINGWALL: I believe that falls to me, sir. 441 MR. BETTS: Mr. Dingwall. 442 And we did have Ms. Street, was there anyone else -- 443 MS. STREET: I'm content to have Mr. Dingwall proceed. 444 MR. BETTS: Thank you. But you are the only other submitter? Is there anyone -- that I think is everybody, isn't it? And you do wish to make a submission? 445 MS. STREET: Yes. 446 MR. BETTS: Thank you. Mr. Dingwall. 447 MR. DINGWALL: I note that we have an hour left by virtue of the clock. I can estimate at this time that my submissions will probably take between 10 to 15 minutes given a good headwind and minimum turbulence. 448 MR. BETTS: Thank you very much. I think we can keep the turbulence down. 449 SUBMISSIONS BY MR. DINGWALL: 450 MR. DINGWALL: I think the Board has benefited from significant submissions of complexity and duration on most of the topics which relate to the quality of evidence, the appropriateness of the evidence, the timing of the evidence, that's put forward by Enbridge to be included in this proceeding as exhibits to the affidavit. 451 The only brief statements I can make with respect to those pieces of evidence are that I agree with the submissions, for the most part, made earlier on by other counsel with respect to their not adding anything in particular to the record; to the first submission, that of Mr. Todd being argumentative rather than stating a matter of expert opinion and therefore doesn't add anything to the record. 452 And with respect to the second exhibit to Ms. Hare's affidavit, which is the evidence, proposed evidence of Mr. Gruending, it again, in our view, does not add anything to the record. The only matter of substance possibly for this hearing is Mr. Gruending's statement that Enbridge Inc. will report 15 months of revenue of Enbridge Gas Distribution in its next year-end statement, which was also mentioned by Mr. Culbert in the cross-examination on the affidavit and so therefore that's not novel either. So I don't believe either of the additional forms of evidence proposed, by virtue of the lack of novelty, would in any way prejudice the applicant by their exclusion from this proceeding and would prejudice intervenors with respect to the timing. 453 Now, in looking at the timing, I note over my notes, turning back a page or so, that a couple of days ago intervenors were asked to address an issue which was the Union Gas storage contract. From the record, the evidence on that contract first came up April 22nd. During the settlement conference, intervenors were provided, quite graciously by the company, draft evidence which included a draft of the contract on May 17th during the issues conference -- during the, I beg your pardon, alternative dispute resolution conference, which was subsequently formalized as evidence earlier this week. I note that by comparison, though, Mr. Todd's evidence first surfaced on the date that the motion was filed, and intervenors had no notice of that in advance. 454 It seems that the process contemplates that parties have a certain alacrity with respect to dealing with the obligations of disclosure of prefiled material in that context, and that's clearly where schedule E to Ms. Hare's affidavit comes in, which is an updating of evidence that's on the record. I don't know whether the company could have anticipated the responses that it received with respect to the Union Gas storage contract; however, it certainly seemed able to do so given that, with the matters not coming out to intervenors until April 22nd and intervenors responding at that time, there seemed no hesitance on the company's part to proceed with that issue. 455 I mention that given that the company's stating that with the somewhat earlier notification of the year-end issue, that they were at that point not in a position to address intervenor responses to something that had come up so purportedly late. 456 With respect to the relief requested by the company, I have a couple of comments as well. What the company appears to be proposing is that the evidence be included in the record that's appended to the affidavit in order that the record be complete - I've spoken to that already - or that the company be permitted the opportunity to refile, and what they would intend to refile would be the last three quarters of fiscal 2005 being sought together with what has been referred to correctly or incorrectly as the orphaned quarter, to substantiate a 12-month filing to establish rates that would then encompass that orphaned quarter. 457 With respect to that, I think that that creates a procedural duplication as it will again involve another review of cost of service, it will again involve intervenor participation, Board participation, and Board scheduling. But a result that would emanate from that, which I don't believe has been mentioned so far, is that that would leave the first quarter of fiscal 2005 as the new orphaned quarter. 458 Within that process, the forecasted revenues and forecasted expenses for that quarter would not be encompassed in the filing for the third quarters -- for the last three quarters of 2005 and the new quarter, which again leaves a period absent regulatory scrutiny. Rate of return would have been set for the 12 months, but the visibility of rate of return would be lost for the first quarter of fiscal 2005 due to the refiling of the last three quarters of fiscal 2005 coupled with the orphaned quarter, being the period between that time and the proposed new year of Enbridge. 459 So I believe that that particular approach does not mitigate or help anybody in this room addressing the issues of whether quarters are orphaned; and if they're orphaned, what is the rate of return during that time and what is the appropriate treatment. 460 Therefore, I see the only feasible way of approaching this is to deal with that additional quarter within this case. So it's Energy Probe's viewpoint and position that the only way to feasibly, fairly and effectively deal with that lost quarter is to do so within this case. 461 My final point is that the company has stated that for the year 2004 that its parent Enbridge Inc. will be reporting, they will be reporting 15 months of Enbridge Gas Distribution revenues. What that means is, for fiscal 2005 for Enbridge Inc., they will be beginning to match, if we deal with rate -- if we deal with the year-end change in this proceeding, they will be beginning to match from a revenue perspective, on a comparable basis, what the utility year-ends will be, which will create a new visibility for future processes before this Board. 462 That's an advantage which we need to gain now. Otherwise, when we get into issues of comparability between Enbridge Inc. reporting of Enbridge Gas Distribution revenues versus what's before the regulator, we'll lose that if we defer that to another year. So I think it's important to deal with that now. 463 And those, well in advance of my half an hour, are my submissions. 464 MR. BETTS: Thank you, Mr. Dingwall. 465 No questions, Mr. Dingwall. Thank you very much. 466 Ms. Street. 467 SUBMISSIONS BY MS. STREET: 468 MS. STREET: Thank you, Mr. Chair. 469 I'm sure everyone, in light of the time, will be relieved to hear that all of the points that I wish to touch on have been covered in one way or another by those who have preceded me. So let me just set out, if I might, the position of CME, and just highlight the reasons for that position. 470 CME supports the position of the other intervenors and in particular Mr. Thompson on this motion, and takes the position that the appropriate determination on the motion is not to allow the company to withdraw the issue; and secondly, not to allow the introduction of further evidence. 471 The reasons for that position, as have been fully canvassed and I won't go through them again, first of all, fairness; we agree that it is an abuse of the ADR process to allow the motion to succeed. 472 Secondly, we agree with the suggestion that the further introduction of evidence can be properly characterized as a buttressing up of the company's case. 473 Thirdly, we agree that the company should have recognized that the issue was implicit in the application itself. Since the application was for a total of 15 months with the inflationary factor for the last three, then it seems that the question of that inflationary factor for those last three months, the stub period, was very much in front of the Board as a result of the application, and the entitlement question was therefore implicit in that application. 474 And fourthly, to refuse the withdrawal of the issue but to allow additional evidence presents as Mr. Shepherd pointed out, certain practical difficulties in terms of the cost to the intervenor of seeing this proceed at some time in the future, some scheduling issues and of course perhaps most importantly, the Board's use of its time as well. 475 So for those reasons which you have heard extensive submissions on, the CME supports the position of the other intervenors, and I should only add that if it is your conclusion that it is appropriate to allow the issue to be withdrawn at this time to be dealt with at some time in the future, then I, again, support Mr. Shepherd's submission and the submission of others that that should only happen on strict conditions that the company cannot in any subsequent application or phase 2 of this application, reopen the rates from January 1st of 2005 to September 30th of that year because the ADR agreement has dealt with that issue, it's a binding decision of the Board and should not be reconsidered. 476 So those are my submissions in light of the fulsome arguments you've already heard and really serve only to put CME's position before you with respect to the issues on the motion. Thank you, Mr. Chair. 477 MR. BETTS: Thank you. No questions, Ms. Street, thank you very much. 478 Does Board counsel have any questions that would assist the panel in its deliberations? 479 MS. LEA: No, thank you, sir. 480 MR. BETTS: Mr. Cass, I'm sure you would like to have more time to consider reply but unfortunately, I'm not sure I can give you that time. Are you able to proceed at this point? 481 MR. CASS: Yes, I am, Mr. Chair. Thank you. 482 MR. BETTS: I appreciate that. So please do so. 483 REPLY SUBMISSIONS BY MR. CASS: 484 MR. CASS: Mr. Chair, before I go through some of the individual submissions from different counsel who spoke in opposition to the motion, I would like to just address a couple of general propositions and get them out of the way, so to speak. 485 First, I thought I heard an implication in some arguments that suggested the contrary so I believe it is important to make very clear that if there is no change in year end for regulatory purposes, there is no $30 million overearnings adjustment in the intervenors' wording from the settlement proposal. So effectively, what has happened is the company has learned that intervenors collectively, and you have seen from today how collectively, are asserting that, if I can put it this way without being abused of being derisive or mocking which is certainly not my intention, that a cost of change of year-end as proposed by the company is $30 million. 486 As far as I'm aware, the first place the only place that anybody will find that on the record for this proceeding prior to this motion, prior to the affidavit and the cross-examination this for this motion, the only place one will find that on the record is in the settlement proposal, the intervenors' position under issue 13.1 in the settlement proposal. So we effectively have learned from issue 13.1 of the settlement proposal that there is this collective view that the price of the change of year end by the company is $30 million. And again, I don't use the word "price" in any derisive manner whatsoever, but just to try to crystallize exactly what we're speaking of. 487 I suggest to the Board that the company's evidence that it did not anticipate when it requested a change of year end and made a proposal for a rate-indexing mechanism for the stub period, the company's evidence that it did not anticipate this issue evolving is entirely credible. I ask the Board Members just to ask themselves whether, if they had been in the company's shoes, it would have occurred to any of them that the price for change of year end would be $30 million coming out of the settlement conference. In that context I make another observation as well. A number of counsel indicated that, well, if intervenors were attempting to do what the company is trying to do, it wouldn't be countenanced. 488 Well, let me put it the other way then. Suppose the company had said in the settlement proposal it will be the company's position at the hearing that in lieu of a rate-indexing mechanism, there should be a credit of $30 million to the company for the change in year end. The first time that issue evolved or appeared on the public record was in the settlement proposal as a statement of the company's position. I suggest to you that intervenors would most certainly be here before the Board with some form of motion, with some form of effort to be able to address something that appeared for the first time on the record in the settlement proposal and that has a magnitude of $30 million. That's my first set of general observations. 489 The other general observation, Mr. Chair, that arises, I think, from virtually every opposing submission, is in relation to the evidentiary record. All opposing counsel talked about this motion being the company's effort to have more evidence, to bolster the evidence, to layer the evidence, in Mr. Warren's words, to buttress the evidence in Ms. Street's words and so on: The simple fact of the matter is this is not a motion about more evidence or buttressing the evidence. On the claimed $30 million overearning adjustment short of what has come out on this motion, the company has no evidence. This is not about buttressing or bolstering evidence, it's about an issue appearing on the record for the first time in the settlement proposal on which the company has no evidence other than what has been brought forward by way of this motion. 490 Now, to come to some of the individual submissions that were made, I'll start with Mr. Shepherd and I will try to work my way through in the order that the submissions were presented. 491 One of Mr. Shepherd's assertions was that the company has decided that its position is weak, and therefore, feels that it's in a situation where it needs to bring this motion. Well, this ties right back to the point that I just made. This is not a situation where the company introduced evidence on a particular issue then concluded that the evidence was weak and sought to bolster it. This is a situation where the company does not have evidence on an issue that evolved very late in the proceeding. 492 Indeed, as I'd indicated in argument in chief, the fact that at least one intervenor used cross-examination on this motion to bring out the intervenors' position in respect of the so-called overearnings adjustment really just supports the position that the evidentiary record is not what it should be. If intervenors, on the motion, have to bring out evidence to explain what their position is in respect of an issue appearing for the first time in the settlement proposal, how could the company possibly have been expected to have addressed that issue with its responding evidence? 493 Now, in relation to Mr. Shepherd's submission, I had intended to make a particular point, but I think that it actually flows from a number of submissions made by counsel opposing the motion. Mr. Shepherd very graciously accepted that there are gaps in the evidence on this issue and then he went on to indicate that the gaps can be filled in on cross-examination. 494 Now, other counsel didn't speak of the gaps, but this notion that the record can be completed on cross-examination then became a theme for most, if not virtually all of counsel making opposing submissions. 495 Well, this, in effect, is really what the problem is. If the record does not exist now, and the remaining means to fill the record is cross-examination, that is a process that is virtually exclusively within the control of intervenors. The company cannot tell them what to ask on cross-examination, tell them how to fill out the record on the cross-examination. What this effectively means is, if there are gaps in the record and the way to do it is cross-examination, the intervenors can selectively fill out the record as they see fit and the company, if the opposition to the motion is successful, is denied the opportunity to fill out the record as it sees fit. And indeed, this selectivity then is applied to the evidence attached to the affidavit. 496 Intervenors are now willing to accept the -- I believe it was Exhibit E to the affidavit, which is a piece of evidence by way of additional interrogatory response from Mr. Culbert, but they're not willing to accept the other parts of the evidence referred to in the affidavit. Well, I submit, Mr. Chair, that it's unfair for the intervenors to be in the position of apparently admitting that it's appropriate to have more evidence, in fact, necessary in the context of cross-examination, but then to say, We pick and choose what that additional evidence will be. We pick and choose what it will be from the affidavit and we decide what it will be from cross-examination. 497 I just wanted to briefly touch on this issue about 15 months versus 12 months. I won't spend a lot of time on it. I don't think it's a big issue in the scheme of things. But Mr. Shepherd's submissions contain some suggestions about the evidence of Ms. Hare on this issue about 12 months versus 15 months that I thought were, frankly, a little unfair to Ms. Hare. 498 Ms. Hare quite readily accepted that when one adds up the 12-month cost-of-service test-year application that the company submitted with the three-month stub-period non-cost-of-service indexing mechanism that the company applied for, that that comes to 15 months. There is no question about that and that was discussed at transcript 462 to 465. However, as indicated in my argument in chief, the issue here is that the company did not apply for 15 months cost of service. The company does not budget, plan or do models on the basis of 15-month cost of service. That's what the 15-month issue is all about. It's not whether 12 and three adds to 15, and I won't dwell on that anymore. 499 Now, Mr. Shepherd had some conditions on any reapplication by the company should the Board see fit to allow the removal of the issues in question from the issues list. The conditions, as I understood them, in part, were an attempt to ensure that the issue comes forward again with a 15-month period. That, Mr. Chair, is the very problem that the company is submitting that a new application would address. 500 The Board, as far as I'm aware, has never determined how -- had never determined a 15-month ROE that, by reason of adding another quarter to the usual 12 months, adds a different element of seasonality to the company's results. If it's a bad quarter, it lowers the results; if it's a good quarter, it improves the results. The Board, as far as I'm aware, has never done an ROE on that 15-month basis. 501 The entire purpose -- I'm sorry, not the entire purpose. One purpose of reapplying later this year, as the company explained, is so that a 12-month ROE can be applied to a 12-month test period and still in the context of change of year-end, so the 12-month test period being January 1 to December 31st. So to attach the condition that Mr. Shepherd talked about would be to perpetuate what I submit is one of the areas of distortion that is troubling this case. 502 Now, Mr. Shepherd and other intervenors also talked about the company's proposal for a reapplication later this year in the context of what has already been agreed to in the settlement proposal and accepted by the Board. 503 Mr. Chair, I have to say at the outset, I don't pretend to be a regulatory accounting expert; I don't pretend to have all the answers. However, because of my lack of expertise, I may see this in an overly simplistic fashion. It strikes me, though, that the reapplication that the company is talking about would proceed on the basis that the numbers for nine years are set -- sorry, thank you, nine months -- nine months are set. 504 The Board would come to a determination of what the appropriate results are for that test year, January 1st to December 31st, 2005, with a set of numbers that are fixed and with variable numbers in the fourth quarter. The variable numbers in the fourth quarter are what would be approved or not approved, as the Board sees fit, to achieve the result that it thinks is appropriate for the 12 months. That's it. 505 Now, yes, issues might arise about rate implementation and how and when do you implement that. It's not the company's intention to in any way have it implemented in any fashion that would be contrary to the settlement proposal. But can the company sit here today and say, Well, that would never happen? Well, just suppose, for example, that the result of this new look at the 12-month period I've described with variable figures only in the last quarter meant a sufficiency. Ratepayers might want to -- intervenors might want to argue an earlier implementation. Would the company say they can't do that or that's a breach of the settlement agreement? I'm not going to sit here today and say that. 506 So it's not the company's intention to do anything that would be contrary to the settlement proposal in this case, but at the same time I don't think it's appropriate for the company to say, Well, rate implementation under a proposal that's not yet been filed would have to be as of a certain date. Intervenors themselves in the context of that case might have different ideas about rate implementation. 507 Mr. Chair, that then brings me to the submissions made by Mr. Thompson. Now, one of Mr. Thompson's submissions at the outset of his argument was that the full parameters of this issue about whether the record is complete can't be determined until cross-examination has occurred. I don't want to be repetitive. This, in part, brings me back to the submission that I've already made that intervenors are in control of the cross-examination. It's very hard for the company, in the context of cross-examination, to address how it might have completed the record with witnesses that, on the intervenors' position, would be denied to come forward as a result of this motion, if you understand what I'm saying. In other words, without the witnesses that the company is requesting the Board to allow it to testify, I'll put it this way, it's a mystery to me how cross-examination without those witnesses is going to establish how complete the record would have been if they'd been here. 508 And again, the cross-examination is in the control of the intervenors so they can -- may well feel the record is very complete from their point of view, but the Board knows already that the company's view is going to be that the record is not complete if the proposed witnesses are not allowed. So I don't think that waiting until cross-examination is a solution to the problem; it's only a solution to the intervenors' desire to complete the record only in the fashion that they see fit. 509 In the course of his submissions, Mr. Thompson referred to a May 14th motion date prior to the settlement conference. I don't intend to spend a lot of time on this, but my understanding of the Procedural Orders was that this motion date was always expressed as a motion in respect of the sufficiency of IR responses. That causes me to wonder why Mr. Thompson seemed to be suggesting that any issue about the sufficiency of IR responses ought to have been brought forward by the company. That date was specifically established in Procedural Order No. 1, originally at May 21st. That's in paragraph 9 in Procedural Order No. 1. And it was the date for sufficiency of interrogatory responses to be determined. If there was an issue about the company's interrogatory responses, it could have been addressed then. 510 The same subject matter was later addressed in Procedural Order No. 4, paragraphs 1 and 2, and the date became May 14th, but the it was still for the purpose of addressing sufficiency of interrogatory responses. 511 Mr. Thompson has also referred to Rule 20.05 and the issue about whether the relief requested by the company adversely affects the rights of any party. This, I think, also ties into submissions by Mr. Thompson about fairness and I believe other counsel referred to fairness. 512 In my submission, the fundamental fairness issue here is what protections would intervenors need if the Board were to decide to allow the record to be completed? That would presumably be interrogatories, it might well be a chance to provide evidence in response to the evidence brought forward in the motion by the company. It might be other things. That's, in fact, why the company framed its motion to include a request for such a procedural order or directions as may be necessary or appropriate. 513 The Board has full authority, if it allows the company to proceed with late evidence, to include whatever protections are needed to ensure fairness to the intervenors so that the record is complete from everyone's point of view. 514 In that context, in my submission, there really is no issue about any party being adversely affected. If the intervenors are given full procedural rights in respect of any new evidence, they're not adversely affected. If there's anything more than that that would have adversely affected them, there's no evidence from intervenors on that. The only evidence is when Mr. Thompson asked Ms. Hare and she said she did not see how intervenors would be adversely affected. 515 So this argument about some adverse effect on parties to this proceeding is not one that's supported by the evidence, and in my submission, is one that can be addressed with whatever interrogatory process or other procedural rights are appropriate to be sure that intervenors have the full opportunity to address this issue just as the company is requesting a full opportunity to do. 516 Mr. Thompson also addressed Rule 39.1 and indicated that an expert cannot give evidence to rebut what was said at the settlement conference. Well, in my submission, Mr. Chair, there is no evidence presented by anybody here that talks about what was said at the settlement conference or that seeks to rebut what was said at the settlement conference. The evidence here is that the company originally consulted Mr. Todd's firm to deal with what was raised at the April 22nd meeting. 517 The evidence that has been presented responds to an issue as formulated in the settlement proposal on the public record and as formulated by intervenors, the settlement proposal being a document on the public record. That, in itself, I would submit, is indeed one of the timing issues that relates to the evolving nature of this issue. Until the settlement proposal, the issue had never been formulated on the record, on the public record. So for the company to have something to respond to by way of the evidence that it proposed to call, there was nothing on the record. That's why, unfortunately, the timing was such that the company's motion followed the settlement proposal. That was the first time there was actually something put on the public record that the company could respond to from the public record. That's what the company was responding to. There is nothing anywhere in the evidence to suggest that it is responding to things said at the settlement conference. 518 Now, it became apparent, I think from Mr. Thompson's submissions, that one of the motivations of the Industrial Gas Users' Association in respect of this motion is its desire to have the deferred taxes issue and the year-end so-called overearnings adjustment issue go forward together. This, it became clear from Mr. Thompson's submissions, was a preference of IGUA; however, I'd suggest to the Board that one particular party's preference about what issues might go forward together in a particular case really is not anything of a procedural fairness matter to compare to another party's concern that if one of those issues goes forward, there is not a complete record. 519 To allow IGUA's preference to offset certain issues against one another, to dictate the determination of a motion as to whether there is a complete record on the overearnings adjustment mechanism, Mr. Chair, I would suggest, would really turn fairness on its head. 520 Now, Mr. Thompson also referred to the company's request for an indexing mechanism in the context of a submission about what the company's position should have been in relation to this overearnings adjustment mechanism. In my submission to the Board, the two are very different. The fact that the company requested an indexing mechanism does not in any way suggest that the company should somehow have been alerted to the possible position that there would be requests for a $30-million adjustment in the other direction and in fact, logic would suggest the opposite. Logic would suggest if the company saw the situation as being one for an inflationary increase, it would have been the furthest thing from the company's mind that, in fact, there was going to be a $30 million cost of the change in year end. 521 So in my submission, Mr. Thompson's attempt to link the evidence addressed what he called the inflationary index to where the company's thinking would have been on the overearnings adjustment mechanism is, in fact, the reverse of what logic would suggest. 522 Another submission made by Mr. Thompson was that had the company answered the School Energy Coalition interrogatories that it would have become more apparent what the ultimate issue would be around the overearnings adjustment mechanism. I have to accept, Mr. Chair, with the benefit of hindsight one can see how those issues led one step into another as I discussed in argument in-chief. That's not to suggest, though, that the company would have foreseen that at the time. The company's difficulty of answering the interrogatories about 15-month cost of service has been explained and I won't do anything more than summarize it again that the company doesn't have a 15-month cost-of-service presentation. In the normal course, it doesn't budget or model that way. And the company did not believe it was making an application for a 15-month cost-of-service test year. 523 So yes, with the benefit of hindsight had the company known the steps down the road that would be taken, things might have turned out differently but again, it is two steps down the road because the first step addressed in the interrogatories was just the 15-month test year. The second step about applying a 12-month ROE to a 15-month test year was not specifically addressed in the interrogatories. 524 So my submission is, however it would have worked out, it would undoubtedly have been a late-breaking issue in any event. So this hypothetical discussion about what might have happened had the interrogatories been answered or had intervenors brought a motion for a sufficient answer to the interrogatories really would not have avoided the fact that this would have been a late-breaking issue by the time the two steps were taken given that the interrogatories only addressed the first step. 525 Now, another of Mr. Thompson's submissions was that -- I believe he said these things almost in conjunction with one another, that the seasonality issue can be addressed by the company's witnesses and he also said that really, this issue about the adjustment -- overearnings adjustment request made by intervenors is a matter of argument. 526 Well, in my submission, the points being made by intervenors tend to become contradictory because we heard from Mr. Thompson and others about how cross-examination will complete the record on the issue. We heard from Mr. Thompson about how company witnesses can address seasonality. That being the case, it's not simply a matter of argument. 527 Really, what the submission I've just alluded to is trying to do is intervenors trying to say how they would like the company's position to be brought out in cross-examination. They would like it to occur only through company witnesses and only through their cross-examination. But given it's inherent in that submission that something needs to be done by way of further evidence and given the company's concerns about completing the evidence, why, I ask rhetorically, should the evidence -- that the company concerned be completed only in a fashion that meets the intervenors' desires? 528 Mr. Thompson made a submission to the effect that from the time of the meeting on April 22nd to May 14th, that the company did nothing, and without repeating the evidence, that is not the evidence. Ms. Hare gave evidence about what the company did. The other point is that the meeting on April 22nd was with one intervenor only. The company did not know what buy-in there would be from other intervenors and the arguments, the position that the Board had heard in such great detail today from a wide group of intervenors, the company simply heard a view expressed by one intervenor, not by a group. It was followed up, in fact, on May 5th by evidence from one of the strongest opponents to the company's motion which did not raise the issue at all. 529 Mr. Thompson also talked about the company seeking to eliminate exposure to this claim by intervenors. For myself, I found that to be a curious submission. The company has never said it wants to eliminate exposure in its materials. The company wants to have the opportunity to ensure that it has the complete record and, indeed, to do it in the context of a filing later this year that would be the most appropriate context. 530 Mr. Thompson's submission that this is eliminating exposure to the claim is, in fact, implying that if the company had the opportunity to put its best foot forward on this issue, the claim would be dismissed. That in itself is, I submit, an admission of the importance of what the company is trying to bring forward. Mr. Thompson is interpreting the company's effort to complete the record as ultimately having the effect of eliminating exposure to the claim. 531 Mr. Thompson had a submission about the relevance of Mr. Gruending's evidence. Without going into great detail, and I probably should at least have it in front of me so that I don't misquote it, but the evidence -- sorry, it will just take me a few moments. The evidence at Exhibit C to Ms. Hare's affidavit talks about a number of things, one of which is how, in the current -- what Mr. Gruending calls the current reporting environment, clarity of results and communication with shareholders have become of paramount importance. 532 He talks about how the presentation that Enbridge Inc. would expect to do with the change in year-end is important to effecting this clarity of communication. This is, effectively, in support of the company's request for a change in year-end, which is issue 13.1, and explaining the importance of that issue to the company. If the issue -- if the year-end change occurs only for financial purposes and not for regulatory purposes, I think we can all readily imagine that the clarity of communication is going to be worse and I would suggest that that would occur even here at the Board. 533 There has been a submission made to the Board that while you can defer the issue until 2006, for regulatory purposes, the company ca have one set of books; for financial purposes, the company -- I shouldn't say one set of books, one year-end. For financial purposes, the company can have another year-end. I just ask the Board to consider the complexity that that would add to this hearing as intervenors attempt to compare the corporate results on the one year-end basis to the regulatory results on another year-end basis, and satisfy themselves as to the reconciliation of those results. 534 The same evidence is essentially being given here in respect of the financial markets and the need for clarity opposite the financial markets -- I shouldn't say the same evidence. Mr. Gruending is not addressing the issue about having two different year-ends, but my submission to the Board is the same point applies about clarity and the need to have a year-end issue addressed in a fashion such that it doesn't wait until 2006 so that there are different year-ends for different purposes. 535 I had a number of submissions to make about what Mr. Thompson said regarding the evidence of Mr. Todd. Now, I think Mr. Janigan's submission at the end probably put to rest a lot of this so I will, I think, cut through it. 536 MR. BETTS: Actually, Mr. Cass, the Panel is prepared to suggest that you don't need to address the issue of the disqualification of Mr. Todd at this time. 537 MR. CASS: All right. Thank you, sir. 538 And I did have quick comments about both cases that were handed to you by other counsel, K.3.2 and K.3.3. I think they fall under the same category. It would be, I believe, the so-called conflict issue, so I won't make any comments about those cases. 539 I did want to address Mr. Warren's submission about the evidence of Mr. Todd. I appreciate that Mr. Warren was very concerned about Mr. Todd's statement regarding the Christmas bonus. I can't speak for Mr. Todd. He hasn't been cross-examined; he wasn't cross-examined when he was here for the motion. I would say in his defence, though, if you look at the report, Mr. Todd was drawing an analogy to a toy retailer that includes two Christmases in a reporting period by way of changing its year-end. And it was in that context that the comment about the Christmas bonus was made. I didn't see that intended to be mocking or derisive as Mr. Warren did. If it was interpreted that way, I apologize on behalf of the company and Mr. Todd for that interpretation. 540 The more fundamental question is whether there is any cause for the Board to be concerned about the way -- about Mr. Todd's presentation of his evidence, and I would suggest to you that that's not the case. If you look at the opening of the report, it has a heading called "Two Views," and Mr. Todd is careful to give both the intervenors' view and the company's view, and he's careful to say, intuitively, both views appear reasonable. 541 So whatever the Board thinks about the Christmas bonus comment, in my submission, the overall report is definitely an attempt to look at both views and to come to a view as to which is the appropriate view, and Mr. Todd treats the intervenors' position with real respect and calls it one that is intuitively reasonable. 542 Now, Mr. Janigan's submissions, most of them, I think, overlap the points I think I've already addressed. There was something I think that he touched on that was not addressed in the same fashion by other counsel prior to him. This was Mr. Janigan's submission that the issue that did emerge on the record for the first time under issue 13.1 of the settlement proposal was reasonably foreseeable. This, in fact, was specifically addressed by Ms. Hare when she was cross-examined and she gave her evidence about whether this was reasonably foreseeable. That was at transcript 652. She did not agree that this issue was reasonably foreseeable for several reasons: One was that when the company looked at the change in year end, they looked at what happened when Union changed its year end and spoke to Union Gas and learned that it was not an issue in their proceeding. 543 Another was that the company met with Board Staff in mid-November and no one from Board Staff raised that type of issue, and yet another reason was, as mentioned to Mr. Shepherd during cross-examination, that there was several meetings with intervenors where it was not raised as an issue. So in my submission, the question about whether what ultimately came out in the settlement proposal was reasonably foreseeable is squarely addressed in the evidence. 544 I'm just skipping through here, Mr. Chair, because a lot of what I had related to this issue of an alleged conflict and I'm just able to cross that out as I go through. 545 Now, Mr. Dingwall made a point that I found rather interesting. His submission, as I wrote it down, was that the evidence put forward by the company on this motion does not add anything. And I ask the Board to consider the extensive argument that we've heard from a number of counsel today, quite passionate argument, in an effort to suggest to the Board that this evidence should not come in. I submit to the Board that it's a little difficult to believe that if this evidence does not add anything to the record, that the Board would have heard the types of submissions it did today in an effort to keep this evidence off the record. 546 Mr. Dingwall also said that the only way to effectively deal with what he called the lost quarter is to do so in the case, in this case. Well, Mr. Chair, the entire point of the company's proposal to reapply later this year is that there would be no lost quarter if the company -- if the issues were removed from the issues list and the company reapplied in the fashion that it did, that's it's proposing, there would be a 12-month test period, there would be no stub period, lost quarter, or anything of that fashion. So in response to Mr. Dingwall's submission that the only way to effectively deal with the lost quarter is this case, well, in fact, the Board doesn't have to deal with the lost quarter at all under the company's proposal to reapply later this year. 547 So just in summary, Mr. Chair, the fundamental aspects of this motion in the view of the company are that the company believes because of the way in which this issue evolved in this case, it should have an opportunity to complete the record on the so-called overearnings adjustment. If intervenors are given whatever procedural rights are needed to protect them and ensure that they can respond to the company's evidence and have whatever evidence they need, in my submission, it is very difficult to see any unfairness that would result or certainly any unfairness that would outweigh the unfairness of not allowing the company the opportunity to complete the record as it has requested. 548 Those are my submissions, Mr. Chair. Thank you. 549 MR. BETTS: Thank you, Mr. Cass. 550 [The Board confers] 551 PROCEDURAL MATTERS: 552 MR. BETTS: And the Board Panel has no questions of you either. Thank you. 553 And thank you all for, I think, working hard at trying to make your points in the time that we had available. I did sense that that was truly your effort so thank you very much. I will just make a couple of comments in closing from a procedural perspective. 554 First of all, Mr. Shepherd indicated he would like to make submissions regarding costs in this. I would ask that any submissions relating to costs, if there are any, be made in writing, and perhaps we can allow you, Friday next, to make such submissions. 555 MR. SHEPHERD: Mr. Chairman, my hope was that we would deal with costs only after the motion was decided. 556 MR. BETTS: After it was decided? 557 MR. SHEPHERD: If that's acceptable to the Board. 558 MR. BETTS: Thank you. And the Board Panel hopes to decide this as promptly as possible. Obviously, today won't be practical, but we'll leave that consideration until that time. Thanks. 559 The next item is the matter of the proposed settlement of issues 8.1 and 7.1. The Panel does accept the June 17th settlement of issue 8.1 and the related amendment of issue 7.1. The Board directs EGDI to modify the settlement proposal and resubmit it to the Board as final settlement proposal dated June 17th, 2004. 560 With respect to the matter we have just heard which is a decision relating to the motion, the Board shall defer its decision hopefully to provide an oral decision on Monday if that is possible. It may or may not be with reasons at that time, but we will do our very best to clear this matter as soon as quickly as possible. 561 Are there any questions that arise? Mr. Dingwall. 562 MR. DINGWALL: Not a question, sir, I was hoping to recapture some of my remaining seconds just to speak to a scheduling matter on Monday. 563 MR. BETTS: That's quite appropriate. Yes, what was your question? 564 MR. DINGWALL: Due to some other conflicts within the morning, I will not be in attendance but will be speaking to or cross-examining the panel that will be appearing on that day and on the next day. One of the future great Canadian legal minds is graduating from kindergarten that morning. 565 MR. BETTS: That's a very important event. 566 MR. DINGWALL: Thank you, sir. 567 MR. BETTS: So you're prepared to continue with the schedule on that basis? 568 MR. DINGWALL: That's correct, sir. 569 MR. BETTS: Thank you. Mr. Shepherd. 570 MR. SHEPHERD: Mr. Chairman, if you're planning to provide a decision on this motion on Monday, does that change when we're going to start on Monday or are we still planning to start on Monday at 9:30. 571 MR. BETTS: We will start at 9:30 a.m. on Monday and thank you for making that clear. 572 Mr. Cass. 573 MR. CASS: Thank you, Mr. Chair. Just before we break and I know we're getting very close to our target time but I think this will be quick. I have two things to address. First, just today it's come to our attention that there is a typographical error in the settlement proposal, so at the earliest opportunity, I wanted to bring it to everyone's attention. It's under issue 15.9 which is entitled "Unauthorized Overrun charges." 574 MR. BETTS: Thank you, I'm there anyway. 575 MR. CASS: Yes, in the third sentence of the paragraph describing the complete settlement there is a reference to an additional .25 cents per cubic metre that is charged if an overrun occurs on a day for which curtailment notice is given. The typographical error is that in fact should be 25 cents. And I believe it also appears a second time in the same paragraph. 576 So I don't know that there's any dispute about it, but all parties from either being here today or from reading the transcript will be aware of that error and unless anybody raises any issue I would propose that perhaps it can be incorporated when the settlement proposal is resubmitted with the EnVision settlement. 577 MR. BETTS: I would suggest you proceed and make that change for the final version and then submit it to us and we can basically accept it at that point. If there are any submissions that oppose that change, we'll hear them before then. 578 MR. CASS: Mr. Chair, just very quickly then, the other thing is I have a handout which is curricula vitae for two witnesses that the company proposes to include on the Transactional Services Panel. 579 MS. LEA: Do those need exhibit numbers, Mr. Cass, or do they have exhibit numbers? 580 MR. CASS: They have been given exhibit numbers in the Exhibit A1, tab 8 series of exhibits. 581 MS. LEA: Thank you. 582 MR. BETTS: Thank you, we will accept those and circulate those to the parties that are present. 583 MS. LEA: Is the company planning to bring a new hearing schedule with the settlement of the EnVision matter? 584 MS. HARE: Yes. 585 MS. LEA: Thank you. 586 MR. BETTS: Are there any matters to consider as we conclude today's hearing? It would appear not. On that basis, thank you all for your participation, your submissions were very helpful, the panelists appreciated that. We'll try and deal with the latest matters as soon as possible. We look forward to seeing everybody early on Monday morning at 9:30 a.m. Thank you all. 587 --- Whereupon the hearing was adjourned at 2:00 p.m.