ONTARIO
ENERGY
BOARD
FILE NO.:
EB-2007-0707
VOLUME:
5
DATE:
September 15, 2008
BEFORE:
Pamela Nowina
Presiding Member
Ken Quesnelle
Member
David Balsillie
Member
EB-2007-0707
THE ONTARIO ENERGY BOARD
IN THE MATTER OF Sections 25.30 and 25.31 of
the Electricity Act, 1998;
AND IN THE MATTER OF an Application by the
Ontario Power Authority for review and
approval of the Integrated Power System Plan
and proposed procurement processes.
Hearing held at 2300 Yonge Street,
25th Floor, Toronto, Ontario,
on Monday, September 15, 2008,
commencing at 9:05 a.m.
-----------------VOLUME 5
-----------------B E F O R E:
PAMELA NOWINA
PRESIDING MEMBER
KEN QUESNELLE
MEMBER
DAVID BALSILLIE
MEMBER
A P P E A R A N C E S
JENNIFER LEA
DAVID CROCKER
Board Counsel
DAVID RICHMOND
VIOLET BINETTE
NEIL McKAY
Board Staff
GEORGE VEGH
MICHAEL LYLE
GLEN ZACHER
JAMES HARBELL
KRISTYN ANNIS
Ontario Power Authority (OPA)
STEVEN SHRYBMAN
Council of Canadians
JAY SHEPHERD
JOHN DeVELLIS
School Energy Coalition (SEC)
DAVID POCH
KAI MILLYARD
Green Energy Coalition, Pembina
Foundation and Ontario Sustainable
Energy Association (OSEA)
ANDREW LOKAN
JUDY KWIK
RICHARD STEPHENSON
Power Workers' Union (PWU)
BASIL ALEXANDER
MURRAY KLIPPENSTEIN
CORY WANLESS
KENT ELSON
Pollution Probe
TOM BRETT
CARLTON MATHIAS
Association of Power Producers of
Ontario (APPrO)
PETER THOMPSON
VINCE DeROSE
NADIA EFFENDI
Canadian Manufacturers & Exporters
(CME)
A P P E A R A N C E S
MARK RODGER
Alliance of Energy Consumers
(Association of Major Power
Consumers of Ontario, AMPCO;
Canadian Chemical Producers'
Association; Cement Association of
Canada (Ontario); Industrial Gas
Users Association, IGUA; Ontario
Federation of Agriculture, OFA;
Ontario Forest Industry
Association; Ontario Mining
Association; Stone, Sand and
Gravel Association of Ontario
IAN MONDROW
ELISABETH DeMARCO
City of Toronto
MICHAEL BUONAGURO
Vulnerable Energy Consumers'
Coalition (VECC)
JOHN CYR
NICK MELCHIORRE
City of Thunder Bay, Northwestern
Ontario Municipal Association
(NOMA), Town of Atikokan
ROBERT WARREN
Consumers Council of Canada
KELLY FRIEDMAN
RAUL AGARWAL
Electricity Distributors
Association
JOHN RATTRAY
PAULA LUKAN
Independent Electricity System
Operator (IESO)
TIM MURPHY
AMANDA KLEIN
Canadian Solar Industries
Association
CHARLES KEIZER
Brookfield Energy Marketing Inc.,
Great Lakes Power Ltd. (GLPL)
DOUG CUNNINGHAM
Nishnawbe Aski Nation
ALEX MONEM
ARTHUR PAPE
Saugeen Ojibway Nations (SON)
PETER FAYE
JOANNA BULL
Lake Ontario Waterkeeper
A P P E A R A N C E S
JENNIFER AGNOLIN
VIVIENNE BALL
Northwatch
JEFF ROSEKAT
CHERIE BRANT
GENEVIEVE LE COMTE
First Nations Energy Alliance
JIM HAYES
JO-ANNE PICKEL
Society of Energy Professionals
SARAH DOVER
Provincial Council of Women of
Ontario (PCWO)
MICHAEL ENGELBERG
BLAIR McDONALD
Hydro One Networks Inc. (HONI)
DAVID GOURLAY
Newfoundland and Labrador Hydro
DAVID STEVENS
DENNIS O'LEARY
Enbridge Gas Distribution
PAUL MANNING
National Chiefs Office, Assembly
of First Nations
FRED CASS
Ontario Power Generation (OPG)
ANDREW TAYLOR
Ontario Waterpower Association,
Canadian Wind Energy Association
DAVID MacINTOSH
Energy Probe
ALSO PRESENT:
Dr. JAN CARR
MIRIAM HEINZ
Ontario Power Authority
TOM ADAMS
Alliance of Energy Consumers
CHRIS BUCKLER
Electricity Distributors'
Association
GRACIA JANES
Provincial Council of Women of
Ontario
I N D E X
O F
P R O C E E D I N G S
Description
Page No.
--- On commencing at 9:05 a.m.
1
Preliminary Matters
1
ONTARIO POWER AUTHORITY - PANEL 2, RESUMED
A. Shalaby, A. Pietrewicz, Previously Sworn
2
Cross-Examination by Mr. Shrybman
2
--- Recess taken at 10:33 a.m.
--- On resuming at 10:55 a.m.
48
48
Cross-examination by Mr. MacIntosh
Cross-Examination by Mr. Rubin
78
79
--- Recess taken at 12:15 p.m.
--- On resuming at 1:45 p.m.
95
95
Cross-Examination by Mr. Pape
116
--- Recess taken at 2:58 p.m.
--- Upon resuming at 3:19 p.m.
134
134
Cross-Examination by Mr. Manning
162
--- Whereupon hearing adjourned at 4:45 p.m.
181
E X H I B I T S
Description
_______Page No.
EXHIBIT NO. K5.1: PRELIMINARY
ASSESSMENT OF THE POTENTIAL FOR A CLEAN
ENERGY TRANSFER BETWEEN MANITOBA AND
ONTARIO
31
EXHIBIT NO. K5.2: PRESS RELEASE OF
MANITOBA AND ONTARIO SIGNED POWER SALE
AGREEMENT
32
EXHIBIT NO. K5.3: WEB PAGE FROM
MINISTRY OF ENERGY AND INFRASTRUCTURE
WEBSITE ENTITLED, "ONTARIO'S ELECTRICITY
TRANSMISSION SYSTEM PROJECTS"
33
EXHIBIT NO. K5.4: COLLECTION OF
CORRESPONDENCE BETWEEN ENERGY PROBE AND
ONTARIO HYDRO.
83
U N D E R T A K I N G S
Description
Page No.
UNDERTAKING NO. J5.1: TO PROVIDE
RECENT ANNOUNCEMENTS MADE BY MANITOBA
HYDRO WITH RESPECT TO AGREEMENTS WITH
POWER SALES TO THE US.
26
UNDERTAKING NO. J5.2: TO PROVIDE
OVERVIEW OF SOURCES OF IMPORTS, TO BE
FURTHER DEFINED.
68
UNDERTAKING NO. J5.3: TO CONFIRM THE
EXTENT TO WHICH LAID-UP UNITS ARE
REPRESENTED IN MODEL RUN 2.
104
NO
1
1
Monday, September 15, 2008
2
--- On commencing at 9:05 a.m.
3
MS. NOWINA:
4
Good morning, everyone.
5
to rest and relax on the weekend.
6
oral portion of the review of the Integrated Power System
7
Plan.
8
approval of the integrated power system plan and certain
9
procurement processes.
10
11
Please be seated.
I hope everyone had a chance
Today is day 5 of the
The Ontario Power Authority is seeking the Board's
The Board has assigned file number
EB-2007-0707 to this application.
Today we continue with the cross-examination of panel
12
2 on plan overview and development.
13
preliminary matters?
Are there any
Mr. Vegh.
14
PRELIMINARY MATTERS:
15
MR. VEGH:
Just as a matter of housekeeping, Madam
16
Chair, and to keep the parties advised, on September 14th
17
the OPA filed responses to some of the interrogatories
18
arising last week.
19
The letter of September 14th was copied to the parties
20
and to the Board Secretary, but I will just put on the
21
record what interrogatories were responded to.
22
J1.2, J2.3, J3.1, J4.3.
23
They were
In addition, in that letter there were filed what are
24
called, for lack of a better term, some supplementary
25
interrogatory responses.
26
for information from the GEC coalition and others.
27
requests were provided to the OPA with respect to some of
28
the evidence filed by external witnesses -- or external
These are responses to requests
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These
2
1
2
parties.
And GEC asked to get this information in lieu of the
3
need to cross-examine those parties.
4
was provided on September 14th under cover of the letter,
5
and they have been marked for identification -- or for
6
evidence purposes as Exhibit I-22, numbers 239 to 247.
7
MS. NOWINA:
8
MR. VEGH:
9
MS. NOWINA:
10
So this information
Thank you, Mr. Vegh.
Thank you.
So for the Council of Canadians, Mr.
Shrybman.
11
ONTARIO POWER AUTHORITY - PANEL 2, RESUMED
12
Amir Shalaby, Previously Sworn
13
Andrew Pietrewicz, Previously Sworn
14
CROSS-EXAMINATION BY MR. SHRYBMAN:
15
MR. SHRYBMAN:
16
17
Good morning, Madam Chair, Members of
the Board, Mr. Shalaby and Mr. Pietrewicz.
I am going to direct my questions, for the sake of
18
brevity, to Mr. -- to one of you, or to Mr. Shalaby.
But I
19
am referring to Mr. Shalaby in the collective sense, Mr.
20
Pietrewicz, so if you have anything to offer, please feel
21
free to do that.
22
I have three general areas I want to cover with you.
23
Two have to do with the methodologies and approaches that
24
you are seeking approval from the Board for as they apply
25
to Ontario's trading relationships with other provinces and
26
US states, and the third has to do with competitive markets
27
and how you have approached that issue using the same
28
methodologies and approaches that you have described in the
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1
2
material before the Board.
Let me begin just to clarify my understanding of what
3
you mean by methodologies and approaches.
4
you need to go there, but I am referring to the transcript
5
from day 1 at page 16.
6
7
I don't think
Let me just read you the portion that I want you to
address:
8
"The plan proposes planning methodologies and
9
approaches, so in addition to specific facilities
10
that we seek approval to procure and approval to
11
develop, the plan proposes methodologies for
12
planning, methodologies for choosing between
13
resources, methodologies for building
14
flexibility, methodologies for incorporating all
15
of the requirements of the regulations, and we
16
seek approval of that, as well."
17
Does that accord with your position with respect to
18
the approvals you are seeking with respect to methodologies
19
and approaches?
20
MR. SHALABY:
21
MR. SHRYBMAN:
22
Yes, it is.
Is there anything that you would add to
that list?
23
MR. SHALABY:
24
MR. SHRYBMAN:
No.
So this, if I am correct, goes
25
significantly beyond simply the methods you have used to
26
develop the criteria, but you are describing methods and
27
approaches that are broader than that; am I correct?
28
MR. SHALABY:
All of the things that are listed there,
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2
yes.
MR. SHRYBMAN:
Okay.
So I want to ask you, then,
3
about how you have used those methodologies and approaches
4
to address, at first instance, the potential for Ontario
5
entering into agreements with Manitoba, Quebec,
6
Newfoundland or Labrador for some type of power purchase or
7
power sharing arrangement.
8
want to cover with you.
9
10
11
So that is the first issue I
So I understand your position with respect to the
potential for those agreements.
Let's start with Manitoba.
You deal with this issue at various places in the
12
materials, I believe, but there are a couple of -- there
13
was a section of section E which is devoted to the
14
potential for purchase of electricity from Manitoba.
15
Can I ask you to turn up E-3-5, if you would?
Just
16
under "Executive Summary" on that first page, if I can, I
17
will just read these two paragraphs to you:
18
"A purchase from Manitoba would assist in meeting
19
the directive's renewable energy goals and could
20
be pursued in combination with, or, depending on
21
the circumstances, in substitution for, some
22
other renewable energy resources included in the
23
plan."
24
Let me stop there and have you confirm that the method
25
and approach that you have used contemplates relying on
26
renewable resources from other provinces to meet the
27
objectives of the supply mix directive with respect to
28
renewables; is that correct?
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1
MR. SHALABY:
2
MR. SHRYBMAN:
Yes.
You go on to say:
3
"It could indeed substitute for conventional
4
resources and even some transmission projects."
5
True again?
6
MR. SHALABY:
7
MR. SHRYBMAN:
Yes.
Here's the key paragraph, because I
8
believe this sums up your position with respect to the
9
potential for such an agreement.
10
Can I just read that to
you, as well?
11
"The OPA is not recommending transmission
12
reinforcements to enable a purchase of power from
13
Manitoba.
14
economics of a potential purchase remain too
15
uncertain.
16
be further explored, and if the feasibility and
17
economics become more definitive, then
18
transmission development work may need to be
19
undertaken."
20
21
22
At this stage, the feasibility and
The OPA recommends that this option
Does that sum up your position with respect to the
potential for an agreement with Manitoba?
MR. SHALABY:
It describes the relevance of the
23
Manitoba option to this particular proceeding.
24
requesting approvals of a purchase from Manitoba at this
25
time, and we think it's premature to even do development
26
work on the transmission beyond what's already done at this
27
time.
28
MR. SHRYBMAN:
We're not
Is this the document in the IPSP that,
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in a way, represents the synthesis of your approach to the
2
question of an intertie or firm purchase agreement with
3
Manitoba?
4
MR. SHALABY:
This is in the transmission section of
5
the evidence, and it highlights the transmission corridors
6
that would be necessary to incorporate a Manitoba purchase.
7
Now, in answer to, Is it the main section talking
8
about approach to purchases, we speak about the role of
9
purchases in the areas of flexibility and of robustness.
10
11
We mention the role of purchases elsewhere in the
evidence; namely, in G-3-1, B-3-1 and B-1-1.
12
MR. SHRYBMAN:
13
MR. SHALABY:
14
MR. SHRYBMAN:
15
Okay.
G-3-1, B-1-1...
And B-3-1.
And B-3-1.
Now, there's another exhibit in the
16
transmission section which deals with the potential for an
17
agreement with Quebec or Labrador, Newfoundland.
18
Exhibit E-3-6.
19
I won't take you there.
That's
If you can confirm that the
20
recommendation that you make with respect to the potential
21
purchase from those provinces is virtually verbatim, the
22
conclusion you arrive at with respect to Manitoba.
23
MR. SHALABY:
Yes, I can confirm that.
24
MR. SHRYBMAN:
25
Is it your intention, Mr. Shalaby, to seek agreement
You can confirm that.
26
from the Board or review or approval from the Board with
27
respect to any draft agreement that might be concluded with
28
Manitoba or other provinces?
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2
3
MR. SHALABY:
No.
We're not seeking that at this
time.
MR. SHRYBMAN:
So you're seeking -- but you are
4
seeking from the Board approval for proceeding with, I
5
believe is the word you used, the negotiations to conclude
6
such an agreement; is that correct?
7
MR. SHALABY:
Continuing in some sense or proceeding,
8
yes, yes.
9
negotiations with all three sources of purchases, Labrador
10
and Newfoundland is one, Quebec is the other, and Manitoba
11
is the third.
12
years at different stages on and off, and at this stage, we
13
are more active in discussions with Quebec and Labrador and
14
Newfoundland, less active in discussions with Manitoba.
15
Manitoba was a very active discussion over the last four
16
years or so.
17
These negotiations, I mean the context is,
These have been ongoing for a number of
So this is an ongoing discussion.
It's partly led by
18
the government.
19
organizations.
20
-- the IESO and Hydro One were participants in the early
21
discussions on the Manitoba Hydro, because the OPA didn't
22
exist at the time.
23
And partly led by different, other
For example, the Manitoba discussions were
The government and the OPA are in discussions with
24
Hydro Quebec at this time.
25
proceedings and the government is quite involved in both
26
Manitoba and Quebec.
27
28
So these are ongoing
The Labrador and Newfoundland, there was at one time
agreement between Quebec, Ontario and Newfoundland and
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1
Labrador to look at the option of developing the site in a
2
three-way agreement.
3
three years ago, and other options have developed from
4
there.
5
6
7
That was about four years ago or
So all of these have been ongoing for the last three
or four years.
MR. SHRYBMAN:
All right.
Let me -- On day 1, Board
8
Counsel asked you some questions about the approvals that
9
you were seeking in this regard.
This is at page 162 of
10
the transcripts and let me just paraphrase.
11
indicated that you are recommending that firm contracts be
12
pursued and, in response to Ms. Lea's questions, who would
13
do that, you indicated that the Ontario Power Authority and
14
the government are pursuing opportunities with neighbouring
15
jurisdictions.
16
Do you recall that, Mr. Shalaby?
17
MR. SHALABY:
18
MR. SHRYBMAN:
19
MR. SHALABY:
That you
Is it page 162?
162.
I see the discussion on page 162 talking
20
about the firmness of the resource in the plan.
21
consistent with what you asked?
22
MR. SHRYBMAN:
No.
Is that
My page 162, there's a question
23
from Ms. Lea -- oh, I have the wrong page number here.
24
But, well let me put it this way, then, the negotiating --
25
the participants in the negotiating process are different
26
when it comes to your discussions with Manitoba than the
27
negotiating team for discussions with Quebec or
28
Newfoundland; did you indicate that?
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MR. SHALABY:
2
MR. SHRYBMAN:
3
Over time, they differ, yes.
But the OPA is a participant in those
negotiations?
4
MR. SHALABY:
5
MR. SHRYBMAN:
6
MR. SHALABY:
It is.
On both sides of the province?
More recently in Manitoba and from the
7
start on Newfoundland and Labrador and from the start --
8
this round of discussions with Quebec.
9
I mean both Manitoba and Quebec, as everybody knows,
10
have been supplying energy to Ontario for many, many years
11
and there have been many discussions over the years.
12
this goes back decades in the case of Manitoba and Quebec,
13
and I'm referring to the recent round that is about three
14
or four years old.
15
MR. SHRYBMAN:
16
what happens next.
17
So
So what I am trying to discover now is
If you conclude an agreement with any province with
18
respect to power purchase or sharing, is it your intention
19
to bring that agreement back to this Board for approval?
20
MR. SHALABY:
I don't know the answer to that.
I
21
don't know what the agreement would look like.
22
know that the government will be the one concluding the
23
agreement or the OPA.
24
from the government to do so or not.
25
I don't
I don't know there will be directive
I can't speculate at this time, if an agreement is
26
concluded in the near future, how exactly that works.
27
it's -- if it's a longer-term agreement, meaning if it is
28
to be approved three or four years from now, then we can
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10
1
2
bring it back in the next round of planning.
But if an agreement is imminent more towards next year
3
or the year after, then I don't know the answer on and how
4
the form will be and who will bring it for approval.
5
MR. SHRYBMAN:
So is it your answer, then, that it is
6
possible that an agreement, if one is concluded, might be
7
considered before it is finalized by the Board, but it is
8
possible that that might not happen?
9
10
MR. SHALABY:
MR. SHRYBMAN:
Yes.
So this might be the only opportunity
11
before an agreement is concluded, for the Board to consider
12
the potential for such an agreement, what might be
13
accomplished by it, even the modalities for negotiating it.
14
This might be the only opportunity the Board has to do
15
that; is that correct?
16
MR. SHALABY:
It is a current opportunity.
Whether it
17
is the only opportunity depends on whether an agreement is
18
reached before we come again, or not; yes.
19
MR. SHRYBMAN:
Fair enough.
Now, if an agreement is
20
concluded with, let's start with -- well, I suppose with
21
either Manitoba or provinces to the east of Ontario, would
22
it have or might it have significant consequences for the
23
plan?
24
25
26
MR. SHALABY:
Not in the immediate approvals we're
asking and not likely on the long-term facilities either.
The nature of the discussions and the availability of
27
resources and so on is unlikely to be impactful on the
28
approvals we're seeking at this time.
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1
MR. SHRYBMAN:
Okay.
Well, let me unpack that,
2
because I think you conflated the issue of the short-term
3
approvals, the three projects you're seeking approval from
4
over the short term, and then the longer-term structuring,
5
configuration and outcomes of the plan.
6
Is it your answer that with respect to both, an
7
agreement with Manitoba or Quebec and Newfoundland, it
8
would have no particular material consequences?
9
MR. SHALABY:
Let me explain, yes, I said that.
In
10
the short term, an agreement would reduce the need to burn
11
coal and gas in Ontario, if the agreement is structured to
12
displace coal and gas.
13
14
15
In the longer term, it will displace resources in the
mid- and longer term that we're not seeking approval for.
So in the short term it reduces energy consumption.
16
In the long term, it affects facilities we're not seeking
17
approval for at this stage anyway.
18
That's the reason I answered the way I did.
19
MR. SHRYBMAN:
Okay.
Let me take you back, then, to
20
Exhibit E-3-5 and the paragraph that I reviewed with you
21
just a few minutes ago and the first paragraph under
22
"Executive Summary".
23
There, it seems that you indicate to me that if an
24
agreement was concluded with Manitoba, depending on the
25
circumstances, it might substitute for renewable energy
26
resources included in the plan, but also substitute for
27
conventional resources and even some transmission projects.
28
So that seemed to indicate to me that concluding an
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agreement with Manitoba could have a very material bearing
2
on the plan, certainly over their planning horizon of 20
3
years.
4
5
6
MR. SHALABY:
That's not in the approvals being sought
at this time.
MR. SHRYBMAN:
No, but that is not my question.
I am
7
asking you about the plan as you have presented it before
8
the Board, which includes both the short-term approvals and
9
a longer-term approach to the Ontario power system.
10
MR. SHALABY:
It will have an impact and possibly
11
material impact depending on the size and length of the
12
agreement, yes.
13
MR. SHRYBMAN:
14
MR. SHALABY:
15
MR. SHRYBMAN:
You said it would; is that correct?
It would, yes.
Okay.
And the impact that it might
16
have extends to a number of the transmission projects, as I
17
read the material, that you described in Exhibit E.
18
take you to one, for example, and that is the Sudbury west
19
transmission reinforcement project, which is in E-3-2 at
20
page --
21
MR. SHALABY:
I can
It will impact the transmission in the
22
north.
23
length of it, the size of it, the transmission in the north
24
can be advanced or delayed or altered in sequence or size,
25
and so on.
26
Depending on the nature of the agreement, the
I accept that.
MR. SHRYBMAN:
And you describe that potential impact
27
when you look at a number of the projects, the transmission
28
projects that you describe in Exhibit E; is that correct?
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MR. SHALABY:
We describe all of the transmission
2
projects that we see some development required for.
3
that your question?
4
MR. SHRYBMAN:
Is
Well, you described transmission
5
projects in Exhibit E, but you also discuss, on several
6
occasions, the possibility of an agreement with Manitoba
7
and enhanced transmission with Manitoba offering either a
8
modification of your plan for that particular transmission
9
undertaking or even an alternative or substitute for it;
10
isn't that true?
11
MR. SHALABY:
12
MR. SHRYBMAN:
Yes.
Can you confirm that some of the
13
projects on that list are projects that you intend to do
14
development work on over the short term, because when I
15
compared the lists, that was my conclusion?
16
MR. SHALABY:
17
MR. SHRYBMAN:
Yes.
So even over the short term, an
18
agreement with Manitoba might have a material effect at
19
least on the transmission work that you are planning for
20
parts of Ontario?
21
MR. SHALABY:
It may make some of the work on
22
transmission that we develop less valuable or irrelevant or
23
unneeded, if that is the case, yes.
24
We could develop something, and the Manitoba purchase
25
would supersede it or come with a different proposal, yes.
26
MR. SHRYBMAN:
Now, I would like you to turn up also
27
-- in this vein, I would like you to turn up
28
Exhibit I-43-9, which is one of the model runs that you
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2
did, this one in response to a request that we made.
Now, on my PDF, you know, the Adobe numbers, this is
3
67 of 120.
4
There it is.
5
It is a larger document, model run number 9.
Now, we asked you to look at a couple of scenarios, to
6
model a couple of scenarios, and I just want to refer you
7
to the first one there.
8
asked you to anticipate an agreement with Quebec, beginning
9
in 2010, for 1,250 megawatts.
10
The scenario is one in which we
Let me begin by saying, the numbers are arbitrary and
11
they were chosen for the purposes of illustrating the
12
potential outcomes of a scenario like this, and we chose
13
1,250 because it accorded with the intertie with Quebec,
14
and then a 1,500 megawatt firm power agreement with
15
Newfoundland and Labrador beginning in 2018, again, because
16
we found some reference to that in the material.
17
If you could scroll down a little to the next page?
18
There you go.
19
think you are advising us of what the potential impact of
20
an agreement like that would be on the plan.
21
Mr. Pietrewicz -- I see you getting ready to answer this
22
question.
23
are and how they arise?
24
Scenario number 1, can you explain -- I
Can you or
Can you explain to me what those consequences
MR. PIETREWICZ:
Sure.
Just for additional context,
25
in order to begin my response, page 1 -- and we are talking
26
about scenario 1, which was a model run.
27
was a model run conducted by the OPA at the request of
28
Council of Canadians.
This schedule 9
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1
Scenario 1, in particular, sees 1,250 megawatts of
2
firm power from Quebec beginning in 2010.
3
point is that this energy was assumed to be in service
4
quite soon; that is, in 2010.
5
So the first
The second point, which is a parameter defined for
6
this model run, is that the price of this power was 10
7
percent less than that of an illustrative combined cycle or
8
intermediate natural gas-fired plant.
9
page 1 of 4 of this model run.
10
That's identified on
So then the OPA illustrated sort of a theoretical or
11
illustrative response to this, and the results are shown on
12
page 2.
13
were a firm purchase available in such a short time frame -
14
that is, as of 2010 - at a cost that is lower than, say, an
15
immediate type of natural gas-fired plant, the result could
16
be directionally -- first of all, we have illustrated a
17
potential advancement of some of the coal replacement;
18
second, deferral or replacement of some planned natural
19
gas-fired resources; and, finally, in the long run, a
20
replacement of additional nuclear resources.
21
And the results are, perhaps intuitively, that
I should have mentioned that in the long run, the
22
model run specified an additional purchase from
23
Newfoundland and Labrador beginning in 2018.
24
purchase was intended to be, I think, at or below, was it,
25
the cost of a typical base-load generator.
26
And this
So, again, to make this rambling answer a little less
27
rambling, the intent was to illustrate a purchase that is
28
cheaper than an intermediate resource in the near term, and
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another purchase that is at or in the ballpark, if I
2
recall, of an illustrative base-load resource in the long
3
run.
4
So the illustrative response, therefore, was that this
5
purchase could serve to avoid a gas-fired plant in the near
6
term and avoid some nuclear capacity in the long term.
7
I should add that these are more illustrative than
8
specific.
9
avoided, but that was for the purposes of this modelling.
10
11
12
I mean, we modelled the specific facility being
MR. SHRYBMAN:
All right.
Well, that's very helpful,
Mr. Pietrewicz, so thank you.
Really, I mean, what you are also saying is that the
13
prices, the costs aren't very, in your view, very realistic
14
and the outcomes would change depending,, obviously on the
15
cost that was built into any agreement that was negotiated.
16
MR. PIETREWICZ:
I am not sure I was commenting as to
17
the realistic-ness of the cost assumed in the model run.
18
think I am just saying that the types of resources that
19
could be displaced would, of course, depend on A, the
20
timing of the potential purchase, the size of the potential
21
purchase, and the sort of energy contribution of the
22
purchase.
23
So if it was a lot of energy, you probably wouldn't
24
use that to displace, say, a peaking type of resource, but
25
you would probably use that to displace a resource that
26
would have produced more energy.
27
MR. SHRYBMAN:
Okay, thank you.
28
Can I ask you to turn up next K1.3.
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1
This is from the first day, list of various projects,
2
including I think they're basically transmission projects
3
that I just asked you about a minute ago.
4
go back there for a second because these are projects with
5
respect to which planning work is going to be undertaken,
6
if the Board approves your plan in the short term, that you
7
confirmed might be influenced by an agreement.
8
9
I just want to
I am trying to illustrate points by referring to
Manitoba.
Don't take my questions to mean that, you know,
10
it's only an agreement with Manitoba that would have this
11
impact.
12
I want to ask you about how -- if an agreement is
13
concluded and you don't return to the Board for three years
14
or so, how you would propose to deal with the fact that
15
your transmission planning over the short term is now going
16
to be affected by an agreement that this Board hasn't had a
17
chance to consider?
18
19
20
That's basically my question.
I see we are having some trouble getting that exhibit
from day 1.
MR. SHALABY:
Well, if we look at the K1.3, which was
21
an exhibit prepared by Board Counsel and submitted as
22
potential projects -- does the Panel have the exhibit?
23
MS. NOWINA:
24
MR. SHALABY:
Yes.
Okay.
Some of the projects will be
25
required or variations of them will be required for a
26
purchase.
27
transmission reinforcement.
28
Some will not.
An example will be north/south
Any purchase from Manitoba has to find its way to the
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load centres in the golden horseshoe in southern Ontario
2
and north/south transmission reinforcement will be required
3
either in the size contemplated in Exhibit K1.3 and in our
4
submission, or larger, most likely larger.
5
Some of the other projects may not be required in
6
their entirety, but the development work is prudent to
7
undertake at this time.
8
9
10
So we can either go through one by one, or I am in
your hands.
I have the list, and I am in your hands.
MR. SHRYBMAN:
I don't want to do that, Mr. Shalaby.
11
Just could you answer or explain to the Board how you will
12
deal with a situation that occurs if an agreement is
13
concluded, let's say six months from now or six months
14
after the Board approves the IPSP; assuming that it does
15
so, an agreement is concluded, it has a material impact on
16
a number of the transmission projects that you are seeking
17
approval from the Board to proceed with development work,
18
you don't plan to be back here for another two-and-a-half
19
years.
20
How do you deal with the consequences of that
21
agreement for projects the Board has approved, without
22
really having a chance to consider the impact of an
23
agreement like that on those projects?
24
MR. SHALABY:
That's my question.
I will answer in two parts.
One is to
25
indicate that that it is our judgment, that it is unlikely
26
to reach an agreement that will alter these transmission
27
projects at this time.
28
transacted on existing transmission and transmission that
The agreements are likely to be
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will be placed in service over the short term.
2
So it is unlikely that we will reach an agreement that
3
will require a resorting of all of the transmission that is
4
being required.
5
plan.
6
That will be a significant change in the
If we reach an agreement anything like what you
7
described in the model run I-43, that's a game change of
8
sorts in the long-term and that will require coming back
9
with a different transmission plan, a different resource
10
plan, different set of approvals for the next round of
11
approvals.
12
approvals, but it would require -- that would be a perfect
13
subject for IPSP 2.
It doesn't affect the current request for
14
It is unlikely that anything we reach agreement on
15
will affect this transmission potential projects that we're
16
dealing with.
17
That is our judgment at this time.
MR. SHRYBMAN:
Am I correct to say that an agreement
18
with Quebec -- with Manitoba, let's say, in the order of I
19
believe in the material describes 1,500, at various places
20
1,500 megawatts I think is the nature of the discussion,
21
that that would have more of an impact on your short-term
22
transmission planning than an agreement with Quebec,
23
because the transmission system is less robust or developed
24
in the west than it is in the east?
25
assumption to make, an unreasonable assumption to make?
26
MR. SHALABY:
27
MR. SHRYBMAN:
28
MR. SHALABY:
Or is that an unfair
You are correct in that assumption, yes.
That's correct?
Yes.
Manitoba will change the
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transmission, will require transmission, and therefore will
2
change a transmission or some of it.
3
Newfoundland and Labrador, depending on the delivery point,
4
will not.
5
MR. SHRYBMAN:
Quebec will not, or
So is the flip side of what you told me
6
in your answer -- not this one, the one preceding.
7
commit to these development projects with respect to
8
transmission - let's deal with the western part of the
9
province for the purposes of this question - if you commit
10
to those projects, have you built in a disincentive, then,
11
to conclude an agreement with Manitoba because you have
12
invested in transmission upgrades in Ontario that wouldn't
13
be necessary if there was an agreement with Manitoba?
14
MR. SHALABY:
If you
I disagree with that on two grounds.
15
One is, the amount of investment in the development of
16
transmission work is a very small fraction of the cost of
17
transmission that will be required, either under these
18
projects or under different projects.
19
The development work is typically a small percentage
20
of the construction and development work of transmission.
21
It's typically 1 or 2 percent and it is prudent planning
22
work to be done to shorten the lead time, to understand the
23
issues, to develop alternatives, to proceed with
24
preliminary approvals.
25
money for understanding the options and developing the
26
options and shortening the lead time.
27
our disagreement with the proposal.
28
All of that is a small amount of
That's one basis for
The second part is, the approach to all of the
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purchases from elsewhere is to prepare an alternative in
2
Ontario.
3
an alternative with Quebec or Labrador or Manitoba is to
4
have a plan in Ontario to proceed, if these don't occur.
5
I think the best thing we can do for negotiating
It's not a very favourable negotiating position to go
6
and say, We see requirements for energy and we have no clue
7
how we're going to meet them.
8
That's not a very good position to be in.
9
to have a plan to meet our requirements with our own
Can we talk with you?
10
resources.
11
negotiate for an agreement with partners.
It's much better
That puts you in a stronger position to
12
So that is what we're doing.
13
MR. SHRYBMAN:
14
MR. SHALABY:
Okay.
Again, it is consistent with our desire
15
to give Ontario options, good options going forward.
16
by developing our own options in Ontario, that gives us
17
capability to negotiate more favourable conditions and
18
ability to accept a favourable deal or not accept a deal if
19
it is not favourable.
20
a very different condition.
21
MR. SHRYBMAN:
And
If we didn't have an option, that's
Okay.
Thank you.
I wasn't making a
22
proposal.
23
to dig a little bit deeper so I really understand what you
24
are saying.
25
I was just asking a question.
But I would like
I don't think we need to go there, but I chose Sudbury
26
West Transmission Reinforcement as an example of this,
27
because you identify a firm purchase agreement of hydro
28
power from either Manitoba or Quebec as an alternative to
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proceeding with that particular transmission reinforcement
2
project.
3
4
5
This is at -- well, just for the purposes of reference
- I don't think we need to go there - E-3-2 at page 8.
So my question is this:
If you proceed with a
6
reinforcement, isn't that point, at least for this purpose,
7
an agreement with another province kind of redundant, or
8
haven't you built kind of an economic disincentive in now?
9
You said, Well, we don't need it.
10
This would have been a benefit or an advantage that
11
would have followed from an agreement with Manitoba and
12
Quebec.
13
economic equation around -- this is just simply one example
14
of several.
15
attractiveness of an arrangement with other provinces is
16
diminished, because you have already made investments in
17
facilities in Ontario that wouldn't be needed if you had an
18
agreement.
I presume it would have had a value.
Now, the
The economic equation around the
19
So my question is:
20
MR. SHALABY:
Have you built a disincentive in?
If your question is:
If we acquire
21
resources in Ontario, does that foreclose opportunities for
22
purchase from outside the province?
23
MR. SHRYBMAN:
No.
My question is:
Does it make them
24
less attractive, because you have invested in facilities
25
that wouldn't have been needed had you an agreement with
26
other provinces?
27
28
MR. SHALABY:
Generally, yes.
Generally, yes.
I
mean, if you need everything today, then purchases have
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more value than if you fill your requirements with Ontario
2
resources along the way, yes.
3
MR. SHRYBMAN:
Okay.
Can I go back to E-3-5 again and
4
this paragraph that I understand is -- in the executive
5
summary is summing up your position with respect to these
6
agreements, and you have confirmed you have the same
7
paragraph in the exhibit that deals with an agreement with
8
Quebec, just to understand what precisely you are seeking
9
from the Board.
10
I am referring to the second paragraph
that we see here.
11
The OPA is --
12
MS. NOWINA:
13
reference, E-3-5?
14
MR. SHRYBMAN:
15
MS. NOWINA:
16
MR. SHRYBMAN:
17
MS. NOWINA:
19
MR. SHRYBMAN:
21
I think.
Page?
Madam Chair, I apologize.
E-3-5, page 4 of 6.
18
20
For the record, can you give the specific
I think I --
I'm sorry, page 4.
Thank you.
"Recommendations", there it is.
I'm
sorry.
I want to refer to the second paragraph here:
22
"The OPA recommends that a purchase with Manitoba
23
be further explored."
24
25
26
What is it that you are seeking from the Board with
respect to that recommendation?
MR. SHALABY:
Line 12 talks about our recommendation
27
that a purchase with Manitoba be further explored.
28
just informing the Board and informing stakeholders here
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24
1
that maintaining that option and exploring that option
2
further is something that we think is in the best interests
3
of Ontario.
4
MR. SHRYBMAN:
So are you asking the Board to, in its
5
decision, indicate that it accepts your recommendation in
6
this regard?
7
or are you making a recommendation to some other entity?
8
9
Are you making a recommendation to the Board,
MR. SHALABY:
We go further in.
I'm going to get back
to it, but go further in line 14:
10
"In this event, the OPA will report to the Board
11
on the need for development work as part of the
12
next IPSP, or, if necessary, in the interim prior
13
to the next IPSP."
14
So we're sharing our thoughts.
We're sharing that, at
15
this stage, we don't see the potential for an agreement for
16
a large purchase from Manitoba.
17
that this is an option to continue to be considered and
18
maintain awareness of, and we're sharing with the Board and
19
with intervenors that if developments occur, we will be
20
back either in the interim or at the next plan.
21
We're sharing our thoughts
So three things we're saying:
Not likely to happen,
22
in our view, at this time.
23
agreement.
24
develop negotiations, and, if things break in a way that is
25
substantial, we will be back either in time for the next
26
plan or before, if developments proceed in a more expedient
27
fashion.
28
It is not likely to be an
It's prudent to keep an eye and continue to
MR. SHRYBMAN:
Okay.
Well, you said a lot there,
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Mr. Shalaby.
2
I didn't find in the material was an assessment that it is
3
not likely that an agreement will be concluded.
4
What I am surprised to hear you say and what
What I saw here was that -- your comment that at this
5
stage the feasibility and the economics remain too
6
uncertain.
7
Are you saying something different?
Are you saying
8
something -- did you intend to say it is unlikely that an
9
agreement will be concluded with other provinces?
10
MR. SHALABY:
There's been recent events, in the last
11
several months since filing this, that indicate that
12
Manitoba has contracted much of the capacity that it is
13
intending to develop to the northern states that it already
14
has trading relationship with.
15
16
17
MR. SHRYBMAN:
Is that information in the material
anywhere?
MR. SHALABY:
I don't know.
I don't know.
I don't --
18
it's recent press releases and recent announcements from
19
Manitoba Hydro about reaching agreements with Northern
20
States Power in Minnesota.
21
material, or not.
22
MR. SHRYBMAN:
23
MR. SHALABY:
I don't know if it's in the
Can you -That's what colours my inclination to
24
indicate that Manitoba has moved to conclude agreements
25
with other trading partners at this time.
26
MR. SHRYBMAN:
My understanding is, and correct me if
27
I am wrong, that the agreement that it concluded with
28
States is a small part of what was being discussed with
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2
3
Ontario, or am I wrong about that?
Do you know the nature of the agreement that it
concluded or how many megawatts are involved?
4
MR. SHALABY:
5
MR. SHRYBMAN:
They announced 500 megawatts.
Okay.
Could I ask you for an
6
undertaking to provide us with information about the
7
agreement that Manitoba has concluded that you are
8
referring to?
9
MR. SHALABY:
We certainly can look for the material.
10
If it's not of a confidential nature and if I haven't said
11
already too much, then we will place it in front of this
12
Board, yes.
13
14
15
MR. RICHMOND:
That will be undertaking J5.1, and OPA
would be providing an assessment of the agreement -MR. SHALABY:
16
by Manitoba Hydro.
17
MR. RICHMOND:
We will provide the announcements made
Thank you.
Recent announcements made
18
by Manitoba Hydro with respect to agreements with power
19
sales to the US.
20
UNDERTAKING NO. J5.1:
TO PROVIDE RECENT ANNOUNCEMENTS
21
MADE BY MANITOBA HYDRO WITH RESPECT TO AGREEMENTS WITH
22
POWER SALES TO THE US.
23
MR. SHRYBMAN:
Now, I will take you to these documents
24
in a moment, Mr. Shalaby, but there are documents certainly
25
on the Ontario government website that indicates that the
26
range of purchase might be from 1,500 to 3,000 megawatts.
27
You have indicated that an agreement may have been
28
concluded for 500 of those.
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Is there any other reason that you think that an
2
agreement with Manitoba is unlikely at this point that
3
wasn't apparent to you when you drafted the plan?
4
MR. SHALABY:
The -- unlikely in the short term, given
5
the daunting task of transmission from the Manitoba border
6
to load centres in Ontario.
7
to contemplate transmission in northern Ontario all the way
8
to Sudbury, and then Sudbury to the GTA area.
9
daunting task the more we look at it, and the different
It's a very large undertaking
It is just a
10
alternatives we look at indicate and do present themselves
11
as a long lead time and it's -- agreements to purchase
12
long-term power will have to consider the feasibility of
13
that transmission.
14
transmission very carefully before we conclude an
15
agreement.
16
We will have to be looking at that
So it is because of the transmission requirements that
17
I suspect a large purchase will have to take time to be
18
concluded, or be concluded in stages or be negotiated in
19
stages.
20
MR. SHRYBMAN:
Okay.
So is it also -- and you have,
21
just to make it clear to the Board and everyone else -- you
22
have a fairly detailed assessment of the transmission
23
projects that would be necessary to support an agreement
24
with Manitoba or Quebec in the material in Exhibit E; is
25
that correct?
26
endeavour would be directed, to that panel?
27
28
And that's where questions about that
MR. SHALABY:
To the extent you consider that
detailed, it is more than destination and length, yes,
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there is more to it than that.
2
detail yet to go, if these projects do proceed.
3
MR. SHRYBMAN:
All right.
But there is much more
So your comment about an
4
agreement being unlikely with Manitoba, now can you tell me
5
what your view is with respect to Quebec, Newfoundland and
6
Labrador; if it is different than the view you express in
7
the document?
8
MR. SHALABY:
9
MR. SHRYBMAN:
10
MR. SHALABY:
11
MR. SHRYBMAN:
12
occasion.
13
recommendations.
14
believe.
15
16
Let me read what is in the document.
Okay.
If you go to E-3-6.
E-3-6, page 4 again?
I don't think it is page 4 on this
It is a little further down when you get through
There we go.
The same language, I
I think if you look at page 4, you use the exact same
phrase:
17
"As noted, at this stage, the feasibility and
18
economics of possible purchases remain too
19
uncertain and it would not, in the OPA's view, be
20
prudent at this stage to recommend expending the
21
substantial resources."
22
But it doesn't say there an agreement with Quebec and
23
Newfoundland and Labrador is unlikely in the OPA's view.
24
Is that your evidence now?
25
26
MR. SHALABY:
It says that the feasibility and
economics remain uncertain.
27
MR. SHRYBMAN:
28
MR. SHALABY:
Yes.
That continues to be the case.
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MR. SHRYBMAN:
But you don't want to add to that the
2
comment that, "...and an agreement with the provinces to
3
our east is unlikely"?
4
MR. SHALABY:
I don't want to add that, no.
5
MR. SHRYBMAN:
You don't want to add that.
6
7
Okay,
thank you.
So in light of the fact that this may be the only --
8
now, let me just go on a little further and say, with
9
respect to the second paragraph, which is --
10
MR. SHALABY:
The primary reason is the exact reason I
11
gave for the Manitoba, that the transmission, a substantial
12
amount of transmission will exist from the province of
13
Quebec into Ontario in two or three years from now.
14
MR. SHRYBMAN:
15
MR. SHALABY:
Okay.
So there will be transmission already in
16
place.
17
major prerequisites for a purchase agreement.
18
exists, then the purchase agreement becomes that much
19
closer to reality than if transmission does not exist.
20
That is one of the major milestones or one of the
MR. SHRYBMAN:
Okay.
If that
You indicate at the top of page
21
5, and I believe this is the same exact sentence you use at
22
the end of the paragraph with respect to Manitoba:
23
event that an agreement - I am paraphrasing - is concluded,
24
the OPA will report to the Board on the need for
25
development work as part of the next IPSP, and, if
26
necessary, in the interim prior to the next IPSP.
27
28
In the
What you are talking about there, I believe, is the
transmission work necessary to support an agreement; is
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that correct?
2
MR. SHALABY:
That's correct.
3
MR. SHRYBMAN:
Okay.
So the agreement itself may
4
never come before the Board for approval, but the
5
transmission work necessary to support a purchase agreement
6
or power sharing agreement will come back to the Board; is
7
that correct?
8
9
MR. SHALABY:
Your first part is something we talked
about, depending on who is entering the agreement, what
10
time frame, is it by government directive or not.
11
too much to speculate on at this stage.
12
first sentence.
13
Yes.
14
transmission requirements.
15
There is
It captures your
The second one is about transmission.
What we talk about in the evidence here is about the
MR. SHRYBMAN:
So with respect to, then, your
16
methodologies and approaches for dealing with this question
17
of agreements with other provinces, would you welcome, in
18
this proceeding, the Board's views with respect to what the
19
objectives of those negotiations might be, what priority
20
they should be accorded, whether they should just be for
21
the purchase of power or perhaps some agreement with those
22
provinces to deal with surplus base-load generation?
23
you welcome the Board's views or guidance with respect to
24
the objectives of those agreements and the timing of them?
25
MR. SHALABY:
Would
We would welcome the Board's views on
26
all matters to do with this application, and -- of course,
27
yes.
28
MR. SHRYBMAN:
Okay.
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MR. SHALABY:
Now, whether the objectives of these
2
agreements -- I suspect will be consistent with the
3
objectives of the entire plan, but, yes, in general, the
4
answer is yes, to your question.
5
MR. SHRYBMAN:
6
So I want to introduce a document now so that I can
7
ask you some questions about how, you know, what methods
8
you have used and approaches you have used to assess the
9
potential contribution and agreements with Quebec,
10
11
Okay.
Thank you.
Newfoundland or Manitoba might make.
You have had this document for a few days and I
12
provided copies to the Board, Madam Chair.
13
Preliminary assessment of the potential for a clean energy
14
transfer between Manitoba and Ontario.
15
September, 2004.
Yes.
It is titled:
It is dated
16
MR. RICHMOND:
That would be Exhibit K5.1.
17
EXHIBIT NO. K5.1:
18
POTENTIAL FOR A CLEAN ENERGY TRANSFER BETWEEN MANITOBA
19
AND ONTARIO
20
MR. SHRYBMAN:
PRELIMINARY ASSESSMENT OF THE
Mr. Shalaby and Mr. Pietrewicz, you
21
have had that for a few days.
22
look at it?
23
MR. SHALABY:
24
MR. SHRYBMAN:
Have you had a chance to
Yes.
Can I begin by taking you to 32.
I
25
think there is -- there are copies of these documents and
26
two others I am going to introduce on the desk here.
27
sorry I don't have anyone with me to distribute them, but
28
perhaps if I could get some help.
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1
2
3
4
5
I provided a copy of this document to Ms. Heinz, so it
should be available electronically as well.
While we're waiting for it to come up, I think
everybody has it.
Does the Board have a copy of it?
On page 32, there are several -- sorry, before I get
6
to page 32.
7
document is, now that you have had a chance to look at it?
8
9
10
Mr. Shalaby, can you just tell me what this
MR. SHALABY:
that.
I think you are better capable of doing
It is your document.
MR. SHRYBMAN:
Okay.
So if you look at the second
11
page, it indicates that this report reflects information
12
compiled by the joint Manitoba/Ontario study team.
13
doesn't necessarily reflect the views of the provinces or
14
the main participants, I suppose, in the electricity
15
sector.
It
16
So it looks like a report prepared by a study team
17
that –- well, I am not sure where it took its mandate from.
18
But perhaps let me introduce the next two exhibits just to
19
situate this a little more firmly in the framework of
20
Ontario policy with respect to the potential for agreements
21
with Manitoba, and indeed, with other provinces as well.
22
The first of these is a press release dated October
23
27, 2005, and again there are copies that I provided to the
24
Board and there are copies here for other parties.
25
witnesses have these as well, as of last week.
26
27
28
MR. RICHMOND:
And the
That would be K5.2, a press release of
Manitoba and Ontario signed power sale agreement.
EXHIBIT NO. K5.2:
PRESS RELEASE OF MANITOBA AND
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1
ONTARIO SIGNED POWER SALE AGREEMENT
2
MR. SHRYBMAN:
Let's the other one on the record, as
3
well, if we might, and it is a web page from the Ministry
4
of Energy's website, Ministry of Energy and Infrastructure.
5
6
MR. RICHMOND:
That would be K5.3, and it is titled,
"Ontario's Electricity Transmission System Projects".
7
EXHIBIT NO. K5.3:
8
AND INFRASTRUCTURE WEBSITE ENTITLED, "ONTARIO'S
9
ELECTRICITY TRANSMISSION SYSTEM PROJECTS"
10
MR. SHALABY:
WEB PAGE FROM MINISTRY OF ENERGY
I have K5.3, which is the website page.
11
I could benefit from the press release that you are talking
12
about.
13
MR. SHRYBMAN:
Oh.
14
MR. RICHMOND:
All of the copies seem to have
15
disappeared.
16
MR. SHALABY:
17
MR. SHRYBMAN:
18
I have it now, thank you.
Okay.
So let's start with K5.2, if we
might.
19
MR. VEGH:
Give them a few minutes to read it.
20
MR. SHRYBMAN:
Oh, okay.
I did provide copies, unless
21
something happened with the transmission electronically
22
last week to everyone, but I guess K5.2 somehow didn't make
23
it through.
24
Have you had a chance to look at K5.2?
25
MR. SHALABY:
26
MS. NOWINA:
I am.
Give me half a minute.
While Mr. Shalaby is doing that, perhaps
27
Mr. Shrybman, you can give us a little bit more information
28
on the source or the history of K5.1.
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2
MR. SHRYBMAN:
Yes.
Well, I am trying to do that by
referring to these documents.
3
MS. NOWINA:
4
MR. SHRYBMAN:
Oh, all right.
I have the document from the website,
5
and I think these documents tell us a little bit more about
6
it.
7
8
9
10
MS. NOWINA:
All right, that's fine.
Thank you.
We
will wait for Mr. Shalaby, then.
MR. SHRYBMAN:
Mr. Shalaby may be able to tell us
more.
11
MR. SHALABY:
12
MR. SHRYBMAN:
Go ahead.
Okay.
So we have this document K5.1,
13
which is dated in September 2004, which is developed by a
14
study team, and then we have this press release about a
15
year later, a little more than a year later.
16
It refers to, in the first paragraph, the Clean Energy
17
Transfer Initiative, which is the subject of K5.1, and it
18
tells us that Manitoba and Ontario have signed an agreement
19
and that the agreement is the first phase, in paragraph 2,
20
of a larger 1,500 to 3,000 megawatt power agreement.
21
That's where -- Mr. Shalaby, when I referred earlier to
22
that larger number, that's where I had gotten it from.
23
24
It tells us, in the next paragraph, that the purpose
of the agreement, which is:
25
"'This is about continuing to build our provinces
26
and our country through strong energy links that
27
will enhance national energy security and
28
stability and help grow our respective
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economies', the Minister [of the time] said.
2
clean energy transfer is the single largest
3
greenhouse gas reduction initiatives in Canada
4
equal to removing 500,000 vehicles from city
5
streets."
6
Do you see that, Mr. Shalaby?
7
MR. SHALABY:
8
MR. SHRYBMAN:
9
10
The
Yes, I do.
Were you familiar with the -- well, let
me go on and provide a little bit more context by referring
you to K5.3.
11
At the bottom of the first page, you will see the
12
Clean Energy Transfer Initiative.
13
Mr. Shalaby, can you confirm -- is it fair to ask you to
14
confirm that this is an accurate representation of the
15
Ministry's website today?
16
where these pages are from.
17
The acronym is CETI.
I accessed it on Friday.
That's
I don't have an affidavit supporting this, Madam
18
Chair.
19
Mr. Shalaby to confirm that this is an accurate reflection
20
of the website or correct it, if it isn't.
21
willing to do that?
22
23
I am wondering if I could get an undertaking from
MR. SHALABY:
know.
24
Would you be
I don't sign up every day, so I don't
I can't confirm that.
I don't cruise websites regularly, so I am honestly
25
not familiar with what is on the website, sir.
26
50.
I am over
I don't do this.
27
[Laughter]
28
MR. SHRYBMAN:
Mr. Pietrewicz, can I prevail upon you
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2
to give an undertaking to do that?
MR. SHALABY:
I suspect that is something that perhaps
3
you are better able to provide in an affidavit, and put the
4
obligation on us to say what you brought in is what -- it
5
is a little uncertain, I think, in my mind, or a bit
6
unreasonable.
7
I have enough homework doing undertakings.
I have no reason to doubt that this is a Ministry
8
website, if that's...
9
MS. NOWINA:
Gentlemen, I don't want to get bogged
10
down in who needs to go after the evidence.
11
clearly something that we would like to discuss.
12
you can provide evidence that it's -- the Ministry's
13
website, contains this, can you not?
14
MR. SHRYBMAN:
This is
One of
I am in your hands, Madam Chair.
15
find a student to swear an affidavit and put that into
16
evidence, if you would prefer.
17
MS. NOWINA:
I would accept either one.
I can
We will
18
certainly accept that, sir, if you would like to do that.
19
Mr. Vegh, would you accept that?
20
MR. VEGH:
I would, Madam Chair.
I think the concern
21
coming from the witness is that they don't want to have to
22
verify every document that is put to them as being
23
accurate.
24
MS. NOWINA:
25
MR. VEGH:
I understand.
Usually counsel, when they present a
26
document, will provide enough information, whether an
27
affidavit or something else, to verify the source of the
28
document.
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MS. NOWINA:
2
MR. VEGH:
3
affidavit.
I understand that.
I would accept a student swearing an
That would certainly meet that requirement.
4
MS. NOWINA:
5
MR. SHRYBMAN:
6
At the bottom of the first page, there is a reference
7
Why don't you do that, Mr. Shrybman?
Okay, thank you.
to this initiative, and it says:
8
"The government is committed to reaching a long-
9
term agreement with Manitoba for the transfer of
10
up to 3,000 megawatts of clean green electricity
11
to Ontario."
12
13
14
And it refers to the memorandum of understanding of
October 27th.
I will have my student confirm this, as well, but if
15
you click on that link, Madam Chairman - this is in
16
response to your question - where you get to is Exhibit
17
K5.1.
18
So when I accessed the Ministry's website last week,
19
that's the path I travelled, though I first accessed this
20
document earlier.
21
So that's the clean energy transfer.
It is still the
22
current link on the Ministry's website, and the Ministry
23
still indicates that this prospect of an agreement with
24
Manitoba seems to be very much alive.
25
Would you dispute that, Mr. Shalaby?
26
MR. SHALABY:
27
28
I don't dispute the words that are on
the page.
MR. SHRYBMAN:
Well, do you dispute what it is that
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they intend to convey?
2
MR. SHALABY:
I don't think it is appropriate for me
3
to comment on the currency of this statement or the
4
currency of this initiative or the currency of the
5
commitment.
6
October 27th, 2005.
7
announcement.
8
the same extent that the words convey is something that I
9
can't attest to.
10
I don't intend to do that.
I mean, this is
This is three-years-ago kind of
Whether that continues to be the priority to
MR. SHRYBMAN:
Okay.
But just to be clear, Mr.
11
Shalaby, I wasn't referring to the news release of 2005 but
12
the website of September 2008, which says:
13
"The government is committed to reaching a long-
14
term agreement with Manitoba for the transfer of
15
up to 3,000 megawatts of clean green electricity
16
to Ontario."
17
Do you have any reason to dispute that statement?
18
MR. SHALABY:
I am suggesting that this statement was
19
prepared in 2005, concurrent with the press release and
20
concurrent with the 2004 report.
21
am making.
22
That's one suggestion I
The second suggestion I am making is, I don't know the
23
currency of that.
24
government policy and commitment, I don't know that.
25
MR. SHRYBMAN:
And the extent this continues to reflect
Well, does having it on the Ministry's
26
website today indicate that it is more current than a
27
historic statement from 2005?
28
MR. SHALABY:
I don't know.
I don't know whether the
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practices of putting things on websites and continuously
2
editing that or it stays -- it could be website material
3
that hasn't been revised.
4
I think that question is better addressed elsewhere than
5
with us.
6
7
8
9
MR. SHRYBMAN:
Okay.
It could continue to be current.
Madam Chair, do you break at
10:15 or 10:30?
MS. NOWINA:
10:30, but if this would be a more
appropriate time for you, we are willing to do that.
10
MR. SHRYBMAN:
11
MS. NOWINA:
12
MR. SHRYBMAN:
10:30 is fine.
10:30, then.
Mr. Shalaby, I have tried to kind of
13
situate, then, this document in more contemporary or
14
current context but I want to go back then to -- and we are
15
talking about K5.1 now, to page 32, which are the
16
conclusions and recommendations of the report or of the
17
advisory team's report.
18
I am going to take you through some of the tangible
19
benefits which are listed on page 32 and ask you about
20
whether you have considered them and whether you have
21
applied the criteria of your planning process to assess
22
these benefits, generally what they methods and approaches
23
you have taken to looking at the advantages and
24
disadvantages of an agreement with Manitoba.
25
So let me begin, if I might, with the first.
One of
26
the tangible benefits identified here is to help Ontario
27
make significant progress in reducing the projected supply
28
gap to 2020, contributing to the portfolio solutions
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2
currently being pursued by the province of Ontario.
Did you take that potential benefit into account in
3
coming to the conclusion that you arrived at with respect
4
to Manitoba, an agreement with Manitoba?
5
MR. SHALABY:
Before we start agreeing or not agreeing
6
to what you describe as tangible benefits, I mean the
7
authorship of this report, I don't know who authored this
8
report.
9
The sequence of events is a little less clear, in my mind,
And I don't know how tangible the benefits are.
10
than I would like to be before I respond to what you
11
describe as tangible benefits.
12
I don't know who authored this report.
13
is it the Bank of Nova Scotia?
14
team, but it is talking about a bank,
It's a bank --
Or is it -- some study
15
"...to thank the National Bank Financial for
16
their assistance in drafting this report."
17
I am just wanting a little more information before we
18
19
20
attest to the tangible benefits.
MR. SHRYBMAN:
Okay.
Well, I am not asking you to
agree that they're tangible benefits, Mr. Shalaby.
21
MR. SHALABY:
22
MR. SHRYBMAN:
Your question implies that.
No.
I think my question indicated the
23
authors of this report -- and I have tried to situate it as
24
well as I can in the framework of Ontario policy --
25
MR. SHALABY:
26
MR. SHRYBMAN:
Yes.
-- and you have noted your reservation
27
with respect to authorship for the record.
I referred to
28
the tangible benefits as the authors of the report describe
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them, but forget about the pedigree or the provenance of
2
the document if you would for the moment, I would like to
3
ask you about the potential advantages and disadvantages of
4
an agreement with Manitoba, as this document describes
5
them.
6
MR. SHALABY:
7
MR. SHRYBMAN:
That's fair, that's fair.
All right.
So the first one is that an
8
agreement with Manitoba could address the supply gap
9
through 2020 that I believe your documents also describe.
10
Is that something that you considered the -- an
11
agreement with Manitoba making a contribution to?
12
MR. SHALABY:
13
MR. SHRYBMAN:
14
MR. SHALABY:
15
16
Yes.
Where is that in the material?
That is in the generic advantages that
we mentioned to purchases from outside the province.
It is more substantially mentioned in the supply mix
17
advice where we actually included, in some of the
18
scenarios, purchases from outside the province as part of
19
the supply mix to illustrate how is it that a purchase from
20
outside the province reduces the resources inside the
21
province.
22
It goes without saying, if you purchase resources that
23
are firm, they can be delivered to your load.
24
the projected supply gap.
25
discuss the validity of that statement.
Okay.
You reduce
I mean there is no reason to
26
MR. SHRYBMAN:
Can I ask you about the next one
27
on the list on page 22.
28
transmission grid, substantially improving the reliability
It reads: "Enhance the national
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and security of electricity supply for Canadians and
2
strengthening the largest east-west gap in the system." Was
3
that a potential benefit of an agreement with Manitoba that
4
you considered in preparing the IPSP, and where?
5
MR. SHALABY:
It certainly will enhance the national
6
transmission grid.
7
substantially improving the reliability and security of
8
electricity supply for Canadians.
9
10
MR. SHRYBMAN:
I don't agree fully to the notion of
And my question is:
Did you consider
this potential benefit in the plan, and where?
11
MR. SHALABY:
12
MR. SHRYBMAN:
13
9 of this exhibit.
14
MR. SHALABY:
15
MR. SHRYBMAN:
16
MR. SHALABY:
17
MR. SHRYBMAN:
No, because -- no, we did not.
All right.
Can I ask you to go to page
Of K?
Page 9 of K5.1.
Okay.
And I don't want to read these, but
18
perhaps I can paraphrase them and ask -- you have had a
19
chance to read this document, Mr. Shalaby?
20
MR. SHALABY:
Not if you're going to refer to it in
21
detail.
22
exhibits I had to read over the weekend, yes.
23
Yes, I read it, together with the many other
MR. SHRYBMAN:
Okay.
Well let me just try to
24
summarize this and you can tell me whether it accords or
25
doesn't accord with your understanding.
26
It describes here the fact that, our interconnections
27
with US jurisdictions are more robust, substantially more
28
robust and developed than they are with other Canadian
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provinces.
2
a weak national grid.
3
And that -- and characterizes that generally as
Paragraph 2, perhaps this is worth reading: "A weak
4
national grid also has implications beyond Canada's ability
5
to provide its citizens and communities with sufficient
6
power in an emergency.
7
Canada's ability to reduce CO2 emissions since Canada cannot
8
always control the type of power it imports.
9
Ontario's transmission interconnections enable the province
A weak national grid also limits
For example,
10
to import twice as much power from the US generation, a
11
significant portion of which may be either directly or
12
indirectly based on coal-fired generation as for Quebec and
13
Manitoba.
14
among the largest exporters of low-cost stably- priced
15
clean power on the continent."
16
This despite the fact that both provinces are
Then the next paragraph reads:
"As described above,
17
east-west connections have limited capacity to transfer
18
power between Provinces.
19
clean energy generation in Canada can only flow to the US
20
rather than to other Canadian markets.
21
combine to produce the perverse effect of making Canada an
22
exporting of its clean energy while increasing imports of
23
power from less desirable sources."
Unless this is changed, increased
These factors could
24
Do you disagree with the description of our systems
25
and the consequences that follow from them, described in
26
those paragraphs I have just referred you to, Mr. Shalaby?
27
28
MR. SHALABY:
I do not disagree with the
characterization that there are stronger ties between the
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provinces and their southern US neighbours, more so than
2
between the provinces and each other.
3
description.
4
I agree with that
The description of the flow of power is more
5
complicated than this picture provides.
6
is used somewhere in the continent, it reduces emissions.
7
It enhances reliability.
8
9
10
11
I mean, if energy
The interconnectedness of the continental grid makes
some of these general remarks not as straightforward as
they appear to be.
So, for example, if Quebec sells New York renewable
12
power, then New York reduces its consumption of fossil
13
fuels, for example.
14
same as if Quebec sold renewable power to Ontario to reduce
15
fossil fuels, more or less.
The benefit to CO2 reduction is the
16
I mean, the important thing is that renewable energy
17
is being produced and is being used, if CO2 is the issue.
18
MR. SHRYBMAN:
Yes, but -- okay, well, let me -- I
19
want to pursue that with you, and, for that purpose, let me
20
also refer you to just to comment on page 1 of the
21
document, just to round out, I suppose, the foundation for
22
the next questions I am going to ask you.
23
At the bottom of -- this is the executive summary
24
page, page 1, at the bottom of the page.
25
Do you have that, Mr. Shalaby?
26
MR. SHALABY:
27
MR. SHRYBMAN:
28
Yes.
It says:
"Strengthening the national grid at this critical
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east-west juncture will not only contribute to
2
Ontario's clean new energy supplies, but would
3
provide substantial improvements to grid, in grid
4
reliability and national energy security,
5
suggesting a possible role for the federal
6
government."
7
I just wanted to complete the picture or the
8
foundation for my question that:
Did you consider the
9
greenhouse gas emission or implications of energy trade
10
with provinces as opposed to States, because your answer
11
that you just gave me suggested that?
12
MR. SHALABY:
My answer suggested the simplicity of
13
discussing CO2 and renewable energy and trade in energy is
14
-- oversimplifies the matter.
15
consider the international dimensions of the Ontario system
16
and international dimensions of Ontario's interactions with
17
its neighbours, the details of which are complex and
18
depends on a lot of assumptions about the other systems.
19
MR. SHRYBMAN:
That is all I am -- we did
As I understood your answer, Mr.
20
Shalaby, you were indicating that, Well, as long as
21
greenhouse gas emissions reductions -- are reduced, whether
22
to offset carbon-based electricity generation either in
23
Canada, the United States, we should be indifferent.
24
that your answer?
25
MR. SHALABY:
26
27
28
No.
Was
This was an example of how simple
descriptions of these effects is superficial.
Considering CO2, renewable energy, reduction of fossil
fuels, international trade and electricity is a complex
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subject, while the statements here make it appear to be
2
more straightforward than it really is.
3
comment.
4
MR. SHRYBMAN:
Well, okay.
That's my only
You have to explain that
5
to me a little more fully, because the statement here, as I
6
understand it, is this:
7
international obligations, to reduce greenhouse gas
8
emissions.
9
Canada has obligations,
The fact that Ontario could use hydroelectric power,
10
if this grid was reinforced, might contribute to meeting
11
those objectives if the power is shared between Manitoba
12
and Ontario, those benefits don't follow if the power is
13
exported to the United States.
14
that -- or the rationale that's being offered here.
15
disagree with that?
16
MR. SHALABY:
I think that's the comment
Do you
That may be the context within which the
17
comments are mentioned.
18
that clear about what Canada's obligations are at this
19
time.
20
that also is a complicated story.
21
emission reductions to sectors, to provinces, to
22
industries, it is not a straightforward matter.
23
24
25
It's not that clear, and I'm not
That story continues to evolve.
MR. VEGH:
It's complicated --
The allocation of
If I may, Madam Chair, I think we are
straying a bit.
I don't think the witness panel is going to be able to
26
really address the issues of how interprovincial
27
arrangements can or cannot help Canada meet any
28
international obligations.
I don't think that's an issue
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2
in this case.
I think the extent to which the interprovincial
3
arrangements can help meet the supply mix directive and how
4
they contribute to meeting the supply mix directive and the
5
alternatives to meeting the supply mix directive is really
6
more the mandate of this review than how these arrangements
7
may or may not contribute to Canada's international
8
obligations.
9
10
I don't think there is any evidence on that, and I
also don't think it is particularly relevant.
11
MS. NOWINA:
12
MR. SHRYBMAN:
13
Mr. Shrybman?
Well, I will take you to -- or I will
take the panel to further passages in the document.
14
The purpose of my question is not to explore the issue
15
substantively with the witnesses, but, rather, to ascertain
16
whether or not they've taken this potential advantage into
17
account and whether they have applied their planning
18
criteria to assess it.
19
And as the study document indicates, according to
20
Ontario and Manitoba, the fact that a clean energy transfer
21
between the provinces could help Canada meet its
22
international obligations may be a good claim for federal
23
funding to support enhanced transmission.
24
I will go on to take the witnesses to those passages.
25
My question is:
In considering all of this and the costs,
26
which Mr. Shalaby has already indicated are formidable, did
27
they take into account the potential contribution of
28
federal funding to a project like this because of the
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broader benefits it offers the country, not just the
2
Province of Ontario and Manitoba?
3
That's where I am going with this.
4
MS. NOWINA:
5
6
With that explanation, do you still have
a concern with relevance, Mr. Vegh?
MR. VEGH:
I do, Madam Chair.
Again, we are assuming
7
some contribution of federal funding and asking the
8
witnesses to comment on that.
9
It seems to me to be astray from the mandate of this
10
review to get involved into those issues, which are,
11
frankly, at this stage -- they were speculation in
12
September 2004 prior to the supply mix, and they remain
13
speculation today.
14
Chair.
15
MS. NOWINA:
So I have the same concerns, Madam
All right.
Well, let's take our morning
16
break and give us a chance to think about it.
We will
17
return in 15 minutes, which takes us to about ten minutes
18
to the hour.
19
--- Recess taken at 10:33 a.m.
20
--- On resuming at 10:55 a.m.
21
MS. NOWINA:
22
Mr. Vegh, we think Mr. Shrybman's questions are
23
relevant because they go to testing the planning criteria
24
for the plan, and we would like to hear the answers to the
25
questions.
26
don't think we need to address those at this point because
27
we have made our decision on other grounds.
28
Please be seated.
Regarding Mr. Shrybman's comments on costs, we
MR. SHRYBMAN:
Thank you, Madam Chair.
I won't
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belabour the point.
2
your approach to that issue was and whether you applied the
3
planning criteria to the -- to the advantage that is
4
identified by this document, in terms of strengthening the
5
grid.
6
It was only really to ask you what
I think you have indicated that you didn't consider
7
that possible advantage.
8
criteria.
9
MR. SHALABY:
It didn't apply the planning
Some advantages, as to value to Ontario,
10
we considered.
11
Canadian interconnection as an example, we did not consider
12
that explicitly in our criteria.
13
But value to strengthening an east-west
MR. SHRYBMAN:
Thank you, Mr. Shalaby.
Is it fair to
14
say, though, what in the document, in the press release
15
which is K5.2, that the province expresses the view that
16
strengthening the grid, the Canadian grid is actually
17
helpful for Ontario energy security and reliability
18
purposes?
19
Aren't the two connected, necessarily connected?
MR. SHALABY:
They are, and that's evidenced by the
20
increase in capacity with the province of Quebec that is
21
underway today.
22
reliability of both systems and the ability to interact for
23
both systems, yes.
24
MR. SHRYBMAN:
That has value in increasing the
All right.
With my eye on the clock, I
25
am not going to take you through the rest of these
26
recommendations, but I do want to refer you to a couple of
27
others that are evidence, addressed Mr. Kliman's report.
28
For the sake of expediting cross-examination, I would
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rather not go there, but if we must, but I am referring to
2
Exhibit L-6-4 and L-6-3.
3
Without taking you there, Mr. Shalaby, because I think
4
you will be able to answer these questions without a
5
specific reference, and again I am talking about the
6
potential role that an interconnection could play or an
7
agreement could play and what your approach for dealing
8
with that role has been and whether you applied the
9
criteria to it.
10
One is surplus base-load generation.
11
As I understand it, from Mr. Kliman's report, the
12
interesting or wonderful features of Quebec and Manitoba's
13
power generation system is that they have large reservoirs
14
behind hydraulic facilities and they can simply store water
15
there.
16
Is that your understanding?
So they have a natural built-in storage capacity.
17
MR. SHALABY:
18
MR. SHRYBMAN:
That is my understanding, yes.
And that they kind of buy power cheaply
19
at night, including from Ontario, and they can run
20
Montreal, just for the sake of illustration, keep water
21
behind their dam and turn it on during the day and sell
22
power for much higher prices than they paid the night
23
before.
24
going on?
Is that the fair general description of what's
25
MR. SHALABY:
26
MR. SHRYBMAN:
Yes.
And Mr. Poch took you to this and I
27
won't do that, but I gather surplus base-load generation
28
for Ontario is a concern, looking forward?
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MR. SHALABY:
It is an issue that we are identifying
2
early on at this stage and there are strategies that the
3
Independent Electricity System Operator and ourselves are
4
looking into, to mitigate that.
5
MR. SHRYBMAN:
Would it be possible to negotiate an
6
agreement with Manitoba or Quebec that wouldn't simply be
7
an agreement for the acquisition of power, but also for
8
helping Ontario deal with its surplus base-load generation
9
problem?
10
It could be a multi-faceted agreement that would
look at both imports and exports.
11
MR. SHALABY:
12
MR. SHRYBMAN:
13
Is that possible?
It is.
Did you look at that potential role of
an agreement with Manitoba and Quebec in material and...
14
MR. SHALABY:
15
MR. SHRYBMAN:
16
MR. SHALABY:
We looked at, yes.
Where would I find that?
The supply mix advice talks about the
17
role of interconnections and the role of deals with other
18
provinces.
19
We are looking at, as we speak, on various options, I
20
mean looking doesn't necessarily mean providing paper in
21
this proceeding, unless you meant that.
22
MR. SHRYBMAN:
Well, no.
I meant paper in this
23
proceeding in general, and in particular, to which panel or
24
where I would find the evidence and to which panel I would
25
address it.
26
MR. SHALABY:
You would find the evidence under the
27
heading of "storage."
28
available in neighbouring utilities and neighbouring
We talked about storage as being
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2
3
4
provinces, if agreements can be negotiated.
MR. SHRYBMAN:
I missed that.
And where would be
that?
MR. SHALABY:
Would that be in G -- D-7 or 8-1.
I can
5
get you the reference to that.
6
in storage options and we mention there the value of the
7
interconnected system, particularly to Quebec and to
8
Manitoba, in storing energy.
9
MR. SHRYBMAN:
We have a brief description
Did you apply the criteria, the
10
feasibility, reliability, those criteria to that potential
11
value of a relationship with other provinces in the
12
material somewhere?
13
MR. SHALABY:
If -- we didn't consider the firm
14
purchase to be an option at this stage.
15
enough to be an option at this stage.
16
we didn't proceed to apply all of the criteria to it.
17
MR. SHRYBMAN:
Okay.
It's not mature
So for that reason,
I want to ask you about another
18
one, and that is – and this is addressed in both, in the
19
reports prepared by Mr. Kliman and the other report we
20
introduced L-6-3, and it's about renewable portfolio
21
standards and the initiatives that are taking place in the
22
United States, and the gist of the evidence is that that
23
policy and regulatory framework was developing rapidly in
24
the United States, and potentially and in fact has already
25
exerted a pool on renewable resources from Canada.
26
27
28
Is that your understanding of the state of the world
in the electricity sector in this part of North America?
MR. SHALABY:
The renewable portfolio standards are in
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place in 20-odd states in the United States and many of
2
them have different requirements.
3
requirements.
4
They're not uniform
For example, Connecticut and Massachusetts would
5
insist that the renewable energy be generated within the
6
state.
7
energy from elsewhere.
8
9
Other states would permit importation of renewable
There is no uniformity to renewable portfolio standard
requirements.
10
MR. SHRYBMAN:
All right.
I think we deal with New
11
York, in particular and offer some evidence that New York
12
does allow acquisitions from Canada.
13
given.
14
a significant new demand for renewable resources from
15
Canada, and that suggests that negotiating an agreement
16
with Manitoba or Quebec be given particular priority,
17
because if we don't acquire these resources, other
18
jurisdictions may.
But take that as a
The point that the evidence makes is that there is
19
Would you agree with that sentiment or disagree?
20
MR. SHALABY:
I would agree that there is competition
21
for these resources from other buyers in the United States,
22
yes.
23
MR. SHRYBMAN:
And that has some bearing on the
24
priority that might be given to negotiating agreements with
25
other provinces, might it not?
26
MR. SHALABY:
27
MR. SHRYBMAN:
28
Yes.
Now, you have indicated that the whole
concept of sustainability really engenders the notion of a
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plan that is explicit and transparent.
2
Mr. Shalaby?
3
MR. SHALABY:
4
MR. SHRYBMAN:
Do you recall that,
Yes.
Would you say that you've achieved that
5
objective with respect to the treatment in the IPSP of the
6
potential for agreements with Manitoba and Quebec and
7
Newfoundland?
8
MR. SHALABY:
9
MR. SHRYBMAN:
10
11
Yes.
All right.
I want to move on to -- oh,
one further question.
Scenarios.
I am curious as to why you didn't model a
12
scenario.
13
that the potential contribution, the agreements with other
14
provinces, might make to meeting the goals of the supply
15
mix directive and, in particular, the underlying need for
16
Ontario to have an electricity system that is adequate and
17
reliable and robust was sufficient that it warranted the
18
treatment of that opportunity as a scenario.
19
20
21
We asked you to do a couple, but it seemed to us
But you are of another view, apparently, and can you
tell me why?
MR. SHALABY:
I can give you two parts to that answer.
22
One is that we did -- when we were in scenario modelling
23
mode, and that's in the supply mix phase of the work, we
24
did model a purchase from outside the province.
25
At this stage here, where we're developing a plan,
26
we're developing a plan from options that we consider
27
feasible at this stage and we do not consider an agreement
28
that has not been concluded to be a feasible option at this
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stage.
2
product that hasn't been defined, hasn't been agreed to at
3
this stage.
4
That's simply a decision we made not to model a
So we are not into scenario planning.
We are into
5
developing a single plan and seeing how it responds, and
6
we're showing input from other provinces coming in
7
throughout the planning period.
8
showing is a contract for these things.
The only thing we are not
9
So there is energy flowing from other provinces that
10
is being modelled and being considered in the plan on the
11
model.
12
MR. SHRYBMAN:
Is it your view the uncertainties
13
concerned with negotiating an agreement with Manitoba and
14
Quebec are of a different character or different order than
15
the uncertainties that append the other scenarios you have
16
modelled, I mean, very different estimates of load growth,
17
whether or not there's going to be renewable development in
18
northwestern Ontario?
19
Isn't it all very uncertain?
20
MR. SHALABY:
It is all very uncertain.
The only
21
additional dimension that an agreement with a neighbouring
22
province introduces is the third party agreement.
23
agreement of a neighbouring utility or a neighbouring
24
province has to be secured.
25
different.
26
MR. SHRYBMAN:
The
So it is, in nature, a little
But isn't a third party agreement
27
precisely what you have when you negotiate procurement with
28
a generator?
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MR. SHALABY:
It is.
It is, but it's -- it is an open
2
request for proposal that multiple proponents can develop
3
projects within Ontario.
4
can develop a project within Quebec and deliver it to
5
Ontario.
6
7
There is only one proponent that
So it is a little different in that regard.
MR. SHRYBMAN:
So there are single-source
procurements?
8
MR. SHALABY:
9
MR. SHRYBMAN:
There are.
There are.
And, I mean, it seems to me
10
that you deal with those in one way and you deal with
11
negotiations with Quebec and Manitoba in a different way,
12
or that's our evidence, and that in a way you have
13
relegated the potential for an agreement with other
14
provinces to some second class status, because of
15
uncertainties that seem to append other features of the
16
system that are no less certain than an agreement with
17
other Canadian provinces, or have we misread the material
18
or misapprehended it?
19
MR. SHALABY:
I disagree with how you characterize
20
that.
It is just a different -- it's a different
21
negotiation, different option to be developed and different
22
-- there is negotiations with another province.
23
includes a level of complexity and a level of consideration
24
that is different than negotiating even a single-source
25
option within Ontario.
26
MR. SHRYBMAN:
That
You're not suggesting, are you, Mr.
27
Shalaby, that our neighbouring provinces, our illustrious
28
neighbouring provinces of Quebec and Manitoba, are harder
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to get along with than the private sector, are you?
2
MR. SHALABY:
3
MR. SHRYBMAN:
4
MR. SHALABY:
5
6
No, just different considerations.
Okay.
Not harder, not softer.
Nothing at all.
Just different.
MR. SHRYBMAN:
Can I move on, then?
So I spent a fair
7
bit of time exploring our relationship with other
8
provinces.
9
exploring our relationships with neighbouring states and US
10
11
I will be a little quicker when it comes to
jurisdictions.
I am trying to understand how you dealt with imports
12
and exports to the United States in the material, and that
13
is what my questions will be attempting to establish.
14
If I understand your approach to import and export
15
flows -- can describe that?
16
the model looks at estimated economic imports and exports.
17
18
You have modelled them, and
Can you just summarize your approach to dealing with
imports and exports from the province in the material?
19
MR. PIETREWICZ:
20
interrogatory reference.
21
of times in the interrogatories.
22
course of this morning, I will point it out.
23
MR. SHRYBMAN:
24
MR. PIETREWICZ:
25
MR. SHRYBMAN:
26
MR. PIETREWICZ:
Sure.
I was just looking for an
We have addressed this a number
If I find it in the
Can I help you with one?
Sure.
It would be one of ours, I-13-17.
Yes, that's a good example.
The
27
general issue of imports and exports in the IPSP, imports
28
and exports in the IPSP are reflected in exhibits such as
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Exhibit D-9-1, which is entitled "Meeting Resource
2
Requirements", and, for example, Exhibit G-1-1, which is
3
entitled "Plan Robustness".
4
The imports and exports reflected in those exhibits
5
illustrate what we have called economic imports and exports
6
that would occur in the normal course of market operations;
7
that is, during the normal operation of the interconnected
8
power system.
9
So these are imports and exports that might occur sort
10
of during the day-to-day bid and offer system that we have
11
here, and as do our neighbouring jurisdictions.
12
These economic imports are different from I think what
13
we've been talking about in this -- this morning, which are
14
more firm imports; that is, a guaranteed basis, contractual
15
basis import.
16
I hope that helps clear it up.
17
MR. SHRYBMAN:
So, all right.
So you have modelled
18
economic imports and exports.
19
account any contract-based exports and imports; is that
20
correct?
21
22
23
24
25
MR. PIETREWICZ:
You haven't taken into
As far as I understand, that's
correct.
MR. SHRYBMAN:
There may be such contracts; is that
fair to say?
MR. PIETREWICZ:
There may be out in the world.
I am
26
not aware of those contracts and I don't think they were
27
reflected in our modelling of the IPSP.
28
MR. SHRYBMAN:
If I am a merchant generator in Ontario
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and I have a contract to supply someone in the United
2
States, there's no disclosure of that contract, is my
3
understanding.
4
Is that yours?
MR. PIETREWICZ:
Again, I think this was another topic
5
that was addressed in the interrogatory responses.
6
recall exactly which one.
7
MR. SHRYBMAN:
I don't
Perhaps you recall.
Well, I think -- I believe you
8
indicated that you had no knowledge of such contracts.
9
That was your answer.
10
MR. PIETREWICZ:
11
MR. SHRYBMAN:
12
Unless I have misunderstood it, you don't distinguish,
13
for the purposes of your model, between exports and imports
14
from other provinces as opposed to exports and imports from
15
the United States.
16
That's right.
Okay.
Is that true?
MR. PIETREWICZ:
We don't distinguish in the sense
17
that they combine -- they equate to a total amount of
18
energy.
19
flow across a certain intertie or set of interties.
20
We do distinguish, in the sense that they would
So, for example, imports from Manitoba would tend to
21
occur over a certain set of interconnections as opposed to
22
imports from Quebec.
23
interconnections.
24
25
26
They would occur over another set of
So in that sense, in that physical sense, more or
less, we can distinguish them, but, yes.
MR. SHRYBMAN:
Okay.
Well, I am asking you
27
specifically about the chart that I think you referred me
28
to, including the ones in G, where there are lines that
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2
show imports or exports.
There is no way for me to tell whether those are
3
imports or exports from Canada or the United States, or did
4
I miss something?
5
MR. PIETREWICZ:
6
characterization.
7
a given year.
8
9
10
11
12
No.
That's an accurate
Those are total imports and exports for
MR. SHRYBMAN:
Can I find anywhere in the material a
breakdown of how much is Canadian as opposed to US trade?
MR. PIETREWICZ:
As far as I recall, there is no such
breakdown in the evidence.
MR. SHRYBMAN:
In terms of imports and exports from
13
the provinces, as I am trying to understand the numbers, it
14
seems to me one of the confounding factors is wheeling of
15
power through the province.
16
So as I understand wheeling, Quebec may have an
17
arrangement to supply New York with power, and it can use
18
Ontario's transmission system if it's available to do that.
19
And so when it ships power into Ontario, that becomes an
20
import.
21
becomes an export.
22
When it ships power out of the province, it
Those transactions are reflected in your model, but
23
really they don't tell me very much about meeting Ontario
24
power needs, because we're just looking at a flow, or is
25
there some way in which your model gives me that
26
information?
27
28
MR. PIETREWICZ:
I suspect this might be a question
that could be more helpfully addressed in the supply
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panels, insofar as -- I am not exactly 100 percent certain
2
whether our modelling, which as we point out in Exhibit G-
3
1-1 tends to be a little -- imports and exports tends to be
4
more directional than sort of precise.
5
6
I am not sure the extent to which that modelling
reflects wheel-throughs, as you have described them.
7
MR. SHRYBMAN:
8
MR. SHALABY:
9
MR. SHRYBMAN:
10
MR. SHALABY:
That's the next panel?
If I may add.
Yes, certainly.
Just expand on the point that Andrew is
11
explaining.
12
terms of our knowledge and details.
13
about the neighbouring systems and the detail that would
14
give precision to the amount of imports and exports.
15
have to make assumptions of the differential energy prices
16
and availability of energy in different interconnected
17
systems, the midwest, New York, New England, Manitoba and
18
Quebec.
19
The imports and exports are a second order, in
These are highly uncertain.
We don't know enough
We
They're uncertain enough
20
to try and estimate what our availability of prices are.
21
As a second order, maybe even deeper uncertainty to
22
understand what the neighbouring systems are going to be
23
going through and then to describe the interaction between
24
them.
25
So we don't put a lot of weight on the amount of
26
imports and exports for the purposes of the approvals we're
27
requesting or for the purposes of consumer costs in
28
Ontario.
They really are an added level of uncertainty
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2
added to them.
They're quite uncertain.
MR. SHRYBMAN:
Well, in that vein, isn't it fair to
3
say that the uncertainties that surround whether there will
4
be power in another system outside the province and at what
5
price it might be available, is much more uncertain,
6
engenders much greater risk than an agreement with another
7
province to supply us with power at a particular price?
8
MR. SHALABY:
9
MR. SHRYBMAN:
10
MS. NOWINA:
Yes.
Kind of logical.
Mr. Shalaby, before you move on, I would
11
like to determine exactly which future panel it is that you
12
can address your questions to in more detail.
13
clear on that.
14
MR. PIETREWICZ:
I wasn't
I suspect members of the supply non-
15
renewable panel are more familiar.
16
panel as well, but the additional members would be more
17
familiar with the details of the modelling than myself.
18
MS. NOWINA:
19
MR. PIETREWICZ:
20
I would be on that
Thank you, Mr. Pietrewicz.
I would like to clear up perhaps what
might be a misimpression that I left.
21
Those economic imports and exports are not being
22
relied on in the plan for capacity planning purposes.
23
Those are simply, as Mr. Shalaby described, sort of
24
representing an outcome of the dispatch of this particular
25
plan.
26
So to your point of whether those -- relying on those
27
imports is any more risky than relying on firm purchases, I
28
would just like to make it clear that we are not relying on
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those imports from other jurisdictions on an economic basis
2
for capacity planning.
3
plan performance section of the IPSP.
4
MR. SHRYBMAN:
They're simply illustrated in the
Okay.
I want to follow up with that,
5
but Madam Chair, I am a little confused about the panel,
6
because I would have thought it might be the reference
7
forecast and reserve requirements are -- no.
8
renewables panel?
9
MR. VEGH:
It's the
Madam Chair, perhaps we could take as an
10
undertaking -- this hasn't been a discrete piece of
11
evidence put forward by the OPA.
12
MS. NOWINA:
It doesn't need to be an undertaking, Mr.
13
Vegh.
Perhaps just let us know after you checked with the
14
OPA which panel Mr. Shrybman should address the questions
15
to.
16
MR. VEGH:
We will do that.
17
MS. NOWINA:
18
MR. SHRYBMAN:
19
MS. NOWINA:
20
MR. SHRYBMAN:
Thank you.
Just to follow up on -- sorry?
Yes, go ahead.
Just to follow up on your last answer,
21
Mr. Pietrewicz.
22
now, the past five days.
23
MR. PIETREWICZ:
24
[Laughter]
25
MR. SHRYBMAN:
26
Thank you.
I have practiced pronouncing your name
It sounds like a Scottish name now.
It's the emphasis on the second
syllable.
27
MR. PIETREWICZ:
28
MR. SHRYBMAN:
Second-last, yes.
Second and last.
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Can I take you to G-1-1 page 42.
2
imports all across the scenarios.
3
the red.
4
And this is showing
To go down so we can see
Thank you very much.
I look at this and, you know, you see these numbers
5
climbing after the coal plants close down, and it looks
6
like Ontario's relying on these imports to materialize or
7
it's going to be in real difficulty to meet system needs
8
after the coal plants close.
9
MR. SHALABY:
Did I misunderstand that?
You see contribution from imports to the
10
energy story, to the energy contribution, the terawatt-
11
hours on the Y axis.
12
then natural gas resources in the province will operate
13
more frequently.
14
If these imports do not materialize,
So the reliance is on displacing other energy in the
15
province, but not providing capacity to meet capacity
16
requirements.
17
MR. SHRYBMAN:
18
MR. SHALABY:
Okay.
It's not reliance.
It is, we suspect
19
there will be energy available in the import market, in the
20
export market, in the markets around us, to displace gas at
21
different parts of the year.
22
we will just have to generate with gas.
23
MR. SHRYBMAN:
But if they're not available,
So, you get these numbers then by
24
estimating what the costs are going to be, if that's
25
correct, my understanding is correct, then you're saying it
26
is just going to be cheaper to buy than it is to generate.
27
28
MR. SHALABY:
Yes.
There will be times when we
estimate there will be an opportunity to displace natural
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gas in Ontario with imports from elsewhere.
MR. SHRYBMAN:
What does the material tell us about
3
the character -- we have already ascertained that you
4
haven't distinguished between Quebec and the States or
5
Manitoba and the States.
What does it tell us about the
6
character of the imports?
Because I read you a passage
7
from the clean energy transfer study and it says, well -
8
and I think we all understand this - power flows into
9
Ontario from neighbouring provinces, it tends to be clean.
10
But if it comes from the States, it may well be coal.
11
What does the material tell us about or what
12
information does it provide us to understand what, when I
13
look at this chart, what kind of power this is?
14
MR. SHALABY:
15
this particular chart.
16
that now, I talked about the first degree of uncertainty
17
about our own costs, our own generation, an added layer of
18
uncertainty about where prices and availability elsewhere.
19
This is even a third layer now, where exactly, what
20
components constitute the power that we're buying from
21
elsewhere.
22
As Andrew indicated, not very much in
There are layers of assumptions
It just becomes very uncertain.
But generally we
23
think and we modelled elsewhere in the model runs that
24
imports from Quebec and Manitoba are going to be primarily
25
hydroelectric-based.
26
have a large measure of coal content in them.
27
28
MR. SHRYBMAN:
Imports from the United States will
What tells me, when I look at -- or
your material, what is likely to be flowing into the
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province during this period when you are estimating we're
2
going to have very substantially increased imports?
3
MR. SHALABY:
I don't know the answer to that, whether
4
we provided material to show you how much comes from the
5
States, how much comes from Canada?
6
7
8
9
MR. SHRYBMAN:
Yes.
Is that --
I couldn't find it.
I was
wondering if I missed it.
MR. SHALABY:
Andrew indicated we didn't dwell on it.
It doesn't mean it cannot be simulated or modelled but I am
10
just indicating the uncertainty in that modelling at this
11
stage.
12
power if we needed to, to get to it.
But the models contain within them sources of that
13
There are some model runs where we made assumptions
14
about the content of the energy coming across to replace
15
nuclear power, for example.
16
of identifying the sources of that power, if it becomes of
17
interest or of relevance.
18
MR. SHRYBMAN:
So we do have the capability
Well, it seems to me that if you are
19
closing coal generation in Ontario and simply relying on
20
imports of power from coal generation plants outside the
21
jurisdiction, particularly if they're upwind, we haven't
22
accomplished very much; or have I missed something?
23
24
25
MR. SHALABY:
You are identifying an issue that we
agree with and we identified that as well.
MR. SHRYBMAN:
What would be - before I ask you for an
26
undertaking - I mean, what would be involved in generating
27
the information that would help us understand the character
28
of the imports we're contemplating?
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[Witness panel confers]
2
MR. PIETREWICZ:
To the question of what would be
3
involved?
4
simulations and trying to dig out and put together the
5
pieces that resulted in these results.
6
a bit of work, but not impossible.
7
I think it would mean going back to the
MR. SHRYBMAN:
I think it would be
Between a bit of work and not
8
impossible.
I don't want to be unreasonable, but it seems
9
to me that this would be helpful for us to have.
Could I
10
ask you, then, for an undertaking to provide us with more
11
information about the character of the electricity we're
12
contemplating going into the province?
13
MR. PIETREWICZ:
Sure.
To be clear, we simulated
14
eight cases in the IPSP filing.
15
cases that you would be most interested in seeing, or are
16
you looking for the results of all of the cases?
17
MR. SHALABY:
18
[Laughter]
19
MR. SHRYBMAN:
20
MR. SHALABY:
Are there any particular
The answer of all cases is not allowed.
Well -Why don't we commit to go back and
21
understand the amount of work needed, and provide
22
illustrative information to help you out with maybe
23
something in the lower end, something in the upper end, and
24
we see whether that would work?
25
26
MR. SHRYBMAN:
For my purposes, defining the
parameters would be helpful.
27
MR. SHALABY:
28
MR. SHRYBMAN:
That might mean two.
Right.
Just to look at the upper end and lower
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end in the same way that the chart I referred to you gives
2
us.
3
4
MR. RICHMOND:
to provide an overview of the imports as to location --
5
MR. SHALABY:
6
MR. RICHMOND:
7
8
9
That would be undertaking J5.2, the OPA
Sources of imports.
Sources of imports.
sources of imports.
MS. NOWINA:
Sorry, can I understand better what you
mean by "sources".
10
resource type?
11
here, Mr. Shrybman.
12
Overview as to
Is that by location or is it by
I am not clear what you are looking for
MR. SHRYBMAN:
I am looking for information about the
13
character of the generation that is going to yield these
14
imports.
15
16
MS. NOWINA:
What do you mean by "character"?
Do you
mean resource type?
17
MR. SHRYBMAN:
Coal, gas.
18
MS. NOWINA:
19
MR. SHRYBMAN:
20
MR. PIETREWICZ:
Resource type?
Hydraulic.
We will definitely have to check out
21
whether we have information available at that level of
22
detail as part of this undertaking.
23
UNDERTAKING NO. J5.2:
TO PROVIDE OVERVIEW OF SOURCES
24
OF IMPORTS, TO BE FURTHER DEFINED.
25
MR. SHRYBMAN:
Madam Chair, I would be happy to leave
26
it with something that Mr. Vegh and I can discuss, perhaps
27
with the witnesses, and refine the undertaking.
28
be helpful?
Would that
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MS. NOWINA:
Yes.
Maybe we can leave it as best
2
efforts, to be clarified, and if there is a refinement to
3
the undertaking, you and Mr. Vegh can give it to me later.
4
5
6
MR. VEGH:
Thank you.
That seems like a fair
approach.
MR. SHRYBMAN:
Did you consider whether or not Ontario
7
has any capacity to control the flow of dirty power into
8
the province, to use it in the vernacular?
9
MR. SHALABY:
We considered -- again, considered as do
10
we -- did we ask the questions, do we know what the
11
mechanisms are, is different than, Did we submit paper to
12
deal with it?
13
But we do understand the issue.
There are -- so we asked the question to do with the
14
phase-out of coal, and, in fact, we recommended in our
15
advice on replacement of coal, that mechanisms about coal-
16
generated energy be explored.
17
generated energy that is crossing the border?
What do we do with coal-
18
There are information sources about tagging.
19
information tabled in this proceeding about electronic
20
tagging of interactions between different states and the
21
provinces.
22
Every transaction in electricity is tagged.
There is
NERC, the
23
North American Electricity Reliability Council, requires
24
that electricity be tagged at the source and at the sync,
25
and there is information available as to where it came from
26
and where it is heading.
27
28
That can be used to detect the amount of coal content,
and what to do with that is more difficult to answer at
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this stage.
MR. SHRYBMAN:
So I don't want to debate the law with
3
you, but I do want to ask you whether or not you took
4
Canada's obligations under the North American Free Trade
5
Agreement into account in your consideration of that
6
question.
7
MR. SHALABY:
8
MR. SHRYBMAN:
9
MR. SHALABY:
No.
The answer is "no".
Now -To add to the material that we
10
understood and presented here and elsewhere is highlighting
11
the need for a regional solution to these issues, rather
12
than a provincial solution to these issues.
13
So, for example, by Ontario joining regional
14
initiatives on greenhouse emission reductions, there is
15
higher chance of success on a regional initiative than on a
16
purely provincial initiative.
17
18
MR. SHRYBMAN:
When you talk about the region, are you
including the United States?
19
MR. SHALABY:
20
MR. SHRYBMAN:
Yes.
And have you considered the way in
21
which the accounting for greenhouse gas emissions would be
22
allocated as between Canada and the US in your thinking
23
about...
24
25
26
27
28
MR. SHALABY:
Not in detail.
I don't think that is
all developed at this time yet, no.
MR. SHRYBMAN:
Can I take you to E-2-7, page 2?
I
want to take you to -- yes, page 2, that's right.
"How is reliability regulated and enforced in Ontario"
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is the heading there.
2
is it fair to characterize it as a US regulatory
3
organization?
4
MR. SHALABY:
5
MR. SHRYBMAN:
6
7
You refer to NERC, which is a US --
Can you repeat the -- what is it?
I understand NERC to be a US regulatory
institution.
MR. SHALABY:
No.
NERC is the North American
8
Electricity Reliability Council.
9
organization.
10
11
12
MR. SHRYBMAN:
It is an international
It says here NERC was certified by the
US Federal Energy Regulatory Commission.
I understand it to be, you know, an adjunct to FERC,
13
though it has a larger remit.
14
remit, but it is basically a US regulatory institution and
15
it reports and is accountable to FERC, or have I got that
16
wrong?
No.
It has a North American
17
MR. SHALABY:
You have that partly right.
18
It's an international organization.
It is accountable
19
to FERC for electricity reliability.
20
an electricity reliability organization for the United
21
States.
22
reliability organization.
23
that designated agency in the United States.
24
It is designated as
FERC has a specific requirement for electricity
This international agency became
It is also identified by Canadian regulators, one by
25
one - that is, the National Electricity Reliability Council
26
- as the standards develop an organization for electricity
27
reliability.
28
So the Ontario Energy Board and the National
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Electricity Reliability Council have memoranda of
2
understanding and agreements as to the role of each in
3
developing standards and adopting standards and monitoring
4
electricity reliability.
5
MR. SHRYBMAN:
I don't want to get bogged down in
6
this, but NERC isn't accountable to the OEB -- is NERC
7
accountable to the OEB or the National Energy Board in the
8
same way that it is accountable to FERC?
9
MR. SHALABY:
10
MR. SHRYBMAN:
11
MR. SHALABY:
12
Yes, it is.
It is?
It is.
The relationship is similar.
The relationship is similar.
13
MR. SHRYBMAN:
14
MR. SHALABY:
Okay.
The Ontario Energy Board can reject
15
reliability standards, can remand reliability standards if
16
they do not meet Ontario requirements.
17
MR. SHRYBMAN:
18
organization, regional?
19
MR. SHALABY:
The NPCC, another international
It is a regional organization that is
20
including Ontario, Quebec and New Brunswick and Nova
21
Scotia, as well as New York and New England.
22
MR. SHRYBMAN:
23
the first one, though.
24
reliability as kind of engendering both the concept of
25
security and the adequacy, I understand.
26
MR. SHALABY:
27
MR. SHRYBMAN:
28
Forgive this naive question; this isn't
In your criteria, you identify
Is that true?
That is true.
There is no question -- how is adequacy
regulated and enforced in Ontario?
What would the answer
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to that question be?
2
MR. SHALABY:
3
MR. SHRYBMAN:
4
How is adequacy?
Yes.
Do any of these institutions
concern themselves with the adequacy of supply in Ontario?
5
MR. SHALABY:
6
MR. SHRYBMAN:
7
MR. SHALABY:
Yes, they do.
Can you tell me how, and why?
The NPCC conducts planning -- they
8
develop ten-year outlook for the adequacy of resources in
9
its member states and identify whether any of the member
10
states or provinces have shortages and alert the
11
authorities.
12
There are authorities, coordinating authorities that
13
have obligations to ensure adequacy in the various states
14
and provinces, according to reliability standards that are
15
being developed more fully as we speak.
16
MR. SHRYBMAN:
Is it fair to say that the US federal
17
regulatory bodies, like FERC, are much more hands-on, in
18
terms of their regulation of interstate trade than the
19
National Energy Board or any other analogue in Canada would
20
be?
21
MR. SHALABY:
They are, because interstate trade in
22
the United States, the electricity and transmission
23
authorities are much more split -- more evenly split
24
between the States and the federal government than they are
25
in Canada between the provinces and the federal government.
26
So by the very nature of the constitution, and the
27
28
interstate authorities versus interprovincial authorities.
MR. SHRYBMAN:
Okay.
Thank you very much Mr. Shalaby,
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Mr. Pietrewicz.
My last -- the last issue I want to canvas with you is
3
just to ask you some questions about the competitive
4
market.
5
the terminology of the regulation.
6
interrogatories about this.
7
Or competitive marked-based approaches I think is
We asked you several
Ontario's system is a hybrid system.
Just without
8
having to take you to the responses to our interrogatories
9
and some by Brookfield and the Board, is it fair to say
10
roughly the system is about 70 percent OPG, 30 percent
11
private, but almost all of that private is subject to some
12
procurement arrangement with either the province or OPA?
13
MR. SHALABY:
The only exception to what you described
14
is the production from Bruce B.
15
procurement.
16
procurement from the OPA.
17
right track.
18
most of the rest is under contract with the OPA.
19
the point you're trying to make, I agree with that.
20
That is not subject to
There is a floor price, but not subject to
But generally you are on the
I mean most of the generation is OPG.
MR. SHRYBMAN:
Yes.
And
If that's
And the secondary point I would
21
make is that this is a system that's predominantly
22
controlled by public bodies accountable to the government
23
or by the government directly.
24
characterization?
25
MR. SHALABY:
Is that a fair
The word "controlled" has got many
26
meanings.
I mean, we have contracts.
To the extent the
27
contracts place obligations and accountabilities on the
28
parties, there are contracts with public bodies such as the
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Ontario Power Authority and with Ontario Power Generation,
2
yes.
3
MR. SHRYBMAN:
But Ontario Power Generation is a
4
publicly-owned entity.
5
MR. SHALABY:
6
MR. SHRYBMAN:
It is.
And with the exception of Bruce, the
7
procurement agreements are with publicly -- are with either
8
the province of Ontario or the OPA.
9
MR. SHALABY:
Yes.
That's different than controlled.
10
That's all I am -- I am trying to differentiate between
11
contractual obligations and control.
12
MR. SHRYBMAN:
Fair enough.
In terms of the role of
13
OPG, which seems, from our naive and uninformed
14
perspective, the elephant in the room, where in the
15
material is the present and future role of OPG addressed,
16
given its dominant position in the market?
17
18
19
MR. SHALABY:
We do not address that specifically or
explicitly in the evidence.
MR. SHRYBMAN:
Does the plan you have put forward
20
contemplate the establishment of a competitive market-based
21
system during the planning period?
22
MR. SHALABY:
I will leave that to the procurement
23
panel to a greater level of investigation of that.
24
is a requirement of Regulation 424 to look for innovative
25
strategies for procurement of power, including the
26
evolution of the markets in Ontario.
27
MR. SHRYBMAN:
28
MR. SHALABY:
But it
So I should ask them this question?
Yes.
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MR. SHRYBMAN:
Can I ask you or should I ask them this
2
question:
3
established in Ontario in the next 20 years, would that
4
necessarily mean a very dramatic reduction in the amount of
5
power, subject to either -- public control either through
6
OPG or through procurement arrangements?
7
necessary consequence?
8
MR. SHALABY:
9
MR. SHRYBMAN:
10
If a competitive market-based system were to be
MR. SHALABY:
Would it be a
Would it lead to less or more?
Less.
Dramatically less.
If the sector develops in a way that
11
generators can develop projects without the need for
12
contracts with the Ontario Power Authority, then there will
13
be less contracts with the Ontario Power Authority.
14
15
16
17
In your language, you equate that to less control by
public entities.
MR. SHRYBMAN:
Does the plan include any or offer any
attempt to apply the criteria to that potential outcome?
18
MR. SHALABY:
19
MR. SHRYBMAN:
No.
Do you have any guidance to offer with
20
respect to the point at which the system in Ontario might
21
be considered to be competitive and market-based?
22
any way to measure that?
23
MR. SHALABY:
Is there
I am reluctant to accept those as --
24
that Ontario isn't competitive or market-based or will be
25
or will be more so.
26
We have a real-time market that is competitive and
27
market-based at this time in conjunction with contracts
28
that are procured in a competitive fashion, in some cases;
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2
in a standard-offer fashion, other cases.
So there are many components and features of the
3
Ontario market today that are competitive and market-based.
4
And we are looking into more ways to make consumers and
5
producers of electricity exercise choices going forward.
6
7
8
9
So having stated that, I don't know whether I answered
your question or I avoided it completely or what.
MR. SHRYBMAN:
system as a hybrid system.
10
MR. SHALABY:
11
MR. SHRYBMAN:
12
13
14
15
Well, I think you have described the
based system?
Sure.
So it isn't now a competitive, market-
Or is your answer that, well, it is?
MR. SHALABY:
It has features that are competitive and
market-based and some other features that are not.
MR. SHRYBMAN:
And does your plan attempt to assess
16
what the system should look like five, 10, 20 years from
17
now, in terms of the balance between -- let me put it this
18
way, what the system will look like in terms of its -- will
19
it still have a hybrid character?
20
hybrid character?
21
criteria that you have identified?
22
MR. SHALABY:
Will it not have a
How does the transition impact the
We did not look into that in detail.
We
23
looked at the system as infrastructure, as facilities, and
24
we indicated that the facilities will operate in whatever
25
sector structure there will be, whatever commercial and
26
regulatory oversight there would be.
27
28
So we focus more on the infrastructure and less on the
regulatory or commercial structuring in the marketplace.
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MR. SHRYBMAN:
If we had a fully competitive market-
2
based system, would we need the OPA any longer to do system
3
planning?
4
5
6
MR. SHALABY:
No to the extent you need it today,
maybe not.
MR. SHRYBMAN:
I don't want that to suggest that I
7
don't appreciate your good work doing system planning.
8
you know our clients -- are sceptical about the market,
9
but...
10
Madam Chair, I am a little ahead of schedule and I am
11
finished with my cross-examination.
12
both of you.
13
MS. NOWINA:
Thank you very much
Thank you, Mr. Shrybman.
14
your being a little ahead of schedule.
15
are up next.
16
I appreciate
Energy Probe.
You
Are you ready to go now?
MR. MacINTOSH:
Madam Chair, Panel Members, my name is
17
David MacIntosh and I am here representing Energy Probe
18
Research Foundation.
19
As
With me today is Norm Rubin who will be conducting
20
cross-examination of this witness panel, but before he
21
begins, I have a general question in respect of the
22
reference for gas for either Mr. Shalaby or Mr. Pietrewicz.
23
CROSS-EXAMINATION BY MR. MACINTOSH:
24
MR. MacINTOSH:
My question is, the OPA has indicated
25
it will review and update the IPSP every three years.
26
the OPA also update the forecasts of energy consumption and
27
peak demand in the reference forecast?
28
MR. SHALABY:
Yes.
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MR. MacINTOSH:
And will these forecasts always be one
year out of date at each IPSP hearing?
MR. SHALABY:
It will be out of date, because the
4
information that we base the forecasts on is obtained prior
5
to producing the forecast.
6
it follows the production of the forecast.
7
will always be a period of time between the currency of the
8
information and the time of examining this information.
9
MR. MacINTOSH:
In the examination of the plan,
So, yes, there
We'll be asking more questions on this
10
with the next panel, but right now I am going to turn this
11
over to Mr. Rubin.
12
MS. NOWINA:
Mr. Rubin, before you begin, I just point
13
out that we are going to break for lunch at 12:15, so if
14
you can work that into your examination, that would be
15
helpful.
16
MR. RUBIN:
Thank you, Madam Chair.
We were down for
17
40 minutes and I am afraid we may take it, so that may
18
bring us a little bit over the lunch break.
19
MS. NOWINA:
Let's do a check at 12:15 and see how
20
many more minutes you are going to be, to see whether or
21
not we --
22
MR. RUBIN:
Thank you.
23
CROSS-EXAMINATION BY MR. RUBIN:
24
MR. RUBIN:
Without further ado, gentlemen, I want to
25
ask a few questions about -- the high-level, broad-brush
26
questions about system planning.
27
28
Some other examiners have taken you to a comparison of
this exercise with the DSP, and I am old enough that this
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is actually my third system-planning exercise, not just my
2
second.
3
I would like to take you back, at least briefly, to
4
the first of the three - namely, Ontario Hydro's system
5
expansion - that brought us virtually all of the coal and
6
nuclear units that Ontario now has.
7
I guess my first question is:
Would you agree with me
8
-- these may be perhaps for Mr. Shalaby, but I am easy.
9
Would you agree with me that in both of these earlier
10
exercises, the official planners were using load forecasts
11
that, in hindsight, significantly overestimated the demand
12
for electricity?
13
MR. SHALABY:
14
MR. RUBIN:
Yes.
And that, as a result, both planning
15
exercises insisted there was a need for more new capacity
16
than was really needed?
17
MR. SHALABY:
That's where -- I think insisted that it
18
might be needed, subject to the forecast materializing and
19
subject to real world unfolding.
20
When you forecast something, you -- the degree of
21
readiness to meet that forecast is coloured by your view of
22
the future.
23
So I am just taking issue with insisting that they're
24
needed.
25
forecast materializes, to have these facilities in process
26
so they can meet demand, if demand materializes, at least
27
in the 1991/92 exercise.
28
We insisted that we should be ready, in case the
MR. RUBIN:
Well, we were both there for that
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exercise.
2
was insisting on the need for, what was it, ten new nuclear
3
reactors until the day when they stopped insisting on that
4
and said that we didn't need them?
5
So can we agree that, in effect, Ontario Hydro
MR. SHALABY:
No, it can't.
I'm saying that we agreed
6
that we should be prepared, prepared -- get approvals.
7
get the difference between the need for something and the
8
need to prepare for something is different?
9
10
MR. RUBIN:
You
Okay, understood.
MR. SHALABY:
I don't remember ten nuclear reactors.
11
It may be in the upper case, but it was reliant on, if load
12
forecast was going to be low, we needed four nuclear units
13
by 2010, as I recall, more if the load was going to be
14
higher, and so on.
15
16
17
So it was adaptive to the nature of load growth that
would be foreseen in the future.
MR. RUBIN:
Understood.
Would you agree with me that
18
the first exercise roughly 30 years ago actually produced
19
more capacity than, in hindsight, we needed?
20
MR. SHALABY:
21
MR. RUBIN:
22
23
If you tell me what "produced" means.
Created, built, put in place, constructed.
Any of those words will do.
MR. SHALABY:
The material that you left with us
24
talked about Bruce B and Darlington.
25
facilities you are talking about?
26
MR. RUBIN:
27
MR. SHALABY:
28
needed.
Are these the two
Sure.
They were built.
They were eventually
They may have been built ahead of actual need, if
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that's what you're getting to.
MR. RUBIN:
Mr. Shalaby, I don't want to be cute here,
3
but, you know, in the long run we're all dead.
4
timing is important.
5
MR. SHALABY:
6
MR. RUBIN:
I mean,
It is.
And I am not sure I understand - perhaps
7
you can explain to me - the difference between building an
8
unnecessary facility and building a facility while it is
9
still unnecessary.
10
MR. SHALABY:
Building an unnecessary facility is a
11
facility that you never, ever use.
12
interpret building an unnecessary facility.
13
MR. RUBIN:
That's how I would
So if we can wait long enough and growth
14
continues or other facilities have to be retired, then the
15
planning error of building something before it is needed
16
becomes less of an error, in your view?
17
MR. SHALABY:
You were asking whether the 30 years ago
18
planning produced plants that were not necessary.
19
how we started this.
20
MR. RUBIN:
21
MR. SHALABY:
That's
That's correct.
And we narrowed that down to Darlington
22
and Bruce B, or at least those are the two that I detected
23
in your communication.
24
MR. RUBIN:
25
MR. SHALABY:
Hmm-hmm.
I indicated that at least for
26
Darlington, it came on line at a time when the need for
27
that power was not as expected at the time.
28
MR. RUBIN:
Right.
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MR. SHALABY:
It was eventually required, and whether
2
you call it -- however you want to describe that, the
3
timing was -- the demand for power was not as high as we
4
thought at the time, at the time of 1981/82.
5
line in 1983.
6
7
MR. RUBIN:
You said "we".
It came on
That's an institutional
"we"?
8
MR. SHALABY:
9
MR. RUBIN:
Yes.
This maybe a convenient time, since we are
10
starting to refer to documents, which I have circulated for
11
us, to give them a document number.
12
MR. RICHMOND:
Yes.
The exhibit would be K5.4, and
13
what would you suggest the name -- collection of documents
14
related --
15
16
17
18
MR. RUBIN:
Or correspondence between Energy Probe and
Ontario Hydro might be helpful.
MR. RICHMOND:
Collection of correspondence between
Energy Probe and Ontario Hydro.
19
EXHIBIT NO. K5.4:
COLLECTION OF CORRESPONDENCE
20
BETWEEN ENERGY PROBE AND ONTARIO HYDRO.
21
MR. RUBIN:
Thank you.
Can we agree that that first
22
system expansion program created premature expansion?
23
that a fair way to summarize what we have been talking
24
about, or sooner than optimal?
25
that that would capture what we both agree on?
26
MR. SHALABY:
Is
Is there some phrase like
Sure, after we know all of the facts.
27
But at the time, was it the right decision at the time or
28
was it -- it became less than optimal ten years later is a
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different assessment of whether it was sooner than optimal
2
or not.
3
MR. RUBIN:
4
MR. SHALABY:
Let me try another approach.
I don't want to hear -- I don't
5
understand the details of that expansion program in detail,
6
but I am just arguing the concept of judging a program ten
7
years before its time in rear view mirrors.
8
way you want to measure it or what?
9
MR. RUBIN:
Is that the
Well, Mr. Shalaby, I guess I may be more
10
impressed than you are with the wisdom of George Santayana,
11
who said, Those who do not learn from history are doomed to
12
repeat it.
13
I am here, in large part, because I am determined that
14
Ontario will not repeat perhaps either of these exercises
15
and that this one will be better.
16
the first steps on that, I believe, is for us to see what
17
we can learn from these first two exercises.
And, you know, one of
18
If errors become not errors because people were
19
ignorant at the time or were well meaning at the time or
20
were intelligent in other ways, then we will not learn from
21
errors.
22
So can we agree that both of these planning exercises,
23
the earlier ones, like this one, were done by well-meaning,
24
intelligent people who believed in the truth of what they
25
were saying?
Can we agree on that, as far as we know?
26
MR. SHALABY:
27
MR. RUBIN:
28
As far as I know, that's true, yes.
So let's just eliminate and put aside any
notion that any past errors that were made were made
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through evil intent or skulduggery.
2
to undermine the reputations of any people, past or
3
present.
4
5
6
Now the question is:
It is not my intention
Can we agree that errors were
made?
MR. SHALABY:
Yes.
There were estimates that were --
7
did not pan out to be right.
8
not considered to the fullest extent that they panned out,
9
estimates of conservation that materialized differently.
10
There were factors that were
The world unfolded differently than seen ten years
11
before.
Now is that an error?
Or is that a difference in
12
forecasts or uncertainties that were not predictable?
13
I am not trying to say there were no errors.
I just
14
want to know whether forecasting the future 10, 15 years
15
ahead of time in a way that it evolves differently from, do
16
you consider that an error?
17
errors, yes.
18
MR. RUBIN:
Or if you do, then there were
Well, Mr. Shalaby, to the extent that you
19
are our forecaster and we are planning to bet tens of
20
billions of dollars on your forecast of what the future is
21
going to be, with some flexibility and three-year reviews,
22
et cetera, et cetera, I would certainly hope that you would
23
agree with me that forecasting a future that does not
24
materialize and betting tens of billions of dollars that it
25
will materialize is an error and one that we should avoid.
26
MR. SHALABY:
I am not accepting betting.
27
betting.
28
way we're forecasting.
We are not
We are not saying the future will materialize the
In fact we're saying the exact
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opposite.
We're saying the future will unfold in ways that we
3
cannot predict at this time.
4
previous exercises.
5
unfold.
6
cannot predict fully at this time.
7
That is a lesson learned from
So we don't know how the future will
We know it will unfold in different ways that we
But we have to make certain assumptions to do the most
8
prudent thing and most economically effective thing as we
9
see it today.
10
MR. RUBIN:
Did you not see similar sentiments
11
expressed by Hugh Macaulay in 1981, very similar to the
12
ones you just said where he said:
13
concrete.
14
ahead if it's needed.
15
statements in his letter of however many years ago, 27?
None of this is cast in
We will review this every year.
16
MR. SHALABY:
17
MR. RUBIN:
It will only go
Can I not take you to all of those
Similar sentiments, yes.
So what have we learned then?
What has
18
changed, then, if you are saying you are going to be
19
flexible by reviewing your expansion plans every year or
20
three, and he said:
21
We're going to review our expansion plans every year or
22
three.
23
24
25
MR. SHALABY:
Relax, we won't bankrupt the company.
What have we learned, in what sense do
you mean?
MR. RUBIN:
Well, what has changed?
I am hearing the
26
same sentiments, that flexibility is assured by having
27
periodic reviews of an expansion plan that deals with long
28
lead time, capital intensive, inherently inflexible
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facilities, in large part.
MR. VEGH:
I mean --
Madam Chair, if I may.
I think I
3
understand where Mr. Rubin is going; and of course it is
4
fair game to ask the witnesses about the treatment of
5
flexibility in the IPSP, the treatment of forecasts, the
6
way the plan responds to changes from forecast.
7
I don't know if it is fruitful to then have to compare
8
what the witnesses are saying to what someone else said 35
9
years ago at Ontario Hydro.
10
I understand the point about learning from history,
11
but I think Mr. Rubin has made that point and I say there
12
is little value in going through a detailed paragraph-by-
13
paragraph statement of what was said 35 years ago and then
14
have the witnesses analyze how that is different from
15
what's being said today.
16
being done today and what is the IPSP doing to address the
17
uncertainty with forecasts.
18
here a long time debating about whether or not that was a
19
proper characterization of what was said 35 years ago.
20
MS. NOWINA:
I think the real issue is what's
Otherwise, we are going to be
Mr. Rubin, I'm somewhat sympathetic to
21
Mr. Vegh's point.
22
the ability to -- for the witness to answer your questions
23
because of the manner you are asking the questions.
24
I am more concerned about the tone and
If you can ask him specific questions and accept the
25
answer you hear and move on, I would appreciate that.
26
don't mind you going to the history if it's clear exactly
27
what historical point you are trying to make and you accept
28
the answer and we move on.
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MR. RUBIN:
Certainly.
2
I guess there's another maxim beside Santayana's, I
3
forget who said it, but somebody said:
4
the same thing and expecting a different result.
5
am testing here to what extent we're doing something
6
different and to what extent we're doing the same thing.
7
MR. SHALABY:
Insanity is doing
I guess I
I can expand a bit on this, and -- I am
8
not going to sit here and guarantee that everything we are
9
telling you about our view of the future is going to pan
10
out the same way we think it is.
11
the opposite.
12
respecting that.
13
In fact, I am telling you
We know the future is uncertain and we are
The plan today is not adding any nuclear capacity more
14
than Ontario had in 1993.
15
going to have what we had ten years ago.
16
one element that is very different from the plan that we're
17
presenting today.
18
two that you are mentioning.
19
20
So in 25 years from now we're
That's -- that is
Different from the expansion plans, the
There is no expansion on addition of capacity.
is only restoration of what we once had.
21
There
That's number 1.
Number 2, we are not counting on any increase in
22
demand after conservation, any substantial increase.
We
23
started with 155 terawatt-hours two or three years ago we
24
are going to end up with 160 terawatt-hours 25 years from
25
now.
26
have three million more people using a lot more electricity
27
in various avenues of the economy, but will do so much more
28
efficiently, so that the economy, despite its expansion,
So we are adopting a view that this province will
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population, despite its expansion, will use the same amount
2
of electricity 25 years from now than it did three years
3
ago.
4
5
6
That is a substantial difference in planning context
than the plans that you are presenting.
We are -- the only increase in capacity is coming from
7
renewables.
We are doubling renewables.
And we are
8
replacing coal completely with natural gas facilities and
9
other resources.
So I characterize the plan as
10
fundamentally different in its reliance on new, long lead
11
time, inflexible capacity as are required.
12
There are decisions that will be inflexible once
13
they're made, yes.
14
nuclear plant, commitment to nuclear capacity are a part of
15
that plan.
16
Those are included.
Refurbishment of
If we want to avoid making commitments to those
17
decisions, you forego the benefits that come with these
18
decisions.
19
MR. RUBIN:
20
Would you agree with me that somebody who had been,
21
you know, a Rip Van Winkle who had been asleep since the
22
DSP and woke up now, might be surprised -– well, might
23
notice that the -- in many aspects, the IPSP more closely
24
resembles the plans that were then put forward by some of
25
Hydro's critics than they do the plans that were then put
26
forward by Hydro?
27
MR. SHALABY:
28
Thank you, that's helpful.
Or have you noticed that?
I have noticed that.
It's a testament
to the openness of the discussion and the flexibility in
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the thinking and adoption of good ideas, wherever they come
2
from.
3
MR. RUBIN:
And is it fair to say that in similar
4
broad-brush terms, the DSP also moved in that direction
5
compared to the earlier expansion plans, that there was
6
more renewables, more conservation than there had been when
7
I communicated with Hugh Macaulay over flexibility and
8
conservation and renewables.
9
10
11
MR. SHALABY:
I am not certain of that, but I suspect
you are right.
MR. RUBIN:
One of my mentors, Dr. Ursula Franklin,
12
used to make a distinction between two conflicting goals in
13
planning, and she actually attributed them to the two
14
genders of humanity.
15
distinctions for today, she said that one approach is to
16
maximize expected benefits.
17
And the other is to avoid worst outcomes, to avoid
18
catastrophes.
19
But leaving aside the gender
She attributed that to males.
I assume we agree that the IPSP has tried to
20
incorporate both of these needs to compromise between these
21
two goals?
22
23
24
MR. SHALABY:
goals.
We're not compromising between these two
We are achieving both of these goals.
MR. RUBIN:
So you believe you are maximizing
25
expectations, expected benefits, and concentrating on
26
insurance or making sure that bad outcomes don't occur?
27
28
MR. SHALABY:
The way you phrased it was different
than bad outcomes.
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MR. RUBIN:
I'm talking about one is to maximize
2
outcomes -- maximize expectation, let's put it
3
mathematically, and the other is to focus on the downside
4
and to avoid the downside, to avoid specifically large
5
downside risks, or...
6
MR. SHALABY:
7
8
9
Yes.
We are being mindful of both of
those and trying to achieve both of those.
MR. RUBIN:
Is it not fair to say that those two goals
conflict, that you do your job slightly differently
10
depending -- if you were only valuing one of those goals,
11
you would sacrifice some of the other; isn't that fair?
12
costs money to insure, to put it in simple terms?
13
MR. SHALABY:
It
I think, I mean in decision theory --
14
and I don't know whether this is where you are heading, and
15
I read Ms. Franklin's literature, as well.
16
of bad outcomes, minimizing regret is one decision
17
criteria.
18
criteria.
19
The avoidance
Maximizing potential gain is another decision
Portfolios typically choose their risk levels to be
20
somewhere in between those two.
21
discussion that -- in which you are asking the question?
22
23
24
25
26
27
28
MR. RUBIN:
Is that the nature of the
I think that's what I am talking about.
Again, let's see if we can agree on some history.
Do we agree that Ontario Hydro essentially did end up
with more liabilities than assets?
MR. SHALABY:
I don't want to agree or disagree to
that.
MR. RUBIN:
Okay.
I thought that was an easy one.
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2
Can you tell me why you don't want to agree with that?
MR. SHALABY:
The value of the assets and the value of
3
the liabilities are well established, and I don't think the
4
value of the assets are lower than the value of the
5
liabilities.
6
MR. RUBIN:
You don't think Ontario Hydro in its last
7
annual report was significantly in the hole by billions of
8
dollars?
9
10
MR. SHALABY:
In comparison to the value of the
assets?
11
MR. RUBIN:
12
MR. SHALABY:
13
that to my attention.
14
MS. NOWINA:
15
16
Yes.
If that's the case, then you can bring
I don't know --
Mr. Rubin, I am not aware that
Mr. Shalaby has any expertise in this area.
MR. RUBIN:
Well, again, I am just wondering if, in
17
broad-brush terms -- these are not secrets.
I mean, you
18
know, all of this was on the public record.
The Ontario
19
government reorganized Ontario Hydro and recognized many --
20
21
22
23
24
25
26
27
28
MS. NOWINA:
Mr. Rubin, do you have a specific
question related to the planning exercise and the plan?
MR. RUBIN:
Well, again, this is about repeating
history, Madam Chair, and if it's -MS. NOWINA:
If you can just draw the line a little
bit more clearly, that would be helpful.
MR. RUBIN:
A reality check.
Well, let me try some
other questions and see if they strike gold.
Let me briefly deal with another item that was in
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dispute between me and Mr. Macaulay 27 years ago, and that
2
is the issue of whether having more than you need is better
3
than not having enough.
4
You engaged in a discussion with Mr. Lokan, I believe,
5
late on Thursday on this topic, and, frankly, I am not
6
clear on where that ended up, so I would like to take you
7
back to that.
8
I would like to give you the proposition that if you
9
try to provide the future needs, the future demand for
10
electricity plus the reserve requirement, as you have
11
calculated it, then at least in a reasonable band around
12
that point, the consequences of having too much and not
13
having enough I would put to you are symmetrical and not
14
asymmetrical.
Would you agree with that?
15
MR. SHALABY:
16
MR. RUBIN:
I agree with that.
So at least within those limits and with
17
that understanding, having more than you need and not
18
having enough, neither is better than the other.
19
both mistakes or they're both errors, and it would be nice
20
to avoid both of them?
21
MR. SHALABY:
22
MR. RUBIN:
They are
Correct.
Thank you.
Do we also agree, before I
23
leave that, that my approach 27 years ago in calculating
24
which is better and which is worse is also the approach you
25
would use; that is, to look at the remedies for having
26
enough or not having enough - and that is for having too
27
much or not having enough - look at the remedies, and the
28
situation with the more painful or more expensive remedies
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2
is the worst one; is that fair?
MR. SHALABY:
Taken in two chunks, it would look at
3
remedies and consequences and choose the prudent path in
4
between those, yes.
5
of the question -- can you elaborate a little more on the
6
second part?
7
MR. RUBIN:
So I don't know what your second part
My question is:
In choosing whether one
8
is better than the other, whether having more than you need
9
-- over-expanding, for example, is better than under-
10
11
12
13
expanding, -MR. SHALABY:
We just agreed that we're not seeing an
advantage to over-expanding or under-expanding.
MR. RUBIN:
Right.
I just want to parse that a little
14
bit in saying that when you say that neither is better,
15
when you agree with me that neither is better, you mean
16
that the cost of dealing with both of them would be about
17
the same, or the pain of dealing with them, or the --
18
whatever.
19
Is that fair?
MR. SHALABY:
In my answer earlier last week, I
20
indicated the consequences come in a different category.
21
If you supply more, the consequences are more costs.
22
you supply less, the consequences are less reliability --
23
could potentially be less reliability.
24
costs, as well, depending on more of what, less of what,
25
what time period, peaking, non-peaking.
26
If
It could be more
Categorically answering this is -- I think we can only
27
agree that providing what's required, plus anticipated
28
reserve, is the right amount to shoot for.
And there are
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2
3
4
ways to correct if you go over or go under.
MR. RUBIN:
Okay, thank you.
I would like to turn,
briefly, -- we can look at it -MS. NOWINA:
Mr. Rubin, it is 12:15.
If you're
5
turning to another topic, why don't we take our break now
6
and you can turn to that topic after break?
7
MR. RUBIN:
8
MS. NOWINA:
9
Okay, thank you.
We are breaking for lunch and we will
return at 1:45.
10
--- Recess taken at 12:15 p.m.
11
--- On resuming at 1:45 p.m.
12
MS. NOWINA:
13
Did any matters come up during the break, before we
14
Please be seated.
proceed with Mr. Rubin?
15
No.
Go ahead, Mr. Rubin.
16
MR. RUBIN:
17
Mr. Shalaby, I want to spend another few minutes on
Thank you, Madam Chair.
18
approaches to planning, no regrets, and perhaps even dare
19
to take another swipe at learning from history.
20
Energy Probe asked, in interrogatory 13, which is
21
short enough we can go to it or not, whether OPA has
22
undertaken any route cause analysis of the discrepancy
23
between Ontario Hydro's LUEC calculations and the actual
24
delivered LUECs of the plants they were calculating.
25
26
Your answer, to paraphrase, basically said that you
had not and that there was no need to.
27
I just wonder if, if you can explain, again, why that
28
might not be helpful and, also, perhaps make a distinction
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between what you might do and what the Ontario Energy Board
2
and the rest of us might do, in trying to add some context
3
or wisdom to your planning exercise.
4
MR. SHALABY:
Thank you.
We indicated that cost
5
estimates are in flux right now.
6
construction costs, material costs, resources cost.
7
that the best estimates are going to come from actual
8
experience.
9
Costs are all rising:
And
The Ontario Power Authority has experience with wind
10
energy, has experience with natural gas combined cycle and
11
simple cycle generation.
We have some experience with
12
combined heat and power.
We do not have experience with
13
new build nuclear.
14
nuclear.
15
We have experience with refurbished
So the experience base of actual projects in recent
16
number of years is a better starting point for cost
17
estimates than analytical or paper estimates or paper study
18
estimates.
19
We will continue to enrich our experience of
20
assessment of the costs and performance of options by
21
actual experience.
22
analysis and further estimates and so on.
23
well and we see what other utilities are doing and what
24
other countries are doing, but our own experience in
25
Ontario is going to be the most relevant.
26
MR. RUBIN:
That pays off a lot more than further
We do that as
But our own experience in Ontario, in that
27
you don't include our own experience at having tried this
28
before and come up with what seems, to some of us at least,
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in hindsight to be a systematic bias in the estimates or a
2
systematic direction of error.
3
4
5
MR. SHALABY:
We have no intention of injecting
systematic bias one way or the other.
MR. RUBIN:
But we have already agreed that your
6
predecessors had no intention of doing that either.
7
just succeeded.
8
biases; correct?
9
10
MR. SHALABY:
MR. RUBIN:
They
Nobody is ascribing intent to earlier
Yes.
So any earlier biases there were, in
11
forecasting either delivery prices or demand or anything
12
else, was innocent not by intent.
13
isn't reassuring, is it?
14
MR. SHALABY:
So the lack of intent
I am not sure what is it that the
15
distinction here is being made.
16
bias and to the extent we know where the biases are and
17
attempt to be free of bias, that's -- that's the only thing
18
we can do.
19
MR. RUBIN:
I am just commenting on
You say we have -- you, OPA, have more
20
experience with refurbishment costs than you do with new
21
build costs.
22
Ontario and what they can tell us about the difference
23
between estimates and reality?
24
Have you analyzed refurbishment costs in
MR. SHALABY:
I can tell you that we are -- we have a
25
contract with Bruce A for purchase of electricity generated
26
from refurbished nuclear power at prices that are published
27
and available.
28
We also know that refurbishment projects are subject
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to uncertainty and did escalate, particularly in the case
2
of Pickering unit 1, less so in unit 4 or one of the
3
other – one of them was much more uncertain than the other
4
or came in at a lot more costs than the other.
5
The Bruce units are still in progress.
They are a
6
little over-budget, but I don't know where the tally will
7
end at the end of the day.
8
are subject to cost uncertainty.
9
MR. RUBIN:
So projects of refurbishment
And I understand that the decision to
10
refurbish or not is not your decision.
11
estimating those costs, can you assure me that the lessons
12
of Pickering A, and Pickering A refurbishment have been
13
incorporated in whatever estimates you are using?
14
those estimates not relevant to your plan?
15
MR. SHALABY:
But in terms of
Or are
We are estimating the costs of
16
refurbishing a nuclear unit at one-and-a-half billion
17
dollars.
18
19
20
MR. RUBIN:
And that number incorporates the learning
from Pickering A refurbishment?
MR. SHALABY:
My understanding of Pickering A when you
21
speak to Ontario Power Generation, they call it a restart.
22
I don't want to get into splitting hairs.
23
refurbished units.
24
from that, Bruce is a refurbishment and is coming in at the
25
-- the estimates are between two and three billion dollars.
26
So one and a half billion dollars per unit adequately
27
covers the experience to date.
28
MR. RUBIN:
These were not
These were restarted units, but apart
Just let me be clear.
You're telling me
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that the two units that were restarted the Pickering A
2
restart was less -- a smaller project than a refurbishment?
3
MR. SHALABY:
That's the way I have seen it described.
4
I don't know whether the scope is different or the amount
5
of work is different, but I have seen it described that
6
way, yes.
7
MR. RUBIN:
Okay, thank you.
8
In terms of -- I think you introduced the phrase "no
9
regrets," which I take as a friendly rephrasing of my
10
second goal to confirm Ursula Franklin of avoiding bad
11
outcomes, and I am -- you have done some what I might call
12
flight testing of your plan in a number of ways.
13
You have done what-if scenarios, what if costs are
14
higher, or demand is lower, whatever.
15
in a number of areas.
16
MR. SHALABY:
17
MR. RUBIN:
You have done that
We have.
I take it we would agree that it is within
18
the realm of the Ontario Energy Board's review to suggest
19
that or to make it happen, that flight tests in other
20
situations are also done?
21
MR. SHALABY:
22
MR. RUBIN:
Yes.
We, I thought we agreed, Energy Probe and
23
OPA on a model run, that would be such a flight test and it
24
involved – actually, there were two that came from Energy
25
Probe.
26
such a dark place that your nuclear performance in the next
27
15 years equals your -- equals Ontario's nuclear, actual
28
nuclear performance in the last 15 years.
And one of them involved:
What if the universe is
And I guess --
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we blew our chance to complain about bad answers through
2
internal disorganization, so I, at the risk of trying to
3
resuscitate a chance we missed, in that model run -- which
4
I thought we agreed on the terms of -- we can turn this up
5
if we want.
6
Exhibit I-43, schedule 2.
7
It is model run number 2, which, therefore, is
Historical nuclear performance is the title, and the
8
short request that we agreed on was:
Apply last 15 years
9
of historical nuclear unit performance to all nuclear
10
units, existing committing and planned for the next 15
11
years on a deterministic basis and identify resource
12
utilization and supply adequacy implications.
13
There are a couple of restrictions that were placed on
14
that modelling that were certainly not agreed and that I
15
find inimical to good flight testing.
16
The most important of them appears on, I believe, page
17
3, starting at around line 11, where it says, yes, just
18
under the first histogram.
19
ahead.
20
Sorry, I must be a page too far
Go up a page, just under the first graph.
MR. VEGH:
Madam Chair, if I might.
We'll just see
21
how far Mr. Rubin wants to go with this with this panel.
22
The model runs were -- would have been addressed in more
23
detail or would have been prepared by the non-renewable
24
panel.
25
Mr. Pietrewicz is on that panel so he could probably
26
provide some insight into this, but ultimately that panel
27
is going to be much more familiar with the details of the
28
model run and the assumptions than certainly Mr. Shalaby
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will be.
2
and just a caution that the details of this run are
3
probably better addressed by the non-renewable panel.
4
So we will see how far Mr. Rubin goes with this,
MS. NOWINA:
Thank you, Mr. Vegh.
I would urge the
5
witness panel to refer us to the subsequent panel if that
6
is the most appropriate thing to do.
7
MR. SHALABY:
8
MR. RUBIN:
9
Thank you.
Thank you, Madam Chair.
Page 3 of 9.
The phrase I am looking for
-- actually, the sentence, I don't see enough of this page
10
to figure out which way I am off, but the quote is as
11
follows:
12
"For the laid-up unit the histogram does not
13
consider the outages beyond the first calendar
14
year of the duration of the unit lay-up."
15
It did, as I recall, appear right under -- I thought
16
it was the first histogram.
17
to figure 1, please.
Yes, that is figure 2.
Go up
There we go.
18
I'm sorry, I should look at the...
19
Yes.
I'm sorry, it is just at the page turn, at the
20
end of page 1, the bottom of page 1 and the first sentence
21
of page 2.
22
page 1.
I have read you the sentence at the bottom of
The sentence at the top of page 2 says:
23
"The exclusion of this extraordinary nuclear
24
event in the histogram provides a better
25
representation of the typical behaviour of
26
nuclear performance."
27
So my understanding of that is that for units that
28
were laid up for seven or eight years, I think the shortest
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of the eight units that was simultaneously laid up was laid
2
up for around six-and-a-half years, if I recall correctly.
3
So for all of those, they were basically considered
4
back in service after one year.
5
of that sentence?
6
histogram, which shows that there is a vanishingly small
7
possibility of having eight units out at a time, which
8
indeed we had for around seven years.
9
10
It is also consistent with the first
So I guess my question is:
Can we do this again,
doing what we said we were going to do?
11
12
Is that your understanding
MR. PIETREWICZ:
To try and respond to that -- can you
hear me?
13
MR. RUBIN:
I can hear you.
14
MR. PIETREWICZ:
The battery is low.
This will be of
15
course subject to check and perhaps better addressed in
16
more detail in the non-renewable panel, but I suspect,
17
again subject to check, that that statement is referring
18
specifically to this histogram that you have pointed out,
19
rather than to what was necessarily modelled in this model
20
run.
21
As you will see on page 3 of 8, page 3 of 8 shows a
22
figure called figure 2, and in capacity terms it
23
illustrates -- the pink line up above illustrates the total
24
installed nuclear capacity in IPSP case 1A.
25
You will see it ranges from about 12,000 megawatts to
26
about 13,300 megawatts; whereas below that pink line is a
27
blue line with dots, which illustrates the total amount of
28
nuclear capacity assumed for the purposes of this model run
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for capacity assessment purposes.
The difference is
2
roughly 5,200 or so, as mentioned on line 1 on page 3.
3
So, again, subject to check, I suspect that for
4
purposes of figure 1, which is a histogram, those laid-up
5
units would not have been represented in that histogram as
6
stated in the sentence, but I imagine that they were
7
represented in the subsequent model run which was done to
8
test:
9
conditions of significantly less nuclear availability?
10
How would the system respond under these kinds of
MR. RUBIN:
So subject to check, it is your evidence
11
that every reassuring statement in here, after that
12
histogram and the surrounding text, is based on what really
13
happened during those -- the past 15 years as opposed to
14
the revisionist history in which the units started up again
15
after 12 months out?
16
MR. PIETREWICZ:
Subject to check.
I am trying to
17
perhaps clarify things.
18
best to address it in the detail that it may deserve, and
19
which I am not able to provide at this time, in the non-
20
renewable panel.
21
MR. RUBIN:
22
Let me just --
23
MS. NOWINA:
24
MR. RUBIN:
25
MS. NOWINA:
If I am not, then perhaps it is
Thank you.
That's helpful.
Mr. Rubin.
Yes.
I am wondering, since this seems to be
26
important to you, that we take an undertaking just to
27
ensure that what you say, subject to check, is actually
28
true so you know how to prepare your cross-examination for
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the subsequent panel.
2
MR. RUBIN:
3
MS. NOWINA:
4
MR. RICHMOND:
5
6
7
Thank you.
Can we take an undertaking?
That would be undertaking J5.3, and OPA
to provide the -- how did you phrase it, Mr. Pietrewicz?
MR. PIETREWICZ:
Confirm, I suppose, the extent to
which laid-up units are represented in model run 2.
8
UNDERTAKING NO. J5.3:
TO CONFIRM THE EXTENT TO WHICH
9
LAID-UP UNITS ARE REPRESENTED IN MODEL RUN 2.
10
MR. RUBIN:
Thank you.
11
Another flight check that turned into a model run
12
concerned what I certainly see as a serious threat to the
13
system plan, if not the system, and that is the
14
increasingly discussed potential of widespread availability
15
of inexpensive photovoltaic capacity.
16
17
We agreed, in a model run -- number 6, is it?
Why can
I never find what I am looking for?
18
MR. SHALABY:
19
MR. RUBIN:
Six.
Yes, six.
Thank you.
To assess the
20
impact on the plan of 5-cent per kilowatt solar becoming
21
widely available in one of three future years.
22
Again, it looks to me as if there were arbitrary
23
limits placed on this that the real world might not place
24
on them, for example, a cap at 5,000 megawatts.
25
to me, if these are at Canadian Tire or available even to
26
local utility companies, it might take the police to limit
27
installations to 5,000 megawatts.
28
It seems
There were a number of other things in that model that
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strike me as just not a helpful -- I mean, the purpose of
2
these flight tests, of these -- assessing these error
3
bounds is to make sure that we don't have regrets.
4
And if one, therefore, restricts them in ways that
5
minimize the regrets, don't we agree that that's not
6
helpful, and, you know, we want to see where the problems
7
are?
8
that it has no impact on existing facilities, only on
9
planned facilities.
10
And so there is another restriction, for example,
Why are you confident that that is how the world would
11
unfold if, in fact, Nanosolar comes out with -- you know,
12
starts selling to us instead of to Germany?
13
ultimately I am asking:
14
actually has the potential to show regrets if there are
15
some there to be found?
16
17
18
19
20
MR. SHALABY:
I mean,
Can we get a flight check that
There's a large number of components to
your question, so let's try to address them all.
MS. NOWINA:
Mr. Shalaby, before you begin, should any
of those questions be addressed by subsequent panels?
MR. SHALABY:
We will address a couple of the points
21
in the question and others will be referred to future
22
panels.
23
MS. NOWINA:
Thank you.
24
MR. SHALABY:
25
The question of solar available at 5 cents in any one
Thank you, Madam Chair.
26
year, if available in unlimited quantities with unlimited
27
or very short lead time, 5 cents is lower cost than almost
28
anything else on the system in 2015 or 2020.
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So the question becomes one of, if we didn't put a
2
bound on it, a simple answer could be it will displace
3
everything else on the system.
4
anything with 5-cent solar power that can meet peak and can
5
follow load and can -- I mean, we have to ask many more
6
questions before a meaningful answer can be given.
7
If overnight we can replace
So we chose a number of parameters to make the model
8
run more meaningful than the other way of saying it can
9
displace everything.
If you can buy infinite amounts of 5-
10
cent power that has no operating cost, that's a dream come
11
true.
12
That would be fantastic.
MR. RUBIN:
Well, I mean, it's not going to generate
13
night-time power.
14
lots of things it won't do.
15
of another constraint.
16
I will concede that.
I mean there are
Actually, you have reminded me
You insisted that in effect the providers of solar
17
power provide for a base-load load.
18
supplementary capacity to build up to 72 percent capacity
19
factor.
20
That is, that they add
That strikes me as unfair to the flight test, to the
21
threat, if you will.
22
your plan, and your restrictions, to me, make it more
23
manageable, but they don't make it more meaningful.
24
I mean, I see this as a threat to
In other words, if Hugh Macaulay had been testing for,
25
what if demand goes through the floor instead of through
26
the roof and then he said, Well, let's just say it goes
27
down to 5 percent, let's be realistic, then he wouldn't
28
have found the threat that in fact was there.
So it would
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have made the exercise more manageable but not more
2
meaningful.
3
reveals threats that he could feel threatened by, because
4
he should have been threatened.
5
I wish he had done some flight testing to
And my question is:
Can you do a better job,
6
ultimately, of trying to assess whether there's a real
7
threat here, because there are people saying they're going
8
to do it.
9
And they're not crackpots.
MR. SHALABY:
I think a more complete specification of
10
the case you want to test, test run or test fly, rather
11
than -- the only description we have is one of assessing
12
the impact of 5 cent power per kilowatt-hour in 2015, 2020
13
and 2025.
14
If you're adding more nuance and more description as
15
to the nature of the test flight, then we can certainly
16
assess more, but I don't know whether that's -- that time
17
for assessment has come and gone or not.
18
MR. RUBIN:
I don't know either.
And I am at I guess
19
the panel's mercy ultimately.
20
simple case and I think the nuances and restrictions were
21
added, you know, I mean I first saw them when I saw the
22
model results, when I saw that there was an arbitrary limit
23
and when I saw there was a requirement for backup, that was
24
not, you know, just implicit in the value of power at
25
different times.
26
But I thought it was a
I mean solar generates wind at peak time.
It's not
27
obvious to me that something that does that has to be
28
reliable for generating power in the middle of the night.
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2
Maybe that makes sense.
It doesn't obviously make sense.
Anyway these, to me, are restrictions that were added,
3
and my question is, just can we do it just looking at the
4
raw threat?
5
MR. VEGH:
Madam Chair, if I may.
6
The response to the model run request is quite
7
explicit about the list of assumptions that go into
8
providing the answer.
9
assumptions is at page 1.
That list is at, that list of
10
Perhaps the most fruitful approach would be, when the
11
panel comes forward that actually did this model run, they
12
can be taken through this list of assumptions and then the
13
Board can determine whether those assumptions were
14
reasonable or unreasonable and draw whatever conclusions it
15
considers appropriate.
16
stage of debating much more generally whether or not this
17
model run was fairly carried out and I think the real issue
18
is whether these assumptions are reasonable.
19
I think right now we're at the
I am not sure that we're getting to that point and I
20
am not sure if this panel is going to be the one to address
21
that in detail.
22
MS. NOWINA:
I assume, Mr. Shalaby, that the future
23
witness panel is the one that has the details about the
24
assumptions?
25
MR. SHALABY:
26
MR. RUBIN:
Yes.
My concern about that, Madam Chair, is
27
that they won't be in a position to do the model run that I
28
thought we'd agreed on while standing on one foot.
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So I guess, again, having blown our chance to argue a
2
motion to send them back, I wonder if this is a reasonable
3
opportunity to try to get richer information before the
4
Board when that panel shows up, so that they would have
5
tried to answer the raw question as best they can.
6
a paradigm buster and all they can do is throw up their
7
hands, then that is the answer; but if they can do
8
something, it would be nice to have it.
9
MS. NOWINA:
If it's
Mr. Rubin, I am reluctant to ask them to
10
do anything further, without us having gone through and
11
tested the assumptions and get a sense of how strong the
12
scenario before us is.
13
As you say, there was an opportunity for motions.
At
14
this point, I would prefer to leave it to the subsequent
15
panel and you can ask your detailed questions there.
16
MR. RUBIN:
Thank you.
17
Let me just, before we leave this, one of the
18
conclusions in that model was that because the solar was
19
coming in at around 5 cents a kilowatt-hour you actually
20
bumped it up a little above 5 cents with the gas-fired
21
backup and nuclear was coming in at 4.4 cents a kilowatt-
22
hour, that therefore there would be no effect on nuclear
23
power.
24
And that brings -- I can quote if you'd like, but --
25
"Plan nuclear resources with an adjusted LUEC of
26
4.4 cents per kilowatt-hour would not be impacted
27
by the assumed solar."
28
That is the statement on page 4 under the heading solar
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2
versus nuclear resources.
I guess that strikes me as, is it me or did the lights
3
go dim?
4
weighting of all environmental impacts that compares
5
everything and equates everything and has a coefficient
6
between land use and nuclear waste and everything else.
7
frankly share the stakeholders you listened to, I share
8
their distrust of numerical equivalencies of that kind.
9
I understand, for example, why you haven't done a
I
However, it seems to me there is a leap from there to
10
saying that everything is equivalent environmentally or
11
that -- I mean it just seems so clear to me at least, that
12
in the preferences of most people who care about the
13
environment, solar would -- photovoltaics would come out
14
ahead of say, nuclear, that some consideration that might
15
bridge a gap from 4.4 cents to about 5 cents even if the
16
4.4 cents were solid, as you have conceded it is not.
17
Anyway, I just...
18
MS. NOWINA:
19
Do you have a question on that, Mr.
Rubin?
20
MR. RUBIN:
21
[Laughter]
22
MR. RUBIN:
23
MR. SHALABY:
Yes.
Is it not so I guess is the...
Can you comment?
Only to observe that 5,000 megawatts of
24
solar or more would require very large amounts of land.
25
These are not going to be roof-mounted -- we are familiar
26
now with some of the proposals for ten megawatts solar to
27
be on 200 or 300 acres' worth of land.
28
The land requirements for solar power are only
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starting to be understood.
We know of a facility like that in the Tucson Electric
3
in Arizona.
4
large tract of land.
5
of land in areas that are close to load, presumably
6
productive farm land, is that a better use of the land?
7
It's a five megawatt facility.
And, again, whether the large amounts
So I stand by the notion of the environmental impacts
8
of one versus the other are different.
9
better?
better than the other.
11
would agree with that.
13
14
15
16
17
18
Are they worse or
You indicated that, to you, one would be obviously
10
12
It is a very
MR. RUBIN:
I am not sure whether everybody
Thank you.
My last question, which
shouldn't take long, I think.
I have been confused by the notion of effective
capacity, and we asked an interrogatory about it.
My understanding of your response to the interrogatory
-- which I should probably pull up -MR. SHALABY:
While you are doing that, I don't want
19
to leave the issue of solar to pass with accepting your
20
description of 5 cent power as a threat.
21
I think it is a wonderful opportunity for Ontario.
I
22
think it would be very good news if solar power can be
23
produced at 5 cents a kilowatt-hour and we should take
24
every advantage to make that work for summer load and for
25
meeting requirements.
26
27
28
So I just don't want to agree with you it is a threat.
It is an opportunity in many ways.
MR. RUBIN:
Okay, fine, thank you.
Number 16, the
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interrogatory 16 is the one I am referring to.
2
My understanding of the response to that, and perhaps
3
you can correct me if I am wrong, is that a distinction is
4
being made between energy and capacity.
5
6
MS. NOWINA:
Energy Probe?
7
MR. RUBIN:
8
MS. NOWINA:
9
MR. RUBIN:
10
MS. NOWINA:
11
MR. RUBIN:
12
13
Mr. Rubin, interrogatory 16, is that
Energy Probe's interrogatory 16.
The first number would be?
I-19-16.
19-16.
Thank you.
I beg your pardon.
Oh, I see the problem.
Thank you.
And this has to do with the fact that nuclear
14
resources are credited with an effective capacity the same
15
as their installed capacity, but I would say most other
16
generation sources are not, or are credited with less.
17
My understanding of the response -- and perhaps I can
18
just ask you is this correct - is that for capacity
19
planning purposes, including meeting peak, you are taking
20
nuclear at 100 percent, whereas for total energy over the
21
course of the year you are taking it at 2005 and 2006
22
historical output values, capacity factors; is that
23
correct?
24
MR. PIETREWICZ:
I think you are most of the way there
25
in your characterization of it.
26
purposes -- can you hear me?
27
on this.
28
MR. RUBIN:
For capacity planning
I think the battery ran out
It did work for a second, but, okay, yes.
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MR. PIETREWICZ:
For capacity planning purposes - what
2
I simply mean by that is for comparing available resources
3
to sort of the peak demands and the reserve that has to be
4
met - we look at most resources on an installed basis, so
5
coal, for the most part gas, nuclear, so thermal resources
6
on an installed basis.
7
8
9
Then we look at -- consider wind and water, in
particular, on an effective capacity basis.
In energy production simulations, absolutely our
10
simulations reflect things like outages, forced planned
11
outages and whatnot.
12
plants is reflected when we look at energy production
13
simulation.
So the actual availability of these
14
But what we really mean by effective capacity is
15
simply that we recognize that nuclear units or coal units,
16
they're not available all the time.
17
the reasons for their unavailability are typically
18
different from the reasons for the unavailability of water
19
and wind, in particular; namely, the unavailability of
20
water and wind is largely -- mostly a result of their fuel,
21
which is sort of -- comes from nature.
22
it doesn't, or the water runs high, medium and low.
23
We realize that.
But
The wind blows or
Therefore, the amount of those resources available to
24
meet the peaks is typically less than their total installed
25
capacity; whereas for things like thermal resources,
26
nuclear, coal, gas, their available capacity is typically
27
closer to their installed capacity because they don't have
28
the same type of relationship between fuel availability and
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overall availability.
MR. RUBIN:
I guess my question is:
Why does this
3
distinction make a difference?
4
year ago we had two nuclear reactors that were out all
5
summer.
6
It seems like cold comfort that they weren't out of
7
service for lack of fuel.
8
including system planners?
9
If we have -- you know, a
MR. PIETREWICZ:
Why does this matter to anybody,
Well if I could put it another way,
10
when we're counting total megawatts, the amount of capacity
11
that could be available matters.
12
terawatt hours, we have to reflect the actual things such
13
as forced outages and planned outages, in which case the
14
type of circumstance you just described would be reflected.
15
MR. RUBIN:
When we're counting
And perhaps we can, for that reason, stop
16
talking about terawatt hours, because I think we more or
17
less agree on the treatment.
18
treatment of megawatts.
19
But we don't agree on the
I guess, again, the question is:
When you are looking
20
at how much, say, nuclear capacity is reliably available at
21
peak time, 100 percent really seems like the wrong number,
22
and then for you to say, Yes, it's the wrong number, but
23
this doesn't really mean effective megawatts, it doesn't
24
really mean reliably available at peak time, it really
25
means it reliably has fuel in the fuel tank, and, again,
26
why do I care?
27
28
Why does anybody who is plugging something in or
turning a light on care?
Why does the system care?
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give this a label when it seems so misleading, frankly?
MR. PIETREWICZ:
Well, of course the reliability of
3
the system is tested against the NPCC reserve criteria,
4
which is described in Exhibit D-2-1 and Exhibit D-2-1,
5
attachment 1, and I understand that will be the subject for
6
the next panel, which is the load forecast and reserve.
7
So the resources that are represented, whether on an
8
installed or effective capacity basis, are the same
9
resources that are being plugged into this adequacy
10
assessment in D-2-1.
11
I don't know if that addresses your question.
12
MR. RUBIN:
So to that extent, you're telling me that
13
this label really doesn't mean anything, because nuclear is
14
discounted elsewhere by the need for reserve as if it had a
15
lower effective capacity; is that fair?
16
MR. PIETREWICZ:
Not that it doesn't mean anything,
17
but, yes, the nuclear is discounted elsewhere in the
18
reliability assessment and in the production simulation.
19
In the energy simulations, all of the different units
20
are coming in and out.
21
They're breaking down.
22
MR. RUBIN:
They have their forced outages.
And there are nuclear outages during peak
23
time in the simulations?
24
MR. PIETREWICZ:
There are 9,000, roughly, hours a
25
year for 20 years, times hundreds of resources.
26
there would be nuclear unavailability at peak times in the
27
simulations.
28
MR. RUBIN:
I imagine
Well, if I had more time, I would take you
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up on the "not that it doesn't mean anything", or -- but I
2
think I've extended my welcome far enough and I thank you
3
for your time.
4
MS. NOWINA:
Thank you, Mr. Rubin.
5
Mr. Pape, are you up next, or is it Mr. Monen?
6
MR. PAPE:
7
MS. NOWINA:
It is Mr. Pape, Madam Chair.
Mr. Pape, just a reminder we will take
8
our afternoon break between 3:00 and 3:15, whenever is a
9
good place for you to break.
10
CROSS-EXAMINATION BY MR. PAPE:
11
MR. PAPE:
12
Good afternoon, Mr. Shalaby, Mr. Pietrewicz.
13
going to be asking you some questions on behalf of the
14
Saugeen Ojibway Nations, and the questions for today are
15
about plan level decisions and plan level processes that
16
may, in one way or another, have an impact on the Bruce
17
region and the types of interests that our clients are
18
particularly concerned about.
19
Thank you.
I am
Let me start with some questions about the concept of
20
certainty.
21
Shalaby, and you spoke with Mr. Shepherd about it on
22
Thursday, and I am going to read back to you what you said
23
to Mr. Shepherd on Thursday.
24
volume 4, at page 140, if you wouldn't mind turning that
25
up.
26
You spoke with Mr. Rubin about that today, Mr.
It's in the transcript of
You certainly said to Mr. Rubin, if I understood you,
27
that the focus on uncertainty and the approach to
28
uncertainty in this plan is one of the things that
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distinguishes it from -- to some extent at least, from
2
previous planning efforts.
3
say.
4
5
That's what I understood you to
You said to Mr. Shepherd this.
He asked you, at line
18:
6
"I guess the one thing I would ask about that,
7
then, is, in terms of the planning criteria and
8
what criteria you used and how you used it, is
9
there a substantial difference today as opposed
10
to 20 years ago?"
11
You said:
12
"I indicated that we put a lot more weight on
13
flexibility, a lot more weight on respect for
14
uncertainty.
15
future will be like a lot more now than we
16
perhaps did in the past."
We know that we don't know what the
17
What I want to ask you, Mr. Shalaby, is if you can
18
tell us a little more about how this is manifest in the
19
IPSP, this respect for uncertainty, either in the IPSP
20
generally or in the planning criteria.
21
MR. SHALABY:
This runs through from beginning to end.
22
We share with you that, for example, we don't make any
23
promises or claims or certainty about what the costs or
24
price of electricity will be in the future.
25
answer we give you is we don't know, but we will help you
26
out.
27
28
Let's unbundle electricity.
assumptions.
The best
Let's make some
Let's multiply them out and draw out a
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picture.
We start by saying we don't know, but we will make our
3
best effort to estimate and make projections.
4
cognizant that developments in the energy business and the
5
energy sector are in high degree of flux, that we don't
6
know the cost of options to any degree of certainty at this
7
time, and we will confirm that going forward.
8
9
10
11
We are
Those are two examples of how uncertainty is being
considered in a way that reflects the state of knowledge
that we have as a planning agency at this time.
We don't know the cost of things as well as perhaps at
12
one time the certainty attributed to them.
13
making promises about the future costs or future projection
14
of contributions of different sources given these
15
uncertainties.
16
our rationale and hoping to learn from others and hoping to
17
incorporate other ideas into this.
18
19
20
21
22
MR. PAPE:
Nor are we
We are sharing with you our best efforts,
All right.
So that's an approach to
certainty in relation to cost.
MR. SHALABY:
That's an expression of -- that's a way
that we, examples of uncertainties.
We deal with that by building flexibility as the
23
slides on day 1 talked about, including the updates, and we
24
went through the ways we're going to deal with that
25
uncertainty.
26
MR. PAPE:
All right.
27
MR. SHALABY:
28
MR. PAPE:
So we recognize it and we deal with it.
Yes.
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Now, the plan says something else about uncertainty.
2
It talks about uncertainty in relation to the planning
3
criteria of feasibility.
4
I want to ask you about something that's in Exhibit B,
5
tab 3, schedule 1, which was the, of course the development
6
of the IPSP.
7
8
On page 13, under the section called "feasibility,"
the document says this:
9
"All planning recommendations necessarily must be
10
feasible if they are to be included in the IPSP,
11
especially in the near term.
12
the near-term feasibility of individual resources
13
cannot be established, the resource could be
14
identified as having potential for the longer
15
term, pending further development of technology
16
or resolution of issues surrounding its
17
availability."
If confidence in
18
Now, is that another reflection of your enhanced
19
respect for uncertainty and how to deal with uncertainty?
20
21
22
MR. SHALABY:
Yes.
Yes.
Could be.
Could be
interpreted that way, yes.
MR. PAPE:
All right.
Then I want to ask you about
23
how this concept -- these two concepts of certainty or
24
uncertainty and its expression in the concept of
25
feasibility -- how those have been applied to the proposals
26
in the plan for the development of wind energy production
27
in the Bruce Peninsula.
28
So I am going to ask you, if you would look at Exhibit
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B-1 for a moment.
2
talk about the integrated power system plan – sorry, I am
3
talking about B-1, schedule 1.
4
B-1, of course, is the exhibit where you
One of the sections there is section 4 on renewable
5
supply.
On page 9, under the heading "implementation
6
priority", the document says:
7
"There are two key elements to implementing the
8
renewable goals:
9
supply and the transmission enhancements that are
10
11
necessary to facilitate the supply."
That's page 9.
Sorry.
12
MR. SHALABY:
13
MR. PAPE:
14
15
the acquisition of renewable
Page 11 in my document, but...
Okay, my apologies.
I am looking at the
old, not the revised version.
MR. SHALABY:
16
stand by them.
17
MR. PAPE:
18
MR. RICHMOND:
Those words were not updated, so we will
Thank you.
I think the old version, Madam Chair,
19
was 28 pages and that page 9 of -- the new version is 34.
20
So it's probably 11 of 34, if I can add that.
21
MR. PAPE:
Okay.
Well, if there are some errors in my
22
references, I apologize, and we will take responsibility
23
for not having noted the updated version.
24
My understanding is, from this version, that the
25
development of wind power in the Bruce Peninsula involves
26
both the development of energy production and transmission
27
line requirements and that it's all explained in Exhibit E,
28
tab 3, schedule 9.
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MR. SHALABY:
The first part, yes.
We will check
2
E-3-1 whether it is all explained there or explained
3
elsewhere, as well.
4
MR. PAPE:
Okay.
And that what we've got here,
5
between the two different documents, the concept in general
6
is that there are proposed clusters of renewable energy
7
production projects and proposed transmission enhancements
8
required to deliver those to the grid.
9
10
11
12
MR. SHALABY:
MR. PAPE:
That's correct.
If you wouldn't mind looking at the second
exhibit I mentioned, Exhibit E, tab 3, schedule 9.
We see this concept mentioned in the Executive
13
Summary, starting on page 1.
14
through a few sections of this to make sure we understand
15
it properly.
16
I am just going to take you
Starting at line 3, "The purpose of this project" -
17
and in this case we're talking about the enabler line-up to
18
the Bruce Peninsula – "is to facilitate and enable the
19
development of wind resources along the Bruce Peninsula."
20
Going to line 10:
21
"The OPA has identified and included
22
approximately 1,100 megawatts of small wind sites
23
and approximately 1,900 megawatts of large wind
24
sites in the IPSP to meet the 2025 target.
25
these, 380 megawatts of the large wind sites are
26
located along the Bruce Peninsula.
27
will provide transmission access and capability
28
to deliver the electricity generated from these
Of
The project
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resources to the Ontario grid."
And the same concept is explained on page 4 to 5 of
this exhibit starting at the bottom of page 4, it says:
4
"The potential for large wind on the Bruce
5
Peninsula is estimated to be approximately 380
6
megawatts, which has been included in the plan as
7
contributing toward meeting the renewable
8
generation target specified in the directive, as
9
shown in Exhibit D-5-1.
The existing 44 kilovolt
10
distribution line has a power transfer
11
capabilities of approximately 25 megawatts.
12
Therefore, in order to facilitate development of
13
the 380 megawatts identify, there is a need to
14
reinforce the transmission system supplying
15
area."
16
So I just want to be completely clear that this
17
proposal to develop the enabler line, up the Bruce, is in
18
every sense connected to the proposal to develop the wind
19
farms in the Bruce.
20
MR. SHALABY:
21
MR. PAPE:
That's correct?
Yes.
Vice versa would also be true, the proposal
22
to develop the wind farms in the Bruce area is integrally
23
connected to the proposal to build the enabler line?
24
MR. SHALABY:
25
MR. PAPE:
26
Absolutely, yes.
You wouldn't move forward with the one
without the other also?
27
MR. SHALABY:
28
MR. PAPE:
That's correct.
All right.
So I take it, then, that both
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the generation elements of this plan, or this part of the
2
plan and the transmission elements of this part of the
3
plan, they must both satisfy the planning criteria?
4
MR. SHALABY:
Correct.
5
MR. PAPE:
6
So if it turned out for one reason or another, that
All right.
7
the wind farms did not satisfy the planning criteria, you
8
would not go ahead with the implementation of the
9
transmission line?
10
MR. VEGH:
Is that a fair thing to say?
Just one caution before Mr. Shalaby answers
11
that question, which is that the wind resources covered
12
under this evidence are currently covered by governmental
13
directive for the procurement of renewable power, so the
14
acquisitions will be made with reference to that directive.
15
Not to the approval of those resources in the IPSP.
16
MR. PAPE:
17
said, Madam Chair.
18
being talked about.
19
are these two wind farm proposals connected to directives?
20
I don't understand what Mr. Vegh has just
MR. SHALABY:
I don't understand what directive is
Perhaps Mr. Shalaby can explain.
They are government directives.
21
referred to RES 3, as an example.
22
2,000 megawatts.
23
500 of those.
How
We
There is a directive for
RES III starts to procure at the first
24
The development of wind and renewables over the next
25
several years would be procured under the 2,000 megawatts
26
of directives that are already in hand.
27
what Mr. Vegh is referring to.
28
MR. PAPE:
I think that is
That's fine, but there is nothing in those
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directives that specifies which particular clusters of wind
2
energy production would satisfy the targets in the
3
directive?
4
MR. SHALABY:
5
MR. PAPE:
I agree with that.
The specific choice of, among others, the
6
two wind farms in the Bruce Peninsula is a choice made by
7
the OPA; isn't that right?
8
9
MR. SHALABY:
The identified -- we identified clusters
of wind that have favourable characteristics, in terms of
10
wind speed, sustainability of the wind speed, that make
11
these sites more economic than other sites.
12
So the information provided to us by Helimax, which is
13
the basis on which we identified these sites, led us to
14
proposing clusters in the locations that are shown here.
15
MR. PAPE:
All right.
16
MR. SHALABY:
17
MR. PAPE:
Yes.
Right.
So that's the economic basis.
So the issue isn't really the
18
source of the -- the issue isn't affected by the fact that
19
this originates with a directive.
20
selection of these two wind farms as one of four clusters
21
which you have preferred as against six others that were
22
identified by Helimax?
23
MR. SHALABY:
24
MR. PAPE:
25
MR. SHALABY:
26
MR. PAPE:
27
28
The issue is about the
Correct.
Right?
Yes.
Yes.
It is in that context that I am asking you
these questions.
Now, in the plan - and it is shown in the renewable
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section - you have included a commitment to develop the
2
transmission line up the Bruce Peninsula as an action item
3
in the near term?
4
MR. SHALABY:
5
6
To develop the transmission option,
that's correct.
MR. PAPE:
All right.
And the only reason that you
7
are doing that is based on -- is a reflection of your
8
choice of the two wind farms in the Bruce as one of four
9
clusters which you, in a planning exercise, have decided
10
11
12
13
should be given first priority or are most preferred?
MR. SHALABY:
In the most part, yes.
I just want to
go over the words "choice" and "preferable".
We identified these sites as having good merit, good
14
economic advantage.
15
candidate for large wind together with the other four
16
locations that we talked about, subject to many other
17
considerations yet to follow.
18
as -- we're not going to develop them at this time.
19
They are to be explored and to be a
So we're not choosing them
We are identifying these sites as good candidates, and
20
we are saying that it is sensible to start thinking about
21
transmission to these sites and develop options for
22
transmission to these sites.
23
So I am just -- I am just differentiating between
24
selecting and offering them as good candidates.
We are not
25
selecting them at this time.
26
Eventually developers will come forth and make proposals
27
whether to develop wind in these areas or not, subject to a
28
number of considerations, in addition to the favourable
Developers will select them.
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wind regime and the data that we have today.
2
3
MR. PAPE:
There were six other clusters of wind
farms --
4
MR. SHALABY:
5
MR. PAPE:
6
MR. SHALABY:
7
MR. PAPE:
Yes.
-- that you considered; right?
Yes.
And you selected four out of a total of
8
ten, and you say you selected them as candidates.
9
what you've said?
10
MR. SHALABY:
11
MR. PAPE:
12
13
14
15
16
17
They're the four, yes.
Yes.
And what did you do with the other
six?
MR. SHALABY:
We will not propose development of
transmission to the other six at this time.
MR. PAPE:
All right.
So for the near term, you have
selected four out of the ten to proceed with and to do -MR. SHALABY:
To consider further.
Maybe I am
18
differentiating the subtlety between selected and
19
considering further.
20
Is that
MR. PAPE:
Well, I appreciate you being very careful,
21
because it is precisely that sort of distinction and
22
nuanced use of language which we're trying to explore, as
23
well.
24
The term that is used in the exhibit, in Exhibit E,
25
tab 3, schedule 9, is "development work".
And if I
26
understand, you are asking the Board to approve the aspects
27
of the plan which says that, in the near term, you're going
28
to proceed with development of the associated --
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development work on the four transmission lines associated
2
with the four clusters of wind power that you have selected
3
at this stage for, as you say, consideration?
4
MR. SHALABY:
The development of transmission options
5
we talked about, as you well know, over the last week, and
6
it is a matter for transmitters to take into account in
7
their planning.
8
9
10
11
It is a matter that is covered in page 13 of schedule
E-3-9, so the scope of what we mean by transmission
development work is listed there.
It's preparation.
It is investigation further,
12
preliminary engineering, preparation and seeking approval
13
for EA, seeking of EA approval.
14
steps to scope and understand the transmission
15
possibilities further.
16
MR. PAPE:
Right.
All of that is taking the
And just to be clear, so that we're
17
not being too general here, I am just going to read to you
18
from a different exhibit, Exhibit D, tab 5, schedule 1,
19
which is the supply of renewable resources.
20
order to make sure we're talking -- we're clear about
21
the...
22
MR. PIETREWICZ:
23
MR. PAPE:
It is only in
Which page is that, please?
Page 35.
This comes following a
24
description of the selection process and the Helimax study,
25
and so on.
26
page 35, it says:
And at paragraph 12 -- sorry, at line 12 on
27
"This process resulted in the selection of four
28
of the ten clusters shown in table 13.
These
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clusters are Bruce Peninsula, Goderich, east Lake
2
Superior and Manitoulin."
3
And what I understand from what you have said and what
4
I understand from the filed evidence is that what the plan
5
includes in this respect is that transmission development
6
work, of the type you have just described, is to proceed
7
now for each of those four -- in respect of the
8
transmission lines that are required for each of those four
9
clusters; is that right, Mr. Shalaby?
10
MR. SHALABY:
11
MR. PAPE:
Right.
All right.
Does it follow that you are not
12
planning to undertake similar transmission development work
13
for the other six at this time?
14
MR. SHALABY:
15
MR. PAPE:
Correct.
All right.
Now, it is mentioned in
16
Exhibit E, tab 3, schedule 9 that a report was prepared by
17
a consulting firm, Hardy Stevenson & Associates, and this
18
is discussed on page 12 of that exhibit.
19
You will see there that you explained, starting at
20
line 1, that OPA retained Hardy Stevenson to analyze the
21
impact on the environment of the proposed transmission
22
facilities.
23
All right.
24
being commissioned?
25
26
Now, what was the reason for that report
MR. SHALABY:
You're looking at E-3-9, page 12; is
that correct?
27
MR. PAPE:
Yes, I am.
28
MR. SHALABY:
The purpose is on the first line:
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"In accordance with paragraph 8 of section 2(1)
2
of regulation 424/04, the OPA retained Hardy
3
Stevenson..."
4
It is to fulfil the requirements of that.
5
MR. PAPE:
6
To do a plan-level analysis of the
environmental impacts of that transmission corridor?
7
MR. SHALABY:
8
MR. PAPE:
9
that purpose.
Correct.
So when you set out to do that, it was for
And then you report in this exhibit, it
10
explains at line 24, on that same page, page 12, that:
11
"Hardy Stevenson concluded that there may be
12
challenges to the feasibility of connecting the
13
wind farms in the northern Bruce Peninsula at
14
Dorcas Bay, and potential transmission corridors
15
in the northern Bruce Peninsula due to the
16
landscape characteristics and First Nations'
17
interests."
18
Right?
Do you see that there?
19
MR. SHALABY:
20
MR. PAPE:
Yes, I do.
I am going to take you to some sections,
21
the relevant sections of the Hardy Stevenson report itself
22
that I think that paragraph is meant to paraphrase.
23
The Hardy Stevenson report, this particular Hardy
24
Stevenson report, is Exhibit E, tab 3, schedule 9.
25
attachment 1.
26
It is
If you wouldn't mind turning that up.
And the conclusion of the type that is paraphrased in
27
the OPA's report, in that part of the plan that we just
28
read, is found on page 11 of the Hardy Stevenson report.
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It is in the section called "conclusion."
It says:
2
"The study team identified factors that challenge
3
the feasibility of connecting new wind powered
4
generation in the northern Bruce Peninsula at
5
Dorcas Bay.
6
is characterized by ecological, cultural,
7
heritage and recreation areas including numerous
8
parks, conservation areas, sensitive ecosystems
9
and First Nations hunting grounds.
The landscape of the Bruce Peninsula
These
10
features will present challenges to the
11
feasibility of potential transmission corridors
12
in the northern Bruce Peninsula."
13
Now, doesn't that mean, sir, that what you learned
14
from this report -- which was prepared for reasons in
15
subsection 8 of the regulation, of section 2(1) of the
16
regulation, doesn't it mean that what you discovered was
17
that the transmission proposal may not be feasible in this
18
case?
19
MR. SHALABY:
That's correct.
They may or may not.
I
20
mean, there are challenges and the next paragraph talks
21
about working, early engagement and involvement and
22
discovery, further discovery, whether it is feasible or not
23
feasible.
24
stage.
25
Can't rule it out, can't rule it in at this
MR. PAPE:
All right.
So does it mean, then, because
26
the transmission line itself can't be ruled in as feasible,
27
that the same is true of the wind farms in that cluster for
28
the Bruce Peninsula, that at this stage, you can't know
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that they're feasible and therefore ruled in on a
2
feasibility level?
3
MR. SHALABY:
4
MR. PAPE:
5
MR. SHALABY:
Yes.
All right.
Mr. Bob Chow, in his day 1 presentation,
6
indicated our recognition that not all of the clusters and
7
all of the megawatts in the clusters will be developed.
8
And for that reason, we identified a larger number of
9
megawatts to develop transmission to, as this stage, than
10
is required for the plan and he can elaborate more on that
11
in the renewable energy panel coming forward.
12
So we recognize that not all of the clusters and not
13
all of the transmission may be developed, and there's a
14
built-in margin of looking at more at this stage than is
15
needed in the mid-term.
16
We can look at more in the longer term.
As our
17
experience develops, we can move on and look at other
18
clusters going forward.
19
MR. PAPE:
So what you're saying, if I understand, is
20
that if it turns out on fuller exploration that this
21
particular line does not turn out to be feasible, that will
22
not be a threat to the integrity of the plan?
23
MR. SHALABY:
24
MR. PAPE:
25
MR. SHALABY:
26
MR. PAPE:
There are other options, yes.
There are other options.
Yes.
And you have -- and the plan is built on
27
the basis that those other options may need to be taken
28
advantage of, because some preferred options may turn out
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not to be available to you.
2
MR. SHALABY:
3
MR. PAPE:
Correct.
All right.
So then let me just check,
4
then, how this jives with other things that are in the
5
plan.
6
Because if you go to Exhibit E, tab 3, schedule 9,
7
which again is the renewable resource development exhibit,
8
and if you will look at page 5 for a second.
9
discussion of alternatives to reinforcing the transmission
There is a
10
system to the Bruce.
And three options are mentioned.
11
Option 1, developing wind projects in other parts of
12
Ontario; and the second being, purchase of hydroelectric
13
power from Manitoba; and the third, firm purchase from
14
Quebec or Labrador.
15
Now, that section goes on to reject those and the
16
conclusions, with respect to these option issues, appear to
17
be stated on page 7.
18
It says, starting at paragraph -- at line 1:
19
"The results indicate that if the 380 megawatts
20
of wind potential on the Bruce Peninsula were to
21
be replaced by the Pembroke, west of London,
22
Parry Sound or North Bay clusters, the system
23
cost would increase by between 12.4 and 17.2
24
million.
25
option when compared with the Bruce Peninsula
26
wind generation development."
27
28
Thus, option 1 is not a cost-effective
It goes on to say:
"Moreover, there are no other reasons
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(reliability, flexibility, feasibility,
2
environmental performance, societal acceptance)
3
that would make higher cost wind preferable to
4
Bruce Peninsula wind."
5
Now, with respect, that seems at odd with what you
6
told me a few minutes ago, that, in fact, in selecting this
7
cluster in the Bruce, you have really selected it for
8
consideration of its feasibility.
9
10
11
MR. SHALABY:
that you see.
I am thinking about the contradiction
I don't know what the contradiction is.
I mean, this says based on the information we have,
12
the cluster in the Bruce is preferred, and we do not see a
13
reason to go to other clusters at this time, until or
14
unless proven different.
15
So at this point of writing this report, we suggested
16
exploring further the cluster on the Bruce Peninsula to
17
confirm or not confirm the feasibility or the acceptability
18
of that option.
19
But from what we -- the information that we had at
20
that time, gave it an economic edge and gave it a
21
preference over other clusters for consideration.
22
MR. PAPE:
So although it doesn't say it here, what
23
this really means is:
24
this project turns out to be feasible in relation to the
25
issues reported on by Hardy Stevenson, then it seems to
26
have an edge on the basis of cost?
27
28
MR. SHALABY:
all other things being equal, or if
That's correct.
That's a fuller way of
describing it, yes.
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MR. PAPE:
This, in no way is a denial of the
2
significance of the issues that have been pointed out to
3
you by Hardy Stevenson and it's not a denial of the
4
relevance of those issues?
5
MR. SHALABY:
No, it is not.
And every one of the
6
clusters will have issues and every one of the clusters
7
will have feasibility to be confirmed.
8
will have its own issues.
9
Every one of them
So we're identifying ones that are more economic at
10
this time.
Ones that we think can be developed in ways
11
that are consistent with transmission capability
12
development, and that's the iterative nature of planning.
13
If we discover it is not feasible for any of the reasons
14
that you mentioned, we will move on.
15
MR. PAPE:
16
MR. SHALABY:
17
18
All right.
This is true of hydroelectric.
This is
true of many other parts of the plan.
MR. PAPE:
Madam Chairman, I maybe finished with this
19
topic but perhaps I could consider -- perhaps we could take
20
the break now and I will move on to it.
21
22
MS. NOWINA:
We will take the afternoon break and
return at 3:15.
23
--- Recess taken at 2:58 p.m.
24
--- Upon resuming at 3:19 p.m.
25
MS. NOWINA:
26
You can go ahead, Mr. Pape.
27
MR. PAPE:
28
Mr. Shalaby, I think you said at the end of our --
Please be seated.
Thank you, Madam Chair.
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just before the break, that all four of these clusters may
2
present issues and challenges.
3
Now, my understanding is that Hardy Stevenson did a
4
corridor level environmental assessment of three of the
5
four.
6
it's too short to fall under the regulation.
The Goderich line wasn't required to do one, because
7
Are you aware of that?
8
MR. SHALABY:
9
10
You seem to be certain of all of that,
so that's fine, yes.
MR. PAPE:
I didn't recall that part, but...
All right.
Well, I will take you to these,
11
if you wish, but the east Nipigon line and the Manitoulin
12
Island proposal and the Bruce Peninsula, all three had
13
Hardy Stevenson reports done?
14
MR. SHALABY:
15
MR. PAPE:
Yes.
And our review of those indicates that in
16
the Hardy Stevenson reports for the east Nipigon cluster
17
and for the Manitoulin Island cluster there is no
18
suggestion of any feasibility being raised.
19
MR. VEGH:
Madam Chair, if we're going to get into
20
comparing and contrasting the results of the different
21
Hardy Stevenson reports, I would suggest that that is
22
better carried out with the transmission panel, who will
23
have Mr. Dave Hardy there, as well.
24
It is fine to sort of go over the high-level
25
conclusion of one report, but now it seems like we're
26
comparing the results of different reports and how those
27
were taken into account in the transmission evidence.
28
I would suggest that it is more useful to have the
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author of that report and the transmission panel address
2
that.
3
4
5
MS. NOWINA:
That makes sense to me, Mr. Pape.
Do you
have any concerns about that?
MR. PAPE:
Well, I do, Madam Chair, only in the sense
6
that I want to understand at the level of how the plan
7
itself is conceived and how the plan itself is to be
8
implemented.
9
consideration of these feasibility issues has been taken in
10
the one case of the Bruce Peninsula, in the same way as --
11
and it's proposed in the plan to take the same approach to
12
next steps for the Bruce system as it is for the others.
13
14
15
I want to understand why the approach to the
MS. NOWINA:
Is there a reason why you think the
subsequent panel can't deal with that?
MR. PAPE:
Well, I want to understand this in terms of
16
plan policy, really.
17
person to ask questions about at that level, across the
18
Board, about what is said about feasibility issues and the
19
general approach to these matters.
20
So if I could --
21
MS. NOWINA:
I thought that Mr. Shalaby is the
Mr. Shalaby, is there any light at a high
22
level you can shed on the questions, without -- do we have
23
to go into the details, Mr. Pape, of doing a comparison in
24
order to do that?
25
MR. PAPE:
I only wanted to make the point that this
26
report, in this particular case, does raise expressly
27
feasibility issues, both with respect to the transmission
28
line and with respect to the energy projects themselves.
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2
3
4
It does that.
MS. NOWINA:
All right.
Why don't you continue and we
will see how far it goes?
MR. PAPE:
Let me take you to that, and let me put it
5
to you this way.
6
mind, that Hardy Stevenson report for the Bruce, and it's
7
Exhibit E, tab 3, schedule 9, attachment 1.
8
9
10
If you will turn up, if you wouldn't
I read to you a section of the conclusion on page 11,
and now I am going to ask you to look at page 9.
Under
"Assessment and Evaluation", the report says:
11
"Based on a feasibility level of analysis of
12
environmental and socioeconomic conditions in the
13
potential corridors, the following conclusions
14
can be drawn."
15
16
And just start at the third line of the next
paragraph:
17
"However, significant social, economic and
18
environmental trade-offs would be required to
19
connect the transmission line to Dorcas Bay.
20
transmission line would have the potential to
21
affect wetlands, forest resources and protected
22
areas.
23
the northern Bruce Peninsula may be affected.
24
The local First Nations communities may have
25
traditional land uses in the area, as well as an
26
interest in the transmission line and renewable
27
energy development in the area.
28
results of this study, the Bruce Peninsula
The
Cultural heritage and tourism features in
Based on the
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transmission line will not be feasible without
2
the involvement of First Nations."
3
So first off, Mr. Shalaby, are you aware that issues
4
of this type and going to feasibility -- are you aware that
5
analogous issues have not been raised by Hardy Stevenson
6
reports with respect to the others, the other two proposals
7
-- the other two corridor analyses that they did for
8
renewables?
9
MR. SHALABY:
When I indicated all options and all
10
clusters have challenges, they're not always by Hardy
11
Stevenson.
12
challenges further downstream in terms of transmission in
13
cooperation.
14
of the clusters, not necessarily one to do with this
15
specific concern.
16
There may be other system challenges,
There are many challenges to do with any one
So maybe the Hardy Stevenson did not identify
17
analogous concerns with other clusters and transmission to
18
incorporate them, but there are other challenges in other
19
clusters, as well.
20
MR. PAPE:
All right.
Then let's understand, if you
21
would, how the plan proposes to deal with these particular
22
challenges which Hardy Stephenson has articulated as
23
challenges going to feasibility, all right?
24
MR. SHALABY:
Precisely the way it is recommended
25
here, and that's to work with First Nations that are
26
impacted and involved.
27
MR. PAPE:
Well, if I understand --
28
MR. SHALABY:
Amongst other things.
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MR. PAPE:
All right.
Now, he says -- or the authors
2
of the Hardy Stevenson report recommend early engagement,
3
right, with groups who would have an interest in these
4
matters, including the First Nations that he specifically
5
has named.
He says that on page 11?
6
MR. SHALABY:
7
MR. PAPE:
Yes.
At the end of the conclusion; right?
8
"First Nations associated with the Bruce
9
Peninsula are likely to have a strong interest in
10
matters of land claims and traditional land uses.
11
Early engagement and involvement of these groups
12
in the development of the new transmission line
13
may help overcome some of the challenges
14
identified."
15
Now, what is the mechanism that the IPSP proposes to
16
use to explore whether these feasibility issues can, in
17
fact, be resolved in favour of these projects going ahead?
18
MR. SHALABY:
19
MR. PAPE:
20
MR. SHALABY:
Those are listed in Exhibit C-1-1.
Right.
This describes the -- this exhibit is
21
entitled "Engagement With First Nations and ^Metis People
22
Related To Integrated Power System Plan and the Procurement
23
Process."
24
MR. PAPE:
So your understanding of the administration
25
and implementation of the plan is that these types of
26
engagements would happen through the general processes for
27
engagements that are found in that exhibit?
28
you're saying?
That's what
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MR. SHALABY:
They start with these processes, and
2
they become more specific and more particular as the
3
specific project is identified and the specific concerns
4
are identified.
5
MR. PAPE:
Are you aware that engagement on these
6
particular issues has not commenced at all at this stage,
7
in the context of the cluster of wind projects proposed for
8
the Bruce?
9
MR. SHALABY:
The evidence indicates the degree of
10
communication and invitations to the First Nations in the
11
area, two, in specific, that are in the area.
12
And letters between them and the government, and
13
invitations to attend regional meetings in relation to the
14
IPSP, for example.
15
So whether the engagement has addressed these issues
16
in any substantial way or not is not to say that attempts
17
have been made and discussions have been held and
18
information has been provided on the integrated power
19
system plan, including the intent to explore the
20
opportunities for wind on the Bruce Peninsula.
21
MR. PAPE:
Well, I take it then that you are going to
22
-- the way the IPSP is structured now, you are going to ask
23
the Board to approve the IPSP, including the aspects of the
24
IPSP that bear on these issues we have been discussing.
25
I take it you are going to -- the way it is structured
26
now, you are going to ask the Board to approve that part of
27
the IPSP without being able to tell the Board about whether
28
this line or these renewable energy developments will be
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feasible, in the sense that Hardy Stevenson report raises
2
for you.
3
You won't have any information about that, because
4
there's been no engagement on these issues and you have no
5
information about the position of the First Nations with
6
respect to this.
7
MR. SHALABY:
8
MR. PAPE:
You are right in that regard, yes.
And you are going to ask the Board to
9
approve you continuing to develop, to do development work
10
on this particular transmission corridor without the Board
11
having any information about whether this is feasible, in
12
the sense that Hardy Stevenson report indicates?
13
MR. SHALABY:
The development work is going to be done
14
by transmitters.
We will not do the development work
15
ourselves, in terms of pre-engineering or environmental
16
assessments.
17
There would be development work done by transmitters,
18
and the approval for that is in the transmitters' budgets.
19
It is part of the considerations that we bring forward, as
20
necessary, to explore -- I mean how could you know whether
21
there is concerns, whether the concerns are addressed or
22
not if you don't develop the work a little further?
23
I mean there is a bit of circularity here.
How would
24
we discover the likely impact, the likely interest, the
25
ways of involving First Nations if we don't do further
26
development work?
27
28
MR. PAPE:
Well, based on the report you received from
Hardy Stevenson, which is different from the reports you
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received for any of the others, the Hardy Stephenson report
2
says, in this particular case there is a threshold issue
3
about feasibility of this line and it's going to require
4
engagement, among other things, with the Aboriginal people
5
in order to see whether this line will turn out to be
6
feasible.
7
MR. SHALABY:
8
MR. PAPE:
9
10
11
Yes.
Are you saying that you couldn't go
directly to a mechanism to explore those feasibility issues
with the Aboriginal people?
MR. SHALABY:
No, I'm not saying that.
We're saying
12
we have done that, as explained in C-1-1 and other
13
exhibits, C-4-2 and others, and the development work will
14
surface the concerns even more explicitly.
15
For example, this transformer connection, what does
16
that mean?
17
be answered with a little bit more document would being on
18
the part of transmitters.
19
What kinds of lands will be affected?
Can only
So when the First Nations asks the legitimate
20
questions of what is it that is being thought of, the
21
transmitters and ourselves will be in a better position to
22
answer, only if we do more development work.
23
We can only answer certain questions right now.
24
can answer more questions and develop more concerns,
25
understand more concerns with a bit more development work.
26
We
The range of issues raised and the range of impacts
27
assessed will be increased with the development work that
28
we are recommending at this stage.
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2
MR. PAPE:
explored by transmitters?
3
4
And you say that these issues will be
MR. SHALABY:
Part of the engagement will be by
ourselves, part by governments, and part by transmitters.
5
MR. PAPE:
6
to be in this case?
You don't know who transmitters are going
7
MR. SHALABY:
8
MR. PAPE:
9
Not by yourselves?
I don't at this time.
And so one of the reasons -- one of the
effects of the Board approving this part of the plan will
10
be that it may cause transmitters to come forward; is that
11
right?
12
MR. SHALABY:
13
MR. PAPE:
14
15
That could be, yes.
And they will come forward to you, to the
OPA?
MR. SHALABY:
They will explore the options and they
16
will develop technical and environmental and social impacts
17
on the projects.
18
us, or with the Board.
19
permit, they will come here.
They will share those results, yes, with
Sorry.
If they proceed for a section 92
20
MR. PAPE:
If I may just have a moment.
21
Let me just try a couple of more questions with you on
22
this, Mr. Shalaby, and then perhaps we'll leave this for
23
the later panel.
24
What I am struck by, is that the processes and
25
mechanisms you have suggested for, plan for development
26
work for, these four transmission enabler line options, the
27
steps that you have suggested are identical in all four
28
cases.
It's what you mentioned:
The technical system
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studies, the preliminary engineering, the route and site
2
identification, preparation and seeking approval for EA
3
terms of reference, and doing EA studies and seeking EA
4
approvals.
5
The same steps are recommended for all four.
6
MR. SHALABY:
7
Exhibit E-3-9.
8
MR. PAPE:
9
MR. SHALABY:
It may be helpful to look at page 13 of
Yes.
And the point I want to illustrate in
10
the table 1 which is on line 15 of that page is the
11
predominance and the length of consultation in any one of
12
these project development stages.
13
So maybe the headings on each of the projects is
14
similar and the schedule looks similar, but the nature of
15
consultation -- this is several years of consultation
16
starting very early in the phase of the project -- will be
17
influenced by the nature of the project, the people
18
impacted, the nature of the development.
19
So that's what we mean by "project timetable" or
20
development timetable, includes extensive consultation yet
21
to go.
22
MR. PAPE:
Now as I understand it, you would ask the
23
Board to approve this aspect of the plan and, if I
24
understand this aspect of the plan, it proposes that these
25
consultations begin after approval?
26
here.
27
28
MR. SHALABY:
That's the way it is
I am willing to accept that, in that
we're asking the Board to approve the methodology and the
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transmission initiatives that we're identifying but there
2
is nothing to stop a transmitter from proceeding with the
3
development of these projects with or without the approval
4
of this Board.
5
Development of the project, understanding it,
6
understanding its characteristics and the nature of the
7
consultation required does not require any explicit
8
approval of this Board on behalf of transmitters.
9
Only section 92 construction that does -- or the
10
licences associated with that is going to be requiring an
11
OEB approval.
12
So I am stopping and reflecting on your description of
13
approval of this Board on the development work.
14
of the plan.
15
but a transmitter can engage in consultation and can engage
16
in project development in response to this plan.
17
18
MR. PAPE:
It's part
It's part of the methodology for the plan,
But you are distinguishing these four
clusters from the other six?
19
MR. SHALABY:
20
MR. PAPE:
Yes, we are.
And that aspect of the plan you are asking
21
the Board to approve?
22
MR. SHALABY:
As a methodology, we are.
We are not
23
requesting procurement of any of the four or any of the
24
renewable energy that is identified in this plan at this
25
time, but we are requesting a review and approval of the
26
methodology for choosing wind resources in the province,
27
prioritizing them, including an all-inclusive levelized
28
costs that includes transmissions as an example, the
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sequencing in time, yes, we are.
MR. PAPE:
You are asking the Board to agree that all
3
of the statutory requirements and all of the requirements
4
in the regulation have been met by the way you went about
5
selecting these four and excluding the other six -- or to
6
the exclusion of the other six?
7
MR. SHALABY:
8
MR. PAPE:
9
MR. SHALABY:
Yes.
All right.
I don't want to interrupt you while your
10
colleague is speaking with you, but "selected" in your
11
terms, I come back to that again.
12
What were selected is nominating these sites as
13
economically superior to other sites, cost-effective
14
compared to other sites, and are worthy for the study and
15
are worthy of further development and understanding.
16
the selection part we spoke about before the break.
17
MR. PAPE:
18
consideration?
Right.
19
MR. SHALABY:
20
MR. PAPE:
21
So
They have been selected for further
Correct.
Right.
And the other six have not been
selected for further consideration at this time?
22
MR. SHALABY:
23
MR. PAPE:
24
MR. SHALABY:
But they have been identified.
Right.
They have been identified.
Other
25
prospectors and developers may go and pursue those.
There
26
is nothing to prevent somebody else from going after those
27
and coming to prove that they're even more effective than
28
the ones we selected.
We don't have a corner of knowledge
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on the best run resources or the best way of developing
2
them.
3
From the data we have and from the information that we
4
have, that's the proposal that we're making at this time.
5
We continue to say better ideas can come forth.
6
MR. PAPE:
Right.
And all of this selection process
7
is based on what you told us earlier, which is if it turns
8
out that some of these four do not turn out to be feasible,
9
we've got it covered?
10
MR. SHALABY:
11
MR. PAPE:
12
13
Yes.
Let me ask you some questions on a
different topic.
I want to take you, sir, to some questions about the
14
announcements by government, by the government of Ontario,
15
in June concerning nuclear procurement and some of the
16
comments Mr. Gibbons made and you have made in the evidence
17
about the consequences for the IPSP of some of those
18
choices or that initiative.
19
20
You said on Thursday, at volume 4, page 42, in answer
to questions from Mr. Rodger, at line 5 Mr. Rodger said:
21
"But it is fair to say that we have one
22
integrated power system plan and it's going to be
23
implemented under potentially two different
24
procurement approaches?"
25
And you said, "Yes."
26
MR. SHALABY:
27
MR. PAPE:
28
MR. SHALABY:
Yes, I see the transcript.
Are you at page 42, sir, of volume 4?
Yes, I am. Yes.
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MR. PAPE:
Line 5 to 9?
2
MR. SHALABY:
The reference there is to
3
infrastructure, Ontario procurement process and OPA
4
procurement processes.
5
MR. PAPE:
Tight.
That's in reference to the process.
I want to make sure we have the
6
relationship clear to the discussion on the first day about
7
planned and committed and the change from planned to
8
committed.
9
In volume 1, at page 88, there is a long discussion by
10
Mr. Gibbons -- yes, it is Mr. Gibbons.
11
he's talking about slide 6 from Exhibit K1.1.
12
13
And on page 88,
It may be that this is in reference to slide 74.
Starting at line 12, he says:
14
"The prefiled IPSP initially included
15
approximately 3,040 megawatts of nuclear capacity
16
at Bruce A and approximately 10,300 megawatts of
17
planned nuclear capacity in all.
18
the government's initiative, the IPSP now assumes
19
an additional committed nuclear capacity of
20
approximately 3,260 megawatts at Bruce B and a
21
range of 2,000 to 3,500 megawatts at Darlington.
22
As a result, the reference plan indicates a need
23
for approximately 3,500 to 5,000 megawatts of
24
base-load nuclear capacity."
25
As a result of
And you said, on the same day, at page 19 of this
26
transcript -- and you were talking about slide 6.
27
for that.
28
Sorry
Starting at line 22:
"The term 'committed' has a very specific meaning
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in the definition that we adopt today, and that
2
is facilities or resources that are under OPA
3
contract are subject to procurement directive, or
4
are being pursued directly by government.
5
amount of committed has increased over the last
6
year, primarily because of the commitments that
7
the government is making to nuclear, and the word
8
'commitment' is just to say that it is outside of
9
the scope of this plan.
The
The nature of the work
10
is either being pursued directly by government,
11
or given directive to the Ontario Power Authority
12
to pursue."
13
Now, it is those issues that I want to understand
14
better.
15
that was issued by the government on June 16th; right?
16
That was part of what this was in reference to?
17
All of this was in respect of the announcement
MR. SHALABY:
There are two announcements, one on
18
March 7th and one on June 16th, and they are both in the
19
update, Exhibit B-1-1, page 3.
20
I'm just saying there are two announcements.
21
MR. PAPE:
Right.
So I'm agreeing with you,
Not one.
We have an exhibit that was filed I
22
think on Thursday, Exhibit K4.2 which includes news
23
releases about the March 7th and the June 16th decisions or
24
they are announcements on those days.
25
releases.
26
They're both news
How did the OPA receive notice of these two
27
announcements?
We could start with the June 16th one and
28
then see if there is any difference for the March 1.
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start with the June 16th.
2
that, sir?
3
4
MR. SHALABY:
MR. PAPE:
6
MR. SHALABY:
Six.
MR. PAPE:
9
MR. SHALABY:
11
12
Sorry?
MR. PAPE:
I received it by reading the
Did you read the announcement in this form,
in that you read it as a news release?
MR. SHALABY:
14
MR. PAPE:
15
MR. SHALABY:
17
I didn't understand that.
announcement.
13
16
I can tell you, I received notice of
that -- I mean I read this announcement when it was issued.
8
10
What page number is that in the exhibit
that you are referring to?
5
7
Yes.
Was it conveyed to OPA in any other way?
I did not -- not to me.
I cannot speak
on behalf of all of the OPA.
MR. PAPE:
So do you know what form this decision
18
took?
19
decision by the government?
20
decision?
21
How did you receive notice of
What is the form of the document which represents a
MR. VEGH:
Is there a documented
Excuse me, Madam Chair.
I am not sure that
22
the OPA is in a position to give evidence on the form in
23
which the government of Ontario made a decision.
24
If the question is, with respect to how the OPA
25
interpreted and works around that decision, that's one
26
thing.
27
on that issue.
28
But I don't think the OPA's here to give evidence
MS. NOWINA:
That's fair, Mr. Vegh.
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Mr. Pape, do you want to rephrase the question?
2
MR. PAPE:
After you learned of this, sir, did you
3
make any enquiries about the form in which this decision
4
was taken?
5
was taken?
6
7
Or the form in which the precise decision that
MR. VEGH:
Sorry, Madam Chair, I still fail to see the
relevance.
8
The OPA used that decision in the IPSP and in the
9
updated evidence and there could be questions about how the
10
OPA used it.
11
what the OPA heard about how the government made that
12
decision, I don't see as relevant to the IPSP at all.
13
MR. PAPE:
But, again, how the government made it or
Well, I am going to come to the
14
implications for the IPSP and what Mr. Shalaby and the OPA
15
make of this decision, or what they understand to be the
16
consequences.
17
My first question is:
Am I understanding, sir, that
18
the only documentary reflection you have of this decision
19
is this news release?
20
MR. SHALABY:
21
MR. PAPE:
22
MR. SHALABY:
This decision has many dimensions to it.
Yes.
And it's subject to a long discussion in
23
the industry and with government, over a long period of
24
time.
But the coming together of:
25
"OPG will operate new two unit plant at
26
Darlington site; Bruce Power to maintain 6300
27
megawatts to either Bruce B refurbishment or new
28
build."
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I mean that is the coming together of a number of
2
decisions by government.
3
by government, discussed with stakeholders over the several
4
months before that.
5
Many of them have been discussed
So I am not saying that this was a surprise, I woke up
6
some morning and found this to be a total surprise but the
7
coming together of these announcements in the specific ways
8
that they did come together, that's how I learned about
9
them.
10
11
And the announcing of all of that together is the
way I learned about it.
MR. PAPE:
So are you indicating, by what you said
12
about this being the result of a long series of
13
discussions, OPA was involved in some of those discussions?
14
MR. SHALABY:
15
MR. PAPE:
Yes, we were.
Is this at all too analogous to the ways
16
that OPA was involved in discussions with the Ministry of
17
Energy before directives were developed on the supply mix,
18
for example?
19
MR. SHALABY:
20
MR. PAPE:
21
22
No, not to the same extent, no.
You were more involved in discussions about
the supply mix or the other way around?
MR. SHALABY:
We were formally asked for advice on the
23
supply mix and we made that advice public, and the
24
government considered it in its supply mix directive.
25
MR. PAPE:
And the end result of the process for the
26
supply mix directive was that you, in fact, had a formal
27
directive --
28
MR. SHALABY:
Yes.
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MR. PAPE: -- from the government?
All right.
And
2
what I am asking you now is, just to confirm, you have no
3
similar document that is a formal document expressing a
4
government decision, in this case?
5
MR. SHALABY:
There is no formal document, no.
6
MR. PAPE:
7
And how did you come to decide that 5,000 to 7,000
There is no formal document, all right.
8
megawatts of nuclear generation is no longer your
9
responsibility as planners or developers of the IPSP?
10
11
How
does that follow from this?
MR. SHALABY:
We went through a discussion of that on
12
day 1, and other days as well last week indicating that to
13
focus the decisions that we need to explore in this
14
particular proceeding, we excluded decisions being pursued
15
elsewhere outside of this proceeding.
16
MR. PAPE:
But how did you come to decide that?
That
17
the IPSP is about things that the government has not
18
decided to do, but doesn't include things the government
19
has decided to do?
20
That's not a self-evident conclusion from this
21
announcement.
22
Do you find some reference to that, for example, in the
23
Electricity Act?
24
Is that something that was a new concept?
MR. SHALABY:
We indicated that government gave us
25
direction to work on certain things with certain targets.
26
If government also indicates that they are pursuing
27
directly certain initiatives, it is self-evident to me that
28
these are being pursued by government.
Government gave us
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direction to pursue other things.
2
other things.
3
MR. VEGH:
So we were pursuing the
And, Mr. Pape was looking for, I guess, by
4
his reference to the Electricity Act, was looking for some
5
sort of legal basis for that determination.
6
point to the OEB's report on the IPSP and guidelines which
7
states that:
I would just
8
"The economic prudence or cost-effectiveness of
9
specific generation or conservation projects that
10
were the subject of a governmental procurement or
11
OPA procurement prescribed by the ministerial
12
directive issued prior to the date of the
13
approval of the IPSP, will not be assessed as
14
part of the IPSP review process even if these
15
projects are included in the IPSP."
16
And that's at Exhibit A-3-1, pages 11 to 12.
17
MR. PAPE:
18
[Witness panel confers]
19
MR. SHALABY:
20
MR. PAPE:
Mr. Shalaby...
Yes.
Did you have an indication prior to June
21
16th that these decisions might be taken by government and
22
that that would cause some change to the IPSP?
23
MR. SHALABY:
The press release that is referred to
24
for March 6th or March 7th gave an indication, which is
25
Exhibit K4.2, page 1, entitled
26
"Ontario takes next step to ensure clean
27
affordable and reliable energy supply for
28
generations to come."
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MR. PAPE:
Yes.
2
MR. SHALABY:
That was an indication of the government
3
taking a step to procure nuclear power for Ontario.
4
June announcement is a subsequent one to that that gives
5
more specifications and more specificity to that particular
6
initiative.
7
So the
That's an indication we knew the government is
8
undertaking a procurement process.
9
that we referred to gave more specifics and more detail.
10
MR. PAPE:
The second announcement
Does the IPSP include some mechanism for
11
ensuring the integration of these kinds of direct
12
initiatives by government with the other parts of the plan?
13
MR. SHALABY:
The facilities referenced in both of
14
these news releases, or at least the one in the -- the
15
latter one, are consistent with the reference case that we
16
have and other cases that we have, as well.
17
18
19
If that's a way of ensuring consistency, then that is
one way.
MR. PAPE:
So the major effect, then, is not to
20
threaten integration or challenge integration.
21
goes to the extent to which those aspects of the plan for
22
the development of energy will be reviewable by the Board
23
according to the criteria by which it reviews the IPSP?
24
25
26
MR. SHALABY:
It simply
I need to be taken through that step by
step, if I may.
MR. PAPE:
Well, you say that in this case you have
27
looked at -- let me take it step by step.
I take it that
28
you're saying that you -- you and the OPA, generally, have
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looked at these announcements and you have concluded that
2
these initiatives by government are consistent with the
3
IPSP as a whole; is that right?
4
MR. SHALABY:
Well, the reference simulations that we
5
have and the other cases, case 2 and 3 and 4, all of the
6
cases that we simulated, are consistent with these
7
announcements.
8
MR. PAPE:
9
10
11
All right.
Now, these announcements being
taken, do they affect -- do they have an effect on the
reference case and on other aspects of the IPSP?
MR. SHALABY:
They affected the range of planned
12
resources, I mean, as we indicated in slide 6 that we
13
referred to, the amount of decisions or the range of
14
decisions that we need to look into.
15
So they don't affect the reference case, but they
16
affect the amount or the extent of decisions being examined
17
or that we would look into with this case.
18
MR. PAPE:
Do they prejudice the -- that is, have an
19
impact on the range of options that are available for
20
what's left for planning?
21
MR. SHALABY:
Not for the approvals requested.
We
22
went through that, as well.
23
here is a subset of what needs to be planned, is an even
24
smaller subset of what needs to be planned and committed
25
over the next several years.
26
MR. PAPE:
The approvals we're requesting
So I take it you're saying that except for
27
the -- for example, the application of the planning
28
criteria, having these matters proceed by way of government
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initiative rather than through inclusion in the plan and
2
approval of the plan, the main impact is that these aspects
3
of the plan that have now been displaced by the government
4
initiative, those aspects of the plan will no longer be
5
reviewed by the Board, according to the requirements in the
6
Electricity Act and the regulation?
7
MR. SHALABY:
I don't know -- I can't agree to that.
8
They can be reviewed -- the reference case is here for
9
review.
10
11
12
13
There is no request to purchase electricity from
these resources at this time.
I don't know what is it that is being excluded from
review.
MR. PAPE:
Well, I guess that is really my question.
14
So I take it you don't need to amend the IPSP in any sense
15
as a document which you are asking the Board to approve?
16
MR. SHALABY:
17
MR. PAPE:
18
to the IPSP itself?
19
No, we --
These announcements don't cause any change
MR. SHALABY:
They do not cause any change to the
20
approvals being sought.
21
and the logic that we are presenting.
22
that.
23
MR. PAPE:
They do not change the methodology
All right.
No, it doesn't do
I am having a little trouble
24
understanding how the result -- the consequence of the
25
initiative is that certain things get taken off the
26
planning table, but, on the other hand, the IPSP as a
27
planning document and as a plan has not been affected.
28
must be missing something.
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Perhaps you could help me with that.
2
MR. SHALABY:
The approvals being sought, as in the
3
application, stay the same.
4
approvals are being sought stay the same.
5
Some aspects of the plan are being pursued directly by
6
government.
7
pursue.
8
developers.
9
The context in which these
Some aspects we are asking transmitters to
Some aspects are being pursued by private
We are recognizing that two specific aspects of the
10
reference case are now being pursued by government
11
directly.
12
MR. PAPE:
I see.
So we're really talking about
13
different ways of implementing different aspects of the
14
plan, is that a fair way to say it, and that some aspects
15
of the plan and perhaps more than we understood a while
16
back -- more aspects of the plan with respect to nuclear
17
are going to be implemented directly by government
18
initiatives pursuant to the March announcement, and so on?
19
MR. SHALABY:
Yes.
Whether they're being implemented
20
or being developed is yet to be worked out over the next
21
several months and years.
22
23
MR. PAPE:
And will the OPA be involved in subsequent
steps with respect to these government initiatives?
24
MR. SHALABY:
25
MR. PAPE:
26
MR. SHALABY:
Yes.
In what ways?
Our incoming CEO, who starts today, is a
27
member of the steering committee for these projects with
28
Infrastructure Ontario.
That's the link, that we now have
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a CEO who is a member of the Infrastructure -- of
2
Infrastructure Ontario's steering committee for these
3
projects, at least for the one project, and that's the
4
Darlington project.
5
MR. PAPE:
All right.
Let me ask a couple of
6
questions about how fluid this initiative is.
If I
7
understand, this particular news release said, among other
8
things, that the government's intention was that
9
approximately 6,300 megawatts of base-load electricity
10
would be provided either through the refurbishment of the
11
Bruce B units or new units at Bruce C; right?
12
Is it conceivable that sometime in the next months or
13
year that the number of megawatts to be provided for at the
14
Bruce will be increased by an alteration of this government
15
initiative?
16
MR. SHALABY:
17
MR. PAPE:
Increased from what level?
From 6,300 or from approximately 6,300.
18
it conceivable that will be done by government directly
19
through a next step in this initiative?
20
MR. SHALABY:
21
MR. PAPE:
Conceivable.
Is
I can't rule that out.
Well, the IPSP now provides for some
22
planning of nuclear power, and the Board will be expected
23
to review those aspects of the IPSP in terms of the -- not
24
only OPA's planning criteria, but in terms of the statutory
25
requirements.
26
But I take it that could change if the government
27
alters the extent of its initiative.
28
telling us?
That's what you're
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MR. SHALABY:
If the recent several weeks and months
2
is any evidence, life moves on and things change and they
3
continue to change, yes.
4
MR. PAPE:
That's a "yes"?
5
MR. SHALABY:
6
MR. PAPE:
That's a "yes".
And just one more question, because I know
7
I am about out of time, Madam Chair.
All that you have
8
explained to us about these initiatives and how they have
9
changed things, could similar kinds of initiatives be taken
10
by government with respect to the development of wind
11
power?
12
13
14
As you understand it?
MR. SHALABY:
The government has issued a number of
directives in relation to wind power.
MR. PAPE:
Yes.
But when the government issues you a
15
directive with respect to wind power, that doesn't take it
16
out of the planning scope of the IPSP.
17
your planning or targets your planning, in some way.
18
if I understand you, something different has happened with
19
these nuclear initiatives.
20
MR. SHALABY:
It simply focuses
But
They're both in the same category.
21
"Committed" includes direction from government to pursue
22
this outside of the IPSP board approval, or being pursued
23
by government.
24
committed, part of the bar chart, both have the same impact
25
of reducing the amount of planned facilities to be explored
26
in this particular proceeding.
27
28
MR. PAPE:
For the purposes of determining what's
Most of the directives that you have
received have left you, at least as I've understood them,
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the directives that you have received have left you
2
planning options with respect to how to implement the
3
directives.
4
MR. SHALABY:
5
MR. PAPE:
The initiative operates differently; isn't
6
that right?
7
responsibilities.
8
MR. SHALABY:
9
MR. PAPE:
10
11
Correct.
It takes the matter away from your planning
It operates differently, yes.
I am asking you whether that could happen
with wind power development, as well.
MR. SHALABY:
I can't speculate, but if government
12
chooses to do so, the government has all kinds of powers to
13
do so.
14
MR. PAPE:
Thank you very much.
15
MS. NOWINA:
16
MR. PAPE:
17
MS. NOWINA:
That concludes your questions, Mr. Pape?
It does.
Thank you, Madam Chair.
Thank you.
Mr. Manning, your estimate is
18
for 20 minutes, do you believe that you will still be able
19
to make it?
20
MR. MANNING:
I think I conveyed to Mr. Crocker that I
21
am more likely to be half an hour, a little bit earlier in
22
the day.
23
It will take me, I think up to half an hour.
I am
24
happy to continue through if the Board panel are inclined
25
to sit but I don't know what your preference is, Madam
26
Chair.
27
28
MS. NOWINA:
Thank you.
All right.
Why don't we go
ahead, Mr. Manning.
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CROSS-EXAMINATION BY MR. MANNING:
2
MR. MANNING:
3
Good afternoon, Mr. Shalaby, Mr. Pietrewicz.
Thank you.
Thank
4
you for bearing with me through this extra quarter of an
5
hour.
6
particular, so I will try and be as quick and as direct as
7
I can be.
8
9
It's been a long day for all of us but you in
If I can just take you, first of all, to Exhibit B1,
schedule 1, at page 3 of 34.
Lines 3 and 4:
10
"It is also to note that the IPSP will be
11
implemented through a number of projects,
12
facilities and programs, some of which are within
13
the OPA's control and some of which are not."
14
It's that, really, that I wanted to ask a few
15
questions about and understand a little bit better from
16
you.
17
To do that, I would just like to refer to a couple of
18
other documents within the evidence and conveniently, the
19
first reference is on that very page.
20
16, about nuclear resources that are being pursued directly
21
by the government.
22
23
You talk, in line
And you talk about specific capacity cost -- this is
in the last three lines:
24
"The specific capacity cost and in-service date
25
will be determined in accordance with the
26
government's RFP process and related initiatives
27
and not in the IPSP application."
28
It is the subject that's just been discussed.
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basically we're talking, in some circumstances, across the
2
Board, not just in nuclear, we're talking about government
3
directives, government RFPs that have already been
4
committed or, in this particular case, in the case of
5
nuclear, matters that the government has indicated it is
6
likely to do, either directly or by directive to the OPG or
7
it already has under discussion or under agreement with
8
Bruce power and/or the OPG.
9
So we have a situation, first of all, nuclear, where
10
the IPSP, as I understand it, is looking at nuclear and
11
saying, Well, this is going to be done by other people.
12
It's going to be done by the government.
13
done by OPG.
14
It's going to be
We don't really influence it as the OPA through our
15
procurement process, but we ought to include it in our
16
plan, because it will be a significant element of what we
17
have to do as the OPA, to comply with the directive that
18
has been given to us.
19
Is that a reasonable outline of...
20
MR. SHALABY:
All until the last few words, about
21
where you have to include it in our plan and it is
22
consistent with our plan.
23
MR. MANNING:
Sorry, what point are you making?
24
MR. SHALABY:
I am in agreement with you except the
25
last few words that talked about, we would not have to
26
implement it -- we will not have to implement certain
27
aspects of these projects.
28
MR. MANNING:
No, no.
If I said it that way, I have
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misstated.
I didn't think that is what I said.
We are in
2
agreement; basically you have included it in the plan.
3
Other people will have to implement it.
4
point.
That's exactly my
5
MR. SHALABY:
Yes.
6
MR. MANNING:
So we are in agreement.
7
Similarly, you have, in conservation and renewable
8
supply -- I won't take you to any documents here -- but we
9
have heard about committed resources, government RFPs, the
10
fact that the Board is not going to consider, in this
11
particular hearing, the economic prudence and efficiency of
12
those committed resources.
13
And really, we are talking there about a lot of
14
projects that will be carried out by proponents, the will
15
of proponents to do that will be influenced by the OPA's
16
procurement, but the OPA's procurement has -- is basically
17
an implementation of the government's RFP in that
18
particular case.
19
So, sorry...
20
MR. SHALABY:
Implementation of government directives.
21
MR. MANNING:
Yes.
22
MR. SHALABY:
Yes.
23
MR. MANNING:
Right.
24
So there's another example of matters that are in the
25
IPSP, but actually other people have the real control over
26
what's going to happen there.
27
government directive, the OPA action pursuant to that
28
directive, and proponents coming forward.
Thank you.
It is a combination of the
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MR. SHALABY:
Correct.
2
MR. MANNING:
Thank you.
3
MR. SHALABY:
I mean we indicated we are not a
4
utility.
5
actually will not build or implement any of this.
6
just a contracting agency and a planning agency.
7
everything will be done by others, absolutely everything
8
there will be done by others.
9
We are not asset-owning or construction firm.
MR. MANNING:
Thank you.
We
We are
So
So this is really the point
10
that I wanted to draw out.
Forgive me if it is so self-
11
evident.
12
it is the OPA's plan, for other people to implement and the
13
OPA can do some things to assist or encourage that
14
implementation by its procurement activity pursuant to its
15
procurement processes.
16
the plan is a small part or rather it's a part of the
17
overall.
It is simply for this reason, that the OPA's --
But its actual ability to implement
18
MR. SHALABY:
Yes.
19
MR. MANNING:
Thank you.
20
I am looking at Exhibit 3-5.
21
referring you correctly here.
22
Yes.
Sorry.
If I can take you now to -Let me just make sure I am
Exhibit E, tab 3, schedule 5.
We
23
already looked at this a little bit earlier today, so I'm
24
not going to spend too much time on it, but it illustrates
25
a couple of points that are of interest to me in my line of
26
questioning.
27
Do you have that before you?
28
MR. SHALABY:
Yes, we do.
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2
MR. MANNING:
Thank you.
In paragraph 1, the
executive summary:
3
"A purchase from Manitoba would assist in meeting
4
the directive's renewable energy goals and could
5
be pursued in combination with or, depending on
6
the circumstances, in substitution for, some
7
other renewable energy resources included in the
8
plan."
9
10
So in reviewing that, in considering that, you
expressed a view about it.
It could be of assistance?
11
MR. SHALABY:
Yes.
12
MR. MANNING:
I appreciate that you will have some
13
14
15
recommendations later on.
If we look down on the same page to paragraph 2,
background, it starts off:
16
"The Ontario and Manitoba governments have been
17
discussing a potential deal involving a power
18
transfer from Manitoba to Ontario."
19
I think it was clear from the earlier discussion that
20
if that is to become a formal agreement, that whilst the
21
OPA appears to be participating in the discussions, that's
22
a matter for government.
23
agreement?
24
25
26
MR. SHALABY:
The government would sign that
Depending on the nature of the
agreement, that could be true.
MR. MANNING:
And if government were to do that
27
tomorrow and a considerable part of your plan objectives
28
for renewable were fulfilled through that route, then you
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would have to -- you would presumably want to amend the
2
remainder of your plan, because you were much further
3
towards achieving your goals?
4
MR. SHALABY:
Yes.
5
MR. MANNING:
Right.
6
MR. SHALABY:
I will be here tomorrow and I will find
7
8
9
out, so it will be fine.
MR. MANNING:
I will try to come back just to see if
there is any excitement on that basis.
10
And then I would like to move you down to paragraph 5,
11
the recommendations, and the second paragraph of 5.0 reads:
12
"The OPA recommends that a purchase with Manitoba
13
be further explored.
14
well and the feasibility and economics of a
15
purchase become more definitive, then
16
transmission development work may need to be
17
undertaken."
18
If negotiations progress
So you reviewed it substantively to an extent, and you
19
formed a view about it having potentially some benefit,
20
that it was sufficient to merit further exploration, to use
21
your word, and you recommended that it be further explored.
22
I am taking it that that is a recommendation
23
effectively to government.
24
government, assuming that the Board approves your plan,
25
this is one of your recommendations in the plan to
26
government to further explore that opportunity, albeit with
27
your assistance.
28
MR. SHALABY:
You're saying to the
Is that a correct understanding?
These recommendations are not directed
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to government.
2
really conclusions of the assessment.
3
of our conclusions.
4
They're recommendations of -- they're
MR. MANNING:
It's communication
Yes, but it doesn't make sense as a
5
recommendation, particularly in the context of a plan that
6
has been careful to deal with implementation at every turn.
7
It doesn't make sense to have it hanging in the air.
8
not a passive thing.
9
to do something?
It's
It is a recommendation for somebody
10
MR. SHALABY:
Yes.
11
MR. MANNING:
And, in practice, because the government
12
is carrying out these negotiations and is the likely party
13
to an interprovincial agreement, that government would have
14
to be the one to act on that recommendation or to consider
15
the recommendation?
16
MR. SHALABY:
In a large measure that's true, yes.
17
MR. MANNING:
Thank you.
18
Then if I can take you to - let me just make sure I
19
have my numbering correct - Exhibit E.
20
so Manitoba comes under transmission, although there is a
21
lot of substantive material in there, as well, but while on
22
the same track of transmission, E-2-1, Exhibit E, tab 2,
23
schedule 1, this is done in this fetching question-and-
24
answer style that you adopted through much of the plan.
25
26
This is still on --
I am looking at the question half way down the page.
Do you have that page before you?
27
"Who will undertake the transmission work
28
recommended by the OPA in the plan?
Some
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preliminary planning level work may be done by
2
the OPA, though the OPA expects that most will be
3
done by transmission proponents."
4
5
That's consistent with what we've already discussed,
that proponents of one form or another will...
6
Sorry.
7
MR. SHALABY:
8
9
Can you help us?
What page number are
you on?
MR. MANNING:
I am on page -- I haven't referred you
10
to the page.
That's my fault.
11
1, page 21 of 22.
12
MR. SHALABY:
It will take us a while to find that.
13
MR. MANNING:
I expected you to guess the page, having
14
referred you to the exhibit.
15
the Panel.
Exhibit E, tab 2, schedule
My apologies to yourself and
16
MR. SHALABY:
Yes.
17
MR. MANNING:
Do you have that available now, Mr.
18
Shalaby?
19
MR. SHALABY:
Yes.
20
MR. MANNING:
I will read it again briefly:
21
"Who will undertake the transmission work
22
recommended by the OPA in the plan?
23
preliminary planning level work may be done by
24
the OPA, though the OPA expects that most will be
25
done by transmission proponents."
26
Some
That's the point we have already been making.
Other
27
people will implement the plan, with the OPA having some
28
influence through procurements.
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2
3
Then if I can take you down to the bottom of the same
page:
"The OPA in consultation..."
Sorry:
4
"How will the OPA monitor progress in doing the
5
necessary transmission work?
6
consultation with the IESO and others, will
7
monitor progress in undertaking the necessary
8
work to complete the recommended transmission
9
projects.
The OPA, in
The OPA will take this progress into
10
account in preparing upcoming IPSP filings.
As
11
appropriate, the OPA will report on this progress
12
to the OEB and, as may be necessary, will
13
recommend to the OEB that it issues the necessary
14
orders or directions."
15
So there is another situation of a recommendation,
16
that presumably you would be recommending to the OEB to
17
issue the order, because you don't feel that the OPA has
18
the mandate or the authority to do that itself?
19
MR. SHALABY:
Yes.
20
MR. MANNING:
So that is a situation where the plan
21
has something in it which needs to be done as part of the
22
plan, in the OPA's view, but not something the OPA feels it
23
can do, and it makes a recommendation to the appropriate
24
party?
25
MR. SHALABY:
Yes.
26
MR. MANNING:
Thank you.
So having looked at those
27
materials, perhaps we can just see if we've reached some
28
principles out of it.
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2
I think we have agreed that implementation of the plan
is to be undertaken mainly by parties other than the OPA?
3
MR. SHALABY:
Yes.
4
MR. MANNING:
And the OPA's role is to influence,
5
where it can, by procurement, other players to produce the
6
outcomes which are sought?
7
MR. SHALABY:
By procurements and other methods.
8
MR. MANNING:
Perhaps you could assist me with the
9
other methods.
10
11
MR. SHALABY:
Well, you just mentioned one about
recommendations to this Board as an example.
12
MR. MANNING:
Yes, thank you.
13
MR. SHALABY:
Policy development.
14
MR. MANNING:
Yes, thank you.
15
That's helpful.
Thank
you.
16
Among the players who might come to the party is, of
17
course, the government, because the government is doing
18
various things in the way that we have described.
19
be one of the players.
20
will implement, a major player?
They may
They are one of the players who
21
MR. SHALABY:
Yes.
22
MR. MANNING:
And we have seen that with nuclear and
23
OPG.
24
purchase, and the whole thing about directives for the RES
25
and similar matters.
26
We have seen it with the potential for a Manitoba
I think this picks up on a point I felt Mr. Pape was
27
moving towards, but I am not sure that we clarified it.
28
Government could take action in the future.
It could issue
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a directive in the future.
Or take some other action, that
2
may achieve some of the goals that would otherwise be
3
undertaken under the plan.
4
having given the OPA the job, it makes it a little less
5
likely but it is possible the government could do so; is
6
that correct?
It's possible.
I appreciate
7
MR. SHALABY:
Yes.
8
MR. MANNING:
And what would happen to the remainder
9
of the plan in those circumstances if the government issued
10
a directive for a RFP of some sort to cut across in some
11
way, or overlapped with what you have in the plan.
12
would you do with the rest of the plan?
13
Would you have to rework it at that point?
14
MR. SHALABY:
What
Well, we have seen an example of that in
15
between filing in 2007 and the update, government is
16
pursuing directly nuclear procurement.
17
MR. MANNING:
Yes.
18
MR. SHALABY:
You see how we reflected that in the
19
20
documentation and planning that we're doing.
MR. MANNING:
Yes, yes.
And you think that will be
21
the same after -- let's assume that the Board approves the
22
plan and it all goes forward, I mean it's, if not carved in
23
stone, it is sort of etched somewhere.
24
the same thing would apply?
25
authority to make adjustments in the remainder of the plan
26
at that point because the goals were being fulfilled in
27
another way or would you have to wait until your three-year
28
review or how do you think that will work?
Do you think that
That you would have the
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MR. SHALABY:
I think we would collect all of that and
2
come back in three years and indicate implementation since
3
then, changes in the words since then and come back in
4
three years and take another snapshot.
5
MR. MANNING:
Thank you, thank you.
Again, I think
6
you have agreed that the plan makes recommendations -- you
7
include recommendations where you considered something
8
necessary or appropriate to make the plan compliant with
9
the directive, the Electricity Act, the regulation, all of
10
those things, but it was something that you couldn't do
11
yourself.
12
basis, to someone else.
13
Someone else has to do it.
14
assuming they will do it because things are drifting that
15
way, we, the OPA recommend in our plan that somebody else
16
do it, be it the government or the OEB in the case of
17
transmission?
18
You make -- you've made a recommendation on that
We think it should be in the plan.
We recommend, where we're not
Is that...
MR. SHALABY:
That is correct.
And I think I said
19
more than once over the last few days, the electricity
20
planning is now – the government is setting goals.
21
OPA's developing the plan.
22
And the implementation is done by a number of entities that
23
are not directly the OPA.
24
25
26
The
The OEB's reviewing the plan.
So this is very consistent with what we have been
saying.
MR. MANNING:
Right.
Thank you.
So I would then like
27
to take you to – well, really to the Electricity Act but I
28
always find one of the most convenient places is at the end
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of the report of the Board on the review of and filing
2
guidelines, but wherever you want to find it.
3
I am going to just read from that.
So when we look at
4
section 25.30(1): The obligation on the OPA is to develop
5
and submit to the Board an integrated power system plan
6
that is designed to assist the achievement by the
7
government of Ontario -- paraphrasing -- of its goals.
8
So it is basically a plan not for things necessarily
9
within the OPA's mandate, but it is a plan for government
10
to achieve its goals, and everything that we've said so far
11
today reflects that.
12
MR. SHALABY:
Yes.
13
MR. MANNING:
You can recommend things for other
14
people to do, including the government, because it's a plan
15
not for the OPA.
16
implemented either by government or other people.
17
18
MR. SHALABY:
It's a plan for government, and to be
The goals for the plan are set by
government.
19
MR. MANNING:
Yes.
20
MR. SHALABY:
It's a plan for electricity consumers in
21
22
Ontario, but the goals are set by government.
MR. MANNING:
Right.
And it doesn't just say that.
23
It is some -- it's not a plan to achieve the goals.
It is
24
a plan for the achievement by the government of Ontario of
25
its goals?
26
MR. SHALABY:
Yes.
27
MR. MANNING:
Thank you.
28
And because you've done it several times, then you've
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taken it -- and I think I agree with you -- that the OPA
2
can, in its IPSP, recommend, it has power to recommend?
3
And make recommendations of the sort we've discussed?
4
MR. VEGH:
Excuse me, Madam Chair.
I'm not sure where
5
my friend is going on this, but with respect to the --
6
since we're going through the legislation, I thought I
7
would step in, because in terms of the government's ability
8
to set its goals, that is clearly set out in section
9
25.30(2) and, as this panel knows, it doesn't have to be
10
reminded by me, the Board's review of the plan is with
11
respect to economic prudence and cost-effectiveness.
12
not expected that an outcome of this proceeding will seek
13
to direct or provide advice to the government on setting
14
its goals.
15
16
The government will set its own goals.
that's where my friend is going.
17
MS. NOWINA:
18
MR. VEGH:
19
MS. NOWINA:
20
MR. MANNING:
It is
I am not sure
Perhaps I'm --
You are anticipating.
Perhaps I'm anticipating.
Let's wait and see where it goes.
I may have no point to make at this
21
stage.
22
has done -- forgive me, what the OPA has done, where it has
23
seen its power and how it is operated and how that works in
24
the context of the statutory obligations.
25
to have a debate in argument with Mr. Vegh about what it
26
all means in statutory terms for consideration by the panel
27
at a later stage.
28
I am just interested to understand what the Board
I may be happy
I am conscious that I am not all that far off my half-
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2
hour and I am trying hard to keep to the time, Madam Chair.
So similarly, when it comes to procurement,
3
presumably, if there were a procurement option, that you
4
felt was a desirable part of the plan to make it work but
5
wasn't something that was within the OPA's powers to do,
6
you would have felt able to make a recommendation.
7
MR. SHALABY:
I'm trying to think of an example and I
8
am trying to understand whether you are talking about
9
procurement processes, or...
10
MR. MANNING:
I suppose the Manitoba purchase itself
11
is such a matter.
12
It's in the scenario we've discussed where government is --
13
there's going to be agreement between governments, that's
14
not something for the OPA.
It's ultimately a matter of procurement.
15
And we've already said that you make recommendation
16
that it should be further explored, presumably you could
17
make a procurement recommendation that the government enter
18
into a procurement agreement if the matter was put to you
19
and it appeared prudent.
20
MR. VEGH:
Again, Madam Chair, we're talking about
21
what the OPA may do.
22
for advice.
23
The government may turn to the OPA
The government may turn to the OEB for advice.
The question in this case is whether the plan meets
24
the directive requirements, is economically prudent and
25
cost-effective, and whether the procurement process is
26
appropriate in light of those criteria.
27
28
It is not about what the OPA ought to be recommending
to the government, whether in terms of setting objectives
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for the plan or for procurements.
2
MR. MANNING:
3
MR. VEGH:
Well, it may --
So I think the questions should tie to, if
4
the questions are about procurement process, they can be
5
directed at a general level to this panel or it can be
6
directed to the procurement process panel to address
7
procurement processes.
8
counsel wants the OPA to make to the government with
9
respect to procurements.
10
Not to address what recommendations
I just don't see how on any reading of the Board's
11
decision on issues day that that is in scope for this
12
proceeding.
13
MS. NOWINA:
14
MR. MANNING:
Mr. Manning?
Thank you, Madam Chair.
I have asked a
15
specific question with reference to a specific example in
16
the OPA's evidence, so it is a question on evidence.
17
I haven't, as yet, argued the conclusion that Mr. Vegh
18
assumes I am going to come to, and that indeed is a matter
19
for argument.
20
case of a specific example in the evidence of the OPA,
21
where there is a procurement opportunity which is beyond
22
the power of the OPA, if they had come -- if the OPA had
23
come to a conclusion that that was the wisest choice for
24
Ontario, would it have felt capable or, indeed, even
25
obliged but let's just say capable of including a
26
recommendation.
27
28
I am just try ping to understand, in the
They certainly recommended it should be further
explored.
Presumably, in the right circumstances, the OPA
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could have reached the conclusion that it should not only
2
be explored but recommend the government should enter into
3
it.
4
MR. SHALABY:
We made requests for authority to
5
procure projects to this Board.
We have a list of
6
procurements that we need approval for and made the request
7
for approval here.
8
MR. MANNING:
Yes.
9
MR. SHALABY:
So we could, if a purchase is seen to be
10
in the best interests of Ontario and is compatible with the
11
criteria, come to this Board and request approval to
12
execute a procurement of Manitoba purchase or any other
13
purchase.
14
MR. MANNING:
And, indeed, to go further than the
15
recommendation you have already had -- made in the IPSP,
16
and to say, actually, We now see this to be a good idea and
17
the best interests of Ontario and we recommend that you
18
should proceed.
19
I mean, in three years' time, for example, if you look
20
at it and you say, Actually, now the circumstances -- the
21
qualifications that we had the first time around are now
22
satisfied, we are satisfied on those issues.
23
be the better option for Ontario.
24
government, that you should now enter into an agreement.
25
We recommend to you, the
That could be the subject -- I'm not saying whether it
26
should be.
27
recommendation in the IPSP?
28
This seems to
I'm saying it could be the subject of a
MR. SHALABY:
The differentiation I am making here is
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that we could come to this Board and say we seek approval
2
to procure electricity from Quebec or Manitoba or
3
Newfoundland of this term, under these conditions.
4
could do that.
We
5
MR. MANNING:
Yes.
6
MR. SHALABY:
All right, but to -- but to come this
7
Board and say we want to recommend to the government to do
8
something is a more complicated procedure that I don't see
9
-- don't see coming to this Board recommending that we go
10
11
12
to government.
MR. MANNING:
But you have made a recommendation
already about Manitoba, that it should be further explored?
13
MR. SHALABY:
Yes.
14
MR. MANNING:
And that it could possibly be a good
15
thing?
16
MR. SHALABY:
Yes.
17
MR. MANNING:
So I'm not saying whether you should
18
have done.
I'm just saying, if you thought it was an
19
overwhelmingly good idea, you could have gone that extra
20
step and said in the same paragraph, And actually we think
21
you should do it.
22
MR. SHALABY:
Whether we make the recommendation that
23
the OPA should contract for it or the government should
24
contract for it, that's where I am stuck.
25
MR. MANNING:
Well, I'm not saying whether you should
26
do one or the other.
27
possibilities?
28
MR. SHALABY:
I'm just saying that both are
Yes.
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MR. MANNING:
2
MS. NOWINA:
Thank you.
Mr. Manning, to be fair, or, Mr. Vegh, it
3
might be a matter of legal argument as to whether or not it
4
is within the bounds of the OPA to do that.
5
MR. MANNING:
I understand that and I am not seeking
6
to trap Mr. Shalaby into a legal conclusion that Mr. Vegh,
7
I'm sure, will not be shy to argue at the appropriate time.
8
MS. NOWINA:
9
MR. MANNING:
Thank you.
And the last question, as I run out of
10
time, is this, that the OPA gave advice on the supply mix
11
to the minister?
12
MR. SHALABY:
Yes.
13
MR. MANNING:
And received a directive with that
14
advice, basically, turned back to it more or less.
15
then ordered by the minister to produce the IPSP with the
16
supply mix it had advised on?
17
18
19
20
21
22
23
MR. SHALABY:
It was
The minister considered the advice and
issued a directive.
MR. MANNING:
Yes.
And the directive was pretty close
to what had been advised?
MR. SHALABY:
We described the differences in our
previous discussion.
MR. MANNING:
That's fine.
So what interests me is
24
what was the -- so there's a dialogue going on.
25
the nature of the dialogue after that was done, as you had
26
gone along and considered and developed the plan?
27
28
What was
I mean, clearly there have been some formal directives
and the notices that Mr. Pape was referring to, and you
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have seen them when you have seen them and you have taken
2
action accordingly.
3
characterizes the relationship between the OPA and the
4
Ministry in terms of a day-to-day dialogue?
5
discussion?
6
I am just interested to know what
Is there a
How does it work?
MR. VEGH:
Madam Chair, I believe that you already
7
made a ruling that the relationship between the OPA and the
8
government is not an issue in this proceeding.
9
have the exact transcript reference in front of me, but I
10
11
12
13
14
15
I don't
thought it was quite clear.
MS. NOWINA:
That's right, Mr. Vegh.
I don't see the
relevance of the question, Mr. Manning.
MR. MANNING:
I am happy to leave it at this time,
Madam Chair.
And that concludes my cross-examination.
Thank you,
16
Mr. Shalaby and Mr. Pietrewicz for your patience, Madam
17
Chair, Members of Panel.
18
MS. NOWINA:
Thank you.
Before we conclude, for those
19
of you that are interested, I wanted to let you know -- for
20
those of you who are interested and have not been checking
21
your BlackBerrys, the Board has issued today its decision
22
in Hydro One's application for leave to construct the
23
Bruce-to-Milton line.
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25
26
With that, we will conclude and resume tomorrow
morning at 9 o'clock.
--- Whereupon hearing adjourned at 4:45 p.m.
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