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Allwest Reporting Ltd. #1200 - 1125 Howe Street Vancouver, B.C. V6Z 2K8
BRITISH COLUMBIA UTILITIES COMMISSION
IN THE MATTER OF THE UTILITIES COMMISSION ACT R.S.B.C. 1996, CHAPTER 473
And
An Inquiry into FortisBC Energy Inc. regarding the Offering of Products and Services in Alternative Energy Solutions and Other New
Initiatives
BEFORE:
N.E. MacMurchy, Chairperson
D.A. Cote, Commissioner
A.A. Rhodes, Commissioner
L.A. O'Hara, Commissioner
VOLUME 1
PRE-HEARING CONFERENCE
Vancouver, B.C. June 15, 2011
APPEARANCES P. MILLER Commission Counsel M. GHIKAS D. CURTIS
Fortis Energy Utilities
K. E. GUSTAFSON, Q.C. Energy Services Association of Canada R. B. WALLACE, Q.C. Corix Utilities Inc. C. WEAFER Commercial Energy Consumers Association of
B.C. W. ANDREWS B.C. Sustainable Energy Association and
Sierra Club of B.C. L. WORTH J. QUAIL
Consumers' Association (B.C. Branch, B.C. Old Age Pensioners' Organization, Counsel Of Senior Citizens' Organizations, Federated Anti-Poverty Groups Of B.C., West End Seniors' Network
P. WIERINGA Ministry of Energy and Mines J. CHRISTIAN B.C. Hydro and Power Authority
INDEX OF WITNESSES PAGE
PROCEDURAL CONFERENCE, WEDNESDAY, JUNE 15, 2011
SUBMISSIONS BY BCUC STAFF ...................... 8, 107
SUBMISSIONS BY MR. GHIKAS ..................... 11, 109
SUBMISSIONS BY MR. GUSTAFSON .................. 38, 114
SUBMISSIONS BY MR. WALLACE .................... 54, 117
SUBMISSIONS BY MR. QUAIL ........................... 61
SUBMISSIONS BY MR. WEAFER ..................... 72, 120
SUBMISSIONS BY MR. ANDREWS .................... 80, 121
SUBMISSIONS BY MR. WIERINGA ................... 92, 122
SUBMISSIONS BY MR. CHRISTIAN .................. 94, 122
REPLY BY MR. GHIKAS ........................... 99, 124
PROCEDURAL CONFERENCE, WEDNESDAY, JUNE 15, 2011
INDEX OF EXHIBITS
NO. DESCRIPTION PAGE
C12-2 OUTLINE OF COMMENTS BY MR. WALLACE 54
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CAARS
VANCOUVER, B.C.
June 15, 2011
(PROCEEDINGS RESUMED AT 9:00 A.M.)
THE CHAIRPERSON: Good morning. Thank you for attending
this procedural conference on an inquiry into FortisBC
Energy Inc., regarding the offering of products and
services and alternative energy solutions and other
new initiatives.
My name is Norman MacMurchy and I've been
designated as panel chair. With me are Commissioner
Rhodes, Commissioner Cote and Commissioner O'Hara.
Commission counsel is Paul Miller from the Boughton
Law Corporation, and from the Commission staff Ms.
Eileen Chang is the lead staff person. And along with
Commission counsel, staff are available to help you if
you have any questions or need some other form of
assistance in the inquiry. The Hearing Officer is Hal
Bemister.
This inquiry is being held under Sections
23, 72, 82 and 83 of the Utilities Commission Act.
These sections deal with the general supervision of
public utilities, jurisdiction of the Commission to
deal with applications, and the power to inquire
without applications and actions on complaints.
By letter dated 27th of April, 2011, the
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Energy Services Association of Canada filed an
application with the Commission requesting a process
to review FortisBC's alternative energy service
activities. It stated its major concerns are related
to the lack of public consultation, use and
distribution of energy efficiency and conservation
funding, delivery of alternative energy services by a
regulated utility, potential cross-subsidization of
alternative energy service activities by natural gas
ratepayers, and the use of sensitive market
information by FEI.
On May 6th, 2011, Corix Utilities Inc. filed
a letter of support for this complaint. On May 9th,
2011, the Commission responded to the complaint filed
by the Energy Services Association of Canada and also
provided FortisBC Energy Inc. with a copy of the
complaint and the Commission's response. On May 24th,
2011, the Commission determined that an inquiry into
FortisBC Energy Inc., or FEI's, transformation from a
traditional gas distribution utility into an
integrated energy power provider is warranted, and
issued Order G-95-11.
The alternative energy services are part of
FEI's response to the February 27th, 2007 B.C.
government's Energy Plan, "A vision for clean energy
leadership" which was followed by the passage of the
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Clean Energy Act.
Proceeding Time 9:04 a.m. T2
This Act received royal assent on June 3rd,
2010. It sets out British Columbia's energy
objectives, which in part encourage switching energy
sources where this leads to decreased greenhouse gas
emissions, encourages waste reduction through the use
of biogas and the use and development of technologies
that support energy conservation and efficiency.
As cited in the preambles in G-95-11, FEI
has filed a number of applications to the Commission
for approval to provide products and services in
alternative energy services and other new initiatives.
These applications led to a series of ad hoc
Commission decisions and orders with respect to energy
efficiency and conservation programs, the framework
for regulating biomethane service offering, and within
the negotiated settlement agreement of Terasen's 2010
and 2011 rate review application agreements, treatment
related to expenditures on innovative technologies and
so forth.
In each of these proceedings, as cited in
the preamble in G-95-11, registered interveners have
raised issues with respect to the scope of regulation
as it relates to these new initiatives. In the
Commission decision dated February 1st, 2011, accepting
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Terasen's long-term resource plan, the Commission
stated that an additional process may be required to
determine how these new ventures would fit within the
context of a regulated utility. The Commission
further stated that without such a process, the
Commission and interested parties would miss the
opportunity for a comprehensive and systematic
consideration of complex regulatory issues embedded in
the new initiatives applications.
At last count there are 14 interveners
registered to participate in this proceeding.
Attached as Appendix B to Order G-95-11 is the
Commission Staff Working Paper on the scope of the
issues. On June 9th, 2011, interveners filed
preliminary comments on issues, scope and process.
Our task today is to work through the issues, not to
resolve them or debate their merits, but to determine
which issues are warranted to be included in the
inquiry, and what is the scope or boundaries within
which each issue will be examined.
A further task is to determine the process
that is most appropriate to allow all interveners to
efficiently and effectively provide analysis and
advice to the Commission that it will allow it to
address the issues in a manner that is fair and in the
public interest. Parties are also free to bring
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forward any other issues of a procedural nature.
To achieve our goal of defining and scoping
out the issues, it is proposed that we proceed by
giving all parties a chance to speak to the issues
they believe are relevant to the inquiry, and the
scope of the issues that they believe should be
addressed by the Commission. To this end, it is
proposed that Commission Staff will speak first,
followed by Fortis Energy, the Energy Services
Association of Canada, and then all other interveners
as called for by Commission Counsel.
Again let me stress this is not the forum
to address the merits or lack thereof of specific
issues. It is a forum to state your views on what
issues should be included in the inquiry and to what
depth or level of detail you would expect the
Commission to deal with the issue.
Following the discussion of the issues,
parties will be canvassed as to the future process and
timelines that they see as most appropriate for the
Commission to follow to deal with the issues. Parties
may then also raise any other procedural concerns that
they may have.
Proceeding Time 9:08 a.m. T03
Based on the input received today, it is
the intent of the Commission to then send out to all
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parties a document setting out the issues that are to
be addressed in the inquiry, and the process and
timeline that will be followed to address these
issues.
Mr. Miller, do you have anything to add?
MR. MILLER: No, Mr. Chair.
THE CHAIRPERSON: Okay, at this time then I call on
Commission staff to put forward their comments.
MR. MILLER: Mr. Chair, if I could call the order of
appearances first, that may be helpful.
THE CHAIRPERSON: Oh, please do.
MR. MILLER: Fortis Energy Utilities.
MR. GHIKAS: Mr. Chairman, Commissioners, my name is
Matthew Ghikas, G-H-I-K-A-S. And with me is David
Curtis, C-U-R-T-I-S. We are counsel for the FortisBC
Energy Utilities.
MR. MILLER: Energy Services Association of Canada.
MR. GUSTAFSON: Mr. Chairman, Commissioners, Karl E.
Gustafson appearing on behalf of the Energy Services
Association of Canada. Karl is spelled K-A-R-L,
Gustafson G-U-S-T-A-F-S-O-N.
MR. MILLER: Corix Utilities Inc.
MR. WALLACE: R. B. Wallace, appearing on behalf of Corix
Utilities Inc.
MR. MILLER: Commercial Energy Consumers' Association of
B.C.
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MR. WEAFER: Good morning, Mr. Chairman, members of the
Commission, my name is Chris Weafer and I am appearing
for the Commercial Energy Consumers' Association of
British Columbia. Thank you.
MR. MILLER: B.C. Sustainable Energy Association and
Sierra Club of British Columbia.
MR. ANDREWS: William Andrews, appearing for the BCSEA
and the Sierra Club of B.C.
MR. MILLER: B.C. Old Age Pensioners' Organization et al.
MS. WORTH: Leigha Worth, appearing as counsel for
BCOAPO, accompanied by co-counsel Jim Quail.
MR. MILLER: Ministry of Energy and Mines.
MR. WIERINGA: Paul Wieringa, I'll spell that. W-I-E-R-
I-N-G-A. With the Ministry of Energy and Mines.
MR. MILLER: B.C. Hydro and Power Authority.
MR. CHRISTIAN: Jeff Christian, C-H-R-I-S-T-I-A-N,
appearing on behalf of B.C. Hydro.
MR. MILLER: Is there any other party that I have failed
to call that wishes to appear?
No response, Mr. Chair.
THE CHAIRPERSON: Ms. Cheng?
MR. MILLER: I'll make submissions on behalf of staff,
Mr. Chair.
THE CHAIRPERSON: Okay.
MR. MILLER: One preliminary comment, Mr. Chair. If it's
satisfactory to the panel, I'd like to advise the
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parties it's not necessary to run through their
written submissions in their entirety. If they could
highlight any points that they wish to make to the
panel that are included in their written submissions,
that would be satisfactory, and if they have any
comments in reply to what someone has said in front of
them, or before them, that would also be helpful.
With those comments, Mr. Chair, I'd like to
move into the staff submissions.
Proceeding Time 9:11 a.m. T04
THE CHAIRPERSON: Please proceed.
SUBMISSION BY BCUC STAFF:
MR. MILLER: Mr. Chair and the panel members, the
recitals in the Commission Order leading to this
inquiry cited a number of Commission determinations
relating to multiple applications such as CPCNs,
revenue requirements, EEC programs and long-term
resource plans regarding Fortis's non-traditional
businesses. In each of those proceedings, the issue
of the evolution of new initiatives at Fortis was
raised.
In staff's submission, this inquiry is an
opportunity for a comprehensive and systematic
consideration of complex regulatory issues and the new
initiatives on a go-forward basis.
In staff's submission, this inquiry should
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include a review of whether or not there is some line
that appears at some point between regulatory and non-
regulatory activities, the potentially competitive
types of enterprises in a traditional regulatory
environment, and the overall context in which to view
these activities.
The Energy Services Association of Canada,
who describe themselves as project integrators of
alternative energy solution projects and an industry
association, wrote to the Commission by letter citing
specific concerns regarding Fortis's activities which
relate to public consultation, use and distribution of
EEC funding, Fortis's activities as a regulated
utility and potential cross-subsidization, and use of
sensitive market information within Fortis.
Staff envisage that this inquiry could
enable the Commission to make determinations on not
only the Energy Services Association complaint but
also develop on a go-forward basis a holistic view of
Fortis's in these areas.
A possible outcome of the inquiry could be
the development of a set of a guidelines in the
context of our provincial legislative and energy
policy environment for Fortis that would update,
expand or supersede the retail market downstream of
the meter guidelines, or RMDUM guidelines as they are
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sometimes called, that are currently in place. Staff
expect that the new guidelines might apply
specifically to Fortis, but the principles inherent in
the guidelines could also form the basis of BCUC's
regulatory framework for other utilities under its
jurisdiction.
With respect to scoping issues to be
examined in this inquiry, staff has put forward its
working paper, as you already referenced, Mr. Chair.
Staff, subject to the few comments I'm going to make
following this, believe that all the issues listed in
their scoping document should be included.
So the scoping document from staff is
listed as Appendix B to the Order. I only have a few
comments on it, subject to my previous submission that
all the issues within the scoping document should be
subjects of the inquiry.
Under issue 1, "Scope", under the first
bullet the issue is whether the inquiry should proceed
as a generic proceeding or whether it should be
focused specifically on Fortis Utilities' activities.
In staff's view, it should be focused on Fortis. It
shouldn't be a more general hearing looking into all
public utility activities.
The second bullet under issue 1, under the
"Scope" heading, staff also believe that this inquiry
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should look at whether the Energy Services Association
of Canada members are public utilities as defined in
the Utilities Commission Act.
Under issue number 2, under "Scope", should
the hearing process be limited to a single activity,
alternative energy solutions only? And staff's view
is, it should not. We should look at all new energy
solutions within this. So, NGV, biogas, et cetera.
Those are my submissions on scope, Mr.
Chair, and we will have some further comments on
process once we get to that point.
THE CHAIRPERSON: Thank you.
Proceeding Time 9:16 a.m. T5
MR. MILLER: Fortis.
SUBMISSIONS BY MR. GHIKAS:
MR. GHIKAS: Thank you, Mr. Chairman, Commissioners.
You'll be relieved to know that part of the benefit of
filing a very lengthy written submission is that that
saves time and doesn't add time at a procedural
conference, which was its intention. And I'll just be
highlighting aspects as Mr. Miller referred to, and
touching on a few of the themes that come out of that
and some of the other submissions that were filed.
I will note at the outset that ESAC, in
particular, took the approach of identifying its
position with respect to a number of the issues. I
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should say that the Fortis Utilities take issue with
many of their positions, but I take to heart that this
is a procedural conference and we'll be dealing with
it on a procedural basis and we won't be making
substantive responses to what is set out in those
submissions.
I will be referring to the materials that
we filed, and so if you have those handy that will be
helpful.
I will speak to five issues with respect to
scope. The first one is the definition of alternative
energy services. The second one is how this inquiry
fits within the context of other Commission
proceedings, including previous proceedings, those
that are currently ongoing, and future proceedings.
Thirdly, whether the inquiry should be generic or
specific to Fortis Energy Utilities. Fourth, the
issue of hearing costs. And fifth, the framing of the
issues.
So turning to the first issue which is the
definition of "alternative energy services". I think
it's important at the outset to just make sure that
everybody in the room is on the same page in terms of
what we're talking about when we refer to "alternative
energy services", because there were some nuances that
I picked up on in various submissions and I want to
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make sure that it's absolutely clear to everyone what
we're referring to.
And if you can start, Mr. Chairman and
Commissioners, by turning to tab 18 of the binder.
There is a copy of the general terms and conditions,
Section 12(a), which refers to alternative energy
extensions, and when the Fortis Energy Utilities are
referring to alternative energy services, this is the
sum total of what we are referring to. And those
services are described in Section 12(a), which is an
approved rate schedule, and you'll see there's
paragraphs in there that deal with geo exchange
systems, solar thermal and water systems and district
energy systems.
And for clarity, when I am referring and
when the companies are referring to alternative energy
services, we're not referring to EEC or DSM
expenditures, we're not referring to natural gas
vehicles and we're not referring to biomethane. So I
think it's important that we have that clear
understanding when going forward.
Now, moving on to the next issue which is
how this inquiry fits within the context of other
proceedings. This is an overarching theme in the
written submissions and it comes up in the recitals of
the order, which my friend Mr. Miller referred to, and
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it comes up in the context of the Commission's
decision in the long-term resource plan where there
was an expression of interest in having a more
comprehensive look at things.
My submission today is that the
interrelationship of this inquiry with those
proceedings gives rise to three considerations that
have to be taken into account and that temper the
ability and the desirability of the Commission having
a broad look at all of the issues that are enumerated
in the recitals to the procedural order.
Proceeding Time 9:21 a.m. T06
The first consideration is that of
regulatory efficiency and a look at what is going on
today, in particular, which is what I'll focus on in
that factor.
The second factor is considerations
regarding the administration of justice. It's a high-
sounding principle but it has very practical
applications in terms of the context of dealing with
issues in multiple proceedings.
The third consideration is that of
substantive fairness.
And I will turn first to the issue of
regulatory efficiency. And this is a theme that is
not only present in Fortis's submissions, but also is
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picked up in other submissions. Administrative
efficiency, in my submission, suggests that the
inquiry should only tackle those issues that it really
needs to address, and not take on issues that are best
addressed in another context. And taking that
approach, in my submission, recognizes that the
regulatory process results in cost to all parties, it
diverts time and resources away from other things and,
most importantly, ensures that issues are addressed in
the context where they fit the most.
The practical issue that comes up in the
context of regulatory efficiency, as I propose to deal
with it, is that currently we have underway a revenue
requirements proceeding, the Fortis Energy Utilities'
2012/2013 revenue requirements proceeding. And part
of that application, for instance, is seeking energy
efficiency and conservation funding, or DSM funding,
for those two years with the expressed intent of
dealing in future years with those issues in the
context of a long-term resource plan, the next long-
term resource plan. And this is the bridge that takes
us to that context.
The other aspect of the revenue requirement
-- and I should say that's an issue that has to be
addressed in the revenue requirements proceeding,
because it's driving costs during the test period.
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And so at this point in time, because there is no
long-term energy efficiency request in place that
takes us beyond 2011, it has to be addressed in the
context of this revenue requirement. So whether or
not that's the right place in the future is an open
issue, and Fortis Utilities have expressed the view
that it's in fact a long-term resource plan issue that
should be placed there going forward, but for the time
being that's an issue that is driving costs in the
test period and has to be addressed there.
Another issue that has to be addressed in a
revenue requirement proceeding is the allocation of
costs to the alternative energy class of service, or
line of business, as it were. In the context of a
revenue requirement, the fact that the Fortis
Utilities have this line of business means that there
are costs that are reducing -- there is an allocation
that is reducing the natural gas costs recovered in
the revenue requirement, and allocating those costs
over to be recovered from alternative energy
customers. And so that's an issue that is affecting
the final rate that is set for natural gas customers,
and has to be addressed in that context.
The Commission IRs in the revenue
requirement also deal with biomethane and natural gas,
and -- natural gas vehicles, pardon me. And I've done
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an approximate breakdown just to give you the sense of
the extent of the overlap, particularly in relation
with EEC. The Commission staff has filed its first
round of Information Requests in that proceeding, and
they filed 720 Information Requests, and 173 of those
deal with EEC. There are approximately 67 dealing
with biogas, approximately 49 or 50 dealing with
natural gas vehicles, and approximately a dozen or so
dealing with alternative energy systems.
Proceeding Time 9:26 a.m. T7
For the other interveners there is 173
other IRs, and 46 of those are dealing with the EEC.
So if you combine those, if you combine those group of
IRs, if you combine those group of IRs effectively,
you have 200 IRs relating to EEC alone. And that
suggests the import of dealing with those issues in
context of the revenue requirements application.
To give you an example of the overlap with
respect to those issues, the IRs contained in the
revenue requirement deal with the guidelines by which
the EEC NGV eligibility and incentive amounts are
determined, and the eligibility of EEC incentives for
NGV and who's eligible for NGV. They also include
incentives, deal with incentives relating to a third
-- dealing with incentives under a third party model,
will they be offered to private companies who provide
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thermal energy services and so on? So these issues
are being picked up in the revenue requirement as
well.
Now, that's not to say that there can never
be IRs dealing with the same topics in multiple
proceedings, but in terms of -- this inquiry is
something that's being layered on top of the
traditional types of proceedings, and in my submission
it's unnecessary for those issues to be addressed in
the context of this inquiry when they're also being
addressed in the revenue requirements at the same
time. And we can expect determinations potentially on
the same issues at the same time in two parallel
proceedings.
The second consideration deals with the
administration of justice, and as I said, it sounds
like a very high principle, and it is, but it has a
very practical application in the context of
litigating issues that have been litigated previously
in the context of the same facts and policy or legal
issues, relitigating legal issues that should remain
the same regardless of the policy and evidence any
changes in those things.
At paragraph 7 of the written submissions,
we highlight what the past proceedings have been. I
won't dwell on those except to say that they include
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the NGV proceeding, the consideration of alternative
energy systems in the revenue requirement application
in 2010 and 2011, and the biomethane application and
past long-term resource plans.
Now, the important point with respect to
these applications is that they were brought forward
putting forward all of the evidence with respect to
these types of businesses. And in terms of the --
there is a broad -- and it's easy to see there is a
broad connection between these offerings in the sense
that they are initiatives designed to respond to
changes in the customer values and changes in the
policy framework going forward. But at a level below
that, they have different considerations that arise.
And each time one of these applications has been
brought forward, it's been done in a comprehensive way
that deals with the rate design issues, deals with the
policy issues, deals with the jurisdictional issues,
all in a comprehensive way.
So the important point to stress in the
context of the administration of justice is that they
were founded on customer and policy drivers, those
applications, that remain equally true today as they
did when those applications were filed.
Proceeding Time 9:31 a.m. T08
The expectation is that the evidence on
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those points would be the same today as it was when it
was filed in the course of those applications that
were heard within the last two years.
The nature of the customer benefits and
risks were the same, in the context of those
applications, as they would be today. And they were
dealt with in a comprehensive manner. The
jurisdictional and legal issues are the same today as
they were when they were dealt with in those
proceedings. And in some cases, particularly the NGV
decision, it's only -- the evidentiary record has only
recently been concluded and the decision is still
outstanding. And the same is true with the
application relating to EEC funding, with specific
regard to natural gas vehicles. The decision is still
outstanding and the evidentiary record only recently
closed. And the expectation would be that the
evidence on those issues would remain the same as it
was when the evidence was first filed in the context
of those applications.
The biomethane application, which was --
which proceeded the NGV applications, but it
contemplated a two-year pilot, and the two years was
of significance because it contemplated that enough
time would pass to allow an assessment to occur after
something had actually happened on the ground. And
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we're only in the beginning stages of getting that
pilot running at this stage, and so to examine these
issues now, when it's contemplated that there will be
a review after two years, examine the same issues, but
examine them before we have a real track record with
respect to the success of the pilot, in my submission,
doesn't make good sense.
Now, touching on the principle of the
administration of justice, these points go further
than just dealing with the issue of administrative
efficiency and dealing with things in multiple
proceedings, and saving people resources. The
administrative law concept that these fall under the
umbrella of is something referred to as abuse of
process. The name sounds sinister. It's not dealing
with the intention of the parties, it's directed at
the integrity of the process and not the intention of
the parties in terms of how things are proceeding.
But what it says is that you can't proceed with the
idea in mind that re-litigating the same issue is
going to result in a more accurate or better result
the second time around. And if an issue is re-
litigated on the same facts, or a legal issue is re-
litigated, where the result should be the same in each
circumstances, to re-litigate those issues results in
a waste of judicial resources and a waste of the
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resources of the parties involved in the proceeding.
Now, if the outcome differs on the same
factual record, or the legal issues are dispensed with
differently, the inconsistency in and of itself
undermines the process. And so those principles, in
my submission, have to be taken into consideration
when setting the scope of this inquiry and determining
the depth to which the Commission should be looking at
issues that have been addressed, and addressed on a
comprehensive record in prior proceedings.
Now, this takes me to my third
consideration, which is that of substantive fairness.
And it's related to the abuse of process submission,
in the sense that there has to be some sort of
finality to decisions that have been made by the
Commission. And there are obviously reconsideration
provisions. There are provisions in the Act that
recognize that stare decisis doesn't apply. In other
words, the Commission is not bound by its prior
rulings. But there is an expectation, in my
submission, in any administrative tribunal, that
decisions -- that there will be an element of finality
to decisions that have been made. And the reason that
is important is because of this substantive fairness
consideration that arises when you have parties that
rely on the decisions of the past in moving forward.
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And this is a good example of why it's important to
uphold the decisions of the past and to not revisit
them.
Proceeding Time 9:36 a.m. T9
This is addressed in paragraphs 18 to 23 of
the written submissions, and if I just turn there.
The key consideration in this context is that -- and
what we focused on in the submission is that of the
alternative energy system rate schedules that are in
place as a result of the revenue requirements
proceeding. We focused on that in the written
proceeding, but there is a similar theme that applies
in the context of past decisions with respect to
biomethane, with respect to EEC, and with respect to
natural gas vehicles.
But in the context of alternative energy,
in paragraph 18 it identifies the aspects of the
approval that came out of the revenue requirements
proceeding, the 2010-2011 revenue requirements
proceeding. This was a product of a negotiated
settlement but it was approved by the Commission. And
you'll see in items (a), (b) and (c) within paragraph
18, what you have approved there are the rate
constructs for the Fortis Utilities to establish an
alternative energy services class of service within
the utility. And there is no question that those rate
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constructs were approved as rate schedules, they're in
place as rate schedules today, and they'll remain in
place subject to a Commission order to the effect that
they are not.
But what the issues that are being raised
in respect of alternative energy services, and one in
particular that we highlighted in the submission,
suggest is that that approval could somehow become
null and void at the end of this year, merely because
the term of the revenue requirement was a two-year
revenue requirement.
Now, we've included submissions there with
respect to the interpretation of the NSA that suggest
that that can't possibly be the interpretation of the
NSA that was intended. But the important point here
is that there has to be some ability for parties, like
the utilities that make the application for these
things, to take for granted that the Commission
considered the evidence in determining whether to
approve the negotiated settlement, considered the full
body of the evidence which included evidence factual
and policy, and determined that that aspect, that rate
structure that was a component of the settlement was,
for all purposes, just and reasonable, and approve
that rate schedule. And the utility that applies for
that has to be able to rely on that going forward,
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without the threat or the potential that someone is
going to come along and make changes to it in a short
period of time that is contrary to what the expressed
intention of the NSA was.
The questions in the submissions, or sorry,
in the staff working paper are: Does an approval of a
NSA represent a statement of Commission policy? And
that may be an issue that can be considered going
forward, but what it speaks to is when matters should
be addressed in an NSA and when they aren't. If
that's an issue that we need to address, so be it.
But the issue shouldn't be whether past orders of the
Commission expire, expire because someone has
complained about it or because the Commission wants to
look at the issue again.
Proceeding Time 9:41 a.m. T10
The prospect of the contrary
interpretation, that would allow this to remain an
issue, does have implications for negotiated
settlement processes generally, and in my submission
it would be something that would be of interest to
most utilities and most participants in an NSP process
to determine how much stock they can put on an NSP
that's -- or an NSA that has been negotiated by the
parties in good faith.
So I turn to now to the issue of generic
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versus a specific proceeding, and I've heard my friend
Mr. Miller's submission that staff would like to see
this focused on Fortis Energy Utilities. And that
would be consistent with what Corix's submission is,
as I understand it, as I read it. In my submission,
to take that approach would ignore the similarities
between the two obvious examples of companies that
offer these services: Fortis, Corix, and other smaller
utilities as well. But there are similarities in
these business models, particularly that with Corix,
that you can't help but be speaking to when you speak
with respect to the business model that's being
pursued by the Fortis Energy Utilities.
And in my submission, it is vitally
important that the appearance of a double standard, in
effect, with respect to requirements that apply to
Fortis versus those of its competitors such as Corix,
is very detrimental, in terms of the competitive
landscape. And the Commission should be avoiding that
by phrasing the issues generically and recognizing the
fact that the decisions that they make in this
application are going to impact more than just the
Fortis Utilities. And to that end, I'll be making
submissions with respect to how the process should
unfold, but this ties in with that. In effect, call
it by any name that you wish, but in effect the Corix
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letter is in substance a complaint. It's a "me too",
but it's in substance a complaint, and it's directed
at Fortis as a competitor. But there should be room
in this inquiry regardless of how the issues are
framed, that Fortis should be able to explore the
similarities that Corix's business shares with the
business model that they're pursuing.
Now, I'll speak very briefly on the issue
of hearing costs, and only because it's a concern to
the Fortis Utilities, and the submission that we will
make in the context of this procedural requirement is
that the issue of costs, of hearing costs, and the
dispensation of hearing costs, and how they should be
recovered, should be an issue that's addressed in the
context of the inquiry at the conclusion of the
inquiry, once the scope has been determined, and once
the issues -- the evidence is out and the evidence has
been heard.
And this has effectively three aspects of
this. And that is that the first aspect is that to
the extent that this is going to be an inquiry that
impacts more than just Fortis, whether it's explicitly
related to Fortis or whether it's related to Fortis
only and impacts others, or whether it is framed in a
generic sense, there are multiple public utilities
that are involved here that will be affected by it.
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And so the first issue with respect to costs is,
should these costs be all allocated to a single
utility, or are they multiple utility costs, of the
hearing costs?
The next aspect of this issue is, are these
costs really alternative energy costs within the
Fortis Utility? Are they gas costs or somewhere in
between? And that issue should be spoken to as well.
Proceeding Time 9:46 a.m. T11
The third issue is one that I won't
belabour, but it relates to the nature of the
allegations, some of the allegations in the ESAC
complaint. Now, in the context of -- ESAC has put
forward its position with a very heavy hand and in the
context of a litigation dispute in the courts, which
this -- and I'm drawing that analogy because we have
here a complaint that's been leveled against Fortis.
In the context of that, that party would have to prove
those allegations, and if they were unable to prove
those allegations, they should have cost consequences.
And in my respectful submission, if the more heavy-
handed allegations that ESAC has included remain part
of its complaint and we proceed forward, there should
be a live issue with respect to how much of the costs
of this inquiry should be allocated to ESAC in the
event that they're unable to prove their allegations.
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Now, the final issue on scope that I intend
to address is the framing of the issues. This is
addressed starting at paragraph 72 of the written
submissions. You don't need to turn there, but in
effect this is an important issue to the Fortis
Utilities, that the presentation of the inquiry scope
has to be done with the utmost care and balance to
ensure that there is a full consideration of issues
that deal with the positives of Fortis offering these
services from a customer perspective, and from a
policy perspective, that deals with those as well as
the considerations that are prevalent and predominate
the staff working paper issues statement, in my
submission, that deal with the risks and the
competitive concerns.
And the issues themselves, in my
submission, these need to be phrased in a manner that
is more neutral than is set out currently in the staff
issues paper. And I'm not trying to fault the way
that they were drafted, but those, the way they're
phrased, look more like IRs than the scoping issues
for an inquiry. And in my submission, when a document
is coming from the Commission Panel and scoping the
issues for this inquiry, it has to be done -- the
issues have to be phrased in a way that does not take
on the look of an information request, which by its
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very nature tends to be more adversarial than
adjudicative. And that's all I'll say in terms of the
formulation of the issues, but I would emphasize that
in terms of procedural fairness that's a significant
concern to the Fortis Utilities.
So subject to questions, those are my
submissions on scope.
COMMISSIONER RHODES: I have one question. I'm not sure
I understand where you're coming down on the generic
versus Fortis oriented.
MR. GHIKAS: I'm sorry. In my submission it should be
within -- if you set aside the issues with respect to
energy efficiency, my submission contemplates that
those issues would not be addressed and that the scope
of the submission would be -- the scope of this
inquiry would be limited to alternative energy which
is the subject matter of the complaint and an issue
that is of obvious interest to many.
If you put aside the other issues in the
context of the alternative energy business, in my
submission that should be generic in the sense that --
and as it relates to procedure, we have other
alternative energy providers that should be involved
in terms of putting panels forward and being subjected
to cross-examination and that type of thing.
COMMISSIONER RHODES: Thanks.
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COMMISSIONER O'HARA: Mr. Ghikas, my question was along
the same lines. You mentioned the appearance of a
double standard concern. So could you still expand on
that?
MR. GHIKAS: Sure. I believe, just thinking back on what
I said, but I believe what I was trying to say is that
there are obviously competitors in the alternative
energy service market, and Corix is one of them and
we're one of them.
Proceeding Time 9:52 a.m. T12
And the fact that an inquiry is ongoing
with respect to Fortis alone has business
ramifications. It has favourable business
ramifications for Fortis's competitors and has
unfavourable ramifications for Fortis itself. And
that's really what I was getting to, but there is a
level below that. That's a practical issue. But
there is a level below that which is that an inquiry
that is limited in scope with respect to only applying
to Fortis has to hinge, in my submission, on an
assumption that there is something different that
Fortis is doing. And where that concept is coming
from is in a phrase, in my submission, that appears
time and time again in the submissions and even in the
procedural order if I recall, or the staff working
paper I believe it is, and that is that of a
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traditional gas utility. And in my submission, basing
an inquiry that is focused on Fortis on the premise
that it's a traditional, quote/unquote, gas utility
and is now doing something different is a flawed
premise because the Utilities Commission Act doesn't
define "regulation" by virtue of the different
services that are provided. It regulates public
utilities.
And what Fortis is doing as a regulated
public utility service in the context of alternative
energy is no different, in my submission, than what
Corix is doing and what Central Heat has been doing
for 25 years and what the place on the Island, its
name is Dockside Green, is doing. There's really no
difference. The only difference that you can really
point to is the fact that Fortis has, to date, been a
natural gas utility and is now intending to be a
provider of energy services that go behind natural
gas.
And so in my submission, the inquiry
shouldn't be founded on the notion that it should be
focused on Fortis merely because of the business it
undertook in the past. It's not -- that speaks to a
pigeonholing of Fortis and trying to keep it in a box
that really doesn't have a valid basis in the
legislation.
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COMMISSIONER O'HARA: So you are saying that there would
be less of an appearance of a double standard, that
should the Commission proceed with a generic inquiry,
there should be submissions, not only from Fortis but
also from companies like Corix or Central Heat, and
they should testify as well, should we proceed with
the public hearing?
MR. GHIKAS: That's my submission. The focus of Fortis's
attention is obviously on ESAC and Fortis -- Corix,
pardon me -- by reason of the fact that they have
filed letters with the Commission complaining about
something which we see as being very similar to the
business of their undertaking on a very similar
business model. So that -- yes. I guess the short
answer is, yes, I think it should be generic.
COMMISSIONER O'HARA: Thank you, Mr. Ghikas.
COMMISSIONER COTE: Mr. Ghikas, during Staff's submission
they spoke to, what I understood, the endgame of this
inquiry being determination of a set of principles
which would hopefully guide future understandings. I
take from that that it's assumed that these principles
would provide guidance for future applications and
ultimately for decisions.
You spoke a lot about regulatory
efficiency. In your mind would this not assist
regulatory efficiency in the future?
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MR. GHIKAS: Indeed, guidelines can be a very efficient
mechanism and I think they're employed really quite
successfully in terms of things like CPCN guidelines,
resource planning guidelines and that type of thing,
and they do enhance efficiency in many respects.
Proceeding Time 9:57 a.m. T13
The caveat that I would add and the caveat
that we elaborate on in the context of written
submissions is that we have to keep in mind what -- my
answer would change depending on the nature of what
the guidelines were trying to dictate. And from your
question, I am inferring that what you're talking
about is things that inform the nature of
applications, how they are brought forward, this type
of thing. But my answer would change in terms of
whether guidelines are an appropriate tool, if they
were, for example, to direct aspects of what I would
submit are within management's control to decide.
Things like how -- one of the examples, I guess, is a
good one just off the top of my head in the staff
working paper is: Should business cases be brought
forward for review by the Commission?
Now, in my mind, if there was a guideline
that suggested something to that effect, that, you
know, a guideline that said that all utilities must
bring forward business cases beforehand, the Fortis
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Utilities would object to that simply on the basis
that the guidelines are trying to do something that
they shouldn't be trying to do, given the Commission's
jurisdiction to regulate.
So, and maybe if I need to elaborate on why
I say that's not appropriate, but it really comes down
to the Commission's jurisdiction being one of a rate
regulator, and there is an opportunity to review
estimates in the context of CPCNs, for example. But
that's where it's triggered. It's not in the context
of dealing with the minutiae or the micro-management
of the utility business, because I think the courts
have said quite clearly that that is outside the scope
of the Commission's jurisdiction.
So, really what I'm getting at is, at the
procedural level I think they are quite efficient, and
they are quite helpful. And indeed the Fortis
Utilities want to make perfectly clear that they see
some benefit in dealing with issues and bringing them
to resolution, because dealing with these issues time
and time again is not efficient from the company's
perspective, any more than it is efficient for anyone
else's perspective. And it would be nice to be able
to put some of these issues to bed finally to the
extent that we can, and to the extent that it's
appropriate to do it here.
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Does that answer your question?
COMMISSIONER COTE: I think so.
MR. GHIKAS: Okay.
THE CHAIRPERSON: I've just got one question. You
confused me a little bit in your discussion of
negotiated settlement agreements and what flows from
them. Are you saying that when a negotiated
settlement agreement expires, that the parties
involved would be constrained in what they could
negotiate in a future settlement?
MR. GHIKAS: No. No. That's not -- no, and I'm sorry if
I left that impression. The context in which I was
making the submission is that there is a particular
issue in the staff working paper that effectively
makes an issue in this inquiry, whether or not the
approval of rate schedules -- the one that I took you
to at the beginning, for example, the rate constructs
for the alternative energy services, would expire at
the conclusion of the term of the settlement
agreement. And my submission was that rate schedules
that were approved by the Commission remain in place
beyond the end of that settlement agreement until they
are changed by the Commission, which is what the Act
says.
THE CHAIRPERSON: Okay. So, just to follow up on that a
little bit -- since I'm going to be sitting in on the
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Fortis rate review, this is of assistance to me in
that procedure.
MR. GHIKAS: Mm-hmm.
THE CHAIRPERSON: So if in the Fortis 2012/13 rate review
based on the evidence before it there was some
different conclusions with respect to rate schedules,
you're not saying that the Commission is constrained
in making changes in that regard?
MR. GHIKAS: No. The Commission is absolutely free to
make determinations based on the evidence before it,
and indeed that's what it should be doing. And not
constraining itself by prior decisions. The
implication of the question in the -- and if the
evidence has changed, and if the evidence dictates
that a change is necessary to particular rate
schedules, then that would have to follow, if that's
what the Commission believed were just and reasonable,
based on the evidence before it.
Proceeding Time 10:02 a.m. T14
The notion that I was objecting to was the
automatic expiry of rate schedules at the conclusion
of the term. The rate schedules, the Act contemplates
that rate schedules are put in place until the
Commission changes them and amends them, and that's
really what -- I was objecting to that being an issue
because to the extent that remains an issue it causes
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all sorts of business uncertainty in terms of whether
the company, the dollars invested so far on the
assumption that there is a rate schedule in place, are
at risk, and indeed if further money can be spent
without it being at risk of having the rate schedule
evaporate suddenly at the end of the year.
THE CHAIRPERSON: Thank you.
MR. GHIKAS: Thank you.
MR. MILLER: Mr. Gustafson is next.
SUBMISSIONS BY MR. GUSTAFSON:
MR. GUSTAFSON: Thank you. Mr. Chairman, Commissioners,
we appreciate this opportunity to come before you
today to address the issues that were outlined in the
Energy Services Association of Canada letter that was
filed with the Commission dated April 27 of this year.
The issues at the heart of this proceeding
are not new. What is new are questions related to the
manner in which Fortis is operating in the alternative
energy services or AES field. Fortis suggests that
there is nothing new in the way it is conducting its
business, and that Mr. Ghikas has mentioned previous
proceedings and evidence filed in those proceedings
and asserts that nothing has changed. We're not so
certain of that and we have questions that we believe
need to be examined in terms of the manner in which
Fortis is in fact operating its business in the AES
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space.
The concerns identified in the ESAC letter
emerged as a result of a number of announcements that
were made earlier this year by Fortis in terms of new
AES projects, and it is those announcements that
prompted the focus and the concern in terms of exactly
how Fortis is operating its business, and it raises a
number of questions. We don't come with allegations,
we come with questions.
Let me touch on the question of
consultation. Fortis has spent considerable time this
morning reviewing the previous regulatory history, and
has asserted today and in its written submission that
this ground has been covered and the matter is dealt
with and ought not now to be revisited. And we submit
that that just is not so.
In conjunction with the Fortis long-term
resource plan review in 2010, there was to have been a
process of public consultation with key stakeholders,
and while Fortis acknowledges the importance of that
process, the fact is that Fortis failed to notify and
to consult with a whole set of some of the most
important stakeholders, namely the parties it now
acknowledges as being its competitors. And we suggest
that it is disingenuous of Fortis to say that ESAC and
its members are somehow at fault when it was Fortis
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who, with the full knowledge of all of the issues and
exactly who its competitors were in the AES space,
chose to exclude those very parties from the
consultation process. So when they say that they
engaged in consultation with select stakeholders, they
really meant select.
Beyond that, ESAC and its members really
had no reason to actively monitor on an ongoing basis
proceedings before this Commission on the off chance
that issues of relevance or concern might be touched
upon. I don't believe that's a fair or reasonable
expectation for ESAC's members to be expected to rise
to that kind of standard of vigilance. The failure to
consult with ESAC and its members, in our submission,
renders the stakeholder consultation process
effectively meaningless. Had proper consultation taken
place, and proper notice been given, and an
opportunity to be heard in that context, it may be
that these issues could have been dealt with at an
earlier stage.
Proceeding Time 10:07 a.m. T15
But in my submission, the consequences of
that failure fall squarely on Fortis. In one breath,
Fortis tells the Commission how valuable and important
the consultation process is, and yet today the
suggestion is that the failure to consult with a whole
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set of key stakeholders is meaningless.
Despite the fact that Fortis excluded a
number of key stakeholders from the review process, in
relation to the long-term resource plan, the
Commission's decision in that particular matter makes
it absolutely clear that the issues that are before us
today were identified as something that would require
further consideration in a future hearing in the not-
too-distant future. And that is precisely why we're
here today.
I won't go into any detail. The issues
that are of concern to ESAC and its members, those are
outlined in the letter of April 27th and in more detail
in the written response that we filed with respect to
the Commission staff's outline of issues and scope
matters.
In our submission, the fundamental issue is
quite simple. We're concerned to investigate just
exactly how Fortis is conducting its business in the
AES space, and then to determine whether it is doing
so fairly and appropriately. In this respect, our
focus is on the business activities that are not
specifically regulated under the Utilities Commission
Act in a space where there can and should remain open
and fair competition.
This will lead to a consideration of
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whether existing rules governing the conduct of Fortis
as a regulated utility are adequate and to assess
whether any changes are required in those rules. And
finally, we will want to know that the rules are being
followed and will be followed in the future.
Our concern, as I said, is to ensure a fair
and level playing field.
In fact, this topic has been considered
previously by this Commission, and it generated a set
of guidelines that my friend referred to as the RMDUM
guidelines. There are a number of related issues
ranging from potential abuse, to abuse of the
utility's monopoly position, to ensuring no cross-
subsidization, to ensure that no risk is imposed on
the utility's ratepayers, no abuse of dominance in the
market to impede competition in an unregulated space.
A quick survey actually shows that this
issue has been a topic of concern really broadly
across North America. At least 12 states have
relatively recently considered the issue. It was
considered recently in Ontario with the Ontario Energy
Board and Enbridge Gas. So, you know, this is an
important issue. The interesting outcome of those
proceedings has been a degree of consistency in the
determination of the need to be vigilant in overseeing
how regulated utilities operate in non-regulated
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space, and those decisions are, in our view,
consistent with the principles that this Commission
established in the RMDUM guidelines.
And in our submission, the application and
enforcement of the RMDUM guidelines would go a long
way to satisfying our concerns if we were confident
that we knew enough about what Fortis was doing to
ensure that those guidelines are being complied with.
It may be, however, that it's time to review those and
ensure that the guidelines are adequate to deal with
circumstances that are before us today.
A specific concern of the Energy
Association of Canada relates to fairness of
competition with respect to fair, open and transparent
access to EEC funding. EEC funds are derived 100
percent from Fortis's ratepayers. They are allocated
and dispensed in the discretion of Fortis, and it's
vital to ensure that those funds are being used in a
way that benefits the ratepayers, and not to enhance
return to the shareholder. And particularly not if
the funds are used in a predatory or anti-competitive
way.
Proceeding Time 10:12 a.m. T16
We want to be certain that Fortis is
expending the EEC funds appropriately, and not in a
way that has the effect, whether intended or not, of
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eliminating competition in AES. We see, for example,
the announcement of some $800,000 of funds being
provided to the Delta School Board, but we are not
able, based on the information provided, to understand
how that figure was arrived at and whether there was
any sort of competitive process related to this
project.
In this context, we believe it's incumbent
on Fortis to submit evidence to describe in detail how
it's operating in the AES space, how EEC funds are
being applied and allocated.
Turning to address specifically some of the
comments made by my friend this morning. He addressed
three broad categories: regulatory efficiency,
administration of justice and substantive fairness,
And I'll just touch on each of those.
With respect to regulatory efficiency, we
believe that it is by far the most efficient way to
deal with these issues by focusing on them squarely,
rather than touching on them peripherally or
tangentially in the context of other hearings, where
the focus is really not on the issues that are before
us today. Multiple processes have taken place, but
none of those have focused squarely on the issues that
are of concern today. And there is a real danger in
following that path, that you end up with an
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unintended result, where approval of an application
with a specific focus touches on or relates in some
indirect and unintended way to another matter. And
that, I think, is at the heart of what Fortis is
complaining about. It suggests that all of this has
been dealt with and approved when, in fact, the focus
of each of those proceedings has not been on the
issues of concern today, but on other matters. And
now it's taking the position that somehow approval for
this activity ought to be implied.
Mr. Ghikas said that issues were picked up
in the revenue requirements application. But in my
suggestion, that's not an appropriate way or a fair
way to ensure that all interested parties have an
opportunity to be heard on those issues. And so that
proceeding in this specific matter, focused on the
issues of concern, is absolutely the most efficient
way to deal with this matter. And indeed it may
actually help the -- speed along the process in
dealing with the revenue requirements hearing if the
issues before us today are dealt with first and then
proceed following that with the revenue requirements
hearing.
Turning to administration of justice, again
I think he suggested in that context that the evidence
is all the same. And again, we're not certain of
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that. And we would like the opportunity to examine
that question, and be certain that, in fact, we
understand how Fortis is operating in this space, and
that it's doing so in an appropriate way. And we
don't believe that the issues of concern here have
been dealt with in any other proceeding in any sort of
comprehensive way.
Turning to substantive fairness, the
suggestion is that there needs to be finality in
decisions. And we don't really disagree with that
principle applied properly and fairly, where the
issues of concern are dealt with in a comprehensive
way in a proceeding before this Commission. But we
submit again that that just hasn't happened to date.
With respect to the concern that somehow a
decision is going to expire, I'm not sure that I
follow the concern there. The Commission has plenty
of scope under the Act to make interim orders and to
do what it needs to do to deal with that kind of
situation.
With respect to the question of whether
this process should be generic or specific, our view
is that it should be specific to Fortis, and we
support the Corix position in that respect.
Proceeding Time 10:17 a.m. T17
Of course there are similarities with other
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utilities, but in our submission that's not the
determinative factor here.
The suggestion was that there may be the
appearance of a double standard. Well, I don't think
it's possible for us to ignore the elephant in the
room. Fortis is not the same as Corix. It's not the
same as the members of the Energy Association of
Canada. It is a large, integrated public utility,
regulated. It is the dominant player in the
marketplace, and I don't think that we should try to
ignore that and suggest that maybe special attention
ought not to be paid to it. The Utilities Commission
Act says that Fortis should be regulated. The RMDUM
guidelines, I think, reflect a previous decision that
it's important, and the reasons why it's important to
regulate the activities of a public utility in an
unregulated space. If it were not for the fact that
Fortis was regulated under the Utilities Commission
Act, it would be subject to supervision and oversight
under the Competition Act of Canada. So there's no
question that public policy one way or the other
treats parties like Fortis in a manner different than
small, independent players in a free and competitive
marketplace.
I think, with respect to the question of
procedural fairness, the concern expressed by Mr.
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Ghikas this morning was that they were more in the
nature of an information request. That might be, but
I think what that tells us is that Commission Staff
have questions as well. There's a lack of a proper
and full understanding of how Fortis is operating in
this space, and that is precisely why we're here to
investigate and to learn what they're doing and make
sure that their business activities are being
conducted in a fair and appropriate way, consistent
with the RMDUM guidelines.
Just one final comment if I may, not really
a scope issue. There seems to be a suggestion in some
of the submissions that ESAC and its members are
somehow, in making this complaint, evidencing an
opposition to green initiatives, energy conservation,
clean energy. Nothing could be further from the
truth. ESAC and its members are eager to participate
in programs and initiatives that support and enhance
the objectives of the provincial government in respect
of the Clean Energy Act and energy conservation. So I
just wanted to make that statement on the record so
there's just no doubt in anybody's mind about what
might be underlying the letter that initiated this
process from ESAC.
Thank you, those are my submissions.
COMMISSIONER O'HARA: Mr. Gustafson, first for the
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benefit of the Panel, would you just take a couple of
minutes to give an overview of ESAC? And just by way
of background, I did go to the website but I didn't
find enough sort of answers to my questions. So first
just basics. When was ESAC established? Second,
number of members today. Third, governance structure.
And fourth, the specific links to British Columbia the
way ESAC members go about their business.
MR. GUSTAFSON: I'll be able to answer some but not all
of your questions and I'll come back with an answer in
writing to the others.
COMMISSIONER O'HARA: That would be fine.
MR. GUSTAFSON: Or I may be able to do so a little bit
later in the proceeding. I don't know exactly when
ESAC was created. I can tell you that its members are
-- let me give you the list of the names. Ainsworth
Ameresco, Direct Energy, Honeywell, Johnson Controls,
MCW, Custom Energy Solutions, Siemens, and Trane. So
I think when you know that information about who the
members are, it probably gives you a pretty good idea
of the businesses in which they're involved. And most,
if not all, of those members conduct business in
British Columbia.
I'm not sure if I've addressed your
question adequately or not at this time, but I'm happy
to follow up.
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Proceeding Time 10:22 a.m. T18
COMMISSIONER O'HARA: So that is the number of members,
that there are no other members, then it's --
MR. GUSTAFSON: That's my understanding, correct, yes.
COMMISSIONER O'HARA: How about, then, the governance
structure?
MR. GUSTAFSON: I don't know what the governance
structure is, but I'll come to you on that.
COMMISSIONER O'HARA: Okay.
MR. GUSTAFSON: I do know that there is a board of
directors, and I presume that each of the members has
representation on the board, or that there is a
process to elect directors, and there is a Chairman or
president of the association.
COMMISSIONER O'HARA: Okay. That's helpful. And then I
also had the second question.
Coming back to this Fortis-specific focus
in the inquiry, perhaps you can still try to help me
out here, that, what would be best from ESAC point of
view. Would it be a proceeding that, with your
complaint as a major focus? And then from that
resolution of the complaint, some general guidelines
might fall out as well almost like as a by-product?
Or on the other way, which is the generic inquiry,
where a by-product would be a solution and resolution
of your complaint as well.
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MR. GUSTAFSON: I think the former of those, in that we
would prefer to focus, if possible, on the issues that
are at the heart of the complaint that was filed. And
we do envisage and understand, of course, that the by-
product of that process may well be a modification of
guidelines that are in place that are of more general
application. But our preference would be to focus on
the issues of concern to ESAC and its members, to the
extent we can.
COMMISSIONER O'HARA: Okay. Thank you, Mr. Gustafson.
THE CHAIRPERSON: I just have one general question.
RMDUM, of course, was put in place prior to 2007, as I
understand it. And therefore it didn't contemplate at
that time the government's policy initiatives with
respect to the greening of British Columbia, if I put
it in simple terms. And I am pleased to hear that
your association is congruent with that. But I think
as Mr. Ghikas mentioned, or at least inferred,
obviously Fortis is trying to follow the same
objective in bringing forward some of its AES
solutions. And do you think that given that the
environment is different with respect to at least that
portion of the government policy, that that in itself
might require -- might make a review of RMDUM an
exercise that would be appropriate at this time?
MR. GUSTAFSON: I'm not certain that I would go that far,
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and the reason I would say that is that the principles
that underlie the guidelines in RMDUM are relatively
general, and I think, in my review of those
principles, they apply and can apply despite the
changes that have occurred since 1997, when these
principles or guidelines were developed and
introduced. It's not clear to me that a change is
required. At the same time, I won't pretend to fully
understand exactly how Fortis is operating in this
space, and it may be when we understand more about
what they're doing and how they're doing it that some
modification of the guidelines may be appropriate to
reflect the new circumstances.
But I think you will see that the
Commission at that time did a very good job in
outlining a set of principles that have stood the test
of time and can continue to stand and to guide the
operations of Fortis and other utilities.
THE CHAIRPERSON: Thank you.
Proceeding Time 10:27 a.m. T19
MR. MILLER: Corix is next, Mr. Chair.
THE CHAIRPERSON: Mr. Miller, perhaps we could take a
short break at this time. If we could be back here 15
minutes from now.
(PROCEEDINGS ADJOURNED AT 10:28 A.M.)
(PROCEEDINGS RESUMED AT 10:46 A.M.) T20
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MR. GUSTAFSON: Mr. Chairman, Commissioners, with your
indulgence I'll try to address Commissioner O'Hara's
question regarding the ESAC organization.
The origins of the organization trace back
to an earlier association called the Canadian
Association of Energy Services Companies that was
formed in the early to mid-1990s. That organization
eventually was dissolved, I guess, or no longer
active. Its core members, however, were involved with
a provincial government task force here in British
Columbia called the Green Buildings B.C. Program, and
were involved in the task force there. And that
program related to energy efficiency in public sector
buildings, and indeed a number of members of --
current members of ESAC have implemented projects
pursuant to that particular program.
ESAC itself -- and a couple of the members
are here but they're not exactly sure when the
organization was formally incorporated but it looks
like it was sometime in the fall of 2010, following a
period of time of the informal activity amongst the
members. It's a national organization. Each member
is represented on the board. Executives are appointed
and there is a paid, although not full-time, person
who serves as president, and that's Peter Love who is
the gentleman who signed the letter on behalf of ESAC.
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ESAC's members are not identical to the
previous organization, the Canadian Association of
Energy Services Companies, but its core members are.
So they continue from one organization to the other.
And our understanding is that ESAC's members compete
with Fortis in every space in AES except for NGV. I
hope I've addressed your question.
THE CHAIRPERSON: That's helpful. Thank you, Mr.
Gustafson.
MR. MILLER: Mr. Wallace.
SUBMISSIONS BY MR. WALLACE:
MR. WALLACE: Thank you, Mr. Chairman, Commissioners.
I've prepared a bit of an outline of where I intend to
go and I would like to hand that forward, in large
part because it contains a proposed timing list that
would be probably useful in the second stage of the
arguments. It's not necessary -- well, it might be
handy to mark it as an exhibit in case there's later
reference. It's not necessary in that I'm not going
to go beyond it, I don't believe, except in response
to the submissions of others.
MR. MILLER: That would be marked Exhibit C12-2.
MR. WALLACE: Thank you.
(OUTLINE OF COMMENTS OF MR. WALLACE MARKED EXHIBIT
C12-2)
MR. WALLACE: In opening I would like to state that
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Corix generally supports the submissions of the BCUC
Staff and ESAC, except where I may vary from it in my
remarks today, and that would be principally that
Corix does not see NGV or biomethane as necessarily
having to form part of this inquiry, and that their
removal may expedite the inquiry.
I'd like to start out by addressing the
issues that were raised by Mr. Ghikas of fairness,
efficiency, and BCUC credibility with respect to this
matter. Corix does not accept Fortis's submission
that nothing has changed. Corix believes that it is
FortisBC that is changing its historic manner of
operating, not the complainants. For many years, PGI
has operated AES-type businesses under a separate and
distinct entity, Terasen Energy Services, and operated
its EEC programs for the benefit and the sole benefit
of its core gas utility customers.
Proceeding Time 10:50 a.m. T21
Both programs now appear to be taking on a
new emphasis or direction, due solely to the actions
of FortisBC. It is normal for the BCUC to revisit
issues as circumstances change, without a formal
review and without a reconsideration. I personally
have attended at many hearings where utilities and
others have raised principles going to revenue
requirements, rate design, or tariff matters, in a
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sequence of cases for reconsideration or for review or
just because circumstances have changed. And it is
our submission that the Commission should not hesitate
because of prior decisions to look at the issues in
this case.
To the extent that Corix did not
participate in some of the prior regulated processes
regarding EEC and AES, it is because Corix did not
understand how directly they might be affected. It
is, in our submission, FortisBC that is consolidating
AES operations with its large gas utility monopoly,
and creating a need to review the framework for both
programs. This inquiry must be able to consider prior
decisions, particularly those involving negotiated
settlement agreements where the scope, or the number
of parties that gets involved is often more limited
and has been in this case than those here today in
light of current circumstances.
That is not to say that prior decisions
should be ignored. The BCUC, or Commission, this
Commission, can address issues of fairness and can
prevent abuse in the course of the proceeding in
dealing with the issues before it.
The fundamental or basic issue in the view
of Corix is, what principles should govern FortisBC in
its conduct of non-gas utility functions, both
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regulated and unregulated functions? Contrary -- or
this view is contrary to what appears to be the view
of Fortis that an operation, if it is a regulated
utility, can automatically be rolled into the gas
utility cost of service. We clearly take a different
view and believe that some of the regulated utilities
of Fortis need to be examined carefully, and the rules
need to be made clearer.
Turning to the scope of the hearing, it's
Corix's view that the issues in this inquiry should be
addressed at a principle level. I think that seems
consistent with the views of FortisBC. It is our view
that it is not necessary in this inquiry to determine
if cross-subsidies are recurring with respect to
specific items or a particular entity, being one of
the sub-utilities of Fortis. Specific expenditures
should be approved or not approved in RRA or LTAP
reviews. The principles and the rules should be set
here, but the evaluation and the dollars and the
individual program can be examined elsewhere. They
may be reviewed here as a good example, but we don't
think the final decision has to be made on the
specifics.
The inquiry should be limited to FortisBC.
The conduct of B.C. Hydro and, for that matter, the
conduct of Corix is not in issue, in our submission.
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That said, Corix recognizes that the principles
established for Fortis can and likely will be applied
to others, where appropriate. And we submit also that
the determination of what is appropriate will have to
be looked at in other circumstances, but where
appropriate, we accept that they likely will be
applied.
The inquiry should cover both EEC and AES.
The core AES and EEC principles that should be
considered include the following: limits on natural
gas ratepayers subsidizing FortisBC shareholders'
competitive endeavours or cross-subsidizing other
forms of energy users.
Proceeding Time 10:55 a.m. T22
Related to these are a number of questions:
The need for and the desirability of
individual stand-alone rate structures for each
regulated non-gas utility facility.
The applicability of RMDUM or similar
principles to Fortis non-regulated and non-gas utility
regulated activities. And I think we take a position
very similar to that of Mr. Gustafson on these issues,
that the RMDUM principles still look appropriate to
use, but it is perfectly appropriate to examine them
today in the context of Fortis's activities and the
Clean Energy Act, and changed circumstances since they
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were first brought in.
The appropriateness of gas ratepayers
bearing FortisBC non-gas utility business development
costs.
The availability of EEC funds to non-gas
utility customers including non-FortisBC subsidiaries.
And we think this should be examined in the same way
and considered in the way that B.C. Hydro provides
funding to others as part of its DSM initiatives. One
question should be: Are these funds available to non-
Fortis entities or only Fortis entities, or should
they only be available to Fortis gas utility
customers?
The need for a FortisBC code of conduct to
address issues of customer confidentiality and the
possibility of an unfair market advantage stemming
from gas utility functions.
The review will have to consider basic rate
design principles and most particularly, fairness.
The inquiry will have to consider the Clean
Energy Act requirements and it will need to consider
economic efficiency and price signals. Can the gas
utility revenues be used to subsidize non-gas utility
actions, and in that way change the price signals in
the market, in a competitive market in particular?
The inquiry will have to consider
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jurisdiction issues. Fortis has put those issues
squarely before you today. Our submission is that
those issues should not be determined on a pre-hearing
conference. They will have to be considered very
carefully in light of the public interest, in light of
the Utilities Commission Act, in light of the Clean
Energy Act, and in light of the Commission decisions
and case law and jurisdiction. Those are complex
matters that should be considered after you've heard
the evidence and as part of final argument in reaching
your conclusions in this matter.
And that concludes my comments on scope and
issues.
THE CHAIRPERSON: Could I just get you to elaborate on
one point? You talked about that you don't see this
getting into specifics on how EEC funds would be spent
specifically. You want to keep it on a principles
level. Is that correct?
MR. WALLACE: That's correct.
THE CHAIRPERSON: Now, FEI has applied for its 2012-2013
rate review. How do you see the Commission dealing
with that rate review, given that we --
MR. WALLACE: I expect that in that application, and I
have not reviewed it myself, that in the EEC elements
a very large proportion of it will probably be non-
contentious. They will be traditional DSM
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expenditures directly targeted at and for the benefit
of the gas utility customers. I would think that if
we were to look at it, we could identify those
programs that are in question, and the principles with
respect to those issues would be argued out in this
proceeding and the merits of the number of dollars and
the particular expenditure could be determined in the
other proceeding.
THE CHAIRPERSON: Thank you, those are my questions.
MR. WALLACE: Thank you.
MR. MILLER: Mr. Chair, there is a request for a slight
alteration for submissions from the order of
appearances. The representatives of the B.C.
Pensioners' Organization have a timing commitment, so
with your leave I would slot them in next.
SUBMISSIONS BY MR. QUAIL:
MR. QUAIL: I would like to thank my friend Mr. Miller
and the counsel for the other interveners for
accommodating us. We have a critical thing and it
saves us some nail biting. There may well be time,
but we do appreciate being permitted to jump the
queue, assuming that that's acceptable to the Panel.
I'd like to start out just by commenting
that this is an area of practice, general utility
regulatory work, where who is your friend and who's
your opponent depends a lot on the issue on the table.
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And we actually find ourselves on behalf of
residential customers agreeing with a great deal of
what my friend Mr. Wallace has said on behalf of
Corix. There may not be many other occasions where
residential customers of the utility are in agreement
with Corix, but to a very large extent we adopt his
comments. And this will also streamline things. I
won't repeat a lot of territory except to the extent
that I may make comments that diverge from my
friends'.
On behalf of our clients, we've raised a
repeated concern over the last couple of years in a
number of proceedings coming out of Terasen, now
Fortis. And that is, where it appears that the
utility is seeking to morph itself from being the sort
of one-trick pony, of being primarily the natural gas
distribution utility into being what they themselves
characterize essentially as a more diverse energy
services provider.
Proceeding Time 11:01 a.m. T23
MR. QUAIL: And our concern has been that we have a
scenario where, by degrees, potentially the utility is
undergoing that morphing without any real opportunity
to step back and ask ourselves, or the Commission, to
determine is that really the place where it should
wind up? Is that really appropriate under the Act,
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and is it appropriate in relation to the public
interest? One place where we raised this was in the
utility's recent long-term resource plan, and in the
decision of the Commission panel our comment was
quoted, that there is the big question that required
to be answered and that is, you know: What fields of
activity and what lines of business are appropriate to
the utility in the context of a changing and evolving
energy sector? And a very dynamic policy context as
well, as from government and from other quarters as
well. There are no easy answers to these questions.
But in our submission, they need to be asked, or we
can't be assured that the outcome is an appropriate
one.
In another context, I have used the
metaphor of someone seeking to change a camel into a
zebra. So first they surgically remove one of the
humps and then they remove another one. And then they
start painting on stripes and without anybody asking,
"Well, do we really want a zebra?", we sort of have
one. And the concern we've got is that we could wind
up at that place, that space, which has consequences
for ratepayers including potentially assets finding
their way into rate base.
You know, and other implications is that
the captive distribution utility customers
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backstopping lines of business to the benefit of the
shareholders. This causes us real concern.
We're not saying that we're opposed to
endeavours of this nature, but the question needs to
be asked at a high level. And I want to adopt the
spirit of much of what my friend Mr. Wallace said in
that, in those terms.
So, we submit that these one-off
applications need a more comprehensive analytical
context. And that is about the character of a
regulated utility in the evolving energy sector. And
I submit that this inquiry, the springboard of these
complaints provides as good an opportunity for that as
any that will come along.
Pardon me, I'm a little hoarse. I think I
might have picked something up on a plane flying from
Heathrow two days ago, so a touch of laryngitis.
And perhaps even a better opportunity than
a future resource plan proceeding, because we do have
the starting point of some very specific activities
which are probably a good anchor for that examination.
And in terms of shaping the process, I
submit that there is really two objectives that need
to be balanced. And one is to produce a sufficiently
comprehensive analysis to provide context and guidance
for the coming period. And guidance as much for the
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utility as anyone else, but to provide that context to
determine these one-off CPCN and other applications.
So that's one objective. But on the other
hand to keep the process manageable, and avoid trying
to chase down every detail and delve into every
conceivable permutation that could arise in the
marketplace. We say that some of that should -- this
is an evolving story. We need to have an analysis
that addresses the state of the market at the present
time, and of the policy issues, but needs to recognize
the story is continuing to evolve. Initiatives will
arise in the future, but they do need a context to be
properly characterized and analyzed.
My friend, Mr. Ghikas, has raised a number
of essentially jurisdictional questions about
administrative law, procedural fairness and so on.
And again, I would adopt Mr. Wallace's comments that a
procedural conference is not the place for that kind
of -- I don't say that faulting my friend, but my
friend Mr. Ghikas identified issues which, I submit,
properly should be addressed through proper legal
argument when the time comes for that to take place.
But we do disagree significantly with Fortis's
characterization of the boundaries of your
jurisdiction.
And we will be arguing, when the time
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comes, that this Commission has extensive jurisdiction
to deal with these issues in terms of the public
interest. We do not agree with Fortis's
characterization of this Commission as a rate
regulator. That's one of your functions, but you have
many other functions. Jurisprudence and also changes
in legislation make that very clear.
It's often said that utility regulators are
economic regulators. People who say that, usually are
utilities. Usually what they really are suggesting is
that you are financial regulators. You know, economic
regulation is a much broader question that involves
much more in terms of the public good and the public
interest and, in fact, statutory changes have
broadened your jurisdiction even beyond that. And we
say there is a fundamentally societal interest and
economic questions that need to be answered.
Anyway, I'll save the argument into that
until the appropriate time in my submission.
Proceeding Time 11:06 a.m. T24
On the issue of the focus on Fortis, is
this just about Fortis or is about other players? In
my submission, that really is not -- not really a live
question. It misses the point, with all respect,
because the issue is the relationship between the
utility and this developing marketplace. There's two
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sides to that equation. There's the utility and
there's the market. You can't answer the question of
what the utility should be up to without looking at
other players in the market. So in my submission it
sort of is a bit of a false question or a straw man to
suggest that that is a specific question that needs to
be determined in some kind of absolute sense. All of
these issues will need to be addressed to answer the
question, what we call the big question of a long-term
resource plan. What is the nature, properly, of a
regulated natural gas utility in the emerging context
of our energy sector? That's the real question, and
that requires full context.
Finally there's the question -- nobody has
really address this -- of evidence and what kind of
evidence should be heard by the Commission, and no
doubt there'll be a wide range of it. One category of
evidence that we submit is going to be important is
high-level analysis of the sector, both in British
Columbia and perhaps more generally, that the process
would be enriched if the record includes high-level
studies of the emerging energy market and the role of
regulation and regulated utilities within that. And I
anticipate that our clients will likely be filing some
evidence, perhaps of that character, but this is going
to be an important underpinning of what takes place.
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In terms of the question of whether this is
a generalized generic inquiry or an examination of the
particular complaints, maybe I'm repeating myself but
I don't think that the Commission can properly resolve
the complaints without first examining the broader
context. So again I think there may be a false
dichotomy there. I think that to do the job properly
of examining the complaints, that more sort of
generalized high-level analysis must take place and it
must ultimately inform the determination on the
particular complaints.
So subject to any questions you have, those
are the submissions that I've got at this point.
Ms. Worth and I will be scurrying out of
here in about a half an hour's time, so we probably
won't be available to speak to the question of
timetable and we're content to abide by whatever that
discussion produces.
COMMISSIONER O'HARA: Mr. Quail, you hinted at it already
in your submission, but I still have to ask this. I
recall from one of the earlier proceedings for this
proceeding, you brought up this issue of
transformation and emerging new technologies and I
recall your mentioning that when it is so new that
there may not be even existing viable businesses that
can address these technologies, that maybe some kind
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of an incubator is required for awhile and a utility
umbrella could be that perfect incubator for a certain
period.
MR. QUAIL: Yes.
COMMISSIONER O'HARA: So, number one, is this now the
forum where that can be addressed? And number two, if
we are planning to address that, would BCOAPO, for
instance, then make some submissions or bring forward
evidence regarding that?
MR. QUAIL: Yes. I can't say at this time for sure that
we'll be producing evidence or what its content would
be. We aren't at that stage of things yet. But yes,
that's the kind of question. The question is how to
adapt these structures and tools that really evolved
in an earlier age. I mean, they evolved in the
context of regulated railways as much as anything, and
even before that, and you know, the world is changing
and we say the Commission has the jurisdictional tools
to adapt to the changing environment. And the
incubation of new technologies initiatives, for
example, may well be a critical thing to be addressed
in the public interest. And a mechanism for that to
take place would be the high priority.
But that would include as well the
incubation assumes that ultimately, you know, the egg
hatches and the bird flies away somewhere. So that
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process would be dealt with, and in a way that's fair
to ratepayers where the ratepayers, as I said earlier,
aren't sort of financially backstopping -- their
presence doesn't backstop the development of ventures
on behalf of shareholders where in effect we're sort
of the captive base that makes it possible for
shareholders to venture into other areas and profit
with no corresponding benefit to ratepayers.
I don't want to suggest that our clients
take necessarily a dim view of a lot of these
initiatives. The question is, what's the appropriate
way for it to be regulated? And to what extent --
maybe there are some activities that should not be
regulated, and that Fortis Inc. is perfectly -- we're
perfectly happy with them pursuing other ventures
outside of the format of their regulated subsidiaries.
Much as Terasen has done in the past. I hope that
addresses your question.
Proceeding Time 11:11 a.m. T25
COMMISSIONER O'HARA: Yes, it does. Thank you, Mr.
Quail.
THE CHAIRPERSON: I've just got one question, because I'm
not sure what your comments really meant, and that is
with respect to Fortis on the one side and the general
market on the other. Were you implying that you
disagree with Corix to the extent that you would see a
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more generic type of proceeding, with perhaps Corix
itself putting forward evidence on some of the issues
like Mr. Ghikas suggested?
MR. QUAIL: I'd place the issue somewhat differently.
And that is that to determine -- the initial focus may
be on -- I mean, the focus is on Fortis. But to
answer the question of what lines of business belong
within their utility, you have to look at the market
context, and that means looking at what's going on in
that marketplace. You know, what are the dynamics of
it; how is it evolving; how mature is it. Those are
issues that must be looked at, and that cannot be
looked at without -- I'm not suggesting probing into
the entrails of other players, but there must be an
analysis of characteristics of the marketplace and
that implies an examination of who's in there, what
are they up to, you know, how mature is the
competitive situation. It seems to me a necessary
part of answering the question about Fortis.
THE CHAIRPERSON: So to try and get an answer that I
understand from your comments, does that imply that
you anticipate that Corix would want to put forward
evidence as to its view as what is in the marketplace,
and how that marketplace is functioning? I mean, how
does the Commission get evidence that it can rely on
if we don't have that type of participation?
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MR. QUAIL: Well, in my submission, I mean, if Corix or
other players are saying there is a competitive market
here, and that Fortis shouldn't be venturing into it,
they'd better have some evidence of that. I mean, it
seems to me that I would assume that they are self-
interest and seeking to obtain the result they want in
this process that they had better be prepared to
pointing up some evidence about what the
characteristics and dynamics of that marketplace are.
Otherwise, I would anticipate that Fortis walks away
from here with sort of a win by default. The other
team isn't showing up in terms of creating the record
that's necessary to suggest that there is anything
amiss in what they're doing. I mean, aside from
things that we and other players who are positioned
differently, as customers and other players might have
evidence and things to say. But in my submission, it
should be expected that they would be delving into at
least that dimension of things.
I hope that that helps.
THE CHAIRPERSON: Thank you. That's helpful.
MR. MILLER: Mr. Weafer?
SUBMISSIONS BY MR. WEAFER:
MR. WEAFER: Mr. Chairman, Mr. Quail started by saying
that these hearings can create different relationships
that don't always exist in others, and he's in support
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of the Corix position in part. I, on behalf of the
CEC, have to say that we have a high level of empathy
for the positions put forward by Mr. Ghikas on behalf
of Fortis, although not in their entirety. And so I
will give you our high-level position on scope, and
then some context as to how we arrived there.
I think the spectrum the panel has before
it is a fairly broad spectrum of scope, as set out in
the staff's scoping paper, which we acknowledge really
does cover the field in terms of a number of issues
that can arise in this evolving marketplace for
alternative energy services and other alternative
energy initiatives of Fortis, on the broad side of the
spectrum. On the more narrow side, we have Fortis's
position paper, which we say is fairly well thought
out and convincing.
What we would encourage the Commission to
do is sort of lay towards the narrower area of the
issues, but create a flexibility in the process, as we
look at a process that may take a year or so to
evolve, based on the projections and the draft
schedules; ensure that through the process, if issues
do arise, that there is an easy way for the issue to
be put on the table and that we don't see too
restrictive a response to Information Requests.
And I'd encourage that, because in the past
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this Commission has set out issues lists, and they
have not always been that effective. And so you're
getting some differing perspectives on issues. The
CEC would like to see a more narrow focus but an
opportunity for an issue to be put in as this process
evolves over the next year.
Proceeding Time 11:17 a.m. T26
In terms of why the CEC supports a more
narrow approach as put forward by Fortis, the CEC has
been around for about eight or nine years now and
we've been an active participant in the Terasen, now
Fortis processes. And in our view, there has been a
fair openness in terms of notification of processes
and issues, and we've participated and we've indeed
raised in some of those processes, where are the
competitors in the process, because we'd like to have
their issues, and we're advised they've been
communicated with and they haven't seen fit to appear.
And so it's difficult for us now, having put in a fair
bit of effort over the last three years in particular,
as alternative energy system issues have been on the
table, to now hear we've got to go back and start
again.
There has, in our view, been a fairly
proactive initiative by Fortis. We've been there,
we've been responsible with what has been in the room
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in terms of the issues that have to be dealt with, and
we think good progress has been made. And one of our
concerns in terms of the broader scoping paper is some
of those benefits will be lost, that we will be
starting from scratch. And I do give high credence to
Mr. Ghikas's comments in terms of the principles of
administrative law and fairness. When a decision is
made, they need to be able to act on it. Participants
who may be investing, based on the decisions of this
Commission, need that certainty that their investments
are going to be valid and they're going to get a
recovery on those investments.
This process in and of itself is going to
create some uncertainty around those types of
initiatives, which we're in the middle of seeing the
province say -- urging Fortis to go forward with them.
This process in and of itself was going to cause
delay.
So in terms of narrowing, we think there
has been a fair bit of thought and discussions on the
issues. That said, the Commission needs to be
comfortable, and the issues you think need to be
considered, we're happy to participate in the scoping,
in the issues that you see as relevant to you having a
comfort level as to what Fortis is doing in the
market.
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Obviously the other reason to narrow the
scope is we've got an invitation for a broad hearing
here, and there's a cost to that. And CEC will be
there and will participate. We participate on a
fairly limited basis, but the broader the scope the
more resources for everybody including, at the end of
the day, the ratepayers have to pay for it all in
effected rate. So we're mindful of Mr. Ghikas's
comments on how this inquiry should be paid for,
because ultimately it'll fall on ratepayers. And so a
narrower scope, we think, is important.
The other reason in support of narrowing
the scope is there are ongoing processes, there are
other opportunities to have input on the issues, and
indeed there will probably be other innovative
initiatives over the next year or two that may invite
applications to the Commission by Fortis, or others,
and people will be able to participate in those
processes and have input on the issues that impact
their interests. So as you look at the scope of --
and I don't intend to go through the scoping document
on an item by item basis. As you consider the lists
of issues that have been put forward by the staff and
as modified by Fortis, our general submission is that
the narrowing is the better approach.
In terms of an issue to add to the list,
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and Fortis added this in their submissions, the staff
document – in fairness, a response to the complaint –
did not really highlight the ratepayer benefit that
may arise from forces being involved in alternative
energy systems. And I don't want to move into
argument, but we certainly have heard convincing
positions put forward by Fortis in our dealings with
them around the risk of the utility as a pure gas
utility in carbon tax environment, and the risk to the
utility which ultimately flows to the ratepayers in
terms of any risk premium to Fortis. They've been
convincing to us in terms of their position. They
need to diversify for the strength of the gas utility.
That's for argument. We'll deal with that in the
process. But that's been the factor we've heard.
And the other factor which doesn't seem to
get a lot of weight, and we think is something that
the Commission does need to take a good look at, is
ensuring that where Fortis is investigating
alternative energy systems, that there is a carryover
to the ratepayers in terms of overhead contribution.
And that's a path we've been on in negotiated
settlements, that the Commission has approved. We
think it's a very important issue for this policy
review to see. If Fortis is in the business, there's
got to be a benefit to the ratepayer, and that issue
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is not as live in the staff's position paper. In fact
Fortis highlighted it at page 31 of their submissions.
In terms of a couple of specific questions that have come
up on the issues list that my friends have dealt with
to make sure you have the CEC's position:
Proceeding Time 11:22 a.m. T27
Firstly, on whether this should be a Fortis
proceeding or a generic proceeding. We believe it
should be, as Mr. Quail has indicated, a more generic
proceeding. Very difficult for the Commission to
assess the position of Fortis as against another
utility operator, Corix, or indeed the ESAC
representatives who have indicated to you that they
compete in every market with Fortis, but for NGV. So
we would expect that they would be leading evidence
and they would be an active participant, allowing all
parties to understand the market better, most
particularly the Commission, to make a good policy
decision at the end of the proceeding. So, we would
support while narrowing in scope, generic in
involvement.
With respect to whether AES or all other
initiatives of Fortis, biogas and NGV should be on the
table, we believe it should be focused on the AES
issue. That is the most complicated issue and the one
that deserves the most attention. The others have had
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individual proceedings and more specific review.
And lastly on RMDUM, there has been
discussion around the RMDUM guidelines. And the RMDUM
guidelines were designed for downstream of the meter
issues. And that is not what we see this primary
focus to be on. We see this focus to be on utility
versus utility competition, or utility versus
competitor competition in the utility sphere, in the
regulated sphere. So, we don't think this is a review
of RMDUM guidelines. This is a review of the evolving
utility on utility competition that we're seeing. And
so, adding the RMDUM guidelines into this -- that was
a proceeding into and of itself. To layer that into
this proceeding we think may be biting off more than
we should be given the broad concerns already in play
in terms of the AES issues.
The other point I would comment on, and I
think it came up from Mr. Gustafson, and it's the
availability of EEC funds. And we have a couple of
concerns, just to highlight that it's an issue for
consideration.
One is a seeming desire to have an
independent administration of those funds and the
concern being that the costs of administering those
funds may be more than some of the projects that
they're involved in. So, just highlighting a concern
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in terms of more administration in relation to that
issue.
And lastly, and more to Mr. Gustafson's
comment, is access -- and maybe Mr. Wallace as well --
access to EEC funds. Certainly from a ratepayer's
perspective, EEC funds are funds that the ratepayers
have -- are putting up, so to speak, and back to my
earlier comment, if we're putting those funds up, the
utilization should be by somebody who's ensuring that
those ratepayers get a benefit through contribution to
overhead or otherwise. So it's an issue that we'll be
focused on in terms of the ratepayer benefit.
In terms of evidence, the CEC does not
anticipate filing evidence in the proceeding, and
participating more in cross-examination and the filing
of arguments and submissions, but not filing evidence.
And those are my comments.
THE CHAIRPERSON: I have no questions. Thank you.
MR. WEAFER: Thank you.
MR. MILLER: Mr. Andrews?
SUBMISSIONS BY MR. ANDREWS:
MR. ANDREWS: The B.C. Sustainable Energy Association and
the Sierra Club of B.C. are generally supportive of
alternative energy projects and initiatives, at least
when they're defined as ones that either meet or avoid
energy needs in a way that reduces greenhouse gas
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emissions, reduces the use of energy, and that are
otherwise cost-effective, and socially beneficial.
So from BCSEA/SCBC's perspective, the
notion of what's been described as a traditional gas
utility moving in the direction of alternative energy
services is, at a generic level, a desirable
direction. And so they would ask: What about all the
other traditional public utilities, why aren't they
moving in the same direction? And maybe some of them
are. And that's considered desirable.
Proceeding Time 11:27 a.m. T28
In my intervention letter on behalf of my
clients, I made two comments on the scope that I want
to emphasize here. Although I said them quite
briefly, I really think that they're at the heart of
this. One is that the staff scoping document is too
broad. It's way, way too broad. And secondly, that
there is a need for evidence on which to base any kind
of decision or outcome, and that in particular, ESAC
and Corix have made allegations and comments about,
for example, the competition between themselves, or
their members, and Fortis. But we have no evidence of
that at all and in my submission, that is a
foundational element to the Commission grappling with
the problem.
I'll address -- one of the first, I guess,
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points in Fortis's submission addresses the
relationship between this proceeding and other
proceedings of the Commission both past and current.
I support Fortis's position, first of all, regarding
past proceedings, which is to say that for a variety
of legal and practical reasons, past proceedings that
have resulted in decisions should not be overturned or
put in question except through the existing procedures
under the Utilities Commission Act for reconsideration
or whatever is appropriate. And I don't hesitate to
say that if there is something arising from this
inquiry that causes the Commission to question
something that happened in a previous proceeding, then
it's fully open for the Commission to deal with that
on a go-forward basis. But the assumption would not
be that the Commission at that point would undo a
previous decision unless it follows the appropriate
steps.
And BCSEA has been involved, and SCBC, in a
number of these alternative energy and NGV biomethane
proceedings. And as Mr. Weafer said, we put a lot of
work and energy and commitment into those proceedings,
and the results of them didn't always meet our
submissions. But there is a need for closure,
recognizing that new issues arise going forward.
In terms of current proceedings, again I
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would support what I take to be the Fortis position,
that this proceeding should not tread on the ground
that is already set out in existing current
proceedings. So for example, issues to do with -- and
I think Mr. Wallace uses the example of whether money
spent by the utility is properly within the revenue
requirement. To the extent that that question arises
regarding a test period, and there is an application
before the Commission, which there is in the case of
Fortis in the 2012-13-14 revenue requirement
application, in my submission that is the place for
that issue to be dealt with. And if his clients have
submissions about whether certain expenditures are
appropriately included in the revenue requirement, a
revenue requirement application is ideally suited to
raise and resolve those issues. And in my submission,
the Commission here in deciding the scope of this
proceeding should ask itself: Is any particular issue
one that is already on the table in some other
proceeding? And if so, then in my submission it
should leave it there and not put it in this
proceeding unless there's a very important reason to
do otherwise.
Proceeding Time 11:31 a.m. T29
One of the comments that Mr. Ghikas made in
the Fortis written submission that I think caught my
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attention, and I think is really quite important, is
the difference between activities and companies. That
is, it's easy to think in terms of a regulated utility
as a regulated company, and we're now in a world where
it's, I think, really especially important to be
distinguishing that what we're talking about is
activities of companies. So it may be one company
with some activities that are regulated and some
activities that are not regulated, or it may be a
bunch of companies that are either totally regulated
or not.
And in that respect, I thought that B.C.
Hydro's written submissions were quite helpful in
setting out three categories of Fortis activities that
are relevant and that are sort of being discussed.
The one being purely regulated activities by Fortis --
the provision of natural gas delivery service to its
customers. The second category being activities that
relate to load and supply. So, EEC and biomethane,
NGV, those kinds of activities that are in a different
respect regulated by the Utilities Commission.
And then the third category of activities
being activities that are not regulated. And that, I
think, is an important distinction because, of course,
the jurisdiction of the Commission ends where the
activities that are not regulated begins. And so, for
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example, to the extent that complaints are made about
activities of Fortis that are not regulated, the
Commission will have to be very alive to whether it
has jurisdiction to go there.
One of the issues I think that's
particularly important here in terms of the scope of
this proceeding is whether this should be a complaint-
oriented process or a policy creation oriented
process. And my submission, and I may go farther than
Fortis or CEC may go on this, is that it should be a
policy creation focus and not a complaint focus. And
since Mr. Quail has introduced the use of odd
metaphors, I will add one of my own. He referred to
the complaint as being the springboard for this
process. And I would use the example of the
gymnastics competitions in which performers on the
high bar use a springboard to get up there, but once
they're up there the springboard is taken away. It's
no longer of any role in the events that proceed. So,
we had complaints or a complaint that got us here
today. But in my submission, the Commission should
seriously consider dealing with that complaint in a
separate manner than following through with this
proceeding.
There are all sorts of policy-type issues
that have been raised, but in my submission the
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Commission gets off on a fundamentally wrong foot if
it deals -- if it starts from the investigation of a
complaint as a method of dealing with issues that are
multi-faceted, where there are often no rights and
wrongs, and my fear would be that the policy would not
be -- the policy that came out of that process would
suffer if Fortis had to be constantly defending itself
against one or more specific complaints, rather than
participating openly in the development of appropriate
policy. And I don't mean to say that there is no
merit in the complaints. But for example, at least
some of them, to my mind, are extremely questionable.
The one example that's questionable is the allegation
that Fortis deliberately failed to inform ESAC and its
members about B.C. Utilities Commission proceedings
causing them not to participate and incur harm. Maybe
I'm not characterizing that correctly because even as
I state it, to me that doesn't add up to a valid
complaint. But if it is, it's something I submit the
Commission should deal with separately from any other
important issue here.
Proceeding Time 11:37 a.m. T30
It's really hard to believe that a company
like Corix or these major companies that are members
of ESAC can say on the one hand that they are
competing with FortisBC, and that they didn't know
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that FortisBC filed a long-term resource plan with the
B.C. Utilities Commission that says, right from the
cover page forward, that they're planning to expand
their activities in alternative energy services. It
certainly -- that to my mind is something that we
don't -- in this policy creation type approach that I
see, I don't think we need to grapple with.
I will just briefly -- specifically in
terms of the topics EEC or DSM, AES, alternative
energy services, biomethane – we won't go with the
acronym for that – NGV, in my submission the core
focus ought to be on alternative energy services. And
to come back to the problem with a complaint-driven
process, ESAC is asking that there be an investigation
that addresses NGV, and yet it says that its members
don't compete with Fortis regarding NGV. So in my
submission that's simply a good reason to keep NGV off
the table, and it's also a good reason to make the
complaint aspect of this separate, and so that the
specific details of the complaints can be fleshed out,
because right now there's very little or no evidence
to support them, and dealt with separately.
The issue has been spoken to about what I
would call the integrity of the negotiated settlement
process. And there's a question from the Panel about
that. And from my perspective, there is a concern
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that if the Commissions puts a decision that arose by
way of Commission approval of a negotiated settlement
agreement in a different category from a Commission
decision that resulted from a written hearing or an
oral hearing, there's a concern that that would
undermine the legitimacy of the negotiated settlement
process. Why would any party want to do an NSP if the
outcome was a decision that had less long-term weight
than a decision that came out of a written or oral
hearing? My clients often support having NSPs – not
always, but – so we would not want to see the NSP
process undermined by officially going back and
differentiating a Commission decision based on the
manner by which it was achieved.
Lastly regarding hearing costs, my clients
will apply for a participant assistant cost award,
guidelines, PACA guidelines, so I would simply ask
that the timetable include a deadline for a submission
of a budget estimate under those guidelines.
And I think, subject to any questions,
those are my submissions.
COMMISSIONER COTE: Mr. Andrews, various proceedings have
been alluded to in some of the submissions and they
have addressed the need for those various proceedings.
I'm talking the long-term resource plan, biomethane, I
think alluded to it in the whole area about broad-
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range inquiries, the need for a broad-range inquiry to
address the broader questions related to the new
initiatives that FEI is undertaking. I'm a little
unclear from your comments where you stand on that.
Is there a need for that, in your mind?
MR. ANDREWS: Well, I'd say first of all the Commission
has said that there is a need, and it's not my role to
question that. The Commission has also approved
particular decisions regarding biomethane and an
interim decision on natural gas vehicles and so on,
and my submission is that those things should not be
undone by going forward.
My clients welcome the opportunity for the
Commission to review how alternative energy services
are regulated.
Proceeding Time 11:42 a.m. T31
MR. ANDREWS: And I guess one of the things that I was
trying to get at, in terms of the distinction between
a complaint-driven process and a policy creation
process, is that I don't think it's desirable to
approach the regulatory issues from a standpoint that
begins with the assumption that Fortis is being
accused of wrongdoing. That, to me, just gets things
off on the wrong foot, and so if there are complaints
I suggest that they be dealt with separately, and that
we enthusiastically do the policy development with the
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narrow focus that Mr. Weafer also referred to.
COMMISSIONER COTE: Okay. A further question. When you
talk about decisions being undone, you're not
objecting to some of the information related to those
various hearings coming into play, as long as it
doesn't involve a decision changing as a result of
that.
MR. ANDREWS: That's correct. And just to be complete, I
would have to say that if there is some reason that
someone can fit within the rules, why a particular
decision should be undone, there is a process for
doing that. And all I'm saying is, this proceeding
should probably not be the place for that to happen.
COMMISSIONER COTE: Thank you.
THE CHAIRPERSON: Just one question. You talked about
the B.C. Hydro submission and the characterization
they had of the three sort of aspects to Fortis's or
other utilities' activities. Would I be correct in
surmising from what I have seen in evidence by a
number of parties that in part what we would be
looking at is where the boundaries lie between these
three different aspects? I mean, one party's got us
being zookeepers and the other one's got us on a high
wire now, but is not part of our function here to try
and -- isn't part of the question that I see is that
some parties, anyway, are not sure where the boundary,
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say, between a non-regulated business and the
regulated business is or should be?
MR. ANDREWS: I think there are two aspects to that.
Some parties are unsure. That, I think, is a fact.
The resolution of that issue traditionally happens as
a result of specific applications and decisions by the
Commission on evidence- and fact-specific situations.
At this point in the proceeding, we don't
-- I'm not clear whether Corix or the ESAC complaint
supported by Corix is that Fortis's competition that
it says is unfair is competition occurring in the
unregulated sphere, or it's Fortis's activities that
are in the regulated sphere. And that involves, of
course, being able to differentiate the two, but since
the activities that the actual complaint to the
Commission is about are by definition regulated
activities, I'm not sure that you can characterize it
as a matter of defining the boundaries between
regulated and unregulated.
THE CHAIRPERSON: Perhaps a better way of stating it
would be to -- would we be looking to come up with
perhaps general principles or guidelines that
utilities such as Fortis could use when they are
contemplating whether an activity should be put into
the utility framework or the non-utility framework.
I recognize where you're coming from on specific
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issues that might be dealt with in a different forum.
MR. ANDREWS: I think my answer to your question is yes.
And also I would say that applies to these companies
that are or would be competitors to Fortis in the same
areas. Because one of the sort of questions begged by
the complaint is whether there are activities going on
in competition with a regulated activity, where the
activity in the first place ought to be regulated but
isn't.
So I mean, I think -- and that's again the
focus on activities rather than companies, that if
we're talking about an activity being of a type that
is regulated in a certain way, then that would apply
to Fortis as well as to same activity by other
companies, competing companies.
THE CHAIRPERSON: That's helpful, thank you.
MR. ANDREWS: Thank you.
Proceeding Time 11:47 a.m. T32
MR. MILLER: Mr. Wieringa?
SUBMISSIONS BY MR. WIERINGA:
I'll try to be relatively short since we're
probably heading closer to lunch.
Our letter stated some of our preliminary
views that we had written out for you, and that we are
coming here to have a better understanding of some of
the views of other parties here. It strikes me, and I
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think that you mentioned something about the Clean
Energy Act and the energy objectives in there. There
are some 16 of those objectives, and three I think
that are of particular interest to us. One is around
increased conservation. A second one was around
meeting greenhouse gas reduction targets, and those
are set in legislation here in B.C. And concurrent
with that is switching to lower emission energy
sources. And we certainly saw that Fortis's attempts
in a sector was certainly living up to some of those
objectives in the Clean Energy Act.
I think there have been a couple of
questions around the scope. You'll see in our letter
we are suggesting that the scope should be fairly
narrow. I think most of the people that I've heard
here as well have suggested that biomethane and NGV
for vehicles not be part of this inquiry. We would
concur with that as well.
We've also heard that you've got a
complaint in front of you by ESAC and Corix, and that
you should probably deal with that complaint. As we
point out in our letter, if you find out that there is
something as a result of that that would lead you to
establishing some new guidelines that may be following
after that. We would suggest however that when you do
establish some new guidelines, those guidelines would
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be consistent with the Clean Energy Act objectives,
and that those would also be fairly flexible in
dealing with changes in the marketplace.
We are not quite convinced that you should
be going to a review of the RMDM, or RMDUM as they
have been nicely termed here. I think most of the
thoughts that you're seeing in front of you deal with
a competition between utilities.
Then I think you've heard something about
whether or not you should be creating a policy
creative process. I'm not quite sure exactly what
that entails. It strikes me that if you're dealing
with a complaint, you might be moving towards looking
at evidence that would be brought before you. That
may persuade you to do something else. But we haven't
got that evidence in front of us so it's hard to
comment on that.
And I'll leave it at that, if that's okay
with you.
THE CHAIRPERSON: That's fine, thank you.
MR. MILLER: Mr. Christian.
SUBMISSIONS BY MR. CHRISTIAN:
So you have ten minutes before I think
people are going to get a little restless for a lunch
break.
B.C. Hydro filed submissions on June 9th in
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this matter. That's Exhibit C7-2. I'm going to just
summarize briefly what Hydro said there and elaborate
on a few points.
In the June 9th submission, B.C. Hydro
submitted that the focus of this inquiry should be on
the activities of FortisBC that are the alternative
energy service activities, and that the focus should
not be on the activities of other parties, necessarily
at least, and that the focus of this inquiry should
not be on Fortis activities that have already been
subject to regulatory review, natural gas vehicles and
biomethane being two examples that have been discussed
this morning.
I offer two caveats to that observation.
First is that if the review of Fortis's alternative
energy services suggests that the regulatory response
to Fortis initiatives already underway and already
subject to Commission review has been inadequate in
some way, then of course BCUC could revisit it. And
in this regard I would echo Mr. Andrews' comments that
any such revisiting of previous decisions of the
Commission would be in accordance with the normal
Commission procedures regarding the consideration.
The other caveat I would offer is that the
complainants and other would-be competitors of Fortis
with respect to alternative energy services ought to
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at least have an opportunity made for them to provide
evidence with respect to what services they provide in
the marketplace and what regulatory regime they thing
should be, or is applicable to the provision of those
services.
Proceeding Time 11:53 a.m. T33
In other words, while the scope of this
proceeding shouldn't necessarily include the
activities of competitors of Fortis, the Commission, I
think, in setting up its process order should make
allowance for and perhaps even invite the competitors
of Fortis to put forward their evidence with respect
to their activities and how it should be regulated.
In the June 9th submission of B.C. Hydro,
B.C. Hydro offered a lens through which the Commission
can view the Fortis AES activities. In essence, B.C.
Hydro suggested that each of the activities -- or,
sorry, each of the AES services that Fortis would
provide should be considered as one of three different
things: Either a regulated service subject to the
determination by the Commission of rates, including
non-rate terms and conditions; that the AES service
could be an activity in the nature of maintaining
Fortis's load resource balance, and in the context of
this hearing, of course, that's primarily demand-side
management; and the third bucket B.C. Hydro offered,
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that the Commission could consider an AES service as
being is an unregulated service or revenue-generating
services, generally beyond the scope of the
Commission's jurisdiction, primarily revenue-related,
or revenue-earning activity.
In B.C. Hydro's submission, the Commission
is going to have to grapple with those questions in
any event, because there is one fundamental question
really that's on the table in this inquiry, and that
is: What is the correct regulatory response to the
AES services that Fortis and others would be offering?
And in B.C. Hydro's submission, it's going to be
challenging, if not impossible, for the Commission to
answer that question, that essential question, what is
the correct regulatory response, without understanding
the essential nature of the activity that's in
question.
So in B.C. Hydro's view, one window the
Commission is going to get to, having to consider
whether the individual AES projects are regulated
services, competitive services or more in the nature
of demand-side management, before it's going to be
able to come up with the correct review on what the
regulatory response should be.
B.C. Hydro also submits that viewing the
Fortis AES services through this paradigm, this three-
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fold paradigm, will minimize the likelihood of
unnecessarily and inefficiently reviewing some of the
Commission determinations with respect to individual
cases that have been before the Commission, and the
guidelines and other documents of Commission decisions
in the past, such as RMDUM guidelines.
And finally an issue near and dear to B.C.
Hydro's heart, minimize the likelihood that the
Commission will start looking generically at the
regulation of demand-side management issues, which of
course is the particular concern that Hydro has here,
given the broad scope of the Commission staff paper.
Now, I was going to say that I think, based
on the written submissions, that all the interveners,
I think, don't disagree with Hydro's views, at least
on the scope that should be focused on. AES -- I'm
not sure that I can still say that, having heard some
of the submissions today, but at least on paper, at
least, I don't think anybody is taking a contrary view
to B.C. Hydro with respect to the focus on AES on a
go-forward basis.
The only other submission I'd like to make
at this time arises from an exchange with Mr. Ghikas
and the panel. I think it was a question that came
from Commissioner Rhodes, and you were asking whether
Fortis's views on the hearings -- whether it should be
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generic here or not. And as I understood Mr. Ghikas's
answer, it was that it could be a generic hearing,
insofar as the scope was limited to the AES activities
of either Fortis, or Fortis and the would-be
competitors of Fortis. And B.C. Hydro agrees with
that. That is, to the extent that the scope is narrow
and focused on AES, then it can be generic. And focus
on not just the AES and Fortis, but the AES of other
competitors.
To the extent that the scope is broad, and
in particular to the extent the scope is as broad as
proposed in the staff Commission paper, including a
review of regulation of demand-side management
activities, B.C. Hydro would strongly object to this
proceeding being generic in that sense.
And, subject to any questions, those are my
submissions.
THE CHAIRPERSON: Thank you very much.
MR. MILLER: Mr. Chair, I believe it would be appropriate
to provide Mr. Ghikas with an opportunity of reply.
He's advised me that he does not intend to be very
long.
THE CHAIRPERSON: Mr. Ghikas.
REPLY BY MR. GHIKAS:
MR. GHIKAS: Thank you, Mr. Chairman.
Just picking up on a few of the points made
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by my friends, the first one -- I'll deal with these
more by topic than by particular speaker, but it deals
with generic versus the specific. And I believe Mr.
Christian's characterization was correct about
Fortis's position, in that the scope is narrow but
generic. I think that's a fair characterization.
Proceeding Time 11:58 a.m. T34
My friend Mr. Gustafson's submission on why
ESAC believes that it should be a more specific
proceeding relating to Fortis, he termed -- he stepped
back and said let's look at the elephant in the room.
And I think it's worthy underscoring that that
involves an assumption of a level of paternalism in
favour of his clients that isn't particularly
warranted, given the list of his clients. I mean,
these are the Honeywells of the world, the Tranes of
the world. These are multinational corporations. And
to try to restrict the scope to Fortis because they
are further ahead in this market, or a large energy
provider in this market, I think does a disservice to
the fact that my friend's clients are significant
entities. They're a herd of elephants in the room, if
I can put if that way, sticking with the zoo metaphors
that we're working with her.
In combination with that submission, my
friend did concede that his clients compete in every
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space except with regard to NGV. And to the extent I
would echo my friend Mr. Quail – and this may be the
only time we ever hear this, so we can all savour it –
to the extent that the market development is a
relevant point in this inquiry, it's difficult to see
how an inquiry can proceed without looking at who the
market players are. And in this case, this inquiry
has been triggered by two market players in this -- or
intended market players in this environment, and it's
difficult for Fortis to accept that those market
players would be able to stand on the outside, launch
bombs in from the outside, and then try to stay on the
periphery and have the inquiry focused on Fortis
rather than being subjected to similar inquiries with
respect to how they operate their business and the
nature of their -- the nature of how they intend to
undertake business and develop in this market.
On a similar point, I heard my friend Mr.
Gustafson go through further points with respect to,
in effect, the -- as I believe ESAC perceives it, the
intentional exclusion of them from past processes by
Fortis. And as I sit through that, I would be remiss
if I didn't say that the Fortis utilities do not
accept what they are saying, factually or the
implications of it.
And I understand why my friend is making
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that point, and it goes to the fact that, as a number
of people have stood up today and said, that there has
to be some finality to decisions that are made. And
in my submission, ESAC recognizes that, and this is
their basis for attacking decisions that have been
made in the past. And if they are going to be
advancing that as the basis of their complaint and as
the basis for the Commission reviewing past decisions,
they, in my respectful submission, have to stand up on
the stand and answer for it. They have to answer
questions, and I'll just list a couple here that I
think should be issues on this point, about where they
were when the public processes were unfolding dating
back to 2008, and whether it's correct that the
organization with whom they say that Fortis failed to
consult was, as their media releases say, formed in
December of 2010; why ESAC failed to mention that one
of its members is in fact participating in stakeholder
sessions; why it has failed to mention that ESAC
members who were invited in writing by Fortis to
participate in stakeholder processes decided not to
attend; why ESAC failed to mention that still other
members of ESAC who had attended the stakeholder
sessions while employees of B.C. Hydro, and why ESAC
has failed to mention the fact that some of its
members have been partnering with the Fortis utilities
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on alternative energy projects.
Now, in my submission, this whole issue is
a side issue because it doesn't take them anywhere.
But if they're going to make those allegations they
have to answer for them. In my respectful submission,
those issues should be on the table, and they should
have to put forward a panel to speak to them.
Proceeding Time 12:04 p.m. T35
Now, with respect to the Corix submissions,
my friend Mr. Wallace, on his written hand-out he has
also spoken to the issue of being limited to FortisBC.
And he says the principles established for Fortis can
be applied to others as appropriate.
Well, while it is true that those may be
applied to others as appropriate, the fact of the
matter is, Corix is a complainant, and they have been
very careful to position themselves, and they don't
mention the word "complaint" in their letter, but the
fact of the matter is, they are raising issues and
they are referencing the possibility of the Commission
granting interim relief. And in such cases, they're a
complainant. And in my submission, it's entirely
appropriate for the complainant in this circumstance,
like Corix, to have to put forward evidence of its own
business model, and its approach to allocating costs,
for example, and its approach of putting different
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types of services, both regulated and non-regulated,
within the same company and corporate structure.
My friend Mr. Andrews spoke to the concern
that he had over a policy-driven process versus a
complaint-driven process. And I have to say the
Fortis utilities do share that fundamental concern
that in a sense this process, and a considered -- the
consideration of some of these issues has been pushed
forward in a sense, and pre-empted, by these
complaints. And we welcome the opportunity to deal
with the issues that we have described, the AES issues
in particular and to deal with them in this process,
and to deal with the complaints, which deal with the
same issues, in this process. I don't think we need
more than one process to deal with the complaints as a
separate issue. Fortis is content to have the
complaints dealt with in this process.
The key, in my submission, for dealing with
the issue that my friend Mr. Andrews has raised, and
legitimately so, is that the process has to be
structured in a way that does not put forward the
complaints as a means of railroading through a process
that's going to have longer-term implications for
everyone in the room. And I can speak further to that
in the context of the process, but I think the
solution to the simple point is that it's how the
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process is crafted, the timelines that are provided,
and the participation of various parties in the
process, that those are the mechanisms by which the
Commission deals with that concern, and it is a
legitimate concern.
Finally, the point about regulated versus
non-regulated. And this came up in a variety of
contexts. My friend Mr. Gustafson, for example, he
was careful to put his comments in terms of the
involvement of Fortis, and I have as a quote "in the
unregulated space". My friend Mr. Wallace talked
about, in his handout, the non-gas non-regulated
sphere. And there was further discussion about RMDUM.
And my friend Mr. Quail said that some of these
activities may not be regulated. And finally, my
friend Mr. Chairman raised the question of what about
guidelines in the area of public utility regulation.
And all of these points, in my submission, come back
to the fundamental point that the regulated nature of
these services is defined by the Act. It always has
been, it always will. And the Act has remained the
same over time.
These services, while Fortis's involvement
is new, these services of the exact same character
have been offered over time and are regulated
services. And so while my friend Mr. Gustafson's
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clients may have some conception that services of this
nature wouldn't be regulated, the fact of the matter
is, it's dictated by the Act as to whether it's
regulated. And to specifically answer the question
that Mr. Chairman posed to my friend Mr. Andrews is,
in my submission, the Commission doesn't need to
prescribe guidelines as to what is regulated and what
is not. The guidelines are the Act. And they're
there, and they're clear, with respect to the
provision of thermal energy. And so regardless of the
submissions that are coming from the various parties
about the potential for regulating these, and possibly
not regulating them, the fact of the matter is,
they're regulated. And in my submission, I have this
fear that we're going to spend an inordinate amount of
time in this process dealing with issues on the false
premise that services of this nature can be non-
regulated when in fact they are. And so I'm -- I just
-- I'm cognizant of the issue. It may be that we have
to address it at the end. But in my submission, the
efficiency of the process could benefit from an early
determination in that regard.
Those are my reply comments, subject to any
questions.
Proceeding Time 12:10 p.m. T36
THE CHAIRPERSON: I'm glad to hear that the Utilities
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Commission Act is so clear in all aspects. Thank you.
MR. MILLER: Mr. Chair, Staff is prepared to make its
submissions on process. I note the time. My
suggestion is I believe that process issues should go
fairly quickly, so I would suggest we go through to
12:30 and see where we are.
THE CHAIRPERSON: That would be satisfactory. Hopefully
hunger pangs will speed things up.
MR. MILLER: Yes.
SUBMISSIONS BY MR. MILLER:
So Staff's position on process is they
strongly encourage the Panel members to order an oral
hearing. Often if the Panel decides to look at
broader policy issues, often IRs aren't satisfactory
from Staff's perspective. And this isn't directed
just to utilities but also to others who have filed
evidence. You ask written questions and you don't get
back answers, and then the staff hasn't been able to
fully explore the issues in front of the Panel so that
the Panel has a full understanding of what's going on.
So we strongly recommend an oral hearing.
Having said that, we understand that
Staff's desire for scoping issues is much broader than
some of the other parties'. So we would suggest that
if you are inclined to go along with Staff's
suggestions, that the hearing could be held in phases,
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the oral part of the hearing could be held in phases
where only those parties that are interested in a
particular issue would attend that part of the oral
hearing.
With respect to timelines, we believe that
the first item should be evidence from Fortis, and
then around the first round of IRs from Fortis and all
the interested parties and the Commission Staff.
Then we would suggest having evidence from
both ESAC and Corix filed, followed by IRs from all
the parties on those issues. The next step would be
evidence from interveners, if any, and then IRs on the
intervener evidence.
And then finally a second procedural
conference to address any outstanding issues that
arise from the evidence being filed in the IRs, if
necessary. And then a second round of IRs on both
Fortis and, if I can call them the complainants, ESAC
and Corix's evidence. And then a final round of IRs
on intervener evidence.
Now, with respect to the timelines between
those steps, particularly the evidence being filed in
the IRs, often Commission Staff shoulders a lot of the
workload for the other parties in the hearing. So
Staff would suggest that there be at least a three to
four week period between filing of evidence and the
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Staff's obligation to produce the first round of IRs.
And those are our submissions.
And just one final comment. We agree with
some of the parties and Mr. Ghikas's last comment that
to a large extent we think we need evidence from Corix
and ESAC to properly understand the scope of the
issues, especially if we're going to be developing --
well, both on developing policy issues so we
understand what the marketplace is, and also
particularly with respect to the complainants, they
should be required to file evidence.
THE CHAIRPERSON: Thank you, Mr. Miller.
MR. MILLER: Mr. Ghikas, I believe, would be next.
SUBMISSIONS BY MR. GHIKAS:
Very briefly, the submissions are laid out
in the written. I'm not going to repeat them, but to
highlight. The general framework that we've put
forward tries to deal with groups of issues in the
sense of are they procedural, are they substantive,
are they fundamentally legal issues? And just to stay
with that framework, I do want to reiterate the belief
of the Fortis utilities that legal issues should be
addressed through legal submissions and not piecemeal
through IRs. And the most efficient means of dealing
with those issues is to have an issues list that comes
from the Panel, or in conjunction with Staff, but to
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put those issues forward in advance so that the
parties know what they're answering in terms of legal
submissions but not to be forced to compartmentalize
legal issues. And any time -- and this isn't a
criticism for people asking IRs, but any time you get
issues asked through IRs, you end up with little
snippets of what amount to legal argument in various
contexts, and there's overlap. And I think in this
context there are so clearly a significant number of
legal issues that will have to be addressed that
certainly the scoping document will make a lot of
those issues clear and unnecessary to ask those issues
again through IR process. But to the extent that they
aren't clear, then a subsequent document that is
released by the Commission requesting specific
information on issues, legal submissions, would be the
most effective way to deal with it, in my submission.
Proceeding Time 12:16 p.m. T37
Dealing with the -- there are some
procedural issues. We've grouped them. They are
largely related to what is addressed in what context,
and in my submission that type of issue isn't
necessarily dealt with in an oral proceeding, and
could be dealt with quite effectively through writing
if there is a convenient way to hive it off. And it
may be that that determination can't be made until
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farther down the road. But to the extent that those
issues can be dealt with in the most efficient way, to
keep the scope of an oral hearing down, that would be
preferable.
And as we set out in our written
submissions, we do favour an oral proceeding in this,
and I think part of that is in recognition of the
Commission's obvious interest in the issue and the
desire of people within the company to want to come
forward and give oral testimony on issues that are of
obvious policy interest to the Commission, and then
they want to make themselves available for that. The
other aspect of things, of course, is that this is
driven by a complaints process, and I've made my
submissions on that point.
But I do believe that the nature of the
dynamic here with respect to the complaints does
require, certainly, that Fortis be able to cross-
examine the panels put forward by the two
complainants.
We have set out in the written proceeding
-- or, sorry, the written submissions, an outline of
the inquiry timing and process. The timing is
obviously going to be changing based on where the
scope of the proceeding is. It obviously depends to
some degree on that. But I think in terms of the
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relative spacing of each step between one another, my
friend Mr. Miller referred to the need for extra time
for Commission staff, and I would echo his comments in
the sense that in a proceeding of this magnitude,
there should be a lot of space in between the
procedural steps, particularly -- and speaking from
the perspective of the utility, there are other
proceedings ongoing. And obviously a lot of the
people in this room are participating in everything,
so to the extent that the process can accommodate
reasonable timelines for people to respond, I think
it's important that we do so.
I was scribbling furiously with respect to
my friend Mr. Miller's procedural outline for process,
and I think I got most of it, and I think the general
thrust of what my friend was getting at was the need
for staged evidence by Fortis and then followed by
IRs, and then the complainants, followed by IRs, and
then interveners followed by IRs. And I think broadly
speaking that parallels what we were putting forward
in the written submission, and I think that makes
sense.
I would also suggest that a need for a
procedural conference somewhere along the line is
probably inevitable, particularly since we'll have a
better idea of what the scope of the proceeding is at
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that time, and perhaps some of these issues will have
to be addressed at that time.
My friend Mr. Miller was discussing about
phasing the proceeding, in a sense where people could
participate in one or the other, and that -- the devil
on those -- on that submission is in the detail. The
difficulty, of course, is that the foundation of the
inquiry is, as we understand it, is that there is a
desire to have sort of a broader look at things. And
that to me what has occurred to date has been
comprehensive applications dealing with each subject
matter.
Proceeding Time 12:21 p.m. T38
And as I understand it, there is some
desire to look at things on a broader level, and to
the extent that you're cutting those things up into
smaller pieces in the inquiry, it does beg the
question. But in principle it would make things much
more manageable to deal with things that way, and so
to the extent that those issues, that concern can be
overcome, I think it does make sense to cut things up
into smaller pieces.
Subject to any questions, I think those are
my submissions.
THE CHAIRPERSON: No, that's quite useful. Thank you.
MR. GHIKAS: Thanks.
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MR. MILLER: Mr. Gustafson.
SUBMISSIONS BY MR. GUSTAFSON:
Thank you. First let me reiterate what I
said right at the outset when I stood up this morning.
We come with questions, not with allegations. We did
not file a complaint. We filed an application
inviting an investigation so that we could understand
better the nature of the activities being conducted by
Fortis in the AES space.
In our view, the evidence that is likely to
be required in this hearing should be provided
primarily by Fortis. And then depending on what
evidence it submits, it may make sense for my clients
and for Mr. Wallace's client to submit evidence as
well to better understand the market. We understand
that that is certainly a possibility, but it really
does depend on what Fortis tells us, because I said,
we're trying to understand what they're doing, and
based on a better understanding of those activities,
that will dictate how we respond.
In our submission, the evidence that is to
be introduced is likely not to be all that
contentious. It's going to be "Here's what we're
doing." The debate will really centre around
jurisdictional questions and questions of policy, and
in our submissions those can be adequately dealt with
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in a written process, and that's what we would
advocate that the Commission endorse and put in place
here.
We are concerned that if we are involved in
an oral hearing, the proceeding will be a protracted
one. It will become extremely expensive for our
clients to participate in and will become potentially
prohibitively expensive and unnecessarily time-
consuming. So we propose that this matter be dealt
with as expeditiously as possible, with a narrow
focus.
Mr. Wallace was kind enough to share a
detailed proposal as to the timing of the process, and
we support what he has outlined, with one small change
and that would be in relation to the proposed November
7th deadline for filing of BCUC and interested party
IRs on the reply evidence; that an opportunity also be
provided at that stage to file further IRs in respect
of responses by Fortis to the earlier round of IRs,
because we do agree that in the initial instance not
all responses to IRs properly and fully address the
questions that are underlying that. So it may be
useful to have a second opportunity to ask questions
or questions of clarification in respect of the
responses to the IRs.
We have a fundamental concern that if --
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particularly if this proceeding is a protracted one,
that Fortis, in the meantime, continues to operate in
this space, potentially in a manner that is
prejudicial to the interests of our clients and those
of Corix and others who compete in the AES business.
And we ask that the Commission make an order, and
particularly, as I say, if the proceeding is to be a
protracted one, that the Commission make an order that
will suspend the use and application of the EEC funds
in the AES space.
If the proceeding is as protracted as my
friend would suggest it should be, in our respectful
submission not only will the horse have left the barn
but it will be out of sight and in the next county
never to be seen again, if Fortis has the opportunity
to continue to pick the low hanging fruit in the
marketplace and continue to support and buttress its
position as the dominant player in this marketplace.
Proceeding Time 12:26 p.m. T39
And so we would ask that in considering how
the Commission wants to proceed, and the nature of the
process, and how long it will take, that in
conjunction with that, that the Commission also
consider making an order that will safeguard and
protect the interests of the key stakeholders in this
process.
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Those are my submissions, thank you.
THE CHAIRPERSON: Thank you.
MR. MILLER: Mr. Wallace.
SUBMISSIONS BY MR. WALLACE:
MR. WALLACE: Thank you. I did outline our thoughts on
process on the back of the document provided to you
earlier. I won't go through that in full detail, but
I do want to highlight a couple of things.
First, Corix prefers an expedited written
process. Like Mr. Gustafson, I don't expect that in
the end the issues will be as complicated as they
might appear to be from this distance. When we get
into what Corix is doing, and why it thinks it's
right, and why other people think it's wrong, or there
should be a change, I think the positions will become
fairly clear.
It's very clear to us that uncertainty
caused by delay is not helpful to us, and we expect to
others. Recognize, Mr. Ghikas has mentioned it, that
it causes uncertainty for Fortis and, as Mr. Gustafson
mentioned, there is a danger that if it's spun out too
long, Fortis will carry on in what his client and ours
believe is inappropriate behaviour. Accordingly, it's
in the interests of everybody to get these issues
resolved as soon as we can, and we believe that a
written process is the best way to do it.
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Clearly, there needs to be an opportunity
for FortisBC and interested parties to file evidence.
And we support that. We believe it's important that
Fortis make it clear what it is doing, and why it
thinks it is right. And that interested parties,
including Corix, be given an opportunity to file
evidence to indicate why they think it is wrong.
A final decision has not been made by Corix
as to filing evidence. We haven't seen Fortis's
evidence. But we have heard the concerns of staff,
we've heard the concerns of Fortis, and obviously
those are going to be taken into consideration.
With respect to the number of rounds of
Information Requests, it would be our submission that
one round of Information Requests directed to all
parties that file evidence, and one round on FortisBC
reply evidence, should be sufficient. Again, we think
that the facts will become clear fairly quickly.
We feel particularly strongly that if there
is going to be an oral proceeding, the delay be caused
by a second round of Information Requests is not
necessary. Issues that fall into that category can
either be brought back to the Commission with requests
for leave to put a second round, where there is a
particularly egregious problem, or they can be
answered orally during the course of the oral
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proceeding. And second round of IRs in Fortis's
evidence, interested party evidence and reply evidence
simply extends the proceeding too long, as is
evidenced, I think, by Fortis's proposed schedule for
these proceedings.
With respect to the possibility for a
procedural conference, in our submission that could be
considered after the Fortis responses to information
requests, or after the filing of evidence by
interested parties. The advantage of doing it after
the filing of evidence by Fortis would be an
opportunity for the Commission to look at the evidence
that far, to see what -- whether the record is
complete in its inquiry, and whether it does wish to
ask interested parties to file evidence. It would be
my submission that the Commission does not have the
jurisdiction over a non- -- or over an interested
party that is not a utility to compel it to file
evidence, but obviously any request would be given the
very highest consideration. And would, I think, be
taken as a strong signal of what is necessary in order
to prove one's case.
And I think -- the only other issue I would
raise is that Mr. Ghikas raised the possibility of
what would amount to, I think, special costs being
assigned against Mr. Gustafson's client. In our
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submission, that's highly unusual and even raising the
possibility feels like a form of intimidation. And I
would urge the Commission not to follow that
suggestion.
Proceeding Time 12:32 p.m. T40
I think anything else I can leave to the
submissions that are on the exhibit. There is a draft
schedule there which we think is fair and reasonable.
If timelines are to be expanded, then of course they
should be expanded for all parties, not just one. And
that concludes my comments.
THE CHAIRPERSON: Thank you.
MR. WALLACE: Thank you.
MR. MILLER: I note the time, Mr. Chair. I have
canvassed the remaining parties, and if their time
estimates hold true they should be no longer than
about ten minutes in total. So would you care to
proceed?
THE CHAIRPERSON: Why don't we try and get through them?
MR. MILLER: Mr. Weafer.
SUBMISSIONS BY MR. WEAFER:
Thank you, Mr. Chairman. The CEC supports
and endorses an oral hearing in this process. One of
the complaints seems to be that there hasn't been
active Commission involvement in the ad hoc processes
that have been referred to, and we believe this is a
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proceeding given, whether you use the broad scope of
issues or the narrow scope of issues, this Panel
should be able to deal directly with the testimony of
witnesses. So we endorse an oral proceeding.
In terms of the inquiry timing, we believe
with a narrower scope you can tighten up the Fortis
timing set out in their submission at page 34, and the
difference between a written and an oral may be a
matter of three or four months in difference of --
given the importance of the issues and the future
activities of the utility that that time is worth
taking to get this right.
So those are our submissions.
THE CHAIRPERSON: Thank you, that's useful.
MR. MILLER: Mr. Andrews.
SUBMISSIONS BY MR. ANDREWS:
BCSEA and SCBC support there being an oral
hearing in this proceeding, for reasons that have been
made already. They also support the Staff's proposal
regarding the sequence of opportunities to file
evidence and information requests on them, and there
being a second procedural conference. I think those
are my submissions subject to any questions.
THE CHAIRPERSON: Thank you.
MR. MILLER: Mr. Wieringa.
SUBMISSIONS BY MR. WIERINGA:
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MR. WIERINGA: In our letter we had suggested a written
process. I think what we're suggesting now is based
on what we've heard is that there might be some things
that you might want to consider in a written process;
otherwise we're in favour of an oral process.
THE CHAIRPERSON: Thank you.
MR. MILLER: Mr. Christian.
SUBMISSIONS BY MR. CHRISTIAN:
Fortis proposes a hearing process that
commences with the filing of evidence by itself by
Fortis, and B.C. Hydro agrees this is a reasonable way
to start off this process, except as noted in my
earlier submissions that sufficient allowance needs to
be made for competitors of Fortis to put in their
evidence with respect to their AES services.
In this regard I just want to follow up on
-- when I made those submissions earlier I was talking
about the prospect of making allowance for them,
perhaps inviting them. And the reason I was careful
to use those words was because I'm echoing concerns
raised by Mr. Wallace, that it's not clear to me that
the Commission has the ability to compel certainly the
non-utility complainants but even necessarily Corix,
to compel them to put evidence forward.
Fortis proposed an August 31 filing date,
which seems reasonable, and Fortis also proposes a
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hearing schedule that would end about a year from now,
as I read it, and includes two rounds of IRs and an
oral hearing. And despite that there's -- perhaps
groundswell is too strong a word, but there seems to
be some enthusiasm for an oral hearing, B.C. Hydro's
view is that it's hard to make that determination in
the absence of making the determination of what the
scope should be. In other words, if the scope is
relatively narrow as B.C. Hydro proposes, it would
have thought that an IR round, maybe two, and written
submissions would be sufficient to deal with the
matters that are in issue. But on the other hand, if
the scope is broad and generic in the way proposed by
staff, then a full-on hearing with multiple IR rounds
and an oral process at the end might well be required.
And so I think the issues of process and
type of -- and a hearing -- or sorry, the scope issues
that we discussed earlier and the type of hearing are
very much interrelated. And the broader and the more
generic the hearing, the more complex and lengthier
the process will have to be necessarily because of the
breadth of issues that are engaged by parties that
would otherwise be merely viewing largely from the
outside.
Proceeding Time 12:37 p.m. T41
And the last comment I'd like to make is
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with respect to a comment made by Mr. Ghikas about the
appropriateness of using the IR process to elicit or
advance legal arguments. Generally speaking, Hydro
agrees with Mr. Ghikas that IRs are not useful to
elicit or advance legal argument. But in this case it
seems that if the Commission does accept B.C. Hydro's
recommendations with respect to how to proceed, namely
by requiring the parties to identify which of the
three buckets their AES activities fall within, it
would be helpful to have that initial evidentiary
filing, have at least a summary of the legal basis and
the argument by which the Fortis or Corix or any of
the others say that their activities fall into those
buckets. In other words, if Fortis, as I understand
it, they say all their AES activities fall within the
bucket of regulated services, their evidentiary
filing, it seems to me, could usefully – and help this
process move along expeditiously – say why, by
reference to the Utilities Commission Act.
And those are my submissions, subject to
any questions.
THE CHAIRPERSON: Thank you.
MR. MILLER: Mr. Chair, I believe Mr. Ghikas has a brief
reply comment.
REPLY BY MR. GHIKAS:
MR. GHIKAS: Thank you, Mr. Chairman. There is actually
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three, but I will be very brief.
The first point is that the timing of some
of the schedules put forward would have the initial
filing being filed relatively close. Given the
magnitude of the potential evidence that has to be put
in, I would just urge the Commission to ensure that
there is sufficient time for the preparation of the
initial evidence, and I believe that the timing that's
set out in the Fortis proposal would allow for that.
The second point is that, while I may have
misheard, I'm not sure whether the process that was
outlined by my friend Mr. Miller accounted for
rebuttal evidence to be filed by Fortis. But in any
event, I notice it's absent from my friend Mr.
Wallace's, and I would submit that it would be
appropriate to provide for that.
Finally, the -- oh, sorry. There is one
more point. Just with respect to my friend Mr.
Christian's comment on having panels testify. That
issue, I'll just cite the section. It's Section 2(4)
of the UCA, which refers to the Administrative
Tribunals Act, and Section 34(3) of the Administrative
Tribunals Act deals with witnesses. And I think
you'll find, if you go there, it applies to persons
and not public utilities.
Finally, my friend Mr. Gustafson raised the
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possibility of interim relief for his clients
suspending the use of EEC funds. My only comment at
this stage would be that that type of request would
have to be supported by an application and supported
by evidence, which at this point there is none
supporting his clients' allegations. And that would
have to also articulate the harm to his clients, and
the harm to the other parties of granting the relief
that he seeks. And including the customers of Fortis
and Fortis itself.
So, those are my reply submissions on that
point. Subject to any questions, I am finished.
THE CHAIRPERSON: This is just -- might be a bit of an
odd question, but Fortis has taken the position this
should be a generic, not a specific inquiry. Is that
correct?
MR. GHIKAS: Correct.
THE CHAIRPERSON: And if it was a generic inquiry, would
you then have rebuttal by who?
MR. GHIKAS: Well, that's a fair question. The reason is
that it's founded by the complaints. I mean, there
still is a complaint in this process. And if you're
going to have the complainants filing evidence, the
Fortis utility should be permitted to respond to that
evidence.
In the absence of the complaints, it's a
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more generic proceeding, and I can take your point.
But in the presence of a complaint, I think the
appropriate process would involve rebuttal evidence.
THE CHAIRPERSON: Thank you.
MR. GHIKAS: Thank you.
MR. WALLACE: Mr. Chairman, I rise simply to correct a
mistake that Mr. Ghikas made, I assume not
deliberately, in his characterization of our
timetable. We do, on October 31st, allow for reply
evidence, which I consider to be rebuttal evidence, by
Fortis. So we do see it as appropriate.
THE CHAIRPERSON: Thank you.
MR. MILLER: Mr. Chair, I am not aware of any further
procedural issues to address.
THE CHAIRPERSON: Are there any further procedural issues
that anyone wishes to raise at this time?
Thank you. We will adjourn. I appreciate
the input that has been provided today, and in due
course the zookeepers will work through the excrement
and deliver a decision.
COMMISSIONER RHODES: Go Canucks Go!
(PROCEEDINGS ADJOURNED at 12:43 P.M.)